Annual Report - Goodtechgoodtech2016.goodtech.no/resources/2016/Annual-Report-Goodtech-ASA-2016.pdfGoodtech Annual Report 2016 2 This is Goodtech Goodtech is a technology group working

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Annual Report Goodtech ASA

Goodtech Annual Report 2016

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This is Goodtech Goodtech is a technology group working to develop and renew systems and facilities that are essential to society. With our core skills in the areas of automation, IT, machine and process technology as well as environmental technology, we contribute to a more streamlined energy supply, enhanced infrastructure and more efficient and environmentally friendly manufacturing.

In recent years, Goodtech has been working on structural and strategic measures to increase the focus of its business and investments. This has led to a consolidation of the Group’s future core business and the sale of non-core activities.

Goodtech is listed on the Oslo Stock Exchange, has a turnover of around NOK 700 billion and employs 341 people in Norway, Sweden and Åland.

In 2016, the company was organised into three business areas. Find out more about our business areas here.

From 1 January 2017, the current business areas will be reorganised and new group roles for sales and marketing will be created. Project implementation into which procurement is incorporated will also be created.

We make a difference

Goodtech has launched a new vision: the first choice for industrial efficiency

Irrespective of whether the Company is working on automation solutions, water treatment plants or streamlining solutions for industry, Goodtech has a business presence in the local community. We leave a lasting impression through the facilities and systems we build.

Goodtech upgrades and modernises industry

Goodtech assists industry through upgrades and modernisation of steering and control systems in plants both in land-based industry and offshore projects.

Goodtech contributes to a cleaner society

In Scandinavia, Goodtech is one of the largest suppliers of water and sewage treatment systems as well as biogas systems for organic waste.

Goodtech streamlines industry

Goodtech contributes to streamlining manufacturing through our design, engineering and provision of customised solutions for the manufacturing industry.

http://aarsrapport2015.goodtech.no/forretningsomradene/vare_foretningsomrader/


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Key figures

Orders and profits/earnings (NOK million) 2013 2014 2015 2016

Sales 618,8 638,8 698,3 704,2

EBITDA 7,4 6,0 -0,7 -12,9

EBITDA % 1,2 % 1,0 % -0,1 % -1,8 %

Earnings before tax (EBT) -17,5 -24,7 -79,1 -60,6

EBT % -2,8 % -3,9 % -11,3 % -8,6 %

Profit after tax from continuing operations -14,7 -12,2 -74,0 -61,2

Profits for the year 41,5 -21,7 -169,5 -25,2

Order book 31.12 250,7 363,3 416,8 346,2

Cash flow

Cash flow from operating activities -8,7 59,9 4,5 -2,6

Cash flow

Cash flow from operating activities 1 536,8 1 570,8 663,7 584,4

Equity 725,2 686,5 341,7 308,6

Equity ratio 47,2 % 43,7 % 51,5 % 52,8 %

Return on equity -4,0 % -1,7 % -14,4 % -18,8 %

Net interest-bearing receivables/debt -162,2 -178,1 -34,5 26,7

Net debt ratio -22,4 % -25,9 % -10,1 % 8,7 %

Current ratio 1,13 0,91 1,24 1,28

Share

Share price as at 31.12 (NOK) 15,90 12,00 10,75 7,00

Profits per share (NOK) 1,28 -0,68 -5,28 -1,13

Dividend per share (NOK) 0,65 - - -

Employees

Number of employees as at 31.12 375 373 374 341

Number of full-time employees 366 363 377 359

HSE

Absence due to illness 3,02 % 4,29 % 3,39 % 2,93 %

*) Continuing operations

**) Includes discontinued operations

Definitions of key financial figures:

EBITDA: earnings before interest, taxes, depreciation and amortisation

EBITDA %: (earnings before interest, taxes, depreciation and amortisation)/sales earnings

EBT%: pre-tax profits/sales earnings

Equity ratio: equity ratio/total equity

Equity profit ratio: profits after tax/average equity

Average equity: (Equity 1.1 + Equity 31.12)/2

Profits per share: profits after tax/average outstanding shares

Net debt ratio: net interest-bearing debt/equity

Current ratio: current assets/current liabilities


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Annual Report 2016

The strategic restructuring of the Group continued in 2016 and Goodtech established a new organisational structure which focuses on project implementation and risk control as well as a clearer and stronger sales and marketing strategy. The Group’s financial situation has improved after sales of its businesses outside its core business area.

The Company After the Company’s strategic restructuring, Goodtech is a market leader in Scandinavian environmental and manufacturing technology.

Goodtech is listed on the Oslo Stock Exchange and is headquartered in Oslo. The Group has companies in Sweden and in Åland as well as in Norway. Goodtech ASA is the parent company in the Group.

The Group’s main markets are manufacturing, energy, environment and infrastructure.

At the end of 2016, Goodtech had 341 employees and a turnover of NOK 704 million.

Goodtech’s vision and values

Goodtech has launched a new vision which is better suited to the Group’s business and aims, namely:

the preferred choice for industrial efficiency

This means that Goodtech will

Offer efficient solutions that add value for customers • Offer leading technical services that ensure efficient and stable operations for customers • Develop the best team in the industry

Strategic and structural processes After the sale of the Swedish business to Eitech in 2015, in 2016 Goodtech Environment AS was sold to the Chinese company Anhui Guozhen Environmental Protection Technology Joint Stock Co. Ltd. (‘GZEP’) and Goodtech Products AS was sold to the Swedish company Addtech Nordic AB (‘Addtech’) as part of the strategic restructuring of the group. In February 2017, Goodtech also sold its activities related to Promaps to Promaps Technology AS for an ownership share of 19%.

The strategic restructuring has put Goodtech in an enhanced financial position, has given the Company a stronger technological focus and has provided a sharpened market orientation.

At the end of 2016, Goodtech established a new organisational structure which focuses on project implementation and risk control as well as a clearer and stronger sales and marketing strategy. As part of this, new group roles for sales and marketing have been created. Project implementation into which procurement is incorporated was also created.

2016

Key figures (NOK 1,000) 2016 2015

Operating income 704,244 698,259

Operating profit (EBITDA) -12,873 699

EBITDA margin % -1.8% 0.1%

Pre-tax profits -60,553 -79,087

Order book 346,222 416,843

Number of employees 341 374

Activity has been somewhat lower than anticipated in 2016, but turnover is stable compared to the previous year. A few major project write-downs and restructuring costs reduced profitability for the year. Cost adjustments are taking place in units with negative earnings.

Goodwill has been written down by NOK 29.4 million in 2016 of which NOK 19.5 million are associated with the Solutions business area. Additionally, intangible assets related to development projects have been written down by a total of NOK 6.6 million. This – in combination with some project write-downs and restructuring costs – resulted in pre-tax losses in 2016.


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The Group had a good order intake in 2016 with the award of several important strategic contracts in the various business areas. The order book overall was satisfactory at the end of the year. Market prospects are good, but there is still some uncertainty about the global economy and effects are being felt from the changes in the oil and gas market.

In 2016, Goodtech organised its continuing operations in the following reporting segments (business areas): Projects & Services, Solutions and Environment.

Projects & Services

Projects & Services handles Goodtech’s various automation, electronics and assembly projects – from preliminary project stage and delivery to operation and maintenance.

Key figures (NOK 1,000) 2016 2015

Turnover 290,099 314,982

Operating profit (EBITDA) 7,370 13,455

EBITDA margin % 2.5% 4.3%

Order book 91,592 86,451


In 2016, Project & Services showed a lower turnover compared with the previous year, mainly due to the downturn in the oil and gas market. This, in combination with the completion of projects with low earnings, reduced profitability for the year.

Work continues on measures to improve profitability and cost adjustments in units with weak earnings. Projects & Services won several important contracts in 2016.

Among major contracts that were won in 2016 is the contract with GE Power for the supply of electronic, instrumentation and automation systems for the treatment system that GE Power is to supply for Hydro’s technology pilot project on Karmøy.

The technology pilot project that Hydro is building on Karmøy will be the world’s most climate and energy-efficient production line for aluminium.

At the beginning of 2016, Goodtech also won a contract from Teekay Offshore for the upgrading of safety and automation systems for FPSO Petrojarl 1.

These projects have been very active throughout 2016.

Goodtech sees opportunities to grow in a market which is experiencing great change and needs cost-effective solutions. We are seeing increased investment in parts of industry, for example, the metal sector. The Group is experiencing a certain pressure on prices due to increased competition from suppliers who have previously focused on the oil and gas industry.

Solutions

In this business area, Goodtech offers its own technologies and customised solutions for the automation and streamlining of production, material handling, warehousing and logistics.

Key figures (NOK 1,000) 2016 2015

Turnover 147,178 172,437

Operating profit (EBITDA) -7,969 -5,066

EBITDA margin % -5.4% -2.9%

Order book 52,502 53,019


Solutions did not achieve a positive EBITDA in 2016 due to project write-downs and restructuring of the Swedish business. Developments in bulk, pharmacy and food have, however, been positive.

Solutions’ Swedish business has completed its reorganisation and resource adaptation in combination with a new strategic platform being launched in the spring of 2016. This, with the further intensification and improvement of quality and project methodology, had a positive effect on the company’s performance in the second half of the year. This positive trend is set to continue in 2017.


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Scandinavian industry has relatively high cost levels and investment in automation and robotics is required to maintain efficiency, profitability and competitiveness. The signals from parts of our markets still very, but the growth potential of our industrial segments is regarded as relatively good and underpins our expectations going forward.

Environment

This business area supplies environmental technology, water and wastewater treatment plants as well as the construction of whole or parts of biogas plants. This activity is handled by the subsidiary Goodtech Environment AB, which is located in Åland (Finland).

Key figures (NOK 1,000) 2016 2015

Turnover 269,126 217,031

Operating profit (EBITDA) 4,653 7,335

EBITDA margin % 1.7% 3.4%

Order book 202,129 277,373


Environment provided significantly increased sales in 2016, but lower earnings compared to the previous year. Environment has a full order book comprising projects where efficient and active project management is expected to bring enhanced earnings in future.

In 2016, Goodtech was awarded a contract worth SEK 82 million by the Municipality of Oskarshamn for the renovation of the Ernemar wastewater treatment plant and has signed a contract with NCC Construction Sverige AB for Phase 3 of new water supply to Skellefteå. Goodtech has previously completed Phases 1 and 2 of the project. Phase 3 includes the completion and commissioning of the project. Goodtech’s share is approx. SEK 80 million.

Cash flow, investments, financing and liquidity

The Group’s financial situation has improved after sales transactions completed at the beginning of 2016.

The Group has a net liquidity of NOK 26.7 million as of 31.12.2016 compared to interest-bearing debt of NOK 34.5 million at the same time last year.

The Group’s equity as at 31 December 2016 is NOK 308.6 million which gives an equity ratio of 52.8 % compared to 51.5 % last year.

Cash flow from continued operations was NOK -0.1 million in 2016 compared to NOK 3.5 million for the same period last year.

Cash flow from operations will, of course, vary from period to period depending on the composition of projects and project invoicing dates. Goodtech prioritises good cash flow management and in 2016 we implemented measures to improve project cash flow, including improved billing procedures and following up on outstanding receivables. These measures have had good results and they will continue to be a priority going forward.

In 2016, Goodtech signed an agreement with Nordea to act as the Group’s new main banking partner. Further information on facilities and terms of the agreement are provided in Note 19 to the Annual Accounts.

The net debt ratio (net interest-bearing debt/equity) constituted -8.7% (net liquidity) at the end of 2016 compared to 10.1% in 2015.

Shares and shareholders

The Company’s share capital consists of 22,876,146 shares with a nominal value of NOK 2 for a total of NOK 45,752,292 as of 31 December 2016.

All shareholders in Goodtech have equal rights. The Company has one share class, and each share carries one vote at AGMs. All shares are freely transferable, and no transferability limits for the Company’s shares have been set out in the Company’s Articles of Association.

Holmen Industri Invest I AS was the Company’s largest shareholder at year end, with 34.3% of the shares in Goodtech. Skagen Vekst is the second largest shareholder with a shareholding of 8.5%. EIO AS has 5.9% of the shares.


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A large number of the Group’s employees are shareholders in Goodtech ASA.

At the end of the year, Goodtech ASA had 394,075 shares, equivalent to 1.72% of the Company’s share capital. Please see the section on Shareholders in the Annual Report.

Staff, working environment and safety

Goodtech works proactively to focus on HSE in the workplace. Activities must be planned and carried out in such a way that nobody is injured or becomes ill, the environment is not contaminated and property is not damaged.

Goodtech has in recent years worked in targeted areas to put HSE at the top of the agenda and reinforce the Group’s safety culture. HSE complies with legislation and authority requirements and must be run in accordance with Goodtech’s guidelines in the HSE control system. HSE is a management responsibility.

For Goodtech, HSE includes the following:

Safety in terms of human life and health, including the working environment

Safety in terms of the external environment

Safety in terms of property and materials

This means targeted measures and a focus on:

working to protect the environment and people, including safety in the workplace and continuous improvements in terms of quality, the environment and the working environment

ensuring that we have the expertise with which to run and manage major and/or complex projects

safeguarding and underpinning the Group’s methods

streamlining and safeguarding the Group’s project implementation

managing and developing the Group’s commercial systems with processes, structures, procedures and

templates

Goodtech’s aim is to have the industry’s most efficient project implementation methods as well as qualified staff who prioritise safety, customers and employees.

The whole business area of Projects & Services and Solutions is ISO-certified.

Health, environment and safety in the workplace

2016 2015

Reported adverse events 154 80

Reported incidents without absence 11 9

Reported lost time injuries 2 5

Absence due to illness 2.9% 3.4%

Employee deaths 0 0

In recent years, Goodtech has increasingly focused on the reporting of accidents and undesirable incidents. The health and safety of all employees and contractors is a top priority. In addition to ongoing risk assessments, it is essential that we learn from our mistakes. Goodtech has systematised this through reporting and monitoring of incidents and industrial accidents. In combination with ongoing risk identification and risk analysis, this constitutes an important tool in preventive safety work. Efforts to reach Goodtech’s vision of zero injuries and accidents in the workplace continue, and significant resources were expended to raise safety levels further.

Goodtech’s ethical guidelines apply to all employees and anyone acting on Goodtech’s behalf. Goodtech’s compliance programme is designed to ensure that all employees understand the scope of the Group’s ethical guidelines and development of practices and procedures to prevent violations of the Company’s ethical guidelines. Goodtech conducts its commercial activities to high ethical standards, based on open and honest competition. We have an open culture in place and regularly discuss ethical dilemmas with employees. Goodtech has a zero tolerance policy with respect to violations of internationally recognised human rights, labour rights and any kind of use of child or slave labour. This is a requirement that also extends to Goodtech’s subcontractors.

The Group’s general guidelines require that all employees are treated with respect and that Goodtech offers a workplace that is free of bullying and/or harassment. Goodtech aims to be a workplace with no discrimination on the basis of race, gender or sexual orientation. The Group strives not to exercise any form of discrimination in its recruitment or employment practices or in terms of access to education, promotion or reward. Goodtech’s general policies and maxims are aligned to the Norwegian Discrimination Act’s aim of promoting equality, ensuring equal opportunities and rights and preventing discrimination based on ethnicity, national origin, ancestry, colour, language, religion and belief.

http://aarsrapport2015.goodtech.no/eierstyring_og_selskapsledelse/aksjonerinformasjon


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The low absence figures in the Group indicate that the well-being and motivation among employees to go to work is good. Goodtech conducts regular satisfaction surveys and appraisals and assesses any improvements and changes on an on-going basis.

Employees 2016 2015


Number of female employees 11.4% 11.7%

Shareholder-elected women on the Goodtech board

2 of 5 2 of 5

The Group aims to be a workplace offering full equality between women and men and strives continuously to attract more female applicants for its job vacancies. The Group’s female employees currently work mainly in finance and administration.

Remuneration paid to the CEO and the Board are stated in a note to the Annual Accounts. Salaries and other remuneration paid to senior executives are detailed in Note 25 to the Annual Accounts.

Environmental reporting Goodtech makes positive contributions to the development of society by supplying cost-effective projects and innovative technology solutions.. At the same time, the Company consumes raw materials and causes emissions to the air from its transport activities.

We refer to our report on social responsibility contained in the section on people, society and environment in the Annual Report.

Risk factors and risk management Goodtech ASA and the group companies are exposed to different types of market, operational and financial risk. Some companies are also exposed to regulatory risk factors and political risk. Political decisions related to infrastructure and the environment are examples of such risk factors.

Goodtech works continuously to strengthen HSE and compliance as a natural part of the company culture. The aim is to ensure that the Group has efficient compliance procedures, internal rules and monitoring routines in place and that Goodtech’s ethical guidelines are safeguarded and complied with.

The Board wants to ensure the systematic and planned management of risk in all parts of the business and considers this to be a prerequisite for long-term value creation for shareholders and employees. Goodtech works actively to manage risk in all parts of the business and risk assessments are regularly carried out to focus on and assess the most significant risks.

A large part of Goodtech’s operations relates to the implementation of individual projects. The complexity, size, duration and risks of these projects vary. To achieve good results, it is therefore vital that project risk is analysed at the tendering stage and managed in a systematic and professional manner during the implementation phase. The consolidated balance sheet includes the assets and liabilities related to ongoing projects. Some items include some uncertainty where the Company’s management and project managers have exercised discretion based on certain assumptions. The best estimate is the basis for the accounting treatment as at 31 December 2016.

During the project period, situations or changes in market conditions may arise that may result in changed estimates, thereby affecting assets, liabilities, equity and profits. The Group has project risk assessment policies and systems in place from tender stage through to finished project. Review and evaluation of projects is conducted each month. The purpose of this is through corrective measures to limit unwanted financial and production-related consequences as well as having ongoing realistic estimates of the projects available. Goodtech simultaneously focuses on utilising positive opportunities in each project. Improvement is continuously made in the implementation of these procedures.

The Group’s future operations will depend on the Group’s employees having the qualities and the skills required to ensure that projects are completed in accordance with contracts that have been entered into. It will be vital in this respect to meet clients’ future demands for service, technology and efficiency. Risk is reduced by a large spread in the contracts in terms of number and size and no contracts are dominant in relation to total turnover. We prioritise these risk factors and seek to offset them through systematic work in each operating unit on managing and developing processes, procedures, methods and expertise to ensure future growth and earnings in the core areas.

http://aarsrapport2015.goodtech.no/dette_er_goodtech/samfunnsansvar


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Goodtech operates in several European countries. Contracts are mainly in NOK, SEK, EUR and USD. Currency fluctuations may result in adjusted income in NOK for foreign projects. However, group policy is to keep most of the purchases and sales of individual projects in the same currency, thus reducing the risks associated with currency fluctuations. The Group has also established a multi-currency cash system that helps to reduce currency risks. Over the past year, the Company has carried out no significant currency hedging transactions with banks. Goodtech has customers in many different industries, something that makes the Group less vulnerable to market fluctuations.

The risk of our partners being financially unable to meet their obligations is regarded as moderate, and historically the Group has experienced only limited losses on receivables. Goodtech has set up clear guidelines and criteria for evaluating credit risk. The Group also has a large spread of customers in terms of both numbers and size, and its customers are mainly well-established companies and public institutions. This reduces vulnerability to losses on individual customers.

The Board deems the liquidity of the Group to be satisfactory. The Group continuously focuses on liquidity measures. The Group’s strategy is always to have sufficient cash, cash equivalents and/or credit facilities in place to be able to finance operations and investments in accordance with the Group’s strategic plan. Excess liquidity is mainly kept in NOK. Interest-bearing debt is mainly taken out in NOK or SEK. To reduce Goodtech’s exposure to changes in interest rate levels, an agreement has been entered into concerning fixed interest rates on the Company’s long-term loans. Otherwise the Group’s loans and borrowing facilities have variable interest rates.

Research and development

Goodtech works continuously on development of technology and solution-oriented projects. As an example, Goodtech supplies its own technology solutions for high-bay warehousing, production lines and robot cells and industrial IT solutions such as Risk Based Management Systems, Manufacturing Execution Systems (MES) and traceability solutions.

It has been decided that further exploitation of the technology associated with the energy recovery project in Goodtech Recovery Technology AS (GRT) will take place in close cooperation with partners through licensing agreements. Goodtech will continue to own the patent rights to the product solution. In 2016, the Group has written down recognised values related to this project by NOK 6.0 million.

Corporate governance

The Board of Directors of Goodtech has set out principles for corporate governance to safeguard the interests of the Company’s owners, employees and other stakeholders. These include a description of the division of responsibilities between shareholders, the Board and the general management.

