Annual Report 2016 DIGITALISATION of the INDUSTRIES of TOMORROW a COMPLETE TECHNOLOGY PARTNER for EMBEDDED and IOT SOLUTIONS

Annual Report 2016 DIGITALISATION OF THE INDUSTRIES OF TOMORROW A COMPLETE TECHNOLOGY PARTNER FOR EMBEDDED AND IOT SOLUTIONS

IoT / Digitalisation

Security

CoConnectitiviv ty

Software & APPs

Embeddede Solutions R&D Services

2 DATA RESPONS ASA | ANNUAL REPORT 2016 A COMPLETE TECHNOLOGY PARTNER FOR EMBEDDED AND IOT SOLUTIONS

IoT / Digitalisation

Security

CoConnectitiviv ty

Software & APPs CONTENTS

04 BOARD OF DIRECTORS’ REPORT 10 The Board of Directors

12 INVESTOR INFORMATION 14 Key figures

16 FINANCIAL STATEMENTS AND NOTES 18 Income statement 19 Statement of comprehensive income Embeddede 20 Statement of financial position Solutions R&D Services 22 Statement on changes in equity 24 Statement of cash flows 25 Notes 58 Auditor’s report 61 Definitons

DATA RESPONS ASA | ANNUAL REPORT 2016 3 CHAPTER 1: BOARD OF DIRECTORS’ REPORT

Board of Directors’ Report

STATEMENT ON THE ANNUAL FINANCIAL STATEMENTS In accordance with the Norwegian Accounting Act § 3.3a the board confirms that the company fulfils the requirements necessary to operate as a going concern, and the 2016 financial state- REVENUE BY REPORTING SEGMENT ments have been prepared on the basis of this assumption. Data Respons ASA is a publicly listed company and have prepared the consolidated financial statements for the Data Respons NOK million 2016 2015 group for the financial year 2016 in accordance with IFRS (International Financial Reporting Standards) as adopted by the European Union. R&D Services 558.3 406.8 Solutions 484.2 559.3 Income statement The report includes comparisons with figures for the same period in 2015 (in parenthesis). Eliminations -2.9 -2.6

Operating revenue for 2016 was NOK 1 040 million (964), a growth of 8 %. EBITDA was NOK Group 1 039.6 963.6 74.4 million (58.5). In 2016, Data Respons has expensed NOK 5.4 million in transaction cost in relation to the acquisition of MicroDoc. The order intake for 2016 totalled NOK 1 129 million (941), a growth of 20 %. The order backlog ended on NOK 781 million (690). Data Respons had a cash flow from operating activities of NOK 79.4 million (49.4).

The revenue growth was driven by a strong performance in the international operations, which KEY FIGURES has improved both the scalability and profitability in the company. Sweden strengthened its position as the largest geographical region in the company with 53 % of total revenue in 2016, NOK million 2016 2015 while 25 % of the total revenue came from Norway. In the fourth quarter, Germany accounted for 21 % of the revenue in Data Respons. Operating revenue 1 039.6 963.6

Data Respons continues to leverage on its leading position in offering customers access to EBITDA 74.4 58.5 highly skilled specialists, project teams and smarter solutions with a broad range of expertise NOCF 79.4 49.4 from future oriented technologies like automation, IoT, digitalisation and different embedded disciplines. Order backlog 781 690 Order Intake 1 129 941 Balance sheet, liquidity & cash flow Employees 500 404 The company’s book value of total assets at the end of the fourth quarter was NOK 786 million. The company’s equity was NOK 283 million, resulting in an equity ratio of 36 %. Current assets

4 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 1: BOARD OF DIRECTORS’ REPORT

Data Respons’ position within industrial digitalisation, embedded and IoT gave record results in 2016 amounted to NOK 339 million and current liabilities were NOK 296 mil- Insurance, Automotive, Defence, Maritime, Energy and Telecommunica- lion. At December 31, 2016, the non-current assets amounted to NOK tions. Data Respons ASA is listed on the Oslo Stock Exchange (Ticker: 447 million, of which deferred tax assets of NOK 11 million and other DAT), and is part of the information technology index. The company has intangible assets including goodwill was NOK 425 million. offices in Norway, Sweden, Denmark, Germany and Taiwan.

The company’s cash flow from operations in 2016 was NOK 79.4 million (49.4). The cash balance on December 31, 2016 was NOK 63 million (of BUSINESS SEGMENTS which NOK 5 million is restricted) and the company had interest bearing debt of NOK 95 million. Strong cash flow from operations has contrib- R&D Services uted to a solid financial position at December 31, 2016. Revenue for 2016 was NOK 558 million (407), a growth of 37 %. EBITDA before corporate costs was NOK 59.1 million (30.9). The order intake for 2016 totalled NOK 621 million (403). The order backlog ended on NOK Financial risk 201 million (144). Management of financial risk is performed by the group’s central finance department under the guidelines set out by the Board of Directors. The The segment experienced strong growth and profitability in R&D Services main principle is to minimise exposure to financial risk and reduce the in 2016, due to an increasing customer base, high utilisation and good probability for financial losses. The financial risks to which the group’s fi- inflow of new assignments and turnkey R&D projects. The unique compe- nancial assets and financial liabilities are exposed are market risk, credit tence base in the embedded, digitalisation and IoT technologies provides risk and liquidity risk. The market risk the group is exposed to is the risk increasing opportunities going forward. that the fair value of future cash flows of its financial instruments – such as the interest bearing loan denominated in EUR and that is at variable Data Respons continues to leverage on its leading position in offering cus- interest rates – fluctuate because of changes in foreign currency or in- tomers access to highly skilled specialists and project teams with a broad terest rates. range of expertise from future oriented technologies like automation, IoT, digitalisation and different embedded solution disciplines. A strong The group’s exposure to credit risk relates to its financial assets – such competence platform is strategically important in order to develop new as amounts owed by customers and deposits held at banks – and is recurring solution customers and to stand out as a complete solutions the risk that the counterparty defaults and does not meet its financial provider in the market. obligation to the group. Liquidity risk is the risk that the group will not be able to meet its current and future cash flow and collateral require- In September 2016, Data Respons acquired 100 % of the shares in Mi- ments without negatively and materially affecting the group’s daily op- croDoc Computersysteme GmbH, a SW technology company in Germany erations or overall financial condition and the potential for expansion. with headquarters in Munich. The company has more than 50 specialists For further details on financial risk management, see Note 20. in SW development, Java and system design as well as SW solutions for IoT, mobile/network infrastructure and embedded applications. Operations Data Respons is a full-service, independent technology company and a Solutions leading player in the IoT and the embedded solutions market. We pro- Revenue for 2016 was NOK 484 million (559), a decline of 13 %. EBITDA vide R&D services and embedded solutions to OEM companies, system before corporate costs was NOK 31.3 million (37.2). The order intake for integrators and vertical product suppliers in a range of market segments 2016 totalled NOK 508 million (538). The order backlog ended on NOK such as Medical, Industry/Automation, Smart grid/Smart home, Banking/ 581 million (546).

Revenue EBITDA NOCF Order backlog 1 040 74.4 79.4 781

Q4 2014 - Q4 2016

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 SOLUTIONS R&D SERVICES

DATA RESPONS ASA | ANNUAL REPORT 2016 5 CHAPTER 1: BOARD OF DIRECTORS’ REPORT

The decline in revenues in Solutions was mainly due to the weak market and more than 30 years of experience have given the company relevant conditions in the Maritime, Oil & Gas industry and associated sectors, vertical competence within these markets. following the trend from earlier of the year. Several cost-reducing initiatives have been implemented in Solutions in 2016, which has compen- The customer list includes world-leading companies such as ABB, Ana- sated the impact on profitability from declined revenues. Although the logic, Assa Abloy, Bombardier, Cisco, Ericsson, Hexagon, Hydro, Klarna, market situation is not expected to change in the near term, there are Kongsberg Group, Maquet, National Oilwell Varco, Raytheon, Rolls Royce, some early signs that the market will bottom out during 2017. Saab, Scania, Schlumberger, Siemens, Statoil, TDC, Tomra, Thales, Thermo Fisher Scientific and Volvo. The number of blue-chip customers is increas- During the year, the growth internationally and the strong decline in ing and the company expects this trend to continue going forward. Norway has led to a change in the customer mix towards new customers in other sectors than the Maritime, Oil & Gas industry and to There is a large business potential in industrial IoT and the digital trans- other geographical markets. The order intake follows the same pattern formation of our key markets such as Automotive, Smart grid/Smart as the revenue, with positive development internationally while the home, Banking/Insurance, Telecom, Defence, Maritime, Medical and In- Norwegian region still is weak. Major orders came from key custom- dustry/Automation. The trend with increased automation, digitalisation ers in Telecom, Transportation, Defence and Industry & Automation. and everything connected (IoT) fit well with both of the company’s busi- The pipeline of larger solution contracts in the industrial IoT area has ness units and competence map. We can develop anything from sensor increased during the quarter. level to the mobile app, making us a good partner for our customers with their digital transition. Data Respons is positioned as the leading provider of smart devices, embedded and industrial IoT solutions in the Nordic region. The com- Automotive projects like connected car, digital transition of car pany has a strong and increasing base of recurring solution customers infotainment systems and telematics solutions Smart grid / Smart home solutions and has a solid order backlog. Solution deliveries secure long-term and Digital ship and maritime IoT applications strategically important customer relationships and provide a significant Digital transition of Banking/Insurance infrastructure and systems potential for future growth. In order to meet the continued demand Advanced security and communication systems for defence applica- for increased SW content, connectivity, higher performance and more tions functionality, many of our customers focus on strategic partnerships. Projects of transforming telecommunication, mobile structure and connectivity platform towards full IoT accessibility Our customers can get access to specialist competence, shorter time- Game changing data acquisition sensor systems to improve ef- to-market and achieve a lower cost of ownership by using the Data Re- ficiency of oil exploration spons model. Future Medtech applications with IoT solution capabilities and a complete digital SW platform The long-term profitability is expected to improve based on a compe- Software-heavy cloud infrastructure systems Software components and solutions for IoT applications tence oriented and focused business model. This includes strategic re- SW end-to-end systems and digital transition of existing industrial lationships with customers in main markets, higher SW content, more products and installations value add services and global partners. Based on feedback from our customers and partners, the company expects a growing market for IoT devices, automation and robotics, ad- CORPORATE vanced communication solutions, connected and integrated systems Corporate activities mainly relate to corporate services, management and the use of consumer-based technologies (mobility, digitalisation). and group finance. The segment reported an operating loss of NOK -16 In addition, there is a growing demand for cost-effective and robust so- million (-10) in 2016. Included in 2016, is NOK 5.4 million in transaction lutions for demanding environmental conditions, areas in which Data cost in relation to the acquisition of MicroDoc. The revenues of NOK 8 Respons has strong competence and experience. million (8) are related to a charge of corporate management fees. The internal revenues generated in the corporate segment is eliminated in the consolidated income statement with corresponding eliminations of GEOGRAPHIC REGIONS operating expenses. Data Respons is located in the Nordics, Germany and Taiwan. Our business model is based on close cooperation with our customers and understanding their business needs. To facilitate close cooperation, Data MARKET DEVELOPMENT Respons believes in having regional offices with skilled engineering staff Data Respons has a solid and well-balanced customer base within sev- (specialist level) in important industrial clusters to build strategic and eral industry sectors, based upon our strong competence within IoT, long-term relationships with our key customers. digitalisation and embedded technologies. Our geographical footprint

Dividend per share EPS REVENUE BY INDUSTRY 1.00 0.95 Transport / Automotive 25 % Telecom 14 %

Public 3 % Finance & Media 6 % Industry / Other 1 % Automation 17 % Defence & Security 11 %

Oil Medical

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Maritime 5 %Services 9 % 8 % 6 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 1: BOARD OF DIRECTORS’ REPORT REVENUE BY SEGMENT

Data Respons Sweden accounted for 53 % of the total revenue and was the largest market area in 2016. The strong development in revenue growth and profitability improvement continued in Sweden. With 18 % revenue growth in 2016, the market share has increased. Sweden has built a strong position in several vertical markets such as Transportation, Tel- R&D ecom, Defence, Industry and Automation, gaining the ability to win new IoT, digitalisation Services 54 % and embedded solution contracts with large customers. The company’s R&D Services seg- Solutions ment has frame agreements with more than 30 large industrial companies. 46 %

Data Respons Norway accounted for 28 % of the group’s revenue in 2016. While the company has high growth outside of Norway, the Norwegian market has been declining with 16 % in 2016, based on demanding conditions in major industries like the Maritime, Oil & Gas industry. Export-oriented customers within other sectors have had a positive development and are increasingly important going forward. The company’s focus is to improve the customer base in sectors such as IoT, Industry/Automation, Telecom, Medi- cal, Public and Defence. REVENUE BY COUNTRY Data Respons Germany continued the positive development in the fourth quarter and represents 14 % of the company’s revenue in 2016. MicroDoc is included in Data Respons Germa- ny from September 2016. Germany is the largest market in the embedded and IoT industry in Europe, estimated to 1/3 of the total European market. Sweden 52 % Data Respons Denmark represents 6 % of the company revenue. Data Respons also has Denmark a quality and technology centre in Taiwan where projects are carried out in cooperation 6 % with our Asian partners.

Germany 14 % ORGANISATION AND WORK FORCE At the end of 2016, the group had 500 employees working at 17 offices in Norway (133), Sweden (251), Denmark (10), Germany (93) and Taiwan (13). The average number of em- Norway ployees at the parent company was 5. The average number of employees in the group 28 % was 447, and there were 68 female employees in the group at the end of the year, of which 10 are in top or middle management.

In Data Respons, the practice is equal pay for work of equal value regardless of gender. Salary and terms of employment for comparable positions are the same for women and men. Recruitment, promotion and development of the employees are based on merit EMPLOYEES BY SEGMENT and equal opportunity regardless of ethnicity, colour, religion, gender, age, national ori- gin, sexual orientation, marital status and disability. Discrimination, bullying or harass- ment is not accepted at Data Respons. Employees are asked to report incidents of such behaviour to their immediate supervisor or the employee representative. R&D Services 79 % CORPORATE GOVERNANCE Data Respons’ organisation is structured and managed in accordance with the Nor- wegian Code of Practice for Corporate Governance. The Board of Directors states that Data Respons has been in compliance with the code throughout 2016. The Board of Directors’ report on corporate governance is available at the company’s website: www.datarespons.com/investors Solutions Objectives 21 % The objectives of the company is to provide products and services, own and manage stocks and shares within IT-related activities and other activities naturally connected to this. Nomination committee Data Respons has incorporated in the articles of association that the company should have a Nomination Committee. The annual general meeting elects the Nomination Committee. The EMPLOYEES BY COUNTRY committee makes proposals to the general meeting regarding the election of shareholder- elected members to the board and proposes remuneration of the Board of Directors.

The annual general meeting decides the remuneration of the Nomination Committee. The members of the Nomination Committee should be selected to take into account the inter- Sweden ests of shareholders in general and the majority of the committee should be independent 50 % Denmark 2 % of the board of directors and senior management. Germany 19 % The committee comprises three members, none of which are board members or employees at Data Respons. The committee involves shareholders, board members and the CEO in proposing candidates to the Board of Directors. Shareholders can propose candidates Taiwan 3 % through the company website.

The Nomination Committee proposes the remuneration of the directors for the com- Norway ing year to the general meeting. Proposals from the Nomination Committee are justified 27 %

DATA RESPONS ASA | ANNUAL REPORT 2016 7 CHAPTER 1: BOARD OF DIRECTORS’ REPORT

and the proposals are made available on the company’s website along The board also appoints a Compensation Committee comprising two with the invitation to the AGM. The current members of the Nomination board members. The Board’s Compensation Committee is a subcom- Committee are Bård Brath Ingerø, Lars Martin Lunde and Andreas B. Lor- mittee of the Board of Directors of Data Respons ASA and is independ- entzen. In addition, the company has an Election Board for the election ent of management. Its role is to prepare for the board’s discussions of employee representatives to the board. The Election Board comprises of questions involving compensation. The Compensation Committee is three members, which are employed at Data Respons. responsible only to the full corporate board and its authority is limited to making recommendations to the board. In 2016, there were 7 directors Board of Directors on the board, 5 of whom were elected by the general meeting and 2 of The Board of Directors is comprised in a way that it can maintain the whom were elected by the employees. In 2016, the board held a total interest of the majority of the company’s shareholders. Each board of 9 meetings. In 2016, there were 4 men and 3 women on the board. member is presented on our website: www.datarespons.com/investors, including information about age, skills and experience and share ownership in Data Respons. INTERNAL CONTROL The Board of Directors oversee the quality of Data Respons’ risk man- The composition of the Board of Directors complies with the require- agement and that the internal control functions are aligned with our ment that the Board be independent from the company management, business objectives and sufficiently takes into consideration the scope and independent from major business associates of the company. Man- and nature of the company’s operations. The Board of Directors evalu- agement is not represented on the Board of Directors. At least two of ates, at least annually, the company’s most significant risks and the the members of the board elected by shareholders are independent of related internal control measures in place. The Board of Directors over- the company’s main shareholders. sees and evaluates the company’s internal control and risk management functions related to financial reporting. The management is responsible The Chairman of the Board of Directors and other Board members are for establishing and maintaining adequate internal control of financial elected by the company’s shareholders in the general meeting. Board reporting. members are normally elected for a term of one year until the next annual general meeting. Board members are encouraged to own shares The objective of the internal control of financial reporting is to provide in the company. Page 10 of the annual report provides a detailed de- reasonable assurance regarding the reliability of financial reporting and scription of the individual members’ backgrounds, qualifications and the preparation of Data Respons’ financial statements for external re- shareholdings. The work of the board is governed by detailed rules of porting purposes in accordance with International Financial Reporting procedure. The board has an annual programme of work including spe- Standards. The Board of Directors evaluates the effectiveness of internal cific topics and fixed items such as the approval of the annual financial control of financial reporting annually. As part of the audit of the finan- statements, interim financial statements and budgets. cial statements, the external auditor reports on the effectiveness of internal controls related to financial reporting to the Audit Committee and the The board is also responsible for overall strategy and for setting long-term Board of Directors at least once every year. goals, as well as important decisions about acquisitions, establishment of new operations and major investments. The Board of Directors evaluates its performance and competence annually. A board member shall CSR not participate in the discussions or decisions of any matters that are of The group aspires to be a responsible corporation in terms of labour particular personal or financial interest to them or to any related party. standards, human rights and environmental protection. The company has implemented corporate social responsibility policies, which are pub- The board has appointed an Audit Committee that provides assistance licly available on the company website: www.datarespons.com/us/drcsr/ to the board in fulfilling their responsibility to the shareholders, potential shareholders and investment community relating to corporate account- The CSR policies are in accordance with UN Global Compact Principles ing, reporting practices of the company, and the quality and integrity of and cover governance and integrity management, anti-corruption poli- the financial reports of the company. cies, environmental protection, human rights and labour standards. CSR is an important focus for Data Respons, and several aspects of our CSR As part of this process, the external auditors participate in several meet- policy are maintained both in internal operations and through the com- ings of the Audit Committee. In carrying out its responsibilities, the Audit pany’s interactions with external stakeholders. Committee should ensure that the corporate accounting and reporting practices of the company are in accordance with all legal require- Concerning suppliers, we have included UN Global Compact 10 princi- ments and are of the highest quality. The Audit Committee comprises ples in contracts with all our major partners. Among our internal initia- two board members. tives, CSR policies and procedures are integrated into the internal audit procedures, CSR training is mandatory for new employees and the level

Declaration on the financial statements We confirm that the financial statements for the year 2016, to the best of our knowledge, have been prepared in accordance with International Financial Reporting Standards (IFRS), gives a true and fair view of the company’s and group’s consolidated assets, liabilities, financial position and results of operations, and that the annual report includes a fair review of the development, results and position of the company and group, together with a description of the most central risks and uncertainty factors facing the group.

