Merit Globe - Annual report 2013

ANNUAL REPORT

2013

TURNING KNOWLEDGE INTO VALUE

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ANNUAL REPORT | MERIT GLOBE | 2013

It commits to be Merit We are looking forward in continuing to help our clients create value and profits.

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 implementation 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 version13 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.

CONTENTS 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

Notes

page 13-21

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ANNUAL REPORT | MERIT GLOBE | 2013

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.

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ANNUAL REPORT | MERIT GLOBE | 2013

Merit’s Unique Offering: We aim to improve our clients competitiveness by streamlining business processes and implementing modern integrated software.

Sales

Account Manager

CUSTOMER TEAM

Operations Service Manager

Industry competence within a few selected industries

Project Solution Manager

Leading Industry suites � – covering your business requirements

ss rld-Cla Ser vices o W ed Applica f Bre tio o t ns s Be ustry Suites d In Industry/Vertical

Merit Customer

M

er

Infor M 3 it A

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

ppSu

je cts |

ite | I n

ac te r f

O p e r a ti o

es

ns Secure efficient implementation with minimized risk and long-term operation of solutions

ANNUAL REPORT | MERIT GLOBE | 2013

Annual Report 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.

Business Merit Globe AS (MGAS) is the parent company in Merit group. MGAS is a provider 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 business solutions (ERP) such as Infor M3.

This has helped us position in existing branches with our own software Merit Portal.

Main market remarks The 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 applications (Merit Portal/Best of Breed) and service-based concepts (Merit Operations & 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 development and unique solutions. At the same

time, sales of mobile solutions increases, especially sales solutions on tables and smartphones. This leads to an adjustment 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 company, 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.

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ANNUAL REPORT | MERIT GLOBE | 2013

Economy and Finances Earnings Merit had NOK 306.650.188,- in earnings 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.

Expenses In 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 expenses, 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.

Result Result (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 operation’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 company The 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 situation The total balance of Merit was NOK 135.626.086,- in the end of the accounting 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 equivalents 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 annual 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 company The parent company has 55% assets per 31.12.2013.

Financial risk The 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 organizations with high credit rating. New business connections are credit checked beforehand. 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 2013 Profit of NOK 588.023,- is transferred to Merit Globe AS to cover loss.

ANNUAL REPORT | MERIT GLOBE | 2013

Organization 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 monitoring 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 solution. In principle, the entire consultant staff is part of these areas in Merit.

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 certificates have been established to value the skills and experience in different areas.

Research and Development

Certification

An 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.

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

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

Professional groups Merit has worked towards establishing professional groups for different competency areas. These groups may be linked towards branches, solutions or processes.

Competency groups are organized by country with contact points and cooperation between countries.

Services Competence Building Merit’s service organization focuses on the following areas: -->

Projects

Operations

Proven implementation methodology Deep industry knowledge for the focused verticals Complete resource teams

Application Monitoring Process Control Application Support Merit’s “Emergency support”

Scalable from small local projects to

(24/7 customer support service)

large and international projects

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ANNUAL REPORT | MERIT GLOBE | 2013

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 development 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 employees 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 competencies. 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-beeing The 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 workenvironment. 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 outside 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 Policies All Merit employees are obligated to support a positive and professional work-environment. This includes that all employees treat each other respectfully and all forms for discrimination are prohibited.

This includes amongst others discrimination 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 Policies Merit has a long-term goal to increase the percentage of female employees, but right skills and competency will always weight more when hiring.

Environmental impact Merit 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.

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ANNUAL REPORT | MERIT GLOBE | 2013

