Key figures*
(Amounts in MNOK) 2005 2004 Operating revenues 3 482.5 4 041.4 Contribution 1 376.3 1 518.9 Contribution margin (%) 39.5 37.6 EBIT -219.4 -148.3 EBIT margin (%) -6.3 -3.7Number of employees as of 31 December 1 693 1 859
Norway
Operating revenues 2 112.7 2 276.7
EBIT -66 -39.5
Number of employees as of 31 December 821 894
Denmark
Operating revenues 843 1 252.7
EBIT -102.7 -94,.8
Number of employees as of 31 December 629 698
Sweden
Operating revenues 612.5 610.4
EBIT -21.5 1.2
Number of employees as of 31 December 236 249
* The numbers are identical with the reported income statement in the annual accounts for 2005 with corresponding figures.
Contents
2 CEO statement 4 What does Ementor do? 12 Board of Directors’ report20 Consolidated income statements Ementor Group 20 Consolidated balance sheets Ementor Group
21 Consolidated statement of changes in equity Ementor Group 21 Consolidated statement of cash flows Ementor Group 22 Notes Ementor Group
45 Income statements Ementor ASA
45 Balance sheets Ementor ASA
46 Statement of changes in equity Ementor ASA 46 Statement of cash flows Ementor ASA 47 Notes Ementor ASA
52 Auditor’s report 53 Glossary
54 Shareholder information
56 Corporate governance and company management 61 Group management
The Ementor Group
Ementor Norge AS
Jo LunderEmentor Sverige AB
Johan Rittner Rune Falstad CFOEmentor ASA
Jo LunderEmentor Danmark A/S
Ementor’s strategy is to strengthen its position as a leading provider
of infrastructure solutions and products in the Nordic region.
Ementor’s goal is to be the first choice of customers, employees
and partners. Customers look to Ementor for innovative, solid and
efficient solutions to their IT challenges. Employees look to Ementor
for professional challenges in an exciting and rewarding work
environment. Partners look to Ementor for added value and good
business opportunities. The goal is to create added commercial
value for everyone who chooses Ementor.
Ementor had 1 693 employees and was represented in 12 cities in
Norway, Denmark and Sweden at the end of 2005. The Company is
listed on the Oslo Stock Exchange. In February 2006 the Company
announced the merger of Ementor and Topnordic. This merger will
form the foundation for a new, focused growth phase for Ementor.
2005 – focus and
alignment
A thorough review of Ementor’s
businesses in the first quarter of 2005
revealed significant challenges and a
substantial need to reduce the company’s
risk profile by focusing our operations.
We have therefore conducted an extensive
financial and operational restructuring
programme, which is still ongoing and
will also have priority in 2006. The
restructuring has provided greater financial
freedom through the sale of several
busi-nesses, including outsourcing in Norway
and Sweden, the consulting unit Avenir in
Norway, and our Finnish subsidiary. The
primary objective of this restructuring has
been to establish a foundation for new
growth and added value for our owners.
The agreement to merge Ementor and
Topnordic, which was made public in
February 2006, provides a solid base for
a new, focused growth phase. Together,
our two companies comprise a leading
provider of infrastructure solutions and
products in the Nordic region.
The merged Group will represent a strong platform for further growth and consoli dation of the Nordic IT infrastructure solutions and products market. Ementor and Topnordic have complementary businesses that, based on our respective strengths, provide exciting opportunities for employees, customers and shareholders. Ementor has decided to focus primarily on infrastructure. Together with Topnordic, the Company enters 2006 with a focused
strategy to consolidate our position as a leading provider of infrastructure solu tions and products in the Nordic region. Ementor and Topnordic will be the market leaders in their focus areas in Norway and Denmark, be a solid number two in Sweden, and will also be present in the Finnish market. We have the will, ability and power to implement this strategy, and will apply our expertise, experience, partner network and local presence and size to strengthen our position.
In 2005, Ementor selected a manage ment model that gave the subsidiaries in Denmark, Sweden and Norway more independence. This was done to infuse the operational change process with more speed and power. This move has given good results and was completely necessary, because the challenges in each country were so different. While all parts of the Group are still working under the same name, profile and overall strategy, and still offer many of the same services, each of the three units has also made great strides in further developing its par ticular areas of strength. The units have now come into their own, and we are expecting growth and good performance in every country in 2006.
Ementor has a strong and balanced customer base, and according to the customer satisfaction survey conducted in 2005, our customers are very satisfied with our solutions, products and exper tise. We know that we fulfil important success criteria, such as a local presence, expertise and focus, and that we are able to service customers of different types and size. At the same time we know
that in the end, the only criteria we are measured by, is whether the solutions and products we provide result in added value for our customers – whether in the form of greater efficiency or other bene fits that our customers find important. Consolidation, efficiency improvement and a greater focus on our core business requires continuous change. All companies experience change to a greater or lesser extent, and in our industry realignment is the rule rather than the exception. For a company like Ementor, the most important element is nevertheless to maintain focus on our customers’ demands and needs. Through a difficult restructuring period, I find additional motivation in the great efforts made by our employees in their strong desire to make Ementor success ful. All contribute their expertise and experience to build good customer rela tions, which is the foundation for the shareholder value we sincerely hope to create. Our employees and their expertise remain our most important asset, and we must continue to ensure that Ementor remains an exciting place to work. We are on the right track. 2006 will be an exciting year for Ementor, especially with regards to the consolidated strength from the Topnordic merger. We will make good use of this consolidation – to reinforce Ementor as the leading provider of infrastructure solutions and products in the Nordic region.
7 March 2006
Ementor Annual Report 005 – CEO
Jo Lunder President and CEO
Ementor is a leading provider of infrastructure solutions and products in the
Nordic region. The company mainly provides services related to hardware/
software products, consulting services and service agreements.
Ementor focuses mainly on designing, building and managing IT infrastructure
solutions for IT platforms/systems, communication, information management/
collaboration and security.
Ementor’s aim is to help its customers become more competitive and reach
their goals through IT. Therefore Ementor continuously strives to ensure that it
possesses the necessary expertise and certifications required by the products
and services it supplies.
In February 2006 Ementor announced a merger with the Danish owned
company Topnordic. The merged Group will comprise a strong platform for
further growth and consolidation of the Nordic IT infrastructure solutions
and product market.
What does Ementor do?
Ementor Annual Report 005 – What does Ementor do?
Local knowledge and presence
Ementor has offices in many of the major cities in Norway, Denmark and Sweden. Even though the Company is a Scandinavian Group with a common owner and common overall strategies, the market offerings in the various countries differ. As providers of infrastructure solu tions and products, the Norwegian and Swedish businesses have a great deal in common, while the Danish business has a far greater focus on IT consulting services. Ementor builds nevertheless on a common origin and culture that is based on shared values, such as flexibility, cooperation, innovation, competence and comprehension of local customer needs. One of the Company’s competitive strengths is precisely its ability to use the local needs as its point of departure and adapt its offerings to the customers’ needs accordingly.Industry experience
Experience and knowledge of the customer’s industry is often of decisive importance to a company’s ability to pro vide good advice and offer products, solu tions and services that meet the customers’ needs. Ementor understands what chal lenges face the various industries, and it has specialised experience and knowledge of the public sector, financial services, trade & manufacturing, energy & utilities, health & life sciences, services, media & entertainment, telecommunication, and travel & transport. The industry experi ence within the markets Ementor operates in will be presented under the description of each country.