8 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 1: BOARD OF DIRECTORS’ REPORT

of knowledge concerning company CSR policies are implemented as a with all suppliers by including questions on CSR policies and actions in standard in the annual employee survey. our supplier surveys.

A whistleblower regime that secures a potential whistleblower’s com- Safety. health & environment (SHE) plete anonymity is available for all employees. We also have questions Data Respons is not regulated by environmental licences or injunctions. on awareness of CSR policy and whistleblower systems in our internal The company does not carry out any activities with a significant nega- audit procedures. Results for several years have shown a strong aware- tive impact on the external environment. Average sick leave over the ness across the company. CSR risk analysis is integrated into the agenda course of the year was 1.8 %, and none of the group’s subsidiaries re- of the management review meetings, covering both segment and group corded work related accidents that resulted in serious personal injury or top management levels. property damage. The working environment is regarded as good, and improvement measures are implemented continuously. Employees and In 2016, Data Respons also started a new procedure for product re- management has constructive collaborations, which has a positive im- cycling design in order to minimise product life cycle environmental pact on our operations. impact. Data Respons has taken a clear position to cooperate with customers and give sincere answers to surveys and requests regarding Green Compliance and Conflict Minerals. We have contractual require- ALLOCATION OF THE RESULT FOR THE YEAR ments with our key suppliers to include Green Compliance standards Data Respons ASA achieved a profit before tax of NOK 40.9 million (25.4) such as RoHS2 (restriction of hazardous substances in electronic mate- in 2016. Profit for the year was NOK 38.0 million (17.8) and total com- rial) and REACH (registration, evaluation, authorisation and restriction prehensive income was NOK 38.0 million (17.8). The Board of Directors of chemicals). propose to distribute a dividend of NOK 1.00 per share for 2016, in total NOK 49.2 million. Following the resolution by the annual general Specific environmental goals for the group were implemented in 2014, meeting on April 27, 2017 the DAT share will be traded ex-dividend on and the goals are revised annually. When defining our goals, an impor- April 28, 2017. Taking the proposed dividend into consideration, NOK tant objective for us was to define how we could contribute to interna- 11.2 million will be transferred from other equity. Before distribution of tional environmental goals. Continuously working to reduce emissions dividends, the parent company had equity of NOK 252.7 million at De- from transportation is the best way we can contribute. Our goal of hav- cember 31, 2016. The equity in the company accounts for 46 % of total ing a minimum of 50 % of our goods, originating from Asia, to be sent assets and is considered adequate based on the extent and risk of the by either boat or train, measured by kilograms transported, has been company’s operations. actively worked for the last three years. Environmental goals also include delivery of either R&D projects or solutions to a set number of customers within green technology. The goal of 15 customers for 2016 was OUTLOOK reached and targets have been increased to 20 for 2017. The company believes that the long-term outlook for specialist consulting services, embedded solutions and the IoT market is positive. The Further environmental goals for the group include development of en- need for more intelligent and cost effective products, more mobility, in- ergy efficient products, decreasing CO2 emissions from personal travel creased automation/robotising and the digitalisation of the society are and green purchasing. We will continue to initiate environmental discus- driving forces in all our markets. Data Respons is well-positioned as a sions with our customers to investigate how we can reduce the environ- full-service, independent technology company and a leading player in mental footprint from our deliveries to the end customer, specifically the Nordics and Germany. The company has customers in a wide range how we can cooperate on reducing emissions from transportation. We of vertical industries and a balanced portfolio of blue-chip customers. will continue to place demands on our suppliers and monitor their pro- gress, and we are certain that our actions and demands will ensure a Although the market conditions are mixed, we continue to see opportu- continued responsible value chain in the future. nities in several of our key markets. Organic growth is the primary objective for Data Respons, however selective acquisitions are continuously We believe that measures undertaken throughout the year has signifi- considered in the Nordics and Germany. cantly raised the awareness and knowledge of CSR policies within the firm, as well as contributed to our major partners taking important steps Profitable growth, positive operational cash flow and a strengthened in securing a responsible complete value chain. We are continuously position in key markets are Data Respons’ main focus areas. Based on striving for a closer integration of CSR policies into our strategy, day-to- the current demand from our customers, a focused organisation and a day operations and in contact with stakeholders. Going forward, we ex- strong order backlog, the company expects growth, increased profitabil- pect improvements and have several actions planned for the immediate ity and positive cash flow from operations going forward. future. Among other initiatives, we will increase our scope to cooperate

THE BOARD OF DIRECTORS OF DATA RESPONS ASA

Høvik, March 23, 2017

Ole Jørgen Fredriksen Janne T. Morstøl Erik Langaker Ulla-Britt Fräjdin Hellqvist CHAIRMAN OF THE BOARD MEMBER OF THE BOARD MEMBER OF THE BOARD MEMBER OF THE BOARD

Narve Reiten Åsa Grübb-Weinberg Knut Skumsvoll Kenneth Ragnvaldsen MEMBER OF THE BOARD EMPLOYEE REPRESENTATIVE EMPLOYEE REPRESENTATIVE CEO

DATA RESPONS ASA | ANNUAL REPORT 2016 9 CHAPTER 1: BOARD OF DIRECTORS’ REPORT The Board of Directors

The board of Directors

Ole Jørgen Fredriksen

CHAIRMAN OF THE BOARD Number of shares/options: 225 544/0

Fredriksen (born 1950) was elected Chair- man of the Board in April 2009. Fredriksen has a Bachelor degree from the Norwegian School of Economics & Business Administration (NHH), and has held various key management positions within the computer industry. He is an independent advisor with broad experience from 10 different Board positions in stock listed companies. Fredriksen was co-founder, CEO and President of ASK ASA for 15 years.

Ulla-Britt Fräjdin-Hellqvist

MEMBER OF THE BOARD Number of shares/options: 10 000/0

Fräjdin-Hellqvist (born 1954) was elected to the Board in November 2011. She holds an MSc in En- gineering Physics from Chalmers and has held leading positions at Volvo Cars and the Swedish Con- federation of Enterprise She has extensive board experience and is currenly Chairman of the Board at Vindora Holding and Karlstad Innovation Park, board member at several public, private and state owned companies. Fräjdin-Hellqvist works as an independent contractor and partner.

Narve Reiten

MEMBER OF THE BOARD Number of shares/options: 0/0

Reiten (born 1961), was elected to the board in April 2015. Reiten founded Reiten & Co in 1992 and established the firm’s private equity investment activities in 1996. He has extensive investing and operational experience in the Nordic market. Reiten holds a Master of Business and Eco- nomics degree from the Norwegian School of Management and is a Certified Financial Analyst (CFA) from the Norwegian School of Economics and Business Administration. Reiten holds various board positions related to Reiten & Co’s private equity investments.

10 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 1: BOARD OF DIRECTORS’ REPORT The Board of Directors

Erik Langaker

MEMBER OF THE BOARD Number of shares/options: 0/0

Erik Langaker (born 1963), was a member of the board of Data Respons from November 2011 to April 2015, and was re-elected in April 2016. He has long experience from Nor- wegian and international technology and finance. He has broad experience in M&A and early commercialisation of technology. Mr. Langaker has extensive board experience from companies like StormGeo Group, GeoKnowledge, Link Mobility (listed in Norway), Talkmore (listed in Sweden) , Payex Group and Viken Fibernett.

Janne T. Morstøl

MEMBER OF THE BOARD Number of shares/options: 0/0

Morstøl (born 1968) was elected to the board in April 2015. She is the CEO at Maritech Systems, a company providing software solutions to the global seafood industry. Previously she has spent more than 20 years in the broadcast industry and has held several corporate management positions in Nevion and T-VIPS, a company she co-founded. Morstøl holds a MSc. in Electronics from NTNU and holds an MBA from the Norwegian School of Economics and Business Administration (NHH).

Åsa Grübb-Weinberg

EMPLOYEE REPRESENTATIVE Number of shares/options: 6 000/0

Grübb-Weinberg (born 1955) was elected as an employee representative in April 2010. She holds a degree in social studies from Stockholm University and has broad experience from various technology-based companies. Grübb-Weinberg has worked in Data Respons since 2006 and is currently Account Manager at the Stockholm office.

Knut Skumsvoll

EMPLOYEE REPRESENTATIVE Number of shares/options: 0/0

Skumsvoll (born 1978) was elected as an employee representative in May 2016. He holds a Master of Electronics from the University of Oslo. Skumsvoll has worked in Data Respons since 2008 and is currently Principal Development Engineer at the Høvik office.

DATA RESPONS ASA | ANNUAL REPORT 2016 11 Investor information Data Respons ASA is listed on the Oslo Stock Exchange (Ticker: DAT), and is included in the information technology index.

SHARE PRICE PERFORMANCE SHARE INFORMATION 2016 2015 2014 Highest price (NOK) 19.10 14.75 14.00 20 Lowest price (NOK) 10.65 10.30 7.46 18

16 Price at year end (NOK) 18.30 13.40 13.00 14 Market value (NOK million) 900.9 655.8 631.2 12 Dividend per share 1.00 1.00 1.00 10 JANUARY 2016 DECEMBER 2016

ANALYST COVERAGE TRADING AND TRANSACTIONS 2016 2015 2014 Number of transactions 4 593 1 914 1 399 ABG SUNDAL COLLIER Average number of transactions per day 19 7 5 Aksel Øverland Engebakken [email protected] Number of shares traded (million) 17.5 7.3 11.5

FONDSFINANS Erik Hjulström [email protected] SHAREHOLDER STRUCTURE 2016 2015 2014 HANDELSBANKEN Number of shareholders 1 121 1 029 894 Johan Dyrstad [email protected] Foreign ownership 23.0 % 10.0 % 3.3 % Number of shares owned by Data Respons SWEDBANK Number of shares outstanding 49.2 48.9 48.6 Andreas Bertheussen [email protected]

FINANCIAL CALENDAR 2017 27.04.17 Presentation of Q1 17 The principal aim of Data Respons’ IR work is to create confidence by 27.04.17 Annual General Meeting means of equal treatment of all investors in terms of access to financial information. 28.04.17 Ex Dividend Date 14.07.17 Presentation of Q2 17 All shares have equal rights and are freely transferable. Data Respons 20.10.17 Presentation of Q3 17 has one class of shares and each share carries one vote. 31.01.18 Presentation of Q4 17

12 DATA RESPONS ASA | ANNUAL REPORT 2016 Norway Oslo, Høvik, Kongsberg, Stavanger, Bergen.

Sweden Stockholm, Gothenburg, Linköping

Denmark Copenhagen

Germany Berlin, Munich, Stuttgart, Erlangen, Karlsruhe

Taiwan Taipei

Our values Being Generous Responsibility To Perform Having fun

DATA RESPONS ASA | ANNUAL REPORT 2016 13 CHAPTER 2: INVESTOR INFORMATION Key figures

KEY FIGURES

NOK 1 000 2016 2015 2014 2013 2012 INCOME STATEMENT Revenue 1 039 630 963 611 849 226 800 783 844 187 Operating expenses 965 255 905 126 791 597 750 387 808 795 EBITDA 74 375 58 485 57 629 50 397 35 390 Depreciation 3 724 3 249 3 051 3 866 4 596 Amortisation 2 213 505 101 Operating profit/loss 68 438 54 731 54 477 46 530 30 794 Profit/loss before tax and non-controlling interest 68 805 48 514 50 376 44 062 25 156 Net profit/loss after tax 53 010 46 489 40 801 31 685 12 813 FINANCIAL POSITION Total assets 786 082 514 051 460 300 477 680 428 455 Equity 282 789 305 858 288 136 291 218 255 330 Interest bearing loans and borrowings 95 332 Cash and cash equivalents 62 895 39 016 42 833 44 143 7 010 KEY FIGURES Revenue growth 7.9 % 13.5 % 6.0 % -5.1 % -0.7 % Gross margin 50.3 % 45.3 % 46.9 % 47.4 % 48.4 % EBITDA margin 7.2 % 6.1 % 6.8 % 6.3 % 4.2 % EBIT margin 6.6 % 5.7 % 6.4 % 5.8 % 3.6 % Net profit margin 5.1 % 4.8 % 4.8 % 4.0 % 1.5 % Cash flow from operations 79 440 49 413 51 450 51 762 31 902 Return on equity 18.0 % 15.7 % 14.1 % 11.6 % 5.1 % Return on total assets 10.5 % 11.2 % 11.6 % 10.3 % 7.1 % Liquidity ratio 114.5 % 151.2 % 163.5 % 163.4 % 150.5 % Equity ratio 36.0 % 59.5 % 62.6 % 61.0 % 59.6 % Working capital 34 347 64 305 62 428 68 752 78 492 KEY FIGURES FOR SHARES Earnings per share (EPS), basic (NOK) 0.95 0.87 0.78 0.61 0.27 Cash flow per share from operations (NOK) 1.62 1.01 1.06 1.07 0.66 Dividend per share (NOK) 1.00 1.00 1.00 1.00 0.25 Book equity per share (NOK) 5.74 6.25 5.93 6.01 5.29 Price / book 3.19 2.14 2.19 1.33 1.08 Number of shares as of December 31 49 228 794 48 940 794 48 553 794 48 416 794 48 284 794 Average number of shares 49 113 594 48 790 294 48 500 516 48 330 261 48 284 794 Average number share transactions per day 19 7 5 3 2 Share price as of December 31 (NOK) 18.30 13.40 13.00 8.00 5.71 Market capitalisation (NOK million) 900.9 655.8 631.2 387.3 275.7

14 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 2: INVESTOR INFORMATION Key figures

GROUP Revenue 1 040 REVENUE BY SEGMENT

KEY FIGURES

NOK million 2016 2015 R&D Services 54 % Operating revenue 1 039.6 963.6 Solutions 46 % EBITDA 74.4 58.5 Order backlog 781 690 Order Intake 1 129 941 Employees 500 404 2012 2013 2014 2015 2016

R&D SERVICES Revenue 558

KEY FIGURES

NOK million 2016 2015 R&D Services 54 % Operating revenue 558.3 406.8 EBITDA 59.1 30.9 Order backlog 201 144 Order Intake 621 403

Employees 389 258 2012 2013 2014 2015 2016

SOLUTIONS Revenue 484

KEY FIGURES NOK million 2016 2015 Solutions Operating revenue 484.2 559.3 46 % EBITDA 31.3 37.2 Order backlog 581 546 Order Intake 508 538

Employees 106 141 2012 2013 2014 2015 2016

DATA RESPONS ASA | ANNUAL REPORT 2016 15 Financial statements

Data Respons places great importance on providing up-to-date information on its activities and financial development to shareholders and other participants in the securities market.

16 DATA RESPONS ASA | ANNUAL REPORT 2016 DATA RESPONS ASA | ANNUAL REPORT 2016 17 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES Income statement

INCOME STATEMENT

GROUP DATA RESPONS ASA

NOK 1000 Note 2016 2015 2014 2016 2015 2014 Sales revenue 2 1 037 959 963 070 848 580 7 981 8 166 8 027 Net income from associated companies 4 1 671 541 646 -10 -119 Total revenue and other income 1 039 630 963 611 849 226 7 981 8 155 7 908 Cost of goods sold 516 686 526 893 450 799 Employee expenses 9, 14 379 347 315 535 282 116 10 458 8 839 9 595 Depreciation 3 3 724 3 249 3 051 1 330 880 842 Amortisation 3 2 213 505 101 99 Other operating expenses 3, 5, 21 69 222 62 698 58 682 13 486 8 895 8 475 Operating profit/loss 68 438 54 731 54 477 -17 293 -10 557 -11 004 Group contribution and dividends from 57 967 40 752 49 269 subsidiaries Other financial income 4, 15, 17 11 731 4 504 6 557 3 398 36 1 647 Other financial expenses 15, 17, 18 -11 365 -10 721 -10 657 -3 152 -4 840 -5 603 Profit/loss before tax 68 805 48 514 50 376 40 919 25 391 34 309 Income tax expense 10 -15 795 -2 025 -9 575 -2 887 -7 621 -5 490 Profit/loss for the year 53 010 46 489 40 801 38 032 17 770 28 819 PROFIT ATTRIBUTABLE TO - Equity holders of the company 46 828 42 560 37 672 - Non-controlling interest 6 182 3 929 3 129 Earnings per share, basic (NOK) 8 0.95 0.87 0.78 - - - Earnings per share, diluted (NOK) 8 0.95 0.86 0.77

18 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES Statement of comprehensive income

STATEMENT OF COMPREHENSIVE INCOME

GROUP DATA RESPONS ASA

NOK 1000 Note 2016 2015 2014 2016 2015 2014 Profit for the year 53 010 46 489 40 801 38 032 17 770 28 819 OTHER COMPREHENSIVE INCOME Items that may subsequently be reclassified to profit or loss Currency translation differences -19 467 13 427 5 399 Currency translation differences on -2 715 2 261 438 non-controlling interests Other comprehensive income -22 182 15 688 5 837 - - - Total comprehensive income 30 828 62 177 46 639 38 032 17 770 28 819 COMPREHENSIVE INCOME ATTRIBUTABLE TO - Equity holders of the company 27 361 55 987 43 072 - Non-controlling interest 3 467 6 190 3 567

DATA RESPONS ASA | ANNUAL REPORT 2016 19 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES Statement of financial position

