Annual REPORT 2017 - Data Respons...The estimated fair value of earnout liabilities is NOK 279...

Annual REPORT 2017

2 DATA RESPONS ASA | ANNUAL REPORT 2017

CoCoCoConnnnnnecececececectititivivivvitytytyty

IoT T / / DiDigigitatalilisasatitionon

SoSoSoftftwawarere && AAPPPPss

Security

EmEmbebeddddedeSoSolulutitiononss R&R&DD SeServrviciceses

A COMPLETE TECHNOLOGY PARTNER FOR EMBEDDED AND IOT SOLUTIONS

3DATA RESPONS ASA | ANNUAL REPORT 2017

CONTENTS04 BOARD OF DIRECTORS’ REPORT10 The Board of Directors

11 INVESTOR INFORMATION 14 Key figures

16 FINANCIAL STATEMENTS AND NOTES18 Income statement19 Statement of comprehensive income20 Statement of financial position22 Statement on changes in equity23 Statement of cash flows24 Notes60 Auditor’s report65 Definitons

CoCoCoConnnnnnecececececectititivivivvitytytyty

IoT T / / DiDigigitatalilisasatitionon

SoSoSoftftwawarere && AAPPPPss

Security

EmEmbebeddddedeSoSolulutitiononss R&R&DD SeServrviciceses

A COMPLETE TECHNOLOGY PARTNER FOR EMBEDDED AND IOT SOLUTIONS


Autonomousdriving

Security

EmbeddedSoftware

ConditionMonitoring

STATEMENT ON THE ANNUAL FINANCIAL STATEMENTSIn accordance with the Norwegian Accounting Act § 3.3a the board confirms that the Data Respons ASA fulfils the requirements necessary to operate as a going concern, and the 2017 financial statements have been prepared on the basis of this assumption. Data Respons ASA is a publicly listed company and have prepared the consolidated financial statements for the Data Respons group (“the Group”) for the financial year 2017 in accordance with IFRS (International Financial Reporting Standards) as adopted by the European Union.

Income statementThe report includes comparisons with figures for the same period in 2016 (in parenthesis).

Operating revenue for 2017 was NOK 1 242 million (1 040), a growth of 19 %. EBITDA was NOK 102.5 million (74.4). In 2017, Data Respons expensed transac-tion costs of NOK 5.3 million in relation to the acquisition of EPOS CAT. The order intake for 2017 totalled NOK 1 325 million (1 129). Data Respons delivered a cash flow from operating activities of NOK 78.3 million (79.4). Data Respons achieved record high revenues in 2017 and both business segments performed well. The R&D Services segment experienced growth of 30 %, driven by industry wide trend of digital transition and bolt-on acquisitions. The Solutions segment had growth of 7 %, backed by the continued positive development in the international operations.

Data Respons continues to capitalise on the ongoing megatrends. Companies across all industries are talking about digital platforms, connecting their assets to make them intelligent, implementing artificial intelligence in their operations, and even rethinking their business models. In this market, Data Respons strengthened its position internationally with Germany being the fastest growing geographical region in the Group with 21 % of total revenues in 2017. Sweden remains the larg-est market with 48 % of the revenues, while Norway and Denmark accounted for 21 % and 10 % of group revenues respectively.

Balance sheet, liquidity & cash flow At December 31, 2017, the Group’s book value of total assets was NOK 1 139 million (786). The Group’s equity was NOK 347 million (283), resulting in an equity ratio of 30.4 % (36.0 %). Current assets amounted to NOK 389 million (339) and current liabilities were NOK 405 million (296). At December 31, 2017, the non-current assets amounted to NOK 750 million (447), of which deferred tax assets of NOK 14 million (11) and other intangible assets including goodwill was NOK 727 million (425).

REVENUE BY REPORTING SEGMENT

2017 2016NOK million

R&D Services 728.1 558.3Solutions 516.7 484.2Eliminations -3.0 -2.9Group 1 241.8 1 039.6

KEY FIGURES

2017 2016NOK million

Operating revenue 1 241.8 1 039.6 EBITDA 102.5 74.4 NOCF 78.3 79.4 Order backlog 794 781 Order intake 1 325 1 129 Employees 617 500

Board of Directors’ Report


The Group’s cash flow from operations in 2017 was strong with NOK 78.3 million, and has contributed to a solid financial position at Decem-ber 31, 2017. The cash balance at December 31, 2017 was NOK 51 mil-lion (of which NOK 5 million is restricted).

The Group had interest bearing debt of NOK 170 million, whereof NOK 21 million is current interest bearing debt. The estimated fair value of earnout liabilities is NOK 279 million, of which NOK 86 million is current. Net financial items is negative of NOK 22.9 million mainly because of unrealised re-estimations and currency translations of earnout-liabilities and borrowings in foreign currency.

Financial riskManagement of financial risk is performed by the Group’s central fi-nance department under the guidelines set out by the Board of Direc-tors. The main principle is to minimise exposure to financial risk and reduce the probability for financial losses. The financial risks to which the Group’s financial assets and financial liabilities are exposed are mar-ket risk, credit risk and liquidity risk. The group is exposed to market risk relating to the fair value of future cash flows of financial instruments, such as interest bearing loans denominated in EUR at variable interest rates. These interest-bearing loans will fluctuate to changes in foreign currency or interest rates.

The Group’s exposure to credit risk relates to its financial assets – such as amounts owed by customers and deposits held at banks – and is the risk that the counterparty defaults and does not meet its financial obligation to the Group. Liquidity risk is the risk that the Group will not be able to meet its current and future cash flow and collateral require-ments without negatively and materially affecting the Group’s daily op-erations or overall financial condition and the potential for expansion. For further details on financial risk management, see note 20.

OperationsData Respons is a full-service, independent technology company and a leading player in the industrial digitalization, IoT and embedded solu-tions market. We provide R&D services and smart embedded solutions to OEM companies, system integrators and vertical product suppliers in a range of market segments such as Transport & Automotive, Industrial Automation, Telecom & Media, Space, Defense & Security, Medtech, En-ergy & Maritime, and Finance & Public Sector.

Data Respons ASA is listed on the Oslo Stock Exchange (Ticker: DAT), and is part of the information technology index. The Group has offices in Norway, Sweden, Denmark, Germany and Taiwan.

BUSINESS SEGMENTSR&D ServicesOperating revenue for 2017 was NOK 728 million (558), a growth of 30 %. EBITDA before group costs was NOK 85.3 million (59.1), resulting in an EBITDA margin of 11.7 % (10.6 %). The order intake for 2017 totalled NOK 809 million (621). The order backlog ended on NOK 306 million (201).

The Group experienced record high revenue and profit in R&D Services in 2017. The main drivers for the positive development are bolt-on ac-quisitions in the Nordic and Germany, overall high utilisation and good inflow of new assignments and turnkey R&D projects, especially in the international parts of the organisation. The unique competence base in the embedded, digitalisation and IoT technologies provides increasing op-portunities going forward.

Data Respons continues to leverage its leading position in offering cus-tomers access to highly skilled specialists and project teams with a broad range of expertise from future oriented technology areas like industrial automation, IoT, digitalisation, artificial intelligence and deep-learning, and different embedded solution disciplines. A strong competence platform is strategically important in order to develop new recurring customers and to stand out as a complete engineering technology and R&D Services pro-vider in the market.

In March 2017, Data Respons acquired the remaining 50 % of the shares in TechPeople A/S, a software specialist company in Denmark with head-quarters in Copenhagen. The company has more than 50 employees and associated consultants that are experts in software and application de-velopment, architecture and system design as well as communication for embedded and IoT solutions. The acquisition strengthens Data Respons’ position as a leading player within R&D Services in Denmark.

In November 2017, Data Respons acquired the German company EPOS CAT GmbH (“EPOS CAT”), with headquarters in Ingolstadt. The company will strengthen Data Respons’ footprint in Germany, the largest market in

Data Respons achieved RECORD HIGH revenues and EBITDA for 2017

CHAPTER 1: BOARD OF DIRECTORS’ REPORT

Order intake1 325

Order backlog794

0

100

200

300

400

500

600

700

800

900

MNOK

SOLUTIONS R&D SERVICES

‘‘Revenue1 242

0

100

200

300

400

500

600

700

800

900

1 000

1 100

1 200

1 300

2017

MNOK

201620152013 2014

EBITDA102.5

0

10

20

30

40

50

60

70

80

90

100

110

2015 201620142013 2017

MNOK

0

100

200

300

400

500

600

700

800

900

1 000

1 100

1 200

1 300

1 400

2017

MNOK

201620152013 2014


Europe. EPOS CAT is a highly regarded industrial digitalisation specialist to the automotive industry with strong competence within software technol-ogy. EPOS CAT was included in Data Respons’ consolidated statement of accounts from December 1, 2017.

SolutionsOperating revenue for 2017 was NOK 517 million (484), a growth of 7 %. EBITDA before group costs was NOK 38.8 million (31.3), resulting in an EBITDA margin of 7.5 % (6.5 %) The order intake for 2017 totalled NOK 516 million (508). The order backlog ended on NOK 488 million (581), after the Q2 2017 adjustment of NOK 70 million.

The Group experienced increasing revenues in 2017 mainly driven by the long-term positive development in the international operations. The improved profitability is due to an increased focus on software content in the solutions in combination with a strong cost discipline in the busi-ness units that have been impacted by the continued weak develop-ment in Maritime, Oil & Gas industry and associated sectors. During 2017, the strong growth internationally and the decline in Norway has led to a change in the customer mix towards new customers in other sectors than the Maritime, Oil & Gas industry and to other geographical markets. The order intake follows the same pattern as the revenue, with positive development internationally while the Norwegian business still is weak in the impacted verticals.

Solutions is positioned as the leading provider of smart devices, embed-ded and industrial IoT solutions in the Nordic region. The Group has a strong and increasing base of recurring solution customers and has a solid order backlog. Solution deliveries secure long term and strate-gically important customer relationships and provide a significant po-tential for future growth. In order to meet the continued demand for increased software content, connectivity, higher performance and more functionality, many of our customers focus on strategic partnerships. Our customers can get access to specialist competence, shorter time-to-market and achieve a lower cost of ownership by using Data Respons.

The long-term profitability is expected to improve based on a compe-tence oriented and focused business model. This includes strategic re-lationships with customers in main markets, higher software content, more value add services and global partners.

CORPORATECorporate activities mainly relate to corporate services, management and group finance. The segment reported an operating loss of NOK -21.7 million (-16.0) in 2017. Included in 2017, is NOK 5.3 million in transaction cost in relation to the acquisition of EPOS CAT. The revenues of

NOK 8.2 million (8.0) are related to a charge of corporate management fees. The internal revenues generated in the corporate segment is elimi-nated in the consolidated income statement with corresponding elimi-nations of operating expenses.

MARKET DEVELOPMENTData Respons has a solid and well-balanced customer base within sev-eral industry sectors, based upon our strong competence within indus-trial digitalisation, IoT, and embedded technologies. Our geographical footprint and more than 30 years of experience have given the Group relevant vertical competence within these markets.

The customer list includes world-leading companies such as ABB, Ana-logic, Assa Abloy, Audi, Bombardier, Bosch, Cargotec, Cisco, Cobham, Daimler, Ericsson, EnBW, Hexagon, Hydro, Klarna, Kongsberg Group, Laerdal Medical, Maquet, National Oilwell Varco, Oticon, Raytheon, Rolls Royce, Saab, Scania, Schlumberger, Siemens, Schneider Electric, Statoil, Tele2, TDC, Tomra, Thales, Thermo Fisher Scientific, Volkswagen and Volvo. The number of blue-chip customers is increasing and the Group expects this trend to continue going forward.

There is a large business potential in industrial IoT and the digital trans-formation of our key markets segments Transport & Automotive, Indus-trial Automation, Telecom & Media, Space, Defense & Security, Medtech, Energy & Maritime, and Finance & Public Sector.

The trend with increased automation, digitalisation and everything connected (IoT) fits well with both of the Group’s business units and competence map. We can develop everything from sensor level to the mobile app, making us a good partner for our customers with their digital transition. Areas in which Data Respons is involved:

� Automotive projects like connected car, digital transition of car infotainment systems and telematics solutions

� Smart grid / Smart home solutions � Digital ship and maritime IoT applications � Digital transition of Banking/Insurance infrastructure and systems � Advanced security and communication systems for defence applications

� Projects of transforming telecommunication, mobile structure and connectivity platform towards full IoT accessibility

� Game changing data acquisition sensor systems to improve ef-ficiency of oil exploration

� Future Medtech applications with IoT solution capabilities and a complete digital software platform

� Software-heavy cloud infrastructure systems � Software components and solutions for IoT applications � Software end-to-end systems and digital transition of existing indus-trial products and installations


REVENUE BY INDUSTRY

Transport & Automotive

22 %

Space, Defense & Security

11 %

Industry & Automation

20 %

Energy & Maritime

10 %

Medtech9 %

Finance & Public 7 %

Telecom & Media17 %

Other4 %

EPS0.80

Dividend per share1.00

1.00

0.00

0.50

NOK

2015 2016 201720142012 2013

1.00

0.50

0.00

NOK

20152013 2016 20172014

* Influenced by negative net financial items. See note 15 for details

*


Based on feedback from our customers and partners, the Group expects a growing mar-ket for IoT devices, automation and robotics, advanced communication solutions, con-nected and integrated systems and the use of consumer-based technologies (mobility, digitalisation). In addition, there is a growing demand for cost-effective and robust solu-tions for demanding environmental conditions, areas in which Data Respons has strong competence and experience.

GEOGRAPHIC REGIONSData Respons is located in the Nordic region, Germany and Taiwan. Our business model is based on close cooperation with our customers and understanding their business needs. To facilitate close cooperation, Data Respons believes in having regional offices with skilled specialist engineers in important industrial clusters to build strategic and long-term relationships with our key customers.

Sweden accounted for 48 % of the total revenue and was the largest market area in 2017. The positive development in revenue growth and profitability improvement con-tinued in Sweden. The Swedish part of the Group has built a strong position in several vertical markets such as Transportation/Automotive, Telecom, Defence/Security, Industry and Automation strengthening the ability to win new IoT, digitalisation and embedded solution contracts with large customers. The Group’s R&D Services segment has frame agreements with more than 30 large industrial companies.

Germany continued its strong growth and represents 21 % of the Group’s revenue in 2017. The Group has an increasing number of larger blue-chip customers in vertical markets like Automotive, Smart grid/Smart home, Banking/Finance, renewable energy and Smart Fac-tory. Germany is the largest market in the embedded and IoT industry in Europe, estimated to 1/3 of the total European market or 10 times the size of the Swedish market.

Norway accounted for 21 % of the Group’s revenue in 2017. The business is still im-pacted by the weak development in Maritime, Oil & Gas industry and associated sectors. While the demand situation is not expected to change significantly in the near term, the contraction of the market seems to be bottoming out at year-end. Export-oriented cus-tomers within other sectors had a positive development and are increasingly important going forward. The Group’s focus is to expand the customer base in sectors such as IoT, Industry and Automation, Infrastructure, Telecom, Medical, Public and Defence.

The Danish market represents 10 % of the Group revenue and the Group has strengthen its position in 2017 based on the acquisition of TechPeople. Data Respons also has a Quality and Technology Centre in Taiwan where projects are carried out in cooperation with our Asian partners.

ORGANISATION AND WORK FORCEAt the end of 2017, the Group had 617 employees working at 19 offices in Norway (131), Sweden (265), Denmark (25), Germany (185) and Taiwan (11). The average number of employees at the parent company was 6. The average number of employees in the Group was 518, and there were 74 female employees in the Group at the end of the year, of which 12 are in top or middle management. In Data Respons, the practice is equal pay for work of equal value regardless of gender. Salary and terms of employment for comparable positions are the same for women and men. Recruitment, promotion and development of the employees are based on merit and equal opportunity regardless of ethnicity, colour, religion, gender, age, national origin, sexual orientation, marital status and disability. Discrimination, bullying or harassment is not accepted at Data Respons. Employees are asked to report incidents of such behaviour to their immediate supervisor or the employee representative.

CORPORATE GOVERNANCEData Respons’ organisation is structured and managed in accordance with the Norwe-gian Code of Practice for Corporate Governance. The Board of Directors states that Data Respons has complied with the code throughout 2017. The Board of Directors’ report on corporate governance is available at the Group’s website: www.datarespons.com/investors

ObjectivesThe objectives of the Group is to provide products and services, own and manage stocks and shares within IT-related activities and other activities naturally connected to this.

Nomination committeeData Respons has incorporated in the articles of association that the Group should have a Nomination Committee. The annual general meeting elects the Nomination Committee. The

REVENUE BY SEGMENT

R&D Services

58 % Solutions42 %

REVENUE BY COUNTRY

Norway21 %

Sweden48 %

Denmark10 %

Germany21 %

EMPLOYEES BY SEGMENT

Solutions16 %

R&D Services84 %

EMPLOYEES BY COUNTRY

Norway21 %

Sweden43 %

Taiwan2 %

Germany30 %

Denmark4 %


committee makes proposals to the general meeting regarding the election of shareholder-elected members to the board and proposes remunera-tion of the Board of Directors.

The annual general meeting decides the remuneration of the Nomination Committee. The members of the Nomination Committee should be se-lected to take into account the interests of shareholders in general and the majority of the committee should be independent of the board of direc-tors and senior management. The committee comprises three members, none of which are board members or employees at Data Respons. The committee involves shareholders, board members and the CEO in pro-posing candidates to the Board of Directors. Shareholders can propose candidates through the Group website.