Income statement PARENT COMPANY

2013

2012

Note

2013

GROUP 2012

Revenue 0

0

Sales revenue

6

10 143 340

9 142 406

Other operating income

12

10 143 340

9 142 406

Total revenue

307 275 204

311 690 311

1 374 984

5 710 699

308 650 188

317 401 010

32 903 369

29 014 349

Operating expenses 0

0

7 523 363

7 449 362

278 378

187 001

5 697 781

Cost of sales Payroll expenses

5,9

209 056 210

204 143 794

Depreciation

7,8

18 185 283

18 471 889

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

Income from investments in subsidiaries

0

0

0

0

2 868 858

749 115

0

0

0

0

3 159 078

2 411 885

-290 220

-1 662 770

-10 895 599

-5 154 487

-135 390

2 116 037

-10 760 209

-7 270 524

Majority interests

-11 143 365

-8 052 919

Minority interests

383 157

782 395

Financial income and expenses 4 264 710

6 612 898

711 033

803 724

Interest income from group companies

1 624 388

187 764

Other financial income

0

2 405 200

126 938

636 076

2 293 626

1 956 690

Other financial expenses

4 179 567

2 606 420

Net finance

823 385

37 473

235 362

408 311

588 023

-370 838

Write-down on financial assets

2

Interest expenses to group companies

Profit/(loss) before income tax

Income tax expence

13

Net profit/(loss)

Distribution

Allocated to: 588 023

-370 838

Uncovered losses

588 023

-370 838

Total

14

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ANNUAL REPORT | MERIT GLOBE | 2013

Balance sheet as of December 31 PARENT COMPANY

2013

2012

Note

2013

GROUP 2012

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

2 695 532

3 253 705

2 695 532

3 253 705

0

0

988 526

241 191

988 526

241 191

47 772 265

62 772 771

Tangible assets 378 456

604 640

Fixtures and fittings, tools, office machinery etc.

378 456

604 640

Total tangible assets

7,11

Financial assets 79 225 476

79 196 836

Investments in subsidiaries

2

15 228 231

77 391

Other receivables

12

94 453 707

79 274 227

Total financial assets

94 844 579

79 878 867

Total fixed assets

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

9 113 918

13 697 126

15 729 458

37 197 780

87 853 821

87 099 278

110 574 037

117 076 647

135 626 086

149 872 049

Cash and cash equivalents

Total current assets

Total assets

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ANNUAL REPORT | MERIT GLOBE | 2013

Balance sheet as of December 31 MORSELSKAP

2013

2012

Note

2013

KONSERN 2012

Share capital

14, 15

1 754 751

1 739 286

14

0

59 799 867

1 754 751

61 539 153

37 985 520

-12 017 115

37 985 520

-12 017 115

1 046 578

663 421

40 786 849

50 185 459

0

0

0

0

23 954 118

24 435 870

Equity Paid-in capital 1 754 751

1 739 286

0

59 799 867

Share premium

1 754 751

61 539 153

Total paid-in capital

Retained earnings 59 306 942

-2 302 723

Other equity

59 306 942

-2 302 723

Total retained earnings

0

0

61 061 693

59 236 430

14

Minority interests

14

Total equity

Liabilities Provisions 0

14 137

Deferred tax

0

14 137

Total provisions

13

Current liabilities 23 954 118

24 435 870

Liabilities to financial institutions

10, 11

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

16 495 406

17 463 607

23 292 491

32 365 303

Other current liabilities

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

135 626 085

149 872 049

Public duties payable 10,12

Total equity and liabilities

Ă…lesund, 21. Mai 2014

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ANNUAL REPORT | MERIT GLOBE | 2013

