Key figures 3. The Glamox Group 4. Summary of the business areas 6. The board of directors annual report 10. Profit and loss account 16

Transcription

1 Annual report 2008

2 Glamox is a Norwegian industrial group that develops, produces and distributes professional lighting solutions for the global market. Glamox consists of a group of companies with operations in several European countries, as well as Asia, the USA and Canada. The Group is organised with Glamox ASA as the parent company. Operations are divided between two independent business areas: European Professional Lighting and Global Marine & Offshore. Each business area is responsible for its group of companies. CONTENT Key figures 3 The Glamox Group 4 Summary of the business areas 6 The board of directors annual report 10 Profit and loss account 16 Cash flow statement 17 Balance sheet 18 Notes 20 Auditors report 36 Key figures 37 Addresses 38 2 GLAMOX

3 MAIN POINTS Increase in profit of 7%. Profit before tax of MNOK against MNOK in Increase in sales revenue of 1 %. Several new product families introduced during the year. Assembly operation being established in Korea. Building development in Molde (warehouse) and Estonia (production). Major deterioration of the market situation in Q4. Proposed dividend payment of NOK 0.50 per share. Key figures Total revenue MNOK Operating profit/loss MNOK Profit/loss before tax MNOK Profit/loss after tax MNOK Cash flow from operations MNOK Total profitability % Equity ratio % Earnings per share NOK Diluted earnings per share NOK

4 the lighting company European Professional Lighting Office and commercial buildings Industrial buildings Educational establishments Health institutions Retail and shopping centres Hotels and restaurants Global Marine & Offshore Commercial marine Cruise & ferries Oil & gas Recreational boats Navy Obstruction lighting The business area European Professional Lighting European Professional Lighting concentrates on the European market for land-based lighting. The business area offers the market total Glamox. A leading European illumination brand for professional markets, offices and industry, onshore and offshore. Has been on the market for 60 years. solutions in several lighting concepts, such as office and commercial buildings, industrial buildings, educational establishments, retail and shopping centres, hotels and restaurants and health institutions. aqua signal. The world leader brand name for marine lighting. Has been on the market for over 140 years. The business area Global Marine & Offshore Global Marine & Offshore is one of the world s leading suppliers of light fittings to the global marine and offshore market. The business area offers the market total solutions in the following segments: commercial marine, cruise & ferries, oil & gas, recreational boats, Norselight. Manufactures highly specialised search light and special applications for the marine market. A high quality brand name. Its history goes back over 80 years. navy and obstruction lighting. Høvik Lys. Established more than 130 years ago, one of the oldest brands in its field world wide. Specialises in luxurious design and customised solutions. 4

5 the lighting company Glamox Group President & CEO Kjell Stamnes Accounting, finance, HR & IT Thomas Lindberg CFO Manufacturing / Purchase Håkan Westin Vice President Global Marine & Offshore Jan Berner Senior Vice President European Professional Lighting Kjell Stamnes Sales Units Production Units Sales Units Production Units Glamox International Norway aqua signal Teterow GmbH & Co KG Bremen Germany Glamox Norge Norway Glamox Fabrikker Molde Norway aqua signal AG Germany Norselight AS Halden Norway Glamox Elektro AB Sweden AS Glamox HE Keila Estonia Aqua Signal Corporation USA Mariteam Lighting Inc. Newfoundland Canada Glamox A/S Denmark Høvik Lys Produksjon Halden Norway Glamox Far East Pte. Ltd. Singapore Glamox (Suzhou) Lighting Co. Ltd Suzhou China Glamox Marketing Oy Finland Mariteam Lighting Inc. Canada Glamox Korea Co. Ltd.* Busan South Korea AS Glamox HE Estonia Norselight AS Norway Glamox Licht GmbH Germany Glamox (Suzhou) Lighting Co. Ltd China Glamox Ireland Ltd. Ireland * Established February 2009 Glamox Electric (UK) Ltd. United Kingdom Turnover by market: MNOK Man-years (average) by market: % 16 % 32 % 3 % 15 % 2 % Norway Nordic Region ex. Norway Europe ex. Nordic Region North-America Asia Others 45 % 5 % 40 % 2 % 8 % Norway Nordic Region ex. Norway Europe ex. Nordic Region North-America Asia 5

6 Summary of the business areas Statsbygg/Jaro Hallan EUROPEAN PROFESSIONAL LIGHTING (EPL) European Professional Lighting (EPL) is an independent business area within the Glamox Group, with full budget and result responsibility. EPL develops, produces and sells lighting solutions for land-based market segments mainly within Europe. EPL also markets and sells Glamox Heating, electric radiators produced by Adax AS. EPL has two brand names: Glamox and Høvik Lys. EPL has its own sales organizations in Norway, Denmark, Sweden, Finland, Estonia, UK, Ireland and Germany. The company and its products are also represented through distributors in other parts of Europe. EPL has its own production units in both Norway and Estonia. At the end of 2008, EPL reported a staff equivalent of 625 man-labour years of which 34 % where employed outside of Norway. Key figures Total revenue NOK mill Operating profit NOK mill Operating margin % EPL supplies a wide range of complete lighting solutions to various markets and market segments. The prioritised market segments are office and commercial buildings, industrial buildings and educational establishments, as well as healthcare institutions in certain markets. EPL also supplies complete lighting solutions for hotels, shops/shopping centres and outdoor lighting applications. Glamox is the market leader in professional lighting in Norway and holds strong market positions in the other Nordic countries as well as in Estonia. EPL serves all important links in the sales and distribution chains, including architects, consultants, building owners, developers and installation contractors. The distribution model used is adapted to the structure of the market in question. In Norway, Sweden and Finland, the majority of sales are made through wholesalers, whereas, in the other markets, sales are made directly to installation contractors, building contractors or the end-users. In all markets, there is strong focus on increased marketing of the descriptive link (architects and consultants), in order to be described in projects. 6

7 SUMMARY OF THE BUSINESS AREAS The market situation in all our main markets was characterised by positive market conditions during first half of the year. However, the situation began to deteriorate gradually during second half of the year. The downturn was particularly acute during fourth quarter. This trend is expected to continue in 2009 and is primarily due to considerable reduction in new building activities within the office, commercial and industrial construction sector as a result of the financial crisis. We believe, however, that state-sponsored building activities within the education and health sectors will remain at a good level. Even more so than in the past, the declining market situation is contributing to increased competition and price pressure in the market. We expect a market downturn in all of our main markets in 2009, but it is extremely difficult to predict how significant this downturn will be. This business area has experienced continuous prosperity since However, we did not succeed in advancing our profit in Higher indirect costs combined with somewhat lower volume resulted in slightly lower profitability. The shortfall in turnover came in the last part of the year and cost measures implemented at the end of 2008 will have effect in During 2008 EPL also focused on product development and has launched several new products. Well over half of sales in 2008 were related to products launched over the past five years. Significant investments were also made in The primary focus has been on product development and increase in production capacity. Work on automating and improving the efficiency of production processes also continues. We opened a new annex to our central warehouse in Molde in 2008, which will enable us to better serve our clients and markets quicker and more effectively. We also expanded our production facilities in Estonia in order to increase efficiency and the production flow and are preparing the factory here for greater capacity. The weak exchange rate for the Norwegian crown against major currencies in the second half of the year had a positive effect. At the same time exchange rate fluctuations lead to unpredictability. A highly export-oriented production base in Norway means that a stable exchange rate for the crown and moderate wage settlements are vital elements for maintaining competitive strength. The lighting industry in Europe continues to be significantly fragmented and characterised by a certain degree of overcapacity. This is amplified in the market situation we are currently experiencing. We expect restructuring in the time to come. To ensure continued positive profitability development, EPL will continue to implement efficiency measures to maintain its competitive strength, increase volume growth in our different markets and invest in product development. 7

