Income Statement Infratek ASA

GUARANTEE LIBILITIES

The Group purchases bank guarantees as security for certain liabilities. As of the 31 December 2012, these amounted to a total of NOK 1.9 million, of which NOK 1.8 million relates to tax deduction guarantees. In 2011, corresponding guarantees amounted to NOK 1.8 million, of which all was applicable to tax deduction guarantees.

In addition to direct bank guarantees, Infratek ASA had to guarantee an amount of NOK 100 million related to our cash credit in DnB and another NOK 200 million in surety associated with Infrateks subsidiaries, also to DnB.

For other contingencies, see note 28 in the Group financial statement.

Select note

1 JANUARY - 31 DECEMBER
Amounts in thousand NOK	Note	2012	2011
Operating revenues	2	13 348	12 730
Total operating revenues		13 348	12 730
Salaries and other personnel expenses	3	(21 058)	(19 605)
Other operating expenses	5	(11 964)	(6 365)
Depreciation	13,14	(7 480)	(6 619)
Total operating expenses		(40 502)	(32 589)
Operating profit		(27 154)	(19 859)
Gains on sale of subsidiaries		-	-
Interest income from Group companies	8	5 251	6 343
Other interest income		12	55
Other financial income	6	76 367	97 771
Interest paid to Group companies		(7 237)	(7 582)
Other interest costs		(17)	(17)
Other financial costs		(2 631)	(1 100)
Total financial items		71 745	95 470
Pre-tax profit		44 591	75 611
Tax on pre-tax profit	7	(12 430)	5 852
Profit for the year		32 161	81 463

Transfers
Dividend allocation	17	95 795	95 795
Transferred from other paid-in equity	17	(63 634)	(14 332)
Transferred from other equity	17	-	-
Total transfers		32 161	81 463

NOTE 1	ACCOUNTING PRINCIPLES
Infratek ASA’s accounts have been prepared in accordance with Norwegian accounting law and generally accepted accounting principles in Norway (NGAAP).

Accrual,classification,and valuation principles

Classification
Classification of balance sheet items is defined as follows: All assets related to the business cycle,receivables payable within one year,and assets not intended for permanent ownership or use by the business,are classified as current assets. Other assets are classified as fixed assets. Liabilities with time to maturity exceeding one year after expiration of the accounting year are entered as long-term liabilities. Other liabilities are classified as current liabilities.

Valuation principles
Revenues
Revenue is recognized when it is earned,that is,when demand for compensation arises. This occurs when services are provided,along with the work performed. Revenues are accounted for by the value of the transaction date.

Assets and liabilities denominated in foreign currencies
Monetary items denominated in foreign currencies are translated at balance sheet date.

Leases
Assets which are leased on terms that are transferring financial risk and control of the leased asset to the company (financial leasing) are recognized under fixed assets,and related lease obligations are included as a liability under the interest bearing long term debt to net present value of lease payments. Assets are depreciated according to plan,and liabilities are reduced by lease payments less the effective interest cost. Lease for assets that are leased on terms where the financial risk and control lies with the lessor are expensed continuously on the basis of invoices received from the lessor.

Cash and cash equivalents
Cash and cash equivalents for the company consists of cash holdings,deposits in company specific bank accounts and net holdings on the Group’s consolidated Group account system. The difference between the net deposit or draft on the company specific account in the Group’s consolidated account system and the net deposit or draft on the consolidated account system for the Group,is presented as Group-internal receivables or debt.

Other receivables
Other receivables are entered at their nominal value less provisions for expected losses. Such loss provisions are made following individual assessment of the receivables in question.

Investments in subsidiaries
Investments in subsidiaries are valued according to the cost method. Dividends received and other profit disbursements from companies are recognized as financial income if the profit disbursement is retained after Infratek ASA bought the shares,if not,then profit disbursement is recognized in deduction of costs of subsidiary shares.

Tax expense,deferred tax,and deferred tax benefit
Tax charges are based on ordinary pre-tax profit. Tax expenses in the profit and loss account consist of taxes payable for the period and any change in deferred taxes/deferred tax benefits. Taxes payable are based on taxable profit for the year. Deferred tax recognized in the balance sheet is calculated using the offset method,with full provision for net tax-increasing temporary differences based on the tax rate on the balance sheet date and nominal sizes. Deferred tax benefits recorded in the balance sheet relating to net tax-reducing temporary differences and carry-forward losses are based on the likelihood of sufficient future earnings or ability to benefit from tax positions that can be offset through Group contributions.

