Otello Corporation ASA

Annual Report (ESEF) • Apr 19, 2024

OTELLOCORPORATION - 2023 391200EWTTF186UWWH072023-01-012023-12-31391200EWTTF186UWWH072022-01-012022-12-31391200EWTTF186UWWH072023-12-31391200EWTTF186UWWH072022-12-31391200EWTTF186UWWH072022-12-31391200EWTTF186UWWH072021-12-31391200EWTTF186UWWH072022-12-31ifrs-full:IssuedCapitalMember391200EWTTF186UWWH072022-12-31ifrs-full:SharePremiumMember391200EWTTF186UWWH072022-12-31ifrs-full:TreasurySharesMember391200EWTTF186UWWH072022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember391200EWTTF186UWWH072022-12-31ifrs-full:OtherEquityInterestMember391200EWTTF186UWWH072023-01-012023-12-31ifrs-full:OtherEquityInterestMember391200EWTTF186UWWH072023-01-012023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember391200EWTTF186UWWH072023-01-012023-12-31ifrs-full:IssuedCapitalMember391200EWTTF186UWWH072023-01-012023-12-31ifrs-full:SharePremiumMember391200EWTTF186UWWH072023-01-012023-12-31ifrs-full:TreasurySharesMember391200EWTTF186UWWH072023-12-31ifrs-full:IssuedCapitalMember391200EWTTF186UWWH072023-12-31ifrs-full:SharePremiumMember391200EWTTF186UWWH072023-12-31ifrs-full:TreasurySharesMember391200EWTTF186UWWH072023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember391200EWTTF186UWWH072023-12-31ifrs-full:OtherEquityInterestMember391200EWTTF186UWWH072021-12-31ifrs-full:IssuedCapitalMember391200EWTTF186UWWH072021-12-31ifrs-full:SharePremiumMember391200EWTTF186UWWH072021-12-31ifrs-full:TreasurySharesMember391200EWTTF186UWWH072021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember391200EWTTF186UWWH072021-12-31ifrs-full:OtherEquityInterestMember391200EWTTF186UWWH072021-12-31391200EWTTF186UWWH072022-01-012022-12-31ifrs-full:OtherEquityInterestMember391200EWTTF186UWWH072022-01-012022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember391200EWTTF186UWWH072022-01-012022-12-31ifrs-full:IssuedCapitalMember391200EWTTF186UWWH072022-01-012022-12-31ifrs-full:SharePremiumMember391200EWTTF186UWWH072022-01-012022-12-31ifrs-full:TreasurySharesMemberiso4217:USDiso4217:USDxbrli:shares 2023 Annual Report Otello Corporation ASA - Annual Report 2023 Table of contents 04 CEO Letter 06 Shareholder information 10 Representation of Board of Directors 12 Report from the Board of Directors 24 Otello Group financial statements 50 Parent company financial statements 70 Auditor’s report 76 Principles of corporate governance CEO Letter In 2023, Otello continued to return cash to its share- value for our shareholders. We saw the culmination of holders and is positioned to maximize the value of its this effort in 2021 where we were able to both IPO Be- remaining asset. mobi on the Bovespa in Brazil at a significant premium to our initial purchase price, as well as sign and close a transaction selling AdColony to Digital Turbine. FINANCIAL OVERVIEW In 2023, Otello continued reducing its expenses which, were down 3% vs 2022. A favorable movement in the In Bemobi, Otello remains the biggest shareholder and is share price of Bemobi allowed for a partial reversal of positive about the prospects of the business. Otello will prior impairment losses, and accordingly an operating have an opportunistic view on its financial investment in profit of USD 1,134 thousand (2022: 2,619 thousand). the company. Otello has, as a result of the transactions above and proceeds received, already repaid all our debt, As of 31 December 2023, Otello had a cash position of USD launched and completed share buybacks accessible to all 14,576 thousand, a reduction from 2022 (18,373 thousand), shareholders of over USD 166 million since 2021 and paid largely due to share buybacks of USD 2,610 thousand. in 2022 nearly USD 200 million in dividend to our share- holders. Going forward, the goal is to maximize the value of all our remaining assets and continue to aggressively RETURNING CASH TO SHAREHOLDERS The Company’s remaining goal is to maximize the val- return cash to shareholders, most likely through a combi- ue of its remaining asset, its stake in Bemobi, and return nation of share buybacks and dividends. cash to its shareholders. Since June 20, 2023, Otello has been conducting a share buyback program. During 2023, a total of USD 2,610 thousand in cash was returned to shareholders through the acquisition of 3,180,027 shares. FUTURE Otello’s strategic focus has been to build and grow com- panies with the ambition to create the highest possible Jason Hoida 4 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 5 8.5% U.K.-based accounts 23.4% Ireland-based accounts Investor Relations 2.3% Sweden-based accounts 2.3% KPI [2019-2023] 2019 2020 2021 2022 2023 Luxembourg-based accounts Revenue ($ million) 240.7 19.4 259.0 23.4 19.1 0.1 (6.3) 4.8 0.2 (3.4) (1.6) 0.0 (3.7) (3.3) Adjusted EBITDA ($ million) Operating cash flow ($ million) (0.2) 62.7% Norway-based accounts Adjusted EBITDA represents EBITDA excluding stock-based compensation expenses, impairment and restructuring expenses LARGEST SHAREHOLDERS at December 31, 2023 Shares INVESTOR RELATIONS POLICY Communication with shareholders, investors, and SAND GROVE OPPORTUNITIES AS CITIBANK, N.A. GOLDMAN SACHS INTERNATIONAL VERDIPAPIRFONDET DNB TEKNOLOGI AREPO AS OTELLO CORPORATION ASA VERDIPAPIRFONDET NORDEA NORGE VERD BANK PICTET & CIE (EUROPE) AG SKANDINAVISKA ENSKILDA BANKEN AB BNP PARIBAS 31.3 % 20.6 % 7.6 % 7.0 % 5.7 % 3.5 % 2.2 % 2.1 % analysts, both in Norway and abroad, is a high priority for Otello. The company’s objective is to 2022 57.1 % 1.2 % 10.9 % 3.6 % 2.3 % 20.9 % 2.1 % Country breakdown shareholders: Norway-based accounts Ireland-based accounts U.K.-based accounts 2023 62.7 % 23.4 % 8.5 % 2.3 % 2.3 % ensure that the financial markets have sufficient information about the company in order to be able to make informed decisions about the company’s Sweden-based account Luxembourg-based accounts U.S-based accounts Belgium-based accounts France-based accounts Accounts based elsewhere underlying value. 2.1 % 1.0 % 0.9% 1.4 % 6 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 7 Executive Team Otello Corporation ASA Jason Hoida Chief Executive Officer Scott Kerrison Chief Financial Officer Jason Hoida is the Chief Executive Officer at Otello Scott Kerrison was appointed Chief Financial Officer in Corporation ASA, a position he has held since January January 2024. He is responsible for the overall financial 2024. Mr. Hoida has extensive experience in the software management of the Group, including consolidated fi- and tech industry and has held the position of General nancial reporting, tax compliance and investor relations. Counsel at Opera Software ASA from 2009-2016 and at Scott joined the company in 2019 and previously held the Otello Corporation from 2016. Prior to his joining Opera role of Head of Accounting. he was an associate at the law firm Wikborg Rein in the Technology, Media and Telecom department. Before joining Otello, Scott had worked with several of Australia's leading commercial property groups (includ- Mr. Hoida holds a law degree from Hamline School of ing The GPT Group, DEXUS Property Group and Colonial Law in St. Paul Minneapolis and Bachelor's Degree from First State/Gandel Retail Management) in roles spanning Notre Dame University in South Bend, Indiana. accounting, financial management and tax. Scott began his professional career working in the business services division for the mid-tier accounting firm William Buck (now part of Grant Thornton), providing accounting and tax services to small- and medium-sized businesses. Since completing an honours degree in accounting and finance with Monash University, Scott has also obtained a Master of Business Administration from Melbourne Business School and a Master of Applied Finance from Kaplan University. Scott is a Chartered Accountant and a Chartered Management Accountant. 8 Otello Corporation ASA - Annual Report 2023 Otelllo Corrpporatiion ASSA - Annual RReporrtt 2023 9 The Board of Directors Otello Corporation ASA André Christensen Chairman Magdalena Kadziolka Board Member Karin Fløistad Board Member Lin Song Board Member André Christensen has extensive strategic and operational Maggie Kadziolka is the Chief Compliance Officer at Sand experience from the Media, Internet, and High Tech in- Grove Capital Management where she is responsible for dustries across Europe, North America and Asia from the U.S. and global regulatory compliance. In addition, she last 25 years. He is currently the CEO and Founder of the serves as a Board member of Sand Grove Special Purpose IPTV/OTT entertainment platform provider Firstlight Me- Fund I Ltd and Sand Grove (Cayman) GP Ltd. Before joining dia based in Toronto/Los Angeles/Chennai. Prior to this Sand Grove in January 2019, Maggie was the Chief Com- he headed product development for AT&T Entertainment pliance Officer and General Counsel at Ivory Investment Group following the acquisition of Quickplay Media where Management, LLC (“Ivory”), where she was responsible for he was the COO and co-owner. He has also been the SVP legal and regulatory support concerning U.S. and foreign Business Operations and Strategy at Yahoo globally after matters. Prior to this, Maggie worked in Cordium’s (since 12 years with McKinsey & Company as a partner estab- acquired by ACA Compliance) compliance consulting divi- lishing and leading the Business Technology practice in sion from April 2013 until 2016, where she managed global Canada as well as the Global Operating Model service line regulatory matters for a client base of investment advisers worldwide. Mr. Christensen currently holds a board posi- of hedge funds, private equity funds and fund of funds. tion with Intermedia in Sunnyvale. He has a MSc/DiplKfm She began her career as an attorney at a law firm found- Karin Fløistad is presently partner in one of Norway's larg- Lin Song is the Co-CEO at Opera Limited, a NASDAQ list- est corporate lawfirms, Simonsen Vogt Wiig AS and head ed company, and a former employee of Otello from its’ of the of the independent Appeals Body for Competition former days as Opera Software ASA, beginning at the Cases in Norway. She has extensive experience litigating company in 2002. Lin Song has been responsible for var- cases in the CJEU and in the EFTA Court and has also giv- ious high-profile projects at Opera, including holding the en advice in a number of years to both governmental and position of Director of Delivery and Engineering in APAC. private clients as a practicing lawyer. She is also qualified Prior to Opera’s browser and consumer business being pri- to plead before the Supreme Court in Norway and she vatized and later listed on the NASDAQ, Lin Song served as provides on a regular basis academic services for the law its COO responsible for business operations, and since the faculty at the University of Oslo. listing has become the Co-CEO of the company. He gradu- ated in 2004 from the University of International Business and Economics in Beijing, China. degree from University of Mannheim, Germany. ed by former SEC attorneys where her practice included SEC defense and investment adviser regulation. Maggie received a B.A. in Political Science and French (Cum Laude and with Honors), from New York University in 2006. In 2009, Maggie obtained her J.D. (Magna Cum Laude), from New York Law School, where she was also a member of the Law Review. 10 Otelllo Corrpporatiion ASSA - Annual RReporrtt 2023 Otello Corporation ASA - Annual Report 2023 11 RBepoortafrormdthe of Directors Otello’s strategic focus has been to build and grow com- A profit before income taxes (including impairment gain panies with the ambition to create the highest possible and restructuring expenses) of $7,563 thousand was rec- value for our shareholders. We saw the culmination of ognized in 2023 (2022: $18,163 thousand). Taxes were nil this effort in 2021 where we were able to both IPO Be- in 2023 (2022: -$2,186 thousand). The result after tax mobi on the Bovespa in Brazil at a significant premium for 2023 was $7,563 thousand (2022: $15,977 thousand). to our initial purchase price, as well as sign and close a Basic and diluted earnings per share were both $0.08 transaction selling AdColony to Digital Turbine. (2022: $0.17). In Bemobi, Otello remains the biggest shareholder and is Cash flow positive about the prospects of the business. Otello will Net cash flow from operating activities in 2023 totaled have an opportunistic view on its financial investment in -$3,310 thousand (2022: -$1,598 thousand). Cash flow the company. Otello has, as a result of the transactions from investing activities amounted to $2,191 thousand in above and proceeds received, already repaid all our debt, 2023, vs $179,102 thousand in 2022, with the net proceeds launched and completed share buybacks accessible to all from the final installment from Digital Turbine’s acqui- shareholders of over USD 166 million since 2021 and paid sition of AdColony and dividend received from Bemobi in 2022 nearly USD 200 million in dividend to our share- Mobile Tech S.A, partly offset by tax paid on changing holders. Going forward, the goal is to maximize the value the investment regime for our shares in Bemobi Mobile of all our remaining assets and continue to aggressively Tech S.A. positively affecting the prior year cashflows. return cash to shareholders, most likely through a combi- Cash flow from financing activities was -$2,716 thousand nation of share buybacks and dividends. in 2023, compared to -$228,128 thousand in 2022. Use of cash for financing activities in 2023 was mainly related to share buybacks of $2,610 thousand. COMPANY OVERVIEW Otello Corporation ASA, the parent company of the Group, is domiciled in Norway. The Company’s principal As of December 31, 2023, the Group had a cash balance of offices are located at Gjerdrums vei 19, Oslo, Norway. The $14,576 thousand (2022: $18,373 thousand), and no inter- company is a public limited company that is listed on the est-bearing debt (2022: nil). Oslo Stock Exchange under the ticker OTEC. Balance sheet As of 31 December 2023, the Group had total assets of Corporate Costs Corporate costs comprise primarily i) costs related to per- $110,193 thousand (2022: $109,800 thousand). Non-cur- sonnel working in functions that serve the Group as a rent assets represented $95,325 thousand of this total whole, including CEO, Board of Directors, corporate finance and primarily consisted of our 37.6% ownership in Be- and accounting, legal, HR and IT, and ii) certain costs relat- mobi of $94,402 thousand. Current assets such as cash ed to business combinations and restructuring processes. and receivables represented $14,869 thousand of to- tal assets, of which $14,576 thousand was cash and cash equivalents. FINANCIAL SUMMARY Income statement The Group had total liabilities of $1,170 thousand as of Otello’s operating revenues were nil in 2023 (2022: $213 31.12.2023 (2022: $2,414 thousand), of which the entire thousand). Operating expenses, excluding impairment 1,170 thousand were current liabilities. Shareholders’ and restructuring expenses, decreased by 3% to $4,113 equity was $109,024 thousand at the end of 2023, com- thousand (2022: $4,261 thousand). Otello delivered Adj pared with $107,387 thousand at the end of the previ- EBITDA (excluding impairment and restructuring expens- ous year. Otello’s equity ratio at year-end was 98.9% es) of -$3,705 thousand (2022: -$3,355 thousand). (2022: 97.8%). 12 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 13 BUSINESS OVERVIEW Since 2021, Otello has not had any operating segments. the Group’s equity was $109,024 thousand (parent com- However, Otello is a major shareholder in Bemobi, and pany: $27,678 thousand). through Otello Technology Investment AS has 32 719 588 shares in Bemobi, equal to 37.6% ownership. Otello also Share Buyback Program holds the chairmanship of Bemobi with Otello’s former During 2023, Otello purchased 3,180,027 (2022: 10,000,000) CEO Lars Boilesen. CORPORATE OVERVIEW Organization treasury shares for $2,610 thousand (2022: $31,192 thou- sand) and sold 0 (2022: 0) treasury shares. Shareholders The Company had 2,764 (2022: 3,039) shareholders at At the close of 2023, the Otello group had 5 full-time year-end. At that time, 62.7% (2022: 57.1%) of the shares employees and equivalents; a reduction from 6 as at the were held in Norway-based accounts, 23.4% (2022: 1.2%) end of 2022. in Ireland-based accounts, 8.5% (2022: 10.9%) in UK-based accounts, 2.3% (2022: 3.6%) in Sweden-based accounts, 2.3% (2022: 2.3%) in Luxembourg-based accounts, and Board of Directors composition At the Annual General Meeting on June 1, 2023, André 0.8% (2022: 24.9%) in accounts based elsewhere. Christensen was re-elected as the chairman of the Board of Directors, and Song Lin, Magdalena Kadziolka and Dividend Karin Fløistad were re-elected to the Board of Directors. The Board of Directors recommends that no dividend be paid for the 2023 financial year. Corporate governance The Company’s guidelines for corporate governance Going concern are in accordance with the Norwegian Code of Prac- In accordance with section 3-3a of the Norwegian Ac- tice for Corporate Governance, dated October 14, 2021, counting Act, the Board confirms that the prerequisites as required by all listed companies on the Oslo Stock for the going concern assumption exist and that the fi- Exchange. Furthermore, the guidelines meet the dis- nancial statements have been prepared based on the go- closure requirements of the Norwegian Accounting Act ing concern principle. and the Securities Trading Act. The guidelines are includ- ed separately in the annual report. Please see the sec- Events after the reporting period tion entitled “Principles of corporate governance” for For further information on subsequent events, see note further information. 21 of the “Consolidated financial statements”. Shareholders and equity-related issues For further information, please see the announce- As of December 31, 2023, Otello Corporation ASA had ments published on the Oslo Stock Exchange website 91,099,729 outstanding shares. As of December 31, 2023, (www.oslobors.no). 