FINANCIAL STATEMENT 2015 PERSONALHUSET AS

Transcription

1 FINANCIAL STATEMENT 2015 PERSONALHUSET AS

2 CONTENT Directors report Consolidated Financial Statement Consolidated Statement of Comprehensive Income Balance Sheet Cash Flow Statement Consolidated Statement of Changes in Equity Notes to the consolidated accounts Financial Statement Personalhuset AS Income Statement Balance Sheet Cash Flow Statement Notes to the accounts Auditors Report PERSONALHUSET AS DRONNING MAUDSGATE OSLO NORWAY WEB:

3 REPORT FROM THE BOARD THE FINANCIAL YEAR 2015 COMPANY BACKGROUND Personalhuset AS with its subsidiaries offers a complete range of staffing services within most major sectors in the Nordics, including temporary and permanent staffing, search & selection and consulting & outplacements. The Group is established in the four Nordic countries, Norway, Sweden, Denmark and Finland and has 185 full time employees with headquarter in Oslo. Personalhuset AS with its subsidiaries is an established player in the staffing industry with 30 branches across the Nordic countries. The company employs 8,000 unique temporary workers and performs over 600 permanent placements for customers yearly. Personalhuset AS were established incorporating Agito Nordic and its subsidiaries to acquire Personalhuset Staffing Group AS and its subsidiaries from ISS. The transaction was completed in October THE 2015 FINANCIAL STATEMENTS The financial statement for Personalhuset AS has been prepared in accordance with Norwegian generally accepted accounting principles and regulations. The consolidated financial statements for the Group has been prepared in accordance with, and in compliance with, IFRS (International Financial Reporting Standard). The critical accounting estimates and judgments are described in note 2. Going concern Pursuant to section 3-3a of the Norwegian Accounting Act, the Board confirms that the 2015 financial statements have been prepared based on the assumption of a going concern and that it believes that this assumption is appropriate. Performance Due to the nature of the transaction in October 2014 the revenue and profit of Personalhuset Staffing Group is only recorded for the 4 th quarter of 2014, while 2015 shows full year. The 2014 result shown in the financial statement therefore not comparable to 2015 and the comments on performance will be mainly for The revenue in 2015 amounted to MNOK which is a decline of 10.8%. The decline is mainly due to the tough market conditions in Norway. As Norway is the major contributor of both the revenue and the EBITDA the full year performance of the group has respectively been impacted. Group EBITDA amounted to 34,2 MNOK the underlying operations are stable and the sales development is positive in certain segments and areas. The Group result has been affected by merge and restructuring activities in the first quarter of the year related to the transaction in Q These cost should be defined as one-off items and amount to 22,6 MNOK. The underlying EBITDA in 2015 is therefore 56,8 MNOK. The diversion of the business has resulted in a reduced margin for the Group however in order to improve the underlying operations and profitability going forward initiatives to streamline the organization has been initiated. Expected growth in Sweden, Finland and Denmark will contribute to a more profitable and balanced group result going forward. Dividend policy The performance of the Company and its subsidiaries is on a full year perspective satisfactory. The Company has a satisfactory balance sheet and a comfortable cash position. The Board of Directors has therefore decided to introduce dividends payouts whenever suited and obliged that the Company is within the covenants and applicable guidelines.

