Merit Globe - Annual report 2013

TURNING KNOWLEDGE INTO VALUE

ANNUALREPORT 2013

2

CEO’s introduction page 3

Merit’s Unique Offering page 4

Annual Report page 5

Economy and Finances page 6

Organization page 7-8

Income statement page 9

Balance sheet page 10-11

Cash flow statement page 12

Notes page 13-21

2013, summarized briefly we have two messages. Consolidation and investment in and around Infor M3. At the same time we can say that this is connected. It has been many years of continuous growth in both the domestic and emerging markets and several new products. During 2013, Merit therefore will ”consolidate” with the focus on improving the efficiency of operations in and around Infor M3 and M3 Merit-optimized products and services, Merit and Merit Portal Operations.

At the same time, we continue the business development of the company. In the start of 2013 we established an office in the Czech Republic, Brno. A success with almost 10 established and competent resources. We are now also established in Spain, Barcelona. There are exciting opportunities in a market showing recovery after a long and heavy period. Merit is now established in 11 countries with its own offices, serving customers in 18 countries.

Merit’s history and perspective are based on customers and knowledge about Infor M3. With Infor, the solution Infor M3, have got an industrial owner with focus and dedication. Infor has made us confident about the future. We also have the scalability to the industries we focus on. The scalability targets industries and verticals where M3s positioning provides the best price / performance and ”cost of own-

ership” - to all our customers. We can also see this in the fact of the increasing rate of new customers who choose M3 and Merit Portal. In 2013, a new major release of Infor M3 was launched, version 13. For Merit, this means investing in skills and adaptation in our own products. Meanwhile the first deliveries of the new version should be done. Autumn / Winter 2013, we started a serie of imple-mentation projects with initial start right after New Year 2014. Without big surprises. We are again able to say that we have a product with very good quality to work with, from Infor. Quality and performance is on par or better than the last version.

We know, as of today, not any other Infor partner that has delivered as many M3 ver-sion13 projects than Merit. At the same time, we can already say that it will also apply to 2014. Infor M3 version 13 is a hit version in relation to new and improved functionality and in terms of quality and performance. Here will our competitors envy us.

With focus on Infor M3 as the best solution to our targeted markets, will growth and new Merit countries apply in the years to come, and this is according to our strategy.

We are looking forward to the future - to help our clients create value and profits. Being Merit commits.

We are looking forward in continuing to help our clients create value and profits.

It commits to be Merit

ANNUAL REPORT | MERIT GLOBE | 2013

CONTENTS

ANNUAL REPORT | MERIT GLOBE | 2013 3

Organization is the soul of our business.We focus each day in working together with our customers to implement Merit’s slogan and guiding principle - “turning knowledge into value.” Our future direction is set.

Best of Breed Applications

Industry Suites

Infor M3Merit AppSuite | Interfaces

Projects | Operations

World-Class Services

Industry/Vertical

Merit Customer

ProjectSolutionManager

OperationsService

Manager

SalesAccountManager

CUSTOMERTEAM

Industry competence within a few selected industries

Best of Breed apps gets the best of the Industry Suite – optimized workflow using the suitable devices

Secure efficient implementation with

minimized risk and long-term operation of solutions

Leading Industry suites �– covering your business

requirements

4

Merit’s Unique Offering:We aim to improve our clients competitivenessby streamlining business processes and implementingmodern integrated software.


Annual Report

BusinessMerit Globe AS (MGAS) is the parent company in Merit group. MGAS is a pro-vider of business solutions, Enterprise Management Solutions, within defined branches and with more than 238 employees in eight countries in Northern and Central Europe.

The company’s products are based on software from Infor M3 and in-house developed software within Business Intelligence (BI) and Event Management. In addition to being a parent company, MGAS is a holding, an organization that covers common functions such as corporate management, management within the business areas, economy and finance, IT, marketing and business development.

Merit has been through an expansion phase to further development of the company’s position in the existing market. We still believe there are many very interesting possibilities in this mar-

ket. In 2013, focus has been on consolidating the business to improve own profitability. This will continue in 2014. We are a leading supplier in selected branches with primarily busi-ness solutions (ERP) such as Infor M3. This has helped us position in existing branches with our own software Merit Portal.

Main market remarksThe market in 2013 was challenging. On the other hand, we see that the new release of Infor M3 triggered great demand of existing customers in the markets we operate in. Our own applica-tions (Merit Portal/Best of Breed) and service-based concepts (Merit Opera-tions & Merit Partnership) have also helped a regular and recently increased demand.

We experience increased demand of different types of hosting services, and this influences own product develop-ment and unique solutions. At the same

time, sales of mobile solutions increases, especially sales solutions on tables and smartphones. This leads to an adjust-ment of the ERP-system’s interfaces; also new user groups are involved, both internally and externally.