The Nomination Committee proposes the remuneration of the direc-tors for the coming year to the general meeting. Proposals from the Nomination Committee are justified and the proposals are made avail-able on the Group’s website along with the invitation to the AGM. The current members of the Nomination Committee are Bård Brath Ingerø, Lars Martin Lunde and Andreas B. Lorentzen. In addition, Data Respons has an Election Board for the election of employee representatives to the board. The Election Board comprises three members, which are em-ployed at Data Respons.

Board of DirectorsThe Board of Directors is comprised in a way that it can maintain the in-terest of the majority of the Group’s shareholders. Each board member is presented on our website: www.datarespons.com/investors, includ-ing information about age, skills and experience and share ownership in Data Respons. The composition of the Board of Directors complies with the requirement that the Board be independent from the Group management, and independent from major business associates of the Group. Management is not represented on the Board of Directors. At least two of the members of the board elected by shareholders are in-dependent of Data Respons` main shareholders.

The Chairman of the Board of Directors and other Board members are elected by the Data Respons` shareholders in the general meet-ing. Board members are normally elected for a term of one year until the next annual general meeting. Board members are encouraged to own shares in Data Respons. Page 10 of the annual report provides a detailed description of the individual members’ backgrounds, qualifica-tions and shareholdings. The work of the board is governed by detailed rules of procedure. The board has an annual programme of work includ-ing specific topics and fixed items such as the approval of the annual financial statements, interim financial statements and budgets.

The board is also responsible for overall strategy and for setting long-term goals, as well as important decisions about acquisitions, establishment of new operations and major investments. The Board of Directors evalu-ates its performance and competence annually. A board member shall not participate in the discussions or decisions of any matters that are of particular personal or financial interest to them or to any related party. The board has appointed an Audit Committee that provides assistance

to the board in fulfilling their responsibility to the shareholders, potential shareholders and investment community relating to corporate account-ing, reporting practices of the Group, and the quality and integrity of the financial reports of the Group. As part of this process, the external auditors participate in several meetings of the Audit Committee. In car-rying out its responsibilities, the Audit Committee should ensure that the corporate accounting and reporting practices of the Group are in accordance with all legal requirements and are of the highest quality. The Audit Committee comprises two board members.

The board also appoints a Compensation Committee comprising two board members. The Board’s Compensation Committee is a subcom-mittee of the Board of Directors of Data Respons ASA and is independ-ent of management. Its role is to prepare for the board’s discussions of questions involving compensation. The Compensation Committee is responsible only to the full corporate board and its authority is limited to making recommendations to the board.

In 2017, there were 6 directors on the board, 4 of whom were elected by the general meeting and 2 of whom were elected by the employees. In 2017, the board held a total of 11 meetings. In 2017, there were 3 men and 3 women on the board.

INTERNAL CONTROLThe Board of Directors oversee the quality of Data Respons’ risk man-agement and that the internal control functions are aligned with our business objectives and sufficiently takes into consideration the scope and nature of the Group’s operations. The Board of Directors evaluates, at least annually, the Group’s most significant risks and the related in-ternal control measures in place. The Board of Directors oversees and evaluates the Group’s internal control and risk management functions related to financial reporting. The management is responsible for estab-lishing and maintaining adequate internal control of financial reporting.

The objective of the internal control of financial reporting is to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Data Respons’ financial statements for external re-porting purposes in accordance with International Financial Reporting Standards. The Board of Directors evaluates the effectiveness of inter-nal control of financial reporting annually. As part of the audit of the financial statements, the external auditor reports on the effectiveness of internal controls related to financial reporting to the Audit Committee and the Board of Directors at least once every year.

CSRThe Group aspires to be a responsible corporation in terms of labour standards, human rights and environmental protection. The Group has implemented corporate social responsibility policies, which are publicly available on the Group website: www.datarespons.com/us/drcsr/

The CSR policies are in accordance with UN Global Compact Principles and cover governance and integrity management, anti-corruption poli-


Declaration on the financial statementsWe confirm that the financial statements for the year 2017, to the best of our knowledge, have been prepared in accordance with International Financial Reporting Standards (IFRS), gives a true and fair view of the company’s and group’s consolidated assets, liabilities, finan-cial position and results of operations, and that the annual report includes a fair review of the development, results and position of the company and group, together with a description of the most central risks and uncertainty factors facing the group.


THE BOARD OF DIRECTORS OF DATA RESPONS ASA

Høvik, March 20, 2018


cies, environmental protection, human rights and labour standards. CSR is an important focus for Data Respons, and several aspects of our CSR policy are maintained both in internal operations and through the Data Respons’ interactions with external stakeholders.

Concerning suppliers, we have included UN Global Compact 10 princi-ples in contracts with all our major partners. Among our internal initia-tives, CSR policies and procedures are integrated into the internal audit procedures, CSR training is mandatory for new employees and the level of knowledge concerning company CSR policies are implemented as a standard in the annual employee survey.

A whistle-blower regime that secures a potential whistle-blower’s com-plete anonymity is available for all employees. We also have questions on awareness of CSR policy and whistle-blower systems in our internal audit procedures. This includes an active management approach to any knowledge or rumours of bullying, unwelcome or inappropriate coer-cion of a sexual nature. Results for several years have shown a strong awareness across the company. CSR risk analysis is integrated into the agenda of the management review meetings, covering both segment and group top management levels.

Data Respons has operationalised procedures for product recycling design in order to minimise product life cycle environmental impact. We have taken a clear position to cooperate with customers and give sincere answers to surveys and requests regarding Green Compliance and Conflict Minerals. We have contractual requirements with our key suppliers to include Green Compliance standards such as RoHS2 (re-striction of hazardous substances in electronic material) and REACH (registration, evaluation, authorisation and restriction of chemicals).

We are continuously working to reduce emissions from transportation in line with international environmental goals. One goal is to optimize and use transportation by either train or boat, of goods originating from Asia. Further environmental goals for the Group include development of energy efficient products, and decreasing CO2 emissions from per-sonal travel and green purchasing. Environmental goals include delivery of either R&D projects or solutions to a set number of customers within green technology. Specific environmental goals for the Group are meas-ured and revised annually.

We will continue to initiate environmental discussions with our custom-ers to investigate how we can reduce the environmental footprint from our deliveries to the end customer. We will continue to place demands on our suppliers and monitor their progress, and we are certain that our actions and demands will ensure a continued responsible value chain in the future.

We believe that measures undertaken throughout the year has signifi-cantly raised the awareness and knowledge of CSR policies within the firm, as well as contributed to our major partners taking important steps in securing a responsible complete value chain. We are continuously striving for a closer integration of CSR policies into our strategy, day-to-day operations and in contact with stakeholders. Going forward, we

expect improvements and have several actions planned for the immedi-ate future.

SAFETY. HEALTH & ENVIRONMENT (SHE) Data Respons is not regulated by environmental licences or injunctions. The Group does not carry out any activities with a significant negative impact on the external environment. Average sick leave over the course of the year was 1.8 %, and none of the Group’s subsidiaries recorded work related accidents that resulted in serious personal injury or prop-erty damage. The working environment is regarded as good, and im-provement measures are implemented continuously. Employees and management has constructive collaborations, which has a positive im-pact on our operations and deliveries.

ALLOCATION OF THE RESULT FOR THE YEARData Respons ASA achieved a profit before tax of NOK 10.4 million (40.9) in 2017. Profit for the year was NOK 12.7 million (38.0) and total com-prehensive income was NOK 12.7 million (38.0). The Board of Directors propose to distribute a dividend of NOK 1.00 per share for 2017, in total NOK 51.4 million.

Following the resolution by the annual general meeting on April 19, 2018 the DAT share will be traded ex-dividend on April 20, 2018. Taking the pro-posed dividend into consideration, NOK 38.7 million will be transferred from other equity. Before distribution of dividends, the parent company had equity of NOK 270.2 million at December 31, 2017. The equity in the company accounts for 31 % of total assets and is considered adequate based on the extent and risk of the company’s operations.

OUTLOOKThe Group believes that the trend towards a more data-driven society is strong. The need for smarter and more software oriented products, platforms and services is becoming increasingly important for compa-nies across all industries. Higher degree of automation, digitalisation, smarter and connected assets, and implementation of artificial intelli-gence and deep learning are driving forces in all our markets.

Data Respons is well-positioned as a complete technology partner for in-dustrial digitalisation, smarter embedded and IoT solutions in the Nordic and German market. The Group is diversified in a wide range of vertical industries and has a balanced portfolio of blue-chip customers.

Although the market conditions are mixed, we continue to see oppor-tunities in our key markets. Organic growth is the primary objective for Data Respons, however selective acquisitions are continuously consid-ered in the Nordics and Germany. Profitable growth and a strengthened position in key markets are Data Respons’ main focus areas. Based on the current demand from our customers, a focused organisation and a strong order backlog, the Group expects growth, increased profitability and positive cash flow from operations going forward.

Kenneth RagnvaldsenCEO

Åsa Grübb-WeinbergEMPLOYEE REPRESENTATIVE

Narve ReitenMEMBER OF THE BOARD

Ulla-Britt Fräjdin HellqvistMEMBER OF THE BOARD

Janne T. MorstølMEMBER OF THE BOARD

HENRIK KAI ERIKSENEMPLOYEE REPRESENTATIVE

Erik Langaker CHAIRMAN OF THE BOARD


CHAPTER 1: BOARD OF DIRECTORS’ REPORTThe Board of Directors

The board of Directors

Narve Reiten MEMBER OF THE BOARD

Number of shares/options: 469 568/0

Reiten (born 1961), was elected to the board in April 2015. Reiten founded Reiten & Co in 1992 and established the firm’s private equity investment activities in 1996. He has extensive invest-ing and operational experience in the Nordic market. Reiten holds a Master of Business and Economics degree from the Norwegian School of Management and is a Certified Financial Ana-lyst (CFA) from the Norwegian School of Economics and Business Administration. Reiten holds various board positions related to Reiten & Co’s private equity investments.

Ulla-Britt Fräjdin-Hellqvist MEMBER OF THE BOARD Number of shares/options: 10 000/0

Fräjdin-Hellqvist (born 1954) was elected to the Board in November 2011. She holds an MSc in Engineering Physics from Chalmers and has held leading positions at Volvo Cars and the Swedish Confederation of Enterprise. She has extensive board experience as board member at several public, private and state owned companies and is currently Chairman of the Board at Karlstad Innovation Park. Fräjdin-Hellqvist works as an independent contractor and partner.

Erik Langaker CHAIRMAN OF THE BOARDNumber of shares/options: 140 000/0

Erik Langaker (born 1963), was a member of the board of Data Respons from November 2011 to April 2015, and was re-elected in April 2016. He has long experience from Norwegian and international technology and finance. He has broad experience in M&A and early commer-cialisation of technology. Mr. Langaker has extensive board experience from companies like StormGeo Group, Cambridge Medical Robotics Ltd (UK), HitecVision (Private Equity), Camo Soft-ware, Resoptima AS, GeoKnowledge, Link Mobility (listed in Norway), Talkmore (listed in Swe-den), Payex Group and Viken Fibernett.


CHAPTER 1: BOARD OF DIRECTORS’ REPORT The Board of Directors

Janne T. MorstølMEMBER OF THE BOARDNumber of shares/options: 0/0

Morstøl (born 1968) was elected to the board in April 2015. She is the CEO at Maritech Systems, a company providing software solutions to the global seafood industry. Previously she has spent more than 20 years in the broadcast industry and has held several corporate management positions in Nevion and T-VIPS, a company she co-founded. Morstøl holds a MSc. in Electronics from NTNU and holds an MBA from the Norwegian School of Economics and Business Administration (NHH).

Henrik Kai Eriksen EMPLOYEE REPRESENTATIVENumber of shares/options: 1 000/0

Eriksen (born 1979) was elected as an employee representative in September 2017. He holds an MEng in Electrical and Electronic Engineering from the Heriot-Watt University in Edinburgh. Eriksen has worked in Data Respons since 2006 and is currently R&D Manager at the Oslo office.

Åsa Grübb-WeinbergEMPLOYEE REPRESENTATIVENumber of shares/options: 8 000/0

Grübb-Weinberg (born 1955) was elected as an employee representative in April 2010. She holds a degree in social studies from Stockholm University and has broad experience from various technology-based companies. Grübb-Weinberg has worked in Data Respons since 2006 and is currently Account Manager at the Stockholm office.


Investor informationData Respons ASA is listed on the Oslo Stock Exchange (Ticker: DAT), and is included in the information technology index.

TRADING AND TRANSACTIONS 2017 2016Number of transactions 14 666 4 593 Average number of transactions per day 54 19 Number of shares traded (million) 38.6 17.5

SHARE INFORMATION 2017 2016Highest price (NOK) 29.00 19.10Lowest price (NOK) 18.60 10.65 Price at year end (NOK) 23.90 18.30 Market value (NOK million) 1 229.3 900.9 Dividend per share 1.00 1.00

SHAREHOLDER STRUCTURE 2017 2016Number of shareholders 1 151 1 121 Foreign ownership 58.0 % 23.0 %Number of shares outstanding (million) 51.4 49.2

The principal aim of Data Respons’ IR work is to create confidence by means of equal treatment of all investors in terms of access to financial information.

All shares have equal rights and are freely transferable. Data Respons has one class of shares and each share carries one vote.


Financial calendar 19.04.18 Annual General Meeting 19.04.18 Presentation of Q1 18 13.07.18 Presentation of Q2 18 18.10.18 Presentation of Q3 18 31.01.19 Presentation of Q4 18

DECEMBER 2017JANUARY 2017

Share price23.90

18

20

22

24

26

28

30

CHAPTER 2: INVESTOR INFORMATIONShare Information

ABG SUNDAL COLLIERAksel Øverland [email protected]

BERINGER FINANCENicoleta [email protected]

HANDELSBANKENErik [email protected]

KEPLER CHEUVREUXAndreas [email protected]

ANALYST COVERAGE

REGISTRARHANDELSBANKENPB 322 Sentrum011 OsloNORWAY

Attn: Arne Roger [email protected]


CHAPTER 2: INVESTOR INFORMATIONKey figures

NOK 1 000

INCOME STATEMENT 2017 2016 2015 2014 2013

Revenue 1 241 798 1 039 630 963 611 849 226 800 783

Operating expenses 1 139 315 965 255 905 126 791 597 750 387

EBITDA 102 483 74 375 58 485 57 629 50 397

Depreciation 3 840 3 724 3 249 3 051 3 866

Amortisation 8 522 2 213 505 101

Operating profit/loss 90 121 68 438 54 731 54 477 46 530

Profit/loss before tax and non-controlling interest 67 269 68 805 48 514 50 376 44 062

Net profit/loss after tax 45 627 53 010 46 489 40 801 31 685

FINANCIAL POSITIONTotal assets 1 138 565 786 082 514 051 460 300 477 680

Equity 346 616 282 789 305 858 288 136 291 218

Interest bearing loans and borrowings 170 143 95 332

Cash and cash equivalents 50 663 62 895 39 016 42 833 44 143

KEY FIGURESRevenue growth 19.4 % 7.9 % 13.5 % 6.0 % -5.1 %

Gross margin 50.7 % 50.3 % 45.3 % 46.9 % 47.4 %

EBITDA margin 8.3 % 7.2 % 6.1 % 6.8 % 6.3 %

EBIT margin 7.3 % 6.6 % 5.7 % 6.4 % 5.8 %

Net profit margin 3.7 % 5.1 % 4.8 % 4.8 % 4.0 %

Cash flow from operations 78 339 79 440 49 413 51 450 51 760

Return on equity 14.5 % 18.0 % 15.7 % 14.1 % 11.6 %

Return on total assets 9.4 % 10.5 % 11.2 % 11.6 % 10.3 %

Liquidity ratio 96.2 % 114.5 % 151.2 % 163.5 % 163.4 %

Equity ratio 30.4 % 36.0 % 59.5 % 62.6 % 61.0 %

Working capital 40 325 34 347 64 305 62 428 68 752

KEY FIGURES FOR SHARESEarnings per share (EPS), basic (NOK) 0.80 0.95 0.87 0.78 0.61

Cash flow per share from operations (NOK) 1.55 1.62 1.01 1.06 1.07

Dividend per share (NOK) 1.00 1.00 1.00 1.00 0.25

Book equity per share (NOK) 6.74 5.74 6.25 5.93 6.01

Price / book 3.55 3.19 2.14 2.19 1.33

Number of shares as of December 31 51 436 157 49 228 794 48 940 794 48 553 794 48 416 794

Average number of shares 50 626 394 49 113 594 48 790 294 48 500 516 48 330 261

Average number share transactions per day 54 19 7 5 3

Share price as of December 31 (NOK) 23.90 18.30 13.40 13.00 8.00

Market capitalisation (NOK million) 1 229.3 900.9 655.8 631.2 387.3

KEY FIGURES


REVENUE BY SEGMENT

R&D Services

58 % Solutions42 %

KEY FIGURES

NOK million 2017 2016

Operating revenue 1 241.8 1 039.6

EBITDA 102.5 74.4

Order backlog 794 781

Order intake 1 325 1 129

Employees 617 500

GROUPRevenue1 242

20172016201520142013

R&D SERVICES

KEY FIGURES


Operating revenue 728.1 558.3 EBITDA 85.3 59.1 Order backlog 306 201 Order intake 809 621 Employees 517 389

Revenue728

20142013 201720162015

SOLUTIONS

KEY FIGURES


Operating revenue 516.7 484.2 EBITDA 38.8 31.3 Order backlog 488 581 Order intake 516 508 Employees 93 106

Revenue517

20142013 201720162015

Norway14 %

Sweden58 %

Denmark11 %

Germany17 %

REVENUE BY COUNTRY

Norway31 %

Sweden34 %

Denmark8 %

Germany27 %

REVENUE BY COUNTRY


Data Respons places great importance on providing up-to-date information on its activities and financial development to shareholders and other participants in the securities market.