14 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 15 CORPORATE SOCIAL RESPONSIBILITY national workforce, where we combine the responsive- Creating a responsible and sustainable business is an inte- ness of a flat structure with an extreme focus on results gral part of everything we do at Otello. We are committed and innovation. All employees are expected to comply to the highest standard of social responsibility and be- with safety and health regulations that apply to our lieve that transparency and openness are key elements in business activities. obtaining a sustainable and responsible operation. Discrimination on the bases of sickness or disability shall In this part of the Board of Directors report, we de- not occur at Otello. We work hard to meet all our em- scribe Otello’s efforts and results related to corporate ployees’ needs. We offer shorter working hours and oth- social responsibility (CSR). Our CSR work is focused on er services to accommodate our employees with disabil- the following areas: Our employees, anti-corruption and ities or other particular needs. the environment. Otello had an average rate of absence due to sick leave of 1.7% in the parent company in 2022 (2022: 0.0%), and an es- Our employees Otello’s success and innovation springs from the minds timated rate of 1.7% for the Group as a whole (2022: 0.0%). and teamwork of its employees. Our employees are our most valuable resource, and we are committed to inter- Anti-corruption acting with our employees in the same way as we strive Otello abstains from and works actively to combat cor- to interact with our customers, following the highest ruption and bribery. Corruption distorts economic deci- ethical standards and respect for individuality. sion-making, deters investment, undermines competitive- ness and, ultimately, weakens economic growth. There is Otello strongly condemns discrimination. We believe no single, comprehensive, universally accepted definition that people should be treated with respect and insist on of corruption. Therefore, each Otello employee must ad- fair, non-discriminative treatment, regardless of irrele- here to the existing laws and regulations in their country vant factors such as nationality, political views, religion, of operation. As a minimum, Otello’s internal regulations sexual orientation and gender. apply to all employees. Controls are made to ensure that the rules are followed. Otello has put in place internal We promote cultural diversity and we are proud to have guidelines to help employees in their day-to-day opera- 4 nationalities represented within the Group. We pride tions. The following is an extract of these guidelines. ourselves on being an international organization, where innovation and teamwork take place across borders and Bribery time zones. No person acting on behalf of Otello shall attempt to influence someone in the conduct of their post, office We continually work to improve the gender balance in or commission by offering an improper advantage. Nor the company. At the end of 2023, 17% of the Group’s staff shall improper advantage be offered to anyone for the members were women. In addition, 2 of the 4 Board of purpose of influencing third parties in the conduct of Directors of the Group are female. their post, office, or commission. This includes all forms of facilitation payments. The principles of equal opportunities and non-discrimi- nation are present throughout the organization and in all Correspondingly, no person acting on behalf of Otello company activities. When recruiting, we use assessment shall request, accept or receive an improper advantage methods such as programming tests and test cases to in connection with his/ her position or assignment or for give equal opportunities to all qualified applicants. Sim- the purpose of influencing a third party. Improper ad- ilar approaches are exercised when promoting, offering vantage can take different forms, including but not lim- training opportunities, etc. ited to money, objects, credits, discounts, travel, accom- modation and other services. Labor rights at Otello Otello respects and observes the fundamental labor Gifts rights set out in international conventions, such as the It is a normal part of business life to exchange business conventions of the International Labor Organization and courtesies, such as meals, transportation, recreation, fa- the United Nations. cilities or small gifts. Such an exchange of business cour- tesies must always follow local laws and regulations and not put any Otello employee in the position of a sense of Health and safety At Otello, we strive to offer our staff members a safe, obligation to return the favor, compromise professional healthy and inspiring workplace. We have a highly inter- judgment, or create the appearance of compromise or 16 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 17 corruption. Otello employees should always check with obliged to familiarize themselves with the Ethical Code their manager or the HR department, if in doubt, and of Conduct when joining the company. consider whether the exchange of business courtesy would be acceptable if it should become publicly known. The Ethical Code of Conduct focuses on the following key areas: the rights and obligations of our employees; a No person acting on behalf of Otello is allowed to accept healthy and safe working environment; anti-corruption; any amount of cash or cash equivalents (such as gift cer- and the external environment. tificates or market securities and similar), regardless of the sum. Correspondingly, cash or cash equivalents may A violation of the Ethical Code of Conduct may result in never be offered by Otello employees as a business cour- disciplinary action, up to and including termination of tesy, regardless of the sum. employment. Several of the guidelines concern actions that are also punishable offenses. The Human Resourc- es department is responsible for following up on any Whistleblowing Otello encourages freedom of speech and blowing the possible breaches. whistle on malpractice, fraud, illegality, or breaches of rules, regulations, and procedures or raising health and Transparency Act safety issues. Any Otello staff member making a whis- Otello has published a Transparency Act report on its tleblowing report is protected from any repercussions, website at https://www.otellocorp.com such as dismissal and other forms of reprisal. To secure of BRL-denominated expenses are also incurred by the any fines as a result of the complaint, Otello may have to Group in Brazil related to this investment. carry some or all of that liability pursuant to the terms of the sale of AdColony. However, Otello has not recognized During 2023 and 2022, the Group did not use forward ex- any contingent liabilities in the interim financial state- change contracts to hedge its currency risk, and Otello ments related to this matter. had not entered into any foreign exchange contracts as an effective procedure, staff members may blow the RISK FACTORS whistle either in person or anonymously to the Work En- Otello has operations across multiple markets and is of December 31, 2023. Operational risk Otello will have limited operational risk going forward as we have no operations which are consolidated into vironment Committee. therefore exposed to a range of risks that may affect its business. Some key risk areas are discussed and de- Credit risk Credit risk is the risk of losses that the Group would suf- our P&L. The operational risk is limited to corporate func- fer if a counterparty fails to perform its financial obli- tions as well as the management of our partly owned gations. The Group's exposure to credit risk is mainly re- assets and in particular Bemobi. lated to external receivables, which are immaterial, and To improve communication and ensure that issues do not scribed below. escalate to the point where they become a whistleblow- ing case, Otello focuses on the following practices: Financial risk Otello will have very limited financial risk going forward accordingly credit risk is not considered significant. Directors and Officers Liability Insurance • Communicate the Company’s norms, values, and rules as we have no operations which are consolidated into and regulations regarding ethical conduct. • Create an open atmosphere by making sure that staff members have the opportunity and possibility to meet Risk management in the Group is carried out by manage- and discuss issues in formal and informal settings. Otello Corporation ASA and its subsidiaries are covered our P&L, nor do we have any interest-bearing debt. The Group has limited exposure in terms of credit risk by Directors and Officers liability insurance. The insur- related to loans and receivables. ance indemnifies directors and officers for defense costs and potential legal liability arising out of claims made against them while serving on a board of directors and ment and approved by the Board of Directors. Potential Liquidity risk • Discuss and put questions regarding freedom of speech risks are evaluated regularly and management deter- and whistleblowing on the agenda in internal commu- mines appropriate strategies related to how these risks As of December 31, the Group had bank deposits well in or as an officer. The insurance renews annually and the excess of the recognized liabilities. Accordingly, liquidity sum insured was USD 25 million as of December 31, 2023. risk is not considered significant. nications. are to be handled within the Group under the approved policies. The Group is exposed to market (currency) risk, credit risk, and liquidity risk to varying degrees. OUTLOOK The Environment Cash and cash equivalents at the end of 2023 were Otello’s strategic focus has been to build and grow com- $14,576 thousand. As of December 31, 2023, Otello has no panies with the ambition to create the highest possible Otello understands the importance of supporting the environment and seeks to prevent any negative envi- Currency risk outstanding loans payable. value for our shareholders. We saw the culmination of this effort in 2021 where we were able to both IPO Be- ronmental impact our activities might have. Otello has The majority of the financial risk that the Group is ex- incorporated its environmental policy as a part of the posed to relates to currency risk due to exchange rate The Group’s equity was $109,024 thousand at the end of mobi on the Bovespa in Brazil at a significant premium 2023, corresponding to an equity ratio of 98.9%. Ethical Code of Conduct. fluctuations. Both revenue and operating expenses are exposed to foreign exchange rate fluctuations. to our initial purchase price, as well as sign and close a transaction selling AdColony to Digital Turbine. Otello is committed to using environmentally safe prod- Although Otello does invest its money conservatively, all ucts in the workplace, to evaluating the consumption of The majority of the Group's operating expenses are de- energy and other resources to ensure efficient use, and nominated in Norwegian kroner (NOK) or United States to ensuring the development of environmentally protec- dollars (USD). The Group maintains cash deposits in both our investments are subject to risk. For example, Otello’s In Bemobi, Otello remains the biggest shareholder and is cash and other investments placed in Norwegian finan- positive about the prospects of the business. Otello will cial institutions are not guaranteed by the government have an opportunistic view on its financial investment in above NOK 2 million per institution. If the financial insti- the company. Otello has, as a result of the transactions tution were to go bankrupt, a portion of Otello’s cash or above and proceeds received, already repaid all our debt, launched and completed share buybacks accessible to all shareholders of over USD 166 million since 2021 and paid As reported in the media, on January 14, 2020, the Nor- in 2022 nearly USD 200 million in dividend to our share- wegian Consumer Council (NCC) filed a complaint to the holders. Going forward, the goal is to maximize the value Norwegian Data Protection Authority (DPA) against Grin- of all our remaining assets and continue to aggressively dr and five other companies, including AdColony, which return cash to shareholders, most likely through a combi- is a supplier to Grindr. Should AdColony be liable to pay nation of share buybacks and dividends. tive procedures. currencies, and no capital controls are limiting the Group's ability to exchange between these currencies, if required. Otello has implemented the following guidelines and investment could be lost. reporting schemes to ensure a high ethical standard The Group's largest asset, its investment in the shares throughout the organization. The Ethical Code of Con- of Bemobi Mobile Tech S.A, is denominated in Brazilian duct is created to help employees, clients and business reais (BRL). Accordingly, fluctuations in the exchange partners understand Otello’s values and standards. Otel- rate between the BRL and the Group's reporting curren- lo’s reputation is created by the conduct of each indi- cy, USD, can impact both the reported profit or loss and vidual staff member. Therefore, all staff members are the carrying value of that investment. A small number 18 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 19 Report from the Board of Directors — Parent company information only Below, please find financial information and commen- The Company reported a profit before income taxes of tary on Otello Corporation ASA, the parent company $5,386 thousand (2022: profit of $20,512 thousand). The (“Company”) of the Otello Group (“Group”). Please note current year's result was improved by a gain of $8,615 that the numbers and comments below are only applica- thousand from a reversal of prior impairment losses, ble to the Company and not for the Group. However, the primarily resulting from the increase in the share price information described above for the Group is also appli- in Bemobi Mobile Tech S.A (being the main investment cable for the Company. of the Company’s wholly-owned subsidiary, Otello Technology Investment AS) and the receipt of a group contribution of $7,181 thousand from Otello Technology FINANCIAL SUMMARY The Company’s main activities are to serve the Group as Investment AS. a whole, through the following functions and services: CEO, Board of Directors, corporate finance and account- Net cash flow from operating activities in 2023 totaled ing, legal, HR and IT. The Company charges some of the -$3,472 thousand (2022: -$2,333 thousand). Cash reserves costs related to these functions to subsidiaries. There were used to initiate a share buyback, with $2,610 thou- was limited operational activity in both 2023 and 2022. sand being used to buy back shares from investors during The Company had 5 full-time employees and equivalents 2023. The cash balance decreased by $5,101 thousand in in 2023 (2022: 6). 2023. As of December 31, 2023, the Company had a cash balance of $9,852 thousand (2022: $14,988 thousand). Operating expenses increased by 5% in 2023. This is pri- marily due to a timing-related increase in other operating The Company has $79,414 thousand in interest-bearing expenses and severance payments in the current year as debt at year-end (all owed to subsidiaries) and the Com- part of the company’s continued focus on cost control. pany’s equity ratio was 26% (2022: 24%). The Company’s operating loss excluding impairment gains of $4,079 thousand (2022: loss of $3,677 thousand) is in line It is the Board’s opinion that the annual accounts provide with operating expenses due to there being no revenues. a true and fair view of the Company’s activities in 2023. Oslo, April 18, 2024 Andre Christensen Chairman of the Board Karin Fløistad Song Lin Magdalena Kadziolka Jason Hoida CEO 20 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 21 Statement by the Board of Directors and the Chief Executive Officer The Board of Directors and the Chief Executive Officer • The consolidated financial statements and the finan- (CEO) have reviewed and approved the Board of Di- rectors’ report and the financial statements for Otello Group and Otello Corporation ASA as of December 31, 2023, (Annual Report for 2023). cial statements for the parent company for 2023 have been prepared in accordance with applicable account- ing standards. • The consolidated financial statements and the finan- cial statements for the parent company give a true and fair view of the assets, liabilities, financial position and profits as a whole as of December 31, 2023, for the Group and the parent company. The consolidated financial statements and the financial statements for the parent company have been prepared in accordance with accordance with IFRS® Accounting Standards as adopted by the EU and accompanying in- terpretations. The consolidated financial statements and the financial statements for the parent company • The Board of Directors’ report for the group and the also include certain disclosures in order to comply with certain regulations and paragraphs in the Norwegian Ac- counting Act and the Securities Trading Act. parent company includes a true and fair review of: • The development and performance of the business and the position of the Group and the parent company • The principal risks and uncertainties the Group and the parent company face To the best of our knowledge: Oslo, April 18, 2024 Andre Christensen Chairman of the Board Karin Fløistad Song Lin Magdalena Kadziolka Jason Hoida CEO 22 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 23 CONSOLIDATED STATEMENT Consolidated statement of Comprehensive Income USD thousands, except per share amounts Note 2023 2022 Continuing operations Revenue - 213 213 Total operating revenue 0 Employee benefits expense Depreciation and amortization expenses Other operating expenses 3 4 5 (2,147) (408) (1,559) (2,171) (693) (1,398) Total