Itera

Earnings Release • Aug 24, 2023

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

Arne Mjøs CHIEF EXECUTIVE OFFICER

Bent Hammer CHIEF FINANCIAL OFFICER

01 Highlights Q2 2023

Q2 in brief

Key figures

02 Business review

We are specialists in sustainable digital transformation

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

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

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

Our steady growth organic model

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

Our profitable growth trajectory is amongst the top peers in our industry and reflects our strong position to deliver on the promise of sustainable digital transformation for our customers

Digital transformation drives the global economy*

Digital transformation investment increases to 16.5% CAGR 2022- 2024

Digital transformation investment = 55% ICT investment by 2024

50% Global economy influenced by digital

AI: The next platform shift

Natural language

ask a question/statement

in the same way that you would

Using natural language

Two new dimensions

Reasoning engine

Superpower engine that works on top of all data and uses knowledge graphs to draw conclusions, make decisions, summarize information, or solve problems based on available data and knowledge.

Towards AI transformation

Using cloud computing as default option for new IT capabilities

Digital Transformation

Reimagining the business through digitalization and automation

AI Transformation

Using algorithms and machine learning to increase automation and value creation

Characteristics of companies that win in the area of AI

Our opportunity

Digital technology drives market cap beyond people and machines Most companies ~80% don't have the data to use the generative AI effectively Almost ~90% of worldwide IT spend yet to move or adapt to the cloud

Digital Factory at Scale: Doing more with less

Global Center of competence

Our global capabilities in Data, AI & Analytics brings together our expertise and cuttingedge technologies to help our customers unleash the power of data and AI at scale.

Data Strategy

Data Platform

Machine Learning operations (MLOps)

Generative AI

Data Literacy, culture and adoption

Data Visualisation & Insight

AI exploration for NHO

Itera has done an exploratory project for NHO (The Confederation of Norwegian Enterprise), investigating how they can use AI to streamline their work and help their members faster.

Through the project, we identified several relevant applications and developed several AI solutions based on chatGPT.

The project explored technical aspects, addressed safety challenges and laid the foundation for further development and innovation for NHO using artificial intelligence.

– Itera impressed us with their commitment, effort and relevant expertise. This project and its deliveries are an important input in our future work with AI.

Kristian Enger. Director of innovation, development and business management, NHO

Projects at IMDi – powered by Digital Factory at Scale

In the past year, Itera has had a central role at IMDi, and solved several projects for them - using the Digital Factory at Scale.

• In Q2, designers from Itera, among others, have had a central role in the "Bedre Bosetting" project at IMDi. They have defined the overall user experience for mapping resettlementrelevant information from refugees to be resettled in Norway.
• The designers have worked closely with stakeholders from IMDi to map existing tools, uncover challenges and develop future solutions.
• The goal has been to ensure a user-friendly and efficient application that contributes to reliable settlement in Norwegian municipalities.

Private sector led recovery of Ukraine

The rebuilding of Ukraine is a collective effort that will only succeed if public and private actors work together.

It is time for the Nordic region's energy sector, supplier industry and technology industry to step in and see how we can contribute, with the focus on business and not just donations.

We at Itera invite the private sector to step up and do business with Ukraine during the war to keep its economy running and to attend international conferences or visit Ukraine to gain insight into the opportunities.

• President Volodymyr Zelenskyy speaks via video link to the Ukraine Recovery Conference 2023 in London.
• Attendants from Norway from the left by Innovation Norway, Itera, Ministry of Foreign Affairs of Norway, Norwegian-Ukrainian Chamber of Commerce (NUCC), Ministry of Trade of Norway, Emergy, Norad and Eksfin.

Ukraine towards the green energy and digital hub for Europe

European FLAGSHIP

in the green energy and industrial transition, including green metallurgy, fertilizer, logistics and transportation.

360 GW

renewables in 2050, mostly wind, solar, storage, green hydrogen.

90% Supply chain

mostly local energy equipment manufacture and huge local access to minerals i.e. lithium.

310 000 IT talents

the global most digital society in 2025, +50.000 educated per year to become largest digital hub in Europe.

© Itera 17

Arendalsuka 2023

Digital transformation, the green shift, the war in Ukraine and artificial intelligence were all topics for our events at Arendalsuka .

