Annual report 2012 - Comrod

Annual report 2012 2/92Strategies and values | Group | Parent company | Corporate governance | ContactComrod Communication Group is developingand manufacturing military and civil antennas,communication masts, power supplies and otherrelated niche products.The Group develops and commercializescompetitive products based on unique in-houseexpertise. Most of the Group’s products are madewith the use of advanced composite materialtechnology.It is the Group’s aim to expand its currentbusiness and become a worldwide leader withinits selected niches. As of today Comrod is one ofthe global leaders in tactical antennas, and holdsolid market positions for other defense products.With further focus on quality and innovative newproducts the Group aims at further improvingits market positions worldwide. As of 2013, anew focus on providing added value integratedsolutions for customers will prevail.Competitiveness will be created by strategicallyfocusing on:• Staying at the forefront technologicallyand being early with the introduction of newinnovative integrated product solutions.• Being responsive and quickly adapting newproduct concepts and solutions to the specificneeds of current main customers.• Maintain high degree of professionalism andintegrity in relations to all customers, ensuringstatus as an independent supplier to the maincommunication radio producers.• Further focus on automated and best in classindustrial production processes throughoutthe Group.• Efficiency and cost competitiveness.• Continuously improving sourcing structures.• Consideration of both organic growth andacquisitions for optimum market coverageand provision of integrated solutions.2

Annual report 2012 3/92Strategies and values | Group | Parent company | Corporate governance | ContactmarketsMost of the Group’s sales are exported. To gainmore global market shares, while also maintainingor increasing profit margins, Comrod concentrateson highly automated production, cost efficiencyand customized design and a well-structuredmarketing and distribution setup.The Group’s overall goal for 2013 is to build globalstrength and expand the overall business withthe aim of also being able to provide value addedsolutions. Each of Comrod CommunicationGroup’s business units have its own marketdevelopment goals and has identified associatedaction-based strategies for 2013.Development strategyAll innovation revolves around the company’s corecompetences. At the same time, the climate fornew ideas is being nurtured in the subsidiaries.The challenge is to timely transform good ideasinto realistic opportunities. This has promptedComrod Communication to form close allianceswith technologically advanced customers aspart of its product development strategy. Strong,dedicated and demanding partners are primemovers in product development and playing a keyrole in the Group’s success.ValuesComrod Communication shares a set of corevalues – honesty, integrity and respect for people.All activities and all work by its employees areperformed in accordance with the highest ethicalstandards and core values with “keeping ourpromises” being a fundamental obligation. TheGroup has adopted the Ten Principles of UnitedNations Global Compact.Organizational and skills developmentThe most important contributing factor in theGroup companies is people. Recruitment of theright people, composition of the right workingteams and identification of the right individualand joint challenges will encourage innovation andset the scene for constant improvement. Formingworking teams and management groups we willuse people who complement each other, in orderto ensure balance and different point of views toconsider every aspect of the total picture. Whenforming groups, care is taken to establish natural,internal control mechanisms, and to discourageany predominantly passive attitudes.Diversity and inclusiveness creates increasedunderstanding, new ideas for solutions, innovationand constant improvement. Comrod seeksto cultivate diversity and inclusiveness. It isimportant to have a good mix in terms of gender,ethnic origin, cultural background and educationalbackground. Energy and risk propensity, which areseen as key elements in the organizations’ culture,enable the company to occupy a position at theforefront of development in its existing businessareas, and to develop new business areas.The Comrod Group makes every effort to recruitkey individuals and managers internally in thefirst instance. Good internal training and regularaddition of new challenges and new positionsalong the internal career route will be instrumentalin producing management candidates. Comrod3

Annual report 2012 4/92Strategies and values | Group | Parent company | Corporate governance | Contactholds annual management meetings, at whichmotivation and leadership are as high on theagenda as strategy, business development andsales.EqualityThe goal of diversity and inclusiveness in theorganization also centers on equality. As anindustrial group with a clear weighting towardstraditionally male-dominated occupations,Comrod Communication faces a challenge inthis area. Accordingly, the company has madeit a priority to seek highly-qualified womenas new appointees, and preference is given towomen when all other conditions are equal.The principle of equal pay for equal work is anabsolute requirement when establishing salarylevels. The Group is also committed to increasingthe percentage of female representation in themanagement team. At the end of the year, therewas one woman in the corporate managementteam. The Board of Comrod Communication ASAhas 40% female representation.4

Annual report 2012 5/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notes2012 Annual ReportHighlights 2012• The difficult market conditions experiencedduring second half 2011 has continuedthroughout 2012 with few signs of a quickmarket recovery.• Mast manufacturing consolidated to a singlesite by transferring Comrod Sweden’saluminum mast manufacturing to Business UnitFrance at end of the year.• New and improved composite masts for heavytop-loads introduced to the market.• During 2012, Comrod has become a qualifiedas supplier to major OEM’s and systemintegrators in targeted markets.• Two Centers of Excellence established duringthe year:- Mast manufacturing and testing at BusinessUnit France- Antenna manufacturing and testing atBusiness Unit NorwayThe Group reported revenues of NOK 218.3million in 2012 compared to NOK 286.2 in 2011and an operating profit before depreciation/amortization (EBITDA) of NOK 0.7 million in2012 compared to NOK 13.9 in 2011. Operatingprofit (EBIT) amounted to NOK – 30.1 million.A non-recurring final impairment of goodwillrelated to the Comrod France and Comrod Swedeninvestment has negatively affected the operatingprofit with NOK 11.8 million.The Norwegian Code of PracticeA detailed description of the Group’s latestCorporate Governance principles and practicehas been covered in the Corporate GovernanceSection of the Annual Report.Operating Business UnitsBusiness Unit NorwaySalesBusiness Unit Norway achieved revenues of NOK143.4 million in 2012 compared to NOK 209.4million for 2011. The main reason for the reducedturnover is the reduction and postponementsof global defence spendings within Comrod’sproduct segments. In spite of reduced volumes,the Business Unit’s international market sharefor tactical antennas remains strong and has notdeteriorated during the year.The 2012 market situation has been challengingand demanding due to budget cuts and politicalcircumstances in the major markets. Despitethat, Comrod has continued to position itselfwithin the target product areas and has nowobtained qualification for several future defenceprograms representing significant medium termopportunities for the Group.Operations and ResultsThe Business Unit’s operating margin for 2012 was0.3 %, compared to 10.1 % in 2011.Business Unit Norway reported an operatingprofit of NOK 0.5 million in 2012, a reduction fromNOK 21.2 million in 2011. This is reflecting lowervolumes of antennas which is the main productsegment for the Norwegian Business Unit.5

Annual report 2012 6/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesOtherThe Business Unit employed 99 staff as of 31December 2012 (2011: 108). No occupationalinjuries resulting in sick leave were recorded in2012. The Business Unit’s work environment isregarded as positive.Existing manufacturing processes and associatedwaste do not require any special permits beyondwaste products being sent to approved disposalsites or being recycled. The products are notregarded to represent any health hazard whenthey leave the Company.Business Unit FranceSalesBusiness Unit France achieved revenues of NOK60.1 million in 2012, compared to the 2011 levelof NOK 70.7 million. The main reason for thedecline is a further reduction in new orders due tostagnant markets. During the year, the BusinessUnit has positioned the mast products for newdefence programs and has further identifiedandis currently involved in -several interestingopportunities expected to provide a positiveimpact on revenue and operating profit on bothshort and medium term.Operations and ResultsBusiness Unit France reported an operating profitof NOK - 7.1 million in 2012, compared to anoperating profit of NOK -9.9 million in 2011.At the end of the year Comrod Sweden’saluminium mast manufacturing was transferred toBusiness Unit France enabling a consolidation ofthe Group’s total mast manufacturing which willestablish Business Unit France as a new Centreof Excellence for both composite and aluminiummast manufacturing and testing.The Business Unit’s consolidated operating profithas been affected by many factors, including butnot limited to:• effects of the general downturn in key segmentsof the global economy and in particular cuts inthe defence budgets.• challenges to meet new market demands withfurther reduced lead-times.OtherThe Business Unit had 67 employees as of 31December 2012 (2011: 69). 2 occupational injuriesresulting in sick leave were recorded in 2012. TheBusiness Unit’s work environment is regarded aspositive.Existing manufacturing processes and associatedwaste do not require any special permits beyondwaste products being sent to approved disposalsites or being recycled. The products are notregarded to represent any health hazard whenthey leave the Company.Research and DevelopmentR&D is a continuous focus area for ComrodCommunication Group aiming at securinga leading position in its niche fields ofcommunication technology though offeringattractive solutions and systems to customers. In2012, the Group capitalized development costs ofNOK 0.6 million and expensed development costsof NOK 17.3 million. (2011: NOK 1.5 million andNOK 14.5 million)The capitalized/expensed development costsduring 2012 related to the following main projects:6

Annual report 2012 7/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notes• New telescopic mast.• Various multiband/wideband antennas,including jamming versions.• Various antenna control systems.• New and improved medium duty mast.Parent CompanyThe Group’s administration is located at Tau (nearStavanger), Norway, and consists of the Group’sChief Executive Officer (a position combined withthe role as Managing Director of Comrod AS) , theChief Financial Officer and the Chief CommercialOfficer . The CFO position of the Group iscombined with the Financial Director role ofComrod AS. With the current level of activity thisis considered to provide a slim and cost-effectiveGroup Management.In 2012, the Parent Company returned anoperating loss of NOK 9.3 million compared toan operating loss of NOK 11.4 million in 2011. Theloss for the year was NOK 31.3 million comparedwith a loss of 11.1 million in 2011. This includesnon-recurring costs of NOK 23.9 million, relatedto investment write-off of the Comrod France andComrod Sweden investments.Cash flow from operations amounted to NOK -6.7million (NOK 19.1 million in 2011) compared to anEBITDA of NOK -9.3 million (NOK -11.4 in 2011).The work environment is regarded as positive.There were no incidents resulting in personalinjury or material damage. The Company’soperations are not considered to pollute theexternal environment.GroupThe Comrod Communication Group reportedrevenues of NOK 218.3 million (compared to NOK286.2 million in 2011) and an operating profitbefore depreciation/amortization (EBITDA) ofNOK 0.7 million in 2012 compared to NOK 13.9million in 2011. Operating profit (EBIT) amountedto NOK – 30.1 million (NOK -24.6 million in 2011).The equity as of 31 December 2012 was NOK104.5 million (NOK 129.1 million in 2011) andthe corresponding equity ratio was 38.4 % (38.9%). The Group’s long-term strategy is to have anequity ratio of minimum 30 %.Inventories increased with NOK 1.5 million duringthe year. Current receivables were reduced byNOK 19.1 million. Current liabilities were reducedby NOK 18.5 million. Total working capital thusincreased by NOK 0.9 million.Net interest-bearing liabilities increased with NOK4.8 million during the year.The total assets at the end of December 2012 wasNOK 272.0 million (NOK 331.9 million in 2011).Due to the non-satisfactory financial performanceduring 2012, a capital increase of NOK 7.9 millionwas issued in December 2012 to strengthen theGroup liquidity.Cash flow from operations amounted to NOK 0.5million (NOK 22.0 million in 2011) compared toan EBITDA of NOK 0.7 million (NOK 13.9 millionin 2011). Investing activities amounted to NOK10.3 million (NOK 35.5 million in 2011). Financingactivities was NOK -11.8 million (NOK 10.8 millionin 2011).During Q4 2012 the EBITDA-bank covenant7

Annual report 2012 8/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notesterms have been renegotiated for the comingyear. At year end, the Group was fulfilling all itsfinancial covenants related to external funding. Tostrengthen the financial and the liquidity positionfor the Group, a cost-saving program is beingpursued as a high priority action plan.The Group employed a total of 210 staff as of 31December 2012 (2011: 222). Of these, the mainBusiness Units (Norway and France) employedrespectively 99 (2011: 108) and 67 (2011:69)staff. Sick leave in the Group amounted to 4.1 % ofworking hours in 2012 (2011: 3.3 %). In absolutefigures, total sick leave for the Group during 2012amounted to 15542 hours (2011: 12137 hours).The Board and the Administration continue theirefforts to improve the current level.The Board and Management wish to promotediversity and equality in all areas. Recruitment andDevelopment opportunities are decided on thebasis of a comprehensive evaluation of the shorttermand long-term competence requirements ofthe individual Company and the Group as a whole.Salaries are based on education, qualifications,experience and performance. Men and women aretreated equally. Most positions in the Group areattributed to manufacturing, traditionally being amale-dominated area. The total number of womenin the Group was 68 (32 %) in 2012 and 73 (33%) in 2011. The Group Board has 40 % femalerepresentation.The Norwegian Discrimination Act aims topromote equality, ensure equal opportunitiesand rights and prevent discrimination basedon ethnicity, national origin, ancestry, colour,language, religion or belief. The Group worksto promote the Act’s purpose throughout thebusiness. The activities include recruitment,wages and working conditions, promotion,development and protection from harassment.The Group aims to be a workplace withoutany discrimination based on disabilities. In theplanning of new premises the Group has activelyand purposely designed and put in place solutionsin the physical working environment to ensurethat the premises are well suited for employeeswith physical disabilities. For these employees theGroup facilitates individual adaptation of workstationsand tasks.While the economical situation for the Group ischallenging given the current market situation, theBoard is confident that the measures taken willlead the Group through the difficult situation. Thefinancial statements for 2012 have been preparedon the basis of a going concern assumption. TheBoard of Directors confirms the validity of thisassumption in accordance with the provisions ofsection 3-3a of the Norwegian Accounting Act.Environmental ReportingThe Group’s operations do not release anysubstances into the surrounding environmentrequiring specific public permits, and no knownhealth hazards are associated with its products.Waste from manufacturing processes, such asmetal shavings are sent to approved disposalcentres. This also applies to hazardous wastesuch as oil emulsions. Other waste is separated atsource and deposited at authorized waste disposalsites. External emissions are registered annually8

Annual report 2012 9/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notesand reported to the Norwegian Pollution ControlAuthority and relevant Authorities in countries inwhich the Company operates.All manufacturing units in the Group are ISO9001-2008 certified.Business Unit France is expected to continue itsrepositioning for future growth during 2013. Theestablishment of a Centre of Excellence for Mastsand the relocation of Comrod Sweden’s aluminiummast production line is expected to provide afuture positive effect on the Business Unit.Future ProspectsThis section, and some other parts of thisBoard report, contains certain forward-lookingstatements. These forward-looking statementsreflect current views with respect to future eventsand are, by their nature, subject to significant risksand uncertainties because they relate to eventsand depend on circumstances which might occurin the future. There are a number of factors thatcould cause actual results and developments todiffer materially from those expressed or impliedby these forward-looking statements, including:levels of industry product supply, demand andpricing; currency exchange rates; political andeconomic policies in Norway and the othercountries the Group have own operations orexport to and import from; general economicconditions; political stability and economic growthin relevant areas of the world; global politicalevents and actions, including war, terrorism andsanctions; the ability of Comrod CommunicationGroup to successfully implement its strategiesand achieve its objectives.Business Unit Norway is expecting a moderateincrease in revenue for 2013 in spite of acontinued challenging market situation. However,this situation may change if some of the largerprospects turn into orders by the end of 2 ndquarter.The Board as well as the Administration arefocussing on consolidating Group activities forlower volume levels and to ensure positioningfor future recovery and growth as soon as globalmarkets return to more normal behaviour.Unique application competence, mainly basedon experience and specific expertise related todevelopment and manufacturing according tostrict defence standards, is likely to represent anentry barrier into this market. The Group doesnot see any immediate short term threats fromemerging technologies or new players.The Group will continue to invest in itsmanufacturing facilities to achieve furtherautomation in order to ensure cost efficiency.The Group will continue to utilize manufacturingcapacity in low cost countries as a means to stayflexible with respect to capacity and to improveoverall profitability.Financial RiskMarket RiskThe Group’s main customers often placetheir orders under long-term defence radiocommunication programmes mostly fundedby Governmental institutions. The businessis, however, influenced by changes in defencestrategies and the level of conflict in the world.9

Annual report 2012 10/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesThe current trends towards greater mobility andtechnologically more advanced communicationsolutions are drivers for the Group’s products.These trends are considered to be persisting forthe foreseeable near future.The Group is exposed to fluctuations in exchangerates, particularly in EUR and USD, as a largeproportion of the Group’s revenue is in foreigncurrency .The currency risk is reduced by meansof foreign forward exchange contracts, foreigncurrency loans and by purchasing products inforeign currency. This also reduces operationalmarket risk. The Group is also exposed to currencyrisk related to the investment in Comrod France.This is partly offset by a long-term currency loanin the same currency (EUR).The Group has no netting agreements in place orother financial instruments to minimize credit risk.Liquidity RiskNo short term measures to change the liquidityrisk is likely to be introduced. On the balancesheet date, short-term interest-bearing liabilitiesamounted to NOK 26.2 million including NOK 1.6million of next year’s instalments of long-termliabilities. The Group will seek to keep the totallevel of short-term credit from lending institutions,excluding next year’s instalments on long-termliabilities, below NOK 50 million. There aresignificant variations in net working capital andutilization of credit facilities between quarters dueto seasonality.The Group is exposed to interest rate changesregarding loans in both NOK and EUR.Credit RiskThe risk of a counterpart not having the financialcapacity to fulfil its obligations is consideredlow. The Group’s gross credit risk was NOK 45million on the balance sheet date, The amountin 2011 was NOK 66 million. NOK 15 millionof the accounts receivable at end of 2012 wasfrom Comrod France, which has credit insurancecovering 100% of the outstanding amount. Thisfurther reduces the total credit risk of the Group.In 2012, one of the Group’s customers accountedfor 21 % of revenues (see note 4 and note 24 ofthe consolidated accounts). This customer is amajor corporation with a strong balance sheet.Credit risk insurance, LOC or other receivablesinsurance, is used for customer portfolios consideredto represent a substantial counterpart risk.Raw Materials RiskAgreements relating to the purchase of rawmaterials represent a large part of the Group’sfinished products. These are normally signedon an annual basis, with an agreed price andquantity for the term of the agreement. TheGroup endeavours to have the same commitmentperiods in its raw materials purchasingagreements as in its agreements for the sale offinished products. Access to raw materials hasnot been constraining. Apart from fixed-pricecontracts with suppliers, no alternative ways arebeing considered for hedging the Group’s mostimportant raw materials using derivatives orfinancial contracts.Share Price DevelopmentComrod Communication ASA has a nominal sharecapital of NOK 21.5 million and each share has anominal value of NOK 1.00. At the end of 2012the share price was NOK 3.70, while it was 5.9910

