annual report 2006

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HiQ ANNUAL REPORT 2006

PASSION

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Yearning is one of man’s strongest driving forces. Once you no longer have a yearning for anything, you ﬁnd yourself at a standstill. An elite athlete has such a great yearning to be the best that their training schedule is often at the limits of what the body can bear. At HiQ we are driven by a yearning to help our clients as they try to take the latest high technology one step further. This annual report contains everything you would normally ﬁnd in an annual report, but also tells you what yearning has done for world history and what HiQ’s yearning does for our clients.

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19.3

HiQ 2006 in brief

Interactive gaming and platforms Simulators for

testing, training and interactive

education

Automotive IT and telematics

Financial/business- critical systems

Fat dogs dance badly.

Page 9.

It’s tempting to take it easy when the market is hot and things are going well, but that’s not our style. Instead, HiQ worked even harder and implemented a number of new initiatives to help our clients in even better ways than before. I think that our respectful attitude to our assignments has played a large part in our being so successful. We know that it is hard, and that is why we put even more effort into continuing to deliver high quality in our assignments and into attracting the best employees by being a really good place to work,” says Lars Stugemo, President and CEO of HiQ International.

HiQ condensed.

Page 11.

HiQ is a specialist consultancy company with expertise in

communications, software development and simulation. We help our clients to improve their competitiveness by supplying the specialist skills that they lack in-house.

What systems, products and services does HiQ develop?

Page 18.

At HiQ we yearn every day to achieve the impossible, to break new high-tech ground and to help our clients develop new services and products that make life easier and more pleasant. We develop systems, products and services in the areas of telecoms, new mobile phones, various kinds of simulators, gaming and platforms for online gaming on the Internet, IT solutions in vehicles as well as a variety of business-critical systems that you come across in your daily life, for example systems for securities trading.

Proﬁtability remains good.

Pages 12, 37, 40.

2006 is greater than 2005, and the same is true of HiQ’s ﬁgures for the year. Sales increased by 11 percent to SEK 801.4 (720.5) million. Proﬁt increased to SEK 154.9 (148.3) million, which represents an operating margin of 19.3 (20.6) percent.

The proposed dividend to shareholders is SEK 2.10 (2.10) per share. We took on 239 new employees, expanding our work- force by 19.6 percent.

Top ten clients 60% (63%)

Our top 10 clients accounted for 60%

of sales in 2006.

Sales to top 10 clients.

Page 23.

Our clients can be found within 7 different business sectors.

Sales by business sector.

Page 23.

Telecoms 48% (49%)

Security &

defence 8% (9%)

Finance &

insurance 5% (7%) Industry 11% (9%)

Gaming &

entertainment 12% (13%) Automotive

10% (8%)

Public sector 6%

(5%)

%

02 03 04 05 06

OPERATING MARGIN 25

20 15 10 5 0

20.6

13.9 8.3 0.2 SEK,

million NET SALES

Sales increased to SEK 801.4 million, representing growth of 11%.

The operating margin was 19.3%.

Who are HiQ’s clients?

Page 18.

Nearly all the Nordic telecoms operators, most of the world’s leading mobile phone producers, a handful of major automotive manufacturers, various companies within the ﬁnancial sector and several companies within the gaming industry that develop online gaming for Internet betting. Also the defence industry. They all have something in common.

Telecoms

Sweden’s best IT-consulting company.

Page 9, 15.

In a survey conducted among Sweden’s 600 largest byers of consultning services HiQ has been awarded Best IT-consulting company.

Communications Simulation Software

development

900 750 600 450 300 150

801.4

02 03 04 05 06

720.5

512.9 403.0 413.8

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Annual General Meeting The Annual General Meeting will take place at 6 pm on 27 March 2007 at HiQ’s offices at Mäster Samuelsgatan 17, 9th floor, in Stockholm. Notice of the Annual General Meeting will be publis- hed in the newspapers Post- och Inrikes Tidningar and Svenska Dagbladet, as well as on the company’s website, www.hiq.se

Upcoming financial information The Annual General Meeting will be held on 27 March 2007.

The interim report for the period January-March will be presented on 26 April 2007.

The interim report for the period January-June will be presented on 15 August 2007.

The interim report for the period January-September will be presented on 22 October 2007.

The year-end release 2007 will be presented on 30 January 2008.

For more information, please contact:

Annika Billberg, Head of Corporate Communications and Investor Relations Manager at HiQ, tel. +46 (0)8-588 90 015, +46 (0)704-200 103, annika.billberg@hiq.se Who is Bengan?