We have partnership agreements with Infor in Central, Western and Northern Europe. These agreements give us a great framework for future growth. Infor is a leading, global software com-pany, and has a development plan for M3 and other applications which is very exciting. With Infor as a partner, we will continue to provide the best solutions for our defined markets, also in the future.

Merit has been through an expansion phase to further development of the company’s position in the existing market. In 2013, focus has been on consolidating the business to improve own profitability. This will continue in 2014.

5ANNUAL REPORT | MERIT GLOBE | 2013

6

EarningsMerit had NOK 306.650.188,- in earn-ings in 2013, a small decrease from NOK 317.404.010,- in 2012. Hourly consultant fees increased in 2013.

Sales of own products has increased to NOK 8.100.000,- in 2013; an increase of 15% compared to 2012. Sales of own products is and will be an important part of Merit’s profitability.

ExpensesIn 2013, Merit could achieve a decline of expenses and total expenses were NOK 319.255.567,-. Decline in expenses was mainly due to reduced payroll ex-penses, as well as other expenses, due to decrease of work force in 2013. During 2013, the work force was decrease by 22 to 238, this effect will further be visible in 2014. In 2013 deductions were 5,7% of expenses.

ResultResult (EBITDA) in 2013 was NOK 7.579.904,- compared to NOK 14.980.172,- in 2012. This represents a decrease of 49,4%. EBITDA-margin was 2,5%. The company is not satisfied with the results and has implemented cost reduction measures which are expected to give positive effects in 2014. Merit has a long-term KPI of EBITDA margin of 15%. The corporation will continue to focus on increasing opera-tion’s efficiency.

Result after tax was NOK -10.760.209,- in 2013 which is a decrease from NOK -7.270.524 in 2012. he decrease is NOK 3.489.685,-.

Result parent companyThe parent company has – since fission in 2010 – only had internal turnover, earnings and expenses. This resulted in a profit of NOK 588.023,-.

Balance and financial situationThe total balance of Merit was NOK 135.626.086,- in the end of the account-ing period. Customer receivables were NOK 62.620.133,-. The receivables were evaluated and are to be seen as solid.The assets were NOK 40.786.849,- on the day the balance was taken. It was very important for Merit to increase solidity of the company. Solidity of assets was 30,1% compared to 33% in 2012. Merit aims to have 30% assets in the future.Debt was NOK 94.839.236,- when the balance was taken; NOK 23.954.118,- were bank debt. Cash and cash equiva-lents of NOK 9.113.918,- are placed in the bank.

Merit has a cash pool with possibility for credit in the bank. This solution provides the possibility to use surplus liquidity in the companies.

In accordance with accountings law § 3-3a the board confirms that operations may be continued with given situation, and an-nual financial statement 2013 is provided under these conditions. The long-term

prognosis for the company, as well as asset and liquidity situation are the basis for this decision.

Balance and financial situation parent companyThe parent company has 55% assets per 31.12.2013.

Financial riskThe largest financial risks the company faces are foreign exchange risk, risk of liquidity, and credit risk. Management evaluates these risks continuously and communicates guidelines on how to mitigate these risks. Merit’s financial strategy is to have enough liquidity and/or credit possibilities at any time to finance operations and investment according to company strategy. Surplus liquidity is places in the bank.

The customer base of the company consists largely of large solid organiza-tions with high credit rating. New business connections are credit checked before-hand. The company has during 2013 improved routines and procedures for handling receivables and has increased focus on terms of credit and receiving payment according to these.

Allocation of result 2013Profit of NOK 588.023,- is transferred to Merit Globe AS to cover loss.

Economy and Finances


7

Merit’s companies are spread in a good way geographically, both in Northern and Central Europe. Merit has 22 offices in 8 countries, and in 2013 we had 238 employees.

During 2013, Merit expanded both geographically and with new services and product-areas. One example of the latter is Merit Operations. Background for this establishment is an increasing customer base seeing advantages in us monitor-ing and supervising the companies’ value adding processes. The establishment is an integrated part of Merit’s existing business which focuses on helping customers grow stronger.

Merit will continue to build on this established strategy in Europe. We now have access to customers in several countries and will focus on sales and implementation of products and strategies we have developed.

Competence Building Solution Consulting is established as a group on parent-company level and all

Merit companies participate. This group is responsible for acquiring competency in and knowledge of new product-areas and new functionality and takes part in defining with products Merit should focus on and build competency in.

Merit Project and Merit Operations are responsible for implementation projects and operation of the implemented solu-tion. In principle, the entire consultant staff is part of these areas in Merit.

Professional groupsMerit has worked towards establishing professional groups for different compe-tency areas. These groups may be linked towards branches, solutions or processes. Competency groups are organized by country with contact points and coopera-tion between countries.

CertificationMerit has strong focus on increasing competency. This is true for own products and also partner products. As an exam-ple, we have also been one of the first to build competency in new versions of Infor

products. When the last version of Infor M3 was launched, Merit was the first partner globally to implement it at a customer. Merit aims to be on the forefront when it comes to certification in Infor programs. Additionally, internal requirements and competency certifi-cates have been established to value the skills and experience in different areas.