4 Assets Total assets for the Group as per were MNOK (MNOK 812.1) consisting mainly of the book value of intangible assets, cash and trade receivables. Total receivables from customers were MNOK 52.3 (MNOK 155.4). Cash and cash equivalents at year-end were MNOK (MNOK 93.0). Financing Bank facilities In September 2014 the Company secured a bond loan of MNOK 375 to acquire Personalhuset Staffing Group AS from ISS. The Bond loan has a maturity in and was listed on Oslo Børs during Q The company has no other loan facilities per Equity The Group s equity at the start of 2015 was MNOK At the end of 2015 the Company s equity was NOK mill. The decreased equity is mainly caused by the transaction in 2014 and as a result of the transaction; restructuring charges. Shareholder Hospitality Invest AS and Scandia Healthcare AS are the Company s largest shareholders and holds 62.2% of the Company s shares. Liabilities The Group s non-current liabilities were MNOK (431.6 MNOK) and consisting mainly of the secured bond loan. A deferred tax liability of 59.2 MNOK (63.3 MNOK) occurs mainly due to offsetting in intangible assets and is not payable. The company s current liabilities were as per MNOK (228.3 MNOK) and consisting mainly of salary related items to the temp workers. Cash flow and liquidity Cash flow from operations was 79.3 MNOK in 2015 (60 MNOK), the difference in cash flow from operations and operating result is mainly due to Personalhuset Staffing Group AS entering into a working capital facility agreement with Nordea. Net cash flow for 2015 was 38.3 MNOK (74.2 MNOK). The larger cash flow in 2014 was due to the issue of bonds. Cash and cash equivalents at period end 2015 amounted to MNOK compared to 93.0 MNOK at the end of The cash situation is considered to be satisfactory for financing future operations. Principal risks and uncertainties The principal risks and uncertainties faced by the Group are disclosed in the notes to the accounts. Health, safety and environment In order to adapt to the prevailing market conditions especially in Norway, Personalhuset had to undertake a major restructuring process during 2014 and 2015 with the effect that the workforce of permanent employees has been reduced by almost 11% the last year. Despite the turbulent times the employees of Personalhuset continue to perform at a high level, which is a testimony of the strong dedication in the organization. The Parent Company did not have any employees. At year end the Group had a total of 185 permanent employees. The average number of employees during the year, both temporary and permanent, was The Board considers the working environment in the Company and Group to be good. No material accidents or illness has been reported. The Board and management believe that employees of diversified gender, ethnicity and nationality are provided with equal opportunity and treated fairly within the Group, and have not considered it necessary to take special measures to correct any discrimination. At the end of 2015, women comprised 51% of the total workforce. The Board of Directors are all men. The company s direct impact on environmental, social and human rights aspects is limited. 2

5 Personalhuset adheres to the laws and regulations in the countries of operation, but the company has not implemented corporate policies or other written procedures regarding corporate social responsibility. Parent company The Parent company s net profit was (1.5) MNOK ((5.8) MNOK) and was suggested to be allocated to other equity. Total assets as were MNOK (550.0 MNOK) consisting mainly of the book value of subsidiaries. Cash and cash equivalents at year-end were 48.1 MNOK (1.6 MNOK). Equity as per was MNOK (163.9 MNOK). Liabilities was MNOK (386.1 MNOK) consisting mainly of the bond loan. Changes in the Board of Directors in 2015 There were no changes in the Board of Directors in 2015 as all members of the board were elected in September There were no changes to the responsibilities of the Board of Directors in Remuneration to the Board is described in Note 5 of the consolidated financial statements. Future outlook The Directors of the Board look positive on the future development of the Group. The year 2015 is impacted by the acquisition in 2014 and the restructuring of the consolidation of the Group. The Group s business and operations are influenced by the general climate and the growth of the Nordic markets. The Group will continuously adapt the business operations accordingly to the development. The demand for staffing services has historically been well correlated with the fluctuations in the general employment market. The slowdown in the Norwegian market, causing a decline in the demand for staffing services, will have a negative effect on the company s business. The development in Norwegian market is expected to continue in the foreseeable future. Market conditions in Sweden and Denmark are positive and expected to remain positive going forward. Finland has a tough economic climate and the highest unemployment rate in the Nordics however the market is big and footprint of Personalhuset is small hence potential possibilities to gain market shares. With new revitalized focus on the healthcare segment it is expected that this area also will contribute to increased revenue going forward. Geographic markets In 2016, the Group will continue its current focus on the Nordic countries and work in order to increase presence in all of the Nordic countries. Events after the balance sheet date Personalhuset AS has entered into a final agreement to acquire the Swedish staffing company Söder & Co with a controlling stake. The agreement was signed 31 March Personalhuset has acquired 29.1 % of the outstanding shares of the company, representing % of the voting shares. Söder & Co is a significant player in the Swedish staffing industry with revenues of more than SEK 200 million in Söder & Co is represented in the most important areas in Sweden and their contribution will expand the footprint of Personalhuset significantly. Consolidation of Söder & CO Based on IFRS, Söder & Co is now controlled by Personalhuset and shall be consolidated in the Group figures as per Q In accordance with the Bond Agreement, Söder & Co will also be included in the pro forma LTM figures as used in the covenant calculations. The immediate impact is an improved revenue and EBITDA together with an increased equity. 3

