Prospectus. EDB ErgoGroup ASA

Transcription

1 Prospectus EDB ErgoGroup ASA (a public limited company organised under the laws of Norway) Listing of 81,064,078 new shares of EDB ErgoGroup ASA on Oslo Børs THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO BUY, SUBSCRIBE OR SELL THE SECURITIES DESCRIBED HEREIN. THIS PROSPECTUS SERVES AS A LISTING PROSPECTUS AND NO SHARES OR OTHER SECURITIES ARE BEING OFFERED OR SOLD IN ANY JURISDICTION PURSUANT TO THIS PROSPECTUS. 14 October 2010

2 IMPORTANT NOTICE This prospectus (the Prospectus ) has been prepared by EDB ErgoGroup ASA (the Company ) in order to provide information about the Company and its business in relation to the listing (the Listing ) of 81,064,078 shares (the New Shares ), and to comply with the Norwegian Securities Trading Act of 29 June 2007 no. 75 (the Norwegian Securities Trading Act ) and related secondary legislation, including the Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 (the Prospectus Directive ). The Financial Supervisory Authority of Norway (the NFSA ) has reviewed and approved this Prospectus in accordance with section 7-7 of the Norwegian Securities Trading Act. The Prospectus has been published in an English version only. Unless otherwise indicated or the context otherwise requires, in this Prospectus all references to the Combined Group and EDB ErgoGroup refer to EDB ErgoGroup ASA together with its consolidated subsidiaries following completion of the combination with ErgoGroup AS ( ErgoGroup ) as further described herein, all references to the Company refer to, as the context requires, (i) for the period from and after 14 October 2010, EDB ErgoGroup ASA, together with its consolidated subsidiaries or (ii) for the period prior to 14 October 2010, EDB Business Partner ASA, together with its consolidated subsidiaries. For definitions of terms used throughout this Prospectus, see Section Feil! Fant ikke referansekilden. Definitions and Glossary of Terms. No shares or other securities are being offered or sold in any jurisdiction pursuant to this Prospectus. All inquiries relating to this Prospectus must be directed to the Company. No other person is authorised to give any information about, or to make any representations on behalf of, the Company in connection with the Listing. If any such information is given or made, it must not be relied upon as having been authorised by the Company. The information contained herein is as of the date hereof and is subject to change, completion and amendment without further notice. The delivery of this Prospectus at any time after the date hereof shall not under any circumstances imply that there has been no change in the Company s affairs or that the information set forth herein is correct as of any date subsequent to the date hereof. The contents of this Prospectus shall not be construed as legal, business or tax advice. Each reader of this Prospectus should consult its own legal, business or tax advisor as to legal, business or tax advice. If you are in any doubt about the contents of this Prospectus, you should consult your stockbroker, bank manager, lawyer, accountant or other professional adviser. The distribution of this Prospectus in certain jurisdictions may be restricted by law. Persons in possession of this Prospectus are required to inform themselves about, and to observe, any such restrictions. No action has been taken or will be taken in any jurisdiction by the Company that would permit the possession or distribution of this Prospectus in any country or jurisdiction where specific action for that purpose is required. Investing in the Company s shares (the Shares ) involves risks. See Section 2 Risk Factors below.

3 EDB ErgoGroup ASA - Prospectus CONTENTS 1 SUMMARY RISK FACTORS STATEMENT OF RESPONSIBILITY NOTICE REGARDING FORWARD LOOKING STATEMENTS PRESENTATION OF EDB ERGOGROUP MARKET OVERVIEW CAPITAL RESOURCES SELECTED CONSOLIDATED FINANCIAL INFORMATION OPERATIONAL AND FINANCIAL REVIEW UNAUDITED PRO FORMA FINANCIAL INFORMATION BOARD OF DIRECTORS, MANAGEMENT AND EMPLOYEES SHARES, SHARE CAPITAL AND SHAREHOLDERS MATTERS SECURITIES TRADING IN NORWAY TAXATION ADDITIONAL INFORMATION DEFINITIONS AND GLOSSARY OF TERMS APPENDICES: Appendix 1: Articles of Association... A 1 Appendix 2: Independent Assurance Report on pro forma information... A 3 Appendix 3: Interim report for ErgoGroup AS for the period from 1 January 2010 to 30 June A 5 1

4 1 SUMMARY The following summary should be read as an introduction to the Prospectus, and in conjunction with, and is qualified in its entirety by, the more detailed information and the Appendices appearing elsewhere in this Prospectus. Any decision to invest in the Shares should be based on consideration of this Prospectus as a whole by the investors. Where a claim relating to the information contained in this Prospectus is brought before a court, a plaintiff investor might, under the national legislation, have to bear the costs of translating this Prospectus before legal proceedings are initiated. No civil liability attaches to those persons who have prepared this summary, including any translations hereof, unless it is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus. 1.1 Legal name, registered office and registration number The Company is the holding company for the Combined Group, an information technology (IT) services provider in the Nordic region. It is a Norwegian public limited company incorporated in Norway under the Norwegian Public Limited Companies Act, with business registration number The legal and commercial name of the Company is EDB ErgoGroup ASA. The Company s registered office and principal place of business is Nedre Skøyen vei 26, N-0276 Oslo, Norway, telephone number (+47) and web address: On 14 October 2010, EDB ErgoGroup was created through completion of the merger between the Company s wholly-owned subsidiary formerly named EDB Business Partner Holding AS ( EDBH ) and ErgoGroup (the Combination ) and the Company changed its name from EDB Business Partner ASA to EDB ErgoGroup ASA. Simultaneous with completion of the Combination, EDBH changed its name to ErgoGroup AS. The Combination was completed for accounting purposes on 30 September History and development The Company s history is a history of technology and innovation which dates back more than 40 years. The Company began its life as Elektronisk Databehandling AS in Over the Company s 48 year history, some 50 other IT-related businesses have been incorporated into the Company. Over the course of the years, the Company has progressed from being a supplier of data centre services, punch cards and banking applications to become one of the largest Nordic IT groups, offering solutions that cover the entire range of business critical IT services from application services and industry specific solutions through to IT operating services and network solutions. Over the period from 2004 to 2008, the Company made almost 20 acquisitions of businesses in Norway, Sweden, Denmark, the Ukraine and India in order to strengthen the Company s market position. Many of these businesses have been integrated into the Company, while others continue to operate as separate subsidiaries. In October 2010, the Company completed the Combination with ErgoGroup thereby forming the Combined Group. ErgoGroup s history started in 1972 through the establishment of Statens Driftsentral for administrativ data behandling. Following a number of acquisitions in the early 1990s, it was renamed Statens Datasentral, and was acquired by Posten and became Posten SDS in In 2001, Posten SDS changed its name to ErgoGroup AS and was established as a private limited liability company. In the period from 2004 to 2009, ErgoGroup carried out a number of acquisitions. 2

5 1.3 Trend information The Nordic IT services market showed a decline in 2009 and in the first six months of 2010 due to reduced demand, resulting in pressure on prices. The market research companies International Data Corporation 1 ( IDC ) and Gartner expect an improving trend in the IT services market during 2010, with the prospect of growth in the second half of the year. In view of the continuing uncertain market situation, the Company and ErgoGroup have launched further cost saving measures. Apart from this, completion of the Combination and the significant events after 30 June 2010, the Company has not experienced any trends or events that are significant to the Company between 30 June 2010 and the date of this Prospectus. For further information on trends, see Section 5.8 Trend information. 1.4 Research and development, patents and licenses The Combined Group has approximately 215 software licenses with an aggregate value of approximately NOK 850 million. The Combined Group is not dependent on any patents or licenses. See Section 5.7 Research and development, patents and licenses for a list of the Combined Group s major licenses. 1.5 Summary of capitalization and indebtedness The Company 30 June 2010 The Company 31 August 2010 ErgoGroup 31 August 2010 Amounts in NOK million (unaudited) (unaudited) (unaudited) Total equity... 2,294 2,286 2,113 Total long term borrowing... 3,108 3,128 1,339 Total current debt Total capitalisation... 3,195 3,215 1, Selected financial information The selected consolidated financial data in this Prospectus should be read in conjunction with the relevant consolidated financial statements and the notes to those statements which are incorporated into this Prospectus by reference. The Company s financial statements may also be inspected at the Company s website or be obtained, free of charge, at the offices of the Company at Nedre Skøyen vei 26, NO-0276 Oslo, Norway. The selected consolidated financial data presented in this section has been derived from the audited consolidated financial statements of the Company and of ErgoGroup as of and as for the three years ended 31 December 2009, 2008 and 2007, and the unaudited interim financial data presented for the three months and the six months ended 30 June 2010 and IDC is a global provider of market intelligence for the information technology market. Reference to IDC in this section 1.3 are to IDC s Semi annual Tracker Nordic by Nils Molin, January

6 Below is an extract of the Company s consolidated profit and loss statement for the periods indicated. See Section Consolidated profit and loss statement for more detailed financial information. As at or for the three months ended 30 June As at or for the six months ended 30 June As at or for the year ended 31 December (unaudited) (unaudited) (audited) NOK million Total operating revenue... 1,809 1,923 3,633 3,859 7,492 7,871 6,354 Total operating costs... 1,661 1,703 3,293 3,441 6,284 6,905 5,419 Operating profit before depreciation of intangible assets Operating profit Profit for the year Total comprehensive income Total profit for the period The following is an extract of ErgoGroup s consolidated profit and loss statement for the periods indicated. See section Consolidated profit and loss statement for more detailed financial information. As at or for the three months ended 30 June As at or for the six months ended 30 June As at or for the year ended 31 December (unaudited) (unaudited) (audited) NOK million Sales revenues... 1,346 1,314 2,628 2,692 5,214 5,689 5,031 Operating profit/loss Profit/loss before tax Profit/loss for the year Below is an extract of the consolidated balance sheet as at the dates indicated. See Section Consolidated balance sheet for more detailed financial information. As at 30 June As at 31 December (unaudited) (audited) NOK million Total fixed assets... 5,341 5,813 5,312 6,002 4,402 Total current assets... 2,225 2,710 2,566 2,799 1,981 Total assets... 7,566 8,523 7,878 8,801 6,383 Total equity and minority interests... 2,294 2,209 2,221 2,153 2,086 Total liabilities... 5,272 6,315 5,656 6,648 4,298 Total equity and liabilities... 7,566 8,523 7,878 8,801 6,383 4

7 The following is an extract of ErgoGroup s consolidated balance sheet. See section Consolidated balance sheet for more detailed financial information. As at 30 June As at 31 December (unaudited) (audited) NOK million Non-current assets... 3,259 3,337 3,257 3,448 3,430 Current assets... 1,851 1,763 1,946 1,910 1,790 Assets... 5,109 5,099 5,203 5,359 5,228 Equity... 2,077 1,895 1,973 2,003 1,615 Non-current liabilities... 1,441 1,721 1,341 1,587 1,975 Current liabilities... 1,590 1,483 1,685 1,582 1,459 Equity and liabilities... 5,109 5,099 5,203 5,359 5,228 Below is an extract of the consolidated changes in equity for the Company as at the dates indicated. See Section Changes in equity for more detailed financial information. As at or for the three months ended 30 June As at or for the six months ended 30 June As at or for the year ended 31 December (unaudited) (unaudited) (audited) NOK million Equity at the beginning of period... 2,266 2,124 2,221 2,153 2,153 2,086 1,889 Equity at the end of period... 2,294 2,209 2,294 2,209 2,221 2,153 2,086 Below is an extract of the consolidated changes in equity for ErgoGroup. See Section Changes in equity for more detailed financial information. As at or for the three months ended 30 June As at or for the six months ended 30 June As at or for the year ended 31 December (unaudited) (unaudited) (audited) NOK million Equity at the beginning of period... 2,069 1,886 1,973 2,003 2,003 1,615 Equity at the end of period... 2,062 1,895 2,062 1,895 1,973 2,003 1,615 Below is an extract of the consolidated balance sheet as at the dates indicated. See Section Consolidated balance sheet for more detailed financial information. As at or for the three months ended 30 June As at or for the six months ended 30 June As at or for the year ended 31 December (unaudited) (unaudited) (audited) NOK million Net cash flow from operations Net cash flow from investments , Net cash flow from financing , Bank deposits at end of period

8 Below is an extract of the consolidated cash flow statement for ErgoGroup. See Section Cash flow statement for more detailed financial information. As at or for the three months ended 30 June As at or for the six months ended 30 June As at or for the year ended 31 December (unaudited) (unaudited) (audited) NOK million Cash flow from operating activities Cash flow from investing activities ,702 Cash flow from financing activities ,262 Cash and cash equivalents at beginning of period Cash and cash equivalents at period end Significant changes to the Company s financial or trading position since 30 June 2010 On 14 October 2010, the Company completed the Combination as further described in Section 5.2 The Combination. The completion date for accounting purposes was 30 September In addition, the Company has resolved to write down some of the balance sheet value of in-house developed software, earnings have been weaker after 30 June 2010 and there have been changes in the funding structure and capitalisation and indebtedness. Otherwise, there has been no significant change in the group s financial or trading position since 30 June For further details see Section 8.5 Significant change in the Company s financial or trading positions since 30 June Directors, management and employees Board of Directors The Board of Directors consists of Arve Johansen (chairman), Anne-Lise Aukner (deputy chairman), Adine Grate Axen, Anders Brandt, Dag Mejdell, Hilde Ringereide, Wenche Brateng, John Ingvar Brekke and Eirik Bornø Management The Management of the Company consists of Terje Mjøs (CEO), John Arne Haugerud (deputy CEO/Strategy and Business Development), Vidar Nysæther (acting CFO), Thorolf Thorstensen (Executive Vice President Global IT Operations), Wiljar Nesse (Executive Vice President Global Bank & Finance), Niklas Ekblad (Executive Vice President Sweden), Hans-Henrik Merckoll (Executive Vice President Consulting), Håvard Larsen (Executive Vice President Solutions), Ole Urdahl (Senior Vice President Strategic Accountants), Hilde Solegaard (Senior Vice President Marketing), Geir Remman (Senior Vice President Communications) and Tone Øvregård (Senior Vice President Human Relations). Jon A. Elde is expected to replace Vidar Nysæther as CFO from 1 November Employees The Combined Group has approximately 9,655 employees. 6

9 1.9 Shares and articles of association As of the date of this Prospectus, the Company s registered share capital is NOK 301,834,333.50, consisting of 172,476,762 Shares, each with a nominal value of NOK The Shares are listed under ticker EDBASA. All Shares are vested with equal shareholder rights in all respects. The Company s Articles of Association do not contain any provisions imposing limitations on the ownership or the tradability of the Shares. The Board of Directors has been granted an authority to acquire own shares, limited to a nominal value of NOK 15,997,219, and the Board has been granted an authority to issue shares, limited to 80,238,285 Shares, which are both valid until the earlier of the next annual general meeting of the Company and 30 June The Company s Articles of Association are included in Appendix 1 to this Prospectus Major shareholders The five largest shareholders in the Company as registered by the VPS on 7 October 2010 were: Shareholder No. of shares Percentage Telenor Business Partner Invest AS... 46,935, % Folketrygdfondet... 6,361, % Oslo Pensjonsforsikring AS... 3,786, % Orkla ASA... 3,100, % Odin Norden... 2,715, % TOP ,898, % Other... 28,514, % TOTAL... 91,412, % On 14 October 2010, as a result of completion of the Combination, 81,064,078 Shares were issued to Posten, making Posten the Company s largest shareholder with 47% of the Shares. This shareholding is not included in the list above. See Section 12.4 Major Shareholders for further information Related party transactions Both the Company and ErgoGroup have undertaken several transactions with related parties in the period from 1 January 2007 and until the date of this Prospectus. See Section 15.2 Related Party Transactions for details Summary of risk factors A number of risk factors may have a material adverse effect on the Combined Group, as well as on the trading value of the Shares. Below is a brief summary of the risk factors described in Section 2 Risk Factors. Please note that the risks described in Section 2 are not the only risks that may affect the Company and the trading value of the Shares. Additional risks not presently known to the Company, or which are currently deemed immaterial, may also have a material adverse effect on the Company, and on the trading value of the Shares. 7

10 Risk related to the Combination The Company may not be able to successfully combine the business of the Company and ErgoGroup. The unaudited pro forma financial information is not necessarily indicative of the Combined Group s future results. The Combined Group may fail to successfully implement its cost reduction initiatives. The Combined Group is exposed to the risk of losing key customers as a consequence of the Combination or due to other reasons Risk related to the Combined Group s business and the industry in which it operates The Combined Group is exposed to downturn in customer markets. The Combined Group may be unable to attract a sufficient number of customers. The Combined Group is exposed to changes in the general economic situation. The future success of the Combined Group depends on continued growth in the markets in which the Combined Group operates. The markets in which the Combined Group operates are highly competitive and competition is likely to intensify. Price erosion may lead to declining profits and revenues. The Combined Group may not be able to manage growth effectively and growth may require additional funding. The Combined Group may be unsuccessful in entering new markets. The Combined Group is exposed to risk related to the availability of funding. Delay in deliveries to customers may reduce the Combined Group s profitability. The Combined Group is vulnerable to adverse market perception. The Combined Group may be exposed to technical problems or other problems relating to the products and services being sold. The Combined Group may not be successful in attracting and retaining sufficient skilled employees. The Combined Group is dependent on third parties. The Combined Group is dependent on intellectual property and proprietary rights (IPR). The Combined Group is exposed to risks associated with international operations. The Combined Group is exposed to the risk of operational disruption. The Combined Group faces the risk of litigation or other proceedings in relation to its business Financial risks Changes in foreign exchange rates may adversely affect the Combined Group s results of operations and financial position. The Combined Group is exposed to interest rate and liquidity risk associated with its borrowing portfolio and fluctuations in underlying interest rates. The Combined Group is exposed to the risk that counterparties are unable to fulfil their obligations. 8

11 Risk related to the Shares The market value of the Shares may fluctuate and may not reflect the underlying asset value of the Company. The Company s ability to pay dividends is dependent on the availability of distributable reserves. The ability to bring an action against the Company may be limited under Norwegian law. Issuances of shares may have a dilutive effect on the ownership interests of the shareholders of the Company at that time. Pre-emptive rights may not be available to U.S. holders of the Shares. It may be difficult for investors based in the United States to enforce civil liabilities predicated on U.S. securities laws against the Company or the Company s directors and executive officers. Holders of the Shares that are registered in a nominee account may not be able to exercise voting rights as readily as other shareholders Selected pro forma financial information The unaudited pro forma consolidated financial information shows how the Combination between EDBH and ErgoGroup might have affected the Company s consolidated income statement for the year 2009 if the Combination had taken place on 1 January 2009 and for the six months ended 30 June 2010 if the Combination had taken place on 1 January In addition, it is shown below how the consolidated balance sheet as of as of 30 June 2010 might have been if the Combination had taken place at 30 June See Section 10 Pro Forma Financial Information for further details. The Combination involves entities under common control. The merger has been accounted for as pooling of interests, and accordingly, the results of operations and financial position for the consolidated ErgoGroup have been combined with the consolidated Company and presented as such in the historical consolidated financial statements. The accounting principles to be applied for the Combined Group will be in accordance with those accounting principles outlined in the Company s annual financial statements for

12 Unaudited pro forma profit and loss statement for the year ended 31 December 2009 ErgoGroup Pro forma GAAP harmon- EDB ization NOK million (audited) (audited) (unaudited) (unaudited) (unaudited) Total operating revenue... 7,492 5,214 12,705 Total operating costs... 6,284 4, ,992 Operating profit before depreciation... 1, ,714 Operating profit before depreciation of intangible assets ,250 Operating profit Net financial items Profit before tax Profit for the year Total comprehensive income Total profit for the period Unaudited pro forma profit and loss statement for the six months ended 30 June 2010 EDB H ErgoGroup H Pro forma adjustments GAAP harmonization Pro forma H NOK million (unaudited) (unaudited) (unaudited) (unaudited) Total operating revenue... 3,633 2,628 6,261 Total operating costs... 3,293 2,346 5,639 Operating profit before depreciation Operating profit before depreciation of intangible assets Operating profit Net financial items Profit before tax Profit for the period Total comprehensive income Total profit for the period

13 Unaudited pro forma condensed balance sheet as of 30 June 2010 GAAP NOK million EDB (unaudited) ErgoGroup (unaudited) Harmonization (unaudited) Pro forma (unaudited) Total fixed assets... 5,341 3,259 8,600 Total current assets... 2,225 1,850 4,075 Total assets... 7,566 5,109 12,675 Total equity and minority interests... 2,294 2,077 4,371 Total liabilities... 5,272 3,032 8,304 Total equity and liabilities... 7,566 5,109 12, Auditor and advisers The Company s statutory auditor is Ernst & Young AS. SEB Enskilda AS has acted as financial adviser and Advokatfirmaet Thommessen AS has acted as legal adviser to the Company in connection with the Combination and the Listing Documents on display Copies of the following documents will be available for inspection at the Company s registered office during normal business hours on Monday to Friday each week (except public holidays) for a period of 12 months from the date of this Prospectus: the Memorandum of Incorporation and the Articles of Association; the audited financial statements of the Company for the years ended 31 December 2009, 2008, 2007; the unaudited financial statements of the Company for the six months and three months ended 30 June 2010; the audited financial statements of ErgoGroup for the years ended 31 December 2009, 2008, 2007; the unaudited financial statements of ErgoGroup for the six months and three months ended 30 June 2010; the audited financial statements of the Company s subsidiaries for the years ended 31 December 2009 and 2008 the International Data Corporation s Semi annual Tracker Nordic by Nils Molin dated in January 2010; and this Prospectus. Copies of this Prospectus may also be obtained from SEB Enskilda AS during the same 12 month period. 11

14 2 RISK FACTORS 2.1 General Investing in EDB ErgoGroup involves inherent risks. In addition to the other information set out in this Prospectus, the following risk factors should be carefully considered before deciding whether to make an investment in the Company. Any of the risks described below could have a material adverse impact on the Combined Group s business, results of operations and financial condition and could therefore have a material adverse affect on the trading price of the Shares and affect a prospective investor s investment. The information below does not purport to be exhaustive. Additional risks and uncertainties not presently known to the Company or that are currently deemed immaterial may also have a material adverse effect on the Combined Group s business, financial condition and/or operating results. If any of the events described below should occur, the price of the Shares may decline and investors could lose all or part of their investment. A prospective investor and shareholder in the Company should carefully consider the factors set forth below, and elsewhere in this Prospectus, and should consult his or her own expert advisors as to the suitability of an investment in the Shares of the Company. The order in which the risks are presented does not necessarily reflect the likelihood of their occurrence or the magnitude of their potential impact on the Combined Group s cash flows, business, results of operations and financial position. This Prospectus also contains forward-looking statements that are subject to future events, risks and uncertainties. The actual outcome could differ materially from the outcome anticipated in these forward-looking statements as a result of many factors, including but not limited to, the risks described below and elsewhere in this Prospectus, see Section 4 Notice regarding forward looking statements. 2.2 Risks related to the Combination The Company may not be able to successfully combine the business of the Company and ErgoGroup. The Combination involves the integration of the Company and ErgoGroup, two companies that have previously operated independently. Such an integration process is challenging and involves risk. Achieving the benefits of the Combination will depend in part upon meeting the challenges inherent in the successful combination and integration of business enterprises of the size and scope of ErgoGroup and the Company, and the possible resulting diversion of management attention for an extended period of time. There can be no assurance that the Company will meet these challenges and that such diversion will not negatively affect operations, or that the benefits expected from the Combination will be realised. Any delays and unexpected costs incurred in the integration process or failure to achieve the advantages contemplated by the Combination may have a material adverse effect on the Combined Group s financial condition and operating result. There can be no assurance that the Combined Group will actually achieve anticipated synergies or other benefits from the Combination. 12