Annual report 2012 11/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notesat the end of 2011. This represents a reduction invalue of 38.2 % during 2012, while the Oslo StockExchange’s benchmark index (OSEBX) increasedby 15.4 % in the same period.In 2012, Comrod’s shares were traded on 74 of the251 trading days. Average daily transactions werelow. A total of 1.2 million shares were traded in2012 (2011: 4.2 million), which corresponds to 5.5% (2011: 21.0 %) of the total number of shares.The Group’s market capitalization was NOK 79.5million at the end of 2012, compared to NOK 117.1million at the end of 2011.As a Group with a relatively low market value, it ischallenging to gain sufficient attention from stockanalysts and the media. The market cap and lowliquidity are also factors impacting on institutionalinvestors’ appetite for investing in Comrod.Compensation of Senior ExecutivesAs a leading player in its field, ComrodCommunication ASA aim to offer salariesattracting top-grade managers. The Board’spolicy is to offer salaries being competitive inan international market in order to secure amotivated and well qualified management.The basic principle is that management salariesmust be at a competitive level in a nationalcontext (this may mean that salary levels formanagers based abroad may sometimes exceedlevels for corresponding positions in Norway, andvice versa).The Group’s policy is that the salary of seniorexecutives shall be almost entirely in the formof a fixed monthly salary that reflects a levelappropriate for the position held by the personconcerned and normal business practice.The Remuneration Committee sets the salaryand other remuneration of the CEO. TheRemuneration Committee also sets the salary andother remuneration of key members of the Groupmanagement team in consultation with the CEO.Pursuant to Norwegian company legislation, theBoard of Directors has also prepared guidelines forthe remuneration of the executive management tobe presented and discussed at this year’s generalmeeting. Details of remuneration and contractualarrangements may be found in note 25 of thefinancial statements of Comrod Communication Group.Statement related to the Annual AccountsThe consolidated financial statements for 2012have been prepared and presented in accordancewith IFRS. The financial statements for the parentcompany have been prepared in accordance withthe Norwegian Accounting Act (NGAAP).The Board of Directors confirms that, to thebest of its knowledge, the financial statementsfor 2012 provide a true and fair view of ComrodCommunication Group’s consolidated assets,liabilities, financial position and results ofoperations. The Board also confirms, to the bestof its knowledge, that the annual report includes afair review of important events that have occurredduring the year and their impact on the annualfinancial statements.No significant events have occurred after the yearendbalance sheet date.11

Annual report 2012 12/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesAllocation of profit for the year in ComrodCommunication ASA.The Board of Comrod Communication ASA(parent company) is proposing to allocate theprofit/loss for the year as follows:The loss for the year of NOK 31,304,647 isproposed transferred to other equity.Share premium reserve of NOK 43,515,434 isproposed transferred to other equity.Distributable equity as of 31 December 2012 isproposed set at NOK 0.Tau, 31 December 2012/26 February 2013The Board of Directors of Comrod Communication ASASturla SandChairman of the BoardMerete HaugliVice-Chairman of the BoardRasmus Nordbø John Steinar Kvitvang Mariann V. ReiteMember of the Board Member of the Board Member of the Board12

Annual report 2012 13/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesIncome statement, consolidated 1 January - 31 December(NOK 1000) Note 2012 2011Operating incomeOperating revenue 4 218 316 286 189Total operating income 218 316 286 189Operating expensesCost of materials 12 72 528 116 334Payroll & social security expenses 9,18,25 102 171 111 840Depreciations and amortizations and impairment losses 10,11 30 740 38 490Other operating expenses 23 42 952 44 095Total operating expenses 248 391 310 759Operating profit -30 075 -24 570Finance income and expenseFinancial income 6 9 400 14 882Financial expenses 6 11 600 16 509Net financial items -2 200 -1 627Profit before tax -32 275 -26 197Tax expense 7 -3 756 -1 938Profit for the year -28 518 -24 260Attributable to:Equity holders of the parent -28 123 -23 964Non-controlling interests -395 -296Earnings per share (NOK) 8 -1,56 -1,3213

Annual report 2012 14/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesStatement of comprehensive income for the period 1 January to 31 December(NOK 1000) 2012 2011Profit/(loss) -28 518 -24 260Change in actuarial gain/(loss) 458 -4 746Income tax effect -274 1 329184 -3 417Change in gain/(loss) on hedge of net investment 1 664 230Income tax effect -441 -641 222 165Translation differerences -3 649 -516Other comprehensive income/(loss) for the period (Net of tax) -2 243 -3 768Total comprehensive income/(loss) for the period (Net of tax) -30 762 -28 028Attributable to:Equity holders of the parent -30 333 -27 732Non-controlling interests -429 -29614

Annual report 2012 16/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Statement of financial position, consolidated31 December(NOK 1000 ) Note 2 012 2 011Current liabilitiesShort-term loans 21,23 26 221 51 267Forward currency exchange contracts 24 0 3 255Trade payables and other current liabilities 22 42 623 54 173Income tax payable 7 333 4 002Total current liabilities 69 177 112 697Total liabilities 167 523 202 782Total equity and liabilities 272 035 331 89516

Annual report 2012 17/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCash flow statement, consolidated(NOK 1000) Note 2 012 2 011Operating activitiesProfit before tax -32 275 -26 197Non-cash elements:Depreciation and impairment losses 10,11 30 740 38 490Interest income -326 -653Interest expense 5 082 4 193Differences between expensed and pension premium paid 521 -1 311Working capital adjustmentsChanges in trade and other receivables 20 691 15 729Changes in inventories -2 760 3 099Changes in trade and other payables -10 684 -11 534Unrealized exchange rate differences -6 385 7 070Income tax paid -4 080 -6 860Net cash flow from operating activities 523 22 025Investing activitiesPurchase of property, plant & equipment 10 -8 372 -24 036Purchase of intangible assets 5,11 -585 -1 518Purchase of subsidiaries 5 -1 716 -10 613Interests received 326 653Net cash flow from investing activities -10 347 -35 513Financing activitiesNew non-current liabilities 0 25 000Net change in non-current liabilities 10 120 -18 729Net change in bank overdraft 21 -24 669 24 149Interest paid -5 082 -4 193Paid in capital 7 877 -15 625Net cash flow from financing activities -11 755 10 602Net foreign currency exchange effect -6 160Net change in cash & cash equivalents -21 579 -2 886Cash & cash equivalents at beginning of period 29 545 32 271Cash & cash equivalents at end of period 15 7 960 29 545Unutilised group overdraft facility 15 14 398 40 52317

Annual report 2012 18/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesStatement of changes in equitySharecapitalSharepremiumOther paidin capitalOtherreservesRetainedearningsNon-controllinginterestsTotal equityBalance 1 Jan 2012 18 235 78 875 828 -16 622 46 341 1 456 129 113Change in actuarial gain/(loss) 184 184Change in gain/(loss) on hedgeof net investment1 222 1 222Translation differences -3 649 -3 649Total other comprehensiveincome/(loss)-2 243 -2 243Profit (loss) for the year -28 123 -395 -28 518Total comprehensive income -2 243 -28 123 -395 -30 762Non-controlling interests -655 -1 061 -1 716Transfer of share premiumreserve to other equity-43 515 43 515 0Capital increase (Note 16) 1 935 5 942 7 877Balance 31 Dec 2012 20 170 41 302 828 23 995 18 217 0 104 512SharecapitalSharepremiumOther paidin capitalOtherreservesRetainedearningsNon-controllinginterestsTotal equityBalance 1 Jan 2011 19 485 78 875 828 1 521 70 304 171 013Change in actuarial gain/(loss) -3 417 -3 417Change in gain/(loss) on hedgeof net investment165 165Translation differences -516 -516Total other comprehensiveincome/(loss)-3 768 -3 768Profit (loss) for the year -23 964 -296 -24 260Total comprehensive income -3 768 -23 964 -296 -28 028Non-controlling interests 1 752 1 752Purchase of own shares -1 250 -14 375 -15 625Balance 31 Dec 2011 18 235 78 875 828 -16 622 46 341 1 456 129 11318

Annual report 2012 19/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesNotes to the Consolidated Financial Statements - IFRSNote 1 Organization and basis ofPresentationComrod Communication ASA is a public limitedcompany with its registered office in Norway. TheCompany’s head office is at Fiskaaveien 1, N-4120TAU, Norway. Comrod Communication ASA andits subsidiaries are collectively referred to as theGroup or the Comrod Communication Group.Comrod Communication ASA was part ofthe Hexagon Composites Group until 19January 2007, at which date the demerger wasimplemented. Comrod Communication ASA waslisted on Oslo Børs on 22 January 2007.The consolidated financial statements of ComrodCommunication Group for the year ended 31December 2012 were authorized for issue inaccordance with a resolution of the Directors on26 February 2013.The principal activities of the Group are describedin note 4 Operating segments.Note 2 Accounting Policies2.1 Basis of preparationsThe consolidated financial statements of ComrodCommunication ASA and all its subsidiaries (theGroup) have been prepared in accordance withInternational Financial Reporting Standards (IFRS)as issued by the IASB and adopted by the EU.value recognized in other comprehensive income.Currency effect for the financial instrumentsrelating to cash flow hedges are recognized in theincome statement.The financial statements of the subsidiaries areprepared for the same reporting period as theparent company, using consistent accountingpolicies.2.2. Functional currency and presentationcurrencyThe Group’s presentation currency is NOK. Thisis also Comrod Communication ASA’s functionalcurrency. The functional currency for eachsubsidiary is set separately based on the specificcircumstances and economical environment foreach individual subsidiary, and may differ from thepresentation currency.2.3 Consolidation principlesThe consolidated financial statements compriseComrod Communication ASA and the companiesit controls. Control normally exists when theGroup owns more than 50 % of the shares ina company, and the Group is in a position toexercise actual control over the company.All intra-group balances, transactions, unrealisedgains and losses resulting from intra-grouptransactions and dividends are eliminated in full.The consolidated financial statements are basedon a historical cost basis, except certain financialinstruments (hedge of net investment)), forwhich are carried at fair value with changes in fairA change in the ownership interest of a subsidiary,without a loss of control, is accounted for as anequity transaction.19

Annual report 2012 20/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notes2.4 Business combination and goodwillBusiness combinations from 1 January 2010Business combinations are accounted for usingthe acquisition method. Companies that areacquired or disposed of during the year areincluded in the consolidated accounts from thedate at which control is obtained and until controlceases. The cost of an acquisition is measured asthe aggregate of the consideration transferred,measured at acquisition date fair value and theamount of any non-controlling interest in theacquiree. For each business combination, theacquirer measures the non-controlling interestin the acquiree either at fair value or at theproportionate share of the acquiree’s identifiablenet assets. Acquisition cost incurred are expensedand included in administrative expenses.When the Group acquires a business, it assessesthe financial assets and liabilities assumed forappropriate classification and designation inaccordance with the contractual term, economiccircumstances and pertinent conditions as theacquisition date. This includes the separation ofembedded derivatives in host contracts by theacquiree.If the business combination is achieved in stages,the acquisition date fair value of the acquirer’spreviously held equity interest in the acquiree isremeasured to fair value at the acquisition datethrough profit or loss.Any contingent consideration to be transferredby the acquirer will be recognised at fair valueat the acquisition date. Subsequent changes tothe fair value of the contingent considerationwhich is deemed to be an asset or liability,will be recognised in accordance with IAS 39either in profit or loss or as a change to othercomprehensive income. If the contingentconsideration is classified as equity, it shouldnot be remeasured until it is finally settled withinequity.Goodwill is initially measured at cost being theexcess of the aggregate of the considerationtransferred and the amount recognised for noncontrollinginterest over the net identifiableassets acquired and liabilities assumed. If thisconsideration is lower than the fair value ofthe net assets of the subsidiary acquired, thedifference is recognised in profit or loss.After initial recognition, goodwill is measured atcost less any accumulated impairment losses.For the purpose of impairment testing, goodwillacquired in a business combination is, from theacquisition date, allocated to each of the Group’scash-generating units that are expected to benefitfrom the combination, irrespective of whetherother assets or liabilities of the acquiree areassigned to those units.Where goodwill forms part of a cash-generatingunit and part of the operation within that unitis disposed of, the goodwill associated with theoperation disposed of is included in the carryingamount of the operation when determining thegain or loss on disposal of the operation. Goodwilldisposed of in this circumstance is measuredbased on the relative values of the operationdisposed of and the portion of the cash-generatingunit retained.20

Annual report 2012 21/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notes2.5 Cash & cash equivalentsCash and cash equivalents consists of cash inhand and at bank. Any positive balances againstbank overdrafts are included as a componentof cash and cash equivalents in the cash flowstatement. The cash flow statement has beenprepared using the indirect method. In the balancesheet, bank overdrafts are included as short-term loans.2.6 Trade receivablesTrade receivables are part of the category loansand receivables and are recognized at nominalamount less provision for bad debt (being areasonable proxy for fair value). Individual tradereceivables are impaired when managementassess them not to be wholly or partiallycollectible.2.7 HedgingHedging of net investmentsForeign exchange gains and losses on the hedginginstrument (interest bearing debt) relating tothe effective portion of the hedge are recognizedin other comprehensive income in equity; gainsand losses relating to the ineffective portion arerecognized in the income statement.Upon disposal of the foreign operation cumulativelosses or gains recorded as other comprehensiveincome in equity are taken to the incomestatement.2.8 InventoriesInventories are recognized at the lower ofhistorical cost and net realizable value. The netrealizable value is the estimated sales price undernormal circumstances less the estimated costof completion, marketing and distribution. Thehistorical cost is based on the average cost price,and includes expenses accrued for the purchaseof the goods and the cost of bringing the goods totheir current state and location. Goods producedby the Company itself include variable and fixedcosts that can be allocated based on normalcapacity utilization.2.9 Property, plant and equipmentProperty, plant and equipment are recognized athistorical cost, less accumulated depreciation andimpairments.The historical cost of property, plant andequipment is the purchase price plus costsdirectly associated with preparing them for use.Expenses accrued after the property, plant orequipment is entered into service, such as ongoingmaintenance, are taken to the income statement,whilst other expenses that are expected to conferfuture financial benefits are recognised in thebalance sheet.The historical cost of non-current assets isdepreciated to their residual value over theiranticipated useful life, which is:Buildings 6-40 yearsMachinery and equipment 3-8 yearsFixtures, fittings and vehicles 3-10 yearsThe depreciation period and method is assessedannually. The same applies to scrap value.When the carrying amount of property, plantand equipment is higher than the estimatedrecoverable amount, carrying amount is writtendown to the recoverable amount.Work in progress is classified as property, plantand equipment and is recognized at its historical21

Annual report 2012 22/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notescost until its manufacture or developmenthas been completed. Work in progress is notdepreciated until the asset is taken into use.An item of property, plant and equipment isderecognized upon disposal or when no futureeconomic benefits are expected from its use ordisposal. Any gain or loss arising on derecognitionof the asset (calculated as the difference betweenthe net disposal proceeds and the carryingamount of the asset) is included in the incomestatement in the year the asset is derecognized.2.10 LeasingFinance leasesA lease is classified as a finance lease if ittransfers to the Group substantially all the risksand rewards incidental to ownership of a leasedasset. At the start of the lease term, finance leasesare recognized at the lower of the fair value andthe net present value of minimum lease payments.When calculating the net present value ofminimum lease payments, the implicit rent of thelease is used if it can be calculated, or otherwisethe Company’s incremental borrowing rate isused. Expenses directly related to establishing thelease are capitalised.The same depreciation period is used as for theCompany’s other depreciable assets. If it is notreasonably certain that the Company will takepossession at the end of the lease term, the assetis depreciated over the shorter of the lease termand the useful life of the asset.by the counterparty are classified as operatingleases. Rent payments are classified as operatingexpenses and are recognized in the incomestatement in a straight line over the course of the lease.2.11 Financial instrumentsFinancial assetsInitial recognitionFinancial assets within the scope of IAS 39 areclassified as financial assets at fair value throughprofit or loss, loans and receivables, held-tomaturityinvestments, available-for-sale financialassets, or as other financial assets. The Groupdetermines the classification of its financial assetsat initial recognition.Financial assets are recognised initially at fairvalue plus, in the case of investments not at fairvalue through profit or loss, directly attributabletransaction costs.Purchases or sales of financial assets that requiredelivery of assets within a time frame establishedby regulation or convention in the marketplace(regular way purchases) are recognised on thetrade date, i.e., the date that the Group commitsto purchase or sell the asset.The Group’s financial assets include cash andshort-term deposits, trade and other receivablesand derivative financial instruments. None of thederivatives are designated as hedging instrumentsin hedge relationships.Operating leasesLeases where most of the risk and returnassociated with ownership of the asset is heldSubsequent measurementThe subsequent measurement of financial assetsdepends on their classification.22

Annual report 2012 23/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesFinancial assets at fair value through profit or lossThis category includes derivative financialinstruments entered into by the Group that arenot designated as hedging instruments in hedgerelationships as defined by IAS 39. Financialassets at fair value through profit and loss arecarried in the statement of financial position atfair value with changes in fair value recognized inprofit and loss.Loans and receivablesThis category includes trade and other receivablescarried at amortised cost or at nominal amountless provision for bad debt were this can beregarded as a reasonable proxy for fair value.Financial liabilitiesInitial recognitionFinancial liabilities within the scope of IAS 39are classified as financial liabilities at fair valuethrough profit or loss, or other liabilities. TheGroup determines the classification of its financialliabilities at initial recognition.Financial liabilities are recognised initially at fairvalue less, in the case of other liabilities, directlyattributable transaction costs.The Group’s financial liabilities include trade andother payables, bank overdraft, interest bearingdebt and derivative financial instruments.Subsequent measurementThe measurement of financial liabilities dependson their classification as follows:Financial liabilities at fair value through profit orlossThis category includes derivative financialinstruments entered into by the Group that donot meet the hedge accounting criteria as definedby IAS 39. Gains or losses on liabilities held fortrading are recognised in profit and loss.Other liabilitiesAfter initial recognition, interest bearing debt issubsequently measured at amortised cost usingthe effective interest rate method. Gains andlosses are recognised in the income statementwhen the liabilities are derecognised as well asthrough the amortisation process. The calculationtakes into account any premium or discount onacquisition and includes transaction costs andfees that are an integral part of the effectiveinterest rate.Offsetting of financial instrumentsFinancial assets and financial liabilities are offsetand the net amount reported in the consolidatedbalance sheet if, and only if, there is a currentlyenforceable legal right to offset the recognisedamounts and there is an intention to settle on anet basis, or to realise the assets and settle theliabilities simultaneously.Impairment of financial assetsThe Group assesses at each balance sheet datewhether there is any objective evidence that afinancial asset or a group of financial assets isimpaired. A financial asset or a group of financialassets is deemed to be impaired if, and only if,there is objective evidence of impairment as aresult of one or more events that has occurredafter the initial recognition of the asset (anincurred ‘loss event’) and that loss event has animpact on the estimated future cash flows of thefinancial asset or the group of financial assets that23