Research and DevelopmentAn important part of Merit’s business plan and idea is to sell and implement in-house developed products, Merit Portal. More than 100 of our customers use these products on a daily basis in their businesses. The goal is to provide customers with tools to make their business processes more effective and user-friendly, as well as providing business-critical data in an efficient and intuitive manner.

Our products are well established within data warehousing and analysis, as well as transaction reporting within value chains. Our solutions are used both via web-interface on PCs but also on mobile

Organization

Services

Projects OperationsProven implementation methodologyDeep industry knowledge for the focused verticalsComplete resource teams Scalable from small local projects to large and international projects

Application MonitoringProcess ControlApplication SupportMerit’s “Emergency support” (24/7 customer support service)

Competence BuildingMerit’s service organization focuses on the following areas: -->


8

devices where also barcode reporting is used excessively.

In 2013 our product development focused especially on further developing the portal concept, as for example sales portal and supplier portal. At the same time, we have developed and implemented our first solutions for mobile platforms such as iOS and Android. These solutions focus on utilizing possibilities of integrating new technologies with the company’s ERP-system solution. Demand of such solutions is growing strongly, which is also reflected in future research and develop-ment activities.

Our product development organization consists of product specialists with great understanding of business processes; they develop with both broad and deep technical understanding and competency. We wish to provide an interesting and dynamic work place by giving our employ-ees the possibility to work closely with customers and solution consultants. We invest a large amount of the turnover in research and development.

We are concerned with providing good opportunities for further developing com-petencies. Together with the possibility to

affect future product development with respect to functionality and technology, this has led to an attractive work place for existing and new employees.

Well-beeingThe parent-company Merit Globe AS had three employees in 2013; the companies together had 238. The board defines the work-environment in Merit as satisfactory. Absences are at a normal rate. There have not been recorded any serious injuries associated with work.

We focus heavily on well-being and work-environment. Committed and motivated colleagues provide good services and satisfied customers.

Merit wishes to arrange positive and healthy experiences outside working hours. Sports and other leisure activities provide a different environment out-side the work-environment. Many have become especially well-known with each other through cycling, skiing, running, hiking, and other leisure activities. Some of these activities are supported by Merit, whilst others are initiated by colleagues.

Anti-Discrimination PoliciesAll Merit employees are obligated to sup-port a positive and professional work-en-vironment. This includes that all employ-ees treat each other respectfully and all forms for discrimination are prohibited. This includes amongst others discrimina-tion based on religion, color of the skin, sex, sexual orientation, age, nationality, race and disability. The company works actively to increase equality, ensure equal opportunities and rights, and stop and prevent discrimination.

Equality PoliciesMerit has a long-term goal to increase the percentage of female employees, but right skills and competency will always weight more when hiring.

Environmental impactMerit works to reduce negative effects on the environment. We use video- and web-conferencing as must as possible to reduce air travel. We reduce the amount of printouts to a minimum and all printers have 2-sided printout as default setting.


Income statement

ANNUAL REPORT | MERIT GLOBE | 2013 9

Revenue

0 0 Sales revenue 6 307 275 204 311 690 311

10 143 340 9 142 406 Other operating income 12 1 374 984 5 710 699

10 143 340 9 142 406 Total revenue 308 650 188 317 401 010

Operating expenses

0 0 Cost of sales 32 903 369 29 014 349

7 523 363 7 449 362 Payroll expenses 5,9 209 056 210 204 143 794

278 378 187 001 Depreciation 7,8 18 185 283 18 471 889

5 697 781 4 074 990 Other operating expenses 5,9 59 110 705 69 262 695

13 499 522 11 711 353 Total operating expenses 319 255 567 320 892 727

-3 356 182 -2 568 947 Operating profit/(loss) -10 605 379 -3 491 717

Financial income and expenses

4 264 710 6 612 898 Income from investments in subsidiaries 0 0

711 033 803 724 Interest income from group companies 0 0

1 624 388 187 764 Other financial income 2 868 858 749 115

0 2 405 200 Write-down on financial assets 2 0 0

126 938 636 076 Interest expenses to group companies 0 0

2 293 626 1 956 690 Other financial expenses 3 159 078 2 411 885

4 179 567 2 606 420 Net finance -290 220 -1 662 770

823 385 37 473 Profit/(loss) before income tax -10 895 599 -5 154 487

235 362 408 311 Income tax expence 13 -135 390 2 116 037

588 023 -370 838 Net profit/(loss) -10 760 209 -7 270 524

Distribution

Majority interests -11 143 365 -8 052 919

Minority interests 383 157 782 395

Allocated to:

