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January 19, 2006

Fast defends corporate governance

In an interview with Computer Business Review, Norway-based Fast Search & Transfer ASA CEO and co-founder John Lervik refuted recent allegations that the enterprise search software vendor has employed dubious accounting practices.

By CBR Staff Writer

The allegedly suspect practices were brought to light in an article entitled Professor Says that Fast is Breaking the Law that appeared in Norwegian financial newspaper Dagens Naeringsliv last December, after a local economics professor, Atle Johnsen, said its accounting practices could be illegal.

But speaking to Computer Business Review, Fast’s Lervik said: Actually we comply with both Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). There’s nothing illegal about them.

Lervik said Atle Johnsen’s findings were related to the way it had treated directors’ compensation payments within its UK-based Fast Ltd subsidiary, which may not have been appropriate had they been dealt with in the same way for its Norwegian operation. Fast said the newspaper in question subsequently printed a revised article.

Nevertheless, Lervik said Fast will be dealing with these financial items in the same manner across all of its subsidiaries in the future. He also conceded: We want to improve how we communicate with customers, analysts and the media; we want to be as open as possible in all aspects.

Recently Fast’s closest rival, UK-based Autonomy, sought to profit from the negative stories in the Norwegian press about Fast, putting out a press release that highlighted those reports and offering, A secure transition route for FAST customers and partners who may be concerned about FAST’s publicly-known accounting questions.

Lervik dismissed Autonomy’s behavior as healthy competition. He can’t be too surprised because in November Fast employed the same tactic, putting out a release that offered, Safe passage to Verity customers and partners who are facing uncertainty arising from the acquisition of Verity by Autonomy.

As well as the recent question over its accounting procedures, Fast has had to fend off speculation that it had become a takeover target. The uncertainty surrounded the fact that 27% of Fast was owned by Opticom, a fellow Norwegian company. Opticom’s own plastic microchips business faced production problems, leaving its stake in Fast its most valuable asset and potentially leaving Fast open to an acquisition bid. Fast looks to have settled the issue by acquiring Opticom, and Lervik said he is now confident that Fast could fend off any hostile takeover attempt.

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Lervik said he can now concentrate on continuing Fast’s stellar growth. For its quarter ended September 2005, it posted sales that grew 61% year on year to $26.6m, while net income grew to $3.5m.

Meanwhile, the day before yesterday Fast announced version 4.1 of Fast ProPublish, a system for gathering, processing and delivering professional reference material to online and offline users, based on the Fast Enterprise Search Platform. Enhancements include saved searches and bookmarks, history, improved navigation, additional user interface localizations, and the like.

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