Arribatec Group ASA

ARRIBATEC_GROUP_ASA - 2021 5967007LIEEXZXFK00402021-01-012021-12-315967007LIEEXZXFK00402020-01-012020-12-315967007LIEEXZXFK00402021-12-315967007LIEEXZXFK00402020-12-315967007LIEEXZXFK00402020-01-01ifrs-full:IssuedCapitalMember5967007LIEEXZXFK00402020-01-01ifrs-full:TreasurySharesMember5967007LIEEXZXFK00402020-01-01ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFK00402020-01-01ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXFK00402020-01-01arribatec_group_asa:OtherEquityMember5967007LIEEXZXFK00402020-01-015967007LIEEXZXFK00402020-01-012020-12-31arribatec_group_asa:OtherEquityMember5967007LIEEXZXFK00402020-01-012020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXFK00402020-01-012020-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFK00402020-01-012020-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXFK00402020-01-012020-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFK00402020-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFK00402020-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXFK00402020-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFK00402020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXFK00402020-12-31arribatec_group_asa:OtherEquityMember5967007LIEEXZXFK00402021-01-01ifrs-full:IssuedCapitalMember5967007LIEEXZXFK00402021-01-01ifrs-full:TreasurySharesMember5967007LIEEXZXFK00402021-01-01ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFK00402021-01-01ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXFK00402021-01-01arribatec_group_asa:OtherEquityMember5967007LIEEXZXFK00402021-01-015967007LIEEXZXFK00402021-01-012021-12-31arribatec_group_asa:OtherEquityMember5967007LIEEXZXFK00402021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXFK00402021-01-012021-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFK00402021-01-012021-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXFK00402021-01-012021-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFK00402021-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFK00402021-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXFK00402021-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFK00402021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXFK00402021-12-31arribatec_group_asa:OtherEquityMemberiso4217:NOKiso4217:NOKxbrli:shares Contents / Arribatec 2021 / Operation, sales & outlook / Financials Arr batec Annual report 2021 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Arribatec at a glance 3 7 Highlights of the year Leter from the CEO 8 Our Values, Vision and Mission Business Area insight 10 11 Our people 13 14 Code of conduct Environmental, Social and Governance (ESG) The Board of Directors 16 19 20 25 26 29 30 36 63 64 68 74 77 Report of the Board of Directors Responsibility statement π Contents ¶ Shareholder information Subsequent events Consolidated Financial Statements Notes to the Consolidated Financial Statements Terms and abbreviations and APMs Parent Company’s Financial Statements Notes to the Parent Company’s Financial Statements Auditor’s Statement Statement of Corporate Governance Annual report 2021 . 2 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Arribatec at a glance ¶ Since the establishment in 2015, Arribatec has experienced an incredible growth and a transformation in the IT consultancy business worldwide. Arribatec is a global provider of integrated digital business solutions supporting customers in gaining competitive advantage through innovative use of IT. The Company’s core competence is focused around ERP, Cloud Solutions, Technology Infrastructure, Enterprise Architecture and consulting services. As of December 2021 Arribatec has nearly 400 dedicated and skilled employees spread over 25 ofﬁces worldwide. We serve more than 900 private and public businesses in over 25 countries. Through the combination of self-developed software, partnerships and consultants, Arribatec provides services to help businesses reach their potential. Annual report 2021 . 3 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Key consolidated ꢀgures and ratios Full year 2021 Full year 2020 Revenue TNOK TNOK TNOK TNOK TNOK TNOK 413 938 321 079 (6 800) (1 601) 154 024 136 415 Gross proꢀt EBITDA (45 259) 14 877 Adjusted EBITDA Operating proꢀt/(loss), EBIT Net proꢀt/(loss) (49 770) (48 858) (52 499) (55 620) Revenue growth y/y for the quarter/full year Gross proꢀt margin % 168.7 % 77.6 % (1.6%) 35.5 % 88.6 % (29.4%) 9.7% % EBITDA margin % Adjusted EBITDA margin Earnings per share % (0.4%) (99.86) NOK (0.18) Cash at end of period TNOK TNOK % 43 758 316 506 57.3 % 1.180 188 270 316 214 76.9 % 2.040 171 Equity Equity ratio Price per share at end of reporting period FTEs NOK Number 374 No. of outstanding shares, beg. of period New shares issued Number Number Number Number 418 583 331 166 319 733 584 903 064 489 277 730 16 077 403 402 505 928 418 583 331 305 239 615 No. of outstanding shares, end of period Average number of shares Annual report 2021 . 4 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Timeline ¶ 2015 2016 2017 2018 2019 2020 2021 ¶ Founded ¶ Expansion to Sweden ¶ New HQ in Oslo ¶ Expansion to Poland, Belgium, Italy and USA ¶ Partnership Xledger ¶ Partnership New Global Partner • Acquisition IB Marine • Acquisition Qualisoft • Acquisition Maksit • Acquisition Integra ¶ Expansion to Denmark ¶ Expansion to Spain ¶ Nominated to Deloite Norway Technology Fast 50 agreement with Unit4 ¶ Partnership Qlik ¶ Partnership Hypergene ¶ Acquisition S4G Consulting Spanish consulting company ¶ Partnership Rambase ¶ Partnership Unit4 in DACHs region ¶ Acquisition Levo 2 Norwegian software company ¶ Reverse takeover of Hiddn Solutions ASA • Establishing a foundation for further growth by building common systems for operational excellence ¶ Acquisition Facil • Acquisition Innit ¶ Acquisition Instidata Norwegian software company • Acquisition Microsky Annual report 2021 . 5 Contents / Arribatec 2021 / Operation, sales & outlook / Financials 25 400+ 900+ Ofﬁces at year end Employees at year end Customers at year end Annual report 2021 . 6 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Highlights of the year ¶ π The quarter of becoming one ¶ Common systems π The quarter of expansion ¶ Acquiring three market leading companies During 2021 we focused on building a common ERP system to ensure operational growth. By the end of 2021, 70% of our employees was onboarded, making it possible for us to get a beter overview of our workforce and operations. We ﬁnished of the year with launching a common management system. The Arribatec Management System (AMS) will include an overview of our group strategy, processes that describe the way we work together, compliance overviews, and clearly deﬁned management responsibilities. Our management system is a living system that will grow and improve over time concurrently with the growth of Arribatec. In the ﬁrst quarter of 2021 we ﬁnalized the acquisition of three market leading companies; Qualisoft, IB Marine and Maksit. Maksit strengthened our position in the ERP market with valuable competence and unique support experience. Qualisoft, a leader in Enterprise Architecture and Business Process Management solutions, broadened our product portfolio and service offering. The acquisition of IB Marine, a leading provider of cloudbased Enterprise Asset Management solutions within the maritime sector gave us unique access to the maritime industry, bringing 38 years of experience and a world-leading position in the design and implementation of advanced software for ship management into Arribatec. Acquiring Integra Our extended solutions and customer base derived from these acquisitions, combined with organic growth and activities, have proven to fuel our growth signiﬁcantly. The acquisition of Integra was completed in the middle of October, bringing 25 years of valuable expertise and experience directly to the heart of Arribatec, and making us the world’s largest provider of Unit 4 ERP services and solutions. With access to Integra’s highly competent consultants and complementary solutions we unleashed great potential. Q4 Q1 Q3 Q2 π The quarter of identity ¶ π The quarter of talent ¶ Unveiling our new brand and identity Digitalization of the onboarding process In September 2021 we unveiled our new brand and identity, a crucial step towards becoming one. Not only will this help with strengthening our new strategy and path, but it will bring all of us closer together as we continue our journey. In the second quarter of 2021 we took a step towards digitizing the onboarding process of new employees. As we are continously and rapidly growing, a common way to onboard helps us ensure that all new employees experiences a thourough and exciting introduction to our company. A new strategy, mission, vision and values As part of the journey of becoming One, the global management team developed common Values, Mission and Vision which was rolled out to the whole organization. Implementation of common & global HR platforms In Q2 we started the implementation of two new HR systems; a recruitment platform helping us to hire top talent both globally and across all business areas, and an employee experience platform, which helps us measure and optimize employee experience. Both of these systems were rolled out successfully and gives us valuable overviews. Common CRM system To join forces, strengthen our offerings and increase the potential of crossales, we implemented a common CRM system across all Business Areas. The CRM system was launched Q3 2021. Annual report 2021 . 7 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Leter from the CEO ¶ 2021 will be remembered as the year when Arribatec became One. Since the last quarter of 2020 Arribatec has grown signiﬁcantly; we have increased our workforce by more than 300 employees, doubled our number of ofﬁces, broadened our service- and product portfolio, and grown our customer base. All done while consecutive waves of the pandemic has affected businesses globally. Throughout the year we have focused on delivering on our priorities and have established a solid foundation to deliver on our new strategy moving forward. Becoming one In 2021 we maintained the growth and M&A trajectory from 2020, and acquired Maksit, Qualisoft and IB Marine. Thus, with the acquisitions of Microsky, Innit and Fácil in late 2020, we had acquired six companies in the timespan of six months. Our last acquisition, Integra, was completed in the fourth quarter of 2021, and jointly made us the largest provider of Unit4 services worldwide. Needless to say, the work during 2021 has centered around integrating the new acquisitions, building out operational capabilities, a common company culture, and establishing a common strategy. As a crucial step on our journey to become one, we involved our marketing and branding resources to renew and revive a common brand and identity, which we could all call our own. The new look was unveiled in September 2021, together with our new mission; to deliver One Solution, empowering our customers by turning technology into an enabler for growth. Annual report 2021 . 8 Contents / Arribatec 2021 / Operation, sales & outlook / Financials During the same period we gathered all Business Area management teams to contribute with input to our new shared strategy, vision, mission and values, and to discuss how our company culture needs to evolve to enable success. After an unanimous agreement, and full commitment from everyone involved, the ﬁnal proposal got approved by the Board of Directors and implemented throughout the organization, met with enthusiasm and commitment from our colleagues. Simplifying complexity We embrace the abundance of new competence and opportunities we have obtained through our recent growth and acquisitions and are amazed of how many skilled and commited colleagues we can embrace ourselves with on a daily basis. With a wide variety of backgrounds and expertise we work together on our mission is to provide simplicity for our customers. We are on an exciting journey, and I strongly believe this year’s accomplishments and the hard work we put into 2021 has laid the foundation for a truly successful future, and we step into 2022 with even greater ambitions. Empowering those around us The acquisitions made since the introduction of Arribatec Group on Euronext, the Oslo stock exchange, led us to reorganize our activities into ﬁve separate business areas (BAs); Business Services, Enterprise Architecture - Business Process Management, Cloud services as well Marine and Hospitality. I would like to extend a big thank you to our valued customers, our commited partners, our shareholders, and of course our highly skilled employees. Your trust and conﬁdence in Arribatec Group helped us build a remarkable company with a great potential for creating value for all stakeholders. Throughout the year we focused both time and resources on developing common processes, systems, tools and procedures across the ﬁve BAs, to enable future growth, efﬁciency and proﬁtability. As a part of these integration efforts we, in the fourth quarter, launched a shared management system delivered by our business area EA-BPM. Additionally, we also integrated 70% of our employees into a common ERP system, and gathered our customer base in a joint CRM system. Geir Johansen CEO Arribatec, including all the acquired companies, continue to work within their ﬁelds of expertise, and will continue to do so as ﬁve business areas with clear mandates and responsibilities to achieve Arribatec Group’s strategic goals. None of these activities would have been possible without the commitment and hard work of our employees. It is imperative for us to continuously work on building an inclusive and engaging culture and working environment where we can maintain and grow our amazing pool of talent. Annual report 2021 . 9 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Our values, vision and mission ¶ As a step of becoming ONE we π Values ¶ We agreed on the following values: π Vision ¶ established common values, vision and mission. Thanks to a large group involved we managed to get an unanimous Our vision should unite and inspire us, and guide us in the direction of where we want to be and how we want to be recognized. Furthermore, we wanted a vision that was easy to remember, understand and incorporate in all business areas and for all products. Based on this we landed on the following vision: Simplify complexity. Responsibility: We take responsibility Our willingness to take responsibility sets us apart. As a group we are authentic, reliable and loyal. We keep our word and own the decisions and actions we take. This is because we understand that we are accountable for our shared impact and results. agreement, and full commitment from everyone involved. The ﬁnal proposal got approved by the Board of Director and implemented throughout the organization. π Mission ¶ To describe how we achieve our vision we deﬁned our mission as follows: Integrity: We act with integrity Integrity is part of our group DNA. We treat our customers, colleagues and partners with respect, professionality and good intentions, as we believe that this fosters trust and long-lasting relationships. We stay true to our group and our shared values even when nobody is watching, as we believe it is the right thing to do. Our mission is to provide simplicity. We deliver One Solution, empowering organizations by turning technology into an enabler for growth. One Solution is delivered as a fully supported and managed service on a sustainable platform – connecting people, processes and systems. We take ownership of the complete service and system landscape, delivering a solution that is tailored and cloud ready. Service-minded: We are service-minded We understand that we are only as successful as our external and internal customers. Hence, we listen, work hard to understand the customers’ needs and strive to deliver above their expectations. Our new set of values, vision and mission has been thoroughly communicated and implemented across the Group and are being met with enthusiasm and commitment. Empower: We empower those around us We have the motivation and conﬁdence to empower those around us. We do so by showing interest, actively sharing our knowledge and giving our customers, colleagues and partners the opportunity to develop and grow. By doing so we lift each other up. The values are recognized as the RISE culture in Arribatec. Annual report 2021 . 10 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Business Area insight ¶ ERP offering with value added services/products and effectively delivering these as a single/uniﬁed solution (One Solution) to our customers. We expect signiﬁcant growth both in the energy sector, health care and public sector in the coming years. Business Services (BizS) Arribatec Business services provides simplicity by implementing, customize, maintain and support the entire business land- scape with ERP as the core engine. We integrate it with other market-leading systems that provide beter operational support and insight than a single ERP system does. Cloud (Cloud) Enterprise Architecture & Business Process Management (EA-BPM) Arribatec Cloud provides consulting, outsourcing and cloud services to private and public enterprises. In addition she offers marked leading cloud services from Microsoft and Google, Arribatec Cloud also operates its own public cloud offering based on Norwegian datacenters to accommodate special use cases for our customers. Arribatec ea&bpm delivers solutions and long-term services within the spaces of business process management, enterprise architecture and corporate governance to major Norwegian and Nordic customers both in the private and public sector. Within Business Services we have been seeing a steady, sustainable growth over the last year, both in the Nordics and the rest of world. In terms of geographical expansion, we have now established our subsidiaries in France, where we have won several deals in close collaboration with our main ERP software partner Unit4, and signiﬁcantly increased our presence in the UK as well as globally within Higher Education, one of our key verticals, with the acquisition of Integra. The organization consists of 50 highly motivated employees. Arribatec Cloud are located in Hamar, Oslo, Gjøvik, Lillehammer and Bergen. Arribatec ea&bpm has seen substantial organic growth through the entire year, with multiple highly skilled staff joining thru the year. We have at the same time managed to maintain high booking on all our resources and to continuously build and maintain a healthy pipeline of new projects. Arribatec Cloud delivers cloud services in a holistic content, with consulting, licensing, security, implementation, operation and support. We are well known for our good user support with documented 95% satisﬁed customers at case level. We have also increased our delivery capacity and further optimized the use of our existing resources across the different regions, by centralizing resource planning/allocation and investing in short and targeted internal training programs, which have both further increased chargeable utilization as well as the overall quality of the delivery. During the last year we have moved into production Quali- Ware-based business process management systems for two major energy companies, with both returning excellent reviews. Information Security and vulnerability management has become the second largest consulting category, following cloud consulting. By using bleeding edge and market leading tools, Arribatec Cloud now offers the industry’s most comprehensive vulnerability coverage with the ability to predict which security issues to remediate ﬁrst. In the public sector we have implemented and are further developing several successful corporate governance and business management solutions. The main trends we have seen are a further increased demand for multi-tenant Cloud solutions as well as a single point of contact, i.e., one vendor taking responsibility for the complete end-to-end solution. Both these trends play well into the hands of our overall strategy of complementing our core Growth opportunities are seen in Norway as well as abroad, and we will increase our efforts to sell and deliver on services across the Arribatec group. Annual report 2021 . 11 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Going forward, we envisage that the increase of cloud and consulting services will continue and we have developed standard products and services to meet the needs. These services have been well received by our customers, helping them make informed decisions about their ongoing and dynamic cloud journey. Marine (Marine) Arribatec Marine is the Business Area of Arribatec Group focused on the Maritime sector. Arribatec Marine competencies are the development, implementation and consultancy of the owned asset management system solutions: Infoship. Arribatec Marine history goes back to early age of Information Technology in the Maritime sector. GDPR services is also an area that is still in demand and we have increased investment in this area and new resources have been added. Customers of Arribatec Marine are cruise companies, ferry and passenger companies, and global merchant ship companies in EU and Americas. Within DevOps, there is also great demand, where we focus on security, compliance, deployment and reporting, all while helping our customers meet their goal for rapid development, secure and stable IT-operations with a predictable cost perspective. Infoship supports ship owners and ship managers in reaching a higher control of their vessels performances through functions designed to cope with their speciﬁc business needs, in relation to technical, maintenance, quality and energy management of the ﬂeets. Hospitality (Hspt) We lead the way to the future of Hospitality! Arribatec Hospitality delivers a various of different solutions within self-check-in, check-out, housekeeping management and conference systems within the hospitality industry. It’s been a highly productive year with new integrations that open new markets both nationally and internationally. These integrations, and the high momentum in the team, made it possible to deliver internationally already at the end of 2021. Throughout the year, we made a very important partnership with Best Western Rewards. This will strengthen our position towards Best Western hotels across the globe. BA Hospitality has strengthened the team with new employees throughout 2021 and will continue the growth in 2022. Annual report 2021 . 12 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Our people ¶ Our people are without doubt Arribatec's most important asset. Our employees are dedicated, curious, highly qualiꢀed and concerned with good delivery in all contexts. 