Annual Report • May 5, 2014
Annual Report
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In 2013, Itera was merged into an integrated company. Former independent subsidiaries were integrated to form a Nordic communication and technology company. The company's strategic focus results in more extensive, long-term customer relationships, a wide range of services, improved scalability through use of resources located nearshore and a robust Nordic brand.
Itera is a communication and technology company that designs, develops and operates innovative digital solutions and services for Nordic companies and enterprises. The Group also has two niche companies: Cicero Consulting supplies advisory services and solutions to the banking and finance sector, while Compendia specializes in products and services in HR, quality and management.
Itera Norge AS was established in the third quarter through the merger of the Norwegian subsidiaries Itera Gazette, Itera Consulting and Itera Networks. The merger quickly resulted in increased efficiency throughout the organization in the form of simpler routines, coordinated working methods and an increased focus on corporate culture and organizational development. The simplification also contributed to improved clarity in both internal and external communication.
The business units in Norway, Sweden, Denmark and Ukraine now use Itera as their sole brand name and present themselves as unified and defined both internally and externally.
The Group's head office is in Oslo, and the Group also has offices in Bryne, Stockholm, Copenhagen, Kiev and Lviv.
The Group did well in the Norwegian and Danish markets, with growth throughout the year. The Swedish market was a little slow during the first six months, but showed signs of improvement during the final six months of the year.
During 2013, Itera continued to develop larger, long-term customer relationships where the Group can deliver a wide range of services and act as a close and strategic business partner. The client base consists of well-established companies in the Nordic countries, and many customers are entering into agreements for a wider range of products and services than previously.
More than half of the Group's income is derived from clients with more than 1,000 employees. The majority of the clients operate in many of the same countries as Itera, focus on innovation, operate in industries with a high rate of change where digitalization is a strong trend, and innovation is a clear competitive advantage. The majority of branches must take into account digitalization, an increase in consumer power, changes in purchasing habits and the emergence of new business models. The Group's customers emphasize that Itera's inclusive range of services in communication and technology provides them with the basis on which to exploit innovativeness and adapt well to market developments.
During 2013, the Group entered into contracts with clients such as Storebrand, KLP, If, Gjensidige, Santander, Nordea, DnB, Nets, the Norwegian Public Service Pension Fund, The Norwegian Environment Agency, The Norwegian Directorate of Health, The Union of Education Norway, NRK, Forsvarsbygg, Haavind, Schibsted, Reitan, NorgesGruppen, Tine and Eurosko.
The above serves to illustrate the sectors from which Itera generates the major part of its revenues: banking/financing/insurance, the public sector/health/organizations, the service industry sector and the retail sector.
The breadth of the assignments illustrates the extent of the Group's expertise in communication and technology: digital strategy development, communication strategy, service design, games development, project management, modernization of core systems, search solutions, web solutions, digital magazines, annual reports, test, information security, management/administration and operations.
During the course of the year, the Group has developed larger and more strategic customer relationships that serve to increase the Group's financial predictability. The growth related to the 30 largest companies was 38 percent for the year compared to 2012.
Nearshore activities have increased in volume, contributing to improvements in competitiveness and scalability. The percentage of capacity located nearshore was 32 percent at the close of 2013. compared to 22 percent at the close of 2012. The implementation of projects by teams composed of resources from across national boundaries works very well, and has been a delivery model for which demand has increased from customers as the year progressed.
In 2013, the Group generated revenues of MNOK 465.22 compared to MNOK 438.2 in 2012. This is an increase of 6 percent. Revenues in Norway were MNOK 357 compared to MNOK 331 in 2012, equal to a growth of 8 percent. Growth in Denmark was 19 percent, revenues in 2013 was MNOK 37 compared to MNOK 31 in 2012. The Swedish market showed a reduction of 7 percent, with revenues in 2013 of MNOK 71 compared to MNOK 76 in 2012.
Gross margin 1 was MNOK 374.6 compared to MNOK 358.0, an increase of 4.6 percent.
Operating results before depreciation were MNOK 43.9 compared to MNOK 25.9 in 2012. This is equivalent to a profit margin of 9.4 percent before depreciation, compared to 5.9 percent for the previous year. The Group's total depreciation and amortization for the period was MNOK 21.4, compared to MNOK 18.6 in 2012. Operating results were MNOK 22.5, compared to MNOK 7.3 in 2012. This is equivalent to an operating margin of 4.8 percent, compared to 1.7 percent for the previous year.
Personnel expenses for the year amounted to MNOK 279.4, a reduction of 0.9 percent. The decrease in personnel expenses is due to the rise in nearshore based resources in deliveries. Average personnel expenses per employee were reduced by 3 percent. Other operating expenses for the year amounted to MNOK 51.3 compared to 50.2 in 2012.
Net financial items amounted to MNOK-2.8 compared to MNOK-0.4 in 2012. Profit before tax was MNOK 20.4 compared to MNOK -6.81 in 2012.
Tax expenses for the year totaled MNOK 4.6, compared to MNOK 2.2 in 2012. Itera paid a total of MNOK 1.2 in 2013. The Group has a deferred tax advantage of MNOK, of which MNOK is recognized in the balance sheet. The Group has capitalized all deferred tax advantages.
Net income for the year was MNOK 15.8, compared to MNOK 4.6 in 2012
It is the opinion of the Board of Directors that the annual accounts provide a true and fair view of the Group's activities in 2013, and the financial position at the end of the year.
In 2013, NOK 3.7 million was provided for development of new solutions compared to NOK 6.0 million in 2012. The amount was provided on a continuous basis, as the criteria for recognition are considered to be met. The solutions are mainly related to existing contracts with fixed future income.
Itera had cash flow from operations amounting to NOK 57.7 compared to MNOK 6.0 in 2012. The Group paid dividends to shareholders of NOK 5 million in 2013. No treasury shares were purchased. Itera's cash balance at the end of the year was NOK 68.0 million, compared to NOK 28.8 million in 2012. The difference between cash flow from operations and the Group's operating result is primarily due to writeoff costs that have no cash effect, but also to some accrual differences in the accounting date for recognizing and the payment date.
In addition to research and development, investments of NOK 15.2 million were made for hardware, software and inventory, compared to NOK 11.7 million in 2012. The increase is related to the new and larger operations contracts entered into by the Group.
Itera held no treasury shares at the close of the year.
At the close of the year, equity was MNOK 86.9, compared to MNOK 72.4 for the previous year. This is equivalent to an equity percentage of 40 percent, compared to 41 percent the year before.
The financial risk factors affecting the company include currency risk, liquidity risk and credit risk. The Management and Board of Directors monitor these factors closely and implement measures when necessary.
Itera's Scandinavian operations provide income and incur expenses in Norwegian, Danish and Swedish crowns. The changes in the exchange rate for Swedish and Danish crowns therefore affect the Group's results. This risk is mitigated as associated expenses are incurred in the same currencies. The Group is exposed to U.S. dollars through its nearshore activities in the Ukraine.
The Board considers the Group's liquidity to be satisfactory, and does not consider it necessary to implement further measures to reduce liquidity risk.
Historically, the Group has incurred very low losses on receivables. This trend continued in 2013.
Nearshore activities in Ukraine expose the Group to new risk factors, including country risk, data security and corruption. These are typical for new markets where the business climate, laws and society are less developed or unfamiliar to us. Violation of legal demands and our standards of business ethics could result in large fines, prevent us from doing business or cause damage to our reputation. Changes in legislation, taxation systems and regulations can also lead to significant changes in how we implement our services and solutions, or lead to increased costs that affect our profitability. Itera closely monitors country risk, has a zero tolerance policy with respect to corruption and does not carry out domestic activities where the problem of corruption is greatest. We have implemented best practices and controls for data security in the Group, as well as legal frameworks to safeguard data security and intellectual property across national borders.
The number of employees at the end of the year was 460, compared to 428 in the previous year. The increase in the number of employees by 32 is an increase of 7 percent. For the year overall, there were 433 man years, compared to 428 in 2012. The majority of operations take place in Norway, where the Group has 233 (238) employees. The Group's Swedish operations include 68 (71), Danish operations 21 (20) and Ukrainian operations 155 (99) employees.
Absence due to illness for the period was 3.5 percent (2.7), which the Board considers to be satisfactory. No accidents or injuries were suffered during the year. The Board considers the work environment to be good. We regularly carry out environmental studies of the Group's work environment.
The Board wishes to thank all Group employees for their efforts in 2013.
Itera recognizes its responsibilities for the society the Group is part of and wishes to contribute to positive development in the areas that are most relevant for the Group's activities.
The Group's ethical guidelines describe the standards that apply in the Group's relationships with its customers, suppliers, public authorities and employees.
The Itera Business Code of Ethics can be found on the company website (itera.no/investor-relations.)
Itera practices zero tolerance of all forms of corruption.
Nearshore activities in Ukraine expose the Group to a certain risk of corruption in that the country scores low on Transparency International's corruption index. Itera has therefore chosen to protect the Group against such risk by not supplying services to the public and private sectors in Ukraine where such problems have been identified, and restricts its activities to exporting to countries where western business standards are the norm.
The Group has also formulated guidelines for all employees concerning the acceptance of gifts, other benefits or advantages and/ or other forms of gratuity. Refer also to the Group's Code of Ethics: (itera.no/investor-relations).
Itera has implemented good control routines and frameworks for data security in the Group across national borders. The Group's Information Security Management System (ISMS) is implemented throughout the Group and is based on the framework standard ISO27002.
Itera's nearshore activities are fully integrated with the Nordic activities. This means that all operations in the Group adhere to the same procedures and ethical standards. The IT infrastructure is common with all customer information stored on servers located in the Nordic Region. Financial processes are carried out as a central function and the Group's auditor is KPMG in all countries with the exception of Denmark. Random sampling is practiced, and any deviations are followed up and rectified.
All Ukrainian employees have signed agreements of confidentiality and commitment with regard to the handling and processing of data and other security arrangements.
The Group implements a leading judicial framework for the secure transfer of data and information across national borders called Binding Corporate Rules (BCR). This includes internal routines and rules covering the transfer of personal details from companies in the EU to the Group's activities outside the EU.
Itera adheres to national legislation in all countries in which the Group operates. All employees are encouraged to report internally if they have cause for concern with regard to the Group's integrity or observes transgressions or breaches of law and/or regulations. Reports can be submitted confidentially if so desired, and the whistle blower cannot be pursued with negative reactions, regardless of whether the content of the report shows to be a reality or not.
Itera places great importance on equality. Men and women should be given the same wage terms and opportunities for professional and personal development. The Group wishes to make it possible for employees of either gender to combine their work and private life, and therefore offers leave arrangements, home office solutions and part time positions to support this.
The proportion of women in the Group is 38 percent (28) in 2012. At the close of the year, the Group's management consists of five men and three women, while the Board of Directors is made up of two women and two men.
