Itera

Annual Report • Apr 28, 2022

Untitled ANNUAL REPORT 2021 Our results 2 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results Ctents CEO comment 4 Board of directors’ report 8 Corporate governance 21 Financial statements Itera Group 28 Financial statements Itera ASA 59 Statement by the Board of directors and the CEO 71 Auditor’s report 72 Shares and shareholders 77 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 4 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 5 CEO Cment 2021 Taking pole position In 2021, we delivered one of the best rates of protable organic growth in our industry while we continued to invest in digital capabilities to help customers accelerate their transition to the cloud. Our strong performance reflects our talented people’s dedication and hard work in following our core strategy: Grow People, Grow Customers and Grow Company. We believe there is a direct link between this strategy, along with our innovative mindset and entrepreneurial culture, and the trust of our customers and partners and our ability to develop and attract great people. Despite another pandemic year, we continued to sit apart in the marketplace with an even stronger foundation and an exciting future as the specialist in creating sustainable digital business. Digitalisation and sustainability have been mutually reinforcing during the pandemic, and we are see- ing positive developments in the market for our services in all locations. To use a term from Formula 1, Itera has taken pole position for enabling businesses in various industries to transition digitally to a more sustainable future. Best ever performance As companies embrace digital transformation, our customers turn to Itera as their trusted realisation partner. This is reflected in 2021 being another year in which Itera performed better than ever before. Here are some highlights: • Itera was again ranked as one of the top 25 most innova- tive companies across all industries in Norway for the sixth consecutive year. • For our core digital business, we delivered organic revenue growth of 19% and increased our operating margin, with “I am condent in our ability to continue to meet the urgency of the challenges and opportunities that lie ahead for our customers and in our ability to deliver on the promise of technology in creating sustainable digital businesses.” ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 6 an EBIT margin of 13.0% in 2021. We also showed 22% organic growth in the number of employees, with a net increase of 113 employees. • We invested more than NOK 18 million in our Digital Factory at Scale and world-class Cloud Centre of Excellence, which put Itera in pole position with a full range of services and capabilities in digital transformation. • We launched a next-generation AI-based offer- ing for anti-money laundering (AML) for Nordic nancial services organisations based on a strategic partnership with IBM and Red Hat. • We moved into new ofces in Copenhagen, Reykjavik, Bergen and Bratislava and opened a new ofce in Fredrikstad close to Oslo. • Net cash flow from operating activities was NOK 70 million. We returned NOK 28 million in cash to shareholders as a dividend of NOK 0.35 per share, continuing to deliver on our disci- plined capital allocation model. Phasing out our own data centres started two years ago and has had a negative impact on revenue growth and protability. At the end of 2021, only a few minor customers remain in our own data center, which will nally be dis continued at the end of the rst quarter of 2022. More importantly, we have been growing our core digital business – with opportunities in areas such as cloud, data and analytics, and AI-based industrial digitalisation with digital twins and automation. We are ready to digitise all aspects of any business with innovation, speed, scale, and quality. Our strategy denes the areas in which we will drive growth, build differentiation, and enable our business to create high value every day. Digital Factory at Scale Digital transformation underpinned by cloud and digital technologies continues to drive strong double-digit growth across our business. As a tech company, we are well prepared to help our customers navigate their futures. It’s now commonly accepted that data is what fuels digital transformation, but it is articial intelligence (AI) that unlocks the value of that data. However, the adoption of AI and data- driven decision making has been slower than anticipated. AI is not magic and requires a thoughtful and well-architected approach. For example, most AI failures are due to data preparation and organisation problems, not the AI models themselves. Success with AI models is dependent on rst achieving success with how you collect and organise the data. In response, we have created a Digital Factory at Scale for data-driven business with a full range of services and capabilities for contex- tualising data and unlocking insights across legacy systems. We are bringing together all our capabilities through our Digital Factory at Scale, from delivering three horizon digital strategies and cloud transformation journeys to cloud migration, cloud-native development, data, AI, application life cycle management and change. More than technology, the move to the cloud is about adopting a new operating system for future data-driven business, opening radically new ways for companies to work, compete and drive value. Our customers value the depth and breadth of our services, our talent for creating sustainable digital business and our ability to nd human solutions to complex challenges and to deliver tangible outcomes. Increasing the speed of the energy transition Digitalisation and sustainability are mutually reinforcing. As an example, transforming the world’s energy system from fossil-based to renewable-based energy sources is one of the key challenges in terms of creating a low- emissions society. The push for decarbonisation towards netzero is a unique opportunity to transform the energy system by modernising the ageing energy infrastructure and investing in new technology to operate more efciently and develop new business models and growth opportunities. According to research by the Royal Society in the UK, existing digital technology, from smart sen- sors to advanced cloud services such as machine learning and articial intelligence, is estimated to contribute to onethird of the required carbon ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 7 “sitat?” reduction by 2030. The Nordic region is often regarded as a digital and sustainable front- runner well-positioned to show the way globally. Through our strategic partnerships with DNV, Cognite, Microsoft and IBM and Red Hat, we are building new digital capabilities for the future energy system. For instance, using our Digital Factory at Scale and Cloud Center of Excellence we are developing data-driven utility asset man- agement solutions to optimise the electric grid in the western part of the United States. With these new solutions, equipment failure is minimised, while the equipment life is optimised. The results are seen in improved efciency, lower emissions and reduced costs, with maximum uptime and reliability of service reliability for end-users. Looking Ahead We enter 2022 with an even stronger founda- tion and an exciting future as the specialist in creating sustainable digital business. We are very focused on capturing the market opportuni- ties, coupled with empowering our great people and the disciplined execution that we expect of ourselves. I am condent in our ability to continue to meet the urgency of the challenges and opportunities that lie ahead and in our ability to deliver on the promise of technology in creating sustain- able digital businesses. More than ever, we are committed to showing the world how to become more sustainable, create new pathways for industrial growth and deliver far-reaching lifestyle changes through digitalisation. As a Nordic-based company with global reach, we will seek to show the way. From day one of the Russian invasion on 24th February 2022, our primary focus has been on the safety of Ukrainian employees and their families. We have updated our business conti- nuity plans for personnel and operations for any new situation. But most of all, we admire our Ukrainian colleagues. In an almost unimaginable situation, their focus has been on resuming cus- tomer deliveries as soon as they have ensured that they and their families are safe. Indeed, our distributed delivery model and our consultants’ high level of mobility enable us to work from anywhere as needed, including with home as part of the new normal hybrid model following the pandemic, with consultants con- tinuing to be able to work at other Itera ofces in the western part of Ukraine, as well as in Slovakia and the Nordics. As a result, most pro- jects have been running more or less as normal through the rst phase of the war. We want to thank both our customers and partners for the strong support and warm compassion they have shown us. It means a lot to us. I want to thank all our people for their incredible dedication and commitment to following our vision to “make a difference” every day. I would also like to warmly thank our customers, strate- gic partners, board of directors and shareholders for their continued trust and support. Arne Mjøs FOUNDER & CHIEF EXECUTIVE OFFICER ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 8 The company Itera (the Group) is a specialist in creating sustainable, digital business. We are uniquely able to bring digital to the core of their business because of our full range of services in strategy and consulting, customer experience, tech nology and cloud operations. The company utilises its solid and multidisciplinary skills in business, customer experience and technology to design, develop and operate innovative digital solutions for Nordic-based customers. Technology is the single biggest driver of change at companies today. The Nordic region, where most of our customers are present, is often regarded as a digital and sustainable pioneer well-positioned to show the way globally. We arefully committed to something bigger than our- selves around the world. We consider ourselves to have a responsibility to show the world how to become more sustainable and to demonstrate new pathways for industrial growth and far- reaching lifestyle changes through digitalisation. The Group also owns two niche SaaS companies with primarily subscription-based recurring revenues: Cicero Consulting, which provides advisory services and solutions to the banking and nance sector, and Compendia, which specialises in products and services for the HR, quality and management areas. Both companies using Itera’s digital capabilities with increasing cross-business opportunities. The Group is headquartered in Oslo and has ofces also in Bergen, Bryne and Fredrikstad in Norway, Copenhagen (Denmark), Stockholm (Sweden), Reykjavik (Iceland), Kyiv and Lviv (Ukraine) and Bratislava (Slovakia). We com- bine strategic partnerships with customers and partners, our entrepreneurial culture, and our innovation mindset to serve customers in more than 20 countries worldwide from our ten ofces across the Nordic region and Eastern Europe. The flexi bility of our distributed delivery model makes local presence less essential or even non-critical. The company will consider opening regional ofces if the opportunity is qualied as offering substantial, long-term value. Our strategy The core of our growth strategy is: Grow People, Grow Customer and Grow Company. We are energised by the opportunity to guide and sup- port our customers in their digital transformation into sustainable business and to contribute to the advancement of the societies we live in. Our strategy denes the areas in which we will drive growth, build differentiation and enable our busi- ness to create high value every day. Key enablers of our growth strategy include: Our People – Itera is a talent-led organisation. Attracting, developing and inspiring the very best talent in our industry is critical to meeting the evolving needs of our customers and growing our business. Our people have highly specialised skills that drive our differentiation and competi- tiveness. We care deeply for our people and are committed to a robust entrepreneurial culture of empowerment and shared consciousness. We invest in our people to provide them with opportunities to learn and grow in their careers through their work experience and continued development, training and reskilling. We help them achieve their aspirations both profession- ally and personally and have a strong commit- ment to inclusion and diversity. Our Capabilities – As ONE Itera, we share the same values, and we are continuously devel- oping our cross-border methodology, practices Board of directors’ report ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 99 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 10 and collaboration. We are committed to nding human solutions to complex challenges through digital transformation by constantly innovating and developing leading-edge ideas and lever- aging emerging technologies to anticipate our customers’ needs. Our culture is underpinned by our core values and Business Framework, which are key drivers of the trust our customers and partners show us. Our Foundation – Our growth model, which leverages our strong customer-centric approach with a mix of local and cross-border sales and customer experience, enables us to be close to our customers, people and partners to scale efciently. We leverage our scale and international footprint, innovation capabilities, and strong partnerships through our Digital Factory at Scale and Cloud Centre of Excellence to consistently deliver tangible value for our customers worldwide. Market conditions As we have seen over the past two pandemic years, digital adoption curves are accelerating across industries and business functions. All our customers are on a journey to becoming digital businesses and thus more agile and resilient. Digital transformation underpinned by cloud and digital technologies continues to drive strong double-digit growth across our core business. While customers’ digital transformations are creating momentum within our business, most companies are at an early stage in their trans- formation. All face multi-year journeys because transitioning to the cloud and adopting new tech- nologies across companies represents a profound transformation. Simultaneously, we are seeing an ongoing exponential change in technology that is accelerating and will create new opportunities, disruption and change for our customers. We are seeing all emerging technology become digital capabilities in the cloud as a dynamic continuum from public and hybrid cloud to edge and everything in between. Every company will need to be a technology company in its own right, and data will be the key to success for such companies. Similarly, sustainability is a critical area in which technology is still evolving. We need to x the climate, and we believe that we have a social responsibility as a tech company to do our part. We believe that every business must be a sustainable business. Most companies are in the early stages of guring out how to make this shift. Digital technology is uniquely suited to this time as it can help people, organisations, and entire industries make all the difference for our climate. It is part of our mission to help our customers do just that. Customers and projects Itera has a strong customer portfolio in Business-to-Customer (B2C) markets, such as banking and insurance, retail and public sector, and in business-to-business (B2B) markets, such as the green transition of the oil and gas indus- try, power & utilities, shing and other heavy assets industries. We help customers digitalise their business toachieve higher efciency, improved customer satisfaction through new and personalised products and services, greater customer loyalty, a stronger brand, a better reputation, and stronger barriers against competitors, which contribute to additional sales and increased protability. A key part of Itera’s strategy is maintaining and developing its largest, strategic customer relationships. In 2021, several new, exciting relationships were developed with customers such as Eviny, Aize and Sector Alarm. These join the strong brands that have continued their long-lasting relationship with Itera, including Santander Consumer Bank, Gjensidige, DNV, Cognite, Aize, Storebrand and Össur. The share of revenue from Itera’s top 30 customers was 76% in 2021, up from 75% in 2020. New customers, dened as customers won in the last 12 months, accounted for 13% ofrevenue in 2021. Hybrid working environment We continued to meet our customers’ strong demand, adding a net 113 talented people to our core digital business in 2021. We are increasing the attractiveness of our brand by positioning ourselves as a leader in the area of Industry 4.0. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 1111 We have expanded our recruitment activities to support our growth ambitions. We provide attractive careers, exciting projects with lead- ing customers, and a flexible, transparent and diversied culture. We also opened a regional ofce in Fredrikstad, for which several new hires were signed. We are also using the pandemic to learn about new ways of working. According to our research, most employees want flexible remote working options, but at the same time, they also wish to have more in-person collaboration. This is hybridworking. Our people will work in the ofce, from home andat customer sites, and many of our customers’ employees will likely be doing the same. We want to create an environment that helps our people grow as best they can and feel a sense of belonging. We will take a lean approach to nd the best solution for our people, customers, and company and dene a new hybrid working environment for Itera. Our approach to sustainability Itera’s ambition is to be the market leader at creating sustainable digital business. By devel- oping and delivering technology projects, we contribute to a sustainable future. The World Economic Forum states that 70 per cent of the UN’s 17 Sustainable Development Goals can be solved using technology. That is why we say that digitalisation and technology are our main contri- butions to increased sustainability. Sustainability is an integral driver of our strategies, and we have prioritized the following Sustain- able Development Goals (UN SDGs) as those to which our core business can make a positive contribution: • 9. Industry, Innovation and Infrastructure • 11. Sustainable Cities and Communities • 12. Responsible Consumption and Production Itera wants to be at the forefront when it comes to gender equality and diversity, and from 2022 we have also chosen to prioritize UN SDG num- ber 5: Gender equality. Itera aims to conduct business and report in accordance with the ESG system and therefore our ambition is to measure sustainability in three specic categories: environmental, social and governance. Itera has also signed the 10 principles contained in the UN Global Com- pact, and Itera Norway is certied as an ECO Lighthouse. Financial results Itera’s core digital business continued its high growth and margin expansion. In 2021, revenue grew by 19% to NOK 593 million and the operating margin improved from 11.9% to 12.9%. Our resilient protable growth reflects the trusted long-term relationships we have with our customers and partners, our world-class distributed delivery model, the breadth of our services, and our great people and their deploy- ment into multi-disciplinary teams with special- ists in customer experience, specic business domains and advanced technology. Itera continued the sunsetting of its data centreoperations and this business line decreased by 66% to NOK 40 million and incurred an operating loss of NOK 18.4 million. The data centre operations were nally discon- tinued at the end of the rst quarter of 2022. In parallel with closing down its own data centres, Itera has invested heavily in a new Cloud Centre of Excellence and migrated several of the on-premise data centre customers to the cloud. Investments into this totalled NOK 18.5 million in 2021. The Group’s consolidated operating revenue for 2021 totalled NOK 633 million as compared to NOK 615 million in 2020. The growth came rst and foremost from Itera’s success in distributed deliveries, where it combines customer proximity with highly scalable and costefcient deliveries from the Group’s nearshore centres in Ukraine and Slovakia. Itera has for more than a decade created a seamless delivery model with a com- mon culture and operating model across coun- tries. This has enabled the Group to run agile and innovative digitalisation projects for Nordic customers with as many as 70–100% of the con- sultants delivering remotely from our nearshore centres. Itera’s experience of using distributed teams has been particularly useful in the last couple of years when the Covid-19 pandemic has required such a modus operandi to be used by all customers and for all projects. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 12 Operating revenue in Norway was NOK 581 million as compared to NOK 568 million in 2020, representing an increase of 2%. This includes revenue from customers outside of Norway that are served by the Norwegian Group entities. Itera registered a legal entity in Iceland towards the end of 2021 and will move its Icelandic customer engagements to this entity in 2022. Operating revenue in Denmark increased by 2% to NOK 48.3 million from NOK 47.2 million in 2020. The Group’s operating result before depreci- ation and amortisation (EBITDA) was a prot of NOK 87.1 million as compared to a prot of NOK 105.1 million in 2020. This represents an operating prot margin before depreciation and amortisation of 13.8%, as compared to 17.1% in 2020. Payroll and personnel expenses were NOK 434.7 million in 2021, which represents an increase of 11% from 2020. The increase was mainly due to growth in the average number of employees compared to 2020. Other operating expenses amounted to NOK 48.2 million in 2021 as compared to NOK 46.0 million in 2020. Total depreciation, amortisation and write-downs were NOK 28.5 million, a decrease of 33% from2020. The Group’s operating result was a prot of NOK58.6 million in 2021 as compared to a prot of NOK 62.6 million in 2020. The reduction in prot was solely due to the sunsetting of the data centre operations. Net nancial items were NOK 1.2 million ascompared to NOK 0.8 million in 2020. The Group’s result before tax was a prot of NOK57.4 million as compared to a prot of NOK61.8million in 2020. Tax expense totalled NOK 13.3 million in 2021 as compared to NOK 13.2 million in 2020. Tax payable in 2021 was NOK 7.3 million as com- pared to NOK 12.7 million in 2020. The result for the year was a prot of NOK44.1million as compared to a prot of NOK48.6million in 2020. The Board of Directors is satised with the progress achieved by Itera in 2021 in terms of its nancial results. Its core digital business is deliv- ering higher growth and better protability than many of its peers. Contractual commitments have made the amount of time and cost to exit the data centers higher than was anticipated. However, Itera has gained invaluable insight into cloud migration and retains signicant compe- tence in hybrid cloud operations. It is the opinion of the Board of Directors that the annual accounts provide a true and fair view of the Group’s activities in 2021 and its nancial position at the end of the year. Research and development Itera invested NOK 18.1 million in a Cloud Centre of Excellence during 2021 based on best practices from Microsoft. Expenditure of NOK 5.2 million relating to the development of new solutions was capitalised in 2021 as compared to NOK 5.7 million in 2020. This was related to further development of the ComPublish solution and the embedded chatbot functionality. The expenditure on research and development was capitalised as it was incurred since it was considered that the requirements for capitalisa- tion were met. The solutions principally relate to contracts entered into that have xed future revenue associated with them or with demon- strated commercial interest. Cash flow and nancial position Itera generated cash flow from operating activities of NOK 69.7 million in 2021 as compared to NOK 99.2 million in 2020. The Group paid shareholders a dividend totalling NOK 27.9 million in 2021. At 31 December 2021, Itera had a cash balance of NOK 37.5 million as compared to NOK 54.4 million at 31 December 2020. The difference between cash flow from operating activities and the Group’s operating prot is primarily due to depreciation costs that have no effect on cash flow, but also reflects tax payments and nancing costs. In addition to the investment made in research and development, NOK 7.5 million was invested in 2021 in hardware and xtures etc. as com- pared to NOK 4.6 million in 2020. Itera nances its investments through generation of cash flow from operations. Total assets at 31 December 2021 amounted to NOK 221.1 million (NOK 224.4 million). Non- current assets were NOK 86.3 million (NOK 82.8 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 1313 million). Accounts receivable were at NOK 76.1 million (NOK 67.3 million). The Group’s equity at 31 December 2021 was NOK 39.5 million as compared to NOK 34.3 mil- lion at the same point in 2020. This represents an equity ratio of 17.9% as compared to 15.3% at the same point in 2020. Long-term lease liabilities totalled NOK 20.0 million (NOK 25.0 million). Other current liabilities were NOK 63.1 million (NOK 51.9 million). Itera held 1,637,006 of its own shares with a market value of NOK 25.0 million at the end of 2021, while at the end of 2020 it held 1,269,136 own shares. Financial risk The Group is exposed to currency risk, liquidity risk and credit risk. The Group’s executive management team and the Board of Directors monitor these risk factors continually and take action as required. The revenues and expenses associated with Itera’s activities in the Nordic region are denom- inated in Norwegian kroner (NOK), Danish kroner (DKK), and Swedish kronor (SEK). Changes in the exchange rate of the Norwegian krone against the Danish krone and the Swedish krona therefore affect the Group’s results. This risk is limited by the fact that the majority of associated expenses are also incurred in these ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 14 currencies. The Group is also exposed through its near shoring activities in Ukraine and Slovakia to expenses in American dollars (USD) and euros (EUR). The currency risk associated with this is limited by the fact that the prices Nordic customers are charged for these services are largely adjusted on a monthly basis in accord- ance with changes in the exchange rates. The Board of Directors considers the Group’s liquidity situation to be satisfactory and does not regard it as necessary to take further measures to reduce the Group’s liquidity risk. The Group has historically incurred very low losses on receivables. This trend continued in 2021. Business risk The Group has deliveries worldwide and ofces in multiple locations in Europe and assesses and manages risk at the country and delivery level. Itera closely monitors and manages country risks, local nancial and social regulations and developments, and has a zero-tolerance policy on corruption. It does not carry out any domes- tic activities in countries where the problem of corruption is at its greatest. Best practice data security procedures and checks have been implemented at the Group together with a legal framework that safeguards data security and intellectual property across national borders. The NOK has continued to trade at historically quite low levels against USD and EUR. This has had a negative impact on the differential between rates from Norwegian and distributed deliveries. However, a general shortage of supply of IT services in the Nordics and more and more customers gaining rsthand experience of working with distributed teams and seeing how effective this can be, has lead to a sharp increase in the demand for Itera’s acclaimed distributed delivery model. Quality policies and approaches help Itera to achieve high levels of customer satisfaction, employee engagement and protable growth. Itera applies a quality management frame- work combining world-class standards with its business models. Certicates and authorisa- tions such as ISO 27001 and BCR-P (Binding Corporate Rules for Processors) are examples of these. Itera’s quality assurance team con- ducts internal audits of adherence and value of framework practices to continuously develop the Group’s capabilities. The management of non conformities and the quality improvement process ispart of Itera’s quality approach. Corporate risk management is performed at the Group level. This includes risk assessments, risk approval and reports on risk management and mitigation for the Board of Directors. Risk management is also performed for deliveries tocustomers and internal projects. In late February of 2022, Russia started a mili- tary invasion of Ukraine. Itera’s primary concern was to facilitate the safety of its employees and their families. Itera supported their relocation to the western region of Ukraine into its Lviv ofce as well as to other countries. Once they were safe, Itera’s employees immediately focused on customer deliveries. The temporary disruption to Itera’s services delivered from its Ukrainian employees was relatively minor, circumstances taken into consideration. Itera has solid business continuity plans that enable it to act quickly in a state of emergency like this and minimise business disruption. 2021 saw the continuation of the Covid-19 virus outbreak. Itera is used to operating with a distributed work force and has maintained productivity levels that have been on par with or better than before the pandemic. If anything, in 2021 the pandemic had a positive impact on the demand for Itera’s digitalisation services. The Group has developed contingency plans to mitigate any major reduction in business volume or availability of delivery personnel should theyoccur. Organisation The Group has a strong portfolio of customers in the Nordic region, where many customers are served from more than one of Itera’s locations. Itera strengthened its progress in this area in 2021 by further expanding its distributed deliv- ery units and resources across the entire Group. The Group’s headcount at 31 December 2021 was 648 as compared to 569 at the end of 2020. The average number of fulltime equivalent posi- tions at the Group in 2021 was 594 as compared to 538 in 2020. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 1515 The proportion of Itera’s capacity that is located nearshore (its nearshore ratio) was 53% at the end of 2021 as compared to 49% at the end of 2020. The Group’s delivery centres in Ukraine and Slovakia provide signicant scalability and cost- effectiveness in what is a heated market for digital business. Absence due to sickness in 2021 was 3.2%, which the Board considers very satisfactory, especially during the Covid-19 pandemic. No accidents or injuries occurred during the year. The Board considers the working environment to be good. Surveys are regularly carried out to assess the Group’s working environment. The Board wishes to warmly thank everyone at Itera for their continued hard work, passion and dedication to our customers and our business in 2021 in what was another trying year for them and society at large given the continued lock- downs and social restrictions. The Board is now naturally deeply concerned about the well-being of Itera’s fantastic Ukrainian employees, who have impressed with their resilience, dedication and ghting spirit. Social responsibility Itera recognises that it has a responsibility to the society of which it is part and seeks to contribute to the positive development of those areas of society that are most related to its activities. The Group’s ethical guidelines describe the standards that apply to the Group’s relationships with customers, suppliers, the public authorities and its own employees. Further information on Itera’s ethical guidelines – The Itera Business Code of Ethics – is available at https://www.itera.com/en/investor-relations. Corruption Itera does not tolerate any form of corruption. The Group is exposed through its nearshore activities in Ukraine to a certain level of corrup- tion risk as the country has a low score on the Transparency International Corruption Index. Itera has therefore decided to protect the Group from this risk by not delivering services to the public or private sectors in Ukraine where the problem of corruption is principally found, and by only exporting its services to countries where western business standards are the norm. The Group has guidelines for all employees con- cerning the acceptance of gifts and other bene- ts or advantages. The Group’s ethical guidelines can be consulted for further information. Security and privacy Underpinning the Itera Business Strategy and pol- icies, the Group has implemented a security and privacy framework applicable to all business units and subsidiaries. Security and privacy as subject matters include privacy, data protection, informa- tion security and cyberse curity. Itera’s security and privacy framework forms the foundation for both its deliverables to customers and its own operations. This applies to all processes, practices, technology and organisation, and the objective is to ensure compliance with laws and regulations, policies, and guidelines. As part of our efforts to achieve compliance, Binding Corporate Rules for Processors (BCR/P) and Standard Contractual Clauses (SCCs) as mandated by respectively by Article 47 of GDPR and Article 46(1) and Article 46 (2)(c) of Regulation (EU) 2016/679 respectively, have been developed and approved by the local Supervisory Authority. The BCR/P allows for the transfer of customers’ personal data and SCCs allow for the transfer ofinternal personal data for processing outside of the EU/EEA, and in Itera’s case, this is Ukraine. Itera’s nearshore activities are fully integrated with its Nordic activities, and the entire Group, therefore, follows the same procedures and ethical standards. The Group operates a cloud- based infrastructure with the CCoE (Cloud Center of Excellence) as its core infrastructure, enabling it to manage internal as well as customer resources either within the CCoE or in customer tenants. All cloud-based services and resources are located within the EU/EEA in line with laws, regulations and customer requirements. Financial processes are carried out by a central function with a team located in Norway and Ukraine. All employees that are part of the Group’s nearshore activities have signed condentiality ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 16 agreements that include undertakings in respect of data processing and other security arrange- ments. There are also DPAs and BCR/Ps among all Itera companies and locations. Integrity and general legislation Itera complies with the national legislation and regulations of all the countries in which it oper- ates. All its employees are encouraged to report internally any situations in which they have concerns with regards to the Group’s integrity or where they are aware that laws or regulations are being breached. Employees can make such disclosures condentially if they so wish, and the Group will not take adverse action against whistle-blowers, regardless of whether the con- tent of the disclosure is found to be true or false. Human resources Equality Itera regards gender equality as important. It believes that women and men should be given the same remuneration and the same personal and professional development opportunities. The Group seeks to ensure employees of both genders are able to combine their work and home lives, and therefore offers maternity and paternity leave arrangements, home ofce solu- tions and part-time positions to support this. 30% of the Group’s employees in 2021 were women as compared to 32% in 2020. The Group’s core management team consisted of seven men and two women in 2021. The share- holder-elected Board members are two women and two men, while the employee-elected representatives and observers are two women and two men. There are large differences in the proportion of women employed in the Group’s various areas of expertise. The proportion of women is lower in technology-focused areas in development and operations, while the proportion of women is higher in areas that are more specialised in consultancy, communication, content and testing. More than 71% of the parent company’s employees are women. There is an uneven distribution of men and women in management positions. The Group has a goal of improving this balance in its management groups. Diversity Itera regards diversity in the Group as impor- tant and seeks to recruit, develop and retain the best employees regardless of gender, ethnicity or disability. Itera strongly believe diversity and inclusion make a difference for Itera, our customers and society. The Group believes in all our individual uniqueness as the driving force for our winning team and the growth of our customers and people. We believe a diverse culture is a sustainable culture. Itera’s diversity framework was implemented in 2021 to address diversity and inclusion. Itera will focus on three high-level areas of diversity and inclusion: ensuring representation of diverse talents, enabling equality of opportunity through fairness and transparency, tackling microaggres- sions and promoting multivariate diversity. The Group’s ethical guidelines also serve to promote diversity and prevent discrimination. For more information, see https://www.itera.com/en/ investor-relations. Human rights Itera is committed to ensuring internationally recognised human rights, such as those dened in the United Nation’s Universal Declaration of Human Rights and other UN conventions, are respected. No one shall in any way contribute to an individual’s human rights being breached or circumvented. The Group places special emphasis on ensuring that employees’ funda- mental rights are respected. Itera has operations in countries outside Scandinavia, specically Ukraine and Slovakia, and considers that the establishment of these workplaces has con- tributed to increasing the living standards of its employees in these countries. Employee engagement Itera does not measure employee satisfaction but employee engagement, as we are of the view that this is a strong indicator of employee wellbeing. The engagement score is an over- all indicator of how engaged our employees are. Employee engagement is measured every two weeks through a digital survey consisting of around 10 questions. Each employee gives his/her score and feedback on a wide range of relevant topics, such as his/her work-life balance, professional development, workload and adherence to Itera’s values. Employees are given the opportunity to share their opinion on which areas and measures should be prioritized ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 1717 in order to improve the results. Based on the input from our employees, different levels of analysis are made and different actions to improve engagement activated. Measures that are assumed to have an effect for several parts of the organiszation are implemented under the guidance of the Group’s HR function. Measures that are more locally targeted are carried out by the department in question under the direction of the relevant manager. The overall average engagement score of 8.5 from 2021 surveys shows that employees nd Itera a good place to work. The engagement score is an overall indicator of how engaged Itera’s employees are. It is an average of scores given on a scale of 0 to 10 in response to the questions below: • Engagement – How likely is it you would recommend Itera as a place to work? • Loyalty – If you were offered the same job at another organisation, how likely is it you would stay at Itera? • Satisfaction – Overall, how satised are you working at Itera? Skills and expertise development A world in constant evolution means that compa- nies need to constantly develop the education, knowledge and skills of their employees to keep up. A high level of skills and expertise is crucial to the Group’s competitiveness. Itera works in a targeted way to develop the skills and expertise of all its employees with regards to our practice areas and capabilities as well as our business framework, entrepreneurial culture, sales and management. Our different training activities support the process of continuous improvement throughout our employees’ careers at Itera. In 2021 Itera launched a common concept for competence development: Level Up. To bring the concept to life throughout the organization Itera has 5 principles guiding employees every day: ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 18 1. We develop our skills and expertise together with our customers! Our work to develop our skills and expertise is always customer-driven. We develop our skills by solving customer challenges using sustain- able solutions. 2. We share everything – always! We are committed to making the development of our skills and expertise visible and available to everyone. We use accessible channels and platforms to share information that is of general interest. This is how we help each other to improve. 3. We are driven by passion and creativity! We want our work to develop our skills and expertise to inspire you. We aim to provide space for your passion and creativity, with your efforts making a difference. 4. We grow professionally and personally! We want our work to develop our skills and expertise to always contribute to our personal and professional development. We aim to build internal and external networks in parallel with developing our skills and expertise. 