IMPORTANT BALANCE SHEET ASSETS

Property

KONGSBERG manages substantial real estate.

The business consists of property management of real estate owned or leased by the Group. The majority of the properties are located in Kongsberg and Horten.

Owned by KONGSBERG

	Projected gross rental income in 2008 – MNOK	Area m2
Kongsberg	60.4	91 800
Horten	23.3	29 500
Total	83.7	121 300

The properties enjoy fully occupancy, consisting mainly of KONGSBERG companies. Following demergers in 2005 and 2006, aggregate real property is divided among several companies, all of which are wholly-owned by Kongsberg Gruppen ASA. They have a collective book value of MNOK 508. Rental revenues reflect market rates for comparable properties in the area.

Goodwill

Goodwill is an asset that arises in connection with acquisitions. It represents the difference between the acquisition price and the items identified and capitalised as underlying assets and liabilities. Compared with other assets such as buildings, technology, receivables and stock in trade, goodwill is more abstract and complex. Our goodwill includes the value of acquired expertise and anticipated synergies ensuing from acquisitions. Synergies can consist of expertise, additional market access and distribution, sales and administration, as well as cost reductions due to more efficient processes and the coordination of central functions. Goodwill is no longer amortised, but rather impairment tested annually to see whether the value is lower than the capitalised value. If the value is lower than the capitalised value, goodwill must be written down. At 31 Dec. 2007, goodwill accounted for approx. 15 per cent of the Group's total assets. See Notes 14 and 15.

Other intangible assets

Other intangible assets generally include the value of technology, as well as research and development (R&D). In recent years, we have acquired companies which have very valuable technology and where the technology is decisive for sales to customers. The technology is depreciated over its expected useful economic life. The remaining useful economic life is assessed annually.

Adding up to about MNOK 374, R&D accounts for a significant share of our costs. In addition, R&D valued at MNOK 97 has been capitalised. The criteria for capitalisation (balance sheet recognition) are strict. There are extensive documentation requirements and the chances of success must be demonstrated before an R&D project can be recognised on the balance sheet. At an early stage, there is normally considerable uncertainty about whether a project can be brought to fruition. For that reason, many of the costs will already be incurred before they satisfy the criteria for balance sheet recognition. Accordingly, the capitalised percentage is relatively low. Even if R&D is not capitalised, it is still of significant value to the company. The percentage of R&D relative to revenue is an indicator of how much the Group invests in R&D.

Receivables

At 31 December 2007, the Group had total receivables of MNOK 1 690, cf. Note 22 to the consolidated accounts.

Amounts in MNOK	31 Dec 07	31 Dec 06
Accounts receivable	1 456	1 329
Other receivables	151	123
Prepayments to suppliers	83	30
Total	1 690	1 482

Projects

The Group's main business objective is largely to develop and manufacture products and systems based on orders received. Balance sheet values attached to long-term production contracts are reported at gross values. Outstanding gross amounts from customers for contractual work are reported as assets.

Most of Kongsberg Maritime's projects last for less than two years, and earnings on individual projects make a modest contribution to overall earnings. The projects at Kongsberg Defence & Aerospace are of longer duration and the overall earnings from each individual project make a significant contribution to the Group's operations. See Note 23.