There are considerable differences between the Group's companies with respect to the proportion of women. The companies that are most technology focused have a lower proportion of women, whereas the parent company and subsidiaries that deliver services in communication and contents have around 43 percent women compared to 47 percent in 2012. Management positions are unevenly distributed between men and women. The Company has a goal of improving this balance in its various management Groups, although the required skills and expertise will be the overriding criterion.
Itera places great importance on Group diversity, and will recruit. develop and keep its best employees regardless of gender, ethnicity and disability. See also itera.no/investor-relations.
The Group monitors employee satisfaction twice annually with the main survey in September and a supplementary survey in April. The same survey is applied throughout the Group, which provides good indicators of general tendencies and local deviations. The survey measures important areas such as the perceived balance between work and leisure time, professional development, workload and degree of commitment and adherence to Itera's values.
The results are distributed to all employees. After the main survey, all employees are afforded the opportunity to participate in decisions concerning the areas to be given priority and measures and initiatives to be implemented during the time ahead to further improve results. Measures and initiatives that can be deemed to have a positive effect for several business areas shall be implemented under the auspices of the Group's HR function. Measures and initiatives that have a more local impact shall be implemented by the division or department in question under the guidance of the Manager. The supplementary survey in April monitors whether the measures / initiatives chosen have had the desired effect or whether adjustments must be introduced until the next main survey.
The survey carried out in 2013 showed a positive development in all the Groups divisions. Two of the Group's divisions were ranked amongst the best work places in Norway and Sweden respectively, while nearshore activities have previously been voted as the best employer in the Ukrainian IT industry.
A high standard of excellence in skills and expertise is a decisive factor for maintaining the Group's competitiveness. Itera has a strong and dedicated commitment to the development of skills and expertise of all employees in all professional disciplines including management. The educational and training programs are conducted under the auspices of 'Itera Academy', which is the Group's overlaying concept for all competence activities. Education courses and training available in Itera Academy are closely linked with the Group's strategy and the varying needs of the business areas, and encompass courses from the role of the consultant for newly-qualified staff through courses at several levels in project management, system development and user experience to management courses for both new and experienced leading staff.
Pollution of the external environment as a result of Itera's operations is limited. The Group's environmental impact is for the most part linked to energy consumption, travel and waste from office activities. One of the Group's environmental measures has been to locate all activities in Oslo in a single location. Transport to and from different office buildings has been eliminated and energy consumption is now limited to a single location.
Further, the Group has limited paper consumption through the introduction of printer systems where documents are not printed unless the requisitioner logs in when picking up the document.
The Group's environmental initiatives focus on using organized recycling schemes for obsolete IT equipment, reducing travel activities through the increased use of teleconferencing, and responsible waste management.
All employees have a mandatory obligation to consciously observe the environmental impact of work-related activities, and to select solutions, products and methods that have a minimum impact on the environment. This is described in the Group's Ethical Guidelines (itera. no/investor-relations).
The share capital in Itera ASA is MNOK 24,655,987, divided into 82.186.624 shares at a value of MNOK 0.30 per share. During the year, the share capital was decreased by MNOK 226,117 through the withdrawal of 753,722 treasury shares.
At the close of the year, Itera holds no treasury shares. The Company has a continuous share option scheme, where the redemption price is significantly higher than current share prices.
At the close of the year, Itera ASA had 1,789 shareholders. The 20 largest shareholders held 46.7 million shares, equivalent to 56.8 percent of the share capital.
Dividends were paid out in 2013 of MNOK 5, equal to NOK 0.06 per share.
Itera's management is based on the Accounting Act and Norwegian recommendations for corporate governance and management. Please see the separate section on how section 3-3 b 2nd article of the Accounting Act and the points in the recommendation are followed up. Itera ASA Board of Directors held twelve meetings in 2013. The Group's strategy and development were important items on the agenda of all the meetings.
The Board has two committees; an Audit Committee and a Compensation Committee. The Audit Committee consists of two board members, and held two meetings in 2013. The Remuneration Committee consists of two board members, and held two meetings in 2013. The Committee prepares and makes recommendations to the Board concerning remuneration to the CEO. The Committee also acts as the advisory body for the CEO for issues concerning remuneration and
other key personnel issues relating to the Group's management. Please refer to the separate section at the back of this report.
Internal support processes and joint solutions are structured as Group Functions in the parent company Itera ASA in areas where significant economies of scale and synergies can be realized. Group Functions are developed in line with the companies' needs and cover areas including accounting/finance, HR, information and communication and internal IT.
As an owner, the parent company receives Group contributions and dividends from the subsidiaries. In 2013, the Group received MNOK 9.3 in Group contributions. Book value of investments in subsidiaries is MNOK 110.0. The parent company administers the Group's Group Account arrangement. The positive cash flow in the Group is also shown as an increase in liquid assets in the parent company as this shows the total holdings in the Group Accounts arrangement. The parent company presents the subsidiaries' deposits in the arrangement as liabilities to Group companies. The Norwegian companies are also jointly registered for value added tax, and the parent company will be responsible for the payment of value added tax for all the said subsidiaries. The obligation is shown as a liability in the balance sheet, but is balanced in inter-company balances with the subsidiaries.
A number of long-term loans have been granted to some subsidiaries in 2013.
The number of employees at the end of the year was 17 (20), of whom 11 are female. Absence through illness for the year was 3.4 percent (4.0 percent), which the Board considers to be satisfactory. No accidents or injuries were suffered during the year. The Board considers the work environment to be good.
It is the opinion of the Board of Directors that the annual accounts provide a true and fair view of the parent company's activities in 2013. and the financial position at the end of the year.
In accordance with Article 3-3 a of the Accounting Act, we confirm that the premises for continued operation are present, and forms the basis for the preparation of the annual accounts. The 2014 budget and the Group's equity and liquidity situation is the basis for this assessment.
The Board proposes that this year's profits for the parent company, Itera ASA, amounting to TNOK 2041, should be distributed as follows:
• TNOK 28 765 to dividends
. TNOK 26724 from other equity.
The Board's proposal for the dividend corresponds to MNOK 0.35 per share.
Itera's strategy has solid foundation in all parts and at all levels of the Group, and our targeted work will continue. The overall strategy remains unchanged, with the development of large and long term customer relationships, higher operational efficiency and the use of delivery models that combine resources across the Nordic countries and nearshore. The Group experiences satisfactory activity in all markets in which it is present, and follows the development of market trends closely.
Oslo, 20 March 2014 The Board of Directors of Itera ASA
$\int$ (yahr
Ole Jørgen Fredriksen Chairman
Trude S Aurelie
Trude S. Husebø Board member
Mimi K. Berdal Vice chairman
an Erik Karlsson Board member
39
| NOK1000 | NOTE | 2013 | 2012 |
|---|---|---|---|
| Operating revenue Sales revenue |
465194 | 438 207 | |
| Total operating revenue | 1 | 465194 | 438207 |
| Operating expenses Cost of sales |
90 630 | 80221 | |
| Payroll and personell expenses | 7,8,9,10 | 279 400 | 281924 |
| 13 | 21376 | 18596 | |
| Depreciation | 51 266 | 50 211 | |
| Other operating expenses | 430952 | ||
| Total operating expenses | 442671 | ||
| Operating profit | 22523 | 7255 | |
| Other financial income | $\mathbf{11}$ | 383 | 758 |
| Other financial expenses | $\mathbf{11}$ | 2467 | 1167 |
| Net financial items | $-2084$ | $-409$ | |
| Profit before taxes | 20 439 | 6846 | |
| Income taxes | 15 | 4639 | 2228 |
| Profit for the year | 15800 | 4618 | |
| Of which: | |||
| Shareholders in the parent company | 15800 | 4618 | |
| Earnings per share | Э | 0.19 | 0.06 |
| Diluted earnings per share | Э | 0.19 | 0.06 |
| Comprehensive income for the year | |||
| Profit for the year | 15800 | 4618 | |
| Other income and expenses, reversed through the income | |||
| Currency translation differences | 2323 | $-899$ | |
| Unrealized net gain/-loss on investment in foreign subsidiaries | 1622 | $-194$ | |
| Tax effect on other income and expenses | $-459$ | 0 | |
| Total comprehensive income for the year | 19286 | 3525 | |
| Attributable to: | |||
| Parent company shareholders | 19 28 6 | 3525 | |
| NOK1000 | Note | 2013 | 2012 |
|---|---|---|---|
| ASSETES | |||
| Fixed assets | |||
| Intangible assets and deferred tax assets | |||
| Deferred tax assets | 15 | 9146 | 12903 |
| Other intangible assets | 13 | 17216 | 20423 |
| Total intangible assets and deferred tax assets | 26362 | 33326 | |
| Tangible fixed assets | |||
| Machinery, equipment and software | 13 | 27858 | 26603 |
| Total tangible assets | 27858 | 26603 | |
| Total fixed assets | 54 2 21 | 59929 | |
| Current assets | |||
| Work in progress | 2 | 15657 | 5892 |
| Receivables | |||
| Accounts receivable | 12 | 69682 | 74176 |
| Other receivables | 4 | 12573 | 8537 |
| Total receivables | 97912 | 88606 | |
| Bank deposits | 17 | 67958 | 28824 |
| Total current assets | 165871 | 117430 | |
| Total assets | 220092 | 177359 |
| NOK1000 | Note | 2013 | 2012 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Paid-in capital | |||
| Share capital | 24 6 5 6 | 24656 | |
| Total paid-in capital | 24 65 6 | 24656 | |
| Retained earnings | 62279 | 47787 | |
| Total retained earnings | 62279 | 47787 | |
| Total equity | 86935 | 72443 | |
| Liabilities | |||
| Non-current liabilities | |||
| Non-current interest bearing liabiliteis | 14 | 15827 | 11889 |
| Total non-current liabilities | 15827 | 11889 | |
| Current liabilities | |||
| Accounts payable | 27171 | 17714 | |
| Payable tax | 151 | 0 | |
| Public duties payable | 24576 | 25978 | |
| Other current liabilities | 5 | 65 431 | 49335 |
| Total current liabilities | 117330 | 93027 | |
| Total liabilities | 133157 | 104916 | |
| Total equity and liabilities | 220092 | 177359 |
Oslo, 20 March 2014 The Board of Directors of Itera ASA
N / VAKAL
Ole Jørgen Fredriksen
Chairman
Luch Bereke يا‰∏ Board member
nillin Karlson Ī Board member
Juile S. Fluwbel
Board member
Arne Mjøs) CEO
41
42 ITERA ANNUAL REPORT 2013
STATEMENT OF CASH FLOW GROUP
| NOK1000 | Note | 2013 | 2012 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Profit before taxes | 20439 | 6846 | |
| Taxes paid | 15 | $-1152$ | $-389$ |
| Profit/loss from fixed assets sales | n | -10 | |
| Depreciation | 13 | 21376 | 18596 |
| Change in work in progress | $-9765$ | $-4425$ | |
| Change in accounts receivable | 12 | 4494 | $-2207$ |
| Change in accounts payable | 9458 | 2619 | |
| Change in other items | 10640 | 2221 | |
| Effect of currency changes | 2236 | $-1158$ | |
| Net cash flow from operating activities | 57726 | 22092 | |
| Cash flow from investment activities | |||
| Payment from sale of fixed assets | 0 | 105 | |
| Investment in fixed assets | 13 | $-5146$ | $-5596$ |
| Investment in intangible fixed assets | 13 | $-3670$ | $-6066$ |
| Net cash flow from investment activities | $-8816$ | $-11557$ | |
| Cash flow from financial activities | |||
| Payment of long term debt | 14 | $-6131$ | $-3089$ |
| Dividend | $-4931$ | $\Omega$ | |
| Net cash flow from financial activities | $-11062$ | $-3089$ | |
| Currency effect on cash | 1286 | $-36$ | |
| Net change in bank deposits | 39134 | 7818 | |
| Bank deposits as of 1 January | 28824 | 21006 | |
| Bank deposits as of 31 December | 67958 | 28824 | |
| NOK1000 | Share capital |
Own shares |
Other deposit equity |
Translation differences |
Other equity |
Total equity |
|---|---|---|---|---|---|---|
| Shareholders' equity as of 31 December 2011 | 24882 | $-225$ | $-3532$ | 47795 | 68920 | |
| Comprehensive income for the year | 0 | $-1093$ | 4618 | 3525 | ||
| Reduction of the share premium reserve | $-225$ | 225 | 0 | |||
| Shareholders' equity as of 31 December 2012 | 24656 | 0 | 0 | $-4626$ | 52412 | 72442 |
| Comprehensive income for the year | 0 | 3486 | 15800 | 19286 | ||
| Dividend | 0 | 0 | $-4931$ | $-4931$ | ||
| Cost effect Stock options | 0 | 138 | 138 | |||
| Shareholders' equity as of 31 December 2013 | 24656 | 0 | 138 | $-1140$ | 63 281 | 86935 |
43
Itera ASA (the company) is domiciled in Oslo, Norway. Itera's consolidated financial statements for the financial year 2013 covers the company and the subsidiaries Itera Norge AS, Cicero Consulting AS, Compendia AS, Itera Offshoring Services AS, Itera Sweden AB, Itera Consulting AB, Itera Networks AB, Objectware AB, Itera Consulting ApS and Itera Consulting Ukraine.
