annual report 2009
09 communication systems for air traffic control
MEASURING SYSTEMS control systemS for oil and gas for power generation
2 DATA RESPONS ASA | ANNUAL REPORT 2009 Data Respons’ vision is to be a leader in embedded solutions in Europe by 2010.
contents
embedded SOLUTIONS 02 Data Respons 04 CEO’s statement Embedded solutions are computer systems 06 This is Data Respons that perform one or more dedicated tasks, and can be described as the computer brain of a machine, 08 Board of Directors’ report a system or an industrial end product. 15 The Board of Directors
Embedded solutions can be used in a broad range 16 Investor information of industrial applications, such as fighter plane radar 17 Growth drivers systems, ticketing systems for public transportation, 18 Key figures network solutions for video conferencing equip- ment or fiscal measuring systems for oil and gas. 20 Financial statements and notes 21 Statement of comprehensive income Data Respons supplies embedded solutions to 22 Statement of financial position 24 Equity statement leading Original Equipment Manufacturers, system 25 Cash flow statement integrators and vertical product suppliers. 26 Notes 46 Auditor’s report
Financial calendar 16.04.10 Presentation of Q1 2010 22.04.10 Annual General Meeting surveillance systems 09.07.10 Presentation of Q2 2010 for medical equipment 15.10.10 Presentation of Q3 2010 26.01.11 Presentation of Q4 2010
DATA RESPONS ASA | ANNUAL REPORT 2009 3 CHAPTER 1: DATA RESPONS CEO’s statement
During 2009 we completed some of our most complex and innovative projects.
LOOKING AHEAD
We have implemented a series of initiatives making us more efficient and focused, and as a result we have increased our competitiveness. The company is lean and our staff are alert, which gives us reason for optimism going forward. a challenging year behind us been working on leading-edge projects in the as a change agent for our customers. Our goal The financial crisis and the subsequent world- medical, offshore, defence, clean tech, auto- is to deliver speed, quality and improved cost- wide recession had a profound impact on the mation, transportation, telecoms and other effectiveness. The solution model, with local climate for our customers and partners. As a industries. Our solutions are embedded in expertise and a flexible and cost-effective pro- result we were confronted with sudden shifts systems and products for world-class compa- duction setup in Asia, provides a strong value in market demand in some regions, and our nies, as well as by medium-size players and proposition to our customers. customers have been careful with their in- innovative start-ups. vestment policies, R&D projects and product Secondly, during the year we have imple- procurements. The recent customer survey shows that we mented changes, sharpened our business have improved overall results over last year. model and processes, increased our sales en- change Of course, this is no reason to rest on our lau- ergy, reduced the cost base and improved our Data Respons has demonstrated the ability to rels, as we continuously need to improve our powers of execution. change and act quickly in a challenging year. expertise, processes and value chain. Never- This is vital for survival in a volatile world. Lo- theless, this is a positive reminder of our good Thirdly, we see some signs of optimism in the cal responsibility and local decision-making work after a demanding year for us all, and economy. Several industries and customers ex- power have been crucial, giving us both the it tells me something about the potential in pect better conditions going forward. Further- energy and the local knowledge needed for our organisation: our employees are strongly more, the need for more intelligent products precise actions and changes. Our efforts have motivated. and increased functionality and services remains produced results: after a tough second quar- evident and is no doubt a long-term trend. ter, the company returned to profitability for renewed optimism the rest of the year. In spite of the fact that we still face a chal- On this background, we are expecting profit- lenging market, I have an optimistic view of able growth in 2010. strong effort the future. Despite the challenging economic environ- ment, it is important to bear in mind that Firstly, Data Respons has a strong vision, strat- during 2009 we completed some of our most egy and competitive concept that position us complex and innovative projects. Our en- well in a long-term growth market. We are a gineering experts and solutions teams have total provider of embedded solutions and act Kenneth Ragnvaldsen, CEO, Data Respons ASA
4 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 1: DATA RESPONS CEO’s statement
DATA RESPONS ASA | ANNUAL REPORT 2009 5 CHAPTER 1: DATA RESPONS This is Data Respons
helsinki bergen oslo kongsberg VÄSTERÅS stockholm stavanger
linköping gothenburg
Århus lund ASIA Gråsten Copenhagen
taipei
erlangen karlsruhe
This is Data Respons Data Respons supplies embedded solutions to leading original equipment manufacturers, system integrators, application providers and vertical product suppliers. Our three business areas enable customers to choose a form of collaboration that suits their needs. solutions products Data Respons develops tailored solutions by Data Respons offers embedded computer combining customised HW/SW with computer products from world-leading partners that products from leading partners. We are: cover all relevant industrial standards. In this business area we: Involved in one or more phases of the solution’s life cycle Are number one in the Nordic region A strategic partner for the customer Minimise time to market through quick access from our global partners services Offer tried-and-tested products Data Respons offers experienced specialists for demanding industrial with a broad range of expertise from different environments disciplines. In this business area we:
Provide local access to a high level of exper- tise when needed Participate in many development projects for customers in different industries
6 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 1: DATA RESPONS This is Data Respons
Data Respons offers full-scale embedded solutions, covering all phases from specification, development, testing and delivery to the next generation.
established: 1986. FINANCIAL SNAPSHOT
VISION: To be the leader in Europe in embedded KEY FIGURES TS solutions for the industrial market by 2010. NOK million 2009 2008 Operating revenue 726.1 818.5 C MISSION: To strengthen our customers’ competi- EBITDA -20.6 62.4 tiveness by providing the best embedded solutions, Order backlog 425 515 A products and services on the market. Employees 464 511
BUSINESS FORM: Public limited company, listed on
the Oslo Stock Exchange (ticker: DAT). REVENUE PER YEAR (NOK million)
1000
CERTIFICATIONS: ISO 9001:2000, ISO 14001:2004 800
600 number of employees: 464 400 KE Y F 200
0 2005 2006 2007 2008 2009
REVENUE BY BUSINESS AREA close to the customer Data Respons forms a part of local industrial networks in several important regions in Den- Solutions 43% mark, Finland, Germany, Norway, Sweden 48% Products and Taiwan. This is vital in order to provide Services customer-relevant skills, services and support 9% as well as developing long-term customer re- lationships.
REVENUE PER COUNTRY
solid industry experience 7% Different industries have varying requirements Norway in order for an embedded solution to work 33% Germany 39% in a specific environment. Data Respons has Sweden developed solid industry expertise in various 21% Denmark industries such as defence, medical, offshore/ maritime, transportation, energy and telecom- munications.
REVENUE BY INDUSTRY
passion for embedded solutions 10% Defence 6% 21% Energy Data Respons has a working environment that 11% Medical combines technology, the best engineering minds Offshore 25% in the industry and a committed sales team. The 18% Telecom will to succeed, a tremendous thirst for knowl- Transportation 9% Other industries edge and a burning passion for embedded solu- tions characterises employees throughout the organisation.
DATA RESPONS ASA | ANNUAL REPORT 2009 7 CHAPTER 2: Board of Directors’ report
Board of Directors’ report
Data Respons have shown the ability to change and act KEY FIGURES quickly in a challenging year. The Board is pleased with the NOK million 2009 2008 company returning to profitability in second half of 2009, Operating revenue 726.1 818.5 EBITDA -20.6 62.4 despite the demanding environment. Order backlog 425 515 Order intake 636 945 from operations in 2009 was positive with Employees 464 511 statement on the annual financial statements NOK 3.8 million. The order intake during 2009 totalled NOK 636 million (945), and the order In accordance with article 3.3a of the Nor- backlog was NOK 425 million (515). REVENUE (NOK million) wegian Accounting Act, the Board confirms
1000 that the company fulfils the requirements nec- Data Respons has prepared pro forma state-
800 essary to operate as a going concern, and the ments per country where historical figures from
600 2009 financial statements have been prepared acquisitions are included, as shown in Note 22.
400 on the basis of this assumption. As a listed 200 company, Data Respons ASA prepared the In 2009 the financial crisis heavily affected the 0 consolidated financial statements for the Data customers of Data Respons. During the first 2005 2006 2007 2008 2009 Respons Group for the 2009 financial year in half of 2009 there was a historic, steep decline accordance with IFRS (International Financial in the demand for services and products for our Reporting Standards). customers in their industrial end-markets. This EBITDA (NOK million) resulted in a tough situation for all members of
80 income statement the value chain. In 2009, the impact for Data 70 60 The report includes comparisons with figures for the Respons was postponed decisions for new 50 40 same period in 2008 (in brackets). projects, decreased demand for services and 30 20 lower volumes in most industry sectors. 10 0 -10 Operating revenue was NOK 726.1 million -20 -30 2005 2006 2007 2008 2009 (818.5), a decrease of 11%. EBITDA was NOK During the second quarter of 2009, the Board -20.6 million (62.4). Profit before tax was NOK decided to implement a series of efficiency ini- -90.9 million (56.2), which include a goodwill tiatives to meet the changed market conditions impairment of NOK 59.0 million. Cash flow and strengthen the company’s long-term prof-
8 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 2: Board of Directors’ report
The Board is pleased with the company returning to profitability in second half of 2009, despite the demanding environment.
itability. The initiatives affected the EBITDA, by the Board of Directors. The main principle is with considerable one-off costs which were to minimise exposure to financial risk, and the expensed in the second quarter of 2009. The group holds no financial assets or liabilities for target of the initiatives was a cost reduction speculative purposes. For further details on fi- of approximately NOK 40 million on an an- nancial risk management see Note 19. nual basis, which the company achieved in the fourth quarter of 2009. operations Data Respons supplies embedded solutions to The Board is pleased with the company re- leading OEM companies, system integrators and turning to profitability in second half of 2009, vertical product suppliers in a number of market despite the demanding environment. A diversi- segments such as defence, offshore, automation, fied large-cap customer portfolio, a strong po- medical equipment, surveillance, transport, tel- sition in the embedded solutions market and a ecommunications and industry in general. solid order backlog mean that the company is well prepared for future growth. Our employees have strong expertise in hard- ware and software design and provide cus- Data Respons is building a strong position in the tomised and cost-effective solutions to our growing embedded solutions market in Europe, customers. The projects involve Research and and has a vision of becoming a leading company Development (R&D), but Data Respons does in Europe within this market by 2010. not perform any material proprietary R&D of own products and solutions. balance sheet, liquidity and cash flow The group’s total assets at the end of 2009 Data Respons ASA is listed on the Oslo Stock were NOK 508.3 million. The group’s equity Exchange (Ticker: DAT) and is included in the was NOK 330.5 million, producing an equity information technology index. The Group has ratio of 65%. Current assets amounted to operations in Norway, Sweden, Denmark, NOK 218.4 million and current liabilities were Germany and Finland. NOK 166.3 million. Earn-out obligations from acquisitions amounted to NOK 25.8 million as of December 31st 2009, where the ma- markets jority is recorded as current liabilities. Of the non-current assets of NOK 289.9 million, norway deferred tax assets were NOK 34.7 million, Operating revenue for 2009 was NOK 282.5 while intangible assets (goodwill) amounted million (298.8), a decrease of 5%. EBITDA was to NOK 240.7 million. In the second quarter NOK 8.9 million (36.7). The order backlog end- of 2009 the company recognised an impair- ed at NOK 204 million (252). ment of goodwill of NOK 59.0 million; see Note 3 for specifications. Revenues in Norway during the second half of the year were affected by the global financial In a challenging year, the company is pleased crisis. The downturn in the economy resulted to have maintained a positive operational cash in lower activity in general for the export sec- flow of NOK 3.8 million for 2009. The group tor, and especially for the industrial and off- has no interest-bearing debt and the li- shore segments. Towards the end of the year, quidity situation is good. The cash balance the company experienced improvements in as of December 31st 2009 amounts to NOK the order intake and an increasing pipeline of 27.1 million. Data Respons has unused credit larger solution potentials. Data Respons has a facilities, and amounts and covenants con- leading market position in Norway with a well- nected to these are specified in Note 17. balanced business mix (solutions, services and products), many recurring large-cap solution financial risk customers and a strong order backlog. The group’s activities expose it to a variety of fi- nancial risks, including price risk, interest rate risk, sweden currency risk, credit risk and liquidity risk. Overall Operating revenue for 2009 was NOK 242.7 these risks are regarded as low. Management of million (294.4), a decrease of 18%. EBITDA financial risk is performed by the group’s central was NOK -0.7 million (17.7). The order backlog finance department under the guidelines set out ended at NOK 128 million (154).
