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Itera Interim / Quarterly Report 2021
3639_rns_2021-10-27_ea52bedb-5537-4727-b19d-77b6950b1d5b.pdf
Interim / Quarterly Report
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- Highlights of the Quarter
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- Business Review
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- Financial Review
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- Outlook
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- Q & A
Arne Mjøs CHIEF EXECUTIVE OFFICER
Bent Hammer CHIEF FINANCIAL OFFICER
Q3 in brief
Key figures core digital business
02 Business review
Specialist in creating sustainable digital business
We are following our customers around the world
We help international customers and partners across borders through our Delivery Factory at Scale and Cloud Centre of Excellence to transform into sustainable business.
The Nordics is often positioned as a digital and sustainable front-runner, showing the way globally.
Our Delivery Factory at Scale with crossfunctional teams across borders was recognised as best in the world by Global Sourcing Association in 2018.
Delivery Factory at Scale for data-driven businesses
| Innovation | Faster business innovation through autonomous teams and adoption of cloud services |
CUSTOMER BUSINESS & DIGITAL STRATEGY | ||||
|---|---|---|---|---|---|---|
| Speed/Agility | Business agility and reduced time-to-market through efficient DevSecOps teams |
CLOUD MIGRATION WORKLOADS |
CUSTOMER PRODUCT WORKLOADS |
ANALYTICS & DATAOPS WORKLOADS |
PARTNERS | |
| Costs | Efficient use of distributed delivery across borders and public cloud scale |
DELIVERY FACTORY AT SCALE | Microsoft IBM Red Hat Cognite Sales force Confluent Others |
|||
| Control | Secure, predictable and flexible service delivery and operations capability end to end |
CLOUD CENTRE OF EXCELLENCE (CCoE) |
Go-to-market model for main segments
B2C B2B
BANKING, FINANCE & INSURANCE HEAVY ASSETS & PROCESS INDUSTRIES
| ENABLEMENT | TRANSFORMATION | |||||||
|---|---|---|---|---|---|---|---|---|
| CLOUD TRANSFORMATION FRAMEWORK |
DELIVERY FACTORY AT SCALE CLOUD CENTRE OF EXCELLENCE
Creating full end-to-end understanding for value creation
| Industry Focus | Business Agenda Conversations |
Business & Product Agenda | We operate | here! | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Business Outcome & Potential |
Digital Agenda Conversations |
Digital Agenda | |||||||||||||||||||||||||||
| Disruption Focus | Initiative Conversations |
Digital Initiative Digital Initiative |
Digital Initiative | Digital Initiative | |||||||||||||||||||||||||
| Technology Focus | Solution Conversations |
Digital Solution |
Digital Solution |
Digital Solution |
Digital Solution |
Digital Solution |
Digital Solution |
Digital Solution |
Digital Solution |
||||||||||||||||||||
| Partnership-led Discussions |
Cloud Platform Conversations |
Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | Cloud | ||||
Itera and Aize join forces towards the 4th industrial revolution
Itera was gold sponsor at Ignite 2021
Ignite is the world's leading industrial conference hosted by Cognite with more than 10.000 participants.
Itera played an important role in the conference and had, among other contributions, two speakers on stage.
The conference gathers leaders from all over the world to present and discuss the most challenging issues that various industries face to become sustainable towards 2050, with a special focus on the energy sector.
Data-driven business report: using data as a strategic asset
Itera launched a report where we examined how Norwegian organisations use data as a strategic asset, which practices hallmark those who succeed and how to practically enable data-driven business at scale.
Our findings show that many businesses are working diligently towards a data-driven transformation.
Still, the difficulty of scaling data initiatives beyond "proof of concepts" and integrating fact-based decision making into the organisation's strategy, culture, and business models remain a key challenge for most organisations.
Market report for the Norwegian energy market
Every six months, Itera prepares a comprehensive report covering the Norwegian energy market together with Thema Consulting.
The report covers the most essential parts of the market dynamic: market development, product overview and changes, customer preferences, pricing strategies, and governmental regulations. The report includes examples and deep dive descriptions from national and international energy companies.
The report is sold as a subscription product, and key findings are presented at different conferences, webinars, and podcasts or referred to by journalists.
Sector Alarm teams up with Itera to increase scalability
Sector Alarm is one of Europe's leading safety providers with 600,000 customers. Providing excellent customer service is extremely important to enable their consistent 95% customer satisfaction rating.
Through a well conducted RFP process, Sector Alarm has chosen Itera as their partner for modernisation of their CRM solution.