The consolidated financial statements are submitted in accordance with applicable EU-approved IFRS regulations and their interpretations as of 31 December 2013, as well as in line with additional Norwegian information requirements which follow from the Accounting Act as of 31 December 2013.
The proposed annual accounts were confirmed by the board and the CEO on 20 March 2014. The annual accounts will be considered at the ordinary general meeting on 22 May 2014. The board has the option of making changes to the annual accounts up until the time of final approval.
The consolidated financial statements have been prepared on the basis of historical costs except for the following items:
Financial instruments at fair value in the profit and loss account, loans and receivables and other financial liabilities at amortized cost.
These consolidated financial statements are presented in Norwegian kroner (NOK), which is the functional currency of the parent company. All financial information has been rounded to the nearest thousand. Balance sheet items of subsidiaries in other functional currencies are translated using the exchange rates prevailing on the balance sheet date, while profit and loss items are translated using the exchange rates on the transaction date. The average monthly exchange rate is used as an approximation of the exchange rate at the time of the transaction. Translation differences are recorded as other income and expenses.
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
The most significant estimates requiring management judgment are the following:
Itera Norge AS leases operating equipment. The lease contracts have been evaluated based on the requirements stipulated in IAS 17, and it has been determined that these shall be posted as financial leasing. Reference is made to note 14.
In some cases, proceeds from sales will cover several deliveries, Itera will then distribute the proceeds among the various deliveries and record this income based on the time of delivery for the various deliveries.
IFRS 13 Fair Value Measurement applies as of 2013. The group has not selected policies where assets and liabilities may be recognized at fair value, or it does not have assets and liabilities which must be recognized at fair value. It has been determined that no financial instruments must be recognized at fair value.
The accounting policies set out below have been applied consistently for all periods and by all group entities.
Subsidiaries are entities controlled by the company. Control exists when the group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that the control ceases. The accounting policies of the subsidiaries have been changed when necessary to align them with the policies adopted by the group.
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in the consolidated financial statements. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the group's interest in the investee. Unrealized losses are eliminated in the same manner, but only to the extent that there is no evidence of impairment.
Transactions in foreign currencies are translated to the respective functional currencies of the group entities at the exchange rate at the
date of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate at the balance sheet date. Exchange differences arising on translation are recognized in the profit and loss account, except that differences arising on translation of long-term receivables considered part of an investment, are recognized directly in equity.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value, are translated to NOK at the exchange rate at the date that the fair value was determined. Assets and liabilities for foreign subsidiaries, including goodwill and adjustments for fair value included in the consolidation, are translated into NOK using the exchange rate at the balance sheet date. Income and expenses for foreign subsidiaries are translated to NOK at the approximate exchange rate at the time of the transactions. Currency translation differences are posted as translation reserves included in the equity.
Ordinary shares are classified as equity. Expenses directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.
When own shares are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a change in the equity. Treasury shares are presented as a deduction from the total equity net of any tax effects. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in the equity, and the resulting transaction surplus or deficit is transferred to/from retained earnings.
Transaction costs directly relating to an equity transaction are recognized against equity after deducting tax expenses.
Fixed assets are entered in the accounts at historical cost less accumulated depreciation and accumulated impairment losses. At the group's transition to IFRS on 1st January 2004, the fair value was assumed to be the estimated historical cost.
The acquisition cost includes expenditures directly attributable to the acquisition of the asset. The cost of self-developed assets includes the cost of direct labour, any other cost directly attributable to ensuring that the assets function as intended, and the cost of dismantling and removing the assets.
Gains and losses on disposal of tangible fixed assets constitute the difference between the sale proceeds from and the carrying amount of the assets, and are recognized net as other income in the profit and loss account.
Depreciation is recognized on a straight-line basis over the estimated useful life of each asset. Leased assets are depreciated over the shortest of either the lease period or the useful life unless it is reasonably certain that the group will obtain ownership by the end of the lease period.
The estimated useful lives for the current and comparable periods are as follows:
| • Fixtures and fittings | 5-10 years |
|---|---|
| • Software | 3 years |
Machinery and equipment 3 years
Depreciation methods, useful lifetimes and residual values are reviewed at the balance sheet date.
Intangible assets are recognized on the balance sheet if it can be proven that there are probable future economic benefits that can be attributed to the asset which is owned by the company and its future recoverability can reasonably be established. Intangible assets are capitalized at cost. Intangible assets with indefinite useful lives are not amortized, but impairment losses are recognized if the recoverable amount is less than the cost price. The recoverable amount is calculated each year or if there are any indications of impairment. Intangible assets with a finite useful life are amortized and any need for impairment losses to be recognized is considered. Other intangible assets are amortized from the date they become available for use.
Expenses linked to the purchase of new software are recognized in the balance sheet as an intangible asset provided these expenses do not form part of the hardware acquisition cost. Expenses incurred as a result of maintaining or upholding the future usefulness of software are expensed as incurred unless the changes in the software increase the future economic benefit from the software.
Expenditures associated with research activities are recognized in the profit and loss account when incurred.
Development activities are related to significant new concepts or solutions. Development expenditures are capitalized only if they can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the group intends to and has sufficient resources to complete the development and to use or sell the asset. The capitalized expenditures include the cost of materials, direct labour and directly attributable overhead costs. Other development expenditures are recognized as incurred.
Capitalized development expenditures are measured at cost less depreciation and impairment.
Intangible assets are depreciated using the straight-line method over the estimated useful lifetime from the time they become available for use. The estimated useful lives for the current and comparable periods are as follows:
• Capitalized development costs 3-5 years
Lease agreements are classified as financial or operational according to the actual content of the agreements. If the greater part of the financial risk and control of the object of the leasing agreement is the responsibility of the lessee, the agreement is classified as a financial lease, and the associated assets and liabilities are capitalized. Other lease agreements are classified as operational leases and the lease fee is carried to expense as leasing costs.
Work in progress represents the accrued and not invoiced revenues deducted expected losses. Invoicing for the individual projects is based on contractual payment milestones.
Trade and other receivables are recognized at nominal value on the balance sheet deducted any foreseeable losses. The interest element is disregarded if insignificant. In case of objective evidence of any impairment, the difference between the posted value and the present value of future cash flows is recognized as a loss.
A financial asset is assessed at each reporting date to determine whether there is any objective evidence of impairment. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.
All impairment losses are recognized in the profit and loss account. Impairment losses are reversed if such reversal may objectively be linked to an event which occurred after such losses were recognized.
The Itera group finances its pension scheme for the employees through collective defined contribution pension schemes. A defined contribution pension scheme is a plan under which an entity pays fixed contributions into a separate fund or pension fund and has no legal or constructive obligation to pay any further amounts. Contribution obligations are recognized as personnel expenses in the profit and loss account when due. Prepaid contributions are recognized as an asset to
the extent that these entail that cash refunds or reduced future payments become available.
Employee stock options in the Group represent rights for the key employees included in the stock option programme to acquire shares in Itera ASA at a future point in time at a pre-determined price. As a general rule, such subscription is conditional upon attainment of specific targets and that the individual is still employed at the time of exercise.
The value of the options is recognized at fair value at the time of grant. The calculated value is posted as personnel expenses, with a cross entry in other called-up and fully paid share capital. The cost is distributed across the accrual period up until the employees gain an unconditional right to the options. The amount carried to expense is adjusted to reflect the actual number of stock options for which associated service and non-market conditions have been met.
The employer's national insurance contribution associated with the employees' taxable advantage is currently recognized over the accrual period, based on the accrual rate and value at the balance sheet date.
A provision is recognized if, as a result of a past event, the group has a current legal or constructive obligation that can be estimated reliably, and it is probable that a payment or transfer of some other asset will be required to settle the obligation.
The calculated provisions constitute the present value of the expected future cash flow, discounted a market-based discount rate before tax.
Revenues from services rendered are recognized in the profit and loss account in proportion to the stage of completion of the transaction at the balance sheet date. The stage of completion is assessed by reference to surveys of work performed. Revenues related to subscriptions are recognized over the contract period. Revenues from long-term projects are recognized on the basis of the precentage of completion. The precentage of completion is calculated on cost of job to date divided on expected total cost. If the outcome of a long-term project cannot be estimated reliably, the contractual revenue is only recognized to the extent that it can be assumed that the accrued contractual costs will be covered by the customer. If the agreed compensation covers several products or services, the compensation is allocated among the various sub-deliveries. Recording of income takes place in line with delivery of the various products or services.
Revenues from subscriptions are distributed across the subscription period.
Expected losses associated with a contract are posted in the profit and
GROUP
loss account when it is determined that the expected costs associated with the contract in question will exceed the anticipated revenues from said contract. Revenues from sale of goods are measured at the fair value of the compensation or claim and recognized in the profit and loss account when the risk has been transferred to the buyer.