DATA RESPONS ASA | ANNUAL REPORT 2009 9 CHAPTER 2: Board of Directors’ report
A diversified large-cap customer portfolio, a strong position in the embedded solutions market and a solid order backlog, means that the company is well prepared for future growth.
in both lower volumes and deliveries of so- The overall market conditions in Sweden have lutions. However, the company experienced REVENUE PER COUNTRY (NOK million) been challenging during 2009, resulting in lower increased interest for our solution capabili- demand and price pressure in services. Despite ties towards the end of 2009. In periods of Country 2009 2008 Change this, Data Respons has maintained profitability economic slowdown our customers focus on Norway 282.5 298.8 -5% in most regions and is well-positioned for fu- cost savings, but must also meet the contin- ture growth. During the second half of 2009 the ued demand for improved performance and Sweden 242.7 294.4 -18% company experienced increased interest in our more functionality. By entering a strategic Denmark 153.6 200.3 -23% solution concept, which will provide opportuni- partnership in which Data Respons builds and Germany 54.2 38.4 41% ties to win new embedded solution contracts deliver customised embedded solutions, our in the future. customers can achieve lower cost of owner- ship, increased efficiency and shorter time to denmark market. Data Respons is in a strong position SHARE OF REVENUE Operating revenue for 2009 was NOK 153.6 as a complete solutions provider with broad million (200.3), a decrease of 23%. EBITDA competency and strong customer focus. So- 7% was NOK -18.8 million (17.7). The order lution deliveries secure long-term and stra- Norway backlog ended at NOK 73 million (85). tegically important customer relationships 33% Germany 39% and provide significant potential for future Sweden The overall market conditions have been ex- growth. 21% Denmark tremely challenging in 2009. After a difficult start to the year, Data Respons is pleased that products the efficiency initiatives implemented in the Operating revenue for 2009 was NOK 63.1 second quarter had the desired effect and re- million (74.2), a reduction of 15%. turned the region to profitability in the second ORDER BACKLOG (NOK million) half of the year. Data Respons is determined to Data Respons is positioned as the leading chan- continue the strategy of building the most com- nel for embedded computer products in the 600 500 plete supplier of services, products and solutions Nordic region, but experienced a decline in vol- 400 in the Danish market. Although the market was ume due to the challenging market conditions. 300 challenging in 2009 the company experienced A large part of the product sourcing is integrated 200 promising improvements in the order intake to- as components in solutions and therefore cat- 100 wards the end of the year, which will provide egorised as solution revenue. 0 2005 2006 2007 2008 2009 good opportunities for future growth. services germany Operating revenue for 2009 was NOK 311.9 Operating revenue for 2009 was NOK 54.2 million (347.5), a reduction of 10%. EMPLOYEES PER COUNTRY 2009 million (38.4), a growth of 41%. EBITDA was NOK 3.9 million (3.2). The order backlog end- The company experienced tough market con- 11% Denmark ed at NOK 20 million (23). ditions for services in 2009 and has taken the 35% necessary actions to adjust to the current eco- 15% Germany The Board is pleased that the German opera- nomic climate and the expected demand situ- Norway tion is profitable and continues the good per- ation. Data Respons will continue to offer our 39% Sweden formance in 2009 under the challenging market customers access to highly experienced spe- conditions. Germany will be an important mar- cialists with a broad range of expertise from dif- ket for Data Respons in the years to come. ferent disciplines within embedded solutions. A strong international competence platform is strategically important in order to develop new EMPLOYEES PER DIVISION 2009 business areas solution customers and to stand out as a com- plete solutions provider in the market. Data Respons allocates its sales to three busi- 13% Operations ness areas: Solutions, Products and Services. 13% Sales organisational structure 9% 65% Development solutions Administration Operating revenue for 2009 was NOK 351.2 At the close of 2009, the group had 464 million (396.8), a decrease of 11%. employees working at 17 offices in Norway The global financial crisis affected our custom- (162), Sweden (179), Denmark (70) and Ger- ers’ end market during 2009. This has resulted many (53). The average number of employees
10 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 2: Board of Directors’ report
during the financial year was 19 in the parent work of the board corporate governance company. The average number of employees in the Group was 494, and there were 72 fe- In 2009 there were seven directors on the objectives and guiding principles male employees in the Group at the end of Board, five of whom were elected at the an- The principal objective of Investor Relations at the year, 14 of whom were middle managers. nual general meeting and two of whom were Data Respons is to create confidence through elected by the employees. the equal treatment of all stakeholders in There are currently no female members of terms of access to financial information. All Group management. Equal pay for work of The Board generally meets nine times a year, shares have equal rights and are freely trans- equal value, regardless of gender, is empha- and otherwise as required. In 2009 the Board ferable. Data Respons has one class of shares, sised at Data Respons. The pay and terms of held a total of 10 meetings. The work of the and each share carries one vote. Data Respons employment for comparable positions are Board is governed by detailed rules of pro- shall comply with the requirements set out the same for women and men. cedure. The Board also has an annual pro- in the Norwegian Companies and Account- gramme of work including specific topics and ing Acts at all times. The company shall also The recruitment, promotion and develop- fixed items such as the approval of the annual aim for transparency in relation to financial ment of the staff are based on merit and financial statements, interim financial state- matters, to help capital markets, sharehold- equal opportunity regardless of race, colour, ments and budgets. ers, customers and suppliers assess the com- religion, gender, age, national origin, sexual pany’s situation and future potential. Data orientation, marital status and disability. Dis- The Board is also responsible for overall strat- Respons believes that it is important to have crimination, bullying or harassment is not ac- egy and for setting long-term goals, as well an open and active dialogue with the stock cepted at Data Respons. Employees are asked as important decisions about acquisitions, es- market, where all shareholders are treated to report incidents of such behaviour to their tablishing overseas operations and major in- equally. The company has been awarded the immediate supervisor or the employee rep- vestments. In 2009 there were four men and Oslo Stock Exchange’s Information Symbol for resentative. threewomen on the Board. good information practices.
DATA RESPONS ASA | ANNUAL REPORT 2009 11 CHAPTER 2: Board of Directors’ report
the annual general meeting shareholder-elected Board members and pro- ment, and independent from major business The annual general meeting is the highest pose directors’ fees. associates of the company. The Chairman of decision-making body of the company, and the Board of Directors is elected by the gen- it elects the shareholders’ representatives The other nominating committee is for the eral meeting. Board members are elected for a and their deputies to the corporate assembly. election of employee representatives to the term of two years. Page 15 of the annual re- Complete documents and background infor- Board, and consists of three members from port provides a detailed description of the in- mation relating to general meeting motions the Data Respons employees. dividual members’ backgrounds, qualifications are to be sent out no less than 21 days prior and shareholdings. to the meeting being held. Provisions are board of directors made for the use of proxies if shareholders are The Board of Directors of Data Respons is re- During 2009, the Board appointed an Audit unable to attend the general meeting. sponsible for the Group’s strategic develop- Committee. The Audit Committee shall pro- ment, and is required to keep itself informed vide assistance to the Board in fulfilling its nominating committee at all times of the company’s financial position, responsibility to the shareholders, potential Data Respons has two nominating committees. as well as to adopt plans and budgets for the shareholders, and investment community One committee is elected by the annual general business. The Board’s role, responsibilities and relating to corporate accounting, reporting meeting and makes proposals to the general work methods have been defined thoroughly practices of the company, and the quality and meeting regarding the election of shareholder- in the rules of procedure that were adopted in integrity of the financial reports of the Compa- elected members to the Board. A nominating 2005. The rules of procedure also define the ny. As part of this process, the external auditors committee for shareholder-elected members tasks and duties of the CEO in relation to the will participate in several meetings of the audit was appointed at the annual general meeting Board in greater detail. committee. In carrying out its responsibilities, in 2009. The committee consists of Nils-Henrik the Audit Committee should ensure that the Petterson, Haakon Sæter, Albert Collett, Leif The composition of the Board of Directors corporate accounting and reporting practices Eriksrød and Patrick Sandahl, and the commit- complies with the requirement that the Board of the company are in accordance with all legal tee’s mandate is to nominate candidates for be independent from the company manage- requirements and are of the highest quality.
12 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 2: Board of Directors’ report
We confirm that the financial statements for the year 2009 have been prepared, to the best of our knowledge, in accordance with International Financial Reporting Standards (IFRS).
The Board also appointed a Compensation meeting. The remuneration of directors is not lated by environmental licences or injunc- Committee in 2009. The Board’s Compensa- performance-related. Directors are not grant- tions. The company does not pollute the tion Committee is a subcommittee of the Board ed share options. external environment. Average sick leave over of Directors of Data Respons ASA. Its role is the course of the year was 2.2%, and none to make preparations for the Board’s discus- management and employee of the Group’s subsidiaries recorded work re- sions of questions involving compensation. remuneration lated accidents that resulted in personal injury The Committee is responsible only to the full The remuneration of the CEO and other mem- or property damage. corporate Board and its authority is limited to bers of the Group management is described making recommendations to the Board. in Note 15 to the financial statements. Data The working environment is regarded as Respons operated bonus schemes for the good, and improvement measures are im- company capital other employees in 2009. The schemes vary plemented continuously. Employees and The company’s equity is appropriate for the from country to country, but the common management have cooperate constructively, goals, strategy and risk profile communicat- denominator is that they are dependent on which has had a positive impact on our op- ed to the market. If the capital exceeds the positive earnings and revenue growth. They erations. need for realisation of the company’s strategic are limited in general to a maximum of 1–2 goals, the company will pay a dividend. The months’ salary. There are currently no share company is currently in a growth phase where option schemes in the company. allocation of the result for it is desirable to reinvest earnings from op- the year erations to ensure further growth, since this is related party transactions regarded as the most appropriate for the crea- The Board of Directors, Group management Data Respons ASA (the parent company) re- tion of value for the shareholders. and other key employees are required to re- ported a profit/(loss) before tax of NOK -24.0 port any potential related party transactions. million (40.5 million) in 2009. The net profit/ The company aims to finance its working Other than ordinary business transactions be- (loss) for the year was NOK -31.1 million capital needs from the anticipated revenue tween group companies there have been no (34.1 million). growth through its own resources. Beyond related party transactions in 2009. All trans- this the Board will continuously evaluate the actions within the group are based on ordi- The Board of Directors proposes that the company’s equity needs in connection with nary commercial terms using the arm’s length profit/(loss) for the year of NOK -31.1 mil- possible acquisitions or other investments. principle. lion is transferred to other reserves and that no dividends are distributed for 2009. As of An increase in the company’s equity will only auditing 31 December 2009 the parent company had be proposed if the Board believes that it will The auditor attends the meeting of the Board an equity of NOK 398.9 million, NOK 32.1 be in the long-term interests of the share- at which the annual financial statements are million of which comprised distributable re- holders. If the Board of Directors proposes scrutinised, and will also participate in several serves. that the general meeting should approve a of the meetings of the audit committee. The waiver of pre-emption rights, the reasons for auditor also has procedures for reviewing the the waiver will be justified by the common company’s internal controls with the Board. future prospects interest of the company and the sharehold- Specified remuneration for the auditor is de- ers. In the general meeting, held on 29 April scribed in Note 15. Although there will always be considerable 2009, the Board was given a general authori- uncertainty in predicting the future, the com- sation to increase the share capital by up to pany believes that the long-term outlook for 4,200,000 shares, and 1,960,016 shares have corporate social responsibility the embedded solutions market is prosperous. been issued in 2009 under this. Further in- The need for more intelligent products, better formation regarding share issues in 2009 is Taking overall responsibility is an important infrastructure and enhanced user functional- disclosed in Note 9 to the financial state- core value at Data Respons. The group aspires ity is necessary for improving our society. Ad- ments. The authorisation can be used to issue to be a responsible corporation in terms of la- vanced computer technology and the ability to shares in connection with acquisitions of new bour standards, human rights and environmen- make solutions is vital for this development. companies as part of the company’s strategy, tal protection. The company has implemented Data Respons is well positioned in the indus- share option schemes for key personnel and corporate social responsibility policies that are trial part of this market. regular cash issues. publicly available. The policies cover govern- ance and integrity management, environ- During 2009 there was a historic, steep decline board of directors’ remuneration mental protection, human rights and labour in the demand for services and products for Detailed information regarding the remu- standards, and are in accordance with the UN our customers in their industrial end-markets. neration of directors is disclosed in Note 15 Global Compact Principles. This has resulted in a tough situation for all to the financial statements. The nominating members of the value chain. The impact committee proposes the remuneration of the health, safety & environment (hse) in 2009 was postponed decisions for new directors for the coming year to the general Data Respons ASA’s operations are not regu- projects, decreased demand for services and
DATA RESPONS ASA | ANNUAL REPORT 2009 13 CHAPTER 2: Board of Directors’ report
lower volumes in the impacted industry sec- providers with complete solution capabilities. Germany. The Group’s growth and profit can tors. The company has achieved its target This trend is reinforced by shorter time to fluctuate between quarters. Based on the from the second quarter of cost reductions market in combination with the need for current demand from our customers, a more of NOK 40 million on an annual basis. Data more intelligent computer technology con- efficient organisation and a solid order back- Respons will continue to focus on improved tent in products, equipment and infrastruc- log, the company expects growth and profit- efficiency and take further streamlining ac- ture. Other important parameters are cost ability in the future. tions if necessary. savings, improved efficiency and more func- tionality. These factors will often amplify Towards the end of the year there were signs during slowdowns. Data Respons is well posi- declaration on the financial of improvement in several market sectors, tioned as a complete solution provider in the statements although the overall market is still challeng- Nordic region and is gradually establishing a ing. In 2010 the company expects a gradual similar position in the German market. The We confirm that the financial statements improvement in the market and the com- company has customers in a wide range of for the year 2009 have, to the best of our pany is well positioned to take advantage of vertical industries, a good geographical span knowledge,been prepared in accordance this. The market for embedded solutions is and a balanced portfolio of large-cap cus- with International Financial Reporting expected to follow a long-term growth trend, tomers. A strong international competence Standards (IFRS), give a true and fair view of despite the negative short-term effects from platform is strategically important in order the company’s and Group’s consolidated as- the current economic climate. The demand is to develop new solution customers and to sets, liabilities, financial position and results driven by the need for new and cost-effective stand out as a complete solutions provider of operations, and that the annual report computer solutions for OEM companies, sys- in the market. includes a fair review of the development, tem integrators and vertically integrated sup- results and position of the company and pliers. The company has observed that more Long-term organic growth is Data Respons’ group, together with a description of the and more companies choose to cooperate main focus. In addition, acquisitions are most central risks and uncertainty factors strategically and closely with solid solution being considered in the Nordic region and facing the companies.