The dog you will spot from time to time in our annual report is a Saluki. He is called Bengan and he’s been representing us in our communications for several years.

The Saluki is probably the oldest breed of dog in the world. Paintings and other finds from the Middle East show that the breed is almost 6,000 years old.

The Saluki was the sporting dog of kings, yet it was also a vital, highly prized hun- ting dog to the nomadic Bedouin tribes. It was so fast that it could be used to hunt the swiftest gazelles.

Traditionally, a Saluki was never sold.

However, it could be given away as a sign of friendship or respect. Indeed, the first Salukis to arrive in the western world were gifts. The first came to Europe in the mid-19th century as a gift presented to an English colonial administrator. Later, British and French officers stationed in the Middle East also received Salukis as gifts and brought them back to Europe, where they came to stay.

As a puppy the Saluki is naturally very playful, and will often remain so as a fully- grown dog – sometimes even throughout its life. The Saluki is known for its ele- gance, endurance and speed. It can reach speeds of up to 70 km/h – and not just in short bursts, but also over long sustained stretches. The Saluki is a wilful animal and wants to follow its own path.

You can never tell exactly where a Saluki is going, only that it will get there faster than anyone else.

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It’s tempting to take it easy when the market is hot and things are going well, but that’s not our style. Instead, HiQ worked even harder and implemented a number of new initiatives to help our clients in even better ways than before.

More details of this in a moment, but the results of our efforts in 2006 were good. We employed 239 new members of staff and grew to nearly 800 employees – our largest work- force ever. Our sales also exceeded anything achieved previously, as did our profits. We had more clients and more orders. And in terms of the number of employees we are among the top companies in our niche in the Nordic region.

I think that our respectful attitude to our assignments has played a large part in our being so successful. We know that it is hard, and that is why we put even more effort into continuing to deliver high quality in our assignments and into attracting the best employees by being a really good place to work.

2006 – a steady 6 metres per second 2006 ended getting two great accolades for HiQ. In a survey carried out by Veckans Affärer, HiQ was named IT Consultant of the Year 2007 by Sweden’s 600 largest buyers of consulting services – which we see as a further sign that we are maintaining the high quality of what we deliver to our clients and that the HiQ brand is strong.

We were also named as one of Sweden’s ten most attractive employers within computing/IT in a survey conducted by Universum

Communications. We work well as a team, we have developed our own consulting school to develop skills and we have fun together – even occasionally in our free time. A good place to work is a strong card in the current climate, when others are attempting to lure away our employees and we ourselves want to employ more skilled consultants.

To translate the market situation into sailing terms, calm prevailed on the sailing race course a few years ago. It was a matter of sitting tight in the boat and making sure we were well equipped and in the right position for when the wind got up again. The wind arrived in 2004, picked up strength in 2005 and in 2006 blew a steady 6 metres per second. The conditions were good, everyone had roughly the same boat speed and most organisations did well to a greater or lesser extent. HiQ had a very successful year and I want to thank our clients and employees for another year together in the service of high technology.

During the year we implemented a number of new initiatives to improve our offering to our clients. In telecoms we developed our test activities so that we can now provide our clients with a complete department for quality assurance of mobile terminals, applications and platforms. Here we work on everything from planning, design and development to implementation. In 2006 we assisted several of the world’s largest mobile phone manufacturers with the quality assurance of close to 50 new models.

Another major initiative was to build up development activities for advanced game- based interactive training, which has already resulted in interesting assignments for clients such as Mazda Scandinavia, AstraZeneca and Volvo Trucks. Here we combine our expertise in the development of interactive gaming on the Internet with our many years’ experience of simulation.

Fat dogs dance badly

ceo – lars stugemo There are many of us that yearn to be able to get to the other side of the globe faster. Researchers at NASA take the matter very

seriously and for some time have been testing a jet engine, the Supersonic Combustion Ramjet (Scramjet), which in theory is capable of reaching speeds up to 15 times the speed of sound. The problem with conventional jet engines is that the moving parts get so hot at high speeds that they expand and destroy the engine. The Scramjet engine has no moving parts, does not need to carry fuel and gives off no toxic emissions. It runs on hydrogen from the air around it, which is forced into the engine’s fuel chambers by the wind effect of travelling at speed.

Developing high technology is something we are constantly yearning to do at HiQ. In telecoms, one of our clients is currently driven by the vision of developing a brand new kind of base station no larger than a matchbox and no more expensive than the mobile phone itself. In the future there will be a requirement for many more base stations to meet the need for higher speeds in the mobile communications network, so that all the new services can be fully exploited.

