Otello Corporation ASA

Annual Report (ESEF) • Apr 20, 2023

OTELLOCORPORATION - 2022 391200EWTTF186UWWH072022-01-012022-12-31391200EWTTF186UWWH072021-01-012021-12-31391200EWTTF186UWWH072022-12-31391200EWTTF186UWWH072021-12-31391200EWTTF186UWWH072021-12-31391200EWTTF186UWWH072020-12-31391200EWTTF186UWWH072021-12-31ifrs-full:IssuedCapitalMember391200EWTTF186UWWH072021-12-31ifrs-full:SharePremiumMember391200EWTTF186UWWH072021-12-31ifrs-full:TreasurySharesMember391200EWTTF186UWWH072021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember391200EWTTF186UWWH072021-12-31ifrs-full:OtherEquityInterestMember391200EWTTF186UWWH072021-12-31ifrs-full:NoncontrollingInterestsMember391200EWTTF186UWWH072022-01-012022-12-31ifrs-full:OtherEquityInterestMember391200EWTTF186UWWH072022-01-012022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember391200EWTTF186UWWH072022-01-012022-12-31ifrs-full:NoncontrollingInterestsMember391200EWTTF186UWWH072022-01-012022-12-31ifrs-full:IssuedCapitalMember391200EWTTF186UWWH072022-01-012022-12-31ifrs-full:SharePremiumMember391200EWTTF186UWWH072022-01-012022-12-31ifrs-full:TreasurySharesMember391200EWTTF186UWWH072022-12-31ifrs-full:IssuedCapitalMember391200EWTTF186UWWH072022-12-31ifrs-full:SharePremiumMember391200EWTTF186UWWH072022-12-31ifrs-full:TreasurySharesMember391200EWTTF186UWWH072022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember391200EWTTF186UWWH072022-12-31ifrs-full:OtherEquityInterestMember391200EWTTF186UWWH072022-12-31ifrs-full:NoncontrollingInterestsMember391200EWTTF186UWWH072020-12-31ifrs-full:IssuedCapitalMember391200EWTTF186UWWH072020-12-31ifrs-full:SharePremiumMember391200EWTTF186UWWH072020-12-31ifrs-full:TreasurySharesMember391200EWTTF186UWWH072020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember391200EWTTF186UWWH072020-12-31ifrs-full:OtherEquityInterestMember391200EWTTF186UWWH072020-12-31ifrs-full:NoncontrollingInterestsMember391200EWTTF186UWWH072020-12-31391200EWTTF186UWWH072021-01-012021-12-31ifrs-full:OtherEquityInterestMember391200EWTTF186UWWH072021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember391200EWTTF186UWWH072021-01-012021-12-31ifrs-full:IssuedCapitalMember391200EWTTF186UWWH072021-01-012021-12-31ifrs-full:SharePremiumMember391200EWTTF186UWWH072021-01-012021-12-31ifrs-full:TreasurySharesMember391200EWTTF186UWWH072021-01-012021-12-31ifrs-full:NoncontrollingInterestsMemberiso4217:USDiso4217:USDxbrli:shares CREATING VALUE FOR THE FUTURE 2022 Annual Report Otello Corporation ASA - Annual Report 2022 Table of contents 04 CEO Letter 06 Shareholder information 10 Representation of Board of Directors 12 Report from the Board of Directors 26 Otello Group financial statements 58 Parent company financial statements 80 Auditor’s report 86 Declaration of executive compensation policies 90 Principles of corporate governance CEO Letter In 2022, Otello returned a significant amount of cash to FUTURE its shareholders and is positioned to maximize the value Otello’s strategic focus has been to build and grow com- of its remaining asset. panies with the ambition to create the highest possi- ble value for our shareholders. We saw the culmination of this effort in 2021 where we were able to both IPO FINANCIAL OVERVIEW Due to the sale of AdColony, Otello treated that business Bemobi on the Bovespa in Brazil at a significant premium as discontinued operations from 2021. The separate list- to our initial purchase price, as well as sign and close a ing of Bemobi in 2021 resulted in Otello’s ownership fall- transaction selling AdColony to Digital Turbine ing below 50% and Otello no longer consolidating Bemo- bi into the Otello P&L. In 2022, Otello continued reducing In Bemobi, Otello remains the biggest shareholder and is its expenses which were down 54% in 2022 vs 2021. positive about the prospects of the business. Otello will have an opportunistic view on its financial investment in At the end of January 2022, Otello got paid the final the company. Otello has, as a result of the transactions earn-out payment from Digital Turbine relating to the above and proceeds received, already repaid all our debt, sale of AdColony, which bolstered the cash position to launched and completed a share buyback program ac- over $270m and a balance sheet without any meaningful cessible to all shareholders of over USD 100 million, and liabilities or debts. paid in 2022 nearly USD 200 million in dividend to our shareholders. Going forward, the goal is to maximize the value of all our remaining assets and continue to aggres- RETURNING CASH TO SHAREHOLDERS The Company’s remaining goal is to maximize the val- sively return cash to shareholders, most likely through a ue of its remaining asset, its stake in Bemobi, and return combination of share buybacks and dividends. cash to its shareholders. On July 28, 2022, the board re- solved to pay a dividend payment of NOK 21 per share, NOK 1 913 094 309 in total. The payment was made on August 18, 2022. Lars Boilesen Otello Corporation ASA - Annual Report 2022 5 20.9% U.S.-based accounts Investor Relations KPI [2018-2022] 2018 2019 2020 2021 2022 Revenue ($ million) 275.4 9.4 240.7 19.4 259.0 23.4 19.1 0.1 (6.3) 4.8 0.2 (3.4) 8.8 Adjusted EBITDA ($ million) Operating cash flow ($ million) 57.1% Norway-based accounts 10.9% U.K.-based accounts (0.2) (0.2) Adjusted EBITDA represents EBITDA excluding stock-based compensation expenses, impairment and restructuring expenses 3.6% Sweden-based accounts INVESTOR RELATIONS POLICY 2.3% Communication with shareholders, investors, and analysts, both in Luxembourg-based accounts Norway and abroad, is a high priority for Otello. The company’s objective is to ensure that the financial markets have sufficient information about the company in order to be able to make informed decisions about the compa- ny’s underlying value. Otello arranges regular presentations in a range of jurisdictions and holds frequent meetings with investors and analysts. 2.1% Belgium-based accounts 1.2% Ireland-based accounts 1.0% France-based accounts 0.9% Accounts based elsewhere LARGEST SHAREHOLDERS at December 31, 2022 Shares SAND GROVE OPPORTUNITIES AS BANK OF AMERICA, N.A. VERDIPAPIRFONDET DNB TEKNOLOGI AREPO AS GOLDMAN SACHS INTERNATIONAL THE BANK OF NEW YORK MELLON SA/NV VERDIPAPIRFONDET NORDEA NORGE VERD PICTET & CIE (EUROPE) S.A. SKANDINAVISKA ENSKILDA BANKEN AB THE BANK OF NEW YORK MELLON SA/NV 31.3 % 20.6 % 7.0 % 5.7 % 4.8 % 2.9 % 2.2 % 2.1 % 2021 33.9 % 7.5 % Country breakdown shareholders: 2022 57.1 % 20.9 % 10.9 % 3.6 % 2.3 % 2.1 % 1.2 % 1.0 % 0.9 % Norway-based accounts U.S.-based accounts 32.3 % 8.5 % 5.1 % U.K.-based accounts Sweden-based account Luxembourg-based accounts Belgium-based accounts Ireland-based accounts France-based accounts Accounts based elsewhere 7.4 % 1.9 % 2.9 % 0.6% 2.1 % 2.0 % Executive Team Otello Corporation ASA Lars Boilesen Chief Executive Officer Petter Lade Chief Financial Officer Lars Boilesen is the Chief Executive Officer at Otello Petter Lade was appointed Chief Financial Officer in Jan- Corporation ASA, a position he has held since 2010. Lars uary 2017. He is responsible for the financial management has extensive experience in the software and tech in- of the Group and oversees financial planning and analy- dustry and has held executive positions in various cor- sis, treasury, M&A and investor relations. Petter comes porations prior to joining Otello. He was Executive Vice from the position as Director, IR & Corporate Develop- President of Sales & Distribution at Opera Software ASA ment and has held several key roles within controlling, from 2000 to 2005 and served on the Board of Directors M&A and IR since joining Otello in 2006. of Opera Software ASA from 2007 to 2009. Before joining Otello, Petter was Finance & Commercial From 2005-2008 he was Chief Executive Officer for the Consultant at Dell EMEA and responsible for the finan- Nordic and Baltic Region at Alcatel-Lucent. Lars started his cial and commercial element for pan-EMEA or Global career in the LEGO Group as Sales and Marketing Manager Dell Managed Services (DMS) deals. Prior to that, Petter for Eastern Europe. After that, he headed the Northern Eu- worked as Business Controller/Bid Analyst for Dell Nor- rope and Asia Pacific markets for Tandberg Data. He cur- way. He began his career with Verdens Gang (Schibsted) rently serves as the Chairman of the Board of Directors of as a controller. Bemobi Mobile Tech S.A and as a Director for Norwegian Air Shuttle ASA, Napatech AS and Airthings ASA. Petter obtained a Siviløkonom degree (four year program in economics and business administration consisting of Lars holds a Bachelor’s Degree in Business Economics three years at bachelor level and one year at master lev- from Aarhus Business School, and postgraduate diploma el) from BI Norwegian Business School. from Kolding Business School. The Board of Directors ANDRÉ CHRISTENSEN CHAIRMAN MARIA BORGE ANDREASSEN BOARD MEMBER Otello Corporation ASA André Christensen Chairman André Christensen has a 25-year track record in the Media, Corporate Business Advisor to the President and CEO of Internet, and High Tech industries, having gained strategic Orkla ASA, the leading Nordic based branded consumer and operational experience across Europe, North America, goods company. She held internal board positions and and Asia. He currently serves as the Chief Executive Of- lead many new growth initiatives. Maria started her ca- ficer and Founder of Quickplay, a global Sports and En- reer as a consultant in McKinsey & Company, Inc., where tertainment technology platform provider headquartered she worked with strategy and organizational topics, and in Toronto. Before founding Quickplay, Mr. Christensen led served clients in many industries in Scandinavia, UK and Product Development for the AT&T/DirecTV Entertain- South Africa. Maria holds an MBA from INSEAD and a ment Group, held the position of SVP Business Operations Bachelor in Business Administration from the University and Strategy at Yahoo worldwide, and spent 12 years as of Strathclyde. MAGDALENA KADZIOLKA BOARD MEMBER KARIN FLØISTAD BOARD MEMBER LIN SONG BOARD MEMBER a partner at McKinsey & Company. In addition to his ex- ecutive roles, he occupies a board position as Chairman Magdalena Kadziolka of LINK Mobility, and as a Board Director of Intermedia. Board Member Mr. Christensen holds an MSc/DiplKfm degree from the University of Mannheim. Maggie Kadziolka is the Chief Compliance Officer at Sand Grove Capital Management where she is responsible for U.S. and global regulatory compliance. In addition, she serves as a Board member of Sand Grove Special Purpose Fund I Ltd and Sand Grove (Cayman) GP Ltd. Before joining Sand Grove York University in 2006. In 2009, Maggie obtained her J.D. Lin Song (Magna Cum Laude), from New York Law School, where she Board Member was also a member of the Law Review. Maria Borge Andreassen Board Member Lin Song is the Co-CEO at Opera Limited, a NASDAQ listed company, and a former employee of Otello from its’ former days as Opera Software ASA, beginning at the company in 2002. Lin Song has been responsible for Maria Borge Andreassen is Commercial Director in Jernia in January 2019, Maggie was the Chief Compliance Officer AS, a specialist retailer chain in Norway with approxi- and General Counsel at Ivory Investment Management, LLC mately 130 stores. She is leading the departments re- (“Ivory”), where she was responsible for legal and regulato- sponsible for marketing, ecommerce, category manage- ry support concerning U.S. and foreign matters. Prior to this, ment, strategic sourcing and analysis. Before that, Maria Maggie worked in Cordium’s (since acquired by ACA Compli- was part of the Executive Team in Europris, the largest ance) compliance consulting division from April 2013 until discount variety retailer in Norway and listed on the Oslo 2016, where she managed global regulatory matters for a Stock Exchange. In her position as the Director of Strat- client base of investment advisers of hedge funds, private egy and Business Development, Maria was responsible equity funds and fund of funds. She began her career as for the overall strategy, including project portfolio, new an attorney at a law firm founded by former SEC attorneys growth initiatives, OMNI channel strategy, digital road- where her practice included SEC defense and investment map and sustainability. Prior to joining Europris, Maria adviser regulation. Maggie received a B.A. in Political Sci- served as Marketing and Innovation Director and as ence and French (Cum Laude and with Honors), from New Karin Fløistad Board Member Karin Fløistad is presently partner in one of Norway's various high-profile projects at Opera, including holding largest corporate lawfirms, Simonsen Vogt Wiig AS and the position of Director of Delivery and Engineering in head of the of the independent Appeals Body for Com- APAC. Prior to Opera’s browser and consumer business petition Cases in Norway. She has extensive experience being privatized and later listed on the NASDAQ, Lin litigating cases in the CJEU and in the EFTA Court and Song served as its COO responsible for business opera- has also given advice in a number of years to both gov- tions, and since the listing has become the Co-CEO of the ernmental and private clients as a practicing lawyer. She company. He graduated in 2004 from the University of is also qualified to plead before the Supreme Court in International Business and Economics in Beijing, China. Norway and she provides on a regular basis academic services for the law faculty at the University of Oslo. 10 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 11 RBepoortafrormdthe of Directors Otello’s strategic focus has been to build and grow com- certain costs related to business combinations and panies with the ambition to create the highest possible restructuring processes. value for our shareholders. We saw the culmination of this effort in 2021 where we were able to both IPO Be- FINANCIAL SUMMARY mobi on the Bovespa in Brazil at a significant premium to our initial purchase price, as well as sign and close a Income statement (Continuing operations) transaction selling AdColony to Digital Turbine. Due to the sale of AdColony, Otello is treating that busi- ness as discontinued operations for 2022 (as was also the In Bemobi, Otello remains the biggest shareholder and is case in 2021). The separate listing of Bemobi in 2021 result- positive about the prospects of the business. Otello will ed in Otello’s ownership falling below 50%. Thus, Otello is have an opportunistic view on its financial investment in no longer consolidating Bemobi into the Otello P&L and is the company. Otello has, as a result of the transactions rather using the equity method. above and proceeds received, already repaid all our debt, and launched and completed a share buyback program Otello’s operating revenues were $0.2 million in 2022 (2021: accessible to all shareholders of over USD 100 million and $0.1 million). Operating expenses, excluding impairment paid in 2022 nearly USD 200 million in dividend to our and restructuring expenses, decreased by 54% to $4.3 mil- shareholders. Going forward, the goal is to maximize the lion (2021: $9.3 million), with significant decreases in both value of all our remaining assets and continue to aggres- employee benefits expense and other operating expenses. sively return cash to shareholders, most likely through a Otello delivered Adj EBITDA (excluding impairment and re- combination of share buybacks and dividends. structuring expenses) of -$3.4 million (2021: -$6.3 million). COMPANY OVERVIEW A profit before income taxes (including impairment gain Otello Corporation ASA, the parent company of the and restructuring expenses) of $17.9 million was recog- Group, is domiciled in Norway. The Company’s principal nized in 2022 (2021: -$58.7 million). Taxes resulted in an ex- offices are located at Gjerdrums vei 19, Oslo, Norway. The pense of $2.2 million in 2022 (2021: -$7.5 million) The result company is a public limited company that is listed on the after tax for 2022 was $15.7 million (2021: -$51.2 million). Oslo Stock Exchange under the ticker OTEC. Basic and diluted earnings per share were both $0.17 (2021: -$1.35). Corporate Costs Corporate costs comprise primarily i) costs related to Cash flow personnel working in functions that serve the Group Net cash flow from operating activities in 2022 totaled as a whole, including CEO, Board of Directors, corpo- $8.8 million (2021: $4.8 million). Cash flow from invest- rate finance and accounting, legal, HR and IT, and ii) ing activities amounted to $179.1 million in 2022, vs $207.1 Otello Corporation ASA - Annual Report 2022 13 million in 2021, positively impacted by net proceeds from Corporate governance the final installment from Digital Turbine’s acquisition The Company’s guidelines for corporate governance are in of AdColony and dividend received from Bemobi Mobile accordance with the Norwegian Code of Practice for Cor- Tech S.A, partly offset by $13.9 million related to tax paid porate Governance, dated October 14, 2021, as required by on changing the investment regime for our shares in Be- all listed companies on the Oslo Stock Exchange. Further- mobi Mobile Tech S.A. Cash flow from financing activities more, the guidelines meet the disclosure requirements of was -$228.1 million in 2022, compared to -$169.7 million in the Norwegian Accounting Act and the Securities Trading 2021. Use of cash for financing activities was mainly re- Act. The guidelines are included separately in the annual lated to dividends paid of $196.8 million and share buy- report. Please see the section entitled “Principles of cor- backs of $31.2 million. porate governance” for further information. As of December 31, 2022, the Group had a cash balance of Shareholders and equity-related issues $18.4 million (2021: $79.0 million), and no interest-bearing As of December 31, 2022, Otello Corporation ASA had debt (2021: nil). 91,099,729 outstanding shares. As of December 31, 2022, the Group’s equity was $107.4 million (parent company: $26.2 million). Balance sheet As of 31 December 2022, the Group had total assets of $109.8 million (2021: $365.0 million). Non-current assets Share Buyback Program represented $89.9 million of this total and primarily con- During 2022, Otello purchased 10,000,000 (2021: sisted of other investments (mainly our 36% ownership 36,500,470) treasury shares for $31.2 million (2021: $132.6 in Bemobi) of $88.6 million. Current assets such as cash million) and sold 0 (2021: 3,272) treasury shares. and receivables represented $19.9 million of total assets, of which $18.4 million was cash and cash equivalents. Shareholders The Company had 3,039 (2021: 3,316) shareholders at The Group had total liabilities of $2.4 million as of year-end. At that time, 57.1% (2021: 33.9%) of the shares 31.12.2022 (2021: $13.7 million), of which $2.3 million were were held in Norway-based accounts, 20.9% (2021: 7.5%) current liabilities. Shareholders’ equity was $107.4 million in US-based accounts, 10.9% (2021: 32.5%) of the shares at the end of 2022, compared with $351.3 million at the were held in U.K.