The symbiosis between business and politics has rarely had more significance than now, which is why we arranged two events during Arendalsuka 2023:

• "AI love you How to navigate a world powered by AI"
• "Rebuild Ukraine towards a significant renewable power producer in Europe"

Welcome to our new headquarters

Itera moved its headquarters to Stortingsgata 6 in central Oslo.

• Hybrid workplace
• Attractive to top talents
• Availability to our customers
• Sustainable

We look forward to opening the doors to customers, partners, investors, and anyone who is curious about working with us this autumn!

Board of directors

Two new board members (from May 2023)

Morten Thorkildsen Chairperson of the board

Gyrid Skalleberg Ingerø Member of the board

Helge Leiro Baastad Member of the board NEW

Åshild Hanne Larsen Member of the board NEW

Jan Erik Carlson Member of the board

Siren Tønnesen Member of the board, employee

Joachim Trøbråten Member of the board, employee

Read more about our Board members at itera.com

Order intake

Order intake from selected new and existing customers.

Book-to-bill ratio*) of 0.6 in Q2 and 1.1 for the last 12 months

Customer development

New business

• Existing customers accounted for 92.6% (89.5%) of revenues in Q2 2023
• New customers won over the past year generated revenues of NOK 16.7 (19.3) million in Q2 2023 (7.4% share)

Good visibility

• Share of revenue from top 30 customers 83% (82%)
• High customer concentration signifies
• Strategic relationships
• Full range of services
• Distributed delivery across borders

Largest customers' share of revenue

Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23

Top 30 Top 10

** New customers defined as customers won since end of corresponding quarter last year

^* Existing customers defined as customers that were invoiced in the corresponding quarter last year

Skilled and innovative employees

741 employees at the end of the quarter

• Up by 80 (82) last twelve months, temporarily impacted by the invasion in Ukraine
• More than 60% of the FTE growth in the Nordics

Nearshore ratio of 53% (54%)

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

Number of employees end of quarter by shore

Rolling 12 months net FTE growth

03 Financial review

Key financials

	2023	2022	Change	2023	2022	Change	2022
Million NOK	4-6	4-6	%	1-6	1-6	%	F Y
Operating revenue	225 2	183 5	23%	455 5	359 5	27%	735 8
profit Gross	208 8	169 6	23%	425 9	331 7	28%	684 2
Personnel expenses	165 1	128 0	29%	323 0	245 0	32%	323 0
Other opex	17 3	12 8	35%	35 7	24 6	45%	35 7
EBITDA	26 4	28 8	-8%	2 67	62 1	8%	109 0
margin EBITDA	11 7%	15 7%	-4pts	14 7%	17 3%	-2 5pts	14 8%
Depreciation	8 0	7 3	9%	15 6	14 5	8%	32
EBIT	18 4	21 5	-15%	51 6	47 6	8%	2 77
margin EBIT	8 2%	7% 11	-3 6pts	3% 11	13 3%	9pts -1	10 5%
cash flow from operations Net Cash and cash equivalents	33 0 52 0	13 0 27 1	154% 92%	40 9 52 0	12 6 27 1	225% 92%	76 0 41 9
Employees end of period at Employees in average	741 736	661 667	12% 10%	741 725	661 664	12% 9%	698 677

• Organic revenue growth of 23%
• Personnel expenses driven by FTE growth, NOK depreciation and salary growth
• Opex increase from higher spending on travelling and training + relocation of HQ
• EBIT of MNOK 18.4 (21.5)
• EBIT margin of 8.2% (11.7%)
• Cash flow from operations MNOK 33.0 (13.0)
• No. of FTEs 741 (+80)

Revenue and earnings development

▪ Strong sales growth year over year with 2-year CAGR of 24.0% and an average of 10.8% EBIT margin

▪ Quarterly figures are impacted by number of working days net of vacations. Q2 2023 had a weighted average of 59.4 (59.5) working days, whereas Q1 2023 had 64.4 days

EBIT margin development

EBIT margin development:

• Margin decrease regular business: -3.1%
• Lower utilization, salary costs, one-off opex
• Support to Ukraine: -0.4%
• Investment in Sweden: -0.4%
• Investment in capacity readiness for cloud expansion: +0.3% vs LY but significantly dilutive until critical business volume

