Torp Computing Group ASA

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10 INFORMATION MEMORANDUM Merger of Komplett ASA and Torp Computing Group ASA 2.2.3 Competitive industry The market in which the Merged Company will operate is highly competitive, and the Merged Company may in the future also be exposed to increased competition from current market players or new entrants to the market. Certain existing and potential new customers may also view the merger of Komplett and TCG negatively and therefore reduce or stop buying from Komplett, TCG or the Merged Company. The failure of the Merged Company to maintain its competitiveness, and respond to increased competition, may have a material adverse effect on the Merged Company’s business, operating results and financial condition. 2.2.4 Risk of price erosion The majority of the Merged Company’s revenues will be derived from sales of computers, computer components, consumer electronics and other products. Most of these products tend to be exposed to price erosion and hence the Merged Company may experience declining profits and revenue despite significant growth in units sold. Neither Komplett, TCG nor the Merged Company can guarantee that it will be able to grow the number of units sold sufficient to secure growth in revenues and profit. 2.2.5 Managing and funding growth The Merged Company’s future growth and performance will partly depend on its ability to manage growth effectively. This include among others number of employees, technical solutions including computer systems and software, warehouse organisation and systems, handling by the company or partners, how the company is organised, locations etc. Such risks include the risk and inefficiency during changing/reorganising the daily operations like moving to new locations, reorganising the warehouse, updating software or systems capable to handling larger number of customers, orders, products, hiring and training new employees, etc. In addition certain acquisitions of other companies may result in accelerated growth and demanding integration processes. For the time being a new location for the TCG warehouse is being built and Komplett is installing a new automated inventory handling system. Komplett acquired the Swedish company inWarehouse in May 2007, and are now in the integration process. Growth may create a need for additional financial funding. The general financial market conditions, stock exchange climate, interest level etc., the investors interest in Komplett, TCG or the Merged Company, the existing share price of the company and other reasons may create a risk for not being capable to raise necessary funding for future growth and/or investments to increase efficiency. The Merged Company’s failure to successfully grow its operations, and/or to handle such growth, could have a material adverse affect on the Company’s business, operating results and financial condition. 2.2.6 Entry into new markets The Merged Company may in the future enter into new markets, both geographically and in terms of new products and new customer groups. New market entries are associated with similar risks as those related to managing growth, and will require investments and significant resources, including management time. In the short term, new market entries may generate negative results. Unsuccessful entry into new markets could have a material adverse affect on the Merged Company’s business, operating results and financial condition.
11 INFORMATION MEMORANDUM Merger of Komplett ASA and Torp Computing Group ASA 2.2.7 Technological risk A significant part of the Merged Company’s operations is generated from orders made through web sites and automatically processed by computer systems. Technical problems with computer systems, automated storage systems and procurement systems may have a material adverse effect on the Merged Company’s business, operating results and financial condition. 2.2.8 Risks regarding start up of new systems/ technology in operation Komplett, TCG or the Merged Company may from time to time invest in new systems and technology or upgrade existing systems to increase handling capacity, efficiency or for other reasons. Based on experience from the years of operation such upgrades or changes may effect the efficiency, cost level, revenue and profit of the operation for a certain period both prior and during installation of such systems, and for a period after such installation. Employees must also be trained to handle the new systems. New systems must be carefully exposed to full load and during such increase of the capacity certain problems may be detected. This includes uncertainty of how long such a period of installation may be before the new or upgraded systems run smoothly. This may involve employees to handle both existing and new systems in parallel for a certain period. 2.2.9 Limitation of deliveries and vendors production capacity The products sold and delivered are manufactured by other companies in different countries around the world. In periods the manufacturing capacity may not be in balance with the market demand for certain products or the vendor may have manufacturing problems. This may result in increased prices or lack of deliveries. Some brands have a strong market position and especially reduced or failed deliveries of such popular products will affect the revenue and profit. 2.2.10 Technical problems or other defects relating to the products being sold and claims arising thereby. Komplett, TCG and the Merged Company are selling a large variety of product mostly operated by electricity. The products are manufactured by hundreds of different vendors in different countries. Komplett, TCG and the Merged Company have through the purchasing agreements with the vendors in different ways and level tried to arrange replacement or repair of defect products. The sales regulations published to the customers on the web-pages, inform the customers of their rights and procedure regarding technical problems with the products sold and related claims. There may be situations where the customers and Komplett, TCG or the Merged Company and the vendors, may not agree upon the reasons for the defect or claim, and that the situation may result in a costly and time consuming process or in other ways may affect the business. For several products Komplett, TCG and the Merged Company are obliged by law or regulations to give their customers better warranties and/or for a longer period than the vendors are willing to give Komplett, TCG or the Merged Company. 2.2.11 Dependence on executive management and certain key personnel The Merged Company’s future success will be dependent upon the continued services of the executive management and other key personnel. Loss of one or more of the members of the executive management and/or capability to attract and recruit new managers or key employees could have a material adverse effect on the Company’s business, operating results and financial condition. 2.2.12 Dependence on and loss of employees The successful development and performance of the Merged Company’s business will also depend on the Merged Company’s ability to attract and retain skilled professionals with appropriate
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Page 23 and 24: Lars Seeberg, Manager TCG 23 INFORM
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Share capital per 01.01.2004 5 910
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7 INFORMATION ABOUT TCG 63 INFORMAT
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65 INFORMATION MEMORANDUM Merger of
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Figure: People having purchased pro
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Appendix 1: Merger Plan with append
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CONTENTS Page 1 BACKGROUND ........
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MERGER PLAN This merger plan is ent
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) The share capital in Komplett is
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8 PROPOSALS FOR AMENDMENTS TO THE A
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16 DISTRIBUTION TO SHAREHOLDERS Non
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Appendices Appendix 1 Articles of A
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Articles of Association for KOMPLET
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Articles of Association for TORP CO
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Articles of Association for KOMPLET
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The Board of Director’s Annual Re
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Financial risk The Group is exposed
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Translated into English for informa
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Torp Computing Group ASA Short-term
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Torp Computing Group ASA Auditor Th
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Torp Computing Group ASA Note 7 Sub
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Torp Computing Group ASA Note 14 Sh
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Appendix 6 Interim balance sheet fo
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Komplett ASA INTERIM BALANCE SHEET
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Appendix 7 Interim balance sheet fo
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Torp Computing Group ASA Equity and
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Appendix 8 Draft opening balance sh
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Komplett ASA Draft Opening balance
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REPORT OF THE BOARD OF DIRECTORS CO
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The exchange ratio for the Merger w
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UNOFFICIAL TRANSLATION FROM NORWEGI
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UNOFFICIAL TRANSLATION FROM NORWEGI
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Appendix 3: Expert Statements on th
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Appendix 5: Financial statements fo
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Trend, active customers (number) 1Q
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THE KOMPLETT GROUP JANUARY - MARCH
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KOMPLETT REPORTS 45 PER CENT GROWTH
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Business development/operations Kom
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THE KOMPLETT GROUP, APRIL - JUNE 20
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Appendix 6: Summary of Fairness Opi
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28 August 2007 Strictly confidentia
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Appendix 7: Summary of Fairness Opi
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28 August 2007 consummated. TCG and
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