operating expenses (4,113) (4,113) 5,246 1,134 (4,261) (4,048) 6,667 Operating profit (loss), excluding impairment and restructuring expenses Impairment gains (losses) and restructuring expenses Operating profit (loss) Consolidated Group 6 2,619 Financial Statements 2023 Share of profit (loss) from associated companies Other net financial items 7 7 4,829 1,600 4,146 11,398 Otello Corporation ASA Profit (loss) before income tax Tax expense 7,563 0 18,163 (2,186) 15,977 8 Profit (loss) 7,563 Other comprehensive income: Items that may or will be transferred to profit (loss) Foreign currency translation differences 1,503 2,324 Items that will not be transferred to profit (loss) Foreign currency translation differences (4,818) (34,211) (15,910) Total comprehensive income (loss) 4,247 Profit (loss) attributable to: Owners of Otello Corporation ASA 7,563 4,247 15,977 Total comprehensive income (loss) attributable to: Owners of Otello Corporation ASA (15,910) Earnings (loss) per share: Basic earnings per share (USD) Diluted earnings per share (USD) 9 9 0.08 0.08 0.17 0.17 24 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 25 CONSOLIDATED STATEMENT Consolidated statement of Consolidated statement of Financial Position Financial Position USD thousands Note 12/31/2023 12/31/2022 USD thousands Note 12/31/2023 12/31/2022 Assets Shareholders’ equity and liabilities Equity attributable to owners of the company 109,024 107,387 107,387 Property, plant and equipment Right of use assets Investments 10 11 12 - 109 95,215 309 219 89,398 Total equity 109,024 Liabilities Lease liabilities Total non-current assets 95,325 89,926 11 - 83 83 Accounts receivable Other receivables 21 272 52 1,449 Total non-current liabilities 0 Cash and cash equivalents 14,576 18,373 Lease liabilities Accounts payable Other current liabilities 11 84 13 1,073 108 172 2,052 Total current assets Total assets 14,869 110,193 19,874 13 109,800 Total current liabilities Total liabilities 1,170 1,170 2,331 2,414 Total equity and liabilities 110,193 109,800 Oslo, April 18, 2024 Andre Christensen Chairman of the Board Karin Fløistad Song Lin Magdalena Kadziolka Jason Hoida CEO 26 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 27 CONSOLIDATED STATEMENT Consolidated statement of Cash Flows USD thousands Note 2023 2022 Cash flow from operating activities 7,563 18,163 Profit (loss) before taxes Income taxes paid 8 4 6 - 408 (5,246) 31 11 693 (6,667) (4) Depreciation and amortization expense Impairment (gains) losses recognized in profit (loss) Changes in accounts receivable Changes in accounts payable (145) (1,662) (214) (4,829) 785 (26) (11,478) 733 (4,146) 1,123 Other adjustments for which cash effects are investing or financing cash flow Other adjustments for non-cash items Share of net income (loss) from associated companies Interest income received 7 Net cash flow from operating activities (3,310) (1,598) Cash flow from investing activities Cash flows from losing control of subsidiaries Dividends received 740 1,480 - 191,595 1,400 (13,857) (36) 12 8 12 Income taxes paid Other cash payments to acquire equity or debt instruments of other entities (29) Net cash flow from investing activities 2,191 179,102 Cash flow from financing activities Payments to acquire entity’s shares Payment of finance lease liabilities, net Payments of dividends to equity holders of Otello Corporation ASA 20 11 20 (2,610) (106) - (31,192) (116) (196,820) Net cash flow from financing activities Net change in cash and cash equivalents (2,716) (3,836) (228,128) (50,624) Cash and cash equivalents (beginning of period) Effects of exchange rate changes on cash and cash equivalents FX differences related to changes in balance sheet items 18,373 (675) 713 79,001 (20,378) 10,375 Cash and cash equivalents 1) 14,576 18,373 1) Of which $94 thousand (2022: $103 thousand) is restricted cash as of December 31, 2023. 28 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 29 CONSOLIDATED STATEMENT Consolidated statement of Consolidated statement of Changes in Equity Changes in Equity Number of Number of shares out- standing (million) Trans- lation reserve shares out- standing (million) Trans- lation reserve Issued Share Treasury Other equity Total equity Issued Share Treasury Other equity Total equity USD thousands (except number of shares) capital premium shares USD thousands (except number of shares) capital premium shares Balance as of 12/31/2022 91,100 209 114,750 0 (468) (7,105) 107,386 Balance as of 12/31/2021 101,100 255 145,922 (25) (2,792) 207,949 351,309 Comprehensive income for the period Comprehensive income for the period Profit (loss) 7,563 7,563 Profit (loss) 15,977 15,977 Other comprehensive income Other comprehensive income Foreign currency translation differences 1,503 (4,818) (3,316) 4,247 Foreign currency translation differences 2,324 (34,211) (18,234) (196,820) (31,886) Total comprehensive income for the period Treasury shares purchased - - - (2,610) (2,610) 1,503 2,745 Total comprehensive income for the period - - - - 2,324 (15,910) (3,180) (2,610) 109,024 Dividends paid Capital decrease Treasury shares purchased (196,820) 0 (31,192) (46) (31,172) 31,218 (31,192) Balance as of 12/31/2023 87,920 209 114,750 1,035 (4,360) (10,000) Balance as of 12/31/2022 91,100 209 114,750 0 (468) (7,105) 107,386 Treasury shares and ordinary share During 2023, Otello purchased 3,180,027 treasury shares for $2,610 thousand, and sold 0 treasury shares for $0.0 thousand. During 2023, Otello issued 0 ordinary shares related to the incentive program, 0 ordinary shares related to business combinations, and 0 ordinary shares related to an equity increase. As of December 31, 2023, Otello owned 3,180,027 treasury shares. Face value of the shares The face value of the shares is NOK 0.02. Reserve for treasury shares The reserve for the Company’s own shares comprises the face value cost and excess value of own shares held by the Company. Translation reserve The translation reserve consists of all foreign currency differences arising from the translation of the financial statements of group companies with a functional currency that is not USD, except for those differences related to the parent company, which are booked directly to other equity. Other equity Other equity consists of all other transactions, including but not limited to, total recognized income and expense for the current period. 30 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 31 CONSOLIDATED STATEMENT Note 1 General information Critical accounting estimtes and significant judgments The preparation of consolidated financial statements in accordance with IFRS® Accounting Standards as adopted by the EU requires manage- ment to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, disclosures of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected within the next financial year. Management does not consider there to be any critical accounting estimates or significant judgments in these consolidated financial statements. and the Otello Corporation ASA (the “Company”) is a public limited company domiciled in Norway. The Company’s principal offices are located at Gjer- drums vei 19, Oslo, Norway. The Company is listed on the Oslo Stock Exchange under the ticker OTELLO. The consolidated financial statements of the Group for the year ended December 31, 2023, comprise the Company and its subsidiaries. These consolidated financial statements have been approved and issued by the Board of Directors on April 18, 2024 for approval by the Annual General Meeting on June 3, 2024. New standards and intepretations not yet adopted Certain amendments to accounting standards have been published that are not mandatory for 31 December 2023 reporting periods and have not been early adopted by the Group. These amendments are not expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions. Note 2 Summary of significant accounting policies Statement of compliance and basis of the consolidated financial statements The consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards as adopted by the EU and accom- panying interpretations. The consolidated financial statements also include certain disclosures in order to comply with certain regulations and paragraphs in the Norwegian Accounting Act and the Securities Trading Act. Note 3 Employee benefits expense Basis of preparation The consolidated financial statements are presented in US dollars (USD), rounded to the nearest thousand, unless otherwise stated. As a result of rounding differences, amounts and percentages may not add up to the total. Transactions are converted from the functional currencies of the companies within the Group using a monthly exchange rate to US dollars. The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements. The accounting policies have been applied consistently by Group entities. Payroll expenses [USD thousands] 2023 2022 Salaries and bonuses (1,615) (1,553) Social security cost (266) (309) Pension cost (115) (135) Insurance and other employee benefits (26) (23) Payments to long-term contractual staff (125) (151) Total (2,147) (2,171) Average number of full time equivalents 5 6 The Norwegian companies in the Group are obliged to follow the Mandatory Occupational Pensions Act and these companies' pension schemes follow the requirements as set in the Act. Consolidation principles Investments in associates – associates: Associates are entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influ- ence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity. The Group’s investment in Bemobi Mobile Tech S.A. (Bemobi) is assessed as being an investment in an associate, with a holding as of December 31, 2023 of 37.6 percent, and is accordingly accounted for using the equity method. Impairment The carrying amounts of the Group’s assets are reviewed at least annually to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. The Group’s main assessment where this has a material impact is the invest- ment in Bemobi. The recoverable amount for the investment in Bemobi is assessed as being the market value of the investment, where the market value is calcu- lated by reference to the prevailing share price of Bemobi as of the reporting date. An impairment loss is recognized if carrying amount of the investment exceeds its recoverable amount. Impairment losses are recognized in the statement of comprehensive income. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount do not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Please see note 12 for further information. Compensation to the CEO and Chairman of the Board The incoming CEO has waived his rights under Section 15-16 of the Norwegian Working Environment Act of 2005 relating to employees' protec- tion, termination of employment contracts, etc. As compensation, the incoming CEO is entitled to receive a termination amount of twelve months’ base salary if the employment contract is terminated by the Company. As of December 31, 2023, there was no existing severance agreement between Otello and the Chairman of the Board. The Group has not given any loans or security deposits to the CEO, the Chairman of the Board or their related parties. Operating and segment information Throughout the year ended December 31, 2023, the Group has been comprised of a single Corporate segment. The Group’s principal activities now involve its investment in the shares of Bemobi Mobile Tech S.A. Following the successful IPO of Bemobi on Bovespa in Brazil, the Group retained a non-controlling ownership, which currently comprises 37.6% of the outstanding shares in Bemobi. The Group also retains rights to its Rocket Optimizer™ technology and owns some minor investments in other companies. A bonus program exists for the senior executive team at Otello. For each individual executive, a limit is set for the amount of bonus that can be achieved. The size of the bonus payment is dependent on actual company performance compared to a set of predefined targets. The bonus program and predefined targets are approved by the Remuneration Committee and the Board of Directors. No bonuses have been accrued for senior executives in the consolidated financial statements for 2023. 32 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 33 CONSOLIDATED STATEMENT Compensation to executive management in 2023 Benefit Pension exercised Remu- Other com- comp- options/ Total com- [USD thousands] neration Salary Bonus pensation ensation RSUs pensation Executive Manangement Lars Boilesen, CEO to 31 December 2023 - 462.74 - 434.09 68.56 - 965.38 Petter Lade, CFO to 31 December 2023 - 162.91 - 136.25 15.85 - 315.01 The Board of Directors Andre Christensen, Chairman 64.15 - - - - - 64.15 Magdalena Kadziolka, Board Member - - - - - - - Karin Fløistad, Board Member 28.88 - - - - - 28.88 Maria Borge Andreassen, Board Member to 1 May 2023 13.41 - - - - - 13.41 Song Lin, Board Member 26.04 - - - - - 26.04 The Nomination Committee Simon Davies, Chairman - - - - - - - Jakob Iqbal, Member 2.84 - - - - - 2.84 Kari Stautland, Member 2.84 - - - - - 2.84 Total 138.16 625.65 - 570.34 84.41 - 1,418.55 Shares owned by members of the Board and the Chief Executive Officer as of December 31, 2023 [In thousands of shares] Name Commission Shares Total Andre Christensen Chairman 42 42 Karin Fløistad Board Member - - Magdalena Kadziolka Board Member - - Song Lin Board Member 0 0 Lars Boilesen CEO to 31 December 2023 261 261 Jason Hoida CEO from 31 December 2023 12 12 315 315 The outgoing CEO owns 260 013 shares via his fully owned company HST INVEST AS. Shares owned by other members of Executive Management as of December 31, 2023 [In thousands of shares, options and RSUs] Title Shares Total Petter Lade CFO to 31 December 2023 67 67 67 67 The outgoing CFO owns 66 888 shares after exercising the forward contract he held to acquire those shares at an average price of NOK 8,2406 per share. Other compensation presented above includes an accrual for the first year of severance payment that was agreed between the board and the outgoing CEO as part of his transition into an advisor role. Other compensation also includes a severance payment to the outgoing CFO equal to nine months salary. The incoming CEO received no remuneration during the year in his capacity as CEO. Members of Executive Management are included in the Company's employee pension scheme, which is a defined contribution plan. There has been no compensation or other economic benefit provided in 2022 or 2023 to any member of the Executive Team or Board of Direc- tors from the Company or any business owned by the Company, except that mentioned above. In 2022 and 2023, there has been no significant additional compensation given to directors with regard to special services performed outside of their normal function. Compensation to executive management in 2022 Benefit Pension exercised Remu- Other com- comp- options/ Total com- [USD thousands] neration Salary Bonus pensation ensation RSUs pensation Executive Manangement Lars Boilesen, CEO - 451.67 228.92 29.19 70.41 - 780.19 Petter Lade, CFO - 200.22 57.23 2.27 18.76 - 278.47 The Board of Directors Andre Christensen, Chairman 62.95 - - - - - 62.95 Magdalena Kadziolka, Board Member from 2 June 2022 - - - - - - - Anooj Unarket, Board Member to 2 June 2022 - - - - - - - Karin Fløistad, Board Member from 2 June 2022 18.51 - - - - - 18.51 Birgit Midtbust, Board Member to 2 June 2022 10.58 - - - - - 10.58 Maria Borge Andreassen, Board Member 30.91 - - - - - 30.91 Song Lin, Board Member 26.23 - - - - - 26.23 The Nomination Committee Simon Davies, Chairman - - - - - - - Jakob Iqbal, Member 3.12 - - - - - 3.12 Kari Stautland, Member 3.12 - - - - - 3.12 Total 155.43 651.89 286.15 31.47 89.16 - 1,214.09 Presented above are the bonuses earned in 2021 and paid in 2022, which are based on the 2021 results. Shares owned by members of the Board and the Chief Executive Officer as of December 31, 2022 [In thousands of shares] Name Commission Shares Total Andre Christensen Chairman 42 42 Karin Fløistad Board Member - - Maria Borge Andreassen Board Member 11 11 Magdalena Kadziolka Board Member - - Song Lin Board Member 0 0 Lars Boilesen CEO 261 261 314 314 Shares owned by other members of Executive Management as of December 31, 2022 [In thousands of shares] Title Shares Total Petter Lade CFO to 31 December 2023 0 0 0 0 34 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 35 CONSOLIDATED STATEMENT Note 4 Depreciation and amortization expenses Note 6 Impairment gains (losses) and restructuring expenses Depreciation and amortization expenses [USD thousands] Note 2023 2022 Property, plant and equipment 10 (293) (584) Right of use assets 11 (115) (108) Total (408) (693) Following the successful IPO of the Bemobi business on Bovespa in Brazil in 2021, the Group is now a major shareholder in Bemobi Mobile Tech S.A with an ownership of 37.6%. The investment in Bemobi Mobile Tech S.A is recognized using the equity method, and the fair value of the investment has been reassessed based on the share price of that business as of December 31, 2023. With a price per share of 14.00 Brazilian real as of that date, a gain of USD 7,251 thousand has been recognized by reducing part of the previous- lyrecognized impairment. See Note 12 for further information regarding the Bemobi Mobile Tech S.A investment. Impairment gains (losses) [USD thousands] Note 2023 2022 Bemobi Mobile Tech S.A shares 12 5,246 6,667 Total 5,246 6,667 Other than the impairment testing described above, there is otherwise no indication of impairment of other assets that would require further impairment testing as of December 31, 2023 under IAS 36. Note 5 Other operating expenses Other operating expenses [USD thousands] 2023 2022 Audit, legal and other advisory services (531) (733) Insurance (276) (266) Purchase of equipment, not capitalized (194) (226) Rent and other office expenses (82) 25 Hosting expenses, excl. depreciation cost (55) (58) Other expenses (421) (140) Total (1,559) (1,398) Note 7 Net financial items