INTERIM REPORT

FIRST QUARTER 2015

CEO ARNE MJØS OSLO, 28 APRIL 2015

Highlights of the first quarter

Revenue NOK 114 million, representing a return to growth of 1 %
Improved EBITDA of NOK 7.7 million, 6.8 % margin
Improved EBIT of NOK 2.8 million, 2.5 % margin
Positive growth in consultancy services in Norway
NOK 170 million order intake, including several long-term IT hosting agreements of 3-5 years
The process of divesting the IT hosting business in Sweden is progressing according to plan

FINANCIAL REVIEW

Key figures

	2015	2014	Change	2014
NOK Million	Q1	Q ₁		FY
Operating revenue	114	112	$1\%$	440
Gross profit	96	95	1 $%$	364
EBITDA	7.7	7.8	$-1\%$	25.2
EBITDA margin	6.8%	7.0%		5.7 %
Operating profit (EBIT)*	2.8	2.4	16 %	3.8
EBIT margin*	2.5%	$2.2\%$		0.9%
Operating profit (EBIT)	0.9	2.4	$-64%$	0.2
EBIT margin	0.8%	$2.2\%$		$0.0\%$
Net cash flow from	-8	$-11$	25 %	46
Cash and cash equivalents	54	53	2%	67
Equity ratio	28 %	41 %		26 %
Employees at end of period	437	464	$-6\%$	447

* Before non-recurring items

Itera returned to revenue growth (+ 1 %) in Q1 2015. Revenue in Norway grew by 4 %, while revenue related to nearshore activities decreased slightly.

Quarterly development

Operating revenue

NOK million

EBITDA

NOK million

Employees

End of period

EBIT NOK million

Statement of income

	2015	2014	Change	2015	2014	Change
NOK Million	Q1	Q ₁		FY	FY
Operating revenue	114	112	$1\%$	114	112	$1\%$
Cost of sales	18	18	2%	18	18	2%
Personnel expenses	75	75	$0\%$	75	75	$0\%$
Depreciation	5	5	$-9\%$	5	5	$-9\%$
Other operating expenses	13	12	13 %	13	12	13 %
Total operating expenses	111	110	$1\%$	111	110	$1\%$
Operating profit before non-recurring items	2.8	2.4	16 %	2.8	$\overline{2}$	16 %
Non-recurring items	2.0	0.0		2.0	0
Operating profit (EBIT)	0.9	2.4	$-64%$	0.9	$\overline{2}$	$-64%$
Net financial income	$-0.8$	$-0.1$		$-0.8$	$-0.1$
Profit before tax	0.1	2.3	$-96%$	0.1	2.3	$-96%$
Tax	0.0	0.6	$-96%$	0.0	0.6	$-96%$
Net profit for the period	0.1	1.7	$-96%$	0.1	1.7	$-96%$

Significant improvements were seen in the profitability of Itera's consulting activities in Norway and Denmark as well as in the profitability of Itera's managed services in Norway.
An unprofitable department in Norway was closed down in Q1 incurring nonrecurring items of NOK 2.0 million, in line with the amount announced earlier.

Statement of cash flow

2015	2014	2014
Q1	Q1	FY.

8	8	25
-16	-19	21
-8	-11	46

$-3$	-2	-12

0	0	-0
-2	-2	$-7$
0	0	$-29$
-2	$-2$	$-36$

0	0
$-13$	-15	$-1$

54	53	67

	$\bf{0}$	4

12 month rolling operating cash flow

First quarter cash flow from operations was impacted by seasonal variations. Improving rolling 12-month cash flow from operations of NOK 49 million in Q1- 2015, an increase of NOK 7 million compared to same period last year.

The process of divesting the IT hosting business in Sweden is progressing according to plan

The process of selling the IT hosting business in Sweden is progressing according to plan
High customer satisfaction and good delivery quality, but a small player in a competitive market
IT hosting is not a critical part of Itera's strategy for success in Sweden
Several bids have been received and due diligence is being carried out
A non-profitable department was closed down in Q1, with the desired effects on profitability
A non-recurring item of NOK 2 million was recognized in Q1 2015, in line with the amount announced last quarter.

