Issuu on Google+

annual reporT

2010


Table of contents


P. 4 -7

Highlights 2010

P. 8

CEO’s Report

P. 10-11

Company Vision and Strategy

P. 12-14 About Blom P. 15 Blom Information Services’ Product Family P. 16 Blom’s Oblique Imagery Save Lives P. 17 Use of Map Data in Public sector P. 18-22 Markets P. 23-27 Financial Analysis P. 29-33 Board of Directors' Report P. 35-39 Blom Group Accounts P. 41-79 Notes to the Blom Group Accounts P. 81-84 Blom ASA Accounts P. 86-95 Notes to the Blom ASA Accounts P. 96-97 Auditor's Report P. 98 Board of Directors’ Responsibility Statement P. 100-104

Corporate Governance

P. 105 Board of Directors P. 106-107 Information on Shares in Blom P. 108

blom offices


2010 highlights


2 0 1 0 HIGHLIGHTS

Key figures Group (Amounts in NOK 1000) IFRS 2010

IFRS 2009

IFRS 2008* adjusted

IFRS 2007

IFRS 2006

Sales turnover: Operating revenues 619 177 736 901 821 684 1 077 262 835 029 Results: EBITDA -45 840 92 306 109 308 521 925 159 230 EBIT -428 218 -53 832 27 968 458 260 100 315 EBT -559 019 -93 960 17 768 412 264 70 359 Net profit/loss for the year -564 957 -83 012 13 302 398 566 62 675 Capital: Current assets 455 756 704 592 704 878 800 268 587 375 Non-current assets 352 537 709 003 837 540 686 984 838 061 Current liabilities 636 009 326 723 418 158 358 042 545 944 Non-current liabilities 64 432 389 342 268 964 305 292 506 332 Equity 107 853 697 530 855 296 823 918 373 160 Balance sheet total 808 294 1 413 595 1 542 418 1 487 252 1 425 436 Margins: Net operating margin (%) -69.16 -7.31 3.40 42.54 12.01 Net profit margin (%) -91.24 -11.26 1.62 37.00 7.51 Profitability: Return on total assets (%) -56.55 -9.03 1.85 31.47 9.12 Return on equity (%) -140.30 -10.69 1.10 66.59 22.28 Financial strength: Equity ratio (%) 13.34 49.34 55.45 55.40 26.18 Liquidity: Current ratio 0.72 2.16 1.69 2.24 1.08 Acid test ratio 0.47 1.35 1.11 1.71 0.75 Key figures per share: Earnings -13.91 -2.04 0.33 9.56 1.81 Cash flow -4.50 1.55 2.33 11.08 3.51 Dividend 0.00 0.00 0.00 0.00 0.00 Ordinary net profit/loss Profit/loss before tax (EBT) – taxes Cash flow Net profit/loss for the year + ordinary depreciation Net operating margin Operating profit/loss (EBIT) x 100 / net operating revenues Net profit margin Net profit/loss for the year x 100 / net operating revenues Return on total assets (Profit/loss before extraordinary items + financial expenses) x 100 / average total assets Return on equity Net profit/loss for the year x 100 / average equity Equity ratio Equity x 100 / total assets Current ratio Current assets/current liabilities Acid test ratio (Liquid resources + financial investments + debtors) / current liabilities * 2008 adjusted for documentation irregularities in connection with the sales turnover in Blom Sistemas Geoespaciales.

5


2 010 HIGHLIGH T S

2010 HIGHLIGHTS REVENUES AND EARNINGS IN 2010 • The year 2010 has been marked by continued weak macro-economic factors in many of the markets where Blom operates. • Sales revenue of NOK 619 million, EBITDA of NOK -46 million • The profit includes a charge of NOK 356 million for the write-down of non-current assets, related primarily to goodwill and assets associated with the Pictometry agreement. • There is also a charge of NOK 75 million for provisions for potential losses on inventories and trade receivables, as well as potential claims from customers as a result of the uncertainty associated with the Pictometry agreement. • Enhanced and optimised operations, including restructuring of the company’s operating units in order to form the basis for a profitable operation. GEO ENGINEERING SERVICES • Sales revenue of NOK 501 million. • Blom was awarded a strategically important contract in Italy through its new partner Telaer STA for the delivery of airborne and satellite-based data information to the Governmental Agency (AGEA) in Italy. The estimated value of the contract is NOK 125 million for the delivery of airborne and satellitebased data and services for use in national agriculture and regional forestry areas in Italy. • Blom signed a strategically important framework agreement valued at NOK 11 million with the French Marine Protected Areas Agency and Marine Natural Park of Iroise for a coastal survey in France. • Blom was awarded a contract valued at NOK 20 million in Mongolia for the establishment of processes­to make the registration of property in Mongolia more efficient in both the public and private sectors. • Blom was awarded a contract valued at EUR 2.8 million by the Albanian Government for the ­registration of property rights in Albania. This project has been financed by the World Bank (IMF). • Blom signed a framework agreement in Italy for the delivery of laser data, aerial photos and ­orthophotos. • Blom and Kongsberg Satellite Services have entered into strategic cooperation for the purpose of developing and delivering geographic information based on satellite and aerial data combined with Blom’s existing databases. The partners will develop services for forest monitoring as part of ­rainforest conservation efforts. • Blom was awarded a contract for aerial triangulation and mapping services in a number of ­municipalities in Belgium. INFORMATION SERVICES Sales revenue of NOK 118 million in 2010. • The company continued to reorganise and build up its own sales force in the BIS segment. • Blom and Microsoft renewed and extended their contract valued at USD 10-14 million. • Blom signed an agreement to sell technology rights to NDrive. • Blom entered into a contract with the Serbian authorities for the delivery of vertical and oblique ­digital images of 3,200 km2, which covers 17 municipalities. • Blom signed a contract with Fortress for the use of oblique images in the real estate brokerage industry in Norway and Sweden. • Blom signed a contract with KLP for the use of oblique images in the insurance industry in Norway. • Dispute between Blom and Pictometry regarding licence agreement. •

6


2 0 1 0 HIGHLIGHTS

Revenue 2009 – 2010

EBITDA 2009 – 2010

(Amount in NOK million)

(Amount in NOK million)

1000

BGES

100

BIS

80

900

92

60 800 700

737

40

119 619

600

618

118

20 2010

0 2009 -20

500

501

400

-40

-46

-60 300 200 100 0 2009

2010

7


c eo's report

CEO's report Blom has put a very challenging period behind it. The year 2010 has been marked by a major change in our framework conditions. The debt burden of countries in Europe and the subsequent reduction in their investment capacity has featured prominently in the news, followed by a significantly lower demand for our engineering services in some instances from our formerly strong customers with links to central and local government. This has resulted in a reduction in volumes, which has in turn resulted in lower margins for the deliveries we have made. The company has implemented measures to meet these changing conditions and made cost adjustments and changes in the organisation in order to adapt to potentially lower demand in the future. In spite of the extensive reorganisation, the company has retained, at the same time, its flexibility to handle larger volumes in the future. In 2010 our revenues totalled NOK 619 million, and our EBITDA margin was –7.4 per cent. In addition to striving to establish a better corporate operating structure in 2010, we have also focused on internal communication and closer cooperation across national borders, with the aim of increasing productivity and optimal exploitation of our resources.

The company has, however, made a focused effort in accordance with the long-term strategy that has been established for our two respective business areas, and has reached important goals for the year 2010. Blom is still the leading and the largest company in Europe in its field. Our employees possess unique expertise and experience, which enables the company to deliver innovative products, services and solutions of high quality adapted to the commercial solutions demanded by the market at any given time. We can now deliver updated databases for a number of products ranging from nationwide orthophotos to advanced 3D urban models and oblique images through BlomURBEX™. We are comfortable that the substantial investments we have made in our databases and server technology will form the basis for satisfactory long-term earnings in this business area. In spite of the fact that 2010 has been a challenging year, the long-term creation of value for our shareholders has always been in focus. We strongly believe that the company’s leading position in Europe, combined with our strong resource base and our ability to innovate, will form the foundation for higher revenues and ­better margins in 2011. I would like to take this opportunity to thank all my colleagues for their great efforts throughout the year that has passed, and we are looking forward to continued good cooperation in the years to come. In 2011 we will increase our focus on development of the expertise represented by each individual, which will in turn form a foundation for strengthening the company’s long-term creation of value.

The company has been impacted more than expected by the economic decline in Europe. Both revenues and sales were weaker than was anticipated in the company’s budgets. Yours sincerely Dirk

8


blom introduction


v i sion and str ategy

Vision and strategy Vision Blom will be a market leader in geographic information through innovation, technology and competence. Blom helps its customers deliver the best possible services that benefit people where they live, work and travel. Goals Blom aims to be an established, recognised international company with a continuous marketoriented focus on innovation and development of the company’s assets. Blom will strengthen shareholder value through achieving profitable­ growth by the development of attractive customer-­oriented solutions, based on full exploitation of the company’s resources and strong competence. •

The company will produce and supply geographic information and geographic information systems for the public and private markets. The company's primary markets are in Europe, but defined projects will be carried out worldwide. Growth and increased profitability will be accomplished through organic growth, expansion in existing and new markets, acquisitions, and structural measures. Profitability will be continuously improved through the development and sale of innovative and scalable solutions, as well as continuous efficiency improvement measures. The group will be organised at all times so that the synergy potential can be fully exploited for increased productivity and cooperation between the companies. The business will be managed in an ethically and socially responsible manner. The company­ will have a good reputation with a strong ­environmental and well-defined profile.

10

Strategy Important measures for achieving our goals are as follow: Market Blom shall continuously develop its existing markets and focus at the same time on expansion into new markets. Over 90 per cent of the company’s sales revenue and growth is from ­countries outside Norway, and the company wants to make sure that this trend continues. Nearness and a close dialogue with customers are necessary to ensure growth and customer satisfaction, and Blom continuously seeks to develop its sales and marketing organisation so that it can meet the needs of the customers in an efficient manner. Blom works actively in markets through alliance partners. Strategic alliance building is essential for development of the markets and continued growth. Blom wins contracts and market shares through a good reputation by continuously delivering high quality products and services with a high level of precision. The company actively seeks to maintain its strong position. In addition, the company will continue to ensure expansion in existing and new markets through the development of innovative and unique products and services. Acquisitions and structural changes Acquisitions and structural changes are a signifi­ cant part of our growth strategy. The company will continue to work actively to increase growth and shareholder value through structural changes. The goal of acquisitions is to gain access to new markets and new technology and to supple­ment our range of products. A continuous development of the company’s market position is completely key to the execution of structural changes. Competence and innovation Knowledge, competence and experience are Blom’s most important competitive advantages.


v i s i o n a n d s t r at e g y

A continuous development of these parameters­ is completely essential if the company is to meet its growth targets through continuous improve­ ment and innovation. Blom attaches importance to the development of competence by offering its employees attractive and challenging tasks. The company continuously develops its products, services and databases through the competence, experience and innovative capacity of its employees. Product and technology development The development of technology and innovation are key to Blom’s product strategy, and the company invests around 10 per cent of its sales revenue annually in the development of products, services and databases. This applies to all market segments and product areas. Product development is financed both by the company and customers, and it will always be the needs of the market that determine our priorities and investments. Blom's product development entails the use of new technology for the collection and processing of geographic information, establish­ ment of new databases and adding value to the data that the company collects through aerial photos and laser scanning of terrain and cities. Social responsibility and ethics The group actively seeks to follow the business ethical guidelines associated with social responsibility and the external environment. These are fundamental elements for the development of a sustainable and profitable business culture where the needs of the employees are also taken into consideration. Financial strategy The company attaches importance to solid and profitable growth that provides financial free­dom. The financing of growth and structural changes shall be based primarily on the company’s earnings and the liberation of capital. The company strives to observe the accounting guidelines in all the countries where it operates, and it is a goal to continuously improve predictability and reduce risk.

11


ABOU T BLOM

ABOUT BLOM The company produces and develops unique European databases of images, 3D models and map data, as well as enabling our customers to access this content through our innovative online and off-line applications & services. The demand for advanced and high quality geographical information is growing rapidly. Blom has a strong position in the digital map data ­market today, and aims at becoming the most innovative and preferred service provider of on­line geographic information in Europe. Today Blom is the largest company in Europe for airborne collection of geographic referenced information. Blom has gone from being a traditional map company focusing on the collection and processing of map data to a leading driving force in the development of new technologies and solutions related to geographic information as a tool and decision-making basis. Examples here include solutions and tools for urban and regional planning, engineering, monitoring and maintenance of major infrastructure facilities, navigation, 3D modelling, and forest and coastal monitoring. In recent years Blom has made several important strategic moves in light of the rapidly growing market within geographic information. While Blom earlier collected and processed geographic information based on specific projects or customer assignments, the company has now built up a large database of geospatial content to which the company holds the IPR. This enables multiple sales of the data collected and creates a more scalable business model. In addition, Blom develops solutions, applications and products based on this content and that of third parties to offer a complete solution to our customers. Blom has created a unique geo server platform – BlomURBEX™ – for online access to our content and that of our partners, offering a distribution and sales channel for the company’s geospatial

12

Blom Facts: •

• •

• •

1093 employees (as of 31 December 2010) Head office in Oslo, Norway Subsidiaries in Norway, Sweden, Denmark, Finland, Germany, UK, Italy, Spain, and Romania Offices in France, the Netherlands, Ukraine, Czech Republic, Bulgaria, Moldova, Hungary, Azerbaijan, Panama and Portugal Production units in Romania and Indonesia Operates 4 helicopters and more than 20 aircrafts Established in 1954 Listed on Oslo Stock Exchange since 1988 Sales revenue of NOK 619 million in 2010

data products. Blom is building up a network of partners who create solutions and services for all types of customers and users ranging from professional solutions for engineering, safety, monitoring, etc., to handheld terminals such as smart phones for navigation and gaming con­ soles. Blom delivers data, data models and solutions to local government, central government, trade and industry and the consumer market, and enables its customers and partners to create applications based on the company’s geo server technology BlomURBEX™ and other applications and services. Geo Engineering Services’ products and services Photography and laser scanning from aircraft and helicopters form the foundation for the company’s products and services within Geo Engineering Services. With aircraft stationed at bases throughout Europe, the company can


ABOUT BLOM

quickly deploy to any relevant area for photo­ graphy and scanning. The company’s engineers have developed a number of map products and data models based on aerial photography and ­laser scanning by means of the latest digital technology for photography and laser technology and advanced data modelling. The areas of application for these products include 3D visualisations, volume calculations for the civil engineering and construction industry, growth calculations for forest management, assessment of coastal erosion, flood calculations and planning in connection with the establishment and maintenance of major road networks, railways, pipelines and transmission line routes. Information Services’ products and services With BlomURBEX™ being fully operational, the company provides geographic data as a service. More and more users of geographic information and data models in public administration and private enterprises are now seeing the benefit of avoiding the management and collection of data themselves. Blom provides online access to images, 3D models and other geographically referenced data with a high level of service quality and safety. In addition, it is guaranteed that the most up-to-date images and models with a change history are available to the users. Information Services is also continuing to ­develop its solutions for navigation and locationbased services aimed at the consumer market. Blom’s navigation solutions enable, for example,­ navigation in high-resolution oblique aerial photos­and 3D models, as well as online search services linked to corresponding images and models. The new solutions enable users to get an overview of their surroundings and the local service offerings, for example, by a couple of keystrokes on their mobile phone, or other handheld application. The market for mobile Internet and the use of navigation and location-based services shows

Aircraft Resources: Company’s resources in the air include: •

• •

16 aircrafts owned by the company: o 1 Lear Jet 25C o 1 CASA 212C o 1 Rockwell Commander C690 o 1 Piper PA 31-350 Chieftain Navajo o 5 Piper PA 31-310 Navajo o 4 Partenavia P68 o 2 Cessna P172 o 1 Cessna 402 4 additional long-term leased aircrafts 4 leased helicopters

Sensor Resources: The company’s state-of-the-art fully digital cameras and sensors include: • • • • • • • •

4 UCXp cameras 4 UCD cameras 2 ADS40 cameras 4 ALTM Gemini laser scanners 1 ALTM Pegasus HD400 laser scanner 1 ALS60 laser scanner 5 Topeye laser scanners 1 Hawkeye laser scanner

strong growth. The moves that Blom has made in recent years makes the company well positioned to be a central player in this development. Blom’s databases Blom focuses on the development of its own, unique databases. The largest database the company currently possesses is the library of oblique aerial photos, Blom­ OBLIQUE™, which covers over 1,100 city areas in Europe. Oblique digital aerial cameras enable objects in the images, such as buildings, to be viewed from an angle, as well as from directly above. The aerial photos in the database have a very high degree of detail and are updated

13


ABOU T BLOM

regularly. In addition, the company has created approximately 400 3D models of cities all over the world, Blom3D™, based on, among other, the high-resolution oblique aerial imagery. Furthermore, the company possesses a number of other databases.

14


b l o m i n f o r m at i o n s e r v i c e s ’ p r o d u c t fa m i ly

BLOM INFORMATION SERVICES (BIS) PRODUCT PORTFOLIO The BIS product range is based on a mix of Blom IPR content, third party content and Blom technology. The Blom product range has been developed to maximize the different possible usage of geospatial content within a large number of different markets. Unlike our traditional project-based business, BIS is primarily focused on offering products in a licensed based business model. The product range we offer is currently comprised of: BlomURBEX™ – An online geoserver, offering access to Blom and partner content via mobile and desktop API’s and SDK’s, together with a selection of GIS plug-ins. BlomURBEX 3D™ – An online 3D model ­service that offers access to Blom3D™ models via API, SDK or through our proprietary viewer technology. BlomOBLIQUE™ – Georeferenced Oblique image library, supplied with a desktop viewer, GIS plug-ins or via the BlomURBEX™ server. Blom3D™ – Blom 3D models, supplied as ­different layers or components: BlomLOD1™ – Basic box 3D model BlomLOD2™ – BLOD1 + roof geometries BlomLOD3™ – BLOD2 + generic, pattern based textures BlomLOD4™ – BLOD2 + photorealistic textures from oblique imagery BlomNAVIGATION™ – Road attributes and urban elements for use in vehicle navigation apps.

BlomPEDESTRIAN™ – Different urban elements modeled for use with pedestrian navigation ­applications. BlomLANDMARKS™ – High-resolution 3D ­models of specific signature buildings or objects. BlomORTHO™ – Blom ortho imagery products, coverage includes high resolution imagery of urban areas within Western Europe and national coverage currently available in Italy, Denmark and The Netherlands. BlomHISTORICAL™ – Georeferenced vertical imagery historical aerial imagery, dating back to the 1940s. During first half of 2011, we will also ­introduce the following new products: BlomWEB™ Viewer – A COTS (Commercial, Off-The Shelf) web based application framework that can be easily deployed by our customers, integrating all the functionality offered by our ­different API’s and SDK’s, including 3D. BlomDESKTOP™ Viewer – A COTS (Commercial, Off-The Shelf) desktop application that can be easily deployed by our customers, integrating all the functionality offered by our different API’s and SDK’s, including 3D. Both these viewer applications will incorporate the ability to view, purchase and download Blom content from our BlomURBEX™ platform in future releases. During 2011, the objective is to enhance and evolve our product offering to meet our customers’ requirements, growing in the value chain and enabling Blom to offer an end-to-end solu­ tion that ranges from data acquisition to end user applications and services.

15


u se of blom’s oblique imagery h e l p s s av e l i v e s

Use of Blom’s oblique imagery helps save lives Blom’s unique oblique aerial imagery, Blom­ OBLIQUE™, currently provides great value to the fire and emergency services throughout Europe. Oblique aerial imagery allows the users to view relevant properties from up to 12 different views before physically arriving on a scene. In addition, the oblique angle enables you to see all details in an image, such as fire hydrants, manholes, power lines, intersections, doors, and windows, in stunning clarity. The technology behind the custom viewer provides the user with the ability to measure the length of a hosepipe between the fire hydrant and the building, predict the size of a ladder to reach a specific floor plan, and orientate in the imagery, to a degree not previously possible with traditional aerial photography. By combining Blom’s oblique aerial imagery with existing traditional maps (vector datasets), users can leverage their geographic information even further.

can easily obtain vital information such as roof type, or structural composition of properties and buildings. As a result, BlomOBLIQUE™ helps save time, resources, and, most importantly, lives. The technology provided by Blom to accompany the BlomOBLIQUE™ product is easy-to-use, whether for preplanning scenarios in important buildings or locations, searching alternative ­water sources en route to an emergency, or other tasks where detailed visual information can help improve response time and efficiency for fire brigades.

ABout SIAMU The SIAMU is the Service d’Incendie et d’Aide Médicale Urgente or Fire Brigade and Emergency Medical Service of the Brussels-Capital Region which represents 1.400.000 people during the day and 1.000.000 inhabitants during the night. Almost 1,000 professional firefighters and 150 administrative workers provide emergency services in Brussels.

