2007

On 27 December 2006, KONGSBERG concluded an agreement to purchase 100 per cent of the technology enterprise Sense Intellifield for a cash consideration of MNOK 266. The acquisition was closed on 23 January 2007 at a consideration estimated at MNOK 324. The consideration consists of cash, acquisition costs and estimated additional remuneration related to earn-outs. Sense Intellifield delivers products in the field of integrated operations for the oil and gas market. Integrated operations are having a growing impact on the oil and gas industry in terms of exploration as well as production. The date of acquisition was 23 January 2007. For the period 1 Jan. 2007 to 31 Dec. 2007, the company contributed MNOK 161 in operating revenues and, at -MNOK 5, its EBITA was negative.

Sense Intellifield AS

Amounts in MNOK	Recognised values at acquisition	Adjust-ments of fair value	Carrying value prior to acquisition
Property, plant and equipment	2	-	2
Other intangible assets and technology	173	142	31
Trade receivables and other receivables	40	-	40
Deferred tax liability	(32)	(40)	8
Contractor and other current liabilities	(43)	-	(43)
Net identifiable assets and liabilities	140	102	38
Goodwill upon acquisition	184
Cash payment incl. acquisition costs and additional remuneration	324
Cash money acquired	-
Net closing cash flow	324

The fair value of technology is calculated based on earnings and hinges on future licence revenues. The value on technology constitutes MNOK 152 and consists of four different applications/systems. Licence revenues are expected to increase in the next two years, and then to decline as future development is not reflected in the estimated licence revenues. The technology has a projected useful life of seven to 10 years. The fair value of customer relations is based on an excess earnings-based method and has a value of MNOK 21. Anticipated operating revenues for advanced conference rooms, consultancy services and service are considered part of customer relations. The projected useful life of customer relations is six years.

Goodwill is residual, and is mainly related to employee expertise, anticipated synergies and future earnings attached to the future development of technology. Future cash flows are discounted by a project-specific discount rate. The estimates are based on past experience, expectations of future licensing agreements, technical assessments of the technology and external market trends. The estimates are contingent on the fulfillment of assumptions. Changes in the assumptions may have a significant impact on future results.

2006

With effect on the accounts as from 1 June 2006, KONGSBERG acquired Gallium Software Inc. of Canada for MNOK 136 (CAN 25) and Fantoft Process Technologies AS for MNOK 67. In addition, transaction costs came to MNOK 4 for Gallium and MNOK 1 for Fantoft. Both acquisitions were settled in cash. In 2006, Gallium contributed MNOK 37 in revenues and MNOK 1 to the profit. Fantoft contributed MNOK 38 in revenues and a negative result of - MNOK 8. Improvement measures, including integration processes, have been initiated in both companies and are expected to have a favourable effect in 2007. Had the acquisitions taken place on 1 January 2006, the consolidated operating revenues would have been MNOK 6 752 higher for Gallium and the profit for the year MNOK 236.

Gallium and Fantoft

Amounts in MNOK	Recognised values at acquisition	Adjust-ments of fair value	Carrying value prior to acquisition
Property, plant and equipment	5	-	5
Other intangible assets and technology	144	143	1
Trade receivables and other receivables	25	-	25
Cash and short-term deposits	2	-	2
Deferred tax liability	(5)	(5)	-
Pension commitments	(4)	(4)	-
Other non-current liabilities	(4)	-	(4)
Contractor and other current liabilities	(25)	-	(25)
Net identifiable assets and liabilities	138	134	4
Goodwill upon acquisition	69
Cash payment incl. acquisition costs	207
Cash money acquired	2
Net closing cash flow	205

The value of the technology/software is based on the net current value of future licence revenues, i.e. our estimate of fair value on the date of acquisition. The estimates on licence revenues and the useful life are based on historic experience, technical valuations, and the estimated discount rate. The estimates are contingent on the fulfillment of assumptions. Changes in the assumptions may have a significant impact on future results. The useful life of Gallium's technology is 15 years for the core technology and 6 years for the remaining part of the technology.

The core technology accounts for 80 per cent of the total value of the technology. The balance sheet values are MNOK 98 and MNOK 25, respectively. The reason for distinguishing between core technology and support technology is that parts of the system experience a more rapid turnover of technology than the core technology. Licence revenues are expected to increase in the years ahead, and then to dwindle since future upgrading and development are not reflected in the estimates. Future cash flows are discounted by a project-specific discount rate. The value of customer relations is virtually zero, and has been estimated on the basis of an added value model. Maintenance and service revenues are assumed to be associated with customer relations. The useful life is expected to be two to four years.

The useful life of the technology at Fantoft is seven years. Future cash flows are discounted by a project-specific discount rate. A useful life of seven years is based on uncertainty about how much of the acquired system or KONGSBERG's original system is to be further developed and maintained in future. Customers are assigned a value of approx. zero, for the same reason as mentioned above in connection with Gallium.

Goodwill, i.e. the residual amount after the allocation of excess value in connection with acquisitions, is mainly related to employee expertise in the acquired companies and expected synergies related to market access, research and development, sales and administration.

KONGSBERG has used independent advisers to help the Group identify and estimate the fair value of the intangible assets.

Disposal of operations

On 26 September 2005, it was announced that KONGSBERG had signed an agreement with the Nordic investment fund Altor for the sale of the parts of Simrad that develop, manufacture and sell maritime electronics for use on yachts and commercial vessels. The business is being carried on under the name Simrad Yachting. Kongsberg retained ownership of the rest of Simrad, which focuses on fishery activities. The sale took place on a debt-free basis for MNOK 586. The price was based on the accounts at 31 December 2004 plus the regulation mechanisms linked to the closing of the accounts on the date of the sale.

The following figures are included on the income statement under "Profit from discontinued operations":

Amounts in MNOK	2007	2006	2005
Sales revenues	-	-	451
Operating expenses	-	-	(429)
Earnings before tax	-	-	22
Net financial income	-	-	(7)
Earnings before tax (EBT)	-	-	15
Gain on sale of operations before tax	-	-	47
Tax	-	-	(15)
Profit from discontinued operations, net after tax	-	-	47