Directors’ Report 2007Innovation Norway

Foto: Jonny Syversen

The future lasts a long time- Norwegian business and industry is currently operating in high gear. Nothing pleases me more than that. Having said that, it is in the good times that we must establish a foundation to ensure that our children and grandchildren will also have something to live by and for in the future.

We look to the past in an annual report. Here you can read more about many of the things we are proud of and have achieved in 2007 at Innovation Norway.

I myself would like to look to the future in my little “epistle” and share some of my thoughts with you.

Innovation is the key wordThe competitiveness of business and industry is determined by our ability to innovate and renew ourselves. How to take a new idea and make it profi table?

The word innovation comprises many different things: new products and services; new technology; new production, de-livery or business processes; new use of existing knowledge; new organisational structures; and new markets. Common to all of these things is the fact that they create or are expected to create economic value.

To contribute to innovative and internationally competitive business and industry, Innovation Norway must understand and deal with the challenges affecting the development of business and industry throughout the country, at the same time as we must continue to exploit and reinforce Norway’s good prerequisites for innovation.

Challenges in the futureThere are a couple of challenges that will face business and industry in the future that we must take into consideration already now.

Globalisation provides new opportunities for growth, while climate and sustainability are the greatest challenges of our time. Our population is aging, and this will result in a shortage of manpower in the long term. Good employees will demand more from their employers, and the level of urbanisation will increase: even more people will be living in cities.

These challenges will affect the development of business and industry throughout the country. Competition will be tougher and more international; it will be more diffi cult to recruit manpower; and there will be new requirements with respect to sustainable development. Business and industry must take these changes into account, and we started to work on a new strategy for In-novation Norway in 2007 so that we can meet these challenges.

We are to promote efforts to make business and industry more innovative at Innovation Norway. We are to challenge our cus-tomers to be innovative and provide training through involving, tying in and pointing out new opportunities.

We are to offer expertise, networks and capital to create good results for our customers and society. If a market is not working, our support measures and resources shall be able to establish a working market and then surrender this arena to private actors.

This will ensure that Norwegian business and industry and the Norwegian welfare state can have a good future that will last a long time.

Gunn OvesenCEO

2Innovation Norway

Business situation in 2007The year 2007 was a good year for Norway and Norwegian business and industry. We are experiencing one of the longest periods of economic expansion in Norway since the war. There is considerable growth, many new ideas and good profi tability in business and industry. Norway is currently benefi tting from a “double China effect” due to low prices for imports and high prices for Norwegian raw materials.

There is a puzzle about NorwayIn its Economic Survey (2007) the OECD states that: “There is a puzzle about Norway”. The OECD is taken aback by how the Norwegian economy, which is apparently breaking all the “rules” for a good productivity policy, can be one of the fastest growing OECD countries over the last 30 years. There are many reasons for Norway’s success, and it is the sum total of these reasons that give us our good results in the opinion of Innovation Norway.

Norway has an industrial structure with few so-called high technology environments, but many innovative low technology industries. This stimulates other types of innovation in the form of the modifi cation of organisations, work processes, distri-bution, and business models, as well as development and design. We have a high capacity to use new knowledge and a high level of education. We have a disciplined macroeconomic policy, good help from the oil industry, and good sociocultural framework conditions. Norway and Norwegian business and industry are internationally oriented, and the economy is small, open and competitive. An active competition policy contributes to the creation of effi cient markets that promote competi-tion. Combined, this creates healthy innovation pressure and fl exible businesses and industries that are under continuous change.

These strengths give good prerequisites for the development and reinforcement of the innovation capacity of business and industry in a global competition situation. This is the point of departure for the Board’s assessment of how Innovation Norway can contribute most effi ciently to the development of the innovation capacity of business and industry in the future as well.

An innovation policy is a policy to make provisions for the unknown. This requires a dynamic policy that is open to experimentation and training, at the same time as it can take into account the need for change. When a new policy is to be established, it is important to understand how the Norwegian innovation system works. The Board is looking forward with excitement and anticipation to the publication of Norway’s fi rst white paper on innovation in 2008.

Future challenges and opportunitiesGlobalisation, climate and the environment, demograph-ics and individualisation, as well as urbanisation, are global trends business and industry must take into account and our policy must respond to. Trends entail both new challenges and new opportunities for Norway and Norwegian business and industry.

Greater productivity and knowledge requiredThere are two factors that will be decisive for whether Norway can defend its top welfare ranking. One factor is the develop-ment of productivity in all sectors of the economy, in order words, effi cient utilisation of scare resources. The second factor is making provisions so that our production of goods and servi-ces can be based increasingly on knowledge, which will create added value.

Norwegian business and industry plays a key roleNorwegian business and industry plays a key role in the economy through its innovation activities by generating new technologies, products, production processes and business models that can contribute to greater productivity and welfare. Norwegian companies also contribute new solutions that can contribute to solving the challenges facing our society through innovation.

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Årsrapport -Innovasjon Norge Nord Trønderlag

Innovation Norway

Authorities must stimulate greater innovationThe responsibility for innovation lies with the companies, but the public authorities can play a decisive role through stimulat-ing and making provisions for greater innovation. Innovation Norway desires to promote greater innovation in Norwegian business and industry in cooperation with other national and regional players.

More intelligent markets will make new demandsGlobalisation entails the development of more differentiated and “intelligent” markets. These markets demand and pay for solutions where considerations other than those asso-ciated with the properties of the actual product play a role. International auditing standards and comparisons of how the companies fulfi l their corporate social responsibility contribute to reinforcing this. In such a perspective it will be important to consider the development of competitive advantages through corporate social responsibility. This is an important prerequisite for, and an integral part of, the innovation and development processes of Norwegian companies.

Innovation Norway’s activities –from internal development to better deliveryInnovation Norway gives local ideas global opportunitiesIn 2007 Innovation Norway has established a foundation for bet-ter cooperation and interaction throughout the entire organisation. An extensive organisational development project has contributed to a more systematic development of services and better sharing of knowledge and experiences. Innovation Norway has thus established a good foundation for improving results by promoting increased innovation and internationalisation.

Innovation Norway identifi es new opportunities and delivers services with ever better quality and greater effi ciency. We bring market and technology knowledge concerning opportu-nities abroad home to Norwegian companies and industries. In addition, Innovation Norway delivers relevant knowledge of high quality to regional and nationwide partnerships. The

purpose of this is to help infl uence tomorrow’s policies and become a more visible innovation policy player. In the future the Board feels that Innovation Norway should focus more on corporate social responsibility. A good reputation for Norway and Norwegian business and industry is important both at home and abroad, and Innovation Norway must contribute to making Norwegian companies, industries and knowledge environments more visible.

Important results in 2007 – “Innovation Norway makes a difference”Business and industry is experiencing good times and there appears to be less of a need to compensate for various types of market and system failures. This means that Innovation Norway can focus its activities on the customers and sectors that have the greatest potential with regard to innovation and internationalisation. Innovation Norway has exploited this opportunity. The Board’s impression is that Innovation Norway has contributed in 2007 to promoting commercially and socio-economically profi table industrial development throughout the country and triggering business opportunities for various districts and regions.

Innovation Norway conducts annual customer effect surveys to measure the effect of Innovation Norway’s contribution to the overall goal of contributing to commercially and socio-economically profi table industrial development. The results of the annual customer effect surveys are showing continuous improvement.

The most recent surveys show that the percentage of cus-tomers stating that the triggering effect has been high has increased signifi cantly from 47% to 59%. The customers state that 75% of the projects have increased profi tability and com-petitiveness. They also state that 64% of the projects are impor-tant for their survival, and that there is a strong increase in the projects’ contribution to cooperation, behavioural changes and innovation.

Our customers are showing ever greater confi dence in Innova-tion Norway, and the large number of new assignments in 2008 refl ects this.

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Corporate social responsibility and ethical guidelinesIn most areas the idea that a company’s only responsibility is to provide maximum profi t for its owners without taking anyt-hing else into consideration is being abandoned by society. Globalisation is making the world more and more transparent. Companies are facing ethical, social and environmental pro-blems that business leaders cannot ignore. In addition to fo-cusing on fi nancial results, corporate social responsibility must be exercised by the companies voluntarily integrating social, environmental and ethical considerations into their operations. Greater awareness and communication of corporate social responsibility gives a clearer and fairer assessment of what benefi ts and costs are inherent to an enterprise.

Corporate social responsibility is important to the reputation of an enterprise, however, and awareness of corporate social re-sponsibility also entails opportunities for gaining new markets and customers. Increased globalisation entails that competi-tive advantages can be developed for Norwegian companies through deliberately focusing on corporate social responsibility. The Board’s ambition is for Innovation Norway to function as an active and competent adviser and promoter with respect to the corporate social responsibility of the companies. Innova-tion Norway shall contribute to greater awareness of corporate social responsibility among customers and in public debates, and transfer competence to Small and Medium-sized Enter-prises (SME), in addition to maintaining and reinforcing internal competence and activities formulated in the Plan of Action for Corporate Social Responsibility.

The Board is satisfi ed with the ongoing work in accordance with Innovation Norway’s Plan of Action for Corporate Social Responsibility 2007. Innovation Norway has also submitted important input to the Government’s work on a white paper concerning corporate social responsibility. It is expected that this white paper will be presented to the Storting in 2008. The white paper may contribute to increased awareness of corporate social responsibility and greater cooperation among Norwegian companies, organisations and various authorities with respect to the development of knowledge.Ethics and corporate social responsibility shall be included in the services offered by Innovation Norway, and they are important evaluation criteria for fi nancing, consulting, network

building, competence development and promotion activities.Innovation Norway reports on corporate social responsibil-ity as part of its annual reporting. The reporting is based on guidelines from the Global Reporting Initiative (GRI), which is an international standard for such sustainability reporting.

Corporate governanceInnovation Norway desires good cooperation with our stakehold-ers. By adhering to principles for good corporate governance, we will establish a foundation for the confi dence of our owner and our other clients/allocating authorities, governing bodies, manage-ment, employees, customers, special interest organisations, cooperation partners and the rest of society.

Good corporate governance describes the legal and operational framework for how Innovation Norway will be managed and controlled to create value for our stakeholders.

Good corporate governance, however, is far more than observing regulations and laws, internally and externally. Innovation Norway’s values and ethical guidelines establish important premises for corporate governance. Innovation Norway desires to create an internal promoter culture marked by our values: customer-oriented, honest, cooperative, result-oriented and innovative.

Innovation Norway’s management model is based on generat-ing permanent value for our clients through our customers, while focusing on the enterprise’s risk situation and cost-effectiveness targets. Information shall be credible, timely and consistent. The Board stresses that the management of Innova-tion Norway’s activities shall be developed in consultation with the owner, Board and management.

Risk managementGood risk management is an important prerequisite for ensuring that Innovation Norway can meet its targets over time. A management model has therefore been established that actively addresses risk through risk-reducing initiatives. Risk management shall deal with assessments related to circumstances and incidents that may prevent an enterprise from achieving its defi ned goals, exploiting new opportunities, damaging its reputation or implementing selected strategies.

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Innovation Norway conducts an overall risk assessment prior to our business plan process every year.

Financial risk related to lending activities and credit risk in par-ticular is the dominant type of risk in the enterprise. With regard to the market risk and liquidity risk, these types of risk will be of lesser importance to an assessment of the enterprise’s assets, liabilities, fi nancial position and results.

To identify the credit risk associated with the loan portfolio, a risk classifi cation system is used, in which the estimated risk is calculated as the product of the assumed operational risk and risk for inadequate security.

Risk management is performed by monitoring the risk associ-ated with new commitments and the current portfolio. The opportunity to control the portfolio risk is linked primarily to what new loans are established, and the estimated risk inher-ent to these loans. The estimated risk of new commitments in 2007 is lower than the portfolio risk.

The developments are reported to the Board on a quarterly basis. If signifi cant negative deviations arise in relation to the target fi gures, the credit policy will be adjusted. Every six months in connection with the presentation of our accounts, we review all signifi cant loans and loans with loss events.

All the potential sources of loss related to Innovation Nor-way’s ongoing operations are included in the operational risk. Examples of such sources include a failure of the routines, computer system failure, failure of competence, and a breach of confi dence by employees. Internal control is an important tool for reducing operational risk. There are separate instruc-tions for IT security.

Work of the Board of DirectorsThe year 2007 was Innovation Norway’s fourth year of opera-tion, and the Board found that it was natural to reassess its strategy. The employees have good insight into and increas-ingly identify themselves with Innovation Norway’s objectives and strategy. The cultures are melting together. At the start of 2008, Innovation Norway has established a solid platform for the development of the organisation.

The Board feels that Innovation Norway needs to focus on the future and develop a strategy that will identify Innovation Norway clearer as a public support body. We have worked on the foundation for a new strategy since February 2007. The regional boards are involved and have contributed actively to work on the analysis of trends, challenges and opportunities for business and industry in various sections of the country. Work on a new strategy will be completed in 2008.

The Board has arranged board meetings outside Oslo to meet key players in the Trøndelag counties and Murmansk.

Composition of the BoardAt the end of 2007 the Board of Directors consisted of:• Kjell A. Storeide, Chairman• Eli Blakstad, Vice Chairman• Siri Bye G. Johansen• Arild Øien• Roar Flåthen• Harald Milli• Kirsti Saxi• Elin Tveit Sveen• Eva Toril Strand• Egil Hagen, Employee Representative• Randi Abrahamsen, Employee Representative

Leif Frode Onarheim and Kirsten Indgjerd Værdal left the Board in 2007, and Harald Milli and Eva Toril Strand joined the Board in 2007.

Report on equalityAt the end of 2007, the percentage of female employees at In-novation Norway was 50.8%. At the end of 2006, the percent-age of women was 50.3%.

Innovation Norway’s plan for equality contains a series of objectives and initiatives for recruitment and career develop-ment, management, expertise and corporate culture. The plan of action is fi rmly rooted with the senior management.

Women represented 56.6% of the new employees recruited in 2007. The percentage of women who applied for positions at Innovation Norway was 46.3%. There are still more women

6Innovation Norway

in lower position categories than in the higher categories. In accordance with the equality plan, initiatives have been imple-mented to increase the percentage of female managers, both through external recruitment and internal motivation initiatives.

Innovation Norway focuses on equal pay, but women still have lower pay than men in some position categories. However, this difference is becoming less every year, as equal pay has been prioritised in the annual wage negotiations.

All job advertisements state that “Innovation Norway focuses in its recruitment process on the establishment of diversity with respect to gender, age and cultural background.”

The enterprise’s recruitment routines state that both genders shall be invited to an interview, provided they meet the mini-mum requirements for the position, and the female perspec-tive shall be clear throughout the entire process. Qualifi ed candidates with a foreign cultural background shall be invited to an interview.

Organisation and the environmentInnovation Norway was established on 1 January 2004 with its own management and administration. The Ministry of Trade and Industry acts as the owner of Innovation Norway. The head offi ce of Innovation Norway is located in Oslo, but most of the employees are based close to customers at offi ces in all the counties of Norway, or close to the market at offi ces in 34 countries worldwide.

Innovation Norway’s Board of Directors consists of nine mem-bers and two employee representatives. The Board is respon-sible for the administration and appropriate organisation of Innovation Norway’s activities. The Board of Directors shall supervise the day-to-day management. The Board appoints regional boards for the regional offi ces. These boards report to the Board of Directors through the CEO.

Innovation Norway is an Inclusive Workplace, and it has estab-lished its own corporate health service at the head offi ce and all the regional offi ces in Norway.Two cultural and working environment surveys were conducted among the employees during the year. Participation in the

surveys was high, and they show good results. Absence due to illness is monitored continuously with quarterly reporting to the management and working environment committees. Absence due to illness was 4.6% in 2007. No occupational accidents were reported in 2007. The organisation has not contributed to pollution of the natural environment. The head offi ce was certi-fi ed as an “Environmental Lighthouse” in 2007.

Highlights of 2007A good year for tourismIn 2007 Innovation Norway devoted a lot of time to coopera-tion with the tourism industry and implementation of plans to contribute to increased innovation through cooperation. We have excellent cooperation with the tourism industry. Firstly, permanent cooperation fora have been established for the tourism industry at the strategic, operational and project levels. Secondly, Innovation Norway has, in close cooperation with the industry, developed, launched and implemented the revised Norway brand with a clear profi le, originator (visitnorway.com) and vision: Powered by Nature. Thirdly, Innovation Norway has placed greater focus on innovation in the tourism industry through new competence services, new Arena projects in tourism and new consulting services.

There is great demand for Innovation Norway’s tourism services, and the allocations have increased. The investment willingness and capacity has never been greater in the tourism industry.

In 2007 the Government published its national tourism strategy, Valuable Experiences, which establishes clear guidelines for Innovation Norway’s tourism work and new tasks in particular.

Steady course: Government’s strategy for environmentally friendly growth in the maritime industriesInnovation Norway is part of MARUT (Maritime Development), a process and cooperation arena for the maritime industry, research and development environments (R&D), the authori-ties, and the public support system. MARUT was established in 2006. The Government published its maritime strategy as part of MARUT in October 2007: Steady course, the Government’s

7Innovation Norway

strategy for environmentally friendly growth in the maritime industries. A total of 54 initiatives in fi ve areas are proposed here, which will contribute to strengthening the maritime indus-tries in Norway. Innovation Norway provides services in four of these areas in 2008:

Globalisation and framework conditions: Innovation Norway will take an initiative, together with the Norwegian Maritime Directorate, Shipping Registers and maritime industry players, to develop a common strategy for the marketing and promo-tion of maritime Norway abroad. Innovation Norway’s services from our offi ce network in international maritime markets and Innovation Norway’s trade fair services are relevant in this area.

Environmentally friendly maritime industries: In 2008 the Mari-time Development grant scheme will give priority to projects focusing on the development of technology to reduce NOx (nitrogen oxides) emissions from shipping.

Maritime research and innovation: The MARUT and IFU (Indus-trial Research and Development Contracts) grant schemes are the most relevant. Contact with the maritime environments, the Norwegian Centre of Expertise Maritime and Norwegian Centre of Expertise Subsea, will be given priority in 2008.

Coastal transport: New schemes in 2008 include grants and innovation loans. In 2008 development projects related to the renewal of small and older vessels will be given priority, as well as cooperation on more effi cient use of the coastal fl eet, such as shipping pool projects.

Skaperen (The Creator) 2007Innovation Norway participated in the TV2 programme Ska-peren (The Creator) in 2007 to create greater awareness of entrepreneurship and entrepreneurs, for example. We also wanted to show that it is possible to start your own company if you have ideas and business development skills. Innovation Norway’s role was to receive, guide and support the business concept of the individual participants. We followed the ideas that were chosen throughout the programme, gave advice and helped the participants through the various establishment phases.The panel of experts received around 500 ideas for considera-

tion during the programme. This season the panel consisted of the editor of Dine Penger, Christian Vennerød, IT entrepreneur Shahzad Rana and Innovation Norway’s Katinka Greve Leiner. The programmes were recorded throughout all of Norway, and the six fi rst programmes were recorded in Oslo, Bergen, Trondheim, Tønsberg, Bodø and Fredrikstad. The programmes were broadcast in the spring of 2007, and the winner of the fi nal on 15 May was Ånund Olsen with his Innowalk exercise apparatus, which can help disabled children strengthen and improve the motor function of their legs.

New investment companyIn the fi scal budget for 2008 the Government proposed the establishment of a new state investment company with equity of NOK 2.2 billion for equity investments. NOK 500 million of these funds are earmarked for the maritime sector. The new investment company shall be organised as a subsidiary of Innovation Norway. The purpose of the new investment company is to contribute to the commercialisation of globally oriented and competitive innovations and projects, prima-rily business start-ups. The company will provide long-term venture capital. The new investment company is to give priority to fi ve focus areas, which include the environment, energy, tourism, marine and maritime sectors. This is in accordance with the Soria Moria Declaration, and the company shall focus in particular on climate and environmental projects.

The investment company shall be used for investments with a long-term perspective, preferably in the area of technology development. The investment focus shall primarily be on the early growth phase. The company shall be used preferably in cases where the private actors do not provide long-term ven-ture capital for innovative companies with international growth potential.

The Board of Innovation Norway agrees with the Government’s assessment of the need and is prepared to accept the assign-ment of establishing the new investment company.

8Innovation Norway

Norwegian cooperation programmes for economic growth and sustainable development in Bulgaria and RomaniaIn 2007 Innovation Norway accepted an assignment from the Ministry of Foreign Affairs to administer the Norwegian cooperation programmes for economic growth and sustain-able development in Bulgaria and Romania. The programmes are part of Norway’s obligations under the EEA agreement concerning the new EU countries, Romania and Bulgaria. Innovation Norway is thus administering a new EUR 68 million grant scheme for the period from 2008 to 2011.

A separate project organisation has been established to main-tain Innovation Norway’s obligations to the Ministry of Foreign Affairs. All projects that receive grants from the programmes shall have Norwegian partners. Innovation Norway will pro-mote the strengthening of Norway’s economic, social, political and cultural cooperation with Romania and Bulgaria through this assignment.

This new model for the realisation of Norway’s obligations under the EEA agreement opens up the possibility of interesting future perspectives when the EEA agreements for the new EU countries are renegotiated in 2009. The Board expects that the cooperation programmes will promote commercial relation-ships between Norway and these countries.

Innovation Norway is involved in the EU’s Innovation ProgrammeCIP (Competitiveness and Innovation Framework Programme 2007-2013) is the EU’s new major initiative for innovation and competitiveness in Europe. The programme consists of three main parts: Entrepreneurship and innovation, as well as ICT policies and energy. Innovation Norway plays two important roles in connection with the Norwegian participation in the programme.

Firstly, Innovation Norway is the Norwegian point of contact for the subprogramme for innovation and entrepreneurship on assignment from the Ministry of Trade and Industry. We are to promote participation and interest in the programme among the relevant Norwegian environments and secure investments in Norway through the European Investment Fund.Innovation Norway also participates in the EU EIPC Commit-

tee (Entrepreneurship and Innovation Programme Committee) together with the Ministry of Trade and Industry. Innovation Norway publishes the programme’s content through websites and the electronic newsletter CIPcom. The newsletter currently has 500 subscribers that include Storting representatives, ministries, regional and local authorities, as well as industry organisations, the public support system and corporate advisers.

Secondly, towards the end of 2007 Innovation Norway received a positive response to its application to the European Commis-sion to lead the network for consulting services for Norwegian companies, Enterprise Europe Network in Norway, during the period from 2008 to 2013. Partners in the network include SIN-TEF, IRIS (International Research Institute of Stavanger), Norwe-gian Food Research Institute, Norut (Northern Research Institute Tromsø AS) and Christian Michelsen Research.

Innovation Norway will recruit a total of four new employees that will work at the regional offi ces in Kristiansand, Leikanger, Bodø and Trondheim. The network is lead from Oslo by the European Affairs Department. The network shall deliver services related to the EU/EEA (regulations, programmes and markets) and the transfer of technology, as well as mobilise for increased international research activities through participa-tion in the EU 7th Framework Programme for Research and Development.

Innovation in cooperationA business cluster is a local or regional concentration of com-panies and knowledge actors in the same industry or area of technology. The purpose of a cluster is to establish dynamic interaction between companies to generate growth and regional development, as well as give better promotion.

Innovation Norway has appointed nine strong clusters with companies that are among the best in the world in their fi elds. Collectively these expert environments represent a Norwegian Centre of Expertise (NCE). The NCE programme is a cooperation project in which SIVA (Industrial Development Corporation of Norway), the Research Council of Norway and Innovation Norway participate, and it has given the development pro-cesses greater importance, a more long-term focus and a higher status. In 2006 an agreement was entered into with six regional cluster projects. In 2007 the following three projects

9Innovation Norway

were selected: NCE Aquaculture in Nordland, NCE Culinology (Industrial gastronomy) in Rogaland and NCE Oslo Cancer Cluster.

