English version - Hexagon Composites ASA

COMROD COMMUNICATION ASA – LISTING ON THE OSLO STOCK EXCHANGE
Comrod AS Group - Notes to the interim financial statements 3. Quarter 2006
Note 4 continued
Pro forma income statement as if the acquisition had taken place 01.01.2006:
Pro forma
Income statement 30.09.2006
Operating revenue 137 812
Cost of materials incl. changes in WIP 46 590
Payroll and social security expenses 40 010
Other operating expenses 34 342
Operating profit before depreciation (EBITDA) 16 869
Depreciation 7 991
Operating profit (EBIT) 8 878
Net financial items -8 946
Profit/loss before tax -68
Taxes -491
Profit/loss after tax -558
Acquisition of Power Division (1. Quarter 2006).
On 28. February 2006, Comrod AS entered into an agreement to purchase from Eltek Energy ASA their department
of telecom power supplies for the defence market. The purchase price was NOK 25 million.
The date of transfer was 1. March 2006.
Details of net assets acquired and goodwill are as follows:
Purchase consideration:
Total consideration, cash only 25 000
The assets and liabilities arising from the acquisition are as
follows:
Recognized values
Goodwill 9 000
Other Intangible assets 15 000
Tangible assets 489
Inventories 511
Total assets acquired 25 000
Liabilities 0
Net assets acquired 25 000
The figures above are not finalized and may be changed in subsequent periods.
It is not possible to give reliable information of revenue and profit and loss for the combined entity as if the acquisition of the
Power Division was made 1. January 2006. This is due to the fact that Comrod AS purchased only a division of Eltek
Energy ASA which did not have separate reliable financial information for this division’s separate revenues,costs and profit and loss.
Comrod AS Group - Notes to the interim financial statements 3. Quarter 2006
Note 5 Transition from NGAAP to IFRS
Introduction
This interim report is prepared in accordance with IAS 34 and is the company´s first IFRS report. The accounting
principles refered in note 2 has been applied in the preparation of the consolidated financial statements as of 30
September 2006, the restatement of the figures for 2004, 2005 and 2006 and the calculation of IFRS opening
balances at 1 January 2004, which is the Group’s date of transition from NGAAP to IFRS.
Preparation of IFRS opening balances has involved some adjustments to previous accounting figures prepared under
NGAAP. The effect of the transition from NGAAP to IFRS on the Group’s financial statements is detailed below.
Transition from NGAAP to IFRS
IFRS 1, First-time adoption of International Financial Reporting Standards has been adopted in preparing Comrod AS
Group´s opening balance sheet at 1 January 2004. For Comrod AS Group the most important effects of the transition
are described below. Please refer to corresponding notes below.
1. Pensions
All accumulated, unrecognised actuarial gains/losses relating to retirement benefit obligation at 1 January 2004 have
been recognised as an equity adjustment. Changed assumptions for calculation of future pension costs under IFRS
involve an increase in the calculated pension expense for 2004.
2. Financial derivatives
Under NGAAP, foreign currency instruments (forwards) which met the hedging criteria were not recognised, while only
unrealised losses on other foreign currency transactions were recognised. Under IFRS, all foreign currency
transactions are measured at fair value and recognised in the balance sheet. Fair value changes relating to foreign
currency transactions which meet the hedging criteria are recognised directly in equity until the object of the hedge
transaction is realised, or the hedging is evaluated not to be effective. Both IAS 32 and IAS 39 have been
implemented with effect from 1 January 2004.
3. Reclassification of long-term debt
Under IFRS the first year instalment of long-term debt is classified as short-term debt.
4. Dividends and Group Contributions
Dividends and Group Contributions are under IFRS not recognised until the entity has an obligation to pay the
dividend or group contribution, which generally is not until these are approved by the General Assembly. Under
NGAAP dividends and group contributions were provided for at the balance sheet date in the year prior to the
approval of the general assembly.
5. Deferred tax
Deferred tax assets and liabilities will be affected by the transition to IFRS due to changes in other balance sheet
values as described in this report.
6. Amortization of goodwill
Amortization of goodwill is not permitted under IFRS. Instead, goodwill is subject to impairment review, both annually
and when there are indications that the carrying value may not be recoverable.
There has been no goodwill recognised in Comrod AS Group financial statements until the acquisitions performed in
2006, consequently this difference will appear in the 2006 financial statements, only.
7. Gains on sale of property, plant & equipment
Under IFRS, gains on sale of property, plant and equipment is classified as a cost reduction.
8. Share-based payment transactions
Under NGAAP Share-based payment transactions has not, until the year 2005, been recognised in the Income
Statement. In accordance with IFRS 2, the fair value of all options granted after 7.11.02 is recognised over the vesting
period. The fair value per option is calculated using an option pricing model (Black & Scholes). Costs are recognised
in profit and loss as payroll expenses together with a corresponding increase in other paid-in capital.
116