Pensions and pension liabilities
See Note 2.15 to the Group accounts. Infratek ASA has exercised the option of switching to NRS 6A,which refers to IAS 19 regarding the accounting treatment of pension expenses.

Cash flow statement principles
The cash flow statement has been prepared using the indirect method of accounting. The method entails analysis being based on the unit’s profit for the year to be able to present cash flows added from ordinary operations,investment activities,and financing activities.

NOTE 2	OPERATING REVENUES
The operating revenues are specified as follows:

Spesification other operating revenues
Amounts in thousand NOK	2012	2011
External revenues	3 760	2 542
Internal revenues	9 588	10 188
Total operating revenues	13 348	12 730

NOTE 3	SALARIES AND OTHER PERSONELL EXPENSES
Spesification of personell expenses
Amounts in thousand NOK	2012	2011
Salaries and holiday pay	14 785	13 565
Social security contribution	2 504	2 307
Net pension expenses	1 139	1 040
Other personnel expenses	2 630	2 693
Total personnel expenses	21 058	19 605

As of 31 December 2012, Infratek ASA had 21 employees.

Specification of remuneration
Amounts in thousand NOK	2012	2011
Salary and other remuneration to general manager	3 153	3 506
Pension costs	162	185
Other remunerations	45	50
Board remuneration	1 237	1 383
Total remuneration to senior executives	4 597	5 124

The CEO has a bonus agreement based on the Group’s performance with respect to share price development and group targets. For further information, please see note 21 in the Group accounts.

Loan to general manager
Infratek has extended an interest-free loan to the general manager as part of a car expenses reimbursement program. The loan is written down over a period of 10 years; security is posted for the loan. As of 31 December 2012, the balance on the loan amounted to NOK 258.333. The annual amount written down and the interest-free loan component are reported to the tax authorities as a salary benefit. In case of resignation, any outstanding loans must be paid before the date of resignation.

Specification of auditor’s fees
Amounts in thousand NOK	2012	2011
Fee statutory audit	647	454
Fee assurance services	13	-
Fee tax advisory services	-	-
Fee other non-audit services	103	63
Total auditor fee	763	517

NOTE 4	PENSION EXPENSES, ASSETS AND LIABILITIES
Per 31 December 2012 the company had pension plans that covered a total of 4 people in the private plan and 5 people in a public plan. The plans provided rights to defined future benefits. These benefits depend chiefly on the number of years of service and pay level upon reaching retirement age. Pursuant to the law governing mandatory occupational pension, agreements have been established concerning defined contribution schemes for everyone who is not covered by the Group’s group pension plans.

Pension liabilities and costs
Amounts in thousand NOK		2012	2011
Liabilities in the balance sheet are arrived at as follows:
Present value of accrued pension liabilities in fund-based plans		8 099	11 677
Fair value of pension assets		(12 342)	(10 291)
Actual net pension liabilities (assets) for defined benefit plans in fund-based plans		(4 243)	1 386
Present value of liabilities not in fund-based plans		1 430	1 891
Estimate deviations not recognized in profit and loss		-	-
Social security contribution		202	693
Net pension liabilities (assets) in the balance sheet as of 31 December		(2 612)	3 971

Net pension expenses are arrived at as follows:
Present value of the year’s pension earnings		(846)	(765)
Interest expenses of liability		(352)	(360)
Expected yield on pension funds		435	233
Liabilities upon change in plan		-	24
Recognized estimate changes and estimate deviations		-	-
Social security contribution		(118)	(122)
Member contributions		9	9
One-time payment		-	-
Total pension expenses, defined benefit plans		(955)	(854)
Net financial cost from performance plans		83	(127)
Sum recognized performance-based pension costs		(872)	(981)

Total pension expenses, contribution plans		(184)	(186)
Adjustment pension premiums		-	-
Total pension expenses (incl. in personnel expenses)		(1 056)	(1 167)


Change in liabilities in the balance sheet:
Balance sheet value as of 1 January		3 971	5 675
Change in employee base due to business transfers		-	-
Change in accounting principle		-	-
Expenses recognized this year		871	981
Pensions paid and payment of pension premium		(1 597)	(718)
Deviation of periods estimate recognized in equity		(5 857)	(2 027)
Balance sheet value as of 31 December		(2 612)	3 971

The following economic assumptions are used in calculating pension liabilities:

		2012	2011
Discount rate		4.00%	2.60%
Expected yield on pension funds		4.00%	4.10%
Salary growth		4.00%	3.25%
G regulation		4.00%	3.25%
Annual social security pensiond growth1)		0.50 % / 2.25 %	0.10% / 2.5%

1) Private pensions schemes 0.5 % and public pension schemes 2.25%.