In a survey carried out by Veckans Affärer, HiQ was named IT Consultant of the year by Sweden’s 600 largest buyers of consulting services.

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2007 – fresh breeze, 6 till 10 metres per second

To return to my sailing analogy, I believe that 2007 will see similar or possibly somewhat rougher conditions. The breeze will be slightly fresher, making for more demanding sailing.

The pace will be fast and some boats will choose the wrong course under the pressure, while others will lack the necessary expertise among the crew.

A number of interesting technical trends will emerge in 2007. Mobile phones with GPS functionality will become increasingly common. On-screen maps will show your current location and how best to get to your destina- tion. Another interesting technological trend is that IPTV will be big. A good friend that I was talking to was greatly surprised to be called by a salesperson from one of the big telecoms operators offering TV via broadband. “Do you mean to say via an ordinary phone line, with high resolution and offering video-on-demand as well?” he asked the salesperson dubiously.

As an ordinary user of broadband with its fluc- tuating speeds, naturally he could not believe that the technology would work in practice and turned down the offer. But as we know, the technology exists and is being launched, inclu- ding as a triple-play offering to end customers.

Your phone, TV and computer on the same line – so you can talk on the phone via computer, watch TV on the phone and surf the Internet on your flat screen TV, or the other way round.

The point is that everything is being built to work together, providing us users with a wealth of options to choose from.

Technological development is racing along and has as usual reached an interesting stage.

Our clients are launching new products and services at an ever faster rate in order to compete successfully in their markets.

The ability of consulting firms to deliver at this ever faster pace will be crucial – and we are talking here about both quantity and quality. If we are to maintain our profitability we cannot afford to be forced to turn down assignments and must maintain the high quality of our work regardless of the fast pace.

We at HiQ will concentrate on two things in 2007. Firstly, looking after our employees and attracting many new skilled staff to join them.

Secondly, we must continue to maintain high quality in our work with our clients.

Although competition for good staff is fierce and will only get fiercer in 2007, there are many indications that we will continue to succeed in recruiting many skilled consultants who can help us meet our clients’ expectations of high quality assignments. The HiQ brand is stronger than ever, Veckans Affärer rate us No. 1 among IT consultancies and we are ranked one of the 10 most attractive companies to work for in IT/computing. In 2006 HiQ recruited 239 new members of staff and we will recruit at least as many again in 2007.

In 2007 we will continue to specialise and to be really good at doing what our clients cannot do themselves.

In 2007 we must continue to be the world’s best consulting firm to our clients and to our employees.

Lars Stugemo

President and CEO of HiQ International AB, 23 February 2007

ceo – lars stugemo

Keeping all expertise in-house is getting harder

The advanced technology that now exists and the increasingly sophisticated services that we use in society are complicating the task of developing new products and services.

Consequently, it is becoming virtually impossible for our clients to maintain in-house all the expertise and human resources needed to develop innovations quickly and to compete successfully on the market. Some companies are simply choosing to outsource all research and development, while others do a lot of development themselves but call in outside expertise when necessary.

One way of increasing competitiveness is to use a niche consulting ﬁrm such as HiQ. We have specialised in what we know best and only work in areas where we have long experience, ﬁrst-class expertise and strong client references.

Specialists in communications, software development and simulation HiQ specialises in communications, software development and simulation. With our in-house expertise, we help our clients to develop systems, products and services in the areas of telecoms, new mobile phones, various kinds of simulators, gaming and platforms for online gaming on the Internet, IT solutions for vehicles as well as a variety of business- critical systems such as systems for electronic equities trading.

Pure consultancy

HiQ is a pure consultancy company that acts as an independent adviser, always with the best interests of our clients at heart. We do not develop our own products that compete with those of our clients, but instead allow our clients to beneﬁt 100% from our skills.

Who wants to be a Jack of all trades and master of none?

communications, software development and simulation

HiQ is a consultancy company specialising in communications, software development and simulation.

Those companies that claim to be able to solve everything are never particularly good at anything.

At HiQ, we have chosen to specialise and work only on what we are really good at: those things that our clients find it difficult to do themselves and have difficulty finding elsewhere. Such expertise as is of value to our clients.

Software development

Communications

Simulation We at HiQ will concentrate on two things in 2007. Firstly, looking after our employees and attracting many new skilled staff

to join them. Secondly, we must continue to maintain high quality in our work with our clients.