SIAMU, the organization in charge of 112 in ­Brussels, in Belgium, is a very successful example of a user of Blom’s oblique aerial imagery. SIAMU have taken the BlomOBLIQUE™ product and have included it as a new integrated key component in the daily workflow within the brigade. In 2010, SIAMU was an award winner at the 112 Awards Ceremony organized by the EENA (European Emergency Number Associ­ ation) for the use of the BlomOBLIQUE™ service in the emergency services industry. BlomOBLIQUE™ imagery is used in all services provided by SIAMU; by call center and interven­ tion teams for better coordination during an incident, by prevention units to prepare visits in the field and by the prediction departments in order to prepare the emergency plan on high risk areas, such as schools and industrial sites. Users

16

BlomOBLIQUE™ integrated in the SIAMU architecture.


use o f m a p d ata f r o m b l o m f o r p u b l i c s e c t o r

use of MAp DATA froM BLoM for puBLiC seCTor the public sector represents the largest client base for blom. 2010 has been marked by a continuing weak economy in a number of countries in which we have a significant portion of our operations. the need for geographic information and geographic information services has however not decreased, although the present macro-economic climate has resulted in a pent up demand for these kinds of services. there is still a fundamental requirement for high quality geographic information such as updated maps, orthophotos and other geo-referenced data and services for planning and documentation purposes within governments, municipalities and administrations. the examples are many, including: Visualization of new buildings or constructions, from planned windmills to power lines, are created through new tools to improve understanding of the subject and to improve communication of the effects of planned actions which require better and more detailed geo information. Risk assessment required for preventive measures on the face of Climate changes and other environmental challenges, which increases the need for high quality, geo-referenced information. the same elements are required for rapid response in the case of emergencies. unexpec-

ted flooding as we have experienced in 2010 indicates the need for higher volumes as well as more detailed flood-maps and digital terrain models. Documentation for various Eu-regulations which develop further to ensure environmental issues, problems with respect to food security and other important cross-border issues inevitably leads to an increasing demand for high quality geo-referenced data. many regions outside Western-Europe already have a high demand for basic infrastructure, e.g. water and waste lines, road and rail construction and maintenance of roads and power lines. this is also representative of many Eastern-European countries whose development of infrastructure is lagging decades behind the level of WesternEurope. blom sees an increasing number of public tenders in this region, which is a result from increased funding from the Eu and the World bank. blom has decades of experience and a robust foothold in this region which, together with the increased demand, gives blom a good platform for future growth. Economies in south and Central america experience significant growth which also increases the investment in infrastructure and thereby also the demand for geographic information. blom has long standing experience and a strong reference list in this region which gives a healthy foundation for future expansion.

17


m arkets

MARKETS INTRODUCTION As one of Europe’s largest providers of geo­ spatial products, services and solutions, Blom’s customers range from public administrations and enterprises to consumers. The company provides a wide variety of mapping and geographic services, meeting local, regional and international standards and specifications, as well as custom solutions for specific customer demand. Blom’s strength lies in the expertise, innovative capability and the technical know-how of its people.

the Far East. In addition, Blom has extensive experience in carrying out projects financed by different Development Funds, of which the primary objective is poverty alleviation in developing countries. Blom has an extensive track record with projects funded through various means, such as the World Bank, EU, Asian Development Bank, African Development Bank etc, and a large number of national aid and donor organizations.

The company operates two business units; Geo Engineering Services and Information Services. GEO ENGINEERING SERVICES Geo Engineering Services cover a range of ­capabilities based on aerial photography and laser scanning. Blom’s engineers and subject experts produce a wide range of geo spatial models for engineering and earth monitoring purposes. The aim is to support customers in handling the continuous change, planning and development of urban and rural areas as well as coastal zones. Blom focus the Geo Engineering Services into the following primary market segments: public services, urban & rural planning, corridor infrastructure engineering, environment & forestry, defense, and telecom. Public Services and Urban & Rural Planning Blom provides high quality engineering, consult­ ancy services and contracted mapping and modeling services for land and property administration. Examples of services are preparation of high quality maps and three-dimensional models, cadastral maps and real estate property databases. Cadastral mapping provides the basis for efficient real estate management and is a fundamental requirement for economic development and growth. The services have been provided to projects in over 30 countries in Europe, Central Asia, Latin America, the Caribbean, Africa and

18

Laser scanning from Holmenkollen in Oslo before reconstruction.

“Corridor” Infrastructure Effective urban community management is ­reliant upon accurate data from a variety of sources and Blom has the ability to produce such data through scalable and highly accurate mapping. Blom offers a range of remote aerial survey sensor techniques for corridor mapping supporting monitoring and maintenance of criti­ cal infrastructure such as gas pipelines, power transmission, railroads, highways and airports. These techniques include use of helicopter for laser scanning and aerial photography providing very high level of accuracy and detail. Environment & Forestry Blom’s remote sensing and modeling capabilities are used to monitor and analyze the impact environmental changes such as flooding and soil erosion have on the landscape. Growth patterns on vegetation can also be monitored and analyzed to assess growth in forestry and agriculture. Blom generates information databases compiled from combinations of aerial photography, hyper


markets

spectral scanning and bathymetric laser scanning to provide data on, among other, land and offshore terrain, land coverage, snow volumes and vegetation. Flood modeling systems and forestry management tools are examples of high value services using Blom’s geo models and information databases. Environmental agencies and private companies such as forestry developers integrate Blom information database as a service to their decisions support applications. Defense Defense organizations are major users of digital maps and are as such an important market segment for Blom. Blom provide large mapping and modeling services to several NATO countries. Factors such as knowledge of the local area, ­presentation of sensitive information, events management and the co-ordination of regional service operators are each fundamentally important to the management of community security. Blom’s libraries with geographic data, now available to many mobile devices, enable the implementation of strategic dashboards to sup-

port mission planning, monitoring of dynamics and the co-ordination of territory monitoring. Any such monitoring can be performed for subjects both static and mobile. Blom’s libraries encompass complete countries and cover vast urban areas, incorporating orthophotos, and vertical and oblique perspectives, and a wide range of resolution options typically between 2 cm and 50 cm. Telecom Mobile phone communication requires network infrastructure investments that are critical to successful roll-out and optimization. To make geographic analyses for planning, maintenance and optimization of radio networks Blom offer­ digital surface model (DSM) databases. The models are created using laser scanning or aerial photography and necessary post-processing. Blom DSM databases cover several European countries, and paired with the Blom high resolution imagery dataset it is a suitable tool for the simulation and planning of antenna positioning for wireless telecommunications.

Forestry assesment

19


m arkets

INFORMATION SERVICES Blom Information Services is the business area responsible for creating and offering new products and services based on Blom content, in addition to content and services provided by our network of partners. Most of the BIS products and services revolve around our Blom­ OBLIQUE™ imagery and our BlomURBEX™ geo server platform, although new products and services are added continuously. As customers increasingly want access to geographic information as an online service, the BlomURBEX™ platform has become a key component for future growth. BlomURBEX™ has a set of tools to make all content available via different platforms and applications. These tools support reliable, quick and easy integration with customers’ end user applications enabling access to the vast amount of data and data models in BlomURBEX™. The BlomURBEX™ tools support high performance, reliable applications for the professional government and enterprise market as well as the high volume consumer navigation and location based services market. The integration tools, such as plug-ins, development toolkits and programming interfaces, are available for all software developers and system integrators. Blom Information Services is focusing on six main markets; navigation, location based services, geo search and online portals, emergency & security, real estate, and land & property administration. In addition, BIS serves the markets within defense & security (including private security), bank, finance & Insurance, media, telecom, utilities, and transport & logistics.

20

NDrive navigator with Blom's oblique areial images included.

Navigation Blom has set a new industry standard with its unique oblique imagery, data models and bespoke software for navigation solutions, both on board and off board. The navigation solutions integrate Blom’s databases and enable navigation by means of detailed, oblique aerial imagery and 3D city models. For navigation, traditional vector maps are useful to provide schematic information, whilst images and 3D models are the perfect complement to provide additional information regarding the area the user is located. With images and 3D models users can easily and rapidly identify their surrounding area, and identify landmarks and locations before actually being there. Location Based Services (LBS) The telecom industry has seen a tremendous growth of smart phones with GPS capabilities which has resulted in this industry focusing on Location Based Services (LBS). Blom’s platform for LBS enables users to access the data in BlomURBEX™ online from any type of device and stream or download the data and images that are relevant to the location of the user. For example, the user can download lists of nearby bus stops, hotels, post offices or parking facilities and immediately locate them in a “real world” environment. Other detailed information can also be provided. For example, how many


markets

hotel rooms or parking spaces are available in the users nearby location at that exact time. Geo-search and Online Portals Blom provides its unique content and online ­services for use in geo-search services, online maps and directory services. Blom’s imagery and 3D models enable service providers to supply the end user and consumer an enhanced real-life experience online. Customers have reported that they have measured an increase in traffic on their web sites when they provide their users with Blom’s high quality imagery and models. Emergency & Security Services Blom’s oblique imagery currently plays a crucial role with operations at emergency call centers such as 112. The operators use the Blom­OBLIQUE™ product to navigate and view, enhancing their decision making in critical situ­ ations. Blom’s oblique imagery is integrated into the emergency dispatch applications and instantly and automatically provides visualization and measurement information on the location from where an emergency call is received. This helps the emergency dispatcher to better assess the situation and direct emergency vehicles and rescue workers to the scene of an incident with more information on their destination. For example, oblique imagery can immediately identify the width of a road, allowing the responders to know if certain emergency vehicles can access this road before they reach the destina­ tion, how large a ladder should be to reach the top of a building and how maneuverable alternative access routes are to a specific location. Perhaps more importantly is the fact oblique imagery provides the opportunity to view an emergency location in daylight hours, while the actual emergency might occur at night or be covered by smoke. This information is vital to any emergency unit to provide efficiency and safety aides. Blom is committed to providing support to all the European 112 Emergency Services.

Real Estate Real estate companies need to present properties in the best possible light to potential customers and partners. Blom offers a unique way to showcase the attributes of the properties offered. In addition to providing high resolution oblique imagery and 3D models of each property or location, Blom provides tool functionality which allows users to measure building heights, surface areas or distances to the nearest park, train station or school etc. Blom offers members of the real estate sector substantial value for money as the oblique imagery provides more information about a property and its’ surroundings compared to other traditional data libraries available today. Land & Property Administration Urban planning and public works carried out by government agencies, utilities companies and engineering and construction companies have now become key industries to take advantage of Blom’s oblique imagery database. The imagery allows the users to operate more efficiently, and the geo referenced data helps achieve a greater level of accuracy. Blom’s database of oblique imagery covers 80 percent of the European ­population, and is updated frequently. As a result, urban planners, for example government agencies, are able to achieve accurate visual information on an area and relate this to the impact of public works. Utilities companies strive for more efficiency when planning their urban network development or maintenance by using as detailed information as possible. Including Blom’s oblique images as part of the planning provides invaluable information which would otherwise be impossible to obtain without actually having to physically be at the location. Other markets 3D social platforms, where the users try to recreate a virtual reality for meeting people with avatar images, is an example of what internet

21


m arkets

users are demanding today; a virtual environment where users can talk and socialize with people in a specific place or city. Interactive tourist guides, where the user can travel virtually to a destination and see if the location is what they expect, or find distances between interesting monuments, hotels etc, are becoming increasingly expected by modern tourist information guides, such as the online Travel Guide from

22

the Repsol Petrol Company. Blom provides the information for developing these real experiences, offering unique aerial images and 3D models covering cities throughout Europe, allowing users to easily zoom to a level of detail that has not been previously available in such a scale. Users can now see detailed characteristics in building faรงades, fences and other features on the ground.


f i n a n c i a l a n a ly s i s

OVERVIEW AND SUMMARY CHALLENGING YEAR WITH A GOOD FOUNDATION FOR GROWTH The year 2010 has been marked by continued weak macroeconomic factors in many of the markets where Blom operates. This has resulted in pressure on the prices in parts of our operations and delayed call-off orders under frame­ work agreements. In Information Services the company’s operations have been marked by uncertainty regarding the licence agreement with Pictometry. In the stock exchange disclosure of 21 December 2010 it was announced that the termination would entail a loss of income that would have a negative impact on the 4th quarter results in 2010. In addition, the uncertainty that has arisen with regard to the agreement with Pictometry has had consequences for other agreements between Blom and its customers.

Revenue 2009 – 2010 (Amount in NOK million)

1000

BGES

BIS

900 800 700

737 119 619

600

618

118

500

501

400 300 200

sales revenue The group’s sales revenue was NOK 619 million in 2010, compared with NOK 737 million in 2009. EBITDA for 2010 was NOK -46 million, with a margin of -7.4 per cent, compared with an EBITDA of NOK 92 million and a margin of 12.5 per cent in 2009. The group's operating loss, measured as EBIT, was NOK 428 million, compared with NOK 54 million in 2009. This includes a charge of NOK 293 million for the write-down of non-current assets, which is related primarily to goodwill and assets associated with the Pictometry agreement. There are also charges totalling NOK 75 million for provisions for potential losses on trade receivables, write-down of inventories and potential claims from customers as a result of the uncertainty associated with the Pictometry agreement. Revenues in Geo Engineering Services declined­ from NOK 618 million in 2009 to NOK 501 million­in 2010, which is primarily the result of the financial­turbulence in many countries where Blom operates. The Information Services segment maintained revenues of NOK 118 million in 2010, compared with revenues of NOK 119 million in 2009.

100 0 2009

2010

EBITDA 2009 – 2010 (Amount in NOK million)

100 80

92

60 40 20 2010

0 2009 -20 -40

-46

-60

23


f i nancial analysis

market The year 2010 has been marked by continued weak macro-economic factors in some of the markets where Blom operates. As a result of this, customers in public administration and the private sector, who focus on the development and management of infrastructure and land areas, have temporarily reduced their budgets, which has entailed a lower revenue volume. Since national investments in infrastructure and land development in some countries in Europe have been low during the last two years, there will be pent-up demand for the services that Blom delivers in BGES. In addition, in light of the new EU guidelines and recent natural disasters there will be a substantial demand for Blom's services in the environmental sector, which includes forest monitoring, flood control and risk surveys, in addition to soil erosion monitoring. Today Blom has a leading position in Europe with regard to the laser scanning of routes and large or small areas of land. In the BIS segment, 2010 has been marked by national debt challenges and a dispute with a major technology supplier, which has resulted in the stagnation of our revenue in 2010 compared with 2009. In recent years Blom has established a unique map data database of photos and 3D models in Europe. With its own databases, Blom will be able to sell the same data multiple times and thus be able to deliver stronger margins. In order to achieve optimal distribution of such data, the company has developed its own geoserver, BlomURBEX™, which can give customers access to the database through a number of proprietary interfaces and the associated development tools. As a result of these investments Blom can also offer its customers access to other databases linked to its own geoserver. In addition, Blom will be able to establish new sales channels and benefit from the market access of other companies through partner agreements. Blom’s largest markets by revenue are the ­Nordic region, Spain, the UK and Italy, cf. Note 1.

24

KEY ACCOUNTING PRINCIPLES The consolidated accounts have been prepared in accordance with the International Financial Reporting Standard (IFRS). These consolidated accounts have been prepared on the basis of historical cost, with the exception of financial instruments that are assessed at market value. The preparation of financial statements in accordance with IFRS requires the use of estimates. In addition, the application of the company’s accounting principles requires that the management exercise judgement. Estimates and discretionary assessments are assessed continuously and based on historical experience and other factors, including expectations of future events that are regarded as probable under the current circumstances. The group prepares estimates and makes assumptions concerning the future. The most important evaluations for Blom ASA are related to goodwill, calculation of the deferred tax assets, recognition of income from projects, and provisions for potential loss in receivables. Blom has maintained a strong focus on online services. The company has enhanced its geo­ server, BlomURBEX®, for online distribution and access to Blom’s databases, developed additional 3D models for navigation, built up a professional sales and marketing organisation, and expanded its oblique image database in Europe. FINANCIAL EXPENSES The net financial expenses totalled NOK 69 million in 2010, compared with NOK 1 million in 2009, which is attributed primarily to higher interest-bearing debt and foreign exchange losses. TAXES The deferred tax assets are recorded on the balance sheet based on the expected future earnings. The tax loss carryforward represents most of the deferred tax assets. The company has recognised the tax effect of the tax loss carryforward of NOK 45 million on the balance


f i n a n c i a l a n a ly s i s

sheet, and NOK 38 million of this amount is not time limited. INTANGIBLE ASSETS Goodwill is the difference between the acquisition cost for the acquisition of a business and the fair value of the net identifiable assets in the business at the time of the acquisition. Goodwill from the acquisition of subsidiaries is treated as an intangible asset. Goodwill is tested annually for impairment in value, and it is recognised at historical cost less accumulated write-downs and amortisation. Due to mutual cash flow dependency between the company’s legal entities, the company is regarded as a cash flow generating unit, and goodwill in the company is allocated to this cash flow generating unit. The recoverable amount from the cash flow generating unit is calculated based on the value determined for the asset by calculating the utility value. These calculations require the use of estimates. The testing of goodwill is described in Notes 3 and 25. Patents and licenses are recorded at historical cost. Patents and licences have a limited economic life and are recorded at historical cost less accumulated depreciation. Patents and licences are depreciated by the straight-line method over their expected life (3-10 years). SEGMENT INFORMATION As a result of the introduction of IFRS 8 on 1 January 2009, the company will report two operating segments from this financial year, Geo Engineering Services and Information Services, which are two separate cash-generating units. PROVISIONS FOR RECEIVABLES The provisions for potential losses on receivables are based on the management’s discretionary assessment of potential future losses on receivables from customers. The company’s customers in BGES are primarily municipalities or government agencies, or companies or institutions

where municipalities or government agencies have a dominant influence. The company considers the risk of potential future losses from this type of customer to be low. During the last two years in BIS the company has acquired more customers who are private companies in handheld terminals, web services and navigation. These customers have by definition a higher probability for potential future losses than the company’s original customer group. As of 31 December 2010 the company has provisions of NOK 22 million for potential future losses on specific trade receivables. These provisions have in general been designated for specific private customers exposed to competition who have acquired services from Blom’s existing database of oblique images. FOREIGN CURRENCY AND INTEREST RATE CONDITIONS The company is somewhat exposed to fluctuations in foreign exchange rates, since substantial revenues are in foreign currencies other than NOK, primarily EUR. The company has operative subsidiaries in nine European countries, four of which use the Euro as their functional currency, while the five remaining subsidiaries use five other functional currencies. The company has certain investments in foreign subsidiaries, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the group’s net investments in foreign operations is managed essentially though raising loans in the relevant foreign ­currency. The company focuses on reducing any foreign currency risk associated with cash flows and does not focus on reducing the foreign currency risk associated with assets and liabilities. The subsidiaries’ income and expenses are in the same currency, and this reduces the group’s cash flow exposure to a single currency substantially. An assessment of the need for and

25


f i nancial analysis

any hedging of currency risks are performed by a central financial function. In 2010 the company did not find it necessary to hedge cash flows against currency risks through forward contracts. The company is also exposed to fluctuations in the interest rates for the company's interestbearing debt and cash reserves. The group's interest rate risk is associated with long-term loans, financial leasing and credit facilities. All of the company’s interest-bearing debt is subject to adjustable interest rates. The company has not made use of interest rate swaps or other financial instruments. LIQUIDITY AND CAPITAL STRUCTURE The company considers its liquidity to be satisfactory. The group had NOK 107 million in liquid reserves at the end of the year, compared with NOK 241 million in liquid reserves at the start of 2009. The available liquid reserves as of 31 December 2010 consist of bank deposits of NOK 96 million and an unused overdraft facility and other unused credit facilities of NOK 11 million. The liquidity is monitored monthly by means of rolling cash flow forecasts from the subsidiaries, which are also used as a basis for the placement of excess liquidity. The group has credit facilities and/or short-term loans in Blom ASA, Blom CGR, Blom Sistemas and BlomInfo Geonet. The group also utilises lease financing. The company issued a new bond loan of NOK 300 million on the Norwegian market in September 2009 (FRN Blom ASA Senior Secured Bond Issue 2009/2012). Blom was in breach of the loan covenants as of 31 December 2010 with respect to the equity ratio and the ratio between net interest bearing liabilities and EBITDA for the company's bond loan, which is designated FRN Blom ASA Senior Secured Bond Issue 2009/2012. The breach of the loan covenants comes after a period of disappointing results, large write-downs and substantial loss

26

of revenue as a result of a dispute with Pictometry. The Board of Directors does not consider the loan covenants to be a temporary problem and finds that it is necessary to restructure the company's capital situation in order to establish a healthy financial foundation for our continuing operations. The company has accordingly engaged in negotiations with representatives for the bondholders with a view to such restructuring. The solution that has been negotiated will include elements that were adopted at the company's general meeting of 18 March 2011: – As part of the solution, Blom will seek to raise at least NOK 50 million in new equity, and – If Blom is not successful in acquiring subscriptions for new equity by 30 April 2011, then NOK 50 million of the bond loan will be converted to a convertible loan. If, however, it becomes clear prior to 30 April that the rights issue for the aforementioned amount cannot be completed, then the conversion shall take place at such an earlier date. An Extraordinary General Meeting was held on 18 March 2011. The General Meeting has decided that Blom shall seek to carry out a rights issue of new shares with gross proceeds of up to NOK 73.1 million. The company's share capital will be increased by a minimum of NOK 0.10 and a maximum of NOK 24,360,381.60 by the issuance of a minimum of 1 and maximum of 243,603,816 new shares, each with a nominal value of NOK 0.10. The new shares will be issued at a subscription price of NOK 0.30 per share. Payment shall be made in cash. In accordance with a resolution passed by the bondholder meeting on 23 March 2011, the Company was given the right to issue an additional bond loan of NOK 50 million. The new bond loan of NOK 50 million is fully subscribed. Further, interest accruing on the present bond loan during


f i n a n c i a l a n a ly s i s

2011 shall be paid in kind by issuing sdditional bond to the existing bond loan. The composition of long-term liabilities and short-term interest bearing liabilities is described in Note 8.

EQUITY Blom has an equity ratio of 13 per cent as of 31 December 2010, compared with 49 per cent in 2009.

27


28

board of director's report


board of director's report

board of directors' report 2010 Company's operations In the report for 2009 the Board of Directors expressed that the company had conservative expectations for 2010. The year 2010 has been marked by continued weak macroeconomic factors in many of the markets where Blom operates. This has resulted in pressure on the prices in parts of our operations and delayed call-off orders under framework agreements. In Information Services the company’s operations have been marked by the uncertainty surrounding the licence agreement with Pictometry. In the stock exchange disclosure of 21 December 2010 it was announced that the termination would entail a loss of income that would have a negative impact on the 4th quarter results in 2010. In addition, the uncertainty that has arisen with regard to the agreement with Pictometry has had consequences for other agreements between Blom and its customers. In light of the company’s results for 2010 and continued uncertainty concerning macroeconomic factors, the company has identified value shortfalls in the company’s assets, which will be commented on in greater detail under the Results section. The company’s operations have been divided into two business areas. One of these areas is Blom Information Services (BIS), which is characterised by the company establishing a customer relationship in which the same data can be delivered to multiple customers. The delivery takes place through services and applications that are provided through wireless access or over the Internet / online. The second business area is Blom Geo Engineering Services (BGES), which represents primarily services linked to non-recurring deliveries, the terms of which are agreed on for each individual customer and each individual delivery.