8 SUMMARY OF THE BUSINESS AREAS GLOBAL MARINE & OFFSHORE (GMO) Global Marine & Offshore is an independent business area within the Glamox Group, with full budget and result responsibility. Global Marine & Offshore is one of the world s leading suppliers of light fittings and lighting solutions to the global marine and offshore markets. The business area has four strong international brands: aqua signal, Glamox, Høvik Lys and Norselight. Global Marine & Offshore is represented globally through its own sales companies, agents and distributors. GMO has sales units in Norway, Germany, Finland, Singapore, China, USA and Canada, and production units in Norway, Germany, China and Canada. At the end of 2008, Global Marine & Offshore reported a staff equivalent of 464 manlabour years of which 87 % where employed outside of Norway. Global Marine & Offshore operates within the commercial marine, cruise & ferries, oil & Key figures Total revenue NOK mill Operating profit NOK mill Operating margin % gas, recreational boat and naval marine segment. GMO is also involved in commercial onshore projects in several regions outside of Europe. The business area is the global leader in the commercial marine and cruise & ferry segment. GMO also holds a strong position in both Europe and Asia within the oil & gas segment and a strong position in the recreational boat segment in both Europe and the U.S., particularly within navigation lights. Global Marine & Offshore has a marketing model that enables it to serve all important sales and distribution channels aimed at shipyards, shipping companies, architects, consultants and installation contractors. We face regional competitors in most countries, but there are currently only three or four competitors in the global market that offers comparable solutions. 8

9 SUMMARY OF THE BUSINESS AREAS The commercial marine (merchant ships) and oil & gas segment were good in Shipyards had a record high order intake in 2007, which allowed them, especially in Asia, to build up large order reserves for 2008 and 2009 and, for many, also for This in turn has resulted in increased demand for lighting solutions. However, we face increased competition and price pressure in several geographic markets. The commercial marine segment in particular shows signs of increasing competition from Asian market players. Global Marine & Offshore has experienced growth in the two largest segments commercial marine (merchant ships) and oil & gas. There has been growth in Asia, which now comprises more than a third of all GMO sales. However, there has been a decline in the recreational boat segment. This is due to an overall decline in the market for recreational boats as a result of the economic uncertainty in the global economy. Global Marine & Offshore s total sales revenue in 2008 amounted to 737 million Norwegian crowns, a 3% increase from The increase was seen within the oil & gas sector and commercial marine (merchant ships), whereas the recreational boat and cruise & ferry sectors experienced a decline. There have also been a number of deliveries to military projects. Total operating profit was 67.7 million, compared to 65 million crowns in The business area has increased the operating profit thanks to a higher volume, good capacity utilisation and efficiency measures within operations. The demand for lighting solutions is expected to remain stable for the main segments for much of 2009 since most shipyards have good order books and considerable activity. Significantly lower contracting in the second half of 2008 also took place and a number of cancellations of previously signed contracts are expected. This creates uncertainty for the market situation in the future and it is presumed that this will affect GMO towards the end of 2009 and into Initiatives in the oil & gas segment will continue in 2009 and continued growth is expected within this segment in In February 2009, we established our own company in Korea called Glamox Korea Co. Ltd. This company will assemble lighting fixtures, hold stock for project deliveries, and provide better support to the shipyards in Korea. We expect this to strengthen our market position in Korea and form the basis for further growth in our most important export market. Asia is becoming an increasingly more important market for GMO, but a challenging one. We are therefore intensifying our sales and marketing activities in this region. 9

10 Annual Report MAIN POINTS AND KEY FIGURES Increase in profit of 7%. Profit before tax of MNOK against MNOK in Increase in sales revenue of 1 %. Several new product families introduced during the year. Assembly operation being established in Korea. Building development in Molde (warehouse) and Estonia (production). Major deterioration of the market situation in Q4. Proposed dividend payment of NOK 0.50 per share. 10

11 ANNUAL REPORT Glamox is a Norwegian industrial group that develops, produces and distributes professional lighting solutions for and to the global market. Glamox has operations in several European countries as well as Asia, the USA and Canada. The Group is organised with Glamox ASA as the parent company and registered offices in Molde, Norway. In 2008 the Group had an order intake of 1,655 MNOK (1,670 MNOK in 2007), a decrease of 1%. Sales revenues amounted to 1,607 MNOK (1,594 MNOK), an increase of 1%. The company had an operating profit of MNOK (158.4 MNOK). The decrease is due to a combination of weak growth in sales revenue and increased costs. The increase in costs is due, among other things, to a reinforcement of the sales and marketing apparatus, continued high activity in product development and payroll increases. Net profit before tax and ordinary items was MNOK (134.5 MNOK). The improvement is due to lower finance costs and gains on foreign exchange as a result of a weaker Norwegian krone in the second half of Profit after tax was MNOK (93.8 MNOK). At year-end 2008, the Group had a taxable deficit for carrying forward of 49 MNOK. In 2008, the Group maintained a positive cash flow from operational activities. The cash flow from business activities (operational activities and investment activities) was 39.7 MNOK (165.6 MNOK). This reduction in cash flow is due to a greater increase in working capital. The liquidity reserve was 347 MNOK at yearend, compared with 340 MNOK in The parent company, Glamox ASA, had a turnover of 928 MNOK (928 MNOK). The operating profit was 75.2 MNOK (82.7 MNOK). Net profit before tax was 31.0 MNOK (80.6 MNOK). In the previous Annual Report, the Board had anticipated a result in 2008 that was either on a par with 2007 or somewhat better. This goal has been reached with an improvement in profit before tax of 7%. The decrease in operating profit is due to a weaker turnover in the Group s main markets in the final quarter STX Europe of the year. This applies in particular to the European Professional Lighting business area. The Board is satisfied with the consolidated results achieved and wishes to thank the entire workforce for the excellent effort made in CAPITAL AND LIQUIDITY The balance sheet stood at 1,070 MNOK at , against 944 MNOK at The Group s equity capital amounted to 384 MNOK at year-end. The equity ratio was 35.9%. Glamox ASA had an equity capital of 277 MNOK and an equity ratio of 34.5%. At year-end, Glamox ASA had distributable reserves (including other called-up capital) amounting to 173 MNOK. The cash flow from business activities in 2008 was 39.7 MNOK (165.6 MNOK). At year-end the liquidity reserve was 347 MNOK (340 MNOK). At the Group had a net interestbearing debt of 73.3 MNOK (62.0 MNOK). In relation to the operating result before depreciation of MNOK, this gives a ratio of