5
Expertise and certifications
Ementor’s strength lies in the knowledge and experience the Company has acquired as a provider of infrastructure solutions and products, and its strong partnerships with leading technology suppliers. Ementor’s greatest competitive strength and its most important asset is the expertise possessed by its employees in various areas and their ability to see what opportunities technology can offer customers. Ementor has also developed its own methodology for the Company’s work processes, based on the experience and expertise acquired by the Company’s employees over the years.
Ementor is the most certified IT partner in the Nordic region. The Company’s employees have a total of 2 597 certifi cations and more than 35 per cent of the employees (all functions) have one or more certifications.
Ementor has established internal control systems for health, safety and the environ ment in each of the countries where the
Company operates. These systems are designed to ensure that the physical and psychological working conditions in the organisation are in accordance with the national legislation and safeguard the inter ests of the employer and employees in the best possible manner. Ementor conducts annual employee satisfaction surveys.
The Group’s strategy and focus
Ementor announced in February 2006 that Ementor and Topnordic will bemerging to create the largest provider of infrastructure solutions and products in the Nordic region. The merged Group will represent a strong platform for further growth and consolidation of the Nordic IT infrastructure solutions and product market. The business will oper ate under the Ementor name in Norway, Ementor and Topnordic in Sweden, and Topnordic in Denmark and Finland. A separate business area will be established in Denmark for activities that are not in
Ementor Annual Report 005 – What does Ementor do?
Important events 2001–2006
2001
• Eterra is launched as an independent Company. • Getronics buys 20 per cent
of the shares in Merkantildata Invest.
• Tom Adolfsen announces that he will resign as Group CEO. • The Company implements
considerable downsizing and cost-cutting measures due to the weak market.
2002
• Arne A. Jensen takes over as Group CEO.
• Merkantildata sells Ementor Financial Systems to TietoEnator.
• Merkantildata sells Rubik to Captive Finance Limited. • Merkantildata sells PC
Superstore to Sekvencia AB.
2003
• Ementor takes over Nordic Voice Competence AS (NVC) by increasing its stake from 49 to 100 per cent. • Ementor acquires the
consulting business of EDB Business Partner in Bergen. • Merkantildata, Ementor and Eterra merge under the new name of Ementor in July. • Ementor acquires MNOK 110
through a private placement to strengthen the Company’s financial position for invest-ment in big projects and outsourcing.
• Ementor takes over the SAP consulting business Broad Partner Services Consulting AS in Norway and the IT outsourcing business of Serco Sweden AB. • TJ Group Plc. takes over
Ementor’s Symfoni product portfolio.
2004
• Ementor refinances the existing revolving credit facility and overdraft facilities, and enters into an agreement with DnB NOR Bank ASA as its new main bank.
• The “stand alone” hardware business in Denmark is spun off and sold to Topnordic A/S. • A new Managing Director is
appointed in Finland. • Ementor sells its entire
share-holdings in iTet to Kunnskap Invest.
• In October the Group CEO Arne A. Jensen announces his resignation.
• MNOK 225 is raised in a rights issue.
• Ementor sells its share-holdings in Ajourit AS to Visma ASA.
• In December Jo Lunder is appointed new Group CEO.
2005
• Ole Morten Settevik takes over as the Managing Director in January, and the corporate staff is reduced significantly at the same time. • Jo Lunder takes office as
Group CEO. • In March, Rune Falstad
is appointed as the new Executive Vice President and CFO, and Carsten Dilling is appointed as the new Managing Director in Denmark and Deputy Group CEO.
• A new strategy for the Group that entails changes in the business model and market offerings is presented in July. The implementation is expected to take 12-18 months. A financial platform for restructuring the business, consisting of an equity guarantee of MNOK 100 from Kistefos in connection with a rights
issue and support from the banks for managing liquid assets etc. realised through restructuring activities, is presented at the same time. • In September 100 per cent
of the shares in the Finnish subsidiary KPY Oyj are sold. • In October Ementor
sells its Norwegian and Swedish outsourcing busi-nesses to ErgoGroup AS.
2006
• Ementor sells its Norwegian consulting business (Avenir) to EDB Business Partner ASA in January. • The merger of Ementor
ASA and the Danish Company Topnordic A/S is announced in February, and, as a consequence of the merger, Jo Lunder takes over as the Managing Director of Ementor Norge AS in addition to his posi-tion as Group CEO.
Group operating revenues per industry segment 2005
Public Sector Financial Services Trade & Manufacturing Energy & Utilities Health & Life Sciences Media & Entertainment Telecommunication Travel & Transport Norway
Denmark Sweden Operating revenues
on consulting and development services (business consulting, ERP services, system development and application outsourcing). The new Ementor Group’s strategic focus will be on strengthening the Group’s position as the leading provider of infra structure solutions and products in the Nordic region.
The descriptions below under each country do not take the merger between Ementor and Topnordic into account and thus only reflect the Ementor organisation.
Norway
Market and trends
The Norwegian ICT market grew by 6.4 per cent in 2005 (source: IDC). Services and software showed stronger growth than hardware. The ICT industry is still consolidating in both the telecom and IT markets. The number of players is relatively constant, but changes in the customers’ purchase patterns due to outsourcing and an ever broader distribution of standard hardware and software affected the various market players differently in 2005.
A strong demand is expected for mobile solutions in the future, both solutions based on the traditional PC platform and solutions based on mobile units linked via a wireless network or telecom operators. The demand for solutions that support new business architectures is also increasing. Infrastructure is becoming increasingly virtualised (an uncoupling
of the physical and logical resources), and provides better utilisation of the available capacity. The trend in appli cations is in the direction of dividing up large, complex applications into smaller parts (componentisation) in an Service Oriented Architecture (SOA). Due to new international regulations (SarbanesOxley in the US and Basel II in the EU), as well as the requirements concerning protection of privacy and sensitive information from national authorities, the IT architecture must fulfil ever stricter legal requirements. The competition climate shows different trends. While the market for simpler products is affected by overdistribution and pressure on the margins, there is still a strong demand for more advanced data centre and communication solutions. The consulting market is growing, and there is especially strong demand for consulting services with regards to communication, consolidation and virtualisation.
In the future the IT infrastructure market is expected to play an ever more important and broader role, and this includes middleware and system administration as well.
Strategy and market offerings
Ementor is strongly represented in the Norwegian market, with offices in Oslo, Trondheim, Bergen, Stavanger, Kristian sand and Larvik, and the Company’s goal is to maintain its position as the largest Norwegian provider of infrastructure solutions and products.
Ementor has a leading position in the Norwegian server, communications and security markets. Great importance is attached to the fact that customers and partners have confidence in Ementor’s ability to build and deliver the most appropriate solutions. Having the right expertise is therefore high on Ementor’s agenda, and the Company is certified at
Ementor Annual Report 005 – What does Ementor do?
Norway
Revenue: MNOK 2 112.7* Number of employees: 821* Number of certifications: 1 238 Some customers in 2005: BKKNorwegian Directorate for Children, Youth and Family Affairs
The Municipality of Bærum DnB NOR Bank ASA
Central Norway Regional Health Authority IT Western Norway Regional Health ICT Eastern Norway Regional Health Authority Lyse Tele AS
Matiq AS Norsk Hydro ASA
The Norwegian Directorate of Taxes The Norwegian Public Roads Administration Statoil ASA
Sør-Trøndelag County Municipality and collabo-rating municipalities
Telenor ASA
* incl. the sold Norwegian consulting business (Avenir)
the highest level by its most important suppliers.