588 023 -370 838 Uncovered losses 14

588 023 -370 838 Total

PARENT COMPANY GROUP 2013 2012 Note 2013 2012

Balance sheet as of December 31

10 ANNUAL REPORT | MERIT GLOBE | 2013

Fixed assets

Intangible assets

0 0 Research and development 8, 9 8 504 949 11 570 557

12 416 0 Deferred tax asset 13 1 388 609 334 425

0 0 Goodwill 8 34 194 649 47 372 893

12 416 0 Total intangible assets 44 088 207 59 277 875

Tangible assets

378 456 604 640 Fixtures and fittings, tools, office machinery etc. 7,11 2 695 532 3 253 705

378 456 604 640 Total tangible assets 2 695 532 3 253 705

Financial assets

79 225 476 79 196 836 Investments in subsidiaries 2 0 0

15 228 231 77 391 Other receivables 12 988 526 241 191

94 453 707 79 274 227 Total financial assets 988 526 241 191

94 844 579 79 878 867 Total fixed assets 47 772 265 62 772 771

Current assets

Receivables

694 623 10 859 807 Accounts receivables 10,11,12 62 620 133 59 539 740

13 099 309 25 085 150 Other receivables 13 16 119 770 13 862 412

13 793 932 35 944 957 Total receivables 78 739 903 73 402 152

1 935 526 1 252 823 Cash and cash equivalents 10 9 113 918 13 697 126

15 729 458 37 197 780 Total current assets 87 853 821 87 099 278

110 574 037 117 076 647 Total assets 135 626 086 149 872 049


11

Balance sheet as of December 31


Equity

Paid-in capital

1 754 751 1 739 286 Share capital 14, 15 1 754 751 1 739 286

0 59 799 867 Share premium 14 0 59 799 867

1 754 751 61 539 153 Total paid-in capital 1 754 751 61 539 153

Retained earnings

59 306 942 -2 302 723 Other equity 14 37 985 520 -12 017 115

59 306 942 -2 302 723 Total retained earnings 37 985 520 -12 017 115

0 0 Minority interests 14 1 046 578 663 421

61 061 693 59 236 430 Total equity 40 786 849 50 185 459

Liabilities

Provisions

0 14 137 Deferred tax 13 0 0

0 14 137 Total provisions 0 0

Current liabilities

23 954 118 24 435 870 Liabilities to financial institutions 10, 11 23 954 118 24 435 870

1 668 298 917 783 Accounts payable 12 6 650 211 6 823 188

261 915 0 Income tax payable 13 989 402 632 252

335 522 107 124 Public duties payable 16 495 406 17 463 607

23 292 491 32 365 303 Other current liabilities 10,12 46 750 099 50 331 673

49 512 344 57 826 080 Total current liabilities 94 839 236 99 686 590

49 512 344 57 840 217 Total liabilities 94 839 236 99 686 590

110 574 037 117 076 647 Total equity and liabilities 135 626 085 149 872 049

MORSELSKAP KONSERN 2013 2012 Note 2013 2012

Ålesund, 21. Mai 2014

Cash flow statement

12 ANNUAL REPORT | MERIT GLOBE | 2013

Cash flow from operating activities

823 385 37 473 Profit/(loss) before taxes -10 895 599 -5 154 487

-4 264 710 -6 612 898 Share of the (profit)/loss of associates 0 0

0 0 Income tax paid -1 622 252 -1 827 565

278 378 187 001 Depreciation 18 185 283 18 471 889

0 2 405 200 Impairment of financial assets 0 0

10 915 699 -7 727 980 Changes in inventories, accounts receivables and accounts payable -3 253 370 5 037 865

-19 234 127 21 251 113 Changes in other accruals -6 513 491 -9 479 923

-11 481 375 9 539 909 Net cash flow from operating activities -4 099 429 7 047 779

Cash flow from investing activities

-371 763 -791 642 Purchase of tangible fixed assets -627 121 -1 609 292

-28 640 -9 229 875 Proceeds from sale of shares 0 -9 229 875

0 0 Payments in relation with capitalized proprietary R & D 0 -9 183 232

0 0 Proceeds from sale of Goodwill 0 2 148 250

-1 266 870 -77 391 Changes in long term receivable -747 335 -77 391

-1 667 273 -10 098 908 Net cash flow from investing activities -1 374 456 -17 951 540

Cash flow from financing activities

7 165 219 301 185 Changes in group accounts -481 752 -480 247

1 372 429 0 Proceeds from capital increase 1 372 429 0

Share issue expenses

5 293 703 0 Proceeds from group contribution 0 0

13 831 351 301 185 Net cash flow from financing activities 890 677 -480 247

682 703 -257 814 Net change in cash and cash equivalents -4 583 208 -11 384 008

1 252 823 1 510 637 Cash and cash equivalents at 01.01 13 697 126 25 081 134

1 935 526 1 252 823 Cash and cash equivalents at 31.12 9 113 918 13 697 126


Notes to the accounts for 2013

The annual report is prepared according to the Norwegian Accounting Act 1998 and to the generally accepted accounting principles.