12 ANNUAL REPORT In 2008, ordinary investments amounted to 51.1 MNOK, compared with 44.4 MNOK the year before. The accounts are prepared on a going concern basis. FINANCIAL RISK The company is exposed to credit risk, interest risk and currency risk in its day-to-day business activity and the Board aims to keep this risk at an acceptable level. As instruments for managing interest risk, the company uses underlying loan agreements as well as financial instruments. Currency risk is managed via internal invoicing rules, matching income against expenses in the same currency and loans against equity in the same currency, and by employing financial instruments. For further information refer to note 17 in the Annual Accounts. DEVELOPMENT PER BUSINESS AREA The Group experienced very good market conditions for both business areas in the first half of Market conditions gradually deteriorated in the second half of the year. This particularly applies to the European Professional Lighting business area, which primarily delivers lighting solutions to offices and commercial buildings, industrial buildings, schools and colleges and health service institutions. As a result of market developments, the Group implemented several measures in the second half aimed at adjusting production capacity in certain factories. These have involved redundancies, layoffs and reduced working hours. The company has also taken extraordinary measures to reduce material costs at various inputs in the production. The Group has maintained a high level of activity in product development in 2008, and has launched several new product families during the year. The Group has shown a continuous improvement in results since This has been achieved through growth in turnover, strict cost management, good product development at the production facilities and good asset-liability management. European Professional Lighting (EPL) The EPL business area had an order intake in 2008 of 873 MNOK (895 MNOK), a decrease of 2%. Sales revenues in the same period amounted to 869 MNOK (879 MNOK), a decrease of 1%. The reduction in sales revenues mainly occurred in the latter part of the year. Increased costs have resulted in setback in results in 2008, compared with the progress the business area has been showing in recent years. The operating profit was 79.4 MNOK (9.1%), against 93.9 MNOK (10.7%) in The increase in costs is due to the fact that EPL has continued its investment in reinforcing its sales and marketing efforts. In addition to its main markets, the business area has also increased its sales effort in Russia. At the same time, measures implemented on the cost side have had limited effect in The lighting markets in which EPL is represented were very good in the first half of the year. All the business area s main markets have shown negative growth in the second half of By year-end, all our main markets were showing signs of decline, with some markets showing signs of serious decline. This is mainly due to a considerable reduction in new building activity in the office, commercial and industrial sectors as a result of the finance crisis. Public sector building activity and the renovation of existing buildings are expected to remain at a reasonable level. As a result of the changes in the markets, EPL is also experiencing an increased squeeze on prices. In 2008, EPL has noted considerably greater interest for energy-efficient lighting solutions. The business area has also launched many new products during the year. High wage increases in recent years are a major challenge for this business area as a large portion of EPL is located in Norway. Global Marine & Offshore (GMO) The GMO business area had an order intake of 782 MNOK (775 MNOK), an increase of 1%. Sales revenues amounted to 737 MNOK (714 MNOK), an increase of 3%. GMO s main markets have shown growth in 2008 as a result of the record order intake experienced by shipyards in The largest growth has been in Asia. At year-end, the shipyards still had a high order reserve for the delivery of new ships in 2009 and However, the second half of 2008 saw a considerable fall off in the contracting of new vessels, and this trend is expected to continue in Some orders for new-builds are 12

13 ANNUAL REPORT expected to be cancelled. This will gradually result in a reduction in demand for lighting systems, but this is not expected to affect the GMO business area until the tail-end of 2009 and early GMO has experienced growth in its two main markets, i.e. commercial marine (merchant ships) and the oil & gas segment. This growth has particularly been noticeable in Asia, which is responsible for more than a third of GMO s total sales revenues. There has been a fall off in sales to the recreational boat market as a result of a substantial decline in the market conditions. In 2008, GMO had an operating profit of 67.7 MNOK (9.2%), against 65.4 MNOK (9.2%) in The improvement is mainly attributed to a somewhat higher volume. A greater degree of uncertainty is expected in GMO s markets. One of the main challenges is to strengthen our market position in Asia. GMO is reinforcing its marketing effort in the region, and in Q will establish a separate company in Korea, which is already the business area s most important export market. This includes the establishment of an assembly line for our own products, local technical support and the holding of a stock of products manufactured in Europe. In addition to this facility, GMO has already developed a production facility for maritime products and a sales organisation in China. The Group has had a sales office in Singapore since In 2008, GMO has also strengthened its sales effort in the Middle East. GLAMOX AND THE EXTERNAL ENVIRONMENT Through planning and long-term effort, and as part of the Group s business concept, Glamox shall position itself as an environmentally aware company. The Group s production units in Molde and Germany are certified according to EN ISO The facilities satisfy the strictest criteria for environmental control and are obliged to document an effective environmental control system. In 2008, the company continued its efforts to reduce the use of hazardous chemicals and Sevan Marine replace the most hazardous products with more environmentally friendly products. At the main production facility in Molde, the unit responsible for providing finishes to aluminium reflectors was closed down in This will reduce the use of chemicals and electricity considerably. Environmental aspects are an important part of our product development strategy. Through energy efficient products and solutions, we aim to utilise the market opportunities resulting from, among other things, the EU s energy directive for buildings. HUMAN RESOURCES AND WORKING ENVIRONMENT The Group reported 1,110 man-labour years at , against 1,051 in Glamox ASA reported 466 man-labour years, the same as in The working environment in the Group s units is satisfactory, and cooperation with workers representatives is good. Absence due to sickness in Glamox ASA in 2008 was 7.1% compared with 6.0% in The company is not happy with the high level of sick leave, as the increase in 2008 represents a setback for the positive trend achieved in recent years. Reducing sick 13

14 ANNUAL REPORT leave is important in order to maintain competitiveness. Reducing the amount of sick leave will remain on the agenda in Sick leave in the Group s other units is variable. The proportion of female board members elected by shareholders was 40%. The proportion of females among workers representatives on the Board was 33%. Glamox ASA had six reported injuries resulting in days off in 2008, compared with five in The H-value in 2008 was 9.3 against 8.2 the year before. H-value is a defined standard measure for the frequency of injury in a company. Focus on a safe working environment will continue with undiminished strength in The number of reported injuries in the Group s other units was minimal in REPORT ON GENDER EQUALITY Glamox ASA had a total of 484 employees by year-end The proportion of women was 33%. The proportion of women working in the production facilities was 39%. The proportion of female office staff was 22%. The proportion of females in line management positions was 6%. Company policy is that same skills and length of service are rewarded on an equal basis regardless of gender. Women and men in all job categories have an equal opportunity to qualify for any type of task and promotion prospects. 14

15 ANNUAL REPORT FEES AND REMUNERATIONS Refer to note 5 in the Annual Accounts for details of fees and remuneration to board members, executives and the auditor. SHAREHOLDER SITUATION Refer to note 12 in the Annual Accounts for information about the shareholder situation. PROPOSAL FOR ALLOCATION OF PROFIT The Board proposes that the profit for the year in Glamox ASA of TNOK 24,723 is allocated as follows: - Conveyed to other equity: TNOK (8,271) - Allocated to payment of dividends: TNOK 32,994 OUTLOOK The Board anticipates a declining market in There is also considerable uncertainty about how great the decline will be. The Group s long-term strategy with focus on profitable organic growth remains unchanged, even though organic growth is unlikely to be achieved in 2009 due to falling markets. The Group will nevertheless maintain strong and aggressive focus on exploiting the market opportunities that exist. In addition to measures already implemented, the company will continue to evaluate further cost-reducing measures. For 2009 as a whole, the Board expects a lower result than in Oslo, 6 March 2009 Bjørn Arnestad Styreformann Sigmund Johansen Eyvin M. Olsen Heidi Marie Petersen Randi Skipnes Marianne Ulrichsen Sverre Valvik Rudi Aas Kjell Stamnes Konsernsjef 15