Finance income comprises interest income on financial investments. Interest income is recognized using the effective interest method. Dividends are recognized in the profit and loss account on the date they are decided by the general meeting of the companies distributing them. Financial expenses comprise interest expenses on borrowings and changes in the fair value of financial assets. All borrowing costs are recognized in the profit and loss account using the effective interest method.
Tax expenses comprise current and deferred tax. Deferred tax/tax assets are calculated on all taxable temporary differences.
Deferred tax assets are recognized when it is probable that the individual company will have a sufficient profit for tax purposes to utilize the tax asset. The individual companies recognize formerly unrecognized deferred tax assets to the extent that it has become probable that the company may utilize the deferred tax asset. Similarly, the companies will reduce their deferred tax assets to the extent that it is no longer probable that the related tax benefit may be realized.
The statement of cash flow has been prepared based on the indirect method. Cash and cash equivalents comprises cash and bank deposits and other short-term liquid investments.
The basic EPS is calculated by dividing the profit or loss for the period attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the period. The diluted EPS is determined by adjusting the profit or loss and the weighted average number of ordinary shares outstanding for the effects of all potentially dilutive effects, which comprise share options granted to employees.
New information obtained after the balance sheet date on the group's financial position at the balance sheet date is taken into account in the financial statements. Events after the balance sheet date that do not affect the company's financial position at the balance sheet date, but will affect the company's financial position in the future, are recognized If significant.
IFRS standards which have not yet been implemented
Several new standards, amendments of standards and interpretations have not yet entered into force for the accounting year which ended on 31 December 2013, and have not been used for the consolidated financial statements. The most significant of these standards are:
It is not expected that any these standards will have any significant effect for the company accounts and the consolidated accounts.
As the company does not have any defined benefit pension schemes. the amended IAS 19 will not have any accounting effect.
The operation in the Itera group consists of seven companies. Every company has a management team and a CEO who is responsible for the company's financial results. The internal structure for management, budgeting and financial reporting including reporting to the chief decision maker, the group CEO, is also based on every single company. The activities in the different subsidiaries are all related to delivering IT solutions to the customers and is considered to have similar economic characteristics. The group is then considered to be one segment.
Transactions and transfers between the companies are carried out on ordinary commercial terms, corresponding to the terms used for external parties.
2013
| NOK1000 | Ukraine | Norway | Sweden | Denmark | Group |
|---|---|---|---|---|---|
| Sales revenue | 2357 | 413727 | 73710 | 39524 | 529319 |
| Group eliminations | $-2357$ | $-56408$ | $-3181$ | $-2178$ | $-64124$ |
| Total revenue | ٥ | 357319 | 70529 | 37346 | 465195 |
| Investments | 1008 | 17571 | 140 | 166 | 18885 |
| Total assets | 1390 | 169910 | 31465 | 17326 | 220092 |
| Total liabilities | $-208$ | 111973 | 12364 | 9029 | 133157 |
2012 NOK1000 Ukraine Sweden Denmark Norway Group $\frac{1}{1015}$ 500659 Sales revenue 390228 77991 31426 Group eliminations $-1015$ $-58849$ $-2300$ $-288$ $-62452$ 438 207 Total revenue $\overline{0}$ 331379 75 691 31138 17424 Investments $\mathbf{0}$ 15383 1740 300 Total assets 626 109617 47385 19732 177360 Total liabilities $\mathbf{0}$ 56366 42294 6256 104916
Work in progress consist of earned, not invoiced revenue.
| NOK1000 | 2013 | 2012 |
|---|---|---|
| Gross work in progress | 18057 | 5918 |
| Provision for impairment | $-2400$ | $-26$ |
| Net work in progress | 15657 | 5892 ---- |
Sales of services are entered as income on delivery. Customer projects are entered in the P&L accounts in accordance with percentage completion of the project. When the result of the transaction cannot be reliably estimated, only income equal to accrued project costs is recognised.
GROUP
| NOK1000 | 2013 | 2012 |
|---|---|---|
| Profit for the year | 15800 | 4618 |
| Average number of outstanding shares | 82187 | 82458 |
| Outstanding options for employees | 2558 | 393 |
| Average number of shares including dilution | 82187 | 82458 |
| EBITDA per share | 0.53 | 0.31 |
| Basic earnings per share | 0.19 | 0.06 |
| Diluted earnings per share | 0.19 | 0.06 |
| Average number of outstanding shares | 82187 | 82458 |
| Dilution of outstanding stock options | Ω | 0 |
| Average number of shares including dilution | 82187 | 82458 |
In that the redemption rate of options is considerably higher that the current share price, the options have no diluting effect.
| NOK1000 | 2013 | 2012 |
|---|---|---|
| Pension fund | 282 | 40 |
| Prepaid expenses | 5560 | 6540 |
| Other current receivables | 6731 | 1957 |
| Total | 12573 | 8537 |
| NOK1000 | 2013 | 2012 |
|---|---|---|
| Holiday pay | 16367 | 16 200 |
| Customer prepayments | 23738 | 21469 |
| Accrued wages and bonuses | 16012 | 9568 |
| Accrued other expenses | 9313 | 2098 |
| Total | 65 431 | 49335 |
The Itera group is exposed to different financial risks such as; credit risk, liquidity risk, currency risk and interest rate risk. Overall, these risks are considered as low. The group has established guidelines to deal with these risks. The main principle is to minimize exposure to financial risks, and the group holds no financial assets or liabilities for speculative purposes. The nearshore operations in Ukraine expose the Group to new risks, such as country risk, IT security and corruption. Itera has zero tolerance for corruption and has no domestic business in countries which are exposed to the risk of corruption.
Credit risk is the risk of financial loss to the group's receivables from customers and other short term receivables. The group has established a credit policy under which each new customer is analysed individually for creditworthiness. The group's exposure to credit risk is not linked to the individual customer but customers as a group. Unless an agreement for delayed settlement has been made with a counterpart, a provision is made for all receivables older than 90 days and recognized in the financial statements. The group's exposure in accounts receivable is presented in note 12.
Liquidity risk is the risk that the group will be able to meet its financial obligations as they fall due. The group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group's reputations. The group has established an overdraft facility with its banking partner, see note 17. In order to accommodate the growth in the group's companies, lease financing arrangements have been established for major investments in software and hardware.
The group is exposed to currency risk through its businesses in Sweden, Denmark and Ukraine. The exposure to currency risk is limited by the fact that the expenses are in the same currencies in Sweden and Denmark. Of the group's total revenue, 16 percent is in Swedish kroner (SEK) and 9 percent is in Danish kroner (DKK). A 10 percent change in the NOK value against SEK and DKK will affect the company's turnover with 2.S%.
In Ukraine the group operates in three different currencies, USD, Euro and Hryvnia. The main exposure is in USD. The company is working on a hedging strategy to reduce this exposure.
The group is exposed to interest risk related to bank deposits. The group is also exposed to connection with the lease financing agreements and when drawing against the overdraft facility. The group has no stocks, shares or other assets with an inherent interest rate risk.
Itera does not have significant differences between fair value and book value in the financial instruments.
51
| NOK1000 | 2013 | 2012 |
|---|---|---|
| Salaries | 233002 | 233599 |
| National insurance contribution | 33 479 | 35139 |
| Pension cost | 8906 | 8560 |
| Stock options | 138 | 0 |
| Other benefits | 6476 | 8826 |
| Capitalized payroll | $-2600$ | $-4200$ |
| Total payroll and personnel expenses | 279400 | 281924 |
| Average number of employees | 456 | 445 |
As of 31 December 2013 Itera had 2558 000 stock options that were outstanding to employees of which 726 000 to employees in the parent company. Itera has two current option programs.
. One was implemented in 2011 under which there are 393 000 options outstanding against employees as of 31.12.2013.
• A new options program was established in 2013. The program has 2165000 options outstanding. The redemption rate for the options is 2.95 (2011) and 2.30 (2013) respectively. The options are targeted at key personnel in the group. The options are conditioned on the achievement of defined targets, both financial and others. The options have a redemption period of 1 to 4 years.
The real worth of the options is calculated at the date of allocation and is charged as an expense over the accrual period of 1 to 4 years. A total cost of TNOK 162 incl. AGA is in 2013 (NOK 0) linked to the options programs. The real worth is calculated using the Black-Scholes-Merton option pricing model.
It is assumed that the historical volatility is an indication of future volatility. Expected volatility is therefore set equal to historical volatility. The interest rate is based on interest gleaned from Norges Bank for the same period as the life of the options.
For calculation purposes interest rates of between 1.57 % and 2.02 % are implemented in the 2013 program period. 4.25% is applied for the full period of the 2011 program.
An annual turnover of 10 % is estimated for both programs. As a calculation tool an estimated dividend of NOK 0.30 per annum was used.
| Program | Number | Laosed in 2013 |
Number as of 31 December 2013 |
Fair value |
Exercise price 1 |
Share price 2 |
Grant date |
Exercise period |
|---|---|---|---|---|---|---|---|---|
| 2011 | 393000 | 393000 | NOK0.11 | NOK2.95 | NOK 2.95 | 18 July 2011 | 2014-2015 | |
| 2013 | 2165000 _________ |
2165000 | NOK 0.15 | NOK 2.30 | NOK 2.30 | 22 Aug 2013 | 2014-2017 |
1) The redemption price is the average share price that applies during the last 30 days prior to the date of award.
2) The share price is set at the market value on the date of award. The company is operating on the premise that the exercise price is the same as the price on the date of award and that the options do not have any intrinsic value on this date.
| Program | Number | Interestrate | Volatility |
|---|---|---|---|
| 2011 | 393000 | 4.25% | 40.0% |
| 2013 | 2165000 | $1.57% - 2.02%$ | 43.5% |
| Total | 2558000 |
Pursuant to Section 6-16a of the Norwegian Public Limited Act, the Board of Directors will present the following remuneration guidelines to the Annual General Meeting:
"The Board of Directors' statement on the stipulation of salaries and other remunerations to executive emplovees
The Itera group's guidelines for determining remunerations to the chief executive officer (CEO) and executive employees, at all times, support prevailing strategy and values, while contributing to the attainment of the Group's targets. The remunerations should inspire conduct to build the desired corporate culture with respect to performance and profit orientation. In connection with this statement, the Board of Directors (the Board) has passed no resolution entailing changes to the principles for the stipulation of remunerations compared with statements presented previously.
The total remuneration to the CEO consists of fixed salary, variable salary, pension, insurance schemes and other benefits. The CEO will also be included in the Group's stock options programs. The total remuneration is determined based on a total evaluation, and the variable part of the salary is primarily based on the Group's financial performance. The remuneration is subject to an annual evaluation and is determined by the Board.
The CEO determines the remunerations to executive employees in agreement with the Chairman of the Board. The total remuneration to executive employees consists of fixed salary, variable salary, pension, insurance schemes and other benefits. Executive employees will also be considered for inclusion in the Group's stock options programs. The total remuneration is determined based on the need to offer competitive terms. The remunerations should promote the Group's competitiveness in the relevant labour market, as well as the Group's profitability, including the desired trend in income and costs. The total remuneration must neither pose a threat to Itera's reputation nor be market leading, but should ensure that Itera attracts and retains executive employees with the desired skills and experience.
