Prospectus. Blom ASA

Transcription

1 Prospectus Blom ASA (a public limited liability company organized under the laws of the Kingdom of Norway) Business registration number: Listing of 973,367,160 New Shares on Oslo Børs, each with a nominal value of NOK 0.05 issued in connection with the conversion of 15 per cent Blom ASA Senior Secured Bond Issue 2012/2013, FRN Blom ASA Senior Bond Issue 2011/2012 and 2 per cent Blom ASA subordinated Convertible Callable Bond Issue 2012/2017 to equity in October 2013 Manager: 19 November 2013

2 IMPORTANT INFORMATION For the definition of certain capitalised terms used throughout this Prospectus, please see Section 14 Definitions and Glossary of Terms which also applies to the front page. Readers are expressly advised that the Shares are exposed to financial and legal risk and they should therefore read this Prospectus in its entirety, in particular Section 2 Risk Factors. The contents of this Prospectus are not to be construed as legal, financial or tax advice. Each reader should consult his, her or its own legal adviser, independent financial adviser or tax adviser for legal, financial or tax advice. This Prospectus, dated 19 November 2013 has been prepared by Blom ASA ( Blom or the Company ) in order to provide a presentation of Blom in connection with the listing of the New Shares on Oslo Børs, as defined and described herein (the Listing ). This Prospectus has been prepared to comply with the Securities Trading Act sections 7-2 and 7-3 and related legislation and regulations, including the Commission Regulation (EC) No. 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council. This Prospectus has been prepared solely in the English language. The information contained herein is as of the date of this Prospectus and subject to change, completion and amendment without notice. In accordance with section 7-15 of the Securities Trading Act, any new circumstance, material error or inaccuracy relating to information included in this Prospectus, which may have significance for the assessment of the Shares, and arises between the date of this Prospectus and before the New Shares are listed on Oslo Børs, will be presented in a supplement to this Prospectus. Publication of this Prospectus shall not create any implication that there has been no change in the Company s affairs or that the information herein is correct as of any date subsequent to the date of this Prospectus. All inquiries relating to this Prospectus must be directed to the Company. No other person is authorised to give information or to make any representation in connection with the listing of the New Shares. If any such information is given or made, it must not be relied upon as having been authorised by the Company or by any of the employees, affiliates or advisers of any of the foregoing. No action has been or will be taken in any jurisdiction other than Norway by the Company that would permit the possession or distribution of this Prospectus, any documents relating thereto, or any amendment or supplement thereto, in any country or jurisdiction where specific action for such purpose is required. The distribution of this Prospectus in certain jurisdictions may be restricted by law. Persons into whose possession this Prospectus may come are required by the Company to inform themselves about and to observe such restrictions. The Company shall not be responsible or liable for any violation of such restrictions by prospective investors. The restrictions and limitations listed and described herein are not exhaustive, and other restrictions and limitations in relation to this Prospectus that are not known or identified at the date of this Prospectus may apply in various jurisdictions. This Prospectus serves as a listing prospectus as required by applicable laws and regulations only. This Prospectus does not constitute an offer to buy, subscribe or sell any of the securities described herein, and no securities are being offered or sold pursuant to it. The securities described herein have not been and will not be registered under the US Securities Act of 1933 as amended (the US Securities Act ), or with any securities authority of any state of the United States. Accordingly, the securities described herein may not be offered, pledged, sold, resold, granted, delivered, allotted, taken up, or otherwise transferred, as applicable, in the United States, except in transactions that are exempt from, or in transactions not subject to, registration under the US Securities Act and in compliance with any applicable state securities laws. This Prospectus is subject to Norwegian law, unless otherwise indicated herein. Any dispute arising in respect of this Prospectus is subject to the exclusive jurisdiction of the Norwegian courts with Oslo District Court as legal venue in the first instance.

3 TABLE OF CONTENTS 1 EXECUTIVE SUMMARY... 3 SECTION A INTRODUCTION AND WARNINGS... 3 SECTION B - ISSUER... 3 SECTION C - SECURITIES... 8 SECTION D - RISKS... 8 SECTION E - OFFER RISK FACTORS STATEMENTS CONVERSION OF DEBT TO EQUITY AND LISTING OF THE NEW SHARES PRESENTATION OF THE COMPANY MARKET ANALYSIS ORGANISATION, BOARD OF DIRECTORS AND MANAGEMENT FINANCIAL INFORMATION SHARES AND SHARE CAPITAL SHAREHOLDER MATTERS AND NORWEGIAN COMPANY AND SECURITIES LAW NORWEGIAN TAXATION LEGAL MATTERS ADDITIONAL INFORMATION DEFINITIONS AND GLOSSARY OF TERMS

4 1 EXECUTIVE SUMMARY Summaries are made up of disclosure requirements known as Elements. These Elements are numbered in Sections A E (A.1 E.7) below. This summary contains all the Elements required to be included in a summary for this type of securities and the issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of not applicable. Section A Introduction and Warnings A.1 Warning This summary should be read as introduction to this Prospectus; any decision to invest in the securities should be based on consideration of this Prospectus as a whole by the investor; where a claim relating to the information contained in this Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the Member States, have to bear the costs of translating this Prospectus before the legal proceedings are initiated; and civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. Section B - Issuer B.1 Legal and commercial name B.2 Domicile and legal form, legislation and country of incorporation B.3 Current operations, principal activities and markets B.4a Significant recent trends affecting the issuer and the industry in which it operates B.5 Description of the Group Blom ASA Blom was incorporated on 12 September 1966 and is a public limited liability company, organised and existing under the laws of Norway pursuant to the Public Limited Companies Act. Blom estimates that it is one of Europe s largest providers of geospatial products, services and solutions, and its customers range from public administrations and enterprises to consumers. The Company provides a wide variety of mapping and geographic services, meeting local, regional and international standards and specifications, as well as custom solutions for specific customer demand. Blom s strength lies in the expertise, innovative capability and the technical know-how of its people. There have not been any recent trends or changes in the operating environment for the Company since 30 June Blom is the parent company of the Group. Blom is a holding company and not an operative company. The following companies are the main subsidiaries directly owned by Blom: Name of subsidiary Blom Data AS, Oslo (100%) Blom Kartta Oy, Finland (100%) Blom Geomatics AS, Oslo (100%) Blom Romania S.R.L, Romania (100%) PT. Blom Nusantara, Indonesia (90%) Blom Deutschland GmbH, Germany (100%) Blom Aerofilms Ltd, England (100%) Blom Sweden AB, Sweden (100%) 3

5 B.6 Interests in the Company and voting rights Blom Sistemas Geoespaciales S.L.U, Spain (100%) Shareholders owning 5% or more of the Shares have an interest in the Company s share capital which is notifiable pursuant to the Norwegian Securities Trading Act. The table below shows the 20 largest shareholders in the Company on 21 October 2013 There are no differences in voting rights between the shareholders. The Company is not aware of any arrangements the operation of which may at a subsequent date result in a change of control of the Company. B.7 Selected historical key financial information Below is an overview of selected historical key information for the Company. Income statement: INCOME STATEMENT, CONSOLIDATED Q Q (NOK 1,000) (Unaudited ) (Unaudit ed) (Unaudited) (Unaudited ) Operating revenues Cost of materials Salaries and personnel costs Depreciation and write downs Other operating and administrative costs Other gains and losses Operating expenses Operating profit/loss Profit/loss attributable to

6 associates Net financial items Pre-tax profit/loss Taxes Net profit/loss from continuing operations Net profit/loss from discontinued operations Net profit/loss for the year Profit/loss attributable to: Shareholders Minority interests Net profit/loss for the year Earnings per share: From continuing operations -0,91-1,15 from discontinued operations -0,07-0,01 From net/profit/loss for the year -0,98-1,16 INCOME STATEMENT, CONSOLIDATED FY 2012 FY 2011 FY 2010 FY 2010 (NOK 1,000) (Audited) (Audited) (Unaudited adjusted) (Audited) Operating revenues Cost of materials Salaries and personnel costs Depreciation and write downs Other operating and administrative costs Other gains and losses Operating expenses Operating profit/loss Profit/loss attributable to associates Net financial items Pre-tax profit/loss Taxes Net profit/loss from continuing

7 operations Net profit/loss from discontinued operations Net profit/loss for the year Profit/loss attributable to: Shareholders Minority interests Net profit/loss for the year Earnings per share: From continuing operations -1,59-150,27-13,58-13,58 from discontinued operations -1,6-52,31-0,33-0,33 From net/profit/loss for the year -3,19-202,58-13,91-13,91 Balance sheet: BALANCE SHEET, CONSOLIDATED (Unaudited (NOK 1,000) ) (Audited) (Audited) (Audited) ASSETS Patents, licenses and similar rights Deferred tax assets Goodwill Intangible noncurrent assets Property plant and equipment Tangible non-current assets Non-current asset investments Investments in associates Total non-current asset investments Total non-current assets Inventories Work in progress Total inventories Trade receivables Other current receivables Total receivables

8 Cash and cash equivalents Assets classified as held for sale Total current assets Total assets BALANCE SHEET, CONSOLIDATED (Unaudited (NOK 1,000) ) (Audited) (Audited) (Audited) EQUITY AND LIABILITIES Share capital Treasury shares Share premium account Currency translation differences Retained earnings Minority interests Total equity Pension obligations Non-current liabilities Deferred taxes Total other noncurrent liabilities Overdraft facilities Other interest-bearing current liabilities Total interest-bearing current liabilities Trade payables Unpaid government taxes Tax payable Other current liabilities Total other current liabilities Liabilities classified as held for sale Total current liabilities Total equity and liabilities B.8 Selected key pro forma financial information Not applicable. There is no pro forma financial information. 7

9 B.9 Profit forecast or estimate B.10 Audit report qualifications B.11 Insufficient working capital Not applicable. No profit forecast or estimate is made. The auditor's report for 2012 included a clarification regarding going concern assumption as set out below: We draw attention to the Board of Director s report and Note 26 in the financial statements which indicate that there is uncertainty regarding whether the company will be able to service its debt at maturity. These conditions, along with other matters as set forth in the Board of Directors report and Note 26, indicate the existence of a material uncertainty that might cast significant doubt about the company s ability to continue as a going concern. Our opinion is not qualified in respect of this matter. Not applicable. The Company is of the opinion that the working capital available to the Group is sufficient for the Group s present requirements, for the period covering at least 12 months from the date of this Prospectus. Section C - Securities C.1 Type and class of securities admitted to trading and identification number The New Shares are ordinary shares in the Company and will have the same ISIN as the existing shares in the Company ISIN NO C.2 Currency of issue The New Shares are denominated in NOK. C.3 Number of shares in issue and par value C.4 Rights attaching to the securities C.5 Restrictions on transfer C.6 Admission to trading As of the date of this Prospectus the Company s registered share capital is NOK 50,353,245 divided into 1,007,064,900 Shares with a par value of NOK The New Shares are ordinary shares in the Company and will be listed on Oslo Stock Exchange as the rest of the shares in the Company. The New Shares receive rights to dividends on the date the capital increases are registered in the Norwegian Register of Business Enterprises. The Shares and the New Shares have equal rights to the Company's profits and upon liquidation. The Company's shares are freely transferrable. The Company's shares are listed on Oslo Stock Exchange with ticker "BLO". The listing of the New Shares on Oslo Stock Exchange is subject to the approval of this Prospectus by the Norwegian Financial Supervisory Authority. The Company will not apply for admission to trading of the New Shares on any other stock exchange than Oslo Stock Exchange. C.7 Dividend policy The Company does not have an established dividend policy but the Company's aim and focus is to enhance shareholder value and provide an active market for its shares. In accordance with the Company s future growth goals, Blom will seek to maintain a sound financial platform. Dividends have historically been considered on an on-going basis as a result of the Company s strategy and earnings. No dividend has been paid during the last 4 years. The Company does not anticipate that it will be able to distribute any dividend to its shareholders in the near future, but always aims to enhance shareholder value. Section D - Risks D.1 Key risks specific to the Company or its industry The Company s revenues are affected by the economic conditions in the countries in which it operates The Company operates in market segments that are highly competitive Governmental bodies and local municipalities represent significant customer groups for the Company The Company is subject to local laws and regulations in the countries in which it operates and requires regulatory approvals for conducting 8

10 D.3 Key risks specific to the securities its operations The Company may be subject to changes in taxation The Company s success depends on key members of its management team The Company relies on its reputation and commercial integrity The Company s results depend on utilisation of its resources The Company relies upon intellectual property rights From time to time, the Company, its customers or third parties with whom the Company works may receive claims, including claims from various industry participants, alleging infringement of their intellectual property rights The Company may file claims against other parties for infringement of its intellectual property that may cause significant costs and may not be resolved in its favour There are significant risks associated with rapid technological change The Company will from time to time be involved in disputes and legal or regulatory proceedings Risks related to funding needs The Company is relying on external subcontractors and suppliers of services and goods to meet agreed or generally accepted standards The Company may not have adequate insurance Foreign currency risk Interest rate risk Credit risk Liquidity risk Need for additional funding There may not be a liquid market for the Shares Volatility of the share price Shareholders may be diluted if they are unable to participate in future offerings Pre-emptive rights may not be available to U.S. holders and certain other foreign holders of the Shares Holders of Shares that are registered in a nominee account may not be able to exercise voting rights as readily as shareholders whose Shares are registered in their own names with the Norwegian Central Securities Depository The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions Certain shareholders will control a substantial shareholding in the Company going forward and the interests of these shareholders could conflict with those of the Company s other shareholders Section E - Offer E.1 Net proceeds and estimated expenses The News Shares are divided in two groups. The first group consists of 973,367,160 shares which were issued at a subscription price of NOK 0.10 and where the total share subscription price of NOK 97,336,716 was settled by way of set off by the bondholders in the Company's existing bond loans. The 9

11 E.2a Reasons for the Offering and use of proceeds Company does not receive any cash proceeds from the issuance of shares in the first group, but converts debt to equity. The second group of shares consists of 15 shares offered to Merckx AS at a subscription price of 0.05 per share and for a total subscription price of NOK The shares in the second group are settled in cash and the net proceeds are thereby NOK The estimated costs for the debt conversion and issuance of the New Shares are approximately NOK 5 million. The debt conversions results in an improved balance sheet for the Company by reducing the debt burden significantly. The implementation of this exercise was vital for the Company and is part of the proposed restructuring the Company is currently carrying out. E.3 Terms and conditions of the Offering E.4 Material and conflicting interests E.6 Dilution resulting from the Offering E.7 Estimated expenses charged to investor The extraordinary general meeting of the Company approved the issuance of the New Shares on 27 September The listing of the New Shares will be carried out as soon as possible after publication of this Prospectus. The Manager or its affiliates have provided from time to time, and may provide in the future, investment and commercial banking services to the Company and its affiliates in the ordinary course of business, for which they may have received and may continue to receive customary fees and commissions. Other than this there are no material and conflicting interests. The dilutive effect for existing shareholders in connection with the issuance of the New Shares resulting from the conversion of debt to equity is approximately 96.7%. The Company will not charge any costs, expenses or taxes directly to any shareholder or to the investor in connection with the listing of the New Shares. 10

12 2 RISK FACTORS Investing in Blom involves inherent risks. Prospective investors should consider carefully, among other things, all of the information set forth in this Prospectus, and in particular, the specific risk factors set out below. An investment in the Shares is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of the investment. If any of the risks described below materialises, individually or together with other circumstances, they may have a material adverse effect on the Company s business, operating results and financial condition, which may cause a decline in the value and trading price of the Shares that could result in a loss of all or part of any investment in the Shares. The order in which the risks are presented below is not intended to provide an indication of the likelihood of their occurrence nor of their severity or significance. 2.1 MARKET RISK The Company s revenues are affected by the economic conditions in the countries in which it operates The Company s business, operating results and financial condition depend on the demand for its key products and services. General economic conditions in the countries in which the Company sells its products and services influence the demand for the Company s products and services. The countries in which the Company has operations have experienced an economic downturn of varying degrees during recent years. If existing economic conditions in the countries in which the Company operates do not improve and demand for the Company s products and services do not increase, its business, operating results and financial condition are likely to be negatively affected. The Company operates in market segments that are highly competitive The market segments in which the Company operates are highly competitive. The Company believes that it is well positioned to retain and strengthen its market position through, among other things, its high quality service offering and position within niches which offer differentiating opportunities. However, the Company s competitive position may be harmed by increased competition, in the form of better technology and product offering, price reductions and/or increased capacity by other operators. Increased competition can come from current competitors or new entrants to the market with a similar product and service offering as the Company. The failure of the Company to maintain its competitiveness could have a material adverse effect on the Company s business, operating results and financial condition. Governmental bodies and local municipalities represent significant customer groups for the Company Governmental bodies and local municipalities throughout Europe represent significant customer groups for the Company. Public spending may be subject to significant fluctuations from year to year and from country to country. Adverse economic and political conditions may reduce the amount of public spending. A change in the funding of customers for financing the products and services provided by the Company could result in a reduction in the demand for the Company s services. Furthermore, defence organisations represent an important market segment for the Company and reduction of defence budgets could impact the demand for the Company s products and services. The failure of the Company to successfully retain current customers and/or attract new customers could have a material adverse effect on the Company s business, operating results and financial condition. 2.2 OPERATIONAL RISK The Company is subject to local laws and regulations in the countries in which it operates and requires regulatory approvals for conducting its operations The Company operates in several European and international markets. It is subject to local laws and regulations and requires regulatory approval for conducting its operation. Flight operation for Blom s aircrafts is dependent on permits for each country. The Company has permits for most countries in Europe and there are normally no difficulties involved in obtaining a flight permit for new countries. If the Company fails to comply with any laws and regulations or fails to obtain necessary regulatory approval, then the Company may be subject to, among other things, civil and criminal liability. Changes in the local laws and regulations or in regulatory approvals that are required in the Company s operations, or the loss of such approvals or permits, could have a material adverse effect on the Company s business, operating results and financial condition.

13 The Company may be subject to changes in taxation The Company is subject to taxes in the countries in which it operates. There can be no assurance that the Company s operations will not become subject to increased taxation by national, local or foreign authorities or to new or modified taxation regulations and requirements, including requirements relating to the timing of any tax payments. From time to time the Company s tax payments may be subject to review or investigation by tax authorities of the jurisdictions in which the Company operates. The consequences of such tax reviews or investigations could have a material adverse effect on the Company s business, operating results and financial condition. The Company s success depends on key members of its management team The Company s success depends, to a significant extent, on the continued services of the individual members of its management team, who have substantial experience in the industry and in the local jurisdictions in which the Company operates. The Company s ability to continue to identify and develop opportunities depends on the management s knowledge of, and expertise in, the industry and such local jurisdictions and on their external business relationships. There can be no assurance that any management team member will remain with the Company. Any loss of the services of key members of the management team could have a material adverse effect on the Company s business, operating results and financial condition. The Company relies on its reputation and commercial integrity The Company s success depends on its ability to maintain and enhance its reputation and trustworthiness. An event or series of events that materially damages the Company s reputation, such as allegations of price collaboration or any unethical behaviour, such as fraud or bribery, could have a material adverse effect on the Company s business, operating results and financial condition. The Company s results depend on utilisation of its resources The Company must to a certain extent keep resources available in order to respond in due time to project requests. The Company evaluates its needs for resources continuously. However, the resources involving staffing, infrastructure and aircrafts, lead to a substantial fixed cost base and risk of overcapacity in relation to the scope of projects in progress. Overcapacity of resources could have a material adverse effect on the Company s business, operating results and financial condition. The Company relies upon intellectual property rights The Company mainly relies upon copyrights, database rights and agreements with its employees, customers, suppliers and other parties to establish and maintain its intellectual property rights in technology and products used in operations. Despite its efforts to protect its intellectual property rights, such rights could be challenged. From time to time, the Company, its customers or third parties with whom the Company works may receive claims, including claims from various industry participants, alleging infringement of their intellectual property rights Although the Company is not currently aware of any parties pursuing intellectual property rights infringement claims against it, there can be no assurance that it will not be subject to such claims in the future. The Company s third party suppliers may also become subject to infringement claims, which in turn could negatively impact the Company s business. Intellectual property litigation is expensive and time-consuming, could divert management s attention from the Company s business and could have a material adverse effect on its business, prospects, operating results or financial condition. If there is a successful claim of infringement against the Company or its third party intellectual property providers, the Company may be required to pay substantial damages to the party claiming infringement, stop selling products or using technology that contains the alleged infringement of intellectual property, or enter into royalty or license agreements that may not be available on acceptable terms, if at all. Any of these developments could materially damage the Company s business, prospects, financial condition or results of operations. The Company may have to develop non-infringing technology, and any failure to do so or to obtain licenses to the proprietary rights on a timely basis could have a significant adverse effect on the Company s business, prospects, financial results and results of operations. The Company may file claims against other parties for infringement of its intellectual property that may cause significant costs and may not be resolved in its favour Although the Company currently is not aware of infringement of its intellectual property by other parties, it cannot guarantee that such infringement does not currently exist or will not occur in the future. To protect its intellectual property rights and to maintain its competitive advantage, the Company may file suits against parties who it believes are infringing its intellectual property. Intellectual property litigation is expensive and time consuming, could divert management s attention from the Company s business and could have a material adverse effect on its business, prospects, operating results or financial condition. In addition, the Company s enforcement efforts may not be successful. In certain situations, the Company may have to bring such suits in foreign jurisdictions, in which case it is subject to additional risk as to the result of the proceedings and the 12