The purpose of the Company’s principles for corporate governance is to create greater predictability and transparency and thereby to reduce uncertainty linked with the business. These principles support the targets which the Company is aiming to achieve. The Board is seeking to maintain corporate governance guidelines which are compliant with the Norwegian recommendation for corporate governance.

Corporate governance principles adopted by the Board on 23 March 2017 are discussed in a separate section in the Annual Report.

Annual Accounts

The Group presents its Annual Accounts in accordance with International Financial Reporting Standards (IFRS). The Annual Accounts for the parent company Goodtech ASA are presented in compliance with the Norwegian Accounting Act and Norwegian accounting practice (NGAAP). The Board is of the opinion that the Annual Accounts provide a true picture of the parent company’s and the Group’s assets and liabilities, financial position and profits. In compliance with Sections 3-3a of the Norwegian Accounting Act and Good Accounting Practice (GRS), it has been confirmed that the conditions are in place for the continued operation of the Company.

Group and parent company profits

The Goodtech Group showed profits of NOK -25.2 million in 2016. Profits are NOK -1.13 per share.

The parent company Goodtech ASA showed profits of NOK -34.7 million in 2016. The loss for the year will be covered by other equity. The Board proposes that no dividends be paid on the basis of the Company’s Annual Accounts for 2016.

Goodtech ASA’s (the parent company’s) equity after the proposed distribution of profits for the year amounted to NOK 289.9 million.

http://aarsrapport2015.goodtech.no/eierstyring_og_selskapsledelse/eierstyring_og_selskapsledelse/


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Events after year end The sales agreement that was signed and completed after the end of the year is described above in the ‘Structural and strategic processes’ section. As a result of completed organisational and reporting changes as of 1 January 2017, the structure of business areas has been removed and Goodtech will report figures for its total business from the first quarter of 2017.

Future development of the Group Goodtech is a leading Scandinavian environmental and technology company whose core expertise is automation, industrial IT, environmental technology and state-of-the-art manufacturing technology. The supply of technology and projects is supported by a high level of engineering and project implementation expertise. The Company’s main markets are manufacturing, energy, environment and infrastructure. Goodtech considers the market situation to be satisfactory, but is still seeing fluctuations in individual markets that affect investment and start-up projects. Uncertainty is still associated with the oil and gas market. Goodtech is seeing increased competition in some markets as a result of the downturn in the oil and gas industry. Goodtech will continue to build on existing customer relationships that make up a significant part of turnover. At the end of 2016, Goodtech established a new organisational structure which focuses on project implementation and risk control as well as a clearer and stronger sales and marketing strategy. It is anticipated that this will have an effect on both turnover and profitability going forward. This, in combination with the existing order book and an improved financial situation, gives the Group a solid foundation for future positive development. The Board regards this as a sound basis for positive value creation for the Company’s shareholders and will continue its active dividends policy for the future – adapted to the Company’s profits and financial situation.

Oslo, 23 March 2017

Stig Grimsgaard Andersen Karl-Erik Staubo Anne M. Sødahl Wessel Chairman of the Board Member of the Board Member of the Board

Vibeke Strømme Terje Thon Håvard Kristiansen Member of the Board Member of the Board Member of the Board,

Employee Representative

Rolf Johansson Eric Staurset Member of the Board, Employee Representative

CEO


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Consolidated statement of income Goodtech Group

(NOK 1,000) Note 2016 2015

Operating income 3 704,244 698,259

Cost of goods 3, 13 -358,461 -349,371

Salary and staff costs 4, 6, 25 -282,732 -279,757

Other operating expenses 5 -68,070 -66,143

Restructuring costs etc. 5 -7,854 -3,688

Operating profit before depreciation and non-recurring items

-12,873 -699

Amortisation 10, 11 -10,256 -8,318

Depreciation 11 -36,029 -60,635

Operating profits

-59,158 -69,652

Financial income 7 4,643 7,469

Financial expenses 7 -6,037 -16,904

Net financial expenses -1,394 -9,435

Pre-tax profits

-60,553

-79,087

Tax costs 8 644 -5,079

Profit after tax from continuing operations -61,197 -74,007

Profit after tax from discontinued operations 2 35,962 -95,499

Profits for the year

-25,235 -169,506 Attributable to:

- Shareholders in parent company

-25,575

-169,727

- Minority interests 340 221

Profits for the year -25,235 -169,506 Earnings per share (NOK)

9

-1.13

-5.28

Earnings per share for discontinued operations (NOK) 9 1.59 -2.97


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Consolidated statement of comprehensive income

(NOK 1,000) Note 2016 2015

Profits for the year -25,235 -169,506

Other comprehensive income

Items that will not be reclassified through profit or loss in subsequent periods Estimate deviation pensions, net of tax 6 -85 968

Items that can be reclassified through profit or loss in subsequent periods

Cash flow hedges, net of tax -29 691

Translation differences

-5,035 3,746

Comprehensive income related to discontinued operations -73 -25,131

Extended profit after tax -5,221 -19,727

Total earnings -30,457 -189,233

Attributable to:

- Shareholders in parent company -30,796 -189,454

- Minority interests 340 221

Total earnings -30,457 -189,233

Amounts attributable to shareholders of parent company stemming from:

- Continuing operations

-66,685

-68,824

- Discontinued operations 35,888 -120,630

Total -30,796 -189,454

Notes 1-28 follow the annual accounts and form an integral part of these.


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Consolidated balance sheet as at 31 December Goodtech Group

(NOK 1,000) Note 2016 2015

ASSETS

Fixed assets

Tangible fixed assets 10 45,262 45,511

Intangible assets 11 161,962 199,750

Deferred tax assets 8 46,317 44,844

Other financial assets 12 1,284 2,576

Total fixed assets

254,826 292,680

Current assets

Inventory 13 8,377 10,112

Trade receivables 14 105,465 122,150

Other current receivables 14, 15 169,106 148,244

Cash and cash equivalents 16 46,393 8,204

Total current assets

329,342 288,711

Assets held for sale 2 210 82,349

Total assets

584,378

663,740


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EQUITY AND LIABILITIES

Equity Paid-in capital

Share capital 17 45,752 45,752

Own shares 17 -788 -252

Other paid-in capital 17 389,808 389,808

Total paid-in capital

434,772 435,308

Retained earnings

Other equity -127,118 -94,397

Total retained earnings

-127,118 -94,397

Minority interests 18 974 834

Total equity

308,627 341,745

Liabilities

Non-current liabilities

Loans

19

17,825 20,865

Pension obligations 6 - 1,063

Deferred tax 8 677 1,054

Total non-current liabilities

18,503 22,982

Current liabilities

Loans and credit

19

1,832

34,496

Trade payables and other current liabilities 20 247,329 234,518

Payable tax 8 185 -2,376

Provisions 21 7,901 4,151

Total current liabilities

257,248 270,789

Total liabilities

275,750 293,771

Debt related to assets held for sale 2 - 28,224

Total equity and liabilities

584,378

663,740


Oslo, 23 March 2017

Stig Grimsgaard Andersen Karl-Erik Staubo Anne M. Sødahl Wessel

Chairman of the Board Member of the Board Member of the Board

Vibeke Strømme Terje Thon Håvard Kristiansen

Member of the Board Member of the Board Member of the Board,


Rolf Johansson Eric Staurset

Member of the Board,


CEO


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Consolidated statement of change in Group equity

Share Own Share Other

paid-in Other

Hedging Actuarial

gains Translation

Minority

Total

(NOK 1,000) Note capital shares premium capital equity reserves pensions differences Total interests equity

Equity as at 1.1.2015 65,058 -252 35,318 500,000 46,150 -1,030 -883 41,184 685,546 972 686,518

Profits for the year - - - - -169,727 - - - -169,727 221 -169,507

Extended profit, continuing operations - - - - - 691 968 3,746 5,404 - 5,404

Extended profit, discontinued operations - - - - - -2,742 - -22,389 -25,131 - -25,131

Dividends 17 - - - - - - - - - -250 -250

Purchase of own shares 17 -19,306 - -35,318 -99,821 - - - - -154,444 - -154,444

Other changes - - - -10,372 9,635 - - - -737 -108 -845

Equity as at 31.12.2015 45,752 -252 0 389,808 -113,942 -3,081 85 22,541 340,911 834 341,745


-

-

-

-

-25,575

-

-

-

-25,575

340

-25,235

Extended profit, continuing operations - - - - - -29 -85 -5,035 -5,148 - -5,148

Extended profit, discontinued operations - - - - - - - -73 -73 - -73

Dividends 17 - - - - - - - - - -200 -200

Purchase/sale of own shares - -536 - - -1,853 - - - -2,389 - -2,389

Other changes - - - - 964 2,407 - -3,443 -72 - -72

Equity as at 31.12.2016 45,752 -788 0 389,808 -140,405 -702 0 13,989 307,653 974 308,627



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Consolidated statement of cash flows

(NOK 1,000)

Note

2016

2015

Cash flow from operating activities Annual profit

Adjusted for:

- Tax costs

8

-61,197

644

-74,007

-5,079

- Depreciation and amortisation 10,11 46,285 68,953

- Net change in provisions 21 3,750 -3,692

- Difference between expensed and paid pension 6 -1,148 575

- Interest income 7 -166 -196

- Interest expenses 7 1,131 2,818

- Other changes

Changes to working capital:

-126 3,099

- Inventory 13 1,398 -138

- Trade receivables and other receivables 14, 15 -15,027 -40,970

- Trade payables and other current liabilities 20 26,283 55,139

Cash flow from operating activities 1,829 6,502

Interest received 7 166 196

Interest paid 7 -1,131 -2,818

Tax paid 8 -993 -358

Net cash flow from operating activities – continuing operations -130 3,522

Net cash flow from operating activities – discontinued operations -2,456 971

Net cash flow from operating activities -2,586 4,493

Cash flow from investment activities

Purchase of fixed assets (**) 3, 10 -10,746 -4,242

Proceeds from sale of fixed assets 10 450 -

Purchase of intangible assets 11 -6,875 -7,292

Net cash flow from investment activities – continuing operations -17,171 -11,534

Sale of subsidiaries added to/deducted from cash 2 81,068 94,330

Net cash flow from investment activities – discontinued operations - -1,365

Net cash flow from investment activities 63,897 81,432

Cash flow from financial activities

Payment of dividends to non-controlling interests -200 -250

Purchase of own shares -2,689 -

Repayment of loans 19 -2,404 -60,530

Net cash flow from financial activities – continuing operations -5,292 -60,780

Net cash flow from financial activities -5,292 -60,780

Net change in cash and cash equivalents

56,019

25,145

Balance of cash and cash equivalents as of 01.01 16 -10,901 -38,001

Effect of exchange rate changes on cash and cash equivalents 1,275 1,955

Balance of cash and cash equivalents as of 31.12 *) 46,393 -10,901

*) Consists of:

Cash and cash equivalents on the balance sheet continuing operations 16 46,393 8,204

Cash and cash equivalents on the balance sheet discontinued operations - 12,702

Withdrawal of overdraft continuing operations - -31,808

Cash and cash equivalents in the cash flow analysis 46,393 -10,901

**) Disbursements on the acquisition of buildings and machinery/fixtures as presented in Note 10.



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Notes to the consolidated financial statements Goodtech Group 2016 Note 1 Accounting principles

Goodtech ASA is a public limited company registered in Norway. The company’s headquarters are located at Per Krogh’s vei 4, 1065 Oslo, Norway.

Goodtech is a technology group that contributes to the development of society through upgrading infrastructure and energy systems, improving efficiency and increasing competitiveness within the industry and through meeting society’s environmental challenges.

The company is listed on the Oslo Stock Exchange, has a turnover of around NOK 700 million and has a total of approx. 400 employees located in Norway, Sweden and Finland.

The company is organised into three business areas; Projects & Services, Solutions and Environment. The accounts were approved for publication by the Board on 23 March 2017. 1.1 Main policy

Goodtech presents its accounts in compliance with the Norwegian Accounting Act and International Financial Reporting Standards (IFRS) as determined by the EU with comparison figures provided for the previous year. New accounting standards adopted during the year are discussed below. New IFRSes and interpretations that have been published, but were not mandatory as of 31 December 2016 are discussed in point 1.32.

The consolidated accounts are based on a historic cost accounts principle. Excepted are financial derivatives recognised at fair value with changes in value over comprehensive income.

The consolidated accounts have been prepared with uniform accounting principles for similar transactions and events under otherwise similar conditions.

The applied accounting principles are consistent with the principles used in the previous accounting period. Restructuring costs etc. are reported separately and are included in EBITDA in 2016. Last year’s figures have been restated accordingly. 1.2 Functional currency and reporting currency

The Group presents its accounts in NOK. This is also the parent company’s functional currency. Subsidiaries using other functional currencies are converted to the day rate for balance sheet items and the profit and loss account at average rates for the period. Translation differences are recognised in other comprehensive income. Upon loss of control, significant control or joint control, accumulated conversion differences relating to investment that are attributable to controlling interests are recognised.

1.3 Consolidation principles

Subsidiaries

The Group includes Goodtech ASA and companies of which Goodtech ASA has control, cf. Note 18. Control can also be achieved where the Group is exposed to variability of returns from the entity and is in a position to affect returns by its control over the entity. Subsidiaries are consolidated from the date control is achieved and deconsolidated when control ceases. The Group assesses whether it controls or does not control companies when facts and circumstances indicate that changes have taken place in one or more control elements. Minority interests are included in the Group’s equity.

The acquisition method is used for recognising company mergers in the profit and loss account. Companies which are bought or sold during the course of the year are included in the group accounts from the date on which control is achieved until the date on which it ceases.

Changes in ownership interests in subsidiaries that do not result in loss of control are accounted for as equity transactions. Consideration is recognised at fair value and the difference between any consideration paid and the carrying value of minority interests are recognised in the controlling owners’ equity.

In the event of a change in ownership resulting in loss of control, consideration is measured at fair value. The carrying value of assets and liabilities of the subsidiary and minority interests are derecognised on the date of loss of control. The difference between the compensation transferred, the carrying value of net assets and any minority interests is recognised in the profit and loss account as profit or loss. Amounts previously recognised in other comprehensive income in respect of that entity are treated as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

Investments in affiliated companies

Affiliated companies are units in which the Group has significant influence, but not control (usually an ownership share of between 20% and 50%) of financial and operational management. The Group accounts include the Group’s share of profits from associated companies entered by equity method from the time significant control was achieved and until such control ceases.

When the Group’s share of losses exceeds its interest in an associate, the Group’s recognised amount is reduced to nil and further losses are not recognised unless the Group has an obligation to cover the loss.


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Elimination of transactions during consolidation

Internal group transactions and intra group balances, including internal earnings and unrealised gains and losses are eliminated. Unrealised earnings in respect of transactions with affiliated companies are eliminated by the Group’s share of the company. Unrealised losses are eliminated, but only to the extent that there is any indication of impairment of the asset sold internally.

1.4 Cash and cash equivalents

Cash and cash equivalents include cash, bank deposits, other short-term, easily transferable investments with a maximum of three months’ original term and withdrawals on bank overdrafts. Bank overdrafts are included in the loans balance under current liabilities.

In the cash flow statement, the credit facility is included in the balance of cash and cash equivalents. The amount of cash and cash equivalents is further detailed by cash and cash equivalents and use of the credit facility.

1.5 Trade receivables

Trade receivables are entered at acquisition price minus loss from depreciation.

1.6 Projects in progress and advance payments from customers

Production which has been carried out, but not invoiced is entered at acquisition price plus share of profit earned on the balance date, see point 1.21 for a description of policies for recognition of income. Acquisition price includes costs directly related to specific projects and a share of fixed and variable indirect costs involved in the Group’s contract activities based on either standard or current capacity utilisation – whichever is highest.

In determining such costs, expenses for future activities on a contract have not been included. These expenses are shown as goods, advance payment or other turnover assets depending on cost type.

The balance shows production that has been carried out, but not invoiced minus provisions for anticipated loss and advance payments under ‘Other current receivables’. In cases where advance payment exceeds the production that has been carried out the advance payment is recognised under ‘Trade accounts payable and other current liabilities’.

1.7 Inventory

Inventory is recognised in the profit and loss account at the lower of either acquisition price or net sales price. Net sales price is an estimated sales price for ordinary operations minus estimated costs for completion, marketing and distribution. Acquisition cost is allocated by use of the FIFO method and includes expenses accrued when acquiring the goods and the costs of bringing the goods to their current condition and location. Proprietary goods include variable and fixed costs which can be allocated based on either standard or current capacity utilisation – whichever is highest.

1.8 Financial derivatives and hedging instruments

Separate derivatives are valued at fair value. The Group uses interest rate swaps as hedging instruments for hedging cash flows related to long-term financing and currency futures designated as hedging instruments for foreign exchange risk on highly probable future cash flows.

Cash flow hedging

The effective element of the change in the fair value of derivatives which are earmarked and qualify as hedging instruments in cash flow hedging are recognised in other comprehensive income.

Hedging profits or losses which are recognised in other comprehensive income and accumulated in equity are reclassified for the profit and loss account in the period in which the hedged item affects the profit and loss account. Profits or losses which are linked to the effective element of the interest rate swap contracts which secure loans with floating interest rates are recognised under ‘Financial expenses’.

When a hedging instrument expires or is sold, or when a hedge no longer meets to criteria for hedge accounting, any cumulative gain or loss is recognised in other comprehensive income in equity and is reclassified as profit at the same time as the hedged transaction is recognised. If a hedged transaction is no longer expected to take place, the carrying amount in equity is immediately transferred to the profit and loss account under ‘Net other (losses) gains’.

1.9 Financial assets

The Group classifies financial assets in the following categories: at fair value included in profits, loans and debts and assets for sale. The classification depends on what is intended with the asset. Management classifies financial assets on acquisition and carries out a new assessment of this classification on each reporting date. During the reporting period the Group only has financial assets classified as ‘loans and debts’.

Loans and debts are non-derivative financial assets with fixed payments which are not transferable in an active market. These are classified as current assets unless they fall due more than 12 months after the balance date. If so, they are classified as fixed assets. Loans and debts are classified as ‘trade receivables, other current liabilities and other fixed assets’ in the balance and are entered at amortised cost.

1.10 Amortisation of financial assets

Financial assets valued at amortised cost are written down when it is probable based on objective evidence that the instrument’s cash flow has been affected negatively by one or more events occurring after the initial recognition of the instrument in the profit and loss account up to the balance sheet date. The amount of the amortisation is recognised in the profit and loss account. If the reason for the depreciation later ceases and the cessation can be objectively associated with an event taking place after


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the inclusion of the depreciation, the previous write-down is reversed. This reversal must not result in the balance value of the financial asset exceeding the amount of what the depreciated cost would have been, if the depreciation had not been included at the time when the write-down was reversed.

1.11 Tangible fixed assets

Fixed assets are measured at acquisition cost minus accumulated depreciation and amortisation. When assets are sold or disposed of, the carrying value in the balance sheet is deducted and any profit or loss recognised in the profit and loss account.

Acquisition price for fixed assets is the purchase price including duties/taxes and costs directly associated with preparing the fixed assets for use. Costs after the fixed asset has been taken into use, such as continuous maintenance, are recognised in the profit and loss account, while other costs that are expected to provide future financial benefit are recognised in the balance sheet.

Depreciation is calculated on a straight-line basis over estimated useful life:

Buildings 20-30 years

Machinery, equipment etc. 3-10 years

Depreciation and amortisation period, method and retirement value are assessed annually.

1.12 Lease agreements

Financial lease agreements

Lease agreements for which the Group assumes the main risk and profit involved in ownership of the asset are financial lease agreements. At the beginning of the lease period, financial lease agreements are recognised at an amount corresponding to the lower of either fair value or the present value of the minimum lease minus the accumulated depreciation and amortisation. For calculation of the lease agreement’s present value the implicit interest cost in the lease agreement is used if it is possible to calculate this. Direct costs associated with establishing the lease agreement are included in the cost of the asset.

The same depreciation time is used as for the Group’s other depreciable assets. If there is no reasonable certainty that the group will take over ownership at the end of the lease period, the asset depreciates over the shortest of the periods for the duration of the lease agreement or for the useful life of the assets.

Operational lease agreements

Lease agreements where the main risk and profit associated with ownership of the asset are not transferred to the lessee are classified as operational lease agreements. Lease payments are classified as operating expenses and are recognised on a straight-line basis over the contract period.