The board of directors of Data Respons ASA Høvik, 17 March 2010
Ole Jørgen Fredriksen Anne-Cecilie Fagerlie Lars-Olof Gustavsson chairman of the board member of the board member of the board
Ingvild Myhre Anne Helene Tryti Steinar Hoen Kenneth Ragnvaldsen member of the board employee representative member of the board CEO
14 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 2: Board of Directors’ report The Board of Directors
The Board of Directors is responsible for the Group’s strategic development, and it shall keep itself informed at all times of the company’s financial position.
ole jørgen fredriksen Anne-Cecilie Fagerlie chairman of the board member of the board Born: 1950 Shares: 59,684 Share options: 0 Born: 1958 Shares: 0 Share options: 0
Fredriksen was elected Chairman of the Fagerlie was elected to the Board in April Board in April 2009. Fredriksen has held 2006. Fagerlie is the General Manager of various key management positions within Avanade Nordic. She has an advanced the computer industry in Europe and US. His engineering degree in computer science main positions today are as Chairman of the from the Norwegian Institute of Technol- Board at Q-Free ASA, Impact Europe Group ogy (NTH) and studied economics and AB, Cyviz AS and Advertik AS. Fredriksen management at the Norwegian School of was a co-founder, CEO and President of Management (BI). Fagerlie is a member of ASK ASA for 15 years. He has a Bachelor the board of Nordic Semiconductor ASA. degree from the Norwegian School of Eco- nomics and Business Adminstration, Bergen, Norway.
Lars-Olof Gustavsson steinar hoen member of the board member of the board Born: 1943 Shares: 20,000 Share options: 0 Born: 1971 Shares: 145,000 Share options: 0
Gustavsson was elected to the Board in April Hoen was elected to the Board in April 2006. He is one of the founders of Four 2008. He has previously worked as a stock- Seasons Venture in Sweden and Norway, broker in First Securities, spending his last and is currently the chairman of the boards three years there as a partner. Hoen is cur- of Fouriertransform AB and Industrifonden. rently the manager of the ExxonMobil Bislett Gustavsson is also a director of SJ AB, Siem Games and runs a wholly-owned investment Capital AB and Mikroponent AB. company which deals in shares and property. Hoen has an economics degree from SMU in Dallas, USA and from the Norwegian School of Management (BI). He is a member of the board of GoStudy AS and the Chairman of the Board of Specter Invest AS.
Ingvild Myhre Anne-helene tryti member of the board member of the board Born: 1957 Shares: 10,000 Share options: 0 Born: 1967 Shares: 6,653 Share options: 0
Myhre was elected to the Board in April Tryti was elected as an employee represent- 2006. She has previously been the group ative in September 2007. She received an chief executive of ID Gruppen/Network education in administrative data processing Norway, the president and CEO of Telenor and human resources in addition to organi- Mobil AS and director of the Norwegian sational subjects at the Norwegian School Red Cross. Myhre is currently the chair- of Economics and Business Administration man of the boards of Simula Research (NHH). Tryti has worked at Data Respons Lab and NTNU’s IME Faculty. She is also Norge AS since 1999. a member of the boards of Simrad Op- tronics, Pragma, the Norwegian National Insurance Scheme Fund, Norsk Tipping and Eidsiva bredbånd.
DATA RESPONS ASA | ANNUAL REPORT 2009 15 CHAPTER 3: INVESTOR INFORMATION
Data Respons places great importance on providing up-to-date information on its activities and financial development to share- holders and other parties with interests in the capital market.
Investor information
Data Respons ASA is listed on the Oslo Stock Exchange (Ticker: DAT), and is included in the information technology index. The company has offices in Denmark, Finland, Germany, Norway, Sweden and Taiwan.
FINANCIAL CALENDAR 2010 Share information 2009 2008 Highest price (NOK) 9.85 17.20 16.04.10 Presentation of Q1 10 Lowest price (NOK) 7.20 8.00 22.04.10 Annual General Meeting Price at year end (NOK) 8.90 8.70 09.07.10 Presentation of Q2 10 Market value (NOK millions) 416.8 368.5 15.10.10 Presentation of Q3 10 Dividend per share - - 26.01.11 Presentation of Q4 10 TRADING AND TRANSACTIONS 2009 2008 Number of transactions 1 040 3 930 SHARE PRICE PERFORMANCE Average number of transactions per day 4 16 10 Number of shares traded (millions) 13.0 15.4
9
8 shareholder structure 2009 2008 Number of shareholders 1 091 1 222 7 JANUARY 2009 DECEMBER 2009 Foreign ownership 2.7% 10.6% Number of shares owned by Data Respons ASA - 157 000 Number of shares outstanding (millions) 46.8 42.4 ANALYST COVERAGE
ABG Sundal Collier Orion Securities Hallgeir Hollup Jonas Jarutis [email protected] [email protected]
Pareto Securities Carnegie Data Respons believes that it is important to have an open and Thomas Nielsen Espen Torgersen active dialogue with the stock market, and all shareholders are [email protected] [email protected] treated equally. The company has been awarded Oslo Stock Ex- change’s Information Symbol for good information practices.
16 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 3: INVESTOR INFORMATION Growth drivers
GROWTH DRIVERS INCREASED USE OF COMPUTER INTELLIGENCE The demand for embedded solutions is driven by an even greater demand for new functionality, increasing complexity and technology content in the products for OEM companies, system integrators and product suppliers. Data Respons has systematically built up a customer base with broad market access, which provides good exposure to the demand for embedded solutions in different market segments. GROWTH IN SOLUTIONS Our customers continuously face demands for new functionality and increased technology content, which entails continual upgrades and product development with shorter time to market. The complexity is increasing. The expertise needed to develop embedded solutions is very specialised, and it is often beyond the scope of the customer’s core expertise. This has resulted in many companies choosing to purchase complete solutions. GROWTH IN NEW REGIONS Organic growth is the primary focus of Data Respons. Data Respons has a tried and tested business model that contributes to rapid establishment in new markets. A strong global partnership structure provides access to leading technology and competitive terms. New areas are under continuous evaluation. Local presence is necessary in order to maintain close contact with customers and expand our customer base. GROWTH THROUGH ACQUISITIONS Data Respons constantly focuses on acquisition opportunities that can contribute to strengthening the company’s position in the form of expertise, market access and an improved customer structure. This provides a foundation for the development of new solution customers, whether they are existing product or service customers.
DATA RESPONS ASA | ANNUAL REPORT 2009 17 CHAPTER 3: INVESTOR INFORMATION Key figures
key figures NOK 1 000 2009 2008 2007 2006 2005
income statement Operating revenue 726 142 818 496 635 047 393 043 267 156 Operating expenses 746 749 756 087 582 010 370 787 253 937 EBITDA -20 607 62 409 53 037 22 257 13 218 Depreciation and amortisation 8 243 7 515 5 556 2 794 1 827 Impairment of goodwill 58 979 - - - - Operating profit/loss -87 828 54 893 47 481 19 463 11 392 Profit/loss before tax and minority interests -90 941 56 157 46 586 20 359 11 409 Net profit/loss after tax -84 665 39 439 32 939 38 407 8 104
balance Total assets 508 251 689 039 503 326 366 449 237 534 Equity 330 476 407 156 270 705 235 722 152 104 Cash and cash equivalents 27 072 55 331 49 347 29 411 48 266
key figures Revenue growth -11.3% 28.9% 61.6% 47.1% 11.1% Gross margin 53.8% 57.1% 52.6% 46.3% 46.9% EBITDA margin -2.8% 7.6% 8.4% 5.7% 4.9% EBIT margin -12.1% 6.7% 7.5% 5.0% 4.3% Net profit margin -11.7% 4.8% 5.2% 9.8% 3.0% Cash flow from operations 3 828 50 698 42 843 -2 449 -12 245 Return on equity -23.0% 11.6% 13.0% 19.8% 6.3% Return on total assets -14.7% 9.2% 10.9% 6.4% 5.5% Liquidity ratio 131.4% 132.0% 132.7% 215.6% 233.9% Equity ratio 65.0% 59.1% 53.8% 64.3% 64.0% Working capital 25 055 22 187 9 315 72 882 44 426
key figures for shares Earnings per share (EPS), basic (NOK) -1.91 0.99 0.89 1.07 0.26 Cash flow per share from operations (NOK) 0.09 1.27 1.16 -0.07 -0.39 Dividend per share (NOK) - - - - - Book equity per share (NOK) 7.06 9.61 7.26 6.39 4.54 Number of shares as of 31 December 46 833 076 42 361 731 37 273 746 36 880 246 33 469 264 Average number of shares 44 355 585 39 931 700 37 086 767 35 728 782 31 197 032 Average number share transactions per day 4 16 29 29 20 Share price as of 31 December (NOK) 8.90 8.70 17.20 12.65 13.90 Market capitalisation (NOK million) 416.8 368.5 641.1 466.5 465.2
definitions
Return on equity Liquidity ratio Working capital Profit/loss for the year / Average equity Current assets / current liabilities (Current receivables + Inventories) - Current liabilities
Return on total assets Equity ratio Earnings per share (EPS) EBIT / Average total assets Equity / Total assets For calculation of EPS, see Note 9
18 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 3: INVESTOR INFORMATION Key figures
GROUP
REVENUE PER COUNTRY KEY FIGURES OPERATING REVENUE (NOK million)
1000 7% NOK million 2009 2008 Norway 800 Operating revenue 726.1 818.5 33% Germany 600 39% EBITDA -20.6 62.4 400 Sweden Order backlog 425 515 200 21% Denmark Employees 464 511 0 2005 2006 2007 2008 2009
DENMARK
REVENUE PER COUNTRY KEY FIGURES OPERATING REVENUE (NOK million)
NOK million 2009 2008 250 200 21% Operating revenue 153.6 200.3 150 EBITDA -18.8 17.7 100 Order backlog 73 85 50
Employees 70 95 0 2005 2006 2007 2008 2009
GERMANY
REVENUE PER COUNTRY KEY FIGURES OPERATING REVENUE (NOK million)
7% NOK million 2009 2008 60 50 Operating revenue 54.2 38.4 40 EBITDA 3.9 3.2 30 Order backlog 20 23 20 10 Employees 53 57 0 2005 2006 2007 2008 2009
NORWAY
REVENUE PER COUNTRY KEY FIGURES OPERATING REVENUE (NOK million)
NOK million 2009 2008 300 250 Operating revenue 282.5 298.8 200 39% EBITDA 8.9 36.7 150 Order backlog 204 252 100 50 Employees 143 146 0 2005 2006 2007 2008 2009
SWEDEN
REVENUE PER COUNTRY KEY FIGURES OPERATING REVENUE (NOK million)
NOK million 2009 2008 300 250 Operating revenue 242.7 294.4 200 33% EBITDA -0.7 17.7 150 Order backlog 128 154 100 50 Employees 179 197 0 2005 2006 2007 2008 2009
DATA RESPONS ASA | ANNUAL REPORT 2009 19 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES
FINANCIAL STATEMENTS and notes
20 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Consolidated statement of comprehensive income
Data Respons’ financial statements for the year 2009 have been prepared in accordance with International Financial Re- porting Standards (IFRS).
