7.1 Working capital statement
In the opinion of EDB ErgoGroup, EDB ErgoGroup has sufficient working capital for its present requirements, that is, for at least the 12 months following the date of publication of this Prospectus.
7.2 Funding structure
As of 30 June 2010, the Company had NOK 283 million in cash and NOK 187 million in undrawn commitments under existing bank facilities on a standalone basis, which lead to a total available liquidity of NOK 470 million. The Company had NOK 3,195 million in interest bearing debt on a standalone basis, of which NOK 87 million was short term interest bearing debt.
ErgoGroup standalone had, per 30 June 2010, NOK 411 million in cash and NOK 270 million in undrawn commitments under existing facilities with Posten. ErgoGroup standalone had NOK 1,442 million in interest bearing debt, of which NOK 103 million was short term interest bearing debt.
As of 31 August 2010, the Company had NOK 131 million in cash and NOK 177 million in undrawn commitments under existing bank facilities, which lead to a total available liquidity of NOK 308 million. As of the same date ErgoGroup (including its subsidiaries) had NOK 366 million in cash and NOK 796 million in undrawn commitments under existing facilities with Posten, which lead to a total available liquidity of NOK 1,162 million. Combined, this would give NOK 497 million in cash and NOK 973 million in undrawn commitments under existing bank facilities, which lead to a total available liquidity of NOK 1,470 million.
On completion of the Combination, NOK 1,000 million of ErgoGroup’s interest bearing debt to Posten was refinanced through the utilisation of the Company’s NOK 1,000 million term loan with Skandinaviska Enskilda Banken. Simultaneously, the Company assumed the balance of ErgoGroup’s outstanding loan with Posten in the amount of approximately NOK 400 million, including accrued interest, and the undrawn commitments on ErgoGroup’s facilities with Posten was cancelled.
In connection with announcement of the Combination, the Company announced a contemplated share issue of up to NOK 1,000 million, which will take place after completion of the Combination. The Company believes that, together with the proceeds from such share issue, funds from operations and funds available under its bank facilities (as described in Section 0 “The Company’s main sources of cash flow are cash flow from operations. In the first half of 2010, the Company had a negative operational cash flow of NOK 22 million, which was mainly due to an increase in accounts payable compared to 31 December 2009. In the same period, ErgoGroup standalone had an operational cash flow of NOK 49 million. Combined, this would give a total operational cash flow in the first half of 2010 of NOK 27 million. Historically, both the Company and ErgoGroup standalone generate nearly all of their cash flow during the final quarter of the year, and it is not expected that it should be any different in the present year. Free cash flow (operational cash flow minus investments) was negative with NOK 217 million in first half of 2010 for the Company. In the same period, ErgoGroup standalone had a free cash flow of NOK -26 million. Combined, this would give a total free cash flow of NOK -243 million.
See Section 8.3.4 “Cash Flow Statement” and Section 9 “Operational and financial review” for details on cash flow for the latest financial year and the first half of 2010.
The Company has not experienced any material changes in the Combined Group’s cash flows.
There are no particular limitations related to transferring of liquidity between fully owned subsidiaries. For partly owned subsidiaries, the Company adheres to generally accepted corporate governance principles and laws and regulations in place.
Borrowings and restrictions on use of capital”) will be sufficient to fulfil the Combined Group’s commitments and strategy going forward. The adequacy of available funds will depend on many factors, including the further growth of the business, capital expenditures, market development, competition and potential acquisitions. Accordingly, the Combined Group may require additional funds going forward.
7.3 Cash flows
The Company’s main sources of cash flow are cash flow from operations. In the first half of 2010, the Company had a negative operational cash flow of NOK 22 million, which was mainly due to an increase in accounts payable compared to 31 December 2009. In the same period, ErgoGroup standalone had an operational cash flow of NOK 49 million. Combined, this would give a total operational cash flow in the first half of 2010 of NOK 27 million. Historically, both the Company and ErgoGroup standalone generate nearly all of their cash flow during the final quarter of the year, and it is not expected that it should be any different in the present year. Free cash flow (operational cash flow minus investments) was negative with NOK 217 million in first half of 2010 for the Company. In the same period, ErgoGroup standalone had a free cash flow of NOK -26 million. Combined, this would give a total free cash flow of NOK -243 million.
See Section 8.3.4 “Cash Flow Statement” and Section 9 “Operational and financial review” for details on cash flow for the latest financial year and the first half of 2010.
The Company has not experienced any material changes in the Combined Group’s cash flows.