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154.9 KEY RATIOS

For definitions see page 77 2006 2005 2004 2003 2002

Net sales, SEK million 801.4 720.5 512.9 403.0 413.8

Growth in net sales, % 11.2 40.5 27.3 – 2.6 – 15.9

Gross margin, % 20.1 21.3 14.7 9.7 1.5

Operating margin, % 19.3 20.6 13.9 8.3 0.2

Return on shareholders’ equity, % 30.0 32.2 18.0 9.3 – 2.4

Return on working capital, % 60.0 66.1 39.5 17.3 0.4

Net sales per employee,

SEK thousand 1,236 1,269 1,260 1,116 1,023

Value added per employee,

SEK thousand 946 963 867 763 776

Operating profit per employee,

SEK thousand 239 261 175 93 2

Average number of employees 648 568 407 361 405

Number of employees at year-end 787 658 535 381 432

Equity/assets ratio, % 68.4 64.2 66.0 66.6 68.0

NET SALES AND PROFIT PER QUARTER 2006 Q 1 Q 2 Q 3 Q 4

Net sales, SEK million 208.1 198.1 174.5 220.7

Operating profit, SEK million 46.2 30.0 32.5 46.2

Operating margin, % 22.2% 15.1% 18.6% 20.9%

Liquid assets at end of quarter 2006 139.3 63.5 62.2 106.7

INCOME STATEMENT

(SEK million) 2006 2005 2004 2003 2002

Net sales 801.4 720.5 512.9 403.0 413.8

Operating expenses

excluding depreciation – 640.7 – 566.9 – 437.6 – 363.7 – 407.7 Operating profit

before depreciation 160.7 153.7 75.3 39.3 6.1

Depreciation and write-downs – 5.8 – 5.3 – 4.2 – 5.8 – 5.5

Operating profit 154.9 148.3 71.1 33.4 0.6

Items affecting comparability 0.0 0.0 0.0 0.0 – 5.8

Financial items 1.3 1.2 2.2 1.7 2.1

Pre-tax profit 156.2 149.5 73.3 35.1 – 3.1

Tax charged to the year’s profit – 44.7 – 41.0 – 21.7 – 10.6 – 3.2

Profit after tax 111.5 108.5 51.7 24.5 – 6.3

1) Pro forma – according to previously applied Swedish accounting principles, but with goodwill amortization reversed

2) Of which SEK 29 million relates to non-recurring restructuring costs in 2002

3) SEK 5.8 million relates to the costs of winding up operations at HiQ A/S (Norway) and HiQ East (Finland) during 2002

In 2006 our sales were SEK 81 million higher than in 2005. The tables below show how HiQ performed financially between 2002 and 2006.

Five-year review

BALANCE SHEET

(SEK million) 2006 2005 2004 2003 2002

ASSETS

Intangible fixed assets 186.6 192.9 188.8 146.4 168.7

Tangible fixed assets 21.0 17.9 15.7 11.4 17.1

Financial fixed assets 13.5 19.7 10.1 13.9 15.5

Total fixed assets 221.1 230.5 214.6 171.7 201.3

Accounts receivable, trade 137.3 124.7 97.1 58.4 71.0

Other current assets excluding

cash and cash equivalents 92.1 77.0 54.7 42.4 47.7

Cash and cash equivalents 106.7 133.7 102.2 107.0 47.1

Total current assets 336.1 335.5 254.0 207.8 165.8

Total assets 557.2 565.9 468.6 379.5 367.1

SHAREHOLDERS’ EQUITY AND LIABILITIES

Shareholders’ equity 381.2 363.6 309.4 246.0 243.8

Non-interest-bearing provisions 1.1 1.4 20.0 18.2 23.0

Non-interest-bearing

long-term liabilities 4.6 6.9 9.2 11.5 0.0

Interest-bearing long-term liabilities 11.8 8.9 8.6 5.6 6.8 Non-interest-bearing

current liabilities 156.1 183.0 119.7 96.7 91.4

Interest-bearing current liabilities 2.4 2.1 1.5 1.4 2.0

Total shareholders’ equity

and liabilities 557.2 565.9 468.6 379.5 367.1

OPERATING PROFIT 175

150 125 100 75 50

02 03 04 05 06 ﬁve-year review

148.3

71.1

33.4 0.6

1) 1)

2)

3)

1) 1)

OPERATING MARGIN SEK

million NET SALES

1) Pro forma – according to previously applied Swedish accounting principles, but with goodwill amortization reversed

ﬁve-year review

SEK million

19.3

02 03 04 05 06

% 25 20 15 10 5 0

20.6

13.9 8.3 0.2 900

750 600 450 300 150

801.4

02 03 04 05 06 720.5 512.9 403.0 413.8

2) 2) A dividend of SEK 103.4 million was paid out in May

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Vision

HiQ was established in the mid-1990s by entre- preneurs who had previously been employed by one of the big IT consultancies of the time.