The remuneration is subject to an annual evaluation and is determined based on general salary levels in the labour market and especially in the IT industry.
Bonuses paid in 2013 are based on results achieved in own companies and personal performance achievements in 2012.
Benefits in kind can be offered to executive employees to the extent such benefits have a logical connection the employee's function or are in line with the market practice.
Executive employees are covered by the contributory pension schemes of the respective companies.
A stock option program for executive- and key employees was established in 2011 and a new share program was established in 2013. Each year the Board considers whether or not such options programs should continue. Any options will be allocated without an intrinsic value. Proposals relating to new stock options programs will be presented to the general meeting.
As a main rule, no termination payment agreements will be signed. However, the Group will honour existing agreements.
The Board confirms that the payments to excutive employees follows the guidelines set forth in the statement and presented for the Annual General Meeting of 23 May 2013. The guidelines remain unchanged from 2012 to 2013."
NOK1000
| Name | Position | Salary | Bonus | Other benefits | Total taxable remuneration |
Pension benefit cost to company |
|---|---|---|---|---|---|---|
| Arne Mjøs | Chief Executive Officer | 1932 | 0 | 107 | 2039 | -67 |
| Torunn Havre | Chief Financial Officer | 1257 | 54 | 1322 | 67 | |
| Anders Lier | EVP Business Develpoment | 1844 | 0 | 10 | 1854 | 62 |
| Kristian Enger | EVP Business Communication and Consulting | 1308 | 200 | 9 | 1517 | 62 |
| Niko Nyström | EVP Technology Consuling | 1282 | 197 | 10 | 1489 | 62 |
| Jon Erik Høgberg | EVP Managed Services | 1302 | 0 | 9 | 1311 | 62 |
| Ane Gjennestad | Chief Communications Officer | 953 | 0 | 4 | 957 | 61 |
| Merete Jordai | Chief Technical Officer | 969 | 0 | $\mathbf{11}$ | 980 | 63 |
| Total 2013 | 10847 | 451 | 171 | 11469 | 506 |
| Name | Position | Salarv | Bonus | Other benefits | Total taxable remuneration |
Pension benefit cost to company |
|---|---|---|---|---|---|---|
| Arne Mjøs | Chief Executive Officer | 1799 | 551 | 124 | 2474 | 64 |
| Torunn Havre | Chief Financial Officer from 20 August | 468 | 472 | 25 | ||
| Total 2012 | 2 2 6 7 | 551 | 128 | 2946 | 89 |
The CEO and CFO have no termination payment agreements.
The operation in the group consists of seven companies. Every company has a management team and a CEO who is responsible for the company's financial results. The management of Itera ASA consist of the groups CEO, CFO, CTO ang CCO in addition to the Executive Vice Presidents (EVP) for the business units.
| Name | Position | 2013 | 2012 |
|---|---|---|---|
| Ole Jørgen Fredriksen | Chairman | 300 | 376 |
| Mimi K. Berdal | Board member | 190 | 240 |
| Trude S. Husebø | Board member | 190 | 190 |
| Jan-Erik Karlsson | Board member | 175 | 0 |
| Johan Lindqvist | Board member | o | 175 |
| John M. Lervik | Board member | 0 | 175 |
| Total | 855 | 1156 |
Payment was made in 2013 to J.E. Karlsson of TNOK 54 in addition to the stipulated Director's fees for additional work in connection with advisory and consulting services.
Included in remunerations to the Board of Directors are payments as follows:
| Name | Position | 2013 |
|---|---|---|
| Erik Sandersen | Leader | 30 |
| Gisle Evensen | Member | 15 |
| Olav W. Pedersen | Member | 15 |
| Total | 60 |
| Name | Position | Shares | Options |
|---|---|---|---|
| Ole Jørgen Fredriksen | Chairman | 650000 | $\mathbf{0}$ |
| Mimi K. Berdal | Board member | 83000 | 0 |
| Trude S. Husebø | Board member | $\mathbf{0}$ | |
| Jan-Erik Karlsson | Board member | 153076 | n. |
| Total | 886076 | ٥ |
| Name | Position | Shares | Options |
|---|---|---|---|
| Arne Mios | Chief Executive Officer | 15018298 | 480000 |
| Torunn Havre | Chief Financial Officer | 150000 | |
| Total | 15 018 298 | 630000 |
Arne Mjøs holds all stocks and options through Arne Mjøs Invest AS
NOTES GROUP
| Audit fees | ||
|---|---|---|
| NOK1000 | 2013 | 2012 |
| Audit fee for Itera ASA | 381 | 196 |
| Audit fee for the subsidiaries from KPMG Norway | 421 | 391 |
| Audit fee from KPMG abroad | 153 | 155 |
| Audit fee from KPMG | 955 | 742 |
| Other authorization statements from KPMG | 81 | 48 |
| Other services from KPMG | 226 | 259 |
| Audit fees from other audit companies | 82 | 42 |
| Other authorization statements from other audit companies | 0 | |
| Other services from other audit companies | 49 | 30 |
Costs of audit fees are exclusive VAT.
All of the group's pension schemes are contributory schemes. Pension expenses correspond to the paid premiums and have been entered under payroll and personell expenses in the profit and loss account. The group's pension schemes in Norway comply with the Norwegian Mandatory Occupational Pension Act (OTP).
| Pension cost | ||
|---|---|---|
| NOK1000 | 2013 | 2012 |
| Norway | 5706 | 5641 |
| Sweden | 2055 | 1726 |
| Denmark | 1145 | 1193 |
| Total ___ _ |
8906 | 8560 |
| 2013 | 2012 | |
|---|---|---|
| Finance income | 322 | 375 |
| Net foreign exchange gain | 173 | |
| Other | 61 | 210 |
| Total financial income | 383 | 758 |
| Finance expenses | 546 | 1052 |
| Net foreign exchange loss | 1776 | 14 |
| Other | 145 | 101 |
| Total financial expenses | 2467 | 1167 |
| NOK1000 | 2013 | 2012 |
|---|---|---|
| Gross accounts receivable as of 31 December | 69939 | 74 553 |
| Provision for bad debt | $-257$ | -377 |
| Net accounts receivable as of 31 December | 69682 | 74176 |
| Age distribution of accounts receivable | Total | Not due | $0-30$ days | 30-60 days | 60-90 days | >90 davs |
|---|---|---|---|---|---|---|
| As of 31 December 2013 | 69939 | 50 978 | 17518 | 420 | 944 | |
| As of 31 December 2012 | 74553 | 47714 | 24 603 | 746 | 1491 |
| 2013 | 96 | 2012 | % | |
|---|---|---|---|---|
| Norway | 48 211 | 69% | 55790 | 75% |
| Sweden | 15522 | 22% | 11919 | 16% |
| Denmark | 6206 | 9% | 6845 | 9% |
| Total | 69939 | 100% | 74553 | 100% ____ |
Losses on accounts receivable are classified as operating expenses in the income statement. Maximum credit risk is equal to the net accounts receivable above.
NOTES GROUP
2013
| Development cost |
Software | & equipment | & fittings | IT-equipment | Total |
|---|---|---|---|---|---|
| 9117 | 38792 | 18958 | 15138 | 129850 | |
| 3670 | 2007 | 2650 | 489 | 10069 | 18885 |
| 0 | 0 | 0 | $-249$ | 0 | $-249$ |
| 269 | 77 | 1971 | 802 | 3314 | 6433 |
| 51784 | 11201 | 43 413 | 20000 | 28 5 21 | 154919 |
| 27421 | 7293 | 34730 | 9758 | 3620 | 82822 |
| 6861 | 1266 | 4233 | 2802 | 6214 | 21376 |
| 0 | $\mathbf 0$ | 0 | $-249$ | 0 | $-249$ |
| 285 | 65 | 1758 | 954 | 2831 | 5893 |
| 34567 | 8624 | 40721 | 13 2 65 | 12665 | 109842 |
| 20423 | 1824 | 4061 | 9200 | 11518 | 47026 |
| 17 216 | 2577 | 2691 | 6735 | 15856 | 45075 |
| 3-5 years | 3-5 years | 3 years | 5-10 years | 3-5 years | |
| linear | linear | linear | linear | linear | |
| 47845 |
| 2012 | ||||||
|---|---|---|---|---|---|---|
| NOK1000 | Development cost |
Software | Machinery & equipment |
Furniture & fixtures |
Leased IT-equipment |
Total |
| Acquisition cost | ||||||
| Accumulated as of 1 January | 41779 | 9100 | 37660 | 16125 | 9706 | 114370 |
| Additions during the year | 6066 | 17 | 2384 | 3829 | 5432 | 17727 |
| Disposals during the year | 0 | 0 | $-1242$ | $-994$ | 0 | $-2236$ |
| Exchange differences | 0 | 0 | $-10$ | $-2$ | 0 | $-12$ |
| Accumulated as of 31 December | 47845 | 9117 | 38792 | 18958 | 15138 | 129850 |
| Depreclation | ||||||
| Accumulated as of 1 January | 20554 | 6014 | 30198 | 8573 | 1060 | 66399 |
| Depreciation | 6870 | 1280 | 4848 | 2189 | 3410 | 18596 |
| Disposals during the year | 0 | 0 | $-297$ | $-994$ | $-850$ | $-2141$ |
| Exchange differences | -3 | -1 | $-20$ | $-10$ | $\bf{0}$ | $-33$ |
| Accumulated as of 31 December | 27 4 21 | 7293 | 34730 | 9758 | 3620 | 82822 |
| Carrying amounts | ||||||
| As of 1 January | 21225 | 3086 | 7462 | 7552 | 8646 | 47971 |
| As of 31 December | 20423 | 1824 | 4061 | 9200 | 11518 | 47026 |
| Estimated useful lives | 3-5 years | 3-5 years | 3 years | 5-10 years | 3-5 years | |
| Depreciation plan | linear | linear | linear | linear | linear |
Intangible fixed assets (development cost) are primarily related to the development of new concepts. The concepts under development are primarily related to contracts entered into with fixed future income.
In 2013 NOK 3.6 million (NOK 6.0 million) was capitalized in connection with the development of concepts. Expenditure incurred in connection with developments is primarily related to the wages and salaries paid to employees who have participated in developing these concepts. As of 31 December 2013, NOK 17.2 million (NOK 20.4 million) was entered under intangible fixed assets.
The group does not have significant differences between net book value and fair value.