STATEMENT OF FINANCIAL POSITION NOK 1000 Note 2011 2010 2009 2011 2010 2009

GROUP DATA RESPONS ASA NOK 1000 ASSETS Note 2016 2015 2014 2016 2015 2014 NON-CURRENT ASSETS Intangible assets 3, 5 425 127 187 761 178 823 14 134 50 Machinery and equipment 3 7 897 7 359 5 007 2 211 2 531 787 Shares in subsidiaries 4 534 222 306 333 306 333 Investments in associates 4 2 786 1 841 2 525 740 Other non-current assets 901 909 232 729 729 Deferred tax assets 10 10 627 11 174 2 759 5 549 7 701 11 957 Total non-current assets 447 338 209 044 189 346 542 725 317 428 319 866 CURRENT ASSETS Inventories 6, 13 34 677 53 093 41 896 Trade receivables 7, 13, 25 225 624 193 933 170 100 404 255 Other current receivables 7, 25 15 549 18 965 16 125 1 022 1 011 971 Cash and cash equivalents 16 62 895 39 016 42 833 388 422 -17 303 Total current assets 338 744 305 007 270 954 1 410 1 838 -16 077

Total assets 786 082 514 051 460 300 544 135 319 266 303 789

20 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES Statement of financial position

STATEMENT OF FINANCIAL POSITION

Note GROUP DATA RESPONS ASA NOK 1000 EQUITY AND LIABILITIES Note 2016 2015 2014 2016 2015 2014 EQUITY Issued capital 8 24 614 24 470 24 277 24 614 24 470 24 277 Share premium 176 166 173 952 170 427 176 166 173 952 170 427 Retained earnings 53 745 79 929 73 191 51 933 67 449 97 853 Equity attributable to equity holders 254 525 278 352 267 895 252 715 265 871 292 556 of the company Non-controlling interests 28 264 27 506 20 241 Total equity 282 789 305 858 288 136 252 715 265 871 292 556 LIABILITIES NON-CURRENT LIABILITIES Deferred tax liabilities 10 19 410 4 228 2 292 Interest-bearing loans and borrowings 17 80 641 80 641 Other non-current financial liabilities 12, 18, 19 106 798 2 280 4 179 95 307 Other non-current liabilities 556 Total non-current liabilities 207 405 6 507 6 471 175 948 - - CURRENT LIABILITIES Current interest-bearing loans and 17 14 691 14 691 borrowings Current loans from group companies 25 59 749 45 367 Trade payables 111 011 103 269 79 985 482 1 431 831 Income tax payable 10 10 167 5 940 5 820 736 3 366 6 627 Public duties payable 42 833 31 451 26 323 408 1 117 983 Other current financial liabilities 12, 18, 19 39 696 2 371 1 985 34 880 Other current liabilities 11, 13, 25 77 491 58 654 51 580 4 527 2 114 2 792 Total current liabilities 295 889 201 685 165 693 115 472 53 394 11 233 Total liabilities 503 293 208 193 172 164 291 420 53 394 11 233

Total equity and liabilities 786 082 514 051 460 300 544 135 319 266 303 789

THE BOARD OF DIRECTORS OF DATA RESPONS ASA

Høvik, March 23, 2017

Ole Jørgen Fredriksen Janne T. Morstøl Erik Langaker Ulla-Britt Fräjdin Hellqvist CHAIRMAN OF THE BOARD MEMBER OF THE BOARD MEMBER OF THE BOARD MEMBER OF THE BOARD

Narve Reiten Åsa Grübb-Weinberg Knut Skumsvoll Kenneth Ragnvaldsen MEMBER OF THE BOARD EMPLOYEE REPRESENTATIVE EMPLOYEE REPRESENTATIVE CEO

DATA RESPONS ASA | ANNUAL REPORT 2016 21 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES Statement of changes in equity

STATEMENT OF CHANGES IN EQUITY

Attributable to equity holders of the company GROUP Non- Issued Share Transltion Other Total Note contr. capital premium differences equity Equity NOK 1000 Total Interest Equity as of January 1, 2014 24 208 169 420 6 853 71 304 271 785 19 433 291 218 Profit for the year 37 672 37 672 3 129 40 801 Other comprehensive income for the year 5 399 5 399 438 5 837 Total comprehensive income for the year - - 5 399 37 672 43 072 3 567 46 639 Dividends -48 417 -48 417 -2 759 -51 176 Employee share option sheme 14 380 380 380 Issue of share capital 8 69 1 007 1 076 1 076 Equity as of December 31, 2014 24 277 170 427 12 252 60 939 267 895 20 241 288 136 Profit for the year 42 560 42 560 3 929 46 489 Other comprehensive income for the year 13 427 13 427 2 261 15 688 Total comprehensive income for the year - - 13 427 42 560 55 987 6 190 62 177 Changes in non-controlling interests 4 -1 075 -1 075 1 075 - Dividends -48 554 -48 554 -48 554 Employee share option sheme 14 380 380 380 Issue of share capital 8 194 3 525 3 719 3 719 Equity as of December 31, 2015 24 470 173 952 25 679 54 250 278 352 27 506 305 858 Profit for the year 46 828 46 828 6 182 53 010 Other comprehensive income for the year -19 467 -19 467 -2 715 -22 182 Total comprehensive income for the year - - -19 467 46 828 27 361 3 467 30 828 Capital increase from non-controlling interests 4 - 245 245 Dividends -48 941 -48 941 -2 953 -51 894 Employee share option scheme 14 -4 607 -4 607 -4 607 Issue of share capital 8 144 2 216 2 360 2 360 Equity as of December 31, 2016 24 614 176 166 6 212 47 532 254 525 28 264 282 789

22 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES Statement of changes in equity

STATEMENT OF CHANGES IN EQUITY

DATA RESPONS ASA

Issued Share Other Total Note capital premium equity Equity NOK 1000 Equity as of January 1, 2014 24 208 169 420 117 071 310 699 Profit for the year 28 819 28 819 Total comprehensive income for the year - - 28 819 28 819 Dividends -48 417 -48 417 Employee share option sheme 14 380 380 Issue of share capital 8 69 1 007 1 076 Equity as of December 31, 2014 24 277 170 427 97 853 292 556 Profit for the year 17 770 17 770 Total comprehensive income for the year - - 17 770 17 770 Dividends -48 554 -48 554 Employee share option sheme 14 380 380 Issue of share capital 8 194 3 525 3 719 Equity as of December 31, 2015 24 470 173 952 67 449 265 871 Profit for the year 38 032 38 032 Total comprehensive income for the year - - 38 032 38 032 Dividends -48 941 -48 941 Employee share option scheme 14 -4 607 -4 607 Issue of share capital 8 144 2 216 2 360 Equity as of December 31, 2016 24 614 176 166 51 933 252 715

DATA RESPONS ASA | ANNUAL REPORT 2016 23 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES Statement of cash flows

STATEMENT OF CASH FLOWS

GROUP DATA RESPONS ASA

NOK 1000 Note 2016 2015 2014 2016 2015 2014 CASH FLOW FROM OPERATING ACTIVITIES Profit before income tax 68 805 48 514 50 376 40 919 25 391 34 309 Depreciation and amortisation 3 5 937 3 754 3 153 1 330 979 842 Net income from associated companies 4 -1 671 -541 -646 10 119 Employee share option scheme 14 95 380 380 95 380 380 Finance cost - net -367 6 217 4 100 -58 213 -35 949 -45 313 Changes in working capital: - Inventories 18 416 -11 197 15 386 - Trade receivables -6 886 -23 833 10 351 404 -150 -255 - Trade payables -2 018 23 284 -9 123 -949 601 -121 - Provisions for pensions 9 729 -41 - Other accruals 7 978 12 981 -15 699 57 -4 907 -1 502 Income tax paid -10 849 -10 146 -7 557 -3 366 -6 627 Net cash flow from operating activities 79 440 49 413 51 450 -19 722 -20 272 -11 583 CASH FLOW FROM INVESTING ACTIVITIES Acquisition of subsidiaries, net of cash acquired 5,12 -92 057 -1 780 -1 800 -95 884 Dividends from subsidiaries 30 398 7 941 Group contributions received 27 570 40 752 34 534 Purchase of machinery and equipment 3 -2 189 -5 502 -1 707 -890 -2 623 -366 Interest received 15 413 363 1 186 15 36 759 Purchase of intangible assets 3 -50 -183 -50 Purchase of financial assets 4 -22 050 Proceeds from sale of financial assets 4 1 814 Payments regarding loans to subsidiaries 45 367 Other investing activities 640 579 550 Net cash flow from investing activities -93 193 -6 339 -1 821 -38 791 83 349 22 580 CASH FLOW FROM FINANCING ACTIVITIES Proceeds from borrowings 17 96 934 96 934 Net change in group internal loans 16 -45 367 Proceeds from issue of shares 8 2 405 3 719 1 076 2 360 3 719 1 076 Interest paid 15 -2 546 -973 -960 -1 554 -517 -732 Dividends paid to equity holders of the company -48 941 -48 554 -48 417 -48 941 -48 554 -48 417 Dividends paid to non-controlling interests -2 953 -2 633 Sale/purchase of treasury shares - 8 -4 702 -4 702 Share option scheme Net cash flow from financing activities 40 197 -45 808 -50 934 -1 270 -45 352 -48 073 Net change in cash and cash equivalents 26 444 -2 696 -1 305 -59 783 17 725 -37 076 Cash and cash equivalents at the start of the period 39 016 42 833 44 143 422 -17 303 19 773 Exchange gains/losses on cash and cash equivalents -2 566 -1 082 -5 Cash and cash equivalents at the end of the period 16 62 895 39 016 42 833 -59 361 422 -17 303

24 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES

GROUP DATA RESPONS ASA

NOK 1000 Note 2016 2015 2014 2016 2015 2014 CASH FLOW FROM OPERATING ACTIVITIES Profit before income tax 68 805 48 514 50 376 40 919 25 391 34 309 Depreciation and amortisation 3 5 937 3 754 3 153 1 330 979 842 Net income from associated companies 4 -1 671 -541 -646 10 119 Employee share option scheme 14 95 380 380 95 380 380 Finance cost - net -367 6 217 4 100 -58 213 -35 949 -45 313 Changes in working capital: - Inventories 18 416 -11 197 15 386 - Trade receivables -6 886 -23 833 10 351 404 -150 -255 - Trade payables -2 018 23 284 -9 123 -949 601 -121 - Provisions for pensions 9 729 -41 - Other accruals 7 978 12 981 -15 699 57 -4 907 -1 502 Income tax paid -10 849 -10 146 -7 557 -3 366 -6 627 Net cash flow from operating activities 79 440 49 413 51 450 -19 722 -20 272 -11 583 CASH FLOW FROM INVESTING ACTIVITIES Acquisition of subsidiaries, net of cash acquired 5,12 -92 057 -1 780 -1 800 -95 884 Dividends from subsidiaries 30 398 7 941 Group contributions received 27 570 40 752 34 534 Purchase of machinery and equipment 3 -2 189 -5 502 -1 707 -890 -2 623 -366 Interest received 15 413 363 1 186 15 36 759 Purchase of intangible assets 3 -50 -183 -50 Purchase of financial assets 4 -22 050 NOTES TO THE Proceeds from sale of financial assets 4 1 814 Payments regarding loans to subsidiaries 45 367 Other investing activities 640 579 550 FINANCIAL STATEMENTS Net cash flow from investing activities -93 193 -6 339 -1 821 -38 791 83 349 22 580 Notes to the CASH FLOW FROM FINANCING ACTIVITIES Proceeds from borrowings 17 96 934 96 934 Net change in group internal loans 16 -45 367 financialData Respons’ statements financial statements and Proceeds from issue of shares 8 2 405 3 719 1 076 2 360 3 719 1 076 notes for 2015 have been prepared in Interest paid 15 -2 546 -973 -960 -1 554 -517 -732 Data Respons’ financial statements and notes Dividends paid to equity holders of the company -48 941 -48 554 -48 417 -48 941 -48 554 -48 417 accordance with International Financial Dividends paid to non-controlling interests -2 953 -2 633 for 2016 have been prepared in accordance Sale/purchase of treasury shares - Reporting Standards (IFRS) as approved 8 -4 702 -4 702 Share option scheme with International Financial Reporting Standards Net cash flow from financing activities 40 197 -45 808 -50 934 -1 270 -45 352 -48 073 by the European Union. Net change in cash and cash equivalents 26 444 -2 696 -1 305 -59 783 17 725 -37 076 (IFRS) as approved by the European Union. Cash and cash equivalents at the start of the period 39 016 42 833 44 143 422 -17 303 19 773 Exchange gains/losses on cash and cash equivalents -2 566 -1 082 -5 Cash and cash equivalents at the end of the period 16 62 895 39 016 42 833 -59 361 422 -17 303

DATA RESPONS ASA | ANNUAL REPORT 2016 25 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES Notes | Note 1

NOTE 1 ACCOUNTING PRINCIPLES

GENERAL INFORMATION account for revenue arising from contracts with customers. Under IFRS Data Respons ASA is a public limited company registered in Norway. The 15, revenue is recognised at an amount that reflects the consideration company’s head office is located at Sandviksveien 26, 1363 Høvik, Nor- to which an entity expects to be entitled in exchange for transferring way. The group’s business operations are described in Note 2. These fi- goods or services to a customer. The new revenue standard will super- nancial statements for Data Respons ASA and the consolidated financial sede all current revenue recognition requirements under IFRS. Either a statements of the group have been issued in accordance with approval full retrospective application or a modified retrospective application is by the Board of Directors on March 23, 2017 and is subject to approval required for annual periods beginning on or after 1 January 2018. Early by the annual general meeting on April 27, 2017. adoption is permitted. The group plans to adopt the new standard on the required effective date using the full retrospective method. During 2016, the group performed a preliminary assessment of IFRS 15, which ACCOUNTING PRINCIPLES is subject to changes arising from a more detailed ongoing analysis. Our Data Respons’ consolidated financial statements and the company fi- preliminary conclusion is that the new standard will not materially affect nancial statements of Data Respons ASA for 2016 have been prepared in the revenue recognition in the group. Furthermore, the group is consid- accordance with International Financial Reporting Standards (IFRSs) and ering the clarifications issued by the IASB in April 2016 and will monitor the interpretations set out by the International Accounting Standards any further developments. Data Respons has revenue from products, Board, as approved by the European Union. The financial statements services or a combination of both. are based on the historical cost principle except when IFRS requires recognition at fair value. This relates to the measurements of certain A. Sale of products financial instruments. The consolidated financial statements have been Contracts with customers in which the sale of products is generally ex- prepared using consistent accounting principles for similar transactions pected to be the only performance obligation are not expected to have and events under otherwise similar circumstances. any impact on the group’s profit or loss. The group expects the revenue recognition to occur at a point in time when control of the asset is trans- The notes include disclosures for both Data Respons ASA and the con- ferred to the customer, generally on delivery of the products. solidated financial statements of the group. Not all notes are applicable to Data Respons ASA nor to the consolidated financial statements of B. Sale of services the group. The group provides services that are either sold on their own in contracts with the customers or bundled together with the sale of products New and amended standards adopted by the group to a customer. Currently, the group accounts for the product and service There are no new standards, amendments or interpretations effective as separate deliverables of bundled sales and allocates consideration for the financial year beginning on January 1, 2016 that have a material between these deliverables using the relative fair value approach. Reve- impact on the group or parent company financial statements. nue from sales of services are based on service agreements with hourly fees, and the group expects that revenue recognition will occur when New standards and interpretations not yet adopted the service is provided. At the date of authorisation of these financial statements, the following standards and interpretations that could affect the group’s consolidated C. Presentation and disclosure requirements financial statements were issued but not effective: IFRS 15 provides presentation and disclosure requirements, which are more detailed than under current IFRS. The presentation requirements IFRS 9 Financial instruments represent a significant change from current practice and significantly In July 2014, the IASB issued the final version of IFRS 9 Financial Instru- increases the volume of disclosures required in group’s financial statements that replaces IAS 39 Financial Instruments: Recognition and ments. Many of the disclosure requirements in IFRS 15 are completely Measurement and all previous versions of IFRS 9. IFRS 9 brings together new. In 2016 the group developed and started testing of appropriate all three aspects of the accounting for financial instruments project: systems, internal controls, policies and procedures necessary to collect classification and measurement, impairment and hedge accounting. and disclose the required information. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Except for hedge accounting, ret- IFRS 16 Leases rospective application is required but providing comparative informa- IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 tion is not compulsory. Determining whether an Arrangement contains a Lease, SIC-15 Opera- ting Leases-Incentives and SIC-27 Evaluating the Substance of Transac- The group plans to adopt the new standard on the required effective tions Involving the Legal Form of a Lease. IFRS 16 sets out the principles date. During 2016, the group has performed a high-level impact assess- for the recognition, measurement, presentation and disclosure of leases ment of all three aspects of IFRS 9. This preliminary assessment is based and requires lessees to account for all leases under a single on-balance on currently available information and may be subject to changes arising sheet model similar to the accounting for finance leases under IAS 17. from further detailed analyses or additional reasonable and supporta- The standard includes two recognition exemptions for lessees – leases ble information being made available to the group in the future. Overall, of ’low-value’ assets (e.g., personal computers) and short-term leases (i.e., the group expects no significant impact on its balance sheet and equity leases with a lease term of 12 months or less). At the commencement except for the effect of applying the impairment requirements of IFRS 9. date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the un- IFRS 9 requires the group to record expected credit losses on all of its derlying asset during the lease term (i.e., the right-of-use asset). Lessees debt securities, loans and trade receivables, either on a 12-month or life- will be required to separately recognise the interest expense on the lease time basis. Our preliminary conclusion is that the new standard will not liability and the depreciation expense on the right-of-use asset. materially affect the recognition of loss allowance, but the group will need to perform a more detailed analysis, which considers all reasonable and Lessees will be also required to remeasure the lease liability upon the supportable information, including forward-looking elements to deter- occurrence of certain events (e.g., a change in the lease term, a change mine the extent of the impact. in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise IFRS 15 Revenue from contracts with customer the amount of the remeasurement of the lease liability as an adjustment IFRS 15 was issued in May 2014 and establishes a five-step model to to the right-of-use asset.