15 The unaudited pro forma financial information is not necessarily indicative of EDB ErgoGroup s future results. This Prospectus contains unaudited pro forma financial information, which gives effect to the Combination. The unaudited pro forma financial information is based on preliminary estimates and assumptions, which the Company believes to be reasonable, and is being furnished solely for illustrative purposes and is not necessarily indicative of what the Combined Group s results of operations and financial condition would have been had the Combination occurred anytime before it actually occurred. As a result, an investor should not place undue reliance on the unaudited pro forma financial information presented in this Prospectus. The Combined Group may fail to successfully implement its cost reduction initiatives. There can be no assurance that the Combined Group will be able to achieve all of the cost savings that it expects to realise from the Combination. In particular, the Combined Group may be unable to implement one or more of its initiatives successfully or may experience unexpected cost increases that offset the savings that it achieves. Given the continued competitive pricing pressure experienced in Combined Group s industry, the Combined Group s failure to realise cost savings would adversely affect the Combined Group s results of operations. The Combined Group is exposed to the risk of losing key customers as a consequence of the Combination or due to other reasons. Prior to the Combination, the Company and ErgoGroup had entered into a number of customer contracts, which generally have a duration of one to five years and which will be continued after the completion of the Combination. Although the companies have a large number of customers, a few customers, such as Telenor, DnB NOR Bank Norge ASA, Posten, Sparebank 1, Storebrand ASA, Statoil ASA and Gjensidige Forsikring AS, represent a significant portion of the Combined Group s revenues. The Combined Group could experience loss of key customers as a consequence of the Combination or due to other reasons. Further, it may be unable to renew its existing customer contracts or establish new customer contracts on terms as favourable as those contracts currently held. The Combined Group s revenues, profitability, cash flows and financial condition may be materially adversely affected in case of loss of key customers or if it fails to continue the current agreements or establish new agreements on similar terms. 2.3 Risks related to the Combined Group s business and the industry in which it operates The Combined Group is exposed to downturn in customer markets. The Combined Group is sensitive to fluctuations in the global private and public spending which could imply a negative development in the demand for its services. The Combined Group cannot predict the future level of demand for its services or future conditions in the industries it serves. Changes in the demand for the Combined Group s services may materially adversely affect revenues, profitability, cash flows and the financial condition of the Group. The Combined Group may be unable to attract a sufficient number of customers. The Combined Group may in the future not be able to attract a sufficient number of customers to generate adequate revenues to cover its operating expenses and/or service its debts. Inability to attract a sufficient number of customers may have a material adverse effect on the Combined Group s business, operating results and financial condition. The Combined Group is exposed to changes in the general economic situation. The Combined Group may be affected by the general state of the economy and business conditions, including, but not limited to, the occurrence of recession and inflation, unstable or adverse credit markets, fluctuations in operating expenses, technical problems, work stoppages or other labour 13

16 difficulties, property or casualty losses which are not adequately covered by insurance, and changes in governmental regulations, such as increased taxation or introduction of regulations decreasing the number of customers or increasing operating costs and capital expenditure. This could take the form of reduced demand for the Combined Group s services, price pressure or losses on receivables resulting from customers inability to pay their debts, which may have a material adverse affect on the Combined Group s sales and profitability. The future success of the Combined Group depends on continued growth in the markets in which the Combined Group operates. The future success of the Combined Group s business depends on the continued growth in the market in which the Combined Group operates. There can be no assurance that the current growth in the market will continue, and discontinued or reduced growth may in turn have a material adverse effect on the Combined Group s business, operating results and financial condition. The markets in which the Combined Group operates are highly competitive and competition is likely to intensify. The markets in which the Combined Group operates are highly competitive, and the Combined Group may in the future also be exposed to increased competition from current market players or new entrants to the market. Competition in the markets where the Combined Group operates may lead to reduced profitability and/or expansion opportunities. Certain existing and potential new customers may also view the Combination negatively and therefore reduce or stop acquiring services and products from EDB ErgoGroup. The failure of the Combined Group to maintain its competitiveness and respond to increased competition may have a material adverse effect on the Combined Group s business, operating results and financial condition. Price erosion may lead to declining profits and revenues. A majority of the Combined Group s revenues is derived from IT outsourcing services. The natural evolution of technology has led to a commoditisation of these services, which implies higher focus on prices and pressure on costs. The Combined Group may therefore experience declining profits and revenue despite significant growth in number of projects and clients, which may in turn have a material adverse affect on the Combined Group s financial condition. The Combined Group cannot guarantee that it will be able to secure growth in revenues and profit. The Combined Group may not be able to manage growth effectively and growth may require additional funding. The Combined Group s future growth and performance will partly depend on its ability to manage growth effectively, including its ability to adequately manage the number of employees, technical solutions including computer systems and software, operational efficiency, the Combined Group s organisation, and locations. Growth may lead to inefficiency during changing/reorganising the daily operations like moving to new locations, reorganising the operations centres, updating software or systems, hiring and training new employees. In addition, acquisitions of other companies may result in accelerated growth and demanding integration processes. Growth may also create a need for additional financial funding. The Combined Group s future capital requirements depend on many factors, including its ability to successfully enter into new customer contracts and establish long term customer contracts. To the extent that the current funds available to the Combined Group and raised on the Contemplated Offering (if and when completed) are insufficient to fund the Combined Group s future operating requirements, the Combined Group may need to raise additional funds through financings or curtail its growth and/or reduce its assets. The general financial market conditions, stock exchange climate, interest level, the investors interest in the Combined Group, the share price of the Combined Group, as well as a number of other factors beyond the Combined Group s control, may restrict the Combined Group s ability to raise necessary funding for future growth and/or investments to increase efficiency. 14

17 The Combined Group s failure to successfully grow its operations, and/or to handle such growth, could have a material adverse affect on the Combined Group s business, operating results and financial condition. The Combined Group may be unsuccessful in entering into new markets. The Combined Group may in the future enter new markets, both geographically and in terms of new products and new customer groups. New market entries are associated with similar risks as those related to managing growth, and will require investments and significant resources, including management time. In the short term, new market entries may generate negative results. Unsuccessful entry into new markets could have a material adverse affect on the Combined Group s business, operating results and financial condition. The Combined Group is exposed to risk related to the availability of funding. The Combined Group is exposed to material risks related to the availability of funding for future growth within its business segments. In the wake of the global financial and economic downturn, access to credit has become increasingly scarce. The Combined Group is committed to considerable future capital expenditure, and is therefore dependent on access to sufficient funding on acceptable terms. Any difficulty the Group may encounter in securing adequate sources of short and long term funding may have a material adverse effect on its profitability, cash flows and financial condition. Delay in deliveries to customers may reduce the Combined Group s profitability. The Combined Group will be involved in a number of large deliveries and projects, many of which imply a customisation of the deliverables to the customer. Although the Combined Group has routines for quality assurance, delays in any of these projects or deliverables may materially adversely affect the Combined Group s profitability, both as a result of claims for compensation and through the increase in costs which normally result from such delays. Delays may also result in cancellation of contracts, which may in turn have a material adverse affect on the Combined Group s profitability, cash flows and financial condition.. The Combined Group is vulnerable to adverse market perception. As it expands, the Combined Group will be vulnerable to adverse market perception as it must display a high level of integrity and maintain the trust and confidence of its customers. Any mismanagement, fraud or failure to satisfy fiduciary or regulatory responsibilities, allegations of such activities, or negative publicity resulting from such activities, or the association of any of the above with the Combined Group or a relevant industry sector generally could adversely affect the Combined Group s reputation and the value of the Combined Group s brands, as well as its business, results of operations and financial position. The Combined Group may be exposed to technical problems or other problems relating to the products and services being sold. The Combined Group provides and will provide a large variety of product and services, which also includes products and services from third party vendors. There may be situations where the customers, the Combined Group and the vendors may not agree upon the reasons for defects or claims, and such situations may result in costly and time consuming disputes or in other ways affect the Combined Group s business. The Combined Group may not be successful in attracting and retaining sufficient skilled employees. The successful development and performance of the Combined Group s business depends on its ability to attract and retain skilled professionals with appropriate experience and expertise. There can be no assurance that the Combined Group will have access to sufficient skilled personnel, especially considering the current labour market with high demand for skilled personnel. Failure to attract or 15

18 retain employees could result in the inability to maintain the appropriate technological or business improvements or take advantage of new opportunities that may arise, which may in turn lead to a subsequent decline in competitiveness could have a material adverse effect on the Combined Group s business, financial condition, operating results and/or cash flows. The Combined Group is dependent on third parties. The Combined Group depends on third parties, such as suppliers and partners, to perform certain services to its customers. There can be no assurance that the Combined Group s suppliers and other partners will not experience problems in the future (within or outside their control), which may adversely affect the Combined Group s business, operating results and financial condition. The Combined Group is dependent on intellectual property and proprietary rights (IPR). The Combined Group s sales and operations are based on several systems, including software developed and sold to the Combined Group by other third parties. It is the Combined Group s policy to require that such third parties have all appropriate IPR for the development, manufacture and sale of their products. Nonetheless, claims could be asserted against the Combined Group that the products or services it sells infringe IPR owned by others. Such claims and/or legal disputes may, amongst other things, result in a loss of reputation for the Combined Group, which may in turn affect the Combined Group s business, results of operation and financial condition. The Combined Group is exposed to risks associated with international operations. The Combined Group s operations in international markets is subject to risks inherent in international business operations, including, but not limited to, general economic conditions in each foreign country in which the Combined Group will operate, overlapping differing tax structures, problems related to management of an organisation spread over various countries, unexpected changes in regulatory requirements, compliance with a variety of foreign laws and regulations, and longer accounts receivable payment cycles in certain countries. The materialisation of such risks may adversely affect the Combined Group s reputation, as well as its business, operating results and financial condition. The Combined Group is exposed to the risk of operational disruption. The Combined Group operates critical solutions for its customers worldwide. Disruptions of such solutions may occur and significantly impact customers operations, which may imply material costs for the Combined Group, and cause loss of key customers and loss of reputation. This could in turn have a material adverse affect on the Combined Group s revenues and profitability. The Combined Group faces the risk of litigation or other proceedings in relation to its business. The Combined Group faces the risk of litigation and other proceedings in relation to its business. Even if the Combined Group believes it has appropriately provided for the financial effects of litigation or other proceedings, the outcomes of any litigation may differ from management expectations, exposing the Combined Group to unexpected costs and losses, reputational and other non-financial consequences and diverting management attention. 2.4 Financial risks Changes in foreign exchange rates may adversely affect the Combined Group s results of operations and financial position. The Combined Group s results of operations are subject to currency translation risk. The results of operations are reported in the relevant functional currency and then translated into NOK for inclusion in the Combined Group s financial statements. Exchange rates between the relevant foreign currencies and the NOK have in the recent years fluctuated significantly and may do so also in the future. Sweden is an important market for the Combined Group, and significant fluctuations in the exchange rates between the SEK and the NOK could significantly affect the Combined Group s reported results accordingly. The Combined Group is also expected to generate significant revenues in EUR, and is also 16

19 significantly exposed to USD and EUR. Significant fluctuations in exchange rates between these currencies and the NOK may thus materially adversely affect the reported results. The Combined Group is exposed to interest rate and liquidity risk associated with its borrowing portfolio and fluctuations in underlying interest rates. The Combined Group s long-term debt is primarily based on floating interest rates. An increase in interest rates can therefore materially adversely affect the Combined Group s cash flows and financial condition. The Combined Group has, and will in the future have, covenants related to its financial commitments. Failure to comply with financial and other covenants may have a material adverse effect on the Combined Group, including potential increased financial cost, requirement for additional security, new loan agreements on less favourable terms or cancellation of loans. The Combined Group is exposed to the risk that counterparties are unable to fulfil their obligations. The Combined Group s customer base consists of a diverse customer base with no single material source of credit risk. However, a general downturn in financial markets and economic activity may result in a higher volume of late payments and outstanding receivables, which may in turn have a material adverse effect on the Combined Group s cash flows and financial condition. 2.5 Risks related to the Shares The market value of Shares may fluctuate and may not reflect the underlying asset value of the Company. The market value of the Shares can fluctuate and may not always reflect the underlying asset value of the Company. A number of factors outside the control of the Company may have an impact on its performance and the price of the Shares. Such factors include the operating and share price performance of other companies in the industry and markets in which the Company operates, speculation about the Company s business in the press, media or investment community, changes to the Company s profit estimates, the publication of research reports by analysts and general market conditions. The Company s ability to pay dividends is dependent on the availability of distributable reserves. The ability of the Company to pay dividends on the Shares is dependent upon the availability of distributable reserves and, therefore, among other things, upon receipt by it of dividends and other distributions of value from its subsidiaries and companies in which it has an investment. The ability to bring an action against the Company may be limited under Norwegian law. The Company is a public limited liability company incorporated under the laws of Norway. The rights of holders of Shares are governed by Norwegian law and by the Articles. These rights might differ from the rights of shareholders in other jurisdictions. In particular, Norwegian law limits the circumstances under which shareholders of Norwegian companies may bring derivative actions. Under Norwegian law, any action brought by the Company in respect of wrongful acts committed against the Company takes precedent over actions brought by shareholders in respect of such acts. In addition, it may be difficult to prevail in a claim against the Company under, or to enforce liabilities predicated upon, securities laws in other jurisdictions. Any future share issues and sales of Shares by major shareholders may have an adverse effect on the market price of the Shares. The Company is planning to carry out a share issue (the Contemplated Offering), and may decide to offer additional Shares in the future. An additional offering or a significant sale of Shares by any of the Company s major shareholders could have an adverse effect on the market price of the outstanding Shares. 17

20 Issuances of shares may have a dilutive effect on the ownership interests of the shareholders of the Company at that time. The Company may require additional capital in the future to finance its business activities and growth plans. The issuance of shares in order to raise such additional capital, or as means of honouring options or warrants, may have a dilutive effect on the ownership interests of the shareholders of the Company at that time. Pre-emptive rights may not be available to U.S. holders of the Shares. Under Norwegian law, prior to the issuance of any new shares for consideration in cash, the Company must offer holders of the 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 shareholders. These pre-emptive rights are generally transferable during the subscription period for the related offering and may be quoted on Oslo Børs. U.S. holders of the Company s 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 of 1933, as amended, is effective with respect to such rights or an exemption from the registration requirements of the U.S. Securities Act of 1933 is available. 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, they may not receive the economic benefit of such rights. In addition, their proportional ownership interests in the Company will be diluted. It may be difficult for investors based in the United States to enforce civil liabilities predicated on U.S. securities laws against the Company or the Company s directors and executive officers. The Company is organised under the laws of Norway. It may be difficult for investors in the U.S. to effect service of process within the U.S. upon the Company or the Company s directors and executive officers and to enforce against the Company or its directors and executive officers judgments obtained in U.S. courts predicated on the civil liability provisions of U.S. federal securities laws. Holders of the Shares that are registered in a nominee account may not be able to exercise voting rights as readily as other shareholders. 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 such shares unless their ownership is re-registered in their names with the Norwegian Centralized Securities Register (VPS) prior to the Company s general meetings. There can be no assurance that beneficial owners of the Company s shares will receive the notice of a general meeting in time to instruct their nominees to either effect a re-registration of their shares or otherwise vote their shares in the manner desired by such beneficial owners. 18

21 3 STATEMENT OF RESPONSIBILITY The Board of Directors of EDB ErgoGroup ASA accepts responsibility for the information contained in this Prospectus. The members of the Board of EDB ErgoGroup ASA hereby confirms 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 contains no omission likely to affect its import. Oslo, 14 October 2010 Arve Johansen (chairman) Anne-Lise Aukner (deputy chairman) Anders Brandt (board member) Adine Grate Axén (board member) Dag Mejdell (board member) Hilde Ringereide (board member) Eirik Bornø (board member) John Ingvar Brekke (board member) Wenche Brateng (board member) 19

22 4 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. 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. Such forward-looking statements involve 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 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: the competitive nature of the markets in which the Company and its subsidiaries operates; global and regional economic conditions; government regulations; changes in political events; and force majeure events. Some important factors that could cause actual results to differ materially from those in the forwardlooking statements are, in certain instances, included with such forward-looking statements and in Section 2 Risk Factors. Given the aforementioned uncertainties, prospective investors are cautioned not to place undue reliance on any of these forward-looking statements. 20

23 5 PRESENTATION OF EDB ERGOGROUP 5.1 Overview The Company is a Norwegian public limited liability company organised under the Norwegian Public Limited Companies Act, with business registration number The Company s registered office is at Nedre Skøyen vei 26, N-0276 Oslo, Norway, and its telephone number is The legal and commercial name of the Company is EDB ErgoGroup ASA. The Company was incorporated under the laws of Norway on 1 September 1983 and registered in the Norwegian Register of Business Enterprises on 19 February The Company s shares are listed on Oslo Børs under the ticker EDBASA. The Company is the holding company for the Combined Group, an information technology (IT) services provider in the Nordic region. EDB ErgoGroup helps customers unlock substantial value from the entire IT services value chain, spanning solutions, consulting and outsourcing. The Company and ErgoGroup both have a history of successfully innovating with, and delivering business-critical solutions to, public and private sector customers, which will be continued in the Combined Group. EDB ErgoGroup serves as a responsive partner, combining local expertise, deep industry knowledge and substantial international delivery capability. 5.2 The Combination On 6 June 2010, the Boards of Directors of the Company, EDBH and ErgoGroup entered into a Merger Plan. The Merger Plan was approved by the general meetings of all three companies on 8 July The Company resolved in its extraordinary general meeting held on 8 July 2010 to increase the share capital of the Company by NOK 141,862,137 through the issue of 81,064,078 New Shares, each with a nominal value of NOK 1.75 to the shareholder in ErgoGroup as merger consideration. As settlement for the share deposit, EDBH issued a receivable in favour of the Company equal to the book value of the assets transferred to EDBH in the Combination. The New Shares were issued upon completion of the Combination (14 October 2010). The Combination was carried out as a triangular merger pursuant to the provisions on statutory mergers set out in Chapter 13 of the Public Limited Companies Act. Upon completion of the Combination, ErgoGroup was dissolved and its assets, rights and obligations were transferred in its entirety to EDBH, in exchange for which ErgoGroup s shareholder received 81,064,078 New Shares in the Company as consideration. The Combination was completed on 14 October For accounting purposes, the Combination was deemed completed on 30 September Upon completion of the Combination, the Company was renamed EDB ErgoGroup ASA and EDBH changed its name to ErgoGroup AS. 5.3 History and development The Company s history of technology and innovation dates back more than 40 years. The Company began its life in 1961 as Elektronisk Databehandling AS. The purpose was to set up a data centre for the insurance companies Sigyn AS, Norsk Alliance and Norden. Over the Company s 50-year history, some 50 other IT-related businesses have been incorporated into the Company. Over the course of the years, the Company has progressed from being a supplier of data centre services, punch cards and banking applications to become one of the largest Nordic IT groups, offering solutions that cover the entire range of business critical IT services from application services and industry-specific solutions through to IT operating services and network solutions. 21

24 The most significant events in the Company s history are: Year Significant events Establishment of A/S EDB Installed the first IBM360 system in Norway First in Norway with communication over data links Installed the first Amdahl computer in Europe Merger between Storebrand and Norden Insurance. The Company takes over Storebrand s IT operations Norwegian Petroleum Consultants become majority shareholders of the Company The Company merged with Telenor Programvare AS The Company acquired Fellesdata AS EDB Sweden was established Acquisition of IBM Local Government Acquisition of TAG Acquisition of the consulting companies Avenir, Guide and Spring Acquisition of the Miratech and Infopulse companies from Ukraine and acquisition of 51% of Span in India as part of the Company s global strategy Acquisition of IS Partner AS from Statoil Completion of the Combination. The most significant events in ErgoGroup s history are: Year Significant events Establishment of Statens driftsentral for administrativ databehandling (the government s operations central for administrative data processing) Reorganised into Statens Datasentral ( SDS ). 1990s... SDS carried out a number of acquisitions SDS was acquired by Posten and became Posten SDS Posten SDS changed its name to ErgoGroup AS and was established as a private limited liability company Terje Mjøs was appointed managing director in 2004 and developed ErgoGroup through amongst other things a number of acquisitions in the period from 2004 to ErgoGroup acquired Allianse AS ErgoGroup acquired SYSteam AB in Sweden ErgoGroup acquired Bekk Consulting ErgoGroup acquired 51% of ION Solutions Pvt Ltd Completion of the Combination. 22

25 5.4 Legal structure General The Company is the holding company of the Combined Group. It has approximately 135 wholly-owned subsidiaries in more than 16 countries. The following chart depicts the Combined Group s high-level legal structure: EDB ErgoGroup ASA ErgoGroup AS EDB Card Services AS EDB Business Partner Sweden AB (Sweden) EDB Consulting Group AS EDB Business Partner Norge AS EDB Consulting Group A/S (Denmark) Description of the Company s significant subsidiaries The following is a list of the Company s significant, directly and indirectly owned, subsidiaries: Name Country of incorporation/ residence Proportion of ownership EDB Business Partner Holding AS (ErgoGroup). Norway 100% EDB Business Partner Norge AS... Norway 100% SYSteam AB... Sweden 100% EDB Business Partner Sverige AB... Sweden 100% EDB Consulting Group AB... Sweden 100% EDB Consulting Group AS... Norway 100% EDB Card Services AS... Norway 100% Bekk Consulting AS... Norway 100% EDB Consulting A/S... Denmark 100% EDB Card Services AB... Sweden 100% Eye-Share AS... Norway 100% Global Office AS... Norway 100% EDB Business Partner AB... Sweden 100% ION Solutions Pvt Ltd.... India 51% The Company s proportion of ownership is identical to the proportion of voting power held. 23

26 5.5 EDB ErgoGroup s vision, objective and strategy EDB ErgoGroup will follow a strategy aimed at Nordic leadership and a more balanced revenue mix that better reflects its customers investment in IT. EDB ErgoGroup will progress this strategy actively, and the Combined Group will be the second largest participant in the Nordic countries with a strong presence in Norway and Sweden. In addition, the Combined Group will be a major supplier of industry-specific solutions and application services. EDB ErgoGroup s strategic plans will be firmly anchored in its industrial orientation and its commitment to profitability. As part of its strategic process, EDB ErgoGroup will define a set of guidelines to provide overall guidance for how the Combined Group and its employees shall operate in their daily work. As part of the ongoing integration process, the Combined Group will harmonize current vision statements and the value propositions for the companies in order to reflect the combined strengths, capabilities and company cultures. 5.6 Business description General The main activities of the Combined Group are provisioning of IT services, ranging from sale of software, systems integration, IT solutions and consulting services, to centralised and decentralised operation of computer systems. The Combined Group also offers outsourcing services and services related to data communication, data security and electronic publishing. The Combined Group has organised its business into five business areas addressing national and Nordic markets in the region. The business areas are Global IT Operations, Global Banking and Finance, Solutions Consulting and Sweden. Global sourcing is a strategic asset for the Combined Group, and with bases in India and the Ukraine, all business areas utilise lower cost resources to provide attractive and competitive services to customers Global IT Operations Global IT Operations is the Company s business area for providing outsourcing services. The Company is a leading provider of IT outsourcing services in the Nordic region. It operates principally in Norway and Sweden, but also provides services to customers also with global business. The outsourcing services entail a complete range of outsourced services to support operations in the public and private sectors. They comprise IT operation services, covering the entire range from centrally located servers and networks through to user equipment at any location, and application operations for business critical applications, such as SAP, Oracle and other business solutions. In addition, the business area Global IT Operations offers data storage and network services. Network services comprise access services, integrated communications and operating services for customer networks, and security services (services within the area of user identity management, content control and internet intrusion detection system). With a specialized regional set-up, the business area provides outsourcing services also to the SMEcustomers, delivering a comprehensive set of infrastructure and application management services tailored to meet the specific needs of this segment. 24