Auditor remuneration The following table shows audit fees for the current and prior year. For all categories the reported fee is the recognized expense in other operat- ing expenses for the year to the external auditor, PwC. [USD thousands] Note 2023 2022 Share of profit (loss) from associated companies 12 4,829 4,146 Other net financial items Interest income 785 1,123 Interest expenses (4) (7) Net FX gains (losses) 137 10,747 Other net financial income (expense) (80) (57) Gain (loss) sale of shares 740 (409) Dividends received 22 - Total other net financial items 1,600 11,398 Total net financial items 6,430 15,544 During the year ended December 31, 2023, the Group realised a gain of $740 thousand, relating to a refund of VAT that had previously been paid on services provided to the Group outside of Norway. Audit fees [USD thousands] 2023 2022 Statutory audit (151) (151) Tax advisory services (12) (12) Other services (11) (11) Total (173) (173) 36 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 37 CONSOLIDATED STATEMENT The Group’s gross tax loss carryforwards expire as follows: [USD thousands] Norway Total No expiration deadline 6,720 6,720 Total 6,720 6,720 Note 8 Taxes [USD thousands] 2023 20221 Income tax expense recognized in the statement of comprehensive income: Current tax 0 (2) Tax paid for change of investment regime in Brazil - (13,857) Impact of changes in foreign exchange rate - 1,511 Changes in deferred taxes - 10,162 Income tax expense 0 (2,186) Reconciliation of effective tax rate [USD thousands] 2023 2022 Profit (loss) before tax 7,563 18,163 Income tax using the corporate income tax rate in Norway (22% in 2023 / 22% in 2022) (1,664) (3,996) Effect of tax rates outside Norway different from 22% / 22% (1) 2,057 Effect of non-taxable and non-deductible items 3,946 (3,728) Effect of non-recognition of certain deferred tax assets (2,282) (581) Use of prior tax losses - 4,068 Other effects 1 (6) Total tax expense for the year 0 (2,186) Effective tax rate 0.0% 12.0% Deferred tax assets (liabilities) and changes during the year Posted to statement Disposals of compre- Posted to discon- hensive directly to tinued Balance income the equity operations Balance 2023 [USD thousands] 1/1/23 12/31/23 Accrual of tax on capital gain in Brazil 0 - - - 0 Total related to temporary differences 0 - - - 0 Net deferred tax assets (liabilities) recognized in the statement of financial position 0 - - - 0 The effective tax rate in 2023 of 0.0% differs from the statutory rate of 22.0% due to the following key items: • The contribution of the share of profit (loss) from associated companies and the partial reversal of the prior impairment of the investment in Bemobi shares are considered as permanent differences and are non-taxable for income tax purposes in Norway. Note 9 Earnings per share Posted to statement Disposals of compre- Posted to discon- hensive directly to tinued Balance income the equity operations Balance 2022 [USD thousands] 1/1/22 12/31/22 Accrual of tax on capital gain in Brazil (10,162) 10,162 - - 0 Total related to temporary differences (10,162) 10,162 - - 0 Net deferred tax assets (liabilities) recognized in the statement of financial position (10,162) 10,162 - - 0 Earnings per share 2023 2022 Earnings (loss) per share: Basic earnings (loss) per share (USD) 0.08 0.17 Diluted earnings (loss) per share (USD) 0.08 0.17 Shares used in earnings per share calculation 89,875,826 93,565,482 Shares used in earnings per share calculation, fully diluted 89,875,826 93,565,482 Earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted ordinary shares on issue during the period. 38 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 39 CONSOLIDATED STATEMENT Note 10 Property, plant and equipment Note 11 Right-of-use assets and lease liabilities The lease liability and right of use asset relates to the Group's office in Oslo, Norway. The lease expires November 30, 2024. Lease liabilities (USD thousands) 2023 2022 Balance as of 1/1 190 310 Additions 5 13 Translation differences (9) (23) Lease payments (106) (116) Interest expense on lease liabilities 4 7 Lease liabilities as of 12/31 84 190 Of which: Current lease liabilities (less than 1 year) 84 108 Non-current lease liabilities (more than 1 year) - 83 Balance as of 12/31 84 190 [USD thousands] 2023 2022 Acquisition cost Acquisition cost as of 1/1 6,506 7,088 Translation differences (160) (582) Acquisition cost as of 12/31 6,346 6,506 Accumulated depreciation and impairment losses Depreciation and impairment losses as of 1/1 (6,197) (6,108) Depreciation (293) (584) Translation differences 144 495 Accumulated depreciation and impairment losses as of 12/31 (6,346) (6,197) Net book value as of 12/31 0 309 Depreciation for the year (293) (584) Right of use assets (USD thousands) 2023 2022 Balance as of 1/1 219 314 Additions 5 13 Depreciation (115) (108) Right of use assets as of 12/31 109 219 Depreciation for the year (115) (108) Depreciation is charged to the statement of comprehensive income on a straight-line basis over the estimated useful life of each leased asset. The estimated useful life is considered to be the term of the contract for each leased asset. IFRS 16 effects on the consolidated statement of comprehensive income for the year (USD thousands) 2023 2022 Operating lease expenses recognized under operating expenses decreased (52) (116) Depreciation expense increased as a result of depreciation of ROU assets 57 108 Net interest expense increased as a result of recognition of the lease liability 2 7 Translation differences (11) (23) Net effect (4) (24) Future lease payments The future minimum lease payments under non-cancellable lease contracts are as follows: Payments for leased premises: 2023 2022 Less than one year 113 112 Between one to five years - 84 More than five years - - Total 113 196 40 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 41 CONSOLIDATED STATEMENT Note 12 Investments The table below gives a breakdown of the total amount of other investments recognized. [USD thousands] 2023 2022 Investment in Bemobi Mobile Tech S.A (associate) 94,402 88,590 Investments in other shares 813 808 Total 95,215 89,398 A reconciliation of the cumulative reported balance of the investment in Bemobi Mobile Tech S.A is as follows. [USD thousands] 2023 2022 Balance as of 1/1 Initial recognition under the equity method 133,198 133,198 Share of the profit (loss) 16,593 10,264 Amortization of excess values (4,996) (3,374) Dividends received (2,758) (1,256) Translation difference (21,847) (18,141) Impairment (25,762) (32,101) Balance as of 12/31 94,402 88,590 The fair value of the investment in Bemobi Mobile Tech S.A has been assessed based on the closing share price of that business as reported by Bovespa in Brazil at the end of each reporting period. The fair value is considered a Level 1 valuation. Fair value as of 12/31 94,402 88,590 Investment in Bemobi Mobile Tech S.A Following the successful IPO of Bemobi on Bovespa in Brazil, the Group became a major shareholder in Bemobi Mobile Tech S.A with an owner- ship of 36.0%. During 2023, Bemobi Mobile Tech S.A cancelled the shares that it had bought back from shareholders, leading to the Group having an ownership of 37.6% as of December 31, 2023. Key financial information regarding Bemobi Mobile Tech S.A [BRL million] 2023 2022 Revenue 1,307.8 1,475.8 EBIT 94.8 98.7 Net profit (loss) 86.9 85.6 Assets 1,443.4 1,349.3 Non-current liabilities 42.4 31.7 Current liabilities 314.6 259.1 Equity 1,086.3 1,058.5 Otello’s share of equity in BRL 408.5 381.0 Otello’s share of equity in USD 84.2 72.1 Share of profit (loss) from associated companies 2023 2022 Share of the profit (loss) 6,483 5,971 Amortization of excess values (1,654) (1,825) Share of profit (loss) from associated companies 4,829 4,146 The investment in Bemobi Mobile Tech S.A is recognized using the equity method. [USD thousands] 2023 2022 Balance as of 1/1 88,590 89,441 Initial recognition under the equity method 0 Movements reflected through the statement of comprehensive income Share of the profit (loss) 6,660 5,968 Amortization of excess values (1,730) (1,788) Impairment 5,306 5,616 Other movements Dividends received (1,571) (1,400) Translation difference (2,852) (9,246) Balance as of 12/31 94,402 88,590 The values reported for the Share of profit (loss) and Amortization of excess values differ between the tables in this note due to the different exchange rate that is used for transalation of items in the Statement of financial position (a period-end rate) compared to that which is used for translation of items in the Statement of comprehensive income (an average rate). Investments in other shares Otello owns 1.42% of the shares in Alliance Venture Spring AS and approximately 0.05% of the shares in Life360, Inc, which merged with Zen Labs, Inc during 2019. Otello owned shares in Zen Labs Inc prior to this merger. The recognized value of the investments in other shares is $813 thousand. Management has not determined the fair value of these investments, as they are not material for the Group. Alliance Venture Spring is a Norwegian venture capital firm investing in early stage technology companies. Life360 provides location-based services, sharing and noti- fications application to consumers globally, including integrated driving safety features and tools like Crash Detection and Roadside Assistance. Investments in other shares are recognized at cost. 42 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 43 CONSOLIDATED STATEMENT Note 13 Other current liabilities Note 15 Alternative performance measures Alternative performance measures Otello discloses alternative performance measures as part of its financial reporting as a supplement to the financial statements prepared in accordance with IFRS. Otello believes that the alternative performance measures provide useful supplemental information to management, investors, financial analysts and other stakeholders, and are meant to provide an enhanced insight into the financial development of Otello’s business operations and to improve comparability between periods. EBITDA and EBIT terms are presented as they are commonly used by investors and financial analysts. Certain items are excluded in the alternative performance measures Adjusted EBITDA and Normalized EBIT to provide enhanced insight into the underlying financial performance of the business operations and to improve comparability between different periods. Alternative performance measures: Gross profit: This comprises revenues minus publisher and revenue share cost. Other current liabilities [USD thousands] Note 2023 2022 Accrued bonuses, commission and other employee benefits 642 1,071 Accrued operating expenses 303 113 Public duties payable 108 165 Stock-based compensation liability - 681 Other current liabilities 20 20 Total 1,073 2,052 EBITDA: This is short for Earnings before financial items, taxes, depreciation and amortization. EBITDA corresponds to Operating profit (loss), (EBIT) in the Consolidated statement of comprehensive income excluding depreciation and amortization expenses. Note 14 Contingent liabilities Adjusted EBITDA: This represents EBITDA excluding stock-based compensation, impairment and restructuring expenses. Adjusted EBITDA corresponds, therefore, to Operating profit (loss), (EBIT) in the Consolidated statement of comprehensive income excluding depreciation and amortization, stock-based compensation, and impairment and restructuring expenses. EBIT: This is short for Earnings before financial items. This is presented both including and excluding impairment and restructuring expenses in the Consolidated statement of comprehensive income. In the KPIs section of this report and the reconciliation below, EBIT represents earnings before financial items including impairment and restructuring expenses, and corresponds to Operating profit (loss), (EBIT) in the Consolidated statement of comprehensive income. See below for reconciliations from Operating profit to EBITDA and Adjusted EBITDA for all periods presented. The table below presents a reconciliation of profit (loss) to Adjusted EBITDA. GDPR complaint filed with the Norwegian Data Protection Authority (DPA) As reported in the media, on January 14, 2020, the Norwegian Consumer Council (NCC) filed a complaint to the Norwegian Data Protection Authority (DPA) against Grindr and five other companies, including AdColony, who is a supplier to Grindr. As of the date of this report, AdColony has not received any formal notification or complaint from the DPA. AdColony is currently looking into the NCC’s complaint and will provide further information if and when necessary. The Company has not recognized any contingent liabilities in the financial statements related to this matter. Material Indemnification-Related Post-Earnout Obligations from the Sale of AdColony Below is a summary of material indemnification-related obligations of Otello Corporation ASA (“Otello”) under that certain Share Purchase Agreement, dated February 26, 2021 (the “SPA”), between Otello, Digital Turbine, Inc., Digital Turbine Media, Inc. (“DT”) and AdColony Hold- ing AS (“AdColony”), following the settlement of DT’s earnout obligations under the SPA. The summary below does not purport to be a complete and accurate summary of Otello’s obligations under the SPA. For a complete understanding of all of Otello’s obligations under the SPA, reference should be made to the full text of the SPA, which can be found at: https://ir.digitalturbine.com/sec-filings/all-sec-filings/con- tent/0001104659-21-060531/0001104659-21-060531.pdf None of the Indemnification Obligations of Otello, as presented below, has been recognized as liabilities in the financial statement as it has yet to be confirmed whether Otello has a present obligation that could lead to an outflow of economic benefits, nor does the Indemnification Obligations of Otello meet the recognition criteria in IAS 37 as it is not probable that an outflow of economic benefits will happen at this stage. Indemnification Obligations of Otello Otello is obligated to indemnify (subject to certain limitations) DT and its affiliates for losses related to the following matters: (i) breaches or inaccuracies of certain representations and warranties; (ii) breaches of certain covenants by Otello and AdColony; (iii) pre-closing and certain other taxes; (iv) the operations and subsequent sale of Skyfire Labs, Inc.; and (v) certain specified matters, consisting of (A) an action for a claim under the Children’s Online Privacy Protection Act; (B) fines levied by the Norwegian Data Protection Authority pursuant to certain data privacy matters; (C) fines arising from a civil investigation by the Federal Trade Commission in connection with certain data privacy matters; (D) a claim for breaches of certain non-solicitation obligations of AdColony and its subsidiaries; and (E) a harassment claim against a former executive of AdColony. Reconciliation of gross profit [USD thousands] 2023 2022 Total operating revenue 0 213 Publisher and revenue share cost 0 0 Gross profit 0 213 Reconciliation of operating profit (loss) to EBITDA and adjusted EBITDA [USD thousands] 2022 2021 Operating profit (loss), (EBIT) 1,134 2,619 Depreciation and amortization expenses 408 693 Impairment gains (losses) (5,246) (6,667) EBITDA (3,705) (3,355) Restructuring expenses 0 0 Stock-based compensation expenses 0 0 Adjusted EBITDA (3,705) (3,355) 44 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 45 CONSOLIDATED STATEMENT Note 16 Assets Note 18 Corporate structure Non-current assets by location [USD thousands] 2023 2022 Non-current assets located in Brazil 94,402 88,590 Non-current assets located in Norway 665 1,017 Non-current assets located in United States 257 266 Total 95,325 89,926 Below is a list of group companies in the Otello group as at December 31, 2023: Owner and Entity name Location Country Segment voting share Otello Corporation ASA Oslo Norway Corporate Listed Directly owned subsidiaries Otello Technology Investment AS (formerly Bemobi Holding AS) Oslo Norway Corporate 100% Indirectly owned subsidiaries None During the year ended December 31, 2023, the directly owned subsidiaries Skyfire Labs, Inc and Performance & Privacy Ireland Ltd entered liqui- dation after settling all liabilities and transferring their remaining assets to their parent company, Otello Corporation ASA. For investments in shares in equity-accounted associates and unrelated parties, the location is based on where those companies are based, without any tracing of the underlying location of their assets. The vast majority of the value of non-current assets is related to the investment in Bemobi Mobile Tech S.A. See Note 12 for further information. Note 17 Financial risk and financial instruments Note 19 Related parties Capital management The Company's policy has been to maintain a high equity-to-asset ratio and to maintain a solid capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. Bemobi The Group holds a 37.6% equity interest in Bemobi Mobile Tech S.A through common shares. Please see Note 12 for further details on the status of this equity interest. The Group continued to provide accounting and legal support to Bemobi on a transitional basis during 2023, which was priced on an arm's-length basis and all outstanding balances are settled within normal commercial terms. Members of the Board of Directors and Executive Management The Group has not engaged in any related party transactions with any members of the Board of Directors of Otello Corporation ASA or Otello Group executive management. Members of the Board of Directors and Executive Management of the Group and their immediate relatives controlled 0.4% (2022: 0.3%) of the Group's voting share as per December 31, 2023. Information regarding compensation for the Board of Directors and executive management can be found in Note 3. Financial risk Risk management in the Group is carried out by management and approved by the Board of Directors. Potential risks are evaluated on a regular basis and management determines appropriate strategies related to how these risks are to be handled within the Group under the approved policies. The Group is exposed to market (currency) risk, credit risk and liquidity risk to varying degrees. Currency risk The majority of the financial risk that the Group is exposed to relates to currency risk due to exchange rate fluctuations. Both revenue and operating expenses are exposed to foreign exchange rate fluctuations. The majority of the Group's operating expenses are denominated in Norwegian kroner (NOK) or United States dollars (USD). The Group maintains cash deposits in both currencies, and there are no capital controls limiting the Group's ability to exchange between these currencies, if required. The Group's largest asset, its investment in the shares of Bemobi Mobile Tech S.A, is denominated in Brazilian reais (BRL). Accordingly, fluctua- tions in the exchange rate between the BRL and the Group's reporting currency, USD, can impact both the reported profit or loss and the carry- ing value of that investment. A small number of BRL-denominated expenses are also incurred by the Group in Brazil related to this investment. Foreign exchange contracts During 2023 and 2022, the Group did not use forward exchange contracts to hedge its currency risk, and Otello had not entered into any foreign exchange contracts as of December 31, 2023. Credit risk Credit risk is the risk of losses that the Group would suffer if a counterparty fails to perform its financial obligations. The Group's exposure to credit risk is mainly related to external receivables, which are immaterial, and accordingly credit risk is not considered significant. Loans and receivables The Group has limited exposure in terms of credit risk related to loans and receivables. Liquidity risk As of December 31, the Group had bank deposits well in excess of the recognized liabilities. Accordingly, liquidity risk is not considered significant. Credit facility As at December 31, 2023, Otello has no outstanding loans payable. 