The clear objective of the Arena Programme is to increase the creation of value in regional industrial environments. These are environments with a concentration of companies in the same industry/value chain, which can collectively establish a well-developed competence environment. The programme was evaluated in 2007, and the feedback was positive. Arena launched seven new projects in 2007. These projects were selected on the basis of a competition in which 24 applicants participated.

In 2007 Innovation Norway saw the need to develop a service to provide professional and fi nancial support for development processes in company networks that was of a simpler nature than Arena and NCE.

Annual accountsAnnual accountsInnovation’s Norway’s accounts show a profi t for the year of NOK 74 million, which is NOK 37 million higher than in 2006. The higher profi t is attributed primarily to a reduction in losses on loans and guarantees. The operating profi t before losses on loans and guarantees is NOK 76 million and remained unchanged from 2006.

Net interest income totalled NOK 209 million, compared with NOK 200 million in the previous year. The combined operating revenues increased by NOK 167 million to NOK 1,026 million. The increase is attributed to government revenues for tourism activities, operations and other projects.

The operating expenses increased from NOK 982 million to NOK 1,160 million, and the payroll expenses accounted for NOK 505 million of this amount. The increase in operating expenses is related to the increase in project activities due to higher government revenues.

Gross income of NOK 6.7 million has been booked for losses on loans and guarantees due to the fact that the reversal of

specifi ed provisions for losses has been somewhat greater than the confi rmed losses and new specifi ed provisions for losses. After the allocation of NOK 8.3 million to provisions for losses, the accounts show net losses of NOK 1.6 million.

The combined provisions for losses on loans totalled NOK 563 million as of 31 December 2007, and this represents a reduc-tion of NOK 62.4 million, compared with the provisions of NOK 626 million as of 1 January 2007. In the opinion of the Board, the provisions for losses refl ect the combined risk of loss in the loan and guarantee portfolio that is to be included in the accounts.

The cash fl ow statement shows that there is a high gross cash fl ow through Innovation Norway on an annual basis. The total amounts received and paid on loans shows a reduction in the loan portfolio, but the reduction in 2007 was only half of the reduction in 2006. The total payments received and repay-ments on amounts borrowed shows that net borrowings have declined in step with the loans.

Innovation Norway’s balance sheet total at the end of the year was NOK 16.3 billion, compared with NOK 16.6 billion at the end of the previous year. Net loans totalled NOK 11.5 billion, which is a reduction of NOK 0.6 billion.

The annual accounts have been prepared under the assump-tion that the company will continue as a going concern. The accounts provide a true picture of the enterprise’s assets, liabilities and results. No circumstances have arisen after the end of the fi nancial year that are signifi cant to an evaluation of the enterprise that has not been mentioned in the annual report and the associated notes.

Distribution of profi tAfter losses and administrative expenses the accounts for 2007 show a profi t of NOK 74,126,516.92.

The Board proposes the following distribution of the annual profi t:

10Innovation Norway

Allocated to dividend to the State from:Low-risk scheme NOK 29 222 170.00Investment Fund for Northwest Russia NOK 3 555 237.00Investment Fund for Eastern Europe NOK 3 396 874.00

Transferred to the State from:Risk loans and guarantees NOK 2 083 317.61Regional loan scheme NOK 47 265.63Environmental loans NOK 35 275.08

Reversed from retained earnings for:Seed Capital Fund NOK 2 202 627.49

Allocated to retained earnings for:Investment Fund for Northwest Russia NOK 1 185 079.88Investment Fund for Eastern Europe NOK 1 132 292.50Low-risk scheme NOK 34 073 768.13Other retained earnings NOK 1 597 864.58

Oslo, 31 December 200721 February 2008

Board of Directors of Innovation NorwayKjell A. Storeide Eli Blakstad Chairman Vice Chairman

Roar Flåthen Siri Bye G. Johansen Harald Milli Kirsti SaxiEva Toril Strand Elin Tveit Sveen Arild Øien

Randi Abrahamsen Egil HagenEmployee Representative Employee Representative

Gunn Ovesen CEO

11Innovation Norway

Profit and loss accountamounts in 1000 NOK Note 2007 2006

Interest from lendings 1 650 469 537 431

Interest from bank deposits 19 158 12 241

TOTAL INTEREST RECEIVED 669 627 549 672

Interest cost borrowings 2 422 376 307 730

Borrowing commission to the Govern-ment

3 37 756 42 126

TOTAL INTEREST PAID 460 132 349 856

NET INTEREST RECEIVED 209 494 199 816

Governmental appropriation 4 803 770 643 782

External incomes 5 213 464 196 368

Other operating incomes 6 9 222 18 705

TOTAL OPERATING INCOME 1 026 456 858 854

Salaries and personnel costs 7 504 671 456 829

Depreciation on tangible fixed assets 8 22 113 21 448

Direct project costs 9 420 158 295 583

Other operating costs 10 213 270 208 390

TOTAL OPERATING COSTS 1 160 212 982 249

OPERATING PROFIT BEFORE LENDING AND GUARANTEES LOSSES

75 739 76 421

Losses on lending and guarantees 11, 26 (6 721) 96 301

Coverage of losses 12, 26 8 333 (56 548)

TOTAL NET LOSSES ON LENDING AND GUARANTEES

1 612 39 753

ANNUAL RESULTS 74 127 36 668

Dividend and transfers to the Government 13 38 340 32 095

To retained earnings in loan and invest-ment funds

13, 29 115 (17 126)

To equity 13, 30 35 672 21 700

TOTAL ALLOCATIONS 13 74 127 36 668

ASSETS

amounts in 1000 NOK Noter 31-12-07 01-01-07

Ordinary deposits in banks 829 082 437 064

Restricted deposits in Norges Bank 14 3 556 584 3 619 589

TOTAL BANK DEPOSITS 4 385 666 4 056 653

Low-risk loans 15 8 880 002 9 324 267

High-risk loans 15 1 396 811 1 561 735

Other lendings 16 1 817 171 1 893 136

Total gross lendings 12 093 984 12 779 138

- Write-downs individual loans 11 (389 484) (459 914)

- Write-downs groups of loans 11 (174 000) (166 000)

TOTAL NET LENDINGS 17 11 530 500 12 153 224

SHARES 18 23 247 16 801

TANGIBLE FIXED ASSETS 8 100 447 108 854

OTHER RESERVES 19 27 235 51 148

DEFERRED INCOME AND NON-ACCRUED COSTS

20 254 922 176 302

PENSION PREMIUMS PAID IN ADVANCE

21 11 228 29 088

TOTAL ASSETS 16 333 245 16 592 070

Liabilities And Equityamounts in 1000 NOK Note 31-12-07 01-01-07

Low-risk borrowing 22 7 591 797 7 873 116

High-risk borrowing 22 1 585 000 1 730 000

TOTAL BORROWING FROM THE STATE 9 176 797 9 603 116

Bond loan debt 3 000 11 400

Own, non-amortised bonds (2 780) (10 591)

TOTAL NET BOND LOAN DEBT 23 220 809

OTHER LIABILITIES 24 245 536 246 237

ACCRUED COSTS AND DEFERRED INCOME

25 252 567 241 796

Pension commitments 21 18 867 12 211

Specified allocations for guarantee liability 11 1 335 2 072

Loss funds 26 1 223 740 1 161 269

Interest support funds 27 45 865 49 320

Subsidies funds 28 2 432 126 2 306 039

TOTAL PROVISIONS FOR COMMITMENTS

3 721 934 3 530 911

Issued capital in loan and investment funds

2 027 000 2 115 797

Retained earnings 36 754 16 639

TOTAL LOAN AND INVESTMENT FUNDS

29 2 063 754 2 132 436

Issued capital 656 045 656 045

Retained earnings 216 392 180 720

TOTAL EQUITY 30 872 437 836 765

TOTAL LIABILITIES AND EQUITY 16 333 245 16 592 070

Oslo, 31 December 2007

21 February 2008

Board of Directors of Innovation Norway

Kjell A. StoreideChairman

Eli BlakstadVice Chairman

Roar Flåthen

Siri Bye G. Johansen Harald Milli Kirsti Saxi

Eva Toril Strand Elin Tveit Sveen Arild Øien

Randi AbrahamsenEmployee Representative

Egil HagenEmployee Representative

Gunn OvesenCEO

12Innovation Norway

Note 1

Interest on loans 2007 2006

Interest on ordinary low-risk loans 184 371 161 814

Interest on fishing vessel loans 129 703 105 751

Interest on agricultural loans 198 015 150 772

Interest on risk loans 116 470 100 886

Interest on other loans 18 454 13 974

Interest support 3 454 4 234

650 469 537 431

Interest support is provided for risk loans. See Note 27 and the accounting policies for a description of the interest support fund.

Geographical breakdown of interest on loans

Northern Norway Central Norway Western Norway Southern/Eastern Norway

Total

2 007 2 006 2 007 2 006 2 007 2 006 2 007 2 006 2 007 2 006

Low-risk loans 24 209 21 243 13 963 10 842 81 025 68 933 65 175 60 796 184 371 161 814

Fishing vessel loans 55 218 45 794 4 222 4 641 67 876 52 899 2 387 2 417 129 703 105 751

Agricultural loans 45 136 34 920 27 494 20 909 48 489 37 363 76 897 57 580 198 015 150 772

Risk loans 31 666 28 249 15 616 12 070 36 975 34 393 32 214 26 174 116 470 100 886

Other loans 2 316 2 055 2 537 1 346 8 616 2 987 8 441 11 820 21 909 18 208

Total 158 544 132 261 63 831 49 808 242 980 196 575 185 113 158 787 650 469 537 431

Note 2Interest On Borrowings 2007 2006

Interest on borrowings for low-risk loans *) 350 258 253 054

Interest on borrowings for risk loans 61 901 45 837

Interest expenses on other loans 10 218 8 839

422 376 307 730

*) Ordinary low-risk loans, as well as loans for fishing vessels and agriculture.

Note 3Borrowing Fees To The State 2007 2006

Borrowing fees for low-risk loans *) 31 180 34 784

Borrowing fees for risk loans 5 750 6 562

Borrowing fees for other loans 826 781

37 756 42 126

*) Ordinary low-risk loans, as well as loans for fishing vessels and agriculture.Innovation Norway pays a 0.4% borrowing fee to the State on all borrowings.

13Innovation Norway

Note 4

Public Allocations

Item 70 Item 71

Operations Promotion Internation-alisation Innova-tion Other Total

Opening balance as of 1/1 8 329 39 441 9 469 1 230 0 58 469

Allocations received 396 800 180 000 23 000 47 000 159 483 806 283

Available for distribution 405 129 219 441 32 469 48 230 159 483 864 753

Closing balance as of 31/12 (7 790) (40 843) (12 351) 0 (60 983)

Booked as income 397 339 178 598 20 119 48 230 159 483 803 770

Allocations granted by the Ministry of Trade and Industry:Chapter 2421 Item 70 Enterprise development and administrationChapter 2421 Item 71 Internationalisation, promotion and innovationOther allocations are funds from the ministries’ grant schemes. The funds have been used to carry out projects in cooperation with our customers. A share of the funds covers the administration work associated with some of the schemes.

Note 5

External Revenue 2007 2006

Norway 72 399 74 253

Other Nordic countries and the Baltic States 22 039 22 740

Western Europe 81 318 60 960

Eastern Europe 7 777 8 265

Americas 13 226 15 461

Asia 16 705 14 690

External revenue primarily comprises the sale ofinternationalisation and marketing services.

Note 6

Miscellaneous Operating Revenue 2007 2006

Revenue from subleases 7 035 6 436

Fees on loans/guarantees 1 730 2 276

Net loss/gain on equities 1 677 (2 516)

Refunded project expenses 468 12 186

Net loss on foreign currencies (2 157) (273)

Miscellaneous revenues 469 595

9 222 18 705

14Innovation Norway

Note 7

PAYROLL EXPENSES 2007 2006

Wages and salaries 348 948 324 355

Employer’s National Insurance contributions 45 742 42 740

Pension costs 61 612 44 195

Other benefits 48 369 45 538

504 671 456 829

Other benefits consist primarily of allowances for envoys abroad, directors’ fees, personnel insurance, government taxes and charges paid abroad, and miscellaneous personnel expenses.

Innovation Norway always has a fixed amount in an account for tax deductions that is greater than the settlement amount for an instalment.

Fixed salary for the CEO 1 759 1 689

Other benefits for the CEO 96 94

Pension agreement with the CEO 106 104

Fee to the Chairman of the Board 160 160

Other benefits for the Chairman of the Board 0 58

Directors’ fees 1 092 930

Statutory auditing 786 772

Other certification services 59 128

Tax consultancy 1 715 367

Other services beyond auditing 2 649 1 954

Loans to employees 2 069 1 099

Average number of full-time equivalents (FTEs) 726 713

There is no severance pay agreement with the CEO other than the ordinary notice terms of six months. Some loans to employees are interest-free and/or unsecured.

Neither the CEO nor the Chairman of the Board has loans from Innovation Norway.

Together with Human Factors AS, KPMG AS has been engaged to implement the LederMentor training programme, which is intended to give women greater influence in the development of Norwegian business and industry. KPMG invoices Innovation Norway for the entire fee. Half of the fee goes to Human Factors. Total fees invoiced in 2007 were NOK 2,599,436, and they are included in “other services beyond auditing”.

Note 8

Depreciation Of Tangible Fixed Assets

Equipment and fixtu-

res, etc.

Buildings and real

estate

Total

Historical cost as of 1/1 154 866 142 650 297 516

Accumulated depreciation as of 1/1 119 360 69 302 188 662

Book value as of 1/1 35 505 73 349 108 854

Additions 7 842 5 863 13 706

Disposals - - -

Depreciation 14 679 7 434 22 113

Book value as of 31/12 28 669 71 778 100 446

Investments 2003 2005 2007

Buildings and real estate 3 931 1 938 5 863

Machinery, fixtures, vehicles, etc. 19 993 11 816 7 842

Total investments 23 924 13 754 13 706

Sale of fixed assets 328 509 105

The depreciation rates for buildings vary from 2.5% to 20% per annum.

The depreciation rates for equipment and fixtures vary from 17% to 25% per annum.

Annual rental agreements amount to approximately NOK 64 million, approximately NOK 34 million of which represents agreements abroad.

Most of Innovation Norway’s rental agreements in Norway and abroad have contractual terms of five years, with

options to extend the leases three to five years.

There are three exceptions:

The lease for the offices in Oslo (Tollbugata) runs until 31 August 2015

The lease for the offices in London (Charles House) runs until 24 March 2014

The lease for the offices in Vadsø runs until 30 April 2015

The lease for the stores depot in Vadsø runs until 29 February 2016

In addition, Innovation Norway has a lease for offices at Stortorvet/Oslo that runs until 1 December 2011. This is the lease for the premises of Stiftelsen Norges Turistråd (the Norwegian Tourist Board Foundation). The premises have been sublet for the entire term at an annual loss in rent of about NOK 1.1 million. Funds have been set aside to cover this loss.

Note 9

DIRECT PROJECT COSTS

Tourism projects Internationalisation projects

Other projects Total

2 007 2006 2 007 2006 2 007 2006 2 007 2 006

External services 20 928 12 712 23 808 10 121 64 166 18 386 108 902 41 220

Office expenses, printed matter and training

2 725 1 145 2 766 3 886 11 134 4 250 16 625 9 281

Telephone and postage

17 914 12 345 262 577 158 101 18 334 13 023

Travel and vehicles

10 764 8 744 6 496 5 924 7 891 5 557 25 151 20 224

Promotion and marketing

205 804 175 297 33 242 25 003 13 206 5 608 252 252 205 908

Miscellaneous operating expen-ses (incl. refunds)

1 273 1 981 (4 104) 3 299 1 725 647 (1 106) 5 927

Total 259 408 212 224 62 470 48 811 98 280 34 549 420 158 295 583

In 2007, direct project costs include purchases of goods and services directly related to Innovation Norway’s operative projects. The costs are funded partly by customers and partly through the government allocations.

“Other projects” include Innovation programmes and grant-financed projects.

Note 10OTHER OPERATING EXPENSES

2 007 2 006

Premises 71 786 72 735

Rental, purchases and maintenance

25 927 18 417

External services 31 556 30 149

Office expenses, printed matter and training

19 338 18 585

Telephone and postage

24 102 27 651

Travel and vehicles 29 049 29 634

Miscellaneous operating expenses

11 513 11 220

213 270 208 390

15Innovation Norway

Note 11LOSSES ON LOANS AND GUARANTEES

Low-risk loans Risk Seed capital funds and

investment loans

Loan loss provisions Ordinary low-risk loans

Fishing vessel loans

Agricultural loans

incl. environ-mental and

regional

Total loans Guarantees Total loans and guarantees

Specified loan loss provisions as of 1/1 83 032 6 044 7 207 267 636 95 995 459 914 2 072 461 986

Increased and new specified provisions 15 156 4 095 62 890 7 603 89 744 485 90 229

Reversals of specified provisions (23 221) (4 637) (1 851) (83 914) (3 108) (116 731) (222) (116 953)

Confirmed losses on loans without specified provisions 2 246 240 1 831 13 224 5 947 23 488 1 650 25 138

Confirmed losses (13 801) (281) (1 831) (42 298) (8 721) (66 931) (2 650) (69 581)

Specified loan loss provisions as of 31/12 63 412 1 367 9 451 217 538 97 717 389 484 1 335 390 819

Unspecified loan loss provisions as of 1/1 112 000 39 000 15 000 166 000 166 000

Change in unspecified provisions for the period 7 000 6 000 (5 000) 8 000 8 000

Unspecified loan loss provisions as of 31/12 119 000 45 000 10 000 0 0 174 000 0 174 000

Book losses

Increased and new specified provisions 15 156 4 095 62 890 7 603 89 744 485 90 229

Reversals of specified provisions (23 221) (4 637) (1 851) (83 913) (3 108) (116 731) (222) (116 953)

Confirmed losses on loans with specified provisions (11 555) (40) (29 074) (2 774) (43 444) (1 000) (44 444)

Change in specified provisions (19 620) (4 677) 2 244 (50 098) 1 721 (70 430) (737) (71 167)

Change in specified provisions for expenses 241 64 305 305

Change in unspecified provisions 7 000 6 000 (5 000) 8 000 8 000

Confirmed losses 13 801 281 1 831 42 298 8 721 66 931 2 650 69 581

Losses on outlays 258 5 4 315 3 586 586

Receipts on previous periods’ confirmed losses (6 790) (314) (8) (6 913) (0) (14 026) (14 026)

Losses on loans and guarantees for the period (5 110) 1 295 (929) (14 334) 10 444 (8 634) 1 913 (6 721)

Confirmed losses

Confirmed losses on loans without specified provisions

2 246 240 1 831 13 224 5 947 23 488 1 650 25 138

Confirmed losses on loans with specified provisions 11 555 40 29 074 2 774 43 444 1 000 44 444

Total confirmed losses 13 801 281 1 831 42 298 8 721 66 931 2 650 69 581

Innovation Norway’s loan portfolio consists of various types of loans with different risk profiles. In the table below, the various loan types are classified in three groups with high, normal or low risk, respectively. The figures are exclusive of subordinated loans to Seed Capital Funds, Investment Funds for Northwest Russia and Eastern Europe and administrative schemes.

“Risk classes Gross loans Specified provisions in NOK Specified provisions as a % of gross loans

Loans without specified provisions

Estimated risk for loans wit-hout specified provisions

Unspeci-fied provisions

High risk * 1 611 282 217 538 13,5 % 1 317 067 26,0 %

Normal risk 5 206 850 64 779 1,2 % 5 016 696 3,0 % 164 000

Low risk 3 654 782 9 451 0,3 % 3 591 516 0,3 % 10 000

Total 10 472 914 291 768 9 925 279 174 000

* Includes risk loans with provisions for losses that cover the estimated risk of loss. Unspecified provisions are not made for these loans.

The table below shows changes in the default situation over the last five years, measured in terms of the total gross defaults over 90 days in NOK million and as a percentage of the current portfolio. Low-risk loans include the ordinary low-risk loan, fleet loan and agricultural loan schemes. Total risk loans include nationwide risk loans and guarantees, regionally targeted risk loans, the regional loan scheme, agricultural risk loans and environmental fund loans.

Gross defaults Low-risk loans Risk loans/guarantees

> 90 days (low and normal risk classes) (high risk class)

NOK million as % of gross portfolio NOK million as % of gross portfolio

31-12-03 908 7,5 % 296 11,9 %

31-12-04 751 6,7 % 298 12,2 %

31-12-05 497 4,8 % 109 5,0 %

31-12-06 480 5,1 % 77 4,0 %

31-12-07 291 3,3 % 131 7,7 %

16Innovation Norway

Note 12COVERAGE OF LOSSES 2007 2006

Losses on risk loans and guarantees covered by separate allocations

6 819 1 204

Losses on risk loans and guarantees covered by provisions for losses

10 639 (34 981)

Losses on regional loan scheme covered by provi-sions for losses

(5 141) (7 633)

Losses on environmental loans and guarantees covered by separate allocations

- -

Losses on investment loans covered by the Agricultu-ral Development Fund

(2 584) (4 151)

Losses on loans from the Seed Capital Fund covered by provisions for losses

(1 504) (11 000)

Losses on loans from the Environmental Fund covered by provisions for losses

105 13

8 333 (56 548)

See the note containing the accounting policies where losses and provisions for losses are described.

Note 13PROFIT FOR THE FINANCIAL YEAR, ALLOCATED 2007 2006

Dividend to the State, low-risk scheme 29 222 23 552

Dividend to the State, Investment Fund for Northwest Russia

3 555 775

Dividend to the State, Investment Fund for Eastern Europe

3 397 -

Transferred to the State, risk loans and guarantees 2 083 7 690

Transferred to the State, environmental protection loan scheme

35 -

Transferred to the State, regional loan scheme 47 78

38 340 32 095

Transferred to accrued capital, Seed Capital Fund (2 203) (17 473)

Transferred to accrued capital, Investment Fund for Northwest Russia

1 185 258

Transferred to accrued capital, Investment Fund for Eastern Europe

1 132 88

115 (17 126)

Transferred to retained earnings, project activity etc. 1 598 7 395

Transferred to retained earnings, low-risk scheme 34 074 14 304

35 672 21 700

Total allocations 74 127 36 668

Note 14RESTRICTED DEPOSITS AT NORGES BANK 2007 2006

For investment in subordinated capital 1 744 902 1 818 614

For disbursement of grants 403 992 516 843

For covering losses 1 407 690 1 284 132

3 556 584 3 619 589

Restricted deposits are earmarked funds. Only a small proportion of these funds earn interest for Innovation Norway.

Note 15LOW-RISK LOANS 2007 01-01-07

Ordinary low-risk loans 3 041 441 3 245 926

Agricultural loans 3 662 788 3 820 717

Loans for fishing vessels 2 175 773 2 257 625

8 880 002 9 324 267

RISK LOANS 2007 2006

Nationwide risk loans 341 147 373 622

Regional risk loans 1 036 578 1 184 014

Agricultural risk loans 19 086 4 099

1 396 811 1 561 735

Note 16

OTHER LOANS 2007 2006

Rural development loans for agriculture 1 203 647 1 317 792

Subordinated loans, Seed Capital Fund 389 235 287 321

Regional loan scheme 139 522 191 531

Loans from the Norwegian State Environmental Fund

77 373 88 973

Subordinated loans, Investment Fund for Northwest Russia

2 840 2 060

Subordinated loans, Investment Fund for Eastern Europe

2 485 4 359

Loans to employees 2 069 1 099

1 817 171 1 893 136

Rural development loans are administered by Innovation Norway on behalf of the Agricultural Development Fund. The loans that are interest-free are financed by disbursements from the development fund, to which repayments are credited and losses are charged.

