Itera

Investor Presentation • Aug 16, 2024

• 1. Highlights of the quarter
• 1. Business review
• 1. Financial review
• 1. Outlook
• 1. Q&A

Arne Mjøs CHIEF EXECUTIVE OFFICER

Bent Hammer CHIEF FINANCIAL OFFICER

1 Highlights Q2 2024

Q2 in brief

0% Organic revenue growth 9.4%	Market The pace of spending is mixed, but the fundamental importance of digital technology has not. Strong demand in the green transition and areas like cloud migration and modernization, data, security and AI.	Wins A major win with an estimated value of 60 MNOK to build the digital core for a major Norwegian industry company Several cloud agreements A new strategic financial services framework agreement
EBIT margin	Performance 1.2 pts margin improvement following the successful implementation of our business optimization program.	Cashflow Cashflow from operations NOK 27 million in Q2 NOK 73 million last 12 months, with EBITDA-to-Cash conversion of 72%

Award

As one of ten companies worldwide, Itera is awarded the "International Flagship Award" by the Ukrainian government.

Itera has also signed several agreements in providing high value advisory services to companies wishing to enter Ukraine.

Order intake

Seasonal variations in order intake with book-to-bill of 0.7 in Q2 and 1.0 last 12 months.

Dividend

Ordinary dividend for 2023 of NOK 0.40 per share paid, with authorization to pay a supplementary dividend later

People

Incremental and temporary capacity reduction to align to market demand.

Number of employees decreased by 28 employees (4%) during the last 12 months.

Key figures

Organic revenue growth

Growth in number of employees last 12 months

Q2 9.4%

EBIT margin

2

Business review

We are specialists in sustainable digital transformation

The Nordics is often positioned as digital and sustainable front-runner that show the way globally.

We are growing together with international customers and partners based on our ONE Itera model across borders.

Our Digital Factory with cross-functional teams across border was recognised as best in the world by Global Sourcing Association in 2018.

A complete provider of services for building the digital core

We deliver projects throughout the entire life cycle of a product or service

Digital strategy

We help companies set direction and convert opportunities from new technology to business value.

Project and product management

By using modern methods and tools, we ensure efficient development and launch of digital services and products

Customer experience

Customer experience is one of our core areas, and we have a strong focus on user insight and end-user needs.

Data, AI and Analytics

We help companies make better decisions faster, preparing them for a data-driven future.

Architecture & Development

We have a wide range of technology competence, integration teams and application modernization

Cloud & Application Services

We help organisations with their cloud transformation enabling them to optimise, modernise and innovate for the future.

Test & Quality Assurance

We ensure a more secure and efficient development process, and help our customers achieve their business goals.

Our steady growth organic model

We have built a strong international ONE Itera operating model and will see more of divergence in the linearity between headcount and revenue growth.

Digital and Business Transformation

Capabilities

Digital Factory at Scale: Doing more with less

¹McKinsey & Company: Driving business outcomes through Developer Velocity 2020 and McKinsey Developer Velocity Survey, Expert Interview

With our customers prioritizing short-term value, we are witnessing an improving sales pipeline of new opportunities.

• We were chosen to build the digital core of a major Norwegian industrial company with an estimated contract value of NOK 60 million.
• Last quarter, we helped them assess and initiate a transformation of their entire technology stack in order to better enable their digital transformation and streamline their operations.

New agreement to enhance Apotek 1's cloud infrastructure

Apotek 1 has engaged Itera to enhance and maintain the robustness of its cloud solutions, a collaboration that stems from a thorough process in which Apotek 1 identified a partner willing to tailor their services to our specific needs and circumstances.

• This strategic partnership underscores our commitment to leveraging cutting-edge technology to improve our operations and service delivery.
• Our world-class Cloud Centre of Excellence manages everything as code – not only software and infrastructure provisioning but also operations and service delivery. The Cloud Centre of Excellence is founded on Microsoft best practices but is also designed to support other hyperscalers.

New win in the financial sector

During the quarter, Itera has been awarded a framework agreement with one of the largest banking alliances in Norway.

• The company operates as a cooperative organization, collectively owned by tenfold local savings banks, serving approximately 1.5 million customers.
• The company has expressed keen interest in leveraging our expertise across various areas, including Project Management, Testing, Architecture and Development, and User Experience.
• This framework agreement solidifies our partnership with the company and reinforces Itera's position as a trusted provider of innovative solutions in the banking sector.

Order intake

Order intake from selected new and existing customers.

Book-to-bill ratio*) of 0.7 in Q2 and 1.0 for the last 12 months.

