Annual Report 2009 N Enea Is the World’S Third-Largest Vendor of Realtime Operating Systems (RTOS)

Annual report 2009 n Enea is the world’s third-largest vendor of realtime operating systems (RTOS). RTOS have more stringent demands for precision, performance and predictabi- ENEA in brief lity than operating systems on PCs. n Over its 40-year history, Enea has become one of the Enea offers solutions which enhance competitive- leading companies in the field of technical consul- ness for customers who develop products driven tancy services. The consultancy field is now a separate by communications. These solutions consist of ad- business area, which in 2009 represented 56 percent vanced realtime operating systems with supple- of revenue. Software, Enea’s other business area, re- mentary software and services, as well as technical presented 44 percent of revenue. consultancy services for product development over Omsättning n The long-term demand for Enea´s products is driven the entire life cycle. Enea employs more than 600 2009 777,7 2008 917,6 by two strong trends. The first is that an increasing employees in Europe, North America and Asia and 2007 820,6 2006 750,1 number of products[Diagram] contain built-in intelligence, while had a turnover of SEK 777.7 million for 2009. 2005 726,2 1000the other is that Rörelseresultat more and 80 more products are com- 2009 -4,1 municating with one2008 73,1 another. For both trends, the use 2007 72,1 65 800 of realtime operating2006 67,6 systems and related services is a 2005 56,4 prerequisite. 50 600 35 400 20

200 5

Revenue,0 MSEK -10Operating profit, MSEK Contents Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 1,0001000 8080 1000 80 n A word from the CEO 4-5 6565 65 n Strategies 6-9 800800 800 5050 50 n Software 10-15 600600 600 3535 35 n Consulting 16-21 400400 400 n The share 22-23 2020 20 200200 200 n Board of Directors’ report 24-29 5 5 n Income statement 30 0 –10-10 0 -10 [Diagram] 200505 2006 06 2007 07 2008 08 2009 09 200505 2006 06 2007 07 2008 08 2009 09 n Balance sheet 31 Försäljning per a ärsområde 2009

Consulting 56% Software 44%

n Cash flow statement and equity 32 Sales by business area Sales by segment n Parent company 33-35 42 % 32 % Telecom Mobile units

n Notes 36-50 44 % infra-

Software structure enheter Mobila infrastruktur

32% 32%

n Auditor's report 51 44% Telecom Software 42% n Five-year review 52 56% n Corporate governance report 53-56 Consulting n Board of Directors 57 8 %

56 % Aero / Flyg/försvare

n Executive Management Team 58 Consulting 18 % defense 8%

Other

övrigt

n Annual General Meeting 59 18%

Övrigt 18% Övrigt

Flyg/försvar 8% Flyg/försvar

Mobila enheter 32% enheter Mobila

Telekom infrastruktur 42% infrastruktur Telekom

Försäljning per segment 2009 segment per Försäljning [Diagram] 300

250

200

150

100

50 Net sales per quarter 0 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 MSEK 300300

250250

200200 Year in brief 150150 10015100

105050 5 00 0 Q1Q1 Q2 Q2 Q3 Q3 Q4 Q4

-5 = 2008 = 2009 -10

-15 Operating-20 profit before non-recur- Q1 ring itemsQ108 Q208 per Q308 quarter Q408 Q109 Q209 Q309 Q409 Over the first quarter, Enea makes a loss which turned out to be MSEK the starting point for a range of improvements and adjustments over the rest of the year. A new Chairman and a new President 1515 are appointed; greater focus is placed on Enea’s future strategy. 1010 55

00 Q2 -5-5 Enea is profitable again. A cost savings program is introduced in -10-10 order to reduce the cost of development and consultancy. With -15-15 market consolidation, Enea becomes the largest independent -20-20 supplier of realtime operating systems. Q1Q1 Q2 Q2 Q3 Q3 Q4 Q4

= 2008 = 2009 Q3 Key figures A new, focused strategy is launched with two business units - Software and Consulting - with the long-term objective of ac- Key figures 2009 2008 2007 2006 2005 hieving an operating margin of 20 percent and 10 percent respectively. The multicore version of Enea’s operating system is Net sales 777.7 917.6 820.6 750.1 726.2 displayed to the world and receives a ”Best in show” award at the Operating profit Embedded Systems Conference. before non-recurring items 38.2 73.1 72.1 67.6 56.4 Operating profit -4.1 73.1 72.1 67.6 56.4 Q4 Operating margin, % -0.5 8.0 8.8 9.0 7.8 Average number of 666 688 547 501 509 The year ends with Enea winning its biggest contract ever, employees worth SEK 37 million. The Software business unit is well on its Earnings per share 0.24 4.90 3.88 2.66 3.81 way to achieving its long-term profit target, while the Con- sulting business unit is still feeling the effects of the difficult economic situation.

ENEA – Annual report 2009 3 A word from the CEO The future Enea is taking shape

The past year has been a year of adjustment for Enea on a num- tion of offering a comprehensive range of solutions, extending ber of levels. The economic downturn has meant that we have from realtime operating systems to development tools and had to adapt our business to lower demand. This has resulted middleware. One of the reasons for the company’s selection of in some 100 people leaving their jobs, and two costsaving pro- this strategy was that open source code was becoming increa- grams that we completed around SEK 65 million. But at the singly common with operating systems such as Linux. It could same time, we have also laid the foundation for a future Enea. become difficult to differentiate ourselves if the company fo- An Enea that will be a bigger, more profitable company than it cused only on operating systems. is today. Since then, the underlying technology in cellphones, base The year began with a quarter in which we reported a loss. stations and other communicating products has made a great At the same time, I was entrusted with the task of taking over deal of progress in terms of technology. It has become clear as President and CEO of the company after four years in the ex- that many different operating systems are required, with diffe- ecutive management team. In addition, Anders Lidbeck was ap- rent requirement in every product, even in products that were pointed the new Chairman of the Board. This marked the start considered to be simpler in design, such as cellphones. There of work on securing Enea’s future growth and profitability. Me- has also been a technical revolution in the field of hardware de- asures were put in place so that the company returned to profit velopment. This revolution is ’multicore’ and means that every in the second quarter. Since then, Enea has been profitable for hardware chip nowadays can contain a number of processor the remaining quarters of 2009, and at year-end the company cores. This creates entirely different demands of operating sys- reported an operating profit before non-recurring items of SEK tems than before, in terms of both scalability and performance, 38.2 million. but also in terms of backwards compatibility so that the applications customers have previously developed can be reused. Two business units created Given this fact, it is natural for Enea to focus once again on Following a painstaking analysis of our market position, tech- its operating systems. Enea’s products for realtime operating nology, the competition and the needs of customers, we have systems currently represent around three-quarters of Software decided to split our company up into two business units: Soft- sales. Moreover, Enea’s basic technology is particularly suitable ware, which covers Enea’s global software business and related for multicore, which means that Enea has every chance of crea- services, and Consulting, which is made up of the consultancy ting for itself a position within a new market segment that is operations in Sweden, Romania and the USA. developing. It is thought that multicore will grow by more than The idea behind this division is to enable each respective 40 percent a year, thereby giving Enea an excellent chance of business unit to focus on its own development within its field growth. Therefore, we were able to launch our multicore version in order to improve their profits and margins. Running a glo- of our flagship, Enea OSE, in 2009. This product was received bal software business is in many ways different to running a very well and won - among other things - an award for ”Best regional consultancy business. One clear difference is in the in show” at the Embedded Systems Conference, demonstrating business models, which is reflected in the long-term targets for that we have managed to renew tried and tested technology to profitability which we have set up for the respective business allow it to meet future technical demands. areas. Software’s target is to achieve an operating margin of 20 percent, while Consulting’s target is an operating margin of 10 Consulting percent. When summing up 2009, we still have actions to imple- Enea’s roots are in consultancy. This was the business that built ment before reaching these targets. Software’s operating mar- Enea once upon a time. When realtime operating systems star- gin before non-recurring items amounted to 8 percent, while ted to show signs of major success, consultancy operations en- Consulting’s margin amounted to 2 percent. ded up being somewhat sidelined within the company. This is not a positive state of affairs for either growth or profitability. Software Placing our consulting oprations in a single business unit with For a number of years now, Enea has worked towards its ambi- a clear result target is an important step towards once again

4 ENEA – Annual report 2009 ”For the year 2010, it is estimated that the company will continue to demonstrate stable renevue development, and that it will see a considerably improved operating profit compared with 2009.”

becoming a leader in the field of technical consultancy services projects. Offshore is still a small part of Enea’s business, but it is on a regional basis. an area with clear potential for growth. The competence center initiative concerning competence centres that was started some time ago has proven to be suc- Summary and the future cessful. Nowadays there are competence centres for wireless When I sum up 2009, it is obvious that a lot of progress has communication, telecom infrastructure, certification for the been made in the right direction, and that the company now is aviation industry, and for Linux and Android. The Android com- heading for its long-term ambition; to become a major, world- petence center in Lund was created in the third quarter of 2009 leading company that is the obvious choice for innovative so- and has attracted the attention of customers and the media, lutions for communication-drive products. For the year 2010, leading to a number of deals. This has definitely placed Enea on it is estimated that the company will continue to demonstrate the map as a leading player in the field of Android and mobile stable revenue development, and that it will see a considerably communication. improved operating profit compared with 2009. Another area Enea is focusing on in the Consulting business We still have some way to go to attain our long-term ambi- unit is our offshore business. With the acquisition that took place tion, but I belive the journey there will offer beneficial develop- in Romania in 2008, Enea has brought more than 100 engineers ment to shareholders, staff and customers alike. into the company, with an attractive balance of expertise and cost-effectiveness. These engineers are - among other things - staffing projects being managed by the consultancy organizations in the Nordic region and the USA, which is giving customers in these countries a flexible way in which to organize their Per Åkerberg President and CEO

ENEA – Annual report 2009 5 The business

Part of your everyday life Regional leader of services for product development over the Enea products and services are not obvious in your everyday life. lifecycle. But they form an integral part of the devices which we use to communicate, move around and live our day-to-day lives. Enea Strategy products can be found in - among other things - millions of smart- In the autumn of 2009, Enea decided to introduce a focused phones and base stations used for communications. And commu- strategy with two independent business areas; one to cover glo- nication is integratedFördelning in lotsFördelning of perproducts land: per that land: we use, such as cars bal software business and related services (known as Software), and medical equipment.Sverige SverigeThe 64% number 64% of products that Enea's con- and one for consultancy operations (known as Consulting). This sultants have helpedRumänien to developRumänien 21% is even 21% greater. So even though gives the respective areas clear development plans and targets Enea cannot be seenÖvriga in yourÖvriga Europa everyday Europa 3% life, 3%you can be sure that we for their work. are there, making USAsure that 8%USA everything 8% works - 24 hours a day, 365 days a year. Kina &Kina Japan & Japan 4% 4% Strategies - Software n Focus on key accounts. Enea’s customers are mainly large, Mission – whatFördelning weFördelning do today per funktion: per funktion: global companies demanding long term commitment. To secure customerKonsulting successKonsulting by 69% offering 69% solutions that increase Enea will continue to focus on building relationships with competitiveness FoU and quality16%FoU 16% for companies developing com- key customers where the client will get local support and munication-drivenSälj products. & Säljmarknad & marknad 12% 12% global coordination. This will be extended to include custo- F&A 3%F&A 3% mers outside of the two main customer groups of today – Vision – what we would like to become Ericsson and Nokia. Enea will be the first choice for innovative solutions for commu- n Complementary distribution channels. Real time opera- nication-driven products. ting systems are becoming a more integrated part of the Global leader of advanced real time operating systems with hardware. Enea will therefore develop and extend partner- complementary products and services. ships with hardware suppliers to complement the current sales channels.

Fördelning per land: Fördelning per funktion: PersonnelFördelning per land: Fördelning per funktion: n Enea had 633 employees at the end of 2009, which is n Our employees are divided into the following 99 fewer than the previous year. groups: 13 % sales and marketing, 24 % R&D, 53 % consulting, 10 % finance & administration. n A majority of the company's employees have high degree-level education, mostly bachelor or master degrees in computer science and business administration. 3% 4% 4% 3% 8% 8%Kina & Japan F&A F&A USA 4 % Kina & Japan USA 12% 10 % 8 % China and Japan 12% Sälj- ochSälj- marknad och marknad F&A 3 % USA 3% 3% 13 % RestÖvriga of EuropeEuropaÖvriga Europa 64% 64% Sales and 69% 69% Konsulting Sverige Sverige marketing Konsulting 16% 16% 21% 21% 21 % FoU FoU RumänienRumänien 53 % Romania Consulting 64 % 24 % Sweden R&D

6 ENEA – Annual report 2009 n Leading position in multicore Enea’s products must conti- Financial objectives nuously be updated and stay ahead of the competition. Mul- For the year 2010, it is estimated that the company will continue ticore is the major technology shift for real time operating sys- to demonstrate stable revenue development, and that it will see tems. Enea will continue to develop products with multicore a considerably improved operating profit compared with 2009. support and secure its leading position in this area. The long-term profit target is for Software to achieve an operating margin of 20 percent and for Consulting an operating mar- Strategies - Consulting gin exceeding 10 percent. For 2009, the margin for Software was n Create competence centers for growth areas. By creating negative, and for Consulting it was 1 percent. local competence centers for growth areas such as wireless Given the company's strong cash flow and good financial po- and Android, Enea’s core competences will be more visible sition, the Board has proposed to the Annual General Meeting a Resultat före omstruktureringskostnader / kassa öde for current and future customers and employees. That will dividend of SEK 1.50 per share and a new program for acquiring result in long-term relationships and increases the internal treasury shares. competence. 25 80 80

n Leverage business with embedded leaders. Enea is cur- 70 70 20 rently a strategic supplier to customers such as Ericsson and 60 60 Nokia. Utilizing the knowledge and experience achieved Fulfillment of objectives 50 50 through these contacts will allow us to reach out to new 15 In its report for the first quarter of 2009, Enea commu- customers. 40 40 10 nicated the outlook for the whole year. Profit before re- n Grow off-shoring as a competitive advantage. Enea’s en- structuring costs was30 expected to be positive30 for each and every remaining20 quarter for 2009, 20 and positive terprise in Romania employs some 100 engineers, some of 5 whom are deployed on consultancy commissions in the USA cash flow from 10operating activities 10 was expected for the year. These targets were met by a decent margin and Sweden. Continuing to extend this enterprise is giving 0 0 0 Enea a competitive advantage thanks to its attractive combi- for 2009. nation of outstanding knowledge and competitive prices. MSEK 80 80 Values – what makes us better 70 70 n We focus on customer success: To contribute to our custo- 25 25 mers’ success is a prerequisite for succeeding ourselves.

n We provide trusted leadership: We strive to be leaders in 20 20 everything we do regardless if its our own product development or how we carry out customer assignments. 15 15 n We innovate for business reasons: Creativity is adding most value when it creates new business opportunities and solve 10 10 customer challenges. 5 5 n We are team players: To be successful when solving complex customer problems we need to take advantage of our Targets for Mål0 0 2009: different competences. To take responsibility for your part of kvQ2 2 kvQ3 3 kvQ4 4 the solution and deliver on our promises is key for success. Exceeding MSEK 0 = Profit (before restructuring costs) = Cash flow

ENEA – Annual report 2009 7 This is what Enea does

We are surrounded by a great deal of technology that we use every day. For many people, cellphones are a natural way to communicate. Other products communicate without us really thinking all that much about it. These include in-car subsystems or pacemakers inserted in the human body. One thing all these products have in common is the fact that they contain some kind of software. For software to work, it has to be run on an operating system. Enea is one of the best in the world when it comes to operating systems for realtime applications.

Realtime systems often have more stringent demands for pre- systems Enea started as a consultancy company more than 40 cision, predictability and performance than operating systems years ago and has a deep knowledge within several technical in PCs, and they are often built into the technical devices with fields. Many of the customers purchasing operating systems which we surround ourselves in our daily lives. Enea also offers from Enea also purchase consultancy services. But there are related products which are needed when developing systems many customers that chose Enea because we are one of the such as development tools or databases. best in technical consultancy services with skilled consultants in Precision, predictability and performance are much apprecia- the fields of IT and communications and technology. ted properties in many technical fields, not just for operating

Software Consulting There is a strong underlying demand for Enea products. Our Our consultants are developing more and more communica- realtime operating systems are in demand in products with tions-driven products, mainly within the telecom industry. For built-in intelligence so that products can communicate securely our customers, maintaining all the expertise and resources re- with one another. These embedded systems contain, to an in- quired is too costly. Consulting also includes the competence creasing extent, multiple processor cores on which the software centers which we have created in growth areas such as wireless is running. With multiple processor cores, more advanced ope- communication, Linux and Android. The business will be deve- rating systems are required, and Enea's operating systems are loped within current and related technical fields. well suited to this technological development.

Software Consulting

n Software is Enea’s business unit for opera- n Consulting is Enea´s business unit for ser- ting systems and related products. vices. n 44 % of revenue and 27 % of employees. n 56 % of revenue and 68 % of employees. n Mainly offers realtime operating systems n Offers consultancy services in the field of (RTOS), but also other products used in the product development such as pilot stu- development of realtime systems such as dies, application development, testing development tools, network protocols, da- and training. tabases and middleware. n The fifth biggest player in Sweden. n The third biggest player in the world for realtime operating systems.

8 ENEA – Annual report 2009 Examples of what Enea can offer its customers

Software Consulting

Pilot studies - analyzing the Project management - e.g. to time and cost required to build develop a project methodology one or more parts of the pro- or be the project manager. duct.

Realtime operating systems Application development - de- (Enea OSE/OSEck) - operating veloping one of the applica- systems which act as the link tions in the product. between the hardware and the applications.

Development tool (Enea Opti- ma) - software used when deve- Requirement management - loping embedded systems. analyzing and developing the requirements for the product to be developed. Databases (Enea Polyhedra) - databases which are particularly appropriate in embedded Communication between pro- systems. cessors (Enea Linx) - software which handles communication between several processors. Protocols (Enea Netbricks) - predefined protocols (based on standards) which are one of the System design - designing the cornerstones in communicating system, which may include devices. Protocols control how both hardware and software. the devices communicate with one another. Training - training on everything from project management Competence centres - collec- to programming. tive expertise on infrastructure, wireless, Linux and Android which can offer complete solu- Middleware (Enea Element) tions in their respective areas. - software that links the operating system with the applications that the user sees.

ENEA – Annual report 2009 9 Software

Technical development is progressing. The boundaries between lion. Growth over the next few years has been estimated by ex- telecom, media and entertainment are starting to disappear. For ternal analysts to be just below 10 percent. instance, nowadays you can watch TV, read a newspaper and call The biggest customer segment is telecom, holding about your friends on your mobile phone. Our everyday products are one-fifth of the world market. Other major customer segments taking on more and more advanced functions and have started are aero/defense and consumer electronics. to communicate with one another. Cars contain many systems which are constantly exchanging information to ensure that the The battle of the operating systems car behaves the way it should on the road. Enea operates in this Over the first half of the 2000s, Linux began to challenge the expansive, fast-moving market. previously established operating systems for embedded soft- The global economy has affected Enea in the short term. The ware. Linux for embedded systems rapidly became popular, lar- long-term demand for Enea products, on the other hand, is dri- gely because it is free and can be customized completely thanks ven by trends which are clear and strong: to its open source code. A lot of industry experts thought that Linux would take over the market and that other operating sys- n More and more products contain embedded intelligence tems would go into decline. That did not happen. n More and more products are communicating with one an- Instead, Linux has found its niche alongside the realtime ope- other rating systems. A lot of products with embedded systems re- This means that Enea's customers have to invest in products quire a realtime operating system; Linux is not one of these. The which have embedded systems, which in turn need an opera- main thing which characterizes a realtime operating system is ting system to be able to function. predictability. It has to respond within a predefined time and The total market for embedded systems is estimated to therefore be very stable. It does not need to be able to handle amount to around USD 1000 million. If we exclude areas in large amounts of data effectively; its reliability and rapid respon- which Enea does not operate, this leaves around USD 400 mil- se times are what make it stand out.

Example of the structure of a cellphone

Application processes Modem – controls communications with the network. - run the applications which users can see. CPU – the central processor which handles the basic software code

User applications such as address book, games, Software which controls browsers, text messages, signaling/communications e-mail, etc.