Annual report 2012 24/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notescan be reliably estimated. Evidence of impairmentmay include indications that the debtors or agroup of debtors is experiencing significantfinancial difficulty, default or delinquency ininterest or principal payments, the probabilitythat they will enter bankruptcy or other financialreorganisation and where observable dataindicate that there is a measurable decrease in theestimated future cash flows, such as changes inarrears or economic conditions that correlate withdefaults.If there is objective evidence that an impairmentloss has been incurred, the amount of the lossis measured as the difference between theasset’s carrying amount and the present valueof estimated future cash flows (excluding futureexpected credit losses that have not yet beenincurred). The carrying amount of the assetis reduced through the use of an allowanceaccount and the amount of the loss is recognisedin the income statement. Loans together withthe associated allowance are written off whenthere is no realistic prospect of future recoveryand all collateral has been realised or has beentransferred to the Group. If, in a subsequentyear, the amount of the estimated impairmentloss increases or decreases because of an eventoccurring after the impairment was recognised,the previously recognised impairment loss isincreased or reduced by adjusting the allowanceaccount. If a future write-off is later recovered, therecovery is recognised in the income statement.Derecognition of financial instrumentsFinancial assetsA financial asset (or, where applicable a partof a financial asset or part of a group of similarfinancial assets) is derecognised when:• the rights to receive cash flows from the assethave expired; or• the Group has transferred its rights to receivecash flows from the asset or has assumed anobligation to pay the received cash flows in fullwithout material delay to a third party under a‘pass-through’ arrangement; and either (a) theGroup has transferred substantially all the risksand rewards of the asset, or (b) the Group hasneither transferred nor retained substantiallyall the risks and rewards of the asset, but hastransferred control of the asset.When the Group has transferred its rights toreceive cash flows from an asset or has enteredinto a pass-through arrangement, it evaluatesif and to what extent it has retained the risksand rewards of ownership. When it has neithertransferred nor retained substantially all of therisks and rewards of the assets, nor transferredcontrol of the asset, the asset is recognized to theextent of the Group`s continuing involvement inthe assets. In that case, the Group also recognizesand associated liability. The transferred assets andthe associated liability are measured on a basisthat reflects the rights and obligations that theGroup has retained.Continuing involvement that takes the form of aguarantee over the transferred asset, is measuredat the lower of the original carrying amount of theasset and the maximum amount of considerationthat the Group could be required to repay.When continuing involvement takes the formof a written and/or purchased option (includinga cash settled option or similar provision) onthe transferred asset, the extent of the Group›s24

Annual report 2012 25/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notescontinuing involvement is the amount of thetransferred asset that the Group may repurchase,except that in the case of a written put option(including a cash settled option or similarprovision) on an asset measured at fair value,the extent of the Group›s continuing involvementis limited to the lower of the fair value of thetransferred asset and the option exercise price.Useful life is either definite or indefinite. Intangibleassets with a definite useful life are depreciatedover their useful life, and are tested forimpairment if there are indications of impairment.The depreciation method and period is assessedat least annually. Changes to the depreciationmethod and/or period are accounted for aschanges in estimate.Financial liabilitiesA financial liability is derecognised when theobligation under the liability is discharged orcancelled or expires. When an existing financialliability is replaced by another from the samelender on substantially different terms, or theterms of an existing liability are substantiallymodified, such an exchange or modification istreated as a derecognition of the original liabilityand the recognition of a new liability, and thedifference in the respective carrying amounts isrecognised in the income statement.2.12 Intangible assetsIntangible assets acquired separately aremeasured on initial recognition at cost. Thecost of intangible assets acquired in a businesscombination is its fair value as at the date ofacquisition. Following initial recognition, intangibleassets are carried at cost less any accumulatedamortization and any accumulated impairmentlosses. Internally generated intangible assets,excluding capitalized development costs, are notcapitalized and the cost is expensed as incurred.Capitalized intangible assets are recognizedat historical cost less any depreciations andimpairments.Intangible assets with an indefinite useful life arenot depreciated, but tested for impairment at leastannually. An annual assessment is made as towhether the assumption of iidefinite useful life isjustifiable. If it is not, the change to definite usefullife is treated prospectively.Patents and licensesPatents and licenses are recognized at historicalcost less accumulated amortisation Patents andlicenses are amortised using the straight linemethod over their anticipated useful lives (6 to 17years)Customer contracts and technologyAcquired customer contracts and technologyhave limited useful lives, and are recognized in thebalance sheet at historical cost less accumulatedamortisation. Acquired customer contracts andtechnology are amortised using the straight linemethod over their anticipated useful lives (5 to 10years), based on the customer base on the date ofacquisition.2.13 Research and developmentResearch costs are expensed as incurred. Thedevelopment costs of projects (relating to thedesign and testing of new or improved products)are recognized as intangible assets if all of the25

Annual report 2012 26/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notesfollowing criteria are fulfilled:a)it is technically possible to finish the asset insuch a way that it in the future can be used orsold;b) the management’s intention is to finish theasset and to use or sell it;c) it is possible to use or sell the asset;d) it can be demonstrated how the asset willgenerate future incomee) technological and financial resources areavailable to finish the assetf) the costs can be reliably measuredOther development costs are expensed asincurred. Development costs that have previouslybeen expensed are not recognized in the balancesheet in subsequent periods. Capitalizeddevelopment costs are depreciated on a straightline basis over the estimated useful life of the asset.2.14. Impairment of non-financial assetsThe Group assesses at each reporting datewhether there is an indication that an assetmay be impaired. If any indication exists, orwhen annual impairment testing for an assetis required, the Group estimates the asset’srecoverable amount. An asset’s recoverableamount is the higher of an asset’s or cashgeneratingunit’s (CGU) fair value less costs tosell and its value in use and is determined foran individual asset, unless the asset does notgenerate cash inflows that are largely independentof those from other assets or groups of assets.Where the carrying amount of an asset or CGUexceeds its recoverable amount, the asset isconsidered impaired and is written down to itsrecoverable amount. In assessing value in use,the estimated future cash flows are discountedto their present value using a pre-tax discountrate that reflects current market assessments ofthe time value of money and the risks specificto the asset. In determining fair value less coststo sell, an appropriate valuation model is used.These calculations are corroborated by valuationmultiples, quoted share prices for publicly tradedsubsidiaries or other available fair value indicators.Impairment losses of continuing operations arerecognised in the income statement in thoseexpense categories consistent with the function ofthe impaired asset.For assets excluding goodwill, an assessmentis made at each reporting date as to whetherthere is any indication that previously recognisedimpairment losses may no longer exist or mayhave decreased. If such indication exists, theGroup estimates the asset’s or cash-generatingunit’s recoverable amount. A previouslyrecognised impairment loss is reversed only ifthere has been a change in the assumptions usedto determine the asset’s recoverable amount sincethe last impairment loss was recognised. Thereversal is limited so that the carrying amount ofthe asset does not exceed its recoverable amount,nor exceed the carrying amount that would havebeen determined, net of depreciation, had noimpairment loss been recognised for the assetin prior years. Such reversal is recognised in theincome statement.2.15 ProvisionsProvisions are recognized if the Group has anobligation (whether legal or self-imposed) as aresult of a previous event, if it is probable thatthe obligation will result in a financial settlement,26

Annual report 2012 27/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notesand if the amount can be reliably estimated. Ifthe impact of the time value is significant, theprovision is calculated by discounting anticipatedfuture cash flow using a discount rate before taxthat reflects the market’s pricing of the presentvalue of money and, if relevant, risks specificallyassociated with the obligation.A provision for guarantees is recognized whenthe underlying products or services are supplied.The provision is based on historical informationabout guarantees and a weighting of all possibleoutcomes by their associated probabilities.A provision for onerous contracts is recognizedwhen the Group’s expected economic benefitsunder the contract are lower than the unavoidablecosts of meeting the obligations under thecontract.2.16 EquityCosts arising from equity transactionsTransaction costs directly linked to an equitytransaction are recognized directly in equity aftera deduction for tax.Translation differencesTranslation differences arise in connection withcurrency differences on consolidation of foreignentities. Exchange rate fluctuations on liabilitiesthat form part of the Company’s hedging of netinvestments in foreign entities are included in thetranslation differences.On disposal of a foreign entity, cumulativetranslation differences are reversed and recognizedin the income statement in the same period inwhich the gain or loss on the disposal is recognized.2.17 Revenue recognitionRevenue is recognized to the extent that it isprobable that the economic benefits will flow tothe Company and the revenue can be measuredreliably. Sales revenue is stated net of VAT anddiscounts.Revenue from the sale of goods and services isrecognized when delivery has taken place and thesignificant risks and rewards of ownership of thegoods have passed to the buyer.Royalties are recognized in accordance with thesubstance of the relevant royalty agreement.Interest is recognised in the income statement tothe extent that it reflects the effective yield on the assets.Dividends are recognized when the shareholders’right to receive the payment is established by theannual general meeting.2.18 Foreign currencyTransactions in foreign currencyTransactions in foreign currencies are translatedat the exchange rates existing at the date of thetransactions. Monetary items denominated inforeign currencies are translated to NOK using theexchange rates at the balance sheet date. Nonmonetaryitems that are measured in terms ofhistorical cost in a foreign currency are translatedto NOK using the exchange rates at the dates ofthe transaction. Non-monetary items measuredat fair value in a foreign currency are translatedusing the exchange rates at the date when the fairvalue was determined. Exchange differences arerecognized in the income statement and classifiedas finance cost in the period in which they arise.27

Annual report 2012 28/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesForeign entitiesAssets and liabilities at foreign entities with afunctional currency that is different from thepresentation currency of the Group are convertedinto Norwegian kroner using the exchange ratein the balance sheet date. Income and expensesfrom foreign entities are converted into Norwegiankroner using the weighted average exchange rate(if the average does not provide a reasonableestimate of the cumulative effects of using thetransaction rate, the transaction rate is used).Exchange differences are recognized in othercomprehensive income.Translation differences arising from the conversionof net investments in foreign entities, and fromrelated hedging instruments, are specified astranslation differences in equity. Translationdifferences in equity are taken to the incomestatement on the disposal of the foreignoperations.2.19 Employee benefitsDefined benefit pension plansThe Group’s Norwegian companies offer theiremployees defined benefit pension plans. Thedefined benefit liability is the net total of thediscounted value of future pension benefitsaccrued at the balance sheet date, minus thefair value of plan assets. The discount rate isequivalent to interest on a 10-year governmentbond plus an additional amount to take intoconsideration the bond’s term to maturity. Thevaluation is carried out by a qualified actuary andthe benefits are attributed using the projected unitcredit method.There are different schemes for the various groupcompanies. Pension benefits are dependenton age, length of service and salary. The netretirement benefit expense for the period (grossexpense less estimated return on pension assets)is included in the item Payroll & social securityexpenses. Employer’s contributions are included inthe figures and are calculated on the basis of thegross retirement benefit liability.The Norwegian group companies participatein the unfunded LO/NHO program where allemployees may choose to retire early retirementfrom 62 years (AFP). This scheme was closedin February 2010 and it was only possible tostart early retirement under the old scheme untilDecember 31, 2010. The gain on the terminationof the arrangement is recognised in 2010 as areduction of payroll and social security expensesin the income statement. The remaining provisionis related to two elements; individuals who areearly retirees in the old scheme and a provisionrelated to an estimate of premiums for the comingthree years.As a replacement for the old pension scheme, itis established a new pension scheme. The newpension scheme is, unlike the old, not an earlyretirement scheme, but a scheme that provides alifelong addition to the regular pension. Employeescan choose to use the new pension scheme fromthe age of 62, also next to stand in the job, and itprovides additional vesting at work until the age of67. The new pension scheme is a defined benefitmulti-employer pension plan, financed throughpremiums that are determined as a percentage ofsalary. The new AFP pension scheme has effectsin the Group’s accounts from 2011.28

Annual report 2012 29/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesThe Group’s companies in France have obligationsrelating to termination benefits for employees.Liabilities are calculated on the basis ofassumptions as length of service, discount rates,salary increases and retirement age. Allowance ismade for social security costs related to the scheme.2.20 Government grantsGovernment grants, including the SkatteFUNN taxincentive scheme, are recognized when there isreasonable assurance that the Group will complywith the incentive conditions attaching to them,and that the grants will be received. Grants areentered as deductions against the expense thatthe grant is intended to cover.Grants relating to assets are capitalized andrecognized as income on a systematic basis overthe useful life of the asset. Investment grants arerecognized as a reduction of the purchase price.2.21 TaxesCurrent income taxCurrent income tax assets and liabilities for thecurrent and prior periods are measured at theamount expected to be recovered from or paid tothe taxation authorities. The tax rates and tax lawsused to compute the amount are those that areenacted or substantively enacted by the balancesheet date.Current income tax relating to items recogniseddirectly in equity is recognised in equity and not inthe income statement.Deferred income taxDeferred income tax is provided using the liabilitymethod on temporary differences at the balancesheet date between the tax bases of assets andliabilities and their carrying amounts for financialreporting purposes.Deferred income tax liabilities are recognised forall taxable temporary differences, except:• where the deferred income tax liability arisesfrom the initial recognition of goodwill or of anasset or liability in a transaction that is not abusiness combination and, at the time of thetransaction, affects neither the accounting profitnor taxable profit or loss; and• in respect of taxable temporary differencesassociated with investments in subsidiaries,associates and interests in joint ventures,wherethe timing of the reversal of the temporarydifferences can be controlled and it is probablethat the temporary differences will not reverse inthe foreseeable future.Deferred income tax assets are recognised for alldeductible temporary differences, carry forward ofunused tax credits and unused tax losses, to theextent that it is probable that taxable profit will beavailable against which the deductible temporarydifferences, and the carry forward of unused taxcredits and unused tax losses can be utilisedexcept• where the deferred income tax asset relating tothe deductible temporary difference arises fromthe initial recognition of an asset or liability ina transaction that is not a business combinationand, at the time of the transaction, affectsneither the accounting profit nor taxable profitor loss; and• in respect of deductible temporary differencesassociated with investments in subsidiaries,associates and interests in joint ventures,deferred income tax assets are recognised only29

Annual report 2012 30/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notesto the extent that it is probable that thetemporary differences will reverse in theforeseeable future and taxable profit will beavailable against which the temporarydifferences can be utilised.The carrying amount of deferred income taxassets is reviewed at each balance sheet date andreduced to the extent that it is no longer probablethat sufficient taxable profit will be available toallow all or part of the deferred income tax assetto be utilised. Unrecognised deferred incometax assets are reassessed at each balance sheetdate and are recognised to the extent that it hasbecome probable that future taxable profit willallow the deferred tax asset to be recovered.their geographical areas. These business areascompromise the basis for primary segmentreporting. Financial information relating tosegments and geographical areas is presented innote 4. The group implemented IFRS 8 “OperatingSegments” (replaced by IAS 14 “SegmentReporting”) from accounting year 2007.In the segment reporting, internal gains on salesbetween segments are eliminated.2.23 Contingent liabilities and contingent assetsContingent liabilities are not recognised in theannual accounts. Significant contingent liabilitiesare disclosed, with the exception of contingentliabilities that are unlikely to be incurred.Deferred income tax assets and liabilities aremeasured at the tax rates that are expected toapply in the year when the asset is realised orthe liability is settled, based on tax rates (and taxlaws) that have been enacted or substantivelyenacted at the balance sheet date.Deferred income tax relating to items recogniseddirectly in equity is recognised in equity and not inthe income statement.Deferred income tax assets and deferred incometax liabilities are offset, if a legally enforceableright exists to set off current tax assets againstcurrent income tax liabilities and the deferredincome taxes relate to the same taxable entity andthe same taxation authority.Contingent assets are not recognised in the annualaccounts but are disclosed if there is a certainprobability that a benefit will be added to theGroup.2.24 Risks associated with capital investmentIn terms of capital investment, the Group’s aim isto safeguard the Company as a going concern inorder to secure returns for shareholders and otherstakeholders, and to maintain a capital structurethat minimizes the cost of capital.In order to improve its capital structure, theGroup can issue new shares or sell assets in orderto repay debt. The capital structure can alsobe adjusted by paying dividends or be repayingshareholders’ capital.2.22 SegmentsFor management purposes, the Group isorganized into three business areas according toIn the same way as other enterprises inthe industry, the Group monitors its capitalinvestment on the basis of its gearing.30

Annual report 2012 31/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesRelated to the demerger and IPO in 2007, theequity of Comrod Communication ASA wasincreased by NOK 15.9 million in share capital andNOK 52.6 million in share premium reserve tohave a robust equity basis. The group’s long termstrategy is to have an equity ratio of at least 30 %.2.25 Events after the balance sheet dateNew information received after the balance sheetdate relating to events and transactions incurredbefore the balance sheet date is reflected in thebalance sheet/income statement. Significantevents after the balance sheet date which donot affect the Company’s financial position atthe balance sheet date, but which will affect theCompany’s financial position in the future, aredisclosed.2.26 Standards issued but not yet effectiveThe standards and interpretations that isissued, but not yet effective, up to the date ofissuance of the Group’s Financial statementsare disclosed below. The Group intends toadopt these standards, if applicable, when theybecome effective. The following IFRS and IFRICinterpretations have not yet been implemented bythe Group:and net loss or gain on available-for-sale financialassets) would be presented separately fromitems that will never be reclassified (for example,actuarial gains and losses on defined benefitplans and revaluation of land and buildings). Theamendment affects presentation only and hasno impact on the Group’s financial position orperformance. The amendment becomes effectivefor annual periods beginning on or after 1 July2012, and will therefore be applied in the Group’sfirst annual report after becoming effective.IAS 19 Employee Benefits (Revised)The IASB has issued numerous amendments toIAS 19. These range from fundamental changessuch as removing the corridor mechanism andthe concept of expected returns on plan assets tosimple clarifications and re-wording. The groupaccounting policy has been to recognise actuarialgains and losses in other comprehensive incomeand the amendment will therefore have no impacton the Group. However, the amended standardwill impact the net benefit expense as theexpected return on plan assets will be calculatedusing the same interest rate as applied for thepurpose of discounting the benefit obligation. Theamendment becomes effective for annual periodsbeginning on or after 1 January 2013.IAS 1 Presentation of Items of OtherComprehensive Income – Amendments to IAS 1The amendments to IAS 1 change the groupingof items presented in other comprehensiveincome (OCI). Items that could be reclassified (or‘recycled’) to profit or loss at a future point in time(for example, net gain on hedge of net investment,exchange differences on translation of foreignoperations, net movement on cash flow hedgesIAS 28 Investments in Associates and JointVentures (as revised in 2011)As a consequence of the new IFRS 11 JointArrangements, and IFRS 12 Disclosure ofInterests in Other Entities,IAS 28 Investmentsin Associates, has been renamed IAS 28Investments in Associates and Joint Ventures, anddescribes the application of the equity methodto investments in joint ventures in addition31