Basis for consolidationThe consolidated financial statements comprise the parent company Merit Globe AS and the subsidiaries as described in Note 2. Subsidiaries are companies in which the Group has a controlling interest. A controlling interest is normally achieved when the Group owns more than 50% of the shares in the company, while also being in the position to exercise control over the company. The minority share of the equity is included in the consolidated equity. The consolidated accounts are prepared such that the group of companies are presented as a single economic entity. Intercompany transactions have been eliminated from the consolidated accounts.

The consolidated accounts are prepared according to the same accounting principles for both parent and subsidiary. Acquired subsidiaries are reported in the annual accounts on the basis of the parent company’s acquisition cost. Subsidiaries are consolidated in the accounts when a controlling interest is achieved, and is included until it no longer applies. SubsidiariesSubsidiaries are valued by the cost method in the company accounts. The investment is valued as cost of acquiring shares in the subsidiary, providing that write down is not required. Write down to fair value will be carried out if the reduction in value is caused by circumstances which may not be regarded as incidental, and deemed necessary by generally accepted account-ing principles. Write downs are reversed when the grounds of the initial write down are no longer present.

Dividends and other distributions are recognized in the same year as appropriat-ed in the subsidiary accounts. If dividends exceed withheld profits after acquisition, the exceeding amount represents reim-

bursement of invested capital, and the dis-tribution will be subtracted from the value of the acquisition in the balance sheet.

Sales revenueSales revenues are recognized at the time of delivery. Revenues from services are recognized at execution. The share of sales revenue associated with future services are recorded in the balance sheet as de-ferred sales revenue, and are recognized at the time of execution. Revenue from projects on fixed price terms that run over a longer period of time are recognized according to the degree of completion. The degree of completion is estimated based on time consumed in relation with estimated total time on the project. Balance sheet classification Net current assets comprise creditors due within one year, and entries related to goods circulation. Other entries are classified as fixed assets and/or long term liabilities.

Current assets are valued at the lower of acquisition cost and fair value. Short term creditors are recognized at nominal value. Fixed assets are valued by the cost of acquisition, in the case of non-incidental reduction in value the asset will be written down to the fair value amount. Long term creditors are recognized at nominal value. Trade and other receivables Trade receivables and other current receivables are recorded in the balance sheet at nominal value less provisions for bad debts. Provisions for bad debts are calculated on the basis of individual assessments. In addition, for the remain-der of accounts receivables outstanding balances, a general provision is carried out based on expected loss. Foreign currency translationForeign currency transactions are trans-lated using the year end exchange rates.

Property, plant and equipmentProperty, plant and equipment is capita-lized and depreciated over the estimated useful economic life. Direct maintenance costs are expensed as incurred, whereas improvements and upgrading are assigned to the acquisition cost and depreciated along with the asset. If carrying value of a non-current asset exceeds the estimated recoverable amount, the asset is written down to the recoverable amount. The re-coverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value. Research and developmentResearch and development costs are capitalized providing that a future economic benefit associated with development of the intangible asset can be identified. Otherwise, the costs are expensed as incurred. Capitalized research and development are amortized linearly over the economic lifetime.

Government grantsGovernment grants for development projects are recognized when it is probable that the Company will receive the grant. The grant is recognized as a reduction of expensed or capitalized development costs. Income taxTax expenses in the profit and loss account comprise both tax payable for the account-ing period and changes in deferred tax. Deferred tax is calculated at 27 percent on the basis of existing temporary differences between accounting profit and taxable profit together with tax deductible deficits at the year end. Temporary differences, both positive and negative, are balance out within the same period. Deferred tax assets are recorded in the balance sheet to the extent it is more likely than not that the tax assets will be utilized. Tax payable and deferred tax is recorded directly against the equity to the extent that the tax positions relate to equity transactions.

Note 1 - Accounting Principles

13NOTES | MERIT GLOBE | 2013


Note 2 - Investment in subsidiaries

Cash flow statement The cash flow statement is presented using the indirect method. Cash and cash equivalents includes cash, bank deposits and other short term highly liquid place-ment with original maturities of three months or less.

Use of estimates The preparation of the financial state-ments requires management to make estimates and assumptions that affect the reported amounts in the profit and loss statement, the measurement of assets and liabilities and the disclosure of

contingent assets and liabilities on the balance sheet date. The estimates are related to capitalization of R&D, provision for bad debts and evaluation of projects. Actual results can differ from these estimates.

* Axcentro Solutions LLC, Capesso Provider AS and Merit Czech Consulting, s.r.o are included in the Group, but are owned by subsidiaries. ** The investment in Tirem Invest AB is written down to NOK 0 by NOK 2 405 200 in 2012 and NOK 14 125 902 in 2011.