Our vision was “to create the kind of company we always wanted to work for, and that clients want to work with”. Those words still guide us as we continue to develop the company. HiQ shall fulﬁl the existing needs in the market for a specialist consulting ﬁrm that is fast on its feet, offers a high level of technical expertise and takes a comprehensive view of client problems and solutions. HiQ shall break new ground in high technology and shall be an entrepreneurial company that lives on, with and for rapid change.

Business concept

As a specialist consultancy company with expert skills in communications, software development and simulation, to supply the expertise that our clients lack. In close cooperation with our clients in high-tech sectors we help them to improve their competitiveness and proﬁtability.

Goals Quality goals

Delivery quality. At HiQ we want each client to be a good reference. Therefore our goal is that every assignment for a client shall be performed in a businesslike manner and with high quality. We continually carry out client surveys to check that we are delivering what we promise, and each year we draw up a plan for making HiQ an even better, sharper supplier to its clients. Our 2006 client survey shows that improvements were made in three important areas since 2005.

In a survey conducted among Sweden’s 600 largest byers of consultning services HiQ has been awarded Best IT-consulting company.

Staff quality. The working environment at HiQ is businesslike and is characterised by a yearning among our employees to load up their brains with hot new high technology every day.

We consider it highly important that our staff thrive and develop. All employees complete a training programme that includes HiQ’s values, our approach to work and further education in the form of various technical courses. In 2006 HiQ was named one of the Sweden’s ten most

attractive employers within computing/IT in a survey carried out by Universum Communica- tions.

Shareholder quality. We provide high quality information to our shareholders by giving a correct, reliable and fair picture of the Group in order to create the prerequisites for a valuation reﬂecting HiQ’s operations. HiQ was named the best company on IR matters among companies on the MidCap list in a survey conducted by Affärsvärlden.

Financial goals

Our long-term ﬁnancial goals are to achieve growth of 30 percent and an operating margin of 15 percent. Since HiQ was established in 1995 our average growth rate has been 31 percent and our operating margin 15.1 percent.

In 2006 we achieved growth of 11 percent and an operating margin of 19.3 percent. Our ﬁnancial goals should not be considered to be a forecast.

Dividend goal

HiQ’s dividend is adjusted to the company’s capital requirements, which mainly take the form of investments and an increase in working capital. The shareholders’ requirements of a healthy yield are also taken into account. The company’s goal is to maintain a long-term dividend level of around 50 percent of HiQ’s proﬁt after tax. The proposed dividend for 2006 is SEK 2.10 per share, amounting to 93 percent of proﬁt after tax.

vision, business concept and goals

Our 2006 client survey shows that improvements were made in three important areas since 2005.

We will break new ground in high technology

How boring that T-shirts are always the same colour, thought a team of US researchers. Now they have succeeded in producing long plastic fibres that change colour in response to an electric field. We have seen conductive plastics that change colour before, but threads kilometres in length are something new entirely. If such threads are woven into cloth, it should in principle be possible to change colours like the pixels on a screen – allowing you to display any image you like on your T-shirt.

At HiQ, we like to help our clients be the first to come up with technical innovations. With our client, we pioneered the development of platforms for gaming and betting on the Internet back in 1996. Now there has been a real explosion in betting services and Internet gaming. We are a leading player in the Nordic region and help our clients to develop and implement platforms for gaming as well as the actual games.

5 4 3 1 0

4,5 4,6 4,3 4,4 4,4 4,6

Satisfied with HiQ

Feel secure with HiQ

Would recommend HiQ

Grade 1-5

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Quality, proﬁtability and growth

Our name breathes high quality and delivering high quality has been the cornerstone of HiQ’s business ever since it was first established. If we deliver quality our clients will be satisfied, which makes us profitable, which in turn allows us to grow. We prioritise quality, profits and growth, in that order. It is a strategy that has proved to be exactly right for us, since we have had an average operating margin of 15.1 percent and average growth of 31 percent since HiQ was established.