Financial statements


CHAPTER 3: FINANCIAL STATEMENTS AND NOTESIncome statement

GROUP DATA RESPONS ASA

NOK 1 000 Note 2017 2016 2017 2016

Sales revenue 3 1 241 391 1 037 959 8 191 7 981

Share of profit from associated companies 5 407 1 671

Total revenue and other income 1 241 798 1 039 630 8 191 7 981

Cost of goods sold 611 894 516 686

Employee expenses 14,26 447 455 379 347 15 759 10 458

Depreciation 4 3 840 3 724 1 426 1 330

Amortisation 4 8 522 2 213

Other operating expenses 3,7,21 79 966 69 222 14 083 13 486

Operating profit/loss 90 121 68 438 -23 077 -17 293

Group contribution and dividends from subsidiaries 47 701 57 967

Other financial income 15,17,18 36 828 11 731 3 389 3 700

Other financial expenses 15,17,18 -59 680 -11 365 -17 599 -3 454

Profit/loss before tax 67 269 68 805 10 414 40 919

Income tax expense 11 -21 642 -15 795 2 289 -2 887

Profit/loss for the year 45 627 53 010 12 703 38 032

PROFIT ATTRIBUTABLE TO

- Equity holders of the company 40 389 46 828

- Non-controlling interest 5 238 6 182

Earnings per share, basic (NOK) 10 0.80 0.95 - -

Earnings per share, diluted (NOK) 10 0.79 0.95

INCOME STATEMENT


GROUP DATA RESPONS ASANOK 1 000 Note 2017 2016 2017 2016

Profit for the year 45 627 53 010 12 703 38 032

OTHER COMPREHENSIVE INCOMEItems that may subsequently be reclassified to profit or loss

Currency translation differences 38 489 -19 467

Currency translation differences on non-controlling interests 1 623 -2 715

Other comprehensive income 40 112 -22 182 - -

Total comprehensive income 85 739 30 828 12 703 38 032

COMPREHENSIVE INCOME ATTRIBUTABLE TO

- Equity holders of the company 78 878 27 361

- Non-controlling interest 6 861 3 467

CHAPTER 3: FINANCIAL STATEMENTS AND NOTESStatement of comprehensive income

STATEMENT OF COMPREHENSIVE INCOME


NOK 1000 Note 2011 2009 2011 2009

GROUP DATA RESPONS ASANOK 1 000

ASSETS Note 2017 2016 2017 2016

NON-CURRENT ASSETSIntangible assets 4,7 727 228 425 127 137 14

Machinery and equipment 4 8 002 7 897 1 856 2 211

Shares in subsidiaries 5 864 654 534 222

Investments in associates 5 2 786

Other non-current assets 519 901 165 729

Deferred tax assets 11 13 902 10 627 7 838 5 549

Total non-current assets 749 651 447 338 874 650 542 725

CURRENT ASSETSInventories 8,13 29 915 34 677

Trade receivables 9,13,25 284 812 225 624 195

Other current receivables 9,25 23 523 15 549 1 141 1 022

Cash and cash equivalents 16 50 663 62 895 543 388

Total current assets 388 914 338 744 1 880 1 410

Total assets 1 138 565 786 082 876 529 544 135

CHAPTER 3: FINANCIAL STATEMENTS AND NOTESStatement of financial position

STATEMENT OF FINANCIAL POSITION


NoteGROUP DATA RESPONS ASA

NOK 1 000

EQUITY AND LIABILITIES Note 2017 2016 2017 2016

EQUITYIssued capital 10 25 718 24 614 25 718 24 614

Share premium 228 317 176 166 228 317 176 166

Retained earnings 71 854 53 745 16 159 51 933

Equity attributable to equity holders of the company 325 888 254 525 270 194 252 715

Non-controlling interests 6 20 727 28 264

Total equity 346 616 282 789 270 194 252 715

LIABILITIESNON-CURRENT LIABILITIESDeferred tax liabilities 11 36 714 19 410

Interest-bearing loans and borrowings 17 149 534 80 641 149 534 80 641

Other non-current financial liabilities 2,18,19 192 605 106 798 186 059 95 307

Other non-current liabilities 8 633 556

Total non-current liabilities 387 486 207 405 335 593 175 948

CURRENT LIABILITIESCurrent interest-bearing loans and borrowings 17 20 609 14 691 20 609 14 691

Current loans from group companies 25 128 215 59 749

Trade payables 144 918 111 011 4 073 482

Income tax payable 11 14 728 10 167 736

Public duties payable 43 962 42 833 1 856 408

Other current financial liabilities 2,18,19 85 928 39 696 80 354 34 880

Other current liabilities 12,13,25 94 317 77 491 35 636 4 527

Total current liabilities 404 463 295 889 270 742 115 472

Total liabilities 791 949 503 293 606 335 291 420

Total equity and liabilities 1 138 565 786 082 876 529 544 135

CHAPTER 3: FINANCIAL STATEMENTS AND NOTESStatement of financial position

THE BOARD OF DIRECTORS OF DATA RESPONS ASA

Høvik, March 20, 2018

STATEMENT OF FINANCIAL POSITION

Kenneth RagnvaldsenCEO

Åsa Grübb-WeinbergEMPLOYEE REPRESENTATIVE

Ulla-Britt Fräjdin HellqvistMEMBER OF THE BOARD

Janne T. MorstølMEMBER OF THE BOARD

Erik Langaker CHAIRMAN OF THE BOARD

HENRIK KAI ERIKSENEMPLOYEE REPRESENTATIVE

Narve ReitenMEMBER OF THE BOARD


GROUPAttributable to equity holders of the company

NOK 1 000Note Issued

capitalShare

premiumTransl.

differencesOther equity Total

Non-contr. interests

Total Equity

Equity as of January 1, 2016 24 470 173 952 25 679 54 250 278 352 27 506 305 859


Other comprehensive income for the year -19 467 -19 467 -2 715 -22 182

Total comprehensive income for the year - - -19 467 46 828 27 361 3 467 30 828

Capital increase from non-controlling interests - 245 245

Dividends 10 -48 941 -48 941 -2 953 -51 894

Employee share option sheme 14 -4 607 -4 607 -4 607

Issue of share capital 10 144 2 216 2 360 2 360

Equity as of December 31, 2016 24 614 176 166 6 212 47 532 254 525 28 264 282 789


Other comprehensive income for the year 38 489 38 489 1 623 40 112

Total comprehensive income for the year - - 38 489 40 389 78 878 6 861 85 739

Purchase of non-controlling interests 6 -12 291 -12 291 -10 099 -22 390

Dividends 10 -49 663 -49 663 -4 298 -53 961

Employee share option scheme 14 1 184 1 184 1 184

Issue of share capital 10 1 104 52 151 53 255 53 255

Equity as of December 31, 2017 25 718 228 317 44 701 27 152 325 888 20 727 346 616

CHAPTER 3: FINANCIAL STATEMENTS AND NOTESStatement of changes in equity

DATA RESPONS ASA

NOK 1 000Note Issued

capitalShare

premiumOther equity

Total Equity

Equity as of January 1, 2016 24 470 173 952 67 449 265 871

Profit for the year 38 032 38 032

Total comprehensive income for the year - - 38 032 38 032

Dividends 10 -48 941 -48 941

Employee share option sheme 14 -4 607 -4 607

Issue of share capital 10 144 2 216 2 360

Equity as of December 31, 2016 24 614 176 166 51 933 252 715

Profit for the year 12 703 12 703

Total comprehensive income for the year - - 12 703 12 703

Dividends 10 -49 663 -49 663

Employee share option scheme 14 1 184 1 184

Issue of share capital 10 1 104 52 151 53 255

Equity as of December 31, 2017 25 718 228 317 16 159 270 194

STATEMENT OF CHANGES IN EQUITY


CHAPTER 3: FINANCIAL STATEMENTS AND NOTESStatement of cash flows

STATEMENT OF CASH FLOWS

GROUP DATA RESPONS ASANOK 1 000 Note 2017 2016 2017 2016

CASH FLOW FROM OPERATING ACTIVITIESProfit before income tax 67 269 68 805 10 414 40 919

Depreciation and amortisation 4 12 362 5 937 1 426 1 330

Net income from associated companies 5 -407 -1 671

Employee share option scheme 14 1 184 95 1 184 95

Finance cost - net 15 22 852 -367 -33 491 -58 213

Changes in working capital:

- Inventories 4 762 18 416

- Trade receivables -23 567 -6 886 -195 404

- Trade payables 22 655 -2 018 3 591 -949

- Other accruals -18 060 7 978 -419 57

Income tax paid -10 710 -10 849 -736 -3 366

Net cash flow from operating activities 78 339 79 440 -18 226 -19 722

CASH FLOW FROM INVESTING ACTIVITIESAcquisition of subsidiaries, net of cash acquired 2,4,7 -159 297 -92 057 -166 820 -95 884

Dividends from subsidiaries 27 850 30 398

Group contributions received 19 852 27 570

Purchase of machinery and equipment 4 -3 629 -2 189 -946 -890

Interest received 16 504 413 15

Other investing activities 640 -248

Net cash flow from investing activities -162 422 -93 193 -120 313 -38 791

CASH FLOW FROM FINANCING ACTIVITIESProceeds from borrowings 17 69 842 96 934 69 842 96 934

Net change in group internal loans 16 68 466 14 382

Proceeds from issue of shares 10 53 255 2 405 53 255 2 360

Interest paid 15,17 -4 471 -2 546 -3 784 -1 554

Dividends paid to equity holders of the company -49 663 -48 941 -49 663 -48 941

Dividends paid to non-controlling interests -4 298 -2 953

Sale / purchase of treasury shares - Share option scheme 10 -4 702 -4 702

Other financing activities 578 578

Net cash flow from financing activities 65 242 40 197 138 693 58 479

Net change in cash and cash equivalents -18 840 26 444 155 -34

Cash and cash equivalents at the start of the period 62 895 39 016 388 422

Exchange gains/losses on cash and cash equivalents 6 609 -2 566

Cash and cash equivalents at the end of the period 16 50 663 62 895 543 388


NOTES TO THE CONDENSED CONSOLIDATED FINACIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


CHAPTER 3: FINANCIAL STATEMENTS AND NOTESNotes | Note 1

NOTE 1 ACCOUNTING PRINCIPLES

GENERAL INFORMATIONData Respons ASA is a public limited company registered in Norway. The company’s head office is located at Sandviksveien 26, 1363 Høvik, Nor-way. The group’s business operations are described in Note 3. These fi-nancial statements for Data Respons ASA and the consolidated financial statements of the group have been issued in accordance with approval by the Board of Directors on March 20, 2018 and is subject to approval by the annual general meeting on April 19, 2018.

ACCOUNTING PRINCIPLESData Respons’ consolidated financial statements and the company fi-nancial statements of Data Respons ASA for 2017 have been prepared in accordance with International Financial Reporting Standards (IFRSs) and the interpretations set out by the International Accounting Standards Board, as approved by the European Union. The financial statements are based on the historical cost principle except when IFRS requires recognition at fair value. This relates to the measurements of certain financial instruments. The consolidated financial statements have been prepared using consistent accounting principles for similar transactions and events under otherwise similar circumstances.

The notes include disclosures for both Data Respons ASA and the con-solidated financial statements of the group. Not all notes are applicable to Data Respons ASA nor to the consolidated financial statements of the group.

New and amended standards adopted by the groupThe group applied for the first time certain amendments to the stand-ards, which are effective for annual periods beginning on or after January 1, 2017. The group has not early adopted any standards, inter-pretations or amendments that have been issued but are not yet effec-tive. The nature and the impact of each amendment is described below:

Amendments to IAS 7 Statement of Cash Flows: Disclosure InitiativeThe amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). The group has provided the information for both the current and the comparative period in note 17 (interest-bearings loans and borrowings) and note 18 (earn-out liabilities).

There are no other new standards, amendments or interpretations ef-fective for the financial year beginning on January 1, 2017 that have a material impact on the group or parent company financial statements.

New standards and interpretations not yet adoptedAt the date of authorisation of these financial statements, the following standards and interpretations that could affect the group’s consolidated financial statements were issued but not effective:

IFRS 9 Financial instrumentsIn July 2014, the IASB issued the final version of IFRS 9 Financial Instru-ments that replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Except for hedge accounting, ret-rospective application is required but providing comparative informa-tion is not compulsory.

The group plans to adopt the new standard on the required effective date. During 2017, the group has performed a detailed impact assess-ment of all three aspects of IFRS 9. This assessment is based on cur-rently available information and may be subject to changes arising from further reasonable and supportable information being made available

to the group in 2018 when the group will adopt IFRS 9. Overall, the group expects no significant impact on its statement of financial position and equity.

IFRS 15 Revenue from contracts with customer IFRS 15 was issued in May 2014, and amended in April 2016, and estab-lishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new rev-enue standard will supersede all current revenue recognition require-ments under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after January 1, 2018. During 2016, the group performed a preliminary assessment of IFRS 15, which was continued with a more detailed analy-sis completed in 2017.

The group is in business of developing and delivery of custom products/solutions and consultancy services. Contracts with customers in which the sale of custom products/solutions is generally expected to be the only performance obligation, adoption of IFRS 15 are not expected to have any impact on the group’s profit or loss. The group expects the revenue recognition to occur at a point in time when control of the as-set is transferred to the customer, generally on delivery of the custom products/solutions.

The group provides services that are either sold on their own in con-tracts with the customers or bundled together with the sale of custom solutions to a customer. Currently, the group accounts for the product and service as separate deliverables of bundled sales and allocates consideration between these deliverables using the relative fair value approach. Under IFRS 15, allocation will be made based on relative stand-alone selling prices. Hence, the allocation of the consideration and, consequently, the timing of the amount of revenue recognised in relation to these sales would be affected. The group assessed that when IFRS 15 is adopted, the current reporting period would not be adjusted since the group has no significant open combined contracts at December 31, 2017.

Consultancy services (normally based on service agreements with hourly fees) are satisfied over time given that the customer simultaneously re-ceives and consumes the benefits provided by the group. Consequently, under IFRS 15 the group would continue to recognise revenue for these service contracts/service components of bundled contracts over time rather than at a point of time.

IFRS 15 provides presentation and disclosure requirements, which are more detailed than under current IFRS. The presentation requirements represent a significant change from current practice and significantly increases the volume of disclosures required in group’s financial state-ments. Many of the disclosure requirements in IFRS 15 are completely new. In 2017, the group continued testing of appropriate systems, inter-nal controls, policies and procedures necessary to collect and disclose the required information.

The group will implement the new standard on January 1, 2018 and will apply the modified retrospective method, which requires the recogni-tion of the cumulative effect of initially applying IFRS 15, as at January 1, 2018, to retained earnings and not restate prior years. However, since the results of the group’s impact assessment indicates that IFRS 15 is not expected to significantly change the amount or timing of revenue recognition in 2017 or prior periods, there will not be any cumulative adjustment to retained earnings as at January 1, 2018.

IFRS 16 LeasesI IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of



Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclo-sure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemp-tions for lessees – leases of ’low-value’ assets (e.g., personal comput-ers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an as-set representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the deprecia-tion expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

IFRS 16 also requires lessees and lessors to make more extensive dis-closures than under IAS 17. IFRS 16 is effective for annual periods be-ginning on or after January 1, 2019. Early application is permitted, but not before an entity applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective ap-proach. The standard’s transition provisions permit certain reliefs. For the group this implies that current operating leases satisfying the criteria will be recognised with assets and liabilities.

The change will have a positive impact on EBITDA in the group’s consoli-dated income statement. In 2018, the group will continue to assess the potential effect of IFRS 16 on its consolidated financial statements. See note 23 for expensed lease in the group.

CURRENCYTransactions in forreign currencyIn preparing the financial statements, subsidiaries translate transac-tions in foreign currencies at the exchange rate for the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of ex-change at the reporting date. Differences arising on settlement or translation of monetary items are recognised in the income statement. Nonmonetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transaction.

Forreign operationsThe group presentation currency is NOK. This is also the functional cur-rency of the parent company. Each group entity with a different func-tional currency are translated into NOK using the foreign exchange rate at the balance sheet date for balance sheet items and monthly average rates for the income statement. Data Respons uses daily and monthly currency exchange rates as published by Norges Bank for translations into presentation currency.

Foreign exchange differences arising from translation from functional currency to presentation currency are recognised in the statement of other comprehensive income. When a foreign subsidiary is partially or completely disposed of or sold, translation differences related to the subsidiary are recognised in the income statement.

CONSOLIDATIONSubsidiariesThe consolidated financial statements comprise the financial statements of Data Respons ASA and its subsidiaries. Control is achieved when the parent company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, Data Respons ASA con-trols an investee if, and only if, the company has:

� Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)

� Exposure, or rights, to variable returns from its involvement with the investee

� The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption, and when Data Respons has less than a majority of the voting or similar rights of an investee, the compa-ny considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

� The contractual arrangement with the other vote holders of the investee

� Rights arising from other contractual arrangements � Data Respons’ voting rights and potential voting rights

Data Respons re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the company obtains control over the subsidiary and ceases when the company loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the company gains control until the date the company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent company and to the non-controlling interests, even if this results in the non-controlling inter-ests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Data Respons’ accounting policies. All intra-group as-sets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If Data Respons loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

Acquired subsidiaries are recognised in the consolidated financial state-ments based on the historical cost to the parent company. Historical cost includes best estimate on future additional payments based on earn-out agreements. The historical cost is allocated to identifiable as-sets and liabilities in the subsidiary, which are recorded in the consoli-dated financial statements at fair value at the time of acquisition.