Ementor has worked on aligning its product and service offerings in 2005. The Company develops and manages innovative solutions in the following four business areas:
• IT platforms
• Productivity and collaboration • Network and communication • Security
Ementor’s goal is to ensure that IT delivers real business value for the customer, inter nally and externally, and the Company also wants to enable the customer’s IT function to document the value generated. Ementor’s Norwegian consulting business (Avenir) was sold to EDB Business Part ner ASA in January 2006.
Today Ementor has one of Norway’s
largest competence bases in the infra structure area, with more than 380 consultants (in addition to the consulting unit that was sold). The Company will continue to develop this competence base in the future.
Ementor’s customers in Norway are primarily large and mediumsized private and public enterprises. The Company’s solutions can be used in most industries, but Ementor focuses primarily on broad band operators, bank/finance, petroleum/ engineering, health services and local government.
External cooperation
Ementor builds on strong partner relation ships. In Norway the Company is one of the largest partners of international tech nology suppliers such as HP, IBM, Cisco, Microsoft and SUN. In addition, Ementor has important partner relationships with Norwegian product and service suppliers such as Telenor and ErgoGroup.
Ementor has, among others, the following certifications: Cisco Gold Partner, HP Premier Partner, IBM Premier Business Partner, Microsoft Gold Certified Partner, SUN IForce Partner and Telenor certi fied partner. In 2005 Ementor was named ”Business Partner of the Year” by IBM Norway.
Examples of customers
Lyse Tele AS
Ementor entered into a framework agree ment with Lyse Tele, one of Norway’s leading broadband operators in the
Triple Play sector, which encompasses, for example, communication equipment, server and storage equipment, and techni cal services.
– It was important to us that Ementor had nationwide delivery capacity. They have done a wonderful job so far, and we are looking forward to continued coopera tion, says Eirik Gundegjerde, Managing Director of Lyse Tele AS.
Eastern Norway Regional Health Authority
Ementor is one of three suppliers to Eastern Norway Regional Health Authority for a framework agreement that encompasses PCs, printers, servers, storage, communication, networking, IT security, video conferencing, and consult ing services for infrastructure solutions and service agreements.
– The suppliers were selected based on their competence and ability to deliver in all areas of the framework agreement, says the Deputy Director of Eastern Norway Regional Health Authority, Steinar Marthinsen.
Denmark
Market and trends
The Danish businesses are making major strategic and visionary IT investments again, and the market is showing a lot of interest in the consolidation and develop ment of IT in general. The customers are looking for efficient solutions that support their business operations, and they place high demands on the suppliers’ innovativeness and ability to
Ementor Annual Report 005 – What does Ementor do?
“It was important to us that Ementor had nationwide delivery
capacity. They have done a wonderful job so far, and we are
looking forward to continued cooperation.”
and the winners are the suppliers who are able to deliver wellintegrated solutions with a component mix that is tailored to the customer’s business, at the right price.
According to IDC, three out of four Danish businesses are planning to invest in portal solutions before the end of 2006. Many businesses expect to develop their ERP applications during the next two years, and more than a third of Danish businesses are planning to phase out one of their key applications. More than half of the businesses in Denmark expect to invest in IP telephony within a year. The primary growth driver in the Danish IT service market is the outsourcing of applications and infrastructure. Such out sourcing is also relevant for small and mediumsized enterprises. Flexibility is an important parameter. It is also expected
that the outsourcing of security and net work solutions will generate additional growth. The customers are concerned about controlling costs associated with their operations and the maintenance of clients, and customer service solutions will be an obvious optimisation object.
Strategy and market offerings
Ementor desires to provide added value to Danish customers through individual and flexible solutions and services with a high standard of quality. In 2005 the Company has enhanced the efficiency of its organi sation, significantly sharpened its focus and established a far simpler structure based on three main areas: projectbased services, service management & out sourcing, and product sales. Ementor’s primary business areas in Denmark are: • Client management, consolidation and
security
• Hardware service
• Broadband and IP telephony
• Employee portals and subsidies administration (TAS)
• Management of infrastructure and SAP or Oracle solutions
• SAP Consulting and Business Consulting Ementor consolidated all its manage ment and SAP consultants in Denmark in the newly established company Ementor Consulting A/S as of 1 October 2005. Ementor Communication A/S was established on 1 January 2006, and this company consolidates the network and cabling business.
Ementor has offices in Ballerup outside Copenhagen and in Århus.
Ementor is currently a leading supplier in the Danish market for IT projects, consultants and services, and it offers one of Denmark’s broadest ranges of infrastructure solutions, outsourcing, consulting, solutions, and services.
Ementor Annual Report 005 – What does Ementor do?
BEC
Codan Trygg-Hansa
Danish Labour Market Supplementary Pension FLSmidth A/S
The Directorate for Food, Ficheries and Agri Business
Hexal
Danish Broadcasting Corporation (DR) Danish State Railway (DSB) Falck Danmark A/S
National IT and Telecom Agency
National Agency for Enterprise and Construction Ministry of Foreign Affairs of Denmark Ministry of Social Affairs
Jyske Bank SDC
Denmark
Revenue: MNOK 843.0 Number of employees: 629 Number of certifications: 928 Some customers in 2005:0
Ementor has a strong position in the Danish public sector. The Company has, for example, long experience in supplying portals, infrastructure and administrative solutions, business consulting and manage ment services. Ementor has a solid platform in the financial sector and the pharma ceutical industry through a number of long standing management and service agree ments. The Company is wellpositioned for the implementation and management of major ERP projects in the energy and transport sector, and it is also a leading cabling project player in the utility and transport sector and in local government.
External cooperation
Ementor in Denmark possesses a high level of expertise through a great number of certifications. Ementor is a Cisco Gold Partner in Denmark, and it has unique partnerships with several of the world’s foremost technology suppliers, such as Microsoft, SAP, Oracle, IBM, HP and Dell.
Examples of customers
ATP
In cooperation with Ementor, ATP has implemented an ERP solution based on SAP. – Our cooperation is embedded in being equal partners, and the project has been a success i.a. because of Ementor’s excellent combination of outstanding competencies and flexibility, states Lars Damgaard Sørensen, CFO in ATP.
Wrist
WRIST Group A/S chose Ementor to design and optimize their international infrastructure and implement IP tele phony on 16 locations.
– We are very satisfied with the solution and Ementor’s handling of the imple mentation. The good results are due to Ementor’s professionalism and strong competencies within infrastructure and IP telephony, says Henrik Buss, IT Manager.
Sweden
Market and trends
Ementor operates in a growing market in Sweden. According to calculations from independent analysts, the Swedish IT market is currently growing by around 5– 10 per cent. Since the customers’ own cus tomers and users are placing ever higher demands on availability, Ementor expects that the growth in the Swedish market will be sustained in the coming years.