16 PROFIT AND LOSS ACCOUNT PARENT GROUP Note NOK THOUSANDS Sales revenue Other operating revenue TOTAL REVENUE Raw materials and consumables used Payroll and related costs Depreciation of fixed assets 3/ Other operating expenses Write-down on shares in subsidiaries OPERATING PROFIT/LOSS Dividend and group contribution from subsidiaries Interest income from other group companies Other financial income Other financial expenses PROFIT/LOSS BEFORE TAX Tax PROFIT/LOSS AFTER TAX PROFIT/LOSS FOR THE YEAR ALLOCATION OF PROFIT/LOSS FOR THE YEAR Proposed dividends Other equity 12 Majority share Minority share TOTAL ALLOCATION STATEMENT OF RECOGNISED INCOME AND EXPENCE PARENT GROUP NOK THOUSANDS Defined benefit plan actuarial gains (losses) Income tax on income and expenses recognised directly in equity INCOME AND EXPENSES RECOGNISED DIRECTLY IN EQUITY Profit for the year TOTAL RECOGNISED INCOME AND EXPENSE FOR THE YEAR

17 CASH FLOW STATEMENT PARENT GROUP Note NOK THOUSANDS CASH FLOW FROM OPERATING ACTIVITIES Profit before tax Taxes paid Profit/loss on sale og fixed assets Depreciation 3/ Changes in inventory Changes in accounts receivables Changes in account payables Changes in pension scheme assets/liabilities Changes defined benefit plan recognised directly in equity Effect of change in exchange rate Changes in other balance sheet items NET CASH FLOW FROM OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES Purchase of tangible fixed assets and intangible assets Purchase of investments in shares and joint ventures Payment of loan to group-companies Proceeds from sale of other investments NET CASH FLOW FROM INVESTING ACTIVITIES CASH FLOW FROM FINANCING ACTIVITIES Repayment of long-term loans Issue of share capital Payment of dividends to share holders Payment purchase minority shares NET CASH FLOW FROM FINANCING ACTIVITIES NET CHANGE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS / CASH AND CASH EQUIVALENTS /

18 ASSETS PARENT GROUP Note NOK THOUSANDS FIXED ASSETS INTANGIBLE FIXED ASSETS Rights, IT system etc Deferred tax assets Goodwill TOTAL INTANGIBLE FIXED ASSETS TANGIBLE FIXED ASSETS Land, buildings and other property 7/ Machinery and plant 7/ Fixtures and fittings, tools, office equipment etc. 7/ TOTAL TANGIBLE FIXED ASSETS FINANCIAL FIXED ASSETS Investments in subsidiaries 7/ Loans to group companies Investments in shares Other receivables Pension funds TOTAL FINANCIAL FIXED ASSETS TOTAL FIXED ASSETS CURRENT ASSETS Inventory 4/ DEBTORS Account receivables Other receivables TOTAL RECEIVABLES Cash and cash equivalents TOTAL CURRENT ASSETS TOTAL ASSETS

19 EQUITY AND LIABILITIES PARENT GROUP Note NOK THOUSANDS EQUITY PAID-IN CAPITAL Share capital Share premium reserve TOTAL PAID-IN CAPITAL RETAINED EARNINGS Other equity 12 Group reserve TOTAL RETAINED EARNINGS Minority interests TOTAL EQUITY LIABILITIES PROVISIONS Deferred tax Other provisions TOTAL PROVISIONS OTHER LONG-TERM LIABILITIES Liabilities to financial institutions 10/ Other long-term loans 10/ Pension liabilities TOTAL OTHER LONG-TERM LIABILITIES CURRENT LIABILITIES Account payable Tax payable Public duties payable Dividends Other current liabilities TOTAL CURRENT LIABILITIES TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES Oslo, 6 March 2009 Bjørn Arnestad Sigmund Johansen Eyvin M. Olsen heidi Marie Petersen Randi Skipnes Chairman of the Board Marianne Ulrichsen Sverre Valvik rudi Aas Kjell Stamnes Chief Executive Officer 19

20 NOTES Note 1 Accounting principles Basic policies - incorporation and classification The annual accounts, which are prepared by the Board and management, must be read in the context of the annual report and the auditor s report. The annual accounts and consolidated accounts comprise the profit and loss account, balance sheet, cash flow statement and notes and are prepared in accordance with the Companies Act, the Accounting Act and generally accepted accounting policy in Norway applicable as at 31st of December All figures in the annual accounts and notes are shown in NOK thousands unless otherwise specified. The annual accounts and consolidated accounts are prepared on the basic principles of historic cost, comparability, continued operation, congruency and prudence. Transactions are incorporated into the accounts at the value of the payment at the time of the transaction. Revenue is incorporated into the profit and loss account when it is earned and costs are grouped with accrued income. Hedging and portfolio management are taken into account. The accounting policies are explained in more detail below. Subsidiaries and associated companies in parent company Subsidiaries refers to companies in which Glamox normally has a shareholding of more than 50%, in which investment is longterm and strategic and in which the company has a controlling interest. Subsidiaries are incorporated into the company accounts at the lowest of cost price or actual value. Associated companies refers to companies in which Glamox normally has a shareholding of 20-50%, in which investment is longterm and strategic and in which the Group has a significant influence. Associated companies are entered in the company accounts at the lowest of cost price or actual value. For the time beeing the parent company does not have any assosiated companies.. Consolidation policies Consolidated companies The consolidated accounts include companies in which the parent company and the subsidiaries directly or indirectly have a controlling interest. The consolidated accounts show the companies financial position, profit/loss from the year s activities and cash flow as a single financial entity. Controlling interest is achieved through direct or indirect ownership of more than 50% of the voting capital. Uniform accounting policies are applied to all group companies. Recently acquired subsidiaries are incorporated from the time a controlling interest is achieved and sold subsidiaries are incorporated until the time of sale. In the case of gradual purchase of shareholdings, figures are based on the value of assets and liabilities at the time of incorporation into the Group. Subsequent purchase of shareholdings in existing subsidiaries will not effect the valuation of assets and liabilities, apart from added value in the form of goodwill, which will be analysed for each acquisition. Elimination of internal transactions All significant intercompany transactions and intercompany balances are eliminated. Elimination of shareholdings in subsidiaries Shareholdings in subsidiaries have been eliminated in the consolidated accounts in accordance with the acquisition method. The difference between the cost price of shareholdings and the book value of net assets at the time of acquisition is analysed and classified under the individual balance sheet items in accordance with actual value. Any further additional cost caused by expectations of future earnings is capitalised as goodwill and depreciated in the profit and loss account in line with underlying conditions and anticipated financial life Conversion of foreign subsidiaries The conversion of foreign subsidiaries from local currency into Norwegian kroner is for balance sheet items done at the exchange rate and for profit and loss items at the year average rate. The discrepancy created by converting the company s opening equity and profit for the year at a different exchange rate is posted on the Groups profit and loss account as financial items. 20