2021 has been a turbulent year in the midst of the pandemic and integrating four new businesses into Arribatec, but our employees have held their heads high in times of change and uncertainty, and kept on delivering on their targets. Due to our skilled employees, we have managed to link all acquired companies without daily operations being signiꢀcantly affected. Our employees consist of roughly 400 highly qualiꢀed developers and business consultants with diverse backgrounds; some come straight from school, others have years of experience within their ꢀeld. We embrace diversity in terms of age, gender, nationality and experience within our workforce, as we believe diverse teams has the best means to uncover opportunities and ensure customer success. This makes us brave in times of change and our employees thrive despite turbulent times. Annual report 2021 . 13 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Code of Conduct ¶ Basic Human Rights –fairness and safe work environment Protection of Personal Data Arribatec respects and secures the employee's privacy and personal information at all time. The company will abide by the Personal Data Protection described in the GDPR regulations. Arribatec ensures that a Data Protection Agreement with customers, partners or other relevant parties is entered when applicable. Reference is made to the GDPR guidelines for the company. GDPR regulations applies to countries within EU, and other countries adhering to EU regulations. Arribatec ensures that employees perform as well as the company's business conduct are being performed in a way that secures the human rights as described in UN's universal "Declaration of Human Rights". One of the main topics in the declaration describes the right to express one's own convictions, opinions and concerns in good faith and without retaliation. Employee's rights and duties Conict of interest Arribatec ensures that all employees have work and employment relations that comply with the current laws and regulations. Employees shall receive an Employment Agreement ahead of his/her start of the employment. In most countries in which Arribatec is operating, the Employment Agreement shall re-ect a description of his/her' s role and responsibilities, work location, working hours, vacation and compensation elements. Employees shall adhere to his/her Employment Agreement. Employment Agreements include reference to the employing Company's policies as well as the respective country's laws and regulations covering working conditions. Employees have the right to be a member of a union as applicable to the country of employment. Employees within Arribatec shall not seek personal interests affecting customer's -or partner's decisions and/or actions and resulting in nancial gain or obtaining other services for the employee representing a con-ict of interest. Further description of behavior to avoid con-ict of interest is described per country, if applicable. Gifts and representation Employees in Arribatec will not offer nor receive any gifts, services, or representation. Gift of symbolic value can be given and/or received from business associates when appropriate. Health, Environment and Safety Competition Arribatec ensures that the company represents a safe workplace, a good working environment as well as do the up most to secure the health and security of the employees. The employees shall contribute to the co-worker's rights at the workplace, as well as a fair treatment by the peers. Any unacceptable event or incident will be analyzed by the company, with the aim to resolve the situation within a reasonable period. Employees in Arribatec will conduct activities in the commercial area in an ethical and a professional way. This behavior also applies in situations where the company experience competition. Employees shall aim to avoid contact with entities understood to operate in an unethical way. Adherence to laws and regulations regarding competition is part of the Code of Conduct within Arribatec. Annual report 2021 . 14 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Handling of information Employees in Arribatec have the duty to secure conꢀdentiality of all types of information about Arribatec 's commercial strategies, business plans- and activities. The same conꢀdentiality applies to handling of customers'- and partner's conꢀdential information when knowledge of such information is provided to an employee of Arribatec. Notiꢀcation of unacceptable situations and/or behavior Arribatec ensures that employees do not experience harassment and/or discrimination. Each and every employee shall show respect and integrity in all interactions in the workplace. Employees within Arribatec have the right to provide information about unacceptable situations/behavior to a representative of choice within the company. Annual report 2021 . 15 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Environmental, Social and Governance ¶ Arribatec recognizes that the environmental, social and governance (ESG) development is an important part of how we create value for our stakeholders. For 2021 the ESG-development has primarily been driven by each Business Area with direction and additional initiatives from the Group. Our employees have stated its engagement for ESG in our internal surveys which emphasizes the importance of embedding ESG in how we operate. Authorities Partners Owners Society Customers Arribatec Our overall ESG ambition is to integrate ESG in all our business decisions, and to take our responsibility to meet UN’s Sustainability Goals. In the following three chapters we will elaborate on what we did in 2021 to meet our stakeholder expectations in the maters of Environment, Social and Governance (ESG). Data storing • We have internal guidelines and routines for reducing the amount of stored data • Our datacenters have green electricity certiﬁcates Interest groups Employees Hardware and equipment • • We reuse equipment where possible We use Greentech for equipment disposals (for equipment that cannot be reused internally) We choose suppliers that are ISO14001 certiﬁed or similar Environment Our biggest impact on the environment is in the process with our customers. Arribatec’s business consists of sale and delivery of software, technology, services and solutions to a wide range of industries. We are in a position where we can impact our customers to make beter decisions and to operate more environmental friendly. This applies in particular in industries like Oil and Gas, Shipping, Health and Public where most of our revenue comes from. Being a part of the IT-industry means that we have a high use of energy. At the core of our vision “simplify complexity” lays the importance of delivering effective and sustainable software and services. • Media Suppliers Travel • We encourage our employees to use public transport or to walk/bike to the ofﬁce and to our customers We encourage to use video-meetings as a replacement for physical meetings whenever possible • Ofﬁce buildings • • We choose ofﬁce locations close to public transport We choose ofﬁce buildings that are environmental friendly e.g. our headquarter Økern Portal, Oslo We have listed the main internal areas of where we are in the position to affect our environmental impact: Solutions • We build sustainable products that enables our customers to improve their ESG compliance Annual report 2021 . 16 Contents / Arribatec 2021 / Operation, sales & outlook / Financials We run weekly surveys to ensure we deliver on what our employees ﬁnd most important; job satisfaction, personal development and meaningfulness. Most of the employees competence development comes from on the job training. In addition to on the job training we invest in internal and external courses and certiﬁcations, regular lunch-and-learn meetings, in-house library of professional literature and time earmarked for training for each employee. Our chargeability target for each employee also reﬂects the allowance of using time to build and share competence. Our competence is shared internally, but also with our clients and the society through conferences, external courses, lectures at Social We believe that a diverse work environment with a mix in age and gender creates the best possible environment to succeed. Being a part of the IT-industry we see few female developers and few women in leading positions. We have the opportunity to change this and to contribute to increased equality and diversity in our global organization. The charts below presents our data when it comes to gender and age balance. 22.5% of the leading position in Group and in each BA are held by women. universities etc. The internal weekly survey includes a range of topics presented in the charts below: Age distribution Gender balance Personal Development Percent Score out of 10 Age 30% 60 M F 40 20 70% 7,4 Job satisfaction Meaningfulness Score out of 10 Score out of 10 0% 5% 10% 15% 20% 7,1 7,3 Annual report 2021 . 17 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Arribatec can indirectly inﬂuence the development of a sustainable society through Corporate Social Responsibility. information security and GDPR as well as all other external regulations we are obligated to be in compliance with. 3. Set our Group ESG Goals and ambition • The ESG goals and ambition shall deﬁne and guide us in who we want to be and where we want to go in terms of ESG In Arribatec we aim to hire people who have dropped out of working life and need a helping hand to return. In these cases we work closely with the Norwegian Labour and Welfare Administration. All our ofﬁces are compliant to the regulations about accessibility for all which means we can hire disabled persons when we have opportunity. ESG in 2022 • Involve the employees in seting the goals and targets, and which of the UN’s Sustainability Goals we should focus on The ESG work in Arribatec in 2021 has been about identifying what we do today, and building the necessary structure that will found the basis for how we will work with ESG in the years ahead. Our ESG process for 2022 includes the following: 4. Set action plans and measure performance • Establish a ESG program and set necessary actions. Deﬁne what success looks like and measure performance throughout the program. Align ESG program with business strategy 1. Build ESG competence across the Group and identify opportunities In 2021 we did the following activities for the society: • To decide our ESG goals and ambition we need to fully understand the ESG topics and identify the opportunities that are most likely to affect our business performance as well as our stakeholders • • Donated to Bidra AS – activity park for kids Donated to Stavanger Dykkerklubb – cleaning up the ocean 5. Report ESG and evaluate • • • Donated to Barnekreftforeningen – Child Cancer Association Raised funds for a local hospice, Cancer Research, and Children’s cancer with a sponsored walk, swim, and scooter ride Report on ESG performance to stakeholders and evaluate program 2. Assess current state • We need to assess the current state/baseline to understand the maturity and where to start • • Donated to Meningitis research foundation Sponsored our customer, Guide Dogs for the Blind’s annual awards evening • Raised funds for our customers Woodland Trust, British Red Cross and local charity Sands FC at an Integra Unit4 ERP user group event • • Sponsored a young sports hopeful to atend an Ice Hockey tournament with the England under 16’s team Sponsored local talents through På lag med fremtiden Governance We sell and deliver governance. Governance is in our DNA. Many of our systems and our key expertise are related to governance. Naturally we use the expertise and the system we sell internally. We have a management system that guides us in the right direction and ensures that we know who does what, when and how. Commitment and compliance to our management system is a requirement. All employees provide feedback through the system when they see room for improvement. The Arribatec management system also works as our information security management system, and is key to ensure governance across the Group when it comes to Annual report 2021 . 18 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Board of Directors ¶ Martin Nes Chairman Øystein Stray Spetalen Board member Yvonne Litsheim Sandvold Board member Henrik Lie-Nielsen Board member Kristin Hellebust Board member Martin Nes has been CEO in TIH AS since 2010. He holds a law degree from the University of Oslo, and also holds a Master of Laws degree from University of Southampton, England. Prior to joining Ferncliff, he spent several years with the Norwegian law ﬁrm Wikborg Rein, working in both the Oslo and London ofﬁces, and with the shipping law ﬁrm Evensen & Co. Mr Nes has extensive corporate experience and is/has been chairman and/or a member of the boards of several listed companies, including SD Øystein Stray Spetalen is Chairman and owner of Henrik Lie-Nielsen is an Kristin Hellebust is the CCO in Xplora Technologies AS and has previously served several years as CEO of Nordisk Film Shortout AS and as CEO of Storm Studios AS and as lawyer at Advokatﬁrmaet Selmer DA. Ms. Hellebust currently serves on the board of several listed companies. She holds a Master of Laws degree from University of Oslo, an Executive Master of Management program in Financial Strategy from BI Norwegian School of Management, and an Executive MBA from the Norwegian School of Economics. Yvonne Litsheim Sandvold is the founder and CEO of YLS Næringseiendom and the marketing manager of Frognerbygg AS. She has extensive experience from the Norwegian real estate industry. Ms. Sandvold currently serves on the Board of several public and private companies. Ms. Sandvold holds a cand. Psychol. degree from the University of Oslo. Ms Sandvold is a Norwegian citizen, and resides in Norway. experienced entrepreneur, private investor, leader, advisor and serves on the board of several companies in Norway and Sweden. He has founded several tech and tech enabled companies in Norway, and has spent most of his career in the intersection between business development and technology in ﬁnancial services. Mr. Lie- Nielsen has studied at Stanford University Graduate School of Business Executive Education and Harvard Business School Executive Education. investment ﬁrm Ferncliff II TIH AS. He is an independent investor. He has worked in the Kistefos Group as an invest- ment manager, as corporate advisor in different investment banks and as a portfolio manager in Gjensidige Forsikring. Mr. Spetalen is a chartered petroleum’s engineer from NTNU. Mr. Spetalen is a Norwegian citizen and resides in Norway. Øystein Stray Spetalen has served the Board in Arribatec Group ASA since February 2020. Yvonne Litsheim Sandvold has served the Board in Arribatec Group ASA since February 2020. Standard Drilling Plc, Aqualis ASA, Nickel Mountain Group AB, Saga Pure ASA, NEL ASA and Weifa ASA. He is a Norwegian citizen, and resides in Norway. Henrik Lie-Nielsen has served the Board in Arribatec Group ASA since October 2020. He is a member of the Audit Kristin Hellebust has served the Board in Arribatec Group ASA since October 2020. She is a member of the Audit Commitee of Arribatec. Commitee of Arribatec. Martin Nes has served the Board in Arribatec Group ASA since February 2020. He is also the chairman of the Audit Comitee of Arribatec. Annual report 2021 . 19 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Report of the Board of Directors ¶ Strategy As a step of becoming One, Arribatec unveiled a new strategy, values, vision and mission in September 2021. The new strategy centers around, growth, talent, customers and innovation with articulated goals within each of these four pillars; Growth - secure protable and sustainable growth in order to create value for our shareholders. Talent - We will hold on to and grow our pool of talent. In 2022 we will focus on empowering our employees to continuously develop themselves. Customer engagement – We will focus on maintaining and developing customer relationships to ensure success, customer engagement, satisfaction and long-term relationships. Innovation and development – continue to bring new and innovative products and solutions to the market place, and increase our focus on sustainability, efciency and performance. male-dominated industry, and we can see a clear improvement in our own workforce since 2020, where Arribatec successfully has increased the percentage of female employees with 9.5% (from 20.5% to 30%). SolaaS Through a combination of internally developed software, strong partnerships, and talented people, Arribatec offers a complete solution to its customers comprising relevant services to turn software into solutions. Solution as a Service is a new approach to cloud computing that delivers all aspects of an IT solution implemented, integrated, and offered as a service. Our business model adds value to software through extensive services and complementary solutions. By delivering this as a service, we aim to deliver a future proof platform of business applications in a unique and scalable way. The way Arribatec deploys and delivers the solutions, creates the platform for our recurring revenue and potential margin expansion over time. During 2021 Arribatec continued the ongoing work to streamline the internal work processes and enhance production systems to increase efciency and reduce unit cost over time. Additionally, the global sales organization worked on adjusting the sales process to ensure Arribatec takes full advantage of all cross-selling opportunities that now are apparent between all acquired companies and the existing Arribatec organization. Working Environment and HSE Managers are encouraged to discuss ethics, ethical dilemmas, information security, nancial crime and HSE in departmental meetings. We monitor whether this is implemented and implement further measures when necessary. Arribatec's sick leave rate among employees has been at a stable low level for many years. Sick leave among employees was 3.2% in Norway and 0.9% in other countries in 2021, or 7 400 hours. Operation We embrace diversity in terms of age, gender, nationality and experience within our workforce, as we believe diverse teams has the best means to uncover opportunities and ensure customer success. We continuously work towards closing the gender-gap in a rather Annual report 2021 . 20 Contents / Arribatec 2021 / Operation, sales & outlook / Financials We use a continuous survey tool to check the temperature of the work environment. This shows that employees thrive quite well in home ofﬁces but that they feel beter when they get to work hybrid. Some days at home ofﬁce and some days in the ofﬁce. Arribatec will offer a hybrid work situation for all employees in the future. This was something we experienced during the pandemic and which has given us useful information for the time ahead. The ﬁve acquisitions in 2021 contributed with NOK 145 million in revenue in 2021. Gross proﬁt was NOK 321 million for the full-year 2021 (NOK 136.4 million) The increase mainly relates to the full annual effect in 2021 from the Cloud acquisitions made in Q4 2020 as well as from the acquisitions in 2021 and relates to goods purchased for resale. Personnel costs were up NOK 173.5 million from NOK 99.1 million in 2020 to NOK 272.7 million in 2021, mainly related to the full year effect of the three acquisitions in 2020 and the four acquisitions in 2021. Number of full-time employees increased from 171 as per 31.12.2020 to 374 as per 31.12.2021. The average number of FTEs was 273 in 2021 compared to 131 in 2020. Covid Fortunately Covid-19 has had litle impact on Arribatec’s operations and performance, but our global workforce has been greatly affected in their day-to-day lives. Even though we are geting used to the new normal, one of our main concerns since the pandemic hit us in March 2020 has been to ensure employee safety and well-being. Other operating costs were NOK 55.2 million (NOK 25.7 million). Restructuring decisions were made in 2021 of NOK 3.4 million relating changes in management functions that has been accrued for in 2021. Being a global software company meant we already had the digital solutions required to continue our operations, but working remotely has highlighted the shared need of adequate workspace and common arenas, as well as the need for social interaction with our colleagues. To meet these needs Arribatec hosted online social events throughout 2021, and facilitated home ofﬁces by assisting with equipment. The common digital workplace we implemented in 2020 is being used frequently to beter integrate and welcome our new colleagues from our various acquisitions, to share company news and to keep our employees connected. EBITDA was negative NOK 6.8 million compared to 11.6 million in 2020. (NOK 45.3 million). Depreciation and amortizations amounted to NOK 43 million (NOK 7.2 million) and included an impairment of NOK 3.4 million relating to own software developed. The net ﬁnancial result amounted to negative NOK 3.9 million (negative NOK 1.7 million). The net loss for 2021 was NOK 48.9 million compared to a net loss of NOK 55.6 million in 2020. We use a continuous survey tool to measure and optimize employee experience. The feedback we have collected throughout 2021 shows that our employees thrive working from home, but that they feel beter when they have the option to work from an ofﬁce and physically meet their colleagues. Based on this information we have decided to offer a hybrid work situation for all employees going forward. Financial position In 2021 Arribatec issued 166.3 million new shares, of which 21.5 million relates to the share consideration from the setlement of the acquisition in 2020 and 20 million shares relating to acquisitions in 2021, whiles 124.8 million shares related to the merger and reverse take-over with Arribatec AS from 2020. Even though several of our employees were infected with Covid-19 during 2021, no one has reported to be hospitalized due to the pandemic, and most were able to return to work from their home ofﬁce after a few days. We have experienced some higher sickness absence due to sick children due to Covid-19. To ensure we do our part to decrease the physical and psychological impact of the pandemic for our employees we have had a clear strategy throughout 2020 and 2021 to take necessary actions to avoid redundancies and downsizing, and to ensure ensure employee safety and well-being. As at 31 December 2021 total assets were NOK 552 million, compared to 411 million as at 31 December 2020. Intangible assets accounted for NOK 316.4 million (NOK 125.3 million). The intangible assets mainly consist of goodwill, customer relations and technical software through business combinations. During 2021, the Company has completed certain trans- actions including the acquisition of Maksit AS and Qualisoft AS Norway, Gruppo IB Srl. Italy and Integra Associated Ltd. UK, ref Note 18. The total combined price was NOK 178.9 million including an earn-out element (Integra) of NOK 16.8 million to be setled in 2023, as partly share- and cash consideration. Financial Review Proﬁt and Loss Full-year revenue amounted to NOK 414 million for 2021, compared to NOK 154 million in 2020. In 2021, recurring revenue amounted to NOK 146 million, while consulting revenue ended at 248 million and other revenue at NOK 20 million. Divided by region, Norway stands for NOK 274 million, Europe NOK 111 million and NOK 29 million from Americas. The relative size within the regions is stable from 2020 to 2021. Annual report 2021 . 