Consolidated statement of comprehensive income
GROUP DATA RESPONS ASA NOK 1000 Note 2009 2008 2007 2009 2007 2007
Sales revenue 2 726 142 818 496 635 047 20 962 19 228 12 683 Operating revenue 726 142 818 496 635 047 20 962 19 228 12 683 Cost of goods sold 335 412 350 873 300 884 - - 322 Payroll expenses 10,15 338 592 338 965 229 672 23 844 23 083 18 021 Depreciation and amortisation 3 8 243 7 515 5 556 1 521 1 089 710 Impairment of goodwill 3 58 979 - - - - - Other operating expenses 3,18 72 744 66 249 51 455 10 992 9 004 6 960 Operating profit/loss -87 828 54 893 47 481 -15 395 -13 947 -13 330 Group contribution and dividends from subsidiaries - - - 51 185 55 075 34 912 Other financial income 16,19 5 266 7 793 2 783 649 765 290 Impairment of shares in subsidiaries 3,4 - - - -58 979 - - Other financial expenses 16,19 -8 379 -6 530 -3 678 -1 492 -1 387 -770 Profit/loss before tax -90 941 56 157 46 586 -24 033 40 505 21 102 Income tax expense 11 6 277 -16 718 -13 647 -7 024 -6 444 -2 199 Profit/loss for the year -84 665 39 439 32 939 -31 056 34 061 18 903
other comprehensive income Currency translation differences -31 808 33 616 -4 652 - - - Total comprehensive income -116 473 73 055 28 287 -31 056 34 061 18 903
profit attributable to Equity holders of the parent -84 665 39 439 32 939 Minority interest - - -
comprehensive income attributable to Equity holders of the parent -116 473 73 055 28 287 Minority interest - - -
allocations From/to other equity -31 056 34 061 18 903
Earnings per share, basic (NOK) 9 -1.91 0.99 0.89 Earnings per share, diluted (NOK) 9 -1.91 0.95 0.86
DATA RESPONS ASA | ANNUAL REPORT 2009 21 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Consolidated statement of financial position
Consolidated statement of financial position
ASSETS AS OF 31 DECEMBER GROUP DATA RESPONS ASA NOK 1000 Note 2009 2008 2007 2009 2008 2007
non-current assets Intangible assets 3,5 240 656 327 926 222 492 - - - Machinery and equipment 3 14 464 15 038 9 272 3 843 2 026 2 219 Shares in subsidiaries 4 - - - 417 115 464 727 380 125 Investments in other shares 34 34 34 - - - Deferred tax assets 11 34 699 26 486 33 388 28 588 34 757 41 202 Total non-current assets 289 853 369 484 265 186 449 545 501 511 423 545
current assets Inventories 6,13 43 172 71 713 60 100 - - -
receivables Trade receivables 7,8,13 116 789 167 432 114 708 593 646 406 Other receivables 7,8 31 364 25 079 13 986 862 4 786 6 720 Total receivables 148 153 192 511 128 693 1 455 5 433 7 126
Cash and cash equivalents 17 27 072 55 331 49 347 - - -
Total current assets 218 398 319 555 238 140 1 455 5 433 7 126
Total assets 508 251 689 039 503 326 451 000 506 943 430 671
22 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Consolidated statement of financial position
Consolidated statement of financial position
EQUITY AND LIABILITIES AS OF 31 DECEMBER GROUP DATA RESPONS ASA
NOK 1000 Note 2009 2008 2007 2009 2008 2007
equity share capital Issued capital 9 23 417 21 181 18 637 23 417 21 181 18 637 Treasury shares 9 - -79 -32 - -79 -32 Share premium 314 729 278 845 218 350 314 729 278 845 218 350 Total share capital 338 146 299 947 236 955 338 146 299 947 236 955 retained earnings Other equity -7 670 107 209 33 750 60 704 90 168 55 702 Total retained earnings -7 670 107 209 33 750 60 704 90 168 55 702 Minority interests ------Total equity 330 476 407 156 270 705 398 850 390 114 292 658
liabilities non-current liabilities Deferred tax liabilities 11 2 832 3 959 2 435 - - - Pension liabilities 10 4 843 3 805 2 891 428 282 262 Other non-current liabilities 13 3 829 32 082 47 816 3 829 32 082 47 606 Total non-current liabilities 11 505 39 845 53 143 4 257 32 364 47 868
current liabilities Interest-bearing loans and borrowings 13,17 - - - 15 579 13 945 19 888 Trade payables 49 988 73 238 31 413 1 273 1 786 1 151 Income tax payable 11 1 000 5 760 5 858 854 - - Public duties payable 30 022 36 442 27 718 967 778 892 Other current liabilities 12 85 260 126 597 114 489 29 219 67 957 68 215 Total current liabilities 166 270 242 038 179 479 47 893 84 466 90 146 Total liabilities 177 775 281 883 232 622 52 150 116 829 138 014
Total equity and liabilities 508 251 689 039 503 326 451 000 506 943 430 671
The board of directors of Data Respons ASA Høvik, 17 March 2010
Ole Jørgen Fredriksen Anne-Cecilie Fagerlie Lars-Olof Gustavsson chairman of the board member of the board member of the board
Ingvild Myhre Anne Helene Tryti Steinar Hoen Kenneth Ragnvaldsen member of the board employee representative member of the board CEO
DATA RESPONS ASA | ANNUAL REPORT 2009 23 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Consolidated equity statement
Consolidated equity statement
GROUP
Minority NOK 1000 Majority interests Total Equity interests Issued Share Treasury Translation Other Note Total capital premium shares differences equity Equity as of 1 January 2007 18 440 213 007 -32 -317 4 624 235 722 - 235 722 Employee share option scheme 15 - - - - 1 156 1 156 - 1 156 Comprehensive income for the period - - - -4 652 32 939 28 287 - 28 287 Issue of share capital 9 197 5 343 - - - 5 540 - 5 540 Equity as of 31 December 2007 18 637 218 350 -32 -4 969 38 719 270 705 - 270 705
Employee share option scheme 15 - - - - 1 156 1 156 - 1 156 Comprehensive income for the period - - - 33 616 39 439 73 055 - 73 055 Purchase/sale of treasury shares 9 - - -47 - -751 -798 -798 Issue of share capital 9 2 544 60 495 - - - 63 039 - 63 039 Equity as of 31 December 2008 21 181 278 845 -79 28 646 78 563 407 156 - 407 156
Employee share option scheme 15 - - - - 184 184 - 184 Comprehensive income for the period - - - -31 808 -84 665 -116 473 - -116 473 Purchase/sale of treasury shares 9 - - 79 - 1 504 1 583 - 1 583 Issue of share capital 9 2 236 35 885 - - -95 38 025 - 38 025 Equity as of 31 December 2009 23 417 314 729 - -3 162 -4 508 330 476 - 330 476
DATA RESPONS ASA
NOK 1000 Total equity
Issued Share Treasury Other Note Total capital premium shares equity Equity as of 1 January 2007 18 440 213 007 -32 35 643 267 058 267 058 Employee share option scheme 15 - - - 1 156 1 156 1 156 Comprehensive income for the period - - - 18 903 18 903 18 903 Issue of share capital 9 197 5 343 - - 5 540 5 540 Equity as of 31 December 2007 18 637 218 350 -32 55 702 292 658 292 658 Employee share option scheme 15 - - - 1 156 1 156 1 156 Comprehensive income for the period - - - 34 061 34 061 34 061 Purchase/sale of treasury shares 9 - - -47 -751 -798 -798 Issue of share capital 9 2 544 60 495 - - 63 039 63 039 Equity as of 31 December 2008 21 181 278 845 -79 90 168 390 114 390 114 Employee share option scheme 15 - - - 184 184 184 Comprehensive income for the period - - - -31 056 -31 056 -31 056 Purchase/sale of treasury shares 9 - - 79 1 504 1 583 1 583 Issue of share capital 9 2 236 35 885 - -95 38 025 38 025 Equity as of 31 December 2009 23 417 314 729 - 60 704 398 850 398 850
24 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Consolidated cash flow statement
Consolidated cash flow statement
GROUP DATA RESPONS ASA
NOK 1000 Note 2009 2008 2007 2009 2008 2007
cash flow from operating activities Operating profit/loss -87 828 54 893 47 481 -15 395 -13 947 -13 330 Income tax paid -11 494 -8 667 -5 260 - - - Depreciation and amortisation 3 8 243 7 515 5 556 1 521 1 089 710 Impairment of goodwill 3 58 979 - - - - - Employee share option scheme 184 1 117 1 195 184 1 117 1 156 Change in inventories 5 23 985 -10 975 -16 614 - - - Change in trade receivables 5 32 270 -43 775 13 958 54 -240 1 497 Change in trade payables 5 -14 457 40 052 -18 584 -512 635 618 Change in provisions for pensions 10 1 038 291 -3 677 - 19 54 Change in other accruals 5 -7 091 10 247 18 788 1 841 2 177 -12 443 Net cash flow from operating activities* 3 828 50 698 42 843 -12 308 -9 151 -21 736
cash flow from investing activities Acquisition of subsidiaries, net of cash acquired 5 -18 939 -34 449 -16 639 - - - Dividends from subsidiaries - - - 13 640 35 201 15 143 Purchase of machinery and equipment 3 -7 798 -9 401 -5 915 -3 337 -896 -1 671 Interest received 16 1 776 3 559 2 037 489 202 279 Interest paid 16 -2 170 -2 845 -1 649 -676 -1 246 -508 Purchase of financial assets 4 - - - -34 980 -49 837 -41 232 Net cash flow from investing activities -27 131 -43 136 -22 166 -24 863 -16 575 -27 989
cash flow from financing activities Net change in overdraft facilities - - - 1 634 -5 943 19 888 Group contributions - - - 37 544 36 310 19 768 Purchase/sale of treasury shares 9 -2 007 -4 640 - -2 007 -4 640 - Net cash flow from financing activities -2 007 -4 640 - 37 172 25 727 39 656
Net change in cash and cash equivalents -25 309 2 922 20 677 0 0 -10 069 Cash and cash equivalents at the start of the period 55 331 49 347 29 411 0 0 10 069 Exchange gains/losses on cash and cash equivalents -2 949 3 061 -741 - - - Cash and cash equivalents at the end of the period 27 072 55 331 49 347 0 0 0
* The company has acquired subsidiaries in the reporting periods. The opening balance sheet for these acquisitions must be taken into account for the calculation of changes in current asset and liability items, so the reported figures will not be in agreement with changes in the consolidated balance sheet figures. Reference is made to Note 5 for additional information on the effects of business combinations.
DATA RESPONS ASA | ANNUAL REPORT 2009 25 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 1
items and an average rate for the income statement. Translation differences NOTE 1 accounting principles are charged against other comprehensive income. When a foreign sub- sidiary is partially or completely disposed of or sold, translation differences general information connected to the subsidiary are recognised in the income statement. Data Respons ASA is a public limited company registered in Norway. The company’s head office is located at Sandviksveien 26, 1323 Høvik, Norway. consolidation The Group’s business operations are described in Note 2. The consolidated financial statements include Data Respons ASA and companies in which Data Respons ASA has a controlling interest. A con- accounting principles trolling interest is normally achieved when the Group owns more than The Data Respons Group’s consolidated financial statements and the 50% of the shares in the company or the Group is in a position to exercise company financial statements of Data Respons ASA for the financial year actual control over the company. Minority interests are included in the of 2009 have been prepared in accordance with International Financial Group’s equity. The consolidated financial statements include the parent Reporting Standards (IFRS) and the interpretations set out by the Interna- company Data Respons ASA and the following subsidiaries: tional Accounting Standards Board, as approved by the European Union. The financial statements are based on the historical cost principle with the Data Respons Norge AS (100%) exception of financial derivatives. The consolidated financial statements Digitas AS (100%) have been prepared using consistent accounting principles for similar Certified Computer Technology AS (CCT) (100%) transactions and events under otherwise similar circumstances. Centrex AS (100%) Data Respons AB (Sweden) (100%) standards, amendments and interpretations published Data Respons Syrén AB (Sweden) (100%) but not yet implemented Sylog Sverige AB (Sweden) (100%) The standards and interpretations listed below have been published, but Professional Finder AB (Sweden) (100%) are not yet effective at the date of approval of the financial statements. Lundinova AB (Sweden) (100%) Data Respons OY (Finland) (100%) IFRIC 12 Service Concession Arrangements Data Respons A/S (Denmark) (100%) IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Data Respons GmbH (Germany) (100%) IFRIC 15 Agreements for the Construction of Real Estate Ipcas GmbH (Germany) (100%) IFRIC 16 Hedges of a Net Investment in a Foreign Operation IFRIC 17 Distributions of Non-Cash Assets to Owners The consolidated financial statements show the overall financial results and IFRIC 18 Transfer of Assets from Customers the overall financial position when presenting the parent company Data IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments Respons ASA and its controlling interests in other companies as a single fi- nancial entity. Companies in which the Group has a sole controlling interest The above mentioned interpretations are not expected to be relevant for (subsidiaries) have been fully consolidated line by line in the consolidated the Group. The following new standards and amendments to existing stand- financial statements. The profit/loss for the year and share of equity attrib- ards are published by IASB, but not implemented by the Group. These will uted to minority interests are presented on separate lines. Intercompany not be implemented until effective date, unless otherwise decided: transactions and balances have been eliminated. The consolidated financial statements have been prepared using uniform principles, which means that IFRS 2 Share-based payments the subsidiaries follow the same accounting principles as the parent com- IFRS 3 Business Combinations pany, and that these principles have been applied consistently over time. IFRS 9 Financial Instruments IAS 24 Related Party Disclosures Acquired subsidiaries are recognised in the consolidated financial state- IAS 27 Consolidated and Separate Financial Statements ments based on the historical cost to the parent company. Historical cost includes all expenses directly attributable to the purchase, as well as best The changes in IFRS 2 are not expected to impact the consolidated accounts. estimate on future additional payments based on earn-out agreements. IFRS 3 R is expected to impact the accounting for future acquisitions prima- The historical cost is allocated to identifiable assets and liabilities in the rily regarding goodwill, contingent consideration and transaction costs. IFRS subsidiary, which are recorded in the consolidated financial statements 9 will replace the recognition and measurement rules in the current IAS 39. at fair value at the time of acquisition. Identifiable assets are defined as Considering the current scope and use of financial instruments, the impact both tangible fixed assets and intangible assets, excluding goodwill. Any of the changes is not expected to be material. The changes in IAS 24 are not excess value or shortfall in value beyond that which can be attributed expected to have any material effects. Revised IAS 27 R could affect the con- to identifiable assets and liabilities is recognised in the balance sheet as solidated accounts in cases of derecognition of subsidiaries and allocations goodwill. Goodwill is treated as a residual value, and it is recognised in between minority and majority. the balance sheet in the amount observed in the acquisition transaction. Excess values in the consolidated financial statements are depreciated on The IASB Annual Improvement Project has approved changes in several a straight-line basis over the anticipated economic life of the acquired standards with effect from 2010. Changes that might affect recognition, assets, less any residual value. Goodwill and excess values attributed to measurement and disclosure are listed below. intangible assets with an indeterminable useful life are not depreciated, but are tested for impairment in accordance with IFRS. IFRS 5 Non-current Assets Held for Sale and Discontinued Operations IFRS 8 Operating Segments classification and valuation of balance sheet items IAS 1 Presentation of Financial Statements Current assets and current liabilities comprise items that fall due within IAS 7 Statement of Cash Flows one year of the balance sheet date, as well as items related to the operat- IAS 17 Leases ing cycle. Other items are classified as non-current assets or non-current IAS 18 Revenue liabilities. Financial instruments are classified and measured in accordance IAS 36 Impairment of Assets with IAS 39, Financial Instruments; Recognition and Measurement. For IAS 38 Intangible Assets the Group the only relevant categories are loans and receivables. Finan- cial assets with fixed or determinable cash flows that are not listed in an functional currency and presentation currency active market are classified as loans and receivables. The Group presents its financial statements in NOK. This is also the func- tional currency of the parent company. Subsidiaries with a different func- receivables tional currency are translated using the closing date rate for balance sheet Accounts receivable and other receivables are recognised in the balance