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7 Consolidated Financial Statements Personalhuset AS 2015

8 Consolidated Statement of Comprehensive Income for the period 1st of January to 31st of December Notes Operating Income Revenue 11 NOK Total operating income Operating expenses External services and consumables Staff costs 5, Depreciation and amortisation expense 6,7, Acquisition costs Other operating expenses Total operating expenses Operating result ( ) Financial income and expense Other financial income Other financial expenses 13 ( ) ( ) Net financial result ( ) ( ) Operating result before tax ( ) ( ) Tax expense 12 ( ) ( ) Net result for the year ( ) ( ) Other comprehensive income Items that may be subsequently reclassified to profit or loss Currency translation differences Total other comprehensive income Total comprehensive income ( ) ( )

9 Balance sheet as of December 31st Assets Notes Fixed assets Intangible assets 7 NOK Total intangible assets Tangible fixed assets Furniture, fixtures and equipment Total tangible fixed assets Financial fixed assets Other receivables 3,4, Total financial assets Total fixed assets Current assets: Trade and other receivables 3,15, Cash and cash equivalents 3, Total current assets Total Assets

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11 Cash Flow Statement Cash flow from operating activities Profit for the year NOK ( ) ( ) Adjustments for: Depreciation of property, plant and equipment Amortisation of intangible fixed assets Interest income/interest expense and financial items Income tax expense 12 ( ) ( ) Changes in working capital Changes in trade receivable and other receivables ( ) Changes in trade and other payables 16 ( ) Cash generated from operations Income taxes paid ( ) 0 Net cash flow from operating activities Investing activities Payments for aquisitions of furniture and equipment 6,7 ( ) 0 Cash payment for acquisition of subsidiaries ( ) ( ) Interest received Net cash used in investing activities ( ) ( ) Financing activities Net change in financial receivables ( ) 0 Payments of long-term loan to finance institutions 0 ( ) Payment of short-term loan to finance institutions 0 ( ) Proceeds from issuing bonds Interest paid 13 ( ) ( ) Payment of refinancing expenses 0 ( ) Distribution to owners 0 ( ) Proceeds from private placements Net cash (used in)/from financing activities ( ) Currency effect ( ) Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

12 Consolidated Statement of changes in Equity as of December 31st Share capital Treasury shares Share premium Retained earnings Translation effects Total equity Balance as at 31 December ( ) ( ) Profit for the period ( ) ( ) Other comprehensive income Total comprehensive income ( ) ( ) Payment of dividends ( ) ( ) Changes from establishing new holding Co ( ) Proceeds from shares issued Total contributions and distributions ( ) ( ) Balance as at 31 December ( ) ( ) Balance as at 31 December ( ) ( ) Profit for the period ( ) ( ) Other comprehensive income Effect from aquisition subsidiary ( ) ( ) Total comprehensive income ( ) ( ) Balance as at 31 December ( ) ( )