Cash flow statement PARENT COMPANY

2013

2012

Note

2013

GROUP 2012

Cash flow from operating activities 823 385

37 473

-4 264 710

-6 612 898

0

0

278 378

187 001

0

2 405 200

10 915 699

-7 727 980

-19 234 127

21 251 113

-11 481 375

9 539 909

Profit/(loss) before taxes

-10 895 599

-5 154 487

0

0

Income tax paid

-1 622 252

-1 827 565

Depreciation

18 185 283

18 471 889

0

0

Changes in inventories, accounts receivables and accounts payable

-3 253 370

5 037 865

Changes in other accruals

-6 513 491

-9 479 923

Net cash flow from operating activities

-4 099 429

7 047 779

-627 121

-1 609 292

Proceeds from sale of shares

0

-9 229 875

Share of the (profit)/loss of associates

Impairment of financial assets

Cash flow from investing activities -371 763

-791 642

Purchase of tangible fixed assets

-28 640

-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

-747 335

-77 391

-1 667 273

-10 098 908

-1 374 456

-17 951 540

-481 752

-480 247

1 372 429

0

0

0

890 677

-480 247

Net change in cash and cash equivalents

-4 583 208

-11 384 008

Changes in long term receivable Net cash flow from investing activities

Cash flow from financing activities 7 165 219

301 185

1 372 429

0

Changes in group accounts Proceeds from capital increase Share issue expenses

5 293 703

0

Proceeds from group contribution

13 831 351

301 185

682 703

-257 814

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

Net cash flow from financing activities

NOTES | MERIT GLOBE | 2013

Notes to the accounts for 2013 Note 1 - Accounting Principles The annual report is prepared according to the Norwegian Accounting Act 1998 and to the generally accepted accounting principles.

Basis for consolidation The 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.

Subsidiaries Subsidiaries 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 accounting 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 appropriated in the subsidiary accounts. If dividends exceed withheld profits after acquisition, the exceeding amount represents reim-

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

Sales revenue Sales 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 deferred 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 remainder of accounts receivables outstanding balances, a general provision is carried out based on expected loss.

Foreign currency translation Foreign currency transactions are translated using the year end exchange rates.

Property, plant and equipment Property, plant and equipment is capitalized 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 recoverable 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 development Research 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 grants Government 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 tax Tax expenses in the profit and loss account comprise both tax payable for the accounting 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.

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NOTES | MERIT GLOBE | 2013

Cash flow statement

Use of estimates

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

The preparation of the financial statements 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.

Note 2 - Investment in subsidiaries PARENT COMPANY 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

* 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.

Note 3 - Merger and reorganization PARENT COMPANY

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 continuity 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 settlement 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 shareholders 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 reorganization 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.

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NOTES | MERIT GLOBE | 2013

Note 4 - Financial market risk PARENT COMPANY

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.

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

The company and the Group are exposed to interest- and exchange rate risk. The Group has no formal hedging strategy.

Exchange rate risk The company and the Group have transactions in different currencies. It is not

Interest risk The company has overdraft facilities with

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

2013

2012

Wage costs

2 882 636

3 230 392

Salaries

587 864

382 430

200 027

112 057

3 852 836

3 724 483

0

0

Refunds

0

0

Capitalized costs

7 523 363

7 449 362

3

3

2013

GROUP 2012

162 484 970

158 716 979

Social security tax

24 567 093

25 752 069

Pension costs

15 419 269

16 441 134

9 537 909

11 764 254

-2 953 031

-530 642

0

-8 000 000

209 056 210

204 143 794

239

265

Other payments

Total

Average number of employees

PARENT COMPANY

Other 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

Chief Executive Officer

Salary 1 240 710

Other remuneration 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.

PARENT COMPANY

2013

Auditor fee has been divided as follows

GROUP 2013

160 000

Statutory audit fee

625 603

0

Assurance services

26 175

20 540

Tax advisory fee

25 775

94 592

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

250 996

16

NOTES | MERIT GLOBE | 2013

Note 6 - Revenues PARENT COMPANY 2013

2012

2013

GROUP 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

Note 7 - Tangible assets PARENT COMPANY Fixture and fittings, tools, office machinery, etc.

Total

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

Additions

Useful economic life Amortization plan

3 years Linear

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

Total

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

Acquisition cost 01.01.

Amortization plan

Linear

17

NOTES | MERIT GLOBE | 2013

Note 8 - Intangible assets GROUP Goodwill

R&D

Total

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

-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

5 years

5 years

Linear

Linear

Acquisition cost at 01.01.

Acc. amortization at 31.12.

Useful economic life Amortization plan

Note 9 - Government grants GROUP

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.

Note 10 - Bank deposit PARENT COMPANY

2013 191 824

GROUP 2013

Restricted bank deposits

4 438 792

PARENT COMPANY

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 intercompany balance with Merit Globe AS. These intercompany balances are classified as other current liabilities or other current receivables.

18

NOTES | MERIT GLOBE | 2013

Note 11 - Debts and receivables PARENT COMPANY

2013

2012

694 623

10 859 807

378 456

604 640

1 073 079

11 464 447

Pledged assets

Accounts receivables Property, plant and equipment Total

2013

GROUP 2012

24 779 390

32 256 392

1 072 956

1 276 324

25 852 346

33 532 716

PARENT COMPANY

The 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.

