AX IV EG Holding III ApS

AX IV EG Holding III ApS
Company Description
Admission to trading on First North Bond Market Copenhagen
Issue of DKK 900,000,000 Senior Secured Floating Rate Bonds
due 2 December 2020
ISIN DK0030329495
FIRST NORTH DISCLAIMER
First North Bond Market is an alternative marketplace operated by an exchange within the
NASDAQ OMX group. Issuers on the First North Bond Market are not subject to the same
rules as Issuers on the regulated main market. Instead they are subject to a less extensive set
of rules and regulations. The risk of investing in an Issuer on First North Bond Market may
therefore be higher than investing in an Issuer on the main market. At least during the listing
process all Issuers with financial instruments traded on First North Bond Market have a
Certified Adviser who monitors that the rules are followed. The Exchange approves the application for admission to trading.
NOTICE TO PROSPECTIVE INVESTORS
This Company Description has been prepared by AX IV EG Holding III ApS for the admission to trading on First North Bond Market of the Bonds.
This Company Description has been prepared on the basis that any offer of Bonds in any
member state of the European Economic Area which has implemented the Prospectus Directive will be made pursuant to an exemption under the Prospectus Directive, as implemented in that Relevant Member State, from the requirement to publish a prospectus for
offers of Bonds. Accordingly, any person making or intending to make an offer in that Relevant Member State of the Bonds may only do so in circumstances in which no obligation
arises for the Issuer or any of the Joint Lead Managers to publish a prospectus pursuant to
Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the
Prospectus Directive, in each case, in relation to such offer. Neither the Issuer nor any Joint
Lead Manager have authorized, nor do they authorize, the making of any offer of Bonds in
circumstances in which an obligation arises for the Issuer or any Joint Lead Manager to publish or supplement a prospectus for such offer.
No person has been authorized by the Issuer or any Joint Lead Manager to give any information or to make any representation other than those contained in this Company Description in connection with the issue or sale of the Bonds and, if given or made, such information
or representation must not be relied upon as having been authorized by the Issuer or any
Joint Lead Manager. The delivery of this Company Description at any time does not imply
that there has been no change in our business or affairs, or any event reasonably likely to
involve a change, since the date hereof or that the information contained herein is correct as
of any time subsequent to the date hereof.
None of the Joint Lead Managers has authorized or verified the whole or any part of this
Company Description and none of them makes any representation or warranty or accepts
any responsibility as the accuracy or completeness of the information contained in this Company Description. Accordingly none of the Joint Lead Managers accept any responsibility for
the contents of this Company Description or for any other statement made or purported to be
made by a Joint Lead Manager or on its behalf in connection with the Issuer or the issuer of
the Bonds.
Neither this Company Description nor any financial statements are intended to provide the
basis of any credit or other evaluation and should not be considered as a recommendation by
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any of the Issuer or the Joint Lead Managers that any recipient of this Company Description or any financial statements should purchase the Bonds. Each potential investor shall
accordingly determine for itself the information included in this Company Description and
its purchase of the Bonds should be based upon such investigation as it deems necessary.
The distribution of this Company Description and the offering or sale of the Bonds in certain
jurisdictions may be restricted by law. Persons into whose possession this Company Description comes are required by the Issuer and the Joint Lead Managers to inform themselves
about and to observe any such restriction.
The Bonds have not been and will not be registered under the US Securities Act of 1933 (the
“Securities Act”) and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act.
This Company Description does not constitute an offer of, or an invitation by or on behalf of
the Issuer or the Joint Lead Managers or any of them to subscribe for or purchase, any
Bonds.
The Bonds have not been assigned a rating by a rating agency.
When investing in the Bonds, Bondholders accept to be bound by the terms of the Bond
Agreement, the Intercreditor Agreement and the Finance Documents, however not including
the Revolving Credit Facility Agreement. The Bond Agreement and Intercreditor Agreement
can be obtained by contacting the Issuer or EG A/S. Please refer to page 55 of this Company
Description for further information regarding the Bond Trustee.
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DISCLAIMER FORWARD-LOOKING STATEMENTS
Any statement in this Company Description that is not a historical fact is a forward-looking
statement. Such statements are not historical facts and may include opinions and expectations about management's confidence and strategies as well as details of management's expectations of new and existing programs, technology and market conditions. These forwardlooking statements rely on assumptions concerning future events that are subject to a number of risks and uncertainties, many of which are outside the Group's control, and which
could cause the Group's actual results to be materially different from these forward-looking
statements. While the Group believes that its assumptions concerning future events are reasonable, there are inherent difficulties in predicting certain important factors that could impact the future performance or results of the Group's business. The Group expressly disclaims any intention or obligation to revise or update any forward-looking statements,
whether as a result of new information, future events, or otherwise. The Group's actual results could differ materially from those indicated in these forward-looking statements as a
result of certain factors, including but not limited to the risks described elsewhere in this
Company Description. Additionally, the Group makes no representations or warranties as to
the suitability of the information for your purposes. You are reminded that all forwardlooking statements in this Company Description are made as of the date hereof.
PRESENTATION OF FINANCIAL INFORMATION
In this Company Description, the Group makes references to EBITDA and/or EBITA and
EBITDA/EBITA margin, neither of which is defined under the Danish Financial Statements
Act. The items excluded from EBITDA/EBITA and EBITDA/EBITA margin are significant in
assessing the Group's operating results and liquidity. EBITDA/EBITA and EBITDA/EBITA
margin have limitations as analytical tools and should not be considered in isolation from, or
as a substitute for, analysis of the Group's results as reported under the Danish Financial
Statements Act. Other companies in the Group's industry and in other industries may calculate EBITDA/EBITA and EBITDA/EBITA margin differently from the way that the Group
does, limiting their usefulness as comparative measures.
Under accounting policies of the Group certain development costs are capitalized in the balance sheet and not expensed in the year they were incurred. This means that EBITDA is
higher than had such development costs been expensed. The development cost capitalized in
the balance sheet will be depreciated over 3-5 year. EBITA includes depreciations on capitalized development costs.
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Table of contents
FIRST NORTH DISCLAIMER ....................................................................................................................... i
NOTICE TO PROSPECTIVE INVESTORS .................................................................................................... i
DISCLAIMER FORWARD-LOOKING STATEMENTS .............................................................................. iii
PRESENTATION OF FINANCIAL INFORMATION .................................................................................. iii
RESPONSIBILITY STATEMENTS ............................................................................................................... 2
RISK FACTORS .............................................................................................................................................. 3
THE BONDS, CAPITALIZATION AND USE OF PROCEEDS .................................................................. 22
BUSINESS .................................................................................................................................................... 25
FINANCIAL INFORMATION ..................................................................................................................... 45
OWNERSHIP ............................................................................................................................................... 54
ADMISSION TO TRADING AND GENERAL INFORMATION ............................................................... 55
BOARD OF DIRECTORS AND EXECUTIVE BOARD .............................................................................. 57
TERMS AND CONDITIONS OF THE BONDS .......................................................................................... 76
SUMMARY OF FINANCE AGREEMENTS .............................................................................................. 129
ADVISERS .................................................................................................................................................. 132
GLOSSARY AND DEFINITIONS .............................................................................................................. 133
ANNEXES
ANNUAL REPORT 2011 – EDB GRUPPEN HOLDING A/S
ANNUAL REPORT 2012 – EDB GRUPPEN HOLDING A/S
Q3 FINANCIAL STATEMENTS – EDB GRUPPEN HOLDING A/S
Q3 FINANCIAL STATEMENTS – AX IV EG HOLDING III APS
ARTICLES OF ASSOCIATION – EDB GRUPPEN HOLDING A/S
ARTICLES OF ASSOCIATION – AX IV EG HOLDING III APS
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......................................F2
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RISK FACTORS
Prospective investors should carefully consider the risks described below before making an
investment decision. Since the Issuer is highly dependent on the performance of the Group,
the following risk factors relate to the Group, rather than only to the Issuer. The risks described below are not the only risks facing the Group. Investment in the Bonds involves a
high degree of risk and to the extent any of the risks described below have a material adverse effect on the Group’s business, Bondholders may lose all or part of their original investment.
The Issuer believes that the factors described below represent the principal risks inherent in
the Group’s business and in investing in the Bonds. The Issuer does not represent that the
statements below regarding the risks of holding the Bonds are exhaustive. Additional risk
factors not presently known, or that are currently deemed immaterial, may also render the
Issuer unable to pay interest, principal or other amounts on or in connection with the
Bonds.
RISK FACTORS IN GENERAL
All of these factors are contingencies which may or may not occur and the Issuer is not in a
position to express a view on the likelihood of any such contingency occurring. It is not possible to quantify the significance of each individual risk factor, as each risk described below
may materialize to a greater or lesser degree, or may have unforeseen consequences. The risk
factors are not listed in any order of priority with regard to significance or likelihood of occurrence.
Prospective investors should also read the detailed information regarding the Group, its
business and industry in general as set out elsewhere in this Company Description, in the
Issuer’s annual report and otherwise available to the investors in order to reach their own
views prior to making any investment decision with respect to the Bonds. Prospective investors are recommended to seek independent advice concerning legal, accounting and tax issues relating to the specific circumstances of individual investors before deciding whether or
not to invest in the Bonds.
Investors should be aware that the Bonds are exposed to market conditions of a general nature. Accordingly, the market price of the Bonds may be influenced by, for example, economic factors that cannot be foreseen at the time of investment. Investors should be aware that
the number of Bonds in circulation may fluctuate over the term of the Bonds and that the
marketability of the Bonds in the secondary market may change over the term of the Bonds,
thus limiting investors’ ability to sell the Bonds. In conducting its business activities, the
Group assumes risks of a varying nature, any and all of which may affect the Group's performance and the value of the Bonds.
Each of the risks set out below applies equally to the Issuer and the Group and the occurrence of any of the following risk factors may materially and adversely affect the Group's
business, results of operations or financial condition and consequently have a negative effect
on the Issuer and its ability to meet its respective obligations under the Bond Agreement.
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Intra-group dependencies
A significant part of the Issuer’s assets are comprised of its shareholdings in its subsidiaries.
The Issuer has limited income and a significant part of the Issuer’s income derives from dividends distributed by its subsidiaries. The Issuer and its ability to pay interest, principal and
other amounts under financial indebtedness are therefore dependent on the capacity of the
Group to generate earnings and distribute these within the Group.
RISKS RELATED TO THE BUSINESS
Global Economy
The Group is operating in primarily Denmark, Norway and Sweden and to a certain extent
also worldwide, particularly with Scandinavian based global companies. The Group's operations and performance depend on economic conditions and the effects hereof on and within
the Retail & Media, Logistics & Production, Public, Utility, Building & Construction and SaaS
& Infrastructure sectors.
The global economy and the global financial system continue to experience a period of significant turbulence and uncertainty following the severe dislocation of the financial markets
and economic decline that began in 2008. The current market climate has until recently been
one of continuing recessionary conditions and trends in many economies throughout the
world and this has impacted the commercial sector and the general financial situation of
enterprises.
Uncertainty about global economic conditions poses a risk as consumers and businesses may
postpone or reduce spending in response to tighter credit, negative financial news or declines
in income or asset values and other macroeconomic factors, which could affect consumer
spending behavior and have a material negative effect on demand for the Group’s software,
services and products. The Group's revenues and gross margins are dependent upon demand
for the Group’s software, services and products and if this demand declines or the margins
decline, it could have a material adverse effect on the Group’s business, results of operations
or financial condition.
The economic environment, pricing pressure and decreased employee utilization rates could
negatively impact the Group’s revenues and operating results.
The Group is unable to predict the likely duration and severity of the current economic
downturn and adverse global economic conditions. If the current uncertainty continues or
economic conditions further deteriorate, it could have a material adverse effect on the
Group’s business, results of operations or financial condition. Furthermore, if the economic
downturn continues or worsens, the Group may not be able to secure short-term and longterm credit or leasing facilities on favorable terms or at all, which could have a material adverse effect on the Group's liquidity.
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Industry and market risks
Technology changes
Rising new technologies such as cloud-based solutions and mobile technologies are gaining
traction. Today, a considerable amount of the Group’s revenues are derived from cloudbased solutions, but other unknown technologies may arise and change the foundation for
the software, services and products offered by the Group. Existing ERP-players such as the
Group will have to adjust their software, services and product offerings with the emergence
of new technologies, and if the Group does not manage to adjust their software, services and
products accordingly, then it may have a material adverse effect on the Group’s business,
results of operations or financial condition.
The Group’s financial condition is partly dependent on solutions based on large software
platforms. These standardized solutions are offered in a highly competitive and specialized
market. Approximately 60 per cent of the Group’s revenues are based on solutions and services related to Microsoft Dynamics AX and Microsoft Dynamics NAV, both of which are
increasing their market share in the ERP SME segment. The Group is dependent on its ability to develop scalable best-in-class industry solutions that supplement these standardized
solutions. Changes in the technical foundations of the standardized solutions and/or changes
in customers’ preferred ERP platforms may force the Group to alter its products accordingly.
The Group is forced to invest time and resources on educating employees and updating existing software, services and products to be competitive when updated versions of existing
technologies and completely new technologies are launched. If the updated versions of existing technologies or the completely new technologies do not penetrate the market, these investments may prove futile. Furthermore the updated versions of existing technologies may
contain errors and flaws, such as the 2012 version of Microsoft Dynamics AX, which are outside of the Group’s control. These errors and flaws may entail difficulties for the Group to
price and budget project offerings for customers. The Group’s business will suffer if the
Group fails to anticipate and develop new services and enhance existing services in order to
keep pace with rapid changes in technology, in the industries and in the standardized solutions on which the Group focuses. This poses a risk that could have a material adverse effect
on the Group’s business, results of operation or financial condition.
Competition
The Group may face significant competitive pressure from other participants in the market
resulting in pricing pressures, lower sales and reduced margins, which could have a material
adverse effect on the Group’s business, results of operations or financial condition.
A significant part of the Group’s revenues are based upon customized add-on solutions to
standard software supplied by platform providers, primarily Microsoft, and to a very limited
degree SAP. In Scandinavia the platform providers do not deliver such customized solutions
and the Group competes with smaller specialized companies e.g. CGI, Acando, Columbus IT,
Evry, Avanade, Norriq, Fujistsu, KMD and Visma.
A part of the Group’s activities within standardized solutions is subject to competition from
competitors based in countries with a lower level of expenses. As the global market place
develops with among other things the development of cloud technology lower market entry
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barriers are expected. If the Group does not meet these challenges it may have a material
adverse effect on the Group’s business, results of operations or financial condition.
Industry changes
The balance between insourcing and outsourcing is constantly changing. An increased focus
on insourcing will lead to falling sales especially within service agreements, while a decreased
focus on insourcing will lead to rising sales.
If major platform service providers such as Microsoft seek downstream expansion in the
value chain and increase their attention towards developing their own industry solutions
then it may pose a risk which unless mitigated by the Group may have material adverse effect
on the Group’s business, results of operations or financial condition.
Operational risks
Innovation and software development
In order for the Group to remain competitive within its markets, it is important that the
Group is able to develop and launch new software, services and products, update existing
products and services and expand new or redesigned products and services in a timely manner. Failure by the Group to do so might result in the Group falling behind its competitors.
There are risks with launching a new product on to the market. The Group’s software, services and products are complex and may contain errors, faults, performance problems or
defects which were undetected in testing. It is important that both the Group’s support and
research and development teams become familiar with new software, services and products
so as to be able to efficiently respond to any problems that may arise. Once a product is
launched, it is necessary to ensure that quality standards are maintained to ensure continuing customer satisfaction and confidence. If problems were to occur which are not adequately
managed it could damage the Group’s reputation and prove more difficult to market the
product. If these risks were to arise they may adversely impact the Group’s business, results
of operations or financial condition.
Compatibility
In order for the Group to remain competitive within its market, compatibility with other
significant components and general IT standards is a core value. Failure by the Group to be
compatible with other components might result in the Group falling behind its competitors
and in loss of customers. If the issue of compatibility is not adequately managed it could
damage the Group’s reputation and prove more difficult to market the product. This may
have adverse effect on the Group’s business, results of operations or financial condition.