Acquisition-related costs are expensed as incurred. Identifiable assets are defined as both tangible fixed assets and intangible assets, exclud-ing goodwill. Any excess value or shortfall in value beyond that which can be attributed to identifiable assets and liabilities is recognised in the balance sheet as goodwill.

Excess values in the consolidated financial statements are depreciated on a straight-line basis over the anticipated economic life of the acquired assets, less any residual value. Goodwill and excess values attributed to intangible assets with an indeterminable useful life are not depreciated, but are tested for impairment in accordance with IFRS.

Associates and joint ventures An associate is an entity over which Data Respons has significant in-fluence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contrac-tually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent


of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. Data Respons’ investments in its associate and joint venture are accounted for using the equity method. Under the equity method, the investment in an associate or a joint ven-ture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in Data Respons’ share of net assets of the associate or joint venture since the acquisition date.

Data Respons presents net income according to the equity method from associated companies and joint ventures as part of the company’s operating profit. Joint ventures are linked closely to the core operations of Data Respons.

By including share of net income in the operating profit a better view of the group’s overall operational performance is provided. The share of revenue from associates and joint ventures is included as a separate line in the condensed consolidated income statement as share of profit from associated companies.

REVENUE RECOGNITIONRevenue is recognised when it is probable that transactions will gener-ate future financial benefits that will pass to the company, and the value of such benefits can be estimated reliably. Sales revenue is recognised net of value added tax and discounts. Data Respons has revenue from products, services or a combination of both:

ProductsRevenue from the sale of products is recognised when delivery has been made and most of the risk and return potential has been transferred.

ServicesRevenue from sale of services are based on service agreements with hourly fees, and are recognised as the service is provided. For fixed price contracts, revenue is recognised according to the stage of completion. The stage of completion is measured as accrued hours in relation to total estimated hours. Estimated loss on contracts will be recognised in the income statement in its entirety in the period when it has been identified.

SolutionsSolutions is recognised in accordance with the principles applicable to services and products described above.

Interest incomeFor all financial instruments measured at amortized cost, interest in-come is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in other financial items in the state-ment of comprehensive income.

DividendsDividends and group contributions are recognised as income when they have been approved by the general meeting of the distributing company.

CURRENT / NON-CURRENT CLASSIFICATIONAn asset is classified as current when it is expected to be realised, or is intended for sale or consumption in the group’s normal operating cycle, is held primarily for the purpose of being traded or it is expected/due to be realised or settled within twelve months after the reporting date.

Other assets are classified as non-current. A liability is classified as cur-rent when it is expected to be settled in the group’s normal operating cycle, is held primarily for the purpose of being traded, if the liability is due to be settled within twelve months after the reporting period or if the group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non- current. Financial instruments are classified based on maturity.

FINANCIAL INSTRUMENTSClassification and recognitionBased on the characteristics of the financial instruments that are recog-nised in the financial statements, the financial instruments are grouped into classes and categories. A financial instrument is defined as any con-tract that gives rise to a financial asset of one entity and a financial liabil-ity or equity instrument of another entity.

The group has classified financial assets and liabilities into the follow-ing classes: trade receivables, other current receivables, cash and cash equivalents, other non-current assets, interest-bearing loans and bor-rowings, other non-current financial liabilities, current loans from group companies, current interest-bearing loans and borrowings, trade paya-bles and other current financial liabilities.

The categorisation of the financial instrument for measurement purpos-es is done based on the nature and purpose of the financial instrument and is determined at the initial recognition. The group has financial as-sets / liabilities classified in the following categories: fair value through profit or loss, loans and receivables and financial liabilities measured at amortised cost.

Financial instruments at fair value through profit and loss consist of earn-out liabilities with contingent considerations. Loans and receiva-bles consist of unquoted non-derivative assets with fixed or determina-ble payments. Financial liabilities measured at amortised cost consist of liabilities that are not a part of the category at fair value through profit or loss. The financial instruments are recognised in the group’s state-ment of financial position as soon as the group becomes a party to the contractual provisions of the instrument, using trade date accounting.

Principles for estimating fair values The estimated fair values of the group’s financial instruments are based on available market prices and the valuation methodologies per class are described below.

Fair value hierarchyThe group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in measuring fair value.

Level 1: Quoted prices (unadjusted) in active markets for identical finan-cial instruments.Level 2: Inputs other than quoted prices included within Level 1 that are observable for assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices).Level 3: Inputs for assets or liabilities that are not based on observable market data (unobservable inputs).

INTEREST-BEARING LIABILITIESInterest-bearing liabilities consist of bank loans and overdrafts, and are classified in the category financial liabilities at amortised cost. These li-abilities are initially measured at fair value net of transaction costs, and are subsequently measured at amortised cost using the effective inter-est-rate method.

RECEIVABLESTrade receivables and other receivables are recognised in the balance sheet at nominal value, less provisions for estimated losses. Provisions for losses are made on the basis of individual assessment of the indi-vidual receivables, as well as past experience.

MACHINERY AND EQUIPMENTMachinery and equipment is recognised in the balance sheet and de-preciated on a straight-line basis over the estimated useful life less any residual value.

Direct maintenance of machinery and equipment is expensed as other operating expenses, while enhancements or improvements that in-



crease the capacity are added to the cost price and depreciated in line with the asset. Depreciation periods and profiles and residual values are assessed annually.

INTANGIBLE ASSETSIntangible assets consist of identifiable intangible assets. Intangible as-sets are recognised in the balance sheet if it is probable that the ex-pected future financial benefits attributable to the asset will pass to the company and the asset’s historical cost can be measured separately and in a reliable manner. Intangible assets with a limited useful life are recog-nised at historical cost, less accumulated amortisation and impairment. Amortisation is charged on a straight-line basis over the estimated use-ful life. The amortisation period and method are reviewed annually. In-tangible assets with an indeterminable useful life are not amortised, but are tested annually for impairment at the balance sheet date, or more frequently if there is an indication of impairment.

GOODWILLThe difference between the historical cost at the time of acquisition and the fair value of net identifiable assets at the time of acquisition are clas-sified as goodwill. Goodwill is recognised in the balance sheet at histori-cal cost, less any accumulated impairments. Goodwill is not depreciated, but is tested annually for impairment at the balance sheet date, or more frequently if there is an indication of impairment. In cases where nega-tive goodwill is identified in connection with business combinations, the purchase price allocation is reassessed before any negative goodwill is recognised in income.

LEASESThe determination of whether an arrangement is (or contains) a lease, is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the ar-rangement is dependent on the use of a specific asset (or assets) and the arrangement conveys a right to use the asset (or assets), even if that asset is (or those assets are) not explicitly specified in an arrangement.

Group as a lesseeA lease is classified at the inception date as a finance lease or an operat-ing lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the group is classified as a finance lease. Fi-nance leases are capitalised at the commencement of the lease at the inception date, fair value of the leased property or, if lower, at the pre-sent value of the minimum lease payments.

A leased asset is depreciated over the useful life of the asset. An operat-ing lease is a lease other than a finance lease. Operating lease payments are recognised as operating expenses in the income statement on a straight-line basis over the lease term.

Group as a lessorData Respons has not entered into arrangements in which the group is a lessor.

REASEARCH AND DEVELOPMENTCosts associated with maintaining software or products are recognised as an expense as incurred. Expenses relating to development activities are recognised in the balance sheet if the following criteria are met;

� Development relates to an idenstifiable, unique product or software controlled by Data Respons

� There is an ability to use or sell the product or software � It is technically and commercially feasible to complete the develop-ment

� The company intends to and has adequate resources to complete the development

� It can be demonstrated how the product or software will generate probable future economic benefits

� The expenditure attributable to the development can be reliably measured.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subse-quent period. Capitalised development expenses are recognised in the balance sheet at historical cost, less any accumulated depreciation and write-downs. Capitalised development expenses are depreciated over the estimated useful life of the asset, which does not exceed three years. Intangible assets under development, however, are not depreciated and are tested for impairment annually or more frequently if there is an in-dication of impairment.

VALUATION OF INVESTMENTS IN SUBSIDIARIESSubsidiaries are valued in accordance with the historical cost method in the parent company’s financial statements. Investments are valued at the historical cost of the shares unless a write-down of the shares has been necessary, in which case they are written down to fair value.

Any contingent consideration, resulting from an investment in subsidiar-ies, is valued at fair value at the acquisition date as part of the business combination. When the contingent consideration meets the definition of a financial liability, it is subsequently remeasured to fair value at each reporting date. Re-estimation effects following changes in estimates of future financial performance of subsidiaries are recognised as part of the cost of the shares in Data Respons ASA.

PROVISIONSProvisions are made in the financial statements where the group has a liability (legal or self-imposed) as a result of a past incident, if it is prob-able that a financial settlement will be made as a result of this liability, and if the amount of such a settlement can be measured reliably. If the impact is significant, the provisions are calculated by discounting the estimated future cash flows by a discount rate before tax that reflects the market’s pricing of the current value of money and, where relevant, risks specifically linked to the liability.

Provisions for restructuring are included if the group has approved a detailed and formal restructuring plan, and the restructuring has either started or been announced. Provisions for loss-making contracts are included when the group’s estimated revenue from a contract is lower than the estimated expenses that will be incurred to fulfil the contrac-tual obligations.

INVENTORIESPurchased inventory is valued at the lower of historical cost (using the FIFO principle) or net realisable value. Write-downs are made for any inventory that is assumed to be obsolete.

PENSION LIABILITIESA defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. Data Respons has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. The group does not have any significant defined benefit pension arrangements. For defined contribution plans, the group pays contributions to pub-licly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The company has no further payment obligations once the contributions have been paid. The contributions are recognised as payroll expenses when they are due. Prepaid contri-butions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

EMPLOYEE SHARE OPTION SCHEMEEmployee share options are calculated at the fair value at the time they are granted and accrued on a linear basis over the vesting period until the earliest exercise date. The employer’s social security contri-



CHAPTER 3: FINANCIAL STATEMENTS AND NOTES| Note 1 - 2

butions linked to vested options are accrued correspondingly over the life-span of the option.

INCOME TAXIncome tax expense in the income statement comprises both income tax payable for the period and changes in deferred tax. Deferred tax is calculated at the current tax rate on the basis of temporary differences between the financial accounting and tax-related values, and tax loss carry forward at the end of the financial year.

Negative and positive temporary differences that reverse or may reverse during the same period are offset and the tax effect of the net amount is calculated. The tax loss carry forward is recognised in the balance sheet as a deferred tax asset if it is considered adequately probable that the losses can be utilised in the future.

CASH AND CASH FLOW STATEMENTThe statement of cash flows has been prepared in accordance with the indirect method. Cash and cash equivalents include cash, bank deposits and other short-term liquid investments that can be converted imme-diately and without any significant exchange rate risk to a known cash amount, and with maturity date less than three months from the pur-chase date.

CONTINGENT LIABILITIES AND ASSETSContingent liabilities are not recognised unless these arise from, and are assessed as a result of business combinations. Material contingent liabilities are disclosed unless the probability of the liability materialising is remote. Contingent assets are not recognised in the annual financial statements.

EVENTS AFTER THE BALANCE SHEET DATENew information received after the balance sheet date relating to the company’s financial position at the balance sheet date has been taken into consideration in preparing the annual financial statements. Events occurring after the balance sheet date that do not affect the compa-ny’s financial position at the balance sheet date, but that will affect the company’s financial position in the future are disclosed in if these are material.

In connection with the preparation of the group’s consolidated financial statements, the management has made assumptions and estimates about fu-ture events and applied judgements that affect the reported values of assets, liabilities, revenues, expenses and related disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The assumptions, estimates and judgements are based on historical experience, current trends and other factors that the group’s management believes to be relevant at the time the consolidated financial statements are prepared.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The group based its assump-tions and estimates on parameters available when the consolidated financial statements were prepared. Accounting estimates may change as a result of future events. Estimates and their underlying assumptions are assessed continuously. Changes to accounting estimates are included in the financial statements for the period in which the change occurs. If the changes also apply to future periods, the impact is spread over the current and future periods. In the process of applying the group’s accounting policies, management has made the following estimates and judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:

Business combinationsAll business combinations are accounted for using the acquisition method, according to the requirements in IFRS 3. The acquisition date is the date on which the acquirer obtains control of the acquiree. All pertinent facts and circumstances surrounding a business combination has been considered in assessing when the group has obtained control. To evaluate whether control has been obtained the group has used the guidance in IFRS 10. The group has used acquisition dates at the beginning or end of a month, the date on which it closes its books, rather than the actual acquisition date during the month. This compiles with the requirements in IFRS 3, cause the events between the convenience date and the actual acquisition date does not result in material changes in the amounts recognised. See note 7 for details on the acquisition dates on the group`s business combinations.

If the business combinations include arrangements for contingent payments to employees or selling shareholders, the group has assessed whether the arrangements are contingent consideration in the business combination or a separate transaction. Understanding the reasons why the acquisi-tion agreement includes a provision for contingent payments, who initiated the arrangement and when the parties entered into the arrangement may be important factors in assessing the nature of the arrangement. If it is not clear whether an arrangement for payments to employees or selling shareholders is part of the exchange for the acquiree or is a transaction separate from the business combination, the group has used the guidance is IFRS 3. The contingent payments in the MicroDoc, EPOS CAT and TechPeople acquisition is concluded to be part of the business combination, as it meets the criteria’s in IFRS 3. See note 7 and 18 for details.

The group has according to IFRS 3 recognised identifiable intangible assets of the acquiree separately from goodwill. An intangible asset has been concluded identifiable if it has met either the contractual-legal criterion or the separable criterion in IAS 38. The group has in their business com-binations assessed if there are any identifiable intangible assets separable from goodwill. The group has used the identification criteria’s in IFRS 3 and assessed if the criteria’s are met based on the nature of the business of the acquiree. The group`s business combinations in 2016 are mainly consulting companies, and the key assets in these companies are often the workforce and customer relationships. The assembled workforce is not considered identifiable according to IFRS 3, so this is recognised as part of goodwill. The group has based on an analysis of the customer base in MicroDoc, EPOS CAT and TechPeople, identified customer relationships as intangible assets. See note 7 for details.

NOTE 2 SIGNIFICANT ESTIMATES AND JUDGEMENTS


CHAPTER 3: FINANCIAL STATEMENTS AND NOTES| Note 2

The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. The valuation of intangible assets have been based on fair value calculations. Cash forecasts are based on projected cash flows based with the following key estimates and judgements; revenue growth, EBIT margin and discount rate. Future revenue growth and EBIT margin is based on the management’s best estimate and judgment. The assumptions used in the valuation of the intangible assets are the same assumptions used in the valuation of the company.

Amortisation of intangible assets are based on management’s estimates of residual value, amortisation method and the useful life of intangible as-sets. The useful life of an intangible asset is based on an estimated length of time the intangible asset can reasonably be used to generate income and be of benefit to the group. The useful lives of intangible assets are reviewed at least annually taking into consideration the factors mentioned above and all other important relevant factors. A change in estimated useful life is a change in accounting estimate, and amortisation plans are adjusted prospectively. The group has estimated the useful life of the customer relationship intangible asset in MicroDoc and EPOS CAT to be 10 years and TechPeople to be 5 years.

Earn-out liabilitiesThe earn-out obligations have been recognised as a contingent consideration, at fair value at the time of the acquisition, based on the facts and circumstances available at that time.

Earn-out liabilities are usually contingent on the future financial performance of subsidiaries, which needs to be estimated when calculating the expected earn-out liabilities. The earn-out liabilities are in the group consilidated financial statements initially recognised and measured at fair value at the date of acquisition, with any subsequent remeasurements recognised in profit or loss. Subsequent remeasurements following the changes in estimates of future financial performance of subsidiaries are recognised as part of the cost of the shares in Data Respons ASA. The determination of the fair value is based on discounted cash flows, and the key assumption is the estimate of the future financial performance of subsidiaries, normally calculated as a multiple of the company’s financial performance measured by EBIT.

At each reporting period, the original estimated fair value of the earn-out obligation needs to be adjusted for two reasons; the net present value of cash payments increases as cash settlements move closer in time, requiring an interest cost to be recognised, and updated estimates of the com-pany’s financial performance may give rise to changes in the expected cash payments needed to settle the earn-out liability.

The interest component of the change in earn-out liability is a financial cost as it relates in its entirety to the financial structure of the acquisition. If the acquisition had been financed by external debt, an equivalent interest cost would be charged by the source of external funding. The second component of the change in the earn-out liability arises due to changes in estimates. The expected financial performance of the company either surpasses or falls short of the expected performance at the time of the acquisition. This leads to a new estimate of the fair value of the obligation. In accordance with IAS 8, the effect of a change in estimates is recognized as financial item in the income statement. See note 18 for details related to calculation of the earn-out liabilities.

Impairment assessmentImpairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calcula-tion is based on a DCF model. The cash flow forecasts are based on budgets approved by the Board of directors for 2018 with a projection for a five-year period and do not include restructuring activities that the group is not yet committed to or significant future investments that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the group. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are disclosed and further explained in note 4.

TaxesDeferred tax assets are recognised to the extent that it is probable that the tax assets will be realised. Significant judgement is required to determine the amount that can be recognised and depends foremost on the expected timing, level of taxable profits as well as tax planning strategies and the existence of taxable temporary differences. The judgements relate primarily to tax losses carried forward in some of the Group’s foreign operations. When an entity has a history of recent losses the deferred tax asset arising from unused tax losses is recognised only to the extent that there is convincing evidence that sufficient future taxable profit will be generated. Estimated future taxable profit is not considered as convincing evidence unless the entity has demonstrated the ability of generating significant taxable profit for the current year or there are certain other events provid-ing sufficient evidence of future taxable profit. Uncertainty related to new transactions and events and the interpretation of new tax rules may also affect these judgements.