Strategy and market offerings
Ementor’s focus as a knowledge company is based on solving the customers’ chal lenges. Ementor is clearly differentiated in relation to its competitors in Sweden. While the Swedish IT market is divided in general into niches, Ementor can han dle the overall IT infrastructure needs of the customers and is competitive in all its areas of expertise at the same time. Ementor is one of Sweden’s leading pro viders of IT infrastructure solutions and products. The Company serves customers all over Sweden from offices in Stock holm, Gothenburg, Växjö and Malmö, offering service, support and a complete range of infrastructure solutions and products in the following areas: • Communication
• Systems • Security
• Information management
Ementor places emphasis on exploiting its own competence and products from lead ing suppliers to meet the customers’ needs. The customers come from both the public
stronger in the public sector and among small and mediumsized enterprises. Ementor does not focus on specific industries in Sweden. Instead, it organises its competence according to the focus areas mentioned above. In Sweden, Ementor’s strongest position is in communication. The Company is Sweden’s next largest network integrator, and it has a strong position in the market for the supply of network products and services to public authorities and directorates. Ementor is also a leader in the delivery of Cisco IP telephony, and it has delivered several of the largest video solutions in Sweden. Ementor is also Sweden’s leading supplier of consolidated system environments and a strong player in security and information management. Ementor’s strength lies in its knowledge and experience as a supplier of IT infra structure solutions and products. In Sweden 170 out of a total of almost 250 employees throughout the country are technicians and consultants with long experience and documented competence. The Company works systematically with the management of its intellectual capital and acquisition of new, relevant knowledge and new skills.
External cooperation
Ementor cooperates with four market leading main partners – Cisco Systems, HP, IBM and Microsoft. A mutual and clear commitment on behalf of the customers represents the foundation of this cooperation.
In addition to the four main partners, Ementor in Sweden cooperates with many other partners who contribute important products to the Company’s focus areas. These partners include Citrix, PacketFront, McAfee, SAS Institute and Netwise. In Sweden, for example, Ementor is a Cisco Gold Partner, HP Preferred Partner, IBM Premium Partner, Microsoft Gold Partner, Citrix Platina Partner and VMware Enterprise Partner.
Examples of customers
Statistics Sweden
Ementor is building a flexible, stable and secure network and storage solution for Statistics Sweden. This solution includes servers, data storage, networking and security.
– We had to modernise and we looked for the best quality we could get for our money. Ementor ranked the best in net working and storage. For us the investment
is all about better utilisation and keeping abreast of new developments, says Fredrik Hård af Segerstad, who is responsible for the IT infrastructure at Statistics Sweden.
GothNet AB
Ementor is assisting the main supplier Goth Net AB to build Sweden’s largest active city network during the next three years. Emen tor is delivering equipment, in addition to a service agreement and other services. – This agreement is probably the largest of its kind with respect to city networks this year in Sweden. We are cooperating with strong subcontractors to fulfil this delivery. We have cooperated with Ementor for 15 years and we are very satisfied with what they have delivered. Ementor assumes responsibility when we meet challenges, and once again they have responded very well. That is why we have longterm cooperation, says Mats Devert, Managing Director of GothNet.
Ementor Annual Report 005 – What does Ementor do?
3 (Tre) AstraZeneca City of Stockholm Handelsbanken
Karolinska University Hospital Region Västra Götaland Securitas
SonyEricsson Statistics Sweden Stena Line Stokab
Swedish Armed Forces Telenor Uppsala University
Sweden
Revenue: MNOK 612.5 Number of employees: 236 Number of certifications: 431 Some customers in 2005:Ementor Annual Report 005 – Board of Directors’ Report
Board of Directors’ report
In connection with the second quar ter report for 2005, Ementor presented a thorough review that revealed sig nificant challenges and a substantial need to reduce the Company’s risk profile by focusing operations. Several activities were initiated to restructure the operations, and the process started in earnest in the third quarter.The Finnish subsidiary Ementor Finland Oy was sold to Kuopion Puhelin Oyj on 6 September 2005. The sale realised liquid assets of MNOK 44. On 3 October Ementor entered into an agreement with the ErgoGroup AS relating to the sale of the outsourcing businesses in Norway and Sweden. This sale realised MNOK 130 in liquid assets in 2005 (payment of an additional MNOK 20 is expected in 2006). The process of establishing an inde pendent consulting business in Denmark was completed in October 2005, and the consulting business in Norway (Avenir), which was not associated with the infrastructure business, was sold to EDB Business Partner AS on 16 January 2006. The restructuring has made it possible to implement changes that are expected to reduce the annual operating expenses in Norway and Sweden by around MNOK 100 in 2006. The changes included a work force reduction from the end of the fourth quarter 2005 by more than 100 people in Norway and Sweden.
In parallel to the restructuring process, the Company started to look at the
opportunities to realise the strategy of strengthening Ementor’s position as a leading provider of infrastructure solu tions and products in the Nordic region. The first and most attractive step in this strategy, and a method to create a foun dation for growth and added value for our shareholders, was the merger with Topnordic. Ementor’s Board of Directors approved an agreement to merge with Topnordic on 1 February 2006.
Topnordic is a privately owned ICT product and infrastructure company with subsidiaries in the Nordic countries and pro forma sales of MNOK 3 051 for 2005. The merged Group had pro forma sales of MNOK 6 533 for 2005. Shareholders of Topnordic received payment in Ementor shares by a new issue in March 2006. Based on Ementor’s share price ten trading days following the 1 February 2006, Ementor’s book equity will increase by MNOK 1 034, and the shareholders of Topnordic will own 49.9 per cent of the merged Company.
The merger of the two companies is an important step in the creation of a strong strategic platform for profitable growth in the Nordic market. The merged Company will be the market leader in Norway and Denmark, will hold a number two posi tion in the Swedish market, and will have representation in the Finnish market. The Board of Directors believes that Ementor/Topnordic has good market posi tions, established customer relationships,
2005 was marked by restructuring.
A new top management team was in
place in the first quarter of 2005, and the
Board of Directors concluded its strategic
review in the summer of 2005. This review
determined that there was a great need
to reduce the Company’s risk profile by
focusing operations.
The Company’s strategy is to focus on
maintaining and strengthening Ementor’s
position as a leading provider of
infra-structure solutions and products in the
Nordic region.
On 1 February 2006, the Board of Directors
approved an agreement to merge with
Topnordic to create a foundation for
growth and added value for shareholders.
Ementor Annual Report 005 – Board of Directors’ Report
and motivated and skilled employees at all levels; and that the merged Group is wellpositioned to increase the longterm creation of value.
Market development and trends
The IT market showed a positive develop ment in 2005 in all the markets where Ementor is present. Ementor’s markets grew between four and six per cent from 2004 to 2005.In the software and services market, the greatest growth is still in advanced services for the outsourcing, server/ storage and communication segments. The hardware volume has increased greatly in quantity, but the growth in sales is relatively modest due to the falling prices. In the software market, software for the management and optimisation of infrastructure made the greatest contribution in 2005 as well.
The project market for consulting services, system integration and application develop ment has shown increasing growth throughout 2005. Continued growth is expected in all of Ementor’s markets in the coming years. It is expected that invest ments will only be made in solutions that can save costs or increase productivity. Important areas will include centralised data centre, mobility and interaction solu tions. Ementor also expects that there will be a greater focus on, and increased investment in, security, due in part to the continuation of the heightened threat situation and in part to the implementation of statutory regulation requirements. Hardware market sales are expected to grow in all three Scandinavian countries in the server, storage and network product areas, while the client market is expected to fall in 2006. The strongest growth is expected in server and storage solutions.
Ementor believes that the market outlook for 2006 and beyond is good. In 2005 the Company made a determined effort to simplify and focus its core activities to make Ementor’s profile and market offerings clearer. Most of the external analyses are positive, and feedback from Ementor’s customers reinforces this picture. The anticipated market growth in the Scandinavian countries in 2006 is estimated to be between two and three percent. Ementor desires to make use of the Company’s customer relationships and competence base to exploit the market growth within its focus areas.