-based accounts, 3.6% (2021: 8.5%) in end of the previous year. Otello’s equity ratio at year-end Sweden-based accounts, 2.3% (2021: 5.1%) in Luxem- was 97.8% (2021: 96.2%). bourg-based accounts, and 5.1% (2021: 12.7% in accounts based elsewhere. BUSINESS OVERVIEW Allocation of the annual profit / coverage of loss As a result of the sale of AdColony as well as the listing The total comprehensive result for the period for the of Bemobi in Brazil, Otello no longer has any operating parent company, Otello Corporation ASA, was a loss of segments. However, Otello is a major shareholder in Be- $3.8 million (2021: loss of $27.2 million). The Board of Di- mobi, and through Otello Technology Investment AS has rectors recommends that no dividend be paid for the 32 719 588 shares in Bemobi, equal to 35.992% ownership. 2022 financial year. The Board proposes that of the 2022 Otello also holds the chairmanship of Bemobi with Otello total comprehensive income, $20.5 million is transferred CEO Lars Boilesen. CORPORATE OVERVIEW Organization to other equity, and -$24.3 million is transferred to the translation reserve. Going concern In accordance with section 3-3a of the Norwegian Ac- At the close of 2022, the Otello group had 6 full-time em- counting Act, the Board confirms that the prerequisites ployees and equivalents; the same number of full-time for the going concern assumption exist and that the fi- employees and equivalents as at the end of 2021. nancial statements have been prepared based on the go- ing concern principle. Board of Directors composition At the Annual General Meeting on June 2, 2022, André Events after the reporting period Christensen was re-elected as the chairman of the Board For further information on subsequent events, see note of Directors, Maria Borge Andreassen and Song Lin were 24 of the “Consolidated financial statements”. re-elected to the Board of Directors, and Magdalena Kadziolka and Karin Fløistad were elected to the Board For further information, please see the announcements of Directors. published on the Oslo Stock Exchange website (www.os- lobors.no). 14 Otello Corporation ASA - Annual Report 2022 CORPORATE SOCIAL RESPONSIBILITY ness of a flat structure with an extreme focus on results Creating a responsible and sustainable business is an inte- and innovation. All employees are expected to comply gral part of everything we do at Otello. We are committed with safety and health regulations that apply to our to the highest standard of social responsibility and be- business activities. lieve that transparency and openness are key elements in obtaining a sustainable and responsible operation. Discrimination on the bases of sickness or disability shall not occur at Otello. We work hard to meet all our em- In this part of the Board of Directors report, we de- ployees’ needs. We offer shorter working hours and oth- scribe Otello’s efforts and results related to corporate er services to accommodate our employees with disabil- social responsibility (CSR). Our CSR work is focused on ities or other particular needs. the following areas: Our employees, anti-corruption and the environment. Otello had an average rate of absence due to sick leave of 0.0% in the parent company in 2022 (2021: 0.3%), and an es- timated rate of 0.0% for the Group as a whole (2021: 1.4%). Our employees Otello’s success and innovation springs from the minds and teamwork of its employees. Our employees are our Anti-corruption most valuable resource, and we are committed to inter- Otello abstains from and works actively to combat cor- acting with our employees in the same way as we strive ruption and bribery. Corruption distorts economic deci- to interact with our customers, following the highest sion-making, deters investment, undermines competitive- ethical standards and respect for individuality. ness and, ultimately, weakens economic growth. There is no single, comprehensive, universally accepted definition Otello strongly condemns discrimination. We believe of corruption. Therefore, each Otello employee must ad- that people should be treated with respect and insist on here to the existing laws and regulations in their country fair, non-discriminative treatment, regardless of irrele- of operation. As a minimum, Otello’s internal regulations vant factors such as nationality, political views, religion, apply to all employees. Controls are made to ensure that sexual orientation and gender. the rules are followed. Otello has put in place internal guidelines to help employees in their day-to-day opera- We promote cultural diversity and we are proud to have tions. The following is an extract of these guidelines. 4 nationalities represented within the Group. We pride ourselves on being an international organization, where Bribery innovation and teamwork take place across borders and No person acting on behalf of Otello shall attempt to time zones. influence someone in the conduct of their post, office or commission by offering an improper advantage. Nor We continually work to improve the gender balance in shall improper advantage be offered to anyone for the the company. At the end of 2022, 17% of the Group’s staff purpose of influencing third parties in the conduct of members were women. In addition, 3 of the 5 Board of their post, office, or commission. This includes all forms Directors of the Group are female. of facilitation payments. The principles of equal opportunities and non-discrimi- Correspondingly, no person acting on behalf of Otello nation are present throughout the organization and in all shall request, accept or receive an improper advantage company activities. When recruiting, we use assessment in connection with his/ her position or assignment or for methods such as programming tests and test cases to the purpose of influencing a third party. Improper ad- give equal opportunities to all qualified applicants. Sim- vantage can take different forms, including but not lim- ilar approaches are exercised when promoting, offering ited to money, objects, credits, discounts, travel, accom- training opportunities, etc. modation and other services. Labor rights at Otello Gifts Otello respects and observes the fundamental labor It is a normal part of business life to exchange business rights set out in international conventions, such as the courtesies, such as meals, transportation, recreation, fa- conventions of the International Labor Organization and cilities or small gifts. Such an exchange of business cour- the United Nations. tesies must always follow local laws and regulations and not put any Otello employee in the position of a sense of obligation to return the favor, compromise professional Health and safety At Otello, we strive to offer our staff members a safe, judgment, or create the appearance of compromise or healthy and inspiring workplace. We have a highly inter- corruption. Otello employees should always check with national workforce, where we combine the responsive- their manager or the HR department, if in doubt, and Otello Corporation ASA - Annual Report 2022 17 consider whether the exchange of business courtesy The Ethical Code of Conduct focuses on the following would be acceptable if it should become publicly known. key areas: the rights and obligations of our employees; a healthy and safe working environment; anti-corruption; No person acting on behalf of Otello is allowed to accept and the external environment. any amount of cash or cash equivalents (such as gift cer- tificates or market securities and similar), regardless of A violation of the Ethical Code of Conduct may result in the sum. Correspondingly, cash or cash equivalents may disciplinary action, up to and including termination of never be offered by Otello employees as a business cour- employment. Several of the guidelines concern actions tesy, regardless of the sum. that are also punishable offenses. The Human Resources department is responsible for following up on any pos- sible breaches. Whistleblowing Otello encourages freedom of speech and blowing the whistle on malpractice, fraud, illegality, or breaches of Transparency Act rules, regulations, and procedures or raising health and Otello will publish a Transparency Act report on its web- safety issues. Any Otello staff member making a whis- site at https://www.otellocorp.com tleblowing report is protected from any repercussions, such as dismissal and other forms of reprisal. To secure RISK FACTORS an effective procedure, staff members may blow the Otello has operations across multiple markets and is whistle either in person or anonymously to the Work En- therefore exposed to a range of risks that may affect vironment Committee. its business. Some key risk areas are discussed and de- scribed below. To improve communication and ensure that issues do not escalate to the point where they become a whistleblow- Financial risk ing case, Otello focuses on the following practices: Otello will have very limited financial risk going forward as we have no operations which are consolidated into our P&L, nor do we have any interest-bearing debt. • Communicate the Company’s norms, values, and rules and regulations regarding ethical conduct. • Create an open atmosphere by making sure that staff Risk management in the Group is carried out by manage- members have the opportunity and possibility to meet ment and approved by the Board of Directors. Potential and discuss issues in formal and informal settings. risks are evaluated regularly and management deter- • Discuss and put questions regarding freedom of speech mines appropriate strategies related to how these risks and whistleblowing on the agenda in internal commu- 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. The Environment Otello understands the importance of supporting the Currency risk environment and seeks to prevent any negative envi- The majority of the financial risk that the Group is ex- ronmental impact our activities might have. Otello has posed to relates to currency risk due to exchange rate incorporated its environmental policy as a part of the fluctuations. Both revenue and operating expenses are Ethical Code of Conduct. exposed to foreign exchange rate fluctuations. Otello is committed to using environmentally safe prod- The majority of the Group's operating expenses are de- ucts in the workplace, to evaluating the consumption of nominated in Norwegian kroner (NOK) or United States energy and other resources to ensure efficient use, and dollars (USD). The Group maintains cash deposits in both to ensuring the development of environmentally protec- currencies, and no capital controls are limiting the Group's tive procedures. ability to exchange between these currencies if required. Otello has implemented the following guidelines and The Group's largest asset, its investment in the shares reporting schemes to ensure a high ethical standard of Bemobi Mobile Tech S.A, is denominated in Brazilian throughout the organization. The Ethical Code of Con- reais (BRL). Accordingly, fluctuations in the exchange duct is created to help employees, clients and business rate between the BRL and the Group's reporting curren- partners understand Otello’s values and standards. Otel- cy, USD, can impact both the reported profit or loss and lo’s reputation is created by the conduct of each indi- the carrying value of that investment. A small number vidual staff member. Therefore, all staff members are of BRL-denominated expenses are also incurred by the obliged to familiarize themselves with the Ethical Code Group in Brazil related to this investment. of Conduct when joining the company. 18 Otello Corporation ASA - Annual Report 2022 During 2022 and 2021, the Group did not use forward ex- excess of the recognized liabilities. Accordingly, liquidity change contracts to hedge its currency risk, and Otello risk is not considered significant. had not entered into any foreign exchange contracts as any fines as a result of the complaint, Otello may have to OUTLOOK carry some or all of that liability pursuant to the terms of Otello’s strategic focus has been to build and grow com- the sale of AdColony. However, Otello has not recognized panies with the ambition to create the highest possible any contingent liabilities in the interim financial state- value for our shareholders. We saw the culmination of of December 31, 2022. Cash and cash equivalents at the end of 2022 were $18.4 million. As of December 31, 2022, Otello has no outstand- ing loans payable. ments related to this matter. this effort in 2021 where we were able to both IPO Be- mobi on the Bovespa in Brazil at a significant premium to our initial purchase price, as well as sign and close a Credit risk Credit risk is the risk of losses that the Group would suf- Operational risk fer if a counterparty fails to perform its financial obliga- The company’s equity was $107.4 million at the end of tions. The Group's exposure to credit risk is mainly relat- 2022, corresponding to an equity ratio of 97.8%. ed to external receivables. Credit risk is assessed for each Otello will have limited operational risk going forward transaction selling AdColony to Digital Turbine. as we have no operations which are consolidated into our P&L. The operational risk is limited to corporate func- In Bemobi, Otello remains the biggest shareholder and is tions as well as the management of our partly owned positive about the prospects of the business. Otello will specific customer. The Group's revenue from continuing Although Otello does invest its money conservatively, all operations is immaterial and the large majority of out- our investments are subject to risk. For example, Otello’s standing receivables at the end of 2021 related to the cash and other investments placed in Norwegian finan- final payment due from Digital Turbine, Inc. related to cial institutions are not guaranteed by the government the sale of the AdColony business. That receivable was above NOK 2 million per institution. If the financial insti- received in early 2022. With the low remaining level of tution were to go bankrupt, a portion of Otello’s cash or assets and in particular Bemobi. have an opportunistic view on its financial investment in the company. Otello has, as a result of the transactions above and proceeds received, already repaid all our debt, Directors and Officers Liability Insurance Otello Corporation ASA and its subsidiaries are covered and launched and completed a share buyback program by Directors and Officers liability insurance. The insur- accessible to all shareholders of over USD 100 million and ance indemnifies directors and officers for defense costs paid in 2022 nearly USD 200 million in dividend to our and potential legal liability arising out of claims made shareholders. Going forward, the goal is to maximize the against them while serving on a board of directors and value of all our remaining assets and continue to aggres- or as an officer. The insurance renews annually and the sively return cash to shareholders, most likely through a sum insured was USD 25 million as of December 31, 2022. combination of share buybacks and dividends. receivables, credit risk is not considered significant. investment could be lost. The Group has limited exposure in terms of credit risk As reported in the media, on January 14, 2020, the Nor- related to loans and receivables. wegian Consumer Council (NCC) filed a complaint to the Norwegian Data Protection Authority (DPA) against Grin- dr and five other companies, including AdColony, which Liquidity risk As of December 31, the Group had bank deposits well in is a supplier to Grindr. Should AdColony be liable to pay 20 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 21 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 $20.5 million (2021: loss $15.2 million). The current year's (“Company”) of the Otello Group (“Group”). Please note profit included a gain of $22.8 million from a reversal of that the numbers and comments below are only applica- prior impairment losses, primarily resulting from the in- ble to the Company and not for the Group. However, the crease in the share price in Bemobi Mobile Tech S.A (being information described above for the Group is also appli- the main investment of the Company’s wholly-owned cable for the Company. subsidiary, Otello Technology Investment AS). FINANCIAL SUMMARY Net cash flow from operating activities in 2022 totaled The Company’s main activities are to serve the Group as $7.1 million (2021: $-6.3 million). The Company’s cash bal- a whole, through the following functions and services: ance was positively impacted in 2022 by the cash re- CEO, Board of Directors, corporate finance and account- ceived from the sale of the AdColony business of $192.0 ing, legal, HR and IT. The Company charges some of the million. This inflow and other cash reserves were used to costs related to these functions to subsidiaries. There pay a dividend to shareholders of $196.8 million and to was limited operational activity in both 2022 and 2021. buy back shares from investors of $31.2 million. The cash The Company had 6 full-time employees and equivalents balance decreased by $43.1 million in 2022. As of Decem- in 2022 (2021: 11). ber 31, 2022, the Company had a cash balance of $15.0 million (2021: $78.1 million). Operating expenses decreased by 51% in 2022. This is pri- marily due to a decrease in employment-related costs The Company has $81.2 million in interest-bearing debt and legal/audit fees from decreased corporate activi- at year-end (all owed to subsidiaries) and the Company’s ty. The Company’s operating loss excluding impairment equity ratio was 24% (2021: 73%). gains of $3.7 million (2021: loss of $7.9 million) is in line with operating expenses due to the limited amount It is the Board’s opinion that the annual accounts provide of revenues. a true and fair view of the Company’s activities in 2022. Oslo, April 20, 2023 Andre Christensen Chairman of the Board Song Lin Karin Fløistad Maria Borge Andreassen Magdalena Kadziolka Lars Boilesen CEO Otello Corporation ASA - Annual Report 2022 23 Statement by the Board of Directors and the Chief Executive Officer The Board of Directors and the Chief Executive Officer To the best of our knowledge: (CEO) have reviewed and approved the Board of Di- rectors’ report and the financial statements for Otello • The consolidated financial statements and the