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2 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 3
OPERA
The Annual Report for Opera Software ASA contains the following:
Directors’ Report 4
The Board of Directors 8
Consolidated Group Annual Accounts 2007 9
• Statementofoperations 10 • Statementofrecognizedincomeandexpense 11 • Balancesheet 12 • Statementofcashflows 14 • Notestotheconsolidatedfinancialstatements 15
Parent Company Annual Accounts 2007 45
• Statementofoperations 46 • Statementofrecognizedincomeandexpense 47 • Balancesheet 48• Statementofcashflows 50 • Notestotheconsolidatedfinancialstatements 51
Auditor’s Report 59
Corporate Governance 60
The consolidated financial statement, which has been drawn up by the board and management,
has to be read in relation to the annual report and the independent auditor’s opinion.
4 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 5
2007: Building momentum and establishing founda-tion for profitable revenue growth going forward
In 2007, Opera continued tomake substantial commercial prog-
ress,notonly in termsofcustomeracquisition,butalsoas faras
strengthening its positionwithin the rapidly growingmarkets it
servesandgeneratingprofitablerevenuegrowth.
Commercial progresswasdemonstrated across all business lines.
In2007,more than40millionmobilephoneswereshippedwith
the Opera full browser pre-installed and 63 new phones were
announced with Opera pre-installed compared to 37 in 2006.
Operaalsocontinuedtomakesignificantprogresswithnon-mobile
devices,demonstratedfruitsoftheCompany’sconcertedeffortsto
investandfocusonthisfast-growingsegment.Duringtheyear,the
Opera browserwas included on a broad array of consumer elec-
tronicproducts,includingset-topboxes,VoIPphones,andgaming
consoles.
Opera’sprogresswithOperaMiniwas substantial in2007.Opera
Mini isaJava-basedWebbrowserthatallowsuserstoaccessthe
fullWebonmobilephones thatwouldnormallybe incapableof
runningaWebbrowserandatspeedswhichare8to9timesfaster
than a normalWeb browser. Opera Mini has enabled Opera to
expandthesizeofthemarketforitsmobilebrowsers.Bytheendof
2007,sincelaunchinginearly2006,morethan35millionusershad
downloadedandusedOperaMini tosurf13.8billionWebpages.
ActiveusersofOperaMinisurfed1.6billionWebpagesinDecem-
ber2007alone.
OperaalsomadetremendousprogressintheDesktopsegment.In
2007,thenumberofactiveOperaDesktopusersgrewbymorethan
55%,substantiallyhigherthantheoverallmarket,enablingOpera
togainmarketshare.Usergrowth,combinedwithhigheraverage
revenueperuser(ARPU),ledtoa103%increaseinrevenuesin2007
comparedto2006.
Improvedoperationalexecution,aswellasverypositive industry
developments in Opera’s coremarket segments, drove revenues
toMNOK315.5in2007,anincreaseof48%comparedtoFY2006,
whererevenueswereMNOK213.8.Operatingexpensesincreased
fromMNOK241.3toMNOK304.6,agrowthof26%.EBITwasMNOK
10.9inFY2007comparedtoMNOK-27.5inFY2006andNetIncome
wasMNOK12.5 inFY2007vs.MNOK -18.2 inFY2006. Operating
cashflowwasMNOK36in2007versusMNOK-.1in2006.
Strategic focusOpera’scorporatevisionistoprovidethebestInternetexperience
onanydevice.Opera’scoretargetcustomersincludemobilephone
operators,mobileanddeviceOEMs,andconsumers. Throughout
2007,Operacontinuedtodeliveronitsvision,withOperapower-
ingtheInternetonnotonlyagrowingrangeofmobilephones,but
alsoonabroaderarrayofnon-mobileInternet-connecteddevices.
Operaalsoexperiencedsubstantialusergrowthontheconsumer
side, inboth theDesktop segment andwith theOperabranded
versionofOperaMini.
Commercial developmentInternet Devices
Internet Devices includes revenue from both mobile phones
andother Internetconnecteddevices, suchasgameconsoles, IP
TV set-top boxes, and portable media players. Internet Devices
also includesOperaMini revenue frommobileoperators suchas
T-MobileInternationalandTelefónicaaswellasrevenuegenerated
fromtheOpera-brandedOperaMiniproduct.
Total revenue from Internet Devices for 2007 was MNOK 248.4
comparedtoMNOK180.8in2006,anincreaseof37%.
Opera Mobile
Shipped on millions of devices from the major mobile phone
manufacturersandoperatorsworldwide,theOperaMobilebrowser
letsuserssurfthefullWebontheirmobilephones.
Themarketformobilephoneswithincreasedfunctionalityshowed
materialgrowthin2007.Advancedhandsetssuchassmartphones
accounted for an increasingly higher proportion of totalmobile
phone sales. Opera believes that twomain factorswill continue
to drive the growth for enhanced handsets: the falling cost of
buildingan advancedmobilephoneand theoperators’ demand
forincreasedfunctionalityandbetterservicestomakeuseoffaster
networkspeeds.
RevenuesfromOperaMobilecontinuedtogrowin2007asOpera
wasshippedonanincreasingnumberofhandsetsamongitsOEM
andoperatorcustomers.In2007,morethan40.8millionphones
wereshippedwiththeOperaMobilebrowserpre-installed,and63
phoneswereannouncedwithOperapre-installed.Thiscompares
to 34 million phones shipped with Opera pre-installed and 37
phonesannouncedin2006.
Furthermore in 2007, handset manufacturers that included the
Operabrowseronhandsetsin2007includeMotorola,SonyEricsson,
Nokia,Sanyo,ASUS,Samsung,Toshiba,Kyocera,Hitachi,Casio,and
Sharp. By the end of 2007, twomanufacturers, including HTC,
hadconfirmedthattheywillshiptheupcomingOperaMobile9.5.
Opera’s longstanding partner UIQ, which develops the software
platformfordevicesfromSonyEricsson,alsoconfirmedthatitwill
includeOperaMobile9.5.
Operaalsomadesubstantialprogresswithmobilephoneoperators.
In 2007, Opera continued to expand its relationship with KDDI.
Directors’Report KDDI, the largest 3G operator in Japan and the fastest growing
operator in the Japanesemarket, launched 19 phones featuring
the Opera browser in 2007. Three of these handsets include
OperaWidgets. Opera also generatedmeaningful revenue and
experiencedattractive revenuegrowthamongoperatorsusinga
customer-branded version of OperaMini. Major operators using
OperaMiniincludeT-Mobile,Vodafone,TMN,TataTeleservices,PTC,
andTelefónica.
Opera Mini – Business
Opera has comprehensive licensing and services deals with six
majoroperators–T-MobileInternational,VodafoneD2,Telefónica
Móviles de España, PTC/era (Poland), TMN (Portugal), and Tata
Teleservices(India)-usinganoperator-brandedversionoftheOpera
MinibrowseraspartoftheirWeb-enabled-handsetportfolios.
Theyear2007sawcontinueduseofOperaMinitopowercustomer-
brandedInternetofferingsfromTierOneEuropeanoperators.For
example, OperaMini is a cornerstone inT-Mobile International’s
web’n’walkprogram.
In June, Opera Software announced that Vodafone D2 GmbH
selected the Opera Mini mobileWeb browser to power its new
“Handy2.0”service.TheagreementwithVodafonewasreachedby
Opera’s reseller partner Bytemobile, Inc. The two companies are
jointlypoweringVodafoneD2`s“Handy2.0”service.
Inthethirdquarterof2007,TataTeleservices,aleadingoperatorin
India,selectedOperaMiniasthekeycomponentofitsmobileWeb
strategy.Tata is thefirstoperator todeployOperaMinionBREW.
ThedealalsogivesOperaakeypartnerandstrongfootholdinthe
rapidlygrowingIndianmobilemarket.
In December, Opera announced that it had made Opera Mini
availableonQualcomm’sBREWplatform.Asaresult,operatorsand
handsetmanufacturerswillbeable to leverageOperaSoftware’s
technologytodrivefeature-richBREWhandsetstothemassmarket
quicklyandenableuserstoaccesstheirfavoriteWebsitesfromthe
convenienceoftheirmobiledevice.
In2007, theprimarydriverof revenue for thecustomer-branded
version ofOperaMini, for exampleT-Mobile andTelefónica,was
license/royalty fees, which was driven by the number of active
usersofOperaMinibythemobilephoneoperatorcustomers.
For2007asawhole,OperaMiniwaspre-installedon59handsets.
Opera Mini - Consumer
In 2007, Opera continued developing Opera Mini, a Java-based
WebbrowserthatallowsuserstoaccesstheWebonmobilephones
that would normally be incapable of running aWeb browser. A
remote server pre-processes theWeb page before sending it to
thephone.ThismakesOperaMinianattractivesolutionforphones
withlimitedresourcesorlowbandwidthconnections.OperaMini
isavailable freeofchargeviaWAPandPCdownloador fora fee
via SMS for consumers. Opera also offers Opera- and customer-
brandedversionsofOperaMini tomobileoperators (see“Opera
Mini–Business”).
Themajorfocusin2007wasongrowingthenumberofOperaMini
users, increasing usage, and adding to the product’s capabilities.
By the end of 2007,more than 35million cumulative users had
downloaded Opera Mini and used it to access the Internet and
downloadmore than13.8billionWebpages. Inaddition,Opera
has been focused on getting more distribution of the Opera-
brandedversionofOperaMinithroughdealswithmobilephone
OEMs.Duringtheyear,theCompanybegantoseethefruitsofthis
effort,particularlyasaresultofits2006agreementwithNokiaon
thehighvolumeSeries40platform,whereOperaMiniisshipped
pre-installedonsuchhighvolumedevicesastheNokia6300and
6500.
During2007,theCompanylaunchedonemajorupgradeofOpera
Mini,includingbreakthroughfeaturessuchasadvancedfull-page
viewofWebpagesonvirtuallyanymobilescreen.Inthefirstten
daysoflaunch,onemillioncopiesofOperaMini4weredownloaded,
anewrecordforthisproduct.
As has been learned from the Desktop business, Opera believes
thereissubstantiallong-termvalueinhavingalargeandgrowing
numberofusersandhighusageofOperaMini.Operabelievesthat
searchwillbeakeycornerstoneofOpera’smonetizationofitsOpera
Miniuserbase,andtheCompanyisconfidentincommercializing
OperaMiniinmanyotherinterestingwaysgoingforward.
Opera Devices
OperaprovidesanoptimizedimplementationofInternettechnolo-
giesforhandhelddevices,digitalTV,andotherdevices,withinno-
vative and powerful features that seamlessly adapt the Internet
experiencetosuitvaryingscreensizesandinputdevices.
Digital media content is rapidly becoming popular in the mass
consumer market, as seen most visibly through the growth of
digital consumer content such as music, images, TV/video, and
games. Opera believes that future devices to a large extent will
benetworkedandhaveelectronicstoragecapacity.Downloading
intoharddriveswillrequireabrowser,andOperabelievesthatits
provenbrowsertechnologywillenablesimplerandcheaperhard-
waretodeliverenhancedapplications.
OperaforDevicescontinuedtogrowinitscoremarketsegments,
as Opera’s browsers get installed on an increasing array of non-
mobilephoneInternetconnecteddevices,suchasgameconsoles,
portablemediaplayers,andnet-TVs.
Desktop
Since thefirstpublic release in1996,Operahas remainedat the
forefrontofbrowser innovationondesktopPCs.Opera’sdesktop
6 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 7
browser provides its users with a safe, efficient, and enjoyable
browsingexperience.
For 2007, Desktop revenue was MNOK 67.7 versus MNOK 33.0
in 2006, an increase of 103%. The marked increase in Desktop
revenue in FY 2007 is attributable to an increase in users and
stronger revenuestreams leading tohigheraverage revenueper
user.Desktopusersgrewmorethan55%in2007.Keydriversof
this user growth includegreater focus byOpera on thedesktop
segment and implementation of a geographic targeted strategy,
regardingbothusersandlocalrevenuepartnerships.
Financial year 2007Total revenuewasMNOK315.5 in 2007, up fromMNOK213.8 in
2006,anincreaseof48%.
OperatingexpensesincreasedtoMNOK304.6in2007fromMNOK
241.3in2006,anincreaseof26%.Payrollandrelatedexpenseswere
MNOK217comparedtoMNOK162.5in2006,anincreaseof37%.
EBITwasMNOK10.9comparedtoMNOK-27.5in2006.NetIncome
wasMNOK12.5inFY2007,comparedtoMNOK-18.2inFY2006.
Theannualfinancial statementshavebeenpreparedona“going
concern”basis.
Shareholders and equity-related issues
As of December 31, 2007, Opera Software had 119,542,246 out-
standing shares. Total stock option costs for employees in 2007
wereMNOK9comparedtoMNOK5.4in2006.
AsofDecember31,2007, theParentcompanyhadMNOK457 in
additionalpaidincapital.TotalequitywasMNOK530.5.Freeequity
perDecember31,2007wasMNOK61.3.
In the annual general meeting held June 21, 2006, William
J. Raduchel was elected Chairman of the Board and Michael
Tetzschnerwasre-elected.Additionally,LarsBoilesen,SilvijaSeres,
andKari Stautland joinedOpera’s Board. CharlesMcCathieNevile,
and StigHalvorsenwere elected as employee representatives to
theBoard,bytheemployeesofOpera.
Allocation of the annual profit
Theincome/profitforOperaSoftwareASAwasMNOK9.2in2007.
The board recommends that the profit is transferred to retained
earnings.
Financial riskTheCompanyhas limitedexposure tofinancial risks, andhasno
current funding requirement. As ofDecember 31, 2007,Opera’s
cashbalancestoodatMNOK466.8.TheCompanyhasnointerest
bearing debt. The Board has instructed management to invest
surplus cash in instruments with minimal credit and liquidity
risk.Investmentsareonlymadeinfundsoperatedbyinstitutions
ratedbyS&PorMoody’s,withaminimumratingofBBBorBaa2,
respectively.
TheCompany is exposed to foreignexchangeand credit risks in
thenormalcourseofbusiness.Theserisksarecloselymonitored.It
isnottheCompany’spolicytousefinancialinstrumentstohedge
againstforeignexchangerisks.
Opera’s customers aremainly large global companies. Customer-
relatedcreditriskisthereforelimited.Newprospectsareevaluated
forcredit-worthiness.
OrganizationOpera Software’s headquarters are located in Oslo, Norway. The
CompanyalsohasofficesinLinköpingandGothenburg(Sweden),
Beijing (China), Tokyo (Japan), Chandigarh (India), Seoul (South
Korea),Wroclaw(Poland),SanDiegoandMountainView(USA),and
Prague(CzechRepublic). TheCompanyhad462employeesasof
December31,2007.
Workplace environmentTheworkplaceenvironment inNorway is incompliancewith the
NorwegianLawofWorkplaceEnvironment.Noinjuriestoemploy-
eesoccurredontheCompanypremisesin2007.Sickleaveisconsid-
eredlowat1.5%.TheCompany’sactivitiesarenotenvironmentally
polluting.
Gender equalityAsofDecember31,2007,Operahad462employees,ofwhich71
werewomenand391weremen.Aspartofitscorevalues,Opera
promotesculturaldiversity,genderequality,andisanequaloppor-
tunityemployer.Operahas two femaleboardmembersand two
femalemembersontheseniorexecutiveteam.
Corporate governanceOperaisincorporatedinNorway,withagovernancestructurebuilt
onNorwegian corporate law.TheCompany isorganizedas a tra-
ditionallimitedcompany,withaboardofdirectors,achiefexecu-
tiveofficer, andanexternal auditor.Theannualgeneralmeeting
iswhere theboard formally ratifiesmajordecisionsaffecting the
Company’saffairs.Operaiscommittedtoasetofvaluesbasedon
diversityandequality,whichguides theway thecompanydevel-
opsitsproductsanditsinteractionwithcustomers,partners,and
investors.TheBoardofDirectors reporton thecompany’sCorpo-
rateGovernancepoliciesisfoundonpage60oftheAnnualReport.
OutlookOperaremainspositiveabouttheCompany’sshort-andlong-term
growth prospects.Within Internet Devices, the success that key
Operacustomers,includingT-MobileandKDDI,haveexperienced
with their mobileWeb initiatives powered by Opera, combined
with recent events in the industry, have heightened interest
amongoperatorsandOEMsforOpera’ssolutions.Operaalsosees
accelerating interest among device manufacturers for Opera’s
solutions,asWebbrowsersbecomeamorecommoncomponent
ofabroadarrayofdevicetypes.Operabelievesitiswell-positioned
totakeadvantageofthese“mega-trends”withinboththemobile
phone and consumer electronics industries. Opera also expects
to see increased revenue streams for theOperabrandedversion
ofOperaMini inFY2008compared toFY2007,asusageexpands
andasrevenueandbusinessmodelsevolvefurtherinthemobile
Internetspace.
TheCompanyalsoseespositivegrowthprospectsintheDesktop
segment,throughincreasedusersandhigherARPU.
Opera’s key operational priorities in FY2008 include (i) focusing
andinvestinginamoreaggressivemannerintheConsumerarea
(Desktop,OperabrandedOperaMini,MyOpera), (ii)accelerating
momentum among mobile phone operators worldwide, (iii)
increasingOpera’spositionwithtopmobilephoneOEMsglobally,
(iv) building on the momentum Opera has going into FY2008
amongmajor consumer electronicOEMs, and (v) capitalizing on
its unique cross-platform position and offering content related
servicestoitsusers,leveragingthefactthatitsbrowsersrunona
wideanddisparatearrayofdevicetypesandformfactors.
Oslo, 25 March 2008
WilliamJ.Raduchel
Chairman of the Board
LarsRabækBoilesen
MichaelTetzschner
SilvijaSeres
StigHalvorsen
Employee representative
KariStautland
CharlesMcCathieNevile
Employee representative
8 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 9
1. Chairman, William J. RaduchelWilliam J. Raduchel is a strategic advisorwho serves as an inde-
pendentdirectorandinvestorformultiplecompanies.From2004
to2006,hewaschairmanofRuckusNetwork,Inc.Priortothathe
wasastrategicadvisortoAOLafterbeingseniorvicepresidentand
chieftechnologyofficerofAOLTimeWarner(andAOLbeforethat).
He joinedAOLfromSunMicrosystems in1999wherehewas last
ChiefStrategyOfficerandamemberofitsexecutivecommittee.
2. Member, Michael TetzschnerTetzschner isaAttorneyatLaw,andaMemberof theNorwegian
BarAssociation.Previously,TetzschnerwaspresidentofFeedback
ResearchConsultingAS,Norway,andLifoResearch&Consulting,
Denmark,aswellasthemanagingdirectoroftheNorwegianSchool
ofManagement (Handelshøyskolen BI).Tetzschner has alsobeen
theHeadoftheExecutiveBoard(Byrådsleder)oftheMunicipality
ofOslo.HegraduatedwithadegreeinLawfromtheUniversityof
Oslo.
3. Member, Lars BoilesenLarsBoileseniscurrentlyservingasCEOforNordicandBalticRegion
atAlcatel-Lucent.Larshasextensivesalesandmarketingexperience
andhasheldexecutivepositionsinvariouscorporationsincluding
OperaSoftware,wherehewasExecutiveVicePresidentofSalesand
Marketing.Priortothat,LarsheadedtheNorthernEuropeandAsia
PacificmarketsforTandberg.LarsstartedhiscareeratLegoGroup
wherehewasSalesandMarketingmanagerforEuro.
4. Member, Silvija SeresSilvija Seres is currentlyVice President of ProductMarketing in a
leading software company Fast Search &Transfer. She has previ-
ouslyworked in research and as aprofessor at various academic
institutions,includingOxfordUniversityintheUK,DECSRCinthe
USA, andDarElHekmaUniversity inSaudiArabia. Silvijaholdsa
Ph.D.incomputersciencefromOxfordUniversityandanMBAfrom
INSEADinFrance.ShealsositsontheboardofseverallargeNorwe-
giancompanies.
5. Member, Kari StautlandKari Stautland is currently Human Resources Manager at GE
Healthcare AS a leading globalmedical company. She has been
workinginHRformanyyearsandhasextensiveknowledgewithin
thisarea.KariholdsaMastersdegree inBusinessandMarketing.
KariStautlandownsArepoAS,whichcontrolsapproximately14%
ofthesharesinOperaSoftware.
6. Employee representative, Charles McCathieNevileCharlesMcCathieNevileisOperaSoftware’sChiefStandardsOfficer.
BeforejoiningOperain2005,McCathieNevilespentsixyearswith
the World Wide Web Consortium (W3C). As well as managing
(andparticipatingin)standardizationworkonbehalfofOpera,he
presentsatconferencesandfairs.
HeworksintheCoreengineeringgroup,isbasedinOslo,holdsa
degreeinmedievalhistory,andenjoyscookingandlearningnew
languages.
7. Employee representative, Stig HalvorsenHalvorsen isaSeniorCoreDeveloperatOpera.Hehasworkedat
Opera since December 2000. Prior to joining Opera, Halvorsen
studied at the Norwegian University of Science and Technology
(NTNU),Trondheim,andholdsaSivilingeniørdegreeinComputer
Science(MSc).
Opera Software ASA
Consolidated Group Annual Accounts 2007
TheBoardofDirectors
10 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 11
Profitandlossaccount[NumbersinTNOK]
Consolidated Group 01.01 - 31.12
Note 2007 2006 2005
Revenue 1,2,5 315 466 213784 153954
Otherincome 3 0 0
Total operating income 315 466 213784 153954
Costofgoodssold 2 143 4641 0
Payrollandrelatedexpenses 3 217 004 162505 108333
Depreciationexpenses 7 6 496 4364 2055
Otheroperatingexpenses 3,4,7,14 78 935 69745 42639
Profit/loss from operation 10 888 -27471 927
Interestincome 5 18 366 9277 3145
Otherfinancialincome 5 10 238 5794 3283
Interestexpenses 5 -11 -21 -8
Otherfinancialexpenses 5 -17 690 -6175 -2729
Operating result before tax 21 468 -18596 4618
Taxonordinaryresult 6 -9 053 405 -1819
Net profit/loss for the year 12 468 -18191 2799
Earnings per share (NOK) 15 0,105 -0,177 0,028
Diluted earnings per share (NOK) 15 0,104 -0,177 0,027
Profit/loss for the year is allocated as follows:
Otherequity 12 468 -18191 2799
Statementofrecognizedincomeandexpense[NumbersinTNOK]
Consolidated Group
Note 31.12.2007 31.12.2006
Translationdifferences -1472 118
Net income recognized directly in equity -1472 118
Profit for the period 12 468 -18191
Total recognized income and expense for the period 10 996 -18073
Attributable to:
Equityholdersoftheparent 10 996 -18073
Minorityinterest 0 0
Total recognized income and expense for the period 9 10 996 -18073
12 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 13
Oslo, 25 March, 2008
WilliamJ.Raduchel
Chairman of the Board
LarsRabækBoilesen
MichaelTetzschner
SilvijaSeres
StigHalvorsen
Employee representative
KariStautland
CharlesMcCathieNevile
Employee representative
JonS.vonTetzchner
Chief Executive Officer
Balancesheet[NumbersinTNOK]
Consolidated Group Note 31.12.2007 31.12.2006
Assets
Fixed assets
Intangible fixed assets
Goodwill 7,8 3 142 3142
Total intangible fixed assets 3 142 3142
Tangible fixed assets
Officemachinery,equipment,etc. 7 17 832 18676
Total tangible fixed assets 17 832 18676
Financial fixed assets and deferred tax asset
Deferredtaxasset 6 9 724 9651
OtherInvestments 4 541 2 077
Total financial fixed assets and deferred tax assets 14 265 11728
Total fixed assets 35 239 33546
Current assets
Receivables
Accountsreceivables 10 65 249 55172
Unbilledrevenue 10 40 700 43636
Otherreceivables 10 5 729 5426
Total receivables 111 678 104234
Cashandcashequivalents 5 466 813 424498
Total current assets 578 491 528732
Total assets 613 730 562278
Balancesheet[NumbersinTNOK]
Consolidated Group Note 31.12.2007 31.12.2006
Shareholders’ equity and liabilities
Equity
Paid in capital
Share capital 9 2 391 2339
Sharepremiumreserve 9 456 973 441190
Other reserves 9 21 977 16111
Total paid in capital 481 341 459640
Retained earnings
Otherequity 9 50 827 39830
Totalretainedearnings 50 827 39830
Total equity 532 168 499470
Liabilities
Long term liabilities
Deferredtaxes 6 0 355
Current liabilities
Accountpayable 10 7 227 6548
Taxespayable 6 2 443 201
Socialsecurity,VAT,andothertaxationpayable 10 9 418 11314
Othershort-termliabilities 10 62 474 44390
Total short term liabilities 81 562 62453
Total liabilities 81 562 62808
Total equity and liabilities 613 730 562278
14 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 15
Note1AccountingprinciplesOperaSoftwareASA (the“Company”) isacompanydomiciled inNorway.Theconsolidatedfinancial statementsof theCompany for theyearended31December2007comprisetheCompanyanditssubsidiariesHernLabsABandOperaSoftwareInternationalAS(includingthesubsidiaryOperaSoftwareKoreaLtdandOperaWebTechnologiesPvt.Ltd),togetherreferredtoasthe“Group”.In2007,OperaSoftwareInternationalAShadbranchesinJapan,USA,China,andPoland.
Statement of compliance
TheconsolidatedfinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRSs)adoptedbytheEUandtheinterpretationsadoptedbytheInternationalAccountingStandardsBoard(IASB).TheconsolidatedfinancialstatementhasalsobeenpreparedaccordingtoapplicableregulationsintheNorwegianAccountingActanddisclosurerequirementsfromtheOsloStockExchange.
Basis of preparation
TheconsolidatedfinancialstatementsarepresentedinNOK,roundedtothenearestthousand.Theyarepreparedonahistoricalcostbasis.NoneoftheassetsandliabilitiesisstatedattheirfairvalueduetothefactthattheGroupdoesnothaveanyderivativefinancialinstruments,financialinstrumentsheldfortrading,orfinancialinstrumentsclassifiedasavailable-for-sale.Receivablesanddebtsareassumedtohaveamarketvalueequaltobookvalue.
PreparationofconsolidatedfinancialstatementsinconformitywithIFRSrequiresmanagementtomakejudgements,estimates,andassumptionsthataffecttheapplicationofpoliciesandreportedamountsofassetsandliabilities,income,andexpenses.Theestimatesandassociatedassump-tionsarebasedonhistoricalexperienceandvariousotherfactorsthatarebelievedtobereasonableunderthecircumstances,theresultsofwhichformthebasisofmakingthejudgementsaboutcarryingvaluesofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Actualresultsmaydifferfromtheseestimates. Theestimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognizedintheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiodorintheperiodoftherevisionandfutureperiodsiftherevisionaffectsbothcurrentandfutureperiods.
JudgementsmadebymanagementintheapplicationofIFRSthathavesignificanteffectontheconsolidatedfinancialstatementsandestimateswithasignificantriskofmaterialadjustmentinthenextyeararediscussedinNote13.
Theaccountingpoliciessetoutbelowhavebeenappliedconsistentlytoallperiodspresentedintheseconsolidatedfinancialstatements.
TheaccountingpolicieshavebeenappliedconsistentlybyGroupentities.
Basis of consolidation
SubsidiariesSubsidiariesareentitiescontrolledbytheCompany.ControlexistswhentheCompanyhasthepower,directlyorindirectly,togovernthefinancialandoperatingpoliciesofanentity,soastoobtainbenefitsfromitsactivities.Inassessingcontrol,potentialvotingrightsthatpresentlyareexercis-ableorconvertiblearetakenintoaccount.Thefinancialstatementsofsubsidiariesareincludedintheconsolidatedfinancialstatementsfromthedatethatcontrolcommencesuntilthedatethatcontrolceases. Transactions eliminated on consolidationIntragroupbalancesandanyunrealizedgainsandlossesorincomeandexpensesarisingfromintragrouptransactionareeliminatedinpreparingtheconsolidatedfinancialstatements.
Foreign currency
Foreign currency transactions
Transactionsinforeigncurrenciesaretranslatedattheforeignexchangeraterulingatthedateofthetransaction.Monetaryassetsandliabili-tiesdenominatedinforeigncurrenciesatthebalancesheetdatearetranslatedtoNOKattheforeignexchangeraterulingatthatdate.Foreignexchangedifferencesarisingontranslationarerecognizedintheincomestatement.Non-monetaryassetsandliabilitiesthataremeasuredintermsofhistoricalcostinaforeigncurrencyaretranslatedusingtheexchangerateatthedateofthetransaction.Non-monetaryassetsandliabili-tiesdenominatedinforeigncurrenciesthatarestatedatfairvaluearetranslatedtoNOKatforeignexchangeratesrulingatthedatesthefairvaluewasdetermined.
Financial statements of foreign operations
Theassetsandliabilitiesofforeignoperations,includinggoodwillandfairvalueadjustmentsarisingonconsolidation,aretranslatedtoNOKatfor-eignexchangeratesrulingatthebalancesheetdate.TherevenuesandexpensesofforeignoperationsaretranslatedtoNOKatratesapproximat-ingtotheforeignexchangeratesprevailingatthedatesofthetransactions.Foreignexchangedifferencesarisingonretranslationarerecognizeddirectlyinaseparatecomponentofequity.
Cashflowstatement[NumbersinTNOK]
*Changesinunbilledrevenueareincludedinchangesinaccountsreceivableinthecashflowstatement.
**CashandcashequivalentsofNOK7829Karerestrictedassetsasof31December2007
andNOK7387Karerestrictedassetsasper31December2006.
Consolidated Group 01.01 - 31.12
Note 2007 2006
Cash flow from operating activities
Profit/lossbeforetaxes 21 521 -18596
Taxespaid 6 -7 155 -5655
Depreciationexpenses 7 6 496 4364
Impairmentofshares 8 500
Changesinaccountsreceivable* -7 141 -16844
Changesinaccountspayable 679 1490
Changes in other accruals 13 418 29688
Share-basedpaymentswithnocasheffect 8 992 5453
Effectoftranslationdifferences -1 289 -9
Net cash flow from operating activities 36 021 -109
Cash flow from investment activities
Acquisitionoftangiblefixedassets 7 -5 874 -13644
Acquisitionofshares 8 -500 -50
Net cash flow from investment activities -6 374 -13694
Cash flow from financing activities
Proceedsfromissueofsharecapital 9 12 668 219775
Net cash flow from financing activities 12 668 219775
Net change in cash and cash equivalents 42 315 205972
Cashandcashequivalents01.01** 424 498 218526
Cash and cash equivalents 31.12 466 813 424498
16 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 17
Property, plant and equipment Owned assets
Property,plant,andequipmentarestatedatcost,asdeemedcostlessaccumulateddepreciation(seebelow)andimpairmentlosses(seeaccount-ingpolicyregardingimpairment).
Wherepartsofproperty,plant,andequipmenthavedifferentusefullives,theyareaccountedforasseparateitemsofproperty,plant,andequip-ment. Leased assets
LeasesintermsofwhichtheGroupassumessubstantiallyalltherisksandrewardsofownershipareclassifiedasfinanceleases.TheGrouphasonlyoperationalleasecontractsasof31December2007.Expensesconcerningtheupgradingofhiredpremiseshavebeencapitalizedandareamortizedovertheremainingtermofthecontract. Subsequent costs TheGrouprecognizesinthecarryingamountofanitemofproperty,plant,andequipmentthecostofreplacingpartofsuchanitemwhenthatcostisincurred,ifitisprobablethatthefutureeconomicbenefitsembodiedwiththeitemwillflowtotheGroup,andthecostoftheitemcanbemeasuredreliably.Allothercostsarerecognizedintheincomestatementasanexpenseasincurred.
Depreciation
Depreciationischargedtotheincomestatementonastraight-linebasisovertheestimatedusefullivesofeachpartofanitemofproperty,plant,andequipment.Landisnotdepreciated.Theestimatedusefullivesareasfollows:
•cost-rentedpremises 5years •machineryandequipment 4years •fixturesandfittings 5years Theresidualvalue,ifnotinsignificant,isreassessedannually.
Intangible assets
Goodwill
Allbusinesscombinationsareaccountedforbyapplyingthepurchasemethod.Goodwillrepresentsamountsarisingfromacquisitionofsubsidiar-ies,associatesandjointventures.Inrespectofbusinessacquisitionsthathaveoccurredsince1January2004,goodwillrepresentsthedifferencebetweenthecostoftheacquisitionandthefairvalueofthenetidentifiableassetsacquired.
GoodwillrelatestothepurchaseofHernLabsAB.AsthegoodwillexistedbeforeJanuary12004,thegoodwillisbasedontheamountrecognizedaccordingtoNGAAP.Goodwillper31December2007hasthesamevalueasgoodwillper1January12004.
Goodwillisstatedatcostlessanyaccumulatedimpairmentlosses.Goodwillisallocatedtocash-generatingunitsandisnolongeramortizedbutistestedannuallyforimpairment(seeaccountingpolicyregardingimpairment). Negativegoodwillarisingonanacquisitionisrecognizeddirectlyinprofitorloss.
Research and development
Expensesrelatedtoresearchactivities,whichareexpectedtoleadtoscientificortechnologicalknowledgeandunderstanding,arecalculatedascostsintheincomestatementintheperiodinwhichtheyareaccrued.
TheCompanydevelopsspecially-designedbrowsersforuseinitscustomers´products.AfeeispaidtotheCompanyforthisserviceandthisfeeshouldcoverthecostsrelatedtothedevelopmentofthesecustom-madebrowsers.Asthecustomers’paymentcoversthedevelopmentcosts,thesecostsarenotreportedinthebalancesheet.Activitiesthatarenotspecificallycustomerrelatedaredefinedasresearch.Seealsoprinciplesofrevenuerecognition.
Other intangible assets
Otherintangibleassets,excludingdeferredtaxassets(seeaccountingpolicyregardingincometax)thatareacquiredbytheGroup,arestatedatcostlessaccumulatedamortization(seebelow)andimpairmentlosses(seeaccountingpolicyregardingimpairment).
Subsequent expenditureSubsequentexpenditureoncapitalizedintangibleassetsiscapitalizedonlywhenitincreasesthefutureeconomicbenefitsembodiedinthespe-cificassettowhichitrelates.Allotherexpenditureisexpensedasincurred.
Amortisation
Amortizationischargedtotheincomestatementonastraight-linebasisovertheestimatedusefullivesofintangibleassetsunlesssuchlivesareindefinite.Goodwillandintangibleassetswithanindefiniteusefullifearesystematicallytestedforimpairmentateachbalancesheetdate.
Other trade and other receivables
Tradeandotherreceivablesarestatedattheircostlessimpairmentlosses(seeaccountingpolicyregardingimpairment).
Cash and cash equivalents
Cashandcashequivalentscomprisecashbalancesandcalldeposits.Depositsinmoneymarketfundsareincludedincashandcashequivalentsasthefundscanbewithdrawnfromthemoneymarketfundwithoutanotice.
Impairment
ThecarryingamountsoftheGroup’sassetsarereviewedateachbalancesheetdatetodeterminewhetherthereisanyindicationofimpairment.Ifanysuchindicationexists,theasset’srecoverableamountisestimated(seebelow).
Forgoodwill,assetsthathaveanindefiniteusefullifeandintangibleassetsthatarenotyetavailableforuse,therecoverableamountisestimatedateachbalancesheetdate.
Animpairmentlossisrecognizedwheneverthecarryingamountofanassetoritscash-generatingunitexceedsitsrecoverableamount.Impair-mentlossesarerecognizedintheincomestatement.
Impairmentlossesrecognizedinrespectofcash-generatingunitsareallocatedfirsttoreducethecarryingamountofanygoodwillallocatedtocash-generatingunits(groupofunits)andthen,toreducethecarryingamountoftheotherassetsintheunit(groupofunits)onaproratabasis.
Whenadeclineinthefairvalueofanavailable-for-salefinancialassethasbeenrecognizeddirectlyinequity,andthereisobjectiveevidencethattheassetisimpaired,thecumulativelossthathadbeenrecognizeddirectlyinequityisrecognizedinprofitorlosseventhoughthefinancialassethasnotbeenderecognized.Theamountofthecumulativelossthatisrecognizedintheprofitorlossisthedifferencebetweentheacquisitioncostandcurrentfairvalue,lessanyimpairmentlossonthatfinancialassetpreviouslyrecognizedintheprofitorloss.
Calculation of recoverable amount
TherecoverableamountoftheGroup’sassetsisthegreateroftheirnetsellingpriceandvalueinuse.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.Foranassetthatdoesnotgeneratelargelyindependentcashinflows,therecoverableamountisdeterminedforthecash-generatingunittowhichtheassetbelongs.
Reversals of impairment
Animpairmentlossinrespectofgoodwillisnotreversed. Inrespectofotherassets,animpairmentlossisreversediftherehasbeenachangeintheestimatesusedtodeterminetherecoverableamount.Animpairmentlossisreversedonlytotheextentthattheasset’scarryingamountdoesnotexceedthecarryingamountthatwouldhavebeendetermined,netofdepreciationoramortisation,ifnoimpairmentlosshadbeenrecognized.
Dividends
Dividendsonsharesarerecognizedasaliabilityintheperiodinwhichtheyaredeclared.
Share-based payment transactions
The shareoptionprogramallowsGroupemployees toacquire sharesof theCompany.The fair valueofoptionsgranted is recognizedas anemployeeexpensewithacorrespondingincreaseinequity.Thefairvalueismeasuredatgrantdateandspreadovertheperiodduringwhichtheemployeesbecomeunconditionallyentitledtotheoptions.ThefairvalueoftheoptionsgrantedismeasuredusingaBlack&Scholesmodel,takingintoaccountthetermsandconditionsuponwhichtheoptionsweregranted.Theamountrecognizedasanexpenseisadjustedtoreflecttheactualnumberofshareoptionsthatvestexceptwhereforfeitureisonlyduetosharepricesnotachievingthethresholdforvesting.Foroptionsgrantedbefore2007,Operahasprogramsforoptionsthatlastforfouryears.
Theprogramgivestheoptionholdertherighttoexercise25%oftheoptionsafteroneyear,thenext25%aftertwoyears,thenext25%afterthreeyears,andthelast25%afterfouryears.Theoptioncostsareaccruedaccordingtotheprincipleofgradedvesting.Thesocialsecuritytaxesconnectedtotheoptionsareaccruedaccordingtotheintrinsicvalue.Thismeansthattheexpensedsocialsecuritytaxiscalculatedbasedonthedifferencebetweenthemarketvalueandthestrikepriceandisaccruedoverthevestingperiod.Foroptionsgrantedin2007,20%oftheoptionsvestsafteroneyear,another20%aftertwoyears,25%afterthreeyears,andthelast35%afterfouryears.Optionscostsrelatedtotheoptionsgrantedin2007areaccruedaccordingtotheprincipleofgradedvesting.Theemployeesareresponsibleforthesocialsecuritytaxes.Operapays
18 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 19
thesocialsecuritytaxes,butgetsthesocialsecuritytaxesrefundedfromtheemployees.Theemployeescanexercisetheoptionsuntiloneyearaftertheyhavevested.Thisconditionisincludedinthecalculationofthefairvalueoftheoptions.
Provisions
AprovisionisrecognizedinthebalancesheetwhentheGrouphasapresentlegalorconstructiveobligationasaresultofapastevent,anditisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligation.Iftheeffectismaterial,provisionsaredeterminedbydiscountingtheexpectedfuturecashflowsatapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyand,whereappropriate,therisksspecifictotheliability.
Warranties
Aprovisionforwarrantiesisrecognizedwhentheunderlyingproductsorservicesaresold.Theprovisionisbasedonhistoricalwarrantydataandaweighingofallpossibleoutcomesagainsttheirassociatedprobabilities.
Onerous contracts
Aprovision foronerous contracts is recognizedwhen theexpectedbenefits tobederivedby theGroup froma contract are lower than theunavoidablecostofmeetingitsobligationsunderthecontract.
Trade and other payables
Tradeandotherpayablesarestatedatcost.
Revenue recognition
TheCompanyhasthefollowingprimarysourcesofrevenue:
•License/royaltyincome•Developmentfeesornon-recurringengineering,wheretheCompanycustomizesthebrowserforitscustomersand/orportsthebrowsertoanoperatingsystem•Maintenanceandsupportrevenue•Searchincome•Advertisingincome
Forcustomercontractswheredevelopmentandcustomizationiscompleteorifnodevelopmentorcustomizationisrequired,Operarecognizeslicense/royaltyrevenueinthesameperiodasthecustomershipstheInternetdeviceswithOperapre-installed.IncaseswhereOperaisnotpre-installed,Operarecognizeslicense/royaltyincomewhenthecustomerorcustomer’scustomerdownloadstheOperabrowsertotheirInternetdevice.OperaalsoentersintocustomeragreementsforacustomizedversionofitsOperaMiniproductofferingwherelicense/royaltyincomeisgeneratedonaquarterlybasispredicatedonthenumberofactiveusersofthebrowserinthatquarterlyperiod(whereanactiveuserisdefinedasauserwhousestheMinibrowsertoaccesstheInternetatleastonceinthequarterlyperiod).Fortheseagreements,OperahoststheOperaMinisolutionandrecognizestherevenuesbasedontheactiveuserinformationtheCompanyhasfromitsowncomputerservers.
Developmentfeerevenuestypicallyspananumberofaccountingperiods.Consequently,recognitionofrevenueoccurseachperiodbasedonthepercentageof completionmethod.Thepercentageof completion is calculatedbasedon the totalnumberofhoursdeliveredduringanaccountingperioddividedbythetotalestimatedhourstofulfilthetermsofthecontract. ThetotalestimatedhourstofulfillthecontractareconstantlymonitoredbytheCompany.Theportionofincomenotyetinvoicedtothecustomerispresentedasunbilledrevenue.
Insomecontracts, thecustomerprepays foraminimumnumberofcopiesof thecustomizedbrowser.Operareceives this license/royalty feeirrespectiveofwhetherthecustomeractuallyusesthenumberofminimumlicensesornot.Wherethereissignificantcustomizationofthebrowserorsignificantengineeringisrequiredtoportthebrowsertotheoperatingsystem,theprepaidminimumlicense/royaltypaymentisrecognizedonapercentageofcompletionbasisalongwiththedevelopmentfeerevenue.Iftheprepaidminimumfeeisconnectedtoabrowserwithnoorinsignificantcustomizationrequirementsorifthereisnoorinsignificantportingrequired,thefeeisrecognizedatthetimethemastercopyisdeliveredtothecustomer.
Maintenanceandsupportrevenuesarerecognizedratablyoverthetermofthemaintenanceandsupportagreementwiththecustomer.
Search income isgeneratedfromagreementsOperahaswith itssearchpartners. Search income isgeneratedwhenanOperauserconductssearchesthroughthe“built-insearch”barsprovidedontheOperadesktopbrowser–intheupperrighthandcornerofthebrowserinthecaseoftheDesktopbrowser.OperaalsogeneratessearchincomefromtheOpera-brandedOperaMinibrowser.
AdvertisingrevenuerelatestoOperabrowsersdownloadedfreeofchargefromtheInternet.Advertisingrevenueisgeneratedona“clickthrough”basis,whererevenueissharedwiththeadvertisingpartner,ona“display”basiswhenanadvertisementisdisplayedonthebrowser,andona“costperaction”basiswhenapurchaseismadeasaresultoftheadvertisement,whereOperasharesintheactualpurchasemadeasaresultoftheadvertisement.Invoicingofadvertisingtypicallyoccursonamonthlybasisandthesalesarebookedasincomeintheperiodtheincomeisgenerated.
Someagreements arebundledagreements,whereOpera receives a fee that coversdevelopment, licenses,maintenanceetc.The total fee isallocatedtothedifferentelementsandtheallocatedfeeisrecognizedaccordingtotheprinciplesdescribedabove.
Cost of goods sold
Purchaseoflicensesisexpensedascostofgoodssold.
Other income (costs)
Materialincomeandcost’s,whicharenotrelatedtothenormalcourseofbusiness,areclassifiedasotheroperatingincome(cost’s).
Expenses
Operating lease payments
Paymentsmadeunderoperatingleasesarerecognizedintheincomestatementonastraight-linebasisoverthetermofthelease.Leaseincentivesreceivedarerecognizedintheincomestatementasanintegralpartofthetotalleaseexpense.
Net financing costs
Otherfinanceincomeandcostscompriseforeignexchangegainsandlosses,whicharerecognizedintheincomestatement.
Interestincomeisrecognizedintheincomestatementasitaccrues,usingtheeffectiveinterestmethod.
Dividendincomeisrecognizedintheincomestatementonthedatetheentity’srighttoreceivepaymentsisestablished.
Income tax
Incometaxontheprofitorlossfortheyearcomprisescurrentanddeferredtax.Incometaxisrecognizedintheincomestatementexcepttotheextentthatitrelatestoitemsrecognizeddirectlyinequity,inwhichcaseitisrecognizedinequity. Currenttaxistheexpectedtaxpayableonthetaxableincomefortheyear,usingtaxratesenactedorsubstantiallyenactedatthebalancesheetdate,andanyadjustmenttotaxpayableinrespectofpreviousyears.
Deferredtaxisprovidedusingthebalancesheetliabilitymethod,providingfortemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandtheamountsusedfortaxationpurposes.Thefollowingtemporarydifferencesarenotprovidedfor:goodwillnotdeductiblefortaxpurposes,theinitialrecognitionofassetsorliabilitiesthataffectneitheraccountingnortaxableprofit,anddif-ferencesrelatingtoinvestmentsinsubsidiariestotheextentthattheywillprobablynotreverseintheforeseeablefuture.Theamountofdeferredtaxprovidedisbasedontheexpectedmannerofrealizationorsettlementofthecarryingamountofassetsandliabilities,usingtaxratesenactedorsubstantivelyenactedatthebalancesheetdate. Adeferredtaxassetisrecognizedonlytotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichtheassetcanbeutilized.
Deferredtaxassetsarereducedtotheextentthatitisnolongerprobablethattherelatedtaxbenefitwillberealized. Additionalincometaxesthatarisefromthedistributionofdividendsarerecognizedatthesametimeastheliabilitytopaytherelateddividend.
TaxespaidabroadfortheparentcompanywillbedeductedinNorwegiantaxesiftheCompanyhastaxespayableinNorway.IfOperahasnoNor-wegiantaxespayable,thetaxespaidabroadwillbecarriedforwardasdeductibleinfuturetaxespayable.
Segment reporting
AsegmentisadistinguishablecomponentoftheGroupthatisengagedeitherinprovidingproductsorservices(businesssegment)orinprovidingproductsorserviceswithinaparticulareconomicenvironment(geographicalsegment),whichissubjecttorisksandrewardsthataredifferentfromthoseofothersegments.
20 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 21
Note2income[NumbersinTNOK]
AccordingtothedefinitionintheInternationalAccountingStandardno.14,SegmentReporting,OperaSoftwareASAclaimsthatthereisnoarea
ofoperationsorgeographicalsegments.Thereasonisthatthecompanydoesnotindividuallydeliverproductsorservicesorgroupsofthese
servicesthathaveariskanddividend,whichisdifferentfromotherareasofoperations.TheGrouphasoneproduct,”thebrowser,”whichismate-
riallythesame,regardlessoftheproductofwhichitispart.Further,accordingtothedefinitioninIASno.14,thegroupdoesnothavegeographi-
calmarketsthatsatisfythestandardsdefinitiontobeclassifiedasasegment.Thegroupdoesnotindividuallydeliverproductsorserviceswithin
aspecificgeographicalmarketthathaveariskanddividend,whicharedifferentfrompartoftheoperationsthatoperatesinothergeographical
markets.
However,OperaSoftwareASAhasdecidedtoprovidefurtherinformationaboutincomeconcerningproductsandproductgroupswherethe
Operabrowserisanintegratedpart.
InternetDevicesreflectsincomefromroyalty,support,andserviceonbrowsersusedonmobilephones,andonotherInternet-connecteddevices,suchasgameconsolesandInternetTVset-upboxes,andOperaMinirevenuefrommobilephoneoperatorsandpartnersfortheOpera-brandedOperaMiniproduct.PCDesktopreflectsincomefromOperasbrowserusedonPCs,includingincomefromcommercialsandsearchesperformedonthebrowser.
ThegeographicbreakdownofrevenueisbasedonthelocationofOpera’scustomersandpartners.BecauseOpera’sproductsandservicesaredistributedonaglobalbasis,theabovebreakdownofrevenuedoesnotreflectafullyaccuratepictureofwhereOpera’sproductandservicesareactuallyutilized.
Income 2007 2006 2005
InternetDevices 248 409 180788 128129
PCDesktop 67 057 32996 25825
Total 315 466 213784 153954
Income per geography 2007 2006 2005
Norway 0 0 1910
Europe 107 896 56288 61392
USA/Canada 89 244 67493 54327
Asia 118 326 90003 36325
Total 315 466 213784 153954
Parent
01.01 - 31.12
2007 2006 2005
Salaries 165 703 126541 79282
Social Security cost 24 581 24996 20161
Pensioncost 7 953 4566 1862
Share-basedremuneration 9 056 5453 2995
Otherpayments 9 711 950 4033
Wage cost 217 004 162506 108333
Averagenumberofemployees 408 314 227
ThecompanyhasestablishedapensionschemefortheNorwegianemployees.Thepension’s
schemeisadefinedcontributionplanwhichcomprisesthenewrequirementswithregardsto
ObligatoriskTjenestePensjon(OTP).
Fees to the CEO and members of executive team andth chairman of the board
TherearenoexistingagreementsconcerningseverancepaytotheCEOandthechairmanof
theboard.ThegrouphasnotgivenanyloansorsecuritydepositstoCEOorthechairmanofthe
board,ortheirrelatedparties.
AbonusprogramexistfortheseniorexecutiveteamatOpera.Foreachindividualexecutive,
thereisalimitedamountofbonusthatcanbeachieved.Thesizeofthebonuspaymentisde-
pendentonactualcompanyperformancecomparedtoasetofpredefinedtargets.Theprimary
targetsarerevenuesandEBITA.
Thebonusesforseniorexecutives,for2007areaccruedintheaccounts.Bonuseswillbepaidin
2008.
Independent auditors
Thetotalfeesbilledbyindependentauditorsduring2007wereNOK1113K.Dividedas
follows:
Statutoryaudit 566
Assurance services 39
Taxadvisoryfee 117
Other services 411
Total 1133
Note3Wagecosts/Numberofemployees/Remunerations[NumbersinTNOK]
22 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 23
Note3Options(continued)[NumbersinTNOK]
Option plan employees. Options approved during 2006 and prior years.
TheGrouphasestablishedashareoptionprogramforsomeofitsemployees.Theoptionsaregrantedbytheboardofdirectors.Theoptionsrunforafouryearperiod,where25%oftheoptionsmaybeexercisedeveryyear(withoutcertainexceptionswheretheboardhasdecidedthat40%oftheoptionmaybeexercisedinthefirstyearand20%inthesubsequentyears).Theoptionsmayonlybeexercisedduringonemontheveryyear.Iftheoptionsarenotexercised,theoptionholderwilllosetherighttoexercisethe25%fortheyear.Theboardmaygrantemployeesanextendedexerciseperiod.Thegrouphasgrantedtheoptionswithanexercisepriceequaltotheestimatedmarketvalueatgrantdate. Options granted during 2007
Asapartofanewpolicyregardingthecompany’spaymentsystem,theboardofdirectorsapprovedanewoptionprogramon14March.Theoptionprogramincludesaone-timeawardof6millionoptionseffectiveimmediatelyandpossibilityofanaddtitionalmillionoptionswithin2007.Inaddition,therewillbeoptionsissuedintherangeof2to3millionannuallywithintheperiod2008-2011,onconditionthattheboardofdirec-tors`authorizationtoincreasethesharecapitalfromthegeneralmeetingisrenewed.Eachoptionentitlestheholdertobuyoneshareofthecom-pany.ThepriceofeachissuedoptionwillcorrespondwiththemarketpriceofashareofOperaonthedaytheoptionwasgranted.Theoptionsareearnedwithanannualquotaoveraperiodof4years.Theholdersoftheoptionsareresponsibleforpayingthecompany’ssocialsecurityrates.Theoptionsmaybeexcercisedwith20%afteroneyear,20%aftertwoyears,25%afterthreeyears,andthefinal35%afterfouryears.Theemployeesmayexercisetheoptionsuptooneyearsubsequenttothevestingdate. Theoptionsareconsiderednon-transferabletootherpersons.Ifthecontractofemploymentisterminated,regardlessofreason,theemployeeloseshisrighttoexercisetheoptions.However,theemployeemaykeepsharesboughtthroughpreviouslyexercisedoptions.
Thenumberofoptionsandtheexercisedpricewillchangeintheeventofasharesplitormerged.
Thenumberandweightedaverageexercisepricesofshareoptionsisasfollows:
In thousands of options Weighted average
exercise price 2007
Number of
options 2007
Weightedaverage
exerciseprice2006
Numberof
options2006
Outstandingatthebeginningoftheperiod 12,41 4 257 7,57 6947
Terminated(employeequit) 18,6 1 255 7,56 833
Forfeitedduringtheperiod 0 0 17,05 110
Exercisedduringtheperiod 5,72 2 114 6,26 2697
Grantedduringtheperiod 12,72 6 745 28,08 950
Outstandingattheendoftheperiod 7 633 12,41 4257
Exercisableattheendoftheperiod 0 0
Thefairvalueofservicesreceivedinreturnforshareoptionsgrantedismeasuredbyreferencetothefairvalueofshareoptionsgranted.TheestimateofthefairvalueoftheservicesreceivedismeasuredbasedontheBlackandScholesmodel. Theexpectedvolatilityisbasedonthehistoricvolatility(calculatedbasedontheweightedaverageremaininglifeoftheshareoptions),adjustedforanyexpectedchangestofuturevolatilityduetopubliclyavailableinformation. Shareoptionsaregrantedunderserviceconditions,notamarketbasedcondition.Suchconditionsarenottakenintoaccountinthegrantdatefairvaluemeasurement.Therearenomarketconditionsassociatedwiththeshareoptiongrants.Forboth2006and2007,anannualaverageattri-tionrateof15%isused.Thisaverageattritionandtheemployeesresponsibilityforpayingthecompany’semployers’contributionsrelatedtotheoptionsaretakenintoconsiderationwhenestimatingthecostsoftheoptionsinaccordancewithIFRS2.Giventhattheemployeesmayexercisetheiroptionsoneyearafterthevestingdate,theestimateisbasedonanassumptionthattheemployeesonaverageareexercisingtheiroptions6monthsafterthevestingdate.
In2007,theconditionsforsomeoptionshavebeenmodifiedbyreducingthestrikeprice.Theoriginalfairvalueoftheoptionscontinuestobeaccruedoverthevestingperiod.Inaddition,theincreasedvalueoftheopstions,calculatedwithassumptionsatthedateofthemodifications,isexpensedoverthevestingperiod.Themodificationrelatesto550000options.Theincreasedcostin2007duetothemodificationisTNOK276.TheincreasedaveragevalueoftheoptionsduetothemodificationisNOK2,38.
Fairvalueofshareoptionsandassumptions 2007 2006
Fairvalueatmeasurementdate(averageperoption) 3,95 9,52
Expectedvolatility(weightedaverage) 45,44 0,57
Optionlife(adjustedforexpectationsofearlyexercise) 3,24 2,45
Expecteddividends 0 0
Risk-freeinterestrate(basedonnationalgovernmentbonds) 4,46 3,47
Totalcosts,bookedaswageexpenses
2007 2006
ExpensedinaccordancewithIFRSno.2(thousandNOK) 9 056 5453
9 056 5453
Note3Options(continued)[NumbersinTNOK]
24 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 25
Note3Options(continued)[NumbersinTNOK]
Thetablebelowshowsthenumberofoptionsissuedtoemployeesatvariousstrikepricesandexercisedates.
Strikeprice=exerciseprice
Expiry date Strike 10,00
Strike 12,40
Strike 12,70
Strike 13,00
Strike 13,15
Strike 13,50
Strike 13,65
Strike 14,30
Strike 14,40
Strike 15,00
Strike 24,00
Total
March2008 1057448 1000 8760 1067208
June2008 282500 37500 60000 25000 405000
September2008
67200 67200
November2008
12500 10000 22500
December2008
175024 16000 191024
March2009 1057448 1000 8760 1067208
June2008 8400 8400
June2009 210000 8300 37500 60000 25000 340800
September2009
67200 67200
November2009
10000 10000
December2009
175024 16000 191024
March2010 1321810 1250 19250 1342310
June2010 75000 25000 100000
September2010
84000 84000
November2010
December2010
218780 20 000 238780
March2011 1850534 1750 15330 1867614
June2011 5000 105000 110000
September2011
117600 117600
December2011
306291 28000 334291
Total 505000 5287240 5000 73800 875119 80000 20 000 75000 300000 336000 75000 7632159
Remuneration Salary Bonus Other compensation
Pension compensation
Benefit exercised
options
Total compensation
Executives
JonS.vonTetzchner,CEO 1 156 218 3 996 48 768 591 090 1 800 072
ErikC.Harrell,COO/CFO 1 140 718 355 565 8 475 48 768 - 1 553 526
Rolf Assev, CSO 1 071 729 48 768 1 163 500 2 283 997
ChristenKrogh,CDO 1 141 036 48 768 1 657 897 2 847 701
HåkonWiumLie,CTO 75 000 303 692 4 000 11 664 591 090 985 446
AnneStavnes,EVPCulture& Facilities
736 739 6 402 44 628 227 800 1 015 569
ToveSelnes,VPofHumanResources 156 666 48 768 205 434
Compensations to Execuive ManagementOperaSotwareASAhasanExecutiveManagementconsistingofleadingemployeesinthemothercompany.
Compensations to Executive in 2007:
Thepresentedbonusesaretheactualbonusespaidoutin2007.Earned,notpaidoutbonusesin2007arenotincludedinthetable.OtherremunerationsmentionedintheNorwegianAccountingAct§7-13barenotrelevantforthecompany.
TheExecutiveGroupisincludedinthecompany’spensionschemefortheemployees.Thepension’sschemeisadefinedcontributionplan. TherehasbeennocompensationorothereconomicalbenefitsgivenfrombusinesseswithinthesameGroup.Therehasbeennosignificantadditionalcompensationsgiventoadirectorwithregardtospecialservicesoutofthenormalfunctionsprovided.
Remuneration Salary Bonus Other compensation
Pension compensation
Benefit exercised
options
Total compensation
The Board of Directors
WilliamJRaduchel,ChairmanoftheBoardfromJune21th2007(boardmemberatthesametime)
207 050 - 207 050
MichaelTetszchner,Boardmember 150 000 30 000 284 750 464 750
LarsBoilesen,Boardmember from21thJune2007
75 000 569 500 644 500
SilvijaSeres,Boardmember from21thJune2007
75 000 75 000
KariStautland,Boardmemberfrom21thJune2007
75 000 30 000 105 000
StigHalvorsen,Employee representative
40 000 525 027 1 800 27 828 284 750 879 405
CharlesC.McCathieNevile, Employeerepresentative
40 000 478 646 22 368 - 541 014
NilsA.Foldal,ChairmanoftheBoard,until21thJune2007
450 000 30 000 2 000 482 000
GraceRekstenSkaugen,Boardmember,until21thJune2007
75 000 72 938 147 938
JohnPatrick,Boardmember, until21thJune2007
75 460 75 460
OlePeterLorentzen,Boardmember,until21thJune2007
75 000 30 000 - 105 000
RuneLillesveen,Boardmemberuntil21thJune2007
15 000 555 474 28 968 284 750 884 192
Total 1 427 510 7 385 945 355 565 26 673 379 296 5 728 065 15 303 054
Compensations to Execuive Management continuedOperaSotwareASAhasanExecutiveManagementconsistingofleadingemployeesinthemothercompany
Note3Options(continued)[NumbersinTNOK]
26 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 27
Note3Options(continued)[NumbersinTNOK]
Options to Execuive Management 2007Therearenoexistingagreementsconcerningloansorsecuritydepositstokeypersonnel,membersoftheboard,ortheirrelatedparties.TheExecutiveManagementhavereceivedoptionsduringthefinancialyear.Forfurtherinformationwerefertothenoteregardingtheoptionprogram.
TheExecutiveManagementhavethefollowingnumbersofoptions.
A-Theaverageexercisepriceforoptionsexecutedinthefinancialyear.B-Theaverageexercisepriceforthenumberofoptionsheldbytheendofthefinancialyear.C-Issuedoptiontoexecutivesmayin2007beexcercisedwith20%afteroneyear,additionally20%aftertwoyears,25%afterthreeyears,andthefinal35%afterfouryears.Inordertoexercisetheiroptions,thepersonsconcernedmustbeemployedintheyearssubsequenttothegrantdate.Optionsnotexercisedwillbeterminatedifanemployeeresigns. ErikC.HarrellhadoptionswithexcercisepricesNOK34.90andNOK15.70.On14thMarchtheboardofdirectorsdecidedtomodifysomeoftheoptions.250000optionsregardingEricC.HarrellweremodifiedtohaveanewstrikepriceofNOK12.40. Boththecostsoftheoriginaloptionsandtheoptionsissuedin2007areincludedwhenestimatingthecostsoftheoptionsinaccordancewithIFRS2.
Opening balance
Issued options
Terminated options
Executed options
Average exercise price - A
Closing balance
Average exercise price - B
Average lifetime-
C
Value of unvested
shares
IFRS 2 cost for
the period
Executives
JonS.vonTetzchner,CEO
100 000 100 000 7,2 - - 64 660
ErikC.Harrell,COO/CFO
250 000 310 000 - 12,4 560 000 12,4 3,25 280 000 1 167 414
Rolf Assev, CSO 250 000 320 000 250 000 8,9 320 000 12,4 3,25 160 000 372 668
ChristenKrogh, CDO
262 500 670 000 262 500 6,6 670 000 12,4 3,25 335 000 357 212
HåkonWiumLie,CTO
100 000 100 000 100 000 7,2 100 000 12,4 3,25 50 000 195 150
Anne Stavnes, EVPCulture& Facilities
20 000 100 000 20 000 2,5 100 000 12,4 3,25 50 000 132 821
ToveSelnes,VPofHumanResources
- 40 000 40 000 13,5 3,25 - 6 050
Total 982 500 1 540 000 732 500 1 790 000 875 000 2 295 975
Note3Options(continued)[NumbersinTNOK]
Thepresentedbonusesaretheactualbonusespaidoutin2006.Earned,notpaidoutbonusesin2006arenotincludedinthetable.OtherremunerationsmentionedintheNorwegianAccountingAct§7-13barenotrelevantforthecompany.
TheExecutiveGroupisincludedinthecompany’spensionschemefortheemployees.Thepension’sschemeisadefinedcontributionplan. TherehasbeennocompensationorothereconomicalbenefitsgivenfrombusinesseswithinthesameGroup.Therehasbeennosignificantadditionalcompensationsgiventoadirectorwithregardtospecialservicesoutofthenormalfunctionsprovided.
Remuneration Salary Bonus Other compensation
Pension compensation
Benefit exercised
options
Total compensation
Executives
JonS.vonTetzchner,CEO 892 435 4 000 45 912 584 000 1 526 347
ErikC.Harrell,COO/CFO 1 001 622 6 000 45 912 - 1 053 534
Rolf Assev, CSO 892 435 45 912 3 164 000 4 102 347
ChristenKrogh,VPEngineering 892 435 45 912 4 817 250 5 755 597
HåkonWiumLie,CTO,Boardmember
150 000 314 492 4 000 11 856 584 000 1 064 348
ScottHedrick,EVPDevices 836 795 146 940 45 912 - 1 029 647
RogerCarlhammar,EVPMobile 722 967 51 012 56 430 - 830 409
AnneStavnes,EVPHR&Facilities 579 615 6 000 41 532 494 000 1 121 147
TimoBurns,EVPBusiness Development
840 545 4 000 45 912 1 182 500 2 072 957
ChristianJebsen,Prev.COO, Resigned01.11.06
745 435 4 000 3 871 250 4 620 685
The Board of Directors
NilsA.Foldal, ChairmanoftheBoard
150 000 150 000
GraceRekstenSkaugen, ViceChairman
150 000 322 500 472 500
JohnR.Patrick,Boardmember 155 725 76 000 231 725
WilliamJRaduchel,Boardmember 77 600 77 600
MichaelTetszchner,Boardmember 150 000 617 500 767 500
OlePeterLorentzen,Boardmember 75 000 - 75 000
StigHalvorsen,Employee representative
15 000 478 721 24 732 617 500 1 135 953
RuneLillesveen,Employee representative
15 000 499 216 27 036 617 500 1 158 752
CharlesC.McCathieNevile, Employeerepresentative
15 000 444 144 21 300 - 480 444
ChristianH.Thommessen, previousChairmanoftheBoard
125 000
NilsRydbäck,previous boardmember
78 125 78 125
LiveLeer,previous Employeerepresentative
15 000 445 447 308 750 769 197
SnorreGrimsby,previous Employeerepresentative
15 000 499 364 720 000 1 234 364
Total 1 186 450 10 085 668 51 012 174 940 458 358 17 976 750 29 808 178
Compensations to Execuive Management 2006
28 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 29
A-TheaverageexercisepriceforoptionsexecutedinthefinancialyearB-TheaverageexercisepriceforthenumberofoptionsheldbytheendofthefinancialyearC-Theoptionsrunforafouryearperiod,where25%oftheoptionsmaybeexercisedeveryyear(withoutcertainexceptionswheretheboardhas decided that 40% of the optionmay be exercised in the first year and 20% in the subsequent years.) If the contract of employment is terminated,regardlessofreason,theemployeeloseshisrighttoexercisetheoptions.Therefore,theaveragelifetimeforthegrantedoptionis2years.
Opening balance
Issued options
Terminated options
Executed options
Average exercise price - A
Closing balance
Average exercise price - B
Average lifetime-
C
Value of unvested
shares
IFRS 2 cost for
the period
Executives
JonS.vonTetzchner,CEO
200 000 100 000 7,2 100 000 7 2 730 000 124 512
ErikC.Harrell,COO/CFO
200 000 100 000 50 000 - 0 250 000 25 2 - 859 599
Rolf Assev, CSO 500 000 - 250 000 8,6 250 000 9 2 1 475 000 377 883
ChristenKrogh, VPEngineering
525 000 - 262 500 7,5 262 500 8 2 1 837 500 324 157
HåkonWiumLie,CTO
200 000 - 100 000 7,2 100 000 7 2 730 000 124 512
ScottHedrick, EVPDevices
200 000 100 000 50 000 - 250 000 26 2 - 901 921
RogerCarlhammar,EVPMobile
- 200 000 - 200 000 35 2 - 860 561
Anne Stavnes, EVPHR&Facilities
40 000 20 000 2,5 20 000 3 2 240 000 8 281
TimoBruns, EVPBusiness Development
275 000 - 75 000 11,43 200 000 11 2 614 000 283 668
Sum 2 140 000 400 000 100 000 807 500 1 632 500 5 626 500 3 865 094
Options to Execuive Management 2006Therearenoexistingagreementsconcerningloansorsecuritydepositstokeypersonnel,membersoftheboard,ortheirrelatedparties.TheExecutiveManagementandsixotherpersons(includingtheBoard)havereceivedoptionsduringthefinancialyear.
TheExecutiveManagementhavethefollowingnumbersofoptions:
Note3Options(continued)[NumbersinTNOK]
Note3Options(continued)[NumbersinTNOK]
Name Commission Shares Options Strike price Total
WilliamJ.Raduchel Chairman 0 75000 24,0 75000
MichaelTetzschner BoardMember 0 50000 14,4 50000
KariStautland** BoardMember 15512120 50000 14,4 15562120
LarsBoilesen BoardMember 0 50000 14,4 50000
SilvijaSeres BoardMember 0 50000 14,4 50000
CharlesMcCathieNevile*** BoardMember 0 17220 12,4 17220
StigHalvorsen*** BoardMember 0 28700 12,4 28,700
JonS.vonTetzchner* CEO 16775890 0 16775890
32288010 320920 32608930
Title Shares Options Strike price Total
Rolf Assev **** ChiefStrategyOfficer 1004518 320000 12,4 1324518
ErikC.Harrell ChiefOperationalOfficer/
ChiefFinancialOfficer
10000 560000 12,4 570000
ChristenKrogh ChiefDevelopmentOfficer 114923 670000 12,4 784923
HåkonWiumLie ChiefTechnologyOfficer 1468865 100000 12,4 1568865
Anne Stavnes ExecutiveViceCulture&
Facilities
0 100000 12,4 100000
Tove Selnes VPHumanResources 0 40000 13,5 200 000
2598306 1790000 4548306
Shares and options owned by members of the board and the general manager pr. 31.12.07:
Shares and options owned by other leading employees as of 31.12.07:
* HåkonWiumLieandJonS.vonTetzchnerhavetransferedtheiroptionstoAmadeusInvestIIAS.PrimaryownersofAmadeusInvestII
ASareTetzchner(88,17%)andWiumLie(7,72%).SeeNote9.Inthisspecification,AmadeusInvestIIASshares
inOperaSoftwareASAaresplitaccordingtotheownershipofAmadeusInvestIIAS.
** KariStautlandowns100%afArepoASwhoowns15512120sharesinOperaSoftwareASA
*** Staffrepresentative
****BjørnvoldInvestASwhichhas574000sharesinOpera,isownedbypersonscloselyrelatedtoRolfAssev
OperaSoftwareASAissuesoptionswithanexercisepriceoftheassumedmarketpriceatthegrantdate.
30 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 31
Note3Options(continued)[NumbersinTNOK]
Name Commission Shares Options Strike price Total
NilsA.Foldal Chairman 43000 150000 24,0 193000
GraceRekstenSkaugen ViceChairman 18750 56250 10,0 75000
HåkonWiumLie* BoardMember 1530625 100000 7,2 1630625
MichaelTetzschner BoardMember 25000 50000 2,5 75000
JohnR.Patrick BoardMember 117089 25000 10,0 142089
WilliamJ.Raduchel BoardMember 0 100000 24 100000
OlePeterLorentzen** BoardMember 7665105 75000 24 7740105
CharlesMcCathieNevile BoardMember 0 0 - 0
RuneLillesveen*** BoardMember 0 25000 2,5 25000
StigHalvorsen*** BoardMember 0 25000 2,5 25000
JonS.vonTetzchner* CEO 17481250 100000 7,2 17581250
26880819 706250 27587069
* HåkonWiumLieandJonS.vonTetzchnerhavetransferredtheirsharestoAmadeusInvestAS.PrimaryinsidersinAmadeusInvestASare
Mr.Tetzchner(88,17%),Mr.WiumLie(7,5%).PleaseseeNote10.
** OlePeterLorentzenindirectlyownssharesinExtellusAS,whichowns1869135sharesinOpera.OlePeterLorentzenisalsotheChairman
oftheBoardofCapriceAS,whichowns5795970sharesinOpera.
*** Representativeofemployees
**** BjørnvoldInvestAS,ownedbyRolfAssev’scloserelatives,owns574000sharesinOpera.
OperaSoftwareASAgrantsoptionswithacallpricethatrepresentsafairmarketvalueonthegrantdate.
Title Shares Options Strike price Total
Rolf Assev **** ChiefStrategyOfficer 753820 100000 7,2 853820
Rolf Assev ChiefStrategyOfficer 0 150000 10,0 150000
ErikC.Harrell ChiefOperationalOfficer/
ChiefFinancialOfficer
0 150000 15,7 150000
ErikC.Harrell ChiefOperationalOfficer/
ChiefFinancialOfficer
0 100000 34,9 100000
ChristenKrogh VPEngineering 26725 87500 2,5 114225
ChristenKrogh VPEngineering 0 175000 10,0 175000
TimoBruns ExecutiveVicePresident
BusinessDevelopment
0 125000 10,0 125000
TimoBruns ExecutiveVicePresident
BusinessDevelopment
0 75000 14,3 75000
ScottHedrick ExecutiveVicePresidentDevice
BusinessUnit
0 150000 18,0 150000
ScottHedrick ExecutiveVicePresidentDevice
BusinessUnit
0 100000 34,9 100000
Anne Stavnes ExecutiveVicePresidentHR&
Facilities
0 20 000 2,5 20 000
RogerCarlhammar ExecutiveVicePresident
MobileBusinessunit
0 200 000 34,9 200 000
780545 1432500 2213045
Shares and options owned by members of the board and the general manager pr. 31.12.06:
Shares and options owned by other leading employees as of 31.12.06:
Declaration of executive compensation policies
TheBoardofDirectorshas,inaccordancewiththePublicLimitedLiabilityCompaniesAct§6-16aoutlinedpoliciesregardingthecompensationoftheExecutiveTeam. TheCompanyhasdesigneditsexecutivecompensationprogramaroundthefollowingmainobjectives:(a)attracting,motivating,andretainingtherightpeople,and(b)ensuringalignmentofmanagement’sinterestwiththelong-terminterestofshareholders.Executivecompensationpack-agescompriseacombinationofbasesalary,bonus,andlong-termincentivecompensation.Acombinationofobjectiveandsubjectivefactorsisusedforeachexecutiveofficerofthecompany.Thesefactorsaredescribedbelow.
Components of Executive Compensation
Base SalaryThefollowingfactorsaredecisiveforthedeterminationofthebasesalaryoftheExecutiveTeam:(a)competitivepaypractices,(b)jobscopeandresponsibility,and(c)evaluationofbusinessandindividualperformance.Adjustmentsinbasesalaryarereviewedevery12monthsorlonger. BasesalaryofexecutiveswhoarepromotedorchangejobswithintheExecutiveTeammayalsobeadjusted. Bonus and other benefitsAnnualbonusestotheExecutiveTeamarelinkedtotheCompany’s,businessunits’,andindividual’sperformance.RelevantmeasuresconsideredbytheBoardindefiningandevaluatingtheexecutiveofficers’performanceinclude:financialmeasuressuchasrevenuegrowthandprofittargetachievementandnon-financialmeasuressuchasstrategicvision,innovation,managementeffectiveness,andembodimentofthecompany’s corevaluesandculture.MembersoftheExecutiveTeammayreceiveotherbenefitsthatareappropriatefortheExecutiveTeammember’s particularsituationandlocalcompensationnormsforexample,inconjunctionwithaforeignassignmentorspecialrequirementsofanewrole.
Long-term incentive compensation During2007, thiselement in thecompensation framework is covered throughanemployee stockoptionprogram.This four-yearprogram isdesignedtoactasanincentiveandretentiontoolwhichalignsmanagement’s interestswiththoseofshareholders.Thevestingpriceissettomarketpriceatthedateofgrant.Thestockoptionsmaybeexercisedonapre-defineddateonceayear.Thestockoptionsareallocatedbasedonanevaluationofjobscopeandresponsibilityaswellasindividualperformance.
InMarch2007,theBoardofDirectorsapprovedanewemployeestockoptionprogram,whichisintendedtocontinueandstrengthentheincen-tiveandretentioneffectwhichalignsmanagement’sinterestswiththoseofshareholders.PleaseseeNote13:Subsequenteventsforfurtherinfor-mation.
Pensions Membersof the ExecutiveTeamparticipate in the regularpensionprogramavailable for all other employees in the locationwhere they arebased.
32 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 33
Note4Otherexpenses[NumbersinTNOK]
2007 2006 2005
Consultancyfeesfortechnicaldevelopment 5 543 2763 2880
Rentandotherofficeexpenses 16 169 12928 7979
Equipment 7 309 6964 5761
Audit,legalandotheradvisoryservices 10 863 11330 4450
Travelexpenses 15 393 12684 6934
Otherexpenses 23 658 23076 14635
Totalotherexpenses 78 935 69745 42639
Research
Theresearchcostsrelatingtosourcecodedevelopmentmainlyconsistsofsalaryexpenses.ThesesalariesareestimatedatNOK136222K(2006:NOK81910K) Otherlong-terminvestmentsareprimarelydepositsforrentalsindifferentcountries.
Note5Financialmarketrisk(continued)[NumbersinTNOK]
Note5Financialmarketrisk[NumbersinTNOK]
OperaSoftwareASAhasnointerest-bearingdebt,financialfixedassetsintheformofloan,semi-rawmaterialsorinvestmentsinsharesexceptfrominvestmentinthesubsidiaries.Consequently,thefinancialriskthegroupfacesisrelatedtoexchangerateriskinUSDandEUR.ExchangeratefluctuationinthecurrencymayhaveaneffectonthesaleandtheP/Lstatement.Operadoesnotusefinancialderivativestocontrolthefluctuationinexchangeratesorinterestrates. Currency risk: OperaSoftware’sincomeismainlyinUSdollarandEuro.Changesinexchangerateshaveanimmediateeffectonthecompany’srevenueandresult.
2007 2006
Numbers in thousand NOK % NumbersinthousandNOK %
NOK 707 0,22 311 0,15
USD 113 419 35,95 75789 35,45
GBP 231 0,07 0 0
JPY 1 885 0,60 0 0
EUR 199 224 63,15 137684 64,40
Total 315 466 100,00 213784 100,00
Credit risk: CreditriskistheriskoffinanciallosstotheGroupifacustomerorcounterpartytoafinancialinstrumentfailstomeetitscontractualobligationsandarisesprincipallyfromtheGroup’sreceivablesfromcustomers.TheGroup’sexsposuretocreditriskisinfluencedmainlybytheindividualchar-acteristicsofeachcustomer.TheGrouphascarriedoutbusinesswithanumberofitslargercustomersinthepastyearswithoutsufferinglosses.Themonitoringofthesecustomersisarrangedbytheregionswhereaccountexecutivesareresponsibleforindividualcustomers.
Theguidelinesforofferingcredittocustomersaregivenbythemanagementandthecreditriskexposureareevaluatedcontinuously.Allcustom-ersaskingforcreditaboveagivenamountaregivenacreditrating. TheGroup’slimitsofexposuretocreditriskcorrespondtoaccountsreceivablesliquidassetsasshownbytheGroup’sbalancesheet.
Creditriskregardingaccountsreceivablesmaybespecifiedperregionasfollows(thousandNOK):
USD 5,7539
GBP 11,5194
JPY 5,0462
EUR 8,0079
Conversionofthecompany`srevenuesfromforeigncurrencyintoNOKyieldsthefollowingaverageexchangerates:
Accordingly,a10%decreaseintheaverageexchangeratewouldincreasetheincomeandoperatingresult
withthesamenumbers.
Netdisagioin2007amountstoNOK7686K(2006:NOK1618K).Unrealizeddisagioregardingaccountsreceiveablesasof31December2007
amounttoNOK574K(2006:NOK184K).Theunrealizeddisagioisestimatedasthedifferencebetweentheexchangerateattheclosingdateand
dateofthetransaction.
Accountsreceivablesasof31December2007areconvertedusingthefollowingexchangerates:EUR7.961,USD5.411andJYP0.0483
TherecievablesasofDecember31
aredistributedasfollows:
2007 2006
USD 2 490 3116
EUR 6 775 4371
JPY 301 0
NOK 409 73
2007 2006
USD 11 342 7579
GBP 23 0
JPY 189 0
EUR 19 922 13767
A10%increaseintheaverageexchangeratewouldhavethefollowingincreaseintheincomewith(thousandNOK):
2007 2006
Europe 21 105 10714
USA/Canada 10 443 13752
Asia 36 707 31412
68 254 55878
2007 2006
Gross receivables Provision for bad debts
Grossreceivables Provisionforbaddebts
Notpastdue 52 427 1 35912 0
Pastdue0-30days 5 125 397 11035 282
Pastdue31-60days 3 856 16 723 0
Pastdue61-90days 1 418 84 1864 113
Morethan90days 5 428 2507 6344 311
Total 68 254 3005 55878 706
Accountsreceivablesdistributedbyageareasof31Decemberasfollows(thousandNOK):
34 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 35
Note5Financialmarketrisk(continued)[NumbersinTNOK]
2007 2006
Provisionasof1January 706 688
Changeinprovisionforbaddebtsrecognizedintheprofitandlossaccount
2 300 18
Provisionasof31December 3 006 706
Realizedlosses,recognizeddirectlyinP/L 278 2566
Receivedfrompreviouslywritten-downbaddebts -1 065 0
Theprovisionforbaddebtsisestablishedonanevaluationofeachcustomer.
Changeinprovisionforbaddebtsmaybespecifiedasfollows(thousandNOK):
Intrest risk and cash unit trust: Asof31December2007,theGrouphasinvestedinthreemoneymarketfunds.Thecompany’smoneymarketfundsarebookedatfairvalueandincludedinCashandcashequivalentssincethemoneyimmediatelycanberedeemedfromthefunds.Thereisapotentialriskoflossesontheredemptionofunitsoccurringafter31December2007.
TheGroup’sintrestriskisconsideredaslowowingtothefactthatitdoesnothaveanyliabilitiesbearinginterests. Liquidity risk: LiquidityriskistheriskthattheGroupwillnotbeabletomeetitsfinancialobligationsastheyfalldue. TheGroupconsidersitsliquidityriskaslowgivenitsconsiderableliquidityreserves Outofshort-termliabilities,NOK26635K(2006:NOK22495K)relatestoprepaidrevenuesthathavenofuturecashpayments.
Capital management: InordertoachievetheGroup’saggressive,long-termobjectives,theGroup’spolicyistomaintainahighequity-to-assetsratio. Owingtotheplannedexpansionandgrowthofitsbusiness,theGroupdoesnotexpecttoissueanysharedividends,inthefollowingyears.TheGroupstillhasabusinessmodelwhichindicatesaconsiderablecashflowinthefuture.Consequently,theGroup`scapitalrequirementsandtheabilitytoissuesharedividendscanbemaintained,providedgrowthtargetsarereached. Thegrouphasissuedoptionstoitsemployeesinaccordancewithitsobjectivethatemployeesshallholdcompanyshares.
Theboardofdirectorhasnot,asof31December,useditsauthorizationtobuytheGroup’sownshares.
36 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 37
Note6Tax[NumbersinTNOK]
Consolidated Group 01.01 - 31.12 01.01-31.12
2007 2006 2005
Tax expense for the year
Currenttax 2 486 774 1781
Deferredtax-grosschanges -428 -8059 402
Taxesoncapitalraisingcosts 83 2349 22
Taxpayableabroad 6 912 4509 0
Toomuch/litlebookedtaxespreviousyear 0 22 -386
Total tax expense for the year 9 053 -405 1819
Specification of tax payable:
Currenttax 2 486 774 1781
Taxesoncapitalraisingcosts 0 0 22
Toomuch/littlebookedtaxespreviousyear 0 0 -386
Taxsettlementpreviousyear 0 0 -526
PrepaidtaxHernLabs/branches -904 -574 -240
Taxesoncapitalraisingcosts 0 0 -22
Taxpaidtoaforeigncountry 860 0 -80
Total tax payable 2 443 201 549
Recognized deferred tax assets and liabilities/
Deferred tax assets and liabilities are
attributable to the following:
Assets Liabilities Net
2007 2006 2007 2006 2007 2006
Inventory,officemachineryetc. -546 0 927 784 381 784
Accountsreceivable -703 0 0 293 -703 293
Payrolltaxonshareoptions -538 -869 0 -538 -869
Taxvalueoflosscarry-forwards -8 864 -9504 0 -8 864 -9504
Deferredtaxes/(taxassets) -10 651 -10373 927 1077 -9 724 -9296
Setoffoftax 927 723 -927 -723 0 0
Netdeferredtaxes/(taxassets) -9 724 -9650 0 354 -9 724 -9296
Note6Tax[NumbersinTNOK]
Deferred tax assets and liabilities/
Movement in temporary differences during the year Posted
Balance
01.01.06
Posted to
P/L
directly to the
equity
Balance
31.12.06
Inventory,officemachinery,etc. 440 328 16 784
Accountsreceivable -131 424 0 293
Liabilities -1546 677 0 -869
Losscarryforward 0 -7139 -2365 -9504
Deferredtaxes/(taxassets) -1237 -5710 -2349 -9296
Posted
Balance Posted to directly to the Balance
01.01.07 P/L equity 31.12.07
Inventory,officemachinery,etc. 784 -361 -42 381
Accountsreceivable 293 -995 0 -702
Liabilities -869 332 0 -537
Taxvalueoflosscarry-forwardsutilized -9504 679 -41 -8866
Deferredtaxes/(taxassets) -9296 -345 -83 -9724
Change in deferred tax assets directly posted against
the equity capital
Note 2007 2006
Capital raising costs 9 -41 2365
Total deferred taxes posted directly against the equity -41 2365
Reconciliation of effective tax rate 2007 2006
Profitbeforetax 21 521 -18596
Incometaxusingthedomesticcorporationtaxrate 28,0% 6 026 28,0% -5207
Toomuch/littlebookedtaxespreviousyear 0,0% 0 0,0% 0
Taxpaidtoaforeigncountry 0,0% 0 -17,5% 3247
Effectofdifferenttaxratesbetweencountries 3,1% 660 0,4% -75
Taxesonotherpermanentdifferences 11,0% 2 367 -8,6% 1608
42,1% 9 053 2,2% -427
Thegroups’sopinionisthatdeferredtaxassetscanbesubstantiatedinthefuture.Thecompany’sopinionisbasedonexpectedandestimated
futureincome.
Permanent differences
Permanentdifferencesdonotincludenon-deductablecosts,includingcostsrelatedtoshare-basedremuneration.
Taxpaidabroadisaccordingtothetaxcalculationregarding2006recognizedasallowancesduetothefactthatthecompanysufferedadeficitand
consequentlydoesnothaveanypayabletaxtodeductthetaxtaxpaidabroad.
Giventhelegislationamendmentin2007,taxpaidabroadwhichcannotbedeductedfromtheNorwegiantaxmaybecarriedforwardfordeduc-
tionsinsubsequentyears.
38 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 39
Note7Fixedassets[NumbersinTNOK]
Consolidated Group 2007 2006
Costrented
premises
Machineryand
equipment
Fixturesand
fittings
Goodwill
Total
Total
Acquisition cost
Acquisitioncostasof01.01 9440 15386 5578 7857 38 261 24473
Acquisitions 615 4333 926 0 5 874 13644
Disposals 0 0 0 0 0 0
Currencydifferences 0 -103 -119 0 -222 144
Acquisition cost as of 31.12 10 055 19 616 6 385 7 857 43 913 38261
Depreciation
Depreciationasof01.01 3058 5281 3389 4715 16 443 12080
Disposalsfixedassets 0 0 0 0 0 0
Accumulateddepreciationasof31.12 4608 9146 4470 4715 22 928 16443
Net book value as of 31.12 5 447 10 470 1 915 3 142 20 975 21818
Depreciation for the year 1550 3865 1081 0 6 496 4364
Usefullife 5years Upto4years Upto5years Undertermined
Depreciationplan Linear Linear Linear Nodepreciation
2007 2006
Leasingcostsexpensed 7 605 6097
Durationoftheleasecontract 31.12.10 31.12.10
2007 2006
Non-terminableoperatingleasesduein:
Lessthanoneyear 9 145 6200
Betweenonetofiveyears 16 542 15600
Morethanfiveyears 0 0
25 687 21800
GoodwillrelatestotheacquisitionofthecompanyHernLabsAB.SeeNote9.
Operating leases:
ThemostsignificantagreementsaretherentalofpremisesinNorwayandSweden.
TheGrouprentsofficesinWaldemarThranesGate84,86and98.TheGrouphasenteredintoanewleasein2005lastingthroughout2010with
anoptionforrenewal.Theleaseagreementis,accordingtoIAS17,consideredasanoperatinglease.
Note8Investmentinsubsidiaries[NumbersinTNOK]
Testing at a decrease in value for cash generating units including goodwill.
RecognizedgoodwillisrelatedtotheacquisitionofthecompanyHernLabsAB.HernLabsABisadevelopmentcompanythatdeliversdevelop-
mentservicestoOperaSoftwareASA.HernLabsABusesacost-plusmodel.Hence,itisdifficulttoestimatethevalueofHernLabsABonthe
basisofitscashflows.TheOperaSoftwareASAGroupisthusconsideredtobethesmallestcashgeneratingunit.Astherecognizedgoodwillis
consideredtobeimmaterial,thegrouphasnotperformedacompleteimpairmenttestasof31December2007,accordingtoIAS36.TheGroup
considersitisunnecessarytorecognizeanimpairmentlossconcerninggoodwill.Thisjudgmenthas,amongotherthings,beenbasedonthefact
thatthemarketvalueoftheOperaGroupisconsiderablyhigherthantheequity.
Company HernLabsAB Opera Software International AS
Formal information
Dateofpurchase 13.12.2000 05.01.2005
Registeredoffice LinköpinginSweden OsloinNorway
Ownership interest 100% 100%
Proportionofvotes 100% 100%
Information related to the date of purchase (in the
year of purchase)
Purchasecost 7965 1006
Goodwillatacquisitioncost 7857 0
Acquisitioncost 7857
Accumulateddepreciationasof31.12.04 6287
Netbookvalueasof31.12.04 1570
Reverseddepreciation2004 1572
Netbookvalueasof01.01.04 3142
OperaSoftwareASA’sfinancialstatementareavailableatOperaSoftwareASA’sheadquartersatWaldemarThranesgt.98inOslo,Norway.
TheCompanyhasboughtMotivationASsharesforNOK50K.ThecompanyhasboughtZIZZRASsharesforNOK500K.Theinvestmentiswritten
downinitsentirety.
Information regarding goodwill in accordance with change in accounting principles to IFRS:
40 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 41
Note9Shareholders’equityandinformation[NumbersinTNOK]
Theholdersofordinarysharesareentitledtoreceivedividendsasdeclaredfromtimetotimeandareentitledtoonevotepershareatthe
GeneralMeeting.
AllsharesrankequallywithregardtotheGroup’sresidualassets.TheGroupdoesnothaveanypreferenceshares.
Forinformationregardingshareoptions,pleaseseetheaccompanyingNoteno.3.
TheBoardofDirectorshaveproposedthatnodividendswillbepaidoutbasedontheannualaccountsfrom2007.
OnJune21st2007,theGeneralMeetingalsodecidedtoauthorizetheBoardofDirectorstobuybackOperastockuptoten(10)percentofthe
sharecapital,NOK228K.Accordinglytotheauthorization,theBoardmaybuystockatapricebetweenNOK0.02andNOK50.Thestockcanbe
usedinconjuctionwithpurchasesandincentiveplansforemployeesandboardmembers.Theauthorizationremains ineffectuntilthenext
GeneralMeeting,butnotbeyondJune30th2008.
OnJune21st2007,theGeneralMeetingdecidedtogivetheBoardofDirectorsaauthoritytoincreasethesharecapitalbyNOK228K.
TheBoardofDirectorshaveusedtheauthorityduring2007andincreasedthesharecapitalbyNOK43K.Restoftheauthoritynotusedby
31December2007isNOK185K.TheauthorityisvaliduntilthenextordinaryGeneralMeeting,stillnolaterthan30June2008.
Paid in, not registered increase of capital
Theincreaseincapitaldecided20December2006wasregisteredintheRegisterofBusinessEnterprisesin2007andisthereforepresentedasan
increaseofequitynotregisteredin2006.Thenewsharesgivetherighttodividendsfromfiscalyear2006.
Note9Shareholders’equityandinformation[NumbersinTNOK]
Face value
Number Share capital
Premium fund
Other reserves
Translation differences
Other equity
Total
Equity as of 31.12.2005 0,02 102 827 2 056 208 188 21 802 -98 58 002 289 950
Increaseofequity 0,02 14101 282 233002 -14270 219 014
Increaseofequitynotregisteredin2005
3126 3 126
Share-basedremuneration,netaftertaxes
5453 5 423
Totalrecognizedincomeandexpense
118 -18191 -18 073
Equity as of 31.12.2006 0,02 116 928 2 338 441 190 16 111 20 39 811 499 470
Changes in equity in current year
Increaseofequity2006registeredin2007
0,02 388 8 3118 -3126 0
IncreaseofequityJanuary 0,02 113 2 718 720
IncreaseofequityJune 0,02 1727 35 9166 9 201
IncreaseofequityDecember 0,02 388 8 2887 2 895
Issueexpenses -147 -147
Impactsoftaxofequitytransactions
41 41
Share-basedremuneration,netaftertaxes
8992 8 992
Totalrecognizedincomeandexpense
-1472 12468 10 996
Equity as of 31.12.2007 0,02 119 542 2 391 456 973 21 977 -1 452 52 279 532 168
Ownership structure:
Shareholderswithmorethan1%ofOperaSoftwareASAsharesasof31December2007werethefollowing:
Number of
Shares
Owners’ share Voting share
AmadeusInvestIIAS 19026755 15,92% 15,92%
JPMorganChaseBank 18000000 15,06% 15,06%
Arepo As 15512120 12,98% 12,98%
Caprice AS 10189605 8,52% 8,52%
SkandinaviskaEnskildaBanken 2960377 2,48% 2,48%
VitalForsikringASA 2635805 2,20% 2,20%
SundtAS 2542933 2,13% 2,13%
DNBNORNordicTechnVPF 2461476 2,06% 2,06%
ArionCustody 1972100 1,65% 1,65%
CommerzbankAG 1889500 1,58% 1,58%
VerdipapirfondetKLPAKSJENORGE 1685000 1,41% 1,41%
DNBNORGE(IV)VPF 1438427 1,20% 1,20%
NordnetSecuritiesBankAB 1336734 1,12% 1,12%
JPMorganChaseBank 1320000 1,10% 1,10%
RO Invest AS 1249000 1,04% 1,04%
Sum 84 219 832 70,45% 70,45%
Othershareholders 35322414 29,55% 29,55%
Total numbers of shares 119 542 246 100,00% 100,00%
42 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 43
Note10Accountsreceivable,otherreceivables,accountspayableandotherpayables [NumbersinTNOK] Financialassetsandliabilitiesmainlycompriseshorttermitems(nointerestbearing).Basedonthis,managementconsidersthatOperaGroupdoesnothavefinancialassetsorliabilitieswithpotentiallysignificantdifferencesbetweennetbookvalueandfairvalue.
Note11Contingentliabilities[NumbersinTNOK]
ClaimforcompensationfromformerJapanesedistributor: Duringthespringof2004,OperareplaceditsdistributorinJapan.Followingthis,theformerdistributorlaunchedaclaimagainstOperabasedontheirassertionthatOperaisobligedtopurchasebacktheirinventoryofunsoldOperaproducts.InOpera’sopinion,theclaimclearlylacksmerit.Operahascontestedtheclaimandwillcontinuetodosovigorously.
ThedistributortooklegalproceedingsagainstOperaandOpera’snewdistributorattheCourtofTokyo,June2005.TheproceedingwasservedtoOperainOctober2005.Accordingtotheproceeding,OperaandthenewdistributoraresuedforJPY41052520(approx.NOK7,141K).ThecontractisgovernedbyNorwegianlawandalldisputesmustberesolvedbythecourtsofNorway.ThecomplaintwasdismissedbythecourtsofTokyoin2006.Operaassumesthatthismakesitunlikelythatthedistributorwillpursuetheclaim.Consequently,thegrouphasnotbookedanyaccrualsinthefinancialstatementsrelatedtotheissue.
Note12SubsequenteventsNosubsequenteventsafterthereportingdatehaveoccuredthatarenecessarytobeincludedinthefinancialstatements.
Note13AccountingestimatesandjudgementsManagementhasevaluatedthedevelopment,selection,anddisclosureofthegroup’scriticalaccountingpoliciesandestimatesandtheapplicationofthesepoliciesandestimates.
Key sources of estimation uncertaintyBasedonsignedcontractswithlarge,establishedmarketparticipants,OperadevelopsandadjuststheOperabrowsersothatitiscompatiblewithmobilephones,gameconsoles,etc.Theadjustmentsandmodificationsaredonecontinuouslyovertime.Hence,incomeandcostsarebookedinaccordancewiththepercentageofcompletionmethod.Estimationofdegreeofcompletionisbasedonbestestimate.Themanagement’schoiceofestimatesfordegreeofcompletionwillhaveaconsiderableeffectonbookedincome.
ThecompanyhasinNote5givenadetailedanalysisofthecurrencyriskandriskrelatedtochangesintheforeignexchangerates.
Thegrouphasestablishedanoptionprogramforitsemployees.TheoptionsarebookedinaccordancewithIFRS2.Theoptioncostsareestimatedonabasisofvariousassumptions,suchasvolatility,interestlevel,dividend,andtheassumptionofhowmanythatwillexercisetheiroptions,etc.Thechosenassumptionscanhaveagreatimpactonthesizeoftheoptioncost.TheassumptionsaregiveninNote3.
Critical accounting judgments in applying the company’s accounting policies ThegrouphasconsidereditsactivitiesrelatedtotechnologicaldevelopmentcomparedtotherequirementsinIAS38.Basedonthisevaluation,ithasbeendecidednottopostexpensesrelatedtotheseactivitiestothebalancesheet.Thereasoningforthisisthatthegrouphasenteredintocontractswithcustomers,committingthegrouptodevelopacustom-madebrowserforasettledfee.ThefeereceivedismeanttocompensateOpera’sexpensesrelatedtothisspecifictechnologicaldevelopment.Theseprojectsarebookedinaccordancewiththepercentageofcompletionmethod,whichstatesthatrelatedincomeandexpensesshouldbebookedinthesameperiod.Otheractivitiesaredefinedasresearchandthecostsareexpensedastheyareincurred.
Insomecontracts,Operareceivesafeewhichcoversdevelopment,aguaranteednumberoflicenses,aswellasmaintenanceinthesubsequentperiod.Theelementsinthedifferentcontractsareassessedinaccordancewithbestestimateoftruevalueandbookedastheelementsaredeliv-ered.Iftheelementscannotbeseparated,allincomeisbookedinaggregationinaccordancewiththepercent-of-completionmethod.
Note14RelatedpartiesThegrouphasnotbeeninvolvedinanytransactionswithrelatedparties,withitsdirectorsandexecutiveofficers,exceptfortransactionswiththesubsidiariesHernLabsandOperaSoftwareInternationalAS.PleaseseetheaccompanyingNotes3and8.Aformerboardmember,JohnPatrickreceivedafeein2007forconsultancyservicetoOperaSoftwareASA.
Theagreementwasfrom1July2005andended21June2007whenJohnPatricklefttheboardofdirectors.
Transactions with key management personnelDirectorsandkeymanagementpersonneloftheGroupandtheirimmediaterelativescontrol29%ofthevotingsharesoftheGroup. TheGrouphavenotgivenanyloanstodirectorsorkeymanagementpersonnelasof31December2007andasof31December2006.
Executiveofficersalsoparticipateinthegroup’sshareoptionprogramme(seeNote3)
KeymanagementpersonnelcompensationscanbefoundinNote3.
44 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 45
Opera Software ASA
Parent Company Annual Accounts 2007
Note15Earningspershare[NumbersinNOK]
2007 2006 2005
1) Calculationofaveragenumberofshares
NumberofsharesoutstandingasofJanuary1 116928200 102807080 99265497
Shareissue09.01.2007(357days) 489041
Shareissue05.07.2007(179days) 846695
Shareissue13.12.2007(18days) 19110
Shareissue19.10.2006(73days) 70 000
Shareissue12.06.2006(201days) 1196088
Shareissue03.04.2006(272days) 484384
Shareissue17.01.2006(348days) 500548
Shareissue06.06.2005(208days) 1508250
Shareissue20.09.2005(102days) 2053333
Averagenumberofshares 118283045 102807080 100698801
Thefollowingequityinstrumentshasdilutingeffect
Options 7632160 4256500 6791500
Warrants - 0 350000
Total 7632160 4256500 7141500
Optionsandwarrants 7632160 4256500 7141500
Numberofboughtshares70675/13.71
(2006;TNOK52146/20.92)
5155016 2492668 3963592
Numberofshareswithdilutingeffect 2477144 1713832 3177908
Expectedoptionstobeexercised 1643634 1456757 3177908
2007 2006 2005
Netresult 12 468 000 -18191000 2799000
Timeaverageofoutstandingshares1) 118 283 045 102807080 100698801
Earningspershare 0,105 -0,177 0,028
Equity-dilutedearningspershare 0,104 -0,177 0,027
Basic earnings per share
Thecalculationofbasicearningspershareat31December2007wasbasedontheprofitattributabletoordinaryshareholdersandaweighted
averagenumberofordinarysharesoutstandingduringtheyearending31December2007arecalculatedasfollows:
TheoptionsandthewarrantshavevariouscallpricesandreflectacashinflowofNOK70675K
(2006;52146K).AccordingtoGAAPregardingearningspershare,thecashinflowisincludedin
thecalculationsofdilutedearningspershares.
Averagemarketvalue,whichisusedinthecalculations,iscalculatedastheaverageshareprice
intheperiod01.01-31.12.2007(2006;01.01-31.12.2006).Theaveragemarketvalueiscalculated
tobeNOK13.71(2006;20.92).
46 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 47
Profitandlossaccount[NumbersinTNOK]
Statementofrecognizedincomeandexpense[NumbersinTNOK] Parent
Note 31.12.2007 31.12.2006
Net income recognized directly in equity 0 0
Profit for the period 9 189 -20593
Total recognized income and expense for the period 9 189 -20593
Attributable to:
Equityholdersoftheparent 9 189 -20593
Minorityinterest 0 0
Total recognized income and expense for the period 10 9 189 -20593
Parent 01.01 - 31.12
IFRS IFRS IFRS
NumbersinTNOK Note 2007 2006 2005
Revenue 1,2,4 315 466 213731 153954
Otherincome 0 53 0
Total operating income 315 466 213784 153954
Costofgoodssold 2 143 4641 0
Payrollandrelatedexpenses 3 148 390 119941 92071
Depreciationexpenses 7 5 397 3556 1504
Otheroperatingexpenses 3,4,7,15 153 863 115117 61009
Profit/loss from operation 5 673 -29471 -630
Interestincome 5 18 228 9177 3122
Otherfinancialincome 5 9 955 4227 3185
Interestexpenses 5 -2 -15 -8
Otherfinancialexpenses 5 -17 849 -5820 -2173
Operating result before tax 16 006 -21902 3496
Taxonordinaryresult 6 -6 817 1309 -1506
Net profit/loss for the year 9 189 -20593 1990
Earnings per share (NOK) 16 0,078 -0,200 0,020
Diluted earnings per share (NOK) 16 0,077 -0,200 0,019
Profit/ loss for the year is allocated as follows:
Otherequity 9 189 -20593 1990
48 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 49
Balancesheet[NumbersinTNOK]
Balancesheet[NumbersinTNOK]
Parent Note 31.12.2007 31.12.2006
Assets
Fixed assets
Tangible fixed assets
Officemachinery,equipment,etc. 7 15 221 16649
Total tangible fixed assets 15 221 16649
Financial fixed assets
Deferredtaxasset 6 9 774 9638
Investmentsinsubsidiaries 8 8 971 8971
Investmentsinothershares 50 50
Total financial fixed assets 18 795 18659
Total fixed assets 34 016 35308
Current assets
Receivables
Accountsreceivables 5,9,11 64 830 54779
Unbilledrevenue 11 40 700 43636
Otherreceivables 9,11 35 886 20429
Total receivables 141 416 118844
Cashandcashequivalents 5 454 180 419278
Total current assets 595 596 538122
Total assets 629 612 573430
Parent Note 31.12.2007 31.12.2006
Shareholders’ equity and liabilities
Equity
Paid-in capital
Share capital 10 2 391 2338
Sharepremiumreserve 10 456 973 441190
Other reserves 10 21 977 16110
Total paid-in capital 481 341 459638
Retained earnings
Otherequity 10 49 135 39946
Totalretainedearnings 49 135 39946
Total equity attributable to equity holders of the parent 530 476 499584
Liabilities
Current liabilities
Accountpayable 9,11 39 022 23253
Taxespayable 6 859 0
Socialsecurity,VAT,andothertaxationpayable 11 10 502 12371
Othershort-termliabilities 9,11 48 753 38222
Total short-term liabilities 99 136 73846
Total liabilities 99 136 73846
Total equity and liabilities 629 612 573430
Oslo, 25 March 2008
WilliamJ.Raduchel
Chairman of the Board
LarsRabækBoilesen
MichaelTetzschner
SilvijaSeres
StigHalvorsen
Employee representative
KariStautland
CharlesMcCathieNevile
Employee representative
JonS.vonTetzchner
Chief Executive Officer
50 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 51
Cashflowstatement[NumbersinTNOK]
* Changesinunbilledrevenueisincludedinchangesinaccountsreceivableinthecashflowstatement.
** CashandcashequivalentsofNOK7829Karerestrictedassetsasof31December2007,andNOK7387K
isrestrictedassetsasof31December2006.
Note1AccountingprinciplesInformationabouttheaccountingprinciplesaregiveninNote1intheconsolidatedfinancialstatement.
Note2incomeInformationabouttheincomearegiveninNote2intheconsolidatedfinancialstatements.
Note3Wagecosts/Numberofemployees/Remunerations[NumbersinTNOK]
Parent
01.01 - 31.12
2007 2006 2005
Salaries 114 354 90573 68391
Social Security cost 16 020 16011 15596
Pensioncost 4 803 3529 1289
Equitysettledshare-basedpayments 8 992 5453 2995
Otherpayments 4 221 4375 3800
Wage cost 148 390 119941 92071
Man-years 263 214 193
ThecompanyhasestablishedapensionschemefortheNorwegianemployees.Thepension’s
schemeisadefinedcontributionplanwhichcomprisesthenewrequirementswithregardsto
ObligatoriskTjenestePensjon(OTP))
Remuneration to key management personnel
InformationaboutremunerationtokeymanagementpersonnelisgiveninNote3inthe
consolidatedfinancialstatements.
Independent auditors
Thetotalfeesbilledbyindependentauditorsduring2007wasTNOK941.Thisisbrokendown
as following:
Statutoryaudit 408
Assurance services 39
Taxadvisoryfee 98
Other services 396
Total 941
Options
InformationaboutoptonsaregiveninNote3intheconsolidatedfinancialstatements.
Parent 01.01 - 31.12
Note 2007 2006
Cash flow from operating activities
Profit/lossbeforetaxes 16 006 -21902
Taxespaid 6 -6 052 -5058
Depreciationexpenses 7 5 397 3556
Impairmentofshares 8 500 0
Changesinaccountsreceivable* -7 116 -16450
Changesinaccountspayable 1 022 15915
Changes in other accruals 7 953 15482
Share-basedpaymentswithnocasheffect 3 8 992 5452
Net cash flow from operating activities 26 702 -3005
Cash flow from investment activities
Acquisitionoftangiblefixedassets 7 -3 971 -12289
Acquisitionofshares 8 -500 -50
Net cash flow from investment activities -4 471 -12339
Cash flow from financing activities
Proceedsfromissueofsharecapital 10 12 671 219775
Net cash flow from financing activities 12 671 219775
Net change in cash and cash equivalents 34 902 204431
Cashandcashequivalents01.01** 419 278 214847
Cash and cash equivalents 31.12 454 180 419278
52 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 53
Note4Otherexpenses[NumbersinTNOK]
2007 2006 2005
Intercompanyservices 97 876 55593 21244
Consultancyfeesfortechnicaldevelopment 5 544 2523 2880
Rentandotherofficeexpenses 10 663 10030 6600
Inventory 4 792 6147 5152
Audit,legal,andotheradvisoryservices 7 908 9554 4068
Travelexpenses 9 547 9699 6175
Otherexpenses 17 533 21571 14890
Totalotherexpenses 153 863 115117 61009
Research
OperaSoftwareASAhaspurchasedservicesconcerningthesourcecodeofOpera’sbrowsersfromHernLabsABforNOK36631K(2006;31337K).Theresearchcostsareincludedinotheroperatingcostsintheincomestatement,andunderintercompanyservicesabove.
Theexpensesforresearchforsourcecodeismainlysalaries.ThesesalariesareforthecompanyestimatedtobeNOK136222K(2006;NOK81910K).
Intercompany service
ThecompanypurchasesmarketingservicesfromthesubsidiaryOperaSoftwareInternationalAS,whichhasbranches/subsidiariesinJapan,USA,Korea,China,andIndia.Thecostisincludedinintercompanyservicesabove.
Note5FinancialmarketriskInformationaboutfinancialmarketriskisgiveninNote5intheconsolidatedfinancialstatements.
Note6Tax[NumbersinTNOK]
Parent 01.01 - 31.12 01.01-31.12
2007 2006 2005
Current tax:
Profit/lossbeforetaxes 16 006 -21902 3496
Permanentdifferencesinprofitandloss 8 341 5630 3265
Taxdeductibleemissioncostbookedagainstequity
-146 -8446 -79
Taxespaidabroad 0 -4509 0
Changesintemporarydifferences 2 729 -4673 2050
Useoftaxablelosscarriedforward -26 930 0 -3226
Basisforcurrenttax 0 -33900 5506
Tax28% 0 0 1542
Current tax 0 0 1542
Tax expense for the year
Currenttax 0 0 1542
Deferredtax-grosschanges -136 -8183 329
Taxesoncapitalraisingcosts 41 2365 22
Taxpaidabroad 6 912 4509 0
Toomuchbookedtaxespreviousyear 0 -386
Total tax expense for the year 6 817 -1309 1506
Specification of tax payable:
Currenttax 0 0 1542
Taxesoncapitalraisingcosts 0 0 22
Toomuchbookedtaxespreviousyear 0 0 -386
Taxsettlementpreviousyear 0 0 -527
Taxesoncapitalraisingcosts 0 0 -22
Taxpaidtoaforeigncountry 859 0 -80
Total tax payable 859 0 549
Recognized deferred tax assets and liabilities/
Deferred tax assets and liabilities are attributable to the following:
Assets Liabilities Net
2007 2006 2007 2006 2007 2006
Inventory,officemachinery,etc. 0 0 330 430 330 430
Accountsreceivable -703 0 293 -703 293
Liabilities -538 -869 -538 -869
Taxvalueoflosscarry-forwards -8 864 -9492 -8 864 -9492
Deferredtaxes/(taxassets) -10 104 -10361 330 723 -9 775 -9638
Supplementarytaxation 330 723 -330 -723 0 0
Netdeferredtaxes/(taxassets) -9 775 -9638 0 0 -9 775 -9638
54 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 55
Note6Tax[NumbersinTNOK]
Deferred tax assets and liabilities/
Movement in temporary differences during the year Posted
Balance
01.01.06
Posted to
P/L
directly to the
equity capital
Balance
31.12.06
Inventory,officemachinery,etc. 223 207 0 430
Accountsreceivables -131 424 0 293
Liabilities -1546 677 0 -869
Lossescarriedforward 0 -7127 -2365 -9492
Deferredtaxes/(taxassets) -1454 -5819 -2365 -9638
Posted
Balance Posted to directly to the Balance
01.01.07 P/L equity capital 31.12.07
Inventory,officemachinery,etc. 430 -100 330
Accountsreceivable 293 -995 -703
Liabilities -869 332 -538
Lossescarriedforward -9492 669 -41 -8864
Deferredtaxes/(taxassets) -9638 -95 -41 -9775
Change in deferred tax asset directly posted against the
equity capital
Note 2007 2006
Capital raising costs 10 41 2365
Total deferred taxes posted directly against the equity 41 2365
Reconciliation of effective tax rate 2007 2006
Profitbeforetax 16 006 -21902
Incometaxusingthedomesticcorporationtaxrate 28,0% 4 482 28,0% -6133
Toomuchbookedtaxespreviousyear 0,0% 0,0% 0
Taxpaidtoaforeigncountry 0,0% -14,8% 3247
Taxesonotherpermanentdifferences 14,6% 2 336 -7,2% 1577
42,6% 6 818 6,0% -1309
Thecompany’sopinionisthatdeferredtaxassetcanbesubstantiatedinthefuture.Thecompany’sopinionisbasedon
expectedandestimatedfutureincome.
Note7Fixedassets[NumbersinTNOK]
Parent 2007 2006
Costrented
premises
Machineryand
equipment
Fixturesand
fittings
Total
Total
Acquisition cost
Acquisitioncostasof01.01 9440 14517 2511 26 468 14179
Acquisitions 615 3178 177 3 970 12289
Acquisition cost as of 31.12 10 055 17 695 2 688 30 438 26468
Depreciation
Depreciationasof01.01 3058 5120 1642 9 820 6264
Impairmentlosses 1550 3577 270 5 397 0
Accumulateddepreciationasof31.12 4608 8697 1912 15 217 9820
Net book value as of 31.12 5 447 8 998 776 15 222 16649
Depreciation for the year 1550 3577 270 5 397 3556
Usefullife 5years Upto4years Upto5years
Depreciationplan Linear Linear Linear
Operating leases:
InformationaboutoperatingleasesaregiveninNote8intheconsolidatedfinancialstatements.
Note8Investmentinsubsidiary[NumbersinTNOK]
Company HernLabsAB Opera Software International AS
Formal information
Dateofpurchase 13.12.2000 05.01.2005
Registeredoffice LinköpinginSweden OsloinNorway
Ownership interest 100% 100%
Proportionofvotes 100% 100%
Information related to the date of purchase (in the year of purchase)
Purchasecost 7965 1006
OperaSoftwareASA’sfinancialstatementisavailableatOperaSoftwareASA’sheadquarteratWaldemarThranesgt.98inOslo,Norway
ThecompanyownssharesinMovationASatNOK50K.
ThecompanyhasboughtZIZZRASsharesforNOK500K.Theshareshavebeenwrittendownintheirentirety.
Thesharesinthesubsidiariesarebookedaccordingtocostofacquisition.
Permanent differences
Permanentdifferencesdonotincludenon-deductablecosts,includingcostsrelatedtoshare-basedremuneration.
Taxespaidabroadareinthetaxcalculationpresentedaspartofthelossescarryforward,asthesecanbeutilizedtooffsetfuturetaxes.
56 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 57
Note9Outstandingaccountsbetweencompanieswithinthesamegroup,etc.[NumbersinTNOK]
31.12.2007 31.12.2006 31.12.2007 31.12.2006
Entitywithingroup 0 0 26 423 12921
Sum 0 0 26 423 12921
31.12.2007 31.12.2006 31.12.2007 31.12.2006
Entitywithingroup 0 0 32 354 17606
Sum 0 0 32 354 17606
Accounts receivables Other receivables
Accounts payableOther long term liabilities
Note10Shareholders’equityandinformation[NumbersinTNOK]
Free equity
ThecompanyhasafreeequityofNOK61337Kasof31December2007.Furtherinformationaboutshareholders’equityisgiveninNote9inthe
consolidatedfinancialstatements.
Note11Accountsreceivable,otherreceivables,accountspayableandotherpayables
Book value of receivables due in more than one year
Financialassetsand liabilitiesmainlycompromiseshort-term items (non-interestbearing).Basedon this, it ismanagement’sassessment thatOperaGroupdoesnothavefinancialassetsorliabilitieswithpotentiallysignificantdifferencesbetweennetbookvalueandfairvalue.
Note12ContingentoutcomeInformationaboutcontingentoutcomeisgiveninNote11intheconsolidatedfinancialstatements.
Note13SubsequenteventSubsequenttothebalancesheetdate,thecompanyisnotawareofanyissuesthatwillhaveasignificantimpactonthefinancialstatements.
Note14Accountingestimatesandjudgements InformationaboutaccountingestimatesandjudgementsisgiveninNote13intheconsolidatedfinancialstatements.
Note15Relatedparties Thecompanyhasnotbeeninvolvedinanytransactionswithrelatedparties,withitsdirectorsandexecutiveofficers,exceptfortransactionswiththesubsidiariesHernLabsandOperaSoftwareInternationalAS.PleaseseeNotes4,8and9.Thetransactionswiththesubsidiariesarebasedonamodelwheretheparentcompanycoversthecostplusamargin.Themarginsarebasedonthearm-lengthprinciple.
Transactions with key management personnel Directors and keymanagementpersonnel of theCompany and their immediate relatives control 29%of the voting sharesof theCompany. Thecompanydidnothaveanyloanstodirectorsorkeymanagementpersonnelasof31December2007andasof31December2006. Aformerboardmember,JohnPatrickreceivedafee,in2007forconsultancyservicetoOperaSoftwareASA.TheagreementwasfromJuly12005andendedJune212007whenJohnPatricklefttheboardofdirectors. Executiveofficersalsoparticipateinthecompany’sshareoptionprogramme(seeNote3) Forinformationregardingcompensationforkeymanagementpersonnel,pleaseseeNote3inthegroupaccounts.
Parent Face value
Number Share capital
Premium fund
Other reserves
Other equity
Total
Changes in equity in current year
Equity as of 31.12.2005 0,02 102 827 2 056 208 188 21 802 60 538 292 584
Increaseofequity2005,registeredin2006 0,02 5079 102 14168 -14270 0
IncreaseofequityinApril 0,02 6500 130 211120 211 250
IncreaseofequityinJune 0,02 2172 43 12927 12 970
IncreaseofequityinOctober 0,02 350 7 868 875
Costsconcerningequityissuetransactions -8446 -8 446
Taxeffectofequitycapitaltransactions 2365 2 365
Increaseofequitynotregisteredin2006 3126 3 126
Share-basedremuneration,netaftertaxes 5453 5 453
Totalrecognizedincomeandexpense -20593 -20 593
Equity as of 31.12.2006 0,02 116 928 2 338 441 190 16 110 39 946 499 584
Changes in equity in current year
Increaseofequity2006,registeredin2007 0,02 388 8 3118 -3126 0
IncreaseofequityinJanuary 0,02 113 2 718 720
IncreaseofequityinJune 0,02 1727 35 9166 9 201
IncreaseofequityinDecember 0,02 388 8 2887 2 895
Costsconcerningequityissuetransactions -147 -147
Taxeffectofequitycapitaltransactions 41 41
Share-basedpayments,netaftertaxes 8992 8 992
Totalrecognizedincomeandexpense 9189 9 189
Equity as of 31.12.2007 0,02 119 542 2 391 456 973 21 977 49 135 530 476
58 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 59
Note16Earningspershare[NumbersinTNOK]
2007 2006 2005
Netresult 9 188 860 -20593000 1990000
Timeaverageofoutstandingshares1) 118 283 045 102807080 100698801
Earningspr.share 0,078 -0,200 0,020
Equitydilutedearningspershare 0,077 -0,200 0,019
Basic earnings per share
Thecalculationofbasicearningspershareat31December2007wasbasedontheprofitattributabletoordinaryshareholdersandaweighted
averagenumberofordinarysharesoutstandingduringtheyearended31December2007arecalculatedasfollows:
2007 2006 2005
1) Calculationofaveragenumberofshares
NumberofsharesoutstandingasofJanuary1 116928200 102807080 99265497
Shareissue09.01.2007(357days) 489041
Shareissue05.07.2007(179days) 846695
Shareissue13.12.2007(18days) 19110
Shareissue19.10.2006(73days) 70 000
Shareissue12.06.2006(201days) 1196088
Shareissue03.04.2006(272days) 484384
Shareissue17.01.2006(348days) 500548
Shareissue06.06.2005(208days) 1508250
Shareissue20.09.2005(102days) 2053333
Averagenumberofshares 118283045 102807080 100698801
Thefollowingequityinstrumentshaveadilutingeffect
Options 7632160 4256500 6791500
Warrants - - 350000
Total 7632160 4256500 7141500
Optionsandwarrants 7632160 4256500 7141500
Numberofboughtshares(NOK70675K/13.71) 5155016 2492668 3963592
Numberofshareswithdilutingeffect 2477144 1763832 3177908
Optionsexpectedtobeexercised 1643634 1499257 3177908
TheoptionsandthewarrantshavevariouscallpricesandreflectacashinflowofNOK70675K(2006;NOK52146K).Accordingtothestandardregardingearningspershare,thecashinflowisincludedinthecalculationofdilutedearningspershare. Averagemarketvalue,whichisusedinthecalculations,iscalculatedasthedilutedsharepriceintheperiod01.01-31.12.2007 (2006;01.01-31.12.2006). TheaveragemarketvalueiscalculatedtobeNOK13.71(2006;20.92).
60 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 61
General Principles Opera strongly believes that strong shareholder rights create
higherfirmvalue,higherprofits,highersalesgrowth,andcontrib-
utetolowercapitalexpenditures.Assuch,CorporateGovernanceis
notjustanemptyphraseatOpera,butarealtoolusedinbridging
thegapbetweenmanagementandshareholders,ensuringgood
corporateethicalbehavior.
Opera is committed tomaintaining high standards of Corporate
Governance. Opera’s principles of Corporate Governance have
beendevelopedinlightoftheNorwegianCodeofPracticeforCor-
porateGovernance,dated28November2006, as required for all
listedcompaniesontheOsloStockExchangefromthe2007finan-
cialyear.OperaviewsthedevelopmentofhighstandardsofCorpo-
rateGovernanceasacontinuousprocess,willcontinuetofocuson
improvingthe levelofCorporateGovernance,andwillupdate its
guidelinesandapplythenewrevisedCodeofPracticeaspublished
on4December2007fromthe2008financialyear.
Opera’s Activities Opera’s vision is to deliver the best Internet experience on any
device.This is reflected inArticle 3 of theArticles ofAssociation,
whichreads“TheCompany’sobjectiveisdevelopment,production
andsaleofsoftwareandrelatedservices,andengagementinother
companiesorothersimilarbusinessactivities.”However,reaching
thisgoalisaboutmuchmorethanleadingtheinnovationofWeb
technologies.Ourbusinessisbasedoncloserelationshipswithcus-
tomers,partners, investors, employees, friends, and communities
allovertheworld–relationshipswearecommittedtobyconduct-
ingourbusinessopenlyandresponsibly.Ourcorporatepoliciesare
developedtruetothiscommitment.
Equity and dividendsTo achieve its aggressive long-term growth targets, it is Opera’s
policy tomaintain a high equity ratio. In viewof theCompany’s
plannedexpansionandgrowthofitsbusiness,theCompanydoes
notexpecttopaydividendsoverthenextfewyears.However,the
company has a businessmodel that allows for strong cash flow
generation inthefuture.Consequently,Opera’sneedsforgrowth
canbemetwhilealsomaintainingadividenddistributionaslong
asthecompanyisreachingtargetedgrowthlevels.Dividendpay-
mentswillbesubjecttoapprovalbytheshareholdersattheCom-
pany’sannualGeneralMeetings.
Mandatesgranted to theboardofdirectors to increase theCom-
pany’ssharecapitalarerestrictedtodefinedpurposesandarelim-
ited intimetono laterthanthedateofthenextAnnualGeneral
Meeting.OntheGeneralMeetingheld21June2007,theBoardof
Directorswasgrantedatheauthoritytoincreasethesharecapital
ofthecompanybyuptoNOK228800,whichequalsapprox.10%of
thesharecapital,withtheauthoritytowaivethepreemptionrights
ofexistingshareholdersandtoissuesharesagainstcontributions
otherthancash.Thesharescanbeusedinconnectionwithacqui-
sitionsandincentiveschemesforemployeesandboardmembers
or forotherpurposesdeemedappropriateby theBoardofDirec-
tors. ThismandateisvaliduntilthedateofthenextAnnualGen-
eralMeetingbutinnoeventlongerthan30June2008.TheBoard
ofDirectors have used the authority during 2007 and expanded
the share capital by NOK52 000 (determined, but not registered,
increaseofequity).Therestoftheauthoritynotusedby31Decem-
ber2007 is NOK176000.
OntheGeneralMeeting21June2007,theBoardofDirectorswas
grantedamandatetoacquireonbehalfofthecompanythecom-
pany’sownshareswithamaximumaggregatedparvalueofupto
NOK228800,whichequalsapprox.10%ofthesharecapital.The
companycanneveracquireownshares ifsuchacquisitionwould
causeitsholdingofownsharestoexceed10%ofthetotalnumber
of shares in the company.Thepriceper share shallbeminimum
NOK0.02andmaximumNOK50.Thesharescanbeusedinconnec-
tionwith acquisitions and incentive schemes for employees and
boardmembers,cf.sections§§9-2and9-4ff.ofthePublicLimited
Companies Act. The Board of Directorsmay determine in which
waysownsharesaretobeacquiredanddisposedof.Thisauthority
istobevaliduntilthedateofthenextAnnualGeneralMeetingbut
innoeventlongerthan30thJune2008.TheBoardofDirectorsdid
notmakeuseofthismandatein2007.
Equal treatment of shareholders and transactions with close associates AkeyconceptinOpera’sapproachtoCorporateGovernanceisthe
equal treatment of shareholders. Opera has one class of shares.
Allsharesinthecompanycarryequalvotingrightsandarefreely
transferable.Theshareholdersexercisethehighestauthorityinthe
company through theGeneralMeeting.All shareholdersareenti-
tledtosubmit itemstotheagenda,meet,speak,andvoteatthe
GeneralMeeting.
Asmentionedabove,on theGeneralMeetingheld21June2007,
the Board of Directors was granted a mandate to increase the
share capital, hereunder the authority to waive the preemption
rightsofexistingshareholdersandtodeterminetheconsideration
forshares issuedintermsotherthancash.Themainreasonisfor
the pre-emption of rights is that that the Company periodically
couldbeconfrontedwithsituationswheretheCompanycangrow
furtherbymakinguseof rights issues tooneor several strategic
partnersaswellasthroughmergersandacquisitionswithshares
or cash, if theCompanyquickly canget inposition toeffectuate
thenecessaryliquidityand/orshares.Inaddition,situationscould
occurwheretheCompany’sequityneedsstrengtheninginorderto
ensurefutureconditionsofoperations.
Any transactions theCompany carriesout in its own shares take
placeinaccordancewithestablishedpracticeandguidelinesfrom
the Oslo Stock Exchange. The Company has an established and
closelymonitoredinsidertradingpolicy.
Freely negotiable sharesOperahasno limitationson the transferabilityof shares andhas
oneclassofshares.Eachshareentitlestheholdertoonevote.
General meetingsThroughtheGeneralMeeting,theshareholdersexercisethehighest
authorityintheCompany.GeneralMeetingsareheldinaccordance
with the Norwegian Code of Practice for Corporate Governance.
Allshareholdersareentitledtosubmititemstotheagenda,meet,
speak,andvoteatGeneralMeetings.TheAnnualGeneralMeeting
is held each year before the end of June. Extraordinary General
Meetingsmaybecalledbytheboardofdirectorsatanytime.The
Company’s auditor or shareholders representing at least fiveper-
centofthetotalsharecapitalmaydemandthatanExtraordinary
GeneralMeetingbecalled.
GeneralMeetingsareconvenedbywrittennoticetoallsharehold-
erswithknownaddressesnolaterthan14dayspriortothedateof
themeeting.Proposedresolutionsandsupportinginformationis
distributedtotheshareholdersnolaterthanthedateofthenotice.
Finaldeadlineforshareholderstogivenoticeoftheirintentionto
attendthemeetingisatleastoneworkingdaypriortothemeeting.
Shareholderswhoareunabletoattendthemeetingmayvoteby
proxy.TheChairman,Vice-Chairman,ChairmanoftheNomination
Committee,CEO,CFO,andtheauditorareallrequiredtobepresent
atthemeetinginperson.TheChairmanforthemeetingisgenerally
independent.Notice,enclosure,andprotocolofmeetingsareavail-
ableonOpera’sWebsite.
The General Meeting elects themembers of the Board of Direc-
tors (excluding employee representatives), determines the remu-
nerationof themembersof theboardofdirectors,approves the
annualaccounts,anddecidessuchothermatters,whichbylawor
theCompany’sarticlesofAssociationare tobe transactedat the
GeneralMeeting.
Nomination committeeThe Nomination Committee consists of three members, all
of whom are elected at the general meeting, and is a body
established pursuant to the Articles of Association. Members of
theNominationCommitteeservefortwoyearperiods.Thetaskof
theNominationCommittee is toproposecandidates forelection
as shareholder-elected members of the Board of Directors and
to make recommendations regarding the remuneration of the
membersoftheBoardofDirectors.Remunerationofthemembers
oftheNominationCommitteewillbedeterminedbytheGeneral
Meeting.TheNominationCommitteeprovidesabriefreasoningfor
itsproposals.
AttheAnnualGeneralMeetingheldonJune21,2007,thefollowing
personswereelectedasmembersoftheNominationCommittee
of the company: Christan Jebsen (chairman),GroMølleskog and
TorkildVarran,ofwhichnonearefromtheBoardofDirectorsorthe
executive management. The Nomination Committee’s proposals
aregiventoshareholderswithatleasttwoweeksnoticeofvoting.
PleaseseeOpera’sWebsitefor further informationregardingthe
Nominationcommittee.
Composition and independence of the Board of DirectorsThe Board of Directors has the overall responsibility for the
management of the Company. This includes a responsibility to
supervise and exercise control of the Company’s activities. The
Board of Directors, shall according to the Articles of Association,
consistof5-10members.TheBoardofDirectorscurrentlyconsists
of seven members, five elected by the shareholders at the
AnnualGeneralMeetingand twoelectedby theemployees.The
proceedings and responsibilities of the Board of Directors are
governedbyasetofrulesofprocedure.
It is the Company’s intention that the members of the Board
of Directorswill be selected in the light of an evaluation of the
Company’s needs for expertise, capacity, and balanced decision
makingwith theaimofensuring that theBoardofDirectorscan
operateindependentlyofanyspecialinterests;andthattheBoard
ofDirectorscanfunctioneffectivelyasacollegiatebody.Pleasesee
Opera’sWebsiteforadetaileddescriptionoftheboardmembers,
including share ownership. Opera does not have a Corporate
Assembly.AtleasthalfofthemembersofBoardofDirectorsshallbe
independentoftheCompany’smanagementanditsmainbusiness
connections. At least two of the shareholder-elected members
of theBoardofDirectorsshallbe independentof theCompany’s
mainshareholder(s).ThetermofofficeformembersoftheBoardof
Directorsistwoyears.
The work of the Board of DirectorsThe conduct of the board of directors is following the adopted
rulesofprocedure for theBoardofDirectors.A specificmeeting
andactivityplanisadoptedtowardstheendofeachyearforthe
followingperiod.TheBoardofDirectorsmeetseighttimesayear,
onceforatwo-daymeeting,butholdsadditionalmeetingsunder
specialcircumstances. Itsworkingmethodsareopenlydiscussed.
Between meetings, the Chairman and Chief Executive Officer
updatetheboardmembersoncurrentmatters.There is frequent
contact regarding theprogressandaffairsof theCompany.Each
board meeting includes a briefing by one of the functional or
department managers of the company followed by Q&A. The
boardmeetingsareacontinuouscenterofattentionfortheboard,
ensuring that the executive management maintains systems,
procedures, and a corporate culture that promote compliance
withlegalandregulatoryrequirementsandtheethicalconductof
thebusiness.One two-daymeeting isdedicated to strategy.The
BoardofDirectorsannuallyevaluates itswork,performance,and
CorporateGovernance
62 | Opera Software ASA | Annual Report 2007 Annual Report 2007 | Opera Software ASA | 63
expertise, and the report is made available for the Nomination
Committee. A Vice-Chairman has been elected for the purpose
ofchairingtheBoardofDirectors intheeventthattheChairman
cannotorshouldnotleadtheworkoftheBoardofDirectors.The
BoardelectedaCompensationCommitteein2006.TheBoardhas
decidednottoelectanAuditCommitteeinlightofthereduction
oftheBoardfromtentosevenmembersaftertheGeneralMeeting
onJune212007butwillconsidertheneedforsuchCommitteeon
anongoingbasis.
Risk management and internal controlOperahasestablishedacomprehensivesetofinternalprocedures
andsystemstoensureunifiedandreliablefinancialreporting.The
Company’s business areas must evaluate their internal control
systemsandprocedureswithregardtofinancialreportingannually.
The Board receives monthly reports on the company’s financial
performanceandstatusreportsforthecompany’smostimportant
individualprojects.
Remuneration of the Board of DirectorsRemunerationforBoardmembersisafixedannualsumproposed
bytheNominationCommitteeandapprovedattheAnnualGeneral
Meeting.Allremunerationtotheboardofdirectorsisdisclosedin
Note3intheAnnualReport.
A largenumber of theCompany’s shareholders are international
withadifferentviewtosomeoftheNorwegianrecommendations.
Hence,Opera’sBoardmemberscarrystockoptionsintheCompany,
asdisclosed in Note3 in theAnnualReport.Thispracticewillbe
furtherlimitedinthefuture,butwillnotbeexcludedasatoolto
enhanceinterestfromparticularlyinternationalexpertsandsenior
executivestojointheBoard.
Remuneration of the Executive ManagementThe Compensation Committee proposes remuneration for the
Company’sExecutiveTeamandguidelinesfortheCompany’scom-
pensationstructuretotheBoard.Detailsconcerningremuneration
of theexecutivemanagement, includingalldetails regardingthe
CEO’s remuneration, aregiven in theAnnualReport,Note3. The
BoardofDirectorsassessestheCEOandhistermsandconditions
onceayear.TheGeneralMeetingisinformedaboutincentivepro-
grams for employees.The Board of Director’s declaration on the
compensationpoliciesoftheExecutiveTeamisfoundonpage31. Information and communicationsCommunication with shareholders, investors, and analysts, both
in Norway and abroad, is a priority for Opera. The Company’s
objective is to ensure that financial markets have sufficient
informationaboutthecompanytobecertainthatpricingreflects
underlying values. During the announcement of quarterly and
annual financial results, there is opportunity formanagement to
answer questions from the Company’s shareholders. Opera also
arrangesregularpresentationsinEuropeandtheUSAinaddition
toholdingmeetingswithinvestorsandanalysts.Importantevents
affectingtheCompanyarereportedimmediatelytotheOsloStock
Exchangeinaccordancewithapplicablelegislation,andpostedon
Opera’sWebsite.
Take-oversTheBoardofDirectorsendorses the recommendationof theNor-
wegianCodeofPracticeforCorporateGovernance.Operahasno
activeanti-takeoverdevicesor“poison-pills”.TheBoardofDirectors
willnotseektohinderorobstructtake-overbidsfortheCompany’s
activitiesorsharesunlessthereareparticularreasonsforthis.The
Board intendstoprepareguidelines forpossibletakeovers inthe
nearfuture.
AuditorTheauditorparticipatesinmeetingsoftheBoardofDirectorsthat
deal with the annual accounts and upon special request. Every
year, the auditor presents to the board a report outlining the
auditactivitiesinthepreviousfiscalyearandhighlightstheareas
thatcausedthemostattentionordiscussionswithmanagement,
aswellasa reviewof theCompany’s internalcontrolprocedures,
including identifiedweaknesses and proposals for improvement.
Theauditorwillmakehimselfavailableuponrequestformeetings
withtheboardatwhichnomemberoftheexecutivemanagement
is present, aswill theboardupon auditor’s request.TheGeneral
Meetingisinformedaboutthecompany’suseandremunerationof
theauditor,anddetailsaregivenin Note3 intheAnnualReport.