Middleware which handles Middleware which handles the linkage between the the linkage between the DSP – digital signal processor, applications and the opera- applications and the opera- particularly good at effective com- ting system ting system munications management. ’ Operating systems - such as Linux, Windows Mobile, Realtime operating systems Realtime operating systems Symbian or Android such as Enea OSE. such as Enea OSE.

Hardware chip Hardware chips Hardware chip

10 ENEA – Annual report 2009 SMP ENEA Application Application

Application Operating system Operating system Core Core Core Core Core Core

When companies want to switch to multicore there are a couple of challenges: reuse of applications already developed, and scalability as more and more hard- Supervised AMP ware chips are used in every unit. Enea offers a solution which combines the best of the two approaches, known as SMP and Supervised AMP. SMP is easy to use but has problems with scalability. Supervised AMP has better scalability, but as the applications have to be Application Application divided over various operating systems, performance is lost on upcaling. Enea’s solution means that previously developed applications can be reused while the- Operating re is no loss of performance. no performance. In other words: the best of both Operating system system worlds. Enea’s multicore solution won a ’best in show’ award at the 2009 Embedded Systems Conference, the leading trade show for embedded systems. Core Core Core

Many products, such as mobile phones, have requirements When every hardware chip has more than one processor core, for both advanced applications and predictable response times. this puts entirely new demands of operating systems. They have A half-second waiting time when you are looking for a contact to be able to handle the distribution of resources between the in your phone book is acceptable. But if the operating system various cores in a predictable, efficient manner. To date, multico- dealing with the radiocommunications had a half-second wai- re is being used in just over 5 percent of all projects, but within ting time, the call quality would be untenable or the call would two years leading industry analysts predict that this usage will be terminated. This means that many products contain both Li- increase to almost 30 percent. nux or another non-realtime operating system and one or more In other words, the industry is facing an important technology realtime operating systems. It is estimated that Linux is used in shift which may offer major opportunities for a company like around one-quarter of embedded system development projects Enea. currently being started. Thus Linux has become a supplement for The market positions that have existed over the last few years many companies selling realtime operating systems. will be challenged when customers take a look at which companies are offering the best multicore support. New alliances will The major technology shift - multicore likely be forged with hardware manufacturers, and the industry An embedded system contains at least one hardware chip, will undergo further consolidation. which in turn has a processor core on which the software is run- Enea has a technical advantage in its operating system as far ning. These processors have gradually improved, making them as multicore is concerned. Enea’s biggest customer group for faster and able to handle ever more complex calculations. a long time now has been telecom, and telecom systems are But now the physical limits are stopping further performance built up in a distributed manner, with subcomponents spread enhancements. The industry’s response to the problem was to out across the network. This is the same basic concept as for include more than one processor core on a hardware chip, and multicore, and so Enea’s operating systems have an architecture hence the multicore chip was born. which is particularly well suited to multicore.

ENEA – Annual report 2009 11 Our offer n Enea Linx - software for handling internal processor com- n Enea OSE - a realtime operating system to be used for embed- munication (IPC), i.e. communications between different ded systems. The operating system is the software closest to cores on the hardware chip. These cores can also run various the hardware and controls how the hardware should behave. operating systems. n Enea Optima - a development environment for software n Enea Netbricks - communication protocol for telecom. Pro- running on Enea's operating system. tocols can be described in simplified terms as the part of the software in a telecom system that handles the signals n Enea Polyhedra - a database developed especially for em- between the telephone and the network. bedded systems. Databases are used to efficiently store large quantities of data. n Supplementary services in the form of customizations, training, etc. n Enea Element - software for middleware, i.e. the software that links the operating system with this applications. Middleware runs in the background and makes sure - among other things - that the system is uninterruptible, predictable and scalable.

Robert Monkman, Director, Corporate Alliances What brought you to Enea? The people, the product strategy, and the commitment to work/life balance for its employees. Before joining Enea, I made contact with people I knew at Enea as I was excited about the top talent in the industry that had recently joined the company. When I discovered the comprehensive platform product strategy that was coming together, it was clearly a very compelling solution for the marketplace and of keen interest to me professionally. What part of your job do you like the most? That the company hires talented, motivated and capable people, sets the overall goals and vision, and lets them execu- te with a great degree of personal freedom. Enea empowers its employees to achieve and deliver results. What makes Enea stand out from other companies? Very few companies in our industry have the diverse product portfolio that is so well suited for where the market is heading. In addition, Enea has a very productive and collaborative ap- proach to working within the ecosystem, knowing where its strengths are and being very open and easy to work with for key alliance partners, in order to deliver the whole solution to the market.

12 ENEA – Annual report 2009 Software

Customer: Research and development Trimble Enea has a long tradition of software development and invests 37 percent of Software’s revenue in research and development The challenge every year. As Enea has some major undertakings with its two When Trimble decided to update its powerful Total- biggest customer groups, Ericsson and Nokia, much of the Station, one of the central software elements to be se- company's product development work is devoted to customer- lected was the realtime operating system. TotalStation specific projects. combines GPS and optical data with versatile metering technology, both automatic and manual. Strategic prioritizations Trimble has used the Enea OSE RTOS in its latest two Enea's future product initiatives are in line with market trends. TotalStation generations. But their latest version is more Multicore support will be further improved. Development complicated and needed more commercial software towards more and more communication being IP-based is components. Trimble evaluated other potential RTOSs, another trend reflected in product development. Cooperation but eventually the company opted to go with Enea. with hardware manufacturers where the Enea operating system is integrated with the hardware chip will also lead to ongoing The solution product development in order to make these offerings even "Enea's OSE guarantees response times which meet our more attractive. stringent realtime requirements," says Peter Fredriksson, Head of R&D at Trimble. Customers "This, together with integrated communications pro- Most of our customers are in the telecom industry. 63 percent of tocols, file systems and development tools, made OSE sales are to customers working in the field of telecom infrastruc- the clear winner. In our market, you have to be certain ture, and 23 percent to customers working with mobile units. that external components are reliable. We know that Other customers include car manufacturers, medical techno- Enea will not let us down." logy companies and the retail sector. Two individual customers stand out due to their major per- Advantages centage of sales. The customer groups Ericsson and Nokia "The fact that all components and tools are preinte- (Ericsson, ST-Ericsson, Sony Ericsson, Nokia and Nokia Siemens grated is important. Our own software experts will not Networks) represent 53 percent of sales for Software. Other need to spend valuable time integrating and testing in- customers include Motorola, LSI, Alcatel-Lucent, Fujitsu, Volvo dividual parts of the software. This is a stable, integrated and Yamaha. package which gives us a reliable platform," says Peter Fredriksson at Trimble. Competitors There are many smaller companies that can compete in niche areas, but only a few that can compete on a broad scale. One thing all of these have in common is the fact that they have the operating systems as a central part of their offerings. The biggest competitor is Wind River, which was acquired by Intel in 2009. Two other major competitors are Green Hills and QNX. The first two are based in the USA, the last in Canada. Enea is number three on the world market, with a market share of around 7 percent.

ENEA – Annual report 2009 13 Business model Sales Enea's software revenue is based on two different licensing mo- In 2009, revenue from the Software business uit amounted to dels: SEK 340 million, which is 10 percent lower than the previous n a development license is used over the initial stage when year. This reduction is due mainly to a decrease in royalty income the customer’s product is still being developed and a com- as Enea's telecom customers are selling fewer units. The under- plete version is not yet available. These development licen- lying demand for Enea software solutions, on the other hand, is ses are charged on a per-user basis and at the same time as good and there are clear drivers for future growth. the license is purchased. Profit/Loss n The production license is sold when the customer's product The operating loss for the Software business unit was SEK 11 goes on sale to end users. One part is charged as the price million. This result is influenced by a very weak result in the first per user in the same way as with the development license. quarter. Software has gradually improved its operating margin This revenue is recognized when the license is purchased. over the year, and the operating margin was 17 percent in the One part is charged in the form of a royalty on every product fourth quarter. However, this is still lower than the 20 percent sold. Revenue recognition for royalties happens when they target set by Enea as the long-term target for Software. are invoiced by Enea, normally quarterly.

Magnus Karlsson, Systems Architect, R&D System Management

What brought you to Enea? – The opportunity to work with design and the core of operating systems. There are only a handful of companies in the world working in this field. The fact that one of them is in Sweden is absolutely fantastic.

What part of your job do you like the most? – The fact that I am always working at the forefront of technology. We want to have the best operating system and software support for present and future processors. To succeed in this, you have to be inventive and discover trends early on which is right up my alley.

What makes Enea stand out from other companies? – The quality of the people working here and the challenging tasks we are addressing.

14 ENEA – Annual report 2009 Software

Customer: Network supplier working in Sales per customer segment telecom The challenge Mobile operators now face never before seen demands 63 % for increased transfer capacity on their networks. This is Telecom infrastructure due mainly to the rapid development of video services,

23 % social networking and the growth of digital services,

Wireless enheter which in turn are driving sales of multimedia telephones devices Mobila and computers. This has led to a tough battle between

23% 23% network suppliers in order to extend bandwidth with the help of new radio standards such as HSPA+ and the

most promising technology LTE, Long Term Evolution, infrastruktur Telekom Telekom so as to be able to meet the demand for a significant

63% 63% network capacity increase.

14 % Other

enheter 14% Övrigt 14%

The solution Mobila

23% 23%

infrastruktur The hardware industry is dealing with these demands Telekom Telekom by introducing hardware which contains more proces-

63% 63% sor cores (multicore). To be able to use the investments already made in existing GSM and WCDMA networks,

adding Övrigt up to14% many billions, network suppliers have to

Försäljning per produkt 2009 jan-dec Software, Försäljning per kundsegment kundsegment switchper mostFörsäljning software platforms and functions to the Software, jan-dec 2009 new processors, simply and efficiently. Moreover, present and new software has to be adapted so that the opportunities offered by the new hardware can be ex- Sales per product ploited. Customers can achieve this by using the Multi- 4% Tools core edition of the operating system Enea OSE.

16% Advantages Middleware 16 % 4 % Tools For customers, this primarily means savings in terms of Middleware 71% development time and development costs. It also re- RTOS duces lead times for customers' new LTE systems and creates development reliability through the scalability 9% 9 % Produktnära of the Enea technology. tjänster Product related services

71 % RTOS

ENEA – Annual report 2009 15 Consulting

The Market Romania Enea's consultants play a part in developing the communica- The Romanian consultancy enterprise was acquired in 2008. It tion-intensive products which surround us. These products are consists of some 100 engineers who have gradually started to being developed mainly in the telecom industry, but also in supply more and more services to other parts of Enea. Much of fields such as the aerospace and automotive industries. It is clear its business is made up of projects for Enea's development de- that these products are becoming more and more complex and partment, which is a cost-effective way of getting high quality harder to develop. This is why Enea's customers demand specia- development tasks done. Another part of its business involves lists. Maintaining all the expertise and resources required them- staffing consultancy assignments managed and procured in the selves would be both costly and difficult. Nordic region and the USA. This is a clear competitive advantage Enea has a combination of consultants that in some cases for Enea when new customer commissions are being discus- have expertise that is unique for the customer and in other sed. Finally, consultancy projects are also executed for external cases are resources required for specific projects. That makes customers in the region. consultant companies like Enea susceptible to market fluctuations since many companies prefer to end consult assignments Competence centers instead of reducing their own staff. A few years ago, Enea set up competence centers relating to In 2009, customers in telecom, the biggest segment for Enea, growth areas such as wireless, testing and Linux. This makes it have undergone major cutbacks. There is some degree of local clear to customers and employees where our ambition lies, and variation, but in general the market position for consultancy ser- it also creates long-term relations and enhances internal levels vices can be described as weak. of expertise. The latest addition over the year was a skills center for Android. Enea's consultancy organization The company had the following competence centers at the start of 2010: Nordic region Nordic consultancy operations are divided across three regions: Wireless (wireless communications) Stockholm, Linköping and Öresund. In total, the Swedish con- Offers manufacturers of mobile phones and other handheld sultancy operation employs 233 people and take on projects in units services in the fields of design, development, integra- Sweden, Denmark and Finland. Most of these consulting projects tion and testing. These services include not only Enea pro- are with Ericsson and Nokia, as are sales within the Software busi- ducts, but also development for systems such as Linux and ness unit. The Ericsson group's cutbacks over the year have been Android. noticeable mainly for the consultancy organization in Öresund. In 2009, Enea has reduced its consultancy workforce by 62 Communications (telecom infrastructure) people in Sweden in order to meet a weaker demand. Offers expert knowledge for manufacturers in the fields of design, development, integration and testing for infrastruc- USA ture products such as routers, base stations and media American consultancy operation is concentrated mainly to Phoenix gateways. Enea is able to support the entire development and employ 35 people, of which approximately 15 are sub cont- process, from the integration of platforms - which includes ractors. Most of its customer projects are with the telecom and operating systems, middleware and protocol stacks - to the aerospace/defense sector. In late 2009, Enea was awarded a major development and maintenance of applications. consultancy deal in the USA worth a total of SEK 37 million of which consulting will account for around two-thirds. This consultancy Certification (aerospace industry) contract will continue until summer 2011 and provide a more stable Offers a range of services in the field of certification for the flow of income for the American enterprise going forward. aviation industry, focusing on American certification processes. Examples of services include the production of plans for hardware and software, analysis of customers' present pro-

16 ENEA – Annual report 2009 cesses in relation to certification in accordance with authority a strong position for itself on the Swedish market. These succes- rulings, and training in standards and project management. ses will be managed and developed still further. Enea's ambition is to offer strategic consultancy services with supreme technical Android (mobile telephony) expertise which customers prioritize in price discussions and The Enea competence center for Android was launched in any business restructuring initiatives. Increasing the profitability September 2009. This combines two of Enea's core compe- of the present business is a priority field for the future. tence areas: mobile platforms and Linux. These services are targeted at hardware suppliers who need to develop drivers, Customers developers who need help with analyzing performance or As for the Software business area, most customers are in the te- developing applications, and general training on Android. lecom industry. 34 percent of sales are to customers working in the field of telecom infrastructure, and 20 percent to customers Strategic prioritizations working with mobile units. The biggest customer segment for Enea's consultancy business will continue to be developed the American consultancy business is the aviation/defense in- within current and related technical fields. The Android Compe- dustry, which represents 14 percent of sales yearly. 13 percent tence Center has attracted a lot of attention and already created of revenue is used for assignments within Enea, mainly for the

Mattias Björnheden, Field Application Engineer

What brought you to Enea? The high level of technical competence and the interesting people at Enea and the fact that Enea is in a rapidly evolving and challenging business area.

What part of your job do you like the most? That I get to work with state of the art technology and gain insight in the shaping of next generation mobile and tele- communications systems. Also, that I work in a result orien- ted environment giving me freedom to plan my time and influence my way of working.

What makes Enea stand out from other companies? Enea has a global reach and capacity to do advanced development while still being a small enough organization to allow for individual initiatives and short decision paths. Combined with the technical excellence of many of its employees it makes for a place that is serious about technology while maintaining a personal feel.

ENEA – Annual report 2009 17 R&D department. Other customers include car manufacturers, compete with Enea. The Romanian enterprise has such a large medical technology companies and the retail sector. number for internal projects that their competition situation Two individual customers stand out due to their major percen- cannot be commented on in specific terms. In the Swedish mar- tage of sales. The customer groups Ericsson and Nokia (which ket, Enea consider HiQ, Cybercom, Prevas and ÅF are its main actually consist of a number of companies which are wholly or competitors. partly owned by these customers) represent 53 percent of sales for Consulting. Other customers include Atlas Copco, Autoliv, Business model and Bombardier. Enea’s income for consultancy services is charged as either: . n A set price for a predefined result achieved, or Competitors n A price per hour. The competition situation differs significantly between the various countries in which Enea’s consultants operate. In the Ameri- Regardless of the price model, the revenue is recognized during can market, there are any number of consultancy firms that can the same time period as the project is taking place.

Connie Beane, Director of Certification & Safety Critical, Enea Consulting USA

What brought you to Enea? The opportunities - Enea is a global company with products and services in several industries. When I interviewed with Enea, I walked away with a sense that I could delve into areas other than aviation and expand my talents and knowledge base.

What part of your job do you like the most? That is a hard question to answer because there are so many positive aspects. I really enjoy the people that I work with and the open communication within Enea as well as the challenges presented and the team problem-solving experiences.

What makes Enea stand out from other companies? From my very first day at Enea, I was impressed with the at- mosphere of camaraderie among the employees. Enea employees and consultants alike have made me feel welcome and a part of the team regardless of what office I visited - US, Sweden, Japan. From engineers to upper management, there is an attitude of working together to get the task completed.

18 ENEA – Annual report 2009 Consulting

Customer: They built and tested a prototype for a platform on which FatSkunk could show its technology for partners, potential FatSkunk customers and other parties in the mobile ecosystem.

The challenge Advantages FatSkunk is an innovative supplier of mobile malware for With this platform supplied and integraded by Enea ex- mobiles. The company had an urgent request for a Android perts, FatSkunk has been able to speed up their develop- demonstration platform, where they could build and show ment of new products. Furthermore by using a third party their technical competence. with deep knowledge of Android, development and integration of systems, content management, data drivers, The solution operator needs and security FatSkunk’s own engineers Enea could offer a team of experts on Linux and Android. could concentrate on their core activitities.

ENEA – Annual report 2009 19 Sales In 2009, revenue from the Consulting business unit amounted Sales per segment,

to SEK 488 million, which is 21percent lower than the previous Consulting enheter

year. This reduction is due mainly to impaired market conditions Försvar

Mobila Mobila enheter

14% 14%

20% 20% linked with the general economic situation. Enea has been af- Mobila

20% 20% fected by the cutbacks in the telecom sector to more or less the 20 % Försvar

14 % Wireless 14% same extent as other consultancies. Aero/defense devices

Profit/Loss

internt

13 % internt

Koncern- The operating profit for the Consulting business unit amounted Koncern-

Group internal 13% to SEK 7 million, equivalent to an operating margin of 1 percent. 13% This is significantly lower than the long-term target of 10 per- 34 %

cent. Demand is estimated to increase in 2010, which will have Telecom

infrastruktur

infrastructure Övrigt a positive effect on both revenue and profit. Telekom infrastruktur

19% 19%

34% 34%

Telekom Telekom 19 % Consulting, jan-dec 2009 jan-dec Consulting, 34% 34%

Other segment per Försäljning

Övrigt 19% 19%

20 ENEA – Annual report 2009 Consulting

Customer: extensive plan for how new technology could be introduced to ensure future compatibility, which resulted in a com- Supplier of industrial pletely new applications. This application was developed in instrumentation .Net and uses Windows Forms in interaction with users.