The Nordic region is our home market We are a Nordic consultancy company that works with companies in the Nordic region.

We also help international clients to become established here and accompany our Nordic clients out globally. HiQ is an established consultancy in the Nordic market. At the same time, the share of our business outside the Nordic region is increasing, both from foreign clients and from Nordic clients with assignments abroad.

Pure consultancy

HiQ is a pure consultancy company that acts as an independent adviser, always with the best interests of our clients at heart. We do not develop our own products that compete with those of our clients, but instead allow our clients to beneﬁt 100% from our skills. And we do so without any commercial tie-up with suppliers, products or technologies.

Expert skills in communications, software development and simulation

We are a specialist consultancy company with expert skills in communications, software development and simulation. We enjoy a strong position in telecoms, where we work with suppliers, operators and users. Our software development results in the development of new products and systems. Our expertise in simulation has been built up through work on advanced ﬂight training simulators for the JAS 39 Gripen ﬁghter aircraft.

Organic growth and acquisitions

HiQ grows organically in combination with strategic acquisitions. In 2006 we recruited 239 people, spread across all our regions. We have made four acquisitions, the most recent in 2004.

Technology and business

At HiQ, we have technological expertise and understand how technology can be used for proﬁtable business. And since we understand how our clients do business, we can help them choose the technology that provides the best solution.

Knowledge transfer between sectors We actively transfer our knowledge to clients in different sectors, enabling our clients to beneﬁt from technical and business expertise drawn from ﬁelds far from their own. The need for communication is becoming ever greater in ever more sectors, and at the same time our expertise in simulation and interactive gaming is being passed on to new sectors.

Experienced and skilled employees

A high level of technical proﬁciency combined with extensive business expertise is typical of HiQ. Our employees have ten years’ experience in technical and business development on average. Nine out of ten have a university degree and 73 percent hold an M.Sc. engine- ering degree.

Distinct values

HiQ is a value-driven company. We believe that clearly conveyed values such as a businesslike approach, entrepreneurial spirit, commitment and knowledge result in good quality work being performed and thus in satisﬁed clients.

Clear values can help our employees and the company’s structural capital to develop in a better way.

At HiQ we have a yearning to make new and better systems. And it’s high time that the old coin system was improved, so that you don’t have to carry around cash and plastic cards for things like travelling on public transport. Together with our client Plusdial we have implemented a mobile ticketing system for public transport that allows you to pay via your mobile, which also forms your ticket.

The system is now in use in Helsinki, the Mälaren Valley and Stockholm, with more cities lined up.

strategies

HiQ’s nine commandments

Quality results in satisfied clients, profitability and growth.

The first mass-produced electric car appeared ten years ago and had a battery weighing 736 kilograms that powered the car for 140 kilometres at highway speeds. Not good enough, thought Finnish researchers. Now they have developed a completely new kind of aluminium battery based on nanotechnology. The batteries weigh considerably less and have twenty times the capacity of

current batteries. This new car battery, which weighs just 60 kilograms, would power the same electric car for 870 kilometres at highway speeds!

Growth

Quality

Profitability

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Agency (SEMA), Nokia, Plusdial, SonyErics- son, The Swedish National Post- and Telecom Agency, Tele2, Telenor, TeliaSonera, Teligent, Teracom and 3.

Example of project:

“Ascom Wireless Solutions develops custo- mised wireless communications solutions based on DECT, IP-DECT and WLAN systems.

The solutions are based on smart integration with the clients’ existing systems for a faster response when business-critical events occur, allowing more efﬁcient processes. Its clients are to be found in manufacturing and process industry, hospitals and care of the elderly, the prisons and probation service, the retail trade and hotels.

HiQ is involved in a number of projects within testing and veriﬁcation at Ascom. One of HiQ’s assignments in 2006 consisted of product and system testing of next generation pagers and alarm transmitters.

The product is a robust pager with alarm functionality that is used in a radio-based paging system for geographically limited areas such as hospitals, prisons and industry.

The products were developed for use in an environment with high requirements of quality, performance and security.

HiQ’s assignment involved activities throughout the test process: everything from requirements analysis through design of test cases to test execution. The assignment also includes certain further development of test tools. HiQ made a professional contribution by quality assuring the products to ensure that the requirements set are met.

As a consultant I found it both fun and interesting to work on this project.”

Anna Ålleving

HiQ Göteborg, Sweden

Simulators for testing,

training and interactive education We are one of the pioneers of simulation technology in the Nordic region and remain a

leading player. The knowledge we have today comes from the high-tech simulators that we develop for pilots training to ﬂy the JAS 39 Gripen ﬁghter aircraft.