Competitive positioning
Ementor had a strong local position in the Scandinavian market and a large, solid customer base for the entire breadth of the Company’s offerings in 2005. The Company meets competition as a Nordic IT partner and a local player. Ementor also competes with niche players within the various business areas in each country. Ementor’s competitors can be divided into two main categories: One group consists of Nordic and international competitors that can offer corresponding products and services, have large resource bases within the various business areas, and opportunities for the direct sale of products. In relation to such competitors, Ementor seeks to build competitive advantages by a local presence, broader competence and greater flexibility. The second group consists of national, regional and local competitors with
Åge Korsvold (b. 1946)
Chairman of the Board MBA Wharton
Current position: CEO of Kistefos AS. Previous experience: CEO of Storebrand ASA. Various positions at Procorp, Fondsfinans and Orkla. Various directorships.
Chairman of the Board since July 00.
Turid Grotmoll (b. 1959)
Member of the Board
Master of Mgmt., Norwegian School of Management (BI). Engineer from the Norwegian Broadcasting Corp. and various education from IMD, Babson Executive and LOTS. Current position: Director Sales and Market development, Sparebank Skadeforsikring AS. Previous experience: Various management positions at Telenor. Member of the Board of Proseq, LA Lund, Lundgruppen, OLTD and SmartClub Telecom.
Member of the Board since spring 00.
Åge Korsvold Turid Grotmoll
The Scandinavian IT market 2006**
(approx. USD 28 billion)
Norway Denmark Sweden ** Source: IDC, Q 005 ** Source: Ementor/IDC 005 0 1 2 3 4 5 6 7 8 2007 2006 2005
Estimated IT market growth in the Nordic region 2005–2007 (%)*
Ementor Annual Report 005 – Board of Directors’ Report
5
challenges to the Ementor Group. With plans for an evaluation of our strategic focus and restructuring of the operations, the Board of Directors envisioned that 2005 would be a transitional year for Ementor.
These circumstances have also presented major challenges and had a very negative effect on the Group’s results in 2005. It has taken a long time to turn this nega tive profit performance around. It has taken longer to realise the effects of posi tive development trends in the market due to the major restructuring activities. The results at the end of the year, how ever, show a significant improvement in relation to the start of the year. The full effect of the implemented improvement measures is not expected until the com pletion of the restructuring in 2006. In 2005, Ementor had consolidated operating revenues of MNOK 3 482.5 (as opposed to MNOK 4 041.4 in 2004),
a decline of 13.8 per cent. The reduction in operating revenues is due primarily to the sale of business operations with product sales in Denmark and a general decline in product sales in Norway. Operating revenue growth in Sweden was 0.3 per cent, while operating rev enues in Norway and Denmark fell by 7.2 and 32.7 per cent, respectively. The Group’s operating loss, after group/ other costs of MNOK 25.0 (MNOK 15.1) and unusual items of MNOK 63.3 (MNOK 126.8), was MNOK 219.3, as opposed to MNOK 148.4 in the previous year. Unusual items in 2005 included costs of MNOK 63.3. These costs are related to restructuring measures implemented in Norway, Sweden and Denmark; primarily workforce reductions and provisions for vacant offices.
In 2005 net financial items totalled MNOK 31.0 (MNOK 24.1).
Ronny Langeland Cathrine Foss Stene
Ronny Langeland (b. 1962)
Member of the Board
B.Com. studies at the Norwegian School of Management (BI)
Current position: Private investor and consultant.
Previous experience: Director of Investments at Avanse Forvaltning and Storebrand. Member of the Boards of the following stock exchange listed compa-nies: Prosafe, Technor and Conseptor.
Member of the Board since spring 00.
Cathrine Foss Stene (b. 1964)
Member of the Board
B. Com., Norwegian School of Economics and Business Administration (NHH), AMP from Harvard Business School, USA Current position: VP Corporate Communications SAS Braathens. Previous experience: VP Strategic Leadership SAS Group, Executive VP Manpower Norge AS, General Manager of Bankpower AS. Chairman of the Board of Fjellinjen AS, Member of the Board of Arbeidsforskningsinstituttet AS. Member of the Board since 00.
0 2000 4000 6000 8000 10000 12000 98 99 00 01 02 03 04 05 Operating revenues 1998–2005 (MNOK)*
Income statement, Group 2005
(Amounts in MNOK) 2005 2004
Operating revenues .5 0.
Operating profit/loss (EBIT) -219.4 -148.3
Net financial items/share of profit/loss from associates -.0 -5.
Profit/loss before taxes (EBT) from continued operations -250.4 -174.2
Profit/loss from discontinued operations .5 .
Group profit/loss before taxes (EBT) -152.9 -165.0
* Historical figures for –00 are originally reported figures, not adjusted for acquisitions/sale of business or IFRS transition effects.
narrower offerings. Ementor’s competitive advantages in relation to these companies are its relative size, range of market offerings and broad competence. With its business areas and Scandinavian presence, Ementor has a good founda tion for selling and delivering products, solutions and services to companies in Scandinavia. Ementor has strong partner ships with the most important IT players, such as Cisco, Microsoft, IBM and HP. Cooperation based on the products, services and market initiatives of these partners gives our customers good, competitive solutions.
Ementor’s ambition is to reinforce its position as a leading provider of infra structure solutions and products in the Nordic region. The Company is com mitted to providing added value to its customers in the form of business value and the transfer of knowledge. With its broad offerings and interaction with important partners, Ementor has a good position and credibility as an alternative to the international players in the Nordic market. Ementor shall provide products, solutions and services in a form and on terms that can create added value for Ementor’s shareholders and employees.
Results
Even though the Board of Directors expressed an expectation of a general positive development in the ICT market in last year’s annual report, they also anticipated that 2005 would bring major
Ementor Annual Report 005 – Board of Directors’ Report
The profit/loss before taxes from con tinued operations was MNOK 250.4 (MNOK 174.2). The profit/loss before taxes from discontinued operations was MNOK 97.5 (MNOK 9.2). The sale of Finnish business operations and the out sourcing business operations in Norway and Sweden is included here. After taxes of MNOK 0.1 (MNOK 10.0) the ordinary loss for the year was MNOK 153.0 (MNOK 175.0).
Equity, financing and cash flow
Equity and debt financing
The Board of Directors believes that the financial statements for 2005 give a true and fair view of the Company’s and the Group’s financial status as of 31 December 2005 and of results, cash flow and changes in equity in the financial year. The financial statements were prepared on the basis of the goingconcern assumption.
The Group’s equity at the end of the year was MNOK 86.5 (MNOK 238.3). The Group’s equity ratio at the end of the year was 5.0 per cent, as opposed to 11.2 per cent at the end of the previous year. The equity is low due to the losses realised and the restructuring measures implemented in 2005. The Group has been undercapitalised and its financial capacity has not been in accordance with its risk profile in 2005. However, a num ber of measures were implemented in 2005 and the beginning of 2006 to secure adequate capitalisation of the Group: • The sale of businesses has generated
liquidity and equity, which has financed other restructuring measures and reduced the Group’s financial risk profile. • An agreement on a financial platform for
the restructuring of the Group was nego tiated in 2005 in cooperation with the Company’s largest shareholder, Kistefos, and the banks. This platform consisted of an equity guarantee of MNOK 100 from Kistefos and support from the banks to apply the liquid assets through the restructuring activities.