21 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Other non-current assets were NOK 58.2 million (NOK 27.4 million) including right to use assets according to IFRS 16 of NOK 30.3 million (NOK 20.8 million), deferred tax assets of NOK 9.5 million (NOK 2.4 million) and tangible assets of NOK 7.4 million (NOK 3.3 million). Current assets amounted to NOK 177.8 million (NOK 258.5 million), including Account receivables of NOK 88.7 million (NOK 33 million), contract assets of NOK 19.5 million (NOK 9.9 million) and cash and cash equivalents of NOK 43.8 million (188.3 million). Risk proﬁle Arribatec’s regular business activities entail exposure to various types of risk. The company manages such risks proactively, and the board of directors regularly analyses its operations and potential risk factors and takes steps to reduce risk exposure. Arribatec’s results of operations could be negatively affected if the Group cannot adapt, expand or develop its services in response to changes in technology or customer demand. The market for the services offered by the Group is characterized by rapid technological changes, frequent new product introductions, technology enhancements, increasingly sophisticated customer requirements and evolving industry standards. The Group’s future success depends on its ability to continue to provide high quality consulting services and to develop, market and implement services and solutions that are atractive, timely and cost-efﬁcient for its existing and new customers. If the Group fails to keep up with technological changes or to convince customers of the value of its services, intellectual assets and solutions in light of new technologies or new offerings by competitors, the Group’s business, results of operations, ﬁnancial condition, cash ﬂow and/or prospects could be materially and adversely affected. Total interest-bearing debt stood at NOK 37.4 million at the end of 2021 (NOK 8.4 million). The increase mainly arose from acquisitions. Deferred tax liabilities at the end of 2021 were NOK 17.1 million, whereof NOK 15.6 million stems from acquisitions during 2021. At the end of the year 2021 total current liabilities were NOK 148.5 million (NOK 78.1 million). The increase from last year mainly relates to contract liabilities (deferred revenue) of NOK 21.5 million (NOK 1.3 million) and other current liabilities of NOK 82.3 million (35 million), whereof NOK 16.8 million relates to provision of an earnout element in the acquisition agreement of Integra associated Ltd. Furthermore, a remaining part of the initial purchase price of NOK 5.1 million will be setled toward the Integra sellers in 2022, consisting of cash- and share considerations. Arribatec’s activities involve various types of ﬁnancial risks like credit risk, liquidity risk, currency risk and interest risks. The primary focus of the Group’s capital structure is to ensure sufﬁcient free cash to meet its obligations on an ongoing basis and at the same time enable the Group to make strategic actions to grow. The credit relates to the risk that counterparty is unable to setle their obligations under a ﬁnancial contract or customer contract, leading to a ﬁnancial loss. As part of the Group’s earning model, certain of its customers pays for software and services under a Solution as a Service (SolaaS) arrange- ment, meaning that the customer is paying a monthly recurring sum for, inter alia, the software and services already provided or to be provided by the Group. As such, these customers’ monthly recurring payment obligations also includes payment for licenses and software already integrated and implemented, in addition to services related to continuous maintenance and consulting. This in contrast to e.g. Software as a service (SaaS) arrangements, where the customer in general pays a lump sum for the initial software integration and implementation, and subsequently only pays for services related to maintenance and consulting services. Total equity as per 31 December 2021 was NOK 316.5 million (NOK 316.2 million), corresponding to an equity ratio of 57.3% (76.9%). Cash Flow Arribatec’s cash ﬂow from operating activities in 2021 was negative with NOK 26.2 million, which compares to a negative NOK 1 million in 2020. The main effects come from net change in accounts receivables and payables that had a negative impact of NOK 20.1 million and hence represent the main difference between Arribatec’s operating result and cash ﬂow from operating activities. As a growth company with several acquisitions during 2021 this had a negative impact on the capital binding of the company with NOK 20.1 million. A change in other operating activities like ﬁnancial items and depreciations and amortizations had a positive impact of NOK 48.6 million. Net cash ﬂow from investing activities was negative with NOK 115.6 million (NOK 37.5 million). Of this, cash consideration in relation to investments in subsidiaries stems for 118.3 million, while cash inﬂow from acquired subsidiaries were NOK 29.9 million. Furthermore NOK 27.4 million relates to capitalized purchased software and internal development costs relating to development of own software solutions. Net cash ﬂow from ﬁnancing was negative by NOK 3 million (positive 220.7 million). This mainly relates to proceed from borrowings and repayment of debts. In addition to the installments paid on the leased assets of NOK 13.3 million. Arribatec had NOK 43.8 million in cash and cash equiva- lents at the end of the year compared to NOK 188.3 million last year. Although the Group has opted with this model to ensure some predictable long-term income, the Group is dependent on its customers having the ability and/or willingness to pay for the software and services already provided or to be provided. Should a certain amount of the customers under the SolaaS arrangement for some reason be prevented from paying the whole or the remaining portion of these ﬁxed monthly payments (e.g. as a result of bankruptcy) during the duration of the contract, the Group’s earnings, results of operations and prospects may suffer as a result as it has ultimately taken the cost related to software and services already provided. The risk on existing contracts is considered low as the customers on SolaaS contracts are mainly governmental. Annual report 2021 . 22 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Arribatec conducts its business in currencies other than its functional reporting currency, making its results of operations, ﬁnancial position and future prospect vulnerable for currency ﬂuctuations. Because part of the business is conducted in currencies other than its functional reporting currency (NOK), the Group will be exposed to volatility associated with foreign currency exchange rates. Exchange rate ﬂuctuations may affect the Group’s ﬁnancial results through translation of the proﬁt and loss accounts and balance sheets of foreign subsidiaries into NOK. Currency risks may also arise when Group companies enter into transactions that are denominated in other currencies other than their functional currency. Environment, Social and Governance. In recent years, the debate about sustainability has largely focused on cuting greenhouse gas emissions to reduce global warming. Going forward, the global sustainability agenda will increasingly also revolve around topics such as biodiversity and ecosystems to solve climate challenges. In addition, the resilience of safeguarding good working conditions and social and economic justice in the transition to a low-emission society has received increased atention. To achieve long-term positive effects, it is important to view environmental and social conditions, and corporate governance in context. As a young company we have just started on this road. But we clearly see how our products can play important role in the ESG process at our customers. Our overall ESG ambition is to integrate ESG in all our business decisions, and to take our responsibility to meet UN’s Sustainability Goals. A large part of the Group’s balance sheet assets consists of excess values and goodwill. The valuation of those includes forward-looking information, hereunder estimates, targets, forecasts, plans and similar projected information. Such forward-looking information is based on various assumptions made by the Company and/or third parties. Assumptions are subject to inherent risks as they are assumptions regarding the Company in the future and may prove to be inaccurate or unachievable. Such assumptions cannot be veriﬁed. Additionally, forward-looking information is based on current information, estimates and plans that may be changed within a short period without notice. The ESG work in Arribatec in 2021 has been about identifying what we do today, and building the necessary structure that will found the basis for how we will work with ESG in the years ahead. Corporate governance Arribatec’s corporate governance structure is based on Norwegian corporate law and Norwegian securities legislation and stock exchange regulations. The company believes that good corporate governance builds conﬁdence among shareholders, customers and other stakeholders, and thereby supports maximal value creation over time. Being a listed company on the Euronext Oslo Exchange, and considering that Arribatec wishes to place emphasis on sound corporate governance, the Company has a policy document on the basis of the Norwegian Code of Practice for Corporate Governance dated 17 October 2018. Read more about our work in the chapter Corporate Governance on page 75 of this annual report. Arribatec holds an Elite Directors & Ofﬁcers Liability insurance covering the Directors of the Boards in the listed company and its subsidiaries and the CEO. The insurances cover the liability from claims which may arise from the decisions and actions taken within the scope of their regular duties. The coverage includes ﬁnancial protection against the consequences of wrongful acts, their personal liability, ﬁnancial loss in respect of any securities claim made against the company and certain costs and ﬁnes related herein. The policies also cover reimbursement of the company where coverage has been made on their behalf. Coverage does not include fraudulent, criminal or intentional non-compliant acts or cases where directors obtained illegal remuneration, or acted for personal proﬁt. The limitation of the liability is NOK 100 million. Going concern Based on the review of the Arribatec Group ASA’s ﬁnancial statements, the Board of Directors conﬁrms that the annual ﬁnancial statements for 2021 have been prepared on the basis of a going concern assumptions and that this assumption has been made in accordance with Section 3-3a of the Norwegian Accounting Act. Research and development The company is on a continuous basis developing own software and solutions which can be deployed across customer segments in all industries. The development is essential to ensure that Arribatec can continue to grow its software portfolio, expand its service offering with cloud infrastructure services and gained a larger customer base. This is done to drive sales growth via cross-selling and upselling, where the intention is to improve EBITDA margins by increasing the share of own IP in future solutions, thus improving EBITDA margin by selling more of our own software and services through subscription models such as SaaS and SolaaS. At the end of 2021 Arribatec had capitalized a total of NOK 19.7 million (NOK 8.8 million) of time and material used to develop internal systems and software. The company has no ongoing research activities. Annual report 2021 . 23 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Proposed allocation of the company’s result of the year The Parent company, Arribatec Group ASA, had a net negative result after tax of NOK 16.2 million in 2021, compared to a negative NOK 10.5 million in 2020. The result available for disposal of the Annual General Meeting as follows: NOK Thousand Covered by other paid in capital 16.200 Outlook Arribatec has an ambitious growth agenda and sees an increasing demand for the product and services that Arribatec brings to the marketplace. With the largest part of integration work behind us, the Group is now gearing up for increased sales and expanded delivery capacity. Oslo, 28 April 2022 Martin Nes Chairman of the board Øystein Stray Spetalen Board member Yvonne Litsheim Sandvold Board member Kristin Hellebust Board member Henrik Lie-Nielsen Board member Geir Johansen CEO Annual report 2021 . 24 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Responsibility Statement ¶ We conﬁrm that, to the best of our knowledge, the Financial Statements 2021, which have been prepared in accordance with IFRS as adopted by EU, give a true and fair view of the Company’s assets, liabilities, ﬁnancial position and results of operations, and that the management report includes a fair review of the information required under the Norwegian Accounting act. Oslo, 28 April 2022 Martin Nes Chairman of the board Øystein Stray Spetalen Board member Yvonne Litsheim Sandvold Board member Kristin Hellebust Board member Henrik Lie-Nielsen Board member Geir Johansen CEO Annual report 2021 . 25 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Shareholder information ¶ The company's total capitalisation at 31 December 2021 was NOK 690 million, based on a closing share price of that day of NOK 1.18. Annual report 2021 . 26 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Dividend policy Annual General Meeting Arribatec is growing fast, both organically and through M&A activities. Both these avenues for growth require liquidity and availability of sufﬁcient funding as well as a healthy equity ratio. While the company is in an expansion phase, the Board is not planning for regular dividends to be paid to the shareholders. There has not been given, nor proposed to give, a mandate to the Board of Directors to approve a distribution of dividends. The annual general meeting of Arribatec is normally held in May each year. Writen notice and additional relevant material are sent to all shareholders individually or to their custodian bank at least three weeks before the AGM is to take place. The notice is also made available on the company’s website. Shareholders are encouraged to participate and to vote at the AGM. To vote, the shareholder must either be physically present or be represented by a proxy. Shares and share capital 31 December 2021, Arribatec Group ASA had 584 903 064 ordinary shares outstanding with a par value of NOK 0.28 per share (see Note 25 to the ﬁnancial statement). The company has one share class, with each share conferring equal dividend rights and votes. On 31 December 2021 the company had 5 404 shareholders. Listing The Company’s shares are quoted and traded in NOK at the Oslo Stock Exchange (Ticker: ARR). The shares are registered in the Norwegian Central Securities Depository (VPS), with Nordea Issuer Service Registrar. The shares carry the security number ISIN NO0003108102. Principal shareholders The 20 largest shareholders of Arribatec are predominantly Norwegian investors. A table of these shareholders is included in this chapter. Investor relations Arribatec will maintain an open dialogue with the capital market. Regular information is therefore published through the annual report, interim reports and presentations and stock exchange announcements. The company distributes all information relevant to the share price to Oslo Børs. Such information is distributed without delay and simultaneously to the capital market and the media and published on the company website The CEO and CFO are responsible for the company’s investor relations activities and for all communication with the capital markets. All information is communicated within the framework established by security and accounting legislation and rules and regulations of Oslo Børs. All information regarding Arribatec is available on the company’s website at www.arribatec.com. Annual report 2021 . 27 Contents / Arribatec 2021 / Operation, sales & outlook / Financials 20 largest shareholders as registered in VPS on 31 March 2022 Geographic residence Shareholders as registered in VPS on 31 March 2022 Name Holding 116 554 032 79 452 700 Stake 19.9% 13.6% Holding 541 023 860 26 940 926 6 161 551 Stake 92.5% 4.6% 1.1% Ferncliff Listed Dai AS Arriba Invest AS Norway Sweden Denmark Belgium Canada Other Dallas Asset Management AS Joar Aarenes 24 598 694 23 911 850 22 959 641 21 000 000 18 710 527 16 952 000 10 797 884 10 000 000 8 542 908 7 553 463 6 770 735 5 743 227 5 518 001 4.2% 4.1% 2 959 061 0.5% 0.4% 0.9% 100% 2 629 485 5 188 181 Nordnet Bank AB Torstein Ingvald Tvenge Srk Consulting AS Erik Skaar Opdal 3.9% 3.6% 3.2% 2.9% 1.8% Total 584 903 064 Trude Halvorsen Tigerstaden AS 1.7% Datum AS 1.5% Hanekamb Invest AS Norsk Regnesentral Danske Bank A/S LCS AS 1.3% 1.2% Ownership structure by size of holding as registered in VPS on 31 March 2022 1.0% 0.9% 0.9% 0.8% 0.7% 0.7% 0.7% 68.6% 31.4% Lars Hugo Braadland Olsen Jan Arne Christensen Nordnet Livsforsikring AS Cantavit Holding AS AWR AS 5 419 500 4 961 750 Number of shareholders Number of shares > 10 000 000 1 000 001-10 000 000 100 001-1 000 000 50 001-100 000 10 001-50 000 1-10 000 Holding 334 937 328 133 885 812 76 372 359 14 149 567 Stake 57.3% 22.9% 13.1% 2.4% 4 139 852 9 46 3 875 000 3 875 000 401 336 764 183 566 300 267 Total 20 largest shareholders Other shareholders 189 776 19 277 891 3.3% 1.1% 4 051 5 338 6 280 107 Total 584 903 064 100% Total 584 903 064 100% Annual report 2021 . 28 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Subsequent Events ¶ • EU sanctions on Russia affects one of Arribatec's clients in Italy, however we expect a modest impact on current operation. • Effective 1 January 2022 Geir Johansen has been appointed as CEO. • A private placement of 100 000 000 shares, each at a price of NOK 0.50 per share was completed in April 2022. Annual report 2021 . 29 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Consolidated Statement of Proﬁt and Loss 31 32 33 34 35 36 Consolidated Statement of Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flow π Arribatec Solution ASA Group And Parent Company ¶ Notes to the Consolidated Financial Statement Parent Company Statement of Proﬁt and Loss Parent Company Statement of Financial Position Parent Company Statement of Cash Flow 65 66 67 68 Notes to the Parent Company Financial Statement Annual report 2021 . 30 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Consolidated Statement of Proﬁt and Loss ¶ For the year ended 31 December NOK Thousand Note 2021 2020 Revenue 5 413 938 (92 859) 321 079 154 024 Materials, software and services Gross proﬁt 10 (17 609) 136 415 Salary and personnel costs Cost from reverse takeover Other operating expenses Total operating expenses EBITDA 8,9 10 (272 679) 0 (99 143) (56 822) (25 710) 10 (55 201) (327 879) (6 800) (181 674) (45 259) Depreciation, amortization and impairment 11, 15, 17 (42 970) (7 240) EBIT (49 770) (52 499) Financial income 12 12 2 597 (6 487) 1 247 (2 945) Financial expense Proﬁt/(loss) before tax Tax expense (53 660) 4 802 (54 197) (1 424) 13 Proﬁt/(loss) after tax (48 858) (55 620) Atributable to: Equity holders of the parent company (48 858) (55 620) Earnings per share: basic Earnings per share: diluted 14 14 (0.10) (0.10) (0.18) (0.18) Annual report 2021 . 31 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Consolidated Statement of Other Comprehensive Income ¶ For the year ended 31 December NOK Thousand 2021 2020 Proﬁt/(loss) after tax (48 858) (55 620) Items that may be classiﬁed subsequently to proﬁt or loss Foreign currency translation differences - foreign operations 390 390 60 60 Other comprehensive income/(loss) for the period Total comprehensive income/(loss) for the period (48 468) (55 561) Atributable to: Equity holders of the parent company (48 468) (55 561) Annual report 2021 . 32 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Consolidated Statement of Financial Position ¶ For the year ended 31 December NOK Thousand Note 2021 2020 NOK Thousand Note 2021 2020 ASSETS EQUITY AND LIABILITIES Equity Non-current assets Property, Plant and equipment Right-of-use assets Goodwill 17 11 7 445 30 266 205 279 46 031 65 047 10 678 9 511 3 258 20 768 93 827 13 145 18 310 945 Paid in capital Share capital 25 163 773 196 700 398 117 203 194 510 8 15, 16 15, 16 15, 16 21 Other paid in capital Exchange differences Other equity Customer relations Other Intangible assets Other non-current assets Deferred tax assets Total non-current assets Current assets (44 365) 316 506 4 493 316 214 Total equity 13 2 436 Non-current liabilities Interest bearing loans Non-current lease liabilities Other non-current ﬁnancial liabilities Deferred tax liabilities Provisions 374 259 152 689 19, 26 11, 19 19 27 902 19 148 96 1 344 15 500 Accounts receivable Other receivables Contract assets 6, 19 19, 23 7 88 674 2 290 32 956 19 651 0 13 17 084 22 789 87 018 0 0 19 549 3 179 12 387 2 439 28 Inventory 22 Total non-current liabilities Current liabilities Current ﬁnancial liabilities Current lease liabilities Accounts payable 16 843 Other current assets Cash and cash equivalents Total current assets 23 20 320 43 758 177 771 2 746 24 188 270 258 448 19, 26 11, 19 19 9 523 12 346 21 227 21 483 1 046 7 046 7 125 23 966 1 283 TOTAL ASSETS 552 029 411 137 Contract liabilities 7, 19 13, 19 19, 29 Current tax payable Other current liabilities Total current liabilities 3 596 82 880 148 505 35 064 78 080 Oslo, 28 April 2022 Total liabilities 235 523 552 029 94 923 411 137 Martin Nes Chairman of the board Øystein Stray Spetalen Board member Yvonne Litsheim Sandvold Board member TOTAL EQUITY AND LIABILITIES Kristin Hellebust Board member Henrik Lie-Nielsen Board member Geir Johansen CEO Annual report 2021 . 