THE ANNUAL ACCOUNTS

The annual accounts for 2006 show a profit of NOK 37 million, compared with NOK 86 million in 2005. The downturn in profit is the result of a number of factors in addition to the fact that 2005 was a particularly good year. Lower lending volumes, reduced interest margins and slightly higher losses on certain loan schemes were contributory factors.

Net interest income amounts to NOK 200 million, compared with NOK 238 million during the previous year. Total operating income increased by NOK 155 million to NOK 859 million. This increase is primarily linked to much larger commitments via the State budget for tourism activities that are being carried out under the direction of Innovation Norway. Of the operating income, sales of services to external customers in connection with marketing and internationalisation account for NOK 209 million (2005: NOK 178 million).

Operating costs increased from NOK 841 million to NOK 982 million, of which salary and personnel costs amount to NOK 457 million. Direct project costs account for the biggest increase, from NOK 184 million to NOK 296 million. Direct project costs comprise the purchase of goods and services directly for Innovation Norway’s activities, largely linked to tourism and internationalisation projects.

Losses on loans and guarantees have been expensed in the amount of NOK 96 million. After coverage from provisions for losses in the amount of NOK 56 million, the accounts show a net loss of NOK 40 million. This is slightly higher than the previous year and is largely due to one loan scheme where a larger amount was set aside as a provision for losses. Otherwise, the other loan schemes show a good trend with reduced losses and default.

Total loss provisions as of 31 December 2006 amount to NOK 679 million, which represents a fall of NOK 86 million. Of this, NOK 180 million consists of unspecified loss provisions. In the opinion of the board, the provisions reflect the total loss risk in the loan and guarantee base which the accounts must take into account.

Innovation Norway’s balance sheet total at the end of the year was NOK 16.5 billion, compared with NOK 18.3 billion at the previous year-end. Net loans amounted to NOK 12.1 billion, a reduction of NOK 1.3 billion. Equity totalled NOK 776 million (2005: 755 million), of which the majority is linked to lending activity. See the supplementary notes for more information on equity and the capitalisation of the various loan and investment funds.

Continued operation was assumed in the preparation of the accounts. Innovation Norway is a State public support system and is dependent on annual funding being allocated by the Norwegian Parliament.

Distribution of profit

After loss and administration costs, the accounts for 2006 show a net income of NOK 36,667,655.

The board proposes that the net income be distributed as follows:

Dividend to the State (low-risk scheme)	NOK 23 551 950
Dividend to the State (Investment Fund for Northwest Russia)	NOK 774 564
Transferred to the State (risk loans and guarantees)	NOK 7 690 294
Transferred to the State (regional loan scheme)	NOK 77 750
Charged to retained earnings, Seed Capital Fund	(NOK 17 472 968)
Credited retained earnings, Investment Fund for Northwest Russia	NOK 258 187
Credited retained earnings, Investment Fund for East Russia	NOK 88 309
Credited retained earnings, low-risk scheme	NOK 14 304 442
Credited other retained earnings	NOK 7 395 127

Report on equality

The proportion of women in Innovation Norway was 50.3% at the end of 2006. At the end of 2005, the proportion was 52%.
 
Innovation Norway’s plan for equality contains a series of objectives and initiatives within recruitment and career development, leadership, expertise and business culture. The action plan is anchored in the senior management.

46% of those who were appointed in 2006 are women. This corresponds to the proportion of women who applied for positions within the organisation. There are still more women in lower position categories than in the higher ones. In accordance with the equality plan, initiatives have been implemented to increase the proportion of female managers, both through external recruitment and internal motivation initiatives.

Innovation Norway is focussing on equal pay, yet women still have lower pay than men in three out of five position categories. However, the difference is becoming less every year, as equal pay has been prioritised in the annual pay settlements.

Organisation and environment

Innovation Norway was founded on 1 January 2004 with its own management and administration. Innovation Norway comes under the Ministry of Trade and Industry. Innovation Norway has its head office in Oslo, but most of the employees are based close to customers at the offices in all the country’s counties, or close to the market at offices in 32 countries worldwide.

Innovation Norway’s principal board consists of nine members and two employee representatives. The board is responsible for the administration and appropriate organisation of Innovation Norway’s activities. The board exercises its supervision through general management. The principal board appoints regional boards for the regional offices. These report to the principal board through the CEO.

Innovation Norway has established its own company medical scheme and an agreement on a More Inclusive Workplace. During the year, two cultural and climate surveys were undertaken amongst the employees. Absence due to illness has fallen from 4.3 percent in 2005 to 4.1 percent in 2006. No occupational accidents were reported in 2006. The organisation has not contributed to the pollution of the natural environment.