21 Note 1 Accounting principles (cont.) Minority interests The minority interests share of profit after tax and equity are shown as separate items in the profit and loss account and balance sheet. Associated companies Associated companies normally refers to companies in which the Group has a shareholding of 20-50%, in which investment is long-term and strategic and in which the Group has a significant influence. Associated companies are incorporated into the consolidated accounts in accordance with the equity method. For the time beeing the Group does not have any assosiated companies. General policies Assets/liabilities associated with the product cycle and items to be repaid within one year of the date of the balance sheet are classified as current assets/current liabilities. Current assets/current liabilities are valued at the lower/higher value of acquisition cost and actual value. Actual value is defined as anticipated future sale price minus anticipated sale costs. Other assets are classified as fixed assets. Fixed assets are valued at acquisition price. Fixed assets that deteriorate are depreciated. If a permanent change in value occurs, the fixed asset is written down. Similar policies are normally applied to liabilities. When using accounting policies and presenting transactions and other conditions, emphasis is placed on financial reality, not just legal practice. Conditional loss that is significant and quantifiable is entered as expenditure. Division into segments is based on the company s internal management and reporting objectives, as well as risk and income. Figures are presented for business areas as well as geographical markets if geographical categorisation of activities is significant to the assessment of the company. The figures are reconciled with the profit and loss account and balance sheet. Accounting policy for significant account items Crediting the profit and loss account Income is credited to the profit and loss account when it is earned. This means that the profit and loss account is normally credited at the time of delivery for the sale of goods and services. Charging as expenditure/grouping Expenses are grouped with and charged as expenditure at the same time as the income to which the expenses can be linked. Expenses that cannot be directly linked to income are entered as expenditure when they arise. In the case of restructuring and winding up of activities, all associated expenses are entered as expenditure, when the decision of restructuring and winding up is taken. Other operating income/expenses Significant income and expenses that are not associated with ordinary activities are classified as other operating income and expenses. Items that are unusual, occur sporadically and are significant are classified as extraordinary. Intangible fixed assets Intangible assets that are expected to generate income in the future, such as goodwill in subsidiaries, rights and IT systems, are capitalised. Depreciation is calculated on a straight-line basis over the financial life of the assets. Expenses associated with research and development are entered as expenditure on a continuous basis Tangible fixed assets Tangible fixed assets are entered in the balance sheet at acquisition cost minus accumulated depreciation and write-downs. If the actual value of a piece of equipment is lower than its book value for reasons that are considered to be permanent in nature, the equipment is written down to actual value. Expenses associated with periodical maintenance and repairs to production equipment are periodized. Expenses associated with standard maintenance and repairs are continuously charged as expenditure. Expenses associated with large-scale replacements and updates that significantly extend the lifetime of the equipment are capitalised. Operating equipment is considered a tangible fixed asset if it has a financial life of more than three years and a cost price of more than NOK Operating equipment leased under conditions which to all intents and purposes transfer financial rights and obligations to Glamox (financial leasing) are capitalised as operating equipment and entered as a commitment under interest-bearing liabilities at the current value of the minimum current rent. Operational leasing is charged as expenditure at ordinary rental cost and classified as ordinary operating expenses. 21

22 Note 1 Accounting principles (cont.) Depreciation Ordinary depreciation is calculated on a straight-line basis over the financial life of the operating equipment, based on historic cost. A similar policy applies to intangible fixed assets. Depreciation is classified as ordinary operating expenses. Leasing costs entered in the balance sheet are depreciated in accordance with the plan and liability is reduced by rent paid minus calculated interest. Stock and raw materials and consumables Stocks of products are valued at the lower of cost price on a first-in-first-out basis and anticipated sale price. Cost price for manufactured goods comprises direct materials, direct salary plus a proportion of indirect manufacturing costs, whereas cost price for purchased goods is the acquisition cost. Raw materials and consumables used for the year consist of the cost price of sold goods with a supplement for write-downs in accordance with standard accounting practice at year-end. Receivables Receivables are entered at nominal value minus anticipated loss. Pension commitments and pension expenses The parent company and some subsidiaries have pension schemes that entitles employees to agreed future pension benefits, referred to as benefit plans. Pension schemes for the the Norwegian companies are booked according to the IAS19 standard. Pension commitments are calculated on linear accrual based on assumed number of years worked, discount rate, future return on pension reserves, future adjustment of wages, pensions and national insurance provisions and actuarial assumptions regarding mortality, voluntary redundancy etc. Pension reserves are valued at actual value. Net pension commitments consist of gross pension commitments minus the actual value of pension reserves. Net pension commitments on under-financed schemes are entered in the balance sheet as a long-term, interest-free liability, whereas net pension reserves on over-financed schemes are entered as a longterm interest-free receivable if it is probable that the over-financing can be utilised. Changes in the pension commitment that are due to changes in the pension plans are posted direct against equity. Changes in the pension commitment and pension reserves that are due to changes in and deviation from the calculation forecasts (estimate changes) are posted direct against equity. Net pension expenses gross pension expenses minus estimated return on pension reserves, adjusted for the effect of changes to estimates and pension plans are classified as ordinary operating expenses and are shown with salaries and other payments. Deferred tax and tax Deferred tax is calculated on the basis of temporary differences between accounting and tax values at the end of the financial year. A nominal tax rate is used in the calculation. Positive and negative differences are valued against each other in the same time intervals. Certain items are still valued separately, including added value from acquisitions and pension commitments. Deferred tax asset occurs if there are temporary differences that create tax deductions in the future. Tax for the year consists of changes in deferred tax and deferred tax asset, together with tax payable for the year, adjusted for errors in the previous year s calculations. Cash flow statement The cash flow statement is prepared in accordance with the indirect method. Cash and cash equivalents includes cash, bank deposits and other current liquid resources that can immediately and with a minimal currency risk be converted into known cash amounts and with a due date of less than three months from the date of acquisition. 22

23 Note 2 Segment information Sales revenue and other Operating Business areas operating revenue profit European Professional Lighting (EPL) MNOK Global Marine & Offshore (GMO) MNOK Group staff/other items MNOK Total Glamox Group MNOK Sales revenue and other operating revenue devided into geographical areas PARENT GROUP Norway MNOK Nordic region, excl. Norway MNOK Europe, excl. Nordic region MNOK North America MNOK Asia MNOK Other MNOK Total MNOK Note 3 Gain on sales of assets, other operating expenses, restructuring expenses and other special expenses In 2006 the Parent Company sold a non-utilized site in Molde. This transaction generated a gain of 11.0 MNOK. In 2008 the Parent Company reversed 6.6 MNOK on previous write downs of shares in subsidiaries. The accounts for 2006 are credited with 6.5 MNOK and the accounts for 2007 are credited with 9.7, due to reversals of earlier write downs of balance items. On Group level the split of the amounts are as follows: Other operating expenses Total

24 Note 4 Inventory PARENT Inventory Change Raw materials Work in progress Manufactured goods Total inventory GROUP Inventory Change Raw materials Work in progress Manufactured goods Total inventory Note 5 Salary costs / Number of man-years / Remuneration / Loans to employees / Pensions etc. PARENT GROUP Payroll and related costs Salaries National insurance Pension costs Other remuneration One-Time bonus to all employees Payroll and related costs Average number of man-years The board's declaration regarding establishing salaries and other considerations for management personnel Guidelines for 2009 The board will present to the General Assembly a statement containing the policy to determine the remuneration to leading employees within Glamox ASA according to Joint Stock Public Companies Act 6-16a. In line with the Accounting Act's 7-31b, paragraph 7, an account of the contents of the declaration are listed below: The fundamental principle for the wage policy is that it must support the objective of keeping and attracting the best persons for the position in question. In addition to fixed salaries, managerial employees also participate in bonus schemes for managers. All leading employees are included in our collective performance-based pension scheme for salaries up to 12G. The Chief Executive Officer also has a pension scheme for salary above 12G, as described in more detail below. 24