Project Management
The management consultancy and programming part of the Group is a project driven organization that requires the Group to ensure that the offer documents have high standards as
well as the subsequent management of the projects and resources is closely supervised. It is
of vital importance that the projects are carried through with high quality in accordance with
the agreed price and deadline. There are risks connected to marketing, sales, analysis and
design, development, implementation and operation in the Group’s project planning. The
Group has established well planned phases and has experience with calculating the risk of
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budgeting, resourcing and quality. As fixed prices become more common in the industry
there exist risks that a project exceeds the anticipated number of hours based on a flawed
estimation of the necessary resources needed. Furthermore there exists a risk when defining
and describing the software, service and/or product to be delivered as there may occur misunderstandings between the Group and customers on the customers objectives which may
result in re-deliverance or disputes.
Connection with Microsoft
The Group’s business and operations are among other things based on sales of standard Microsoft licenses and individually designed solutions based on Microsoft products but the
Group has not entered into any agreements with Microsoft that are unusual or peculiar within the industry. However, if Microsoft’s market share decreases, it may have an adverse effect
on the Group’s business, results of operations and financial condition.
Customer Concentration
The Group operates mainly in Denmark, Norway and Sweden and has a large customer base.
Currently the Group has a diversified customer base with low dependency on single customers. In 2012, the 10 largest customers accounted for approx. 11 per cent of the Group’s revenues, while top 20 per cent accounted for approx. 17 per cent. The Group’s divisions Utility
and Public are characterized by having relatively larger customers than the rest of the divisions. Dependency on one or more customers within Utility and Public may have material
adverse effect on the divisions’ business and results of operations.
Attack by IT viruses
As an IT business, attacks by IT viruses are a threat, both to the Group and its customers. If
the Group’s products or internal IT systems are contaminated with a virus this could temporarily prevent the Group’s customers from conducting their business or the Group from
providing adequate support and services to its customers. Failure to maintain sound IT infrastructure and virus protection could therefore result in disruptions and if they were to
continue for a considerable length of time they may adversely impact the Group’s business,
results of operations or financial condition.
Fires and other natural catastrophic events
The Group’s servers, systems and physical operations are vulnerable to damage or interruption from earthquakes, volcanoes, fires, floods, power losses, telecommunications failures,
terrorist attacks, acts of war, human errors, break-ins and similar events. The Group may not
have sufficient protection or recovery plans in certain circumstances and the Group’s business interruption insurance may be insufficient to compensate the Group for losses that may
occur. As the Group rely heavily on the Group’s servers, systems, the physical operations and
the Internet to conduct the Group’s business such disruptions could negatively impact the
Group’s ability to run the business, which could have an adverse effect on the Group’s operating results.
Acquisitions
The business segments which the Group is active are subject to continuous consolidation
driven by the increase in cross-border trade and the search for economies of scale. The strat-
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egy of the Group is to participate actively in this consolidation process. This strategy for
long-term growth, improved productivity and profitability depends in part on the Group's
ability to make acquisitions and to realize the expected benefits from its acquisitions. While
the Group expects such acquisitions to enhance its value proposition to customers and improve its long-term profitability, there can be no assurance that the acquisitions will meet the
Group's expectations within the established time frame or at all.
Acquisitions involve a significant number of risks, including, but not limited to, risks arising
from change of control provisions in contracts of any acquired company, local law factors,
pending and threatening lawsuits and risks associated with restructuring operations. The
integration of acquired companies may result in unforeseen operational difficulties and
costs, and the Group may encounter unforeseen difficulty in retaining customers from and
key personnel in acquired businesses. The Group may not be able to realize the expected
benefits from a certain acquisition or the profitability of the acquired company may be lower
than expected or even result in a loss.
To successfully manage the integration of acquired companies or assets, the Group will need
to maintain high standards of service and manage its employees effectively. The Group's
successful growth will furthermore depend on its ability to manage its expanding operations,
as well as the operations of the networks of its local partners, including its ability to establish
and maintain an adequate IT infrastructure, to integrate new qualified personnel and any
newly acquired businesses on a timely basis, and to maintain robust financial and management control and reporting systems and procedures. There is a risk that the Group will not
succeed therein.
If the Group is unable to expand its operational, financial, and management systems in a
manner that supports the expected growth, or is unable to attract, motivate and manage a
skilled workforce, the Group may not be able to continue to satisfy customer demands. If the
Group expands the business too rapidly in anticipation of increased customer demand that
does not materialize, the increase in operating expenses could exceed revenues growth and as
a result reduce net income. Thus if the Group is unable to manage its growth, it could have a
material adverse effect on the Group’s business, results of operations or financial condition.
The Group has built up considerable goodwill on its accounts due to acquisitions. Notwithstanding that the goodwill is impairment tested annually the rise of new “game changing” or
transformational technology may entail that the goodwill must be immediately written off.
Risks related to employees
Attracting and retaining employees
To a large extent the Group relies on human know-how. The employees of the Group have
specific sector related know-how, which is valuable for the Group. The Group has not generally entered into non-competition or non-solicitation clauses. If employees with specific sector related know-how leave the Group, the Group might lose valuable knowledge and the
employees might be hired by competitors or establish their own companies.
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The customers of the Group require deep sector knowledge including supply chain
knowledge and understanding. To ensure the Group continues to offer high level advice and
solutions, including further development of software, services and products, thereby ensuring profitability the Group depends largely upon highly skilled technology professionals and
the Group’s ability to hire, attract, motivate, retain and train these personnel. Key employees
might be attracted to opportunities in rising market, i.e. Norway. A failure to attract and
retain competent key employees could have material adverse effect on the Group’s business,
results of operations or financial conditions.
Invoicing rate
The Group is highly dependent on the employees’ invoicing rate, which equals the billable
hours. The invoicing rate depends on the composition of the staff as well as how the individual employee spends his time. In 2012, a 1.00 per cent decline in the Group’s employees’
invoicing rate would have equaled a DKK 23 million decline in (EBITDA) for the period to
the extent that the Group did not adjust costs accordingly. A decline in the employees’ invoicing rate across the Group could have material adverse effect on the Group’s business, results
of operations or financial condition.
Increased wage pressure
In certain industry sectors and countries there continues to be a significant wage pressure
due to the demand for skilled employees. In a positive economic environment the wage pressure will rise as well as the employee turnover. This may cause heavier expenses for training
of new employees. If the Group does not comply with the wage demands within these industry sectors and countries, the Group may lose valuable employees. The wage pressure and
employee turnover may have an adverse effect on the Group’s profitability
IPR and Legal Risks
Contractual liability
Typically a service agreement contains provisions requiring a high percentage of uptime as
well as other service requirements. In connection with the contract negotiation phase the
Group seeks to draft provisions that mitigate the size of potential liability claims and penalties. The Group has established internal controls to secure reasonable liability provisions
when entering into agreements. Nevertheless, the Group is exposed to contractual liabilities,
which could have a material adverse effect if such exposure materializes. Moreover, human
errors in judgment may cause the Group to accept contractual liability provisions inadvertently or outside of internal control systems established to secure management approvals.
Under some contracts or legal regimes the Group may have unlimited liability for losses
caused by its own negligence, and such liability may not be covered by the Group’s insurance
policies.
Loss making contracts
The Group is currently reviewing a selected number of loss making contracts. This review
may result in renegotiation or cancelation of the contracts and may entail losses.
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Litigation and disputes
The Group’s software, services and products relate to extensive, complex transactions often
involving considerable sums. Customers or other parties may file claims for compensation
for loss or damage alleged to have arisen due to reported faults or defects in the Group’s
software, services, products and management or the Group may become party to judicial or
administrative proceedings relating to the Group’s business, including, responsibility for
software, services and products as well as contractual interpretation and intellectual property
rights. Any such claims against the Group or the Group’s involvement in any judicial or administrative proceedings in respect of such claims could mean that the Group is forced to
expend considerable sums and resources in defending such claims, whether or not they have
legal merit, and this could adversely impact the Group’s business, results of operations or
financial conditions.
Insurance
The Group believes that is has a normal, market standard insurance program. The insurance
program is reviewed once a year. However, the insurance program contains provisions on
own risk and not all types of losses and liabilities are covered. If a loss occurs that the insurance does not cover, it may have material adverse effect on the Group.
Competition
The Group had entered, enters and will enter into agreements with other companies who in
some aspects of the Group’s business may be assessed as competitors of the Group. The
Group does not believe that it has entered into any agreements that contain provisions that
infringe current competition law. However, the competition authorities in various jurisdictions may interpret the agreements otherwise. Furthermore, there cannot be given any assurance that an adoption of new competition legislation may result in that certain of the provisions of the agreements may be assessed as an infringement of the new competition law. If
the Group fails to comply with the existing competition law this could adversely impact the
Group’s business, results of operations or financial conditions.
Intellectual property rights
The products marketed by the Group consist mainly of computer programs developed by the
Group over a long period of time. The Group relies primarily on copyright and trade secret
protection, and not on registered rights, for the computer programs in question. It cannot be
assured that the intellectual property rights relied on by the Group will afford sufficient protection of the Group’s technology or business and given the international market in which the
Group operates, any attempt to take measures against any infringement of its intellectual
property rights may be difficult and result in considerable costs. If the risk of infringement
and the fetters on access to judicial remedies were to materialize, it may adversely impact the
Group’s business, results of operations or financial conditions.
In addition that Group has and may in the future enter into cooperation agreements and
other contractual arrangements with third parties that allow such third party to use
knowledge obtained during such cooperation or the right to use any source codes, which may
include the third party applying such knowledge in its own products and services.
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The Group does not consider that its software, services and products infringe the rights of
any third party. Nevertheless, customers or others might make claims to the contrary whether or not they have legal merit. If such claims were to be made the Group may be prevented
from licensing the necessary technology or be unable to develop alternative software, services
or products to avoid such claims of infringement and continue to deliver the software, services and products to its customers. The Group gives its customers certain guarantees and
indemnities including, amongst others, that the Group holds all necessary rights to the products that are made available to the customers. If any claims were filed against customers,
enforcement of the guarantee or infringement claims under the indemnity may result in considerable costs for the Group, which may adversely impact the Group’s business, results of
operations or financial conditions.
Open Source
The Group incorporates open source software into the Group’s platform. The Group believes
that the use of open source codes has not surpassed what is deemed ordinary within the industry. It is within ordinary practice for Danish and Scandinavian companies, who offer and
develop proprietary solutions, to use open source codes when developing proprietary solutions, including use of open source components. Given the nature of open source software,
third parties might assert copyright and other intellectual property infringement claims
against the Group based on the Group’s use of certain open source software programs. The
Group could be required to seek licenses from third parties in order to continue offering the
Group’s software, services and products, to re-develop the Group’s software, services and
products, to discontinue sales of the Group’s software, services and products, or to release
the Group’s proprietary software source code under the terms of an open source license, any
of which could adversely affect the Group’s business. This may adversely impact the Group’s
business, results of operations or financial conditions.
Legislation and regulations
As the Group’s business activities are spread over a number of geographical markets, it is
exposed to many different laws, regulations, ordinances, agreements and guidelines. New
laws and regulations or changes in the applicability of existing laws and regulations to the
Group’s business activities may result in a risk of reduced revenues and/or increased costs. If
changes in laws or regulations, or their applicability to the Group’s activities, were to occur it
may adversely impact the Group’s business, results of operations or financial conditions.
Financial Risks
Seasonality
The Group’s earnings and turnover may vary from period to period. If the spreading of earnings and turnover over a year surpasses expectations it may have an influence on the Group’s
liquidity as a part of the Group’s expenses do not fluctuate with the revenues on a short term
basis.
The Group’s biggest single expense is salary. Almost all staff are hired as salaried employee.
It is therefore not possible to reduce the major part of the Group’s expenses on a short term
basis. The Group has launched programs to minimize this risk. If the programs do not have
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the expected effect it may adversely impact the Group’s business, results of operations or
financial conditions.
Risk of refinancing and financial covenants
The Group has debt obligations and is required to dedicate a portion of its cash flows to service the debt, which reduces cash available to fund acquisitions and to finance operations,
capital expenditures, working capital and other general corporate purposes. A part of the
Group’s financing is short term financing, making the Group dependent on having such credit facilities renewed from time to time. If any of the lenders under such financing agreements
are unwilling to extend such arrangements and the Group is unable to find an alternative
source of funding at comparable rates, this may affect the Group’s liquidity adversely or increase the Group’s interest expenses substantially. Furthermore, the level of indebtedness
may render the Group unable to secure new credit facilities when required, either on commercially attractive terms or at all.
The Group’s ability to make payments on and to refinance its debt, and to fund planned capital expenditures and other strategic investments will depend on its ability to generate cash in
the future. This, to a certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are outside the Group’s control.
There can be no assurance that the Group’s business will generate sufficient cash flows from
operations or that future debt and equity financing will be available in an amount sufficient
to enable the Group to pay its debts as they fall due or to fund other liquidity needs.
Certain of the Group’s financing arrangements are subject to various covenants, including
financial covenants, including the Bond Agreement, which could limit the Group’s ability to
finance its operations and capital needs and pursue acquisitions and other business activities. There can be no assurance that the obligations contained in the aforementioned financing arrangements will be met.
You are advised to carefully read the covenants in the Bond Agreement, including the carveouts and permitted actions.
A breach of the Group’s financing agreements may trigger cross-default or cross-acceleration
provisions and provide a substantial number of the Group’s lenders with a right to cancel
their commitments to the Group and require the outstanding indebtedness to be immediately repaid. In addition, an event of default would occur under the Bonds. In such circumstances, all of the Group’s debt could be accelerated at the same time.
The occurrence of either of the above could have a material adverse effect on the Group’s
ability to satisfy its debt obligations as they fall due and, as a result, could have a material
adverse effect on its business, results of operations or financial condition.
Currency
The Group’s accounts are consolidated in DKK, whereas a proportion of the proceeds of sale
of the Group’s products and services outside Denmark are denominated in NOK and SEK. In
12
the twelve months up to 30 September 2013 revenues in NOK constituted approximately 17
per cent and revenues in SEK approximately 7 per cent of the total consolidated revenues. In
the twelve months up to 30 September 2013 the revenues in NOK constituted approximately
12 per cent and revenues in SEK approximately 9 per cent of the total EBITDA. The Group is
consequently exposed to currency risks, including currency exchange control risks and other
restrictions by foreign governments. To some extent the Group hedges currency risks but
there is no standard operating procedure requiring hedging in any event. Furthermore there
are risks connected to conversion of intragroup outstanding accounts. Fluctuations in currency exchange rates, including primarily NOK but also in SEK, relative to DKK could have a
material adverse effect on the Group’s business, results of operations or financial condition.
Goodwill
See the section “Acquisitions” for the description on the risks related to goodwill.
Taxation and Duties
The Group conducts its operations through companies in a number of different jurisdictions.
Applicable taxes could increase significantly in each of these countries as a result of changes
in the tax laws or their application. Furthermore, the Group may become subject to tax audits, which could increase the amount of tax that the Group is required to pay and have a
material adverse effect on its business, results of operations or financial condition.
The Group has transfer pricing arrangements among subsidiaries in relation to various aspects of the Group’s business, including operations, marketing, sales and delivery functions.
Transfer pricing regulations require that any international transaction involving associated
enterprises be on arm’s-length terms. The Group considers the transactions to be on arm’slength terms. The determination of the Group’s consolidated provision for income taxes and
other tax liabilities requires estimation, judgment and calculations where the ultimate tax
determination may not be certain. The Group’s determination of its tax liability is always
subject to review or examination by authorities in various jurisdictions.
RISK RELATED TO THE BONDS
Suitability
The Bonds may not be a suitable investment for all investors. Each prospective investor in
the Bonds must determine the suitability of that investment in light of its own circumstances.
In particular, each prospective investor should:
(i)
(ii)
(iii)
have sufficient knowledge and experience to make a meaningful evaluation
of the Bonds, the merits and risks of investing in the Bonds and the information contained or incorporated by reference in this Company Description;
have access to, and knowledge of, appropriate analytical tools to evaluate, in
the context of its particular financial situation, an investment in the Bonds
and the effect the Bonds will have on its overall investment portfolio;
have sufficient financial resources and liquidity to bear all of the risks of an
investment in the Bonds, including Bonds where the currency for principal
or interest payments is different from the potential investor’s currency;
13
(iv)
(v)
understand thoroughly the terms of the Bonds and be familiar with the behavior of any relevant indices and financial markets; and
be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect
its investment and its ability to bear the applicable risks.