27 5.6.3 Banking and Finance The business area offers a Financial Suite as an overall solutions concept for banking and financial customers covering all aspects of their business, from sales to customer service, transaction management, business intelligence and compliance. The Combined Group is a leading provider of such services to financial institutions in the Nordic region. In addition to the Financial Suite, the Combined Group offers card solutions, including solutions for payment terminals, internet payment, card productions and fraud prevention through the Banking and Finance business area. The solutions are provided as ASP-services, or as customer specific projects and deliveries Solutions The business area solutions provides vertical and horizontal IT-solutions that improve its customers efficiency and help them to strengthen their relationships with their customers. The business area has a particularly strong position in solutions for the public sector, with a comprehensive set of administrative solutions, including integration and technology, interactive solutions and resource allocation. The Combined Group further provides industry-specific solutions, supporting business process areas specific to the process or manufacturing (P&M) industries, as well as a variety of solutions for efficient management of a business, such as ERP and CRM systems, content management and document and case management. The business area also offers applications management both for the solutions IT supplies and for thirdparty solutions Consulting The business area consulting provides a complete range of IT consulting services, spanning design, development systems integration and operations. The business area has extensive experience in industry standard solutions, particularly SAP, Microsoft, Oracle and IBM technology, as well as in project management, systems development, testing and business development. The business area has strong regional presence throughout Norway, and delivers attractive services with consultants close to the customers, often tapping into resources and skills from competence centres in other locations Sweden The business area addresses the Swedish market with a broad spectrum of IT-services, ranging from sale of software, systems integration, IT solutions and consulting services, to centralised and decentralised operation of computer systems. The business area has strong regional presence throughout Sweden. Similar to the consulting business area, the Combined Group delivers attractive services with consultants close to the customers through this business area, often tapping into resources and skills from competence centres in other locations. Local presence and delivery-capability, combined with operations in large-scale Nordic production sites provide customers with competitively priced IT-services, while maintaining flexibility to address customer specific needs. 25

28 5.7 Research and development, patents and licenses Total research and development costs for the Company were NOK 529 million in 2009, NOK 417 million in 2008 and NOK 331 million in Research and development activities are primarily associated with the development of IT solutions used in the provision of services and, to some degree, for sales and licensing purposes. See Section 8.5 Significant change in the Company s financial or trading positions since 30 June 2010 for information on the recent resolution to write down some of the book value of software developed in-house. The Combined Group has approximately 215 software licenses with an aggregate cost per year of approximately NOK 850 million. The Combined Group is not dependent on any patents or licenses. The following is a list of the Combined Group s major licensors: IBM Norge AS Computer Associates Norway AS Hewlett-Packard Norge AS Microsoft Ireland Operations Ltd. Compuware Nordic AS Commaxx AS Oracle Norge AS Mnemonic AS SAS Institute AS SAP Norge AS Sterling commerce Quest Steria SUN Microsystems 5.8 Trend information The Nordic IT services market showed a decline in 2009 due to reduced demand, resulting in pressure on prices. Customers remain reluctant to commit to new investment spending, and continuing downward pressure on prices in the outsourcing segment meant that the IT services market again showed an overall decline in the first six months of There are, however, clear signs of growth in a number of segments, and this has caused the decline in demand to level off. The market research companies International Data Corporation 2 ( IDC ) and Gartner expect an improving trend in the IT services market during 2010, with the prospect of growth in the second half of the year. In view of the continuing uncertain market situation, the Company and ErgoGroup have launched further cost saving measures. The Board of the Company is maintaining a strong focus on ensuring that the Combined Group continues to implement the measures necessary to maintain satisfactory profitability and competiveness. Apart from this, the Combination (described in Section 5.2 The Combination ) and the significant events after 30 June 2010 (described in Section 8.5 Significant change in the Company s financial or trading positions since 30 June 2010 ), the Company has not experienced trends or events that are significant to the Company between 30 June 2010 and the date of this Prospectus. 2 IDC s Semi annual Tracker Nordic by Nils Molin, January

29 6 MARKET OVERVIEW 6.1 Overview EDB ErgoGroup operates in the Nordic IT services market with focus on IT outsourcing and IT solutions. Global economic conditions deteriorated significantly over the course of 2009, causing a decline in the Nordic IT services market in which EDB ErgoGroup has a leading position. According to the IDC 3, the total market showed a decline in the order of 5% to NOK 126 billion with lower volumes and price pressure in most areas. EDB ErgoGroup experienced lower spending on IT services by customers in both the public and private sectors. Among its primary markets, the sharpest decline was seen in Sweden and in the consulting segment across the Nordic countries, with demand for consulting from industrial companies particularly negatively affected. Going forward, it is expected that customers continue to be cautious in their IT services spending. Among the few bright spots are services related to standardising IT infrastructure, automating work processes and security. IDC also projects that the IT services market will improve gradually during 2010, with potential for growth in the latter half of the year. In the Nordic region, the market has been evolving quickly, with customers tending to prefer integrated providers such as EDB ErgoGroup, who provide a full range of services. The market has experienced a trend of corporate divestment of former in-house IT services units, which has influenced contract flow. This is reflected in the rapid consolidation of the market. According to IDC, the top 10 Nordic IT services providers now command 54% of the market. With the Nordic IT services market now close to NOK 130 billion in annual sales, these developments provide opportunities for EDB ErgoGroup. EDB ErgoGroup is the second largest IT services provider in the Nordic region with a market share of 7.9% of the approximately NOK 130 billion market. The following table shows the market share of the top five companies in Nordic IT services market in 2009 according to IDC: Company Market share 1 IBM 13.3% 2 EDB + ErgoGroup 7.9% 3 Tieto 7.1% 4 Logica 6.8% 5 HP 5.4% The macroeconomic environment is expected to improve in 2010 and 2011 to support investments in IT, with SEB s (Nordic Outlook Update, August 2010) estimate of overall GDP growth in Norway being 1.6% and 2.4% in 2010 and 2011, respectively. In Sweden, SEB expects a recovery leading to a GDP increase of 3.6% in 2010 and 2.5% 2011 (calendar adjusted: 3.3% in 2010) and in Denmark, SEB expects GDP to grow by 1.7% in 2010 and 1.8% in In Finland, that experienced a global economic slowdown with GDP declined by 7.8%, SEB expects the GDP to grow by 1.8% in 2010 and 2.5% in The IT outsourcing market EDB ErgoGroup has seen an increased customer focus on cost-oriented projects and more flexible business models, and hence experienced stronger demand for their outsourcing services in combination with global delivery models. EDB ErgoGroup is the second largest provider of IT outsourcing services in the Nordic region, with an 11.9% share of the Nordic IT outsourcing market. Sweden is the largest single geographic market, 3 All references to IDC within this Section 6 are to IDC s Semi annual Tracker Nordic by Nils Molin, January

30 accounting for 39% of spending, followed by Denmark, Norway and Finland. Sweden is a target growth market for EDB ErgoGroup. The following table shows the market share of the top five companies in the Nordic IT outsourcing market in 2009 according to IDC: Company Market share 1 IBM 16.2% 2 EDB + ErgoGroup 11.9% 3 Logica 7.5% 4 Tieto 7.4% 5 CSC 6.3% The Nordic market has a large potential for outsourcing. Data from IDC shows that only 50% of companies outsourced their IT operations to any extent. A great deal of this potential market will be served by global sourcing, which is now widely accepted by customers as method of controlling costs. However, some sectors, such as finance, have not yet received the regulatory frameworks they need in order to commit fully to global sourcing. It is expected that these issues will be cleared over the next year, as the economic downturn in the Nordic countries has set cost control and flexibility higher on organisational agendas. This development should drive higher demand for outsourcing, particularly in Sweden. Projections from IDC indicate that a gradual recovery of the IT outsourcing services market by the end of 2010 can be expected. 6.3 The IT solutions market The IT solutions market has grown rapidly over the last five years, although the economic downturn reduced demand and increased price pressure in Lower demand in the private sector segments has been offset with higher sales in the public sector, due to investment in internet-based self-service solutions and workflow automation tools. Independent market analysts predict that the demand for solutions should increase in the second half of 2010, but uncertainty remains in the forecasts. The underlying growth potential comes from customers need to adapt to new business models, that are more flexible and technology driven. As a result, it is expected that demand will increase as the macroeconomic environment improves. In addition, the public sector is in the midst of a renewal. Organisations in this sector are all seeking to use resources more effectively, while delivering faster outcomes, better quality service and increasing public access to information. EDB ErgoGroup is the fourth largest provider of IT solutions services in the Nordic region, with a 6.2% share. The following table shows the market share of the top five companies in the Nordic IT solutions market in 2009 according to IDC: Company Market share 1 IBM 11.4% 2 Tieto 9.8% 3 Logica 7.0% 4 EDB + ErgoGroup 6.2% 5 Accenture 5.9% 28

31 7 CAPITAL RESOURCES 7.1 Working capital statement In the opinion of EDB ErgoGroup, EDB ErgoGroup has sufficient working capital for its present requirements, that is, for at least the 12 months following the date of publication of this Prospectus. 7.2 Funding structure As of 30 June 2010, the Company had NOK 283 million in cash and NOK 187 million in undrawn commitments under existing bank facilities on a standalone basis, which lead to a total available liquidity of NOK 470 million. The Company had NOK 3,195 million in interest bearing debt on a standalone basis, of which NOK 87 million was short term interest bearing debt. ErgoGroup standalone had, per 30 June 2010, NOK 411 million in cash and NOK 270 million in undrawn commitments under existing facilities with Posten. ErgoGroup standalone had NOK 1,442 million in interest bearing debt, of which NOK 103 million was short term interest bearing debt. As of 31 August 2010, the Company had NOK 131 million in cash and NOK 177 million in undrawn commitments under existing bank facilities, which lead to a total available liquidity of NOK 308 million. As of the same date ErgoGroup (including its subsidiaries) had NOK 366 million in cash and NOK 796 million in undrawn commitments under existing facilities with Posten, which lead to a total available liquidity of NOK 1,162 million. Combined, this would give NOK 497 million in cash and NOK 973 million in undrawn commitments under existing bank facilities, which lead to a total available liquidity of NOK 1,470 million. On completion of the Combination, NOK 1,000 million of ErgoGroup s interest bearing debt to Posten was refinanced through the utilisation of the Company s NOK 1,000 million term loan with Skandinaviska Enskilda Banken. Simultaneously, the Company assumed the balance of ErgoGroup s outstanding loan with Posten in the amount of approximately NOK 400 million, including accrued interest, and the undrawn commitments on ErgoGroup s facilities with Posten was cancelled. In connection with announcement of the Combination, the Company announced a contemplated share issue of up to NOK 1,000 million, which will take place after completion of the Combination. The Company believes that, together with the proceeds from such share issue, funds from operations and funds available under its bank facilities (as described in Section 0 The Company s main sources of cash flow are cash flow from operations. In the first half of 2010, the Company had a negative operational cash flow of NOK 22 million, which was mainly due to an increase in accounts payable compared to 31 December In the same period, ErgoGroup standalone had an operational cash flow of NOK 49 million. Combined, this would give a total operational cash flow in the first half of 2010 of NOK 27 million. Historically, both the Company and ErgoGroup standalone generate nearly all of their cash flow during the final quarter of the year, and it is not expected that it should be any different in the present year. Free cash flow (operational cash flow minus investments) was negative with NOK 217 million in first half of 2010 for the Company. In the same period, ErgoGroup standalone had a free cash flow of NOK -26 million. Combined, this would give a total free cash flow of NOK -243 million. See Section Cash Flow Statement and Section 9 Operational and financial review for details on cash flow for the latest financial year and the first half of The Company has not experienced any material changes in the Combined Group s cash flows. There are no particular limitations related to transferring of liquidity between fully owned subsidiaries. For partly owned subsidiaries, the Company adheres to generally accepted corporate governance principles and laws and regulations in place. 29

32 Borrowings and restrictions on use of capital ) will be sufficient to fulfil the Combined Group s commitments and strategy going forward. The adequacy of available funds will depend on many factors, including the further growth of the business, capital expenditures, market development, competition and potential acquisitions. Accordingly, the Combined Group may require additional funds going forward. 7.3 Cash flows The Company s main sources of cash flow are cash flow from operations. In the first half of 2010, the Company had a negative operational cash flow of NOK 22 million, which was mainly due to an increase in accounts payable compared to 31 December In the same period, ErgoGroup standalone had an operational cash flow of NOK 49 million. Combined, this would give a total operational cash flow in the first half of 2010 of NOK 27 million. Historically, both the Company and ErgoGroup standalone generate nearly all of their cash flow during the final quarter of the year, and it is not expected that it should be any different in the present year. Free cash flow (operational cash flow minus investments) was negative with NOK 217 million in first half of 2010 for the Company. In the same period, ErgoGroup standalone had a free cash flow of NOK -26 million. Combined, this would give a total free cash flow of NOK -243 million. See Section Cash Flow Statement and Section 9 Operational and financial review for details on cash flow for the latest financial year and the first half of The Company has not experienced any material changes in the Combined Group s cash flows. There are no particular limitations related to transferring of liquidity between fully owned subsidiaries. For partly owned subsidiaries, the Company adheres to generally accepted corporate governance principles and laws and regulations in place. 7.4 Borrowings and restrictions on use of capital As of completion of the Combination (14 October 2010), the Combined Group has an aggregate long term debt of approximately NOK 4,267 million, which represents bank borrowings and is divided as follows: Type of debt facility Lender Facility amount (NOK million) Final maturity Multi currency revolving credit...dnbnor, Nordea and Handelsbanken 500 March 2011 Multi currency revolving credit...dnbnor, Nordea and Handelsbanken 800 February 2012 Term loan...dnbnor, Nordea and Handelsbanken 850* February 2013 Multi currency revolving credit...dnbnor, Nordea and Handelsbanken 950 February 2013 Term loan...skandinaviska Enskilda Banken** 1, October 2012 * The term loan has semi annual repayments of NOK 70 million. ** The loan replaced an intra-group loan from Posten to ErgoGroup and was drawn in connection with and at completion of the Combination. The Company has the following covenant in relation to the loan agreements: The Borrower (EDB ErgoGroup) undertakes to ensure that the ratio of the Combined Group's Net Interest Bearing Debt to EBITDA does not exceed 3.25:1, save that the ratio may increase to 3.50:1 at the end of any quarterly reporting period two (2) times during the Facility Period (consecutively or separately). As described in Section 7.2 Funding Structure, the Company assumed the balance of ErgoGroup s outstanding loan with Posten in the amount of approximately NOK 400 million, including accrued interest. This loan has a final maturity on 14 April

33 7.5 Capitalisation and indebtedness The following table shows the actual capitalisation for the Company on a consolidated basis as per 30 June 2010 and as per 31 August 2010, together with consolidated actual capitalisation for ErgoGroup standalone as per 31 August 2010: The Company The Company ErgoGroup 30 June 2010 (unaudited) 31 August August 2010 Amounts in NOK million (unaudited) (unaudited) Share capital Share premium reserve ,231 Own shares Retained earnings... 2,066 2, Minority interests Total equity... 2,294 2,286 2,113 Long-term borrowings (secured/guaranteed)... Long-term borrowings (secured/unguaranteed)... 3,108 3,128 1,339 Long-term borrowings (unsecured/unguaranteed)... Total long term borrowing... 3,108 3,128 1,339 Current debt (secured/guaranteed)... Current debt (secured/unguaranteed) Current debt (unsecured)... Total current debt Total capitalization... 3,195 3,215 1,442 The following table shows the net indebtedness on a consolidated basis as per 30 June 2010 and as per 31 August 2010 together with consolidated net indebtedness for ErgoGroup standalone as per 31 August 2010: The Company 30 June 2010 (unaudited) The Company 31 August 2010 ErgoGroup 31 August 2010 Amounts in NOK million (unaudited) (unaudited) A. Cash B. Cash equivalent C. Trading securities... D. Liquidity (A + B + C) E. Current financial receivable... 1, F. Current bank debt... 1,942 G. Current portion of non current debt* H. Other current financial debt ,315 1,129 I. Current financial debt (F + G + H)... 1,554 1,402 1,232 J. Net current financial indebtedness (I - E - D)... 1, K. Non-current bank loans ,128 1,339 L. Bond issued... 3,108 M. Other non-current loans... N. Non-current financial indebtedness (K + L + M).. 3,128 1,339 O. Net financial indebtedness (J + N)... 3,108 2,522 1,525 Following 31 August 2010, the share capital of the Company has been increased from NOK 160 million to NOK 301 million and the share premium fund has increased from NOK 27 million to approximately NOK 1,757 million (see Section 12.1 Description of the Shares and share capital ). As a result of completion of the Combination, the Company acquired the financial assets and assumed the 31

34 indebtedness of ErgoGroup as at 14 October 2010 as further described above. Other than this, there have not been any significant changes in the capitalisation and indebtedness of the Company since 31 August There were no significant changes in the capitalisation and indebtedness of ErgoGroup in the period from 31 August 2010 until the completion of the Combination occurred on 14 October

35 8 SELECTED CONSOLIDATED FINANCIAL INFORMATION 8.1 General The selected consolidated financial data for the Company set forth in this section has been derived from the Company s audited financial statements for the financial years 2009, 2008 and 2007 and the unaudited interim financial statements for the six months ended 30 June 2010 and The Company s annual reports for the years 2009, 2008 and 2007, including the auditor s reports, as well as the interim financial statements for the six months ended 30 June 2010 and 2009, are incorporated by reference into this Prospectus (ref. Section 15.7 Incorporation by reference ). The Company s financial statements may also be inspected at the Company s website or be obtained, free of charge, at the offices of the Company at Nedre Skøyen vei 26, NO-0276 Oslo, Norway. The Company s financial statements for the financial years 2009, 2008 and 2007 and for the six months ended 30 June 2010 have been prepared in accordance with IFRS. For information purposes, this section also includes selected consolidated historical financial information for ErgoGroup standalone, i.e. prior to the Combination. ErgoGroup s annual reports for the years 2009, 2008 and 2007, including the auditor s reports are incorporated by reference into this Prospectus (ref. Section 15.7 Incorporation by reference ). The interim financial statements for the six months ended 30 June 2010 and 2009 are enclosed with this Prospectus in Appendix 3. ErgoGroup s financial statements may also be obtained, free of charge, at the offices of the Company at Nedre Skøyen vei 26, NO-0276 Oslo, Norway. The selected consolidated financial data set forth below may not contain all of the information that is important to a potential purchaser of shares in the Company, and the data should be read in conjunction with the relevant consolidated financial statements and the notes to those statements. Certain financial data in the tables below have been rounded. As a result of this rounding, the totals of data presented in the tables below may vary slightly from the actual arithmetic totals of such data. 8.2 Summary of accounting policies Please see the annual report for 2009 as incorporated by reference into this Prospectus for a full summary of the Company s accounting policies. 33

36 8.3 Selected consolidated financial information Consolidated profit and loss statement The table below summarizes the consolidated income statements for the Company for the years ended 31 December 2009, 2008 and 2007, and the six month period ended 30 June 2010 and As at or for the three months ended 30 June As at or for the six months ended 30 June As at or for the year ended 31 December (unaudited) (unaudited) (audited) NOK million Total operating revenue... 1,809 1,923 3,633 3,859 7,492 7,871 6,354 Total operating costs... 1,661 1,703 3,293 3,441 6,284 6,905 5,419 Operating profit before depreciation Depreciation of operating assets Write-down of operating assets Operating profit before depreciation of intangible assets Depreciation and write down of intangible assets Write down of intangible assets Operating profit Net financial items Profit before tax Tax on profit Profit for the year Total comprehensive income Total profit for the period

37 The table below summarizes the consolidated income statements for ErgoGroup standalone for the years ended 31 December 2009, 2008 and 2007, and the six month period ended 30 June 2010 and As at or for the three months ended 30 June As at or for the six months ended 30 June As at or for the year ended 31 December (unaudited) (unaudited) (audited) NOK million Sales revenues... 1,346 1,314 2,628 2,692 5,214 5,689 5,031 Cost of goods and services sold... 1,594 1,727 1,597 Personnel expenses ,267 1,389 2,544 2,586 2,179 Other operating expenses ,039 1, Depreciation and amortization Write-downs (excluding goodwill) Operating profit/loss before restructuring, gain/loss from sale of non-current assets, amortisation from acquisitions and goodwill write-downs Non-recurring items Profit/loss disposal of non-current assets Amortization of excess value from acquisitions Goodwill write-downs Operating profit/loss Income from associates Financial income Financial expenses Profit/loss before tax Taxes Profit/loss for the year Profit/loss attributable to majority interests Profit/loss attributable to minority interests

38 8.3.2 Consolidated balance sheet The table below summarizes the consolidated balance sheet for the Company as at 31 December 2009, 2008 and 2007, and as at 30 June 2010 and As at 30 June As at 31 December (unaudited) (audited) NOK million Fixed assets Intangible assets... 4,570 4,967 4,500 5,100 3,783 Fixed operation assets Non-current Financial assets Total fixed assets... 5,341 5,813 5,312 6,002 4,402 Current assets Current assets... 1,942 1,964 1,793 1,887 1,501 Cash and bank deposits Total current assets... 2,225 2,710 2,566 2,799 1,981 Total assets... 7,566 8,523 7,878 8,801 6,383 Equity Total equity exclusive of minority interests... 2,250 2,175 2,184 2,123 2,063 Minority interests Total equity and minority interests... 2,294 2,209 2,221 2,153 2,086 Liabilities Provision for liabilities Non-current interest bearing liabilities... 3,108 3,493 2,682 3,693 2,292 Non-current non-interest bearing liabilities Current liabilities... 1,641 1,837 2,526 1,976 1,450 Total liabilities... 5,272 6,315 5,656 6,648 4,298 Total equity and liabilities... 7,566 8,523 7,878 8,801 6,383 36

39 The table below summarizes the consolidated balance sheet for ErgoGroup standalone as at 31 December 2009, 2008 and 2007, and as at 30 June 2010 and As at 30 June As at 31 December (unaudited) (audited) NOK million ASSETS Intangible assets... 2,823 2,850 2,784 2,928 2,870 Deferred tax assets Property, plant and equipment Investments in jointly controlled entities, associates and other shares Interest-bearing non-current receivables Other non-current receivables Non-current assets... 3,259 3,337 3,257 3,448 3,430 Inventory Interest-free current receivables... 1,422 1,357 1,285 1,379 1,386 Interest-bearing current receivables Bank deposits, deposits in cash pool system Current assets... 1,851 1,763 1,946 1,910 1,790 Assets held for sale Assets... 5,109 5,099 5,203 5,359 5,228 EQUITY AND LIABILITIES Share capital Share premium reserve... 1,231 1,231 1,231 1,231 1,141 Other paid-in capital Other equity Minority interests Equity... 2,077 1,895 1,973 2,003 1,615 Provisions for liabilities Interest-bearing non-current liabilities... 1,339 1,407 1,341 1,483 1,897 Interest-free non-current liabilities Non-current liabilities... 1,441 1,721 1,341 1,587 1,975 Interest-bearing current liabilities Interest-free current liabilities... 1,487 1,229 1,368 1,302 1,185 Taxes payable Current liabilities... 1,590 1,483 1,685 1,582 1,459 Equity and liabilities... 5,109 5,099 5,203 5,359 5,228 37

40 8.3.3 Changes in equity The table below summarizes the consolidated changes in equity for the Company for the years ended 31 December 2009, 2008 and 2007, and the three months and six months periods ended 30 June 2010 and As at or for the three months ended 30 June As at or for the six months ended 30 June As at or for the year ended 31 December (unaudited) (unaudited) (audited) NOK million Equity at the beginning of period... 2,266 2,124 2,221 2,153 2,153 2, Purchase of own shares Share issue Dividend Total profit for the period Equity at the end of period... 2,294 2,209 2,294 2,209 2,221 2,153 2,086 The table below summarizes the consolidated changes in equity for ErgoGroup standalone for the years ended 31 December 2009, 2008 and 2007, and for the three months and six months periods ended 30 June 2010 and As at or for the three months ended 30 June As at or for the six months ended 30 June As at or for the year ended 31 December (unaudited) (unaudited) (audited) NOK million Equity at the beginning of period... 2,069 1,886 1,973 2,003 2,003 1,615 Acquisition shares group companies Dividend / group contr Total profit for the period Equity at the end of period... 2,062 1,895 2,062 1,895 1,973 2,003 1,615 38

