Arribatec Group ASA

Annual Report (ESEF) • Apr 24, 2024

ARRIBATEC GROUP ASA 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Annual report 2023 ^ 2021 Artbox Report Template All rights reserved © Artbox AS 2021 A pioneering consulting company with expertise in technology for integrated business solutions ^ Our mission is to leverage technology to streamline and declutter non-essential systems and processes. In doing so, we enhance our clients’ outcomes and deliver peace of mind for those at the helm. By streamlining and clarifying, we provide a better overview and contribute to stability and dependability in the daily working environment. This enables our clients to spend their time and effort on more productive activities that drive value creation. This is how we simplify complexity. Arribatec Group ASA | Annual report 2023 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Contents ^ Highlights 4 Arribatec at a glance 4 Key figures 5 Letter from the CEO 6 Our business 8 Arribatec vision and values 8 ESG report 9 Board of Directors report 21 Board of Directors 21 Responsibility Statement 22 The Board of Directors’ Report 23 Shareholder information 29 Financial statements 31 The Group 32 Parent company 78 Auditor’s report 95 Corporate Governance 100 APMs, terms and abbreviations 105 Arribatec Group ASA | Annual report 2023 3  2021 Artbox Report Template All rights reserved © Artbox AS 2021 Arribatec at a glance ^ More about us Our results Our people Recurring of total revenue 37% Employees 341 Organic growth 13.5% Nationalities 25 Number of clients 1 760 Listed on Oslo Stock Exchange 60+ Software and solution offerings Key partnerships: Unit4, QualiWare, Hypergene, RamBase, Microsoft, CatalystOne, Pagero, PowerBI, Prophix, SEMINE Appr. 40% business outside of Norway 15 offices around the globe 35% women, 65% men Main industries: Governmental, Higher education, Research, Health, Energy and oil & Gas, Bank & Finance, Shipping, Hospitality, Engineering and construction, Non-profits Overall job satisfaction score 72% Average age 41 years Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 4 4 Highlights Highlights | Arribatec at a glance Highlights | Arribatec at a glance 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Key figures ^ Key consolidated figures and ratios Full year 2023 Full year 2022 Revenue TNOK 572 981 504 968 Gross profit TNOK 440 308 389 934 EBITDA TNOK 24 463 (34 107) Adjusted EBITDA TNOK 24 463 (25 090) Operating profit/(loss), EBIT TNOK (23 844) (90 339) Net profit/(loss) TNOK (23 416) (83 393) Revenue growth y/y for the year % 13.5% 22.0% Gross profit margin % 76.8% 77.2% EBITDA margin % 4.3% (6.8%) Adjusted EBITDA margin % 4.3% (5.0%) Earnings per share NOK (0.33) (0.13) Cash at end of period TNOK 39 371 40 449 Equity TNOK 262 463 281 927 Equity ratio % 52.3% 54.7% Price per share at end of reporting period NOK 4 650 0 369 FTEs, employed Number 329 353 No. of outstanding shares, beg. of period‌ 1 Number 690 573 217 584 903 064 New shares issued‌ 1 Number 514 887 105 670 153 No. of outstanding shares, end of period‌ 1 Number 69 572 206 690 573 217 Average number of shares, year to date Number 69 057 322 658 988 513 1 Reversed share split (10:1) in Q1 2023 Gross profit 440 MNOK EBITDA margin 4.3% Revenue 573 MNOK Revenue growth y/y 13.5% Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 5 5 Highlights Highlights | Key figures Highlights | Key figures 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Letter from the CEO A year of building common structures ^ I want to begin this letter by expressing my sincere appreciation to all our employees in the Arribatec Group. The resilience and determination that everyone has demonstrated during 2023 have helped the company sustain growth and secure new and significant contracts. I’m amazed by what we accomplish together with our customers, and I’m very proud of all the positive feedback we have received from them on the work we are doing. We repeatedly see that the positive impacts we create from good customer outcomes help us win new projects from existing and new customers across the Arribatec universe. As Arribatec reached its eighth year in 2023, we noticed that our company kept developing and growing. We saw more collaboration and coordination among our five business areas, which made our project delivery more dynamic and opened new opportunities for our staff to get involved in different and interesting projects. Our shared values of Responsibility, Integrity, Service-mindedness, and Empowerment, or RISE for short, motivate us to help each other in our daily work and create a work environment that encourages cooperation and unity. We succeed together, and we learn together. This way of working together allows us to grow personally and provide value for our customers, partners, and owners. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 6 6 Highlights Highlights | Letter from the CEO Highlights | Letter from the CEO 2021 Artbox Report Template All rights reserved © Artbox AS 2021 We passed several significant financial milestones in the last year. Arribatec had a positive EBITDA of 25 million for the year and a revenue of 573 million, which is almost 14% higher than last year. Also important, all our five Business Areas had positive EBITDA in the final quarter. This shows us that the hard work we have done in the previous years to merge and improve our business model has paid off. We believe we have built a strong foundation that can support our future growth. Our operation was influenced significantly, both positively and negatively, by strategic changes that our software partners made in 2023. For the parts of our business that felt the impact directly, we have chosen to be less reliant on single dominant partners and to have more flex- ibility with various systems and software solutions in our portfolio. To be less reliant, we are forming new partnership agreements with more software owners and plan to have a wider range of skills in our organisation. This will allow us to provide even more customised solutions to the individual client’s needs while reducing the impact of partner decisions in the future. The new alliances have not only broadened our reach but have also improved our offerings, enabling us to transform even more complex challenges into simple solutions, improving our clients’ outcomes and providing confidence for those at the helm. As we approached the end of 2023, we began to revise our strategy for the next three years, from 2024 to 2026. We have established challenging objectives for what we want to accomplish in this period, both in terms of customer and market outcomes, as well as financial and opera- tional performance. Environmental, Social, and Governance (ESG) factors are now embedded in our business model and in our decision-making process. This includes adopting sustainable practices throughout our operations, complying with new regulatory demands, and preparing to assist our clients with their ESG journey. In the past year, we have made donations to various charities selected by our employees, purchased supplies from disability organisations and sponsored initiatives that promote health internally and externally. These activities will persist in the coming year, in addition to the influence of ESG on our business decisions. These efforts embody our RISE values and our “positive impact” mentality. Looking beyond 2023, we see that helping our customers build strong governance- compli- ance- and management systems is essential for the future. The energy sector will have a major impact on how our societies will evolve. Developing renewable energy sources and modern- ising and expanding the distribution grid are vital, and the need for a reliable energy supply is more evident than ever. A significant part of Arribatec’s activities is related to the broader energy sector - and we think that we can contribute to improving our customers’ performance and compliance with the regulations they follow. Other sectors that Arribatec works with, such as the public sector, professional service firms, civil engineering, manufacturing, higher education, transportation and hospitality, all aim to become more data-driven, automated and digitally proficient. We will always stand ready to help, support and advise, and as a pioneering consulting company, we will keep exploring new possibilities and finding simple solutions for complex problems in the coming years. Sincerely, Geir Johansen CEO of Arribatec Group Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 7 7 Highlights Highlights | Letter from the CEO Highlights | Letter from the CEO 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Arribatec vision and values ^ “We simplify complexity”. At Arribatec, we are pioneers in transforming complex challenges into simple solutions. Our job is to create order from chaos. And in doing so, we enhance our clients’ outcomes and guarantee peace of mind for those at the helm. We provide a better overview and contribute to stability and dependability in the daily working environment. This enables our clients to spend their time and effort on more productive activities that drive value creation. Our ambition is to simplify complexity. Responsibility We take responsibility Our willingness to take responsi- bility 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. 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 foster 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. 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. Empower We empower those around us We have the motivation and confi- dence 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 recognised as the RISE culture in Arribatec. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 8 8 Our business Our business | Arribatec vision and values Our business | Arribatec vision and values 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Environment, Social and Governance ^ This chapter offers an insight into Arribatec’s Environmental, Social, and Governance (ESG) endeavours and achievements throughout 2023, in addition to the upcoming plans. The ESG standards and regulations are dynamically evolving alongside global shifts, necessitating proactive responses to emerging challenges. Arribatec remains committed to meet these challenges with actions and compliance and by leading the way for others through our vision statement “we simplify complexity”. Arribatec Group ASA | Annual report 2023 9 ESG report ESG report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 The ESG efforts shall not only benefit the environment and society but also contribute to the financial performance and long-term success. Arribatec has used 2023 to further integrate the ESG practices into ways of working. Arribatec aim to mini- mize the environmental footprint, foster a diverse and inclusive workplace culture, and maintain high ethical standards. Arribatec are data-driven and aim to provide transpar- ency and accountability to the stakeholders to share our ESG-performance and ambitions. For ESG to have an effect in our company and the society at large we have incorporated this into our business so it’s no longer something we do on the side of things, but a part of how we are making decisions. Geir Johansen, CEO Authorities Employees Society Customers Interest groups Owners Suppliers Partners Media Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 10 10 ESG report ESG report ESG report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Our ESG strategy statement At Arribatec, we take ownership of the complete service we provide and are responsible for our impact on the environ- ment, society, and the economy throughout our value chain. ESG is incorporated into our business strategy and processes and reflected in our values. We strive to manifest our values and show our commitment to ESG in everything we do. We consider ESG and our values to be mutually reinforcing. We take responsibility for reducing our environmental footprint and caring for our employees and clients. We act with integ- rity in all business practices and internal processes. We are service-minded in offering our clients the best products and competence and our employees the best development oppor- tunities. We empower our employees, clients, and business partners to act in the planet’s and society’s best interests. Arribatec has eight priority areas within ESG based on the materiality assessment. The priority areas guide the opera- tional decision-making, as well as the product and service offerings. The priority areas are listed below: Environment Our aim is to become carbon neutral by 2030. We aim to ensure 100% reuse and recycling rate of electronic waste by 2026. Social We have a strong focus on ESG competence building among our employees and across the group. Our employees are our main asset. We want our employees to thrive at work and we aim to be recognised as an employer by choice, placing our people at the heart of everything we do. We aim for our employees to find meaning in what they do and to develop their skills and abilities. Governance We aim to influence and support our business partners and clients to maintain high standards of ESG. Ethical business conduct is at the highest priority in Arribatec. We have zero tolerance for corruption and unethical behaviour. We aim to ensure high-level protection of our customer and employee data. The ESG reporting is currently based on the GRI standard. However, Arribatec is preparing for the European Sustainability Reporting Standards (ESRS) and EU taxonomy that will become applicable in 2025. Conducting an EU taxonomy eligibility assessment and double materiality assessment will be the first step. Based on the assessments, a roadmap will be created to ensure alignment and reporting in 2025. UN’s Sustainable Development Goals Arribatec acknowledge the significance of all the UN’s Sustainable Development Goals but have pinpointed those that align most effectively with our stakeholders and where we can make the most positive impact. ESG performance Arribatec adopted structured reporting following the GRI standard in 2022, which continued into the 2023 reporting cycle. However, with upcoming regulatory changes, Arribatec will transition to using the European Sustainability Reporting Standards (ESRS) for its 2024 reporting. The following sections will elaborate on the work and performance within the three ESG categories. The following sections will elaborate on the work and perfor- mance within the three ESG categories. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 11 11 ESG report ESG report ESG report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Environment Climate change is one of the most pressing challenges of our era. As a multinational organisation with projects in close to 30 countries, Arribatec is dedicated to fulfilling the responsibility of addressing climate change and minimising emissions intensity. Energy The operations produce the following emissions based on the GHG emission standard; scope 1 and 2. Arribatec has ESG reporters located at every office with the key responsibility of reporting annually on all metrics and driving positive environ- mental change initiatives. Arribatec has a goal to “reduce the emission from direct activ- ities by 30% by 2024 compared to baseline in 2023”. Since Arribatec does not own any of the buildings they operate from they are challenging the building owners to put in place efforts that can help reduce the energy usage. However, Arribatec sees a clear variation across locations in maturity and willing- ness to do the necessary changes. Arribatec will continue to challenge and believe this will lead to a positive change. Scope 1 emissions: 3.9 tonnes CO 2 e Scope 1 emissions are direct greenhouse (GHG) emissions that occur from sources that are controlled or owned by Arribatec (e.g., Arribatec vehicles). The scope 1 emissions have increased by 40% compared to 2022, primarily due to a significant increase in the activities where cars are part of the operation, resulting in considerably more driving. Two cars have already been replaced with elec- tric vehicles, while the remaining two diesel cars are next in line for replacement. Scope 1 emissions are related to the two diesel cars Arribatec use in their project deliveries. The diesel cars are used when the distance and load require it, while the two electric cars (that is part of the Scope 2 emission) is used for shorter deliveries. Scope 2 emissions: 225.8 tonnes CO 2 e Scope 2 emissions are indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling. Although scope 2 emissions physically occur at the facility where they are generated, they are accounted for in Arribatec’s GHG inventory because they are a result of the organisation’s energy use. The scope 2 emissions have risen by 34% since 2022. Arribatec is collaborating with building owners on initiatives aimed at reducing emissions. Additionally, internal meas- ures are being implemented to decrease emissions within Arribatec’s designated office area. Some of the efforts to reduce Scope 2 emissions at the Arribatec main office include implementing night temperature reduction, adjusting air volume during vacancy periods, and using demand-controlled ventilation. Climate screens are integrated to minimise cooling needs and lighting systems have been upgraded to energy-efficient LEDs with presence detection. The Arribatec main office has also implemented over 20 fractions for proper waste management. The building’s sorting rate for 2023 is 63.1%. Waste management is an initia- tive Arribatec is working to establish in all offices. Energy consumption through own operations kWh Electricity renewable 174 939 Electricity non-renewable 470 675 Arribatec has identified the sources of energy consumption, pinpointing areas for improvement to reduce emissions and achieve carbon neutrality. Heating constitutes the primary energy usage in most locations. Arribatec is committed to increasing the use of renewable electricity. Consequently, all data centres are powered by green electricity, and supplier selection prioritises environmental performance. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 12 12 ESG report ESG report ESG report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Circular economy Arribatec aims to reuse and recycle 100% of all electronic waste by 2026. This commitment extends not only to internal electronics but also to items delivered to the clients. Arribatec has designated equipment disposal closets at the largest office sites to facilitate the convenient return of any electronic waste. In 2023, the following number of electronic units went through the circular economy process: Reused units 33 Recycled units 72 Products in process 17 Social Arribatec firmly believes that the company’s core strength resides in the dedicated efforts of its employees. They work tirelessly to expand the business and empower Arribatec to assist clients in overcoming challenges and pursuing new opportunities. In essence, employees serve as the driving force behind the company, making it imperative to consist- ently prioritise their needs and aspirations to sustain ongoing growth. Arribatec’s key strategic driver is personal growth, recognising that investing in the development and well-being of employees is essential for both their success and the success of the company. The social impact of Arribatec extends beyond our work with employees and clients. Arribatec endeavour to create a positive difference in communities and the world through charitable initiatives, sponsorships, volunteer work, and the behaviour and actions of our employees during client assign- ments. Corporate Social Responsibility Arribatec is committed to be a good corporate citizen and demonstrate integrity and high ethical standards in all its business. Arribatec’s Board of Directors has implemented guidelines for Ethical and Corporate Social Responsibility. The purpose of these guidelines is to create a sound corporate culture and to preserve the integrity of Arribatec by helping employees to promote standards of good business practice. Arribatec’s guidelines on Ethical and Social Responsibilities applies to all employees of the Group and to anyone who holds a position of trust in the Group, including members of the boards and consultants acting on behalf of the Group. The principles and standards provided therein aim to provide guidance to Arribatec’s people for a common platform and to support Arribatec’s vision, core values and principles. These guidelines are instrumental for Arribatec’s approach to human rights, fair working environment and equal rights, health and safety, environment, business ethics and anti-corruption. The Group regularly reviews the guidelines and will continue its ongoing efforts to educate the organisation on the prevailing standards and principles. Arribatec’s Ethical and Corporate Social Responsibility Guideline is publicly available on Arribatec’s website. Human rights Arribatec shall ensure that the company’s business conduct is being performed in a way that secures human rights as described in the 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. Working environment The Group has business contacts of different nationalities and cultures and has built an international mindset for years. Employees are encouraged to treat each other and business contacts with respect and act according to local laws and regulations, as well as to pay attention to local values and norms for social conduct. The Group does not tolerate derog- atory treatment of any employee. The Board of Directors and Management seeks to create a working environment that is pleasant, stimulating, safe and beneficial to all employees. The Group’s working environment complies with applicable rules and regulations and the Board of Directors has not found reason to implement any special measures in this respect. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 13 13 ESG report ESG report ESG report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Going forward, Arribatec commits to actively continue its work for a safe and nurturing working environment in accordance with applicable rules and regulations. Equal rights Arribatec does not accept discrimination on the grounds of race, colour, gender, sexual orientation, age, disability, language, religion, legitimate political or other opinions, national or social origin, property, birth or other status. The Group’s facilities are equally well equipped for females and males. The Company complies with Norwegian legal require- ments with respect to gender representation in the Board of Directors. The Board of Directors will continue its efforts to ensure that the principle of equal treatment is carried out in accordance with the adopted policy. Both recruitment of new personnel and professional development for the Group’s existing employees will be based on qualifications, achievements and equal opportunities. Health and Safety Health and safety are indispensable components of all the Group’s activities. All hazards and risks to health and safety must be mitigated when identified. Generally, Arribatec’s business involves low risk in the day-to-day activities, without the use of chemicals, heavy machinery or equipment that can cause damage or injuries. Delivery of Arribatec’s services and solutions is sometimes done in cooperation with business part- ners, all of whom shall have a good reputation and standing. Environment The Group’s operations shall always be in accordance with applicable environmental legislation. Arribatec’s guidelines on Social and Corporate Responsibility provide that the Group shall always strive for improvements that may reduce its environmental impact. Arribatec does not own or operate manufacturing facilities. Arribatec seeks to limit its resource consumption, prevent unnecessary environmental pollution, including optimising transportation of goods, and manage waste in an environment-friendly and resource-efficient manner. Business ethics and anti-corruption The Group’s operations depend on the trust of contractual parties, authorities, shareholders, employees and society in general. In order to gain trust, the Group is dependent upon professionalism, expertise and high ethical standards in all aspects of the Group’s work. This applies to the way the Group operates and the conduct of everyone associated with the Group. All employees are expected to behave with care, integ- rity and professionalism and abstain from actions that may weaken confidence in the Group. The Group’s Ethical Guidelines and Corporate Social Responsibility Guidelines contain guidelines on ethical behav- iour in business relations and are applicable to all employees in the Group. These guidelines clearly state that Arribatec has a zero-tolerance policy for any form of corruption or bribery and encourages reporting of suspected misconduct. The Group’s guidelines explicitly govern conflict of interests, gifts and money laundering. No employee may receive bene- fits for themselves or for others from the Group’s business contacts if such benefits are based on the employment rela- tionship. Correspondingly, no one shall give such benefits to the Group’s business contacts. Business courtesies of modest value, conforming to normal social customs and not intended for influence, are not considered bribes. All gifts with an estimated value of more than NOK 1 000 must be reported to the Group’s CFO, who will assess whether the relevant gift can be received on a case-by-case basis. Arribatec has to date not been accused of or involved in, any cases pertaining to any form of corruption or bribery. Arribatec encourages each employee to report on possible censurable incidents. Arribatec’s employees have an obligation to report on criminal activity and on incidents that could endanger life or health. Raising awareness of Arribatec’s existing guidelines has been the Group’s main action regarding business ethics and anti-corruption, and the Group will continue such work going forward. Neither the Board of Directors nor management are aware of any breach of the Group’s ethical code of conduct. Work force highlights Work environment Arribatec uses an artificial-driven survey every week to monitor, evaluate and act on some key factors that influence the overall job satisfaction among the employees, supported Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 14 14 ESG report ESG report ESG report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 by Winningtemp. The weekly survey helps the company to create a positive and efficient work environment, by hearing and getting input from the employees and responding to their feedback. This is a helpful way of getting feedback that helps the company to identify areas for improvement and ongoing growth. One of the strategic objectives for Arribatec is to score at or above industry index (source Winningtemp) in all param- eters. Arribatec has achieved targets for some parameters but is slightly behind on others, seeing a decrease of 0.2 of the overall satisfaction score compared to 2022 (7.4 vs. 7.2). Even though not meeting all parameters, Arribatec is pleased with the scoring, considering the significant consolidation activities we have gone through. Furthermore, the implementation of the pulse survey across all Arribatec departments has resulted in an average participation rate of 78%, representing a 17% increase from 2022. Diversity highlights The company is founded based on senior high-level compe- tence providing the market with the most in depth expertise within its domains, which is reflected in the age distribution. The average age in Arribatec is 41 years (same for male and female employees). The youngest employees are apprentices, while the largest age group is between 40-49 years. Arribatec value age diversity and are committed to maintaining a broad range of ages within the workforce, as it creates a more productive and conducive work environment. Total 7.2 (business industry index 7.5). Score out of 10. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 15 15 ESG report ESG report ESG report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Personal growth Working at Arribatec is intended to facilitate both professional and personal development. One of the strategic drivers at Arribatec is to attract and retain talent including fostering personal growth. A key initiative in ensuring Arribatec delivers on this commitment has been the establishment of a compre- hensive Arribatec Job Architecture including position mapping. Ultimately engaging the entire company, we implemented our Job Architecture similar with the Mercer Methodology principals and skills categories, plus leveraged our internal tooling competence by developing a Human Resources Transformation Dashboard (Power BI Management Dashboard) to create reports to measure what matters. This has made our endeavours much more cost efficient and effective.The Arribatec Job Architecture is a strategic framework aimed at aligning positions, responsibilities, and mandates defined in corresponding role descriptions. The job architecture categorizes and defines positions plus levels to ensure they are in line with, and serve Arribatec’s strategic objectives, and has been developed to promote transparency, consistency, and fairness in the job structures. Furthermore, to streamline and ensure equity in job structures, address pay disparities, facilitate talent management and performance, raise the quality of planned recruitments, and succession planning.For Arribatec it has been a necessary, rewarding, and pivoting journey. Partly to enable more qualified follow ups of required legislation in the country and/or legal entity the employee belongs to, but also to create a shared understanding of our desired culture and leadership traits. As an organisation that is going through the typical phases of a post-merger, the Arribatec Job Architecture has helped us create a necessary identity exercise, focusing on our goals and aspirations, and the skills we need in the organisation to achieve them. In addition, to enhance the role descriptions and maintain the dedication to personal growth, Arribatec has planned and initiated a competence mapping process. This process will continue in 2024 to provide comprehensive insights, fostering a clear understanding of the development needs of each employee and the company as well as support new recruit- ments. ESG-competence development Enhancing ESG performance significantly relies on cultivating ESG competency, making it a key priority for Arribatec. Arribatec believes that as employees gain a better under- standing of ESG and its potential for positive impact, the likelihood of significant changes increases, both within the company, with clients, and across the society at large. In 2023, over 50% of the employees completed the ESG training, with the aim for all employees to complete the training by 2024. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 16 16 ESG report ESG report ESG report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 The gender diversity The current workforce at Arribatec has a higher proportion of men than women. This discrepancy is not intentional but rather a consequence of the companies acquired in recent years and the limited availability of women in certain areas of expertise where Arribatec operates. Arribatec believes in the effective- ness of diverse teams and is therefore encouraged by the gradual improvement in the gender ratio compared to 2022, as well as the fact that the workforce includes individuals from 25 different nationalities. Ratio of basic salary of women to men Top-management: 0.79 Mid-management: 1.05 Non-management employees: 0.85 The ratio of women’s salaries to men’s is lower in top manage- ment positions (C-level), higher in mid-management, and lower again for non-management positions. Arribatec regularly monitors this ratio to ensure no intentional or unintentional discrimination exists. Upon closer examination, it is apparent that the variation in the ratio is influenced by factors such as seniority, competence and skills, educational level, and job position. Additionally, historical and geographic elements play a significant role in this variation. Sick leave and turnover Arribatec maintains a notably low sick leave percentage, accounting for only 3.6% of total workdays, which is consid- ered a privilege. The long-term sick leave rate stands at 1.6%, while short-term sick leave is at 2%, both well below the industry average. While various factors can impact sick leave rates, Arribatec has implemented several measures to prevent illness and injury. This includes systematic work on job descriptions and expectations, continuous development and documentation of crucial work processes, training initiatives, clearly defined authorisations, and improved recruitment processes. In the event of illness, there are clear routines for fostering and follow-up by line management. Moreover, Arribatec is also committed to preventing physical strain by providing modern office spaces and encouraging employees to come to the office. In addition, Arribatec offers flu vaccinations fruit in offices, conducts campaigns focusing on mental health, and performs regular social events. Arribatec has implemented numerous measures to maintain this low rate. These include providing flu vaccinations, offering training activities, stocking fruit in offices, revamping sick leave follow-up processes, conducting mental health campaigns, organising regular social events, and fostering a positive work environment. However, working at Arribatec may involve long workdays and challenging tasks, potentially affecting work-life balance. To address this, a stricter system has been introduced to monitor employees’ work hours and ensure a healthy balance. Additionally, Arribatec closely monitors results from the weekly pulse survey to identify any negative trends that could contribute to increased sick leave. As part of the employee benefits program, Arribatec offers health insurance. The turnover rate at Arribatec has risen to 20.85%, a signif- icant increase from 2022’s 8.53%. As Arribatec continues to evolve and undergo changes, including assembling the right teams to achieve its goals, turnover remains a natural aspect of organisational development. While the primary goal is to retain employees for the long term, a certain level of turnover can be beneficial as it introduces new individuals with fresh energy, skills, and perspectives. In 2023, Arribatec onboarded 48 new highly skilled employees, largely in line with its growth strategy, to fill vacant positions and meet the increased work- load. This ambitious growth strategy will continue into 2024. With an extensive number of applicants and the impressive skillsets they possess, Arribatec has become an attractive option for both the best young talents and experienced professionals in the market. Society Arribatec is privileged to have employees who care about making a positive impact on society. Arribatec has set aside 800 hours for doing voluntary work. Some of these are used for planting trees and cleaning beaches. Other examples are Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 17 17 ESG report ESG report ESG report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 using disability organisations, installing beehives, arranging lottery for charity, sponsoring local organisations (e.g. cancer organisations, football, and ski clubs). Other examples are collaborating with disability organisations, setting up beehives, organising charity raffles, or supporting local organisations (e.g. cancer organisations, football, and ski clubs). Arribatec continued its tradition by, instead of giving holiday presents to the employees, arranging surveys among the employees to decide where the donations should be given. As a result, Arribatec gave donations to Doctors without Borders, World Wildlife Foundation, World Food Program, Red Cross and Amnesty International. Governance As a professional service and IT company listed on Oslo Stock Exchange, Arribatec aims to maintain the highest standards of governance and accountability and to ensure that the stake- holders can have confidence in the business practices. Arribatec not only has a responsibility to govern its own oper- ations effectively but is also expected to deliver systems and services to the clients at the same standards. The clients and stakeholders rely on Arribatec to provide secure and reliable technology solutions, and Arribatec recognise that the success depends on maintaining their trust. The UK office participated in the Christmas Santa aid-walk for a local children hospice. Cleaning beaches for World Ocean Day. Bee safari at Arribatec EA & BPM’s roof terrace where we have installed bee hives and planted flowers. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 18 18 ESG report ESG report ESG report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Authority and governance The level of authority is stated in the Delegation of authority policy and matrix that state the mandate for each level and positions in the organisation. This ensures decisions are made at the right level, involving the right personnel. The governance hierarchy model visualizes the governance structure of Arribatec and the management system. Ensuring that we do the right things right. Arribatec has built a robust management system that guides the company in the right direction and ensure that everyone know who does what, when and how. The management system ensure that risk is managed, and that the company operate safe, reliable, efficient, and effective. Commitment and compliance to the management system is a requirement. Corporate governance Arribatec is committed to maintaining the highest standards of corporate governance and transparency. The Company believe that effective corporate governance is essential for building trust and confidence among the stakeholders, including shareholders, employees, customers, suppliers, and the wider community. See Corporate Governance Statement on Arribatec’s website. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 19 19 ESG report ESG report ESG report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Compliance A key aspect of the management system involves detailing how Arribatec ensures compliance. The ability to achieve the growth ambitions and maintain the market position hinges entirely on the professionalism and conduct of the employees, as well as the commitment to operating with the utmost ethical standards in accordance with laws and regulations. The Arribatec values, referred to as “RISE”, serve as a guiding force for the actions and form the bedrock of the compli- ance culture. Arribatec has built code of conduct, policies, processes and guidelines, ensuring the Company operates in compliance with applicable laws and regulations. These include areas such as information security, data privacy, anti- bribery and corruption, and environmental sustainability, in addition to other areas. The focus on compliance, operating in accordance with laws and regulations, and upholding high ethical standards extends not only to the internal operations and own employees but also to the suppliers, partners, and clients. The suppliers shall comply with the code of conduct, all applicable laws and regulations, contractual obligations, and the terms of the supplier code of conduct. The supplier code of conduct makes sure that every supplier fully respects human rights, does not use child labour, refrains from human trafficking, complies with employment rights in the country in which they operate, respects environmental, health and safety matters and has zero tolerance for corruption. Arribatec screens all existing and new suppliers based on these criterias. (see our Supplier code of conduct here: www.arribatec.com/ investors/supplier-code-of-condu ct ). Data privacy and information security As a company that handles a significant amount of sensitive data and information from multiple clients, data privacy and information security are critical considerations. Arribatec recognises the potentially disastrous consequences of a data breach or mishandling of the clients’ data, not only for the clients but also for the Company and the stakeholders. That is why Arribatec has taken extensive measures to ensure that the Company are fully compliant with GDPR regulations and has obtained the ISO 2 7001 certification. Adherence to these frameworks demonstrates the commitment to main- taining the highest data privacy and information security standards. Each of the team members has integrated this focus into their work practices, and it is an integral part of the company culture. Arribatec understands the value of the client’s trust and works hard to earn and maintain it. By prioritising data privacy and information security, Arribatec can ensure that the client’s confidential information remains safe and secure and, by that, maintains its reputation as a reliable and trustworthy cloud and service company. As part of the mandatory onboarding process, all new employees are required to undergo information security training. The global employee security handbook and policies are consistently enforced and regularly reviewed in information security meetings, email and intranet reminders, and relevant gatherings. Furthermore, Arribatec undergoes regular testing to ensure that the Company is not susceptible to any informa- tion security breaches. Final word In conclusion, Arribatec is committed to ESG and dedicated to being a part of building a sustainable future. The Company is experiencing enhanced attention to ESG and comprehensive reporting requests from all stakeholders. With the new ESG regulations and standards in place, this focus is expected to increase in the future. Arribatec supports the new standards and acknowledges that only by collaborating across the ecosystem can meaningful change occur. The Company is pleased to see ongoing progress and that the foundational elements are in place to achieve the ESG targets and ambi- tions in the years ahead. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 20 20 ESG report ESG report ESG report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Board of Directors ^ Martin Nes Chairman Chairman Martin Nes has been CEO of Ferncliff TIH AS since 2010. He holds a law degree from the University of Oslo and also holds a Master of Laws degree from the 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 international law firm Evensen & Co. Mr. Nes has extensive corporate expe- rience and is/has been chairman and/ or a member of the boards of several listed companies, including SD Standard ETC Plc, Dolphin Drilling AS, Saga Pure ASA, Standard Supply AS, Aqualis ASA, Nickel Mountain Group AB, Self-Storage Group ASA, NEL ASA, and Weifa ASA. He is a Norwegian citizen and resides in Norway. Martin Nes has served the Board of Arribatec Group ASA since February 2020. He is also the chairman of the Audit Committee of Arribatec. Øystein Stray Spetalen Board member Board member Øystein Stray Spetalen is the Chairman and owner of invest- ment firm Ferncliff II TIH AS. He is an independent investor. He has worked in the Kistefos Group as an investment manager, as a corporate advisor in different investment banks, and as a portfolio manager in Gjensidige Forsikring. Mr. Spetalen is a chartered petroleum 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. Kristin Hellebust Board member Board member Kristin Hellebust is the CLO (former CCO) ‌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 a lawyer at Advokatfirmaet Selmer DA. Ms. Hellebust currently serves on the board of several listed companies. She holds a Master of Laws degree from the 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. Kristin Hellebust has served the Board of Arribatec Group ASA since October 2020. She is a member of the Audit Committee of Arribatec. Terje Mjøs Board member Board member Terje Mjøs has broad operational experience as former CEO of Visolit AS, EVRY ASA, Ergo Group AS, and Hydro IS Partner AS and as a senior advisor to Apax Partners (private equity). Previous directorships and senior management positions last five years outside the Arribatec is Solid Media Group (Chair) and Visolit group (CEO and Chair in several of their companies). Current director- ships are Chair in Vali AS, Chair at Axaxtor ASA, where he also is the Chair of the remuneration committee and the investment committee. He is also a board member of Axactor Capital AS and Sparebank 1 Ringerike Hadeland. Mr. Mjøs has a Cand. Scient. Degree in Computer Science from the University of Oslo, and an MBA in Economics and Business Administration from Norwegian Business School BI.Terje Mjøs has served the Board of Arribatec Group ASA since June 2023. He is a member of the Audit Committee of Arribatec. Linn Katrine Høie Board member Board member Linn Katrine Høie works as CCO in the threat-intelligence software company OpenHorizon. She is also a partner in Frøya Ventures. Linn has 20+ years of experience with Norwegian and international businesses and is an educated system architect with a master’s degree in societal safety and risk management, specialized in project management. Linn expertise lies in management, strategic enterprise risk management, digitalization, strategy, and business development. She has served as a member of the Board in Arribatec since May 2022. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 21 21 Board of Directors report Board of Directors report | Board of Directors Board of Directors report | Board of Directors 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Responsibility Statement ^ We confirm that, to the best of our knowledge, the Financial Statements 2023, which have been prepared in accordance with IFRS® Accounting Standards as adopted by the 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 24 April 2024 The board of Arribatec Group ASA Signed Martin Nes chairman of the board Øystein Stray Spetalen member of the board Linn Katrine Høie member of the board Kristin Hellebust member of the board Terje Mjøs member of the board Geir Johansen Group CEO Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 22 22 Board of Directors report Board of Directors report | Responsibility Statement Board of Directors report | Responsibility Statement 2021 Artbox Report Template All rights reserved © Artbox AS 2021 The Board of Directors’ Report ^ About Arribatec Arribatec is positioned as a global provider of digital business solutions. Arribatec is listed on Oslo Stock exchange, with the headquarter in Oslo. Arribatec is pioneers in transforming complex challenges into simple solutions. Our job is primarily to be of service and ensure the seamless operation of our customers’ digital solu- tions and technological infrastructure. We develop, automate, and integrate where we can, and we develop entirely new solutions when necessary. Our mission is to intelligently leverage technology to stream- line and declutter non-essential systems and processes. In doing so, we enhance our clients’ outcomes and deliver peace of mind for those at the helm. By streamlining and clarifying, we provide a better overview and contribute to stability and dependability in the daily working environment. This enables the client to channel their time and effort to more productive activities that drive value creation. Arribatec has built the strategy around growth, talents, deliver- ables, and customers. These elements are interdependent and supported by a comprehensive set of strategic objectives and roadmaps to guide our efforts. Leaving behind 2022, which was a year of business collab- oration including integration of all businesses on to uniform digitalised platforms across business areas and countries, 2023 was a year proving an organic growth of 13.5%, as well as scaling the business achieving 74% improved consolidated profit and loss. Although most of the company’s revenue still comes from Norway, Arribatec aims to become a more prominent player outside Norway. The company’s focus remains on generating recurring revenue in addition to revenue through consultancy services. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 23 23 Board of Directors report Board of Directors report | The Board of Directors’ Report Board of Directors report | The Board of Directors’ Report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Operation and Segments Arribatec is divided into five segments (Business Areas), ref No te 3 Enterprise Architecture and Business process management (EA&BPM) Cloud services Business Services (BizS) Marine Hospitality The first three Business Areas (BA’s) listed above are all industry agnostic, meaning the product and services delivered by the BA’s, can be sold to any industry, private or public. Cooperation between EA&BPM, BizS and Cloud is natural, and they meet the needs of medium- and large-sized mature organisations. They are the three largest BA’s both in terms of people and activities and they are considered as the compa- ny’s horizontals. The Business Area Hospitality had during 2023 secured contracts with chains and stand-alone hotels in both Nordics as well as in the UK and Ireland. Additionally, Hospitality extended its industry focus to include transportation. During 2023 they signed a NOK 22m agreement with Flytoget for the software development and installation of 29 ticket vending machines in 2024. Marine deliver its self-developed software to the shipping industry bringing ship owners to a different level of control of their vessels with functions designed to scale with their specific market requirements. Marine underwent an exten- sive restructuring process during 2022 which has turned the Business Area around to become a profit making business in 2023. Financial Review Profit and Loss Full-year revenue amounted to NOK 573 million for 2023, compared to NOK 505 million in 2022. In 2023, recurring revenue amounted to NOK 214 million, while consulting revenue ended at 333 million and other revenue at NOK 26 million. Divided by region, Norway stands for NOK 360 million, Europe NOK 173 million, and NOK 39 million from America. The relative size within the regions shows a slight increase for Norway and America is stable from 2022 to 2023. Gross profit was NOK 440 million for the full-year 2023 (NOK 390 million). The margin is 76%, which is slightly below last year. The decreased margin mainly relates to increased costs of goods purchased for resale. Personnel costs were up total net NOK 7.8 million in total from NOK 338.8 million in 2022 to NOK 346.6 million in 2023, primary relating to the annual salary settlement in the Group that in average ended at 5.5% in 2023 offset by reduction relating to reduced number of full-time employees from 353 as per 31.12.2022 to 329 as per 31.12.2023. The average number of FTEs was 341 in 2023 compared to 363 in 2022. The decrease mainly stems from the closedown of entities in Poland and Belgium. Other operating costs were NOK 69.2 million (NOK 85.2 million). Depreciation and amortisations amounted to NOK 48.3 million (in 2022 NOK 56.2 million, whereof NOK 5.6 related to impaired software development from discontinued operation in Italy). Of the total depreciation and amortisation, NOK 15.5 million stems from exceed values from acquisitions, which is the same amount as last year. The net financial result amounted to negative NOK 6.2 million (negative NOK 0.1 million), of which NOK 2 million relates to realised losses from foreign exchange losses, mainly from EUR and GBP and NOK 1.7 million related to an earn-out settlement toward the acquisition of Integra associated in 2021. The net loss for 2023 was NOK 23.4 million compared to a net loss of NOK 83.4 million in 2022. Financial position In 2023 Arribatec issued 515 thousand new shares, of which all relates to the final earn-out settlement of the acquisition of Integra in 2021. 50% of the earn-out were settled as a share consideration. As of 31 December 2023, total assets were NOK 501 million, compared to 515 million as of 31 December 2022. Intangible assets accounted for NOK 274.4 million (NOK 281.2 million). The intangible assets mainly consist of goodwill, customer relations, and technical software through business combinations in addition to internal developed soft- ware of NOK 12.9 million in 2023 (NOK 11.8 million). Other non-current assets were NOK 57.4 million (NOK 65.8 million) including right-to-use assets of NOK 28.4 million (NOK 41.7 million), deferred tax assets of NOK 18.6 million (NOK 12.3 million) and tangible assets of NOK 6.4 million (NOK 6.5 million). Current assets amounted to NOK 169.3 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 24 24 Board of Directors report Board of Directors report | The Board of Directors’ Report Board of Directors report | The Board of Directors’ Report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 million (NOK 168.3million), including Account receivables of NOK 90.9 million (NOK 88.2 million), contract assets of NOK 24.2 million (NOK 16.3 million) and cash and cash equiv- alents of NOK 39.4 million (40.5 million). Total interest-bearing debt stood at NOK 39.4 million at the end of 2023 (NOK 33.1 million). Deferred tax liabilities at the end of 2023 were NOK 7.7 million (10.6 million). At the end of the year, 2023 total current liabilities were NOK 189.1 million (NOK 162.1 million). The increase from last year mainly relates to increases in Accounts payables and Contract liabilities of NOK 7.9 million and NOK 7.8 million respectively. Total equity as of 31 December 2023 was NOK 262.1 million (NOK 281.9 million), corresponding to an equity ratio of 52.3% (54.7%). Cash Flow Arribatec’s cash flow from operating activities in 2023 was positive with NOK 33.7 million, which compares to a negative NOK 26.8 million in 2022. The main effects come from the improved results compared to 2022 of NOK 60.4 million. Net cash flow from investing activities was negative with NOK 22.3 million (NOK 6.2 million). Of this, cash consideration related to the earn-out to the sellers of Integra Associated Ltd was partly settled with NOK 3.7 million. Capitalised purchased software and internal development costs relating to the development of own software solutions were negative by NOK 16.5 (13.8 million). In 2022 there was a cash inflow from a sale of intan- gible assets NOK 9.3 million. Net cash flow from financing was negative by NOK 11.5 million (positive 27.5 million). The change from 2022 of negative NOK 39 million mainly relates to the proceeds from the share issue in 2022 of 51.8 million. The main financial activities in 2023 relates to proceeds from overdrafts of NOK 6.5 million (negative NOK 7.9 million) and instalments paid on the leased assets of NOK 20 million (NOK 15.9 million. Arribatec had NOK 39.4 million in cash and cash equivalents at the end of the year compared to NOK 40.5 million last year. 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 char- acterised 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 attractive, 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 considering 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. 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. Credit relates to the risk that counterparty is unable to settle 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 pay for soft- ware as a Service (SaaS) arrangement, 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 for 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 already provided or to be provided. Should a certain amount of the customers under the SaaS arrangement for some reason be prevented from paying the whole or the remaining portion of these fixed monthly payments (e.g., because 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 moderate as the customers on SaaS contracts in large extent are mainly governmental. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 25 25 Board of Directors report Board of Directors report | The Board of Directors’ Report Board of Directors report | The Board of Directors’ Report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Arribatec conducts its business in currencies other than its reporting currency, making its results of operations, financial position, and future prospect vulnerable for currency fluctua- tions. Because part of the business is conducted in currencies other than its presentation 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 subsid- iaries into NOK. Currency risks may also arise when Group companies enter into transactions that are denominated in other currencies other than their functional currency. 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. Arribatec holds 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 reim- bursement 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 100m. Research and development The company continuously develops its 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 gain 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 our own IP in future solutions, thus improving EBITDA margin by selling more of our own software and services through SaaS subscription models. At the end of 2023, Arribatec had capitalised a total of NOK 12.9m (NOK 11.7m) of time and material used to develop internal systems and software. The company has no ongoing research activities. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 26 26 Board of Directors report Board of Directors report | The Board of Directors’ Report Board of Directors report | The Board of Directors’ Report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Corporate governance Arribatec’s corporate governance structure is based on Norwegian corporate law and Norwegian securities legisla- tion 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 emphasise sound corporate governance, the Company has a policy document based on the Norwegian Code of Practice for Corporate Governance dated 14 October 2021. Read more about our work in the chapter Corporate Governance on page 93 of this annual report. Corporate social responsibilities Developing sound health, safety and environment (HSE) principles is important for the Group. Long term sick leave was 1.9% in 2023 Norway and 1.1% in other countries(2022: 2.05% in Norway and 0.9% in other countries) for the Group for the year. No serious work incidents or accidents resulting in personal injuries or damages to materials or equipment occurred in 2023. The Board and management team continue to focus on equal opportunities for men and women. We embrace diversity when we recruit in terms of age, gender, nationality and experience within our workforce, as we believe diverse teams have the best means to uncover opportunities and ensure customer success. We continuously work towards closing the gender gap in a rather male-dominated industry, and we can see a slightly improvement in our workforce since 2022, where Arribatec successfully has increased the percentage of female employees from 35.4% to 36%. Two of the five Board members at year-end were female. The company has during 2023 been a signatory to the UN Global Compact, supporting the UN Sustainable Development Goals. Arribatec’s values and corporate policies support these goals. The sustainability report describes Arribatec’s work on ESG, ref page 10 - Environment, Social and Governance section. The Norwegian Transparency act The Group has implemented formal guidelines for due dili- gence as required by the OECD Guidelines for Multinational Enterprises. Further information about this is available on the Group’s website: www.arribatec .com Subsequent events There have been no subsequent events since 31 December 2023. Going concern The Board of directors consider that the group entities and company have adequate resources to continue operating for the foreseeable future. Therefore, adopting the going concern basis, following §3-3a of the Norwegian Accounting Act, in preparing the consolidated and company financial statements is appropriate. Proposed allocation of the company’s results of the year The Parent company, Arribatec Group ASA, had a net negative result after tax of NOK 22.1 million in 2023, compared to a negative NOK 41.7 million in 2022. The results available for disposal of the Annual General Meeting are as follows: NOK thousand 2023 Covered by other paid-in capital 22 051 Outlook Arribatec has an ambitious growth agenda and sees an increasing demand for the product and services that Arribatec brings to the marketplace. Our partnership strategy will continue and additional partnerships will be pursued going forward. We see a robust demand for cloud services that will drive growth within our cloud- and managed IT-services. Additionally, cloud migration and related digital transformation projects are expected to increase among existing and new U4 customers. Within the hospitality segment we see a significant increase in demand from international hotel brands for our hospitality solutions, thus international is to growth is expected to pick up. Within the marine industry we notice increased interest for industry specific software and we believe that this Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 27 27 Board of Directors report Board of Directors report | The Board of Directors’ Report Board of Directors report | The Board of Directors’ Report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 trend will continue throughout 2024. Lastly, we plan to take our business process management solutions out of Norway in 2024, as we have built up a significant industry expertise within the oil&gas sector, and should be able to build on this internationally. With the proven scalable business behind us, the Group will continue gearing up for increased sales and expanded delivery capacity. Oslo 24 April 2024 The board of Arribatec Group ASA Signed Martin Nes chairman of the board Øystein Stray Spetalen member of the board Linn Katrine Høie member of the board Kristin Hellebust member of the board Terje Mjøs member of the board Geir Johansen Group CEO Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 28 28 Board of Directors report Board of Directors report | The Board of Directors’ Report Board of Directors report | The Board of Directors’ Report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Shareholder information ^ The company’s total capitalisation at 31 December 2023 was NOK 324 million, based on a closing share price of that day of NOK 4.65. 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 share- holders. There has not been given, nor proposed to give, a mandate to the Board of Directors to approve a distribution of dividends. Shares and share capital 31 December 2023, Arribatec Group ASA had 69 572 206 ordinary shares outstanding with a par value of NOK 2.80 per share (see Note 24 to the financial statement). The company has one share class, with each share conferring equal dividend rights and votes. On 31 December 2023 the company had 5 100 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 NO0012861667. 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 communica- tion 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 informa- tion regarding Arribatec is available on the company’s website at www.arribatec. com . Annual General Meeting The annual general meeting of Arribatec is normally held in May each year. Written 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. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 29 29 Board of Directors report Board of Directors report | Shareholder information Board of Directors report | Shareholder information 2021 Artbox Report Template All rights reserved © Artbox AS 2021 20 largest shareholders at 11 April 2024 Holding Stake FERNCLIFF LISTED DAI AS 16 655 404 23.9% TITAN VENTURE AS 2 988 661 4.3% DALLAS ASSET MANAGEMENT AS 2 467 200 3.5% JOAR AARENES 2 411 185 3.5% ARRIBA INVEST AS 2 290 500 3.3% SRK CONSULTING AS 1 770 947 2.5% ERIK SKAAR OPDAL 1 695 200 2.4% Nordnet Bank AB 1 653 849 2.4% TRUDE HALVORSEN 1 079 789 1.6% HANEKAMB INVEST AS 1 055 347 1.5% EXCESSION AS 900 000 1.3% DATUM AS 854 291 1.2% MIDDELBOE AS 739 662 1.1% KRISTIAN FALNES AS 700 000 1.0% Danske Bank A/S 591 097 0.8% LARS HUGO BRAADLAND OLSEN 574 850 0.8% LCS AS 551 801 0.8% JAN ARNE CHRISTENSEN 524 675 0.8% BJØRN ASLE ALEXSANDER TEIGE 500 000 0.7% NORDLYS TRADING AS 450 000 0.6% Total 20 largest shareholders 40 454 458 58.1% Other shareholders 29 117 748 41.9% Total 69 572 206 100.0% Geographic residence Shareholders as registered in VPS on 11 April 2024 Country Holding Stake Norway 64 448 223 94.1% Sweden 1 929 687 2.8% United Kingdom 691 762 1.0% Denmark 659 098 0.9% Belgium 298 404 0.4% Other 545 032 0.8% Total 69 572 206 100.0% Ownership structure by size of holding as registered in VPS on 11 April 2024 Number of shareholders Number of shares Holding Stake 10 >1 000 000 34 068 082 49.0% 82 100 001-1 000 000 21 334 731 30.7% 357 10 001-100 000 10 382 919 14.9% 196 5 001-10 000 1 468 900 2.1% 698 1 001-5 000 1 792 601 2.6% 3 589 1-1 000 524 973 0.8% 4 932 Total 69 572 206 100.0% Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 30 30 Board of Directors report Board of Directors report | Shareholder information Board of Directors report | Shareholder information 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Condensed consolidated financial statements & notes ^ The Group 32 Parent company 78 Auditor’s report 95 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 31 Financial statements Financial statements 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Consolidated statements of profit and loss 33 Consolidated statement of other comprehensive income 34 Consolidated statement of financial position 35 Consolidated statement of changes in equity 36 Consolidated statement of cash flow 37 Notes to the financial statements 39 Note 1 Corporate information 39 Note 2 Basis for preparation 39 Note 3 Segment 40 Note 4 Materials, software and services 45 Note 5 Personnel 46 Note 6 Key management 47 Note 7 Other operating expense 49 Note 8 Property, plant and equipment 50 Note 9 Right-of-use assets and lease liabilities 52 Note 10 Intangible assets 54 Note 11 Financial items and risks 57 Note 12 Tax 58 Note 13 Earnings per share 60 Note 14 Goodwill and impairment 61 Note 15 Business Combinations 63 Note 16 Investment in subsidiaries 64 Note 17 Other non-current assets 64 Note 18 Account receivable 65 Note 19 Financial instruments 66 Note 20 Other current assets 67 Note 21 Contract assets and liabilities 68 Note 22 Inventory 69 Note 23 Cash and cash equivalents 69 Note 24 Shares 70 Note 25 Long term incentive plan 72 Note 26 Interest bearing debt 74 Note 27 Pensions 75 Note 28 Provisions 76 Note 29 Other current liabilities 76 Note 30 Transactions with related parties 77 Note 31 Pledged assets 77 Note 32 Subsequent events 77 Consolidated financial statements Arribatec Group ASA | Annual report 2023 32 Financial statements Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Consolidated statements of profit and loss NOK thousand Note Full year 2023 Full year 2022 Revenue 3 , 21 572,981 504,968 Materials, software and services 4 (132,673) (115,035) Gross profit 440,308 389,934 Salary and personnel costs 5 , 6 (346,608) (338,800) Other operating expenses 7 (69,236) (85,241) Total operating expenses (415,845) (424,041) EBITDA 24,463 (34,107) Depreciation, amortisation and impairment 8 , 9 , 10 (48,307) (56,232) EBIT (23,844) (90,339) Financial income 11 3,208 5,191 Financial expense 11 (9,414) (5,280) Profit/(loss) before tax (30,050) (90,428) Tax expense 12 6,998 7,035 Profit/(loss) after tax (23,053) (83,393) Attributable to: Equity holders of the parent company (23,053) (83,393) Earnings per share: basic 13 (0.33) (0.13) Earnings per share: diluted 13 (0.33) (0.13) Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 33 33 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Consolidated statement of other comprehensive income NOK thousand Full year 2023 Full year 2022 Profit/(loss) after tax (23,053) (83,393) Items that may be classified subsequently to profit or loss Foreign currency translation differences - foreign operations 3,087 282 Other comprehensive income/(loss) for the period 3,087 282 Total comprehensive income/(loss) for the period (19,965) (83,111) Attributable to: Equity holders of the parent company (19,965) (83,111) Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 34 34 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Consolidated statement of financial position NOK thousand Note 31 Dec 2023 31 Dec 2022 ASSETS Non-current assets Property, Plant and equipment 8 6,436 6,517 Right-of-use assets 9 28,442 41,719 Goodwill 10 , 14 206,457 204,581 Customer relations 10 , 14 24,125 34,637 Other Intangible assets 10 , 14 43,771 41,934 Other non-current assets 17 3,989 5,323 Deferred tax assets 12 18,998 12,322 Total non-current assets 332,217 347,034 Current assets Accounts receivable 18 , 19 90,898 88,214 Contract assets 21 24,244 16,276 Inventory 22 1,548 3,777 Other current assets 19 , 20 13,267 19,612 Cash and cash equivalents 23 39,371 40,449 Total current assets 169,329 168,328 TOTAL ASSETS 501,545 515,362 NOK thousand Note 31 Dec 2023 31 Dec 2022 EQUITY AND LIABILITIES Equity Share capital 24 194,802 193,361 Other paid in capital 214,085 215,645 Exchange differences 3,767 679 Other equity (150,191) (127,758) Total equity 262,463 281,927 Non-current liabilities Interest bearing loans 19 , 26 12,928 18,883 Non-current lease liabilities 9 , 19 16,836 26,727 Other non-current financial liabilities 19 1,804 967 Deferred tax liabilities 12 7,786 10,590 Provisions 28 10,685 14,202 Total non-current liabilities 50,038 71,369 Current liabilities Interest bearing loans - current portion 19 , 26 26,460 12,328 Current lease liabilities 9 , 19 12,909 16,765 Accounts payable 19 , 29 39,816 31,879 Contract liabilities 19 , 20 , 21 24,319 16,476 Current tax payable 12 , 19 1,669 650 Other current liabilities 19 , 29 83,869 83,969 Total current liabilities 189,044 162,066 Total liabilities 239,082 233,435 TOTAL EQUITY AND LIABILITIES 501,545 515,362 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 35 35 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Consolidated statement of changes in equity Equity related to the shareholders of the parent company Restricted NOK thousand Note Share capital Other paid in capital Exchange differences Other equity Total Equity Balance on 1 January 2022 163,773 196,700 398 (44,365) 316,506 Result of the period (83,393) (83,393) Other comprehensive income for the period 282 282 Total comprehensive result for the period - - 282 (83,393) (83,111) Capital issue, April 24 28,000 22,000 50,000 Share issue, repair offer, July 24 1,015 798 1,813 Share consideration relating to acquisition of Integra (2,872) (2,872) Capital issue in relation to acq. of Integra, Nov 24 573 2,299 2,872 Share issue cost (3,280) (3,280) Closing balance 31 Dec 2022 193,361 215,645 679 (127,758) 281,927 Balance on 1 January 2023 193,361 215,645 679 (127,758) 281,927 Result of the period (23,053) (23,053) Other comprehensive income for the period 3,087 3,087 Total comprehensive result for the period - - 3,087 (23,053) (19,965) Capital issue, Feb 24 0 0 Share issue cost 24 (118) (118) Share consideration relating to acquisition of Integra 24 (8,409) (8,409) Capital issue in relation to acq. of Integra, Dec 1,442 6,968 8,409 Share option cost 24 620 620 Closing balance 31 Dec 2023 194,802 214,085 3,767 (150,191) 262,463 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 36 36 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Consolidated statement of cash flow NOK thousand Note Full year 2023 Full year 2022 Operating activities Profit/(Loss) before tax (30,050) (90,428) Taxes paid (2,192) (1,566) Adjustments for: - Finance income and expense 11 6,203 73 - (Increase)/decrease in trade receivables (2,684) 460 - (Decrease)/increase in trade payables 7,937 10,652 - Depreciation and amortisation 8 , 9 , 10 48,488 50,618 - Impairment losses on intangible assets 10 - 5,614 Calculated cost of employee share option program 620 - Change in other current accounts 5,340 (2,190) Net cash flows operating activities 33,663 (26,766) Investing activities Sale of intangible asset - 9,347 Cash consideration earn-out payment (3,704) - Purchase of property, plant and equipment 8 (2,693) (1,964) Purchase and development of intangible assets 10 (16,502) (13,881) Interest received 563 291 Net cash flows investing activities (22,336) (6,207) Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 37 37 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 NOK thousand Note Full year 2023 Full year 2022 Financing activities Change in overdrafts 26 12,677 (2,432) Repayment of debt 26 (6,173) (5,464) Interest paid (1,161) (697) Received Gov.grants (SkatteFUNN) 3,301 3,493 Instalments lease liabilities (20,038) (15,932) Proceeds from shares issued 0 51,813 Share issue cost (118) (3,280) Net cash flows financing activities (11,511) 27,501 Net change in cash and cash equivalents (184) (5,472) Cash and cash equivalents at beginning of period 40,449 43,758 Currency translation (893) 2,163 Cash and cash equivalents at end of period, incl. restricted cash 39,371 40,449 -whereof restricted cash 12,111 13,492 Oslo 24 April 2024 The board of Arribatec Group ASA Signed Martin Nes chairman of the board Øystein Stray Spetalen member of the board Kristin Hellebust member of the board Terje Mjøs member of the board Linn Katrine Høie member of the board Geir Johansen Group CEO Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 38 38 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Notes to the financial statements Note 1 Corporate information The Parent Company Arribatec Group ASA (publ) (“Arribatec”), with Norwegian corporate identity number 979 867 654 is a public limited liability 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, Oslo Børs. ticker ARR. 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-, integra-tion- and domain competence, Arribatec builds long-term strategic partnership with a broad customer base. Arribatec serves more than 1 000 entities spread over 20 countries and various industries, both in the private and public sector. The activities are further described in Note 3. The Annual Report and Parent Company Report for Arribatec Group ASA (publ) were adopted by the Board of Directors on 24 April 2024 and will be submitted for approval to the Annual General Meeting 27.05.2024. Note 2 Basis for preparation 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 Parent company has NOK as its functional currency. The consolidated finan-cial accounts are presented in NOK. All presented figures in this interim report have been rounded and consequently, the sum of individual figures can deviate from the presented total figure. The Group has prepared the financial statements on the basis that it will continue to operate as a going concern. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 39 39 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 3 Segment The market for Arribatec’s Software and services are global. The chief decision maker will follow up revenue and profitability on a global basis, segmented into the Business Areas. This is consistent with the internal reporting submitted 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 this note. The management of the Group follows up the revenue, EBITDA and EBIT by Business Area and geography according to tables below. Business servicesare focusing on ERP, BI & Analytics, DevOps, integrations and software solutions for research institutes. Arribatec Business services provide simplicity by implementing, customizing, maintaining and supporting the entire business landscape, with ERP as the core engine. We integrate it with other market leading systems that provide better operational support and insight than a single ERP system does. EA & BPMprovides Enterprise Architecture and Business Process Management. Arribatec EA&BPM delivers solutions and long-term services within the spaces of business process management, enter-prise architecture and corporate governance to major Norwegian and Nordic customers, both in the private and public sector. Cloudprovides cloud services such as hosting IT infrastructure within f ex hybrid, Azure, Splunk and 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 data centers to accommodate special use cases for our customers. Hospitalitydelivers solutions for self-check-in/check-out and payments for the hospitality industry. Marinefocus on the Maritime sector. BA Marine’s competencies are the development, implementation, and consulting of the owned asset management system solutions: Infoship. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 40 40 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 2023 NOK thousand Business services EA & BPM Cloud Hospitality Marine Corporate Eliminations Total Revenue 294 258 111 010 127 016 10 903 47 645 662 (18 514) 572 981 Materials, software and services (56 402) (24 170) (61 136) (4 318) (3 075) (1 989) 18 418 (132 673) Gross margin 237 856 86 840 65 880 6 585 44 570 (1 327) (96) 440 308 Salary and personnel costs (190 084) (59 394) (43 950) (4 400) (23 939) (24 841) 0 (346 608) Other operating expenses (18 170) (5 832) (12 732) (5 518) (6 942) (20 139) 96 (69 236) Total operating expenses (208 254) (65 227) (56 682) (9 918) (30 882) (44 980) 96 (415 845) EBITDA 29 602 21 614 9 198 (3 333) 13 689 (46 307) 0 24 463 Depreciation, amortisarion and impairment (19 563) (6 557) (7 802) (3 533) (7 211) (3 642) 0 (48 307) EBIT 10 039 15 057 1 396 (6 866) 6 478 (49 949) 0 (23 844) Gross margin % 80.8% 78.2% 51.9% 60.4% 93.5% na na 76.8% EBITDA % 10.1% 19.5% 7.2% (30.6%) 28.7% na na 4.3% EBIT % 3.4% 13.6% 1.1% (63.0%) 13.6% na na (4.2%) Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 41 41 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 2022 NOK thousand Business services EA & BPM Cloud Hospitality Marine Corporate Eliminations Total Revenue 291 362 89 789 113 726 3 642 47 066 1 166 (41 781) 504 968 Materials, software and services (64 177) (19 812) (48 862) 1 948 (6 365) (17 561) 39 794 (115 035) Gross margin 227 185 69 977 64 864 5 590 40 701 (16 395) (1 988) 389 934 Salary and personnel costs (177 970) (52 108) (41 291) (10 192) (39 066) (18 172) 0 (338 800) Other operating expenses (21 768) (5 437) (22 031) (3 678) (11 702) (22 613) 1 988 (85 241) Total operating expenses (199 739) (57 545) (63 322) (13 870) (50 768) (40 785) 1 988 (424 041) EBITDA 27 446 12 432 1 542 (8 280) (10 067) (57 180) 0 (34 107) Depreciation, amortisation and impairment (15 110) (5 707) (7 116) (2 762) (14 696) (10 842) 0 (56 232) EBIT 12 336 6 725 (5 573) (11 042) (24 764) (68 022) 0 (90 339) Gross margin % 78.0% 77.9% 57.0% 153.5% 86.5% na na 77.2% EBITDA % 9.4% 13.8% 1.4% (227.4%) (21.4%) na na (6.8%) EBIT % 4.2% 7.5% (4.9%) (303.2%) (52.6%) na na (17.9%) Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 42 42 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Consulting services Consulting services mainly come from time and material projects. The revenue is recognised as revenue as they are delivered to the customer every month. A receivable is recognised at the time of invoicing as this is the point in time when the right to consideration becomes unconditional. Recurring revenue 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. 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. In most cases, the sale of licenses is part of SaaS contracts. Arribatec in some instances has contracts that include the sale of licenses only. Arribatec has analyzed its (partner) licensing contracts and concluded that it controls the license before it is transferred to the customer since Arribatec has legal ownership, physical possession, and the risk and reward of ownership before being transferred to the customer. Arribatec is therefore the principal in the customer contract. When Arribatec licenses are distinct on-premises licenses (soft-ware installed on customers’ server), these fall under the category “right-to-use” since the license grants the right to the IP “as is” when delivered. The distinct on-premises licenses pricing model is a one-time fixed fee. Revenue is recognised at the point in time when the customer is provided with the ability to use the software. The fee is recognised as a revenue at the point of time when the customer has received legal title and physical possession, and the customer has accepted the license. Generally, this is at the beginning of the license period. When Arribatec license cloud-based subscription licenses (“right to access”), the license is not considered distinct from the online/hosting service. Revenue is recognised over time, over the license/contract period, as the customer is receiving and consuming the benefits of access to the cloud-based license on an ongoing basis. The cloud-based subscription licenses are sold for a fixed annual or monthly fee. Revenue is recognised linearly over the subscription time. 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 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. The customer will purchase and obtain control of the software on a subscription or consumption basis. Revenue is therefore recognised periodically over the life 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 to each other, Arribatec considers whether the two contracts have been negotiated as a package with a single commercial objective, or not. If this is the case the two contracts are combined. If not, they are accounted for separately. The implementation and installation services are capable of being distinct and distinct within the context of these contracts. This is concluded based on an analysis of the different deliveries and the performance obligations in the contract. Arribatec has therefore concluded that there are generally two distinct performance obliga-tions 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 that are estimated based on the pricing of each element in the contract like hours, contract length, and options to extend the contract. Arribatec’s performance obligation under the installation and integra-tion 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 recognised over time as the installation and integration is performed based on the hours worked. Managed services Under the managed services contracts Arribatec helps customers operate their IT environments, either on-premises or from the cloud. Managed services contracts are delivered at a fixed price and a minimum commitment to the customers, on a long-term contract. Additional work above the agreed level is considered normal consulting services. 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 recognised over time. One-time revenue from third party hardware In some contracts, Arribatec delivers both physical hardware and installation of software on the hardware, e.g. for self-service /check-in kiosks. In such cases, the hardware product is considered as a separate contract obligation that is recognised as revenue when it is installed. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 43 43 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Disaggregation of revenue In the following table, revenue is disaggregated by primary Business area, geography and recurrence. In presenting the geographic information, revenue has been based on the geographic location of the legal entity. The table shows external revenue. Full year 2023 NOK thousand Consulting services Recurring Revenue One-time revenue Total Norway 169 368 174 273 16 463 360 104 Business services 70 912 51 921 1 577 124 411 EA & BPM 77 521 29 439 3 119 110 080 Cloud 16 716 89 714 8 208 114 638 Hospitality 4 219 3 207 3 478 10 903 Corporate 0 (9) 81 72 Continental Europe 86 016 15 900 6 874 108 790 Business services 67 762 7 446 411 75 619 Marine 18 254 8 454 6 463 33 171 UK 46 581 17 291 571 64 442 Business services 46 581 17 291 571 64 442 Americas 31 167 6 714 1 764 39 645 Business services 24 496 0 692 25 188 Marine 6 670 6 714 1 072 14 456 Total revenue 333 131 214 177 25 672 572 981 Full year 2022 NOK thousand Consulting services Recurring Revenue One-time revenue Total Norway 140 157 149 666 15 472 305 295 Business services 65 425 46 299 876 112 601 EA & BPM 59 512 23 995 5 402 88 909 Cloud 13 966 78 095 8 170 100 230 Hospitality 1 253 1 286 1 023 3 562 Corporate 0 (8) 0 (8) Continental Europe 95 440 14 457 5 262 115 159 Business services 72 401 6 952 247 79 601 Marine 23 039 7 505 5 015 35 558 UK 33 955 13 454 557 47 966 Business services 33 955 13 454 557 47 966 Americas 28 902 6 917 728 36 548 Business services 25 075 21 236 25 333 Marine 3 827 6 896 492 11 215 Total revenue 298 454 184 495 22 019 504 968 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 44 44 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 4 Materials, software and services Materials, software and services represent the external cost of operations and are expensed when the revenue and cost occurs. The cost of finished goods and work in progress comprises design costs, raw materials, direct labour and other direct costs. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. It excludes borrowing costs and own operating cost. NOK thousand 2023 2022 Hired consultans (40 302) (48 851) Hardware for resale (8 999) (7 738) Software for resale (66 896) (58 212) Other (16 475) (234) Total materials, software and services (132 673) (115 035) Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 45 45 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 5 Personnel NOK thousand 2023 2022 Salaries (271 802) (256 568) Social security tax (42 480) (38 407) Bonuses (6 752) (6 878) Share option cost (620) 0 Pension costs defined contribution (Note27) (20 105) (19 337) Other personnel cost (4 850) (17 609) Total salaries and personnel expense (346 608) (338 800) Average number of FTEs 2023 2022 Number os FTEs, start of year 353 374 Number os FTEs, end of year 329 353 Average number of FTEs 341 363 Gender split, end of year Male 215 233 Female 114 120 Number of FTEs, end of year, per country 2023 2022 Belgium 0 1 Cyprus 3 3 Denmark 1 1 France 4 2 Germany 0 3 Italy 28 35 Norway 208 204 Netherlands 0 1 Poland 0 7 Singapore 1 2 Spain 25 26 Sweden 16 22 United Kingdom 33 31 USA 11 15 Total number of FTEs 329 353 Pension obligations The Group’s pension obligations vary between countries depending on the local legislation and different pension systems, please see Note 2Note 2Note 2Note 27for further description. The group only has defined contribu-tion retirement plans.Note 27for further description. The group only has defined contribu-tion retirement plans.7for further description. The group only has defined contribu-tion retirement plans. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 46 46 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 6 Key management The Group Management consists of the Group Directors. Group Directors are the CEO, COO, CFO, CPOO and CCO that are all employed by the parent company. The IT Director is employed by one of the subsidiaries. Compensation to the management during the year is detailed in this note. Amounts presented are the total part of salary, not only the part for the Group management role. The Group CEO has a three-month notice period and is entitled to severance pay for twelve months in case of termination initiated by the company. None of the Board members or the CEO have executive loans or guarantees in the company. See remuneration report for details on bonus and share option program in relation to management. Management remuneration 2023 NOK thousand Board remuneration Audit committee remuneration Salary Bonus Benefits in kind Share option cost Pension cost Total remuneration Management Geir Johansen - CEO 0 0 4 000 0 17 38 100 4 154 Ole Jakob Kjølvik - COO 0 0 1 559 137 17 28 100 1 840 Bente Brocks - CFO (interim) 0 0 1 762 0 14 34 100 1 909 Erik Sundet - Group IT director (50% mgmt) 0 0 1 231 0 56 28 86 1 401 Pål Stueflotten - CCO 0 0 1 458 513 84 28 100 2 182 Solfrid Buø - CPOO 0 0 1 500 0 24 28 100 1 652 Management total 0 0 11 509 649 212 184 584 13 138 Members of the Board Martin Nes (Chairman) 265 38 0 0 0 0 0 303 Øystein S. Spetalen (Member) 215 0 0 0 0 0 0 215 Kristin Hellebust (Member) 215 33 0 0 0 0 0 248 Linn Katrine Høie (Member) 215 0 0 0 0 0 0 215 Terje Mjøs (Member, from May-23) 131 20 0 0 0 0 0 152 Henrik Lie-Nielsen (Member, to May-23) 83 13 0 0 0 0 0 96 Members of the Board total 1 123 104 0 0 0 0 0 1 227 Total salaries and personnel expense 1 123 104 11 509 649 212 184 584 14 365 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 47 47 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Management remuneration 2022 NOK thousand Board remuneration Audit committee remuneration Salary Bonus Benefits in kind Share option cost Pension cost Total remuneration Management Geir Johansen - CEO 0 0 2 700 0 11 0 90 2 800 Ole Jakob Kjølvik - COO 0 0 1 500 0 16 0 90 1 606 Bente Brocks - CFO (interim) 0 0 1 680 0 11 0 90 1 781 Erik Sundet - Group IT director (50% mgmt) 0 0 993 48 21 0 69 1 132 Pål Stueflotten - CCO (from May-22) 0 0 800 0 74 0 56 930 Solfrid Buø - Chief People & Organisation Officer (from Nov-22) 0 0 217 0 3 0 15 235 Grete Thomassen - HR director (to Apr-22) 0 0 400 0 4 0 28 432 Espen Karsrud - Group EVP Business Development (to Apr-22) 0 0 500 0 4 0 35 539 Management total 0 0 8 790 48 144 0 473 9 455 Members of the Board Martin Nes (Chairman) 279 20 0 0 0 0 0 300 Øystein S. Spetalen (Member) 217 0 0 0 0 0 0 217 Kristin Hellebust (Member) 217 18 0 0 0 0 0 234 Henrik Lie-Nielsen (Member) 217 18 0 0 0 0 0 234 Linn Katrine Høie (Member) (from May-22) 117 0 0 0 0 0 0 117 Yvonne Litsheim Sandvold (Member) (to May-22) 100 0 0 0 0 0 0 100 Members of the Board total 1 146 55 0 0 0 0 0 1 201 Total salaries and personnel expense 1 146 55 8 790 48 144 0 473 10 656 The following remuneration has been made to the members of the nomination committee during the year: NOK thousand 2023 2022 Nomination committee Espen Lundaas (head) 20 40 Øystein Tvenge (member) 0 0 Total 20 40 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 48 48 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 7 Other operating expense NOK thousand 2023 2022 Marketing cost (4 966) (4 385) Rental and leasing cost1 (8 145) (8 750) Travel cost (11 348) (7 929) Fees for external services (18 784) (29 261) IT and communication cost (16 992) (19 829) Loss on sale of intangible fixed assets 0 (4 241) Other operating cost2 (9 001) (10 846) Total operating expenses (69 236) (85 241) 1Includes common cost related to premises, such as electricity, cleaning, moving cost and cost in relation to non-material leasing contracts. 2Includes coursing, representation cost, mobile usage for employees, insurance premiums and other office expense NOK thousand 2023 2022 Specification of auditor’s fee Statutory audit (1 224) (2 988) Other assurance services (11) (62) Other non-assurance services (132) (306) Total (1 366) (3 355) Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 49 49 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 8 Property, plant and equipment Property, plant and equipment are measured at cost in the balance sheet, with a deduction for accumulated depreciation and 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 five to ten years. 2023 NOK thousand Office equipment Fixtures and fittings Other Total Cost at 1 Jan 2023 16 785 5 028 1 837 23 650 Additions 2 442 147 104 2 693 Reclassifications (57) 0 0 (57) Sale (244) 0 (5) (249) Disposals (1 246) (381) (174) (1 800) Translation difference 693 162 60 914 Cost, end of period 18 373 4 956 1 821 25 151 Accumulated depreciation at 1 Jan 2023 (13 842) (2 331) (959) (17 133) Depreciation during the year (1 969) (739) (176) (2 884) Reclassifications 57 0 0 57 Sale 222 0 5 227 Disposals 1 202 381 165 1 747 Translation difference (610) (71) (48) (729) Accumulated depreciation, end of period (14 941) (2 760) (1 014) (18 715) Carrying amount at 31 Dec 2023 3 432 2 197 808 6 436 Useful life 5-10 yrs 5 yrs 5 yrs Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 50 50 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 2022 NOK thousand Office equipment Fixtures and fittings Other Total Cost at 1 Jan 2022 18 819 3 572 1 239 23 631 Additions 788 1 147 29 1 964 Reclassifications (2 468) 267 757 (1 444) Sale (370) (14) (160) (545) Disposals (426) - (117) (543) Translation difference 442 56 89 587 Cost, end of period 16 785 5 028 1 837 23 650 Accumulated depreciation at 1 Jan 2022 (13 943) (1 463) (779) (16 185) Depreciation during the year (1 634) (701) (170) (2 505) Reclassifications 1 511 (143) (145) 1 224 Sale 294 5 132 431 Disposals 335 (0) 45 381 Translation difference (405) (30) (43) (478) Accumulated depreciation, end of period (13 842) (2 331) (959) (17 133) Carrying amount at 31 Dec 2022 2 942 2 697 877 6 517 Useful life 5-10 yrs 5 yrs 5 yrs Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 51 51 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 9 Right-of-use assets and lease liabilities Right of use assets and Lease liabilities The Group recognises leasing contracts as Right of use assets and lease liabilities. The exemptions are short term leases (defined as twelve months or loss) and/or low value assets. Contracts not mate-rial to IFRS 16 are expensed in P&L as they occur. Leases that fulfill the criteria are recognised in balances sheet and the Group recognises the lease payments as other operating expenses in the statement of profit or loss when they incur. The lease term represents the non-cancellable period of the lease, together with estimated periods where the option to extend or termi-nate contracts when the Group is reasonably certain to exercise this option. This is mainly valid for facility agreements that are about to expire, but there is no plan to change location. The Group presents its lease liabilities as separate line items in the statement of financial position. Right-of-use assets NOK thousand Buildings Vehicles Hardware Other Total Right-of-use assets per 1 Jan 2022 18 149 430 3 139 8 548 30 266 Addition of right-of-use assets 18 336 0 37 9 836 28 209 Depreciation in the period (10 791) (345) (1 561) (4 518) (17 215) Reclassification 6 631 1 191 (6 822) 0 Translation difference 447 3 9 0 459 Right-of-use assets per 1 Jan 2023 32 773 89 1 814 7 043 41 719 Addition of right-of-use assets 4 740 724 1 135 270 6 869 Correction of initial index regulation, addition part (1 372) 0 0 0 (1 372) Depreciation in the period (13 320) (235) (1 650) (3 458) (18 663) Correction of initial index regulation, reversal of depr. prev.years 180 0 0 0 180 Reclassification between categories (41) 41 0 0 0 Disposals (952) 0 0 0 (952) Translation difference 657 1 1 0 659 Carrying amount of right-of-use assets, end of period 22 665 620 1 299 3 856 28 442 Remaining lease term 1-5 years 1-4 years 1-3 years 1-3 years Depreciation method Linear Linear Linear Linear Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 52 52 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Lease liabilities NOK thousand 31 Dec 2023 31 Dec 2022 Undiscounted lease liabilities and maturity of cash outflow < 1 year 13 609 17 782 1-2 years 9 421 12 435 2-3 years 5 344 8 306 3-4 years 2 064 4 811 4-5 years 546 1 566 > 5 years 0 621 Total undiscounted lease liabilities, end of period 30 984 45 521 Discount element (1 239) (2 028) Total discounted lease liabilities, end of period 29 745 43 492 NOK thousand 2023 2022 Total lease liabilities, end of period 29 745 43 492 Lower liabilities at end of 2023 from 2022 is mainly due to some office locations that have been cancelled. The payments made on lease liabilities are presented in the cash flow statement on a separate line. 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 internal financing. See Note 11for interest expenses related to leasing contracts. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 53 53 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 10 Intangible assets Acquisition costs Acquisition costs incurred are expensed and included in operating expenses. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in the income statement as financial income or expense. Government grants Government grants are recognised when there is reasonable assur-ance 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 recognised in profit or loss over the useful life of the depreciable asset by way of a reduced depreciation charge. During 2023, Arribatec received government grants in the form of SkatteFUNN in relation to a development project of 0.6m NOK in 2023 (1.0m NOK). 2023 NOK thousand Goodwill Customer relations Other intangible assets; Custom software Other intangible assets; Technical software Other intangible assets; Licenses Total Cost at 1 Jan 2023 204 581 56 799 51 883 13 654 7 752 334 669 Additions 0 0 0 0 3 634 3 634 Additions - internally developed 0 0 12 868 0 0 12 868 Less government grants 0 0 (604) 0 0 (604) Reclassifications‌1 0 0 (2 249) 2 249 7 7 Disposals 0 0 (5 559) (0) (161) (5 720) Translation difference 1 875 1 541 1 099 937 71 5 523 Cost, end of period 206 457 58 340 57 438 16 839 11 303 350 377 Accumulated amortisations at 1 Jan 2023 0 (22 162) (21 290) (6 684) (3 381) (53 517) Amortisation 0 (11 721) (9 969) (3 086) (2 165) (26 941) Reclassifications‌1 0 0 1 253 (1 253) (7) (7) Disposals 0 0 5 559 (0) 84 5 644 Translation difference 0 (332) (399) (423) (50) (1 204) Accumulated amortisation and impairment, end of period 0 (34 215) (24 845) (11 446) (5 518) (76 024) Carrying amount at 31 Dec 2023 206 457 24 125 32 593 5 393 5 785 274 352 Useful life Infinite 5 yrs 5–10 yrs 5 yrs 3–10 yrs 1Reclassifications made between categories Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 54 54 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Goodwill and customer relations are pure excess values and are explained in Note 14.The main part of technical software is also related intangible excess values IB, Italy. Custom software consists of internally developed software. Technical software is other intangible assets and trademarks. For Impairment testing on Goodwill, see Note 14. Conducted impair-ment test applies for all intangible assets. Research and Development cost Development expenditures are capitalized only when the criterion for recognition is met, i.e., it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity, management has committed 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 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. The development expenditures that do not meet the criteria for capi-talization are recognised as salary and personnel expenses and other operating expenses in profit and loss. The Group distinct between development and maintenance. Expenditures after the internal generated software is ready to be used in customer deliveries are recognized as an operating mainte-nance cost in the profit and loss statement. Customer relationships and technical assets The assets acquired in a business combination are recognised at fair value on the acquisition date. Customer relationships and databases have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over their useful lives of 3 to 5 years. 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 a significant risk of causing a material adjust-ment to the carrying amounts of assets and liabilities within the next financial year are addressed below. Goodwill In accordance with requirements in IAS 36, the group annually tests whether goodwill has suffered any impairment or more frequently if impairment indicators are identified. The recoverable amount of the 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 five 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 regarding goodwill and impair-ment reviews are included in Note 14Impairment. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 55 55 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 2022 NOK thousand Goodwill Customer relations Other intangible assets;Custom software Other intangible assets;Technical software Other intangible assets;Licenses Total Cost at 1 Jan 2022 205 279 57 526 29 975 54 353 4 979 352 112 Additions 0 0 887 0 1 240 2 127 Additions - internally developed 0 0 11 755 0 0 11 755 Less government grants 0 0 (1 006) 0 0 (1 006) Reclassifications1 0 (691) 44 003 (32 619) 1 551 12 244 Sale of asset (910) 0 0 (9 202) 0 (10 113) Disposals 0 0 (35 302) 0 0 (35 302) Translation difference 213 (36) 1 570 1 122 (17) 2 852 Cost, end of period 204 581 56 799 51 883 13 654 7 752 334 669 Accumulated amortisations at 1 Jan 2022 0 (11 495) (10 093) (13 523) (643) (35 755) Amortisation 0 (11 360) (13 962) (3 887) (1 689) (30 898) Impairment 0 0 (5 606) 0 0 (5 606) Reclassifications1 0 691 (19 283) 7 614 (1 054) (12 032) Sale of asset 0 0 0 3 527 0 3 527 Disposals 0 0 28 408 0 0 28 408 Translation difference 0 2 (754) (416) 6 (1 163) Accumulated amortisation and impairment, end of period 0 (22 162) (21 290) (6 684) (3 381) (53 517) Carrying amount at 31 Dec 2022 204 581 34 637 30 593 6 969 4 372 281 152 Useful life Infinite 5 yrs 5–10 yrs 5 yrs 3–10 yrs 1Reclassifications made between categories Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 56 56 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 11 Financial items and risks NOK thousand 2023 2022 Finance income Interest income 563 291 Realized foreign exchange gains 2 149 2 153 Net unrealized foreign exchange gains 381 1 522 Other financial income 115 1 225 Total financial income 3 208 5 191 Finance expenses Interest on debts and borrowings (1 161) (697) Interest expense on lease liabilities (1 171) (1 236) Realized foreign exchange losses (4 131) (1 998) Other financial expenses (2 952) (1 350) Total financial expenses (9 414) (5 280) Net financial items (6 206) (89) Financial risk In Arribatec, risks as currency risk, interest rate risk and other price risk are all factors that could have a negative impact on the ability of the Group to achieve its business objectives. All economic activities are associated with risk. 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 systematically. The following summary is by no means comprehensive but offers an overview of all material financial risk factors that are considered important for Arribatec’s future development. 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 fair value of future cash flows, cash and financial instruments may shift as a result of changes in exchange rates. Transactions in foreign currency in each entity are converted at the exchange rate on the transaction date. Monetary items in foreign currency are converted to NOK using the exchange rate at the balance sheet date. Non-monetary items measured at the historical rate expressed in a foreign currency are converted into NOK using the exchange rate on the transaction date. The currency risk is limited in Arribatec as few balance items are posted in foreign currency per 31.12.2023 in each subsidiary. The risk is in the conversion of foreign operation into NOK in consolidation. 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 NOK 39.4m on 31 December 2023 (2022: NOK 31.2m). The loan carries a variable interest rate based on the interbank rate in each currency with a margin. Any annualized increase or decrease by 100 basis point would increase/decrease the Groups loss before tax by appr. NOK 0.3m (NOK 0.3m). The Group continuously assesses and monitors interest rate risk and exposure. Based on these assessments, the group also assesses alternative financing and hedging. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 57 57 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 12 Tax Arribatec account for current income tax assets and liabilities based on the expected recovery from, or payment to, tax authorities. The applicable tax rates and laws are those in effect at the end of the reporting period. Additionally, we calculate deferred income tax using the deferred tax method, considering temporary differences between tax bases and carrying amounts of assets and liabilities for financial reporting purposes. Our policy recognizes deferred income tax liabilities for taxable temporary differences, except when arising from goodwill recognition or non-business combination transactions that do not impact accounting or taxable profit or loss. We also assess deferred tax assets, recognizing them to the extent of probable future taxable profit availability or utilization of unused tax losses and credits. The carrying amount of deferred tax assets is reviewed periodically, and unrecognized assets are reas-sessed at each reporting date. Finally, we offset deferred income tax assets and liabilities only when legally enforceable rights exist to set off tax assets against income tax liabilities within the same taxable entity or taxation authority. Income tax calculation The Group’s tax expense is affected by several factors, where the most important are tax losses carried forward, currency effects and local GAAP/IFRS-differences for calculation of taxable profit. The Group’s tax is related to continuing operations only, as there are no discontinued operations. NOK thousand 2023 2022 Income tax expense Current tax Current Income Tax - Norway 2 597 889 Correction previous year - Norway (7) 0 Current Income Tax - Other countries 2 762 1 539 Correction previous year - other countries (59) 968 Deferred tax Change in deferred taxes - Norway (10 392) (7 653) Change in deferred taxes - Other countries (1 900) (2 778) Tax income recorded in consolidated statement of Profit & Loss (6 998) (7 035) A reconciliation of the tax base Profit/(loss) before tax (30 050) (90 428) Adjustment of current income tax of previous years 3 (50) Temporary differences (2 336) 690 Non deductible expenses 1 113 37 375 Non-taxable income (367) (916) Tax base (31 637) (53 331) Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 58 58 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 NOK thousand 2023 2022 A reconciliation of the effective tax rate Income taxes calculated at the Company's domestic tax rate (22%) 6 960 (11 733) Tax previous year (65) 968 Group contribution with tax effect (tax payable effect) (2 576) 0 Group contribution with tax effect (deferred tax effect) 2 576 0 Changes in recognised deferred taxes (12 292) (10 431) Effect from previously unrecognised deferred taxes (1 607) 14 734 Different tax rates applied in foreign jurisdictions 6 (573) Tax income at effective tax rate (6 998) (7 035) Effective tax rate 23.3% 7.8% Tax rate Norway 22.0% 22.0% Deferred taxes Tax losses carried forward, accumulated 23 756 54 245 Property, plant and equipment 79 4 544 Intangible assets 1 492 (11 413) Receivable (123) 91 Other provisions 316 0 Leases 105 110 Deferred tax on intangible assets from business combinations 3 141 (857) Tax losses carried forward, not recognised (17 556) (44 989) Deferred taxes, net 11 212 1 732 Deferred taxes, recognised 11 212 1 732 Deferred taxes, not recognised 17 556 44 989 NOK thousand 2023 2022 Reconciliation to balance sheet Deferred tax assets 18 998 12 322 Deferred tax liabilities (7 786) (10 590) Net Deferred tax assets (liabilities) 11 212 1 732 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 59 59 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 13 Earnings per share Basic earnings per share (EPS) are calculated by dividing the profit attributable 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. Issued shares and share capital Number of shares Share Capital (NOK) 31 December 2022 690 573 217 193 360 501 Capital issue, February 3 1 Reverse share split (10:1), March (621 515 898) Capital issue, December 514 884 1 441 675 31 December 2023 69 572 206 194 802 177 Diluted EPS amounts are calculated by dividing the profit attributable 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: NOK 2023 2022 Net profit/(loss) to equity holders (23 052 518) (83 393 192) Total (23 052 518) (83 393 192) Number of shares (in thousands) Weighted average number of ordinary shares 69 057 322 658 988 513 Effects of dilution, weighted average 371 097 5 663 984 Weighted average number of shares, adjusted for effects of dilution 69 428 419 664 652 497 Basic earnings per share (0.33) (0.13) Diluted earnings per share (0.33) (0.13) In 2023, part of the share consideration for Integra was still outstanding. This was settled during 2024. Effects of dilution NOK 2023 2022 Share consideration outstanding Integra 371 097 5 663 984 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 60 60 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 14 Goodwill and impairment Goodwill recognised 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 in 2020 and Maksit AS, Qualisoft AS, IB Group and Integra Ass. Ltd in 2021. Recognised goodwill amounts to NOK 206.5m as of 31 December 2023 (NOK 204.6m). Other intangible assets related to excess values in the Group accounts are customer relations and software, with a carrying amount of NOK 31.8 million as per 31 December 2023 (NOK 45.3m). Only goodwill has an indefinite lifetime, all other intangible assets are amortized, ref Note10. 