Itera

Quarterly Report • May 14, 2018

Digitalisation drives growth and profitability

Digitalisation drives growth and profitability

Oslo, 14th May 2018: The Group's operating revenue was up 11% compared with the same period in 2017. Denmark almost doubled its revenue. The proportion of Itera's capacity located nearshore was 44%, approaching the strategic target of achieving a nearshore ratio of more than 50%.

The Group reports operating revenue of NOK 131.2 million (NOK 118.6 million) for the first quarter of 2018, which represents a growth of 11 %. Revenue from services delivered by Itera's own consultants grew by 16%, while third-party service revenue was up by 33%. Subscription-related revenue grew by approximately 2%. Denmark almost doubled its revenue.

The Group's total operating expenses in the first quarter of 2018 were 13% higher at NOK 121.1 million (NOK 107.3 million).

The operating result before depreciation and amortisation (EBITDA) for the first quarter of 2018 was a profit of NOK 15.2 million (NOK 16.1 million), while the operating result (EBIT) was a profit of NOK 10.0 million (NOK 11.3 million). The EBIT margin for the first quarter of 2018 was 7.6% as compared to 9.5% in the first quarter of 2017. The quarter had three fewer working days than last year, which typically represents more than NOK 3 million negative impact on both revenue and earnings. Profitability is also impacted by the relocating of our development centre in Kiev into larger, modern and newly built premises in the central part of the city. Reallocation of almost 200 employees had a temporary slowdown of the Group's recruitment capacity. From mid-March, the operation is running as normal and with high speed, welcoming both new employees and visits from existing and potential customers.

Cash flow from operating activities was NOK -8.2 million (NOK -0.8 million) in the first quarter of 2018.

- A part of the strategy is to work with what we call "first movers", i.e. customers who are early adopters of new technology, models and concepts. I would like to mention APCOA Parking, (formerly Europark) as an example. Together with APCOA we have worked with advanced camera and machine learning technology to develop a parking solution that reads each car's number plate when it drives into a car park, interprets the image, and then matches it to various different registers and identifies it. At the end of the quarter, the solution is rolled out to a large number of airports in Norway. Itera is at our best when we explore new technology and business ideas together with our ambitious customers, says, Arne Mjøs, CEO of Itera.

The revenue from Itera's 30 largest customers grew by 14% in the first quarter of 2018 and accounted for 80% of the Group's operating revenue, up from 76% in the first quarter of 2017.

- Our strong organic growth and improving profitability adjusted for seasonal effects continues quarter by quarter. Our new facilities nearshore increase our ability to provide innovative solutions and services to Nordic customers when the availability of local digitalisation skills is a real challenge, says Arne Mjøs.

The Group's headcount at the end of the first quarter of 2018 was 489 as compared to 419 at the end of the first quarter of 2017.

The proportion of Itera's capacity that is located in low-cost countries nearshore (its nearshore ratio) was 44% (38%) at the end of the first quarter. The Group has a long-term strategic target of achieving a nearshore ratio of more than 50%.

At its meeting on 15 February 2018, the Board of Directors passed a resolution to propose an ordinary dividend of NOK 0.25 per share at the Annual General Meeting on 22 May 2018. It will also ask for its authorisation to approve possible additional dividends to be renewed.

Further information:

Arne Mjøs, CEO Bent Hammer, CFO

+47 905 23 172 +47 982 15 497

arne.mjos@itera.no bent.hammer@itera.no

About Itera - specialists in creating digital business

Itera is a communication and technology company that delivers services in the strategy and consulting, design and development, and operations and management areas. Its customers are Nordic organisations that aim to deliver great

user experiences to their customers, and that see the instrumental contribution that innovation, efficient communication and good technology use can make to achieving their goals. Itera is headquartered in Oslo, and has almost 500 employees across the Nordics and in Ukraine and Slovakia. Itera is listed on Oslo Stock Exchange under the ticker ITE.