Itera

Investor Presentation • Aug 25, 2020

2020

PRESENTERS AND AGENDA

Arne Mjøs Chief Executive Officer

Highlights of the quarter Business review

Bent Hammer Chief Financial Officer

Financial review Outlook

2

HIGHLIGHTS OF THE SECOND QUARTER

High growth and profitability in core digital business (81% of total)

Gross profit growth of 8%

EBIT margin of 12.7% (11.1%)

Total business Revenue NOK 150.8 (143.3) million, up by 5% y-o-y

Gross profit NOK 131.6 (122.1) million, up by 8% y-o-y

EBIT of NOK 15.8 (13.9) million, 10.5% (9.7%) margin

COVID-19

Moderate impact from COVID-19

Increased competition but our position is strengthened due to our hybrid delivery model

Grow people

High productivity maintained with remote work

Number of employees increased by 31 last 12 months

Summer internships as planned with 31 master students

Dividend

Ordinary dividend for 2019 of NOK 0.20 paid out

Authorisation to distribute additional dividends later

HIGHLIGHTS OF THE SECOND QUARTER

Core digital business:

• Gross profit growth of 8.3% (12.6% in H1)
• EBIT margin of 12.7% (13.5% in H1)

Total business:

• Gross profit growth of 7.8% (11.5% in H1)
• EBIT margin of 10.5% (11.2% in H1)

EBIT NOK million

Revenues

NOK million

Business review

5 Itera | Q2 2020

THE SPECIALIST IN CREATING SUSTAINABLE DIGITAL BUSINESS

WE UNDERSTAND THE USER

New use cases

WE UNDERSTAND THE BUSINESS Data centric

WE UNDERSTAND THE TECHNOLOGY

Artificial intelligence

MAKE A DIFFERENCE FOR OUR EMPLOYEES, OUR CUSTOMERS, THEIR CUSTOMERS AND SOCIETY AS A WHOLE WHY WE ARE HERE

HOW?

Skilled people and multidisciplinary teams

Platform first

ONE Itera across borders

Entrepreneurship and local ownership

Sustainability focus

EVOLVING OUR SUSTAINABLE BUSINESS

2019: The ambitions

• Developed sustainability strategy
• Prioritized United Nations (UN) sustainability goals
• Certified according to Nasdaq Environment, Social and Governance (ESG) initiatives
• Increasing engagement in strategic sustainability consulting

2020: The platforms

• Make creating sustainable digital business as our core position
• Implement relevant KPIs for selected three UN sustainable goals
• Signed UN Global Compact
• Established internal competence arena; Itera Sustainability Academy

2021->: Full realization

• New concepts and tools combining sustainability and digitalization
• Sustainability is central to our onboarding program
• Developing sustainable business is the new normal
• Itera is a key player in the post-pandemic shift to the green economy

SUSTAINABLE ENGAGEMENTS

Reducing cement's carbon footprint by extending service life time

• Today, the production of concrete accounts for 8 per cent of the global CO2 emissions.
• A new data driven solution extends critical infrastructure life time by combining bridge data, weather data and 3D data from ELOP scanner technology
• Sustainable gains include reduced CO2 emission, lower communicy costs and potential save lives

The green transformation of oil & gas and its supply industry

• Oil & gas and its supply industry are committed to reduce carbon footprint and benefit from the rise of floating offshore wind power
• The green transition is accelerated with governments Covid-19 packages of measures
• Itera is involved in several projects through our Smart Energy initiatives

SUMMER INTERNSHIPS AS PLANNED

• Itera did not reduce the intake of summer students despite Covid-19 challenges
• 31 students were engaged in five real customer projects
• New technology was utilized for a wide range of solutions and services
• Sustainable gains were realised through energy optimisation, better working life and sustainable resource utilisation

VISUAL ASSET TRACKING AT KVAERNER

At Kvaerner's production yards, thousands of assets such as wagons, production equipment and trucks are in continuous motion. This makes it challenging to have an overview of where the different assets are located at any time.

Some of Itera's summer interns participated in the development of "Visual Asset Tracking", a solution for tracking assets by utilising technologies like advanced robotics and machine learning.

Kvaerner employees can track assets through an app which shows a digital representation of the yard with an overview of updated locations on assets.

The solution has been delivered in collaboration with Cognite.

BEST IN EUROPE, GLOBAL FINALIST

• Itera awarded the best project management office (PMO) in Europe by a jury of 420 judges from 110 countries.
• The award was based on a thorough evaluation of our delivery framework, methodology, routines and practices related to project management.
• As the winner of 2020 Europe PMO of the year, Itera is now one of the World PMO of the Year Award finalists.