33 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Consolidated Statement of Changes in Equity ¶ For the year ended 31 December Equity related to the shareholders of the parent company Restricted Share Treasury shares Other paid in capital Exchange differences Other equity Total Equity NOK Thousand Note capital Balance on 1 January 2020 2 589 (312) 16 286 (52) 3 291 21 802 -55 620 60 Result of the period (55 620) Comprehensive income for the period Total comprehensive result for the period Treasury shares acquired 60 0 0 0 60 (55 620) (55 561) (276) (276) Other equity transactions (834) 83 824 2 848 (834) Issue of share capital in Arribatec AS Reverse take over reclassiﬁcation of Arribatec AS Reverse take over Arribatec Solutions ASA Capital Increase employees offer, Nov Capital increase repair issue, Nov Capital increase, Private placement Dec Cost of share issue 847 (3 436) 91 204 2 800 84 670 0 588 (64 614) 6 600 56 822 83 412 9 400 9 199 21 684 96 000 (12 891) 45 607 194 510 30 884 110 000 (12 891) 45 607 316 214 14 000 Share consideration relating business combinations – shares to be issued in 2021 Closing balance on 31 December 2020 117 203 0 8 4 493 Balance on 1 January 2021 117 203 0 194 510 8 4 493 316 214 (48 858) 390 Result of the period (48 858) Comprehensive income for the period Total comprehensive result for the period 390 0 0 0 390 (48 858) (48 468) Other equity transactions (2 870) (45 607) 74 929 11 281 (2 870) (45 607) 86 557 11 281 Share consideration relating to business combination 2020 (Facil, Microsky and Innit) Capital increase related to business combinations 25 25 25 11 628 34 941 Conditional share consideration relating to acquisition of Integra – shares to be issued during 2022 and 2023 Capital increase related to merger with subsidiary Arribatec AS Share issue cost (34 941) (600) 0 (600) Closing balance 31 December 2021 163 773 0 196 700 398 (44 365) 316 506 Annual report 2021 . 34 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Consolidated Statement of Cash Flows ¶ For the year ended 31 December NOK Thousand Note 2021 2020 NOK Thousand Note 2021 2020 Operating activities Financing activities Proﬁt/(Loss) before tax (53 660) (982) (55 620) (1 196) Proceeds from borrowings Change in overdrafts 26 26 26 18 445 (2 067) (3 006) (2 507) (13 293) 0 5 472 (3 821) (1 179) (755) Taxes paid Adjustments for: Repayment of debt - Calculated cost from reverse takeover - Finance income and expense - (Increase)/decrease in accounts receivable - (Decrease)/increase in accounts payable - Depreciation and amortization - Impairment losses on intangible assets Change in other current assets / liabilities Net cash ﬂows operating activities 0 3 890 56 822 1 698 Interest paid 12 Instalments lease liabilities Other changes in equity Proceeds from shares issued Share issue costs 0 (6 874) (13 257) 39 611 1 328 (1 110) 234 954 (12 891) 220 671 6 089 7 240 0 0 15, 17 17 (600) (3 028) 3 359 Net cash ﬂows ﬁnancing activities 1 715 (17 369) (1 009) (26 197) Net change in cash and cash equivalents Cash and cash equivalents at beginning of period Currency translation (144 872) 188 270 361 182 149 6 121 Investing activities 0 Cash received through business combination Cash consideration Investment in subsidiaries Capitalized tangible and intangible assets Interest received 18 18 29 857 (118 299) (27 416) 212 34 741 (59 942) (12 548) 236 Cash and cash equivalents at end of period 43 758 188 270 15, 17 Net cash ﬂows investing activities (115 647) (37 514) Annual report 2021 . 35 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 1 Corporate Information Note 2 Summary of signiﬁcant Accounting Principles Note 3 Financial risks Note 4 Critical accounting estimates and judgements in terms of accounting policies Note 5 Segment Note 6 Accounts receivable Contract assets and liabilities Personnel Note 7 Note 8 Note 9 Key management Expenses Note 10 Note 11 Note 12 Note 13 Note 14 Note 15 Note 16 Note 17 Note 18 Note 19 Note 20 Note 21 Note 22 Note 23 Note 24 Note 25 Note 26 Note 27 Note 28 Note 29 Note 30 Note 31 Note 32 Right-of-use assets and lease liabilities Financial items Tax Earnings per share Intangible assets Goodwill and impairment Tangible assets π Notes ¶ Business Combinations Financial instruments Investments in subsidiaries Other non-current investments Inventory Other currents assets Cash Shares Borrowings Pensions Provisions Other current liabilities Transactions with related parties Pledged assets Subsequent events Annual report 2021 . 36 Contents / Arribatec 2021 / Operation, sales & outlook / Financials when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. The consolidation stops when the control ceases. Where necessary, adjustments are made to the ﬁnancial statements of subsidiaries to bring the accounting policies used into line with the Group’s accounting policies. Note 1 Corporate Information The Parent Company Arribatec Group ASA (publ) (“Arribatec”), with Norwegian corporate identity number 979 867 654 is a joint stock company, incorporated in Norway. The registered address is Lørenfaret 1B, NO-0585 Oslo. The company’s shares are traded in Norway on the Oslo Stock Exchange. There is a presumption that if the Group has the majority of the voting rights in an entity, the entity is considered as a subsidiary. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over the entity. Including ownership interests, voting rights, ownership structure and relative power, as well as options controlled by the Group and shareholder’s agreement or other contractual agreements. The principal activities of the company and its subsidiaries (the Group) are to be a software and consulting company. With a customer centric engagement model, combined with a deep system, integration and domain competence, Arribatec builds long term strategic partnership with a broad customer base. Arribatec serves more than 900 entities spread over 20 countries and various industries, both in the private and public sector. The activities are further described in Note 5. The assessments are done for each individual investment. The Group re-assesses whether it controls an entity if facts and circumstances indicate that there are changes to one or more of the three elements of control. The Annual Report and Parent Company Report for Arribatec Group ASA (publ) were adopted by the Board of Directors on 28 April 2022 and will be submited for approval to the Annual General Meeting 30.05.2022. Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Proﬁt or loss and each component of other comprehensive income (OCI) are atributed to the equity holders of the Parent Company. Note 2 Summary of signiﬁcant Accounting Principles 2.1 / Basis for preparation 2.3 / Loss of control The ﬁnancial accounts for Arribatec Group ASA as “the Parent company” together with its controlled subsidiaries, together called “the Group” have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (IFRS), relevant interpretations, and the Norwegian Accounting Act. The consolidated ﬁnancial statements have been prepared on a historical cost basis, except where IFRS explicitly requires use of other values. As the Parent company has NOK as its functional currency, the ﬁnancial accounts are presented in NOK. All presented ﬁgures in this report have been rounded and consequently, the sum of individual ﬁgures can deviate from the presented total. If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognized in proﬁt or loss. Any investment retained is recognized at fair value. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. 2.4 / Functional currencies and Presentation currency The ﬁnancial statements are presented in NOK, which is the functional currency of the Parent company, as well as being the presentation currency for the Group. For the purposes of presenting this consolidated ﬁnancial statement, the assets and liabilities of the Group’s non-NOK operations are translated into NOK using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the year. All group transactions and group unsetled maters, and proﬁt and losses for transactions between group companies that are put into effect, are eliminated at the consolidation. In 2020, Arribatec Solutions ASA (former named Hiddn ASA) entered into a share exchange agreement with Arribatec AS and the majority of Arribatec’s shareholders to acquire all of the shares in Arribatec. The transaction was analyzed and determined to be a Reverse take-over. This meant that, despite Arribatec Solutions ASA was the legal acquirer and Arribatec AS the legally acquired company, Arribatec Solutions was accounted for as the acquiree and Arribatec AS the acquirer foraccounting purposes. 2.5 / Business combinations and goodwill 2.2 / Basis of consolidation The consolidated ﬁnancial statements comprise the ﬁnancial statements of the Parent Company and its subsidiaries as of 31 December 2021. Business combinations are accounted for using the acquisition accounting method. Acquisition costs incurred are expensed and included in operating expenses. When the Group acquires a business, it assesses the identiﬁable assets acquired and liabilities assumed for appropriate classiﬁcation and designation in accordance with the contractual terms, economic circumstances and relevant conditions as at the acquisition date. The acquirer’s identiﬁable assets, liabilities and contingent liabilities that meet the conditions for recognition are recognized at their fair values at the acquisition date, except for non-current assets that are classiﬁed as held for sale and recognized at fair value less cost to sell, and deferred tax assets and liabilities which are recognized at nominal value. Control is established when the Parent Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Business combinations are accounted for by using the acquisition method. Consolidation of a subsidiary begins Annual report 2021 . 37 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Goodwill arising on acquisition is recognized as an asset measured at the excess of the sum of the consideration transferred, the fair value of any previously held equity interests and the amount of any non-controlling interests in the acquiree over the net amounts of the identiﬁable assets acquired and the liabilities assumed. If, after reassessment, the Group’s interest in the net fair value of the acquirer’s identiﬁable assets, liabilities and contingent liabilities exceeds the total consideration of the business combination, the excess is recognized in the income statement immediately. Sale of licenses A license establishes the customer’s rights related to a company’s intellectual property (IP) and the obligations of the company to provide those rights. Arribatec in some instances has contracts that includes sale of licenses only. Arribatec has analyzed its (partner) licensing contracts and concluded that they control the license before it is transferred to the customer since Arribatec has legal ownership, physical possession and the risk and reward of ownership. Arribatec is therefore the principal in the customer contract. IFRS 15 distinguishes between whether the license provides a” right to use” or a “right to access” IP. This impacts the timing of revenue recognition. Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognized in the income statement as ﬁnancial income or expense. When Arribatec licenses distinct on-premise licenses, these fall under the category “right-to use” since the license grants the right to the IP “as is” when delivered. Revenue is recognized at the point in time when the customer is provided with the ability to use the software. Generally, at the beginning of the license period. If the contingent consideration is classiﬁed as equity, it will not be premeasured, and subsequent setlement will be accounted for within equity. If the business combination is achieved in stages, the fair value of the Group’s previously held equity interest in the acquire is remeasured to fair value at the acquisition date through the income statement. When Arribatec license cloud-based subscription licenses (“right to access”), the license is not considered distinct from the online/hosting service. Revenue is recognized over time, over the license/contract period, as the customer is receiving and consuming the beneﬁts of the access to the cloud-based license on an ongoing basis. The distinct on-premise licenses pricing model is a onetime ﬁxed fee. The fee is recognized as revenue at the point of time that the customer has received legal title and physical possession and the customer has accepted the license. The cloud- based subscription licenses are sold for a ﬁxed annual or monthly fee. Revenue is recognized linearly over the subscription time. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the group’s cash-generating units that are expected to beneﬁt from the combination, irrespective of whether other assets or liabilities of the acquired entity are assigned to those units. The Group assesses each cash generating unit annually to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the actual value less costs to sell and value in use. If there is an indication that an asset is impaired, the recoverable amount of the asset is calculated in accordance with IAS 36 Impairment of assets. For goodwill, other intangible assets with indeﬁnite useful lives and intangible assets not yet ready for use, the recoverable amount is assessed annually. Software as a service (SaaS) Software is provided over time to an end- customer from a Data Center managed or contracted by Arribatec. The obligations in the SaaS contract are to offer a cloud- based access to the license (owned by Arribatec), maintenance of the utility of the software, including rights to updates and future releases, and in some contracts, provide support. 2.6 / Revenue from contracts with customers Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer. The Group recognizes revenue when it transfers control of a good or service to a customer. Intercompany sales are eliminated. The customer will purchase and obtain control of the software as-a-service on a subscription or consumption basis. Revenue is therefore recognized periodically over the lifetime of the SaaS contract. In some cases, Arribatec has a separate installation and implementation contract regarding the same customer projects. When these contracts are negotiated close in time from each other, Arribatec considers whether the two contracts have been negotiated as a package with a single commercial objective. If this is the case the two contracts are combined. If not, they are accounted for separately. Consulting services Arribatec provides implementation and integration services under consulting contracts with customers. Most contracts have a variable pricing structure where Arribatec agrees to implement and integrate software for a ﬁxed hourly rate agreed upon in the contract. The implementation and installation services are capable of being distinct and distinct within the context of these contracts. Arribatec has therefore concluded that there are generally two distinct performance obligations in the two combined contracts. When there are two combined contracts, the transaction price is allocated between the two performance obligations based on relative stand-alone prices. Arribatecs performance obligation is satisﬁed over time because the consulting services does not create an asset that Arribatec could use for an alternative purpose and Arribatec has an enforceable right to payment for the hours worked. Revenue is recognized over time, normally according to the invoiced hours for the period. In cases where the contract prescribes advance or deferred invoicing, the recognized amount is adjusted and presented as a contract liability or contract asset, respectively. Arribatecs performance obligation under the installation and integration contract is satisﬁed over time because the consulting services does not create an asset that Arribatec could use for an alternative purpose and Arribatec has an enforceable right to payment for the hours worked. Revenue is accordingly recognized over time, based on the hours worked. From time-to-time Arribatec has ﬁxed price consulting contracts. In the same manner as for the variable price contracts, the asset created does not have an alternative use for Arribatec and Arribatec has an enforceable right to payment in line with progress in the project. Arribatec recognizes revenue over time, in line with progress in the project. Progress is estimated as hours spent at the balance sheet date divided with estimated total hours in the project. This requires estimating the remaining hours to complete. Annual report 2021 . 38 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Solution as a service (SolaaS) Deﬁned contribution retirement plans are retirement plans where the company’s payment obligations are limited to the ﬁxed contributions and where the fees already have been undertaken. The retirement beneﬁts for the individual employee are dependent on the contributions paid to the retirement plan or an insurance company by the employer, and the return of capital invested in the retirement fund. Consequently, it is the employee that holds the risk of return (that the return will be lower than expected) and the risk of the investment (the risk that the invested pension provision will not be sufﬁcient to cover expected retirement compensation in the future). The obligations of the Company related to payments of deﬁned contribution retirement plans are expensed in the income statement as they are earned by the employee for services conducted on behalf of the employer during the period. As for SaaS, the main obligations in the SolaaS contract are to offer a cloud- based, “right to access” type of license, maintenance of the utility of the software, including updates and future releases, and provide support. In the SolaaS contracts an additional part of the value chain, the implementation and integration services, is added to the contract. As for the SaaS, contracts with a separate (combined) implementation and integration service contract, generally in the SolaaS contracts, there are two distinct POs. However, this is assessed on a contract to contract basis, where all facts and circumstances are being considered. Two or more performance obligations are being considered for Solaas contracts. The ﬁrst one is Consulting Service. Revenue is recognized over time when the consulting service has been delivered. See description above for consulting services. 2.8 / Research and Development cost Development expenditures are capitalized only when the criterion for recognition is met, i.e. that it is probable that the expected future economic beneﬁts that are atributable to the asset will ﬂow to the entity, management has commited itself to complete the asset, the technical feasibility of completing the asset has been demonstrated and the cost can be measured reliably. Research costs are expensed in full. The second one is SaaS (license, online service and maintenance and support): The customer receives and consumes the beneﬁts from the SaaS delivery as Arribatec performs under the contract. Therefore, the performance obligation is satisﬁed over time and revenue is recognized over the period the service is available for use by the customer. The assets are amortized over their expected useful life once the assets are available for use. During the period of development, the asset is tested for impairment annually. Development costs that do not meet the criteria for capitalization are expensed as incurred. Managed services Under the managed services contracts Arribatec helps customers operate their IT environments, either on premise or from the cloud. Managed services contracts are delivered on a ﬁxed price and minimum commitment from customers, on a long-term contract. Additional work above the agreed level is considered normal consulting services. 2.9 / Taxes Income taxes consists of current tax and deferred tax. Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. Arribatec delivers an integrated set of services as deﬁned in the managed service agreement. The customer receives and consumes the beneﬁts from the Managed services as Arribatec performs under the contract. Therefore, the performance obligation is satisﬁed over time and revenue is recognized over time. Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for ﬁnancial reporting purposes. Deferred income tax liabilities are recognized for all taxable temporary differences except where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting proﬁt nor taxable proﬁt or loss. Revenue from other services Arribatec to a limited extent provides maintenance services, support services and application management services under separate contracts, for a ﬁxed fee. The performance obligations under these contracts are satisﬁed over time and revenue is recognized accordingly. A deferred tax asset is recognized to the extent that is probable that future taxable proﬁt will be available against for which unused tax losses and unused tax credits can be utilized. A deferred tax asset arising from unused tax losses or tax credit is only recognized to the extent that the entity has sufﬁcient taxable temporary differences or that there is convincing other evidence supporting the utilization of the tax losses and tax credits, including the impact of time restriction by local tax authorities. The carrying amount of deferred tax asset is reviewed at the end of each reporting period. Unrecognized deferred tax assets are reassessed at each balance sheet date. Deferred income tax assets and deferred income tax liabilities are offset, when a legally enforceable right exists to set off tax assets against income tax liabilities and the deferred income taxes relate to the same taxable entity or taxation authority. Government grants Government grants are recognized when there is reasonable assurance that the grant will be received, and all associated conditions will be complied with. When the grant relates to an asset, it reduces the carrying amount of the asset. The grant is then recognized in proﬁt or loss over the useful life of the depreciable asset by way of a reduced depreciation charge. 2.7 / Employee beneﬁts Pension obligations The Group’s pension obligations vary between countries depending on the local legislation and different pension systems. The Group only has deﬁned contribution retirement plans. See Note 8 and 27. 2.10 / Tangible ﬁxed assets Tangible ﬁxed assets are reported at cost in the balance sheet, with a deduction for accumulated depreciation and any impairment. Depreciation is made on a straight-line basis over the asset’s estimated useful life, which is assessed on an individual basis, ranging from three to ﬁve years. Annual report 2021 . 