otrum asa annual report 2008rss.hsyndicate.com/file/152003402.pdf · coax in early autumn, otrum is...

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OTRUM ASA ANNUAL REPORT 2008

3Letter from the CEO :: OTRUM ASA

Bjørn Ove Skjeie

2008 was the year OTRUM started roll out of a totally new generation of systems, using the TV as a true portal for a hotel guest to the world at large, and at the same time enabling personalised and tailor made communication with hotel guests not only from the hotel, but from central hotel chain offices. This development is a first in the industry, and OTRUM is the only company to offer this high-level of personalised service.

Using web-centric solutions lowers the knowledge threshold that hotel staff need to be able to lift guest communications to a totally new level. After years of planning and interaction with major hotel chains, the future is now here, also for the first time offering true end-to-end digital HD-quality.

New patent pending technologies were implemented in 2008 and, together with further streamlining of OTRUM’s operations, OTRUM took a firm grip on technology leadership within our industry.OTRUM also took new initiatives to expand content and total offering via the TV solution including initiating OTRUM Media, a concept of bringing laser targeted information and advertising to the right guests in the hotels.

With focus on keeping OTRUM’s financial strength and flexibility we have manoeuvred OTRUM into pole position for managing the challenging environment of 2009, at the same time we have set pace for profitable growth when the financial crisis dominating today’s world turns around.

Creating values through industrial leadership2008 reflected a transition from delivering traditional pay-TV solutions to the hospitality market, into the roll out of state-of-the-art digital solutions for Guest Relationship Management (GRM). From a first half year where most projects relied on our well proven analogue platform with high quality of service, we gradually started to install our new OTRUM Evolution family, creating a totally new guest experience and also a different user environment for the hotels.

After several roadshows in OTRUM markets during summer 2008, we

experienced good feedback and a lot of interest from large international chains, regional chains and also individual hotels who want to build their brand and raise their service levels to guests well above what has been achievable through TV solutions in the past.

Throughout this effort OTRUM has focused on maintaining quality of service, and even improving the reliability which is needed to become best in class within the industry.

Continuous communication with leading edge people and organisations in the industry has been vital, and valuable feedback from partners like Rezidor, Intercontinental Hotel Group (IHG) and others has been important in the evolution.

OTRUM has kept its dominating role in the Nordic Region throughout 2008 and at the same time has taken important steps to further gain position in Central Europe and important parts of Southern Europe, this during a period where recession started to influence the market. Interesting partnership processes are taking place within those regions.

OTRUM expanded its initiatives in the Middle East and Africa region during the year and the new OTRUM Evolution system was installed in South Africa, amongst others. Also in the former Eastern Europe, OTRUM’s footprint was extended and several projects were executed.

During 2008 OTRUM became a preferred supplier of its state-of-the-art solution to IHG and also entered into exclusive frame agreements with the Norlandia Hotel Chain in the Nordic Region and with Reval for the Eastern Europe market, all moves which confirm the interest for new and groundbreaking solutions in our industry.OTRUM also established partnerships with new Distribution Partners in some of our markets, and at the same time made organisational changes to increase efficiency in the market and to reduce costs where possible, this to be well prepared for the added general uncertainty in the world economy.

The marketThe hotel market in general was influenced by the dramatic downturn in the global economy, leading to recession in many countries. A substantial reduction in travel activity was recognised in the second half of 2008, leading to reduced occupancy and a decline in room rates.

This again led many hotel chains and also individual hotels to go into cost cutting mode, construction activities were reduced and many upgrade projects postponed.

At the same time, strong players in the industry started repositioning activities, this to benefit from the crisis while weaker players started to lose position. This is a trend which is expected to continue in 2009.

Letter from the CEO

4 OTRUM ASA :: Letter from the CEO

The drive for new and commercially attractive solutions for brand building, laser targeted communication and new revenue streams continued in 2008 and was actually fuelled by the economic downturn.

The market activity based on this was satisfactory in 2008 and our order intake and market effort reflected the shift from old fashioned pay-TV systems to full blown digital Guest Relationship Management.

We also recognised some need in the market for prolonging of existing contracts, based on lack of funds to invest.

Market-wise we saw a change from activity in well-known and mature markets in the beginning of the year, into more initiatives in parts of the Middle East, Africa and former Eastern Europe. This together with the uncertainty in the world economy also influenced OTRUM’s focal point during the year.

Products and ServicesOTRUM continued its development of state-of-the-art solutions which began in 2007. After pilot installations with CAT5 infrastructure during the first half year, followed by the introduction of our new end-to-end fully digital HD solution over COAX in early autumn, OTRUM is building up a strong presence with installations of these solutions all over Europe.

With its web-based portal OTRUM is not only accommodating the need for individualisation of communication to the hotel guest, but paving the way for new ideas from chains and hotel staff as to revenue management and giving guest recognition.

The OTRUM Evolution family of interactive systems and the Brand Channel application, in combination with traditional analogue systems, has received very good feedback in the market. IPTV and also extended content has been added to our portfolio, and OTRUM’s ability to offer digital HD quality content to the guests confirms technology leadership.

OTRUM has also during 2008 prepared its roadmap for future evolution of solutions.In the later part of 2008 OTRUM has added resources and made plans for the

introduction of media and advertising applications to our portfolio, taking full benefit of the features built into our new system.

By combining our solutions with our knowledge of the hotel industry and adding media competence, OTRUM will in co-operation with partners pursue another avenue creating value for clients and shareholders of the company. OTRUM has also throughout 2008 added new partners for screens, expanding the choice available to our clients within this area.

Organisation, Employees and Social ResponsibilityOTRUM continued its work to keep a flexible, competent and quality oriented organisation in 2008. We made adjustments regarding serving specific markets, adding resources and competence where needed and adjusting activity where appropriate.

OTRUM also invested in a totally new IT platform for all customer related and internal functions. By doing this we not only increased efficiency, but secured “best in class” stability, quality and IT security - something we find of great importance to our clients as we strive for open but secure communications with our clients and within OTRUM at any time. Here OTRUM made a major leap during 2008; something that we also believe will defend and increase value for our shareholders.

During 2008 OTRUM implemented several improvement processes initiated on the back of our “climate analysis” made in late 2007. This is a continuous process to improve overall working conditions in the company, not only making life better for our employees, but enabling OTRUM to serve clients and create value in the best way.

OTRUM also ran a Corporate Social Responsibility program during 2008, this in line with our commitment to environment issues and following up our social responsibility as a company. Also in 2008 OTRUM gave a contribution to Save the Children.

The futureMost companies and industries in the world are preparing for a more uncertain year in

2009 than what we have seen for a long time. Even though governments all over the world have taken strong measures to rectify the imbalance in the world economy, and are also prepared to do more, I think that we are in for a long and rough ride.

Having said that, these conditions also give opportunities and OTRUM has over the last couple of years made major adjustments to its operations, giving a good foundation, not only for surviving but to benefit from the activity taking place.

We have towards the end of 2008 seen that clients do invest in our new solutions, we see ongoing activity with strong international chains and we see partners actively seeking to utilise the uniqueness of our solutions. This is supported by the activity level in the beginning of 2009.

OTRUM went through a year of transition in 2008 which in spite of negative P&L figures reflected controlled investments and a strong operating cash flow. A balance sheet with limited risk and an equity share of 62% reflects a company that is solid and prepared for rainy days.

OTRUM also managed to utilise an especially favourable currency situation between the Euro and Norwegian Kroner at the end of 2008, adding security into our plans for 2009.

Also with the organisational adjustments made, with a dedicated and competent workforce, OTRUM is well prepared for a challenging 2009 as well as set up for handling growth and new opportunities when they arise.

Many shareholders in all stock markets have seen their values being dramatically reduced in 2008. OTRUM’s ambitions for 2009 are clearly to serve our clients in a way which secures long term co-operation and value creation, and through this also re-establish and increase shareholder value.

Bjørn Ove SkjeiePresident & CEO

5Key Facts & Figures :: OTRUM ASA

OTRUM Key Facts & Figures

Other – 7%

UK – 9%

Sweden – 8%

South Africa – 2%

Switzerland – 2%

Russia – 4%

Romania – 2%

Latvia – 2%

Norway– 10%

Denmark – 3%

Spain – 6%

Finland – 7%

France – 14%

Germany – 16%

Hungary – 2%

Italy – 5%

OTRUM defines Europe, the Middle East and Africa as a home market, and covers more than 40 countries in the area. The company is represented by wholly owned subsidiaries in the Nordic countries, France, Germany, Italy, Spain, the UK and China. In the remaining countries in Europe, the Middle East and Africa, OTRUM has distribution partners with long experience in the hospitality industry.

Sales per country (based on number of installed rooms)

6 OTRUM ASA :: Key Facts & Figures

35

30

25

20

15

10

5

35

30

25

20

15

10

5

2002

2001

2003

2004

2005

2006

2007

2008

Rooms installed with OTRUM technology

OTRUM sold its products through distributors until 31st March 2001, from this date onwards OTRUM began to market and sell its own products directly to hotels.

Recurring business

OTRUM has reoccurring revenue streams from films, satellite channels, maintenance and self-financed systems. The sale of systems is based on deliveries to hotels where either the hotel purchases the system from OTRUM, or OTRUM is financing the sale by selling the system to a finance institution. Self-financed systems are systems rented to the hotel, where OTRUM keeps legal ownership of the system and the system remains in the balance sheet as an asset.

150

100

50

20062005 2007 2008

DepreciationOperating Expense

Gross Profit - Film & satelliteGross Profit - Rental own system

Sales development

NO

K m

illio

ns

50

100

150

200

250

300

350

50

100

150

200

250

300

350

2006

2007

2008

2005

2004

2003

2002

2001

400

450

400

450 OTRUM technology has been installed in more than 400,000 rooms since 1992.

NO

K m

illio

ns

NO

K m

illio

ns

Thou

sand

room

s

7Key Facts & Figures :: OTRUM ASA

Key figures

(in MNOK) 2008 2007 2006 2005 2004

Profit and loss accountSales 344.0 401.8 333.8 335.0 314.0Operating expense 370.2 438.0 396.9 326.9 289.8Operating result -26.2 -36.1 -63.1 8.1 24.2Net financial result 4.9 -3.8 5.3 -2.8 -1.2Result before taxes -21.3 -39.9 -57.8 5.3 23.0Tax -7.1 -2.9 -2.6 9.9 0.3Profit/loss for the year -28.4 -42.8 -60.4 15.2 23.3

BalanceFixed assets 209.6 180.2 225.4 203.6 201.2Current assets 206.7 224.4 277.2 251.6 266.9Total assets 416.3 404.6 502.6 455.1 468.0Equity 256.6 247.9 298.1 356.6 345.2Long term liabilities 42.0 48.9 66.6 10.0 12.7Current liabilities 117.1 107.3 138.0 88.6 110.1Total equity and liabilities 416.3 404.6 502.6 455.1 468.0

Key figuresEBIT margin -7.6 % -9.0 % -18.9 % 2.4 % 16.2 %NOPLAT margin 0.0 % 0.0 % 0.0 % 0.0 % 7.4 %

Earnings per share (NOK) -1.30 -1.95 -2.75 0.69 1.07

Equity per share NOK 11.72 NOK 11.32 NOK 13.61 NOK 16.28 NOK 15.76

Equity % 61.6 % 61.3 % 59.3 % 78.4 % 73.8 %

8 OTRUM ASA :: Guest Relationship Management

As hotel brands aim to attract new customers, and to hold onto those clients they already have, the importance of targeted customer communication becomes higher than ever.

In 2008, OTRUM launched the industry’s first tool dedicated to global communication with hotel guests, based not only on the message and the location, but also on the demographics and profile background of the clients.

OTRUM Evolution MarketingOTRUM Evolution Marketing is the tool which will shape guest communication for OTRUM customers – a web centric portal, finally giving the brand managers and CRM specialists the tool they have been missing within their Interactive TV solutions. Targeting the right guests with the right message has never been as simple; the OTRUM Evolution Marketing Module offers the industry leading solution for effective guest communication and GRM (Guest Relationship Management).

Via the OTRUM Evolution web portal any hotel chain can build communication campaigns basedon the profiles of the checked-in guests throughout the chain. Communication can be tailored tobrands, countries, regions, properties and

Guest Relationship Management

9Guest Relationship Management :: OTRUM ASA

Digital solutions – all the way!2009 will see one of the most aggressive technology shifts for some time. This year hotel TV solutions will move from ‘mainly’ digital – to ‘completely’ digital implementations. This comprehensive, end-to-end digital shift is possible thanks to two powerful technologies under active deployment.

First is the usage of broadcast standard IPTV and DVB to carry digital content all the way to the OTRUM hardware in the guest room, and second is the digital HDMI interface to enable OTRUM to securely deliver encrypted digital content directly into the LCD screen installed within each room. As a licensed adopter of the HDCP standard, OTRUM can interface securely with a large range of HDMI equipped displays.

even specific floors within a property. Campaigns can be used for brand building, simple communication, advertising, internal promotion, guest feedback and revenue management.

Real-time targeted advertising is the ultimate dream for paying advertisers, even more so when they have a captive audience with the guarantee that almost every advert impression will be viewed. Laser marketing enables person to person marketing, drilling down to individual guests. Targeting refined hotel brands also results in a refined guest profile. This new opportunity for revenue generation coincides with what may be a tough year for other revenue streams.

Opportunities through simplicityTraditionally hotel reception staff have been hesitant to use communication opportunities within interactive solutions, due to the proprietary control tools of legacy solutions. OTRUM breaks the mould by offering truly intuitive web-centric browser based interfaces which are both familiar and easy to navigate for the most basic PC users. The low knowledge threshold required therefore encourages staff to utilise the communications tools available.