There are no particular limitations related to transferring of liquidity between fully owned subsidiaries. For partly owned subsidiaries, the Company adheres to generally accepted corporate governance principles and laws and regulations in place.
7.4 Borrowings and restrictions on use of capital
As of completion of the Combination (14 October 2010), the Combined Group has an aggregate long term debt of approximately NOK 4,267 million, which represents bank borrowings and is divided as follows:
Type of debt facility Lender Facility amount (NOK million) Final maturity Multi currency revolving credit ...DnBNOR, Nordea and Handelsbanken 500 March 2011 Multi currency revolving credit ...DnBNOR, Nordea and Handelsbanken 800 February 2012 Term loan ...DnBNOR, Nordea and Handelsbanken 850* February 2013 Multi currency revolving credit ...DnBNOR, Nordea and Handelsbanken 950 February 2013 Term loan ...Skandinaviska Enskilda Banken** 1,000 14 October 2012 * The term loan has semi annual repayments of NOK 70 million.
** The loan replaced an intra-group loan from Posten to ErgoGroup and was drawn in connection with and at completion of the Combination.
The Company has the following covenant in relation to the loan agreements: The Borrower (EDB ErgoGroup) undertakes to ensure that the ratio of the Combined Group's Net Interest Bearing Debt to EBITDA does not exceed 3.25:1, save that the ratio may increase to 3.50:1 at the end of any quarterly reporting period two (2) times during the Facility Period (consecutively or separately).
As described in Section 7.2 “Funding Structure”, the Company assumed the balance of ErgoGroup’s outstanding loan with Posten in the amount of approximately NOK 400 million, including accrued interest. This loan has a final maturity on 14 April 2011.
7.5 Capitalisation and indebtedness
The following table shows the actual capitalisation for the Company on a consolidated basis as per 30 June 2010 and as per 31 August 2010, together with consolidated actual capitalisation for ErgoGroup standalone as per 31 August 2010:
Amounts in NOK million
The Company 30 June 2010 (unaudited) The Company 31 August 2010 (unaudited) ErgoGroup 31 August 2010 (unaudited) Share capital ... 160 160 250 Share premium reserve ... 27 27 1,231 Own shares ... -3 -3 0 Retained earnings ... 2,066 2,055 628 Minority interests ... 44 46 4 Total equity ... 2,294 2,286 2,113 Long-term borrowings (secured/guaranteed) ...
Long-term borrowings (secured/unguaranteed) ... 3,108 3,128 1,339 Long-term borrowings (unsecured/unguaranteed) ...
Total long term borrowing ... 3,108 3,128 1,339 Current debt (secured/guaranteed) ...
Current debt (secured/unguaranteed) ... 87 87 103
Current debt (unsecured) ...
Total current debt ... 87 87 103 Total capitalization ... 3,195 3,215 1,442
The following table shows the net indebtedness on a consolidated basis as per 30 June 2010 and as per 31 August 2010 together with consolidated net indebtedness for ErgoGroup standalone as per 31 August 2010:
Amounts in NOK million
The Company 30 June 2010 (unaudited) The Company 31 August 2010 (unaudited) ErgoGroup 31 August 2010 (unaudited) A. Cash ... 366 B. Cash equivalent ... 283 131 C. Trading securities ... D. Liquidity (A + B + C) ... 283 131 366 E. Current financial receivable ... 1,877 680 F. Current bank debt ... 1,942
G. Current portion of non current debt* ... 87 103
H. Other current financial debt ... 87 1,315 1,129 I. Current financial debt (F + G + H) ... 1,554 1,402 1,232 J. Net current financial indebtedness (I - E - D) ... 1,641 -606 186 K. Non-current bank loans ... -584 3,128 1,339 L. Bond issued ... 3,108
M. Other non-current loans ...
N. Non-current financial indebtedness (K + L + M) .. 3,128 1,339
O. Net financial indebtedness (J + N) ... 3,108 2,522 1,525
Following 31 August 2010, the share capital of the Company has been increased from NOK 160 million to NOK 301 million and the share premium fund has increased from NOK 27 million to approximately NOK
1,757 million
(see Section 12.1 “Description of the Shares and share capital”). As a result of completion of the Combination, the Company acquired the financial assets and assumed theindebtedness of ErgoGroup as at 14 October 2010 as further described above. Other than this, there have not been any significant changes in the capitalisation and indebtedness of the Company since 31 August 2010.
There were no significant changes in the capitalisation and indebtedness of ErgoGroup in the period from 31 August 2010 until the completion of the Combination occurred on 14 October 2010.