13 Notes to the accounts December 31st 2015 Note 1 Accounting principles General information Personalhuset (the Group) consists of Personalhuset AS and its subsidiaries as presented in note 10. Personalhuset AS is a limited liability company incorporated in Norway. The Company's registered office is in Dronning Mauds gate 10, Oslo, Norway. Personalhuset AS has a bond loan registred on Oslo Stock Exchange. The Group provides staffing services in Norway, Sweden, Denmark and Finland. Changes in group Stucture During 2014 a new holding company (Personalhuset AS) was estabilshed as the parent company in the group, the former parent company Agito Nordic AS was merged into one of the subsidiaries (Personalhuset Staffing Group AS). The consolidated financial statements is prepared as being the continuing consolidated financial statement of Agito Nordic group. The financial statements for 2015 were approved by the Board of Directors April The financial statements presented cover the results for the Group for the financial year 2015 with comparative information for the financial year The consolidated financial statements are presented in Norwegian kroner (NOK). Basis of preparation The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all of the years presented, unless stated otherwise. The consolidated financial statements have been prepared under the historical cost convention, as modified by valuing financial derivative instruments at fair value through profit or loss. These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs"). The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effects are disclosed in note 2. Changes in accounting policies New and revised standards - adopted The accounting policies adopted are consistent with those of the previous financial year. The following amendments to IFRS are effective for an accounting period beginning after 1 January IAS 19 Defined Benefit Plans: Employee Contributions Amendments to IAS 19. Adoption 1 January Improvements to IFRS, cycle and cycle (December 2013). Adoption 1 January These amendments had no material impact on the disclosures or amounts recognized in the Group s consolidated financial statements. New and revised standards not yet effective At the date of authorization of these financial statements, the following standards and Interpretations were in issue but not yet effective: IAS 1 Disclosure Initiative Amendments to IAS 1. Adoption 1 January 2016 IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortization- amendments to IAS 16 and IAS 38. Adoption 1 January IAS 27 Equity Method in Separate Financial Statements Amendments to IAS 27. Adoption 1 January IFRS 15 Revenue from contracts with customers (issued 2014). Adoption 1 January IFRS 9 Financial Instruments (issued 2009). Expected adoption 1 January Improvements to IFRSs, cycle and cycle (September 2014). Adoption 1 January IFRS 16 Leases. Expected adoption 1 January Impact on the group selected standards not yet effective IFRS 9 Financial Instruments (as revised in 2014) will supersede IAS 39 upon its effective date for annual periods beginning on, or after, 1 January The number of categories of financial assets have been reduced to financial assets measured at amortized cost and financial assets measured at fair value. However, the standard introduces a fair value through other comprehensive income measurement category for certain simple debt instruments. IFRS 9 also presents a new impairment model which is based on expected credit losses, rather than incurred credit losses. As a credit event is unnecessary for recognizing an impairment loss, the directors expect that there may be a change in timing of recognizing impairment losses as these may be recognized at an earlier stage, but not necessarily a change in the amount of recognized losses. IFRS 9 also suggests more flexibility in hedge accounting, as it allows entities to hedge one or more risk components of non-financial contracts. It has not been assessed whether Personalhuset will apply these policies. Full evaluation of the impact has not been completed at this stage.

14 IFRS 15 was issued in May The standard establishes a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction contracts and the related interpretations when it becomes effective. Under IFRS 15 an entity recognizes revenue when a performance obligation is satisfied, i.e. when control over the goods or services underlying the particular performance obligation is transferred to the customer. The evaluation of the impact will be completed during the next year, but as the majority of revenues in Personalhuset stem from sale of services with only one performance obligation, the directors do not anticipate the implementation of IFRS 15 to significantly impact the financial statements, except for more extensive disclosures. IFRS 16 Leases was issued in January 2016 and applies to annual periods beginning after 1 January IFRS 16 specifies how to recognize, measure and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. The evaluation of the impact has not been completed at this stage, but the directors anticipate a positive impact on EBITDA since the costs will be presented as depreciations and interest expense in the income statement, rather than operating lease expense. The effects have not been quantified at this stage. See note 14 for more information about the Group s operating and financial lease commitments. The Directors anticipate that the adoption of other new and revised standards will not significantly impact the financial statement. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for services sold, net of VAT and discounts. The Group recognizes revenue when the amount can be measured reliably and it is probable that future economic benefits will flow to the Group. Consolidated revenue comprises sales of staffing, recruitment, and outplacement services. Revenue is recognized in the period that services were rendered. Earned but not yet invoiced work at the end of the reporting period is recognized as accrued income. Revenue from recruitment and outplacement is recognized in conjunction with completion of the service as contracted. Other operating revenue relates to revenue from activities outside the Group s main business. Segments An operating segment is a part of the Group that conducts business from which it may earn income and incur expenses and for which separate financial information is available. The operating segment is reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker monitors and evaluates the segment s performance and allocates resources to the operating segment. See Note 11 for an additional description of the division and presentation of operating segments. Operating expenses Operating expenses mainly refer to employee expenses. Wages, salaries, paid vacation, paid sick leave, social charges, and pensions are charged to the income statement for the period in which the services are performed. Other operating expenses include administrative expenses such as rental charges and IT. Expenses are carried in the period in which they arise. Finance income and expense Finance income comprises interest income on financial investments and dividend income. Interest income is recognized using the effective interest method. Dividend income is recognized when the right to receive payment is established. Finance expense comprises interest expenses on borrowings, accounts payable, and other finance expenses. Interest expenses are accrued over the duration. Other finance expenses mainly include bank charges. Exchange gains and losses are reported net. Basis of consolidation In addition to the Parent Company, the consolidated financial statements include all subsidiaries under the controlling influence of the Parent Company. Controlling influence means that the Group is exposed to or has rights to variable returns from its holdings in the company and is able to affect yields through its influence in the company. Subsidiaries are recognized using the acquisition method. Using this method, acquisition of a subsidiary is viewed as a transaction whereby the Group indirectly acquires the subsidiary s assets and assumes its liabilities. In the acquisition analysis, the fair value of the identifiable assets acquired, liabilities assumed, and any non-controlling interest is fixed on the acquisition date. In business combinations in which transferred consideration, any non-controlling interest, and fair value of previously owned participating interest (in step acquisitions) exceed the fair value of assets acquired and liabilities assumed that are recognized separately, the difference is recognized as goodwill. When the difference is negative (bargain acquisition), it is recognized directly in profit/loss for the year. Consideration transferred in connection with the acquisition does not include payments for settlement of past business dealings. This type of settlement is recognized in profit/loss. Conditional transferred considerations/additional purchase prices are recognized at fair value on the date of acquisition. Other conditional purchase prices are revalued at each reporting date and the change is recognized in profit/loss for the year. Transaction expenditures that arise, with the exception of transaction expenditures that are attributable to issued equity instruments or debt instruments, are recognized in profit/loss for the year. Financial statements of subsidiaries are consolidated from the date of acquisition until the date that control ceases. In cases where the subsidiary s accounting policies do not comply with Group accounting policies, adjustments are made to the Group accounting policies. Non-controlling interests Non-controlling interests are recognized as their proportional share of net assets. Transactions with non-controlling interests are recognized in equity, that is, between the Parent Company shareholders and non-controlling interests. For acquisitions from non-controlling interests, the difference between the purchase price paid and the actual acquired share of the carrying amount of the subsidiary s net assets is recognized as a transaction within equity. Hence, no goodwill arises in these transactions. Gains and losses on disposals of non-controlling interests are also recognized in equity. Losses attributable to non-controlling interest are apportioned even in cases where non-controlling interest will be negative.