Company Acquisition year Location Share owners Voting rights Book value 31.12

Merit Consulting AS 2010 Ålesund 100 % 100 % 19 219 030

Merit Platform Partner AS 2009 Ålesund 51 % 51 % 576 500

Merit Consulting OY 2008 Finland 100 % 100 % 25 882 782

Merit Consulting AB 2009 Sweden 100 % 100 % 5 469 839

Tirem Invest AB** 2010 Sweden 100 % 100 % 0

Merit Consulting AS 2009 Denmark 100 % 100 % 5 638 311

Merit Consulting GmBH 2010 Germany 100 % 100 % 4 937 847

Merit Central Europte AG 2010 Switzerland 100 % 100 % 15 893 768

Merit Consulting UK 2008 England 100 % 100 % 1 578 759

Axcentro Solutions LLC* 2010 Switzerland 0

Capesso Provider AS* 2011 Gjøvik 0

Merit Czech Consulting s.r.o.* 2013 Czech Republic 0

Sum 79 225 476

Merger between Merit Consulting I AS and Merit Consulting AS: The wholly owned subsidiary Merit Consulting I AS merged with the subsidiary Merit Consulting AS in 2012. The merger was completed at continu-ity in booked values with effect from 1.1.2012. The shareholders in Merit Consulting AS got shares in Merit Globe AS as settlement. In relation to the set-tlement there was a capital increase in Merit Globe AS of NOK 376 978 and a share premium of NOK 3 305 529.

Merger between Merit Consulting AS and Merit Consulting Øst AS: Merit Consulting AS merged with the subsidiary Merit Consulting Øst AS in 2012. The merger was completed at continuity in booked values with effect from 1.1.2012. The shareholders in Merit Consulting Øst AS got shares in Merit Globe AS as settlement. In relation to the settlement there was a capital increase in Merit Globe AS of NOK 48 230 and a share premium of NOK 5 409 831.

Reorganization of ownership through buyout of minority shareholders in foreign subsidiaries: The minority shareholders in the foreign subsidiaries in the group was in 2012 bought out by Merit Globe AS, with the purpose of achieving 100 % ownership in all subsidiaries. The minority share-holders got shares in Merit Globe AS as settlement. In relation to the settlement there was a capital increase in Merit Globe AS of NOK 306 078 and a share premium of NOK 47 191 107. After completion of the mergers and re-organization in 2012, Merit Globe AS now has 100 % ownership in all subsidiaries except of Merit Platform Partner AS. For a list of subsidiaries we refer to note 2.

Note 3 - Merger and reorganization

PARENT COMPANY

14 NOTES | MERIT GLOBE | 2013

PARENT COMPANY

PARENT COMPANYThe company and the Group are exposed to interest- and exchange rate risk. The Group has no formal hedging strategy. Interest riskThe company has overdraft facilities with

a financial institution at floating interest rates. The company has not entered into any fixed rate contracts.

Exchange rate riskThe company and the Group have trans-actions in different currencies. It is not

entered into any hedging transactions to reduce this risk. The risk is however reduced by the fact that income and expenses in each company in the group to a great extent is in the same currency.

PARENT COMPANYOther remunerations include administrative costs for Group management, amounting to NOK 3 554 550 (2012: NOK 2 569 271). Board of directors’ remuneration has been paid, at NOK 190 000 in 2013 (2012: NOK 112 200. No bonus is expensed to management in 2013 (NOK 875 902 excl. social security tax in 2012). No bonus is expensed to the CEO in 2013 (NOK 250 000 excl. social security tax in 2012).

Management remuneration Salary Other remunerationChief Executive Officer 1 240 710 216 736

GROUP Management remuneration Some of subsidiaries are obliged to have a pension plan according to Norwegian pension regulations. The companies have a pension plan that meets the criteria in the regulations.

PARENT COMPANY Loans and guarantees for management, representatives and stockholders etc. The company has not provided loans or security to anyone in the management or shareholders, or any of their affiliates.

Note 5 - Wage costs, number of employees, remuneration, loans to employees and auditor’s fee

Note 4 - Financial market risk

2 882 636 3 230 392 Salaries 162 484 970 158 716 979

587 864 382 430 Social security tax 24 567 093 25 752 069

200 027 112 057 Pension costs 15 419 269 16 441 134

3 852 836 3 724 483 Other payments 9 537 909 11 764 254

0 0 Refunds -2 953 031 -530 642

0 0 Capitalized costs 0 -8 000 000

7 523 363 7 449 362 Total 209 056 210 204 143 794

3 3 Average number of employees 239 265

160 000 Statutory audit fee 625 603

0 Assurance services 26 175

20 540 Tax advisory fee 25 775

94 592 Other services 250 996

VAT is not included in the figures of auditor’s fee.