The challenge Advantages Our customer, a leading supplier of industrial instrumen- Enea took responsibility for product development together tation, needed its user interface updated. Their customers with design and implementation. This product was delive- wanted a user interface that was simpler to use, with more red on time, with all the customer’s requirements met. The applications. application was designed to be easy to expand with new functions. This design resulted in a stable product with few The solution bugs. Enea suggested a solution whereby an external team of consultants rewrote the old applications. Enea suggested an

ENEA – Annual report 2009 21 Shares and shareholders

Enea was listed on the Stock Exchange in 1989 and since 1 July Largest shareholders as at 31 December 2009 2007 has been listed on the NASDAQ OMX Nordic Exchange in Percentage Stockholm for Swedish shares - Small Cap (ENEA). share of share Number of capital and Price trend Shareholder shares votes (%) The price has fluctuated over the year between SEK 21.10 at its lowest and SEK 48.70 at its highest. The closing price at year-end Per Lindberg 3,124,585 17.0% was SEK 42. Enea's share price has risen by 78 percent over the year, which can be compared with the 52 percent increase of SIX SIS AG 2,941,597 16.0% the general index (OMXSGI) and the 16 percent increase of the DnB NOR 1,307,514 7.1% IT index (SX45PI). Lgt Bank in Lichtenstein Ltd 1,072,737 5.8% Enea's total market capitalization amounted to SEK 753 mil- 60 AMF Försäkring och fonder 424,907 2.3% lion as at 31 December 2009. Infläktor Fastighets AB 394,000 2.2% 50 Trade volume Handelsbanken fonder inkl Exact 304,334 1.7% In total, some 5.53 million shares were traded at a total value ap- Skandia fonder 278,031 1.5% 40 proaching SEK 186 million. This is equivalent to a turnover rate JP Morgan Bank 173,303 1.0% of 12 percent for 2009. On average, 22,000 shares were traded every trading day over the year. Kapitalförsäkring30 Skandialink 163,272 0.9% Ten largest shareholders, total 10,184,280 55.5% Ownership 20 The number of company shareholders was 11,455 as at 31 Other shareholders 7,297,281 39.7% December 2009. The holdings of the ten largest shareholders Enea AB 874,153 4.8% amounted to 55.5 percent of capital and votes. The largest ow- 10 ners are mainly institutions and fund management companies. Total 18,355,714 100.0% Foreign ownership accounted for 53 percent of capital and vo- 0 tes. Share price development 2009 60 60 Stock option programs The company has two stock option programs which have been decided upon and allocated. These were implemented in 2006 50 50 and 2007 for employees at Enea's American subsidiary. The stock option programs from 2006 matured in 2009, but they were not 40 40 redeemed as the redemption price was greater than the share price. The maximum dilutive effect for outstanding stock option30 30 programs is around 0.2 percent of the number of shares in the company. 20 20 Number of shares The number of shares amounted to 18,355,714 as at 31 Decem-10 10 ber 2009. 0 0

Enea Nasdaq, OMX, Stockholm IT-index, Stockholm

22 ENEA – Annual report 2009 Development of share capital Year Share capital New shares Number of shares Event 7,680,900 – 1,536,180 1998 7,680,900 4,608,540 6,144,720 Stocksplit 4:1 1998 – – – Conversion to one share 1999 7,845,284 131,507 6,276,227 Issue in kind 2000 7,920,214 59,944 6,336,171 Issue in kind 2000 8,712,235 633,618 6,969,788 Issue of new shares 2000 8,712,235 167,274,912 174,244,700 Stocksplit 25:1 2001 8,877,235 3,300,000,1 77,544,700 Issue of new shares 2002 8,923,181 918,919 178,463,619 Issue in kind 2003 9,107,843 3,693,243 182,156,862 Issue in kind 2003 18,215,686 182,156,862 364,313,724 Issue of new shares 2004 18,215,686 – 364,313,724 – 2005 18,215,686 – 364,313,724 – 2006 18,265,096 988,192 365,301,916 Issue of new shares 2007 18,355,714 1,812,348 367,114,264 Issue of new shares 2008 18,355,714 – 18,355,714 Reversed split 1:20 2009 18,355,714 – 18,355,714 –

Ownership structure Size class, number of shares per owner Number of owners Number of shares Holding (%) 1 – 500 9,673 1,198,464 6.53% 501 – 1 000 804 631,970 3.44% 1 001 – 5 000 769 1,744,022 9.50% 5 001 – 10 000 93 675,860 3.68% 10 001 – 15 000 35 442,308 2.41% 15 001 – 20 000 17 290,649 1.58% 20 001 – 64 13,372,441 72.85% Distribution of ownership Shareholders (%) Holding Holding (%) Physical persons 93.24% 4,763,273 25.95% of whom resident in Sweden 92.18% 4,694,669 25.58% Legal entities 6.76% 13,592,441 74.05% of whom resident in Sweden 4.43% 3,872,541 21.10% Total 100.00% 18,355,714 100.00% of whom resident in Sweden 96.60% 8,567,210 46.67% Shareholders (%) Holding Holding (%) Resident in Sweden 96.60% 8,567,210 46.67% Other Nordic countries 0.87% 1,516,556 8.26% Rest of Europe 1.68% 8,095,191 44.10% USA 0.42% 147,307 0.80% Rest of world 0.42% 29,450 0.16% Total 100.00% 18,355,714 100.00%

Five-year summary 2009 2008 2007 2006 2005 Earnings per share 29.52 30.43 23.71 20.83 18.62 Profit per share 0.24 4.90 3.88 2.66 3.81 Profit per share after full dilution 0.24 4.90 3.88 2.64 3.77 Cash flow from current operations per share 4.02 4.54 3.62 0.30 2.83 Dividend per share 1.501) 0 0 0 0

1) If the Annual General Meeting makes a decision in accordance with the proposal of the board.

ENEA – Annual report 2009 23 Board of Directors’ report

The Board and President of Enea AB (publ), company Consulting business unit registration number 556209-7146, hereby submit The Consulting business unit consists of consultancy operations the Annual Report for the parent company and the in Sweden, Romania and the United States and focuses on local Group for the 2009 financial year. expertise combined with off-shoring services. Services offered include everything from integration of Enea's own products to Business development and testing of the customer's proprietary solutions. Enea is a global software and services company focused on so- Most of these consultancy tasks are for communication-intensi- lutions for communication-driven products. Enea supplies ex- ve products. Product development with stringent requirements pertise and products that shorten development times, reduce for reliability, uptime and performance in real time gives Enea product costs and ensure that systems are reliable. About half consultants the opportunity to demonstrate their cutting edge of its customers are manufacturers of telecom equipment, while skills and innovative spirit; testing mobile systems, development the others are divided more equally over the fields of medical of cars with night vision, control systems for airbags and flight technology, industry, vehicles, aviation and defense. Important system safety are just a few examples. customers include Ericsson, ST-Ericsson, Nokia, Nokia Siemens To clarify its expertise in the field of development, Enea has Networks, Volvo, ZTE, Boeing, Sony Ericsson, Bombardier, Mo- launched a number of competence centers in areas such as Li- torola, LSI, MobiTV, Texas Instruments, Honeywell, Hughes, Alca- nux, mobile platforms, telecom infrastructure and middleware. tel-Lucent, Tellabs, Yamaha, Fujitsu and Samsung. The emphasis on Linux has resulted in Enea having one of the Enea is listed on the Nasdaq OMX Nordic Exchange in Stockholm. largest Linux development centers in the Nordic region. Another is the Enea Android Competence Center, which was established Software in 2009 and offers professional services for software develop- This business unit includes Enea's global product business and ment, as well as a range of training programs for developers of product-related services. Software focuses on the company's mobile phones, netbooks and Mobile Internet Devices (MIDs). strong position in the realtime operating system (RTOS) market in Consulting accounted for 56 percent of net sales for the 2009 which Enea is a world leading supplier to the telecom industry. full year. Enea's R&D unit is the best in the world with regards realtime operating systems, and it employs around 140 people in Swe- Significant events during the year den, Romania, the UK and France. Sales mainly take place via the In the second quarter of 2009, a cost savings program began in company's own subsidiaries in Sweden, the USA, France, Ger- the Software business unit in order to reduce expenses by SEK many, China and Japan. 50 million annually, with full effect from 1 January 2010. This sa- Technology development is driving an increase in the amount vings program was completed in December 2009, and restruc- of software for products such as mobile phones, industrial ro- turing expenses amounted to SEK 7.5 million for the full year. bots, cars, trains or other vehicles, and hence is also increasing Decisions on new, higher profitability targets, with a 20 per- the complexity and cost of developing software. The more com- cent operating margin for the Software business area and 10 plex the systems, the more stringent the demands made of per- percent operating margin for the Consulting business unit. formance, reliability and realtime functions. In September, a decision was made to focus on two indepen- Enea's portfolio contains 30 products. Most of the users of the- dent business units, Software and Consulting. se products are manufacturers of telecom equipment. There are Enea established an Android competence center in order to many applications for these products. For example, they are used meet the strong demand for the company's Android expertise. in over half of the world's base stations and 3G mobile phones The Enea Android Competence Center offers professional servi- and handle five billion phone calls daily. Enea's product portfolio ces for software development, as well as a range of training pro- has a core of realtime operating systems and a broad range of grams for developers of mobile phones, netbooks and Mobile middleware, development tools, databases, network protocols Internet Devices (MIDs). and interprocess communication protocols. A market-leading global manufacturer in the field of mobile The Software business unit accounted for 44 percent of net infrastructure chose Enea to supply new multicore technology sales for the 2009 full year. for use in its next generation's network infrastructure. This solu-

24 ENEA – Annual report 2009 tion makes it possible for the leading realtime operating system amounted to SEK 125 (121) million, and development expen- Enea OSE(TM) to coexist with Linux on Multicore processors. diture has also been capitalized over the year with an amount This contract is worth around SEK 10 million over the life cycle of SEK 8 (18) million. The operating profit has been charged with of the project. depreciation of capitalized development expenditure of SEK 37 Enea was chosen to supply Enea Element, Enea System Mana- (13) million over the first quarter of 2009, of which SEK 25 mil- ger and Tail-f Systems ConfD to a leading North American ma- lion is a non-recurring depreciation. Research and development nufacturer of networking equipment. This contract is estimated expenses for the year amounted to 37 percent (36 percent) of to be worth SEK 14 million over the life cycle of the project and software income. was entered into over the third quarter of 2009. The customer has to build one of the industry's most advanced IP-based ga- Sales and profit development teway platforms. For the full year 2009, sales fell by 15 percent to SEK 777.7 (917.6) Enea entered into a contract worth SEK 37 million (USD 5.1 million. Adjusted for currency effects, this decrease amounted million) with a global service developer. The customer will be to 16 percent. As in the fourth quarter, most of this reduction for benefiting from the assistance of Enea's consultancy organi- the full year was due to lower revenues from consultancy ope- zation in the USA in order to develop financial solutions. This rations. Sales were also affected by a change in the accounting project will also include Enea® System Manager, a solution for for royalties, which had a negative effect of SEK 7 million over hardware and software configuration, and also Enea® Element. the first quarter. Element is a platform for middleware which can be described in Enea executed three acquisitions in Europe in 2008. Minus simple terms as the software which links the operating system these acquisitions, revenues fell 16 percent for the 2009 full year with the applications. This order value is spread over consul- compared with the previous year. tancy services, product licenses and maintenance. In addition, The cost-cutting program for the Software business unit an- there will also be future royalties on every system sold. nounced in April continued in the fourth quarter. This program Anders Lidbeck was elected the new Chairman of the Board has reduced costs by about SEK 50 million on a full year basis at the Annual General Meeting. and will take full effect as of January 2010. Costs for this program Per Åkerberg took over as President and CEO in March, and have amounted to SEK 7.5 million. Lars Kevsjö was appointed CFO in August. Operating profit before non-recurring items for the full year amounted to SEK 38.2 (73.1) million and after non-recurring Significant events after the end of the financial year items to SEK -4.1 (73.1) million. These non-recurring items consist In February 2010, Enea entered into a non-exclusive partnership of a change in accounting principles for royalty revenue recogni- contract with Freescale Semiconductor, which holds a leading tion, writedowns of capitalized R&D costs and restructuring costs position on the market for integral systems. As part of this cont- relating to cost-cutting programs. Net financial income for the ract, Enea and Freescale will be reinforcing their cooperation full year totaled SEK 3.3 (7.9) million. Profit for the full year after tax on Enea's realtime operating systems and some elements of amounted to SEK 4.2 (88.3) million. The comparative figures for Freescale's processors and DSPs. 2008 include capitalization of tax loss-carry forwards of SEK 19.9 million, which had a positive effect on profit. Business partners Earnings per share for the full year amounted to SEK 0.24 Enea works in cooperation with third-party suppliers such as (4.90), and without adjusting for holdings of own shares, to SEK IBM, Kontron, Radisys, Freescale, Texas Instruments, CEVA, LSI, 0.23. Return on equity for the full year was 0.8 (18.0) percent. MontaVista, Software, Wind River Systems, Tail-F Systems, IPInfu- sion, DataConnection, SNMP Research and DataLight. Investments The Group’s investments for the full year amounted to SEK 15.1 Research and development (129.8) million. The comparative figures for the previous year Enea’s R&D unit is the best in the world as regards realtime ope- include SEK 92.4 million in respect of corporate acquisitions. rating systems, and it employs around 140 people in Sweden, Capitalized product development expenses were SEK 8.3 (18.3) Romania, the UK and France. Expenses for product development million over the full year.

ENEA – Annual report 2009 25 Financial situation holders whose shares represent at least one-tenth of votes for all Cash flow from current operations amounted to SEK 70.3 (81.8) shares in the company are Per Lindberg, partly via Electro Medi- million for the full year. Total cash flow amounted to SEK 35.4 cinska AB (a total of 17.0 percent of share capital and votes) and (-41.6) millions for the full year. SIS SegaInterSettle AG (16.0 percent of share capital and votes). Cash and cash equivalents amounted to SEK 153.9 (122.1) mil- The number of shareholders as at 31 December 2009 was 11 455 lion. In addition, the Group had an unused credit facility amoun- (12 806). ting to SEK 100 million. Enea has a continued strong financial The Annual General Meeting decided to authorize the Board position, with an equity ratio of 74.1 (71.5) percent. to make decisions on acquisitions and transfer of own shares. Shares in the company may only be acquired on the Nasdaq Parent Company OMX Stockholm (”the Stock Exchange”) or in accordance with ac- The parent company’s net sales amounted to SEK 32.5 (28.4) mil- quisition offers to all of the company’s shareholders. The number lion for the full year and profit before tax amounted to SEK -11.6 of shares acquired must be such that the holding of own shares (-16.1) million. The parent company’s net financial income was does not at any time exceed one-tenth of all shares in the com- SEK 15.0 (17.4) million, and at the end of the year cash and cash pany. A maximum of 10 percent of the total number of shares in equivalents amounted to SEK 108.4 (69.9) million. The parent the company may be transferred. The purpose of the acquisition company’s investments were SEK 3.3 (5.3) million. The parent of own shares is to allow Enea’s capital structure to be adapted company does not operate any business and its risks are prima- constantly to Enea’s capital requirement and to permit financing rily attributable to the activities of the subsidiaries. - either fully or partially - in connection with corporate acquisitions. Employees As a consequence of such buybacks, Enea AB has a total of At the end of the year 633 (732) people were employed by the 874 153 of its own shares, equivalent to 4.8 percent of the share Group. This reduction in staffing levels has mainly affected pro- capital, for which SEK 37.3 million was paid. In 2009, Enea AB has duct developers and consultants in Sweden. The average num- bought back 536 270 of its own shares, equivalent to 2.9 percent ber of employees in the Group during the year was 666 (688). of the share capital, for which SEK 21.8 million was paid. The 2009 Annual General Meeting authorized the Board to Guidelines on remuneration for senior executives make decisions, for the period until the 2010 Annual General The proposed guidelines on remuneration for senior executives Meeting, on one or more occasions, on the issue of new shares are described in detail in Note 4. At the 2010 Annual General without preferential rights for shareholders, with provision re- Meeting, it will be proposed that current guidelines should con- garding in kind or other terms as referred to in Chap. 13, Section tinue to apply until the next Annual General Meeting. If owner- 5, first paragraph of the Swedish Companies Act, and that the ship conditions change such that there are new majority owners Board in general may decide on the terms of the issue. However, in the company, the CEO will be entitled to severance pay equal the issue price must be determined under market conditions to six months’ salary. The Board of Directors shall be entitled to and must correspond at most to 10 percent of the number of deviate from these guidelines if there are special reasons for outstanding shares. This authorization has not been utilized in doing so in the individual case in question. 2009.

Enea shares Environmental aspects As at 31 December 2009, the registered share capital covered 18 Enea sells software and consultancy services. Its products have 355 714 shares with a nominal value of SEK 1.00. Holders of sha- no environmental impact per se. The company’s environmental res are entitled to a dividend which is determined by the Annual impact originates from staff travelling on business. Videoconfe- General Meeting, and the shareholding provides entitlement to a rencing equipment has been acquired and will replace some right to vote at the Annual General Meeting, one vote per share. international travel. There are no limits to the transferability of shares or the vote entitlement of each individual shareholder at the Annual General Meeting due to provisions in the Articles of Association. Share-

26 ENEA – Annual report 2009 Future development racts. Enea is working deliberately to reduce its dependency on Technology development is progressing at a tremendous pace these customers, but despite this income from the major custo- in areas such as IP-based communication, increased intelligen- mers has increased over the past few years. ce in mobile units and fourth generation networks (LTE). This means major, long-term investments for Enea’s customers and Contract structure great opportunities to be able to offer products which, com- More than 40 percent of Enea’s income relates to software pro- bined with expert knowledge, reduce costs and lead times. At ducts. A large proportion of this income is repetitive in nature, the same time, customers are pressuring their subcontractors to in the form of long-term contracts with royalties and mainte- match the tough cost cutting programs which they themselves nance in the form, with limited costs in connection with the si- have implemented. multaneous flow of income. On the other hand, royalty income Enea has succeeded in positioning its consultants in various is directly linked to the customer’s development of the product areas of expertise. Pressure on the price of consultancy services in question, and Enea is unable to influence the future income. has remained high, and this situation is expected to continue in Around one-third of the annual income from software is non- the early part of the year. The demand for consultancy services repetitive in nature, but that also has limited direct production is expected to recover slightly in early 2010. costs. On the other hand, every new deal is of course linked with For the year 2010, it is estimated that the company will conti- sales costs. nue to demonstrate stable income development, and that it will Enea can normally gain an overview of income for consul- see a considerably improved operating profit compared with tancy work around three months in advance. A small number 2009. of consultancy tasks have guaranteed minimum volumes for up The long-term profit target is for Software to achieve an ope- to one year. rating margin of 20 percent and for Consulting an operating margin exceeding 10 percent. Coverage Enea receives more than half of its income from consultancy. Risks and uncertainty factors Thus a reduction in consultancy hours poses a risk for Enea. A reduction in demand may come about for many reasons, such Enea is exposed to a number of risks which could affect the as an economic downturn, incorrect consultancy expertise, etc. Group’s profit. Enea identifies and deals with the company’s risks To meet demand in the market, Enea is working to maintain the on a continuous basis. The risks deemed to be of the greatest consultancy expertise demanded by customers, even under significance to the company have been classified below as busi- poorer economic conditions. ness-related, market-related or financial risks. IT security Business-related risks Current working methods make stringent demands of IT access which have to be balanced against security requirements. Enea Customer structure works actively with IT security issues and has - among other In the field of both software and consultancy business, Enea things - an IT policy which ensures disruption-free business whi- is dependent upon a small number of major customers, all of le at the same time security in the form of firewalls and antivirus which are suppliers of telecom equipment. Ericsson, ST-Ericsson protection is guaranteed. Software is upgraded regularly. and Sony Ericsson Mobile Communications in particular are major customers, as are Nokia Siemens Networks and Nokia Mo- Competence supply bile Phones. The development of these customers, particularly Enea’s success is very much linked to its ability to employ, de- as regards their production volumes and product development velop, motivate and retain engineers and other qualified per- plans, are significant to Enea in the short term. Apart from the sonnel. There is strong competition for qualified personnel in credit risk of these companies are considered very small, the risk the IT industry. Enea’s combination of products and services, ho- of rapid negative changes due to change of the use of Enea´s wever, gives the company an advantage over its competitors by products and services are limited because of long-term cont- allowing it to offer broader career paths. Enea’s company in Ro-

ENEA – Annual report 2009 27 mania is helping to provide a good supply of competence while Competitors at the same time achieving cost benefits. Enea also traditionally The market for software for embedded systems is fragmented, has a low staff turnover, particularly as regards software. with a handful of players of the order of size of Enea, or lar- ger. All major competitors are, like Enea, globally active. Niche Integration of acquisitions companies may be competitors in restricted fields. One form Part of Enea’s strategy involves growth through acquisitions. Ac- of competition is made up of customers software solutions quisitions are preceded by thorough strategic, economic and legal which they have developed themselves, although this consti- analysis. In this analysis, major emphasis is also placed on the op- tutes a decreasing proportion of software usage overall. Within tions for successfully integrating the acquisition in the Enea Group. consultancy operations, the market is equally fragmented, with Despite this, there are risks in the form of unwanted staff turnover, a large number of players active globally, nationally and locally. unsuccessful product integrations and loss of synergy effects. One particular risk is the pace of globalization of the consultancy market, which will lead to price pressure on local markets, such Market-related risk as competition from Indian suppliers on the Swedish market. Enea offers high quality services from both high and low cost Macroeconomic development countries, which increases the chances of facing up to the com- Enea is dependent upon the financial development of its big- petition successfully. gest customers. Most of its income comes from customers in the telecom industry, so the economic risks are linked with the Financial risks economic situation in general and also with the specific development of the telecom industry. A generally impaired econo- The financial risks can be divided into currency risks, liquidity mic situation mainly has consequences for customers’ current risks, capital risks, interest risks and credit risks. willingness to invest, and hence reduced purchases of Enea In its operations, Enea is exposed to various financial risks, of products and services follow. Structural changes such as an in- which currency risk dominates. The Group has a financial policy crease in the use of embedded systems in various contexts are established by the Board which forms a framework of guidelines of greater significance than changes in the economic situation. and rules for dealing with financial risks. The Board is of the view that Enea is mainly exposed to the following financial risks: Products and technology Enea’s competitiveness and market position are largely depen- Currency risk dent on the company’s ability to manufacture innovative pro- Currency risk is the risk of the value of financial instruments va- ducts. Enea has been developing products with a very high rying due to changes in currency exchange rates. Currency risks technical content for a long time. Close consultation with its are handled in accordance with the financial policy laid down biggest customers concerning product development is of ma- by the Board. Enea has an international business, with most of its jor importance. The increasing presence of software based on sales in SEK, EUR and USD. To a great extent, currency exposure open source code means a risk of Enea’s customers choosing is minimized by running the business in subsidiaries which in- such solutions instead of the company’s copyright-protected voice in the same currency as that in which their costs are incur- products. As a consequence of this, Enea has built up a business red. The risk of currency exchange rate changes is also handled around Linux and participates in the OpenSAF Foundation, a fo- by the company regularly adapting and assessing its price lists. rum for middleware open source code. Within its consultancy A Group account structure with a number of currencies keeps operations, competence centers are being established for cut- currency exchanges to a minimum and increases flexibility in ting edge expertise in various service fields. respect of the time for exchanges. Major known deposits and Semiconductor manufacturers have a major influence on outgoing payments in foreign currency are hedged through fo- customers’ choice of software. Therefore, Enea cooperates in va- reign exchange forwards in accordance with the financial policy. rious ways with a number of players, which involves - among In 2009, currency hedging has taken place in respect of a total of other things - them selling Enea products preintegrated into EUR 6 (0) million and JPY 42 (0) million. their own products. Foreign subsidiaries are translated to Swedish krona in accor-