Annual report 2012 32/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notesto associates. The revised standard becomeseffective for annual periods beginning on or after1 January 2014. The amendment is considered tonot have impact on the Group.IAS 32 Offsetting Financial Assets and FinancialLiabilities — Amendments to IAS 32These amendments clarify the meaning of“currently has a legally enforceable right to setoff”.The amendments also clarify the applicationof the IAS 32 offsetting criteria to settlementsystems (such as central clearing house systems)which apply gross settlement mechanisms thatare not simultaneous. These amendments are notexpected to impact the Group’s financial positionor performance and become effective for annualperiods beginning on or after 1 January 2014.IFRS 7 Disclosures — Offsetting Financial Assetsand Financial Liabilities — Amendments to IFRS 7These amendments require an entity to discloseinformation about rights to set-off and relatedarrangements (e.g., collateral agreements).The disclosures would provide users withinformation that is useful in evaluating the effectof netting arrangements on an entity’s financialposition. The new disclosures are required for allrecognised financial instruments that are set offin accordance with IAS 32 Financial Instruments:Presentation. The disclosures also apply torecognised financial instruments that are subjectto an enforceable master netting arrangementor similar agreement, irrespective of whetherthey are set off in accordance with IAS 32. Theseamendments will not impact the Group’s financialposition or performance and become effective forannual periods beginning on or after 1 January 2013.IFRS 9 Financial Instruments: Classification andMeasurementIFRS 9, as issued, reflects the first phase of theIASB’s work on the replacement of IAS 39 andapplies to classification and measurement offinancial assets and financial liabilities as definedin IAS 39. The standard was initially effective forannual periods beginning on or after 1 January2013, but Amendments to IFRS 9Mandatory Effective Date of IFRS 9 and TransitionDisclosures, issued in December 2011, movedthe mandatory effective date to 1 January 2015.In subsequent phases, the IASB will addresshedge accounting and impairment of financialassets. The adoption of the first phase of IFRS9 is considered not to have an effect on theclassification and measurement of the Group’sfinancial assets or financial liabilities. The Groupwill quantify the effect in conjunction with theother phases, when the final standard including allphases is issued.IFRS 10 Consolidated Financial Statements, IAS27 Separate Financial StatementsIFRS 10 replaces the portion of IAS 27Consolidated and Separate Financial Statementsthat addresses the accounting for consolidatedfinancial statements. It also addresses theissues raised in SIC-12 Consolidation — SpecialPurpose Entities. IFRS 10 establishes a singlecontrol model that applies to all entities includingspecial purpose entities. The changes introducedby IFRS 10 will require management to exercisesignificant judgement to determine which entitiesare controlled and therefore are required to beconsolidated by a parent, compared with therequirements that were in IAS 27. Based on the32

Annual report 2012 33/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notespreliminary analyses performed, IFRS 10 is notexpected to have any impact on the currently heldinvestments of the Group. This standard becomeseffective for annual periods beginning on or after 1January 2014.IFRS 11 Joint ArrangementsIFRS 11 replaces IAS 31 Interests in Joint Venturesand SIC-13 Jointly-controlled Entities — NonmonetaryContributions by Venturers. IFRS11 removes the option to account for jointlycontrolled entities (JCEs) using proportionateconsolidation. Instead, JCEs that meet thedefinition of a joint venture must be accounted forusing the equity method. This standard becomeseffective for annual periods beginning on or after 1January 2013, and is to be applied retrospectivelyfor joint arrangements held at the date of initialapplication. The amendment is considered not tohave impact on the Group.IFRS 12 Disclosure of Interests in Other EntitiesIFRS 12 includes all of the disclosures that werepreviously in IAS 27 related to consolidatedfinancial statements, as well as all of thedisclosures that were previously included in IAS 31and IAS 28. These disclosures relate to an entity’sinterests in subsidiaries, joint arrangements,associates and structured entities. A numberof new disclosures are also required, but hasno impact on the Group’s financial position orperformance. This standard becomes effective forannual periods beginning on or after 1 January 2013.IFRS 13 Fair Value MeasurementIFRS 13 establishes a single source of guidanceunder IFRS for all fair value measurements. IFRS 13does not change when an entity is required to usefair value, but rather provides guidance on howto measure fair value under IFRS when fair valueis required or permitted. The Group is currentlyassessing the impact that this standard will haveon the financial position and performance, butbased on the preliminary analyses, no materialimpact is expected. This standard becomeseffective for annual periods beginning on or after 1January 2013.IAS 1 Presentation of Financial StatementsThis improvement clarifies the difference betweenvoluntary additional comparative information andthe minimum required comparative information.Generally, the minimum required comparativeinformation is the previous period. This standardbecomes effective for annual periods beginningon or after 1 January 2013 or later. The standard isnot adopted by EU yet.IAS 16 Property Plant and EquipmentThis improvement clarifies that major spare partsand servicing equipment that meet the definitionof property, plant and equipment are not inventory.The amendment is considered not to have impacton the Group. This standard becomes effective forannual periods beginning on or after 1 January 2013or later, the standard is not adopted by EU yetIAS 32 Financial Instruments, PresentationThis improvement clarifies that income taxesarising from distributions to equity holders areaccounted for in accordance with IAS 12 IncomeTaxes. The amendment is considered not to haveimpact on the Group. This standard becomes effectivefor annual periods beginning on or after 1 January2013 or later, the standard is not adopted by EU yet.33

Annual report 2012 34/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesThe Group does not anticipate that the implementationof the standards and interpretationsdetailed above will have any material impact onthe consolidated accounts when they are implementedother than in terms of the informationthat will have to be provided in the notes.plant and equipment. The expected useful lifeof the Group’s production equipment is highlyaffected by technological development. Thepresent depreciation period is 3-12 years, andthere is a reasonable interval of uncertaintybetween 10 and 12 years. See also note 11.Note 3 Uncertainty of estimatesEstimates are continuously reassessed andare based on historical experience and otherfactors, including expectations of future eventsthat are considered probable under the currentcircumstances.Capitalized goodwill is tested annually forimpairment. Recoverable values of cashgenerating units are determined by calculatingvalues in use. These calculations require the useof estimates and assumptions about future trendsrelating to revenues and expenses. See also note 12.The Group prepares estimates and makesassumptions about the future. The estimates inthe accounts that are based on such a process areby definition rarely completely in line with the finalresult.Estimates and assumptions represent a risk ofmaterial changes in the balance sheet value ofassets and liabilities over the next financial year.The Group’s most significant accounting estimatesare related to the following items:• Depreciation of property, plant and equipment.• Impairment test of goodwill and other intangibleassets.• Fair value of assets and liabilities acquired aspart of an acquisition.• Product warranty provisions.• Net pension commitments• Capitalized development costsThe Group management determines the usefullife and associated depreciation rates for property,The Group has chosen to charge all actuarialgains or losses directly to equity. The discountedvalue of pension commitments is dependent onseveral factors that are determined using a rangeof actuarial assumptions. Any change in theseassumptions will affect the balance sheet value ofthe Group’s net pension liabilities.The discount rate is determined at the year-end.This is the interest rate that is used to calculatethe present value of future payments needed tocover pension commitments. The discount rateis based on government bonds with virtuallyidentical maturity dates to the pension liabilities.Other underlying assumptions relating to pensioncommitments are partially based on actualmarket conditions. Assumptions about mortalityand invalidity rates are based on standardizedassumptions, as well as demographic factorsdeveloped by the Norwegian Financial ServicesAssociation. Additional information is provided innote 20.34

Annual report 2012 35/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesNote 4 - Operating segmentsThe Group manufactures and sell high-quality products and systems for the defense and civil/maritime markets.The Group’s operations are divided into operating segments, which are organised and managed separately.The different operating segments is to a large extent addressed to the same customer groups. The segments, except partsof the sivilian market have similar risk profiles.The following are the Groups reporting segments:a. Franceb. Norwayc. Swedend. Other, adjustments and eliminationsThe segment category Other, adjustments and eliminations includes the parent company Comrod Communication ASA,Comrod UK,Comrod Hungary, Comrod Inc. and group eliminations.The Groups management reporting and controlling systems use accounting policies that are the same as those described inNote 1 in the summary of significant accounting policies under IFRS.The Group measures the performance of its operating segments through a measure of segment profit or loss which isreferred to as “EBIT” in our management and reporting system. EBIT is the measure of segment profit (loss) used in segment reportingand comprises gross profit, selling and general administrative expenses, research and non-capitalized deveopment costs and otheroperating income (expense).The Executive Management monitors the operating results of its business units separately for the purpose of making decsions aboutresource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measuredconsistently with operating profit or loss in the consolidated financial statements. However, Group financing (including finance costs andfinance income) and income taxes are managed on a Group basis and are not allocated to operating segments.Operating segmentdata France Norway SwedenOther, adjustmentsand eliminationGroupconsolidated(NOK 1000) 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011Revenue from externalcutomers:60 106 70 725 143 410 209 390 31 086 8 340 -16 285 -2 266 218 316 286 189Operating result before -1 695 -4 654 11 560 31 488 -1 210 -1 770 -7 991 -11 144 665 13 920depreciation (EBITDA)Operating result (EBIT) -7 051 -9 930 484 21 232 -1 477 -1 817 -22 030 -34 055 -30 075 -24 570Pretax income -7 317 -9 755 456 21 495 -1 941 -1 981 -23 473 -35 956 -32 275 -26 197The Groups other operating segments do not meet the quantitative criteria and are included in “other, adjustments and eliminations”.Geographicsegment data basedon the location of thecustomer Europe America Asia Other Consolidated(NOK 1000) 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011Revenue from externalcustomers:119 013 131 294 63 693 123 584 18 784 14 511 16 827 16 800 218 316 286 18935

Annual report 2012 36/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 4 - Operating segmentsMajor customersThe group has 1 customer with revenues at 10% or more of 2012 revenues(NOK 1000) Major customers Group2012 2011Revenue:Operating segment:Customer 1 Norway 45 993 96 938Total external Revenue major customers 45 993 96 938Note 5 - List of subsidiariesThe following subsidiaries are included in the consolidated financial statements:Company Country Reg’d office Main business Stake Voting stakeComrod AS Norway Tau Composite antennas andpower supply100% 100%Comrod Air AS Norway Stavanger Unmanned Aerial vehicle 100% 100%Comrod Sweden AB Sweden Mora Masts 100% 100%Comrod France SAS France St.Amand Les Eaux Masts and antennas 100% 100%Comrod Hungary Kft Hungary Budapest Masts and antennas 100% 100%Comrod UK United Kingdom Southampton Masts and antennas 100% 100%Comrod Inc USA Ohio Masts, antennas andPower Supply100% 100%Transactions with subsidiaries are conducted at arm’s length principlesMast manufacturing consolidated to a single site by transferring Comrod Sweden’s aluminum mast manufacturing to Business UnitFrance at end of the year.2012; Acquisition of the remaining shares of Comrod SwedenOn 23. November 2012, Comrod Communication ASA acquired the remaining 20% of the voting shares of Comrod Sweden AB at thepurchase price of SEK 2.0 mill. By this transaction the equity is reduced by 1.7 mnok related to the reduction of non-controlling interest.36

Annual report 2012 37/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 5 - List of subsidiaries2011; Acquisition of WIBE Telescopic Mast ABOn 16 September 2011, Comrod Communication ASA (“Comrod”) acquired 80% of the voting shares of WIBE Telescopic Mast AB (“WIBETM”), an unlisted company based in Sweden. The remaining 20% of the shares was then held by AB Wibe – a subsidiary of the FrenchSchneider Electric Group. Comrod had an agreement to acquire this remaining 20% shareholding within the next two years at agreed terms.WIBE TM brings to Comrod an aluminium mast product range complementary to the Group’s current composite mast offering. This willprovide Comrod with a unique opportunity to expand its tactical mast offering to the global civil and defence markets.The acquisition has been accounted for using the acquisition method. The company has been consolidated into the Comrod Group from 01.September 2011.The Group has elected to measure the non-controlling interest at the acquire at fair value.The fair value of the identifiable assets and liabilities of WIBE TM AB as at the date of acquisition was:ASSETSFair value recognizedon acquisitionUnaudited (NOK 1000)Property, plant and equipment 1 312Intangible assets 2 956Deferred tax asset 423Trade receivables 1 001Inventories 14 278Other current assets 31120 281LIABILITIESBank overdraft -6 652Trade payables -1 155Other current liabilities -1 518-9 325Total identifiable net assets at fair value 10 956Non-controlling interest measured at fair value -1 716Goodwill arising on acquisition 1 373Purchase consideration transferred 10 613Bank overdraft acquired with the subsidiary -6 652Contingent liability -849Cash paid -9 764Net cash outflow 17 266From the date of the acquisition until 31.12.2011, WIBE TM has contributed MNOK 8.3 of revenue and with a negative effect of MNOK 2.0to net profit before tax.The transaction costs of NOK 1 276 590 was expensed and included in other operating expenses in the income statement of 2011.37

Annual report 2012 38/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesNote 6 - Financial items(NOK 1000) 2012 2011Interest income 176 653Net gain on derivatives at fair value 2 865 3 255Other finance income 2 392Currency gains 6 357 10 583Total finance income 9 400 14 882Currency losses 5 838 11 731Interest expense 4 843 4 193Other finance expense 919 585Total finance expense 11 600 16 509Net financial items -2 200 -1 627note 7 income taxTax expense of the year appears as following: 2012 2011Tax payable on taxable income for the year 330 4 704Recognised change in deferred tax -3 767 -6 861Tax recognized in other comprehensive income -299 -94Adjustment of taxes from previous years 3 313Tax expenses for the year -3 756 -1 938Reconciliation of actual vs calculated tax expenses:Tax expenses for the year -3 756 -1 93828% of net income before tax -9 442 -7 813Difference 5 686 5 876Changes in deferred tax assets not recognized in the balance sheet -2 611 0Adjustment of taxes from previous years 3 -346Permanent differences and difference related to differences in tax rates -3 078 -5 529Unexplained 0 0Tax payable in tax expenses for the year appears as following:Profit before tax -32 275 -26 197Permanent differences relating to items recognized in other comprehensive income 1 288 229Other permanent differences 11 627 20 464Recognised change in temporary differences and tax losses carry forward 20 591 22 302Basis tax payable 1 231 16 798Payable tax regarding net income of the year 316 4 70438

Annual report 2012 39/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. note 7 income taxTax expense of the year appears as following: 2012 2011Tax payable in the balance sheet appears as following:Outstanding tax payable on net income for the year 316 4 704Prepaid income tax 17 0Outstanding tax reduction regarding the “Skattefunn” tax incentive scheme -365 -692Tax payable in the balance sheet -32 4 002Deferred tax assetsDeferred tax assetsPension liability 5 011 4 925Property, plant and equipment 2 877 0Inventories and trade receivables 836 3 265Forward currency contracts 0 911Provisions / other current liabilites 420 420Other temporary differences* 9 597 4 878Deferred tax assets - gross 18 741 14 400Deferred tax asset not recognized 2 611 0Deferred tax assets - net 16 130 14 400Deferred tax liabilitiesIntangible assets 2 893 3 568Property, plant and equipment 0 1 761Forward currency contracts 802 0Unrealized currency profit non current liabilites 0 0Other temporary differences 34Deferred tax liabilities - gross 5 725 7 383Net recognised deferred tax liabilities (-) 10 405 7 017*Other temporary differences is mainly related to tax losses carry forward.Included in the above is net recognised deferred tax assets related to Comrod France SAS of 3 265 TNOK as of December 31, 2012.Deferred tax asset not recognized is related as a whole to Comrod France SAS.Included in the above is the following deferred tax relating to changes in pensions recognized in othercomprehensive income.-3 060 -3 300Deferred tax assets are recognized only to the extent that the entity has sufficient taxable temporary differences.39

Annual report 2012 40/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesNote 8 - Earnings per shareBasic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holdersof the parent by the weighted average number of ordinary shares outstanding during the year.(NOK 1000) 2012 2011Profit for the year flowing to holders of ordinary sharesProfit for the year -28 518 -24 260Profit for the year flowing to holders of ordinary shares -28 518 -24 260Weighed average number of shares outstanding 31.12 2012 2011Ordinary shares issued 1 Jan 19 547 345 19 547 345Effect of own shares -1 312 200 -1 312 200Shares issued 21.12.2012 1 935 000Weighed average number of shares outstanding 31.12 18 294 250 18 321 951Earnings per share -1,56 -1,32Note 9 - Payroll and number of employees(NOK 1000) 2012 2011Salaries/fees 72 471 79 862Bonus/profit-sharing 805 1 838Pension expense, defined-benefit plans (Note 18) 3 892 1 695Other contributions and social security costs 25 003 28 446Total payroll costs 102 171 111 840Number of average full-time equivalents: 212 2092012 2011Norway 101 106France 67 69Sweden 15 5Group management and other not distrubuted 29 29Total 212 20940

Annual report 2012 41/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesNote 10 - Property, plant and equipment(NOK 1000)Cost of acquisitionLand andbuildingsPlant andequipmentFurniture andfittingsConstructionin progress2012 2011Cost of acquisition 1 Jan. 85 763 78 219 10 509 68 174 559 150 068Additions 4 349 1 239 2 785 0 8 372 24 285Disposals 0 -204 0 0 -204 -249Additions from purchase of companies 0 0 0 0 0 1 345Translation differences -1 160 -1 372 -120 -4 -2 657 -890Acquisition cost 31 Dec. 88 952 77 882 13 173 64 180 071 174 559Accumulated depreciation andamortizationAccumulated depreciation 1.1 18 179 57 753 5 158,52 0 81 091 69 422Depreciation for the year 3 909 6 485 1 836 0 12 230 12 337Disposals 0 -100 0 0 -100 -249Translation differences -401 -995 -61 0 -1 457 -419Accumulative depreciation and amortization 21 687 63 143 6 933 0 91 763 81 091Carrying amount at 31 Dec. 67 265 14 739 6 240 64 88 308 93 468Of which pledged: 64 503 52 768TotalTotalDeprectiation rate 0-5% 12.5-33% 10-33%Useful life 6-40 år 3-8 år 3-10 årDepreciation method Straight-line Straight- line/unitStraight-lineBook value related to finance leased equipment was NOK 1.4 million and NOK 1.9 million at 31.12.2012 and and 31.12.2011, respectively.See note 23.41