17Innovation Norway

Note 17 GEOGRAPHICAL BREAKDOWN OF LOANS

Northern Norway Central Norway Western Norway Southern/Eastern Norway Total

Amounts in NOK million 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006

Ordinary low-risk loans 363 404 264 225 1 246 1 300 985 1 129 2 858 3 058

Fishing vessel loans 880 931 72 81 1 135 1 151 44 48 2 131 2 211

Agricultural loans 826 852 508 529 884 941 1 424 1 473 3 642 3 795

Risk loans 304 324 171 179 409 468 310 334 1 194 1 305

Other loans 302 264 238 258 504 544 661 718 1 705 1 784

Total net loans 2 675 2 775 1 253 1 272 4 178 4 404 3 424 3 702 11 530 12 153

Note 18EQUITIES

Company name Share capital Number of shares Nominal value Ownership interest Acquisition cost

Investment Funds for Northwest Russia and Eastern and Central Europe

Akvamiljø Caspian AS 2 750 1 000 1 000,00 36,4 1 000

Baltic Hydroenergy AS 10 936 176 050 10,00 16,1 3 376

Baltic Pork LVL 1 409 17 614 LVL 20,00 25,0 6 182

Barel AS 10 836 4 226 1 000,00 39,0 4 981

ECDL Russia AS 2 229 1 855 459 0,50 41,6 4 250

Euro-Teminal AS 20 303 370 621 1,00 1,8 7 333

International Pork Investment 478 17 614 7,00 25,8 128

Int. School of Management LTL 60 21 347 LTL 1,00 35,6 439

Kirkenes Trading AS 8 470 1 200 2 500,00 35,4 3 000

Norum Russia General Partners Ltd 1) 3,4 265

Dvina AS 600 204 1 000,00 34,0 204

Pomor Gateway AS 295 575 100,00 19,5 389

Vangazu Sildspeks LVL 330 5 000 LVL 20,00 30,3 1 420

Shares converted from loans

Gellyfeed AS 6 095 2 000 150,00 4,9 300

Interance AS 192 17 913 0,10 9,3 3 245

Kongsberg Innovasjon AS 9 500 1 000 1 000,00 10,5 1 000

Lyng Motor AS 25 000 1 000 1 000,00 4,0 1 000

Ocean Power USD 44 295 300 265 USD 0,89 0,6 2 336

Quasar Consultants AS 1 119 3 707 29,50 9,8 902

Syncroport AS 110 040 500 000 0,00 0,0 1 245

Tellus-IT AS 176 16 000 0,10 0,9 400

Long-term equity holdings

Noretude Sarl EUR 8 500 EUR 15,24 100,0 69

Scandinavian Tourism Inc. DKK 1 20 DKK 10,00 20,0 -

Subsidiaries

Nortra AS 300 300 100,00 100,0 300

Total equities 43 763

Total write-downs (20 516)

Net book value of equities 23 247

Innovasjon Norway owns Visit Norway AS through Nortra AS. The companies Nortra AS and Visit Norway AS have no operations and are omitted from consolidation, as they have no signifi-cance for the financial assessment of Innovation Norway.

1) Invested equity fund share

18Innovation Norway

Note 19

OTHER ASSETS 31-12-07 01-01-07

Accounts receivable attributable to project activity 29 135 50 620

Provisions for losses on accounts receivable (2 750) (2 750)

Loss debt/claims against the State (7 927) (3 575)

Receivables from the State Treasury 1 256 998

Other receivables 7 521 5 855

27 235 51 148

Note 20

ACCRUED INCOME AND NON-ACCRUED EXPENSES 31-12-07 01-01-07

Accrued, unmatured interest on loans 150 763 104 230

Accrued, non-invoiced operating revenue 85 647 45 845

Recognised, unaccrued operating expenses 18 512 26 227

254 922 176 302

Note 21

PENSION OBLIGATIONS

For accounting purposes, the pension schemes are treated in accordance with NRS 6 Pension Costs. Innovation Norway’s pension schemes are all defined benefit plans. The company has pension plans that cover a total of 616 active employees and 214 retirees. The schemes give entitlement to defined future benefits. These depend primarily on the number of years of pensionable service, salary level at retirement age and the size of the National Insurance benefits. The commitments are covered through insurance compa-nies, For accounting purposes, the pension schemes are treated in accordance with NRS 6 Pension Costs. Innovation Norway’s pension schemes are all defined benefit plans. The company has pension plans that cover a total of 616 active employees and 214 retirees. The schemes give entitlement to defined future benefits. These depend primarily on the number of years of pensionable service, salary level at retirement age and the size of the National Insurance benefits. The commitments are covered through insurance compa-nies, principally the Norwegian Public Service Pension Fund and Vital.

There are currently a total of six different pension schemes in Innovation Norway. Employees in Innovation Norway are also affiliated with contractual early retirement schemes. These schemes cannot be transferred between each other and the net value has therefore not been entered.

Pension cost

2007 2006

Present value of current year’s pension benefits earned

44 289 36 354

Interest cost of pension obligations 38 753 29 029

Return on pension fund assets (29 683) (26 877)

Recognised effect of actuarial gains/losses 13 931 9 063

Accrued employer’s National Insurance contributions 7 546 6 149

Net pension cost 74 835 53 719

Reconciliation of the pension schemes’ funded status against amounts on the balance sheet:

31/12/2007 31/12/2006

Funds < obliga-

tions

Funds > obligations

Funds < obliga-

tions

Accrued/estimated pension obligations

115 531 664 476 621 254 19 084

Pension fund assets (at market value)

(97 374) (463 672) (511 886) (10 316)

Unrecognised effect of actuarial gains/losses

(29 386) (183 074) (138 457) 1 173

Accrued employer’s National Insurance contributions

0 1 137 0 2 269

Net pension obligations (11 228) 18 867 (29 088) 12 210

2007 2006

Economic assumptions:

Discount rate 5,50 % 5,00 %

Expected salary inflation 4,50 % 3,50 %

Expected pension increase

4,50 % 2,50 %

Expected National Insurance basic amount (G) adjustment

4,50 % 3,10 %

Expected return on pension fund assets

5,75 % 6,00 %

Unrecognised effect of actuarial gains/losses are amortised over 13 years or the remai-ning accrual period.

The actuarial assumptions for demographic factors and retirement rely on

assumptions from NRS 6 Pension Costs (November 2007).

Innovation Norway is required to have an occupational pension scheme pursuant to the Mandatory Occupational Pension Act. Innovation Norway’s pension schemes satisfy the requirements of this Act.

19Innovation Norway

Note 22BORROWINGS FROM THE STATE

Maturity Borrowings Effective interest rate

Maturity Borrowings Effective interest rate

Low-risk loans 2008 6 700 000 5,1 % Risk loans 2008 1 365 000 5,1 %

2009 145 000 3,6 %

2010 210 000 4,1 %

2011 175 000 4,8 % Other loans 2008 180 000 5,2 %

2012 210 000 4,6 % 2009 40 000 5,0 %

2016 150 000 4,8 %

Premium 1 797

Total 7 591 797 5,0 % Total 1 585 000 5,1 %

The maturity structure of the borrowings, which consist of fixed-interest rate loans, is adapted to the fixed-rate periods and terms for the loans. This is done as part of the work to manage the interest rate risk in the portfolio.

Most of the borrowings are short-term and mature within six months. These finance loans to customers with floating interest rates, i.e. loans with an interest rate that may be changed upon six weeks’ notice. The interest rate risk associated with these loans is limited to the notice period and is deemed to have a moderate effect on earnings.

Note 23

NET BOND DEBT

The last bond debt instalment falls due in February 2008. The bond debt is guaranteed by the government.

Note 24

OTHER LIABILITIES 2007 2006

Accounts payable 92 037 86 511

Undisbursed grant allocations 55 768 75 579

Unpaid transfer to the State 38 340 32 095

Unpaid settlement of loss and grant funds 34 638 21 824

Taxes, charges and other salary deductions 13 475 18 379

Miscellaneous liabilities 11 279 11 849

245 536 246 237

Undisbursed grant allocations are grant commitments that have been paid to Innovation Norway, but have not been disbursed to the recipient.

Note 25

ACCRUED EXPENSES AND UNEARNED INCOME 2007 2006

Accrued, unmatured interest on borrowings 86 525 51 520

Accrued, not due fees on borrowings 37 756 42 142

Accrued operating expenses 49 607 53 100

Operational and programme allocations not booked as income

60 983 58 470

Other unaccrued allocations received from the State 11 596 17 095

Invoiced, unaccured operating revenue 6 101 19 470

252 567 241 796

Note 26PROVISIONS FOR LOSSES

Allocated provisions for losses

Accumulat-ed losses

Remaining provisions for losses

Net loans

Provisions for losses

Risk loans disbursed 2 822 498 2 163 707 658 791 1 156 902

Agricultural risk loans disbursed

3 445 - 3 445 19 049

Environmental Fund loans disbursed

80 508 46 662 33 846 76 838

Disbursed from regional loan scheme

39 481 19 971 19 509 125 571

Environmental Fund loans disbursed

119 251 81 921 37 331 291 518

Undisbursed loans 388 838 - 388 838 -

Risk guarantees 158 722 77 182 81 540 -

Unissued gua-rantees

439 439 -

Total 3 613 183 2 389 443 1 223 740 1 669 879

20Innovation Norway

Accumulated losses in the tables comprise confirmed losses and specified loss provisions.

Net loans are gross loans less loan loss provisions. Innovation Norway is obligated to ensure that the size of the provisions for losses is appropriate in relation to the portfolio’s estimated risk. Innovation Norway is responsible for replenishing the loss provisions for regional and nationwide risk loans and guarantees if the portfolio risk deviates negatively by more than 10 percentage points in relation to the provisions. As of 31 December 2007 the risk for nationwide risk loans was estimated to be 33%, while the provisions for losses represented 67% of the portion of this portfolio that does not have provisions for losses. The es-timated risk for regional risk loans is 28%, while the provisions for losses represent 51%. The provisions for losses are thus solid. There are three reasons for this: Firstly extraordinary measures were taken to strengthen the provisions for losses during the period from 2003 to 2006 due to large losses during the period from 2002 to 2003. Secondly, the development of the economy in recent years has resulted in a low level of losses, and, thirdly, there have been extraordinary loan redemptions that have reduced the portfolio risk.

The situation for the Norwegian State Environmental Fund is the same as for nationwide and regional risk loans. For the regional loan scheme the provisions for losses for disbursed loans is 19%, while the estimated risk is 13%, and the agricultural risk loan scheme has provisions for losses of 18% , while the estimated risk is 11%. See the accounting policies for a more detailed description of the provisions for losses and loss accounting.

Note 27

INTEREST SUPPORT FUND 2007 2006

Opening balance as of 1/1 49 320 53 553

Allocated to fund - -

Interest support booked as income (3 454) (4 234)

Closing balance as of 31/12 45 865 49 320

The interest support fund is used to cover the estimated loss of revenue when nation-wide and regional risk loans are granted interest-free.

Note 28

GRANT FUND

Undisbursed commitments broken down by year

2003 2004 2005 2006 2007 2008 TOTAL

From the Ministry of Local Government and Regional Development

1 929 36 387 27 490 18 131 135 761 40 831 260 530

From the Ministry of Trade and Industry - 10 114 9 112 16 461 64 992 372 101 052

From the Ministry of Foreign Affairs 5 500 5 500

From the county authorities 72 556 111 069 89 845 252 001 304 289 829 759

From the Agricultural Development Fund (ADF) - - - - 21 403 21 403

ADF share related to interest-free loans*) - - - - 1 203 609

Grants to Northwest Russia *) - - - - 10 273

74 485 157 570 126 448 286 593 531 945 41 203 2 432 126

*) Schemes are not linked to a particular year

Innovation Norway disbursed NOK 1,815 million in grants in 2007. Amounts in the 2008 column are interest on grant accounts in 2007 that can be used in 2008.

21Innovation Norway

Note 29LOAN AND INVESTMENT FUNDS

Seed Capital Fund Norwegian State Environmental Fund

Investment Fund for Northwest Russia

Investment Fund for Eastern Europe

Total

Contributed capital 1 757 000 88 797 150 000 120 000 2 115 797

Accrued capital (16 245) 39 424 (6 540) 16 639

Total capital as of 1/1 1 740 755 88 797 189 424 113 460 2 132 436

Contributed capital returned - (88 797) - - (88 797)

Strengthening of accrued capital 20 000 20 000

Profit (loss) for the year (2 203) - 1 185 1 132 115

Contributed capital 1 757 000 - 150 000 120 000 2 027 000

Accrued capital 1 552 - 40 609 (5 408) 36 754

Total capital as of 31/12 1 758 552 - 190 609 114 592 2 063 754

Note 30EQUITY

Capital Change New balance

31-12-06 01-01-07 01-01-07

Specified loan loss provisions (136 180) 39 897 (96 283)

Unspecified loan loss provisions (180 000) 14 000 (166 000)

Change in unmatured interest on loans 8 261 3 426 11 687

Change in accrued interest on loans 92 172 3 040 95 212

Change in low-risk capital as of 1/1/2007 (215 747) 60 363 (155 384)

Low-risk scheme Project

Common activity etc. Total

Paid-up equity 10 000 619 788 26 257 656 045

Retained earnings 111 028 9 329 120 357

Changes in retained earnings 60 363 60 363

Total equity as of 1/1 10 000 791 179 35 586 836 765

Profit (loss) for the year 34 074 1 598 35 672

Paid-up equity 10 000 619 788 26 257 656 045

Retained earnings - 205 465 10 927 216 392

Total equity as of 31/12 10 000 825 253 37 184 872 437

The Ministry of Trade and Industry acts as the owner of Innovation Norway.

Note 31

CONTINGENT LIABILITIES

Environmental guarantees have been issued on behalf of the State. Accrued losses are covered on an ongoing basis by a separate allocation.

Losses on nationwide risk guarantees are covered by separate provisions for losses. See Note 26.

As of 31 December 2007 Innovation Norway is not involved in any disputes that may result in a loss with consequences in excess of the provisions made in the accounts.

22Innovation Norway

A - Total funds obtained from operations 68 825 -46 337

B - Contributions to investment funds by owner -107 137 -53 639

Payments received on amounts borrowed 38 063 000 45 145 000

Repayments on amounts borrowed and bond loans -38 489 908 -46 912 808

C - Total payments received and repayments on amounts borrowed -426 908 -1 767 808

Amounts received on loans 2 273 150 2 729 717

Amounts paid on loans -1 587 996 -1 374 032

D - Total amounts received and paid on loans 685 154 1 355 685

Amounts received from the State for grant activities 1 941 620 2 007 556

Grants disbursed -1 815 533 -2 027 240

E - Net cash flow from grant activities 126 087 -19 684

Purchases of equities and interest-bearing securities -6 414 -678

Disposals of securities 3 007 9 417

F - Total purchases and disposals of securities -3 407 8 739

Amounts received from the disposal of tangible fixed assets 105 481

Amounts paid out for the purchase of tangible fixed assets -13 706 -15 177

G - Net cash flow provided by investment activities -13 601 -8 160

Fixed assets - -

H - Net cash flow from other balance sheet items - -

A+B+C+D+E+F+G + H - net change in liquidity 329 013 -531 204

Liquidity as of 1/1 4 056 653 4 587 857

Liquidity as of 31/12 4 385 666 4 056 653

CASH FLOW ANALYSIS

2 007 2 006

Profit (loss) for the year 74 127 36 668

Gains/losses on the sale of fixed assets 105 215

Ordinary depreciation 22 113 21 448

Change in provisions for losses on loans -62 430 -86 224

Change in write-downs on equity investments -3 039 -5 758

Difference expensed/paid pensions 24 516 2 747

Change in other accruals 13 433 -8 897

WE GIVE LOCAL IDEAS GLOBAL OPPORTUNITIES

Innovation Norway

CEO: Gunn OvesenAddress: Innovation Norway, PO Box 448 Sentrum,

N-0104 Oslo, NorwayInternet www.innovationnorway.no

Auditor’s report for 2007KPMG ASP.O. Box 7000 MajorstuenSørkedalsveien 6N-0306 Oslo Telephone: +47 04063Fax: +47 22 60 96 01Internet: www.kpmg.noEnterprise: 935 174 627 VAT

To the General Meeting of Innovation Norway

Management’s responsibility and auditor’s dutyWe have audited the annual report and accounts of Innovation Norway for the 2007 fi nancial year, showing a profi t for the year of NOK 74,126,516.96. We have also audited the information in the report of the Board of Directors concerning the fi nancial statements, the going concern assumption, and the proposal for the appropriation of the profi t. The annual accounts consist of the profi t and loss statement, balance sheet, cash fl ow state-ment and notes. The rules of the Norwegian Accounting Act and the generally accepted accounting principles in Norway have been applied for the preparation of the accounts. The annual report and accounts are presented by the enterprise’s Board of Directors and CEO. Our responsibility is to express an opinion on these fi nancial statements and on other information, according to the requirements of the Norwegian Act relating to Auditing and Auditors.

Grounds for our statementWe have conducted our audit in accordance with the laws, regulations and generally accepted auditing practices in Norway, including the auditing standards adopted by the Nor-wegian Institute of Public Accountants. The auditing standards require that we plan and conduct our audit in order to safely assure that the annual accounts do not contain any mate-rial misstatements. An audit involves examination of selected parts of the evidence supporting the accounts, an assessment of the accounting principles used and signifi cant account-ing estimates, in addition to an evaluation of the content and presentation of the annual accounts. To the extent required

by the generally accepted auditing standards, an audit also encompasses an evaluation of the company’s asset manage-ment and internal control. In our opinion our audit provides a proper basis for our statement.

StatementIn our opinion• the annual accounts have been prepared in accordance

with the applicable laws and regulations and fairly refl ect the enterprise’s fi nancial position as of 31 December 2007 and the result of its operations for the fi nancial year in accord-ance with the rules of the Norwegian Accounting Act and the generally accepted accounting standards in Norway.

• the management has fulfi lled its duty to produce a proper and clearly set out registration and documentation of accounting information.

• the information in the directors’ report on the annual accounts, going concern assumption and the proposal for the application of the profi t are consistent with the annual accounts and in accordance with the applicable laws and regulations.

Oslo, 21 February 2008KPMG AS

Ole Christian FongaardState Authorised Public Accountant (Norway)

THE AMERICAS 2007 The Americas Region consists of 7 offices in 3 countries, with an organization of 30 people and 7 nationalities. The offices are located in Toronto, San Francisco, Boston, New York, Washington, Houston and Rio de Janeiro. Organization Region Americas has a stable organization, with low turnover of people. Changes in 2007 were a new Region Director who also serves as Director of Travel, and the decision of not replacing the Station Manager in Houston, having one Station Manager in charge of both Houston and San Francisco. Focus areas Region Americas is continually working on improving and strengthen the sector focus. It has been a clear objective for year 2007 to increase cross office projects. To do so a more proactive work making the region one organization instead of 7 offices has been carried out. Our main sectors are: ICT Oil and Gas Biotech Tourism Renewable energy Design/New Media Marin/Aqua culture Working with these sectors is a continuation of the strategy from previous years, and will carry on in 2008. With a fairly week start of the year in terms of projects, we saw a slightly increase in Q3 and a good pipeline in Q4, which took us into 2008 with a full portfolio.

Cooperation The relationship with other Norwegian organizations is important in the work of profiling Norway and in the networking area. We have carried out several activities in 2007 together with Norwegian American Chamber of Commerce, Norwegian American Foundation, The Norwegian Seamanchurch, INTSOK and of course MFA. Just to highlight one of the successful projects:

World Environment Day was hosted by Tromsø, 2007. In connection with this event, The Royal Norwegian Embassy in Washington decided to host a conference on the topic. Innovation Norway saw the opportunity and organized a”travel” World Environment Day, inviting press and travel trade. The event led to actual sales of trips to Finnmark, major media coverage and Lofoten awarded one of the best Adventure destinations in the World 2008 in National Geographic. We also had our annual Team Norway meeting in DC with fruitful discussion about common objectives cross organizations. Region Director

Americas: Kristin Dahle

Foto: Karin Gjerløw Høidahl

WASHINGTON 2007 The Washington office has been the hub of the Americas region organization. With the Region Director, region accountant and the region responsible for our customer management system and internet the office has had a major focus on internal processes.

2007 Was a transitional year for the Washington operations; we have become more sectors focused and less organization oriented. In addition to having ICT as a focus sector, we also began the process of moving toward a more ‘design-centric’ sector. This is both a priority area for Innovation Norway and also has synergies with tourism sector. We will also be able to collaborate closely with MFA in certain projects. For 2008 Defense, Design and ICT will be the Washington offices main focus areas. Here are a few highlights of our accomplishments in 2007: Ti-Mo

We worked with this distinctive women’s clothing line to find representation in the US. As a result of our efforts, Ti-Mo’s apparel is now being introduced at selected retailers in the US West Coast. Defense In the work identifying opportunities, the collaboration with the Defense Attaché and his team at the Royal Norwegian Embassy has led to a new position focusing on the defense marked. We are exited to implement this new position in 2008. The position is a joint project between FSi (The Norwegian Defense and Security Industry Association), Ministry of Defense and Innovation Norway. Dolphiscan/NASA Intellectual Property dispute resolution Dolphiscan turned to Innovation Norway for help when NASA sought to prevent the Norwegian company from commercializing its ultrasound reader intended for capturing 2D data matrix codes. NASA alleged that Dolphiscan’s technology infringed on one it its patent, a claim that Dolphiscan vehemently denied. Through Innovation Norway’s collaboration with our intellectual property lawyers and the Embassy in Washington, we were able to convince NASA to drop its pursuit of Dolphiscan. Kari Traa’s sponsorship of Innovation Norway's Exhibit at World Travel Adventure Summit Oct 07 – While this was, generally speaking, a relatively small initiative, it nonetheless represented a significant milestone in that it represented a first concrete example of how trade and tourism can collaborate in a mutually beneficial way. Cross team projects with the Royal Norwegian Embassy A focus has been placed on increasing our cooperation with the MFA, one of our most successful projects were the World Environment Day project that was undertaken in cooperation with the Embassy in DC and Innovation Norway DC and our Tourism office in NYC. An excellent example on how our organisations can work together in the future. For more detailed info see the report from NY Tourism. Innovation Norway 2720 34th Street, N.W. 20008 Washington, D.C. washington@innovationnorway.no Tel: +1 202-333-6000, Fax: +1 202-337-0870 Employees Kristin Dahle - Station Manager Karin Gjerløw Høidahl Antonio Raposo Cathrin Bowen

Region Director Americas: Kristin Dahle

Photo credit: Michael Holterman

NEW YORK OFFICE TOURISM 2007 Even though the weak American economy hit the headlines all of last year, our fear off decreased travel to Norway was needless. Three year in a row we have seen a slight increase and are up 4 % from 2006 and 12 % from 2005. We do believe our targeted focus, in terms of choice of segments, consumer groups and individual objectives for our partners have contributed to the positive trend. We have also seen an increased interest of Norway as a country, with large American companies using Norway as example of the good life, The Polar Year and as a leading country within environmental work.

From idea to result – World Environment Day World Environment Day was hosted by Tromsø, 2007. In connection with this event, The Royal Norwegian Embassy in Washington decided to host a conference on the topic. Innovation Norway saw the opportunity and organized a”travel” World Environment Day, inviting press and travel trade. Process: In collaboration with Innovation Norway Finnmark, Tromsø and Nordland two speakers for the conference was identified; Lars Petter Øie and Beate Juliussen.