26 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES Notes | Note 1

IFRS 16 also requires lessees and lessors to make more extensive dis- expenses of a subsidiary acquired or disposed of during the year are closures than under IAS 17. IFRS 16 is effective for annual periods be- included in the consolidated financial statements from the date the ginning on or after 1 January 2019. Early application is permitted, but company gains control until the date the company ceases to control not before an entity applies IFRS 15. A lessee can choose to apply the the subsidiary. standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs. For Profit or loss and each component of other comprehensive income (OCI) the group this implies that current operating leases satisfying the criteria are attributed to the equity holders of the parent company and to the will be recognised with assets and liabilities. The change will have a po- non-controlling interests, even if this results in the non-controlling inter- sitive impact on EBITDA in the group’s consolidated income statement. ests having a deficit balance. When necessary, adjustments are made to In 2017, the group plans to assess the potential effect of IFRS 16 on the financial statements of subsidiaries to bring their accounting policies its consolidated financial statements. See note 23 for expensed lease into line with the Data Respons’ accounting policies. All intra-group as- rentals in the group. sets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the group are eliminated in full on consolidation. CURRENCY Transactions in forreign currency A change in the ownership interest of a subsidiary, without a loss of In preparing the financial statements, subsidiaries translate transac- control, is accounted for as an equity transaction. If Data Respons loses tions in foreign currencies at the exchange rate for the date of the control over a subsidiary, it derecognises the related assets (including transaction. Monetary assets and liabilities denominated in foreign goodwill), liabilities, non-controlling interest and other components of currencies are translated at the functional currency spot rates of ex- equity while any resultant gain or loss is recognised in profit or loss. Any change at the reporting date. Differences arising on settlement or investment retained is recognised at fair value. translation of monetary items are recognised in the income statement. Non-monetary items that are measured in terms of historical cost in a Acquired subsidiaries are recognised in the consolidated financial state- foreign currency are translated using the exchange rates at the dates ments based on the historical cost to the parent company. Historical cost of the initial transaction. includes best estimate on future additional payments based on earn-out agreements. The historical cost is allocated to identifiable assets and li- Forreign operations abilities in the subsidiary, which are recorded in the consolidated financial The group presentation currency is NOK. This is also the functional cur- statements at fair value at the time of acquisition. rency of the parent company. Each group entity with a different functional currency are translated into NOK using the foreign exchange rate Acquisition-related costs are expensed as incurred. Identifiable assets at the balance sheet date for balance sheet items and monthly average are defined as both tangible fixed assets and intangible assets, excluding rates for the income statement. Data Respons uses daily and monthly goodwill. Any excess value or shortfall in value beyond that which can currency exchange rates as published by Norges Bank for translations be attributed to identifiable assets and liabilities is recognised in the bal- into presentation currency. Foreign exchange differences arising from ance sheet as goodwill. translation from functional currency to presentation currency are recognised in the statement of other comprehensive income. When a foreign Excess values in the consolidated financial statements are depreciated subsidiary is partially or completely disposed of or sold, translation differ- on a straight-line basis over the anticipated economic life of the acquired ences related to the subsidiary are recognised in the income statement. assets, less any residual value. Goodwill and excess values attributed to intangible assets with an indeterminable useful life are not depreciated, but are tested for impairment in accordance with IFRS. CONSOLIDATION Associates and joint ventures Subsidiaries An associate is an entity over which Data Respons has significant in- The consolidated financial statements comprise the financial state- fluence. Significant influence is the power to participate in the financial ments of Data Respons ASA and its subsidiaries. Control is achieved and operating policy decisions of the investee, but is not control or joint when the parent company is exposed, or has rights, to variable returns control over those policies. from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, Data A joint venture is a type of joint arrangement whereby the parties that Respons ASA controls an investee if, and only if, the company has: have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control Power over the investee (i.e., existing rights that give it the current of an arrangement, which exists only when decisions about the relevant ability to direct the relevant activities of the investee) activities require unanimous consent of the parties sharing control. Exposure, or rights, to variable returns from its involvement with the investee The considerations made in determining significant influence or joint The ability to use its power over the investee to affect its returns control are similar to those necessary to determine control over subsidiaries. Data Respons’ investments in its associate and joint venture Generally, there is a presumption that a majority of voting rights result in are accounted for using the equity method. Under the equity method, control. To support this presumption, and when Data Respons has less the investment in an associate or a joint venture is initially recognised than a majority of the voting or similar rights of an investee, the compa- at cost. The carrying amount of the investment is adjusted to recognise ny considers all relevant facts and circumstances in assessing whether it changes in Data Respons’ share of net assets of the associate or joint has power over an investee, including: venture since the acquisition date.

The contractual arrangement with the other vote holders of the Data Respons presents net income according to the equity method investee from associated companies and joint ventures as part of the company’s Rights arising from other contractual arrangements operating profit. Joint ventures are linked closely to the core operations Data Respons’ voting rights and potential voting rights of Data Respons.

Data Respons re-assesses whether or not it controls an investee if facts By including share of net income in the operating profit a better view and circumstances indicate that there are changes to one or more of of the group’s overall operational performance is provided. The share the three elements of control. Consolidation of a subsidiary begins when of net income from associates and joint ventures is included as a sepa- the company obtains control over the subsidiary and ceases when the rate line in the condensed consolidated income statement as other company loses control of the subsidiary. Assets, liabilities, income and revenue.

DATA RESPONS ASA | ANNUAL REPORT 2016 27 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES Notes | Note 1

REVENUE RECOGNITION companies, current interest-bearing loans and borrowings, trade paya- Revenue is recognised when it is probable that transactions will gener- bles and other current financial liabilities. ate future financial benefits that will pass to the company, and the value of such benefits can be estimated reliably. Sales revenue is recognised The categorisation of the financial instrument for measurement purpos- net of value added tax and discounts. Data Respons has revenue from es is done based on the nature and purpose of the financial instrument products, services or a combination of both: and is determined at the initial recognition. The group has financial assets / liabilities classified in the following categories: fair value through Products profit or loss, loans and receivables and financial liabilities measured at Revenue from the sale of products is recognised when delivery has been amortised cost. made and most of the risk and return potential has been transferred. Financial instruments at fair value through profit and loss consist of Services earn-out liabilities with contingent considerations. Loans and receiva- Revenue from sale of services are based on service agreements with bles consist of unquoted non-derivative assets with fixed or determina- hourly fees, and are recognised as the service is provided. For fixed price ble payments. Financial liabilities measured at amortised cost consist of contracts, revenue is recognised according to the stage of completion. liabilities that are not a part of the category at fair value through profit or loss. The financial instruments are recognised in the group’s state- The stage of completion is measured as accrued hours in relation to total ment of financial position as soon as the group becomes a party to the estimated hours. Estimated loss on contracts will be recognised in the contractual provisions of the instrument, using trade date accounting. income statement in its entirety in the period when it has been identified. Solutions Principles for estimating fair values The estimated fair values of the group’s financial instruments are based Solutions is recognised in accordance with the principles applicable to on available market prices and the valuation methodologies per class services and products described above. If the customer only pays for are described below. the finished product, the company, in cases where there is a contractual delivery, capitalises development work in line with the percentage Fair value hierarchy of completion. Capitalised development work is subsequently expensed The group measures fair values using the following fair value hierarchy in line with the delivery of the products. that reflects the significance of the inputs used in measuring fair value.

Interest income Level 1: Quoted prices (unadjusted) in active markets for identical finan- For all financial instruments measured at amortized cost, interest in- cial instruments. come is recorded using the effective interest rate (EIR). EIR is the rate Level 2: Inputs other than quoted prices included within Level 1 that that exactly discounts the estimated future cash payments or receipts are observable for assets or liabilities, either directly (i.e. as prices) or over the expected life of the financial instrument or a shorter period, indirectly (i.e. derived from prices). where appropriate, to the net carrying amount of the financial asset or Level 3: Inputs for assets or liabilities that are not based on observable liability. Interest income is included in other financial items in the state- market data (unobservable inputs. ment of comprehensive income. Dividends INTEREST-BEARING LIABILITIES Dividends and group contributions are recognised as income when they Interest-bearing liabilities consist of bank loans and overdrafts, and are have been approved by the general meeting of the distributing company. classified in the category financial liabilities at amortised cost. These liabilities are initially measured at fair value net of transaction costs, and are subsequently measured at amortised cost using the effective inter- CURRENT / NON-CURRENT CLASSIFICATION est-rate method. An asset is classified as current when it is expected to be realised, or is intended for sale or consumption in the group’s normal operating cycle, is held primarily for the purpose of being traded or it is expected/due RECEIVABLES to be realised or settled within twelve months after the reporting date. Trade receivables and other receivables are recognised in the balance Other assets are classified as non-current. sheet at nominal value, less provisions for estimated losses. Provisions for losses are made on the basis of individual assessment of the indi- A liability is classified as current when it is expected to be settled in the vidual receivables, as well as past experience. group’s normal operating cycle, is held primarily for the purpose of being traded, if the liability is due to be settled within twelve months after the reporting period or if the group does not have an unconditional right MACHINERY AND EQUIPMENT to defer settlement of the liability for at least twelve months after the re- Machinery and equipment is recognised in the balance sheet and de- porting period. All other liabilities are classified as non- current. Financial preciated on a straight-line basis over the estimated useful life less any instruments are classified based on maturity. residual value. Direct maintenance of machinery and equipment is expensed as other operating expenses, while enhancements or improvements that increase the capacity are added to the cost price and depreciated in line with the asset. Depreciation periods and profiles and FINANCIAL INSTRUMENTS residual values are assessed annually. Classification and recognition Based on the characteristics of the financial instruments that are recog- INTANGIBLE ASSETS nised in the financial statements, the financial instruments are grouped Intangible assets consist of identifiable intangible assets. Intangible as- into classes and categories. A financial instrument is defined as any con- sets are recognised in the balance sheet if it is probable that the ex- tract that gives rise to a financial asset of one entity and a financial liabil- pected future financial benefits attributable to the asset will pass to ity or equity instrument of another entity. the company and the asset’s historical cost can be measured separately and in a reliable manner. Intangible assets with a limited useful The group has classified financial assets and liabilities into the follow- life are recognised at historical cost, less accumulated depreciation ing classes: trade receivables, other current receivables, cash and cash and impairment. Depreciation is charged on a straight-line basis over equivalents, other non-current assets, interest-bearing loans and bor- the estimated useful life. The depreciation period and method are re- rowings, other non-current financial liabilities, current loans from group viewed annually. Intangible assets with an indeterminable useful life are

28 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES Notes | Note 1

not depreciated, but are tested annually for impairment at the balance been necessary, in which case they are written down to fair value. sheet date, or more frequently if there is an indication of impairment. Any contingent consideration, resulting from an investment in subsidiaries, is valued at fair value at the acquisition date as part of the business GOODWILL combination. When the contingent consideration meets the definition The difference between the historical cost at the time of acquisition and of a financial liability, it is subsequently remeasured to fair value at each the fair value of net identifiable assets at the time of acquisition are clas- reporting date. Re-estimation effects following changes in estimates of sified as goodwill. Goodwill is recognised in the balance sheet at histori- future financial performance of subsidiaries are recognised as part of cal cost, less any accumulated impairments. Goodwill is not depreciated, the cost of the shares in Data Respons ASA. but is tested annually for impairment at the balance sheet date, or more frequently if there is an indication of impairment. In cases where nega tive goodwill is identified in connection with business combinations, the PROVISIONS purchase price allocation is reassessed before any negative goodwill is Provisions are made in the financial statements where the group has a recognised in income. liability (legal or self-imposed) as a result of a past incident, if it is probable that a financial settlement will be made as a result of this liability, and if the amount of such a settlement can be measured reliably. If the LEASES impact is significant, the provisions are calculated by discounting the The determination of whether an arrangement is (or contains) a lease, estimated future cash flows by a discount rate before tax that reflects is based on the substance of the arrangement at the inception of the the market’s pricing of the current value of money and, where relevant, lease. The arrangement is, or contains, a lease if fulfilment of the ar- risks specifically linked to the liability. rangement is dependent on the use of a specific asset (or assets) and the arrangement conveys a right to use the asset (or assets), even if that Provisions for restructuring are included if the group has approved a asset is (or those assets are) not explicitly specified in an arrangement detailed and formal restructuring plan, and the restructuring has either started or been announced. Provisions for loss-making contracts are Group as a lessee included when the group’s estimated revenue from a contract is lower A lease is classified at the inception date as a finance lease or an operat- than the estimated expenses that will be incurred to fulfil the contrac- ing lease. A lease that transfers substantially all the risks and rewards tual obligations. incidental to ownership to the group is classified as a finance lease. Fi- nance leases are capitalised at the commencement of the lease at the inception date, fair value of the leased property or, if lower, at the pre- INVENTORIES sent value of the minimum lease payments. Purchased inventory is valued at the lower of historical cost (using the FIFO principle) or net realisable value. Write-downs are made for any A leased asset is depreciated over the useful life of the asset. An operat- inventory that is assumed to be obsolete. ing lease is a lease other than a finance lease. Operating lease payments are recognised as operating expenses in the income statement on a straight-line basis over the lease term. PENSION LIABILITIES A defined contribution plan is a pension plan under which the group Group as a lessor pays fixed contributions into a separate entity. Data Respons has no Data Respons has not entered into arrangements in which the group legal or constructive obligations to pay further contributions if the fund is a lessor. does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. REASEARCH AND DEVELOPMENT Costs associated with maintaining software or products are recognised The group does not have any significant defined benefit pension ar- as an expense as incurred. Expenses relating to development activities rangements.For defined contribution plans, the group pays contribu- are recognised in the balance sheet if the following criteria are met; tions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. Development relates to an idenstifiable, unique product or software controlled by Data Respons The company has no further payment obligations once the contribu- There is an ability to use or sell the product or software It is technically and commercially feasible to complete the develop- tions have been paid. The contributions are recognised as payroll ex- ment penses when they are due. Prepaid contributions are recognised as an The company intends to and has adequate resources to complete asset to the extent that a cash refund or a reduction in the future pay- the development ments is available. It can be demonstrated how the product or software will generate probable future economic benefits The expenditure attributable to the development can be reliably measured. EMPLOYEE SHARE OPTION SCHEME Employee share options are calculated at the fair value at the time Other development expenditures that do not meet these criteria are they are granted and accrued on a linear basis over the vesting period recognised as an expense as incurred. Development costs previously until the earliest exercise date. The employer’s social security contri- recognised as an expense are not recognised as an asset in a subse- butions linked to vested options are accrued correspondingly over the quent period. Capitalised development expenses are recognised in the life-span of the option. balance sheet at historical cost, less any accumulated depreciation and write-downs. Capitalised development expenses are depreciated over the estimated useful life of the asset, which does not exceed three INCOME TAX years. Intangible assets under development, however, are not depre- Income tax expense in the income statement comprises both income ciated and are tested for impairment annually or more frequently if tax payable for the period and changes in deferred tax. Deferred tax is there is an indication of impairment. calculated at the current tax rate on the basis of temporary differences between the financial accounting and tax-related values, and tax loss VALUATION OF INVESTMENTS IN SUBSIDIARIES carry forward at the end of the financial year. Subsidiaries are valued in accordance with the historical cost method in Negative and positive temporary differences that reverse or may reverse the parent company’s financial statements. Investments are valued at during the same period are offset and the tax effect of the net amount is the historical cost of the shares unless a write-down of the shares has

DATA RESPONS ASA | ANNUAL REPORT 2016 29 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 1 - 2

calculated. The tax loss carry forward is recognised in the balance sheet liabilities are disclosed unless the probability of the liability materialising as a deferred tax asset if it is considered adequately probable that the is remote. Contingent assets are not recognised in the annual financial losses can be utilised in the future. statements.

CASH AND CASH FLOW STATEMENT EVENTS AFTER THE BALANCE SHEET DATE The statement of cash flows has been prepared in accordance with the New information received after the balance sheet date relating to the indirect method. Cash and cash equivalents include cash, bank deposits company’s financial position at the balance sheet date has been taken and other short-term liquid investments that can be converted imme- into consideration in preparing the annual financial statements. Events diately and without any significant exchange rate risk to a known cash occurring after the balance sheet date that do not affect the company’s amount, and with maturity date less than three months from the pur- financial position at the balance sheet date, but that will affect the com- chase date. pany’s financial position in the future are disclosed in if these are material. CONTINGENT LIABILITIES AND ASSETS Contingent liabilities are not recognised unless these arise from, and are assessed as a result of business combinations. Material contingent

NOTE 2 OPERATING SEGMENTS

Operating segments align with internal management reporting to the group’s chief operating decision maker, defined as the group management team. The operating segments are determined based on the underlying operations and geographical location. The business segments reported are Solutions, R&D Services and Corporate. Segment result is defined as EBITDA. R&D services Data Respons offers consultancy services for a range of technology related development projects. Solutions Solutions segment consist of development and delivery of custom solutions by combining engineering services; with standard embedded computer products from leading partners or deliveries of standard embedded computer service. Corporate Corporate comprises the activities of corporate services, management and group finance.

OPERATING SEGMENTS 2016

NOK 1000 Solutions R&D Services Corporate* Eliminations ** Group

External revenue 481 827 556 133 1 037 959 Internal revenue 727 2 143 7 981 -10 850 - Net income from associated companies 1 671 1 671 Total revenue 484 224 558 275 7 981 -10 850 1 039 630 Operating expenses 452 939 499 222 23 945 -10 850 965 255 EBITDA 31 285 59 054 -15 964 - 74 375

OPERATING SEGMENTS 2015

NOK 1000 Solutions R&D Services Corporate* Eliminations ** Group

External revenue 558 776 404 293 963 070 Internal revenue 2 542 8 166 -10 708 - Net income from associated companies 552 -10 541 Total revenue 559 328 406 836 8 155 -10 708 963 611 Operating expenses 522 144 375 956 17 734 -10 708 905 126 EBITDA 37 184 30 880 -9 578 - 58 485

30 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 2

OPERATING SEGMENTS 2014

NOK 1000 Solutions R&D Services Corporate* Eliminations ** Group

External revenue 478 726 369 854 848 580 Internal revenue 145 455 8 027 -8 626 - Net income from associated companies 765 -119 646 Total revenue 479 636 370 309 7 908 -8 626 849 226 Operating expenses 442 722 339 431 18 071 -8 626 791 597 EBITDA 36 913 30 878 -10 163 -0 57 629

* The item “corporate” includes all transactions recognised in the parent company Data Respons ASA. **The item “eliminations” includes eliminations of intercompany revenue and expenses.

Revenue is reported to mangement in four geographic regions: Norway, Sweden, Denmark and Germany.

REVENUE 2016

NOK 1000 Solutions R&D Services Eliminations Group

Norway 183 455 112 606 -2 070 293 991 Sweden 162 408 383 977 - 1 035 545 350 Denmark 57 530 57 530 Germany 83 258 61 692 225 145 175 Eliminations -4 099 11 -4 088 Sales revenue 482 553 558 275 -2 869 1 037 959

REVENUE 2015

NOK 1000 Solutions R&D Services Eliminations Group

Norway 243 574 109 189 -1 312 351 452 Sweden 170 300 299 794 -1 809 468 286 Denmark 44 239 44 239 Germany 106 288 106 288 Eliminations -5 626 -2 148 578 -7 195 Sales revenue 558 776 406 836 -2 542 963 070

REVENUE 2014

NOK 1000 Solutions R&D Services Eliminations Group

Norway 267 052 111 154 -254 377 951 Sweden 106 825 259 924 -312 366 437 Denmark 31 839 31 839 Germany 78 020 78 020 Eliminations -4 864 -768 -34 -5 666 Sales revenue 478 871 370 309 -600 848 580

Major customers In 2016, the top 10 largest customers of the the group accounted for 53 % of consolidated revenues (2015: 50 %). The group does not disclose a breakdown of customers as management considers this information to be confidential and commercially sensitive in nature.