28 ENEA – Annual report 2009 dance with the current method, which means that the income The Board’s proposal for distribution of Enea AB’s earning statement is translated in accordance with the average rate for the (SEK) period, and the balance sheet is translated according to the rate The following funds are available to the parent company: on the balance sheet date. Translation exposure is not hedged. Share premium reserve 1,379,822 If the Swedish krona were to strengthen/weaken by an aver- Retained earnings 192,226,613 age of 5 percent in relation to the EUR, with all other variables Profit for the year -8,658,753 constant, income for the year as at 31 December 2009 would Total 184,947,682 have been SEK 1 million lower/higher. If the Swedish krona were to strengthen/weaken by 5percent The Board proposes to pay shareholders in relation to the USD, with all other variables constant, income SEK 1,50 per share (17,353,671 shares) 26,030,507 for the year as at 31 December 2009 would have been SEK 6 million lower/higher. and the remaining amount to be carried forward 158,917,175 Liquidity risk 184,947,682 Liquidity risk means that financing cannot be acquired, or else it can only be acquired at greatly increased cost. Enea’s liquidity For information on the company’s results and general position, risk is limited. Cash and equivalents as at 31 December amoun- please refer to the following income statements, balance sheets ted to SEK 154 (122) million. The group has no interest-bearing and cash flow statements with supplementary notes. The finan- debts. Enea’s cash pool, with mostly cash and equivalents in the cial reports were approved for issue by the parent company’s Swedish companies, is handled by the parent company. Excess Board on 10 March 2010. liquidity is invested as a special deposit or as commercial papers with maturity periods from one day to three months with well Board statement on the proposed dividend in established financial institutes. These investments take place accordance with the Swedish Companies Act, with minimization of the risk level in order to attempt to attain Chapter 18, Section 4 a low risk profile in accordance with Enea’s financial policy as The proposed dividend to shareholders reduces the parent established by the Board. company’s equity ratio from 80 percent to 79 percent and the Group’s equity ratio from 74 percent to 73 percent. Capital risk The equity ratio is satisfactory, given that the operations of The Group’s target concerning the capital structure is to main- the company and the Group are continuing to take place with tain a stable financial position which secures the Group’s ability profitability. It has been assessed that it will be possible to main- to continue its operations and generate returns for shareholders tain the liquidity in the company and the Group at an equally and to benefit other stakeholders and engender confidence in satisfactory level. the often close and long-term customer relations. At 31 Decem- It is the view of the Board that the proposed dividend will not ber 2009, the Group’s financial position was still strong, with an impede the company, and other companies forming part of the equity ratio of 74 percent (72 percent). To maintain or alter the Group, from fulfilling its obligations in the short and long term, capital structure, the Group may issue a dividend or repay capi- nor from completing necessary investments. The proposed divi- tal to shareholders or issue new shares or sell assets. As at 31 De- dend can thus be viewed as justifiable, given what is stated in cember 2009, Enea had bought back 874 153 shares, equivalent the Swedish Companies Act, Chapter 17, Section 3, paragraphs to 4.8 percent of the total number of shares.. 2-3. It is proposed that 22 April 2010 be the reconciliation date for the dividend. If the Annual General Meeting passes a reso- lution in accordance with this proposal, the dividend will be issued through the agency of Euroclear Sweden AB (formerly VPC AB) on 29 April 2010.

ENEA – Annual report 2009 29 Group

GROUP REPORT ON TOTAL PROFIT OR LOSS SEK 000s (1 January-31 December) Note 2009 2008 Net sales 2 777,711 917,588 Operating expenses Cost of sold products and services –442,654 –503,729 Gross profit/loss 335,057 413,859 Sales and marketing expenses –167,039 –168,178 Product development expenses –125,856 –121,066 Administration expenses –46,287 –51,558 Operating profit 3, 4, 5, 6, 7, 11 -4,125 73,057 Financial income 13,275 12,043 Financial expenses –9,996 –4,114 Net financial items 8 3,279 7,929 Profit before tax -846 80,986 Tax 9 5,027 7,329 Profit for the year 4,181 88,315 Other comprehensive profit Translation differences -15,332 26,932 Total profit or loss for the year, net after tax -11,151 115,247 Profit for the period attributable to parent company shareholders 4,181 88,315 Total profit for the period attributable to parent company shareholders -11,151 115,247 Earnings per share, SEK 15 0.24 4.90 Earnings per share, full dilution, SEK 0.24 4.90

30 ENEA – Annual report 2009 BALANCE SHEET SEK 000s (31 December) Note 2009 2008 Assets Intangible assets 10 237,213 273,483 Equipment, tools, fixtures and fittings 11 17,084 21,426 Financial investments 1,519 1,424 Deferred tax assets 9 28,137 23,190 Total fixed assets 283,953 319,523 Tax assets 9,218 6,390 Accounts receivable 12 223,221 285,681 Prepaid expenses and accrued income 13 19,927 29,989 Other receivables 6,339 3,230 Cash and cash equivalents 153,945 122,144 Total current assets 412,650 447,434 Total assets 696,603 766,957

Share holders´ equity 14 Share capital 18,356 18,356 Other paid-in capital 713,289 713,289 Reserves -139 15,193 Retained earnings including profit for the year –215,535 –198,403 Total shareholders´equity 515,971 548,435

Provisions Deferred tax liabilities 9 4,658 6,949 Total provisions 4,658 6,949 Long-term liabilities Long-term liabilities, non-interest bearing 24 27,295 24,482 Total long-term liabilities 27,295 24,482

Current liabilities Advances from customers 5,012 3,395 Accounts payable 39,166 49,583 Other liabilities 24,932 28,102 Accrued expenses and deferred income 16 79,569 106,011 Total current liabilities 148,679 187,091 Total shareholders´equity and liabilities 696,603 766,957

ENEA – Annual report 2009 31 SUMMARY OF CHANGES IN CONSOLIDATED EQUITY Other capital Ret. earnings inc. Total share- Share capital contributions Reserves profit for year holders’ equity Opening equity, 1 Jan 2008 18,356 713,289 -11,730 -285,277 434,638 Total profit Profit for the year 88,315 88,315 Other comprehensive profit - Translation difference 26,923 Other total profit or loss, total 26,923 26,923 Total profit 26,923 88,315 115,238 Transactions with shareholders Stock option programs 309 309 Buy-back of own shares -1,750 -1,750 Total transactions with shareholders -1,441 -1,441 CLOSING EQUITY 31 DEC 2008 18,356 713,289 15,193 -198,403 548,435

OPENING EQUITY 1 JAN 2009 18,356 713,289 15,193 -198,403 548,435 Total profit Profit for the year 4,181 4,181 Other comprehensive profit - Translation difference -15,332 Other total profit or loss, total -15,332 -15,332 Total profit -15,332 4,181 -11,151 Transactions with shareholders Stock option programs 475 475 Buy-back of own shares -21,788 -21,788 Total transactions with shareholders -21,313 -21,313 CLOSING EQUITY 31 DEC 2009 18,356 713,289 -139 -215,535 515,971

CONSOLIDATED CASH FLOW STATEMENT SEK 000s (31 December) Note 18, 24 2009 2008 Operating activities Profit before tax - 847 80,986 Adjustment for items not included in cash flow 48,773 23,921 47,926 104,907 Paid tax - 6,541 -12,037 Cash flow from operating activities before change in working capital 41,385 92,870 Cash flow from change in working capital Change in operating receivables 69,413 -34,755 Change in operating liabilities - 40,455 23,672 Cash flow from change in working capital 28,958 -11,083 Cash flow from current operations 70,343 81,787 Investing activities Acquisition of intangible assets -10,089 -108,503 Acquisition of tangible fixed assets - 4,591 -13,146 Acquisition of financial assets 1,503 32 Cash flow from investing activities -13,177 -121,617 Financing activities Buyback of own shares - 21,788 -1,750 Cash flow from financing activities - 21,788 -1,750 Cash flow for the year 35,378 - 41,580 Cash and cash equivalents at start of year 122,144 155,973 Exchange rate differences in cash and cash equivalents -3,577 7,751 Cash and cash equivalents at end of period 153,945 122,144

32 ENEA – Annual report 2009 Parent Company

INCOME STATEMENT SEK 000s (1 January -31 December) Note 2009 2008

Net sales 32,505 28,381 32,505 28,381 Operating expenses Administration expenses –63,495 –57,442 Operating income 3, 4, 5, 6, 7, 11 –30,990 –29,061

Income from participations in Group companies 8 0 0 Interest income and similar income items 8 16,170 18,143 Interest expenses and similar expense items 8 –1,149 –732 Net financial income/expense 15,021 17,411

Profit after financial items –15,969 –11,650 Appropriations 4,443 –4,443 Profit before tax –11,526 –16,093 Tax 9 2,868 –1,118 Profit for the year –8,658 –17,211

ENEA – Annual report 2009 33 BALANCE SHEET SEK 000s (31 December) Note 2009 2008 Assets Intangible assets 10 3,737 4,230 Equipment, tools, fixtures and fittings 11 5,998 7,134 Participations in Group companies 17 232,534 232,534 Fixed assets, total 242,269 243,898 Current receivables from Group companies 19 266,827 344,073 Tax assets 2,789 0 Prepaid expenses and accrued income 13 5,865 5,829 Other receivables 359 1,376 Cash and bank equivalents 108,386 69,856 Current assets, total 384,226 421,134 Total assets 626,495 665,032 Shareholders’ equity 14 Restricted equity Share capital (18 355 714 shares) 18,356 18,356 Reserve fund 299,668 299,668 Non-restricted equity Share premium reserve 1,380 1,380 Accumulated profit or loss 192,227 222,451 Profit for the year –8,658 –17,211 Equity, total 502,973 524,644 Provisions Untaxed reserves 0 4,443 Provisions, total 0 4,443 Liabilities Accounts payable 5,213 3,138 Tax liability 0 3,810 Current liabilities to Group companies 19 111,199 124,060 Other liabilities 877 500 Accrued expenses and prepaid income 16 6,233 4,437 Current liabilities, total 123,522 135,945 Total shareholders’ equity and liabilities 626,495 665,032

34 ENEA – Annual report 2009 SUMMARY OF CHANGES IN PARENT COMPANY’S EQUITY Restricted equity Non-restricted equity Total share 2008 Share pre- Accumulated Profit for holders’ SEK 000s (31 December) Share capital Reserve fund mium reserve profit or loss the year equity

OPENING EQUITY 1 JAN 2008 18,356 299,668 1,380 203,035 522,439 Group contributions received, net after tax 20,857 20,857 Total wealth changes reported directly agains equity, excl. transactions with the company’s owners 20,857 20,857 Profit for the year –17,211 –17,211 Total capital changes, excl. transactions with the company’s owners Stock option programs 309 309 Buy-back of own shares –1,750 –1,750 CLOSING EQUITY 31 DEC 2008 18,356 299,668 1,380 222,451 –17,211 524,644

2009

SEK 000s (31 December)

OPENING EQUITY 1 JAN 2009 18,356 299,668 1,380 205,241 524,644 Group contributions received, net after tax 8,299 ,8,299 Total wealth changes reported directly against equity, excl. transactions with the company’s owners 8,299 8,299 Profit for the year –8,658 –8,658 Total wealth changes , excl. transactions with the company’s owners Stock option programs 475 475 Buy-back of own shares –21,788 –21,788 CLOSING EQUITY 31 DEC 2009 18,356 299,668 1,380 192,227 –8,658 502,973

CASH FLOW STATEMENT, PARENT COMPANY SEK 000s (31 December Note 18 2009 2008 Operating activities Profit before tax –11,526 –16,093 Adjustment for items not included in cash flow 573 8,531 –10,953 –7,562 Paid tax –6,693 –8,100 Cash flow from operating activities before change in working capital –17,646 –15,662 Cash flow from change in working capital Change in operating receivables 89,487 –30,496 Change in operating liabilities -8,612 2,587 Cash flow from change in working capital 80,875 –27,909 Cash flow from current operations 63,229 –43,571 Investment activities Acquisition of fixed capital assets 10, 11 –2,642 –5,307 Cash flow from investing activities –2,642 –5,307 Financing activities Buyback of own shares –21,787 –1,750 Cash flow from financing activities –21,787 –1,750 Cash flow for the year 69,586 –50,628 Cash and cash equivalents and short-term investments at start of year 69,856 120,484 Exchange rate differences in cash and cash equivalents 0 0 Cash and cash equivalents at end of period 108,386 69,856

ENEA – Annual report 2009 35 Notes

1 Accounting policies which do not relate to transactions with shareholders” be reported separately from changes in equity which relate to transactions with Compliance with standards and legislation shareholders in a report on total profit. Therefore, the Group pre- The consolidated financial statements have been prepared in accordance sents all owner-related changes in equity in the table ”Summary with the Swedish Company Accounts Act, International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board relating to changes in equity”, while all changes in equity which do (IASB), and interpretation pronouncements from the International Financial not relate to transactions with shareholders are reported in ”Con- Reporting Interpretations Committee (IFRIC) as assumed by the EU. In addi- solidated report on”. tion, Swedish Financial Accounting Standards Council’s recommendation Segment reporting RFR 1.2 Supplementary accounting rules for groups has been applied. The operating segments are reported in a manner which is comp- The parent company applies the same accounting policies as the liant with the internal reporting to the highest executive decision- Group except in the cases stated below in the section on “The making authority. A segment is an identifiable accounting unit of parent company’s accounting policies”. The inconsistencies bet- the Group which either provides goods and services within certain ween the parent company’s and the Group’s policies stem from the economic surroundings (geographical areas), or products or servi- limited opportunities for applying the IFRS to the parent company ces (business areas) which are exposed to risks and opportunities as a consequence of the Swedish Company Accounts Act, and in which distinguish it from other segments. The Group will apply IFRS some instances for tax reasons. 8 Operating segments as of 1 January 2009. Given the internal con- Conditions that apply to preparation of the parent company’s trol to the Board and executive, business is reported over two seg- financial statements and consolidated financial statements ments, Software and Consulting. Software covers the development The parent company’s functional currency is Swedish krona which also and sale of Enea’s software products and services directly linked constitutes the presentation currency for the parent company and the with the products. Consulting covers Enea’s consultancy operations, Group. This means that the financial statements are presented in Swedish a not insignificant proportion of which are supplied to Software. kronor. Assets and liabilities are recognized at historical acquisition value. Internal sales are based on market conditions. The Board and execu- Preparation of the financial statements as per IFRS requires that tive assess the profits for the operating segments on the basis of the company’s management makes assessments, estimates and the operating profit. assumptions that affect the application of the accounting policies Classification, etc. and the carrying amounts of assets, liabilities, income and expenses. Fixed assets and long-term liabilities in he parent company and The estimates and assumptions are based on historical experience Group essentially consist only of amounts expected to be recovered and a number of other factors that are deemed reasonable under or paid after more than twelve months reckoned from the balance prevailing circumstances. The result of these estimates and assump- sheet date. Current assets and short-term liabilities in he parent tions are then used to assess the carrying amounts of assets and company and Group essentially consist only of amounts expected liabilities that are not otherwise clear from other sources. Actual to be recovered or paid within twelve months reckoned from the outcomes may deviate from these estimates and assessments. balance sheet date Estimates and assumptions are reviewed regularly. Changes to estimates are reported in the period in which the change is made Consolidation principles if the change has only impacted upon this period, or in the period Subsidiaries in which the change is made and future periods if the change Subsidiaries are companies over which Enea AB exercises a control- affects both the current period and future periods. ling influence. Decisive influence means that the Group has the Assessments made by the company management when apply- right to determine, directly or indirectly, financial and operational ing the IFRS which have a significant impact on the financial reports strategies for the purpose of obtaining financial benefit. When and assessments made which could result in substantial adjust- assessing whether a decisive influence exists, shares providing ments to following years’ financial reports are described in greater potential entitlement to votes which can be utilized or converted detail in Note 22. without delay are taken into account. The accounting policies stated below for the Group were applied Subsidiaries are reported according to the purchase method. This consistently in all periods presented in the consolidated financial method means that acquisition of a subsidiary is considered to be statements, unless stated otherwise. The Group’s accounting poli- a transaction through which the Group indirectly acquires the cies have been applied consistently to the reporting and consoli- subsidiary’s assets and assumes its liabilities and contingent liabili- dation of the subsidiaries. ties. The consolidated acquisition value is calculated in an acquisi- The financial reports are formulated in accordance with IAS 1 tion analysis in conjunction with the acquisition. The analysis esta- (Revised) which is applicable as of 1 January 2009. The revised stan- blishes the acquisition value of the participations or the business, dard prohibits presentation of income and expense items in the the fair value of acquired identifiable assets and liabilities on the report on changes in equity, but requires that ”changes to equity acquisition date and contingent liabilities taken over. The acquisi-

36 ENEA – Annual report 2009 tion value for subsidiary shares and the business is made up of the foreign operation, the accumulated translation differences attribu- total of fair value on the acquisition date for assets paid for, liabilities table to the operation are realized. Accumulated translation diffe- arising or assumed, and for issued equity instruments which are rences are presented as a separate category under the equity item submitted as payment in exchange for the acquired net assets, as ”Reserves”, designated ”Translation reserve”, and include translation well as the transaction expenses which are directly attributable to differences accumulated as of 1 January 2004. Accumulated trans- the acquisition. In the case of business combinations where the lation differences before 1 January 2004 are distributed over other acquisition cost exceeds the net value of the acquired assets and equity categories and are not recognized separately. assumed liabilities, as well a contingent liabilities, the difference is Income recognized as goodwill. Where the difference is negative, this is recognized directly in the income statement. Reporting of income Subsidiaries’ financial reports are included in the consolidated Services are executed largely on a current account basis and are accounts as of the time of acquisition to the date on which the recognized in income as the work is carried out. Services which are decisive influence ceases. based on a functional undertaking are recognized in income linearly over the agreed period in which the services are provided. A func- Transactions to be eliminated on consolidation tional undertaking involves a service function with an indetermi- Internal Group receivables and liabilities, income or expenses and nate number of services which are to be maintained over a specific unrealized losses arising from internal Group transactions between period. Projects which are executed at a set price are recognized in Group companies are eliminated in their entirety when establishing income as they are completed, which is determined on the basis of the consolidated accounts. contract costs expended in relation to estimated contract costs for Unrealized losses are eliminated in the same manner as unreali- the entire contract in accordance with the percentage of comple- zed profits. tion method. If a loss risk is deemed to exist, current individual reser- Foreign currency vations take place. The enterprise also has income from software Transactions in foreign currencies sales which is based on royalty income, license fees, maintenance Transactions in foreign currencies are translated into the functional contracts and buyouts (where the customer buys the product for currency at the exchange rate in force on the transaction date. an unlimited time). Royalty income and license fees are distributed Monetary assets and liabilities in foreign currencies are translated over a period of time in accordance with the current agreement’s into the functional currency at the exchange rate in force on the financial substance. License fees and buyouts are recognized in balance sheet date. Exchange rate differences arising from the con- income on full delivery of the software in accordance with contract versions are recognized in the income statement. Non-monetary as no significant obligations remain following the delivery date. assets and liabilities recognized at historical acquisition value are Maintenance contracts normally run for a twelve-month period and translated at the exchange rate at the time of the transaction. Non- the income is distributed over the contract period. monetary assets and liabilities reported at fair value is translated Criteria for revenue recognition of licenses revenue are: into the functional currency at the exchange rate in force on the n A written contract signed by both parties. evaluation date for fair value, the exchange rate change is then n Delivery has taken place. recognized in the same way as the other value changes in respect n The license fee must be a set amount, or calculated according of the asset or liability. to a reliable method, and there are no withdrawal options, or Functional currency is the currency in the primary economic the credit period is less than 12 months. environments where the companies included in the Group run their n Assurance that payment will be received. business. The companies included in the Group are the parent com- Operating expenses and financial income and expenses pany and subsidiaries. The parent company’s functional currency and reporting currency is the Swedish krona (SEK). The Group’s Payment concerning operational leases reporting currency is the Swedish krona (SEK). Payments concerning operational leading contracts are recognized linearly in the income statement over the leasing period. Benefits Financial statements of foreign operations received in connection with the signing of an agreement recogni- Assets and liabilities in foreign operations, including goodwill and zed as part of the total lease expense in the income statement. other Group-related surplus values, are converted to Swedish kro- nor at the currency exchange rate prevailing on the balance sheet Financial income and expenses date. Income and expenses in a foreign company are converted to Financial income and expenses may consist of income on bank Swedish kronor at an average rate approximating to the rates app- deposits and debt and debts securities, interest on loans, dividend lying on the respective transaction dates. Translation differences income, foreign exchange differences, unrealized and realized gains arising on currency conversion by foreign operations are recognized on financial investments and derivative instruments used in finan- directly against equity as a translation reserve. On divestment of a cing activities.