BGES is based on the traditional activities that the company was built on historically, and the customer base is linked primarily to public enterprises or customers who deliver services that focus on the development and management of infrastructure and land areas. While photogrammetry and the production of maps was the main pillar for such services four-five years ago, now the company has increased its focus on various forms of laser scanning as part of its goal to improve its profit margin. Today Blom has a leading position in Europe with regard to the laser scanning of corridors and large or small areas of land. The foundation for BIS is the company’s longterm strategy to establish a unique European database of oblique images and 3D models in Europe. With its own databases, Blom will be able to sell the same data multiple times and thus be able to deliver stronger margins. In order to achieve optimal distribution of such data, the company has developed its own geoserver, BlomURBEX™, which can give customers access to the database through a number of proprietary interfaces and the associated development tools. As a result of these investments Blom can also offer its customers access to other databases linked to its own geoserver. In addition, Blom will be able to establish new sales channels and benefit from the market access of other companies through partner agreements. Blom has independent operations in a total of 12 countries in Europe and a production unit in Indonesia. The parent company has offices at Skøyen in Oslo and manages the operations from there. Comments on the annual accounts The Board of Directors believes that the annual accounts provide a true picture of the group's results and position. Sales revenue declined by 16 percent. This reduction is attributed primarily to the 19 per cent decline in the Geo Engineering Services segment. EBITDA margin for 2010 was -7.4 per cent, compared with 12.5 per cent in 2009.

29


b oard of director's report

The company's balance sheet is significantly lighter whitch is attributed primarily to the weak operating results and special write-downs. The equity ratio is 13.3 per cent, compared with 49.3 per cent in 2009, cash and cash equivalents are NOK 96 million, compared with NOK 165 million in 2009, and net interest-bearing liabilities are NOK 332 million, compared with NOK 304 million in 2009. As a consequence of the company's financial standing, the company's Extraordinary General Meeting of 18 March 2011 has decided to strengthen the capital structure through a rights issue and raising a new bond loan. Results The group’s sales revenue was NOK 619 million­ in 2010, compared with NOK 737 million in 2009. EBITDA for 2010 was NOK -46 million, with a margin of -7.4 per cent, compared with an EBITDA of NOK 92 million and a margin of 12.5 per cent in 2009. The group's operating loss, measured as EBIT, was NOK 428 million, compared with NOK 54 million in 2009. This includes a charge of NOK 293 million for the write-down of non-current assets, which is related primarily to goodwill and assets associated with the Pictometry agreement. There are also charges totalling NOK 75 million for provisions for potential losses on trade receivables, write-down of inventories and potential claims from customers as a result of the uncertainty associated with the Pictometry agreement. Net cash flow from operating activities was positive NOK 59 million, which is attributed primarily to an improvement in the working capital. In this context trade receivables have been reduced by NOK 76 million in 2010 to NOK 164 million, while work in progress is NOK 152 million, compared with NOK 261 million in 2009. Write-downs in associated companies in 2010 represented a total charge of NOK 63 million. Net financial expenses totalled NOK 69 million in 2010. Since the company’s bond loan has been reclassified from a long-term to a current liability, all of the transaction costs associated with the bond loan totalling have been recognised. 30

Investments The combined operational investments in 2010 totalled NOK 79 million, compared with NOK 101 million in 2009. The decline in investments from 2009 to 2010 is attributed primarily to the fact that the company built up its map databases in 2009 and earlier years. There has been no need in 2010 to expand the geographic coverage area as much as in earlier years. Financing Blom was in breach of the loan covenants as of 31 December 2010 with respect to the equity ratio and the ratio between net interest bearing liabilities and EBITDA for the company's bond loan, which is designated FRN Blom ASA Senior Secured Bond Issue 2009/2012. The breach of the loan covenants comes after a period of disappointing results, large write-downs and substantial loss of revenue as a result of a dispute with Pictometry. The Board of Directors does not consider the loan covenants to be a temporary problem and finds that it is necessary to restructure the company's capital situation in order to establish a healthy financial foundation for our continuing operations. The company has accordingly engaged in negotiations with representatives for the bondholders with a view to such restructuring. The solution that has been negotiated will include elements that were adopted at the company's General Meeting of 18 March 2011: – As part of the solution, Blom will seek to raise at least NOK 50 million in new equity, and – If Blom is not successful in acquiring subscriptions for new equity by 30 April 2011, then NOK 50 million of the bond loan will be converted to a convertible loan. If, however, it becomes clear prior to 30 April that the rights issue for the aforementioned amount cannot be completed, then the conversion shall take place at such an earlier date.


board of director's report

Total assets at the end of the year were NOK 808 million, compared with NOK 1,414 million at the end of the previous year. The equity ratio was 13.3 per cent as of 31 December 2010, compared with 49.3 per cent as of 31 December 2009. Continuation as a going concern Pursuant to Section 3-3 of the Accounting Act, it has been confirmed that the prerequisites for continued operations have been met. This assumption has been made for the preparation of the accounts, forecasted results for the year 2011 and the group’s long-term strategic forecast for the coming years. The group has an economic and financial position to support continued operations. Comments on the business outlook Blom has experienced market-related and operational challenges that have resulted in lower than budgeted revenues and margins for the year 2010. In the current year the company has implemented measures to reduce the cost base, primarily through a reduction of the workforce. The company will continue to focus on measures to improve its margin, through both cost adaptation and more efficient use of the company’s resources. Based on the company's contract coverage and budgets for 2011, the Board of Directors believes that it is possible to achieve positive operating margins in the current year. In addition, the company has prepared a solution outline together with its largest creditors that will strengthen the company's financial position. The solution entails both an injection of new equity and expanded credit limits. The company is still exposed to markets, especially in Southern Europe, which may be marked by uncertainty well into 2011. The Board of Directors points out there is normally uncertainty related to the assessment of future conditions.

Environment and equality Working environment In 2010 the company has adjusted its workforce, based on the demand for the company’s products in the market. Due to the continued restructuring of the group, combined with improved coordination and utilisation of the company’s resources, as well as the introduction of new technology, a decision has been made to implement additional workforce reductions that will take effect in 2011. The company has a staff of employees with a high level of competence. This represents the foundation for the company's future growth. As of 31 December 2010 there was a total of 523 employees in the operative companies, while there was a total of 570 employees at the production facilities in Indonesia and Eastern Europe. The group has a total of 1,093 employees. In 2010 the number of employees was reduced by 76 in the operative companies and 19 at the production facilities in Indonesia and Eastern Europe, for a total of 95. In 2010 absence due to illness in Norway was 1.1 per cent compared with 1.8 per cent in 2009, and no work-related injuries were reported in 2010. It is the Board of Directors' opinion that the working environment, general level of workplace satisfaction, and loyalty to the company are satisfactory. Blom continuously seeks to improve the working environment. This is followed up locally in the individual subsidiaries. Equal status The percentage of women in the operations in Norway is 15 per cent, compared with 22 per cent in 2009, and two of the group’s five elected board members are women. The employees are represented on the Board of Directors of the operative company in Norway. There are no employee-elected representatives on the Board of Directors who are women. Blom’s personnel policy is deemed to be gender neutral in all areas and equal status issues are

31


b oard of director's report

safeguarded in a satisfactory manner. We are in a male-dominated industry, and this is reflected in the company's gender composition. The Board of Directors will continue its efforts to ensure that the company satisfies the equal status requirements at any given time. External environment The group owns 16 aircraft and operates 20 aircraft and four helicopters for the collection of data, and this does have some impact on the environment. The nature of the other operations in the group is such that they only pollute the external environment to a very limited extent, and the company operates in compliance with the applicable laws and rules. Corporate governance The company seeks to follow the Norwegian Code of Practice for Corporate Governance ­issued by the Norwegian Corporate Governance Board (NUES) on 21 October 2010. A detailed summary of to what extent the company complies with this code of practice can be found in this annual report. Application of the profit for the parent company The Board of Directors proposes the following application of the profit: Proposed dividend NOK 0,From other reserves NOK 498 079 000,The company's distributable equity is NOK 43 722 000,-. Events after the date of the balance sheet An extraordinary general meeting was held on 18 March 2011. The General Meeting resolved that the company should seek to carry out a right issue giving gross proceeds up to NOK 73.1 million, through which the company’s share capital be increased by a minimum of NOK 0.10 and a maximum of NOK 24 360 381.60 through the issuance of a minimum of 1 and a maximum of 243 603 816 new shares. The new shares will

32

be issued at a subscription price of NOK 0.30 per share to be paid in cash. Further, the General Meeting decided to shall take up a convertible loan with nominal value NOK 50 million. The issuance of the convertible loan is conditional upon the gross proceeds from the right issue are below NOK 50 million or 166,666,667 new shares. If the subscriptions in the rights offering amount to less than NOK 50 million or 166,666,667 new shares, the Bondholders will have the right to convert NOK 50 million of the existing bond loan into a new zero-coupon convertible bond with a conversion price of NOK 0.30 per share. In accordance with a resolution passed by the bondholder meeting on 23 March 2011, the Company was given the right to issue an additional bond loan of NOK 50 million. The new bond loan of NOK 50 million is fully subscribed. Further, interest accruing on the present bond loan during 2011 shall be paid in kind by issuing additional bond to the existing bond loan. Pictometry International Corp. advised Blom ASA on 16 October 2010 that the company found that Blom had breached the licence agreement that was entered into on 29 January 2009, and Pictometry terminated the agreement with immediate effect. Blom is of the opinion that the company has not acted in breach of the agreement and that the termination is thus invalid. Blom has taken the steps necessary to safeguard the company’s interests in the short term through its legal advisors. As a result of this, Blom was granted a preliminary injunction in a case that the company brought before a court in New York claiming that the agreement must be re-established until a valid judgment is handed down. At the same time the judge ruled that Blom was not to deliver Pictometry-related services to a named partner of Blom until this point in time. As a result of this ruling, Blom was notified by its partner that the company was considered to be in breach of the conditions of the cooperation agreement. Blom did not manage to comply with the arguments


board of director's report

put forward by the agreed deadline, and the agreement is therefore terminated. Blom and Pictometry have recently invested a lot of resources to find a solution for the dispute outside of the agreed legal proceedings. The

parties have, therefore, appointed a voluntary mediator. Both parties strive to find a solution outside the legal system. The parties have not yet reached any agreement, but they are still working to find a solution.

Oslo, 24. March 2011

Gunnar Hirsti Board Chairman

Brita Eilertsen Board Member

Per Kyllingstad Board Member

Bente Loe Board Member

Dirk Blaauw Board Member / CEO

33


blom group accounts


blom group accounts

Consolidated Statement of Comprehensive Income – Blom Group (Amounts in NOK 1000) Note

2010

Operating revenues 1 619 177 Cost of materials 236 546 Salaries and personnel costs 12 277 215 Ordinary depreciation 2 / 3 382 377 Other operating and administrative costs 13 151 256 Operating expenses 1 047 394

2009

736 901 242 461 297 554 146 138 104 580 790 733

Operating profit/loss -428 218 -53 832 Profit/loss attributable to associated companies 23 -61 595 -565 Net financial items 14 -69 207 -39 562 Pre-tax profit/loss -559 019 -93 960 Taxes 9 -5 938 10 949 Net profit/loss for the year -564 957 -83 012 Profit/loss attributable to: Shareholders -564 949 -82 506 Minority interests -8 -506 Net profit/loss for the year -564 957 -83 012 Total comprehensive income: Currency translation differences 22 -23 347 -74 757 Total comprehensive income for the year -589 677 -157 769 Comprehensive income attributable to: Shareholders -588 296 -156 688 Minority interests -1 381 -1 081 -589 677 -157 769 Earnings per share/diluted earnings per share

18

-13,91

-2,04

Notes 1 to 26 are an integral part of the consolidated accounts.

35


b lom group accounts

BALANCE SHEET – BLOM GROUP ASSETS

(Amounts in NOK 1000) Note

36

2010

2009

Patents, licences and similar rights 3 Deferred tax assets 9 Goodwill 3 Total intangible assets Property, plant and equipment 2 Non-current asset investments 21 Investments in associated companies 23 Total non-current asset investments Total non-current assets

3 184 39 680 125 699 168 563

36 700 50 428 270 579 357 707

144 127

295 797

24 253 15 593 39 847

10 253 45 246 55 498

352 537

709 003

Inventories Work in progress 4 Total inventories Trade receivables 5 Other current receivables 5 Total receivables Cash and cash equivalents 6 Total current assets TOTAL ASSETS

2 558 152 479 155 038

2 826 261 237 264 062

164 334 40 497 204 831

240 252 35 404 275 656

95 888

164 873

455 756

704 592

808 294

1 413 595


blom group accounts

BALANCE SHEET – BLOM GROUP EQUITY AND LIABILITIES

(Amounts in NOK 1000) Note

2010

Called-up and fully paid share capital: Share capital 17 4 170 Treasury shares 17 - 110 Share premium account 129 581 Other reserves: Currency translation differences - 42 832 Retained earnings 17 036 107 845

2009

4 170 - 110 129 581

- 19 485 581 985 696 141

Minority interests 8 1 389 Total equity 107 853 697 530 Pension obligations 7 18 031 20 625 Non-current liabilities 8 / 15 40 786 356 366 Deferred taxes 9 5 616 12 351 Total other non-current liabilities 64 432 389 342 Overdraft facilities 8 54 184 89 824 Other interest-bearing short-term liabilities 8 / 15 335 239 31 031 Total interest bearing short-term liabilities 389 423 120 855 Payables to suppliers 92 381 104 798 Unpaid government taxes 29 171 35 289 Tax payable 9 9 063 8 197 Other current liabilities 10 115 970 57 583 Total other current liabilities 246 585 205 868 Total current liabilities 636 009 326 723 TOTAL EQUITY AND LIABILITIES 808 294 1 413 595 Notes 1 to 26 are an integrated part of the consolidated accounts.

Oslo, 24. March 2011

Gunnar Hirsti Board Chairman

Brita Eilertsen Board Member

Per Kyllingstad Board Member

Bente Loe Board Member

Dirk Blaauw Board Member / CEO 37


b lom group accounts

CASH FLOW STATEMENT – BLOM GROUp Indirect model

(Amounts in NOK 1000) Note

2010

CASH FLOW FROM OPERATING ACTIVITIES Pre-tax profit/loss -559 019 + Depreciation and write-downs 2/3 382 377 - Taxes paid 9 -10 373 - Interest paid 14 -38 854 +/- Profit/loss attributable to associated companies 23 61 595 +/- Change in trade receivables 50 988 +/- Change in inventories and work in progress 109 025 +/- Change in supplier debt -12 417 +/- Change in other accruals and unrealised foreign exchange 75 187 A = Net cash flow from operating activities 58 509 CASH FLOW FROM INVESTING ACTIVITIES - Purchases of property, plant and equipment 2/3 -56 425 B = Net cash flow from investing activities -56 425 CASH FLOW FROM FINANCING ACTIVITIES + New long-term debt 8 0 - Payments on long-term debt and loans 8 -39 499 +/- Net change in overdraft facilities 8 -31 569 C = Net cash flow from financing activities -71 068 A+B+C Net change in cash and cash equivalents -68 985 + Cash and cash equivalents 164 873 = Cash and cash equivalents 6 95 888

Notes 1 to 26 are an integrated part of the consolidated accounts.

38

2009

-93 960 146 138 -4 875 -27 771 565 112 767 16 121 24 219 -99 907 73 297

-76 555 -76 555

287 269 -201 643 6 023 91 649

88 391 76 482 164 873


blom group accounts

consolidated statement of CHANGES IN EQUITY – BLOM group (Amounts in NOK 1000) Note

Share capital

Treasury shares

Share premium

Currency trans­ lation differences

Retained earnings

TOTAL

Minority interests

Equity

Equity as of 1 January 2009 4 170 -110 129 581 54 694 664 491 852 826 2 470 855 296 Net profit/loss for the year -82 506 -82 506 -506 -83 012 Other compreh. income: Currency transl. differences 22 Other compreh. income

-74 179 -74 179

Total compreh. income

-74 179

-74 179 -74 179

-575 -575

-74 179 -74 179

-82 506 -156 685

-575 -157 766

Equity as of 31 Dec. 2009 26 4 170 -110 129 581 -19 485 581 985 696 141 Net profit/loss for the year -564 949 -564 949

1 389 697 530 -8 -564 957

Other compreh. income: Currency transl. differences 22 Other compreh. income

-23 347 -23 347

-23 347 -23 347

Change in ownership subsidiaries: Acquisition of minority interest Transactions with owners

-1 373 -1 373

-23 347 -23 347

-1 373 -1 373

Total compreh. income -23 347 -564 949 -588 296 -1 381 -589 677 Equity as of 31 Dec. 2010 4 170 -110 129 581 -42 832 17 036 107 845 8 107 853

Notes 1 to 26 are an integrated part of the consolidated accounts.

39


notes to the blom group accounts


notes to the blom group accounts

NOTES TO THE ACCOUNTS

General information Blom ASA collects, processes and sells high quality map data. The group possesses unique databases, and it has developed applications and services for navigation and location-based services. Blom ASA has subsidiaries in 13 countries. Blom ASA is a public limited company registered and domiciled in Norway. The office address is Drammensveien 165, 0277 Oslo, Norway. Blom ASA is listed on Oslo Børs. The consolidated accounts were approved by the company’s Board of Directors on 24 March 2011. Summary of the most important accounting principles The most important accounting principles applied by the group in the preparation of the consolidated accounts are described below. These principles have been applied identically to all the periods that are presented unless otherwise stated in the description.

Basic principles The consolidated accounts have been prepared in accordance with the International Financial Reporting Standard (IFRS) as stipulated by the EU. These consolidated accounts have been prepared on the basis of the historical cost principle, with the exception of financial instruments that are assessed at market value. The preparation of accounts in accordance with IFRS requires the use of estimates. In addition, the application of the company’s accounting principles requires that the management exercise judgement. Areas that contain a large degree of such discretionary assessments, a high degree of complexity, or areas where the assumptions and estimates are of significance to the consolidated accounts are described in Note 25.

IAS 27 Consolidated and separate financial statements (revised): The revised standard requires that the effect of all transactions with non-controlling interests shall be recognised in equity if there is no change in control, and these transactions will no longer result in goodwill or gains or losses. This standard also specifies the accounting when the control ceases. Any remaining interest in the unit will be measured at fair value, and the loss of gain will be recognised in the profit and loss account. The effect on the accounts for 2010 is considered to be insignificant.

b) New and amended standards adopted by the group that do not currently affect the accounts: •

a) The group has adopted the following new and amended standards in 2010:

IFRS 3 Business Combinations (revised) and subsequent changes in IAS 27 Consolidated and separate financial statements, IAS 28 Investments in associates, and IAS 31 Interests in joint Ventures are used for business combinations dated after January 1, 2010. The acquisition method for business combinations has significant changes. According to revised standards, all consideration for the purchase of businesses with minority interest shall be accounted for in the equity when there is no change in control. These transactions will no longer result in goodwill or profits or losses. If the ownership becomes a non-controlling interest, remaining ownership is measured at fair value and profit or loss is recognised. IAS 3 does not affect the accounts for 2010.

IFRIC 17 Distribution of Non-cash Assets to Owners. This interpretation regulates the recognition of specific distributions in kind to the owners. IFRS 5 has also been amended, and assets that are to be distributed are classified as “held for distribution” only when they are available for distribution in their present state and the distribution is highly probable. IFRIC 18 Transfers of assets from customers provides guidance on the accounting of property, plant and equipment that an entity

41


n otes to the blom group acco u n t s

receives from a customer and is to be used either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services (such as a supply of electricity, gas or water). In some cases, cash is received from a customer that must be used to acquire or construct the item of property, plant, and equipment in order to connect the customer to a network or provide the customer with ongoing access to a supply of goods and/or services. •

IFRIC 9 Reassessment of embedded derivatives (amended) and IAS 39 Financial instruments: Recognition and measurement. This amendment to IFRIC 9 requires an entity to assess whether an embedded derivative should be separated from a host contract when the entity reclassifies a hybrid financial asset out of the fair value through profit or loss category. This assessment is to be made based on circumstances that existed on the later of a) the date the entity first became a party to the contract and b) the date of any contract amendments that significantly change the cash flows of the contract. If the entity is unable to make a reliable assessment, no reclassification may be made.. IFRIC 16 Hedges of a net investment in a foreign operation (amended). This amendment clarifies that, in a hedge of a net investment in a foreign operation, qualifying hedging instruments may be held by any entity or entities within the group, including the foreign operation itself, as long as the designation, documentation and effectiveness requirements of IAS 39 that relate to a net investment hedge are satisfied. In particular, the group should clearly document its hedging strategy because of the possibility of different designations at different levels of the group.. An IAS 38 Intangible asset (amended) clarifies guidance in measuring the fair value of an intangible asset acquired in a business combination. It permits the grouping of intangible as-

42

sets as a single asset if each asset has similar useful economic lives. •

IAS 1 Presentation of Financial Statements (revised). The revised standard requires that income and expense items that were recognised directly in equity previously be presented in a statement of comprehensive income now. The equity statement shows transactions with owners and income and expense items separately, both of which are broken down by equity category as before. The comparison figures have been restated so that they are in accordance with the revised standard. The change affects only the presentation and not the earnings per share. IAS 36 Impairment. This amendment clarifies that the largest cash-generating unit (or group of units) to which goodwill should be allocated for the purposes of impairment testing is an operating segment, as defined by paragraph 5 of IFRS 8 Operating segments. IFRS 2 (amendments), ‘Group cash-settled share-based payment transactions’, effective form 1 January 2010. In addition to incorporating IFRIC 8, ‘Scope of IFRS 2’, and IFRIC 11, ‘IFRS 2 – Group and treasury share transactions’, the amendments expand on the guidance in IFRIC 11 to address the classification of group arrangements that were not covered by that interpretation. IFRS 5 (amendment), ‘Non-current assets held for sale and discontinued operations’. The amendment clarifications that IFRS 5 specifies the disclosures required in respect of noncurrent assets (or disposal groups) classified as held for sale or discontinued operations. It also clarifies that the general requirement of IAS 1 still apply, in particular paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources of estimation uncertainty) of IAS 1.