DATA RESPONS ASA | ANNUAL REPORT 2016 31 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 3

NOTE 3 INTANGIBLE ASSETS, MACHINERY AND EQUIPMENT

DATA RESPONS GROUP ASA NOK 1000 Cust. Other Total Machinery Other Machinery Good- relation- intangible intangible and intangible and will ships assets assets equipment assets equipment

Cost or valuation on January 1, 2014 320 078 2 603 322 681 63 134 10 688 Additions 1 268 1 268 1 707 50 366 Disposals - -588 Translation differences 2 580 -106 2 474 1 774 Total non-current assets 322 658 - 3 765 326 423 66 026 50 11 054 Accum. depr. & impairm. as of January 1 2014 145 000 2 603 147 603 56 943 9 425 Depreciation / amortisation for the year 101 101 3 051 99 842 Impairment for the year - -69 Disposals - -590 Translation differences 145 000 -106 -106 1 684 Accum. depr. & impairm. as of Dec. 31, 2014 177 658 - 2 599 147 599 61 019 99 10 267 Net book value as of December 31, 2014 322 658 - 1 167 178 823 5 007 50 787 Cost or valuation on January 1, 2015 3 765 326 423 66 026 50 11 054 Additions 183 183 5 502 183 2 623 Translation differences 9 260 154 9 414 2 180 Cost or valuation as of December 31,2015 331 918 - 4 101 336 019 73 707 233 13 677

Accum. depr. & impairm. as of January 1 2015 145 000 2 599 147 599 61 019 10 267 Depreciation / amortisation for the year 406 406 3 249 99 880 Impairment for the year - Translation differences 253 253 2 081 Accum. depr. and impairm. on Dec. 31, 2015 145 000 - 3 257 148 257 66 348 99 11 147 Net book value on December 31, 2015 186 918 - 844 187 761 7 359 134 2 531 Cost or valuation as of January 1, 2016 331 918 4 101 336 019 73 707 233 13 677 Additions 199 234 52 058 3 068 254 360 2 189 890 Translation differences -14 273 -1 193 -10 -15 476 -1 781 Additions/disposals from acq./sold companies 410 410 1 444 Cost or valuation as of December 31,2016 516 879 50 865 7 570 575 313 75 559 233 14 567 Accum. depr. and impairm. on January 1, 2016 145 000 3 257 148 257 66 348 99 11 147 Depreciation / amortisation for the year 1 707 505 2 212 3 316 120 1 209 Translation differences -421 -421 -2 003 Additions/disposals from acq./sold companies 139 139 Cost or valuation as of December 31,2016 145 000 1 286 3 901 150 187 67 662 219 12 356 Net book value on December 31, 2016 371 879 49 579 3 669 425 127 7 897 14 2 211

Both the parent company and group use straight-line depreciation for all machinery and equipment. The estimated economic life of machinery and equipment is 3 to 5 years. Intangible assets are amortised over the life of the asset, which is estimated to be from 2.5 to 10 years. Intangible assets Intangible assets consist of intangible assets recognised at fair value upon the acquisition of companies and capitalised development expenses. Customer relationship is related to the acquistion of Microdoc in 2016. See note 5 for further information.

In 2016, one development project was capitalised of NOK 3.1 million. The project consisted of development of a new and improved generation of products with significant future earnings potential.

32 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 3

Changes in goodwill There has been three acquistions in 2016; South Pole Consulting AB (resulting in an additon of goodwill of NOK 5.6 million), MicroDoc Computer- systeme GmbH (resulting in an additon of goodwill of NOK 182.1 million) and Atero AB (resulting in an additon of goodwill of NOK 11.5 million). See note 5 for further information. All goodwill is recorded in functional currency, and as a result, changes in currency exchange rates will affect the value of goodwill. Compared to the currency rate at the acquisition date, goodwill was adjusted upwards by NOK 5 224 thousand at the end of 2016, compared to an upwards adjustment of NOK 19 496 thousand at the end of 2015. Impairment test of goodwill Goodwill recognised through the acquisition of companies and units is allocated to the individual cash generating unit if the cash flows are still identifiable.

ALLOCATION OF GOODWILL NOK 1000 2016 2015 2014 R&D Services Norway 62 000 62 000 62 000 R&D Services Sweden 103 452 95 125 87 151 R&D Services Germany 177 811 Solutions Norway 8 548 8 549 8 549 Solutions Germany 20 068 21 244 19 958 Total 371 879 186 918 177 658

The recoverable amount for the cash flow generating units is calculated based on the value the asset will generate, using cash flow forecast for the business operations. Cash flow forecasts are based on budgets approved by the Board of Directors for 2017 with a projection for a five-year period based on the assumptions below. Cash flows beyond the budgeted period are extrapolated using estimated growth rates for the individual units. Future EBIT margin and cash flow is based on the management’s best estimate and judgment. The most significant assumptions for calculation of the recoverable amount are as follows: Discount rate: A calculated WACC of 9.5 % (2015: 10.3 %) after tax has been used as the discount rate for all units. CGUs in the group are based in the Nordic / Northern European region, and regional differences are not estimated to make a significant impact on the applied WACC rate at the balance sheet date. The corresponding WACC before tax is 12.7 %. The WACC before tax is calculated by determining the effective discount rate that, applied to the undiscounted pre-tax cash flows, results in the (post-tax) VIU amount. Revenue growth: Historically the group has achieved a strong growth, and management believe that the long-term outlook for specialist consulting services, embedded solutions and IoT market is prosperous. However, as the group is focusing efforts in key markets and downsizing less profitable business units, growth rates are expected to vary among the cash generating units. Expected growth rates in 2016 vary between -4 % and 20 % (2015: -7 to 20 %). Beyond 2017, the group expects growth rates at 2 to 15 % (2015: 2 to 7 %) in the forecasted four-year period.

Extrapolated growth rate: The growth rate beyond five years has been set at 0 % (2015: 0 %) for all units. EBIT margin: The group has used EBIT margins that reflect management’s best estimate of earnings potential in the period. EBIT margins applied in the calculation of value-in-use range from 5 % to 22 % (2015: 7 to 10 %), dependent on past financial performance and expected profit margins for each unit. Sensitivities No indications of impairment losses have been identified for R&D Services Norway, R&D Services Sweden, R&D Services Germany, Solutions Norway and Solutions Germany in 2016. The recoverable amounts of these cash generating units exceed their carrying amounts by significant margins. A sensitivity analysis has been performed for these CGUs, in order to determine if a reasonable change in key assumptions would cause the units’ carrying amounts to exceed their recoverable amounts. A reduction in the estimated growth rate by 5 percentage points, a reduction in the estimated EBIT margin by 1 percentage point or an increase in WACC after tax by 1 percentage point would not lead to impairment losses in either of the units.

DATA RESPONS ASA | ANNUAL REPORT 2016 33 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 4

NOTE 4 SUBSIDIARIES, NON-CONTROLLING INTERESTS AND OTHER INVESTMENTS

GROUP

Date of Registered Total DAT ownership Company Owned by acquisition office and voting interest SUBSIDIARIES Data Respons Norge AS Data Respons ASA 27.11.2001 Bærum 100 % Data Respons Asia AS Data Respons ASA 17.02.2000 Bærum 100 % Digitas AS Data Respons ASA 01.04.2006 Bærum 100 % Data Respons AB Data Respons ASA 27.11.2001 Stockholm (SE) 100 % Sylog Sverige AB Data Respons ASA 06.07.2007 Stockholm (SE) 75 % Professional Finder AB Sylog Sverige AB 06.07.2007 Stockholm (SE) 75 % Sylog Väst AB Sylog Sverige AB 26.09.2014 Göteborg (SE) 75 % Sylog Öst AB Sylog Sverige AB 10.06.2015 Linköping (SE) 60 % iWise AB Sylog Sverige AB 05.12.2013 Stockholm (SE) 75 % YABS AB Sylog Sverige AB 08.10.2013 Stockholm (SE) 60 % South Pole Consulting AB Sylog Sverige AB 26.01.2016 Stockholm (SE) 75 % Atero AB Sylog Sverige AB 27.10.2016 Linköping (SE) 75 % Sylog Epic AB Sylog Sverige AB 31.08.2016 Stockholm (SE) 60 % Data Respons A/S Data Respons ASA 27.11.2001 København (DK) 100 % Microdoc Computersysteme GmbH Data Respons ASA 26.09.2016 Munich (DE) 100 % Microdoc Software GmbH Microdoc Computersysteme GmbH 26.09.2016 Munich (DE) 100 % Data Respons GmbH Data Respons ASA 17.02.2005 Karlsruhe / Erlangen (DE) 100 % JOINT ARRANGEMENTS TechPeople A/S Data Respons A/S 16.05.2012 Herlev (DK) 50 %

Joint arrangements Data Respons A/S owns 50 % of the shares in TechPeople A/S. KIF Invest ApS owns the remaining 50 % of the company. Shares, voting rights and board representation is divided equally among the two owning parties, and important decisions require consensus between the owners. The investment is classified as a joint venture according to IFRS 11, and is accounted for using the equity method.

The group’s share of the result in the joint ventures, and its aggregated assets and liabilities, are as follows:

DAT share Financial year 2016 At December 31, 2016 NOK 1000 Revenue Profit or Other Total Operating Assets Liabilities Carrying loss compr. compr. cash value income income flow

TechPeople A/S 32 189 1 686 0 1 686 -185 9 312 7 330 2 786

Data Respons received a dividend payment of DKK 0.5 million from TechPeople A/S in 2016. Data Respons has no commitments to provide financial support to the joint venture.

On March 1, 2017, Data Respons entered into an agreement to acquire the remaining 50 % of the shares in TechPeople A/S. See note 26 for details.

34 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 4

DATA RESPONS ASA

Company Currency Issued capital Ownership Book value (NOK 1000)

SUBSIDIARIES Data Respons Norge AS NOK 1 387 100 % 163 153 Data Respons Asia AS NOK 1 100 100 % Digitas AS NOK 100 100 % Data Respons AB (SE) SEK 100 100 % 24 457 Sylog Sverige AB (SE) SEK 100 75 % 44 615 Data Respons A/S (DK) DKK 2 277 100 % 22 050 Data Respons GmbH (DE) EUR 100 100 % 52 056 Microdoc Computersysteme GmbH (DE) EUR 52 100 % 227 889 Total subsidiaries 534 222

The impairment test performed as of December 31, 2016 did not result in any impairment of book value of the investments. The impairment test for book value of subsidiaries and joint ventures in the Data Respons ASA company accounts were based on the same assumptions as used in the impairment test of goodwill in the group accounts. Refer to note 3 for further specification.

Non-controlling interests Data Respons controls 75 % of shares and voting rights in the subsidiary Sylog Sverige AB, and non-controlling interests hold the remaining 25 %. Sylog Sverige AB owns 100 % of shares and voting rights in Professional Finder AB, iWise AB, Sylog Väst AB, South Pole Consulting AB and Atero AB. Sylog Sverige AB also owns 80 % of shares and voting rights in YABS AB, Sylog Öst AB and Sylog Epic AB. Sylog Epic AB was incorporated during 2016. Profit allocated to non-controlling interests were NOK 6.2 million in 2016 (2015: NOK 3.9 million), and at the end of the year non-controlling interests amounted to NOK 28.3 million (2015: NOK 27.5 million).

The non-controlling interests in Sylog Sverige AB are considered material and the financial information is provided below:

NOK 1000 2016 2015 2014 Current assets 133 664 112 316 83 883 Non-current assets 41 217 26 612 12 795 Current liabilities 110 332 92 514 72 205 Non-current liabilities 14 752 5 980 6 471 Revenue 383 977 294 506 233 161 Profit or loss 23 827 14 945 12 440 Dividends paid to non-controlling interests 2 898 2 633

Other non-controlling interests are not considered material on a standalone basis and the summarised financial information is provided below:

NOK 1000 2016 2015 2014 Current assets 31 925 24 187 6 518 Non-current assets Current liabilities 20 015 15 071 5 423 Non-current liabilities 730 856 Revenue 59 321 10 621 40 Profit or loss 8 480 4 324

Includes fully owned subsidiaries of Sylog Sverige AB: Professional Finder AB, Sylog Väst AB, iWise AB, South Pole Consulting AB and Atero AB. Also includes YABS AB, Sylog Öst AB and Sylog Epic AB which are owned 80 % by Sylog Sverige AB.

DATA RESPONS ASA | ANNUAL REPORT 2016 35 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 5

NOTE 5 BUSINESS COMBINATIONS

On September 26, 2016, Data Respons acquired 100 % of the shares in MicroDoc Computersysteme GmbH, a SW technology company in Germany with headquarters in Munich. The company has 60 specialists in SW development, Java and system design as well as SW solutions for IoT, mobile/ network infrastructure and embedded applications. In 2015 MicroDoc had a revenue of EUR 12.5 million with an EBIT of EUR 3.0 million.

The acquistion strengthens Data Respons within several key strategic areas and gives a big boost in SW development capabilities, IoT and digitalisation for the group as a whole. Further, Data Respons gets a strong foothold in Germany within R&D Services and gain access to a strong customer portfolio in markets such as Automotive, Smart grid/Smart home, Banking/Insurance, IoT and Industrial Automation.

The consideration for the shares has two parts. The first part was paid in September 2016 as a fixed cash consideration of EUR 10.5 million, which was funded by a bank loan of EUR 10.5 million. The second part of the consideration consists of variable earn-out payments, in addition to the fixed cash consideration. The earn-out payments will depend on the actual EBIT in MicroDoc in 2016, 2017 and 2018. The yearly earn-out payments will be due for payment in Q2 the year following the respective earn-out year.

The acquisition of MicroDoc is considered as a business combination under IFRS 3 and it is assessed that the carrying amount of assets and liabilities in MicroDoc represents its fair value at the acquisition date September 1 2016. Based on the final purchase price allocation, the gross purchase price is estimated to be NOK 228.9 million. Book value of equity is NOK 10.1 million, which gives an excess value of NOK 218.8 million.

The excess value have been allocated to customer relationship intangible asset, deferred tax on excess value and goodwill. The goodwill of NOK 182.1 million comprises of the value of expected synergies arising from the acquisition, assembled workforce and deferred tax on excess values.

MicroDoc is from September 2016 included in Data Respons’ consolidated statement of accounts. Data Respons has in 2016 expensed NOK 5.4 million in transaction cost in relation to the acquisition of MicroDoc.

Other business combinations Sylog Sverige AB, a subsidiary of Data Respons, entered into an agreement to acquire 100 % of the shares in South Pole Consulting AB on January 26, 2016. South Pole Consulting has 10 employees located in Stockholm and are experts in embedded Linux. The company is consolidated into Data Respons’ financial statements from 2016. An agreement has been reached for a cash consideration of SEK 2.8 million with additional payments depending on the company’s development over the next two years.

Sylog Sverige AB, a subsidiary of Data Respons, entered into an agreement to acquire 100 % of the shares in Atero AB on October 27, 2016. Atero has 15 employees located in Linköping and are experts in software development, system design and communication for embedded and IoT solutions. The company is consolidated into Data Respons’ financial statements from November 1 2016. An agreement has been reached for a cash consideration of SEK 4.4 million with additional payments depending on the company’s development over the next three years.

The fair values of the identifiable assets and liabilities of the businesses as at the date of acquisition were:

NOK MILLION MicroDoc South Pole Consulting Atero Machinery and equipment 1.5 Trade receivables 8.8 3.0 2.3 Other current receivables 11.9 0.1 Other assets 10.3 2.2 2.1 Total assets 32.4 5.2 4.5 Trade payables 7.5 0.6 0.1 Other current liabilities 14.8 3.1 3.3 Total liabilities 22.3 3.7 3.4

Net identifiable assets 10.1 1.5 1.1 Total identified excess value 218.8 5.6 11.5

Intangible assets 52.5 - - Deferred tax on excess value -15.8 - - Goodwill 182.1 5.6 11.5

Business combinations in 2017 On March 1, 2017, Data Respons entered into an agreement to acquire the remaining 50 % of the shares in TechPeople A/S. See note 26 for details.

36 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 6 - 7

NOTE 6 INVENTORIES

NOK 1000 GROUP DATA RESPONS ASA GOODS PURCHASED FOR RESALE NOK 1000 2016 2015 2014 2016 2015 2014 Historical cost 35 701 54 019 42 798 Write-down and provisions for obsolescence -1 024 -927 -902 Book value 34 677 53 093 41 896 - - - Value of pledge (inventory as collateral) 80 000 40 000 40 000

NOTE 7 TRADE AND OTHER RECEIVABLES

NOK 1000 GROUP DATA RESPONS ASA

NOK 1000 2016 2015 2014 2016 2015 2014 Trade receivables 226 363 195 403 171 907 404 255 Provisions for impairment of receivables -739 -1 470 -1 807 Trade receivables, net 225 624 193 933 170 100 - 404 255 Accrued revenue 531 4 288 3 162 Prepayments 11 159 10 389 9 534 1 029 986 917 Other current receivables 3 858 4 287 3 429 -7 25 54 Total other receivables 15 549 18 965 16 125 1 022 1 011 971 Total receivables 241 172 212 898 186 225 1 022 1 416 1 226 Provisions as of January 1 1 470 1 807 1 729 Realised losses -75 -381 -121 Provisions for the period -656 45 200 Disposals from sold companies Provisions as of December 31 739 1 470 1 807 - - -

Losses on trade receivables are classified as other operating expenses in the income statement. Maximum credit risk is represented by the row Total receivables.

AGING ANALYSIS OF TRADE RECEIVABLES Carrying amount Not due Number of days past due date NOK 1000 0-30 31-60 61+ Trade receivables as of December 31, 2016 226 363 173 386 46 706 1 913 4 357 Trade receivables as of December 31, 2015 195 403 164 016 24 641 3 097 3 650 Trade receivables as of December 31, 2014 171 907 124 765 41 574 2 228 3 340

DATA RESPONS ASA | ANNUAL REPORT 2016 37 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 8

NOTE 8 SHARE CAPITAL, SHAREHOLDERS, EARNINGS PER SHARE

The registered share capital of Data Respons ASA consisted of 49 228 794 shares with a par value of NOK 0.50 as of December 31, 2016. All shares have equal rights and are freely transferable. Data Respons has one class of shares and each share carries one vote.

A total of 17.5 million shares were traded and 4 540 transactions were registered at the Oslo Stock Exchange during the year. At the end of the year Data Respons ASA had 1 046 Norwegian shareholders and 75 foreign shareholders. Foreign shareholders owned 23 % of the shares. During 2016, no treasury shares were bought or sold. The company did not own any treasury shares at the end of the year.