5. We prioritize and systematise! Skills and expertise development will always be a priority. This means that time will be set aside for skills and expertise development regardless of whether or not you are currently working on a project. The skills and expertise programs run at Itera together constitute the “Itera Academy”, which is the overall structure for all training. The training available through the “Itera Academy” is closely linked with the Group’s strategy and with the various requirements of the business areas, and ranges from courses on the role of the consultant for new graduates, through courses of varying levels on project manage- ment, system development and user experience, to management skills training for both new and experienced managers. Environment Itera’s activities only pollute the external environ ment to a limited extent. The Group’s environmental impact is principally a result of its use of energy, business travel and the waste created by its ofce activities. The Group is EcoLighthouse certied (recertied for another three years in 2019), which means it operates environmentally friendly and sustainable procedures in areas including business travel, procurement and waste management. The Group is headquartered in a BREEAM NOR certied building. BREEAM is the world’s longest-established (1990) and Europe’s leading environmental assessment tool for buildings, and BREEAM certication is based on a build- ing’s documented environmental performance across nine sustainability categories: manage- ment, health and well-being, energy, transport, water, materials, waste, land use and ecology, and pollution. The ofce part of the building has received an assessment rating of “Very good”. Other environmental initiatives at the Group seek to promote the use of organised recycling schemes for obsolete IT equipment, to reduce travel by ensuring video meetings are used as effectively as possible and to encourage responsible waste management. All employees have a duty to consider the environmental impact of work-related activities and to favour solutions, products and methods that impact the environment as little as possi- ble. Details of this can be found in the Group’s ethical guidelines (https://www.itera.com/en/ investor-relations). Shares and shareholder relations The share capital of Itera ASA is NOK 24,655,987 divided into 82,186,624 shares each with a face value of NOK 0.30 per share. Itera held 1,637,006 own shares at the end of 2021. The Group has four ongoing share options programs, the last of which was issued in 2021. The exercise price for all of these programs was below the share price at the end of 2021. In 2017, Itera introduced an annual Employee Share Purchase Programme, where employees could purchase shares up to a market value of NOK 20,000 at a 20% discount. The programme has been repeated each year since 2017. After changes in Norwegian tax legislation in 2021, the programme was changed so that employees could purchase shares up to a market value of NOK 30.000 at a 25% discount. The key objec- ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 1919 tives of these programs are to align the interest of employees and shareholders, and to give employees an opportunity to take part in the value creation and long-term development of the Group. In total, 130 employees purchased a total of 268,615 shares through the offering in 2021. Itera had 2,278 shareholders at the close of 2021. The 20 largest shareholders owned 59.6million shares, which represents 72.5% ofthe share capital. An ordinary dividend of NOK 20.5 million was paid in 2021 based on the Group’s 2020 results, which is equivalent to NOK 0.25 per share. In addition, a supplementary dividend of NOK 8.2 million (NOK 0.10 per share) was paid in Novem- ber 2021. The Board of Directors proposes the payment of an ordinary dividend of NOK 0.20 per share based on the Group’s 2021 results andwill also request from the General Meeting an authorisation to pay an additional dividend later in the year. Corporate governance Itera applies corporate governance that is based on the requirements of the Norwegian Account- ing Act and the Norwegian Code of Practice for Corporate Governance. The separate section on corporate governance provides more information on how Itera complies with Section 3-3(b) para- graph 2 of the Norwegian Accounting Act and the provisions of the Norwegian Code of Practice for Corporate Governance. The Board of Directors of Itera ASA held six board meetings in 2021. The Board of Directors has two subcommittees, namely the Audit Committee and the Compensa- tion Committee. The Audit Committee consists of two board members and held ve meetings in 2021. The Compensation Committee consists of two board members and held two meetings in 2021. The Compensation Committee prepares and makes recommendations to the Board regarding the CEO’s remuneration. The Compen- sation Committee acts as an advisory body for the CEO on compensation-related issues and other signicant personnel questions related tothe executive management. Further information on this area is provided in the corporate governance report at the end of this report. Directors’ and ofcers’ liability insurance Itera has signed a directors’ and ofcers’ liability insurance agreement with Gjensidige covering the board of directors and executive management. The insurance will cover damages amounting to NOK 10 million for each incident and accumulated over the insurance period (oneyear). PARENT COMPANY Financial results Internal support processes and shared solutions are structured as Group Functions in the parent company Itera ASA in areas where this facilitates signicant economies of scale and synergies. The scope of Group Functions is managed in line with the Group’s requirements, and covers areas such as accounting/nance, HR, communication, marketing and internal IT. The parent company’s operating revenue of NOK 46.4 million (NOK 38.1 million) was related to sales of these services to other Group companies. The parent company’s operating result was a loss of NOK 2.8 million (NOK 3.3 million). Its operating loss reflects the costs of owning the subsidiary companies. As the owner, the parent company receives group contributions and dividends from the subsidiary companies. In 2021, the parent com- pany received group contributions and dividends totalling NOK 46.9 million (NOK 53.4 million). The parent company’s prot before tax was NOK 43.9 million (NOK 50.3 million) and theprot after tax was NOK 44.0 million (NOK50.4 million). Prot allocation The Board of Directors proposes that the prot of NOK 44,002 k recorded by the parent company Itera ASA is allocated as follows: • NOK 16,437k to ordinary dividend • NOK 8,219k to supplementary dividend paid in 2021 • NOK 19,346k to other equity ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 20 The book value of the parent company’s invest- ments in the subsidiary companies is NOK 116.0 million. The parent company administers the Group bank account system. The Group’s positive cash flow also appears as an increase in the liquid assets held by the parent company as this shows the combined bank deposits held in the Group bank account system. The parent company reports the bank deposits held by the subsidiary companies in the Group bank account system as liabilities to Group companies. The Norwegian companies are also jointly VAT regis- tered, and the parent company is responsible for paying VAT on behalf of all these companies. The total VAT liability is reported as a liability on the parent company balance sheet but is offset by intragroup receivables due from subsidiaries. The parent company’s headcount at the end of 2021 was 20 compared to 21 at the end of 2020. 14 of the 20 employees are women. Absence due to sickness in 2021 was 4.7% as compared to 4.9% in 2020. No accidents or injuries occurred during the year. The Board considers the working environment to be good, which is supported by the company’s employee satisfaction score. It is the opinion of the Board of Directors that the annual accounts provide a true and fair view of the parent company’s activities in 2021 and its nancial position at the end of the year. Going concern assumption In accordance with Section 3-3a of the Norwegian Accounting Act, it is conrmed that the going concern assumption is applicable and that the annual accounts have been prepared on this basis. The forecast for 2022 and the Group’s equity situation and liquidity situation provide the basis for the going concern assumption. Outlook Future outlook is by its nature associated with considerable uncertainty related to both external and internal factors. Itera has a well-founded strategy and it continues to work in a targeted way. Its overall strategy of developing larger, long-term customer relationships, achieving greater operational efciency and using delivery models that combine resources from across the Nordic region and its nearshore locations remains unchanged. The Group is seeing sat- isfactory levels of activity in all the markets in which it is represented and is keeping a close watch on how market trends are developing. The Board closely follows the development of the war in Ukraine and ensures all reasonable measures are taken to safeguard our impacted employees and customer deliveries. It is impressed by the effectiveness of the business continuity plans that were put to test when the war broke out. Itera is committed to continuing to operate its prosperous delivery centres in Ukraine. Anne Nyseter Perez Board member Arne Mjøs Chief Executive Ofcer Jan-Erik Karlsson Board member Andreas Almquist Board member Gyrid Skalleberg Ingerø Board member Morten Thorkildsen Chairman of the board Marianne Killengreen Board member Oslo, 28 April 2022 The Board of Directors of Itera ASA ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 2121 The Board of Directors and executive management of Itera ASA carry out an annual review of the principles for corporate governance and how they function within the Group. Itera provides here an account of its principles and practice for corporate governance pursuant to Section 3-3b of the Norwegian Accounting Act and the Norwegian Code of Practice for Corporate Governance (NUES) as issued on 14October 2021. Corporate governance The Norwegian Code of Practice for Corporate Governance is available on www.nues.no/en/. A description of how Itera complies with the 15 recommendations set out in the Code of Practice for Corporate Governance is provided below. 1. Implementation and reporting on corporate governance Itera ASA’s principles for corporate governance ensure an appropriate division of roles and good collaboration between the company’s owners, its Board of Directors and its executive manage- ment as well as satisfactory control of its activ- ities. This helps to ensure the greatest possible value creation over time in the best interests of owners and other stakeholders. The company’s ethical guidelines address conflicts of interest, relationships with custom- ers, suppliers and the media, inside information issues and other relevant nancial interests of a personal nature. The ethical guidelines apply to all employees of the Itera Group. Itera’s employees increasingly regard non- nancial incentives as important. Itera’s manage ment principles therefore contain a clearset of values for employees to identify with. Itera also focuses on making social and moral considerations part of its business processes. This means that customers or projects may be rejected on account of their being in conflict with the Group’s set of values and vision, which is: “Make a difference”. This applies to all the contexts in which Itera is present; the aspira- tion is for Itera’s employees to view working at Itera as more than just a job, for its customers to nd real value in collaborating with Itera, for its owners to receive a greater return from their investment than would be the case with other comparable investments, and for the company to make a positive contribution to economic and social development the local environments in which itoperates. Itera complies with the Norwegian Code of Practice for Corporate Governance with no material deviations from the Code’s recommen- dations, with the exception of the deviations set out in sections 6 and 14. 2. Business (No deviation from the Code) Itera is a specialist in creating digital business, with communication, technology and innovation as the core competency tools. Itera delivers projects and services in cross-functional teams ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 22 to Nordic organisations that see the instrumental contribution that innovation, efcient commu- nication and smart utilisation of technology can make to achieving their goals. Itera’s core sectors are banking and insurance, public, healthcare, the service industry, energy and utility. The company’s Articles of Association areavailable on its website (www.itera.com). The Board monitors the progress of the company’s ESG strategy and its associated pro- cesses and reporting. The Board includes these issues in its discussions relating to strategy, risk and performance. The annual report contains details of the com- pany’s goals and strategies, and the nancial markets are provided with continual updates bythe company’s quarterly presentations. 3. Equity and dividends (No deviation from the Code) The company’s capital situation is kept under constant review in relation to its objectives, strategy and desired risk prole. The company’s objective is to generate a competitive return for its shareholders through dividends and increases in the share price that is in line with comparable investments. Itera’s dividend policy is intended to strike a balance between capital adequacy and providing share- holders with a reasonable return. The company’s current dividend policy is to distribute at least 50% of the Group’s adjusted annual prot after tax. Payment of the annual dividend is depend- ent on the company’s nancial situation, its working capital requirements and investment/ acquisition opportunities. The Annual General Meeting approves the annual dividend based on a proposal from the Board of Directors. For 2021, the Board of Directors proposes the payment of an ordinary dividend of NOK 0.20 per share. The Board of Directors has also resolved to ask the Annual General Meeting to renew its authorisation to pay a supplementary dividend for 2021 if the Group’s nancial situation makes this possible. At the Annual General Meeting in 2021, the Board of Directors was granted authorisation to increase the company’s share capital by up to NOK 1,232,799 by issuing for subscription up to 4,109,331 new shares with a nominal value of NOK 0.30. The authorisation is effective until 30 June 2022 and replaced the authorisation approved by the Annual General Meeting held on 25 May 2020. The Board is authorised to waive the preferential rights of shareholders pursuant to Section 10-4 of the Norwegian Public Limited Companies Act. The authorisation also covers capital increases for non-cash payment or other special subscription terms pursuant to Section 10-2 of the Norwegian Public Limited Compa- nies Act. The authorisation also covers resolu- tions in connection with mergers pursuant to Section 13-5 of the Norwegian Public Limited CompaniesAct. At the same Annual General Meeting, the Board of Directors was granted authorisation to buy back own shares up to a nominal value of NOK 1,232,799, equivalent to 4,109,331 shares each of a face value of NOK 0.30. The authorisation is effective until 30 June 2022 and replaced the authorisation granted at the Annual General Meeting held on 25 May 2020. The authorisation was used to buy back 1,726,000 shares in May 2021 for the purpose of implementing employee share purchase programmes. The Board of Directors as part of its prepara- tions for the Annual General Meeting carries out an annual review of whether it should ask for authorisation from the Annual General Meeting to increase the company’s share capital and/or to be allowed to buy back own shares. Any author- isation is normally granted for one year, and the basis for such authorisation must be clearly com- municated at the Annual General Meeting. 4. Equal treatment of shareholders and transactions with close associ- ates (No deviation from the Code) The company is committed to treating all shareholders equally. There is only one class of shares. The Articles of Association do not impose any restrictions on voting rights. Treat- ing all shareholders equally is regarded as important. All information liable to influence the company’s share price is published through the Oslo Stock Exchange’s information system and on the company’s website. The company’s transactions in its own shares (share buy-backs) are carried out through the ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 2323 stock exchange at market rates, except in cases of exercising buy-back options in discontinued employee share incentive programmes. The Board will normally obtain independent valuations for any material transactions involv- ing the company and its shareholders, mem- bers of the Board, executive personnel or close associates of such parties. 5. Shares and negotiability (No deviation from the Code) Itera shares are listed on the Oslo Stock Exchange and are freely negotiable. Itera has one class of shares, and each share equals one vote at the General Meeting. The shares have no trading restrictions in the form of Board consent or ownership limitations. The Articles of Asso- ciation of Itera ASA contain no restrictions on negotiability or voting rights and all shares have equal rights. According to the conditions in Share Purchase Programme offered to selected managers and key personnel in 2018 and 2020, a three-year lock-in period applies to ownership of the shares purchased under this programme. Itera has a buy-back option of the shares in cases where the employee terminates his or her employ- ment with Itera within the lock-in period. Itera considers that such trading limitation does not cause disturbances in the market due to limited scope and thus is not in violation of the NUES recommendation. 6. Annual General Meeting All shareholders are entitled to participate in the Annual General Meeting. Arrangements have been made that allow shareholders to vote in accordance with their ownership through a legal representative or proxy. All shares in the company carry equal voting rights. There are no ownership restrictions, and the company is not aware of any shareholder agreements. Minutes from the Annual General Meeting are made available using the Oslo Stock Exchange’s information system and on the company’s web- site (www.itera.com). NUES recommends that the Annual Gen- eral Meeting should vote separately on each individual candidate for any corporate bodies to which members are elected. Itera’s practice is for the entire Board to be elected. 7. Committees (No deviation from the Code) Nomination Committee The Annual General Meeting has established a Nomination Committee in accordance with Itera’s Articles of Association. The Annual General Meeting issues the mandate for the work of the Nomination Committee. The Nomination Committee nominates candidates for appoint- ment to the Board of Directors for consideration by the Annual General Meeting. The nominations are required to provide relevant information about the candidates’ background and inde- pendence. The Nomination Committee also makes proposals regarding the remuneration paid to members of the Board. The remuneration paid to the Nomination Committee is determined by the Annual General Meeting. The members of the Nomination Committee are Eli Giske, Bjørn Wicklund and Olav Werner Pedersen. No Board members or Itera manage- ment employees are members of the Nomination Committee. The Nomination Committee publishes an invita- tion to submit proposals for candidates for elec- tion to the Board on the company’s website. The Nomination Committee will also send a letter to the largest shareholders inviting their proposals. Audit Committee The Board has established an Audit Committee in accordance with Itera’s Articles of Association. The Audit Committee has two members. Its mandate is to supervise the company’s reporting procedures and to assess the effective ness of internal control and risk management activi- ties. The Audit Committee is in regular contact with the auditor and ensures the auditor is independent. The Audit Committee reports to the Board. Members of the Board have access to all relevant documentation as well as to the minutes of all Audit Committee meetings. The members of the Audit Committee are Marianne Killengreen (chair) and Gyrid Skalleberg Ingerø. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 24 Compensation Committee The Board has established a Compensation Committee to develop and coordinate the Group’s compensation systems. The Compen- sation Committee has two members – Jan-Erik Karlsson (chair) and Morten Thorkildsen. 8. Board of Directors: Composition and (No deviation from the Code) Itera does not have a corporate assembly. Itera’s Articles of Association state that the company is to have a Board of between four and six mem- bers. The Board currently has six members, four of whom are elected by shareholders at the Annual General Meeting. Itera’s employees are represented by two employee electives and two observers. Fifty percent of each of the share- holder and employee elected board members and observers are women. It is regarded as important for the Board to be balanced in terms of its members’ expertise, experience and backgrounds in relation to areas that are of relevance to the company’s activi- ties. It is also desirable for the composition of the Board to reflect both the company’s own- ership structure and the need for independent representatives. The current Board includes four members elected by shareholders at the company’s Annual General Meeting, and its composition satises the independence requirements set out in the Norwegian Code of Practice for Corporate Governance. No member of the executive management is a member of theBoard. The Board of Directors held 6 board meetings in 2021 with an attendance rate of 100%. 9. The Work of the Board of Direc- tors (No deviation from the Code) The Board prepares an annual plan for its work with an emphasis on targets, strategy and implementation. In addition, the Board has a formal mandate that regulates its areas of responsibility, its duties and the allocation of roles between the Board, the Chairman of the Board and the CEO. The Board receives monthly nancial reports for the Group as a whole and for the subsidiary companies, in which the executive management comments on nancial performance and nancial position. The Board discusses the company’s strategy and budgets at extended board meetings. The Board will normally obtain independent valuations for any material transactions involving the company and its shareholders, members of the Board, executive personnel or close associ- ates of such parties. The Board holds 6–10 meetings a year and assesses its own work on an annual basis. In addition, the Nomination Committee make an annual assessment of each Board member’s performance and contribution. 