14 amount of damage that it can recover, including currency risk. Moreover enforcement of the judgment is not assured. Certain foreign jurisdictions may not provide protection to intellectual property comparable to that in the United States or Western Europe. The Company s engagement in intellectual property enforcement actions may have significant adverse effects on its business, prospects, financial results and results of operations. There are significant risks associated with rapid technological change The market for the Company's products and services is subject to rapid technological change and is characterised by frequent introductions of improved or new products and services and ever-changing and new customer requirements. The Company expects that this will continue to be the case in the future. The success of the Company depends decisively on the timely perception of new trends, developments and customer needs, constant further development of technological expertise and ensuring that the portfolio of products and services keeps pace with technological developments. This presents the risk that competitors may launch new products and services earlier or at more competitive prices or secure exclusive rights to new technologies. If these circumstances were to materialise, it may have a material adverse effect on the business, prospects, financial condition or results of operations of the Company. The Company will from time to time be involved in disputes and legal or regulatory proceedings The Company will from time to time be involved in disputes and legal or regulatory proceedings. Such disputes and legal or regulatory proceedings may be expensive and time-consuming, and could divert management s attention from the Company s business. Furthermore, legal proceedings could be ruled against the Company and the Company could be required to, inter alia, pay damages or fines, halt its operations, stop its projects, stop the sale of its products, etc., which can consequently have a material adverse effect on the Company s business, prospects, financial results or results of operations. Risks related to funding needs As of the date of this Prospectus the Company does not have any outstanding bond debt or significant bank debt, see chapter 8.7 Capital resources for an overview of the Company's debt. The Company s ability to meet its payment obligations related to its running operations is dependent on its future performance and may be affected by events beyond its control. If the financing available to the Company is insufficient to meet its financing needs, it may be forced to reduce or delay capital expenditures, sell assets or businesses at unanticipated times and/or at unfavourable prices or other terms, seek additional equity capital or restructure or refinance its debt. There can be no assurance that such measures would be successful or adequate to meet the Company s financing needs. The Company is relying on external subcontractors and suppliers of services and goods to meet agreed or generally accepted standards The Company relies on external subcontractors and suppliers of services and products to varying degrees. This operating model inherently contains a risk to the Company s goodwill and branding, if suppliers fail to meet agreed or generally accepted standards in areas such as environmental compliance, human rights, labour relations and product quality. Failure by subcontractors to deliver products or services with the required quality could lead to the Company not being able to fulfil its obligations towards its customers, which in turn could lead to termination of contracts and/or claims for contractual liability. The Company may not have adequate insurance The Company has insurance for certain liabilities and losses. If the Company incurs significant liabilities or losses for which it is not adequately insured, or not insured at all, or if the Company s insurance policies are terminated for any reason and the Company is not able to obtain replacement insurance policies at favourable rates, or at all, the Company s business, operating results and financial condition may be materially adversely affected. The Company may also face consequential claims from customers who have made use of data and information supplied by the Company. 2.3 FINANCIAL RISK Foreign currency risk The Company is somewhat exposed to fluctuations in foreign exchange rates, since substantial revenues are in foreign currencies, primarily Euro. The Company has relatively large operative subsidiaries in eight European countries, three of which use Euro as their functional currency, while the five remaining subsidiaries use four other functional currencies. The Company has certain investments in foreign subsidiaries, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the Company s net investments in foreign operations is managed essentially through raising loans in the relevant foreign currency. The Company focuses on reducing any foreign currency risk associated with cash flows and does not focus on reducing the foreign currency risk associated with assets and liabilities. The subsidiaries income and expenses are in the same currency, and this reduces the Company s cash flow exposure to a single currency substantially. An 13

15 assessment of the need for and any hedging of currency risks are performed by a central financial function. In 2012 the Company did not find it necessary to hedge cash flows against currency risks. Interest rate risk The Company s interest-bearing assets are cash and cash equivalents, and the Company s profit and cash flow from operations are in general independent of changes in market interest rates. The interest-bearing debt has adjustable or fixed interest rates that are shorter than three months at any given time. Since the debt can be repaid at the points in time when the interest rate is adjusted, the difference between the fair value and book value will be small and insignificant. The Company's interest rate risk is associated with interest bearing loans, financial leasing and overdraft facilities. The Company has not made use of interest rate swaps or other financial instruments. Credit risk The credit risk in connection with sales to customers is managed in the local subsidiaries and at the group level for particularly large projects. The credit risk is monitored locally with central monitoring of the local subsidiary. The Company has guidelines for new contracts that focus on various elements, all of which shall contribute to the customer paying the company as quickly as possible. The company s customers are primarily municipalities, government agencies, or companies or institutions where municipalities or government agencies have a dominant influence. Inherently the risk of potential future losses from this type of customer is low. The Company has earmarked provisions for potential losses on specific customers and evaluated the size of the potential loss. The provisions for potential losses on receivables are based on the management s discretionary assessment of potential future losses on receivables from customers. The Company has not entered into any transactions that involve financial derivatives or other financial instruments to mitigate credit risks. Liquidity risk The Company s management of liquidity risk entails maintenance of adequate liquid reserves and credit facilities. The central management team and the local managers of subsidiaries monitor the Company s liquid resources and credit facilities through revolving forecasts based on the expected cash flow. The Company's operations are discernible by seasonal fluctuations, since a large portion of the Company's operations consist of airborne data acquisition and the processing and modelling of the resultant map data. Data acquisition is not normally performed when the surface of the earth is covered in snow. This denotes that the company ties up working capital in the spring being the start of the airborne data acquisition. The subsequent processing of data is not normally remunerated for until the summer months. The Company has not entered into any financial instruments and consequently does not have any liquidity risk originating from financial instruments. Need for additional funding The Company's future capital requirements and level of expenses depend on several factors, including, among other things, the timing and terms on which contracts can be negotiated, the amount of cash generated from operations, the level of demand for the Company's services and general industry conditions. There can be no assurance that the Company's business will generate sufficient cash flow from operations to service its debt and fund future capital requirements and expenses. In the event that the Company's existing resources are insufficient to fund the Company's business activities, the Company may need to raise additional funds through public offerings or private placements of debt or equity securities. The Company cannot guarantee that it will be able to obtain additional funding at all or on terms acceptable to the Company. Failure to do so could have a material adverse effect on the Company's business, operations and financial conditions. 2.4 RISKS RELATED TO THE SHARES There may not be a liquid market for the Shares Following the mandatory offer from Merckx AS and the conversion of the Company's bond issues, Merckx AS holds approximately 69.5% of the Shares. The Company's market capitalisation, based on the closing share price on 17 October 2013 is approximately NOK 10,000,000, which means that the Company is among the lowest valued companies on Oslo Børs. The limited free float and the low market capitalisation may result in limited or no liquidity in the Company's Shares going forward. Active, liquid trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors. If there proves to be no active trading market for the Shares, the price of the Shares may be more volatile and it may be more difficult to complete a buy or sell order for Shares. Even if there is an active public trading market d, there may be little or no market demand for the Shares, making it difficult or impossible to resell the shares, which would have an adverse effect on the resale price, if any, of the Shares. Furthermore, there can be no assurance that the Company will maintain its listing on Oslo Børs. A delisting from Oslo Børs would make it more difficult for shareholders to sell their Shares and could have a negative impact on the market value of the Shares. 14

16 Volatility of the share price The trading price of the Shares could fluctuate significantly in response to quarterly variations in operating results, general economic outlook, adverse business developments, interest rate changes, changes in financial estimates by securities analysts, matters announced in respect of competitors or changes to the regulatory environment in which the Company operates. Market conditions may affect the Shares regardless of the Company s operating performance or the overall performance in the industry. Accordingly, the market price of the Shares may not reflect the underlying value of the Group s net assets, and the price at which investors may dispose of their Shares at any point in time may be influenced by a number of factors, only some of which may pertain to the Company, while others of which may be outside the Company s control. The market price of the Shares could decline due to sales of a large number of Shares in the Company in the market or the perception that such sales could occur. Such sales could also make it more difficult for the Company to offer equity securities in the future at a time and at a price that are deemed appropriate. Shareholders may be diluted if they are unable to participate in future offerings The development of the Group s business may, inter alia, depend upon the Company s ability to obtain equity financing. Shareholders may be unable to participate in future offerings, due to misapplication of shareholders pre-emptive rights in order to raise equity on short notice in the investor market, or for reasons relating to foreign securities laws or other factors. Unless otherwise resolved by the general meeting or the Board by proxy, shareholders in Norwegian public companies such as the Company have pre-emptive rights proportionate to the aggregate amount of the shares they hold with respect to new shares issued by the Company. Pre-emptive rights may not be available to U.S. holders and certain other foreign holders of the Shares Under Norwegian law, prior to the Company s issuance of any new Shares for consideration in cash, the Company must offer holders of the Company s then-outstanding Shares pre-emptive rights to subscribe and pay for a sufficient number of Shares to maintain their existing ownership percentages, unless these rights are waived at a general meeting of the Company s shareholders. These pre-emptive rights are generally transferable during the subscription period for the related offering and may be listed on Oslo Stock Exchange. U.S. holders of the Shares may not be able to receive trade or exercise pre-emptive rights for new Shares unless a registration statement under the U.S. Securities Act is effective with respect to such rights or an exemption from the registration requirements of the U.S. Securities Act is available. The Company is not a registrant under the U.S. securities laws. If U.S. holders of the Shares are not able to receive trade or exercise pre-emptive rights granted in respect of their Shares in any rights offering by the Company, then they may not receive the economic benefit of such rights. In addition, their proportional ownership interests in the Company will be diluted. Similar restrictions may apply to other foreign holders of Shares, including, but not limited to shareholders in Australia, Canada, Hong Kong, Japan and Switzerland. Holders of Shares that are registered in a nominee account may not be able to exercise voting rights as readily as shareholders whose Shares are registered in their own names with the Norwegian Central Securities Depository Beneficial owners of the Company s Shares that are registered in a nominee account (e.g., through brokers, dealers or other third parties) may not be able to vote for such Shares unless their ownership is re-registered in their names with the VPS prior to the Company s general meetings. The Company cannot guarantee that beneficial owners of the Company s Shares will receive the notice for a general meeting in time to instruct their nominees to either effect a re-registration of their Shares or otherwise vote for their Shares in the manner desired by such beneficial owners. The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions The Company has not registered the Shares under the U.S. Securities Act or the securities laws of other jurisdictions than Norway and the Company does not expect to do so in the future. The Shares may not be offered or sold in the United States, nor may they be offered or sold in any other jurisdiction in which the registration of the Shares is required but has not taken place, unless an exemption from the applicable registration requirement is available, or the offer or sale of the Shares occurs in connection with a transaction that is not subject to these provisions. In addition, there can be no assurances that shareholders residing or domiciled in the United States will be able to participate in future capital increases or exercise subscription rights. Certain shareholders will control a substantial shareholding in the Company going forward and the interests of these shareholders could conflict with those of the Company s other shareholders After completion of the conversion of debt to equity, certain former bondholders will hold 973,367,160 of the Shares, which corresponds to approximately 96.7% of the Company's issued shares. Particularly, Merckx AS, which holds approximately 69% of the Shares. 15

17 As a result of this substantial ownership interest in the Company, the former bondholders, particularly Merckx AS, will have the ability to exert significant influence over most actions requiring shareholder approval, including, but not limited to, increasing or decreasing the authorised share capital of the Company (and waiving pre-emptive rights), the election of Board of Directors, distribution of dividends, the appointment of management and other policy decisions. While transactions with a controlling shareholder could benefit the Company, the interests of the former bondholders, particularly Merckx AS, could at times conflict with the interests of other holders of the Company s Shares. Although the Company has in the past sought and continues to seek to conclude all related party transactions on an arm s-length basis, and the Company has adopted procedures for entering into transactions with related parties, conflicts of interest may arise between the Company and the Company s principal shareholders or their respective affiliates, resulting in the conclusion of transactions on terms not determined by market forces. Any such conflicts of interest could adversely affect the Company s business, financial condition and results of operations, and therefore the value of its Shares. 16

18 3 STATEMENTS 3.1 RESPONSIBILITY FOR THE PROSPECTUS We, the Board of Directors of Blom, hereby declare that, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of our knowledge, in accordance with the facts and contain no omissions likely to affect its import. 19 November 2013 The Board of Directors of Blom Siv Staubo Chair Tore Hopen Board member Kristian Gjertsen Lundkvist Board member Birgitte Askjem Ellingsen Board member 17

19 3.2 INFORMATION SOURCED FROM THIRD PARTIES In certain sections of this Prospectus information sourced from third parties has been reproduced. In such cases, the source of the information is always identified. Such third party information has been accurately reproduced. As far as the Company is aware, and is able to ascertain from information published by the relevant third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. 3.3 NOTICE REGARDING FORWARD-LOOKING STATEMENTS This Prospectus includes forward-looking statements, including, without limitation, projections and expectations regarding the Company s future financial position, business strategy, plans and objectives. All forward-looking statements included in this document are based on information available to the Company, and views and assessment of the Company, as of the date of this Prospectus. The Company expressly disclaims any obligation or undertaking to release any updates or revisions of the forward-looking statements contained herein to reflect any change in the Company s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, unless such update or revision is prescribed by law. When used in this document, the words anticipate, believe, estimate, expect, seek to, may, plan and similar expressions, as they relate to the Company, its subsidiaries or its management, are intended to identify forward-looking statements. The Company can give no assurance as to the correctness of such forwardlooking statements and investors are cautioned that any forward-looking statements are not guarantees of future performance. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company and its subsidiaries, or, as the case may be, the industry, to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company s present and future business strategies and the environment in which the Company and its subsidiaries are operating or will operate. Factors that could cause the Company s actual results, performance or achievements to materially differ from those in the forward-looking statements include, but are not limited to, those described in Section 2 Risk Factors and elsewhere in this Prospectus. Given the aforementioned uncertainties, readers are cautioned not to place undue reliance on any of these forward-looking statements. 18

20 4 CONVERSION OF DEBT TO EQUITY AND LISTING OF THE NEW SHARES 4.1 INTRODUCTION In connection with the interim financial report for the second quarter of 2013, Blom announced that the Company had reduced its operations over several years through sale and downscaling of several subsidiaries and that Blom intended to further reduce its geographic exposure and risk. Additionally, the Company was making an active effort to adapt its structure, cost base and product portfolio in order to improve the company's earning capacity. Since Blom's cashflows were not sufficient to service its existing debt financing Blom entered into a dialogue with a majority of the bondholders for the Company's bond loans. The bondholders approved an extension of the maturity of the loan ISIN NO until 26 September 2013 at the bondholder meeting of 26 June Additionally, the term of a short-term liquidity loan of EUR 2.5 million from Hexagon AB agreed on in December 2012 was extended until 24 September Following these extensions, the Company continued the dialogue with its principal creditors with a view to finding a final and permanent solution for the Company's debt that matured at the end of September On the basis of the above the Company went into negotiations with representatives of the bondholders with a view to restructure the Company s debt facilities. These discussions resulted in an agreement which included the following key elements (the Financial Restructuring ): NOK 36 million of the 15 per cent Blom ASA Senior Secured Bond Issue 2012/2013 with ISIN NO is converted into equity in Blom NOK 51 million of the FRN Blom ASA Senior Bond Issue 2011/2012 with ISIN NO is converted into equity in Blom NOK 11 million of the 2 per cent Blom ASA subordinated Convertible Callable Bond Issue 2012/2017 with ISIN NO is converted into equity in Blom The Financial Restructuring was approved by the three bondholders meetings held on 19 September 2013, while the Extraordinary General Meeting in Blom held on 27 September 2013 passed the following resolutions: (i) to reduce Blom s share capital by NOK 15,163, by way of a reduction of the nominal value of the Company's shares from NOK 0.50 to NOK (ii) to increase Blom s share capital by NOK 18,025, through the issuance of 360,500,000 New Shares by converting NOK 36,050,000 (principal, including capitalised interest, and accrued, uncapitalised interest for the period up to, and including, 27 September 2013) of the 15 per cent Blom ASA Senior Secured Bond Issue 2012/2013; and (iii) to increase Blom s share capital by NOK 25,261, through the issuance of 505,228,601 New Shares by converting NOK 50,522, (principal, including capitalised interest, and accrued, uncapitalised interest for the period up to, and including, 27 September 2013) of the FRN Blom ASA Senior Bond Issue 2011/2012; and (iv) to increase Blom s share capital by NOK 5,381, through the issuance of 107,638,559 New Shares by converting NOK 10,763, (principal, including capitalised interest, and accrued, uncapitalised interest for the period up to, and including, 27 September 2013) of the 2 per cent Blom ASA subordinated Convertible Callable Bond Issue 2012/2017; and (v) subsequent combination of shares, where 100 shares with a nominal value of NOK 0.05 shall be combined to one new share with a nominal value of NOK 5.00 Prior to the combination of shares set forth in (v) above, the Company issued 15 shares to Merckx AS at a subscription price of NOK 0.05 per share to facilitate the combination of shares. The conversion of debt into New Shares in Blom was carried out at a conversion price of NOK 0.10 per share. The conversion price is equal to the offer price of the mandatory offer on all the shares of Blom by Merckx AS announced 18 September The share capital increases described above were registered with the Norwegian Register of Business Enterprises on [ ] November

21 4.2 RESOLUTION TO ISSUE THE NEW SHARES On 27 September 2013, pursuant to the Board of Directors proposal, the Extraordinary General Meeting of the Company passed the following resolutions to reduce and increase the share capital of the Company in connection with the Financial Restructuring and the conversion of debt to equity: Reduction of share capital (i) The Company's share capital shall be reduced by NOK 15,163, from NOK 16,848, to NOK 1,684, by a reduction of the nominal value of the Company's shares from NOK 0.50 to NOK (ii) The amount of the reduction shall be allocated to a fund to be used as decided by the General Meeting, cf. section 12-1 (1) no. 3 of the Public Limited Liability Companies Act. (iii) Section 4 of the Articles of Association shall be amended to reflect the share capital and nominal value of the shares after the reduction in capital. (iv) The reduction in capital is carried out upon the expiry of the period allowed for notice to creditors pursuant to section 12-6 of the Public Limited Liability Companies Act. Capital increase in connection with conversion of ISIN NO (i) The Company's share capital shall be increased by NOK 18,025,000 by the issuance of 360,500,000 new shares, each with a nominal value of NOK (ii) The new shares shall be issued at a subscription price of NOK 0.10 per share. (iii) The new shares are issued to the bondholders of the bond loan ISIN NO (iv) Subscription for the new shares shall be made in the minutes of the General Meeting. (v) Settlement for the new shares will take place by offsetting so that the principal, including capitalised interest, and accrued, uncapitalised interest for the period up to, and including, 27 September 2013 under the bond loan is used as share deposit in its entirety. The amount that is set off constitutes NOK 36,050, Such offsetting shall take place from the point in time when the new shares are subscribed for. (vi) The new shares will be entitled to dividends from the date when the capital increase is registered with the Register of Business Enterprises. (vii) Section 4 of the Articles of Association shall be amended so that it reflects the share capital and number of shares after the increase in capital. (viii) Completion of the capital increase is subject to completion of the preceding capital reduction, cf. Item 6 on the General Meeting's agenda and combination of shares, cf. Item 8 on the General Meeting's agenda. The capital increase will be completed at the time of registration of the completion of this capital reduction and combination of shares at the earliest. (ix) The Company's estimated costs in connection with the capital increase are NOK 25,000. Capital increase in connection with conversion of ISIN NO (i) The Company's share capital shall be increased by NOK 25,261, by the issuance of 505,228,601 new shares, each with a nominal value of NOK (ii) The new shares shall be issued at a subscription price of NOK 0.10 per share. (iii) The new shares are issued to the bondholders of the bond loan ISIN NO (iv) Subscription for the new shares shall be made in the minutes of the General Meeting. (v) Settlement for the new shares will take place by offsetting so that the principal, including capitalised interest, and accrued, uncapitalised interest for the period up to, and including, 27 September 2013 under the bond loan is used as share deposit in its entirety. The amount that is set off constitutes NOK 50,522, (vi) Such offsetting shall take place from the point in time when the new shares are subscribed for. (vii) The new shares will be entitled to dividends from the date when the capital increase is registered with the Register of Business Enterprises. 20

22 (viii) Section 4 of the Articles of Association shall be amended so that it reflects the share capital and number of shares after the increase in capital. (ix) Completion of the capital increase is subject to completion of the preceding capital reduction, cf. Item 6 on the General Meeting's agenda, and combination of shares, cf. Item 8 on the General Meeting's agenda. The capital increase will be completed at the time of registration of the completion of this capital reduction and combination of shares at the earliest. (x) The Company's estimated costs in connection with the capital increase are NOK 25,000. Capital increase in connection with conversion of ISIN NO (i) The Company's share capital shall be increased by 5,381, by the issuance of 107,638,559 new shares, each with a nominal value of NOK (ii) The new shares shall be issued at a subscription price of NOK 0.10 per share. (iii) The new shares are issued to the bondholders of the bond loan ISIN NO (iv) Subscription for the new shares shall be made in the minutes of the General Meeting. (v) Settlement for the new shares will take place by offsetting so that the principal, including capitalised interest, and accrued, uncapitalised interest for the period up to, and including, 27 September 2013 under the Bond Loan is used as share deposit in its entirety. The amount that is set off constitutes NOK 10,763, Such offsetting shall take place from the point in time when the new shares are subscribed for. (vi) The new shares will be entitled to dividends from the date when the capital increase is registered with the Register of Business Enterprises. (vii) Section 4 of the Articles of Association shall be amended so that it reflects the share capital and number of shares after the increase in capital. (viii) Completion of the capital increase is subject to completion of the preceding capital reduction, cf. Item 6 on the General Meeting's agenda, and combination of shares, cf. Item 8 on the General Meeting's agenda. The capital increase will be completed at the time of registration of the completion of this capital reduction and combination of shares at the earliest. (ix) The Company's estimated costs in connection with the capital increase are NOK 25,000. Consolidation of shares The Company's share capital shall be increased by NOK 0.75 from NOK 50,353, to NOK 50,353,245 by issuing 15 new shares to the Company's largest shareholder, Merckx AS, at a subscription price of NOK The pre-emptive rights of the existing shareholders shall be waived. The shares shall be subscribed for in the minutes of the General Meeting, and payment of the subscription amount shall be made to the Company's new issue account no later than the same day as the General Meeting. This share shall carry dividend rights from the date the capital increase is registered with the Register of Business Enterprises. The Company's estimated costs in connection with the capital increase are NOK 0. Thereafter, 100 shares with a nominal value of NOK 0.05 shall be combined to one new share with a nominal value of NOK The issuance of share fractions is not permitted. It is a condition for the execution of the combination that the Company transfer the number of shares that is required free of charge so that all share fractions can be rounded up to the nearest whole share. The combination shall be carried out so that the Company's shares are traded combined from the first trading day after the combination has been registered with the Register of Business Enterprises. The number of shares before the combination is 1,007,064,900, and after the combination the number of shares will be 10,070,649. The combination of shares is subject to, and shall, at the earliest, be carried out at the same time as, the execution of the capital reduction in the form of a reduction in the nominal value of the shares; cf. Item 6 on the General Meeting's agenda. The exact date for the execution of the combination shall be determined by the Board of Directors. It is proposed accordingly that article 4 of the Articles of Association be amended to reflect the number of shares and their nominal value after completion of the combination. 4.3 SHARE CAPITAL AND SHARES As of the date of this Prospectus the Company s registered share capital is NOK 50,353,245 divided into 1,007,064,900 Shares with a par value of NOK This amount includes the New Shares issued in connection with the conversion of debt to equity. All Shares in the Company, including the New Shares, have been issued in 21