26 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 1
sheet at nominal value, less provisions for estimated losses. Provisions for future financial benefits that will pass to the company, and the value of such losses are made on the basis of individual assessment of the individual benefits can be estimated reliably. Sales revenue is recognised net of value receivables, as well as past experience. added tax and discounts. The Group has revenue from three different areas: machinery and equipment products Machinery and equipment is recognised in the balance sheet and depreci- Revenue from the sale of goods is recognised when delivery has been made ated on a straight-line basis over the estimated useful life less any residual and most of the risk and return potential has been transferred. value. Direct maintenance of machinery and equipment is expensed as other operating expenses, while enhancements or improvements that increase the services capacity are added to the cost price and depreciated in line with the asset. Revenue from the sale of services is recognised according to the stage of Depreciation periods and profiles and residual values are assessed annually. completion. The stage of completion is measured as accrued hours in relation to total estimated hours. Estimated loss on contracts will be recognised in the intangible assets income statement in its entirety in the period when it has been identified. Intangible assets consist of identifiable intangible assets. Intangible assets are recognised in the balance sheet if it is probable that the expected solutions future financial benefits attributable to the asset will pass to the company Revenue from the sale of solutions is a combination of the sale of devel- and the asset’s historical cost can be measured separately and in a reliable opment services and the subsequent delivery of products. The recognition manner. Intangible assets with a limited useful life are recognised at his- of revenue from solutions is dependent on the pricing model selected. In torical cost, less accumulated depreciation and impairment. Depreciation cases where the customer pays separately for development work and the is charged on a straight-line basis over the estimated useful life. The depre- products, and pricing is established independently, revenue is recognised ciation period and method are reviewed annually. Intangible assets with in accordance with the principles applicable to services and products de- an indeterminable useful life are not depreciated, but are tested annually scribed above. If the customer only pays for the finished product, the com- for impairment at the balance sheet date. pany, in cases where there is a contractual delivery, recognises revenue and capitalises development work in line with the degree of completion. This is goodwill subsequently expensed in line with the delivery of the products. The difference between the historical cost at the time of acquisition and the fair value of net identifiable assets at the time of acquisition is classified as Interest income is recognised as it is accrued. Dividends are recognised goodwill. Goodwill is recognised in the balance sheet at historical cost, less as income when they have been approved by the general meeting of the any accumulated impairments. Goodwill is not depreciated, but is tested an- distributing company. nually for impairment at the balance sheet date, or more frequently if there is an indication of impairment. In cases where negative goodwill is identified inventories in connection with business combinations, the purchase price allocation is Purchased inventory is valued at the lower of historical cost (using the FIFO reassessed before any negative goodwill is recognised in income. principle) or net realisable value. Write-downs are made for any inventory that is assumed to be obsolete. research and development Expenses related to research activities are recognised in the income state- currency ment when they are incurred. Expenses relating to development activities transactions in foreign currency are recognised in the balance sheet if these relate to an identifiable product Transactions in foreign currencies are translated at the rate in effect on the that is technically and commercially feasible and the Group has adequate date of the transaction. Monetary items in foreign currencies are translated resources to complete the development. Expenses that are recognised in the to Norwegian kroner (NOK) using the rate in effect at the balance sheet balance sheet include materials expenses, direct payroll expenses and a per- date. Exchange rate fluctuations are recognised in the income statement on centage of directly attributable overhead expenses. Capitalised development an ongoing basis during the accounting period. expenses are recognised in the balance sheet at historical cost, less any accu- mulated depreciation and write-downs. Capitalised development expenses foreign operations are depreciated over the estimated useful life of the asset. Intangible assets The assets and liabilities of foreign operations, including goodwill, are trans- under development, however, are not depreciated and are tested annually lated into Norwegian kroner (NOK) using the exchange rate in effect at the for impairment, or more frequently if there is an indication of impairment. balance sheet date. Revenue and expenses relating to foreign operations are translated into Norwegian kroner (NOK) using an average exchange valuation of investments in subsidiaries rate for the period. Translation differences resulting from the translation of Subsidiaries are valued in accordance with the historical cost method in net investments in foreign operations are specified as currency translation the parent company’s financial statements. Investments are valued at the differences under other comprehensive income. historical cost of the shares unless a write-down of the shares has been necessary, in which case they are written down to fair value. government grants Government grants are recognised in the financial statements where it is rea- provisions sonably certain that the company will fulfil the terms of the grants, and that the Provisions are made in the financial statements where the Group has a liabil- grants will be received. Operating subsidies are accounted for systematically ity (legal or self-imposed) as a result of a past incident, if it is probable that a over the period that the subsidies are received. Grants are recorded in the fi- financial settlement will be made as a result of this liability, and if the amount nancial statements as a deduction in the expenses they are meant to cover. of such a settlement can be measured reliably. If the impact is significant, the provisions are calculated by discounting the estimated future cash flows by a pensions discount rate before tax that reflects the market’s pricing of the current value Pension expenses and pension liabilities are calculated on a linear earning of money and, where relevant, risks specifically linked to the liability. Provi- basis in accordance with assumptions regarding the discount rate; future ad- sions for restructuring are included if the Group has approved a detailed justment of wages, pensions and social security benefits; future return on and formal restructuring plan, and the restructuring has either started or pension funds; as well as actuarial assumptions regarding mortality, voluntary been announced. Provisions for loss-making contracts are included when retirement, etc. The pension funds are valued at fair value less the net pension the Group’s estimated revenue from a contract is lower than the estimated liabilities in the balance sheet. Changes in pension liabilities due to changes in expenses that will be incurred to fulfil the contractual obligations. pension plans are allocated over the estimated remaining earning period. The same applies to actuarial gains or losses (estimated discrepancies) exceeding revenue recognition 10% of the higher of the pension liabilities or pension funds (corridor). Em- Revenue is recognised when it is probable that transactions will generate ployer’s social security contributions are charged as an expense based on the
DATA RESPONS ASA | ANNUAL REPORT 2009 27 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 1-2
pension premium paid for insured (Group) pension schemes, and are accrued operations as these are reported to and monitored by the group manage- in accordance with the change in the pension liabilities for uninsured pen- ment. The different geographical areas form the operating segments and sions. Defined contribution pension schemes are expensed as they are due. the financial information is retrieved and produced based on geographical operating segments. employee share option scheme Employee share options are calculated at the fair value at the time they contingent liabilities and assets are granted and accrued on a linear basis over the vesting period until the Contingent liabilities are not recognised unless these arise from, and are exercise date. The employer’s social security contributions linked to vested assessed as a result of, business combinations. Material contingent liabilities options are accrued correspondingly over the life-span of the option. are disclosed unless the probability of the liability materialising is remote. Contingent assets are not recognised in the annual financial statements. income tax Income tax expense in the income statement comprises both income tax events after the balance sheet date payable for the period and changes in deferred tax. Deferred tax is calcu- New information received after the balance sheet date relating to the com- lated at the current tax rate on the basis of temporary differences between pany’s financial position at the balance sheet date has been taken into con- the financial accounting and tax-related values, and tax loss carryforward at sideration in preparing the annual financial statements. Events occurring the end of the financial year. Negative and positive temporary differences after the balance sheet date that do not affect the company’s financial posi- that reverse or may reverse during the same period are offset and the tax ef- tion at the balance sheet date, but that will affect the company’s financial fect of the net amount is calculated. The tax loss carryforward is recognised position in the future, are disclosed if these are material. in the balance sheet as a deferred tax asset if it is considered adequately probable that the losses can be utilised in the future. use of estimates The management has used estimates and assumptions that have affected cash and cash flow statement assets, liabilities, income, expenses and information on potential liabilities. The cash flow statement has been prepared in accordance with the indirect This applies in particular to the recognition of revenue related to long-term method. Cash and cash equivalents include cash, bank deposits and other manufacturing projects, development projects, capitalised development short-term liquid investments that can be converted immediately and with- expenses, pension liabilities and the valuation of goodwill. The estimates out any significant exchange rate risk to a known cash amount, and with may change as a result of future events. Estimates and their underlying maturity date less than three months from the purchase date. assumptions are assessed continuously. Changes to accounting estimates are included in the financial statements for the period in which the change segments occurs. If the changes also apply to future periods, the impact is spread over The Group is organised into operating segments based on the underlying the current and future periods.
NOTE 2 operating segments
Data Respons’ risk and return profile is largely based on the localisation of its customers, who are in different markets. The Group’s operations are therefore based on the geographic identification of the companies, which also corresponds with management reporting. Transactions and transfers between the Group’s segments are carried out on ordinary commercial terms, corresponding to the terms used for external parties.
operating segments 2009 Unallocated/ NOK 1000 Norway Sweden Denmark Germany Group eliminations*
External operating revenue 278 040 240 401 153 557 54 144 - 726 142 Internal operating revenue 4 499 2 252 - 38 -6 789 0 Operating revenue 282 539 242 653 153 557 54 183 -6 789 726 142 Operating expenses 273 623 243 381 172 339 50 321 7 085 746 749 Depreciation 2 001 1 119 1 992 570 2 561 8 243 Impairment of goodwill 4 300 14 473 40 205 - 0 58 979 Operating profit/loss 2 615 -16 320 -60 980 3 292 -16 436 -87 828 Interest income 615 243 249 180 489 1 776 Interest expense -40 -188 -1 146 -120 -676 -2 170 Other financial items -948 -405 -298 -410 -657 -2 719 Profit/loss before tax 2 242 -16 672 -62 175 2 943 -17 279 -90 941 Income tax expense -1 943 837 5 505 -1 610 3 489 6 277 Profit/loss for the year 298 -15 835 -56 670 1 333 -13 791 -84 665 Capital expenditures this period 2 402 240 1 289 531 3 337 7 798 Total assets 105 222 87 933 24 163 23 076 267 857 508 251 Total liabilities 58 930 54 563 26 348 2 947 34 986 177 775
28 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 2
operating segments 2008 Unallocated/ NOK 1000 Norway Sweden Denmark Germany Group eliminations*
External operating revenue 287 293 292 476 200 346 38 381 - 818 496 Internal operating revenue 11 479 1 878 - - -13 356 - Operating revenue 298 771 294 354 200 346 38 381 -13 356 818 496 Operating expenses 262 054 276 621 182 694 35 215 -498 756 087 Depreciation 1 971 1 296 1 573 289 2 386 7 515 Operating profit/loss 34 747 16 437 16 078 2 876 -15 245 54 893 Interest income 1 936 936 183 302 202 3 559 Interest expense -24 -612 -790 -172 -1 254 -2 853 Other financial items 684 -69 -164 -324 429 557 Profit/loss before tax 37 343 16 692 15 307 2 682 -15 867 56 157 Income tax expense -10 545 -4 760 -3 934 -1 200 3 723 -16 718 Profit/loss for the year 26 797 11 932 11 373 1 482 -12 145 39 439 Capital expenditures this period 2 447 858 5 002 199 896 9 401 Total assets 140 522 112 311 72 726 26 159 337 321 689 039 Total liabilities 93 551 70 150 52 090 7 244 58 848 281 883
operating segments 2007
Unallocated/ NOK 1000 Norway Sweden Denmark Germany Group eliminations*
External operating revenue 281 276 183 563 153 276 16 932 - 635 047 Internal operating revenue 6 587 84 242 1 -6 914 - Operating revenue 287 863 183 646 153 518 16 933 -6 914 635 047 Operating expenses 248 126 168 730 139 125 20 324 5 706 582 010 Depreciation 1 821 699 1 418 102 1 517 5 556 Operating profit/loss 37 916 14 218 12 976 -3 493 -14 136 47 481 Interest income 1 098 606 205 28 99 2 037 Interest expense -126 -435 -288 -404 -250 -1 503 Other financial items -388 109 19 -59 -1 110 -1 429 Profit/loss before tax 38 500 14 498 12 911 -3 928 -15 396 46 586 Income tax expense -10 713 -3 018 -3 252 - 3 336 -13 647 Profit/loss for the year 27 787 11 480 9 659 -3 928 -12 060 32 939 Capital expenditures this period 2 217 640 1 288 99 1 671 5 915 Total assets 152 204 74 157 43 502 2 976 230 487 503 326 Total liabilities 84 968 47 314 25 281 2 952 72 107 232 622
* The item “unallocated/eliminations” includes non-allocated Group expenses (ASA) and eliminations of intercompany revenue and expenses. In addition, the item includes non- allocated assets and liabilities related to the group (ASA), deferred tax assets/liabilities, goodwill, as well as eliminations of intercompany balances.