15 Transactions eliminated on consolidation Intra-group receivables and liabilities, income or expenses, and unrealized gains or losses arising from intra-group transactions between Group companies are eliminated in full when preparing the consolidated financial statements. Translation of foreign subsidiaries Assets and liabilities in foreign operations, including goodwill and other consolidated surplus and deficit values, are translated from the foreign operation s functional currency to the Group s reporting currency, the Norwegian krone, at its exchange rate at the end of the reporting period. Income and expenses in foreign operations are translated to the Norwegian krone at an average rate that is an approximation of the exchange rates on the respective transaction date. Translation differences that arise for currency translation of foreign operations are recognized in consolidated other comprehensive income and are accumulated in a separate component of equity called the translation reserve. When disposing of foreign operations, they are realized in the operation for accumulated translation differences, when they are reclassified from translation reserve in equity to profit/loss for the year. Internal pricing policies Pricing of transactions between entities within the Group is founded on market-based conditions, which means that internal customers are not treated differently from external customers. Goodwill Goodwill represents the excess of the cost of a business combination over, the Group's interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired and, the total acquisition date fair value of the identifiable assets, liabilities and contingent liabilities acquired. The cost of a business combination comprises the fair value of assets given, liabilities assumed and equity instruments issued, plus the amount of any non-controlling interests in the acquiree plus, if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree. Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial liability, remeasured subsequently through profit or loss. Direct costs of acquisition are recognized immediately as an expense. Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income at the acquisition date. Other intangible assets Other intangible assets include mainly customer relationships. Directly attributable expenditures that are capitalized as part of intangible assets for internal use are recognized as assets in the consolidated statement of financial position, provided that future economic benefits are probable and exceed accrued expenditures. Expenditures for feasibility studies, training, and ongoing maintenance are expensed as incurred. In the consolidated statement of financial position, other intangible assets are recognized at cost less accumulated depreciation and any impairment losses. Capitalized customer relationships and brand name have been acquired as part of business combinations. Capitalized customer relationships have a finite useful life, and in the statement of financial position, capitalized customer relationships are recognized at fair value on the acquisition date less accumulated amortization in subsequent periods and any impairment losses. Capitalized brand name have indefinite useful life and are subject to impairment testing annually. Amortization of intangible assets is based on their estimated useful lives. Amortization is on a straight-line basis over the asset s estimated useful life. Capitalizable Customer relationships 15 years Other intangible assets 3-5 years Goodwill is not amortized but is tested for impairment annually, or more frequently if circumstances indicate that the asset in question has declined in value. Useful life is reassessed annually. Impairment of non-financial assets (excluding inventories and deferred tax assets) Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly. Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units ('CGUs'). Goodwill is allocated on initial recognition to each of the Group's CGUs that are expected to benefit from the synergies of the combination giving rise to the goodwill. Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognized in other comprehensive income. An impairment loss recognized for goodwill is not reversed. Foreign currency Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at rates on the transactions date. The functional currency of the parent company and all subsidiaries is NOK. Foreign currency monetary assets and liabilities are translated at the rates as per the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognized immediately in profit or loss. Exchange gains and losses arising on the retranslation of monetary available for sale financial assets are treated as a separate component of the change in fair value and recognized in profit or loss. Exchange gains and losses on non-monetary available for sale financial assets form part of the overall gain or loss recognized in respect of that financial instrument. Financial assets The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group has not designated any of its financial assets as hedging instruments or held to maturity. The Group's accounting policy for each category of financial assets is as follows: Fair value through profit or loss This category comprises only in-the-money derivatives (see "Financial liabilities" section for out-of-money derivatives). They are carried in the statement of financial position at fair value with changes in fair value recognized in the consolidated statement of comprehensive income in the finance income or expense line. The Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.