10. Risk management and internal control (No deviation from the Code) Risk management and internal control are car- ried out by the Group using a range of processes, both at Board level and by the Group’s executive management. The Audit Committee monitors risk management and internal control on behalf of the Board in ways that are additional to the reports and discussions on the issue at Board meetings. Risk management The Board is regularly updated on risk manage- ment at its meetings, by routine nancial reports and by the reports produced by the executive management on the Group’s business activities. The Board also assesses the need for measures to be taken in response to risk factors. The basis of risk management at Itera is that the CEOs of the companies that form the Group are responsible for risk within their individual companies and must therefore have necessary knowledge and understanding of their compa- nies’ risk proles, so that these companies can be managed in a nancially and administratively responsible way. The CEO and CFO continually assess the nan- cial results of the various business areas, the extent to which they are meeting the objectives that have been set, critical situations and events that might influence the future performance of the company, and whether optimal use is being made of resources. The CEO and CFO carry out this work in close cooperation with the manage- ment of the individual units. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 2525 Internal control The Board assesses the internal control systems and considers the most important risk factors facing the company as part of the budget plan- ning and budget approval process. The Group has in recent years pursued a growth strategy and the Board is committed to ensuring that all the Group’s activities are covered at all times by internal control systems. The senior management of the subsidiary companies are responsible for ensuring there are appropriate and effective internal controls that meet all applicable requirements and are responsible for ensuring compliance with the internal control requirements. Accounting & Finance, HR, IT and Communica- tions are organised as common Group Functions across the Group. This ensures there is internal control across the companies and across national borders. Accounting & Finance has implemented shared accounting procedures for the Group where it has proved efcient to do so, including in relation to charts of accounts and reporting. The companies in the Group all use the same accounting system, which in 2020 was switched from Maconomy to Microsoft Dynamics 365. A specic approval authority matrix has been implemented that determines the authori- sation routines for expenditure, and the approval of two individuals is required for payments to be made. The Group Finance Function has a separate function that manages accounting in the subsidiary companies. This function is also responsible for quality control of accounting information by performing reconciliations and other checks. Some accounting work is carried out by the Group’s accounting department in Ukraine, which currently has four employees. There were also three full-time positions in the accounting department in Norway in 2021. In addition to the accounting department, there are separate Business Controllers that assist thecompanies with nancial reporting, analyses, forecasting and budgets. There is a separate accounting function in Ukraine and an external accounting rm servicing the Slovakian branch. The CFO and the Finance Manager are respon- sible for continually assessing whether the accounting routines are functioning as required, including controlling reconciliations and analys- ing and monitoring a range of KPIs. The reports produced by the subsidiary companies are con- solidated on a monthly basis, and analyses are carried out as part of the reporting process, with action taken as required. Reporting is carried out using the Group’s standard reporting template, with consolidation being carried out using spreadsheets. The CEO and CFO continually assess the nan- cial results of the various business areas, the extent to which they are meeting the objectives that have been set, critical situations and events that might influence the future performance of the company, and whether optimal use is being made of resources. Meetings are held with the subsidiary companies every quarter to review these topics and others, and also to consider the risks related to nancial reporting, over both the short and long term. The CEO, the CFO, the man- agement of the subsidiary companies and rele- vant experts participate in these meetings, which are led by the CEO. The Group CEO proposes any riskreduction measures that are required on the basis of the companies’ nancial reports and any follow-up meetings that are held. 11. Remuneration of the Board of Directors (No deviation from the Code) The Nomination Committee makes recommen- dations to the Annual General Meeting regarding the remuneration paid to the Board of Directors. The remuneration paid to the members of the Board is determined by the Annual General Meeting once it has considered the proposals of the Nomination Committee. The remuneration paid to the Nomination Committee is determined by the Annual General Meeting once it has con- sidered the proposals of the Board. Information on the remuneration paid to the members of the Board and their shareholdings can be found in the notes to the accounts in the annual report. NUES recommends that members of Board of Directors should note participate in any incentive or share option programme. Employee elected Board members in Itera may be part of incen- tive and/or share option programmes in their capacity as employees. Inclusion in such pro- gramme may occur prior to or after the employ- ee’s election to the Board. Itera considers such inclusion to be independent of and unrelated to the employee’s Board position and thus not in violation of the NUES recommendation. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 26 12. Remuneration of executive per- sonnel (No deviation from the Code) The Board has produced guidelines on the remuneration of executive personnel in accord- ance with the rules set out in Section 6-16a of the Public Limited Liability Companies Act. The Company’s Compensation Committee is involved in the process of determining the remuneration paid to executive personnel. Details of the Board’s guidelines on the remuneration of executive personnel are set out in a separate remuneration report. 13. Information and communica- tions (No deviation from the Code) The company strives to provide accurate and sufciently comprehensive information every quarter, and to be quick to publish it. The com- pany normally publishes quarterly gures within seven weeks of the end of a quarter. The compa- ny’s provisional annual accounts are published in February. Open quarterly presentations are held with a webcast made available so that they can be viewed either live or subsequently. The notice calling the Annual General Meeting and the annual report are made available on the company’s website three weeks prior to the date of the Annual General Meeting. The company strives to publish information in a non-discriminatory and simultaneous man- ner. The company maintains regular dialogue with shareholders, analysts and other parties. The company takes a cautious approach in its contacts with these parties. The company limits its communication with investors and analysts in the thirty days prior to the publication of an interim report. In addition, the company does not issue comments to the media or any other parties about the Group’s results during this period. This is to ensure all market participants concerned are treated equally. 14. Take-overs The Board of Directors is committed to equal treatment of shareholders and will ensure openness with respect to any potential takeover of the company. In the event of a takeover bid for Itera, the Board of Directors and executive management will seek to ensure all shareholders have access to sufcient information for them to be able to form a position on the bid. The Board has not issued separate guidelines on how it would operate in the event of a formal takeover bid, but it would conduct itself in accordance with the relevant provisions and recommenda- tions set out by legislation and the Norwegian Code of Practice for Corporate Governance. The Board regards this as sufcient to ensure that shareholders’ interests are safeguarded in an equal and proper manner. The Board will inform shareholders of its opinion of any bid, and the Board will in connection with this inform shareholders about whether they themselves wish to accept the offer should they have taken a position on it. 15. Auditor (No deviation from the Code) The company has elected PwC as its external auditor. PwC audits all the companies in the Group that are subject to statutory audit. The auditor participates in all meetings of the Audit Committee. The auditor prepares reports for the Audit Committee and the Board. These reports include an audit plan, an assessment of internal con- trol at the company and a review of signicant accounting principles and estimates. The auditor participates in the Board meeting at which the annual accounts are considered. The auditor participates in the Annual General Meeting. Information about the fees paid to the auditor can be found in the annual report. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 2727 OUR R ES U LTS 2021 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 28 Contents Itera Group Consolidated statement of comprehensive income 29 Consolidated statement of nancial position 30 Consolidated statement of cash flows 32 Consolidated statement of changes in equity 33 Corporate information and basis of preparation 34 Summary of signicant accounting policies 34 Note 1. Overview of subsidiaries 40 Note 2. Segments 40 Note 3. Contract assets, contract costs and contract liabilities 42 Note 4. Earnings and diluted earnings per share 43 Note 5. Other current assets 43 Note 6. Other current liabilities 43 Note 8. Other Operating Expenses 45 Note 9. Salaries and personnel costs 46 Note 10. Share-based remuneration 46 Note 11. Executive personnel 47 Note 12. Pension 47 Note 13. Financial income and expenses 48 Note 14. Accounts receivable 48 Note 15. Non-current assets 48 Note 16. Right-of-use assets and lease liabilities 51 Note 17. Financial assets and nancial liabilities 54 Note 18. Taxes 55 Note 19. Exchange rates 56 Note 20. Cash and cash equivalents 56 Note 21. Shareholders 56 Note 22. Transactions with related parties 57 Note 23. Subsequent events 58 Note 24. Alternative performance measures 58 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 29 Consolidated statement of comprehensive income Itera Group 1 January – 31 December NOK 1 000, except earnings per share Note 2021 2020 Revenues 2 633 062 615 392 Cost of goods and services 63 120 71 820 Salaries and personnel expenses 9,10,11 434 697 392 447 Depreciation and amortisation 15,16 28 467 42 505 Other operating and administrative expenses 8,11 48 176 46 047 Total operating expenses 574 460 552 818 Operating prot 58 602 62 573 Financial income 13 2 424 6 448 Financial expense 13 3 602 7 236 Net nancial income (expenses) (1 178) (788) Prot before taxes 57 424 61 785 Income taxes 18 13 276 13 152 Net income 44 148 48 633 Total income attributable to: Shareholders in parent company 44 148 48 633 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Other comprehensive income Translation differences on net investment in foreign operations 258 79 Total comprehensive income 44 406 48 712 Total comprehensive income attributable to: Shareholders in parent company 44 406 48 712 Earnings per share 4 0.55 0.60 Diluted earnings per share 4 0.55 0.60 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 30 Consolidated statement of nancial position Itera Group 31 December NOK 1 000 Note 2021 2020 ASSETS Deferred tax assets 18 4 791 4 916 Intangible assets 15,16 34 826 24 225 Right of use assets 16 30 917 38 263 Property, plant and equipment 15 15 729 15 403 Total non-current assets 86 262 82 807 Current assets Contract costs 3 4 035 6 851 Contract assets 3 1 120 1 196 Accounts receivable 14, 17 76 092 67 275 Lease receivable - current 16, 17 3 370 - Other current assets 5 12 794 11 901 Cash and cash equivalents 20, 17 37 457 54 399 Total current assets 134 868 141 621 Total assets 221 130 224 428 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 31 Consolidated statement of nancial position Itera Group 31 December NOK 1 000 Note 2021 2020 EQUITY AND LIABILITIES Equity Share capital 21 24 656 24 656 Other equity 14 880 9 685 Total equity 39 536 34 341 Other provisions and liabilities 1 740 715 Lease liabilities - non-current 16, 17 20 036 24 962 Total non-current liabilities 21 775 25 676 Accounts payable 17 18 846 23 169 Tax payable 18 7 278 12 733 Public fees payable 37 136 37 665 Lease liabilities - current 16, 17 15 163 17 636 Contract liabilities 3 18 318 21 291 Other current liabilities 6, 16 63 078 51 917 Total current liabilities 159 819 164 411 Total liabilities 181 594 190 087 Total equity and liabilities 221 130 224 428 Oslo, 28 April, 2022 The Board of Directors of Itera ASA Morten Thorkildsen Marianne Killengreen Jan-Erik Karlsson Chairman of the board Board member Board member Gyrid Skalleberg Ingerø Anne Nyseter Perez Andreas Almquist Board member Board member Board member (Employee elected) (Employee elected) Arne Mjøs Chief Executive Ofcer ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 32 Consolidated statement of cash flows Itera Group 1 January – 31 December NOK 1 000 Note 2021 2020 Prot before taxes 57 424 61 785 Income taxes paid 18 (13 223) (9 374) Depreciation and amortisation 15 28 467 42 505 Share option costs 763 (2 491) Change in contract assets 75 (463) Change in accounts receivable 14 (8 817) (10 200) Change in accounts payable (4 323) (669) Change in other accruals 11 414 14 916 Effect of changes in exchange rates (2 040) 3 168 Net cash flow from operating activities 69 740 99 177 Investment in xed assets 15 (7 492) (4 642) Investment in intangible assets 15 (25 297) (12 364) Net cash flow from investing activities (32 789) (17 006) Purchase of own shares (23 522) (18 242) Sale of own shares 8 427 7 953 Cash settlement of options contract (978) - Equity settlement of options contract 3 951 - Principal elements of lease payments 16 (17 534) (22 608) Instalment of sublease receivable 3 616 - Dividends paid to equity holders of Itera ASA (27 853) (47 963) Net cash flow from nancing activities (53 892) (80 861) Effects of exchange rate changes on cash and cash equivalents (2) 4 Net change in cash and cash equivalents (16 943) 1 314 Cash and cash equivalents as of 1 January 54 399 53 084 Cash and cash equivalents as of 31 December 37 457 54 399 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 33 Consolidated statement of changes in equity Itera Group 31 December NOK 1 000 Note Total paid in capital Own shares Other paid in equity Cumulative translation differences Other equity Total equity Equity as of 1 January 2020 24 655 (231) (8 933) 483 30 396 46 370 Net income for the period - - - - 48 633 48 633 Other comprehensive income for the period - - - 79 - 79 Share option costs - - 575 - - 575 Cash settlement of options contract - - (3 067) - - (3 067) Equity settlement of options contract - 156 2 108 - - 2 264 Purchase of own shares 21 - (478) (17 764) - - (18 242) Sale of own shares 10 - 172 5 517 - - 5 689 Dividends - - - - (47 963) (47 963) Equity as of 31 December 2020 24 655 (381) (21 563) 563 31 066 34 341 Net income for the period - - - - 44 148 44 148 Other comprehensive income for the period - - - 258 - 258 Share option costs - - 763 - - 763 Cash settlement of options contract - - (978) - - (978) Equity settlement of options contract - 185 3 766 - - 3 951 Purchase of own shares 21 - (518) (23 005) - - (23 522) Sale of own shares 10 - 223 8 205 - - 8 427 Dividends - - - - (27 853) (27 853) Equity as of 31 December 2021 24 655 (492) (32 811) 820 47 362 39 536 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 34 Corporate information and basis of preparation Corporate information Itera ASA (the Company) including its subsidiaries (the Group) is a specialist in creating digital business, with design, technology and innovation as its core competency tools. Itera provides solutions and services to customers in industries where change and innovation are central to adapt rapid changes, such as insurance, banking and nance, high tech, energy, media and public sector. Itera has ofces in Norway, Sweden, Denmark, Iceland, Ukraine and Slovakia. Itera ASA is a public limited company registered and domiciled in Norway. The ofce address is Nydalsveien 28, 0422 Oslo, Norway. Itera ASA is listed on Oslo Stock Exchange (ticker ITERA). Itera ASA is the ultimate parent company of the Group. The consolidated nancial statements for Itera ASA were approved by the Board of Directors on 28 April 2022 and are subject to approval by the Annual General Meeting on 24 May 2022. Basis of preparation The consolidated nancial statements have been prepared in accordance with the Interna- tional Financial Reporting Standards (IFRS) and related interpretations as approved by the EU as in effect at 31 December 2021, and with all additional disclosure requirements pursuant to the Norwegian Accounting Act as in effect at 31 December 2021. The consolidated nancial statements have been prepared on the historical cost principle. The consolidated nancial statements are presented in Norwegian Kroner (NOK). Amounts are rounded to the nearest thousand, unless otherwise stated. As a result of rounding adjust- ments, amounts and percentages may not add up to the total. The most important accounting principles applied by the Group in the preparation of the consolidated nancial statements are described below. These principles have been applied identically to all the periods that are presented, unless otherwise stated. Consolidation principles Subsidiaries are companies where the Group has a controlling interest. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. A controlling interest is normally achieved when the Group owns, directly or indirectly, more than 50% of the voting shares in the target company. The results of subsidiaries acquired or disposed of during the year are included in the income statement from the date when control is obtained and until the date when control ceases. All intercompany transactions, outstanding balances and unrealised group internal prots or losses are eliminated. Foreign currency translation The consolidated nancial statements are presented in NOK, which is Itera ASA’s functional currency. Transactions in foreign currencies are initially recognised in the functional currency at the exchange rate at the date of the transaction. Monetary assets and liabilities denomi- nated in foreign currencies are translated to the functional currency using the exchange rate at the reporting date. All exchange differences are recognised in the income statement with the exception of exchange differences on a net investment in a foreign entity. These exchange differences are recognised as a separate component of other comprehensive income until the disposal of the net investment, at which time they are recognised in the income statement. Non-monetary items measured at historical cost in foreign currency are translated using the exchange rates at the dates of the initial transactions. The date of initial transaction for non-monetary assets on which the Group has paid an advance consideration is the date of the Summary of signicant account- ing policies ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 35 payment of the advanced consideration. The Group has foreign entities with functional cur- rency other than NOK. At the reporting date, the assets and liabilities of foreign entities with functional currencies other than NOK are translated into NOK at the rate of exchange at the reporting date and their income statements are translated at the average exchange rates for the year. The translation differences arising from the translation are recognised in other com- prehensive income until the disposal of the net investment, at which time they are recognised in the income statement. Key sources of estimation uncertainty - critical accounting estimates A critical accounting estimate is one which is both important to the presentation of the Group’s nancial position and results and requires management’s most difcult, subjective or complex judgements, often as a result of the need to make important estimates based on assumptions about the outcome of matters that are inherently uncertain. Management evaluates such estimates on an ongoing basis, based upon historical results and experience, consultations with experts, trends and other methods which management considers reasona- ble under the circumstances, as well as forecasts as to how these might change in the future. Areas of signicant estimation uncertainty include: Revenue recognition Itera delivers most of its non-subscription services on Time & Material agreements. However, it may occasionally enter into xed or target price agreements for development work. In such cases, the revenue is recognised proportionately to its estimated completion rate and con- tract value. Completion is measured as incurred hours relative to the estimate to complete the project. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specics of each arrangement. As of the end of 2021, there were no xed or target price projects outstanding which may have represented any signicant estimation uncertainty. Refer to note 2 for further information. Impairment of capitalised development costs Itera has capitalised development costs related to its Intellectual Property Rights (IPR). The IPR generate monthly subscription revenues over the length of the customer contracts, and the capitalised development costs are amortised over their estimated useful life. Signicant technological changes or loss of major customer contracts may impact the remaining useful life or the fair value of the asset, respectively. The Group conducts impairment tests on the assets to assess whether there is a need to write down or accelerate the amortisation of the assets when such triggering factors occur. The current carrying value of the assets are low compared to the associated revenue generated from this. The Group thus considers the risk of impairment to be limited. Share capital, share premium and other equity Payments for the purchase of own shares are recognised as a reduction in equity and pro- ceeds from any sales as an increase. Transaction costs directly related to equity transactions less taxes are recognised against equity as a reduction in the proceeds. Tangible xed assets Tangible xed assets are recognised at acquisition cost, less accumulated depreciation and accumulated impairment losses. Acquisition cost includes expenses directly attributable to purchasing the asset. Acquisition cost for assets developed inhouse includes direct salary costs, other costs directly attributable to ensuring that the assets function as intended, and the costs of dismantling and removing the assets. Gains and losses on disposals of tangible xed assets are presented as part of the operating prot/loss and calculated as the difference between the consideration received and the carrying value of the asset. Depreciation of xed assets Depreciation and amortisation expenses are based on management’s estimates of resid- Summary of signicant account- ing policies, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 36 ual value, depreciation and amortisation method and the useful life of property, plant and equipment. Estimates may change due to technological developments, competition, changes in market conditions and other factors and may result in changes in the estimated useful life and in the amortisation or depreciation charges. Technological developments are difcult to predict and the Group’s views on the trends and pace of development may change over time. Critical estimates in the evaluations of useful lives for tangible assets include, but are not lim- ited to, expected developments in technology and markets. The useful lives of property, plant and equipment assets are reviewed at least annually taking into consideration the factors mentioned above and all other important relevant factors. Estimated useful lives for similar types of assets may vary between different entities in the Group due to local factors such as growth rate, maturity of the market, history and expectations for replacements or transfer of assets. A change in estimated useful life is a change in accounting estimate, and depreciation and amortisation plans are adjusted prospectively. Tangible xed assets are depreciated on a straightline basis over their estimated useful life. Leased assets are depreciated over the shorter of the lease term and estimated useful life, unless it is reasonably certain that the Group will obtain ownership after the end of the lease term. The estimated useful lives for the current and comparison periods are: Fixtures and ttings: 510 years Other xed assets: 3 years Depreciation methods, useful lives and residual values are reviewed at each balance sheet date. Intangible assets Research and development activities relate to signicant new concepts or solutions. Costs are capitalised only to the extent that they can be measured reliably, the product or process is technically or commercially viable, the future economic benets are likely, and the Group intends and has sufcient resources to complete its development as well as to sell or make use of it. Capitalised expenses include costs for materials, direct salary costs, and directly attributable overhead costs. Other development costs are expensed as incurred. Capitalised development expenditure is carried at cost minus amortisation and impairment. Intangible assets not yet in use are tested for impairment annually or more often if indicators of impairment exist, whereas other assets are tested for impairment when circumstances indicate there may be a potential impairment. Factors that indicate impairment which trigger impairment testing include the following: signicant fall in market values; signicant under- performance relative to historical or projected future operating results; signicant changes in the use of the assets or the strategy for the overall business, including assets that are decided to be phased out or replaced and assets that are damaged or taken out of use; signicant neg- ative industry or economic trends; signicant loss of market share; signicant unfavourable regulatory and court decisions and signicant cost overruns in the development of assets. Amortisation of intangible assets Intangible assets are amortized on a straight-line basis over their estimated useful life from the date they become available for use. The estimated useful lives for the current and comparison periods are: Capitalised development costs: 3–5 years Software and IT equipment: 3–5 years Leases At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is or contains a lease if the contract conveys the right to control the use of an identied asset for a period in exchange for consideration. Summary of signicant account- ing policies, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 37 Itera ASA agreements consists of buildings, cars, equipment used in the operating activities and ofce machines. Cars usually have a lease period of 5 years, while several of the buildings have a longer time frame. The ofce machines are leased in a 35 year period. Some of the building leases have extension options and this has been taken into account. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • xed payments, less any lease incentives receivable • amounts expected to be payable by the group under residual value guarantees • the exercise price of a purchase option if the group is reasonably certain to exercise that option, and • payments of penalties for terminating the lease, if the lease term reflects the group exercis- ing that option. The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred. The lease liability is initially measured at the pres- ent value of the lease payments that are not paid at the commencement date, discounted using the Groups incremental borrowing rate. The Groups incremental borrowing rate is the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. The Group has elected not to recognise the right-of-use assets and liabilities for short-term leases of equipment and low value assets. Shortterm leases are dened as 12 months or less, and low value assets at NOK 50 000 or lower. Accounts receivable and other receivables Accounts receivable are recognised in the balance sheet at their nominal value, less a provi- sion for expected losses. The interest element is disregarded if it is not material. The expected credit loss on trade receivables and contract assets is measured using a simplied lifetime model. Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the group will comply with all attached condi- tions. The Itera Group receives government grants related to SkatteFUNN. Government grants relating to costs are deferred and recognised in prot or loss over the period necessary to match them with the costs that they are intended to compensate. Pension The Itera Group nances its pension arrangements for employees through collective dened contributionbased schemes. A dened contribution pension scheme is a plan under which an entity pays xed contributions into a separate fund or pension fund and has no legal or constructive obligation to pay any further amounts. Contribution obligations are recognised as personnel expenses in the prot and loss account when due. Prepaid contributions are recognised as an asset to the extent that they entail cash refunds or that future payments to the scheme are reduced. Summary of signicant account- ing policies, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 38 Share-based remuneration Employee share options at the Group give employees the right to subscribe for shares in Itera ASA at a future point at a predetermined price (exercise right). This right as a rule is depend- ent on the Group achieving concrete targets and the employee still being employed at the time of exercise. Employee share options are valued at fair value on the grant date. Their calculated value is recognised as a personnel expense, with a counter entry to other paidin equity. The cost of share options is divided over the period until the employee becomes unconditionally entitled to exercise the options. The expensed amounts are adjusted to reflect the actual amount of stock options exercised if the associated service and non-market conditions are met. The social security tax costs associated with employees’ taxable benets are expensed as incurred over the accrual periods on the basis of the accrual rates and values at the balance sheet date. Provisions Provisions are recognised when the Group has incurred a legal or constructive obligation as a result of a previous event and it is likely that this will lead to it making a payment or transfer- ring other assets in order to settle the obligation, and the size of the obligation can be meas- ured reliably. Provisions are measured at the present value of the expected future cash flows, discounted using a market-based discount rate before tax. Revenue recognition Revenue arising from subscriptions is recognised over the course of the contract period. Revenue from a transition project that is an integral part of a subsequent operating services contract is recognised on a linear basis over the period of the latter contract. Revenue from services is recognised when the hours are delivered. When the contract outcome cannot be measured reliably, revenue is recognised only to the extent that the expenses incurred are eli- gible to be recovered. Revenue is measured based on the consideration specied in a contract with a customer. Revenue from the sale of goods is measured based on the consideration specied in a con- tract with a customer. Where the consideration covers multiple sub-deliveries, it is broken down and recognised when the various components are delivered. Revenue from contracts with customers IFRS 15 Revenue from Contracts with Customers is based on the principle of recognising reve- nue when control of goods or services transfers to a customer. Itera mostly derives its revenue from the transfer of services over time as opposed to point in time. Revenue from consulting services rendered that relate to subscription contracts will in some cases be recognised over the contract period for the subscription contract and not at point in time when the services are delivered. The costs of fullling a contract, such as costs related to delivering the services mentioned are capitalised as contract costs if the amortisation period is more than 12 months. The amortisation period is the expected contract period, including renewals. Payments from customers for delivering these services are under IFRS considered prepayments and classied as contract liabilities under current liabilities. Contract assets, contract costs and contract liabilities Contract assets comprises earned and recognised revenue that has not yet been invoiced. Contract assets is transferred to receivables when the rights to payment become uncondi- tional, which usually occurs when invoices are issued to the customers. Summary of signicant account- ing policies, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 39 Contract costs comprise expenses related to fullling a contract, typically implementation costs in the initial stage of a contract, capitalised and expensed over the expected contract periods. Contract liabilities comprise prepayments from customers for delivering services. Cost of goods and services Cost of goods and services is the costs paid to external suppliers for goods or services directly related to Itera’s delivery of goods and services. Cost of goods and services includes costs due to third-party contractors, the rental of software, purchases of software and hardware for resale, travel expenses for consultants and other costs. Financial income and nancial expense Financial income comprises interest income from nancial investments and bank deposits. Interest income is recognised using the effective interest rate method. Dividends are recog- nised in prot and loss when they are approved by the annual general meeting of the company from which they will be received. Financial expense comprises interest expense on borrowings and changes in the fair value of nancial assets. All borrowing costs are recognised in prot and loss using the effective interest rate method. Financial income and nancial expense also comprise foreign currency gains and losses. Tax expense Tax expense comprises both tax payable and changes in deferred tax. Deferred tax/tax assets are calculated on all differences between the accounting values and tax values of assets and liabilities. Deferred tax assets are capitalised on the balance sheet when it is probable that the individual company will have sufcient taxable prots in subsequent periods to be able to use the tax asset. The individual companies recognise previously non-capitalised tax assets to the extent that it has become probable that they will make use of them. Likewise, the individual compa- nies reduce the value of their deferred tax assets to the extent that they no longer regard it as probable that they will be able to make use of their deferred tax assets. New standards and interpretations not yet adopted Certain new accoounting standards, amendments to standards and interpretations have been published that are not mandatory for the year ended 31 December 2021 and have not been applied in preparing these consolidated nancial statements. The standards thay may be relevant to the Group are set out below. These will be adopted in the period that they become mandatory unless otherwise indicated. These standards, amendments or interpretations are not expected to have a material impact on the Group in the current or future reporting periods. Amendments to IAS 1 Presentation of Financial Statements Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors Amendments to IAS 12 Income Taxes Statement of cash flows The statement of cash flow is prepared using the indirect method. Cash and cash equivalents comprise cash, bank deposits and other shortterm liquid investments. Interest paid is pre- sented as part of operating activities. Summary of signicant account- ing policies, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 40 NOK 1000 Country Share holding Result 2021 Equity 31.12.2021 Itera Norge AS 1) Norway 100% 17 878 28 833 Itera Offshoring Services AS 1) Norway 100% 10 078 9 699 Cicero Consulting AS 1) Norway 100% 6 728 10 194 Compendia AS 1) Norway 100% 6 259 9 112 Itera Sverige AB 1) Sweden 100% (34) 1 669 Itera ApS 1) Denmark 100% 3 972 2 949 Itera ehf 2) Iceland 100% (290) (259) Itera Consulting Group Ukraine, LLC 1) Ukraine 100% 1 812 9 598 Total 46 403 71 796 1) Consolidated pre 2016 2) Consolidated from 2021 The business activities of the Group are carried out by 7 operational companies in 6 countries. Each company has its own management team and a CEO who is responsible for the company’s nancial results. Each company also has its own internal structure for management, budget- ing and nancial reporting, including reporting to the Group CEO. The Chief Operating Deci- sion-Maker (CODM), who is responsible for allocating resources and assessing performance of operating units, has been identied as the steering committee consisting of the CEO and the CFO. The activities carried out by all the subsidiaries are for all practical purposes related to delivering IT and communication solutions to customers. In particular, the Group utilises its nearshore delivery capabilities seamlessly across its various operating units and locations. The reported revenue in 5 geographical reporting segments, from both external customers and intragroup sales, is less than 12% of the combined revenue. The operating segments in Norway and Denmark are aggregated into two reporting segments, Core digital business and Data centre operations. Itera’s data centre operations are being transitioned to the cloud and will be sunset once the existing customers have been migrated to the cloud or termi- nated. Once the Data Center Operations have been discontinued in 2022 Itera will only show geographical reporting segments. Transactions and transfers between the companies are c arried out on normal commercial terms. Revenues from transactions with the two largest external customers in Norway amount to NOK 72.9 and 69.5 million respectively. Note 1. Overview of subsidiaries Note 2. Segments ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 41 Geographical information: NOK 1 000 2021 Norway Sweden Denmark Ukraine Slovakia Iceland Group Sales revenue 783 814 - 48 336 14 398 36 531 - 883 079 Intragroup eliminations (202 609) - - (14 398) (33 010) - (250 017) Net sales revenue 581 205 - 48 336 - 3 520 - 633 062 Services 439 542 - 39 464 - 3 520 - 482 526 Services 3rd Party 42 339 - 2 726 - - - 45 065 Subscriptions 87 381 - 5 650 - - - 93 031 Other revenue 11 943 - 497 - - - 12 440 581 205 - 48 336 - 3 520 - 633 062 Operating prot 49 934 (34) 5 301 2 093 1 599 (290) 58 602 Investments in xed assets 29 282 - 195 1 740 1 573 - 32 789 Total assets 195 466 1 671 8 006 11 225 4 594 168 221 130 Total liabilities 169 379 3 6 871 1 102 3 948 292 181 594 2020 Norway Sweden Denmark Ukraine Slovakia Iceland Group Sales revenue 762 174 - 47 218 14 759 31 382 855 532 Intragroup eliminations (194 015) - - (14 759) (31 367) (240 141) Net sales revenue 568 159 - 47 218 - 14 615 392 Services 389 430 - 27 352 - 14 416 796 Services 3rd Party 22 178 - 4 117 - - 26 295 Subscriptions 147 299 - 7 432 - - 154 731 Other revenue 9 251 - 8 317 - - 17 568 568 159 - 47 218 - 14 615 392 Operating prot 56 939 (22) 5 166 (829) 1 319 62 573 Investments in xed assets 16 882 - 307 1 659 598 19 446 Total assets 202 822 254 7 075 10 871 3 405 224 428 Total liabilities 170 225 1 15 896 1 200 2 766 190 087 Services revenue is generated from rendering of services to customers by Itera’s own consult- ants. The service contracts are with a few exceptions Time & Material agreements where the invoicing is based on hours performed at agreed rates. Services 3d party revenue is generated from rendering of services to customers performed by subcontractors. Note 2. Segments, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 42 Subscriptions revenue is generated from services provided on regular basis with fees based on xed amounts or volumes. Segment information: NOK 1 000 2021 Core digital business (95%) Data centre operations (5%) Group Sales revenue 592 956 40 106 633 062 Operating prot 77 079 -18 477 58 602 2020 Core digital business (95%) Data centre operations (5%) Group Sales revenue 497 634 117 758 615 392 Operating prot 59 177 3 396 62 573 Signicant changes in contract assets NOK 1 000 2021 2020 Balance, beginning of period 1 196 732 Net additions arising from operations in the period 1 720 1 196 Amounts billed in period and thus reclassied to accounts receivables (1 796) (1 332) Changes in impairment allowances - 600 Balance, end of period 1 120 1 196 Signicant changes in contract costs NOK 1 000 2021 2020 Balance, beginning of period 6 851 11 571 Costs capitalised in the period - - Amortisation (2 816) (4 721) Impairment losses - - Balance, end of period 4 035 6 851 Signicant changes in contract liabilities NOK 1 000 2021 2020 Balance, beginning of period 21 291 37 176 Increases due to cash received, excluding amounts recognised as reve- nue during the period 15 084 15 637 Revenue recognised that was included in the contract liability balance at the beginning of the period (18 058) (31 521) Balance, end of period 18 318 21 291 Changes in contract liabilities for 2020 have been updated due to incorrect classication in the 2020 Annual accounts. Management expects that approximately 67% of the transaction price allocated to the unsat- ised contract obligations as of 31.12.2021 will be recognised as revenue in the 2022 scal year. The remaining 33% will be recognised in the scal year 2023. Note 3. Contract assets, contract costs and contract liabilities Note 2. Segments, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 43 NOK 1000, except earnings per share 2021 2020 Prot for the year 44 148 48 633 Average number of outstanding shares 80 550 80 917 Outstanding employee share options 2 110 1 789 Dilution effect of outstanding share options 399 585 Average number of shares including dilution 80 949 81 502 Basic earnings per share 0,55 0,60 Diluted earnings per share 0,55 0,60 The average share price for 2021 is calculated on the basis of the market closing price for the Itera share on each trading day (except for days when no shares were traded when the bid price has been used) was NOK 14.56. Basic earnings per share calculations are based on the weighted average number of common shares outstanding during the period, while diluted earnings per share calculations are per- formed using the average number of common shares and dilutive common shares equivalents outstanding during each period. The share option exercise prices are NOK 13.50, NOK 13.91, NOK 11.46 and NOK 10.29 for 2021, 2020 (programme 2), 2020 (programme 1) and 2019 programmes, respectively. NOK 1 000 2021 2020 Prepaid expenses 7 973 8 548 Other current receivables 4 822 3 353 Total 12 794 11 901 Prepaid expenses in 2021 includes a reclassication of the Group cloud based accounting system Dynamics 365. The expenses for conguring the software was classied as an intan- gible asset in 2020. In accordance with IFRIC Update March 2021 NOK 5.5 moved to prepaid expenses in 2021 as the criteria in IAS 38 were not met. The costs have been capitalised as the conguration and customisation services are not distinct from the SaaS agreement. The costs are accrued over the terms of the service agreement, in total 5 years, the same time period as the initial depreciation period for the asset. NOK 1 000 2021 2020 Holiday pay 22 912 24 562 Accrued wages and bonuses 25 682 18 334 Accrued other expenses 14 484 9 021 Total 63 078 51 917 Accrued other expenses for 2020 have been updated due to incorrect classication in the 2020 Annual accounts. Note 5. Other current assets Note 6. Other current liabilities Note 4. Earnings and diluted earnings per share ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 44 The Itera Group is exposed to nancial risks such as: credit risk, liquidity risk, currency risk and interest rate risk. The Group’s exposure to these risks is considered to be low. The Group has established guidelines to manage its exposure to these risks. The main principle is to minimize exposure to nancial risks, and the Group accordingly holds no nancial assets or liabilities for speculative purposes. The Group’s nearshore operations in Ukraine and Slovakia exposes it to new risks, such as coun- try risk, IT security risks and the risk of corruption. Itera has a zero-tolerance policy on corruption. Credit risk Credit risk is the risk of nancial loss to the Group’s receivables due from customers and other short-term receivables. In order to manage this risk, the Group has established credit approval procedures to evaluate the creditworthiness of all material counterparties. The Group’s expo- sure to credit risk is not dependent on individual customers but customers as a group. The amount is examined as of every closing date. The provision is supported by historical credit loss experience of trade receivables, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. Information on the Group’s risk exposure in respect of accounts receivable is provided in note 14. The Group’s customers are private and public companies. The Group assesses the credit worthiness of all new customers and periodically for existing customers. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its nancial obligations as they fall due. The Group manages its liquidity in such a way as to ensure, as far as possible, that it will always have sufcient liquidity to meet its liabilities when they fall due without incurring unacceptable losses or risking damage to the Group’s reputation. The Group has established an overdraft facility with its banking partner. See note 18 for further information. In order to accommodate growth in the Group’s operational companies, lease nancing con- tracts have been entered into for major investments in software and hardware. The amounts disclosed in the table below are the contractual undiscounted cash flows. NOK 1 000 Less than 6 months 6–12 months 1–5 years Over 5 years Total Balance at 31st Dec 2021 Accounts payable 18 846 - - - 18 846 Leasing liabilities 7 581 7 581 14 552 5 485 35 199 Balance at 31st Dec 2020 Accounts payable 23 169 - - - 23 169 Leasing liabilities 8 818 8 818 20 474 4 488 42 597 Currency risk The Group is exposed to currency risk through its businesses in Sweden, Denmark, Iceland, Ukraine and Slovakia. The exposure to currency risk is limited by the fact that businesses in Sweden, Denmark and Iceland have revenue and costs in the same currency, and in addition most borrowing is arranged within the Group. Of the Group’s total revenue, 8% is in Danish kroner (DKK). A 10% change in the NOK exchange rate against SEK and DKK would have a 0.8% effect on the Group’s revenue. The effect of currency deviation on nancial assets and liabilities denominated in non-functional currency is not material. Note 7. Financial risk management ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 45 The Group’s nearshore companies operate in three different currencies: USD, Euro and Ukrain- ian Hryvna. The main exposure is in USD. The Group has to a large extent currency adjustment mechanisms in its agreements with customers to counteract its exposure to US dollar and Euros, where service fees for nearshore services are denominated in USD or EUR and con- verted to NOK at the start of the monthly delivery period. Interest rate risk The Group is exposed to interest rate risk in relation to its bank deposits. The Group is also exposed in connection with lease nancing contracts and when drawing against the overdraft facility. The Group does not hold any nancial securities or other assets that have an inherent interest rate risk. The effect on prot and loss of change in interest rate is insignicant. Fair value Itera does not have signicant differences between fair value and book value in respect of nancial instruments, which mainly comprise accounts receivable and accounts payable, other current receivables and other current liabilities and lease liabilities. On 24 February 2022, Russia started a military invasion in Ukraine. For further information on the impact on our nancial statements, refer to note 23. 2021 2020 Facilities 9 332 13 680 Ofce supplies 15 441 10 930 Professional fees 9 669 6 899 Courses 3 653 3 236 Travel and entertainment 1 591 1 981 Sales and marketing 5 263 4 520 Other operating expenses 3 227 4 801 Total 48 176 46 047 Fees to the auditors NOK 1 000, excluding VAT 2021 2020 Statutory audit of Itera ASA 241 182 Statutory audit of subsidiaries in Norway 299 193 Statutory audit of international subsidiaries 94 - Audit fees 634 375 Tax advisory services - - Fees for other certication services - - Other services provided to subsidiaries in Norway 59 59 Note 8. Other Operating Expenses Note 7. Financial risk management, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 46 NOK 1000 2021 2020 Salaries 379 664 339 846 Share option costs 611 693 Social security taxes 34 496 30 696 Pension costs 12 114 10 710 Other benets 15 459 13 303 Salaries and personnel expenses capitalised ) (7 646) (2 802) Total payroll and personnel expenses 434 697 392 447 Average number of employees 594 538 See note 15 Share option programmes The Group had ve share option programmes running in 2021. All schemes to be settled in shares. The share option programme issued in 2017 expired in June 2021. New share option pro- grammes were issued late 2019, twice during 2020 and once in 2021. These programmes have no nancial targets attached, and up to onethird of the options are exercisable after three years and otherwise rolled forward. All remaining options must be exercised after four years or otherwise forfeited. The fair value of the options was calculated on the date they were granted, and the options granted are being expensed over the accrual periods of four years in accordance with the graded vesting principle. Fair value is calculated using the Black-Scholes-Merton option pricing model. The calculation of fair value assumes that historical volatility is an indica- tion of future volatility. Expected volatility is therefore set equal to historical volatility. The interest rate is based on rates obtained from Norges Bank for the same period as the life of the options. For the option programmes, an annual participant attrition rate of 10-20% were assumed. For calculation purposes, an annual dividend of NOK 0.45 to NOK 0.90 were assumed for the various programmes. Share option costs (excluding employer’s social security contributions) of NOK 763k were expensed in 2021 (NOK 693k in 2020). Note 9. Salaries and personnel costs Note 10. Share-based remuneration Programme Out- standing 31.12.2020 Issued in 2021 Expired in 2021 Exer- cised in 2021 Out- standing 31.12.2021 Fair value when issued Exercise price 1 ) Share price when issued 2) Date of issue Exercise period 2017 730 880 - 200 000 530 880 - NOK 0.60 NOK 6.42 NOK 6.42 28.06.2017 2021 2019 260 000 - - - 260 000 NOK 1.66 NOK 10.29 NOK 10.29 17.12.2019 2023 2020 (pro- gramme 1) 775 000 - 20 000 - 755 000 NOK 2.07 NOK 11.32 NOK 11.46 02.07.2020 2024 2020 (pro- gramme 2) 375 000 - - - 375 000 NOK 2.45 NOK 13.91 NOK 13.91 23.12.2020 2024 2021 - 775 000 55 000 - 720 000 NOK 2.36 NOK 13.50 NOK 13.50 22.06.2021 2025 Total 2 140 880 775 000 275 000 530 880 2 110 000 1) The exercise price is the average share price over the 30 days prior to the date the option is granted. 2) The exercise price is set at fair value on the date the option is granted. The company works on the basis that the exercise price is the same as the share price on the date the option is granted and that the options do not have any intrinsic value on this date. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 47 Programme No. of options Interest rate Volatility Lifetime 2017 - 0.90% 28.9% 4 years 2019 260 000 0.99% 37.8% 4 years 2020 (programme 1) 755 000 0.28% 43.2% 4 years 2020 (programme 2) 375 000 0.54% 42.2% 4 years 2021 720 000 1.06% 41.7% 4 years Total 2 110 000 Employee share purchase programme In 2017, Itera introduced an annual Employee Share Purchase Programme, where employees could purchase shares up to a market value of NOK 20,000 at a 20% discount. The pro- gramme was repeated each year since 2017. After changes in Norwegian tax legislation in 2021 the programme was changed so that employees could purchase shares up to a market value of NOK 30.000 at a 25% discount. In 2021, a total of 130 employees purchased a total of 268,615 shares. The discount is recognised against the equity. Share purchase programme for managers and key personnel In 2021, a Share Purchase Programme was offered to the Group’s managers and key person- nel in order to foster alignment of interests between executives and shareholders, as well as contribute to retention of key people. The programme was in lieu of a Share Option Pro- grammes that have been used in previous years. Under the programme, the invitees were offered to purchase up to a dened number of shares at a valuation discount of NOK 3.37 per share. The discount was related to a three-year lock-in period of the shares. The Company has an option to re-purchase all or some of the shares with the same discount in the event the shareholder terminates his or her employment in the Group within the lock-in period. 24 key employees and executives showed their long-term commitment by purchasing a total of 474,075 shares for a total investment of NOK 4.8 million under this programme. The discount is recognised against the equity. This information is available in the separate Remuneration Report available on www.itera.com. All of the Group’s pension schemes are dened contribution schemes. The Group’s pen- sion expense is represented by the premiums paid and is included in payroll and personnel expenses in the Statement of Comprehensive Income. The Group’s pension schemes in Norway comply with the Norwegian Mandatory Occupational Pension Act (OTP). Pension cost NOK 1 000 2021 2020 Norway 18 806 17 428 Denmark 2 047 1 626 Total 20 853 19 053 Note 11. Executive personnel Note 12. Pension Note 10. Share-based remuneration, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 48 NOK 1000 2021 2020 Interest income 32 337 Foreign currency gains 1 770 5 526 Other nancial income 624 585 Net nancial income 2 424 6 448 Interest expense 294 393 Foreign currency losses 1 951 6 539 Other nancial expense 1 358 304 Total nancial expenses 3 602 7 236 Net foreign currency losses (181) (1 013) NOK 1 000 2021 2020 Gross accounts receivable at 31 Dec 76 242 67 425 Provision for bad debts (150) (150) Net accounts receivable at 31 Dec 76 092 67 275 Aging of receivables Total Not due < 30 days 30–60 days 60–90 days > 90 days Accounts receivable 2021 76 092 63 764 8 850 2 882 559 37 Accounts receivable 2020 67 275 41 096 7 150 17 936 1 093 0 Accounts receivable by currency 2021 % 2020 % NOK 67 684 89% 59 112 88% SEK 0 0% 0 0% DKK 8 153 11% 7 541 11% UAH 255 0% 320 0% EUR 0 0% 301 0 % Sum 76 092 100 % 67 275 100% Change in provisions for bad debts Losses on accounts receivable are classied as operating expenses in the Consolidated Income Statement. A loss of NOK 216k was recognised in 2021, NOK 115k in 2020. Maximum credit risk is equivalent to the gure for net accounts receivable shown in the table above. Intangible assets Intangible assets (capitalised development costs) are primarily related to the development of new concepts. These concepts are primarily related to contracts with xed future income. In 2021, costs of NOK 7.7 million (NOK 5.7 million) incurred in connection with the develop- ment of products were capitalised. Expenditure incurred in connection with development work relates principally to the salaries and personnel costs of the employees involved in developing the concepts. Note 13. Financial income and expenses Note 14. Accounts receivable Note 15. Non-current assets ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 49 During 2021, Itera has capitalized NOK 17.8 million of development costs for a Cloud Center of Excellence (CCoE), of which NOK 8 million is direct services and purchases of goods from external suppliers. The remaining amount is linked to own staff through a global interdiscipli- nary team that has formed the basis for a new global business unit called Cloud & Application Services (CAS). Cloud & Application Services (CAS, formerly HCS) was launched on January 1, 2022, where CCoE is the backbone for direct (architecture and automation, process and security, cloud operations, managed workloads, migration services) and indirectly related services (support, maintenance of the application lifecycle). With an estimated useful life of 5 years, an average of 3.6 MNOK per year must be recovered through sales and delivery of related services. 2021 NOK 1 000 Development costs Software Sum Acquisition cost Accumulated at 1 January 42 054 9 506 51 560 Additions 23 372 1 924 25 297 Disposals (5 331) (6 732) (12 063) Accumulated at 31 December 60 095 4 698 64 794 Amortisation Accumulated at 1 January 24 594 2 742 27 336 Amortisation for the year 7 155 991 8 146 Amortisation on disposals in the year (5 331) (188) (5 519) Other changes - - - Accumulated at 31 December 26 418 3 545 29 963 Book value Book value at 1 January 17 458 6 762 24 225 Book value at 31 December 33 675 1 154 34 826 Estimated useful life 3–5 years 3–5 years Amortisation plan linear linear Prepaid expenses in 2021 includes a reclassication of the Group cloud based accounting system Dynamics 365. The expenses for conguring the software was classied as an intangi- ble asset in 2020. In accordance with IFRIC Update March 2021 MNOK 5.5 moved to prepaid expenses in 2021 as the criteria in IAS 38 were not met. The costs have been capitalised as the conguration and customisation services are not distinct from the SaaS agreement. The costs are accrued over the terms of the service agreement, in total 5 years, the same time period as the initial depreciation period for the asset. Note 15. Non-current assets, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 50 2020 NOK 1 000 Development costs Software Sum Acquisition cost Accumulated at 1 January 81 418 2 575 83 992 Additions 5 665 6 699 12 364 Disposals (45 029) (142) (45 172) Accumulated at 31 December 42 054 9 131 51 185 Amortisation Accumulated at 1 January 60 360 1 769 62 128 Amortisation for the year 9 264 1 115 10 379 Amortisation on dispoals in the year (45 029) (142) (45 172) Other changes - (372) (372) Accumulated at 31 December 24 594 2 370 26 964 Book value Book value at 1 January 21 058 805 21 864 Book value at 31 December 17 458 6 762 24 225 Estimated useful life 3–5 years 3–5 years Amortisation plan linear linear Property, plant and equipment 2021 NOK 1 000 Ofce machinery & equipment Fixtures and ttings Sum Acquisition cost Accumulated at 1 January 29 358 6 793 36 151 Additions 6 468 1 025 7 492 Disposals (1 051) (102) (1 153) Translation differences - - - Accumulated at 31 December 34 775 7 715 42 490 Depreciation Accumulated at 1 January 17 085 3 661 20 747 Depreciation 6 593 544 7 138 Depreciation on disposals (959) (103) (1 063) Translation differences - (62) (62) Accumulated at 31 December 22 719 4 041 26 760 Book value Book value at 1 January 12 273 3 131 15 404 Book value at 31 December 12 056 3 674 15 729 Estimated useful life 3 years 5–10 years Depreciation plan linear linear Note 15. Non-current assets, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 51 2020 NOK 1 000 Ofce machinery & equipment Fixtures and ttings Sum Acquisition cost Accumulated at 1 January 31 708 11 909 43 617 Additions 4 018 624 4 642 Disposals (5 876) (2 905) (8 781) Translation differences (492) (2 835) (3 327) Accumulated at 31 December 29 358 6 793 36 151 Depreciation Accumulated at 1 January 18 307 2 798 21 105 Depreciation 5 079 3 528 8 607 Depreciation on disposals (5 886) (1 959) (7 845) Translation differences (415) (705) (1 120) Accumulated at 31 December 17 085 3 661 20 747 Book value Book value at 1 January 13 401 9 111 22 512 Book value at 31 December 12 273 3 131 15 403 Estimated useful life 3 years 5–10 years Depreciation plan linear linear The Group has leasing contracts in connection with investments in IT equipment related to its major IT hosting contracts, ofce premises and company cars. The Group had a liability for rent of premises and company cars totalling NOK 35.2 million at 31 December 2021. Rental agreements Lease expiration Ofce premises Head ofce Oslo, Norway 30.06.2023 Bergen, Norway 30.04.2024 Bryne, Norway 30.06.2023 Copenhagen, Denmark 30.06.2031 Kiev, Ukraine 05.12.2022 Bratislava, Slovakia 16.03.2028 Company cars, Oslo, Norway 31.03.2022 Note 16. Right-of-use assets and lease liabilities Note 15. Non-current assets, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 52 Incremental borrowing rate Date Rate Leased ofce premises at date of incorporation of IFRS 16, Norway 01.01.2019 2.72% Leased ofce premises at date of incorporation of IFRS 16, Denmark 01.01.2019 1.17% Leased ofce premises at date of incorporation of IFRS 16, Ukraine 01.01.2019 4.26% Leased ofce premises at date of incorporation of IFRS 16, Slovakia 01.01.2019 1.14% Leased ofce premises, Slovakia 01.10.2021 0.95% Leased ofce premises, Bergen, Norway 01.05.2021 1.76% Leased company cars, Norway 01.04.2019 2.72% Right-of-use assets 2021 Leased IT equipment Leased ofce premises Sum Net value at 1 January 4 883 33 380 38 263 Additions - 13 849 13 849 Disposals (544) (6 670) (7 214) Depreciation (3 080) (10 383) (13 463) Translation differences - (516) (516) Net value at 31 December 1 258 29 659 30 917 2020 Leased IT equipment Leased ofce premises Sum Net value at 1 January 13 476 40 821 54 297 Additions 2 440 8 827 11 267 Disposals (1 186) - (1 186) Depreciation (9 846) (14 229) (24 075) Translation differences - (2 039) (516) Net value at 31 December 4 883 33 380 38 263 Lease liabilities 2021 Future minimum lease payments are as follows Leased IT equipment Leased ofce premises Sum Up to 1 year 860 14 795 15 655 1 to 5 years 137 14 884 15 021 Over 5 years - 5 534 5 534 Future minimum lease payments 997 35 213 36 210 Future interest up to 1 year 13 480 493 Future interest 1 to 5 years 3 467 470 Future interest over 5 years - 49 49 Discounted present value of future minimum lease payments 982 34 217 35 199 Of which – current liabilities 847 14 316 15 163 – non-current liabilities 134 19 902 20 036 Note 16. Right-of-use assets and lease liabilities, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 53 2020 Future minimum lease payments are as follows Leased IT equipment Leased ofce premises Sum Up to 1 year 4 489 13 589 18 077 1 to 5 years 3 020 17 503 20 523 Over 5 years - 5 206 5 206 Future minimum lease payments 7 508 36 298 43 806 Future interest up to 1 year 119 323 442 Future interest 1 to 5 years 49 718 767 Discounted present value of future minimum lease payments 7 340 35 257 42 597 Of which – current liabilities 4 369 13 266 17 636 – non-current liabilities 2 971 21 991 24 962 The total cash outflow relating to leases was NOK 17.53 million in 2021. The Group does not have signicant residual value guarantees related to its leases. Sublease agreement In 2021 the Group decided to sublease a part of the ofce premises in Kiev, Ukraine. The sublease expires 30.11.2022. In 2021 income from subleasing right of use assets was MNOK 2.3. Lease receivable Future minimum lease receivable are as follows 2021 Subleased ofce premises Sum Up to 1 year 3 429 3 429 1 to 5 years - - Over 5 years - - Future minimum lease receivable 3 429 3 429 Future interest up to 1 year 59 59 Future interest 1 to 5 years - - Discounted present value of future minimum lease receivable 3 370 3 370 Of which - current liabilities 3 370 3 370 - non-current liabilities - - Short term