Their presentation inspired National

Geographic’s representative, who took the story back to his editor. The presented adventure trip, King Crab safari in Finmark was announced as one of the 25 best new trips in the world for 2008. At the same time Borton Overseas created an itinerary and have already received several bookings. It has also resulted in a major PR reaction in Norway. Conclusion: • Seamless deliverance from all involved; the trade both in Norway and US, press, MFA,

Innovation Norway regionally and office abroad. • Relationship and networking extremely important in US. • We dared to think, try and act outside the “box” • And we did it together

Other important activities in 2007 Press The New York office is delivering the greatest media value per journalist, and the total value for 2007 was 46 mill. NOK. Workshop in New York We had 11 new tour operators attending the WS in New York, which shows increased interest for Norway. “I thought this was an extremely productive and well executed event and it was wonderful to have the opportunity to meet so many suppliers from Norway… I am looking forward to expanding our business to Norway and making this one of our most sought after products.” Kevan Cowie, Exeter International Adventure travel Adventure travel is the fastest growing segment, after cruise in the market. It is therefore of course one of our focus segments. This was the second year we participated at the World Adventure Travel Summit and the response was beyond expectation. We have truly started to build a strong awareness of Norway as an attractive adventure destination, and the feedback received from Norwegian industry is very promising.

Kristin Dahle Director

“I have never had such a massive response after a 10-minute speech as I had here. This is absolutely wonderful. We are here to stay!” Terje Devold, Fjord Norway. Summer campaign Our targeted media campaign has given Hurtigruten US, one of our main partners, a double digit growth in 2007. Innovation Norway 655 Third Avenue, Suite 1810 New York, NY 10017, USA Ph. +1 212 885 9700 usa@innovationnorway.no Employees: Harald Hansen, PR Beate Gran, www.visitnorway.no/us Hege Barnes, Key Account Kristin Dahle, Director

INNOVATION NORWAY IN BOSTON - PROVIDING COMPETENT HELP FOR US MARKET EXPANSION Innovation Norway in Boston aids both new ventures and established firms looking for US corporate expansion. Our value adding services are mainly consultative and advisory and we base our services on own knowledge and industry experience and on our proprietary network of industry and academic experts. Innovation Norway in N Boston ssists in evaluating markets and technology and based on this information and knowledge furnish Norwegian companies with strategic options for US business development. We help companies strategize around given options and also help them implement chosen plans. The Innovation Norway Boston office has a very operational and hands on approach to problem solving. Our Main Services and Knowledge Network

� Proof of market analysis � Technology and needs assessment � Strategy development � Partnering � Financing � Incorporation and recruitment � Incubator facilities � Workshops/Conferences/Study tours

Innovation Norway in Boston has an extensive network of friends and helpers with unique industry experience and insights. This network of helpers is an active and crucial part of our mission in the US and is an integral part of our knowledge base and service portfolio:

� Researchers and staff at MIT, Harvard, University hospitals and other Mass. colleges and universities

� Service providers (lawyers, accountants, FDA consultants, CROs, etc.) � Investors (VCs, IBs) � Life Science industry organizations (MASSMedic, MBC) � US, European and Scandinavian biotech and medtech industry contacts � US, European and Scandinavian information technology contacts

Some Highlights from Our Services During 2007

� Imatis – Norwegian IT company with unique application for US healthcare sector. Helped with their incorporation in the US and provided office incubator space

� FORNY TTO Internationalization Assistance program – providing advice on US business opportunities and market strategy

� IP Policy study tour – educating Norwegian TTOs and university administrators on US university IP management and practice

� MIT Transatlantic Renewable Energy/Clean Technology Seminar with Minister Jonas Gahr Støre

� TRISC 2007 North Carolina – promoting transatlantic collaboration in cancer research and innovation

� OG21 study tour – Norwegian department of Oil and Energy task force learning about cluster formation and dynamics in Mass.

Contact Details Sander J. Tufte Managing Director satuf@innovationnorway.no T: +1 617 818 3900 www.innovationnorway.no/boston

HOUSTON OFFICE 2007 was a busy year for Innovation Norway in Houston. As usual, the Offshore Technology Conference (OTC) in May was a highlight for the spring. OTC is a key industry event for companies working within the global offshore marketplace and is considered the largest oil and gas conference in the world. Attendance reached record numbers with the same trend apparent in the number of Norwegian companies represented as part of the Norwegian Pavilion. Innovation Norway also organized a delegation from Hordaland county to OTC 2007. The delegation was led by Hordaland County Mayor Torill Selsvold Nyborg with an aim to effort to support increased activity from Hordaland based oil & gas companies in the US offshore industry. Following OTC, Innovation Norway in Houston organized the first Norwegian Stand at the 2nd Annual Mexican Oil Congress held in Veracruz, Mexico in June. The organization of the pavilion was handled entirely by Innovation Norway in Houston. 10 Norwegian companies were represented at the stand which was located in close proximity to Pemex’s exhibition space. Two important client projects in 2007 worth mentioning were for Synergi Solutions and Advantec. A multi-office project in coordination with San Francisco, Rio and Toronto, the Synergi project’s goal was to define the optimal market entry strategy in addition to developing partner and company infrastructures. Innovation Norway in Houston assisted with oil & gas market research and Houston establishment information. For Advantec, Innovation Norway in Houston arranged market visits to Houston to assist Advantec in introducing themselves to potential clients and customers as well as local attorneys regarding Houston establishment. Advantec Inc. is currently in operation in Houston. Innovation Norway Royal Norwegian Consulate General 2777 Allen Parkway, Ste 1185 Houston TX 77019 713-526-1300 phone 713-521-9473 fax E-mail: houston@innovationnorway.no http://www.innovationnorway.no/Houston 4 employees: Svein Egil Nielsen Bernardo Cuellar Juli Jansing Julie Eriksen

Svein Egil Nielsen Manager

SAN FRANCISCO The San Francisco office does a variety of projects and some go on year after year such as Gründerskolen and Research and Educational Network (REN). We do projects for organisation and networks, private and public but mostly we work for Norwegian companies looking for assistance in the US market.

We are responsible for all activities for Gründerskolen here in San Francisco. This year we placed 17 student with start-up companies in the Silicon Valley giving them a real taste of what starting a company entails and hopefully inspiring them to seek entrepreneurial ventures on their own. We also arranged to have Gründerskolen become affiliated with the University of California, Berkeley REN was started in San Francisco 10 years ago and we still manage this very active network with 32 active members and partners. There are regular meetings in Oslo as well as yearly excursions to learn and build relationships. This year the network visited Washington for a week in October with an extensive program put on. Innovation Norway also organized a delegation from the Ministry of Oil and Energy. The group that visited us was focus on issues related to electricity, generation and distribution. We met with regulatory bodies, academia at University of California, Berkeley and local companies.

The office did several client projects during the year. One important client projects worth mentioning were for Synergi Solutions. This was a multi-office project headed up by San Francisco in coordination with Houston, Rio and Toronto. The Synergi project’s goal was to define the optimal market entry strategy in addition to developing partner and company infrastructures.

Innovation Norway 20 California Street 6th floor San Francisco CA 94111-4833 Tel: +1 415 986 0765 / 0770 Fax: +1 415 986 7875 E-mail: sanfrancisco@innovationnorway.no http://www.innovationnorway.no/SF 4 employees: Station Manager Svein Egil Nielsen Lisbeth Smestad Veslemøy Barnes Åse Pettersen Bailey

Svein Egil Nielsen Manager

Photo: Hans Petter Bugge

CANADA OFFICE (TORONTO) High prices on oil and resources have in 2007 strengthen the Canadian dollar. Today the value is the same as USD, historically the CAD has been 20% lower. Despite this the economy is still prospering, employment still high, and Canada has still cost advantages compared to the US and G-8 countries.

Innovation Norway in Toronto’s focus has been in aquaculture, automotive, oil and gas, and renewable energy.

Aquaculture In aquaculture we see a substantial investment in new operations and new species on the east coast, and upgrading of existing sites on the west coast. This creates a lot of opportunities for investment, sale of equipment, and academic cooperation.

Sustainable technologies StatoilHydro ASA invested 2,2 billion CAD in the Alberta oil sands, and it is estimated they will invest 10-12 billion CAD more. This is a huge opportunity for Norwegian companies with sustainable technologies in oil recovery, oil processing, environment, CO2 capture and storage, and water conservation. In CO2 we have been working with Gassnova and also facilitating HTC Energy to be qualified for the capture studies at Kårstø.

Wind power Wind power market is the fastest growing in the world. Last year two Norwegian wind farm developers started up business here. Innovation Norway in Toronto helped one of these to start up in the heart of the american-norwegian population in the Upper Mid-West of the US.

ICT Security network Bluelight The ICT Security network Bluelight (now Security Valley) visited Canada last fall, and found many areas of common interest and future collaobration. Address: Innovation Norway 2 Bloor Street West Suite 2120 Toronto Ontario M4W 3E2 Canada

Tel: +1 416 920 0434 Fax: +1 416 920 5982 Website: www.innovasjonnorge.no/canada

Tor Mühlbradt Manager

Rio de Janeiro office Our office in Rio de Janeiro provides a local presence and works proactively in Brazil and Chile, and at the same time has a coordination responsibility for the other countries in Latin America. The office’s primary focus is on the oil/offshore sector and the maritime sector. These sectors are currently experiencing high growth in Brazil as a result of investments by the state oil company Petrobras totalling over NOK 100 billion per annum. The office assisted around 40 Norwegian companies to penetrate the Brazilian market in 2007, and Norwegian activity is following a very positive trend. In our new office in Chile, the primary focus is on the fish farming sector, with a particular focus on equipment and technology imports from Norway. The office started work in December 2007. NORWAY DAY, 17 May 2007 The Head of Hydro Oil and Energy Brazil and a representative of the energy minister in the State of Rio de Janeiro were the principal speakers at the “Norway Day” trade event on 17 May, which was organised jointly by the Norwegian-Brazilian Chamber of Commerce and Innovation Norway (IN). BRASIL OFFSHORE 2007 19 – 22 June 2007 Innovation Norway and the Consulate-General in Rio de Janeiro welcomed the joint Norwegian stand to Brasil Offshore 2007 and its Partnership project. A total of 7 Norwegian companies took part in the Norwegian joint stand. NORWEGIAN BUSINESS INCUBATOR OFFICE Innovation Norway and INTSOK decided to jointly invest in an office facility for Norwegian business representatives with a temporary need for a functional office. NBIO began operations in April 2007. The purpose of having such a facility is to facilitate market access for Norwegian businesses to a market known for its bureaucracy and for its many obstacles to setting up and operating. This measure has been a great success and more than ten businesses have already made use of the availability of the facility. OFFICIAL VISIT OF THE CROWN PRINCE AND PRINCESS OF NORWAY TO CHILE IN JANUARY 2008 IN Brazil has responsibility for activities throughout Latin America and preparations for the Crown Prince and Princess’s visit began in the second half of 2007, with frequent visits to Chile by Erik Hannisdal and the project manager for Chile, Renata Prado. In December 2007 we established an office in Santiago in order to respond to the great interest shown from Norwegian business and industry in this regard. ALVESTAD MARIN AS Alvestad Marin is a good example of a company that has had help from IN in relation to our vision of giving local ideas global opportunities. Alvestad Marin has had assistance setting up in Norway and in 2007 it was IN Brazil’s first assignment in Chile. We provided assistance before and in the course of Alvestad Marin AS setting up its own office in Puerto Montt, Chile.

Employees: Erik Hannisdal, Office Manager and Director, Latin America Renata Prado, Project Manager, Chile Renata Ferreira, Market Advisor, Organisation Marcelo Baldez, Project Manager Paal Hovland, Senior Market Advisor and Deputy Director Christine Schnabel, Accounts Johnar Olsen, Special Advisor, Oil and Gas Rodrigo Bastos, Office Assistant Guilherme Mendes, Trainee Marcelo Tobar, Project Manager (Santiago)

Russia and the Commonwealth of Independent States (CIS) Russia Innovation Norway has three offices in the region – all in Russia – specifically in Moscow, St Petersburg and Murmansk. Roger Martinsen is the regional manager. Russia is a country characterised by rapid development and change, possibly without parallel (with the exception of China). Russia has the world’s greatest supply of natural resources (around 50%) and can point to average annual economic growth of 6.7% over the 2001-2007 period. The balance of trade surplus was USD 61 billion after the first half of 2007. The recent strong economic growth is certainly dependent on significant oil income and driven by the high prices for petroleum. This – together with greater purchasing power and consumption – led, amongst other things, to higher inflation in 2007 (from 9% in 2006 to 11.9% in 2007) than expected (8%). In Ernst & Young’s European Attractiveness Survey 2007, Russia was fifth behind China, the USA, India and Germany. Norway’s relationship with Russia is becoming more and more important – and it has many fronts, with the government’s High North strategy being just one example. Six Norwegian ministers – including Prime Minister Stoltenberg and Foreign Minister Gahr Støre – visited Russia in the course of 2007, a fact that also confirms the importance of the bilateral relations between Norway and Russia.

Russian-Norwegian trade is growing. The value of Norway’s product exports to Russia amounted to a good NOK 5.5 billion in 2007 – a 1.1% increase compared to 2006. Seafood is easily Norway’s biggest export product to Russia – making up a good 65% of the total value. Imports from Russia amounted to nearly NOK 11.5 billion, which represented an increase of 14.7% in comparison with the preceding year. Russia’s biggest export product to Norway is aluminium (approximately 49% of the total value). Trade between Norway and Russia has almost doubled over the period 2000-2007 (91.6%). Norwegian exports to Russia in the same period rose by 334%, whilst imports from Russia rose by 58% (source: www.ssb.no). The figures for the first 4 months of 2008 show an increase in exports to Russia of 5.5% in comparison with the results for the same period in 2007 whilst imports from Russia fell by 10.2%.

More and more Norwegian businesses are choosing to turn to Russia. There is a growing trend for Norwegian companies to set up in Russia and a differentiation as regards the sectors represented. Our calculations show that approximately 150-160 Norwegian companies have established themselves in Russia – the number of companies is highest in Murmansk, followed by Moscow and St Petersburg. Norwegian investments are also rising – total Norwegian direct investments in Russia amounted to a good NOK 5.3 billion in 2004, a figure which rose to almost NOK 8.1 billion in 2005, a rise of fully 52% (source: www.ssb.no).

There are no new figures for Norwegian direct investment after 2005, but we are absolutely sure that it has risen considerably – a trend that will continue over coming years according to our calculations. This is based on increased activities in and focus on areas such as hotel development, printing and the press, banking, engineering and oil and gas.

Focus and initiatives The Russian office prioritises the following sectors: oil and gas, maritime activities, tourism, seafood and environmental technology, with a focus on industrial activities and innovation development and high-tech.

Collaboration with Innovation Norway’s regional offices The offices in Russia cooperate closely and strongly with numerous regional offices – primarily within those sectors that both parties prioritise. In addition, we must emphasise the cooperation with the offices in Norway’s three northernmost counties, since they have chosen to define Russia as a strategically important impact area for future internationalisation. SMEs and internationalisation Viktor Avershin is in charge of initiatives in relation to environmental technology, with a focus on industry. Viktor’s personal opinion is that it should be possible, as a starting point, to sell all types of Norwegian products, technologies and solutions in Russia. Our view is that his proactive and optimistic attitude is an example for others to follow. Viktor further argues that it is a myth that the Russian market is not suited to SMEs and he asserts, on the contrary, that all types of businesses can succeed there irrespective of size. In his business portfolio Viktor has numerous examples that confirm the theory – SMEs that supply their products and services to large Russian companies with tens of thousands of staff. CIS Initiatives in and focus on the countries that make up the Commonwealth of Independent States are limited since Innovation Norway is neither present in, nor earmarks resources for, these countries. Despite this, the Moscow office has carried out some activities, particularly in Kazakhstan, with Norwegian client businesses (see below). The Moscow office would, however, like to emphasise the positive cooperation it has experienced, in particular from the embassy in Kiev in 2007, with regard to promoting Norwegian tourism and seafood and a couple of ad hoc projects for Norwegian client businesses. In 2007, Mette Kongshem was appointed as (domestically-based) ambassador to the five CIS countries in Central Asia (Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan and Kyrgyzstan). Since 2004 the Moscow office has organised a joint Norwegian stand at the Mining World Central Asia (MWCA) trade fair in Almaty (Kazakhstan), the largest of its kind in the region. The Norwegian companies Thrane Teknikk, Protan, Nordic Seal and Thermo Byggvarme have participated every year. After participation in the MWCA trade fair in September 2007, the office in Moscow organised a visit by Thrane Teknikk and by Nordic Seal to the three largest mining companies in Kazakhstan. The Moscow office also represented four other Norwegian companies at the same time. The Norwegian company KVX undertakes regular deliveries of its products to Kazakh mining companies in Karaganda following an initiative of and work by Innovation Norway’s Moscow office. It all started with a visit in 2007. This has also led to KVX commencing negotiations with Kazzink about the production of KVX products under licence at Kazzink’s machinery production facilities. The Moscow office frequently works on marketing Protan’s products to a range of Kazakh mining companies.

Moscow Innovation Norway’s Moscow office places a particular focus on the supply industry in oil and gas (working closely with INTSOK), tourism, seafood, environmental technology (especially in connection with industrial activities) and innovation development and high-tech. The office shares a site with the embassy, with which it works closely and actively on promotional and public relations activities and various events for Norwegian trade and industry. The office is regularly very busy – lots of enquiries and requests from businesses and organisations, often varying widely in nature. Oil and gas Despite the fact that INTSOK was established to support Norwegian suppliers in the Russian market and organises conferences and workshops, Innovation Norway’s Moscow office has practical responsibility for joint Norwegian stands at 2 annual oil and gas trade fairs. This has also included organising a boat trip for the exhibitors and their business contacts and a reception at the embassy (for around 200 participants). Trade fairs in 2007: MIOGE (Moscow International Oil & Gas Exhibition) and KIOGE (Kazakhstan International Oil & Gas Exhibition), Almaty. These activities were performed in close cooperation with Innovation Norway’s trade fairs department at the headquarters in Oslo. Fourteen businesses participated in Norway’s joint standard at MIOGE, while 11 companies participated in Norway’s joint stand at KIOGE. The Moscow office also organised a reception for Norwegian and Russian representatives from the industry at the oil and gas trade fair RAO (Russian Arctic Offshore) in St Petersburg in collaboration with the embassy and Hydro (which subsequently merged with Statoil to form StatoilHydro). In addition, the Moscow office is also represented in Innovation Norway’s multi-disciplinary team in the oil and gas field. Seafood Ms Lubov Bychkova is the Moscow office’s representative in Innovation Norway’s multi-disciplinary team in the seafood field. The fishing industry underwent comprehensive restructuring in 2006 and 2007, one of the results of which was that many Norwegian companies lost the opportunity to export salmon and trout to Russia. As a result of this, the Moscow office took it upon itself to identify “open” market segments or areas that are accessible for other types of fish and seafood (such as fresh and live seafood products for the catering sector). Norwegian seafood products and producers are relatively unknown amongst the big players in the Russian market and amongst Russian consumers. At the same time, Norwegian producers have little awareness of the potential of the Russian market. This gave rise to a specific project relating to sending relevant market information (i.e. market information concerning trends and developments in the Russian market) back to Norway, which information was then made available to those within the seafood sector who may find such information useful. The Moscow office has also assisted numerous Norwegian companies (market studies, partner searches, facilitating events and meetings, networking, etc.). These companies have included Kvitsøy Edelskjell (scallops), Engelsviken Canning (pickled seafood) and Gamvik Seafood (crab roe).

At the request of the organisers of the Salmon Festival in Trondheim (January 2007), the Moscow office raised a Russian delegation and prepared a presentation during the conference section of the festival for a Russian importer of salmon and trout. The presentation concerned the strict veterinary monitoring performed by the Russian authorities, including sanitary and veterinary approvals, inspections and certification of Norwegian producers – these being factors that were relevant and highly topical at the time. The presentation also covered the state of affairs vis-à-vis the consolidation processes (i.e. reduction of market players) on both the Norwegian and Russian sides, policy relating to market supervision, the effect of lobbying on the Russian side and many other current issues. The presentation elicited great interest from Norwegian exporters, which provided a good reference for the conference proper. In September 2007 the Moscow office, together with the trade fairs department at headquarters in Oslo, organised a joint Norwegian stand at the international trade fair World Food, with a total of 9 Norwegian participants. The organisation also included organising a boat trip for the exhibitors and their business contacts and a seafood reception at the embassy. The latter event involved fresh seafood flown in from Norway and prepared by master chefs from the Norwegian Institute of Gastronomy. Three hundred people took part in the reception overall. In October 2007, the Moscow office organised a reception presenting products from the Villa Group, Troika Seafood/seafood producers from the Norwegian county of Finnmark. Fresh seafood including organic cod, salmon and Kamchatka crab were flown in from Norway. Russian players in the catering sector showed great interest in the seafood presentation, which is to say that it was a great success. Tourism The Moscow office invests considerable resources in initiatives relating to tourism. A look at the official statistics shows that the investment is clearly paying off. This is shown by the fact that the number of Russian overnight stays in Norway rose by 26.2% from 2006 to 2007 (from 103,291 to 130,362). Rising visa figures also conform to these positive figures – whilst the embassy in Moscow issued around 20,000 visas in 2006, this figure rose to fully 27,000 in 2007 (a 35% increase). The office has over 40 collaboration partners in Norway, including key players such as FjordNorge, Norwegian Air Shuttle and VisitOslo. The positive results from 2007 meant that Russia achieved the status of a consumer market as of 2008 – meaning that it becomes one of the most important markets for the Norwegian tourism industry. Energy and the environment On the basis of assessments of the status of the various market segments in Russia, the Moscow office decided to focus on those niches in the market that are regarded as more or less “mature”, which is to say energy efficiency, water purification and also waste management. Over the course of many years the office has assisted Norwegian companies in Russia, Kazakhstan and Ukraine. In addition to Mining World Central Asia (Almaty, Kazakhstan), Innovation Norway’s Moscow office was also responsible for organising the joint Norwegian stand at the international Mining World Russia trade fair (Moscow). Furthermore, the office organised numerous study trips – one to central parts of Russia (Belgograd and Kursk) for a selection of Norwegian businesses and another in October 2007 to five leading mining companies on the Kola Peninsula for all the businesses that have established service agreements with the Moscow office. Based on these “service

agreements”, Innovation Norway’s Moscow office has performed a considerable amount of preparatory work with the aim of realising large projects for Norwegian business customers in 2008. The close following-up of Norwegian business customers leads to considerable, tangible results. One example is the company Protan, which, with the necessary assistance from the Moscow office, increased its sales of ventilation systems in Russia by an impressive 60% in 2007. The Moscow office was also responsible for organising a visit by Russian certification specialists to Haplast Technology (Furuflaten, Troms county) in April 2007. The result was that Haplast was issued a Russian product certificate in May 2007 and a licence (to use specified products in Russia) from the Russian supervisory authorities in June 2007. It should also be said that the Moscow office arranged a visit to Protan in Norway for 15 Russian businesses in March 2007. Innovation development and high-tech The development of start-ups/innovative enterprises based on venture capital in Russia is high on the agenda as far as State economic strategies are concerned. The importance of arranging seed and venture investments has been emphasised many times at the very highest level, including in speeches by Vladimir Putin. Numerous investment and venture-capital projects have been promised in Russia in recent times and various forms of partnership model between the public sector and private industry have been carved out. In the course of 2005-2006 a process was set up in connection with the establishment of Russian venture capital companies, investment funds and regional public and private venture capital funds. The scope of venture capital investments in Russia is relatively modest in comparison with other high-tech countries. One of the reasons for this is the lack of experience of establishing innovation companies. Russia has also drawn up and adopted laws regulating economic free zones (or special economic zones, as they are known in Russia). Businesses that set up within these zones are granted particularly favourable conditions, including tax exemptions and deferments. The competition between the various Russian regions to have such zones established there has been fierce. In the meantime, the decision has been taken about which regions have “won” the tender. Many of these will focus on ICT and high-tech. Norway has come a long way in preparing the multiplication and commercialisation of newly established businesses with innovation and marketing potential – the structures with research and business parks and incubators are well developed and proven. Many of these gather businesses with common interests within a specific field or sector. In light of the above, Norwegian experience gained from activities both at home and abroad could play an important roll in Russia’s venture-capital structures and making preparations for newly established enterprises with innovation potential. Gjøvik Research Park, for example, has established good contact with Dubna Science Park (which focuses on ICT) and sees the opportunity to establish consultancy services in connection with planned development projects. Seed Forum is a relevant example of how it is possible to facilitate contact between newly established innovation and high-tech enterprises with the need for capital and investor environments/potential industrial partners. After being responsible for the practical implementation of six events in Moscow for Seed Forum International (including the entire invitation process), Innovation Norway’s Moscow office organised a new Seed Forum event in Moscow in collaboration with Moscow’s city administration. In practice, Seed Forum’s event represented one of the series of modules that made up the Moscow Venture Forum, which was arranged for the first time for 20-21 June 2007. It should be noted that Moscow’s city administration has placed a particular focus on assistance to small and medium-sized start-ups that develop innovative and high-tech solutions and products. To that end, Moscow’s city

administration established a venture capital fund that currently amounts to approximately NOK 200 million. Miscellaneous In order to provide examples of scope in relation to assignments for Norwegian businesses, we can present the following: In October 2007, the Moscow office organised a reception presenting mutton ham products from Gilde (now Nortura) to catering industry players in Moscow. The event was a great success – a sales driver, as the meat was very much to the taste of the Russian experts. This has subsequently led to mutton ham achieving a certain degree of demand on the Russian market. The Moscow office carried out a market study for ProfVet, which is involved in software in the veterinary market. The work was well received by those who ordered it. Safetel – a developer of fire alarm and security systems – ordered a market study from the Moscow office. The feedback about the work was positive. Malthus – a producer of primary construction modules – ordered a market study from the Moscow office. The company subsequently decided to set up an office in Murmansk. Tone Lise Design (nail care) has been able to make partners in Russia thanks to services and assistance from the Moscow office. This has enabled the company to begin selling its products on the Russian market in 2008. Aviv Capinor commissioned partner search services from Innovation Norway Moscow. As a result of the Moscow office’s efforts, the company made contact with numerous interesting/relevant players in both Moscow and other cities. The office has a staff of 13 (including 1 INTSOK representative) Address: Royal Norwegian Embassy Povarskaya st., 7 Moscow 131940 Russian Federation Tel.: +7 495 9331410 Fax: +7 495 9331429 Email: moskva@innovasjonnorge.no Website: www.innovasjonnorge.no/russland