• On 1 February 2006 an agreement was entered into to merge with the Danish owned company Topnordic. The merger involves a share capital increase that will give the Group MNOK 1 034 in new equity based on the share price ten trading days following the 1 February 2006 annoucement. Holdings of cash and cash equivalents totalled MNOK 404.2 (MNOK 557.8) as of 31 December 2005. The unused portion of drawing facilities amounted to MNOK 100. After the deduction of restricted funds, Ementor’s liquidity reserve was MNOK 337.0 (MNOK 652.0) at the end of the year. The Group’s liquidity situation was good at the end of the year and will improve further upon the sale of Avenir in January 2006.
At the end of 2005 the Group had drawn MNOK 214 on a facility of MNOK 300 for the sale of accounts receivable (securiti sation), which has been provided by Skandinaviska Enskilda Banken (SEB). This was the maximum financing avail
able based on the size of the accounts receivable from customers at the end of the year. The amount available for borrowing under the facility will vary depending on the size of the accounts receivable. In addition, MNOK 125 (MNOK 125) was drawn on the loan facility from DnB NOR as of 31 December 2005. Net interestbearing debt as of 31 Decem ber 2005 was MNOK 47.6 (interestbearing receivables), as opposed to MNOK 166.5 one year earlier.
In the opinion of the Board of Directors, Ementor had adequate financing in 2005 and at the beginning of 2006 based on the measures implemented and adopted in 2005.
Cash flow and working capital
The Group has focused for several years on keeping a low level of tiedup working capital, which is the sum total of accounts receivable, noninterest bearing shortterm accounts receivable and the value of inventories, after the deduction of accounts payable and other current liabilities. As of 31 December 2005, the working capital was MNOK 199.3 (4.6 % of annualised operating revenues in the 4th quarter), as opposed to MNOK 180.7 (4.6 %) one year earlier. The Group’s cash flow from operations was MNOK 268.5 (MNOK 132.1) in 2005. This includes the payment of restructuring provisions of MNOK 77.6 (MNOK 42.4) made earlier. The Group has largely attempted to
Dag Sørsdahl (b. 1963)
Member of the Board
MSc, University of Lund. Masters degree, Norwegian School of Economics and Business Administration (NHH). PMD, Harvard Business School.
Current position: Investment Manager, Kistefos AS.
Previous experience: Senior VP, Norway Post AS. Investment Banking, Carnegie ASA. Senior VP, Schibsted ASA. Member of the Boards of Atex Group Ltd. and Advanzia Bank SA.
Member of the Board since November 00.
Knut Øversjøen (b. 1965)
Member of the Board
Bachelor of Commerce, Norwegian School of Management (BI). Current position: President & CEO, Kverneland Group. Previous experience: Executive VP Finance and M&A/CFO, Umoe ASA, CFO, PGS ASA. CFO, Enitel ASA (restructuring). M&A, Elkem ASA. CFO, Hafslund ASA and Hafslund Nycomed. Member of the Boards of Umoe Catering AS, Sønnico AS, Unitor ASA, Kverneland ASA, Actinor Shipping ASA, Fesil ASA, Sparebank MidtNorge, Pemco AS, Tensil Ltd. and Pelican AS. Member of the Board since November 00.
Ementor Annual Report 005 – Board of Directors’ Report
limit its level of investments with the exception of investments in a new ERP system. Net ordinary investments totalled MNOK 41.1 in 2005 (MNOK 101.3) and ERP system investments accounted for MNOK 32.7 (MNOK 62.3) of this amount. Net cash flow in 2005 was MNOK 153.6 (MNOK 238.4).
Financial risk
Market risk
The Company is exposed to foreign currency fluctuations, especially Swedish Kronor (SEK), Danish Kroner (DKK), and US Dollars (USD). The Company’s policy is to hedge any significant stock or loan trans actions with foreign currency exposure. The Company is also exposed to fluctua tions in interest rates, since most of the Company’s debt has adjustable interest rates.
Credit risk
The risk that contracting parties do not have the financial capacity to fulfil their obligations is regarded as low, since there have historically been very few losses on receivables.
No agreements relating to setting off claims or other financial instruments that would minimise the Company’s credit risk have been established.
Liquidity risk
The Company considers its liquidity to be good. The Group has established a common cash pool system in Norway, Sweden and
Denmark to manage cash flows in the Group as efficiently as possible.
Shares and shareholders
Ementor’s shares fell 25.8 per cent in 2005, from NOK 3.02 to NOK 2.24. The low for the year was NOK 1.24 on 21 October. The high for the year was NOK 3.17, which was quoted on 3 January. The information technology index fell 20.2 per cent during the same period. A total of 1 374.4 million shares in Ementor were traded for a total of MNOK 2 893.3 in 2005. Each share changed hands 3.6 times on average during the year, compared with 6.9 times in 2004. There were 13 823 share holders at year end, 11.6 per cent fewer than the previous year. As of 31 December 2005 the registered share capital was NOK 381 903 146, divided into 381 903 146 shares with a par value of NOK 1. The Annual General Meeting in 2004
authorised the Board of Directors to establish a new option programme with a maximum of 20 million shares. As of 31 December 2005, 12.5 million shares had been issued pursuant to this authorisation (Note 14 to the Financial Statements). During the year the Company’s largest known shareholder, Kistefos AS and associated companies and persons, maintained its ownership interest (owned and controlled shares) of 21.9 per cent. Ementor’s Chairman of the Board, Åge Korsvold, is the CEO of Kistefos AS.
Employees
At the end of 2005 Ementor had a total of 1 693 employees, as opposed to 1 859 at the end of the previous year. This reduction is due primarily to a general workforce reduction. Extensive reorganisation processes and a focus on costeffectiveness marked the year 2005.
Truls Berntsen (b. 1960)
Member of the Board (employee elected) Certificate of apprenticeship construction machine repairer, Personnel and org. development -year, Norwegian School of Management. Current position: Senior sales consultant, Ementor Norge AS.
Previous experience: Construction machine repairer, member of trial committee for skill training Oslo Municipal, senior shop steward Verkstedklubben Pay & Brinck Jern & Metall, board member Jern & Metall dep. Oslo, board member Pay & Brinck AS, member of corporate assembly Dyno Industrier, person-nel consultant Pay & Brinck AS, network responsible Pay & Brinck AS. Member of the Board since April 005.
Heljar Heradstveit (b. 1964)
Member of the Board (employee elected) Degree in economics, Norwegian School of Management (BI)
Current position: Business Controller, Ementor Norge AS.
Previous experience: Department Manager and Senior Consultant at Eterra AS. Logistic Manager at Teamco Systemsenter and Systems Programmer at Teamco ADB. Member of the Board since 00.
Truls Berntsen Heljar Heradstveit
0 500 1000 1500 2000 2500 2004 2005 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Development number of employees 2004–2005 Norway Denmark Sweden Group Number of employees as of 31 December 2005
Ementor Annual Report 005 – Board of Directors’ Report
A knowledgedriven organisation like Ementor creates value by effective development and exploitation of the Company’s expertise. This places great demands on managers. Management appraisal and development programs are important tools in this work. Sales training has also been a focus area during the past year.
A great deal of importance is still attached the development of all employees. Goal and development interviews were held with all the employees, and employee surveys were conducted in every country. The implementation of SAP as a new ERP system in Norway and Denmark has placed high demands on the adaptation of all the work processes.