DATA RESPONS ASA | ANNUAL REPORT 2009 29 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 3
NOTE 3 Intangible assets, machinery and equipment
GROUP DATA RESPONS ASA
Other Total Machinery Machinery and NOK 1000 Goodwill intangible intangible and equipment assets assets equipment Cost or valuation as of 1 January 2008 220 141 4 294 224 435 30 752 5 296 Additions 72 482 828 73 310 9 401 896 Disposals - -287 -287 -410 - Translation differences 33 610 435 34 045 1 980 - Additions from acquired companies - - - 7 046 - Cost or valuation as of 31 December 2008 326 233 5 270 331 503 48 768 6 191
Accum. depr. and impairm. as of 1 January 2008 - 1 943 1 943 21 554 3 077 Depreciation for the year - 1 403 1 403 6 112 1 089 Impairment for the year - - - - - Disposals - - - -334 - Translation differences - 230 230 1 706 - Additions from acquired companies - - - 4 693 - Accum. depr. and impairm. as of 31 December 2008 - 3 576 3 577 33 730 4 165 Net book value as of 31 December 2008 326 233 1 694 327 926 15 038 2 026
Cost or valuation as of 1 January 2009 326 233 5 270 331 503 48 634 6 191 Additions 3 303 - 3 303 7 798 3 337 Disposals - - - -87 - Translation differences -30 280 -606 -30 886 -3 598 - Additions from acquired companies - - - - - Cost or valuation as of 31 December 2009 299 256 4 663 303 919 52 747 9 528
Accum. depr. and impairm. as of 1 January 2009 - 3 576 3 576 33 596 4 165 Depreciation for the year - 1 151 1 151 7 092 1 521 Impairment for the year 58 979 - 58 979 - - Disposals - - - -33 - Translation differences - -442 -442 -2 372 - Additions from acquired companies - - - - - Accum. depr. and impairm. as of 31 December 2009 58 979 4 285 63 264 38 283 5 686 Net book value as of 31 December 2009 240 277 379 240 656 14 464 3 843
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 depreciated over the life of the asset, which is estimated to be from 2.5 to 10 years.
Expensed lease rentals in the group (NOK 1000) 2009 2008 2007 Rental of premises in Norway 9 580 7 035 7 078 Rental of premises outside Norway 9 311 7 256 4 077 Operational leasing of vehicles 2 773 2 928 1 052
The group does not have any purchase options on the properties. In Norway the lease for the head office at Høvik has in 2009 been expanded to 30.06.2015 on existing terms, while the terms of lease for the foreign units vary from a lease requiring 9 months’ notice to a lease with an expiry date of 1 October 2014. The leases will continue on unchanged terms. Leasing contracts on vehicles have a duration of 36 months.
30 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 3
intangible assets Other intangible assets consist of capitalised development expenses, as well as intangible assets recognised at fair value upon the acquisition of companies. In 2009, no development project expenses were capitalised, while NOK 108 000 was charged as expenses. changes in goodwill 2009 There were no acquisitions in 2009. As a result of changes in estimates for earn-out payments in connection with acquisition prior to 2009, the related goodwill has been adjusted upwards by NOK 3,303,000 in 2009. All goodwill is recorded in local 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 downwards by NOK 697,000 at the end of 2009, compared to a upward adjustment of NOK 26,708,000 at the end of 2008. impairment of goodwill per 30 june 2009 Data Respons experienced a record 2008 as well as a satisfactory start in the first quarter of 2009. However, during the second quarter of 2009 the recession hit the Group, producing severely reduced results in some parts of the Group, as well as high uncertainty about the future market develop- ment. In light of these events the Group’s adjusted impairment test showed a need for NOK 59.0 million impairment of goodwill, distributed on NOK 40.2 million for Data Respons A/S (Denmark), NOK 14.1 million for Lundinova AB (Sweden), NOK 4.3 million for Digitas AS (Norway), and NOK 0.4 million for Data Respons Oy (Finland).
For the impairment test the Group used similar assumptions as for 2008, with a calculated WACC of 12%, revenue growth of 5-10%, and extrapo- lated growth rate of 0% beyond the five years of calculated cash flows. The Group used baselines for both revenues and margin in line with the existing market conditions. impairment test of goodwill Goodwill recognised through the acquisition of companies and units is allocated to the individual unit if the cash flows are still identifiable. In cases where units have been merged and operations are integrated, it is difficult to isolate the cash flows. In these cases the combined goodwill will be assessed for the merged unit.
Goodwill is allocated as follows: (NOK 1000) 2009 2008 2006 Data Respons Norge AS 49 455 49 455 48 078 Digitas AS 20 219 22 163 14 420 Data Respons AB (SE) 21 248 24 139 22 518 Sylog Sverige AB (SE) 53 023 58 524 40 305 Data Respons Syrén AB (SE) 9 968 10 555 9 192 Lundinova AB (SE) 5 419 22 236 - Data Respons A/S (DK) 51 769 104 549 85 628 Ipcas Gmbh (DE) 29 176 34 612 - Total 240 277 326 233 220 141
The recoverable amount for the cash flow-generating units is calculated based on the value the asset will generate for the business operations. Cash forecasts are based on budgets approved by the management for 2010 with a projection for a five-year period based on the assumptions below. Cash flows beyond this period are extrapolated using estimated growth rates for the individual units.
The impairment test for 2009 showed no need for impairment of goodwill beyond the impairment of NOK 59.0 million recognised as of June 30th, 2009 described above. The most import assumptions for calculation of the recoverable amount are as follows:
revenue growth: Historically the Group has achieved an organic (pro forma) growth of appr. 20%, and management believes that the long-term outlook for the em- bedded solutions market is prosperous. However, in these uncertain times it is reasonable to expect a lower growth rate, and to reflect the uncertain conditions the yearly growth rate has been set at 5-10 % in the five-year period. A reduction of the growth rate of 5 percentage points (i.e. 0-5% growth) would result in an impairment need of NOK 2.1 million.
extrapolated growth rate: The growth rate beyond five years has been set at 0% for all units. A residual growth rate of 2% would remove any impairment need calculated by the sensitivity analysis related to both revenue growth and discount rate.
ebit margin: The group has used EBIT margins that are higher than those achieved in 2009, but lower than margins achieved in the previous years. As a conserva- tive approach, it is assumed that the units will gradually achieve margins similar to 2008 over the five-year period.
discount rate: A calculated WACC of 12% after tax has been used as the discount rate for all units. An increase of 1 percentage point to 13% would result in an impairment need of NOK 1.1 million.
DATA RESPONS ASA | ANNUAL REPORT 2009 31 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 4
NOTE 4 subsidiaries and other investments
GROUP Company Date of acquisition Registered office Ownership and voting interest
Data Respons Norge AS 27.11.2001 Bærum 100% Certified Computer Technology AS 17.02.2000 Bærum 100% Data Respons AB (SE) 27.11.2001 Upplands Väsby (SE) 100% Data Respons A/S (DK) 27.11.2001 Herlev (DK) 100% Data Respons OY (FI) 01.11.2003 Espo (FI) 100% Data Respons GmbH (DE) 17.02.2005 Karlsruhe (DE) 100% Centrex AS 01.04.2006 Bærum 100% Data Respons Syrén AB (SE) 08.01.2007 Gøteborg (SE) 100% Digitas AS 04.07.2007 Asker 100% Sylog Sverige AB (SE) 06.07.2007 Kista (SE) 100% Professional Finder AB (SE) 06.07.2007 Kista (SE) 100% Lundinova AB (SE) 16.01.2008 Lund (SE) 100% Ipcas GmbH (DE) 11.09.2008 Erlangen (DE) 100%
The investments are carried using the historical cost method in the parent company’s financial statements.
Data Respons Components AB merged with Data Respons AB with effect from 1 January 2009, with Data Respons AB as the acquiring company.
DATA RESPONS ASA
Company Currency Issued capital Shareholding Book value (NOK 1000)
Data Respons Norge AS NOK 1 387 100% 139 880 Certified Computer Technology AS NOK 1 100 100% - Data Respons AB (SE) SEK 507 100% 38 167 Data Respons OY (FI)* EUR 150 100% 3 115 Data Respons A/S (DK)* DKK 2 277 100% 73 855 Data Respons GmbH (DE) EUR 100 100% 14 236 Centrex AS NOK 100 100% - Data Respons Syrén AB (SE) SEK 105 100% 15 895 Digitas AS* NOK 313 100% 22 402 Sylog Sverige AB (SE) SEK 100 100% 59 453 Lundinova AB (SE)* SEK 100 100% 7 466 Ipcas GmbH (DE) EUR 26 100% 42 645 Total 417 115
* The impairment test performed in connection with the presentation of the Q2 figures for 2009 resulted in an impairment of NOK 59.0 million of goodwill, with a correspond- ing impairment of book value of the relevant subsidiaries. The impairment amounted to NOK 40.2 million for Data Respons A/S (Denmark), NOK 14.1 million for Lundinova AB (Sweden), NOK 4.3 million for Digitas AS (Norway), and NOK 0.4 million for Data Respons Oy (Finland). See note 3 for further specification.
32 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 5-6
NOTE 5 business combinations business acquisitions in 2009 There have been no acquisitions in 2009. For pro forma figures including previous years’ acquisitions, see Note 22. summary of previous years’ acquisitions The following table is a summary of the original acquistion analysis for the two previous years. For full specifications, see the annual report for the respective year.
2008 2007
Lundinova AB Ipcas GmbH Syrén Software AB Digitas AS Sylog Sverige AB SEK 1000 EUR 1000 SEK 1000 NOK 1000 SEK 1000 Net identifiable assets - Book value 1 656 1 522 5 539 1 683 3 737 Net identifiable assets - Fair value 2 156 1 572 6 039 2 183 4 737
Share (%) acquired 100% 100% 100% 100% 100% Net assets acquired 2 156 1 572 6 039 2 183 4 737
Purchase price 26 748 5 081 16 910 16 604 52 407
Goodwill at time of acquisition 24 592 3 509 10 871 14 421 47 670 Exchange rate at time of acquisition 0.85 8.07 0.92 1.00 0.87 Goodwill (NOK 1000) 20 869 28 324 10 031 14 421 41 443
NOTE 6 inventories
goods purchased for resale GROUP DATA RESPONS ASA
NOK 1000 2009 2008 2007 2009 2008 2007 Historical cost 46 539 74 745 62 161 - - - Written down to fair value 46 471 74 301 62 161 - - - General provisions for obsolescence -3 298 -2 588 -2 061 - - - Book value 43 172 71 713 60 100 - - -
Value of inventory pledged as collateral 17 000 17 000 17 000 - - -
DATA RESPONS ASA | ANNUAL REPORT 2009 33 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 7-8
NOTE 7 trade and other receivables
GROUP DATA RESPONS ASA
NOK 1000 2009 2008 2007 2009 2008 2007 Trade receivables 118 974 167 946 115 128 593 646 406 Provisions for impairment of receivables -2 185 -515 -420 - - - Trade receivables, net 116 789 167 432 114 708 593 646 406 Accrued revenue 16 213 11 688 1 469 - - - Prepayments 11 736 7 784 4 710 490 385 307 Other current receivables 3 415 5 607 7 806 373 4 401 6 413 Total other receivables 31 364 25 079 13 986 862 4 786 6 720 Total receivables 148 153 192 511 128 693 1 455 5 433 7 126
Provisions as of 1 January 515 420 776 - - - Realised losses -57 -558 -278 - - - Provisions for the period 1 727 614 -347 - - - Additions from acquired companies - 39 269 - - - Provisions as of 31 December 2 185 515 420 - - -
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 (NOK 1000) Carrying amount Not due Number of days past due date 0-30 31-60 61+ Trade receivables as of 31 Dec. 2009 118 974 94 201 19 957 1 814 3 002 Trade receivables as of 31 Dec. 2008 167 946 109 425 52 656 4 405 1 460
NOTE 8 intercompany balances
DATA RESPONS ASA
NOK 1000 Current receivables Current liabilities 2009 2008 2007 2009 2008 2007 Data Respons Norge AS 461 560 1 294 95 3 293 3 544 Digitas AS - 4 000 12 - - - Certified Computer Technology AS - - -47 - - - Data Respons AB 106 - 130 113 186 62 Sylog Sverige AB - - - 75 - - Lundinova AB 253 - - - - - Data Respons Oy - - 110 - - - Data Respons A/S 67 48 5 337 - - 80 Data Respons GmbH 5 39 40 - 29 - Total 893 4 646 6 875 283 3 509 3 686
Data Respons Components AB merged with Data Respons AB with effect from 1 January 2009. The comparative figures have been adjusted accor- dingly. Intercompany balances are mainly due to deliveries of group management services from Data Respons ASA to the subsidiaries. Sales revenue for Data Respons ASA consists mainly of group management fees.
34 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 9
NOTE 9 SHARE capital, shareholders, earnings per share
The registered share capital of Data Respons ASA consisted of 46,833,076 shares with a par value of NOK 0.50 as of 31 December 2009. Each share carries one vote. A total of 13.0 million shares were traded on the Oslo Stock Exchange in 2009, a decrease from 15.4 million shares in 2008. At the end of the year Data Respons ASA had 1,049 Norwegian shareholders and 42 foreign shareholders. The foreign shareholders owned 2.7 % of the shares. During 2009 a total of 269,224 treasury shares were bought, and 426,224 were used as payment for acquisitions (earn-out obligations). The company did not own any treasury shares at the end of the year.