46 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 47 CONSOLIDATED STATEMENT Note 20 Shares and shareholder information Note 21 Events after the reporting period As of December 31, 2023, Otello had a share capital of NOK 1 821 994.58 (USD 184 987) divided into 91 099 729 ordinary shares with a nominal value of NOK 0.02 each (USD 0.002). All ordinary shares have equal voting rights and the right to receive dividends. The annual general meeting of the Company on June 1, 2023, authorized the Board of Directors of Otello Corporation ASA (the "Company") to acquire shares in the Company. The maximum value of the shares which the Company may acquire pursuant to the authorization is a total face value of NOK 182 199. The minimum amount which may be paid for each share acquired pursuant to this power of attorney is NOK 5, and the maximum amount is NOK 200. The shares purchased through the share buyback program may be disposed of to meet obligations under employee incentive schemes, as part of consideration payable for acquisitions made by the Company, as part of consideration for any mergers, demergers or acquisitions involving the Company, to raise funds for specific investments, for the purpose of paying down loans, or in order to strengthen the Company's capital base. The above authorization is valid up to and including June 30, 2024. Otello's case regarding the potential sale of Vewd minority stake On 8 January 2024, the notice of final account prior to dissolution from the liquidator of Last Lion Holdings Limited was publicly released. The report advised that no further dividend would be paid. This is consistent with Otello's previous assumption that no further value would be realised from its investment. Last Lion Holdings Limited was finally dissolved on 8 April 2024. No events have occurred after the reporting date that would require the financial statements to be adjusted. Please see stock exchange announcements for further information on any subsequent events. Treasury shares and ordinary shares During 2023, Otello purchased 3 180 027 (2022: 10 000 000) treasury shares for $2,610 thousand (2022: $31,192 thousand), and sold 0 (2022: 0) treasury shares for $0.0 thousand (2021: $0.0 thousand). As of December 31, 2023, Otello owned 3 180 027 treasury shares (December 31; 2022: 0). Dividends Otello did not pay a dividend in 2023. The Board of Directors proposes that the 2023 Annual General Meeting does not approve any dividend payment. Ownership structure The 20 largest shareholders of Otello Corporation ASA shares as of December 31, 2023, were as follows: 2023 2023 2022 Owner’s Owner’s and voting and voting [In thousands of shares] Shares share % share % SAND GROVE OPPORTUNITIES AS 28,480 31.3% 31.3% CITIBANK, N.A. 18,795 20.6% 0.1% GOLDMAN SACHS INTERNATIONAL 7,097 7.8% 4.8% VERDIPAPIRFONDET DNB TEKNOLOGI 6,385 7.0% 7.0% AREPO AS 5,199 5.7% 5.7% OTELLO CORPORATION ASA 3,169 3.5% 0.0% VERDIPAPIRFONDET NORDEA NORGE VERD 2,041 2.2% 2.2% BANK PICTET & CIE (EUROPE) AG 1,921 2.1% 0.0% SKANDINAVISKA ENSKILDA BANKEN AB 1,901 2.1% 2.1% BNP PARIBAS 1,301 1.4% 0.0% BONHEUR ASA 1,217 1.3% 1.3% VERDIPAPIRFONDET NORDEA AVKASTNING 789 0.9% 0.9% THE NORTHERN TRUST COMP, LONDON BR 784 0.9% 0.9% CMDC AS 567 0.6% 0.0% NORDNET LIVSFORSIKRING AS 557 0.6% 0.1% BÆKKELAGET HOLDING AS 500 0.5% 0.6% AS SUKA 500 0.5% 0.0% VERDIPAPIRFONDET NORDEA KAPITAL 469 0.5% 0.5% VI ØNSKER STYREPLASS AS 446 0.5% 0.0% WOENSEL AS 400 0.4% 0.4% Sum 82,517 90.6% 57.9% Other shareholders 8,582 9.4% 42.1% Total numbers of shares 91,100 100.0% 100.0% 48 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 49 PARENT COMPANY Statement of Comprehensive Income USD thousands Note 2023 2022 Revenue 0.0 213 213 Total operating revenue 0.0 Employee benefits expense Depreciation and amortization expenses Other operating expenses 2 3 4 (2,142) (384) (1,553) (1,952) (687) (1,251) Total operating expenses (4,079) (4,079) (3,890) (3,677) Operating profit (loss), excluding impairment and restructuring expenses Parent Company Impairment gains (losses) and restructuring expenses Operating profit (loss) 5 8,615 4,536 850 22,844 19,167 1,345 Financial Statements 2023 Net financial items 6 Otello Corporation ASA Profit (loss) before income taxes 5,386 20,512 0.0 Income taxes 7 0.0 Profit (loss) 5,386 20,512 Other comprehensive income: Items that may or will be transferred to profit (loss) Foreign currency translation differences (1,256) (24,349) (3,837) Total comprehensive income (loss) 4,131 Profit (loss) attributable to: Owners of Otello Corporation ASA 5,386 4,131 20,512 (3,837) Total comprehensive income (loss) attributable to: Owners of Otello Corporation ASA 50 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 51 PARENT COMPANY Statement of Statement of Financial Position Financial Position USD thousands Note 12/31/2023 12/31/2022 USD thousands Note 12/31/2023 12/31/2022 Assets Shareholders’ equity and liabilities Property, plant and equipment Right of use assets Investments in subsidiaries Other investments 8 9 10 11 0 109 97,162 813 284 219 91,810 808 Equity attributable to owners of the company 27,678 26,158 26,158 Total equity 27,678 Liabilities Total non-current assets 98,085 93,122 Lease liabilities Other non-current liabilities 9 13 - - 83 81,194 Accounts receivable Other receivables 22 272 64 378 Total non-current liabilities 0 81,277 Cash and cash equivalents 9,852 14,988 Lease liabilities Accounts payable Other current liabilities Other current liabilities to group companies 9 84 13 1,042 79,414 108 164 845 - Total current assets Total assets 10,146 15,430 12 13 108,231 108,551 Total current liabilities Total liabilities 80,553 80,553 108,231 1,117 82,394 108,551 Total equity and liabilities Oslo, April 18, 2024 Andre Christensen Chairman of the Board Karin Fløistad Song Lin Magdalena Kadziolka Jason Hoida CEO 52 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 53 PARENT COMPANY Statement of Cash Flows USD thousands Note 2023 2022 Cash flow from operating activities Profit (loss) before taxes 5,386 20,512 Depreciation and amortization expense Impairment (gains) losses recognized in profit (loss) Changes in accounts receivable 1) 3 5 13 13 384 (8,615) 31 (137) (1,205) 220 687 (22,844) (4) (3) (631) (1,090) 1,040 Changes in accounts payable 1) Other adjustments for which cash effects are investing or financing cash flow Other adjustments for non-cash items Interest income received 465 Net cash flow from operating activities (3,472) (2,333) Cash flow from investing activities Proceeds from sale of shares 740 (29) 376 - 191,971 (36) Other cash payments to acquire equity or debt instruments of other entities Proceeds from loans received from group companies Repayment of loans to group companies 11 13 13 - (14,847) 850 Repayment of loans to other companies - Net cash flow from investing activities 1,087 177,938 Cash flow from financing activities Payments to acquire entity’s shares Payment of finance lease liabilities, net Payments of dividends to equity holders of Otello Corporation ASA (2,610) (106) - (31,192) (116) (196,820) 9 Net cash flow from financing activities Net change in cash and cash equivalents (2,716) (5,101) (228,128) (52,524) Cash and cash equivalents (beginning of period) Effects of exchange rate changes on cash and cash equivalents FX differences related to changes in balance sheet items 14,988 (642) 607 78,080 (20,040) 9,473 Cash and cash equivalents 2) 9,852 14,988 1) This includes changes in intercompany balances. See Note 13 for further information. 2) Of which $94 thousand (2022: $103 thousand) is restricted cash as of December 31, 2023. 54 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 55 PARENT COMPANY Statement of Statement of Changes in equity Changes in equity Number Number of shares of shares outstanding (million) Issued capital Share premium Treasury shares Translation reserve Other equity Total equity outstanding (million) Issued capital Share premium Treasury shares Translation reserve Other equity Total equity USD thousands USD thousands Balance as of 12/31/2022 91,100 209 114,750 (0) (193,137) 104,336 26,158 Balance as of 12/31/2021 101,100 255 145,922 (25) (168,788) 280,644 258,008 Comprehensive income for the period Comprehensive income for the period Profit for the period 5,386 5,386 Profit for the period 20,512 20,512 Other comprehensive income Other comprehensive income Foreign currency translation differences Foreign currency translation differences (1,256) (1,256) (24,349) (24,349) Total comprehensive income for the period Total comprehensive income for the period - - - (2,610) (2,610) (1,256) 5,386 4,131 (2,610) 27,678 - - - (24,349) 20,512 (3,837) Treasury shares acquired (3,180) Dividends paid Capital decrease Treasury shares acquired Treasury shares sold (196,820) (196,820) (46) (31,172) 31,218 (31,192) 0 0 (31,192) 0 Balance as of 12/31/2023 87,920 209 114,750 (194,393) 109,722 (10,000) 0 Face value of the shares The face value of the shares is NOK 0.02. Balance as of 12/31/2022 91,100 209 114,750 (0) (193,137) 104,336 26,158 Reserve for treasury share The reserve for the Company’s own shares comprises the face value cost and excess value of own shares held by the Company. Translation reserve The translation reserve consists of all foreign currency differences arising from the translation of the account balances that are not in USD. Other equity Other equity consists of all other transactions, including but not limited to, total recognized income and expense for the current period. 56 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 57 PARENT COMPANY Note 1 Note 3 General information and significant accounting principles Depreciation and amortization expenses Depreciation and amortization expenses [USD thousands] Note 2023 2022 General information These are the financial statements of Otello Corporation ASA, which is the holding company for the Otello Group and includes the Group Executive Management (chief operating decision-makers) and associated staff functions. See also Note 1 in the Group’s consolidated financial statements. Property, plant and equipment Right of use assets 8 9 (270) (115) (579) (108) Total (384) (687) Statement of compliance The parent company financial statements have been prepared in accordance with IFRS® Accounting Standards as adopted by the EU and accom- panying interpretations. The parent company financial statements also include certain disclosures in order to comply with certain regulations and paragraphs in the Norwegian Accounting Act and the Securities Trading Act. These parent company financial statements have been approved and issued by the Board of Directors on April 18, 2024 for approval by the Annual General Meeting on June 3, 2024. Note 4 The explanation of the accounting policies in the consolidated financial statements also applies to the parent company, and the notes to the consolidated financial statements will cover the parent company, except for the below. Other operating expenses Investments in subsidiaries – parent company For investments in subsidiaries, associates and jointly controlled entities, the cost method is applied. The cost price is increased when funds are added through capital increases or when group contributions are made to subsidiaries. Dividends received are initially taken as income. Divi- dends exceeding the portion of retained profit after the acquisition are reflected as a reduction in cost price. Dividend/group contributions from subsidiaries are reflected in the same year that the dividend is approved by the general meeting. Other operating expenses [USD thousands] 2023 2022 Audit, legal and other advisory services Purchase of equipment, not capitalized Rent and other office expenses Hosting expenses, excl. depreciation cost Other expenses (530) (194) (82) (55) (692) (604) (226) 25 (58) (389) Investments in subsidiaries, associates and jointly controlled entities are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may exceed the fair value of the investment. An impairment loss is reversed if the impairment situation is deemed to no longer exist. Company activities Total (1,553) (1,251) The Company’s main activities are to serve the Group as a whole, through the following functions and services: CEO/Board of Directors, corpo- rate finance and accounting, legal, HR, and IT. The Company charges some of the costs related to these functions to subsidiaries. Auditor remuneration The following table shows audit fees for the current and prior year. For all categories the reported fee is the recognized expense in other operat- ing expenses for the year to the external auditor, PwC. The principal activities of the Group’s business area are described in more detail under Operating and segment information in Note 2 in the Group’s consolidated financial statements. Audit fees [USD thousands] 2023 2022 Note 2 Statutory audit Assurance services Other services (172) 0 (4) (182) (12) (11) Employee benefits expense Total (176) (205) Payroll expenses [USD thousands] 2023 2022 Salaries and bonuses Social security cost Pension cost Insurance and other employee benefits Payments to long-term contractual staff (1,608) (297) (115) (26) (96) (1,484) (307) (134) (22) (6) Total (2,142) (1,952) 6 Average number of employees 5 The Company has incorporated the requirements set out by the Mandatory Occupational Pensions Act (“Obligatorisk Tjeneste Pensjon”). Remuneration to key management personnel Information about remuneration to key management personnel is given in the accompanying Note 3 in the consolidated financial statements. 58 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 59 PARENT COMPANY Note 5 Note 7 Impairment gains (losses) and restructuring expenses Taxes [USD thousands] 2023 2022 Income tax expense recognized in the statement of comprehensive income: Current tax Following the successful IPO of the Bemobi business on Bovespa in Brazil in 2021, the Group is now a major shareholder in Bemobi Mobile Tech S.A with an ownership of 37.6%. The investment in Bemobi Mobile Tech S.A is recognized using the equity method, and the fair value of the investment has been reassessed based on the share price of that business as of December 31, 2023. 