The average number of manyear equiva lents employed by Ementor in 2005 was
1 922, as opposed to 2 332 in 2004. For the operations as a whole, registered sickness absences was 4.0 per cent, a decline of one percentage point from 2004. There were no serious accidents or injuries in connection with the Company’s activities in 2005. The Company has worked systematically with health, safety and the environment, and uses its own HSE tools.
Diversity contributes to better decisions and strengthens innovativeness. Ementor considers the stimulation of diversity in the organisation and its exploitation to be of significant importance. The Company’s goal is for groups at all levels to represent different experience, ages, genders and other backgrounds.
At the end of 2005 the percentage of women among Ementor’s employees
in the Scandinavia was 23 per cent (23 per cent in Norway). The Company is working systematically to recruit more women at all levels. In addition, an effort is being made to ensure that women stay at Ementor – both today and tomorrow. Equal status surveys have been conducted, and plans of action have been established. Dedicated coordinators have been appointed in all three Scandinavian countries. As of 31 December 2005, 33 per cent of the shareholderelected represen tatives on the Board of Directors, were women. The Company is working on increasing this percentage in accordance with the demands currently being made of Norwegian boards. Ementor Norway participates in ICT Norway’s Od@ program, the aim of which is to increase the percentage of women managers in ICT Norway’s member companies. Reorganisation, workforce reductions and costsaving processes place major demands on the employees’ coopera tiveness and flexibility. The Board of Directors would like to thank all the employees for their great efforts and cooperativeness that contribute to the development of Ementor.
Ulf Dahl Ryen (b. 1966)
Member of the Board (employee elected) Master of Science, Information Technologies
Current position: Sales Manager Ementor Norge AS.
Previous experience: Support Manager Merkantildata, IT Manager Bolig- og Næringsbanken, Key Account Manager Eterra.
Member of the Board since April 005.
Ulf Dahl Ryen
Men % Women % Percentage men/women – Nordic 2005 0 100 200 300 400 500 >60 55–59 50–54 45–49 40–44 35–39 30–34 25–29 <24
Age breakdown, all employees – Nordic 2005
Change in number of employees 2005
Employees as of December 00 5
Net reduction due to natural
attrition and restructuring
Ementor Annual Report 005 – Board of Directors’ Report
Board of Directors and corporate
management
As of the Extraordinary General Meeting of 4 November 2004, the Board of Directors has consisted of the following shareholderelected members:
• Board Chairman: Åge Korsvold
• Board members: Turid Grotmoll, Ronny Langeland, Cathrine Foss Stene, Dag Sørsdahl and Knut Øversjøen As of the Annual General Meeting of 20 April 2005, the employeeelected members have comprised:
• Board members: Truls Berntsen, Heljar Heradstveit and Ulf Dahl Ryen
There have been significant corporate management changes in 2005. Jo Lunder took office as the President and CEO on 7 February. Ementor Norway and Ementor Denmark have both replaced their Managing Directors in 2005. Ole Morten Settevik took office as the Managing Director of Ementor Norge AS on 12 January, and Carsten Dilling assumed the corresponding position at Ementor Danmark A/S on 17 March. As a result of the merger with Topnordic, Ole Morten Settevik decided to resign from his position. In addition to responsi bility as the President and CEO, Jo Lunder assumed responsibility as the Managing Director of Ementor Norge AS from 2 February 2006. Rune Falstad assumed the position of Executive Vice President and Chief Financial Officer from 1 August. Ementor’s corporate management consists of the following members:
• Jo Lunder, President and CEO of
Ementor ASA and Managing Director of Ementor Norge AS
• Rune Falstad, Executive Vice President and Chief Financial Officer Ementor ASA
• Carsten Dilling, Managing Director of Ementor Danmark A/S and Deputy CEO of Ementor ASA
• Johan Rittner, Managing Director of Ementor Sverige AB
Environmental measures
The physical products that Ementor sells are developed and manufactured by international technology companies. Ementor does not have any production of physical products, and the distribution is largely outsourced to distribution partners. Hence there is little pollution connected with the Company’s own operations. Ementor participates in measures required by law to protect the environment, including schemes to return obsolete ICT equipment in Norway. The Group utilises modern and func tional offices as a tool for improving the working environment among the employees. Source separation of waste has been introduced at most of the Group’s offices.
Corporate governance and company
management
The annual report includes a separate description of the Group’s guidelines and control routines. The key principles of Ementor’s policies in this area are: • An open information policy
• Equal treatment of all shareholders • A Board of Directors consisting of out
side members that are not associated with the Company’s operations
See also the separate section on corporate governance and company management on page 56.
Outlook for 2006
The macroeconomic outlook is relatively good at the start of 2006, and the market outlook for Ementor’s focus areas is positive.
The year 2005 was marked by restruc turing, and in spite of the improvement in the fourth quarter results compared to the start of the year, Ementor must con tinue to reduce its cost base and improve the internal control of its underlying operations.
The Company’s focus on infrastructure solutions and products in the Nordic region and the merger with Topnordic will consolidate our position as a leading provider of infrastructure solutions and products.
The Board of Directors believes that Ementor/Topnordic has good market positions, established customer relation ships, and motivated and skilled employees at all levels; and that the merged Group is wellpositioned with a view to increasing the longterm creation of value. The Board of Directors is looking forward to Ementor’s performance in 2006.
Oslo, March 00
Knut Øversjøen Ulf Dahl Ryen Jo Lunder
President and CEO Truls Berntsen Heljar Heradstveit
Åge Korsvold Chairman of the Board
Cathrine Foss Stene
Ementor Annual Report 2005 – Financial Statements
20
Consolidated income statement
IFRS NGAAP 1)(Amounts in MNOK) Note 2005 2004 2004 2003
Operating revenues 6 3 482.5 4 041.4 4 568.8 4 663.1
Goods consumed 2 106.2 2 522.5 2 755.7 2 823.2
Employee compensation and benefit expense 20 1 189.3 1 232.8 1 429.4 1 409.5
Depreciation and amortisation 8, 9 57.9 61.1 75.4 84.2
Other operating expenses 285.2 246.5 352.3 404.5
Unusual items 21 63.3 126.8 141.1 155.0
Operating profit/loss -219.4 -148.3 -185.1 -213.3
Finance income 15.0 10.8 24.9 30.2
Finance cost -46.0 -34.9 -45.3 -72.5
Net finance 22 -31.0 -24.1 -20.4 -42.3
Share of profit/loss of associates 10 - -1.8 - -
Profit/loss before taxes from continued operations -250.4 -174.2 -205.5 -255.6
Taxes on continued operations 17 0.1 10.0 10.0 0.9
Profit/loss for continued operations -250.5 -184.2 -215.5 -256.5
Discontinued operations 7 97.5 9.2 - -13.6
Ordinary profit/loss for the year -153.0 -175.0 -215.5 -270.1
Earnings per share (Amounts in NOK)
- basic, group total 23 -0.40 -0.74 -0.91 -1.25
- diluted, group total 23 -0.40 -0.74 -0.91 -1.25
- basic, continued operations 23 -0.66 -0.77 -0.91 -1.18
- diluted, continued operations 23 -0.65 -0.77 -0.91 -1.18
1) Figures from the NGAAP financial statement for 2004 with comparative figures for 2003 (not restated for operations dicontinued in 2005).