39 Contents / Arribatec 2021 / Operation, sales & outlook / Financials 2.11 / Intangible assets 2.14 / Right-of-use assets and Lease liabilities Goodwill At the inception of a contract, the Group assesses whether the 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 identiﬁed asset for a period of time, in exchange for consideration. Goodwill represents the excess of cost of an acquisition over the fair value of the net identiﬁable assets of the acquired subsidiary at the date of acquisition. Goodwill on the acquisition of subsidiaries is included within intangible assets. Goodwill that arises on the acquisition of subsidiaries is allocated to cash generating units (CGUs). Goodwill is measured at cost (residual) less accumulated impairment losses. Goodwill is tested for impairment at least annually, or when there are indications of impairment. Impairment is determined for goodwill by assessing the recoverable amount of each CGU to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods. When the Group disposes of an operation within a CGU or group of CGUs to which goodwill has been allocated, a portion of the goodwill is included in the carrying amount of the operation when determining the gain of loss on disposal. The portion of the goodwill allocated is measured based on the relative values of the operation disposed of and the portion of the CGU retained at the date of the partial disposal, unless it can be demonstrated that another method beter reﬂects the goodwill associated with the operation disposed of. The same principle is used for allocation of goodwill when the Group reorganizes its businesses. For contracts that constitute, or contain a lease, the Group separates lease components if it beneﬁts from the use of each underlying asset either on its own or together with other resources that are readily available, and the underlying asset is neither highly dependent on, nor highly interrelated with, the other underlying assets in the contract. The Group then accounts for each lease component within the contract as a lease separately from non-lease components of the contract. At the lease commencement date, the Group recognizes a lease liability and corresponding right-of-use asset for all lease agreements in which it is the lessee, except for the following exemptions applied: • • Short-term leases (deﬁned as 12 months or less) Low value assets For these leases, the Group recognizes the lease payments as other operating expenses in the statement of proﬁt or loss when they incur. The lease liability is recognized at the commencement date of the lease. The Group measures the lease liability at the present value of the lease payments for the right to use the underlying asset during the lease term that are not paid at the commencement date. Customer relationships and technical assets The assets acquired in a business combination are recognized at fair value at the acquisition date. Customer relationships and databases have a ﬁnite useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost over their useful lives of 3 to 5 years. The lease term represents the non-cancellable period of the lease, together with periods covered by an option either to extend or to terminate the lease when the Group is reasonably certain to exercise this option. 2.12 / Financial instruments All ﬁnancial assets and liabilities are initially recognized at fair value, and subsequently classiﬁed either as ﬁnancial assets at amortized cost or ﬁnancial assets through proﬁt or loss The lease liability is subsequently measured by increasing the carrying amount to reﬂect interest on the lease liability, reducing the carrying amount to reﬂect the lease payments made and remeasuring the carrying amount to reﬂect any reassessment or lease modiﬁcations, or to reﬂect adjustments in lease payments due to an adjustment in an index or rate. The Group does not include variable lease payments in the lease liability. Instead, the Group recognizes these variable lease expenses in proﬁt or loss. Accounts and other receivables Accounts receivables are initially recognized at the transaction price and are subsequently carried at amortized cost less provision for expected credit losses. Trade and other payables Trade and other payables are initially recognized at fair value, and subsequently measured at amortized cost. Trade and other payables are measures at their nominal amount when the effect of discounting is not material. The Group presents its lease liabilities as separate line items in the statement of ﬁnancial position. The Group measures the right-of use asset at cost, less any accumulated depreciation and impairment losses, adjusted for any remeasurement of lease liabilities. Cash and Cash equivalent Cash and cash equivalents include cash at banks and on hand and other short term highly liquid investments with original maturities of three months or less. In the consolidated balance sheet, any bank overdrafts are shown within borrowings in current liabilities. The Group applies the depreciation requirements IAS 16 ’Property, Plant and Equipment’ in depreciating the right-of-use asset, except that the right-of-use asset is depreciated from the commencement date to the earlier of the lease term and the remaining useful life of the right-of-use asset. Interest bearing loans and other ﬁnancial liabilities The Group’s debt and other ﬁnancial liabilities are initially recognized at fair value, including transaction costs directly atributable to the transaction, and are subsequently measured at amortized cost. The Group applies IAS 36 ’Impairment of Assets’ to determine whether the right-of-use asset is impaired and to account for any impairment loss identiﬁed. 2.15 / Provisions 2.13 / Classiﬁcations Provisions and contingent liabilities Fixed assets and non-current liabilities consist of items expected to be setled more than twelve months after the balance sheet date. Current assets and current liabilities consist of amounts that are expected to be setled within twelve months after the balance sheet date. Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outﬂow of resources will be required to setle the obligation and the amount can be reliably estimated. Annual report 2021 . 40 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Restructuring provisions are recognized only when the recognition criteria for provisions are fulﬁlled. The Group has a constructive obligation when a detailed formal plan identiﬁes the activities concerned, the location and number of employees affected, a detailed estimate of the associated costs, and an appropriate timeline. Furthermore, the employees affected have been notiﬁed of the plan’s main features. management and internal funding in foreign currencies. Translating the balance sheets and income statements of Group companies into NOK creates a translation exposure. Credit risk Credit risks is the risk that counterparty will not meet its obligations under a ﬁnancial contract or customer contract, leading to a ﬁnancial loss. The Group is exposed to credit risk from its operating activities, primarily related to cash and cash equivalents, trade receivables and contract assets from contracts with the customers and other receivables. 2.16 / Changes in Accounting Policies and disclosures for 2021 calendar year or thereafter New standards, interpretations and amendments not yet effective No new standards was implemented during 2021. There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early. As part of the Group’s earnings model, certain of its customers pays for software and services under a solutions as-a-software (SolaaS) arrangement, meaning that the customer is paying a monthly recurring sum for, inter alia, the software and services already provided or to be provided by the Group. As such, these customers’ monthly recurring payment obligations also includes payment for licenses and software already integrated and implemented, in addition to services related to continuous maintenance and consulting. This in contrast to e.g. software-as-a-service (SaaS) arrangements, where the customer in general pays a lump sum for the initial software integration and implementation, and subsequently only pays for services related to maintenance and consulting services. Although the Group has opted with this model to ensure some predictable long-term income, the Group is dependent on its customers having the ability and/or willingness to pay for the software and services already provided or to be provided. The following amendments are effective for the period beginning 1 January 2022: • • • Onerous Contracts – Cost of Fulﬁlling a Contract (Amendments to IAS 37); Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16); Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and • References to Conceptual Framework (Amendments to IFRS 3). Customer credit risk is managed subject to established policies, procedures and controls relating to customer credit risk management. The maximum exposure to credit risk at the reporting date is the carrying value of each class of ﬁnancial assets. The following amendments are effective for the period beginning 1 January 2023: • • • Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2); Deﬁnition of Accounting Estimates (Amendments to IAS 8); and Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12). The Company manages the credit risk by working closely with the customers. The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the Group. Interest rate risks Interest risk is related to the risk the Group is exposed to from changes in the market’s interest rate which can affect the net proﬁt. The Group’s main interest rate risk arises from long-term borrowings with variable rates, which amounted to 37.4 million on 31 December 2021 (2020: NOK 8.4m). The loan carries a variable interest rate based on the interbank rate in each currency with a margin. Any annualized increase/ decrease by 100 basis point would increase/decrease the Group’s proﬁt before tax by appr. NOK 0.4m (NOK 0.08m). Note 3 Financial risks Liquidity risk Arribatec deﬁnes risk as all factors which could have a negative impact on the ability of the Group to achieve its business objectives. All economic activities are associated with risk. In order to manage risk in a balanced way, it must ﬁrst be identiﬁed and assessed. Arribatec conducts risk management at both a Group and company level, where risks are evaluated in a systematic manner. The following summary is by no means comprehensive but offers an overview of all material ﬁnancial risk factors which are considered important for Arribatec’s future development. Liquidity risk is the potential loss arising from the Group’s inability to meet its contractual obligations when due. The Group monitors its risk of a shortage of funds using cash ﬂow forecasts. The Group had cash and cash equivalents of NOK 43.8m at 31 December 2021 (2020: NOK 188.2m). The following table shows the Group’s remaining contractual maturity for its non-derivative ﬁnancial liabilities with agreed repayment periods. The tables have been drawn based on the undiscounted cash ﬂows of ﬁnancial liabilities based on the most likely date on which the Group can be required to pay. The table includes both interest and principal cash ﬂows. To the extent that interest ﬂows are ﬂoating rate, the undiscounted amount is derived from the interest rate curves at the end of the reporting period. The contractual maturity is based on the most likely date on which the Group may be required to pay. Ref Note 7. Risks associated with changes in economic conditions are managed through regular checks on developments in each country. Currency risk Currency risk refers to the risk that the value of liquid and ﬁnancial instruments may shift as a result of changes in exchange rates. Part of the Groups business operation is in different currency countries, though the dominating business is in NOK. Arribatec’s currency transaction exposure arises from foreign trade, cash Annual report 2021 . 41 Contents / Arribatec 2021 / Operation, sales & outlook / Financials The amounts presented are subject to change if changes in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period. Goodwill In accordance with the stated accounting policy, the Group annually tests whether goodwill has suffered any impairment or more frequently if impairment indicators are identiﬁed. The recoverable amount of cash- generating units has been determined based on value-in-use calculations. These calculations require the use of estimates. The value-in-use calculation is based on a discounted cash ﬂow model. The cash ﬂows are derived from the budgets and forecasts for the next three years, as approved by the Company’s Board of Directors, and do not include signiﬁcant investments that will enhance the performance of the CGU being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash ﬂow model, as well as the expected future cash-inﬂows (sensitive to estimates of sales and cost levels) and the growth rate used for extrapolation purposes. Further details about goodwill and impairment reviews are included in Note 16 Impairment. 6 months NOK thousand Interest bearing loans Accounts payable Other current liabilities Total -6 months 4 098 - 1 year 1-2 year 2-4 years 4+ years Total 43 196 21 227 82 880 4 338 0 13 723 18 624 2 413 21 227 0 0 0 0 0 0 47 796 73 121 35 085 39 422 13 723 18 624 2 413 147 303 Financing risk To supports the Group’s growth ambitions, the Group continuously works on securing necessary commited ﬁnancing and alternative funding sources. Securing non-current ﬁnancing at competitive terms is a major part of the Group’s long-term liquidity planning. Note 5 Segment The market for Arribatec’s Software and services are global. The chief decision maker will therefore follow up revenue and proﬁtability on a global basis, segmented into geographical regions. This is consistent with the internal reporting submited to the chief operating decision maker, deﬁned as the Management Group. The Management Group is responsible for allocating resources and assessing performance as well as making strategic decisions. Principles of revenue recognition are stated in accounting principles Note 2.6. Capital management The primary objective of the Group’s capital management is to ensure the Group maintains a solid capital structure enabling it to develop and build its business to maximize shareholder value. The Group’s objective is to maintain a balance of ﬁnancial assets that reﬂects the cash requirement of its operations and investments for the next 12 months. No change was made in the objectives, policies, or process for managing capital during the year ended 31 December 2021. Segment The management of the Group follow up the revenue by Business Area and geography. In 2020, there was no segment proﬁt reporting. During 2021, segment reporting has been implemented and for comparable ﬁgures, estimates have been applied, ref table below. Note 4 Critical accounting estimates and judgements in terms of accounting policies Business Area Business services is focusing on ERP, BI & Analytics, Devops, integrations and research management. Arribatec Business services provide simplicity by implementing, customize, maintain and support the entire business landscape with ERP as the core engine. We integrate it with other market-leading systems that provide beter operational support and insight than a single ERP system does. The preparation of the consolidated ﬁnancial statements in conformity with IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the accompanying disclosures, and the disclosures of contingent liabilities. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Business Area EA & BPM provides Enterprise Architecture and Business Process Management. Arribatec EA&BPM delivers solutions and long-term services within the spaces of business process management, enterprise architecture and corporate governance to major Norwegian and Nordic customers both in the private and public sector. Business Area Cloud provides Cloud solutions; hybrid, Azure, Splunk, GDPR. Arribatec Cloud provides consulting, outsourcing and cloud services to private and public enterprises. In addition to offering market leading cloud services from Microsoft and Google, Arribatec Cloud also operates its own public cloud offering based on Norwegian datacenters to accommodate special use cases for our customers. Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by deﬁnition, seldom equal the related actual results. The Group based its assumptions and estimates on parameters available when the ﬁnancial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reﬂected in the assumptions when they occur. The estimates and assumptions that have signiﬁcant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next ﬁnancial year are addressed on the following pages. Business area Hospitality delivers a various of different solutions within self-check-in, check-out, housekeeping management, conference systems and more. Annual report 2021 . 42 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Business Area Marine is the Business Unit of Arribatec Group focusing on the Maritime sector. Arribatec Marine competencies are the development, implementation and consultancy of the owned asset management system solutions: Infoship. Arribatec Marine history goes back to early age of Information Technology in the Maritime sector. Note 6 Accounts receivable NOK thousand Current 0-30 days 31-60 days 61-90 days 90+days Total Ageing, Accounts receivable 2021 Revenue divided by segment 49 285 25 505 23 200 6 016 5 819 676 7 004 415 3 366 88 674 (570) (570) 343 32 956 (456) (456) whereof estimated credit losses 2020 NOK thousand Business services EA & BPM Cloud 2021 223 390 72 967 87 673 1 097 2020 186 318 0 whereof estimated credit losses Provision for Expected Credit Losses (ECL) are included with NOK 570 thousand (456 thousand). The provision is based on a valuation per subsidiary at year end based on general assumptions as well as agreements with customers and payments made in next year. Accounts receivables are non-interest bearing. See Note 2 for a description of allowance for expected credit losses. Note 3 provides a description of the Group’s credit risk management. 32 994 610 Hospitality Marine 49 540 (20 729) 413 938 0 Eliminations Total revenue (65 898) 154 024 Disaggregation of revenue In the following table, revenue is disaggregated by primary service line, geography and recurrence. In presenting the geographic information, revenue has been based on the geographic location of legal entity. Note 7 Contract assets and liabilities Contract assets Contract assets are recognized for performance obligations satisﬁed over time, mainly from installation services and projects where progress is measured over time. When the consideration becomes unconditional the contract assets are reclassiﬁed to accounts receivables, which atributes the main changes to the contract assets in the periods shown. 2021 Consulting services Recurring Revenue One-time revenue NOK thousand Norway Total 273 672 111 297 131 872 92 742 126 924 14 345 4 313 14 877 4 211 2021 9 948 2020 4 912 6 824 0 Europe As of 1 January Americas 23 355 247 969 1 301 28 968 413 938 Performance obligations met Reversed over contract period From business combinations Translation difference 20 676 (16 006) 2 335 Total revenue 145 581 20 388 652 2020 157 0 Consulting services Recurring Revenue One-time revenue Total contract assets 31 December 19 549 12 387 NOK thousand Norway Total 97 362 39 727 16 935 64 236 37 588 16 768 118 591 26 198 1 786 0 6 928 354 It is expected that 36% of the above contract assets will be reversed in 2022, 32% in 2023 followed by 24% in 2024, 6% in 2025 and the remaining 2% in 2026. Europe Americas 168 There are no expected credit losses on Contracts assets as the contracts are mainly with governmental parties and therefore secured. Contracts are subject to valuation of credit losses in same way as Accounts receivable. Total revenue 27 984 7 449 154 024 There are no customers that represent more than 10% of revenue. Annual report 2021 . 43 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Contract liabilities Number of FTEs, end of year, per country 2021 1 2020 3 Contract liabilities relate to consideration received in advance of performance under revenue contracts with customers. Revenue is recognized as (or when) the Group fulﬁlls its performance obligation(s) under the contracts. Belgium Cyprus 3 0 Contract liabilities are presented in the table below: Denmark France 5 1 1 2 2021 1 283 2020 5 048 0 Germany Italy 17 1 12 0 As of 1 January Deferred revenue 38 779 (30 256) 11 679 Norway 65 200 13 22 1 1 Recognized as revenue in P&L From business combinations Translation difference (5 016) 1 251 0 Poland 107 14 22 0 Singapore Spain (2) Total contract liabilities 31 December 21 483 1 283 Sweden Contract liabilities are mainly invoiced to customers in advance and relating to 2022. United Kingdom USA 30 15 374 0 9 Total number of FTEs 171 Note 8 Personnel NOK thousand 2021 2020 (74 406) (12 489) (1 196) Salaries (205 315) (40 413) (8 110) Social security tax Bonuses Pension costs deﬁned contribution (Note 27) Other personnel cost (14 268) (4 573) (5 568) (5 484) (99 143) Total salaries and personnel expense (272 679) Average number of FTEs Number of FTEs, start of year Number of FTEs, end of year Average number of FTEs 2021 171 2020 90 374 273 171 131 Male 262 112 136 35 Female Annual report 2021 . 44 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 9 Key management Management remuneration 2021 NOK Thousand Board remuneration Salary Bonus Beneﬁts in kind Pension cost Total remuneration Management Per Ronny Stav - CEO 0 0 0 0 0 0 0 0 3 235 2 439 2 243 846 0 0 0 0 0 0 0 0 13 11 9 89 89 89 84 0 3 338 2 539 2 341 942 Jhonny Sharma - COO Geir Johansen - CFO Grete Thomassen - HR director (from May 2021) Ole Jacob Kjølvik - Strategy Director (from December 2021) Espen Karsrud - Group EVP Business Development (from November 2021) Else Thoresen - HR director (until March 2021) Management total 12 1 125 126 300 3 0 303 438 3 22 374 463 9 627 51 10 052 Members of the Board Martin Nes (Chairman) 267 200 150 0 0 0 0 0 0 0 0 0 0 0 0 267 200 Øystein S. Spetalen (Member) Kristin Hellebust (Member) 0 0 0 0 150 Henrik Lie-Nielsen (Member) Yvonne Litsheim Sandvold (Member) Members of the Board total Total salaries and personnel expense 150 0 0 0 0 150 200 967 967 0 0 200 0 0 0 967 9 627 51 374 11 019 The CEO, Per Ronny Stav has a 3 months notice period and is entitled to a severance pay for 12 months in case of termination by the company. Annual report 2021 . 45 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Management remuneration 2020 The Group Management consists of the Group Directors. Group Directors are the CEO, the CFO and the COO that are all employed by a Group company, in addition to the General Managers in the largest subsidiaries. NOK Thousand Board remuneration Salary Bonus Beneﬁts in kind Pension cost Total remuneration Management Per Ronny Stav - CEO Jhonny Sharma - COO Management total 0 0 0 3 200 1 800 1 583 0 8 5 27 31 4 818 1 835 6 653 5 000 1 583 12 57 Members of the Board Martin Nes (Chairman) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Øystein S. Spetalen (Member) Kristin Hellebust (Member) 0 0 0 0 0 0 0 0 Henrik Lie-Nielsen (Member) Yvonne Litsheim Sandvold (Member) Members of the Board total Total salaries and personnel expense 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5 000 1 583 12 57 6 653 The CEO, Per Ronny Stav has a 3 months notice period and is entitled to a severance pay for 12 months in case of termination by the company. The remuneration of the Board of Directors has been paid in 2021. Annual report 2021 . 