NOTE 3 OPERATING SEGMENTS

Operating segments align with internal management reporting to the group’s chief operating decision maker, defined as the group management team. The operating segments are determined based on the underlying operations and geographical location. The business segments reported are R&D Services, Solutions and Corporate. Segment result is defined as EBITDA.

R&D servicesData Respons offers consultancy services for a range of technology related development projects.

SolutionsSolutions segment consist of development and delivery of custom solutions by combining engineering services; with standard embedded computer products from leading partners or deliveries of standard embedded computer service.

CorporateCorporate comprises the activities of corporate services, management and group finance.

OPERATING SEGMENTS 2017

NOK 1 000 R&D Services Solutions Corporate* Eliminations ** Group

External revenue 726 027 515 364 1 241 391

Internal revenue 2 105 894 8 191 -11 191 -

Share of profit from associated companies 407 407

Total revenue 728 133 516 665 8 191 -11 191 1 241 798

Operating expenses 642 842 477 821 29 843 -11 191 1 139 315

EBITDA 85 291 38 844 -21 651 - 102 483

Depreciation 3 840

Amortisation 8 522

Operating profit/loss 90 121

* The item “corporate” includes all transactions recognised in the parent company Data Respons ASA.** The item “eliminations” includes eliminations of intercompany revenue and expenses.


OPERATING SEGMENTS 2016

NOK 1 000 R&D Services Solutions Corporate* Eliminations ** Group

External revenue 556 133 481 827 1 037 959

Internal revenue 2 143 727 7 981 -10 850 -

Share of profit from associated companies 1 671 1 671

Total revenue 558 275 484 224 7 981 -10 850 1 039 630

Operating expenses 499 222 452 939 23 945 -10 850 965 255

EBITDA 59 054 31 285 -15 964 - 74 375

Depreciation 3 724

Amortisation 2 213

Operating profit/loss 68 438


REVENUE 2017

NOK 1 000 R&D Services Solutions Eliminations Group

Norway 104 448 161 404 -960 264 891

Sweden 421 447 175 950 -1 148 596 249

Denmark 80 848 42 387 123 236

Germany 121 390 137 775 -527 258 638

Eliminations -1 259 -364 -1 623

Total revenue 728 133 516 258 -3 000 1 241 391

REVENUE 2016

NOK 1 000 R&D Services Solutions Eliminations Group

Norway 112 606 183 455 -2 070 293 991

Sweden 383 977 162 408 -1 035 545 350

Denmark 57 530 57 530

Germany 61 692 83 258 225 145 175

Eliminations -4 099 11 -4 088

Total revenue 558 275 482 553 -2 869 1 037 959

Revenue is reported to mangement in four geographic regions: Norway, Sweden, Denmark and Germany.

Major customersIn 2017, the top 10 largest customer of the the group accounted for 40 % of consolidated revenues (2016: 53 %). The group does not disclose a breakdown per customer, as sales revenues do not exceed 10 % of the total revenue in the group.



GROUP DATA RESPONS ASA

Good-will

Cust.relation-

ships

Otherintangible

assets

Totalintangible

assets

Machineryand

equipment

Otherintangible

assets

Machineryand

equipmentNOK 1 000

Cost or valuation on January 1, 2016 331 918 4 101 336 019 73 707 233 13 677

Additions 199 234 52 058 3 068 254 360 2 189 890

Translation differences -14 273 -1 193 -10 -15 476 -1 781

Additions/disposals from acq./sold companies 410 410 1 444

Cost or valuation as of December 31,2016 516 879 50 865 7 570 575 313 75 558 233 14 567

Accum. depr. & impairm. as of January 1 2016 145 000 3 257 148 257 66 348 99 11 147

Depreciation / amortisation for the year 1 707 505 2 212 3 724 120 1 209

Additions/disposals from acq./sold companies -421 -421 -2 411

Translation differences 139 139

Accum. depr. and impairm. on Dec. 31, 2016 145 000 1 286 3 900 150 186 67 660 219 12 356

Net book value on December 31, 2016 371 879 49 579 3 670 425 127 7 897 14 2 211

Cost or valuation as of January 1, 2017 516 879 50 865 7 570 575 313 75 558 233 14 567

Additions 215 761 62 945 254 278 960 3 629 248 946

Translation differences 26 959 4 204 31 163 1 708

Additions/disposals from acq./sold companies 1 074

Cost or valuation as of December 31, 2017 759 599 118 014 7 824 885 436 81 969 481 15 513

Accum. depr. and impairm. on January 1, 2017 145 000 1 286 3 900 150 186 67 660 219 12 356

Depreciation / amortisation for the year 6 935 1 587 8 522 3 840 125 1 301

Translation differences -500 -500 2 467

Additions/disposals from acq./sold companies

Accum. depr. and impairm. on Dec. 31, 2017 145 000 7 721 5 487 158 208 73 967 344 13 657

Net book value on December 31, 2017 614 599 110 293 2 337 727 228 8 002 137 1 856

NOTE 4 INTANGIBLE ASSETS, MACHINERY AND EQUIPMENT


GoodwillThere has been two acquisitions in 2017; TechPeople (goodwill of NOK 48 858 thousand) and EPOS CAT (goodwill of NOK 166 903 thousand). See note 7 for further information.

Goodwill is recorded in functional currency and as a result, changes in currency exchange rates affect the value of goodwill. Compared to the cur-rency rate at the acquisition date, goodwill was adjusted upwards by NOK 32 183 thousand at the end of 2017, compared to an upwards adjustment of NOK 5 224 thousand at the end of 2016.

The group has during the year reorganised its reporting structure in MicroDoc. This change in reporting structure changed the composition of the cash-generating unit, to which goodwill has been allocated, and goodwill of NOK 71 250 thousand has been reallocated from R&D Services Germany - MicroDoc to Solutions Germany - MicroDoc. The reallocation was performed in accordance with IAS 36 using a relative value approach.


ALLOCATION OF GOODWILL

NOK 1 000 2017 2016

R&D Services Norway 62 000 62 000

R&D Services Sweden 108 716 103 452

R&D Services Germany - MicroDoc 165 407 177 811

R&D Services Germany - EPOS CAT 166 912

R&D Services Denmark 54 124

Solutions Germany - MicroDoc 27 160

Solutions Germany - Data Respons 21 733 20 068

Solutions Norway 8 548 8 548

Total 614 599 371 879

Impairment test of goodwillGoodwill recognised through the acquisition of companies and units is allocated to the individual cash generating unit, if the cash flows are still identifiable.

The recoverable amount for the cash flow-generating units is calculated based on value in use calculations by using cash flow forecasts for the bu-siness operations. Cash flow forecasts are based on budgets approved by the Board of Directors for 2018, with a projection for a five-year period based on the assumptions below. Cash flows beyond the budgeted period are extrapolated using estimated growth rates for the individual units. Future EBIT margin and cash flow is based on the management’s best estimate and judgment.

The most significant assumptions for calculation of the recoverable amount are as follows:

Discount rate:A calculated WACC of 7.3 % (2016: 9.5 %) after tax has been used as the discount rate for all units. The decrease in WACC from last year mainly relates to a decrease in Beta and the small business premium. CGUs in the group are based in the Nordic / Northern European region, and re-gional differences are estimated to not make a significant impact on the applied WACC rate at the balance sheet date. The corresponding WACC before tax is 9.3 %. The WACC before tax is calculated by determining the effective discount rate that, applied to the undiscounted pre-tax cash flows, results in the (post-tax) VIU amount.

Revenue growth:Historically the group has achieved a strong growth, and management believe that the long-term outlook for specialist consulting services, em-bedded solutions and IoT market is positive. However, as the group is focusing efforts in key markets and downsizing less profitable business units, growth rates are expected to vary among the cash generating units. Expected growth rates in 2018 vary between -2 % and 11 % (2016: -4 to 20 %). Beyond 2018, the group expects growth rates at 2.5 % to 10 % (2016: 2 % to 15 %) in the forecasted four-year period.

Extrapolated growth rate:The growth rate beyond five years has been set at 2 % (2016: 0 %) for all units.

EBIT margin:The group has used EBIT margins that reflect management’s best estimate of earnings potential in the period. EBIT margins applied in the calcula-tion of value-in-use range from 5 % to 30 % (2016: 5 to 22 %), dependant on past financial performance and expected profit margins for each unit.

SensitivitiesNo indications of impairment losses have been identified for R&D Services Norway, R&D Services Sweden, R&D Services Germany - MicroDoc, R&D Services Germany - EPOS CAT, R&D Services Denmark, Solutions Germany - MicroDoc, Solutions Germany - Data Respons and Solutions Norway in 2017. The recoverable amounts of these cash generating units exceed their carrying amounts by significant margins. A sensitivity analysis has been performed for these CGUs, in order to determine if a reasonable change in key assumptions would cause the units’ carrying amounts to exceed their recoverable amounts. A reduction in the estimated growth rate by 5 percentage points, a reduction in the estimated EBIT margin by 1 percentage point or an increase in WACC after tax by 1 percentage point would not lead to impairment losses in either of the units.

Other intangible assetsIntangible assets consist of intangible assets recognised at fair value upon the acquisition of companies and capitalised development expenses. Customer relationship is related to the acquisitions of MicroDoc in 2016 and EPOS CAT and TechPeople in 2017. See note 7 for further information. Intangible assets are amortised over the life of the asset, which is estimated to be from 2.5 to 10 years.

Machinery and equipmentBoth the parent company and group use straight-line depreciation for all machinery and equipment. The estimated economic life of machinery and equipment is 3 to 5 years.




GROUP

Company Owned by Date of acquisition

Registered office

Total DAT ownership and voting interest

SUBSIDIARIESData Respons Norge AS Data Respons ASA 27.11.2001 Bærum 100 %

Data Respons Asia AS Data Respons ASA 17.02.2000 Bærum 100 %

Digitas AS Data Respons ASA 01.04.2006 Bærum 100 %

Data Respons AB Data Respons ASA 27.11.2001 Stockholm (SE) 100 %

Sylog Sverige AB Data Respons ASA 06.07.2007 Stockholm (SE) 83 %

Data Respons A/S Data Respons ASA 27.11.2001 København (DK) 100 %

Microdoc Computersysteme GmbH Data Respons ASA 26.09.2016 Munich (DE) 100 %

Data Respons GmbH Data Respons ASA 17.02.2005 Karlsruhe/Erlangen (DE) 100 %

EPOS CAT GmbH Data Respons ASA 30.11.2017 Ingolstadt (DE) 100 %

TechPeople A/S Data Respons ASA 01.03.2017 Herlev (DK) 100 %

Professional Finder AB Sylog Sverige AB 06.07.2007 Stockholm (SE) 83 %

Sylog Väst AB Sylog Sverige AB 26.09.2014 Göteborg (SE) 83 %

Sylog Öst AB Sylog Sverige AB 10.06.2015 Linköping (SE) 66 %

iWise AB Sylog Sverige AB 05.12.2013 Stockholm (SE) 83 %

YABS AB Sylog Sverige AB 08.10.2013 Stockholm (SE) 66 %

South Pole Consulting AB Sylog Sverige AB 26.01.2016 Stockholm (SE) 83 %

Atero AB Sylog Sverige AB 27.10.2016 Linköping (SE) 83 %

Sylog Epic AB Sylog Sverige AB 31.08.2016 Stockholm (SE) 66 %

Microdoc Software GmbH Microdoc Computersysteme GmbH 26.09.2016 Munich (DE) 100 %

NOTE 5 SUBSIDIARIES

DATA RESPONS ASACompany Currency Issued capital Ownership Book value (NOK 1000)

SUBSIDIARIESData Respons Norge AS NOK 1 387 100 % 163 153

Data Respons Asia AS NOK 1 100 100 %

Digitas AS NOK 100 100 %

Data Respons AB (SE) SEK 100 100 % 24 457

Sylog Sverige AB (SE) SEK 100 83 % 64 477

Data Respons A/S (DK) DKK 2 277 100 % 22 050

Data Respons GmbH (DE) EUR 100 100 % 52 056

Microdoc Computersysteme GmbH (DE) EUR 52 100 % 258 463

EPOS CAT GmbH EUR 50 100 % 222 554

TechPeople A/S DKK 500 100 % 57 443

Total subsidiaries 864 654

The impairment test performed as of December 31, 2017 did not result in any impairment of book value of the investments. The impairment tests for book value of subsidiaries in the Data Respons ASA company accounts were based on the same assumptions as used in the impairment test of goodwill in the group accounts. See note 4 for further information.

TechPeople A/SOn March 1, 2017, Data Respons entered into an agreement to acquire the remaining 50 % shares of TechPeople. Prior to the acquisition, Data Respons owned 50 % of the shares in TechPeople and the investment was, in the financial statements, classified as a joint venture according to IFRS 11 and was accounted for by using the equity method. The share of profit in the two month period was NOK 407 thousand. From March 1, 2017, TechPeople’s income statement and balance sheet has been fully consolidated in the consolidated accounts of Data Respons. See note 7 for further information.



NOK 1 000 2017 2016

Current assets 138 593 133 664

Non-current assets 45 281 41 217

Current liabilities 126 336 110 332

Non-current liabilities 8 700 14 752

Revenue 376 183 330 426

Profit or loss 21 087 15 347

Dividends paid to non-controlling interests 4 298 2 953

On May 31, 2017, Data Respons entered into an agreement with QTOB AB to acquire 8 % of the shares in Sylog Sverige AB and thereby increasing Data Respons’ shareholding in Sylog Sverige AB from 75 % to 83 % of the shares. Changes in ownership interests in subsidiaries has been recorded as an equity transaction in accordance with IFRS 10. The difference between the changes of the minority interests (NOK 10 099 thousand) and the estimated consideration (NOK 22 390 thousand) has been booked directly to equity (NOK 12 291 thousand).

After the transaction date, Data Respons controls 83 % of shares and voting rights in the subsidiary Sylog Sverige AB, and non-controlling interests hold the remaining 17 %. Sylog Sverige AB owns 100 % of shares and voting rights in Professional Finder AB, iWise AB, Sylog Väst AB, South Pole Consulting AB and Atero AB. Sylog Sverige AB also owns 80 % of shares and voting rights in YABS AB, Sylog Öst AB and Sylog Epic AB.

Profit allocated to non-controlling interests were NOK 5 238 thousand in 2017 (2016: NOK 6 182 thousand). At the end of the year the equity attri-butable to the non-controlling interests, amounted to NOK 20 727 thousand (2016: NOK 28 264 thousand).

The non-controlling interests in Sylog Sverige AB is considered material and the financial information are provided below:

NOK 1 000 2017 2016Current assets 20 463 31 925

Non-current assets

Current liabilities 7 381 20 015

Non-current liabilities 730

Revenue 43 876 47 790

Profit or loss 2 198 8 480

Other non-controlling interests are not considered material on a standalone basis and the summarised financial information are provided below:

Includes fully owned subsidiaries of Sylog Sverige AB: Professional Finder AB, Sylog Väst AB ,iWise AB, South Pole Consulting AB and Atero AB. Also includes YABS AB, Sylog Öst AB and Sylog Epic AB which are owned 80 % by Sylog Sverige AB.

NOTE 6 NON CONTROLLING INTERESTS


NOTE 7 BUSINESS COMBINATIONS

On March 1, 2017, Data Respons entered into an agreement to acquire the remaining 50 % of the shares in TechPeople. TechPeople was estab-lished in 2010 and specialises in Software and application development, architecture and system design as well as communication for embedded and IoT solutions. The acquisition strengthens Data Respons’ position as a leading player within R&D Services in Denmark. TechPeople had a revenue of DKK 51 580 thousand for 2016, resulting in a growth of 49 % and a profit before tax of DKK 3 547 thousand. By the end of 2016, the company had approximately 50 consultants in R&D assignments at its customers. As of December 31, 2016, total assets in TechPeople was DKK 15 121 thousand. Prior to the acquisition, Data Respons owned 50 % of the shares in TechPeople A/S and the investment was, in the financial state-ments, classified as a joint venture according to IFRS 11 and is accounted for by using the equity method. From March 1, 2017, TechPeople’s income statement and balance sheet has been fully consolidated in the consolidated accounts of Data Respons. TechPeople had revenues of NOK 95 552 thousand for 2017 and a profit before tax of NOK 8 495 thousand. It was agreed an upfront consideration at the closing of the agreement, where the seller received 434 000 newly issued shares in Data Respons ASA through a private placement. In addition, the seller will receive annual earn-out payments depending on the company`s actual EBIT for 2017, 2018 and 2019. Annual earn-out payments will be due for payment in Q2 the year following the respective earn-out year.

The acquisition of TechPeople is considered as a business combination achieved in stages under IFRS 3 and Data Respons has remeasured its pre-viously held equity interest in TechPeople at its acquisition date fair value. See note 15 for details. It is assessed that the carrying amount of assets and liabilities in TechPeople represents its fair value at the acquisition date March 1, 2017. Based on the final purchase price allocation, the gross purchase price for 100 % of the shares is estimated to be NOK 54 797 thousand. Book value of the equity is NOK 1 472 thousand, which gives an excess value of NOK 53 326 thousand. The excess value has been allocated to customer relationship intangible asset, deferred tax on excess value and goodwill. Goodwill of NOK 48 858 thousand comprises the value of expected synergies arising from the acquisition, assembled workforce and deferred tax on excess values.