The high levels of staff turnover in the average hotel has motivated OTRUM to create and customise solutions which require the most minimal level of training and support before a new staff member is up to full speed. The sooner someone is comfortable with the tools they can access, the sooner they will begin to utilise and maximise the capabilities.

An increasing number of solutions from OTRUM now employ web based user interaction, including the OTRUM Evolution Digital Signage solution, providing both way-finding and marketing tools for hotels of any size. Hotel digital signage is a huge area for growth in 2009, and this will only be possible if the users find the solution simple to use, therefore simplicity of use and web-centric operations will continue as a core focus for OTRUM R&D in the coming years.

IPTV itself offers huge benefits for the hotel, in that the integrity and quality of the received material in the room is guaranteed to be ‘best in class’. IPTV offers many value added services such as guest selectable audio and subtitles, while delivering a useful EPG (Electronic Programming Guide) for the guest’s usage.

When operating a converged IP network within a hotel property, IPTV is the only choice for offering a robust, redundant and scalable deployment, which is both future proof and extremely cost effective for new installations. As standard, IPTV is also ready to carry superior HD content just as soon as the hotel wishes to switch – something which is on the horizon for most hotels within 2009.

IPTV

10 OTRUM ASA :: Annual Report 2008

OTRUM’s board of non-executive directors provides a wealth of knowledge and experience, together with the business skills to protect the interests of the shareholders. The board of directors includes two employee representatives from within OTRUM.

Kristin Blix-EltonREC Solar ASBoard member since 2006

Background: Kristin works as Marketing Director for REC Solar AS. She has wide international experience from various positions in sales, sales management, channel management, marketing and competence building, working several years for TANDBERG ASA.

Left to Right: Kristin Blix-Elton, Henning Olset, Anne Helga Seltveit, Christian Albech, Synnøve Brudevoll, Cato Moen and Christian Falster.

Henning OlsetCorporate Express Nordic ASBoard member since 2007

Background: Henning is Chief Financial Officer (CFO) at Corporate Express Nordic AS (earlier Andvord Tybring-Gjedde ASA). Prior to that, Henning was CFO at Telecomputing ASA. He has also within IBM held different senior management positions within various areas of responsibility over a period of 15 years.

Anne Helga SeltveitITE View ASBoard member since 2007

Background: Anne Helga holds a PhD in computer science from NTNU in Trondheim. She works as a consultant for ITE View AS. She has broad experience as a manager and is a subject matter expert within IT and telecommunication.

Christian AlbechChairman of the boardTelenor Broadcast Holding AS Board member since 2001

Background: Christian holds the position of CEO Telenor Broadcast Holding AS. Christian has wide experience from various management and board positions, which strengthens his role as Chairman of the OTRUM board.

Synnøve BrudevollOTRUM ASABoard member since 2008

Background: Synnøve is an employee representative on the board. She has worked for OTRUM since 2007 as a Logistics Coordinator in OTRUM’s head office in Oslo, Norway. Previously Synnøve has worked in Finance and International Shipping/Transport.

Cato MoenOTRUM ASABoard member since 2005

Background: Cato is an employee representative on the board. He has worked for OTRUM since 1997 and is currently Office Manager in OTRUM’s office in Arendal, Norway. Previously Cato has worked as Accounting Manager in the company.

Christian FalsterAros Capital Partners LLPBoard member since 2008

Background: Christian is the Managing Partner of Aros Capital Partners LLP, a newly formed investment management company based in London, UK. Previously he was a Director at FBR Capital Markets (NASDAQ: FBCM). His years of experience as a banker in the financial markets includes careers at Montgomery Securities in San Francisco, Industrifinans in Oslo and Thomas Weisel Partners (NASDAQ: TWPG) in London.

Board of Directors

11Annual Report 2008 :: OTRUM ASA

Directors Report

In 2008 OTRUM took an important step forward to further develop the interactive TV industry within the hospitality market. In mid-2008 deployment of the latest OTRUM solutions commenced, embracing the use of the TV as the guest’s portal to the world as well as the hotel and hotel chains portal to the guest. As these solutions are web-based, they offer a simplicity and flexibility that is unique in the industry. Additionally these solutions are widely accepted as the industry’s first fully “end-to-end” digital systems with full HD quality.

Profitability-wise, OTRUM showed progress compared to 2006 and 2007, but still have a way to go before long-term and continuous profitable operation is achieved. At the same time OTRUM achieved a good cash flow from operations, which together with a controlled investment in leases of the company’s hotel systems, provides a good foundation for value creation for OTRUM’s shareholders.

The total volume in 2008 was lower than expected, this was largely influenced by market reluctance to invest in traditional Pay-TV systems and in anticipation of new and innovative solutions, as well as lower investment willingness and ability due to the global financial crisis in the second half of 2008.

In its articles of association, OTRUM has stated the goal of carrying out business activities within electronics and data technology as well as participation in other companies. OTRUM’s main strategy is to develop, market and distribute interactive TV solutions to the hotel industry and to supply interactive TV systems with a range of services developed for hotels, as well as films, satellite channels and

Internet solutions adapted to the type of guests accommodated by the hotel.

OTRUM’s head office is situated in Oslo, whereas research and development (R&D) is based in Arendal. The R&D department in OTRUM develops in-house software and designs hardware for interactive TV systems, it employs a total of 20 persons. OTRUM has furthermore entered into some larger partner agreements for development of both hardware and software.

The main focus of R&D activities in 2008 has been to commission new digital solutions in the area of infotainment, solutions that will change the marketing potential with regard to hotel TVs personalisation of content and service range, as well as dramatically enhancing the user interface.

Distribution and service are handled in Norway as well as via the company’s wholly owned subsidiaries in Sweden, Denmark, Finland, France, the UK, Germany, Spain, Italy and China. In addition, OTRUM has agreements with external distributors in those areas of Europe and the Middle East in which the group does not have its own sales and service companies. OTRUM has in 2008 strengthened its distribution network, particularly in the Middle East and in former Eastern Europe.

The OTRUM group enters 2009 with a strong financial position, an equity ratio of 62% and cash and other liquid assets amounting to MNOK 107. The board of directors is of the opinion that the company has the equity appropriate to the company’s goals, strategies and risk profile, and on this basis has compiled the annual accounts on the assumption

that the company will continue as a going concern.

The group is required to submit the group accounts in accordance with InternationalFinancial Reporting Standards (IFRS) and OTRUM has also chosen to register the accounts of the parent, OTRUM ASA in accordance with IFRS. Developments over the year In the opinion of the board, the annual accounts provide a true summary of the developments and results from operations in OTRUM during 2008.

OTRUM supplies its products and services to hotels in Europe, the Middle East and Africa. OTRUM’s level of activity in China has been reduced due to lack of sales results during 2008. At the same time, we have strengthened sales resources related to the Middle East where OTRUM considers there to be good opportunities for OTRUM products.

OTRUM’s main clients are business hotels in the three to five star segments. Historically, the hotel’s willingness to invest is linked to their own profitability, as well as technology shifts. OTRUM Evolution will be at the forefront of the technology that will dominate the hospitality industry in the years ahead.

In 2008, OTRUM has focused on product development and in particular the company’s new product OTRUM Evolution. In addition, there has been continuous monitoring with respect to cash flow, project follow-up and efficient operation, all areas that are important to underpin value creation and profitable growth.

Annual Report 2008


The financial crisis, having global effect in the second half of 2008 and into 2009, will also affect OTRUM. The extent of this effect is somewhat uncertain, however OTRUM with its financial solidity and its recently launched products has every opportunity to strengthen its position in relation to its competitors. In 2008 and into 2009 OTRUM has implemented several cost reduction measures, including a reduction of employees, to prepare for a potentially long-term economic recession.

The most important agreement for OTRUM in 2008 was a partnership agreement with The Rezidor Hotel Group that included agreement conditions for delivery and strategic cooperation to develop the most innovative solutions for interactive TV.

Turnover and profit

Parent companyTurnover for the parent company, which includes direct sales activities in the Norwegian hotel market and Emerging Markets, reduced from MNOK 216 in 2007 to MNOK 171 in 2008. The reduction is due to overall lower activity in the group. Operating profit ended with a loss of MNOK 84.1 compared with a loss of MNOK 96.6 last year, this is essentially as a result of depreciations of values and receivables of subsidiaries.

OTRUM ASA has a write-off on values in its subsidiaries after impairment testing of MNOK 45.2 in 2008. The following companies have been written down; OTRUM Denmark AS MNOK 5.4, OTRUM UK Ltd MNOK 16.2, OTRUM Interactive Iberica SL MNOK 16.7, OTRUM Italy Srl MNOK 2.4 and OTRUM Trading (Shanghai) Co Ltd MNOK 4.5.

In addition, OTRUM ASA has written-down the value of receivables towards the subsidiaries by the following; OTRUM Interactive Iberica SL MNOK 0.5, OTRUM Italy Srl MNOK 4.5 and OTRUM Trading (Shanghai) Co Ltd MNOK 1.2.

Losses in the subsidiaries have been continuously recognised in the group accounts and the write-off has consequently no effect on the group’s result and equity.

Net financial items were MNOK 41.6 compared to MNOK 2.3 last year. The strengthening of net financial items can be largely attributed to the strong EUR exchange rate. OTRUM has substantial loans to subsidiaries in EUR and the strengthening of EUR against NOK provides a positive unrealised foreign exchange gain. The pre-tax loss was MNOK 42.5 against a loss of MNOK 94.3 last year. There was no tax in the parent company, so the pre-tax loss ended at MNOK 42.5.

The board of directors proposes not to pay dividend for 2008.

It is proposed that the parent company’s loss of MNOK 42.5 should be allocated as follows:

Allocation of loss:To other reserves: MNOK 42.5Total allocated: MNOK 42.5

The groupAs of December 31st 2008, the group consisted of the parent company OTRUMASA and the wholly owned subsidiaries OTRUM Svenska AB, OTRUM DanmarkAS, OTRUM Finland OY, OTRUM France SA, OTRUM GmbH, OTRUM UK Ltd,OTRUM Interactive Iberia SL, OTRUM Italia S.r.l. and OTRUM Trading (Shanghai) Co Ltd. The first four mentioned, were acquired in connection with an issue directed towards Telenor Vision International AB in April 2001, whilst the other companies were established during the years 2001-2006.

Turnover in 2008 was MNOK 344, a decrease from MNOK 402 in 2007. Gross margin strengthened to 42% in 2008 compared to 38% in 2007, this increase is due in part to the introduction of OTRUM Evolution and a series of measures to improve margins.

Total operating expenses increased by MNOK 11 from MNOK 117 in 2007 to MNOK 128 in 2008. The increase is mainly due to increased provisions for losses on receivables as well as increased marketing activities associated with OTRUM’s new product OTRUM Evolution.Operating income for 2008 was negative with MNOK 26 compared with a loss of MNOK 36 in 2007.

Net financial items were MNOK 4.9 in 2008 compared to MNOK -3.8 in 2007. This is due to the increase in realised and unrealised disagio. Turbulence in financial markets led to large fluctuations in exchange rates especially towards the end of 2008 when the EUR strengthened relatively to the NOK. This depreciation of the NOK is positive for OTRUM as the group has substantial income in EUR, while development and parent company costs are in NOK.

The result before tax was MNOK -21.3 compared to MNOK -39.9 in 2007. Tax expense in 2008 was MNOK -7.1, and is due to net profit in some subsidiaries as well as write-off of the carrying deferred tax assets related to activities in Finland.

Capital and balance sheet

Parent company The company’s balance sheet decreased by 16% from MNOK 395 in 2007 to MNOK 332 in 2008. After this year’s allocation of result the equity capital will be MNOK 287 compared with MNOK 329 in 2007. The equity ratio was 86% at the end of 2008. Free equity capital in OTRUM ASA is MNOK 2.

The groupThe balance sheet for the group as a whole amounts to MNOK 416, up from MNOK 405 in 2007. Equity capital is up from MNOK 248 to MNOK 257 at the end of 2008. The strengthening of equity is due to currency effects and in particular the strong EUR exchange rate at the end of 2008. The equity ratio is 62%. Free equity capital in the group is MNOK 43.

Liquidity

Parent company At the end of the year, the parent company had MNOK 20 in cash and bank deposits. Liquidity in the parent company is good.

Corporate Cash flow from operations was positive at MNOK 56 in 2008, while net investments totalled MNOK 40. The cash flow from operations was around MNOK 82 better than the company’s operating result, this


relates mostly to write-downs of fixed assets and a decrease in working capital. This reflects OTRUM’s business model for rental of TV systems to hotels, with capitalisation into the balance sheet and depreciations over the systems rental period.

Cash flow from financial activities was negative with MNOK 11 due to down payment of debt. Currency effect on the cash had a positive effect on cash holdings with MNOK 7.

At the end of the year the group had MNOK 107 in cash and bank deposits, compared to MNOK 95 in 2007. Liquidity in the group is considered good and the company’s ability to finance its own investments is considered satisfactory.

The working environmentThe company’s working environment is considered to be satisfactory.

The parent company had 461 days of sick leave, which amounts to 4.0% of total work hours - up from 3.0% in 2007. Sick leave in the group was 743 days, amounting to 3.0% of total work hours, an increase of 1.9% from last year. OTRUM will continue its work to reduce sick leave, and is co-operating with the company’s insurance company to keep sick leave at the lowest rate possible. In addition, the parent company carried out individual workplace evaluations with an occupational physiotherapist to reduce sick leave. No accidents, personnel injury or equipment damage has been registered in the company during 2008.

The average number of employees in OTRUM ASA in 2008 was 46 persons, which is down by 1 person from last year. The group has a mean of 108 employees, and at year end the company had a total of 106 employees.