16 Loans and receivables These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognized at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at Amortized cost using the effective interest rate method, less provision for impairment. Impairment provisions are recognized when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognized within administrative expenses in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and - for the purpose of the statement of cash flows - bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the consolidated statement of financial position. Financial liabilities The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired. Non of the Group's financial liabilities are designated as hedging instruments. The Group's accounting policy for each category of financial liabilities is as follows: Fair value through profit or loss This category comprises only out-of-the-money derivatives (see "Financial assets" for in the money derivatives). They are carried in the consolidated statement of financial position at fair value with changes in fair value recognized in the consolidated statement of comprehensive income. The Group does not hold or issue derivative instruments for speculative purposes, but for hedging purposes. Other than these derivative financial instruments, the Group does not have any liabilities held for trading nor has it designated any financial liabilities as being at fair value through profit or loss. Other financial liabilities Borrowings are initially recognized at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at Amortized cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. Interest expense in this context includes initial transaction costs and premia payable on redemption, as well as any interest or coupon payable while the liability is outstanding. Trade payables and other short-term monetary liabilities, which are initially recognized at fair value and subsequently carried at Amortized cost using the effective interest method. IFRS 13 fair value measurement hierarchy IFRS 13 requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement. The fair value hierarchy has the following levels: (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); (b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). The level in the fair value hierarchy within which the financial asset or financial liability is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement. Financial assets and financial liabilities are classified in their entirety into only one of the three levels. Share capital Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group's ordinary shares are classified as equity instruments. Leased assets Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a "finance lease"), the asset is treated as if it had been purchased outright. The amount initially recognized as an asset is the lower of the fair value of the leased property and the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element is charged to the consolidated statement of comprehensive income over the period of the lease and is calculated so that it represents a constant proportion of the lease liability. The capital element reduces the balance owed to the lessor. Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an "operating lease"), the total rentals payable under the lease are charged to the consolidated statement of comprehensive income on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognized as a reduction of the rental expense over the lease term on a straight-line basis.