A multi-disciplined team from Itera provides services within project management, architecture, user experience, development, design and testing.
The engagement is fully based on our distributed delivery model across borders to increase speed, scalability and cost efficiency for Sector Alarm.
Summer internships
During the summer, 27 master's students were engaged in four customer projects at Itera Norway
The students were divided into multi-disciplined teams of business consultants, developers, UX specialists and testers.
New technology was applied for a wide range of innovative solutions and services.
Disrupting the global self-storage industry through technology
Summer internship for ADD+SPACE
The ADD+SPACE platform is turning three different actors into one seamless ecosystem.
is to build the biggest self-storage company in the world, not owning any storage room.
the world's first virtual and sustainable selfstorage for physical things.
- Offensive rollout in US and Europe the following 5 years.
Order intake
Order intake from selected new and existing customers
Book-to-bill ratio*) of 0.9 in Q3 for core digital business and 1.1 for the last 12 months
Customer development
▪ New business
- Existing customers accounted for 85.8% (91.8%) of revenues in Q3 2021
- New customers won over the past year generated revenues of NOK 20.9 (11.2) million in Q3 2021 (14.2%)
- Good visibility
- Share of revenue from top 30 customers 77% (78%)
- High customer concentration signifies
- Strategic relationships
- Full range of services
- Distributed delivery across borders
Revenue customers split (in MNOK)
Largest customers' share of revenue
Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21
Top 30 Top 10
** New customers defined as customers won since end of corresponding quarter last year
* Existing customers defined as customers that were invoiced in the corresponding quarter last year
Skilled and innovative employees in core digital business
- 589 employees at the end of the quarter
- Up by 50 in the quarter
- Up by 103 (43) last twelve months
- Nearshore ratio of 51% (46%)
- Our distributed delivery model of onshore and nearshore consultants are increasing our price competitiveness as well as providing high scalability through access to a very large talent pool
Number of employees end of quarter by shore
Rolling 12 months net FTE growth
03 Financial review
Financial reporting 2021
▪ Given the sunsetting of the data centre operations, focus for our financial reporting is on the core digital business, including the investment in the Cloud Centre of Excellence.
Key financials core digital business
| 2021 | 2020 | change | change | |
|---|---|---|---|---|
| in million Amounts NOK |
7-9 | 7-9 | % | |
| Sales revenue |
138 9 |
109 7 |
29 3 |
26 7 % |
| of sales Cost |
10 0 |
7 9 |
2 0 |
25 4 % |
| profit Gross |
129 0 |
101 7 |
27 3 |
26 8 % |
| margin Gross |
92 8 % |
92 8 % |
0 1 pts , |
0 1 pts , |
| Personnel expenses |
96 8 |
73 2 |
23 6 |
32 2 % |
| Other operating expenses |
11 2 |
9 4 |
1 8 |
19 0 % |
| Depreciation and amortisation |
6 5 |
8 7 |
2 -1 |
0 % -16 |
| Total operating expenses |
124 5 |
98 3 |
26 1 |
26 % 6 |
| EBITDA | 21 0 |
19 1 |
1 9 |
10 0 % |
| margin EBITDA |
15 1 % |
17 4 % |
-2 3 pts |
-2 3 pts |
| EBIT | 14 5 |
11 3 |
3 1 |
27 8 % |
| margin EBIT |
10 4 % |
10 3 % |
0 1 pts |
0 1 pts |
| . of employees the end of the period No at |
589 | 487 | 103 | 21 1 % |
- Strong growth of 27% fuelled by some major new accounts and more subcontractors
- Personnel expenses include a double annual salary adjustment (last year postponed until Q4) and return of social events
- Opex increase from recruitment fees and new SK office