GROUP
The group has entered into leasing contracts in connection with investments in IT equipments related to the major hosting agreements.
| ີ | ||
|---|---|---|
| NOK1000 | 2013 | 2012 |
| IT equipment | 26051 | 15982 |
| Accumulated depreciation | $-10677$ | $-4463$ |
| Net book value | 15 374 | 11519 |
| Future minimum lease payments | ||
| Up to 1 year | 7006 | |
| 1 to 5 years | 9751 | |
| After 5 years | 0 | |
| Total future minumum lease payments | 16757 | |
| Interest | 930 | |
| Present value of future minumum lease payments | 15827 | |
| Of which | ||
| - current liabilities | 0 | |
| - non current liabilities | 15827 |
| 3940 | 4953 |
|---|---|
| 700 | $-2726$ |
| -1 | |
| 4639 | 2228 |
| Tax payable | ||
|---|---|---|
| Profit before taxes | 20441 | $-2180$ |
| Permanent differences | 380 | 689 |
| Change in temporary differences | 3209 | $-2060$ |
| Utilization of previously recognized tax losses | $-9400$ | $-4018$ |
| Total | 14630 | $-7569$ |
Income taxes in the consolidated income statement
Effective tax rate
| NOK1000 | 2013 | 2012 |
|---|---|---|
| Specification of the deferred tax | ||
| Fixed assets | $-2729$ | 217 |
| Current assets | $-148$ | $-31$ |
| Other temporary differences | 680 | 0 |
| Losses carried forward | $-33913$ | $-53418$ |
| Total | $-36110$ | $-53232$ |
| Deferred tax assets | $-9146$ | $-14639$ |
| Recognized in the balance sheet | $-9146$ | $-12903$ |
| Recognized assets and liabilities related to deferred tax asset | ||
| Fixed assets | $-753$ | 30 |
| Current assets | -38 | -9 |
| Gain and loss account | 184 | $\mathbf 0$ |
| Losses carried forward | $-8538$ | $-12924$ |
| Total | $-9146$ | $-12903$ |
| Changes in deferred tax asset | ||
| Opening balance | $-12903$ | $-14191$ |
| Recognized in comprehensive income | 700 | $-2726$ |
| Calculation difference | $-24$ | 0 |
| Tax effect of items entered against income and costs | 459 | 0 |
| Effects of group contribution | 2622 | 4014 |
| Closing balance | $-9146$ | $-12903$ |
| Tax rate reconciliation | ||
| Profit before tax | 20441 | 6846 |
| Tax calculated at the domestic Corporate tax rate of 28% | 5723 | 1917 |
| Effects from changed tax rate | 234 | 0 |
| Different taxrate in subsidiares | 85 | $-78$ |
| Permanent differences | 104 | 219 |
| Unrecognized tax losses for the period | O | 496 |
| Recognized previously unrecognized tax losses | $-1507$ | -323 |
4639
22,7%
$\overline{2228}$
$32,5%$
NOTES GROUP
| NOK1000 | 2013 | 2012 |
|---|---|---|
| Losses carried forward | 31Dec | 31Dec |
| Norway | $-21543$ | $-45774$ |
| Sweden | $-12370$ | $-7644$ |
| Denmark | ||
| Total | $-33913$ | $-53418$ |
Based on the Itera's losses to be carried forward as of 31 December 2013 has a deferred tax advantage of NOK 9.1 million of which NOK 9.1 million is recognized in the balance sheet. The deficits to be carried forward are not time-limited. The future utilization of the recognized deferred tax asset is likely, based on budgets and cash flow analyses.
Information regarding exchange rates used in the Itera group for 2013.
| Exchange rate 1 Jan | Average | Exchange rate 31 Dec | |
|---|---|---|---|
| SEK | 0.8549 | 0.9020 | 0.9472 |
| DKK | 0.9840 | 1.0470 | 1.1237 |
| EUR | 7.3410 | 7,8087 | 8.3825 |
| USD | 5.5664 | 5.8768 | 6.0837 |
| UAH | 0.6935 | 0.7118 | 0.7291 |
| 2013 | 2012 | |
|---|---|---|
| Cash and cash deposits | 67958 | 28824 |
| of which restricted (witheld tax) | $-6948$ | $-7346$ |
| Unrestricted cash and cash equivalents | 61011 | 21478 |
| Unused credit facilities | 25 000 | 32700 |
| Cash reserve | 86011 | 54178 |
The group has a cash-pool agreement so that the item "cash and bank deposits" is a net item and includes any draws against the overdraft facility.
The overdraft facility agreement with Danske Bank has the following loan premises: • net interest bearing debt (NIBD)/EBITDA in the Itera group shall not be more than 2.5 . book equity in the Itera group excluding goodwill shall be minimum 30% of the total balance
Key annual figures shall be measured as of 31 December, at the latest 120 days after year's end. The group is not in breach of the loan premises as 31 December 2013.
As surety for the operating credit drawn against the overdraft facility the bank has security in the receivables in the Norwegian subsidiaries.
As of 31 December 2013, the group had a total rent commitment amounting to NOK 24.8 million. The group's leases expire during the period 2014 to 2015, with the major lease contracts expiring in mid-2016.
63
As of 31 December 2012 Itera ASA had a share capital amounted to NOK 24 655 987 distributed among 82 186 624 shares, each with a face value of NOK 0.30 and fully paid.
At the close of the year, Itera ASA had 1789 (1910) shareholders. At year-end 11% (5%) of the company's Share capital was owned by foreign investors. The company's 20 largest shareholders owned 57% (61%) of the company's shares.
The Itera Group had no own shares at the start of the year, the group has not purchased any own shares during the course of 2013. The Itera Group had no own shares at the close of the year.
| The top 20 largest shareholders | Shares | 96 |
|---|---|---|
| Arne Mjøs Invest AS | 15718298 | 19.1% |
| Assuranceforeningen SKULD | 5479401 | 6.7% |
| OP Capital AS | 3465000 | 4.2% |
| Verdipapirfondet DNB SMB | 3000000 | 3.7% |
| Eikestad AS | 2925000 | 3.6% |
| Jøsyra Invest AS | 2 200 000 | 2.7% |
| Marxpist Invest AS | 2031588 | 2.5% |
| Septim Consulting AS | 1830600 | 2.2% |
| Bo Investering AS | 1705828 | 2.1% |
| Gamst Invest AS | 1306982 | 1.6% |
| Johs. Haugerudsvei AS | 1073639 | 1.3% |
| GIPAS | 1000000 | 1.2% |
| Aanestad Panagri AS | 900000 | 1.1% |
| Ole Jørgen Fredriksen | 650000 | 0.8% |
| Verdipapirfondet Storebrand Norge | 627398 | 0.8% |
| DNB NOR Bank ASA Egenhandelskonto | 617401 | 0.8% |
| Morten Johnsen Holding AS | 600000 | 0.7% |
| Jan Morten Måøy | 569212 | 0.7% |
| Jørund Arne Lie | 500000 | 0.6% |
| Fredrik Wiese | 500000 | 0.6% |
| Total | 46700347 | 56.8% |
| Other shareholders | 35 4 8 6 2 7 7 | 43.2% |
| Total number of shares | 82186624 | 100.0% |
There have been no material transactions with related parties in the period from 1 January to 31 December 2013.
There have been no material events after 31st of December 2013 of significance for the annual report.
| NOK1000 | NOTE | 2013 | 2012 |
|---|---|---|---|
| Operating revenue | |||
| Sales revenue | 14 | 19367 | 18082 |
| Total operating revenue | 19367 | 18082 | |
| Operating expenses | |||
| Payroll and personell expenses | 1,2,3 | 16536 | 17953 |
| Depreciations | 4 | 1465 | 1149 |
| Other operating expenses | 1 | 7324 | 8426 |
| Total operating expenses | 25326 | 27529 | |
| Operating profit | $-5959$ | $-9446$ | |
| Financial items | |||
| Income from investments in subsidiaries | 10 | 9363 | 14258 |
| Interest income from group companies | 400 | 244 | |
| Other financial income | 505 | 257 | |
| Interest paid to group companies | 1037 | 770 | |
| Other financial expenses | 12 | 127 | 516 |
| Net financial items | 9105 | 13473 | |
| Profit before taxes | 3146 | 4027 | |
| Income taxes | 8 | 1105 | 1130 |
| Profit/-loss of the year | 9 | 2041 | 2897 |
| Allocations and transfers | |||
| To dividend | 28765 | 4931 | |
| To/-from other reserves | $-26724$ | $-2034$ | |
| Total allocations and transfers | 2041 | 2897 | |
65
| NOK1000 | NOTE | 2013 | 2012 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Intangible assets | |||
| Deferred tax asset | 8 | 4933 | 6038 |
| Total intangible assets | 4933 | 6038 | |
| Tangible fixed assets | |||
| Machinery, equipment and software | 4 | 3046 | 2906 |
| Total tangible assets | 3046 | 2906 | |
| Financial fixed assets | |||
| Investment in subsidiaries | 5 | 109953 | 109953 |
| Loan to group companies | 7 | 28955 | 16536 |
| Other financial assets | 30 | $\Omega$ | |
| Total financial fixed assets | 138938 | 126489 | |
| Total fixed assets | 146917 | 135433 | |
| Current assets | |||
| Receivables | |||
| Intercompany receivables | 10 | 10868 | 26467 |
| Other receivables | 2194 | 390 | |
| Total receivables | 13062 | 26857 | |
| Bank deposits | 13 | 35 2 29 | 6080 |
| Total current assets | 48 290 | 32937 | |
| Total assets | 195 207 | 168370 |
67
| NOK1000 | NOTE | 2013 | 2012 |
|---|---|---|---|
| EQUTY AND LIABILITIES | |||
| Paid-in capital | |||
| Share capital | 24656 | 24656 | |
| Other paid-in capital | 2028 | 1890 | |
| Total paid-in capital | 26684 | 26546 | |
| Retained earnings | 56332 | 83056 | |
| Total retained earnings | 56332 | 83056 | |
| Total equity | 9 | 83016 | 109602 |
| Liabilities | |||
| Current liabilities | |||
| Accounts payable | 1974 | 406 | |
| Public duties payable | 15 | 11204 | 1832 |
| Intercompany liabilities | 11,12 | 67621 | 49769 |
| Provision for dividend | 9 | 28765 | 4931 |
| Other short term liabilities | 2626 | 1830 | |
| Total current liabilities | 112191 | 58768 | |
| Total liabilities | 112191 | 58768 | |
| Total equity and liabilities | 195 207 | 168370 |
Oslo, 20 March 2014 The Board of Directors of Itera ASA
& J Galfe
Ole Jørgen Fredriksen
Chairman
$\Lambda$ Bereks
Mimi K. Berdal Board member
Jande S. Aurebel
Trude S. Husebø Board member
Arne Mjøs CEO
(Oulsin mazuik Jah-Erik Karlsson
Board member
| NOK1000 | 2013 | 2012 |
|---|---|---|
| Cash flow from operating activities | ||
| Profit before taxes | 3146 | 4027 |
| Group contribution, not paid | $-9363$ | $-14258$ |
| Depreciation | 1465 | 1149 |
| Change in accounts payable | 2022 | $-558$ |
| Effect of currency changes | 1742 | 214 |
| Change in other items | 3494 | 3778 |
| Net cash flow from operating activities | 2507 | $-5649$ |
| Cash flow from investment activities | ||
| Investment in fixed assets | $-1605$ | $-1246$ |
| Investment in shares | $\mathbf{0}$ | $-950$ |
| Group contribution | 14258 | 8500 |
| Payment of intercompany borrowings | $-5232$ | 0 |
| Net cash flow from investment activities | 7421 | 6304 |
| Cash flow from financial activities | ||
| Changes in cash-pool | 24150 | 6260 |
| Purchase own shares | 0 | $-1598$ |
| Dividend | $-4931$ | $\mathbf 0$ |
| Net cash flow from financial activities | 19 219 | 4662 |
| Net change in bank deposits | 29147 | 5316 |
| Bank deposits as of 1 January | 6080 | 764 |
| Bank deposits as of 31 December | 35 2 27 | 6080 |
69
The financial statements consist of the profit and loss statement, balance sheet, cash flow statement and notes and have been prepared in accordance with the Public Limited Liability Companies Act, the Accounting Act and the Norwegian Generally Accepted Accounting Principles (NGAAP).