We also apply this knowledge when we assist many other clients within the ﬁeld of simulation. We develop simulators that are used in the development and testing of new mobile phones and IT solutions in cars. We help companies in various sectors to train staff by developing interactive training in which the company’s staff are trained through educatio- nal games. This may involve simulating a plan- ned work situation in an industrial company or training service personnel in an aftermarket organisation.

Our expertise in simulation is also used to simulate environments in which technicians learn how to deal with faults that arise in a modern combat vehicle.

As technology becomes increasingly advanced and needs to be developed quickly, so there is an increased requirement for cost-effective testing of products in simulated technical environments prior to market launch.

This was one of the reasons why the need for simulation remained substantial in 2006.

Our clients in the application area of simulation for testing, training and interactive education include BAE Systems Hägglunds, the Swedish Defence Materiel Administration (FMV), Mazda, Mölnlycke Healthcare and Volvo.

“For more than ten years HiQ has been a supplier to the Swedish Defence Materiel Administration (FMV) within the area of model- ling and simulation. Our responsibilities include the further development and maintenance of training simulators for the JAS 39A Gripen.

HiQ has total responsibility for the Flight Training Simulators JAS 39A (FTS 39A) project, which includes all phases of the project from analyses of new functionality to deliveries and training and contacts with users, who are the Swedish armed forces’ JAS 39A pilots.

FTS 39A has two types of simulator: the Full Mission Simulator (FMS) and the Multi Mission Trainer (MMT). The FMS is a dome simulator in which the virtual environment is projected on the walls of the dome. It has a model-perfect JAS 39 cockpit and canopy and the pilots train wearing G-suits and helmets.

The simulator is used for all kinds of basic training and emergency training in order to cer- tify the pilots to move on to the actual aircraft.

Emergency training involves the instructor Telecoms – systems, networks and services

plus mobile terminals and applications A large amount of technological development is led by telecoms companies. Many of these are Nordic and are clients of HiQ. And you will recognise many of their products and services and beneﬁt from them at home and at work.

Around half of our business concerns assignments within telecoms. We have cooperated for a long time with most of the renowned telecoms operators, suppliers and users in the Nordic region. For many years we have also been involved in developing the mobile phone from a simple machine for making phone calls to becoming a compact electronic box that has gradually replaced a great many other sepa-

rate technical gadgets such as music players, cameras, TV, GPS, etc. Now it is on its way to replacing your wallet. We develop and test not only the actual mobiles, but also services and platforms.

In 2006 mobile phone manufacturers con- tinued developing new models at a rapid pace.

Competition is ﬁerce and consumers constantly expect new models with new functions and facilities for using new services. In Japan, many people change their mobile at least once a year. We may be heading in the same direction here in the Nordic region. During the year an ever clearer trend towards combining ﬁxed and mobile telephony was also apparent.

There are also many opportunities to use IP telephony via computers as well as ﬁxed or mobile phones. For HiQ, which has many years’

experience of working both with terminal manufacturers and on various assignments within IP telephony, this is creating new business.

Our clients in this application area include:

Ascom, Com Hem, Ericsson, The Finnish Com- munications Regulatory Agency (Ficora), Glo- calnet, the Swedish Emergency Management

Our clients represent technological development

We and our clients are at the centre of technological development and develop products and services that you use every day.

clients, application areas and market areas

Just a few years ago it was quicker to go to the shops, buy what you needed and travel home again rather than sitting by a slow modem on a sluggish website to order goods. Now it is the other way round. 2006 was the year in which the Internet achieved major recognition by the population. Ad- vertising investments in the Internet are increasing substantially now that shopping sites and other Internet-based services have ﬁnally moved from being new and exciting to genuinely saving time for users. And now you can also make many purchases, carry out banking, watch TV, etc. on your mobile.

At the centre of this development are our clients; we and our clients develop products and services that you use every day. Either we assist our clients by running the entire project, or we offer our specialist expertise in certain areas of large projects. We develop systems, products and services in the areas of telecoms, new mobile phones, various kinds of simulators, gaming and platforms for online gaming on the Internet, solutions within banking and ﬁnance, IT solutions in vehicles as well as a variety of business-critical systems that you come across in your daily life.

At HiQ we divide this up into ﬁve application areas in which you can see how the results of our work are used in society.