Credit Risks
The Group may become unable to pay interest, principal or other amounts on or in connection with the Bonds, which may affect the value of the Bonds adversely. An increased credit
risk or decrease in the Group’s creditworthiness may have an adverse effect on the market
price of the Bonds.
The Group’s ability to make payments on the Bonds will depend on its ability to generate
cash or refinance itself in the future. This, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are outside the Group’s
control.
Registration
The Bonds will be registered with VP Securities A/S and payment of interest, principal or
other amounts on or in connection with the Bonds will be made through VP Securities A/S.
The Bondholders will thus rely on VP Securities A/S’ procedures for transfer, payment and
communication with the Group.
Modification, Waivers and Substitution
The terms of the Bonds contain provisions for calling meetings of Bondholders to consider
matters affecting their interests generally. These provisions permit defined majorities to bind
all Bondholders, including Bondholders who did not attend and vote at the relevant meeting
and Bondholders who voted in a manner contrary to the majority. A Bondholder may be
adversely affected by such decisions.
Bondholders Representation
In accordance with the Bond Agreement, the Bond Trustee represents each Bondholder in all
matters relating to the Bonds and the Bond Agreement and holds and shall enforce the Bond
Agreement on behalf of the Bondholders. The Bond Agreement contains provisions to the
effect that a Bondholder is prohibited from taking actions of its own against the Issuer. This
does not, however, rule out the possibility that the Bondholders, in certain situations, could
bring their own action against the Issuer, which could negatively impact the chances of an
effective enforcement of the Bond Agreement.
Danish law may not recognize the concept of a trustee and Bondholders may under Danish
law have to submit a written power of attorney to enable the Bond Trustee to represent the
Bondholders in legal proceedings in court. The failure of all Bondholders to submit such a
power of attorney could negatively impact the enforcement options available to the Bond
Trustee when considering its enforcement of the Bond Agreement for and on behalf of the
Bondholders.
14
Additionally, under the Bond Agreement the Bond Trustee has the right in some cases to
make decisions and take measures that bind all Bondholders without first obtaining the prior
consent of the Bondholders, including:
(a)
(b)
the right to agree to amendments to the Bond Agreement provided such
amendments do not materially and adversely affect the rights or interest of
the Bondholders or such amendments are made solely for the purpose of
rectifying obvious errors and mistakes; and
the right to accelerate the Bonds and exercise any right, remedies, powers or
discretions under the Bond Agreement upon the occurrence of an Event of
Default.
Legislative Changes
The terms of the Bonds are based on Norwegian law as in effect on the issue date, 2 December 2013 and no assurance can be given as to the effect of any possible judicial decision or
change to Norwegian or Danish law or administrative practice after 2 December 2013.
Covenants
See “Risk of refinancing and financial covenants” page 12.
Liquidity
The Bonds will be admitted to trading on the First North Bond Market Copenhagen. The
Bonds do not currently have an established trading market, and one may never develop. If an
effective market does not develop, the Bonds may not be very liquid. Therefore, investors
may not be able to sell their Bonds easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. Illiquidity may have
a material adverse effect on the market value of Bonds.
The Issuer expects the liquidity of the Bonds to be limited.
Early Redemption
Under the terms of the Bonds, the Issuer may under certain circumstances redeem the Bonds
prior to the Maturity Date. An investor may not be able to reinvest the redemption proceeds
at an effective interest rate as high as the interest rate on the Bonds being redeemed and may
only be able to do so at a significantly lower rate.
Restrictions on Resale
The Bonds are subject to certain restrictions on resale and other transfers thereof as set forth
in the section entitled “Notice to Prospective Investors”. The Issuer gives no representation
with respect to the existence of a secondary market for the Bonds or the liquidity of such a
market if one develops. Consequently, Bondholders must be able to bear the economic risk of
their investment in the Bonds for the terms of the Bonds.
Market Volatility
The market price of the Bonds may be volatile and subject to significant fluctuations caused
by various factors, many of which not directly related to the Group. Factors having a potential effect on the price of the Bonds include actual or anticipated fluctuations in the results of
15
the operations of the Group or its competitors, circumstances, trends or changes in the
markets in which the Group operates, changes to the market’s valuation of other corresponding companies, changes to management and as well as general macroeconomic conditions.
Tax Risks
Prospective investors should be aware that the investment in the Bonds may have unforeseen
tax implications. Prospective investors should seek independent advice relating to tax risks
prior to making a decision to invest in the Bonds.
Exchange Rates
The Issuer will pay principal and interest on the Bonds in DKK. This presents certain risks
relating to currency conversions if a Bondholder’s financial activities are denominated principally in a currency or currency unit other than DKK. As a result, Bondholders may receive
less interest or principal than expected, or no interest or principal.
Government and monetary authorities may impose (as some have done in the past) exchange
controls that could adversely affect an applicable exchange rate. As a result, Bondholders
may receive less interest or principal than expected, or no interest or principal.
European Monetary Union
It is possible that prior to the maturity of Bonds the euro may become the lawful currency of
Denmark. In that event (i) all amounts payable in respect of any Bonds denominated in DKK
may become payable in euro; and (ii) the law may allow or require such Bonds to be redenominated into euro and additional measures to be taken in respect of such Bonds. The
introduction of the euro in any jurisdiction could also be accompanied by a volatile interest
rate environment, which could adversely affect investors in the Bonds.
The Bonds will be secured
The Collateral is subject to the Intercreditor Agreement. For certain risks relating to the Intercreditor Agreement please see the section “Intercreditor Agreement” under these Risk
Factors.
If the Issuer defaults on the Bonds, the Bondholders will be secured only to the extent of the
value of the Collateral underlying the security interest. The Group may incur additional indebtedness in the future which may also be secured by the Collateral on a pari passu basis
with the Bonds. If the value of the Collateral is less than the value of the claims of the Bondholders together with claims from the other secured creditors, those claims may not be satisfied in full.
The value of the Collateral may fluctuate over time and no appraisal is made by the Group or
any other person with respect to the value of any Collateral. The amount received upon a sale
of the Collateral will depend on numerous factors including, but not limited to, the actual fair
market value of the Collateral at such time, market and economic conditions, and the timing
and the manner of the sale. There also can be no assurance that the Collateral will be saleable
and, even if saleable, the timing of any liquidation or foreclosure is uncertain.
16
Under applicable law, a security interest in certain assets can only be properly perfected,
and its priority retained, through certain actions undertaken by the secured party or the
grantor of the security. Absent perfection the holder of any security interest in the Collateral
may have difficulty enforcing or may be entirely unable to enforce such holder’s rights in the
Collateral in competition with third parties, including the receiver or administrator in bankruptcy and other creditors who claim a security interest in the Collateral. In addition a debtor
may in certain circumstances discharge its obligation under a receivable by paying to the
security provider until the debtor receives a notification of the existence of the security interest. Finally the ranking of pledges may be determined by the date on which they are perfected. A security interest created on a later date but perfected earlier would generally have priority.
The security interests in the Collateral and the provision of any of the Guarantees may be set
aside and clawed-back under applicable law claimed by the bankruptcy estate of the security
provider in the event that the security provider is deemed to have been or became insolvent
at the time the security interests were provide, or due to the security interests were provided,
and the secured parties knew or had reason to believe that the security provider was or became insolvent, subject to applicable hardening periods if any.
The Collateral will not be granted directly to the Bondholders but will be granted to the Bond
Trustee as security agent. The Bond Agreement and the Intercreditor Agreement will provide
that only the Bond Trustee in its capacity as security agent has the right to enforce the security interests in the Collateral and the Guarantees. As a consequence, Bondholders will not
have direct security interests and will not be entitled to take enforcement action in respect of
the Collateral securing the Bonds, except through the Bond Trustee as security agent, who
will provide the relevant instructions with respect to enforcement.
Norsk Tillitsmann ASA acts not only as trustee for the Bondholders and security agent for the
Bondholdes, but also as security agent for all secured parties under the Intercreditor Agreement. In certain situations Norsk Tillitsmann ASA will accordingly by obliged under the Intercreditor Agreement to act on behalf of and under and following the instructions of other
parties than the Bond Trustee.
Furthermore the ability to enforce the security interests in the Collateral will be subject to
mandatory provisions of the laws of the jurisdiction in which the security interests over the
Collateral are taken, and the concept of a trustee or a security agent may not be recognized in
all relevant jurisdictions.
The security interest in the Collateral and the Guarantees may also be released in certain
situation described in the Intercreditor Agreement.
17
Structural Subordination
The payment obligations of the Issuer under the Bonds will be structurally subordinated to
payment obligations owed to creditors of the subsidiaries of the Issuer and the subsidiaries of
such subsidiaries. The Guarantors will unconditionally and irrevocably guarantee the payment obligations of the Issuer under the Bonds. The Bonds will accordingly have the benefit
of a direct claim on the Guarantors, but not on all members of the Group. The benefits of the
Guarantees are also limited by the provisions of the Intercreditor Agreement and general
law. Please see the sections “Intercreditor Agreement” and “Enforceability of the Collateral
Granted and Guarantees”
Intercreditor Agreement
The security interests over the Collateral are subject to the Intercreditor Agreement. The
Intercreditor Agreement provides that the proceeds of enforcement of the security interests
in the Collateral will be applied to repay claims of the lenders under the Revolving Credit
Facility Agreement and counterparties to certain hedging liabilities in priority to the Bondholders (such creditors, the super senior creditors). Bondholders may therefore receive less
or no proceeds from the enforcement of the security interests in the Collateral or in an insolvency scenario.
The Bondholders may not control the enforcement of the security interests in the Collateral
as such enforcement is in certain circumstances controlled by the super senior creditors as
provided in the Intercreditor Agreement. The arrangements in the Intercreditor Agreement
could result in the enforcement of the security interests in the Collateral in a manner that
results in lower recoveries by the Bondholders.
Additional security interests may be provided to any ancillary lenders under the Revolving
Credit Facility Agreement which are not also granted to the Bondholders, and the terms of
the Revolving Credit Facility Agreement may be amended by the parties thereto without the
consent of the Bondholders and without such amendment entitle the Bondholders to get
repaid, prepaid or accelerate the Bonds, save that super senior security under the Revolving
Credit Facility Agreement cannot be increased above DKK 90,000,000. Additional super
senior security may arise under the Group’s hedging agreements for the purposes of hedging
interest rate liabilities (including by way of index based instruments) and/or foreign exchange rate risks in each case on a non-speculative basis and in the normal course of business which may not with respect to foreign exchange rate risk be increased above a notional
amount of DKK 350,000,000.
Under the Intercreditor Agreement the security agent will in the case of conflicting enforcement instructions with respect to enforcement of the security interests in the Collateral, and
after the elapse of a consultation period of not less than 30 days, follow the enforcement instructions provided by the Bond Trustee as representative of the Bondholders in the event
that the Bond Trustee as representative of the Bondholders and the representative of the
super senior creditors deliver conflicting enforcement instructions to the security agent. The
security agent will, however, not follow the enforcement instructions delivered by the Bond
Trustee as representative of the Bondholders, but follow the enforcement instructions of the
representative of the super senior creditors, if (i) in the event that the aggregate of all liabili-
18
ties owed to super senior creditors exceeds the aggregate of all liabilities owed to the Bondholders and any creditors ranking pari passu with the Bondholders , (ii) enforcement of the
security interests in the Collateral has not commenced 3 months after the initiation of the
enforcement, (iii) the security interests in the Collateral have become enforceable due to an
insolvency, arrangement with creditors or appointment of any liquidator or receiver of the
Issuer or a Guarantor, or (iv) the super senior creditors have not been fully discharged 6
months after the initiation of the enforcement.
The Bondholders are in certain default, insolvency and acceleration events described in the
Intercreditor Agreement obliged to turn over any amount received in respect of the Bonds to
the security agent under the Intercreditor Agreement. This may also include holding such
amount on trust or the benefit of the security agent pending payment or pay an amount to
the security agent corresponding to any amount received in the form of set-off. In such
events the Issuer and the Guarantors will not pay any amounts to the Bondholders. Instead
the Bond Trustee will be instructed to direct that payments are made to the security agent
under the Intercreditor Agreement to be applied in accordance with the waterfall in the Intercreditor Agreement.
The Bonds will under the Intercreditor Agreement be subject to provisions on equalisation.
This means that a Bondholder in the event that not all Bondholders are repaid in full after
enforcement of the security interests in the Collateral, the Guarantees and any other money
or assets available for realisation may be required to pay an amount as required by the security agent under the Intercreditor Agreement for the purpose of the security agent distributing such amount to other Bondholders so that the resulting loss borne by each Bondholder
corresponds to its holding of Bonds out of the total principal amount of Bonds outstanding.
The Intercreditor Agreement contains provisions whereby the security interests in the Collateral can be released in certain circumstances, including in connection with a permitted
disposal of the Collateral in either a non-distressed or distressed scenario or in connection
with an enforcement of the security interests in the Collateral. The same applies to the obligations of a Guarantor under a Guarantee. The security agent under the Intercreditor
Agreement is irrevocably authorised to effect such release on behalf of the Bondholders. The
net proceeds of any distressed disposal of the Collateral will be used in accordance with the
waterfall in the Intercreditor Agreement, which means that the super senior creditors will
rank in priority to the Bondholders in relation to such proceeds. Any proceeds of the disposal
in a non-distressed scenario may have to be applied for the purpose of mandatory prepayments under financing agreements, including the Revolving Credit Facility Agreement and
the Bond Agreement.
You are advised to carefully read the Intercreditor Agreement in full and recommended to
seek independent legal advice concerning the interpretation and your position under the
Intercreditor Agreement.
19
Interest Rate
The Bonds are exposed to the risk of fluctuating interest rate levels and uncertain interest
income. Investment in the Bonds involves the risk that subsequent changes in market interest rates may adversely affect the value of the Bonds.
Legal Investment Considerations
The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult
its legal advisers to determine whether and to what extent (1) the Bonds are legal investments for it, (2) the Bonds can be used as collateral for various types of borrowing and (3)
other restrictions apply to its purchase or pledge of the Bonds. Financial institutions should
consult their legal advisors or the appropriate regulators to determine the appropriate treatment of the Bonds under any applicable risk-based capital or similar rules.
Dematerialized Securities
Because the Bonds are dematerialized securities held in the system of VP Securities A/S,
investors will have to rely on the clearing system procedures for transfer, payment and communication with the Issuer. The Bonds will not be evidenced by any physical note or document of title other than statements of account made by VP Securities A/S. Ownership of the
Bonds will be recorded and transfer effected only through the book entry system and register
maintained by VP Securities A/S.
Change of Control Put Option
The Bond Agreement contains provisions relating to a "Change of Control". Upon the occurrence of a Change of Control, each Bondholder will have the option to put all or part of its
Bonds to the Issuer who will be required to redeem or purchase or procure the purchase of
such Bonds at a price equal to 101 per cent of the nominal amount together with accrued
interest. If a Change of Control were to occur, the Issuer may not have sufficient funds available, or may not be able to obtain the funds needed, to redeem or pay the purchase price for
all of the Bonds put to it by Bondholders. Failure to redeem or purchase the Bonds would be
an Event of Default under the Bond Agreement.
Various restrictions in future indebtedness of the Group may also prohibit the Group from
being provided with the funds necessary to redeem or purchase any Bonds prior to their stated maturity in the case of a Change of Control. Before the Issuer can be provided with any
funds to redeem or purchase any Bonds, the Group may be required to repay indebtedness
under future senior credit facilities, or, possibly, other future indebtedness that ranks senior
to the Bonds or obtain a consent from various lenders of other indebtedness, to make funds
available to permit the redemption or repurchase of the Bonds.
Choice of Law and Enforcement
The Issuer is a private limited company under the laws of Denmark, and the terms of the
Bonds are subject to Norwegian law, which may complicate or make it difficult for Bondholders to exercise or enforce certain rights. For example, it may be difficult for investors
outside Denmark to serve process on or enforce judgments against the Issuer in connection
with the Issue or in connection with their rights as Bondholders.