*) The book-to-bill ratio is the ratio of orders received to the amount of revenue for a specific period for Itera units

Itera is awarded «International Flagship Project Award»

ITERA

For successful and inspiring international business ventures which highlight how attractive Ukraine is for business and investment despite the ongoing Russian war of aggression being waged against it.

FIRST DEPUTY PRIME MINISTER AND MINISTER OF ECONOMY OF UKRAINE

International Flagship Project Award

As one of ten companies globally, this recognition was achieved for our instrumental role in supporting Ukraine in critical areas.

• 10 temporary bridges in the early phase of the war
• Green energy transition
• Framework for housing

In addition, the energy authorities in Ukraine have on their own initiative entered a Memorandum of Understanding (MOU) with Itera to mobilize the Nordic energy industry for increased support to Ukraine.

Group COO Jon Erik Høgberg with the Certificate of Award together with Deputy Minister of Ministry of Foreign Affair Eivind Vad Petersson and Deputy Minister of Trade Vegard Grøslie Wennesland just after the award ceremony.

CEO Arne Mjøs in panel debate with other awarded companies during the URC 2024 in Berlin.

Ukrainian-Norwegian roundtable and signing of MOU on Energy by Minister of Trade of Norway Cecilie Myrseth and Minister of Energy of Ukraine German Galushchenko at the sideline of URC Berlin.

Moelven Byggmodul AS, a Scandinavian industrial group that produces building products and systems, and Itera are launching a groundbreaking initiative, "Housing for Ukraine".

• The project aims to improve the living conditions for Ukrainian citizens by rapidly increasing the availability of safe and good homes.
• This ambitious goal requires cooperation across private and public sectors and national borders, marking the start of Moelven's operations in Ukraine. Itera, with its 16 years of experience in the country, is leading the way.

A Concession
	15

Customer mix

Share existing customers

94.7% (92.6%)

of revenues in Q2 2024

New customers

11.9 (16.7) NOK mill.

Revenue from new customers won over the past year Q2 2024 (5.3% share)

* Existing customers defined as customers that were invoiced in the corresponding quarter last year ** New customers defined as customers won since end of corresponding quarter last year

High visibility

82% (83%)

Top 30 customers, share of revenue

High customer concentration signifies

• Strategic relationships
• Full range of services
• Distributed delivery across borders

Revenue customers split (in MNOK)

Largest customers' share of revenue

Skilled and innovative employees

713 employees at the end of the quarter

Down by 28 last twelve months as part of the business optimization program.

Nearshore ratio of 51% (53%)

Our distributed delivery model of onshore and nearshore consultants are increasing our price competitiveness as well as providing high scalability through access to a very large talent pool.

Rolling 12 months net FTE growth

Number of employees end of quarter by shore

3 Financial review

Key financials

• Flat organic revenue (0%)
• Personnel expenses down in line with FTEs
• Opex decrease following business optimization program
• EBIT of MNOK 21.1 (18.4)
• EBIT margin of 9.4% (8.2%)
• Cash flow from operations MNOK 27.2 (32.7)
• No. of FTEs 713 (-28)

	2024	2023	Change	2024	2023	Change	2023
NOK Million	4-6	4-6	%	1-6	1-6	%	F Y
Operating revenue	224.1	225.2	0%	452.6	455.5	-1%	871.6
Gross profit	205.2	208.8	-2%	417.4	425.9	-2%	813.7
Personnel expenses	161.3	165.1	-2%	330.6	323.0	2%	634.4
Depreciation	8.3	8.0	4%	16.8	15.6	8%	32.3
Other opex	14.5	17.3	-16%	29.6	35.7	-17%	68.7
EBITDA	29.4	26.4	12%	57.1	67.2	-15%	110.7
EBITDA margin	13.1%	11.7%	1.4pts	12.6%	14.7%	-2.1pts	12.7%
Depreciation	8.3	8.0	4%	16.8	15.6	8%	32.3
EBIT	21.1	18.4	15%	40.3	51.6	-22%	81.4
EBIT Margin	9.4 %	8.2 %	1.3 pts	8.9 %	11.3 %	-2.4 pts	9.3 %
Net cash flow from operations	27.2	32.7	-17%	19.7	40.4	-51%	93.4
Cash and cash equivalents	29.5	52.0	-43%	29.5	52.0	-43%	49.2
Employees at end of period	713	741	-4%	713	741	-4%	758
Employees in average	725	736	-2%	736	725	1%	741

Business optimization program

Itera has implemented a business optimization program with the target of improving EBIT margin by 1.2-1.6 points

• Strict cost control has brought spending on other Operating Expenses (OPEX) down in the last two quarters
• In Q2 of 2024, year-over-year reductions in other OPEX was accretive to the EBIT margin by 1.1 pts
• OPEX relative to revenue at the lowest since the pandemic, where travel and social activities were naturally restricted