On November 30, 2017, Data Respons announced the acquisition of EPOS CAT, a German software technology company and R&D Services company with 100 employees and with headquarters in Ingolstadt. The company will strengthen Data Respons’ footprint in Germany, the largest market in Europe. EPOS CAT is a highly regarded industrial digitalisation specialist to the automotive industry with strong competence in SW technology. EPOS CAT had a turnover of NOK 91 371 thousand in 2017 and an EBIT of NOK 24 667 thousand, equal to an EBIT margin of 27%. The transaction is struc-tured as an earn-out with an upfront consideration of EUR 9 800 thousand due at closing and an additional amount based on the company’s EBIT performance over the next 3 years (2018, 2019 and 2020). The total consideration for the purchase will be determined by the average EBIT during the next 3 years multiplied by 7.0 (however not lower than the upfront amount of EUR 9 800 thousand). The initial cash consideration will be funded by a combination of a new 7-year bank loan of NOK 85 000 thousand and existing cash reserves. The second part of the consideration consists of variable earn-out payments, and will be funded with issue of shares and cash flow from operations. The earn-out payments will be due in Q2 the year following the respective earn-out year with the first payment on April 30, 2019, the second payment on April 30, 2020 and the last payment on April 30, 2021. EPOS CAT is consolidated into Data Respons’ consolidated financial statements from December 2017. Total transaction costs booked in 2017 is NOK 5 281 thousand. EPOS CAT had revenues of NOK 10 842 thousand in December 2017 and an EBIT of NOK 4 363 thousand.

Based on the preliminary purchase price allocation, the gross purchase price is estimated to be NOK 223 010 thousand. Book value of the equity is NOK 16 054 thousand, which gives an excess value of NOK 206 956 thousand. The excess value have been allocated to customer relationship intangible asset (NOK 57 218 thousand), deferred tax on excess value (NOK 17 165 thousand) and goodwill (NOK 166 903 thousand). Goodwill comprises the value of expected synergies arising from the acquisition, assembled workforce and deferred tax on excess values. The fair values of the identifiable assets and liabilities of the TechPeople and EPOS CAT as of the date of the acquisition was:

NOK 1 000 EPOS CAT TechPeople

Machinery and equipment 20 149 15 470

Other current receivables 5 552 6 865

Other assets 3 527 176

Total assets 29 229 22 511

Trade payables 516 10 741

Other current liabilities 1 655 4 573

Accrued wages and salaries 5 677 1 775

Other current liabilities 5 326 3 949

Total liabilities 13 175 21 039

Net identifiable assets 16 054 1 472

Total identified excess value 206 956 53 326

Intangible assets 57 218 5 727

Deferred tax on excess value -17 165 -1 260

Goodwill 166 903 48 858



On May 31, 2017, Data Respons entered into an agreement with QTOB AB to acquire 8 % of the shares in Sylog Sverige AB, and thereby increasing Data Respons’ shareholding in Sylog Sverige AB from 75 % to 83 % of the shares. It has been agreed that a consideration of NOK 19 862 thousand is paid in Data Respons shares through a private placement at the closing of the agreement with an additional earn-out payment in 2018, depending on the growth in the company’s actual EBIT for 2017. See note 18 for furter details regarding re-estimation of the earn-out liability as at December 31, 2017. Changes in ownership interests in subsidiaries has been recorded as an equity transaction in accordance with IAS 27. The difference between the changes of the minority interests (NOK 10 099 thousand) and the estimated consideration (NOK 22 390 thousand) has been booked directly to equity (NOK 12 291 thousand).

NOK 1000GROUP DATA RESPONS ASAGOODS PURCHASED FOR RESALE

NOK 1 000 2017 2016 2017 2016

Historical cost 30 684 35 701

Write-down and provisions for obsolescence -769 -1 024

Book value 29 915 34 677 - -

Value of pledge (inventory as collateral) 80 000 80 000

NOTE 8 INVENTORIES

AGING ANALYSIS OF TRADE RECEIVABLESCarrying amount Not due Number of days past due date

NOK 1 000 0-30 31-60 61+

Trade receivables as of December 31, 2017 285 314 230 550 36 527 6 528 11 709

Trade receivables as of December 31, 2016 226 363 173 386 46 706 1 913 4 357

NOK 1000GROUP DATA RESPONS ASA

NOK 1 000 2017 2016 2017 2016

Trade receivables 285 314 226 363 195

Provisions for impairment of receivables -502 -739

Trade receivables, net 284 812 225 624 195 -

Accrued revenue 962 531

Prepayments 11 903 11 159 1 133 1 029

Other current receivables 10 659 3 858 9 -7

Total other receivables 23 523 15 549 1 141 1 022

Total receivables 308 335 241 172 1 337 1 022

Provisions as of January 1 739 1 470

Realised losses - 91 -75

Provisions for the period -146 -656

Provisions as of December 31 502 739 - -

NOTE 9 TRADE AND OTHER RECEIVABLES

Losses on trade receivables are classified as other operating expenses in the income statement. Maximum credit risk is represented by the row Total receivables.

CHAPTER 3: FINANCIAL STATEMENTS AND NOTES| Note 7 - 8 - 9



The registered share capital of Data Respons ASA consisted of 51 436 157 shares with a par value of NOK 0.50 as of December 31, 2017. All shares have equal rights and are freely transferable. Data Respons has one class of shares and each share carries one vote. A total of 38.6 million shares were traded and 14 666 transactions were registered at the Oslo Stock Exchange during the year. At the end of the year Data Respons ASA had 1 151 Norwegian shareholders and 94 foreign shareholders. Foreign shareholders owned 58 % of the shares. During 2017, no treasury shares were bought or sold. The company did not own any treasury shares at the end of the year.

I March 2017, 434 000 new shares were issued in connection with the acquistion of 50 % share of TechPeople.

In May 2017, 173 000 new shares were issued in connection with the company’s employee share saving scheme. Data Respons has implemented an employee share saving scheme directed at all employees in Norway, Sweden, Denmark and Germany where each employee may subscribe a maximum 10 % of the employee’s yearly gross fixed salary. The subscription price was set to NOK 20.19 per share, representing a 25 % discount to market value. The market value was NOK 26.92, equal to the weighted average traded price of the Data Respons share on the Oslo Stock Exchange the last 10 trading days, in the period of 28th of April 2017 to 12th of May 2017. A total of 72 employees subscribed to 173 000 new shares.

In May 2017, 724 877 new shares were issued at a price of NOK 27.40 per share in connection with the increase in shareholding in Sylog. In May 2017, 875 486 new shares were issued at a price of NOK 23.11 per share in connection with the earn-out payment in 2017 to the former owners of MicroDoc.

NOTE 10 SHARE CAPITAL, SHAREHOLDERS, EARNINGS PER SHARE

LIST OF 20 LARGEST SHAREHOLDERS AS OF DECEMBER 31, 2017

Shareholder Ordinary shares Proportion of ownership

HANDELSBANKEN FONDER AB 4 446 395 8.64 %

MP PENSJON PK 4 315 055 8.39 %

DANSKE BANK A/S 3 144 376 6.11 %

NORDEA NORDIC SC FUNDS 2 669 746 5.19 %

FONDITA NORDIC MICRO CAP 2 350 000 4.57 %

VPF ALFRED BERG GAMBAK 2 332 038 4.53 %

SKANDINAVISKA ENSKILDA S.A. 1 741 431 3.39 %

CLEARSTREAM BANKING S.A. 1 542 657 3.00 %

VARNER INVEST AS 1 500 000 2.92 %

HERALD INVESTMENT TRUST 1 465 287 2.85 %

HSBC TTEE MARLB EUR TRUST 1 346 826 2.62 %

VPF DNB SMB 1 297 024 2.52 %

SKANDINAVISKA ENSKILDA FI. 1 265 090 2.46 %

NEW YORK MELLON SA/NV 1 178 137 2.29 %

METZLER EURO SMALl/MICRO CAP 1 065 100 2.07 %

STOREBRAND VEKST VPF. 1 056 776 2.05 %

JPMORGAN CHASE N.A. LONDON 928 248 1.80 %

STOREBRAND NORGE I VPF 840 325 1.63 %

DANSKE INVEST NORGE VEKST 729 250 1.42 %

SKANDINAVISKA ENSKILDA SWE 708 310 1.38 %

Total 20 largest 35 922 071 69.84 %

Total others 15 514 086 30.16 %

Total no. of shares 51 436 157 100.00 %

SHARE ISSUES IN 2017Date Type Subscription price Number of shares After new issue

02.03.2017 Capital increase 22.70 434 000 49 662 794






The Board of Directors has been granted power of attorney to increase the company’s share capital by a maximum of NOK 2 000 000 through the issue of maximum 4 000 000 new shares, each with a par value of NOK 0.50. The authorisation is valid until the annual general assembly in 2018 and can be used by the board in connection with acquisitions of new companies within the company’s core business and strategy, in connection with the company’s employee share option scheme or to raise cash. The company’s shareholders have waived their pre-emptive subscription rights in accordance with Section 10-4 of the Norwegian Public Limited Companies Act. The board may decide that the share deposit shall take the form of assets other than cash or rights to incur particular obligations for the company pursuant to Section 10-2 of the Norwegian Public Limited Liability Companies Act.

The Board of Directors has been granted power of attorney to purchase up to 800 000 treasury shares with an equivalent nominal value of NOK 400 000. The amount which may be paid per share is to be minimum NOK 1.00 and maximum NOK 20.00. The board is free to choose the method by which the purchase or sale is executed. The authorisation is valid until the annual general assembly in 2018. The purpose of the authorisation is to give the company the facility to implement buy-back of shares with subsequent cancellation, in order to optimise the company’s capital structure. Furthermore, the company wishes to be able to use such authorisation to purchase and sell treasury shares in connection with complete or partial settlement for acquired companies or in connection with the company’s employee share saving scheme .

Earnings per shareThe earnings per share ratio is calculated by dividing the profit/loss for the year attributable to the company’s shareholders by a time-weighted average of outstanding ordinary shares throughout the year, less the company’s treasury shares.

The diluted earnings per share ratio is based on the same calculation as above, however, it also takes into account potential shares that have been outstanding during the period and will have a diluting effect, i.e. reduce the earnings per share for the ordinary shares. The company has only one category of potential shares that can result in dilution: share options. Potential ordinary shares are treated as dilutive only if their conversion to ordinary shares would decrease profit per share or increase loss per share from continuing operations attributable to ordinary equity holders.

NOK 1 000 2017 2016

Profit/loss for the year attributable to the equity holders of the company 40 389 46 828

Weighted average number of outstanding shares (1 000) 50 626 49 114

Effect of dilution:

-Employee share option scheme 480

Weighted average number of outstanding shares, diluted (1 000) 51 106 49 114

Earnings per share, basic 0.80 0.95

Earnings per share, diluted 0.79 0.95

CALCULATION OF TIME-WEIGHTED SHARES

Date Number of shares Number of days Weighted number of shares

01.01.2017 49 228 794 61 8 364 781

02.03.2017 49 662 794 88 12 173 610

30.05.2017 51 436 157 210 30 088 003

359 50 626 394

DividendsOn the annual general meeting on April 27, 2017, the dividend for 2016 of NOK 1.00 per share was approved. The dividend of NOK 49.7 million was paid in May 2017 and the DAT share traded ex dividend on April 28, 2017. The Board of Directors propose to distribute a dividend of NOK 1.00 per share for 2017. Following the resolution by the annual general meeting on April 19, 2018 the DAT share will be traded ex dividend on April 20, 2018.

POWER OF ATTORNEY TO ISSUE SHARES AND PURCHASE TREASURY SHARES

Passed Type Year issued

Maximum share limit

Shares issued/purchased 2017

Remaining number of shares Duration

27.04.2017 Capital increase 2017 4 000 000 1 773 363 2 226 637 Until 19.04.2018

27.04.2017 Treasury shares 2017 800 000 800 000 Until 19.04.2018



NOK 1 000 2017 2016 2017 2016

INCOME TAX EXPENCE COMPRISESIncome tax payable in Norway 736 736

Income tax payable outside Norway 26 823 14 817

Total income tax payable 26 823 15 552 - 736

Change in deferred tax in Norway -3 817 47 -2 289 2 152

Change in deferred tax outside Norway -1 365 197

Total change in deferred tax -5 182 244 -2 289 2 152

Unrecognised change in deferred tax

Total income tax expense/(revenue) 21 642 15 795 -2 289 2 888



NOK 1 000 2017 2016 2017 2016

SUMMARY OF TEMPORARY DIFFERENCESReceivables -461 -476

Other current assets -709 -926

Non-current assets -9 454 -7 548 -1 326 -1 126

Receivables in foreign currency -2 109 -2 109 -2 109 -2 109

Pensions 143 59

Other current liabilities -65 -296

Group contributions* -13 237 -27 570

Total -12 656 -11 295 -16 672 -30 805

Untaxed reserves Sweden 18 591 20 638

Tax loss carryforward -82 594 -50 798 -17 408

Total positive /(negative) temporary differences -76 658 -41 456 -34 080 -30 805

Deferred tax asset at current tax rate 20 614 14 820 7 838 5 549

Of which, deferred tax assets not recognised** 6 712 4 194

Deferred tax assets in the balance sheet 13 902 10 627 7 838 5 549

Deferred tax liability at current tax rate 36 714 19 410

Deferred tax liability in the balance sheet 36 714 19 410 - -

* In accordance with IFRS, group contributions are entered as income in the parent company the year after the allocation for tax purposes in the subsidiaries.** 2017 amount includes unrecognised tax loss carryforward in Data Respons GmbH of NOK 10 824 thousand (NOK 3 247 thousand at 30 % tax rate) and Data Respons A/S of NOK 15 745 thousand (NOK 3 465 thousand at 22% tax rate) which, due to uncertainties regarding the amount, was not reported as basis for deferred tax.

The deferred tax assets in the balance sheet relate primarily to the recognised tax loss carryforward in Data Respons A/S in Denmark and other temporary differences in the Norwegian group companies. These companies have shown healthy profits, and it is expected that it will be possible to utilise the deferred tax assets within a reasonable timeframe. The tax losses can be carried forward indefinitely.

NOTE 11 INCOME TAX



NOK 1 000 2017 2016 2017 2016

Prepayments from customers 11 888 399

Accrued wages 40 246 44 403 3 850 2 956

Accrued expenses 42 183 32 689 31 786 1 571

Total other current liabilities 94 317 77 491 35 636 4 527



NOK 1 000 2017 2016 2017 2016

CALCULATIONS OF TAX BASE FOR THE YEARProfit/loss before tax 67 269 68 805 10 414 40 919

24 % tax (2016: 25 %) 16 144 17 201 2 499 10 230

TAX EFFECT OF:Permanent differences 3 777 400 -5 129 -7 574

Change in not-recognised deferred tax assets -247 -783

Adjustment from previous years -145 -148

Differences in tax rates 1 880 -938

Changes in tax rates 232 63 341 231

Income tax expense (revenue) for the year 21 642 15 795 -2 289 2 887

Effective tax rate 32 % 23 % -22 % 7 %

NOTE 12 OTHER CURRENT LIABILITIES

The Board of Directors, group management and other key employees are required to report any potential related party transactions.

In addition to the ordinary business transactions between group companies there have been two signifcant related party transactions in 2017; acquistion of shares in TechPeople and Sylog.

On March 1, 2017, Data Respons entered into an agreement to acquire remaining 50 % share of TechPeople. Prior to the acquisition, Data Respons owned 50 % of the shares in TechPeople and the investment was, in the financial statements, classified as a joint venture according to IFRS 11 and is accounted for by using the equity method. Please refer to note 7 for further details.

On May 31, 2017, Data Respons entered into an agreement with QTOB AB (non-controlling interest) to acquire 8 % of the shares in Sylog Sverige AB, and thereby increasing Data Respons’ shareholding in Sylog Sverige AB from 75 % to 83 % of the shares. Please refer to note 7 for further details.

All transactions within the group are based on ordinary commercial terms using the arm’s length principle. For the parent company, transactions with group companies consist mainly of fees for group management services. See note 14 for information on the remuneration of group manage-ment and Board of Directors, as well as note 25 for balances between Data Respons ASA and other group companies.

NOTE 13 RELATED PARTY TRANSACTIONS


NOK 1000GROUP DATA RESPONS ASAEMPLOYEE EXPENSES

NOK 1 000 2017 2016 2017 2016

Wages and salaries 326 517 278 093 10 350 8 886

Social security tax 70 426 61 213 2 670 1 050

Pension expenses, defined contribution scheme 23 053 21 251 182 100

Other benefits 27 459 18 790 2 558 422

Total 447 455 379 347 15 759 10 458

NOTE 14 EMPLOYEE EXPENSES, REMUNERATION AND LOANS

The average number of FTEs during the financial year was 6 (2016: 5) in the parent company. The average number of FTEs in the group was 518 (2016: 482) and there were 617 (2016: 500) employees at the end of the year. There were 74 (2016: 68) female employees in the group, 12 (2016: 10) of whom were top or middle managers.