ENEA – Annual report 2009 37 Interest income on receivables and interest expenses on liabilities have been realized, have expired or the company loses control over are calculated using the effective interest rate method. The effective them. The same applies for part of a financial asset. A financial lia- interest rate is the interest rate which means that the current value bility is removed from the balance sheet once the obligation in the of all future deposits and outgoing payments during the fixed inte- contract has been fulfilled or is in some other way extinguished. rest term is the same as the reported value of the receivable or lia- The same applies for part of a financial liability. bility. Interest income includes accrued amounts of transaction Accounts payable have short expected maturities and are valued expenses and any discounts, premiums and other differences bet- at a nominal amount without discounting ween the original value of the receivable and the amount received Cash and cash equivalents upon maturity. The Group does not capitalize interest on assets’ Cash and cash equivalents comprise cash, immediately accessible acquisition values. bank balance as well as special deposits and commercial papers Financial instruments with maturity periods of less than three months. These items have The Group classifies financial instruments into categories. This clas- been recognized at accrued acquisition value. sification is dependent upon the intention of the acquisition of the Tangible fixed assets financial instrument. The corporate executive determines classifi- Owned assets cation at the original time of acquisition. Enea has classified financial Tangible fixed assets are posted as assets in the balance if it is pro- instruments into the following categories: bable that the future financial benefits will accrue to the company Loans and receivables and the acquisition value of the asset can be calculated in a reliable Loans and accounts receivable are financial assets which do not way. Tangible fixed assets are recognized in the Group at cost less constitute a derivative with fixed payments or with payments which accumulated depreciation and any writedown. The acquisition can be determined and which are not listed on an active market. value includes the purchase price plus expenses directly attribu- Receivables arise when companies provide funds, goods and ser- table to the asset in order to put it in place and make it appropriate vices directly to the borrower with no intention of trading the claim. for use in accordance with the purpose of the acquisition. Examples This category also includes acquired receivables. Assets in this cate- of directly attributable expenses included in the acquisition value gory are valued at the accrued acquisition value. Accrued historical are expenses for delivery and handling, installation, consultancy cost is determined from the effective interest that is calculated at services and legal services. the date of acquisition. They are included under current assets Leased assets except for items with due dates more than twelve months after the IAS 17 is applied in respect of leased assets. Leasing is classified in balance sheet date which are classified as fixed assets. Loans and the consolidated financial statement either as finance or operating receivables are classified as trade and other receivables in the leasing. Leases signed are, with no significant exceptions, operatio- balance sheet. nal in nature and relate mainly to cars and rent on premises. Ope- Receivables are recognized at an amount which is expected to rational leasing involves the leasing charge being entered as an impact after deduction of distressed debts which are assessed indi- expense over the term starting from utilization, which may differ vidually. The expected maturity of accounts receivable is short, and from what has been actually paid for leasing over the year. so the value has been recognized at a nominal amount without discount. Depreciation principles Depreciation is carried out on a straight-line basis over the asset’s Other financial liabilities estimated useful life. The estimated useful life for tangible fixed Financial liabilities which are not held for trading are valued at assets such as equipment, tools and installations is five years. The accrued acquisition value. Accrued acquisition value is determined useful life and residual value of assets are assessed annually. from the effective interest rate calculated at the time the debt was taken out. This means that over- and undervaluation, like direct issue Intangible assets costs, are accrued over the term of the debt. Goodwill Financial instruments recognized in the balance sheet include, Goodwill represents to the difference between the acquisition value on the asset side, cash and cash equivalents and accounts receiva- of a business and the fair value of acquired assets, assumed liabilities ble, and liabilities and equity include accounts payable. A financial and contingent liabilities. Goodwill is valued at acquisition value asset or financial liability is posted to the balance sheet when the minus any accumulated writedown. Goodwill is distributed to cash- company becomes a party to the contractual terms of the instru- generating units and is tested at least annually for writedown requi- ment. Accounts receivable are recognized in the balance sheet rements. when the invoice has been sent. Accounts payable are recognized Research and development in the balance sheet when the invoice has been received. A financial Fees for research aimed at obtain new scientific or technical know- asset is excluded from the balance sheet once the contractual rights ledge are recognized as expenses when they arise.

38 ENEA – Annual report 2009 Fees for development where research results or other knowledge Calculation of recoverable value are applied in order to bring about new or improved products or The recoverable value is the highest of fair value minus sales costs processes are entered as an asset in the balance sheet if the product and the utility value. When calculating the utility value, future cash or process can be used technically and commercially and the com- flow is discounted at a discount rate which takes into consideration pany has sufficient resources to complete development and then risk-free interest and the risk involved with the specific asset. For an use or sell the intangible asset. The reported value includes charges asset which does not generate cash flows which are significantly for materials, direct charges for salaries and indirect charges which independent of other assets, the recoverable value is calculated for can be attributed to the asset in a reasonable and consistent man- the cash-generating unit to which the asset belongs. ner. Other charges for development are entered in the income sta- Reversal of writedowns tement as expenses when they arise. Development expenses ente- Writedowns of goodwill are not reversed. Writedowns of other red in the balance sheet are reported at the acquisition value minus assets is reversed if a change occurs in the assumptions that formed accumulated depreciation and any writedowns. the basis of calculation of the recoverable amount. Other intangible assets Writedowns is only reversed to the extent that the asset’s carrying Consisting mainly of trademarks, licenses and contractual customer amount after reversal does not exceed the carrying amount that relations arising through business combinations. The assets are the asset would have had if impairment had not been recognized recognized at fair value on the acquisition date minus accumulated – accounting for depreciation or amortization that would have depreciation. occurred. Depreciation principles Employee benefits Depreciation is recognized straight-line in the income statement Defined contribution plans over the estimated useful lives of intangible assets, unless such use- Obligations relating to charges for defined contribution pension ful lives are indeterminate. Goodwill and intangible assets with inde- plans are recognized as costs in the income statement as they arise. terminate useful lives are tested for the need for writedown on a All pension solutions in foreign companies are classified and reported quarterly basis or as soon as there are indications that the asset in as defined contribution plans, which means that the Group’s profit question has declined in value. Intangible assets which can be is burdened with pension expenses as the benefits were earned. depreciated are depreciated from the date on which they are avai- Salaried staff employed in Sweden are covered by the ITP scheme lable for use. The estimated useful life for capitalized development (ITP1 and ITP2), reported as defined contribution pension plans. expenditure is five years. Acquired trademarks and licenses are Commitments for retirement pensions and family pensions for sala- depreciated over five years, while acquired contractual customer ried employees in Sweden are secured through an insurance policy relations are depreciated over three years. with Alecta. According to a statement from the Swedish Financial Writedowns Reporting Board’s Emerging Issues Task Force, URA 42, this is a defi- The reported values for Group assets, with the exception of defer- ned benefit plan which covers several employers. For the 2009 red tax receivables and financial assets, are tested on every balance financial year, the company has not had access to such information sheet date in order to assess whether there is any indication of a that would make it possible to recognize this plan as a defined need for writedown. If there is any such indication, the recoverable benefit pension plan, which is why it is being recognized as a defi- amount of the asset is calculated. For excepted assets as stated ned contribution plan. This plan is being financed on an ongoing above, the values are tested in accordance with the relevant stan- basis through pension payments. For the employees who selected dard. For goodwill and intangible assets which are not yet ready for what is known as an alternative service pension, defined contribu- use, the recoverable value is estimated annually. tion pension premiums are paid regularly over the year by the rele- If it is not possible to establish materially independent cash flows vant Group companies to selected insurance companies. Alecta’s for a certain asset, when testing for writedown needs the assets are surplus can be distributed to the policyholders and/or the insured grouped at the lowest level where it is possible to identify materially persons. Collective funding is the market value of Alecta’s assets as independent cash flow (known as a cash-generating unit). Write- a percentage of insurance commitments, calculated in accordance downs are recognized when the recognized value of an asset or with Alecta’s calculation assumptions for insurance purposes, which cash-generating unit exceeds the recoverable amount. Writedowns do not comply with IAS 19. are charged to the income statement. Termination benefits Writedown of assets attributable to a cash-generating unit (group A provision is recognized in connection with termination of person- of units) is distributed initially to goodwill. After that, proportional nel only if the company is demonstrably committed to ending an writedown of other assets included in the unit (group of units) takes employment situation before the normal date or when benefits are place. provided as an incentive to encourage voluntary redundancy. If the company terminates personnel, a detailed plan is created which, at

ENEA – Annual report 2009 39 the very least, contains workplace, positions and approximate num- appurtenant tax effect is recognized in equity. Current tax is tax that ber of affected persons as well as the benefits for each personnel is to be paid or received related to the current year, using the tax category or position and the time for the plan’s implementation. rates that were decided or had in practice been decided as at the Remuneration to senior executives balance sheet date; this includes adjustment of current tax relating Guidelines on remuneration for senior executives are laid down by to earlier periods. the Annual General Meeting. For the Group executive, salaries and Deferred tax is calculated according to the balance sheet method other employment conditions are applied under market conditions. on the basis of temporary differences between the carrying value In addition to fixed annual salary, the Group executive also receive and the tax-related value of assets and liabilities. The following tem- a variable salary which is capped and based on earnings perfor- porary differences are not taken into account: temporary differences mance compared with set targets. Remuneration to certain leading arising upon the first recognition of goodwill; first recognition of officials within the Enea Group is also paid in the form of share- assets and liabilities which are not business acquisitions and which based payments. at the time of the transaction did not affect either recognized or taxable profits; nor are temporary differences attributable to parti- Share-based payments cipations in subsidiaries which are not expected to be written back Outstanding option programs allow employees to acquire shares in the foreseeable future taken into account. The valuation of defer- in the company. The fair value of allocated options is recognized as red tax is based on how reported values of assets or liabilities are a payroll expense, with a corresponding increase in equity. The fair expected to be realized or settled. Deferred tax is calculated using value is calculated at the time of allocation and distributed over the the tax rates and tax rules that were decided or had in practice been earning period. The fair value of the allocated options is calculated decided as at the balance sheet date. according to the Black-Scholes model, and the terms and conditions Deferred tax receivables in tax-deductible temporary differences applicable at the time of allocation are taken into account. The and loss carry-forwards are only recognized if it is likely that they amount recognized as an expense is adjusted in order to reflect the can be used in the future. The value of deferred tax receivables is actual number of options earned. reduced when it is no longer deemed likely that they can be used. Payroll overheads attributable to share-related instruments to Any additional income tax that arises at the time of dividend pay- employees as remuneration for services purchased are entered as ment is recognized at the same time that the dividend is recognized an expense, charged to the period under which services are perfor- as a liability. med. The provision for payroll overheads is based on the fair value of the options at the time of reporting. Fair value is calculated using Financial risks the same valuation model used when the options were issued. The greatest financial risk is the exchange rate risk. Enea has a financial policy established by the Board which forms a framework of Provisions guidelines for dealing with financial risks. There is a detailed descrip- Appropriations are recorded in the balance sheet when the group tion of the financial risks can be found in the Directors’ Report. has an existing legal or informal obligation as a result of an event occurring, and it is likely that an outflow of financial resources will Earnings per share be required to settle the obligation and a reliable estimate of the The calculation of earnings per share is based on the profit for the amount can be made. If the payment date has a significant effect, year within the Group which is attributable to the parent company’s provisions are calculated through discounting of the expected shareholders and on the weighted average number of outstanding future cash flow at a pre-tax interest rate that reflects current market shares during the year. In calculating earnings per share after dilu- assessments of the time value of money and, where applicable, the tion, profit and the average number of shares are adjusted to take risks associated with the liability. into account the effects of potentially diluting common shares, Restructuring which during the reporting periods are attributable to the pro- A provision for restructuring is reported once the Group has prepa- missory notes and options issued to employees. Dilution takes red a detailed and informal restructuring plan, and the restructuring place only when the share price is lower than the stock exchange has either commenced or been publicly announced. No provisions price. The share price is adjusted by means of a supplement for the are made for future operating expenses. value of future services linked to an own capital-regulated stock option program reported as share-based payments in accordance Onerous contract with IFRS 2. A provision for a future onerous contract is reported when the expected benefits that the Group is expecting to obtain from a Contingent liabilities contract are lower than the unavoidable costs of fulfilling the terms A contingent liability is recognized when there is a possible com- of the contract. mitment that stems from events that have occurred and its exis- tence is only confirmed by one or more uncertain future events or Taxes when there is a commitment that is not recognized as a liability or Income taxes comprise current tax and deferred tax. Income taxes provision, because it is not likely that an outflow of resources will are recognized in the income statement, except when the under- be required. lying transaction is recognized directly against equity, whereby the

40 ENEA – Annual report 2009 Parent company’s accounting policies is recognized as a dividend. This means that the Group contribution The parent company has prepared its annual accounts in accor- and its current tax effect received is recognized in the income sta- dance with the Swedish Annual Accounts Act (1995:1554) and tement. Group contributions paid and the current tax effect are recommendation RFR 2.2, Reporting of legal entities, of the Swedish recognized directly in retained earnings. Financial Accounting Standards Council. Under RFR 2.2, the parent Group contributions, the equivalent of shareholder contributions, company in the annual accounts of the legal entity must apply all are charged directly to profits for the recipient, taking into conside- of the EU-approved IFRS standards and statements provided this is ration current tax effect. The donor recognizes the Group contribu- possible within the framework of the Swedish Annual Accounts Act tion and its current tax effect as an investment in shares in Group and with due regard for the relationship between accounting and companies, insofar as a writedown is not required. taxes. This recommendation specifies which exceptions and addi- New IFRS tions must be applied with regard to IFRS. The differences between The following standards and interpretations of existing standards the accounting principles of the Group and the parent company have been published and are mandatory for the Group’s accounts are described below. for the financial year commencing on or after 1 January 2010, but Differences between the Group’s and parent company’s have not been applied in advance: accounting policies IFRS 2 (amendment), ”Group cash-settled and share based pay- The differences between the accounting principles of the Group ment transactions”, applicable from 1 January 2010. This deals with and the parent company are described below. The accounting poli- transactions with own shares; internal Group transactions are also cies stated below for the parent company were applied consistently incorporated in the standard. The new guide is not expected to in all periods presented in the parent company’s financial state- have any significant impact on the consolidated financial reports. ments. IFRS 3 (revised), ”Business acquisitions”, applicable from 1 July Subsidiaries 2009. The revised standard continues to prescribe application of the Participations in subsidiaries are reported in the parent company purchase method for business acquisitions, but with a few signifi- in accordance with the cost method. Dividends received are only cant changes. For example, all transaction expenses relating to recognized as revenue if they are derived from profits earned after acquisitions must be expensed. The Group will be applying IFRS 3 acquisition. Dividends in excess of such earnings are regarded as (revised) for all business acquisitions from 1 January 2010 repayment of the investment and reduce the carrying amount of onwards. the participating interest. IFRS 9 ”Financial instruments” (applicable for financial years com- Dividends mencing 1 January 2013 or later). IFRS 9 deals with Valuation and Dividends to the parent company’s shareholders are reported as lia- classification of financial instruments. Once this standard is com- bilities in the consolidated financial reports for the period in which plete, its effect on the consolidated financial reports will be evalua- the dividend is approved by the parent company’s shareholders. ted. Anticipated dividends from subsidiaries are reported if the parent IAS 1 (amendment), ”Presentation of Financial Statements”. This company has sole entitlement to make a decision on the size of the amendment clarifies that the potential regulation of a debt through dividend and the parent company has made a decision on the size the issue of shares is not relevant to its classification as short or long- of the dividend before the parent company has published its finan- term. The Group will be applying IAS 1 (amendment) from 1 January cial reports. 2010. It is not expected to have any impact on the consolidated financial reports. Taxes IAS 27 (revised), applicable from 1 July 2009. Deals with transac- The parent company reports untaxed reserves including deferred tions with holders with no decisive influence, formerly known as tax liabilities. However, in the consolidated financial statement minority interests. Not expected to have any significant impact on untaxed reserves are divided into deferred tax liabilities and the consolidated financial reports. equity. IAS 38 (amendment), ”Intangible assets”. This amendment is part Group contributions and shareholders’ contributions for legal of the IASB’s annual improvement project which was published in entities April 2009. This amendment provides clarification in the case of The company reports Group contributions and shareholders’ con- valuation at fair value of an intangible asset acquired in a business tributions as per the statement of the Swedish Financial Accounting acquisition. This amendment will not have any significant impact Standards Council’s Emerging Issues Task Force. Shareholders’ con- on the consolidated financial reports. tributions are taken directly to the equity of the recipient and are IFRIC 17, ”Distribution of non-cash assets to owners”, applicable capitalized in the shares and participating interests of the payer, from 1 July 2009. Not expected to have any significant impact on insofar as impairment losses are not required. Group contributions the consolidated financial reports. are recognized according to economic substance. This means that Group contributions made so as to minimize the Group’s total tax are charged directly to retained earnings less its current tax effect. Amounts in thousands of Swedish kronor unless otherwise indicated. If a Group contribution is given which is ranked as a dividend, this

ENEA – Annual report 2009 41 2 Business segment reporting 3 Exchange rate gains and exchange rate losses

Operating segments 2008 Software Consulting Other Elimination Group 2009 2008

Internal net sales 173 76,228 - -76,401 - GROUP External net sales 377,915 539,673 - - 917,588 Exchange rate gains on receivables/liabilities operational in character 11,528 18,714 Operating profit 28,255 44,802 - - 73,057 Exchange rate losses on receivables/liabilities operational Net financial items - - 7,929 in character –13,076 –16,311 Profit before tax - - - - 80,986 PARENT COMPANY Tax - - - - 7,329 Exchange rate gains on receivables/liabilities operational Profit for the year - - - - 88,315 in character 67 91 Exchange rate losses on receivables/liabilities operational –106 –59 Assets 356,684 252,549 200,503 -42,860 766,956 in character Investments 82,708 41,738 5,333 - 129,779 Depreciation 17,836 1,448 3,951 - 23,235

Operating segments 2009 Software Consulting Other Elimination Group 4 Human resources and payroll expenses 2009 2008 Internal net sales1 732 49,298 - -50,030 - of which of which Average number of employees Total Total External net sales2 339,049 438,662 - - 777,711 men, % men, % Operating profit –11,165 7,040 - - -4,125 Net financial items - - - - 3,279 PARENT COMPANY Profit before tax - - - - -846 Sweden 24 56 20 43 Tax - - - - 5,027 Parent company, total 24 56 20 43 Profit for the year - - - - 4,181 SUBSIDIARIES Enea Services Stockholm AB 135 82 139 81 3 Assets 279,769 213,001 206,700 -2,867 696,603 Enea Services Öresund AB 83 85 97 85 4 Investments 10,078 1,785 3,279 - 15,142 Enea Services Linköping AB 71 81 78 81 Depreciation 15,948 1,921 3,317 - 21,186 QiValue Technologies AB 17 99 18 94 Writedowns 24,400 990 - - 25,390 Enea Software AB 108 90 117 88 Enea Zealcore AB 4 100 1 100 Enea Embedded Technology Inc, 58 86 111 86 Information: USA Enea GmbH, Tyskland 5 78 5 80 The operating segments are reported in a manner which is compliant with the internal reporting to the highest executive decision-making authority. These operating segments Enea Netbricks SAS, Frankrike 14 88 12 85 are Software and Consulting. Software covers the development and sale of Enea’s software Enea S.A.R.L, Frankrike 1 100 1 55 products and services directly linked with the products. Consulting covers Enea’s consul- Enea Software (Beijing) Co. , Ltd. 13 89 0 0 tancy operations, a not insignificant proportion of which are supplied to Software. Income Enea Embedded Technology K.K, 3 100 5 78 from external customers in Sweden amounted to SEK 607.9 million (742.3), and total Japan income from other countries amounts to SEK 169.8 million (175.3). Enea UK Ltd, United Kingdom 0 0 2 100 Enea Polyhedra Ltd, United Total fixed assets excluding deferred tax receivables which are located in Sweden amount 7 100 7 100 to SEK 252.0 million (292.1), and the total of such fixed assets which are located in other Kingdom countries amounts to 3.8 (4.3). Enea Netbricks Ltd, Israel 3 52 3 67 Income from the Group’s biggest customer constitutes 55% (57%) of total income for the Enea Romania SRL, Romania 120 83 72 81 Group. Total for subsidiaries 642 76 668 84 Total, Group 666 75 688 84

Distribution of assets 2009 2008 Gender breakdown in Group Assets for which information is to be provided 492,770 609,234 executive Assets with other companies 21,751 12,389 Board of Directors 8 88 8 88 Cash 153,945 122,144 Other senior executives 7 86 6 83 Deferred tax 28,137 23,190 Total assets 696,603 766,957 Salaries, Salaries, 1. Sales between segments take place under market conditions. Salaries, other remuneration remune- Payroll remune- Payroll 2. Based on the segment in which the income is entered and expenses ration overheads ration overheads 3. Based on where the assets are located. 4. Intangible and tangible assets. PARENT COMPANY 17,933 7,007 15,190 7,369 Of which pension expenses1 – 2,566 – 2,591

SUBSIDIARIES 322,723 116,538 328,776 115,225 Of which pension expenses – 34,589 – 31,525 Total, Group 340,656 123,615 343,966 122,594 Of which pension expenses2 – 37,155 – 34,116

1, Of the parent company's pension expenses, SEK 539 thousand (1,131) relates to the Board and CEO, including variable remuneration converted to pension. 2, Of the Group's pension expenses, SEK 2,100 thousand (2,596) relates to the Board and CEO, including variable remuneration converted to pension.