41 8.3.4 Cash flow statement The table below summarizes the consolidated cash flow statement for the Company for the years ended 31 December 2009, 2008 and 2007, and the three months and the six months periods ended 30 June 2010 and As at or for the three months ended 30 June As at or for the six months ended 30 June As at or for the year ended 31 December (unaudited) (unaudited) (audited) NOK million EBITDA , Taxes / financial items paid Change in accounts receivable Change in accounts payable Change in other accruals Operational cash flow before nonrecurring items Change in provision non-recurring items Net cash flow from operations Investment in fixed operating assets Investment in in-house developed software Sale of fixed operating assets Acquisition of businesses , Sale of businesses Net cash flow from investments , Borrowings repaid New borrowing (current and noncurrent) , Dividends paid Share issues Net cash flow from financing , Net change in liquid assets Bank deposits at start of period Currency translation diff. cash and bank dep Bank deposits at end of period

42 The table below summarizes the consolidated cash flow statement for ErgoGroup standalone for the years ended 31 December 2009, 2008 and 2007, and the three months and the six months periods ended 30 June 2010 and As at or for the three months ended 30 June As at or for the six months ended 30 June As at or for the year ended 31 December (unaudited) (unaudited) (audited) NOK million Cash flow from operating activities Cash flow from investing activities ,702 Cash flow from financing activities ,262 Net change in cash and cash equivalents Cash and equivalents for acquired companies Cash and cash equivalents at beginning of period Cash and cash equivalents at period end Segment information Business segments In 2009, the Company s business was divided into three strategic business areas: IT Operations, Solutions and Application Services. The IT Operations segment offers services related to outsourcing of operations in the public and private sectors. Solutions offers applications and services for the bank and finance industry and the public sector. Application services delivers services related to SAP, Microsoft IBM, and Oracle technology, project management and systems development. Application services also include global sourcing, which delivers consultant services from Ukraine and India. The following table sets forth the Company s turnover divided between the three main segments of activities: As for the three months ended 30 June As for the six months ended 30 June As for the year ended 31 December (unaudited) (unaudited) (audited) NOK million IT Operations... 1,049 1,107 2,126 2,215 4,380 4,512 3,393 Solutions ,507 1,427 1,373 Consulting ,046 1,963 2,214 1,223 Not allocated* Eliminations Total... 1,809 1,923 3,633 3,859 7,492 7,871 6,354 *Items included in Not allocated relate to support functions and non-recurring items. Reference is made to note 2 to the annual accounts for 2009, incorporated into this Prospectus by reference, for details on the non-recurring items included in the Not allocated items. 40

43 For the purposes of financial reporting, ErgoGroup s business was divided into two business segments: Solutions & Application Services and IT-Operations & Infrastructure Services. The following table sets forth ErgoGroup s turnover divided by segments of activities: As for the three months ended 30 June As for the six months ended 30 June As for the year ended 31 December (unaudited) (unaudited) (audited) NOK million Solutions & Applications Services ,156 2,271 1,978 IT-Operations & Infrastructure Services ,422 3,783 3,347 Eliminations Total ,214 5,869 5, Geographical segments The Company s activities are divided between Norway, Sweden and other countries. The following table shows the turnover divided between the three main segments for the Company s geographical activity: As for the year ended 31 December (audited) NOK million Norway... 5,383 5,554 4,269 Sweden... 1,520 1,752 1,904 Other countries* Total... 7,492 7,871 6,354 ** Other countries mainly relate to Denmark, Ukraine and India. ErgoGroup s activities were divided between Norway and the Nordic countries. The following table shows the revenues divided between the two segments for ErgoGroup s geographical activity: As for the year ended 31 December (audited) NOK million Norway... 3,866 4,135 3,662 Nordic region... 1,373 1,757 1,384 Other countries Total... 5,214 7,871 5, Significant change in the Company s financial or trading positions since 30 June 2010 The Board of Directors of the Company has resolved to write down some of the book value of software developed in-house by NOK 176 million in the third quarter The remaining balance sheet value is thus NOK 9 million. The change in accounting treatment is expected to give rise to a loss in EBITA in the order of NOK 40 million for the third quarter of The Company has indicated that non-recurring costs totalling NOK 120 million would be recognised in the third quarter 2010 accounts in respect of its cost saving program, which is due to be completed in the fourth quarter 2010 and was expected to have an annual cost saving effect of NOK 200 million from first quarter These costs are now expected to be in the order of NOK 80 million and the annual cost saving effect is expected to be in the order of NOK 180 million from 1 quarter 2011 and onwards. 41

44 The Company has experienced weaker demand in the industry segment, and together with the impact on earnings of the Public Sector solutions area, the Company anticipates EBITA before restructuring costs in the order of NOK 65 million for the third quarter of ErgoGroup anticipated EBITA in the order of NOK 85 million for the same period. Other than this, and except for completion of the Combination (as described in Section 5.2 The Combination ) and the changes in funding structure and capitalisation and indebtedness as further described in Section 7.2 Funding structure and Section 7.5 Capitalisation and indebtedness, respectively, there has been no significant change in the group s financial or trading position since 30 June Principal investments Principal investments in the period from 1 January 2010 to the date of this Prospectus No material investments were made by the Company or ErgoGroup in the period from 1 January 2010 to the date of the Prospectus Principal investments in 2009 No material investments were made by the Company or ErgoGroup in Principal investments in 2008 On 9 January 2008, the Company entered into an agreement with StatoilHydro ASA to acquire 100% of the share capital of IS Partner AS. At the time, IS Partner AS was Norway s largest IT supplier to the oil & gas sector and to the manufacturing industry. The company was consolidated with effect from 1 February 2008 and was merged into EDB Business Partner Norge AS with effect from 1 January In 2008, the Company also entered into an agreement concerning the lease of IT-equipment. The acquisition was financed through a financial lease. Otherwise, no material investments were made by the Company in No material investments were made by ErgoGroup in Principal investments in 2007 Infopulse Ukraina LLC On 30 January 2007, EDB Business Partner AB entered into an agreement to purchase 60.1% of the shares in the Ukrainian IT company Infopulse Ukraina LLC. The transfer was carried out with effect from 1 September Centralen for Elektroniska Korttransaktioner AB With effect from 1 April 2007, EDB Business Partner AB acquired 100% of the shares in the Swedish card processing company Centralen for Elektroniska Korttransaktioner AB (CEKAB), which has been renamed to EDB Card Services AB. Tre60AB With effect from 1 April 2007, through its subsidiary Guide Konsult AB, the Company acquired 100% of the shares in Tre60 AB. Tre60 AB is a Swedish IT consulting firm with a strong position in business intelligence consulting. 42

45 Miratech Corporation Ltd On 17 July 2007, EDB Business Partner AB entered into an agreement to purchase 60.1% of the shares in Ukrainian company Miratech Corporation Ltd, one of the leading IT services companies in the Ukraine. The transfer was completed with effect from 1 December TeamR3 A/S With effect from 1 October 2007, the Company acquired 100% of the shares in the Danish IT company TeamR3 A/S. TeamR3 is one of the leading vendors of SAP solutions in Denmark. TeamR3 A/S has been merged into Spring Consulting, which has in turn been renamed to EDB Consulting Group A/S. Span Infotech and Span Systems Corporation Inc With effect from 1 November 2007, EDB Business Partner AB acquired 50.1% of the shares in the Indian IT company Span Infotech, as well as 50.1% of the shares in its American sister company Span Systems Corporation Inc. Otherwise, no material investments were made by the Company in In the same period, ErgoGroup carried out the following material investments: SYSteam AB In January 2007, ErgoGroup acquired Systeam AB from Bure Equity AB and the founders of the company. BEKK Consulting AS With effect from 1 September 2007, ErgoGroup acquired 75% of the shares in BEKK Consulting AS. Acquisition of the remaining 25% was completed on 1 July Shareholdings Through EDBH, the Company has an indirect 50% shareholding in the Norwegian company Buypass AS, which is established on a joint venture basis. The registered office of Buypass AS is at Nydalsveien 30A, N-0402 Oslo, Norway. 43

46 8.8 Property, plants and equipment The Combined Group leases all its offices, including the Company s current headquarters at Skøyen, Oslo, Norway. The following is a list of the Combined Group s main properties, all of which are leases for office space: Contry Address Rent expires Annual rental cost 2009 Size sqm Norway Nedre Skøyen vei 26, Oslo ,900,000 30,000 Norway Oslo, Nydalsveien 28 (Avantor / Storebrand) ,390,296 22,140 Norway Gullhaug Torg 4, Oslo ,800,000 15,000 Sweden Ekensbergvägen 113, Solna ,200,000 15,000 Norway Sandslimarka 260, Bergen ,300,000 11,300 Norway Nedre Skøyen vei 24, Oslo ,600,000 4,850 Norway Hovfaret 11, Oslo ,700,000 5,400 Norway Trondheim, Stindveien 4/Klæbuveien ,827,000 4,908 Norway Tungaveien 30, Trondheim ,113,000 6,600 Norway AS Industribygg (Gjøvik, dagbygg + datahaller) ,670,893 6,300 Sweden KB Fast Positronen 1, Huskvarna ,254,405 4,346 Sweden Kvarngärdet 32:2 AB, Uppsala ,839,736 2,128 Norway Stavanger, Maskinveien ,372,000 5,086 Sweden Fastighets AB Alrun, Solna ,164,279 1,785 Norway Brumundal, Strandveien ,157,500 2,350 Norway Stavanger, Petroleumsveien ,462,344 2,125 With the exception of the premises at Gullhaug Torg 4 in Oslo, all properties are used in full by the Combined Group. There is a sub-lease agreement for Gullhaug Torg 4 amounting to an annual rent of approximately NOK 6 million. The following table gives an overview of the Company s material owned and leased property, plant and equipment. Amounts in NOK million Year ended 31 December Improvements to leased premises Machinery, fixtures Vehicles IT Equipment Assets of execution Total fixed assets

47 The following table gives an overview of the historical figures for property, plants and equipment for ErgoGroup on a standalone basis: Amounts in NOK million Year ended 31 December Leased property* Improvements to leased premises Machinery, fixtures Vehicles... IT Equipment Assets of execution... Total fixed assets * Financial lease 8.9 Statutory auditors The Company s and EroGroup s historical financial information for the last three years has been audited by Ernst & Young AS, registration number , with registered business address at Christian Fredriks plass 6, N-0154 Oslo, Norway. Ernst & Young AS is member of Den Norske Revisorforening (the Norwegian Institute of Public Accountants). Ernst & Young AS has conducted the audit in accordance with laws, regulations and auditing standards and practices generally accepted in Norway, including the auditing standards adopted by the Norwegian Institute of Public Accountants. The auditor s reports do not express a qualified opinion and does not include any emphasizes. Ernst & Young AS has issued an assurance report on the preliminary pro forma financial information included in Section 10 Unaudited pro forma financial information, which assurance report is included in Appendix 2. 45

48 9 OPERATIONAL AND FINANCIAL REVIEW 9.1 General The following is a discussion of the Company s financial condition and results of operations as of and for the years ended 31 December 2009, 2008 and 2007, and as for the six months periods ended 30 June 2010 and Investors should read the following discussion together with the Company s historical consolidated financial statements and the related notes, incorporated by reference into this Prospectus, as well as the other Sections of this Prospectus, and should not rely solely on the information contained in this Section. The forward-looking statements contained in this Section are subject to risks, uncertainties and other factors that could cause the Company s future results or operations or cash flows to differ materially from those contemplated by such forward-looking statements. Factors that may cause such differences include, but are not limited to, those discussed in Section 2 Risk Factors. Reference is made to Section 2 Risk Factors for information on governmental, economic, fiscal, monetary or political policies or factors that could materially affect, directly or indirectly, the Company s operations and financial condition. 9.2 Comparison between the three month periods ended 30 June 2010 and P&L accounts The Company reported operating revenue for the second quarter of 2010 of NOK 1,809 million as compared to NOK 1,923 million in the same quarter of 2009, representing a decline of 5%. The second quarter was affected by continuing weak conditions in the Nordic IT services market, and downward pressure on prices that was particularly apparent in the outsourcing segment. These conditions had an adverse effect on the IT Operations and Consulting business areas in particular. The Company reported operating profit before amortisation of intangible assets (EBITA) of NOK 127 million for the second quarter of 2010, as compared to NOK 151 million for the same quarter in The Company s EBITA margin was 7.0% for the quarter as compared to 7.9% for the same quarter in Operating profit before non-recurring items (EBIT) for the second quarter of 2010 was NOK 84 million as compared to NOK 107 million in the second quarter of After adjusting for non-recurring items, operating profit for the second quarter of 2010 was NOK 48 million. The Company recognised in its accounts transaction costs of NOK 24 million in connection with the Combination. In addition, consultancy costs of NOK 12 million associated with implementation of the announced restructuring program are charged to the second quarter Net financial expenses were NOK 43 million in the second quarter of 2010, a reduction of NOK 4 million from the same quarter of Net interest expense for the second quarter of 2010 totaled NOK 41 million, compared to NOK 38 million in the second quarter of The increase was principally the result of higher interest rates in the second quarter of 2010 than in the same period of The Company reported a profit after tax of NOK 3 million for the second quarter of 2010, as compared to NOK 40 million for the second quarter of The IT Operations business area reported operating revenues of NOK 1,049 million for the second quarter of 2010, representing negative organic growth of 5% from the second quarter of The drop in operating revenues is attributable almost entirely to revenue from customers of the Industrial IT area. The Company s other operating services activities reported aggregate turnover in line with the second quarter of Operating profit before amortisation of intangible assets (EBITA) was NOK 75 46

49 million in the second quarter of 2010, as compared to pro forma NOK 91 million in the second quarter of EBITA margin for the second quarter was 7.1%, as compared to pro forma 8.2% in the second quarter of The Solutions business area reported operating revenues of NOK 414 million in the second quarter of 2010 as compared to NOK 385 million in the same quarter of This represents organic growth of 7% for the quarter. The business area s Bank & Finance industry vertical achieved organic growth of 10% for the quarter as a result of an increased inflow of new customers and successful product launches. The business area produced an operating profit before amortisation of intangible assets (EBITA) of NOK 55 million for the second quarter of 2010, in line with the second quarter of EBITA margin for the second quarter was 13.2%, as compared to 14.1% for the second quarter of The Consulting business area reported operating revenues of NOK 457 million in the second quarter of 2010 as compared to pro forma NOK 495 million in the second quarter of After adjusting for the Swedish businesses sold in the third quarter of 2009, this represents a decline of 8%. The reduction is largely the result of lower demand from Nordic industrial customers. The Company s global sourcing activities achieved organic growth between the second quarter of 2009 and the second quarter of 2010 of 23%. The business area produced operating profit before amortisation of intangible assets (EBITA) of NOK 24 million for the second quarter of 2010, representing an EBITA margin of 5.2%. By way of comparison, the pro forma EBITA margin for the second quarter of 2009 was 6.3% Cash The Company generated cash from operations before non-recurring items of negative NOK 160 million in the second quarter of 2010, compared to NOK 168 million for same period of At 30 June 2010, the Company s liquidity reserves totalled NOK 470 million, representing a net decrease of NOK 599 million from the close of the first quarter of The reduction reflects the repayment of a bond loan of NOK 600 million at maturity in May Undrawn credit facilities accounted for NOK 187 million of the total at 30 June The Company s equity at 30 June 2010 was NOK 2,294 million, representing an equity ratio of 30%. At the same time in 2009, the Company s equity was NOK 2,209 million, representing an equity ratio of 26% Cash flow Net cash flow from operating activities decreased to negative NOK 154 million for the second quarter of 2010 (compared to NOK 168 million for same period of 2009). Net cash flow from investing activities came to a negative NOK 87 million for the second quarter of 2010 (compared to a negative NOK 104 million for the second quarter of 2009), which was driven by reduced investments in businesses in Net cash flow from financing activities was negative NOK 284 million for the second quarter of 2010 (compared to NOK negative 14 million for the second quarter of 2009), which was mainly influenced by repayment of bond loan of NOK 600 million. Cash and bank deposits decreased to NOK 283 million at 30 June 2010 (compared to NOK 746 million 30 June 2009). 9.3 Comparison between the six month period ended 30 June 2010 and General On 6 June 2010, the Boards of directors of the Company and ErgoGroup approved the merger plan pertaining to the Combination. Lower demand and pressure on prices in the Nordic IT services market make it essential to implement further cost saving measures to maintain satisfactory profitability. Over the course of the third quarter, the Company implemented measures that will permit a reduction in the Company s costs in the order of NOK 200 million yearly. 47

50 9.3.2 P&L accounts The Company reported operating revenues for the first six months of 2010 of NOK 3,633 million as compared to NOK 3,859 million in the same period of The decline relates principally to lower levels of activity in the industrial customers segment of the Nordic market, which affected the business areas IT Operations and Application Services. The Company reported operating profit before intangible asset amortisation (EBITA) of NOK 261 million for the first six months of 2010, as compared to NOK 285 million for the same period in The Company s EBITA margin for the first six months was 7.2%, as compared to an EBITA margin of 7.4% for the first six months of Operating profit before non-recurring items (EBIT) for the first six months of 2010 was NOK 176 million as compared to NOK 211 million in the first six months of The Company recognised in its accounts transaction costs of NOK 24 million in connection with the Combination. In addition, consultancy costs of NOK 12 million associated with implementation of the announced restructuring program are charged to the second quarter Net financial expense was NOK 82 million the six first months of 2010, compared to NOK 87 million in the six first months of 2009, reflecting the effect of lower interest rates. Consolidated profit before tax was NOK 58 million for the first six months of 2010, compared to NOK 124 million for first six months of Consolidated profit for the first six months of 2010 was NOK 41 million, compared to NOK 86 million first six months of IT Operations reported total operating revenue of NOK 2,126 million for the six first months of 2010, compared to pro forma NOK 2,203 million for the six first months of Operating profit before depreciation of intangible assets (EBITA) was NOK 159 million in the six first months of 2010, compared to pro forma NOK 164 million the six first months of EBITA margin was 7.5%, which was at the same level as The drop in operating revenues is attributable almost entirely to revenue from customers of the Industrial IT area. The Company s other operating services activities reported aggregate turnover in line with the same period of Solutions reported operating revenue of NOK 817 million for the six first months of 2010, compared to NOK 760 million for the six first months of Operating profit before depreciation of intangible assets (EBITA) was NOK 104 million for the six first months of 2010, compared to NOK 102 million for the six first months of EBITA margin was 12.7%, compared to 13.4% in Application Services reported total operating revenue of NOK 908 million for the six first months of 2010 compared to pro forma NOK 1,017 million for the six first months of Operating profit before depreciation of intangible assets (EBITA) was NOK 53 million for the six first months of 2010 compared to pro forma NOK 69 million for the six first months of EBITA margin was 5.8%, compared to NOK 6.8% in Cash The Company generated cash from operations before non-recurring items of negative NOK 22 million for the six first months of 2010, compared to NOK 187 million for the six first months of The Company s liquidity reserves totalled NOK 470 million at 30 June 2010, including undrawn committed credit facilities of NOK 187 million. The Company s net interest-bearing liabilities totalled NOK 2,913 million at the end of June 2010, compared to NOK 2,965 million at the end of The Company s equity at 30 June 2010 was NOK 2,294 million, representing an equity ratio of 30%. At the same time in 2009, the Company s equity was NOK 2,209 million, representing an equity ratio of 26%. 48

51 9.3.4 Cash flow Net cash flow from operating activities decreased to negative NOK 41 million for the six first months of 2010 (compared to NOK 187 million for the six first months of 2009). Net cash flow from investing activities came to a negative NOK 171 million for the six first months of 2010 (compared to a negative NOK 216 million for the six first months of 2009), which was driven by reduced investments in businesses in Net cash flow from financing activities was negative NOK 310 million for the six first months of 2010 (compared to NOK 116 million for the six first months of 2009), which was mainly influenced by repayment of bond loan of NOK 600 million. Cash and bank deposits decreased to NOK 283 million at 30 June 2010 (compared to NOK 746 million 30 June 2009). 9.4 Management s discussions and analysis of financial conditions and results of operations in General The Board resolved that the Company should report on the basis of three business areas with effect from 2009: IT Operations accounts, Application Services and Solutions. The Company prepared pro forma comparable figures for 2008 for these three business areas P&L accounts The Company had a revenue of NOK 7,492 million in 2009, representing a decline of 5% in total. The Company generated 31% of its revenue outside Norway, a slight increase from Consolidated operating profit before depreciation and write-down of intangible assets (EBITA) was NOK 954 million in 2009, compared to NOK 670 million in EBITA margin was 8.1% in 2009, compared to 9.2% in the previous year. The Company s operating profit for 2009 after amortisation and writedowns of intangible assets was NOK 454 million, compared to NOK 517 million in Net financial expense was NOK 162 million in 2009, compared to NOK 225 million in 2008, reflecting the effect of lower interest rates. Consolidated profit before tax was NOK 292 million in 2009, compared to NOK 291 million for Consolidated profit for the year was NOK 134 million 2009, compared to NOK 209 million in IT Operations reported total operating revenue of NOK 4,380 million for 2009, compared to pro forma NOK 4,577 million for Operating profit before depreciation of intangible assets (EBITA) was NOK 365 million in 2009, compared to pro forma NOK 409 million in EBITA margin was 8.3%, compared to 8.9% in The comparable figures reported for operating revenue are affected by the extraordinary level of revenue generated in 2008 by the former company IS Partner AS in respect of the demerger of Yara ASA and the StatoilHydro ASA merger. Solutions reported operating revenue of NOK 1,507 million in 2009, compared to NOK 1,427 million in Operating profit before depreciation of intangible assets (EBITA) was NOK 198 million in 2009, compared to NOK 207 million in EBITA margin was 13.1%, compared to 14.5% in Application Services reported total operating revenue of NOK 1,963 million in 2009 compared to pro forma NOK 2,241 million in Operating profit before depreciation of intangible assets (EBITA) was NOK 145 million in 2009 compared to pro forma NOK 198 million in EBITA margin was 7.4% in 2009, compared to NOK 8.8% in Capital The Company generated cash from operations before non-recurring items of NOK 582 million in 2009, compared to NOK 716 million in The Company s liquidity reserves totalled NOK 1,376 million at 31 December 2009, including undrawn committed credit facilities of NOK 601 million. The Company s 49

52 net interest-bearing liabilities totalled NOK 2,695 million at the end of 2009, compared to NOK 2,963 million at the end of The Company s equity at 31 December 2009 was NOK 2,221 million, representing an equity ratio of 28%. At the same time in 2008, the Company s equity was NOK 2,153 million, representing an equity ratio of 25%. The distributable reserves of the Company amounted to NOK 799 million at 31 December Cash flows Net cash flow from operating activities decreased to NOK million in 2009 (compared to NOK million in 2008), which was primarily due to higher interest expenses and reduced cash flow generated EBITA from operations. Net cash flow from investing activities came to a negative NOK 374 million (compared to a negative NOK 1,508.2 million in 2008), which was due to less investments in new businesses in 2009 than in Net cash flow from financing activities was negative NOK million (compared to NOK 1,207.6 million in 2008), which was mainly influenced by no dividend payment in 2009 and no debt financing acquisitions in Cash and bank deposits decreased to NOK million in 2009 (compared with NOK million in 2008). 9.5 Management s discussions and analysis of financial conditions and results of operations in General The Company purchased IS Partner AS from StatoilHydro ASA on 1 February 2008 and thereby strengthened its competitive position as a leading supplier of IT services to industrial companies. This acquisition also strengthened the Company s delivery capacity for Nordic businesses with international operations. The Company had five business areas in 2008: IT Operations, Solutions, Application Services, IS Partner and Global Sourcing P&L accounts The Company reported a 24% increase in consolidated operating revenue for 2008 to NOK 7,900 million. Operating revenue generated outside Norway increased by 11% to NOK 2,300 million. This is equivalent to 30% of total consolidated operating revenue. The Company s businesses in Sweden generated revenue of NOK 1.8 billion in total in 2008, which was in line with The Company s operating profit before depreciation of intangible assets and non-recurring items (EBITA) was NOK 724 million in 2008, compared to NOK 607 million in EBITA margin was 9.2% in 2008, compared to 9.5% in the previous year. Ordinary depreciation for the Company was NOK 296 million in 2008, compared to NOK 291 million in Depreciation of intangible assets totalled NOK 153 million in 2008, compared to NOK 96 million in The book value of goodwill at 31 December 2008 was NOK 4,465 million, compared to NOK 3,379 million in This increase was mainly due to businesses acquired. The Company s operating profit for 2008 was NOK 517 million, compared to NOK 547 million in Net financial expense was NOK 225 million in 2008, compared to NOK 123 million in Consolidated pre-tax profit was NOK 291 million in 2008, compared to NOK 424 million for IT Operations reported total operating revenue of NOK 3,691 million for 2008, compared to NOK 3,939 million for Operating profit before depreciation of intangible assets (EBITA) was NOK 302 million in 2008, compared to NOK 330 million in EBITA margin was 8.2%, compared to 8.4% in