25 Note 5 Salary costs / Number of man-years / Remuneration / Loans to employees / Pensions etc. (cont.) Managerial salary policies completed in 2008 Salaries for leading employees in 2008 have been in accordance with the declarartion presented to the General Assembly in The declaration for 2009, cf. requirements in the Joint Stock Public Companies Act 6-16a, will be attached to the summons to the general assembly for Benefits for managerial persons agreements on severance pay, bonuses, etc. The CEO has an agreement for severance pay of 24 months. In his contract, the CEO's retirement age is fixed at 65 years, having a pension scheme of 70% of the basic salary starting at 65 years of age until reaching 67. Starting at 67 years of age until reaching 70 a benefit of 65% of basic salary is applied, and thereafter 60% of basic salary. Payments associated with basic salary above 12G are covered as an operational pension. The CEO has a bonus agreement based on results, limited to maximum 3 monthly salaries. In 2008, this gave a payment of NOK. The board also paid the CEO an extraordinary bonus of NOK in 2008, because of extraordinarly good results and progress in earnings for the company's fiscal year These amounts are included in the listed item for performance-related bonuses in the summary below. The chairman of the board has no agreement for severence pay, bonus or profit-sharing. The CEO, chairman of the board, nor any other person in a similar position have been given a loan, or securities been put at their disposition. Performance- Change Other Remuneration to Group Management in 2008 Salaries related bonus pension* remuneration Kjell Stamnes - President & Chief Executive Officer (CEO) Jan Berner - Senior Vice President GMO Thomas Lindberg - Chief Financial Officer * Change pension = Change in worked up pension rights Director's Other Remuneration to Board members fees Salaries remuneration Bjørn Arnestad 440 Eyvind M. Olsen 220 Marianne Ulrichsen 220 Ralph Høibakk 40 Sverre Valvik 220 Heidi Marie Petersen 220 Sigmund Johansen Randi Skipnes Rudi Aas Henny Eidem Mette Smisetfoss Jørn Løvik Thorleif Kristiansen Total remuneration to Board From year 2008 the Group changed the routines for payment of the Director's fee, from after-payment to current payments. Accumulated Director's fees at were paid in Accrued Director's fees at end of 3rd quarter 2008 were paid out in In May 2008 the General Assembly decided the following level of Director's fees for the coming period: NOK to the Chairman of the board, NOK to the board members elected by the shareholders and NOK to the employees representatives. 25

26 Note 5 Salary costs / Number of man-years / Remuneration / Loans to employees / Pensions etc. (cont.) Auditor PARENT GROUP Total auditors fee for 2008 are split as follows: Statutory ruled auditor fee Other attestation services Tax advisory service Other services, beyond audit Total Composition of all pensions and pension obligations in Norwegian companies The company is obligated to keep an occupational pension scheme pursuant to the Mandatory Occupational Pensions Act. The company has a pension scheme that satisfies the requirements of this Act. Net pension funds/obligations below are only valid for Norwegian companies in the Group, as pension costs in foreign subsidiaries are handled as contribution plans, which is to say that amounts paid out are charged as expenses. The pension schemes are handled in the accounts according to IAS - starting in Estimated deviations from previous years were recognized in the balance sheet and charged to equity. This year's estimated deviations are also charged directly against equity. The company's pension scheme is handled as a payment plan. The Group's Norwegian companies have pension schemes that include all employees over the age of 20 years old and who hold more than a 20% position. The schemes give the right to defined future payments. These are mainly dependent on total years of service, salary level at reaching retirement age, and size of payments from the national insurance scheme. The obligations are covered by insurance companies. PARENT GROUP Pension expenses Current value of this years pension accrual Interest cost of pension commitments Return on pension reserves Pension defined contribution plans Net pension expenses Reconciliation of pension scheme's financed against sum in balance sheet: PARENT GROUP Calculated pension commitments Pension reserves (at market value) Net pension reserves Posted in balance sheet as: Pension funds Pension liabilities Net pension reserves Financial conditions: Discount rate 4,30 % 5,00 % Anticipated salary settlement 4,25 % 4,25 % Anticipated pension increase 2,00 % 2,00 % Anticipated change in national insurance bare rate 4,25 % 4,25 % Anticipated return on pension fund reserves 6,30 % 5,75 % AFP withdrawal 10,00 % 10,00 % 26 Standard conditions used in the insurance industry form the basis of the actuarial preconditions for demographic factors and retirement.

27 Note 6 Specification of financial items PARENT GROUP Other financial income Other financial expences Total other financial items Of this: Agio/disagio change on opening equity Agio/disagio from profit & loss and balance items Total currency effects Note 7 Tangible fixed assets and intangible fixed assets - PARENT Land/ Machinery Fixtures and/ Total Buildings fittings Acquisition cost Acquisition of tangible fixed assets Disposal Acquisition cost Accumulated depreciation Accumulated depreciation Reversed accumulated depreciation of tangible fixed assets Balance sheet value at Depreciation for the year Financial life Up to 20 yrs. Up to 8,3 yrs. Up to 8,3 yrs. Depreciation plan Straight-line Straight-line Straight-line Further the group has lease agreements on operating equipment. These lease agreements are regarded as operational leasing. Annual rental amounts are 5.7 MNOK. Rights, IT systems Total IT systems (leased) Acquisition cost Acquisition of tangible fixed assets Disposal Acquisition cost Accumulated depreciation Accumulated depreciation Accumulated write downs Reversed accumulated depreciation of tangible fixed assets Balance sheet value at Depreciation for the year Financial life Up to 7 yrs. Up to 7 yrs. Depreciation plan Straight-line Straight-line 27

28 Note 7 Tangible fixed assets and intangible fixed assets - Group Land/ Machinery Fixtures and Total Buildings fittings Acquisition cost Currency effects on balance with rates at Acquisition cost Acquisition of tangible fixed assets Disposal Acquisition cost Depreciation and write downs at Currency effect on balance with rates at Depreciation and write downs at Accumulated depreciation Reversed acc. depreciation tangible fixed assets Balance sheet value Depreciation for the year Financial life Up to 20 yrs. Up to 10 yrs. Up to 10 yrs. Depreciation plan Straight-line Straight-line Straight-line Further the group has lease agreements on operating equipment. These lease agreements are regarded as operational leasing. Annual rental amounts are 5.7 MNOK. Rights, IT systems Goodwill Total IT systems (leased) Acquisition cost Currency effects on balance with rates at Acquisition cost Acquisition of purchase intangible fixed assets Disposal Acquisition cost Depreciation and write downs at Currency effect on balance with rates at Depreciation and write downs at Accumulated depreciation Accumulated write downs Reversed acc. depreciation intangible fixed assets Balance sheet value Depreciation for the year Financial life Up to 7 yrs. Up to 7 yrs. Up to10 yrs. Depreciation plan Straight-line Straight-line Straight-line The company s and the Group s expenses on research and development are chareged to profits when they arise. Goodwill is depreciated over 10 years as the company believes this to be the financial life on which the assessment should be based. In the notes, all figures related to 2008 are translated at the currency exchange rates on For this reason there will be a discrepancy between depreciation for the year in the notes and depreciation in the accounts, which is calculated based on average exchange rates for the year. Sum this years depreciation ref. Note Sum this years depreciation ref. Profit & Loss Currency deviation = Deviation average-rate and closing-rate

29 Note 8 Subsidiaries, and jointly controlled companies for the parent Shareholding in Book value in Group's Name of company Share capital Glamox ASA Glamox ASA vouting-/ ownership share TNOK Glamox A/S, Denmark DKK % % Glamox Elektro AB, Sweden SEK % % Glamox Electric (UK) Ltd., UK GBP % % Glamox Marketing Oy, Finland EUR % % AS Glamox HE, Estonia EEK % % Glamox Licht GmbH, Germany EUR % % aqua signal AG, Germany EUR % % aqua signal Teterow GmbH & Co. KG, Germany EUR % % Aqua Signal Corporation, USA EUR % % Mariteam Lighting Inc., Canada CAD % % Glamox Far East Pte Ltd., Singapore SGD % % Glamox Ireland Ltd., Ireland EUR % % Norselight AS, Norway NOK % % Glamox (Suzhou) Lighting Co. Ltd, China CNY % % Birger Hatlebakks veg 15 AS, Norway NOK % % Total subsidiaries ) Glamox Far East Pte Ltd. (Singapore), owns 100% of the shares in Glamox (Suzhou) Lighting Co. Ltd, China. Minority interests: 1.27% of shares in Glamox Far East Pte Ltd, Singapore 1.27% of shares in Glamox (Suzhou) Lighting Co. Ltd, China 29