42 ENEA – Annual report 2009 NOTE 4 CONT.

Salaries, other remuneration by 2009 2008 country and between members Board of Board of of the Board of Directors, the Directors Other Directors Other Remuneration payable to the Board has been paid to CEO and other employees and CEO employees and CEO employees Chairman of the Board 900 430 Other members 910 760 PARENT COMPANY 1,810 1,190 Sweden 4,644 13,289 4,851 10,339 Total for parent company 4,644 13,289 4,851 10,339 Salaries and other remuneration have been paid to CEO Per Åkerberg 2,097 - SUBSIDIARIES of which variable component 500 - Sweden 5,508 207,865 6,798 207,005 of which impacting on the year 500 - Germany 818 2,698 1,489 2,997 Former CEO Åsa Landén Ericsson 737 1,665 Japan 2,067 1,722 1,437 1,691 Former CEO Johan Wall - 1,996 France 0 10,650 951 11,779 of which variable component - 7 United Kingdom 1,281 3,866 2,128 4,631 of which impacting on the year - 7 USA 1,170 64,193 1,639 74,626 Romania 2,195 17,260 722 10,007 Pension agreements Israel 888 392 0 875 CEO Per Åkerberg 246 - Total for subsidiaries 13,927 308,646 15,164 313,611 Former CEO Åsa Landén Ericsson 188 333 Total, Group 18,571 321,935 20,015 323,950 Former CEO Johan Wall - 798

Remuneration to the Board of Salaries and other remuneration have been paid to 9,161 9,419 Director CEO and other senior other senior executives, 6 people (5 people) executives 2009 2008 of which variable component 2,207 2,256 PARENT COMPANY Sick leave, % Salaries and other remuneration 8,377 7,131 of which variable component 1,210 33 PARENT COMPANY 4.0 5.0 Pensions1 881 1,475 Number of persons 11 7 Men 2.0 2.3 Women 6.4 7.6 SUBSIDIARIES Salaries and other remuneration 17,097 18,423 Up to age 29 – – of which variable component 4,183 5,001 30-49 year(s) 4.6 6.2 Pensions 2,119 2,161 Age 50 and above 3.2 –

Number of personnel 15 15 Sick leave of at least 60 days as a % of total sick leave 47.4 49.7 1. Including variable remuneration converted to pension.

REMUNERATION PRINCIPLES 5 Emoluments and costs for the auditors The Annual General Meeting decides on fees for the Board. Remuneration to the CEO is decided upon by the Chairman of the Board and members appointed by the committee Audit assignments refer to the reviewing of the annual report, the accounts and the according to proposals by the remuneration committee. Guidelines on remuneration for administration by the Board of Directors and Managing Director. Auditing assignments also senior executives are laid down by the Annual General Meeting. For the Group executive, include what the company’s auditor is required to perform, advise on or other contribu- market conditions are applied to salaries and other employment conditions. In addition to tions resulting from observations made during this auditing work or while carrying out fixed annual salary, the Group executive also receive a variable salary which is capped and these assignments. All other work comes under other assignments. based on earnings performance compared with set targets. Remuneration to certain leading officials within the Enea Group may also be paid in the form of share-based payments. 2009 2008 For more information, see note 20. GROUP PricewaterhouseCoopers PENSION AGREEMENTS Auditing engagement 999 725 The CEO’s pension agreement means that his pension premiums will amount to a set Other engagements 227 2 093 percentage of his set salary. Other senior executives in Sweden have pension contracts within the scope of the ITP scheme, with a pensionable age of 65, and pension provisions Other auditors are related to employees’ salaries. Pension premiums are paid regularly. For more informa- Auditing engagement 426 131 tion, see note 20. Other engagements 333 819 1,985 3,768 SEVERANCE PAY If the CEO’s employment is terminated, the company shall observe a notice period of six 2009 2008 months, and the CEO a notice period of six months. In addition, severance pay will be paid which is equivalent to six months’ set salary if the Board terminates the employment. If PARENT COMPANY ownership conditions change such that there are new majority owners in the company, the CEO will be entitled to severance pay equal to six months’ salary. All termination PricewaterhouseCoopers salaries and severance pay will be settled against any other income from service. For other Auditing engagement 890 725 senior executives, a notice period of three to twelve months will be applied. Other engagements 227 2,093

Other auditors Auditing engagement 0 0 Other engagements 19 0 1,136 2,818

ENEA – Annual report 2009 43 6 Operating expenses, by cost type 9 Taxes

2009 2008 2009 2008

Consumables and subconsultants 147,196 220,388 GROUP Other external costs 86,378 90,742 Current tax expense Payroll expenses 499,966 510,166 Tax expense for period –3,714 –13,643 Depreciations and writedowns 48,297 23,235 –3,714 –13,643 781,837 844,531 Deferred tax - tax income in loss carryforwards capitalized during the 7,141 27,275 year - tax expense in loss carryforwards utilized during the year –422 –5,604 - tax expense/income relating to temporary differences 2,022 –699 7 Leasing fees related to operating leases 8,741 20,972 Operational leasing relates mainly to cars and rents on Total tax expense recognized, Group 5,027 7,329 premises. 2009 2008 Reconciliation of effective tax GROUP GROUP Leasing charges, current year 17,874 21,753 Contractually agreed future minimum leasing Profit before tax -847 80,986 14,269 19,426 fees within 1 year Flat rate tax 26.3% 223 –22,676 Contractually agreed future minimum leasing 50,109 64,484 fees within 2-5 years Tax effect of PARENT COMPANY - other tax rates in foreign subsidiaries 468 –457 Leasing charges, current year 8,505 8,229 - utilization of previously capitalized loss carryforwards 1,308 3,420 Contractually agreed future minimum leasing - utilization of previously non-capitalized loss carryforwards 0 5,658 8,950 8,300 fees within 1 year - valuation of future loss carryforwards in foreign Contractually agreed future minimum leasing 7,141 27,275 35,601 33,200 companies fees within 2-5 years - non-deductible costs –8,220 –9,934 - non-taxable income 4,048 9,511 Adjustment of tax for previous years 59 –5,468 8 Net financial items Total tax expense recognized, Group 5,027 7,329 593 % 9 %

2009 2008 2009 2008 GROUP Interest income 2,,092 5,226 PARENT COMPANY Currency gains 11,183 6,817 Current tax Financial income 13,275 12,043 Tax for the period 2,868 –1,118 2,868 –1,118 Interest expenses –682 –540 Currency losses –9,314 –3,574 PARENT COMPANY Financial expenses –9,996 –4,114 Profit before tax -11,526 –16,093 Tax 26.3% 3,031 4,506 Net financial items 3,279 7,929 Tax effect of PARENT COMPANY - non-deductible costs –95 –160 Dividend, shares and participations in subsidiaries 0 0 - non-taxable income 0 5 Writedown, shares and participations 0 0 Adjustment of tax for previous years -69 –5,469 in Group companies Income from participations in Group companies 0 0 Total tax recognized, parent company –2,868 –1,118 25 % 7 % Interest income, other 626 2,496 Interest income, Group companies 14,793 15,568 Currency gains 751 179 GROUP Interest income and similar income items 16,170 18,143 The following components are included in deferred Interest expenses, other –371 –399 tax receivables and tax liabilities Interest expenses, Group companies –387 –289 Deferred tax receivables: Currency losses –391 –44 - loss carryforwards 27,187 22,237 Interest expenses and similar expense items –1,149 –732 - temporary differences on intangible assets 950 953 Total deferred tax receivables 28,137 23,190 Net financial items 15,021 17,411 Deferred tax liabilities: - temporary differences on intangible assets 4,658 6,949 Total deferred tax liabilities 4,658 6,949

Non-capitalized deferred tax receivables for unutilized deficits amount to SEK 2.7 million of which SEK 1,7 million concern England and SEK 1,0 million Sweden. Deferred tax in the USA had a positive effect on tax of SEK 21.3 million in 2008.

44 ENEA – Annual report 2009 10 Intangible assets impairment TESTS FOR CASH-GENERATING UNITS CONTAINING GOODWILL Capitalized Other in- Cash-generating units consist of the business areas Software and Consulting. These impair- development tang.fixed ment tests are based on calculations of the utility value, and these calculations have been 2008 Goodwill costs assets Total done in the same way for both units. These calculations are based on estimated future cash flows on the basis of financial budgets that have been approved by management and GROUP that cover a five-year period. Cash flows beyond the five-year period have been forecast Accumulated acquisition value with long-term stable growth of 2% terminal value, as it is known. Enea has carried out a Opening balance, 1 Jan 2008 111,230 80,787 4,040, 196,057 susceptibility analysis of important assumptions in which the executive have found that no reasonable changes to these assumptions will result in writedown as at 31 December Acquisition for the year 64,833 27,567 18,865 111,265 2009. The cash flows forecast have been based on annual income growth for Software of Translation difference for the year 5,787 0 0, 5,787 5%, and 3% for Consulting. Cost development for Software has been forecast at 4%, and Closing balance as at 31 Dec 2008 181,850 108,354 22,905 313,109 2% for Consulting. The forecast cash flows have been assessed at current value with a discount interest rate of 10% and 12% before tax for Software and Consulting respectively. Accumulated depreciations and writedowns The terminal value is calculated at 2%. The assumptions which are important in the busi- Opening balance, 1 Jan 2008 0 –20,344 –573 –20,917 ness plan are described in the following list: Acquisition for the year 0 –2,795 0 –2,795 Depreciation for the year 0 –13,164 –2,750 –15,914 VariabLE Assumed value Closing balance as at 31 Dec 2008 0 –36,303 –3,323 –39,626 Income growth Cost 3–5 % Recognized value as Cost trend 2–4 % 181,850 72,051 19,582 273,483 at 31 Dec 2008 Interest rate 10-12 % Terminal value 2% 2009

GROUP 11 Equipment, tools, fixtures and fittings Accumulated acquisition value Opening balance, 1 Jan 2009 181,850 108,354 22,905, 313,109 Group Parent Company Acquisition for the year 1,109 9,267 2,087 12,463 2009 2008 2009 2008 Translation difference for the year -8,321 0 0, -8,321 Closing balance as at 31 Dec 2009 174,638 117,621 24,992 317,251 Accumulated acquisition value At start of year 87,800 75,174 20,806 20,284 Accumulated depreciations and writedowns Acquisition for the year 4,696 17,233 2,211 3,557 Opening balance, 1 Jan 2009 0 –36,303 –3,323 –39,626 Divestments/scrapping –8,596 –8,522 –199 –3,035 Acquisition for the year 0 0 0 0 Translation difference for the year -1,961 3,915 0 0 Depreciations and writedowns for 0 –36,543 –3,869 -40,412 81,939 87,800 22,818 20,806 the year Closing balance as at 31 Dec 2009 0 –72,846 –7,192 –80,038 Accumulated depreciation according to plan: Recognized value as at 31 Dec 2009 174,638 44,775 17,800 237,213 At start of year –66,374 –59,921 –13,672 –13,832 Acquisition for the year 0 –3,084 0 0 Divestments/scrapping 8,393 7,519 168 3,020 Depreciation for the year according to plan –8,701 –7,289 –3,316 –2,860 Other intangible fixed assets 2009 2008 Translation difference for the year 1,827 –3,599 0 0 PARENT COMPANY –64,855 –66,374 –16,820 –13,672 Accumulated acquisition value Opening balance 1 Jan 5,680 3,915 Recognized value at year-end 17,084 21,426 5,998 7,134 Acquisition for the year 1,068 1,765 Depreciations are attributable to the cost of sold goods and services, sales and marke- Divestments/scrapping -488 0 ting expenses, production development expenses and administration expenses. Closing balance, 31 Dec 6,260 5,680

Opening balance 1 Jan –1,450 –531 12 Accounts receivable Depreciation for the year –1,225 –919 Divestments/scrapping 152 0 As at 31 December 2009, accounts receivable amounted to SEK 223,221 thousand Closing balance, 31 Dec –2,523 –1,450 (285,681). Accounts receivable where there is a need for writedown comply with provision for bad debts. The age distribution of accounts receivable is shown below: Recognized value as at 31 Dec 3,737 4,230 Goodwill is attributable to the cash-generating units below. Age analysis, accounts receivable 2009 2008 GROUP 2009 2008 Not due 189,855 250,248 Due 1-60 days 29,302 28,753 Enea Software - software business 90,744 96,490 Due 61-90 days 1,599 0 Enea Consulting - consultancy business 83,894 85,360 Due 90 days- 2,465 6,680 174,638 181,850 Total 223,221 285,681 Capitalized development expenses within Enea Software relate primarily to internal work on development of new products. Over the first quarter of 2009, a non-recurring writedown of SEK 25 million took place. The depreciation time for capitalized development expenses is five years, and for other intangible assets three to five years.

ENEA – Annual report 2009 45 13 Prepaid expenses and accrued income NON-RESTRICTED EQUITY Share premium reserve 2009 2008 When shares are issued at a premium, i.e. more is paid for the shares than the shares’ GROUP nominal amount, an amount equal to the amount received in excess of the nominal value of the shares shall go to the share premium reserve. Prepaid expenses 15,070 16,636 Accrued income 4,857 13,353 Retained earnings 19,927 29,989 Is made up of the previous year’s non-restricted equity after any provisions to the statutory reserve and after any distribution of profits has been paid. Together with profit for the year, PARENT COMPANY this constitutes total non-restricted equity, i.e. the amount available for distribution to Prepaid insurance 1 69 shareholders. Prepaid rents 2,049 2,077 See also Summary of changes in consolidated equity on page 9 and Summary of changes Other prepaid expenses 3,801 3,201 in parent company’s equity on page 11. Accrued income 14 482 5,865 5,829

15 Earnings per share 14 Shareholders’ equity 2009 2008

GROUP Earnings per share before dilution Share capital Profit for the year after tax 4,181 88,315 Average number of shares, thousands 17,482 18,018 As at 31 December 2009, the registered share capital covered 18,355,714 common shares with a nominal value of SEK 1.00. Holders of common shares are entitled to a dividend Earnings per share before dilution, SEK 0,24 4,90 which is determined, and the shareholding provides entitlement to a right to vote at the Annual General Meeting, one vote per share. The company has purchased 536,270 (40,833) Earnings per share after dilution of its own shares over the year. 1:20 consolidation of shares took place in 2008. Profit for the year after tax 4,181 88,315 Average number of shares, thousands 17,482 18,018 Other capital contributions Earnings per share after dilution, SEK 0.24 4.90 Refers to shareholders’ equity contributed by the owners. This includes share premium reserves transferred to a statutory reserve as at 31 December 2005. Provisions for the share In accordance with a decision made at the 2008 Annual General Meeting, an option pro- premium reserve from 1 January 2006 and onwards are also recognized as contributed gram was assumed for employees of Enea Embedded Technology Inc. equivalent to 37,500 capital. share options following the 1:20 consolidation of shares that took place in 2008. A subscription entitlement provides entitlement to subscribe for shares at a rate of SEK ReserveS 48.80. This program will run from 2008 to 2011. In accordance with a decision made at the 2007 Annual General Meeting, an option pro- Translation reserve gram was assumed for employees of Enea Embedded Technology Inc. equivalent to 75,000 The translation reserve comprises all exchange rate differences arising when translation share options following the 1:20 consolidation of shares that took place in 2008. of net assets from foreign companies which have prepared their financial reports in a A subscription entitlement provides entitlement to subscribe for shares at a rate of SEK currency different to the currency in which the Group’s financial reports are presented. The 77.50. This program will run from 2007 to 2010. parent company and Group present their financial reports in Swedish kronor. In accordance with a decision made at the 2006 Annual General Meeting, an option 2009 2008 program was assumed for employees of Enea Embedded Technology Inc. equivalent to 100,000 share options following the 1:20 consolidation of shares. A subscription entitle- Opening translation reserve 15,193 –11,730 ment provides entitlement to subscribe for shares at a rate of SEK 69.50. This program will run from 2006 to 2009. Translation difference for the year -15,332 26,923 Closing translation reserve -139 15,193 The average number of shares has fallen by the average number of own shares and has been weighted in relation to the time they have been outstanding. As at 31 December 2009, the option programs did not give rise to dilution. Retained earnings including profit for the year Earnings in the parent company and its subsidiaries are included in retained earnings including profit for the year. Earlier provisions made to a statutory reserve, excluding transferred share premium reserves, are included in this equity item. 16 Accrued expenses and prepaid income Over the period 19 November 2007 to 10 December 2009, the parent company bought back 874,153 shares on the Nasdaq OMX Nordic Exchange in Stockholm at an average 2009 2008 stock exchange price of SEK 42.68. A total of SEK 37,308 thousand was paid for the shares, which has reduced the retained earnings. These shares are held as own shares and were GROUP fully paid up as at 31 December 2009. Support income 12,252 18,348 Accrued payroll expenses 40,294, 48,249 PARENT COMPANY Other 27,023 39,414 79,569 106,011 Statutory reserve The purpose of the statutory reserve is to retain a part of the net profit which is not allo- PARENT COMPANY cated to cover balanced losses. Accrued payroll expenses 5,413 3,712 Other 820 725 6,233 4,437