1.13 Fixed assets held for sale and phased-out operations

Fixed assets and groups of fixed assets and debt are classified as for sale if their book value will be recovered through a sales transaction instead of through continued use. This is deemed to be the case when a sale is very probable and the fixed asset (or group of fixed assets and debt) is available for immediate sale in its present form. Management must have committed itself to a sale and the sale must be expected to be completed within a year from the date of classification.

Fixed assets and groups of fixed assets and debt classified as for sale are measured at the lowest value of previously booked value and fair value minus sales costs.

1.14 Intangible assets

Intangible assets acquired separately are recognised on the balance sheet at cost. The cost of intangible assets obtained through acquisitions are entered on the balance sheet at fair value in the consolidated opening balance. Intangible assets entered on the balance sheet are entered in the accounts at cost less any depreciation or write-down.

Internally generated intangible assets, with the exception of recognised development costs, are not entered on the balance sheet but are entered as costs on an ongoing basis.

Intangible assets with finite lives are amortised over their useful economic life and assessed for impairment if there are indications of this. Depreciation method and period are reviewed at least annually. Changes to depreciation and/or period are treated as a change in estimate.

Intangible assets with indefinite useful life are assessed annually for depreciation. See Point 1.16.

Patents and licences

Patents and licences are recognised in the balance sheet at acquisition cost minus accumulated depreciation and amortisation. Depreciation is calculated on a straight-line basis over estimated useful life, which is varying from 5-10 years. Depreciation period and method are reviewed annually.


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Research and development

Expenses associated with research activities are recognised in the profit and loss account when they arise. Development expenses are recognised in the profit and loss account when it is probable that the project will produce future financial benefit. The prerequisite for being recognised in the profit and loss accounts is that the project is technically and commercially viable, that the Group has sufficient resources to complete the project and that expenses can be reliably measured. Other development expenses are recognised in the profit and loss account when they arise. Development expenses which have previously been recognised are not recognised in the balance sheet in subsequent periods. Expenses which are recognised in the balance sheet include material costs, direct salary expenses and other directly attributable costs. Development expenses recognised in the balance sheet are entered as acquisition costs minus accumulated depreciation and amortisation. Development costs depreciate on a straight-line basis over the estimated useful life of the asset. This may take place using either straight-line depreciation or project allocation of depreciation charge over the life of the asset.

Customer contracts

On acquisition of a company, customer contracts which fulfil the definition of intangible assets contained in IAS 38 are separated and recognised individually. Income-based models are used as a basis for determination of fair value. Customer agreements depreciate on a straight-line basis over the contract period.

1.15 Company mergers and goodwill

Mergers are recognised according to the acquisition method. For a description of how minority interests are measured, please see Note 1.20. Transaction costs are recognised as they are incurred.

The cost of an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed, and equity instruments issued. The cost includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Expenses related to the merger are recognised as they are incurred. Identifiable assets and liabilities are recognised at fair value on the acquisition date. Minority interests in the acquired entity are measured from time to time either at fair value or at their share of the acquiree’s net assets.

When a company is acquired in stages, the stake from previous purchases is reassessed at fair value at the time of the recognition of the value change.

Contingent consideration is measured at fair value on the acquisition date. The contingent consideration is classified as a liability under IAS 39 and is recognised at fair value in subsequent periods of change in value in the profit and loss account.

If the sum of the consideration, the fair value of previous ownership interests and any fair value of minority interests exceed the fair value of identifiable net assets acquired, the difference is recorded as goodwill. If the total is less than the company’s net assets, the difference is recognised. Goodwill is not amortised, but is tested for impairment at least annually, cf. Point 1.16.

The part of the fair value of the equity that exceeds the consideration (negative goodwill) is recognised immediately upon acquisition.

1.16 Decrease in value of non-financial assets

Intangible assets with indefinite useful lives are not amortised and are assessed annually for impairment. Tangible and intangible assets are tested for impairment when there are indicators that the future cash flows do not justify the carrying value. Depreciation is recognised with the difference between the carrying value and recoverable amount. The recoverable amount is the higher of fair value less sales costs and utility value.

When assessing decrease in value, fixed assets are grouped at the lowest level where it is possible to divide out independent cash flows (cash flow generating units). At each reporting date, the possibility of reversing previous write downs of non-financial assets (except goodwill) is assessed.

For assessment of the need for depreciation of goodwill, goodwill is allocated to the current cash-generating units. The allocation of goodwill is to the cash-generating units or groups of cash-generating units which are expected to gain from the purchase.

1.17 Loans

Loans are recognised in the profit and loss account at fair value when payment of the loan occurs, with deduction for transaction costs. In subsequent periods, loans are entered at amortised cost calculated using effective interest rate. The difference between the loan amount paid out (less transaction costs) and the redemption value is recognised in the profit and loss account over the term of the loan.

Loans are classified as current liabilities unless an unconditional right exists to defer payment of the debt for more than 12 months from the balance sheet date.

1.18 Provisions

A provision is recognised in the profit and loss account when the Group has an obligation (legal or self-imposed) as a result of an earlier event, there is a strong probability that a financial settlement will take place and the size of the obligation can be reliably measured. If the effect is significant, the provision is calculated by discounting anticipated future cash flows with a discount rate before tax which reflects current market conditions and risk applicable to the obligation.

A provision for guarantees is included when the underlying products or services are sold. The provision is based on historical information about guarantees and a weighting of possible outcomes according to the probability of their occurrence.


21

Restructuring provisions are included when the group has approved a detailed and formal restructuring plan and the restructuring has already started or has been made public.

Provision for loss-making contracts is entered when the Group’s anticipated income from a contract is lower than the unavoidable costs involved in discharging obligations under the contract. 1.19 Equity

Expenses for equity transactions

Transaction costs directly associated with equity transactions are recognised in the profit and loss account allocated directly to the equity after deduction of tax.

Translation differences

Translation differences arise in conjunction with currency differences on consolidation of foreign units. For disposal of foreign units the accumulated translation difference associated with the unit is reversed and recognised in the profit and loss account for the same period as the profit or loss of the disposal is recognised in the profit and loss account.

1.20 Minority interests

Minority interests included in the consolidated accounts constitute the minority interest’s carrying value of equity.

The subsidiary’s income and the components of other income and costs are attributed to the owners of the parent company and minority interests. Results are attributed to the parent company owners and to the minority interests even if this results in the minority interest having a deficit.

1.21 Principles for recognition as income

Income is recognised in the profit and loss account when it is probable that transactions will generate future financial benefit which will accrue to the group and the size of the amount can be reliably estimated. Sales income is presented after deduction of value added tax and discounts.

Sale of goods

Income from the sale of goods is recognised when delivery has taken place and the significant risks and rewards of ownership have been transferred to the buyer, and Goodtech no longer has control or administrative influence over the goods.

Construction contracts

Income from long-term construction projects is recognised in the profit and loss account as the project progresses when the result of the transaction can be reliably estimated. Progress is measured using one of two methods: accrued expenses on the balance date compared to total estimated project cost or hours worked compared to total estimated hours. The choice of method depends on the type of project; hourly or product-based. When the result of the transaction cannot be reliably estimated, only income corresponding to accrued project costs will be recognised as income. In the period in which a project is identified as giving a negative result, the estimated loss on the contract will be recognised in the profit and loss account in its entirety.

Services

Income from the sale of services is recognised in the profit and loss account as the project progresses. Progress is measured in accrued hours compared to total estimated hours. Some projects include the supply of both products and services. Such projects are recognised in the profit and loss account according to the principles for construction contracts. In the period in which a project is identified as giving a negative result, the estimated loss on the contract will be recognised in the profit and loss account in its entirety.

Royalties are recognised in the profit and loss account when they are earned in accordance with the provisions of the underlying agreement. Interest earnings are recognised in the profit and loss account based on the effective rate as they are earned.

Dividends are recognised when the shareholders’ right to receive dividends has been determined by the AGM.

1.22 Foreign currency

Foreign exchange transactions

Foreign exchange transactions are calculated at the exchange rate prevailing at the time of the transaction. Monetary items in foreign currency are converted to Norwegian kroner by using the rate of exchange on the balance date. Non-monetary items which are measured at historical exchange rates expressed in foreign currency are converted to Norwegian kroner by using the exchange rate at the time of transaction. Non-monetary items which are measured at fair value expressed in foreign currency are converted to the exchange rate determined at the time of the balance. Foreign currency fluctuations are recognised in the profit and loss account continuously over the accounting period.


22

The following exchange rates are used:

SEK EUR Exchange rate 1.1.2016 104.75 9.62 Exchange rate 31.12.2016 95.12 9.09 Average rate 2016 92.63 9.04

Activities abroad

Assets and liabilities in foreign companies including goodwill and fair value adjustments which appear on consolidation are converted to Norwegian kroner by using the exchange rate on the balance date. Income and expenses in foreign enterprises are converted to Norwegian kroner by using the average exchange rate. Average exchange rate is calculated quarterly. Exchange rate differentials are allocated to equity. Translation differences in equity are recognised in the profit and loss account on disposal of the foreign enterprise.

1.23 Employee benefits

Pension schemes

The Group has various pension schemes. The pension schemes are generally financed through disbursements to insurance companies. At the end of 2016, the Group only has contribution-based schemes for its employees in place. In accordance with the law on mandatory company pensions, all group employees in Norway participate in pension schemes that meet the requirements of the law. For defined contribution plans, the company pays fixed contributions. The company has no legal or self-imposed obligations to inject further funds if it turns out that there are not sufficient assets to pay all employees the benefits that are related to their service in the current or previous periods. A defined-benefit plan is defined as a scheme which is not a defined-contribution plan.

A defined-benefit plan will typically define the amount an employee will receive from the retirement date, usually depending on age, years of employment and salary.

Defined-benefit pension schemes

Net obligation is calculated based on the present value of the future pension benefits which the employee has accrued on the date of balance, less the net realisable value of pensions assets. Gross liability is calculated by independent actuaries. The discount rate is derived on the basis of on the interest rate on corporate bonds and is adapted to the maturity of the liability. The calculation is based on a linear earnings model and includes employer’s contributions for net actually underfinanced schemes.

Introduction of a new defined-benefit scheme or improvement of an existing one involves changes in pension obligations. This is entered as cost on a straight-line basis until the effect of the change is taken up. The introduction of new schemes or changes to existing ones that occur with a retroactive effect, so that the employees have immediately earned a paid-up pension (or change in paid-up pension) are entered immediately. Gains or losses in respect of restriction or conclusion of pension schemes are entered as they occur.

Profit and loss resulting from the recalculation of the liability resulting from experience variances and changes in actuarial assumptions are charged directly against equity through comprehensive income in the period they occur.

Contribution-based pension schemes

During 2016, the Group has discontinued the defined benefit scheme that existed in one Norwegian subsidiary. At the end of 2016, the Group’s subsidiaries have only have contribution-based schemes in place. The Group makes a fixed payment to an insurance company and has no legal or other obligation to make any further payment. Pension premiums are entered as costs as they occur.

Profit share and bonus schemes

The Group recognises a provision in the profit and loss account where it has contractual obligations or where a previous practice has created a self-imposed obligation.

1.24 Loan costs

Loan costs that are directly attributable to the acquisition or production of a qualifying asset are capitalised as part of the acquisition cost of the asset.

1.25 Public grants

Public grants are recognised in the profit and loss account when there is reasonable certainty that the company will fulfil the conditions associated with the grant and that the grant will be received. Recognition of operational grants is calculated systematically over the grant period. Grants are recognised as deductions from the cost that the grant is intended to cover. Investment grants are recognised in the balance sheet and calculated systematically over the useful life of the asset. Investment grants are calculated by deducting the grant from the value of the asset recognised in the profit and loss account.

1.26 Income tax

Tax costs consist of payable tax and changes in deferred tax. Deferred tax/tax advantage is calculated on all differences between accounting and tax values of assets and liabilities with the exception of temporary differences in connection with goodwill.


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Deferred tax advantage is recognised in the profit and loss account when it is probable that the company will have sufficient tax surplus in later periods to utilise the tax advantage. The Group recognises in the profit and loss account tax advantages which have previously not been recognised to the extent that it has become probable that the Group can utilise such deferred tax advantage. The Group will likewise reduce deferred tax advantages to the extent that the group no longer regards it as probable that it can utilise the deferred tax advantage.

Deferred tax and deferred tax advantages are measured based on anticipated future tax rates for the companies in the Group where previously temporary differentials have arisen.

Deferred tax and deferred tax advantages are recognised at nominal value and are classified as financial capital expenditure (long-term debt) in the balance sheet.

Payable tax and deferred tax are allocated in the profit and loss account to equity to the extent that the tax entries relate to equity transactions.

1.27 Segment information

The Group reports segment information in accordance with IFRS 8, Business Segments, which requires that segment information be based on internal management reports which are followed up regularly by the Group’s most senior decision-maker (Chief Operating Decision Maker) to evaluate the profits of the segments and to allocate resources to them. The Group presents segment information for business segments and geographical segments (see Note 2).

In 2016, Goodtech organised its business into three reportable segments (business areas), based on the types of project, products and services supplied and various customer groups: Projects & Services, Solutions and Environment.

1.28 Contingent liabilities and assets

Contingent liabilities that are unlikely to be settled or which cannot be measured reliably are not recognised in the annual profit and loss account. Significant contingent liabilities are recognised with the exception of contingent liabilities where the probability of the liability is low.

A contingent asset is not recognised in the annual profit and loss account, but is recognised where it is probable that a benefit will accrue to the Group.

1.29 Events after the balance date

New information about the Group’s financial position on the balance date arising after the balance date is recognised in the profit and loss account. Events after the balance date which do not affect the group’s financial position on the balance date, but which will influence the Group’s financial position in the future are recognised if they are significant.

1.30 Uncertainty of estimates

In its presentation of the annual accounts in compliance with IFRS the group management has used estimates and assumptions deemed to be realistic. Situations or changes may arise which may mean that such estimates require adjustment and thereby affect the group’s assets, debt, equity or profit and loss.

The Group’s most important accounting estimates relate to the following:

Construction contracts

Estimates of goodwill

Deferred tax assets

Construction contracts present a number of challenges from the tender phase to handover. The estimates on which the accounts are based rely on uniform principles and are subject to control procedures which are designed to ensure effective measurement of project results and progress. The complexity and scope mean that the project estimates have an inherent risk of error despite the Group’s efforts to ensure correct measurement.

The Group’s recognised goodwill is assessed annually or when there are indications of a fall in value. Factors that may trigger a review of the asset value include poor profits compared to historical profits or poor anticipated profits, significant negative industry or financial developments or significant changes to overall business strategy. Assessments of recoverable amounts of assets and companies are partially based on management estimates, including determining own cash flow generating units, estimates of future profits, an asset’s income capacity and assumptions about future market conditions and use of synergy effects. Changes in circumstances and management assumptions may lead to write-downs.

Deferred tax assets based on losses carried forward are recognised to the extent expected future income for the company, taking into account Group contributions, in the medium term will be sufficient to utilise these losses. This makes it necessary to estimate the company’s future income. Such estimates may change over time and cause changes in the carrying value of deferred tax assets.

1.31 Standards not yet effective

The following new standards, corrections and interpretations of standards had not come into effect by 31 December 2016 and have not been applied in these consolidated accounts. Commencement dates are those that apply to IFRS adopted by the EU. These may in some instances deviates from commencement dates according to IASB.


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IFRS 9 Financial Instruments addresses the classification, measurement and recognition of financial assets and financial liabilities. The standard replaces those parts of IAS 39 that relate to the classification and measurement of financial instruments. The parts of IAS 39 that have not been amended as part of this project have been transferred to and incorporated in IFRS 9. The standard will have an impact on how the company presents its results. According to IFRS 9, profits on disposals of financial instruments available for sale are not recognised in the profit and loss account, but only included in the total profit and loss account. The standard will apply to accounting periods beginning 1 January 2018 or later. As the Group is currently organised and financed, no significant effects are anticipated on the basis of the proposed changes. IFRS 15 ‘Revenue from contracts with Customers’ requires a division of customer contracts into separate performance obligations. A performance obligation may be a product or a service. Revenue must be recognised when a customer obtains control of goods or services and thus has the ability to determine the use and receive the benefits of that product or service. The standard will replace IAS 18 Operating Income and IAS 11 Construction Contracts. The standard comes into force for the financial year 2018. Recognition concurrently with the project’s degree of completion is still expected to be the main method applied to construction and service contracts in the Group. Assessments of the effects of the new standard on the consolidated accounts are on-going. The current view is that the new standard will not significantly affect the Group’s recognition of income.

IFRS 16 Leases will come into force from 2019. The new standard means that the leases currently accounted for as operating leases will be entered in the accounts as equivalent to current accounting of financial leasing so that the value of the right of use of an asset and the corresponding lease liability are recognised in the balance sheet. Only leases for short-term rental periods and assets of lesser value will be exempt. As a result, the assets and liabilities will increase and EBITDA will be enhanced as a result of leasing costs being presented as depreciation and financial costs rather than as operating expenses.


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Note 2 Sale of business and phased-out operations (NOK 1,000)

On 27 January 2016, Goodtech signed an agreement for the sale of all its shares in Goodtech Products AS (GPR) to Addtech Nordic AB. The transaction was completed on 1 February 2016. The sale price for all shares in Goodtech Products AS was finally set at NOK 26.9 million, taking into account the agreed adjustment for net debt and equity divergence on the acquisition date.

The sale of all shares in Goodtech’s wholly owned subsidiary Goodtech Environment AS (GEAS) to the Chinese company Anhui Guozhen Environmental Protection Technology Joint Stock Co. Ltd. (GZEP) was completed on 29 February 2016. On completion of the transaction, Goodtech received NOK 44.4 million as the purchase price and repayment of loans of NOK 17.6 million that Goodtech had extended to GEAS. Goodtech additionally received NOK 6.1 million in dividends from GEAS for the financial year 2015.

At the beginning of February 2017, the business associated with Promaps (PRO) was transferred to Promaps Technology AS for a cash payment of NOK 190,000 which has been used for a subsequent cash issue for a stake of 19%. The other shareholders in Promaps Technology AS have an option to buy the shares. As a result of this transaction, the Promaps business has been classified as ‘Held for sale’ and presented on the line for discontinued operations in the prof it and loss account. Comparison figures have been restated accordingly.

Earnings from discontinued operations and phased-out operations 2016

Promaps GEAS GPR Previous sales and disposals Total

Operating income 1,165 16,849 6,050 - 24,063

Cost of goods sold 52 11,036 4,002 - 15,090

Salary costs 1,207 3,586 1,448 - 6,242

Other operating expenses 2,361 1,978 530 - 4,868

EBITDA -2,456 249 70 0 -2,137

Amortisation 810 164 72 - 1,046

Depreciation 2,880 - - - 2,880

Operating profit EBIT -6,146 85 -2 0 -6,063

Net financial items - 2 76 - 78

Pre-tax profits -6,146 87 74 0 -5,985

Tax costs -1,536 22 - - -1,514

Profit after tax from discontinued operations -4,610 65 74 0 -4,471

Gain/loss on sale - 33,140 7,859 -568 40,432

Total recognised profit discontinued operations -4,610 33,245 7,933 -641 35,962

Assets and liabilities of discontinued operations and derecognised phased-out operations

Specified assets discontinued operations classified as held for sale as at 31.12.2016

Promaps Total

Tangible fixed assets 20 20

Intangible assets 190 190

Total fixed assets 210 210

Total assets discontinued operations 210 210

Cash flow from discontinued operations and phased-out operations 2016

Discontinued operations Promaps Total

Net cash flow from operating activities -2,456 -2,456

Net cash flow from investment activities - 0

Net cash flow from financial activities - 0

Discontinued operations

GEAS

GPR

Previous sales

and disposals

Total

Net cash flow from operating activities 249 70 - 319

Net cash flow from investment activities - - - 0

Net cash flow from financial activities - - - 0

Net sales proceeds and repayment loans

67,243

27,752

-1,225

93,770

Cash sold -8,597 -4,105 - -12,702

Net cash flow 58,646 23,647 -1,225 81,068


26

Sale of subsidiaries and organisational changes 2015 Discontinued operations consist of activities disposed of in the sale of Goodtech Intressenter AB and activities held for sale in Goodtech Products AS and Goodtech Environment AS.

Fixed assets held for sale and phased-out operations 2015

On 22 December 2015, all the shares in Goodtech Intressenter AB (GIAB) were sold to AB Coport 480 (now called Eitech Holding AB). GIAB is the parent company in Goodtech’s Swedish group and owns all the shares in Goodtech Projects & Services AB, INAC Process AB and Power Control AB. Goodtech Projects & Services AB owns 50% of the shares in GAQ Contracting AB which is also included in the transaction.