53 Solutions reported operating revenue of NOK 1,427 million in 2008, compared to NOK 1,373 million in Operating profit before depreciation of intangible assets (EBITA) was NOK 207 million in 2008, compared to NOK 200 million in EBITA margin was 14.5%, compared to 14.6% in Application Services reported total operating revenue of NOK 1,312 million in 2008 compared to NOK 1,178 million in Operating profit before depreciation of intangible assets (EBITA) was NOK 130 million in 2008 compared to NOK 140 million in EBITA margin declined from 11.9% in 2007 to 9.9% in IS Partner reported total operating revenue of NOK 1,492 million in 2008 compared to NOK 1,599 million in Operating profit before depreciation of intangible assets (EBITA) was NOK 181 million in 2008 compared to NOK 280 million pro forma in EBITA margin was 12.1% compared to 17.5% in Operational investment spending totalled NOK 30 million in 2008, compared to NOK 55 million pro forma in The pro forma figures for 2007 include nonrecurring items in connection with the phase-out of the Yara contract and a high level of activity caused by the merger of Statoil and Hydro s oil and gas divisions. As a result of these circumstances, the Company announced that it expected a 5 10% year-on-year decline in IS Partner s operating revenues in However, the actual decline was 7%. Global Sourcing reported total operating revenue of NOK 230 million in 2008 compared to NOK 158 million pro forma in The business incurred an operating loss before depreciation of intangible assets (EBITA) of NOK 18 million in 2008, compared to an EBITA profit of NOK 23 million in EBITA margin was a negative 7.7% in 2008 compared to a positive 14.4% in EBITA for 2008 was affected by charges from the other business areas for start-up costs incurred in launching global sourcing for the Company s Nordic customers Capital The Company produced cash from operations before non-recurring items of NOK 759 million in 2008, compared to NOK 807 million in The Company s liquidity reserves totalled NOK 1,295 million at 31 December 2008, including undrawn committed credit facilities of NOK 383 million. The Company s net interest-bearing liabilities totalled NOK 2,963 million at the end of 2008, compared to NOK 1,837 million at the end of 2007, due to the financing of acquisitions made during the year. The Company s equity at 31 December 2008 was NOK 2,153 million, compared to NOK million the previous year. The distributable reserves of the parent company, EDB ErgoGroup ASA, amounted to NOK 654 million at 31 December Cash flows Net cash flow from operating activities increased to NOK million in 2008 (compared to NOK million in 2007). Net cash flow from investing activities came to a negative NOK 1,508.2 million (compared to a negative NOK million in 2007), which was driven by the acquisition of ISPartner in Net cash flow from financing activities was NOK 1,207.6 million (compared to NOK million in 2007), which was mainly influenced by increased debt financing due to the acquisition of ISPartner. Cash and bank deposits increased to NOK million in 2008 (compared with NOK million in 2008). 9.6 Management s discussions and analysis of financial conditions and results of operations in P&L accounts The Company reported a 9% increase in consolidated operating revenue for 2007 to NOK 6.4 billion. In accordance with the Company s strategy, the Company took steps in 2007 to strengthen its international presence. Operating revenue generated outside Norway increased by 47% to NOK 2,085 million in This is equivalent to 33% of total consolidated operating revenue. It strengthened its 51

54 position in the Swedish market through the acquisitions of Tre60 and CEKAB in Organic growth in Sweden was 13% in The Company s businesses in Sweden generated revenue of NOK 1,849 million in total in The Company s operating profit before intangible asset amortisation and non-recurring items (EBITA) was NOK 607 million in 2007, compared to NOK 541 million in EBITA margin was 9.5% in 2007, compared to 9.3% in the previous year. Ordinary depreciation for the Company was NOK 291 million in 2007, compared to NOK 311 million in Intangible asset amortisation totalled NOK 96 million in 2007, compared to NOK 87 million in The book value of goodwill at 31 December 2007 was NOK 3,379 million. This represents an increase of NOK 291 million from 2006, mainly due to businesses acquired. The Company has tested the value of its goodwill in accordance with IFRS and has not identified any impairment. The Company s operating profit for 2007 was NOK 547 million, compared to NOK 310 million in Net financial expense was NOK 123 million in 2007, compared to NOK 53 million in Consolidated pre-tax profit was NOK 424 million in 2007, compared to NOK 257 million for IT Operations increased its operating revenue by 2% in 2007 to NOK 3,393 million. Growth was entirely organic, and was in line with the growth rate of the outsourcing market in general. Operating profit before intangible asset amortisation (EBITA) was NOK 330 million in 2007 compared to NOK 336 million in EBITA margin was 8.4%, compared to 8.7% in Solutions reported a 13% increase in revenue to NOK 1,373 million in The acquisition of the Swedish card processing company CEKAB, with effect from April 2007, strengthened the business area. After adjusting for acquisitions, organic revenue growth was 5%, which was in line with general growth in the markets in which Solutions operates. Application Services reported total operating revenue of NOK 1,223 million in 2007 compared to NOK 862 million in The acquisitions of the Swedish company Tre60 and the Danish SAP specialist TeamR3 contributed to revenue growth. The Ukrainian companies Infopulse and Miratech, together with Span Systems in India, were also consolidated into the Application Services business area over the course of 2007 and contributed to the growth in revenue reported Capital The Company produced cash from operations before non-recurring items of NOK 807 million in This was 14% higher than Cash from operations, after costs incurred with respect to cost reducing measures, was NOK 707 million. The Company s liquidity reserves totalled NOK 1,010 million at 31 December 2007, including undrawn committed credit facilities of NOK 530 million. The Company s net interest-bearing liabilities totalled NOK 1,833 million at the end of 2007, compared to NOK 1,756 million at the end of 2006, due to the financing of acquisitions made during the year. The Company s equity at 31 December 2007 was NOK 2,086 million, compared to NOK 1,889 million the previous year. The Company s distributable reserves amounted to NOK 891 million at 31 December Cash flows Net cash flow from operating activities increased to NOK million in 2007 (compared to NOK million in 2006). Net cash flow from investing activities came to a negative NOK million (compared to a negative NOK 1,634.5 million in 2006), which was driven by less acquisition of businesses in 2007 than in Net cash flow from financing activities was NOK million (compared to NOK 1,072.7 million in 2006), which was mainly due to acquisitions made in Cash and bank deposits increased to NOK million in 2008 (compared with NOK million in 2008). 52

55 10 UNAUDITED PRO FORMA FINANCIAL INFORMATION 10.1 Purpose of the pro forma financial information The unaudited pro forma condensed consolidated financial information has been prepared for illustrative purposes only. The pro forma information is based on certain management assumptions and adjustments made to illustrate what the financial results of EDB ErgoGroup might have been had the proposed Combination occurred at the commencement of the period being reported on or at the date reported. The unaudited pro forma consolidated financial information should be read in conjunction with the Company s and ErgoGroup s audited consolidated financial statements for the year 2009 and unaudited consolidated financial information for the six months ended 30 June The unaudited pro forma condensed consolidated financial information addresses a hypothetical situation, and therefore, does not represent EDB ErgoGroup s actual financial position or results as it would have been had the Combination taken place at an earlier date, and is not representative of the results of operations for any future periods. It should be noted that greater uncertainty is attached to the unaudited pro forma financial information than ordinary historical accounting information. Investors are cautioned against placing undue confidence on this unaudited pro forma condensed consolidated financial information. The unaudited pro forma consolidated financial information shows how the Combination between EDBH and ErgoGroup might have affected EDB ErgoGroup s consolidated income statement for the year 2009 if the Combination had taken place on 1 January 2009 and for the six months ended 30 June 2010 if the Combination had taken place on 1 January In addition, it is shown below how the consolidated balance sheet as of 30 June 2010 might have been if the Combination had taken place at 30 June The unaudited pro forma condensed consolidated financial information is based on the audited financial statements for the year ended 31 December 2009 and the unaudited financial information for the six months ended 30 June 2010 for the Company and ErgoGroup (incorporated into this Prospectus by reference). Summaries of the selected financial information for the Company and ErgoGroup is available in Section 8 Selected consolidated financial information. Certain financial data in the tables below have been rounded. As a result of this rounding, the totals of data presented in the tables below may vary slightly from the actual arithmetic totals of such data Pro forma accounting principles The accounting principles applied for the unaudited pro forma condensed consolidated financial information are in accordance with those accounting principles outlined in the Company s annual financial statements for 2009, incorporated by reference into this Prospectus, see Section 15.5 Incorporation by reference. The Company and ErgoGroup s accounting principles are in accordance with International Financial Reporting Standards (IFRS) as approved by IASB and adopted by the EU Sources of pro forma financial information historical financial information The financial information for EDB ErgoGroup has been extracted from the audited financial statements of the Company for 2009 and the unaudited financial information for the six months ended 30 June 2010 incorporated into this Prospectus by reference (ref. Section 15.5 Incorporation by reference ). The financial information for ErgoGroup has been extracted from the audited financial statements of ErgoGroup for 2009 incorporated into this Prospectus by reference and the unaudited financial information for the six months ended 30 June 2010 included in this Prospectus as Appendix 3. An 53

56 adjustment of NOK 20 million from NOK 59 million to NOK 39 million has been made in the line nonrecurring items related to provision of restructuring increasing profit in the unaudited financial information presented in the financial report for the six months ended 30 June The Combination involves entities under common control. The merger has been accounted for as pooling of interests; accordingly, the results of operations and financial position for the consolidated ErgoGroup have been combined with the consolidated Company and presented as such in the historical consolidated financial statements. The Combination involves entities under common control. The Combination has been accounted for as pooling of interests, accordingly, the consolidated results of operations and financial position of ErgoGroup have been combined with the consolidated results of operations and financial position of the Company and presented as such in the historical consolidated financial statements. The previous shareholder of ErgoGroup was allotted, upon the completion of the Combination, with shares in the Company, which were issued through a NOK 141,862, increase in the share capital of the Company. The total proceeds from the share capital increase equaled the amount of the merger receivable, and consequently amounted to NOK 1,874,294,000, of which NOK 141,862, were in the form of share capital and NOK 1,732,431, were in the form of share premium, which will be recorded in the books on the basis of the principle of accounting pooling of interests. The unaudited pro forma condensed consolidated financial information for EDB ErgoGroup does not include all information required for financial statements under IFRS, and should be read in conjunction with the historical information for the Company and ErgoGroup. Ernst & Young AS has issued an Independent Assurance Report on the pro forma financial information for EDB ErgoGroup as of 14 October The report is included as Appendix 2 to this Prospectus. 54

57 10.4 Unaudited pro forma condensed profit and loss statement Unaudited pro forma condensed profit and loss statement for the year ended 31 December 2009 (NOK million) EDB 2009 (audited) ErgoGroup 2009 (audited) GAAP Harmonization (unaudited) Pro forma adjustments 2009 (unaudited) Pro forma 2009 (unaudited) Total operating revenue ,705 Total operating costs Operating profit before depreciation ,714 Depreciation of operating assets Write-down of operating assets Operating profit before depreciation of intangible assets ,250 Depreciation of intangible assets Write down of intangible assets Operating profit Net financial items Profit before tax Tax on profit Profit for the year Total comprehensive income Total profit for the period The GAAP harmonization in the profit and loss statement is a reclassification of depreciation of inhouse developed intangible assets. ErgoGroup classifies depreciation of in-house developed software as a part of Depreciation of operating assets while EDB classifies it as a part of depreciation of intangible assets. The pro forma adjustment is related to transactions costs incurred during the business combination process in 2010, as if the combination had taken place on 1 January

58 Unaudited pro forma condensed profit and loss statement for the six months ended 30 June 2010 (NOK million) EDB H (unaudited) ErgoGroup H (unaudited) GAAP Harmonization (unaudited) Pro forma H (unaudited) Total operating revenue... 3,633 2,628 6,261 Total operating costs... 3,293 2,346 5,639 Operating profit before depreciation Depreciation of operating assets Write-down of operating assets Operating profit before depreciation of intangible assets Depreciation of intangible assets Write down of intangible assets Operating profit Net financial items Profit before tax Tax on profit Profit for the period Total comprehensive income Total profit for the period

59 10.5 Unaudited pro forma condensed balance sheet (NOK million) Fixed assets EDB (unaudited) ErgoGroup (unaudited) GAAP Harmonization (unaudited) Pro forma (unaudited) Intangible assets... 4, ,443 Fixed operating assets ,136 Non-current financial assets Total fixed assets... 5,341 3,259 8,600 Current assets Current assets ,440 3,382 Cash and bank deposits Total current assets... 2,225 1,850 4,075 Total assets... 7,566 5,109 12,675 Equity Total equity exclusive of minority interests... 2,250 2,072 4,322 Minority interests Total equity and minority interests... 2,294 2,077 4,371 Liabilities Provision for liabilities Non-current interest bearing liabilities... 3,108 1, ,047 Non-current non-interest bearing liabilities Current liabilities... 1,641 1, ,631 Total liabilities... 5,272 3,032 8,304 Total equity and liabilities... 7,566 5,109 12,675 The pro forma adjustment is related to reclassification of non-current interest bearing liabilities to current liabilities as a result of the closing of the business combination GAAP harmonization The GAAP harmonization in the profit and loss statement is a reclassification of depreciation of inhouse developed intangible assets. ErgoGroup classifies depreciation of in-house developed software as a part of depreciation of operating assets while EDB classifies it as a part of depreciation of intangible assets. The GAAP harmonization has no effect on the unaudited pro forma operating profit. 57

60 11 BOARD OF DIRECTORS, MANAGEMENT AND EMPLOYEES 11.1 Election Committee The election committee consists of three members, elected by the annual general meeting. The members of the election committee are elected for a two year period. Remuneration to the members of the election committee is decided annually by the annual general meeting. The current members of the election committee are Erik Amlie (Chair), Sindre Sørbye (Orkla ASA) and Bjørn Magnus Kopperud (Telenor). The election committee is required to carry out a search process to identify candidates for vacancies on the Board who satisfy the requirements specified by the committee, including their suitability in terms of impartiality, business ethics, gender and nationality. Taking into account these criteria, the election committee puts forward proposals for individuals to be elected by shareholders to the Board, including the chairman of the Board, for consideration by the annual general meeting. The election committee also nominates candidates to be elected by shareholders as deputy members of the Board, as well as candidates to be elected to the election committee. The election committee submits proposals for approval by the General Meeting of remuneration to the members of the Board of Directors, as well as proposals for any additional remuneration to be paid to members of sub-committees established by the Board of Directors Board of Directors Overview of the Board of Directors The current Board of Directors comprise nine directors. Currently, six of the members of the Board of Directors are elected by the General Meeting, while three are elected by and among the Company s employees in Norway, normally for a period of two years. In accordance with Norwegian law, the Board of Directors assumes the overall governance of the Company, ensures that appropriate management and control systems are in place and supervises the day-to-day management as carried out by the CEO. All of the directors of the Board are independent from the Company s executive management and material business contacts. The chairman of the Board, Arve Johansen represents Telenor and Director Dag Mejdell is the CEO of Posten, both of which are major shareholders of EDB ErgoGroup. The Board of Directors satisfies the requirement of the Norwegian Code of Practice for Corporate Governance that at least two directors shall be independent from major shareholders. None of the Board members elected by the shareholders are part of the Company s executive management. 58

61 The table below sets out the name, year of birth, position and current term of office, followed by additional biographical information, for each of the members of the Board of Directors: Name and position Principal activities Term expires Arve Johansen (chairman) Strategy consultant and non-executive director of a number of companies AGM 2012 Anne-Lise Aukner (Deputy chair)... Managing director, Nexans Norway AS AGM 2012 Adine Grate Axen (Director)... Adviser to the Swedish government as a member of the commission for the sale of shares in companies with state ownership AGM 2011 Anders Brandt (Director)... Partner in IdeKapital AS AGM 2012 Dag Mejdell (Director)... CEO of Posten AGM 2012 Hilde Ringereide (Director)... HR manager of IT functions for Upstream operations in Shell Group AGM 2012 Wenche Brateng (employee representative and Director)... Systems Architect Autumn 2011 John Ingvar Brekke (employee representative and Director)... Business Manager Autumn 2011 Eirik Bornø (employee representative and Director)... Senior consultant Autumn 2011 The business address of each director of the present Board of Directors is: EDB ErgoGroup ASA, Nedre Skøyen vei 26, N-0276 Oslo, Norway Brief biographies of the members of the Board of Directors Set out below are brief biographies of the members of the Board of Directors, including their relevant management expertise and experience, an indication of any significant principal activities performed by them outside EDB ErgoGroup and names of companies and partnerships of which a member of the Board of Directors is or has been a member of the administrative, management or supervisory bodies or partner the previous five years (not including directorships and executive management positions in subsidiaries of EDB ErgoGroup). In the following (C) means chairman, (DC) means deputy chairman, (D) means Director (DD) means deputy Director and (GM) means general manager. Arve Johansen, Chairman of the Board: Arve Johansen is currently a strategy consultant and nonexecutive director of a number of companies. Arve Johansen has many years of experience from Telenor, including experience from Telenor s international business. In recent years, Arve Johansen was Deputy CEO and Head of Telenor Asia. Prior to this, he was responsible for developing Telenor s international mobile telephony business. Mr Johansen is educated from the Norwegian University of Science and Technology (NTNU) and Harvard Business School. Other board appointments include Chairman of the Board of two Telenor start-up subsidiary companies, as well as director of Wireless Matrix (USA mobile fleet management), Eltek (Norway telecom power and Nera networks) and Opera Software (Norway internet browsers). Johansen has been a Director of the Board since May He holds no Shares in the Company. 59

62 Current directorships and management positions:... Altera Management Arve Johansen AS (C), Telenor Objects AS (C), Eltek ASA (D), Opera Software ASA (D), Telenor Connexion AB (C), Wireless Matrix Inc. (D). Previous directorships and Telenor Asia (ROH) Ltd. (C), GSM Association (D), DTAC (Total management positions last five Access Communication PCL) (D), Nera Telecommunications years:... Ltd. (D), Grameen Phone Ltd. (C), Digi (C), Telenor Pakistan (C), Vimpelcom (D). Anne-Lise Aukner, Deputy chair: Anne-Lise Aukner is currently managing director of Nexans Norway AS. Previous experience includes the position as corporate attorney at Alcatel STK ASA, and as Vice President of Gjensidige Forsikring responsible for the Company s total claims settlement activity, and she is attorney-at-law. She is board member of Kongsberg Gruppen ASA, Norsk Industri and INTPOW, in addition to a number of internal appointments with group companies. Aukner has been a Director of the Board since May She holds no Shares in the Company. Current directorships and management positions:... Aukner Holding AS (D), Norsk Industri (DC), Europacable Norge AS (C), Nexans Skagerrak AS (C), Nexans Norway AS (GM/D), Kongsberg Gruppen ASA (D). Previous directorships and management positions last five years:... Næringslivets hovedorganisasjon (NHO) (D), Nemko AS (D). Adine Grate Axén, Director: Adine Grate Axén is adviser to the Swedish government as a member of the commission for the sale of shares in companies with state ownership. She is director and former member of the Management Group at Investor AB. Adine Grate Axén has some 20 years experience of investment management and the finance industry. She holds a Masters degree from the Stockholm School of Economics and the Harvard Advanced Management Program. Adine Grate Axén has extensive experience of appointments on the boards of both listed and unlisted companies, including 3 Scandinavia, Carnegie Investment Bank and NASADAQ OMX. She is also member of the Swedish Industry and Commerce Stock Exchange Committee. Axén has been a Director of the Board since May She holds no Shares in the Company. Current directorships and management positions:... Swedish listing Committee for NASDAQOMX (C), SOBI (D and member of Audit Committee), SWEDAVIA (D), ACNE Studios (D), 3 Scandinavia (D), Swedish Government, Advisory Committee to divest state owned enterprises (member). Previous directorships and Investor AB (EVP and Managing Director), Swedish Security management positions last five Council (member), Carnegie Investment Bank AB (D), years:... NASDAQ OMX AB (chairman of Audit Committee and member of the Remuneration Committee), Gambro AB (member of Audit Committee), Swedish Industry and Commerce Stock Exchange Committee (member), Nomination Committee to appoint Board of Directors in SEB, Scania, SAAB and WM- Data. 60

63 Anders Brandt, Director: Anders Brandt is partner in IdeKapital AS. Since 1987, he has founded several companies, and has launched and subsequently sold a number of companies in the areas of technology, content and marketing. Board appointments include Viken Fibernett, ONE Holding, Best Consulting, Telepress and others. Brandt has been a Director of the Board since May He holds 10,000 Shares in the Company. Current directorships and management positions:... Idekapital AS (D), Gametainment AS (C), Best Consulting AS (D), Viken Fibernett AS (D), Online Media Group AS (C), Interjob AS (DBM), Spiralis AS (DD), Espen Askeladd AS (C/GM). Previous directorships and management positions last five One Holding AS (D), Telepress AS (D), Small Film AS (D), years:... SportMedia AS. Dag Mejdell, Director: Dag Mejdell is President and CEO of Posten. He holds an MSc in Business and Economics from the Norwegian School of Economics and Business Administration, Bergen. Prior experience includes Dyno Industrier since 1981 including CFO, Executive Vice-President and Group Chief Executive from 1997 until the company was bought out, as well as Group Chief Executive in Dyno Nobel ASA from 2000 to Dag Mejdell has been director of the Board since completion of the Combination, on 14 October He holds no Shares in the Company. Current directorships and management Arbeidsgiverforeningen Spekter (C), Bring AS (C), Posten positions:... (GM), Bring Citymail (AB) (C), Bring Citymail Sweden AB (C), Bring Parcels AB (C), SAS AB (DC), Corporate Assembly Orkla ASA (DC), International Post Corporation SA (C), IK Investment Partners Advisory Board (D). Previous directorships and management positions last five years:... Dyno Nobel ASA (president and CEO), DYWIDAG Systems GmbH (D), Svenska Handelsbanken Norway branch (C). Hilde Ringereide, Director: Hilde Ringereide is Global HR manager of Upstream IT functions at the Shell Group, employed by Shell International in the Hague. She has IT qualifications from NKI Polytechnic College and post graduate courses from the Norwegian School for Business and Administration (BI), including HR Management. She has completed various Shell training programs from, amongst other, INSEAD and the University of Michigan. From 1984, Hilde Ringereide has held several different positions within IT and HR in the Shell Group, with several assignments abroad. She has held the position as HR Director at Norske Shell from 2002 to Hilde Ringereide has been director of the Board since completion of the Combination, on 14 October She holds no Shares in the Company. Current directorships and management positions:... Shell Group Upstream IT (HR Manager). Previous directorships and AS Norge Shells Pensjonskasse (D), AS norske Shell (HR management positions last five years:... Director). 61