46 ENEA – Annual report 2009 17 Group companies 18 Cash flow statement

Holdings in subsidiaries Country Holding, % CASH AND CASH EQUIVALENTS The subcomponents included in cash and cash equivalents are cash, bank and special Enea Services Stockholm AB Sweden 100 deposits or commercial papers which have an insignificant risk of value fluctuations and Enea Services Öresund AB Sweden 100 which can easily be converted into cash and cash equivalents and have a maturity of no Enea Services Linköping AB Sweden 100 more than three months from the time of acquisition. QiValue Technologies AB Sweden 100 Enea Services Västerås AB Sweden 100 Group Parent Company Enea Software AB Sweden 100 Information on interest rates 2009 2008 2009 2008 Enea Zealcore AB Sweden 100 Enea TekSci Inc USA 100 Interest received over the period 2,088 5,226 627 2,496 Enea Embedded Technology Inc USA 100 amounts to Enea GmbH Germany 100 Interest paid over the period amounts to –682 –540 –371 –399 Enea S.A.R.L France 100 Enea Netbricks SAS France 100 Adjustment for items not included Enea Software (Beijing) Co. , Ltd. China 100 in cash flow Enea KK Japan 100 Depreciations and writedowns 48,298 23,236 4,541 3,779 Enea UK Ltd United Kingdom 100 Employee stock option program 475 309 475 309 Enea Polyhedra Ltd United Kingdom 100 Provisions 0 0 -4,443 4,443 Enea Romania SRL Romania 100 Exchange rate differences, net 0 376 0 0 Enea Netbricks Ltd Israel 100 Total 48,773 23,921 573 8,531

Parent Company 2009 2008 19 Related parties Accumulated acquisition value Opening balance, 1 January 391,130 391,130 CLOSE ASSOCIATIONS Closing balance, 31 December 391,130 391,130 The parent company has close associations with its subsidiaries (see note 17) and senior Accumulated writedowns executives (see note 4). Opening balance, 1 January List of close transactions Writedowns for the year 0 0 GROUP Closing balance, 31 December –158,596 –158,596 Purchase of Sales of goods/ goods and Liabilities to Receivables Recognized value at year-end 232,534 232,534 services to services from associated from associa- associated associated parties on ted parties Close association Year parties parties 31 Dec on 31 Dec Specification of parent Recognized value company’s holdings of shares Number Share Key people in in subsidiaries of participations of shares % 2009 2008 senior posts 2009 – – – – Key people in Subsidiary/co. reg. no./reg. office senior posts 2008 – – – – Enea Software AB, Other associated 556183-3012, Kista 5,900 100 172,034 172,034 2009 – – – – Enea Services Öresund AB, parties Other associated 556586-3494, Kista 5,000 100 60,500 60,500 2008 – – – – parties Enea Services Västerås AB, 556545-4161, Stockholm 1,000 100 0 0 232,534 232,534 List of close transactions PARENT COMPANY Purchase of Sales of goods/ goods and Liabilities to Receivables services to services from associated from associa- associated associated parties ted parties Close association Year parties parties on 31 Dec on 31 Dec

Subsidiaries 2009 32,438 1,589 111,199 15,551 Subsidiaries 2008 28,242 1,654 124,060 344,073

Key people in senior posts 2009 – – – – Key people in senior posts 2008 – – – –

Other associated 2009 – – – – parties Other associated 2008 – – – – parties

Transactions with associated parties are priced in accordance with market conditions. For information on remuneration to key persons in senior positions, see note 4, Employees and payroll expenses, and note 20, Pensions, share-related remuneration, benefits to senior executives.

ENEA – Annual report 2009 47 20 Pensions, share-related remuneration, benefits to Payroll expenses for share-related remuneration senior executives Group 2009 2008

DEFINED CONTRIBUTION PLANS Option program Enea Embedded Technology Inc 475 307 The methods for calculating pension expenses and pension liabilities differ from country to country. The companies report in accordance with local rules, and the reported figures are consolidated in the consolidated accounts. All pension solutions in foreign companies are REMUNERATION TO SENIOR EXECUTIVES classified and reported as defined contribution plans, which means that the Group’s profit Principles is burdened with pension expenses as the benefits were earned. Salaried staff employed in Sweden are covered by the ITP scheme, reported as defined contribution pension The AGM decides on annual fees for the Board Chairman and Board members. Employee plans. Commitments for retirement pensions and family pensions for salaried employees representatives do not receive Board remuneration. Remuneration to the CEO is decided in Sweden are secured through an insurance policy with Alecta. According to a statement upon by the Chairman of the Board and members appointed by the committee according to from the Swedish Financial Reporting Board’s Emerging Issues Task Force, URA 42, this is proposals by the remuneration committee. a defined benefit plan which covers several employers. For the 2009 financial year, the Guidelines on remuneration for senior executives are laid down by the Annual General company has not had access to such information that would make it possible to recognize Meeting. For the Group executive, market conditions are applied to salaries and other this plan as a defined benefit pension plan, which is why it is being recognized as a defined employment conditions. Besides a set annual salary, the Group executive also receive a vari- contribution plan. This plan is being financed on an ongoing basis through pension insu- able salary which is capped and based on earnings performance compared with set targets. rance. Charges to Collectum for pension insurance for the year amount to SEK 10,841 (9,654) Remuneration to certain leading officials within the Enea Group may also be paid in the form thousand. The surplus can be distributed to the policyholders and/or the insured persons. of share-based payments. Alecta’s surplus in the form of the collective funding level amounted to 141% (112%) at the end of 2009. Collective funding is the market value of Alecta’s assets as a percentage of Pension agreements insurance commitments, calculated in accordance with Alecta’s calculation assumptions for The CEO’s pension agreement means that his pension premiums will amount to a set insurance purposes, which do not comply with IAS 19. percentage of his set salary. Other senior executives in Sweden have pension contracts within the scope of the ITP scheme, with a pensionable age of 65, and pension provisions are related to employees’ salaries. The ITP scheme is, by its nature, mainly a defined benefit Group Parent company plan. The ITP scheme is insured through Alecta. Pension premiums are paid regularly. 2009 2008 2009 2008 Severance pay Cost of defined contribution plans 39,315 35,239 1,965 2,591 If the CEO’s employment is terminated, the company shall observe a notice period of six months, and the CEO a notice period of six months. In addition, severance pay will be paid SHARE-BASED PAYMENTS which is equivalent to six months’ set salary if the Board terminates the employment. If ownership conditions change such that there are new majority owners in the company, the In accordance with a decision made at the 2006 Annual General Meeting, an option CEO will be entitled to severance pay equal to six months’ salary. All termination salaries and program was assumed for employees of Enea Embedded Technology Inc. equivalent to severance pay will be settled against any other income from service. For other senior execu- 100,000 share options following the 1:20 merger of shares. A subscription entitlement pro- tives, a notice period of three to twelve months will be applied. vides entitlement to subscribe for shares in Enea AB at a rate of SEK 69.50 when employed at the time of the exercise period. Contractual maturity 3.3 years. This allocation has taken place free of charge. Remuneration and other benefits, 2008 In accordance with a decision made at the 2007 Annual General Meeting, an option Perfor- program was assumed for employees of Enea Embedded Technology Inc. equivalent to Basic salary/ mance- Other Pension 75,000 share options following the 1:20 merger of shares. A subscription entitlement pro- directors’ fees related pay benefits expense Total vides entitlement to subscribe for shares in Enea AB at a rate of SEK 77.50 when employed at the time of the exercise period. Contractual maturity 3.3 years. This allocation has taken Chairman Staffan Ahlberg 430 430 place free of charge. In accordance with a decision made at the 2008 Annual General Meeting, an option Board member Åsa Landén Ericsson 0 0 program was assumed for employees of Enea Embedded Technology Inc. equivalent Board member Gösta Lemne 160 160 to 37,500 share options following the 1:20 merger of shares that took place in 2008. A Board member Jon Risfelt 210 210 subscription entitlement provides entitlement to subscribe for shares in Enea AB at a rate Board member Kjell Duveblad 170 170 of SEK 48.80 when employed at the time of the exercise period. Contractual maturity 3.3 Board member Anders Skarin 220 220 years. No allocation has taken place as at 31 December 2009. CEO Åsa Landén Ericsson 1,665 333 1,998 Former CEO Johan Wall 1,996 7 36 798 2,837 Option program maturing in 2009 2009 2008 Other senior executives (5) 6,948 2,256 215 1,616 11,035 Total 11,799 2,263 251 2,747 17,060 Outstanding options at start of period 67,950 100,000 Allocated over period 0 0 Remuneration and other benefits, 2009 Forfeited over period –850 –32,050 Perfor- Outstanding at end of period 67,100 67,950 Basic salary/ mance- Other Pension directors’ fees related pay benefits expense Total Option program maturing in 2010 2009 2008 Chairman Anders Lidbeck 900 900 Outstanding options at start of period 46,034 ,65,250 Board member Åsa Landén Ericsson 160 160 Allocated over period 0 0 Board member Gösta Lemne 160 160 Forfeited over period –4,200 –19,216 Board member Jon Risfelt 190 190 Outstanding at end of period 41,834 46,034 Board member Kjell Duveblad 180 180 Board member Anders Skarin 220 220 CEO Per Åkerberg 1,538 500 59 246 2,343 Option program maturing in 2011 2009 2008 Former CEO Åsa Landén Ericsson 737 0 0 188 925 Other senior executives (6) 6,732 2,207 220 1,295 10,454 Outstanding options at start of period 0 0 Total 10,817 2,707 279 1,729 15,532 Allocated over period 0 0 Forfeited over period 0 0 People included in the group of other senior executives have varied over the year. Until Outstanding at end of period 0 0 Per Åkerberg was appointed CEO, his remuneration was included in the Other senior executives group. The Other senior executives group includes consultancy fees of SEK 1,653 (1,073) thousand.

48 ENEA – Annual report 2009 21 Translation Exposure IMPORTANT ASSESSMENTS ON APPLICATION OF THE GROUP’S ACCOUNTING POLICIES Enea’s foreign subsidiaries are translated to Swedish kronor in accordance with the current method. This means that the balance sheet is translated according to the rate on the The corporate executive has discussed with the audit committee the development of, balance sheet date, and the income statement in accordance with the average rate for the choice of and information on the Group’s important accounting policies and estimates, period. plus the application of the same. Some important account-related estimates made on application of the Group’s accounting policies are described below. Rates used for the Group’s significant currencies are shown in the table below. Rate on balance sheet date Average rate IMPORTANT SOURCES OF UNCERTAINTY IN Currency 2009 2008 2009 2008 ESTIMATES EUR 10.35 10.94 10.62 9.61 Impairment testing of goodwill USD 7.21 7.75 7.65 6.58 When calculating the recoverable amount of cash-generating units for assessment of any GBP 11.49 11.25 11.93 12.09 necessary impairment of goodwill, a number of assumptions have been made on future JPY 0.082 0.086 0.078 0.064 conditions and estimates of parameters. Enea has carried out a susceptibility analysis of RON 2.43 2.74 2.43 2.74 important assumptions in which the executive have found that no reasonable changes CNY 1.06 - 1.12 - to these assumptions will result in impairment as at 31 December 2009. A report on these can be found in note 10. ILS 1.88 2.05 1.88 2.05 When converting foreign subsidiaries’ balance sheets to Swedish kronor, the Group is Impairment testing of capitalized development expenses exposed to currency exchange rate fluctuations. The effect on equity in 2009 on translation When calculating the recoverable amount of cash-generating units for assessment of any of foreign subsidiaries’ accounts to Swedish kronor amounted to SEK -15,322 thousand necessary impairment for capitalized development expenses, a number of assumptions (26,923). The Group’s exposure in equity to currency exchange rate fluctuations was as have been made on future conditions and estimates of parameters. Enea has carried out follows on the balance sheet date: a susceptibility analysis of important assumptions in which the executive have found that Translated to SEK no reasonable changes to these assumptions will result in impairment as at 31 December Currency Amount according to rate on balance sheet date 2009.

USD 11,696 84,357 EUR 820 8,489 RON 6,544 15,888 23 Contingent liabilities GBP 229 2,630 The group has no pledged assets or contingent liabilities. JPY 28,281 2,219 The parent company has issued capital coverage guarantees which guarantee coverage of ILS 752 1,416 equity in Group companies. CNY 204 216

24 Long-term liabilities

22 Critical accounting estimates and assumptions 2009 2008 Estimates and assumptions are evaluated on a running basis and are based on historical experience and other factors, including expectations of future events which are considered Not regulated price, Netbrick SAS 12,646 11,269 reasonable under prevailing conditions. Not regulated price, IP Devel SRL 14,649 13,213 27,295 24,482

Definitions

MARGINS Proportion of risk-bearing Shareholder’s equity and deferred tax liabilities in relation to Operating margin Operating profit in relation to net sales. balance sheet total capital. Profit margin Profit after financial items in relation to net sales. DATA PER SHARE RETURN Earnings per share Profit for the year in relation to average number of shares. Return on equity Profit for the year in relation to average equity. Net asset value per share Net asset value, equivalent to equity in relation to total Return on capital employed Operating profit plus financial income in relation to average number of outstanding shares. capital employed. Dividend per share Actual dividend for current financial year divided by the number of shares on the balance sheet date. CAPITAL STRUCTURE Cash flow from current Cash flow from current operations in relation to average Equity ratio Shareholder’s equity including minority interest in relation to number of shares operations per share. the balance sheet total. Liquidity Cash and cash equivalents, short-term investments and Interest cover ratio Profit after financial items plus financial expenses in relation current receivables in relation to current liabilities. to financial expenses. Capital employed Balance sheet total minus non interest-bearing liabilities OTHER inclusive deferred tax liabilities. Average capital employed Net sales per employee Net sales in relation to average number of employees. has been calculated as opening plus closing capital employed divided by two.

ENEA – Annual report 2009 49 Board declaration

The Board and CEO certify that the principles of consolidation have been parent company provides a true and fair overview of the development of the prepared in accordance with the International Financial Reporting Standards business, financial position and results of the Group and the parent company (IFRS) as adopted by the EU and the Swedish Annual Accounts Act and pro- and describes significant risks and [un]certainty factors which affect the vide a true and fair picture of the financial position and result of the Group. parent company and the companies forming the Group. The Report of the Directors for the Group and the

Stockholm 10 March 2010 Enea AB (556209-7146)

Anders Lidbeck Åsa Landén Ericsson Kjell Duveblad Gösta Lemne Chairman of the Board Board member Board member Board member

Jon Risfelt Anders Skarin Anders Dahlenborg Mattias Östholm Board member Board member Board member Board member employee representative employee representative

The Annual Report and consolidated accounts, have, as specified above, been approved for publication by the Board of Directors on 10 March 2010. The consolidated income statement and balance sheet and the parent company’s income statement and balance sheet will be subject to ratification at the Annual General Meeting on 19 April 2010.

Our auditor´s report was submitted on 11 March, 2010 PricewaterhouseCoopers AB

Michael Bengtsson Authorized Public Accountant

50 ENEA – Annual report 2009 Auditor’s report

To the Annual General Meeting of Enea AB Co. reg. no. 556209-7146

We have audited the annual accounts, the consolidated ac- opinion concerning discharge from liability, we examined signi- counts, the accounting records and the administration of the ficant decisions, actions taken and circumstances of the com- board of directors and the managing director of Enea AB for the pany in order to be able to determine the liability, if any, to the year 2009. (The company’s annual accounts and consolidated company of any Board member or the CEO. We also examined accounts are included in the printed version of this document whether any Board member or the Managing Director has, in on pages 24-49.)* The Board of Directors and the Managing Di- any other way, acted in contravention of the Swedish Compa- rector are responsible for these accounts and the administration nies Act, the Swedish Annual Accounts Act or the Articles of As- of the company as well as for the application of the Swedish An- sociation. We believe that our audit provides a reasonable basis nual Accounts Act when preparing the annual accounts and the for our opinion set out below. application of International Financial Reporting Standards IFRS The annual accounts have been prepared in accordance with as adopted by the EU and the Swedish Annual Accounts Act the Swedish Annual Accounts Act and give a true and fair view when preparing the consolidated accounts. Our responsibility is of the company’s financial position and results of operations to express an opinion on the annual accounts, the consolidated in accordance with generally accepted accounting principles accounts and the administration based on our audit. in Sweden. The consolidated accounts have been prepared in We conducted our audit in accordance with generally accep- accordance with International Financial Reporting Standards ted auditing standards in Sweden. Those standards require that (IFRS) as adopted by the EU and the Swedish Annual Accounts we plan and perform the audit to obtain reasonable assurance Act, and give a true and fair view of the Group’s financial position that the annual accounts and the consolidated accounts are and results of operations. The Directors’ Report is in accordance free of material misstatement. An audit includes examining, on with the annual accounts and other parts of the consolidated a test basis, evidence supporting the amounts and disclosures financial statements. in the accounts. An audit also includes assessing the accounting We recommend that the Annual General Meeting adopt the principles used and their application by the Board of Directors income statements and balance sheets for the parent company and the President and CEO and significant estimates made by and the report on total profit and balance sheet for the Group, the Board of Directors and the President and CEO when pre- appropriate the profit of the parent company in accordance paring the annual accounts and consolidated accounts as well with the proposal in the Directors’ Report and discharge the as evaluating the overall presentation of information in the an- members of the Board and CEO from liability for the financial nual accounts and the consolidated accounts. As a basis for our year.

Stockholm, 11 March 2010 PricewaterhouseCoopers AB

Michael Bengtsson Authorized Public Accountant

ENEA – Annual report 2009 51 Five-year review

Income statement, SEK millions 2009 2008 2007 2006 2005 Net sales 777.7 917.6 820.6 750.1 726.2 Operating expenses -781.8 -844.5 -748.5 -682.5 -669.8 Operating income -4.1 73.1 72.1 67.6 56.4 Net financial items 3.3 7.9 4.8 1.7 4.4 Profit before tax -0.8 81.0 76.9 69.3 60.8 Tax 5.0 7.3 -5.7 -20.9 8.5 Profit for the year 4.2 88.3 71.2 48.4 69.3

Balance sheet, SEK millions Intangible assets 237.2 273.5 175.1 132.6 108.5 Other fixed assets 46.7 46.0 24.9 15.5 30.8 Trade and other current assets 258.8 325.4 268.3 265.5 185.6 Cash and cash equivalents 153.9 122.1 156.0 146.4 178.4 Total assets 696.6 767.0 624.3 560.0 503.0

Shareholders’ equity 516.0 548.4 434.6 379.4 339.2 Provisions, long-term liabilities and minority interests 32.0 31.5 8.9 0.2 0.8 Current liabilities 148.6 187.1 180.8 180.4 163.0 Total shareholders’ equity and liabilities 696.6 767.0 624.3 560.0 503.0

Cash flow Cash flow from current operations before changes in working capital 41.4 92.9 90.2 77.7 63.2 Cash flow from change in working capital 29.0 -11.1 -23.8 -72.1 -11.7 Cash flow from current operations 70.4 81.8 66.4 5.6 51.5

Cash flow from investing activities -13.2 -121.6 -42.7 -34.6 -13.0 Cash flow from financing activities -21.8 -1.8 -12.8 0.5 - Cash flow for the year 35.4 -41.6 10.9 -28.6 38.5

Key figures Operating margin, % -0.5 8.0 8.8 9.0 7.8 Profit margin, % -0.1 8.8 9.4 9.2 8.4 Return on capital employed, % 1.7 17.3 19.5 20.0 20.7 Return on equity, % 0.8 18.0 17.5 13.5 23.0 Capital employed, SEK millions 516.0 548.4 434.6 379.5 340.0 Return on total capital, % 1.3 12.2 13.4 13.5 12.6 Interest coverage ratio, times 0.9 20.7 30.1 29.2 37.9 Equity ratio, % 74 71 70 68 67 Liquidity, % 278 239 235 228 223 Share of risk-bearing capital, % 75 72 70 68 67 Average number of employees 666 688 547 501 509 Number of employees at year-end 633 732 567 513 508 Net sales per employee 1,168 1,334 1,500 1,497 1,427 Net asset value per share 29.52 30.43 23.71 20.83 18.62 Earnings per share 0.24 4.90 3.88 2.66 3.81 Cash flow from current operations per average number of shares 4.02 4.54 3.62 0.30 2.83 Dividend per share* 1.50 0 0 0 0 *If the Annual General Meeting makes a decision in accordance with the proposal of the board.