finan- Group and Otello Corporation ASA as of December 31, 2022, (Annual Report for 2022). cial statements for the parent company for 2022 have been prepared in accordance with applicable account- ing standards. The consolidated financial statements and the financial statements for the parent company have been prepared • The consolidated financial statements and the finan- in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and accompanying interpretations. The consolidated financial statements and the financial statements for the parent company also include certain disclosures in order to comply with 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, 2022, for the Group and the parent company. certain regulations and paragraphs in the Norwegian Ac- • The Board of Directors’ report for the group and the 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 Oslo, April 20, 2023 Andre Christensen Chairman of the Board Song Lin Karin Fløistad Maria Borge Andreassen Magdalena Kadziolka Lars Boilesen CEO Otello Corporation ASA - Annual Report 2022 25 CONSOLIDATED STATEMENT Consolidated statement of Comprehensive Income USD million, except per share amounts Note 2022 2021 Continuing operations Revenue 0.2 0.1 0.1 Total operating revenue 0.2 Employee benefits expense Depreciation and amortization expenses Other operating expenses 4 5 6 (2.2) (0.7) (1.4) (6.7) (0.8) (1.9) Total operating expenses (4.3) (4.0) 6.7 (9.3) (9.2) Operating profit (loss), excluding impairment and restructuring expenses Impairment gains (losses) and restructuring expenses Operating profit (loss) 7 (59.9) (69.1) 2.6 Share of profit (loss) from associated companies Other net financial items 8 8 4.1 11.1 3.1 7.3 Profit (loss) before income tax Tax expense 17.9 (2.2) 15.7 (58.7) 7.5 Consolidated Group 9 Profit (loss) from continuing operations (51.2) Financial Statements 2022 Discontinued operations Profit (loss) from discontinued operations, net of tax Otello Corporation ASA 10 0.3 0.3 220.1 220.1 168.9 Profit (loss) from discontinued operations Profit (loss) 16.0 Other comprehensive income: Items that may or will be transferred to profit (loss) Foreign currency translation differences Reclassification of foreign currency translation reserve 2.3 0.0 (7.4) 30.2 Items that will not be transferred to profit (loss) Foreign currency translation differences (34.2) 0.0 Total comprehensive income (loss) (15.9) 191.7 Profit (loss) attributable to: Owners of Otello Corporation ASA 16.0 168.9 191.7 Total comprehensive income (loss) attributable to: Owners of Otello Corporation ASA (15.9) Earnings (loss) per share: Basic earnings per share (USD) Diluted earnings per share (USD) 11 11 0.17 0.17 1.35 1.35 Earnings (loss) per share (continuing operations): Basic earnings per share (USD) Diluted earnings per share (USD) 11 11 0.17 0.17 (0.41) (0.41) Otello Corporation ASA - Annual Report 2022 27 CONSOLIDATED STATEMENT Consolidated statement of Consolidated statement of Financial Position Financial Position USD million Note 12/31/2022 12/31/2021 USD million Note 12/31/2022 12/31/2021 Assets Shareholders’ equity and liabilities Equity attributable to owners of the company 107.4 351.3 351.3 Property, plant and equipment Right of use assets Investments 14 15 16 0.3 0.2 89.4 0.0 1.0 0.3 90.3 0.6 Total equity 107.4 Other non-current assets Liabilities Deferred tax liabilities Lease liabilities Other non-current liabilities 9 15 18 - 0.1 - 10.2 0.2 0.6 Total non-current assets 89.9 92.2 Accounts receivable Other receivables Cash and cash equivalents 0.1 1.4 18.4 0.1 193.7 79.0 Total non-current liabilities 0.1 11.0 Lease liabilities Accounts payable Other current liabilities 15 18 0.1 0.2 2.1 0.1 0.2 2.4 Total current assets Total assets 19.9 272.8 365.0 109.8 Total current liabilities Total liabilities 2.3 2.4 2.7 13.7 Total equity and liabilities 109.8 365.0 Oslo, April 20, 2023 Andre Christensen Chairman of the Board Song Lin Karin Fløistad Maria Borge Andreassen Magdalena Kadziolka Lars Boilesen CEO 28 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 29 CONSOLIDATED STATEMENT Consolidated statement of Cash Flows USD million Note 2022 2021 Reconciliation of profit (loss) before taxes Profit (loss) before income taxes Profit (loss) from discontinued operations, net of tax Tax expense, discontinued operations 17.9 0.3 0.0 (58.7) 220.1 3.8 Profit (loss) before taxes, as presented in the statement of cash flows below 18.2 165.2 Cash flow from operating activities Profit (loss) before taxes 18.2 165.2 Income taxes paid 9 5 7 0.0 0.7 (6.7) (0.0) (0.0) 0.4 0.7 (4.1) - (0.0) 7.0 59.8 17.6 (9.0) (215.7) (5.7) (3.0) (14.1) 2.7 Depreciation and amortization expense Impairment (gains) losses recognized in profit (loss) Changes in accounts receivable Changes in accounts payable 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 Share-based remuneration 10 8 4 FX differences related to changes in balance sheet items (0.4) Net cash flow from operating activities 8.8 4.8 Cash flow from investing activities Purchases of property, plant and equipment (PP&E) and intangible assets Capitalized development costs Cash flows from losing control of subsidiaries Dividends received 14 - - (0.1) (2.8) 179.3 30.8 0.0 10 10, 16 9 191.6 1.4 (13.9) (0.0) Income taxes paid Other cash payments to acquire equity or debt instruments of other entities 16 (0.1) Net cash flow from investing activities 179.1 207.1 Cash flow from financing activities Payments of other equity instruments Payments to acquire entity’s shares Repayments of loans and borrowings Payment of finance lease liabilities, net Payments of dividends to equity holders of Otello Corporation ASA 23 23 - (31.2) - (0.1) (196.8) (0.1) (132.6) (35.5) (1.5) 15 23 - Net cash flow from financing activities Net change in cash and cash equivalents (228.1) (40.2) (169.7) 42.2 Cash and cash equivalents (beginning of period) Effects of exchange rate changes on cash and cash equivalents 79.0 (20.4) 41.9 (5.1) Cash and cash equivalents 1) 18.4 79.0 1) Of which $0.1 million (2021: $0.1 million) is restricted cash as of December 31, 2022. 30 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 31 CONSOLIDATED STATEMENT Consolidated statement of Consolidated statement of Changes in Equity Changes in Equity Number of shares out- standing Number of shares out- standing Trans- lation reserve Non-con- trolling Trans- lation reserve Non-con- trolling Issued Share Treasury Other Total equity Issued Share Treasury Other Total equity USD million (except number of shares) (million) capital premium shares equity interests USD million (except number of shares) (million) capital premium shares equity interests Balance as of 12/31/2021 101.1 0.3 145.9 (0.0) (2.8) 207.9 0.0 351.3 Balance as of 12/31/2020 137.6 0.3 347.8 (69.3) (30.2) 58.3 (0.4) 306.4 168.9 30.2 Comprehensive income for the period Profit (loss) Comprehensive income for the period Profit (loss) 16.0 16.0 168.9 Other comprehensive income Recycling of foreign currency translation difference to profit (loss) Other comprehensive income Recycling of foreign currency translation difference to profit (loss) 30.2 0.0 Foreign currency translation differences 2.3 (34.2) (18.2) (31.9) Foreign currency translation differences (2.8) (4.6) (7.4) Total comprehensive income for the period - - - 2.3 0.0 (15.9) Total comprehensive income for the period - - - 27.5 164.3 - 191.7 Dividends paid Issue of share capital Capital decrease Treasury shares purchased Treasury shares sold (196.8) (196.8) 0.0 0.0 (31.2) 0.0 Dividends paid Issue of share capital Capital decrease Treasury shares purchased Treasury shares sold 0.0 0.0 0.0 (0.0) (31.2) 31.2 (31.2) (0.1) (201.9) 201.9 (132.6) 0.0 (10.0) 0.0 (36.5) 0.0 (132.6) 0.0 Share-based payment transactions Divestment of a subsidiary 0.0 0.0 0.0 Share-based payment transactions Divestment of a subsidiary (14.1) (0.4) (14.1) 0.0 0.4 Balance as of 12/31/2022 91.1 0.2 114.8 0.0 (0.5) (7.1) 0.0 107.4 Balance as of 12/31/2021 101.1 0.3 145.9 (0.0) (2.8) 207.9 0.0 351.3 Non-controlling interests During 2021, Otello Corporation ASA’s ownership in Bemobi was reduced to 36%. Please see Note 16 for further information. Share capital decrease Reference is made to the resolution by the extraordinary general meeting on September 30, 2021, where a resolution was passed to reduce the share capital of the parent company, Otello Corporation ASA, by the cancellation of 11,200,000 treasury shares. The share capital reduction has been registered with the Norwegian Register of Business Enterprises, and the new registered share capital of the parent company was NOK 2,021,994.54, and the total share count was 101,099,727. Reference is made to the resolution by the extraordinary general meeting on January 27, 2022, where a resolution was passed to reduce the share capital of the parent company, Otello Corporation ASA, by the cancellation of 9,999,998 treasury shares. The share capital reduction has been registered with the Norwegian Register of Business Enterprises, and the new registered share capital of the parent company is NOK 1,821,994.58, and the total share count was 91,099,729. Treasury shares and ordinary share During 2022, Otello purchased 10,000,000 treasury shares for $31.2 million, and sold 0 treasury shares for $0.0 million. During 2022, 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, 2022, Otello owned 0 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. Other equity Other equity consists of all other transactions, including but not limited to, total recognized income and expense for the current period. 32 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 33 CONSOLIDATED STATEMENT Note 1 General information An impairment loss is recognized whenever the carrying amount of an asset, its cash-generating unit or a group of units exceeds its recoverable amount. The cash-generating unit is considered to be the acquired companies. Please see note 13 for further information. Impairment losses are recognized in the statement of comprehensive income. Calculation of recoverable amount: The recoverable amount of the Group’s assets is the greater of their fair value less the cost of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recover- able amount is determined for the cash-generating unit to which the asset belongs. 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, 2022, comprise the Company and its subsidiaries. These consolidated financial statements have been approved and issued by the Board of Directors on April 20, 2023 for approval by the Annual General Meeting on June 2, 2023. Reversals of impairment: With respect to assets other than goodwill, 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. Note 2 Summary of significant accounting policies Dividends Dividends on shares are recognized as a liability in the period in which they are declared. Provisions A provision is recognized in the statement of financial position when the Group has a currently existing legal or constructive obligation as a result of a past event, and it is probable that a future outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Statement of compliance and basis of the consolidated financial statements The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and accompanying 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. Contingent consideration Contingent consideration is measured at fair value using the expected payment amounts and their associated probabilities (i.e., probabili- ty-weighted). Please see note 3 for further information. Basis of preparation The consolidated financial statements have been prepared on a historical cost basis, and are presented in US dollars (USD), rounded to the near- est hundred thousand, unless otherwise stated. As a result of rounding differences, amounts and percentages may not add up to the total. Receivables and debts are assumed to have a market value equal to the carrying amount. 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. Trade and other payables Trade and other payables are recognized at amortized cost. Net financing costs Other finance income and costs comprise primarily foreign exchange gains and losses and interest income. Interest income is recognized using the effective interest method. Dividend income is recognized on the date upon which the entity’s right to receive payment is established. Consolidation principles Subsidiaries – consolidated financial statements: Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Income tax Income tax on the profit or loss for the year comprises current and deferred taxes. Income tax is recognized in profit or loss or other compre- hensive income, except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Please see note 9 for further information. 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. Investments in associates are accounted for using the equity method and are recognized initially at cost (except for investments in associates arising from the loss of control of a subsidiary). Foreign currency Foreign currency transactions: Transactions in foreign currencies are translated at the foreign exchange rate prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to the functional currency at the foreign exchange rate prevailing on that date. Foreign exchange differences arising from translation are recognized in the statement of comprehensive income. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate prevailing on the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are recognized at fair value are translated to USD at foreign exchange rates prevailing on the date the fair value was determined. The functional currency for the Group is USD. Earnings per share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Dilut- ed EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which include share options granted to employees. Operating and segment information Throughout the year ended December 31, 2022, 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 of 36.0%. The group also retains rights to its Rocket Optimizer™ technology via its Skyfire business and owns some minor investments in other companies. Following the successful IPO of the Bemobi business in February 2021 and the sale of the AdColony business in April 2021, those businesses no longer form part of the consolidated Group and are considered discontinued operations. See note 10 for further information regarding discontinued operations. Financial instruments Cash and cash equivalents: Cash and cash equivalents comprise cash balances and call deposits. Impairment Non-financial assets: The carrying amounts of the Group’s assets are reviewed annually to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. 34 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 35 CONSOLIDATED STATEMENT Share compensation program Otello used to have two equity-based incentives: ordinary stock options and Restricted Stock Units (“RSU”). As of December 31, 2022, there are no options outstanding for current Otello employees. Combined, the IPO of the Bemobi business and the sale of the AdColony business in 2021 was deemed to constitute a change of control under the terms of the outstanding options agreements for shares in Otello. This led to the mandatory exercise of those options. Following the successful IPO of the Bemobi business in 2021, responsibility for the original Bemobi option plan transferred to Bemobi Mobile Tech S.A, and accordingly Otello Corporation was released from all obligations related to this option plan. This transfer of responsibility was recognised in the financial statements through a reversing of the previous cost that had been recognised. As of December 31, 2022, the only outstanding options within the Group relate to the RSU Award replacement for Pedro Ripper for shares in Bemobi Mobile Tech S.A. There are no unvested RSUs left for Otello employees as of December 31, 2022. The RSUs granted in 2020 were granted to Pedro Ripper and were recognized, in accordance with IFRS 2, in the statement of comprehensive income. However, that RSU Award has been terminated and was replaced in 2021. Please see Note 21 for more information. Note 3 Critical accounting estimates and significant judgments The preparation of consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assump- tions that affect the reported amounts of revenues, expenses, assets and liabilities, and the 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. Estimates and judgments are evaluated on an ongoing basis, based upon historical results and experience, consultations with experts, trends and other methods which management considers reasonable under the circumstances, as well as forecasts as to how these might change in the future. Significant judgments Significant judgements in applying the entity’s accounting policies are specified below. Contingent considerations The Group has previously entered into earnout agreements in connection with acquisitions. An analysis is given in Note 21 of how the provisions related to contingent considerations have been calculated. Compensation to executive management in 2022 Benefit Pension exercised Remu- Other com- comp- options/ [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. 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 2021 or 2022 to any member of the Executive Team or Board of Directors from the Company or any business owned by the Company, except that mentioned above. In 2021 and 2022, there has been no significant addi- tional compensation given to directors with regard to special services performed outside of their normal function. Total com- Note 4 Employee benefits expense Payroll expenses [USD million] 2022 2021 Salaries and bonuses (1.6) (2.8) Social security cost (0.3) (1.2) Pension cost (0.1) (0.2) Insurance and other employee benefits (0.0) (0.1) Payments to long-term contractual staff (0.2) (0.1) Stock-based compensation expense, including social security cost 0.0 (2.2) Total (2.2) (6.7) Average number of full time equivalents 6 10 The Norwegian companies in the Group are obligated to follow the Mandatory Occupational Pensions Act and these companies’ pension schemes follow the requirements as set in the Act. Compensation to the CEO and Chairman of the Board The CEO has waived his rights under Section 15-16 of the Norwegian Working Environment Act of 2005 relating to employees’ protection, termination of employment contracts, etc. As compensation, the CEO is entitled to receive a termination amount of two years’ base salary if the employment contract is terminated by the Company. As of December 31, 2022, 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. 