OTRUM attempts to make arrangements so that both women and men are provided with equal opportunities in respect of personal development in the company.

On recruitment both women and men have equal opportunities, and we look at qualifications rather than gender.

Efforts are being made to achieve a higher percentage of women in management positions. Of the groups 106 employees, 35 are women and 71 are men.

All employees have the same working hours, and both women and men have the possibility to apply for a reduction in working hours when needed. Furthermore, there is a tendency for fathers to be more active than previously in utilising their right of absence in connection with the birth of a child / sickness of a child.

Both the board of directors and the management are conscious of the expectations from society in showing resolve in promoting gender equality in the company and the board. Of the representatives elected by the stockholders, 2 out of 5 were women.

The external environment The company’s operations have a very limited negative impact on the external environment. When establishing offices, efforts have been made to select solutions that are as environmentally friendly and energy saving as possible.

OTRUM’s interactive solutions contain a number of functions that make customers’ activities more environmentally friendly. Energy control systems and maintenance management systems for hotel rooms are examples of this.

Most countries have established systems for the return of old TV’s, and OTRUM ensures that all old TV’s removed from hotels are taken to approved recycling points if they cannot be utilised elsewhere.

Financial riskThe company is exposed to market risk, credit risk, interest risk and currency risk during the course of its ordinary business.

Market risk is primarily related to general market development in the hospitality industry as well as external factors that influence this, such as people’s travel patterns and the willingness of customers to invest. Additionally, there is a risk of technology shifts that may influence OTRUM’s competitiveness.

The market risk is evaluated through

market analysis and ongoing assessments of structure and cost profiles.

The risk related to technology shifts is evaluated by ongoing assessment and analysis of trends, together with competitor analysis and necessary adjustments to the competence profile and the direction of development programs.

The credit risk is managed by subjecting all new customers to a credit assessment and by including a clause in the system rental agreement which specifies that all deliveries may be stopped if payment is not made on time.

The interest risk is primarily connected to profitability in respect of sales of rental agreements to credit institutions, since such agreements are discounted at the current fixed interest rate which applies to the currency concerned. An increase in the interest rate will therefore reduce the group’s gross margin.

Currency risk is connected to income and costs, as well as internal financing of subsidiaries. The group has at this time an income in EUR that corresponds to purchases in EUR. The difference in margin will give a foreign currency exposure. The group is further exposed to currency risks on short-term loans granted to subsidiaries by the parent company. Here, fluctuations in the EUR against NOK provide unrealised gains and losses, depending on whether the NOK strengthens or weakens against the EUR.

It is emphasised that there is normally considerable uncertainty associated with assessments of future conditions.

OTRUM’S future development The board of directors is of the opinion that OTRUM ASA’s financial position is satisfactory, while the company has made significant progress in positioning itself as the most innovative supplier of interactive TV systems.

OTRUM has in 2008 started the installation of new solutions that bring the use of interactive TV in the hospitality industry into a new dimension, providing a significantly enhanced content offering as


well as ease of use and thus usability for both local hotels and central head offices.

Feedback from the market confirms a significantly enhanced potential for value creation and profitability for hotels.

With OTRUM’s solid financial position, competitive products and a well-developed distribution network, the company is well prepared for the uncertainty of the financial crisis that has developed in 2008, and is well positioned for further growth. OTRUM will continue to focus on continuous development of its products and service range, in order to safeguard and strengthen the leading position that has been built up throughout 2008.

As part of OTRUM’s strategy, and in partnership with leading hotel chains, an ‘advertising concept’ branded “OTRUM Media” will create new revenue streams and provide the basis for Brand Management stretching significantly beyond what the hospitality industry has seen before. OTRUM will continue to work towards partnership agreements with leading international hotel chains. Experience

gained in the last two years through OTRUM’s collaboration with The Rezidor Hotel Group provides and will continue to provide a solid basis for establishing agreements and concepts for hotel chains both at a global and regional level.

OTRUM has in the past year strengthened its position in exciting markets such as the Middle East, Africa and central parts of Eastern Europe. These are markets that, despite economic setbacks in the world, have had a positive development within OTRUM’s portfolio. Both by OTRUM’s own efforts and through distributors and partners, we see significant opportunities in these areas, in combination with OTRUM’s new and pioneering digital solutions.

OTRUM has in 2008 and into 2009 also adapted it’s organisation with respect to efficiency and management of markets depending on the activity. OTRUM has also made further adjustments in staffing levels related to administrative functions, to ensure best positioning in relation to economic development in the world.

Recent economic development has negatively affected the hospitality industry. Investment willingness is reduced and

there are greater demands on the quality of the investments made. This will also affect OTRUM going forward, but with the action that has been taken in the company during 2007 and 2008, the situation also could provide opportunities for the company.

Financially OTRUM entered into forward currency exchange contracts at the end of 2008, when OTRUM exploited the particularly favourable price situation that occurred between the EUR and NOK. At the end of December 2008 a total of 12 MEUR is secured at an average sales price of 9.87. This helps to give confidence in the company’s profitability in 2009.

Cato Moen Henning Olset Anne Helga Seltveit

Synnøve Brudevoll


Christian AlbechChairman of the Board

Christian Falster Kristin Blix-Elton

The Board of Directors OTRUM ASAOslo, 31st December 2008 / 10th March 2009


Profit and loss account Annual accounts 01.01 -31.12

Group Parent company2008 2007 (amounts in 1000 NOK) Note 2008 2007

343 979 401 830 Sales 2/9 170 766 216 177198 680 249 009 Raw materials and consumables used 2/3 128 293 147 666

70 823 69 204 Payroll and related costs 5/6 36 728 30 05535 491 37 152 Depreciation of fixed assets 7 2 045 85456 981 47 619 Other operating expenses 1/9 28 148 21 677

8 183 34 971 Depr/Write down of intangible assets 8 8 182 7 0890 0 Writedown shares in subsidiaries and receivables

from Group companies1/16 51 507 105 358

-26 178 -36 125 Operating profit/loss -84 138 -96 58220 885 10 254 Financial income 20 47 947 13 848-15 959 -14 053 Financial expenses 21 -6 301 -11 589

4 927 -3 799 Net financial items 41 647 2 259

-21 251 -39 924 Result before taxes -42 492 -94 323-7 144 -2 882 Tax 11 0 0

-28 395 -42 806 Profit /loss for the period -42 492 -94 323

Attributable to:-28 395 -42 806 Equity holders of the parent

-1,30 -1,95 Earnings per share (NOK) 13-1,30 -1,95 Diluted earnings per share (NOK) 13

Profit/loss for the year is distributed/covered as follows:Other equity -42 492 -94 323

Total distributed / covered -42 492 -94 323


Balance Sheet as at 31.12Group Parent company

2008 2007 (amounts in 1000 NOK) Note 2008 2007

Fixed assets1 818 1 921 Land, buildings and other property 7 1 818 1 921

149 162 127 094 Machinery, fixtures and fitting etc. 7/25 5 812 3 763150 980 129 015 Total tangible assets 7 631 5 685

21 742 12 275 Research and development 8 21 742 12 2750 Goodwill 8 0

21 742 12 275 Total intangible fixed assets 21 742 12 275

0 0 Investments in subsidiaries 16 77 064 71 3830 0 Loans to group companies 27 106 143 91 227

6 180 6 760 Receivables 1 688 98730 731 32 108 Deferred tax asset 11 30 731 30 73136 911 38 868 Other financial fixed assets 215 626 194 327

209 633 180 158 Total fixed assets 244 999 212 287

Current assets31 838 52 413 Inventory 3 17 964 40 97966 670 75 574 Receivables 4 48 958 107 239

813 1 345 Investments 10 804 1 338107 362 95 120 Bank deposit, cash in hand, etc. 14 19 511 32 791206 684 224 452 Total current assets 87 237 182 347

416 316 404 610 Total assets 332 235 394 634

EquityPaid in capital

21 900 21 900 Share capital 12 21 900 21 900191 738 191 738 Share premium reserve 262 451 262 451213 638 213 638 Total paid-in capital 284 350 284 350

Retained earnings42 929 34 229 Other equity 2 183 44 67442 929 34 229 Total retained earnings 2 183 44 674

256 567 247 867 Total equity 286 533 329 025

LiabilitiesOther long term liabilities

38 680 46 785 Deferred income - non current 25 0 04 008 2 625 Other long-term liabilities 592 5 506

42 688 49 410 Total long-term liabilities 592 5 506Current liabilities

446 1 043 Liabilities to financial institutions 0 038 075 47 056 Accounts payable 19 156 36 16378 540 59 234 Other short-term liabilities 17 25 954 23 940

117 061 107 333 Total current liabilities 45 110 60 103

159 749 156 743 Total liabilities 45 702 65 610

416 316 404 610 Total equity and liabilities 332 235 394 634



Synnøve Brudevoll





Changes in equityGroup 2008 Share

capitalShare

premium reserve

Other paid-in capital

Exchange differences

Other equity

Total equity

Equity 1.1.08 21 900 191 738 0 -14 715 48 944 247 867Exchange differences 0 0 0 37 095 0 37 095This years profit/loss 0 0 0 0 -28 395 -28 395Equity 31.12.08 21 900 191 738 0 22 380 20 549 256 567

Group 2007 Share capital

Share premium reserve


Exchange differences

Other equity

Total equity

Equity 1.1.07 21 900 191 738 0 -7 296 91 750 298 092Exchange differences 0 0 0 -7 419 0 -7 419Profit/Loss 2007 0 0 0 0 -42 806 -42 806Equity 31.12.07 21 900 191 738 0 -14 715 48 944 247 867

Parent company 2008 Share capital



Other equity

Total equity

Equity 1.1.08 21 900 262 451 0 44 674 329 025This years profit/loss 0 0 0 -42 492 -42 492Equity 31.12.08 21 900 262 451 0 2 182 286 533

Parent company 2007 Share capital



Other equity

Total equity

Equity 1.1.07 21 900 262 451 0 138 997 423 348Profit/Loss 2007 0 0 0 -94 323 -94 323Equity 31.12.07 21 900 262 451 0 44 674 329 025


Cash Flow StatementGroup Parent company

2008 2007 (amounts in 1000 NOK) Note 2008 2007

Cash flow from operating activities-21 251 -39 924 Profit before tax -42 492 -94 323

0 0 Taxes paid 0 00 0 Profit/loss on sale of fixed assets 0 0

43 674 72 123 Depreciation 10 227 7 9430 0 Impairment 51 507 105 358

16 513 15 988 Changes in inventory, accounts receivables and accounts payables 15 15 784 -18 7550 0 Difference in booked pension costs 0 00 0 Amounts classified as investing/financing activities 0 0

17 463 -3 230 Changes in other balance sheet items 2 302 -7 62556 399 44 958 Net cash flow from operating activities 37 328 -7 403

Cash flow from investing activities-40 390 -34 238 Investments in fixed assets and intangible assets -22 095 -8 972

0 0 Proceeds from sale of fixed assets 0 00 0 Proceeds from sale of shares 0 00 0 Payments related to subsidiaries 0 0

-40 390 -34 238 Net cash flow from investing activities -22 095 -8 972

Cash flow from financing activities-11 151 -20 116 Proceeds from issuance of long term debt -28 513 15 036

0 0 Increase in equity 13 0 0-11 151 -20 116 Net cash flow from financing activities -28 513 15 036

4 857 -9 397 Net change in cash and cash equivalents 1 -13 279 -1 338

7 385 0 Currency-effect on cash and cash equivalents 0 095 120 104 517 Cash and cash equivalents 01.01 1 32 791 34 129

107 362 95 120 Cash and cash equivalents 31.12 14 19 511 32 791


Note 1 Accounting principlesOTRUM ASA (the “Company”) is a company domiciled in Norway. The consolidated financial statements of the Company for the year ending December 31st 2008 comprise the Company and its subsidiaries (together referred to as the “Group”). The financial statements were authorised for issue by the directors on the 10th of March 2009.

Statement of compliance with IFRSThe financial statement of the company and the consolidated financial statements have been prepared in accordance with Accounting Act rules, International Financial Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB).

Basis of preparationThe financial statements are presented in NOK, rounded to the nearest thousand. They are prepared on the historical cost basis except that financial instruments held for trading are stated at their fair value.

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which form the basis of making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgments made by management in the application of IFRS that have significant effect on the financial statements are discussed in note 24.

The accounting policies set out below have been applied consistently for the years 2007 and 2008 as presented in the annual report. The accounting principles have been used consistently for all companies in the group.

Standards, interpretations and changes that are effective in 2008 but not relevant to the group:The following standards, changes and interpretations are compulsory for annual reports starting 1st of January 2008 or later, but evaluated to be not relevant to the group.

IFRIC 12, Service concession arrangements•

Standards that are effective and the group has chosen not to implement at this stageThe following standards are published and will later be compulsory for the group in annual reports starting 1st of January 2009 or later, but the group has not chosen to use them yet.

IFRS 8 Operating segments replaces IAS 14 Segment •reporting and aligns segment reporting with the requirements of the FASB standard SFAS 131, Disclosures about segments of an enterprise and related information. The new standard requires the use of a management approach where segment information is presented in the same way as the internal reporting.

IAS 27 (Revised), ‘Consolidated and separate financial •statements’, (effective from 1 July 2009). The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in profit or loss. The group will apply IAS 27 (Revised) prospectively to transactions with non-controlling interests from 1 January 2010.

IFRS 3 (Revised), ‘Business combinations’ (effective from •1 July 2009). The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed. The group will apply IFRS 3 (Revised) prospectively to all business combinations from 1 January 2010.