LIst of 20 largest shareholders as of 31 december 2009 Shareholder Ordinary shares Proportion of ownership CUSTOM HOLDING AS 5 246 968 11.2 % MP PENSJON 4 121 000 8.8 % FERD AS INVEST 4 096 500 8.7 % DYVI CAPITAL AS 2 120 000 4.5 % VARNER INVEST AS 1 500 000 3.2 % BRAGANZA AS 1 400 000 3.0 % HAAKON MORTEN SÆTER 1 252 211 2.7 % RO INVEST AS 1 188 000 2.5 % ALFRED BERG GAMBAK 1 180 671 2.5 % ALFRED BERG NORGE 1 082 100 2.3 % ALFRED BERG AKTIV 980 400 2.1 % FOUGNER INVEST AS 900 000 1.9 % DELPHI NORGE 866 500 1.9 % BERNT AS 800 000 1.7 % LOLIGO AS 800 000 1.7 % SILVERCOIN INDUSTRIES AS 772 700 1.6 % VENTOR AS 695 500 1.5 % SKAGEN VEKST 600 000 1.3 % DNB NOR SMB 550 000 1.2 % PETER ELIAS SÆTER 541 050 1.2 % Total 30 693 600 65.5 % Others 16 139 476 34.5 % Total number of shares 46 833 076 100.0 %
share issues in 2009 Date Type Subscription price Number of shares After new issue 21.04.2009 Private placement - Earn-out payment acquisitions 8.46 2 511 329 44 873 060 13.10.2009 Private placement - Earn-out payment Sylog Sverige AB 8.62 1 960 016 46 833 076
power of attorney to issue shares and purchase treasury shares Year Maximum Shares issued/ Remaining Passed Type Duration issued share limit purchased 2009 number of shares 29.04.2009 Capital increase 2009 4 200 000 1 960 016 2 239 984 Until 22.04.2010 29.04.2009 Purchase of treasury shares 2009 4 000 000 174 224 3 825 776 Until 22.04.2010
DATA RESPONS ASA | ANNUAL REPORT 2009 35 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 9
The Board has been granted power of attorney to increase the company’s share capital by a maximum of NOK 2,100,000 through the issue of a maxi- mum of 4,200,000 new shares, each with a par value of NOK 0.50. The authorisation is valid until the annual general meeting in 2010 and can be used by the Board in connection with acquisitions of new companies as part of the company’s strategy, option schemes for employees, or cash issues. The company’s shareholders have waived their pre-emptive subscription rights in accordance with Section 10-5, cf. article 10-4, of the Norwegian Public Limited Companies Act.
The Board has been granted power of attorney to purchase up to 4,000,000 shares with an equivalent nominal value of NOK 2,000,000, in accordance with article 9-4 of the Norwegian Public Limited Companies Act. The amount which may be paid per share is to be minimum NOK 1.00 and maximum NOK 50.00. 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 2010. The purpose of the authorisation is to give the company the facility to implement the 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 to fulfil the existing share option scheme for employees. 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 out- standing 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.
2009 2008 2007 Profit/loss for the year attributable to the company’s shareholders (NOK 1000) -84 665 39 439 33 033
Weighted average number of outstanding shares (1000) 44 356 39 932 37 087 Effect of dilution -Employee share option scheme - 1 470 1 470 Weighted average number of outstanding shares, diluted (1000) 44 356 41 402 38 557
Earnings per share, basic -1.91 0.99 0.89 Earnings per share, diluted -1.91 0.95 0.86 calculation of time-weighted shares Date Number of shares* Number of days Weighted number of shares 01.01.2009 42 204 731 120 13 875 528 01.05.2009 44 873 060 178 21 883 300 26.10.2009 46 833 076 67 8 596 756 44 355 585
* Number of shares has been adjusted by the treasury shares held by the company.
No distribution of dividends has been proposed for the 2009 financial year.
36 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note10
NOTE 10 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 16 people in 2009. As of 1 December 2007, the parent company and Data Respons Norge AS changed from a defined benefit pension scheme to a defined contribution pension scheme, but kept the disability part as a defined benefit scheme. The Group as a whole has a defined benefit pension scheme that covers 149 people in total. This relates mainly to the disability part. The liabilities are covered through an insurance company. The calculations are performed by an actuary and are based on the IFRS standard. The annual pension expenses are included under payroll expenses, and they consist of changes in the liabilities and pension funds, as well as contributions to the collective pension scheme. In addition to the aforementioned schemes in Norway, the Group’s subsidiaries have, with one minor exception, defined contribution pension schemes, and the expenses associated with these schemes are included under payroll expenses in the income statement. The expenses broken down into defined contribution and defined benefit schemes are specified in Note 15.
GROUP DATA RESPONS ASA
NOK 1000 2009 2008 2007 2009 2008 2007 the pension expense is calculated as follows: Net present value of current year’s accrued pension benefits 2 369 1 564 3 546 340 255 899 Interest cost on accrued pension liabilities 343 233 760 103 37 213 Expected return on pension funds -298 -160 -466 -110 -37 -107 Amortisation of actuarial gains/losses 13 - - 13 - - One-time effect of transition to defined contribution scheme - - -3 657 - - -313 Pension expenses for the year 2 426 1 636 183 346 255 1 005 pension liabilities and pension funds: Estimated uninsured pension liabilities 10 219 10 322 5 305 2 516 2 466 863 Estimated value of pension funds 6 038 5 832 2 414 1 779 1 723 601 Net estimated pension liabilities 4 181 4 490 2 891 738 743 262 Unrecognised actuarial gains/losses 662 -685 - -310 -461 - Net pension liabilities 4 843 3 805 2 891 428 282 262 changes in the liabilities: Net pension liabilities as of 1 January 3 805 2 891 6 568 282 262 208 Recognised pension expenses 2 427 1 636 183 346 255 692 Premium payments -1 388 -1 522 -3 860 -200 -236 -638 Additions from acquired companies - 799 - - - - Net pension liabilities as of 31 December 4 843 3 805 2 891 428 282 262
The following assumptions have been used for the calculation of the pension expenses and net pension liabilities: 2009 2008 2007 Discount rate 4.40% 4.30% 4.8 % Return on pension funds 5.60% 6.30% 5.8 % Future salary increases 4.25% 4.50% 4.5 % Annual basic amount adjustment 4.00% 4.25% 4.3 % Future pension increases 2.75% 3.00% 2.0 %
Percentage distribution of pension funds by investment category: 2009 2008 2007 Equities 3.8 % 6.0 % 29.6 % Bonds 29.9 % 32.4 % 16.7 % Money market 14.0 % 11.5 % 7.9 % Long-term bonds 28.8 % 28.7 % 27.7 % The actuarial assumptions are based on Real estate 16.8 % 17.1 % 15.2 % normal assumptions used by the insur- ance industry with regard to demo- Other 6.7 % 4.3 % 2.9 % graphic factors: Table K2005.
DATA RESPONS ASA | ANNUAL REPORT 2009 37 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note11
NOTE 11 income tax
GROUP DATA RESPONS ASA
Summary of temporary differences (NOK 1000) 2009 2008 2007 2009 2008 2007 Receivables -1 104 95 -360 - - - Other current assets -1 585 -2 272 -1 917 - - - Non-current assets -4 082 -4 400 -4 618 -1 421 -1 414 -1 343 Pensions -4 136 -3 032 -2 891 -428 -282 -262 Work in progress - -183 - - - - Provisions for contingent liabilities - - -349 - - - Financial assets ------Group contributions* - - - -7 222 -37 544 -36 310 Total -10 907 -9 792 -10 135 -9 070 -39 240 -37 916 Tax loss carryforward -104 681 -70 755 -101 061 -93 029 -84 893 -109 233 Total positive/negative temporary differences -115 588 -80 547 -111 195 -102 100 -124 133 -147 149 Deferred tax assets at current tax rate 34 699 26 486 33 535 28 588 34 757 41 202 Of which, deferred tax assets not recognised - - 147 - - - Addition of deferred tax assets from acquisitions ------Deferred tax assets in the balance sheet 34 699 26 486 33 388 28 588 34 757 41 202 Deferred tax liability at current tax rate 2 832 3 959 2 435 - - - Deferred tax liability in the balance sheet 2 832 3 959 2 435 - - -
* In accordance with IFRSs, Group contributions are entered as income in the parent company the year after the allocation for tax purposes in the subsidiaries.
The deferred tax assets in the balance sheet relate primarily to the tax loss carryforward in the Norwegian companies. These companies have, with the exception of a challenging 2009, shown healthy profits, and based on updated forecasts prepared for the coming years, it is expected that it will be possible to utilise the tax loss carryforward. Unrecognised deferred tax assets relate to the tax loss carryforward in Sweden. The tax loss can be carried forward indefinitely.
GROUP DATA RESPONS ASA Income tax expense for the year consists of 2009 2008 2007 2009 2008 2007 Income tax payable in Norway ------Income tax payable outside Norway 2 243 8 195 5 771 - - - Total income tax payable 2 243 8 195 5 771 - - - Change in deferred tax in Norway -1 545 6 823 7 377 7 024 2 199 -21 287 Change in deferred tax outside Norway -6 974 1 700 499 - - - Change in deferred tax from acquisitions - -96 1 362 - - - Total change in deferred tax -8 519 8 427 9 239 7 024 2 199 -21 287 Unrecognised change in deferred tax assets ------Total income tax expense/revenue -6 277 16 718 13 647 7 024 2 199 -21 287
38 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 11-12
GROUP DATA RESPONS ASA
Calculation of tax base for the year (NOK 1000) 2009 2008 2007 2009 2008 2007 Profit/loss before tax -90 941 56 157 46 586 -24 033 40 505 21 102 28% tax -25 464 15 724 13 044 -6 729 11 341 5 908 tax effect of: Permanent differences 17 051 1 706 1 132 12 899 -4 898 -3 709 Change in not-recognised deferred tax 744 -85 -142 - - - Adjustment from previous years 854 - - 854 - - Differences in tax rates 538 -627 -387 - - - Income tax expense (revenue) for the year -6 277 16 718 13 647 7 024 6 444 2 199 Effective tax rate 7% 30% -89% -29% 16% -162%
NOTE 12 other current liabilities
GROUP DATA RESPONS ASA
NOK 1000 2009 2008 2007 2009 2008 2007 Prepayments from customers 1 160 42 3 244 - - 1 Accrued wages/bonuses/holiday pay 30 534 36 095 28 230 4 007 4 471 3 769 Accrued expenses 31 635 31 496 23 581 3 281 4 523 5 011 Other current liabilities* 21 932 58 963 59 434 21 932 58 963 59 434 Total other current liabilities 85 260 126 597 114 489 29 219 67 957 68 215
*Other current liabilities consists of additional payments according to earn-out agreements that are due within a year. See Note 13 for specification.
DATA RESPONS ASA | ANNUAL REPORT 2009 39 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 13
NOTE 13 other provisions for liabilities
GROUP DATA RESPONS ASA Other Other NOK 1000 Total Total provisions provisions Provisions as of 1 January 2009 91 045 91 045 91 045 91 045 Recognised in the income statement during the year: – Provisions for the year - - - - – Reversal of unutilised provisions - - - - Recognised in the balance sheet during the year 1 505 1 505 1 505 1 505 Utilised during the year -63 990 -63 990 -63 990 -63 990 Additions from acquired companies - - - - Translation differences -2 798 -2 798 -2 798 -2 798 Provisions as of 31 December 2009 25 762 25 762 25 762 25 762 Classified as current liabilities in the balance sheet 21 933 21 933 21 933 21 933 Classified as non-current liabilities in the balance sheet 3 829 3 829 3 829 3 829
Other provisions In connection with acquisition of companies, an earn-out agreement is often entered into, where the previous owners receive additional payments based on the performance of the acquired company in a specified time period after the acquisition. The additional payments will be made in cash or in shares in Data Respons ASA based on market rate. The following table specifies estimated earn-out payments divided into operating segments as of 31 December 2009. Payments due in 2010 are classified as current liability and the outcome will depend on exchange rate development up until payment date. Payments due after 2010 are classi- fied as non-current liability, and the outcome will depend on both performance development in the acquired companies and the exchange rate development.
Estimated earn-out payments Country (NOK 1000) 2010 2011+ Total Norway 8 706 - 8 706 Sweden 5 930 - 5 930 Denmark - - - Germany 7 297 3 829 11 126 Provisions as of 31 December 2009 21 933 3 829 25 762
GROUP DATA RESPONS ASA
NOK 1000 2009 2008 2007 2009 2008 2007 mortgages and guarantees Debt secured by mortgage ------Guarantees 4 531 2 579 1 262 255 - -
book value of secured assets used as collateral Trade receivables 29 191 37 723 38 607 - - - Inventories 24 614 37 566 42 132 - - - Total 53 805 75 289 80 739 - - -
A guarantee of NOK 4,531,000 has been provided in connection with lease agreements.
Guarantees and overdraft facilities are secured by a lien on inventory and trade receivables. A total lien of NOK 17 million has been placed on invento- ries, and a total lien of NOK 45 million has been placed on trade receivables. unsettled disputes: Data Respons ASA has received a claim of NOK 0.9 million in connection with the sale of a company in 2001. The company has accrued the full amount, but regard the claim as unfounded and will contest it. The company has also accrued for a minor VAT issue, which is still under consideration with the tax authorities.