17 Deferred taxation Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on: - the initial recognition of goodwill; - the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and - investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future. Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered). Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either: - the same taxable group company; or - different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered. Dividends Dividends are recognized when they become legally payable. Property, plant and equipment All property, plant and equipment are carried at cost less subsequent depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance are expensed as incurred. If new parts are capitalised, replaced parts are de-recognized and any remaining net book value is recorded in operating profit or loss as loss on disposal. Depreciation of assets is calculated using the straight-line method to allocate the cost less residual value over the estimated useful life. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. The Group assesses at each reporting date whether there are indicators of impairment. If any such indicators exist, the Group makes an estimate of the asset s recoverable amount. Assets are impaired if the carrying amount is greater than its estimated recoverable amount. Recoverable amount is the higher of value in use and fair value less costs to sell. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the profit or loss. Expected useful economic is as follows: Furniture, fixtures and equipment 3-5 years At the date of revaluation, the accumulated depreciation on the revalued freehold property is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. The excess depreciation on revalued freehold buildings, over the amount that would have been charged on a historical cost basis, is transferred from the revaluation reserve to retained earnings when freehold land and buildings are expensed through the consolidated statement of comprehensive income (e.g. through depreciation, impairment). On disposal of the asset the balance of the revaluation reserve is transferred to retained earnings. Cash flow statement The cash flow statement is derived using the indirect method. Cash flows from investing and financing activities are presented separatly. Operating activities comprise both monetary and non-monetary items. Interest income and interest expenses are presented as part of operating activities with the exception of interest paid and received which is separated and presented as financial activities. Cash and cash eqvivalents comprise of bank deposits. Equity In the consolidated financial statements equity is divided in share capital and other equity. The share capital item refers to the registered share capital for the parent company. The other equity item consists of treasury shares, share premium, retained earnings and translation effects. When Treasury shares are bought back, the purchase price, including directly attributable costs, are recognized as a deduction from equity. The cumulative gain or los on sales of treasury shares is presented on a net basis in equity. Net accumulated losses on sales or treasury shares are regognized under other retained earnings, while net accumulated gains are recognized under other equity. When shares are issued at a premium, that is, mote than the share's quotient value will be paid for the shares, an amount corresponding to the amiunt received over and above the quotient value of the shares is added to the share premium reserve. The retained earnings item corresponds to the total accumulated gains and losses generated in the Group. Translation effects arise in connection with currency differences when forreign entities are consolidated. When a foreign operation is sold, the accumulated exchange differences linked to the entity are reversed and recognized in the income statement in the same period as the gain and loss on the sale are recognized. For more, see the statement of changes in equity.

18 Notes to the accounts Note 2 Important estimates and assessments Preparation of the financial statements in compliance with IFRS presumes that the Board and company management make assessments and assumptions that affect application of the accounting policies and the recognized amounts of assets, liabilities, income, and expenses. These assessments and assumptions are based on historic experience and industry knowledge of Personalhuset's sector, and what is reasonable taking current conditions into consideration. The results of the assessments and assumptions are used to determine the carrying amount of assets and liabilities that are not otherwise clear from other sources. The actual outcome may differ from these assessments. The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The accounting policies applied by Personalhuset in which judgments, estimates and assumptions may significantly differ from actual results are discussed below. Impairment of goodwill and other aquisition-related intangible assets Determining whether goodwill and other intangible assets are impaired requires an estimation of the value in use of the cash-generating units to which goodwill and other intangible assets have been allocated. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The carrying value of goodwill and other intangible assets at 31 December 2015 is MNOK 329 and MNOK 206 respectively. Details of recognized goodwill are provided in note 7 with the impairment information, including sensitivity disclosures. Other intangible assets mainly comprises customer relationships and trademarks identified as part of the purchase price allocation. See note 7 for further details. Property, plant and equipment and intangible assets with finite useful life Measurement of property, plant and equipment and intangible assets with finite useful lives requires estimates for determining the asset s expected useful lives and residual values. Management judgement is required to determine the components and the depreciation. See note 6 for further details. Deferred tax Significant judgement is required in determining the provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the company recognizes tax liabilities based on estimates of whether additional taxes and interest will be due. These tax liabilities are recognized when, despite the company's belief that its tax return positions are supportable, the company believes that certain positions are likely to be challenged and may not be fully sustained upon review by tax authorities. The company believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgements about future events. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will impact income tax expense in the period in which such determination is made. Deferred tax assets are recognized when it is considered probable that deductible temporary differences will be recovered in the foreseeable future. To the extent that future taxable income and the application of existing tax laws in each jurisdiction differ significantly from the Company s estimate, the ability of the Company to realize the deferred tax assets could be impacted. See note 12 for further details. Measurement of accounts receivable and provision for bad debt losses Accounts receivable is one of the most significant balance sheet items. Accounts receivable are reported net less provision for anticipated losses on accounts receivable. The provision for anticipated losses on accounts receivable is thus subject to critical estimates and assessments. For more information on credit risk in accounts receivable see Notes 3 and 15.