Interactive gaming and platforms Automotive IT and

telematics Financial/business-

critical systems Telecoms

Simulators for testing, training

and interactive education

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putting the simulator into various types of fault conditions to study how the pilot handles situations that may arise in the air. Emergency training on the simulator is important for mini- mising the risk of a crash in the event of similar incidents in the air. In the MMT the hardware has been simpliﬁed somewhat. This simulator is primarily used for tactical training and method training. Both simulators contain the same detailed JAS 39A aircraft simulation, an advanced simulated tactical environment and instructor and operator stations.

Work on the actual aircraft elements of the simulators consists of developing and integra- ting models and program code. Extensive reuse of real code from the aircraft, which in the simulators is run on COTS computers, is possible thanks to the emulation platforms developed by HiQ. In addition to the aircraft elements, there are also simulator-speciﬁc functions such as error functions for emergency training, the visual system, the tactical environment and the instructor system that must be integrated with the simulators. The simulators need not ope- rate individually, but can also be run together in a network. This function also allows two or more simulators in different global locations to be networked. The networking functions allow advanced tactical training to be carried out, which is extremely important if the pilots are to succeed in their missions in the real world.

Since the project involves everything from project management to development and sup- port, this makes great technical demands of the expertise of HiQ’s consultants in real time simulation in a multiprocessor environment, as well as of their emulation expertise and pure knowledge of the JAS 39A aircraft.”

Joakim Olsson HiQ, Arboga, Sweden

Interactive gaming and platforms

Betting services and Internet gaming continue to be an interesting growth market for us in which we are again a leading player in the

Nordic region. We generally work on interactive gaming for betting and sports gaming, in which we develop and implement gaming platforms as well as the actual games. We also develop advanced solutions that provide security, accessibility and high performance. Our clients are state-owned and privately owned gaming companies as well as companies in the entertainment industry.

In 2006 the gaming market developed strongly, partly thanks to increased opportunities for mobile services and Internet-based services. Our cooperation with the global US gaming corporation GTECH means that HiQ is one of those leading the development of interactive gaming. HiQ and GTECH are together developing a new generation of the OnNet gaming platform for Veikkaus, the Finnish state lottery company.

As well as GTECH, our major clients within the application area are ACE Interactive, De Lotto, Svenska Spel and Veikkaus.

De Lotto is the Dutch state lottery with products like betting, Lotto, Keno and scratch cards. HiQ has been working on the development of an Interactive Gaming System for De Lotto since 2002.

In 2006, HiQ Softplan and HiQ Göteborg began a joint effort in creating new functionality for De Lotto. In cooperation with Dutch marketing and advertising agencies, the two HiQ divisions are responsible for upgrading and redesigning front-end and back-end functionality in an effort to make the online gaming easier for the Dutch customers on the Internet.

Through HiQ’s initiative on interactivity, HiQ Göteborg can complement the project with unique competence in interactive training, usa- bility functions and Flash technology, adding extra value to HiQ Softplan’s competence in gaming platforms and business-critical systems.

In the plans for 2007, HiQ will further develop new functionality in close cooperation with De Lotto.

Nick Öfwerman, HiQ Göteborg, Sweden Tuukka Murto

HiQ Softplan, Finland Fixed wrenches are good, but JP Johansson was driven by the idea of developing something good into something even

better – a single wrench that could be used for everything. In 1892 he invented the adjustable wrench. Production and sale of the new device was started by BA Hjort, later known as Bahco. Adjustable wrenches are now produced by many manufacturers and around 40 million of Johansson’s model of adjustable wrench are produced annually worldwide.

HiQ is also driven by a yearning to make what is good even better. The idea of developing the mobile phone into a complete tool housing all our technical needs – voice, text, photo, video, music, TV, radio, Internet, GPS navigation, wallet, etc. – is a strong driving force for us at HiQ. Right now we are developing your next mobile communications centre with some of the world’s leading mobile manufacturers.

annual report 2006

HiQ 2006 in brief

Fat dogs dance badly.

Page 9.

HiQ condensed.

Page 11.

What systems, products and services does HiQ develop?

Page 18.

Proﬁtability remains good.

Pages 12, 37, 40.

Sales to top 10 clients.

Page 23.

Sales by business sector.

Page 23.

Who are HiQ’s clients?

Page 18.

Sweden’s best IT-consulting company.

Page 9, 15.

Contents

Fat dogs dance badly

Who wants to be a Jack of all trades and master of none?

Five-year review

We will break new ground in high technology

HiQ’s nine commandments

Our clients represent technological development