Statement of cash flow

Statement of cash flow
	2023	2022	2023	2022	2022
NOK Million	4-6	4-6	1-6	1-6	F Y
EBITDA	26.4	28.8	67.2	62.1	109.0
Change in balance sheet items	6.6	(15.8)	(26.3)	(49.5)	(32.9)
Net cash flow from operating activities	33.0	13.0	40.9	12.6	76.0
Net cash flow from investment activities	(3.7)	(3.9)	(7.6)	(8.0)	(15.2)
Purchase of own shares	-	-	(0.1)	(0.6)	(9.1)
Sale of own shares	-	6.6	6.2	6.6	6.6
Equity settlement of options contract	0.3	-	-	-	-
Principal elements of lease payments	(3.5)	(3.9)	(6.8)	(7.7)	(15.5)
Instalment of sublease receivable	-	0.8	-	1.8	1.8
External dividend paid	(24.7)	(16.1)	(24.7)	(16.1)	(40.5)
Net cash flow from financing activities	(27.9)	(12.7)	(25.3)	(16.1)	(56.8)
Net change in bank deposits and cash	2.2	(2.4)	10.0	(10.4)	4.5

• Cash flow from operations NOK 33.0 (13.0) million in Q2
• 12-month rolling cash flow from operations was NOK 104.3 (58.0) million
• Cash conversion from EBITDA of 91% last 12 months

Dividend and own shares

• An ordinary dividend of NOK 0.30 per share for 2022 paid + authorization for potential supplementary dividend
• Share price was NOK 15.00 at the end of June 2023, a change of +22% incl. dividends from NOK 12.80 at the end of June 2022
• Current holding of own shares is 948,059. Value at 30 June 2023 was MNOK 14.2
• Consistent high distribution of earnings.

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

Statement of financial position

• Equity ratio of 24% (25%) per 30 June 2023
• 30% (28%) excl. IFRS 16 Leasing
• Right-of-use assets up MNOK 42 from new facility agreement
• Cash balance of MNOK 52 (MNOK 27)
• Total balance increased by MNOK 88 to MNOK 318

04 Outlook

Q2 REPORT 2023

Outlook

Regional expansion continues in the Nordics and Central Europe for access to more customers and talents.

Continued high growth for digital transformation through existing and new customers but softening of market in general

Readiness to migrate and operate larger scale cloud transformations.

Connecting Ukraine and the Nordics to enable the green energy shift

Profitable growth and cash flow are key focus areas.

32

ITERA | 32

Itera does not provide guidance to the market on future prospects.

Top 20 shareholders

No Name	%	Nat	Shareholding
MJØS INVEST AS 1 ARNE	32 08	NOR	26 363 031 , ,
2 OP CAPITAL AS	60 5	NOR	605 242 4 , ,
3 GIP AS	19 5	NOR	262 000 4 , ,
SEPTIM CONSULTING AS 4	3 93	NOR	3 226 876 , ,
BOINVESTERING AS 5	3 47	NOR	2 852 862 , ,
EIKESTAD AS 6	3 16	NOR	2 600 000 , ,
GAMST INVEST AS 7	3 13	NOR	2 070 575 , ,
JØSYRA 8 INVEST AS	2 68	NOR	2 200 000 , ,
9 Privatbank S DZ A	2 51	LUX	2 060 000 , ,
HØGBERG 10 JON ERIK ,	1 46	NOR	1 197 356 , ,
11 DNB BANK ASA	1 21	NOR	996 262 ,
12 AANESTAD PANAGRI AS	1 16	NOR	950 000 ,
13 ITERA ASA	1 15	NOR	948 059 ,
14 FRAMAR INVEST AS	1 07	NOR	880 000 ,
15 ALTEA AS	0 85	NOR	700 000 ,
16 NYVANG JETMUND GUNNAR ,	0 83	NOR	685 000 ,
17 JENSEN LARS PETER ,	0 78	NOR	637 450 ,
GRØSLAND 18 KIM-KJETIL ,	0 76	NOR	622 678 ,
19 MORTEN JOHNSEN HOLDING AS	0 73	NOR	600 000 ,
20 HAMMER BENT ,	0 69	NOR	566 695 ,
TOP 20	72 43		59 528 581 , ,

*Arne Mjøs Invest AS holds a future contract on 1,000,000 shares. The total controlling interest of Arne Mjøs is thus 27,363,031 shares (33.3%).