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. An accrual for all 2022 bonuses for senior executives has been recognized in the consolidated financial statements. Bonuses will be paid in 2023. Refer to the remuneration report for further information, available on Otello’s website: https://otellocorp.com/ 36 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 37 CONSOLIDATED STATEMENT Compensation to executive management in 2021 Benefit Pension exercised Remu- Other com- com- options/ Total com- [USD thousands] neration Salary Bonus pensation pensation RSUs pensation Executive Manangement Lars Boilesen, CEO - 615.09 639.66 34.28 79.87 3 670.35 5 039.26 Petter Lade, CFO - 233.21 159.91 2.25 22.40 652.51 1 070.27 The Board of Directors Andre Christensen, Chairman 76.76 - - - - - 76.76 Anooj Unarket, Board Member - - - - - - - Birgit Midtbust, Board Member 35.47 - - - - - 35.47 Maria Borge Andreassen, Board Member 35.47 - - - - - 35.47 Song Lin, Board Member 31.98 - - - - - 31.98 The Nomination Committee Simon Davies, Chairman from 15 January 2021 - Nils Foldal, Chairman to 15 January 2021 0.29 - - - - - 0.29 Jakob Iqbal, Member 3.49 - - - - - 3.49 Kari Stautland, Member 3.49 - - - - - 3.49 Total 186.95 848.30 799.57 36.53 102.27 4 322.86 6 296.48 Presented above are the bonuses earned in 2020 and paid in both 2020 and 2021, which are based on the 2020 results. Shares, options, RSUs owned by members of the Board and the Chief Executive Officer as of December 31, 2021 [In thousands of shares, options and RSUs] Name Commission Shares Total Andre Christensen Chairman 42 42 Frode Jacobsen Board Member - - Birgit Midtbust Board Member 11 11 Maria Borge Andreassen Board Member - - Anooj Unarket Board Member 0 0 Lars Boilesen CEO 261 261 314 314 Shares, options and RSUs owned by other members of Executive Management as of December 31, 2021 [In thousands of shares, options and RSUs] Name Title Shares Total Petter Lade CFO 67 67 67 67 Shares, options, RSUs owned by members of the Board and the Chief Executive Officer as of December 31, 2022 [In thousands of shares, options and RSUs] 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 On December 20, 2021, Lars Boilesen sold 260 613 shares in Otello Corporation ASA to his fully owned company HST INVEST AS at an average price of 8,35kr per share. After this transaction, Lars Boilesen holds 0 shares in Otello Corporation and HST INVEST AS holds 260 613 shares in the company. Note 5 Depreciation and amortization expenses Depreciation and amortization expenses [USD million] Note 2022 2021 Property, plant and equipment 14 (0.6) (0.7) Right of use assets 15 (0.1) (0.1) Total (0.7) (0.8) Shares, options and RSUs owned by other members of Executive Management as of December 31, 2022 [In thousands of shares, options and RSUs] Title Shares Total Petter Lade CFO 0 0 0 0 On December 21, 2021, Petter Lade sold 66 888 shares in Otello Corporation ASA at an average price of 8,13kr per share and subsequently entered into a forward contract for 66 888 shares expiring 21.03.2023 and forward price of 8,2406kr per share. After this transaction Petter Lade holds 0 shares in Otello Corporation and 66 888 shares through a forward contract. 38 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 39 CONSOLIDATED STATEMENT Note 6 Other operating expenses Note 8 Net financial items Other operating expenses [USD million] 2022 2021 Audit, legal and other advisory services (0.7) (1.2) Purchase of equipment, not capitalized (0.2) (0.2) Rent and other office expenses 0.0 (0.0) Hosting expenses, excl. depreciation cost (0.1) (0.1) Other expenses (0.4) (0.4) Total (1.4) (1.9) [USD million] Note 2022 2021 Share of profit (loss) from associated companies 16 4.1 3.1 Other net financial items Interest income 1.1 0.3 Interest expenses (0.0) (0.4) Net FX gains (losses) 10.7 7.8 Other net financial income (expense) (0.1) (0.0) Profit (loss) sale of shares (0.7) (0.3) Total other net financial items 11.1 7.3 Total net financial items 15.2 10.4 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. Audit fees [USD million] 2022 2021 Statutory audit (0.2) (0.3) Assurance services - (0.0) Tax advisory services (0.0) - Other services (0.0) (0.1) Total (0.2) (0.3) Note 7 Impairment gains (losses) and restructuring expenses 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 36.0%. 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, 2022. See Note 16 for further information regarding the Bemobi Mobile Tech S.A investment. During 2021, Otello recognized impairment expenses in connection with its loan and investment in the Vewd Group, based on the uncertainty of recovery and the commencement of a Chapter 11 bankruptcy proceeding. The value of both the loan and the investment was written down to zero. During 2021, Otello recognized restructuring expenses in connection with a strategic cost reduction that will better align costs with revenues. The restructuring expenses recognized this year relate mainly to the reduction in corporate staffing levels following the IPO of the Bemobi businesses and the sale of the AdColony business. Impairment gains (losses) and restructuring expenses [USD million] 2022 2021 Impairment gains (losses) 6.7 (59.8) Salary restructuring expense - (0.1) Impairment gains (losses) [USD million] Note 2022 2021 Bemobi Mobile Tech S.A shares 16 6.7 (41.4) Vewd Software AS loan - (8.3) Last Lion Holdings Ltd shares - (10.1) Total 6.7 (59.8) 40 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 41 CONSOLIDATED STATEMENT Deferred tax assets (liabilities) and changes during the year Posted to statement Disposals of compre- Posted to hensive directly tinued Balance income the Balance 2022 [USD million] 1/1/22 12/31/22 Accrual of tax on capital gain in Brazil (10.2) 10.2 - - 0.0 Total related to temporary differences (10.2) 10.2 - - 0.0 Deferred tax liabilities related to amortizable excess value from business combinations 0.0 - - - 0.0 Tax loss carryforwards recognized in the statement of financial position 0.0 - - - 0.0 Net deferred tax assets (liabilities) recognized in the statement of financial position (10.2) 10.2 - - 0.0 Note 9 Taxes discon- to equity operations [USD million] 2022 2021 Income tax expense recognized in the statement of comprehensive income: Current tax (0.0) (0.1) Tax paid for change of investment regime in Brazil (13.9) 0.0 Impact of changes in foreign exchange rate 1.5 0.0 Changes in deferred taxes 10.2 7.6 Income tax expense (2.2) 7.5 During the year ended December 31, 2022, the Group elected to change the investment regime for its holding of Bemobi shares in Brazil. This resulted in the previously recognized deferred tax liability of USD 10.2 million becoming a current tax liability. The increase in the share price of the Bemobi shares since the previous reporting date also resulted in an increase in the total income tax expense, resulting in a final tax payment equivalent to USD 13.9 million to change the investment regime. Movements in the foreign exchange rate between the initial provision for deferred tax and the final tax payment had an impact on the tax expense of USD 1.5 million. Posted to statement Disposals of compre- Posted to hensive directly tinued Balance income the Balance 2021 [USD million] 1/1/21 12/31/21 Property, plant and equipment 0.6 - - (0.6) 0.0 Intangible assets 2.5 - - (2.5) 0.0 Accounts receivable 0.1 - - (0.1) 0.0 Payroll tax on share options (0.6) - - 0.6 0.0 Provisions and accruals 0.3 - - (0.3) 0.0 Other 3.7 - - (3.7) 0.0 Accrual of tax on capital gain in Brazil 0.0 7.5 - (17.7) (10.2) Total related to temporary differences 6.6 7.5 - (24.3) (10.2) Deferred tax liabilities related to amortizable excess value from business combinations (1.2) - - 1.2 0.0 Tax loss carryforwards 38.2 - - (38.2) 0.0 Set off of tax (valuation allowance) (5.4) - - 5.4 0.0 Tax loss carryforwards not recognized in the statement of financial position (12.1) - - 12.1 0.0 Tax loss carryforwards recognized in the statement of financial position 20.7 - - (20.7) 0.0 Net deferred tax assets (liabilities) recognized in the statement of financial position 26.1 7.5 - - (10.2) Recognized deferred tax assets and liabilities: Deferred tax balances presented in the statement of financial position comprise the following: discon- to equity operations [USD million] 2022 2021 Deferred tax liabilities related to temporary differences - (10.2) Net deferred assets (liabilities) 0.0 (10.2) Otello recognizes deferred tax assets related to tax losses in the statement of financial position when it is considered probable that taxable profit will be generated in future periods against which these tax loss carry forwards can be utilized. Management does not believe that suffi- cient future taxable profits will be generated in future periods against which these tax loss carry forwards can be utilized, and accordingly they are not recognized in the statement of financial position as of December 31, 2022. The Group’s gross tax loss carryforwards expire as follows: United [USD million] States Norway Ireland Total No expiration deadline 0.0 14.4 4.6 19.0 Total 0.0 14.4 4.6 19.0 42 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 43 CONSOLIDATED STATEMENT Reconciliation of effective tax rate [USD million] 2022 2021 Profit (loss) before tax 17.9 (58.7) Income tax using the corporate income tax rate in Norway (22% in 2022 / 22% in 2021) (3.9) 12.9 Effect of changes in tax rates 0.0 0.0 Effect of tax rates outside Norway different from 22% / 22% 2.1 0.5 Effect of non-taxable and non-deductible items (3.8) (5.7) Deferred tax assets from previously unrecognized tax losses 0.0 0.0 Effect of non-recognition of certain deferred tax assets (0.6) (0.1) Use of prior tax losses 4.1 0.0 Other effects (0.0) (0.2) Total tax expense for the year (2.2) 7.5 Effective tax rate 12.3 % 12.8 % Note 10 Discontinued operations Sale of AdColony to Digital Turbine During the year ended December 31, 2022, Otello recognised as income an amount of $0.3m related to the settlement of the exact cost of em- ployer taxes on the bonuses paid by AdColony to employees as a result of the sale transaction. This amount was received in full during 2022. The cash for the earnout amount payable by Digital Turbine, previously recognised as a receivable of $191.7m, was received by Otello in early 2022. To assist AdColony in paying bonus obligations tied to the sale of the business, Otello had provided a short-term loan of $850,000 to AdColony. Repayment of this was settled in full at the same time as the earnout payment. As of December 31, 2022, there are no remaining items recognized as receivables or payables related to the sale of AdColony to Digital Turbine. Material Indemnification-Related Post-Earnout Obligations 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 (“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 should be made to the full text of the SPA, which can be found at: https://ir.digitalturbine.com/sec-filings/all-sec-filings/content/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. Holding AS SPA, reference The effective tax rate in 2022 of 12.3% differs from the statutory rate of 22.0% due to the following key items: • The Group elected to change the investment regime for its holding of Bemobi shares in Brazil. This change required the Group to pay tax in Brazil based on the difference between the share market price of the Bemobi shares on March 31, 2022 and the tax cost basis. • 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. • The Group expects that it will utilize som of the tax loss carryforwards available to reduce the income tax that would otherwise be pay- able on the taxable profits for the year. Permanent differences Permanent differences comprise changes in the fair value of contingent considerations, amortization of acquired intangibles assets, impairment losses, share-based remuneration costs and other non-deductible costs. GDPR complaint filed with the Norwegian Data Protection Authority (DPA) Please refer to Note 21 for information on this matter. Bemobi IPO On February 9, 2021, Otello announced that Bemobi Mobile Tech S.A. ("Bemobi Brazil"), had set a price of 22.00 Brazilian real (“R$”) per common share for its IPO. Based on this price, the gross proceeds of the primary component of the IPO reached R$ 1,094,117,684 ($203,943,536), resulting in an equity value, post-money, of Bemobi Brazil at IPO of R$ 2,000,000,024 ($372.800.004). Information regarding the IPO of Bemobi Brazil, including the Brazilian Final Prospectus, is available in Portuguese on the websites of Bemobi Brazil (https://www.bemobi.com.br), the Brazilian underwriters, the CVM and the São Paulo stock exchange. Following the successful IPO of Bemobi on Bovespa in Brazil, Otello Corporation ASA ("Otello") is now a major shareholder in Bemobi Brazil with an ownership below 50%. Consequently, Bemobi financials are no longer consolidated into Otello's accounts but are booked according to the equity method. Please see Note 16 for more information about the equity method accounting. 44 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 45 CONSOLIDATED STATEMENT Note 11 Earnings per share Note 12 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. Earnings per share 2022 2021 Earnings (loss) per share: Basic earnings (loss) per share (USD) 0.17 1.35 Diluted earnings (loss) per share (USD) 0.17 1.35 Shares used in earnings per share calculation 93 565 482 124 603 099 Shares used in earnings per share calculation, fully diluted 93 565 482 124 603 099 Earnings (loss) per share (continuing operations): Basic earnings (loss) per share (USD) 0.17 (0.41) Diluted earnings (loss) per share (USD) 0.17 (0.41) Shares used in earnings per share calculation 93 565 482 124 603 099 Shares used in earnings per share calculation, fully diluted 93 565 482 124 603 099 Earnings (loss) per share (discontinued operations): Basic earnings (loss) per share (USD) 0.00 1.77 Diluted earnings (loss) per share (USD) 0.00 1.77 Shares used in earnings per share calculation 93 565 482 124 603 099 Shares used in earnings per share calculation, fully diluted 93 565 482 124 603 099 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. In periods with negative net income, the dilutive instruments will have an anti-dilutive effect when calculating diluted earnings per share. For this reason, there is no difference between earnings per share and diluted earnings per share for these periods. 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. 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. Reconciliation of gross profit [USD million] 2022 2021 Total operating revenue 0.2 0.1 Publisher and revenue share cost 0.0 0.0 Gross profit 0.2 0.1 Reconciliation of operating profit (loss) to EBITDA and adjusted EBITDA [USD million] 2022 2021 Operating profit (loss), (EBIT) 2.6 (69.1) Depreciation and amortization expenses 0.7 0.8 Impairment gains (losses) (6.7) 59.8 EBITDA (3.4) (8.6) Restructuring expenses 0.0 0.1 Stock-based compensation expenses 0.0 2.2 Adjusted EBITDA (3.4) (6.3) 46 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 47 CONSOLIDATED STATEMENT Note 13 Impairment testing Note 15 Right-of-use assets and lease liabilities Otello has carried out impairment testing as of December 31, 2022, according to IAS 36. As of December 31, 2021, all previously recognized good- will and intangible assets were derecognized following the loss of control of both the AdColony and Bemobi businesses. As a result of the testing, Otello has recorded adjustments to the impairment of one asset in the current year. Investment in Bemobi Mobile Tech S.A The fair value of the investment in Bemobi Brazil has been reassessed based on the share price of that business as of December 31, 2022. With a price per share of 14.31 Brazilian real as of that date, a gain of USD 6.7 million has been recognized by reducing part of the previously- recognized impairment. See Note 16 for further information regarding Otello's investment in Bemobi Mobile Tech S.A There is otherwise no indication of impairment of other assets that would require impairment tests to be conducted upon those. The remaining lease liability and right of use asset relate to the Group’s office in Oslo, Norway. Lease liabilities (USD million) 2022 2021 Balance as of 1/1 0.3 4.0 Additions 0.0 1.8 Translation differences (0.0) (0.1) Lease payments (0.1) (2.0) Interest expense on lease liabilities 0.0 0.1 Derecognized upon loss of control of business - (3.5) Lease liabilities as of 12/31 0.2 0.3 Of which: Current lease liabilities (less than 1 year) 0.1 0.1 Non-current lease liabilities (more than 1 year) 0.1 0.2 Balance as of 12/31 0.2 0.3 Note 14 Property, plant and equipment Right of use assets (USD million) 2022 2021 Balance as of 1/1 0.3 3.0 Additions 0.0 1.8 Depreciation (0.1) (1.9) Adjustment for depreciation related to Lease receivables - 0.5 Derecognized upon loss of control of business - (3.0) Right of use assets as of 12/31 0.2 0.3 Depreciation for the year (0.1) (1.9) Continuing operations (0.1) (0.1) Discontinued operations - (1.8) 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. [USD million] 2022 2021 Acquisition cost Acquisition cost as of 1/1 7.1 29.3 Additions 0.0 (0.1) Translation differences (0.6) (0.6) Derecognized upon loss of control of business 0.0 (21.6) Acquisition cost as of 12/31 6.5 7.1 Accumulated depreciation and impairment losses Depreciation and impairment losses as of 1/1 (6.1) (23.3) Depreciation (0.6) (1.0) Translation differences 0.5 0.3 Derecognized upon loss of control of business 0.0 17.9 Accumulated depreciation and impairment losses as of 12/31 (6.2) (6.1) Net book value as of 12/31 0.3 1.0 Depreciation for the year (0.6) (1.0) Continuing operations (0.6) (0.7) Discontinued operations - (0.3) Impairment losses for the year - - Useful life Up to 10 years Depreciation plan Linear IFRS 16 effects on the consolidated statement of comprehensive income for the year (USD million) 2022 2021 Operating lease expenses recognized under operating expenses decreased (0.1) (0.1) Depreciation expense increased as a result of depreciation of ROU assets 0.1 0.1 Net interest expense increased as a result of recognition of the lease liability 0.0 0.0 Translation differences (0.0) 0.0 Net effect (0.0) (0.0) Future lease payments The future minimum lease payments under non-cancellable lease contracts are as follows: Payments for leased premises: 2022 2021 Less than one year 0.1 0.1 Between one to five years 0.1 0.2 More than five years - - Total 0.2 0.3 48 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 49 CONSOLIDATED STATEMENT A reconciliation of the cumulative reported balance of the investment in Bemobi Mobile Tech S.A is as follows. [USD million] 2022 2021 Balance as of 1/1 Initial recognition under the equity method 133.2 133.2 Share of the profit (loss) 10.3 4.8 Amortization of excess values (3.4) (1.8) Dividends received (1.3) 0.0 FX adjustment (18.1) (5.4) Impairment (32.1) (41.4) Balance as of 12/31 88.6 89.4 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 88.6 89.4 Note 16 Investments The table below gives a breakdown of the total amount of other investments recognized. [USD million] 2022 2021 Investment in Bemobi Mobile Tech S.A (associate) 88.6 89.4 Investments in other shares 0.8 0.9 Total 89.4 90.3 Investment in Bemobi Mobile Tech S.A Following the successful IPO of Bemobi on Bovespa in Brazil, the Group is now a major shareholder in Bemobi Mobile Tech S.A with an ownership of 36.0%. For more information regarding the IPO, please see Note 10. Key financial information regarding Bemobi Mobile Tech S.A The summary below provides key financial information for the full year 2022 as well as for the period of 2021 where Bemobi Mobile Tech S.A was accounted for as an associated company. Share of profit (loss) from associated companies 2022 2021 Share of the profit (loss) 6.0 4.9 Amortization of excess values (1.8) (1.8) Share of profit (loss) from associated companies 4.1 3.1 2021 from February [BRL million] 2022 10. 