Annual report 2012 42/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesNote 11 - Intangible assetsComrod Communication Group has the following intangible assets:Intangible assets(NOK 1000)CostGoodwillPatentesandlicencesTechnologyCustomerrelationshipsDevelopmentcostsOpening balance 41 981 470 10 714 18 593 36 176 107 935 102 358Additions from purchase of companies 0 0 0 0 0 0 4 436Additions 0 44 0 0 541 585 1 518Translation differences -1 648 -25 -33 -624 -452 -2 782 -3782012Total2011TotalAcquisition cost 31 Dec 40 333 489 10 681 17 969 36 266 105 738 107 935Accumulated amortization andimpairmentOpening balance 20 908 439 4 721 10 153 17 067 53 288 27 288Amortization and impairment for the year 11 802 40 851 1 920 3 897 18 510 26 153Translation differences -1 241 -24 -2 -353 -122 -1 741 -153Accumulated depreciation and impairments 31 469 455 5 571 11 720 20 843 70 056 53 28831 DecNet carrying amount 8 864 35 5 110 6 249 15 423 35 681 54 647Deprectiation rate None 5-50% 12,5-20% 10-50% 12,5-33%Useful life Indefinite 2-17 yrs 5 - 8 yrs 2-10 yrs 3 - 8 yrsDepreciation method None StraightlineStraight-line StraightlineStraightlineAddition for the year of Development cost is related to product developments on the Antenna, Mast and Power Supply products. Thedepreciation of the costs will start once the development of the assets have been finalized and the assets are ready for use.The opening balance on goodwill is related to;Comrod AS’ purchase of Power supply division of Eltek on 1 March 2006. This acquisition also added Technology and Customerrelationships. Comrod France SAS (prior Lerc SAS) in September 2006. This acquisition also added intangible assets relating to customerrelationships.Comrod AS’ purchase of 100% of the shares in the Hungarian company Norworks Kft on 07 May 2008. (renamed to Comrod Hungary Kft)Purchase of 80% of the shares of WIBE Telescopic Mast AB in Sweden (renamed to Comrod Sweden). This acquisition also addedTecnology and Trade Marks (Included into Customer Relationship).In November 2012 Comrod Communication ASA acquired the remaining 20% of the shares in Comrod Sweden.Impairment testingGoodwill is not amortised but is subject to annual impairment testing to determine whether the recoverable amountis lower than the carrying amount.The goodwill amounts of the following cash-generating entities are subject to impairment testing as of December 31;42

Annual report 2012 43/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 11 - Intangible assetsName (NOK 1000) 2012 2011Power supply 8 500 8 500Comrod France 0 10 802Comrod Sweden 0 1 407Comrod Hungary 364 364Total goodwill 8 864 21 073The recoverable amount is based on value in use for the Group and is estimated by discounting future cash flows. Present value calculations are based on expected future cash flows for the different cash-generating units. Comrod France SAS, Comrod Sweden ABand Comrod Hungary Kft are separate subsidiaries. Power supply is a separate division in the Comrod AS subsidiary.In December 2012 the productionline of Comrod Sweden AB was moved to Comrod France SAS. The opening balance of goodwillin Comrod Sweden AB is included in the impairment test of Comrod France SAS as per year end 2012.Cash flow projections are based on reasonable and supportable assumptions that represent management’s best estimate of futureperformance.The growth rates in the extrapolation period do not exceed the growth rates for the products, industry or country in which the entityoperates.None of the projected cash flows includes cash inflows or outflows expected to arise from future restructurings or from improving orenhancing the asset’s performance. The explicit forecast period cover a period of five years. Cash flow projections after five years areextrapolated using a constant growth rate of 2 -2,25 %.Key assumptions:* Operating margin* Growth rate* Discount rateOperating margins and growth rates are based on average values achieved the last years and managements assumptions for the comingfive years.Discount rates represent the current market assessment of the risks specific to each cash-generating unit, regarding the time value ofmoney and individual risks of the underlying assets which have not been incorporated in the cash flow estimates. The discount ratecalculation is based on the specific circumstances of the Group and its operating segments and derived from its weighted average cost ofcapital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return oninvestment by the Group’s investors. The cost of debt is based on the interest bearing borrowings the Group is obliged to service.A discount rate before tax (Power Supply 13.2 % and Comrod France SAS 13.5%) has been applied to the units. The discount rates aremade up of a risk-free interest rate of 2.1% for Power Supply and 1.6 % for Comrod France, a market return of 6.0 % and a beta of 0.9 totake into account specific risk.For Power Supply a variation of +/- 1% in WACC does not materially affect the conclusion.Based on the above test a non-recurring impairment loss of goodwill of 11.8 MNOK related to the purchase of Comrod France andComrod Sweden has been booked in the 4th quarter of 2012. This is due to the continuing weak performance in the Business UnitComrod rance and Comrod Sweden. A change in WACC could have an impact on this conclusion. The difference between the loss ofgoodwill of 11.8 MNOK and the goodwill amount of Comrod France and Comrod Sweden as per 31.12.2011 is due to translation difference.43

Annual report 2012 44/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesNote 12 - Inventories(NOK 1000) 2012 2011Raw materials and consumables 52 560 47 818Work in progress 6 895 9 747Finished goods 16 907 17 260Total inventories 76 362 74 825The carrying amount of inventories used as pledged assets 39 505 35 592The entire inventory of Comrod AS is pledged.Of the total inventories above, inventories carried at fair value less cost to sell amounts to:1 343 1 578Change in provision for obsolence in the year: -3 623 -401(charged to the income statement)Note 13 - Trade receivables2012 2011(NOK 1000) 44 869 66 498Trade receivables external 0 0Receivables related partyTrade receivables 44 869 66 498As of 31 Dec 2012, a provision of NOK 833.285 has been made to cover bad debt. The level last year was NOK 2.421.163.As at 31 December, the ageing analysis of trade receivables is as follows:NOK 1000 Not due DueNumber of days since due date0 - 30days31 - 60days61 - 90days91 - 180days181 -360daysover oneyear2012 25 548 19 321 7 381 2 497 1 530 1 318 6 595 02011 48 788 17 711 5 762 2 846 1 283 5 643 2 177 044

Annual report 2012 45/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesNote 14 - Other current assets(NOK 1000) 2012 2011Prepaid expenses 829 783VAT due 4 030 4 505Other 726 607Total other current assets 5 586 5 895Note 15 - Cash and cash equivalents(NOK 1000) 2012 2011Cash at bank and in hand 7 960 29 545Cash & Cash equivalents on balance sheet 7 960 29 545Bank overdraft 24 073 32 807Cash & Cash equivalents in cash flow statement7 960 29 545Unutilized group overdraft facility 14 398 40 523Restricted funds included in cash & cash equivalents 1) 1 554 1 6051) Restricted payroll tax witholdingsNote 16 - Share Capital and PremiumNumber of shares 31.12 2012 2011Ordinary shares with par value of NOK 1.00 each 21 482 345 19 547 345Total number of shares 21 482 345 19 547 345Total registered share capital of the Company is NOK 21,482,345 consisting of 21,482,345 shares, each with par valueof NOK1.The company’s share capital consists of one class of shares. All shares carry equal rights.45

Annual report 2012 46/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 16 - Share Capital and PremiumChanges in share capital and share premium:Ordinary sharesNumber of sharesShare capital(NOK 1000)Share premium(NOK 1000)2012 2011 2012 2011 2012 2011Issued and paid at 1 Jan 19 547 345 19 547 345 19 547 19 547 78 875 78 875Shares issued 19.12.2012 1 935 000 1 935 5 942Issued and paid 31 Dec 21 482 345 19 547 345 21 482 19 547 84 817 78 875Own shares01.01 1 312 200 62 200 1 312 6231.12 1 312 200 1 312 200 1 312 1 312On 13 September 2010, the Company bought 62 200 of its own shares with a purchase price of 0.8 Mnok. On 27 January2011, the company bought another 1 250 000 of its own shares with a purchase price of 15.6 Mnok. Both transactions wereentered as a deduction against equity. The shares are held as own shares, and the Company is entitled to sell them in thefuture.On December 21, 2012 a capital increase of 1,935,000 shares was issued by a private placing. Cost of NOK 250.000related to the capital increase was deducted from the share premium amount.46

Annual report 2012 47/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 16 - Share Capital and Premium20 Largest shareholders at 31.12.2012Number ofsharesShare-holding%HABU HOLDING AS 6 223 120 28,97%BRØDRENE NORDBØ AS 3 477 081 16,19%DNB NOR SMB 1 940 511 9,03%MP PENSJON PK 1 565 309 7,29%COMROD COMMUNICATION ASA 1 312 220 6,11%SPILKA INTERNATIONAL AS 1 214 908 5,66%STATOIL PENSJON 723 870 3,37%TANANGER ENTERPRISE AS 390 300 1,82%DAHLE 371 031 1,73%VPF NORDEA SMB 321 750 1,50%TANANGER HOLDING AS 292 200 1,36%TELENOR PENSJONSKASSE 220 025 1,02%LANDKREDITT NORGE 200 000 0,93%NBI HF ICELAND 190 950 0,89%STATOIL FORSIKRING AS 176 130 0,82%AUSTERHEIM 174 410 0,81%THORKILDSEN ALF C. 173 154 0,81%VPF NORDEA KAPITAL 164 800 0,77%VPF NORDEA AVKASTNING 152 500 0,71%FLYDAL 122 332 0,57%Total 20 largest shareholders 19 406 601 90,34%Other shareholders 2 075 744 9,66%TOTAL 21 482 345 100,00%The total number of shareholders at 31.12.2012 was 1,030 of whom 25 (2.4%) were foreign shareholders.Note 17 - Exchange ratesExchange rate1.1.2012Average Exchangerate 2012Exchange rate12.31.2012USD 5,99 5,82 5,57EUR 7,75 7,48 7,34GBP 9,28 9,22 9,00HUF 0,02 0,03 0,03SEK 87,01 85,89 85,4947

Annual report 2012 48/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement Notesnote 18 Pension obligationsThe Norwegian group companies are legally obliged to have occupational pension arrangements under the Norwegianpension act. The group’s pension arrangements satisfy the requirements of this act.The group’s pension arrangements are treated as defined-benefit plans. A collective pension insurance scheme has beenestablished for the group’s employees. The group’s defined benefit obligations are financed throug a life insurance company.The French pension schemes are funded by the group itself.(NOK 1000)Pension costs for 2012 are calculated as follows:FundedschemesNorwayUnfundedschemeNorwayPensionschemeFranceCurrent service cost, inclusive social security tax 3 734 0 74 3 808Interest cost on benefit obligation 858 5 78 941Expected return on plan assets net of administration costs -857 0 0 -857Curtailments/settlement 0 0 0 0Total 3 735 5 152 3 892TotalPension costs for 2011 are calculated as follows:Current service cost, inclusive social security tax 2 963 0 -1 420 1 543Interest cost on benefit obligation 1 009 16 0 1 025Expected return on plan assets net of administration costs -839 0 0 -839Curtailments/settlement -35 0 0 -35Total 3 098 16 -1 420 1 695Benefit liability and plan assets: present value of funded obligationsPresent value of funded obligations 34 156 428 2 328 36 912Fair value of plan assets -19 459 0 0 -19 459Net liability recognised in balance sheet 31.12.12 14 697 428 2 328 17 453Benefit liability and plan assets: present value of funded obligationsPresent value of funded obligations 33 062 1 058 1 995 36 114Fair value of plan assets -18 618 0 0 -18 618Net liability recognised in balance sheet 31.12.11 14 444 1 058 1 995 17 497Net liability 1.1.12 14 444 1 058 1 995 17 497Recognised benefit expense 3 735 5 152 3 892Benefits paid -41 -303 -339 -683Contribution paid -2 795 0 0 -2 795Recognised actuarial gains/losses -647 -332 520 -458Net liability recognised in balance sheet 31.12.12 14 697 428 2 328 17 45348

Annual report 2012 49/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 18 Pension obligations(NOK 1000)FundedschemesNorwayUnfundedschemeNorwayPensionschemeFranceNet liability 1.1.11 9 374 1 300 3 415 14 089Recognised benefit expense 3 098 16 -1 420 1 695Benefits paid -165 -259 0 -424Contribution paid -2 610 0 0 -2 610Recognised actuarial gains/losses 4 746 0 0 4 746Net liability recognised in balance sheet 31.12.11 14 444 1 058 1 995 17 497Total2012 2011Accumulated actuarial gains/losses recognised in OCI (net after tax) at 31.12. -7 871 -8 575FundedschemesNorwayUnfundedschemeNorwayPensionschemeFranceChange in pension liability during year:Pension liability 1.1.12 33 062 1 058 1 995 36 115Current service cost 3 734 0 74 3 808Interest expense 858 5 78 941Actuarial gains/losses (-) -3 317 -332 520 -3 129Benefits paid -182 -303 -339 -824Curtailments/settlements 0 0 0 0Pension liability 31.12.12 34 157 428 2 328 36 912TotalChange in pension liability during year:Pension liability 1.1.11 25 664 1 300 3 415 30 378Current service cost 2 963 0 -1 420 1 543Interest expense 1 009 16 0 1 025Actuarial gains/losses (-) 4 106 0 0 4 106Benefits paid -260 -259 0 -519Curtailments/settlements -419 0 0 -419Pension liability 31.12.11 33 063 1 058 1 995 36 114Change in fair value of pension assets during year:Pension assets 1.1.12 18 618 0 0 18 618Return on plan assets, net of administration costs 857 0 0 857Actuarial gains/losses (-) -2 671 0 0 -2 671Pension contributions 2 795 0 0 2 795Benefits paid -140 0 0 -140Curtailments/settlements 0 0Pension assets 31.12.12 19 459 0 0 19 45949

Annual report 2012 50/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 18 Pension obligationsChange in fair value of pension assets during year:FundedschemesNorwayUnfundedschemeNorwayPensionschemeFrancePension assets 1.1.11 16 291 0 0 16 291Return on plan assets, net of administration costs 839 0 0 839Actuarial gains/losses (-) -641 0 0 -641Pension contributions 2 484 0 0 2 484Benefits paid -96 0 0 -96Curtailments/settlements -259 -259Pension assets 31.12.11 18 618 0 0 18 618TotalThe average distribution of the pension assets by investment category at 31 December 2012 and 2011 was:2012 2011Shares 9% 18%Bonds/securities 71% 62%Property 17% 17%Other 3% 3%Total 100% 100%The calculation of pension expense and net pension liability are based on the following assumptions:Discount rate 2,40% 2,60%Expected salary increase 3,50% 3,50%Expected pension increase 0,20% 0,10%Adjustment of national insurance base rate 3,25% 3,25%Expected return on plan assets 4,00% 4,10%Proportion of employees taking early retirement 0% 0%Mortality table K2005 K2005For the French schemes, a discount rate of 4,6 % and 2,69 % and an assumption of annual average salary increase of 2% has been applied for respectively 2011 and 2012. The scheme is based on a retirement age of 65.Expected pension contribution in 2013 is TNOK 2 797.50

Annual report 2012 51/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesNote 19 - ProvisionsNon-current provisions(NOK 1000)PublicsubsidiesMaintenancewarranties Other Total 2012 Total 2011Balance 1.1 0 1 500 0 1 500 1 500Balance 31.12 0 1 500 0 1 500 1 500Note 20 - Non-current liabilities(NOK 1000)Effectiveintereste rateCurrencyCarrying amountMaturitydate 2012 2011UnsecuredBank debts CDN 4,90 % Euro 2013 205 718Bank debts BNP Paribas 4,88 % Euro 2013 365 879Bank debts BNP Paribas (revolving) Euribor + 1% EUR 2014 881OSEO debts advance 0,00 % Euro 2015 2 202 1 628Total unsecured non-current liabilites 3 653 3 225SecuredBank debt - serial debt Euribor + 2,40% Euro 2014 2 144 2 264Bank debt - serial debt Euribor + 2,40% Euro 2017 27 380 30 859Bank debt - serial debt Nibor + 2,40% NOK 2016 5 000 6 500Bank debt - serial debt Nibor + 2,40% NOK 2032 27 647 28 740Bank debt - serial debt Nibor+3,00% NOK 2018 14 450 16 150Total secured non-current liabilities NOK 76 620 84 513Total non-current liabilities 80 274 87 7391st year’s instalments, non-current liabilities -1 605 -17 917Total non-current liabilities, not incl. 1st year’s instalments 78 669 69 822All long-term debts have quarterly interest charges.Estimated repayment schedule for finance leases and serial debts at 31 Dec. 2012(Nominal value NOK 1000): 2013 2014 2015 2016 2017 2018 After 2018Total 2 148 18 053 15 261 13 199 10 215 2 308 20 357Herby finance leases ref Note 23 543 543 181 0 0 0Bank debts are secured against receivables, inventories and property, plant & equipment in the group’s Norwegian subsidiaries. Bank debtsare also secured by pledge in shares at Comrod France SAS. Bank debt covenants is measured against equity, EBITDA, inventory and tradereceivables. During Q4 2012 the EBITDA bank covenant terms have been renegotiated for the coming year. At year end the Group wasfulfilling all its financial covenant requirements related to external funding. No loan agreements are due until 2014.The financial leasing agreement is a turning lathe machine used in the production department.51

Annual report 2012 52/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesNote 21 - Short-term debt and other borrowings(NOK 1000) Maturity 2012 2011Secured On demand 24 073 32 8071st year’s instalments, non-current liabilitiesMonthly andquarterly1 605 17 917Total 25 678 50 724At 31 December 2012, short-term interest-bearing debt and other borrowings consisted of bank overdrafts and 1st year’s instalments onnon-current liabilities. See note 20.Current liabilities are subject to the same terms as non-current liabilities. See note 20. The overdraft facility in Norway is subject toNIBOR + margin. Interest rate/deposits in foreign currency are subject to the DnB base rate + margin.Short term leases debt are not included ref Note 23.Note 22 - Trade payables an other current liabilities(NOK 1000) 2012 2011Trade payables 15 265 22 722Public duties payable 5 498 6 087Accrued expenses and other liabilities 21 860 25 364Total 42 623 54 173As at 31 December, the ageing analysis of other current liabilities are as follows:Number of days to due date20120 - 30days31 - 60days61 - 90days91 - 180days181 - 360daysTrade payables 13 489 1 660 27 89 0Other accrued expenses 21 837 1 180 398 1 807 2 13652

Annual report 2012 53/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesNote 23 - LeasesFinance leases – Group as lesseeThe Group has a finance lease for a turning lathe and is responsible for maintenance and insurance. The original lease term was 5 years.Payments are made monthly.Assets held under finance leases:(NOK 1000) 2012 2011Plant and equipment 3 915 3 915-Accumulated depreciations -2 528 -1 966Net carrying amount 1 387 1 948Future minimum lease paymentsNot later than 1 year 567 7951 to 5 year 509 1 077Later than 5 years 0 0Future minimum lease payments 1 077 1 872Present value of future minimum lease payments 1 266 1 809Of whichcurrent liabilities 543 543non-current liabilities 724 1 266Operating leases – Group as lesseeThe group has entered into various operating leases on items of machinery, office equiment and other facilities. Most ofthese leases have a renewal option. Others have fixed terms. The leases have terms ranging from 3 to 5 years.The leasesnormally allow revision to accommodate factors such as changes in the CPI, increases in public duties and interest rates.None of the leases includes contingent rents. There is no legal right to acquire title to any leased asset.Lease payments:(NOK 1000) 2012 2011Ordinary lease payments 2 512 1 235Total 2 512 1 235Future minimum payments for fixed term leases:Not later than 1 year 970 1 1191 to 5 year 1 744 823Later than 5 years - -Total 2 714 1 94153