2017 Salaries and fees Pensions

Other benefits in kind

Total remuneration

No. of shares

No. of options

Kenneth Ragnvaldsen, CEO 3 582 193 73 932 112 731 3 768 856 282 000 200 000

Jørn Toppe, COO 1 736 626 72 636 79 952 1 889 214 164 937 90 000

Rune Wahl, CFO 2 614 574 75 132 242 610 2 932 316 81 000 150 000

Erik Langaker, Chairman of the Board, member of the M&A Committee and Compensation Committee 465 000 465 000 140 000

Narve Reiten, Board member, Chairman of the Audit Committee and member of the M&A Committee 255 000 255 000 469 568

Janne Morstøl, Board member and member of the Audit Committee 220 000 220 000

Ulla-Britt Fräjdin Hellqvist, Board member and member of the Compensation Committee 210 000 210 000 10 000

Åsa Grübb-Weinberg, Board member, employee representative 50 000 50 000 6 000

Henrik Kai Eriksen Board member, employee representative(from August 2017) 50 000 50 000 1 000

Knut Skumsvoll Board member, employee representative (until August 2017)

Bård Brath Ingerø, Chairman of the Nomination committee 25 000 25 000

Lars Martin Lunde, Nomination committee member 20 000 20 000

Andreas Berdal Lorentzen, Nomination committee member 20 000 20 000

SHARES, OPTIONS AND REMUNERATION TO THE CEO, KEY EMPLOYEES, BOARD OF DIRECTORS AND NOMINATION COMMITTEE




2016 Salaries and fees Pensions

Other benefits in kind

Total remuneration

No. of shares

No. of options

Kenneth Ragnvaldsen, CEO 2 715 618 72 396 1 938 198 4 726 212 272 000

Jørn Toppe, COO 1 907 647 77 700 940 840 2 926 187 214 937

Rune Wahl, CFO 2 034 395 75 573 1 070 836 3 180 804 72 000

Ole Jørgen Fredriksen, Chairman of the Board and member of the Audit Committee 420 000 420 000 225 544

Narve Reiten, Board member and Chairman of the Audit Committee 230 000 230 000

Janne Morstøl, Board member and Chairman of the Compensation Committee 200 000 200 000

Ulla-Britt Fräjdin Hellqvist, Board member and member of the Compensation Committee 195 000 195 000 10 000

Erik Langaker, Board member 190 000 190 000

Åsa Grübb-Weinberg, Board member, employee representative 30 000 30 000 6 000

Knut Skumsvoll, Board member, employee representative 30 000 30 000

Bård Brath Ingerø, Chairman of the Nomination committee 25 000 25 000

Lars Martin Lunde, Nomination committee member 20 000 20 000

Andreas Berdal Lorentzen, Nomination committee member 20 000 20 000

SHARES, OPTIONS AND REMUNERATION TO THE CEO, KEY EMPLOYEES, BOARD OF DIRECTORS AND NOMINATION COMMITTEE



Remuneration of the Board of Directors On April 27, 2017 the annual general meeting decided that the Board of Directors shall be remunerated with a fixed salary of NOK 420 000, NOK 200 000 and NOK 50 000 for respectively the Chairman of the board, shareholder elected board members, and employee representatives. Based on the current composition of the Board of Directors this amounts to a total of NOK 1 120 000 in remuneration.

In addition, an annual compensation of NOK 30 000 shall be paid to the Chairman of the Audit Committee and NOK 20 000 for the committee mem-bers. For the M&A Committee, a compensation of NOK 25 000 shall be paid to each of the two members. For the Compensation Committee, NOK 20 000 shall be paid to the Chairman of the committee and NOK 10 000 shall be paid to other members. For the Nomination committee, NOK 25 000 shall be paid to the leader and NOK 20 000 shall be paid to other members.

No loans or guarantees have been provided to the Board of Directors, key employees, other employees or their related parties. There are no share-holder agreements in Data Respons ASA.

Board’s guidelines and main principles for the stipulation of salaries and other remuneration to key employees

ObjectivesThe objective of the remuneration policy for the CEO and other senior management is to provide a competitive compensation that contains incentives to work for profitable growth and long term value creation for the shareholders within the scope of the group’s adopted values and strategies. The Board of Directors is in general positive to compensation that ensures convergence of the financial interests of the executive personnel and the shareholders.

AuthorityThe Board shall determine the salary and other remuneration to the CEO. The CEO shall determine the salaries and other remuneration for other senior management. The Board shall establish guidelines for remuneration to other senior management. Any remuneration to other senior management beyond the guidelines shall be approved by the Board of Directors. Any share-based incentive plans should always be approved by the Board.

Guidelines and principles for remunerationThe CEO and other senior management shall be paid a competitive fixed basic salary and other administrative benefits in line with similar positions in comparable companies in Norway. In addition to the fixed salary, the CEO and other senior management have annual variable salaries through bonus agreements in which payments are dependent on achieving goals for profitability improvement, growth and cash flow targets for the company. For the CEO and other senior management the variable salary shall be a maximum of 50 % of the fixed base salary.

The group has established a share savings programme for employees in order to create dedication for value creation and ensure convergence of the financial interests of the employees and the shareholders. The CEO and other senior management are invited to participate in the programme on equal terms as other employees. Employees subscribe to shares at a maximum of 25 % discount to market value at the time of share subscription. The Board of Directors decide on the on the maximum amount of shares that can be subscribed by employees and the discount. 173 000 new shares were issued under this programme in 2017, refer to note 10 for further information.

In order to create a long term incentive for value creation and attract and retain key personnel, the company had a share option scheme for the CEO and other senior management in accordance with the approved framework at the annual general meeting held in 2016. The share option scheme with a duration of three years was established to give the company’s management incentives to create value for the shareholders.

The CEO and other senior management are covered by the prevailing defined contribution pension schemes on the same terms as other employees. The group does not have any defined benefit pension or insurance schemes. The CEO is entitled to 12 months’ salary after termination or amendment of his position/employment. Other senior management have a mutual notice period of up to six months and no special arrangements.

Employee share option scheme for senior managementOn April 14, 2016 the annual general meeting of Data Respons ASA approved a share option program for 5 employees in top management positions with a total scope of 1 440 000 options. The options will be issued in 3 equal parts over a 3 year period. The share options can only be exercised after the three year period following the annual general meeting in 2019. The strike price for one third of the share options granted shall be determined annually equal to market value at the beginning of each vesting period.

In May 2016 the strike price for the first vesting period was set to NOK 11.31. In May 2017 the strike price for the second vesting period was set to NOK 27.37. The strike price for the third vesting period will be set in May 2018. Strike prices for options granted are adjusted for subsequent divi-dend payments. The first 480 000 options was issued in May 2017. 480 000 more options will be issued in May 2018 and the last 480 000 options under this agreement will be issued in May 2019, totalling 1 440 000 options.



NOK 10002017 2016

Average Exercise price Options Average

Exercise price Options

NOK 1 000

As of January 1 - - 6.52 800

Granted 11.31 480 13.02 400

Exercised -5.52 -800

Expired -13.02 -400

Dividend adjustment -1.00 -1.00

As of December 31 10.31 480 - -

GROUP DATA RESPONS ASAREMUNERATION TO THE AUDITORNOK 1 000 2017 2016 2017 2016

Auditing services 1 261 1 108 265 232

Other certification services 78 40 63

Tax advice 26 26

Other non-auditing services 641

Total remuneration 2 007 1 173 328 232

The fair value of the options granted to employees has been calculated using the Black & Scholes’ valuation model for options. The most important input data included the share price of NOK 11.30 when granted, estimated exercise price of NOK 11.31, estimated volatility of 31.62 % based on the share prices over a period of one year leading up to the issue date and a risk-free interest rate of 0.51 %. The cost is calculated based on the total of 1 440 000 options to be issued and will be accrued over the vesting period with deductions for the estimated number of forfeited options.

In accordance with IFRS 2, the fair value of options granted to employees is accrued over the vesting period and in 2017 a total of NOK 1 184 thousand was expensed related to options granted to the CEO and key employees.

MOVEMENTS IN THE NUMBER OF OUTSTANDING SHARE OPTIONS AND THE ASSOCIATED WEIGHTED AVERAGE EXERCISE PRICES ARE AS FOLLOWS:

Remunerations to the auditor are presented net of VAT.



NOK 1 000 2017 2016 2017 2016

FINANCIAL INCOME

Interest income on cash reserves 504 400 15

Realised / unrealised currency exchange gain 6 905 11 301 3 389 3 685

Other financial income* 29 419 31

Other financial income 36 828 11 732 3 389 3 700

FINANCIAL EXPENSESInterest expenses on interest bearing loans & borrowings 5 101 3 089 4 309 2 313

Interest expenses on earn-out liabilities 7 881 2 522

Realised / unrealised currency exchange loss 31 480 4 771 11 864

Other financial costs ** 15 219 982 1 427 1 142

Other financial expenses 59 680 11 365 17 599 3 454

Net financial items -22 852 367 -14 210 245

NOTE 15 NET FINANCIAL ITEMS


*Includes changes on estimates on earn-out liabilities and a remeasurement of its previously held equity interest in TechPeople at its acquisition-date fair value. The acquisition of TechPeople is considered as a business combination achieved in stages under IFRS 3. In a business combination achieved in stages, the acquirer shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognise the resulting gain or loss, if any, in the income statement. Data Respons has remeasured its previously held equity interest in TechPeople at its acquisition-date fair value and have in March 2017 recognised the resulting gain of NOK 26 524 thousand as a financial item in the income statement.

**Other financial costs includes changes on estimates on earn-out liabilities.



NOK 1 000 2017 2016 2017 2016

Cash and bank deposits 50 663 62 895 543 388

– of which restricted -4 622 -4 660 -543 -388

Unrestricted cash and cash equivalents 46 041 58 234 - -

Unutilised overdraft facilities 40 000 40 000 40 000 40 000

Unutilised other credit facilities 32 000 33 655 32 000 33 655

Cash reserve 118 041 131 889 72 000 73 655

NOTE 16 CASH AND CASH EQUIVALENTS

Data Respons has established a corporate account system in which Data Respons ASA is the corporate account holder, while the other group com-panies are subaccount holders. The bank can set off any withdrawals or deposits against each other, so that the net position represents the balance between the bank and Data Respons ASA. As of December 31, 2017 there was a net positive balance in the corporate account system of NOK 7 473 thousand. The overdraft limit for the corporate cash pool system is NOK 40 000 thousand, and the group had unrestricted cash outside the cash pool of NOK 38 568 thousand.

In addition to the NOK 40 000 thousand overdraft limit, Data Respons has a long term revolving credit facility of NOK 70 000 thousand as of Decem-ber 31, 2017; of which NOK 38 000 thousand has been utilised in the acquisition of MicroDoc. Unutilised long term revovling credit facility as of December 31, 2017 is NOK 32 000 thousand.

The total unutilised cash reserve for the group at December 31, 2017 is NOK 118 041 thousand. Restricted cash consists of employee’s tax deduc-tions of NOK 4 622 thousand.

The NOK 40 000 thousand credit facility is available to the company until March 2021 and the revolving credit facility is available to the company until September 2021.

There are financial covenants which may restrict the use of the credit facilities. The equity-to-asset ratio should be minimum 30 % for the group. As of December 31, 2017 the ratio was 30.4 %. Furthermore, there is a covenant requirement that the net interest bearing debt divided by a 12 months rolling consolidated EBITDA should not exceed 3.0. As of December 31, 2017, the ratio was 1.2 (2016: 0.4).




NOK 1 000 2017 2016 2017 2016

Credit facility 132 143 59 317 132 143 59 317

Revolving credit facility 38 000 36 015 38 000 36 015

Total interest-bearing loans and borrowings 170 143 95 332 170 143 95 332

Of which:

Current liability portion 20 609 14 691 20 609 14 691

Non-current liability 149 534 80 641 149 534 80 641

NOTE 17 INTEREST-BEARING LOANS AND BORROWINGS

As of December 31, 2017, Data Respons has interest-bearing loans and borrowings of NOK 170 143 thousand (2016: NOK 95 332 thousand). The interest-bearing loans and borrowings consists of a EUR credit facility of EUR 4 800 thousand and a NOK revolving credit facility of NOK 38 000 thousand related to the funding of the acquisition of MicroDoc in 2016 and a NOK credit facility of NOK 84 357 thousand related to funding of the acquisition of EPOS CAT in 2017.

The interest-bearing loans and borrowings are measured at amortised cost. The EUR credit facility has a biannual repayment profile over 7 years. The EUR credit facility has a floating interest rate, EURIBOR with a fixed margin of 2.4 %. The NOK revolving credit facility has a biannual interest repayment profile over 4 years with a lump-sum down payment after 4 years in 2021. The NOK revolving credit facility has a floating interest rate, NIBOR with a fixed margin of 2.0 %. The NOK credit facility has a quarterly repayment profile over 7 years and a floating interest rate, NIBOR with a fixed margin of 2.6 %. Data Respons has used the inventory and accounts receivable in Data Respons Norge AS as collateral for interest bearing loans and borrowings.

Data Respons is subject to certain covenants as part of its credit facilities and revolving credit facility. The equity-to-asset ratio should be minimum 30 % for the group, and as of December 31, 2017, the ratio was 30.4 % (36.0 %). Furthermore, there is a covenant requirement that the net interest bearing debt divided by a 12 months rolling consolidated EBITDA should not exceed 3.0. As of December 31, 2017, the ratio was 1.2 (2016 0.4).

NOK 1000GROUP

NOK 1 000 2017 2016

January 1 95 332 -

CASH CHANGES

- Net change in borrowings 69 842 96 934

- Interest payments -2 924

NON CASH CHANGES- Translation differences 4 404 -2 867

- Accrued interest and fee 3 489 1 266

December 31 170 143 95 332

Classified as current interest-bearing loans and borrowings 20 609 14 691

Classified as non-current interest-bearing loans and borrowings 149 534 80 641


CHANGES IN INTEREST-BEARING LOANS AND BORROWINGS




NOK 1 000 Fair Value Level Category 2017 2016 2017 2016

Current earn-out liabilities 3 FVPLT * 85 928 39 696 80 354 34 880

Non-current earn-out liabilities 3 FVPLT * 192 605 106 798 186 059 95 307

Total 278 533 146 494 266 413 130 187

NOTE 18 FAIR VALUE MEASUREMENTS

*FVPLT: Fair value through profit and loss

Data Respons has earn-out liabilities that are initially recognised and measured at fair value at the date of acquisition, with any subsequent remea-surements recognised in profit or loss. The fair value of the earn-out liabilities are calculated by estimating the future financial performance of subsidiaries, normally calculated as a multiple of the company’s financial performance measured by EBIT. The earn-out liabilities are classified in the statement of financial position as disclosed in the table above. There are no significant differences between total carrying value and fair value. Re-estimation effects following changes in estimates of future financial performance of subsidiaries are recognised in the income statement in the group and capitalised as part of the cost of the asset in Data Respons ASA.

As the financial performance of MicroDoc for 2017 surpassed the expected performance at the time of the acquisition, Data Respons has re-estimated the earn-out liability at December 31, 2017, resulting in an increase of the earn-out liability of NOK 13 491 thousand. As the financial performance of Sylog for 2017 fell short of the expected performance at the time of the acquisition of the additional 8 % of the shares, Data Respons has re-estimated the earn-out liability at December 31, 2017, resulting in an decrease of the earn-out liability of NOK 2 368 thousand. As the financial performance of South Pole Consulting for 2017 fell short of the expected performance at the time of the acquisition, Data Respons has re-estimated the earn-out liability at December 31, 2017, resulting in an decrease of the earn-out liability of NOK 521 thousand. The financial performance of Atero, EPOS CAT and TechPeople was according to the expected performance at the date of acquisition, and the earn-out liabilities have therefore not been re-estimated at December 31, 2017.

A interest cost related to the earn-out liabilities of NOK 7 881 thousand (2016: NOK 2 522 thousand) has been expensed as a financial item in the income statement. The earn-out obligations are usually settled over specified time period, where the previous owners receive additional payments based on the performance of the acquired company at a specified time period after the acquisition. Earn-out obligations as of December 31, 2017 relate to the acquisition of Atero, South Pole Consulting, MicroDoc, EPOS CAT and TechPeople, see note 7 for further details. The additional pay-ments for Atero and South Pole Consulting will be made in cash by the acquiring company Sylog Sverige AB. Remaining earn-out obligations from the acquisitions will be settled in remaining payments in 2018, 2019 and 2020. The additional payments for MicroDoc, EPOS CAT and TechPeople will be made in cash by the acquiring company Data Respons ASA. Remaining earn-out obligations from the acquisitions will be settled during 2018 - 2021. Se note 20 for maturity table.

NOK 1000GROUP

NOK 1 000 2017 2016

January 1 146 494 4 651

RECOGNISED IN THE INCOME STATEMENT DURING THE YEAR

- Interest cost 7 881 2 512

- Re-estimation 10 586 34

RECOGNISED IN THE BALANCE SHEET DURING THE YEAR

- Paid during the year -23 159 -5 992

- Issue of shares -20 230

- Additions from acquired companies 146 635 150 900

- Translation differences 10 326 -5 610

December 31 278 533 146 494

Classified as current earn-out liabilities 85 928 39 696

Classified as non-current earn-out liabilities 192 605 106 798

CHANGES IN EARNOUT LIABILITIES



Valuation technique

Significant unobservable inputs Range Sensitivity of the input to the fair value

Earn-out liabilities DCF method Long-term growth rate for cash flows for sub-sequent years

2017: 2.5 % - 10 % 2016: 2.5 % - 20 %

1% (2016: 1%) increase (decrease) in the growth rate would result in an increase(decrease) in fair value by NOK 5 600 thousand (2016: NOK 4 500 thousand)

Long-term operating margin

2017: 5 % - 30 % 2016: 5 % - 22 %

1% (2016: 1%) increase (decrease) in the margin would result in an increase (decrease) in fair value by NOK 14 800 thousand (2016: NOK 10 500 thousand)

Discount rate 2017: 4-5 % 2016: 5 %

1% (2016: 1%) increase(decrease) in the Discount rate would result in a decrease(increase) in fair value by NOK 4 100 thousand (2016: NOK 2 400 thousand)

DESCRIPTION OF SIGNIFICANT UNOBSERVABLE INPUTS TO VALUATION

The significant unobservable inputs used in the fair value measurements categorised within Level 3 of the fair value hierarchy, together with a quantitative sensitivity analysis as at 31 December 2017 and 2016 are as shown below:



2017 GROUP DATA RESPONS ASA

NOK 1 000

Fair value through profit or

loss

Loans and

receivables

Financial liabilities

at amorti-sed cost

Total carrying amount


loss

Loans and

receiva-bles


at amorti-sed cost


FINANCIAL ASSETSOther non-current assets 519 519 165 165

Trade receivables 284 812 284 812 195 195

Other current assets 23 523 23 523 1 141 1 141

Cash and cash equivalents 50 663 50 663 543 543

Total financial assets - 359 518 - 359 518 - 2 044 2 044

FINANCIAL LIABILITIESInterest-bearing loans and borrowings 149 534 149 534 149 534 149 534

Other non-current financial liabilities 192 605 192 605 186 059 186 059

Current loans from group companies - 128 215 128 215 Current interest-bearing loans and borrowings 20 609 20 609 20 609 20 609

Trade payables 144 918 144 918 4 073 4 073

Other current financial liabilities 85 928 85 928 80 354 80 354

Total financial liabilities 278 533 - 315 061 593 594 266 413 128 215 174 216 568 844

NOTE 19 FINANCIAL ASSETS AND LIABILITIESFinancial instruments and their carrying amounts recognised in the consolidated statement of financial position at 31 December, as defined by IAS 39, are presented below. There are no significant differences between total carrying value and fair value.

