Itera — Interim / Quarterly Report 2010

Apr 20, 2010

Interim Report

First Quarter 2010

CEO Arne Mjøs
CFO Frank Martinsen
Oslo, 20 April 2010

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→ Highlights in the first quarter 2010

• Flat development from Q4 2009
• Revenues down 11 % to MNOK 100 compared to Q1 2009 but unchanged to Q4 2009
• EBIT down 34 % but flat to Q4 2009
• Shifting focus to growth
• Strengthen the Itera brand across all units
• Positioning for larger full-life cycle customer relationships
• Market improvement
• Good demand in Norway and Sweden
• Still challenging market in Denmark but the dark clouds are lifting

Revenues
NOK million

EBIT
NOK million

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Business Review

First Quarter 2010

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Towards the focused One Billion Company

• Focus on full-lifecycle relationships with large customers
• Take a leading position in superior user experience at any device
• Leverage seamless nearshoring for new opportunities of efficiency and growth
• Positioning the ITERA brand in all countries we operate, leveraging The Little Big Company

Leading Nordic
next generation
provider in selected
services segments

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→ We deliver full scope services to create long term customer relationships

Next Generation Digital Solutions
for Web-centric Businesses and Knowledge Workers

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$\rightarrow$ We integrate communication and IT service offerings

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→ We offer a flexible delivery model

Perform work where it makes most economic sense

• We offer specialist expertise for projects on the customer's site, in our own facilities and via our nearshore center.

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$\rightarrow$ We empower the Itera brand

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• A new visual identity is creating a conform visual profile across business disciplines and Itera companies.

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→ Market environment

• The IT market bottomed out in 2009 in Norway and Sweden but still challenging in Denmark
• Pent-up demand for new technologies and next generation solutions is releasing as enterprises focus on new growth opportunities and increase spending plans
• Less intense competition but a cautious mind-set continues as the norm among most buyers
• Strong demand for business intelligence, Software-as-a-Service (SaaS) and the second Internet generation (web 2.0, social media)
• Increasing demand for offshoring to lower cost structures
• The future is bright for our next generation expertise.

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→ A growing number of frame agreements

Oslo kommune

• Itera is increasing the total customer value, creating longer sustainable relationships with key customers.

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→ A growing workforce nearshore

• 373 employees
• Nearshoring ratio at 7%

• Itera will continue to grow its workforce both onshore and nearshore.

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Financial Review

First Quarter 2010

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Interim Report Q1 2010

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→ Key figures

		Q1 2010	Q1 2009	Change %	FY 2009
Operating revenue	MNOK	100.2	112.0	-11	411.5
EBITDA	MNOK	8.3	10.9	-25	39.6
EBITDA margin		8.2 %	9.8 %	-16	9.6 %
Operating profit (EBIT)	MNOK	5.1	7.6	-34	26.5
EBIT margin		5.0 %	6.8 %	-26	6.4 %
Profit before taxes	MNOK	5.5	7.8	-30	29.3
Profit for the period	MNOK	4.0	5.6	-30	20.6
Earnings per share (EPS)	NOK	0.05	0.07	-29	0.25
Net cash flow from operations	MNOK	-2.7	4.2		51.5
Cash and cash equivalents	MNOK	66	61		72
Equity ratio		51 %	50 %		49 %
Number of employees at end of period		373	391	-5	370
Number of employees in average		372	391	-5	381

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→ Income statement

NOK Million	Q1 2010	Q1 2009	Change %	FY 2009
Operating revenue	100.2	112.0	-11	411.5
Cost of sales	19.6	17.2	14	67.0
Personnel expenses	64.3	74.4	-14	268.3
Depreciation	3.2	3.3	-3	13.1
Other operating expenses	8.0	9.4	-15	36.5
Total operating expenses	95.1	104.4	-9	385.0
Operating profit (EBIT)	5.1	7.6	-34	26.5
Net financial income	0.5	0.2	119	2.8
Profit before taxes	5.5	7.8	-30	29.3
Income taxes	1.5	2.2	-30	8.7
Net profit for the period	4.0	5.6	-30	20.6