Earnings from discontinued operations and phased-out operations 2015

Phased out operations Discontinued operations

(NOK 1,000) GIAB GEAS GPR Promaps Total

Operating income 2,100,710 121,237 87,774 553 2,310,274

Operating expenses -2,075,524 -111,087 -83,634 -2,677 -2,272,922

Amortisation -7,186 -918 -873 - -8,977

Depreciation and non-recurring items -1,840 -1,568 - - -3,408

Net financial expenses -5,690 -230 -741 - -6,661

Profit from affiliated companies 3,984 - - - 3,984

Pre-tax profits 14,454 7,434 2,526 -2,124 22,289

Tax costs -3,252 -2,293 -711 531 -5,725

Profits after tax 11,202 5,141 1,815 -1,593 16,564

Impairment of goodwill -164,782 - - - -164,782

Remaining losses -2,759 - - - -2,759

Translation differences current year 30,344 - - - 30,344

Acc. translation differences previous years 25,131 - - - 25,131

Results from phased-out operations -100,863 5,141 1,815 -1,593 -95,499

Specified assets and liabilities derecognised on disposal of subsidiaries, assets and liabilities as of 31.12.2015

GEAS GPR Elimination Total

Tangible fixed assets 3,492 2,457 - 5,949

Intangible assets 5,634 6,453 - 12,087

Investments in affiliated companies 1,638 - - 1,638

Deferred tax assets - 197 - 197

Total fixed assets 10,764 9,106 0 19,871

Inventory 15,784 5,644 - 21,428

Trade receivables 12,799 13,542 -422 25,919

Other current receivables 2,060 370 - 2,430

Cash and cash equivalents 8,597 4,105 - 12,702

Total current assets 39,240 23,660 -422 62,479

Total assets discontinued operations 50,005 32,767 -422 82,349

Non-current liabilities 116 - - 116

Current liabilities 36,115 14,017 -22,023 28,108

Total debt related to assets discontinued operations 36,231 14,017 -22,023 28,224

Cash flow from discontinued operations and phased-out operations 2015

Discontinued operations GEAS GPR Promaps Total

Net cash flow from operating activities 8,444 -5,348 -2,124 972

Net cash flow from investment activities -1,101 -264 - -1,365

Net cash flow from financial activities - - - 0

Phased-out operations GIAB

Net cash flow from operating activities 44,192

Net cash flow from investment activities -2,713

Net cash flow from financial activities -36,139

Total 5,340


27

Note 3 Segment information (NOK 1,000)

Operating segments

Segment information has been prepared in compliance with IFRS 8 and is based on the reporting the management uses when assessing performance, profitability and resource allocation.

In 2016, Goodtech has organised its business into three reportable segments (business areas), based on the types of project, products and services supplied and various customer groups. Segment information has been prepared in compliance with IFRS 8 and is based on the reporting the management uses when assessing performance, profitability and resource allocation. The reporting segments (business areas) in 2016 are: Projects & Services, Solutions and Environment.

Goodtech has completed organisational and reporting changes which mean that the business areas will be removed effective from 1 January 2017. In line with the requirements for aggregation according to IFRS 8, Goodtech will thus not be reporting on separate segments (business areas) in 2017.

The Projects & Services business area supplies qualified technical solutions in the fields of automation, industrial IT and

power for industry and the public sector. These deliveries include everything from large, technically demanding projects to smaller, on-going local projects.

The Solutions business area supplies automation products and streamlining solutions for production, material handling, warehousing and logistics to Scandinavian industry as well as to selected customers and industries internationally.

The Environment business area supplies customised environmental technology, products and solutions for environmental problems to municipalities and industrial companies.

2016

Projects &

Services

Solutions

Environment Group items *)

Total

Revenue from external customers 288,035 147,042 269,126 42 704,244

Inter-segment revenue 2,064 136 - -2,200 0

Total segment revenue 290,099 147,178 269,126 -2,159 704,244

Cost of goods -58,863 -70,546 -229,544 492 -358,461

Salary costs -181,030 -63,673 -27,014 -11,014 -282,732

Other operating expenses -42,836 -16,953 -7,915 -366 -68,070

Restructuring etc. - -3,974 - -3,880 -7,854

Operating income before depreciation and amortisation

7,370 -7,969 4,653 -16,927 -12,873

Amortisation -4,697 -2,960 -1,220 -1,379 -10,256

Depreciation -10,462 -19,500 -6,067 - -36,029

Operating profits -7,790 -30,429 -2,634 -18,306 -59,158

Net financial expenses 2,895 -1,553 -816 -1,920 -1,394

Pre-tax profits -4,895 -31,982 -3,449 -20,226 -60,553

Assets

277,500

62,528

163,628

83,914

587,570

Acquisition of fixed assets 3,952 992 1,042 4,761 10,746

In 2016, amortisation of goodwill in the Solutions and Projects & Services business areas was applied and intangible assets

within Projects & Services and Environment, cf. Note 11.


28

2015

Projects &

Services

Norway

Solutions

Environment Group items *)

Total

Revenue from external customers 310,251 172,231 215,764 12 698,259

Inter-segment revenue 4,731 207 1,267 -6,205 -

Total segment revenue 314,982 172,437 217,031 -6,192 698,259

Cost of goods -82,512 -92,997 -176,031 2,170 -349,371

Salary costs -174,517 -67,608 -26,667 -10,964 -279,757

Other operating expenses -43,724 -16,497 -6,998 1,076 -66,143

Restructuring etc. -774 -401 - -2,512 -3,688

Operating income before depreciation and amortisation

13,455 -5,067 7,335 -16,422 -699

Amortisation -2,763 -2,958 -1,066 -1,530 -8,318

Depreciation -3,074 -30,961 -26,600 - -60,635

Operating profits 7,617 -38,986 -20,331 -17,952 -69,652

Net financial expenses -2,011 1,236 -8,022 -638 -9,435

Pre-tax profits 5,606 -37,749 -28,354 -18,590 -79,087

Assets

270,061

101,301

163,010

129,368

663,740

Acquisition of fixed assets 3,254 253 672 63 4,242

The segments are reported gross including sales to other segments. Group items include sales among the segments and group activities in the parent company Goodtech ASA that are not distributed among the segments. Standard business conditions apply to transactions and transfers among the group’s segments similar to those employed with external parties.

In 2015, amortisation of goodwill in the Solutions business area was applied and intangible assets within Projects & Services and Environment, cf. Note 11.

*) Assets under Group items mainly consist of assets owned by the parent company and assets related to discontinued operations.

Income by product group 2016 2015

Sale of goods 43,482 18,857

Construction contracts 468,065 492,370

Services 190,553 170,599

Other revenue 2,144 16,433

Total revenue 704,244 698,259

Information about geographical areas 2016 2015

Norway 452,212 470,126

Sweden 191,729 179,250

Finland 2,587 1,114

Poland 4,031 1,845

USA 5,471 1,113

Japan 24,651 21,963

Hungary 801 9,397

Belgium 3,228 1,248

Germany 4,371 1,850

Netherlands 2,759 -

Romania 993 403

Chile 7,665 4,166

Others 3,747 5,784

Total revenue 704,244 698,259


29

Information about geographical areas is based on where the customer is located.

Fixed assets 2016 2015

Home state/Norway 15,424 10,975

Sweden 13,189 17,984

Other 17,954 19,128

Total fixed assets 46,567 48,087

Fixed assets consist of plant and equipment, investments in associated companies and other financial assets presented in the balance sheet.

Note 4 Salaries and staff costs (NOK 1,000)

2016 2015

Payroll 220,068 216,248

Employers’ national insurance 35,678 36,415

Pension costs 18,681 17,210

Other staff costs 8,305 9,883

Total payroll costs 282,732 279,757

Average number of full-time equivalents in the period 363

368

Number of employees as at 31.12. 341 374

Number of employees in discontinued operations has been deducted from comparison figures for 2015.

Note 5 Other operating costs and restructuring costs (NOK 1,000)

Other operating expenses 2016 2015

Rent and commercial premises 19,250 17,932

Travel expenses 11,172 10,933

Car expenses 2,729 3,165

Sales and marketing expenses 3,422 3,653

Consultants, advisors and other external services 9,938 8,825

IT costs 9,113 8,186

Fixtures 1,530 962

Postage and telephone 2,976 3,882

Losses on receivables 379 -137

Other operating expenses 7,561 8,743

Total other operating expenses 68,070 66,143

Remuneration for auditors is included under ‘Consultants, advisors and other external services’ in the table above and is

distributed as follows:

Auditor remuneration 2016 2015

Auditor’s fee 1,281 866

Other certification services

Tax consultancy

Other-non audit services

-

-

45

84

-

534

Total excl. VAT 1,326 1,485

Restructuring costs

2016

2015

Restructuring costs etc. 7,854 3,688

Total 7,854 3,688

Restructuring costs apply to incurred costs associated with internal improvement, structural and strategic processes and other significant costs of a non-recurring nature.


30

Note 6 Pensions (NOK 1,000)

The Group’s Norwegian companies are subject to the Norwegian Mandatory Pension Act and the pension schemes offered in Norway meet the requirements of this legislation. During 2016, Goodtech has discontinued the defined benefit scheme that existed in one Norwegian company. The phasing out of the defined benefit scheme resulted in a positive accounting effect of NOK 1.0 million. Goodtech now has only offers its employees defined contribution pension schemes.

The pension schemes are funded through payments to insurance companies. The Group’s defined contribution pension schemes in its Norwegian companies include most employees in Norway and constitute between 2% and 8% of employee salaries. The Group’s companies outside Norway have pension schemes that comply with local practice and local legislation.

Employees of the Swedish subsidiaries have pension schemes (ITP - Industrins och Handelns tilläggspension) covered by insurances in Alecta AB. The ITP pension is managed by Alecta AB and Collectum. ITP includes all ‘tjänstemän’ in the Group’s Swedish operations. Industrins och handelns tilläggspension is a plan for employees in the private sector in Sweden. The pension schemes in Sweden are based on mandatory collective agreement plan negotiated as part of collective agreements. The ITP pension scheme includes pension, medical insurance and survivors pensions.

Employees born after 1979 are included in ITP Plan Option 1, which is a defined contribution plan where the pension premium each term is fixed based on percentage ranges as set out in the associated collective agreement. Employees born in 1978 or earlier are covered by ITP Plan Option 2, but may choose ITP Plan Option 1. ITP 2 is a defined benefit plan where the pension premium varies from term to term based on different calculation variables. Employees who have ITP 2 also has a defined contribution pension scheme called ITPK. ITPK plan in Swedish companies make up 2% of employees’ salaries. The defined benefit plan for Goodtech’s employees acts as a defined contribution scheme for the Group where annual premiums are expensed as incurred. This is a multi-employer scheme where policyholders do not have access to the information needed to recognise the scheme as a defined benefit scheme. The pension scheme has therefore been recognised as a defined contribution scheme, in accordance with IAS 19.34.

Total pension costs for the Group’s defined contribution pension schemes for continued operations constitute NOK 18.7 million for 2016 (NOK 17.2 million for 2015) which are recognised as payroll costs in the profit and loss account (cf. Note 4).

Calculation of the year’s pension costs: 2016 2015

Current value of the year’s pension contribution - 477

Net interest costs - 33

Administration costs - 26

Employer tax - 75

Annual pension costs defined benefit pension plans 0 610

Annual pension costs defined contribution scheme 1) 18,681 16,600

Total annual pension costs 18,681 17,210

Pension liability and pension assets: 2016 2015

Gross pension liability - 8,790

Fair value pension assets - 7,929

Net pension liability - 861

Employer tax - 202

Pension liabilities recognised in balance sheet 0 1,063

Change to liabilities:

2016

2015

Net pension liability 1.1. 1,063 1,813

Pension costs/liquidation recognised in profit and loss account -1,148 610

Premium payments - -35

Estimate deviation included in other comprehensive income 85 -1,325

Net pension liability recognised in balance sheet 31.12 0 1,063


31

The calculation of pension costs and net pension obligations has assumed the following: 2015

Discount rate 2.70%

Return on pension assets 3.30%

Wage growth 2.50%

Pension adjustment 0.00%

G- adjustment 2.25%

Average turnover 0.00%

1) The pension costs for the year for defined contribution pension schemes include defined contribution pension schemes in Norway and defined benefit pension schemes in Sweden that are recognised as defined contribution schemes.

The pension funds in an insurance-based plan consist of an insurance policy. The insurance policy is measured at fair value. Fair value corresponds to the transfer value of the policy and any premium funds. The life assurance investment profile is determined in guidelines from the Financial Supervisory Authority of Norway.

Pension assets by main investment category as a percentage of total pension funds: 2015

Shares 10.1%

Property 13.6%

Bonds at amortised cost 41.5%

Bonds 32.2%

Other 2.6%

Total 100.0%

Note 7 Financial income and financial expenses (NOK 1,000)

2016 2015

Interest income 116 196

Foreign exchange gains 4,413 7,261

Other financial income 65 12

Total financial income 4,643 7,469

Interest costs -1,131 -2,818

Warranties -792 -791

Foreign exchange losses -3,430 -12,508

Other financial costs -684 -787

Total financial costs -6,037 -16,904

Net financial costs -1,394 -9,435


32

Note 8 Tax (NOK 1,000)

Tax costs 2016 2015

Payable tax*) 1,061 331

Adjustments for previous years -65 320

Change in deferred tax assets 23 -5,393

Change in deferred tax -377 -336

Tax costs 644 -5,079

Effective tax rate in % -3% 6%

The effective tax rate is significantly affected by accounting write-downs without tax effect of discontinued operations.

*) Current tax liability 185 -2,376

Reconciliation of effective tax rate with tax rate in Norway:

Tax costs differ from the amount that would have arisen if the nominal tax rate had been applied. The difference between the nominal rate and the effective tax rate is specified below. The main components are specified.

2016 2015

Tax calculated at a tax rate of 25% (tax rate in Norway) -15,138 -21,927

Activities with tax rate other than 25% 457 496

Tax law change – effect of change to tax rate 1,800 3,420

Non-deductible costs 13,631 12,399

Change to deferred tax on equity transactions - 204

Effects discontinued operations - 808

Translation differences -106 -479

Tax costs 644 -5,079

Comparative figures have been restated to show the tax costs for continuing operations.

The ordinary corporate tax rate for companies domiciled in Norway was 25% in 2016, but it was decided to decrease this to 24% from the financial year 2017. In 2016, the net tax benefit in Norway decreased by NOK 1.8 million due to lower corporate tax as of 2016. The Group has businesses in Sweden (22%) and Finland (20%) which have lower tax rates than 25%.

The Company has losses within the exemption method which are not subject to normal deductions. The Group completed write-down of goodwill associated with Goodtech Solutions AB and Goodtech Power AS and write-down of intangible assets in Goodtech Recovery Technology AS.

Deferred tax and deferred tax assets presented on the balance sheet

Deferred tax assets

Balance sheet

2016 2015

Fixed assets 6,352 306

Current assets -204 2,092

Pension - 258

Provisions 1,464 803

Profit and loss account -58 -76

Losses carried forward 38,764 41,461

Carrying value deferred tax assets 46,317 44,844

Deferred tax

2016

2015

Hedging reserve in equity - 133

Provisions Sweden 287 466

Fixed assets, Finland 390 456

Carrying value deferred tax liability 677 1,054

Deferred tax relates to temporary differences in Sweden and industrial property in Finland which cannot be offset against deferred tax assets. Group recognises net liability and deferred tax assets only if the Group has a legal right to offset these and only liability and deferred tax assets that are within the same tax regime.


33

Tax losses to be carried forward by country: 2016 2015

Norway -178,383 -163,907

Sweden -26,066 -9,447

Norway (not recognised) -26,837 -4,704

Sweden (not recognised) -15,967 -

Total loss to be carried forward -247,253 -178,057

Change in deferred tax 2016 2015

As of 1 January, net assets/liabilities 43,790 38,796

Recognised in the profit and loss account 353 5,730

Recognised assets held for sale 1,536 -3,757

Recognised in other comprehensive income - 16

Recognised directly in equity -39 -357

Derecognition and reclassification sold and phased-out operations - 3,362

As of 31 December, net assets/liabilities 45,640 43,790

Change to deferred tax assets and deferred tax liability

Deferred tax assets

Fixed assets, R&D/ customer

contracs

Current assets Pension Provisions

Profit and loss

account

Losses carried

forward Total

Balance 31.12.2014 -3,398 -4,181 839 1,146 -671 49,748 43,484

Recognised in the profit and loss account 3,733 6,365 -224 -415 1,164 -5,230 5,393

Recognised profit discontinued operations -27 -530 - 5 -147 -3,057 -3,757

Recognised directly in equity - - -357 - - - -357

Reclassification operations held for sale -2 438 - 66 -421 - 81

Balance 31/12/2015 306 2,092 258 803 -76 41,461 44,844

Recognised in the profit and loss account 6,046 -2,296 -219 661 18 -4,233 -23

Recognised profit discontinued operations - - - - - 1,536 1,536

Recognised directly in equity - - -39 - - - -39

Balance 31/12/2016 6,352 -204 0 1,464 -58 38,764 46,317

Deferred tax liability Hedging

reserve in equity

Provisions Sweden

Fixed assets Finland

Total

Balance sheet 31.12.2014 286 3,928 473 4,687

Recognised in the profit and loss account - -319 -18 -336

Recognised in other comprehensive income -16 - - -16

Deduction sold operations -137 -3,144 - -3,281

Balance sheet 31.12.2015 133 466 456 1,054

Recognised in the profit and loss account -133 -179 -65 -377

Balance sheet 31.12.2016 0 287 390 677

Group tax loss to be carried forward with expiry date:

2016

2015

2015 or later - -

No due date -247,253 -175,057

Total loss to be carried forward -247,253 -175,057


34

Note 9 Earnings per share (NOK 1,000)

Earnings per share are calculated by dividing the share of the annual profits allocated to the company’s shareholders by a weighted average of the number of ordinary shares issued over the year.

To calculate the diluted profits per share, the weighted average of the number of issued ordinary shares in circulation is used and adjusted for the effect of conversion of all potential shares which may be diluted. The company has no potential shares which may be diluted. The company has no potential shares which may be diluted.

2016 2015

Profit for the period allocated to the company’s shareholders -25,575 -169,727

Weighted average number of issued shares (thousands) 22,629 32,165

Profits per share (NOK) -1.13 -5.28

Profit after tax from discontinued operations

35,962

-95,499

Earnings per share for discontinued operations (NOK) 1.59 -2.97

(number of shares thousands)

2016

2015

Ordinary shares issued as of 31 December 22,876 22,876

Own shares held -394 -126

Total 22,482 22,750

Weighted average number of ordinary shares 22,629 32,165


35

Note 10 Plant and equipment (NOK 1,000)

Buildings Machinery/ fixtures Total

Financial year 2015 Carrying value as of 01.01.14 20,632 45,424 70,972

Translation differences 1,409 992 2,400

Acquisition 85 4,157 4,242

Disposals on sale of subsidiaries - -9,486 -14,402

Reclassified assets discontinued operations - -5,949 -5,949

Inflow related to discontinued operations - 1,365 1,365

Inflow related to sold subsidiary - 4,120 4,120

Depreciation related to discontinued operations - -8,978 -8,978

Annual depreciation -811 -7,448 -8,258

Carrying value as of 31.12.2015 21,314 24,197 45,511

As of 31 December 2015

Acquisition cost 29,425 51,468 80,893

Accumulated depreciation -2,873 - -2,873

Accumulated depreciation -5,238 -27,271 -32,509


Financial year 2016


Translation differences -1,334 -1,020 -2,353

Acquisition - 10,746 10,746

Disposal - -24 -24

Reclassified assets discontinued operations - -20 -20

Annual depreciation -820 -7,777 -8,597

Carrying value as of 31.12.2016 19,160 26,102 45,262 As of 31 December 2016

Acquisition cost 28,092 61,150 89,242

Accumulated depreciation -2,873 - -2,873

Accumulated depreciation -6,058 -35,048 -41,106


Economic life

20-30 years

3-10 years

Depreciation method linear linear

Asset categories presented in the above table are the aggregate sum of various asset components that belong to a specific category and depreciation rates represent the economic life allocated to components.