23 accordance with the Norwegian Public Limited Companies Liability Act, are issued in accordance with Norwegian law, and vested with equal shareholder rights in all respects. There is only one class of Shares and all Shares in the Company have equal voting rights. After listing of the New Shares, the combination of shares will be carried out which will result in the Company having 10,070,649 shares with a par value of NOK PROCEEDS The New Shares have been issued in exchange for the conversion of NOK 36 million of the bond issue with ISIN NO , NOK 51 million of the bond issue with ISIN NO and NOK 11 million of the convertible bond issue with ISIN NO into equity. Consequently, the issuance of the New Shares gives no cash proceeds to the Company. The Company has incurred costs in relation to the Financial Restructuring and the conversion of debt to equity, as further described in Section 4.10 Expenses. 4.5 THE RIGHTS ATTACHED TO THE NEW SHARES The New Shares are ordinary shares in the Company and have a nominal value of NOK 0.05 each and have been issued electronically in registered form in accordance with the Public Limited Companies Act. The New Shares rank pari passu in all respects with the existing Shares and carry full shareholder rights in the Company from the time of registration of the share capital increase with the Norwegian Register of Business Enterprises. The New Shares are eligible for dividends. All Shares, including the New Shares, have voting rights and other rights and obligations which are standard under the Public Limited Companies Act, and are governed by Norwegian law. Please refer to Section 9 Shares and Share Capital for a more detailed description of the Shares. 4.6 VPS REGISTRATION The New Shares were registered in the Norwegian Register of Business Enterprises on [ ] November 2013 and will be registered with the VPS on [ ] November The Company s registrar in the VPS is DnB Bank ASA, Registrar Department, Stranden 21, NO-0021 Oslo, Norway. 4.7 LISTING OF THE NEW SHARES The Company s Shares are listed on Oslo Børs under ticker code BLO. The New Shares will be listed on Oslo Børs in connection with the publication of this Prospectus. This will take place as soon as this Prospectus has been published and publication is expected to take place on 20 November No Shares or any interests in Shares of the Company are listed, and no application has been filed for listing, on any other stock exchange or regulated market than Oslo Børs. 4.8 TRANSFERABILITY OF THE NEW SHARES Subject to any applicable securities laws, the New Shares will be freely transferable. 4.9 DILUTION The dilutive effect for existing shareholders in connection with the issuance of the New Shares resulting from the conversion of debt to equity is approximately 96.7% EXPENSES Costs attributable to the Financial Restructuring and the conversion of debt to equity will be borne by the Company. The total costs will amount to approximately NOK 5 million. The costs relate to fees to the Financial Supervisory Authority of Norway, Oslo Børs, fees to financial and legal advisors and costs to the Company s auditor INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE LISTING The Manager or its affiliates have provided from time to time, and may provide in the future, investment and commercial banking services to the Company and its affiliates in the ordinary course of business, for which they may have received and may continue to receive customary fees and commissions. The Manager does not have a specific interest in the conversion of debt to equity and subsequent the listing of the New Shares GOVERNING LAW AND JURISDICTION This Prospectus shall be governed by and construed in accordance with Norwegian law. The New Shares will be issued pursuant to the Norwegian Public Limited Companies Act. Any dispute arising out of, or in connection with, this Prospectus shall be subject to the exclusive jurisdiction of the courts of Norway, with Oslo District Court as legal venue. 22

24 4.13 ADVISORS The financial advisor to the Company in connection with the Financial Restructuring and Manager for the Listing of the New Shares is ABG Sundal Collier Norge ASA. Address: Munkedamsveien 45 Vika Atrium, 0250 Oslo, Norway. Advokatfirmaet Wiersholm AS has acted as legal advisor to the Company. Address: Ruseløkkveien 26, 0251 Oslo, Norway. 23

25 5 PRESENTATION OF THE COMPANY 5.1 OVERVIEW Blom is a public limited liability company, organised and existing under the laws of Norway pursuant to the Public Limited Companies Act. Blom s registered office is in the municipality of Oslo, Norway and its organisation number in the Norwegian Register of Business Enterprises is The Company was incorporated on 12 September The Company s Shares are listed on the Oslo Stock Exchange and are registered in VPS under ISIN NO The Company s register of shareholders in VPS is administrated by DNB Bank ASA, Registrars Department, 0021 Oslo. The Group has approximately 557 employees as of the date of this Prospectus. Registered office: Drammensveien 165, NO-0277 Oslo, Norway Telephone: Fax : Website: HISTORICAL BACKGROUND AND COMPANY DEVELOPMENT The most significant milestones in the development of the Company since 1 January 1992 are summarised below. Year Significant events 1992 Blom signs a contract with the mapping authority of Indonesia valued at NOK 300 million for land surveying 1995 Blom signs a contract with the mapping authority of Indonesia valued at NOK 816 million for marine surveying 1997 Merger between Blom and the credit information company Creditinform AS 1998 Blom establishes BlomInfo AS in Denmark to serve Denmark, the EU market and Eastern Europe 2000 The business operation of Creditinform AS was sold for NOK 227 million Blom establishes a new map production unit in Bandung Indonesia 2001 Blom signs a framework contract with the Norwegian Hydrografic Service for maritime mapping of the Norwegian coastline over a period for 5 years 2002 A decision was made to write down the company s share capital and raise new capital through a rights issue of NOK 10 million 2003 Blom incurred substantial losses for the third year in a row. The results were affected by significant restructuring costs and write downs 2004 Gunnar Hirsti becomes Chairman of the Board and Dirk Blaauw becomes CEO Acquisition of three geographic information companies; Blom Kartta Oy in Finland, Blom Geomatics AS in Norway and Blom Romania SRL in Romania 2005 Blom acquires four geographic information companies; Blom Deutschland GbmH in Germany, Blom Aerofilms Ltd in UK, Blom Sweden AB and Blom CGR in Italy Blom enters into an exclusive agreement with Pictometry for the rights for the Pictometry technology for 23 countries in Europe 2006 Blom acquires a geographic information company; Blom Sistemas Geoespaciales SLU operating in Spain and Portugal A five year agreement for the use of Pictometry data in Europe is entered into with a major international company Blom acquires ScanRope AS, a company specialised in design, production and marketing of mooring lines 2007 Demerger of Offshore Technology Division into a separate listed company, Scan Subsea ASA where Blom owned 36.7% of the shares Sale of Scan Subsea ASA to Parker Hannifin. Recorded gain on sale was NOK 369 million for Blom 2008 Blom divided into two business areas, Blom Geo Engineering Services (BGES) and Blom Information Services (BIS) Launch of a unique geo server, Blom URBEX, for online distribution of and access to Blom s database Acquisition of 20% of the navigation company NDrive Navigation Systems S.A Declining revenues due to financial turmoil in core markets Blom issues 3-year 300 million NOK bond 2010 Deteriorating financial macro conditions causes reduced demand for Blom s core products Legal dispute with previous technology provider, Pictometry Significant write-downs of non-current assets 2011 Blom raises NOK 63 million through a rights issue and issues a 1-year 50 million NOK bond Macro-economic conditions continue to be challenging, causing further deterioration of revenue and profit, the company ending the year with negative equity Blom executes cost-cutting to regain profitability and align cost base 24

26 2012 Blom divested its Danish subsidiary Conversion of bond debt of NOK 312 million into equity In spite of growth in sales turnover and somewhat improved profitability combined with continued reduction of its cost base in 2012, the company's results are not satisfactory 2013 Blom divested its Italian subsidiary Blom's subsidiary Blom Data AS divests intellectual property rights related to BlomURBEX to Hexagon AB and the purchase price is settled by way of set off. The parties enter into a perpetual, royalty-free and non-exclusive licence agreement which grants Blom Data AS the right to continue to use the database and software in its operations. On 19. September 2013 Merckx AS launched a mandatory offer to purchase all shares in Blom On 19 September 2013 the bondholder meetings voted in favour of converting all outstanding bond debt to equity in the Company. The Extraordinary Meeting of Blom resolved the same on 27. September LEGAL STRUCTURE Blom is the parent company of the Group. Blom is a holding company and not an operative company. The following companies are the main subsidiaries directly owned by Blom: Name of subsidiary Blom Data AS, Oslo (100%) Blom Kartta Oy, Finland (100%) Blom Geomatics AS, Oslo (100%) Blom Romania S.R.L, Romania (100%) PT. Blom Nusantara, Indonesia (90%) Blom Deutschland GmbH, Germany (100%) Blom Aerofilms Ltd, England (100%) Blom Sweden AB, Sweden (100%) Blom Sistemas Geoespaciales S.L.U, Spain (100%) Company Address Drammensveien 165, P.O.Box 34 Skoyen, NO-0212 Oslo, Norway Blom Kartta Oy, Pasilanraitio 5, FI Helsinki, Finland Drammensveien 165, P.O.Box 34 Skoyen, NO-0212 Oslo, Norway Str. I.H. Radulescu Nr. 3-5, Mun. Targoviste, Jud. Dambovita, Romania, Cod postal Jl. Cicendo No. 41 Bandung 40171, West Java - Indonesia Oskar-Frech-Straße 15, Schorndorf, Germany Cheddar Business Park, Wedmore Road, Cheddar, Somerset, BS27 3EB, UK Hammarbacken 6B, Sollentuna, Sweden c/ Zurbano, 46, Madrid, Spain 5.4 BUSINESS OVERVIEW Introduction Blom estimates that it is one of Europe s leading providers of geospatial products, services and solutions. Blom s customers range from public administrations and enterprises to consumers. The Company provides a wide variety of mapping and geographic services, meeting local, regional and international standards and specifications, as well as custom solutions for specific customer demand. Blom s strength lies in the expertise, innovative capability and the technical know-how of its people Vision Blom's ambition is to be a market leader in geographic information through innovation, technology and competence. Blom helps its customers deliver the best possible services that benefit people where they live, work and travel Goals Blom aims to be an established, recognised international company that works continuously on innovation and development to enhance the Company s assets. Blom will strengthen shareholder value through achieving profitable growth by the development of attractive solutions, based on full exploitation of the Company s resources and competence. The Company will produce and supply geographic information and geographic information systems for the public and private markets. The Company's primary markets are in Europe, but defined projects will be carried out worldwide. Growth and increased profitability will be accomplished through organic growth, expansion in existing and new markets, acquisitions, and structural measures. Profitability will be continuously improved through the development and sale of innovative and scalable solutions, as well as continuous efficiency improvement measures. 25

27 The Group will be organised at all times so that the synergy potential can be exploited for increased productivity and cooperation between the companies. The business will be managed in an ethically and socially responsible manner. The Company will have a good reputation with a strong environmental and well-defined profile Strategy Important measures for achieving the goals are as follows: Market Blom aims to continuously develop its existing markets and customers. Nearness and a close dialogue with customers are necessary to ensure growth and customer satisfaction. Blom seeks continuously to develop its sales and marketing organization so that it can meet the needs of the customers in an efficient manner. Blom works actively in markets through alliance partners. Strategic alliance building is essential for the development of markets and customers. Blom wins contracts and market shares through a good reputation and by continuously delivering high quality products and services with a high level of precision. The Company actively seeks to maintain its strong position. In addition, the Company will continue to ensure expansion through the development of innovative and unique products and services Acquisitions and structural changes The Company will continue to work actively to increase growth and shareholder value through structural changes. The goal is to gain access to new markets, new technology and to supplement the range of products. A continuous development of the Company s market position is fundamental to the execution of structural changes Competence and innovation Knowledge, competence and experience are some of Blom s most important competitive advantages. Blom attaches importance to the development of competence by offering its employees attractive and challenging tasks. The Company continuously develops its products, services and databases through the competence, experience and innovative capacity of its employees Product and technology development The development of technology and innovation are vital for Blom's product strategy. The Company invests a significant portion its sales revenue annually in the development of products, services and databases. Product development is financed both by the Company and customers, and it will always be the needs of the market that determine our priorities and investments. Blom's product development entails the use of new technology for the collection, processing and distribution of geographic information, establishment of new databases and adding value to the data Social responsibility and ethics The Group actively seeks to follow the business ethical guidelines associated with social responsibility and the external environment. These are fundamental elements for the development of a sustainable and profitable business culture where the needs of the employees are also taken into consideration Financial strategy The Company attaches importance to solid and profitable growth that provides financial freedom. The financing of growth and structural changes shall be based primarily on the Company s earnings and the liberation of capital. The company strives to observe the accounting guidelines in all the countries where it operates, and it is a goal to continuously improve predictability and reduce risk Markets Blom estimates that it is one of Europe's leading providers of geographic information. The Company's customers range from public authorities and local governments to private enterprises. The Company supplies a wide range of mapping and geographic services that satisfy local, regional and international standards and specifications. Blom also delivers custom solutions for specific purposes. Blom s strength lies in the competence of its 26

28 employees, as well as the innovative capability and the technical expertise of the Company. Blom delivers the following products and services: Maps and 3D modelling LiDAR/Laser scanning Aerial photography GIS services Online mapping services (BlomURBEX ) Blom covers a range of capabilities based on aerial photography and laser scanning. Blom s engineers and technical experts produce a wide range of geographic models for use in local and central government administration, public works, environmental monitoring and earth observation. Modern use of geographic information supports our customers in their management of continuous change, dynamic planning and the development of cities, landscapes and coastal zones. Blom focuses on the following main market segments: Defence & Security Resources & Environment Government & Public Administration Utilities & Infrastructure Web & Mobile Solutions Defence & Security Defence organisations are major users of digital maps and are, as such, an important market segment for Blom. Blom supplies mapping and modelling services to several NATO countries. Factors such as knowledge of the local area, representation of sensitive information, events management and the co-ordination of regional service operators are each fundamentally important to the management of community security. Blom s libraries with geographic data, now available to many mobile devices, enable the implementation of strategic dashboards to support mission planning, monitoring of dynamics and the co-ordination of territory monitoring. All such monitoring can be performed with both static and mobile objects. Blom s libraries encompass complete countries and cover vast urban areas, incorporating orthophotos, vertical and oblique perspectives, and a wide range of resolution options, typically between 2 cm and 50 cm. Blom's emergency and security solutions include oblique imagery to help the operators at emergency call centres, such as 112. The operators use the BlomOBLIQUE product to navigate and view, which enhances their decision making in critical situations. Blom s oblique imagery is integrated into the emergency call centre applications, and it instantly and automatically provides visualisation and measurement information on the location from where an emergency call is received. This helps the emergency dispatcher to better assess the situation and direct emergency vehicles and rescue workers to the scene of an incident. Oblique imagery can immediately identify the width of a road, allowing the responders to know if certain emergency vehicles can access this road before they reach the destination, how long a ladder should be to reach the top of a building and how manoeuvrable alternative access routes are to a specific location. Perhaps more importantly is the fact that oblique imagery provides the opportunity to view an emergency location in daylight hours, while the actual emergency might occur at night or be covered by smoke. This information is vital to any emergency unit to provide efficiency and safety aides. Blom is interested in supporting all the European 112 emergency Services Resources & Environment Blom s remote sensing and modelling capabilities are used to monitor and analyse the impact of environmental changes, such as flooding and soil erosion, on the landscape. The growth pattern of vegetation can also be monitored and analysed to assess growth in forestry and agriculture. Blom generates information databases compiled from a combination of aerial photography, hyper spectral scanning and bathymetric laser scanning to provide data on land and offshore terrain, land coverage, snow volumes, vegetation, etc. Flood modelling systems and forestry management tools are examples of high value services using Blom s models and information databases. Environmental agencies and private companies, such as forestry developers, use Blom's information database in their information systems and commercial and administrative decision support applications Government & Public Administration Blom provides high quality engineering, consultancy services and contracted mapping and modelling services for land and property administration. Examples of the services offered include the preparation of high quality 27

29 maps, road maps and three-dimensional models, cadastral maps and real estate property databases. Cadastral mapping provides the basis for efficient real estate management and is a fundamental requirement for economic development and growth. The services have been provided to projects in over 30 countries in Europe, Central Asia, Latin America, the Caribbean, Africa and the Far East. In addition, Blom has extensive experience in carrying out projects financed by various development funds, of which the primary objective is poverty alleviation in developing countries. Blom has an extensive track record with projects funded through various means, such as the World Bank, EU, Asian Development Bank, African Development Bank, etc., and a large number of national aid and donor organisations Utilities & Infrastructure Effective urban community management is reliant on accurate data from a long list of sources. Blom presents such data as scalable, high-resolution maps. Blom offers a range of remote aerial survey sensor techniques for corridor mapping that supports monitoring and maintenance of critical infrastructure, such as gas pipelines, power transmission lines, railroads, highways and airports. These techniques include the use of helicopters for laser scanning and aerial photography, which provides very high level of accuracy and detail. Mobile phone communication requires network infrastructure investments. Such investments are critical to a successful rollout and optimisation. To make geographic analyses for planning, maintenance and optimisation of radio networks, Blom offers digital surface model (DSM) databases. The models are created using laser scanning or aerial photography and the necessary post-processing. Blom DSM databases cover several European countries. When combined with Blom's high resolution imagery dataset, they are a suitable tool for the simulation and planning of antenna positioning for wireless telecommunications. Urban planning and public works carried out by government agencies, utilities and engineering and construction companies have now become the most important industries to take advantage of Blom s oblique imagery database. The imagery allows the users to operate more efficiently, and the geo-referenced data helps achieve a greater level of accuracy. Blom s database of oblique imagery covers 80 per cent of the European population and is updated frequently. As a result, urban planners, such as government agencies, are able to achieve accurate visual information on an area and relate this to the impact of public works. Utility companies strive for more efficiency when planning their development of urban networks or maintenance by using as detailed information as possible. Including Blom s oblique images as part of the planning provides invaluable information that would otherwise be impossible to obtain without actually being physically present at the location Web & Mobile Solutions Blom delivers services and solutions for various web portals that sell their solutions to the public sector, businesses and consumers. This includes maps, photos of roads and cities, and three-dimensional models. Blom offers a number of techniques for mobile, aerial and helicopter-based solutions. Blom provides unique content and online services for use in geosearch services, online maps and directory services. Blom s imagery and 3D models enable service providers to provide an improved, realistic online experience for users. Customers desire to increase traffic on their websites by offering unique content through offering imagery and models of high quality from Blom. Real estate companies need to present properties in the best possible light to potential customers and partners. Blom offers a unique way to showcase the attributes of the properties offered. In addition to providing high resolution oblique imagery and 3D models of each property or location, Blom provides tool functionality that allows users to measure building heights, surface areas or distances to the nearest park, train station, school, etc. Blom offers substantial value for money to players in the real estate sector, since the information about a property and its surroundings is more extensive compared with other traditional data libraries. 3D social platforms, where the users try to recreate a virtual reality for meeting people with avatar images, is an example of what internet users are demanding today; a virtual environment where users can talk and socialise with people in a specific place or city. Interactive tourist guides, where the user can travel virtually to a destination and see if the location is what they expect, or find distances between interesting monuments, hotels, etc., are becoming increasingly expected by modern tourist information guides, such as the online Travel Guide from the Repsol Petrol Company. Blom provides the information for developing these experiences, offering unique aerial images and 3D models covering cities throughout Europe, allowing users to easily zoom to a level of detail that has not been previously available in such a scale. Users can now see detailed characteristics in building façades, fences and other features on the ground. The telecom industry has seen a tremendous growth of smart phones with GPS capabilities, which has resulted in this industry focusing on Location Based Services (LBS). Blom s platform for LBS enables users to access the data in BlomURBEX online from any type of device and stream or download the data and images that are relevant to the location of the user. For example, the user can download lists of nearby bus stops, hotels, post offices or parking facilities, and then find them immediately in the real world. Other detailed information can 28

30 also be provided, such as how many hotel rooms or parking spaces are available in the users immediate vicinity in real time BlomURBEX Blom is developing and offering new products and services through the BlomURBEX database based on Blom's content, as well as the content and services that are offered by our partner network. Customers desire access to geographic information through an online service. The BlomURBEX platform can provide both offline and online services. BlomURBEX has a set of tools to make all content available via different platforms and applications. These tools support reliable, quick and easy integration with the customers end-user applications, enabling direct access to the vast amount of information and data models in BlomURBEX. The BlomURBEX tools support reliable applications with high performance for the public sector and corporate markets, as well as the high volume consumer market, for navigation and location based services. Integration tools, such as plug-ins, development toolkits and programming interfaces, are available to all software developers and system integrators. BlomURBEX is a modern, future-oriented platform to serve growing markets in the areas of defence & security (including private security), banking, finance & insurance, media, telecom, utilities, and transport & logistics. 5.5 PROPERTY AND EQUIPMENT The Group s main tangible fixed assets are 5 owned aircrafts: 5 Piper PA Navajo Other material equipment includes digital cameras and sensors. The Group s office facilities are mainly leased and are not considered to be material. 5.6 INTELLECTUAL PROPERTY RIGHTS, PATENTS AND LICENCES The Group has several licenses to fly and capture aerial photography and doing other type of airborne surveys. These permits and licenses are handled by each local Blom subsidiary and are subject to approval from local authorities. The Group is not dependent on these agreements to conduct its business. There are no other material patents, licenses, or intellectual property rights which the Group depends on for its daily operations. 5.7 RESEARCH AND DEVELOPMENT Development expenditures that meet the criteria for recognition, i.e. that it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost can be measured reliably, are capitalised. The amounts are not significant. The assets are amortised over their expected useful life once the asset is available for use. Costs incurred during the research stage of a project, as well as maintenance and training costs are expensed as incurred. Development costs that do not meet the criteria of capitalisation are expensed as incurred. 5.8 CONTRACTS OF SIGNIFICANT IMPORTANCE TO THE COMPANY S BUSINESS On 27 September 2013 Blom's subsidiary entered into an agreement with Hexagon AB under which Hexagon AB acquired databases, software and intellectual property rights related to BlomURBEX. At the same time the parties entered into a license agreement which gives Blom Data AS a perpetual, royalty free and non-exclusive licence to use the database and software in its operations. Blom Data AS will due to the license agreement not have any restriction in its operation following the divestment of assets and thereby be able to serve its existing and new customers in the same manner as previously. The purchase price amounted to NOK 19,927,500 and was settled in the way that Hexagon AB forgave the principal of the short term liquidity loan given to Blom Data AS, amounting to NOK 19,927, TREND INFORMATION There have not been any recent trends or changes in the operating environment for the Group since 1 January