Annual report 2012 54/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesNote 24: Financial instrumentsCapital managementCapital includes equity attributable to the equity holders of the parent.The primary focus of the Group’s capital management is to ensure that it maintains a strong credit rating and a healthy capital ratio inorder to support its business and maximize shareholders value.The Group manages its capital structure and makes adjustments to it, in light of changes in the economic conditions. To maintain oradjust the capital structure the Group may issue new shares. No changes were made in the objectives, policies or processes during 2012.The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.The Group includes within net debt, trade and other payables, less cash and cash equivalents.2012 2011Interest bearing loans and borrowings 81 540 89 548Trade and other payables 37 125 48 086Short term loans 24 073 32 807Less cash and short-term deposits -7 960 -29 545Net debt 134 779 140 897Equity 104 512 127 657Total capital 104 512 127 657Capital and net debt 239 291 268 554Gearing ratio 56% 52%Financial riskThe Comrod Group’s international activities expose it to currency risk and interest risk. The Group uses derivatives to minimise currencyrisks under its strategy for currency risk management. The procedures for risk management are adopted by the board and carried out bythe chief financial officer in close cooperation with the individual operating units.The Group uses the following financial instruments: cash and cash equivalents, trade and other receivables, trade payables, other currentliabilities, long term interest bearing debt and derivative financial instruments were hedge accounting has not been applied. See notes 13,15, 20, 21, 22 and 23 for book value of these instruments.(i) Credit riskExcept the one major customer (see note 4) amounting to 21 % of revenues (2011: the one major customer amounting to 34 %), thegroup has no significant concentrations of credit risk relating to one counterparty or a number of counterparties which can be consideredto be a group due to similarities in credit risk. The customer is a major company and the credit risk is considered to be low.The group has policies and procedures in place to ensure that sales of products are made to customers with an appropriate credit historyand that outstanding amounts do not exceed the defined credit limits.The group has not issued guarantees for the liabilities of third parties.The carrying amount of financial assets, including derivatives, on the balance sheet allows for the maximum risk exposure.As counterparties in derivative transactions are normally bankers, the credit risk associated with derivatives is considered to benegligible.54

Annual report 2012 55/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 24: Financial instrumentsAs at 31 December, the aging analysis of trade receivables is as follows:NOK 1000Not dueDueNumber of days since due date0 - 30days31 - 60days61 - 90days91 - 180days181 - 360daysover oneyear2012 25 548 19 321 7 381 2 497 1 530 1 318 6 595 02011 48 788 17 711 5 762 2 846 1 283 5 643 2 177Most of the customers are big companies and/or public organisation and entitites. Losses on receivables has historically been low,reflecting a relatively low risk. Sales to new and unknown customers are normally conditioned by LOC or other type of collateral.NOK 0.7 million (2011: NOK 0.6 million) of the due amount is related to Comrod France SAS. The company has a credit insurancecovering 100% of the outstanding amount.(ii) Interest rate riskSee note 20 for information on long-term loans, note 21 for short-term financing obligations and note 23 for information on finance leaseobligations. The group has only floating interest on loans and credits and has currently no strategy for interest rate hedging.(iii) Liquidity riskThe Comrod Group’s strategy is to have, at any given time, sufficient cash, cash equivalents and credit facilities to be able to financeoperations and investments over the next 3 months. Unused credit facilities are dealt with in note 15. Excess liquidity is mainly investedin bank deposits. Note 20 describes all the companies non-current liabilities. To meet with future growth Comrod has in February 2009been offered extended credit facilities with a permanent perspective.Future investments will continuously be evaluated and decided upon with basis on the liquidity status, benefits and the possibilities forhaving further long-term liabilities.See note 20, 21, 22 and 23 for information for maturity date for liabilities and debt.Year ended 31 December 2012:Less than 3months3 to 12months1 to 5years >5 years TotalInterest-bearing loans and borrowing 401 1 204 59 036 20 034 80 274 note 20Leasing 136 407 724 1 266 note 23Trade payables 15 177 89 15 265 note 22Other payables and expenses 23 415 3 943 27 358 note 2239 129 5 643 59 759 20 034 124 164Year ended 31 December 2011:Less than3 months3 to 12months1 to 5years >5 years TotalInterest-bearing loans and borrowing 4 479 13 438 51 096 18 726 87 739Leasing 136 407 1 266 1 809Trade payables 20 457 2 265 22 722Other payables and expenses 23 853 6 389 30 24248 925 22 499 52 363 18 726 142 512Bank overdraft by 24 073 KNOK year ended 31 December 2012 and 32 807 KNOK year ended 31 December 2011 is not included in thetabell above.55

Annual report 2012 56/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 24: Financial instruments(iv) Currency riskAs the group has production and sales in foreign countries, it is exposed to currency risk. The group seeks to mitigate its currency riskfrom cash inflows.The Group’s strategy is to hedge net cash flow in the foreign currency by using forward exchange contracts.The Group does not use hedge accounting for forward exchange contracts.At 31 Dec. 2012, the group had the following forward contracts to hedge future forecasted sales to customers. Forward contracts areused to reduce currency risk associated with expected future sales. The terms of the contracts are as follows:Forward exchangecontractsAmount(1000)MaturitydateExchangerateFair value31.12.12Forward contracts to hedge sales contracts USD 900 1.15.2013 6,028 396,09Forward contracts to hedge sales contracts USD 900 2.15.2013 5,857 236,23Forward contracts to hedge sales contracts USD 900 3.15.2013 5,863 236,08Forward contracts to hedge sales contracts USD 900 4.15.2013 5,871 237,13Forward contracts to hedge sales contracts USD 900 5.15.2013 6,010 355,40Forward contracts to hedge sales contracts USD 900 6.17.2013 6,073 404,95Forward contracts to hedge sales contracts USD 900 7.15.2013 6,187 500,90Forward contracts to hedge sales contracts USD 900 8.15.2013 6,192 498,7Total 2 865,5The above currency effects relating to the cash flow hedges have been recorded as financial item in the income statement.At 31 Dec. 2011, the group had the following forward contracts to hedge future forecasted sales to customers. Forward contracts are usedto reduce currency risk associated with expected future sales. The terms of the contracts are as follows:Forward exchangecontractsAmount(1000)MaturitydateExchangerateFair value31.12.11Forward contracts to hedge sales contracts USD 900 1.17.2012 5,585 (363,1)Forward contracts to hedge sales contracts USD 900 2.16.2012 5,600 (354,0)Forward contracts to hedge sales contracts USD 900 3.15.2012 5,690 (278,9)Forward contracts to hedge sales contracts USD 900 4.13.2012 5,634 (333,2)Forward contracts to hedge sales contracts USD 900 5.18.2012 5,567 (397,9)Forward contracts to hedge sales contracts USD 900 6.18.2012 5,575 (394,4)Forward contracts to hedge sales contracts USD 900 7.17.2012 5,581 (392,7)Forward contracts to hedge sales contracts USD 900 8.16.2012 5,744 (252,0)Forward contracts to hedge sales contracts USD 900 9.18.2012 5,750 (251,2)Forward contracts to hedge sales contracts USD 900 10.16.2012 5,857 (160,4)Forward contracts to hedge sales contracts USD 900 11.16.2012 6,000 (38,4)Forward contracts to hedge sales contracts USD 900 12.17.2012 6,004 (38,8)Total (3 255,0)The above currency effects relating to the cash flow hedges have been recorded as financial item in the income statement.(v) Measurement of fair valueSet below is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments that are carried in thefinancial statements.56

Annual report 2012 57/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 24: Financial instruments2012 2011Book value Fair value Book value Fair valueFinancial assetsTrade receivables 44 869 44 869 66 498 66 498Other financial assetsForward currency contracts 2 865 2 865 0 0Other current assets 5 221 5 221 5 895 5 895Other non-current assets 5 221 5 895 -Financial liabilitiesForward currency contracts 0 0 (3 255) (3 255)Bank overdraft (24 073) (24 073) (32 807) (32 807)Trade and other payables (42 623) (42 623) (54 173) (54 173)Interest-bearing debt and borrowings:Bank debt (80 274) (81 366) (87 739) (88 161)Obligations under finance leases (1 266) (1 266) (1 809) (1 809)Forward currency contracts - - - -The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a currenttransaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used toestimate the fair values:Bank deposits, cash and similar, trade receivables, other current and non current assets and trade and other payables approximate theircarrying amounts largely due to the short- term maturities of these instruments.The fair value of bank debt and obligatons under finance leases is estimated by discounting future cash flows using rates currentlyavailable for debt on similar terms. The carrying amount of bank debt are measured to amortized cost. Reference is made to note 20.The fair value of forward exchange contracts is determined by reference to the forward rate at the balance sheet date. For all of the abovederivates, the fair value is confirmed by the financial institution with which the Group has signed the contract.Fair value hierarchyAs at December 31, 2012, the Group held the following financial instruments measured at fair value:The group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques:Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilitiesLevel 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly orindirectlyLevel 3: Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable marketdata.12.31.2012 Level 1 Level 2 Level 3Assets measured at fair valueFinancial assets at fair value through profit and loss:Foreign exhange contracts - non-hedged 2 865 - 2 865 -During the reporting period ending December 31, 2012, there were no transfers between Level 1, Level 2 and Level 3.57

Annual report 2012 58/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 24: Financial instrumentsOther information relating to financial instrumentsNo financial assets have been reclassified by changing the measurement method from amortised cost to fair value or vice versa.Hedge of net investment12.31.2012 12.31.2011Comrod Communication ASA has the following investments in subsidiaries:Investment in Comrod France SAS in EUR (1000) 7 534 8 932During 2012 the investment in Comrod France SAS has been impaired. The impairment was in EUR (1000) 1 398.The investment in Comrod France SAS is eliminated in the Comrod Communication Group figures.The investment in Comrod France SAS is partly financed in Euro, the functional currency of Comrod FranceThe debt is recorded as investment hedging in NOK (1000) 29 524 33 123Debt amount in EUR (1000) 4 022 4 272Change in gain/(loss) of hedge of net investment are recognized in other comprehensive income.Sensitivity analysisCurrent receivables and payablesThe table below give the group exposure for the main foreign currencies, USD and EUR, given that othervariables are left unchanged, andbased on the balances 31.12. It is the net impact of derivatives related to loans, trade and other current receivables, trade and othercurrent payables. The table give the impact on Profit before tax and on equity of a change in USD and EUR respectively.Exposure (full year effect) (NOK 1000) ofPercentagechange inexchangeratesImpacton Profitbefore taxImpact onequity 31.12Currency - USD/NOK 2012 -20 % 3 969 -+20 % (3 969) -2011 -20 % (3 320) -+20 % 3 320 -Currency - EURO/NOK 1 2012 -20 % 3 261 5 476+20 % (3 261) (5 476)2011 -20 % 5 398 6 171+20 % (5 398) (6 171)58

Annual report 2012 59/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 24: Financial instrumentsInterest ratesExposure (full year effect) (NOK 1000) ofChange inbase pointsImpacton Profitbefore tax2012 -100 803+100 (803)2011 -100 877+100 (877)Impact onequity 31.12+100 -2011 -100 877 -+100 (877) -Note 25 - Related party transactionsParent company in Comrod Communication Group is Comrod Communication ASA. This company is listed at Oslo Børs (Stock exchange).The group’s related parties consist of main shareholders, subsidiaries (see note 5), members of the board and Group management.Remuneration of the Board and the Management:Executive managementOle Gunnar Fjelde, Group President andCEO*Board fees/consultantfeesElectioncommitee feesSalaryBonuspaidBenefits inkindNOKTotalcompensation2 028 074 2 028 074Kari Duestad, CFO 1 150 210 150 000 225 343 1 525 553Steinar Omdahl, CCO 1 240 065 1 240 065Board of Directors 0Sturla Sand 0 0Merete Haugli 150 000 6 667 156 667John Steinar Kvitvang 172 800 18 333 191 133Merete Alnes Mostue 50 000 50 000Alf C. Thorkildsen 50 000 10 000 60 000Tore Fjell 5 000 5 000Morten Bjørnsen 16 666 16 666Mariann V. Reite 100 000 100 000Rasmus Nordbø 100 000 100 000000Total compensation 1 862 865 56 666 3 178 284 150 000 225 343 5 473 158059

Annual report 2012 60/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 25 - Related party transactionsNo loans have been made, or security provided for loans, to any member of group management, the board or other electedstanding committees.There were no option agreements to the Group Management as per the end of 2012.*The salary for the CEO Ole Gunnar Fjelde is paid on a monthly basis to his company OGF Technology AS.The amount paid includes the cost of social securities and benefits in kind.Shares owned by Management, Board members or related parties: 12.31.2012Habu Holding AS 6 223 120Tananger Enterprise AS 390 300Tananger Holding AS 292 200Brødrene Nordbø 3 477 081Comrod Communication ASA 1 312 220Ole Gunnar Fjelde 15 576Tore J. Fjell 64 104John Steinar Kvitvang 10 000Expensed costs to auditors are NOK 1.124.492 and the split relates to the following:NOK2012 2011Statutory auditing 760 496 674 663Other attestation services 22 426 7 793Tax advice 9 219 0Other audit related services 332 351 630 555VAT is not included in the fees specified above.Transactions with the subsidiary of related party Brødrene Nordbø; WestControl:2012 2011Purchase from WestControl 10 635 834 35 711 295Outstanding balance with WestControl as per 31.12 1 107 300 1 657 343Pursuant to section 6-16a of the Norwegian Act on Public Limited companies, the Board issue a declaration to the ordinary general meetingregarding salaries and other remuneraction for the CEO and other senior executives.The company’s policy is that the Salary of senior executives should find expression almost entirely in a fixed monthly salary which reflects alevel appropriate to the position held by the person concerned and normal practice.Pension schemes for senior executives will basically be the same as those provided generally for employees in the business.Bonus schemes for the executive management team will be linked in part to the company’s performance and in part to an assessmentbased on the board’s judgment.Such judgment will take account in part of the quality of work on health, safety and the environment in the company, and results measuredby the company’s HSE statistics.60

Annual report 2012 61/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 25 - Related party transactionsThe board is able to offer option schemes to members of the executive management team. These options can be awarded to the peopleregarded by the board as playing a key role in the development of the company’s value.Senior executives are offered a company car to the extent considered to accord with normal practice.Salary guarantee schemes agreed when senior executives leave the company will be viewed in relation to clauses related to confidentialityand restrictions on competing activities in the contract of employment with the person concerned. Such schemes can only compensate forsuch restrictions imposed on the person concerned in taking a new job. Salary guarantee schemes will basically require the deduction ofincome from other sources.Compensation policy for the previous fiscal year (2012): The compensation policy applied for senior executives in the previous fiscal yearaccorded with the principles which also apply for 2013. These are specified above.Related Party transactions are treated in accordande with the arm-lenght principle.Note 26 - Events after the balance sheet dateNo substantial issues.Tau, 31 December 2012/26 February 2013The Board of Comrod Communication ASASturla SandChairman of the BoardMerete HaugliVice-Chairman of the BoardRasmus Nordbø Mariann V. Reite John Steinar KvitvangMember of the Board Member of the Board Member of the Board61

Annual report 2012 62/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportIncome Statement, Parent Company1 January - 31 December(NOK) Note 2012 2011Sales revenueTotal operating income 0 0Operating expensesPayroll & social security expenses 8 4 354 698 7 179 717Other operating expenses 4 956 017 4 260 672Total operating expenses 9 310 715 11 440 389Operating profit -9 310 715 -11 440 389Finance income and expenseIncome from investment in subsidiaries 0 20 851 049Finance income from subsidiaries 1 959 284 1 105 423Other finance income 11 239 684 785 449Other finance expense 11 27 340 324 22 102 727Net Finance items -25 141 356 639 194Profit on ordinary activities before tax -34 452 071 -10 801 196Tax on profit on ordinary activities 7 -3 147 424 292 633Profit on ordinary activities -31 304 647 -11 093 829Profit for the year -31 304 647 -11 093 829Transferred to other equity 1 -31 304 647 -11 093 829Total disposals -31 304 647 -11 093 82962

Annual report 2012 63/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportBalance Sheet, Parent Company31 December(NOK) Note 2012 2011ASSETSNon-current assetsIntangible assetsDeferred tax assets 7 2 705 926 0Total intangible assets 2 705 926 0Financial assetsInvestments in subsidiaries 2 105 865 567 129 590 036Loans to group companies 4 6 539 828 10 093 620Total financial assets 112 405 395 139 683 656Total non-current assets 115 111 321 139 683 656Current assetsCurrent receivablesTrade receivables 4 958 814 874 451Short term receivables 3, 4 51 710 437 55 319 377Total current receivables 52 669 251 56 193 828Bank deposits, cash and similar 5 310 265 450 134Total current assets 52 979 517 56 643 962Total assets 168 090 837 196 327 618EQUITY AND LIABILITIESEquityPaid-in capitalShare capital 1, 6 20 170 145 18 235 145Share premium reserve 1 68 970 969 106 544 403Other paid-in capital 1 228 046 228 046Total paid-in capital 89 369 160 125 007 594Retained earningOther equity 1 0 -11 769 290Total retained earnings 0 -11 769 290Total equity 89 369 160 113 238 30463

Annual report 2012 64/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportCont. Balance Sheet, Parent Company(NOK) Note 2012 2011Non-current liabilitiesNon-current interest-bearing liabilities 9 41 830 344 35 809 245Total non-current liabilities 41 830 344 35 809 245Current liabilitiesShort-term loans 10 27 149 578 37 935 409Trade payables 4 1 548 462 1 082 655Public duties payable 427 893 626 819Other current liabilities 3, 4 7 765 401 7 635 186Total current liabilities 36 891 334 47 280 069Total liabilities 78 721 678 83 089 314Total equity and liabilities 168 090 837 196 327 61864

Annual report 2012 65/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportCash Flow Statement, Parent company(NOK) 2012 2011Operating activitiesProfit before tax -34 452 071 -10 801 196Non-cash elements:Depreciation and Impairment of shares in subsidiaries 23 870 362 19 436 000Differences between expensed and paid pension cost 0 -160 713Working capital adjustmentsChanges in trade and other receivables 3 524 577 -26 797 809Changes in trade and other payables 397 096 -393 726Income tax paid 0 -334 504Net cash flow from operating activities -6 660 036 -19 051 948Investing activitiesPurchase of own shares 0 -15 625 000Purchase of subsidiaries -1 722 668 -11 691 668Net cash flow from investing activities -1 722 668 -27 316 668Financing activitiesNew non-current liabilities 0 17 000 000Repayment of non-current liabilities -3 602 125 -8 897 807Net change in bank overdraft 414 169 26 735 409Net change in lending to subsidiaries 3 553 792 0New paid in capital /dividend paid 7 877 000 0Net cash flow from financing activities 8 242 835 34 837 602Net change in cash & cash equivalents -139 868 -11 531 014Cash & cash equivalents at beginning of period 450 134 11 981 147Cash & cash equivalents at end of period 310 265 450 13465