30 Note 9 Receivables due for payment later than one year after Balance sheet value of receivables due for payment later than one year after for parent and Group: PARENT GROUP Receivables, Group Companies Other receivables Total Note 10 Liabilities and bonds Liabilities due for payment more than five years after the end of the financial year for the parent company and Group: PARENT GROUP Liabilities to financial institutions Note 11 Tax PARENT GROUP Tax payable is calculated as follows: Ordinary profit before tax Permanent differences Change in temporary differences Change defined benefit plan recognised diretly against equity Applied defict to be carried forward Basis tax payable 0 0 Tax payable on profit for the year Tax for the year is calculated as follows: Tax payable on profit for the year Gross change in deferred tax Deferred tax on group contribution booked in balance sheet Income tax on income and expenses recogniced directly in equity Total tax for the year Total tax for the year on group level: Norwegian companies Foreign companies Total tax for the year

31 Note 11 Tax (cont.) PARENT GROUP Specification of basis for deferred tax: Differences offset: Fixed assets Intra-group receivables Other current assets Liabilities Net pension reserves/commitments Gross basis for deferred tax: Deficit to be carried forward (incl. remuneration) Reduction regarding intra-group receivables Basis for deferred tax assets: Calculated deferred tax assets not posted as deferred tax assets in balance sheet Net deferred tax assets posted in balance Spesification of posting in balance sheet Deferred tax assets posted in balance Deferred tax posted in balance Net deferred tax assets posted in balance The parent company has tax payables on a foreign department. The Group Management and Board does a continuous evaluation of the amount they consider to be secure to book in the companies balance sheet, based on the expected future income and realistic tax adaptation. Based on these evaluations 28 MNOK have been booked as net deferred tax in the balance sheet. As stated above Glamox ASA has booked 39 MNOK as deferred tax assets in the balances sheet. The accounts of the parent company have in total write-downs on receivables in subsidiaries of 54 MNOK. These write-downs are done without any tax reductible effect, but are not included in the synopsis of basis of deferred tax above since there is some uncertainty if or when the difference will be reversed. 31

32 Note 12 Equity and sharesholders Share Other Other PARENT capital reserves equity Total Equity Change in equity for the year: Profit for the year Proposed dividends Income and expenses recognised directly in equity Other equity effect Equity Share Other Reserves Minority GROUP capital reserves in Group interests Total Equity Change in equity for the year: Profit for the year Proposed dividends Inc. and exp. recognised directly in equity Other equity effect Equity Share capital and shareholder information: Share capital in Glamox ASA at consist of: Number Nominal value Balance sheet Shares Total All shares have the same voting rights Ownership structure: The largest shareholders in Glamox ASA at were: Shareholding/ Total shares Vouting Arendals Fossekompani ASA ,90 % Fondsavanse AS ,97 % Skagen Vekst ,01 % Sundial 2000 Limited ,54 % Havfonn AS ,43 % Vicama AS ,37 % Kjell Stamnes ,11 % Snefonn AS ,60 % Erik Must ,42 % Dag Henning Larsen ,88 % Total 10 largest ,23 % Other ,77 % Total shares ,00 % 32

33 Note 12 Equity and shareholders (cont.) Shares and options owned by Board members and the Group Management: Name Position Shares Kjell Stamnes President & CEO Thomas Lindberg CFO Rudi Aas Board member 10 Note 13 Assets pledged as security and guarantee liabilities PARENT GROUP Secured balance sheet liabilities Liabilities to financial institutions Balance sheet value of assets pledged as security for secured liabilities: Land, buildings etc Shares Inventory Account receivable Total The same assets that are pledeged as security in the parent company are also security for liabilities in the subsidiares. In the loan agreements, the lenders also have demand to keyfigures as eqiuty ratio, debt ratio etc. On Group level shares in subsidiaries, with a total equity of 224 MNOK, are pledged as security. PARENT GROUP Guarantee liabilities Guarantee liabilities towards third party

34 Note 14 Outstanding accounts against Group companies and associated companies PARENT GROUP Account receivables Loans to Group companies Total receivables on Group companies Account payables to Group companies Total payables to Group companies Note 15 Cash etc. PARENT GROUP Liquidity reserve The liquidity reserve is a result of summing up the overdraft facility lines for each of the Group companies, reduced with the drawn credit, and added all cash on hand and deposits. The liquidity reserve for the Group is organized in a Multi Currency Cashpool. This implies that the cash deposits of the subsidiaries formally are account receivables towards the parent company, and all participating group companies are jointly responsible for overdraft within the Cashpool. Accounts with deposit and debt within the cashpool are netted in the group balance sheet. Locked-up deposits in Glamox ASA amount to 8.7 MNOK. Locked-up depositis in Norwegian Group companies amount to 9.3 MNOK. Note 16 Related parties for parent company and Group Related parties are Group companies, major shareholders, board and senior management in the parent company and the group subsidiaries. Agreements on remuneration for Group Management appear in note 5. No transactions or agreements of significance were entered into with related parties in 2008 or in the financial years for which comparison figures are given, other than standard business transactions with subsidiaries and associated companies. 34

35 Note 17 Financial market risk The Group s attitude and aims relating to financial market risk are important in the assessment of earnings and value. This note deals with what interest and currency risk the group is exposed to and what means are used to manage the risk in check. a) Interest risk and control The aim of the Glamox Group is to follow the general long-term development in money market interest levels. The effects of shortterm fluctuations in money market interest levels can be reduced by controlling the loan portfolio s average interest duration and by managing when the interest fixing is due. Underlying loan agreements and financial instruments (interest derivatives) can be used to partly manage the interest risk. Interest-bearing liabilities at are 301 MNOK. Of this amount 101 MNOK runs in Norwegian currency. As of MNOK runs with fixed interest, 44 MNOK of these loans are in Norwegian currency. Net interest-bearing liabilities, including bank deposit, was 73 MNOK at Given the net loan portfolio at the Group s interest expenses on an annual basis will change by approximately 0.1 MNOK when there is a 1% change in interest in all currencies and periods of validity. b) Currency risk and control Operational cash flow (transaction risk) Glamox is exposed to transaction risk by purchasing and selling in different currencies. Purchase and production expenses are mainly in NOK and EUR, with sales mainly in NOK, EUR, SEK, DKK, GBP and USD. Glamox aims to minimize the risk of value changes in net cash flow due to short-term fluctuations in exchange rates. Transaction risk is controlled by means of internal invoicing rules, matching of income and expenses in the same currency and by using financial instruments (futures contracts and currency options). At the Group had future contracts in current currencies. Calculated at rates the future contracts consist of 50 MNOK in currency sales contracts and 47 MNOK in currency purchase contracts. Equity in foreign subsidiaries Glamox is exposed to book value changes in equity in foreign subsidiaries. Changes in the value of equity for foreign subsidiaries are partly offset by loans in the same currency. 35