36

Note 11 Intangible assets (NOK 1,000)

Development projects

Client contracts

Goodwill

Total

Financial year 2015 Carrying value as of 01.01.14 45,288 89 633,489 678,866

Translation differences - - 37,216 37,216

Acquisition 7,292 - - 7,292

Phased-out operations - - -449,991 -449,991

Reclassification to discontinued operations - - -12,087 -12,087

Depreciation -29,674 - -30,961 -60,635

Allocated development costs -852 - - -852

Annual depreciation - -59 - -59

Carrying value as of 31.12.2015 22,054 30 177,666 199,750


Acquisition cost 49,875 47,050 295,526 392,834

Accumulated depreciation and amortisation -27,821 -47,020 -117,860 -193,084


Financial year 2016


Translation differences - - -2,774 -2,774

Acquisition 6,875 - - 6,875

Reclassification to discontinued operations -190 - - -190

Depreciation and amortisation related to discontinued operations

-3,690 - - -3,690

Depreciation -6,629 - -29,400 -36,029

Allocated development costs -321 - - -321

Annual depreciation -1,628 -30 - -1,659

Carrying value as of 31.12.2016 16,471 -0 145,491 161,962


Acquisition cost 52,870 47,050 292,752 393,055

Accumulated depreciation and amortisation -36,399 -47,050 -147,260 -231,093

Carrying value as of 31.12.2016 16,471 -0 145,491 161,962

Depreciation %

16.7-25%

Economic life 4-6 years Depreciation method linear

Asset categories presented in the above table are the aggregate sum of various asset components that belong to a specific category and depreciation rates represent the economic life allocated to components.

Development projects

Development costs are associated with development projects in Goodtech Recovery Technology AS, Goodtech Projects & Services AS and Goodtech Power AS.

The Group continuously monitors development projects in relation to the market, substitutes and potential customers in order to assess the recoverable value of the development projects. Development costs are amortised over their useful life. Useful life varies from asset to asset, from 3 years to 10 years. If there are indications that the values of the assets are no longer recoverable, an impairment test will immediately be carried out to determine whether the asset can still justify its carrying value. If new estimates conclude that the value is no longer recoverable, impairment of assets to their recoverable value is carried out, the higher of net realisable value and utility value (discounted cash flow).

It has been decided that further exploitation of the technology associated with the energy recovery project in Goodtech Recovery Technology AS (GRT) will take place in close cooperation with partners through licensing agreements. Goodtech will continue to own the patent rights to the product. As of 31 December 2015, GRT was valued at NOK 10 million based on estimated realisable value. This value was upheld in 2016 based on continued interest in technology in the market and licence agreements signed in 2016. Over the year, NOK 6.0 million have been activated for development work. The same amount was written down as of 31 December 2016 so that recognised values associated with this technology as of 31 December 2016 was maintained at NOK 10 million.


37

Goodtech Projects & Services AS has activated NOK 0.9 million related to on-going development projects in 2016. Development costs are amortised using both a project allocation method and a linear depreciation method. In 2016, costs of NOK 0.3 million were allocated for projects and NOK 1.7 million were depreciated. The depreciation reflects the consumption of future economic benefits of developed assets. Assets are developed either on the direct request of a customer or by identifying market requirements and thus positioning them for future small and large projects. An impairment test as of 31 December 2016 has meant that the Group has written down the carrying value of some of these products to their estimated realisable value. This has resulted in an impairment of developed assets of NOK 0.6 million.

Recognised development costs associated with Promaps in Goodtech Power AS were written down to the estimated net sales value. See Note 2 for more detailed information. This has resulted in an amortisation of NOK 2.9 million. Recognised amounts of NOK 0.2 million have been reclassified as ‘discontinued operations’.

The Group had no research costs in 2016 (NOK 0.0 million in 2015).

Goodwill

Goodwill is not amortised. This asset is tested at least annually for impairment. At Goodtech, this is done at year end. If there is any indication of impairment, impairment tests are carried out more frequently.

Goodwill which has arisen through the acquisition of activities is allocated to the individual unit where the cash flows are identifiable.

Allocation of goodwill by cash-generating units: 2016 2015

Goodtech Projects & Services AS 117,488 117,488

Goodtech Power AS 15,337 25,237

Goodtech Electro AS 302 302

Projects & Services 133,127 143,027

Goodtech Solutions AS 4,463 4,463

Goodtech Solutions AB 7,901 30,175

Solutions 12,364 34,638

Carrying value as of 31.12 145,491 177,666

Goodtech Power AS became a separate company from 2016 and will be assessed as a separate cash-generated unit as of 31 December 2016. Comparison figures 2015 have been restated accordingly.

After completed impairment testing, goodwill associated with the Solutions and Projects & Services business areas was written down by NOK 19.5 million and NOK 9.9 million respectively in 2016. Goodwill associated with the Solutions business area has been reduced by NOK 2.8 million as a result of exchange rate fluctuations.

Goodwill is in all entities related to employees with special skills and anticipated synergies with other Group companies.

Testing for value decrease of cash generating units that include goodwill

Impairment testing for cash-generating units with significant recognised amounts of goodwill is based on the recoverable amounts. Recoverable amounts are determined on the basis of an assessment of the cash-generating unit’s utility value. The utility value is calculated by discounting the expected future cash flows over a period of five years, including a terminal value based on Gordon’s growth formula. Cash flow projections are used based on financial budgets approved by management. Cash flow over and above approved budgets is derived on the basis of the Group’s long-term strategic plans.

Weighted rate of return used in the impairment test (WACC) After tax Before tax Goodtech Projects & Services AS 9.2% 11.5%

Goodtech Power AS 9.2% 11.5%

Goodtech Electro AS 9.2% 11.5%

Goodtech Solutions AS 9.2% 11.7%

Goodtech Solutions AB 8.2% 10.1%

Weighted pre-tax required rates of return were applied in the completed impairment tests.

The discount rate used is risk-adjusted for each cash-generating unit to reflect the asset’s specific risks and tax adjusted before tax using the methods described in IAS 36.

Risk-free interest rate is determined based on ten-year Norwegian and Swedish government bonds and ten-year swap interest in Norway and Sweden. The Norwegian and Swedish risk-free rate has been used in the respective calculations of return to be consistent with the units’ currency in cash flows. Ten-year government bonds are calculated to estimate the required rate of return on equity and ten-year swap rates are used to estimate the required rate of return on foreign capital.


38

Estimates of future cash flows are based on numerous assumptions. These include economic and market developments. The companies within the Group are affected by market fluctuations and estimates made in weak markets may differ significantly from the estimates made in stronger markets. This indicates that in companies operating in volatile markets it may be difficult to make the right long-term decisions when the market is characterised by short-term volatility.

Management expects that the market for the company’s products and services will increase in the coming years and that the company will be able to take a larger market share within the indicated segments. The Group sees opportunities in a market which is experiencing great change and needs cost-effective solutions. Stable growth in turnover and moderate improvement in EBITDA margins are assumed. Moderate growth expectations and increased earnings beyond the budget period have been assumed, and the conditions set are considered to be moderate. See also the sensitivity analysis below for further discussion of the units in which the discounted value is only marginally higher than the recognised value of capital employed.

Impairment of goodwill

An impairment test in accordance with IAS 36 at 31 December 2016 involved the following:

Goodwill associated with the Solutions business area was written down to a book value of NOK 12.4 million, a write-down of NOK 19.5 million.

Goodwill associated with the Projects & Services business area was written down to a book value of NOK 133.1 million, a write-down of NOK 9.9 million.

No further impairment situations in the Group have been discovered.

Sensitivity analysis

If conditions develop differently from what has been assumed, this may result in impairment of goodwill and intangible assets. Key assumptions used in the calculation of recoverable amounts are discount rates and developments in EBITDA.

In connection with impairment testing of goodwill, the Group has carried out sensitivity analyses for each cash-generating unit. The calculated amount of each cash flow-generating unit exceeds its recognised amount by a relatively good margin for Goodtech Solutions AS and Goodtech Solutions Manufacturing AB at the end of 2016.

The following units are most vulnerable to changes in key assumptions beyond reasonable change: Goodtech Projects & Services AS, Goodtech Solutions AB and Goodtech Power AS.

Goodtech Projects & Services AS

The Company posted a weaker result than expected in 2016 due to internal restructuring processes and a somewhat weak market. Activities are in place to reduce costs and increase profitability in each underperforming unit. A good order book as of 31 December 2016 lays the foundation for improved performance in 2017 and beyond. The next five-year period assumes expected sales growth of 2-3% and a gradual increase in EBITDA margin until 2021.

Sensitivity analyses are performed based on the assumptions that are believed to be the most relevant: discount rate and EBITDA margin. The following levels are critical in terms of possible impairment, given that all other factors are held constant:

a) Increase in discount rate before tax to more than 12.1%. b) EBITDA margin lower than 2.8% in 2017.

A discount rate before tax at more than 12.1% (a 0.6% increase compared to the discount rate used in impairment tests) or an EBITDA margin lower than 2.8% in 2017 could trigger a write-down requirement. A 2.0% terminal value is assumed in the calculation of minimum levels.

Goodtech Solutions AB

Goodwill was written down to a recoverable value as of 31 December 2016. Negative deviations and changes to assumptions in this calculation could imply a need for further write-downs.

The value of the goodwill associated with Goodtech Solutions AB is dependent on the Company achieving profits in 2017. Profits for the year were affected by the depreciation of individual system projects and project delivery. Restructuring was completed in 2016 which provides a basis for better earnings in the period ahead. The Company has a good order book which is expected to generate the required profit margins. The next five-year period assumes expected sales growth of 1-2% and moderate growth in EBITDA margin until 2021.


a) Increase in discount rate before tax to more than 10% b) Positive EBITDA margin in 2017.

An increase in the discount rate before tax to more than 10% or a negative EBITDA margin in 2017 may trigger impairment. A growth in the terminal value of 1.0% in the calculation of minimum levels has been assumed.


39

Goodtech Power AS

Goodwill was written down to a recoverable value as of 31 December 2016. Negative deviations and changes to assumptions in this calculation could imply a need for further write-downs.

The value of the goodwill associated with Goodtech Power AS is dependent on the Company achieving profits in 2017. The Company posted a weaker result than expected in 2016 due to internal restructuring processes and a somewhat weak market. Activities are in place to reduce costs and increase profitability. The next five-year period assumes expected sales growth of 3-4% and a gradual increase in EBITDA margin until 2021.


a) Increase in discount rate before tax to more than 11.5% b) Positive EBITDA margin in 2017.

An increase in the discount rate before tax to more than 11.5% or a negative EBITDA margin in 2017 may trigger impairment. A growth in the terminal value of 2.0% in the calculation of minimum levels has been assumed.

A summary of potential changes in impairment of goodwill on certain assumptions can be found below.

Goodtech Projects & Services AS (NOK million) Discount rate

EBITDA margin 11.6% 12.1% 12.6%

1.8% 25.2 -31.0 -36.2

2.8% 0.0 0.0 -6.2

3.8% 0.0 0.0 0.0

Goodtech Solutions AB (NOK million) Discount rate

EBITDA margin 9.5% 10.0% 10.5%

-0.5% -7.0 -7.6 -7.9

0.0% 0.0 0.0 -1.0

0.5% 0.0 0.0 0.0

Goodtech Power AS (NOK million) Discount rate

EBITDA margin 11.0% 11.5% 12.0%

-0.5% 0.0 -1.0 -1.6

0.0% 0.0 0.0 -1.0

0.5% 0.0 0.0 0.0

Note 12 Other financial fixed assets (NOK 1,000)

2016 2015

Non-current interest-bearing receivables 1,189 2,375

Other financial investments 95 201

Total other financial fixed assets 1,284 2,576

Non-current interest-bearing receivables are deferred payment of purchase price and loan to new owners in connection with the

disposal of the Gothenburg business in Goodtech Solutions AB in 2014.

Loan to the new owners is to be paid off over five years in equal annual instalments, to be fully repaid by 30 September 2019.

Agreed interest rate is STIBOR + 3%. In 2016, an instalment of NOK 0.2 million was received.


40

Note 13 Inventory

(NOK 1,000)

2016

2015

Materials 7,288 7,929

Goods under production 1,302 1,834

Finished goods 425 348

Unsaleability -637 -

Total net inventory 8,377 10,112

Total cost for the period

358,461

349,371

Recognised value of stock pledged as security 8,377 5,047

Inventory mainly includes sales products and materials used for the supply of goods and services. Write-downs of inventory in the event of unsaleability are recognised as costs of goods sold. The carrying amount of inventories is stated as part of the security with which Nordea has been provided. See Note 19.

Note 14 Trade receivables (NOK 1,000)

2016 2015

Trade receivables

106,074

122,773

Provisions for loss 609 623

Trade receivables net 105,465 122,150

Change in provisions for loss -14 83

Actual losses 59 -

Loss on trade receivable is classified in the same way as other operating expenses in the profit and loss account.

Trade receivables by age Not due 0-30

days 30-60 days

60-90 days

More than 90 days

Total

2016 90,672 1,501 - 410 12,882 105,465

86% 1% 0% 0% 12% 100%

2015

85,709

15,438

7,811

452

12,741

122,150

70% 13% 6% 0% 10% 100%

Provision for bad debts is distributed proportionately. Of outstanding receivables as at 31 December 2016, NOK 98.0 million was paid as at 1 March 2017.

Current receivables 2016 2015

Trade receivables net 105,465 122,150

Other current receivables – ref. Note 15. 169,106 148,244

Total current receivables 274,571 270,395

Current receivables – value per currency

2016 2015

2016

2015

Amounts in local currency

NOK NOK

USD 64 486 554 4,279

EUR 2,488 1,687 22,610 16,228

SEK 82,937 88,266 78,890 92,458

NOK 172,517 157,430 172,517 157,430

Total trade receivables and other current receivables 274,571 270,395


41

Note 15 Other current receivables (NOK 1,000)

2016 2015

Receivable government grants - 912

Prepaid costs 6,040 7,763

Production completed, but not invoiced (fixed-price projects) 124,904 117,073

Production completed, but not invoiced (other projects) 9,737 8,616

Other current receivables 28,425 13,880

Total other current receivables 169,106 148,244

The Group produces a large part of its output on a fixed-price contract basis. These contracts are recognised in the profit and loss account as ongoing settlements. Progress is calculated as incurred production costs relative to expected total production costs.

Breakdown of ongoing settlement of current projects

On-going projects are accumulated operating income and operating costs for all ongoing fixed-price projects.

On-going projects as at 31.12. 2016 2015

Accrued income 1,017,790 970,848

Accrued costs -906,515 -853,519

Recognised profit 111,275 117,329

Projects where profits are higher than the A account invoiced amounts are presented as receivables on the balance sheet. Projects where profits are lower than the A account invoiced amounts are presented as liabilities.

Production completed, but not invoiced (fixed-price projects) 2016 2015

Recognised on-going projects 761,038 797,886

Amounts invoiced on account 636,134 680,813

Completed, but not invoiced production 124,904 117,073

Amount invoiced on account, but not paid

43,983

57,163

Of this withheld amount 10,600 -

Invoiced, but not completed production (fixed-price projects) – liabilities

2016 2015

Recognised on-going projects 256,752 172,962

Amounts invoiced on account 276,380 214,114

Invoiced, but not completed production (ref. Note 20) 19,628 41,152

Amount invoiced on account, but not paid

24,191

28,905

Of this withheld amount - -

The best estimate is the basis for the accounting treatment as at 31.12. See Note 21 for provisions for losses.


42

Note 16 Cash and cash equivalents (NOK 1,000)

2016 2015

Cash and bank deposits 46,393 8,204

Cash and cash equivalents in the balance sheet 46,393 8,204

Cash and cash equivalents discontinued operations - 12,702

Credit facility - -31,808

Cash and cash equivalents in the cash flow analysis 46,393 -10,901

The Group has established group account system. According to the agreement, Goodtech ASA is the consolidated account holder and the other group companies are sub-account holders or participants. The bank may offset against deposits, so that the net position represents the balance between the bank and the Group account holder.

Cash and cash equivalents from continuing operations include restricted deposits (tax withholdings) as at 31 December 2016 NOK 8.2 million (2015: NOK 8.2 million).

Note 17 Share capital, premium and paid-in capital (NOK 1,000)

(NOK 1,000)

Share capital

Own shares

Share premium

Other paid-in

capital

Total

As of 01 January 2015 65,058 -252 35,318 500,000 600,123

Capital reduction related to sale of subsidiary -19,306 - -35,318 -99,821 -154,444

Other changes - - - -10,372 -10,372

As of 31 December 2015 45,752 -252 0 389,808 435,308

Purchase/sale of own shares - -536 - - -536

As of 31 December 2016 45,752 -788 0 389,808 434,772

Share capital

Nominal value per share is NOK 2.00. All shares have equal voting rights. All issued shares are fully paid up.

The general meeting of shareholders authorised the Board to increase the share capital by up to 50%. The authority expires on 30 June 2017. The purpose of the authority is to give the Board financial freedom to make acquisitions etc. As of today’s date the authority has not been used.

Own shares

At the end of the year, Goodtech ASA had 394,075 shares, equivalent to 1.72% of the Company’s share capital.

The general meeting has authorised the Board of Directors on behalf of the Company to acquire own shares amounting to 10

% of the share capital. The maximum amount which may be paid per share is NOK 80 and the minimum amount is the nominal value of NOK 2. The authority expires on 30 June 2017. Shares acquired under this authorisation may be used for the implementation of the share scheme for employees, for acquisitions where the consideration consists of shares, for the redemption of shareholdings and for other purposes.

Dividends 2016 2015

Dividends paid per share (NOK) 0 0

Total dividends paid (NOK 1,000) 0 0

Dividend per share proposed by the Board 0 0


43

20 largest shareholders as at 31 December 2016 Number of shares % of total

Holmen Industri Invest 7,850,288 34.32

Skagen Vekst 1,950,949 8.53

EIO AS 1,352,694 5.91

Sedlak Holding AS 1,275,409 5.58

Nordnet Bank AB (nom.) 526,425 2.30

MP Pensjon PK 474,000 2.07

Goodtech ASA 394,075 1.72

Avanza Bank AB (nom.) 370,940 1.62

Trollhaug Invest 320,000 1.40

Svenska Handelsbanken C/O Handelsebanken AS (nom.) 319,566 1.40

Part Invest AS 300,000 1.31

Skandinaviska Enskil. Proprietary trading account (publ) Oslo branch 300,000 1.31

Swedbank client account (nom.) 257,066 1.12

Tvenge Torstein Ingvald 250,000 1.09

Fram Realinvest AS 250,000 1.09

Storhaugen Invest AS 250,000 1.09

Raymond Harland 250,000 1.09

Skandinaviska Enskil. A/C client account (nom.) 204,107 0.89

Paulsberg Invest AS 200,000 0.87

Åge Westbø AS 200,000 0.87

Total 20 largest 17,295,519 75.61

Other shareholders 5,580,627 18.79

Total 22,876,146 100.00

At the end of 2016, Goodtech ASA had 1,722 shareholders compared to 1,768 at the end of 2015.

Shares owned by the Board and management as of 31.12.2016 Number of shares

Stig Grimsgaard Andersen (Chairman of the Board) *) 107,201

Karl Erik Staubo (Member of the Board) *) 35,000

Håvard Kristiansen (Member of the Board, Employee Representative) 2,388

Rolf Johansson (Member of the Board, Employee Representative) 278

Eric Staurset (Group CEO) 32,085

Synnøve Granli (CFO) 13,394

Magne Reierson (Group CEO, Projects & Services) 10,454

Hans R. Vedde (Group CEO Solutions) 35,246

Alef Jansson (Group CEO, Environment) 819

*) Also indirect ownership in Holmen Industri Invest 1 AS

In addition, executive management in individual subsidiaries in the Group own minor shareholdings.

Share price

At year end, shares were quoted at NOK 7.00 per share, compared with NOK 10.75 at year end 2015.


44

Note 18 Group companies and minority interests

The largest subsidiaries that are included in the consolidation of the Goodtech Group appear in the following table. Companies owned directly by Goodtech ASA are highlighted.

Company

Group’s

share Voting share

Registered office

Country

Goodtech Industry Holding AS 100.0% 100.0% Oslo Norway

Goodtech Electro AS *) 50.0% 50.0% Oslo Norway

Goodtech Projects & Services AS 100.0% 100.0% Oslo Norway

Goodtech Power AS 100.0% 100.0% Bergen Norway

Goodtech Solutions AS 100.0% 100.0% Porsgrunn Norway

Goodtech Recovery Technology AS 100.0% 100.0% Oslo Norway

Goodtech Solutions AB 100.0% 100.0% Karlstad Sweden

Goodtech Solutions Manufacturing AB 100.0% 100.0% Arvika Sweden

Goodtech Environment AB 100.0% 100.0% Mariehamn Åland (Finland)

*) Goodtech Industry Holding AS represents the majority of votes on the company’s board.