2016 GROUP DATA RESPONS ASA

NOK 1 000


loss

Loans and

receivables


at amorti-sed cost



loss

Loans and

receiva-bles


at amorti-sed cost


FINANCIAL ASSETSOther non-current assets 901 901 729 729

Trade receivables 225 624 225 624 -

Other current assets 15 549 15 549 1 022 1 022

Cash and cash equivalents 62 895 62 895 388 388

Total financial assets - 304 968 - 304 968 - 2 139 2 139

FINANCIAL LIABILITIESInterest-bearing loans and borrowings 80 641 80 641 80 641 80 641

Other non-current financial liabilities 106 798 106 798 95 307 95 307

Current loans from group companies - 59 749 59 749

Current interest-bearing loans and borrowings 14 691 14 691 14 691 14 691

Trade payables 111 011 111 011 482 482

Other current financial liabilities 39 696 39 696 34 880 34 880

Total financial liabilities 146 494 - 206 343 352 837 130 187 59 749 95 814 285 750



NOTE 20 FINANCIAL RISK MANAGEMENTFinancial risks are continuously monitored and analysed. Financial risk includes credit risks, liquidity risks, currency risks and interest rate risks. Measures are taken to mitigate these risks and reduce the probability for financial losses. Management of financial risk is performed by the group’s central finance department under the guidelines set out by the Board of Directors. The main principle is to minimise exposure to financial risk and reduce the probability for financial losses. There have been no significant changes in the group’s objectives, policies or processes for managing capital during the reporting period.

The financial risks to which the group’s financial assets and financial liabilities are exposed are market risk, credit risk and liquidity risk. The market risk the group is exposed to is the risk that the fair value of future cash flows of its financial instruments – such as the interest bearing loan deno-minated in EUR and that is at variable interest rates – fluctuate because of changes in foreign currency or interest rates. The group’s exposure to credit risk relates to its financial assets – such as amounts owed by customers and deposits held at banks – and is the risk that the counterparty defaults and does not meet its financial obligation to the group. Liquidity risk is the risk that the group will not be able to meet its current and future cash flow and collateral requirements without negatively and materially affecting the group’s daily operations or overall financial condition and the potential for expansion.

Credit riskThe group is exposed to credit risk from its operating activities, primarily its accounts receivable and accrued revenue, and from its cash and cash equivalents deposited with banks. Identified default risks for individual customers are reflected in bad debt allowances. Data Respons’ customers largely consist of large and medium-sized companies with good solvency and the customer base is diversified into different vertical market segment. Neither of the group’s operating segments had any significant concentration of credit risk. Credit checks are performed on new customers. Histo-rically, bad debt losses have been low, and the group does not expect to see any major increase in losses.

Liquidity risk and capital management The primary objective of Data Respons’ capital management is to maintain a healthy capital ratio and financial flexibility to support the group’s continued operations and potential expansion, and dividend payments according to the established dividend policy. The group manages liquidity risk through continuous review of future commitments and sources of liquidity. Cash flow forecasts are prepared and adequate utilised financing facilities are monitored on a monthly basis.

The group emphasises financial flexibility. An important part of this emphasis is to minimise liquidity risk through ensuring access to a diversified set of funding sources. The group will finance potential expansions through cash generated by the operational activities and the use of credit facilities. To cover potential funding needs, the group has secured a credit facility of NOK 110 000 thousand; of which an overdraft limit of NOK 40 000 thou-sand and revolving credit facility of NOK 70 000 thousand. As of December 31, 2017, NOK 38 000 thousand of the revolving credit facility have been used in the acquisition of MicroDoc, and total unutilised credit facilities as of December 31, 2017 is NOK 72 000 thousand.

The group also has credit facilities related to the acquisitions of MicroDoc and EPOS CAT, where NOK 132 143 thousand were outstanding as of December 31 2017. Total interest bearing loans and borrowings as of December 31, 2017 was NOK 170 143 thousand. A description of the maturity of the interest bearing loans and borrowings is specified in table below. There are financial covenants which may restrict the use of the total credit facilities, see note 16 and 17.

The group has 45-90 days in credit terms from the main suppliers. Surplus cash holdings will be kept in interest-bearing bank accounts with reputa-ble banks. As of December 31, 2017 the group has NOK 50 663 thousand in cash. The group will primarily finance dividends through cash generated by the operational activities.

Dividend policy- Data Respons’ objective is to pay out a minimum of 50 % of net income in the form of dividends - The payout should reflect Data Respons’ aim to give its shareholders competitive returns benchmarked against alternative investments in compa-rable companies. - The dividend pertaining to a fiscal year will be declared at Data Respons’ annual general meeting in the following year.- Data Respons may consider buying back shares in addition to ordinary dividend payments. Such considerations will be made in the light of the financial situation of the company.

The following table shows the maturity profile of the group’s financial liabilities based on contractual payments and noncancellable lease commit-ments for premises, equipment and vehicles. The amounts disclosed in the table are undiscounted cash flows.

MATURITY PROFILE

NOK 1 000 2018 2019 2020 2021 2022+ Total

Interest-bearing loans and borrowings 25 108 24 489 23 891 60 998 54 424 188 910

Financial liabilities 85 928 98 285 52 060 42 259 278 533

Trade payables 144 918 144 918

Noncancellable lease commitments 27 864 27 864 13 932 4 207 2 103 75 971

Total 283 819 150 639 89 883 107 464 56 527 688 332



NOK 1 000 Increase/ decrease in basic points Effect on profit before tax

2017+100 -99

-100 99

2016+100 -47

-100 47

Currency riskData Respons has operations in five different countries with five different currencies and is as such exposed to currency fluctuations when transla-ting into the group currency NOK.

As of December 31, 2017, the interest bearing loans and borrowings and earn in the group are in EUR and is exposed to currency risk related to changes in value of NOK compared to EUR. A change of +/-5 % in the exchange rate between NOK and EUR will have an impact of +/-NOK 2 400 thousand.

The group also has earn-out liabilities in EUR, SEK and DKK and is exposed to currency risk related to changes in value of NOK compared to EUR, SEK. and DKK. A change of +/-5 % in the exchange rate between NOK compared to EUR, SEK and DKK will have an impact of +/-NOK 13 900 thousand.

In addition to the above interest bearing loans and borrowings, the group had trade receivables, trade payables and some other current financial assets and liabilities denominated in foreign currencies at December 31, 2017 and under standard credit terms (where applicable). Due to the short term nature of these financial assets and liabilities, the foreign currency risk is considered low.

Exposure from individual subsidiaries vary according to the nature of their business. The R&D Services segment abroad generate a currency ex-posure for the group on the net profit only, as both revenue and expenses are in the same local currency. Hedging has been deemed unnecessary. For the Solutions segment the exposure is higher, as parts are purchased from different suppliers across the globe and predominately invoiced in USD or EUR. With most of our major customers, the group has entered into a agreements whereby material fluctuations in price of components due to currency, lead to a corresponding adjustment of the selling price. The group then achieves a natural hedge on a significant part of its embed-ded products and solutions sales. In instances where it is not possible to enter such an agreement with the customer, currency hedges on large deliveries of components will be considered.

The group’s activities are global and the foreign currency risk related to its operating activities may change from year-to-year depending on the dif-ferent jurisdictions the group operates in. In general, the majority of operating revenues and costs are denominated in foreign currencies.

Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the market interest rate. The group is exposed to interest rate risk through the group’s interest bearing loans and borrowings with floating interest rates and cash management activities. Changes in interest rates affect the fair value of assets and liabilities. Interest income and interest expense in the income statement are influ-enced by changes in interest rates in the market.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant:



NOK 1 000 2017 2016 2017 2016

Expenses related to premises and equipment 23 981 21 009 804 814

External services 12 802 10 573 7 696 7 993

IT expenses 10 559 8 423 2 725 2 397

Travel expenses 11 485 9 931 1 095 1 064

Office expenses 5 521 5 815 107 110

Marketing expenses 7 932 6 918 1 059 537

Other operating expenses 7 688 6 553 597 573

Total 79 966 69 222 14 083 13 486

NOTE 21 OTHER OPERATING EXPENSES


The group does not have significant costs related to R&D activities. As at December 31, 2017 Data Respons has intangible assets of NOK 2 045 thousand (2016: 3 372 thousand) related to product development. See note 4 for further information.

NOTE 22 RESEARCH AND DEVELOPMENT

NOTE 23 LEASES

EXPENSED LEASE RENTALS IN THE GROUP

NOK 1 000 2017 2016

Rental of premises in Norway 8 813 9 150

Rental of premises outside Norway 12 711 8 895

Operational leasing of IT equipment 1 769 1 668

Operational leasing of vehicles 4 571 3 796

The group does not have any purchase options on the properties.

The group has entered into operating leases on offices in Norway, Sweden, Denmark and Germany. These leases have terms of between three and five years. In Norway the lease for the head office at Høvik ends at June 30, 2020.

In Sweden the lease for the head office in Stockholm ends on April 30, 2020. The remaining offices in Norway, Sweden, Germany and Denmark have lease terms between three and five years and ends in the period 2019 - 2023.

The group has also entered into operating leases on certain vehicles and IT equipment, with lease terms between one and three years.

The group has entered into operating leases on office and manufacturing buildings, IT equipment and certain vehicles. Operating lease payments are recognised as an operating expense in the income statement on a straight-line basis over the lease term.


CHAPTER 3: FINANCIAL STATEMENTS AND NOTES| Note 24 - 25


NOK 1 000 2017 2016 2017 2016

GUARANTEESGuarantees 5 743 7 387 440 435

BOOK VALUE OF SECURED ASSETS USED AS COLLATERALTrade receivables 55 980 51 750

Inventories 17 239 19 106

Machinery and equipment 2 219 2 388

Total 75 438 73 244 - -

NOTE 24 GUARANTIEES AND COMMITMENTS

Guarantees of NOK 5 243 thousand (2016: NOK 6 911 thousand) have been provided in connection with lease agreements and a guarantee of NOK 500 thousand (2016: NOK 476 thousand) has been provided to Swedish customs.

Data Respons has used the inventory and accounts receivable in Data Respons Norge AS as collateral for interest bearing loans and borrowings. A total lien of NOK 80 000 thousand has been placed on inventories, a total lien of NOK 10 000 thousand as been placed on machinery and equipment and a total lien of NOK 80 000 thousand has been placed on trade receivables.

DATA RESPONS ASA Current receivables Current liabilities

NOK 1 000 2017 2016 2017 2016

Data Respons Norge AS 195 4

Data Respons AB 7

Data Respons A/S 30 352

Total 195 - 30 356 7

NOTE 25 INTERCOMPANY BALANCES

Data Respons ASA had an overdraft in the corporate cash pool of NOK 128 215 thousand at December 31, 2017 (2016: 59 749 thousand), presented as short term loans from group companies in the statement of financial position.

Sales revenue for Data Respons ASA consists mainly of group management fee.

The current liabilities against Data Respons A/S is related to Data Respons ASA acquistion of 50 % of the shares in TechPeople A/S from Data Re-spons A/S. This share purhcase agreement was entered into at the same date as Data Respons ASA acquired remaining 50 % share of TechPeople A/S from owner KIF Invest ApS. See note 7 for further information.


There have been no events subsequent to the reporting period that might have a signficant effect on the financial statements for 2017.

NOTE 27 EVENTS AFTER THE BALANCE SHEET DATE


The parent company is required to operate a company pension scheme pursuant to the Mandatory Occupational Pension Act, and operates a pension scheme that meets this requirement. This scheme covered a total of 7 people in 2017.

The group’s employees in Norway were members of a defined benefit pension scheme in 2013 that covered a disability pension. The pension liabilities were covered through an insurance company. This scheme was in December 2013 replaced by a defined contribution arrangement. The group does not have any significant defined benefit pension schemes as of December 31, 2017.

The group’s foreign subsidiaries have defined contribution pension schemes, and the expenses associated with these schemes are included under payroll expenses in the income statement. Payroll expense details are available in Note 14.

NOTE 26 PENSIONS


We makethe technology you need


AUDITORS REPORT


DEFINITIONSORDER INTAKE: Order intake means that Data Respons has received a purchase order from a customer or has entered into a delivery contract with a customer in the relevant accounting period where Data Respons will deliver a specific solution or consultancy services at a predefined cost. The timeframe for the orders vary.

For the R&D Services segment the order will typically be executed immediately and produce revenue over the next 3 to 12 months. The customer has the right to cancel the contract on short notice, but Data Respons rarely experience cancellations.

For the Solutions segment, delivery (and revenue) will typically start 6-18 months after the order date. Once deliveries have started, the relevant order will include serial deliveries over a period of 12 to 36 months.

Some Solutions orders are firm contracts, especially for deliveries within the next 12 months. Other orders, especially long-term contracts, have estimated delivery volumes, are non-binding for the customer and could either be cancelled, adjusted or prolonged in time. The risk of cancellations exists; however, the risk for adjust-ments of the delivery volume or extensions of the delivery period is a larger risk.

ORDER BACKLOG: Order Backlog is the total NOK value of unfulfilled and undelivered orders as of the balance sheet date in the relevant accounting period. The order backlog is adjusted for currency fluctuations, revisions of the order quantity and cancellations on a quarterly basis.

DEFINITION OF NON-IFRS FINANCIAL MEASURES:EBIT: is defined as earnings before interest and tax. Equivalent to operating profit.

EBITDA: Is defined as operating profit adjusted for depreciation, amortisation and impairments.

EBITDA margin before corporate costs: Is defined as operating profit adjusted for depreciation, amortisation and impairments, before allocation of corporate costs divided by revenues

EQUITY RATIO: Is defined as total equity divided by total assets.

RETURN ON EQUITY: Profit/loss for the year / Average equity

RETURN ON TOTAL ASSETS: EBIT / Average total assets

WORKING CAPITAL: (Current receivables + Inventories) - Current liabilities

LIQUIDITY RATIO: Current assets / current liabilities

EARNINGS PER SHARE (EPS): For calculation of EPS, see Note 10

NOCF: Net operating cash flow

DENMARKCopenhagen, Aarhus

GERMANYKarlsruhe, Erlangen, Munich, Berlin, Stuttgart, Ingolstadt

TO PERFORM

RESPONSIBILITY

BEING GENEROUS

HAVING FUN

We liveOUR VALUES

Every day!

NORWAYHøvik, Oslo, Kongsberg, Stavanger, Bergen

Stockholm, Gothenburg, Linköping

SWEDEN

DENMARKCopenhagen, Aarhus

Karlsruhe, Erlangen, Munich, Berlin, Stuttgart, Ingolstadt

TaiwanTaipei

datarespons.com

Group HQData Respons ASASandviksveien 26NO-1363 Høvik, NorwayTel.: +47 67 11 20 [email protected]

DenmarkData Respons A/SSmedeholm 10DK-2730 HerlevTel.: +45 88 32 75 [email protected]

NorwayData Respons Norge ASSandviksveien 26NO-1363 HøvikTel.: +47 67 11 20 [email protected]

GermanyData Respons GmbHAmalienbadstr. 41, Bau 53DE-76227 KarlsruheTel.: +49 721 480 887 [email protected]

TaiwanData Respons ASIA18F-6 NO. 738, Chung-Cheng Road, Chung-Ho, New TaipeiTel.: +886 2 8226 2150

SwedenData Respons ABJan Stenbecks Torg 17, IIISE-164 40 KistaTel.: +46 8 501 688 [email protected]

Main offices

Sylog ABJan Stenbecks Torg 17, IIISE-164 40 KistaTel.: +46 (0)8 750 49 00

TechPeople A/SSmedeholm 10DK-2730 HerlevTel.: +45 88 32 75 00

MicroDoc Computersysteme GmbHElektrastrasse 6AD-81925 Munich, GermanyTel: +49-89-551969-0

EPOS CAT GmbH Friedrichshofener Str. 1s DE-85049 Ingolstadt, Germany Tel.: +49 841 88197070

TechPeople A/S Rymarken 2, 3. sal DK-8210 Aarhus V. Tel.: +45 70 25 55 35

Annual REPORT 2017 - Data Respons...The estimated fair value of earnout liabilities is NOK 279...

Documents

Transcript of Annual REPORT 2017 - Data Respons...The estimated fair value of earnout liabilities is NOK 279...