(c) Standards, amendments and interpretations of existing standards that have not yet entered


notes to the blom group accounts

into force, for which the company has not chosen early adoption: •

IFRS 9 Financial Instruments (applies to annual accounts that start on or after 1 January 2013) replaces the measurement rules in IAS 39 for financial assets. Measurement in IFRS 9 is determined by the company’s business model and the characteristics of the individual financial asset. A financial asset is measured at amortised cost if the object of the company’s business model is to hold the asset in order to receive contractual cash flows and the cash flows from the asset only represent instalments and interest on the outstanding amount. The group and the parent company have not finished evaluating the effects of IFRS. IAS 24 Related party disclosures (revised) replaces the former IAS 24 from 2003. This standard is mandatory for financial years beginning on or after 1 January 2011, but earlier application, in whole or in part, is permitted. The revised standard clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. The group will apply the revised standard from 1 January 2011, and this will mean that the group and the parent will need to disclose any transactions between its subsidiaries and its associates in the notes. The group is currently putting systems in place to capture the necessary information. It is, therefore, not possible at this stage to disclose the impact, if any, of the revised standard on the related party disclosures. IAS 32 (amendment) Classification of rights issues. This standard is mandatory for financial years beginning on or after 1 February 2010, but earlier application, in whole or in part, is permitted. This amendment addresses the accounting for rights issues that are denominated in a currency other than the functional currency

of the issuer. Provided certain conditions are met, such rights issues are now classified as equity regardless of the currency in which the exercise price is denominated. Previously, these issues had to be accounted for as derivative liabilities. This amendment applies retrospectively in accordance with IAS 8 Accounting policies, changes in accounting estimates and errors. The group will apply the amended standard from 1 January 2011. •

IFRIC 19 Extinguishing financial liabilities with equity instruments is effective from 1 July 2010. The interpretation clarifies the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability (debt for equity swap). It requires the debtor to recognise a gain or loss in profit or loss in connection with the conversion, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued. If the fair value of the equity instruments issued cannot be reliably measured, the equity instruments should be measured to reflect the fair value of the financial liability extinguished. The group will apply the revised standard from 1 January 2011, subject to endorsement by the EU. It is not expected to have any impact on the group or the parent entity’s financial statements. IFRIC 14 (amendment) Prepayments of a minimum funding requirement. The amendment corrects an unintended consequence of IFRIC 14, IAS 19 – The limit on a defined benefit asset, minimum funding requirements and their interaction. Without the amendment, entities are not permitted to recognise as an asset some voluntary prepayments for minimum funding contributions. The amendment is effective for financial years beginning on or after 1 January 2011. Earlier application is permitted. The amendment should be applied retrospec-

43


n otes to the blom group acco u n t s

tively to the earliest comparative period presented. The group will apply this amendment starting with the financial year 2011. •

Various standards amended in the 2010 round of annual improvements. These amendments include a number of minor changes in the following standards and interpretations that may be relevant to the company: IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 27, IAS 34 and IFRIC 13. The amendments to IFRS 3 and IAS 27 apply to financial years beginning on or after 1 July 2010, while the other amendments apply to financial years beginning on or after 1 January 2011. The amendments have not yet been endorsed by the EU. IFRS 7 (amendment) Financial instruments: Disclosures introduces new disclosure requirements related to continued exposure to assets that have been removed from the balance sheet and transferred assets that are still recognised in full or in part on the balance sheet. The group will put systems in place to capture the necessary information. It is, therefore, not possible at this stage to disclose the impact, if any, of the revised standard on the notes. This amendment applies to financial years beginning on or after 1 July 2011. There will not be any requirement to restate additional information for comparison figures. The amendments have not yet been endorsed by the EU.

shares in the company and the group are able to exercise actual control over the company. Subsidiaries are consolidated from the point in time when control is transferred to the group and eliminated from consolidation when such control ends. The acquisition method of accounting is used for the acquisition of subsidiaries. The acquisition cost is assessed at the fair value of the assets that are contributed as consideration for the acquisition, equity instruments that are issued, liabilities that are assumed, plus direct costs associated with the acquisition. Identifiable acquired assets, liabilities and conditional obligations that are assumed to be inherent to the integration of a business are assessed at their fair value, independent of any minority interests. The portion of the acquisition cost that exceeds the fair value of identifiable net assets in the subsidiary is recognised as goodwill. All internal transactions, outstanding accounts and unrealised gains between group companies are eliminated. Unrealised losses are also eliminated unless the transaction establishes a loss in value on the transferred asset. The accounting policies in subsidiaries are changed as required achieving compliance with the group’s accounting policies.

IAS 12 (revised): Deferred tax: Recovery of Underlying assets. The revised standard requires that deferred tax on investment property measured to fair value and fixed assets measured to revalued amounts according to IAS 16 is to be measured based on tax rate used if sold. The change will not have any impact on deferred tax for the group.

Transactions with minority interest owners in subsidiaries are treated as equity transactions. For the acquisition of shares from minority interest owners, the difference between the consideration and the share's proportionate share of the carrying amount of the net assets in the subsidiary is recognised in the equity of the parent company's owners. Gains or losses from the sale to minority interest owners are recognised correspondingly in the equity.

Consolidation principles Subsidiaries are companies where the group has a controlling interest. A controlling interest is normally achieved when the group owns, directly or indirectly, more than 50 per cent of the voting

Associated companies Associated companies are units where the group has a significant, but not controlling, influence. A significant influence exists normally for investments where the group has between 20 and

44


notes to the blom group accounts

50 per cent of the voting capital. Investments in associates are recognised in accordance with the equity method of accounting. At the time of acquisition investments in associates are recognised in the accounts at the historical cost. The group's share of profits or losses in associated companies is recognised in the income statement and added to the carrying value of the investments together with its share of unrecognised changes in equity. The group does not recognise its share of the losses in the income statement if this entails that the book value of the investment becomes negative, unless the group has assumed liabilities or granted guarantees for the associated company’s liabilities. The group’s share of unrealised gains on transactions between the group and its associated companies are eliminated. The same applies to unrealised losses unless the transaction indicates a write-down of the asset transferred. Segment information The operating segments are reported in the same manner as the internal reporting to the group's highest decision-maker. The company’s highest decision-maker, who is responsible for the allocation of resources to and the assessment of earnings in the operating segments, is defined as the corporate management. Foreign currency translation a) Functional and presentation currencies The accounts of the individual units in the group are measured in the currency that is used primarily in the economic area where the unit operates (functional currency). The consolidated accounts are presented in Norwegian kroner (NOK), which is both the functional and presentation currency for the parent company. b) Transactions and balance sheet items Transactions involving foreign currencies are translated into the functional currency using the exchange rates that are in effect at the time of the transactions. Foreign currency gains and losses that arise from the payment of such transactions and the translation of monetary items

(assets and liabilities) at the rates in effect on the balance sheet date are recognised in the income statement. Currency gains and losses linked to loans, cash and cash equivalents are presented on a net basis as financial income or expenses. If the foreign currency position is regarded as the hedging of a net investment in foreign business operations the gains or losses are recognised as part of extended profit. c) Group companies When consolidating the accounts of foreign subsidiaries, the income statement is translated into the presentation currency according to average exchange rates for the year. Balance sheet items are translated at the exchange rate in effect on the date of the balance sheet. Currency translation gains or losses resulting from differences in the exchange rates in effect on the date of the balance sheet compared to the rates in effect at the previous year-end are recognised as part of extended profit and specified separately. When consolidating differences from the translation of net investments in foreign business operations, they are posted directly against equity. When portions of a foreign operation are sold the associated exchange difference that was recognised directly in equity is recognised in the income statement as part of the gain or loss on the sale. Goodwill and the fair value adjustments for assets and liabilities associated with the acquisition of a foreign unit are treated as assets and liabilities in the acquired unit and translated at the rate in effect on the date of the balance sheet. Revenue recognition Sales are recognised in the income statement when the revenue can be measured reliably, it is probable that the financial benefits attributable to the transaction will pass to the group and special criteria related to various forms of sale have been met. Reliable measurement of sales is not regarded as possible until all the conditions linked to the sale have been fulfilled. The group

45


n otes to the blom group acco u n t s

bases its accounting estimates on historical data, an assessment of the type of customer and transaction, as well as any circumstances related to the individual transaction. The sale of services is recognised in the income statement in the period in which the service was performed, based on the degree of completion of the transaction in question. The degree of completion is determined by measuring the services provided in relation to the total agreed volume of services to be provided. In the period when it is identified that a project will lead to a negative result, the estimated loss on the contract will be recognised in full in the income statement. Work in progress represents the value of services performed in long-term projects, and the change in the work in progress is included under operating revenues. The sale of licences is recognised in the income statement when the licences have been made available to the customer, and the risk related to the delivery has been transferred to the customer. In addition, the customer must have accepted the delivery as part of the contract, and the period for submitting complaints must have expired or documentation must exist that all the criteria related to the delivery have been met. Property, plant and equipment Property, plant and equipment are recognised in the accounts at historical cost less accumulated depreciation and write-downs. Historical cost includes costs that are directly attributable to the acquisition of the items. Subsequent expenditure is added to the carried amount for the value of the asset or recognised separately on the balance sheet, when it is probable that the future economic benefits related to the expenditure will go to the group, and that the expenditure can be reliably measured. Other repair and maintenance costs are recognised in the income statement in the period when the expenses are incurred. Depreciation is calculated based on the straightline method so that the cost price of the noncurrent asset is depreciated to the residual value over the expected life of the asset:

46

Airframes and engines Lasers and digital cameras Other equipment

3-15 years 3-5 years 2-5 years

Long term and intangible assets that are depreciated are evaluated for impairment when conditions for future revenue no longer can substantiate the asset's booked value. The economic life of the non-current asset and the scrap value are reviewed on the date of each balance sheet and adjusted as required. When the book value of the non-current asset is higher than the estimated recoverable amount, the value is written down to the recoverable amount. Gains and losses on disposals are presented as part of the operating profit/loss and calculated by comparing the sales price with the book value. Intangible assets Goodwill is the difference between the historical cost of the acquisition of a business and the fair value of the group’s share of the net identifiable assets in the business at the time of the acquisition. Goodwill from the acquisition of subsidiaries is treated as an intangible asset. Goodwill is tested annually for impairment in value, and it is recognised at historical cost less accumulated write-downs and amortisation. In evaluating whether there is a need to write down goodwill, it is allocated to separate cash flow generating units. This allocation is made to the cash flow generating units or groups of cash flow generating units that are expected to benefit from the acquisition. Patents and licences have a limited economic life and are recognised on the balance sheet at historical cost less depreciation. Patents and licences are depreciated by the straight-line method over their expected life (3-12 years). Accounts payable Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities


notes to the blom group accounts

if payment is due within one year or less. If not, they are presented as non-current liabilities. Accounts payable are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the income statement over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to property, plant and equipment are included in non-current liabilities as deferred government grants and are credited to the income statement on a straightline basis over the expected lives of the related assets. Loans Loans are recognised at their fair value when they are disbursed, less any transaction costs. In subsequent periods, loans are recognised at their amortised cost, as calculated by means of the effective interest rate method. The difference between the loan amount disbursed (less transaction costs) and the redemption value are recognised in the income statement over the term of the loan. Loans are classified as current liabilities unless there is an unconditional right to postpone payment of the debt by more than 12 months from the date of the balance sheet. Trade receivables Trade receivables are recognised at fair value. For subsequent measurement, trade receivables are assessed at their amortised cost by means of the effective interest method, less provision for losses that have been incurred. Provisions for losses on trade receivables are recognised when there are objective indicators that the group will not receive settlement in accordance with the

original terms. The amount of the write-down will be recognised in the income statement. Cash and cash equivalents Cash and cash equivalents consist of cash, bank deposits, and other short-term, readily negotiable investments with an original maturity of less than three months. Credit facilities used are included under current liabilities on the balance sheet. Share capital and premiums Ordinary shares are classified as equity. Expenses that are directly attributable to the issuance of new shares less taxes are posted against the equity as a reduction in the proceeds. Payments for the purchase of treasury shares are recognised as a reduction in equity. A loss or gain is not recognised in the income statement for any purchase, sale, issuance or cancellation. Taxes The tax charge in the income statement encompasses the tax payable for the period and the change in deferred tax. Tax is recognised in the income statement, except when it is related to items that are recognised directly in equity. If this is the case, the tax will also be recognised directly in equity. The tax charge is calculated in accordance with the tax laws and regulations that have, or have essentially, been adopted by the tax authorities on the date of the balance sheet. It is the legislation in the countries where the group's subsidiaries or associated companies operate and generate taxable income that determine how the taxable income is calculated. The management evaluates the group's tax positions for each period with regard to situations where the current tax laws are subject to interpretation. Provisions are allocated for the expected tax charges based on the management's evaluations. Deferred tax is calculated for all the temporary differences between the tax values and consoli-

47


n otes to the blom group acco u n t s

dated accounting values of assets and liabilities. If deferred tax arises upon the initial recognition of liabilities or assets in a transaction that is not part of a business combination and does not affect either the reported or taxable profit on the transaction date, it will not be recognised in the balance sheet. Deferred tax is determined by means of the tax rates and tax laws that have been adopted or essentially adopted on the balance sheet date, which are assumed to apply when the deferred tax asset is realised or when the deferred tax is settled. Deferred tax assets are recognised provided future taxable income is probable and the temporary differences can be offset against this income. Deferred tax is calculated based on temporary differences from investments in subsidiaries and associates except when the Group controls the timing for the reversal of the temporary differences, and it is probable that they will not be reversed in the foreseeable future. Provisions The group recognises provisions in the accounts when there is a legal or self-imposed obligation to do so as a result of earlier events, there is a preponderance of evidence that the obligation will be settled by a transfer of economic resources, and the size of the obligation can be estimated with an adequate degree of reliability. Provisions are not allocated for future operating losses. Pension schemes The companies in the group have different pension schemes. The pension schemes are financed in general by payments to insurance companies or pension funds, as determined by periodic actuarial calculations. The group has both defined contribution and defined benefit plans. A defined contribution plan is a pension scheme in which the group pays fixed contributions to a separate legal entity. The group does not have any legal or other obligation to pay additional contributions if this unit does not have sufficient funds to pay

48

all employees benefits relating to their service in current and prior periods. The contributions are recognised as an employee benefit expense on a linear line basis for the period in question. Contributions paid in advance are recognised as an asset in the accounts if the contribution can be refunded or reduce future payments. A defined benefit plan is a pension scheme that defines the pension payments employees will receive when they retire. Pension payments are normally dependent on one or more factors such as age, years of service and salary level. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. The pension obligation is calculated annually by an independent actuary on the basis of a linear model. The present value of the defined benefits is determined by discounting the estimated future payments at the interest rate for a bond issued by a company with high creditworthiness in the same currency as the benefits will be paid with a term that is approximately the same as the term of the associated pension obligation. Estimate deviations due to new information or changes in the actuarial assumptions in excess of 10 per cent of the value of the pension assets or 10 per cent of the pension obligations will be recognised in the income statement over a period that corresponds to the employees' expected average remaining service lifetime. Leasing Leasing agreements where a significant part of the risk does not lie with the lessee are classified as operating leasing agreements. Payments for operating leasing agreements (less any financial subsidies/contributions from the lessor) are recognised in equal amounts over the term of the leasing agreement.


notes to the blom group accounts

Leasing agreements for property, plant and equipment where the group has significant risk and control are classified as financial leasing agreements. Financial leasing agreements are recognised on the balance sheet at the start of the leasing agreement at the lower of the fair value of the leased asset and the present value of the total minimum rent. Each rent payment consists of an interest element and a principal element. The interest element is recognised as a financial cost and the principal element reduces

the liability. The interest cost is recognised in the income statement under financial items, and it is distributed over the leasing period so that the interest rate on the residual liability is constant for each period. The leasing liability in question, less the interest costs, is classified under other non-current liabilities. Property, plant and equipment acquired through financial leasing agreements are depreciated over the shorter of the expected life of the asset or term of the leasing agreement.

49


n otes to the blom group acco u n t s

Note 1: Segment information In 2010 the group is reporting on its operations primarily in two business areas, Blom Information Services, BIS, and Blom Geo Engineering Services, BGES. The activities in the business areas are carried out primarily through independent companies, and the distribution of revenues, costs, assets and investments is based on the accounts of the individual companies. The results per business area for 2010 are as follow: (Amounts in NOK 1,000) BGES

BIS

Not allocated

Operating revenues 501 304 117 873 0 Depreciation 63 533 318 644 200 Operating profit/loss -72 009 -317 753 -38 456 Net financial items Pre-tax profit/loss Taxes Net profit/loss for the year Assets 435 432 172 544 200 318 Investments 34 612 43 557 340 Goodwill 71 659 54 040 0

Group

619 177 382 377 -428 218 -69 207 -559 019 -5 938 -564 957 808 294 78 508 125 699

The results per business area for 2009 are as follows: (Amounts in NOK 1,000) BGES

BIS

Not allocated

Group

Operating revenues 617 540 119 361 0 Depreciation 44 391 101 613 134 Operating profit/loss -26 517 7 895 -35 210 Net financial items Pre-tax profit/loss Taxes Net profit/loss for the year Assets 586 459 566 178 260 958 Investments 30 258 70 773 0 Goodwill 93 915 176 664 0

736 901 146 138 -53 832 -39 562 -93 960 10 949 -83 013 1 413 595 101 031 270 579

Assets allocated to segments consist primarily of property, plant and equipment, intangible assets, work in progress and trade receivables. Deferred tax assets and cash are not allocated to segments. The parent company's operating expenses (primarily wages and salaries and costs related to the head office) and assets are not allocated to segments. Investments consist of the addition of property, plant and equipment and intangible assets.

50


notes to the blom group accounts

The group’s largest markets by revenue are the Nordic region, Italy, Spain and the UK. Operating revenues are allocated based on the customer's home country. Operating revenues: (Amounts in NOK 1,000)

Norway Other Nordic countries Italy Spain/Portugal UK Romania Other countries Total operating revenues

2010

2009

43 813 120 408 144 055 62 764 40 439 36 629 171 069 619 177

46 939 129 195 182 389 112 226 74 947 51 882 139 323 736 901

Assets: (Amounts in NOK 1,000)

Norway Other Nordic countries Italy Spain UK Romania Other countries Total intangible assets Unallocated assets Total assets

2010

2009

79 448 109 929 255 194 85 956 12 709 51 948 12 792 607 976 200 318 808 294

284 864 152 314 318 589 220 197 88 492 57 604 28 259 1 150 319 263 276 1 413 595

Investments: (Amounts in NOK 1,000) 2010

Norway Other Nordic countries Italy Spain UK Romania Other countries Total extraordinary investments Unallocated assets Total investments

37 629 1 026 24 631 9 116 210 4 532 1 032 78 168 340 78 508

2009

73 559 4 542 5 579 7 296 5 398 1 742 2 915 101 032 0 101 032

51


n otes to the blom group acco u n t s

Note 2: Property, plant and equipment (Amounts in NOK 1,000) Buildings

2009 financial year Book value as of 1 January 2009 Currency translation differences Additions Disposals/other movements 1) Depreciation for the year Book value as of 31 December 2009 As of 31 December 2009 Historical cost Accumulated depreciation Book value as of 31 December 2009 2010 financial year Book value as of 1 January 2010 Currency translation differences Additions Disposals/other movements Depreciation for the year Write-down for the year Book value as of 31 December 2010 As of 31 December 2010 Historical cost Accumulated depreciation Accumulated write-downs Book value as of 31/12/2010 2)

Machinery, fixtures, etc.

Total

525 -16 498 78 86 843

315 323 -29 193 95 101 5 055 91 332 294 954

315 848 -29 209 95 599 -4 977 91 418 295 797

1 135 292 843

552 276 257 322 294 954

553 411 257 614 295 797

843 -47 574 56 237 0 1 077

294 954 -6 091 74 746 7 021 80 836 132 702 143 050

295 797 - 6 138 75 320 7 077 81 073 132 702 144 127

1 596 519 0 1 077

588 111 312 359 132 702 143 050

589 707 312 878 132 702 144 127

1) Disposals/other movements include reclassification between property, plant and equipment and intangible assets. 2) In property, plant and equipment includes leased equipment (Note 15).

52


notes to the blom group accounts

Note 3: Intangible assets (Amounts in NOK 1,000) Goodwill

Patents, licences and similar rights

2009 financial year Book value as of 1 January 2009 367 496 56 959 Currency translation differences -53 147 -1 301 Additions 0 5 431 Disposals/other movements 1) 0 13 439 Write-downs for the year 43 770 0 Depreciation for the year 0 10 950 Book value as of 31 December 2009 270 579 36 700 As of 31 December 2009 Historical cost 314 634 80 179 Accumulated write-downs 44 055 0 Accumulated depreciation 0 43 479 Book value as of 1 January 2010 270 579 36 700

Total

424 455 -54 448 5 431 13 439 43 770 10 950 307 279

394 813 43 770 43 764 307 279

2010 financial year Book value as of 1 January 2010 270 579 36 700 Currency translation differences -12 727 594 Additions 0 3 188 Disposals/other movements 0 849 Write-downs for the year 2) 132 153 29 397 Depreciation for the year 0 7 052 Book value as of 31 December 2010 125 699 3 184 As of 31 December 2010 Historical cost 301 907 82 406 Accumulated write-downs 176 208 29 397 Accumulated depreciations 0 49 825 Book value as of 31 December 2010 125 699 3 184

307 279 -12 132 3 188 849 161 550 7 052 128 883

384 313 29 397 226 033 128 883

1) Disposals/other movements include reclassification between property, plant and equipment and intangible assets. 2) The write-downs for 2010 include write-downs of licences regarding Pictometry. Write-down test for goodwill Goodwill in the company has arisen due to the acquisition of companies from 2004 to 2007. The group performs annual tests to assess whether the value of goodwill is impaired. Goodwill is recognised on the balance sheet at historical cost less write-downs. Due to mutual cash flow dependency between the company’s legal entities within its two business areas, the company is regarded as a cash flow generating unit, and goodwill in the company is allocated to this cash flow generating unit. The recoverable amount from the cash flow generating units is calculated based on the value determined for the asset by calculating the utility value for the company. These calculations require the use of estimates..