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 impairment indications in the impairment test 2023 where recoverable amounts exceeded the balance sheet amounts, thus no impairment has been done in 2023. The recoverable amount for each CGU has been determined by 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 estimates, reflecting the Group’s financial planning process. The discount rates are derived as the weighted average cost of capital (WACC) for a similar business in the same business environment. Goodwill has been allocated for impairment testing purposes to the CGUs below. 2023 NOK thousand Cloud BizS Marine Hospitality EA&BPM Total Norway 56 622 35 585 0 24 416 66 361 182 984 UK 0 18 983 0 0 0 18 983 Italy 0 0 4 489 0 0 4 489 Total 56 622 54 568 4 489 24 416 66 361 206 457 2022 NOK thousand Cloud BizS Marine Hospitality EA&BPM Total Norway 56 622 35 585 0 24 416 66 361 182 984 UK 0 17 398 0 0 0 17 398 Italy 0 0 4 199 0 0 4 199 Total 56 622 52 983 4 199 24 416 66 361 204 581 Cash flow projections and assumptions A five-year forecast of discounted cash flows plus a 2.0% terminal value growth rate was used to determine net present value of the CGU. Discounted cash flows were calculated after tax and applying a WACC after tax. Key assumptions for the value in use calculations The basis for the projection of the future cash flows estimated is based on the financial budget for one year, approved by the Board of Directors. The budget in combination with the forecasts represents management’s best estimate of the range of economic conditions that will exist over the remaining useful life of the asset. The remaining four years of the forecast period are estimated based on budget and projected performance. The calculation of VIU for the CGU is most of all sensitive when it comes to the following assumptions: Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 61 61 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Discount rate The input data for the WACC is gathered from external sources. 2023 2022 Norway UK Italy Norway UK Italy Risk free interest rate 3.0% 4.25% 3.7% 3.1% 3.3% 4.2% Debt risk premium 3.0% 3.0% 3.0% 6.6% 6.6% 6.6% Equity risk premium 4.0% 4.0% 4.0% 5.9% 5.9% 5.9% Equity Beta 1.61 1.61 1.61 1.37 1.37 1.37 Cost of equity 9.4% 9.4% 9.4% 11.2% 11.2% 11.2% Tax rate 22% 19% 29% 22% 19% 29% Credit spread 3% 3% 3% 3% 3% 3% After tax cost debt 4.8% 4.8% 4.8% 7.6% 7.7% 8.0% Equity weight 90% 90% 90% 90% 90% 90% WACC (pre tax) 15.4% 14.9% 17.0% 17.7% 17.3% 23.4% WACC (after tax) 12.0% 12.1% 12.1% 13.8% 14.0% 16.6% The average growth rate and EBITDA margin assumptions are based on historical experience and perfor-mance as well as market analysis used for budget 2024 and estimates from 2025-2027 and a terminal growth rate of 2%. The average growth rates in the estimate period 2025-2027 for each Business Area is: 2023 Cloud BizS Marine Hospitality EA&BPM Average revenue growth 7% 8% 11% 73% 15% Average Gross profit margin 12.3% 8.1% 11.0% 91.5% 15.6% Average EBITDA margin 12% 11% 22% 32% 22% Compared to the same assumptions in 2022 we see a rather significant decline in the growth assumptions. This is explained by the implementation of a new internal policy of using modest growth assumptions as the basis for impairment tests. This, however, must not be seen in conjunction with the company’s expectations for future growth. 2022 Cloud BizS Marine Hospitality EA&BPM Average revenue growth 16.0% 9.0% 0.0% 196.0% 16.0% Average EBITDA margin 7.0% 15.0% 18.0% 41.0% 19.0% 1The restructuring and sales of IP in the Marine CGU from 2022 to 2023 effect the average growth rates 2CGU Hospitality will until Q2 2023 go from a start up to become a mature profit making unit, thus impact on the growth rates seems unnatural Sensitivity At 31 December 2023, the Group’s value in use for each CGU was higher than the carrying amount of tested goodwill with indefinite useful life and intangible assets. The calculation is most sensitive to changes in EBITDA and gross profit (GP) margins. No reasonably likely change in the key assumptions listed above would cause the carrying value to materially exceed the recov-erable amount for any of the CGUs. The headroom on the most significant CGUs varied from 25% - 170%. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 62 62 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 15 Business Combinations During 2022 or 2023, Arribatec did not acquire any shares in companies. During 2021, Arribatec 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 on the acquisition date. The 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 alloca-tion 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 accord-ance with IFRS 3. Goodwill in relation to the acquisition is related to different CGU’s as according to Note14. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 63 63 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 16 Investment in subsidiaries Subsidiary Owning entity Ownership Year of acquisition/foundation Head office Arribatec Group ASA 100% 2015 Oslo Arribatec Norge AS Arribatec Group ASA 100% 2017 Oslo Arribatec Hospitality AS Arribatec Group ASA 100% 2019 Oslo Arribatec Cloud AS Arribatec Group ASA 100% 2020 Oslo Arribatec EA & BPM AS Arribatec Group ASA 100% 2021 Oslo Arribatec Sverige AB Arribatec Group ASA 100% 2016 Stockholm Arribatec Denmark ApS Arribatec Group ASA 100% 2015 Copenhagen Arribatec Innovation Sp. z o.o. Arribatec Group ASA 100% 2018 Wroclaw Arribatec Belgium NV Arribatec Group ASA 100% 2018 Vosselaar Arribatec Italy S.r.l. Arribatec Group ASA 100% 2018 Pontinia Arribatec Iberia SL Arribatec Group ASA 100% 2017 Granada Arribatec Americas Inc Arribatec Denmark ApS 100% 2018 Colorado Arribatec Hospitality LLC Arribatec Americas Inc 100% 2018 Colorado IB S.r.l. Arribatec Italy S.r.l. 100% 2021 Rapallo IB Cyprus LTD IB S.r.l. 100% 2021 Limassol IB USA Inc IB S.r.l. 100% 2021 Florida Arribatec Solutions UK LTD Arribatec Group ASA 100% 2018 Closed Arribatec UK Ltd (former Integra Ass. Ltd) Arribatec Group ASA 100% 2021 Leicester Infoship GmbH IB Cyprus LTD 100% 2021 Dormant Arribatec France Sarl Arribatec Group ASA 100% 2021 Levallois-Perret Arribatec Solutions Pte. LTD Arribatec Group ASA 100% 2021 Singapore All entities listed are included in the consolidated financial statements of Arribatec Group ASA. Arribatec Group ASA hold 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. Note 17 Other non-current assets NOK thousand 2023 2022 Investment in shares 60 60 Deposits 3 929 5 263 Total other non-current assets 3 989 5 323 Deposits are mainly deposits in relation to office rental agreements. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 64 64 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 18 Account receivable NOK thousand Current 0-30 days 31-60 days 61-90 days 90+days Total whereof estimated credit losses Ageing, Accounts receivable 2023 45 192 33 769 5 533 2 795 3 608 90 898 (4 230) 2022 60 600 17 022 5 200 2 984 2 409 88 214 (2 994) Provision for Expected Credit Losses (ECL) is included with NOK 4.2m (NOK 3.0m). 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 the next year. Account receivables are non-interest bearing. Expensed credit loss in 2023 was NOK 0.1m (0.1m) Credit risk Credit risks are the risks that counterpart 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. As part of the Group’s earnings model, certain of its customers pays for software and services under a 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 for this model to ensure some predict-able 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. 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 Company manage the credit risk by working closely with the customers. Accounts and other receivable Accounts receivable and other receivables are initially recognized at fair value and are subsequently measured at amortized cost, less provision for expected credit losses. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 65 65 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 19 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 carrying amount is reasonable approximate of fair value for Arribatec’s financial instruments such as short-term trade receivables and payables and lease liabilities. The financial assets principally consist of investments in shares, accounts receivables, deposits related to premises, cash and cash equivalents and other receivables. The financial liabilities principally consist of non-current lease liabilities, other non-current financial liabilities, current lease liabilities, accounts payable, contract liabili-ties, current tax payable, other current liabilities and interest bearing loan. Any draw-downs on the Credit facility in Danske Bank are classified as short term interest bearing loan. 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. Carrying amount Fair value NOK thousand Amortized cost Fair value through profit and loss Total Level 1 Level 2 Level 3 Total 31 Dec 2023 Financial assets Investment in shares1 0 60 60 0 0 60 60 Accounts receivable 90 898 0 90 898 0 0 90 898 90 898 Deposits related to premises 3 929 0 3 929 0 0 3 929 3 929 Cash and cash equivalents 39 371 0 39 371 0 0 39 371 39 371 Other receivables 1 398 0 1 398 0 0 1 398 1 398 Total financial assets 135 595 60 135 655 0 0 135 655 135 655 Financial liabilities Non-current lease liabilities 16 836 0 16 836 0 0 16 836 16 836 Other non-current financial liabilities 1 804 0 1 804 0 0 1 804 1 804 Current lease liabilities 12 909 0 12 909 0 0 12 909 12 909 Accounts payable 39 816 0 39 816 0 0 39 816 39 816 Contract liabilities 24 319 0 24 319 0 0 24 319 24 319 Current tax payable 1 669 0 1 669 0 0 1 669 1 669 Other current liabilities 83 869 0 83 869 0 0 83 869 83 869 Interest bearing loan 39 388 0 39 388 0 0 39 388 39 388 Total financial liabilities 220 611 0 220 611 0 0 220 611 220 611 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 66 66 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Carrying amount Fair value NOK thousand Amortized cost Fair value through profit and loss Total Level 1 Level 2 Level 3 Total 31 Dec 2022 Financial assets Investment in shares1 0 60 60 0 0 60 60 Accounts receivable 88 214 0 88 214 0 0 88 214 88 214 Deposits related to premises 5 263 0 5 263 0 0 5 263 5 263 Cash and cash equivalents 40 449 0 40 449 0 0 40 449 40 449 Other receivables 1 128 0 1 128 0 0 1 128 1 128 Total financial assets 135 054 60 135 114 0 0 135 114 135 114 Financial liabilities Non-current lease liabilities 26 727 0 26 727 0 0 26 727 26 727 Other non-current financial liabilities 967 0 967 0 0 967 967 Current lease liabilities 16 765 0 16 765 0 0 16 765 16 765 Accounts payable 31 879 0 31 879 0 0 31 879 31 879 Contract liabilities 16 476 0 16 476 0 0 16 476 16 476 Current tax payable 650 0 650 0 0 650 650 Other current liabilities 83 969 0 83 969 0 0 83 969 83 969 Interest bearing loan 31 211 0 31 211 0 0 31 211 31 211 Total financial liabilities 208 643 0 208 643 0 0 208 643 208 643 1Investment in shares is classified as Other non-current assets 2Consists of lease liabilites, other non-current financial liabilities, accounts payable, contract liabilities, current tax payable and other current liabilities Note 20 Other current assets NOK thousand 2023 2022 Government receivables 1 978 4 317 Prepaid cost‌1 10 539 13 648 Other current assets 750 1 647 Total other current assets 13 267 19 612 1Prepaid cost mainly consist of advances paid for software, rent and insurance Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 67 67 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 21 Contract assets and liabilities Consulting services Arribatec provides implementation and integration services under consulting contracts with customers. Most contracts have a pricing structure where Arribatec agrees to implement and integrate software for a fixed hourly rate agreed upon in the contract, but where the number of hours to be delivered is not specified in the contract. Arribatec’s performance obligation is satisfied over time because the consulting services do 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 recognised over time, normally according to the invoiced hours for the period. A contract asset is recognised when the company has an unconditional right to payment. A contract liability is recognised when invoicing is done in advance compared to revenue recognition. From time-to-time Arribatec has a fixed price consulting contract. In the same manner as for the contract with variable hours, 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 recognises 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. Contract assets Contract assets are recognised for performance obligations satis-fied 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 receiv-able, which attributes the main changes to the contract assets in the periods. Contract assets will typically occur in Saas projects where the customer pays a fixed annual or monthly fee over 3-5 years. In such cases revenue is recognised at the time where performance obliga-tions are met and registered as contract assets on the balance sheet. A reclassification to accounts receivable is done when the customer is invoiced. NOK thousand 2023 2022 As of 1 January 16 276 19 549 Performance obligations met 42 789 36 572 Reclassified to receivables (35 305) (40 272) Translation difference 484 427 Total contract assets 24 244 16 276 It is expected that 93% of the above contract assets will be reclassi-fied to receivables in 2024, 5% in 2025 followed by 2% in 2026. The expected credit losses on Contracts assets are considered immaterial as the contracts are mainly with governmental parties and therefore secured Contracts are subject to valuation of credit losses in the same way as Account receivables. Contract liabilities Contract liabilities relate to consideration received in advance of performance under revenue contracts with customers. Revenue is recognised as (or when) the Group fulfils its performance obligation(s) under the contracts. Contract liabilities are presented in the table below: NOK thousand 2023 2022 As of 1 January 16 476 21 483 Deferred revenue 101 264 68 627 Recognised as revenue in P&L (94 227) (73 811) Translation difference 806 177 Total contract liabilities 24 319 16 476 Contract liabilities are mainly invoiced to customers in advance and relating to 2024. All liabilities per 1 January was recognised as revenue in P&L during the year. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 68 68 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 22 Inventory Inventories are recognised at the lower of cost and net realisable value. The cost is arrived at using the FIFO method and includes the costs incurred in acquiring the goods and bringing them to their current state and location. NOK thousand 2023 2022 Hardware for resale 1 548 900 Licenses for resale 0 2 877 Total inventory 1 548 3 777 Note 23 Cash and cash equivalents NOK thousand 2023 2022 Cash, free 27 260 26 956 Cash, restricted 12 111 13 492 Total cash and cash equivalents 39 371 40 449 Restricted cash consists of rental deposits and tax accounts. Liquidity risk Liquidity risk is the potential loss of 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 39.4m on 31 December 2023 (2022: NOK 40.4m). The following table details the Group’s remaining contractual matu-rity for its non-derivative financial liabilities with agreed repayment periods. The tables have been set up based on the undiscounted cash flows of financial liabilities based on the most likely first 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 a floating rate, the undiscounted amount is derived from the interest rate curves at the end of the reporting period. The contractual matu-rity is based on the earliest date on which the Group may be required to pay. 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. NOK thousand -6 months 6 months - 1 year 1-2 years 2-4 years 4+ years Total Interest bearing loans (including interest) 33 709 4 880 1 875 3 723 600 44 788 Provisions 0 0 2 254 1 270 7 160 10 685 Accounts payable 39 816 0 0 0 0 39 816 Lease liabilities 6 805 6 805 9 421 5 344 2 610 30 984 Other current liabilities 42 432 41 437 0 0 0 83 869 Total 122 762 53 122 13 550 10 337 10 370 210 141 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 69 69 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 The Group closely monitors and follow up the cash situation. During 2022 Arribatec carried out a private placement and a subsequent repair offer that brought in 51.8million. The Group’s cash situation, including proceeds from this capital increase, were minus 3.3 million. Furthermore, 2022 was a year bringing the different acquired units into One Group on common policies, structure and systems, with the intention to realize the synergizes and secure being cash positive. Financing risk To support the Group’s growth ambitions, the Group continuously work on securing necessary committed financing and alternative funding sources. Securing non-current financing at competitive terms is a major part of the Group’s long-term liquidity planning. Management continuously monitors financing risk, different funding related to revolving facilities, to minimize financing risk. 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 twelve months. The group defines a solid capital structure as balanced ration between debt and equity. No change was made in the objectives, policies, or process for managing capital during the year ended 31 December 2023. Note 24 Shares Issued shares and share capital Number of shares Share Capital (NOK) 1 January 2020 16 077 403 16 077 403 Capital issue, Jan 7 164 688 7 164 688 Capital issue, Mar 41 666 666 41 666 666 Capital issue, Mar 25 000 000 25 000 000 Capital decrease, Nov (64 734 305) New shares, Oct 235 819 574 66 029 481 Share issue, repair offer, Nov 32 855 000 9 199 400 Share issue, employee offer, Nov 10 000 000 2 800 000 Share issue, private placement, Dec 50 000 000 14 000 000 1 January 2021 418 583 331 117 203 333 Capital issue in relation to acq. of Facil, Jan 12 423 200 3 478 496 Capital issue in relation to acq. of Microsky, Feb 3 499 998 979 999 Capital issue in relation to acq. of Innit, Mar 5 606 400 1 569 792 Capital issue in relation to acq. of Qualisoft, May 15 000 000 4 200 000 Capital issue in relation to acq. of Maksit, Aug 5 000 000 1 400 000 Capital issue in relation to merger with Arribatec AS, Sep 124 790 135 34 941 238 31 December 2021 584 903 064 163 772 858 Capital issue, April 100 000 000 28 000 000 Share issue, repair offer, July 3 625 153 1 015 043 Capital issue in relation to acq. of Integra, Nov 2 045 000 572 600 31 December 2022 690 573 217 193 360 501 Capital issue, February 3 1 Reverse share split (10:1), March (621 515 898) Capital issue, December 514 884 1 441 675 31 December 2023 69 572 206 194 802 177 Each share has the same rights and has a par value of NOK 2.80 (0.28 prior to the reverse share split in March). Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 70 70 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 20 largest shareholders at 31 Dec 2023 Holding Stake FERNCLIFF LISTED DAI AS 16 655 404 23.9% TITAN VENTURE AS 2 988 661 4.3% DALLAS ASSET MANAGEMENT AS 2 467 200 3.5% JOAR AARENES 2 411 185 3.5% ARRIBA INVEST AS 2 290 500 3.3% SRK CONSULTING AS 1 780 947 2.6% ERIK SKAAR OPDAL 1 695 200 2.4% Nordnet Bank AB 1 653 270 2.4% TRUDE HALVORSEN 1 079 789 1.6% HANEKAMB INVEST AS 1 055 347 1.5% EXCESSION AS 900 000 1.3% DATUM AS 854 291 1.2% MIDDELBOE AS 739 662 1.1% KRISTIAN FALNES AS 654 592 0.9% Danske Bank A/S 602 331 0.9% LARS HUGO BRAADLAND OLSEN 574 850 0.8% LCS AS 551 801 0.8% JAN ARNE CHRISTENSEN 524 675 0.8% NORDLYS TRADING AS 450 000 0.6% VALSET INVEST AS 450 000 0.6% Total 20 largest shareholders 40 379 705 58.0% Other shareholders 29 192 501 42.0% Total 69 572 206 100.0% Shares held by related parties Holding Stake FERNCLIFF LISTED DAI AS 16 655 404 23.9% Related to Øystein S. Spetalen, Member of the Board in Arribatec Group ASA HANEKAMB INVEST AS 1 055 347 1.5% Related to Martin Nes, Chairman of the Board in Arribatec Group ASA FINANCE RESOURCES GJ AS 360 609 0.5% Related to Geir Johansen, CEO of Arribatec Group ASA TERJE MJØS HOLDING AS 150 000 0.2% Related to Terje Mjøs, Member of the Board in Arribatec Group ASA KJØLVIK INVEST AS 58 334 0.1% Related to Ole-Jakob Kjølvik, COO of Arribatec Group ASA SICUBI AS 24 072 0.0% Related to Bente Brocks, CFO (interim) of Arribatec Group ASA HELLEBUST, KRISTIN 22 728 0.0% Related to Kristin Hellebust, Member of the Board in Arribatec Group ASA Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 71 71 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 25 Long term incentive plan During 2023, a long-term incentive plan in the form of a share-based remuneration program has been launched within Arribatec, with the intention to incentivize and retain key employees. The program is an equity-settled option plan where one option gives the right to acquire one share in Arribatec Group ASA on the exercise date. There is no cash settlement for the employee at the grant date. No shares have yet been vested through the program. The shares currently held by certain members of management or other employees were acquired at market conditions. Measurement of fair values The Black-Scholes-Merton Option Pricing Model is used for valuing the share options. The measure of the expected volatility in the option pricing model has been calculated as the annualized standard deviation of the continuously compounded rates of return on the share over a period of time. The options are vested over a period of three years and the employee continues to be employed by the group. Total costs and Social Security Provisions NOK thousand Total IFRS cost 2023 619 924 Total Social security provisions 2023 0 Total costs and Social Security Provisions Instrument Option Quantity 31.12.2023 (instruments) 3 303 240 Quantity 31.12.2023 (shares) 3 303 240 Contractual life‌1 5.00 Strike price‌1 5.25 Share price‌1 4.63 Expected lifetime‌1 3.00 Volatility‌1 65.66% Interest rate‌1 3 965% Dividend‌1 0.00 FV per instrument‌1 1.97 1Weighted average parameters at grant of instrument Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 72 72 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Outstanding instruments Year End - Option Quantity and weighted average prices 01.01.2023 - 31.12.2023 Activity Number of instruments Weighted Average Strike Price Outstanding OB (01.01.2023) 0 0.00 Granted 3 303 240 5.25 Exercised 0 0.00 Released 0 0.00 Adjusted 0 0.00 Performance Adjusted 0 0.00 Cancelled 0 0.00 Terminated 0 0.00 Expired 0 0.00 Outstanding CB (31.12.2023) 3 303 240 5.25 Vested CB 0 0.00 Outstanding Instruments Overview Outstanding Instruments Vested Instruments Strike price Number of instruments Weighted Average remaining contractual life Weighted Average Strike Price Vested instruments 31.12.2023 Weighted Average Strike Price 5.00 1 101 077 4.84 5.00 0.00 0.00 5.25 1 101 081 4.84 5.25 0.00 0.00 5.50 1 101 082 4.84 5.50 0.00 0.00 3 303 240 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 73 73 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 26 Interest bearing debt NOK thousand Debt financial institutions Type Currency Facility limit Interest rate Year of maturity 31 Dec 2023 31 Dec 2022 Danske Bank Revolving credit facility NOK 20 000 NIBOR+2.75% 2024 19 458 6 750 DLL Leasing & finance company NOK 4.5% 2024 19 244 Bank Intesa, Italy Unsecured bank facilities EUR EURIBOR+1.95%-2.40% 2027 7 896 8 411 Bank Progetto, Italy Unsecured bank loan EUR EURIBOR+5% 2025 3 671 5 759 Bank Carige, Italy Unsecured bank loan EUR 1.3% 2027 5 681 6 863 Bank Passadore, Italy Unsecured bank loan EUR EURIBOR+1.5% 2028 2 663 3 154 Italian banks, ref above Revolving credit facility EUR 1.0-4.75% 2023 0 29 Total 39 388 31 211 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 74 74 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Credit facilities Other borrowings Total Balance at 1 Jan 2022 9 030 28 394 37 425 Proceeds from loans and borrowings 4 067 0 4 067 Repayment of loans and borrowings (6 499) (5 464) (11 963) Total changes in financial cashflow (2 432) (5 464) (7 896) Translation difference 181 1 501 1 682 Balance at 1 Jan 2023 6 779 24 431 31 211 Proceeds from loans and borrowings 19 686 0 19 686 Repayment of loans and borrowings (7 009) (6 173) (13 183) Total changes in financial cashflow 12 677 (6 173) 6 504 Translation difference 2 1 672 1 674 Total Borrowings at end of period 19 458 19 930 39 388 Interest bearing loans and other financial liabilities The Group’s debt and other financial liabilities are initially recognised at fair value, including transaction costs directly attributable to the transaction, and are subsequently measured at amortized cost. Note 27 Pensions Arribatec group meets the different local mandatory occupational pension requirement. Arribatec operates defined contribution retirement benefit plans for all qualifying employees of its subsidi-aries in Norway, Sweden and Denmark. The only obligation of the group with respect to retirement benefit plan is to make the specified contributions. The employees of other subsidiaries are members 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. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 75 75 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 28 Provisions NOK thousand 2023 2022 Severance indemnity funds in Italy 8 145 10 364 Other provisions 2 540 3 838 Total provision 10 685 14 202 Severance funds in Italy relates to a monthly accrual for severance pay for all employees. The funds are paid to the employee when they leave the company. Per 31.12.2023, all funds estimated as long term (2-4+ years). Provisions and contingent liabilities Provisions are recognised 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 settle the obligation and the amount can be reliably estimated. Restructuring provisions are recognised 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. Note 29 Other current liabilities NOK thousand 2023 2022 Employer tax and employee withholding tax 24 302 22 700 Accrued holiday payments and bonuses 30 640 31 987 VAT liabilities 9 632 10 121 Remaining part of acq.price, Integra 7 441 8 569 Other short term liabilities 11 855 10 591 Total other current liabilities 83 869 83 969 Trade and other payables Accounts receivable and other receivables are initially recognized at the transaction price and are subse-quently carried at recognized cost, less provision for expected credit losses. For Arribatec, the main part of accounts payable consists of annual fees for the following year from software providers. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 76 76 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Note 30 Transactions with related parties During 2022 and 2023, rent for office in UK is paid to MDB & Sons Ltd, a company related to the CEO of Arribatec UK Ltd (former Integra Associated Ltd). NOK thousand 2023 2022 Transactions with related parties MDB & Sons Ltd - office rental, Leicester 481 402 Total Related parties transactions 481 402 Note 31 Pledged assets The Group have no pledged assets. Note 32 Subsequent events There have been no subsequent events since 31.12.2023. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 77 77 Financial statements Financial statements | The Group Financial statements | The Group 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Income statement of Arribatec Group ASA 85 Balance sheet of Arribatec Group ASA 86 Balance sheet of Arribatec Group ASA 87 Statement of cash flow of Arribatec Group ASA 88 Notes to the financial statement 89 Note 1 Accounting principles 89 1.1 Basis for preparation of the company accounts 89 1.2 Currency 89 1.3 Revenue 89 1.4 Defined contribution pension schemes 89 1.5 Classification of assets and liabilities 89 1.6 Receivables 89 1.7 Use of estimates 89 1.8 Contingencies and events after the Balance Sheet date 89 1.9 Cash Flow Statement 89 Note 2 Employee compensation 90 Note 3 Other operating expenses 92 Note 4 Other financial income 93 Note 5 Other financial expenses 93 Note 6 Tax 94 Note 7 Property, plant and equipment 96 Note 8 Other intangible assets 96 Note 9 Shares in subsidiaries and intercompany transac- tions 97 Note 10 Non-current financial assets 97 Note 11 Cash and short term deposits 98 Note 12 Share capital and shareholder information 98 Note 13 Equity 99 Note 14 Other current liabilities 99 Note 15 Transaction with related parties 100 Note 16 Events after the balance sheet date 100 Parent company financial statements Arribatec Group ASA | Annual report 2023 78 Financial statements Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Income statement of Arribatec Group ASA NOK thousand Note 2023 2022 Operating income and operating expenses Sales revenue 499 0 Other income 1 266 4 360 Total income 1 765 4 360 Raw materials and consumables used (3 225) (21 154) Employee benefits expense 2 (23 315) (16 567) Depreciations, amortisation and impairment of tangible and intanglible fixed assets 7 , 8 (1 744) (5 253) Other expenses 3 (297) (3 449) Total expenses (28 581) (46 424) Operating profit/loss (26 816) (42 063) Financial income and expenses Dividend from other group companies 1 812 0 Other interest income 2 512 1 416 Other financial income 4 582 1 687 Other interest expenses (2 975) (1 197) Other financial expenses 5 (3 304) (2 335) Net financial items (1 374) (430) Result before tax (28 190) (42 493) Tax expense‌ 1 6 6 139 712 Result for the year 12 (22 051) (41 781) Allocation of result for the year Other equity‌ 1 (22 051) (41 781) Total brought forward (22 051) (41 781) 1 2022 restated after correction of filed tax, see No te 6 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 79 79 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Balance sheet of Arribatec Group ASA NOK thousand Note 2023 2022 ASSETS Non-current assets Intangible assets Licences, patents etc. 8 4 442 6 005 Deferred tax assets‌ 1 6 15 076 8 937 Total intangible assets 19 517 14 942 Property, plant and equipment Equipment, fixtures and fittings and other movables 939 1 010 Total property, plant and equipment 7 939 1 010 Non-current financial assets Investments in other group companies 9 , 10 322 011 309 969 Loans to group companies 9 , 10 49 522 30 413 Other long-term receivables 10 3 386 3 386 Total non-current financial assets 374 919 343 767 Total non-current assets 395 376 359 720 NOK thousand Note 2023 2022 Current assets Inventories Inventories 0 2 877 Total Inventories 0 2 877 Receivables Accounts receivables 85 70 Accounts receivables from group companies 9 13 654 36 670 Other short-term receivables 2 272 1 422 Receivables from group companies 9 5 907 12 349 Total receivables 21 918 50 511 Bank deposits, cash and cash equivalents Bank deposits, cash and cash equivalents 11 1 278 3 469 Total bank deposits, cash and cash equivalents 1 278 3 469 Total current assets 23 196 56 856 Total assets 418 572 416 577 1 2022 restated after correction of filed tax, see No te 6 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 80 80 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Balance sheet of Arribatec Group ASA NOK thousand Note 2023 2022 Equity and liabilities Equity Paid in equity Share capital 12 194 802 193 361 Other paid in capital 217 004 215 645 Total paid-in equity 411 806 409 005 Retained earnings Other equity‌ 1 (81 530) (68 508) Total retained earnings (81 530) (68 508) Total equity 1 3 330 275 340 497 NOK thousand Note 2023 2022 Liabilities Other non-current liabilities Liabilities to group companies 9 11 346 16 669 Total non-current liabilities 11 346 16 669 Current liabilities Liabilities to financial institutions 19 458 32 314 Accounts payable 3 782 6 127 Public duties payable 1 515 1 722 Liabilities to group companies 9 40 482 2 Other current liabilities 14 11 713 19 245 Total current liabilities 76 950 59 410 Total liabilities 88 297 76 079 Total equity and liabilities 418 572 416 577 1 2022 restated after correction of filed tax, see No te 6 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 81 81 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Statement of cash flow of Arribatec Group ASA For the year ended 31 December NOK thousand 2023 2022 Operating activities Profit/(Loss) before tax (28 190) (42 493) Adjustments for: - (Increase)/decrease in accounts receivable 28 593 5 569 - (Decrease)/Increase in accounts payable (2 345) (37 361) - Depreciation, amortisation and impairment 1 744 5 253 Change in other current assets/ liabilities (35 369) (17 475) Net cash flows operating activities (35 568) (86 507) Investing activities Capitalized tangible and intangible assets 0 2 738 Net cash flows investing activities 0 2 738 Financing activities Change in overdraft 21 547 32 314 Other changes in equity 11 947 51 813 Share issue costs (118) (3 280) Net cash flows financing activities 33 377 80 847 Net change in cash and cash equivalents (2 191) (2 922) Cash and cash equivalents at beginning of period 3 469 6 391 Cash and cash equivalents at end of period 1 278 3 469 whereof restricted cash 1 277 763 Oslo 24 April 2024 The board of Arribatec Group ASA Signed Martin Nes chairman of the board Øystein Stray Spetalen member of the board Kristin Hellebust member of the board Terje Mjøs member of the board Linn Katrine Høie member of the board Geir Johansen Group CEO Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 82 82 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Arribatec Group ASA Notes to the financial statement Accounting principles Basis for preparation of the company accounts 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. The most important accounting principles that are used in the prepa- ration of the annual accounts are as follows: Currency 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. Revenue Revenues mainly consist of sales of services to other companies in the group. The company recognises revenue when it transfers control of a good or service to a customer. Dividends and group contributions from subsidiaries are recognised 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 compa- nies’ annual accounts. Interest income is entered as it is earned. Defined contribution pension schemes 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. All employees are included in the same pension scheme. Classification of assets and liabilities Fixed assets and long-term liabilities consist of items expected to be settled more than twelve months after the balance sheet date. Current assets and current liabilities consist of amounts that are expected to be settled within twelve months after the balance sheet date. Fixed assets are valued at historical cost but written 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. Receivables Receivables are recorded at nominal value less provisions for expected losses. Provisions for losses are made based on an indi- vidual analysis of the individual receivables. Use of estimates 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. Contingencies and events after the Balance Sheet date Contingent losses that are probable and quantifiable are expensed. 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. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 83 83 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Employee compensation NOK thousand 2023 2022 Salaries (16 228) (11 791) Employment tax (2 775) (1 720) Pension costs (731) (389) Other benefits (3 581) (2 667) Total employee compensation (23 315) (16 567) Arribatec Group ASA had 14 employees as per end of 2023, whereof 4 men and 10 women. Number of FTEs were 12.7 (3.3 men and 9.4 women). The Board of Directors are not included in the employee numbers. Management remuneration 2023 NOK thousand Board remuneration Audit committee remuneration Salary Bonus Benefits in kind Share option cost Pension cost Total remuneration Management Geir Johansen - CEO 0 0 4 000 0 17 38 100 4 154 Ole Jakob Kjølvik - COO 0 0 1 559 137 17 28 100 1 840 Bente Brocks - CFO (interim) 0 0 1 762 0 14 34 100 1 909 Pål Stueflotten - CCO 0 0 1 458 513 84 28 100 2 182 Solfrid Buø - CPOO 0 0 1 500 0 24 28 100 1 652 Management total 0 0 10 278 649 156 156 498 11 737 Members of the Board Martin Nes (Chairman) 265 38 0 0 0 0 0 303 Øystein S. Spetalen (Member) 215 0 0 0 0 0 0 215 Kristin Hellebust (Member) 215 33 0 0 0 0 0 248 Linn Katrine Høie (Member) 215 0 0 0 0 0 0 215 Terje Mjøs (Member, from May-23) 131 20 0 0 0 0 0 152 Henrik Lie-Nielsen (Member, to May-23) 83 13 0 0 0 0 0 96 Members of the Board total 1 123 104 0 0 0 0 0 1 227 Total salaries and personnel expense 1 123 104 10 278 649 156 156 498 12 964 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 84 84 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Management remuneration 2022 NOK thousand Board remuneration Audit committee remuneration Salary Bonus Benefits in kind Share option cost Pension cost Total remuneration Management Geir Johansen - CEO 0 0 2 700 0 11 0 90 2 800 Ole Jakob Kjølvik - COO 0 0 1 500 0 16 0 90 1 606 Bente Brocks - CFO (interim) 0 0 1 680 0 11 0 90 1 781 Pål Stueflotten - CCO (from May-22) 0 0 800 0 74 0 56 930 Solfrid Buø - Chief People & Organisation Officer (from Nov-22) 0 0 217 0 3 0 15 235 Grete Thomassen - HR director (to Apr-22) 0 0 400 0 4 0 28 432 Espen Karsrud - Group EVP Business Development (to Apr-22) 0 0 500 0 4 0 35 539 Management total 0 0 7 797 0 123 0 403 8 323 Members of the Board Martin Nes (Chairman) 279 20 0 0 0 0 0 300 Øystein S. Spetalen (Member) 217 0 0 0 0 0 0 217 Kristin Hellebust (Member) 217 18 0 0 0 0 0 234 Henrik Lie-Nielsen (Member) 217 18 0 0 0 0 0 234 Linn Katrine Høie (Member) (from May-22) 117 0 0 0 0 0 0 117 Yvonne Litsheim Sandvold (Member) (to May-22) 100 0 0 0 0 0 0 100 Members of the Board total 1 146 55 0 0 0 0 0 1 201 Total salaries and personnel expense 1 146 55 7 797 0 123 0 403 9 524 Five out of six in the Group Management are employed in Arribatec Group ASA; the CEO, COO, CFO, CPOO and CCO. Compensation to the management during the year is detailed in this note. The CEO has a three-month notice period and is entitled to sever- ance pay for twelve months in case of termination initiated by the company. None of the Board members or the CEO have executive loans or guarantees in the company. See remuneration report for details on bonus and share option program in relation to management. See Note 25 Long term incentive plan in Group report for information regarding share based payments. Pension cost Arribatec operates defined contribution retirement benefit plans for all qualifying employees. The only obligation of the company with respect to retirement benefit plan is to make the specified contribu- tions. Pension cost is expensed including social security cost. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 85 85 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Other operating expenses NOK thousand 2023 2022 Consultants, etc (4 655) 0 Legal costs (1 011) (5 301) Computer and software costs (8 024) (2 822) Leasing (465) (3 205) Audit and accounting fees (1 311) (1 957) Stock fees/Listing of shares (314) (219) Other 15 482 10 054 Total other operating expenses (298) (3 449) Specification of auditor’s fee NOK thousand 2023 2022 Statutory audit (444) (1 448) Other non-assurance services (21) (202) Total (465) (1 649) 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 recognised linearly over the contract period. Future cash flow from lease contracts NOK thousand Less than 1 year 4 700 1-2 years 4 199 2-3 years 2 034 3-4 years 48 Future cash flow from lease contracts 10 981 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 86 86 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Other financial income NOK thousand 2023 2022 Net unrealised foreign exchange gain 582 1 687 Total other financial income 582 1 687 Unrealised effects from foreign exchange are presented net of gain and loss. For 2023 and 2022, net unrealised effects were income and therefor presented as Financial income. For description of risks, see Group Note 11 . Other financial expenses NOK thousand 2023 2022 Write off intercompany loan (2 042) (1 530) Other (1 262) (805) Total other financial expenses (3 304) (2 335) Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 87 87 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Tax Tax expenses consist of tax payable and change in deferred tax. Deferred 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 fiscal year. Net deferred tax assets are recognised 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 recognised directly against equity. NOK thousand 2023 2022 Income tax expense Current tax Current Income Tax 0 0 Deferred tax Change in deferred taxes - Norway 6 139 712 Tax income recorded in Profit & Loss 6 139 712 A reconciliation of the tax Profit/(loss) before tax (28 190) (42 493) Temporary differences (267) (2 653) Non deductible expenses 2 099 1 606 Non-taxable income (1 812) 0 Tax base (28 171) (43 540) Income taxes calculated at the Company's domestic tax rate (22%) 6 198 9 579 Changes in recognized deferred taxes (59) (8 867) Tax income at effective tax rate 6 139 712 Effective tax rate 21.8% 1.7% Tax rate Norway 22.0% 22.0% Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 88 88 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 The tax effect of temporary differences that has formed the basis for the deferred tax and deferred tax assets, specified on type of temporary differences. NOK thousand 2023 2022 Deferred taxes Tax losses carried forward, accumulated 37 041 30 844 Property, plant and equipment 149 233 Intangible assets 2 806 3 158 Other provisions 377 0 Tax losses carried forward, not recognised (25 298) (25 298) Deferred taxes, net 15 076 8 937 Deferred taxes, recognised 15 076 8 937 Deferred taxes, not recognised 25 298 25 298 Reconciliation to balance sheet Deferred tax assets 15 076 8 937 Deferred tax liabilities 0 0 Net Deferred tax assets (liabilities) 15 076 8 937 Deferred tax NOK thousand 2023 2022 Deferred tax asset 15 076 8 937 Deferred tax Deferred tax is recognised with NOK 15.1 million in 2023. Not recognised tax losses are NOK 25.3 million, relating to the period prior to the current owners, when the company was Hiddn Solution. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 89 89 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Property, plant and equipment Tangible fixed assets are recognised at historical cost in the balance sheet, with a deduction for accumu- lated depreciation and any impairment. The write down is reversed when the basis for the write 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 five to ten years. NOK thousand Office equipment Fixture and fittings Other Total Cost at 1 January 2023 3 142 865 745 4 752 Additions 109 109 Disposals (381) (381) Cost at 31 December 2023 3 142 484 854 4 481 Accumulated depreciation at 1 January 2023 (3 142) (498) (102) (3 742) Depreciation during the year (66) (113) (180) Disposals 381 381 Accumulated depreciation at 31 December 2023 (3 142) (184) (215) (3 541) Carrying amount at 31 December 2023 0 301 639 939 Useful life 5-10 yrs 5 yrs 5 yrs Other intangible assets Intangible fixed assets are recognised at cost in the balance sheet, with a deduction for accumulated depreciation and any impairment. Amortisation is calculated using the straight-line method to allocate the cost over their useful lives of five to ten years. NOK thousand Custom software Licenses Other Total Cost at 1 January 2023 8 202 1 544 101 9 847 Cost at 31 December 2023 8 202 1 544 101 9 847 Accumulated amortisation at 1 January 2023 (3 139) (661) (41) (3 841) Amortisation during the year (1 245) (309) (10) (1 564) Accumulated amortisation at 31 December 2023 (4 384) (970) (51) (5 405) Carrying amount at 31 December 2023 3 818 574 50 4 442 Useful life 5-10 yrs 5 yrs 5 yrs Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 90 90 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Shares in subsidiaries and intercompany transactions In Arribatec Solutions ASA’s company accounts, shares in subsidiaries are valued following the cost method. Group contributions are entered into 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 the cost price of the shares. Provided group contributions net after tax are entered as increased investment in subsidiaries. NOK thousand Head office Ownership and vote % Book value of shares Equity in subsidiaries 2023 result in subsidiaries Arribatec Norge AS Oslo 100% 44 250 6 454 (1 957) Arribatec Hospitality AS Oslo 100% 45 182 17 478 (5 799) Arribatec Cloud AS Oslo 100% 80 091 12 849 820 Arribatec EA & BPM AS Oslo 100% 85 605 8 065 10 047 Arribatec Belgium NV Vosselaar 100% 586 2 864 236 Arribatec Denmark ApS Copenhagen 100% 56 574 515 Arribatec UK Ltd Leicester 100% 39 670 12 398 2 726 Arribatec France Sarl Levallois-Perret 100% 102 (2 076) (770) Arribatec Iberia SL Granada 100% 28 273 (4 196) Arribatec Sverige AB Stockholm 100% 9 199 (285) (1 029) Arribatec Italy S.r.l. Pontinia 100% 17 024 13 449 (245) Arribatec Solutions Pte. LTD Singapore 100% 0 (4 078) (1 102) Arribatec Innovation Sp. z o.o. Dormant 100% 218 1 268 (45) Total 322 011 69 233 (796) Total receivables related to Group companies were NOK 69.1m on 31.12.2023, and total internal liabilities at the same date were NOK 51.8m. Non-current financial assets Non-current financial assets mainly consist of investments in subsidiaries (NOK 322m) and loans to entities within the Arribatec Group (NOK 50.0m). Deposits (NOK 3.4m) are related to rental agreement of the office facilities in for the head office in Oslo. These are all due more than 12 months after the balance sheet date. There are no deviation between booked values and fair values. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 91 91 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Cash and short term deposits Cash and cash equivalents include cash, bank deposits and other short-term liquid investments. Cash pool with negative balances are classified as debt. The cash pool limit is NOK 20m and all is considered short-term. Per 31.12.2023, NOK 19.5m of the limit was used. As of 31 December 2023 the Company had a cash balance of NOK 1.3 million with restricted cash. 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 2023 consisted of 69 572 206 shares, each with a nominal value of NOK 2.80. The company has one share class, with each share conferring equal dividend rights and votes. The total share capital was NOK 194 802 177. See Note 24 in the Group report for more detailed information. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 92 92 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Equity NOK thousand Share capital Other paid-in capital Other equity Total equity Equity 31 December 2022‌ 1 193 360 215 645 (68 508) 340 497 Result of the year (22 051) (22 051) Paid in capital 1 442 9 886 11 328 Share option cost 620 620 Share issue cost (118) (3 281) Reclassificaion within equity (8 409) 8 409 0 Equity 31 December 2023 194 802 217 004 (81 530) 330 276 1 2022 restated after correction of filed tax, see No te 6 Other current liabilities Other current liabilities consist of unpaid holiday pay, bonus and other short term accruals and the remaining amount to be settled for the earn-out related to the acquisition of the subsidiary Arribatec UK (formerly Integra). Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 93 93 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Transaction with related parties There have not been any transactions with related parties during 2023 or 2022. Events after the balance sheet date There have been no subsequent events since 31.12.2023. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 94 94 Financial statements Financial statements | Parent company Financial statements | Parent company 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 95 95 Financial statements Financial statements | Auditor’s report Financial statements | Auditor’s report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 96 96 Financial statements Financial statements | Auditor’s report Financial statements | Auditor’s report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 97 97 Financial statements Financial statements | Auditor’s report Financial statements | Auditor’s report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 98 98 Financial statements Financial statements | Auditor’s report Financial statements | Auditor’s report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 99 99 Financial statements Financial statements | Auditor’s report Financial statements | Auditor’s report 2021 Artbox Report Template All rights reserved © Artbox AS 2021 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 of 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 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. The Company adheres to the following set of principles with regard to corporate governance: Transparency The communication between the Company and its stakeholders shall be based on transparency about matters that are relevant to evaluate the operations of the Company. Independence The Board of Directors shall act independently of the Company’s executive management to ensure that decisions are made on fair and neutral grounds. Equality All shareholders shall be treated equally. Control and governance Good internal control and governance principles shall contribute to predictability and risk mitigation for owners and other stakeholders. 1. Corporate Governance at Arribatec Group ASA The Company always seeks to comply with the most recent appli- cable legal framework for companies listed on the Norwegian stock exchange. The Company endorses the “Norwegian Code of practice for Corporate Governance” (“NUES”) in its most recent revision (October 2021), 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. 2. Operations and corporate social responsibility The Board of Directors prepares annual business plans that include 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 describe how the Company shall integrate its social considerations in its business. The guide- lines are published on Arribatec’s website, www.arribatec.com . A Corporate Social Responsibility Report is found in this annual report. 3. Equity and Dividend 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 situa- tion of the Company prove to be below an acceptable level. 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 divi- dends 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. Board authorizations Authorisations 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 permitting the repurchase of shares. The ordinary General Meeting held on the 24 May 2023 gave the Board of Directors authorization to increase the Company’s Share Capital by up to NOK 966 802 250. The authorizations are valid until the next ordinary general assembly, and no later than 30 August 2024. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 100 100 Corporate Governance Corporate Governance Corporate Governance 2021 Artbox Report Template All rights reserved © Artbox AS 2021 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 2.80. 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 share- holders shall be justified and in accordance with the authorization given to the Board of Directors from the General Meeting. The justifi- cation shall be publicly disclosed in a stock exchange announcement issued in connection with the increase in share capital. Transactions with related parties The Company’s board members, management and significant share- holders 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. 5. Shares and negotiability The shares in the Company are freely transferable, and there are no constraints in the Articles of Association preventing or contradicting this. 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. 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 Committee 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 matters discussed at the General Meeting. The Company’s Articles of Association provide that the Company does not have to send docu- ments relating to matters 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. Participation by shareholders in absentia: Shareholders that are unable to attend the General Meeting in person, are encouraged to vote by proxy. In connection with any General Meeting, the Company provides information on proxy voting, designates 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. Attendance, agenda and execution: Board members, the Nomination Committee and the auditor are encouraged to attend 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. 7. Nomination Committee Requirements for the Company’s Nomination Committee are outlined in the Articles of Association, §6. According to the Company’s Articles of Association, the Company shall have a Nomination Committee consisting of 2-5 members by the further decision of the General Meeting. Pursuant to the guidelines for the Nomination Committee, the Nomination Committee 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 Committee 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. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 101 101 Corporate Governance Corporate Governance Corporate Governance 2021 Artbox Report Template All rights reserved © Artbox AS 2021 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 attend 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 competen- cies to independently evaluate the cases presented to them by the executive management, as well as to monitor the daily operations of the Company. 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 attend to the common interests of all shareholders and operate independently of special interests. Any deviation from the independence 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. The Board of Directors held nine meetings in 2023. 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 matters 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 management’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 matters, significant litigation and regulatory exposures, and other current matters that may present a 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 matters of a material character in which the Chairman of the Board is, or has been, personally involved, the Board’s consideration of such matters shall be chaired by some other members of the Board. Audit Committee: The audit committee’s main responsibilities are to ensure the integrity of the Group’s financial reporting, to supervise the Group’s internal control and risk management system, to ensure the auditor’s independence, to inform the Board of the results of the stat- utory audit, 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 principles. The audit committee works as the Board’s risk committee, reviews the procedures for risk management, and assesses the risks and financial controls related to the Group’s business activities. The audit committee ensures that the company has a sufficient focus on ESG to contribute to sustain- able development and appropriate risk management to minimize the negative impact of the operations. The audit committee also receives reports on the work of the external auditor and the results of the audits. As of 31 December 2023, the audit committee consisted of the following members: Martin Nes (Chair) Terje Mjøs Kristin Hellebust The audit committee held six meetings in 2023. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 102 102 Corporate Governance Corporate Governance Corporate Governance 2021 Artbox Report Template All rights reserved © Artbox AS 2021 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 the 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 matters that form part of day-to-day management. The day-to-day management does not cover matters of extraordinary nature or of major importance. However, the CEO is authorized to decide on matters of extraordinary nature or of major importance in cases where the decisions of the Board of Directors cannot be awaited without serious detriment to the Company. The Board of Directors shall be notified of the decision as soon as possible. Financial reporting: The Board of Directors is responsible for ensuring the integrity of financial information. The Board evaluates the integ- rity 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: Compliance with legislation and regulations, as well as internal guidelines Quality and efficiency within internal operations 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 omitted. The Company uses an external accounting agency for all Group companies. Disqualification: The CEO or a member of the board may not partici- pate in the discussion on Board issues that are of special financial or personal interest to the individual in question. 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’ attention 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 Committee is responsible for issuing a proposal on the remuneration terms to the AGM. 12. Remuneration of executive management In accordance with the Norwegian Public Limited Liability Companies Act, the Board of Directors establishes guidelines for the remu- neration of the executive management team. These guidelines are presented to the General Meeting through a statement on remuner- ation for executive management. The statement is presented for an advisory vote, which is subject to the General Meeting’s approval. The Company’s general principle for management remuneration is to offer competitive terms, to attract and retain the competence it needs. 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. 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 takeovers 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 regu- lations. 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 written explicit principles for how it will act in the event of a take-over bid. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 103 103 Corporate Governance Corporate Governance Corporate Governance 2021 Artbox Report Template All rights reserved © Artbox AS 2021 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 written confirmation that the auditor satisfies established requirements pertaining to independence and objectivity. The auditor participates in the Audit Committee’s meetings. The auditor provides the Audit Committee and the Board with its perspectives on the annual statement and informs them of any disagreements between the auditor and the executive manage- ment. The Board of Directors also has contact with the auditor when required outside the situations mentioned above. At least once a year, the auditor attends a meeting with the Board of Directors in which no representatives from the Company’s executive management will be present. During 2023, the auditor attended 1 board meeting and 6 Audit Committee meetings. 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 remu- neration associated with other assignments. Information on the fees paid to the auditor in 2023, including a 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. Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 104 104 Corporate Governance Corporate Governance Corporate Governance 2021 Artbox Report Template All rights reserved © Artbox AS 2021 APMs, terms and abbreviations ^ NOK thousand 2023 2022 EBITDA 24 463 (34 107) Restructuring cost 0 3 779 Bad debt in relation to discont. product 0 1 048 Sale of intangible asset (IP) 0 4 190 Adjusted EBITDA 24 463 (25 090) Revenue 572 981 504 968 EBITDA 24 463 (34 107) EBITDA margin 4.3% (6.8%) Adjusted EBITDA 24 463 (25 090) Adjusted EBITDA margin 4.3% (5.0%) APM costs are considered as one-time and not part of the ongoing business and are therefore adjusted to show an EBITDA mirroring the underlying business. Restructuring cost is related to the restructuring of BA Marine, bad debt is related to discontinued product in BA Business Services and Sale of intangible asset is related to loss on sale of IP in BA Marine. KPI/APM definition KPI/APM Definition Gross profit Operating revenue less materials, software and services EBITDA Earnings before Interest, Tax, Depreciation and Amortisation EBITDA margin EBITDA as a percentage of Total income Equity ratio Equity as a percentage of total assets Adjusted EBITDA EBITDA, adjusted for restructuring cost and other one-time effects Adjusted EBITDA margin EBITDA margin, adjusted for restructuring cost and other one-time effects Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 105 105 APMs, terms and abbreviations APMs, terms and abbreviations APMs, terms and abbreviations 2021 Artbox Report Template All rights reserved © Artbox AS 2021 Terms and abbreviations BA Business Area BizS BA Business Services BoD Board of Directors BPM Business Process Management CGU Cash Generating Unit Cloud BA Cloud EA&BPM BA Enterprise Architecture & Business Process Management EBIT Operating profit, Earning before Interest and Tax EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation ECL Estimated Credit Losses EPS Earnings Per Share ESG Environmental, Social and Governance EUR Euro FTE Full Time Equivalent GBP British Pounds GDPR General Data Protection Regulation GHG Greenhouse Gas emissions Hspt BA Hospitality IFRS International Financial Reporting Standards IP Intellectual Property M&A Mergers and Acquisitions Marine BA Marine NOK Norwegian Krone RISE Responsibility, Integrity, Service-mindedness and Empowerment Solaas Solution as a service Saas Software as a service UN United Nations VIU Value in Use WACC Weighted Average Cost of Capital Arribatec Group ASA | Annual report 2023 Arribatec Group ASA | Annual report 2023 106 106 APMs, terms and abbreviations APMs, terms and abbreviations APMs, terms and abbreviations 2021 Artbox Report Template All rights reserved © Artbox AS 2021 artbo x.no Arribatec is a global supplier of digital business solutions that help our customers achieve competitive advantage through innovative use of IT. +47 4000 3355 info@arribatec .com Arribatec Group ASA Lørenfaret 1D N-0585 Oslo 5967007LIEEXZXFK00402023-01-012023-12-315967007LIEEXZXFK00402022-01-012022-12-315967007LIEEXZXFK00402023-12-315967007LIEEXZXFK00402022-12-315967007LIEEXZXFK00402021-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFK00402022-01-012022-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFK00402022-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFK00402021-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFK00402022-01-012022-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFK00402022-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFK00402021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXFK00402022-01-012022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXFK00402022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXFK00402021-12-31ARR:RetainedEarningsAndMiscellaneousOtherReservesMember5967007LIEEXZXFK00402022-01-012022-12-31ARR:RetainedEarningsAndMiscellaneousOtherReservesMember5967007LIEEXZXFK00402022-12-31ARR:RetainedEarningsAndMiscellaneousOtherReservesMember5967007LIEEXZXFK00402021-12-315967007LIEEXZXFK00402023-01-012023-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFK00402023-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXFK00402023-01-012023-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFK00402023-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXFK00402023-01-012023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXFK00402023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXFK00402023-01-012023-12-31ARR:RetainedEarningsAndMiscellaneousOtherReservesMember5967007LIEEXZXFK00402023-12-31ARR:RetainedEarningsAndMiscellaneousOtherReservesMemberiso4217:NOKiso4217:NOKxbrli:shares