Annual report 1999 DOMSTEIN ASA GROUP INCOME STATEMENT - GROUP Amount in 1000 nok Note 1999 1998 OPERATING INCOME Revenue 1 1.855.807 1.870.640 Revenue reduction 194.619 177.767 Operating income 1.661.188 1.692.873 OPERATING EXPENSES Changes in inventoriesof work in progress and finished goods 8 -24.028 Raw materials and consumables used 1.229.986 1.327.698 Payroll expenses 2,6 190.991 185.249 Depreciation and amortisation expenses 4,5 33.846 31.284 Other operating expenses 3,12 131.392 121.047 Total operating expenses 1.586.223 1.641.250 Operating Profit 74.965 51.623 FINANCIAL INCOME AND EXPENSES Income from subsidiaries and other group entities 9 2.567 1.517 Other financial income 3.701 2.160 Ohter financial expenses 50.117 42.196 Result og finacial items, net 43.849 38.519 Operating result before tax 31.116 13.104 Tax on ordinary result 7 9.271 2.661 Net profit of the year 21.845 10.443 Majority share 21.845 9.493 Minority share 0 950 ANNUAL REPORT 1999 – DOMSTEIN ASA Page 2 BALANCE SHEET - GROUP Amount in 1000 nok Note 1999 1998 ASSETS FIXED ASSETS Intangible fixed assets Licences 5 16.636 11.702 Goodwill 5 20.432 18.664 Total intangible fixed assets 37.068 30.366 Tangible fixed assets Buildings and land 4,11 195.022 196.035 Machinery 4,11 143.782 141.925 Ships, rigs, etc. 4,11 2.491 2.401 Equipment and vehicles 4,11 24.575 25.713 Total tangible fixed assets 365.870 366.074 Financial fixed assets Investments in subsidiaries 9 24.188 12.742 Loans to associates 15 22.344 19.944 Investment in shares 8 2.691 2.485 Other receivables 15 27.178 24.307 Total financial fixed assets 76.401 59.478 Total fixed assets 479.339 455.918 CURRENT ASSETS Inventory 16 342.447 332.837 Debtors Account receivables 257.260 172.997 Other receivables 13 33.888 34.164 Total debtors 291.148 207.161 Cash and bank deposits 14.224 12.553 Total current assets 647.819 552.551 TOTAL ASSETS 1.127.159 1.008.469 ANNUAL REPORT 1999 – DOMSTEIN ASA Page 3 BALANCE SHEET - GROUP Amount in 1000 nok Note 1999 1998 EQUITY AND LIABILITIES EQUITY Share capital 17 20.150 20.150 Fund 17 217.206 204.562 Total paid in capital and retained earnings 237.356 224.712 Minority 17 03.316 Total equity and minority 237.356 228.028 LIABILITIES Provisions Allocation for liabilities 9 1.080 0 Pension liabilities 6 5.342 4.449 Deferred tax 7 37.831 29.912 Total provisions 44.253 34.361 Other long-term liabilities Liabilities to financial institutions 10,11 337.298 324.383 Other long-term liabilities 10 3.211 2.715 Total long-term liabilities 340.509 327.098 Current liabilities Bank overdraft 11 308.759 229.431 Account payables 123.091 121.823 Taxes payable 7 2.141 1.044 Public duties payable 24.339 23.519 Dividends 10.075 8.060 Other short term liabilities 36.637 35.105 Total current liabilities 505.042 418.982 Total liabilities 889.804 780.441 TOTAL EQUITY AND LIABILITIES 1.127.159 1.008.469 Måløy 15. mai 2000 Olav Hørsdal Rolf Domstein Asbjørn Reinkind Gunnar Domstein Styrets leder Adm. dir. Knut M. Domstein Endre Sekse Jostein Refvik ANNUAL REPORT 1999 – DOMSTEIN ASA Page 4 CASH FLOW STATEMENT GROUP Amount in 1000 nok 1999 1998 NET CASH FLOW FROM OPERATING ACTIVITIES Profit/loss before tax 31.116 13.104 Taxes paid 0 0 Depreciation 33.846 31.284 Pension costs, net of contributors -983 0 Profit/loss from sale of fixed assets -967 -93 Items classified as investing or financing activites -2.567 -1.517 Change in inventories -9.610 -25.964 Change in accounts receivables -84.263 16.636 Change in accounts payables 1.268 30.123 Changes in other current balance sheet items 1.390 -12.501 Net cash flow from operating activities -30.770 51.072 NET CASH FLOW FROM INVESTING ACTIVITIES Purchase of shares -18.081 -7.623 Purchase of fixed assets -30.348 -61.168 Proceeds from sale of fixed assets 1.462 2.393 Investment in other financial fixed assets -5.271 -27.972 Net cash provided by investing activities -52.238 -94.370 NET CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issuance of long term debt 46.063 52.457 Repayment of long-term loans -32.652 -44.464 Net change in bank overdraft 79.328 42.695 Dividends paid -8.060 -6.045 Net cash provided by financing activities 84.679 44.643 Net change in cash and cash equivalents 1.671 1.345 Cash and cash equivalents January 1. 12.553 11.208 Cash and cash equivalents December 31. 