Itera

Earnings Release • Feb 19, 2016

Continued improvements in growth and profitability

Continued improvements in growth and profitability

Oslo, 19 February 2016: Itera's IT hosting and consulting

activities in Norway and Denmark grew strongly with

signficant profitability improvements achieved. Itera's

nearshore activities also saw strong growth.

The Group reports operating revenue of NOK 113.1 million

(110.4) for the fourth quarter of 2015 and NOK 435.4 million

(439.8) for 2015 as a whole.

As in the previous quarters of 2015, Itera's consulting

activities in Sweden produced weak figures in the fourth

quarter. Keeping this unit is not regarded as important to

Itera's ability to realise its strategy, and it will be

closed with effect for accounting purposes from 1 February

2016. The business in question has operated on a stand-alone

basis in Sweden, meaning its closure will have no effect on

the Group's Nordic customers, as they are being served by

other units in the Group.

The Group experienced strong demand for its services and

achieved a high level of efficiency in the quarter. Pro

forma

operating revenue excluding discontinued businesses (Itera's

IT hosting business in Sweden was sold with effect from 1

July 2015) was NOK 106.6 million (95.8) for the fourth

quarter, equivalent to growth of 11%. Pro forma operating

revenue for 2015 as a whole was NOK 394.2 million (379.5),

equivalent to growth of 4%.

The group's total operating costs were 7% lower in the

fourth

quarter of 2015 relative to the same period in 2014 at NOK

105.0 million (112.6). Pro forma operating costs were NOK

94.5 million (97.9) for the fourth quarter and NOK 366.3

million (371.5) for 2015 as a whole.

The operating result before non-recurring items (EBIT) for

the fourth quarter of 2015 was a profit of NOK 8.2 million

(a

loss of NOK 2.2 million in Q4 2014). EBIT for 2015 as a

whole

was NOK 20.1 million (3.8). Pro forma figures excluding

discontinued businesses show EBIT before non-recurring items

of NOK 8.8 million (-2.1) for the fourth quarter and NOK

26.4

million (4.0) for 2015 as a whole.

The fourth quarter has traditionally been the quarter with

the strongest cash flow from operations. Cash flow from

operations was NOK 30.1 million (46.8) for the fourth

quarter

of 2015 and NOK 20.8 million (45.8) for 2015 as a whole.

Cash

flow from operations for 2015 was NOK 19.7 million lower

than

EBITDA, which is largely due to higher accounts receivable

from customers due to growth and on-account invoicing

towards

the end of the year not paid in the quarter. Cash flow from

operations for 2015 was also influenced by exceptionally

high

cash flow from operations in 2014.

The revenue from Itera's 30 largest customers grew by 11% in

the fourth quarter of 2015 and accounted for 72% of the

Group's operating revenue, up from 68% in the fourth quarter

of 2014.

"We are very satisfied with Itera's performance from

continuing operations, with double-digit pro forma revenue

growth. The Group's structure has been simplified, and we

are

now concentrating on reinforcing the strong progress we have

made", comments Arne Mjøs, CEO of Itera.

The Group experienced good order inflows in the fourth

quarter of 2015, with customers such as Eika Forsikring,

VPS,

If Skadeforsikring, Santander, KLP, the Norwegian Public

Service Pension Fund and Bluegarden either extending

existing

or entering into new agreements. These agreements span the

whole range of services offered by the group, from

consultancy and strategy through to IT hosting and

management

via design and development. The design and development

projects cover both business-critical core systems and

communications solutions for Itera's customers to use with

their own customers, existing as well as potential. The IT

hosting and management services to an increasing degree

involve setting up and hosting cloud-based platforms and

applications rather than more traditional technology.

The Group's headcount at the end of the fourth quarter of

2015 was 400 as compared to 445 at the end of the fourth

quarter of 2014. The decrease can largely be explained by

the

sale of Itera's IT hosting business in Sweden in the first

half of 2015 and the discontinuation of unprofitable

activities over the course of the year.

The proportion of Itera's capacity that is located nearshore

(its nearshore ratio) was 33% (29%) at the end of the fourth

quarter. The Group's development centre in Bratislava

provides great flexibility with regard to meeting the target

of achieving a nearshore ratio of 50% in the future.

For more information:

Arne Mjøs, CEO

+47 905 23 172

arne.mjos@itera.no

Bent Hammer, CFO

+47 982 15 497

bent.hammer@itera.no