BUSINESS REVIEW

Long-term profitable growth: Key enablers

50%+ of staff nearshore

Larger projects and revenue visibility

Communication AND Technology

Our multi-site strategy provides agility, scalability and access to top-notch resources

A Nordic full service provider with seamless nearshoring
Serving leading customers in fastgrowing industries
Flexibility of a hybrid model
Sourcing for value rather than volume by maximizing efficiency instead of just capacity

• A multi-site strategy

– Nearshore development centres (NDC) are located inside and outside the EU

• EU Data Protection Law compliance

– Binding corporate rules (BCR) ensure data protection for all flows of data across borders

Developing larger projects and higher revenue per customer

Revenue from top 30 customers up by 9 % in Q1
Top 10: 42 % of total revenue
Top 20: 58 % of total revenue
Top 30: 66 % of total revenue
Benefits:
Increased revenue visibility
Improved operational efficiency
Lower sales costs and overhead costs

We are approaching our target: several customers are likely to spend more than NOK 50 million per year on services from Itera. Solid order intake in Q1 of NOK 170+ million from existing and new customers

Book-to-bill ratio1) of 2.0 in Q1 2015 with several long-term hosting agreements with durations of 3-5 years

1) The book-to-bill ratio is the ratio of orders received to the amount billed for a specific period

Digitalization is a major market trend across sectors

Source: A.T Kearney Analysis

Nearshore ratio development

Nearshore ratio of 28 % in Q1, representing a temporary decline
Target is for the nearshore ratio to be in excess of 50 %
Mixed teams are increasing our price flexibility as well as providing unlimited access to resources

Nearshore ratio

% of all staff located nearshore

FTE: Full time employee

OUTLOOK

Outlook

Customer demand remains strong in all Nordic markets
Profitable growth and cash flow are key focus areas
Process to sell the IT hosting business in Sweden to be concluded
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

BACKUP

Statement of financial position

	2015	2014	Change	2014
NOK Million	31 Mar	31 Mar	%	31 Dec
Deferred tax assets	6	9	$-32%$	6
Other intangible assets	16	16	$0\%$	16
Fixed assets	25	30	$-18%$	27
Total non-current assets	47	55	$-15%$	49
Work in progress	13 ₁	7	92 %	12
Accounts receivable	61	81	$-25%$	60
Other receivables	18	19	$-8%$	17
Bank deposits	54	53	2 %	67
Total current assets	146	160	$-9\%$	156
Total assets	193	215	$-10 \%$	205
Total equity	53	87	$-39%$	54
Non-current liabilities	14	18	$-24%$	16
Accounts payable	18	23	$-23%$	27
Public duties and taxes payable	33	33	$0\%$	31
Other short-term liabilities	75	54	40 %	77
Total current liabilities	126	109	15 %	135
Total equity and liabilities	193	215	$-10 \%$	205
Equity ratio	28 %	41 %		26 %

Good financial position with equity ratio of 28 % after dividend payment of NOK 29 million in 2014

Top 20 shareholders

Holding $\sim$	Percentage $\hat{=}$	Name ≑	Citizenship $\hat{=}$
15,018,298	18.27	ARNE MJØS INVEST AS	NOR
6,101,575	7.42	STOREBRAND VEKST JPMORGAN EUROPE LTD,	NOR
5,242,206	6.38	MIDELFART INVEST AS	NOR
4.154.320	5.05	OP CAPITAL AS	NOR
3,000,000	3.65	EIKESTAD A/S C/O PARTNER REVISJON	NOR
2,711,611	3.30	VERDIPAPIRFONDET DNB	NOR
2,250,000	2.74	SEPTIM CONSTULTING A	NOR
2,240,698	2.73	BOINVESTERING AS	NOR
2,200,000	2.68	JØSYRA INVEST AS	NOR
2,031,588	2.47	MARXPIST INVEST AS	NOR
1,953,587	2.38	GAMST INVEST AS	NOR
1.920.028	2.34	STOREBRAND NORGE I JPMORGAN EUROPE LTD,	NOR
1,523,622	1.85	GIP AS	NOR
1,000,000	1.22	FRAMAR INVEST AS C/O FRANK MARTINSEN	NOR
900.000	1.10	AANESTAD PANAGRI AS	NOR
818,349	1.00	JOHS. HAUGERUDSVEI A	NOR
600.000	0.73	MORTEN JOHNSEN HOLDI MORTEN JOHNSEN	NOR
505,000	0.61	NYVANG JETMUND GUNNAR	NOR
500,000	0.61	GRØSLAND KIM-KJETIL	NOR
500.000	0.61	LIE JØRUND ARNE	NOR

AI Terminal

Itera

3639_rns_2015-04-28_ea24e5b8-7e47-4bcb-bbe4-9fee4fc3899b.pdf