Consolidated balance sheet
IFRS(Amounts in MNOK) Note 2005 2004
ASSETS
Property, plant and equipment 8 51.1 112.8
Goodwill 9 113.3 118.8
Other intangible assets 9 98.1 96.8
Non-current assets 262.5 328.4
Inventories 12 39.0 65.8
Trade receivables 11 892.4 1 034.4
Other receivables 11 129.1 145.2
Cash and cash equivalents 13 404.2 557.8
Current assets 1 464.7 1 803.2
Total assets 1 727.2 2 131.6
EQUITY AND LIABILITIES
Share capital 14 7 745.0 7 736.8
Other reserves -7.6 -0.6
Retained earnings -7 650.9 -7 497.9
Shareholders equity 86.5 238.3
Interest-bearing borrowings/liabilities 16 7.0 29.1
Retirement benefit obligations 18 22.0 34.5
Non-current liabilities 29.0 63.6 Trade payables 15 443.7 660.2 Interest-bearing borrowings/liabilities 16 355.0 365.1 Provisions 19 210.5 217.4 Other liabilities 15 602.5 587.0 Current liabilities 1 611.7 1 829.7 Total liabilities 1 640.7 1 893.3
Total equity and liabilities 1 727.2 2 131.6
Consolidated income statement/balance sheet Ementor Group
Oslo, 7 March 2006
Knut Øversjøen Ulf Dahl Ryen Jo Lunder
President and CEO Truls Berntsen Heljar Heradstveit
Åge Korsvold
Ementor Annual Report 2005 – Financial Statements
21
Consolidated statement of cash flows
(Amounts in MNOK) Note 2005 2004
Profit/loss before taxes 1) -152.9 -165.0
Depreciation 57.9 86.4
Gain/loss on disposal of subsidiaries -134.1 -40.5
Share of profit/loss and gain/loss on disposal of associates - 1.8
Change in inventory 15.6 12.7
Change in trade receivables 58.5 139.9
Change in trade payables -182.1 2.2
Change in other accruals 78.0 95.4
Taxes paid -9.4 -0.8
Net cash flow from operations -268.5 132.1
Aquisition of subsidiaries/businesses - -0.9
Disposal of subsidiaries/businesses 173.9 19.5
Purchase of property, plant, equipment and IT-systems -42.2 -107.7
Proceeds from sale of property, plant, equipment and IT-systems 1.1 6.5
Sale of other investments - 1.7
Net cash flow from investing activities 132.8 -80.9
Proceeds from share issues - 204.9
Proceeds from borrowings 6.0 25.9
Repayments of borrowings -23.9 -43.6
Net cash flow from financing activities -17.9 187.2
Net cash flow for the year -153.6 238.4
Cash and cash equivalents at the beginning of the year 13 557.8 319.4
Cash and cash equivalents at the end of the year 13 404.2 557.8
1) Includes all interests paid and received (see Note 22).
Consolidated statements of changes in equity/cash flows Ementor Group
Consolidated statement of changes in equity
(Amounts in MNOK) Share capital 1) Other reserves 2) Retained earnings Total equity
Balance as of 1 January 2004 7 531.3 -7 322.9 208.4
Currency translation differences -0.6 -0.6
Profit for the year -175.0 -175.0
Employees share option scheme, value of employee services 3.8 3.8
Issue of share capital 204.9 204.9
Changes related to own shares -3.2 -3.2
Balance as of 31 December 2004 7 736.8 -0.6 -7 497.9 238.3
Balance as of 1 January 2005 7 736.8 -0.6 -7 497.9 238.3
Currency translation differences -7.0 -7.0
Profit for the year -153.0 -153.0
Employees share option scheme, value of employee services 8.7 8.7
Issue of share capital -0.5 -0.5
Balance as of 31 December 2005 7 745.0 -7.6 -7 650.9 86.5
1) See Note 14.
Ementor Annual Report 2005 – Financial Statements
22
Notes Ementor Group
Note 1 – General information
Ementor is a leading provider of infrastructure solutions and products in Scandinavia with headquarter in Oslo. The Company has a strong position with key global technology partners such as Cisco, IBM, Microsoft and HP. Ementor had 1 693 employees as of 31 December 2005. The Company is located in Norway, Denmark and Sweden with 12 offices.
The Company is a limited liability company incorporated and domiciled in Norway. The address of its registrated office is Brynsalléen 2, Oslo. Ementor ASA is listed on the Oslo Stock Exchange and had 13 823 shareholders as of 31 December 2005. Kistefos AS is currently the largest single shareholder with 21.9 % of the shares.
Ementor is reporting its consolidated financial statements in accordance with IFRS (International Financial Reporting Standards), as determined by EU. All numbers are presented in NOK millions (MNOK).
These consolidated financial statements have been approved for issue by the Board of Directors on 7 March 2006. Because of the loss in 2005, the Board of Directors has decided that no dividend shall be paid for 2005. The Board proposes that the loss of the parent company Ementor ASA of MNOK -820.4 should be covered by a transfer from the premium fund by MNOK 713.0 and a transfer to carried forward losses by MNOK 107.4. Free equity that can be distributed as a dividend totals MNOK 0.
Note 2 – Summary of significant accounting policies
2.1 Basis of preparation
The consolidated financial statements of Ementor have been prepared in accordance with International Financial Reporting Standards (IFRS) as determined by EU, and include Ementor ASA and subsidiaries in which Ementor ASA, directly or indirectly, has a controlling interest through ownership interests or agreements. The consolidated financial statements have been prepared under the historical cost convention, and modified by any revaluation of assets and liabilities at fair value through profit or loss according to the policies for the relevant areas.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires manage-ment to exercise its judgemanage-ment in the process of applying Emanage-mentor’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed separately. Certain new standards, amendments and interpretations to existing standards have been published. These are as follows and are mandatory for the Group’s and holding company’s accounting periods from 2006 or later, but which the Group has not early adopted:
• IAS 19 (Amendment), Employee Benefits (effective from 1 January 2006)
• IAS 39 (Amendment), Cash Flow Hedge Accounting of Forecast Intragroup Transactions (effective from 1 January 2006)
• IAS 39 (Amendment), The Fair Value Option (effective from 1 January 2006)
• IAS 39 og IFRS 4 (Amendment), Financial Guarantee Contracts (effective from 1 January 2006) • IFRS 1 (Amendment), First Time Adoption of International Financial Reporting Standards and IFRS 6 (Amendment), Exploration for and Evaluation of Mineral Resources (effective from 1 January 2006)
• IFRS 6, Exploration for and Evaluation of Mineral Resources (effective from 1 January 2006) • IFRS 7, Financial Instruments: Disclosures, and a supplementary change of IAS 1,
Presentation of Financial Statements - Capital Disclosures (effective from 1 January 2007) • IFRIC 4, Determining whether an Arrangement contains a Lease (effective from 1 January 2006) • IFRIC 5, Rights to Interests arising from Decommissioning, Restoration and
Environmental Rehabilitation Funds (effective from 1 January 2006)
• IFRIC 6, Waste Electrical and Electronic Equipment (effective from 1 January 2006)
The management judgement is that none of these changes are relevant for the Group’s and holding company’s current operations and financial statements in 2006.
2.2 Consolidation 2.2.1 Subsidiaries
Subsidiaries are all entities over which Ementor has the power to govern the financial and operating policies generally accompanying a share-holding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to Ementor. They are de-consolidated from the date that control ceases.
Ementor uses the purchase method of accounting to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given and liabilities incurred or assumed at the date of exchange, plus costs directly attrib