"TECHNOLOGIES DEMYSTIFIED"

• Webinar in June based on the experience with kompensasjonsordningen.no with 100+ participants
• Very strong line-up, with DNB, BITS, Microsoft and The Norwegian Tax Administration
• 8 more webinars are planned in 2H

ORDER INTAKE FROM NEW AND EXISTING CUSTOMERS Order intake from selected new and existing customers

Book-to-bill ratio*) of 0.8 in Q2 and 1.1 in H1 for core digital business

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

STRATEGIC PARTNER FOR GJENSIDIGE

15 Itera | Q2 2020

• During the second quarter, Itera was chosen as one of Gjensidige's strategic partners in digitalisation.
• Among the criteria for Gjensidige's choice of partner were competence, delivery model, flexibility, professionalism and the ability to reduce risk.
• The agreement has a duration of up to 5 years and covers Gjensidige's operations in the Nordic and Baltic countries.
• With this agreement, Itera is a central part of Gjensidige's digitalisation program. The agreement covers the entire breadth of Itera's service areas, including project management, architecture, design, development and testing.
• The agreement involves the continuation of a collaboration of more than 20 years.

CUSTOMER DEVELOPMENT

• New business

• Existing customers accounted for 89.1% (87.7%) of revenues in Q2 2020
• New customers won over the past year generated revenues of NOK 16.4 (17.6) million in Q2 2020
• Good visibility
  • Share of revenue from top 30 customers steady at 76%
  • High customer concentration signifies
    • Strategic relationships
    • Full range of services
    • Hybrid delivery across borders

Revenue customers split (in MNOK)

Existing customers* New customers**

Largest customers' share of revenue

Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20

SKILLED AND INNOVATIVE EMPLOYEES

• 530 employees at the end of the quarter
  • Up 3 from last quarter and 31 from same period last year
  • 6 quarters of sequential growth
• Nearshore ratio of 48% (48%)
  • Our hybrid delivery model of onshore and nearshore consultants are increasing our price competitiveness as well as providing a high degree of scalability through access to a very large resource pool

Number of employees end of quarter by shore

Year-over-year growth in no. of employees

Financial review

18 Itera | Q2 2020

KEY
FIGURES

	2020	2019	Change	2020	2019	Change	2019
NOK Million	4-6	4-6	%	1-6	1-6	%	FY
Sales revenue	150 8	143 3	5 %	312 7	286 1	9 %	560 3
Gross profit	131 6	122 1	8 %	272 8	244 7	11 %	483 0
Personnel expenses	96 2	87 9	9 %	195 6	178 2	10 %	348 3
Other opex	9 6	11 6	(18 %)	22 0	21 7	2 %	42 7
EBITDA	25 8	22 6	14 %	55 1	44 9	23 %	92 0
EBITDA margin	17 1 %	15 8 %	1 4 pts	17 6 %	15 7 %	1 9 pts	16 4 %
Depreciation	10 0	8 6	15 %	20 0	17 1	17 %	35 8
EBIT	15 8	13 9	14 %	35 1	27 8	26 %	56 2
EBIT margin	5 10 %	9 7 %	0 8 pts	11 2 %	9 7 %	1 5 pts	10 0 %
Net cash flow from operations	40 2	26 9	49 %	47 7	21 9	118 %	80 0
Cash and cash equivalents	47 9	44 1	9 %	47 9	44 1	9 %	53 1
Equity ratio	18 6 %	19 6 %	-1 1 pts	18 6 %	19 6 %	-1 1 pts	19 2 %
Employees end of period at	530	499	6 %	530	499	6 %	512
Employees in average	529	493	7 %	524	490	7 %	498

• Growth despite Covid -19 impact
• Cost savings mitigating impact and providing improved profitability
• Continued capacity growth
• Cash flow from operations seasonably strong, aided by government relief in terms of extended payment dates

BUSINESS
SEGMENTS

Q2	H1
2	10
%	0
5	%
5	6
5	3
%	%
5	9
2	3
%	%
Q2	H1
8	12
3	6
%	%
4	4
5	2
%	%
7	11
8	5
%	%
Q2	H1
12	13
%	%
7	5
1	1
1	4
%	%
5	11
10	2
%	%

• Core digital business growing at high speed and profitability
• Traditional data centre operations under transformation to cloud services since our decision to move to cloud late 2018.
• The cloud market is growing at high speed and Itera's transformation will be accelerated next 6-12 months.