NOTE 5	OTHER OPERATING EXPENSES
Amounts in thousand NOK	2012	2011
Real estate expenses	(7 706)	(4 058)
In-sourced services, etc.	9 824	10 741
Office expenses	(10 701)	(10 194)
Other operating expenses	(3 381)	(2 854)
Total other operating expenses	(11 964)	(6 365)

NOTE 6	OTHER FINANCIAL INCOME / GROUP CONTRIBUTIONS
Other financial income comprises Group contribution from subsidiaries, recognized as financial income of NOK 76.1 million in 2012 and dividend received from subsidiaries, recognized as financial income of NOK 97.5 million in 2011.

NOTE 7	TAX EXPENSE
Amounts in thousand NOK	2012	2011
Pre-tax profit	44 591	75 611
Permanent differences	(70 415)	(95 671)
Non-taxed gain on sales of shares	-	-
Non-taxed Group contribution recognized as financial income	76 074	-
Pension recognized in equity	5 857	-
Change in temporary differences	(12 439)	(1 704)
Tax basis before application of loss carryforward	43 668	(21 764)
Applied tax loss carryforward	(21 764)	-
Taxable income	21 904	(21 764)

Specification of tax expense for the year:
Tax payable	(6 133)	-
Tax on share issue expenses recognized in equity	-	(332)
Tax effect of pension recognized in equity	1 640	-
Change in deferred tax asset (recognized)	(7 937)	6 184
Ordinary tax expense	(12 430)	5 852
Taxation rate, 31 December	28%	28%

Amounts in thousands NOK	2012	2011
Deferred tax/deferred tax benefit:
Pension liabilities	(2 611)	3 971
Temporary differences that affect tax payable:	(2 611)	3 971
Tax loss carryforward	-	21 764
Basis, deferred tax/(deferred tax benefit)	(2 611)	25 735
Deferred tax/(deferred tax benefit)	731	(7 206)

Reconciliation of effektive tax rate:
Amounts in thousand NOK	2012	2011
Pre-tax profit	44 591	75 611
Expected tax expense, 28% nominal taxation rate	(12 485)	(21 171)
Incorrect tax cost 2010	-	(332)
Effect of non-taxed Group contribution	-	27 286
Impact of reversed pension effect recognized in OCI	-	568
Effect of permanent differences	55	(499)
Tax expense	(12 430)	5 852

Effective tax rate	27,9 %	7,7 %

NOTE 8	BANK AND OTHER GUARANTEES
Amounts in thousand NOK	2012	2011
Bank deposits, Group accounts	201 544	283 997
Bank deposits outside the Group account system	724	741
Total cash and cash equivalents	202 268	284 738

See Note 12 to the Group accounts for a presentation of the Group account system.

Restricted bank deposits
Amounts in thousand NOK	2012	2011
Employees tax deduction	-	-
Down payment deposits	-	-
Total restricted cash and cash equivalents 1)	17 261	16 247
Total restricted cash and cash equivalents	17 261	16 247
1) At the date of establishing Infratek Group, the employees received a consideration from Hafslund ASA of NOK 15 million as settlement for loss of rights concerning use of the Hafslund Group’s company cabins. These funds are deposited in an account in the name of Infratek ASA. The funds belong to the employees and the yield is earmarked for social purposes benefiting the employees of the Infratek Group. Per 31 December 2012 the deposited amount increased to NOK 17.2 million.

NOTE 9	INVESTMENTS IN SUBSIDIARIES
		Registered business adress	Book value	Balance sheet equity	Profit for the year	Ownership voting rights
Amounts in thousand NOK		Registered business adress	Book value	Balance sheet equity	Profit for the year	Ownership voting rights
Infratek Entreprenør AS		Oslo	332 173	294 729	68 641	100%
Infratek Sverige AB		Stockholm	254 068	119 355	8 495	100%
Infratek Finland OY		Helsinki	41 942	77 271	5 454	100%
Infratek Elsikkerhet AS		Oslo	21 965	36 236	12 224	100%
Infratek Sikkerhet AS		Oslo	54 540	48 613	5 137	100%
Total			704 687	576 204	99 951

NOTE 10	GROUP INTERNAL ACCOUNTS RECEIVABLE AND PAYABLE
Sale and purchase of goods and services to / from other group companies are based on general market conditions. Administrative services provided to subsidiaries are sold at cost plus basis.