20
The Enforceability of the Collateral Granted and Guarantees
The laws on inter alia financial assistance may limit the security providers’ ability to grant
the security interests in the Collateral and the Guarantors’ ability to provide the Guarantees.
These limitations arise under various provisions or principles of corporate and tax law which
include provisions requiring a subsidiary security provider or guarantor to receive adequate
corporate benefit from the provision of the security or guarantee respectively, financial assistance rules, ultra vires rules and rules governing preservation of share capital. In Scandinavia
the security documents granting the security interests in the Collateral will contain language
limiting the amount of debt secured to the maximum extent allowable in accordance with
applicable local law.
Please note that the Danish security providers and Guarantors have not and will not in connection with the provision of the security interests in the Collateral and Guarantees apply or
follow the procedure in the sections 206-209 of the Danish Corporations Act for the provision of legal financial assistance, and no security provider or Guarantor from any other jurisdiction will apply or follow a similar procedure under the laws of such jurisdiction.
Accordingly the security interests of the grantor in these jurisdictions were to be enforced;
the claims of the holders of the Notes may be limited. If these limitations were not observed,
the security interests could be subject to legal challenge. Furthermore, although we believe
that the security interests are enforceable (subject to local law restrictions), a third party
creditor may challenge these security interests and prevail in court.
Danish law limits the ability of Danish subsidiaries, directly or indirectly, to guarantee and
secure debt of a direct and indirect parent company. These limitations arise under various
provisions, which include, among others, provisions or principles of corporate law concerning minority interests and the interests of creditor, ultra vires rules and rules related to capital maintenance, meaning that the issuance of a guarantee or granting of security must be
justifiable in light of the financial position of the entity in question.
Further, it is a requirement under Danish law that a guarantor or security provider obtains
an adequate corporate benefit from the issuance of a guarantee or granting of a security. It
has not been tested to what extent such corporate benefit is established when a subsidiary
guarantees and secures debt of direct or indirect parent company.
21
THE BONDS, CAPITALIZATION AND USE OF PROCEEDS
Axcel’s purchase of EG
Axcel IV acquired EDB Gruppen Holding A/S from Nordic Capital at the end of August 2013.
Due to the fast track pre-emptive nature of the transaction, Axcel decided on a bank-to-bond
(bridge-type) financing of DKK 727,000,000.
The Bonds
The Bonds were issued on 2 December 2013 and are governed by Norwegian law. For a description of the Bonds, including, but not limited to, terms and conditions, rights attaching to
the Bonds, the procedures for the exercise of said rights, the ranking of the Bonds, and the
representation of the bondholders by the Norwegian Bond Trustee, reference is made to the
Bond Agreement incorporated in and forming part of this Company Description, on page 76
to 128 this Company Description. The Bond Agreement will be available on the website of the
Group until and including the Maturity Date.
The Issuer’s payment obligations under the Bonds are guaranteed by the Guarantors. For a
description of the guarantees, reference is made to the Bond Agreement, on page 76 to 128 of
this Company Description.
The Bonds are secured with security interests over shares of the Issuer and all Material Subsidiaries. Furthermore each of EDB Gruppen Holding A/S, EG Holding A/S, EG A/S, EG
Data Inform A/S, Dynaway A/S, EG Utility A/S, EG KommuneInformation A/S, the Issuer
and AX IT Holding II ApS has registered a negative pledge in the Danish Register of Persons.
For a description of the security interest, reference is made to the Bond Agreement, on page
76 to 128 of this Company Description.
The shares of EG Holding A/S and its subsidiaries are recorded at cost price in EDB Gruppen
Holding A/S’ 2012 annual report.
The value of the shares of EDB Gruppen Holding A/S has not been recorded in the any annual report after being acquired from Nordic Capital.
The value of the shares of the Issuer has not been recorded in any annual report.
The amount recorded in annual reports does not reflect market value, and hence it does not
provide an idea to which extent the underlying assets cover the obligations to the Bondholders.
Moreover, the Bonds are continuously secured with security interests over existing and future intragroup company loans made by AX IV EG II Holding ApS, EG A/S, EG Data Inform
A/S, Dynaway A/S, EG Sverige AB, EG Norge AS, EG Utility A/S, EG KommuneInformation
A/S, EG Retail AS, EG NaviPartner AS, EG Navicom AS but not the Issuer , EDB Gruppen
Holding A/S and EG Holding A/S) and any other company later becoming an obligor with
respect to the Bonds to another member of the Group, provided such loan i) has a maturity of
22
more than 1 year and ii) in an aggregate on a debtor basis exceeds DKK 10,000,000, and
where first DKK 10,000,000 shall also be included in the assignment. These loans include by
the time of admission an intercompany loan agreement entered into between EG Holding
A/S (as debtor) and the Issuer (as creditor) with a principal amount totaling DKK
246,177,768.58, an intercompany loan agreement entered into between EDB Gruppen Holding A/S (as debtor) and EG A/S (as creditor) with a principal amount totaling DKK
35,395,179.75 as well as an intercompany loan agreement entered into between EDB Gruppen Holding A/S (as debtor) and the Issuer as creditor with a principal amount totaling DKK
1,000,938.00.
Further, the Bonds are continuously secured with security interests over (i) existing and future intragroup loans owed by any of AX IV EG Holding II ApS, AX IV EG Holding III ApS,
EDB Gruppen Holding A/S, EG Holding A/S, EG A/S, EG Data Inform A/S, Dynaway A/S,
EG Sverige AB, EG Norge AS, EG Utility A/S, EG KommuneInformation A/S, EG Retail AS,
EG NaviPartner AS, EG Navicom AS and any other company later becoming an obligor with
respect to the Bonds to AX IV EG Holding II ApS, AX IV EG Holding III ApS, EDB Gruppen
Holding A/S or EG Holding A/S, including payments made thereto or any interest accrued,
and (ii) existing and future shareholder loans owed by AX IV EG Holding III ApS to Axcel IV
K/S, Axcel IV K/S 2, AX Management Invest K/S or AX Management Invest II K/S (or any
other Shareholder as defined in therein), including payments made thereto or any interest
accrued.
In August 2013, AX IV EG Holding III ApS acquired the shares in EDB Gruppen Holding.
The Bonds are secured with security interests over any rights under the share purchase
agreement between the Issuer and the vendor named therein relating to the sale and purchase of EDB Gruppen A/S.
In connection with the issue of the Bonds EG A/S has entered into an agreement with Danske Bank A/S and Skandinaviska Enskilda Banken AB (publ) regarding a revolving credit facility (the “Revolving Credit Facility Agreement”). The Revolving Credit Facility Agreement is
also guaranteed by the Guarantors and share in the Collateral pari passu with the Bonds, but
with super senior priority with respect to proceeds from enforcement and distressed disposals of the Collateral as provided in the Intercreditor Agreement. In a case of default under the
Revolving Credit Facility Agreement, the RCF Lenders thereunder may be paid in full by
taking possession of the assets of EG A/S as well as the guarantors as defined in the Revolving Credit Facility Agreement which may decrease the value of the security interests under
the Bond Agreement. Reference is made to the description of the Intercreditor Agreement
and the Revolving Credit Facility Agreement, on page 129 to 131 of this Company Description.
Parts of the Collateral, including the value of the share pledges, have not been value assessed.
The value of the Collateral may fluctuate over time and no appraisal is made by the Group or
any other person with respect to the value of any Collateral. The amount received upon a sale
of the Collateral will depend on numerous factors including, but not limited to, the actual fair
23
market value of the Collateral at such time, market and economic conditions, and the timing and the manner of the sale.
There also can be no assurance that the Collateral will be saleable and, even if saleable, the
timing of any liquidation or foreclosure is uncertain. The Bondholders may not control the
enforcement of the Collateral as such enforcement is under certain circumstances controlled
by the super senior creditors as provided in the Intercreditor Agreement. Reference is made
to the description of the Intercreditor Agreement on page 129 to 131 of this Company Description.
Capitalization
The proceeds of the Issue amounted to DKK 900,000,000. Furthermore, Axcel and the
Management injected DKK 400,000,000 in equity.
Use of Proceeds
Net Proceeds from the Issue have primarily been used for repayment of the senior debt
bridge and the equity bride. Furthermore a part of the proceeds were allocated to a M&A
reserve, while approximately 1% of the proceeds were allocated to fees and other expenses in
connection with the issuance.
Sources and uses (AX IV EG Holding III ApS level)
Sources
DKKm
%
Uses
DKKm
%
Senior Secured Notes
900
69%
Repayment of senior debt bridge
727
56%
Equity
400
31%
Repayment of equity bridge
538
41%
M&A reserve
22
2%
Fees
13
1%
1,300
100%
Total Sources
1,300
100%
Total Uses
24
BUSINESS
Overview over the Issuer
The Issuer is a wholly owned subsidiary of Axcel and owned directly by AX IV EG Holding II
ApS. The Issuer is the sole owner of the EG A/S through the holding companies EDB Gruppen Holding A/S and EG Holding A/S. Aside from having issued bonds and acting as holding
company, the Issuer has for the time being very limited operations.
Overview over the Group
The Group is among Scandinavia’s leading IT software and service companies with a strong
market focus within the SME segment. The position is based on close relationships with customers, deep sector knowledge and value adding IT solutions. The Group’s offering is based
on 30 years of industry experience leading to software solutions and a clear vertical focus.
The Group’s core focus
25
The Group has over the last five years experienced growth both in revenues and EBITDA as
well as the number of employees has increased:
EDB Gruppen Holding – Reported figures:
EG facts
2012
2011
2010
Revenues
(DKKm)
1,502
1,330
1,017
EBITDA
(DKKm)
143
128
89
26
The Group’s organization
The Group consists of six market facing divisions organized according to industry focus
which are supported by shared service functions. Each division comprises one to ten business
units and is headed by a division director. The current organization is the result of the reorganization carried out in 2010 with effect from January 2011, where the focus on verticals
was significantly strengthened. Please see below for a detailed description of the divisions.
27
Divisions
The Group’s services are targeting several different industries. A central part of the Group’s
brand is based on the Group’s in-depths knowledge of the different industries’ processes and
needs. The Group focuses on six groups of customer verticals: (i) Retail & Media, (ii) Logistics & Production, (iii) Public, (iv) Utility, (v) Building and Construction and (vi) SaaS & Infrastructure.
2012 Revenues by division
Logistics & Production
7%
9%
26%
SaaS & Infrastructure
Retail & Media
16%
18%
25%
Building &
Construction
Utility
Public
Retail and media
The Group’s Retail & Media division supplies end-to-end solutions for the retail industry in
Scandinavia and provides solutions handling subscriptions and advertising for high-end and
mid-market media companies.
The division is organized in three business units organized according to country: (i) Retail
Denmark, (ii) Retail Norway and (iii) Retail Sweden. Since 2009 the Retail & Media division
has been strengthened significantly through business transformation and acquisitions.
Within the retail sector the Group has established individualized systems that are specifically
aimed at retail businesses handling (i) groceries, (ii) specialty goods and (iii) plant nurseries.
The solutions cover the full retail value from main office and headquarter to store offices and
shops. For larger retail chains solutions are based on Microsoft Dynamics AX, while solutions for medium sized retail chains are primarily based on LS Retail, combined with a range
of proprietary software products.
Your magazine subscription is most likely handled
by an EG solution
The Group offers services that enable the grocery industry
business to control and monitor groceries, suppliers and
day to day administrative tasks.
28
The Group offers services to specialty goods businesses assisting them to get an overview of
the flow of products and data between the companies’ suppliers, head office and individual
stores. The systems offered by the Group ensure that each business is able to handle information about available products and demand in the different stores.
The Group has developed specific systems aimed at retail and production plant nurseries; the
PlantSoft Production system and PlantSoft Retail systems. The systems are designed to assist
the plant nurseries in the daily work to save time spent on manual work and have better control over tasks.
The Group has more than 25 years of industry experience with supplying specialized IT solutions for the media industry. The Group has developed specific software that enables media
companies to establish different subscription and production solutions, handling the massive
data of a media company.
In 2012, the Retail and Media division constituted 18% of the total Group revenues.
Logistic and Production
The Group’s Logistic & Production division focuses on business oriented IT solutions for
supply chain management companies within production, logistics, transportation and textile.
The division is organized in four business units organized according to the software chosen
by the customers: Aspect 4, Microsoft AX (EG NeoProcess), Microsoft NAV and SAP.
Customers vary in size and typical customers range
from smaller companies with around 100 employees to
companies with up to 2,000 employees.
The truck you passed this
morning was most likely controlled by EG solutions
The division Logistic and Production covers different
industries, such as Machine production, Steel & Metal,
Electronics, Chemical, Foods, Pharmaceutical and
Plastic & Rubber.
Machine production companies are among other
things offered services and software that assist the machine production company to deliver
effective quotations to ensure profitability and realistic delivery times as well as inventory
management, so the company can have control of all components when installing the products.
Steel and metal working companies are offered services that among other things assist the
company in handling demands from customers, calculating how the quality can be increased
with the lowest cost possible.
The Group offers solutions to electronics and advanced technology companies that are met
with challenges such as warehouse management, supplier network handling and filing of
drawings and diagrams of the companies’ products.
29
Within the chemical industry the Group offers solutions enabling the chemical industry
business to comply with various validation standards e.g. the need to be able to trace and
document ingredients and processes in order to comply with regulations and filing documentation.
The division also offers services that assist food production companies in controlling the freshness of perishable ingredients as well as
timetable and processes on how finished products has to be managed. Further, the division provides services that file the recipes
and make the companies able to control and monitor internal and
Your draft might
external quality management.
have found its way
to you with the
help from EG
The pharmaceutical sector is characterized by complex development
and production environments which must be observed on a daily
basis. The Group’s offering enables pharmaceutical companies to observe European and US
requirements on the production of medications and comply with stringent traceability requirements in relation to development and production.
For the plastic industry, the services provided by the Group addresses the plastic industry
companies’ needs for quality management, high demand on planning production change
over time and filing different recipes.
Furthermore, the Group individualizes the service and software provided to the industries by
offering different solutions according to the type of production of the business. The Group
has different offers based on whether the business type of production is mass production,
production to order, project-based production or process-based production.
In 2012, the Logistic and Production division constituted 26% of the total Group revenues.
Public
The Group’s public division offers services to public authorities and independent institutions
that enable the institutions to create an efficient administration. The division is organized in
two units EG Public and EG KommuneInformation. In 2011, the market position of the Public division was significantly strengthened through the acquisition of EG KommuneInformation.
The division’s developed solutions are based on the specific needs and requirements of a
public administration or an independent institution. The Group has divided the public division into five groups: (i) local authorities, (ii) regional authorities, (iii) national governments,
(iv) independent institutions and (v) churches and cemeteries. The typical length of contracts
is 4-6 years, with an option to extend the contract for additional years providing a high degree of recurring revenues.
Local and regional authorities handle a significant amount of information and data and the
Group has developed a system enabling local and regional authorities to handle, distribute,
share and utilize the information and data gathered.
30
The Group has established a sector-specific IT solution aimed at government ministries and
agencies enabling the ministries and agencies to improve efficiency, streamline administrative routines and tie the government institution’s subsystems together.
In 2012, the Public division constituted 7% of the total Group revenues.
Utility
The Group’s Utility division provides solutions for handling tasks such as billing, debtor
management, trade and data analysis across borders for utility companies in Denmark, Norway and Sweden. The Group’s utility sector covers different industries such as electricity,
water & drains, heating, gas, renewable energy, waste collection, broadband Internet, TV &
telephony and trading.
The utility division is organized in one business unit focusing on all the Scandinavian countries. The business unit has expanded geographically through acquisitions and acquired EnergyFront in 2009 to expand into Norway and CS Transmission in 2011 to expand into Sweden.
The Group has developed a solution for the utilities sectors allowing the businesses to achieve control of consumptions and transactions, invoicing, change of market conditions, customer management and compliance with and documentation for regulatory requirements.
Your electricity bill
is most likely delivered with assistance from EG
Customers are small and mid-sized utility companies across the
Scandinavian countries.
In 2012, the Utility division constituted 9% of the total Group revenues.