*) The new managed cloud service offering has been included into core digital business after the initial investments in 2019. 2019 figures have been restated to new classification

REVENUE AND EARNINGS DEVELOPMENT

• Revenue increased by 5% to 151 MNOK and EBIT margin by 0.8 pts to 10.5%
• Last 12 months rolling revenue increased by 7% to 587 MNOK and EBIT by 24% to 63.5 MNOK. EBIT margin of 10.8% (9.3%)

Quarterly Revenue and EBIT margin

Last 12 months Revenue and EBIT margin

REVENUE SPLIT

Revenue increased by 5% y-o-y

• Service revenues from own consultants increased by 8% to NOK 104 million
• Subscription revenue increased by 8% to NOK 38 million
• 3 rd party service revenue decreased by 25% to NOK 6 million
• Other revenue, incl. HW/SW sales, decreased by 28% to NOK 3 million

Revenue split (quarterly figures) NOK Million

Revenue percentage split (rolling 12 months)

STATEMENT OF CASH FLOW

	2020	2019	2020	2019	2019
NOK Million	4-6	4-6	1-6	1-6	FY
Cash flow from operations (EBITDA)	25.8	226	55.1	44.9	92.0
Change in balance sheet items	14.4	4.4	(7.4)	(22.9)	(12.0)
Net cash flow from operating activities	40.2	26.9	47.7	21.9	80.0
Net cash flow from investment activities	(3.9)	(8.0)	(7.7)	(5.4)	(18.8)
Purchase of own shares	(18.2)	(22.6)	(18.8)		(0.1)
Sale of shares	2.3	29	2.3	2.1	2.1
Instalment of lease liabilities	(3.2)	(2.1)	(5.1)	(5.1)	(9.1)
External dividend paid	(16.3)	(20.5)	(16.3)	(20.2)	(44.1)
Net cash flow from financing activities	(35.4)	(42.3)	(37.9)	(23.2)	(51.8)
Net change in bank deposits and cash	(2.8)	(28.7)	(5.2)	(11.2)	(2.2)
Bank deposits at the end of the period	47.9	44.1	47.9	44.1	53.1
New borrowing related to leasing	1.3	0.2	1.9	3.3	11.5

• Cash flow from operations NOK 40.2 (26.9) million in Q2
• 12 month rolling cash flow from operations was NOK 106 million

• An ordinary dividend of NOK 0.20 per share was paid on 4 June 2020
• Share price was NOK 11.55 at the end of Q2 2020, an increase of 48% (52% incl. dividends) from NOK 7.80 at the end of Q2 2019.
• Current holding of own shares is 1,691,594 shares, a net increase of 856,537 in the quarter
• Consistent high distribution of earnings

STATEMENT OF FINANCIAL POSITION

• Equity ratio of 19% (20%) per 30 June (23% excl. IFRS 16 Leasing)
• Cash balance of MNOK 48 (MNOK 44)

Outlook

• Recovery in many sectors with the re-openings in the Nordics, but still high global uncertainty due to Covid-19.
• Underlying attractive market with high demand for digitalisation in all Nordic markets.
• Itera well positioned to gain market shares through attractive hybrid delivery model
• Accelerating transformation of own data centres to the cloud with some potential one-offs and increased investments next 6-12 months.
• Profitable growth and cash flow are key focus areas
• Larger projects and customers expected to continue to increase revenue visibility, efficiency and scalability

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

Q&A session

TOP 20 SHARE-HOLDERS

No.	Name	%	Nat.	Shareholding
1	ARNE MJØS INVEST AS*	28.35	NOR	23 297 854
2	OP CAPITAL AS	5.41	NOR	4 443 357
3	GIP AS	4.62	NOR	3 800 000
4	DnB NOR Bank ASA	4.08	NOR	3 350 000
5	EIKESTAD AS	4.03	NOR	3 310 000
6	SEPTIM CONSULTING AS	3.52	NOR	2 890 000
7	BOINVESTERING AS	3.21	NOR	2 640 000
8	GAMST INVEST AS	2.85	NOR	2 344 927
9	JØSYRA INVEST AS	2.68	NOR	2 200 000
10	MARXPIST INVEST AS	2.47	NOR	2 031 588
11	VERDIPAPIRFONDET STOREBRAND VEKST	2.00	NOR	1 641 189
12	ITERA ASA	1.59	NOR	1 305 136
13	FRAMAR INVEST AS	1.12	NOR	921 489
14	AANESTAD PANAGRI AS	1.10	NOR	900 000
15	HØGBERG	0.95	NOR	782 045
16	ALTEA PROPERTY DEVELOPMENT AS	0.85	NOR	700 000
17	JENSEN	0.79	NOR	652 800
18	NYVANG	0.77	DEN	630 000
19	GRØSLAND	0.74	NOR	610 000
20	MORTEN JOHNSEN HOLDING AS	0.73	NOR	600 000
	TOP 20	71.85		59 050 385

*Arne Mjøs Invest AS holds a future contract expiring 18 September 2020 on 3,350,000 shares at an average price of NOK 9.1427 per share. The total controlling interest of Arne Mjøs is thus 26,647,852 shares (32.4%).

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Disclaimer

This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Itera ASA and Itera ASA's (including subsidiaries and affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Itera ASA. Although Itera ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Itera ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Itera ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.