2021 Revenue 1 475.8 488.8 EBIT 98.7 87.7 Net profit (loss) 85.6 75.4 Assets 1 349.3 1 445.5 Non-current liabilities 31.7 66.3 Current liabilities 259.1 349.4 Equity 1 058.5 1 029.7 Otello’s share of equity in BRL 381.0 370.6 Otello’s share of equity in USD 72.1 66.5 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 $0.8 million. 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 notifica- tions 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. The investment in Bemobi Mobile Tech S.A is recognized using the equity method. [USD million] 2022 2021 Balance as of 1/1 89.4 0.0 Initial recognition under the equity method 133.2 Movements reflected through the statement of comprehensive income Share of the profit (loss) 6.0 4.8 Amortization of excess values (1.8) (1.8) Impairment 5.6 (41.4) Other movements Dividends received (1.4) 0.0 FX adjustment (9.2) (5.4) Balance as of 12/31 88.6 89.4 50 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 51 CONSOLIDATED STATEMENT Note 17 Assets Note 19 Financial risk and financial instruments Non-current assets by location [USD million] 2022 2021 Non-current assets located in Brazil 88.6 89.4 Non-current assets located in Norway 1.1 1.9 Non-current assets located in United States 0.3 0.3 Total 89.9 91.6 The breakdown of non-current assets above does not include financial instruments, deferred tax assets and other non-current assets. 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 16 for further information. 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. 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 main- tains 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. Note 18 Other liabilities Foreign exchange contracts During 2022 and 2021, 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, 2022. Other non-current liabilities [USD million] Note 2022 2021 Stock-based compensation liability 4 0.0 0.6 Total 0.0 0.6 Other current liabilities [USD million] Note 2022 2021 Stock-based compensation liability 4 0.7 0.6 Public duties payable 0.2 0.2 Accrued bonuses, commission and other employee benefits 1.1 1.2 Accrued operating expenses 0.1 0.3 Other current liabilities 0.0 0.0 Total 2.1 2.4 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. Credit risk is assessed for each specific customer. The Group's revenue from continuing oper- ations is immaterial and the large majority of outstanding receivables at the end of 2021 related to the final payment due from Digital Turbine, Inc. related to the sale of the AdColony business. That receivable was received in early 2022. With the low remaining level of receivables, 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 signifi- cant. Credit facility As at December 31, 2022, Otello has no outstanding loans payable. 52 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 53 CONSOLIDATED STATEMENT Note 20 Corporate structure Note 22 Related parties Below is a list of group companies in the Otello group as at December 31, 2022: 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% Privacy & Performance Ireland Ltd Dublin Ireland Corporate 100% Skyfire Labs, Inc. San Mateo United States Corporate 100% Indirectly owned subsidiaries None Bemobi The Group holds a 36% equity interest in Bemobi Mobile Tech S.A through common shares. Please see Note 16 for further details on the status of this equity interest. The Group also continues to provide accounting and legal support to Bemobi on a transitional basis, which is priced on an arm's-length basis and all outstanding balances are settled within normal commercial terms. Agreement with Bemobi earnout participants Please see Note 21 for details of the transaction with the Bemobi earnout participants. Last Lion / Vewd (Opera TV) The Group holds a 27% equity interest in Last Lion Holdings Ltd, through preferred shares. The Group has also provided a loan to Vewd Soft- ware AS (formerly Opera TV AS). As previously reported, the Group has written down the value of the shares and the loan to zero. During the year-ended December 31, 2022, liquidators were appointed to wind up Last Lion Holdings Ltd. The Group continues to view it as unlikely that any value will be received for either its shares or loan. 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 0.3% (2021: 0.3%) of the Group's voting share as per December 31, 2022. Information regarding compensation for the Board of Directors and executive management can be found in Note 4. Executive Management have also previously participated in the Group's stock option and RSU program (see Note 4), although there are currently no such plans operating. Note 21 Contingent liabilities Note 23 Shares and shareholder information As of December 31, 2022, 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 2, 2022, 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, 2023. Accounting treatment of Security Holders agreements with Bemobi Mobile Tech S.A in the consolidated financial statements The RSU award agreement with Bemobi Brazil's CEO was terminated in January 2021, and contained vesting conditions tied to Pedro Ripper remaining as Bemo- bi CEO as of the applicable vesting date, to avoid forfeiture. A contingent consideration arrangement in which the payments are automatically forfeited if employment terminates, is according to IFRS 2 Share-based payments, to be recognized as remuneration for post combination ser- vices. The costs associated with the RSU award were therefore recognized, in accordance with IFRS 2, in the statement of comprehensive income in the 2020 consolidated financial statements. An amendment to the Security Holders agreement made in January 2021, in which an additional portion of 4.88% of shares were granted to Be- mobi Brazil CEO, Pedro Ripper, is considered to be a replacement of the terminated RSU award. This amendment should therefore be recognized as a modification of the RSU Award, and as such the costs associated with the grant are recognized, in accordance with IFRS 2, in the statement of comprehensive income in the 2021 consolidated financial statements. The impact of this amendment is recognized within the operating costs of discontinued operations. 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. Refer to Note 10 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. Share capital decrease Reference is made to the resolution by the extraordinary general meeting on March 29, 2022, where a resolution was passed to reduce the share capital of the parent company, Otello Corporation ASA, by the cancellation of 9 999 998 treasury shares. The share capital reduction has been registered with the Norwegian Register of Business Enterprises, and the new registered share capital of the parent company is NOK 1,821,994.58, and the total share count is 91 099 729. Treasury shares and ordinary shares During 2022, Otello purchased 10 000 000 (2021: 36 500 470) treasury shares for $31.2 million (2021: $132.6 million), and sold 0 (2021: 3,272) trea- sury shares for $0.0 million (2021: $0.0 million). As of December 31, 2022, Otello owned 0 treasury shares (December 31; 2021: 11 199 998). 54 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 55 CONSOLIDATED STATEMENT Dividends On August 18, 2022, Otello paid a dividend to shareholders of NOK 21 per share and NOK 1,913,094,309 in total. Otello did not pay a dividend in 2021. The Board of Directors proposes that the 2022 Annual General Meeting does not approve any dividend payment. Note 24 Events after the reporting period Ownership structure The 20 largest shareholders of Otello Corporation ASA shares as of December 31, 2022, were as follows: 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. 2022 2022 2021 Owner’s Owner’s and voting and voting [In thousands of shares] Shares share % share % SAND GROVE OPPORTUNITIES AS 28 480 31.3 % 0.0 % BANK OF AMERICA, N.A. 18 795 20.6 % 0.0 % VERDIPAPIRFONDET DNB TEKNOLOGI 6 385 7.0 % 5.5 % AREPO AS 5 199 5.7 % 4.6 % GOLDMAN SACHS INTERNATIONAL 4 355 4.8 % 19.0 % THE BANK OF NEW YORK MELLON SA/NV 2 600 2.9 % 4.5 % VERDIPAPIRFONDET NORDEA NORGE VERD 2 041 2.2 % 3.1 % PICTET & CIE (EUROPE) S.A. 1 921 2.1 % 0.0 % SKANDINAVISKA ENSKILDA BANKEN AB 1 901 2.1 % 1.6 % THE BANK OF NEW YORK MELLON SA/NV 1 790 2.0 % 0.0 % J.P. MORGAN SE 1 343 1.5 % 0.0 % SKANDINAVISKA ENSKILDA BANKEN AB 1 227 1.3 % 0.0 % BONHEUR ASA 1 217 1.3 % 1.1 % THE BANK OF NEW YORK MELLON SA/NV 994 1.1 % 0.0 % SOCIETE GENERALE 856 0.9 % 2.5 % VERDIPAPIRFONDET NORDEA AVKASTNING 795 0.9 % 0.8 % THE NORTHERN TRUST COMP, LONDON BR 784 0.9 % 0.7 % BÆKKELAGET HOLDING AS 505 0.6 % 0.5 % J.P. MORGAN SECURITIES PLC 483 0.5 % 0.0 % VERDIPAPIRFONDET NORDEA KAPITAL 476 0.5 % 0.7 % Sum 82 147 90.2 % 44.8 % Other shareholders 8 953 9.8 % 55.2 % Total numbers of shares 91 100 100.0 % 100.0 % 56 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 57 PARENT COMPANY Statement of Comprehensive Income USD million Note 2022 2021 Revenue 0.2 0.0 0.0 Total operating revenue 0.2 Employee benefits expense Depreciation and amortization expenses Other operating expenses 2 3 4 (2.0) (0.7) (1.3) (4.3) (0.6) (2.9) Total operating expenses (3.9) (3.7) (7.9) (7.9) Operating profit (loss), excluding impairment and restructuring expenses Impairment gains (losses) and restructuring expenses Operating profit (loss) 5 22.8 19.2 1.3 (66.4) (74.3) 59.1 Net financial items 6 Profit (loss) before income taxes 20.5 (15.2) 0.0 Income taxes 7 0.0 Parent Company Profit (loss) 20.5 (15.2) Financial Statements 2022 Other comprehensive income: Items that may or will be transferred to profit (loss) Foreign currency translation differences Otello Corporation ASA (24.3) (12.0) (27.2) Total comprehensive income (loss) (3.8) Profit (loss) attributable to: Owners of Otello Corporation ASA 20.5 (3.8) (15.2) (27.2) Total comprehensive income (loss) attributable to: Owners of Otello Corporation ASA Otello Corporation ASA - Annual Report 2022 59 PARENT COMPANY Statement of Statement of Financial Position Financial Position USD million Note 12/31/2022 12/31/2021 USD million Note 12/31/2022 12/31/2021 Assets Shareholders’ equity and liabilities Property, plant and equipment Right of use assets Investments in subsidiaries Other investments 8 9 10 11 0.3 0.2 91.8 0.8 0.9 0.3 80.0 0.9 Equity attributable to owners of the company 26.2 258.0 258.0 Total equity 26.2 Liabilities Total non-current assets 93.1 82.2 Lease liabilities 9 0.1 0.2 Other non-current liabilities 13 81.2 90.6 Accounts receivable Other receivables Cash and cash equivalents 0.1 0.4 15.0 0.1 193.1 78.1 Total non-current liabilities 81.3 90.8 Lease liabilities Accounts payable Other current liabilities 9 0.1 0.2 0.8 0.1 0.2 4.3 Total current assets Total assets 15.4 271.2 353.4 12 108.6 Total current liabilities Total liabilities 1.1 82.4 4.6 95.4 Total equity and liabilities 108.6 353.4 Oslo, April 20, 2023 Andre Christensen Chairman of the Board Song Lin Karin Fløistad Maria Borge Andreassen Magdalena Kadziolka Lars Boilesen CEO 60 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 61 PARENT COMPANY Statement of Cash Flows USD million Note 2022 2021 Cash flow from operating activities Profit (loss) before taxes 20.5 (15.2) Depreciation and amortization expense 3 5 13 13 0.7 (22.8) (0.0) (0.0) 0.4 0.6 66.4 (0.1) 0.1 (51.3) 1.3 Impairment (gains) losses recognized in profit (loss) Changes in accounts receivable 1) Changes in accounts payable 1) Other adjustments for which cash effects are investing or financing cash flow Other adjustments for non-cash items 2.5 Share-based remuneration FX differences related to changes in balance sheet items 2 0.0 5.9 (5.8) (2.4) Net cash flow from operating activities 7.1 (6.3) Cash flow from investing activities Proceeds from sale of shares 10 11 13 13 10 10 192.0 (0.0) - (14.8) 0.9 - 185.5 (0.1) 73.4 (2.0) - 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 Repayment of loans to other companies Loans given to other companies (0.9) Net cash flow from investing activities 177.9 256.0 Cash flow from financing activities Payments of other equity instruments Payments to acquire entity’s shares Repayments of loans and borrowings Payment of finance lease liabilities, net Payments of dividends to equity holders of Otello Corporation ASA - (31.2) - (0.1) (196.8) (0.1) (132.6) (35.5) (0.1) 9 0.0 Net cash flow from financing activities Net change in cash and cash equivalents (228.1) (43.1) (168.3) 81.4 Cash and cash equivalents (beginning of period) 78.1 2.7 Effects of exchange rate changes on cash and cash equivalents (20.0) (6.0) Cash and cash equivalents 2) 15.0 78.1 1) This includes changes in intercompany balances. See Note 13 for further information. 2) Of which $0.1 million (2021: 0.1 million) is restricted cash as of December 31, 2022. 62 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 63 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 million USD million Balance as of 12/31/2021 101.1 0.3 145.9 (0.0) (168.8) 280.6 258.0 Balance as of 12/31/2020 137.6 0.3 347.8 (69.3) (156.8) 301.7 423.7 Comprehensive income for the period Comprehensive income for the period Profit for the period 20.5 20.5 Profit for the period (15.2) (15.2) Other comprehensive income Other comprehensive income Foreign currency translation differences Foreign currency translation differences (24.3) (24.3) (12.0) (12.0) Total comprehensive income for the period Total comprehensive income for the period - - - (24.3) 20.5 (3.8) - - - (12.0) (15.2) (27.2) Dividends paid Capital decrease Treasury shares acquired Treasury shares sold (196.8) (196.8) 0.0 (31.2) 0.0 Dividends paid Capital decrease Treasury shares acquired Treasury shares sold 0.0 0.0 (132.6) 0.0 (0.0) (31.2) 31.2 (31.2) (0.1) (201.9) 201.9 132.6 0.0 (10.0) (36.5) 0.0 Share-based payment transactions Share-based payment transactions 0.0 (5.8) (5.8) Balance as of 12/31/2022 91.1 0.2 114.8 0.0 (193.1) 104.3 26.2 Balance as of 12/31/2021 101.1 0.3 145.9 (0.0) (168.8) 280.6 258.0 Face value of the shares The face value of the shares is NOK 0.02. 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. 64 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 65 PARENT COMPANY Note 1 Note 2 General information and significant accounting principles Employee benefits expense Payroll expenses [USD million] 2022 2021 Salaries and bonuses Social security cost Pension cost Insurance and other employee benefits Payments to long-term contractual staff Share-based remuneration including social security cost (1.5) (0.3) (0.1) (0.0) (0.0) 0.0 (2.8) (1.2) (0.2) (0.1) (0.0) (0.0) 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. Statement of compliance The parent company financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and accompanying 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. Total (2.0) (4.3) 11 Average number of employees 6 These parent company financial statements have been approved and issued by the Board of Directors on April 20, 2023 for approval by the Annual General Meeting on June 2, 2023. The Company has incorporated the requirements set out by the Mandatory Occupational Pensions Act (“Obligatorisk Tjeneste Pensjon”). 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. Remuneration to key management personnel Information about remuneration to key management personnel is given in the accompanying Note 4 in the consolidat- ed financial statements. 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. Share-based compensation For details of share-based compensation, including options, see Note 4 in the consolidated financial statements. 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 Note 3 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. Depreciation and amortization expenses 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. Depreciation and amortization expenses [USD million] Note 2022 2021 Property, plant and equipment Right of use assets 8 9 (0.6) (0.1) (0.6) (0.1) Total (0.7) (0.6) 66 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 67 PARENT COMPANY Note 4 Note 6 Other operating expenses Net financial items Other operating expenses [USD million] 2022 2021 Other net financial items [USD million] Note 2022 2021 Audit, legal and other advisory services Purchase of equipment, not capitalized Rent and other office expenses Hosting expenses, excl. depreciation cost Other expenses (0.6) (0.2) 0.0 (0.1) (0.4) (2.0) (0.2) (0.2) (0.1) Interest income, external Interest income, intercompany Interest expenses, external Interest expenses, intercompany Net FX gains (losses) 1.0 0.0 (0.0) (2.9) 3.6 0.0 0.3 (0.4) (1.3) 8.8 13 13 (0.4) Profit (loss) sale of shares (0.4) 51.7 Total (1.3) (2.9) Total other net financial items 1.3 59.1 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. Audit fees [USD million] 2022 2021 Statutory audit Assurance services Other services (0.2) (0.0) (0.0) (0.2) - (0.1) Total (0.2) (0.3) Note 5 Impairment gains (losses) and restructuring expenses 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 36.0%. 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, 2022. 