No changes in the Group’s ownership or voting rights from previous years in the Group’s subsidiaries. Companies disposed of by the Group over the year are listed in Note 2. All subsidiaries are consolidated. Voting rights correspond to ordinary shares. Minority interest in Goodtech Electro AS on the balance date is NOK 1.0 million. The minority interest is not regarded as significant for the Group. Consequently, summarised financial information has not been presented, cf. IFRS 12.

The Power division in Goodtech Projects & Services AS was made into a separate company as of 1 January 2016.


44

Note 19 Loans and credit facilities (NOK 1,000)

Interest-bearing liabilities

Nom. Forreign Value in local Carrying value

interest rate Due currency currency Company 2016 2015

Non-current interest-bearing liabilities

Nordea Bank Finland Abp Euribor + 1,75% 31.10.2023 EUR 1,572 Goodtech Environment AB 14,281 15,929

Various bank loans – variable interest rate 1,03% - 3,31% 28.02.2031 SEK 4,914 Goodtech Solutions Manufactoring AB 4,674 6,951

Total non-current interest-bearing liabilities 18,955 22,880

Total non-current liabilities 18,955 22,880

First year’s repayment on non-current liabilities -1,832 -2,688

Total non-current liabilities, excl. first year’s repayment 17,123 20,192

Current interest-bearing liabilities

Non-current liabilities, due < 1 year 1,832 2,688

Credit facility (credit NOK 50 million) Nibor + 2,0% NOK & SEK - 31,808

Total current liabilities 1,832 34,496

Total interest-bearing liabilities 18,955 54,687

Forfall for rentebærende gjeld ekskl. kassekreditt er som følger: 2016 2015

1 year 2,534 3,362

2 years 1,805 1,982

3 years 1,587 1,953

4 years 1,467 1,712

5 years 965 1,580

More than 5 years 11,298 12,965

The Group’s corporate account system and accounts with short-term overdraft facilities are not included in the maturity summary.


45

Interest rate swaps

A fixed rate (interest rate swap) has been agreed on the long-term loan (the original loan was EUR 0.9 million) with Nordea for the period 31.07.13 to 31.10.23 at 1.91% including margin.

Carrying value

Interest rate Due Foreign currency

Nominal amount currency

Company 2016 2015

Interest rate swap (long-term loan of EUR 0.9 million) 1.91% 31.10.2023 EUR 771 Goodtech Environment AB 702 674

Total fair value interest rate swaps

702 674

Reconciliation with balance sheet

The fair value of interest rate swaps included in ‘Loans’ and ‘Loans and credits’ in the balance sheet.

Carrying value

2016 2015

Interest-bearing liabilities 17,123 20,192

Interest rate swaps 702 674

Total long-term loans in balance sheet 17,825 20,865

Carrying value

2016 2015

Interest-bearing liabilities 1,832 34,496

Total loans and credit facilities in balance sheet 1,832 34,496

List of used and unused loan and guarantee facilities

Credit facility

Total facility

Unused facility

Nordea group credit facility (NOK 20 mill.) 20,000 20,000

Nordea Åland operating credit facility (EUR 3.0 mill.) 27,259 7,664

Westra Wermlands Sparbank (SEK 0.5 mill.) 476 476

Total credit facility 47,735 28,139

Guarantee facility

Total 160,000 61,500


46

In June 2016, Goodtech signed an agreement with Nordea to act as the Group’s new main banking partner. The agreement applies to a group guarantee framework of up to NOK 160 million, a consolidated credit facility of up to NOK 20 million and credit facility for Goodtech operations in Åland of up to EUR 3 million. The credit and guarantee facilities are renegotiated on an annual basis. In addition, long-term loans in Åland have been continued with the current repayment plan and deduction structure.

The following covenants apply to the agreement with Nordea in 2017:

Quarterly Clean Down of the Group’s multi-account structure.

Net Interest-bearing debt /12 months rolling EBITDA < 2.5 Quarterly measurement, initially 30.06.2017.

In the initially agreed terms with Nordea, there was also a minimum requirement for EBITDA for 2016. This lapsed before the end of the year.

Security and guarantees

As security for the bank facilities, Nordea has first priority in terms of property, accounts receivable, inventories etc. in Goodtech ASA and applicable subsidiaries, in addition to the MIS clause and Material Adverse Change clause. The book value of accounts receivable, inventory and property as of 31 December 2016 is contained in Note 14, Note 13 and Note 10.

The Goodtech ASA parent company has provided Westra Wermlands Sparebank with security of up to SEK 2 million for various bank loans supplied to Goodtech Solutions Manufacturing AB.

Note 20 Trade payables and other current liabilities (NOK 1,000)

2016 2015

Trade payables 57,652 45,175

Unpaid public taxes 22,006 24,082

Holiday pay/salaries owed 32,761 33,603

Invoiced, but not completed production (fixed-price projects, cf. Note 15)

19,628 41,152

Invoiced, but not completed production (other projects) 9,569 12,963

Accrued costs 6,841 12,420

Other current liabilities 98,872 65,124

Total 247,329 234,518

Other short-term liabilities include expensed project costs in accordance with the current settlement method.


47

Note 21 Provisions (NOK 1,000)

Current provisions Warranty Liabilities Onerous contracts

Total

Balance sheet 1 January 2015 18,736 9,456 709 28,900

Effects of exchange rate changes 1,473 - 56 1,529

Provisions during the year 2,907 56 175 3,138

Provisions reversed during the year 3,751 - 95 3,845

Provisions used during the year - 9,456 - 9,456

Disposals discontinued operations 15,444 - 670 16,115

Balance sheet 31.12.2015 3,920 56 175 4,151 Current provisions

Warranties

Liabilities

Onerous contracts

Total

Balance sheet 01 January 2016 3,920 56 175 4,151

Effects of exchange rate changes -147 - -3 -150

Provisions during the year 3,271 2,874 124 6,268

Provisions reversed during the year 1,874 25 126 2,025

Provisions used during the year 344 - - 344

Balance sheet 31.12.2016 4,827 2,905 170 7,901

Warranties

Provisions for warranties relate to the costs of possible future warranty work on products and services provided by the Group. The provision is based on obligations that the Group has in terms of contracts entered into as well as historical experience with the frequency and cost of warranty work. The Group provides from 1- to 5-year warranties on products and services.

Warranty provisions are recognised when the underlying products or services are sold. Warranty provisions are included in the project forecasts and worked through the life of the project in line with the stage of completion. When projects are completed and handed over to the customer, warranty provision is assessed and recognised in the balance sheet.

Liabilities

In 2016, provisions were made for severance and restructuring costs associated with internal improvement measures and ongoing structural and strategic processes, cf. Note 5.

Provisions have been made for estimated commission settlement with Goodtech’s former partner in Hungary.

Onerous contracts

Provision for loss-making contracts is entered when the anticipated income from a contract is lower than the unavoidable costs involved in discharging obligations under the contract. Completed, but not invoiced production recognised on the balance sheet as assets is written down before provision for losses on contracts are recognised in the balance sheet.


48

Note 22 Lease agreements (NOK 1,000)

The Group has no financial lease agreements as of 31 December 2016.

Operational lease agreements

The Group has operational leases associated with machinery, cars, equipment and buildings/offices.

Costs associated with operational leases represent minimum lease payments during the notice period.

The lease costs for continued operations consisted of the following:

Buildings/ offices

Machinery/cars/ fixtures

Total

Annual lease of assets not recognised on balance sheet 13,091 1,928 15,020 Estimated lease payments next year 13,518 1.825 15,343

Future minimum lease payments under non-terminable leases fall due as follows: Up to 1 year 14,695

2-5 years 22,552 More than 5 years -

Future minimum lease 37,247

Note 23 Financial risk and financial instruments (NOK 1,000)

Financial risk

The Goodtech Group has operations in several European countries and is exposed primarily to interest risk, currency risk, liquidity risk and credit risk.

The Board is intending to implement an annual review of procedures for risk management. The Group’s management has continuously assessed these risks and establishes guidelines for how they should be handled. Management within each business unit is responsible for ongoing monitoring of risks within their area of responsibility.

Asset management

The Board’s goal is to maintain a strong capital base to maintain investor, creditor and market confidence and to develop the business. By ensuring a good ratio between equity and debt, the Group will support its activities and thus maximise the value of its shares. The Group manages its capital structure and makes necessary changes to it based on a continuous assessment of the economic conditions under which the Group is operated as well as general prospects in the short and medium terms.

The Group monitors its capital by assessing its gearing ratio, which is defined as net interest-bearing debt divided by equity. Additionally, the Group’s policy is governed by capital requirements (covenants) related to liabilities to banks. The Group should have net interest-bearing debt/EBITDA of a maximum of 2.5. See Note 19.

No companies in the Group are subject to external capital requirements beyond covenants related to debt to banks.

Credit risk

The risk that counterparts do not have the financial ability to meet their obligations is regarded as low. Goodtech has set up clear guidelines and criteria for evaluating credit risk. In addition, the Group has a large spread of customers in terms of both number and size, and customers are mainly financially solid, established companies. The Group has no significant credit risk associated with a single counterpart or counterparts which can be viewed as a group as they present a similar credit risk. The creditworthiness of customers who require credit is regularly assessed. This reduces vulnerability to losses on individual customers, and recent years have shown few losses in this area. There is therefore no requirement for further provisions for such losses. See also Note 14 for information on age distribution and losses.

The Group considers its maximum risk exposure to be the recognised value of trade receivables and other current assets.

Max. credit exposure 2016 2015

Cash and cash equivalents (Note 16) 46,393 8,204

Trade receivables (Note 14) 105,465 122,150

Other current receivables (Note 15) 169,106 148,244


49

Interest rate risk

The Group’s exposure to interest rate risks is mainly related to financing at variable interest rates. Excess liquidity is primarily invested in bank deposits and low-risk money market funds. Interest income and interest expenses recognised in the accounts are affected by interest rate fluctuations.

The main objective of managing financial interest rate risk is to reduce the financial risk and to minimise interest expenses over time. The Group’s interest-bearing debt is based on variable interest rates. The Group has entered into interest rate swaps, fixed-rate agreements, to hedge against one of the Group’s long-term loans. See Note 19.

Sensitivity analysis of interest rate risk

Changes in interest rates on the Group’s loan will affect the Group’s interest costs. Sensitivity analyses reflect a change in the interest rate of 0.5 base points relative to interest rates as at 31 December 2016. If all interest rates for all currencies had been reduced or increased by 0.5 base points for Goodtech ASA and its subsidiaries, interest expenses for the Group would be NOK 0.1 million higher or lower as at 31 December 2016 (NOK 0.3 million as at 31 December 2015).

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Liquidity management is exercised to ensure that liquidity is sufficient to meet liabilities when they fall due.

The Goodtech Group’s strategy is to maintain sufficient cash, cash equivalents and credit facilities to be able to finance operations and investments in accordance with the Group’s strategic plan. Unused credit facilities are described in Note 19. Excess liquidity is mainly kept in Norwegian kroner.

As of 31 December 2016, the Group has positive liquidity reserves. The Group’s financial situation has significantly improved after sales transactions were completed.

The Group monitors its liquidity situation in the short and long terms through active monitoring and management through corporate accounts and in close dialogue with its subsidiaries. The Group carries out periodic monitoring of liquidity and overdue receivables with its subsidiaries and focuses on developments in its working capital.

The table below shows the maturity structure of the Group’s financial liabilities based on nominal payments of principal and estimated interest payments. Estimated future interest payments are based on the maturity profile of the Group’s financial liabilities.

Maturity profile for the Group’s financial liabilities as at 31.12.2016

< 1 year 1-3 years 3-5 years More than 5 years Total


Bank loans

2,091

3,910

2,853

10,101

18,955

Settlement interest rate agreement, SWAP

- - - 702 702

Total interest-bearing liabilities 2,091 3,910 2,853 10,803 19,657 Non-interest-bearing liabilities

Trade payables

57,652

-

-

-

57,652

Other current liabilities 161,385 - - - 161,385

Total non-interest-bearing liabilities 219,036 - - - 219,036

Total 221,127 3,910 2,853 10,803 238,693 Future interest payments

303

531

397

281

1,511

Total including interest payments 221,430 4,441 3,250 11,084 240,205


50

Maturity profile for the Group’s financial liabilities as at 31.12.2015

< 1 year 1-3 years 3-5 years More than 5 years Total


Bank loans

2,688

4,670

3,665

11,857

22,880

Settlement interest rate agreement, SWAP - - - 674 674

Shareholder loan - - - - -

Withdrawals from long-term credit facility - - - - -

Credit facility 29,708 - - - 29,708

Total interest-bearing liabilities 32,396 4,670 3,665 12,531 53,262 Non-interest-bearing liabilities

Trade payables

45,175

-

-

-

45,175

Other current liabilities 135,229 - - - 135,229

Total non-interest-bearing liabilities 180,404 - - - 180,404

Total 212,800 4,670 3,665 12,531 233,666 Future interest payments

1,336

781

626

908

3,651

Total including interest payments 214,136 5,451 4,291 13,439 237,317

Currency risk

Goodtech is exposed to currency risk, as the Group operates in several countries both within and outside Europe. Contracts are mainly in local currency (NOK, SEK, EUR and USD). Currency fluctuations may result in adjusted income in NOK for foreign projects. The main risks are related to fluctuations in SEK, USD and EUR. However, Group policy is to keep most of the purchases and sales of individual projects in the same currency, thus reducing the risks associated with currency fluctuations.

The recognised value of the Group’s net investment in foreign companies fluctuates as the Norwegian krone changes compared with the applicable currencies. Profit after tax for the Group is also affected by changes in exchange rates, as the profits in foreign companies are converted into Norwegian kroner at a weighted average exchange rate for the period.

The Group has also established a multi-currency cash system that helps to reduce currency risks. Over the past year, the Company has carried out no significant currency hedging transactions.

Sensitivity analysis of currency risk

The following table shows the Group’s sensitivity to potential changes in the krone exchange rate – all other factors being equal. The calculation is based on the same change against all applicable currencies. The effect on earnings comes from changes in the value of monetary items, and the effect on equity is the value of net investments in foreign currency.

Accounting impact 2016 Accounting impact 2015

Pre-tax profits Equity Pre-tax profits Equity

10% increase/reduction NOK/SEK (+/-) 1,853 (-/+) 402 (+/-) 1,316 (-/+) 695

10% increase/reduction NOK/EUR (+/-) 718 (-/+) 4,409 (+/-) 11 (-/+) 4,074

Determination of fair value

A list of the recognised amounts and fair values of the Group’s financial instruments and how these are recognised in the accounts is shown below. The table also shows at what level in the fair value hierarchy the different measurement methods for the financial instruments measured at fair value are deemed to be according to how objective the measurement method is.

There is no significant difference between the fair value and book value. The recognised value of cash and cash equivalents and bank overdrafts approximates fair value because these instruments have short maturities. Similarly, the recognised amount of accounts receivable and accounts payable approximates fair value as these are entered into on ‘normal’ terms. Liabilities to banks are based on floating interest rates and recognised value is regarded as approximating fair value.


52

Categories of financial instrument

2016

(NOK 1,000) Note

Valuation level

Loans and receivables

Assets available for

sale

Assets and liabilities at fair value

above profits

Assets and liabilities at fair value measured against comprehensive income

Debt carried at amortised cost Total

Assets in the balance sheet

Current receivables

Trade receivables

14

105,465

-

-

-

-

105,465

Other current receivables 12,839 - - - - 12,839

Cash and cash equivalents 16 46,393 - - - - 46,393

Total 164,697 Debt in the balance sheet


Loans

19

-

-

-

17,123

17,123

Long-term interest swap 19 2 - - - 702 - 702

Total 17,825 Current liabilities

Loans and credit

19

-

-

-

1,832

1,832

Trade payables 20 - - - 57,652 57,652

Other current liabilities 20 - - - 161,385 161,385

Total 220,868

Total financial instruments

164,697

-

-

702

237,991

403,390


52

2015

(NOK 1,000) Note Valuation

level Loans and

receivables

Assets available for

sale

Assets and liabilities at fair value

above profits

Assets and liabilities at fair value measured against comprehensive income

Debt measured at amortised cost Total

Assets in the balance sheet

Current receivables

Trade receivables 14 122,150 - - - - 122,150

Other current receivables 16,199 - - - - 16,199

Cash and cash equivalents 16 8,204 - - - - 8,204

Total 146,554

Debt in the balance sheet


Loans 19 2 - - - - 20,192 20,192

Long-term interest swap 19 - - - 674 - 674

Total 20,865

Current liabilities

Loans and credit 19 - - - - 34,496 34,496

Trade payables 20 - - - - 45,175 45,175

Other current liabilities 20 - - - - 135,229 135,229

Total 214,899

Total financial instruments 146,554 674 235,091 382,318

Valuation hierarchy

The Group classifies fair value measurements using a fair value hierarchy that reflects the significance of the input used in the preparation of the measurements. No financial assets or liabilities have been reclassified in such a way that the valuation method has been changed from amortised cost to fair value or vice versa.

The different valuation levels have been defined as:

Level 1: fair value is measured using quoted prices in active markets for identical financial instruments.

Level 2: fair value is measured using observable inputs other than Level 1 inputs – either directly (prices) or indirectly (derived from prices). Level 3: fair value is measured using inputs that are not based on observable market data (unobservable inputs).


53

Note 24 Transactions with related parties

Goodtech ASA is the parent company and has direct and indirect ownership and control of nine companies as of 31 December 2016. These are presented in Note 18. Transactions between group companies are eliminated in the consolidated accounts. Activity between Group companies is presented in the segment information in Note 3 to the consolidated accounts. Intercompany balances with the parent company are presented in Note 10 to the Goodtech ASA accounts.

In a few cases, Goodtech enters into purchase and sale transactions with related parties as part of normal business operations. No significant transactions completed in 2016.

Inter-group transactions are carried out done according to separate agreements on the arm’s-length principle and joint expenses in Goodtech are distributed among the Group companies in accordance with distribution formulas, depending on the various costs, according to the arm’s-length principle.

The Group has not identified other transactions with related parties than the ones mentioned above. Information on executive management employees is presented in Note 25 to the consolidated accounts.

Note 25 Remuneration for the board, management etc. (NOK 1,000)

Remuneration to board and board committees

Board remuneration consists of a fixed annual fee depending on the role on the Board and remuneration for participation in other committees established by the Board and is approved in arrears by the general meeting. The amounts shown in the table below are remuneration adopted by the general meeting in 2016.

Total remuneration for the Board, election committee and board committees recognised in the accounts in 2016 was NOK 1.9 million (NOK 1.8 million in 2015).

See Note 17 for a list of shares held by directors and group management. Shareholdings of directors and executive management includes their families.

Remuneration of the Board 2016 2015

Stig Grimsgaard Andersen (Chairman of the Board) 320 275

Karl Erik Staubo (Member of the Board) 200 175

Veroslav Sedlak (Member of the Board until Sept 2015) 83 175

Anne M. Sødahl Wessel (Member of the Board) 200 175

Terje Thon (Member of the Board from Sept 2015) 117 -

Hilde Matre Vik (Member of the Board until April 2016) 200 175

Åsa Otterlund (Member of the Board until Dec 2015) 133 175

Rolf Tannergård (Member of the Board until Dec 2015) 133 175

Håvard Kristiansen (Employee Representative) 100 88

Susanne Häggström (Employee Representative until Dec 2015) 67 88

Christer Erita (Employee Representative until Dec 2015) 67 88

Total 1,620 1,589

Remuneration for audit committee

2016

2015

Karl-Erik Staubo 18 25

Anne M. Sødahl Wessel 14 25

Åsa Otterlund 11 25

Total 42 75

Remuneration for Election Committee

2016

2015

Nicolas Brun-Lie (Chairman of Election Committee) 125 50

Harald Skogholt (Member of Election Committee) 55 30

Stig Martin (Member of Election Committee) 55 60*)

Total 235 140

*) Remuneration paid applies to 2014 and 2015


54

Remuneration for Remuneration Committee 2016 2015

Stig Grimsgaard Andersen 4 4

Åsa Otterlund 4 4

Total 8 8

The employee representatives on the Board also receive normal salary, earn pension rights and receive other benefits as employees that are not included in the table above.

Remuneration for Group management

Salary, fees etc.