31 6 MARKET ANALYSIS 6.1 DEFINITION OF THE MARKET The Group is addressing markets and segments that have a need for managing, analysing, producing or exploiting geographical information. The markets continuously evolve due to an on-going digitalization trend combined with an increasing use of new technology 6.2 MARKET POSITION Industry surveys expect growth in the geospatial market (see 6.3 below) in the years to come for both the consumer- and professional market. Blom has adopted different business models for targeting these differentiated market segments The consumer market New technology and new products will enable (available and developed for) the consumer market with advanced geographical information for free through the global players, such as Google, Apple, TomTom and others.(are expected to be offered at low prices from the large global players such as Google, Apple, TomTom and others.) Blom's position in this market is as a provider of geographical information to these global players The professional market The professional market demands high-quality, usually tailor-made / unique, solutions frequently integrated in advanced GIS solutions. These systems are applied by the clients to enhance geographical services in order to improve efficiency, work faster and/or smarter. (offered and to increase the overall efficiency). Likely users are yellow pages, municipalities for urban planning, emergency units for the police, powerline companies, railways, road authorities (with maintenance planning for their high-voltage power lines) and others. In this segment Blom has the ability and technology to develop, implement and maintain unique solutions directly to the end users 6.3 MARKET OVERVIEW The global geospatial market has changed dramatically over the last few years. Geographical data that used to be paid data is now made available for free based on new business models. The industry has experienced a transformation which has had huge impacts for all players in the IT and technology industry. Key elements are: Rapid growth of smartphones and tablets has resulted in a global build out of broadband and access to Wi-Fi zones. People are always connected. Apple, Samsung, HTC, Nokia etc. have realized the importance of access to quality content, where geographical information is key Starting from basis maps, consumers have been given access to increasingly advanced information (i.e. 2D and 3D city models) Reduced airfare tickets during the last years have resulted in an huge growth in leisure travel around the world, where use of advanced geographical information is key (i.e. point of interest, hotel locations) New business models from Google, Yahoo & Apple have dramatically changed the game and made geographical information available for free to consumers Use of advanced GIS solutions for professionals have experienced growth worldwide (i.e. growth in urban cities, climate changes, flooding s) According to a report by The Boston Consulting Group 1, within the U.S. economy alone, the geospatial services industry is estimated to employ more than 500,000 people, generate $75 billion in annual revenues, and have an overall economic impact estimated at $1.6 trillion annually in revenues. Oxera reports 2 similar impact for the global geospatial services industry, which is estimated to generate $150-$270 billion annually in revenues. The market is also expected to continue growing in coming years, 30% per year globally according to Oxera and 10% per year in the U.S. according to The Boston Consulting Group. The overall diversity and growing importance of geospatial products in our society is the foundation for this continued growth. Growth within the market has not been equally divided between the different client groups (B2G, B2B, B2C.) This trend is predicted to widen further as B2G spending continues to reduce:

32 Revenues (Indicative) e2007: $6-7bn* growth +9% /year GIS Software $ ~2 bn +9% GeoInfo Services $ ~ 3bn +9% Air Image $1.0 /1.2 bn +7% Sat Image* $ 0.6 bn +15% Revenues Market Access End Users** e2020 : ~$ 20bn GIS Software $~ 6 bn GeoInfo Services $~ 9 bn Air Image $ ~2 bn Sat Image* $ ~3 bn B2G, B2B Sales of : data (raw or processed) : image license, sat telemetry,. GeoInfo solution B2B2C Web actors (e.g. geoportails, PND providers 1996 breakdown 85% Governmental B2B 15% Governmental B2B 20% 5% B2C 75% E2007 breakdown Overall market $6-7 bn is expected to grow at ~ +9% Governmental still dominates but Commercial (B2B, B2C) growing faster These relatively dramatic changes in the sector brought forward by the emergence of players such as Google, Microsoft and Apple, have fundamentally changed the dynamics of the market; and market needs - shown below: Evolved market Traditional market Blurred boundaries Web actors Mobile GIS market Emphasis placed on data aesthetics data integrity not as demanding as in traditional market Characterised by need for high quality data conforming accepted standards on attributes such as accuracy Time In the market place, a large amount of money is today being spent in these markets: Natural resources Utilities and Infrastructure Social media Defence, Intelligence driven market segments Proportionally, the amounts that the players in these market segments spend on geospatial information albeit substantial are relatively small with respect to their total business. In the rest of the market, the spending is often larger with respect to the business like e.g. local government. The overall market place is changing at a rapid pace: Demand for more accurate geographical information Geographical information is becoming a common component of applications in consumer & business IT, fuelled by the mobile Smart Phone and tablets growth. Better resolution, more frequent update and higher quality images Easy access to data, mainly online However, growth is happening where there is an emphasis on meeting specific user needs, as the shift from providing information to providing intelligence and where there is a proven saving/improvement in operational efficiency e.g. enhanced asset management. This requires a combination of vertical market integration and core GI skills. Players need to understand and manage both these two dimensions. The trend during the last few years has been to deliver geospatial data online through geo servers. Large global players with large volumes have taken a dominant position in this space. 31

33 Through BlomData, Blom's vision has been to give professional players access to geospatial data in the shape of a service. Blom is applying this technology to services and solutions within five industry segments. These are: Defence & Security Resources & Environment Government & Public Admin Utilities & Infrastructure Web & Mobility Solutions Below is a more detailed description of each market segment: Defence & Security Market Description Comprised of both government and private actors: 1. Government actors: mainly represented by the Ministry of Defence, Emergency Services, Police and Security Services. At international level, projects range from NATO led military mapping projects like Multinational Geospatial Co-production Program (MGCP), to EU security programs like FRONTEX (Frontières extérieures; Judicial name: European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union.). On a national level, Police and Emergency Services (i.e. Public Safety or Blue Light markets) are also potential customers for geospatial data although they frequently are offered access to the different national datasets provided by the national mapping agencies (eg. Ordnance Survey in the UK or Statens Kartverk in Norway). There is a market for non-standard mapping products like oblique imagery, as well as for very high precision aerial imagery and other solutions that the mapping agencies normally don t cater to. Geospatial data is used for navigation, mission training, training & simulation, intelligence, command & control solutions, etc. 2. Private actors: fundamentally defence contractors and private security companies who need more than just base cartography, including sometimes more complex services with LBS, tracking and very high resolution map data for event management (e.g. Olympics), command & control platforms and other systems. One of the key characteristics of this market segment is that suppliers are normally required to be residents of the country they want to do business in, on some occasions with security clearance and in every case with a strong, local representation of people who speak the local language. Most governmental customers tend to select and / or favour companies from their own country or with a strong local partner Customers Defence Industry: Blom has been a trusted supplier to this segment for many years, with multiple clients across Europe. These include multi-year MGCP NATO standard mapping contracts in France, Spain and UK. Blom also has specific, classified Defence contracts in the UK and Germany. The customers in this industry are fundamentally the different MoD s of the countries where Blom has a strong local presence, but also the major defence contractors like Lockheed Martin, Raytheon, EADS and others. Command & Control solutions, and via partnership with companies like FAST Protect AG from Switzerland, Blom s geospatial data libraries (including 3D) provide the real-world backdrop and as is view of the area of interest. Emergency Call Centres (such as 112), Blom s oblique imagery already plays a crucial part in helping operators navigate and view the sites of incidence in critical situations. Blom s oblique imagery is typically integrated into the emergency dispatch application to instantly provide the operator with visual and measurement information. Since the 112 centres are, by definition, centralised services there are normally not more than 1-4 possible clients in each country. Almost without exceptions, the 112 centres in Europe are public entities. 32

34 6.3.2 Resources & Environment Market Description The R&E market segment is made up of two main groups of customers: Oil, Gas and Mineral (OGM) companies (mostly private) Environmental agencies (also incl. agriculture, forestry), more projects on local/regional/national basis (mostly public) These are very different market sectors with different market needs. OGM companies are predominantly private entities with worldwide activities, as the exploitation of natural resources in an efficient manner requires the synergies of a large corporation with many extraction sites spread across the globe. Demand for geospatial data is high, but so is also the need to have access to the data on multiple devices and from many different sites. High precision data services are needed for specific installations and sites, but lower resolution wide area coverage is also important for assessing things like road networks and other logistical needs. Like most private enterprises, this market is quick to pick up on new technologies and ways to make their business more efficient. Environmental agencies are normally public in nature, and managed through one or several government ministries or programs. The type of services required are related to land use, flooding analysis, crops & harvesting monitoring, etc. The market is very conservative, but a gradual shift has been observed in later years to accept the serving of data in on-line environments. The Light Detection And Ranging (LIDAR) technology provides a cost efficient and accurate forest inventory services, but the use of these technologies also place high demands on data accessibility and integration with industry standard GIS and other tools Customers In the OGM market segment, the biggest players are: Global Oil Companies: Exxon/Mobil, Shell, BP, Repsol, etc. National Oil Companies: Petrobras, Saudi Arabian Oil Company, etc. Independent Groups: Tullow, Cairn Energy, etc. Major suppliers: Schlumberger, Fugro, etc. Minerals: RioTinto, Glencore, Xstrata, BHP, Anglo American, Vale, etc. Forestry owners Forestry (inventory and engineering) companies in the Western world have all adopted LiDAR based inventory processes that enable them to accurately plan and forecast yield for their plantations. Big players in the European market include companies like Stora Enso, MoDo, etc. For monitoring and analysis of growth patterns on vegetation and the impact environmental changes such as flooding and soil erosion have on the landscape, the customer base is largely public entities like the Ministry of Environment or Agriculture in each country Trends EU Directives issued from Brussels - are generating lots of business opportunities within areas such as environmental monitoring, flooding analysis and disaster prevention, agriculture, health and safety, etc Government & Public Administration Market Description The G&PA market is basically split into three sub-categories: National/Federal Regional/Province/State Local Public administrations across Europe are traditionally some of the biggest consumers of geospatial data, with the national mapping agencies (or IGN s) taking the lead. Local governments tend to use the data for urban planning and zoning, as well as for cadastral purposes. 33

35 There are European directives like INSPIRE who encourages the publishing of publicly held map and geospatial data, yet many entities are still struggling with deploying the necessary platforms. By providing outsourced solutions or platforms that enable these customers to comply with INSPIRE but also achieve a more costefficient and better performing service for internal use, new business can be generated Customers Potential customers include every municipal, regional or national government with responsibilities for cadastral mapping (for tax collection), urban planning and other core competences for the public administration. Traditional core services such as aerial or topographical survey have more recently been packaged together with new solutions such as instant access to hosted services of geographical data, fully compatible with the INSPIRE directive. These services are the best basis for building a SDI, from local administration to government size SDI s. The services have been provided to projects in over 30 countries in Europe, Central Asia, Latin America, the Caribbean, Africa and the Far East. Customers include Government of Cameroon, Cadastral Agency of Panama and others Trends Public Administrative mapping markets in south- and mid-europe have been hard hit by the recession in Europe, whilst customers in north Europe have had a more stable demand and it is unlikely that it will recover substantially over the next few years. There will always be a need for geospatial data for this market, but the demand is generally decreasing. New low cost entrants (i.e. many from Eastern Europe) have made the competitive situation demanding for companies like Blom Utilities & Infrastructure Market Description The utility market is a diverse, often highly regulated business. The market can be split into the following subsegments: Power Transmission Water & Waste Water Gas Electricity distribution Telecom These segments are highly dependent on the availability of accurate, up-to-date geospatial content in order to cater to its needs for Operations & Maintenance, Network Planning and other core functional areas. The market in the Western world is dominated by large, international private companies, on some occasions part-owned by the government but by and large run as private businesses. Utility companies are adopting new technologies as they see the benefits in form of more accurate data, better integration to GIS systems and CAD systems etc. Utility companies operate in a more non-cyclical, captive market which provides stable revenue and are thus willing to invest in technology and content that allows them to be more competitive. In a similar way, the infrastructure business is characterised by both large, private multinational companies as well as governmental bodies responsible for infrastructure projects. The construction of roads, railways and other similar projects require the use of high-precisions geospatial data and the whole industry is rapidly moving towards (Building Information Model (BIM) where all modelling is done in 3D environments. In the telecom space, the need for geospatial data and solutions is divided between mobile carriers and fixed line carriers, with focus on data and services suitable for network deployment & maintenance activities Customers In the utility segment, there are several large international players like E.ON, Enel, Iberdrola, GDF, EDF, EdP, etc. followed by the 2nd tier companies who normally act on a local market (Vattenfall, Statnett, Statkraft, Fingrid etc.). 34

36 The utility companies are moving into an outsourced service model for their geospatial data needs. In addition to supplying geospatial data, customers demand higher value services like business specific data analysis. The challenge is to ensure that the data is distributed and used throughout the organization including the results of the analysis, all presented in a user friendly way or integrated directly with the customers own applications. The Infrastructure market has several international players like Atkins, AHC, OHL, FCC and others. The infrastructure companies need high-precision geospatial data for the planning and execution of their projects, including terrestrial LiDAR scanning, very high resolution aerial imagery, etc. The trend is also to outsource services and there is demand for increased accessibility of data in the field via on-line or embedded solutions. This space are dominated by the large consulting companies, but niche players as Blom has been able to grab market shares due to special competence. Mobile phone communication requires network infrastructure investments that are critical to successful roll-out and optimization. To make geographic analyses for planning, maintenance and optimization of radio networks customers require digital surface model (DSM) databases. Coupled with high-resolution imagery datasets and on-line services, they provide a very powerful combination for the simulation and planning of antenna positioning for wireless telecommunications. Customers for these services include companies like Vodafone or TDC. Fixed line telecom companies may benefit from oblique imagery when planning new network deployment, deciding optimal access routes and visualising possible impediments before work commences. Potential customers for these services and products include companies like Deutsche Telekom, BT, Telekom Italia, Telefónica, Telia and others. Most of the work within this segment is project oriented, permitting a partnership relationship, with repetitive orders for updates, maintenance etc Web & Mobility Solutions Market Description With the rise of on-line mapping portals for the consumer market, the use of geospatial data is now ubiquitous and present in applications ranging from web portals to Smart Phone applications. The market is dominated by a handful of global players, and a slightly more numerous amount of 2nd and 3rd tier regional and even national players. The directory services industry is converging towards a few main suppliers like Google or Bing, but the second tier players are in dire need of content and services to help differentiate their offering and carve themselves a space on the market. Another important market segment is Navigation and LBS, where the clear trend is towards 3D and on-line services on the one hand, and Smart Phones instead of PND s on the other. The ability to embed 3D datasets on portable devices is very important for this market, and the key lies within the mix of visual quality and size of the datasets Customers Customers increasingly want access to data and data models as an online service. Customers for these services vary, and here are the three major categories of clients in this market segment: Directory services/search engines/web portals: the big players Google and Bing dominate the supply of geospatial data to most of the bigger customers. Medium sized, regional and local customers like 1881.no, Map and Route, Guia Repsol, Via Michelin and Eniro all are customers which could be offered a more differentiated, customised offering of geospatial data services. Navigation companies: there are three companies supplying world-wide coverage of navigable maps: TomTom (owner of previous Teleatlas) and NOKIA (owner of previous Navteq). Higher up in the value chain, we find the device and navigation software manufacturers who are also potential customers. Mobile application providers: The market for mobile application providers is more fragmented, with a very large number of small players and a few very big ones, normally linked to social media platforms & services. Customers include companies like Nav N Go, N-Drive, Sygic, etc. 35

37 Trends New markets for on-line services of geospatial content are appearing, as has been the case in the US with aerial measurement reports for insurance, roof contracting industries. This will help drive growth. Smartphone market with LBS is driving demand for high quality data, be it maps, 3D or imagery. Big volume, low margins and consolidating market with few players left. OS is down to three: ios, Android and Win7 Mobile. Customer is this segment look for world-wide suppliers, not regional players. 6.4 COMPETITIVE ANALYSIS On-line imagery services Market The two big players in the on-line mapping services segment are Bing and Google. Bing is currently a client of Blom with access to 90%+ of our current European oblique library. In addition to the pure imagery, Bing also supplies geocoding, routing and map services. More recently, they are also adding street view imagery from their collaboration with Nokia/Navteq and their True Car capturing program. Global coverage, and focus on B2C, B2B2C with directory services and web portals as their main customer base. Google is by far the biggest supplier of on-line imagery and map services today. Principal strength is their combination of global coverage, multiple datasets (very little oblique imagery, but working to increase coverage) and seamless integration of all content into a number of different platforms, among them their own trademark Android mobile OS. Like Bing, focused mainly on the B2C, B2B2C markets but with an increasing focus on B2B, offering complete imagery & map services to be integrated with customer data and hosted on-site. icubed Owned by Astrium, icubed is a middle tier player, their Data Doors solution is standard supplier for ArcGIS On-Line and also used by TomTom to supply mapping services to the core mapping division. AeroGrid part of Aerodata and hence the Pasco Group, AeroGrid is offering a simple WMS service with high-res ortho imagery (no oblique imagery) as a pure B2B service, aimed at European customers with need for high quality imagery data. The service is costly, but the coverage offered is very ample due to agreements with public and private suppliers across Europe to get access to the best, most up-to-date coverage. Very much a niche player and wants to control the B2B market (Engineering, Utilities etc). Open Street Maps (OSM) OSM is a non-profit initiative that aims to supply all kinds of vector maps and imagery as a free service for non-commercial use. The quality of the map data varies greatly across the world, and although there is a lot of user generated content, the bulk of the coverage is public map data that is freely made available by the national IGN s. Lately, aerial imagery is also supplied by the IGN s and made available on OSM. The user license is very strict and specifically states that if their data is used as a component of an application, the entire application must be released as freeware and made available without cost. No service levels are guaranteed Oblique imagery capture Market There are several competitors for the acquisition and production of oblique imagery: Geodis, Czech Rep AeroWest, Germany COWI, Denmark Stereocarto, Spain Geofoto, Croacia Fugro, The Netherlands Terratec, Norway Getmapping, UK Some of these competitors already have geoserver platforms capable of managing oblique imagery and more are very likely under development. 36

38 D modelling, on-line services (large volumes) Market C3 Technologies (purchased by Apple), has yet to reveal its plans for the future, but it is highly likely that they will initiate a very aggressive capture program to build a world-wide coverage from their current somewhat scattered coverage. However, Apple will use all data internally and as such C3 is not an external competitor to Blom. Google employs mainly crowd sourced 3D in conjunction with city models supplied by local companies across the globe. Google also offers a simplified 3D extracted from vector map sources (their own!) to create worldwide quasi-lod1 models to be used in Android navigation apps. Google has developed pilot industry verticals, but it seems the company will primarily focus the consumer market with advertisement. Computamaps (South African/French) is focused on delivering 3D models for mainly the telecom industry. They employ a range of different sources to create the models, and claim to be able to serve models from any place in the world by employing satellite imagery as the source. Production is done in SAF, and business development is managed from Paris, with an international customer base. GTA (Germany) was the first supplier to Teleatlas for their 3D City Model (3DCM) product line which was later replaced by the Advanced City Models, delivered by Blom. GTA is specialised in high-quality LOD3 renderings of cities and the production of 3D Landmarks. They employ different source materials for the production, and their commercial activities are mainly focused on the DACH region of German speaking countries although they aspire to grow business in other parts of Europe. Others there are numerous other players on the market, as PLW (Pictometry s US partners) who make photorealistic 3D models like Blom, but with a very high visual quality. Lately Blom has also worked with Acute, a French company delivering 3D based on Obliques. LiDAR data can and should be considered as a subset of 3D models as this is a base layer of data that is used to create DTM/DSM data models, and even to extract building models. Advanced post processing is capable of converting the extracted buildings into a simple kind of wireframe 3D model, but that can be more than sufficient for different types of business uses. 37

39 7 ORGANISATION, BOARD OF DIRECTORS AND MANAGEMENT 7.1 BOARD OF DIRECTORS In accordance with Norwegian law, the Board of Directors is responsible for administering the Company's affairs and for ensuring that the Company's operations are organised in a satisfactory matter Members of the Board of Directors The Board of Directors currently consists of the following persons: Board member Director since Current term expires Business address Siv Staubo, Chair 27/09/2013 AGM 2015 C/o Blom ASA, Drammensveien 165, 0277 Tore Hopen 27/09/2013 AGM 2015 Oslo, C/o Blom Norway ASA, Drammensveien 165, 0277 Kristian G. Lundkvist 27/09/2013 AGM 2015 Oslo, C/o Blom Norway ASA, Drammensveien 165, 0277 Birgitte A. Ellingsen 27/09/2013 AGM 2015 Oslo, C/o Blom Norway ASA, Drammensveien 165, 0277 Oslo, Norway Siv Staubo, Oslo, Chair. Staubo, is working in the field of Corporate Governance at the Department of Financial Economy at the Norwegian Business School. She is a senior lecturer in the same department. Staubo holds a Bachelor of Applied Physics from Heriot-Watt University, Edinburgh, studies in geophysics from Arizona State University, US, and a Master of Finance from the Norwegian Business School. Staubo has previously worked as a consultant on alternative energy resources and with computer technology for oil exploration. Tore Hopen, Nøtterøy, Board member. Hopen is a partner in Jarlsberg Partners AS. He is educated at the Royal Norwegian Naval Academy and holds an MBA from Rotterdam School of Management. Hopen has previously worked as head of corporate finance in Handelsbanken Capital Markets Norway, CEO of SEB Privatbanken and CFO of Storebrand Bank. Prior to that he worked with business development in Storebrand ASA and corporate finance in JP Morgan. Kristian G. Lundkvist, Nøtterøy, Board member. Lundkvist is the founder of Middelborg AS, a corporation with roots from the retail business in the telecom industry, which has grown into a diversified holding company including investments in real estate, equities, and shipping. Middelborg AS is a long term industrial owner who actively participates in the value creation of the companies in the portfolio, especially business development, optimization of capital structures and networking. Birgitte A. Ellingsen, Nøtterøy, Board member. Ellingsen is CFO in Middelborg AS. She is educated at Agder University College and is a registered auditor. She has previously worked eight years as an auditor in KPMG AS, and has for the last eleven years worked at Middelborg AS with investments within telecom, real estate and shipping Remuneration and benefits The remuneration of the member of the Board of Directors is determined annually by the General Meeting of the Company. Remuneration to the Board of Directors paid for the period from 1 June 2011 to 31 may 2012 (date of the Annual General Meeting): Name of director Remuneration (NOK) Gunnar Hirsti, chairman 450,000 Per Kyllingstad 225,000 Hege Skryseth 225,000 Siv Staubo 225,000 Total 1,125,000 The following provisions have been made for remuneration to the Board of Directors for the period from 1 June 2012 to 3 June 2013 (date of the Annual General Meeting): Name of director Remuneration (NOK) Tom Knoff, Chairman 450,000 Per Kyllingstad 225,000 Siv Sandvik 225,000 Siv Staubo 225,000 Johnny Andersson 225,000 Total 1,125,000 38