Building and Construction
The Group has been developing and marketing a number of sector-specific IT solutions for
the building and construction industry for over 30 years. The Groups has developed specific
systems aimed directly at (i) contractors, (ii) tradesmen, electricians,
plumbers and technicians and (iii) lumber yards and DIY (‘do-ityourself’) stores. Customer size varies from small craftsmen to larger
contractors.
The division has 219 employees in four
business units organized according to
EG is a trusted partner to the construction
customer and country focus. The diviindustry benefitting craftsmen, as well as DIY
sion has been strengthened through a
people
number of acquisitions, including the
acquisition of Bygteq (Denmark) in
2010, ADB (Norway) in 2011, Navicom (Norway) in 2012 and NaviPartner (Norway) in 2013.
The Group has developed a sector-specific solution particularly aimed at contractors providing the foundation for a better organization and streamlined processes. The services devel-
31
oped by the Group enable the contractor to optimize the utilization of employees and machines and provide management tools to assist project managers and foremen. The customers include earthmoving contractors, building contractors, electricity and sanitation contractors, painting contractors and landscape gardeners.
The Group offers tradesmen as well as electricians, plumbers and technicians a sectorspecific solution that enables the tradesmen to handle vouchers, time sheets and other administrative documentation and to perform calculations and record of time and materials.
The customer portfolio includes tradesmen within bricklaying, carpentry, building insulation, sewerage piping, roofing, painting, windows, plumbing and metalwork.
The Group offer process optimization systems to the DIY sector and lumber sector. The
Group’s solution enables the business to create an overview over the value chain of the industry and handle the various needs for filing and handling of papers within the sector.
In 2012, the Building and Construction division constituted 16% of the total Group revenues.
SaaS & Infrastructure
The division SaaS & Infrastructure covers solutions to different niche customers, such as the
legal industry, doctors, churches and cemeteries, real estate agents, operation centers, products sales & logistic, CRM and business analytics. The division is organized in nine business
units of which four focuses on software solutions and five focuses on infrastructure and enterprise solutions.
30% chance your
lawyer is supported by EG
Infrastructure and enterprise solutions include IT operations and
hosting solutions, flexible operational solutions, infrastructure services, service & support, hardware and software products. The Group
is a provider in small niches and works closely together with the
customer on finding the right individualized solution. Other small
businesses requiring ERP are typically handled by the Group’s SaaS
model which includes integration of project management, financials,
manufacturing, warehouse management, accounting, sales and business management within one operating system.
The industries and business sorted under the division SaaS & Infrastructure all have in
common that they depend on human knowledge and ability to collect, file and handle documents and knowledge fast and efficient. The services offered by the Group are individualized
to different industries allowing the businesses to optimize their case management processes,
keep track of recorded hours and cases and enable the companies to share knowledge across
the organization and with business partners and clients.
In 2012, the SAAS & Infrastructure division constituted 25% of the total Group revenues.
32
Services & Products offering
The Group calculates revenues based on the different classes of product offerings. However,
sales and revenues within one class of product offering may have a spill-over effect on the
sales and revenues within another class of product offering as a part of the Group’s strategy
to offer a broad product portfolio.
The services and products offered by the Group through the divisions are divided into five
categories:
Each of the five categories is described in detail below.
The Group’s ability to offer a broad product portfolio is believed to be a significant competitive advantage, since customers are able to use the Group as a one point supplier limiting
administrative expenses and freeing up resources.
The Group has developed a ‘360 degree’ solution matrix, mapping the services and products
offered by the Group to customers.
33
Consultancy & Programming
The Group is specialized in offering products handling process optimization, organization,
business intelligence as well as budgeting & consolidation. Consultancy and programming
primarily relates to configuration and implementation of customer’s IT solutions. The specific customer’s strategy and specific business cases are the point of departure of the Group’s
solutions.
Simple projects are implemented with standardized project methods and larger projects are
implemented in several steps with different implementation methods. Consultancy revenues
are charged either based on hours spent or on a fixed price. 48% of consulting and programming revenues relate to implementation and configuration of own software products.
Management consulting is the Group’s business consulting team and is an important part of
the Group’s full industry offering. The team consists of 15 consultants in a matrix organization with industry knowledge of the Group’s verticals and divisions. The consultants analyze
and map the customer’s need, processes and demands by working together with the executive management. The consultants are thus able to sell business improving solutions from an
executive point of view and not only from an IT point of view. In the management consultancy setup, IT solutions are moved from being perceived as part of the back-office solutions to
actually develop the customers’ business by e.g. being a critical part of implementing a new
strategic plan.
34
Process optimization entails that the Group in cooperation with the customer investigates
the customer’s current and future needs and seek to optimize the customer’s processes, including optimization of the customer’s IT procedures. The process optimization is companyspecific and goes through the following steps (i) a requirement specification individualized to
the customer, (ii) scope & pre-project analysis, (iii) system selection, (iv) improvement suggestions and benefit analysis, (v) system design, (vi) implementation in cooperation with the
Group’s sector-specific competencies and (vii) follow-up on results achieved after implantation.
In 2012, the Consultancy & Programming category constituted 44% of the Group revenues.
Software
The Group’s industry solutions are based on the Group’s proprietary software (own IP) comprising a range of standard software products. Sale of own software products accounted for
55% of software revenues in 2012.
Revenues software 2012
Own
software
45%
55%
External
software
The Group is specialized in offering ERP
solutions. ERP software integrates all facets
of operations, including development,
manufacturing, sales and marketing. ERP
systems connect different aspects of the
enterprise into one cohesive system, enabling the data to be utilized by the different
functions of the Group. Typically, ERP
software is considered an enterprise application and the Group designs ERP solutions
for both larger enterprises that require a
dedicated team to customize, analyze the
data and reports and handle upgrades and
deployment and smaller businesses.
The Group specializes in ERP services to corporate customers within a broad range of industries. The ERP solutions offered by the Group services are based on the Group’s own software
and configurations of for example ERP platforms such as Microsoft Dynamics AX, Microsoft
Dynamics NAV and the Group’s proprietary ERP platform ASPECT4. The Group adds to and
alters the existing source codes of the existing ERP platforms, individualizing the software to
the specific business.
35
A graphic presentation of software offering
For a consultancy focused player like the Group, the development in the software market is
critical since this shapes the market potential for implementation services and maintenance.
The Group is currently servicing approximately one third of the total Danish ERP market.
36
ERP
ecosys-
tem
Description
Customer
decisionmaking
cess
pro-
Product De-
Distribution
Infrastructure
velopment
and
and
(licenses)
mentation
Operations
ERP new software development and upgrading of existing software
- Selling and
marketing of
software
- Customization
of ERP solutions
according to
client specific
demands
- ERP software
implementation
- Servicing and
maintaining
hardware (i.e.
hosting)
- Servicing and
maintaining
software
- Business process outsourcing
Decides on ERP
system based on
functionality /
price tradeoff
Decides on
solution provider based on ERP
customization
needs
Selects infrastructure often
in dialogue with
software / solution provider
imple-
The selection in step two last steps in ecosystem is dependent
on the choice of software / ERP system selection in step 1
In 2012, the Software category, including sales of EG’s own software and external software,
constituted 29% of the total Group revenues.
37
Subscription based offerings
The Group offers a comprehensive range of subscription based offerings providing recurring
revenues. These offerings include Services and Support (hotline and support agreements),
technical service agreements, IT operations & hosting and business process outsourcing. The
Group’s service and support organization consists of 70 employees.
Subscription based revenue 2012
100% = 265m in 2012
Hot-line and support
agreements
17%
46%
37%
IT operations and
hosting
Technical service
agreement
The subscription based sales constituted 18% of the total Group revenues in 2012.
Hardware
The Group sells hardware directly to companies as part of the 360 degrees offering. Hardware sales comprise sale of infrastructure hardware (e.g. servers) and industry specific hardware from external providers. The Group sells PCs from Lenovo, HP, Acer, Fujitsu and Apple. The Group also offers storage hardware from HP and IBM as well as servers.
In connection with the sales of hardware the Group also installs the necessary software in
agreement with the customer ensuring that the sold goods are ready to integrate in the customer’s existing IT facilities. Furthermore the Group offers safety services, unpacking and
installation.
Hardware share of revenues has been reduced due to a strategic decision of classifying hardware as noncore and the Group only offers hardware sales to existing customers of the
Group’s IT solutions.
The hardware category constituted 9% of the total Group revenues in 2012.
Business Models
The Group operates with two business models: Project Business and Cloud Based Businesses.
The business models differ by offering and delivery as well as type of customers.
Project Business
Project Business covers the type of service which entails larger consulting projects with IT
solutions delivered by a project team, often with a duration of 6-12 months. The offered solutions are based on standard software with industry specific configurations and a large degree
of customer specific customization. The contractual framework around Project Business can
vary between a predetermined fixed price or on-going fee based on time and material spent.
38
Potential add-ons to this contractual framework may include service contracts, as well as
maintenance and configurations of the delivered software and solutions.
The sales processes are often relationship based and include customer specific designs, calculations and adjustments. The customers are predominantly mid-sized and larger enterprises
trying to optimize their technical infrastructure.
Cloud Based Business
Cloud Based Business includes cloud based products as well as data centre solutions.
Cloud based products require no installation and the solutions are hosted centrally by the
Group and accessed through a thin client or a web browser. The solutions hosted by the
cloud solution are predominantly standard software products for industry specific solutions
that provide scalability to the business model, including standard processes. The contracts
are subscription based contracts with subscription payments, however, in some cases an
upfront subscription fee is included in the agreement. The marketing is predominantly
through direct marketing, e.g. through websites.
39
The data centre solutions are hosted in the Group’s own data centre and are delivered as a
cross service. Customers of the cloud based products are characterized by small businesses,
while data centre customers are small and mid-sized enterprises.
Strategy
The Group’s strategic focus for expanding in Denmark, Norway and Sweden towards 2017 is
reflected the Group’s three main focuses: (i) accelerate organic growth, (ii) continue the
transactional trajectory and (iii) improve operational efficiency.
The Group expects the strategy to result in a significant increase of total revenues by 2017.
Accelerate growth
The Group has a strategy to expand the market position within the existing market. The
Group plans to achieve this by developing strong industry solutions that enables to Group to
increase its sales and revenues. The Group plans to invest approximately 2.5% of the annual
revenues primarily in software development and expansion of the data center to support
growth.
In connection with this the Group plans to increase attention towards bundling products
aimed at customers. This entails bundling of for example ERP, customer relationship management, hosting services and other similar products.
Furthermore, the Group intends to re-organize the sales organization as the Group will seek
to improve sales effectiveness.
The Group also intends to increase the share of recurring revenues from 38% to 45%.
Continue the transactional trajectory
The Group has managed to successfully integrate several acquisitions into the Group. The
Group plans to continue to acquire companies that fit into the Group’s purpose and have
identified two specific objectives based on the acquisition strategy.
One of the objectives is for the Group to build operational scale in Sweden and the Group has
identified potential acquisition targets.
The other objective of acquisitions is to strengthen the market position or the product portfolio within existing markets of the Group. The Group has identified potential acquisition targets.
In order to realize the strategy, the Group concretely expects to acquire companies with revenues for DKK100,000,000, spread on 3-6 targets a year in line with the historic level of
acquisitions and to finance the acquisition strategy by the free cash-flow of the business and
thereby maintaining a stable leverage ratio.
40
Improve operational efficiency
The third main part of the Group’s strategy towards 2017 is to improve operational efficiency.
This entails that the Group will establish resource centers of excellence across divisions and
industries enabling valuable knowledge contained within one division to be shared with the
whole organization. Simultaneously, the Group seeks to increase use of common support
functions and in that way render the support more efficiently.
Furthermore, the Group seeks to centralize and contract out software development resources.
History
EDB Gruppen A/S was established in 1977 in Herning, Denmark. EDB Gruppen A/S offered
IT related services to Danish business community. In 1985, EDB Gruppen A/S was listed on
the stock exchange of Copenhagen and was acquired by IBM in 1993. In 2007, EDB Gruppen
A/S acquired IT Gruppen A/S, making EDB Gruppen the largest IT supplier in Denmark. In
2008, EDB Gruppen A/S acquired U9consult A/S.
In September 2008, Nordic Capital took over the majority shareholding from IBM. In connection with the acquisition EDB Gruppen A/S was delisted from the stock exchange.
In March 2009, EDB Gruppen A/S changed its name to EG A/S.
Throughout 2010 EG A/S continued its expansion and acquired Bygteq it A/S, EnergyFront,
DAAB A/S and Brandsoft A/S.
In January 2011, EG A/S passed the 1,000 employee mark following the acquisition of NeoProcess A/S and ASP A/S (Application System Partner). EG A/S also acquired KommuneInformation A/S and Örebro Computer Service AB in January. ADB Team (Norway) in June
and thy:data & Dynaway in October 2011.
In January 2012, EG acquired NaviCom in Norway.
In January 2013, EG A/S acquired Swedish retail experts Unitail and became the only Nordic
IT house offering a complete approach to retail companies. In January EG acquired NaviPartner (Norway) and in April EG acquired DataPro A/S.
In late August 2013, Axcel acquired the all shares from Nordic Capital.
41
Customers
The Group has a diversified customer base with approximately 10,000 customers, and within
its focus industries, the Group is present across all market size segments, from small and
medium businesses with 1-99 employees to large enterprises with 1000+ employees. In 2012,
top 10 largest customers accounted for approximately 11% of the Group revenues; while top
20 accounted for approximately 17% (sales to different entities within the Group are taken
into account).
Significant differences exist in the customer concentration across the divisions. Public and
Utility divisions are characterized by having relatively larger customers than the rest of the
divisions.
Smaller customers tend to be more profitable due to their purchase of standardized products.
100%
90%
37
80%
51
70%
60%
62
74
84
79
14
98
50%
12
40%
6
20%
6
11
0%
Top 10-20 largest
11
30%
10%
Other
19
49
7
Top 10 largest
37
28
15
2
42
Market overview
The Group is active on a number of markets, both geographically and in terms of products.
The Group is operating in primarily Denmark, Norway and Sweden and to a certain extent
also worldwide, particularly with Scandinavian based global companies. The Group has local
presence with more than 20 offices throughout Scandinavia. The Group management is located in Ballerup, Denmark.
The two largest markets for the Group are Denmark and Norway; however the Group also
has a presence in Sweden. The Swedish market is expected to grow into a significant market
within 2017. In Denmark the largest competitors are CGI, Columbus IT A/S and Visma, however also international European and global companies are competitors.
The Group estimates that the five primary market drivers are productivity, cloud, big data,
customer relationship management & customer experience and mobility.
The Group’s presence and geographical breakdown of revenue 2012
78%
17%
5%
43
Significant contracts and Copyrights
The Group has a diversified customer portfolio, and does therefore not consider any individual contract to be significant. Furthermore, the Group does not consider any individual supplier contract to be significant. The Group applies financial contracts in its operations, but
does not consider any one contract or type of contract significant.
The following nine group companies have entered into a global cash pool arrangement with
Nordea Bank with EG Holding A/S as top account holder: EG A/S, Dynaway A/S, EG Datainform A/S, EG Utility A/S, EG KommuneInformation A/S, EG Norge AS, EG Retail AS, EG
Navicom AS and EG Sverige AB. Standard terms and conditions apply in relation to the cash
pool agreements.
The Issuer has provided an intercompany loan of DKK 246,484,180.15 to EG Holding A/S,
which the Issuer due to the amount lent regards as a significant contract.
Furthermore EG A/S has entered into a revolving credit facility agreement. The revolving
credit facility agreement is further described in this Company Description page 129 to 131.
The Group holds a number of rights over intellectual property, but does not consider them
significant for its operations. The Group normally retains all propriety rights and copyrights
to both the program code and the associated customer, however, there are deviations from
such terms in relation to the Group’s major customers.
To a certain extent the Group’s software is based on open source codes, which in some cases
may be covered by a copy left open source license.
Properties and Facilities
The Group owns two real properties in Denmark and has 13 leaseholds, mainly located in
Jutland, Denmark.