64 Wenche Brateng, employee elected Director: Wenche Brateng is currently an architect in Systems in the Company. She is an engineering graduate of the Norwegian University of Science and Technology (NTNU) and has been a Director of the Board since September She holds 2,857 Shares in the Company. Current directorships and management positions:... Tekna EDB (D). Previous directorships and management positions last five years:... Tekna Telenor (D). John Ingvar Brekke, employee elected Director: John Ingvar Brekke is a Business Manager in the Company. He is a qualified business economist, and has been a Director of the Board since November He holds 1,208 Shares in the Company. Current directorships and management positions:... Straume Idrettspark AS (D), Negotia i EDB (D). Previous directorships and management positions last five years:... Finansforbundet i EDB (D). Eirik Bornø, employee elected Director: Eirik Bornø is a Senior Consultant in the Company. He has graduated high school, and has been a Director of the Board since November He holds no Shares in the Company. Current directorships and management positions:... Negotia EDB (GM/C). Previous directorships and management positions last five years:... None Remuneration and benefits The remuneration paid to the Board of Directors in 2009 was a total of NOK million. The table below sets out the total remuneration paid to the current members of the Board of Directors in 2009 (in NOK) for work performed in Members of the Board of Directors who were appointed after 31 December 2009 are not included in the table. Name Position Remuneration for 2009 Bjarne Aamodt (Telenor)... Chair 407,000 Anne-Lise Aukner... Deputy chair 277,000 Anders Brandt... Director 133,000 John Ingvar Brekke... Director 222,000 Eirik Bornø... Director 255,000 Wenche Brateng... Director 200,000 Ingrid Lund... Director 11,000 Anne-Grethe Dalane*... Director 222,000 Staffan Bohman*... Director 293,000 Monica Caneman*... Director 329,000 Hans Kristian Rød*... Director 329,000 *previous members of the Board 62

65 In the Annual General Meeting of the Company held on 8 May 2010, it was resolved that the remuneration to the Board members for 2009 shall be as follows: Chairman of the Board... NOK 330,000 Deputy chairman of the Board... NOK 230,000 Members of the Board... NOK 200,000 Deputy members... NOK 11,000 per meeting The additional remuneration to members of the compensation committee and the audit committee shall be NOK 11,000 per meeting attended. None of the members of the Board of Directors has entered into any service contracts with the Company or any of its subsidiaries providing benefits upon termination of their employment Shares and options held by members of the Board of Directors As of 7 October 2010, the members of the Board of Directors have the following shareholdings in the Company: Name and position Number of Shares Arve Johansen (chairman)... 0 Anne-Lise Aukner (Deputy chair)... 0 Adine Grate Axen (Director)... 0 Anders Brandt (Director)... 10,000 Dag Mejdell (Director)... 0 Hilde Ringereide (Director)... 0 Wenche Brateng (Director)... 2,857 John Ingvar Brekke (Director)... 1,208 Eirik Bornø (Director)... 0 As of the date of this Prospectus, none of the members of the Board holds any options for Shares in the Company Board committees Audit Sub-Committee The Company s audit committee consists of three members elected by and amongst the members of the Board of Directors. At least one of the committee members shall have accounting or auditing expertise. The purpose, responsibilities and functions of the audit committee are in compliance with the Norwegian Public Limited Companies Act and the Corporate Governance Code. The audit committee supervises the Company s internal control systems, and ensures that the auditor is independent and that the annual accounts give a fair picture of the Company s financial condition in accordance with generally accepted accounting principles. The audit committee reviews the procedures for risk management and financial controls in the major areas of the Company s business activities. It receives reports on the work of the external auditor and the results of the audit. In addition, the committee reviews the Company s work on corporate governance. The current members of the audit committee are Adine Grate Axén (chair), Anders Brandt and Wenche Brateng. It is expected that new members of the audit committee will be elected during the fall of

66 Compensation Sub-Committee The compensation committee consists of minimum three members elected by and amongst the members of the Board of Directors. The compensation committee s primary function is to make recommendations to the Board on all forms of compensation to be granted to the executive management. The committee shall annually review the corporate goals and objectives that are specifically relevant to the executives compensation and evaluate their performance in light of such goals and objectives. The recommendation for compensation is based on such review. The compensation committee gives the annual general meeting an account for the compensation to the executive management of the Company. The current members of the compensation committee are John Ingvar Brekke, Ellen Christine Orvin Raaholt and Stig Karlsson. Two of the former members of the compensation committee (Ellen Christine Orvin Raaholt and Stig Karlsson) are no longer part of the Board of Directors. As the new Board of Directors came in effect as of completion of the Combination (on 14 October 2010), it has not yet elected new members to the compensation committee amongst the Board s current members. It is expected that new members of the compensation committee will be elected shortly after the date of this Prospectus Group management Overview The present group management of EDB ErgoGroup comprises thirteen executives. The following table sets out the name and position for each of the members of the Company s executive management as at the date of this Prospectus, followed by additional bibliographical information. Name Terje Mjøs... John Arne Haugerud... Vidar Nysæther... Jon A. Elde... Thorolf Thorstensen... Wiljar Nesse... Niklas Ekblad... Hans-Henrik Merckoll... Håvard Larsen... Ole Urdahl... Hilde Solegaard... Geir Remman... Tone Øvregård... Position Group Chief Executive Officer Deputy Chief Executive Officer / Strategy and Business Development Acting Chief Financial Officer Chief Financial Officer Executive Vice President Global IT Operations Executive Vice President Global Bank & Finance Executive Vice President Sweden Executive Vice President Consulting Executive Vice President Solutions Senior Vice President Strategic Accounts Senior Vice President Marketing Senior Vice President Communications Senior Vice President Human Relations The business address of each member of the present management is: EDB ErgoGroup ASA, Nedre Skøyen vei 26, N-0276 Oslo, Norway Brief biographies of the members of the group management Set out below are brief biographies of the members of the group management, including their relevant management expertise and experience, an indication of any significant principal activities performed by them outside EDB ErgoGroup and names of companies and partnerships of which a member of the Board of Directors is or has been a member of the administrative, management or supervisory bodies or partner the previous five years (not including directorships and executive management positions in subsidiaries of EDB ErgoGroup). 64

67 In the following (C) means chairman, (DC) means deputy chairman, (D) means Director (DD) means deputy Director and (GM) means general manager. Terje Mjøs, President and CEO: Terje Mjøs joined ErgoGroup in June 2004 as CEO and became CEO and President of the Company in connection with completion of the Combination. Previous appointments include CEO of ErgoGroup, Managing Director of Hydro IS Partner AS, various positions in Norsk Hydro ASA, including Sales and Marketing Director of Hydro Agri Europe in Brussels. He holds a MSc in Information Science from the University of Oslo, MBA from BI Norwegian School of Management. Current directorships and management positions:. Buypass AS (DC). Previous directorships and management positions last five years:... None. John Arne Haugerud, deputy CEO /Strategy and Business Development: John Arne Haugerud has acted as group CEO from January 2010 and to the date of completion of the Combination, upon which he took up his appointment as deputy CEO. During the four years prior to that, he was head of Business Development in the Company. Before that, he was managing director of the Company s IT operations since He has previously held various senior management positions in Teamco and Novit since 1991 and has broad experience from the banking and finance sector. Current directorships and management positions:. None. Previous directorships and management positions last five years:... None. Vidar Nysæther, Acting CFO: Vidar Nysæther joined the Company as acting CFO on 1 June He came from the position as Director Mergers & Acquisitions in Telenor, and has broad experience within finance, including M&A, investment management, financing and business development. Prior to joining the Telenor Group in 2001, he worked with IT outsourcing / managed services in Intel Corporation as well as Innovation Strategic Consulting. He holds a Siv.Øk./MBA, and has his education from the USA and Cambridge University in England. Current directorships and management positions:. Kjonerud Eiendom AS (C), Kjonerud Teknologisenter ANS (C), Virtu AS (C), Telenor Venture VII (D). Previous directorships and management positions last five years:... None. Jon A. Elde, Chief Financial Officer: Jon A. Elde will take up his appointment as CFO of the Company no later than 1 November His current position is as CEO of GTB Invest ASA. He has previously worked as CFO of Ringnes, which is part of the Carlsberg Group, in corporate development in Orkla ASA and in corporate finance in KPMG. Elde holds an MBA from Manchester Business School and a BSc from the University of California. Current directorships and management positions:. North Invest Holding AS (D/GM), Gjensidige Investeringsrådgivning ASA (D), South Invest AS (DBM/GM) JE Oil Services AS (C). Previous directorships and management positions last five years:... Zaplife AS (C). Thorolf Thorstensen, Executive Vice President Global IT Operations: Thorolf Thorstensen is a mathematics and informatics graduate of the University of Oslo. Thorstensen has many years experience of major negotiations and strategic acquisitions, involving companies such as Shell, Statoil, Nordea, DnB, DnB NOR, SJ-Data and Apoteket. He also participated in the acquisition of Capgemini. Thorstensen has extensive management experience in the IT industry at all levels. He was previously a 65

68 member of the executive management team at Teamco and Fellesdata, and managing director of IF Assistor and EDB ITO Sweden. Thorstensen joined the Company in 1970 (Fellesdata AS). Current directorships and management positions:. Team Gjøra AS (DD). Previous directorships and management positions last five years:... None. Wiljar Nesse, Executive Vice President Global Bank & Finance: Wiljar Nesse is responsible for the Bank & Finance industry vertical at the Company. His previous work experience includes Elkem and AP Dow Jones. He joined the Company from Manamind AS, where he was the chief executive and part owner. In addition, Wiljar Nesse has extensive experience of senior management positions in IT companies, with particular focus on IT solutions for the finance industry. He is a business economics graduate of the Norwegian School of Economics and Business Administration and joined the Company in March Current directorships and management positions:. None. Previous directorships and management positions last five years:... None. Niklas Ekblad, Executive Vice President Sweden: Niclas Ekblad joined ErgoGroup in January 2007 and took up the position of EVP Sweden upon completion of the Combination. He was previously Group Managing Director of SYSteam since Previous appointments include various positions within SYSteam since Mr. Ekblad holds a degree in Industrial Electronics and Production from Jönköping University. Niclas Ekblad has thorough experience from successfully turn around processes as well product development. Current directorships and management positions:. Taberg Media Group (D), Handelsbanken Jönköping (D). Previous directorships and management positions last five years:... None. Hans-Henrik Merckoll, Executive Vice President Consulting: Hans-Henrik Merckoll joined ErgoGroup in May 2009 and took up the position of EVP Consulting upon completion of the Combination. Previous appointments include Managing Director in Telenor Telehuset, Sales Director, partner and SME in HP Norway, Director, Private Markets in Compaq Norway, Assistant Director in Storebrand and If, Product Group Manager, Nordic Region in Thorn Norden. He has special experience from developing new markets and turn around operations. He holds an MBA from BI Norwegian School of Management with a major in Marketing. Current directorships and management positions:. Loa Asker AS (C). Previous directorships and management positions last five years:... Loa AS (C). Håvard Larsen, Executive Vice President Solutions: Håvard Larsen joined ErgoGroup in 2005 as head of solutions and took up the position of EVP Solutions upon completion of the Combination. He holds a degree in Business Administration (BBA) from BI. Håvard Larsen has extensive experience from the Norwegian IT Industry. He has previously held senior management positions in major companies like Oracle, Compaq and TDC, and was earlier also a marketing manager in the Company. Current directorships and management positions:. Kompetansesenter for E-Forvaltning (D), AL Kommunedata (DC), Gecko Informasjonssystemer AS (C). Previous directorships and management positions last five years:... Serve ASA (C). 66

69 Ole Urdahl, Senior Vice President Strategic Accountants: Ole Urdahl s previous experience includes running the IT Operations business area and Bank & Finance at the Company, and he was formerly Deputy Managing Director of EDB Teamco. He joined the Company through the acquisition of Fellesdata AS, where he was responsible for the IT operations area. Prior to this, Ole Urdahl held senior management positions in marketing and product development at Fellesdata AS. Ole Urdahl is a business economics graduate of the Norwegian School of Management and joined the Company in Current directorships and management positions:. None. Previous directorships and management positions last five years:... None. Hilde Solegaard, Senior Vice President Marketing: Hilde M. Solegaard joined ErgoGroup in November 2006 and took up the position as EVP Marketing upon completion of the Merger. Previous appointments include Director of Marketing, Indirect Sales and Business Development in SAP Norge and SAP Nordic and management positions within marketing, sales and product liability in Visma Norge. Solegaard holds a degree in Economics, marketing and strategy, organisational development. Hilde Solegaard has, during the last 30 years, built extensive experience within Marketing and Communication Management in the IT sector. Current directorships and management positions:. Hunsfos Fabrikker AS (D), Contendo AS (D), Idium AS (D). Previous directorships and management positions last five years:... SAP Norge (Business Development Director). Geir Remman, Senior Vice President Communications: Geir Remman joined the Company in the autumn 2005 as head of the Company s section for communications and marketing and took up the position as EVP Communications upon completion of the Combination. For a period of ten years before he joined the Company, Mr. Remman worked for the newspaper Finansavisen - in the last five years he was the editor of Finansavisen. Mr. Remman is a MBA graduate of the Norwegian School of Business Administration (BI). Current directorships and management positions:. None. Previous directorships and management positions last five years:... None. Tone Øvregård, Senior Vice President Human Relations: In January 2007, Tone Øvregård joined the Company from ErgoGroup, where she was HR Director. She has extensive and varied experience of working in HR, and has held a number of senior management positions at Posten, including responsibility for training and management development. Øvregård holds qualifications in business organisation and management from institutions including the Norwegian School of Management (BI). She took up the position as EVP Human Relations upon completion of the Combination. Current directorships and management positions:. IKT - Norge (deputy D). Previous directorships and management positions last five years:... None. 67

70 Remuneration and benefits Total remuneration The table below sets out the total remuneration paid to the members of the group management in 2009 (in MNOK). Members of the group Management who were appointed after 31 December 2009 are not included in the table. Name Salary Bonus paid Pensions Other remuneration Total remuneration Endre Rangnes* (CEO) John Arne Haugerud** Oddgeir Hansen Kristian Kuvaas Johansen Tone Øvregård Geir Remman Wiljar Nesse Eva Trasti Ivar Arne Børset Tom Scharning Johnny Ringdal * CEO Endre Rangnes resigned from his position with effect as from January ** Deputy CEO John Arne Haugerud acted as CEO in the period from January 2010 up until completion of the Combination. Share option scheme for key employees In 2006, the Company started a share option scheme for members of executive management and key employees in specific senior positions. 38 employees were members of the share option scheme at 31 December The option scheme has a three-year vesting period and rights to one third of the options granted are accrued each year. Options can be exercised quarterly in a period of 3 to 10 days following the publication of the Company s quarterly report. The earliest exercise period for the first one-third of the options followed the publication of the second quarter report for The maximum gain on exercising share options is subject to a limit of 250%. On 1 June 2006, 1.5 million options were granted at an average price of NOK A further 310,000 options were granted in 2007: 210,000 options on 30 January at an average price of NOK and 100,000 options on 1 March at NOK As a result of the Norwegian government s statement on the government s role and ownership interest in Norwegian companies, the Annual General Meeting held on 9 May 2007 resolved that no further share options should be granted, but that existing option agreements can be completed. Options outstanding Options outstanding at ,480,000 1,582,500 1,741,752 Options granted ,000 Options exercised ,252 Options terminated ,000-90, ,000 Options expired ,500 - Options outstanding at ,090,000 1,480,000 1,582,500 Of which fully vested... 1,003, , ,450 The average share price for options terminated in 2009 was NOK

71 The terms and conditions for options outstanding are as follows: Date of Expiry Average exercise price Number of Shares 29 January ,000 Total ,000 Provision is made for employer s social security contributions on the difference between the exercise price of options fully vested and the market value at 31 December Provision for employer s social security contributions in the balance sheet was NOK 0 millions in 2009, 2008 and The fair value of options is calculated when they are granted, and charged to profit and loss over the vesting period. The cost recognised for the option program was NOK 1.0 million in 2009, NOK 3.7 million in 2008 and NOK 6.7 millions in Fair value of options is estimated using the Black and Scholes option pricing model. The average fair value of options as per 31 December 2009 was NOK Agreements providing benefits upon termination of employment The members of the present management have the following service contracts with EDB ErgoGroup providing for benefits upon termination of employment: The CEO, Terje Mjøs, has an individual agreement to receive salary for 12 months following the normal notice period of 6 months in case of termination of his employment. In the event that CEO has resigned from his position, any income paid to the CEO in the severance payment period will lead to a reduction of up to 75% of the severance pay. In case of changes in the ownership of the Company where the CEO has not been offered to continue in the position as CEO within 3 months after the change in ownership, Mjøs is granted severance pay for 18 months. Terje Mjøs has waived protection against dismissal pursuant to chapter 5 of the employment protection act The deputy CEO, John Arne Haugerud, has an individual agreement to receive salary for 12 months following the normal notice period of 6 months in case of termination of his employment by the Company, and for 6 months following the normal notice period of 6 months. Salary payable for the 12- month (6-month if applicable) period shall be reduced with 100% of other income earned by Mr. Haugerud in such period. The following of the group s Executive Vice Presidents have agreements entitling them to salary for periods of up to 6 months following the normal notice period of 6 months: Tone Øvregård, Geir Remman, John A. Elde and Ole Urdahl. Otherwise, no member of the group management has service contracts with the Company or any of its subsidiaries providing for benefits upon termination of employment. 69

72 Shares and options held by members the executive management As of 7 October 2010, the members of the group management have the following shareholdings and options in the Company: Name and position Number of options Number of Shares Terje Mjøs (Group CEO) John Arne Haugerud (Deputy CEO/Strategy and Business Development) ,584 Vidar Nysæther (Acting CFO) Jon A. Elde (to become CFO) Thorolf Thorstensen (Executive Vice President Global IT Operations) ,765 Wiljar Nesse (Executive Vice President Global Bank & Finance) ,987 Niklas Ekblad (Executive Vice President Sweden) Hans-Henrik Merckoll Executive Vice President Consulting) Håvard Larsen (Executive Vice President Solutions) Ole Urdahl (Senior Vice President Strategic Accountants) ,149 Hilde Solegaard (Senior Vice President Marketing) Geir Remman (Senior Vice President Communications) ,600 Tone Øvregård (Senior Vice President Human Relations)... 50,000 25, Pensions The accrued pension commitments excluding payments into funded pension schemes in respect of the members of the group Management during 2009 amounted to approximately NOK 13.5 million. Apart from the employee representatives, none of the members of the Board of Directors or the Election Committee is entitled to any pension benefits from the Company Loans and guarantees The Company does not have a policy for granting loans and guarantees to its employees. However, 78 of the Company s employees have outstanding loans to the Company. As of August 2010, the aggregate amount of the loan is approximately NOK million. The original lender was IS Partner AS and the loans were granted to employees in IS Partner AS. The loans were transferred to the Company in connection with the acquisition of IS Partner AS in Conflicts of interests There are no conflicts of interest between the members of the Board of Directors and the members of the executive management s duties to EDB ErgoGroup and their private interests and/or other duties. During the last five years preceding the date of this document, no Director on the Board of Directors or the executive management has: had any convictions in relation to fraudulent offences; been officially publicly incriminated and/or sanctioned by any statutory or regulatory authorities (including designated professional bodies) or been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct the affairs of a company; or been associated with any bankruptcy, receivership or liquidation. Arve Johansenrepresents Telenor and Dag Mejdell represents Posten at the Board of Directors. In addition, acting CFO, Vidar Nysæther is on hire from Telenor and will return to Telenor when the new CFO, Jon A. Elde, takes up his position. Save for this, there is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any member of the Board of Directors and the group Management has been selected. 70

73 There are no family relationships between any members of the Board of Directors and the members of the executive management Employees Geographic location and business areas As of 31 August 2010, the Company and its subsidiaries had 5,876 employees. As of the Completion (14 October 2010), EDB ErgoGroup and its subsidiaries had approximately 9,655 employees. As at 31 December 2009, the Company and its subsidiaries had approximately 6,095 employees on a consolidated basis. 905 of these were in the IT Operations segment, 606 were in the Banking & Finance segment, 115 were in the DnB NOR segment, 116 were in the public segment, 89 in the VAS segment, 140 in staff and support, 3 in the telecom segment and 584 in the industry segment (IS Partner AS). The table below reflects a breakdown of the number of employees of the Company and their geographic location as of 31 December 2009, 2008 and Location Norway... 2,965 3,079 2,593 Belgium France Germany United States Singapore United Kingdom Sweden... 1,408 1,329 1,478 Denmark Ukraine India Remaining Europe Total... 6,095 6,168 5,401 At year-end 2009, 2008 and 2007, ErgoGroup standalone had 3,709, 3,714 and 3,573 permanent employees respectively Employee share purchase plan The Board introduced a share purchase program for all permanent employees in 2008, in which all employees eligible to participate are entitled to purchase shares for up to 4% of their fixed salary. Employees can then earn bonus shares after two years, subject to remaining with the company. The number of bonus shares allocated to an individual is based on a combination of the company s performance and the individual s performance. The maximum allocation is four bonus shares for every four shares purchased, and everyone entitled to bonus shares will receive at a minimum one bonus share for every four shares purchased Corporate governance With the exception set out below, the Company complies with the Norwegian corporate governance regime, as detailed in the Norwegian Code of Practice for Corporate Governance published on 21 October 2009 by the Norwegian Corporate Governance Board (the Corporate Governance Code ). 71

74 Deviations from the Corporate Governance Code: Deviation from section 8 Corporate assembly, Board of Directors, composition and independence : The Company does not have a corporate assembly. Up until completion of the Combination, both the Company and ErgoGroup were exempted pursuant to rulings from the Industrial Democracy Commission for the Telenor group and the Posten group, respectively. Instead of a corporate assembly, employee representation has been catered for through employee representation in the Board of the ultimate parent companies in the each of the groups (Telenor and Posten). As a result of completion of the Combination, the Company is no longer considered as an affiliate of the Telenor group, which in turn implies that the ruling from the Industrial Democracy Commission no longer applies to the Company. Employee democracy and employee representation in governing bodies is important to the Company and the Company is currently negotiating with the employee organisations in the Combined Group in respect of the question of employee democracy in the Combined Group. At the date of completion of the Prospectus, it has not been determined whether the Company will apply for an exemption from the corporate assembly requirement. 72

75 12 SHARES, SHARE CAPITAL AND SHAREHOLDERS MATTERS The following is a summary of certain information relating to the Shares and certain shareholder matters, including summaries of certain provisions of the Company s Articles of Association and applicable Norwegian law in effect as of the date of the Prospectus. The summary does not purport to be complete and is qualified in its entirety by the Company s Articles of Association and Norwegian law Description of the Shares and share capital EDB ErgoGroup s registered share capital is NOK 301,834,333.50, divided into 172,476,762 shares, each with a nominal value of NOK All the Shares are authorised, issued and fully paid in compliance with the Norwegian Public Companies Act. The Shares are registered in the VPS under ISIN NO The Company holds 1,712,940 Shares, each with a nominal value of NOK 1.75 and an aggregate book value of NOK 2,997,645, in treasury as of the date of this Prospectus. The Company s registrar is Nordea Norge ASA, Securities Services - Issuer Services, Essendropsgate 7, N-0701 Oslo, Norway Stock Exchange listing The Shares are listed on Oslo Børs under ticker EDBASA. The New Shares will be listed under the same ticker on Oslo Børs. They are not listed (and no application has been filed for listing) on any other stock exchange or regulated market than Oslo Børs Historical development in share capital and number of shares The table below sets forth the historical development of the Company s share capital and the number of issued and outstanding Shares for the period between 1 January 2007 and the date of this Prospectus. Date 12 Feb May Oct 2010 Type of change Capital increase/decrease (NOK) New share capital (NOK) Total number of Shares Par value (NOK) Issue of Shares pursuant to authority granted to the Board as part of the share option program. 291, ,862,822 91,350, Issue of Shares pursuant to authority granted to the Board as part of the share option program. 109, ,972,197 91,412, Issue of consideration shares in the Combination 141,862, ,834, ,476, Price per share (NOK) * ** *The price per shares was set in accordance with the share option program for employees. The price for 156,752 shares was fixed at NOK 45.55, for 60,000 shares the price was fixed at NOK per share and for 12,500 shares, the price was set at NOK per share. **The price per shares was set in accordance with the share option program for employees. The price for a block of 50,000 shares was fixed at NOK per share and for a block of 12,500 shares, the price was set at NOK per share. 73