46 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 10 Expenses NOK thousand 2021 2020 Cost - materials, software and services Hired consultants (29 889) (8 382) (7 152) (2 540) (7 916) 0 Hardware for resale Software for resale (45 539) (9 049) Other Total materials, software and services (92 859) (17 609) NOK thousand 2021 2020 Other operating expenses Marketing cost (5 534) (5 971) (867) (2 433) (1 306) Rental and leasing cost Travel cost (5 223) (21 537) (13 237) (3 697) (55 201) Fees for external services IT and communication cost Other operating cost Total operating expenses (12 385) (6 593) (2 126) (25 710) In 2020, a cost relating to Arribatec AS reverse takeover of Arribatec Solutions ASA, ref described in Note 2.1, was expensed with an amount of NOK 56.8 million. NOK thousand 2021 2020 Speci-cation of auditor's fee Statutory audit 1 107 749 0 646 300 Other assurance services Other non-assurance services Total 893 1 857 1 839 Annual report 2021 . 47 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 11 Right-of-use assets and lease liabilities Right-of-use assets YTD NOK thousand Buildings 15 867 9 446 (6 833) 0 Vehicles 143 Hardware Other 4 757 7 817 (4 170) 143 Total 20 768 22 501 (12 656) 0 Right-of-use assets per 1 Jan 2021 Addition of right-of-use assets Depreciation in the period Reclassiﬁcation 0 4 560 (1 421) 0 678 (233) (143) (16) Translation difference (331) 0 0 (347) Carrying amount of right-of-use assets, end of period 18 149 430 3 139 8 548 30 266 Remaining lease term Depreciation method 1-5 years Linear 1-4 years Linear 1-3 years Linear 1-3 years Linear Lease liabilities NOK thousand 31 Dec 2021 Undiscounted lease liabilities and maturity of cash outﬂow < 1 year 13 873 11 235 5 701 1-2 years 2-3 years 3-4 years 1 622 4-5 years 400 Total undiscounted lease liabilities, end of period Discount element 32 831 (1 337) 31 494 Total discounted lease liabilities, end of period The interest rate used for discounting the lease liability is based on the same as according to the terms of interest rate from the Group’s external ﬁnancing. Any movement of the interest rate +/- 1% will impact the lifetime discount element, ref table above, with approximately NOK 0.2m. Annual report 2021 . 48 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 12 Financial items NOK thousand 2021 2020 Finance income Interest income 259 2 193 146 236 892 Realized foreign exchange gains Other ﬁnancial income Total ﬁnancial income 119 2 597 1 247 Finance expenses Interest on debts and borrowings Interest expense on lease liabilities Realized foreign exchange losses Net unrealized foreign exchange losses Other ﬁnancial expenses (1 872) (1 079) (1 821) (979) (754) (953) (1 117) 0 (736) (120) Total ﬁnancial expenses (6 487) (2 945) Net ﬁnancial items (3 890) (1 698) Annual report 2021 . 49 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 13 Tax NOK thousand 2021 2020 NOK thousand 2021 2020 Income tax expense Deferred taxes Current tax Property, plant and equipment Receivable 2 689 (35) 687 68 Current Income Tax - Norway Current Income Tax - Other countries Current income tax from business combinations Deferred tax 1 741 398 0 3 596 0 Tax losses carried forward Other provisions 5 824 (2 676) 0 2 436 2 193 (2 159) Intangible assets (1 053) (1 895) 2 436 Change in deferred taxes - Norway Change in deferred taxes - Other countries Tax expense (6 963) 23 (13) 0 Deferred tax on intangible assets from business combinations Deferred taxes, net (13 375) (7 573) (4 802) 1 424 Reconciliation to balance sheet Deferred tax assets A reconciliation of the effective tax rate 9 511 (17 084) (7 573) 2 436 0 Proﬁt/(loss) before tax (53 660) (54 197) Deferred tax liabilities Net Deferred tax assets (liabilities) 2 436 Adjustment of current income tax of previous years Changes in unrecognized deferred tax asset Temporary differences 61 41 875 2 417 0 0 0 Tax rate 0 Effective tax rate Tax rate Norway 8.9 % (2.6 %) 22.0 % Non deductible Reverse takeover cost (not subject to taxation) Non deductible expenses 56 822 4 656 0 22.0 % 4 279 (2 906) 0 Non-taxable income Deferred taxes, capitalized (7 573) 19 755 2 436 Other tax effects (4 997) 2 285 Deferred taxes, not capitalized 18 050 Tax base (7 933) Income taxes calculated at country rate Tax previous year 2 120 19 503 0 Changes in unrecognized deferred taxes Tax expense (6 940) (4 802) 921 1 424 Annual report 2021 . 50 Contents / Arribatec 2021 / Operation, sales & outlook / Financials In 2020, the number of redemption shares represented the fact that 35.48% of Arribatec AS’ employees still held A and B shares of appr. 35% of the shares in Arribatec AS as per 31.12.2020. The Sales Purchase agreement between the sellers of Arribatec AS included a call option which gave the remaining AS shareholders the right and obligation to sell and exchange their shares to ASA shares. Arribatec Group ASA had the right and obligation to buy these shares in 2021. Note 14 Earnings per share Basic earnings per share (EPS) are calculated by dividing the proﬁt atributable to equity holders of the Company by the weighted average number of ordinary shares in Issue during the year according to the following number of outstanding shares. For 2022, the remaining obligation for share consideration for Qualisoft AS and Maksit has been issued, only the weighted dilution persists. For the acquired entity Integra, the share consideration is still outstanding. Issued shares and share capital Number of shares (NOK thousand) Share Capital 1 January 2021 418 583 331 12 423 200 3 499 998 117 203 3 478 980 Effects of dilution 2021 85 130 804 2 876 712 2 465 753 1 302 943 2020 Capital issue in relation to acq. of Facil, Jan Capital issue in relation to acq. of Microsky, Feb Capital issue in relation to acq. of Innit, Mar Capital issue in relation to acq. of Qualisoft, May Capital issue in relation to acq. of Maksit, Aug Capital issue in relation to merger with Arribatec AS, Sep 31 December 2021 Redemption shares to minority shareholdes of Arribatec AS Share consideration outstanding Qualisoft Share consideration outstanding Maksit Share consideration outstanding Integra 129 663 617 0 0 0 5 606 400 1 570 15 000 000 5 000 000 4 200 1 400 124 790 135 584 903 064 34 941 163 773 Diluted EPS amounts are calculated by dividing the proﬁt atributable to ordinary equity holders of the Company by weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be Issued on conversion of all the dilutive potential ordinary shares into ordinary shares. The following reﬂects the Income and share data used in the basic and diluted EPS calculations: Earnings per share NOK 2021 2020 Net proﬁt/(loss) to equity holders (48 858 404) (55 620 279) Total (48 858 404) (55 620 279) Number of shares (in thousands) Weighted average number of ordinary shares Effects of dilution, weighted average 489 277 730 91 776 213 305 239 615 129 663 617 Weighted average number of shares, adjusted for effects of dilution 581 053 943 434 903 232 Basic earnings per share Diluted earnings per share 1 (0.10) (0.10) (0.18) (0.18) 1) If Net loss, EPS per Basic and Diliuted share will be equal. Annual report 2021 . 51 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 15 Intangible assets 2021 Other intangible assets; Custom software Other intangible assets; Technical software Other intangible assets; Licenses NOK Thousand Customer relations Goodwill Total 132 942 0 Cost at 1 January 2021 Adjustment of opening balance Additions 93 827 15 529 12 568 (700) 826 1 000 0 10 018 0 700 0 4 876 0 0 0 0 153 5 855 19 706 195 537 0 Additions - internally developed From business combinations 1 Reclassiﬁcations 0 111 282 0 10 316 1 116 9 390 42 167 3 773 (713) (1 416) 54 353 40 972 0 0 6 613 (725) (39) (10 386) 0 Less government grants Translation difference 0 0 (1 438) (489) 352 112 170 325 57 526 470 Cost at 31 December 2021 205 279 29 975 4 979 Accumulated amortizations at 1 January 2021 Amortization 0 0 0 0 0 (3 084) (8 411) 0 (1 807) (3 091) (667) (11 335) (1 521) 0 (2 102) (1 898) 3 357 0 (7 660) (24 735) 0 Reclassiﬁcations (1 836) Impairment 0 (3 359) (10 093) (3 359) (35 755) Accumulated amortization at 31 December 2021 (11 495) (13 523) (643) Carrying amount at 31 December 2021 205 279 46 031 19 882 40 830 4 336 316 358 Useful life Inﬁnite 5 yrs 5-10 yrs 5 yrs 3-10 yrs 1) Ref Note 18, Business combinations. The development expenditures that do not meet the criteria for capitalization are recognized as salary and personnel expenses and other operating expenses in proﬁt and loss. The Group has received government grants related to development of software of NOK 1.4m (NOK 1.5m). The grants have been subtracted from the carrying amount of internally generated software. Development expense not capitalized, but expensed in operating expense amounts to NOK 1.1 million. Referring to PPA (Purchase Price Allocation) from business combination Note 18. For Impairment testing on Goodwill see Note 16. Annual report 2021 . 52 Contents / Arribatec 2021 / Operation, sales & outlook / Financials 2020 Other intangible assets; Custom software Other intangible assets; Technical software Other intangible assets; Other NOK Thousand Customer relations Goodwill Total 18 639 3 702 Cost at 1 January 2020 Additions 2 577 7 000 3 799 1 460 8 799 0 1 000 4 264 2 241 0 0 0 0 0 0 Additions - internally developed From business combinations Less government grants Cost at 31 December 2020 0 0 8 799 91 250 0 8 529 0 3 513 0 103 292 (1 490) 132 942 (1 490) 12 568 0 93 827 15 529 1 000 10 018 Accumulated amortizations at 1 January 2020 Amortization 0 0 0 (700) (2 384) (3 084) (191) (1 615) (1 807) (167) (500) (667) (1 022) (1 081) (2 080) (5 580) (7 660) Accumulated amortization at 31 December 2020 (2 102) Carrying amount at 31 December 2020 93 827 12 445 10 762 333 7 915 125 282 Useful life Inﬁnite 5 yrs 5-10 yrs 5 yrs 5-10 yrs Annual report 2021 . 53 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Cash ﬂow projections and key assumptions Note 16 Goodwill and impairment A ﬁve-year forecast of discounted cash ﬂows plus a 1.5% terminal growth was used to determine net present value of the CGU. Discounted cash ﬂows were calculated after tax and applying a WACC after tax. Estimated cash ﬂow covering the period 2022-2026 consists of Arribatec’s budget and strategy plan approved by the Board of Directors. Other assumptions are historical information, market analysis and discount rates. The cash ﬂow projections have been extrapolated based on expected growth rates from the actual performances within the individual CGU’s. Goodwill and intangible assets stated in the consolidated ﬁnancial position are mainly derived from excess value following the acquisitions of Instidata AS in 2019, Facil AS, Microsky AS and Innit AS (including its subsidiaries Innit Drift AS and Innit Utvikling AS) in 2020, and Maksit AS, Qualisoft AS, IB Group and Integra Ass. Ltd in 2021. Recognized goodwill amounts to NOK 205.3 million as of 31 December 2021. Other intangibles assets related to excess values in the Group accounts are customer relations and software, with a carrying amount of NOK 62.3 million as per 31 December 2021. The terminal value is based on the estimated after tax net cash ﬂow in 2026, using a standard perpetuity formula with a long-term growth rate of 1.5% (1.5%). Only goodwill has an indeﬁnite lifetime, all other intangible assets are amortized, ref Note 15. The calculation of VIU for the CGU’s is most of all sensitive when it comes to the following assumptions: Goodwill is tested for impairment for each cash generating unit (CGU) prior to preparation of the annual accounts. The test is performed annually, and when there are indications of impairment. There were no impairments of goodwill made during 2021. Discount rate The input data for the WACC is gathered from external sources. The recoverable amount for each CGU has been determined estimating their Value in Use (VIU) and comparing that to the carrying amount of the speciﬁc CGU. The calculation of VIU has been based on management’s best estimate, reﬂecting the Group’s strategy plan. The discount rates are derived as the weighted average cost of capital (WACC) for a similar business in the same business environment. 2021 3 % 2020 3 % Risk free interest rate Debt risk premium Equity risk premium Equity Beta 3 % 3 % 4 % 4 % Goodwill has been allocated for impairment testing purposes to the CGU’s below. 1.61 1.61 Cost of equity Tax rate 9.40 % 22 % 4.70 % 90 % 9 % 9.40 % 22 % 4.70 % 90 % 9 % NOK Thousand Norway UK Cloud 67 089 0 BizS 25 119 17 435 0 Marine 0 Hospitality EA&BPM 66 361 0 Total 182 985 17 435 24 416 After tax cost debt Equity weight WACC 0 0 0 Italy 0 4 859 4 859 0 4 859 Total 67 089 42 554 24 416 66 361 205 279 Cloud 5-10% 9-11% Bisz 2-10% Marine 7-10% 1-12% Hospitality 20-100% EA&BPM 5-35% 15 % Growth rate EBITDA margin 15-37% -33-34% Growth rate and EBITDA margin assumptions are based on historical experience and performance as well as market analysis used for budget and strategy plan per each CGU. Annual report 2021 . 54 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 17 Tangible assets 2021 2020 Ofﬁce Fixtures Ofﬁce Fixtures NOK Thousand equipment and ﬁtings Other 0 Total 10 114 3 443 11 366 0 NOK Thousand equipment and ﬁtings Other Total 4 661 1 537 3 916 10 114 Cost at 1 January 2021 Additions From business combinations1 9 367 2 760 8 399 (1 573) (331) 748 626 Cost at 1 January 2020 Additions 4 661 789 0 748 0 0 0 0 0 58 1 175 1 286 (352) 89 1 792 287 (905) 8 From business combinations Cost at 31 December 2020 3 916 9 367 Reclassiﬁcations 748 Disposals (1 588) 295 Translation difference Cost at 31 December 2021 198 Accumulated depreciation at 1 January 2020 From business combinations (3 100) (2 098) (892) 0 0 0 0 0 0 0 (3 100) (2 098) (1 042) (618) 18 819 3 572 1 239 23 631 Depreciation during the year (150) 0 Accumulated depreciation at 1 January 2021 From business combinations1 Depreciation during the year Reclassiﬁcations (6 707) (7 086) (1 510) 953 (150) (252) (523) (861) 352 0 (1 253) (186) (92) (6 857) (8 591) (2 219) 0 Disposals (618) Accumulated depreciation at 31 December 2020 (6 707) (150) (6 857) Carrying amount at 31 December 2020 2 659 598 0 3 258 Disposals 302 768 1 422 59 Translation difference 105 (30) (15) Useful life 5-10 yrs 5 yrs 5 yrs Accumulated depreciation at 31 December 2021 (13 943) (1 463) (779) (16 185) Carrying amount at 31 December 2021 4 876 2 109 460 7 445 Note 18 Business Combinations Useful life 5-10 yrs 5 yrs 5 yrs Arribatec has, during the last twelve months, acquired shares in the companies mentioned below and consequently controls the subsidiaries from the date of acquisition. In the purchase price allocations (PPA), the assets and liabilities of the companies have been measured at the estimated fair value at the acquisition date. 1) Ref Note 18, Business combinations. The preliminary purchase price allocation identiﬁed fair value adjustments on Intangible assets like customer relations and software and deferred tax liabilities/assets. The residual value of the purchase price allocation is allocated to goodwill. Arribatec acquired ﬁve companies during 2021 within IT and operation technology. The acquisitions are carried out in line with Arribatec’s strategy. The labor force and ’going concern’ elements are the main part of the acquired excess value and has been allocated to goodwill in accordance with IFRS 3. Goodwill in relation to the acquisition is related to different CGU’s as according to Note 16. The preliminary PPAs (Purchase price allocation) are shown on the next page. Annual report 2021 . 55 Contents / Arribatec 2021 / Operation, sales & outlook / Financials 2021 2020 NOK Thousand Maksit 18.02.2021 100 % Qualisoft 23.02.2021 100 % IB Group 20.01.2021 100 % 20 830 20 830 0 Infoship Integra 11.10.2021 100 % Microsky 11.11.2020 100 % 11 160 1 500 Facil 05.11.2020 100 % 24 846 0 Innit 03.11.2020 100 % Date of acquisition 01.04.2021 Acquired part of Company 100 % 258 258 0 Purchase price 35 987 25 787 10 200 0 85 605 54 855 30 750 0 36 268 16 569 2 863 69 543 58 442 11 101 Whereof Cash consideration Whereof Share consideration An earn-out component is included in the purchase price amounting to1 9 660 0 24 846 0 0 0 16 836 0 Fair value of assets and liabilities on date of acquisition Non-current assets Property, plant and equipment Goodwill 101 457 1 114 5 025 0 142 9 940 271 4 1 543 57 157 8 018 0 22 541 66 361 17 091 9 931 24 416 Customer Relations 9 234 15 128 0 16 610 511 0 Software 0 0 43 282 22 034 71 143 0 0 0 0 Other intangible assets Deferred tax assets 0 0 0 0 0 51 3 513 0 0 0 0 0 0 0 0 0 0 Other non-current assets Total non-current assets Current assets 0 0 0 267 31 876 81 946 71 527 294 34 640 10 713 24 471 70 498 Accounts receivable 3 675 263 21 856 7 218 3 060 1 202 240 31 7 648 462 1 861 1 034 1 0 63 8 087 6 631 Other current assets Contract assets (earned, not invoiced) Cash & cash equivalents Total current assets Total Assets 0 656 748 0 930 0 651 7 331 11 269 43 145 10 937 40 667 122 613 2 446 7 457 78 985 1 253 1 524 1 817 7 890 16 930 51 570 2 463 5 359 16 072 360 4 816 423 20 185 90 683 24 894 Non-current liabilities Non-current interest bearing debt Deferred tax liabilities 0 2 032 0 0 3 328 0 16 227 7 127 0 0 0 3 126 1 101 0 112 0 0 0 0 0 534 1 782 0 Other non-current liabilities & provisions Total non-current liabilities Current liabilities 14 472 37 825 1 549 1 549 2 032 3 328 4 228 112 2 316 Accounts payable 613 520 1 871 0 6 287 0 0 0 1 747 (443) 0 1 533 50 0 3 888 474 Tax liabilities 0 Current Contract liabilities (deferred revenue) Other current liabilities 0 10 942 20 867 0 737 0 2 0 48 0 3 621 372 13 306 0 10 9 771 0 3 215 0 14 180 283 Accrued expenses and prepaid income Total current liabilities Total Net assets 0 0 5 126 35 987 33 680 85 605 20 330 20 830 10 258 11 075 36 268 4 800 11 160 48 18 825 69 542 24 846 Net Sales full year Merged Merged Merged Merged 78 309 7 964 45 167 (17 838) 45 167 2 280 (2 147) 2 280 46 556 (2 870) 13 053 (133) 17 454 497 376 (167) 218 77 729 2 067 19 165 1 230 Proﬁt / (loss) full year Net Sales (Arribatec ownership period) Proﬁt / (loss) (Arribatec ownership period) 72 967 7 309 3 530 308 (17 838) (2 147) 16 1) The sellers are granted an Earn-out based on Target revenue for 2021-2022 and a Target EBITDA. The earn-out will be setled by a 50% cash consideration and 50% share consideration. Annual report 2021 . 56 Contents / Arribatec 2021 / Operation, sales & outlook / Financials The Group uses the following hierarchy for determining and disclosing the fair value of ﬁnancial instruments by valuation technique: Note 19 Financial instruments Set out below is a comparison by class of carrying amounts and fair values of all ﬁnancial instruments that are carried in the ﬁnancial statements. Level 1: The fair value of ﬁnancial instruments traded in active markets is based on quoted market prices Level 2: The fair value of ﬁnancial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market price and rely as litle as possible on entity-speciﬁc estimates. If all signiﬁcant Inputs require to fair value an Instrument are observable. The ﬁnancial assets principally consist of cash and cash equivalents obtained through the operating business. The ﬁnancial liabilities principally consist of trade and other payables arising directly from its operations. The fair value of the ﬁnancial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Level 3: techniques that use inputs that have a signiﬁcant effect on the recorded fair value that are not based on observable market data. Carrying amount Fair value Amortized Fair value through NOK Thousand cost proﬁt and loss Total Level 1 Level 2 Level 3 Total 31 Dec 2021 Financial assets Investment in shares1 Accounts receivable and other receivables Total ﬁnancial assets 0 90 964 90 964 60 0 60 90 964 91 024 0 0 0 0 0 0 60 90 964 91 024 60 90 964 91 024 60 Financial liabilities Accounts payable and other payables2 166 643 37 425 0 0 0 166 643 37 425 0 0 0 0 0 0 166 643 37 425 166 643 37 425 Interest bearing loan Total ﬁnancial assets 204 068 204 068 204 068 204 068 31 Dec 2020 Financial assets Investment in shares1 Accounts receivable and other receivables Total ﬁnancial assets 0 55 045 55 045 445 0 445 55 045 55 491 0 0 0 0 0 0 445 55 045 55 491 445 55 045 55 491 445 Financial liabilities Accounts payable and other payables2 83 103 8 389 91 492 0 0 0 83 103 8 389 91 492 0 0 0 0 0 0 83 103 8 389 91 492 83 103 8 389 91 492 Interest bearing loan Total ﬁnancial assets 1) Investment in shares is classiﬁed as Other non-current assets. 2) Consists of lease liabilites, other non-current ﬁnancial liabilities, accounts payable, contract liabilities, current tax payable and other current liabilities. Annual report 2021 . 57 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 20 Investments in subsidiaries Year of acquisition/ foundation Proﬁt after tax 2021 Total Equity 31.12.2021 Proﬁt after tax 2020 Total Equity 31.12.2020 NOK Thousand Ownership 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % Arribatec Group ASA Arribatec Norge AS1 Arribatec Hospitality AS2 Arribatec Cloud AS3, 4 Innit Utvikling AS 2015 2017 2019 2020 2020 2020 2021 2016 2015 2018 2018 2018 2017 2018 2018 2021 2021 2021 2021 2018 2021 2021 2021 2021 2021 (16 200) 823 331 154 8 628 8 156 5 954 2 253 1 850 5 776 669 (6 248) 6 823 (2 042) 869 362 308 na 97 055 8 789 25 202 69 063 2 292 11 468 na (7 724) 940 1 298 613 Microsky AS Arribatec EA & BPM AS5 Arribatec Sverige AB Arribatec Denmark ApS Arribatec Innovation Sp. z o.o. Arribatec Belgium 7 309 (4 453) 447 (891) 59 (680) 915 1 301 636 439 (180) 365 (300) 769 2 232 (78) na (181) 1 045 (156) 2 646 3 793 0 547 1 535 15 476 4 374 7 015 (1 024) (4 774) 241 Arribatec Italy S.r.l. (406) 2 289 2 899 (922) (18 876) 23 Arribatec Iberia SL Arribatec Americas Inc Arribatec Hospitality LLC IB S.r.l. na IB Digital Ship S.r.l. na na IB Cyprus LTD 160 4 057 (1 060) (1 893) 6 619 (1 870) (87) na na IB USA Inc 855 na na Arribatec Solutions UK LTD Integra Associates Ltd. Infoship GmbH (1 757) (134) (2 147) (188) (358) (767) na na na na na na Arribatec France na na Arribatec Solutions Trading Ltd Arribatec Solutions Pte. LTD (363) (709) na na na na 1) The acquired entity Maksit AS was merged into Arribatec Norge AS. 2) Include the merged entity Facil AS. 3) Innit AS changed name to Arribatec Cloud AS in 2021. 4) Innit Drift AS was merged into Arribatec Cloud AS during 2021. 