IFRS 5 (Amendment), ‘Non-current assets held-for-sale and •discontinued operations’ (and consequential amendment to IFRS 1, ‘First-time adoption’) (effective from 1 July 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. The amendment clarifies that all of a subsidiary’s assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control. Relevant disclosure should be made for this subsidiary if the definition of a discontinued operation is met. A consequential amendment to IFRS 1 states that these amendments are applied prospectively from the date of transition to IFRSs. The group will apply the IFRS 5 (Amendment) prospectively to all partial disposals of subsidiaries from 1 January 2010.

IAS 28 (Amendment), ‘Investments in associates’ (and •consequential amendments to IAS 32, ‘Financial Instruments: Presentation’, and IFRS 7, ‘Financial instruments: Disclosures’) (effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. An investment in associate is treated as a single asset for the purposes of impairment testing. Any impairment loss is not allocated to specific assets included within the investment, for example, goodwill. Reversals of impairment are recorded as


an example of a reporting entity. This means that in order for hedge accounting to be applied at segment level, the requirements for hedge accounting are currently required to be met by the applicable segment. The amendment removes the example of a segment so that the guidance is consistent with IFRS 8, ‘Operating segments’, which requires disclosure for segments to be based on information reported to the chief operating decision-maker. Currently, for segment reporting purposes, each subsidiary designates contracts with group treasury as fair value or cash flow hedges so that the hedges are reported in the segment to which the hedged items relate. This is consistent with the information viewed by the chief operating decision-maker. See note 3.1 for further details. After the amendment is effective, the hedge will continue to be reflected in the segment to which the hedged items relate (and information provided to the chief operating decision-maker), but the group will not formally document and test this relationship. – When remeasuring the carrying amount of a debt instrument on cessation of fair value hedge accounting, the amendment clarifies that a revised effective interest rate (calculated at the date fair value hedge accounting ceases) are used.

The group will apply the IAS 39 (Amendment) from 1 January 2009. It is not expected to have an impact on the group’s income statement.

IAS 1 (Amendment), ‘Presentation of financial statements’ •(effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. The amendment clarifies that some rather than all financial assets and liabilities classified as held for trading in accordance with IAS 39, ‘Financial instruments: Recognition and measurement’ are examples of current assets and liabilities respectively. The group will apply the IAS 39 (Amendment) from 1 January 2009. It is not expected to have an impact on the group’s financial statements.

There are a number of minor amendments to IFRS 7, ‘Financial •instruments: Disclosures’, IAS 8, ‘Accounting policies, changes in accounting estimates and errors’, IAS 10, ‘Events after the reporting period’, IAS 18, ‘Revenue’ and IAS 34, ‘Interim financial reporting’, which are part of the IASB’s annual improvements project published in May 2008 (not addressed above). These amendments are unlikely to have an impact on the group’s accounts and have therefore not been analysed in detail.

IFRIC 16, ‘Heges of a net investment in a foreign operation’ •(effective from 1 October 2008). IFRIC 16 clarifies the accounting treatment in respect of net investment hedging. This includes the fact that net investment hedging relates to differences in functional currency not presentation currency, and hedging instruments may be held anywhere in the group. The requirements of IAS 21, ‘The effects of changes in foreign exchange rates’, do apply to the hedged item. The group will apply IFRIC 16 from 1 January 2009. It is not expected to have a material impact on the group’s financial statements.

an adjustment to the investment balance to the extent that the recoverable amount of the associate increases. The group will apply the IAS 28 (Amendment) to impairment tests related to investments in subsidiaries and any related impairment losses from 1 January 2009.

IAS 36 (Amendment), ‘Impairment of assets’ (effective from 1 •January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. Where fair value less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for value-in-use calculation should be made. The group will apply the IAS 36 (Amendment) and provide the required disclosure where applicable for impairment tests from 1 January 2009.

IAS 19 (Amendment), ‘Employee benefits’ (effective from 1 •January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. – The amendment clarifies that a plan amendment that results in a change in the extent to which benefit promises are affected by future salary increases is a curtailment, while an amendment that changes benefits attributable to past service gives rise to a negative past service cost if it results in a reduction in the present value of the defined benefit obligation. – The definition of return on plan assets has been amended to state that plan administration costs are deducted in the calculation of return on plan assets only to the extent that such costs have been excluded from measurement of the defined benefit obligation. – The distinction between short term and long term employee benefits will be based on whether benefits are due to be settled within or after 12 months of employee service being rendered. – IAS 37, ‘Provisions, contingent liabilities and contingent assets, requires contingent liabilities to be disclosed, not recognised. IAS 19 has been amended to be consistent.

The group will apply the IAS 19 (Amendment) from 1 January 2009.

IAS 39 (Amendment), ‘Financial instruments: Recognition • and measurement’ (effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. – This amendment clarifies that it is possible for there to be movements into and out of the fair value through profit or loss category where a derivative commences or ceases to qualify as a hedging instrument in cash flow or net investment hedge. – The definition of financial asset or financial liability at fair value through profit or loss as it relates to items that are held for trading is also amended. This clarifies that a financial asset or liability that is part of a portfolio of financial instruments managed together with evidence of an actual recent pattern of short-term profittaking is included in such a portfolio on initial recognition. – The current guidance on designating and documenting hedges states that a hedging instrument needs to involve a party external to the reporting entity and cites a segment as


Interpretations and amendments to existing standards that are not yet effective and not relevant for the group’s operations

The following interpretations and amendments to existing standards have been published and are mandatory for the group’s accounting periods beginning on or after 1 January 2009 or later periods but are not relevant for the group’s operations:

IFRIC 13, ‘Customer loyalty programmes’ (effective from 1 • July 2008). IFRIC 13 clarifies that where goods or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple element arrangement, and the consideration receivable from the customer is allocated between the components of the arrangement using fair values. IFRIC 13 is not relevant to the group’s operations because none of the group’s companies operate any loyalty programmes.

IAS 16 (Amendment), ‘Property, plant and equipment’ (and • consequential amendment to IAS 7, ‘Statement of cash flows’) (effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. Entities whose ordinary activities comprise renting and subsequently selling assets present proceeds from the sale of those assets as revenue and should transfer the carrying amount of the asset to inventories when the asset becomes held for sale. A consequential amendment to IAS 7 states that cash flows arising from purchase, rental and sale of those assets are classified as cash flows from operating activities. The amendment will not have an impact on the group’s operations because none of the group’s companies ordinary activities comprise renting and subsequently selling assets.

IAS 27 (Amendment), ‘Consolidated and separate financial • statements’ (effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. Where an investment in a subsidiary that is accounted for under IAS 39, ‘Financial instruments: recognition and measurement’, is classified as held for sale under IFRS 5, ‘Non-current assets held-for-sale and discontinued operations’, IAS 39 would continue to be applied. The amendment will not have an impact on the group’s operations because it is the group’s policy for an investment in subsidiary to be recorded at cost in the standalone accounts of each entity.

IAS 28 (Amendment), ‘Investments in associates’ (and • consequential amendments to IAS 32, ‘Financial Instruments: Presentation’ and IFRS 7, ‘Financial instruments: Disclosures’) (effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. Where an investment in associate is accounted for in accordance with IAS 39 ‘Financial instruments: recognition and measurement’, only certain rather than all disclosure requirements in IAS 28 need to be made in addition to disclosures required by IAS 32, ‘Financial Instruments: Presentation’ and IFRS 7 ‘Financial Instruments: Disclosures’.

The amendment will not have an impact on the group’s operations because it is the group’s policy for an investment in an associate to be equity accounted in the group’s consolidated accounts.

IAS 29 (Amendment), ‘Financial reporting in hyperinflationary • economies’ (effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. The guidance has been amended to reflect the fact that a number of assets and liabilities are measured at fair value rather than historical cost. The amendment will not have an impact on the group’s operations, as none of the group’s subsidiaries or associates operate in hyperinflationary economies.

IAS 38 (Amendment), ‘Intangible assets’ (effective from 1 • January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. The amendment deletes the wording that states that there is ‘rarely, if ever’ support for use of a method that results in a lower rate of amortisation than the straight-line method. The amendment will not have an impact on the group’s operations, as all intangible assets are amortised using the straight-line method.

IAS 40 (Amendment), ‘Investment property’ (and consequential • amendments to IAS 16) (effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. Property that is under construction or development for future use as investment property is within the scope of IAS 40. Where the fair value model is applied, such property is, therefore, measured at fair value. However, where fair value of investment property under construction is not reliably measurable, the property is measured at cost until the earlier of the date construction is completed and the date at which fair value becomes reliably measurable. The amendment will not have an impact on the group’s operations, as there are no investment properties are held by the group.

IAS 41 (Amendment), ‘Agriculture’ (effective from 1 January • 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. It requires the use of a market-based discount rate where fair value calculations are based on discounted cash flows and the removal of the prohibition on taking into account biological transformation when calculating fair value. The amendment will not have an impact on the group’s operations as no agricultural activities are undertaken.

Basis of consolidationSubsidiariesSubsidiaries are entities controlled by the company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.


Transactions eliminated on consolidationIntergroup balances and any unrealised gains and losses or income and expenses arising from intergroup transactions, are eliminated in preparing the consolidated financial statements.

Foreign currencyForeign currency transactionsTransactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to NOK at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of transaction.

Financial statements of foreign operationsThe assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to NOK at foreign exchange rates ruling at the balance sheet date. Profit and loss transactions are booked at average exchange rates and translation differences are booked to equity.

Net investment in foreign operationsLong term loans given to fully owned subsidiaries abroad are booked as a net investment in foreign operation. The translation difference coming from net investments in foreign operations, are booked against equity.

Property, plant and equipmentOwn assetsItems of property, plant and equipment are stated at cost, as deemed cost less accumulated depreciation (see below) and impairment losses.

Subsequent costsSubsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

DepreciationDepreciation is charged to the income statement on a straight-line basis over the estimated useful lives for entities of property, plant and equipment. Land is not depreciated.The economic life time is estimated as follows:- buildings 36 years- plant and equipment 3-5 years- pay-TV systems 5-8 yearsThe residual value, if not insignificant, is reassessed annually.

Intangible assetsResearch and developmentExpenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the group has sufficient resources to complete development. The expenditure capitalised includes cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the income statement as an expense as it incurs. Capitalised development expenditure is stated at cost less accumulated amortisation (see below) and impairment losses.

Subsequent expenditureSubsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

AmortisationAmortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Goodwill and intangible assets with an indefinite useful life are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows.- own development 3 years- acquired development in parent company 5 years

Shares in subsidiariesShares in subsidiaries are stated at cost less impairment loss in the Company’s financial statements. The book value of the shares is examined for impairment loss on the reporting day if there are indications of impairment loss. If such indications exist, the value of the shares is stated at the recoverable amount. Impairment loss is booked when the book value of the shares or cash generating unit is higher than the recoverable amount. Impairment losses are recognised in the income statement.

InvestmentsInvestments in debt and equity securitiesFinancial instruments held for trading are classified as current assets and are stated at fair value, with any resultant gain or loss recognised in the income statement.

Trade and other receivablesTrade and other receivables are stated at their cost less impairment losses.

A provision for losses on claims for receivables are recognised when there are objective indicators that the group will not receive settlement in accordance with the original conditions. Impairment amounts are recorded in the income statement.


ProvisionsThe Group recognises provisions when there exists a legal or self-imposed obligation as a result of earlier events, it is likely that the preponderance of the obligation will be settled in the form of a transfer of economic resources and the obligation can be estimated with a sufficient degree of reliability. Provisions are not recognised for future operating losses.

InventoriesInventories are stated at the lower cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The cost of inventories is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

Cash and cash equivalentsCash and cash equivalents comprise cash balances and cash deposits.

ImpairmentThe carrying amounts of the group assets, other than deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. For goodwill and intangible assets recoverable amount is estimated. For goodwill and intangible assets the recoverable amount is estimated at each balance sheet date. An impairment loss is recognised whenever the carrying amount or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement.

Calculation of recoverable amountThe recoverable amount of assets is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risk specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairmentAn impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation; if no impairment loss had been recognised.

Employee benefitsDefined contribution plansObligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred.

Trade and other payablesTrade and other payables are stated at cost.Loans are classified as current liabilities unless there is an unconditional right to defer payment of debt for more than 12 months from the balance sheet date.

RevenueGoods sold and services renderedRevenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Income from rental agreements directly with the customer is recognised when the invoice is issued. Income from agreements where property and risk is transferred to the customer or to a bank, and the customer makes a rental agreement with the bank, is recognised when the transfer takes place. In these cases, an accrual is made for the future maintenance of the systems.

In the cases where OTRUM guarantees the payments on behalf of the hotel to the bank, income is recognised over the contract period.

Income from movies and satellite channels are recognised when the hotel has the rights to show the content to guests.

In cases where the sales of systems includes the right to show movies over a time period, revenue related to the movies is deferred and recognised over the contract period.

OTRUM has entered into agreements with some hotels where OTRUM receives income from the guest’s use of the system. The hotel receives payment from the guests and OTRUM issues an invoice to the hotel. Income from this is recognised monthly in the income statement. In some cases OTRUM shares the risk and reward linked to income from the guest. This income or loss is recognised in the income statement on a monthly basis.

Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet date. The stage of completion is assessed by reference to surveys of work performed.

No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods also continuing management involvement with the goods.

Expenses Operating lease paymentsPayments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease.

Leases where the lease holder does not have a significant part of the risk are classified as operating leases. Investment in operating leases (with a deduction for any financial grants / contributions from the leaser) are recognised in the income statement linearly over the lease period.


Leases where the Group has the significant risk and control are classified as financial leasing and is booked in the balance sheet at fair value.

RoyaltyOTRUM pays royalty to the satellite channels and movie studios when distributing the content to hotels. Royalty is booked in the same period as the revenue is recognised.