40 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 14-15
NOTE 14 related party transactions
There have been no transactions between the company and related parties except transactions between Group companies. All transactions between Group companies follow the arms-length principle.
For the parent company, transactions with Group companies consists mainly of fees for Group management services.
See Note 15 for information on the remuneration of Group management and Board of Directors, as well as Note 8 for balances between Data Respons ASA and other Group companies.
NOTE 15 payroll expenses, employees, remuneration and loans
GROUP DATA RESPONS ASA
Payroll expenses (NOK 1000) 2009 2008 2007 2009 2008 2007 Wages and salaries 257 028 254 387 175 300 18 674 17 098 13 315 Social security tax 45 619 41 717 29 105 2 586 1 922 1 683 Pension expenses, defined benefit scheme 2 426 1 636 183 346 255 692 Pension expenses, defined contribution scheme 17 772 16 438 8 312 722 730 49 Other benefits 15 746 24 786 16 772 1 517 3 078 2 283 Total 338 592 338 965 229 672 23 844 23 083 18 021
The average number of employees during the financial year was 19 in the parent company. The average number of employees in the group was 494, and there were 464 employees at the end of the year. There were 72 female employees in the Group, 14 of whom were middle managers. shares, options and remuneration to the ceo, key employees, board of directors and nomination committee *Bonus listed is for the financial year of 2008, paid out in the beginning of 2009. For the financial year 2009, Group management has relinquished bonus and there will be no bonus payments.
Salaries Other benefits Total No. of No. of Bonus* Pensions and fees in kind remuneration shares options Kenneth Ragnvaldsen, CEO 1 995 440 791 976 61 637 7 655 2 856 708 245 000 - Rune Wahl, CFO 1 595 143 371 675 66 208 7 655 2 040 681 60 000 - Åge Gjellesvik, Vice President Sales 1 278 673 310 883 66 886 7 655 1 664 097 33 043 - Hans Christian Lønstad, CTO 1 342 536 235 870 65 774 7 655 1 651 835 61 596 - Georg Huus, Marketing Director 1 063 197 151 639 64 904 7 655 1 287 395 3 000 -
Ole Jørgen Fredriksen, Chairman of the Board - - 59 684 - Svein R. Goli, former Chairman of the Board 161 700 161 700 150 000 - Anne-Cecilie Fagerlie, Board member 100 800 100 800 - - Lars-Olof Gustavsson, Board member 109 200 109 200 20 000 - Ingvild Myhre, Board member 92 400 92 400 10 000 - Steinar Hoen, Board member 117 600 117 600 145 000 - Mikkel Helweg, former Board member/employee rep. 23 100 23 100 1 601 - Anne Helene Tryti, Board member/employee rep. 23 100 23 100 6 653 - Nils-Henrik Petterson, Nomination Committee member 10 000 10 000 - - Albert Collet, Nomination Committee member - - - - Haakon Sæter, Nomination Committee member 7 000 7 000 2 024 911 - Leif Eriksrød, Nomination Committee member - - - -
DATA RESPONS ASA | ANNUAL REPORT 2009 41 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 15
As part of the remuneration of the CEO and key employees, a total of 740,000 options had been granted in April 2006. All of the options expired as of 01 May 2009, and no options were exercised. In accordance with IFRS 2, the fair value of options granted to employees was accrued over the vesting period and in 2009 a total of NOK 277,500 was expensed related to options granted to the CEO and key employees, NOK 0.375 per option.
On 29 April 2009, the General Meeting decided that the scope for the Board of Directors’ fee for the 2009 working period should be NOK 837,200, based on the current composition of the Board of Directors. 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.
The Board of Directors’ guidelines and principles for the stipulation of salaries and other remuneration to key employees In accordance with the provisions of the Public Limited Companies Act, the Board of Directors has prepared the following declaration of guidelines and main principles for the stipulation of salaries and other remuneration for key employees. The object of designing a compensation package for the CEO and other key employees is to provide a competitive package that contains incentives to strive for profitable growth and increase the creation of value for the shareholders within the scope of the company’s adopted values and strategies. The individual manager shall be paid a fixed basic salary in line with market salaries for corresponding positions in comparable companies in Norway. A variable salary shall be paid in addition to the fixed salary. The variable salary is dependent on achieving profitability improvement and growth targets for the Group. For the CEO and the other key employees the variable salary will be a maximum of 40% of the fixed base salary.
The company had a share option scheme for Group management and managers in the Group’s subsidiaries which expired in May 2009. The share option scheme was established to give the company’s management incentives to strive to create value for the shareholders. Any future share option schemes or other share-based remuneration schemes shall be approved by the general meeting. The Board of Directors is in general positive to per- formance related arrangements which are linked to value creation for shareholders or the company’s earnings performance over time. The CEO and Group management are covered by the company’s pension scheme on the same terms as other employees. This pension scheme is described in Note 10. The CEO is entitled to 12 months’ salary after termination or amendment of his position/employment. Other members of Group management have a mutual notice period of up to six months and no special arrangements. employee share option scheme On 31 March 2006 the Board of Directors of Data Respons ASA approved a share option programme for the management and key employees with a total scope of 1,500,000 options. The exercise price was set at the quoted price plus 20%. All of the options expired as of 01 May 2009, and no options were exercised. As of 31 December 2009 there are no option programmes in the group.
Movements in the number of outstanding share options and the associated weighted average exercise prices are as follows:
2009 2008 2007 Average Average Average Exercise price Options Exercise price Options Exercise price Options NOK 1 000 NOK 1 000 NOK 1 000 As of 1 January 16.80 1 230 16.80 1 470 16.80 1 320 Granted - - - - 16.80 150 Forfeited 16.80 -100 16.80 -240 - - Exercised ------Expired 16.80 -1 130 - - - - As of 31 December - - 16.80 1 230 16.80 1 470
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 14.00 when granted, exercise price of NOK 16.80, estimated volatility of 39.50% based on the share prices during the period from May 2003 to April 2006, risk-free interest rate of 3.67%, and a term of two and three years, respectively. The cost will be accrued over the vesting period with deductions for the estimated number of forfeited options. In 2009, a total of NOK 184,344 were expensed for the option programme.
remuneration to the auditor GROUP DATA RESPONS ASA NOK 1000 2009 2008 2007 2009 2008 2007 Auditing services 1 237 1 241 1 070 291 281 268 Other certification services 34 14 13 27 6 2 Tax advice 246 121 159 83 39 18 Other non-auditing services 88 192 85 24 68 57
42 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 16-17
NOTE 16 financial items
GROUP DATA RESPONS ASA
NOK 1000 2009 2008 2007 2009 2008 2007
financial income Interest received from Group companies - - - - - 179 Interest income 1 776 3 559 2 037 489 202 99 Other financial income 3 490 4 234 746 160 562 11 Total other financial income 5 266 7 793 2 783 649 765 290
financial expenses Interest expenses 2 170 2 853 1 503 676 1 246 508 Other financial expenses 6 209 3 677 2 174 817 142 261 Total other financial expenses 8 379 6 530 3 678 1 492 1 387 770
NOTE 17 cash and cash equivalents
GROUP DATA RESPONS ASA
NOK 1000 2009 2008 2007 2009 2008 2007 Cash and bank deposits 27 072 55 331 49 347 -15 579 -13 945 -19 888 – of which restricted -5 065 -5 045 -4 411 -793 -735 -631 Unrestricted cash and cash equivalents 22 007 50 286 44 936 -16 372 -14 680 -20 519
Unutilised short-term credit facilities 26 774 25 000 18 000 26 774 25 000 18 000 Unutilised long-term credit facilities - 55 000 80 000 - 55 000 80 000 Cash reserve 48 781 130 286 142 936 10 402 65 320 77 481
The Data Respons Group 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 31 December 2009 the net position in the corporate account system was NOK -3.2 million, and Data Respons ASA had position of NOK -15.6 million.
There are financial covenants which may restrict the use of the credit facilities. The short-term facility of NOK 30 million has a covenant requiring an equity-to-asset ratio of minimum 40%. The long-term facility of NOK 50 million has in addition a covenant where consolidated net interest bearing debt divided by a 12 months rolling consolidated EBITDA should not exceed 3.0.
Due to the Group’s negative EBITDA in 2009, the long-term facility is not available as of 31 December 2009. The negative result in 2009 was due to the one-off expenses in Q2, and the Group expects most of the long-term facility to become available after the presentation of the Q2 results for 2010.
DATA RESPONS ASA | ANNUAL REPORT 2009 43 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes | Note 18-19
NOTE 18 other operating expenses
GROUP DATA RESPONS ASA
NOK 1000 2009 2008 2007 2009 2008 2007 Expenses related to premises and equipment 24 228 18 312 13 173 2 054 1 030 578 External services 5 419 7 559 7 214 3 002 2 689 2 094 Marketing expenses 7 454 8 881 8 171 1 303 978 523 Other operating expenses 35 643 31 497 22 897 4 633 4 307 3 765 Total 72 744 66 249 51 455 10 992 9 004 6 960
NOTE 19 Financial Risk Management
The Group’s activities expose it to a variety of financial risks, including price risk, interest rate risk, currency risk, credit risk and liquidity risk. Overall these risks are regarded as low. Risk management 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 the Group holds no financial assets or liabilities for speculative purposes. market price risk As of 31 December 2009, all financial assets and liabilities are classified as loans or receivables under IAS 39, and their value is not subject to any market price risk. credit risk The Group’s exposure to non-payment of contractual obligations is reflected by outstanding trade receivables and accrued revenue specified in Note 7. Identified default risks for individual customers are reflected in bad debt allowances. The Group’s customers largely consist of large and medium-sized companies with good solvency, and the customer base is diversified into different vertical market segment. None of the Group’s operating segments had any significant concentration of credit risk. Credit checks are performed on new customers. Historically bad debt losses have been low, and although the current economic conditions will increase the risk of non-payment, the Group does not expect to see any major increase in losses. liquidity risk and capital management The primary objective of the Group’s capital management is to maintain a healthy capital ratio to support the Group’s continued expansion. The Group will primarily finance the expansion through cash generated by the operational activities and equity. To cover temporary funding needs for acquisitions, the Group has secured a credit facility of NOK 80 million. There are financial covenants which may restrict the use of the credit facilities; see Note 17 for specifications regarding cash and credit facilities. The Group has 30-60 days in credit terms from the main suppliers. Surplus cash holdings will be kept in interest-bearing bank accounts with reputable banks. As of 31 December 2009 the Group has NOK 27 million in cash and no interest-bearing debt and regards the liquidity situation as healthy. currency risk The group has operations in 5 different countries with 4 different currencies and is as such exposed to currency fluctuations when translating into the Group currency NOK. Exposure from individual subsidiaries varies according to the nature of their business. Consultancy operations 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 product sales 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 an agreement 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 components/solutions sales, and further hedging is deemed unnecessary. interest rate risk The Group primarily finances its operations and acquisitions through equity and cash generated from operational activities, and has no investments in long- term interest-bearing financial assets. Consequently the exposure to interest rate fluctuation is low and hedging is deemed unnecessary.
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 +100 266 2009 -100 -266 +100 398 2008 -100 -398
44 DATA RESPONS ASA | ANNUAL REPORT 2009 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Notes |Note 20-22
NOTE 20 government grants
Data Respons has been awarded the following grants by the Research Council of Norway in 2009:
Company Project Grant (NOK 1000) Digitas AS FPGA Platform IPR 321
The project is approved as R&D projects covered by the SkatteFUNN scheme in accordance with Section 16-40 of the Taxation Act. A total of NOK 518,000 has been allocated to the project, with NOK 197,000 already refunded and NOK 321,000 included in the balance sheet under other receivables. NOK 321,000 has been recognised in the income statement as a reduction in payroll expenses.
NOTE 21 events after the balance sheet date
There have been no major events between the balance sheet date and the approval of the annual accounts for 2009.
NOTE 22 pro forma (unaudited)
The following tables show the income statement and operating revenue and EBITDA distributed by primary segment, as if all the acquisitions had been consolidated as of 1 January 2007.
NOK 1000 2009 2008 2007 Operating revenue 726 142 840 131 751 594 Cost of goods sold 335 412 352 355 327 861 Payroll expenses 338 592 353 816 298 374 Other operating expenses 72 744 68 126 63 520 EBITDA -20 607 65 834 61 840 Depreciation 8 243 7 849 6 848 Impairment of goodwill 58 979 - - Operating profit (EBIT) -87 828 57 985 54 992 Net financial items -3 113 1 317 -1 956 Profit before tax -90 941 59 301 53 036
operating Revenue EBITDA NOK 1000 2009 2008 2007 2009 2008 2007 Norway 282 539 298 771 293 396 8 916 36 717 40 655 Sweden 242 653 294 354 267 245 -728 17 733 19 771 Denmark 153 557 200 346 153 518 -18 783 17 651 14 393 Germany 54 183 60 016 44 349 3 862 6 590 -360 Eliminations/Corporate -6 789 -13 356 -6 914 -13 874 -12 859 -12 619 Group 726 142 840 131 751 594 -20 607 65 834 61 840
DATA RESPONS ASA | ANNUAL REPORT 2009 45 CHAPTER 4: FINANCIAL STATEMENTS AND NOTES Auditor’s report
Auditor’s report
46 DATA RESPONS ASA | ANNUAL REPORT 2009 Data Respons has offices in Denmark, Finland, Germany, Norway, Sweden and Taiwan. Contact us – we know embedded solutions.
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