St Petersburg Innovation Norway’s office in St Petersburg has a strategic focus on the following sectors:

• Maritime activities • The supply industry in the oil and gas sector (in close collaboration with INTSOK) • Tourism

Nikolay Shavrov is the office manager. Maritime activities

St Petersburg has traditionally and historically been Russia’s window on Europe and a maritime centre in Russia. Many Norwegian businesses in the sector focus in the region, some them having set up an office or business in the city. Innovation Norway’s office in St Petersburg was involved in the practical organisation of the Norwegian pavilion at the large international maritime trade fair/exhibition NEVA 2007, working with the trade fairs department at head office in Oslo. Twelve Norwegian companies took part. The office produces the Russian Maritime Newsletter every month which, based on the number of subscribers (around 350), is a very popular and welcome production, both in the Norwegian and international maritime environment. The office has also carried out market studies, etc., for Norwegian customers including Jotun Paints. Jotun Paints used a market study on the development trends within the maritime sector in St Petersburg and Russia as a whole as an important basis for decision-making in respect of whether to establish local production of industrial and maritime paint products. Oil and gas St Petersburg is becoming more and more important as a technological centre for Russia’s activities in the offshore-based oil and gas sector. The engineering companies participating in the Shtokman project are all from St Petersburg (Rubin, Giprospetsgaz and Technip St. Petersburg – which reports to Technip in Norway). The office in St Petersburg participated in the organisation of B2B meetings for INTSOK during the international trade fair Russian Arctic Offshore. Tourism The head of tourism activities in Russia – Olga Philippenko – lives and works in St Petersburg for practical reasons. She reports directly to the regional manager, Roger Martinsen, in Moscow. On 23 July 2007 the ship Statsraad Lehmkuhl made port in the city of St Petersburg. On the same day Innovation Norway – together with the embassy in Moscow, the Norwegian College of Naval Warfare, the Military Attaché in Moscow and the Norwegian Export Council for Fish (EFF) – organised a reception with seafood buffet for around 100 selected guests (including representatives of tour operators, shipping companies, ship suppliers, public bodies, etc.). The seafood buffet included salmon, herring, prawns, etc., and quality beverages (including Norwegian akevitt). A press conference involving over 30 journalists was also held, thus ensuring wide coverage in the media. This gave rise to the likes of peak time reports on the most important national TV channels. The next day, the ship was made open to anyone who was curious, which went down well with the city’s residents. Tourist brochures about Norway were handed out and samples of TINE cheese were given out. In collaboration with EFF and others, the office arranged a Week of Norway in both St Petersburg and Moscow. The activities in particular – and the marketing campaign – in St Petersburg were a success and aroused a great deal of attention. More information can be seen in the Moscow section. The office has a staff of three. Address: Innovation Norway Kaluzhskiy Per., 3

St Petersburg 193015 Russian Federation Tel.: +7 812 3269037 Fax: +7 812 3269038 Email: st.petersburg@innovasjonnorge.no Website: www.innovasjonnorge.no/russland

Murmansk Innovation Norway’s office in Murmansk covers Northwest Russia and shares its premises with the Consulate-General. The office focuses on the following sectors:

• The supply industry within oil and gas • Infrastructure (related to oil and gas) • Maritime activities

2007 was the first full year of operations for Innovation Norway’s office in Murmansk. The market is characterised by a rapidly growing interest in Northwest Russia amongst Norwegian trade and industry. The continuing trend is for more and more companies, including from southern parts of Norway, to see the region as commercially interesting. At the same time, Russia remains a different and complicated market, which means that assistance, including from the Norwegian authorities, is both desirable and often entirely necessary. 2007 was therefore a busy year with numerous visits, trade fairs, conferences and other events. The main thrust of activities continues to be in relation to supply companies for the petroleum industry, but a range of other industries are also showing greater interest. On Innovation Norway Murmansk’s initiative, a Norwegian trade association was founded in 2007, which already have over 40 Norwegian member companies. Innovation Norway’s Murmansk office regularly produces lectures and presentations at seminars and conferences, both locally in Murmansk and in Norway. In so doing, we work closely with Innovation Norway’s regional offices, INSTOK, NHO, industry associations and others. In 2007, we also established dedicated Russia contacts at Innovation Norway’s three most northerly regional offices so that they could be used as points of contact both for Innovation Norway’s Russian offices and, in particular, for companies in those regions. A whole spectrum of delegations visited Murmansk during the year, including Innovation Norway’s board of directors. Norwegian Prime Minister Jens Stoltenberg also visited the city in June 2007 and large parts of the visit were devoted to Russo-Norwegian cooperation in trade. 2007 was the first full year of operations for Innovation Norway’s office in Murmansk. The market is characterised by a rapidly growing interest in Northwest Russia amongst Norwegian trade and industry. The continuing trend is for more and more companies, including from southern parts of Norway, to see the region as commercially interesting. At the same time, Russia remains a different and complicated market, which means that assistance, including from the Norwegian authorities, is both desirable and often entirely necessary. 2007 was therefore a busy year with numerous visits, trade fairs, conferences and other events. The main thrust of activities continues to be in relation to supply companies for the petroleum industry, but a range of other industries are also showing greater interest. On Innovation Norway Murmansk’s initiative, a Norwegian trade association was founded in 2007, which already have over 40 Norwegian member companies. Innovation Norway’s Murmansk office regularly produces lectures and presentations at seminars and conferences, both locally in Murmansk and in Norway. In so doing, we work closely with Innovation Norway’s regional offices, INSTOK, NHO, industry associations and others. In 2007, we also established dedicated Russia contacts at Innovation Norway’s three most northerly regional offices so that they could be used as points of contact both for Innovation Norway’s Russian offices and, in particular, for companies in those regions. A whole spectrum of delegations visited Murmansk during the year, including Innovation Norway’s board of directors. Norwegian Prime Minister Jens

Stoltenberg also visited the city in June 2007 and large parts of the visit were devoted to Russo-Norwegian cooperation in trade. The office has 1 employee. Address: Royal Norwegian Consulate General Sofi Perovskoy st., 5 Murmansk 183038 Russian Federation Tel.: +7 8152 400600 Fax: +7 8152 456871 Email: murmansk@innovasjonnorge.no Website: www.innovasjonnorge.no/russland

Nordic Region 2007

Innovation Norway is represented by three offices in the Nordic region: Sweden, Denmark and Helsinki.

The region reports directly to the Markets Abroad management in Norway under Gro Eirin Dyrnes.

The Nordic region is characterised, amongst other things, by a high technology level and a relatively high degree of research and development. Stable economies and good relations at both the political and business-promotion level underpin good trade development.

Exports from Norway to other Nordic countries make up 19.8% of the total. This compares with total exports to North America and Asia of 11.5% in each case. Despite the high export figures already achieved for the region, we have seen significant growth in exports in the last year to both Sweden and Denmark, whilst the figures for Finland have remained steady. Sweden is our most important import market and the import figures from both Sweden and Finland rose by more than 10% in 2007. Swedish investors are also responsible for the largest percentage of foreign investments, while 15% of Norwegian foreign investments were made in Sweden. (Source: www.ssb.no)

Measured in terms of number of holiday trips, Swedish has been our most important market for years. Last year, the number of Swedish visitors to Norway rose by 6%, which means that one in four visitors to Norway is Swedish. The figure for Denmark fell slightly, but it remains our second largest foreign market, with a 13% share. Finland is a tourist market that Norway has had little focus on, yet we do still see signs that could indicate growing interest. The great importance of business collaboration within the Nordic region and the broad scope of industries that this covers represent a challenge for Innovation Norway. The Nordic region is a local market and is traditionally an interesting market for SMEs looking to improve their competitiveness in the international arena. In order to ensure the power to penetrate, we have decided to focus on those areas where we think we have the best chance of making a difference for Norwegian businesses in the region. The focus areas are as follows:

� Travel and tourism � Creative industries

Film and music – Helsinki Design – Copenhagen and Stockholm

� Energy and the environment Bioenergy – Helsinki Alternative energy (wind & wave power, natural gas, CO2) – Stockholm and Copenhagen

� ICT � Healthcare

Stockholm office Address: Visiting address Sveavägen 64 SE-111 34 Stockholm Sweden Postal address PB 3363 SE-103 67 Stockholm Sweden Telephone and fax numbers: Tel.: + 46 8 791 83 15 Fax: + 46 8 24 98 00 Email address and website: Email: stockholm@innovasjonnorge.no Website: www.innovasjonnorge.no/sverige Number of employees: 6 Highlights from 2007 2007 has been a busy year for Innovation Norway Stockholm. A focus on areas such as health, cleantech and ICT has led to a range of interesting projects with a high technological profile and high growth potential. Innovation Norway Stockholm moved to new premises in the city centre in June and our employees within travel and tourism and trade are now in the same premises. The office has office space for businesses in a start-up phase as part of the support we are able to offer on introducing companies to Sweden as a market. In terms of capacity, we increased our staff by adding a new senior consultant with a background in consultation for SMEs with international ambitions and potential and with a good knowledge of the Swedish business world.

Travel and tourism:

� The following projects directed at the Swedish tourist market were implemented in 2007:

� Winter campaign 2007 � Summer campaign � Short breaks campaign � Press project with a presentation tour for Norway as a tourist destination � Brochure for Norway as a tourist destination � MICE campaign for greater focus on and awareness of what Norway has to offer in

a seminar and conferencing context � Various trade fairs and conferences where Norwegian suppliers meet potential

Swedish customers, including the Norwegian Travel Workshop.

Healthcare: Telemedicine found its way onto the agenda when a Swedish business delegation visited the High North in June 2007. Among other things, the Karolinska University Hospital showed an interest in entering into a possible collaboration in this area. As a result of

this, Innovation Norway focused on the Stockholm region in 2007. Two dedicated networks within medtech visited the Stockholm area in relation to meetings in Swedish medtech. The aim was to increase knowledge of the Swedish healthcare sector and to market Norwegian technology in the area to the project management at the Karolinska hospital.

Other examples of interesting businesses within the sector were Sonitor (ultrasound-based indoor positioning) and HealthTech (electronic ward cabinets for medicine and medical supplies).

Renewable energy: The delegation to the High North also put the spotlight on the challenges in relation to CO2 management, and representatives from the two countries discussed co-operation in research and pilot projects. In the light of this discussions and visits in relation to alternative energy have been arranged between the Universities of Luleå and Tromsø, Narvik University College and the Tromsø and Narvik research parks.

In September 2007 Statkraft and SCA announced that they were to collaborate on wind power. Through the establishment of a jointly owned company they aim to make large-scale investments in wind power in northern Sweden. The investments are estimated to amount to around SEK 16 billion. The agreement has heightened the focus on collaboration between the two countries in the field of renewable energy.

Opportunities within the area of alternative fuels and environmentally-friendly solutions in the automotive industry are studied and followed-up on an on-going basis in an established collaboration between the Norwegian Ministry of Foreign Affairs, the Norwegian Centre of Expertise Raufoss, Arena Automotive and Innovation Norway Stockholm.

In May 2007 cleantech companies from Norway and Sweden set up a working group to discuss collaboration in relation to joint exports. The Norwegian network is linked to IN Oslo/Akerhus and Oslo Teknopol, whilst the Swedish network is linked to the Gothenburg business region.

The Stockholm office also participated in a pan-European project aimed at exploring the market for wind and wave power. The purpose was to investigate and highlight market opportunities for Norwegian companies in this area.

Creative industries: Innovation Norway Stockholm and Copenhagen, along with those responsible for the sector in Innovation Norway and the Norwegian Ministry of Foreign Affairs, came together to work on joint projects promoting furniture design in the two markets.

Copenhagen office Number of employees: 6 Highlights: In January 2007 Denmark underwent a comprehensive restructuring of the public sector known as The Structural Reform which resulted, inter alia, in Denmark being divided into five new, larger, regions. The five new regions are North Jutland, Central Jutland, South Denmark, Zealand and the Capital Region, and they replace the 13 former counties. Innovation Norway has followed the course of trade and industry and has good contacts with the various new regions. Innovation Denmark has always been particularly active in the capital, Copenhagen, which is in the Øresund Region of Denmark and southern Sweden. The region has fully 3.6 million residents and a quarter of the combined GDP of Denmark and Sweden is generated here. Business in the region is growing strongly, especially when it comes to research and development. As an example, the region is ranked third in Europe, after London and Paris, in relation to medical and biotechnology research. The Øresund Region is so attractive that The Economist, in its annual selection, named the Danish “business environment” as the best in the world, and there is no sign of these trends stagnating. The region is the region in Scandinavia where the highest number of businesses are established and it is currently evident that the good opportunities of the region to be up-to-date with the latest trends in research and development mean that more and more companies are choosing to set up here. There are many networks in the area in which Innovation Norway is represented and actively involved. In the autumn of 2007, Per Sponholtz was appointed as the head of both the trade and industry and the tourism areas of Innovation Norway’s work in Denmark. Travel and tourism: At the end of 2007 we began to draw up a situation analysis of the Danes’ visiting habits in relation to Norway so as to be best able to promote Norway as a holiday destination. The analysis project provides Innovation Norway in Denmark with a good overview of what products are in demand on the tourism market and what more is needed in order to convince our customers to choose to holiday in Norway.

� The following projects directed at the Danish tourist market were implemented in 2007:Winter campaign 2007

� Summer campaign � Short breaks campaign � Press project with a presentation tour for Norway as a tourist destination � Brochure for Norway as a tourist destination � MICE campaign for greater focus on and awareness of what Norway has to offer in

a seminar and conferencing context � Various trade fairs and conferences where Norwegian suppliers meet potential

Danish customers, including the Norwegian Travel Workshop.

Creative industries: Denmark is a market that has had great success with adding value to various products through design and brand-building. It is a country that many Norwegian companies would like to learn about and from, specifically in relation to Denmark’s experiences with design in the commercialisation process. What is more, there is a growing interest in the Danish market in Norwegian design. The growing interest from and in the market has meant that, over the last year, Denmark has been a central market for Innovation Norway’s design work. The initiative manager has implemented a series of projects to increase awareness of the opportunities and to learn from Denmark. In connection with

the market opportunities that were identified, a seminar was arranged in the autumn of 2007 at which the latest trends in Norwegian furniture design were presented in the form of a special exhibition in the Norwegian embassy in Denmark. During the exhibition, the head chef of the Michelin-starred restaurant NOMA prepared and served fresh Norwegian delicacies such as scallops, king crabs, ptarmigan and mullet in the style of an exclusive restaurant. The design exhibition was put on in collaboration with Insidenorway and the design phenomenon Norway Says, which has had a stellar rise on the furniture scene. The target groups were designers, architects, distributors, restaurants, fishmongers and the daily and specialist press. One hundred guests representing all kinds of groups took part in the event, which had a very positive reception on TV and in the daily and specialist press. .

IT sector The service sector makes up around 70% of Denmark’s GDP and employs 75% of Danes. The largest area in the service sector is IT services, general and technical guidance and consultancy. The Øresund Region, amongst other things, has Scandinavia’s largest concentration of IT skills. The Danish office has office space for businesses in a start-up phase as part of the support we are able to offer on introducing companies to Denmark as a market. This offer has been frequently taken up, especially among IT businesses, which use it in order to reduce the risk when setting up and to be close to the advice on offer in our office. On this basis, Innovation Norway Copenhagen carried out a series of projects with Norwegian IT companies in the market. The construction industry In recent years the Danish construction industry has experienced a real boom, especially in house-building. This success has had a lot to do with rising property prices, increased personal consumption and low interest rates. The industry has found it difficult to attract enough qualified workers to meet the heavy demand. The stabilisation of property prises in the last year, rising interest rates and the anticipated stabilisation of Danes’ consumption have, however, put the brakes on that demand. In 2007 Innovation Norway carried out a number of projects for SMEs within the industry with high international potential.

Renewable energy: The Copenhagen office participated in a pan-European project aimed at exploring the market for wind and wave power. The purpose was to investigate and highlight market opportunities for Norwegian companies in this area. The project was part of the work on increasing the focus on this important sector. Helsinki office

Innovation Norway Eriksgatan 2 FI-00100 Helsingfors Finland Phone: + 358 9 6129 690 Fax: + 358 9 64 00 53 E-mail: helsinki@innovationnorway.no Homepage: www.innnovasjonnorge.no/finland

Number of employees: 2 Highlights: Finns have a very favorable attitude towards other Scandinavians. Especially the business culture is very similar in Finland and Norway, which make it easy for us to communicate and do business with them. This combined with the investment opportunities and its close locations should not be forgotten when considering of exporting or investing abroad. Bilateral relations between Finland and Norway was confirmed in 2007 when HE King Harald V and Queen Sonja visited Finland in June. In relation to the visit the Embassy in Finland and Innovation Norway arranged a number of seminars, conferences and political talks between the two sides. The visit also involved business interests. Finland is a member both in the EU and in the European Monetary Union, and the Finnish economy is among the best in the euro zone. In this respect Finland is a gateway to the EU if not even more important a gateway to Russia. ICT High technology plays an important role in Finland. Today information technology is integrated into production, work and home-life. Banks, schools, libraries, among others, can today exist virtually as well as physically. Several multinationals have located themselves in Finland in order to be a part of the new technology. In the future, success factors will be education, knowledge, cooperation and competitiveness. Finland’s success in high-tech industries is based on its advanced R&D infrastructure, technology-friendly culture, highly educated workforce and extensive networking of resources and competencies. Innovation Norway in Finland was in 2007 an important co-ordinator for projects within the ICT-sector in Innovation Norway. Alternative energy sources and agriculture Finland is ranked at the top of the listing for environmental sustainability according to the World Economic Forum's Environmental Sustainability Index (ESI). Finland is also a world leader in bio energy use and the development of combustion technologies and fuel chains. Related to Finlands strong position in this field Innovation Norway in Finland have conducted a number of knowledge increasing projects related to alternative energy and agriculture as well as co-operations with individual companies in this sector and the construction and building sector. Health care Finnish education and training in medicine, electronics and biotechnology have high quality. The network of central hospitals and health care centres constitutes one of the most comprehensive health care systems in the world. These are things that companies in health care-related fields have benefited from. The Finnish market offers an excellent platform from which to launch and develop innovative health care products. In 2007 some Norwegian companies exploited the opportunity and had activities towards the Finnish market together with Innovation Norway. Creative industries The latest years we have seen an increasing interest in the Finish market for Norwegian culture and experience industries. Related to this Innovation Norway in Finland have conducted a market survey of opportunities in the film and music industry.

North-East Asia (NEA) The North-East Asia region covers the markets of China (offices in Beijing and Shanghai), Japan and North Korea. The three countries make up Norway’s largest trade area in Asia. Idun Christie manages this region. Focus and initiatives: The important trade and collaboration areas between Norway and NEA have traditionally be in the seafood and marine sector, the maritime sector, environmental and renewable energy, ICT, medical technology, transport and oil and gas. The region has its own tourism representative, who covers the whole of Asia. Within R&D, there is growing interest in cooperation between Norway and the region, and Japan and China have research and technology councils that are co-financed by the Research Council of Norway (NFR). Environmental technology and renewable energy: The entire region has a significant energy deficit, and our offices are active facilitators of technological solutions from Norway. Collaboration across the national boundaries of the region is effective because the three countries exhibit very different levels of technological development whilst, at the same time, they have high-volume internal trade. Key areas such as energy conservation, solar energy, bioenergy, waste management, water and water purification technology are relevant for Norwegian technology and knowledge transfer. Maritime sector: Together, Japan, China and Korea account for around 80% of the world market in shipbuilding (81.7 % orders, 77.9% completion, 77.9% backlog - Lloyd's World Shipbuilding Statistics) and are the world’s 2nd, 4th and 8th-largest shipping nations, respectively, controlling approximately 1/4 to 1/3 of the world’s shipping transport (maritime forum). Electronics: In electronics, domestic appliances and the semiconductor industry, China, Korea and Japan have the largest companies and market share (Sony, Hitatchi, Panasonic, Samsung, LG, Hynix, Huawei) in both development and production. CDM: The Clean Development Mechanism (CDM) is a generic term for the international market in the buying and selling of CO2 quotas, one of the primary instruments established under the Kyoto Agreement. China is the world’s largest individual market for buying quotas, including from Norway. We are in the process of operationalising the political guidelines in this area, including for consultation and participation in quota-buying projects. Skills and capacity in this area must be considerably strengthened going forwards, something which also clearly represents compliance with the guidelines under the government’s new China strategy that was launched in August 2007.