Annual report 2012 66/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportNotes parent companyAccounting policiesThe annual accounts have been prepared inaccordance with the provisions of the AccountingAct and generally accepted accounting principlesin Norway.Sales revenueRevenue from services is recognized as servicesare rendered. Interest income is recognized asinterest accrues. Dividend from subsidiaries arerecognized as dividend are earned. Dividend fromothers than subsidiaries is recognized when theshareholders’ right to receive the payment isestablished by the annual general meeting.Classification and measurement of balance sheetitemsCurrent assets and liabilities include itemsdue for payment within one year of the dateof acquisition and items which are part of theoperating cycle. Other items are classified asnon-current assets/liabilities.Current assets are measured at the lower of costof acquisition and fair value. Current liabilitiesare recognized at nominal value on the date ofcommencement.Non-current assets are measured at the cost ofacquisition, but are written down to fair value ifimpairment is identified which is not consideredto be of a temporary nature. Non-currentliabilities are recognized at nominal value on thedate of commencement. Costs associated withthe bond issue are amortized over the duration ofthe loan using the effective interest method.ReceivablesTrade and other receivables are recognized in thebalance sheet at their nominal value, followingdeductions for provisions for expected losses.Provision for losses is made on the basis of theindividual claims. There is also an unspecifiedprovision to cover expected losses on other tradereceivables.Assets and liabilities in foreign currencyTransactions in foreign currencies are recognizedat the exchange rate in effect at the transactiondate. Monetary items in foreign currency aremeasured using the exchange rate in effect at thebalance sheet date. Currency gains/losses onreceivables/liabilities are classified as financialitems.SharesThe cost method of accounting is used for allshares. Investments in subsidiaries are financedthrough long term loans in the subsidiary’sfunctional currency. Translation effects onthe long term loan are recorded toward theinvestment in the balance sheet as hedging ofnet investment. Tax effects arising from thetranslation effects are recorded towards equity.Share-based paymentSenior executives in the group have receivedoptions to subscribe for shares in the parentcompany. The fair value of the share optionsis measured at the grant date and the costis recognized, together with a correspondingincrease in other paid-in capital, over the66

Annual report 2012 67/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportperiod in which the performance and/or serviceconditions are fulfilled. The fair value is calculatedusing the Black & Scholes model. The employer’scontribution is accrued over the period in whichthe service conditions are fulfilled based on theintrinsic value.Pension expensePensions are accounted for in accordance withIAS 19, and in accordance with the NorwegianLegislation (NRS 6A). Pension costs and benefitobligation are calculated using the straight-linemethod, based on the expected final salary.The calculations are based on a number ofassumptions, including discount rate, futurechanges in salary, pensions and national insurancecontributions, the expected return on plan assetsand actuarial assumptions on mortality and earlyretirement. Plan assets are measured at fair valueand deducted from net pension commitmentsin the balance sheet. Changes in the benefitobligation arising from changes in plan assets aredistributed over the expected remaining serviceperiod. Changes in the benefit obligation and planassets due to the effects of changes in actuarialassumptions (actuarial gains and losses) arerecognized in equity (net after tax).TaxTax expense in the income statement includesincome tax payable for the period and changesin deferred tax assets and liabilities. Deferred taxassets and liabilities is calculated at 28 % basedon the temporary differences between accountingand fiscal values and loss carry forwards at theend of the financial year.Tax-increasing and tax-reducing temporarydifferences which reversed or may reverse in thesame period are offset. Net deferred tax asset isrecognized to the extent that it is probable that itcan be utilized.Interest-bearing loans and borrowing costsLoans are recognized at the initial amountreceived less directly associated transaction costs.In subsequent periods, interest-bearing loans andborrowings are valued at amortized cost usingthe effective interest method. Gains and lossesare recognized in profit or loss when the liabilityis derecognized and through the amortizationprocess. Borrowing costs are recognized as incurred.Cash flow statementThe cash flow statement has been prepared usingthe indirect method. Cash and cash equivalentsinclude cash and bank deposits.Use of estimatesPreparation of the annual financial statementsin accordance with good accounting practicerequires use of estimates and assumptions bymanagement, which affects the income statementand measurement of assets and liabilities, anddisclosures on uncertain assets and obligations atthe balance sheet date.Contingent losses which are probable andquantifiable are expensed as incurred.67

Annual report 2012 68/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportNote 1 - Equity(NOK)Share capitalShare premiumreserveOther paidin capitalOtherequityTotal equityEquity at 1.1. 2012 18 235 145 106 544 403,00 228 046,00 -11 769 290 113 238 304Change in fair value of hedging instruments -441 497 -441 497Profit for the year -31 304 647 -31 304 647Transfer of share premiumreserve to other equity-43515434 43 515 434 0Capital increase 1 935 000 5 942 000 7 877 000Equity at 31.12 2012 20 170 145 68 970 969 228 046 -0 89 369 160On December 21, 2012 a capital increase of 1,935,000 shares was issued by a private placing. Cost of NOK 250.000related to the capital increase was deducted from the share premium amount.Equity at 1.1. 2011 19 485 145 106 544 403 228 046 13 753 665 140 011 259Change in fair value of hedging instruments -54 126 -54 126Profit for the year -11 093 829 -11 093 829Purchase of own shares -1 250 000 -14 375 000 -15 625 000Equity at 31.12 2011 18 235 145 106 544 403 228 046 -11 769 290 113 238 304On December 21, 2012 a capital increase of 1,935,000 shares was issued by a private placing. Cost of NOK 250.000 related to thecapital increase was deducted from the share premium amount.68

Annual report 2012 69/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportNote 2 - Investments in subsidiares(NOK)Company Country Reg’d office Main business StakeComrod AS Norway Tau Composite antennas andpower supplyVotingstakeCarrying amount100% 100% 46 419 000Comrod Air AS Norway Stavanger Unmanned Aerial vehicle 100% 100% 0Comrod France SAS France St.AmandLes EauxMasts and antennas 100% 100% 59 247 367Comrod Sweden AB Sweden Mora Masts 100% 100% 0Comrod UKUnitedKingdomComrod Inc USA Ohio Masts, antennas andPower SupplySouthampton Masts and antennas 100% 100% 199 200100% 100%105 865 567NOKEquity and profit/loss (-)in last annual accounts Comrod AS Comrod Air AS Comrod France SAS Comrod UKComrodSweden AB Comrod IncCost of acquisition 46 419 000 0 59 247 367 199 200 0 0Equity at 31.12.2012 60 592 258 125 344 42 572 595 1 534 728 5 443 967 332 809Profit/loss (-) 2012 241 984 -3 651 -7 388 104 667 408 -1 729 132 341 921Based on the impairment test for the subsidiary Comrod France SAS and Comrod Sweden AB a non-recurring loss of MNOK 23,9 hasbeen expensed in Comrod Communication ASA in the 4th quarter of 2012.There are excess values compared to book values for all subsidiaries except from Comrod France SAS and Comrod Sweden AB,and it is expected that the respective Net Present Values of estimated future cash flows are higher than the booked value.2012; Acquisition of the remaining shares of Comrod Sweden.On 23 November 2012, Comrod Communication ASA acquired the remaining 20% of the voting shares of Comrod Sweden AB at thepurchase price of SEK 2.0 mill.Mast manufacturing consolidated to a single site by transferring Comrod Sweden’s aluminum mast manufacturing to Business UnitFrance at end of the year.2011; Acquisition of WIBE Telescopic Mast ABOn 16 September 2011, Comrod Communication ASA (“Comrod”) acquired 80% of the voting shares of WIBE Telescopic Mast AB(“WIBE TM”), an unlisted company based in Sweden. The remaining 20% of the shares will be held by AB Wibe – a subsidiary of theFrench Schneider Electric Group. Comrod has agreed to acquire this remaining 20% shareholding within the next two years at agreedterms.WIBE TM brings to Comrod an aluminium mast product range complementary to the Group’s current composite mast offering.This will provide Comrod with a unique opportunity to expand its tactical mast offering to the global civil and defence markets.69

Annual report 2012 70/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportCont. Note 2 - Investments in subsidiaresThe provisional fair value of the identifiable assets and liabilities of WIBE TM AB as at the date of acquisition was:ASSETSFair value recognizedon acquisitionUnaudited (NOK 1000)Property, plant and equipment 1 312Intangible assets 2 956Deferred tax asset 423Trade receivables 1 001Inventories 14 278Other current assets 31120 281LIABILITIESBank overdraft -6 652Trade payables -1 155Other current liabilities -1 518-9 325Total identifiable net assets at fair value 10 956Non-controlling interest measured at fair value -1 716Goodwill arising on acquisition 1 373Purchase consideration transferred 10 613Bank overdraft acquired with the subsidiary -6 652Contingent liability -849Cash paid - 9 764Net cash outflow 17 266From the date of the acquisition, WIBE TM has contributed MNOK 8.3 of revenue and with a negative effect of MNOK 2.0 to net profitbefore tax.The transaction costs of NOK 1 276 590 have been expensed and are included in other operating expenses in the income statement.70

Annual report 2012 71/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportNote 3 - Receivables and liabilities(NOK ) 2012 2011Short term receivablesReceivables 587 987 114 166Receivables from Group companies (see note 4) 51 122 450 55 205 211Short term receivables 51 710 437 55 319 377Other current liabilitiesOther current liabilities 765 401 635 186Current liabilities Group companies (see note 4) 7 000 000 7 000 000Other current liabilities 7 765 401 7 635 186Short term receivables from Group companies is expected paid during 2013.Note - 4 Intra - group balances(NOK ) 2012 2011Financial assetsLoans to group companies 6 539 828 10093620Total receivables to group companiesTrade receivables 932 280 861 296Other current receivables 51 122 450 55 205 211Total receivables 52 054 730 56 066 507Total liabilities to group companiesTrade payables 815 377 935 967Other current liabilities 7 000 000 7 000 000Total liabilities 7 815 377 7 935 967Note 5 - Bank deposits(NOK ) 2012 2011Restricted tax withholdings representing 310 265 450 134Unutilised group overdraft facility 14 398 000 40 523 00071

Annual report 2012 72/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportNote 6 - Share capital and shareholder information(NOK)Share capital consists of: Number of shares Nominal value Carrying amountA shares 21 482 345 1,00 21 482 345The Company’s share capital consists of one class of shares. All shares carry equal rights.On 13 September 2010, the company bought 62 200 of its own shares with a purchase price of 0.8 Mnok. On 27 January 2011,the company bought another 1 250 000 of its own shares with a purchase price of 15.6 Mnok. Both transactions were enteredas a deduction against equity. The shares are held as own shares, and the company is entitled to sell them in the future.On December 21, 2012 a capital increase of 1,935,000 shares was issued by a private placing. Cost of NOK 250.000 related to thecapital increase was deducted from the share premium amount.20 Largest shareholders at 31.12.2012Number ofshares Share-holding %HABU HOLDING AS 6 223 120 28,97%BRØDRENE NORDBØ AS 3 477 081 16,19%DNB NOR SMB 1 940 511 9,03%MP PENSJON PK 1 565 309 7,29%COMROD COMMUNICATION ASA 1 312 220 6,11%SPILKA INTERNATIONAL AS 1 214 908 5,66%STATOIL PENSJON 723 870 3,37%TANANGER ENTERPRISE AS 390 300 1,82%DAHLE 371 031 1,73%VPF NORDEA SMB 321 750 1,50%TANANGER HOLDING AS 292 200 1,36%TELENOR PENSJONSKASSE 220 025 1,02%LANDKREDITT NORGE 200 000 0,93%NBI HF ICELAND 190 950 0,89%STATOIL FORSIKRING AS 176 130 0,82%AUSTERHEIM 174 410 0,81%THORKILDSEN ALF C. 173 154 0,81%VPF NORDEA KAPITAL 164 800 0,77%VPF NORDEA AVKASTNING 152 500 0,71%FLYDAL 122 332 0,57%Total 20 largest shareholders 19 406 601 90,34%Other shareholders 2 075 744 9,66%TOTAL 21 482 345 100,00%The total number of shareholders at 31.12.2012 was 1,030 of whom 25 (2.4%) were foreign shareholders.72

Annual report 2012 73/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportnote 7 - Income tax(NOK) 2012 2011Tax expense of the year appears as following:Tax directly posted to equity -441 498 -54 126Recognised change in deferred tax -2 705 926 12 255Correction tax from last year 334 504Tax expenses for the year -3 147 424 292 633Reconciliation of actual vs calculated tax expenses:Tax expenses for the year -3 147 424 292 63328% of net income before tax -9 646 580 -3 024 335Difference 6 499 156 3 316 968Tax effect on dividend not taxable in Norway 23 500Correction tax from last year 334 504Other permanent differences 6 499 156 2 958 9646 499 156 3 316 968Tax payable in tax expenses for the year appears as following:Net income before tax -34 452 071 -10 801 196Permanent differences 23 211 272 10 776 771Recognised change in temporary differences -168 882Change in temporary differences posted directly to equity 1 576 778 193 307Basis tax payable -9 664 021 0Payable tax regarding net income of the year 0 0Deferred tax assets and deferred tax liabilities:Deferred tax assetsTax losses carry forward 2 705 926 0Deferred tax assets - gross 2 705 926 0Net recognised deferred tax liabilities (-) 2 705 926 073

Annual report 2012 74/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportNote 8 - Payroll and number of employees(NOK)Payroll costs 2012 2011Salaries/fees 4 091 609 6 120 476Employers contribution 118 356 791 284Bonus/profit-sharing 160 000 127 994Pension expense, defined-benefit plans -16 054 -35 356Other contributions and social security costs 787 175 319Total 4 354 698 7 179 717Number of employees in the Company at year end 1 1Number of average employees in the Company 1 1There are no costs associated with pensions because the company has no employees.Remuneration of the Board and the Management:NOKBoard fees/ ElectionExecutive managementconsultantfeescommiteefees SalaryBonuspaidBenefitsin kindTotal compensationOle Gunnar Fjelde, Group President and CEO* 2 028 074 2 028 074Kari Duestad, CFO 1 150 210 150 000 225 343 1 525 553Steinar Omdahl, CCO 1 240 065 1 240 065Board of Directors 0Sturla Sand 0 0Merete Haugli 150 000 6 667 156 667John Steinar Kvitvang 172 800 18 333 191 133Merete Alnes Mostue 50 000 50 000Alf C. Thorkildsen 50 000 10 000 60 000Tore Fjell 5 000 5 000Morten Bjørnsen 16 666 16 666Mariann V. Reite 100 000 100 000Rasmus Nordbø 100 000 100 000000Total compensation 1 862 865 56 666 3 178 284 150 000 225 343 5 473 15874

Annual report 2012 75/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportCont. Note 8 - Payroll and number of employeesNo loans have been made, or security provided for loans, to any member of group management, the board or other electedstanding committees.There were no option agreements to the Group Management as per the end of 2012.*The salary for the CEO Ole Gunnar Fjelde is paid on a monthly basis to his company OGF Technology AS.The amount paid includes the cost of social securities and benefits in kind.Expensed costs to auditors are NOK 417.477 and the split is given below:*)(NOK) 2012 2011Statutory auditing 211 400 152 600Other attestation services 0 0Tax advice 0 0Other audit services 206 077 334 905*) Figures are exclusive of VATNote - 9 Non-current liabilities(NOK ) 2012 2011SecuredEffective interesterate Currency Maturity dateCarryingamountBank loan - serial loan Euribor + 2,40% EUR 9.30.2017 27 380 344 30 859 245Bank loan - serial loan Nibor+3,00% NOK 3.31.2018 14 450 000 16 150 000Total secured non-current liabilities 41 830 344 47 009 245Total non-current liabilities 41 830 344 47 009 2451st year’s instalments, non-current liabilities 0 -11 200 000Total non-current liabilities, not incl. 1st year’s instalments 41 830 344 35 809 245All long-term loans have quarterly interest charges.Estimated repayment schedule for finance leases and serial loans at 31 December 2012 (NOK):2013 2014 2015 2016 2017 2018Total 0 10 741 000 10 741 000 10 741 000 8 757 344 850 000Bank debts are secured against receivables, inventories and property, plant & equipment in the group’s Norwegiansubsidiaries. Bank debts are also secured by pledge in shares at Comrod France SAS. Bank debt covenants is measuredagainst equity, EBITDA, inventory and trade receivables. During Q4 2012 the EBITDA bank covenant terms have beenrenegotiated for the coming year. At year end the Group was fulfilling all its financial covenant requirements related toexternal funding. No loan repayments are due until 2014.The finance leasing agreement is a turning lathe machine used in the production department.75

Annual report 2012 76/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportNote 10 - Short-term loans and other borrowings(NOK) Maturity 2012 2011- -Secured On demand 27 149 578 26 735 4091st year’s instalments, non-current liabilities Quarterly - 11 200 000Total 27 149 578 37 935 409NOTE - 11 Financial items(NOK) 2 012 2 011Finance incomeOther interest income 120 592 554 835Other finance income ( currency gains ) 119 092 230 613Total other finance income 239 684 785 449Finance expenseOther interest expense 2 616 605 2 175 902Currency losses 357 527 115 415Other finance expense 24 366 192 19 811 410Total other finance expense 27 340 324 22 102 727Other finance expence are primarily related to the write-down of shares in Comrod France SASComrod Sweden ( Note 2 )Note 12 - Financial market riskInterest risk arises in the short and medium term from the Company’s floating rate liabilities.See also note 24 Financial instruments in the group accounts for additional comments.76

Annual report 2012 77/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportNote 13 - Events after the balance sheet dateNo substantial issues.Tau, 31 December 2012/26 February 2013The Board of Comrod Communication ASASturla SandChairman of the BoardMerete HaugliVice chairman of the BoardRasmus Nordbø Mariann V. Reite John Steinar KvitvangMember of the Board Member of the Board Member of the Board77

Annual report 2012 78/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors report78

Annual report 2012 79/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors report79