Net financial itemsNet financial items comprise interest receivable on funds invested, dividend income and foreign exchange gains and losses. Interest income is recognised in the statement as it accrues. Dividend income is recognised in the income statement on the date the entity’s right to receive payments is established, which in the case of quoted securities is usually the ex-dividend date.

Income taxIncome tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it related to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect to previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, nor differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Segment reportingA segment is a significant component of the group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

Derivatives Derivatives are capitalised at fair value on the date the derivative contracts are entered into, and then continuously at fair value.


Note 2 Segment reporting (continues on next page) (amounts in 1000 NOK)

Segment information is presented for the business segments and the geographic segments. The primary segment, the business segment, is based on the group’s management and reporting structure. The segment result, segment assets and liabilities include expenses that relate directly to the segments, and also expenses that are allocated by an allocation key. The segments investments are the total additions acquired that have a life expectancy of more than a year.

Group Year 2008

Business segmentSale of

systemsRental own

systems ContentNot

allocated

TotalSales 150 644 89 055 82 894 21 386 343 979Raw material and consumables used 119 710 13 460 53 602 11 908 198 680Depreciations 0 32 421 0 10 610 43 031Impairment 0 643 0 0 643Other operating costs 0 0 5 716 122 087 127 804Net financial result 0 0 0 -4 927 -4 927Taxes 0 0 0 7 144 7 144Result 30 934 42 531 23 576 -125 437 -28 396Fixed assets 0 152 285 0 57 348 209 633Current assets 0 0 0 174 845 174 845Liabilities 0 0 0 159 749 159 749Investments 0 9 605 0 24 468 34 073

Geographical area SalesSegment

assets InvestmentsNordic countries 154 894 173 339 4 600Europe (non Nordic) 181 806 242 376 29 473Other markets 7 279 601 0Total 343 979 416 316 34 073

Group Year 2007

Business segmentSale of

systemsRental own

systems ContentNot

allocated TotalSales 212 066 91 151 77 438 21 175 401 830Raw material and consumables used 167 286 15 916 49 408 16 399 249 009Depreciations 0 35 219 0 36 685 71 904Impairment 0 219 0 0 219Other operating costs 0 0 5 253 111 570 116 823Net financial result 0 0 0 3 799 3 799Taxes 0 0 0 2 882 2 882Result 44 780 39 797 22 777 -150 160 -42 806Fixed assets 12 146 123 772 0 44 240 180 158Current assets 131 930 15 742 2 004 74 776 224 452Liabilities 47 928 76 467 6 460 25 888 156 744Investments 0 17 783 0 0 17 783

Geographical area SalesSegment

assets InvestmentsNordic countries 240 035 201 718 0Europe (non Nordic) 156 422 202 892 17 783Other markets 5 373 0 0Total 401 830 404 610 17 783


(amounts in 1000 NOK)

Parent company Geographic area

Geographical area Sales2008 2007

Nordic countries 95 364 158 551Europe (non Nordic) 68 123 50 058Other markets 7 279 7 508Total 170 766 216 117

Parent company Business segment

Sale of systems

Rental own systems Content

Not allocated Total

2008 133 896 1 806 29 250 5 814 170 766

2007 180 655 1 593 27 223 6 646 216 117

Note 3 Inventory (amounts in 1000 NOK) Group Parent company

2008 2007 2008 2007Finished goods 31 838 52 413 17 964 40 979Inventory at book value 31 838 52 413 17 964 40 979

Recognised as expense this year: 198 680 249 009 128 293 147 666Write-downs for obsolescence at 31.12 7 971 3 715 5 736 3 115

Amount posted as write-down 4 256 3 100 2 621 2 500Book value of inventory valued to net sales value 1 861 1 386 1 530 1 386

Note 4 Accounts receivables (continues on next page) (amounts in 1000 NOK)

Group Parent company2008 2007 2008 2007

Accounts receivables 54 748 54 133 9 876 11 477Receivables on group companies 0 0 31 421 83 449Other receivables 11 922 21 441 7 661 12 313Net book value 66 670 75 574 48 958 107 239Depreciations based on probable loss on receivables 10 692 5 050 3 538 2 022Nominal value 77 362 80 624 52 496 109 261

The movement in provision for bad debts are as follows:

Per 1st January 5 050 8 788 2 022 6 723

Provision for bad debts 6 642 2 112 2 516 1 150

Receivables which are depreciated as lost during the year -1 000 -5 850 -1 000 -5 851

Per 31st December 10 692 5 050 3 538 2 022

Depreciation and reversal of depreciation of bad debts are included in the cost of sales and marketing in the profit and loss accounts. Amounts posted as bad debts are removed from receivables when there is no expectation of further cash collection. Provisions for bad debts are based on individual valuations of each case. Account receivables in the parent company against the daughters are not secured. In the case that the daughter is not able to pay debts, it will be assessed if the debt should be changed from short-term to long-term debt. The aging of the account receivables are based on limited data stipulated by the following:

Group Parent company

2008 2007 2008 2007

Not overdue 21 318 33 193 2 827 2 403

0-3 months overdue 27 809 12 267 3 953 5 633

Over 3 months overdue 5 621 8 673 3 096 3 441

Total 54 748 54 133 9 876 11 477


The carrying amounts of the group’s trade receivables are denominated in the following currencies:

2008 2007 2008 2007NOK 8 712 15 144 8 712 15 144EURO 46 842 36 054 40 048 92 095DKK 3 008 5 028 0 0GBP 5 748 14 991 0 0SEK 2 361 4 357 199 0Total 66 670 75 574 48 958 107 239

Note 5 Payroll/Employees (continues on next page) (amounts in 1000 NOK) Group Parent company

Payroll and related costs 2008 2007 2008 2007Payroll 58 862 57 494 31 739 28 976Social security costs 9 270 9 838 4 125 4 971Pension costs 3 310 2 161 1 222 0Other employee related costs 5 044 5 191 5 305 1 588Capitalised development costs -5 662 -5 480 -5 662 -5 480Payroll and related costs 70 823 69 204 36 728 30 055Average number of employees 108 107 46 55

2008 Salary Brd. Comp. Bonus Adt. Comp. Pensions Other TotalLeading employees (amounts in NOK)CEO Bjørn Ove Skjeie 1 958 376 0 0 56 061 319 472 2 333 909CFO Asgaut Moe 854 778 0 0 56 406 195 747 1 106 931Christian Kocsis 1 242 766 11 647 51 116 52 283 0 1 357 812Frank van de Laar 1 570 841 0 0 105 068 3 945 1 679 854Pål Byberg 890 509 0 0 57 537 390 687 1 338 733Cathryn Trollsås 889 288 15 463 76 928 226 458 8 183 1 216 320Samu Raunela 999 261 89 092 0 55 545 181 795 1 325 693Nigel Bateson 761 666 0 0 54 933 120 547 937 146Erlend Strømnes 759 978 53 680 0 56 190 263 139 1 132 987Total leading employees 9 927 463 169 882 128 044 720 481 1 483 515 12 429 385

Board of directors (amounts in NOK)Christian Albech 0 270 000 0 0 0 0 270 000Trond Vernegg 0 170 000 0 0 0 0 170 000Kristin Blix-Elton 0 170 000 0 0 0 0 170 000Henning Olset 0 170 000 0 0 0 595 170 595Anne Helga Seltveit 0 106 250 0 0 0 0 106 250Cato Moen 569 985 50 000 108 662 0 30 420 78 607 837 674Helge Olav Henriksen 0 8 000 0 0 0 24 627 32 627Lars Biørn Eilertsen 543 104 25 000 13 185 0 28 720 75 808 685 817Synnøve Brudevoll 386 066 15 000 4 348 0 16 830 34 531 456 775Total board of directors 1 499 155 984 250 126 195 0 75 970 214 168 2 899 738

The CEO has a 12 month notice period and an additional 12 months compensation in case that the end of the employment relationship is due to the introduction of a new controlling owner of the company, merger or the like, resulting in a major change to the CEO’s responsibility and tasks. Other leading employees have a regular 6 month notice period, and no compensation is regulated in the employment contract. All bonuses are dependent on result, individually or for the company.

2007 Salary Brd. Comp. Bonus Adt. Comp. Pensions Other TotalLeading employees (amounts in NOK)

CEO Bjørn Ove Skjeie 1 855 878 250 000 0 0 205 193 2 311 071CFO Stein Hedemark - 1/1 - 28/2 170 334 0 11 328 0 139 024 320 686CFO Asgaut Moe - 1/4 - 31/12 613 850 0 0 0 92 959 706 809Harri Gabrielsson - 1/1- 31/10 980 000 75 180 0 152 754 67 680 1 275 614Christian Kocsis 1 152 000 131 840 0 49 124 49 755 1 382 719Frank van de Laar 1 488 000 234 317 0 102 264 3 840 1 828 421Pål Byberg 845 193 375 000 0 0 255 460 1 475 653Cathryn Trollsås 856 030 39 000 0 220 650 90 000 1 205 680Samu Raunela 781 595 267 317 643 247 0 130 248 1 822 407Pierre Hetzel 1/1 - 31/8 431 997 0 0 0 105 278 537 275Nigel Bateson 687 693 126 432 0 0 94 193 908 318Total leading employees 9 862 570 1 499 086 654 575 524 792 1 233 629 13 774 652


Note 6 Pensions (continues on next page)Until 2007 OTRUM had a pension scheme for the parent company through an insurance company. The program included a total of 59 employees. The average employee age is 38 years, and the remaining years of service is an average of 23 years. The pension plan is a defined benefit plan. Actuarial gains and losses are recognised only if the actuarial gains and losses exceed 10% of the greater of the defined benefit obligation of fair value of the plan assets. Actuarial gains and losses that exceed this limit are amortised over the remaining working lives of the employees. At year end 2007 OTRUM replaced the defined benefit plan with a premium deposit plan. The effect on the financial statement of this is shown in the table below as “one-off effect of closing the benefit plan”. OTRUM has, during its time with the benefit plan, built up a premium fund with a value of MNOK 2.1. This premium fund will be transferred to Gjensidige insurance company and will contribute to the deposit for the new plan. In addition to costs regarding the parent company benefit plan, TNOK 3,479 (2007:TNOK 2,069) is taken as cost relating to other companies in the group. For the parent company, the figures show TNOK 1,391 (2007:TNOK 0).

(amounts in 1000 NOK)Actuarial assumptions 2007Discount rate 6.0 %Expected return on plan assets 4.9 %Future salary increases 4.5 %Future increase in social security basic pension 4.3 %Future pension increase 2.3 %

Group/parent companyPension cost for the year 2007Current service cost 3 580Interest cost 405Expected return on plan assets -437Recognised actuarial gains and losses 22Administration cost 93Social security tax 672One-off effect of closing the benefit plan -3 380Total pension cost recognised in P&L 995

Pension assets and obligationsPension liability 13 556Estimated fair value of plan assets -9 218Non-recognised actuarial gains and losses -1 570Social security tax 612One-off effect of closing the benefit plan -3 380Pension liability 0

Board of directors (amounts in NOK)Christian Albech 0 270 000 0 0 0 0 270 000Trond Vernegg 0 170 000 0 0 0 0 170 000Siri-Lill Stensby 0 170 000 175 000 98 416 0 54 727 498 143Magnus Johansson 0 170 000 0 0 0 0 170 000Kristin Blix-Elton 0 170 000 0 0 0 0 170 000Cato Moen 524 759 40 000 0 0 0 76 589 641 348Helge Olav Henriksen 1/1-31/7 205 227 40 000 0 0 0 50 515 295 742Total board of directors 729 986 1 030 000 175 000 98 416 0 181 831 2 215 233

(amounts in 1000 NOK) Group Parent companyLoans 2008 2007 2008 2007Loans to employees 452 248 452 248Total 452 248 452 248Interest rate, 6.25 %, adjusted 4 times in 2008. Payback period of 11 years. Interest on the second loan is 7.50%, regulated 2 times per year. Pay back period of 2 years.

(amounts in 1000 NOK)The company/group have expensed the following fees to the auditor: Group Parent companyFees to the auditor 2008 2007 2008 2007Audit fee 1482 1235 650 590Tax consulting 83 42 0 10Fee other services provided by the auditor 321 349 319 314Total 1886 1626 969 914


Reconciliation of net pension liability: 2007Net pension liability per 1.1 443Net pension cost 955Employers contribution -1 398Net pension liability per 31.12 0

Note 7 Tangible fixed assets (continues on next page) (amounts in 1000 NOK)

Group 2008

Fixed assets BuildingsMachinery,

fixture & fittingsInteractive

TV systems Total

Acquisition cost as of 01.01 2 796 18 328 272 322 293 446Additions acquired 0 3 716 30 910 34 625Disposals 0 -276 -21 304 -21 580Exchange differences 0 2 524 2 204 4 728Acquisition cost as of 31.12 2 796 24 292 284 131 311 219

Acc. depreciation as of 31.12 875 15 006 116 971 132 852Depreciation for the year 103 2 840 32 548 35 491Acc. depreciations on sold assets 0 -149 -7 954 -8 104Acc. depreciation and writedown as of 31.12 978 17 696 141 565 160 239

Net book value as of 31.12 1 818 6 595 142 567 150 980

Useful life: 36 years 3-5 years 5-8 yearsDepreciation plan: Linear Linear Linear

Fixed assets are tested for impairment on 31.12.08. Fixed assets generating cash are primarily TV systems financed by the company. They are tested based on the expected cash flows from installations. On the basis of this testing, an impairment loss has been recognised on some of the TV systems.