or low value lease agreements The Group has other lease contracts with low value or short contract terms where the Group has decided to not recognise lease liabilities or right-of-use assets. These leases are instead expensed when they incur. Short term leases expensed in 2021 amounted to NOK 4.8 million. Note 16. Right-of-use assets and lease liabilities, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 54 Extension options Several of the Group’s lease agreements for rent of ofce premises include a right of renewal which may be exercised during the last period of the lease term. The Group’s potential future lease payments not included in the lease liabilities related to extension options is MNOK 18.3 (gross) at 31 December 2021. Variable lease payments The Group has no variable lease payments. Interest expense The interest expense was MNOK 0.8 in 2021 compared to MNOK 1.0 in 2020. NOK 1 000 Financial assets 2021 2020 Trade receivables 76 092 67 275 Cash and cash equivalents 37 457 54 399 Total 113 548 129 720 Financial liabilities 2021 2020 Long term leasing liabilities 20 036 24 962 Trade payables 18 846 23 169 Short term leasing liabilities 15 163 17 636 Total 54 045 95 808 There are no material differences between the recognised and fair value of nancial assets and liabilities. Note 17. Financial assets and nancial liabilities Note 16. Right-of-use assets and lease liabilities, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 55 NOK 1 000 2021 2020 Tax expense Tax payable 13 471 15 430 Change in deferred tax (20) (2 135) Correction of previous years - - Tax credit (175) (142) Total tax expense 13 276 13 152 Tax payable in the balance sheet: Prot before tax 57 424 61 786 Permanent tax differences (963) 2 358 Changes in temporary differences 2 924 4 730 Tax losses carried forward (190) - Group contribution - - Total basis for tax payable 59 194 68 874 Tax payable Dec. 31 12 166 14 785 Tax paid in advance (129) (276) Correction of previous years 184 227 SkatteFUNN (4 767) (1 861) Deduction of tax paid in Slovakia (175) (142) Net tax payable Dec. 31 7 278 12 733 Taxes paid in advance is included in other current receivables. Specication of the basis for deferred tax 2021 2020 Fixed assets (13 867) (14 663) Current assets (150) (150) Other temporary differences (236) (922) Other accruals (1 217) (1 938) Tax losses carried forward - (190) Remaining tax credit (6 424) (4 630) Total (21 893) (22 494) Deferred tax (4 791) (4 916) Deferred tax recognised in the balance sheet (4 791) (4 916) NOK 1 000 2021 2020 Reconciliation of tax rate Prot before tax 57 424 61 785 Tax calculated at the nominal corporation tax rate of 22% 12 633 13 593 Effect of change in the tax rate - - Effect of tax from previous year - (227) Effect of differing tax rates for foreign subsidiaries (39) (27) Effect of permanent differences (212) 519 Effect of change in tax calculation previous years - - Effect of other differences 894 (705) Tax expense in prot and loss 13 276 13 152 Effective tax rate (23.1%) (21.3%) Note 18. Taxes ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 56 Information on the exchange rates applied by the Itera Group in 2021. Jan 1 Average Dec 31 SEK 1,0435 1,0019 0,9745 DKK 1,3935 1,3666 1,3432 EUR 10,3661 10,1633 9,9888 USD 8,5174 8,5904 8,82 UAH 0,3034 0,3148 0,3226 NOK 1 000 2021 2020 Cash and bank deposits 37 457 54 399 Restricted cash (10 511) (10 282) Unrestricted cash and cash equivalents 26 946 44 117 Undrawn credit facilities 21 500 21 500 Cash reserve 48 446 65 617 Restricted cash include the employees’ tax withholdings. The Group has a multi-currency cash-pool agreement with Danske Bank. The overdraft facility agreement with Danske Bank has the following nancial covenant: * NIBD / EBITDA (net interest-bearing debt ratio) shall not be more than 2.25. This key ratio is assessed as at December 31st each year and at the latest 120 days after year-end. The Group had no overdraft or borrowings from Danske Bank as at 31 December 2021. As collateral for the line of credit, the bank has a pledge on the customer receivables of the Norwegian subsidiaries. Refer to note 24 for Alternative Performance Measures. Share capital Itera ASA’s share capital on December 31st 2021 was NOK 24,655,987 made up of 82,186,624 fully paid shares each with nominal value of NOK 0.30. All shares in Itera have the same dividend and voting rights. Ownership structure At the close of 2021, Itera ASA had 2,278 (2,216) shareholders. Of these 4% (4%) were for- eign shareholders. The company’s 20 largest shareholders owned 73 % (72%) of the compa- ny’s shares at year-end. Holdings of own shares Note 19. Exchange rates Note 20. Cash and cash equivalents Note 21. Shareholders ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 57 The Itera Group held 1,269,136 own shares at the start of 2021. The Group purchased 1,726,000 own shares in 2021. 1,358,130 own shares were used in connection with share option programme and employee share purchase programme. The Itera Group held 1,637,006 own shares at the end of 2021. Dividend An ordinary dividend of NOK 0.25 per hare (20.5 million) based on the 2020 result was paid in June 2021. A supplementary dividend of NOK 0.10 per share (8.2 million) was paid in November 2021. An ordinary dividend of NOK 0.10 per share (NOK 16.4 million) is proposed based on the 2021 result. The Board will also ask for an authorisation to pay a supplementary dividend later in the year. 20 largest shareholders in Itera ASA at 31 December 2021 Shares % ARNE MJØS INVEST AS* 24 863 031 30.3% OP CAPITAL AS 4 551 083 5.5% GIP AS 4 158 000 5.1% EIKESTAD AS 3 350 000 4.1% SEPTIM CONSULTING AS 2 940 000 3.6% BOINVESTERING AS 2 686 968 3.3% GAMST INVEST AS 2 527 867 3.1% DnB NOR Bank ASA 2 384 125 2.9% JØSYRA INVEST AS 2 200 000 2.7% ITERA ASA 1 637 006 2.0% DZ Privatbank S.A. 1 280 000 1.6% VERDIPAPIRFONDET STOREBRAND VEKST 1 078 218 1.3% HØGBERG 967 959 1.2% FRAMAR INVEST AS 925 000 1.1% AANESTAD PANAGRI AS 900 000 1.1% ALTEA PROPERTY DEVELOPMENT AS 700 000 0.9% GRØSLAND 630 000 0.8% JENSEN 623 720 0.8% NYVANG 620 921 0.8% MORTEN JOHNSEN HOLDING AS 600 000 0.7% Total 20 largest 59 623 898 72.5% Other shareholders 22 562 726 27.5% Total all issued 82 186 624 100.0% * Arne Mjøs Invest AS holds a future contract expiring 18 March 2022 on 2,600,000 shares at an average price of NOK 8.824 per share. The total controlling interest of Arne Mjøs is thus 27,263,031 shares (33.2%). There were no other transactions between the Group and related parties in the period from 1January to 31 December 2021 other than those described in note 9. Note 22. Transactions with related parties Note 21. Shareholders, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 58 On 24 February 2022, Russia started a military invasion in Ukraine. Itera has around 260 employees in Ukraine, of which close to 250 normally belong to the Kyiv ofce and the rest in Lviv, close to the Polish border. With the outbreak of the war, a large portion of our employees moved out of the Kyiv area into less affected areas or abroad. Our employees are able to work from anywhere, so the downtime was mostly related to a few days of relocating, after which deliveries were restored to more than 90%. Itera’s only assets in Ukraine are related to the ofce furniture & equipment, leasehold improvements and personal equipment. The net book value of this was NOK 6.9 million on 31December 2021. The assets are insured and also still intact. Consequently, it’s the management’s assessment that these subsequent events have no impact on the nancial statements for 2021. In accordance with previously communicated plans, Itera discontinued its data centre opera- tions by the end of the rst quarter of 2022. The remaining business that had not already been migrated to the cloud was sold to Move AS. All customer and supplier contracts related to Itera’s data centre operations were transported to Move in the transaction. Some employees were also transferred, and some were made redundant. It’s management’s assessment that this transaction does not impact the presentation of the nancial statements for 2021. No other events have been identied that have any material impact on the nancial state- ments for 2021. In accordance with the guidelines issued by the European Securities and Markets Authority on alternative performance measures (APMs), Itera publishes denitions for the alterna- tive performance measures used by the company. Alternative performance measures, i.e. performance measures not based on nancial reporting standards, provide the company’s management, investors and other external users with additional relevant information on the company’s operations by excluding matters that may not be indicative of the company’s operating result or cash flow. Itera has adopted non-recurring costs, EBITDA, EBITDA margin, EBIT, EBIT margin and equity ratio as alternative performance measures both because the company thinks these measures will increase the level of understanding of the company’s operational performance and because these represent performance measures that are often used by analysts and investors and other external parties. EBITDA is short for earnings before interest, tax, depreciation and amortisation. It is calcu- lated as prot for the period before (i) tax expense, (ii) nancial income and expenses and (iii) depreciation and amortisation. EBITDA margin is calculated as EBITDA as a proportion of operating revenue. EBIT is short for earnings before interest and tax and is calculated as prot for the period before (i) tax expense and (ii) nancial income and expenses. EBIT margin is calculated as EBIT as a proportion of operating revenue. Equity ratio is calculated as total equity as a proportion of total equity and liabilities. NIBD/EBITDA ratio is calculated as the interestbearing liabilities minus cash or cash equiva- lents, divided by its EBITDA. Note 23. Subsequent events Note 24. Alternative perfor- mance measures ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 59 Contents Itera ASA Income statement 60 Statement of nancial position 61 Statement of cash flows 63 General information and signicant accounting principles 64 Note 1. Salaries, personnel expenses and other remuneration 66 Note 2. Pensions 66 Note 3. Share-based remuneration 66 Note 4. Non-current assets 67 Note 5. Shares insubsidiaries 68 Note 6. Additional equity information 68 Note 7. Income taxes 69 Note 8. Income from investments in subsidiaries 69 Note 9. Balances between companies in the same group, including cash pool 69 Note 10. Restricted deposits 70 Note 11. Transactions with related parties 70 Note 12. Public taxes and duties payable 70 Note 13. Financial risk management 70 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 60 Income statement Itera ASA 1 January – 31 December NOK 1 000 Note 2021 2020 Sales revenue 46 395 38 130 Operating revenue 11 46 395 38 130 Salaries and personnel expenses 1,2,3 26 017 22 154 Depreciation and amortisation 4 1 602 2 073 Other operating expenses 1 21 580 17 263 Total operating expenses 49 199 41 490 Operating prot (loss) (2 804) (3 360) Income from investments in subsidiaries 8 46 937 53 406 Interest income from companies in the same group 112 153 Other nancial income 349 762 Interest expense to companies in the same group 210 431 Other nancial expense 404 266 Net nancial income 46 784 53 624 Prot before income tax 43 980 50 264 Income taxes 7 (22) (89) Net prot for the year 44 002 50 353 Allocation of prot/loss: To supplemental dividend 6 8 219 32 875 To ordinary dividend 6 16 437 20 547 To/from other equity 6 19 346 (3 069) Total allocation 44 002 50 353 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 61 Statement of nancial position Itera ASA 31 December NOK 1 000 Note 2021 2020 ASSETS Deferred tax assets 7 328 306 Intangible assets 4 592 5 914 Property, plant and equipment 4 1 756 2 639 Investment in subsidiaries 5 116 041 115 168 Total non-current assets 118 716 124 027 Receivables from group companies 9 4 579 3 875 Other receivables 6 477 1 058 Cash and cash equivalents 9, 10 23 249 42 850 Total current assets 34 305 47 783 TOTAL ASSETS 153 021 171 810 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 62 Statement of nancial position Itera ASA 31 December NOK 1 000 Note 2021 2020 EQUITY AND LIABILITIES Share capital 6 24 656 24 656 Other paid-in capital 6 7 166 (3 981) Own shares 6 (491) (381) Total paid-in capital 31 331 20 294 Other equity 6 37 694 40 441 Total retained earnings 37 694 40 441 Total equity 69 025 60 735 Accounts payable 3 425 2 999 Tax payable 7 - - Public fees payable 12 15 787 15 415 Liabilities to group companies 9 41 579 65 577 Proposed dividend 6 16 437 20 547 Other current liabilities 6 766 6 538 Total current liabilities 83 996 111 076 Total liabilities 83 996 111 076 TOTAL EQUITY AND LIABILITIES 153 021 171 810 Oslo, 28 April, 2022 The Board of Directors of Itera ASA Morten Thorkildsen Marianne Killengreen Jan-Erik Karlsson Chairman of the board Board member Board member Gyrid Skalleberg Ingerø Anne Nyseter Perez Andreas Almquist Board member Board member Board member (Employee elected) (Employee elected) Arne Mjøs Chief Executive Ofcer ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 63 Statement of cash flows Itera ASA 1 January – 31 December NOK 1 000 Note 2021 2020 Cash flow from operating activities Prot before tax 43 980 50 264 Dividend and group contribution recognised but not paid 8 (46 937) (53 406) Share option costs 154 (2 189) Depreciation and amortisation 4 1 602 2 073 Change in accounts payable 426 (3 516) Change in other accruals (3 346) (1 909) Net cash flow from operating activities (4 121) (8 683) Cash flow from investment activities Purchases of property, plant and equipment and intangible assets 4 (988) (5 617) Payments from group contributions and dividends from subsidiaries 53 406 51 221 Payments of liabilities to group companies (1 117) (1 702) Payments of receivables from group companies 2 900 1 240 Net cash flow from investment activities 54 201 45 142 Cash flow from nancing activities Net change in group cash pool (29 707) 35 201 Cash settlement of options contract (978) - Payments for purchases of own shares 6 (23 522) (18 242) Proceeds from sales of own shares 6 8 427 7 953 Equity settlement of options contract 3 951 - Dividend paid (27 853) (47 963) Net cash flow from nancing activities (69 681) (23 051) Net change in cash and cash equivalents (19 601) (13 408) Cash and cash equivalents as at 1 January 42 850 29 442 Cash and cash equivalents as at 31 December 23 249 42 850 ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 64 General information and signicant accounting principles General information The accounts for Itera ASA have been prepared in accordance with the Accounting Act of 1998 and the generally accepted accounting principles in Norway (NGAAP). In cases where the notes for the parent company are signicantly different from the notes for the Group, these are provided below. Reference is otherwise made to the information in the notes for the Group. Estimates and judgment Preparing accounts in accordance with Norwegian Generally Accepted Accounting Principles involves management making judgments, estimates and assumptions that influence the accounting principles that are applied and the amounts that are reported for assets, liabilities, revenue and costs. Actual amounts may vary from the estimated amounts. The estimates and underlying assumptions used are evaluated continuously. Changes in accounting estimates are recognised in the period in which the estimates are changed and in all future periods that are affected by the changes. Subsidiaries Investments in subsidiaries are valued at acquisition cost less any write downs. Investments are written down when impaired unless the impairment is regarded as temporary. Impairment losses are reversed if the basis for the impairment loss is no longer present. Dividends, group contributions and other distributions from subsidiaries are recognised in prot and loss on the same date as they are recognised in the accounts of subsidiaries. If the distributions paid by a subsidiary exceed the prot earned by the company during any given ownership period, these are regarded as repayments of the investment and the carrying value of the investment is reduced. Currency Transactions involving foreign currencies are translated into functional currency using the exchange rates that are in effect at the time of the transactions. Gains and losses that arise from the payment of such transactions and the translation of monetary items in foreign cur- rencies at the rates in effect on the date of the balance sheet are recognised in the income statement. The Company uses the Norwegian kroner (NOK) as both its functional and pres- entation currency. Share capital Ordinary shares are classied as equity. Costs directly attributable to the issuance of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. Purchase of own shares Where the Company purchases its own shares, the consideration paid, including any directly attributable costs, is recognised as a change in equity. Own shares are presented as a reduc- tion in equity, net of any tax effects. When the Company sells or reissues it own shares, the consideration received is recognised as an increase in equity, and gains or losses arising from such transactions are applied to retained earnings. Intangible assets Intangible assets are recognised on the balance sheet if it can be shown to be probable that there will be future economic benets attributable to the assets and their cost price can be estimated reliably. Intangible assets are carried at cost price. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 65 Tangible xed assets Tangible xed assets are carried at acquisition cost less accumulated depreciation and accu- mulated impairment losses. If the fair value of a tangible xed asset is lower than its carrying value and the impairment is not temporary, the asset is written down to fair value. Impairment At each balance sheet date, the Company assesses whether there are objective indications that assets may be impaired. Assets that are individually signicant are tested for impairment on an individual basis. The remaining assets are assessed collectively or in groups of assets that share similar credit risk characteristics. All impairment losses are charged to prot and loss. Impairment losses are reversed if the reversal can be objectively linked to an event that occurs after the loss was recognised. Pension plan The Company has a dened contribution pension plan. The contributions are recognised as salaries and personnel cost in the income statements as they incur. Share-based remuneration Employee share options at Itera give employees the right to subscribe to shares in Itera ASA at a future point at a predetermined price (exercise right). This right is dependent on the employee still being employed at the time of exercise. The value of share options is calculated at grant date and expensed as a personnel cost over the vesting period. Options are normally granted with a subscription price equal to the average share price over the thirty days prior to the grant date. The social security tax costs associated with employees’ taxable benets are expensed as incurred over the accrual periods on the basis of the accrual rates and values at the balance sheet date. Operating revenue The parent company’s operating revenue arises from the shared services it delivers through its Group Functions in the accounting/nance, HR, IT and communication areas. Its revenue is based on a cost-plus model and is recognised when the services are delivered. Financial income and expense Financial income comprises interest income from nancial investments and group contri- butions or dividends from subsidiaries. Group contributions and dividends are recognised in prot and loss on the same date that they are recognised by the company from which they are received. Financial expense comprises interest expense on borrowings. Tax expense Tax expense comprises both tax payable and changes in deferred tax. Tax expense is recog- nised in the prot and loss account. Deferred tax assets and liabilities are calculated using the liability method on a non-discounted basis and are calculated for all differences arising between accounting values and tax values of assets and liabilities as well as for losses carried forward. Deferred tax assets on net tax-reducing differences that have not been eliminated and tax losses that are to be carried forward are recognised on the basis of expected future earnings. General information and signicant accounting principles, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 66 NOK 1000 2021 2020 Salaries 21 123 17 414 Share option costs 154 31 Social security tax 3 079 3 405 Pension costs 912 836 Other personnel costs 749 468 Total salaries and personnel expenses 26 017 22 154 Average number of employees 22 21 For information on salaries and other remuneration of the executive management, see note 9 to the consolidated accounts. Auditor Analysis of remuneration paid to the auditor: 2021 2020 Statutory audit 241 182 Tax advice - - Other services 4 15 Total fees paid to the auditor 245 197 Itera ASA operates a dened contribution pension scheme. The Company’s pension expense is represented by the premiums paid, and totalled NOK 912K in 2021 (NOK 836k). The Com- pany’s pension scheme complies with the Norwegian Mandatory Occupational Pension Act (OTP). Share option costs (including employer’s social security contributions) of NOK -186k were expensed in 2021 (NOK 31k in 2020). See note 8 in the consolidated nancial statements for further information on share-based remuneration. Note 1. Salaries, personnel expenses and other remuneration Note 2. Pensions Note 3. Share-based remuneration Pro- gramme Out- standing 31.12. 