53


n otes to the blom group acco u n t s

In 2010 the company took a write-down of NOK 113 million related to the BIS segment and NOK 18 million related to the BGES segment. The reason for these write-downs is a dispute with a supplier that has contributed to a reduction in the company's cash flow in 2010 and the creation of uncertainty concerning the future cash flows in the BIS segment. For the BGES segment, the year 2010 has been marked by continued weak macro-economic factors in many of the markets where Blom operates, which also has a negative impact on the expected cash flows. The testing of goodwill uses liquidity forecasts before tax based on the 2011 budget approved by the company's Board of Directors. Different growth assumptions are used for each of the cash-generating units, BGES and BIS, to reflect the expected market performance of the individual markets. In addition, a gradual reduction in the number of credit days to 130 and 50 days, respectively, for BGES and BIS has been assumed. The value of goodwill is tested by creating 5-year liquidity forecasts and using a cautiously estimated terminal value (1.5 per cent annual cash flow growth), and then discounting these cash flows by the required rate of return on the total assets. The required rate of return used in the test is 10.6 per cent before tax. The book value of property, plant and equipment and the net working capital exceeds the cash flow from the cash-generating units. See note 25 for a sensitivity analysis for the write-down test.

Note 4: Inventory and work in progress Work in progress includes accrued, unbilled work on long-term projects of NOK 152.5 million in 2010 and NOK 261.2 million in 2009.

Note 5: Trade and other receivables

Trade receivables Write-down for expected losses Net trade receivables Prepayments Other current receivables Total other current receivables Total current receivables

54

(Amounts in NOK 1,000) 2010

2009

186 679 -22 345 164 334

259 197 -18 945 240 252

11 460 29 037 40 497

13 565 21 839 35 404

204 831

275 656


notes to the blom group accounts

Change in allocation for expected loss on accounts receivables: (Amounts in NOK 1,000)

Per 1. January Allocation for expected loss Write-down of accounts receivable 2010 Reversing of unused amount Per 31. December

2010

2009

18 945 6 116 - 1 330 - 1 386 22 345

30 077 13 365 - 24 497 0 18 945

As of 31 December 2010 the provisions for probable losses on trade receivables totalled NOK 22,345,000 (2009: NOK 18,945,000). The provisions are related primarily to Spain. Other current receivables include, for example, prepaid government taxes, receivables from associated companies and insurance settlement payments. Age distribution of group’s trade receivables: (Amounts in NOK 1,000)

Trade receivables not due for payment Up to 30 days Between 30 and 90 years Over 90 days Total outstanding receivables Total trade receivables

2010

2009

103 663 21 356 14 258 25 057 60 671 164 334

165 925 11 499 15 414 47 463 74 327 240 252

Recognised value of the group's trade by currency: (Amounts in NOK 1,000)

NOK DKK GBP EUR Other currencies Total current receivables

2010

2009

8 315 7 620 5 444 124 690 18 265 164 334

9 981 17 953 8 923 207 661 31 139 275 657

55


n otes to the blom group acco u n t s

Note 6: Cash and cash equivalents (Amounts in NOK 1,000)

Cash and bank deposits Restricted bank deposits Short-term bank investments Total cash and cash equivalents

2010

2009

75 229 20 659 0 95 888

149 837 5 036 10 000 164 873

The restricted bank deposits include the employees' tax withholdings, government subsidies in Romania and cash deposits for portions of the group's guarantees. The group has credit facilities totalling NOK 65 million, and NOK 54 million of these facilities were used as of 31 December 2010. Blom ASA has a corporate cash pooling system with Skandinaviska Enskilda Banken that covers most of the group's subsidiaries.

Note 7: Pensions (Amounts in NOK 1,000)

Book value of obligation: Pension benefits Cost charged to the income statement (Note 12): Defined benefit pension plans Pension plans based on deposits Pension cost

56

2010

2009

18 031 18 031

20 625 20 625

503 9 158 9 661

2 063 6 725 8 788


notes to the blom group accounts

The following companies are included in this table: Blom ASA, CGR (Italy), Blom Deutschland (Germany) and Nusantara (Indonesia)

Pension benefits: (Amounts in NOK 1,000)

Book value of obligation is determined as follows: Present value of accrued pension obligations for benefit plans in fund-based schemes Fair value of plan assets Present value of obligation for non-fund-based schemes Unrecognised estimate deviations Unrecognised costs related to pension benefits earned in prior periods Net pension obligations on the balance sheet

2010

2009

5 856 -2 759 3 097 15 882 -926 -21 18 031

5 337 -2 759 2 578 18 322 -252 -23 20 625

Changes in the defined benefit pension obligations during the year: (Amounts in NOK 1,000)

Pension obligations as of 1 January Present value of current year’s pension benefits earned Interest costs Actuarial losses/gains Foreign currency fluctuations Benefits paid Pension obligations as of 31 December

2010

2009

21 713 745 725 571 -1 717 -1 247 20 790

25 067 1 841 843 473 -2 603 -2 237 23 384

Change in the fair value of the plan assets: (Amounts in NOK 1,000)

1 January Expected return on plan assets Contributions from employer 31 December

2010

2009

-2 759 -147 147 -2 759

-2 759 -147 147 -2 759

57


n otes to the blom group acco u n t s

Total cost recognised in the income statement: (Amounts in NOK 1,000)

Cost of pension benefits earned in current period Interest costs Expected return on plan assets Actuarial gains and losses Employers' share of National Insurance contributions Losses from reduction Total, including payroll costs (Note 12)

2010

2009

86 360 - 147 3 201 0 503

1 483 401 - 147 125 201 0 2 063

Economic assumptions: (Amounts in NOK 1,000)

Discount rate Expected return on plan assets Annual salary inflation Annual pension adjustment

2010

2009

3.05-8.0% 0.0-4.6% 2.0-10.0% 0.5-3.0%

3.34-9.5% 0.0-5.6% 2.0-10.0% 2.0-3.0%

Blom Nusantara (Indonesia) has a discount rate of 8.0 per cent. a) Mortality. The mortality assumptions are based on published statistics and experience in each individual country. Average life expectancy in Norway (number of years) on the date of the balance sheet for a person who retires when he she reaches the age of 65 is as follows:

Men Women

2010

2009

16 19

15 19

The average expected life in Italy is 83 years for women and 78 years for men. The average expected life in Germany is 82 years for women and 77 years for men. The assets in fund-based schemes in Norway are managed by a life insurance company that has invested the funds in compliance with the regulations that apply to life companies. The actual return on the plan assets was NOK 147,000 in 2010 (2009: NOK 147,000).

58


notes to the blom group accounts

Note 8: Loans and other non-current liabilities A bond loan of NOK 300 million was raised on 25 September 2009, and it is referred to as the FRN Blom ASA Senior Secured Bond Issue 2009/2012. The loan matures on 25 September 2012. Security and financial covenants that are common for financing of this nature have been stipulated for the loan. The covenants attached to the loan include maximum net interest-bearing liabilities / EBITDA (excluding any intangible asset write-downs) of 3.50 and a minimum equity ratio of 40 per cent. Blom was in breach of the loan covenants as of 31 December 2010 with respect to the equity ratio and the ratio between net interest-bearing liabilities and EBITDA for the company's bond loan. The company has received a waiver for the loan covenants as of 31 December 2010. The Board of Directors does not consider the loan covenants to be a temporary problem and finds that it is necessary to restructure the company's capital situation in order to establish a healthy financial foundation for our continuing operations. The company did engage in negotiations with representatives for the bondholders with a view to such restructuring. The negotiated solution consists of a new senior bond loan of MNOK 50 million with a duration of one year, combined with a right offering aiming to raise up to MNOK 71 million, ref note 26 � Events after the date of the balance sheet�. The group has been granted a waiver from the loan covenants until August15, 2011, after this new loan covenants will be negotiated. Additional information regarding this can be found under the Liquidity risk chapter in Note 22. The group has a credit facility and factoring agreement in Blom Italia. The value of the unused credit facility is NOK 11 million and the factoring amount is NOK 54 million. The group had total cash reserves of NOK 96 million, and thus the total available funds are NOK 107 million. The group also utilises lease financing (Note 15). The composition of non-current liabilities and current interest-bearing liabilities is as follows:

Non-current liabilities: Bond loans Bank loans Financial leasing Other non-current liabilities Current interest-bearing liabilities: Bond loans Credit facilities Bank loans Financial leasing Other liabilities

(Amounts in NOK 1,000) 2010

2009

0 23 719 15 176 1 891 40 786

288 330 26 816 21 371 19 840 356 366

298 939 54 184 18 509 13 965 3 826 389 423

0 89 824 15 615 15 416 0 120 855

59


n otes to the blom group acco u n t s

Other non-current liabilities consist of loans of NOK 23 million provided by the Spanish authorities with an interest-free period for the first years of the loans and grants from the Spanish authorities totalling NOK 8 million, which will be reduced in step with the amortisation of relevant assets in Blom Spain. The fair value of an interest-free loan provided by the Spanish authorities of NOK 23 million and grants of NOK 8 million from the Spanish authorities is NOK 16.9 million as of 31 December 2010. The interest-bearing debt has adjustable interest rates or interest adjustment clauses that are shorter than three months at any given time. Since the debt can be repaid at the points in time when the interest rate is adjusted, the difference between the fair value and book value will be small and insignificant with the exception of the Spanish interest-free loans and grant. The effective interest rate on the date of the balance sheet was as follows: (Amounts in NOK 1,000) 2010 NOK

2009 EUR/GBP

NOK

EUR/GBP

Bond loans 10.7 % 10.2 % Bank loans 3 - 6.8 % Financial leasing 2.5 - 4.1 % Credit facilities 2.6 - 7 % Other non-current liabilities 0 %

2.5 - 6 % 3 - 3.3 % 1.3 - 4.5 % 0%

Book value of the group’s long-term debt and current interest-bearing debt:

NOK GBP EUR Other currencies

60

(Amounts in NOK 1,000) 2010

2009

309 068 3 119 115 528 2 494 430 209

302 949 6 634 144 628 23 010 477 221


notes to the blom group accounts

The maturity structure of the group’s short-term and long-term interest-bearing debt is as follows: 2011

Bond loans* Bank loans Financial leasing Credit facility Other liabilities Total

298 939 18 509 13 965 54 184 3 826 389 423

(Amounts in NOK 1,000)

2012

2013

2014

11 614 8 614 - 1 891 22 119

7 537 5 416 - 0 12 953

4 568 1 146 - 0 5 714

2015 –>

0 0 0 0

*The bond loan is due 25th september 2012. Due to breach of covenants the bond loan is classified as a short term loan.

Note 9: Taxes Deferred taxes are netted if the group has a legal right to offset deferred tax assets against deferred taxes on the balance sheet and if the deferred taxes are owed to the same tax authority. The following amounts have been netted: (Amounts in NOK 1,000) 2010

2009

Deferred Tax Assets: Deferred tax assets that reverse after more than 12 months Deferred tax assets that reverse within 12 months Deferred tax assets as at 31 December

-38 048 -1 632 -39 680

- 46 837 -3 591 -50 428

Deferred tax: Deferred tax that reverse after more than 12 months Deferred tax that fall due for payment within 12 months Deferred tax as at 31 December Net deferred taxes

5 139 477 5 616 - 34 064

10 700 1 651 12 351 -38 077

Change in recognised deferred taxes: (Amounts in NOK 1,000)

Book value as at 1 January Foreign currency translation Recognised in P&L account during the period Book value as at 31 December

2010

2009

-38 077 -1 736 5 749 -34 064

-26 083 6 536 -18 530 -38 077

61


n otes to the blom group acco u n t s

Change in deferred tax assets and deferred taxes (without netting within the same tax regime):

Deffered tax: 1 January 2009 Recognised in P&L account 31 December 2009 Recognised in P&L account 31 December 2010

(Amounts in NOK 1,000)

Machinery and plant

Projects

Other

Total

9 981 - 3 164 6 817 - 3 158 3 659

1 074 577 1 651 - 187 1 464

2 411 1 472 3 883 - 3 390 493

13 466 - 1 115 12 351 - 6 735 5 616

(Amounts in NOK 1,000)

Deferred tax assets: 1 January 2009 Recognised in P&L account Foreign currency differences 31 December 2009 Recognised in P&L account Foreign currency differences 31 December 2010

Tax loss carry forward

Fixed assets

Other

Total

- 33 278 - 22 046 7 260 - 48 064 37 530 - 1 260 - 11 794

- 2 481 - 1 636 - 223 - 4 340 - 9 734 - 75 - 14 149

- 3 790 6 267 - 501 1 976 - 15 312 - 401 - 13 737

- 39 549 - 17 415 6 536 - 50 428 12 484 - 1 736 - 39 680

The deferred tax assets related to tax loss carry forwards are recognised on the balance sheet when it is probable that the group can apply this against future taxable income. The table below shows that most of the tax losses carry forwards expires after 2015 (or that there is no deadline linked to the right to carry forward). The deferred tax assets related to tax loss carry forwards that are not recognised on the balance sheet totalled NOK 98.5 million as at 31 December 2010 and NOK 11.5 million as at 31 December 2009. Deferred tax assets which is not recognised consists of carry forward losses in Blom Sistemas (TNOK 52 000), Blom ASA (TNOK 10 000), Blom Data (TNOK 12 000), the Swedish subsidiaries (TNOK 10.000) in addition the Danish subsidiary (TNOK 8 000). Reference is also made to Note 25.

62


notes to the blom group accounts

(Amounts in NOK 1,000) Amount

Expiration dates for tax loss carry forward 2011 2012 2013 2014 2015 Later than 2015 No restrictions Total tax loss carry forward

0 0 0 54 0 16 144 374 951 391 149

(Amounts in NOK 1,000)

Tax charge: Tax payable Change in deferred taxes Total tax charge

2010

2009

189 5 749 5 938

7 581 -18 530 -10 949

The tax payable on the balance sheet (TNOK 9,063) differs from the tax payable in the profit and loss account due to payments in advance. The tax charge deviates from the amount that would have applied if the nominal tax rate in the various countries had been used. The difference can be explained as follows: (Amounts in NOK 1,000)

Pre-tax profit/loss Tax calculated at the tax rate of the various countries Non-taxable income Non-tax deductible expenses Utilisation and previously recognised tax loss carry forward Taxes

2010

2009

-559 019 -122 083 2 594 114 492 -941 5 938

-93 960 -8 105 1 055 0 -3 899 -10 949

The weighted average tax rate was 1.1 % (2009: 11.7 %) The following tax rates apply in the various countries in 2010: Norway 28 per cent, Sweden 26.3 per cent, Denmark 25 per cent, Finland 26 per cent, Germany 39 per cent, UK 28 per cent, Italy 27.5 per cent, Spain 30 per cent and Romania 16 per cent

63


n otes to the blom group acco u n t s

Note 10: Other current liabilities (Amounts in NOK 1,000)

Prepayments Holiday pay etc. for employees Interest/fees on bond loans Project costs Public subsidies (note 8) Other current liabilities Total other current liabilities

2010

2009

7 694 26 827 2 869 16 117 19 670 42 793 115 970

10 401 25 340 593 20 007 0 1 242 57 583

Other current liabilities include provisions for potential obligations as a result of the uncertainty related to the Pictometry agreement (note 26).

Note 11: Charges on assets and security Machinery and plant totalling NOK 150.0 million, trade receivables totalling NOK 150.0 million and inventories totalling NOK 150.0 million have been pledged as collateral for the parent company’s debt to Skandinaviska Enskilda Banken as of 31 December 2010. As security for the bond loan of NOK 300 million the parent company has pledged as collateral its shares in Blom Data AS, BlomInfo A/S, Blom Geomatics AS, Blom Kartta OY, Blom Deutschland Gmbh, Blom Aerofilms Ltd, Blom Sweden AB, Blom Environmental Coastal Surveys AB, Blom CGR and Blom Sistemas Geoespeciales S.p.A. The financial covenants are described in Note 8. In addition, the subsidiaries, Blom Data AS, Blom Geomatics AS, Blom Info A/S, Blom Aerofilms Ltd, Blom CGR and Blom Sistemas Geoespeciales S.p.A. have guaranteed the parent company’s loan covenants linked to the bond. Bank guarantees totalling NOK 76.7 million have been furnished by the company, primarily in connection with the execution of projects. A cash deposit totalling NOK 13.2 million has been furnished as collateral for bank guarantees. Blom ASA has furnished certain guarantees for Scan Subsea ASA. Blom ASA has guaranteed that Scan Subsea ASA will pay its rent in connection with the sale of the real estate in Tønsberg. Scan Subsea ASA was acquired in 2007 by the NYSE listed company Parker Hannifin Corporation.

64


notes to the blom group accounts

Note 12: Payroll costs (Amounts in NOK 1,000)

Wages and salaries Employers' share of National Insurance contributions Pension costs Other benefits Total

2010

2009

213 599 45 072 9 661 8 882 277 215

230 146 45 724 8 788 12 896 297 554

The pension costs include both defined benefit and defined contribution schemes. The group had 1,093 employees as of 31 December 2010.

Note 13: Other operating and administrative expenses (Amounts in NOK 1,000) 2010

Travel expenses Rent and other office expenses Sales and marketing costs Provisions for losses on inventories and receivables External assistance Other operating and administrative expenses Total

6 619 25 861 13 465 27 214 25 432 52 665 151 256

2009

7 754 27 633 15 750 11 132 18 371 23 940 104 580

Other operating and administrative expenses include provisions for potential obligations in connection with the Pictometry agreement.

Note 14: Financial income and expenses (Amounts in NOK 1,000)

Interest and other financial income Interest and other financial expenses Net currency gains/losses Net finance

2010

2009

3 074 - 65 724 -6 557 - 69 207

3 377 - 34 995 7 943 - 39 562

Interest and other financial expenses in 2010 include costs in connection to the company’s bond loan and the financial reconstruction totalled NOK 21.6 million (note 8).

65


n otes to the blom group acco u n t s

Note 15: Financial leasing agreements Property, plant and equipment acquired through financial leasing agreements include the following:

Historical cost recognised on balance sheet Accumulated depreciation Book value as of 31 December

The present values of obligations related to financial leasing agreements are as follow:

Maturity within 1 year Maturity between 1 and 5 years Maturity later than 5 years

(Amounts in NOK 1,000) 2010

2009

113 363 -81 240 32 123

111 637 - 70 891 40 747

(Amounts in NOK 1,000) 2010

2009

16 877 15 404 0 32 281

15 600 18 821 0 34 421

The financial leasing agreements encompass the leasing of aircraft, sensors, vehicles and IT-related equipment. The duration of the agreements is from 3 to 5 years. The leasing agreements have an adjustable interest rate.

Note 16: Operating leasing agreements Minimum future leasing payments related to operating leasing agreements are as follow: (Amounts in NOK 1,000)

Maturity within 1 year Maturity between 1 and 5 years Maturity later than 5 years

2010

2009

19 056 21 014 0 40 071

21 307 35 696 981 57 983

The operating leasing agreements encompass the leasing of vehicles, offices, aircraft and IT-related equipment.

66


notes to the blom group accounts

Note 17: Share capital and shareholder information The share capital of Blom ASA as of 31 December 2010 was NOK 4,170,063.60, divided into 41,700,636 shares, each with a nominal value of NOK 0.10. There is one class of shares, and all of the shares are freely transferable. There has been no increase in the share capital in 2010. treasure shares At the company's Annual General Meeting on 29 April 2010 the Board was authorised to acquire the company's own shares for a maximum of NOK 417,000 according to the nominal value of the shares. This authorisation can also be used in full or in part to raise a convertible loan. The authorisation remains in force until the next Annual General Meeting and is a continuation of an earlier authorisation. No treasury shares were bought or sold in 2010. As of 31 December 2010 the company held a total of 1,100,000 treasury shares, which represents 2.64 per cent of the total number of outstanding shares. The average price for the shares is NOK 44.25. Ownership structure The number of shareholders as of 31 December 2010 was 2,542, compared with 2,742 shareholders as of 31 December 2009. Foreign shareholders have a 32.1 per cent ownership interest in the company, compared with 46.4 per cent as of 31 December 2009.. Blom’s 20 largest shareholders as of 31 December 2010: Number

%

Shareholder 1 JP MORGAN CLEARING C A/C CUSTOMER SAFE K NOM 4 102 009 2 GOLDMAN SACHS & CO - SECURITY CLIENT SEGR NOM 3 963 469 3 FINANSPARTNER INVEST AS 2 129 213 4 GOLDMAN SACHS INT. - SECURITY CLIENT SEGR NOM 1 782 500 5 BLOM ASA 1 100 000 6 BJØRNSTAD & JENDAL AS 1 023 648 7 EBAS CONSULTING AS 1 000 000 8 MP PENSJON 826 524 9 DEUTCHE BANK AG CLIENTS ACCOUNT NOM 526 000 10 O. HOVDE AS 498 000 11 TRAN TRUC CHANH 485 330 12 NORDNET BANK AB NOM 438 797 13 VPF NORDEA VEKST JPMORGAN EUROPE LTD 393 900 14 EIENDOMSUTVIKLING KR 300 000 15 THUNDER INVEST AS 300 000 16 AGAT AS 292 000 17 CITIBANK N.A. NEW YORK A/C DFA-INTL SML CAP NOM 270 088 18 HAVTRÅL AS 250 000 19 STAV, JAN OLE 225 000 20 CLEARSTREAM BANKING NOM 223 000 Total 20 largest shareholders 20 129 478 Others 21 571 158 Total 41 700 636

9.84 % 9.50 % 5.11 % 4.27 % 2.64 % 2.45 % 2.40 % 1.98 % 1.26 % 1.19 % 1.16 % 1.05 % 0.94 % 0.72 % 0.72 % 0.70 % 0.65 % 0.60 % 0.54 % 0.53 % 48.27 % 51.73 % 100.00 %

67


n otes to the blom group acco u n t s

Shares held by members of the Board of Directors and CEO: No. of shares as 31 December 2010 Gunnar Hirsti Board Chairman 0 Dirk Blaauw CEO and Board Member 0 Per Kyllingstad Board Member 0 Bente Loe Board Member 7 500 Brita Eilertsen Board Member 0 Finanspartner Invest AS

Related party to Dirk Blaauw and Gunnar Hirsti 2,129,213

Note 18: Earnings and diluted earnings per share The earnings per share is calculated by dividing the net profit/loss for the year with the weighted average of outstanding ordinary shares throughout the year, less the company's own shares. (Amounts in NOK 1,000)

Net profit loss for the year (in NOK 1,000) Weighted average of number of outstanding shares (1,000s) Earnings and diluted earnings per share (NOK)

There are no financial instruments that can dilute the shares.