Group 2007



TV systems Total

Acquisition cost as of 01.01 2 700 17 486 258 179 278 365Additions acquired 96 1 092 22 093 23 281Exchange differences 0 -250 -7 950 -8 200Acquisition cost as of 31.12 2 796 18 328 272 322 293 446

Acc. depreciation as of 01.01 776 13 302 116 971 131 049Depreciation for the year 99 1 834 35 219 37 152Exchange differences 0 -130 -3 640 -3 770Acc. depreciation and writedown as of 31.12 875 15 006 148 550 164 431


Useful life: 36 years 3-5 years 5-8 yearsDepreciation plan: Linear Linear Linear

Parent company 2008



TV systems Total

Acquisition cost as of 01.01 2 796 11 496 6 019 20 311Additions acquired 0 2 982 1 464 4 446Acquisition cost as of 31.12 2 796 14 478 7 483 24 757



Parent company 2008Acc. depreciation as of 01.01 875 8 280 5 472 14 627Depreciation for the year 103 1 684 258 2 045Acc. impairment loss as of 31.12 0 0 454 454Acc. depreciation as of 31.12 978 9 964 6 184 17 126


Useful life: 36 years 5 years 5 yearsDepreciation plan: Linear Linear LinearUseful life of buildings was reduced from 50 to 36 years in 2004. The effect of the change is depreciated over the rest of useful life. No tangible assets are pledged as security for liabilities.

Parent company 2007



TV systems Total

Acquisition cost as of 01.01 2 700 8 793 5 678 17 171Additions acquired 96 2 703 341 3 140Acquisition cost as of 31.12 2 796 11 496 6 019 20 311

Acc. depreciation as of 31.12 776 7 685 5 312 13 773Depreciation for the year 99 595 160 854Acc. depreciation as of 31.12 875 8 280 5 472 14 627

Net book value as of 31.12 1 921 3 216 547 5 684

Useful life: 36 years 5 years 5 yearsDepreciation plan: Linear Linear Linear

Note 8 Intangible assets (continues on next page) (amounts in 1000 NOK)

Group 2008

Intangible assetsOwn

developmentAcquired

developmentSoftware and

other Goodwill Total

Acquisition cost as of 01.01 34 669 14 420 495 53 480 103 064Additions acquired 5 711 11 938 0 0 17 649Acquisition cost as of 31.12 40 380 26 358 495 53 480 120 713

Acc. depreciation as of 01.01 25 278 11 536 495 53 480 90 789Depreciation for the year 3 939 4 243 0 0 8 182Acc. depreciation and writedown as of 31.12 29 217 15 779 495 53 480 98 971


Group 2007


developmentAcquired

developmentSoftware and

other Goodwill Total

Acquisition cost as of 01.01 29 189 10 936 495 53 480 94 100Additions acquired 5 480 3 484 0 0 8 964Acquisition cost as of 31.12 34 669 14 420 495 53 480 103 064

Acc. depreciation as of 01.01 18 789 10 936 495 25 597 55 817Depreciation for the year 6 489 600 0 27 883 34 972Acc. depreciation and writedown as of 31.12 25 278 11 536 495 53 480 90 789


Useful life: 3 years 3-5 years 3-5 years IndefiniteDepreciation plan: Linear Linear Linear


(amounts in 1000 NOK)Parent company 2008


developmentAcquired

development Goodwill TotalAcquisition cost as of 01.01 33 181 20 188 4 897 58 266Additions acquired 5 711 11 938 0 17 649Acquisition cost as of 31.12 38 892 32 126 4 897 75 915

Acc. depreciation as of 01.01 23 790 17 304 4 897 45 991Depreciation for the year 3 939 4 243 0 8 182

Acc. depreciation as of 31.12 27 729 21 547 4 897 54 173


Useful life: 3 years 3 - 5 years IndefiniteDepreciation plan: Linear Linear

Parent company 2007


developmentAcquired

development Goodwill TotalAcquisition cost as of 01.01 27 701 16 704 4 897 49 302Additions acquired 5 480 3 484 0 8 964Acquisition cost as of 31.12 33 181 20 188 4 897 58 266

Acc. depreciation as of 01.01 17 301 16 704 1 764 35 769Depreciation for the year 6 489 600 0 7 089Impairment loss for the year 0 0 3 133 3 133Acc. depreciation as of 31.12 23 790 17 304 4 897 45 991


Useful life: 3 years 3 - 5 years Indefinite

Depreciation plan: Linear Linear

Own development cost is related to the development of the group’s hotel TV systems.

2008 2007Total research and development expenses parent company and group 17 649 8 964


Note 9 Operational rental agreements (amounts in 1000 NOK)

Rental premises and other

The Group leases office and warehouse premises. These are not capitalised when leases according to IAS 17 are not to be regarded as financial leases. The amounts set out under lease agreements that constitute the parent company and the group have a non-removable commitment in the coming years.

Group Year 2008 Year 2007Payment Payment Payment Payment Payment Payment

Rental amounts: next year 2-5 years after 5 years next year 2-5 years after 5 yearsOffice 2 825 7 775 0 5 249 8 003 1 041Warehouse 198 0 0 1 631 112 0Cars 973 546 0 516 463 0Office equipment 65 94 0 234 179 0Total rental amounts per period 4 060 8 415 0 7 630 8 757 1 041

Parent company Year 2008 Year 2007Payment Payment Payment Payment Payment Payment

Rental amounts: next year 2-5 years after 5 years next year 2-5 years after 5 yearsOffice 1 667 3 270 0 1 702 3 545 0Warehouse 429 0 0 1 405 0 0Cars 0 0 0 0 0 0Office equipment 19 0 0 54 0 0Total rental amounts per period 2 115 3 270 0 3 161 3 545 0

Rental revenue The parent and the group have entered into rental agreements with hotels for interactive TV solutions where OTRUM install equipment for an agreed fixed monthly amount. The agreements can not be terminated by the leaser and have a total contract period of 5-7 years. In addition to fixed agreed rental amounts, OTRUM also has some deals where the rental income is variable in relation to the revenue the system generates. The agreements which have variable income are not included in this section. Expected earnings on fixed leases are:

Group Year 2008 Year 2007Payment Payment Payment Payment Payment Payment

Rental amounts: next year 2-5 years after 5 years next year 2-5 years after 5 years66 718 176 388 13 572 60 502 162 708 15 092

Total rental amounts per period 66 718 176 388 13 572 60 502 162 708 15 092

Parent company Year 2008 Year 2007Payment Payment Payment Payment Payment Payment

Rental amounts: next year 2-5 years after 5 years next year 2-5 years after 5 years710 3 039 487 1 300 3 250 0

Total rental amounts per period 710 3 039 487 1 300 3 250 0

Note 10 Investments (amounts in 1000 NOK)

Purchase price Currency Book value Market valueCurrent assets:Sparebanken Pluss primary capital certificate 1 052 NOK 804 804Sum investments Parent company 804 804Elisa Communications 9 20Sum investments in Group 813 824

Note 11 Taxes (continues on next page) (amounts in 1000 NOK) Parent company Group

Current tax: 2008 2007 2008 2007Profit before taxes -42 492 -94 323 -21 251 -42 806Permanent differences 45 554 83 313 -1 006 1 321Change in temporary differences -3 062 11 010 37 551 51 365Taxable profit 0 0 15 293 9 880Current tax 0 0 4 585 3 767

Tax expense for the yearCurrent tax 0 0 4 585 3 767Deferred tax expense 0 0 2 559 -885Benefits of previously unrecognised tax asset 0 0 0 0Total tax expense for the year 0 0 7 144 2 882



Specification of the basis for deferred taxes: Parent company Group2008 2007 Changes 2008 2007 Change

Fixed assets 548 899 350 15 585 16 708 1 123Receivables 14 967 12 470 -2 497 867 133 -734Inventory 1 599 872 -727 2 632 1 993 -639Other tax assets -8 131 68 8 199 68 68 0Pensions -586 -532 54 -586 -532 54Liabilities 935 369 -566 329 -146 -475Temporary differences 9 333 14 146 4 813 18 895 18 224 -671

Loss carried forward 30 309 26 353 -3 956 91 575 77 722 -13 853Deferred tax asset 39 642 40 545 858 110 470 95 946 -14 524

Deferred tax asset 39 642 40 545 110 470 95 946Recognised deferred tax asset 30 731 30 731 30 731 32 108Recognised deferred tax liability 0 0 -676 -515

OTRUM has a renewed assessment of the balance sheet recognition of deferred tax and has, based on this year’s negative result, decided not to increase the balance sheet asset by deferred taxes beyond last year’s balance sheet value.

Reconciliation of the periods tax expense 2008 2007 2008 2007Profit before tax -42 492 -94 323 -21 251 -42 806Calculated tax nominal rate -11 898 -26 410 -5 531 -11 248Permanent differences 12 755 23 328 -311 367Effect of non-recognised deferred tax assets -858 3 082 12 986 13 763Actual tax charge for the period 0 0 7 144 2 882Average applicable tax rate 28 % 28 % 27 % 30 %Average effective tax rate 0 % 0 % -34 % -7 %

The parent company’s losses carried forward have, after changes in the tax regulation in Norway, no time limit. The remaining part of the group’s loss carried forward are also mainly in countries that have no time limit on losses.

Note 12 Equity and shareholders information (continues on next page) (amounts in NOK)

Number of shares Nominal value Book valueThe share capital in OTRUM ASA at 31.12.2008 consists of: 21 899 730 1 21 899 730

The shareholders in OTRUM ASA at 31.12.2008 were:Name: Number of shares Proportion of shares Proportion of votesTELENOR VISION INTERNATIONAL AB 7 258 064 33.14 % 33.14 %MOHN FREDERIK WILHELM 5 501 100 25.12 % 25.12 %SKAGEN VEKST 1 000 000 4.57 % 4.57 %MP PENSJON 922 000 4.21 % 4.21 %HOLBERG NORGE 536 100 2.45 % 2.45 %SVENSKA HANDELSBANKEN DEPOT 506 700 2.31 % 2.31 %OVRUM HOLDING AS 430 518 1.97 % 1.97 %LIVSFORSIKRINGSSELSKAPET NORDEA 368 094 1.68 % 1.68 %VERDIPAPIRFONDET NORDEA SMB 292 600 1.34 % 1.34 %VALKYRIEN EIENDOM AS 250 000 1.14 % 1.14 %CLEARSTREAM BANKING 239 150 1.09 % 1.09 %ROPERN AS 235 000 1.07 % 1.07 %TANJA A/S 210 000 0.96 % 0.96 %HETZEL PIERRE ANDRÉ 174 755 0.80 % 0.80 %KJØSTVEDT PER ARNE 131 000 0.60 % 0.60 %CAL-PRIVATE BANK 116 000 0.53 % 0.53 %NHO ARBEIDSMILJØFIND 113 297 0.52 % 0.52 %LURA TURISTHEIM A/S 105 500 0.48 % 0.48 %PUMPØS A/S 100 000 0.46 % 0.46 %CARE HOLDING AS 100 000 0.46 % 0.46 %Total for the 20 largest shareholders 18 589 878 84.9 % 84.9 %Other shareholders (739) 3 309 852 15.11 % 15.1 %Total number of shares 21 899 730 100 % 100 %

OTRUM has only one class of shares. There are no restrictions on buying the share in the company’s regulations. All shares have the same voting rights.


(amounts in NOK)

2008 2007Issued shares per 1st of January 21 899 730 21 899 730 Total issued shares per 31st of December - fully paid 21 899 730 21 899 730

Shares and rights to shares owned by members of the board and leading employees:Name Title Options SharesThe BoardChristian Albech Chairman of the board 0 8 000Christian Falster Member of the board 0 50 000Kristin Blix-Elton Member of the board 0 0Henning Olset Member of the board 0 0Anne Helga Seltveit Member of the board 0 0Cato Moen Member of the board 0 78 600Synnøve Brudevoll Member of the board 0 0

Leading employeesBjørn Ove Skjeie CEO 0 0Asgaut Moe CFO 0 6 000Christian Kocsis Senior Vice President 0 34 817Frank van de Laar (and associates) Senior Vice President 0 216 000Pål Byberg Senior Vice President 0 0Cathryn Trollsås Senior Vice President 0 0Erlend Strømnes Senior Vice President 0 0Samu Raunela CTO 0 0Nigel Bateson Vice President 0 0

01.01.08 01.01.07 01.01.06 01.01.05 01.01.04 01.01.03 01.01.02Risk per share 0.00 0.00 0.00 0.00 0.00 0.00 0.00

The statutory meeting held on the 20th of May 2008 gave the board of directors power of attorney to issue and/or repurchase their own shares. Comprehensive information about this can be found under shareholder information.

Note 13 Earnings per shareBasic earnings per share/Diluted earnings per share The result per share is calculated based on the group’s profit for the year after dividend and payments to minority interests, divided by the average sum of shares during the year.