36 KPMG AS P.O. Box 7000 Majorstuen Sørkedalsveien 6 N-0306 Oslo Telephone Fax Internt Enterprise MVA To the Annual Shareholders Meeting of Glamox ASA AUDITOR S REPORT FOR 2008 Respective Responsibilities of Directors and Auditors We have audited the annual financial statements of the Glamox ASA as of 31 December 2008, showing a profit of TNOK for the parent company and a profit of TNOK for the group. We have also audited the information in the Board of Directors report concerning the financial statements, the going concern assumption and the proposal for the allocation of the profit. The annual financial statements comprise the parent company s financial statements and the group accounts. The parent company s financial statements comprise the balance sheet, the statements of income and cash flows, the statement of recognised income and expense and the accompanying notes. The group accounts comprise the balance sheet, the statements of income and cash flows, the statement of recognised income and expense and the accompanying notes. The rules of the Norwegian accounting act and good accounting practice in Norway have been applied to prepare the financial statements. These financial statements and the Board of Directors report are the responsibility of the Company s Board of Directors and Managing Director. Our responsibility is to express an opinion on these financial statements and on the other information according to the requirements of the Norwegian Act on Auditing and Auditors. Basis of Opinion We conducted our audit in accordance with the Norwegian Act on Auditing and Auditors and good auditing practice in Norway, including standards on auditing adopted by Den norske Revisorforening. These auditing standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. To the extent required by law and good auditing practice an audit also comprises a review of the management of the Company s financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion. Opinion In our opinion, the financial statements are prepared in accordance with the law and regulations and give a true and fair view of the financial position of the Company and of the Group as of 31 December 2008, the results of its operations and its cash flows and the recognised income and expense for the year then ended, in accordance with the rules of the Norwegian accounting act and good accounting practice in Norway the company s management has fulfilled its duty to produce a proper and clearly set out registration and documentation of accounting information the information in the Board of Directors report concerning the financial statements, the going concern assumption and the proposal for the allocation of the profit is consistent with the financial statements and comply with the law and regulations. Oslo, 6 March 2009 KPMG AS Henning Aass State Authorised Public Accountant Note: This translation from Norwegian has been prepared for information purposes only Offices in: KPMG AS is a member firm of the KPMG network of independent member firms affiliated with KMPG International, a Swiss cooperative. Statsautoriserte revisorer - medlemmer av Den norske Revisorforening Oslo Bodø Alta Arendal Bergen Elverum Finnsnes Hamar Grimstad Haugesund Kristiansand Larvik Lillehammer Mo i Rana Molde Narvik Røros Sandefjord Sandnessjøen Stavanger Stord Tromsø Trondheim Tønsberg Ålesund 36

37 KEY FIGURES SALES / PROFIT 1. Total revenue MNOK Operating profit/loss MNOK Profit/loss before tax and extra. items MNOK Profit/loss before extraordinary items MNOK PROFITABILITY 5. Operating margin % Gross profit margin % Gross profit margin % Total profitability % Return on equity % CAPITAL/LIQUIDITY 10. Current ratio Cash flow MNOK Cash flow from activities MNOK (8.6) Equity MNOK Equity ratio % Investments MNOK SHARE-RELATED KEY FIGURES 16. Earnings per share nok Diluted earnings per share nok Cash flow per share nok Diluted cash flow per share nok Book equity per share nok Diluted book equity per share nok DEFINITION OF KEY FIGURES 5) Operating margin: Operating profit/loss as a percentage of total sales revenue and other operating revenue. 6) Gross profit margin: Profit/loss before tax and extraordinary items as a percentage of total sales income and other operating revenue. 7) Net profit margin: Profit/loss before extraordinary items as a percentage of total sales revenue and other operating revenue. 8) Total profitability: Profit/loss before tax plus financial costs as a percentage of average total capital. 9) Return on equity: Profit/loss after tax as a percentage of average equity. 10) Current ratio: Current assets in relation to current liabilities. 11) Cash flow: Profit/loss before tax and extraordinary items, minus tax payable, plus ordinary depreciation. 12) Cash flow from activities: From cash flow statement. Net cash flow from operating activities plus net cash flow from investing activities. 13) Equity: Book equity including minority items and subordinated loans. 14) Equity ratio: Book equity including minority items and subordinated loans as a percentage of total capital at ) Investments: Investments excluding leased assets. 16) Earnings per share: Profit/loss after tax per share for the years 2008 are calculated based on shares. Profit/loss after tax per share for the years 2007 are calculated based on shares, after converting of shares from subordinated loan. Profit/loss after tax per share for the years 2006 are calculated based on shares, after converting of shares from subordinated loan. profit/loss after tax per share for the years are calculated based on shares. 17) Diluted earnings per share: Profit before tax adjusted with interest on subordinated loans, calculated based on total shares (sum ordinary and convertible shares). The company has paid back a subordinated loan during This loan is not included in the calculation of diluted earnings per share. 18) Cash flow per share: Cash flow per share for the years 2006 is calculated based on shares Cash flow per share for the years 2007 is calculated based on shares, sum after converting of shares from subordinated loan. Cash flow per share for the years 2006 is calculated based on , sum after converting of shares from subordinated loan. Cash flow per share for the years is calculated based on shares. 19) Diluted cash flow per share Cash flow adjusted with interest on subordinated loans calculated based on total shares (sum ordinary and convertible shares). 20) Book equity per share Book equity (not incl. subordinated loans) divided on number of ordinary shares 21) Diluted book equity per share total book equity incl. subordinated loans, divided on number total number of shares (sum ordinary and convertible shares). 37

38 Glamox ASA Sandakerveien 138 P.O. Box 4253, Nydalen N Oslo Tel Fax info@glamox.com 38 EUROPEAN PROFESSIONAL LIGHTING Sales Units Norway Glamox Norge Oslo Tel Fax info.no@glamox.com Sweden Glamox Elektro AB Stockholm Tel Fax info.se@glamox.com Denmark Glamox A/S Ishøj Tel Fax info.dk@glamox.com Finland Glamox Marketing OY Vantaa Tel Fax info.fi@glamox.com Baltikum AS Glamox HE Keila, Estonia Tel Fax info.es@glamox.com Germany Glamox Licht GmbH Bremen Tel Fax info.de@glamox.com United Kingdom Glamox Electric (UK) Ltd. Northamton Tel Fax info.uk@glamox.com Ireland Glamox Ireland Ltd. Dublin Tel Fax info.ie@glamox.com Production Units Norway Glamox Fabrikker Molde Tel Fax Høvik Lys Produksjon Halden Tel Fax Estonia AS Glamox HE Keila Tel Fax GLOBAL MARINE & OFFSHORE Sales Units Germany aqua signal AG Bremen Tel Fax info@aquasignal.de USA Aqua Signal Corporation Cary, Illinois Tel Fax info@aquasignal.de Norway Glamox International Molde Tel Fax info.gi@glamox.com Norselight AS Halden Tel Fax office@norselight.no Singapore Glamox Far East Pte. Ltd. Tel Fax gfe1026@singnet.com.sg China Glamox (Suzhou) Lighting Co. Ltd. Suzhou Tel Fax glamox@public1.sz.js.cn North America Mariteam Lighting Inc. New Foundland Tel Fax info@mariteam.com Production Units Germany aqua signal Teterow GmbH & Co. KG Bremen/Teterow Tel Fax Norway Norselight AS Halden Tel Fax Canada Mariteam Lighting Inc. New Foundland Tel Fax China Glamox (Suzhou) Lighting Co. Ltd. Suzhou Tel Fax Korea Glamox Korea Co. Ltd. Busan Tel +82 (0) Fax +82 (0)