Pension

Other

benefits

Total 2016

Total 2015

Foreign currency

Group management

Eric Staurset (Group CEO from Aug 2016) 761 26 337 1,124 - NOK

Synnøve Granli (CFO) 1,676 79 122 1,877 1,612 NOK

Magne Reierson (Group CEO, Projects & Services 1) 1,292 74 77 1,443 1,426 NOK

Hans Vedde (Group CEO, Solutions 1) 1,106 75 182 1,363 1,331 NOK

Alef Jansson (Group CEO, Environment 1) 118.6 7 2 127 - EUR

Jørn Jørgensen (IT director from April 2016) 719 56 135 910 - NOK

Arve Teie (acting Group CEO until June 2016) 924 45 1,149 2,118 1,976 NOK

Rune Hoseth (business development until Sept 2016) 966 48 585 1,599 1,619 NOK

1) Remuneration is paid by a subsidiary in the Group.

Salaries, fees, etc. in the table above include additional allowances and holiday pay beyond the monthly salary in addition to severance pay. Other benefits include insurance, company car and electronic communications.

Group CEO Eric Staurset received 32,085 shares in Goodtech at a total value of NOK 0.3 million, which is included in ‘Other benefits’ in the table above.

The former acting Group CEO has received severance pay corresponding to 12 months after his left as Group CEO. Severance pay beyond the notice period was paid as early retirement salary to December 2016 in addition to a lump-sum payment in January 2017. Total severance pay in 2016 was NOK 1.1 million and was included in ‘Other benefits’ in the table above.

Former Group CEO Business Development has received severance pay equivalent to 12 months’ salary after stepping down. Severance pay beyond the notice period was paid as early retirement salary to February 2017 in addition to a lump-sum payment in March 2017. Total severance pay in 2016 was NOK 0.5 million and was included in ‘Other benefits’ in the table above.

All figures are exclusive of employer contribution.

No loans or guarantees have been granted to group management.

The Board’s declaration regarding determination of salary and other remuneration for management The Board of Goodtech ASA has set out guidelines for salary and other benefits for management employees in the company and group companies (‘Goodtech’ or ‘the Group’) for the coming financial year. This statement has been prepared in accordance with § 6-16a. This will be considered at the Annual General Meeting in 2017. See Sections 5-6, paragraph 3, of the Norwegian Public Companies Act.

All companies in the Group must follow these guidelines as set out below. The objective is to coordinate salary policies and schemes for variable benefits across the Group. These policies are a guide.

1. Main principles for the company’s management salary policy

Management salaries must be competitive without Goodtech being a salary leader – the company must be able to attract and retain talented managers

Salaries (total remuneration received) should usually lie around the average level of managerial salaries for comparable managers in similar companies in the country in which the manager is resident.

Managerial salaries must be motivational – the salary must be put together in such a way that it motivates effort continually to improve the company’s results.

The main element of the managerial salaries must be the fixed salary, but additional variable benefits may be awarded to motivate managers’ efforts on behalf of the company. Variable benefits must be reasonable in relation to the company’s profits for the year. In order for these variable benefits to work as an incentive, the criteria must be related to factors that the individual is able to influence. Goodtech wishes the salary system to be structured in such a way as to nurture a team spirit internally in the group and stimulate efforts that produce results outside the individual’s area of responsibility. Part of the overall remuneration may also be awarded in the form of shares in the company.


55

The salary system must be flexible – so that it can be adapted when required.

In order to be able to offer competitive salaries, Goodtech must have a flexible salary system that can be adapted to special circumstances. Goodtech should have salaries that are competitive in terms of being able to attract and retain executives in the various geographical areas where Goodtech operates, and the payroll system must be flexible and allow adaptation when required. The salary system must be understandable and acceptable both internally in Goodtech and externally. The salary system should not be disproportionately difficult to explain to the public and should not be disproportionately complex to manage.

2. Principles for determining salary levels

The basis for determining salary levels must be the overall level of fixed salary and other benefits. This level must be competitive, but not lead the market. The fixed salary should usually form the main element of any manager’s salary.

3. Principles for benefits that can be given in addition to fixed salary

Remuneration for executive management employees may be awarded in addition to the fixed salary:

Benefits in kind

Bonuses

Share-based remuneration

Pension schemes

Early retirement benefits

Other remuneration

Specific benefits are detailed below. Unless otherwise indicated below, no special conditions, frameworks or allocation criteria apply to the benefit concerned.

Benefits in kind

Benefits in kind will usually consist of car scheme, newspaper/magazine subscriptions and electronic communication. Allocation of benefits in kind must be related to function or in line with market practice. These benefits should not be significant in relation to salary.

Bonuses

Goodtech currently has no established incentive or bonus scheme in place for managerial staff in the Group. The

Group CEO has a bonus scheme of up to 25% of his fixed salary on terms set by the Board.

A small number of sales bonuses and leadership bonuses of limited character are in place. Work is now being done to establish a unified bonus scheme that will motivate further efforts continuously to improve both the business and company results.

Share-based remuneration

The Group currently has no established bonus schemes or share-based incentive programmes in place for management. If the Group establishes a share-saving scheme for employees, management employees will be given the opportunity to participate on an equal footing. The Group has not had a share-saving scheme in place for employees in 2016.

The Board may in the current and coming financial year establish a share-saving scheme for employees, including the CEO and other senior executives. The Board proposes that the general meeting give the Board authority to purchase own shares for this purpose.

Pension schemes

Management employees are included in the Group’s pension and insurance schemes for all employees. This ensures that they receive a pension commensurate with their salary levels.

Early retirement benefits

The CEO and Group Directors have an agreement on pay after termination of employment schemes that varies between 6 and 12 months.

The mutual notice period for the CEO is six months. If Goodtech should terminate the employment, it is agreed that, in addition to salary, a package corresponding to up to six months’ salary will be provided. The Group CEO should usually have an agreement in place that allows the Group CEO to step down immediately, should this be in the interest of the Company. Early retirement pay must therefore be sufficiently favourable for the CEO to accept an agreement on a reduced notice period.

Agreements on pay after termination can be entered into for other managers to ensure that the composition of managers is always in the Company’s interests. Such agreements will in accordance with the Norwegian Working Environment Act not be binding on any management employees except the CEO.

Early retirement schemes must be designed so that they are acceptable internally and externally. In addition to salary and other compensation in the notice period such schemes must not entail rights to early retirement benefit for more than 6 months.

Other remuneration

Other variable elements in the remuneration may be used or other special benefits allocated than set out above if this is deemed to be practical in order to attract and/or retain managers. No special limitations exist to the benefits that may be agreed.


56

General information

The Board has established a Remuneration Committee which is a preparatory and advisory committee to the Board. The task of the Remuneration Committee is:

To prepare cases for the Board’s consideration and decision on the remuneration of, and other matters relating to,

the Company’s senior executives.

To prepare the Board’s assessments and decisions regarding the Board’s statement on salary and other remuneration to senior executives in accordance with Section 6, 16a of the Norwegian Public Companies Act.

To propose guidelines for compensation and terms of employment for the Company’s executive management.

Remuneration for the CEO is determined by the Chairman of the Board in consultation with the Board. Remuneration for other management is determined by the CEO in consultation with the Chairman of the Board. The company uses standard employment contracts and standard employment terms regarding notice periods and payment on termination of employment for the positions of CEO and Group Directors.

Note 26 Contingent liabilities

Operational and project risk and uncertainty

From time to time, the Group receives claims resulting from its ordinary operations. This may be warranty claims and claims for damages resulting from injury to persons or property arising from the use of its products and solutions. Management is not aware of any on-going issues that will result in significant liabilities for the Group.

The Group’s operations are based on long-term contracts and some of them are fixed-price turnkey contracts. Failure to meet delivery schedules or performance guarantees or increases in contract costs may result in costs that cannot be covered and that may be greater than the income from the project. Where a project is identified as loss-making, provisions to cover future losses are recognised in the accounts. The accounting treatment is based on available information and recommendations. Circumstances and information may change in subsequent periods, and the final outcome may be better or worse than the assessments made at the time of preparation of the accounts.

Legal disputes

Goodtech’s subsidiary Goodtech Environment AB has commenced proceedings against the Municipality of Eidsvoll in relation to the Bårlidalen sewerage plant project. The Municipality of Eidsvoll is withholding payment as a result of counterclaims. Judicial hearings are scheduled for 4 May 2017.

Bank and corporate guarantees

The Group has provided Nordea and other banks with guarantees in connection with the Group’s operating credit facilities and guarantee framework. See Note 19 for further discussion of these guarantees.

Note 27 Government grants

An ongoing development project for the development of technology for the production of aluminium (heat pipe) has been approved as a multi-annual R&D project by SkatteFunn.

The Group will recognise grants for the research and development project via SkatteFunn in 2016 when these are paid out.

In 2015, the Group received NOK 1.0 million in grants. This amount is fully recognised as a reduction of capitalised costs associated with the project.

The development project is recognised in the balance sheet, cf. Note 11.

Note 28 Subsequent events

The activities associated with Promaps were sold after year end. See details in Note 2.

No significant events after the balance sheet date have significantly affected the Group’s financial position and should have been reflected in the accounts.


57

Alternative Performance Measures

Goodtech presents some alternative performance measures in its interim report as a supplement to the profit and loss account prepared according to IFRS. Such target figures are often used by analysts, investors and other stakeholders. Their purpose is to provide enhanced insight into the company’s operations, financing and future prospects.

Performance measures:

EBITDA and EBIT are concepts that are normally used by analysts and investors.

EBITDA Is an abbreviation of earnings before interest, taxes, depreciation and amortisation and equals operating profits

before depreciation and write-downs in the annual report.

EBIT Is an abbreviation of earnings before interest and taxes and equals operating profits in the annual report.

EBITDA margin is used to compare relative results between periods. EBITDA margin is calculated as EBITDA/operating

income.

Order book:

The order book is presented as an alternative performance target, as it indicates the company’s earnings and operations in the future. Represents the estimated value of remaining work on signed contracts. Financial target figures:

Alternative target figures for financing and equity are presented as they are indicators of the company’s ability to fund and service its debt.

Net interest-bearing debt:

Cash and cash equivalents minus interest-bearing debt.

Equity ratio: Total equity/Total assets.


58

Profit and loss account

Goodtech ASA parent company

1 January – 31 December

(NOK 1,000)

Operating income

Note 2016 2015

Operating income

Sales 2 5,882 6,115

Total operating income 5,882 6,115

Operating expenses

Operating expenses

Salary costs 3 15,126 11,475

Depreciation and amortisation 7 1,351 1,501

Other operating expenses 3, 4 8,357 37,030

Total operating expenses 24,834 50,006

Operating profits

- 18,952

- 43,890

Financial income and expenses

Financial income and expenses

Income from investments in subsidiaries 11 24,471 19,857

Financial income 3,513 6,372

Loss on sale of shares 11 2,889 62,307

Depreciation financial assets 11 40,728 24,285

Financial expenses 745 5,733

Net finance 5 - 16,378 - 66,096

Pre-tax profits

- 35,330

- 109,986 Tax costs 6 -676 -1,279

Tax costs

6

- 676

- 1,279 Profits for the year - 34,654 - 108,708

Allocation/coverage of profit

Allocation/coverage of profit

Provisions to/from other equity - 34,654 - 108,708

Allocation for dividends 13

Total allocations - 34,654 - 108,708


59

Balance sheet as of 31 December

(NOK 1,000) Note 2016 2015

ASSETS

Fixed assets

Intangible assets

Intangible assets 7 - 9

Deferred tax assets 6 44,484 43,807

Total intangible assets 44,484 43,817

Tangible fixed assets


Tangible fixed assets 7 6,581 3,162

Total fixed assets 6,581 3,162

Financial assets

Financial assets

Investments in subsidiaries 11 141,581 192,240

Loans to group companies 10 67,550 85,233

Total financial assets 209,131 277,472

Total fixed assets

260,196

324,451

Current assets

Receivables

Trade receivables 10 6,669 7,579

Other current receivables 10 12,143 45,415

Total receivables 18,812 52,993

Cash and cash equivalents

8

21,887

949 Total current assets 40,698 53,942

TOTAL ASSETS 300,894 378,393


60

(NOK 1,000) Note 2016 2015

EQUITY AND LIABILITIES Equity

Paid-in capital

Share capital 12, 13 45,752 45,752

Own shares 13 - 788 - 252

Other paid-in capital 13 389,808 389,808

Total paid-in capital 434,772 435,308

Retained earnings

Other equity 13 - 144,839 - 108,332 Total retained earnings

- 144,839

- 108,332

Total equity 289,933 326,975 Liabilities

Current liabilities

Interest-bearing liabilities 9 - 32,484

Trade payables 10 3,716 7,973

Unpaid public taxes 89 13

Other current liabilities 9 7,155 10,948

Total current liabilities 10,961 51,418

Total liabilities 10,961 51,418

TOTAL EQUITY AND LIABILITIES

300,894

378,393

Oslo, 23 March 2017

Stig Grimsgaard Andersen Karl-Erik Staubo Anne M. Sødahl Wessel

Chairman of the Board Member of the Board Member of the Board

Vibeke Strømme Terje Thon Håvard Kristiansen Member of the Board Member of the Board Member of the Board,



Member of the Board, Employee Representative

CEO


61

Cash flow statement

(NOK 1,000) Notes 2016 2015

Cash flow from operating activities


- 34,654

- 108,708

Adjusted for:

- Tax costs 6 - 676 - 1,279

- Amortisation 7 1,351 1,501

- Interest income 5 - 3,186 - 5,874

- Group contributions and dividends recorded as financial income - - 19,857

- Gains and losses on the sale of shares 4, 11 - 24,924 87,447

- Net write-downs of shares and financial assets and share conversion

Changes to working capital:

- Inventory

40,728

-

-

68

- Trade receivables and other receivables 28,956 11,229

- Trade payables and other current liabilities - 7,979 4,017

Change provisions and other time limits 514 1,576

Net cash flow from operating activities 129 - 29,880 Cash flow from investment activities

Purchase of tangible fixed assets and intangible assets

7

- 4,761

- 63

Shareholder contribution subsidiaries - 12,250 -

Net receipts from sale of companies 11 44,436 77,954

Net cash flow from investment activities 27,425 77,890 Cash flow from financial activities

Lending, out

- 860

- 4,102

Lending, in 18,543 7,004

Repayment of loans 9 - - 57,607

Payment of group contributions and dividends 3,704 12,811

Purchase/sale of own shares - 2,389 -

Change in withdrawals group account 27,114 10,227

Net cash flow from financial activities 46,112 - 31,667 Net change in cash and cash equivalents

73,666

16,343

Balance of cash and cash equivalents as of 01.01 8 - 31,536 - 47,879

Balance of cash and cash equivalents as of 31.12 8 42,130 - 31,536


62

Notes to the accounts for 2016 for the Goodtech ASA parent company Note 1 Accounting principles

The company’s accounts have been prepared in accordance with the Norwegian Accounting Act and good accounting practice in Norway. The main standards are described below.

The use of estimates

In the preparation of these accounts, the management has used estimates and prerequisites that have affected the profit and loss account and the valuation of assets and debt as well as unsecured assets and liabilities on the balance date in accordance with good accounting practice.

Foreign currency

Foreign exchange transactions are calculated at the exchange rate prevailing at the time of the transaction. Monetary items in foreign currency are converted to Norwegian kroner by using the rate of exchange on the balance date. Non-monetary items which are measured at historical exchange rates expressed in foreign currency are converted to Norwegian kroner by using the exchange rate at the time of transaction. Non-monetary items which are measured at fair value expressed in foreign currency are converted to the exchange rate determined at the time of measuring. Foreign currency fluctuations are recognised in the profit and loss account continuously over the accounting period.

Criteria for recognition of income

Income is recognised when it is earned, i.e. when the claim for payment arises. This takes place when the service is provided, as the work is carried out. Income is recognised by the value of the payment on the transaction date.

Tax

Tax costs are presented together with the ordinary pre-tax profits. Tax costs consist of payable tax and changes in deferred tax. Deferred tax/tax advantage is calculated on all differences between accounting and tax values of assets and liabilities. Deferred tax/tax advantages are calculated on all differences between accounting and tax value on assets and debt. Deferred tax is calculated as 24% on the basis of the temporary differentials that exist between accounting and tax values and tax deficits to be carried forward at the end of the financial year. Net deferred tax assets are recognised to the extent that it is probable that they will be utilised.

Payable tax and deferred tax are allocated in the profit and loss account to equity to the extent that the tax entries relate to equity transactions.

Classification and valuation of balance sheet items

Current assets and short-term debt include items which become due for payment within a year after the date of acquisition and items associated with the goods cycle. Other items are classified as fixed asset/long-term debt.

Current assets are valued at the lower of acquisition cost and fair value. Short-term debt is recognised in the balance sheet at the nominal amount at the time it is taken out.

Fixed assets are valued at acquisition price, but are written down to fair value if the decrease in value is not expected to be temporary. Long-term debt is recognised in the balance sheet at the nominal amount at the time it is taken out.


Fixed assets are recognised in the balance sheet at acquisition cost minus the accumulated ordinary depreciation and amortisation. Fixed assets are recognised and depreciated on a straight-line basis over the anticipated life of the asset.

Direct maintenance of equipment is recognised continuously as an expense under operating expenses, while increased costs or improvements are added to the equipment’s price and amortised concurrently. If the recoverable value of the equipment is lower than the recognised value, depreciation is carried out to the recoverable amount. Recoverable amount means the highest of net sales price and value in use. Value in use is the current value of future cash flows that the asset is expected to generate.

Subsidiaries/affiliated companies/companies under joint control

Subsidiaries, affiliated companies and companies under joint control are assessed using the cost method in the company accounts. Investments have been assessed at their share acquisition price unless write-down has been necessary. Write-down to fair value has taken place when a decrease in value is due to factors that are not deemed to be temporary and when it is deemed necessary in accordance with good accounting practice. Write-down is reversed when the basis of the write-down no longer exists.

Dividends, group and other distributions from subsidiaries are recognised in the same year as appropriated in the subsidiary’s accounts. If the dividend/group contribution should exceed the percentage of earned income after acquisition, the excess represents repayment of invested capital, and the distribution is deducted from the investment value in the balance sheet.

Receivables

Trade debt and other liabilities are recognised in the balance sheet at their nominal value after deductions for provision for expected loss. Provision for losses is made on the basis of individual assessment of each liability. In addition, an unspecified provision is made for the remaining trade debts to cover assumed loss.


63

Cash and cash equivalents

Cash and cash equivalents for the company comprise cash, separate company bank deposits and net overdraft balance on the group account. The difference between net balance on the company’s overdraft and net balance in total on the group account is presented as an internal balance within the group.

Short-term positions

Short-term positions (shares and units as current assets) are valued at the lower of cost or fair value on the balance sheet date. Dividends and other distributions from the companies are recognised as other financial income.

Leasing

Rental agreements are assessed as financial or operational leasing based on an evaluation of the individual agreement. Equipment covered by rental agreements deemed to be financial leasing is recognised in the balance sheet and depreciated as ordinary business equipment. Payment of the rental liability is recognised as non-current liability. The liability is reduced by paid rent after deduction of calculated interest costs.

Operational lease agreements are recognised in the balance sheet only to the extent that advance payment has been made to the lessor. The rental payments are classified as operating expenses and is distributed on a straight-line basis over the rental period.

Transactions with related parties

Transactions between group companies take place subject to standard market terms.

Cash flow statement

The cash flow statement has been prepared using the indirect method. This means that the analysis is based on the unit’s annual results in order to present cash flow from ordinary operations, investment activity and financing activity.

Note 2 Segment information (NOK 1,000)

Geographical distribution of income 2016 2015

Norway 3,807 4,095

Sweden 850 1,334

Finland 1,224 686

Total 5,882 6,115

Note 3 Salary costs, number of employees, remuneration, loans to employees etc. (NOK 1,000)

Salary costs 2016 2015

Salaries 12,482 9,234

Employer tax 1,647 1,791

Pension costs 438 379

Other benefits 560 71

Total 15,126 11,475

Salaries include Board fees of NOK 1.7 million in 2016 (NOK 1.9 million in 2015) and payroll costs associated with the reorganisation completed in 2016.

As at 31 December 2015, the company had six employees and the average number of FTEs over the year was six. For information on remuneration for the Board and executive management, see Note 25 to the consolidated accounts. Compulsory occupational pension – OTP

The company has an agreement on a defined contribution pension, the Compulsory Occupational Pension (OTP). The scheme meets statutory requirements for compulsory occupational pensions. The scheme covers all employees. Pension premium paid is recognised continuously over the year.