The company accounts have been prepared on the basis of historical costs
Transactions are allocated to the value of the remuneration at the time of the transaction. Revenues are recognized in the financial statements when earned and expenses are matched with earned revenues.
The preparation of financial statements in conformity with NGAAP requires the management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Subsidiaries are entities controlled by the group. Control exists when the group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases
Investments in subsidiaries are valued at the historical cost reduced by any write-downs. The investments are written down to fair value unless the impairment is due to temporary circumstances. Impairment losses are reversed when the basis for impairment no longer is present.
Dividends, group contributions and other distributions from subsidiaries are recognized in the same year as they are accrued in the subsidiary's accounts. If the distributions exceed the earned income after the acquisition date, this is considered as a repayment of the invested capital, and such distributions will reduce the book value of the investment.
Receivables and liabilities denominated in foreign currencies are translated to Norwegian kroner (NOK) at the exchange rate at the balance sheet date.
Ordinary shares are classified as equity. Expenses directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.
When own shares are repurchased, the amount of the consideration paid, which includes directly at tributable costs, is recognized as a change in the equity. Treasury shares are presented as a deduction from the total equity net of any tax effects. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in the equity, and the resulting transaction surplus or deficit is transferred to/from retained earnings.
Intangible assets are recognized on the balance sheet if it can be proven that there are probable future economic benefits that can be attributed to the asset which is owned by the company and its future recoverability can reasonably be established. Intangible assets are capitalized at cost. Intangible assets with indefinite useful lives are not amortized, but impairment losses are recognized if the recoverable amount is less than the cost price.
Fixed assets are entered in the accounts at historical cost, with deductions for accumulated depreciation and accumulated impairment losses. If the fair value of a fixed asset is lower than the book value, and the impairment is not temporary, the fixed asset will be written down to fair value.
A financial asset is assessed at each reporting date to determine whether there is any objective evidence of impairment. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.
All impairment losses are recognized in the profit and loss account. Impairment losses are reversed if such reversal may objectively be linked to an event which occurred after such losses were recognized.
The parent company has provided subordinated loans to several of its subsidiaries. For foreign subsidiaries, the loan is provided in the local currency of the subsidiary. The loans are recognized at the exchange rate at the reporting date. Any changes in value due to changes in the exchange rate are recognized under financial items.
Loans in NOK are recognized at the nominal value.
Trade and other receivables are recognized at nominal value on the balance sheet deducted any foreseeable losses. The interest element is disregarded if insignificant. In case of objective evidence of any impairment, the difference between the posted value and the present value of future cash flows is recognized as a loss.
The company finances its pension scheme for the employees through a collective defined contribution pension scheme. The pension cost corresponds to the premium paid.
Employee stock options in Itera represent a right for key employees to aquire shares in Itera ASA at a future point in time at a pre-determined price. As a general rule, such right is conditional upon attainment of specific targets and that the individual is still employed at the time of exercise.
The value of the options is calculated at the time of grant and recognized as payroll expenses over the accrual period. Options are normally assigned a subscription price that corresponds to the share price at the time of grant; i.e. without intrinsic value. The employer's national insurance contribution associated with the employees' taxable advantage is currently recognized over the accrual period, based on the accrual rate and value at the balance sheet date.
The parent company's revenues are generated from delivery of common accounting/financial, HR, IT and information/communication services under Group Functions. The parent company's revenues are based on a cost plus model. Revenue is recognized at the time of delivery of the services.
Finance income comprises interest income on funds invested and group contributions or dividends from subsidiaries. Interest income is recognized using the effective interest method. Group contributions and dividends are recognized in the profit and loss account on the date allocated in the company from which they are distributed.
Financial expenses comprise interest expenses on borrowings and changes in the fair value of financial assets. All borrowing costs are recognized in the profit and loss account using the effective interest method.
Tax expenses comprise current and deferred tax. Tax expenses are recognized in the profit and loss account. Deferred tax assets and liabilities are recognized using the liability method on a non-discounted basis, providing for any differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes as well as losses carried forward.
The statement of cash flow is prepared using the indirect method. Cash and cash equivalents include cash and bank deposits.
$71$
| NOK1000 | 2013 | 2012 |
|---|---|---|
| Salaries | 12663 | 14239 |
| National insurance contribution | 1947 | 2064 |
| Pension cost | 555 | 440 |
| Other benefits | 1235 | 1210 |
| Total payroll and personell expenses | 16536 | 17953 |
| Average number of employees | 18 | 17 |
For information regarding remuneration for senior management, see note 9 in the group section.
| Audit fees | |
|---|---|
| Audit fees | 381 |
| Other authorization statements | |
| Tax services | 26 |
| Other services | 25 |
| Total audit fees | 433 |
As of 31 December 2013 Itera had 2558 000 stock options that were outstanding to employees of which 726 000 to employees in the parent company. Itera has two current option programs.
. One was implemented in 2011 under which there are 393 000 options outstanding against employees as of 31.12.2013.
. A new options program was established in 2013. The program has 2165 000 options outstanding. The redemption rate for the options is 2.95 (2011) and 2.30 (2013) respectively. The options are targeted at key personnel in the group. The options are conditioned on the achievement of defined targets, both financial and otherwise. The options have a redemption period of 1 to 4 years.
The real worth of the options is calculated at the date of allocation and is charged as an expense over the accrual period of 1 to 4 years. A total cost of TNOK162 incl. AGA is in 2013 (NOK 0) linked to the options programs. The real worth is calculated using the Black-Scholes-Merton option pricing model.
It is assumed that the historical volatility is an indication of future volatility. Expected volatility is therefore set equal to historical volatility. The interest rate is based on interest gleaned from Norges Bank for the same period as the life of the options.
For calculation purposes interest rates of between 1.57 % and 2.02 % are implemented in the 2013 program period. 4.25% is applied for the full period of the 2011 program.
An annual turnover of 10 % is estimated for both programs. As a calculation tool an estimated dividend of NOK 0.30 per annum was used.
| Program | Number | Lapsed in 2013 |
Number as of 31. December 2013 |
Fair value |
Exercise price 1) |
Share price 2 |
Grant date |
Exercise period |
|---|---|---|---|---|---|---|---|---|
| 2011 | 393000 | 393000 | NOK 0.11 | NOK 2.95 | NOK 2.95 | 18 July 2011 | 2014-2015 | |
| 2013 | 2165000 | 2165000 | NOK 0.15 | NOK 2.30 | NOK 2.30 | 22 Aug. 2013 | 2014-2017 |
1) The redemption price is the average share price that applies during the last 30 days prior to the date of award.
2) The share price is set at the market value on the date of award. The company is operating on the pr
| Program | Number | Interestrate | Volatility |
|---|---|---|---|
| 2011 | 393000 | 4.25% | 40.0% |
| 2013 | 2165000 | $1.57% - 2.02%$ | 43.5% |
| Total | 2558000 |
Itera ASA has pension schemes organized through an insurance company. The company's pension scheme is a defined contribution plan and the cost correspond to the premium paid. Pension expense charged for 2013 amounts to NOK 555 thousand (NOK440 thousand). The group's pension schemes in Norway comply with the Norwegian Mandatory Occupational Pension Act (OTP).
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| NOK1000 | Machinery & equipment |
Software | Total | Machinery & equipment |
Software | Total |
| Acquisition cost | ||||||
| Accumulated 1 January | 3949 | 4304 | 8253 | 2538 | 4468 | 7006 |
| Additions during the year | 204 | 1401 | 1605 | 1579 | 0 | 1579 |
| Disposals during the year | 0 | 0 | 0 | $-168$ | $-164$ | $-332$ |
| Accumulated 31 December | 4153 | 5705 | 9858 | 3949 | 4304 | 8253 |
| Depreclation | ||||||
| Accumulated1January | 2303 | 3044 | 5347 | 2144 | 2054 | 4198 |
| Depreciation | 548 | 917 | 1465 | 159 | 990 | 1149 |
| Disposals during the year | 0 | 0 | 0 | 0 | 0 | 0 |
| Accumulated 31 December | 2851 | 3961 | 6812 | 2303 | 3044 | 5347 |
| Carrying amounts | ||||||
| As of 1 January | 1646 | 1260 | 2906 | 394 | 2414 | 2808 |
| As of 31 December | 1302 | 1744 | 3046 | 1646 | 1260 | 2906 |
| Estimated useful lives | 3-5 years | 3-5 years | 3-5 years | 3-5 years | ||
| Depreciation plan | linear | linear | linear | linear |
| NOK1000 | Registered office |
Share capital* |
Shareholding and voting interest |
Book value 1 Jan |
Changes | Book value 31 Dec |
Profit and loss 2013 |
Equity 31 Dec |
|---|---|---|---|---|---|---|---|---|
| Itera Gazette AS | Oslo | 500 | 100% | 5000 | $-5000$ | 0 | 0 | 0 |
| Itera Consulting AS | Oslo | 1000 | 100% | 16630 | $-16630$ | 0 | 0 | 0 |
| Itera Networks AS | Oslo | 1000 | 100% | 28100 | $-28100$ | 0 | 0 | 0 |
| Itera Norge AS | Oslo | 2500 | 100% | 0 | 49730 | 49730 | 10814 | 39378 |
| Itera Offshoring Services AS | Oslo | 200 | 100% | 7500 | 0 | 7500 | 3870 | 5306 |
| Cicero Consulting AS | Oslo | 200 | 100% | 21438 | 0 | 21438 | 40 | 9226 |
| Compendia AS | Bryne | 182 | 100% | 14237 | 0 | 14237 | 7656 | 8205 |
| Itera Sweden AB | Stockholm | 100 | 100% | 0 | 0 | 0 | $-17$ | 17083 |
| Itera Networks AB | Stockholm | 4400 | 100% | 0 | 0 | 0 | $-3857$ | 2212 |
| Itera Consulting AB | Stockholm | 111 | 100% | 0 | 0 | 0 | 15 | 2561 |
| Objectware AB | Stockholm | 100 | 100% | 0 | 0 | 0 | $-2$ | 3748 |
| Itera Consulting Denmark ApS | København | 1424 | 100% | 16559 | 0 | 16559 | 4960 | 19445 |
| Itera Consulting UA | Kiev | 50 | 100% | 489 | 0 | 489 | 826 | 1598 |
| Total | 109 953 | 0 | 109953 | 108762 |
* The share capital is entered in local currency (thousand), for the Ukrainian company, the currency is Euro.