In 2016, 288 000 new shares were issued in connection with the company’s employee share saving scheme. Data Respons has implemented an employee share saving scheme directed at all employees in Data Respons Norway, Sweden and Denmark where each employee may subscribe to a maximum of 10 000 shares.

The subscription price was set to NOK 8.35 per share, representing the weighted average share price of transactions in the DAT share on Oslo Stock Exchange on April 26, 2016 less a 25 % discount. A total of 50 employees subscribed to 288 000 new shares.

On the basis of an authorisation granted by the annual general meeting held on April 14, 2016, the Board of Directors resolved to increase the share capital by NOK 144 000 from NOK 24 470 397 to NOK 24 614 397 through the issue of 288 000 new shares with a nominal value of NOK 0.50 per share. The Articles of Association were adjusted accordingly.

LIST OF 20 LARGEST SHAREHOLDERS AS OF DECEMBER 31, 2016 Shareholder Ordinary shares Proportion of ownership CUSTOM HOLDING AS 16 087 279 32.68 % MP PENSJON PK 4 315 055 8.77 % STOREBRAND VEKST VERDIPAPIRFOND 2 948 619 5.99 % NORDEA NORDIC SMALL CAP FUND 2 669 746 5.42 % JPMORGAN CHASE BANK, HB SWED FUNDS 2 090 282 4.25 % JPMORGAN CHASE BANK, AKTIA NORDIC 2 062 266 4.19 % VARNER INVEST AS 1 500 000 3.05 % STOREBRAND NORGE I VERDIPAPIRFOND 1 017 434 2.07 % HERALD INVESTMENT TRUST PLC 965 676 1.96 % CARNEGIE INVESTMENT BANK AB 891 833 1.81 % VERDIPAPIRFONDET DNB SMB 788 365 1.60 % NHO - P665AK 741 873 1.51 % VERDIPAPIRFONDET STOREBRAND OPTIMA 684 013 1.39 % HSBC TTEE MARLB EUROPEAN TRUST 548 709 1.11 % ALTEA PROPERTY DEVELOPMENT AS 431 717 0.88 % NORDNET BANK AB 418 539 0.85 % SKANDINAVISKA ENSKILDA BANKEN AB 401 568 0.82 % VENTOR AS 384 257 0.78 % EUROVEST AS 350 000 0.71 % METZLER EURO SMALL + MICRO CAP 335 000 0.68 % TOTAL 39 632 231 80.51 % OTHER 9 596 563 19.49 % TOTAL NUMBER OF SHARES 49 228 794 100.00 %

SHARE ISSUES IN 2016

Date Type Subscription price Number of shares After new issue 25.06.2016 Capital increase 8.35 288 000 49 228 794

38 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 8

POWER OF ATTORNEY TO ISSUE SHARES AND PURCHASE TREASURY SHARES

Year Maximum Shares issued/ Remaining Passed Type Duration issued share limit purchased 2016 number of shares 14.04.2016 Capital increase 2016 4 000 000 288 000 3 712 000 Until 27.04.2017 14.04.2016 Treasury shares 2016 800 000 800 000 0 Until 27.04.2017

The Board of Directors has been granted power of attorney to increase the company’s share capital by a maximum of NOK 2 000 000 through the issue of maximum 4 000 000 new shares, each with a par value of NOK 0.50. The authorisation is valid until the annual general meeting in 2017 and can be used by the board in connection with acquisitions of new companies within the company’s core business and strategy, in connection with the company’s employee share saving scheme or to raise cash. The company’s shareholders have waived their pre-emptive subscription rights in accordance with Section 10-4 of the Norwegian Public Limited Companies Act. The board may decide that the share deposit shall take the form of assets other than cash or rights to incur particular obligations for the company pursuant to Section 10-2 of the Norwegian Public Limited Liability Companies Act.

The Board of Directors has been granted power of attorney to purchase up to 800 000 treasury shares with an equivalent nominal value of NOK 400 000. The amount which may be paid per share is to be minimum NOK 1.00 and maximum NOK 20.00. The board is free to choose the method by which the purchase or sale is executed. The authorisation is valid until the annual general meeting in 2017. The purpose of the authorisation is to give the company the facility to implement buy-back of shares with subsequent cancellation, in order to optimise the company’s capital structure. Furthermore, the company wishes to be able to use such authorisation to purchase and sell treasury shares in connection with complete or partial settlement for acquired companies or in connection with the company’s employee share saving scheme.

Based on the approval in the annual general meeting in 2013, the Board of Directors allocated 400 000 share options in 2014 and an additional 400 000 in 2015. On 15 April 2016, the participants in the share option scheme exercised a total of 800 000 share options (equal to 800 000 shares). See note 14 for details. On the same date, Data Respons ASA purchased 800 000 own shares to settle its obligation to deliver the shares. The shares were purchased in accordance with the authorisation granted at the annual general meeting on April 14, 2016. The Board of Directors used the authorisation to purchase treasury shares based on the financial solidity of the company and in order to optimise the company’s capital structure. Following these transactions Data Respons still hold no treasury shares.

Earnings per share The earnings per share ratio is calculated by dividing the Profit/loss for the year attributable to the company’s shareholders by a time-weighted average of outstanding ordinary shares throughout the year, less the company’s treasury shares. The diluted earnings per share ratio is based on the same calculation as above, however, it also takes into account potential shares that have been outstanding during the period and will have a diluting effect, i.e. reduce the earnings per share for the ordinary shares. The company has only one category of potential shares that can result in dilution: share options. Potential ordinary shares are treated as dilutive only if their conversion to ordinary shares would decrease profit per share or increase loss per share from continuing operations attributable to ordinary equity holders.

NOK 1000 2016 2015 2014 Profit/loss for the year attributable to the equity holders of the company (NOK 1000) 46 828 42 560 37 672 Weighted average number of outstanding shares (1000) 49 114 48 790 48 501 Effect of dilution: -Employee share option scheme 800 400 Weighted average number of outstanding shares, diluted (1000) 49 114 49 590 48 901 Earnings per share, basic 0.95 0.87 0.78 Earnings per share, diluted 0.95 0.86 0.77

CALCULATION OF TIME-WEIGHTED SHARES

Date Number of shares Number of days Weighted number of shares 01.01.2016 48 940 794 144 19 576 318 25.06.2016 49 228 794 216 29 537 276 360 49 113 594

Dividends On the annual general meeting on April 14, 2016, the dividend for 2015 of NOK 1.00 per share was approved. The dividend of NOK 48.9 million was paid in May 2016 and the DAT share traded ex dividend on April 15, 2016.

The Board of Directors propose to distribute a dividend of NOK 1.00 per share for 2016. Following the resolution by the annual general meeting on April 27, 2017 the DAT share will be traded ex-dividend on April 28, 2017.

DATA RESPONS ASA | ANNUAL REPORT 2016 39 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 9 - 10

NOTE 9 PENSIONS

The parent company is required to operate a company pension scheme pursuant to the Mandatory Occupational Pension Act, and operates a pension scheme that meets this requirement. This scheme covered a total of 5 people in 2016.

The group’s employees in Norway were members of a defined benefit pension scheme in 2013 that covered a disability pension. The pension liabilities were covered through an insurance company. This scheme was in December 2013 replaced by a defined contribution arrangement. The group does not have any significant defined benefit pension schemes as of December 31, 2016.

The group’s foreign subsidiaries have defined contribution pension schemes, and the expenses associated with these schemes are included under payroll expenses in the income statement. Payroll expense details are available in Note 15.

NOTE 10 INCOME TAX

NOK 1000 GROUP DATA RESPONS ASA

NOK 1000 2016 2015 2014 2016 2015 2014 SUMMARY OF TEMPORARY DIFFERENCES Receivables -476 78 Other current assets -926 -818 -618 Non-current assets -7 548 -7 554 -8 264 -1 126 -1 126 -1 574 Receivables in foreign currency -2 109 -2 109 -1 957 -2 109 -2 109 -1 957 Pensions 59 357 74 Other current liabilities -296 -913 Group contributions* -27 570 -27 570 -40 752 Total -11 295 -11 036 -10 687 -30 805 -30 805 -44 284 Untaxed reserves Sweden** 20 638 19 218 10 420 Tax loss carryforward*** -50 798 -59 120 -49 150 Total positive /(negative) temporary differences -41 456 -50 939 -49 417 -30 805 -30 805 -44 284 Deferred tax asset at current tax rate*** 14 820 16 661 14 697 5 549 7 701 11 957 Of which, deferred tax assets not recognised*** 4 194 5 488 11 938 Deferred tax assets in the balance sheet 10 627 11 174 2 759 5 549 7 701 11 957 Deferred tax liability at current tax rate 19 410 4 228 2 292 Deferred tax liability in the balance sheet 19 410 4 228 2 292 - - -

* In accordance with IFRS, group contributions are entered as income in the parent company the year after the allocation for tax purposes in the subsidiaries.

** Tax loss carryforward was presented net of untaxed reserves in Sweden until 2014. From 2015, we present the basis split between these two elements. Comparative figures have been adjusted accordingly.

*** 2016 amount includes unrecognised tax loss carryforward in Data Respons GmbH of NOK 13.3 million (NOK 4.0 million at 30 % tax rate) which, due to uncertainties regarding the amount, was not reported as basis for deferred tax in 2014 and 2015.

The deferred tax assets in the balance sheet relate primarily to the tax loss carryforward in Data Respons A/S in Denmark and other temporary differences in the Norwegian group companies. These companies have shown healthy profits, and it is expected that it will be possible to utilise the deferred tax assets within a reasonable timeframe. Unrecognised deferred tax assets mainly relate to the tax losses carryforward in Germany. The tax losses can be carried forward indefinitely.

40 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 10 - 11

NOK 1000 GROUP DATA RESPONS ASA

NOK 1000 2016 2015 2014 2016 2015 2014 INCOME TAX EXPENCE COMPRISES Income tax payable in Norway 736 3 366 6 627 736 3 366 6 627 Income tax payable outside Norway 14 817 5 285 3 514 Total income tax payable 15 552 8 651 10 141 736 3 366 6 627 Change in deferred tax in Norway 47 58 -77 2 152 4 255 -1 138 Change in deferred tax outside Norway 197 -6 684 165 Total change in deferred tax 244 -6 626 88 2 152 4 255 -1 138 Unrecognised change in deferred tax -654 Total income tax expense/(revenue) 15 795 2 025 9 575 2 888 7 621 5 490

NOK 1000 GROUP DATA RESPONS ASA

NOK 1000 2016 2015 2014 2016 2015 2014 CALCULATIONS OF TAX BASE FOR THE YEAR Profit/loss before tax 68 805 48 514 50 376 40 919 25 391 34 309 25 % tax (2015: 27 %) 17 201 13 099 13 602 10 230 6 856 9 263 TAX EFFECT OF: Permanent differences 400 752 507 -7 574 150 -3 774 Change in not-recognised deferred tax assets **** -783 -10 031 -3 460 Adjustment from previous years -148 Differences in tax rates -938 -1 920 -1 074 Changes in tax rates 63 125 231 616 Income tax expense (revenue) for the year 15 795 2 025 9 575 2 887 7 621 5 490 Effective tax rate 23 % 4 % 19 % 7 % 30 % 16 %

**** Includes previously not-recognised deferred tax assets in Denmark.

NOTE 11 OTHER CURRENT LIABILITIES

NOK 1000 GROUP DATA RESPONS ASA

NOK 1000 2016 2015 2014 2016 2015 2014 Prepayments from customers 399 135 60 Accrued wages 44 403 33 583 31 217 2 956 999 1 519 Accrued expenses 32 689 24 937 20 303 1 571 1 115 1 273 Total other current liabilities 77 491 58 654 51 580 4 527 2 114 2 792

DATA RESPONS ASA | ANNUAL REPORT 2016 41 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 12

NOTE 12 SIGNIFICANT ESTIMATES AND JUDGEMENTS

In connection with the preparation of the group’s consolidated financial statements, the management has made assumptions and estimates about future events and applied judgements that affects the reported values of assets, liabilities, revenues, expenses and related disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities af- fected in future periods. The assumptions, estimates and judgements are based on historical experience, current trends and other factors that the group management believes to be relevant at the time the consolidated financial statements are prepared.

Key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date - that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year - are described below. The group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Accounting estimates may change because of future events. Estimates and their underlying assumptions are assessed continuously.

Changes to accounting estimates are included in the financial statements for the period in which the change occurs. If the changes apply to future periods, the impact is spread over the current and future periods. In the process of applying the group’s accounting policies, management has made the following estimates and judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements: Business combinations All business combinations are accounted for using the acquisition method, according to the requirements in IFRS 3. The acquisition date is the date on which the acquirer obtains control of the acquire. All pertinent facts and circumstances surrounding a business combination has been considered in assessing when the group has obtained control. To evaluate whether control has been obtained the group has used the guidance in IFRS 10. The group has used acquisition dates at the beginning or end of a month, the date on which it closes its books, rather than the actual acquisition date during the month. This compiles with the requirements in IFRS 3, cause the events between the convenience date and the actual acquistion date does not result in material changes in the amounts recognised. See note 5 for details on the acquistion dates on the group`s business combinations.

If the business combinations include arrangements for contingent payments to employees or selling shareholders, the group has assessed whether the arrangements are contingent considerations in the business combinations or separate transactions. Important factors in assessing the nature of the arrangement is understanding the reasons why the acquisition agreement includes a provision for contingent payments, who initiated the arrangement and when the parties entered into the arrangement. If it is not clear whether an arrangement for payments to employees or selling shareholders is part of the exchange for the acquiree or is a transaction separate from the business combination, the group has used the guidance is IFRS 3. The contingent payment in the Microdoc acquistion is concluded to be part of the business combination, as it meets the criterias in IFRS 3. See note 5 and 18 for details.

The group has according to IFRS 3 recognised identifiable intangible assets of the acquiree separately from goodwill. An intangible asset has been concluded identifiable if it has met either the contractual-legal criterion or the separable criterion in IAS 38. The group has in their business combinations assessed if there are any identifiable intangible assets separable from goodwill. The group has used the identification criterias in IFRS 3 and assessed if the criterias are met based on the nature of the business of the acquiree. The group`s business combinations in 2016 are mainly consulting companies, and the key assets in these companies are often the workforce and customer related intangible assets. The assembled workforce is not considered identifiable according to IFRS 3, so this is recognised as part of goodwill. The group has based on an analysis of the customer base in Microdoc, identified customer relationships as intangible assets. See note 5 for details.

The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. The valuation of intangible assets have been based on value-in-use calculations. Cash forecasts are based on projected cash flows based with the following key estimates and judgements; revenue growth, EBIT margin and discount rate. Future revenue growth and EBIT margin is based on the management’s best estimate and judgment. The assumptions used in the valuation of the intangible assets are the same assumptions used in the valuation of the company.

Amortisation of intangible assets are based on management’s estimates of residual value, amortisation method and the useful life of intangible assets. The usefull life of an intangible asset is based on a estimated length of time the intangible asset can reasonably be used to generate income and be of benefit to the group. The useful lives of intangible assets are reviewed at least annually taking into consideration the factors mentioned above and all other important relevant factors. A change in estimated useful life is a change in accounting estimate,and amortisation plans are adjusted prospectively. The group has estimated the usefull life of the customer realtionsship intangible asset in the Microdoc to be 10 years. Earn-out liabilities The earn-out obligations have been recognized as a contingent consideration, at fair value at the time of the acquisition, based on the facts and circumstances available at that time.

Earn-out liabilities are usually contingent on the future financial performance of subsidiaries, which needs to be estimated when calculating the expected earn-out liabilities. The earn-out liabilities are initially recognised and measured at fair value at the date of acquisition, with any subsequent remeasurements recognised in profit or loss. The determination of the fair value is based on discounted cash flows, and the key assumption is the estimate of the future financial performance of subsidiaries, normally calculated as a multiple of the company’s financial performance measured by EBIT.

At each reporting period, the original estimated fair value of the earn-out obligation needs to be adjusted for two reasons; the net present value of cash payments increases as cash settlements move closer in time, requiring an interest cost to be recognized, and updated estimates of the company’s financial performance may give rise to changes in the expected cash payments needed to settle the earn-out liability.

The interest component of the change in earn-out liability is a financial cost as it relates in its entirety to the financial structure of the acquisition. If the acquisition had been financed by external debt, an equivalent interest cost would be charged by the source of external funding. The second

42 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 12 - 13

component of the change in the earn-out liability arises due to changes in estimates. The expected financial performance of the company either surpasses or falls short of the expected performance at the time of the acquisition. This leads to a new estimate of the fair value of the obligation. In accordance with IAS 8, the effect of a change in estimates is recognized in the current operating profit or loss.

See note 18 for details related to calculation of the earn-out liabilities.

Impairment assessment Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value, less costs of disposal calculation, is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The cash flow forecasts is based on budgets approved by the Board of Directors for 2017, with a five-year projection period and do not include restructuring activities that the group is not yet committed to, or significant future investments that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intan- gibles with indefinite useful lives recognised by the group. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are disclosed and further explained in note 3.

Taxes Deferred tax assets are recognised to the extent that it is probable that the tax assets will be realised. Significant judgement is required to determine the amount that can be recognised and depends foremost on the expected timing, level of taxable profits as well as tax planning strategies and the existence of taxable temporary differences. The judgements relate primarily to tax losses carried forward in some of the group’s foreign operations. When an entity has a history of recent losses, the deferred tax asset arising from unused tax losses is recognised only to the extent that there is convincing evidence that sufficient future taxable profit will be generated. Estimated future taxable profit is not considered as convincing evidence unless the entity has demonstrated the ability of generating significant taxable profit for the current year, or there are certain other events providing sufficient evidence of future taxable profit. Uncertainty related to new transactions and events and the interpretation of new tax rules may affect these judgements. See note 10 for tax calculations.

NOTE 13 RELATED PARTY TRANSACTIONS

The Board of Directors, group management and other key employees are required to report potential related party transactions. Other than ordinary business transactions between group companies there have been no related party transactions in 2016. All transactions within the group are based on ordinary commercial terms using the arm’s length principle.

For the parent company, transactions with group companies consist mainly of fees for group management services.

See note 14 for information on the remuneration of group management and Board of Directors, as well as note 25 for balances between Data Respons ASA and other group companies.