40 The following provisions have been made for remuneration to the Board of Directors for the period from 3 June 2013 to 27 September 2013 (date of the Extraordinary General Meeting): Name of director Remuneration (NOK) Tom Knoff, Chairman 150,000 Siv Sandvik 75,000 Ingvild Myhre 75,000 Olav Fjell 75,000 Total 375,000 None of the members of the Board of Directors has a service contract with the Company or any of its subsidiaries providing for benefits upon termination of their role as Board members Director s shareholdings and options Shares held by members of the Board of Directors as of 1 October 2013: Name of director Number of ordinary shares % Ownership Options Siv Staubo, Chairperson Birgitte Ellingsen Tore Hopen Kristian Lundkvist Merckx AS The Board of Directors current and previous directorship and partnership Over the five years preceding the date of this Prospectus, the Board of Directors holds or have held the following directorships and partnerships: Board of Directors: Current membership of the administrative management, supervisory bodies and/or partnerships Siv Staubo Board member in Fred. Olsen Production ASA. Tore Hopen Partner and board member Jarlsberg Partners AS, chairman of the board of Merckx AS, Foyncorp AS, Foyn Eiendom AS, Foyn Drift AS, Foyn Matmarked AS, Olafsen Eiendom AS, Parkeringshuset AS, Vestcorp AS, Tannlege Hopen AS, BER Bygg og Eiendomsrevisjon AS, board member of AS Johs. Hopen, Strandgata 18 AS, Omagata 160 AS, J O Odfjell AS. Previous membership of the administrative management, supervisory bodies and/or partnerships during the five years preceding the date of this Prospectus Board member in CECO ASA. Board member in Eitzen Chemical ASA. Chairman of the Board in Jason Shipping ASA. Chairman of the board of Privatmegleren AS, Imobilia AS, Haugerud Regnskap, European Helicopter Center AS, Skylift Invest AS, Skytec AS, Jotne EPMT AS. Kristian G. Lundkvist Lundkvist holds several positions in various business ventures, including board memberships of Merckx AS, Telefast AS, Kjedehuset AS, Telenordic AS, and as Chair of the boards of Teki Solutions AS, Nordialog Oslo AS, Netconnect ASA, Contante AS, and Navis Finance AS. 3 Birgitte Ellingsen, Tore Hopen and Kristian Lundkvist are board members of both the Company and Merkx AS. 39

41 Board of Directors: Birgitte A. Ellingsen Current membership of the administrative management, supervisory bodies and/or partnerships Board member of Merckx AS, Contante AS, Nordialog Tønsberg AS, Telecom Fornebu AS, Netconnect ASA, Contido AS, Rdr AS, Storgaten 51 Tønsberg AS, Askjems AS, Bant Invest AS, chairman of the board of Bito Production AS. Previous membership of the administrative management, supervisory bodies and/or partnerships during the five years preceding the date of this Prospectus Board member of Telecom Alnabru AS and Askjems Camping-center AS Independence of the Board of Directors In accordance with Norwegian law, the Board of Directors is responsible for administering the Company s affairs and for ensuring that the Company s operations are organised in a satisfactory manner. The Company s Articles of Association provide that the board shall have no fewer than four members and no more than six members. In accordance with Norwegian law, the CEO and at least half of the members of the Board must either be resident in Norway, or be citizens of and resident in an EU/EEA country. The members of the board are elected by the General Meeting of shareholders. The Board of Directors is elected for a term of two years. Board members may be re-elected. In the event of equal voting, the Chairman of the Board shall have a double vote. The Board of Directors consists of four members, whereof three are independent of the Management, main business associates and the main shareholders Nomination committee The Company does not have a nomination committee as recommended by the Corporate Governance Code. The Board of Directors believes that the duties of the nomination committee can be performed satisfactorily by the Board of Directors in dialogue with various shareholder groups and the company s principal shareholders Audit committee The Company has established an audit committee in accordance with the Public Limited Companies. The members of the audit committee are appointed by the Board for a period of two years, or until the resign their position as a member of the Board. The committee currently consists of the following two persons: Birgitte A. Ellingsen Siv Staubo The audit committee is a preparatory and advisory committee for the Board. The audit committee shall; (a) prepare the supervision of the Company s financial reporting process for the Board, (b) monitor the systems for internal control and risk management, including the internal audit of the Company to the extent such function is established, (c) have continuous contact with the Company s auditor regarding the auditing of the Company s annual accounts, and (d) review and monitor the independence of the Company s auditor, including in particular to which extent other services than audit services having been rendered by the auditor or the audit firm represents a threat against the independence of the auditor. The Company has adopted separate instructions for the audit committee setting out further details on the duties, composition and procedures of the committee Remuneration committee The Company has established a remuneration committee. The members of the remuneration committee shall be independent of the Company s executive management. The members of the remuneration committee are appointed by the Board for a period of two years, or until they resign their position as a member of the Board. The committee currently consists of the following two persons: Tore Hopen Kristian Lundkvist The remuneration committee is a preparatory and advisory committee for the Board that shall prepare matters for the Board s consideration and decisions regarding the remuneration of, and other matters pertaining to, the Company s executive management. The recommendations of the remuneration committee shall cover all aspects of remuneration to the executive management, including but not limited to salaries, allowances, bonuses, options and benefits-in-kind. All aspects of remuneration, including but not limited to directors fees, salaries, allowances, bonuses, options and benefits-in-kind will be considered by the remuneration committee. 40

42 7.2 EXECUTIVE MANAGEMENT Executive management The Executive Management is responsible for the daily management and the operations of the Company. As of date of publication of this Prospectus, the Company s Executive Management consists of the following three individuals: Dirk Blaauw, Oslo, Chief Executive Officer. Blaauw holds a business management degree from Heriot-Watt University in Edinburgh. He has more than 20 years of experience from managerial positions in a number of shipping and offshore companies listed on the Oslo Stock Exchange, and he has worked with business development in recent years. He has been the CEO of Blom from January Lars Bakklund, Oslo, Chief Financial Officer. Bakklund holds a M.Sc in Economics and Business from the University of Mannheim, Germany. He has robust financial and managerial experience from international companies within various industries, namely IT, telecom, media and trading. The last fifteen years he has held positions as Chief Financial Officer or Financial Director. Prior to joining Blom as CFO he held the position as CFO of Ignis ASA. Nils Karbø, Ås, Chief Technical Officer. Karbø holds a master degree in photogrammetry and geodesy from the Norwegian Agricultural University in Ås. He has worked for several years in the private and public mapping industry of Norway. From 1994 to 2006 Karbø worked for the Norwegian institute of land inventory (NIJOS) where he was acting Director General from From 2006 until today he has worked for Blom except for a period from 2011 to 2012 where he was Director of Mapping and Cadaster Division in the Norwegian Mapping Authority. The business address of the Company s Executive Management is C/o Blom ASA, Drammensveien 165, 0277 Oslo Remuneration and benefits Salary and other remunerations to key executives in 2012: Base salary Bonus earned Other taxable Name Position (NOK) (NOK) benefits (NOK) Dirk Blaauw CEO 3,112, ,454 Lars Bakklund CFO 2,593, , ,552 Nils Karbø CTO from 1 Sep 600, ,815 NOK 1,034,515 was charged against income in 2012 for the early retirement scheme for CEO Dirk Blaauw, and the total pension obligation was NOK 6,088,781. The pension rights apply from age 62. NOK 1,898,686 was charged against income in 2012 for the early retirement scheme for CFO Lars Bakklund, and the total pension obligation was NOK 1,661,237. The pension rights apply from age 62. CEO Dirk Blaauw and CFO Lars Bakklund are entitled to severance remuneration equal to 18 months salary. CTO Nils Karbø is entitled to severance remuneration equal to 6 months salary. Except as mentioned for Dirk Blaauw, Nils Karbø and Lars Bakklund, none of the Companies key executives has a service contract with the Company or any of its subsidiaries providing for benefits upon termination of employment Management s shareholding and options Shares held by the management at 30 September 2013: Name of director Number of ordinary shares % Ownership Options Dirk Blaauw, CEO Lars Bakklund, CFO 8, Nils Karbø, CTO The Company does not currently have any agreements with key employees concerning allocation of shares, subscription rights, option and other forms of remuneration linked to shares The Management s current and previous directorship and partnership Over the five years preceding the date of this Prospectus, the senior management holds or have held the following directorships and partnerships: 41

43 Management: Current membership of the administrative management, supervisory bodies and/or partnerships Previous membership of the administrative management, supervisory bodies and/or partnerships during the five years preceding the date of this Prospectus Dirk Blaauw CEO Blom ASA. Finanspartner AS, corporate investment. Lars Bakklund CFO Blom ASA. CFO Ignis ASA, CFO Idex ASA. Nils Karbø Board member of GRID Arendal 7.3 TRANSACTIONS WITH RELATED PARTIES The Company has not entered into any transactions with related parties in the period covered by the historical financial information and up to the date of this Prospectus. 7.4 CONFLICT OF INTERESTS, ETC. There are no conflicts of interest between any duties to the Company of the members of the administrative, management of supervisory bodies, and their private interests and/or duties. During the last five years preceding the date of this Prospectus no member of the Board of Directors or the senior management has: any convictions in relation to fraudulent offences; been involved of any bankruptcies, receiverships or liquidations in his capacity as a member of the administrative, management or supervisory bodies and; received any official public incrimination and/or sanctions by statutory or regulatory authorities (including designated professional bodies) or ever been disqualified from a court from acting as a member of the administrative, management or supervisory bodies of an issuer or from acting in the management or conduct affairs of any issuer. 7.5 CORPORATE GOVERNANCE Corporate governance, based on the principles set forth in the Corporate Governance Code, dated October 23, 2012, is the basis for the activity of the Company. The Company s corporate governance principles are based on, and comply with, the Corporate Governance Code, with the following exceptions: The Company does not have a nomination committee (Corporate Governance Code Section 8). See Section Nomination committee for further information. The Management and Board of Directors strive to treat the Company s shareholders equal and just. The Board of Directors and other leading bodies holds integrity and legal qualification. The financial statements are audited by qualified and independent auditors, such that the provided financial statements give a correct picture of the Company s operational and financial position. The Board of Directors are responsible for the implementation of appropriate principles for corporate governance and management of the Company. The Board of Directors reviews the Company s corporate governance on a yearly basis. 7.6 EMPLOYEES As of 30 June 2013, the Group had 557 employees compared to 585 as of 31 December 2012 and 875 as of 31 December There are no material changes in the number of employees from 30 June 2013 and to the date of this Prospectus. 7.7 PENSIONS AND OTHER OBLIGATIONS The companies in the Group have different pension schemes. The pension schemes are financed in general by payments to insurance companies or pension funds, as determined by periodic actuarial calculations. The Group has both defined contribution and defined benefit plans. 42

44 8 FINANCIAL INFORMATION The following discussion of the financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto that have been included elsewhere in this Prospectus. The selected consolidated financial data presented below has been derived from the Group s audited consolidated financial statements as of and for the years ended 31 December 2010, 2011 and 2012, the Group s unaudited interim consolidated financial statement as of, and for the 3 months ended 30 June 2013 (with comparable figures as of, and for the 3 months ended 30 June 2012), prepared in accordance with International Financial reporting Standards (IFRS) as adopted by the European Union (EU). The following discussion contains forward-looking statements that are based on current assumptions and estimates by the Group s management regarding future events and circumstances. The Group s actual results could differ materially from those expressed or implied by the forward-looking statements as a result of many factors, including those described in Section 2 Risk factors. Annual reports including audited historical financial information and audit reports with respect to 2010, 2011, and 2012, and unaudited interim financial reports for 1 st half of 2012 and 2013, are incorporated by reference to this Prospectus (see Section 13.2 Incorporation by reference ). The financial reports and information are also available at the Company s website and at under the ticker BLO. 8.1 ACCOUNTING PRINCIPLES The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The IFRS principles have been applied consistently for 2010, 2011, 2012 and The Group s accounting principles and notes are incorporated by reference to this Prospectus (see Section 13.2 Incorporation by Reference ). 8.2 HISTORICAL FINANCIAL ACCOUNTS The selected historical consolidated financial information set forth in this section has been derived from the Group s audited consolidated financial statements for the financial years 2010, 2011 and 2012 and unaudited interim financial reports for 1 st half of 2012 and The full year figures for income statement and cash flow for 2010, 2011 and 2012 are adjusted for the Board of Directors decision to sell the Company s Italian subsidiary, Blom CGR S.p.A. Both adjusted and audited figures are included for 2010 since the adjusted figures are not included in the above mentioned statements and reports. Pre-tax profit/loss in the audited cash flow statement for 2010 includes the result from discontinued operations in accordance with IFRS 5, 33. The difference between pre-tax profit/loss in the income statement and the cash flow statement is negative NOK 13.4 million and relates to BlomInfo A/S. The company was divested in February See Note 26 in the 2011 annual report for further information. The selected historical consolidated financial information for the Group set forth in this section should be read in conjunction with the financial statements as incorporated by reference in this Prospectus (see section 13.2 Incorporation by Reference ). The auditor's report for 2012 included a clarification regarding going concern assumption as set out below: We draw attention to the Board of Director s report and Note 26 in the financial statements which indicate that there is uncertainty regarding whether the company will be able to service its debt at maturity. These conditions, along with other matters as set forth in the Board of Directors report and Note 26, indicate the existence of a material uncertainty that might cast significant doubt about the company s ability to continue as a going concern. Our opinion is not qualified in respect of this matter INCOME STATEMENT INCOME STATEMENT, CONSOLIDATED (NOK 1,000) Q Q FY 2012 FY 2011 FY 2010 FY 2010 (Unauditedditedditeddited) (Unau- (Unau- (Unau- (Unaudited (Audited) (Audited) Adjusted) (Audited) Operating revenues Cost of materials Salaries and

45 personnel costs Depreciation and write downs Other operating and administrative costs Other gains and losses Operating expenses Operating profit/loss Profit/loss attributable to associates Net financial items Pre-tax profit/loss Taxes Net profit/loss from continuing operations Net profit/loss from discontinued operations Net profit/loss for the year Profit/loss attributable to: Shareholders Minority interests Net profit/loss for the year Earnings per share: From continuing operations -0,91-1,15-1,59-150,27-13,58-13,58 from discontinued operations -0,07-0,01-1,6-52,31-0,33-0,33 From net/profit/loss for the year -0,98-1,16-3,19-202,58-13,91-13, BALANCE SHEET BALANCE SHEET, CONSOLIDATED (NOK 1,000) (Unaudited) (Audited) (Audited) (Audited) ASSETS Patents, licenses and similar rights Deferred tax assets Goodwill Intangible non-current assets Property plant and equipment Tangible non-current assets

46 Non-current asset investments Investments in associates Total non-current asset investments Total non-current assets Inventories Work in progress Total inventories Trade receivables Other current receivables Total receivables Cash and cash equivalents Assets classified as held for sale Total current assets Total assets BALANCE SHEET, CONSOLIDATED (NOK 1,000) (Unaudited) (Audited) (Audited) (Audited) EQUITY AND LIABILITIES Share capital Treasury shares Share premium account Currency translation differences Retained earnings Minority interests Total equity Pension obligations Non-current liabilities Deferred taxes Total other non-current liabilities Overdraft facilities Other interest-bearing current liabilities Total interest-bearing current liabilities Trade payables Unpaid government taxes Tax payable Other current liabilities Total other current liabilities Liabilities classified as held for sale Total current liabilities Total equity and liabilities

47 8.2.3 CASH FLOW STATEMENT CASH FLOW STATEMENT, CONSOLIDATED Q Q (NOK 1,000) Cash flow from operating activities (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audite d) (Audite d) (Unadui ted adjuste d) (Audite d) Pre-tax profit/loss Depreciation and write-downs Taxes paid Interest paid Profit/loss attributable to associates Change in trade receivables Change in inventories and work in progress Change in supplier debt Change in other accruals and unrealised foreign exchange Net cash flow from operating activities - continuing operations Net cash flow from operating activities - discontinued operations Net cash flow from operating activities Cash flow from investing activities Purchases of property, plant and equipment Receipts from sale of shares and other investments Net cash flow from investing activities - continuing operations Net cash flow from investing activities - discontinued operations Net cash flow from investing activities Cash flow from

48 financing activities Net change in long term debt and loans Net change in overdraft facilities Net receipt of equity capital Net cash flow from financing activities - continuing operations Net cash flow from financing activities - discontinued operations Net cash flow from financing activities Net change in cash and cash equivalents Cash and cash equivalents at the start of the period Cash and cash equivalents at the end of the period Cash and cash equivalents - continuing operations Cash and cash equivalents - discontinued operations STATEMENT OF CHANGES IN EQUITY CHANGES IN EQUITY, CONSOLIDATED (NOK 1,000) Share capital Treasury shares Share premium Currency transaction differences Retained earnings TOTAL Minority interests Equity Equity as of 1 January Net profit loss for the year Other comprehensive income: Currency translation differences Comprehensive income for the year Acquisition of minority interests Transactions with

49 owners Total comprehensive income Equity as of 31 December Equity as of 1 January Net profit loss for the year Other comprehensive income: Currency translation differences Comprehensive income for the year New share capital by issue of new shares Premium on share issue Tax recognised through equity Total comprehensive income Equity as of 31 December Equity as of 1 January Net profit loss for the year Other comprehensive income: Currency translation differences Comprehensive income for the year Reduction of capital New share captial by conversion Premium on conversion Costs recognised through equity Other transfers

50 Total comprehensive income Equity as of 31 December Equity as of 1 January Net profit loss for the year Other comprehensive income: Currency translation differences Comprehensive income for the year Total comprehensive income Equity as of 30 June DIVESTMENT OF BLOM CGR S.P.A The Group divested its Italian subsidiary Blom CGR S.p.A in February The transaction would normally trigger a requirement for pro forma financial information. The transaction is however presented in accordance with IFRS 5 Non-current assets held for sale and discontinued operations in the interim financial report for Q4 2012, annual report for 2012 and the interim report for Q1 and Q Net result for discontinued operations is presented on a separate line in the income statement. Consequently there was no need for pro forma financial information in connection with this transaction. Below the profit and loss from discontinued operations is shown as in the explanatory note to the 2012 accounts: Profit/loss from discontinued operations: Operating revenues Expenses Net profit /loss Blom CGR S.p.A Net profit/loss BlomInfo A/S Net profit/loss from discontinued operations OPERATING AND FINANCIAL REVIEW The management s comments to the operational development and financial statements for the fiscal years 2010, 2011, 2012, Q and 2013, and 1 st half of 2012 and 2013 are set out below. The comments regarding the fiscal years 2010, 2011 and 2012 financial statements includes the Board of Directors decision to sell the Company s Italian subsidiary, Blom CGR S.p.A Financial period ended 30 June 2013 and second quarter

51 The macroeconomic conditions in several of the regions in which Blom operates remain challenging. This may negatively impact the Company's earnings and liquidity situation and warrant further compensatory measures. The Company is working actively to improve the efficiency of its operations, cut costs further, scale down its operations through existing markets, dispose of certain assets and extend the maturity structure of the Company's debt. Blom has reduced its operations over several years through sale and downscaling of several subsidiaries. The Company intends to further reduce its geographic exposure and risk. The Company's scope, complexity and risk have thus been significantly reduced. To improve the Company's profitability under the prevailing market conditions, Blom has focused on market niches in which the Company has a competitive advantage, geographic regions that have an increasing need for the Company's products and services, and the continuing implementation of margin-improving measures. Income statement Revenues for Q totalled NOK 86 million, compared with NOK 107 million for the same period in EBITDA for Q was NOK 2 million, compared with NOK 44 million for the corresponding period in This corresponds to an EBITDA margin of 2.4 per cent, compared with 40.7 per cent for Q The operating loss for Q was NOK - 8 million, compared with an operating profit of NOK 33 million for the same period in The comparative figures from Q were marked by several non-recurring events, the most significant of which was the conversion of debt, which entailed as other gains/losses of NOK 24 million. The restructuring costs associated with the personnel reductions impacted the cost base for the second quarter of Revenues for the 1 st half 2013 totalled NOK 138 million, compared with NOK 169 million for the same period in EBITDA for the 1 st half year was NOK 7 million, compared with NOK 31 million for the corresponding period in This corresponds to an EBITDA margin of 5.4 per cent, compared with 18.1 per cent for the 1 st half of The operating loss for the 1 st half year was NOK 25 million, compared with an operating profit of NOK 10 million for the same period in The comparative figures from 2012 were marked by several non-recurring events, the most significant of which was the conversion of debt, which entailed as other gains/losses of NOK 24 million, as well as larger call-offs from existing framework agreements. As a result of lower volumes and prices in certain Nordic countries and a lower number of public tenders in Romania revenues declined in the first half of 2013 compared with the first half of The market in Iberia was also particularly challenging compared with the first half of The implementation of a more marketoriented organisational structure, cost-rationalisation measures and reduced geographic exposure have not adequately compensated for the impact on earnings this quarter. The restructuring costs associated with the personnel reductions impacted the cost base for the second quarter of As a result of the conversion of debt in Q2 2012, the net finance totalled NOK -2 million in Q2 2013, compared with NOK -6 million in Q Net finance for 1 st half of 2013 totalled NOK -5 million, compared with NOK -20 million in Balance sheet The equity ratio was 5.2 per cent compared with 18.7 per cent in 2012, cash and cash equivalents were NOK 39 million, compared with NOK 72 million in 2012, and net interest-bearing liabilities were NOK 77 million, compared with NOK 117 million in As a result of the divestment of the Company s Italian subsidiary Blom CGR S.p.A, total assets as per 30 June 2013 were NOK 258 million, compared with NOK 426 million as per The amount of work in progress and trade receivables has declined significantly in 2013 as a result of the company's reduced exposure to Southern European markets, compared with The Company had an on-going dialogue with a majority of the bondholders for the Company's bond loan. The bondholders approved an extension of the maturity of the loan ISIN NO until 26 September 2013 at the bondholder meeting of 26 June The term of a short-term liquidity loan of EUR 2.5 million from Hexagon AB agreed on in December 2012 was extended until 24 September The creditors for this debt are also among the Company's principal shareholders. These loans have subsequently been converted into equity, see section 4 of this Prospectus. Cash flow Cash flow from operating activities from continuing operations in Q was negative NOK 4 mill compared with NOK 1 mill in Due to seasonal working capital demand trade receivables and work in progress 50