14.224 12.553 ANNUAL REPORT 1999 – DOMSTEIN ASA Page 5 NOTES - GROUP Accounting principles The consolidated financial statements for Domstein ASA are prepared in accordance with The Norwegian Accounting Act of 1998.In the preparation of the financial statement; management has used the principles that give the best periodic accuracy of the company’s income statement. The principles used are described below. Consolidation basis Shares in subsidiaries are eliminated and the cost price for the shares is replaced with the company’s assets and liabilities, valued at cost price for the group. The difference between the purchase price for the shares and the groups share of the acquired company’s equity at the purchase time is analysed and first of all refer to those of the company’s tangible assets (or incurred liabilities) that has values different than those registered. The rest of the company’s equity and the minorities share of the referred excess value is being presented in the balance sheet as minority shares. Shares in associates are valued in accordance to the equity method an the group’s share of the annual result in the associate company after depreciation of excess value is ascribed the cost price for the share. We use the same methods for handling excess value in both subsidiaries and associates. Foreign Companies Using the exchange rate at 31.12 for both the income statement and the balance sheet recalculates Foreign Companies. The valuation variances are regulated directly against the equity. Companies where Domstein ASA directly or indirectly owns more than 50% of the shares are being treated as subsidiaries. Investments in companies where the group owns between 20 and 50 % of the voting shares, and where the group has substantial influence (associates) are valued by the equity method. In the financial statement of the parent company, the cost method is used to value associates. Investments in companies where the group owns less than 20% of the voting shares are valuated by the cost method. Domstein Espana S.L. is left out of the consolidation. Bank deposits, cash in hand etc. Bank deposits, cash in hand etc includes cash with a short maturity. Fixed assets in tax deduction are included. Means of payment in foreign currencies are valued at the exchange rate of the balance day. Inventories Inventories are valued at the lower of cost price (the first in first out principle) and net realisable value. The cost price includes direct material cost, direct payment costs and the share of the factory overhead cost for produced goods. It also includes the purchase costs for purchased goods. ANNUAL REPORT 1999 – DOMSTEIN ASA Page 6 NOTES - GROUP Property, plant and equipment Tangible fixed assets are activated and depreciated if they will last more than three years and cost more than NOK 15.000, -. Costs concerning normal and periodical maintenance are charged as expenses. Costs of larger replacements and renovation that increases the value of the asset considerably are activated. Investment deficit are deducted in the purchase cost, so this is registered at net value in the balance sheet. This means that the investment deficit is deducted indirectly in the depreciation through the reduced purchase cost. Intangible fixed assets and excess value at take over that is expected to have a lasting value are capitalised in the balance sheet. An intangible value that is not refereed to specific items/assets is capitalised as goodwill. Intangible fixed assets and goodwill are depreciated through expected economic life. Leases Assets that are leased on terms that transfers substantially all the risk and reward incident to Domstein ASA are not capitalised. The agreed rent is registered as current costs. Research and development Research and development expenses are considered current costs. Assets and liabilities in foreign currency Actual and unrealised currency profits and –losses that occur trough transactions, assets or liabilities are included in the income statement. Taxes Deferred taxes are calculated by the debt method. In accordance to this method the deferred tax is calculated because of temporary differences between the financially calculated values of the balance sheet and the tax valuations of the balance sheet. The effect of the result is showing as a change in deferred taxes in the balance sheet. Dividend The dividend from the subsidiaries are registered as revenue in the parent company the same year. Change in accounting principles 1997. Effectively from December 31. Domstein presents the operating revenue net in the income statement. Sales reductions like freight; import duty insurance etc. is withdrawn from the gross revenue. 1996. Effectively from December31. Domstein introduced using the principle of the current rate of exchange, in appreciation of the current assets and the current liabilities in the future. Investments in other companies We have made the following purchase and sale of companies.