68

2010

2009

-564 957 40 600

-83 012 40 600

-13.91

-2.04


notes to the blom group accounts

Note 19: Key executives Pursuant to Section 6-16a of the Public Limited Companies Act, the board of directors’ shall prepare a separate statement concerning the adoption of salaries and other remuneration to the CEO and executive management. Pursuant to Section 5-6 of the Public Limited Companies Act a consultative vote shall be held on the Board of Directors' guidelines for setting the salary level for the next accounting year. If the guidelines include share-based payment schemes, then such schemes shall also be approved by the General Meeting. The Board of Directors proposes the following guidelines, which are to be subjected to a consultative vote at the General Meeting in 2011: Declaration concerning stipulation of salary and other remuneration to key executives Guidelines for 2011 The company’s key executives are paid a fixed salary that reflects the employee’s education, experience and professional qualifications. It is important that the remuneration is at a level that makes it possible to attract the best qualified persons to the company’s key positions. In addition to their base salary, key executives can receive a variable bonus of up to 30 per cent of the individual’s gross annual salary. The size of the bonus paid to the individual employees will be dependent in part on the achievement of individual targets and in part on the performance of the group. The targets for the CEO are set by the Board of Directors. The CEO has set the targets for key executives. Key executives receive free car, free telephone, mobile phone, Internet, newspapers and canteen as benefits in kind. Key executives in Norway are members of the company's defined contribution scheme in the same manner as other employees. The retirement age for key executives follows the local legislation. If employment is terminated the individual employees are entitled to a salary for a maximum of 12 months after the termination of employment. Blom believes that the company’s performance-based bonus agreements with key executives have a motivating effect and are in the best interest of the company and its shareholders. The company does not currently have any agreements with key employees concerning the allocation of shares, subscription rights, options and other forms of remuneration linked to shares or the performance of the company's share or shares of other companies within the group. The Board of Directors will, however, continuously consider incentive schemes that are appropriate to secure a qualified management for the company, including the use of various share option schemes.

Implemented executive remuneration policy for 2010 The remuneration of key executives in 2010 has been in accordance with the declaration that was presented to the General Meeting in 2010.

69


n otes to the blom group acco u n t s

Key executives Salary and other remunerations to key executives in 2010: Name

Position

Dirk Blaauw CEO Lars Bakklund CFO Nils Karbø CTO Gunnar Hirsti Board Chairman

Base salary

Bonus earned

Other taxable benefits

NOK 3 000 000 1 962 500 1 500 000 600 000

NOK 0 0 0 0

NOK 199 868 141 000 194 618 120 000

NOK 670,000 was charged against income in 2010 for the early retirement scheme for CEO Dirk Blaauw and the total pension obligation was NOK 4,035,000. The pension rights apply from age 62, and the assumptions made for the pension obligation are a return of 0.0 per cent, discount rate of 3.60 per cent, expected National Insurance basic amount (G) adjustment of 4.0 per cent and wage inflation of 4.0 per cent. Salary and other remunerations to key executives in 2009: Name

Position

Dirk Blaauw Board Chairman until 30/6 Dirk Blaauw CEO from 01/07 Håkon Jacobsen CEO until 30/06 / COO until 31/12 Jan Erik Braathen CFO until 30/09 / Controller until 31/12 Lars Bakklund CFO from 01/10 Nils Karbø CTO Gunnar Hirsti Board Chairman from 01/07

Base salary

Bonus earned

Other taxable benefits

NOK 900 000 1 500 000 2 750 000 1 036 920 462 500 1 245 626 300 000

NOK 0 0 0 0 0 0 0

NOK 110 271 110 271 134 894 16 894 0 207 421 60 000

NOK 1,468,526 was charged against income in 2009 for the early retirement scheme for CEO Dirk Blaauw and the total pension obligation was NOK 3,366,300. The pension rights apply from age 62, and the assumptions made for the pension obligation are a return of 0.0 per cent, discount rate of 4.40 per cent, expected National Insurance basic amount (G) adjustment of 4.0 per cent and wage inflation of 4.25 per cent. Remuneration to the Board of Directors paid for the period from 1 May 2009 to 29 April 2010: Blom ASA NOK

Gunnar Hirsti Dirk Blaauw Per Kyllingstad Bente Loe Brita Eilertsen Sum

70

450 000 225 000 225 000 225 000 225 000 1 350 000


notes to the blom group accounts

The following provisions have been made for remuneration of the Board of Directors for the period from 30 April 2010 to 5 May 2011 (Annual General Meeting): Blom ASA NOK

Gunnar Hirsti Dirk Blauuw Per Kyllingstad Bente Loe Brita Eilertsen Sum

450 000 225 000 225 000 225 000 225 000 1 350 000

Kyllingstad Kleveland Advokatfirma, where board member Per Kyllingstad is managing director and owner of 14.29% of the firm, have recieved NOK 2,930,000 for legal services.

Note 20: Auditor Auditor's fees totalling NOK 2,526,000 were charged against income in the group for 2010 (2009: NOK 2,025,000). In addition, there were fees for other certification services (including declarations associated with share capital increases and agreed audit procedures) totalling NOK 564,000 (2009: NOK 37,000), as well as fees totalling NOK 70,000 (2009: NOK 241,000) for tax consulting (including technical assistance with tax papers and advice on tax matters). A total of NOK 520,000 (2009: NOK 771,000) was charged against income for other non-auditing services. The amounts quoted are exclusive of value-added tax.

Note 21: Fair value of assets and liabilities, as well as financial assets by category With the exception of loans with an interest-free period and grants for 2010, there is no difference between the fair value and book value of assets and liabilities. The fair value of loans with an interest-free period provided by the Spanish authorities of NOK 23 million and grants of NOK 8 million from the Spanish authorities totalled NOK 16.9 million as of 31 December 2010, while the corresponding figure as of 31 December 2009 was NOK 19 million.

71


n otes to the blom group acco u n t s

Financial instruments by category: (Amounts in NOK 1,000) 2010

2010

2010

Non- financial assets

Total

Non-current asset investments 3 119 21 134 Trade receivables 164 334 0 Other current receivables 29 037 11 460 Cash and cash equivalents 95 888 0 Total 292 378 32 594 Liabilities Financial Non- liabilities at financial amortised liabilities cost

24 253 164 334 40 497 95 888 324 972

Non-current liabilities Credit facilities Other interest-bearing current liabilities Trade payables Other current liabilities Total

46 402 54 184 335 239 92 381 115 970 644 176

Assets Loans and receivables

46 402 54 184 335 239 92 381 108 276 636 482

0 0 0 0 7 694 7 694

Total

(Amounts in NOK 1,000) 2009

2009

2009

Non- financial assets

Total

Non-current asset investments 5 884 4 369 Trade receivables 240 252 0 Other current receivables 21 839 13 565 Cash and cash equivalents 164 873 0 Total 432 848 17 934 Liabilities Financial Non- liabilities at financial amortised liabilities cost

10 253 240 252 35 404 164 873 450 782

Non-current liabilities Credit facilities Other interest-bearing current liabilities Trade payables Other current liabilities Total

356 366 89 824 31 031 104 798 57 583 599 558

Assets Loans and receivables

72

356 366 89 824 31 031 104 798 47 182 629 201

0 0 0 0 10 401 10 401

Total


notes to the blom group accounts

Note 22: Financial risk The group’s activities entail different types of financial risk: market risk (foreign currency and interest rates), credit risk, liquidity risk and risk associated with asset management. The group’s risk management is provided by a central financial function in close cooperation with the subsidiaries. The purpose of risk management is to minimise the potential negative effects of the group’s financial results. Market risk a. Foreign currency risk The company is somewhat exposed to fluctuations in foreign exchange rates, since substantial revenues are in foreign currencies other than NOK, primarily EUR. The company has relatively large operative subsidiaries in nine European countries, four of which use the Euro as their functional currency, while the five remaining subsidiaries use five other functional currencies. The company has certain investments in foreign subsidiaries, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the group’s net investments in foreign operations is managed essentially though raising loans in the relevant foreign currency. The company focuses on reducing any foreign currency risk associated with cash flows and does not focus on reducing the foreign currency risk associated with assets and liabilities. The subsidiaries’ income and expenses are in the same currency, and this reduces the group’s cash flow exposure to a single currency substantially. An assessment of the need for and any hedging of currency risks are performed by a central financial function. In 2010 the company did not find it necessary to hedge cash flows against currency risks through forward contracts. In 2010 the net foreign currency loss in the net financial items totalled NOK 6.6 million. The company has investments in foreign subsidiaries, whose net assets and goodwill are exposed to a foreign currency translation risk. The translation difference for the equity as of 31 December 2010 totalled NOK -26 million. The Euro rate as of 31 December 2010 was 7.81 against NOK, while the average of the monthly average rates that is used to translate the income statement was 8.01 against NOK. b. Interest rate risk The group’s interest-bearing assets are cash and cash equivalents, and the group’s profit and cash flow from operations are in general independent of changes in market interest rates. The group has interest-bearing liabilities as described in Note 8. The interest-bearing debt has adjustable or fixed interest rates that are shorter than three months at any given time. Since the debt can be repaid at the points in time when the interest rate is adjusted, the difference between the fair value and book value will be small and insignificant. The group's interest rate risk is associated with long-term loans, financial leasing and credit facilities. All of the company’s interest-bearing debt is subject to adjustable interest rates. The company has not made use of interest rate swaps or other financial instruments. A change in the interest rate level by 1 per cent will entail a change in the interest costs of around NOK 4.4 million. 73


n otes to the blom group acco u n t s

Credit risk The company has not entered into any transactions that involve financial derivatives or other financial instruments. The counterpart risk in financial transactions is, therefore, non-existent. The credit risk in connection with sales to customers is managed in the local subsidiaries and at the group level for particularly large projects. The credit risk will be monitored locally with central monitoring of the local subsidiary. The company has guidelines for new contracts that focus on various elements, all of which shall contribute to the customer paying the company as quickly as possible. The company’s customers in BGES are primarily municipalities or government agencies, or companies or institutions where municipalities or government agencies have a dominant influence. The company considers the risk of potential future losses from this type of customer to be relatively low. During the last two years in BIS the company has acquired more customers who are private companies in handheld terminals, web services and navigation. These customers have by definition a higher probability for potential future losses than the company’s original customer group. As of 31 December 2010 the company has provisions of NOK 22.3 million for potential future losses on specific trade receivables. These provisions have in general been designated for specific private customers exposed to competition who have acquired services from Blom’s existing database of oblique images. The company has earmarked provisions for specific customers and evaluated the size of the potential loss. The company is focusing on the reduction of outstanding trade receivables. The age distribution of the group’s trade receivables is specified in Note 4. The company’s BGES segment is expected to have a higher percentage of trade receivables and work in progress compared with the BIS segment. This is due to the duration of the projects and the customers’ delivery terms in BGES. Trade receivables (invoiced to customers) and work in progress (not yet invoiced to customers) totalled NOK 317 million as of 31 December 2010, compared with NOK 501 million as of 31 December 2009, i.e. a reduction of 36.7 per cent. Liquidity risk The company’s management of liquidity risk entails maintenance of adequate liquid reserves and credit facilities. The central management team and the local managers of subsidiaries monitor the group’s liquid resources and credit facilities through revolving forecasts based on the expected cash flow. The company considers its liquidity to be satisfactory after the added liquidity through the New Bond loan totalling NOK 50 million. In addition, the rights offering with an aim of raising MNOK 73 million will strengthen the company’s capital structure. The company had NOK 94 million in liquid reserves at the end of the year as of 31 December 2010, compared with NOK 165 million at the end of the previous year. The group has an unused credit facility and factoring agreement in Blom Italia. The value of the unused credit facility is NOK 11 million and the factoring amount is NOK 54 million. The group had total cash reserves of NOK 96 million, and thus the total available funds are NOK 107 million. The maturity structure of the group’s long-term debt (excluding deferred tax liabilities) and short-term interest-bearing debt is specified in Note 8.

74


notes to the blom group accounts

In addition, the company has current liabilities of NOK 116 million as of 31 December 2010, as specified in Note 10. The group has current assets excluding cash and cash equivalents of NOK 359.9 million as of 31 December 2010. The company will need to renegotiate the new loan covenants on the loan “FRN Blom ASA Senior Bond Issue 2009/2012” before the15. August 2010.These negotiations will have some uncertainty in terms of final agreed result and therefore pose a risk to the group. There can be no assurance that the bondholders will agree to covenants which are satisfactory to the group. A breach of the revised loan covenants will constitute a default under the terms of the agreements. The company’s ability to comply with these restrictions and covenants, including meeting financial ratios and measures, is dependent on its future performance and may be affected by events beyond its control. If a default occurs under these agreements, lenders could terminate their commitments to lend or accelerate the outstanding loans and declare all amounts borrowed due and payable. If any of these events occur, the company cannot guarantee that the company’s assets will be sufficient to repay in full all of its outstanding indebtedness, and the company may be unable to find alternative financing. Even if the company could obtain alternative financing, that financing might not be on terms that are favourable or acceptable. If the financing available to the company is insufficient to meet its financing needs, it may be forced to reduce or delay capital expenditures, sell assets or businesses at unanticipated times and/or at unfavourable prices or other terms, seek additional equity capital or restructure or refinance its debt. There can be no assurance that such measures would be successful or adequate to meet the company’s financing needs. Additional information can be found in Note 26. Risk associated with asset management: The company has managed its surplus liquidity primarily by depositing it with its main banks or in short bond funds with a low credit risk. The company considers this counterparty risk to be relatively limited.

Note 23: Investments in associated companies Investments in associated companies consist of the following companies: Company Name

Country

Ndrive Navigation Systems S.A Portugal I-JOY Europe S.L. Spain Sum

Ownership

Value Increases/ 31.12. decreases 2009

20% 25%

45 246 0 45 246

0 23 438 23 438

Share result

Amortisation

1 710 0 1 710

30 394 17 188 47 582

Elimination internal profit

Value 31.12. 2010

7 219 0 7 219

9 343 6 250 15 593

Ownership and voting share is the same in both companies. As a result of weak macroeconomic conditions in the markets the associated companies operate, the group has written down NOK 47.6 million on the value of the shares and additional NOK 15.7 million on the value of the receivables. . 75


n otes to the blom group acco u n t s

Note 24: Subsidiaries The following directly and indirectly owned subsidiaries are included in the consolidated accounts: Blom Data AS, Oslo (100%) BlomInfo A/S, Denmark (100%) Blom Kartta Oy, Finland (100%) FMKaart OU, Estonia (100%) Blom Geomatics AS, Oslo (100%) Blom Romania S.R.L, Romania (100%) BlomInfo SP z.o.o., Poland (100%) PT. Blom Nusantara, Indonesia (90%) Blom SWE AB, Sweden (100%) Blom International AB, Sweden (100%) BlomInfo Ukraine, Ukraine (51%) Blom Deutschland GmbH, Germany (100%) Blom Aerofilms Ltd, England (100%) Blom Sweden AB, Sweden (100%) Blom CGR S.p.A., Italy (100%) Consorzio Compagnie Aeronautiche S.r.l., Italy (80%) Compagnia Aeronautica Emiliana S.r.l., Italy (100%) Blom Sistemas Geoespaciales S.L.U, Spain (100%) Trabajos Aereos S.A., Spain (100%) Blom Portugal, Portugal (100%) Blom Environmental and Coastal Survey AB, Sweden (100%) ĂŽ.C.S. Blom S.R.L, Moldovia (100%) Blom Bulgaria EOOD, Bulgaria (100%)

Note 25: Important accounting estimates and discretionary assessments Estimates and discretionary assessments are evaluated continuously and based on historical experience and other factors, including expectations of future events that are regarded as probable under the current circumstances. The group prepares estimates and makes assumptions concerning the future. The accounting estimates that are made as a result of this will rarely coincide in full with the final outcome. The most important valuation items for Blom ASA are discussed below. Goodwill The group performs annual tests to assess the value of goodwill (Note 3). The recoverable amount from cash flow generating units is determined by calculation of the utility value. These calculations require the use of estimates. If the required rate of return is increased by 2 percentage points to 12.6 per cent, the testing of goodwill will result in the need for a write-down of NOK 116.6 million.

76


notes to the blom group accounts

If a reduction in the number of credit days by 7 in BGES from 2011 to 2015 does not take place, the testing of goodwill will result in the need for a write-down of NOK 24.4 million. If the growth in the terminal value from 2015 and beyond is reduced to 0 per cent, the testing of goodwill will result in the need for a write-down of NOK 47.7 million. Deferred tax assetsl The group is taxed for income in many different jurisdictions. The use of discretion is required to determine the income tax in all the countries combined in the consolidated accounts. For many transactions and calculations there will be uncertainty related to the ultimate tax liability. The group recognises deferred tax assets on its balance sheet insofar as it is probable that there will be taxable income in the future. The tax loss carry forward represents most of the deferred tax assets. The company has recognised the tax effect of the tax loss carry forward of NOK 45 million on the balance sheet and NOK 38 ­million of this amount is not time limited. If the company does not manage to utilise the time limited tax loss carry forward, the company’s deferred tax assets would be reduced by the tax effect of a tax loss carry forward of NOK 26 million, i.e. around NOK 7 million. Recognition of project income Recognition of project income shall be in accordance with the percentage of completion method. This method requires that the group make discretionary assessments concerning what percentage of the total project has been delivered on the date of the balance sheet. The company has recognised work in progress of NOK 152 million as of 31 December 2009. Work in progress is recognised as revenue, but not invoiced to the customer as of 31 December 2009. If the percentage of services delivered on the date of the balance sheet in relation to the total services delivered was to deviate 10 per cent from the management’s estimate, the revenue for the year would change by NOK 15 million. Provisions for receivables The provisions for receivables are based on the management’s discretionary assessment of potential future losses on trade receivables. The company’s customers are primarily municipalities or government agencies, or companies or institutions where municipalities or government agencies have a dominant influence. The company considers the risk of potential future losses from this type of customer to be very low. During the last two years the company has also acquired more customers who are private companies in handheld terminals, web services and navigation. These customers have by definition a higher probability for potential future losses than the company’s original customer group. As of 31 December 2010 the company has provisions of NOK 22.3 million for potential future losses on specific trade receivables. These provisions have in general been earmarked for specific private customers who have acquired services from Blom’s existing database of oblique images. The company has earmarked provisions for specific customers and evaluated the size of the potential loss. If any losses upon realisation were to deviate 10 per cent from the management’s estimate, the realised losses in relation to the provisions would change by NOK 2 million.

77


n otes to the blom group acco u n t s

Note 26: Events after the date of the balance sheet An extraordinary general meeting was held on 18 March 2011. The General Meeting resolved that the company should seek to carry out a right issue giving gross proceeds up to NOK 73.1 million, through which the company’s share capital be increased by a minimum of NOK 0.10 and a maximum of NOK 24 360 381.60 through the issuance of a minimum of 1 and a maximum of 243 603 816 new shares. The new shares will be issued at a subscription price of NOK 0.30 per share to be paid in cash. Further, the General Meeting decided to shall take up a convertible loan with nominal value NOK 50 million. The issuance of the convertible loan is conditional upon the gross proceeds from the right issue are below NOK 50 million or 166,666,667 new shares. If the subscriptions in the rights offering amount to less than NOK 50 million or 166,666,667 new shares, the Bondholders will have the right to convert NOK 50 million of the existing bond loan into a new zero-coupon convertible bond with a conversion price of NOK 0.30 per share. In accordance with a resolution passed by the bondholder meeting on 23 March 2011, the Company was given the right to issue an additional bond loan of NOK 50 million. The new bond loan of NOK 50 million is fully subscribed. Interest rate is nibor +11%, interest is due quarterly. Principle amount NOK 50 million is due in March 2012. Further, interest accruing on the present bond loan during 2011 shall be paid in kind by issuing additional bond to the existing bond loan. The maturity on FRN Blom ASA Senior Secured Bond Issue 2009/2012 is unchanged, September 2012. Pictometry International Corp. advised Blom ASA on 16 October 2010 that the company found that Blom had breached the licence agreement that was entered into on 29 January 2009, and Pictometry terminated the agreement with immediate effect. Blom is of the opinion that the company has not acted in breach of the agreement and that the termination is thus invalid. Blom has taken the steps necessary to safeguard the company’s interests in the short term through its legal advisors. As a result of this, Blom was granted a preliminary injunction in a case that the company brought before a court in New York on December 2, 2010 claiming that the agreement must be re-established until a valid judgment is handed down. At the same time the judge ruled that Blom was not to deliver Pictometry-related services to Infoterra Ltd. according to an agreement between the company and Infoterra Ltd., later transferred from Infoterra Ltd. to Astrium SAS, until a final verdict has been made As a result of this ruling, Blom was notified by its partner that the company was considered to be in breach of the conditions of the cooperation agreement. Blom did not manage to comply with the arguments put forward by the agreed deadline, and the agreement is therefore terminated by Astrium SAS on January 21, 2011. In the event that the parties cannot find a solution, the case shall be decided through arbitration according to the ICC rules. If the Arbitration court were to rule in favour of Pictometry desire to terminate the license agreement, the company cannot engage in activities directly in competition with Pictometry and its license holders within the geo-referenced oblique imagery over a period of 3 years. This may have significant impact on the company’s BIS-division.