Revenue and earnings development

Strong revenue growth year over year with 2 -year CAGR of 15.0% and an average of 8.9% EBIT margin

Opportunities for margin expansion

• Conversion of promising pipeline
• Normalization of utilization
• Increasing recurring revenue and cloud migration and modernization driven by AI and security
• Expansion in Sweden
• Advisory services and Ukraine recovery

Statement of cash flow

	2024	2023	2024	2023	2023
Million NOK	4-6	4-6	1-6	1-6	F Y
EBITDA	29 4	26 4	57 1	2 67	110 7
Change in balance sheet items	(2 3)	6 3	(37 4)	(26 8)	(17 3)
cash flow from operating activities Net	27 2	32 7	19 7	40 4	93 4
investment activities cash flow from Net	(1 9)	(3 7)	(4 8)	(7 6)	(19 4)
Purchase of shares own	-	-	-	(0 1)	(11 9)
Sale of shares own	4 9	-	4 9	6 2	6 2
Equity settlement of options contract	-	0 3	-	0 3	2 9
Principal elements of lease payments	(3 5)	(3 2)	(6 9)	(6 2)	(12 9)
Instalment of sublease receivable	-	-	-	-	-
borrowings Long-term	(0 3)	-	(0 5)	-	4 8
External dividend paid	(32 4)	(24 7)	(32 4)	(24 7)	(56 9)
cash flow from financing activities Net	(31 3)	(27 6)	(34 9)	(24 5)	(67 7)
change in bank deposits and cash Net	(6 6)	2 2	(19 7)	10 0	3 7
Bank deposits the end of the period at	29 5	52 0	29 5	52 0	49 2

12 month rolling cash flow from operations (NOK Million)

▪ Cash flow from operations NOK 27.2 (32.7) million in Q2

▪ 12-month rolling cash flow from operations was NOK 72.8 (103.8) million

▪ Cash conversion from EBITDA of 72% (91%) last 12 months

• An ordinary dividend of NOK 0.40 per share for 2023 paid + authorization for supplementary dividend later
• Share price was NOK 11.55 at the end of June 2024, a change of -18% incl. dividends from NOK 15.00 at the end of June 2023
• Current holding of own shares is 1,143,465. Value at 30 June 2024 was MNOK 13.2
• Consistent high distribution of earnings.

Allocations to shareholders

EBIT in 2021 and 2022 is excluding discontinued operations of -0.23 and -0.17 per share

Statement of financial position per 30 June 2024

• Cash and equity reduced following aggressive dividend payments last 12 months
• Equity ratio of 18% (23%), 23% (30%) excluding IFRS 16 Leasing
• Cash balance of MNOK 29 (MNOK 52)
• Other balance sheet items substantially unchanged
• Total balance decreased by MNOK 26 to MNOK 292

4

Outlook

Outlook

Underlying strong demand for digital transformation with the market expected to gradually return in the coming months

Readiness to migrate and operate larger scale cloud transformations to enable the AI opportunity

Continued attention to business optimization to improve profitability

Connecting Ukraine and the Nordics to enable the green energy shift

Profitable growth and cash flow are key focus areas.

5

Q&A

No.	Name	%	Nat.	Shareholding
1	ARNE MJØS INVEST AS	33.29	NOR	27 363 031
2	OP CAPITAL AS	5.64	NOR	4 635 242
3	GIP AS	5.23	NOR	4 300 000
4	SEPTIM CONSULTING AS	5.01	NOR	4 120 000
5	BOINVESTERING AS	3.63	NOR	2 982 862
6	GAMST INVEST AS	3.21	NOR	2 635 462
7	JØSYRA INVEST AS	2.68	NOR	2 200 000
8	DZ PRIVATBANK S.A.	2.29	LUX	1 880 000
9	EIKESTAD AS	2.14	NOR	1 755 000
1 0	HØGBERG, JON ERIK	1.52	NOR	1 247 356
1 1	ITERA ASA	1.39	NOR	1 143 485
1 2	AANESTAD PANAGRI AS	1.16	NOR	950 000
1 3	FRAMAR INVEST AS	0.97	NOR	800 000
1 4	SOBER KAPITAL AS	0.97	NOR	794 643
1 5	NYVANG, JETMUND GUNNAR	0.92	NOR	758 950
1 6	ALTEA AS	0.85	NOR	700 000
1 7	JENSEN, LARS PETER	0.78	NOR	641 500
1 8	MORTEN JOHNSEN HOLDING AS	0.73	NOR	600 000
1 9	HAMMER, BENT	0.69	NOR	569 133
2 0	FRATERNITAS A/S	0.63	NOR	514 413
	TOP 20	73.72		60 591 077