(amounts in 1000 NOK)2008 2007

Profit/loss for the period -28 395 -42 806Profit/loss attributable to ordinary shares -28 395 -42 806Issued shares per 1st January 21 900 21 900Average sum of ordinary shares per 31st December 21 900 21 900

Note 14 Cash and cash equivalents (amounts in 1000 NOK)

Group Parent companyRestricted cash and cash equivalents 2008 2007 2008 2007Withheld employees payroll taxes 280 963 0 0Restricted bank account for guarantees/debt 16 746 3 696 3 350 3 219Total restricted cash and cash equivalents 17 026 4 659 3 350 3 219Free cash deposit 90 337 90 461 16 161 29 572Total free cash deposit 90 337 90 461 16 161 29 572Total cash deposit 107 363 95 120 19 511 32 791

Note 15 Change in inventory, account receivables and account payables (amounts in 1000 NOK) Group Parent company Items that are combined in the cash flow statement: 2008 2007 2008 2007Changes in inventory 22 714 3 152 23 015 -11 108Changes in accounts receivables 5 475 29 348 9 776 -6 111Changes in accounts payables -11 675 -16 511 -17 008 -1 536Total 16 513 15 988 15 784 -18 755


Note 18 Financial market risk (continues on the next page)

Note 16 Shares in subsidiaries (amounts in 1000 NOK)

Address Voting rights Ownership share Acquisition cost Book valueOTRUM Svenska AB Stockholm, Sweden 100 % 100 % 128 100 34 185OTRUM Danmark AS Copenhagen, Denmark 100 % 100 % 14 014 4 097OTRUM Finland OY Helsinki, Finland 100 % 100 % 29 400 0OTRUM Gmbh Goch, Germany 100 % 100 % 29 553 29 553OTRUM France SA Paris, France 100 % 100 % 42 454 0OTRUM Technology Ltd Helsinki, Finland 100 % 100 % 17 308 537OTRUM UK Ltd London, UK 100 % 100 % 24 865 8 692OTRUM Interactive Iberica SL Madrid, Spain 100 % 100 % 19 094 0OTRUM Italia S.r.l. Milan, Italy 100 % 100 % 7 202 0OTRUM China Shanghai, China 100 % 100 % 4 573 0Total 316 563 77 064

As some of OTRUM ASA’s subsidiaries have made a loss and thus have lost their equity, there has been the need to write down the value of the shares in daughter companies. OTRUM ASA has written down the value of its subsidiaries by 45.2 MNOK in 2008: OTRUM Denmark AS 5.4 MNOK, OTRUM UK Ltd 16.2 MNOK, OTRUM Interactive Iberica SL 16.7 MNOK, OTRUM Italy Srl 2.4 MNOK and OTRUM China 4.5 MNOK.

As part of the net investment in the Spanish, Italian and Chinese subsidiaries, OTRUM ASA also decided to write down loans by 0.5 MNOK, 4.5 MNOK and 1.2 MNOK respectively.

In the parent company impairment testing of the book value of each subsidiary, and the book claims against the subsidiary, was evaluated to assess the fair value.

The fair value was assessed both on the basis of discounted value of future cash flows from the companies and an assessment of the sales value for companies. The sales value is calculated under the assumption that the business is sold to a company that already has a similar business and that therefore can exploit synergies in sales and administration. The estimation of present value/sales value is based on the discounted value of contracts, with a deduction for necessary restructuring costs in order to exploit the expected synergies of the purchase. The discount rate used is 12%.

Note 17 Other short term liabilities (amounts in 1000 NOK)

Group Parent companyOther short term liabilities consist of: 2008 2007 2008 2007Public duties payables 6 959 5 008 2 412 691Salaries payable 6 887 6 691 4 874 5 358Period-based movie and service income 13 059 14 863 8 216 10 191Other short term liabilities 51 635 32 537 10 452 7 700Total other short term liabilities 78 540 59 099 25 954 23 940

Period-based movie and service income related to rental income that is received by the leases are sold to financial institutions. Movies and service revenues are recognised over the contract life, typically 5-7 years.Under other current liabilities in the parent company and group, there is a liability associated with a lack of fulfillment of a minimum guarantee of an agreement. The amount is 3.7 MNOK and is assumed to be paid in 2009. In addition, there are other short-term com-mitments where provisions for an upgrade cost of 3.2 MNOK have been made. A large share of this obligation is assumed to come in 2009.

Currency riskSubsidiaries sell products and services in their local currency, whilst the parent company sells in EUR and the local currency. Purchases are mainly in EUR, USD or NOK. The parent company finances its subsidiaries in EUR, and changes in the exchange rate for EUR will have a currency impact on the parent company and group. The group carried currency risks in 2008. For 2009 the company chose, at the end of December 2008, to sign a contract for the sale of 12 MEUR through 2009 to for an average price of 9.87 against NOK.

Currency risks of operational activities are moderate, but greater in respect of the internal financing. The group is exposed to the Euro. If the Euro exchange rate changes +/-10 % next year it will affect the value of assets/liabilities in Euro by +/-MNOK 2.5.

Interest riskInterest risk is the possible risk that changes in interest rates will have a negative effect on the company’s profit. The interest risk is first and foremost connected to profitability in respect of sales of rental agreements to credit institutions, since such agreements are discounted at the current fixed interest rate that applies to the currency concerned. An increase in the interest rate will therefore reduce the company’s gross margin and correspondingly, a decrease will increase the group’s gross margin. Our surplus cash is invested in a bank. Changes in interest rates will influence the financial income. A +/- 1% change in the interest rate will change our net financial items by +/- 0.5 MNOK.

Credit riskThe group has credit risk related to both rental of own systems


Note 19 Collateral and guarantees(amounts in 1000 NOK)

OTRUM is offering financing of systems as part of the total solution to the hospitality industry. In certain cases where OTRUM has supplied a customer that does not fulfil the financial requirements of the financing institutions, OTRUM is providing a guarantee on behalf of the customer to the financing institution.

The parent company has given guarantees amounting to MNOK 41.4 to external financing institutions.

2008 2007DnbNor 2 178 7 290

Nordania 560 2 559

ING Lease * 38 680 44 226

41 418 54 075

*This concerns agreements entered into by certain subsidiaries, ref note 25.

Note 20 Financial income (amounts in 1000 NOK)

Group Parent companyFinancial income consist of : 2008 2007 2008 2007Interest group companies 0 0 4 128 5 899Other interests received 1 910 1 607 596 790Exchange gains 18 284 7 604 43 113 7 040Other financial income 692 1 043 110 119Total financial income 20 885 10 254 47 947 13 848

Note 21 Financial expenses (amounts in 1000 NOK)

Group Parent companyFinancial expenses consist of: 2008 2007 2008 2007Interest expenses 3 441 2 978 166 1 020Change in market value of shares/bonds 534 162 534 162Exchange losses 11 176 9 827 5 290 8 849Other financial expenses 807 1 085 310 398Total financial expenses 15 959 14 053 6 301 10 429

Note 22 Related parties

Telenor owns 33.1% of OTRUM. Christian Albech, the chairman of the board is CEO of Telenor Broadcast AS, which is a company in the Telenor group.

OTRUM is buying and renting hardware, and pays royalty regarding channels to Telenor companies. Total amount in 2008 is TNOK 745. In addition, the company rented satellite capacity from Telenor satellite services for TNOK 576 in 2008.

The parent company sells hotel TV systems to the subsidiaries and the subsidiaries sell or rent the hotel TV systems to hotels. Loans from the parent company are the subsidiaries main source of finance. All transactions are based on the arms length principle.

The balance sheet, note 4 and 17, shows the intercompany receivables and liabilities as per 31st of December. Note 20 shows the interest from the group companies.

and sale of channels. The credit risk is managed by doing a credit risk analysis of all new customers, and also selling contracts of rental of systems includes a covenant that the rental can be stopped if payment doesn’t takes place when due. The company is focused on reducing overdue receivables. This is done through close monitoring of the summary ageing accounts receivable in the Company’s management meetings.

Liquidity riskThe Company has made an agreement for the sale of fixed assets to a financial institution on the condition that they are rented back by OTRUM. These fixed assets are rented to a hotel prior to the transaction. The lease with the financial institution is running over the same period as the underlying agreement with the hotel, so that payment of the lease to the financial institution is continuous with the income from the underlying contract. In this way no liquidity is being debited by this liability.

The group has no other interest bearing loans demanding instalments, so the liquidity risk is primarily linked to the group’s future capacity to invest in own financed hotel TV systems, which are rented to customers. The group’s strategy is to make agreements with leading credit institutions which can finance the TV systems rented out to customers. This means that OTRUM sells the systems to the credit institution at the same moment that the client signs the agreement, and thus gets back the investment the group made in building the system. In cases where OTRUM rents out in markets where such financing cooperation does not exist, the group has to bear the investment itself.

The group’s financial assets and debts are mainly short term and not interest bearing. For these financial assets and debts, OTRUM finds that there is no material difference between the booked value and the market value. Bank deposits and short term investments are booked at market value.


The CEO has a combination of fixed salary and a bonus as determined under the pre-agreed criteria for each financial year. This is determined by the company’s compensation committee. Bonus is maximized to 50% of salary.

The principle for other leading employees follows the same principles as for the CEO, a combination of salary and bonus is determined annually on the basis of agreed criteria. Usually the bonus for leading employees is based on a combination of overall company goals and individual goals associated with the function. Depending on the position the bonus is up to 50% of salary.

The company has no arrangement for the issuance of shares, warrants or options.

The company has from 1.1.2008 changed from defined benefit pensions to a premium deposit plan. The CEO has a 12 month notice period, and an additional 12 months post wages are rewarded in the case that termination of the contract is due to a new executive owner of the company, merger and the like, resulting in a considerable change in the responsibilities and tasks of the CEO. Other leading executives normally have a 6 month notice period, no agreement of post wages is regulated in the employment agreement. In addition to this, chief executives are compensated with a company car and lesser services like newspapers, telephone, Internet access etc.

Note 23 Salary policy

Note 24 Estimates and judgments

These are OTRUM’s accounting estimates, which are important for the presentation of the company’s and the group’s economic status and results, and which need subjective estimation.

Accounting estimates and judgmentsThe management has discussed the development, the selection and description of the company’s critical accounting principles and estimates, and also the use of these in collaboration with the board of directors. Key sources of estimation uncertaintyIn Note 18, there is an analysis of the currency exposure in the Group and risks in relation to foreign exchange and interest rate changes. Note 7 contains information about the assumptions and their associated risk factors related to the loss of impairment of fixed assets. Note 16 contains information about the shares in subsidiaries and the net book value of these. Note 3 contains information on inventories and provision for obsolescence. Note 4 provides information on accounts receivable and assessment of bad debts. Note 1 includes information about deferred income in connection with service contracts, whilst Note 8 contains information about the value of capitalised development and expected depreciation time.

Basis for the estimates Shares in subsidiaries are valued based on discounted expected future cash flow from the individual subsidiaries. Budgets and long-term plans have been used for estimates, using a discount rate of 12% and a 3% growth rate.

Inventories are valued at the lower of cost and selling price, less the sale costs. This means that in the cases where sales prices are used, it is taken into account the prices that are achieved in past transactions where the current products have been sold. Considerations of obsolescence are made by individual review per item, where turnover is taken into consideration.

Accounts receivable are valued on the basis of the individual customer’s expected ability to pay the debt they had per 31.12, taking into consideration the developments that have occurred

since the balance sheet date and the final approval of the accounts. Accounts receivable are referred to in Note 4.

Provisions for future service costs (deferred income) is based on the experience that is gained when service costs for the individual products are incurred. When external alternatives exist such as gurantees from screen suppliers, the cost of entering into such an agreement is also included in the assessment.

Capitalised development costs are written down over the course of three years. Due to rapid changes in the development of software, and past experience, software must be written off during a three-year period. The transition from analogue to digital technology, combined with the introduction of web based solutions, underpin this depreciation rate.

Cash-generating assets are primarily self-funded TV systems. They are valued based on estimates of expected cash flows from the installations. The estimate is made on historical cash flow, to the extent that this does not give the wrong impression. In those cases where it is judged to be misleading, budgeted cash flow is used. OTRUM’s rental of hotel TV systems to hotels is considered an operational leasing. The systems are considered to have a longer useful lifetime than the contracts, and OTRUM takes the equipment back to rent it or sell it to other hotels. There is a market for used TV’s and equipment. Based on the fact that the risk and ownership is not transferred to the hotel, the rent is considered an operational lease. Equipment is sold to finance companies, who again rent this equipment to hotels. This is booked as sales, since the risk and ownership is transferred to the finance company. In some cases OTRUM provides a guarantee to the finance company that the hotel will fulfil its payment obligations. See Note 26 and 19. In these cases OTRUM considers that the risk is not transferred to the finance company and the revenue cannot be booked as a sale straight away, but when the hotel fulfils its obligations.


Note 25 Deferred income

In 2006 OTRUM entered into an agreement to sell its future revenue streams for some rental agreements to ING Lease in Italy, France, Spain and Belgium.

OTRUM ASA has in this case given the credit institutions a guarantee that the hotels will fulfil their payment obligations. In these cases OTRUM considers that the risk is not transferred to the credit institution and the revenue cannot be recognised as a sale directly, until the hotel fulfils its payment obligations.


Sales value recognised as debt on sales time 64 259Booked value on sale time:Spain 13 343Italy 8 895Belgium/France 12 676Total 34 913Instalment plan is approximately 5 years

2008 2007Liability to ING 38 680 44 226

Carrying amounts on assets regarding ING agreement 2008 2007Spain 8155 10 564Italy 5 189 6 968Belgium/France 7 394 9 929Total 20 738 27 461


Note 26 Financial instruments (amounts in 1000 NOK)

The following principles for the subsequent measurement of financial instruments have been used for financial instruments in the balance sheet:

Group

Pr. 31.12.08 Assets

Loans and receivables

Assets valued at fair value through

profit

Derivatives used for hedging

purposesTotal

Derivatives 0 0 0 0Accounts receivable and other assets, excluding prepayments 72 850 0 0 72 850

Financial assets at fair value through profit 0 813 0 813Cash and cash equivalents 107 362 0 0 107 362

Total 180 212 813 0 181 025

Group

Pr. 31.12.08 Obligations

Other financial liabilities at

amortised costTotal

Accounts payable and other liabilities, excluding statutory debt 109 656 109 656

Loans 446 446Total 110 102 110 102

Group

Pr. 31.12.07 Assets



profitTotal

Accounts receivable and other assets excluding prepayments

82 334 0 82 334

Financial assets at fair value through profit 0 1 345 1 345Cash and cash equivalents 95 120 0 95 120Total 177 454 1 345 178 799

Group



amortised costTotal

Accounts payable and other liabilities, excluding statutory debt

101 148 101 148

Loans 1 043 1 043Total 102 191 102 191

Parent company

Pr. 31.12.08 Assets



profit

Derivatives used for hedging

purposesTotal

Derivatives 0 0 0 0

Accounts receivable and other assets, excluding prepayments

50 673 0 0 50 673

Financial assets at fair value through profit 0 804 0 804Cash and cash equivalents 19 511 0 0 19 511Total 70 184 804 0 70 988



Parent company



amortised costTotal


42 698 42 698

Loans 0 0Total 42 698 42 698

Parent company

Pr. 31.12.07 Assets


Assets valued at fair value

through profitTotal

Accounts receivable and other assets, excluding prepayments

108 226 0 108 226

Financial assets at fair value through profit 0 1 338 1 338Cash and cash equivalents 32 791 0 32 791Total 141 017 1 338 142 355

Parent company



amortised costTotal


59 412 59 412

Loans 0 0Total 59 412 59 412

It is considered that there are significant differences between the book value and fair value for the group’s assets and liabilities.Changes in fair value of financial assets over the results included in financial income / financial expenses.