5) Represents only the share of proﬁt related to the Arribatec time. All entities listed are included in the consolidated ﬁnancial statements of Arribatec Group ASA. During 2021, Arribatec Hospitality AS and Facil AS were merged. Furthermore, Arribatec Cloud AS changed name from Innit AS and was merged with Innit Drift AS. Arribatec Group ASA are holding direct ownership of most entities. Arribatec Americas INC and Arribatec Americas LLC are both subsidiaries of Arribatec Denmark Aps. The IB Group is owned by Arribatec Italy S.r.l and Arribatec Cloud AS holds the share of Arribatec Utvikling AS. Annual report 2021 . 58 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 21 Other non-current investments Note 23 Other current assets NOK thousand 2021 60 2020 60 NOK thousand 2021 4 189 2020 1 853 Investment in shares Bond notes in Italy Desposits Government receivables Prepaid cost 9 836 664 0 9 689 8 732 22 610 15 404 5 139 385 500 945 Other current assets Total other current assets Other 118 22 396 Total other non-current assets 10 678 Note 24 Cash Note 22 Inventory Cash and cash equivalents Cash, free 2021 39 919 3 839 2020 185 410 2 860 NOK thousand 2021 324 2020 0 Hardware for resale Licenses for resale1 Total Inventory Cash, restricted 2 855 3 179 2 439 2 439 Total cash and cash equivalents 43 758 188 270 1) Reclassiﬁed from Other current assets in 2020. Annual report 2021 . 59 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 25 Shares Issued shares and share capital 1 January 2020 Number of shares Share Capital (NOK) 20 largest shareholders at 31 December 2021 Ferncliff Listed Dai AS Arriba Invest AS Holding 116 554 032 80 965 209 24 598 694 23 911 850 23 014 128 21 000 000 18 710 527 16 952 000 10 797 884 10 000 000 8 542 908 7 553 463 6 888 760 6 770 735 5 688 213 Stake 19.9% 13.8% 4.2% 4.1% 16 077 403 7 164 688 16 077 403 7 164 688 Capital issue, Jan Capital issue, Mar 41 666 666 25 000 000 41 666 666 25 000 000 (64 734 305) 66 029 481 9 199 400 Dallas Asset Management AS Joar Aarenes Capital issue, Mar Capital decrease, Nov Nordnet Bank AB 3.9% 3.6% 3.2% 2.9% 1.8% New shares, Oct 235 819 574 32 855 000 10 000 000 50 000 000 418 583 331 12 423 200 3 499 998 Torstein Ingvald Tvenge SRK Consulting AS Erik Skaar Opdal Share issue, repair offer, Nov Share issue, employee offer, Nov Share issue, private placement, Dec 1 January 2021 2 800 000 14 000 000 117 203 333 3 478 496 979 999 Trude Halvorsen Tigerstaden AS 1.7% Capital issue in relation to acq. of Facil, Jan Capital issue in relation to acq. of Microsky, Feb Capital issue in relation to acq. of Innit, Mar Capital issue in relation to acq. of Qualisoft, May Capital issue in relation to acq. of Maksit, Aug Capital issue in relation to merger with Arribatec AS, Sep 31 December 2021 Datum AS 1.5% Hanekamb Invest AS Lani Invest AS 1.3% 5 606 400 1 569 792 1.2% 15 000 000 5 000 000 4 200 000 1 400 000 Norsk Regnesentral Danske Bank A/S LCS AS 1.2% 1.0% 124 790 135 584 903 064 34 941 238 163 772 858 5 518 001 0.9% 0.9% 0.8% 0.7% 0.7% 69.3% 30.7% 100.0% Lars Hugo Braadland Olsen Jan Arne Christensen Cantavit Holding AS AWR AS 5 097 500 4 961 750 Each share has the same rights and has a par value of NOK 0.28. 3 875 000 3 875 000 405 275 654 179 627 410 584 903 064 Total 20 largest shareholders Other shareholders Total Shares held by related parties Ferncliff Listed Dai AS Hanekamb Invest AS Finance Resources GJ AS Reaktor Returns AS Kjølvik Invest AS Holding 116 554 032 7 553 463 3 079 574 1 738 830 583 334 Stake 19.9% 1.3% Related to Øystein S. Spetalen, Member of the Board in Arribatec Group ASA Related to Martin Nes, Chairman of the Board in Arribatec Group ASA Related to Geir Johansen, CEO of Arribatec Group ASA 0.5% 0.3% 0.1% Related to Henrik Lie-Nielsen, Member of the Board in Arribatec Group ASA Related to Ole-Jakob Kjølvik, COO of Arribatec Group ASA Sicubi AS 240 712 0.0% Related to Bente Brocks, CFO (interim) of Arribatec Group ASA Annual report 2021 . 60 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 26 Borrowings Interest-bearing debt in detail NOK thousand Debt ﬁnancial institutions Type Currency NOK NOK NOK NOK NOK NOK EUR Facility limit Interest rate Year of maturity 2023 31 Dec 2021 5 710 185 31 Dec 2020 DNB Revolving credit facility Unsecured bank loan Revolving credit facility Unsecured bank loan Leasing & ﬁnance company Governmental 7 000 6.15% 5 018 336 1 346 445 682 562 0 DNB 4.65% 2023 DNB 6 000 4.5% 4.5% 2021 0 DNB 2025 0 DLL 4.5% 2024 493 The Norwegian Research Council Bank Intesa, Italy Bank Progeto, Italy Bank Carige, Italy Bank Passadore, Italy Italian banks, ref above Total 3.35% 2022 188 Unsecured bank facilities Unsecured bank loan Unsecured bank loan Unsecured bank loan Revolving credit facility EURIBOR+1.95%-2.40% EURIBOR+5% 1.3% 2027 9 824 7 236 7 478 2 991 3 320 37 425 EUR 2025 0 EUR 2027 0 EUR EURIBOR+1.5% 1.0-4.75% 2028 0 EUR 2023 0 8 389 Credit Other facilities borrowings Total Balance at 1 Jan 2021 6 364 2 026 8 389 Acquisition of subsidiaries 4 904 11 323 16 227 Proceeds from loans and borrowings Repayment of loans and borrowings Total changes in ﬁnancial cashﬂow 4 012 (6 079) (2 067) 18 445 (3 006) 15 439 22 457 (9 085) 13 373 Translation difference (170) (394) (564) Total Borrowings at end of period 9 030 28 394 37 425 Annual report 2021 . 61 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 27 Pensions Note 30 Transactions with related parties Arribatec Group meets the different local mandatory occupational pension requirement. The following transactions were approved by the General meeting in Arribatec Group ASA 20 November in 2020. Ferncliff is a related party to Tycoon Industrier AS, related to Øystein S. Spetalen, Member of the Board in Arribatec Group ASA. Arribatec operates deﬁned contribution retirement beneﬁt plans for all qualifying employees of its subsidiaries in Norway, Sweden and Denmark. The only obligation of the group with respect to retirement beneﬁt plan is to make the speciﬁed contributions. NOK thousand 2021 562 0 2020 1 290 3 400 4 690 Ferncliff AS - Fee for CEO and CFO for hire Ferncliff AS - Fee related to capital increase Total Related parties transactions The employees of other subsidiaries are member of a state managed retirement beneﬁt plan operated by the government. The subsidiaries are required to contribute a speciﬁed percentage of payroll costs to the retirement beneﬁt scheme to fund the beneﬁts. 562 Note 28 Provisions Note 31 Pledged assets The Group have no pledged assets. NOK thousand 2021 9 586 9 541 2020 Severance indemnity funds in Italy Non-current part of Integra earn-out estimate Other provisions 0 0 0 0 3 661 Note 32 Subsequent events Total provisions 22 789 Subsequent to 31 December 2021, the following highlights has occurred: • • • EU sanctions on Russia affects one of Arribatec’s client in Italy, however we expect a modest impact on current operation. Effective 1 January 2022 Geir Johansen has been appointed as CEO, while Per Ronny Stav has taken up the position as CCO. A private placement of 100 000 000 shares, each at a price of NOK 0.50 per share was completed in April 2022. Note 29 Other current liabilities NOK thousand 2021 16 172 31 337 10 786 6 748 2020 9 049 10 011 0 Employer tax and employee withholding tax Accrued holiday payments and bonuses Remaining part of acq. price, Integra VAT liabilities 2 576 0 Severance payments 3 069 Other short term liabilities Total other current liabilities 14 768 82 880 13 429 35 064 Annual report 2021 . 62 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Terms and abbreviations and APMs ¶ Terms and abbreviations APAC BA Asia/Paciﬁc EPS Earnings Per Share Euro RTO Reverse take over Business Area BA Business Services Board of Directors Cash Generating Unit BA Cloud EUR FTE SEK Swedish Krone BizS Full Time Equivalent BA Hospitality Saas Solaas USD Software as a service Solution as a service US dollar BoD Hspt IFRS Marine M&A NOK Opex RR CGU International Financial Reporting Standards BA Marine Cloud DKK VIU Value in Use Danish Krone Mergers and Acquisitions Norwegian Krone WACC WAEP Weighted Average Cost of Capital Weighted Average Exercise Price EA-BPM BA Enterprise Architecture & Business Process Management Operating expenses EBIT Operating proﬁt, Earning before Interest and Tax Recurring revenue, derived from sale of services and solutions through subscription models this reporting period EBITDA Earnings Before Interest, Tax, Depreciation and Amortization APM / KPI deﬁnition Gross proﬁt EBITDA Operating revenue less materials, software and services Arribatec uses EBITDA and adjusted EBITDA as an alternative performance measures (APM) to beter reﬂect its operational business performance and to enhance comparability between ﬁnancial periods. These alternative performance measures are reported in addition to, but not as a substitute for, the performance measures reported in accordance with IFRS. Earnings before Interest, Tax, Depreciation and Amortization NOK thousand 2021 2020 Adjusted EBITDA EBITDA, adjusted for calculated reverse take-over cost, restructuring cost and direct M&A cost EBITDA (6 800) 0 (45 259) 56 822 3 314 Cost from reverse take over M&A cost EBITDA margin Equity ratio EBITDA as a percentage of revenue Equity as a percentage of total assets 1 959 3 240 (1 601) Restructuring cost Adjusted EBITDA 0 14 877 Annual report 2021 . 63 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Arribatec Parent Company Statement of Proﬁt and Loss 65 66 67 68 Parent Company Statement of Financial Position Parent Company Statement of Cash Flow Solution ASA Parent Company ¶ Notes to the Parent Company Financial Statement Annual report 2021 . 64 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Statement of Proꢀt and Loss ¶ For the year ended 31 December NOK thousand Note 2021 2020 Revenue 7 093 0 0 456 0 Other income Materials, software and services Gross proꢀt (14 031) (6 938) 456 Salary and personnel costs Other operating expenses Total operating expenses 2 3 (1 490) (15 522) (17 012) (165) (8 561) (8 726) EBITDA (23 950) (8 270) Depreciation, amortization and impairment 12 472 0 EBIT (36 423) (8 270) Interest income 942 15 848 (178) 64 0 Other nancial income Interest expense 4 5 (2) Other nancial expenses Net ꢀnancial items Proꢀt/(loss) before tax Tax expense (2 428) 14 186 (2 310) (2 248) (10 518) 0 (22 237) 6 037 6 Proꢀt/(loss) after tax aributable to equity holders of the parent company (16 200) (10 518) Annual report 2021 . 65 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Statement of Financial Position ¶ For the year ended 31 December NOK thousand Note 2021 2020 NOK thousand EQUITY AND LIABILITIES Equity Note 2021 2020 ASSETS Non-current assets Property, plant and equipment Other intangible assets Deferred tax assets 7 8 6 9 1 773 15 006 0 Paid in capital Share capital 0 0 163 773 582 605 746 378 117 203 493 716 610 919 8 505 Other paid in capital Total paid in capital Other equity Investments in subsidiaries Intercompany non-current receivable Total non-current assets 303 817 27 322 356 423 343 554 0 343 554 Other reserves Other equity 0 (415 224) (415 224) 16 175 (241 122) Current assets Total other equity (224 946) Accounts payable, external Accounts payable, internal Other receivables 127 24 365 0 0 0 215 Total equity 331 154 385 973 Other current assets 4 601 26 987 6 391 62 470 0 Non-current liabilities Intercompany current receivables Cash and current deposits Total current assets 0 Intercompany interest-bearing loans Total non-current liabilities 18 425 0 10 168 249 168 464 18 425 0 Current liabilities TOTAL ASSETS 418 893 512 018 Accounts payable, external Accounts payable, internal Public duties payable 4 728 38 759 (4 102) 27 603 2 325 4 051 0 0 Other current liabilities, external Other current liabilities, internal Total current liabilities Total liabilities 121 995 0 Oslo, 28 April 2022 69 314 87 739 126 045 126 045 Martin Nes Chairman of the board Øystein Stray Spetalen Board member Yvonne Litsheim Sandvold Board member TOTAL EQUITY AND LIABILITIES 418 893 512 018 Kristin Hellebust Board member Henrik Lie-Nielsen Board member Geir Johansen CEO Annual report 2021 . 66 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Statement of Cash ꢀow ¶ For the year ended 31 December NOK thousand Note 2021 2020 Operating activities Proꢀt/(Loss) before tax (22 237) (10 518) Adjustments for: - (Increase)/decrease in accounts receivable - (Decrease)/increase in accounts payable - Depreciation and amortization Change in other current assets / liabilities Net cash ꢀows operating activities (3 768) (12 632) 12 472 9 212 2 420 0 (168 356) (194 521) (592) 521 Investing activities Cash received through business combination Cash consideration Investment in subsidiaries Capitalized tangible and intangible assets Net cash ꢀows investing activities 5 7 1 339 153 065 (7 917) 0 (224 305) 0 146 487 (224 305) Financing activities Proceeds from borrowings Other changes in equity Proceeds from shares issued Share issue costs 21 850 (221 630) 86 557 0 (50 000) 451 953 (12 891) 389 062 (600) Net cash ꢀows nancing activities (113 824) Net change in cash and cash equivalents (161 858) 168 249 6 391 165 280 2 969 Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 168 249 Annual report 2021 . 67 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 1 Accounting principles Note 2 Note 3 Note 4 Note 5 Note 6 Note 7 Note 8 Note 9 Note 10 Note 11 Note 12 Note 13 Employee compensation Other operating expenses Other ﬁnancial income π Notes ¶ Other ﬁnancial expense Tax Property, plant and equipment Other intangible assets Shares in subsidiaries and intercompany Cash and short-term deposits Share capital and shareholder information Equity Events after the balance sheet date Annual report 2021 . 68 Contents / Arribatec 2021 / Operation, sales & outlook / Financials down no longer exists. Depreciation is made on a straight-line basis over the asset’s estimated useful life, which is assessed on an individual basis, ranging from three to ﬁve years. Note 1 Accounting principles 1.1 Basis for preparation of the company accounts 1.8 Other intangible assets The annual accounts are set up in accordance with the Accounting Act of 1998, Norwegian accounting principles (NGAAP) and generally accepted Norwegian accounting best practice (NGRS). The annual accounts consist of the income statement, balance sheet, cash ﬂow statement and notes. The annual accounts constitute a whole. Intangible ﬁxed assets are recognized at historical cost in the balance sheet, less accumulated depreciation and impairment losses. Amortization is calculated using the straight-line method to allocate the cost over their useful lives of 3 to 5 years. The most important accounting principles that are used in the preparation of the annual accounts are as follows: 1.9 Shares in subsidiaries In Arribatec Group ASA’s company accounts, shares in subsidiaries are valued in accordance with the cost method. Group contributions are entered in the parent company’s accounts as income in investment in subsidiaries under ﬁnancial items, in the extent to which the distribution relates to the earnings accrued in the holding period. Other received group contributions are entered as a reduction of cost price of the shares. Provided group contributions net after tax are entered as increased investment in subsidiaries. Shares in subsidiaries are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may exceed the fair value of the investment. An impairment loss is reversed if the impairment is deemed to no longer exist. 1.2 Currency The functional currency of the company is the Norwegian krone, NOK. Monetary items in foreign currencies are valued at the year-end exchange rate. Other assets and liabilities in foreign currency are valued according to general valuation regulations. Realized and unrealized currency gains or losses on transactions denominated in other currencies than NOK as well as currency gains or losses on assets and liabilities in a currency other than NOK are included in other Financial Income. 1.10 Receivables 1.3 Revenue Receivables are initially recognized at transaction price, subsequently accounted for at amortized cost and are reviewed for impairment on an ongoing bases. Provisions for losses are made based on an individual analysis of the individual receivables. Revenues mainly consist of sales of services to other companies in the Group. The company recognizes revenue when it transfers control of a good or service to a customer. Dividends and group contributions from subsidiaries are recognized in the same year in which they are earned in the underlying companies, and when such distributions are expected to be resolved, and are included in the underlying companies’ annual accounts. Interest income is recognized as it is earned. 1.11 Taxes Tax expenses consist of tax payable and the change in deferred tax. Deferred tax / tax assets are calculated on all differences between accounting and tax values of assets and liabilities. Deferred tax is calculated at 22 % based on the temporary differences that exist between the accounting and tax values, and tax loss carried forward at the end of the ﬁnancial year. Net deferred tax assets are recognized to the extent that it is likely that they could be utilized. Tax expenses and deferred tax are entered in the accounts directly against equity so far as the tax items relate to items recognized directly against equity. 1.4 Expenses Expenses are included with and expensed simultaneously with the income that the expenses are atributable to. Costs that cannot be directly atributed to income are expensed when incurred. Interest and fees are expensed as these are earned as income or incurred as costs. 1.5 Deﬁned contribution pension schemes 1.12 Leasing agreements The obligations of the Company related to payments of deﬁned contribution retirement plans are expensed in the income statement as they are earned by the employee for services conducted on behalf of the employer during the period. Leases where the most signiﬁcant risks and returns associated with ownership of the asset are not acquired by the company are classiﬁed as operating lease agreements. Lease payments are classiﬁed as an operating expense and are recognized linearly over the contract period. 1.6 Classiﬁcation of assets and liabilities 1.13 Use of estimates Fixed assets and non current liabilities consist of items expected to be setled more than twelve months after the balance sheet date. Current assets and current liabilities consist of amounts that are expected to be setled within twelve months after the balance sheet date. Management has used estimates and assumptions that affect the income statement and the valuation of assets and liabilities, as well as contingent assets and liabilities on the balance sheet date during the preparation of the annual accounts in accordance with generally accepted accounting principles. Fixed assets are valued at historical cost but writen down to actual value when the reduction in value is not expected to be temporary. Fixed assets with a limited economic lifetime are depreciated in accordance with a depreciation plan. Long-term loans are recorded at the nominal received value at the time of establishment. Current assets are valued at the lowest of the cost value and actual value. Long-term liabilities are recorded at the nominal received value at the time of establishment. 1.14 Contingencies and events after the Balance Sheet date Contingencies are recognized in the ﬁnancial statements when probable of occurrence and reliably estimable. 1.13 Cash Flow Statement The cash ﬂow statement is prepared according to the indirect method. Cash and cash equivalents include cash, bank deposits and other short-term liquid investments. 1.7 Tangible ﬁxed assets Tangible ﬁxed assets are recognized at historical cost in the balance sheet, with a deduction for accumulated depreciation and any impairment. The write down is reversed when the basis for the write Annual report 2021 . 69 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 2 Employee compensation Note 4 Other ﬁnancial income NOK Thousand 2021 0 2020 165 0 NOK Thousand 2021 7 649 6 789 1 411 2020 Salaries Intercompany Group contribution received Intercompany accrued dividend received Realized foreign exchange gains Total 0 0 0 0 Board members and election commitee fees1 1 490 1 490 0 Total 165 0 15 848 Average FTE 1) Including Social security and training paid to board members. Arribatec Group ASA had no full-time employees during 2021, the Group Management has been employed in other Arribatec companies. Note 5 Other ﬁnancial expense NOK Thousand 2021 0 2020 (2 310) 0 Write off intercompany loan to Finn Clausen Sikkerhetssystemer AS Note 3 Other operating expenses Other (2 428) (2 428) Total (2 310) NOK Thousand 2021 3 024 0 2020 16 Consultants, etc Legal costs 989 0 R&D related costs Management-for-hire (CFO/CEO) Computer and software costs Leasing 170 0 2 375 0 2 805 5 027 2 516 860 0 0 Audit and accounting fees Stock fees/Listing of shares Setlement dispute Other 577 2 229 1 000 1 374 8 561 1 119 15 522 Total Annual report 2021 . 70 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 6 Tax Note 7 Property, plant and equipment Ofﬁce Fixtures NOK Thousand equipment and ﬁtings Other 0 Total 0 NOK Thousand 2021 (22 237) 0 2020 (10 518) 3 502 Cost 1 January 2021 Additions 0 895 0 0 Earnings before tax 745 0 1 640 3 688 5 328 Permanent differences Change in temporary differences Taxable income From merger with Arribatec AS Cost 31 December 2021 3 142 4 037 546 546 6 037 (38 761) (45 777) 745 (16 200) Accumulated depreciation 1 January 2021 From merger with Arribatec AS 0 (3 015) (96) 0 (378) (67) 0 0 0 0 0 (3 393) (162) Payable tax on this year’s result Deferred tax 0 0 0 Depreciation during the year 8 505 Accumulated depreciation 31 December 2021 (3 111) (445) (3 555) Deferred tax Deferred tax is recognized with NOK 8.5 million in 2021. Carrying amount 31 December 2021 926 102 745 1 773 Useful life 5-10 yrs 5 yrs 5 yrs Annual report 2021 . 71 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 9 Shares in subsidiaries and intercompany Note 8 Other intangible assets Book value Equity in subsidiaries Custom software NOK Thousand Ownership 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% of shares 44 250 32 224 68 931 11 160 85 605 586 NOK Thousand Licenses Other Total 0 Arribatec Norge AS Arribatec Hopitality AS Arribatec Cloud AS Mikrosky AS 8 628 8 156 5 954 1 850 5 776 1 535 1 301 Cost 1 January 2021 Additions 0 569 0 0 0 0 569 Additions - internally developed From merger with Arribatec AS Less government grants Cost 31 December 2021 6 433 24 455 (725) 0 0 6 433 26 100 (725) 32 377 1 544 0 101 0 Arribatec EA &BPM Arribatec Belgium Arribatec Denmark Integra Associates Ltd Arribatec France 30 732 1 544 101 56 36 268 102 6 619 (87) Accumulated amortizations at 1 January 2021 Amortization 0 (3 681) (4 996) (8 311) 0 (309) (44) 0 0 (31) 0 0 (4 021) (5 040) (8 311) Arribatec Solutions Trading Arribatec Iberia SL Arribatec Sverige AB Arribatec Italia 59 (363) 4 374 669 From merger with Arribatec AS Impairment 28 0 7 309 17 024 218 Accumulated amortization 31 December 2021 (16 987) (352) (31) (17 371) 15 476 439 Arribatec Innovation Sp zoo Total Carrying amount 31 December 2021 13 745 1 191 70 15 006 303 817 60 324 Useful life 5-10 yrs 3-10 yrs 3-10 yrs Note 10 Cash and short-term deposits As of 31 December 2021 the Company had a cash balance of NOK 6.4 million, with no restricted cash. Note 11 Share capital and shareholder information The Company is listed on the Oslo Stock Exchange under the ticker ARR. Share capital in the company per 31 December 2021 consisted of 584 903 064 shares, each with a nominal value of NOK 0.28. Total share capital was NOK 163 772 858. Annual report 2021 . 