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 reassessment of the carrying value of those shares has a follow-up impact on the assessment of the fair value of Otello Technology Investment AS. See Note 10 for further information regarding the Bemobi Mobile Tech S.A investment. During 2022, the only customer contract which Performance & Privacy Ireland Ltd had came to an end, and its only remaining recognized assets are its bank accounts. As the value of the recognized net assets was lower than the carrying value by the Company, an impairment loss has been recognized. During 2021, Otello recognized impairment expenses in connection with its loan and investment in the Vewd Group, based on the uncertainty of recovery and the commencement of a Chapter 11 bankruptcy proceeding. The value of both the loan and the investment has been written down to zero. Impairment gains (losses) and restructuring expenses [USD million] Note 2022 2021 Otello Technology Investment AS shares Performance and Privacy Ireland Limited shares Vewd Software AS loan 10 10 23.0 (0.2) - (48.1) - (8.2) (10.1) Last Lion Holdings Ltd shares - Total 22.8 (66.4) 68 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 69 PARENT COMPANY Note 7 Posted to statement of compre- Disposals Posted to discon- Taxes hensive directly to tinued 2021 Balance 1/1/21 income the equity operations Balance [USD million] 2022 2021 [USD million] 12/31/21 Income tax expense recognized in the statement of comprehensive income: Current tax Changes in deferred taxes Accounts receivable Provisions and accruals 0.0 0.1 (0.0) (0.1) - - - - 0.0 (0.0) 0.0 0.0 - - Total 0.1 (0.1) 0.0 (0.1) 0.1 0.0 0.0 0.0 0.0 0.0 0.0 (0.0) 0.0 Total 0.0 0.0 Temporary differences not recognized in the statement of financial position Temporary differences recognized in the statement of financial position 0.0 (0.0) Recognized deferred tax assets and liabilities: Deferred tax balances presented in the statement of financial position comprise the following: Tax loss carryforwards Tax loss carryforwards not recognized in the statement of financial position 3.7 (3.7) 0.2 (0.2) - - - - 3.9 (3.9) [USD million] 2022 2021 Tax loss carryforwards recognized in the statement of financial position 0.0 0.0 0.0 0.0 0.0 Deferred tax assets related to tax loss carryforwards Deferred tax assets related to temporary differences 0.0 0.0 - - Net deferred tax assets (liabilities) recognized in the statement of financial position 0.0 0.0 0.0 0.0 (0.0) Net deferred assets (liabilities) 0.0 0.0 The Company recognizes deferred tax assets related to tax losses in the statement of financial position when it is considered probable that taxable profit will be generated in future periods against which these tax losses carries forwards can be utilized. Management does not believe 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, 2022. Reconciliation of effective tax rate [USD million] 2022 2021 Profit (loss) before tax Income tax using the corporate income tax rate in Norway (22% in 2022 / 22% in 2021) 20.5 (4.5) (15.2) 3.3 Deferred tax assets (liabilities) and changes during the year Posted to statement of compre- Effect of changes in tax rates Effect of deferred tax assets not recognized Effect of non-taxable and non-deductible items 0.0 0.1 4.4 0.0 (0.1) (3.2) Disposals Posted to discon- hensive directly to income the equity operations tinued 2022 Balance 1/1/22 Balance 12/31/22 Total tax expense for the year Effective tax rate 0.0 0.0 [USD million] 0.0 % 0.0 % Accounts receivable 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (0.0) Provisions and accruals (0.0) The effective tax rate in 2022 of 0.0% differs from the statutory rate of 22.0% due to the following key items: Total (0.0) 0.0 0.0 (0.0) (0.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (0.0) (0.0) • 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. Temporary differences not recognized in the statement of financial position Temporary differences recognized in the statement of financial position (0.0) Permanent differences Permanent differences include impairment losses, dividends received, share-based remuneration, and non-deductible costs. Tax loss carryforwards Tax loss carryforwards not recognized in the statement of financial position 3.9 (3.9) 0.4 (0.4) 0.0 0.0 0.0 0.0 4.2 (4.2) Tax loss carryforwards recognized in the statement of financial position 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net deferred tax assets (liabilities) recognized in the statement of financial position (0.0) (0.0) (0.0) 70 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 71 PARENT COMPANY Note 8 Note 9 Property, plant & equipment Right-of-use assets and lease liabilities The remaining lease liability and right of use asset relate to the Group’s office in Oslo. [USD million] 2022 2021 Acquisition cost Acquisition cost as of 1/1 Acquisitions Lease liabilities (USD million) 2022 2021 5.5 - (0.6) 5.7 - (0.2) Balance as of 1/1 Additions 0.3 0.0 0.2 0.2 Currency differences Translation differences Lease payments Interest expense on lease liabilities (0.0) (0.1) 0.0 0.0 (0.1) 0.0 Acquisition cost as of 12/31 4.9 5.5 Depreciation and impairment losses Acquisition cost as of 1/1 Depreciation for the year Currency differences (4.5) (0.6) 0.5 (4.0) (0.6) 0.1 Lease liabilities as of 12/31 0.2 0.3 Of which: Current lease liabilities (less than 1 year) Non-current lease liabilities (more than 1 year) 0.1 0.1 0.1 0.2 Accumulated depreciation as of 12/31 Net book value as of 12/31 (4.6) 0.3 (4.5) 0.9 Balance as of 12/31 0.2 0.3 Depreciation for the year (0.6) (0.6) Right of use assets (USD million) 2022 2021 Useful life Depreciation plan Up to 10 years Linear Balance as of 1/1 Additions 0.3 0.0 0.2 0.2 Depreciation (0.1) (0.1) Right of use assets as of 12/31 0.2 0.3 Depreciation for the year (0.1) (0.1) 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 million) 2022 2021 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 (0.1) 0.1 0.0 (0.1) 0.1 0.0 (0.0) (0.0) Net effect (0.0) 0.0 Future lease payments The future minimum lease payments under non-cancellable lease contracts are as follows: 2022 2021 Payments for leased premises: Less than one year Between one to five years More than five years 0.1 0.1 - 0.1 0.2 - Total 0.2 0.3 72 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 73 PARENT COMPANY Note 10 Note 11 Investments in subsidiaries 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 $0.8 million. 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 notifica- tions 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. Investments in subsidiaries Below is an overview of the investments in subsidiaries directly held by Otello Corporation ASA as of December 31, 2022. Otello Technology Investment AS (formerly Bemobi Holding AS) Privacy & Performance Ireland Ltd [USD million] Skyfire Labs, Inc. Segment (Group) Acquisition/establishment date Registered office Corporate 8/8/2016 Oslo, Norway 100% Corporate 9/14/2016 Dublin, Ireland 100% Corporate 04/05/2006 San Mateo, USA 100% Note 12 Ownership and voting share Other liabilities Equity at year end Profit for the year 170.9 16.8 0.0 0.3 Other non-current liabilities [USD million] Note 2022 2021 (0.3) (0.0) Non-current liabilities, intercompany 13 81.2 90.6 90.6 Privacy & Performance Ireland Ltd Otello Technology Investment AS Total 81.2 Information related to carrying value: Skyfire Labs, Inc. Total Other current liabilities [USD million] Note 2022 2021 Acquisition cost 63.0 64.6 (48.1) 23.0 0.2 - - (0.2) (0.0) 0.3 - - - 63.6 64.6 (48.1) 22.8 Equity increase prior to current year Impairment gain (loss) prior to current year Impairment gain (loss) in the current year Translation differences Other current liabilities, external Other current liabilities, intercompany 0.8 0.0 1.7 2.6 13 Total 0.8 4.3 (11.1) (0.0) (11.1) Carrying value 91.5 0.0 0.3 91.8 Note 13 Impairment of investment in Otello Technology Investment AS The Company has carried out impairment testing as of December 31, 2022. 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 16 of the consolidated financial state- ments for more information. Receivables, payables and transactions with group companies Impairment of investment in Performance & Privacy Ireland Ltd The Company has carried out impairment testing as of December 31, 2022. Performance & Privacy Ireland Ltd’s only customer contract came to an end during 2022, and its only remaining recognized assets are its bank accounts. As the value of the recognized net assets of Performance & Privacy Ireland Ltd was lower than the carrying value, the Company has recognized an impairment loss. Receivables and payables Acquisition of Skyfire Labs, Inc. The table below presents a breakdown of receivables and payables with group companies. [USD million] As part of a restructuring in conjunction with the sale of the AdColony business, the Company acquired direct ownership of Skyfire Labs, Inc. from AdColony Holdings US, Inc. during 2021. Skyfire Labs, Inc. was acquired at net asset value. Other receivables (non-current) 2022 Accounts receivables 2022 Other receivables (current) 2022 Sale of AdColony to Digital Turbine During the year ended December 31, 2021, the Company disposed of all of the shares of AdColony Holding AS to Digital Turbine. As at December 31, 2021, the final proceeds from that sale remained outstanding. The cash for this outstanding amount of $191.7m was received by Otello in ear- ly 2022. In addition, during the year ended December 31, 2022, the Company recognized as income an amount of $0.3m related to the settlement of the exact cost of employer taxes on the bonuses paid by AdColony to employees as a result of the sale transaction. This amount was received in full during 2022. To assist AdColony in paying bonus obligations tied to the sale of the business, Otello had provided a short-term loan of $850,000 to AdColony. Repayment of this was settled in full at the same time as receipt of the $191.7m. 2021 2021 2021 0.0 0.0 0.0 0.0 0.0 0.0 Liabilities (non-current) 2022 Accounts payable 2022 Other liabilities (current) 2022 As of December 31, 2022, there are no remaining items recognized as receivables or payables related to the sale of AdColony to Digital Turbine. 2021 2021 2021 Shares in subsidiaries 81.2 90.6 0.0 0.0 0.0 2.6 There were no shares in subsidiaries owned by other group companies, and indirectly owned by the Company, as at December 31, 2022. 74 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 75 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: Currency risk 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. 2022 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. Receivables from group companies [USD million] Payables to group companies [USD million] Otello Technology Investment AS Performance and Privacy Ireland Limited 0.0 0.0 Otello Technology Investment AS 81.2 The Company’s largest asset, its investment in the shares of its subsidiary Otello Technology Investment AS, is denominated in Norwegian krone (NOK). Total receivables 0.0 Total payables 81.2 Accordingly, fluctuations in the exchange rate between the NOK and the Company’s reporting currency, USD, can impact both the reported prof- it 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. 2021 Receivables from group companies [USD million] Payables to group companies [USD million] Otello Technology Investment AS Performance and Privacy Ireland Limited 0.0 0.0 Otello Technology Investment AS 93.2 Foreign exchange contracts During 2022 and 2021, 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, 2022. Total receivables 0.0 Total payables 93.2 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. Credit risk is assessed for each specific customer. The Company’s revenue from oper- ations is immaterial and the large majority of outstanding receivables at the end of 2021 related to the final payment due from Digital Turbine, Inc. related to the sale of the AdColony business. That receivable was received in early 2022. With the low remaining level of receivables, credit risk is not considered significant. Breakdown of intercompany receivables by currency All outstanding amounts as of December 31, 2022 are denominated in NOK. Breakdown of intercompany payables by currency All outstanding amounts as of December 31, 2022 are denominated in USD. Loans and receivables The Company has limited exposure in terms of credit risk related to loans and receivables with non-related parties. Transactions with group companies 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. Transactions [USD million] 2022 2021 Credit facility Interest income from related parties Interest expense to related parties 0.0 (2.9) 0.3 (1.3) As at December 31, 2022, 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. Loans from Otello Technology Investment AS As of December 31, 2022, the Company has five outstanding loans from Otello Technology Investment AS, totaling $81.2m, 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. Note 15 Contingent liabilities Note 14 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. Financial risk and financial instruments 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. Refer to Note 10 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 Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. Financial risk 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. 76 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 77 PARENT COMPANY Note 16 Note 18 Related parties Events after the reporting period Bemobi No events have occurred after the reporting date that would require the financial statements to be adjusted. Through its wholly owned subsidiary, Otello Technology Investment AS (formerly Bemobi Holding AS), the Company holds a 36% equity interest in Bemobi Mobile Tech S.A through common shares. Please see Note 16 in the consolidated financial statements for further details on the status of this equity interest. The Company also continues to provide accounting and legal support to Bemobi on a transitional basis, which is priced on an arm's-length basis and all outstanding balances are settled within normal commercial terms. Please see stock exchange announcements for further information on any subsequent events. Agreement with Bemobi earnout participants Please see Note 21 in the consolidated financial statements for details of the transaction with the Bemobi earnout participants. Last Lion / Vewd (Opera TV) The Group holds a 27% equity interest in Last Lion Holdings Ltd, through preferred shares. The Group has also provided a loan to Vewd Soft- ware AS (formerly Opera TV AS). As previously reported, the Group has written down the value of the shares and the loan to zero. During the year-ended December 31, 2022, liquidators were appointed to wind up Last Lion Holdings Ltd. The Group continues to view it as unlikely that any value will be received for either its shares or loan. Apart from the above transactions, and for transactions with group companies in the normal course of business, the Company did not engage in any related party transactions, including with any members of the Board of Directors or Executive Management. See Note 13 for information regarding transactions with group companies. 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 0.3% (2021: 0.3%) of the Group's voting share as per December 31, 2022. See Note 4 in the consolidated financial statements for further information. Information regarding compensation for the Board of Directors and executive management can be found in Note 4 in the consolidated financial statements. Executive Management also participate in the Group's stock option and RSU program (see Note 4 in the consolidated financial statements), although there are currently no such plans operating. Note 17 Shares and shareholder information Information regarding shares and shareholder information can be found in Note 23 in the consolidated financial statements. Information regarding shares, options and RSUs owned by members of the Board, the Chief Executive Officer and other members of Executive Management can be found in Note 4 in the consolidated financial statements. 78 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 79 Auditor's report Otello Corporation ASA - Annual Report 2022 81 82 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 83 84 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 85 Declaration of executive compensation policies PART 1: POLICIES AND EXECUTIVE COMPENSATION EXCEPT SHARE-BASED INCENTIVES 1. Base salary Base salary is typically the primary component of Exec- The Board of Directors has, in accordance with the Public utive Team compensation and reflects the overall contri- Limited Liability Companies Act § 6-16a, developed poli- bution of the executive to the Company. The determina- cies regarding compensation for the Executive Team. tion of base salaries for the executives considers a range of factors, including (i) job scope and responsibilities, (ii) The objectives of the Executive Team compensation pro- competitive pay practices, (iii) background, training, and gram are, in particular, to (i) attract, motivate, retain, and experience of the executive, and (iv) past performance reward the individuals on the Executive Team and (ii) en- of the executive at the Company. Adjustments to base sure alignment of the Executive Team with the long-term salary are ordinarily reviewed every 12 months or longer interests of the shareholders. The Company’s Executive by the Board. Team compensation program is intended to be perfor- mance-driven and is designed to reward the Executive 2. Cash incentive bonus Team for both reaching key financial goals and strategic The Company uses a cash-incentive bonus to focus the business objectives and enhancing shareholder value. Executive Team members on, and reward the Executive Team members for, achieving key corporate objectives, The most important components of Executive Team com- which typically involve corporate, financial, and opera- pensation are as follows: (i) base salary, (ii) cash-incen- tional performance. Cash-incentive bonuses tied to stra- tive bonus, and (iii) long-term, equity-based incentives. tegic business objectives, which may be individual to or Only the statement in Part 2 “Share-based incentives”, shared among the Executive Team members, may also below, will be binding for the Board of Directors. be considered as part of the cash-incentive bonus. The Otello Corporation ASA - Annual Report 2022 87 determination of the total bonus that can be potential- 4. Pension ly earned by an executive in a given year is based on, Members of the Executive Team participate in regular among other factors, the executive’s current and expect- pension programs available for all employees of the ed contributions to the Company’s performance, his or Company. For members of the Executive Team based in her position within the Executive Team, and competitive Norway, an additional pension agreement is in place. This compensation practices. agreement is based on a defined contribution scheme and contributes 20% of salary over 12G. In October 2020, members of the Executive Team agreed on new cash bonus structures where annual, cash bonus- PART 2: es are based on achievement of targets, and capped at SHARE-BASED INCENTIVES 200% payout. The Board may deviate from the 200% cap. As a starting point, the cash-incentive bonus for FY 2022 1. Existing programs for Executive Team members was, and for FY 2023 will For members of the Executive Team, the Company cur- be, based on business-/operational targets and achieve- rently has no ordinary stock option program or RSU pro- ments of these targets. gram in place. The previous stock options held by the Ex- ecutive Team were mandatorily exercised following the After considering the above, the CEO was paid NOK 4.4 Bemobi IPO and AdColony sale. million and the CFO was paid NOK 1.1 million in cash bo- nus in 2022 related to the 2021 year. 2. Vesting criteria for existing options N/A. 3. Severance-payment arrangements Pursuant to Section 15-16 second subsection of the Nor- PART 3: wegian 2005 Act relating to Employees’ Protection, CEO 2022 COMPLIANCE Lars Boilesen has waived his rights under Chapter 15 of In 2022, the Executive Team received base salaries and the Act. As compensation, he is entitled to a severance cash-incentive bonuses in line with the Executive Com- payment of two years’ base salary if his employment is pensation Policy as presented to the 2020 Annual Gener- terminated by the Company. If the CEO has committed a al Meeting and as set out in Part I, Item 2 "Cash incentive gross breach of his duty or other serious breaches of the bonus" as described above. contract of employment, the employment can be termi- nated with immediate effect without any right for the Total compensation earned for the Executive Team in FY CEO to the mentioned severance payment. 