Derivatives All of the real value of the hedging instruments are classified as current asset or liability if the remaining maturity of a hedged item is less than 12 months.

The group has invested in foreign currency forward contracts for cash flow hedging purposes. Nominal amount of outstanding forward currency contracts per. 31.12.2008 is NOK 118 380 000 (2007: NOK 0). The assured anticipated transactions stated in foreign currency are expected to take place on different dates within the next 12 months.

Outstanding forward contracts pr. 31.12.2008:

Forward contracts Amount in currency Exchange rate Due date

Sale EUR 3 000 000 9,881 31.03.2009Sale EUR 3 000 000 9,881 30.06.2009Sale EUR 3 000 000 9,875 30.09.2009Sale EUR 3 000 000 9,868 30.12.2009

Any gains and losses from the value of forward currency contracts are recognised in the income statement. The outstanding forward contracts as of the end of the year were all entered into on the 30th of December 2008. Unrealised gains / losses on the contracts by the end of the year are considered insignificant and thus not recognised.


Note 27 Loans to group companies

2008 2007OTRUM Svenska AB - -OTRUM Danmark AS 2 517 4 291 OTRUM Finland OY 9 902 3 685 OTRUM Gmbh 22 147 17 363 OTRUM France SA 1 143 4 373 OTRUM Technology Ltd 987 797 OTRUM UK Ltd 13 446 23 230 OTRUM Interactive Iberica SL 29 826 25 037 OTRUM Italia S.r.l. 25 788 11 640 OTRUM China 388 812 Total 106 143 91 227

Note 28 Potential legal disputes

Note 29 Events after the balance sheet date

There have been no significant events after the balance sheet date.

There is no security associated with loans to group companies. Receivables rent is calculated quarterly by market conditions. Receivables impairment testing is carried out annually. See note 16 and note 4.

The Finnish company Kovotekniikka Oy, which has bankruptcy protection according to Finnish legislation, has directed a claim against OTRUM ASA. Kovotekniikka Oy has been a supplier and customer of OTRUM ASA. OTRUM ASA contests the claim.

If the claim was to be successful, the net effect on OTRUM ASA would be a cost of approximately 840,000 euro.


We confirm, to the best of our knowledge, that the financial statements for the period 1 January to 31 December 2008 have been prepared in accordance with current applicable accounting standards, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the entity and the group taken as a whole. We also confirm that the Board of Directors’ Report includes a true and fair review of the development and performance of the business and the position of the entity and the group, together with a description of the principal risks and uncertainties facing the entity and the group.

Responsibility Statement


Synnøve Brudevoll






Shareholder policyOTRUM’s overall target is to give shareholders a return on their investment, which is equal or better than alternative investments with the same risk profile. The company seeks to inform its shareholders in an open and consistent manner. OTRUM aims to present financial information in a way that complies with the criteria that the Oslo Stock exchange has established as good information policy.

Share price development and tradingAt the end of 2008, OTRUM’s share price was NOK 3.19 per share, while it stood at NOK 9.90 per share at the beginning of the year. The average share price in 2008 was NOK 7.43 compared to NOK 13.93 in 2007. The highest price during the year was NOK 12.00, whereas the lowest was NOK 2.90. Shares were traded on 163 of a total of 252 days in 2008, against 204 of 251 days in 2007. A total of 8,893,023 shares were traded in 2008, representing 40.6% of outstanding shares. This compared to a total of 15,254,667 shares representing 69.7% of outstanding shares in 2007. The average value of each trade in OTRUM shares was NOK 90,981 in 2008 compared to NOK 106,390 in 2007.

The company had 759 shareholders at the end of the year. Telenor Vision International AB and Frederik Wilhelm Mohn owned 33.14% and 25.12% respectively.

Power of attorney to issue new sharesThe board of directors was, at the general meeting, given the power to increase the share capital by NOK 2,189,973, allocated on 2,189,973 shares, to be used in connection with possible acquisitions. The board can decide not to give existing shareholders their pre-emption to use their subscription rights. The lowest subscription price will be the market price at the time of subscription, with a 10 per cent deduction. This power of attorney is valid until the general meeting in 2009.

Power of attorney to repurchase own sharesThe board of directors was, at the general meeting on the 20th of May 2008, given the power of attorney to repurchase their own shares at a total of NOK 2,189,973. The minimum purchase price should be NOK 5 per share, and the maximum should be NOK 60 per share. This power is valid until the general meeting in 2009.

Dividend policyThe company plans to grow over the next few years. Parts of this growth will be self-financed. At the same time, it will be important to demonstrate good solidity and liquidity to be competitive, when competing for five to seven years agreements with the international hotel chains. The policy is therefore not to pay out dividend to the shareholders.

Shareholder information

Financial calendar:

February 10thResult Q4 2008

April 29thResult Q1 2009

May 19thAnnual General Meeting

July 31stResult Q2 2009

October 28thResult Q3 2009

MAY JUN JUL AUG SEP OCT NOV DECAPRMARFEBJAN0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

8,00

9,00

10,00

11,00

Share price in 2008 OTR

NO

K


1. Corporate governance In order to succeed, all companies are dependent on good relationships with interested parties. For OTRUM, this is also a decisive success factor. A good reputation and positive economic development are fundamental if trust is to be established and maintained with important target groups such as customers, investors, employees, suppliers, partners and the authorities. This requires the company to have good control and steering. Open and honest communications and equal treatment of company shareholders is also important to increase share value and achieve the trust of the investors. OTRUM emphasizes independence and neutrality in all matters between the board, the management and the owners. The principles of independence, neutrality and normal business practice also apply in respect of dealing with other interested parties such as customers, suppliers, banks and other business relations.

2. BusinessOTRUM’s main strategy is to develop, market and distribute interactive TV solutions to the hotel industry. The company supplies interactive TV systems with a range of services developed for hotels, as well as movies, satellite channels and Internet solutions adapted to the type of guests accommodated by the hotel. The head office is in Oslo with a Research and Development department in Arendal. The company’s Articles of Association states the following in § 3:

“The Company’s business objective is to carry out business activities within electronics and data technology as well as participation in other companies”

3. Equity and dividendsOTRUM will endeavour to finance its activities using its own equity. OTRUM ASA has an equity ratio of 86% in the parent company and 62% in the group. OTRUM will at all times ensure that it has a strong balance sheet with a sufficiently high equity. OTRUM aims to have a return to the shareholders through development of the share price and the paying of dividend. In evaluating payment of dividend and its amount, the board will consider the dividend capacity of the company, the requirements of maintaining a responsible level of equity and the need for sufficient financial resources for future growth. According to the Norwegian Companies’ Act, the basis for determining the dividend capacity is the equity available for distribution (“free” equity) in the parent company OTRUM ASA.

4. Equal treatment of shareholders and transactions with close associatesThe company has only one class of shares. Transactions in the company’s own shares (share buy-back) are carried out through the Oslo Stock Exchange at prevailing stock exchange prices. The company emphasizes equal treatment of shareholders when

it comes to price sensitive information. OTRUM ASA is listed on the Oslo Stock Exchange and is therefore obliged to follow all relevant information requirements. The company publishes all price sensitive information to the stock market through its information system and also on the company’s website at www.otrum.com.

5. Freely negotiable sharesOTRUM has the aim of ensuring that all shareholders have the same rights. OTRUM has one class of shares, and each share qualifies for one vote at the shareholders’ meeting. All shares are publicly traded and there are no trade barriers. All OTRUM’s shareholders are entitled to the same dividend payments, and have equal rights in the event of share capital increases (unless waived by the general meeting).

6. General meetingsThe company’s shareholder meetings are open for all shareholders, and all shares have the same voting rights. All shareholders can be represented either in person or through a power of attorney. It is not possible to participate and/or vote through the Internet. There are no ownership limitations and no known shareholder agreements. Notice of a shareholder meeting will be published on the company’s website 21 days prior to the general meeting and sent out to all shareholders with 14 days prior notice, in accordance with the law. Minutes of general meetings are made available through the stock exchange information system and on the company’s website.

7. Nomination committeeThe board of directors has established a committee to oversee the selection and proposal of board members. The company’s Articles of Association states the following in § 6:

“The Company shall have an election committee consisting of 3 members; all elected by the general meeting. The election committee presents suggestions for members to the company board to the general meeting. The election committee’s nomination must be sent out together with the summons to the general meeting, if election is on the agenda.

The composition of the election committee should be attempted to be representative of the composition of the company’s shareholders. The election committee is elected for a period of 2 years. The board members are not eligible. In the summons for the general meeting the company’s shareholders have to be invited to nominate members for the election committee”

The members of the committee are not members of the board of directors or the company’s executive management. The committee consists of Fredrik W. Mohn, Erik Nord and Stig Eide Sivertsen.

Corporate governance


8. Corporate assembly and board of directors: composition and independenceOTRUM ASA does not have a corporate assembly. OTRUM aims to ensure a balanced composition of the board taking into account the competence, experience and relevant background of the individuals. It is also desirable that the structure of the board of directors reflects both the ownership of the company as well as the need for neutral, independent representation without specific shareholder affiliation. The company management is not represented on the board and none of the shareholder-elected board members have previously been employees of the company. There are no personal relationships either to the Chief Executive Officer or to other key employees. There are no performance based fees to the board, and the board members do not participate in option programs.

9. The work of the board of directorsThe board of directors periodically receive a management report which describes the company’s development. In addition, every quarter the board receives a complete set of financial statements including financial results, liquidity and the balance sheet. Every year in extended board meetings the company strategy is presented to the board and discussed.

The board of directors evaluates its work and competence annually.

10. Risk management and internal controlRisk management and internal control is performed through various processes within the group, both on a board level and in daily management of the company. The board of directors perform risk management and internal control through board meetings. Periodically the board of directors receives a board report from the management outlining the financial and operational performance of the company. An annual planning and budgeting process, which ends with a budget approved by the board, sets the framework for the coming year. Annually, the board approves a proposal for the annual report and dividend payment to the general meeting.

Risk management and internal control on a management level is carried out through monthly reviews of financial performance. Each month a review of results and development of the company is held with the leader of each region. Financial risk management and internal control procedures are carried out both on a group level and in each subsidiary.

In addition, instructions have been made to regulate the lines of responsibility and authority between the board of directors and the administration.

The administration’s assessment of internal control and risk management has been reviewed at a board of directors meeting during the year.

11. Remuneration of the board of directorsRemuneration to the board members is at a sufficiently competitive level in order to ensure the desired composition of the board. The board comprises five shareholder-elected members and two representatives from the employees. The shareholder-elected members are elected on a two-yearly basis by the general meeting. Details of remuneration to the board for 2008 are described in the notes to the financial statements.

12. Remuneration of the executive managementA remuneration committee has been appointed to oversee the compensation of the President & CEO of OTRUM ASA. Remuneration of the executive management is based on a fixed and a variable element. The variable element is based on performance compared to budget for revenues and results for the OTRUM Group. The details of the remuneration to executive management and the board of directors are disclosed in the notes to the financial statements.

13. Information and communicationsThe company endeavours to give accurate and sufficiently extensive information each quarter and publish this information quickly. The company has ceased to give concrete guidance on future revenue and results. Responsibility for IR and price sensitive information rests with the company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO). In meetings with shareholders, analysts and others, special emphasis is placed on not discussing issues that are considered to be price sensitive.

14. TakeoversThe board’s primary objective is to give the best possible dividends and long-term return on investment for the shareholders. Unless specific conditions apply, the board will not prevent or obstruct in the event that a bid is made for the company or its shares. In such situations, the board will evaluate the offer and make a statement which is communicated to the shareholders. A decision will be made through a general meeting.

15. AuditorOTRUM uses the same firm of auditors in the parent company and all subsidiaries of significance. The auditors are also used as advisors for the preparation of tax returns and tax advice in general. The auditors are not used as advisors for strategic issues or in connection with operational tasks for the company. Only the CFO and CEO are able to approve non-audit related assignments. The auditors participate in two board meetings a year, one where the annual financial statements are approved and one where the quarterly financial report is presented. In the same meeting the auditors will give their opinions as to the company’s accounting principles, risk areas, internal controls and accounting routines. Audit fees are approved at the annual general meeting and are described in the notes to the financial statements.

48

OTRUM ASAPostbox 879, SentrumN-0104 Oslo, NorwayVisitors address:Nedre Vollgt.4

Tel +47 23 89 72 00Fax +47 23 89 72 83Email [email protected]

Tel +47 23 89 72 00Fax +47 23 89 72 83Email [email protected]

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