The Group has 15 leaseholds in Norway and 7 in Sweden. Furthermore the Norwegian division has recently taken over two leaseholds in Norway, one in Oslo and one in Ålesund. The
Group has in H2 of 2013 entered into an agreement regarding a leasehold in Aarhus, Denmark. The new leasehold is to replace other office facilities in Jutland.
Competitive situation
The Group’s business segments are highly competitive and characterized by price competition and low margins. It is essential for the Group to maintain a constant focus on costs
throughout development, marketing, implementation and operations. The business areas
which the Group operates within, requires a stable economic environment with opportunities
for small- and medium sized business to be able to maintain a sustainable income.
44
FINANCIAL INFORMATION
Summary Consolidated Financials of the Issuer
The Issuer was incorporated on 20 June 2013 for purposes of Axcel’s acquisition of EG and
has not prepared annual reports at the date of this Company Description. Please see the
section regarding Admission to Trading and General Information of this Company
Description regarding future financial disclosure.
Summary consolidated financials of EDB Gruppen Holding A/S
Prior to Axcel’s acquisition, EDB Gruppen Holding A/S was the top holding company of the
EG group and accordingly EDB Gruppen Holding A/S’ consolidated financials will be
presented in this Company Description.
The 2011 and 2012 annual reports of EDB Gruppen Holding A/S which include the audited
consolidated financial statements of EG A/S for the years ending 2011 and 2012 and the
audit reports thereof are attached to this Company Description and shall by reference be
incorporated in, and form part of, this Company Description.
For ease of reference the documents incorporated by reference into this Company
Description can be found on the following pages of the 2011 and 2012 annual reports of EDB
Gruppen Holding A/S, respectively:
2012
2011
Page 35
Page 31
Page 36-37
Page 32-33
Cash Flow Statement
Page 39
Page 34
Notes to Annual Report
Page 41
Page 37
Management’s Statement
Page 18
Page 14
Auditor’s Report
Page 19
Page 15
Income Statement
Balance Sheet
The board of directors of the Issuer believes that the Issuer possesses sufficient financial
resources and earnings capacity to be able to conduct the planned business for at least twelve
months after the first day of trading of the Bonds on the First North Bond Market. The board
45
of directors of the Issuer expects the Issuer to be profitable in the coming years and until
then the Issuer will be supported by the Guarantor, if necessary, in order to finance its
operations.
Summary Consolidated Financials for Q3 for 2013 for the Issuer and the Group
The Q3 2013 financial statement of the Issuer and EDB Gruppen Holding A/S are attached to
this Company Description and shall by reference be incorporated in, and form part of, this
Company Description.
Issuer
EDB Gruppen Holding
A/S
Income Statement
Page 3
Page 23
Balance Sheet
Page 7
Page 27
Q3 2013
46
Management Discussions and Analysis of Key Figures and Ratios
Reported Finan-
2010*
2011*
2012*
Q3 2013**
Sep 2013 LTM**
Revenues
1,017
1,330
1,502
359
1,589
Cost of sales
279
342
344
75
363
Gross Profit
738
989
1,157
284
1,226
Staff costs
524
677
815
183
838
Other external costs
126
183
200
52
198
EBITDA
88
128
143
49
189
Operational depreciation and amortisation
14
19
22
6
24
EBITA
74
109
120
43
165
Amortisation
24
41
64
8
58
EBIT
50
68
56
34
108
Financial income
4
1
2
0
2
Financial expenses
15
17
14
5
15
Pretax profit
40
53
44
30
94
Tax
11
14
14
1
13
Profit after tax
28
39
30
29
81
cials (DKKm)
*
Reflects EDB Gruppen Holding A/S
**
Pro-forma management accounts reflecting the new capital structure for the Issuer following Axcel’s
acquisition on 31 August 2013.
47
Overview on the development in the Group’s revenues
+9.0%
1.330
1.032
2008
1.502
1.589
1.017
924
20091
2010
2011
2012
September LTM
Reported revenue (DKKm)
The growth in revenues from 2009 to 2012 was primarily based on acquisitions combined
with organic growth. The reduction in revenues from 2008 to 2009 was based on decreased
sales of low margin hardware. From 2009 to September 2013, the share of recurring revenues has increased from 30% to 38% of the total Group revenues, caused by a larger share of
sales of software, hotline and support agreements as well as operational agreements.
2009
September 2013 (LTM)
30%
38%
62%
70%
100% = DKK 924m
100% = DKK 1,589m
Non-recurring revenues
Recurring revenues
48
The development in EBITDA margin is driven by a) increasing recurring revenues, b) of synergies from acquisitions, c) reduction of hardware sales with low margin and d) LEAN optimizations.
Historical
(2010-2012)
cash conversion
of app. 80%
9,8%
6,2%
65
2008
150
11,3%
203
12,8%
8,4%
87
92
2009
2010
EBITDA, reported normalised (DKKm)
163
10,8%
2011
2012
September LTM
EBITDA margin, reported normalised
49
1) Reflects
EDB Gruppen Holdings A/S; 2) Pro-forma mgmt. accounts, i.e. reflect the new capital structure for AX IV EG Holding III Aps associated with Axcel IV’s acquisition 31/08/2013
Restructuring costs represent costs paid to employees where no work has been done and are
mainly related to project ‘One’, acquired companies and restructuring made in Retail & Media, SaaS & Infrastructure and Building & Construction divisions. Integration costs cover
actual costs incurred in accordance with integration budgets and include internal and external costs. The definition 2013 September LTM covers DKK 1,800,000 that relates to transaction costs associated with Axcel’s investment in Q3 2013, DKK 5,700,000 that relates to adjustments for acquisitions and DKK 6,100,000 that relates to adjustments for integration
and restructuring costs. The definition Q3 2013 covers DKK 1,800,000 that relates to transactions costs associated with Axcel’s investment in Q3 2013 as well DKK 1,100,000 that relates to transactions costs associated with the acquisition of DataPro A/S.
50
EG balance sheet 2010-September 2013
Intangible assets consist of goodwill and customer relationships (DKK 255,000,000) related
to Nordic Capital’s acquisition of The Group and the Group’s subsequent acquisitions.
Goodwill is reviewed for impairment losses each year and in 2012 a write down of DKK
24,200,000 for the division Utility was included. Approximately DKK 42,300,000 relates to
completed development projects and development projects in progress.
Tangible assets consist mainly of buildings DKK 16,100,000 and technical equipment DKK
18,200,000. Technical equipment consists mainly of hosting equipment at the data centre
and the Group’s back-up centre.
51
Adjusted NWC 2010-September 2013
52
The decreasing trend in NWC from 2010 is driven by several effects:

Other payables increase due to increasing VAT and higher staff liabilities following an
increase in the number of FTEs

Increase in level of advance invoicing due to the acquisition of EG KommuneInformation
A/S.

A focus on collection of trade debtors, which has reduced days sales outstanding

Reduction in the level of receivables and days inventory out in thy:data (now a part of EG
A/S), which were very high at the time of acquisition

Reduced inventory and DIO - During 2012, two inventory systems were integrated,
thereby reducing duplicates. In addition, hardware sales have decreased

Adoption of weekly invoicing in some business units during 2011
Adjusted monthly LTM NWC & LTM avg. NWC in % of LTM revenues
-
0,0%
(0,5%)
(10)
(1,0%)
DKK in millions
(20)
(1,5%)
(30)
(2,0%)
(40)
(2,5%)
(50)
(3,0%)
(60)
(3,5%)
(70)
(4,0%)
(80)
(4,5%)
Jul 12
Act
Sep 12
Act
Nov 12
Act
Adjusted LTM avg. NWC
Jan 13
Act
Mar 13
Act
May 13
Act
Jul 13
Act
Sep 13
Act
Adjusted LTM avg. NWC in % of LTM revenue
53
OWNERSHIP
Axcel IV internal structure and
management shareholders
Axcel IV internal structure consists of
the following companies:
• Axcel IV K/S
• Axcel IV K/S 2
• AX Management Invest K/S
• AX Management Invest II K/S
AX IV EG
Holding ApS
AX IV EG
Holding II ApS
AX IV EG
Holding III ApS
EDB Gruppen
Holding A/S
EG Holding A/S
EG A/S
Dynaway
A/S
EG Data
Inform A/S
Datapro
A/S
EG Utility
A/S
EG Kommune
Information
A/S
EG Sverige
AB
EG Norge
AS
EG Retail
AS
EG Navicom AS
EG NaviPartner AS
54
ADMISSION TO TRADING AND GENERAL INFORMATION
Corporate data
Issuer:
AX IV EG Holding III ApS
c/o EG A/S
Industrivej Syd 13 C
Birk
7400 Herning C
Denmark
Registration number (CVR): 35 38 11 39
Financial calendar
The Issuer will continuously comply with the most recent First North Bond Market Rulebook. This currently includes publishing the annual report and H1 financial statement of the
Issuer. Under the Bond Agreement, the Issuer is obliged to issue consolidated and unconsolidated quarterly financial statements and such statements will also be disclosed to the market.
The Issuer expects the general meeting to approve its annual report for 2013 17 February
2014, and the publication of the audited annual financial statement shortly thereafter. The
annual report of the Issuer will also be available on the Group’s website on the same day.
The Issuer will continuously observe its obligation to disclose all information which is likely
to have a significant effect on the price of the bonds.
Reasons for the decision to apply for admission to trading
Admission of the Bonds to trading on First North Bond Market will furthermore contribute
to the spreading of knowledge about the Group and will hereby increase the interest among
business partners and customers. Admission of the Bonds to trading on First North Bond
Market has been approved, and the first trading date is expected to be 30 December 2013.
Related party transactions
The Issuer does not engage in related party transactions.
Board members’ etc. shareholdings
No member of the Board of Directors, the Executive Board of the Issuer nor any Certified
Advisers hold any shares in the Issuer.
Bond Trustee
The Issuer has entered into an agreement with the Bond Trustee whereby the Bond Trustee
vis-à-vis the Issuer has undertaken to act as a single point of contact for and represent the
Bondholders in accordance with the terms of the Bond Agreement. Pursuant to the agree-
55
ment, the Issuer has undertaken to, among other things, pay certain fees to the Bond Trustee and to indemnify the Bond Trustee against costs, losses or liabilities incurred by the Bond
Trustee in acting as Bond Trustee under any Finance Documents. The agreement and any
non-contractual obligations arising out of or in connection therewith are governed by and
shall be construed in accordance with the laws of Norway. Further information is available
on the Bond Trustee’s website www.trustee.no.
For a description of the rights and obligations of the Bond Trustee towards the Bondholders,
reference is made to clause 17 of the Bond Agreement incorporated in and forming part of
this Company Description on page 76 to 128.
There are no other contractual obligations between the Issuer and the Bond Trustee and to
the best of the knowledge of the board of directors of the Issuer, the Bond Trustee does not
have any conflicts of interest with respect to representation of the Bondholders vis-á-vis the
Issuer.
Reference is made to the sections “Bondholders Representation”, “The Bonds will be secured” and “Intercreditor Agreement” under “Risk Factors” for certain risks relating to the
Bond Trustee.
Litigation
The Group is from time to time involved in litigation. The Issuer is not currently involved in
legal proceedings, and to the best of the knowledge of the board of directors of the Issuer, no
litigation is pending or imminent.
56
BOARD OF DIRECTORS AND EXECUTIVE BOARD
Board of Directors
Klaus Holse, Chairman
Born:
1961
Nationality:
Danish
Education
MSc – Computer Science
BA – Business Administration
Current position(s):
SIMCORP A/S – CEO
KHABOOM ApS - CEO
Previous position(s):
TENACITY ApS, Member of the Executive Board
CPH SOFTWARE BUSINESS APS - Liquidated, Member of the Executive Board
MICROSOFT DEVELOPMENT CENTER COPENHAGEN ApS, Member of the Executive Board
MICROSOFT EMEA, Member of the Executive
Board
Current directorships (both within and outside the Group)
Company name:
Directorship:
AX IV EG HOLDING III ApS
Chairman
EG A/S
Chairman
EG HOLDING A/S
Chairman
THE SCANDINAVIAN ApS
Board Member
Dansk Industri
Board Member
Directorships held within the past 5 years (both within and outside the Group)
Company name:
Directorship:
57
ESKO-GRAPHIC A/S
Vice-chairman
Copenhagen Business School
Handelshøjskolen
Board Member
Dansk Industri
Board Member
58
Per Christensen, Vice-chairman
Born:
1966
Nationality:
Danish
Education
Cand.oecon.
Current position(s):
AXCEL MANAGEMENT A/S, Partner
AXII HOLDING ApS, Member of the Executive Board
M/S2 D1 ApS, Member of the Executive Board
M/S2 D2 ApS, Member of the Executive Board
M/S2 D3 ApS, Member of the Executive Board
AXIII MPH INVEST ApS, Member of the Executive Board
M/S2 HOLDING ApS, Member of the Executive
Board
Previous position(s):
MP-AX II INVEST ApS, Member of the Executive
Board
AXCIM INVEST A/S, Member of the Executive
Board
DOOR HOLDING A/S, Member of the Executive
Board
DOOR HOLDING A/S, Member of the Executive
Board
AZTEC HOLDING A/S, Member of the Executive
Board
Maersk Medical (1996-2000), General Manager
McKinsey & Co. (1992-1996), Consultant
Current directorships (both within and outside the Group)
Company name:
Directorship:
EG A/S
Vice-chairman
EG HOLDING A/S
Vice-chairman
EDB
GRUPPEN
HOLDING
Chairman
59
A/S
AX IV EG INV 1 ApS
Chairman
AX IV EG INV 2 ApS
Chairman
AX IV EG HOLDING III ApS
Chairman
AX IV EG HOLDING II ApS
Chairman
AX IV EG HOLDING ApS
Chairman
AXCEL II A/S
Vice-chairman
KIFU-AX II A/S
Vice-chairman
AXCIM INVEST A/S
Vice-chairman
BEST
A/S
Board Member
FRIEND
DANMARK
VITAL INVEST ApS
Board Member
GO CARE A/S
Board Member
BEST VPG HOLDING A/S
Vice-chairman
MNGT2 ApS
Board Member
VITAL PETFOOD GROUP A/S
Board Member
VPG HOLDING A/S
Board Member
CONCEPTA SKABE A/S
Board Member
TCM GROUP A/S
Board Member
TMK A/S
Board Member
TCM INVEST A/S
Chairman
60
AXIII TCM INVCO ApS
Board Member
AXTCM INVEST ApS
Board Member
TCM MANAGEMENT INVEST
ApS
Board Member
AXIII MP HOLDING ApS
Board Member
Directorships held within the past 5 years (both within and outside the Group)
Company name:
Directorship:
EG A/S
Chairman
EG HOLDING A/S
Chairman
MNGT
KOMPLEMENTAR
ApS Winded up 23-10-2013
Board Member
A/S CIMBRIA
Chairman
AXCIM INVEST A/S
Chairman
A/S CIMBRIA
Vice-chairman
DDD INVEST ApS Winded up
16-06-2013
Chairman
MNGT1 ApS
Board Member
Axcel III K/S 3 Kommanditselskab 20-08-2012
Board Member
AXBL INVCO ApS
Board Member
KIMBA HOLDING A/S
Chairman
MNGT3 ApS Demerged 28-112011
Board Member
A/S CIMBRIA
Chairman
61
AXCIM INVEST A/S
MNGT4 NEWCO ApS
merged 13-09-2012
Board Member
De-
Board Member
MNGT4 ApS Demerged 16-062011
Board Member
BEST VPG HOLDING A/S
Board Member
DDD HOLDING A/S
Vice-chairman
ELLIPSE A/S
Vice-chairman
NTEH A/S Winded up 23-122010
Chairman
2D HOLDING A/S Merged 1903-2010
Board Member
DERMA
HOLDING
Merged 19-03-2010
ApS
Vice-chairman
DIAGNOSTIC HOLDING ApS
Merged 19-03-2010
Vice-chairman
DRIFT HOLDING ApS Merged
19-03-2010
Vice-chairman
MNGT HOLDING A/S Demerged 17-02-2010
Board Member
BALL HOLDING ApS
Board Member
BALL INVEST ApS
Board Member
BALL ApS
Board Member
AX BALL INVEST ApS
Board Member
ICP INVEST A/S Winded up
12-01-2010
Board Member
A/S TVIS EJENDOMSSELSKAB Merged 09-03-2012
Chairman
62
TVIMO A/S Winded up 10-062012
Chairman
NTEG A/S Disolved
a 11-12-2008
Chairman
63
Jørgen Vilhelm Løvenørn Bardenfleth, Board Member
Born:
1955
Nationality:
Danish
Education
Civilingeniør – MSEE (DTU); MBA (UCLA)
Current position(s):
TENACITY ApS - CEO
LIONEAGLE ApS - CEO
Previous position(s):
MICROSOFT DANMARK ApS, Country Manager
Current directorships (both within and outside the Group)
Company name:
Directorship:
AX IV EG HOLDING III ApS
Board Member
EG A/S
Board Member
EG HOLDING A/S
Board Member
DHI GROUP
Chairman
ADACTIT ApS
Chairman
SYMBION A/S
Chairman
SYMBION
A/S
Chairman
MANAGEMENT
SYMBION FONDEN
Vice Chairman
MINERVA GROUP A/S
Board Member
ATHENA IT-GROUP A/S
Board Member
COWI HOLDING A/S
Board Member
64
COWI A/S
Board Member
THEEYETRIBE
Board Member
VALLØ STIFT
Board Member
IT-BRANCHEFORENINGEN
Chairman
COPENHAGEN CAPACITY
Board Member
DANSK ERHVERV
Board Member
Directorships held within the past 5 years (both within and outside the Group)
Company name:
Directorship:
GT NETCOM A/S
Board member
GN RESOUND A/s
Board Member
GN STORE NORD A/S
Board Member
COMBILENT A/S
Chairman
IPTRONICS ApS
Chairman
DEZIDE ApS
Chairman
IT-VÆKSTHUS A/S
Chairman
65
Jørgen Lindholm Lau, Board Member
Born:
1975
Nationality:
Danish
Education
MSc., Corporate Finance and Strategy
Current position(s):
AXCEL MANAGEMENT A/S, Director
LINDHOLM INVEST ApS, Member of the Executive
Board
Previous position(s):
Carnegie Investment Banking, Associate
Arla Foods, Project Manager
Current directorships (both within and outside the Group)
Company name:
Directorship:
AX IV EG HOLDING III ApS
Board Member
AX IV SD HOLDING ApS
Chairman
AX IV SD HOLDING II ApS
Chairman
AX IV SD INV 1 ApS
Chairman
AX IV SD INV 2 ApS
Chairman
EG HOLDING A/S
Member of the Board
EG A/S
Vice-chairman
AX BALL INVEST ApS
Board Member
ASBL INVCO ApS
Board Member
EGA INVCO NEWCO ApS
Board Member
66
ESKO-GRAPHICS A/S
Board Member
BALL ApS
Vice-chairman
BALL HOLDING ApS
Vice-chairman
BALL INVEST ApS
Vice-chairman
Directorships held within the past 5 years (both within and outside the Group)
Company name:
Directorship:
EGA INVEST ApS, Merged 1309-2012,
Board member
ESKO-GRAPHICS HOLDING
A/S, Merged 13-09-2012
Board Member
ESKO-GRAPHICS
INVEST
A/S, Merged 13-09-2012
Board Member
PANDORA
MANAGEMENT
INVEST A/S, Merged 13-092012
Board Member
EGA 2008 ApS, Merged 13-092012
Board Member
EGA INVCO ApS, Merged 1309-2012
Board Member
67
Martin Lippert, Board Member
Born:
1967
Nationality:
Danish
Education
Cand. Oecon, Ph.D.