78


notes to the blom group accounts

Blom and Pictometry have recently invested a lot of resources to find a solution for the dispute outside of the agreed legal proceedings. The parties have, therefore, appointed a voluntary mediator. Both parties strive to find a solution outside the legal system. The parties have not yet reached any agreement, but they are still working to find a solution.

79


blom asa accounts


blom asa accounts

PROFIT AND LOSS ACCOUNT – BLOM ASA (Amounts in NOK 1,000) Note

Operating revenues 1 Salaries and personnel cost 2 Ordinary depreciation 3 Other operating and administrative costs 4 Operating expenses Operating profit/loss Financial income/expenses Group contributions received Write down of equity interests in subsidiaries/associates 14/15 Net financial items Pre-tax profit/loss Taxes 10 Net profit/loss for the year Allocation of profit/loss Transferred to/from other reserves Total allocations

2010

2009

22 300

20 600

22 863 200 15 393 38 456

21 805 134 13 272 35 211

-16 156

-14 611

-24 676 0 -460 154 -484 830

-12 498 31 482 -80 000 -61 016

-500 986

-75 626

2 907 -498 079

-1 258 -76 884

498 079 498 079

76 884 76 884

81


b lom asa accounts

BALANCE SHEET – BLOM ASA ASSETS

(Amounts in NOK 1,000) Note

82

2010

2009

Intangible assets 10 7 178 Property, plant and equipment 3 302 Shares in subsidiaries 14 289 807 Investments in associated companies 15 417 Non-current receivables 15 42 778 Total non-current asset investments 348 002 Total non-current assets 355 482 Current receivables 5/15 126 271 Cash and cash equivalents 6 26 265 Total current assets 152 536 TOTAL ASSETS 508 018

4 271 162 447 079 45 811 70 174 563 063 567 497 343 183 90 599 433 782 1 001 279


blom asa accounts

BALANCE SHEET – BLOM ASA EQUITY AND LIABILITIES

(Amounts in NOK 1,000) Note

2010

Called-up and fully paid share capital: Share capital 4 170 Treasury shares -110 Share premium account 129 581 Retained earnings: Other reserves 50 950 Total equity 8 184 591 Pension obligations 7 4 957 Other non-current liabilities 9 0 Total non-current liabilities 4 957 Trade payables 2 599 Unpaid government taxes 934 Other current liabilities 9/11/15 314 936 Total current liabilities 318 470 TOTAL EQUITY AND LIABILITIES 508 018

2009

4 170 -110 129 581 549 007 682 648 4 397 288 735 293 132 1 377 1 247 22 875 25 499 1 001 279

Oslo, 24 March 2011

Gunnar Hirsti Board Chairman

Brita Eilertsen Board Member

Per Kyllingstad Board Member

Bente Loe Board Member

Dirk Blaauw Board Member/CEO

83


b lom asa accounts

CASH FLOW STATEMENT – BLOM ASA Indirect model

(Amounts in NOK 1,000) 2010

CASH FLOW FROM OPERATING ACTIVITIES Pre-tax profit/loss + Depreciation and write-downs +/- Group contributions received +/- Change in current receivables +/- Change in current liabilities +/- Change in other accruals A = Net cash flow from operating activities CASH FLOW FROM INVESTING ACTIVITIES - Purchases of property, plant and equipment B = Net cash flow from investing activities CASH FLOW FROM FINANCING ACTIVITIES + New long-term debt - Payments on long-term debt and loans C = Net cash flow from financing activities A+B+C Net change in cash and cash equivalents + Cash and cash equivalents = Cash and cash equivalents

84

2009

-500 986 460 354 0 -13 529 -7 144 -2 690

-75 626 80 134 -31 482 -11 956 -5 510 16 914

-63 995

-27 527

-340

-87

-340

-87

0 0

287 269 -200 000

0

87 269

-64 335 90 599

59 655 30 944

26 264

90 599


notes to the blom asa accounts


n otes to the blom asa accoun t s

NOTES TO THE ACCOUNTS General information The accounts for Blom ASA have been prepared in accordance with the Accounting Act of 1998 and the generally accepted accounting principles in Norway (NGAAP). In cases where the notes for the parent company are significantly different from the notes for the group, they are listed below. Reference is made otherwise to the note information for the group. Foreign currency Transactions involving foreign currencies are translated into the functional currency using the exchange rates that are in effect at the time of the transactions. Gains and losses that arise from the payment of such transactions and the translation of monetary items in foreign currencies at the rates in effect on the date of the balance sheet are recognised in the profit and loss account. The company uses Norwegian 足kroner (NOK) as both its functional and presen足 tation currency. Subsidiaries Investments in subsidiaries are valued in accordance with the cost method and written down if the value in the balance sheet exceeds the recoverable amount. Write-downs are reversed if the basis for the write-down no longer exists. The group contribution received from subsidiaries is recognised as income under financial income. The net group contribution paid is added to the acquisition cost for investments in subsidiaries. Property, plant and equipment Property, plant and equipment are recognised in the accounts at historical cost less accumulated depreciation and write-downs. Depreciation is calculated based on the linear method so that the cost price of the non-current assets is depreciated to the residual value over the expected life of the asset.

86

Loans Loans are recognised at their fair value when they are disbursed, less any transaction costs. In subsequent periods, loans are recorded at their amortised cost, as calculated by means of the effective interest rate method. The difference between the loan amount disbursed (less transaction costs) and the redemption value are recognised in the profit and loss account over the term of the loan. Loans are classified as current liabilities unless there is an unconditional right to postpone payment of the debt by more than 12 months from the date of the balance sheet. Cash and cash equivalents Cash and cash equivalents consist of cash, bank deposits and other short-term, readily negotiable investments. Utilised overdraft facilities are included under current liabilities on the balance sheet. Associated companies Associated companies are units where the group has a significant, but not controlling, influence. A significant influence exists normally for invest足 ments where the group has between 20 and 50 per cent of the voting capital. Investments in associates are recorded in accordance with the cost method of accounting. They are written down to fair value if an impairment in value is attributed to causes that cannot be expected to be of a temporary nature and must be regarded as necessary in accordance with the generally accepted accounting principles. Write-downs are reversed when the basis for the write-downs no longer exists. Taxes The tax charge in the profit and loss account encompasses the tax payable for the period and the change in deferred tax. Deferred tax is calculated at the rate of 28 per cent on the basis of temporary differences between the financial accounting and tax-related values, in addition to any tax loss carryforward at the end of the accounting year. Tax increasing or reducing temporary differences that may reverse during the same


notes to the blom asa accounts

period are offset. Deferred tax and tax assets that can be recognised on the balance sheet are recognised on a net basis on the balance sheet. Deferred tax assets are recognised on the balance sheet provided future taxable income is probable and the temporary differences can be offset against this income. Pension schemes The company has both defined benefit and defined contribution schemes. The contributions are recorded as a payroll cost in the accounts as they fall due. Contributions paid in advance are recognised as an asset in the accounts if the contribution can be refunded or reduce future payments. The liability recognised in the balance sheet in respect of defined benefit pension plans

is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. Pension payments an employee will receive on retirement are normally dependent on one or more factors such as age, years of service and salary level. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefits is determined by discounting the estimated future payments at the interest rate for a bond issued by a company with high creditworthiness in the same currency as the benefits will be paid with a term that is approximately the same as the term of the associated pension obligation.

Note 1: Revenues The operating revenues consist of fees for services the parent company performs for companies in the group. Operating revenues are allocated to business areas and geographic areas: (Amounts in NOK 1,000) 2010

2009

Business areas:: Information Services Geo Engineering Services Total

6 300 16 000 22 300

7 000 13 600 20 600

Geographic areas: Norway Other Nordic countries Other Europe Total

5 900 3 100 13 300 22 300

6 100 3 500 11 000 20 600

87


n otes to the blom asa accoun t s

Note 2: Payroll and pension (Amounts in NOK 1,000)

Wages National Insurance contribution Pension costs Other benefits Total

2010

2009

17 053 2 870 1 524 1 416 22 863

15 617 2 260 2 415 1 513 21 805

Pension costs include both defined benefit and defined contribution schemes. In 2010 the average number of man-years was 10.

Note 3: Property, plant and equipment (Amounts in NOK 1,000)

Cost at 1 January 2010 Additions during the year Accumulated depreciation at 31 December Book value at 31 December 2010 Depreciation for the year

2010

2009

390 340 428 302 200

303 87 228 162 134

Note 4: Other operating and administrative expenses (Amounts in NOK 1,000)

Travel expenses Rent and other office expenses External services Other operating and administrative expenses Total

88

2010

2009

1 450 1 511 9 548 2 884 15 393

1 619 1 301 7 755 2 597 13 272


notes to the blom asa accounts

Note 5: Current receivables (Amounts in NOK 1,000)

Intragroup receivables (Note 15) Accrual items Other current receivables Total

2010

2009

111 346 750 14 175 126 271

335 189 554 7 440 343 183

The intragroup receivables as of 31 December 2010 include the subsidiaries’ overdrafts on accounts that are part of the company’s cash pooling system and group contributions. Receivables from associated companies are included in other current receivables. The parent company had NOK 0 in bad debts in 2010 and 2009.

Note 6: Cash and cash equivalents (Amounts in NOK 1,000)

Cash and bank deposits Restricted bank deposits Short-term bank investments Total

2010

2009

12 470 13 795 0 26 265

79 664 935 10 000 90 599

Blom ASA has a cash pooling system with Skandinaviska Enskilda Banken (SEB) that covers most of the group's subsidiaries. Cash and bank deposits include the subsidiaries’ net deposits in accounts that are part of the company’s corporate account system. The restricted bank deposits include the employees' tax withholdings and cash deposits for portions of the company's guarantees (note 12).

89


n otes to the blom asa accoun t s

Note 7: Pensions Blom ASA has a defined contribution pension scheme. This scheme covers 10 persons. In addition, the pension for two persons is covered by the company and charged against income. (Amounts in NOK 1,000) 2010

2009

Net pension costs – guaranteed schemes 25 Net pension costs – non-guaranteed schemes 281 Total pension costs 306 Net pension obligations – guaranteed schemes 922 Net pension obligations – non-guaranteed schemes 4 035 Total pension obligations 4 957 Net pension costs – guaranteed schemes Interest cost of pension obligations 151 Return on plan assets -147 Employers' share of National Insurance contributions 21 Net pension costs 25 Net pension obligations Accrued pension obligations at 31 December. 3 271 Estimated pension obligations at 31 December 3 271 Plan assets (at market value) at 31 December 2 760 Unrecognised effect of estimate deviations/plan changes -50 Employers' share of National Insurance contributions 461 Net pension obligations 922 Net pension costs – non-guaranteed schemes Present value of current year’s pension benefits earned 177 Interest cost of pension obligations 69 Employers' share of National Insurance contributions 35 Net pension costs 281 Net pension obligations Accrued pension obligations at 31 December 3 836 Estimated pension obligations at 31 December 3 836 Plan assets (at market value) at 31 December Unrecognised effect of estimate deviations/plan changes -370 Employers' share of National Insurance contributions 569 Net pension obligations 4 035 Economic assumptions Discount rate 3.4 % Expected return on plan assets 4.6 % Expected salary inflation 4.0 % Expected pension increase 0.5-3.0 % Expected National Insurance basic amount (G) adjustment 3.8 %

17 1 469 1 486 1 030 3 367 4 397

144 -147 20 17

3 549 3 549 2 760 -259 500 1 030

1 125 161 183 1 469

2 882 2 882

77 406 3 366

4.4 % 5.6 % 4.25 % 2.0-3.0 % 4.0 %

The actuarial assumptions are based on the normal assumptions that are used by the insurance ­industry with regard to demographic factors.

90


notes to the blom asa accounts

Note 8: Equity (Amounts in NOK 1,000) Share capital

Treasury shares

Share premium

Equity at 1 January 2010 4 170 -110 129 581 Net profit/loss for the year Currency translation differences Equity at 31 December 2010 4 170 -110 129 581

Retained earnings

549 007 - 498 079 22 50 950

Equity

682 648 - 498 079 22 184 591

Note 9: Non-current liabilities A bond loan of NOK 300 million was raised on 25 September 2009, and it is referred to as the FRN Blom ASA Senior Secured Bond Issue 2009/2012. The loan matures on 25 September 2012. Security and financial covenants that are common for financing of this nature have been stipulated for the loan. The covenants attached to the loan include maximum net interest bearing liabilities / EBITDA (excluding any intangible asset write-downs) of 3.50 and a minimum equity ratio of 40 per cent. Blom was in breach of the loan covenants as of 31 December 2010 with respect to the equity ratio and the ratio between net interest bearing liabilities and EBITDA for the company's bond loan. The company has received a waiver for the loan covenants as of 31 December 2010. The Board of Directors does not consider the loan covenants to be a temporary problem and finds that it is necessary to restructure the company's capital situation in order to establish a healthy financial foundation for our continuing operations. The company did engage in negotiations with representatives for the bondholders with a view to such restructuring. The negotiated solution consists of a new senior bond loan of MNOK 50 million with a duration of one year, combined with a right offering aiming to raise up to MNOK 71 million, ref note 26 Blom ASA Group � Events after the date of the balance sheet�. The company has been granted a waiver from the loan covenants until August 15, 2011. After this, new loan covenants will be negotiated.

91


n otes to the blom asa accoun t s

Note 10: Taxes (Amounts in NOK 1,000)

Calculation of deferred tax assets/liabilities: Temporary differences: Property, plant and equipment Receivables Capital gain and loss account Provisions in accordance with the generally accepted accounting principles Plan assets/pension obligations Net temporary differences Tax loss carryforward Basis for deferred tax assets 28% deferred tax assets Deferred tax assets on balance sheet Tax basis, change in deferred taxes and tax payable: Pre-tax profit/loss Permanent differences Write-down of shares Tax basis for current year Change in temporary profit/loss differences Basis for tax payable in the profit and loss account Use of tax loss carryforward Tax breakdown: Tax payable Change in deferred taxes Tax charge (28% of basis for the tax for the year) Share of deferred tax assets not recognised on the balance sheet Tax charge

2010

2009

-726 -15 729 13 250 -213 -4 957 -8 376 -63 333 -71 709

-868 0 16 562 -813 -4 397 10 485 -25 739 -15 254

-20 079 -7 178

-4 271 -4 271

-500 986 30 501 414 031 -56 454

-75 626 118 80 000 4 492

18 860 -37 594 0

5 192 9 683 9 683

0 -15 808 -15 808 12 901 -2 907

0 1 258 1 258 0 1 258

Tax loss carryforward is NOK 63.3 million.

Note 11: Other current liabilities (Amounts in NOK 1,000)

Intragroup liabilities (Note 15) Bond loan (Note 9) Interest and fees on loans Other current liabilities Total

2010

2009

7 358 298 939 2 869 5 770 314 936

15 754 0 593 5 718 22 875

The intragroup liabilities include the subsidiaries’ bank deposits in accounts that are part of the company’s cash pooling system.

92


notes to the blom asa accounts

Note 12: Charges on assets and security Machinery and plant totalling NOK 150.0 million, trade receivables totalling NOK 150.0 million and inventories totalling NOK 150.0 have been pledged as collateral for the parent company’s debt to Skandinaviska Enskilda Banken as of 31 December 2010. As security for the bond loan of NOK 300 million the parent company has pledged as collateral its shares in Blom Data AS, BlomInfo A/S, Blom Geomatics AS, Blom Kartta OY, Blom Deutschland Gmbh, Blom Aerofilms Ltd, Blom Sweden AB, Blom Environmental Coastal Surveys AB, Blom CGR and Blom Sistemas Geoespeciales S.p.A. The financial covenants are described in Note 9. In addition, the subsidiaries, Blom Data AS, Blom Geomatics AS, Blom Info A/S, Blom Aerofilms Ltd, Blom CGR and Blom Sistemas Geoespeciales S.p.A. have guaranteed the parent company’s loan covenants linked to the bond. Bank guarantees totalling NOK 28.1 million have been furnished by the company, primarily in connection with the execution of projects. A cash deposit of NOK 13.2 million has been pledged as collateral for bank guarantees. Blom ASA has furnished certain guarantees for Scan Subsea ASA. Blom ASA has guaranteed that Scan Subsea ASA will pay its rent in connection with the sale of the real estate in Tønsberg. Scan Subsea ASA was acquired in 2007 by the NYSE listed company Parker Hannifin Corporation.

Note 13: Auditor fees NOK 990,000 (2009: NOK 415,000) in auditor’s fees has been charged against the income of Blom ASA for 2010. In addition, there were tax consulting fees (including technical assistance with tax papers and guidance concerning tax questions) totalling NOK 25,000 (2009: NOK 107,000). A total of NOK 295,000 (NOK 559,000) was charged against income for other non-auditing services.

93


n otes to the blom asa accoun t s

Note 14: Subsidiaries (Amounts in NOK 1,000) Company:

Company’s share capital

No. of shares

Total nominal value

Blom Data AS 1 000 000 10 000 1 000 000 BlomInfo A/S DKK 5 500 000 5 500 5 500 000 Blom Kartta OY EUR 58 865,77 30 EUR 58 865,77 Blom Geomatics AS 1 000 000 10 000 1 000 000 Blom Deutschland Gmbh EUR 30 677,51 12 EUR 30 677,51 Blom Aerofilms Ltd GBP 300 300 GBP 300 Blom Sweden AB SEK 1000 000 10 000 SEK 1000 000 Compagnia Generale Ripreseaeree S.p.A. EUR 1500 000 10 000 EUR 1500 000 Blom SWE AB SEK 310 000 3 100 SEK 310 000 Blom Sistemas Geoespaciales S.L.U. EUR 522 870 8 700 EUR 522 870 Blom Sistemas Geoespaciales S.L.U. – converted loan Blom Enviromental and Costal Survey AB SEK 800 000 8 000 SEK 800 000 Total

The value of shares was written down by a total of NOK 157.3 million in 2010. All the companies are wholly owned.

94

Cost price of shares

Balance sheet value

18 529 7 866 29 791 11 622 12 865 88 809 21 015 157 014 285 57 521

0 0 29 791 11 622 1 991 66 877 21 015 157 014 285 0

98 071 1 212 504 600

0 1 212 289 807


notes to the blom asa accounts

Note 15: Associated companies The parent company does not have any closely related parties other than the subsidiaries and associated companies. Reference is also made to the notes to the consolidated accounts. Transactions between the parent company and subsidiaries are as follow: (Amounts in NOK 1,000) P&L Purchases

Blom Data AS Blom Info A/S PT. Blom Nusantara Blom Geomatics AS Blom Kartta OY Blom Deutschland GmbH Blom Aerofilms Ltd Blom Sweden AB Blom SWE AB CGR Blom Sistemas Geoespaciales Blom Environmental and Coastal Surveys AB BlomInfo Romania SRL Total

Current liabilities 31/12/2010

P&L Sales

Current receivables 31/12/2010

Non-current receivables 31/21/2010

Non-current liabilities 31/12/2010

0 0 0 0 0 0 0 0 0 0 0

0 216 0 79 0 39 4 023 2 030 0 313 658

5 000 1 400 0 900 600 500 3 900 1 100 0 5 000 3 000

0 13 357 41 5 579 2 486 15 308 6 069 1 115 2 182 5 259 32 738

0 0 4 181 22 212 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0

0 0 0

0 0 7 358

0 900 22 300

272 26 940 111 346

0 0 26 393

0 0 0

Current liabilities and receivables including the subsidiaries’ deposits and utilised overdraft facilities in the company’s corporate cash management system. The value of receivables was written down by a total of NOK 256,8 million in 2010. The value of shares and receivables with associated company was written down by NOK 46.2 million ( Note 23 in group accounts).

95


a uditor's report

PricewaterhouseCoopers as Postboks 748 sentrum nO-0106 Oslo telefon 02316

inDepenDenT AuDiTor’s reporT REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of blom asa, which comprise the financial statements of the parent company and the financial statements of the group. the financial statements of the parent company comprise the balance sheet as at 31 december 2010, and the income statement, and cash flow statement, for the year then ended, and a summary of significant accounting policies and other explanatory information. the financial statements of the group comprise the balance sheet at 31 december 2010, income statement, changes in equity, cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information. The Board of Directors and the Managing Director’s Responsibility for the Financial Statements the board of directors and the managing director are responsible for the preparation and fair presentation of the financial statements of the parent company in accordance with norwegian accounting act and accounting standards and practices generally accepted in norway, and for the preparation and fair presentation of the financial statements of the group in accordance with international financial Reporting standards as adopted by Eu and for such internal control as the board of directors and the managing director determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in norway, including international standards on auditing. those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. the procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. in making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. an audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

96


auditor's report

Opinion on the financial statements of the parent company In our opinion, the financial statements of the parent company give a true and fair view of the financial position for Blom ASA as at 31 December 2010, and of its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway. Opinion on the financial statements of the group In our opinion, the financial statements of the group give a true and fair view of the financial position of the group Blom ASA as at 31 December 2010, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Report on Other Legal and Regulatory Requirements Opinion on the Board of Directors’ report and statement of corporate governance principles and practices Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors report and statement of corporate governance principles and practices in the financial statements and the going concern assumption, and the proposal for coverage of the loss is consistent with the financial statements and complies with the law and regulations. Opinion on Registration and documentation Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements ISAE 3000 “Assurance Engagements Other than Audits or Reviews of Historical Financial Information”, it is our opinion that the company’s management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the company’s accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway.