Amounts in thousand NOK	2012	2011
Receivables
Group internal receivables	4 928	2 815
Receivables, Group contribution	220 000	-
Earned income, Group	58 133	97 452
Total accounts receivable	283 061	100 267

Amounts in thousand NOK	2012	2011
Payables
Group Internal payable	1 130	954
Bank accounts in Group account system	342 579	337 000
Other short-term debt	25 000	-
Incurred costs, Group companies	257 000	257 000
Total accounts payable	625 709	594 954

NOTE 11	OTHER LONG TERM RECEIVABLES
Amounts in thousand NOK	2012	2011
Loans to employees	2 450	1 469
Paid core-capital, pension fund	14 079	14 079
Subordinated loan, pension fund	1 939	1 939
Total other long-term receivables	18 467	17 487

NOTE 12	OTHER SHORT TERM RECEIVABLES
Amounts in thousand NOK	2012	2011
Pre-paid expenses	3 075	85
VAT receivable	-	708
Other short term receivables	378	3 304
Total other short-term receivables	3 453	4 097

NOTE 13	PROPERTY, PLANT & EQUIPMENT
				Fixtures and fittings
Amounts in thousand NOK				Fixtures and fittings
Aquisition costs 1 January				18 254
Operating investments				-
Acuisition costs as of 31 December				18 254

Accumulated depreciation and impairment charges 1 January				(4 473)
Depriciation and impairment charges				(1 969)
Accumulated depreciation and impairment charges as of 31 December				(6 442)

Book value as of 31 December 2012				11 812

Expected economic life			10 years
Depreciation			Linear

Operating leasing obligations
		Future lease payments
		Rent	Machinery / equipment	Total
Amounts in thousand NOK		Rent	Machinery / equipment	Total
Due within 1 year		6 060	70	6 130
Due later than 1 year not later than five years		24 020	105	24 125
Due later than 5 years		6 002	-	6 002
Total		36 082	175	36 257

Recognized costs regarding operating leases for the period

NOTE 14	INTANGIBLE ASSETS
Amounts in thousand NOK		Software & licenses
Aquisition costs 1 January		54 749
Operating investments		5 376
Aquisition costs as of 31 December		60 124

Accumulated depreciation and impairment charges 1 January		(9 973)
Depriciation and impairment charges		(5 512)
Accumulated depreciation and impairment charges as of 31 December		(15 485)

Book value as of 31 December 2012		44 639

Expected economic life		10 years
Depreciation		Linear

NOTE 15	OTHER CURRENT LIABILITIES
Amounts in thousand NOK	2012	2011
Incurred salaries, holiday pay, employee-related liabilities	3 045	2 676
Personal fund	826	766
Other incurred costs	653	321
Total other current liabilities	4 524	3 763

NOTE 17	EQUITY
		Share capital	Share premium fund	Other paid-in equity	Other equity/ uncovered loss	Total equity
Amounts in thousand NOK		Share capital	Share premium fund	Other paid-in equity	Other equity/ uncovered loss	Total equity
Equity as of 1 January 2012		319 316	82 458	104 205	87 769	593 748

Accrued dividend 2012		-	-	-	(95 795)	(95 795)
Change in estimate pensions		-	-	-	4 217	4 217
Profit for the year 2012		-	-	-	32 161	32 161
Equity as of 31 December 2012		319 316	82 458	104 205	28 353	534 332

NOTE 18	SHARE CAPITAL AND SHAREHOLDER MATTERS
See Note 13 to the Group accounts.

Declaration
The Board of Directors and CEO hereby declare that to the best of their knowledge, the accounts covering the period 1 January through 31 December 2012, including notes to the accounts, have been prepared and presented in accordance with current accounting standards . They further declare that the information in the annual report for 2012 provides a true and fair view of the Group’s assets, liabilities, financial position, and results as a whole. The Board and CEO also declare that to the best of their knowledge, the annual report provides a true and fair overview of profit, key events in the accounting period and their influence on the annual accounts, the company’s position, and the most important risks and uncertainties facing the company and the Group.