72 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Note 12 Equity For the year ended 31 December Equity related to the shareholders of the parent company Restricted Share capital Other paid in capital Other Equity Total Equity NOK Thousand Capital Increase employees offer, Nov Capital increase repair issue, Nov Capital increase, Private placement Dec Cost of share issue 2 800 9 199 2 800 9 199 14 000 14 000 (12 891) (12 891) 385 973 Closing balance on 31 December 2020 117 203 117 203 0 493 716 (224 946) Balance on 1 January 2021 493 716 0 (224 946) (16 200) (16 200) 385 973 (16 200) (16 200) Result of the period Total comprehensive result for the period Other equity transactions 13 802 (13 802) 0 (124 575) 86 557 0 Merger effect (124 575) Capital increase related to business combinations Capital increase related to merger with subsidiary Arribatec AS Share issue cost 11 628 34 941 74 929 158 (35 100) (600) (600) Closing balance 31 December 2021 163 773 582 605 (415 224) 331 154 Note 13 Events after the balance sheet date From 01.01.2022, the corporate staff is employed by Arribatec Group ASA. Annual report 2021 . 73 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Auditor’s Statement ¶ Annual report 2021 . 74 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Annual report 2021 . 75 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Annual report 2021 . 76 Contents / Arribatec 2021 / Operation, sales & outlook / Financials π Statement of Corporate Governance ¶ This chapter describes Arribatec Group ASA’s (“Arribatec” or “the Company”) compliance with the Norwegian code of practice for corporate governance. The Company’s Board of Directors embraces the principles for good corporate governance and is vigilant about the Company’s adherence to these principles. This report includes the information required to comply with §3-3b in the Norwegian Accounting Act. CORPORATE GOVERNANCE CONTROL AND GOVERNANCE Good internal control and governance principles shall contribute to predictability and risk mitigation for owners and other stakeholders. As a security provider, understanding and adhering to rules and regulations is of the utmost importance to Arribatec. Good corporate governance beneﬁts the Company’s reputation and thus value, and vice versa. 1. Corporate Governance at Arribatec Group ASA At all times, the Company seeks to comply with the most recent applicable legal framework for companies listed on the Norwegian stock exchange. The Company adheres to the following set of principles with regards to corporate governance: Transparency The communication between the Company and its stakeholders shall be based on trans- parency about maters that are relevant to evaluate the operations of the Company. The Company endorses the “Norwegian code of practice for Corporate Governance” (“NUES”) in its most recent revision (October 2018), which is available on www.nues.no. The Company conducts annual corporate governance reviews to ensure continued compliance. Considering the size and maturity of the Company, there may be deviations from the code. Arribatec will adhere to the principle “declare or explain” regarding any non-compliance with respect to the code. The Company’s policies, instructions and internal processes are continuously developed. Independence The Board of Directors shall act independently of the Company’s executive management, to secure that decisions are made on fair and neutral grounds. Equality All shareholders shall be treated equally. Annual report 2021 . 77 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Transactions with related parties: 2. Operations and corporate social responsibility The Company’s board members, management and signiﬁcant shareholders are considered related parties. Any transactions with related parties are carried out on an arm’s length basis. If the value of such a transaction is signiﬁcant, the Board of Directors is responsible for assigning an independent third party to perform a valuation. Alternatively, the transaction in question can be treated as an issue at the General Meeting, in accordance with the Norwegian Public Limited Liability Companies Act. The Board of Directors prepares annual business plans that includes the goals, key strategies and risk proﬁle for the Company, which shall be reviewed on an annual basis. The Company has implemented ethical and corporate social responsibility guidelines in accordance with its basic corporate values, which describes how the Company shall integrate its social considerations in its business. The guidelines are published on Arribatec’s website, www.arribatec.com. 5. Shares and negotiability 3. Equity and Dividend The shares in the Company are freely transferable, and there are no constraints in the Articles of Association preventing or contradicting this. Equity: The Company strives to maintain a healthy relation between the Company’s equity and other forms of ﬁnancing, given the Company’s strategy and risk proﬁle. The Board of Directors takes immediate and appropriate action should the equity or liquidity situation of the Company prove to be below an acceptable level. 6. General meetings The General Meeting is the main governing body of the Company. The Board shall facilitate so that all shareholders are given the opportunity to participate in General Meetings, and that the General Meetings are an effective forum for the views of shareholders and the Board of Directors. Dividend policy: Arribatec is growing fast, both organically and through M&A activities. Both these avenues for growth require liquidity and availability of sufﬁcient funding as well as a healthy equity ratio. While the company is in an expansion phase, the Board is not planning for regular dividends to be paid to the shareholders. There has not been given, nor proposed to give, a mandate to the Board of Directors to approve a distribution of dividends. Notiﬁcation: No later than 21 days prior to the Annual General Meeting (“AGM”), an invitation will be made available on the Company’s website, www.arribatec.com. Supporting information on resolutions to be considered, as well as the recommendations of the Nomination Commitee will be presented in due time before the AGM. The Board of Directors seeks to ensure that all shareholders are provided with sufﬁcient information to form qualiﬁed views on the maters discussed at the General Meeting. The Company’s Articles of Association provides that the Company does not have to send documents relating to maters to be considered by the General Meeting by mail to shareholders when these documents are made available on the Company’s website. Any such documents shall, however, be sent free of charge upon request from individual shareholders. Further, the right to participate and vote at the Company´s General Meeting can only be exercised for shares when the purchase of shares is listed in the shareholder register no later than ﬁve workdays prior to the General Meeting. Other than aforementioned, there are no provisions in the Articles of Association regarding General Meetings in the Company that deviates from the provisions of the Norwegian Public Limited Companies Act. The AGM will be held no later than 30 June each year. The AGM will be held in Oslo, unless otherwise is clearly speciﬁed. Board authorizations: Authorizations to the Board of Directors to approve share capital increases shall be conﬁned to deﬁned purposes and should not be given for longer periods of time than until the next Ordinary General Meeting. If an authorization encompasses several purposes, each purpose should be treated as a separate issue at the General Meeting. This also applies to authorizations permiting the repurchase of shares. The Extraordinary General Meeting held 29 June 2021 gave the Board of Directors authorization to increase the Company’s Share Capital by up to NOK 63 715 810. The authorizations are valid until next ordinary general assembly, and no later than 30 June 2022. 4. Equal treatment of shareholders and transaction with related parties Class of shares: The Company has one class of shares, without any form of voting restriction imposed. Each share represents one vote at the Company’s General Meeting. The par value per share is NOK 0.28. Participation by shareholders in absentia: Shareholders that are unable to atend the General Meeting in person, are encouraged to vote by proxy. In connection with any General Meeting, the Company provides information on proxy voting, designate a person who will be available to vote on behalf of the shareholders in question, and prepare a form for the appointment of a proxy. Pre-emption rights of existing shareholders: The Company’s existing shareholders have pre-emption rights to subscribe for shares in the event of share capital increase, unless special circumstances necessitate a deviation from this principle. Any decision to deviate from the pre-emption rights of existing shareholders shall be justiﬁed and in accordance with the authorization given to the Board of Directors from the General Meeting. The justiﬁcation shall be publicly disclosed in a stock exchange announcement issued in connection with the increase in share capital. Annual report 2021 . 78 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Atendance, agenda and execution: Board members, the Nomination Commitee and the auditor are encouraged to atend the General Meeting in person. The Company will make arrangements to ensure that an independent chairman for the General Meeting can be elected. The company will conduct General Meetings by way of web meetings if the situation requires it. 9. The Board of Directors – work and instructions The formal responsibilities of the Board of Directors are mandated by Norwegian law. The fundamental responsibility of the directors is to oversee day-to-day management and evaluate strategy, to exercise their business judgment acting in what they reasonably believe to be the best interests of the Company and its shareholders. The Board of Directors is also to oversee such maters as are required by statutory law, the Company’s Articles of Association, policies, instructions and procedures as well as resolutions or the resolutions of the General Meeting. It is the duty of the Board of Directors to monitor management’s performance to ensure that the Company operates in an effective and ethical manner, focused on creating value for the Company’s shareholders. The Board of Directors also evaluates the Company’s overall strategy and evaluates performance against the manage- ment’s operating plan. The Board of Directors is responsible for supervising strategic, ﬁnancial and execution risks, as well as exposures associated with the Company’s business strategy, products- and services innovation and sales road map, policy maters, signiﬁcant litigation and regulatory exposures, and other current maters that may present material risk to the Company’s ﬁnancial performance, operations, infrastructure, plans, prospects or reputation, acquisitions and divestitures. Furthermore, the Board of Directors shall control the ongoing activities of the Company in a satisfactory manner. Instructions for the Board of Directors: The Board of Directors shall issue instructions for its own work as well as for the executive personnel with emphasis on clear internal allocation of responsibilities and duties. In order to ensure a more independent consideration of maters of a material character in which the Chairman of the Board is, or has been, personally involved, the Board’s consideration of such maters shall be chaired by some other members of the Board. 7. Nomination Commitee Requirements for the Company’s Nomination Commitee are outlined in the Articles of Association, §6. According to the Company’s Articles of Association the Company shall have a Nomination Commitee consisting of 2-5 members by the further decision of the General Meeting. Pursuant to the guidelines for the Nomination Commitee, the Nomination Commitee shall, inter alia, assess the need for change in the Board of Directors, propose candidates for election to the Board of Directors and propose remuneration to be paid to such members. The Nomination Commitee is responsible for assessing the need for change in the Board of Directors, proposing, in consultation with relevant shareholders, candidates for election to the Board of Directors, and proposing the remuneration to be paid to such members. All members of the nomination commitee are independent of the Board of Directors, CEO and other executive management staff. The nomination commitee ensures that due atention is paid to the interests of the shareholders and the company’s requirements for comeptence, capacity and diversity. The nomination commitee also takes account of relevant statutory requirements regarding the composition of the company’s governing bodies. 8. The Board of Directors – composition and independence According to the Articles of Association, the Board of Directors should consist of three to seven members, chosen by the General Meeting. The Chairman of the Board is elected by the General Meeting. The composition of the Board shall ensure that the Board can atend to the common interests of all shareholders and meet the Company’s need for expertise, capacity and diversity. It is of great importance to the Company that the board members have the relevant competencies to independently evaluate the cases presented to them by the executive management, as well as to monitor the daily operations of the Company. Board commitees The Board has established an audit commitee. The audit commitee’s main responsibilities are to supervise the Group’s internal control and risk management system, to ensure that the auditor’s independency, and to ensure that the annual accounts give a fair picture of the Group’s ﬁnancial results and ﬁnancial condition in accordance with generally accepted accounting practice. The audit commitee works as the Board’s risk commitee, reviews the procedures for risk management, and assess the risks and ﬁnancial controls related to the Group’s business activities. The term of ofﬁce for members of the Board of Directors shall not be longer than two years at the time. Members of the Board of Directors may be re-elected. The Company’s Board of Directors shall normally not include members of the executive management team. The Company strives to apply NUES’ criteria to evaluate whether a director can be considered independent. The Board should have a composition that enables it to atend to the common interests of all shareholders and operate independently of special interests. Any deviation from the independency principle will be properly explained by the Company. Any director experiencing a change in his or her ability to act independently is obligated to notify the Chairman of the Board. At least two of the shareholder-elected board members shall be independent of the Company’s main shareholders. Instructions for the CEO: Executive management and Board of Directors’ responsibilities are clearly segregated. The CEO shall follow the guidelines and instructions issued by the Board of Directors. The CEO is responsible for day-to-day management of the Company pursuant to section 6-14 of the Norwegian Public Limited Companies Act. The CEO represents the Company externally in maters that form part of the day-to-day management. The day to day management does not cover maters of extraordinary nature or of major importance. However, the CEO is authorized to decide on maters of extraordinary nature or of major importance in cases, where the decisions of the Board of Directors cannot be awaited without serious detriment for the Company. The Board of Directors shall be notiﬁed of the decision as soon as possible. Annual report 2021 . 79 Contents / Arribatec 2021 / Operation, sales & outlook / Financials Financial reporting: The Board of Directors is responsible for ensuring the integrity of ﬁnancial information. The Board evaluates the integrity of the Company’s accounting and ﬁnancial reporting systems, including the audit of the Company’s annual ﬁnancial statements by the independent auditor, and that there are appropriate systems of internal control in place. The main purpose of risk management and internal control is to provide reasonable assurance that the group will achieve: 12. Remuneration of executive management In accordance with the Norwegian Public Limited Liability Companies Act, the Board of Directors establishes guidelines for the remuneration of the executive management team. These guidelines are presented to the General Meeting through a statement on remuneration for executive management. The statement is presented for a vote, which is subject to the General Meeting’s approval. • • • Compliance with legislation and regulations, as well as internal guidelines Quality and efﬁciency within internal operations The Company’s general principle for management remuneration is to offer competitive terms, in order to atract and retain the competence it needs. Reliable internal and external reporting quarterly and annual ﬁnancial reports are reviewed and approved at board meetings and form the basis for external ﬁnancial reporting. Upon the presentation of year-end ﬁnancial statements, the CEO and the CFO declare that the accounts have been prepared in accordance with generally accepted accounting principles, and that to the best of their knowledge, all information is accurate, and no material information has been omited. The Company uses an external accounting agency for all Group companies. 13. Information and communication Regular information to the Company’s shareholders and the market is provided through the annual report, quarterly reports and open presentations. All reports and notices are issued and distributed according to the rules and regulations of the Oslo Stock Exchange. Insider information is treated in accordance with Norwegian law. Shareholder information, including the ﬁnancial calendar, is available on www.arribatec.com. The Company’s CEO and CFO is responsible for investor relations. The Company has established procedures for discussions with shareholders other than at Ordinary General Meetings. All information distributed to the Company’s shareholders is published on the Company’s website at the same time as it is sent to shareholders. Disqualiﬁcation: The CEO or a member of the board may not participate in the discussion on Board issues that are of special ﬁnancial or personal interest to the individual in question. Commitees: During 2020 the Board had considered it premature to establish audit and remuneration commitees as the company was in transitional phase. However, in beginning of 2022, due to signiﬁcant growth of the company, the establishment of the audit commitee was decided. 14. Take-overs There are no defense mechanisms against take-over bids in the Company’s Articles of Association or in any underlying governance document. In corporate take-overs or restructuring situations, the Board shall exercise due and proper care so that all shareholder values and interests are preserved. The Board of Directors will ensure that the shareholders are given enough information and time to form a view of the offer in a bid situation. The Board of Directors will handle take-over bids in accordance with Norwegian laws and regulations. Furthermore, the Board of Directors will seek to comply with the recommendations set out in the NUES, including arranging for a valuation from an independent expert and making a recommendation as to whether the shareholders should accept the bid. Other than the guidelines described above, the Board of Directors has not found it appropriate to establish any other writen explicit principles for how it will act in the event of a take-over bid. 10. Risk management and internal control The Board of Directors performs an annual audit of the main risks and internal control routines of the Company. The audit shall encompass the issues that have been brought to the Board of Directors’ atention throughout the year. The routines for internal control shall encompass the Company’s adherence to its values, and its guidelines on ethics and corporate social responsibility. 11. Remuneration of the Board of Directors The Ordinary General Meeting approves the remuneration paid to the Board of Directors. The Nomination Commitee is responsible for issuing a proposal on the remuneration terms to the AGM. Annual report 2021 . 80 Contents / Arribatec 2021 / Operation, sales & outlook / Financials 15. Auditor The external auditor is elected by the General Meeting. The auditor is fully independent of the Company. BDO is the Company’s auditor. Each year the auditor presents the Board of Directors with a plan for the implementation of the audit, and a writen conﬁrmation that the auditor satisﬁes established requirements pertaining to independence and objectivity. Upon request, the auditor participates in board meetings. The auditor provides the Board with its perspectives on the annual statement and informs of any disagreements between the auditor and the executive management. The Board of Directors also has contact with the auditor when required outside the situations mentioned above. At least once a year, the auditor atends a meeting with the Board of Directors in which no representatives from the Company’s executive management will be present. During 2021, the auditor atended 1 board meeting. The auditor is present at the General Meeting, where the Board of Directors also informs about the compensation for the auditory work required by law and remuneration associated with other assignments. Information of the fees paid to the auditor in 2021, including breakdown between statutory auditing and other assistance/service is presented in notes to the consolidated ﬁnancial statements. In connection with the auditor’s presentation to the Board of Directors of the annual work plan, the Board of Directors considers if the auditor to a satisfactory degree also carries out a control function. Annual report 2021 . 81 Contents / Arribatec 2021 / Operation, sales & outlook / Financials arribatec.com

AI Terminal

More from Arribatec Group ASA

Talk to a Data Expert