Oslo 24 March 2011 PricewaterhouseCooper AS Geir Haglund State Authorised Public Accountant (Norway)

97


b oard of director's responsib i l i t y s tat e m e n t

Responsibility Statement We confirm, to the best of our knowledge that the financial statements for the period 1 January to 31 December 2010 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 management 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.

Oslo, 24 March 2011

Gunnar Hirsti Board Chairman

Brita Eilertsen Board Member

98

Per Kyllingstad Board Member

Dirk Blaauw Board Member/CEO

Bente Loe Board Member


k a p i t t e l n av n

corporate governance

99


c orpor ate governance

Corporate Governance 1. Statement For Blom ASA it is important that investors, clients, partners and others who follow the company have confidence in the fact that the company’s operations are managed properly in accordance with sound ethical guidelines. Reliability, honesty and integrity are key to the company’s core values. These are values that are important for a good reputation and the realisation of Blom’s business goals. Blom is concerned about having an adequate level of independence between the company’s bodies and confidence in the fact that the company is managed in accordance with principles that promote ethical and sustainable business practices. Blom ASA, which is the parent company of the group, is the company in which the group’s supervisory board and management functions are carried out. The group’s management structure is based on Norwegian company law, the Articles of Association, the rules of procedure for the Board of Directors, and the instructions for the company’s management adopted by the Board of Directors. The company has prepared ethical guidelines and guidelines for corporate social responsibility. Non-conformance with the recommendation: None. 2. Operations Blom is a leading European supplier for the collection, processing and modelling of geographic information. Blom possesses unique European databases with maps, images and models. The company delivers data and solutions to customers in the public and private sectors, as well as the consumer market, and it allows partners to develop applications based on the company’s databases, location-based services and navigation solutions. The object of the Company is established in the Articles of Association.

100

The Board of Directors views it as its duty to continuously adapt the company’s strategy so as to optimise the shareholders’ return, based on the resources represented by the company at any given time. The Board of Directors works to develop the company based on the resources represented by the competence of its employees and the recognition the company enjoys in the market. Blom will use the financial platform and instruments that are available to achieve this goal. Non-conformance with the recommendation: None. 3. Share capital and dividends Capital The total assets at the end of the year 2010 were NOK 808,294 million, with an equity ratio of 13.3 per cent. Dividends will be considered on an ongoing basis as a result of the company’s strategy and earnings. Authorisation to increase capital The Board of Directors’ power of attorney to increase the share capital by a maximum of 4,170,000 shares (10 per cent), which was granted at the General Meeting of 29 April 2010, is time-limited and valid until the Ordinary General Meeting in 2011. The authorisation is a continuation of the authorisation granted to the Board of Directors by the Annual General Meeting in 2009. The object of this authorisation is to give the Board of Directors financial freedom in connection with any acquisitions or similar transactions, and to strengthen the company’s equity and financial platform in general. This authorisation was not utilised in 2010. Authorisation to acquire treasury shares The Board of Directors was authorised to acquire the company’s own shares for a maximum of 10 per cent of the share capital, which corresponds to 4,170,000 shares, at the General Meeting of 29 April 2010. This authorisation is time-limited and valid until the Annual General Meeting in 2011. The authorisation is a continuation of the


c o r p o r at e g o v e r n a n c e

authorisation granted to the Board of Directors by the Annual General Meeting in 2009. The object of this authorisation is part of the Board of Directors’ efforts to create the best possible capital structure for the company. This authorisation was not utilised in 2010. Non-conformance with the recommendation: None. 4. Equal treatment of shareholders and transactions with close associates The Board of Directors of Blom ASA is concerned about equal treatment of the company’s shareholders. This is done by informing Oslo Børs, the company’s shareholders, securities firms and the rest of the market on a continuous basis about the company’s performance, activities and special events that may affect the price of the company’s shares. Blom ASA only has one class of shares. The liquidity of the share is good, and the share is listed under OB Match on Oslo Børs.

6. General Meeting The Board of Directors will make arrangements so that as many shareholders as possible can exercise their rights by participating in the company’s General Meeting and that the General Meeting can function as an effective meeting place for the shareholders and Board of Directors. •

If the Board of Directors proposes that the existing shareholders’ pre-emptive rights be waived, the waiver will be based on the common interests of the company and the shareholders. The reasons will be made public in a stock exchange disclosure in connection with the capital increase. If any not immaterial transactions are conducted between the company and shareholders, key executives and their close associates, the board will ensure that an independent valuation of the transactions in question is performed by a third party as required. Non-conformance with the recommendation: None. 5. Freely negotiable Shares in Blom ASA are freely negotiable. The Articles of Association do not restrict the negotiability of shares. Non-conformance with the recommendation: None.

A complete notice will be sent to all the shareholders in writing at least 21 days in advance and will be available on Blom’s website 21 days prior to the General Meeting. Enclosures to the notice and documents concerning the items on the General Meeting's agenda will be published on the company's website and not sent to the shareholders. A shareholder may nevertheless request that the documents concerning the items to be discussed are sent free of charge. The registration deadline is normally the day prior to the meeting. The right to participate or vote at the General Meeting may only be exercised when the acquisition of shares has been entered in the register of shareholders on the fifth working day prior to the date of the General Meeting (registration date). Shareholders who cannot be present at the General Meeting will be given an opportunity to vote. The Board of Directors will: - Provide information on the procedure for attending by proxy - Appoint a person who can vote by proxy on behalf of shareholders - Prepare a proxy form so that individual items to be considered and candidates to be elected can be voted on. The Board of Directors and auditor will be present at the General Meeting The Board of Directors and chairperson will make arrangements so that the General Meeting has an opportunity to vote on each of the individual candidates for positions in the company’s bodies.

101


c orpor ate governance

The Board of Directors will put forth a proposal for an independent chairperson if such a chairperson is required to ensure a proper execution of the General Meeting. • The Ordinary General Meeting elects the Board of Directors, determines the directors’ fees, approves the annual accounts and dividend proposed by the Board of Directors, elects the auditor and approves the auditor’s remuneration, and deals with any other items stated in the notice of the meeting. • The Board Chairman is elected by the General Meeting. • Minutes of the General Meeting will be available on the company’s website www.blomasa. com. Non-conformance with the recommendation: None. See Item 7 with regard to nomination committee non-conformance. •

7. Nomination Committee Blom ASA does not have a nomination committee. The Board of Directors believes that the duties of the nomination committee can be performed satisfactorily by the Board of Directors in dialogue with various shareholder groups and the company’s principal shareholders. Non-conformance with the recommendation: One instance of non-conformance. 8. Composition and independence of the Board of Directors The object of the Board of Director’s work is to manage the shareholders’ assets in the best possible manner and treat all shareholders equally. In electing Board Members, emphasis is, therefore, placed on having a Board of Directors that can safeguard the common interests of shareholders and the company’s need for competence, capacity and diversity. The members are elected for a term of two years. Board Member Bente Loe was up for election at the Annual General Meeting of 29 April 2010. She was re-elected for a new two-year term. Gunnar Hirsti was elected as the Board Chairman by the General Meeting.

102

After the General Meeting the Board of Directors consisted of Gunnar Hirsti as the Board Chairman, in addition to Dirk Blaauw, Per Kyllingstad, Bente Loe and Brita Eilertsen as board members. The majority of the board members are independent of the company’s key employees and principal shareholders. The Board Chairman is elected by the General Meeting. The Board of Directors will elect a deputy chairman if it is appropriate for the proper performance of the Board of Directors. Non-conformance with the recommendation: CEO Dirk Blaauw is a member of the Board of Directors. He represents one of the company's principal shareholders, and the Board of Directors has found, therefore, that it is appropriate that he is represented on the Board. In accordance with amendments to the Norwegian Public Limited Companies Act, the CEO will not be a member of the Board of Directors after the company's Annual General Meeting in 2011. 9. Work of the Board of DirectorsI In accordance with Norwegian law the Board of Directors is responsible for the supervisory management of the company, while the CEO is responsible for the day-to-day management. The Board Chairman shall follow the development of the operations in close cooperation with the CEO, plan the board meetings and ensure that the Board Members receive the information that is required so that they can perform their functions properly in accordance with the legislation. The Board Chairman chairs the board meetings. If it is appropriate for the proper performance of the Board of Directors, the Board of Directors will appoint another board member to head the discussion at board meetings. The CEO participates at board meetings. Other members of the management ordinarily participate whenever appropriate. The Board of Directors held a total 15 meetings in 2010.


c o r p o r at e g o v e r n a n c e

In accordance with the rules of procedure, the Board of Directors shall have an annual plan for its work with emphasis on goals, strategy and execution. With effect from the Ordinary General Meeting in 2010, the Board of Directors has appointed and elected members to an audit committee and a compensation committee. The Board of Directors will consider the use of other board committees if it is appropriate to ensure that the Board of Directors performs its work in an independent manner. The Board of Directors has not made use of board committees in 2010. Non-conformance with the recommendation: None. 10. Risk management and internal control The Board of Directors is concerned about the company having sound internal control and an appropriate system for risk management. This includes elements such as risk management of significant business risks, execution of significant management controls, and control of financial reporting and monitoring mechanisms. Significant risks include strategic risks, financial risks, liquidity risks and operational risks. The company’s significant risks are assessed on an ongoing basis and at least once a year, and they are included in the company’s annual report. Blom’s internal control of financial reporting encompasses guidelines and procedures to ensure that the accounts are prepared in accordance with IFRS and provide a true picture of the company’s operations and financial position. Management controls are performed at a senior level in the company. The management structure was changed at the start of 2009 and the reporting system was changed accordingly in order to provide a closer follow-up of the subsidiaries, both financially and operatively. All of the Country Managing Directors (CMDs) in the group report now directly to the Chief Executive Officer (CEO). The CEO holds monthly meetings with each individual CMD.

Non-conformance with the recommendation: None 11. Remuneration of the Board of Directors The General Meeting determines the remuneration for the Board of Directors. NOK 1,350,000 was paid in directors’ fees for the period from 1 May 2008 to 29 April 2010. Provisions totalling NOK 1,350,000 have been allocated in the accounts for the remuneration of the Board of Directors for the period from 30 April 2010 to 05 May 2011. The remuneration breaks down into NOK 450,000 for the Board Chairman and NOK 225,000 for other board members. The remuneration of the Board of Directors shall reflect the Board’s responsibility, expertise and time spent, and it is not to be performancebased. No options have therefore been issued or any other performance-linked remuneration given to members of the Board of Directors. For special tasks that are carried out by the members of the Board of Directors, the Board of Directors can approve separate remuneration for these services. Non-conformance with the recommendation: None. 12. Remuneration of the executive management The Board of Directors has prepared separate guidelines for remuneration of the executive management in accordance with the Limited Liability Companies Act. The guidelines will be presented to the General Meeting. Special instructions have been prepared for the Chief Executive Officer. Reference is also made to his responsibilities and duties in the company’s rules of procedure for the Board of Directors. The General Meeting determines the remuneration of the Chief Executive Officer.

103


c orpor ate governance

The company’s key executives are paid a fixed salary that reflects the employee’s education, experience and professional qualifications. It is important that the remuneration is at a level that makes it possible to attract the best qualified persons to the company’s key positions. A bonus can be agreed on in addition to the base salary. The size of the bonus paid to the individual employees will be dependent in part on the achievement of individual targets and in part on the performance of the group. Key executives receive free telephone, mobile phone, Internet, newspapers and canteen as benefits in kind. Key executives are members of the company's defined contribution scheme in the same manner as other employees. Blom believes that the company’s performance-based bonus agreements with key executives have a motivating effect and are in the best interest of the company and its shareholders. The company does not currently have any agreements with key executives concerning the allocation of shares, subscription rights, options and other forms of remuneration linked to shares or the performance of the company's share or shares of other companies within the group. The Board of Directors will, however, continuously consider incentive schemes that are appropriate to secure a qualified management for the company, including the use of various share option schemes. Non-conformance with the recommendation: None. 13. Information and communication Blom ASA seeks to maintain an open information policy in relation to shareholders, the media and other interested parties within the bounds of the securities legislation, accounting law and stock exchange regulations. The group has its own website (www.blomasa.com), which contains IR information and other information that is useful for understanding the group’s overall operations and development. Open presentations with webcasts are held in connection with the reporting of interim results.

104

The Board Chairman and CEO or CFO are authorised to speak on behalf of the company. Non-conformance with the recommendation: None. 14. Corporate takeovers The Board of Directors will not attempt to influence, hinder or complicate the submission of bids for the acquisition of the company's operations or shares, or prevent the execution thereof. The Board of Directors will help ensure that shareholders are treated equally. If a bid is made for the company’s shares, the Board of Directors will obtain a valuation from an independent expert and issue a recommendation to shareholders as to whether they should accept or reject the bid. Non-conformance with the recommendation: None. 15. Auditor The company’s auditor will prepare an annual plan for the performance of audit work and present the plan to the audit committee. The auditor will attend the board meeting that reviews the annual accounts. The auditor performs otherwise the activities he is required to perform in accordance with Norwegian law and the generally accepted auditing standards. The auditor will review the company’s internal control, including the identification of weaknesses and recommendations for improvements, annually together with the audit committee. The Board of Directors has given the management access to use the auditor, to a limited extent, for the performance of services for the company other than pure auditing. This applies in particular to matters of a particularly complicated nature such as tax issues, acquisitions and mergers/demergers. The Board of Directors feels that such consulting does not affect the auditor's independence in relation to the company. Non-conformance with the recommendation: None.


board of directors

The Board of Directors consists of: Gunnar Hirsti, Drøbak, sBoard Chairman. Hirsti holds a drilling engineering degree. During the last 25 years he has held various managerial and board positions in various private and listed companies, both nationally and internationally. His managerial duties have been related to companies where, for example, structural and strategic changes have been required.

Per Kyllingstad, Bærum, Board member. Kyllingstad holds a law degree from the University of Oslo and a Master of Law degree from Temple University, Philadelphia. He has almost 25 years of experience as an attorney, and his main fields of practice include offshore, shipping, banking and finance, property, board appointments and general business law. Kyllingstad is a partner in the firm of Kyllingstad Kleveland Advokatfirma DA.

Dirk Blaauw, Oslo, Board member. Blaauw holds a business management degree from Heriot-Watt University in Edinburgh. He has more than 25 years of experience from managerial positions in a number of shipping and offshore companies listed on the Oslo Stock Exchange, and he has worked with business development in recent years. He has been the CEO of Blom from January 2004.

Brita Eilertsen, Oslo, Oslo, Board member. Eilertsen is a business economist with an MSc (siviløkonom) degree from the Norwegian School of Economics and Business Administration (NHH) and a licensed Financial Analyst. She has more than 10 years of experience from corporate finance activities in securities firm in the areas of mergers and acquisitions and equity transactions. She currently has her own business.

Bente Loe, Oslo, Board member. Loe studied at the University of Denver and has an MBA in Finance. She has experience from acquisitions and mergers, as well as the financing of projects for Kværner investments in Oslo and London. During eight years she worked as a partner in Tele Venture Management with the development of Telenor Venture Fonds companies in IT and telecommunication and the last 3 years Loe worked as an investment director with Ojada AS, a private investment company. She currently has her own business.

105


i n formation on shares in blom

INFORMATION ON SHARES IN BLOM Blom ASA has one class of shares, and there were 41,700,636 outstanding shares in the company at the end of 2010. The share capital has remained unchanged throughout the year. At the end of the year the company owned 1,100,000 shares, which corresponds to 2.64 per cent of the share capital. Blom’s Annual General Meeting of 29 April 2010 granted the Board of Directors authorisation to increase the share capital by up to 10 per cent, which corresponds to 4,170,000 shares. This authorisation can also be used in full or in part to raise a convertible loan for a maximum of NOK 100 million. The General Meeting also granted the Board of Directors authorisation to acquire

shares in Blom ASA for up to 10 per cent of the share capital, which corresponds to 4,170,000 shares. Both of these authorisations are valid up until the Annual General Meeting in 2011. None of the authorisations were utilised in 2010. Dividends In accordance with the company’s future growth goals, Blom will seek to maintain a sound financial platform. Dividends will be considered on an ongoing basis as a result of the company’s strategy and earnings. The Board of Directors proposes that no dividend be distributed for the 2010 financial year. Shareholders and voting rights Blom ASA had 2,542 shareholders at the end of 2010. Foreign shareholders owned 32.1 per cent of the shares. All the shares are registered by name and carry equal voting rights. The shares are freely negotiable.

Blom's 20 largest shareholders as of 31 December 2010: Shareholder 1 JP MORGAN CLEARING C A/C CUSTOMER SAFE K NOM 2 GOLDMAN SACHS & CO - SECURITY CLIENT SEGR NOM 3 FINANSPARTNER INVEST AS 4 GOLDMAN DACHS INT. - SECURITY CLIENT SEGR NOM 5 BLOM ASA 6 BJØRNSTAD & JENDAL AS 7 EBAS CONSULTING AS 8 MP PENSJON 9 DEUTCHE BANK AG CLIENTS ACCOUNT NOM 10 O. HOVDE AS 11 TRAN TRUC CHANH 12 NORDNET BANK AB NOM 13 VPF NORDEA VEKST JPMORGAN EUROPE LTD 14 EIENDOMSUTVIKLING KR 15 THUNDER INVEST AS 16 AGAT AS 17 CITIBANK N.A. NEW YORK A/C DFA-INTL SML CAP NOM 18 HAVTRÅL AS 19 STAV. JAN OLE 20 CLEARSTREAM BANKING NOM Total 20 largest shareholders Others Total

106

Number 4 102 009 3 963 469 2 129 213 1 782 500 1 100 000 1 023 648 1 000 000 826 524 526 000 498 000 485 330 438 797 393 900 300 000 300 000 292 000 270 088 250 000 225 000 223 000 20 129 478 21 571 158 41 700 636

% 9.84 % 9.50 % 5.11 % 4.27 % 2.64 % 2.45 % 2.40 % 1.98 % 1.26 % 1.19 % 1.16 % 1.05 % 0.94 % 0.72 % 0.72 % 0.70 % 0.65 % 0.60 % 0.54 % 0.53 % 48.27 % 51.73 % 100.00 %


i n f o r m at i o n o n s h a r e s i n b l o m

Information to the stock market Blom assigns high priority to contact with the stock market and desires an open dialogue with the market players. Our goal is to ensure that the market always has adequate and identical information to ensure correct pricing of our shares. This is done by informing Oslo Børs, the company’s shareholders, securities firms and the rest of the market on a continuous basis about the company’s performance, activities and special events that may affect the price of the company’s shares. The liquidity of the share is good, and the share is listed under OB Match on Oslo Børs.

The company’s annual and quarterly reports will be published in Norwegian and English. Presentation of the quarterly reports will also be broad­ cast as webcasts. The group’s website www. blomasa.com contains IR information in accordance with the requirements of Oslo Børs. Financial calendar 2011: Date Event 05/05/11 1st quarter 2011 results 05/05/11 General Meeting 2011 11/08/11 2nd quarter 2011 results 27/10/11 3rd quarter 2011 results 16/02/12 4th quarter 2011 results

Share price performance

18 16 14

share price

12 10 8 6 4 2 0 2/10

4/10

6/10

8/10

10/10

12/10

107


b lom offices

Blom ASA/Head Office PB 34 Skøyen 0212 Oslo Norway Tel: +47 23 25 45 00 Email: info.no@blomasa.com

Blom CGR S.p.A. Via Cremonese 35/A 43126 Parma Italy Tel: + 39 0521 99 49 48 Email: info.it@blomasa.com

Blom Aerofilms Ltd The Astrolabe Cheddar Business Park Wedmore Road Cheddar Somerset BS27 3EB UK Tel: +44 (0) 1934 311000 Sales Hotline: +44 (0) 1934 311001 Email: info.uk@blomasa.com

Blom Portugal Av. do Forte, nº8, Edifício Pujol, Fracção K 2795-503 Carnaxide Portugal Tel.: +351 21 425 3830 Email:info@blom.pt

Blom Deutschland GmbH Oskar-Frech-Straße 15 73614 Schorndorf Germany Tel: + 49 7181 980210 Email: info.de@blomasa.com BlomInfo A/S Masnedøgade 20 2100 København Ø Denmark Tel: + 45 70 200 226 Email: info.dk@blomasa.com Blom Romania Ion Heliade Radulescu Street, no 3-5, 130010 - Targoviste, Romania Tel.: +40(0)245 606 150 Email: office@blominfo.ro Blom Kartta OY Pasilanraitio 5 00240 Helsinki Finland Tel: + 358 9 229 3060 Email: info.fi@blomasa.com Blom Sistemas Geoespaciales C/ Zurbano 46 28010 Madrid Spain Tel: +34 912 106 700 Email: info.spain@blomasa.com Blom Sweden AB Klippan 1J 414 51 Göteborg Sweden Tel: +46 31 704 56 70 Email: info.se@blomasa.com

108

Blom Ukraina Production Office Demiivs'ka str, 43, 3-d floor Kiev 03040 Ukraine Tel: 0038 044 2587 266 Email: info.ua@blomasa.com Blom Bulgaria EOOD 2 Nikolay Haytov Str., Entr. A, Fl. 8, Apt. 16 1113 Sofia Bulgaria Tel: +359 2 489 7019 ICS Blom SRL Str. Valea Trandafirilor, nr. 24A, Mun. Chisinau, 2001 Republica Moldova Tel: +373 22 261045 Email: office@blom.md Blom Netherlands Roggeakker 12 8091 NH Wezep The Netherlands Email: henk.lambers@blomasa.com Phone: +31 38 376 1225 Blom France Parc de Crécy 13, rue Claude Chappe 69771 Saint Didier au Mont d’Or Cedex, Lyon France Email:didier.mendel@blomasa.com Tel: +32 (0)492 720 240 Blom Czech Republic Olomoucka 1158 / 164a CZ - 627 00 Brno Czech Republic Tel.: +420 513 033 050 Email: info.cz@blomasa.com


Blom ASA Annual Report 2010