PARENT COMPANY GROUP 2013 2012 Wage costs 2013 2012

PARENT COMPANY GROUP 2013 Auditor fee has been divided as follows 2013


PARENT COMPANY GROUP 2013 2012 2013 2012

Geographical distribution

0 0 Norway 158 719 626 171 667 353

0 0 Nordic countries 84 335 488 94 720 164

0 0 Europe 58 165 816 45 302 794

0 0 307 275 204 311 690 311

Fixture and fittings, tools, office machinery, etc. Total

Additions 52 194 52 194

Acquisition cost 31.12. 843 836 843 836

Acc.depreciation 31.12. -465 380 -465 380

Net carrying amount at 31.12. 378 456 378 456

Depreciation for the year 278 378 278 378

Useful economic life 3 years

Amortization plan Linear

Fixture and fittings, tools, office machinery, etc. Total

Acquisition cost 01.01. 8 782 808 8 782 808

Additions 627 121 627 121

Disposals -512 336 -512 336

Conversion differences 225 643 225 643

Acquisition cost 31.12. 9 123 236 9 123 236

Acc.depreciation 31.12. -6 427 704 -6 427 704

Net carrying amount at 31.12. 2 695 532 2 695 532

Depreciation for the year 1 410 937 1 410 937

Useful economic life 3-10 years

Amortization plan Linear

Note 6 - Revenues

Note 7 - Tangible assetsPARENT COMPANY

GROUP


PARENT COMPANY GROUP 2013 2012 2013 2012

2013 2013

191 824 Restricted bank deposits 4 438 792

Goodwill R & D Total

Acquisition cost at 01.01. 65 042 359 15 884 348 80 926 707

Conversion differences 221 756 463 412 685 168

Acquisition cost 31.12. 65 264 115 16 347 760 81 611 875

Acc. amortization at 31.12. -31 069 466 -7 842 811 -38 912 277

Net carrying amount at 31.12. 34 194 649 8 504 949 42 699 598

Amortization for the year 13 400 000 3 374 346 16 774 346

Useful economic life 5 years 5 years

Amortization plan Linear Linear

Note 8 - Intangible assets

Merit Consulting AS and Merit Platform Partner AS have ongoing development projects that are approved as SkatteFUNN-projects in Norway. In total, the companies have applied for grants amounting to NOK 2 200 000. In 2013, the subsidiary Merit Platform Partner AS has applied for a government grant from Innovasjon Norge amounting to NOK 960 430. The amounts are recognized as a reduction in capitalized development expenses and payroll expenses.

The Merit Globe group has established a multi-account system where Merit Globe AS is the holder, while the other group companies are sub-account holders or participants. The bank can offset any balance against one another so that the net position represents the balance between Handelsbanken and Merit Globe AS. Each participant’s deposit or liability on the sub-account represents an intercom-pany balance with Merit Globe AS. These intercompany balances are classified as other current liabilities or other current receivables.

Note 9 - Government grants

Note 10 - Bank deposit

GROUP

GROUP

PARENT COMPANY

PARENT COMPANY GROUP


Note 11 - Debts and receivables

Note 12 - Intercompany balance group companies and associates

694 623 10 859 807 Accounts receivables 24 779 390 32 256 392

378 456 604 640 Property, plant and equipment 1 072 956 1 276 324

1 073 079 11 464 447 Total 25 852 346 33 532 716

Accounts receivables 694 623 10 859 807

Other receivables 12 347 951 9 055 221

Long term receivables 15 228 231 13 961 361

Total 28 270 805 33 876 389

Payables 2013 2012

Accounts payables 980 000 406 017

Other short term payables 22 797 961 31 325 206

Total 23 777 961 31 731 223

PARENT COMPANYThe parent company and the group have an overdraft facility agreement; cf. Note 10, of NOK 25 million in total, and an additional credit of NOK 5 million in 2013. As of 31.12.2013 NOK 23 954 118 (2012: 24 435 870) is drawn on this facility. The assets in the table above are pledged as collateral. There are financial covenants related to the agreement. The company meets all of these requirements as of 31.12.2013.

Interest is calculated on intercompany balances in 2013. Management services have been posted as income in 2013, amounting to NOK 10 143 340 in the parent company (2012: NOK 9 142 406).

PARENT COMPANY GROUP 2013 2012 Pledged assets 2013 2012

PARENT COMPANY GROUP Receivables 2013 2012


PARENT COMPANY GROUP Receivables 2013 2012

Note 13 - Income taxes

261 915 0 Tax payable 989 402 1 831 283

0 0 Too much/little allocated in previous year(s) -70 608 56 753

-36 553 408 311 Change in deferred tax -1 054 184 228 001

235 362 408 311 Total income tax expense -135 390 2 116 037

Parent company

2013 2012 Tax base estimation

823 385 37 473 Ordinary result before tax

15 550 6 183 Permanent differences

0 2 405 200 Write-down on shares

0 -990 600 Income from investment in subsidiaries

-4 264 710 -5 622 298 Group contribution

96 475 -50 491 Changes in temporary differences

-3 329 300 -4 214 533

0 -1 407 765 Applied loss carried forward

4 264 710 5 622 298 Group contibution

935 410 0 Tax base

45 984 0 Fixed assets -438 272 -313 163

0 0 Other differences -323 001 -313 317

0 0 Accounting provisions -6 018 753 -650 000

-45 984 0 Total -6 780 026 -1 276 480

0 Loss carried forward -13 011 863 -26 048 866

-45 984 50 491 Net temp differences as of 31.12 -19 791 889 -27 325 346

-12 416 14 137 Deferred tax/deferred tax asset (27% this year, 28% last year) -5 343 810 -7 651 097