JAPAN OFFICE (TOKYO), 2007

1. Project work for Norwegian companies

Innovation Norway has worked with projects for companies that want to get into the Japanese market and those that are already in the market but would like to re-scale or re-focus their business. Ten or so small and medium-sized enterprises have had relatively large projects during the period (in software, electronics, automotive components, rail, healthcare and renewable energy) and many other businesses have also received information and assistance in connection with a potential future initiative.

(Photography: Geir Jacobsen)

2. Collaboration in research

In 2003 Japan and Norway signed a collaboration agreement in research and technology which focuses on energy and the environment, material technology and food safety. In 2007, a study trip to Norway was organised, focusing on hydrogen, and there has been a great exchange of researchers between the two countries. Ten seminars were held with a total of 600 participants, and Norwegian and Japanese research institutions signed 5 collaboration agreements. The climate was the subject of a well-promoted seminar at which Norwegian Foreign Minister Jonas Gahr Støre was the principal speaker, and collaboration on climate research, including space-related activities, is a new area in which work is now well under way and which offers an exciting potential for both countries.

3. Information about Japanese technology and opportunities in the Japanese market

� Study trips for Norwegian researchers and for students from Norwegian universities.

� Study trips for the Minister of Transport and Communications Liv Signe Navarsete and the management of the Ministry of Transport and Communications and for the Transport and Communications Committee – with a focus on high-speed trains, ticketing systems and environmentally friendly transport.

� State-of-the-art studies and opportunities to cooperate in relation to the removal and storage of CO2.

Manager: Geir Jacobsen (Photography: Astrid Mathisen) The office employs seven people. Innovation Norway Royal Norwegian Embassy, 5-12-2 Minami Azabu, Minato-ku, Tokyo 106-0047, JAPAN

tokyo@innovationnorway.no

Innovation Norway China, Beijing office (11 employees) General: Goods exports (such as oil, gas, ships and drilling rigs) from Norway to China rose by 33% in 2007. Total exports of goods amounted to NOK 8.6 billion, while imports from China amounted to NOK 27.8 billion (up 20.5%), which makes China Norway’s most important trading partner in Asia. Machinery, chemicals and fish/seafood products represent large and rapidly-growing export groups. NOK 1 billion worth of Norwegian seafood was exported. Salmon exports rose by 70%. If last year’s growth continues, in 3 to 4 years the Chinese market will be of the same size as the Spanish and Italian markets. Customer projects: The office has assisted businesses in around 25 projects within the areas of seafood, healthcare, IT, the environment and energy, and oil and gas. The majority of the projects are in the environment and energy sector, which is the result of systematic work in this field over many years. Ten projects in the seafood sector focused on seafood exports, aquaculture technology and biomarine products. Network projects: The Beijing office organises the majority of its energy and environmental initiatives through the Norwegian Energy and Environment Consortium (neec - www.neec.no). This has proven very effective, and there are around 30 neec members active in the Chinese market. Neec actively collaborates with partners in Norway and China, in both the private and the public sectors. The consortium is active in four sectors: water and water purification, green/smart/modular construction, funding and energy efficiency. The last of these was established as an independent energy management programme in China with the aim of improving energy efficiency in Chinese heavy industry and in construction. In November, the North-East Asia offices decided to expand the scope of this network project to the whole region. Significant work has been carried out on formalising a network on water and water [purification] technology which will be implemented during 2008. Collaboration on research: In the course of the year much work has been done within the energy and environmental sector on focusing efforts on energy efficiency measures. The neec umbrella covers the PINs (Project Idea Notes) developed for 6 potential CDM (Clean Development Mechanism) projects in China. Norwegian public bodies and the industrial sectors are the principal suppliers and the Beijing office is the facilitator of projects and collaboration. The economy, welfare and regional development are among the top priority areas in China. Many Norwegian universities and research institutions are actively involved in collaborative work. Public collaboration: The office has actively participated in all official visits to China on Norway’s part. In March, the Prime Minister visited China along with the Minister for Trade and Industry, the Minister of Finance and secretaries of state from the Ministry of Petroleum and Energy, the Ministry of the Environment, the Ministry of Defence and a selected group of representatives from industry. We organised 3 expert seminars within the environmental and energy field. During the trip, an MoU was signed for businesses (wind power), along with cooperation agreements in the climate field and a new fishery agreement, with key areas such as farming, health, the environment and technology being covered.

Shanghai office (China), 2007 1. General information about the Shanghai office During this period the office had a staff of four, including the Asia representative for tourism. External staff were also taken on during the period for larger individual projects. The office experienced a significant rise in demand for its services, and at the end of the year it was forced to turn away projects on the basis of its lack of capacity. 2. Project collaboration with Norwegian companies During the period, the office implemented specific projects for around ten Norwegian companies, half of these in maritime-related fields. Services included market evaluations and searches for partnerships, company start-ups, assistance in negotiations and the organisation of events. Most of these businesses are SMEs and only a small number are already established here. The office has also helped businesses with more limited requests or that have sought guidance in relation to specific situations that have arisen whilst operating in China. The office also drew up a report about port expansion and logistics in China and an investment guide now due to be published on Innovation Norway’s websites. This last element is one part of the office’s attempts to optimise its delivery in relation to more limited requests. 3. Study trips and events The office assisted Bergen Chamber of Commerce and Industry in organising the China-Bergen Summit in April. The events arranged consisted of a one-day pre-event seminar for the China Shipping conference, a three-day study trip for the business delegation from Bergen and a concert featuring Norwegian artists. The office also acted as a supporting organisation for Tradewind/Mareforum’s China Shipping conference. As regards Marintec, the office assisted the Association of Norwegian Maritime Exporters (NME) in arranging an official reception at their stand. A study trip was also arranged for specialists in the maritime sector within Innovation Norway in connection with the trade fair. The heads of the Maritime and Oil & gas sectors participated. In addition, a range of offices were represented, including three of our foreign offices (Russia, Korean and Vietnam). 4. Entrepreneur school In 2007 the entrepreneur school returned to Shanghai after 8 years. The spring semester was first tried out here and it was very well received. The students worked partly in Chinese companies and partly in Norwegian companies established here. Office manager: Kari Bjørnaas

Innovation Norway Korea office (Seoul)

Customer projects

Innovation Norway’s office in Korea was involved in 22 customer projects in the course of 2007. In terms of income stream, the dominant sectors were ICT (including medical technology), which made up 45%, then the seafood sector (aquaculture and seafood) at 19%, energy and the environment at 17%, maritime and shipbuilding at 12%, plus other sectors such as the automotive industry, etc.

The office experienced continued strong growth in external enquiries categorised as Government Export Services (GES). In total, around 200 enquiries were recorded, and around 500 hours were expended on dealing with the enquiries. The most frequently dealt-with sectors were maritime, ICT, seafood and energy and the environment, but there were also enquiries in other sectors.

Network projects

The office focussed strongly on network projects in ICT and medical technology, energy and the environment and the seafood sector. An MoU (Memorandum of Understanding) on cooperation in the fields of medical technology and hospital solutions was signed between the Norwegian University of Science and Technology (NTNU) and Yonsei University. The office is also involved in a cooperation network in the seafood sector. In 2007, plans were made for a network project in content services and entertainment in the digital media, which are to be realised in 2008.

Company visits

Innovation Norway organised the business delegations and seminars during the Crown Prince and Princess’s visit to South Korea, with more than 100 business delegates from 50 Norwegian companies. The delegation held seminars with its Korean counterparts in Seoul and Busan in the maritime, seafood, ICT, medical technology, energy and the environment and oil and gas sectors.

In addition to the seminars during the Crown Prince and Princess’s visit, Innovation Norway Korea organised two delegations to Korea from Norway and two to Norway from Korea.

Innovation Norway Korea hosted North-East Asia INspiration 2007, an internal inter-divisional conference with more than 30 participants from the regional offices, offices abroad and the head office.

Address: Innovation Norway, c/o Royal Norwegian Embassy, 258-8 Itaewon Dong, Yongsan Ku, Seoul 140-200, Korea Tel.: +82 2 795 6850 ext 105/+82 10 3743 5992 Fax: +: +82 2 798 6072 Email: reidar.grevskott@innovationnorway.no Number of employees: 4

Reidar Grevskott Photo: Espen Guterud – Innovation Norwaay

CENTRAL EUROPE AND THE BALTIC STATES The Central Europe and the Baltic States Region consists of Estonia, Latvia, Lithuania, Poland, the Czech Republic, Hungary, Turkey, Romania and Bulgaria. The region is headed by Bjørn O. Bjørnsen. The focus in this region as a whole has been on seafood, oil and gas, the maritime sector, the environment and renewable energy, ICT, defence technology and EU/EEA projects. Interest from business and industry is significant and growing, especially in Poland and Estonia. Cooperation programmes for Romania and Bulgaria. New offices in Bucharest and Sofia. In connection with the EEA enlargement in 2007, Norway established a bilateral cooperation programme with Romania and Bulgaria. The aims of the programme are to smooth out social and economic differences in the EEA and to contribute to increased bilateral cooperation through partnership projects between Norwegian and Romanian or Bulgarian participants. The target group for the programme includes private industry, public bodies and institutions and voluntary organisations. Both Norwegian and Romanian or Bulgarian participants will be able to apply for grants from the programme funds, which amount to EUR 48 million for Romania and EUR 20 million for Bulgaria. Increasing tourism from Poland The number of overnight stays from Polish visitors rose by 26% in 2007 in comparison with 2006. Since 2005, the number of overnight stays from Polish visitors has risen from a little over 100,000 to nearly 250,000, which represents an increase of 142%. No other country can show growth in tourist traffic to Norway of the magnitude that Poland can. As of 2007, Poland thus became a fully-fledged tourist market within Innovation Norway and the office will be employing specialists in 2008. Greater interest from Norwegian companies In 2006 the markets of Central and Eastern Europe exhibited growth of 4 to 6%, which also led to greater interest from Norwegian companies in these markets. The primary focus was on assistance for partner searches for distribution and local production in the aforementioned sectors. Focus on environmental technology In 2007 the offices were on the lookout, in particular, for new market opportunities in renewable energy and environmental technology, with action taken including the implementation of repatriation projects and participation in trade fairs. Strong growth in Turkey Turkey is experiencing continued economic growth of around 6% per annum, which has also resulted in significant activity, especially in the maritime and ICT sectors. Turkey is in negotiations about membership of the EU, which would, of course, result in greater interest and opportunities for Norwegian industry.

Czech Republic office (Prague) In 2007, economic growth was over 6% - the highest growth in recent times. Lower growth is expected for 2008. Unemployment was the lowest for 11 years and there was also a clear rise in the standard of living. Per capita income is at nearly 80% of the EU average. The Czech Republic has thus overtaken Portugal in terms of purchasing power. The primary factors that have acted as driving forces in the Czech economy are significant foreign investment, growth in export-oriented industries and continued strong consumption in both the private and public sectors. Focus on environmental technology In 2007, the office in the Czech Republic put particular focus on environmental technology, renewable energy, IT and local subcontractor production in various sectors, including mechanical products and IT. Interesting market The Czech Republic is an interesting market for Norwegian companies for exports, as well as for companies that are interested in collaboration on technology and/or in local production, which may involve assistance from the Prague office. In 2007, the Prague office carried out projects primarily for SMEs, including Sør Tre Bruk, PromedPharma, Card Meister and BankZone. The office has also provided support to the Norwegian Agricultural Authority, the Kongsberg group, Tine and Fugro. The office has also assisted companies with interests in Slovakia. The office has three employees. Manager: Bjørn O. Bjørnsen Innovation Norway in Prague Na Prikope 21 Post Box 102 CZ - 110 01 Prague Czech Republic Tel: + 420 22481 0031 Tel: + 420 22481 0923 Fax: + 420 22481 0002 Email: praha@innovasjonnorge.no www.innovasjonnorge.no/tsjekkia

Estonian office (Tallinn)

Estonia becomes increasingly interesting as a market for Norwegian products and services. There was also substantial number Norwegian companies interested in finding technology cooperation or production partners in Estonia, due lack of capacity in Norway.

Norwegian business consists mostly of small and medium sized companies and so does business in the Baltic States. This match makes it relative easy to find motivated cooperation partners. Geographic and cultural closeness, as well excisting business ties also contribute to growing business between Norway and the Baltic region.

Norway as a country has a naturally positive image in Estonia (according International Brand Index Norway and Sweden have the highest ranking among foreign nations in Estonia) making Norwegian companies welcome in Estonia.

26 contracts

Tallinn office carried out 26 (fee-based) projects for Norwegian companies from maritime, energy and environment, ICT, business services, tourism sectors in 2007. 85% of projects were with small and medium sized companies.

Lot of requests

General export service makes a big part of the office work.

In addition to Norwegian small and medium sized companies there are also numerous requests from Norwegian enterpreneurs interested in doing business in Estonia, many from construction and design sectors.

There are also many Norwegian groups arranging study tours to Estonia

Tallinn office also contributed to arrangement of international events in Bergen, Raufoss, Trondheim and Agder in 2007.

Focus areas: maritime, renewable energy, environment and e-health

The Tallinn office carried out following Innovation Norway Business Development Projects in 2007

- Mapping of education/resources available in the maritime sector on an assignement from Ålesund Maritime Center of Excellence.

- Mapping of market entry possibilities in wind energy sector on an assignment from Innovation Norway’s Wind and Ocean companies network.

- Mapping of market opportunities in the environmental sector in Central Eastern Europe and contributing to arrangement of related events in Oslo, Warsaw and Vilnius.

- Norwegian-Baltic workshop in e-health in Riga in cooperation Norwegian Competence Center for ICT in health and social sector and Norwegian Centre for Telemedicine.

Active co-operation with the embassy with regards profiling Norway in Estonia

- Participation in establishment of the Norwegian-Estonian Chamber of Commerce in 2007.

- Arrangement of Norwegian week in Estonia together with the embassy and 20 more substantial Norwegian companies in Estonia. The week included promotions of Norwegian food, cultural arrangements, design and Norway travel workshop. Norwegian, Fjord Norway, Hurtigruten, Trysil, Hafjell, Hemsedal and 50 Estonian travel companies participated.

- Nordic-Baltic innovation seminar that was a joint arrangement together Nordic embassies and the Nordic Council of Ministers in Tallinn. Innotown as a substantial innovation-related event in Nordic was presented.

Office contacts:

Innovation Norway Tallinn

Norwegian Embassy, Harju 6, 15054 Tallinn, Estonia

phone +3726313466

e-mail: tallinn.trade@innovationnorway.no

Office has 2 employees.

Picture:

Estonia is gaining importance as a market for Norwegian products and services. Due increasing passenger and cargo flows in the Baltic Sea Tallink has ordered a number of new ships from Aker. Picture: Tallink.

HUNGARY (BUDAPEST)

Visits to Hungary: � Week 6-7 /February 2007: Hamar

Katedralskole - 20 students from tschool came for a study tour to Budapest. Our office organised all programs

he

� 19-21 June 2007: Arbeiderpartiets Stortingsgruppe - 46 participants have scheduled meetings with representatives of the Hungarian Socialist Party (MPs, policy advisors, members of the party’s youth organisation).

Visit to Norway: 3 October: Hungarian Prime Minister visit, we have been involved in advising the Business Round table meeting. Visits by our office to Norway in cooperation with our District Offices: March – Telemark May - Agder September – Oslo October – Trøndelag

Each cases we have met 5-10 SMEs. We have learnt about their activities and needs for international expansion. The follow up of these meetings are in progress. Focus areas Environmental protection and renewable energy. EEA/Norwegian financial support: The aim of our activities is to support bilateral cooperation. We were actively involved in partner search and in appraisal projects. Activities, arrangements: 29 March-1 April 2007: International Travel Exhibition – Budapest. Together with the Embassy a Norwegian Stand was made to promote Norway as a tourist destination. Fjord Norway, Hurtigruten, Norwegian - sponsored the event. According to statististics 70.000 people visited the Fair during those 4 days. 28 November 2007: International Growth for Norwegian Environmental Technology and Renewable Energy Seminar and Workshop - Oslo Assistance for individual companies: Tomra, Aker Kvearner, Nor-X, Katapult, BV Energi, Norsk Energi, Virtual Garden, Powel,Lindorff,, Best of Norway, Norplan etc. Adress: Innovation Norway (Royal Norwegian Embassy, Commercial Section) Ostrom u. 13. Budapest H-1015 HUNGARY T: +361 201 9395 F: +361 201 9396 budapest@innovasjonnorge.no www.innovasjonnorge.no/ungarn Judit Ujfalussi

Manager LATVIA (RIGA) Innovation Norway in Riga has delivered services in connection with the following main projects with customers in 2007:

� Otera Entreprenor - development of city lighting and heating - market information and identification of potential partners

� Sogn og Fjordane Energi Group – investigation of market potential for drinking water in Latvia

� Instant Norge -sales and rent of lifting equipment for building sector - company establishment and assistance with staff recruitment and selection

� Edda Jobs – establishment on the Latvian market � Hospital Organiser – representation on steering group in IRD project in hospital

management system pilot project in Traumatology and Orthopaedic Hospital of Latvia

� Maritime Forum – seminar project development in the Baltic States � Ecotech – partner search for production outsourcing in metal industry

INBDP Innovation Norway Business Development Project: INBDP creates opportunities for Norwegian organisations and assuring that target groups have a solid knowledge base for own decisions and actions:

� Energy from Wind and Ocean - A European Market Study on market conditions for wind and ocean based renewable energy.

� Environment in Baltic countries - environmental problems and opportunities for Norwegian environmental technologies and companies

� E-health in the Baltic states – different status of e-health development in the Baltics, further development plans and possibility to network with relevant Norwegian institutions and partnerships within the area

Workshops

� Participation in CEE Seminar and Workshop on Energy and Environment in Oslo with a presentation "Opportunities and Challenges in Latvian Environmental Sector" - market information on environmental issues for Norwegian companies

� Arrangement of Baltic - Norwegian E-Health Workshop in Riga - exchange of Norwegian and Baltic experiences within e-health development

� Seminar-workshop in partnership with Price Waterhouse Coopers & Lybrand in Bergen on business environment and investment possibilities in the Baltic States

� Export–days related seminar in Trondheim. Networking activities Networking is an important part of our activities:

� networking with the national professional associations in different industrial sectors. Maintaining regular contacts and flow of current information for the purpose of interested Norwegian companies and institutions.

� networking with the governmental and municipal institutions with the purpose to facilitate business contacts in regions outside the capital and learn opinions of local decision makers and opinion-leaders.

� networking with the Norwegian community in Latvia - Norwegian Chamber of Commerce in Latvia to ensure updated Norwegian opinion on current situations and issues and to facilitate entrance of new members. To ensure "idea testing" of newcomers to the community within the business experts of the community.

� networking with international non-governmental organisations, like other Nordic chambers of commerce, Council of Foreign Investors, etc.

� networking with Innovation Norway’s offices in Norway in relation to information exchange, introduction to each other and potential development of new projects (Hedmark, Trondelag, Kristiansand, Drammen, etc.)

The office got closed in 2008 LITHAUEN (VILNIUS) In 2007 the office focused on environment and renewable energy, IT and health, the EEA/EU funding in addition to various client assisgments wihin SMEs.

Ineta Leikuma Manager

Highlights in 2007 Innovation Norway in Vilnius has delivered services in connection with the following main projects with customers in 2007:

� Stafa Industrier ASA – development of new business in Lithuania, within automotive sector.

� Idium – software for website development – analysis of market potential for the development of simple websites and sale of maintenance programs in Latvia.

� Cambi AS – assistnace in tendering procedure, environmental project � Minera Norge AS – assistance in finding the right distribution (partner for

Norwegian natural stone). Entrance to the market strategy

� Lindorff Group- advise to the top management and recruitment of service personell, business development

� Storebrand bank- advise to the top management and assistance with the development of the organisation

� Tømrerfirma Alexander Gundersen AS – corporate establishment � Boen AS- information services on Norwegian establishments � Deloitte AS- information services on Norwegian establishments � DnB Nord - information services on Norwegian establishments � Baltic Polis/Gjensidige- introduction to local Norwegian establishment networks � Personec- information services on Norwegian establishments � Nordia DA- information services on Norwegian establishments � Fugro Oceanor- advise on EEA grants � Med-Lab AS – advise on laboratory business in Lithuania, partner search. Project

continued into 2008 Innovation Norway Business Development Project (INBDP) projects perforemed in 2007: Wind and ocean, Waste water, E- health Examples of group/delegation visits:

� Study tour of DnB bank, 30 companies participated. Innovation Norway in Vilnius organised visiting programme and presentation of the country's potential.

� Sparebanken delegation visit Meeting with offices in Norway Vilnius office’s representative presented the office’s tasks, business plans and activities to colleagues from the office in Aalesund and discussed future cooperation models. Visit to Trondheim, Steinkjer in relation to export days. Meeting with offices abroad Visit to Riga, e-health related seminar, December 5 Oslo, November 28, presentation of environmental Meetings with Innovation Norway Oslo, Internationalisation Group Seminar organized by the office Seminar on business environment and corruption perception in Lithuania. The main idea behind the seminar is networking amongst Norwegian companies. Networks lasting for more than one year. 43 companies was present. Seminar organised by Innovation Norway Vilnius, financed by the Norwegian Royal Embassy in Vilnius. In cooperation with Euro Info Centre, PAVE seminar and B2B meetings in Vilnius. Around 300 companies present, from Norway only 1 company was attracted (TCI). 16 meetings arranged on behalf of Norwegian interest. Vilnius office on behalf of the Baltic states. Baltic e-health workshop in Riga. 10 participants. Project manager: Innovation Norway in Riga.Export days in Trondheim. Innovation Norway in Vilnius participated on behalf of the Baltic region. Project manager: Trondheim office. The office got closed in 2008.

Rita Boguzaite Manager

Polish office (Warsaw) In 2007 Poland’s GDP rose by 6.5%, the strongest economic growth since 1997. This was due to increased domestic consumption, rising exports and major foreign investments in Poland. Inflation remained low at 2.5%, but it is expected to rise a little in 2008. Wage inflation in industry was 7%, and the unemployment rate fell from 14.9% in 2006 to 11.7% in January 2008. Trade between Norway and Poland 2007 also saw a strong increase in trade between Norway and Poland. Exports of traditional goods from Norway to Poland grew by 20.9%, whilst imports from Poland grew by 21.5%. Polish tourists visiting Norway The number of overnight stays from Polish visitors rose by 26% in 2007 in comparison with 2006. Since 2005, the number of overnight stays from Polish visitors has risen from a little over 100,000 to nearly 250,000, which represents an increase of 142%. No other country can show growth in tourist traffic to Norway of the magnitude that Poland can. Focus areas In 2007 the office in Poland put particular focus on the following five areas: Tourism Seafood Defence Renewable energy and environmental technology ICT Trade fairs In 2007 the office organised three trade fairs with a joint Norwegian stand: Polfish – International fair of Fish Processing and Fish Products At Polfish, which was held in Gdansk in May, we organised a joint Norwegian stand in conjunction with the Export Council for Fish. Seventeen Norwegian companies were represented. Polfish is the must important trade fair in Poland for the fishing industry and it was a great success for Norwegian seafood and clearly demonstrated the strong position that Norway enjoys as an exporter of fish to the Polish market. TT Warsaw – International Tourism Fair TT Warsaw Tour & Travel This trade fair, which featured 500 exhibitors from 59 countries, was held in Warsaw in September. It is one of the largest tourism trade fairs in Central and Eastern Europe and the most important international meeting place in Poland for the tourism industry. For the first time we organised a joint Norwegian stand featuring 21 Norwegian tourism companies. The Norwegian stand attracted lots of attention and was selected by a group of journalists as the most professional and original at the entire trade fair. Norway was chosen as the partner country for the year at the trade fair, and that gave Norway as a tourist destination an excellent push. Poleko – International Ecological Fair Poleko is the largest trade fair in Central and Eastern Europe for environmental technology and renewable energy. It was held in Poznan in November and the Warsaw office organised a joint Norwegian stand for the first time. Twenty Norwegian companies took part. Most of these belonged to the Green Business Norway and Clean Tech Mid-Norway networks. On Poland’s side, great interest was shown in Norwegian technology to solve environmental problems that Poland and other countries in Central and Eastern Europe are now facing.