Current position(s):
CEO Broadnet AS
Previous position(s):
TDC A/S – Member of the Executive Board
SYNIVERSE TECHNOLOGIES PAYMENT SERVICES ApS – Member of the Executive Board
SYNIVERSE TECHNOLOGIES MESSAGING ApS
- CEO
Current directorships (both within and outside the Group)
Company name:
Directorship:
AX IV EG HOLDING III ApS
Board Member
EG A/S
Board Member
EG HOLDING A/S
Board Member
HARALD HALBERG EXPORT
A/S
Board Member
MAC BAREN PRODUCTION
A/S
Board Member
MAC
BAREN
COMPANY A/S
Board Member
HALBERG A/S
TOBACCO
Board Member
Directorships held within the past 5 years (both within and outside the Group)
Company name:
Directorship:
YOUSEE A/S
Board Member
68
DANSK KABEL TV A/S
Chairman
HALBERG INVESTERING
Board Member
SE 274711 A/s
Board Member
HALBERG KAPITAL A/S
Board Member
NETDESIGN A/S
Chairman
ZYLINC A/S
Board Member
TDC SONG DANMARK A/S,
Liquidated 10-01-2012
Chairman
SYNIVERSE DENMARK ApS
Chairman
SYNIVERSE
Aps
Chairman
TECNOLOGIES
WP ROAMING
ApS
DENMARK
Board Member
69
Jesper Frydensberg Rasmussen, CEO
Born:
1976
Nationality:
Danish
Education
Cand.merc.aud
Current position(s):
AXCEL MANAGEMENT A/S, Head of Finance
AX IV MITA INV 1 ApS, Member of the Executive
Board
AX IV MITA INV 2 ApS, Member of the Executive
Board
AX MITA INVEST ApS, Member of the Executive
Board
AX IV EG INV 1 ApS, Member of the Executive Board
AX IV EG INV 2 ApS, Member of the Executive Board
AX IV EG HOLDING III ApS, Member of the Executive
Board
AX IV EG HOLDING II ApS, Member of the Executive
Board
AX IV EG HOLDING ApS, Member of the Executive
Board
AXCIM INVEST A/S, Member of the Executive Board
NJK2 ApS, Member of the Executive Board
AX IV NEXT INV 1 ApS, Member of the Executive
Board
AX IV NEXT INV 2 ApS, Member of the Executive
Board
AX NEXT INVEST ApS, Member of the Executive
Board
AX IV EXHAUSTO INV 1 ApS, Member of the Executive Board
AX IV EXHAUSTO INV 2 ApS, Member of the Executive Board
AX IV EXHAUSTO INVEST ApS, Member of the Executive Board
AXLGT INVESTCO ApS, Member of the Executive
Board
AXLGT INVESTCO NEWCO ApS, Member of the Executive Board
IRW2 ApS, Member of the Executive Board
70
IRW3 ApS, Member of the Executive Board
LGT INVEST ApS, Member of the Executive Board
LGT1 INVEST ApS, Member of the Executive Board
LGT1 INVEST NEWCO ApS, Member of the Executive
Board
LGT2 INVEST ApS, Member of the Executive Board
IDDESIGN HOLDING 2011 A/S, Member of the Executive Board
IDINVEST 2011 ApS, Member of the Executive Board
IDINVEST ApS, Member of the Executive Board
IDINVEST AX 2011 ApS, Member of the Executive
Board
BEST VPG HOLDING A/S, Member of the Executive
Board
VPG HOLDING A/S, Member of the Executive Board
VITAL INVEST ApS, Member of the Executive Board
AFMS INVEST ApS, Member of the Executive Board
AFMS INVESTCO ApS, Member of the Executive
Board
AFMS INVESTCO NEWCO ApS, Member of the Executive Board
ALDF-JUNCKERS ApS, Member of the Executive
Board
ANI INVESTCO 2 ApS, Member of the Executive Board
ANI INVESTCO 2 NEWCO ApS, Member of the Executive Board
AX BALL INVEST ApS, Member of the Executive
Board
AX IV WATERPROOFING INV 1 ApS, Member of the
Executive Board
AX IV WATERPROOFING INV 2 ApS, Member of the
Executive Board
AX NO INVEST ApS, Member of the Executive Board
AX3 INVESTCO ApS, Member of the Executive Board
AXBL INVCO ApS, Member of the Executive Board
AXCEL PROMETHEUS INVEST 1, Member of the
Executive Board
AXCEL PROMETHEUS INVEST 2 ApS, Member of the
Executive Board
AXCEL-JUNCKERS INVEST A/S, Member of the Executive Board
71
AXIII TCM INVCO ApS, Member of the Executive
Board
AXNO INVCO ApS, Member of the Executive Board
AXTCM INVEST ApS, Member of the Executive Board
BB ELECTRONICS INVEST ApS, Member of the Executive Board
EGA INVCO NEWCO ApS, Member of the Executive
Board
ESKO-GRAPHICS A/S, Member of the Executive
Board
FA A/S, Member of the Executive Board
IRW1 ApS, Member of the Executive Board
JNP AX-III INV ApS, Member of the Executive Board
NORDIC WATERPROOFING 2 ApS, Member of the
Executive Board
NORDIC WATERPROOFING 3 ApS, Member of the
Executive Board
SAD1 INVEST ApS, Member of the Executive Board
SAD1 INVESTCO ApS, Member of the Executive Board
TCM INVEST A/S, Member of the Executive Board
AAI HOLDING A/S, Member of the Executive Board
AAI INVEST A/S, Member of the Executive Board
JEBA INVEST ApS, Member of the Executive Board
Previous position(s):
PROMETHEUS INVEST ApS, Member of the Executive Board
SAJBO INVESTCO ApS, Member of the Executive
Board
SAJBO1 INVEST ApS, Member of the Executive Board
SAJBO2 INVEST ApS, Member of the Executive Board
IRW4 ApS Merged 04-09-2013, Member of the Executive Board
AXCEL PROMETHEUS NEWCO 4 ApS, Member of the
Executive Board
KW INVEST ApS, Member of the Executive Board
EDUCATION INVEST ApS, Member of the Executive
Board
AXCEL PROMETHEUS NEWCO 2 ApS Merged 28-052013, Member of the Executive Board
AXCEL PROMETHEUS NEWCO 3 ApS Merged 28-052013, Member of the Executive Board
72
AXCEL PROMETHEUS NEWCO ApS Merged 28-052013, Member of the Executive Board
AXCEL III G.P. ApS Winded up 04-11-2013, Member
of the Executive Board
MNGT KOMPLEMENTAR ApS Winded up 23-102013, Member of the Executive Board
VENTILATION HOLDING ApS, Member of the Executive Board
KIFU-AX II A/S, Member of the Executive Board
TCM MANAGEMENT INVEST ApS, Member of the
Executive Board
AXCIM INVEST A/S, Member of the Executive Board
AX CIMBRIA INVEST ApS, Member of the Executive
Board
AX IV CIMBRIA INV 1 ApS, Member of the Executive
Board
AX IV CIMBRIA INV 2 ApS, Member of the Executive
Board
FM-SØKJÆR HOLDING 1 A/S, Member of the Executive Board
NJK1 ApS, Member of the Executive Board
ANI INVEST 2 ApS Merged 19-10-2012, Member of the
Executive Board
ANI INVEST ApS Merged 19-10-2012, Member of the
Executive Board
ANI INVESTCO ApS Merged 19-10-2012, Member of
the Executive Board
NC AX 21 ApS Merged 19-10-2012, Member of the
Executive Board
NC AX 22 ApS Merged 19-10-2012, Member of the
Executive Board
EGA 2008 ApS Merged 13-09-2012, Member of the
Executive Board
EGA INVCO ApS Merged 13-09-2012, Member of the
Executive Board
EGA INVEST ApS Merged 13-09-2012, Member of the
Executive Board
ESKO-GRAPHICS HOLDING A/S Merged 13-09-2012,
Member of the Executive Board
ESKO-GRAPHICS INVEST A/S Merged 13-09-2012,
Member of the Executive Board
PANDORA MANAGEMENT INVEST A/S Merged 1309-2012, Member of the Executive Board
73
ATX 2008 ApS Winded up 26-06-2013, Member of the
Executive Board
HOLDINGSELSKABET AF 7. OKTOBER 2009 A/S,
Member of the Executive Board Winded up 04-032013
DF AF 1. JANUAR 2009 A/S Winded up 10-06-2011,
Member of the Executive Board
Dansk Kapitalanlaeg (2006-2011), Member of the Executive Board
Deloitte (1999-2006), Member of the Executive Board
Current directorships (both within and outside the Group)
Company name:
Directorship:
AX IV NEXT INV 1 ApS
Board Member
AX IV NEXT INV 2 ApS
Board Member
AX IV WATERPROOFING
INV 1 ApS
Board Member
AX IV WATERPROOFING
INV 2 ApS
Board Member
AX NEXT INVEST ApS
Board Member
NORDIC WATERPROOFING
2 ApS
Board Member
NORDIC WATERPROOFING
3 ApS
Board Member
ANI INVESTCO 2 ApS
Board Member
ANI INVESTCO 2 NEWCO
ApS
Board Member
IRW1 ApS
Board Member
IRW2 ApS
Board Member
IRW3 ApS
Board Member
AXCEL IKU INVEST A/S
Board Member
Directorships held within the past 5 years (both within and outside the Group)
Company name:
Directorship:
74
EG A/S
Board Member
EG HOLDING A/S
Board Member
IRW4 ApS Merged 04-092013
Board Member
ORION FINANCE ApS Winded up 16-01-2013
Board Member
HOLDINGSELSKABET AF 7.
OKTOBER 2009 A/S Winded
up 04-03-2013
Board Member
M-K-S HOLDING ApS
Board Member
DF AF 1. JANUAR 2009 A/S
Winded up 10-06-2011
Board Member
DKA CAPITAL A/S
Board Member
Statement of past records
There have been no instances within the last 5 years of any conviction of economic crime,
fraud related convictions, or similar processes where members of the Issuer’s executive
board or the board of directors have been involved and no such instances or processes are
ongoing.
Except the abovementioned information, presented in the records of the members of the
board of directors and the executive board, the members have in no instances within the last
5 years bankruptcies, liquidations or similar procedures where members of the Issuer’s executive board or the board of directors have been involved and no such instances or processes
are ongoing.
No member of the Issuer’s executive board or board of directors have within the last 5 years
been disqualified the right to act as a board member or member of the executive board by a
court of law.
75
SUMMARY OF FINANCE AGREEMENTS
Intercreditor Agreement
The security interests over the Collateral are subject to the Intercreditor Agreement. The
Collateral will be shared by certain other creditors of the Group in the form of the RCF Lenders and certain hedge counterparties that provide interest rate risk hedging with respect to
the Bonds and the facility provided under the Revolving Credit Facility and certain other
non-speculative interest rate risk and foreign exchange risk hedging to the Group (in the case
of foreign rate risk subject to a cap of a notional amount of DKK 350,000,000). The Intercreditor Agreement provides that the proceeds of enforcement or a distressed disposal of the
Collateral will be applied to repay claims of the lenders under the Revolving Credit Facility
and the counterparties to the interest rate risk and foreign exchange risk hedging liabilities
referred to above (such creditors: “Super Senior Creditors”) in priority to the Bondholders.
Bondholders may therefore receive less or no proceeds from the enforcement of the Collateral or in an insolvency scenario.
The parties to the Intercreditor Agreement are (i) AX IV EG Holding II ApS (as parent), (ii)
the Issuer (as senior secured notes issuer), (iii) AX IV EG Holding II ApS, AX IV EG Holding
III ApS, EDB Gruppen Holding A/S, EG Holding A/S, EG A/S, EG KommuneInformation
A/S, EG Utility A/S, Dynaway A/S, EG Data Inform A/S, EG Norge AS, EG Retail AS, EG
Navicom AS, EG NaviPartner AS and EG Sverige AB (as original debtors), (iv) Danske Bank
A/S (as RCF Representative), (v) Norsk Tillitsmann (as senior secured notes trustee), (vi)
Norsk Tillitsmann (as security agent), and (vii) Axcel IV K/S, Axcel IV K/S 2, AX Management Invest K/S, AX Management Invest II K/S, Danske Bank A/S, Skandivaviska Enskilda
Banken AB (publ) (as Certain Entities, such as RCF Finance Parties, Hedge Counterparties,
Intra-Group Lenders, Intra-Group Borrowers and Shareholder Creditors).
The Bondholders may not control the enforcement of the security interests in the Collateral
as such enforcement is under certain circumstances controlled by the super senior creditors
as provided for in the Intercreditor Agreement. The arrangements in the Intercreditor
Agreement could result in the enforcement of the security interests in the Collateral in a
manner that results in lower recoveries by the Bondholders.