0 - Total 0 0 As the shares in Bemobi Mobile Tech S.A are the main asset of the Company's wholly-owned subsidiary, Otello Technology Investment AS, the re- assessment of the carrying value of those shares has a follow-up impact on the assessment of the fair value of Otello Technology Investment AS. Recognized deferred tax assets and liabilities: The Company recognizes deferred tax assets related to tax losses in the statement of financial position when it is co sidered probable that taxable profit will be generated in future periods against which these tax losses carries forwards can be utilized. Management does not believe See Note 10 for further information regarding the Bemobi Mobile Tech S.A investment. that sufficient future taxable profits will be generated in future periods against which these tax loss carry forwards can be utilized, and accord- ingly they are not recognized in the statement of financial position as of December 31, 2023. Impairment gains (losses) and restructuring expenses [USD thousands] Note 2023 2022 Reconciliation of effective tax rate [USD thousands] 2023 2022 Otello Technology Investment AS shares Performance and Privacy Ireland Limited shares 10 10 8,615 - 23,033 (189) Profit (loss) before tax Income tax using the corporate income tax rate in Norway (22% in 2023 / 22% in 2022) 5,386 (1,185) 20,512 (4,513) Total 8,615 22,844 Effect of deferred tax assets not recognized Effect of non-taxable and non-deductible items (10) 1,195 121 4,391 Total tax expense for the year Effective tax rate 0 0 0.0% 0.0% The effective tax rate in 2023 of 0.0% differs from the statutory rate of 22.0% due to the following key items: • The partial reversal of the prior impairment of the investment in subsidiaries is considered as a permanent difference and is non-taxable for income tax purposes in Norway. Note 6 Net financial items Permanent differences Permanent differences include impairment losses, dividends received, share-based remuneration, and non-deductible costs. Other net financial items [USD thousands] Note 2023 2022 Interest income, external Interest expenses, external Interest expenses, intercompany Net FX gains (losses) Other net financial income (expense) Profit (loss) sale of shares Dividends received 465 (4) (5,401) (2,153) 7,181 1,040 (7) (2,852) 3,573 - 13 740 22 (409) - Total other net financial items 850 1,345 60 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 61 PARENT COMPANY Note 8 Note 9 Property, plant & equipment Right-of-use assets and lease liabilities The lease liability and right of use asset relates to the Group's office in Oslo, Norway. The lease expires November 30, 2024. [USD thousands] 2023 2022 Acquisition cost Acquisition cost as of 1/1 Currency differences Lease liabilities [USD thousands] 2023 2022 4,910 (158) 5,486 (576) Balance as of 1/1 Additions Translation differences Lease payments Interest expense on lease liabilities 190 5 (9) (106) 4 310 13 (23) (116) 7 Acquisition cost as of 12/31 4,752 4,910 Depreciation and impairment losses Acquisition cost as of 1/1 Depreciation for the year Currency differences (4,626) (270) 144 (4,540) (579) 493 Lease liabilities as of 12/31 84 190 Of which: Accumulated depreciation as of 12/31 Net book value as of 12/31 (4,752) 0 (4,626) 284 Current lease liabilities (less than 1 year) Non-current lease liabilities (more than 1 year) 84 - 108 83 Balance as of 12/31 84 190 Depreciation for the year (270) (579) Right of use assets [USD thousands] 2023 2022 Balance as of 1/1 Additions 219 5 314 13 Depreciation (115) (108) Right of use assets as of 12/31 109 219 Depreciation for the year (115) (108) Depreciation is calculated on a straight-line basis over the estimated useful life of each lease asset. The estimated useful life is considered to be the term of the contract for each leased asset. IFRS 16 effects on the statement of comprehensive income for the year [USD thousands] 2023 2022 Operating lease expenses recognized under operating expenses decreased Depreciation expense increased as a result of depreciation of ROU assets Net interest expense increased as a result of recognition of the lease liability Translation differences (106) 115 4 (116) 108 7 (9) (23) Net effect 3 (24) Future lease payments The future minimum lease payments under non-cancellable lease contracts are as follows: 2023 2022 Payments for leased premises: Less than one year Between one to five years More than five years 113 - - 112 84 - Total 113 196 62 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 63 PARENT COMPANY Note 10 Note 12 Investments in subsidiaries Other liabilities Other non-current liabilities [USD thousands] Note 2023 2022 Investments in subsidiaries Below is an overview of the investments in subsidiaries directly held by Otello Corporation ASA as of December 31, 2023. Non-current liabilities, intercompany 13 - 81,194 81,194 Total 0 [USD thousands] Otello Technology Investment AS Other current liabilities [USD thousands] Note 2023 2022 Segment (Group) Acquisition/establishment date Registered office Corporate 8/8/2016 Oslo, Norway 100% Other current liabilities, external Other current liabilities, intercompany 1,042 79,414 845 - 13 Ownership and voting share Total 80,456 845 Equity at year end Profit for the year 176,576 17,576 Information related to carrying value: Otello Technology Investment AS Total Note 13 Acquisition cost 63,000 63,000 Receivables, payables and transactions with group companies Equity increase prior to current year Impairment gain (loss) prior to current year Impairment gain (loss) in the current year Translation differences 64,641 (25,055) (25,055) 8,615 8,615 (14,040) (14,040) 64,641 Carrying value 97,162 97,162 Receivables and payables The table below presents a breakdown of receivables and payables with group companies. Impairment of investment in Otello Technology Investment AS [USD thousands] The Company has carried out impairment testing as of December 31, 2023. The main asset owned by Otello Technology Investment AS are the shares in the listed Bemobi Mobile Tech S.A. Based on the share price of Bemobi Mobile Tech S.A at that date and the prevailing exchange rate, the Company recognized a partial reversal of the previous impairment loss recognized. Please see Note 12 of the consolidated financial state- ments for more information. Other receivables (non-current) 2023 Accounts receivables 2023 Other receivables (current) 2023 2022 2022 2022 Shares in subsidiaries - - 1 11 - - During the year ended December 31, 2023, the directly owned subsidiaries Skyfire Labs, Inc and Performance & Privacy Ireland Ltd entered liqui- dation after settling all liabilities and transferring their remaining assets to their parent company, Otello Corporation ASA. Liabilities (non-current) 2023 Accounts payable 2023 Other liabilities (current) 2023 There were no shares in subsidiaries owned by other group companies, and indirectly owned by the Company, as at December 31, 2023. 2022 2022 2022 - 81,194 - - 79,414 - Note 11 Other investments Investments in other shares Otello owns 1.42% of the shares in Alliance Venture Spring AS and approximately 0.05% of the shares in Life360, Inc, which merged with Zen Labs, Inc during 2019. Otello owned shares in Zen Labs Inc prior to this merger. The recognized value of the investments in other shares is $813 thousand. Management has not determined the fair value of these investments, as they are not material for the Group. Alliance Venture Spring is a Norwegian venture capital firm investing in early stage technology companies. Life360 provides location-based services, sharing and noti- fications application to consumers globally, including integrated driving safety features and tools like Crash Detection and Roadside Assistance. Investments in other shares are recognized at cost. 64 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 65 PARENT COMPANY All outstanding balances with the related parties are priced on an arm’s-length basis and are to be settled in cash within five years of the reporting date. None of the balances are secured. The balances outstanding are specified as follows: Note 14 Financial risk and financial instruments 2023 Receivables from group companies [USD thousands] Payables to group companies [USD thousands] Capital management Otello Technology Investment AS 1 Otello Technology Investment AS 79,414 The Company's policy has been to maintain a high equity-to-asset ratio and to maintain a solid capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Total receivables 1 Total payables 79,414 Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. 2022 Financial risk Receivables from group companies [USD thousands] Payables to group companies [USD thousands] Risk management in the Company is carried out by management and approved by the Board of Directors. Potential risks are evaluated on a regular basis and management determines appropriate strategies related to how these risks are to be handled within the Company under the approved policies. The Company is exposed to market (currency) risk, credit risk and liquidity risk to varying degrees. Otello Technology Investment AS Performance and Privacy Ireland Limited 10 1 Otello Technology Investment AS 81,194 Currency risk Total receivables 11 Total payables 81,194 The majority of the financial risk that the Company is exposed to relates to currency risk due to exchange rate fluctuations. Both revenue and operating expenses are exposed to foreign exchange rate fluctuations. The majority of the Company's operating expenses are denominated in Norwegian kroner (NOK) or United States dollars (USD). The Company maintains cash deposits in both currencies, and there are no capital controls limiting the Company's ability to exchange between these curren- cies, if required. Breakdown of intercompany receivables by currency All outstanding amounts as of December 31, 2023 are denominated in NOK. Breakdown of intercompany payables by currency All outstanding amounts as of December 31, 2023 are denominated in USD. The Company's largest asset, its investment in the shares of its subsidiary Otello Technology Investment AS, is denominated in Norwegian krone (NOK). Accordingly, fluctuations in the exchange rate between the NOK and the Company's reporting currency, USD, can impact both the reported profit or loss and the carrying value of that investment. Further, the largest asset of Otello Technology Investment AS, its investment in the shares of Bemobi Mobile Tech S.A, is denominated in Brazilian reais (BRL). Accordingly, fluctuations in the exchange rate with the BRL can also impact the reported figures. Transactions with group companies Foreign exchange contracts During 2023 and 2022, the Company did not use forward exchange contracts to hedge its currency risk, and the Company had not entered any foreign exchange contracts as of December 31, 2023. Transactions [USD thousands] 2023 2022 Interest expense to related parties (5,401) (2,852) Credit risk Credit risk is the risk of losses that the Company would suffer if a counterparty fails to perform its financial obligations. The Company's expo- sure to credit risk is mainly related to external receivables, which are immaterial, and accordingly credit risk is not considered significant. Loans from Otello Technology Investment AS As of December 31, 2023, the Company has five outstanding loans from Otello Technology Investment AS, totaling $79,414k, including accrued interest. All of these loans are subject to written loan agreements, with an interest rate of 3 month LIBOR + 250 basis points being charged. Each loan, along with accumulated interest, is due for repayment at some time during the year ended December 31, 2024. Loans and receivables The Company has limited exposure in terms of credit risk related to loans and receivables with non-related parties. Liquidity risk As of December 31, the Company had bank deposits well in excess of the recognized liabilities to non-related parties. Accordingly, liquidity risk is not considered significant. Credit facility As at December 31, 2023, the Company has no outstanding loans payable to non-related parties. The only outstanding loans payable relate to money borrowed from the Company's wholly-owned subsidiary, Otello Technology Investment AS. Note 15 Contingent liabilities GDPR complaint filed with the Norwegian Data Protection Authority (DPA) As reported in the media, on January 14, 2020, the Norwegian Consumer Council (NCC) filed a complaint to the Norwegian Data Protection Au- thority (DPA) against Grindr and five other companies, including AdColony, who is a supplier to Grindr. As of the date of this report, AdColony has not received any formal notification or complaint from the DPA. AdColony is currently looking into the NCC’s complaint and will provide further information if and when necessary. The Company has not recognized any contingent liabilities in the financial statements related to this matter. Refer to Note 14 of the consolidated financial statements for further information on this matter, and associated and other obligations of Otello under the Share Purchase Agreement with Digital Turbine, inc. related to the sale of AdColony. 66 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 67 PARENT COMPANY Note 16 Note 18 Related parties Events after the reporting period Bemobi Otello's case regarding the potential sale of Vewd minority stake The Group holds a 37.6% equity interest in Bemobi Mobile Tech S.A through common shares. Please see Note 12 in the consolidated financial statements for further details on the status of this equity interest. The Group continued to provide accounting and legal support to Bemobi on a transitional basis during 2023, which was priced on an arm's-length basis and all outstanding balances are settled within normal commercial terms. On 8 January 2024, the notice of final account prior to dissolution from the liquidator of Last Lion Holdings Limited was publicly released. The report advised that no further dividend would be paid. This is consistent with Otello's previous assumption that no further value would be realised from its investment. Last Lion Holdings Limited was finally dissolved on 8 April 2024. See Note 13 for information regarding transactions with group companies. No events have occurred after the reporting date that would require the financial statements to be adjusted. Please see stock exchange announcements for further information on any subsequent events. Members of the Board of Directors and Executive Management The Group has not engaged in any related party transactions with any members of the Board of Directors of Otello Corporation ASA or Otello Group executive management. Members of the Board of Directors and Executive Management of the Group and their immediate relatives controlled 0.4% (2022: 0.3%) of the Group's voting share as per December 31, 2023. See Note 3 in the consolidated financial statements for further information. Information regarding compensation for the Board of Directors and executive management can be found in Note 3 in the consolidated financial statements. Note 17 Shares and shareholder information Information regarding shares and shareholder information can be found in Note 20 in the consolidated financial statements. Information regarding shares owned by members of the Board, the Chief Executive Officer and other members of Executive Management can be found in Note 3 in the consolidated financial statements. 68 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 69 To the General Meeting of Otello Corporation ASA Independent Auditor’s Report Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Otello Corporation ASA, which comprise: ● the financial statements of the parent company Otello Corporation ASA (the Company), which comprise the statement of financial position as at 31 December 2023, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, and ● the consolidated financial statements of Otello Corporation ASA and its subsidiaries (the Group), which comprise the statement of financial position as at 31 December 2023, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information. Auditor's report In our opinion ● ● the financial statements comply with applicable statutory requirements, the financial statements give a true and fair view of the financial position of the Company as at 31 December 2023, and its financial performance and its cash flows for the year then ended in accordance with IFRS Accounting Standards as adopted by the EU, and the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2023, and its financial performance and its cash flows for the year then ended in accordance with IFRS Accounting Standards as adopted by the EU. ● Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of the Company for 7 years from the election by the general meeting of the shareholders on 2 June 2017 for the accounting year 2017. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined that there are no key audit matters to communicate in our report. PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap Otello Corporation ASA - Annual Report 2023 71 Other Information effectiveness of the Company's and the Group's internal control. The Board of Directors and the Managing Director (management) are responsible for the information in the Board of Directors’ report and the other information accompanying the financial statements. The other information comprises information in the annual report, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the information in the Board of Directors’ report nor the other information accompanying the financial statements. ● ● evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's and the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern. In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’ report and the other information accompanying the financial statements. The purpose is to consider if there is material inconsistency between the Board of Directors’ report and the other information accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors’ report and the other information accompanying the financial statements otherwise appears to be materially misstated. We are required to report if there is a material misstatement in the Board of Directors’ report or the other information accompanying the financial statements. We have nothing to report in this regard. ● ● evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view. Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report ● ● is consistent with the financial statements and contains the information required by applicable statutory requirements. obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate Governance and Corporate Social Responsibility. Responsibilities of Management for the Financial Statements We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Management is responsible for the preparation of financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Report on Other Legal and Regulatory Requirements Report on Compliance with Requirement on European Single Electronic Format (ESEF) As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: Opinion As part of the audit of the financial statements of Otello Corporation ASA, we have performed an assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual report, with the file name otellocorporation-2023-12-31-en.zip, have been prepared, in all material respects, in compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in XHTML format, and iXBRL tagging of the consolidated financial statements. ● identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. We design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with the ESEF regulation. ● obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the 2 / 4 3 / 4 72 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 73 Management’s Responsibilities Management is responsible for the preparation of the annual report in compliance with the ESEF regulation. This responsibility comprises an adequate process and such internal control as management determines is necessary. Auditor’s Responsibilities For a description of the auditor’s responsibilities when performing an assurance engagement of the ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger Oslo, 18 April 2024 PricewaterhouseCoopers AS Eivind Nilsen State Authorised Public Accountant (This document is signed electronically) 4 / 4 74 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 75 Principles of Corporate Governance at Otello Corporation ASA General principles, implementation and reporting on corporate governance Otello’s activities Otello primarily holds shares in Bemobi, a pioneering Otello Corporation ASA (“Otello” or the “Company”) technology company offering mobile solutions and plat- strongly believes that strong corporate governance forms for digital payments, customer engagement, mi- creates higher shareholder value. As a result, Otello is crofinance and digital services. The Group also retains committed to maintaining high standards of corporate rights to its Rocket Optimizer™ technology and owns governance. Otello’s principles of corporate governance some minor investments in other companies. have been developed in light of the Norwegian Code of Practice for corporate governance (the “Code”), dat- Our business is based on close relationships with cus- ed October 14, 2021, as required for all listed companies tomers, partners, investors, employees, friends, and on the Oslo Stock Exchange. The Code is available at communities all over the world — relationships we are www.nues.no. The principles are further developed and committed to developing by conducting our business are in accordance with section 3-3b and section 3-3c of openly and responsibly. Our corporate policies are devel- the Norwegian Accounting Act, which can be found at oped in order to be true to this commitment. https://lovdata.no/dokument/NL/lov/1998-07-17-56. Otello views the development of high standards of corpo- Corporate Social Responsibility guidelines rate governance as a continuous process and will continue The Board of Directors has adopted corporate social re- to focus on improving the level of corporate governance. sponsibility (“CSR”) guidelines. These guidelines cover a range of topics and are focused around the following The Board of Directors has the overall responsibility for areas: our employees, human rights, anti-corruption and corporate governance at Otello and ensures that the the environment. These general principles and guidelines Company implements sound corporate governance. The apply to all employees and officers of the Group. See the Board of Directors has defined Otello’s basic corporate Board of Directors report for further information. values, and the Company’s ethical guidelines and guide- lines on corporate social responsibility are in accordance Equity, capital structure and dividends with these values. The Company’s capital structure and financing is consid- ered to be appropriate in terms of Otello’s objectives, The Board of Directors has defined clear objectives, strategy and risk profile. strategies, and risk profiles for Otello's business activi- ties such that Otello creates value for shareholders in a Otello’s policy is to maintain a high equity ratio. Otello sustainable manner. The Board of Directors considered believes that share buybacks and dividend distributions financial, social and environmental considerations when can be undertaken as long as the Company can sustain- they carried out this work. ably fund its ongoing operating expenses.. Dividend pay- ments will be subject to approval by the shareholders at The Board of Directors further will annually evaluate the Company’s Annual General Meetings. This dividend Otello's objectives, strategies and risk profiles. policy is considered clear and predictable. 76 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 77 Authorizations granted to the Board of Directors to in- where relevant, comply with the procedures set out in crease the Company’s share capital will be restricted to the Norwegian Public Limited Liability Companies Act defined purposes and will in general be limited in time (the "NPLCA"). The Board of Directors will arrange for to no later than the date of the next Annual General a valuation to be obtained from an independent third Meeting. To the extent that authorization to increase party unless the transaction, agreement or arrangement the share capital shall cover issuance of shares under in question is considered to be immaterial or covered by employee share option schemes and other purposes, the the provisions of section 3-16 of the NPLCA. Company will consider presenting the authorizations to the shareholders as separate items. If the Company should enter into a not immaterial trans- action with related parties within Otello or with compa- The Board of Directors may also be granted the author- nies in which a director or leading employee of Otello or ity to acquire own shares. Authorizations granted to the close associates of these have a material direct or indirect Board of Directors to acquire own shares will also be re- vested interest, those concerned shall immediately noti- stricted to defined purposes. To the extent that authori- fy the Board of Directors. Any such transaction must be zation to acquire own shares shall cover several purposes, approved by the Board of Directors, and where required the Company will consider presenting the authorization also as soon as possible publicly disclosed to the market. to the shareholders as separate items. Such authority may by law apply for a maximum period of two years, Insider trading and will state the maximum and minimum amount pay- The Company has an established and closely monitored able for the shares. Normally, the proposed authority insider trading policy. Otello employees are prohibited will be for one year or to the next annual general meet- from trading in Otello securities based on information ing. In addition, an authorization to acquire own shares that is material, nonpublic information; that is, the pub- will state the highest nominal value of the shares which lic does not yet have access to this information, and this Otello may acquire, and the mode of acquiring and dis- information may be deemed interesting for an investor posing of own shares. Otello may not at any time hold to use when deciding whether to buy or sell securities. more than 10% of the total issued shares as own shares. This rule also applies to other companies, where Otello employees may have access to such nonpublic informa- Equal treatment of shareholders tion. Please note that even a tip to family and friends A key concept in Otello’s approach to corporate gover- is considered illegal, if this should be used as a basis for nance is the equal treatment of shareholders. Otello has buying or selling securities. one class of shares and all shares are freely transferable (with possible exceptions due to foreign law restrictions Any transaction the Company carries out in its own on sale and offering of securities). All shares in the Com- shares will be carried out either through the stock ex- pany carry equal voting rights. The shareholders exer- change or at prevailing stock exchange prices if carried cise the highest authority in the Company through the out in any other way. General Meeting. All shareholders are entitled to submit items to the agenda, and to meet, speak, and vote at the Freely negotiable shares General Meeting. Otello has no limitations on the transferability of shares and has one class of shares. Each share entitles the hold- Any decision to waive the pre-emption rights of exist- er to one vote. ing shareholders to subscribe for shares in the event of an increase in share capital will be explained. Where the General Meetings Board of Directors resolves to carry out an increase in the Through the General Meeting, the shareholders exercise share capital and waive the pre-emption rights of the the highest authority in the Company. General Meetings existing shareholders on the basis of a mandate granted are held in accordance with the Code. All shareholders are to the board, an explanation will be publicly disclosed entitled to submit items to the agenda, meet, speak, and in a stock exchange announcement issued in connection vote at General Meetings. The Annual General Meeting is with the increase of the capital. held each year before the end of June. Extraordinary Gen- eral Meetings may be called by the Board of Directors at any time. The Company’s auditor or shareholders repre- Transactions with related parties Any transactions, agreements or arrangements between senting at least five percent of the total share capital may the Company and its shareholders, members of the demand that an Extraordinary General Meeting be called. Board, members of the executive management team or close associates of any such parties will only be entered General Meetings are convened by written notice to into as part of the ordinary course of business and on all shareholders with known addresses no later than 21 arm's length market terms. All such transactions shall, days prior to the date of the meeting. Proposed resolu- 78 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 79 tions and supporting information, including information Nomination Committee on how to be represented at the meeting, vote by proxy The Nomination Committee is a body established pur- and the right to propose items for the General Meeting, suant to the Articles of Association and shall consist of is generally made available to the shareholders no later three to five members. The members and the chairper- than the date of the notice. According to the Compa- son are elected by the General Meeting. The members ny’s Articles of Association, attachments to the calling of the Nomination Committee should be selected to notice may be posted on the Company’s website and take into account the interests of shareholders in gen- not sent to shareholders by ordinary mail. Shareholders eral. Members of the Nomination Committee serve for who wish to receive the attachments may request the a two-year period but may be re-elected. Following the Company to mail such attachments free of charge. Res- ordinary general meeting held on 2 June 2022, the cur- olutions and the supporting information are sufficiently rent members of the Nomination Committee are Simon detailed, comprehensive and specific to allow share- Davies (Chairperson), Kari Stautland and Jakob Iqbal. The holders to form a view on all matters to be considered in members of the Nomination Committee are independent the meeting. of the Board of Directors and executive management, however it is noted that the chairperson of the Nomina- Shareholders who are unable to be present, are encour- tion Committee is a representative of a shareholder who aged to participate by proxy and a person who will be also is represented at the Board of Directors. Pursuant to available to vote on behalf of shareholders as their proxy the Articles of Association, no member of the Nomina- will be nominated. Proxy forms will allow the proxy hold- tion Committee can also simultaneously be a member of er to cast votes for each item separately. A final dead- the Board of Directors. line for shareholders to give notice of their intention to attend the meeting or vote by proxy will be set in the The tasks of the Nomination Committee are to propose notice for the meeting. Such deadline will be set as close candidates for election as shareholder-elected members as possible to the date of the General Meeting and under of the Board of Directors and members of the Nomina- every circumstance, in accordance with the principles of tion Committee. The Nomination Committee is encour- section 5-3 of the NPLCA. aged to have contact with shareholders, the Board of Directors and the Company’s Chief Executive Officer as The members of the Board of Directors, Chairman of the part of its work on proposing candidates for election to Nomination Committee, CEO, CFO and the auditor are all the Board of Directors. The Committee cannot propose required to be present at the meeting in person, unless its own Committee members as candidates for the Com- they have valid reasons to be absent. The Board of Direc- pany’s Board of Directors. Further, the Committee shall tors normally proposes that the General Meeting elects an make recommendations regarding the remuneration of independent chairman for the meeting. Notice, enclosures the members of the Board of Directors. Its recommenda- and protocol of meetings are available on Otello’s website. tions will normally be explained, and information about proposed candidates will normally be given, no later The General Meeting elects the members of the Board than 21 days before the General Meeting. The tasks of of Directors (excluding employee representatives), deter- the Nomination Committee are further described in the mines the remuneration of the members of the Board Company’s Nomination Committee guidelines, as adopt- of Directors, approves the annual accounts and decides ed by the Annual General Meeting held on June 14, 2011. such other matters which by law, by separate proposal Remuneration of the members of the Nomination Com- or according to the Company’s Articles of Association, are mittee will be determined by the General Meeting. Infor- to be decided by the General Meeting. Shareholders will mation regarding deadlines for proposals for members to normally be able to vote on each individual candidate the Board of Directors and the Nomination Committee nominated for election to the Board of Directors, the will be posted on Otello’s website. Nomination Committee and any other corporate bodies to which members are elected by the General Meeting. Corporate assembly Otello does not have a corporate assembly as the em- The Board of Directors may decide to allow electronic ployees have voted, and the General Meeting in 2010 ap- participation in General Meetings and will consider this proved, that the Company should not have a corporate before each General Meeting. assembly. The minutes from General Meetings will be posted on The Board of Directors the Company’s website within 15 days after the Gener- Appointed by Shareholders at the General Meeting, the al Meeting has been held. Information that a General Board of Directors is the central governing mechanism Meeting has been held will be made public as soon as between shareholders and executive management. The possible after the end of the meeting. members of the Board of Directors are selected in light 80 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 81 of an evaluation of the Company’s need for expertise, The Board of Directors is entrusted with and responsi- capacity and balanced decision-making, and with the ble for the oversight of the assets and business affairs of aim of ensuring that the Board of Directors can operate Otello in an honest, fair, diligent and ethical manner. The independently of any special interests and function ef- Board of Directors has adopted a Code of Conduct and fectively as a collegial body. Members of the Board of Di- the directors are expected to adhere to the standards of rectors are encouraged to own shares in the Company. At loyalty, good faith, and the avoidance of conflict of in- least half of the members of the Board of Directors shall terest that follow. The Code of Conduct should be read be independent of the Company’s management and its and applied in conjunction with the Rules of Procedure main business connections. Members of the Board of Di- as applicable at any time, and other rules and guidelines rectors serve for a two-year period, or such shorter peri- relevant to and adopted by the Board of Directors and / od as decided by the General Meeting, but directors may or the shareholders of Otello. be re-elected. At least two of the shareholder-elected members of the Board of Directors shall be independent The Board of Directors has further established a Remu- of the Company’s main shareholder(s). The Board of Di- neration Committee and an Audit Committee. Currently, rectors does not include executive personnel. The current the Remuneration Committee and the Audit Committee Otello Board of Directors meets these criteria. each consist of two members. According to the Code, a majority of the members of each Committee should be The annual report will provide information to illustrate independent from the Company. If the requirements for the expertise of the members of the Board of Directors, independence are not met, Otello will explain the reasons information on their record for attendance at board in our Annual Report. Currently, Maria Borge Andersen meetings and it will identify which members are consid- (Chairperson) and Magdalena Kadziolka members of the ered to be independent. Audit Committee, and Andre Christensen (Chairperson), and Karin Fløistad are members of the Remuneration Otello’s Board of Directors diligently performs its over- Committee. The requirements for independence are thus sight function and closely monitors major develop- met. Further, according to the Public Limited Liability ments. The principal tasks of the Board of Directors are Companies Act, at least one member of the Audit Com- outlined below: mittee shall have qualifications within audit or account- ing, and in the Company's view this requirement is met. • Ensuring compliance with applicable laws • Considering the interests of Otello’s different stake- holders The Audit Committee’s main responsibilities include fol- lowing up on the financial reporting process, monitoring • Reviewing and guiding corporate strategy, major plans the systems for internal