2020 Issued 2021 Expired in 2021 Exercised in 2021 Out- standing 31.12. 2021 Fair value when issued Exercise price 1 ) Share price when issued 2) Date of issue Exercise period 2017 223 080 - - 223 080 - NOK 0.60 NOK 6.42 NOK 6.42 28.06.2017 2021 2020 120 000 - - - 120 000 NOK 2.07 NOK 11.32 NOK 11.46 02.07.2020 2024 2021 - 130 000 - - 130 000 NOK 2.36 NOK 13.50 NOK 13.50 22.06.2021 2025 1) The exercise price is the average share price over the 30 days prior to the date the option is granted. 2) The exercise price is set at fair value on the date the option is granted. The company works on the basis that the exercise price is the same as the share price on the date the option is granted and that the options do not have any intrinsic value on this date. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 67 Programme No. of share options Interest rate Volatility Lifetime 2017 - 0.90% 28.9% 4 years 2020 120 000 0.28% 43.3% 4 years 2021 130 000 1.06% 41.7% 4 years 2021 NOK 1 000 Research and develop- ment Soft- ware Total intan- gible assets Ofce machin- ery & equip- ment Fixtures and ttings Total property, plant and equip- ment Total non- current assets Acquisition cost Accumulated at 1 January 1 918 6 492 8 410 2 385 3 831 6 216 14 626 Additions - 745 745 166 77 243 988 Disposals - (5 778) (5 778) (40) - (40) (5 818) Accumulated at 31 December 1 918 1 459 3 377 2 511 3 908 6 419 9 796 Depreciation and amortisation Accumulated at 1 January 1 727 773 2 500 746 2 829 3 574 6 074 Depreciation and amortisation 192 282 474 808 320 1 128 1 602 Depreciation and amortisa- tion on disposals - (188) (188) (40) - (40) (228) Accumulated at 31 December 1 918 867 2 785 1 514 3 149 4 663 7 448 Book value Book value at 1 January 191 5 719 5 910 1 639 1 002 2 641 8 551 Book value at 31 December - 592 593 997 759 1 756 2 348 Estimated useful life 3-5 years 3-5 years 3-5 years 3-5 years Depreciation plan linear linear linear linear Note 4. Non-current assets Note 3. Share-based remuneration, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 68 NOK 1 000 Registered ofce Share capital 1) Share holding Book value 1 Jan. Change Book value 31 Dec. Prot/Loss in 2021 Equity in 2021 Itera Norge AS Oslo 1 000 100% 51 054 659 51 713 18 593 31 371 Itera Offshoring Services AS Oslo 200 100% 7 500 - 7 500 9 939 9 561 Cicero Consulting AS Oslo 200 100% 16 474 - 16 474 6 728 10 232 Compendia AS Bryne 182 100% 14 394 81 14 475 6 259 9 112 Itera Sverige AB 1) Stockholm 100 100% - - - (34) 1 669 Itera ApS Copenhagen 1 424 100% 16 619 98 16 717 4 059 3 015 Itera Ehf Reykjavik 34 100% - 34 34 (290) (259) Itera Consulting Group Ukraine, LLC Kiev 7 125 100% 9 127 - 9 127 1 812 9 589 Total 115 168 872 116 041 47 066 74 290 1) Itera Sverige AB is owned through Itera Norge AS, with book value of NOK 1.3 million. Note 5. Shares in subsidiaries NOK 1 000 Share capital Own shares Other paid-in capital Other equity Total equity Equity at 01 January 2020 24 656 (231) (7 545) 59 816 76 696 Net income for the period - - - 50 353 50 353 Share option costs - - (2 970) - (2 970) Employee share purchase programme - 172 5 207 - 5 379 Purchase of own shares - (478) (781) (16 983) (18 242) Sale of own shares - 156 2 108 - 2 264 Ordinary dividend - - - (20 547) (20 547) Supplementary dividend - - - (32 197) (32 197) Equity at 31 December 2020 24 656 (381) (3 981) 40 441 60 735 Net income for the period - - - 44 002 44 002 Share option costs - - 154 - 154 Cash settlement of options contract - - (978) - (978) Employee share purchase programme - 223 8 205 - 8 427 Purchase of own shares - (518) - (23 005) (23 522) Sale of own shares - 185 3 766 - 3 951 Ordinary dividend - - - (16 437) (16 437) Supplementary dividend - - - (7 307) (7 307) Equity at 31 December 2021 24 656 (491) 7 166 37 695 69 025 See note 8 in the consolidated nancial statements for further information on sharebased remuneration. Note 6. Additional equity information ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 69 NOK 1 000 2021 2020 Tax expense for the year Current tax on prot for the year - - Change in deferred tax (22) (89) Total tax expense for the year (22) (89) Tax payable Prot before tax 43 980 50 264 Permanent differences (44 079) (50 671) Change in temporary differences 646 406 Utilisation of losses carried forward (190) - Basis for current tax, taxable revenue 357 - Tax payable in the balance sheet - - Specication of the basis for deferred tax Fixed assets (1 460) (831) Other temporary differences (30) (370) Total temporary differences (1 491) (1 201) Losses carried forward - (190) Basis for deferred tax (1 491) (1 391) Deferred tax asset (-) / Deferred tax liability (+) (328) (306) Itera ASA has recognised the following income in its annual accounts from its investment in its subsidiaries: NOK 1 000 Company name Dividend Group contribution Total Itera Norge AS 22 000 - 22 000 Itera Offshoring Services AS 7 900 - 7 900 Compendia AS 5 000 - 5 000 Itera Aps 4 701 - 4 701 Cicero Consulting AS 4 700 2 635 7 335 Total income from investment in subsidiaries 44 301 2 635 46 937 Receivables from Group companies NOK 1 000 Company name 2021 2020 Itera Norge AS 2 975 2 940 Itera ApS 217 174 Cicero Consulting AS 49 42 Compendia AS 217 148 Itera Offshoring Services AS 981 571 Itera Ehf 140 - Total 4 579 3 875 Note 7. Income taxes Note 8. Income from investments in subsidiaries Note 9. Balances between companies in the same group, including cash pool ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 70 Receivables from group companies consist of group accounts receivables, receivables from group companies relating to the group’s joint value added tax registration (see Note 12). Liabilities to Group companies NOK 1 000 Company name 2021 2020 Itera Norge AS 10 207 40 472 Compendia AS 11 700 7 487 Cicero Consulting AS 10 446 9 227 Itera ApS 1 766 7 460 Itera Offshoring Services AS 7 460 932 Total 41 579 65 577 Liabilities to group companies consist bank deposits held by subsidiaries in group cash pool, payables to group companies relating to the group’s joint value added tax registration and net of receivables in relation to group contributions and dividends. Cash Pool In the group’s cash pool, Itera ASA is responsible both for its own deposits/drawings and for deposits/drawings made by the subsidiaries. The gures reported for bank deposits held by Itera ASA in the balance sheet include deposits paid into the cash pool by the subsidiaries, which are netted against the parent company’s drawings. The bank deposits held by the subsidiaries in the cash pool are reported in the parent company accounts as liabilities to group companies. Itera ASA holds NOK 23.2 million (42.9 million) in cash and bank deposits, of which NOK 0.9 million (NOK 0.9 million) is on restricted accounts for payment of payroll tax deductions. Itera has structured internal support processes in the areas of accounting/nance, HR, inter- nal IT, and communication as Group Functions. These functions are part of Itera ASA and work with subsidiaries. The parent company invoices these subsidiaries on a cost-plus model. In 2021 Itera invoiced NOK 46.4 million (NOK 38.1 million) in respect of these services. The Norwegian companies in the group are jointly registered for value added tax and other taxes and duties, and accordingly the gures reported for public taxes and duties payable include value added tax payable by the other Norwegian companies in the group. The total VAT liability is included in the parent company accounts but is offset by intragroup receivables due from subsidiaries. The Group is exposed to various nancial risks, such as credit risk, liquidity risk, currency risk and interest rate risk. These risks are regarded as low. The Group has established procedures for managing these risks. The main principle is to minimise the level of nancial risk, and the Group on this basis holds no assets or liabilities for speculative purposes. See note 6 to the group accounts for further information on nancial risk management. Note 10. Restricted deposits Note 11. Transactions with related parties Note 12. Public taxes and duties payable Note 13. Financial risk management Note 9. Balances between companies in the same group, including cash pool, cont. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 71 The Board of Directors and the CEO have today approved the annual report and annual accounts of the Itera ASA group and the parent company for the 2021 calendar year and as at31 December 2021 (2021 Annual Report). We conrm that, to the best of our knowledge: • The consolidated accounts have been prepared in accordance with the IFRS and related interpreta- tions as approved by the EU and with the additional Norwegian disclosure requirements pursuant to the Norwegian Accounting Act as in effect at 31 December 2021. • The annual accounts of the parent company have been prepared in accordance with the Norwegian Accounting Act and Norwegian Generally Accepted Accounting Principles as in effect at 31 December 2021. • The annual report of the group and the parent company, including the statements on corporate govern- ance and on corporate social responsibility, has been prepared in accordance with the requirements of the Norwegian Accounting Act and Norwegian Accounting Standard No. 16 as in effect at 31 December 2021. • The information contained in the accounts provides a true and fair view of the group’s and the parent company’s assets, liabilities, nancial position and earnings taken as a whole at 31 December 2021. • The annual report of the group and the parent company provides a true and fair view of: – the developments, earnings and nancial position of the group and the parent company – the principal risk and uncertainty factors facing the group and the parent company Oslo, 28 April 2022 The Board of Directors and the CEO of Itera ASA Statement by the Board of directors and the CEO Arne Mjøs Chief Executive Ofcer Jan-Erik Karlsson Board member Gyrid Skalleberg Ingerø Board member Morten Thorkildsen Chairman of the board Marianne Killengreen Board member Andreas Almquist Board member Anne Nyseter Perez Board member ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 72 PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap To the General Meeting of Itera ASA Independent Auditor’s Report Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Itera ASA, which comprise: • the financial statements of the parent company Itera ASA (the Company), which comprise the statement of financial position as at 31 December 2021, the income statement and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and • the consolidated financial statements of Itera ASA and its subsidiaries (the Group), which comprise the statement of financial position as at 31 December 2021, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion • the financial statements comply with applicable statutory requirements, • the financial statements give a true and fair view of the financial position of the Company as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and • the financial statements give a true and fair view of the financial position of the Group as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by laws and regulations and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of the Company for 4 years from the election by the general meeting of the shareholders on 22 May 2018 for the accounting year 2018. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 73 2 / 5 Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The Group’s business activities are largely unchanged compared to last year. We have not identified regulatory changes, transactions or other events that qualify as new key audit matters. Recognition of revenue contains the same characteristics and risks as last year and consequently has been an area of focus also for the 2021 audit. Key Audit Matters How our audit addressed the Key Audit Matter Recognition of revenue The Group’s revenue for the year ended 31 December 2021 amounted to NOK 633 062 thousand. The majority of the Group’s revenue is derived from the transfer of services over time, but some are also point in time contracts. Revenue from subscription contracts are recognized over the contract period, in accordance with IFRS 15. Revenue is the most material amoun t in the financial statement, and the number of transactions and data involved in recognizing revenue can be quite significant and sometimes complex, making revenue an area with an inherent risk of errors occurring. Refer to notes 2 and 3 to the financial statements, and the summary of significant accounting policies for further details, as well as an explanation of the accounting principles related to revenue recognition. We obtained an understanding of the revenue recognition process based on intervie ws with management and reviews of the Group’s process and policy documentation. We evaluated management’s application of revenue recognition principles and whether they were in accordance with IFRS 15. We assessed the Group’s revenue recognition accountin g policies by testing the application for a sample of contracts. We identified, assessed and tested the design and operating effectiveness of management’s internal controls over revenue recognition which includes change of data in the Group’s billing syste m to test the accuracy and validity of revenues. We traced a sample of sales transactions to supporting documentation, such as contracts, to verify the accuracy, validity and cut -off of revenues. Based on our understanding of the standard flow of revenue transactions, we also performed analytical procedures to further test the accuracy and validity of the transactions. Our procedures included comparing booked revenues throughout the year to receipts of payments. We noted no significant deviations as a resu lt of our audit procedures. We considered the Group’s disclosures about revenue recognition in note 2 and 3 to the financial statements and the summary of significant accounting policies and found them to be appropriate. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 74 3 / 5 Other Information The Board of Directors and the Managing Director (management) are responsible for the information in the Board of Directors’ report and the other information accompanying the financial statements. The other information comprises information in the annual report, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the information in the Board of Directors’ report nor the other information accompanying the financial statements. In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’ report and the other information accompanying the financial statements. The purpose is to consider if there is material inconsistency between the Board of Directors’ report and the other information accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors’ report and the other information accompanying the financial statements otherwise appear to be materially misstated. We are required to report if there is a material misstatement in the Board of Directors’ report or the other information accompanying the financial statements. We have nothing to report in this regard. Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report • is consistent with the financial statements and • contains the information required by applicable legal requirements. Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate Governance and Corporate Social Responsibility. Responsibilities of Management for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation and true and fair view of the consolidated financial statements of the Group in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 75 4 / 5 As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. We design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's or the Group's internal control. • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's and the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern. • evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view. • obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 76 5 / 5 Report on Other Legal and Regulatory Requirements Report on compliance with Regulation on European Single Electronic Format (ESEF) Opinion We have performed an assurance engagement to obtain reasonable assurance that the financial statements with file name “5967007LIEEXZXFZFK03-2021-12-31-en-zip” have been prepared in accordance with Section 5-5 of the Norwegian Securities Trading Act (Verdipapirhandelloven) and the accompanying Regulation on European Single Electronic Format (ESEF). In our opinion, the financial statements have been prepared, in all material respects, in accordance with the requirements of ESEF. Management’s Responsibilities Management is responsible for preparing, tagging and publishing the financial statements in the single electronic reporting format required in ESEF. This responsibility comprises an adequate process and the internal control procedures which management determines is necessary for the preparation, tagging and publication of the financial statements. Auditor’s Responsibilities For a description of the auditor’s responsibilities when performing an assurance engagement of the ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger Oslo, 28 April 2022 PricewaterhouseCoopers AS Jone Bauge State Authorised Public Accountant ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 77 The objective of Itera ASA (the Company) is to ensure its shareholders a competitive return in the form of dividends and higher share price in comparison with alternative investments. Shareholder policy Itera endeavours to ensure shareholders a competitive return on their investment in the form of a higher share price and dividends. The share price shall reflect the Company’s earnings and underlying values. Open communication and equally treatment of the shareholders shall contribute to increased shareholder values and trust among investors. Investor information Itera ASA was listed on the Oslo Stock Exchange (OSE) on 27 January 1999 under the ticker code ITE, which in 2020 was changed to ITERA. The Company shall treat all shareholders equally concerning information which may affect the market value of the shares. All informa- tion of relevance for the share price is published via the notication system of the Oslo Stock Exchange as well as on the Company’s website www.itera.no, to ensure such information is made available to all stakeholders simultaneously. The quarterly reports are also made available on Itera’s website in the form of online webcasts. The shares have been assigned the ISIN NO 0010001118, and the Company’s organisation number at the Norwegian Brønnøysund Register Centre is NO 980 250 547. Share capital Itera ASA’s share capital at 31 December 2021 was NOK 24,655,987 made up of 82,186,624 fully paid shares each with nominal value of NOK 0.30. All shares have the same voting rights at the General Meeting. Shareholders As of 31 December 2021, Itera had 2 178 (2 216) shareholders. At year-end, 6% (4%) of the Company’s shares were owned by foreign investors. The Company’s twenty largest investors owned 73% (72%) of the Company’s shares. Dividend During 2021, dividends of NOK 0.35 (0.60) per share were paid, for a total of NOK 27.9 (48.0) million. Share price The Itera share price opened the year at NOK 15.00 and closed at NOK 15.25, corresponding to a change of 2%, or 4% including dividend payments in the period. The highest share price during the year was NOK 16.50 and the lowest price was NOK 13.00. Itera had a market value corresponding to MNOK 1,253 (1,233) million at 31 December 2021. Share option schemes The Company has established option programmes for key personnel. Current share option programmes were implemented in 2017, 2019, 2020 and 2021. The 2017 programme expired in June of 2021. There were 2,110,000 outstanding share options at year-end. Refer- ence is also made to Note 10 to the Consolidated Financial Statements. Major shareholders For major shareholders, see note 21 in the consolidated accounts. Shares and shareholders ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 78 Revenue EBITDA EBIT 0 100 200 300 400 500 600 700 20212020201920182017 NOK million 0 20 40 60 80 100 120 20212020201920182017 NOK million 0 20 40 60 80 100 120 20212020201920182017 NOK million Employees EBITDA margin EBIT margin 0 100 200 300 400 500 600 700 20212020201920182017 Number 0 5 10 15 20 20212020201920182017 % 0 2 4 6 8 10 12 20212020201920182017 % Bank deposits Cash flow Equity ratio 0 10 20 30 40 50 60 70 20212020201920182017 NOK million 0 20 40 60 80 100 120 20212020201920182017 NOK million 0 5 10 15 20 25 30 20212020201920182017 % Development 2017–2021 (after adjustment for non-recurring costs) ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results 79 Development 2019–2021 (after adjustment for non-recurring costs) Revenue Employees 0 50 100 150 200 2021 2020 2019 Q4Q3Q2Q1 0 100 200 300 400 500 600 700 2021 2020 2019 Q4Q3Q2Q1 NOK million End of period EBITDA EBITDA margin 0 5 10 15 20 25 30 35 2021 2020 2019 Q4Q3Q2Q1 0 5 10 15 20 25 2021 2020 2019 Q4Q3Q2Q1 NOK million % EBIT EBIT margin 0 5 10 15 20 25 2021 2020 2019 Q4Q3Q2Q1 0 3 6 9 12 15 2021 2020 2019 Q4Q3Q2Q1 NOK million % ANNUAL REPORT 2021 Content CEO comment Board of Directors Our results Arne Mjøs CEO Mobile +47 905 23 172 arne.mjos@itera.com Bent Hammer CFO Mobile +47 982 15 497 bent.hammer@itera.com Itera ASA Telephone +47 23 00 76 50 Nydalsveien 28 P. O. 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