Customer projects There is great and increasing interest in Poland among Norwegian companies. This applies both to companies that view Poland as a major and growing market, and companies that are interested in finding a partner in Poland for technological cooperation or production. In 2007 the Warsaw office carried out paid projects for 19 Norwegian companies. Five of these were small and medium-sized enterprises (SMEs). In addition, we performed paid services for a total of 34 companies that took part in TT Warsaw and Poleko. Most of these companies were small and medium-sized enterprises. The office employed six people in 2007.

PROGRAMME OFFICES IN BULGARIA (Sofia) AND IN ROMANIA (Bucharest) The Norwegian Ministry of Foreign Affairs appointed Innovation Norway as the administrator of the Norwegian Cooperation Programmes for Bulgaria and Romania. As a consequence Innovation Norway established a programme organisastion and programme offices were established in Sofia and in Bucharest, September 2007. The offices are managed by Innovation Norway’s Commercial Counsellor to Bulgaria and Romania, supported by two programme officers locally engaged. The programme offices are dedicated to work with the implementation of the Norwegian Cooperation Programmes, therefore commercial requests, not directly related to the programmes priority sectors, have been forwarded to the Norwegian Embassies commercial officers or to Innovation Norways regional office in Innovasjon Norges regionkontor i Praha.

Norwegian Cooperation Programmes with Bulgaria and Romania

In July 2007, agreements to include Bulgaria and Romania in the European Economic Area (EEA) were signed. Following this enlargement, Norway is granting €68 million (€20 million for Bulgaria and €48 million for Romania) through a new set of Cooperation Programmes with the two new member states. The objective is to stimulate economic growth and sustainable development, and to promote innovation and technology transfer. Consequently, the programmes prioritise sectors in which Norway has specific competencies and technologies, and the Beneficiary States have specific needs includes the following:

- Reduction of greenhouse gas emissions and other emissions in air and water - Energy efficiency and renewable energy - Sustainable production, including verification and certification - Additional sector for Bulgaria: Schengen acquis - Additional sector for Romania: Public health

Projects under the cooperation programmes are implemented in the form of partnerships between Norwegian actors and actors in the two beneficiary states.

Launching seminars in Romania and Bulgaria

About 500 representatives from a wide variety of interested governmental institutions, private sector and non-governmental organisations took part in the launching of the programme in Bucharest on November 13.

About 40 participants from Norway added to the overall good reception of the programme. State Secretary Elisabeth Walaas, Norwegian Ministry of Foreign Affairs, gave her views on the expectations to the result of both the Norwegian Cooperation Programme and the EEA Financial Mechanisms. During the opening there were also presentations of partnerships between Romanian and Norwegian parties. The afternoon session saw 4 different parallel sessions where workshops covering energy, HES (health, environment and safety), protection of the environment and cultural heritage took place. The participants were equally split between private companies, NGOs/social organisations and governmental institutions. More than 300 persons participated at the launching of the programme in Sofia on November 15, listening to a similar programme as in Bucharest. State secretary Elisabeth Walaas called the programmes a new area in the relationship between the two countries. Examples of good partnership were presented and the participants took great interest in the following workshops allowing a more direct contact and dialogue with the about 40 Norwegians participating at the launch. There was an equal share of participants from private and public sector while only about 10% represented non-governmental organisations/social partners.

Services The programme offices are responsible for programme administration and follow-up of projects in Bulgaria and Romania on behalf of Innovation Norway. This is done in close cooperation with the Ministries of Finance in the beneficiary states. The interest for the cooperation programmes has been significant so far. Innovation Norway will, together with the Norwegian Embassies and the Ministries, continue the marketing of the programmes through regional information seminars in the two beneficiary states during first part of 2008.

Royal Norwegian Embassy Innovation Norway - Sofia Office 54B, Dondukov Blvd 1000 Sofia Bulgaria

Tel: +359 2 981 9424/9434 Fax: +359 2 98022 67 Email: sofia@innovationnorway.no Website: www.norwaygrants.no

Royal Norwegian Embassy Innovation Norway – Bucharest office Strada Dumbrava Rosie 4 020463 Bucharest 2 Romania

Tel: +40 21 21 22 023/028 Fax: +40 21 21 22 038 Email: bucharest@innovationnorway.no Website: www.norwaygrants.no

TURKEY OFFICE (ISTANBUL) Turkey has continued its ongoing growth trend by of 4.5% real GDP growth in 2007. In 2007 the Istanbul Office focused mainly on Renewable Energy (mainly hydropower), Aquaculture and Environmental Technology.

Renewable Energy Turkey's energy demand is expected to grow exponentially in the next 10-15 years. The energy investment needed will reach a total of $130 billion by the year 2020. Many firms who see this as an opportunity not to be missed have taken action to invest in the energy field. Due to the sheer magnitude of the investments involved, almost all companies view having a foreign partner favorably.

Bosphorus at night. Photo: Ali Basol / Innovation Norway

Innovation Norway in Istanbul has paid a visit to Environmental Technology Fair

and the I.C.C.I – International Energy Co-Generation and Environmental Technologies Conference held in Istanbul. Aand

visiting both events enabled us to get an up-date and strengthen our local network while at the same time assess potential partners in connection with our on-going assignments.

ttendance

Workshop has been organized in Ankara about hydropower sector where Norwegian stakeholders had the chance to present themselves to Turkish Hydropower license owners. Innovation Norway in Istanbul has worked together with Kjell Joa Hydroenergi AS and Grenor Group in order for Norwegian expertise to play a role in this tremendous sector. Aquaculture Relocation of the farms further into the sea due to environmental concerns has increased the need for further investment in technology and maintenance. Istanbul Office working together with some major technology supplier companies has provided the Turkish farmers with the Norwegian expertise in technology. The potential of Turkish aquaculture and Turkey’s geographic location played a major role in the European Aquaculture Society’s decision to organize their yearly meeting in Istanbul. Innovation Norway’s Istanbul Office has participated in this event, which created increasing networking activities. Exchange Program and Visits to Norway One of our colleagues have lived and worked in Arendal and Krisitansand Offices for a month as part of the exchange program, which has been successful in improving relationships with district offices as well as generating new projects for the office. To increase the cooperation between the district office as and Istanbul Office, trips have been done to Bergen, Stavanger, Arendal, Kristiansand, Skien, Hamar, Drammen, Trondheim, Steinkjer, and Ålesund offices. Acting Director: Ali Ba�ol The office has 3 employees Innovation Norway Istanbul Office Aytar Cad., Aydin Sokak, Aydin is Merkezi, A Blok No: 2, D:7, 1. Levent, 34340 ISTANBUL TURKEY

Ali Ba�ol Acting Director

T: +90 212 284 4362pbx F: +90 212 284 4364 istanbul@innovasjonnorge.no www.innovasjonnorge.no/tyrkia

SOUTH AND SOUTH-EAST ASIA The South and South-East Asia region covers Innovation Norway’s offices in India (New Delhi), Malaysia (Kuala Lumpur), Singapore, Thailand (Bangkok) and Vietnam (Hanoi). All the offices are located as an integrated part of, or are connected with, the embassies in the countries in question. The responsibility of the regional management also covers those countries in South and South-East Asia where Innovation Norway does not have a dedicated office and where the embassies, in accordance with cooperation agreements between the Norwegian Ministry of Foreign Affairs and Innovation Norway, provides assistance to Norwegian business interests. As of the start of 2008, Ole Johan Sandvær took over from Jan Erik Svensson as regional manager. The regional head office was moved from Bangkok to Singapore. Ole Jakob Sørdalen is the technology representative in the region and has been based in Singapore since 2004. The year 2007 has been another busy year for the offices in this region with numerous projects, the organisation of seminars, trade fairs and delegations, as well as general information-gathering work for Norwegian companies. The MatchMaking programme (MMP) The offices in India and Vietnam were set up in 2005 and, in their opening years, developed into efficient tools for Norwegian market interests, having acquired crucial local expertise to handle an increasing number of enquiries from Norwegian companies. Both the MatchMaking programme (MMP), which covers India and Sri Lanka (plus South Africa) and the TIP programme (Vietnam) are sound and important tools to attract interest from the Norwegian business community in this region. Both of these programmes belong to Norad (the Norwegian Agency for Development Cooperation). However, the offices in India and Vietnam also cover many other Norwegian business interests and have built up an extremely useful network within the local business community and in the public sector which Norwegian companies have already made good use of. Energy and the maritime industry All the offices are involved in the energy sector, which a key focus area for Innovation Norway in this region. The same applies to the maritime industry. Through many years of targeted work, the office in Malaysia has built up strong expertise in the maritime sector and oil and gas and has thus established itself as an extremely useful tool for small and medium-sized Norwegian businesses in precisely that field. This has also helped to strengthen bilateral cooperation between Norway and the region and has opened the door to industry. Otherwise, 2007 will be remembered as the year when REC announced its big wafer investment in Singapore, with investment estimates approaching NOK 25 billion. Manager: Ole Johan Sandvær

India office (New Delhi) India has had a consistent economic growth rate of around 8% for the last five years. The causes are manifold – strong growth in manufacturing, an enormous boom in the IT sector, relatively liberal economic policy and greater openness towards foreign investment. Inflation has fallen and is currently around 4%, as compared to 5% in 2006. India’s economy consists of a traditional agricultural sector (18%), a varied industrial sector (27%) and the service sector (55%). The service sector is one of India’s biggest sources of income and makes up more than half of the economy but employs less than 30% of the workforce. More than 60% of the population work in agriculture. Foreign trade In 2006, foreign trade amounted to USD 307 billion (exports: 123 billion; imports: 184 billion). Indian exports have doubled, overall, over the last three years, with annual growth of 25%. India has a balance of trade deficit, but if the export of services is included the deficit is substantially lower. As part of its reform programme, the government has reduced its control over foreign trade and investments. This has led to a tripling of foreign investment in the last year (from USD 5.5 billion to USD 16 billion). India’s industry India’s industry has previously developed slowly and it has suffered from heavy State control. The economic reforms have meant that industrial conditions have improved considerably and industry is now on the way to developing into a solid driving force in the Indian economy. Challenges The Indian economy also faces a number of challenges: - A lack of infrastructure (access to water, electricity, education, sanitation bodies, roads and healthcare). - India’s labour market legislation and regulations are amongst the strictest in the world, which scares many employers off from setting up there. The result has been little new job creation. - Poor results in agriculture. This is worrying, as 60% of India’s population subsist on agriculture. Comprehensive reforms are needed if those who live in the countryside are also to enjoy the benefits of increasing prosperity. - Large class differences. Current reform policy is not very inclusive. - Indian politics is heavily dominated by caste-based preferential treatment and the relations between Hindus and Muslims. This takes up a lot of time in the political arena, and the country’s economy is forced down the political agenda. 2007-2008 marks the start of India’s eleventh economic Five Year Plan, the main aim of which is “faster and more inclusive growth”. One primary goal is to nearly double the allocations for infrastructure from 5.5% to 9% of GDP. Prime Minister Manmohan Singh has said that the country is ready to do what is necessary to achieve 9 – 10% growth. It remains to be seen whether the government manages to include a greater share of the population in the “growth fest” during the upcoming plan period, particularly the majority of the population, who continue to dwell in the country Innovation Norway in India The main focus of our work in business and the economy is collaboration within energy development, oil and gas, fisheries and aquaculture, ICT, marine technology and environmental projects. Numerous presentations about Norwegian skills and technology

within the oil and gas and maritime sectors were held in India over the last year and we are witnessing an increase in interest from Norwegian companies in these sectors. Ships’ equipment suppliers The majority of the larger Norwegian ships’ equipment suppliers have established agents or sales offices in India. In light of the increased shipbuilding capacity and skills that have developed in India over the last 6 – 7 years there is strong demand from Norway, in particular for offshore vessels. As an example there are around 40 ships being built or planned to be built at Indian shipyards for Norwegian shipowners. Indian shipowners build in Norway to a lesser extent, but the export of new ship from Norway to India was more than halved last year. Indian shipowners also buy both new and used Norwegian ships. The Indian shipbuilding industry is investing heavily and it is expected that the capacity will double to 2 million tonnes over the next five years. With Indian prices and available capacity, we expect the Indian market for Norwegian ships’ equipment to increase going forwards. Wilh. Wilhelmsen and its subsidiaries are very active in India, and both BW Offshore and Oddfjell have their own representative offices in Mumbai. Energy security Energy security is an important issue. India’s development of a its own oil and gas resources is a high priority, and there is great potential in the offshore sector. Future development will be in deeper water, with a future market in deep-water technology in which Norway leads the way. There is growing interest in this in Norwegian oil and gas circles, but so far only AkerKværner has had fairly large-scale contracts on the Indian continental shelf. The trend, however, is towards greater engagement from Norwegian companies and Norwegian service-providers will have an interesting market once activities on the Indian continental shelf increase. A number of contracts and MoUs between Norwegian and Indian companies in the oil and gas sector have recently been entered into. India has an energy deficit, and plans are therefore being made for a major increase in the development of available energy resources. Total generation today is around 140,000 MW, approximately 35,000 MW of which comes from hydroelectric power. Wind power contributes around 10,000 MW. Under the forthcoming five year plan, energy generation is to be increased by 70%, which means greater development of all forms of energy. The development of hydroelectric power resources is top priority. SN Power is actively involved in India and is participating in two quite large-scale projects with an Indian partner. They are now setting up their own business in India in order to position themselves in this growing market. In solar power there is collaboration between REC and Moser Baer, one of India’s largest solar energy companies. REC has been given a supply contract amounting to around NOK 5 billion over the next 5 years. Fish India is one of the world’s largest producers of fish. The country is looking for partners with new technology to commence the offshore breeding of new species. Innovation Norway and the State organisation MPEDA signed an MoU in the autumn of 2007 to start a pilot project involving Norwegian and Indian commercial interests to adapt Norwegian breeding technology for salmon to the breeding of sea bass and sea bream. We expect the project to get under way in the first half of 2008. Salmon At present, there is a limited market for salmon in India. Norwegian exports primarily go to the hotel and restaurant sector and amount to around 150 tonnes per annum. With an anticipated building up of Indian retailing and strong growth in the purchasing power of

the Indian middle classes, it seems that there is scope for the market for salmon to progress in the right direction. EFF and IN have set up a project aimed at making connections with Indian chefs to develop the hotel and restaurant market, but the market will only be interesting once a modern infrastructure has been established in retailing. For the present, a number of European groups (including Tesco and Carrefour) are working with Indian partners to establish themselves in the market. IT IT is the flagship of the Indian export industry. Around 30% of Indian exports are IT services. Norway has traditionally had a very small share of this, but over the last few years the Norwegian market has received growing interest, and a number of large Indian IT companies are in the process of establishing themselves in Norway. EDB Business Partner has a large operation aimed at India and most of the larger Norwegian IT consultancies have increasing activity involving India. Architects and engineering Indian architectural/engineering services are also in demand in Norway to cover some of the need for local workers. Indian businesses are looking to further develop engineering services within oil and gas in cooperation with Norwegian industry. Orkla has recently gone into the Indian market in an active way and is constantly expanding its activities. The company is currently active in aluminium, chemicals, microsilica and processed food, with a turnover of around NOK 400 million. Other Norwegian industrial companies that have set up in India include Hydro, SN Power, Tandberg, Telenor, Aker, Kongsberg, Veritas and Jotun. Most of them work through agents of partners. Trade Trade between Norway and India amounted to NOK 5.1 billion in 2007 (NOK 3.4 billion in exports and NOK 1.7 billion in imports). Goods exports rose by 112%, whilst imports rose by 13.7%. The most important export goods are ships and rigs (26%), machinery (14%) and electrical machinery and components (33%). The most important import goods are textiles and clothing (42%), chemicals (6%) and furniture (3.5%). This picture covers only the direct mutual trade of goods, however. Indian service exports to Norway (IT, engineering services), and exports and imports to India via third countries in Asia and the Middle East, are coming on in leaps and bounds. EFTA and India decided in 2006 to set up a common study group to assess whether to enter into negotiations about an economic cooperation agreement (free trade agreement plus). The group recommended in favour of this in the autumn of 2007 and negotiations are expected to start in the spring of 2008. Special events Together with the Export Council for Fish (EFF) and the embassy, in January Innovation Norway organised “A journey to Norway” – a gala evening at the Taj Mahal Hotel in Delhi. One hundred and fifty members of the gastronomical and tourist trades, as well as important Indian decision-makers, attended. The event also marked the start of EFF’s fish week at the Taj Mahal Hotel. In April we presented India as a market for investment in hydroelectric power plants. There was a conference in Oslo (20 interested parties) in order to build a hydroelectric network in connection with India. In June we had a delegation (6 people) from Indian shipyards and shipowners at NorShipping.

In August Innovation Norway had a delegation (10 people) of Indian fish farmers and representatives of fish farming organisations at “Aqua Nor”. During the trade fair, an MoU was signed between IN and MPEDA (the Marine Products Export Development Association). In September, Innovation Norway and Norinco organised the Norwegian participation at the ships’ equipment trade fair INMEX 2007 in Mumbai. Thirty-three Norwegian companies were involved in the Norwegian stand, which was opened by the Norwegian ambassador. Manager: Per Reinboth The office has four employees. Innovation Norway India c/o Royal Norwegian Embassy 50 C Shantipath, Chanakyapuri New Delhi 110 021 INDIA Tel: +91 114177 9200 Fax: +91 11 41680145 Email: newdelhi@innovasjonnorge.no www.innovasjonnorge.no/india Vietnam office (Hanoi) Vietnam formally became a member of the WTO on 11 January 2007. The US also granted “Permanent Normal Trade Relations (PNTR)” status to Vietnam. General development trends Vietnam is expected to have an annual GDP growth rate of 8 - 8.5% over the next five years. FDI amounted to USD 5 billion in 2005, USD 10 billion in 2006 and USD 20.3 billion in 2007. A comparable level of FDI is anticipated for 2008. In 2007, inflation in Vietnam was close to 10% and the authorities are trying to get it under control. It is, however, expected that inflation will also be around 10% in 2008. Demand and assignments from our customers In the period 9 – 14 June, Innovation Norway Hanoi organised a study visit to Ho Chi Minh City and the Mekong delta for five Norwegian companies to allow them to assess the opportunities for collaboration with the Vietnamese catfish industry. We also took in the trade fair and conference at VietFish 2007. The result of this was that two of the companies have now chosen to set up an office in Vietnam and Fiskeriforskning has established a collaboration with AgiFish in relation to the processing of catfish skin. In the period 9 – 16 June, Innovation Norway Hanoi assisted Vinashin (the Vietnam Shipbuilding Industry Corporation) with a programme and trade fair participation at NorShipping in Oslo. The event was carried out in close cooperation with NME (the Association of Norwegian Maritime Exporters). Meetings were organised for Vinashin’s management with organisations and businesses in the maritime sector. In addition, meetings were arranged between Vinashin staff and around 30 Norwegian suppliers of ships’ equipment. Vinashin, NME and the Norwegian companies were all well satisfied with what was organised.

In the period 13 – 17 August, Innovation Norway Hanoi organised participation in “Aqua Nor 2007”, with participation from a Vietnamese delegation representing research communities, fishery provinces and VASEP (the Vietnam Association of Seafood Exporters and Producers). Meetings were held with more than 10 Norwegian companies during the visit, in addition to excursions to HitraMat and to Lerøy Seafood’s plant outside Trondheim. The Vietnamese delegation were very satisfied with the visit. A number of collaboration projects are now under consideration. Results in the form of work initiated, on-going and completed In 2007 we carried out assignments for nearly 20 companies within the seafood, maritime, oil and gas and other sectors. The assistance provided included agent searches, market searches, securing sites, establishment of representative offices, workshops, study visits, market analyses and meetings with the authorities. We have also assisted over 60 Norwegian companies with “General Export Services”. Cooperation with the Ministry of Foreign Affairs and Norad: Innovation Norway Hanoi issues statements to Norad in relation to applications received for pilot project funding. In May 2007, Innovation Norway Hanoi, in cooperation with IN International Business Development, established a MatchMaking Programme for Vietnam known as the “Trade & Industry Program Vietnam–Norway” (TIP). In 2007 eight Norwegian companies were approved for participation in TIP. The “Norwegian Business Forum in Vietnam” has been established, with 33 representatives for Norwegian companies established in Vietnam and Norwegians managing foreign companies in Vietnam. (Updated 21 August 2008).

2007 at a glance 2007 has been a busy year for the Singapore office, with many projects such as the organizing of trade delegations, seminars, orientation programs and trade fairs; as well as partner searches & general market information for Norwegian companies and reporting on market opportunities in Singapore. Maritime & Offshore Delegation A successful business delegation was organized in April to Singaporean yards and oil & gas engineering companies for 15 Norwegian technology providers. This was arranged in cooperation with INTSOK and involved presentations & workshops with more than 100 participants from the yards and engineering companies, which build oil rigs and convert oil tankers to Floating Production Storage Offloading (FPSO) vessels.

Exhibitions & Seminars A Norwegian Pavilion was organized in cooperation with Oslo/Akerhus district office (OSAK) at the CommunicAsia Exhibition (a major information & communication show in Asia) in June. Eight Norwegian exhibitors participated at this exhibition. In addition, we also organized a Norwegian Stand at the largest tourism trade fair in Singapore during March (NATAS Fair) in cooperation with the Norwegian Embassy.

A seminar on the market potential for the Bio- & Medtech sector in Singapore and Malaysia was organized in Oslo in November, also in cooperation with OSAK.

Students from Grunderskolen Innovation Norway (Singapore) arranged a three-month program for a group of 20 students from Grunderskolen. The program included a one-week orientation on South East Asia and in particular, Singapore’s political, social, economic, business environment & business culture; entrepreneurship course at the National University of Singapore and internship with start-up companies.

Business Conference and Network Meetings Innovation Norway (Singapore) cooperated with the Norwegian Business Association, Singapore (NBAS) in organizing the bi-annual Norway - Asia Business Conference in October with about 100 participants.

For the maritime R&D cooperation between Norway and Singapore, delegation tours from Singapore and bilateral meetings were organized in Norway in conjunction with the NorShipping exhibition in June where new project cooperation opportunities were identified.

Innovation Norway (Singapore) also participated at INTSOK’s network seminar / meeting at Gardermoen during September where a presentation was made on how to establish a business in Singapore.