DATA RESPONS ASA | ANNUAL REPORT 2016 43 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 14

NOTE 14 EMPLOYEES AND REMUNERATION

NOK 1000 GROUP DATA RESPONS ASA EMPLOYEE EXPENSES NOK 1000 2016 2015 2014 2016 2015 2014 Wages and salaries 278 093 226 992 205 739 8 886 6 556 6 953 Social security tax 61 213 52 315 46 760 1 050 1 468 1 729 Pension expenses, defined benefit scheme -51 -51 -41 Pension expenses, defined contribution scheme 21 251 18 580 16 187 100 143 280 Other benefits 18 790 17 648 13 482 422 672 675 Total 379 347 315 535 282 116 10 458 8 839 9 595

The average number of FTEs during the financial year was 5 (2015: 5, 2014: 5) in the parent company. The average number of FTEs in the group was 482 (2015: 390, 2014: 362) and there were 500 (2015: 404, 2014: 369) employees at the end of the year. There was 68 (2015: 67, 2014: 64) female employees in the group, 10 (2015: 11, 2014: 13) of whom were top or middle managers.

SHARES, OPTIONS AND REMUNERATION TO THE CEO, KEY EMPLOYEES, BOARD OF DIRECTORS AND NOMINATION COMMITTEE 2016 Salaries Other benefits Total No. of No. of and fees Pensions in kind remuneration shares options Kenneth Ragnvaldsen, CEO 2 715 618 72 396 1 938 198 4 726 212 272 000 Jørn Toppe, COO 1 907 647 77 700 940 840 2 926 187 214 937 Rune Wahl, CFO 2 034 395 75 573 1 070 836 3 180 804 72 000

Ole Jørgen Fredriksen, Chairman of the Board and 420 000 420 000 225 544 member of the Audit Committee Narve Reiten, Board member and 230 000 230 000 Chairman of the Audit Committee Janne Morstøl, Board member and 200 000 200 000 Chairman of the Compensation Committee Ulla-Britt Fräjdin Hellqvist, Board member and 195 000 195 000 10 000 member of the Compensation Committee Erik Langaker, Board member 190 000 190 000 Åsa Grübb-Weinberg, Board member, employee representative 30 000 30 000 6 000 Knut Skumsvoll, Board member, employee representative 30 000 30 000

Bård Brath Ingerø, Chairman of the Nomination committee 25 000 25 000 Lars Martin Lunde, Nomination committee member 20 000 20 000 Andreas Berdal Lorentzen, Nomination committee member 20 000 20 000

44 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 14

SHARES, OPTIONS AND REMUNERATION TO THE CEO, KEY EMPLOYEES, BOARD OF DIRECTORS AND NOMINATION COMMITTEE

2015 Salaries Other benefits Total No. of No. of and fees Pensions in kind remuneration shares options Kenneth Ragnvaldsen, CEO 2 731 372 72 624 191 872 2 995 868 262 000 300 000 Jørn Toppe, COO 1 887 119 71 088 41 535 1 999 742 204 937 150 000 Rune Wahl, CFO 2 001 028 72 540 166 351 2 239 919 62 000 150 000

Ole Jørgen Fredriksen, Chairman of the Board 430 000 430 000 225 544 Kathryn Moore Baker, Board member 230 000 230 000 Ulla-Britt Fräjdin-Hellqvist, Board member 195 000 195 000 10 000 Erik Langaker, Board member 210 000 210 000 Åsa Grübb-Weinberg, Board member, employee representative 30 000 30 000 4 000 Jarl Guntveit, Board member, employee representative 30 000 30 000 17 000

Haakon Sæter, Nomination committee member 20 000 20 000 572 376 Narve Reiten, Nomination committee member 15 000 15 000 Andreas Berdal Lorentzen, Nomination committee member 15 000 15 000

SHARES, OPTIONS AND REMUNERATION TO THE CEO, KEY EMPLOYEES, BOARD OF DIRECTORS AND NOMINATION COMMITTEE 2014 Salaries Other benefits Total No. of No. of and fees Pensions in kind remuneration shares options Kenneth Ragnvaldsen, CEO 2 634 149 70 788 185 979 2 890 916 252 000 150 000 Jørn Toppe, COO 1 750 369 69 804 10 274 1 830 447 194 937 75 000 Rune Wahl, CFO 2 032 741 70 728 155 879 2 259 348 52 000 75 000

Ole Jørgen Fredriksen, Chairman of the Board 330 000 330 000 225 544 Kathryn Moore Baker, Board member 200 000 200 000 Ulla-Britt Fräjdin-Hellqvist, Board member 160 000 160 000 10 000 Erik Langaker, Board member 180 000 180 000 350 000 Åsa Grübb-Weinberg, Board member, employee representative 25 000 25 000 Jarl Guntveit, Board member, employee representative 25 000 25 000 7 000

Haakon Sæter, Nomination committee member 20 000 20 000 1 134 516 Narve Reiten, Nomination committee member 15 000 15 000 Andreas Berdal Lorentzen, Nomination committee member 15 000 15 000 14 655

DATA RESPONS ASA | ANNUAL REPORT 2016 45 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 14

Remuneration of the Board of Directors On April 14, 2016 the annual general meeting decided that the remuneration of the Board of Directors should be a fixed salary of NOK 400 000, NOK 190 000 and NOK 30 000 for respectively the chairman of the board, shareholder elected board members, and employee representatives. Based on the current composition of the Board of Directors this amounts to a total of NOK 1 220 000 in remuneration. In addition, a compensation per meeting shall be paid to members of the Audit committe and Compensation committee of NOK 10 000 and NOK 5 000 for respectively the committee leaders and members. For the Nomination committee, NOK 25 000 shall be paid to the leader and NOK 20 000 shall be paid to other members. No loans or guarantees have been provided to the Board of Directors, key employees, other employees or their related parties. There are no shareholder agreements in Data Respons ASA. Board’s guidelines and main principles for the stipulation of salaries and other remuneration to key employees

Objectives The objective of the remuneration policy for the CEO and other senior management is to provide a competitive compensation that contains incentives to work for profitable growth and long term value creation for the shareholders within the scope of the company’s adopted values and strategies. The Board of Directors is in general positive to compensation that ensures convergence of the financial interests of the executive personnel and the shareholders.

Authority The Board shall determine the salary and other remuneration to the CEO. The CEO shall determine the salaries and other remuneration for other senior management. The Board shall establish guidelines for remuneration to other senior management. Any remuneration to other senior management beyond the guidelines shall be approved by the Board of Directors. Any share-based incentive plans should always be approved by the Board. Guidelines and principles for remuneration The CEO and other senior management shall be paid a competitive fixed basic salary and other administrative benefits in line with similar positions in comparable companies in Norway. In addition to the fixed salary, the CEO and other senior management have annual variable salaries through bonus agreements in which payments are dependent on achieving goals for profitability improvement, growth and cash flow targets for the company. For the CEO and other senior management the variable salary shall be a maximum of 50 % of the fixed base salary.

The company has established a share savings programme for employees in order to create dedication for value creation and ensure convergence of the financial interests of the employees and the shareholders. The CEO and other senior management are invited to participate in the programme on equal terms as other employees. Employees subscribe to shares at a maximum of 25 % discount to market value at the time of share subscription. The Board of Directors decide on the on the maximum amount of shares that can be subscribed by employees and the discount. 288 000 new shares were issued under this programme in 2016, refer to note 8 for further information. In order to create a long term incentive for value creation and attract and retain key personnel, the company had a share option scheme for the CEO and other senior management in accordance with the approved framework at the annual general meeting held in 2013. The share option scheme had a duration of three years and was established to give the company’s management incentives to create value for the shareholders. The share option scheme concluded in 2016.

The CEO and other senior management are covered by the prevailing defined contribution pension schemes on the same terms as other employees. The company does not have any defined benefit pension or insurance schemes. The CEO is entitled to 12 months’ salary after termination or amendment of his position/employment. Other senior management have a mutual notice period of up to six months and no special arrangements.

Employee share option scheme for senior management On April 25, 2013 the annual general meeting of Data Respons ASA approved a share option program for 6 employees in top management positions with a total scope of 1 200 000 options. The options will be issued in 3 equal parts over a 3 year period. The share options can only be exercised in the 10 business days following the annual general meeting in 2016, scheduled for April 14, 2016. The strike price is set at market price the start of each vesting period for the 1/3 issued. In May 2013 the strike price for the first vesting period was set to NOK 6.92. In May 2014, the strike price for the second vesting period was set to 9.11. In May 2015, the strike price for the third and final vesting period was set to NOK 13.02 . Strike prices for options granted are adjusted for subsequent dividend payments. The first 400 000 options was issued in May 2014, another 400 000 options were issued in May 2015 and the last 400 000 options were issued in April 14 2016, totalling 1 200 000 options. In April 2016, a total of 800 000 options were excercised and 400 000 options expired. At December 31 ,2016, there were no outstanding share options.

46 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 14

MOVEMENTS IN THE NUMBER OF OUTSTANDING SHARE OPTIONS AND THE ASSOCIATED WEIGHTED AVERAGE EXERCISE PRICES ARE AS FOLLOWS:

NOK 1000 2016 2015 2014

Average Average Average NOK 1000 Options Options Options Exercise price Exercise price Exercise price

As of January 1 6.52 800 5.92 400 - - Granted 13.02 400 9.11 400 6.92 400 Exercised -5.52 -800 Expired -13.02 -400 Dividend adjustment -1.00 -1.00 -1.00 As of December 31 - - 6.52 800 5.92 400

The fair value of the options granted to employees has been calculated using the Black & Scholes’ valuation model for options. The most important input data included the share price of NOK 7.00 when granted, estimated exercise price of NOK 6.92 for all 3 years, estimated volatility of 43.15 % based on the share prices over a period of one year leading up to the issue date, risk-free interest rate of 1.26 - 1.51 %, and a term of 1, 2 and 3 years, respectively. The cost is calculated based on the total of 1 200 000 options to be issued and will be accrued over the vesting period with deductions for the estimated number of forfeited options. In accordance with IFRS 2, the fair value of options granted to employees is accrued over the vesting period and in 2016 a total of NOK 0.1million was expensed related to options granted to the CEO and key employees.

GROUP GROUP REMUNERATION TO THE AUDITOR (NET OF VAT) NOK 1000 2016 2015 2014 2016 2015 2014 Auditing services 1 108 960 878 232 190 190 Other certification services 40 25 35 9 20 Tax advice 26 26 24 Other non-auditing services

DATA RESPONS ASA | ANNUAL REPORT 2016 47 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 15 - 16

NOTE 15 FINANCIAL ITEMS

NOK 1000 GROUP DATA RESPONS ASA

NOK 1000 2016 2015 2014 2016 2015 2014 FINANCIAL INCOME Interest received from group companies 34 Other interest income 413 363 1 186 15 36 725 Other financial income 11 318 4 141 5 371 3 383 889 Total financial income 11 731 4 504 6 557 3 398 36 1 647 FINANCIAL EXPENSES Interest expenses 5 122 973 1 305 2 313 517 699 Other financial expenses 6 242 9 748 9 352 840 4 323 4 904 Total other financial expenses 11 365 10 721 10 657 3 152 4 840 5 603

NOTE 16 CASH AND CASH EQUIVALENTS

NOK 1000 GROUP DATA RESPONS ASA

NOK 1000 2016 2015 2014 2016 2015 2014 Cash and bank deposits 62 895 39 016 42 833 388 422 -17 303 – of which restricted -4 660 -4 846 -4 612 -388 -422 -360 Unrestricted cash and cash equivalents 58 234 34 170 38 221 - - -17 663 Unutilised overdraft facilities 40 000 40 000 40 000 40 000 40 000 40 000 Unutilised other credit facilities 33 655 40 000 40 000 33 655 40 000 40 000 Cash reserve 131 889 114 170 118 221 73 655 80 000 62 337

Data Respons has established a corporate account system in which Data Respons ASA is the corporate account holder, while the other group companies are subaccount holders. The bank can set off any withdrawals or deposits against each other, so that the net position represents the balance between the bank and Data Respons ASA. As of December 31, 2016 there was a net positive balance in the corporate account system of NOK 17.9 million. The overdraft limit for the corporate cash pool system is NOK 40 million, and the group had unrestricted cash outside the cash pool of NOK 40.3 million.

In addition to the NOK 40 million overdraft limit, Data Respons has a long term revolving credit facility of NOK 70 million as of December 31, 2016; of which NOK 36.3 million has been utilised in the acquisition of MicroDoc. Unutilised long term revovling credit facility as of December 31, 2016 is NOK 33.7 million.

The total unutilised cash reserve for the group at December 31, 2016 is NOK 131.9 million. Restricted cash consists of employee’s tax deductions of NOK 4.7 million.

The NOK 40 million credit facility is available to the company until March 2021 and the revolving credit facility is available to the company until Sep- tember 2021.

There are financial covenants which may restrict the use of the credit facilities. The equity-to-asset ratio should be minimum 35 % for the group. As of December 31, 2015 the ratio was 36 %. Furthermore, there is a covenant requirement that the net interest bearing debt divided by a 12 months rolling consolidated EBITDA should not exceed 3.0. As of December 31, 2016, the ratio was 1.3.

In 2017, the equity-to-asset ratio covenant has been reduced to 30 % for all remaining periods.

48 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 17

NOTE 17 INTEREST-BEARING LOANS AND BORROWINGS

NOK 1000 GROUP DATA RESPONS ASA

NOK 1000 2016 2015 2014 2016 2015 2014 Credit facility 59 031 59 031 Revolving credit facility 36 301 36 301 Total interest-bearing loans and borrowings 95 332 - - 95 332 - - Of which: Current liability portion 14 691 14 691 Non-current liability 80 641 80 641

Data Respons has interest-bearing loans and borrowings of EUR 10.5 million related to the acquisition of MicroDoc. The interest-bearing loans and borrowings consists of a credit facility of EUR 6.5 million and a revolving credit facility of EUR 4.0 million, and is measured at amortised cost.

The credit facility has a biannual repayment profile over 7 years. The credit facility has a floating interest rate; EURIBOR with a fixed margin of 2.9 % in 2016.

The revolving credit facility has a biannual interest repayment profile over 5 years with a lump-sum downpayment after 5 years in 2021. The revolving credit facility has a floating interest rate; EURIBOR with a fixed margin of 2.5 % in 2016.

Data Respons is subject to certain covenants as part of its credit facility and revolving credit facility. The equity-to-asset ratio should be minimum 35 % for the group, and as of December 31, 2016 the ratio was 36 %. Furthermore, there is a covenant requirement that the net interest bearing debt divided by a 12 months rolling consolidated EBITDA should not exceed 3.0. As of December 31, 2016 the ratio was 1.3.

In 2017, the equity-to-asset ratio covenant has been reduced to 30 % for all remaining periods.

DATA RESPONS ASA | ANNUAL REPORT 2016 49 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 18

NOTE 18 FAIR VALUE MEASUREMENTS

NOK 1000 GROUP DATA RESPONS ASA

Fair Value NOK 1000 2016 2015 2014 2016 2015 2014 Level Category Current earn-out liabilities 3 FVPLT * 39 696 2 371 1 985 34 880 Non-current earn-out liabilities 3 FVPLT * 106 798 2 280 4 179 95 307 Total 146 494 4 651 6 164 130 187 - -

*FVPLT: Fair value through profit and loss

Data Respons has earn-out liabilities that are initially recognised and measured at fair value at the date of acquisition, with any subsequent remeasurements recognised in profit or loss. The fair value of the earn-out liabilities are calculated by estimating the future financial performance of subsidiaries, normally calculated as a multiple of the company’s financial performance measured by EBIT.

The earn-out liabilities are classified in the statement of financial position as disclosed in the table above. There are no significant differences between total carrying value and fair value.

Re-estimation effects following changes in estimates of future financial performance of subsidiaries are recognised in the income statement in the group and capitalised as part of the cost of the asset in Data Respons ASA. As the realised EBIT in Microdoc during 2016 met the estimate of 2016 and there was no changes in the EBIT forecast for remaining years, the earn-out obligation has not been re-estimated at December 31, 2016. An interest cost related to the earn-out obligation of NOK 2.1 million has been expensed as a financial item in the income statement. As the realised EBIT during 2016 met the estimate of 2016 and there was no changes in the EBIT forecast for remaining years for South Pole Consulting AB and Atero AB, the earn-out obligations have not been re-estimated at December 31, 2016. Interest costs related to the earn out obligations of NOK 0.3 million have been expensed as a financial item in the income statement.

The earn-out obligations are usually settled over specified time period, where the previous owners receive additional payments based on the performance of the acquired company at a specified time period after the acquisition. Earn-out obligations as of December 31, 2016 relate to the acquisition of iWise AB, Atero AB, South Pole Consulting AB and MicroDoc Computersysteme GmbH, see note 5 for further details.

The additional payments for iWise AB, Atero AB and South Pole Consulting AB will be made in cash by the acquiring company Sylog Sverige AB. Remaining earn-out obligations from the acquisitions will be settled in remaining payments in 2017, 2018 and 2019. The additional payments for Microdoc will be made in cash by the acquiring company Data Respons ASA. Remaining earn-out obligations from the acquisitions will be settled in 2017, 2018 and 2019. Se note 20 for maturity table.

NOK 1000 CHANGES IN EARNOUT LIABILIIES GROUP

NOK 1000 2016 2015 2014

January 1 4 651 8 654 Recognised in the income statement during the year

- Interest cost 2 512 217 344 - Re-estimation 34 132 -1 087 Recognised in the balance sheet during the year

- Paid during the year -5 992 -1 780 -1 800 - Additions from acquired companies 150 900 - Translation differences -5 610 -82 53 December 31 146 494 4 651 6 164 Classified as current earn-out liabilities 39 696 2 371 1 985 Classified as non-current earn-out liabilities 106 798 2 280 4 179

50 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 18

The significant unobservable inputs used in the fair value measurements categorised within Level 3 of the fair value hierarchy, together with a quantitative sensitivity analysis as at 31 December 2016 and 2015 are as shown below:

DESCRIPTION OF SIGNIFICANT UNOBSERVABLE INPUTS TO VALUATION

Valuation Significant Range Sensitivity of the input to the fair value technique unobservable inputs

Earn-out liabilities DCF method Long-term growth rate 2016: 2.5 % - 20 % 1 % (2015: 1 %) increase (decrease) for cash flows for sub- 2015: 2.5 % - 10 % in the growth rate would result in an sequent years increase (decrease) in fair value by NOK 4.5 million (2015: NOK 0.1 million)

Long-term opearting 2016: 5 % - 25 % 1 % (2015: 1 %) increase (decrease) in margin 2015: 5 % - 10 % the margin would result in an increase (decrease) in fair value by NOK 10.5 million (2015: NOK 0.3 million)

WACC 2016: 5 % 1 % (2015: 1 %) increase (decrease) in 2015: 5 % the WACC would result in a decrease (increase) in fair value by NOK 2.4 million (2015: NOK 0.1 million)

DATA RESPONS ASA | ANNUAL REPORT 2016 51 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 19

NOTE 19 FINANCIAL ASSETS AND LIABILITIES

Financial instruments and their carrying amounts recognised in the consolidated statement of financial position at 31 December, as defined by IAS 39, are presented below. There are no significant differences between total carrying value and fair value.