Note 12 - Intercompany balance group companies and associates PARENT COMPANY

Receivables Accounts receivables

2013

GROUP 2012

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

2013

2012

980 000

406 017

Other short term payables

22 797 961

31 325 206

Total

23 777 961

31 731 223

Payables Accounts payables

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).

19

NOTES | MERIT GLOBE | 2013

Note 13 - Income taxes PARENT COMPANY

2013

2012

Income tax expenses

2013

GROUP 2012

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

823 385

37 473

15 550

6 183

Permanent differences

0

2 405 200

Write-down on shares

0

-990 600

-4 264 710

-5 622 298

96 475

-50 491

-3 329 300

-4 214 533

0

-1 407 765

4 264 710

5 622 298

935 410

0

PARENT COMPANY

2013

2012

Ordinary result before tax

Income from investment in subsidiaries Group contribution Changes in temporary differences

Applied loss carried forward Group contibution Tax base

Temporary differences outlined

2013

GROUP 2012

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

Loss carried forward

-13 011 863

-26 048 866

-19 791 889

-27 325 346

-5 343 810

-7 651 097

3 955 201

7 316 672

-1 388 609

-334 425

0

GROUP

Tax base estimation

-45 984

50 491

Net temp differences as of 31.12

-12 416

14 137

Deferred tax/deferred tax asset (27% this year, 28% last year)

0

0

Deferred tax asset in subsidiaries not in balance sheet

0

0

Deferred tax asset

It 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.

20

NOTES | MERIT GLOBE | 2013

Note 14 - Owners equity PARENT COMPANY Share capital

Share premium reserve

Other equity

Sum

1 739 286

59 799 867

-2 302 723

59 236 430

0

0

588 023

588 023

15 465

1 221 775

0

1 237 240

-61 021 642

61 021 642

0

0

59 306 942

61 061 693

Owners equity 01.01.

Profit for the year Capital increase Reallcotated share premium reserve Owners equity 31.12.

1 754 751

GROUP

Owners equity 01.01.

Profit for the year Capital increase

Share capital

Share premium reserve

Other equity

Minority int.

Total

1 739 286

59 799 867

-12 017 115

663 421

50 185 459

0

0

-11 143 365

383 157

-10 760 208

15 465

1 221 775

0

0

1 237 240

-61 021 642

61 021 642

0

0

124 358

0

124 358

1 754 751

0

37 985 520

1 046 578

40 786 849

Reallcotated share premium reserve Conversion differences Owners equity 31.12.

0

21

NOTES | MERIT GLOBE | 2013

Note 15 - Share capital and shareholder information PARENT COMPANY Share capital: Number of shares

Face value

Book value

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 %

1 754 751

100,00 %

100,00 %

Ordinary shares

Shareholders per 31.12:

Total number of shares

www.meritglobe.com NORWAY

GERMANY

BERGEN GJØVIK MOLDE OSLO

LANDSHUT

SANDNES TRONDHEIM ÅLESUND

SWITZERLAND

Phone: +47 400 03 650 E-mail: norway@meritglobe.com

SWEDEN GÖTEBORG KALMAR LINKÖPING MALMÖ STOCKHOLM Tel.: +46 8 410 234 00 Phone: sweden@meritglobe.com

FINLAND HELSINKI TURKU TAMPERE

Phone: +49 176 832 799 44 E-Mail: germany@meritglobe.com

BASEL ZUG Phone: +41 41 561 44 00 E-Mail: centraleurope@meritglobe.com

CZECH BRNO Phone: +41 78 688 99 13 E-Mail: centraleurope@meritglobe.com

ITALY Phone: +41 78 688 9912 E-Mail: centraleurope@meritglobe.com

UK MANCHESTER

DENMARK

Phone: +44 78 94 414026 E-mail: enquiries@meritglobe.com

Infor Business partner covering Great Britain, Ireland, the Netherlands,

ODENSE

Belgium and Luxemburg.

Phone: +358 290 091 040 E-mail: finland@meritglobe.com

Phone: +45 42 14 91 20 E-mail: denmark@meritglobe.com