control and risk management, of action, annual budget and business plans; setting performance objectives; monitoring implementation and corporate performance; and overseeing major capital expenditures. • Selecting, monitoring, and, when necessary, replacing key executives and overseeing succession planning • Reviewing key executive and Board remuneration • Monitoring and managing potential conflicts of interest of management, Directors and shareholders, including misuse of corporate assets and abuse in related party transactions. • Ensuring the integrity of Otello’s accounting and financial reporting systems, and that appropriate systems of control are in place. • Monitoring the effectiveness of the governance prac- tices under which it operates and making changes as needed • Overseeing the process of disclosure and communica- tions • A more in-depth description of the Board’s duties can be found in the Rules of Procedure section on the Otello website: https://www.otellocorp.com/ir/ board-of-directors/rules-of-procedure-for-the-board- In order to ensure a more independent consideration of of-directors-of-otello. having continuous contact with the appointed auditor, and reviewing and monitoring the independence of the auditor. The Board of Directors maintains responsibility and decision-making in all such matters. Please see be- low under the section “Remuneration of the Executive Personnel” for information regarding the tasks to be per- formed by the Remuneration Committee. The Board of Directors will consider carrying out self-evaluation processes, evaluating its work, perfor- mance and expertise annually. To the extent that such a process is carried out, it would normally also include an evaluation of the composition of the Board and the manner in which its members function, both individu- ally and as a group, in relation to the objectives set out for its work. Any report will be more comprehensive if it is not intended for publication. However, any reports or relevant extracts from there should normally be made available to the nomination committee. The Board of Directors will also consider whether to use an external person to facilitate the evaluation of its own work. matters of a material character in which the Chairman 82 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 83 of the Board of Directors is, or has been, personally in- The Board of Directors carries out an annual review of volved, such matters will be chaired by some other mem- the Company's most important areas of exposure to risk established consisting of the CFO and a business control- half-yearly and annual financial statements, which ulti- ler. The CFO and business controller tasks are, among oth- mately are approved by the Board of Directors. er things, to perform management’s risk assessment and ber of the Board of Directors. and its internal control arrangements. risk monitoring across the group’s activities, to administer Other guidelines and policies the Company’s value-based management system and to As an extension of the general principles and guidelines, coordinate planning and budgeting processes and inter- Otello has drawn up additional guidelines. nal controls reporting to the Board of Directors and Ex- ecutive Team. The business controller reports to the CFO. Information security guidelines Otello has guidelines and information policies covering The finance department prepares financial reporting for information security roles, responsibilities, training, con- the Group and ensures that reporting is in accordance with tingency plans, etc. applicable laws, accounting standards, established ac- counting principles and the Board’s guidelines. The finance Investor relations policy department provides a set of procedures and processes Otello is committed to reporting financial results and detailing the requirements with which local reporting other relevant information based on openness and tak- units must comply. The Group has established processes ing into account the requirement for equal treatment of and a variety of control measures that will ensure quality all participants in the securities market. To ensure that assurance of financial reporting. A series of risk assess- correct information is made public, as well as ensuring ments and control measures have been established in equal treatment and flow of information, the Company’s Risk management and internal control Executive Team The Board of Directors has overall responsibility for the Otello’s Board of Directors has drawn up instructions management of the Company. This includes a responsi- for the Executive Team of the Company. The purpose of bility to supervise and exercise control of the Company’s these instructions is to clarify the powers and responsi- activities. The Board has drawn up the rules of procedure bilities of the members of the Executive Team and their for the Board of Directors of Otello. The purpose of these duty of confidentiality. rules of procedure is to set out rules on the work and administrative procedures of the Board of Directors of The Executive Team conducts an annual strategy meet- Otello. The Board of Directors shall, among other things, ing with the Board of Directors. The strategy meeting ensure that the Company’s business activities are sound- focuses on products, sales, marketing, financial and or- ly organized, supervise the Company’s day-to-day man- ganizational matters, and the corporate development agement, draw up plans and budgets for the Company’s strategy for the Group. activities, keep itself informed on the financial position of the Company, and be responsible for ensuring that the The Board of Directors has ensured that the Company has Company’s activities, accounts, and asset management sound internal control and systems for risk management are subject to adequate control. In its supervision of the that are appropriate in relation to the extent and nature business activities of Otello, the Board of Directors will of the Company’s activities. The Company has performed connection with the preparation of financial statements. Board of Directors has approved an Investor Relations policy. A primary goal of Otello’s investor relations activ- ensure that: a scoping of the financial risks in the Company and has established written control descriptions and process descriptions. The controls are executed on a monthly, quarterly or yearly basis, depending on the specific con- trol. The internal controls and systems also encompass the Company’s corporate values, ethical guidelines, and guidelines for corporate social responsibility. The Board of Directors carries out an annual review of the Compa- ny’s most important areas of exposure to risk and its in- ternal control arrangements. In 2023, all Board members confirmed that they had read and complied with the Code of Conduct during the term of their directorship. The CFO and the business controller are responsible for ities is to provide investors, capital-market players, and (i) the ongoing financial reporting and for implementing shareholders with reliable, timely and balanced informa- sufficient procedures to prevent errors in the financial tion for investors, lenders and other interested parties in reporting, (ii) identifying, assessing and monitoring the the securities market, to enhance their understanding of risk of significant errors in the Group’s financial report- our operations. • The Chief Executive Officer uses proper and effective management and control systems, including systems for risk management, which continuously provide a satisfactory overview of Otello’s risk exposure. • The control functions work as intended and neces- sary measures are taken to reduce extraordinary risk exposure. ing, and (iii) implementing appropriate and effective internal controls in accordance with specified group re- Remuneration of the Board of Directors quirements and for ensuring compliance with local laws Remuneration for members of the Board of Directors is a and requirements. All interim financial statements are fixed annual sum proposed by the Nomination Commit- analyzed and assessed relative to budgets, forecasts, and tee and approved at the Annual General Meeting. The • There exist satisfactory routines to ensure the fol- low-up of principles and guidelines adopted by the Board of Directors in relation to ethical behavior, conformity to law, health, safety and working envi- ronment, and social responsibility. historical trends. remuneration reflects the responsibility, qualifications, time commitment and complexity of the tasks in general. Critical issues and events that affect the future develop- No members of the Board of Directors (or any company ment of the business and optimal utilization of resources associated with such member) elected by the sharehold- are identified, and action plans are put in place, if necessary. ers have assumed special tasks for the Company beyond what is described in this document, and no such member The Audit Committee oversees the process of financial (or any company associated with such member) has re- reporting and ensures that the Group’s internal controls ceived any compensation from Otello other than ordi- and the risk management systems are operating effec- nary Board of Directors remuneration. The remuneration tively. The Audit Committee performs a review of the of the Board of Directors is not linked to the Company's The Group’s CFO is responsible for the Group’s control functions for risk management and internal control. Otel- • Otello has a competent finance department and accounting systems, capable of producing reliable and lo publishes two interim financial statements in addition on-time financial reports to the annual report. The financials are published on the Oslo Stock Exchange. Given the importance of providing accurate financial information, a centralized corporate control function and risk management function has been • Directives from the external auditor are obeyed and that the external auditor’s recommendations are given proper attention. 84 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 85 performance. The Company currently does not grant press releases and stock exchange announcements, share share options to the members of the Board of Directors. price and shareholder information, a financial calendar, All remuneration to the Board of Directors is disclosed in an overview of upcoming investor events, and other rel- Note 3 to the Annual Report. evant information. Members of the Board of Directors and/or companies During the announcement of half-yearly and annual with which they are associated will normally not take on financial results, there is a forum for shareholders and specific assignments for the Company in addition to their the investment community to ask questions of the Com- appointment as a member of the Board of Directors. If pany’s management team. Otello also arranges regular they nonetheless do take on such assignments, this must presentations in a range of jurisdictions, in addition to be disclosed to the full Board of Directors. The remuner- holding meetings with investors and analysts. Important ation for such additional duties shall be approved by the events affecting the Company are reported immediately Board of Directors. to the Oslo Stock Exchange in accordance with applicable legislation and posted on https://www.otellocorp.com/ir. All material information is disclosed to recipients equally Remuneration of executive personnel A Remuneration Committee has been established by the in terms of content and timing. Board of Directors. The Committee shall act as a prepa- ratory body for the Board of Directors with respect to (i) The Board of Directors has further established an inves- the compensation of the CEO and other members of the tor relations policy for contact with shareholders and Executive Team and (ii) Otello’s corporate governance others beyond the scope of the General Meeting. policies and procedures, which, in each case, are matters for which the Board of Directors maintains responsibility Takeovers and decision making. The Board of Directors endorses the recommendations of the Code. Otello’s Articles of Association do not contain Details concerning remuneration of the executive per- any restrictions, limitations or defense mechanisms on sonnel, including all details regarding the CEO’s remuner- acquiring the Company’s shares. In accordance with the ation, are given in Note 3 to the Annual Report. The per- Securities Trading Act and the Code, the Board has ad- formance-related remuneration to executive personnel is opted guidelines for possible takeovers. subject to an absolute limit. The Board of Directors as- sesses the CEO and his terms and conditions once a year. In the event of an offer, the Board of Directors will not The guidelines on the salary and other remuneration for seek to hinder or obstruct takeover bids for Otello’s activ- executive personnel are clear and easily understandable, ities or shares. In such situations, the Board of Directors and they contribute to the Company's commercial strate- and the Company's executive management have an in- gy, long-term interests and financial viability. The General dependent responsibility to help ensure that sharehold- Meeting is informed about incentive programs for em- ers are treated equally, and that the Company's business ployees, and, pursuant to section 6-16 b. of the NPLCA, an activities are not disrupted unnecessarily. The Board of annual report regarding remuneration for the Executive Directors has a particular responsibility to ensure that shareholders should or should not accept the offer. The Company to the Audit Committee annually. The auditor Board of Director's statement on the offer will make it also reports at least annually on internal control observa- clear whether the views expressed are unanimous, and if tions during the conduct of the audit, including identified this is not the case it will explain the basis on which spe- weaknesses and proposals for improvement. cific members of the board have excluded themselves from the board’s statement. The Board of Directors will The auditor will make himself available upon request for normally arrange for a valuation from an independent meetings with the Board of Directors during which no expert. The valuation should include an explanation, and member of the executive management is present at least will normally be made public no later than at the time of once each year, as will the Board of Directors upon the the public disclosure of the Board of Directors statement. auditor’s request. At meetings where the annual accounts are dealt with, the auditor shall report on any material Team will be presented to the General Meeting. shareholders are given sufficient information and time to form a view of the offer. Any agreement with the bid- der that acts to limit the Company’s ability to arrange Information and communications Communication with shareholders, investors, and analysts other bids for the Company’s shares will only be entered is a high priority for Otello. The Company believes that into where the Board believes it is in the common in- objective and timely information to the market is a pre- terest of the Company and its shareholders. This shall requisite for a fair valuation of the Company’s shares and, also apply to any agreement on the payment of financial in turn, the generation of shareholder value. The Compa- compensation to the bidder if the bid does not proceed. ny continually seeks ways to enhance our communication Any financial compensation should normally be limited with the investment community. The Company's reporting to the costs the bidder has incurred in making the bid. of financial and other information is based on openness Any transaction that is in effect a full disposal of the Com- changes in the Company’s accounting principles and key pany’s activities should be decided by a General Meeting. aspects of the audit, comment on any material estimat- ed accounting figures and report all material matters on Auditor which there has been disagreement between the audi- The auditor participates in meetings of the Board of Direc- tor and the executive management of the Company. The tors that deal with the annual accounts, as well as upon General Meeting is informed about the Company’s en- special request. Every year, the auditor presents to the Au- gagement and remuneration of the auditor and for fees dit Committee a report outlining the audit activities in the paid to the auditor for services other than the annual au- previous fiscal year and highlighting the areas that caused dit, and details are given in Note 5 to the Annual Report. the most attention or discussions with management, as and taking into account the requirement for equal treat- Information about agreements entered into between ment of all participants in the securities market. the Company and the bidder that are material to the market’s evaluation of the bid will be publicly disclosed Otello’s company website (https://www.otellocorp.com/ no later than at the same time as the announcement of ir) provides the investment community with information an impending bid is published. about the Company, including a comprehensive investor relations section. This section includes the Company’s If an offer is made for the shares of Otello, the Board of investor relations policy, annual and quarterly reports, Directors will make a recommendation as to whether the well as a plan for the work related to the Company’s au- The Board of Directors has established guidelines in re- dit. The Board of Directors will make sure that the auditor spect of the use of the auditor by the Company’s execu- submits the main features of the plan for the audit of the tive management for services other than the audit. 86 Otello Corporation ASA - Annual Report 2023 Otello Corporation ASA - Annual Report 2023 87 Otello Corporation ASA Gjerdrums vei 19 NO-0484 OSLO Tel: +47 9190 9145 www.otellocorp.com