52 increased with NOK 22 mill in Q compared with NOK 24 mill in Net cash flow from investing activities from continuing operations was negative NOK 3 mill compared with negative NOK 6 million in Q Due to downpayment of loan cash flow from financing activities was negative NOK 7 mill in Q Due to the new secured bond loan cash flow from financing activities was NOK 15 in Q Due to seasonal working capital demands net cash flow from operating activities from continuing operations in the first half of the year was negative NOK 15 million compared with negative NOK 23 million in Trade receivables have increased by NOK 7 million to NOK 47 million, while work in progress increased by NOK 11 million to NOK 56 million. Net cash flow from investing activities from continuing operations was positive NOK 1 million, including a compensation of NOK 8 million from divestment of Blom CGR S.p.A. The total cash flow from financing activities was negative NOK 11 million. As of 30 June 2013, the Group had cash and bank deposits of NOK 39 million, of which NOK 14 million was restricted. The restricted bank deposits include the employees' tax withholdings, government subsidies cash deposits for portions of the Group's guarantees. The Group has overdraft facilities totalling NOK 5.9 million, of which NOK 3.5 million was utilised as at 30 June Net financial expenses totalled NOK 5 million for the first half of the year which are lower than the same period last year as a result of lower interest-bearing debt. The Company's net cash flow from financing activities from continuing operations reflects that the company's debt was reduced by NOK 11 million in the first half of the year Financial year ended 31 December 2012 Challenging macroeconomic conditions has also characterised 2012, especially countries in Southern Europe. This impacted the Company s profitability and liquidity. There were postponements and a significant decline in public tendering processes, and there was uncertainty associated with the time frame for new government tendering processes, particularly in Southern Europe. As a result of this, Blom ASA sold its Italian subsidiary Blom CGR S.p.A. in February This sale reduced the Company s exposure in a geographic region of high macroeconomic uncertainty. Blom also significantly reduced its cost base in

53 Income statement The Group s revenues from continuing business was NOK 335 million in 2012, compared with NOK 289 million in EBITDA was NOK 45 million for 2012, with a margin of 13.3 per cent, compared with an EBITDA of NOK -58 million and a margin of per cent for The operating profit for the year, measured as EBIT, was NOK 2 million, compared with NOK -138 million in The 2012 figures were marked by several non-recurring events, the most significant of which was the conversion of debt, shown as other gains/losses of NOK 24 million, as well as larger call-offs from existing framework agreements. A final settlement between Pictometry International Corp. and Blom for the dispute concerning the termination of the licence agreement entered into on 29 January 2009 had a positive impact on the results. The 2012 accounts also included charges for write-down of intangible assets, inventories and trade receivables The net financial expenses totalled NOK 34 million in 2012, compared with NOK 78 million in 2011Noncurrent asset investments were written down by NOK 31 million in The net profit for 2012 was negative NOK 67 million compared to negative NOK 361 million in Balance sheet The equity ratio was 10.3 per cent, compared with per cent in 2011, cash and cash equivalents were NOK 65 million, compared with NOK 75 million in 2011.Net interest-bearing liabilities were NOK 56 million, compared with NOK 439 million in The conversion of NOK 312 million in bond loan to equity was adopted on 25 April 2012 by the company's General Meeting. Conversion of the bond loan took place in the form of a capital increase, where the bonds and the accrued interest were used to subscribe for shares. The company did thus not receive any injection of cash, but the balance sheet was considerable improved by converting the debt to equity. NOK 35 million of the 2009 bond loan was replaced by a new convertible bond loan with a nominal value of NOK 10,729,762 and with a term of five years and an interest rate of 2.0 per cent p.a. Bonds in the convertible bond issue could be converted to shares during the two first years of the term of the loan at a subscription price equal to 120 per cent of the volume-weighted average price two days following the Extraordinary General Meeting. On 24 April 2012 an amendment agreement was entered into with the bondholders that extended the term of the company's NOK 50 million bond loan ("FRN Blom ASA Senior Bond Issue 2011/2012") by three years, and the interest rate was changed from NIBOR +11 per cent to NIBOR per cent. In the 2 nd quarter the Company decided to issue a new secured bond loan that matured on 8 February The maximum amount for the new bond loan was NOK 30 million. As a result of write-downs of intangible assets, inventories and trade receivables total assets were NOK 426 million, compared with NOK 587 million in Total assets per 2012 included NOK 144 million classified as assets held sale, which is referring to the divestment of Blom CGR S.p.A. Cash flow Net cash flow from operating activities from continuing operations was negative NOK 13 million. Trade receivables for continuing operations decreased by NOK 18 million in 2012 to NOK 39 million, while work in progress for continuing operations decreased by NOK 20 million to NOK 45 million. Net cash flow from investing activities from continuing operations was negative NOK 10 million. The combined operational investments in 2012 totalled NOK 36 million, compared with NOK 70 million in Blom received a compensation of DKK 19, 4 from the divestment of BlomInfo A/S. Cash flow from financing activities from continuing operations was positive of NOK 22 million including EUR 2.5 million in a short term loan from Hexagon AB. The total cash flow from financing was negative NOK 11 million. As of 31 December 2012, the Group had cash and bank deposits of NOK 65 million, of which NOK 11 million was restricted. The restricted bank deposits included the employees' tax withholdings, government subsidies in Romania and cash deposits for portions of the Group's guarantees. The Group had overdraft facilities totalling NOK 5.9 million, NOK 5.7 million of which was utilised as at 31 December Financial year ended 31 December 2011 In the report for 2010, the Board of Directors stated that the Group could be exposed to markets marked by uncertainty in 2011 as well. The macroeconomic conditions worsened significantly in 2011, particularly in debtridden countries in Southern Europe. This resulted in a significant fall in the demand from several of the Group's public sector customers. In spite of significant cost savings in 2011, the Group did not manage to compensate adequately for the loss of revenue, resulting in the Group's poor financial results. 52

54 Income statement The Group s revenues from continuing operations was NOK 289 million in 2011, compared with NOK 400 million in EBITDA was NOK -58 million for 2011, with a margin of per cent, compared with an EBITDA of NOK -59 million and a margin of per cent for The operating loss for the year from continuing operations, measured as EBIT, was NOK -139 million, compared with NOK -416 million in This includes a charge of NOK 41 million for the write-down of non-current assets, which is related primarily to goodwill. Provisions for potential losses on trade receivables and inventory write-downs totalling NOK 32 million were also charged against the operating profit. Write-downs in associated companies represented a total charge in the accounts of NOK 19 million in The net financial expenses totalled NOK 78 million in 2011, compared with NOK 65 million in Non-current asset investments were written down by NOK 31 million in In addition, deferred tax was written down by NOK 50 million. The net profit for 2011 was, primarily as a result of the challenging market environment and significant writedowns, negative NOK 361 million compared to negative NOK 565 million in Balance sheet The equity ratio was per cent, compared with 13.3 per cent in 2010, cash and cash equivalents were NOK 75 million, compared with NOK 96 million in 2010, and net interest-bearing liabilities were NOK 439 million, compared with NOK 332 million in As a result of the weak financial results in 2011, the Group's equity was lost and stood at negative NOK 194 million as per A conversion of NOK 312 million in bond loan to equity was adopted on 25 April 2012 by the Company's General Meeting. As a result of write- downs of goodwill, other non-current assets, inventories and trade receivables total assets were NOK 587 million, compared with NOK 808 mill as per Total assets per 2011included NOK 44 mill assets classified as held for sale, which is referring to the divestment of BlomInfo A/S. Cash flow Net cash flow from operating activities from continuing operations was negative NOK 45 million. Trade receivables decreased by NOK 8 million in 2011, while work in progress decreased by NOK 23 million. The combined operational investments in 2011 totalled NOK 70 million, compared with NOK 79 million in Cash flow from financing activities from continuing operations was NOK 91 million, which reflected the issue of a new senior note of NOK 50 million and a share issue of NOK 63 million adjusted for down payment on leasing commitment. As of 31 December 2011, the Group had cash and bank deposits of NOK 77 million, of which NOK 19 million was restricted. The restricted bank deposits included the employees' tax withholdings, government subsidies in Romania and cash deposits for portions of the Group's guarantees. The Group had overdraft facilities totalling NOK 13.1 million, of which NOK 5.2 million was utilised as at 31 December Financial year ended 31 December 2010 The Group has during 2010 experienced challenges related to macroeconomic turmoil and uncertainty surrounding the licence agreement with Pictometry which had a strong negative impact on the Group s financial results. The dispute with Pictometry has also entailed a substantial write-down of goodwill and other fixed assets. The demand for the Group s contractual services, for which the public sector is the largest customer group, had during 2010 been marked by a continuing weak economy in a number of countries in which the Group has a significant portion of operations. This resulted in temporary pressure on the prices in parts of the Group s operations and delayed call-off orders under framework agreements. Income statement The Group s revenues from continuing operations totalled NOK 400 million in 2010, compared with NOK 737 million in EBITDA for 2010 from continuing operations was negative NOK 58 million, compared with NOK 92 million for This corresponded to an EBITDA margin of 14.6% for 2010, compared with 12.5% for The operating profit for the year, measured as EBIT, was a loss of NOK 375 million, compared with a loss of NOK 54 million in The operating profit included a write-off of NOK 245 million for the writedown of fixed assets, related primarily to goodwill and assets associated with the Pictometry agreement. There were also charges totalling NOK 75 million for provisions for potential losses on stocks and receivables from customers, as well as potential claims from customers as a result of the uncertainty associated with the Pictometry agreement. Write-downs in associated companies represented a total charge of NOK 63 million. Net financial expenses totalled NOK 65 million for 2010 compared to NOK 40 million in the previous year. 53

55 The Net profit for 2010 was, primarily as a result of the significant write-downs, negative NOK 565 million compared to negative NOK 83 million in Balance sheet The equity ratio was 13.3% at the end of 2010, compared with 49.3% at the end of 2009, and cash and cash equivalents decreased by NOK 69 million to NOK 96 million during the year. Net interest-bearing liabilities were NOK 332 million. Both work in progress and accounts receivables fell in 2010 by a total of 185 MNOK, partly caused by lower revenue but also tight cash collection routines and increased focus on invoicing. Intangible assets fell sharply in 2010 as a result of a NOK 84 million write down of goodwill and NOK 29 million write down of the Pictometry licenses due to the dispute. Tangible fixed assets also dropped mainly due to the Pictometry dispute as existing databases was written down by NOK 123 million. Investments in associated companies also dropped as the Group re-evaluated some of its investments after the slow macro-economic recovery. All other changes in balance sheet items were a result of normal operation and natural changes according to our activity level. Cash flow Net cash flow from operating activities from continuing operations was positive by NOK 52 million, primarily driven by an improvement of working capital. Cash flow from investment activities from continuing operations was negative NOK 43 million, reflecting primarily investment in databases, aircraft engines and sensors. Cash flow from financing from continuing operations was negative NOK 56 million, which reflected primarily the repayment of short and long term credit facilities as well as down payment on leasing commitments. Total cash and bank deposits were NOK 96 million of which restricted bank deposits were NOK 21 million, which include the employees' tax withholdings, government subsidies in Romania and cash deposits for portions of the Group's guarantees SEGMENT INFORMATION The Group reports on its operations primarily in four segments: Nordic, Mid-Europe, Eastern Europe and Iberia & Latin America. The activities in the segments are carried out primarily through independent companies, and the distribution of revenues, costs, liabilities and investments is based on the accounts of the individual companies. BUSINESS SEGMENT (NOK 1,000) Nordic Mid- Europe Eastern Europe Iberia & LatAm Not allocated Group Q (Unaudited) Operating revenues EBITDA Depreciation Operating profit/loss Profit/loss attributable to associates 0 0 Net financial items Pre-tax profit/loss Tax Net profit/loss form the year from continuing operations Net profit/loss form the year from discontinued operations Net profit/loss for the year Assets Investments Q (Unaudited) Operating revenues EBITDA 1) Depreciation Operating profit/loss Profit/loss attributable to associates

56 Net financial items Pre-tax profit/loss Tax Net profit/loss form the year from continuing operations Net profit/loss form the year from discontinued operations Net profit/loss for the year Assets Investments Per (Unaudited) Operating revenues EBITDA Depreciation Operating profit/loss Profit/loss attributable to associates 0 0 Net financial items Pre-tax profit/loss Tax Net profit/loss form the year from continuing operations Net profit/loss form the year from discontinued operations Net profit/loss for the year Assets Investments Per (Unaudited) Operating revenues EBITDA 1) Depreciation Operating profit/loss Profit/loss attributable to associates 0 0 Net financial items Pre-tax profit/loss Tax Net profit/loss form the year from continuing operations Net profit/loss form the year from discontinued operations Net profit/loss for the year Assets Investments (Audited) Operating revenues

57 EBITDA Depreciation Operating profit/loss Profit/loss attributable to associates 0 0 Net financial items Pre-tax profit/loss Tax Net profit/loss form the year from continuing operations Net profit/loss form the year from discontinued operations Net profit/loss for the year Assets Investments (Audited) Operating revenues EBITDA Depreciation Operating profit/loss Profit/loss attributable to associates Net financial items Pre-tax profit/loss Tax Net profit/loss form the year from continuing operations Net profit/loss form the year from discontinued operations Net profit/loss for the year Assets Investments (Unaudited adjusted) Operating revenues EBITDA Depreciation Operating profit/loss Profit/loss attributable to associates Net financial items Pre-tax profit/loss Tax Net profit/loss form the year from continuing operations Net profit/loss form the year from discontinued operations Net profit/loss for the

58 year 907 Assets Investments Goodwill ) EBITDA incl Other gains/losses of NOK 24 mill ( conversion of bond loan) 8.5 SHARES IN SUBSIDIARIES AND ASSOCIATED COMPANIES Please refer to the Group s Annual Reports for 2010, 2011 and 2012, note 22, as incorporated by reference to this Prospectus (see Section 13.2 Incorporation by Reference ). 8.6 INVESTMENTS Historical investments HISTORICAL INVESTMENTS (NOK 1,000) Investments in tangible fixed assets Buildings Databases Sensors and digital cameras Other machinery, fixtures, etc Total investments in tangible fixed assets Investments in intangible fixed assets Investment in goodwill Investment in patents, licenses and similar rights Total investments in intangible fixed assets Total investments in fixed assets Investments for 2010, 2011 and 2012 have been specified according to category above. None of the investments in these categories are material investments as they are a part of running operational investments Investments in 2013 as of the date of this Prospectus amounts to NOK 11.5 million and are primarily related to databases. In addition to running operational investments, the Company has in the period from 2010 made investments in one associated company, NOK 23 million purchase in I-JOY Europe S.L (25%) in In addition, the Company increased its ownership in the company Compagnia Aeronautica Emiliana S.r.l, from 50% to 100% in 2010 at a cost of NOK 1.3 million, owned by Blom CGR S.p.A, and divested February Planned and committed investments For 2013 and the coming years the Group expects to invest in the same type of assets, being databases, sensors / digital cameras and other machinery, when considered necessary for ordinary business and at a lower level than in Further investment in databases is expected to be financed by internal resources, and the investments will be made in Norway. 57

59 As of the date of this Prospectus, the Group has no commitments to invest in any type of material or nonmaterial investments beyond ordinary maintenance investments in assets already held by the Group. 8.7 CAPITAL RESOURCES The capital resources of the Group consist of equity from its shareholders, bank loans in subsidiaries, financial leasing, short term credit facilities in subsidiaries and potential divestment of certain assets. As of 30 June 2013, the Group had an equity ratio of 5.2 % and net interest bearing debt amounting to NOK 77 million. The Group s working capital assets consisted of work in progress (NOK 56 million), receivables from customers (NOK 47 million), and other current receivables (NOK 26 million). The Group s working capital liabilities consisted of payables to suppliers (NOK 50 million), unpaid government taxes (NOK 21 million), other current liabilities (NOK 46 million) and overdraft facilities (NOK 4 million). The Group s net working capital as of 30 June 2013 was NOK 12 million which includes NOK 4 million in overdraft facilities. As of 30 June 2013, the Group had cash and cash equivalents of NOK 39 million. Conversion of the bond loan shall be in the form of a capital increase, where the bonds and the accrued interest are to be used to subscribe for shares. The Company shall thus not receive any injection of cash and the conversion would subsequently not impact the working capital but the balance sheet shall be impacted by converting the debt to equity. Leasing obligations As of the date of this Prospectus, the present values of obligations related to the Group s financial leasing agreements are as follows: Financial leasing obligations (NOK 1,000) Maturity within 1 year 357 2,137 9,773 16,877 Maturity between 1 and 5 years ,195 7,494 15,404 Maturity later than 5 years Total 1,836 3,332 17,267 32,281 The financial leasing agreements encompass the leasing of aircraft, sensors, vehicles and IT -related equipment. The duration of the agreements is from 3 to 5 years. The leasing agreements have an adjustable interest rate. As of the date of this Prospectus, the present values of obligations related to the Group s operating leasing agreements are as follows: Operating leasing obligations (NOK 1,000) Maturity within 1 year ,746 19,056 Maturity between 1 and 5 years 5,602 7,402 5,849 21,014 Maturity later than 5 years Total 9,302 11,202 17,595 40,071 The operating leasing agreements encompass the leasing of vehicles, offices, aircraft and IT -related equipment. The duration of the agreements is from 3 to 5 years, and most of them are renewable at the market rate when they expire. Debt overview As of the date of this Prospectus, the maturity structure of the Group s short-term and long-term interest-bearing debt is as follows: Debt maturity structure (NOK 1,000) Bond loans Bank loans

60 Financial leasing Overdraft facility Other liabilities Total The Group s management of liquidity risk entails maintenance of adequate liquid reserves and credit facilities. The central management team and the local managers of subsidiaries monitor the Group s liquid resources and credit facilities through revolving forecasts based on the expected cash flow. Blom has cash management systems with Skandinaviska Enskilda Banken that covers most of the Group's subsidiaries. See the Group s Financial Analysis and Note 21 in the annual report for 2012 for further description of the Group s funding and treasury policy. 8.8 WORKING CAPITAL Working Capital Statement Working Capital (NOK 1,000) Current assets excluding cash Total other current liabilities Working Capital Working capital management has been a focus area for the Group. The reduction in working capital is partly due to lower activities but mainly due to the initiatives taken by the Group. This has been achieved by increased focus on invoicing, cash collection and liquidity management. The Group is constantly trying to re-negotiate supplier terms in order to better reflect the cash flow in the projects. Due to seasonal working capital demands the group's liquidity reserves normally will be at their lowest in the spring and throughout summer / early autumn. During this period the company has a low level of liquidity reserves for unforeseen events. The Group will focus on maintaining a minimum working capital level, but some increases must be expected as activities increase. Seasonality wise the company is presently deploys a relative high working capital and the company s liquidity reserves are presently low. The company is actively working to streamline operations, cut further costs, further scaling down of operations, the withdrawal from selected markets and sale of certain assets. The Company's current working capital is sufficient to cover the Group's present requirements for the next 12 months. 8.9 CAPITALISATION AND INDEBTEDNESS The table below sets forth the Group s statement of capitalisation based on the balance sheet as of 30 June 2013 and 31 December 2012, and has been derived from the unaudited interim financial report for 1 st half of 2013 and the audited financial statements for The changes to the capitalisation and indebtedness in relation to the Financial Restructuring as described in Section 4 The financial restructuring of this Prospectus are shown in the table below through the adjusted column. The table should be read together with the consolidated financial statements and the related notes thereto, as well as the information under Section 8 Financial information. TOTAL CAPITALISATION (NOK 1,000) (Actual) (Actual) (Actual) (Adjusted) Total current debt Guaranteed current debt¹1) Secured² Unguaranteed/Unsecured Total non-current debt Guaranteed non-current debt 2)

61 -Secured Unguaranteed/Unsecured Total shareholders' equity a. Share capital 3) b. Legal reserve c. Other reserves 3) Total NET FINANCIAL INDEBTEDNESS (NOK 1,000) (Actual) (Actual) (Actual) (Adjusted) A. Cash B. Cash equivalents Traded securities and other financial C. instruments D. Liquidity (A)+(B)+(C) E. Current financial receivables F. Current bank debt G. Current portion of non-current debt1) H. Other current financial debt I. Current financial debt (F)+(G)+(H) J. Net current financial indebtedness (I)-(E)-(D) K. Non-current bank loans L. Bonds issued2) M. Other non-current loans Non-current financial indebtedness N. (K)+(L)+(M) O. Net financial indebtedness (J)+(N) Guaranteed debt is the FRN Blom ASA Senior Secured Bond Issue 2009/ Secured debt is financial leasing, where the leased assets are the security, mainly sensors and digital cameras. As a result of the Financial Restructuring, the following changes have been made in the adjusted column in the table above: 1) The Company s current debt was reduced by NOK 26.7 million as a result of the conversion of the current bond loan into equity. 2 )The Company s non-current debt was reduced by NOK 61.9 million as a result of the conversion of the non-current bond loan into equity. 3) The Company s share capital was increased by NOK 33.5 million as a result of conversion of all current and non-current bond loans into equity. Debt As of 30 June 2013, total debt was NOK 245 million. The Group s interest bearing debt was NOK 116 million at 30 June 2013 of which NOK 89 million was bond debt. The remaining NOK 27 million of interest bearing debt consisted mainly of a short term loan from Hexagon AB, overdraft facilities and loans at banks and financial 60

62 leasing. The short term loan frorm Hexagon loan is at a fixed rate and rest of the borrowings at a floating rate. Non-interest bearing debt of NOK 129 million consisted primarily of pension obligations, taxes, payables to suppliers and other current liabilities. See section 8.6 Capital resources of this Prospectus for a description of the Group s current debt structure. Indirect Indebtedness: Blom ASA has guaranteed that Scan Subsea ASA will pay its rent in connection with the sale of real estate in Tønsberg. Scan Subsea ASA was acquired in 2007 by the NYSE listed company Parker Hannifn Corporation. Blom and Scanrope Holding jointly guarantees for the rental commitments until 5 September The annual amount of indirect indebtedness is estimated to approximately NOK 3.8 million FOREIGN CURRENCY Transactions in foreign currency are booked in NOK according to the exchange rates at the time of each transaction. Receivables and liabilities held in foreign currency are translated into NOK at the observed exchange rate at the day of the balance sheet. Exchange rate differences from period to period are accounted for in the Income Statement. Non-monetary assets held in foreign currency are accounted for using the exchange rates at the time of purchase. Assets accounted for in real value held in foreign currency are translated into NOK using the exchange rate observed at the time of the real value assessment FINANCIAL RISK MANAGEMENT The Group is somewhat exposed to fluctuations in foreign exchange rates, since a significant portion of the revenues are in foreign currencies, primarily EUR, USD and GBP. The foreign currency risk is not regarded as substantial, since the revenues and expenses are normally in the same currency and the revenues are distributed across several foreign currencies. The Group is also somewhat exposed to fluctuations in interest rates, since most of the Company's debt has adjustable interest rates. The risk that the Group's debtors do not have the financial capacity to fulfil their obligations is regarded as low, since the customer base consists primarily of municipalities or government agencies, or companies or institutions where municipalities or government agencies have a dominant influence. Historically there have been very few losses on receivables in this customer group. The Group has found it proper, nevertheless, to set aside provisions totalling NOK 5.4 million for possible future losses on receivables from customers in 2012, which is related primarily to specific private customers exposed to competition. The Group has a strong focus on measures to increase cash flow and reduce working capital. The liquidity management is based on a cash management system for the entire Group, in addition to 12-month rolling liquidity forecasts SIGNIFICANT CHANGES AFTER 30 JUNE 2013 AND CURRENT TRENDS Events after 30 June 2013 In the period after 30 June 2013 Blom has carried out a conversion of most of its debt into equity. See section 4 of this Prospectus for a description of this process. Merckx AS became owner of shares in Blom ASA corresponding to approx % of the outstanding shares in the Company on 22 August On 19 September 2013 Merckx AS launched a mandatory offer to purchase all shares in Blom not already owned by Merckx at a price of NOK 0.10 per share (the "Offer"). The offer period expired on 17 October 2013.Merckx AS received acceptances for a total of 8,588,088 Shares, representing approximately 25.5% of the issued Shares in the Company. Together with the 12,283,969 shares already held by Merckx AS in the Company, Merckx AS held, after completion of the Offer, a total of 20,872,057 Shares, representing 61.9% of all the issued Shares of the Company. On 27 September 2013 Blom s subsidiary Blom Data AS entered into an agreement with Hexagon AB under which Hexagon AB acquired databases, software and intellectual property rights related to BlomURBEX. At the same time the parties entered into a license agreement which gives Blom Data ASA a perpetual, royalty free and non-exclusive licence to use the database and software in its operations. Blom Data AS will due to the license agreement not have any restriction in its operation following the divestment of assets and thereby be able to serve its existing and new customers in the same manner as previously. The purchase price amounts to NOK 19,927,500 and was settled by Hexagon AB forgiving the principal of the short term liquidity loan given to Blom Data AS, amounting to NOK 19,927,