Annual report 2012 80/92Strategies and values | Group | Parent company | Corporate governance | ContactBoard and administration Corporate governance General business principlesBoard of directorsSturla SandChairman of the Board Number of shares: 6 905 620Sand has an MSc in Chemical Engineering from the Technical Universityof Norway. He has a close to 40 year varied international job experience.This includes a number of management positions in Shell (Norway andinternationally) and Achilles Group which he started. Sand is involved asan active investor in various roles in a number of niche companies in theoil service sector and the business information segment. Most businesseswhere Sand is taking an active role are typically businesses focusing on nichetechnology aimed at the international markets.Merete HaugliVice Chairman of the Board Number of shares: 0Haugli is a professional board member and has a history as a responsiblelicensing manager for many companies: Seb, Private Banking ASA, FirstSecurities ASA. She was also consultant for the compliance department inABG Sundal Collier ASA, and board member.In 2002 to 2005, she hold a position as Assistant Chief of Police, responsiblefor the section organized economic crime in Oslo Police District.Haugli, has current directorships in RS Platou AS, Acta Holding ASA,Comrod ASA, Floatel International, Folketrygdefondet (deputy member).Former Directorships, Aktivkapital ASA, ABG Sundal Collier ASA, SEB ASAand Formuesforvaltning ASA .Education; 4 years graduate study Huma Nova, Psychosynthesis Therapy,completed in spring 2011. The Norwegian School of Management, finance.Banking Academy.80

Annual report 2012 81/92Strategies and values | Group | Parent company | Corporate governance | ContactBoard and administration Corporate governance General business principlesRasmus nordbøBoard member Number of shares: 3 477 081Mr. Nordbø has an economical education from the Norwegian School ofManagement (BI). He has a wide experience from different managementpositions, and is currently the leader of the family business BrødreneNordbø AS. He holds various directorships in related companiesMariann V. ReiteBoard member Number of Shares: 0Reite has a Master of Science (MSc) in Economics and BusinessAdministration from the Norwegian School of Economics (NHH). Shehas experience as Finance Controller at several international companieslike Statoil, Rolls-Royce and Marine Harvest. For much of her career,Reite has worked with demanding restructuring processes and mergers.She has also worked within the Human Resources area, and was HRDirector at Marine Harvest Norway during the first couple of years afterthe three party merger between Marine Harvest, Fjord Seafood and PanFish. Today she works as CEO in PatoGen Analyse AS.Number of Shares: 0john steinar kvitvangBoard member Number of shares: 10 000Kvitvang has an M.Sc in Chemical Engineering from NTH, Trondheimand has more than 30 years experience from Shell International invarious technical and leadership capacities in Europe and Africa. His lastposition in Shell was Vice President in Shell Global Solutions based inAmsterdam, having global responsibilities in the area of Manufacturing,Supply and Distribution. He retired from Shell on 31.12.09 and now hashis own consultancy based in Stavanger.81

Annual report 2012 82/92Strategies and values | Group | Parent company | Corporate governance | ContactBoard and administration Corporate governance General business principlesmanagementOle gunnar fjelde,President & CEO Number of shares: 15 576Mr. Fjelde is the Presiden & CEO of Comrod Communication ASA. Inaddition he holds the position as Managing Director of Comrod AS. Hejoined the Company in 2003 as VP Operations. He also served as CEOfor Comrod Communication Group from January 2007 till June 2007. Hehas experience from consultancy and product development from ABBOffshore Systems and Ole Gunnar Fjelde AS. Mr. Fjelde is an automationmechanic and has also studied aircraft engineering.Kari Duestad,CFO Number of shares: 0Ms. Duestad joined Comrod AS as Financial Director in 2005. Fromthe listing of Comrod Communication ASA in January 2007 till theend of March 2008 she was Group CFO in addition to her position atComrod AS. She has served as Group CFO from February 2009. Herformer experience includes being Accounting Supervisor of WeatherfordNorge AS and Accounting Counsultant at Amoco. She is a Bachelor ofManagement from the Norwegian School of Management (BI).steinar theis omdahl, ccocco Number of shares: 0Mr Omdahl joined Comrod Communication ASA as CCO in March2012. His former experience is mainly within telecom and IT industryby management positions within sales and marketing. Further, hehas experience from management consultancy and establishment ofconsultancy businesses. He holds a Bachelor degree within InternationalBusiness from the Norwegian School of Management (BI).82

Annual report 2012 83/92Strategies and values | Group | Parent company | Corporate governance | ContactBoard and administration Corporate governance General business principlesjean fagot,managing director comrod france sas Number of shares: 0Mr Fagot joined Comrod in April 2010, to take over the Frenchsubsidiary.He has more than 15 years experience in managing Frenchmanufacturing plants. He had various positions as: production manager,plant manager and managing director. Mainly into Stanley and GeneralElectric. He spent most of his carrier in 100 heads plants, subsidiariesof international multi-sites groups. He is mechanical engineeringgraduated.David Jankovits,General Manager, Comrod Hungary Kft Number of shares: 0Mr. Jankovits joined Comrod in 2008. He has a Master of Science degreein electrical engineering from the Technical University of Budapest. Hehas experience from the Norwegian Companies Electrocompaniet ASand West Control AS as product developer and outsourced productionsupervisor.83

Annual report 2012 84/92Strategies and values | Group | Parent company | Corporate governance | ContactBoard and administration Corporate governance General business principlesCorporate governanceIntroductionComrod Communication ASA (Comrod)is a Norwegian Public Limited Companywhich shares are listed on the Oslo StockExchange. The company is thereforesubject to the Corporate Governancerequirements as set out in the NorwegianCode of Practise for CorporateGovernance. The corporate governanceprinciples of Comrod complying withthe Norwegian Code of Practice dated23.10.2012.BusinessComrod is a technology group committed todeveloping and commercializing communicationand composite products based on innovativetechnology.Its goal is to rank among the leading internationalplayers in selected markets, and to gain marketshares through innovative and competitivesolutions in close cooperation with key customers.Activities relating to communication productsare defined as a priority area for the group in itsarticles of association.The Company Policy is to promote equality,ensure equal opportunities and rights and preventdiscrimination based on ethnicity, national origin,ancestry, language, or religion.Equal treatmentComrod has only one class of shares.In the event of capital increases, all shareholderswill normally be treated equally. If this is not84

Annual report 2012 85/92Strategies and values | Group | Parent company | Corporate governance | ContactBoard and administration Corporate governance General business principlesthe case, the other shareholders will, as far aspossible and through the adoption of subsequentmeasures, be restored to the position they wouldhave held had they participated in the capitalincrease.Transactions by the group in its own shares will beconducted through the stock exchange.Special care will be exercised in respect oftransactions with other parties in which thegroup’s shareholders, directors, management orclosely related parties have a financial or personalinterest.Not insignificant transactions with other partiesin which the group’s shareholders, directors,management or closely related parties have afinancial or personal interest will be evaluated byan independent third party.A power of attorney to the Board of Directorsto acquire own shares is to be approved by TheGeneral Meeting on a yearly basis.Free marketabilityAll shares in Comrod are freely marketable.Annual general meetingThe final deadline for registering to attend theannual general meeting is three days in advance.Shareholders who are unable to attend may voteby proxy.Invitation to attend the general meeting will besent to shareholders no later than three weeksbefore the date of the AGM. All other relevantdocumentation will simultaneously be availableto shareholders on the company’s website www.comrod.com.Composition and independence of the BoardThe main emphasis in the Board’s compositionwill be to assemble sufficient expertise to makeindependent evaluations of the group’s operationsand to act as a well-functioning collegial body.At least half the shareholder-elected directorsshould be independent of the group’smanagement and principal business connections.In this context, independent means:- directors receive no remuneration other thantheir Director’s fees- director’s fees are not bonus-linked- directors have no close family ties to thechief executive officer- directors do not have or representany significant business relationships with thecompany.At least two of the shareholder-elected directorsshould be independent of the company’s principalshareholder.The chief executive officer will not have a seat onthe Board.The period of election for Directors is two years.Nomination committeeThe group has a separate nomination committeeelected by the AGM.85

Annual report 2012 86/92Strategies and values | Group | Parent company | Corporate governance | ContactBoard and administration Corporate governance General business principlesThe nomination committee consists of threemembers, one of whom must be a Director.The nomination committee proposes candidatesfor election as directors.The nomination committee will in closeco-operation with the Chairman of the Boardpropose the compensation to be paid to directors.Remuneration to the Board will reflect itsresponsibilities, expertise and use of time, and thecomplexity of its activities.Remuneration of the Board will not be bonuslinked.Directors may be included in any share optionschemes for senior executives in the group.Directors, or companies with which they areconnected, will not normally undertake specialtasks for the company in addition to their boardduties.In special cases, a director may be asked toassist the Chairman of the Board, the CEO or themanagement team in particular matters. Suchassignments must be approved by the Chairmanof the Board and the board will also be informed.Remuneration will reflect normal competitiveconsultancy fees for the type of assignmentinvolved. Such assignment and remuneration mustbe mentioned in the annual report.The nomination committee’s recommendationsand relevant information on the candidates will beavailable with other documentation for the AGM.Work of the BoardRegulations have been drawn up to govern thework of the Board.The Board organizes its work on the basis of anannual schedule.Regulations for the chief executive officer havebeen drawn up.The Board will work with the chief executiveofficer and the auditor to ensure that the groupis run in accordance with its basic values, ethicalguidelines and corporate social responsibility.An evaluation by the Board of its own work will beconducted yearly.A Board committee for remuneration ofmanagement has been established.Remuneration of senior executivesGuidelines have been drawn up for theremuneration of senior executives as perCompany Framework remuneration policyapproved by the Board.86

Annual report 2012 87/92Strategies and values | Group | Parent company | Corporate governance | ContactBoard and administration Corporate governance General business principlesRemuneration will, in both form and size,encourage long-term value creation in thecompany. Prior authorization must be obtainedfrom the AGM for option schemes and otheragreements relating to the allocation of shares.All components in the remuneration of the chiefexecutive officer and all remuneration of othersenior executives will be described in the annualreport.availability of information.Takeover bidsIn the event of a potential takeover or inrestructuring processes, the holdings and interestsof all shareholders will be safeguarded.Unless special grounds exist for so doing, noattempt will be made to obstruct or impede thesubmission of a takeover bid.Senior executives and closely related parties whodeal in the company’s shares must obtain priorauthorization.Senior executives and closely related parties arenot permitted to engage in short-term dealing inthe company’s shares.Comrod’s Information PolicyThe Group’s Information Policy is based onopenness and equal treatment of all shareholders.If a takeover bid is submitted, the board will notuse its authority or take other measures designedto impede the bid without the prior approval ofthe general meeting after the bid has been madeknown. The board will still be bound by resolutionsadopted by previous general meetings.Transactions which would in reality involvedisposal of the entire company’s operations will besubmitted to the general meeting if this is deemednecessary.All shareholders will receive correct, clear,relevant and up-to-date information.The emphasis will be on information about centralvalue drivers and risk factors.While the chief executive officer will be theGroup’s spokesperson in normal matters, thechairman of the Board will also be involved inproviding information on matters of a specialcharacter.The Group will comply with the Oslo StockExchange’s requirements concerning theAuditorThe auditor will provide annual writtenconfirmation of his or her impartiality andobjectivity.The auditor will attend board meetings that dealwith the annual accounts.The auditor will also present a report giving his/her view of such items as accounting principles,risk areas, internal control procedures, etc, andplans for implementing their own work.All important correspondence from the auditor87

Annual report 2012 88/92Strategies and values | Group | Parent company | Corporate governance | ContactBoard and administration Corporate governance General business principleswill be presented to the board.In principle the auditor will not be used forassignments other than audit work and mattersnaturally associated with auditing, such asclarification of accounting regulations, normal taxmatters, etc.The AGM will receive a report on the auditor’s fee,broken down into legally required auditing andremuneration relating to other assignments.Internal control and risk management routinesIntroductionThe Board of Directors shall ensure that theCompany has sound internal control and systemsfor risk management that are appropriate inrelation to the extent and nature of the Company’sactivities. This documents sets out the routinesfor such internal control and risk management.Objective of the risk management and internalcontrolThe objective for the Company’s risk managementand internal control is to manage, rather thaneliminate, exposure to risks related to thesuccessful conduct of the Company’s businessand to support the quality of its financialreporting. Effective risk management andgood internal control contribute to securingshareholders’ investment in the Company and theCompany’s assets.The Board’s responsibility for risk managementand internal controlThe Board shall ensure that the Company’sinternal control comprises guidelines, processes,duties, conduct and other matters that:(i) facilitate targeted and effective operationalarrangements for the Company andalso make it possible to manage commercialrisk, operational risk, the risk of breachinglegislation and regulations as well asall other forms of risk that may be materialfor achieving the Company’s commercialobjectives;(ii) contribute to ensuring the quality of internaland external reporting; and(iii) contribute to ensuring that the Companyoperates in accordance with the relevantlegislation and regulations as well as withits internal guidelines for its activities,including the company’s ethical guidelinesand corporate values.The Board shall form its own opinion on theCompany’s internal controls, based on theinformation presented to the Board. Reporting bythe management to the Board shall be preparedin a format which gives a balanced presentationof all risks of material significance, and of howthe internal control system handles these risks.Internal control and risk management systemThe Board shall develop and assess the needfor internal control systems which address theorganisation and execution of the Company’sfinancial reporting. These systems shall becontinuously developed in light of the Company’sgrowth and situation.88

Annual report 2012 89/92Strategies and values | Group | Parent company | Corporate governance | ContactBoard and administration Corporate governance General business principlesThe Board shall also focus on the need fordeveloping ethical guidelines ensuring thatemployees can safely communicate to the Boardmatters related to illegal or unethical conduct bythe Company.The Board shall ensure that the Company has thenecessary routines and hired personnel to ensurethat any outsourced functions are handled in asatisfactory manner.control situation in the Company and howrisks are being managed;(iv) instances of material shortcomings orweaknesses in internal control that cometo light during the course of the year whichhave had, could have had or may havehad a significant effect on the Company’sfinancial results or financial standing; and(v) how well the Company’s external reportingprocess functions.Annual review by the Board of DirectorsThe Board shall annually carry out a reviewof the Company’s most important areas ofexposure to risk and of the Company’s internalcontrol systems. The Board’s review shall coverall matters included in reports to the Boardduring the course of the year, together with anyadditional information that may be necessary toensure that the Board has taken into account allmatters related to the Company’s internal control.When conducting their review, the Board shall payattention to:(i) changes relative to previous years’ reports inrespect of the nature and extent of materialrisks and the Company’s ability to cope withchanges in its business and externalchanges;(ii) the extent and quality of management’sroutine monitoring of risks and the internalcontrol system;(iii) the extent and frequency of management’sreporting to the Board on the results ofsuch monitoring, and whether this reportingmakes it possible for the Board to carryout an overall evaluation of the internalThe Board shall provide an account in the annualreport of the main features of the Company’sinternal control and risk management systems asthey relate to the Company’s financial reporting.89

Annual report 2012 90/92Strategies and values | Group | Parent company | Corporate governance | ContactBoard and administration Corporate governance General business principlesGeneral business principlesComrod Communication Group shares a setof core values- honesty, integrity and respectfor people and all activities and all work by itsemployees shall be performed in accordance withthe highest ethical standards and core valuesand “keeping our promises” being a fundamentalobligation.The Group has adopted the Ten Principles ofUnited Nations Global Compact.We recognize that commercial success dependson the full commitment of allemployees.To those with whom we do Business:To seek mutually beneficial relationships withContractors, Suppliers and Partners and topromote the application of our General Businessprinciples.Responsibilities to Shareholders:To protect shareholders investment and provide along term competitive return.Responsibility to Customers:To win and maintain customers by developingand providing products and services which offervalue in terms of price and quality as well astechnological edge.Responsibility to Employees:To respect the human rights of our employees,and provide good and safe working conditionsas well as competitive terms and conditions ofemployment.To Society:To conduct our business as reasonable corporatemembers of society , to comply with applicablelaws and regulations, to support fundamentalhuman rights in line with the legitimate role ofour business and to give proper regard to health,safety, security and the environment.CompetitionWe support free enterprise and seek to competefairly and ethically and within the framework ofapplicable competition laws. We will not preventothers from competing freely with us.90

Annual report 2012 91/92Strategies and values | Group | Parent company | Corporate governance | ContactBoard and administration Corporate governance General business principlesBusiness IntegrityWe insist on honesty, integrity and fairness inall aspects of our business and expect the samein our relationship with whom we do business.The direct or indirect offer, payment, soliciting oracceptance of bribes in any form is unacceptable.Facilitation payments are also bribes and areunacceptable. lt is important that gifts orhospitality never influence imminent businessdecisions-making processes or cause others toperceive an influence.We shall work against corruption in all its forms,including extortion and bribery.Employees must avoid conflict of interest betweentheir private activities and their part in theconduct of company activities. Employees mustdeclare to their employing company any conflictof interest.Equal OpportunityOur responsibility is to create an inclusive workenvironment where every employeehas an equal opportunity to develop his or herskills and talents. We will not tolerate unlawfulemployment discrimination of any kind.Living by the principleslt is the responsibility of management to lead byexample, to ensure that all employees are awareof these principles and behave in accordancewith these, in spirit as well as in the letter of thisstatement.Violation may have severe consequences both forindividuals as well as the Company.Political activitiesComrod Communications shall act in a sociallyresponsible manner within the laws ofthe countries in which we operate in pursuit of ourlegitimate commercial objectives.We shall not make any payments to politicalparties, organisations or their representatives.Health, Safety, Security and EnvironmentComrod Communication has a systematicapproach to health, safety, security andenvironment management in order to achievecontinuous improvement.91

Annual report 2012 92/92Strategies and values | Group | Parent company | Corporate governance | ContactContact informationComrod communication asaFiskåvegen 1, 4120 TauPhone +47 51 74 05 00 Fax +47 51 74 05 01E-mail post@comrod.comwww.comrod.comGroup President & CEO Ole Gunnar FjeldeComrod asFiskåvegen 1, 4120 TauPhone +47 51 74 05 00Fax +47 51 74 05 01E-mail post@comrod.comwww.comrod.comManaging Director Ole Gunnar FjeldeComrod as – division power supplyLeangbukta 40,1392 VettrePhone +47 51 74 05 00Fax +47 51 74 05 01Comrod france sas600 Chemin des HamaidesBP 1011959732 Saint Amand Les Eaux CedexFrancePhone +33 3 27 22 85 50Fax +33 3 27 22 85 55www.comrod.comManaging Director Jean FagotComrod hungary kftMunkasotton U.8.4/4H-1043 BudapestHungaryPhone +47 21 64 18 06E-mail dj@comrod.comManaging Director David JankovitsComrod ukRegus House, SouthamptonInternational Business Park,George Curl Way SO18 2RZSouthampton, Great BritainPhone +44 23 80 30 24 94Fax +44 23 80 30 21 95E-mail drm@comrod.comManaging Director Derek MclellandComrod inc.Cleveland Warehouse,12830 Triskett Road,US-44111 Cleveland, OhioUSAPhone +1 216 403 0226E-mail meghan@comrod.comManaging Director Will ConveryComrod INC.Cleveland Warehouse,12830 Triskett Road,US-44111 Cleveland, OhioUSAPhone +1 216 403 0226E-mail meghan@comrod.comManaging Director Will Convery92