52 ENEA – Annual report 2009 Corporate governance report

Enea AB (publ) is listed on the Nasdaq OMX Nordic of the Board shall contact the four biggest shareholders in terms Exchange in Stockholm. Corporate Governance of number of votes at the end of the third quarter of 2009 to ask within the Enea Group is based on Swedish law and them to appoint one member each for the nomination com- the rules and recommendations published by rele- mittee. If any of the four biggest shareholders in terms of votes vant organizations such as the Swedish Corporate declines to appoint a representative on the election committee, Governance Board, Nasdaq OMX, and Equity Mar- the next shareholder in order of size must be given the opportu- ket Committee. Enea is covered as of 1 July 2008 nity to appoint such a representative. The names of nomination by the Swedish Code for Corporate Governance committee members shall be published in the company’s inte- and applies it without exception. This description rim report for the first three quarters of the year. The mandate has been compiled in accordance with the Swedish period for the nomination committee appointed shall continue Code for Corporate Governance. Steering, ma- until a new nomination committee has taken over. A represen- nagement and control of Enea is shared among tative of the shareholders should be appointed chairman of the shareholders at the Annual General Meeting, the nomination committee. Board and the CEO in accordance with the Swedish If any significant change takes place to the ownership struc- Companies Act and the Articles of Association. ture once the nomination committee has been inaugurated, the composition of the nomination committee shall be amended in Annual General Meeting accordance with the principles above. The Annual General Meeting of Enea AB (publ) 2009 took place on 26 March 2009 in Kista. Besides the Annual General Meeting’s The nomination committee shall prepare and submit motions: decision to ratify the income statement and balance sheet for • to the Chairman at the coming Annual General Meeting, the company and the Group and the fact that no dividend • for election of a Chairman and other company directors, was issued for 2008, the Meeting decided to discharge Board • for Board fees divided among the Chairman and other mem- members and the CEO from liability, elected Board members bers of the Board, along with principles for any payment for and an auditor, and approved fees for the Board and auditors committee work, and guidelines for senior executives. Kjell Duveblad, Åsa Landén • for election of and payment to an auditor and deputy audi- Ericsson, Gösta Lemne, Jon Risfelt and Anders Skarin were re- tor (where appropriate), and elected as regular Board members at the Annual General Mee- • for decisions on principles for the appointment of a nomi- ting. Anders Lidbeck was elected as a new Board member and nation committee. Chairman of the Board. In addition, the Board was authorized to make decisions on acquisitions and the transfer of own shares The nomination committee for the 2010 Annual General Mee- corresponding to no more than 10% of all shares in the com- ting comprises Chairman Per Lindberg (biggest shareholder pany, plus the new issue of shares for share or business acquisi- in Enea), Sverre Bergland (DnB Nor), Anders Ljungqvist (AMF), tions corresponding to an increase of no more than 10% of the Robert Andersson (Infläktor Fastighets AB) and Chairman of the share capital. Board Anders Lidbeck. The complete minutes from the Annual General Meeting, together with the Meeting’s decision data, can be viewed at www. Board work enea. com/omenea/investorrelations/bolagstyrning. The Board shall manage the company’s interests and the interest of all shareholders. The tasks of the Board include approving Nomination committee business targets and strategy, appointing, evaluating and - whe- The Annual General Meeting shall appoint members of the no- re necessary - dismissing the CEO, ensuring that effective sys- mination committee or indicate how these members are to be tems are in place for following up and checking the company’s appointed. Enea’s nomination committee for the 2010 Annual operations, ensuring that there is satisfactory control over the General Meeting shall comprise representatives of four major company’s compliance with laws and other rules applicable to shareholders plus the Chairman of the Board, and the Chairman the company’s operations, ensuring that the requisite ethical

ENEA – Annual report 2009 53 guidelines are approved for the company’s conduct, and ensur- Board work. This must be reported separately. ing that the company’s provision of information is characterized Besides regular Board work, some members are also mem- by openness and is correct, relevant and reliable. bers of the company’s audit committee and remuneration com- The Enea Board comprises six members elected by the An- mittee. nual General Meeting and two members and one deputy elected by the staff organizations. The CEO participates in every Board independence Board meeting and reports on the company’s business situa- All members were to be considered independent in respect of tion, future prospects, financial position and events of essential the company and the corporate executive and in respect of ma- significance, as well as the budget and action plan for the co- jor shareholders in the company. ming business year. Other officers of the company also take part in Board meetings, presenting reports when necessary. The CEO Director Gösta Lemne represents Enea’s biggest customer. does not participate in the parts of Board meetings which deal with the relationship between the CEO and the company, and For information on Board members and the CEO, see pages 57 the work of the CEO is evaluated at least once a year. and 58. The company’s auditor reports every year to the Board his observations from the review and his assessment of the company’s Audit committee internal accounting control. The audit committee is a committee for the Board which in The guidelines for Board work are based on the procedures 2009 comprised Anders Skarin (Chairman), Anders Lidbeck and which regulate the distribution of work between the Board, the Jon Risfelt. Enea’s Director of Finance and the company’s external Chairman and the CEO, and indicate which matters are to be auditor are co-opted to the meetings, which are normally held discussed at Ordinary General Meetings. The Board’s agenda is once a quarter. The work of the audit committee is reported to approved each year at the inaugural Board meeting immedia- the Board. tely following the Annual General Meeting and is adjusted as The audit committee shall stand responsible for preparation of required. the Board’s work on quality assurance of the company’s financial Besides the tasks already stated, the agenda includes appro- reporting, inform itself of the direction and scope of the audit, val of the Board’s meeting agenda, an instruction for the CEO, and discuss coordination between the external and internal a decision-making structure within the company, the relevant audit and the view of the company’s risks, approve guidelines division of work and an information arrangement between the concerning which services other than the audit that the com- company and the Board. pany may procure from the company’s auditor, evaluate the In 2009, the Enea Group’s strategy and business operations, audit initiative and notify the company’s nomination commit- regular follow-up and forecasts, decisions on cutback programs tee of the evaluation, and assist the nomination committee with of SEK 50 million in the Software business area, a new organiza- producing proposals for auditors and remuneration. The audit tional structure with Software and Consulting as two indepen- committee had four meetings in 2009. The formulation of the dent business areas, and the buyback of own shares. The recruit- company’s interim reports, product and customer profitability, ment of a CEO/President and Director of Finance have also been risk management, capital immobilization, finance-related issues discussed. The work of the Board was evaluated at the end of and internal review were the main topics discussed. the year. The Board held nine meetings in 2009. The Group’s auditor reports his findings from the audit to the The Board will be paid fees of SEK 1,350,000, to be distributed entire Board each year when the annual accounts are compiled. among the Chairman of the Board (SEK 380,000) and to other In addition, the Board meets the company’s auditor at least once members appointed by the meeting (SEK 160,000 each), as well a year – without the presence of the corporate executive – in or- as SEK 170,000 to be divided among Board members according der to find out information on the focus and scope of the audit, to their efforts and participation in committee work. In addition, and also to discuss coordination between the external audit and it was approved that the Board should appropriate SEK 500,000 the internal review and views of the company’s risks. for use for extraordinary initiatives over and above their regular The term of office for the company’s firm of auditors, Pricewa-

54 ENEA – Annual report 2009 terhouseCoopers AB, with Michael Bengtsson auditing, expires relating to financial reporting. at the 2011 Annual General Meeting. For information on the audit fee, see note 5. Review environment Enea’s objective is to meet the requirements for ongoing work Remuneration committee with risk and internal review which follow on from Enea app- The overall responsibilities of the Board cannot be delegated, lying the Swedish Code for Corporate Governance. At Enea, but the Board has established a remuneration committee tas- internal review of financial reporting is an integral part of cor- ked with preparing issues relating to salaries, remuneration and porate governance. It includes processes and methods in order other terms of employment for the CEO and other members to assure Group assets and correctness in financial reporting, of the corporate executive. Reporting takes place to the Board and through this aims to protect the owners’ investment in the on an ongoing basis. In 2009, Board members Anders Lidbeck company. (Chairman) and Kjell Duveblad made up the remuneration com- The Board monitors the quality of financial reporting in a num- mittee. ber of ways. The Board approves an agenda each year which - The agenda for the remuneration committee is approved an- among other things - regulates the tasks of the Chairman and nually by the Board. Examples of issues which the remuneration CEO. According to these instructions, the CEO is responsible for committee prepares for the Board include scope, terms and reviewing and ensuring the quality of all financial reporting, and distribution of general option and bonus programs according for making sure that the Board in general receives the reports to proposals from the CEO, the CEO’s contract of employment required to allow the Board to assess the financial position of including salary, pension benefits, allocation in option and bo- the Group on an ongoing basis. The instructions for the CEO nus programs and similar, and remuneration to other senior state the issues on which the CEO is permitted to exercise his executives according to proposals from the CEO. In addition authorization to represent the company, but only once the to tasks recurring yearly, such as the distribution of Board fees Board has given its authorization or approval for this. and remuneration to senior executives, remuneration to the At an inaugural Board meeting following the Annual Gene- CEO who was appointed in March 2009 and remuneration to ral Meeting, the Enea Board approves an agenda for the Board, the CFO who was appointed in September 2009 have also been audit committee, remuneration committee, and acquisition dealt with in 2009. The remuneration committee is convened as committee. In addition, the instructions for the CEO, attestation required and reports on its work to the Board. The remuneration instruction and instruction for trading the company’s shares are committee had three meetings in 2009. approved. Below is an attendance list showing all Board members. Enea’s CEO and Group executive hold operational responsibility for the internal review. Based on the Board’s guidelines Remuneration and laws and rules relating to financial reporting, the executive Attendance Board meetings Audit Committee committee has approved the division of roles and responsibilities for em- Anders Lidbeck 7/9* 3/4* 3/3 ployees working with financial reporting within the Group. The Jon Risfelt 9/9 4/4 Anders Skarin 9/9 4/4 Group is divided into units, for which each respective manager Åsa Landén Ericsson 9/9 is responsible for compliance with targets and budgets for his Kjell Duveblad 8/9 3/3 Gösta Lemne 9/9 or her unit. Enea’s organizational structure is communicated on the Group’s intranet so that roles and responsibilities are clear to * Elected at the Annual General Meeting on 26 March 2009. everyone working with financial information. At Enea, there are instructions for the CEOs of the subsidiaries Internal review and risk management relating to which are based on the principles which apply to the CEO of financial reporting Enea AB. Enea also has a number of policies available to staff According to the Swedish Companies Act and the Swedish via the intranet which control work at Enea and which create a Code for Corporate Governance, the Board is responsible for foundation for good internal review, including a finance policy, internal review. This description is restricted to internal review attestation policy, IT policy, insider policy and communications

ENEA – Annual report 2009 55 policy. The Group also has an accounting and reporting manual Review activities which contains instructions on the Group’s accounting poli- Every business area at Enea is followed up every month by the cies, reporting instructions and a schedule in order to ensure relevant executive and controller. Results are compared with that consistent, correct accounting information is provided in a earlier results and budgets for all units. Enea’s Group executive, timely manner. These guidelines are followed up and updated which meets around twice a month, follows up financial results regularly, as well as being communicated to all employees wor- and targets every month, and where necessary follows up me- king directly or indirectly with financial reporting. Enea’s Group asures deemed to be necessary for good internal review. An accounts are compiled in an IT-based, standardized Group ac- aggregated report is sent to the Board every month. If neces- counting system which reduces the risk of errors and facilitates sary, more precise follow-up is carried out; e.g. in the form of follow-up of financial reporting. audits of subsidiaries which are carried out by controllers. In 2009, Enea’s auditors carried out a general review in con- Risk assessment nection with the financial report for the third quarter and sub- The objective of Enea’s risk assessment is to secure the Group’s mitted their review report in the interim report for the period profit development and financial position. The Board ofDi- 1 January - 30 September 2009 and a review of the annual ac- rectors at Enea AB approves principles and guidelines for risk counts, the company’s auditor submitting his audit report in the management at Enea, and the CEO and Group executive hold company’s annual report for 2009. operational responsibility. Regular risk assessments are carried Given Enea’s size, with similar operations within the Group’s out within the scope of Enea’s monthly financial follow-ups by business areas, the Board has not deemed it feasible to have a the managers of each respective unit, the executive team and separate internal audit function. The internal review described the controller, measures being implemented as required. above is deemed sufficient to be able to assure the quality of the financial reporting.

This corporate governance report has not been reviewed by the company’s auditors.

56 ENEA – Annual report 2009 Board of Directors

Anders Dahlenborg Jon Risfelt Born in 1967. Born in 1961. Employee representative of SI since 2006. Board member since 2003. Education: Master of Engineering, Computer Science. Education: Master of Engineering, Other Board assignments: - Chemical Technology. Work experience: Several years of experience as a support Other Board assignments: Chairman of the Board for Ortivus AB, engineer and in technical sales support at Enea. Mawell OY and C3 Technologies AB. Board member at Bilia AB, Primary occupation: Group manager, Enea Research & TeliaSonera AB and ÅF AB, plus KaroBio AB. Advisor to Capman Development. and GAC. Shares: 2700. Primary occupation: Board work and advisory roles Shares: 4,000. Åsa Landén Ericsson Born in 1965. Anders Lidbeck Board member since 2003. Born in 1962. Education: Master of Engineering and MBA. Chairman of the Board since 2009. Education: B.Sc. (Econ.). Other Board assignments: Board member at Rejlerkoncernen AB. Other Board assignments: Chairman for Creandum AB, Board Primary occupation: CEO, PointerSweden AB. Shares: 2,500. member at Scalado AB and Vizrt Ltd. Primary occupation: Board assignments. Anders Skarin Shares: 35,000 (through endownment assurance) Born in 1948. Board member since 2005. Mattias Östholm Education: Fil.kand. Born in 1970. Other Board assignments: Chairman of Cambio Healthcare Sys- Employee representative for the Union since 2005. tems AB, PocketMobile Communications AB and Sörman Informa- Education: Engineering (college level). tion AB. Board member at Acando AB, Entraction Holding AB and Primary occupation: Senior consultant, Enea Services Stockholm. WSP Europé AB. Shares: 0. Primary occupation: Management consulting and board work. Shares: 15,000. Gösta Lemne Born in 1956. Kjell Duveblad Board member since 2003. Born in 1954. Education: Master of Engineering. Board member since 2008. Primary occupation: VP R&D Operations, Education: B.Sc. (Econ.). Stockholm School of Economics. Networking business area, Ericsson. Other Board assignments: Chairman of the Board at Remium Shares: 2,000. Fondkommission, Energo Retea Group and Madeo Sourcing Group. Board member for Bure Equity, Nuport, Teleopti, 3L System, Financial Systems FS and Softone. Primary occupation: Consultant. Shares: 10,000. * Holdings are specified inclusive of affiliates and companies. This information relates to holdings as at 31 December 2009.

ENEA – Annual report 2009 57 Executive

Håkan Rippe, Senior Vice President, Corporate Development and Senior Vice President Nordic Consulting Mathias Båth, Senior Vice President, Marketing Born: 1968. Born: 1963. Employed since 2009. Employed since 2001. Education: Master of Engineering, Chalmers Gothenburg. Education: Business administration (college level), Uppsala gymnasium. Former positions: Business Development Executive at IBM Rational Soft- Former positions: Head of Nordic Market Area at Enea Software, Business ware, Executive Vice President Corporate Development at Telelogic. Area Manager at Nocom AB. Number of shares: Shares: 35,000 (through endownment assurance) Number of shares: 0.

Gregory Singh, Senior Vice President, Global Services Adrian Leufvén, Senior Vice President, Born: 1958. Research & Development Employed since 2007. Born: 1972. Education: Computer Technology, Stockholm University. Employed since 1998. Former positions: President of ipUnplugged, president of CYage Dan- Education: Master of Engineering in Mechatronics, Royal Institute of mark, SVP & CTO at Cygate AB, president of Cygate Sverige, president of Technology, Stockholm. CMA. Former positions: VP Strategic Outsourcing at Enea, VP Support at Enea, Number of shares: 0. VP Marketing at Enea, Director Asian Sales at Enea. Number of shares: 9,560. * Gregory Singh left ENEA in February 2010. Lars Kevsjö, CFO Per Åkerberg, President and CEO Born: 1958. Born in 1966. Employed since 2009. Employed since 2004. Education: Bachelor in Business Administration, Stockholm University. Education: Bachelor in Business Administration, Sundsvall University. Former positions: Chief Financial Officer at Net Insight, Chief Former positions: Senior Vice President for Telelogic Central Europe and Financial Officer at Bewator, Chief Financial Officer at Cygate, Scandinavia, Vice President for Telelogic North America, Head of Sales at Director of Finance at Telia Telecom. Telia Megacom AB. Number of shares: 0. Number of shares: 2,500.

Catharina Paulcén, Vice President, Corporate Communications Born: 1973. Employed since 2009. Education: international business administration, Universities of Lund and Mannheim. Former positions: Branding at IBM Nordics, Director of Marketing at IBM Rational Software, Executive Vice President Marketing & Communications at Telelogic. Number of shares: 12,000. * Holdings are specified inclusive of affiliates and companies. This information relates to holdings as at 31 December 2009.

58 ENEA – Annual report 2009 Annual General Meeting Dividends The Annual General Meeting will be held at 18:00 CET on 19 Given Enea’s strong cash flow and good financial position, the April 2010 at Enea’s premises at Skalholtsgatan 9, Kista. Share- Board has proposed to the Annual General Meeting a dividend holders wishing to participate at the AGM must be entered in of SEK 1.50 per share (last year SEK 0 per share). the register of shareholders kept by Euroclear Sweden AB (name changed from VPC AB) no later than 13 April 2010. Participants must also register with Enea AB by 17:00 CET on Future reporting, 2010 13 April 2010 at the latest. Registrations are submitted by post Interim report Jan-Mar 28 April to Enea AB (publ), Box 1033, 164 21 Kista, by telephone on +46 Interim report Apr-Jun 22 July (0) 8 507 144 85, or by e-mail to [email protected]. Regist- Interim report Jul-Sep 28 October rations must include name, personal ID number or company registration number, shareholding, address, telephone numbers All financial information is published on the Enea website: and information on any assistant. www.enea.com

Financial reports can also be ordered from Enea AB, Box 1033, 164 21 Kista, or by e-mail: [email protected]

This document is essentially a translation of Swedish language original thereof. In the event of any discrepancies between this translation and the original Swedish document the latter shall be deemed correct

Addresses

Sweden Phoenix Germany Aix-en-Provence 25 South Arizona Place Aix Métropole Bâtiment D, Stockholm Suite 305 Schlosserstrasse 4 RdC Gauche Box 1033 Chandler, AZ 85225 80336 München Allée de Beaumanoir Skalholtsgatan 9 Phone +1 480 753 92 00 Phone +49 0 89 544 676 – 0 30, Avenue Malacrida 164 21 Kista F-13100 Aix-en-Provence Phone +46 8 507 140 00 Japan United Phone +33 04 429 144 70 Linköping 1-4-2 Kanda Ogawa-machi Kingdom Teknikringen 8 Chiyoda-ku Charlton Barn Israel 583 30 Linköping Tokyo 101-0052 Lower Charlton Trading 11 Beit Hadfus Street Phone +46 13 465 58 00 Phone +81 3 520 761 67 Estate (Building Lev Hagiva) Shepton Mallet. Somerset Jerusalem 95483 Öresund China GB-BA4 5QE Phone +972 2 995 12 53 Box 702 Phone +44 01844 27 69 80 Emdalavägen 8 Shanghai Romania 220 07 Lund Room 1203, Silver Tower France Phone +46 46 540 96 00 No.218 South XiZang Road 319c Splaiul Independentei Shanghai 200021 Paris Bucharest 6 USA Phone +86 21 633 434 06 Immeuble Le Vancouver Phone +40 21 305 15 00 15, Avenue du Hoggar Boston Beijing ZA Courtaboeuf 1, Les Ulis Nashua Office Park RM1706, Block A, Reward F-91969 Courtaboeuf Cedex One Tara Blvd, Ste 404 Building Phone +33 01 769 158 20 Nashua, NH 03062 No. 203, 2nd Section of Phone +1 603 888 75 75 WangJing LiZe ZhongYuan ChaoYang District Beijing 100102 Phone +86 10 643 983 90

Enea®, Enea OSE®, Netbricks®, Polyhedra® and Zealcore® are registered trademarks of Enea AB and its subsidiaries. Enea OSE®ck, Enea OSE® Epsilon, Enea® Element, Enea® Optima, Enea® Optima Log Analyzer, Enea® Black Box Recorder, Enea® LINX, Enea® Accelerator, Polyhedra® Flashlite, Enea® dSPEED Platform, Enea® System Manager, Accelerating Network Convergence™, Device Software Optimized™ and Embedded for Leaders™ are unregistered trademarks of Enea AB. All rights reserved. © 2009 Enea AB.

ENEA – Annual report 2009 59