63 Except for the items mentioned above, there have been no significant changes to the Company s or the Group s financial or trading position since 30 June THE COMPANY'S AUDITOR PricewaterhouseCoopers AS has been the Company s elected auditor since PricewaterhouseCoopers AS is member of Den Norske Revisorforening. The registered address of PricewaterhouseCoopers AS is: Name: PricewaterhouseCoopers AS Business Address: Dronning Eufemias gate 8, 0191 Oslo Post Address: P.O.Box 748 Sentrum, 0106 Oslo Telephone: Telefax: The Group s financial statements as of 31 December 2010, 2011 and 2012, and for each of the three years then ended, included in this Prospectus, have been audited by PricewaterhouseCoopers AS, independent auditors, as stated in their reports appearing herein. 62

64 9 SHARES AND SHARE CAPITAL 9.1 SHARE CAPITAL AND SHARES The issued share capital of the Company is at the date of this Prospectus NOK 50,353,245 divided into 1,007,064,900 Shares with a par value of NOK The Shares are fully paid and issued in accordance with Norwegian law. The Shares are registered in the VPS register with ISIN NO The Shares are equal in all respects and each share carry one vote at the Company s General Meeting. 9.2 HISTORICAL DEVELOPMENT IN SHARE CAPITAL AND NUMBER OF SHARES The development of the Company s share capital since 1 January 2003 is set forth in the table below. Time Event Capital increase Par value (NOK) Share price Share capital (NOK) Shares issued ,750,000 11,500, Write down of -27,600, ,150,000 11,500,000 share capital Equity issue 1,000, ,150,000 21,500, Partial settlement acquisition of FM- Kartta 215, ,365,000 23,650, Partial settlement acquisition of Blom Norkart Mapping Partial settlement acquisition of Blom Norkart Mapping Settlement for acquisition of Geonet SRL Settlement for acquisition of Geo- Tec Gmbh Partial settlement for acquisition of Simmons Aerofilms Ltd Partial settlement for acquisition of CGR Partial settlement for acquisition of Seficart Group Partial settlement for acquisition of Scanrope Holding 200, ,565,000 25,650, , ,672,500 26,725,000 54, ,727,100 27,271, , ,892,700 28,927, , ,157,700 31,577,000 79, ,236,900 32,369,000 57, ,294,170 32,941, ,564, ,673, ,737, Private placement 360, ,033, ,337, Settlement for acquisition of Opera Wireless 136, ,170,063,60 41,700, Rights issue 21,294, ,464, ,647, Reverse split 10,00 25,464, ,546, Reduction of share capital thru reducing the nominal value 0,50 1,273,236 2,546, Conversion of bond debt to share capital [date] Conversion of bond debt to share capital 15,575, ,848,862 33,697,725 48,688, ,353,245 1,007,064,

65 The rationale to reduce the nominal value of the share in April 2012 was due to the fact that the Company's shares have traded at a price that is close to the nominal value of the shares. The fact that the nominal value is so high in relation to the market value limits the Company's flexibility to increase the share capital. The Board of Directors therefore proposed a reduction in capital in the form of a reduction in the nominal value of the shares. As of the date of this Prospectus the Company s registered share capital is NOK 50,353,245 divided into 1,007,064,900 Shares with a par value of NOK This amount includes the New Shares issued under the conversion of debt to equity. 9.3 AUTHORISATION TO ISSUE SHARES The Board of Directors currently does not have any authorisations to issue shares. 9.4 AUTHORISATION TO REPURCHASE SHARES On 27 September 2013 Blom s Extraordinary General Meeting granted the Board of Directors an authorisation to acquire shares in Blom for up to NOK 5,035,324 calculated based on the shares' nominal value. The Board of Directors' acquisition of shares under the authorisation can only take place between a minimum price of NOK 0.01 and a highest price of NOK 50 per share (after conversion and combination of shares). The authorisation applies from registration in the Register of Business Enterprises and up until the ordinary general meeting in the spring of 2014, but no later than 30 June Acquisition and disposal of treasury shares can take place in the manner found appropriate by the Board of Directors. 9.5 OPTIONS AND WARRANTS Blom has not issued any warrants, options and/or other subscription rights. 9.6 OWN SHARES As of the date of this Prospectus the Company holds 10,707 treasury shares. Voting rights cannot be exercised for the Company's treasury shares, and they shall not be counted when a resolution requires approval by a certain percentage of the share capital, cf. section 5-4 of the Public Limited Liability Companies Act. 9.7 OWNERSHIP STRUCTURE Shareholders holding 5% or more of the Shares in the Company have an interest in the Company s share capital which is notifiable pursuant to the Norwegian Securities Trading Act, see further description of disclosure obligations in Section 10.7 Disclosure obligations below. At the date of this Prospectus, the following shareholders own more than 5% of the outstanding shares in the Company (after completion of the Financial Restructuring and the conversion of debt to equity): As of 29 October 2013 the registered ownership structure is as follows: Name of shareholder Number of Shares Percentage (%) Mercxk ,94 % Bergen Kommunale Pensjonskasse ,6 % Bolus Johansen ,8 % Nordnet Bank AB ,7 % Except for the above, the Company is not aware of any other shareholders or consolidated groups of shareholders owning more than 5% of the Shares. As of the date of this Prospectus, the Company is not aware of any arrangements or agreements that may result in, prevent, or restrict a change of control in the Company. 9.8 SHARE REGISTRAR AND SECURITIES NUMBER The Shares are registered in the VPS. The Shares current securities number is ISIN NO The shares are listed on Oslo Stock Exchange under ticker code BLO. The Registrar for the Shares is DNB Verdipapirservice, Dronning Eufemias gate 30, 0191 Oslo, Norway. 9.9 DIVIDEND POLICY In accordance with the Company s future growth goals, Blom will seek to maintain a sound financial platform. Dividends have historically been considered on an on-going basis as a result of the Company s strategy and earnings. No dividend has been paid during the last three years. 64

66 9.10 SHAREHOLDER AGREEMENTS The Company is not aware of any shareholder agreements in respect of the Shares TRANSACTIONS WITH RELATED PARTIES The Company has not during the last three financial years and up until the date of this Prospectus had any closely related parties other than its subsidiaries and associated companies. The Company has had one transaction with an associated company, Ndrive which involved the sale of technology rights related to navigation on mobile devices (August 2010). The revenue impact for the Company in 2010 was NOK 25 million. In relation to this sale there was granted a loan of NOK 23 million to Ndrive which was later written down to NOK 7 million. The transactions between the Company and its subsidiaries and associated companies are listed in note 15 to Blom s annual reports for 2010, 2011 and 2012, incorporated hereto by reference. 65

67 10 SHAREHOLDER MATTERS AND NORWEGIAN COMPANY AND SECURITIES LAW 10.1 GENERAL MEETING According to the Public Limited Companies Act, a company s shareholders exercise their voting rights in the company at the General Meeting. A shareholder may attend the General Meeting either in person or by proxy. According to the Securities Trading Act section 5-9 (3) a company listed on Oslo Børs shall send proxy forms to its shareholders prior to its General Meetings, unless such form is made available to the shareholders on the internet site of the company and the notice of the General Meeting includes all information needed by the shareholders to gain access to the documents, including the internet address. In accordance with the Public Limited Companies Act, the Annual General Meeting of the company shall be held each year no later than 30 June. The following matters must be on the agenda for the Annual General Meeting: approval of the annual accounts and annual report, including the distribution of any dividends the statement of the Board of Directors with regard to remuneration and benefits to the company s managing director and other senior management; a statement of principles and practice for corporate governance; and any other business required to be discussed at the General Meeting by law or in accordance with the company s Articles of Association. The Public Limited Companies Act requires that publicly listed companies send written notice of General Meetings to all shareholders at least 21 days prior to the date of the General Meeting. Shareholders who want to participate at the Company s general meeting shall give notice to the Company by the deadline stated in the notice for the General Meeting. The deadline for giving notice of participation at the General Meeting is normally the day before the meeting. Any shareholder of the Company is entitled to demand that a matter is added to the agenda of a General Meeting provided that such shareholder provides the Board of Directors with a written notice of the matter at least seven days prior to the deadline for submitting the notice of the General Meeting. In addition to the Annual General Meeting, extraordinary general meetings of shareholders may be held if deemed necessary by the Company s Board of Directors. An Extraordinary General Meeting shall also be convened for the consideration of specific matters at the written request of the Company s auditor or shareholders representing in total at least 5% of the share capital of the Company VOTING RIGHTS The Public Limited Companies Act sets forth that each share in a company shall represent a right to one vote at the general meeting. No voting rights can be exercised with respect to treasury shares (own shares) held by a company. In general, decisions that shareholders are entitled to make under the Public Limited Companies Act or the Company s Articles of Association may be made by a simple majority of the votes cast. In the case of elections, the persons who obtain the most votes cast are elected. However, certain decisions, including but not limited to resolutions to: authorise an increase or reduction of the Company s share capital, authorise an issuance of convertible loans or warrants, authorise the Board of Directors to purchase the Company's own shares and hold them as treasury shares, waive preferential rights in connection with a share issue, approve a merger or demerger, and amend the Company s Articles of Associations, must receive the approval of at least two-thirds of the aggregate number of votes cast at the General Meeting, as well as at least two-thirds of the share capital represented at the General Meeting. The Public Limited Companies Act further requires that certain decisions, which have the effect of substantially altering the rights and preferences of any shares or class of shares, receive the approval of the holders of such shares or class of shares as well as the majority required for amendments to the Articles of Association. Decisions that (i) would reduce the rights of some or all of the Company's shareholders in respect of dividend payments or other rights to assets or (ii) restrict the transferability of the Shares, require that at least 90 per cent 66

68 of the share capital represented at the Company s general meeting vote in favour of the resolution, as well as the majority required for amending the Articles of Association. Decisions which (i) increases the shareholders' obligations towards the Company, (ii) restricts the shareholders' right to transfer their shares other than requiring consent, (iii) make shares subject to forced redemption, (iv) changes the legal relationship between previously equal shares and (v) reduces the shareholders' right to dividends or the Company's capital, require the approval of all shareholders in the Company. In general, only a shareholder registered in the VPS is entitled to vote for such Shares. Beneficial owners of the Shares that are registered in the name of a nominee are generally not entitled to vote under Norwegian law, nor are any person who is designated in the VPS register as the holder of such Shares as nominees. Investors should note that there are varying opinions as to the interpretation of the right to vote on nominee registered shares. There are no quorum requirements for the General Meeting of the Company ADDITIONAL ISSUANCES AND PREFERENTIAL RIGHTS If a public limited company issues any new shares, including bonus share issues (involving the issuance of new shares by a transfer from the company s share premium reserve or distributable equity to the share capital), such decision requires a two-thirds majority of the votes cast and the share capital represented at a General Meeting of shareholders. In connection with an increase in the Company s share capital by a subscription for Shares against cash contributions, Norwegian law provides the Company s shareholders with a preferential right to subscribe for the new Shares on a pro rata basis based on their then-current shareholding in the Company. The preferential rights to subscribe for Shares in a Share issue may be waived by a resolution in the General Meeting with the same voting requirements as for amendments to the Articles of Association. A waiver of the shareholders preferential rights in respect of bonus issues requires the approval of all outstanding Shares. The General Meeting may, with two-thirds majority vote as described above, authorise the Board of Directors to issue new Shares. Such authorisation may be effective for a maximum of two years, and the par value of the Shares to be issued may not exceed 50 per cent of the nominal share capital at the time the authorisation is registered in the Norwegian Register of Business Enterprises. The Corporate Governance Code recommends that the authorisation is limited to specific purposes and not valid for longer than until the next Annual General Meeting. The preferential right to subscribe for Shares against consideration in cash may be set aside by the Board of Directors only if the authorisation includes such option for the Board of Directors. To issue Shares to shareholders who are citizens or residents of the United States upon the exercise of preferential rights, the Company may be required to file a registration statement in the United States under U.S. securities laws. If the Company decides not to file a registration statement, these holders may not be able to exercise their preferential rights. Under Norwegian law, bonus shares may be issued, subject to shareholder approval and provided, amongst other requirements, that the Company does not have an uncovered loss from a previous accounting year, by transfer from the Company s distributable equity or from the Company s share premium reserve. Any bonus issues may be accomplished either by issuing Shares or by increasing the par value of the outstanding Shares. If the increase in share capital is to take place by new Shares being issued, these new Shares must be allotted to the shareholders of the Company in proportion to their current shareholding in the Company MINORITY RIGHTS The Public Limited Companies Act contains a number of provisions protecting minority shareholders against oppression by the majority, including but not limited to those described in this and preceding sections. Any shareholder may petition the courts to have a decision of the company s Board of Directors or General Meeting declared invalid on the grounds that it unreasonably favours certain shareholders or third parties to the detriment of other shareholders or the Company itself. In certain grave circumstances, shareholders may require the courts to dissolve the company as a result of such decisions. Shareholders holding in aggregate 5% or more of a public limited company s share capital have a right to demand that the company holds an Extraordinary General Meeting to address specific matters. In addition, any shareholder may demand that the company places an item on the agenda for any General Meeting if the company is notified in time for such item to be included in the notice of the Meeting MANDATORY OFFER REQUIREMENTS The Norwegian Securities Trading Act requires any person, entity or consolidated group that becomes the owner of shares representing more than one-third of the voting rights of a Norwegian company listed on a Norwegian regulated market to, within four weeks, make an unconditional general offer for the purchase of the remaining shares in that company. A mandatory offer obligation may also be triggered where a party acquires the right to become the owner of shares that, together with the party s own shareholding, represent more than one-third of the voting rights in the company and the Oslo Stock Exchange decides that this is regarded as an effective 67

69 acquisition of the shares in question. The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells the portion of the shares that exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered. When a mandatory offer obligation is triggered, the person subject to the obligation is required to immediately notify the Oslo Stock Exchange and the company in question accordingly. The notification is required to state whether an offer will be made to acquire the remaining shares in the company or whether a sale will take place. As a rule, a notification to the effect that an offer will be made cannot be retracted. The offer and the offer document required are subject to approval by the Oslo Stock Exchange before the offer is submitted to the shareholders or made public. The offer price per share must be at least as high as the highest price paid or agreed by the offeror for the shares in the six-month period prior to the date the threshold was exceeded. However, if it is clear that that the market price was higher when the mandatory offer obligation was triggered, the Norwegian Securities Trading Act states that the offer price shall be at least as high as the market price. If the acquirer acquires or agrees to acquire additional shares at a higher price prior to the expiration of the mandatory offer period, the acquirer is obliged to restate its offer at such higher price. A mandatory offer must be in cash or contain a cash alternative at least equivalent to any other consideration offered. In case of failure to make a mandatory offer or to sell the portion of the shares that exceeds the relevant threshold within four weeks, the Oslo Stock Exchange may force the acquirer to sell the shares exceeding the threshold by public auction. Moreover, a shareholder who fails to make an offer may not, as long as the mandatory offer obligation remains in force, exercise rights in the company, such as voting in a general meeting of the Company s shareholders, without the consent of a majority of the remaining shareholders. The shareholder may, however, exercise his/her/its rights to dividends and pre-emption rights in the event of a share capital increase. If the shareholder neglects his/her/its duty to make a mandatory offer, the Oslo Stock Exchange may impose a cumulative daily fine that runs until the situation has been rectified. Any person, entity or consolidated group that owns shares representing more than one-third of the votes in a Norwegian company listed on a Norwegian regulated market is obliged to make an offer to purchase the remaining shares of the company (repeated offer obligation) if the person entity or consolidated group through acquisition becomes the owner of shares representing 40%, or more of the votes in the company. The same applies correspondingly if the person, entity or consolidated group through acquisition becomes the owner of shares representing 50% or more of the votes in the company. The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells the portion of the shares which exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered. Any person, entity or consolidated Group that has passed any of the above mentioned thresholds in such a way as not to trigger the mandatory bid obligation, and has therefore not previously made an offer for the remaining shares in the company in accordance with the mandatory offer rules is, as a main rule, obliged to make a mandatory offer in the event of a subsequent acquisition of shares in the company. The Company has not received any takeover bids or bids to acquire controlling interest during the last 12 months COMPULSORY ACQUISITION Pursuant to the Norwegian Public Limited Liability Companies Act and the Norwegian Securities Trading Act, a shareholder who, directly or through subsidiaries, acquires shares representing more than 90% of the total number of issued shares in a Norwegian public limited liability company, as well as more than 90% of the total voting rights, has a right, and each remaining minority shareholder of the company has a right to require such majority shareholder, to effect a compulsory acquisition for cash of the shares not already owned by such majority shareholder. Through such compulsory acquisition the majority shareholder becomes the owner of the remaining shares with immediate effect. If a shareholder acquires shares representing more than 90% of the total number of issued shares, as well as more than 90% of the total voting rights, through a voluntary offer in accordance with the Norwegian Securities Trading Act, a compulsory acquisition can, subject to the following conditions, be carried out without such shareholder being obliged to make a mandatory offer: (i) the compulsory acquisition is commenced no later than four weeks after the acquisition of shares through the voluntary offer, (ii) the price offered per share is equal to or higher than what the offer price would have been in a mandatory offer, and (iii) the settlement is guaranteed by a financial institution authorised to provide such guarantees in Norway. 68

70 A majority shareholder who effects a compulsory acquisition is required to offer the minority shareholders a specific price per share, the determination of which is at the discretion of the majority shareholder. However, where the offeror, after making a mandatory or voluntary offer, has acquired more than 90% of the voting shares of a company and a corresponding proportion of the votes that can be cast at the general meeting, and the offeror pursuant to Section 4-25 of the Public Limited Companies Act completes a compulsory acquisition of the remaining shares within three months after the expiry of the offer period, it follows from the Norwegian Securities Trading Act that the redemption price shall be determined on the basis of the offer price for the mandatory /voluntary offer unless specific reasons indicate another price. Should any minority shareholder not accept the offered price, such minority shareholder may, within a specified deadline of not less than two months, request that the price be set by a Norwegian court. The cost of such court procedure will, as a general rule, be the responsibility of the majority shareholder, and the relevant court will have full discretion in determining the consideration to be paid to the minority shareholder as a result of the compulsory acquisition. Absent a request for a Norwegian court of law to set the price or any other objection to the price being offered, the minority shareholders would be deemed to have accepted the offered price after the expiry of the specified deadline DISCLOSURE OBLIGATIONS Pursuant to the Securities Trading Act, a person, entity or a group acting in concert acquires or disposes shares or rights to shares, i.e. convertible loans, subscription rights, options to purchase shares and similar rights to shares, which results in beneficial ownership, directly or indirectly, in the aggregate, reaching or exceeding or falling below the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital, or a corresponding portion of the votes, is obligated to notify the Oslo Stock Exchange and the issuer immediately. Certain voting rights are counted on equal basis as shares and rights to shares. A change in ownership level due to other circumstances (i.e. other than acquisition or disposal) can also trigger the notification obligations when the said thresholds are passed, e.g. changes in the company s share capital RIGHTS OF REDEMPTION AND REPURCHASE OF SHARES The share capital of the Company may be reduced by reducing the par value of the Shares or by redeeming Shares. Such a decision requires the approval of at least two thirds of the aggregate number of votes cast and at least two thirds of the share capital represented at a general meeting of the Company's shareholders. Redemption of individual Shares requires the consent of the holders of the Shares to be redeemed. The Company may purchase its own Shares provided that the Board of Directors has been granted an authorisation to do so by the general meeting with the approval of at least two thirds of the aggregate number of votes cast and at least two thirds of the share capital represented at the meeting. The aggregate par value of treasury shares so acquired, and held by the Company, must not exceed 10 per cent of the Company's share capital, and treasury shares may only be acquired if the Company's distributable equity, according to the latest adopted balance sheet, exceeds the consideration to be paid for the shares SHAREHOLDER VOTE ON CERTAIN REORGANISATIONS A decision to merge with another company or to demerge requires a resolution of the Company s shareholders at a General Meeting passed by two-thirds of the aggregate votes cast, as well as two-thirds of the aggregate share capital represented at the General Meeting. A merger plan or de-merger plan signed by the Company s Board of Directors along with certain other required documentation shall be sent to all shareholders and registered with the Norwegian Register of Business Enterprises at least one month prior to the General Meeting to decide upon the matter DISTRIBUTION OF DIVIDENDS Dividends may be paid in cash or in some instances in kind. Pursuant to the Norwegian Public Limited Companies Act, a public company may only distribute dividends to the extent it after the distribution has net assets covering the company's share capital and other restricted equity. The calculation shall be made on the basis of the balance sheet in the company's last approved financial statements, however so that it is the registered share capital on the time of decision that applies. In the amount that may be distributed according to the first paragraph, a deduction shall be made for (i) the aggregate nominal value of treasury shares held by the company, (ii) credit and collateral pursuant to sections 8-7 and 8-10 of the Norwegian Public Limited Companies Act, with the exception of credit and collateral repaid or settled prior to the time of decision or credit which is settled by a netting in the dividend and (iii) other dispositions after the balance day which pursuant to the law shall lie within the scope of the funds that the company may use to distribute dividend. 69