Auditor remuneration 2016 2015

Audit fees, statutory audit services 335 299 Other certification services - 219

Tax consultancy 25 -

Other-non audit services - 107

Total remuneration 360 625

VAT is not included in the audit fee.


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Note 4 Other operating costs (NOK 1,000)

Other operating expenses 2016 2015

Rent and commercial premises 494 440

Maintenance/service agreements 687 707

Travel expenses 257 398

Car expenses 90 18

Sales and marketing expenses 67 87

Foreign services etc. 4,888 20,720

Postage and telephone 130 155

Provisions for bad debts 500 12,300

Costs for exchange etc. 822 1,141

Other operating expenses 423 1,062

Total other operating expenses 8,357 37,030

External services etc. include fees paid to financial and legal advisors used in conjunction with the Company’s and the Group’s structural and strategic processes.

A provision in 2015 was related to an uncertain claim against one of its subsidiaries. The claim is related to a development project which in the consolidated accounts 2015 has been written down after the update of the estimated recoverable amount. See also Note 11 to the consolidated accounts.

Note 5 Financial income/financial expenses (NOK 1,000)

Financial income 2016 2015

Income from investments in subsidiaries - 19,875

Gains on the sale of shares 24,471 -

Interest income within the Group 3,186 5,874

Other interest income 28 2

Other financial income 299 -

Total 27,984 25,751

Financial expenses

2016

2015

Loss on sale of shares

2,889

62,307

Depreciation financial assets 40,728 24,285

Interest expenses 530 4,091

Other financial expenses 214 1,164

Total 44,361 91,847

Net finance - 16,378 - 66,096

The Group’s Norwegian subsidiaries are part of the parent company’s group account arrangement with Nordea. Interest costs in subsidiaries at net amounts payable to Goodtech ASA which, with Nordea, is the other legal party. Goodtech ASA is charged total interest costs on the cash pool arrangement.

See Note 2 and Note 11 of the consolidated accounts for information on the sale of shares and write-down of financial fixed assets.


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Note 6 Tax (NOK 1,000)

Annual tax is distributed as follows: 2016 2015

Payable tax

Change to deferred tax/deferred tax assets

-

- 676

-

- 1,279

Total tax costs - 676 - 1,279

Calculation of the year’s tax basis:

Pre-tax profits - 35,330 - 109,986

Permanent differences 26,056 92,270

Change in temporary differences 885 12,714

Change loss to be carried forward 9,235 5,002

Annual tax basis 845,532 0

Summary of temporary differences

2016

2015

Current assets/current liabilities - 12,831 - 12,339

Fixed assets - 132 261

Losses carried forward - 172,386 - 163,151

Total temporary differences - 185,349 - 175,229

Carrying value deferred tax assets - 44,484 - 43,807

Reconciliation of effective tax rate:

25%/27% tax on pre-tax profit - 8,833 - 29,696

Permanent differences (25%/27%) 6,514 24,913

Effect of change to tax rate 1,643 3,505

Calculated tax costs - 676 - 1,279

Effective tax rate (tax in relation to pre-tax profits) 2% 1%

Permanent differences include gains and losses on the sale of shares, write-down of shares and other non-deductible expenses.

Note 7 Tangible and intangible assets (NOK 1,000)

Machinery and

fixtures Intangible

assets Total

Acquisition costs as at 01.01 8,695 102 8,797 Acquisition 4,761 - 4,761 Acquisition costs 31.12 13,455 102 13,558 Accumulated depreciation 31.12. - 6,875 - 102 -

6,977 Book value as of 31.12 6,580 -0 6,58

1

Annual depreciation

1,341

9

1,35

1

The company uses straight-line depreciation for all tangible and intangible assets. The useful life of machinery and equipment is estimated as 3-10 years and intangible assets 5 years.

Significant leases

Goodtech ASA leases offices at Per Kroghs vei 4 in Karihaugen. These offices are sublet by the subsidiary Goodtech Projects & Services AS. The rental costs for 2016 were NOK 0.5 million.


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Note 8 Cash and cash equivalents (NOK 1,000)

2016 2015

Deposits/withdrawals from group account (withdrawals classified as current liabilities)

20,243 - 32,484

Bank deposits excluding group account 21,887 949

Total cash and cash equivalents 42,130 - 31,536

Total cash and cash equivalents as presented in the balance sheet 21,887 949

Deposits/Withdrawals from the group account arrangement are classified as other current receivables and current interest-bearing liabilities in the balance sheet.

NOK 0.6 million of company funds are bound up in owed tax. The corresponding amount as at 31.12 last year was NOK 0.4 million. See Note 16 to the group accounts for a description of the group accounts arrangement.

Note 9 Liabilities (NOK 1,000)

Current liabilities 2016 2015

Withdrawals from group account - 32,484

Total current interest-bearing liabilities 0 32,484

See also Note 19 to the consolidated accounts for information on the Group’s credit facility.

Other current liabilities 2016 2015

Current liabilities Group 1,456 1,823

Salary and holiday allowance owed 1,078 931

Accrued costs 4,621 7,194

Other current liabilities - 1,000

Total other current liabilities 7,155 10,948

Note 10 Balances between group companies (NOK 1,000)

Receivables 2016 2015

Loans to group companies 67,550 85,233

Accounts receivable group 6,676 7,579

Other current receivables group 11,024 44,138

Total 85,251 136,950

Liabilities

2016

2015

Trade payables within group 70 148

Other current liabilities group 1,456 1,823

Total 1,525 1,970

Loans to group companies consist of loans to Goodtech Industry Holding AS of NOK 66 million and loans to Goodtech Solutions Manufacturing AB of NOK 1.5 million. The loans are due for payment 30 days on demand by the lender and are classified as non-current liabilities. Loans are provided on market terms.

Other outstanding balances between group companies are mainly related to the purchase and sale of products and services and deposits in the group account scheme.

The Group’s Norwegian and Swedish subsidiaries are part of the parent company’s group account arrangement with Nordea. As of 31 December 2016, the subsidiaries had withdrawals on the group account totalling NOK 19.0 million (as of 31 December 2015: withdrawals of NOK 25.8 million), classified as other short-term receivables in the balance sheet.


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Note 11 Subsidiaries (NOK 1,000)

Shares in subsidiaries owned by Goodtech ASA are shown below. Several of the subsidiaries in the table own shares in other subsidiaries. This is described in their respective annual accounts.

Company

Ownership/ voting share

Business office

Acquisition cost

Acc. increase/writ

e-downs Carrying

value 2016

Earnings for the year on inv. in subsidiaries

Goodtech Industry Holding AS 100% Norway 123,501 -7,487 116,014 -

Goodtech Environment AB 100% Åland (Finland) 21,822 -8,699 13,123 -

Goodtech Solutions AB 100% Sweden 66,806 -54,362 12,444 -

Total 212,129 -70,548 141,581 0

Gains of NOK 24 million been recognised in 2016 for the sale of all shares in Goodtech Environment AS. The transaction was completed at the beginning of 2016.

In 2015, Goodtech ASA purchased all the shares in Goodtech Environment Gøteborg AB from its previous subsidiary Goodtech Environment AS. Goodtech Environment Gøteborg AB was liquidated in 2016. Gains of NOK 0.4 million were recognised for this liquidation.

Impairment of financial assets - investments in subsidiaries

Goodtech conducts annual testing of impairment of investments in subsidiaries. If there are indications that the values of the assets are no longer recoverable, an impairment test will immediately be carried out to determine whether the asset can still justify its carrying value. If new estimates conclude that the value is no longer recoverable, impairment of assets to their recoverable amount is carried out, the higher of net realisable value and utility value (discounted cash flow). See Note 11 to the consolidated accounts for further information to the assumptions used in calculating the estimated recoverable value. In 2016, this led to a write-down of NOK 40.7 million on the investment in Goodtech Solutions AB to an estimated utility value of NOK 12.5 million. In 2016, Goodtech ASA made share contributions to Goodtech Solutions AB of a total of NOK 12.2 million. Converted share contributions were written off and included in the impairment amount stated above.

Note 12 Share capital

For information about share capital/shareholders in the company/equity, see Note 17 to the consolidated accounts.

Note 13 Equity (NOK 1,000)

Share

capital

Own

share

s

Other paid-in

capital

Other

equity

Total

Equity as at 1.1 45,752 - 252 389,808 - 108,332 326,975

Change own shares - 536 - 1,853 - 2,389

Annual profits - - - - 34,654 - 34,654

Equity as at 31.12 45,752 - 788 389,808 - 144,839 289,933


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Note 14 Collateral and guarantees

In June 2016, Goodtech signed an agreement with Nordea to act as the Group’s new main banking partner. The Group’s Norwegian subsidiaries form part of the parent company’s group account arrangement with Nordea. The Group’s deposits on the credit facility under the group account arrangement was NOK 20.2 million as of 31 December 2016. Subsidiaries’ outstanding balances with the parent company under this arrangement are shown in Note 10. For further information about the group’s loans and credit facilities, see Note 19 to the consolidated accounts.

Goodtech ASA has bank guarantees in place that are also used by its subsidiaries. Total credit facilities are NOK 160 million where NOK 98.5 million have been withdrawn as of 31 December 2016.

Goodtech ASA additionally makes available other guarantees on behalf of its subsidiaries to customers and suppliers as part of standard operations. As of 31 December 2016, parent company guarantees constituted NOK 12.6 million.

Goodtech ASA has provided Westra Wermlands Sparebank with security of up to SEK 2 million for various bank loans supplied to Goodtech Solutions Manufacturing AB.

For collateral and guarantees, see Note 19 to the consolidated accounts.

.

Note 15 Financial market risk

The company does not use financial instruments for the management of financial risk.

Interest rate risk

Interest rate risk arises in the short and medium term as a result of the company’s debt being at a variable rate.

Currency risk

The company is at low risk from developments in currency exchange rates. Loans to companies within the group are mainly in Norwegian kroner.

Note 16 Related parties

The purchase and sale of goods and services between group companies and related parties are all on market terms. Loans between group companies are based on market terms.

No remuneration was paid by the parent company to related parties with the exception of the group companies and employees in 2016. See Notes 24 and 25 to the consolidated accounts for a detailed summary of transactions with related parties.

Note 17 Subsequent events

The activities associated with Promaps were sold after year end. See details in Note 2 in the consolidated accounts.

No significant events after the balance sheet date have significantly affected the Group’s financial position and should have been reflected in the accounts.


69

Declaration from the Board and Group CEO

The Board and CEO have today reviewed and approved the Annual Report and Annual Accounts for Goodtech ASA, the Group

and the parent company, as at 31 December 2016.

The Consolidated Annual Accounts have been produced in accordance with the EU approved IFRSs and related

interpretation statements and further Norwegian disclosure requirements contained in the Norwegian Accounting Act

and which must be applied as at 31.12.2016. The Annual Accounts for the parent company have been produced in

accordance with the Norwegian Accounting Act and Norwegian accounting practice as at 31 December 2016. The Annual

Report for the Group and parent company comply with the provisions contained in the Norwegian Accounting Act and

Norwegian accounting practice no. 16 as at 31 December 2016.

To the best of our knowledge:

- these Annual Accounts for 2016 for the parent company and the Group meet all current accounting standards - the information contained in the accounts provides a true picture of the Group’s assets, liabilities and financial position

and profits as a whole as at 31 December 2016

- the Annual Report for the Group and parent company provides a true summary of

o the developments, results and position of the Group and parent company

o the most important risk and uncertainty factors facing the Group and Company

Oslo, 23 March 2017

Stig Grimsgaard Andersen Karl-Erik Staubo Anne M. Sødahl Wessel Chairman of the Board Member of the Board Member of the Board

Vibeke Strømme Terje Thon Håvard Kristiansen Member of the Board Member of the Board Member of the Board, Employee

Representative


Member of the Board, Employee Representative

CEO

PricewaterhouseCoopers AS,T: 02316, org.no.: 987 009 713 VAT, www.pwc.noState authorised public accountants, members of The Norwegian Institute of Public Accountants, and authorisedaccounting firm

To the Annual Shareholders’ Meeting of Goodtech ASA

Independent Auditor’s Report

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Goodtech ASA. The financial statements comprise:

The parent company’s financial statement which comprise of the balance sheet as at 31December 2016, the income statement, and statement of cash flows for the year then ended, andnotes to the financial statements, including a summary of significant accounting policies; and

The group consolidated financial statement which comprise the balance sheet as at 31 December2016, income statement, statement of comprehensive income, statement of changes in equityand statement of cash flows for the year then ended, and notes to the financial statements,including a summary of significant accounting policies.

In our opinion:

the accompanying financial statements are prepared in accordance with law and regulations;

the accompanying financial statements present fairly, in all material respects, the financialposition of the parent company as at 31 December 2016, and its financial performance and itscash flows for the year then ended in accordance with the Norwegian Accounting Act andaccounting standards and practices generally accepted in Norway.

the accompanying financial statements present fairly, in all material respects, the financialposition of the group as at 31 December 2016, and its financial performance and its cash flowsfor the year then ended in accordance with International Financial Reporting Standards asadopted by EU.

Basis for Opinion

We conducted our audit in accordance with laws, regulations, and auditing standards and practicesgenerally accepted in Norway, including International Standards on Auditing (ISAs). Ourresponsibilities under those standards are further described in the Auditor’s Responsibilities for theAudit of the Financial Statements section of our report. We are independent of the Company asrequired by laws and regulations, and we have fulfilled our other ethical responsibilities in accordancewith these requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.

(2)

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance inour audit of the financial statements of the current period. These matters were addressed in thecontext of our audit of the financial statements as a whole, and in forming our opinion thereon, and wedo not provide a separate opinion on these matters.

Key Audit Matter How our audit addressed the Key Audit Matter

Carrying value of intangible assets(See note 11)

Intangible assets comprise of goodwilland project development costs, totallingNOK 162.0 million as of 31 December2016. An impairment charge of NOK 29.4million is recorded in the incomestatement, related to the Solutions andProjects & Services segments, in additiona NOK 9.6 million impairment chargewas recorded in relation to projectdevelopment costs.

These matters were significant in ouraudit as the valuation of the assets arecomplex and contains significantjudgements and estimates includingrevenue growth, profit margins, futurerequired investments and discount rate.

We have obtained the group’s impairment analysis andverified that the analysis contains an assessment ofcash generating units (CGUs) as well as the variousestimates and judgements included. Our evaluation isthat the analysis was based on discounted cash flowsin accordance with the requirements in IFRS, asadopted by EU, and that the model calculated thenumbers correctly.

We challenged management to substantiate itsassumptions related to revenue, operating costs, andfuture required investments, including comparingrelevant assumptions to historical performance andboard approved budgets.

The reasonableness of the discount rate is tested bycomparing it to empirical data, expected futureinterest rates, appropriate risk premium and debtratio. The discount rate used appears reasonable.

Accrued project revenues and costs (Seenote 15 and 20)

Accrued revenues comprise NOK 124.9million within assets and comprise NOK19.6 million within liabilities.

The group records a significant part of itsrevenues based on degree of completion.Degree of completion is either based oncosts or hours incurred as of the balancesheet date as a proportion of estimatedtotal costs or hours. The group re-evaluates estimated total costs and hourson a regular basis.

We have focused on this matter assignificant judgements and estimates areapplied when choosing the methodology

We have obtained and read the larger contracts andreviewed the group’s calculation of percentage ofcompletion with a focus on applying a consistentmethodology and the appropriateness (and accuracy?)of the calculation.

The group’s internal controls in place to ensure thatthe completeness of costs are recorded on the correctproject have been mapped and evaluated. Our testingdid not note any significant exceptions. The group alsohas controls in place where management challengesthe project managers’ judgement. The controls are putin place to ensure that that projects progress asplanned and estimated costs are up to date, includingadequate provisions for costs related to the projects.Management prepares an assessment of estimatedcosts and degree of completion at the project level.

(3)

for calculating degree of completion, aswell as estimated total costs and hours.

We have reviewed the reasonableness ofmanagement’s assumptions by:

interviewing project managers and other keypersonnel about what the assumptions andestimates are based on.

inquiring around accrued costs and hourscompared to budgeted costs and hours.

comparing ongoing projects to actual results oncompleted similar projects by reviewing projectfinancials.

making our own assessment of the degree ofcompletion of the projects reviewed.

challenging management on the provisions andevaluating the degree of completion compared toamount invoiced.

The project financials have been reconciled to thegeneral ledger and the timesheet system has beenreconciled to the project financials. We have testedthat the degree of completion is correctly computed bythe system. Our controls did not uncover any errors.

Other information

Management is responsible for the other information. The other information comprises the Board ofDirectors’ report, the statements on Corporate Governance and Corporate Social Responsibility, butdoes not include the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we do not expressany form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact. We have nothing to report in this regard.

(4)

Responsibilities of The Board of Directors and the Managing Director for theFinancial Statements

The Board of Directors and the Managing Director (management) are responsible for the preparationin accordance with law and regulations, including fair presentation of the financial statements of theparent company in accordance with the Norwegian Accounting Act and accounting standards andpractices generally accepted in Norway, the group consolidated financial statements in accordancewith International Financial Reporting Standards as adopted by the EU, and for such internal controlas management determines is necessary to enable the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s abilityto continue as a going concern, disclosing, as applicable, matters related to going concern. Thefinancial statements use the going concern basis of accounting insofar as it is not likely that theenterprise will cease operations.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a wholeare free from material misstatement, whether due to fraud or error, and to issue an auditor’s reportthat includes our opinion. Reasonable assurance is a high level of assurance, but is not a guaranteethat an audit conducted in accordance with laws, regulations, and auditing standards and practicesgenerally accepted in Norway, including ISAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material if, individually or inaggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with laws, regulations, and auditing standards and practicesgenerally accepted in Norway, including International Standards on Auditing (ISAs), we exerciseprofessional judgment and maintain professional scepticism throughout the audit. We also:

• identify and assess the risks of material misstatement of the financial statements, whether dueto fraud or error. We design and perform audit procedures responsive to those risks, and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk ofnot detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

• obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Company’s internal control.

• evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by management.

• conclude on the appropriateness of management’s use of the going concern basis of accountingand, based on the audit evidence obtained, whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the Company’s ability to continue as agoing concern. If we conclude that a material uncertainty exists, we are required to drawattention in our auditor’s report to the related disclosures in the financial statements or, if such

(5)

disclosures are inadequate, to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor’s report. However, future events or conditionsmay cause the Company to cease to continue as a going concern.

• evaluate the overall presentation, structure and content of the financial statements, includingthe disclosures, and whether the financial statements represent the underlying transactions andevents in a manner that achieves fair presentation.

• obtain sufficient appropriate audit evidence regarding the financial information of the entitiesor business activities within the Group to express an opinion on the consolidated financialstatements. We are responsible for the direction, supervision and performance of the groupaudit. We remain solely responsible for our audit opinion.

We communicate with the Board of Directors regarding, among other matters, the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internalcontrol that we identify during our audit.

We also provide the Board of Directors with governance with a statement that we have complied withrelevant ethical requirements regarding independence, and to communicate with them allrelationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were ofmost significance in the audit of the financial statements of the current period and are therefore thekey audit matters. We describe these matters in our auditor’s report unless law or regulation precludespublic disclosure about the matter or when, in extremely rare circumstances, we determine that amatter should not be communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

Opinion on the Board of Directors’ report

Based on our audit of the financial statements as described above, it is our opinion that theinformation presented in the Board of Directors’ report and the statements on Corporate Governanceand Corporate Social Responsibility concerning the financial statements, the going concernassumption, and the proposal for the allocation of the profit is consistent with the financial statementsand complies with the law and regulations.

(6)

Opinion on Registration and Documentation

Based on our audit of the financial statements as described above, and control procedures we haveconsidered necessary in accordance with the International Standard on Assurance Engagements(ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical FinancialInformation, it is our opinion that management has fulfilled its duty to produce a proper and clearlyset out registration and documentation of the company’s accounting information in accordance withthe law and bookkeeping standards and practices generally accepted in Norway.

Oslo, 23 March 2017PricewaterhouseCoopers AS

Herman SkibrekState Authorised Public Accountant (Norway)

Note: This translation from Norwegian has been prepared for information purposes only.

Documents

Annual Report - Goodtechgoodtech2016.goodtech.no/resources/2016/Annual-Report-Goodtech-ASA-2016.pdfGoodtech Annual Report 2016 2 This is Goodtech Goodtech is a technology group working