2016 GROUP DATA RESPONS ASA

Fair value Financial Fair value Loans Financial through Loans liabilities Total through and liabilities Total NOK 1000 profit or and at amorti- carrying profit or receiva- at amorti- carrying loss receivables sed cost amount loss bles sed cost amount FINANCIAL ASSETS Other non-current assets 901 901 729 729 Trade receivables 225 624 225 624 Other current assets 15 549 15 549 1 022 1 022 Cash and cash equivalents 62 895 62 895 388 388 Total financial assets - 304 968 - 304 968 - 2 139 - 2 139 FINANCIAL LIABILITIES Interest-bearing loans and 80 641 80 641 80 641 80 641 borrowings Other non-current financial liabilities 106 798 106 798 95 307 95 307 Current loans from group companies - 59 749 59 749 Current interest-bearing loans and 14 691 14 691 14 691 14 691 borrowings Trade payables 111 011 111 011 482 482 Other current financial liabilities 39 696 39 696 34 880 34 880 Total financial liabilities 146 494 - 206 343 352 837 130 187 59 749 95 814 285 750

2015 GROUP DATA RESPONS ASA

borrowings - - Other non-current financial liabilities 2 280 2 280 - Short term loans from group companies - 45 367 45 367 Current interest-bearing loans and - - borrowings Trade payables 103 269 103 269 1 431 1 431 Other current financial liabilities 2 371 2 371 - Total financial liabilities 4 651 - 103 269 107 920 - 45 367 1 431 46 798

52 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 19 - 20

2014 GROUP DATA RESPONS ASA

Fair value Financial Fair value Loans Financial through Loans liabilities Total through and liabilities Total NOK 1000 profit or and at amorti- carrying profit or receiva- at amorti- carrying loss receivables sed cost amount loss bles sed cost amount FINANCIAL ASSETS Other non-current assets 158 158 - Trade receivables 170 100 170 100 255 255 Other current assets 16 125 16 125 971 971 Cash and cash equivalents 42 833 42 833 -17 303 -17 303 Total financial assets - 229 215 - 229 215 - -16 077 -16 077 FINANCIAL LIABILITIES Interest-bearing loans and - - borrowings Other non-current financial liabilities 4 179 4 179 - Short term loans from group companies - - Current interest-bearing loans and - - borrowings Trade payables 79 985 79 985 831 831 Other current financial liabilities 1 985 1 985 - Total financial liabilities 6 164 - 79 985 86 149 - - 831 831

NOTE 20 FINANCIAL RISK MANAGEMENT

Financial risks are continuously monitored and analysed. Financial risk includes credit risks, liquidity risks, currency risks and interest rate risks. Measures are taken to mitigate these risks and reduce the probability for financial losses. Management of financial risk is performed by the group’s central finance department under the guidelines set out by the Board of Directors. The main principle is to minimise exposure to financial risk and reduce the probability for financial losses. There have been no significant changes in the group’s objectives, policies or processes for managing capital during the reporting period.

The financial risks to which the groups’s financial assets and financial liabilities are exposed are market risk, credit risk and liquidity risk. The market risk the group is exposed to is the risk that the fair value of future cash flows of its financial instruments – such as the interest bearing loan denominated in EUR and that is at variable interest rates – fluctuate because of changes in foreign currency or interest rates. The groups’s exposure to credit risk relates to its financial assets – such as amounts owed by customers and deposits held at banks – and is the risk that the counterparty defaults and does not meet its financial obligation to the group. Liquidity risk is the risk that the group will not be able to meet its current and future cash flow and collateral requirements without negatively and materially affecting the groups daily operations or overall financial condition and the potential for expansion. Credit risk The group is exposed to credit risk from its operating activities, primarily its accounts receivable and accrued revenue, and from its cash and cash equivalents deposited with banks. Identified default risks for individual customers are reflected in bad debt allowances. Data Respons’ customers largely consist of large and medium-sized companies with good solvency, and the customer base is diversified into different vertical market segment. Neither of the group’s operating segments had any significant concentration of credit risk. Credit checks are performed on new customers. Histo- rically, bad debt losses have been low, and the group does not expect to see any major increase in losses. Liquidity risk and capital management The primary objective of Data Respons’ capital management is to maintain a healthy capital ratio and financial flexibility to support the group’s continued operations, potential expansion and divdend payments according to the established dividend policy.

The group manages liquidity risk through continuous review of future commitments and sources of liquidity. Cash flow forecasts are prepared and adequate utilised financing facilities are monitored on a monthly basis.

The group emphasises financial flexibility. An important part of this emphasis is to minimise liquidity risk through ensuring access to a diversified set of funding sources. The group will finance potential expansions through cash generated by the operational activities and the use of credit facilitites. To cover potential funding needs, the group has secured a credit facility of NOK 110 million; of which an overdraft limit of NOK 40 million and revolving credit facility of NOK 70 million. As of December 31, 2016, NOK 36.3 million of the revolving credit facility have been used in the acquisition of MicroDoc, and total unutilised credit facilities as of December 31, 2016 is NOK 73.7 million.

DATA RESPONS ASA | ANNUAL REPORT 2016 53 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 20

The group has an interest bearing loan (credit facility) of NOK 59 million related to the aquisition of MicroDoc. Total interest bearing loans and borrowings at December 31, 2016 is NOK 95.3 million. A description of the maturity of the interest bearing loans and borrowings is specified in the table below. There are financial covenants which may restrict the use of the total credit facilities, see note 17 and 18.

The group has 45 - 90 days in credit terms from the main suppliers. Surplus cash holdings will be kept in interest-bearing bank accounts with repu- table banks. As of December 31, 2016 the group has NOK 62.9 million in cash. The group will primarily finance dividends through cash generated by the operational activities. Dividend policy - Data Respons objective is to pay out a minimum of 50 % of net income in the form of dividends - The payout should reflect Data Respons aim to give its shareholders competitive returns benchmarked against alternative investments in comparable companies. - The dividend pertaining to a fiscal year will be declared at Data Respons annual general meeting in the following year. - Data Respons may consider buying back shares in addition to ordinary dividend payments. Such considerations will be made in the light of the financial situation of the company.

The following tables show the maturity profile of the group’s financial liabilities based on contractual payments and non-cancellable lease commitments for premisis ,equipment and vehicles. The amounts disclosed in the table are undiscounted cash flows.

MATURITY PROFILE

NOK 1000 2017 2018 2019 2020 2021 Total Interest-bearing loans and borrowings 17 284 9 526 9 312 9 102 45 243 90 467 Financial liabilities 39 696 56 555 50 243 146 494 Trade payables 111 011 111 011 Non-cancellable lease commitments 23 145 23 145 23 145 6 861 76 296 Total 191 136 89 226 82 699 15 963 45 243 424 268

Currency risk Data Respons has operations in five different countries with five different currencies and is as such exposed to currency fluctuations when transla- ting into the group currency NOK.

As of December 31, 2016, the interest bearing loans and borrowings in the group are in EUR and is exposed to currency risk related to changes in value of NOK compared to EUR. A change of +/-5 % in the exchange rate between NOK and EUR will have an impact of +/-NOK 4.8 million. The group has earn-out liabilities in EUR and SEK and is exposed to currency risks related to changes in value of NOK compared to EUR and SEK. A change of +/-5 % in the exchange rate between NOK compared to EUR and SEK will have an impact of +/-NOK 7.2 million. In addition, the group had trade receivables, trade payables and some other current financial assets and - liabilities denominated in foreign currencies at December 31, 2016 and under standard credit terms (where applicable). Due to the short-term nature of these financial assets and liabilities, the foreign currency risk is considered low.

Exposure from individual subsidiaries vary according to the nature of their business. The R&D Services segment abroad generate a currency exposure for the group on the net profit only, as both revenue and expenses are in the same local currency. Hedging has been deemed unnecessary. For the Solutions segment the exposure is higher, as parts are purchased from different suppliers across the globe and predominately invoiced in USD or EUR. With most of our major customers, the group has entered into a agreements whereby material fluctuations in price of components due to currency, lead to a corresponding adjustment of the selling price. The group then achieves a natural hedge on a significant part of its embedded products and solutions sales. In instances where it is not possible to enter such an agreement with the customer, currency hedges on large deliveries of components will be considered.

The group’s activities are global and the foreign currency risk related to its operating activities may change from year-to-year depending on the different jurisdictions the group operates in. In general, the majority of operating revenues and costs are denominated in foreign currencies. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. The group is exposed to interest rate risk through the group’s interest bearing loans and borrowings with floating interest rates and cash management activities. Changes in interest rates affect the fair value of assets and liabilities. Interest income and interest expense in the income statement are in- fluenced by changes in interest rates in the market. The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant:

NOK 1000 Increase/ decrease in basic points Effect on profit before tax +100 -47 2016 -100 47 +100 264 2015 -100 -264

54 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 21 - 23

NOTE 21 OTHER OPERATING EXPENSES

NOK 1000 GROUP DATA RESPONS ASA

NOK 1000 2016 2015 2014 2016 2015 2014 Expenses related to premises and equipment 21 009 21 399 19 515 814 681 652 External services 10 573 6 354 6 249 7 993 2 624 3 216 Marketing expenses 6 918 7 637 8 166 537 565 746 Other operating expenses 30 722 27 309 24 751 4 143 5 025 3 861 Total 69 222 62 698 58 682 13 486 8 895 8 475

NOTE 22 RESEARCH AND DEVELOPMENT

The group does not have significant costs related to R&D activities. Intangible assets of NOK 3.1 million have been recognised in the balance sheet related to product development in 2016, see note 3 for furhter information.

NOTE 23 LEASES

The group has entered into operating leases on office and manufacturing buildings, IT equipment and certain vehicles. Operating lease payments are recognised as an operating expense in the income statement on a straight-line basis over the lease term.

EXPENCED LEASE RENTALS IN THE GROUP NOK 1000 2016 2015 2014 Rental of premises in Norway 9 150 10 459 10 481 Rental of premises outside Norway 8 895 7 917 6 835 Operational leasing of IT equipment 1 668 2 221 1 861 Operational leasing of vehicles 3 796 3 758 1 161

The group does not have any purchase options on properties.

The group has entered into operating leases on offices in Norway, Sweden, Denmark and Germany. These leases have terms of between three and five years. In Norway, the lease for the head office at Høvik ends at June 30, 2020.

In Sweden the lease for the head office in Stockholm ends at April 30, 2020. The other offices in Norway, Sweden, Germany and Denmark have lease terms between three and five years and ends in 2019 and 2020.

The group has also entered into operating leases on certain vehicles and IT equipment, with lease terms between one and three years.

DATA RESPONS ASA | ANNUAL REPORT 2016 55 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 24 - 25

NOTE 24 GUARANTIEES AND COMMITMENTS

NOK 1000 GROUP DATA RESPONS ASA

NOK 1000 2016 2015 2014 2016 2015 2014 GUARANTEES Guarantees 7 387 7 897 5 511 440 440 435 BOOK VALUE OF SECURED ASSETS USED AS COLLATERAL

Trade receivables 51 750 54 834 57 336 Inventories 19 106 29 684 30 655 Total 70 856 84 518 87 991 - - -

Guarantees of NOK 6.9 million have been provided in connection with lease agreements and a guarantee of SEK 0.5 million has been provided to Swedish customs.

Guarantees and overdraft facilities are secured by a lien on inventory, machinery and equipment and trade receivables in Data Respons Norge AS. A total lien of NOK 80 million has been placed on inventories, a total lien of NOK 10 million has been placed on machinery and equipment and a total lien of NOK 80 million has been placed on trade receivables.

NOTE 25 INTERCOMPANY BALANCES

DATA RESPONS ASA Current receivables Current liabilities

NOK 1000 2016 2015 2014 2016 2015 2014 Data Respons Norge AS 390 255 1 003 359 Data Respons AB 7 7 13 Data Respons GmbH 7 Total - 396 255 7 1 010 371

Data Respons ASA had an overdraft in the corporate cash pool of NOK 59.7 at December 31 2016, presented as short term loans from group companies in the statement of financial position. Sales revenue for Data Respons ASA consists mainly of group management fee. There are no significant intercompany receivables or liabilities at the end of 2016.

56 DATA RESPONS ASA | ANNUAL REPORT 2016 CHAPTER 3: FINANCIAL STATEMENTS AND NOTES | Note 26

NOTE 26 EVENTS AFTER THE BALANCE SHEET DATE

On March 1, 2017, Data Respons entered into an agreement to acquire TechPeople A/S. TechPeople was established in 2010 and is specialises in software and application development, architecture and system design as well as communication for embedded and IoT solutions. The acquisition strengthens Data Respons’ position as a leading player within R&D Services in Denmark

TechPeople had a turnover of DKK 52 million for 2016, resulting in a growth of 49 % and a profit before tax of DKK 3.6 million. By the end of 2016, the company had approximately 50 consultants in R&D assignments at its customers. As of December 31, 2016, total assets in TechPeople was DKK 15.3 million.

Before the acquisition, Data Respons owned 50 % of the shares in TechPeople A/S and the investment is, in the financial statements, classified as a joint venture according to IFRS 11 and is accounted for by using the equity method. The group’s share of the results in joint ventures and its aggregated assets and liabilities, are specified in note 4.

From March 1, 2017, TechPeople’s profit and loss statement and balance sheet will be fully consolidated in the consolidated accounts of Data Respons. It has been agreed an up front consideration at closing of the agreement where the seller receives 434 000 newly issued shares in Data Respons ASA through a private placement. In addition, the seller will receive annual earn-out payments depending on the company’s actual EBIT for 2017, 2018 and 2019. Annual earn-out payments will be due for payment in Q2 the year following the respective earn-out year.

The acquisition of TechPeople is considered as a business combination achieved in stages under IFRS 3, and Data Respons has remeasured its previously held equity interest in TechPeople at its acquisition-date fair value and will recognise the resulting gain in the income statement in 2017. It is assessed that the carrying amount of assets and liabilities in TechPeople represents its fair value at the acquisition date March 1 2017. Based on the preliminary purchase price allocation, the gross purchase price for 100 % of the shares is estimated to be NOK 54.8 million. Book value of the equity is NOK 1.5 million, which gives an excess value of NOK 53.3 million. The excess value have been allocated to customer relationship intangible asset, deferred tax on excess value and goodwill. The goodwill of NOK 48.9 million comprises the value of expected synergies arising from the acquisition, assembled workforce and deferred tax on excess values.

The fair values of the identifiable assets and liabilities of the business as at the date of acquisition were:

NOK MILLION TechPeople A/S Trade receivables 15.5 Cash and cash equivalents 6.9 Other assets 0.2 Total assets 22.5 Trade payables 10.7 Other current liabilities 10.3 Total liabilities 21.0

Net identifiable net assets 1.5 Total identified excess value 53.3

Intagible assets 5.7 Deferred tax on excess value -1.3 Goodwill 48.9

There have been no other events subsequent to the reporting period that might have a significant effect on the financial statements for 2016.

DATA RESPONS ASA | ANNUAL REPORT 2016 57 AUDITORS REPORT

58 DATA RESPONS ASA | ANNUAL REPORT 2016 AUDITORS REPORT

DATA RESPONS ASA | ANNUAL REPORT 2016 59 AUDITORS REPORT

60 DATA RESPONS ASA | ANNUAL REPORT 2016 AUDITORS REPORT

DATA RESPONS ASA | ANNUAL REPORT 2016 61 Digitalisation of the industries of tomorrow

62 DATA RESPONS ASA | ANNUAL REPORT 2016 DEFINITIONS ORDER INTAKE: Order intake means that Data Respons has received a purchase order from a customer or has entered into a delivery contract with a customer in the relevant accounting period where Data Respons will deliver a specific solution or consultancy services at a predefined cost. The timeframe for the orders vary.

For the R&D Services segment the order will typically be executed immediately and produce revenue over the next 3 to 12 months. The customer has the right to cancel the contract on short notice, but Data Respons rarely experience cancellations.

For the Solutions segment, delivery (and revenue) will typically start 6-18 months after the order date. Once deliveries have started, the relevant order will include serial deliveries over a period of 12 to 36 months.

Some Solutions orders are firm contracts, especially for deliveries within the next 12 months. Other orders, especially long-term contracts, have estimated delivery volumes, are non-binding for the customer and could either be cancelled, adjusted or prolonged in time. The risk of cancellations exists; however, the risk for adjustments of the delivery volume or extensions of the delivery period is a larger risk.

ORDER BACKLOG: Order Backlog is the total NOK value of unfulfilled and undelivered orders as of the balance sheet date in the relevant accounting period. The order backlog is adjusted for currency fluctuations, revisions of the order quantity and cancellations on a quarterly basis.

DEFINITION OF NON-IFRS FINANCIAL MEASURES:: EBIT: is defined as earnings before interest and tax. Equivalent to operating profit.

EBITDA: Is defined as operating profit adjusted for depreciation, amortisation and impairments.

EBITDA margin before corporate costs: Is defined as operating profit adjusted for depreciation, amortisation and impairments, before allocation of corporate costs divided by revenues

EQUITY RATIO: Is defined as total equity divided by total assets.

RETURN ON EQUITY: Profit/loss for the year / Average equity

RETURN ON TOTAL ASSETS: EBIT / Average total assets

WORKING CAPITAL: (Current receivables + Inventories) - Current liabilities

LIQUIDITY RATIO: Current assets / current liabilities

EARNINGS PER SHARE (EPS): For calculation of EPS, see Note 8

NOCF: Net operating cash flow

DATA RESPONS ASA | ANNUAL REPORT 2016 63 Main offices

Group HQ Denmark Data Respons ASA Data Respons A/S Sandviksveien 26 Smedeholm 10 NO-1363 Høvik, Norway DK-2730 Herlev Tel.: +47 67 11 20 00 Tel.: +45 88 32 75 00 [email protected] [email protected] Sylog AB Germany Norway Jan Stenbecks Torg 17, III Data Respons GmbH Data Respons Norge AS SE-164 40 Kista Amalienbadstr. 41, Bau 53 Sandviksveien 26 Tel.: +46 (0)8 750 49 00 DE-76227 Karlsruhe NO-1363 Høvik Tel.: +49 721 480 887 10 Tel.: +47 67 11 20 00 TechPeople A/S [email protected] [email protected] Smedeholm 10 DK-2730 Herlev Sweden Taiwan Tel.: +45 88 32 75 00 Data Respons AB Data Respons ASIA Jan Stenbecks Torg 17, III 18F-6 NO. 738, MicroDoc Computersysteme GmbH SE-164 40 Kista Chung-Cheng Road, Elektrastrasse 6A Tel.: +46 8 501 688 00 Chung-Ho, New Taipei D-81925 Munich, Germany [email protected] Tel.: +886 2 8226 2150 Tel: +49-89-551969-0

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