2022 is summarized in note 4 of the consolidated finan- cial statements. Except for the CEO as described above, the employment agreements for the members of the Executive Team have During 2022, no deviations from the existing share-based no provisions with respect to severance payments if a compensation programs as previously approved were member of the Executive Team should leave his or her made with respect to the Executive Team. No new op- position, whether voluntarily or involuntarily. Severance tions have been approved since the extraordinary gener- payment arrangements, if any, will thus be based on ne- al meeting held on 15 January 2021. gotiations between the Company and the relevant mem- ber of the Executive Team on a case-by-case basis. 88 Otello Corporation ASA - Annual Report 2022 Principles of Corporate Governance at Otello Corporation ASA General principles, implementation and reporting on corporate governance The Board of Directors further will annually evaluate Otello's objectives, strategies and risk profiles. Otello Corporation ASA (“Otello” or the “Company”) strong- ly believes that strong corporate governance creates higher Otello’s activities shareholder value. As a result, Otello is committed to main- Otello holds shares in different businesses, including (i) taining high standards of corporate governance. Otello’s Bemobi, a Mobile Media and Entertainment company principles of corporate governance have been developed in that integrates people and mobile content through tech- light of the Norwegian Code of Practice for corporate gov- nology and offers a leading subscription-based discovery ernance (the “Code”), dated October 14, 2021, as required for service for mobile apps in Latin America and beyond; and all listed companies on the Oslo Stock Exchange. The Code is (ii) Skyfire which offers cloud-based network solutions available at www.nues.no. The principles are further devel- for mobile operators. oped and are in accordance with section 3-3b and section 3-3c of the Norwegian Accounting Act, which can be found Our business is based on close relationships with cus- at https://lovdata.no/dokument/NL/lov/1998-07-17-56. tomers, partners, investors, employees, friends, and Otello views the development of high standards of corpo- communities all over the world — relationships we are rate governance as a continuous process and will continue committed to developing by conducting our business to focus on improving the level of corporate governance. openly and responsibly. Our corporate policies are devel- oped in order to be true to this commitment. The Board of Directors has the overall responsibility for corporate governance at Otello and ensures that the Corporate Social Responsibility guidelines Company implements sound corporate governance. The The Board of Directors has adopted corporate social re- Board of Directors has defined Otello’s basic corporate sponsibility (“CSR”) guidelines. These guidelines cover a values, and the Company’s ethical guidelines and guide- range of topics and are focused around the following lines on corporate social responsibility are in accordance areas: our employees, human rights, anti-corruption and with these values. the environment. These general principles and guidelines apply to all employees and officers of the Group. See the The Board of Directors has defined clear objectives, Board of Directors report for further information. strategies, and risk profiles for Otello's business activi- ties such that Otello creates value for shareholders in a Equity, capital structure and dividends sustainable manner. The Board of Directors considered The Company’s capital structure and financing is consid- financial, social and environmental considerations when ered to be appropriate in terms of Otello’s objectives, they carried out this work. strategy and risk profile. Otello Corporation ASA - Annual Report 2022 91 Otello’s policy is to maintain a high equity ratio. Otello Transactions with related parties believes its needs for growth can be met while also al- Any transactions, agreements or arrangements between lowing for a dividend distribution as long as the Company the Company and its shareholders, members of the is reaching its targeted growth and cash generation lev- Board, members of the executive management team or els. Dividend payments will be subject to approval by the close associates of any such parties will only be entered shareholders at the Company’s Annual General Meetings. into as part of the ordinary course of business and on This dividend policy is considered clear and predictable. arm's length market terms. All such transactions shall, where relevant, comply with the procedures set out in Authorizations granted to the Board of Directors to in- the Norwegian Public Limited Liability Companies Act crease the Company’s share capital will be restricted to (the "NPLCA"). The Board of Directors will arrange for defined purposes and will in general be limited in time a valuation to be obtained from an independent third to no later than the date of the next Annual General party unless the transaction, agreement or arrangement Meeting. To the extent that authorization to increase in question is considered to be immaterial or covered by the share capital shall cover issuance of shares under the provisions of section 3-16 of the NPLCA. employee share option schemes and other purposes, the Company will consider presenting the authorizations to If the Company should enter into a not immaterial trans- the shareholders as separate items. action with related parties within Otello or with compa- nies in which a director or leading employee of Otello or The Board of Directors may also be granted the author- close associates of these have a material direct or indirect ity to acquire own shares. Authorizations granted to the vested interest, those concerned shall immediately noti- Board of Directors to acquire own shares will also be re- fy the Board of Directors. Any such transaction must be stricted to defined purposes. To the extent that authori- approved by the Board of Directors, and where required zation to acquire own shares shall cover several purposes, also as soon as possible publicly disclosed to the market. the Company will consider presenting the authorization to the shareholders as separate items. Such authority Insider trading may by law apply for a maximum period of two years, The Company has an established and closely monitored and will state the maximum and minimum amount pay- insider trading policy. Otello employees are prohibited able for the shares. Normally, the proposed authority from trading in Otello securities based on information will be for one year or to the next annual general meet- that is material, nonpublic information; that is, the pub- ing. In addition, an authorization to acquire own shares lic does not yet have access to this information, and this will state the highest nominal value of the shares which information may be deemed interesting for an investor Otello may acquire, and the mode of acquiring and dis- to use when deciding whether to buy or sell securities. posing of own shares. Otello may not at any time hold This rule also applies to other companies, where Otello more than 10% of the total issued shares as own shares. employees may have access to such nonpublic informa- tion. Please note that even a tip to family and friends Equal treatment of shareholders is considered illegal, if this should be used as a basis for A key concept in Otello’s approach to corporate gover- buying or selling securities. nance is the equal treatment of shareholders. Otello has one class of shares and all shares are freely transferable Any transaction the Company carries out in its own (with possible exceptions due to foreign law restrictions shares will be carried out either through the stock ex- on sale and offering of securities). All shares in the Com- change or at prevailing stock exchange prices if carried pany carry equal voting rights. The shareholders exer- out in any other way. cise the highest authority in the Company through the General Meeting. All shareholders are entitled to submit Freely negotiable shares items to the agenda, and to meet, speak, and vote at the Otello has no limitations on the transferability of shares General Meeting. and has one class of shares. Each share entitles the hold- er to one vote. Any decision to waive the pre-emption rights of exist- ing shareholders to subscribe for shares in the event of General Meetings an increase in share capital will be explained. Where the Through the General Meeting, the shareholders exercise Board of Directors resolves to carry out an increase in the the highest authority in the Company. General Meetings share capital and waive the pre-emption rights of the are held in accordance with the Code. All shareholders are existing shareholders on the basis of a mandate granted entitled to submit items to the agenda, meet, speak, and to the board, an explanation will be publicly disclosed vote at General Meetings. The Annual General Meeting in a stock exchange announcement issued in connection is held each year before the end of June. Extraordinary with the increase of the capital. General Meetings may be called by the Board of Direc- 92 Otello Corporation ASA - Annual Report 2022 tors at any time. The Company’s auditor or shareholders line for shareholders to give notice of their intention to representing at least five percent of the total share cap- attend the meeting or vote by proxy will be set in the ital may demand that an Extraordinary General Meeting notice for the meeting. Such deadline will be set as close as possible to the date of the General Meeting and under every circumstance, in accordance with the principles of General Meetings are convened by written notice to section 5-3 of the NPLCA. all shareholders with known addresses no later than 21 The Board of Directors may decide to allow electronic par- the Articles of Association, no member of the Nomina- ticipation in General Meetings and will consider this be- tion Committee can also simultaneously be a member of fore each General Meeting. the Board of Directors. be called. The minutes from General Meetings will be posted on the The tasks of the Nomination Committee are to propose Company’s website within 15 days after the General Meet- candidates for election as shareholder-elected members ing has been held. Information that a General Meeting has of the Board of Directors and members of the Nomina- been held will be made public as soon as possible after the tion Committee. The Nomination Committee is encour- days prior to the date of the meeting. Proposed resolu- The members of the Board of Directors, Chairman of the tions and supporting information, including information Nomination Committee, CEO, CFO and the auditor are on how to be represented at the meeting, vote by proxy all required to be present at the meeting in person, un- and the right to propose items for the General Meeting, less they have valid reasons to be absent. The Board of is generally made available to the shareholders no later Directors normally proposes that the General Meeting than the date of the notice. According to the Company’s elects an independent chairman for the meeting. Notice, Articles of Association, attachments to the calling notice enclosures and protocol of meetings are available on may be posted on the Company’s website and not sent Otello’s website. end of the meeting. aged to have contact with shareholders, the Board of Directors and the Company’s Chief Executive Officer as part of its work on proposing candidates for election to Nomination Committee The Nomination Committee is a body established pur- the Board of Directors. The Committee cannot propose suant to the Articles of Association and shall consist of its own Committee members as candidates for the Com- three to five members. The members and the chairper- pany’s Board of Directors. Further, the Committee shall son are elected by the General Meeting. The members make recommendations regarding the remuneration of of the Nomination Committee should be selected to the members of the Board of Directors. Its recommenda- take into account the interests of shareholders in gen- tions will normally be explained, and information about eral. Members of the Nomination Committee serve for proposed candidates will normally be given, no later a two-year period but may be re-elected. Following the than 21 days before the General Meeting. The tasks of ordinary general meeting held on 2 June 2022, the cur- the Nomination Committee are further described in the rent members of the Nomination Committee are Simon Company’s Nomination Committee guidelines, as adopt- Davies (Chairperson), Kari Stautland and Jakob Iqbal. The ed by the Annual General Meeting held on June 14, 2011. members of the Nomination Committee are independent Remuneration of the members of the Nomination Com- of the Board of Directors and executive management, mittee will be determined by the General Meeting. Infor- however it is noted that the chairperson of the Nomina- mation regarding deadlines for proposals for members to tion Committee is a representative of a shareholder who the Board of Directors and the Nomination Committee also is represented at the Board of Directors. Pursuant to will be posted on Otello’s website. to shareholders by ordinary mail. Shareholders who wish to receive the attachments may request the Company to The General Meeting elects the members of the Board mail such attachments free of charge. Resolutions and the of Directors (excluding employee representatives), deter- supporting information are sufficiently detailed, compre- mines the remuneration of the members of the Board of hensive and specific to allow shareholders to form a view Directors, approves the annual accounts and decides such on all matters to be considered in the meeting. other matters which by law, by separate proposal or ac- cording to the Company’s Articles of Association, are to be Shareholders who are unable to be present, are encour- decided by the General Meeting. Shareholders will nor- aged to participate by proxy and a person who will be mally be able to vote on each individual candidate nomi- available to vote on behalf of shareholders as their proxy nated for election to the Board of Directors, the Nomina- will be nominated. Proxy forms will allow the proxy hold- tion Committee and any other corporate bodies to which er to cast votes for each item separately. A final dead- members are elected by the General Meeting. 94 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 95 Corporate assembly Otello does not have a corporate assembly as the employ- The principal tasks of the Board of Directors are outlined ees have voted, and the General Meeting in 2010 approved, below: that the Company should not have a corporate assembly. • Ensuring compliance with applicable laws The Board of Directors • Considering the interests of Otello’s different stake- holders Appointed by Shareholders at the General Meeting, the Board of Directors is the central governing mechanism • Reviewing and guiding corporate strategy, major plans between shareholders and executive management. The members of the Board of Directors are selected in light of an evaluation of the Company’s need for expertise, capacity and balanced decision-making, and with the of action, annual budget and business plans; setting performance objectives; monitoring implementation and corporate performance; and overseeing major capital expenditures. aim of ensuring that the Board of Directors can operate • Selecting, monitoring, and, when necessary, replacing independently of any special interests and function ef- key executives and overseeing succession planning fectively as a collegial body. Members of the Board of Di- • Reviewing key executive and Board remuneration rectors are encouraged to own shares in the Company. At • Monitoring and managing potential conflicts of least half of the members of the Board of Directors shall be independent of the Company’s management and its main business connections. Members of the Board of Di- interest of management, Directors and shareholders, including misuse of corporate assets and abuse in related party transactions. rectors serve for a two-year period, or such shorter peri- • Ensuring the integrity of Otello’s accounting and od as decided by the General Meeting, but directors may be re-elected. At least two of the shareholder-elected financial reporting systems, and that appropriate systems of control are in place. members of the Board of Directors shall be independent • Monitoring the effectiveness of the governance prac- of the Company’s main shareholder(s). The Board of Di- rectors does not include executive personnel. The current Otello Board of Directors meets these criteria. tices under which it operates and making changes as needed • Overseeing the process of disclosure and communica- tions The annual report will provide information to illustrate • A more in-depth description of the Board’s duties the expertise of the members of the Board of Directors, information on their record for attendance at board meetings and it will identify which members are consid- ered to be independent. 