0 0 Deferred tax asset in subsidiaries not in balance sheet 3 955 201 7 316 672

0 0 Deferred tax asset -1 388 609 -334 425

GROUPIt is expected to receive NOK 2 200 000 (NOK 1 980 000 in 2012) in SkatteFUNN (Norwegian R&D refund plan) in Norwegian subsidiaries. NOK 0 (990 000 in 2012) is classified as a reduction of tax payable in the balance sheet, and NOK 2 200 000 (NOK 990 000 in 2012) is classified as other current receivables.

PARENT COMPANY GROUP 2013 2012 Income tax expenses 2013 2012

PARENT COMPANY GROUP 2013 2012 Temporary differences outlined 2013 2012


Note 14 - Owners equity


Share capital Share premium reserve Other equity Sum

Owners equity 01.01. 1 739 286 59 799 867 -2 302 723 59 236 430

Profit for the year 0 0 588 023 588 023

Capital increase 15 465 1 221 775 0 1 237 240

Reallcotated share premium reserve -61 021 642 61 021 642 0

Owners equity 31.12. 1 754 751 0 59 306 942 61 061 693

Share capital Share premium reserve Other equity Minority int. Total

Owners equity 01.01. 1 739 286 59 799 867 -12 017 115 663 421 50 185 459

Profit for the year 0 0 -11 143 365 383 157 -10 760 208

Capital increase 15 465 1 221 775 0 0 1 237 240

Reallcotated share premium reserve -61 021 642 61 021 642 0

Conversion differences 0 0 124 358 0 124 358

Owners equity 31.12. 1 754 751 0 37 985 520 1 046 578 40 786 849

GROUP

PARENT COMPANY

Note 15 - Share capital and shareholder information


Share capital:

Number of shares Face value Book value

Ordinary shares 1 754 751 1 kr 1 754 751

Ordinary shares Ownership share Voting rights

Kjell Harald Danielsen 128 764 7,34 % 7,34 %

Erik Outzen, Daglig leder 116 782 6,66 % 6,66 %

Jon Jåre Aarskog, Styremedlem 98 283 5,60 % 5,60 %

Arnfinn Hjellen 89 715 5,11 % 5,11 %

Markus Tronich 77 153 4,40 % 4,40 %

Frank Skorgen 76 195 4,34 % 4,34 %

Hallgeir Øvrebust 74 485 4,24 % 4,24 %

Kjetil Hjellegjerde 62 341 3,55 % 3,55 %

Håvard Valderhaug 55 424 3,16 % 3,16 %

Lars Sæther 52 297 2,98 % 2,98 %

Audun Krutvik 48 488 2,76 % 2,76 %

Bjørn Vanebo 48 488 2,76 % 2,76 %

Trond Langørgen 47 024 2,68 % 2,68 %

Ragnhild Sunde 44 617 2,54 % 2,54 %

Bjørn Vidar Remme 41 907 2,39 % 2,39 %

John Andre Tran 41 605 2,37 % 2,37 %

Morten Bremseth 41 561 2,37 % 2,37 %

Egil Gussiås, Styremedlem 36 366 2,07 % 2,07 %

Eirik Nesje 31 171 1,78 % 1,78 %

Halvard Aarønes 25 975 1,48 % 1,48 %

Total 1 246 769 71,05 % 71,05 %

Other 507 982 28,95 % 28,95 %

Total number of shares 1 754 751 100,00 % 100,00 %

Shareholders per 31.12:

PARENT COMPANY

www.meritglobe.com

NORWAY BERGEN GJØVIKMOLDEOSLOSANDNESTRONDHEIMÅLESUND

Phone: +47 400 03 650E-mail: [email protected]

SWEDENGÖTEBORGKALMARLINKÖPINGMALMÖSTOCKHOLM

Tel.: +46 8 410 234 00Phone: [email protected]

FINLAND HELSINKITURKU TAMPERE Phone: +358 290 091 040E-mail: [email protected]

DENMARKODENSE

Phone: +45 42 14 91 20E-mail: [email protected]

GERMANYLANDSHUT

Phone: +49 176 832 799 44E-Mail: [email protected]

SWITZERLANDBASELZUG


CZECHBRNO


ITALY

Phone: +41 78 688 9912E-Mail: [email protected]

UK MANCHESTER

Phone: +44 78 94 414026E-mail: [email protected] Infor Business partner covering Great Britain, Ireland, the Netherlands, Belgium and Luxemburg.

Documents

Merit Globe - Annual report 2013