71 Even if all other requirements are fulfilled, the company may only distribute dividend to the extent that it after the distribution has a sound equity and liquidity. Distribution of dividends is resolved by a majority vote at the general meeting of the shareholders of the Company, and on the basis of a proposal from the Board of Directors. The general meeting cannot distribute a larger amount than what is proposed or accepted by the Board of Directors. According to the Norwegian Public Limited Companies Act, there is no time limit after which entitlement to dividends lapses. Further, there are no dividend restrictions or specific procedures for non-norwegian resident shareholders in the Act DISTRIBUTION OF ASSETS ON LIQUIDATION According to the Public Limited Companies Act, a company may be wound-up by a resolution of the company s shareholders in a General Meeting passed by the same vote as required with respect to amendments to the Articles of Association. The shares rank equally in the event of a return on capital by the Company upon a winding-up or otherwise THE VPS AND TRANSFER OF SHARES The VPS is the Norwegian paperless centralised securities registry. It is a computerised bookkeeping system in which the ownership of, and all transactions relating to, Norwegian listed shares must be recorded. The Company s share register is operated through the VPS. All transactions relating to securities registered with the VPS are made through computerised book entries. No physical share certificates are, or may be, issued. The VPS confirms each entry by sending a transcript to the registered shareholder irrespective of any beneficial ownership. To affect such entries, the individual shareholder must establish a share account with a Norwegian account agent. Norwegian banks, Norges Bank, authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA are allowed to act as account agents. The entry of a transaction in the VPS is prima facie evidence in determining the legal rights of parties as against the issuing company or a third party claiming an interest in the given security. The VPS is liable for any loss suffered as a result of faulty registration or an amendment to, or deletion of, rights in respect of registered securities unless the error is caused by matters outside the VPS s control and which the VPS could not reasonably be expected to avoid or overcome the consequences of. Damages payable by the VPS may, however, be reduced in the event of contributory negligence by the aggrieved party. A transferee or assignee of shares may not exercise the rights of a shareholder with respect to such shares unless such transferee or assignee has registered such shareholding or has reported and shown evidence of such share acquisition, and the acquisition of shares is not prevented by law, the Articles of Association or otherwise SHAREHOLDERS REGISTER Under Norwegian law shares are registered in the name of the owner of the shares. As a general rule, there are no arrangements for nominee registration and Norwegian shareholders are not allowed to register their shares in VPS through a nominee. However, shares may be registered in the VPS by a fund manager (bank or other nominee) approved by the Norwegian Ministry of Finance, as the nominee of foreign shareholders. An approved and registered nominee has a duty to provide information on demand about beneficial shareholders to the company and to the Norwegian authorities. In the case of registration by nominees, registration with the VPS must show that the registered owner is a nominee. A registered nominee has the right to receive dividends and other distributions but cannot vote at General Meetings on behalf of the beneficial owners. Beneficial owners must register with the VPS or provide other sufficient proof of their ownership to the shares in order to vote at General Meetings THE ARTICLES OF ASSOCIATION The Articles of Association of the Company (last amended 27 September 2013) are incorporated by reference to this Prospectus (Se section 13.2 Incorporation by reference ). The following is a summary of provisions of the Company s Articles of Association as of the date of this Prospectus, some of which have not been addressed in the preceding discussion. Section 2 The Company's objective is, to perform maritime and land mapping, surveying and data services, to engage in industrial, trading, agency and consulting activities, and other activities related to the above objects including the operation and management of the company's own properties and other resources. 70

72 The objects can also be pursued through participation in or cooperation with other enterprises and companies in Norway and abroad. Section 3 The Company's registered office is in the municipality of Oslo, Norway. Section 4 The Company's share capital is NOK 50,353, divided into 1,007,064,885 shares, each with a nominal value of NOK Section 5 The Company's Board of Directors shall consist of 4 to 6 board members. The Board of Directors is elected for two years at a time. It is possible to elect as many deputy members as there are members of the Board. The deputy members are also elected for two years at a time. Section 6 The right to sign for the Company is held by the Managing Director and the Board Chairman jointly or the Managing Director and two Board Member jointly or the Board Chairman and two Board Members jointly. The Managing Director has the Company's power of procuration. The board may grant power of procuration to others as well INSIDER TRADING According to Norwegian law, subscription for, purchase, sale or exchange of financial instruments that are listed, or subject to the application for listing, on a Norwegian regulated market, or incitement to such dispositions, must not be undertaken by anyone who has inside information, as defined in Section 3-2 of the Securities Trading Act. The same applies to the entry into, purchase, sale or exchange of options or futures/forward contracts or equivalent rights whose value is connected to such financial instruments or incitement to such dispositions. 71

73 11 NORWEGIAN TAXATION Set out below is a summary of certain Norwegian tax matters related to the purchase, holding and disposal of Shares. The summary is based on Norwegian laws, rules and regulations applicable as of the date of this Prospectus, and is subject to any changes in law occurring after such date. Such changes could possibly be made on a retroactive basis. The summary does not address foreign tax laws. The summary is of a general nature and does not purport to be a comprehensive description of all the Norwegian tax considerations that may be relevant for a decision to acquire, own or dispose of Shares. Shareholders who wish to clarify their own tax situation should consult with and rely upon their own tax advisors. Shareholders resident in jurisdictions other than Norway should consult with and rely upon local tax advisors with respect to the tax position in their country of residence. The statements only apply to shareholders who are beneficial owners of the shares. Please note that for the purpose of the summary below, a reference to a Norwegian or Non-Norwegian shareholder refers to the tax residency rather than the nationality of the shareholder Norwegian Shareholders This section summarises certain Norwegian tax rules relevant to shareholders that are residents of Norway for Norwegian tax purposes ( Norwegian Shareholders ) Taxation of dividends Norwegian Personal Shareholders Dividends received by shareholders who are individuals tax-resident in Norway ( Norwegian Personal Shareholders ) from a limited liability company tax-resident in Norway are subject to tax in Norway as general income at a flat rate of 28%. Norwegian Personal Shareholders may be entitled to deduct a calculated allowance when calculating their taxable dividend income. The allowance is calculated on a share-by-share basis, and the allowance for each share is equal to the cost price of the share, multiplied by a risk-free interest rate. The allowance is calculated for each calendar year, and is allocated solely to Norwegian Personal Shareholders holding shares as of 31 December of the relevant calendar year. Norwegian Personal Shareholders who transfer shares will thus not be entitled to deduct any calculated allowance related to the year of transfer. Any part of the calculated allowance one year exceeding the dividend distributed on the share can be forwarded and deducted when calculating taxable dividend income on the same share a later year. Furthermore, unused allowance can be added to the cost price of the share and included in the basis for calculating the allowance on the same share the following years. Norwegian Corporate Shareholders Dividends received by shareholders that are limited liability companies, equities funds, savings banks, mutual insurance companies or similar entities tax-resident in Norway ( Norwegian Corporate Shareholders ) from a limited liability company tax-resident in Norway are comprised by the participation exemption method. Three percent of the dividends comprised by the participation exemption method is to be entered as general income and taxed at the flat rate of 28%, implying that such dividend is effectively taxed at a rate of 0.84%. Norwegian Shareholders holding shares through partnerships Partnerships are as a general rule transparent for Norwegian tax purposes. Taxation occurs at partner level, and each partner is taxed on a current basis for its proportional share of the net income generated by the partnership at a rate of 28%, regardless of whether such income is distributed to the partners or not. For partnerships, dividends received on shares from a limited liability company tax-resident in Norway are comprised by the participation exemption method. Three percent of the dividends comprised by the participation exemption method is to be entered as general income and taxed at the flat rate of 28%, implying that such dividend is effectively taxed at a rate of 0.84%. For partners who are Norwegian Personal Shareholders, further taxation occurs when the dividends received are distributed from the partnership to such partners. Such distributions will be taxed as general income at a rate of 28%. The Norwegian Personal Shareholders will be entitled to deduct a calculated allowance when calculating their taxable income from the partnership. Norwegian Corporate Shareholders holding shares through a partnership are exempt from further taxation when the dividends received are distributed by the partnership. For partners who are Norwegian Corporate Shareholders three percent of the distribution comprised by the participation exemption method will be entered as general income and taxed at the flat rate of 28%, implying that such distributions are effectively taxed at a rate of 0.84%. 72

74 Taxation of capital gains on realisation of shares Norwegian Personal Shareholders Sale, redemption or other disposal of shares is considered a realisation for Norwegian tax purposes. A capital gain or loss generated by a Norwegian personal shareholder through a disposal of shares is taxable or tax deductible in Norway. Such capital gain or loss is included in or deducted from the basis for computation of general income in the year of realisation. General income is taxable at a rate of 28%. Gain is subject to tax and loss is tax deductible irrespective of the duration of the ownership and the number of shares disposed of. The capital gain is calculated as the consideration received less the cost price of the share, including costs incurred in relation to the acquisition or realisation of the share. From this capital gain, Norwegian Personal Shareholders may be entitled to deduct a calculated allowance when calculating their taxable income, provided that the allowance has not already been used to reduce taxable dividend income, cf. above. The allowance for each share will be equal to the cost price of the share multiplied by a determined risk-free interest rate. The allowance is calculated per each calendar year, and is allocated solely to Norwegian Personal Shareholders holding shares as of 31 December of the relevant calendar year. Norwegian Personal Shareholders who transfer shares will thus not be entitled to deduct any calculated allowance related to the year of transfer. The unused allowance may only be deducted in order to reduce a taxable gain on the same share, and may not be deducted in order to increase or produce a deductible loss. Further, unused allowance may not be set off against gains from realisation of other shares. If the shareholder owns shares acquired at different points in time, the shares that were acquired first will be regarded as the first to be disposed of, on a first-in first-out basis. Special rules apply for Norwegian Personal Shareholders who cease to be tax-resident in Norway. Norwegian Corporate Shareholders Sale, redemption or other types of disposal of shares is considered realisation for Norwegian tax purposes. Capital gains derived from the realisation of shares qualifying for the participation exemption method are exempted from taxation. Losses incurred upon realization of such shares are not deductible. Norwegian Shareholders holding shares through partnerships Partnerships are as a general rule transparent for Norwegian tax purposes. Taxation occurs at partner level, and each partner is taxed on a current basis for its proportional share of the net income generated by the partnership at a rate of 28%, regardless of whether such income is distributed to the partners or not. For partnerships, realisation of shares in a limited liability company tax-resident in Norway is comprised by the participation exemption method. Capital gains derived from the realisation of shares qualifying for the participation exemption method are exempted from taxation. Losses incurred upon realization of such shares are not deductible. If the shares are acquired at different points in time, the shares that were acquired first will be regarded as the first to be disposed of, on a first-in first-out basis. For partners who are Norwegian Personal Shareholders, further taxation occurs when the capital gains received are distributed from the partnership to such partners. Such distributions will be taxed as general income at a rate of 28%. The Norwegian Personal Shareholders should be entitled to deduct a calculated allowance when calculating their taxable income from the partnership. Norwegian Corporate Shareholders holding shares through a partnership are exempt from further taxation when the capital gains received are distributed by the partnership For partners who are Norwegian Corporate Shareholders further taxation occurs when the capital gains received are distributed from the partnership to such partners. Three per cent of such distributions comprised by the participation exemption method will be entered as general income and taxed at the flat rate of 28%, implying that such distributions are effectively taxed at a rate of 0.84%, conf. Section above NET WEALTH TAX For Norwegian Personal Shareholders, shares will form part of their basis for calculation of Norwegian net wealth tax. Listed shares are valued at 100% of their quoted value as of 1 January in the assessment year (the year following the income year). The current marginal net wealth tax rate is 1.1% of the value assessed. Norwegian Corporate Shareholders are exempt from Norwegian net wealth tax Foreign Shareholders This section summarises certain Norwegian tax rules relevant to shareholders that are not resident in Norway for Norwegian tax purposes ( Foreign Shareholders ). The potential tax liabilities for foreign shareholders in the jurisdiction where they are resident for tax purposes or other jurisdictions will depend on tax rules applicable in the relevant jurisdiction. 73

75 Taxation of dividends General Dividends paid by Norwegian limited liability companies and similar entities to Foreign Shareholders, both corporate and individuals, are as a general rule subject to withholding tax in Norway at the regular rate of 25%, unless otherwise provided for in an applicable income tax treaty or the recipient is covered by the specific regulations for corporate shareholders tax-resident within the European Economic Area (EEA). The withholding obligation lies with the company distributing the dividends. In accordance with the present administrative system in Norway, the Norwegian distributing company will normally deduct withholding tax at the regular rate or reduced rate according to an applicable tax treaty, based on the information registered with the VPS with regard to the tax- residence of the Foreign Shareholder. Dividends paid to Foreign Shareholders in respect of nominee- registered shares will be subject to withholding tax at the general rate of 25% unless the nominee, by agreeing to provide certain information regarding beneficial owners, has obtained approval for a reduced rate from the Central Office for Foreign Tax Affairs (Nw. Sentralskattekontoret for utenlandssaker). Foreign Shareholders that are exempt from withholding tax and Foreign Shareholders who have suffered a higher withholding tax than set out by an applicable tax treaty can apply for a refund of any excess withholding tax deducted. If a Foreign Shareholder is engaged in business activities in Norway, and the shares are effectively connected with such business activities, dividends distributed to such shareholder will generally be subject to the same taxation as that of Norwegian Shareholders, as described above. Foreign Shareholders should consult their own advisers regarding the availability of treaty benefits in respect of dividend payments, including the ability to effectively claim refunds of withholding tax. Foreign Shareholders tax-resident within the EEA Foreign Shareholders who are individuals tax-resident within the EEA for tax purposes ( Foreign Personal EEA Shareholders ) are upon request entitled to a deductible allowance. The shareholder shall pay the lesser amount of (i) withholding tax according to the rate in an applicable tax treaty or (ii) withholding tax at 25% of taxable dividends after allowance. Foreign Personal EEA Shareholders may carry forward any unused allowance, if the allowance exceeds the dividends. Foreign Shareholders who are corporations tax-resident within the EEA ( Foreign Corporate EEA Shareholders ) are exempt from Norwegian tax on dividends distributed from Norwegian limited liability companies, provided that the Foreign Corporate EEA Shareholder in fact is genuinely established within the EEA and manages a genuine business within the EEA TAXATION OF CAPITAL GAINS ON REALISATION OF SHARES As a general rule, capital gains generated by Foreign Shareholders are not taxable in Norway. If a Foreign Shareholder is engaged in business activities in Norway, and the shares are effectively connected with such business activities, capital gains realised by such shareholder will generally be subject to the same taxation as that of Norwegian Shareholders, c.f. the description of tax issues related to Norwegian Shareholders above NET WEALTH TAX Foreign Shareholders are as a general rule not subject to net wealth tax in Norway on shares unless the shareholder is an individual who is engaged in business activities in Norway, and the shares are effectively connected with such business activities INHERITANCE TAX When shares are transferred either through inheritance or as a gift, such transfer may give rise to inheritance tax in Norway if the decedent, at the time of death, or the donor, at the time of the gift, is a resident or citizen of Norway, or if the shares are effectively connected with a business carried out through a permanent establishment in Norway. However, in the case of inheritance, if the decedent was a citizen but not a resident of Norway, Norwegian inheritance tax will not be levied if inheritance tax or a similar tax is levied by the decedent s country of residence. The basis for the computation of inheritance tax is the market value at the time the transfer takes place. The rate is progressive from 0% to 15%. For inheritance and gifts from parents to children the maximum rate is 10% VAT AND TRANSFER TAXES Norway does not impose VAT, stamp duty or similar taxes on the transfer of shares. 74

76 12 LEGAL MATTERS 12.1 DISPUTES ACTUAL AND POTENTIAL DISPUTES The Company is and will in the future be involved in disputes and potentially legal proceedings in the course of its regular business operations. Pictometry agreement As the Company has disclosed through stock exchange announcements, the annual report for 2011 and 2012 and the company's prospectus from March 2011 and May 2012, there has been an on-going dispute between Pictometry International Corp. and Blom ASA concerning the license agreement entered into on 29 January This dispute was to be resolved by arbitration in accordance with the ICC rules in London in A final settlement between Pictometry International Corp. and Blom ASA for this dispute was entered into on 6 February 2013 Except for the above, neither the Company nor any other company in the Group are, nor have been during the course of preceding 12 months, involved in any governmental, legal or arbitration proceedings which may have, or have had in the recent past, significant effects on the Company or the Group s financial or trading position and the Company is not aware of any such proceedings which are pending or threatened. 75

77 13 ADDITIONAL INFORMATION 13.1 DOCUMENTS ON DISPLAY For the life of this Prospectus the following documents (and copies thereof) are available for inspection at the Company s offices and can be downloaded from the Company's web page ( Articles of Association of Blom All reports, letters and other documents, historical financial information, valuations and statements prepared by any expert at the issuer's request any part of which is included or referred to in the registration document; Historical financial information for the Group s annual accounts for 2010, 2011 and 2012; Historical financial information for the Group s quarterly accounts for the period ending 30 June 2012 and June 2013 Historical financial information for the Company s subsidiaries for the last two financial years; and Stock exchange notices, including quarterly reports, distributed by the Company through Oslo Stock Exchange information system NewsWeb INCORPORATION BY REFERENCE The information incorporated by reference in this Prospectus shall be read in connection with the cross-reference list as set out in the table below except as provided in this Section, no other information is incorporated by reference into this Prospectus. The Annual Reports for 2010, 2011 and 2012, quarterly reports for the period ending 30 June 2012 and 30 June 2013 as well as the Company s Articles of Association are incorporated by reference. Reference Blom s audited annual report for 2012, including an overview of the Company s accounting policy, explanatory notes and auditor s statement. Blom s audited annual report for 2011, including an overview of the Company s accounting policy, explanatory notes and auditor s statement. Blom s audited annual report for 2010, including an overview of the Company s accounting policy, explanatory notes and auditor s statement. Blom s unaudited quarterly report for Q and 1 st half of 2013 Section in the Incorporated by reference Prospectus 9 The consolidated financial information in Blom s annual report for 2012, including income statement, balance sheet, changes in equity, cash flow statement, an overview of accounting principles, explanatory notes and the auditor s report. 9 The consolidated financial information in Blom s annual report for 2011, including income statement, balance sheet, changes in equity, cash flow statement, an overview of accounting principles, explanatory notes and the auditor s report. 9 The consolidated financial information in Blom s annual report for 2010, including income statement, balance sheet, changes in equity, cash flow statement, an overview of accounting principles, explanatory notes and the auditor s report. 9 The consolidated financial information in Blom s quarterly report for Q and 1 st half of 2013 including income statement, balance sheet, changes in equity, cash flow statement and segment information Website nvestor-relations/reportsandannouncements/annualreport-2012-en.html nvestor-relations/reportsandannouncements/annualreport-2011-en html nvestor-relations/reportsandannouncements/annualreport-2010.html orporate/investorrelations/financials/financi al-reports.html m_asa_bis/investor_relatio ns/blom_2q%202013_res ult%20report.pdf 76

78 Blom s unaudited quarterly report for Q and 1 st half of The consolidated financial information in Blom s quarterly report for Q and 1 st half of 2012 including income statement, balance sheet, changes in equity, cash flow statement and segment information m_asa_bis/investor_relatio ns/blom_2q 2013_Result Report.pdf m_asa_bis/investor_relatio ns/blom_2q_report% pdf Articles of Association The Articles of Association of Blom nvestorrelations/corporategovernance-en/articles-ofassociation-en.html 77

79 14 DEFINITIONS AND GLOSSARY OF TERMS Annual Report The Company s consolidated annual report Annual General Meeting The annual general meeting of Blom Anti-Money Laundering Legislation The Norwegian Money Laundering Act No. 11 of 6 March 2009 and the Norwegian Money Laundering Regulations No. 302 of 13 March 2009 Articles of Association The Company s articles of association B2G Business to Government B2B Business to Business B2C Business to Consumer BGES Blom Geo Engineering Services BIM Building Information Model BIS Blom Information Services Blom or the Company Blom ASA Board of Directors or Board The board of directors of Blom CAD Computer-aided design CEO Chief Executive Officer CFO Chief Financial Officer Conversion Price NOK 0.10 per share Corporate Governance Code Norwegian Code of Practice for Corporate Governance of 23 October 2012 DSM Digital surface models EBT Earnings Before Tax EBIT Earnings Before Interest and Tax EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation EENA 112 European Emergency Number Associations EPS Earnings per share EU/EEA The European Union / European Economic Area EUR, USD, GBP, NOK The lawful currencies of the European Union, Unites States of America, United Kingdom and Norway Executive Management The executive management team of Blom Extraordinary General Meeting The extraordinary general meeting of Blom Foreign Corporate EEA Shareholders Foreign Shareholders who are corporations tax-resident within the EEA Foreign Personal EEA Shareholders Foreign Shareholders who are individuals tax-resident within the EEA for tax purposes Foreign Shareholders Shareholders that are not resident in Norway for Norwegian tax purposes Frontières extérieures. Judicial name: European Agency for the Management of FRONTEX Operational Cooperation at the External Borders of the Member States of the European Union GIS Geographical Information Systems Group Blom ASA and its consolidated subsidiaries IFRS International Financial Reporting Standards ISIN International Securities Identification Number LBS Location Based Services LIDAR Light Detection And Ranging technology Manager ABG Sundal Collier Norge ASA MGCP Multinational Geospatial Co-production Program MOD Ministry of Defense The new shares of the Company to be issued in connection with conversion of the15 New Shares per cent Blom ASA Senior Secured Bond Issue 2012/2013, the FRN Blom ASA Senior Bond Issue 2011/2012 and the 2 per cent Blom ASA subordinated Convertible Callable Bond Issue 2012/2017to equity NIBOR Norwegian Inter Bank Offered Rate Norwegian Corporate Shareholders Shareholders that are limited liability companies, equities funds, savings banks, mutual insurance companies or similar entities tax-resident in Norway Norwegian Financial Supervisory Authority The financial supervisory authority of Norway Norwegian Personal Shareholders Shareholders who are individuals tax-resident in Norway OGM companies Oil, Gas and Mineral companies Pictometry PND Prospectus Public Limited Companies Act Securities Trading Act Shares US Securities Act Pictometry International Corp. Portable Navigation Device This prospectus including all appendices The Norwegian Public Limited Liability Companies Act of 13 June 1997 No. 45 (as amended) The Norwegian Securities Trading Act of 29 June 2007 No. 75 (as amended) The existing shares of the Company, including the New Shares The Securities Act of 1933, as amended 78

80 VPS VPS account The Norwegian Central Securities Depository or "Verdipapirsentralen" An account with VPS for the registration of holdings of securities 79

81 Blom ASA Drammensveien Oslo Norway Phone: Fax: