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OPERA ANNUAL REPORT 2007

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Annual Report 2007 | Opera Software ASA | 1

operaaNNUaL reporT 2007

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.

66 | Opera Software ASA | Annual Report 2007

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