76 Apart from this, there have not been any changes in the Company s share capital since 1 January 2007 until the date of this Prospectus (i.e. in the period covered by the historical financial information included in this Prospectus). Accordingly, as of 1 January 2009 and 1 January 2010, the Company had a total number of 91,412,684 Shares, each with a nominal value of NOK Major Shareholders The 20 largest shareholders in EDB ErgoGroup as registered by the VPS on 7 October were: Shareholder No. of shares Percentage Telenor Business Partner Invest AS... 46,935, % Folketrygdfondet... 6,361, % Oslo Pensjonsforsikring AS... 3,786, % Orkla ASA... 3,100, % Odin Norden... 2,715, % Arendals Fossekompani ASA... 2,142, % EDB ErgoGroup ASA... 1,712, % Verdipapirfondet Handelsbanken... 1,140, % UBS AG, London Branch S/A... 1,052, % Skandinaviska Enskilda Banken Clients Account... 1,049, % DnB NOR SMB... 1,040, % Trafalgar AS , % Skagen Vekst , % DNB NOR Norge Selektiv (III) , % Kommunal Landspensjonkasse , % A/S Skarv , % Skandinaviska Enskilda Banken , % KLP Aksje Norge VPF , % Vital Forsikring ASA , % Danske Invest Norske Aksjer Bank , % Centra Klaveness Invest AS , % TOP ,191, % Other... 14,223, % TOTAL... 91,412, % In accordance with the disclosure obligation under the Norwegian Securities Trading Act, shareholders acquiring ownership to or control over more than 5% of the share capital of a company listed on Oslo Børs must notify the stock exchange immediately. On 14 October 2010, 81,064,078 New Shares were issued to Posten as consideration shares in the Combination, making Posten the Company s largest owner with 47% of the Shares. As these New Shares were issued in connection with completion of the Combination and subsequent of 7 October 2010 (which is the date of the information listed above), this shareholding is not included in the list above. Telenor Business Partner Invest AS, a company wholly owned by Telenor, owns 27.2% of the total Shares in the Company following completion of the Combination. The Company is not aware of any other persons or entities who, directly or indirectly, have an interest of 5% or more of the Shares as of the date of the Prospectus. There are no differences in voting rights. Save for Posten and Telenor s standstill obligations, the Company is not aware of any other arrangements that may result in, prevent, or restrict a change in control of the Company. The Company is not aware of any measures in place to ensure that such control is not abused. 74

77 12.5 Outstanding authorisations Authorization to the Board to issue shares On 8 July 2010, the extraordinary general meeting authorized the Board to increase the share capital by issuance of new shares, limited to a total share capital increase of NOK 150,916,998.75, through the issue of up to 80,238,285 Shares, provided however, that the total share contribution shall not be lower than NOK 800 million and not higher than NOK 1,000 million. The authorisation is valid until the annual general meeting in 2011, but in any case no longer than 1 June Authorization to the Board to acquire shares On 6 May 2010, the general meeting of the Company authorised the Board to acquire the Company s own shares, limited to a maximum nominal value of the shares of NOK 15,997,219, and in any event limited so that the total nominal value of shares owned by the Company does not exceed 10% of the Company s share capital. The authorization is valid until the annual general meeting in 2011, but in any case no longer than 1 June Shareholders rights The Shares are equal in all respects and there are no different voting rights or classes of shares. Each Share carries one vote at the Company s general meeting. The Company has only one class of Shares Limitations on the right to own and transfer Shares The Shares are freely transferable. The Company s Articles of Association do not contain any provisions imposing limitations on the ownership of the Shares and there are no limitations under Norwegian law on the rights of non-residents or foreign owners to hold or vote for the Shares Shareholders agreements Posten and Telenor have entered into a shareholders agreement which regulates certain matters relating to their joint shareholding in the Company. Pursuant to the shareholders agreement, Posten s shareholding shall at the latest within two years of the completion of the Combination be reduced to a maximum of 40% through dilution in connection with the Contemplated Offering in EDB ErgoGroup of up to NOK 1,000 million (see Section 0 Funding Structure ) and/or through the sale of shares. Until such maximum shareholding has been achieved, Posten has undertaken not to vote for more than 40% of the outstanding shares at any general meeting of EDB ErgoGroup. In addition to the reduction of Posten s ownership as aforesaid, the shareholders agreement provides for a standstill period of two years during which neither of the parties shall transfer any of their shares in EDB ErgoGroup to a third party without the consent of the other party. After such standstill period, transfers by either party will be subject to certain restrictions, including a right of first offer and tagalong rights for the other party. Posten and Telenor have also agreed that they shall procure that they are both represented at the Board of Directors of the Company in accordance with market practice for shareholders with such shareholdings, taking into account the provisions of the Norwegian Code of Practice for Corporate Governance. The parties to the shareholders agreement will encourage the participation by the Company in future consolidation within its industry. The parties have also established mechanisms whereby a party may, after the standstill period, initiate processes to evaluate alternatives for the ownership and industrial development of the Company and which may, ultimately and on certain conditions (but earliest after 75

78 five years following completion of the Combination), require a party to participate in a transaction involving the Company, which is supported by the other party, the board of the Company and a majority of the shareholders other than the parties. Except for the above, the Company is not aware of any shareholders arrangements that may result in, prevent, or restrict a change in control of the Company Dividend policy and payment of dividends Dividend policy The Company s objective is to generate a return for its shareholders through dividends and increases in the share price that is at least in line with the return available on similar investment opportunities of comparable risk. The Company aims to pay an annual dividend to shareholders equivalent to 20 50% of normalised post-tax profit. The Board proposes a dividend if it is satisfied that this will not have an adverse effect on the Company s future growth ambitions and capital structure Dividend payments per share In 2009 and 2008, no dividends were paid to the Company s shareholders. In 2007, a total dividend payment of NOK million was paid, giving a dividend payment per Share of NOK General Meetings The general meeting of shareholders is the highest authority of a Norwegian public limited company. The Company must arrange for the annual general meeting to be held before the end of June every year. The annual general meeting shall, inter alia, approve the annual accounts, the Board of Directors report and any dividends payable and consider the Board of Director s declaration concerning determination of salaries and other remuneration to the Chief Executive Officer and other senior executive officers. An extraordinary general meeting shall be called if the Board of Directors so resolves or the auditors or shareholders holding in aggregate at least 5% of the Company s share capital require it. The general meeting shall be convened by a written notice to all shareholders with a known address no later than 21 days prior to a general meeting. A shareholder is entitled to submit proposals to be discussed in a general meeting provided that such proposals are submitted in writing to the Board of Directors at least seven days prior to the deadline for the notice to the general meeting. Such proposal shall be accompanied by a proposed resolution or the reasons why the matter should be included on the agenda. Further, a shareholder is entitled to table draft resolutions for items included on the agenda for the general meeting. All shareholders in the Company are entitled to attend and vote in general meetings, either in person or by proxy. See Section (Shares, Shareholder Matters and Ownership Structure Voting Rights) below with regard to certain restrictions on voting rights applicable to nominee-registered Shares. The Company will distribute proxy forms to its shareholders together with the notice of any general meeting Voting Rights Each Share carries one vote in a general meeting. As a general rule, resolutions shareholders are entitled to make pursuant to Norwegian law or the Company s Articles of Association require approval by a simple majority of the votes cast. However, certain decisions, including resolutions to (i) waive pre-emptive rights in connection with any issue of shares, convertible bonds, warrants, etc., (ii) approve a merger or demerger, (iii) amend the Articles of Association, (iv) authorize an increase or decrease in the share capital, (v) authorize issuance of 76

79 convertible loans or warrants, (vi) authorize the Board of Directors to purchase treasury shares or (vii) dissolve the Company, must receive the approval of at least two-thirds of the votes cast and two-thirds of the share capital represented in a general meeting. Decisions that would (i) reduce any existing shareholder s right with respect to dividend payments or other rights to the assets of the Company or (ii) restrict the transferability of the Shares through introduction of a consent requirement, a right of first refusal upon transfers or a requirement that shareholders must have certain qualifications, require a majority vote of at least 90% of the share capital represented in the general meeting in question as well as the majority required for changes to the Articles of Association. Certain other decisions involving fundamental changes in the status of already issued shares, including but not limited to increased obligations of the shareholders, other transfer restrictions than those mentioned above and introduction of forced redemption, require the consent of all shareholders affected thereby as well as the majority required for amendments to the Company s Articles of Association. The Company s Articles of Association do not contain provisions deviating from the Norwegian Public Limited Companies Act in this respect. In order to be entitled to vote in a general meeting, a shareholder must, as a general rule, be registered as owner of the Shares in the Company s shareholder register kept by the VPS. Beneficial owners of Shares that are registered in the name of a nominee are generally not entitled to vote under Norwegian law, nor are any persons who are designated in the shareholder register as holding such Shares as nominees. The Company has applied this principle consistently. It should, however, be noted that there are different opinions as to the interpretation of Norwegian law with respect to the right to vote for nominee-registered shares. For example, the Oslo Stock Exchange has in a statement of 21 November 2003 held that in its opinion beneficial owners of Shares that are registered in the name of a nominee may vote in general meetings if they prove their actual shareholding prior to the general meeting Additional issuances and preferential rights If the Company issues any new Shares, including bonus Shares (i.e. new Shares issued through a transfer from the Company s share premium reserve or distributable equity to the share capital), the Company s Articles of Association must be amended, which requires support by at least two-thirds of the votes cast and share capital represented in a general meeting. Pursuant to the Norwegian Public Limited Companies Act, the Company s shareholders have a preferential right to subscribe for new Shares issued against contribution in cash pro rata basis to their shareholdings in the Company. Said preferential right may be waived by a resolution in a general meeting passed by two-thirds of the votes cast and share capital represented. A waiver of the shareholders preferential right in respect of bonus issues requires the approval of all outstanding shares, irrespective of class. The general meeting may, in a resolution supported by at least two-thirds of the votes cast and share capital represented, authorize the Board of Directors to issue new Shares. Such authorization may remain in force for a maximum of two years, and the nominal value of the shares to be issued may not exceed 50% of the nominal share capital of the Company at the time the authorization is registered. The Board of Directors may only waive the shareholders preferential right to subscribe for new shares issued against contribution in cash if permitted according to the authority. Under Norwegian law, bonus Shares may be issued through a transfer from the Company s distributable equity or share premium reserve to the share capital. Such bonus issues may be carried out either through the issue of Shares or through an increase of the nominal value of the shares outstanding. 77

80 In order to issue Shares in the Company to holders 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 United States securities law. If the Company decides not to file a registration statement, such holders may not be able to exercise their preferential rights. The same applies to other jurisdictions which, according to the Company s considerations, have similar restrictive legislation Regulation of Dividends Dividends may be paid in cash or in some instances in kind. The Norwegian Public Limited Companies Act provides several constraints on the distribution of dividends applicable to the Company: (i) Dividends are payable only out of distributable reserves. Section 8 1 of the Norwegian Public Limited Companies Act provides that distributable reserves consist of the profit for the prior financial year (as reflected in the income statement approved by the annual general meeting of shareholders) and the retained profit from previous years (adjusted for any reclassification of equity), less (i) uncovered losses, (ii) the book value of research and development, goodwill and net deferred tax assets (as recorded in the balance sheet as of the end of the prior financial year approved by the annual general meeting), (iii) the total nominal value of treasury shares which the Company has acquired for ownership or as security in previous financial years, as well as credit and security which, pursuant to sections 8 7 to 8 9 of the Norwegian Public Limited Companies Act, fall within the limits of distributable equity, and (iv) the part of the profit for the prior financial year which, by law or pursuant to the Company s Articles of Association, must be allocated to the undistributable reserve or cannot be distributed as a dividends. (ii) (iii) Dividends can only be distributed to the extent compatible with good and careful business practice, with due regard to any losses which the Company may have incurred since the balance sheet date (i.e. the end of the previous financial year) or which the Company may expect to incur. The amount of dividends the Company can distribute is calculated on the basis of the Company s annual financial statements, not the Group s consolidated financial statements. Distribution of dividends is resolved by the general meeting on the basis of a proposal from the Board of Directors. The general meeting cannot resolve a larger dividend than proposed or accepted by the Board of Directors. The shareholders have, through the entitlement to dividends, a right to share in the Company s profits. Shareholders holding in aggregate 5% or more of the Company s share capital have a right to request that the courts set a higher dividend than decided by the general meeting. The courts may set a higher dividend to the extent the resolved dividend is considered to be unreasonably low. All shareholders that are shareholders at the time the general meeting pass its resolution to distribute dividends are entitled to such dividends. There is no time limit after which entitlement to dividends lapses under the Norwegian Public Limited Companies Act or the Company s Articles of Association. Further, there are no dividend restrictions or specific procedures for non-norwegian resident shareholders in the Norwegian Public Limited Companies Act or the Company s Articles of Association Minority Rights Norwegian law contains a number of protections for 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 78

81 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 Transactions with Related Parties Pursuant to the Norwegian Public Limited Companies Act, an agreement between the Company and (i) a shareholder of the Company, (ii) a shareholder s parent company, (iii) a member of the Board of Directors, (iv) the President and Chief Executive Officer of the Company, (v) somebody acting pursuant to an agreement or understanding with some of the aforementioned persons, or (vi) a person or company that is a close associate (as defined by the Norwegian Public Limited Companies Act) of a shareholder or a shareholder s parent company, which involves consideration from the Company in excess of one-twentieth of the Company s share capital at the time, is not binding for the Company unless the agreement has been approved by the shareholders in a general meeting. There are certain exemptions from this rule. For example, business agreements in the normal course of the Company s business containing pricing and other terms and conditions which are normal for such agreements and the purchase of securities at a price which is in accordance with public quotation do not require such approval Rights of Redemption and Repurchase of Shares The Company s share capital may be decreased by redemption of Shares or by reducing the nominal value of the Shares. Such a decision requires the approval of at least two-thirds of the aggregate number of votes cast and share capital represented in the general meeting. The Company has not issued redeemable shares (i.e. shares in the Company redeemable without the shareholder s consent). Redemption of individual Shares, apart from treasury shares held by the Company, requires the consent of the shareholders affected by such redemption. The Company may purchase its own Shares if an authorization to the Board of Directors to this effect has been given by the shareholders in a general meeting with the support of at least two-thirds of the votes cast and share capital represented. The aggregate nominal value of treasury shares so acquired and held by the Company may not exceed 10% 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 treasury shares. The authorization from to the Board of Directors cannot be given for a period exceeding 18 months Liability of Directors and Chief Executive Officer The members of the Board of Directors and the Company s President and Chief Executive Officer owe a fiduciary duty to the Company and thereby to its shareholders. Such fiduciary duty requires that the members of the Board of Directors, the members of the Corporate Assembly and the President and Chief Executive Officer act in the Company s best interests when exercising their functions and exercise a general duty of loyalty and care towards the Company. Their principal task is to safeguard the interests of the Company. Members of the Board of Directors or the Corporate Assembly and the President and Chief Executive Officer may each be held liable for any damage they negligently or willfully cause the Company. Norwegian law permits the general meeting to exempt any such person from liability, but the exemption is not binding unless substantially correct and complete information was provided to the general meeting passing the resolution. If a resolution to grant such exemption from liability or not to pursue claims against any such person has been passed by a general meeting with a majority below that required to amend the Company s Articles of Association, shareholders representing more than 10% of the share capital or, if there are more than 100 shareholders in the Company at the relevant point in time, more than 10% of the total number of shareholders, may pursue the claim on behalf of 79

82 the Company and in the Company s name. The cost of any such action is not the responsibility of the Company, but can be recovered from any proceeds the Company receives as a result of the action. If a resolution to grant an exemption from liability or not to pursue claims has been passed with a majority equal to or larger than the majority required to amend the Company s Articles of Association, or if a settlement has been reached, the minority shareholders cannot pursue the claim in the name of the Company. A resolution by the general meeting to exempt the directors, members of the Corporate Assembly or the President and Chief Executive Officer from liability does not protect the directors, members of the Corporate Assembly or the President and Chief Executive Officer from a claim or a lawsuit filed by a third party other than a shareholder, for example a creditor Distribution of Assets on Liquidation Pursuant to the Norwegian Public Limited Companies Act, a company may be liquidated 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 liquidation or otherwise. In the event that a resolution to liquidate the Company has been passed, the Company s assets shall be transformed into cash in order to cover the Company s obligations and for distribution to the shareholders to the extent not all shareholders have voted for distributions in kind Summary of the Company s Articles of Association The following is a summary of certain provisions of the Company s Articles of Association, some of which have not been addressed in the preceding Sections. The Company s Articles of Association are included in Appendix 1 to this Prospectus Objective The objective of the Company is, pursuant to Section 2 of the Articles of Association, to develop, manage and operate its own and other parties IT solutions, to sell services and consultancy and any activities related to the foregoing. These activities may be carried out by the company itself, by its subsidiaries or through participation in other companies and collaboration with other parties Provisions with respect to the members of the administrative, management and supervisory bodies The Board of Directors The Board of Directors shall consist of minimum five and maximum eleven members. The chairman of the board is elected by the General Meeting. The Board of Directors shall have a deputy chairman, who shall be elected by the Board. The Election Committee The Company shall have an election committee. The mandate of the Election Committee and the remuneration of its members shall be determined by the annual general meeting. Period of service The members of the Board of Directors are elected for a period of up to two years at a time General meetings The annual general meeting shall (i) elect the chairman of the Board of Directors and the other members of the Board of Directors, together with any deputy members of the Board of Directors, (ii) elect the Chairman and other members of the election committee, (iii) adopt the Board of Directors report and the annual accounts, including the payment of any dividend, and (iii) deal with any other 80

83 matters as by law or by operation of the Articles of Association are to be dealt with at a General Meeting. General meetings shall be convened by the Board of Directors in accordance with applicable legal requirements. The chairman of the Board of Directors opens the general meeting. Documents concerning matters to be considered at the general meeting that have been made available for the shareholders on the Company s website, do not have to be sent to the shareholders. This also applies to documents which by law shall be included in or attached to the notice of the general meeting. A shareholder may nonetheless request that documents concerning matters to be considered at the general meeting be sent to him or her free of charge. Shareholders or their representatives wishing to attend and vote at the general meeting must inform the company of this within a time limit given in the notice of the General Meeting, which cannot expire earlier than five days prior to the general meeting. Shareholders who have failed to give such notice within the time limit can be denied admission. 81

84 13 SECURITIES TRADING IN NORWAY 13.1 Introduction The Oslo Stock Exchange was established in 1819 and is the principal market in which shares, bonds and other financial instruments are traded in Norway. As of 31 December 2009, the total capitalization of companies listed on the regulated markets operated by the Oslo Stock Exchange amounted to approximately NOK 1,530 billion. The Oslo Stock Exchange has recently entered into a strategic cooperation with the London Stock Exchange Group with regards to, inter alia, trading systems for equities, fixed income and derivatives Trading of Equities and Settlement Trading of equities on the Oslo Stock Exchange is carried out in the electronic trading system TradElect. This trading system is in use by all markets operated by the London Stock Exchange, as well as by the Borsa Italiana and the Johannesburg Stock Exchange. Official trading on the Oslo Stock Exchange takes place between 09:00 hours (CET) and 17:30 hours (CET) each trading day, with pre-trade session between 08:15 hours (CET) and 09:00 hours (CET). The settlement period for trading on the Oslo Stock Exchange is three trading days (T+3). Oslo Clearing ASA, a wholly owned subsidiary of Oslo Børs VPS Holding ASA, has a license from the NFSA to act as a central clearing service, and has from 18 June 2010 offered clearing and counterparty services for equity trading on the Oslo Stock Exchange. Investment services in Norway may only be provided by Norwegian brokerage houses holding a license under the Norwegian Securities Trading Act, branches of brokerage houses from an EEA member state or brokerage houses from outside the EEA that have been licensed to operate in Norway. Brokerage houses in an EEA member state may also provide cross-border investment services in Norway. It is possible for brokerage houses to undertake market-making activities in shares listed in Norway if they have a license to this effect under the Norwegian Securities Trading Act, or in the case of brokerage houses in an EEA member state, a license to carry out market-making activities in their home jurisdiction. Such market-making activities will be governed by the regulations of the Norwegian Securities Trading Act relating to brokers trading for their own account. However, such market-making activities do not as such require notification to the NFSA or the Oslo Stock Exchange except for the general obligation on brokerage houses that are members of the Oslo Stock Exchange to report all trades in stock exchange listed securities Information, Control and Surveillance Under Norwegian law, the Oslo Stock Exchange is required to conduct a number of surveillance and control functions. The Surveillance and Corporate Control unit of the Oslo Stock Exchange monitors all market activity on a continuous basis. Market surveillance systems are largely automated, promptly warning department personnel of abnormal market developments. The NFSA controls the issuance of securities in both the equity and bond markets in Norway and evaluates whether the issuance documentation contains the required information and whether it would otherwise be unlawful to carry out the issuance. Under Norwegian law, a company which is listed, or has applied for listing, on a Norwegian regulated market, must promptly release any inside information (i.e. precise information about financial instruments, the issuer thereof or other matters which are likely to have a significant effect on the price of the relevant financial instruments or related financial instruments, and which are not publicly 82

85 available or commonly known in the market). A company may, however, delay the release of such information in order not to prejudice its legitimate interests, provided that it is able to ensure the confidentiality of the information and that the delayed release would not be likely to mislead the public. The Oslo Stock Exchange may levy fines on companies violating these requirements The VPS and Transfer of Shares The VPS is the Norwegian paperless centralized securities register. It is a computerized bookkeeping system in which the ownership of, and all transactions relating to, Norwegian listed shares must be recorded. The Company s shareholder register is operated through the VPS. The VPS and the Oslo Stock Exchange are both wholly owned by Oslo Børs VPS Holding ASA. All transactions relating to securities registered in the VPS are made through computerized 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 give effect to such entries, the individual shareholder must establish a share account with a Norwegian account agent. Norwegian banks, Norges Bank (i.e. Norway s central bank), authorized 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 any third party claiming an interest in the given security. 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 is not prevented by law, the relevant company s articles of association or otherwise. 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 control 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. The VPS must provide information to the NFSA on an ongoing basis, as well as any information that the NFSA requests. Further, Norwegian tax authorities may require certain information from the VPS regarding any individual s holdings of securities, including information about dividends and interest payments Shareholder 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. 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. Nominee registration for Norwegian shareholders is not permitted. 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 case of registration by nominees, the registration in 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 in general meetings on behalf of the beneficial owners, see Section Voting Rights above Foreign Investment in Norwegian Shares Foreign investors may trade shares listed on the Oslo Stock Exchange through any broker that is a member of the Oslo Stock Exchange, whether Norwegian or foreign. 83

86 13.7 Disclosure Obligations If a person s, entity s or consolidated group s proportion of shares and/or rights to shares in a company listed on a regulated market with Norway as its home state (e.g. the Company) reaches, exceeds or falls below the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital or the voting rights of the company, the person, entity or group in question has an obligation under the Norwegian Securities Trading Act to immediately notify Oslo Børs. The same applies if the disclosure thresholds are passed due to other circumstances, such as a change in the company s share capital 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, see Section 13.3 Information, Control and Surveillance above. 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 Mandatory Offer Requirement The Norwegian Securities Trading Act requires any person, entity or consolidated group who becomes the owner of shares representing more than 1/3 of the voting rights of a Norwegian company listed on a Norwegian regulated market to make an unconditional general offer for the purchase of the remaining shares in such company. Such offer must be made within four weeks of the time the threshold has been exceeded. A mandatory offer obligation may also be triggered where a party acquires the right to become the owner of shares which together with the party s own shareholding represent more than 1/3 of the voting rights in the company and the Oslo Stock Exchange decides that this must be regarded as an effective 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 shall immediately notify the Oslo Stock Exchange and the company accordingly. The notification shall state whether an offer will be made to acquire the remaining shares in the company or whether a sale will take place. As a main 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 the market price was higher when the mandatory offer obligation was triggered, 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 shareholders, without the consent of a majority of the remaining shareholders. The shareholder may, however, exercise the right to dividend and his/her/its 84