Additional security interests may be provided to the Revolving Credit Facility lenders in the
form of cash cover which are not also granted to the Bondholders, and the terms of the Revolving Credit Facility may be amended by the parties thereto without the consent of the
Bondholders and without such amendment entitling the Bondholders to get repaid, prepaid
or accelerate the Bonds, save that the Revolving Credit Facility cannot be increased above
DKK 90,000,000.
Under the Intercreditor Agreement the security agent will in case of conflicting enforcement
instructions with respect to enforcement of the security interests in the Collateral follow the
enforcement instructions provided by the Bond Trustee as representative of the Bondholders
in the event that the Bond Trustee as representative of the Bondholders and the representative of the super senior creditors deliver conflicting enforcement instructions to the security
agent. Notwithstanding the above, the security agent will, however, not follow the enforce-
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ment instructions delivered by the Bond Trustee as representative of the Bondholders, but
follow the enforcement instructions of the representative of the super senior creditors, if (i) it
cannot reasonably be expected that the recoveries from the enforcement of the security interests in the Collateral will result in any payment to the Bondholders, (ii) enforcement of the
security interests in the Collateral has not commenced 90 days after the initiation of the enforcement or (iii) the super senior creditors have not been fully discharged 6 months after
the initiation of the enforcement.
The Bondholders are in certain default, insolvency and acceleration events described in the
Intercreditor Agreement obliged to turn over any amount received in respect of the Bonds to
the security agent under the Intercreditor Agreement. This may also include holding such
amount on trust for the benefit of the security agent pending payment or pay an amount to
the security agent corresponding to any amount received in the form of set-off. In such
events the Issuer and the Guarantors will not pay any amounts to the Bondholders. Instead
the Bond Trustee will be instructed to ensure that payments are made to the security agent
under the Intercreditor Agreement to be applied in accordance with the waterfall in the Intercreditor Agreement, which provides that certain creditors of the Group, including the Super Senior Creditors, have priority before the Bondholders.
The Bonds will under the Intercreditor Agreement be subject to provisions on equalisation.
This means that a Bondholder in the event that not all Bondholders are repaid in full after
enforcement of the security interests in the Collateral, the Guarantees and any other money
or assets available for realisation may be required to pay an amount to the security agent
under the Intercreditor Agreement for the purpose of the security agent distributing such
amount to other Bondholders so that the loss borne by each Bondholder corresponds to its
holding of Bonds relative to the total principal amount of Bonds outstanding.
The Intercreditor Agreement is governed by Danish law.
Revolving Credit Facility
In connection with the Issue and subject to certain conditions, EG A/S entered into a new
DKK 60,000,000 Revolving Credit Facility for general corporate and working capital purposes, with Danske Bank A/S and Skandinaviska Enskilda Banken AB (publ) as lenders (the
“RCF Lenders”). The facility may be increased to DKK 90,000,000 without the consents of
the Bondholders. The facility will be available for borrowings in DKK, NOK, as well as in SEK
(and in such other currencies as agreed between the parties). The commitments under the
Revolving Credit Facility will also be available towards overdraft facilities, guarantees, standby letters of credit and short term loan facilities as agreed with the RCF Lenders. The Revolving Credit Facility matures at the earlier of six years after the Bonds closing date and the date
which is six months prior to the maturity of the Bonds, and is guaranteed by the Issuer and
the companies guaranteeing the Bonds.
The Revolving Credit Facility has an applicable margin of 3.5% per annum and a default
margin of 1.0% per annum. EG A/S pays an unused commitment fee equal to 40% of the
applicable margin, calculated on the undrawn and uncancelled commitments from the closing date of the Revolving Credit Facility. Interest periods on the Revolving Credit Facility are
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monthly, quarterly or semi-annually or as otherwise agreed between EG A/S and the RCF
Lenders. EG A/S shall repay or ensure that it has available in cash an amount equal to the
amount outstanding under the facility (as regards ancillary facilities only including cash loan
elements of the ancillary outstandings under all the ancillary facilities and any cash loans
covered by a letter of credit or a guarantee issued under an ancillary facility) for at least five
successive business days in each of its financial years, with no less than three months elapsing between such periods. The obligations under the Revolving Credit Facility will be secured
on a first-ranking basis and with security over the Collateral and benefit from guarantees
provided by the Guarantors and the Issuer. Pursuant to the Intercreditor Agreement, the
liabilities under the Revolving Credit Facility and certain hedging obligations will have priority over the Bonds with respect to any amounts received from the sale of Collateral pursuant
to a distressed disposal or an enforcement action taken with respect to the Collateral. The
liabilities under the Revolving Credit Facility and certain hedging obligations will also have
priority with respect to payments made under the Guarantees and certain other payments in
certain super senior priority protection event.
EG A/S is required, upon entry into the Revolving Credit Facility and upon each borrowing
thereunder, to provide certain customary representations and warranties, including, but not
limited to, status, power and authority, legal validity, encumbrances, no default, no litigation,
title to assets and tax liabilities. The Revolving Credit Facility contains requirements for
mandatory prepayments upon (i) a change of control, (ii) receipt of disposal proceeds, (iii)
receipt of acquisition proceeds or (iv) receipt of insurance proceeds. The Revolving Credit
Facility does in addition to the financial covenants included in the Bond Agreement contain
one financial covenant providing that the ratio of total net debt to EBITDA (as defined therein) shall not exceed 8:1. The Revolving Credit Facility has also incurrence covenants including limitations on (i) incurrence of additional indebtedness, (ii) restricted payments, (iii)
transactions with affiliates and (iv) asset sales and mergers. The Revolving Credit Facility
also contains certain customary events of default which, upon their occurrence, will provide
the RCF Lenders with the right to declare all outstanding amounts under the facility to become due and payable.
The Revolving Credit Facility is governed by Danish law.
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ADVISERS
Joint Lead Managers
Danske Bank A/S
Holmens Kanal 2-12
1092 Copenhagen K
Denmark
SEB Skandinaviska Enskilda Banken AB, Danmark, filial af Skandinaviska Enskilda Banken
AB (publ), Sverige
Bernstoffsgade 50
1577 Copenhagen V
Denmark
The Joint Lead Managers act as Certified Advisers for the Group during the period for application to admission to trading and until the first day of trading on First North Bond Market.
Each Joint Lead Manager has been approved as Certified Advisers by NASDAQ OMX Copenhagen A/S.
There is no agreement or arrangement in place between the Joint Lead Managers and the
Issuer regarding provision of liquidity.
Legal adviser
Bruun & Hjejle
Nørregade 21
1165 Copenhagen K
Denmark
Auditors
PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab
VP Agent
Danske Bank A/S
Holmens Kanal 2-12
1092 Copenhagen K
Denmark
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GLOSSARY AND DEFINITIONS
The following table sets forth definitions of terms used in this Company Description. They
are however not intended as technical definitions, but are provided purely for assistance in
understanding certain terms as used in this Company Description.
Acquisition
means the acquisition by the Issuer of EDB
Gruppen A/S on the terms of the Acquisition
Documents.
Acquisition Agreement
means the share purchase agreement entered
into relating to the sale and purchase of EDB
Gruppen A/S between AX IV EG Holding
ApS and Nordic Capital.
Acquisition Documents
means the Acquisition Agreement, and any
ancillary document relating to the Acquisition and any other document designated as
an "Acquisition Document" by the Agent and
the Issuer.
AX3
means the Issuer and its subsidiaries.
Axcel
means Axcel Management A/S, Axcel IV K/S
and Axcel IV K/S 2, jointly.
Axcel IV
Means Axcel IV K/S, Axcel IV K/S 2, AX
Management Invest K/S,
AX
Management Invest II K/S
Bondholders
means any investor, who invests in the
Bonds.
Bond Agreement
means the Bond Agreement between AX IV
EG Holding III ApS and Norsk Tillitsmann
ASA on behalf of the Bondholders in the
bond issue Ax IV EG Holding III Floating
Rate Senior Secured Callable Bond Issue
2013/2020, including any attachments to it,
each as amended from time to time.
Bonds
means the DKK 900,000,000 Floating Rate
bonds due December 2, 2020 issued by the
Issuer pursuant to the Bond Agreement.
Bond Trustee
means Norsk Tillitsmann ASA.
Cloud
Cloud (computing) is a synonym for distributed computing over a network (typically the
Internet) and means the ability to run a program on many connected computers at the
133
same time.
Certified Advisors
means Danske Bank A/S and Skandinaviska
Enskilda Banken, Danmark, filial af Skandinaviska Enskilda Banken AB, who have acted
as Certified Advisers for the Issuer during
the period for application to admission to
trading and until the first day of trading on
First North Bond Market.
Change of Control
shall have the meaning set out in the Bond
Agreement.
Collateral
mean the Bondholders’ security interests in:
(i)
First priority assignment of the Issuer’s rights under Acquisition Agreement
(ii)
First priority share pledge over the
shares in the Issuer
(iii)
First priority share pledge over the
shares in EDB Gruppen Holding A/S
(iv)
First priority share pledge over the
shares in EG Holding A/S
(v)
First priority share pledge over the
shares in EG A/S
(vi)
First priority share pledge over the
shares in EG KommuneInformation
A/S
(vii)
First priority share pledge over the
shares in EG Utility A/S
(viii) First priority share pledge over the
shares in Dynaway A/S
(ix)
First priority share pledge over the
shares in EG Data Inform A/S
(x)
First priority share pledge over the
shares in EG Norge AS
(xi)
First priority share pledge over the
shares in EG Navicom AS
(xii)
First priority share pledge over the
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shares in EG Retail AS
(xiii) First priority share pledge over the
shares in EG Sverige AB
(xiv) First priority share pledge over the
shares in EG NaviPartner AS
(xv)
First priority assignment by shareholder creditors of shareholder loans
made to the Issuer
(xvi) First priority assignment of intragroup loans made by AX IV EG Holding II ApS, AX IV EG Holding III ApS,
EDB Gruppen Holding A/S and EG
Holding A/S to members of the
Group, including an intercompany
loan of DKK 246,484,180.15 provided
by AX IV EG Holding III ApS to EG
Holding A/S
(xvii) First priority assignment of intragroup loans made by members of the
Group (other than AX IV EG Holding
III ApS, EDB Gruppen Holding A/S
and EG Holding A/S) to another
member of the Group, provided such
loan has i) a maturity of more than 1
year and ii) in an aggregate on a debtor basis exceeds DKK 10,000,000,
and where first DKK 10,000,000 shall
also be included in the assignment,
including an intercompany loan of
DKK 35,000,000 provided by EG A/S
to EDB Gruppen Holding A/S
Negative Pledges registered in the Danish
Personal Register for each of AX IV EG Holding II ApS, AX IV EG Holding III ApS, EDB
Gruppen Holding A/S, EG Holding A/S, EG
A/S, EG Data Inform A/S, EG Utility A/S,
EG KommuneInformation A/S and Dynaway
A/S.
Company Description
means this document, which is referred to as
a Company Description in the rule book of
the First North Bond Market, and which is
required to be submitted no later than the
application for admission to trading on the
First North Bond Market.
Danish Financial Statements Act
means Act no. 323 of April 11, 2011 on Com-
135
mercial Enterprises’ Presentation of Financial Statements, etc., as amended.
EBITDA
means Reported and Normalized EBITDA.
Reported EBITDA means earnings before
income taxes, net financial income, special
items and total depreciation and amortization. Under accounting policies of the Group
certain development costs are capitalized in
the balance sheet and not expensed in the
year they were incurred. This means that
EBITDA is higher than had such development costs been expensed. The development
cost capitalized in the balance sheet will be
depreciated over 3-5 years.
Normalized EBITDA is as Reported EBITDA
adjusted regarding a) EBIDTA on acquired
companies, meaning that the acquired companies are included with 12 months in the
LTM statement, b) external costs regarding
acquisitions, c) costs in connection with integration (however not loss of the Group’s
working man hours etc.).
EBITA
means primary earnings before income taxes, net financial income, special items and
amortization.
ERP
means Enterprise Resource Planning. Enterprise resource planning systems integrate
internal and external management of information across an entire organization – encompassing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software
application. ERP facilitates information flow
between all business functions inside the
organization, and manages connections to
outside stakeholders.
Exchange
means a securities exchange or other reputable market place on which the Bonds are
listed, or where the Issuer has applied for
admission to trading of the Bonds.
Finance Documents
mean (i) the Bond Agreement, (ii) the
agreement between the Bond Trustee and
the Issuer (iii) the agreements granting security interests in the Collateral, (iv) the Intercreditor Agreement (v) The Revolving Credit
Facility Agreement and (vi) any other document (whether creating a Security or not)
136
which is executed at any time by the Issuer
or any other person in relation to any
amount payable under the Finance Documents.
Floating Rate Bonds
mean the debt instruments issued by the
Issuer pursuant to the Bond Agreement.
Group
means the AX IV EG Holding III ApS and
any of its subsidiaries from time to time.
Guarantors
mean AX IV EG Holding II ApS, EDB Gruppen Holding A/S, EG Holding A/S, EG A/S,
Dynaway A/S, EG Data Inform A/S, EG Sverige AB, EG Norge AS, EG Utility A/S, EG
KommuneInformation A/S, EG Retail AS,
EG NaviPartner AS and EG Navicom AS.
Issue
means the bond issue constituted by the
Bonds
Issuer
means AX IV EG Holding III ApS, business
registration number 35 38 11 39.
Joint Lead Managers
mean Danske Bank A/S and Skandinaviska
Enskilda Banken, filial af Skandinaviska
Enskilda Banken AB (publ), Sverige.
Material Subsidiary
means any subsidiary of the Issuer which on
a consolidated basis together with its subsidiaries has revenues, gross assets, or EBITDA
which represents five (5) per cent or more of
the consolidated revenues, gross assets or
EBITDA of the Group or as defined in Clause
13.4(g) in the Bond Agreement.
Microsoft Dynamics AX
means Microsoft Dynamics AX (formerly
known as Axapta). Microsoft Dynamics AX is
one of Microsoft’s ERP software products. It
is part of the Microsoft Dynamics family.
Originally developed by Damgaard Data and
acquired by Microsoft in 2002. Microsoft
Dynamics AX is aimed at the upper midmarket and lower enterprise market.
Microsoft Dynamics NAV
means Microsoft Dynamics NAV (formerly
known as Navision). Microsoft Dynamics
NAV is one of Microsoft’s ERP software
products. It is a part of the Microsoft Dynamics family. Originally developed by
Navision and acquired by Microsoft in 2002.
Microsoft Dynamics NAV is aimed at the
137
SME segment and lower/core mid-market.
Open Source
Open source refers to a program in which the
source code is available to the general public
for use and/or modification from its original
design free of charge, i.e., open. Open source
code is typically created as a collaborative
effort in which programmers improve upon
the code and share the changes within the
community. Some open source codes are
subject to a license providing that the software produced with an open source code
must be available to the public.
Maturity Date
means 2 December 2020
Member State
means a member state of the European Economic Area, which has implemented the
Prospectus Directive.
Prospectus Directive
means Directive 2003/71/EC and amendments
thereto,
including
Directive
2010/73/EU.
RCF Lenders
mean Danske Bank A/S and Skandinaviska
Enskilda Banken AB (publ)
Relevant Member State
means a Member State in which the Bonds
are offered, which has implemented the Prospectus Directive.
SaaS
means ‘Software as a service’. A subscription
based software delivery model in which users
are provided access to application software
and databases centrally hosted in the cloud.
SaaS is sometimes referred to as “on-demand
software” and is usually priced on a pay-peruse basis. SaaS providers generally price
applications using a monthly subscription
fee.
SAP
means SAP Business Suite (SAP BS) and is
an ERP software product developed by SAG
AG. SAP BS is the global market leader in the
enterprise segment. In order to address midmarket need SAP partners like EG have developed pre-configured versions of SAP BS,
which are marketed under the SAP All-inone branding.
Securities Act
means the U.S. Securities Act of 1933, as
amended.
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Security
means any encumbrance, mortgage, charge,
pledge, lien or other security interest securing any obligation of any person or any other
agreement or arrangement having a similar
effect.
SME
means small-medium enterprises. Typically
this refers to companies with less than 50
employees.
Super Senior Creditors
See definition in Summary of Finance
Agreements
139