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→ Cash flow statement

Million NOK	Q1 2010	Q1 2009	Change %
Cash flow from operating activities
Cash flow from operations (EBITDA)	8.3	10.9	-25
Change in balance sheet items	-11.0	-6.8	-62
Net cash flow from operating activities	-2.7	4.2	-166
Net cash flow from investment activities	-2.8	-3.2	12
Cash flow from financing activities
Purchase of own shares	-0.4	-0.1	-304
Exercise of stock option programs	0.0	0.0
External dividend paid	0.0	0.0
Net cash flow from financing activities	-0.4	-0.1	-304
Net change in bank deposits and cash	-6.0	0.9	-801
Bank deposits at the end of the period	65.8	61.0	8

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→ Cash flow from operations

• Reduced cash flow from operations in Q1 2010
• MNOK -2.7, down from MNOK 4.2 in Q1 2009
• Work in progress and accounts receivable up by MNOK 7.0
• Public duties payable down by MNOK 5.3
• Good control and visibility of accounts receivables
• No loss in Q1 2010

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→ Quarterly development

Operating revenue

Employees

EBITDA and margin

EBIT margin

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→ Shares, Options and Dividend

• 2.8 million (3.3 %) number of own shares at end of period
• Average price of NOK 3.12 per share
• The stock option program are not in the money
• Dividend proposal of NOK 0.20 per share

End of period number of shares	85 340 346
End of period number of shares diluted	82 560 462
End of period number of own shares	2 779 884
End of period number of stock options.	0

• The board is proposing a dividend of NOK 0.20 per share on Annual General Meeting on the 29th April 2010.

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Outlook

First Quarter 2010

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→ Outlook 2010

• A normalized macroeconomic environment in 2010 should support a return to modest growth in IT spending
• Recruitment will continue in Norway and Sweden but awaiting a stabilized market situation in Denmark
• Scaling up our nearshoring capability in Ukraine will continue to ensure future competitiveness

• The Itera Consulting Group does not give any forecasts

• The future is bright for our next generation expertise.

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Top 20 Shareholders

Name: ITERA CONSULTING GROUP ASA
Security type: AK
Date: 19.04.2010

Holding	Percentage	Name	Account type	Citizenship
15,718,298	18.42	ARNE MJØS INVEST AS		NOR
3,053,000	3.58	DELPHI NORGE JPMORGAN EUROPE LTD,		NOR
2,860,000	3.35	PEDERSEN OLAV WERNER		NOR
2,850,000	3.34	DNB NOR SMB VPF		NOR
2,715,000	3.18	EIKESTAD A/S C/O PARTNER REVISJON		NOR
2,553,100	2.99	STOREBRAND LIVSFORSI P980, AKSJEFONDET		NOR
2,400,000	2.81	RBC DEXIA INVESTOR S S/A LUX-NON-RESIDENT NOM		LUX
2,200,000	2.58	JØSYRA INVEST AS		NOR
2,084,996	2.44	ITERA CONSULTING GRO		NOR
2,031,588	2.38	MARXPIST INVEST AS		NOR
1,632,000	1.91	BRØDRENE JOHANSSEN H		NOR
1,410,000	1.65	BOINVESTERING AS		NOR
1,069,898	1.25	STOREBRAND VEKST JPMORGAN EUROPE LTD,		NOR
902,700	1.06	STOREBRAND NORGE I JPMORGAN EUROPE LTD,		NOR
746,000	0.87	AANESTAD PANAGRI AS		NOR
697,700	0.82	STOREBRAND NORGE H JPMORGAN EUROPE LTD,		NOR
694,888	0.81	OBJECTWARE AS		NOR
608,100	0.71	AS NORSKE SHELLS PEN P857AK		NOR
600,000	0.70	ULLALAND MALVIN		NOR
587,164	0.69	DANSKE BANK A/S 3887 OPERATIONS SEC.	NOM	DNK
47,414,432	55.54

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Notes

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Notes

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Interim Report Q1 2010