87 pre-emption rights in the event of a share capital increase. If the shareholder neglects his/her/its duties to make a mandatory offer, the Oslo Stock Exchange may impose a cumulative daily fine which runs until the circumstance has been rectified. A shareholder or consolidated group who has passed the relevant threshold for a mandatory offer obligation without triggering such an obligation, and who consequently has 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 (subsequent offer obligation). A shareholder who represents more than 1/3 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) where the shareholder through acquisition becomes the owner of shares representing 40% or more of the votes in the company. The same applies correspondingly where the shareholder 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 shareholder 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. Pursuant to the Norwegian Securities Trading Act and the Norwegian Securities Regulation of 29 June 2007 No. 876, the above mentioned rules also apply in part or in whole to acquisitions of shares in certain non-norwegian companies whose shares are listed on a Norwegian regulated market Compulsory Acquisition Pursuant to sections 4-24 cf of the Norwegian Public Limited Companies Act and chapter 4 of 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 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 authorized to provide such guarantees in Norway. 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 the offeree company and a corresponding proportion of the votes that can be cast in the general meeting, and the offeror pursuant to section 4 25 of the Norwegian 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, absent specific reasons indicating another price. 85

88 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 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 Foreign Exchange Controls There are currently no foreign exchange control restrictions in Norway, other than in certain extreme macroeconomic conditions, that would potentially restrict the payment of dividends to a shareholder outside Norway, and there are currently no restrictions that would affect the right of shareholders of a Norwegian company who are not residents in Norway to dispose of their shares and receive the proceeds from a disposal outside Norway. There is no maximum transferable amount either to or from Norway, although transferring banks are required to submit reports on foreign currency exchange transactions into and out of Norway into a central data register maintained by the Norwegian customs and excise authorities. The Norwegian police, tax authorities, customs and excise authorities, the National Insurance Administration and the NFSA have electronic access to the data in this register. 86

89 14 TAXATION Set out below is a summary of certain Norwegian tax matters related to investments in the Company. The summary is based on Norwegian laws, rules and regulations applicable as of the date of this Prospectus, which may be 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 and shareholders who cease to be resident in Norway for tax purposes (due to domestic tax law or tax treaty) should consult with and rely upon their own tax advisors with respect to the tax position in their country of residence and the tax consequences related to ceasing to be resident in Norway for tax purposes. Please note that for the purpose of the summary below, a reference to a Norwegian or foreign shareholder refers to the tax residency rather than the nationality of the shareholder Norwegian Shareholders Taxation of dividends Norwegian Personal Shareholders Dividends received by shareholders who are individuals resident in Norway for tax purposes ( Norwegian Personal Shareholders ) are taxable as ordinary income for such shareholders at a flat rate of 28% to the extent the dividend exceeds a tax-free allowance. The allowance is calculated on a share-by-share basis. The allowance for each share is equal to the cost price of the share multiplied by a determined risk-free interest rate based on the effective rate after tax of interest on treasury bills (Norwegian: statskasseveksler ) with three months maturity. The allowance is calculated for each calendar year, and is allocated solely to Norwegian Personal Shareholders holding shares at the expiration 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 ( excess allowance ) may be carried forward and set off against future dividends received on, or gains upon realization, of the same share. Any excess allowance will also be included in the basis for calculating the allowance on the same share the following years. Norwegian Corporate Shareholders Dividends received by shareholders who are limited liability companies (and certain similar entities) resident in Norway for tax purposes ( Norwegian Corporate Shareholders ) are included in the calculation of the shareholders net income from shares qualifying for participation exemption, including dividends received from the Company. Only 3% of net income from shares qualifying for participation exemption shall be included in the calculation of ordinary income. Ordinary income is subject to tax at a flat rate of 28%, implying that net income from shares is effectively taxed at a rate of 0.84% Capital gains tax Norwegian Personal Shareholders Sale, redemption or other disposal of shares is considered a realization for Norwegian tax purposes. A capital gain or loss generated by a Norwegian Personal Shareholder through a realization of shares is taxable or tax deductible in Norway. Such capital gain or loss is included in or deducted from the shareholder s ordinary income in the year of disposal. Ordinary income is taxable at a rate of 28%. The 87

90 gain is subject to tax and the loss is tax-deductible irrespective of the duration of the ownership and the number of shares disposed of. The taxable gain/deductible loss is calculated per share, as the difference between the consideration for the share and the Norwegian Personal Shareholder s cost price of the share, including any costs incurred in relation to the acquisition or realization of the share. From this capital gain, Norwegian Personal Shareholders are entitled to deduct a calculated allowance, provided that such allowance has not already been used to reduce taxable dividend income. See Section Taxation of dividends above for a description of the calculation of the allowance. The allowance may only be deducted in order to reduce a taxable gain, and cannot increase or produce a deductible loss, i.e. any unused allowance exceeding the capital gain upon the realization of a share will be annulled. If the Norwegian Personal 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. Norwegian Corporate Shareholders Capital gains derived from the realization of shares qualifying for participation exemption are included in the calculation of net income from such shares. Losses incurred upon realization of such shares may be deducted in order to reduce net taxable income from shares in the same fiscal year. Only 3% of net income from shares qualifying for participation exemption shall be included in the calculation of ordinary income. Ordinary income is subject to tax at a flat rate of 28%, implying that net income from shares is effectively taxed at a rate of 0.84%. Negative net income from shares does not reduce ordinary income Taxation of Subscription Rights Norwegian Personal Shareholders A Norwegian Personal Shareholder s subscription for shares pursuant to a subscription right is not subject to taxation in Norway. Costs related to the subscription for shares will be added to the cost price of the shares. Sale and other transfer of subscription rights is considered a realization for Norwegian tax purposes. For Norwegian Personal Shareholders, a capital gain or loss generated by a realization of subscription rights is taxable or tax deductible in Norway. Such capital gain or loss is included in or deducted from the basis for the computation of ordinary income in the year of disposal. The ordinary income is taxable at a flat rate of 28%. Norwegian Corporate Shareholders A Norwegian Corporate Shareholder s subscription for shares pursuant to a subscription right is not subject to taxation in Norway. Costs related to the subscription for the shares will be added to the cost price of the shares. Capital gains derived from the realization of subscription rights to shares in limited liability companies resident in Norway for tax purposes (and certain other entities) are included in the calculation of net income from shares qualifying for participation exemption, see Section Capital gains tax above. Losses incurred upon realization of such subscription rights may be deducted in order to reduce net taxable income from shares in the same fiscal year. Only 3% of net income from shares qualifying for participation exemption is included in the calculation of ordinary income for Norwegian Corporate Shareholders which is subject to tax at a flat rate of 28%, implying that such net income is effectively taxed at a rate of 0.84%. Negative net income from shares does not reduce ordinary income. 88

91 Net wealth tax The value of shares is included in the basis for the computation of wealth tax imposed on Norwegian Personal Shareholders. Currently, the marginal wealth tax rate is 1.1% of the value assessed. The value for assessment purposes for shares listed on the Oslo Stock Exchange is the listed value as of 1 January in the year of assessment. Norwegian Corporate Shareholders are not subject to wealth tax Foreign Shareholders Taxation of dividends Foreign Personal Shareholders Dividends distributed to shareholders who are individuals not resident in Norway for tax purposes ( Foreign Personal Shareholders ), are as a general rule subject to withholding tax at a rate of 25%. The withholding tax rate of 25% is normally reduced through tax treaties between Norway and the country in which the shareholder is resident. The withholding obligation lies with the company distributing the dividends and the Company assumes this obligation. Foreign Personal Shareholders resident within the EEA for tax purposes may apply individually to Norwegian tax authorities for a refund of an amount corresponding to the calculated tax-free allowance on each individual share (see above). If a Foreign Personal Shareholder is carrying on business activities in Norway and the shares are effectively connected with such activities, the shareholder will be subject to the same taxation of dividends as a Norwegian Personal Shareholder, as described above. Foreign Personal Shareholders who have suffered a higher withholding tax than set out in an applicable tax treaty may apply to the Norwegian tax authorities for a refund of the excess withholding tax deducted. Foreign Corporate Shareholders Dividends distributed to shareholders who are limited liability companies (and certain other entities) not resident in Norway for tax purposes ( Foreign Corporate Shareholders ), are as a general rule subject to withholding tax at a rate of 25%. The withholding tax rate of 25% is normally reduced through tax treaties between Norway and the country in which the shareholder is resident. Dividends distributed to Foreign Corporate Shareholders resident within the EEA for tax purposes are exempt from Norwegian withholding tax provided that the shareholder is the beneficial owner of the shares and that the shareholder is genuinely established and performs genuine economic business activities within the relevant EEA jurisdiction. Foreign Corporate Shareholders who have suffered a higher withholding tax than set out in an applicable tax treaty may apply to the Norwegian tax authorities for a refund of the excess withholding tax deducted. Nominee registered shares will be subject to withholding tax at a rate of 25% unless the nominee has obtained approval from the Norwegian Tax Directorate for the dividend to be subject to a lower withholding tax rate. To obtain such approval the nominee is required to file a summary to the tax authorities including all beneficial owners that are subject to withholding tax at a reduced rate. The withholding obligation in respect of dividends distributed to Foreign Corporate Shareholders and on nominee registered shares lies with the company distributing the dividends and the Company assumes this obligation. 89

92 Capital gains tax Foreign Personal Shareholders Gains from the sale or other disposal of shares by a Foreign Personal Shareholder will not be subject to taxation in Norway unless the Foreign Personal Shareholder holds the shares in connection with business activities carried out or managed from Norway. Foreign Corporate Shareholders Capital gains derived by the sale or other realization of shares by Foreign Corporate Shareholders are not subject to taxation in Norway Taxation of Subscription Rights Foreign Personal Shareholders A Foreign Personal Shareholder s subscription for shares pursuant to a subscription right is not subject to taxation in Norway. Gains from the sale or other transfer of subscription rights by a Foreign Personal Shareholder will not be subject to taxation in Norway unless the Foreign Personal Shareholder holds the subscription rights in connection with business activities carried out or managed from Norway. Foreign Corporate Shareholders A Foreign Corporate Shareholder s subscription for shares pursuant to a subscription right is not subject to taxation in Norway. Capital gains derived by the sale or other transfer of subscription rights by Foreign Corporate Shareholders are not subject to taxation in Norway Net wealth tax Shareholders not resident in Norway for tax purposes are not subject to Norwegian net wealth tax. Foreign Personal Shareholders can, however, be taxable if the shareholding is effectively connected to the conduct of trade or business in Norway Inheritance Tax When shares are transferred by way of inheritance or gift, such transfer may give rise to inheritance or gift 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 tax, 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. Inheritance tax will be applicable to gifts if the donor is a citizen of Norway at the time the gift was given. However, for taxes paid in the donor s country of residence a credit will be given in the Norwegian gift taxes. 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% Duties on Transfer of Shares No stamp or similar duties are currently imposed in Norway on the transfer or issuance of shares in Norwegian companies. 90

93 15 ADDITIONAL INFORMATION 15.1 Material contracts Neither EDB ErgoGroup nor any of the companies in the Combined Group have entered into any material contracts outside the ordinary course of business during the last two years Related party transactions General Prior to completion of the Combination, the Company was part of the Telenor group (owning 51.3% of the Shares) and ErgoGroup was a wholly-owned subsidiary of Posten. The companies financial statements were part of the consolidated financial statements of Telenor and Posten, respectively. As a result of these relations, the Company and ErgoGroup were parties to agreements concerning sale of services to a number of companies in their respective groups of companies. All such transactions are carried out on normal arm s length commercial terms. There have not been given any guarantees related to sales with any of the companies in the Telenor group or in the Posten group Related party transactions for the Company from the period from 2007 and to the date of the Prospectus In 2010, Telenor entered into an agreement with the Company to purchase IT operating services with an estimated gross revenue of NOK 2.1 billion for the period 1 May 2010 to 31 December The services supplied through this contract relate to Telenor's activities in Norway. In the period from 1 January 2010 up until the date of this Prospectus, total revenue from sales to companies in the Telenor group amounted to NOK 460 million. The Company and subsidiaries purchased goods and services from the Telenor group in 2009 totalling NOK 137 million. In 2009, total revenue from sales to companies in the Telenor group amounted to NOK million. The Company and subsidiaries purchased goods and services from the Telenor group in 2009 totalling NOK million. In 2008, total revenue from sales to companies in the Telenor group amounted to NOK million. The Company and subsidiaries purchased goods and services from the Telenor group in 2008 totalling NOK million. In 2007, total revenue from sales to companies in the Telenor group amounted to NOK million. The Company and subsidiaries purchased goods and services from the Telenor group in 2007 totalling NOK million. There has been no provision of losses related to outstanding accounts with Telenor-companies. Telenor Pensjonskasse manages the Company s benefit plan assets Related party transactions for ErgoGroup from the period from 2007 and to the date of the Prospectus Services acquired by different companies in the Posten group from ErgoGroup, comprise operation of IT systems, consultants and other IT-services, while ErgoGroup mainly acquires transportation services and stamps. Up to 14 October 2010, total revenue from sales to companies in the Posten group amounted to NOK million. ErgoGroup standalone and subsidiaries purchased goods and services from the Posten group in the same period amounting to NOK 13.1 million. 91

94 In 2009, total revenue from sales to companies in the Posten group amounted to NOK million. The company and subsidiaries purchased goods and services from the Posten group in 2009 totalling NOK 32.5 million. In 2008, total revenue from sales to companies in the Posten group amounted to NOK 954 million. The company and subsidiaries purchased goods and services from the Posten group in 2008 totalling NOK 19.9 million. In 2007, total revenue from sales to companies in the Posten group amounted to NOK million. The company and subsidiaries purchased goods and services from the Posten group in 2007 totalling NOK 14.5 million Disputes Pending dispute with the Oslo Municipality In February 2009, the Company cancelled a contract with the Oslo Municipality for the supply of applications operating services because of disagreement between the parties on commercial matters. Based on both internal and external evaluations, the Company believes that it has a valid claim for remuneration in respect of the services supplied that are the subject of disagreement between the parties. Legal proceedings are scheduled for September/October Threatened legal proceedings regarding termination of defined benefit pension scheme The Company s defined benefit pension schemes in Norway were closed with effect from 31 December In replacement, the Company made arrangements with the insurance company Vital for a defined contribution pension scheme. Existing employees were free to choose whether to move to the new scheme. New employees appointed after 31 December 2006 are members of the defined contribution scheme. The Board of the Company resolved with effect from 1 September 2009 to terminate the defined benefit pension schemes operated for part of the Norwegian activities, with the transfer of the remaining members to the already existing defined contribution pension scheme arranged through Vital. A number of employees and trade unions have challenged whether the Company had the right to unilaterally decide to make changes to the pension arrangements, and the Company has recently received a complaint to appear before the Conciliation Board (Forliksrådet) Legal proceedings regarding CMA On 22 July 2010, ErgoGroup received a judgment for payment of approximately NOK 12 million for leasing fees in the third and fourth quarter of The Company is considering an appeal of the judgment. Other than this, the Company is not aware of any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened) in the 12 months prior to the date of this Prospectus, which may have, or have had in the recent past, significant effects on the Company s and/or Combined Group financial position or profitability Auditor and advisers The Company s statutory auditor is Ernst & Young AS. SEB Enskilda AS has acted as the Company s financial advisor and Advokatfirmaet Thommessen AS has acted as the Company s legal adviser to the Company in connection with the Combination and the Listing. 92

95 15.5 Expenses Costs attributable to the listing of the New Shares will be borne by the Company. The total costs attributable to the Combination, including listing of the New Shares, are expected to amount to approximately NOK 25 million Statement regarding expert opinions This Prospectus does not refer to any expert opinions Incorporation by reference Oslo Børs Continuing Obligations for Listed Companies allow the Company to incorporate by reference information in this Prospectus that has been previously filed with Oslo Børs in other documents. The Company hereby incorporates the following documents by reference into this Prospectus: its interim report for the six months ended 30 June 2010, available at its annual report for the year ended 31 December 2009, available at its annual report for the year ended 31 December 2008, available at its annual report for the year ended 31 December 2007, available at its information memorandum dated 21 June 2009, available at ErgoGroup s annual report for the year ended 31 December 2009, available at ErgoGroup s annual report for the year ended 31 December 2008, available at ErgoGroup s annual report for the year ended 31 December 2007, available at 93

96 The information incorporated by reference into this Prospectus should be read in connection with the cross-reference list below. All the relevant information can be found on the Company s webpage Section in Prospectus Disclosure requirements of the Prospectus Reference document and link Page (P) in reference document Section 8 and 10 Unaudited interim report EDB interim report for the six months ended 30 June 2010: P 8 Pro forma financial information (Annex II, Section 3.) Section 8 and 10 Audited historical financial information (Annex I, Section 20.1) EDB financial statements 2009: EDB Director s report 2009: P 42 Pro forma financial information (Annex II, Section 3.) EDB financial statements 2008: P 31 EDB Director s report 2008: P 44 P 38 EDB financial statements 2007: P 34 EDB Director s report P 28 Section 8 and 10 Audited historical financial information (Annex I, Section 20.1) ErgoGroup financial statements 2009: ErgoGroup Director s report 2009: P 16 P 12 Pro forma financial information (Annex II, Section 3.) ErgoGroup financial statements 2008: P 16 ErgoGroup Director s report 2008: P 12 ErgoGroup financial statements 2007: P 56 ErgoGroup Director s report 2007: P

97 Section in Prospectus Disclosure requirements of the Prospectus Reference document and link Page (P) in reference document Section 8.9 Audit report (Annex I, Section ) EDB Auditor s report 2009: P 93 EDB Auditor s report 2008: P 85 EDB Auditor s report 2007: P 73 Section 8.9 Audit report (Annex I, Section ) ErgoGroup Auditor s report 2009: P 44 ErgoGroup Auditor s report 2008: P 43 ErgoGroup Auditor s report 2007: P 84 Section 8.2 Accounting policies (Annex I, Section 20.1) EDB Accounting principles (annual report 2009): P Documents on display Copies of the following documents will be available for inspection at EDB ErgoGroup s registered office during normal business hours on Monday to Friday each week (except for public holidays) for a period 12 months from the date of this Prospectus: the Memorandum of Incorporation and the Articles of Association; the audited financial statements of the Company for the years ended 31 December 2009, 2008, 2007; the unaudited financial statements of the Company for the six months and three months ended 30 June 2010; the audited financial statements of ErgoGroup for the years ended 31 December 2009, 2008, 2007; the unaudited financial statements of ErgoGroup for the six months and three months ended 30 June 2010; the audited financial statements of the Company s subsidiaries for the years ended 31 December 2009 and 2008; the International Data Corporation s Semi annual Tracker Nordic by Nils Molin dated in January 2010; and this Prospectus. Copies of this Prospectus may also be obtained from SEB Enskilda AS during the same 12 month period. 95

98 15.9 Confirmation regarding sources The information in this Prospectus that has been sourced from third parties has been accurately reproduced and as far as the Company is aware and able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. The source of third party information is identified where used. 96

99 16 DEFINITIONS AND GLOSSARY OF TERMS Combination... Combined Group or EDB ErgoGroup... The combination of the Company and ErgoGroup through the triangular merger between EDBH and ErgoGroup, completed on 14 October 2010, but with accounting effect on 30 September 2010, with EDBH as the surviving entity and consideration with shares in EDB. EDB ErgoGroup ASA together with its consolidated subsidiaries following completion of the Combination. Company... As the context so requires, (i) for the period from and after 14 October 2010, EDB ErgoGroup ASA, together with its consolidated subsidiaries or (ii) for the period prior to 14 October 2010, EDB Business Partner ASA, together with its consolidated subsidiaries Corporate Governance Code... EDBH... ErgoGroup... Foreign Corporate Shareholders... Foreign Personal Shareholders... IDC... Listing... New Shares... NFSA... Norwegian Corporate Shareholders... Norwegian Personal Shareholders... Norwegian Code of Practice for Corporate Governance published on 21 October 2009 by the Norwegian Corporate Governance Board EDB Business Partner Holding AS, business registration number ErgoGroup AS, which was merged into EDBH as a result of completion of the Combination. Shareholders who are limited liability companies (and certain other entities) not resident in Norway for tax purposes Shareholders who are individuals not resident in Norway for tax purposes International Data Corporation The listing of the New Shares on Oslo Børs. The 81,064,078 shares New Shares in EDB ErgoGroup issued to Posten as consideration in the Combination Norwegian Financial Supervisory Authority Shareholders who are limited liability companies (and certain similar entities) resident in Norway for tax purposes Shareholders who are individuals resident in Norway for tax purposes Norwegian Securities Trading Act... Norwegian Securities Trading Act of 29 June 2007 no. 75 Posten... Posten Norge AS, business registration number Prospectus... Prospectus Directive... SDS... SEB... Shares... This prospectus. Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 Statens Driftssentral. Skandinaviska Enskilda Banken AB (publ). All the outstanding shares of Company from time to time. Telenor... Telenor ASA, business registration number

100 Appendix 1 EDB ErgoGroup ASA articles of association EDB ERGOGROUP ASA ARTICLES OF ASSOCIATION Updated 14 October 2010 Article 1 Company name The name of the company is EDB ErgoGroup ASA. The company is a public limited company. Article 2 Registered Office The company's registered office is in Oslo. Article 3 The object of the Company The company's business is to develop, manage and operate its own and other parties IT solutions, to sell services and consultancy and any activities related to the foregoing. These activities may be carried out by the company itself, by its subsidiaries or through participation in other companies and collaboration with other parties. Article 4 Share capital The share capital is NOK 301,834, consisting of 172,476,762 shares each of nominal value NOK Article 5 Board of Directors The company's Board of Directors shall have a minimum of five and a maximum of eleven members in accordance with the decision of the General Meeting. The Chairman of the Board is elected by the General Meeting. The Board of Directors shall have a Deputy Chairman, who shall be elected by the Board. Article 6 Power of signing The Board of Directors acts on behalf of the company and has power of signing for the company. Power of signing for the company is also vested in the Chairman and one member of the Board of Directors signing jointly. Article 7 General Meeting The business of the Annual General Meeting shall be to consider and vote upon the following matters: - To elect the Chairman of the Board of Directors and the other members of the Board of Directors, together with any deputy members of the Board of Directors - To elect the Chairman and other members of the Election Committee - To adopt the Board of Directors' Report and the Annual Accounts, including the payment of any dividend - Such other matters as by the law or by operation of the Articles of Association are to be dealt with at a General Meeting. The Chairman of the Board of Directors opens the General Meeting and puts forward a proposal for a person to chair the General Meeting. Provided that documents which deal with matters that are to be handled at the General Meeting are made available on the internet site of the company, the requirement of mailing the documents to the shareholders does not apply. This also applies for documents which, according to the law, shall be included in or attached to the notice of the General Meeting. Despite this, each shareholder is entitled to request that the documents which deal with matters that are to be handled at the General Meeting are mailed. Shareholders who intend to attend the General Meeting shall give the company written notice of their intention within a time limit given in the Notice of the General Meeting, which cannot expire earlier than five days before the General Meeting. Shareholders, who have failed to give such notice within the time limit, can be denied admission. A1

101 Article 8 Election Committee The company shall have an Election Committee. The Annual General Meeting shall determine the Mandate of the Election Committee and shall decide the remuneration of the members of the Election Committee. The Election Committee shall submit proposals to the Annual General Meeting in respect of the following matters: - Election of persons to fill vacancies for the Chairman of the Board of Directors and members of the Board of Directors - Any election of persons as deputy members of the Board of Directors - Election of persons to fill vacancies for the Chairman and other members of the Election Committee - The remuneration to be paid to the Chairman, the Deputy Chairman, the members of the Board of Directors and any deputy members of the Board of Directors. The Board of Directors shall submit proposals for the remuneration to be paid to the members of the Election Committee. Article 9 Share option schemes and arrangements for distributing shares to employees The limits to be applied to share option schemes and arrangements for distributing shares to employees shall be approved in advance by the Annual General Meeting. A2

102 Appendix 2 Independent assurance report on pro forma information A3

103 A4

104 Appendix 3 Unaudited interim financial statements for ErgoGroup AS A5

105 A6

106 A7

107 A8

108 A9

109 A10

110 A11

111 A12

112 A13

113 A14

114 A15

115 EDB ErgoGroup ASA Nedre Skøyen vei 26 NO-0276 Oslo Norway /