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- of-directors-of-otello. Otello’s Board of Directors diligently performs its over- The Board of Directors is entrusted with and responsi- sight function and closely monitors major developments. ble for the oversight of the assets and business affairs of Otello Corporation ASA - Annual Report 2022 97 Otello in an honest, fair, diligent and ethical manner. The volved, such matters will be chaired by some other mem- Board of Directors has adopted a Code of Conduct and ber of the Board of Directors. the directors are expected to adhere to the standards of loyalty, good faith, and the avoidance of conflict of in- Risk management and internal control terest that follow. The Code of Conduct should be read The Board of Directors has overall responsibility for the and applied in conjunction with the Rules of Procedure management of the Company. This includes a responsibil- as applicable at any time, and other rules and guidelines ity to supervise and exercise control of the Company’s ac- relevant to and adopted by the Board of Directors and / tivities. The Board has drawn up the rules of procedure for or the shareholders of Otello. the Board of Directors of Otello. The purpose of these rules of procedure is to set out rules on the work and adminis- The Board of Directors has further established a Remu- trative procedures of the Board of Directors of Otello. The neration Committee and an Audit Committee. Currently, Board of Directors shall, among other things, ensure that the Remuneration Committee and the Audit Committee the Company’s business activities are soundly organized, each consist of two members. According to the Code, a supervise the Company’s day-to-day management, draw majority of the members of each Committee should be up plans and budgets for the Company’s activities, keep independent from the Company. If the requirements for itself informed on the financial position of the Company, independence are not met, Otello will explain the rea- and be responsible for ensuring that the Company’s activ- sons in our Annual Report. Currently, Maria Borge Ander- ities, accounts, and asset management are subject to ad- sen (Chairperson) and Magdalena Kadziolka members of equate control. In its supervision of the business activities the Audit Committee, and Andre Christensen (Chairper- of Otello, the Board of Directors will ensure that: son), and Karin Fløistad are members of the Remuner- ation Committee. The requirements for independence • The Chief Executive Officer uses proper and effective are thus met. Further, according to the Public Limited Liability Companies Act, at least one member of the Au- dit Committee shall have qualifications within audit or management and control systems, including systems for risk management, which continuously provide a satisfactory overview of Otello’s risk exposure. accounting, and in the Company's view both members • The control functions work as intended and necessary fulfill this requirement. measures are taken to reduce extraordinary risk expo- sure. The Audit Committee’s main responsibilities include fol- • There exist satisfactory routines to ensure the fol- lowing up on the financial reporting process, monitoring the systems for internal control and risk management, having continuous contact with the appointed auditor, and reviewing and monitoring the independence of the low-up of principles and guidelines adopted by the Board of Directors in relation to ethical behavior, con- formity to law, health, safety and working environ- ment, and social responsibility. auditor. The Board of Directors maintains responsibility • Otello has a competent finance department and ac- and decision-making in all such matters. Please see be- low under the section “Remuneration of the Executive counting systems, capable of producing reliable and on-time financial reports. Personnel” for information regarding the tasks to be per- • Directives from the external auditor are obeyed and formed by the Remuneration Committee. that the external auditor’s recommendations are given proper attention. The Board of Directors will consider carrying out self-evaluation processes, evaluating its work, perfor- The Board of Directors carries out an annual review of mance and expertise annually. To the extent that such the Company's most important areas of exposure to risk a process is carried out, it would normally also include and its internal control arrangements. an evaluation of the composition of the Board and the manner in which its members function, both individu- Executive Team ally and as a group, in relation to the objectives set out Otello’s Board of Directors has drawn up instructions for its work. Any report will be more comprehensive if it for the Executive Team of the Company. The purpose of is not intended for publication. However, any reports or these instructions is to clarify the powers and responsi- relevant extracts from there should normally be made bilities of the members of the Executive Team and their available to the nomination committee. The Board of duty of confidentiality. Directors will also consider whether to use an external person to facilitate the evaluation of its own work. The Executive Team conducts an annual strategy meet- ing with the Board of Directors. The strategy meeting In order to ensure a more independent consideration of focuses on products, sales, marketing, financial and or- matters of a material character in which the Chairman ganizational matters, and the corporate development of the Board of Directors is, or has been, personally in- strategy for the Group. 98 Otello Corporation ASA - Annual Report 2022 The Board of Directors has ensured that the Company has The CFO and the head of accounting are responsible for sound internal control and systems for risk management (i) the ongoing financial reporting and for implementing that are appropriate in relation to the extent and nature sufficient procedures to prevent errors in the financial of the Company’s activities. The Company has performed reporting, (ii) identifying, assessing and monitoring the a scoping of the financial risks in the Company and has risk of significant errors in the Group’s financial report- established written control descriptions and process ing, and (iii) implementing appropriate and effective descriptions. The controls are executed on a monthly, internal controls in accordance with specified group re- quarterly or yearly basis, depending on the specific con- quirements and for ensuring compliance with local laws trol. The internal controls and systems also encompass and requirements. All interim financial statements are the Company’s corporate values, ethical guidelines, and analyzed and assessed relative to budgets, forecasts, and guidelines for corporate social responsibility. The Board historical trends. Remuneration of the Board of Directors understandable, and they contribute to the Company's Remuneration for members of the Board of Directors is a commercial strategy, long-term interests and financial fixed annual sum proposed by the Nomination Commit- viability. The General Meeting is informed about incen- tee and approved at the Annual General Meeting. The tive programs for employees, and, pursuant to section remuneration reflects the responsibility, qualifications, 6-16 b. of the NPLCA, an annual report regarding remu- time commitment and complexity of the tasks in general. neration for the Executive Team will be presented to the No members of the Board of Directors (or any company General Meeting. associated with such member) elected by the sharehold- ers have assumed special tasks for the Company beyond Information and communications what is described in this document, and no such member Communication with shareholders, investors, and ana- (or any company associated with such member) has re- lysts is a high priority for Otello. The Company believes ceived any compensation from Otello other than ordi- that objective and timely information to the market nary Board of Directors remuneration. The remuneration is a prerequisite for a fair valuation of the Company’s of the Board of Directors is not linked to the Company's shares and, in turn, the generation of shareholder val- performance. The Company currently does not grant ue. The Company continually seeks ways to enhance our share options to the members of the Board of Directors. communication with the investment community. The All remuneration to the Board of Directors is disclosed in Company's reporting of financial and other information of Directors carries out an annual review of the Compa- ny’s most important areas of exposure to risk and its in- Critical issues and events that affect the future develop- ternal control arrangements. In 2022, all Board members ment of the business and optimal utilization of resources confirmed that they had read and complied with the are identified, and action plans are put in place, if necessary. Code of Conduct during the term of their directorship. The Audit Committee oversees the process of financial The Group’s CFO is responsible for the Group’s control reporting and ensures that the Group’s internal controls functions for risk management and internal control. Otel- and the risk management systems are operating effec- lo publishes two interim financial statements in addition tively. The Audit Committee performs a review of the to the annual report. The financials are published on the half-yearly and annual financial statements, which ulti- Oslo Stock Exchange. Given the importance of providing mately are approved by the Board of Directors. accurate financial information, a centralized corporate Note 6 to the Annual Report. is based on openness and taking into account the re- quirement for equal treatment of all participants in the Members of the Board of Directors and/or companies securities market. with which they are associated will normally not take on specific assignments for the Company in addition to their Otello’s company website (https://www.otellocorp.com/ appointment as a member of the Board of Directors. If ir) provides the investment community with information they nonetheless do take on such assignments, this must about the Company, including a comprehensive investor be disclosed to the full Board of Directors. The remuner- relations section. This section includes the Company’s ation for such additional duties shall be approved by the investor relations policy, annual and quarterly reports, control function and risk management function has been Other guidelines and policies established consisting of the head of accounting and a As an extension of the general principles and guidelines, business controller. The corporate and business controller Otello has drawn up additional guidelines. tasks are, among other things, to perform management’s Board of Directors. press releases and stock exchange announcements, share price and shareholder information, a financial calendar, an overview of upcoming investor events, and other rel- risk assessment and risk monitoring across the group’s Information security guidelines activities, to administer the Company’s value-based Otello has guidelines and information policies covering management system and to coordinate planning and information security roles, responsibilities, training, con- budgeting processes and internal controls reporting to tingency plans, etc. Remuneration of executive personnel A Remuneration Committee has been established by the evant information. Board of Directors. The Committee shall act as a prepa- the Board of Directors and Executive Team. The head of accounting reports to the CFO. ratory body for the Board of Directors with respect to (i) During the announcement of half-yearly and annual the compensation of the CEO and other members of the financial results, there is a forum for shareholders and Executive Team and (ii) Otello’s corporate governance the investment community to ask questions of the Com- policies and procedures, which, in each case, are matters pany’s management team. Otello also arranges regular for which the Board of Directors maintains responsibility presentations in a range of jurisdictions, in addition to Investor relations policy Otello is committed to reporting financial results and The finance department prepares financial reporting for other relevant information based on openness and tak- the Group and ensures that reporting is in accordance ing into account the requirement for equal treatment of with applicable laws, accounting standards, established all participants in the securities market. To ensure that accounting principles and the Board’s guidelines. The correct information is made public, as well as ensuring finance department provides a set of procedures and equal treatment and flow of information, the Company’s processes detailing the requirements with which lo- Board of Directors has approved an Investor Relations cal reporting units must comply. The Group has estab- policy. A primary goal of Otello’s investor relations activ- lished processes and a variety of control measures that ities is to provide investors, capital-market players, and will ensure quality assurance of financial reporting. A shareholders with reliable, timely and balanced informa- series of risk assessments and control measures have tion for investors, lenders and other interested parties in been established in connection with the preparation of the securities market, to enhance their understanding of and decision making. holding meetings with investors and analysts. Important events affecting the Company are reported immediately Details concerning remuneration of the executive per- to the Oslo Stock Exchange in accordance with applicable sonnel, including all details regarding the CEO’s remu- legislation and posted on https://www.otellocorp.com/ir. neration, are given in Note 6 to the Annual Report. The All material information is disclosed to recipients equally performance-related remuneration to executive per- in terms of content and timing. sonnel is subject to an absolute limit. The Board of Di- rectors assesses the CEO and his terms and conditions The Board of Directors has further established an investor once a year. The guidelines on the salary and other re- relations policy for contact with shareholders and others muneration for executive personnel are clear and easily beyond the scope of the General Meeting. financial statements. our operations. 100 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA - Annual Report 2022 101 Takeovers The Board of Directors endorses the recommendations of will normally be made public no later than at the time of the Code. Otello’s Articles of Association do not contain the public disclosure of the Board of Directors statement. any restrictions, limitations or defense mechanisms on acquiring the Company’s shares. In accordance with the Any transaction that is in effect a full disposal of the Com- Securities Trading Act and the Code, the Board has ad- pany’s activities should be decided by a General Meeting. opted guidelines for possible takeovers. Auditor In the event of an offer, the Board of Directors will not The auditor participates in meetings of the Board of Di- seek to hinder or obstruct takeover bids for Otello’s activ- rectors that deal with the annual accounts, as well as ities or shares. In such situations, the Board of Directors upon special request. Every year, the auditor presents to and the Company's executive management have an in- the Audit Committee a report outlining the audit activi- dependent responsibility to help ensure that sharehold- ties in the previous fiscal year and highlighting the areas ers are treated equally, and that the Company's business that caused the most attention or discussions with man- activities are not disrupted unnecessarily. The Board of agement, as well as a plan for the work related to the Directors has a particular responsibility to ensure that Company’s audit. The Board of Directors will make sure shareholders are given sufficient information and time that the auditor submits the main features of the plan to form a view of the offer. Any agreement with the bid- for the audit of the Company to the Audit Committee der that acts to limit the Company’s ability to arrange annually. The auditor also reports at least annually on other bids for the Company’s shares will only be entered internal control observations during the conduct of the into where the Board believes it is in the common in- audit, including identified weaknesses and proposals for terest of the Company and its shareholders. This shall improvement. also apply to any agreement on the payment of financial compensation to the bidder if the bid does not proceed. The auditor will make himself available upon request Any financial compensation should normally be limited for meetings with the Board of Directors during which to the costs the bidder has incurred in making the bid. no member of the executive management is present at least once each year, as will the Board of Directors upon Information about agreements entered into between the auditor’s request. At meetings where the annual ac- the Company and the bidder that are material to the counts are dealt with, the auditor shall report on any market’s evaluation of the bid will be publicly disclosed material changes in the Company’s accounting principles no later than at the same time as the announcement of and key aspects of the audit, comment on any materi- an impending bid is published. al estimated accounting figures and report all material matters on which there has been disagreement between If an offer is made for the shares of Otello, the Board of the auditor and the executive management of the Com- Directors will make a recommendation as to whether the pany. The General Meeting is informed about the Com- shareholders should or should not accept the offer. The pany’s engagement and remuneration of the auditor and Board of Director's statement on the offer will make it for fees paid to the auditor for services other than the clear whether the views expressed are unanimous, and if annual audit, and details are given in Note 6 to the An- this is not the case it will explain the basis on which spe- nual Report. cific members of the board have excluded themselves from the board’s statement. The Board of Directors will The Board of Directors has established guidelines in re- normally arrange for a valuation from an independent spect of the use of the auditor by the Company’s execu- expert. The valuation should include an explanation, and tive management for services other than the audit. 102 Otello Corporation ASA - Annual Report 2022 Otello Corporation ASA Gjerdrums vei 19 NO-0484 OSLO Tel: +47 9190 9145 www.otellocorp.com