General Export Services Attending to general trade enquiries from both Singaporean as well as Norwegian companies

Individual Company Projects Partner Search - Identify potential Singaporean partners (distributors / agents, JV partners, alliances) Consultancy - Identify business opportunities in Singapore for Norwegian companies

- Provide advice to Norwegian companies on the planning & implementation of their marketing strategies in Singapore

Tay Siow Hwee

Director Siow.hwee.tay@

innovationnorway.no

Diana Tan Executive Secretary

diana.tan@ innovationnorway.no

Claus Gaasvig Senior Market Adviser

claus.gaasvig@ innovationnorway.no

Susanna Heng Market Assistant susanna.heng@

innovationnorway.no

Vi gir lokale ideer globale muligheter

Innovation Norway

Singapore Annual Report 2007

Norway in Singapore About Singapore Innovation Norway (Singapore) Norwegian Companies: 150 est. Population: 4.7 mill. (2007 est.) 16 Raffles Quay #44-01

Land area: 704 km2 Main business sectors: Hong Leong Building Languages: English, Mandarin, Malay, Tamil Maritime, Shipping, Oil & Gas Singapore 048581 Government: Parliamentary System Norwegian residents: ca. 1 300 Tel: +65 6222 1316 President: Mr Sellapan Ramanathan Fax: +65 6224 7079 Prime Minister: Mr Lee Hsien Loong Email: singapore@innovationnorway.no GDP per capita: USD 30,724 (2006)

Currency: Singapore Dollar

Innovation Norway Kuala Lumpur Annual Report 2007

The Malaysian economy grew by 6.3% during 2007 with strong growth in sectors such as services (9.7%), followed by construction (4.6%), mining (3.2%), manufacturing (3.1%) and agriculture (2.2%). The high commodity prices have also contributed to the high growth. Foreign Direct Investments (FDI) amounted to UDS9.4 billion in 2007 as compared to UDS6.0 billion in 2006. The sectors that would be of interest to Norwegian companies include the oil & gas, marine aquaculture, ICT, maritime and energy.

Summary of activities IN Kuala Lumpur (IN KL) assisted four Norwegian companies in establishing their presence in Malaysia – two have established subsidiaries and the other two are in progress. Our office has also supported companies in partner and agent searches, project support in energy intensive industries, information on market opportunities in the oil & gas and marine aquaculture sectors, organised two profiling events for groups of companies in the oil and gas sector and within food and consumer products. The Malaysian oil and gas sector has attracted growing interests from Norwegian companies with seminars/ workshops, delegations and visits taking place both in Malaysia and Norway. In promoting agriculture food, seafood and consumer products, a week of activities at a popular high-end shopping complex was successfully carried out. Oil & Gas Asia (OGA) IN KL organised a Norwegian Pavilion with 8 Norwegian companies in connection with the “OGA 2007” (Oil & Gas Asia 2007), which has become the largest oil & gas exhibition in Asia. There were about 1,000 exhibitors from 37 countries and drawn some 20,000 visitors from the region. A series of related activities were arranged at the same time such as the official opening of AkerKvaerner’s UDS100 million subsea manufacturing plant, breakfast seminar by APL ASA, cocktail reception by the Norwegian ambassador, a mini seminar on doing business in Malaysia with speakers from the Malaysian Industrial Development Authority as well as a concert by Norwegian conductor Arild Remmereit with the Malaysian Philharmonic Orchestra. Due to the strong interests from Norwegian companies, our office will again stage a Norwegian pavilion during “OGA 2009”. PETRONAS delegation to Norway In late June, IN KL in cooperation with INTSOK organised a successful trip with the theme “Promotion of Malaysia as Regional Deepwater Center for Norwegian Oil & Gas Industry” for 5 senior managers from PETRONAS (the national oil company of Malaysia). The delegation, led by the Vice President for E&P Business, met with 33 companies and institutions such as NTNU, Sintef, Ministry of Petroleum and Energy, IFE, Statoil, AkerKvaerner and smaller companies like Geolab Nor, Marine Cybernetics and Ziebel. The PETRONAS delegation was generally impressed with the work carried by the R&D institutions and university and has expressed interest to cooperate with these institutions. We expect to continue with arranging such visits for PETRONAS in the coming years. Norwegian Food & Consumer Fair

A week of profiling and promotion of Norwegian food and consumer products involving six Norwegian companies was held at the main concourse area of a high-end shopping complex in Kuala Lumpur. Various food and consumer products were on display for sampling and purchase such as fresh, smoked, hot-smoked Norwegian salmon, salmon and cod pate, salmon burger, fish cakes, breads, bread mixes, cake mixes, jams, cheeses, margarines, Mills caviar and bread spreads, Jordan toothbrushes and Ekornes stressless chairs and sofa sets.

Working cooperation was established with Cold Storage, the anchor supermarket at the complex, which was involved in selling the seafood products both at its store as well as the fair. Due to positive responses from consumers as indicated by the sales, Cold Storage has decided to retail the various seafood products permanently at its store.

Promoting Oil & Gas sector to Norwegian companies IN KL presented opportunities in the oil & gas sector to companies in Bergen at a Subsea seminar organised by NCE Subsea, IN Bergen and Bergen Næringsråd in April. In September, IN KL spoke on “doing business in Malaysia” at the South East Asia Network meeting at Gardermoen, organised by INTSOK. IN KL also participated in 3 workshops/seminars organised by INTSOK, PETRAD, PETRONAS and CCOP during the year where 23 speakers from 13 Norwegian speakers spoke on topics that ranged from Deepwater Technology-concept selection and long tie-backs, pipeline integrity management to high pressure high temperature drilling and development technology. There were about 279 participants from PETRONAS, ExxonMobil, Shell, Talisman, Nippon Oil, New Field and local service providers. Norwegian Gala Dinner IN KL assisted the embassy in organising the annual event where some 480 Malaysian and Norwegian businessmen and -women participated in a gala dinner in October. The “Malaysia Norway Business Innovation Award for 2007” was presented during the evening, with Jotun Paints as the winners. Seminar on Bio & MedTech IN KL presented market opportunities on Bio & MedTech sectors in Malaysia together with IN Singapore at a seminar in Oslo. The seminar was organised by the Oslo & Akershus office of Innovation Norway. General Export Services In addition to paid assignments from individaul companies, our offices attended to various trade enquiries from Malaysian and Norwegian companies.

Ewe Tuan Hai

Director tuan.hai.ewei@nnovationnorway.no

Jamaliah Abdul Manap

Market Adviser jamaliah.abdul.manap@innovationnorway.no

Julia Gan Soke Ee

Market Adviser julia.gan@innovationnorway.no

Innovation Norway (Kuala Lumpur) About Malaysia Norway in Malaysia Suite 53C, Level 53, Population: 27,5 mill. (March 2008 est.) Norwegian Companies: 60 est.

Land area: 329.733 km2 Empire Tower, Main business sectors: Languages: English (working language), Malay (national language), Mandarin and Tamil.

Jalan Tun Razak, Oil & Gas, aquaculture, ICT, maritime, energy 50400, Kuala Lumpur,

Political System: Constitutional Monarchy, Parliamentary Democracy

Malaysia. Norwegian residents: ca. 300 Tel: +60 2162 1200 Head of State: Sultan Mizan Zainal Abidin Fax: +60 2162 2200 Head of Government: Dato’ Seri Abdullah Badawi Email: kuala.lumpur@innovationnorway.no GDP per capita: USD 6.249 (2006)

Currency: Malaysian Ringgit (MYR/RM)

Innovation Norway Thailand Annual Report 2007

With a well-developed infrastructure, a free-enterprise economy, and pro-investment policies, Thailand appears to have fully recovered from the Asian financial crisis in the late 90-ies. Major industrial focus sectors are: Automotive (automobiles and automotive parts), Electronics and ICT, Fashion (garments, textile and design), Food, Value-added services including entertainment, healthcare and tourism Thai economy in 2007 was supported by robust growth in export volume of goods and services, growing at around 6.4%, while import volume of goods and services grew at 3.5%. Also, accelerated public spending played a vital role in supporting the economy at a time when private spending slowed down. Public consumption and public investments grew at 9.2% and 2.9%, respectively.

Summary of activities IN Bangkok assisted 5 Norwegian companies in establishing their offices or factories or obtaining their business license from BOI (Board of Investment) in Thailand. 4 of them will use Innovation Norway consulting services for their office establishment. Our office has also supported companies in partner and agent searches, outsouring, information on market and investment opportunities in the energy, food and aquaculture sectors. INBD Reports IN Bangkok carried out market surveys to identify business opportunitie and potential projects in Thailand within following sectors: Aquculture, Oil and Gas, Renewable Energy and Automotive The reports will be presented to relevant Norwegian companies through our district officves during 2008. Small PTT delegation to Norway In late Nov, IN Bangkok in cooperation with IN Hordaland brought a group of people from PTT (the largest oil company in Thailand), Ministry of Energy, Ministry of Transport, and the CEO of a leading logistic company to visit some companies in Norway in order to get an overview of and understand NGV/LPG transportation and storage systems and NGV/LPG engines. The delegation visited Maritek, Rolls-Royce Marine and Norgas. We expect this visit will lead to future business cooperation and opportunites for projects in Thailand. Thai Norwegian Business Seminar IN Bangkok cooperated with the Norwegian Embassy and Thai-Norwegian Chamber of Commerce in arranging the “Thai-Norwegian Business Seminar” in Bangkok in Nopvember 2007. The seminar, held at The Conrad Hotel in Bangkok targeted: • Norwegian businesses aiming to invest in Thailand • Norwegian businesses present in Thailand • Thai businesses wishing to co-operate with Norwegian companies

The seminar covered subjects concerning investments in Thailand, macro-economic issues including questions on political stability, economic development, legal considerations and practical experiences from companies having gone through the investment process in Thailand.

Ugris Prinyagul Senior Market Adviser ugris.prinyagul@innovationorway

Innovation Norway (Bangkok) About Thailand Norway in Thailand 18th UBCII Building, Population: 65 mill. (2007) Norwegian Companies: 50 est.

Land area: 314,000 km2 591 Sukhumvit 33, Main business sectors: Languages: Thai (official language), Bangkok 10600 ICT, General production English (business language) THAILAND Norwegian residents: 1 500 est. Political System: Constitutional Monarchy, Parliamentary Democracy

Tel.: +66 22 04 65 80 (approx. 800 registered at embassy) Fax: +66 22 62 02 16

Head of State: King Bhumibol Adulyade

Web: www.innovationnorway.no Head of Government: Samak Sundaravej Email: bangkok@innovationnorway.no GDP per capita: USD 3.132 (2006)

Currency: Thai baht (Baht)

The Western Europe region: The Western Europe/South Africa region consists of our offices in the United Kingdom, Germany, France, the Netherlands, Spain, Italy, Portugal and South Africa, with a total staff of around 70. The markets of this region represent more than 50% of Norwegian exports and, together with the Nordic region, make up the primary markets for entrepreneurs and small and medium-sized enterprises with international potential. More information about the services, activities and skills of these offices: Provide links here to the websites of the Hamburg, Madrid, London, Paris and Milan offices. The focus areas for IN in Western Europe are as follows: - Energy and the environment - Tourism - ICT (essential software and new applications) - Seafood and other foods - The oil and gas industry - The maritime sector - Small and medium-sized enterprises with ambitions for international growth, from the above and other sectors - Promoting Norway and Norwegian trade and industry. Within the prioritised sectors, we work on networking, forums for contact between Norwegian and local trade and industry, providing information and performing assignments for individual companies. The combined capacity and skills in the region have been set up as a network so that the capacity and skills can be deployed across national borders as required.

Germany The most important focus area in Germany is tourism. German tourists represent more 20% of all foreign overnight stays in Norway. Germany is therefore the most important market for the tourism sector. In 2007, Norwegian trade and industry enjoyed a good year in the German market, with growth of 3% in overnight stays and a 4% rise in the number of visits. The trend in the German tourist market means that there are not as many holidays to Norway as previously. The Germans are taking more numerous but shorter holidays. We are attempting to compensate for this by targeting the marketing more at short trips and above-average niches. In 2007, together with the industry, we carried out a strategy project (OPTIMA) that involves a gradual re-alignment of activities to new target groups, both geographically in Germany and to a younger target group. The focusing of campaigns on short trips, themed trips and families with children is being taken further. We are building on our previous experience in the summer and winter campaigns, and we have not made any extensive changes in direction or policy with regard to our strategy, media plans, or the like for these campaigns. Energy and the environment are the other main focus for IN in the German market. Traditionally, oil, gas and electricity-related products and services have been in focus. This is turning more and more towards technology for renewable forms of energy. Germany is the world’s largest market for this sector. We are making an active effort to bring Norwegian and German companies together so that new opportunities can be exploited. Our German-Norwegian energy forum is a leading network for energy links between the two countries. The network held three events in 2007, with around 420 companies participating. The King and Queen of Norway made an official visit to Germany in October 2007. During the visits, Innovation Norway held a series of events for the business community, with a focus on the tourism and energy and the environment sectors. The events represented an important promotional effort for Norwegian business interests in Germany and garnered very strong participation from the German side. Other important focus areas in Germany include environmental technology and healthcare. In these sectors, too, Germany is among the best in the world when it comes to innovation and purchasing power. As an important market for businesses across most industries and sectors, the German office worked on around 30 business start-ups and partner searches for individual companies in 2007. The upswing in the German economy continues, providing greater opportunities in the German market going forwards. Manager: Sverre Lindtvedt Innovation Norway ABC-Strasse 19 ABC-Bogen 20354 Hamburg Tel: +49 40 22 94 15 0, Fax: +49 40 22 94 15 88 Email trade: hamburg@innovationnorway.no Email Travel and Tourism: germany@invanor.no

SPAIN Spain has been experiencing strong economic growth for a number of years. Purchasing power has risen significantly and many sectors can offer very exciting market opportunities for Norwegian companies. In the light of interest from the Norwegian business community and priorities set by the Norwegian government, in 2007 Innovation Norway’s Madrid office focused on tourism, repurchasing in connection with the Norwegian frigates, surf and turf, and renewable energy. Norsvin – a good example of the internationalisation of Norwegian agriculture Some sections of Norwegian agriculture have a great potential for export and international cooperation. Norwegian biotechnology and Norsvin are examples of this. In 2007, Norsvin was able to sign an agreement with one of Spain’s largest companies in relation to breeding and meat production. This entry into a contract was the result of targeted work on analysing the market, identifying potential customers and meeting the company that best fit Norsvin’s needs. The work in Spain went on in parallel to Innovation Norway Hedmark’s collaboration with Norsvin on a number of product and process development projects with the aim of improving Norsvin’s competitiveness internationally and increasing profitability in Norwegian pig production. In this connection, Norsvin received grants from Innovation Norway and tax incentives from the Research Council of Norway under the SkatteFUNN scheme. There are more trips to Norway by Spanish tourists than ever before. Once again there was strong growth in the number of Spaniards travelling to Norway. A pleasing rise of 13% was recorded in the number of overnight stays – the 300,000 barrier has been broken! These good results occurred in a very busy year for the Spanish office. The efforts were divided into three areas: Spanish consumers, Spanish press and the Spanish tourism industry. Press The marketing value of press coverage we achieved was estimated at NOK 19.1 million, which is a 70% rise compared to 2006. We organised 24 press trips to Norway with 71 journalists. More than 400 press contacts received our newsletter. Tourism industry To prime the tourism industry in Spain, we organised a trip to Norway plus seminars involving 200 travel agencies. We distributed 42,500 brochures. Sixty tour operators currently sell Norway and 3200 industry players receive our newsletter. We organised two workshops with the industry – one in Madrid and one in Barcelona – which saw participation from 28 Norwegian and around 150 Spanish travel companies. MICE had its own seminar in connection with these workshops. At Fitur, Europe’s second-largest travel and tourism trade fair, we had a joint Norwegian stand featuring 16 Norwegian participants and with 22,000 visitors. Consumers www.visitnorway.es is our most important information channel to Spanish consumers. The number of unique users rose by 30% as compared with the preceding year to 330,000. We had a Norwegian stand at 8 public trade fairs, which had 37,000 visitors. Campaigns were held for short breaks and for Finnmark as a winter destination. Channels

such as Google, Blogger, underground railway billboards, travel magazines and national newspapers were used with good results. In addition, we distribute tourist information based on enquiries, including from visitnorway.es. We distributed record numbers of brochures (49,000) for 14 partners. We kept the office open to the public until September. We received 4500 enquiries in 2007, up 12% on 2006. The electronic newsletter was sent to 20,000 consumer contacts. A total of 70,000 Spanish Norway Catalogues were sent to the industry, the press and consumers. The repurchasing contract was fulfilled ahead of schedule – an open door to further industrial cooperation In 2007, Navantia fulfilled its repurchasing obligations 8 years after winning the contract to purchase five frigates from the Norwegian military. Around 35 of the numerous companies that managed to benefit from the repurchasing work since then received assistance from IN Madrid. During this period, the office developed very good relations with the players in Spain that can be made use of in future for further civilian and military industrial cooperation between Norway and Spain. Our work over a period of years in priming the market for port security and securing the position of Norwegian companies bore fruit in 2007. Spain – the land of the sun and the wind In 2007, IN Madrid carried out an analysis of the markets for wind power and marine energy. The report found, amongst other things, that Spain is the second-largest market for wind power (12,800 MW installed) The way is currently being cleared for offshore wind projects Spain is the country with the most sunshine and best potential for solar power growth in Europe, which has given rise to enormous investments in the sector (249 MW installed). The report was produced under the auspices of Innovation Norway Rogaland and London, in collaboration with a series of other Innovation Norway offices. 2007 summary Innovation Norway Madrid organised: 26 company projects 3 information-gathering projects (renewable energy, port security, ICT) 8 tourism trade fairs with a Norwegian stand 24 press trips involving 71 journalists Close collaboration with colleagues in the offices in Finnmark, Hedmark, Trøndelag and Oslo Numerous events with the Spanish-Norwegian Chamber of Commerce Manager: Vincent Wego Fleischer Innovation Norway Real Embajada de Noruega Paseo de la Castellana, 31-planta baja 28046 MADRID SPAIN Tel: +34 91 344 09 87 Fax: +34 91 344 09 47 Email: madrid@innovasjonnorge.no Website: www.innovasjonnorge.no/spania

ITALY 2008 was a busy year with efforts focus on the following sectors: tourism, agriculture (study trips), renewable energy (work for Norsk Solkraft and preparation of various sector reports), maritime (assignments for EFF and individual companies) plus assignments in the other sectors of healthcare and ICT. For EFF (the Export Council for Fish), Innovation Norway in Milan set up a course for Italian cookery school students and held a recipe competition. Innovation Norway in Milan organised and ran numerous important study trips for groups in agriculture. Thus the agricultural cooperative organisations and Innovation Norway spent new year in Emilia-Romagna studying ecological farming, cooperation and the production of cheese and ham. Small-scale production in Tuscany The office assisted Innovation Norway’s Arendal office and 6 farms in studying small-scale production in Tuscany in April. In addition, Innovation Norway Milan organised two busy study trips: to Tuscany for the Norwegian Agricultural Authority in September and to Umbria for NGB (Rural tourism and traditional food in Norway) in October. Cultural heritage in the promotion of tourism Other partners had study trips organised by Innovation Norway Milan to Piedmont in March, where the Nordland County Council learned about the use of cultural heritage in promoting tourism and to Bologna in May, where the county executives observed Italian administration. Common geographical branding The interest in learning from and taking inspiration from Italy and in selling to the market also manifested itself in active collaboration with various regional offices and especially Innovation Norway Vadsø. For Finnmark, the office assisted Finnmark groups in studying the use of common geographical branding, a women’s network and a market trip in Finnmark organised by Innovation Norway in Vadsø. The planning began for other schemes from Innovation Norway in Buskerud (agriculture), Hedmark (tourism) and Sogn and Fjordane (innovation). Tourism As regards tourism, Innovation Norway Milan continued its programme, that has been running for many years, of quite large-scale workshops in Norway (spring) and Milan (autumn) and smaller and more specialised events around Italy. At the tourism trade fair BIT, the office has a joint Scandinavian stand. One new initiative was Identita Golose, a gourmet trade fair at which Scandinavian cuisine was promoted. Innovation Norway Milan has for many years put a lot of effort into promotion through the specialist press and in 2007 it organised around 40 trips to Norway for Italian journalists. Another primary target group for these trips is tour operators.

Manager: Knut A. Mugaas Innovation Norway Milan Via Puccini 5 20121 Milano, Italy Tel: +39 0285451411 Fax: +39 0285451430 Email: milano@innovasjonnorge.no Website: www.innovasjonnorge.no/italia

South Africa South Africa experienced a continuation of strong economic growth in 2007. Even if inflation rose more than in the preceding year, there continues to be optimism and good times in the business community. According to the World Bank, South Africa is a country where it is easy to carry out business. Norwegian businesses communicate easily with South African businesses and adapt easily to the business culture in the country. An active year The office in Johannesburg had a change of manager in August 2007. Bjørn Eriksen succeeded Knut Ringstad, who has taken on new duties at Innovation Norway’s head office in Oslo. The main project for the office was the MatchMaking programme for South Africa, which was funded by the Norwegian Agency for Development Cooperation (Norad). The programme is a partner-search concept for Norwegian companies looking to find collaboration partners in South Africa. An information-gathering/survey project in wireless technology with a focus on mobile technology has been launched and is due to conclude in the first half of 2008. This will provide a good basis for Norwegian companies looking to market themselves for the projects arising from the fact that the football World Cup in 2010 will be in South Africa. The office’s focus is on the following areas: ICT, and in particular wireless technology; oil and gas; energy; manufacturing and the maritime sector. The MatchMaking programme Twenty-five companies were involved in the programme in 2007 and 20 of them visited South Africa. A total of 98 meetings were held between potential collaboration partners. Two South African companies visited Norway. In October a delegation of Norwegian suppliers of the oil and gas sector visited potential collaboration partners in Cape Town. A return visit to Norway will take place in the spring of 2008. Manager: Bjørn Eriksen Innovation Norway 14th Floor, Sandton City Office Towers P.O.Box 785436, Sandton 2146 Johannesburg South Africa Tel: +27 11 7848150 Fax: +27 11 784 8153 Email: johannesburg@innovationnorway.no

France (Paris) In 2007, the French office focused on tourism, seafood, new energy, small and medium-sized enterprises and information-gathering within the food industry. The office in Paris was also heavily involved in the value-adding programme that has been started in the seafood sector. In parallel with the Bocuse D’Or final in Lyon, a food and restaurant-related trade fair was organised, at which Innovation Norway Paris was responsible for organising a joint Norwegian stand. Gilde AS and Norwegian producers of king crabs from Finnmark took part. The Paris office hosted numerous visits by delegations from many of our county councils during the year. Information and talk about local opportunities on the French market to take back to Norway are always in demand. Numerous study trips to France were organised during the course of 2007. Eleven companies from Finnmark participating in the competence development programme for food and seafood were in Paris in June. The programme is to continue in 2008 as part of the Marine Value Creation Programme, in which France will continue to play an important role going forwards. As regards tourism, a range of activities targeting the French consumer market took place in 2007. A large-scale billboard campaign in the Paris Métro took place over a week with the aim of tempting the French population to visit Norway. Participation in the most important tourism trade fairs in France and Norway has been an important tool in the work of promoting Norway as a travel destination. Workshops have been held within the tourism industry involving the biggest players from both the Norwegian and the French sides. Collaboration between Innovation Norway and the Export Council for Fish is also strong in France and since December 2007 they have been fully integrated into our office. Tourism Market activities in France are predominantly targeted at consumers. There was a big escalation in this area in 2007, with large-scale campaigns in the Paris Métro, backed up by ads in selected media and on TV. In addition, there is also editorial coverage in the press and on a number of big TV programmes as a result of the press visits under the auspices of our office. We also participated in three consumer trade fairs. Activities aimed at the tourism industry: workshops in Paris and Norway, two study trips, three newsletters, seminars for tour operators’ sales staff and for travel agents. Continuous follow-up of enquiries from the industry and active search activities. Press work is prioritised as before. In 2007 we had 59 journalists visiting Norway, and in the course of the year 95 relatively large editorial articles with an advertising value of over NOK 20 million appeared. We recorded 40 TV broadcasts/films about Norway. Manager: Kjell Grønn

Innovation Norway 22, rue de Marignan BP 497, FR-75366 Paris FRANCE Tel: +33 1 53 23 00 50 Fax: +33 1 53 23 00 59 Email: paris@innovationnorway.no Website: www.innovasjonnorge.no/frankrike