Itera Gazette AS, Itera Networks AS and Itera Consulting AS merged in 2013 as the entity Itera Norge AS.
Itera ASA has received NOK 9.3 million in group contributions from the Norwegian subsidiaries.
Information regarding exchange rates used in Itera ASA for 2013.
| Exchange rate 1 Jan |
Average | Exchange rate 31 Dec |
|
|---|---|---|---|
| SEK | 0.8549 | 0.9020 | 0.9472 |
| DKK | 0.9840 | 1.0470 | 1,1237 |
| EUR | 7.3410 | 7,8087 | 8.3825 |
| USD | 5.5664 | 5.8768 | 6.0837 |
| UAH | 0.6935 | 0.7118 | 0.7291 |
| NOK1000 | Subordinated | ||||||
|---|---|---|---|---|---|---|---|
| Company name | Loans | loans | Total 2013 | Total 2012 | |||
| Itera Networks AS | 83 | 0 | 83 | 4000 | |||
| Itera Offshoring Services AS | 9362 | 0 | 9362 | $\mathbf{0}$ | |||
| Itera Sweden AB | 10871 | 10871 | 7247 | ||||
| Itera Networks AB | 8639 | 8639 | 5289 | ||||
| 18084 | 10871 | 28955 | 16536 | ||||
| a final de la comparación de la comparación de la comparación de la comparación de la comparación de la compa |
| NOK1000 | 2013 | 2012 |
|---|---|---|
| Income taxes | ||
| Change in deferred taxes | 1105 | 1130 |
| Total | 1105 | 1130 |
| Tax payable | ||
| Profit before taxes | 3146 | 4027 |
| Permanent differences | 148 | 10 |
| Change in temporary differences | 363 | 7 |
| Utilization of previously recognized tax losses | $-3658$ | $-4044$ |
| Total | 0 | 0 |
| Specification of deferred taxes | ||
| Fixed assets | $-562$ | $-222$ |
| Provisions according to accounting practices | $-24$ | 0 |
| Loss carried forward | $-17683$ | $-21341$ |
| Total | $-18269$ | $-21563$ |
| Deferred tax assets | $-4933$ | $-6038$ |
| Deferred tax recognized in the balance sheet | $-4933$ | $-6038$ |
| NOK1000 | 2013 | 2012 |
|---|---|---|
| Tax rate reconciliation | ||
| Profit before tax | 3146 | 4027 |
| Income taxes | ||
| Tax calculated at the domestic Corporate tax rate of 28% | 881 | 1120 |
| Effects from changed fax rate | 183 | 0 |
| Permanent differences | 42 | 10 |
| Income taxes in the statement of income | 1105 | 1130 |
| Effective tax rate | 35.1% | 28,1% |
| NOK1000 | Share capital |
Other paid-in capital |
Retained earnings |
Total equity |
|---|---|---|---|---|
| Equity as of 31 December 2012 | 24656 | 1890 | 83056 | 109602 |
| Profit for the year | 0 | 2041 | 2041 | |
| Cost effect stock options | O | 138 | 0 | 138 |
| Dividend | 0 | $-28765$ | $-28765$ | |
| Equity as of 31 December 2013 | 24 6 5 6 | 2028 | 56332 | 83016 |
Itera ASA has received NOK 9.3 million in group contribution from the Norwegian subsidiaries.
| NOK1000 | ||
|---|---|---|
| Company name | 2013 | 2012 |
| Itera Consulting AS | 17076 | 4045 |
| Cicero Consulting AS | 6408 | 5958 |
| Compendia AS | 14412 | 13942 |
| Itera Networks AS | 13581 | 11895 |
| Itera Offshoring Services AS | 150 | 105 |
| Itera Consulting ApS | 9408 | 8065 |
| Itera Consulting AB | 1480 | 1282 |
| Total | 67 621 | 49769 |
76 ITERA ANNUAL REPORT 2013
In the group accounts Itera ASA is responsible for their own and for the Norwegian subsidiary companies' deposits/withdrawals within the group accounts. The bank deposits for Itera AS as presented in the balances include deposits which the subsidiary companies have made within the group accounts and effected net against a withrawal which the parent company has made in the accounts. The subsidiary companies' deposits into the accounts are presented as intercompany liabilities.
Please refer to note 11.
Itera ASA has bank deposits and cash holdings of NOK 35.2 million of which NOK 0.6 million is restricted deposits.
Itera has organized joint solutions in accounting and finance, HR, IT and information/communication for Group Functions. These functions are organized in Itera ASA and work across all the subsidiaries. The parent company invoices the subsidiaries at cost plus model. A total of NOK 19.4 million (18.1) was invoiced in 2013 for the services.
The Norwegian companies have a common registration at the Norwegian Brønnøysund Register Centre. The public duties thus include the payable VAT for all the Norwegian companies of the group. The Parent reports the full payable VAT for the Norwegian companies and has a corresponding Intercompany receivable.
KPMG AS P.O. Box 7000 Majorstuen Sørkedalsveien 6 N-0306 Oslo
Telephone +47 04063 +47 22 60 96 01 Fax Internet www.kpmg.no Enterprise 935 174 627 MVA
To the Annual Shareholders' Meeting of Itera ASA
We have audited the accompanying financial statements of Itera ASA, which comprise the financial statements of the parent company Itera ASA and the consolidated financial statements of Itera ASA and its subsidiaries. The parent company's financial statements comprise the balance sheet as at 31 December 2012, the income statement and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. The consolidated financial statements comprise the statement of financial position as at 31 December 2012, and the income statement and the statement of other comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of the parent company financial statements in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway and for the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
KPMG membe Internat Statsau
| -------- | |||
|---|---|---|---|
| Oslo | Haugesund | Sandnessipen | |
| Alta | Knarvik | Stavanger | |
| Arendal | Kr stiansand | Stord | |
| Bergen | Larvik | Straume | |
| AS, a Norwegian member firm of the KPMG network of independent | Bodo | Mo i Rana | Tromso |
| r firms affiliated with KPMG International Cooperative ("KPMG | Elverum | Molde | Trondheim |
| ional"), a Swiss entity. | Finnsnes | Narvik | Tonsberg |
| Grimstad | Raros | Alesund | |
| oriserte revisorer - mediemmer av Den norske Revisorforening | Hamar | Sandefiord |
Offices in
In our opinion, the parent company's financial statements are prepared in accordance with the law and regulations and give a true and fair view of the financial position of Itera ASA as at 31 December 2012, and of its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway.
In our opinion, the consolidated financial statements are prepared in accordance with the law and regulations and give a true and fair view of the financial position of Itera ASA and its subsidiaries as at 31 December 2012, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU.
Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors' report and Report on corporate governance concerning the financial statements, the going concern assumption and the proposal for the allocation of the profit is consistent with the financial statements and complies with the law and regulations.
Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements (ISAE) 3000, «Assurance Engagements Other than Audits or Reviews of Historical Financial Information», it is our opinion that the management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the company's accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway.
Oslo, 29 April 2013 KPMG AS
Gunnar Sotnakk State Authorized Public Accountant
Translation has been made for information purposes only
On this date, the Board of Directors and the Chief Executive Officer have approved the annual report and annual accounts for the Itera group and the parent company for the 2013 calendar year as of 31 December 2013 (Annual Report 2013).
To the best of our knowledge:
Oslo, 20 March 2014 The Board of Directors of Itera ASA
Ole Jørgen Fredriksen Chairman
Toude S. Aurebel
Trude S. Husebø Board member
Mimi K. Berdal Board member
Jan-Frik Karlsson
Board member
The objective of Itera ASA (the company) is to ensure its shareholders a competitive return in the form of dividends and higher share price in comparison with alternative investments.
Itera endeavours to ensure shareholders a competitive return on their investment in the form of a higher share price and dividends. The share price shall reflect the company's earnings and underlying values. Open communication and equally treatment of the shareholders shall contribute to increased shareholder values and trust among investors.
Itera ASA was listed on the Oslo Stock Exchange (OSE) on 27 January 1999 under the ticker code ITE. The company shall treat all shareholders equally concerning information which may affect the market value of the shares. All information of relevance for the share price is published via the notification system of the Oslo Stock Exchange as well as on the company's website www.itera.no, to ensure such information is made available to all stakeholders simultaneously. The quarterly reports are also made available on Itera's website in the form of online webcasts. The shares have been assigned the ISIN NO 0010001118, and the company's organisation number at the Norwegian Brønnøysund Register Centre is NO 980 250 547.
As of 31 December 2013, Itera ASA had a share capital of NOK 24 655 987 distributed among 82186 624 shares, each with a face value of NOK 0.30.
All shares have the same voting rights at the General Meeting.
As of 31 December 2013, Itera had 1789 (1910) shareholders. At year-end, 11% (5%) of the company's shares were owned by foreign investors. The company's twenty largest investors owned 57% (61%) of the company's shares.
During 2013, a dividend of NOK 0.06 (0.00) per share was paid, for a total of NOK 5 (0) million.
The Itera share opened the year at NOK 2.19 and closed at NOK 2.78, corresponding to a change of 27% (-17%). The highest share price during the year was NOK 2.98 and the lowest price was NOK 1.55. Itera had a market value corresponding to NOK 228 (156) million at 31 December 2013.
The Company has established option schemes for key personnel. A new option scheme was implemented in 2013. There were 2,558,000 outstanding stock options at year-end. Reference is also made to Note 8.
| The top 20 largest shareholders | Shares | 96 |
|---|---|---|
| Arne Mjøs Invest AS | 15718298 | 19.1% |
| Assuranceforeningen SKULD | 5479401 | 6.7% |
| OP Capital AS | 3465000 | 4.2% |
| Verdipapirfondet DNB SMB | 3000000 | 3.7% |
| Eikestad AS | 2925000 | 3.6% |
| Jøsyra Invest AS | 2200000 | 2.7% |
| Marxpist Invest AS | 2031588 | 2.5% |
| Septim Consulting AS | 1830600 | 2.2% |
| Bo Investering AS | 1705828 | 2.1% |
| Gamst Invest AS | 1306982 | 1.6% |
| Johs. Haugerudsvei AS | 1073639 | 1.3% |
| GIPAS | 1000000 | 1.2% |
| Aanestad Panagri AS | 900000 | 1.1% |
| Ole Jørgen Fredriksen | 650000 | 0.8% |
| Verdipapirfondet Storebrand Norge | 627398 | 0.8% |
| DNB NOR Bank ASA Egenhandelskonto | 617401 | 0.8% |
| Morten Johnsen Holding AS | 600000 | 0.7% |
| Jan Morten Måøy | 569212 | 0.7% |
| Jørund Arne Lie | 500000 | 0.6% |
| Fredrik Wiese | 500000 | 0.6% |
| Total | 46700347 | 56.8% |
| Other shareholders | 35486277 | 43.2% |
| Total number of shares | 82186624 | 100.0% |
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