- Depreciation down due to office sublease and end-of-life R&D assets
- EBIT up 28% to MNOK 14.5
- EBIT margin of 10.4% (10.3%)
- No. of FTEs up 103 to 589
Revenue and earnings development
Quarterly Revenue and EBIT margin*
- Strong sales growth year over year
- Q3 margins seasonally lower due to vacations and additionally by high recruitment
- Quarterly figures are impacted by number of working days net of vacations
Subscription revenue from data centre operations
- Subscription revenue from data centre operations will continue to drop as customers are migrated to cloud or exited
- Freed up resources will be available to help new customers on their cloud journey
Segment reporting
| 7-9 2021 |
7-9 2020 Growth |
Year-to-date growth |
||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| in million Amounts NOK |
Core digital business (94%) |
Data centre operations (6%) |
Total | Core digital business (80%) |
Data centre operations (20%) |
Total | Core digital business |
Data centre operations |
Total | Core digital business |
Data centre operations |
Total | ||||
| Sales revenue |
138.9 | 8.5 | 147.5 | 109.7 | 27.6 | 137.3 | 26.7 % |
-69.0 % |
7.4 % |
20.0 | % -63.9 % |
3.8 % |
||||
| Cost of sales |
10.0 | 3.9 | 13.9 | 7.9 | 8.0 | 15.9 | 25.4 % |
-50.8 % |
-12.8 % |
35.3 | % -53.1 % |
-11.6 % |
||||
| Gross profit |
129.0 | 4.6 | 133.6 | 101.7 | 19.6 | 121.4 | 26.8 % |
% -76.4 |
10.1 % |
18.8 | % -69.3 % |
6.0 % |
||||
| Gross margin |
92.8 % |
% 54.1 |
90.6 % |
92.8 % |
% 71.1 |
88.4 % |
0.1 pts |
-17 pts |
2.2 pts |
-0.9 pts |
-10 pts |
1.8 pts |
||||
| Personnel expenses |
96.8 | 6.9 | 103.7 | 73.2 | 13.1 | 86.3 | 32.2 % |
-47.1 % |
20.1 % |
22.6 | % -42.8 % |
12.6 % |
||||
| Other operating expenses |
11.2 | 1.2 | 12.5 | 9.4 | 1.0 | 10.4 | 19.0 % |
23.6 % |
19.4 % |
1.1 | % -1.1 % |
0.8 % |
||||
| Depreciation and amortisation |
6.5 | 1.0 | 7.5 | 7.8 | 2.3 | 10.1 | -16.0 % |
-57.1 % |
-25.5 % |
-18.4 | % -52.1 % |
-25.8 % |
||||
| Total operating expenses |
124.5 | 13.1 | 137.5 | 98.3 | 24.4 | 122.7 | 26.6 % |
-46.4 % |
12.1 % |
18.6 | % -45.2 % |
% 5.5 |
||||
| EBITDA | 21.0 | -3.5 | 17.5 | 19.1 | 5.5 | 24.6 | 10.0 % |
-163.7 % |
-29.1 % |
12.9 | % -200.4 % |
-15.6 % |
||||
| margin EBITDA |
15.1 % |
-41.3 % |
11.8 % |
17.4 % |
20.0 % |
17.9 % |
-2.3 pts |
-61.3 pts |
-6.1 pts |
-1.1 pts |
-46.8 pts |
-3.3 pts |
||||
| EBIT | 14.5 | -4.5 | 10.0 | 11.3 | 3.2 | 14.5 | 27.8 % |
-240.3 % |
-31.6 % |
29.1 | % -443.9 % |
-9.4 % |
||||
| margin EBIT |
10.4 % |
-52.9 % |
6.7 % |
10.3 % |
11.7 % |
10.6 % |
0.1 pts |
-64.5 pts |
-3.8 pts |
1 pts |
-49.3 pts |
-1.4 pts |
▪ Data centre operations revenue MNOK 8.5 (-69%)
▪ Decline in data centre operations revenue more than mitigated by growth in core digital business
Statement of cash flow
| 2021 | 2020 | 2021 | 2020 | 2020 | |
|---|---|---|---|---|---|
| NOK Million | 7-9 | 7-9 | 1-9 | 1-9 | F Y |
| Cash flow from operations (EBITDA) | 17.5 | 24.6 | 67.3 | 79.7 | 108.9 |
| Change in balance sheet items | (1.8) | (8.2) | (26.3) | (16.2) | (9.7) |
| Net cash flow from operating activities | 15.6 | 16.4 | 41.0 | 63.5 | 99.2 |
| Net cash flow from investment activities | (6.5) | (4.5) | (26.1) | (12.2) | (17.0) |
| Purchase of own shares | - | - | (23.5) | (18.2) | (18.2) |
| Sale of shares | - | 3.6 | 8.4 | 5.9 | 8.0 |
| Principal elements of lease payments | (2.9) | (5.7) | (14.5) | (18.1) | (22.6) |
| Instalment of sublease receivable | 0.9 | - | 2.7 | - | - |
| External dividend paid | - | - | (19.8) | (16.3) | (48.0) |
| Net cash flow from financing activities | (1.9) | (2.1) | (46.7) | (46.7) | (80.9) |
| Net change in bank deposits and cash | 7.2 | 9.9 | (31.8) | 4.6 | 1.3 |
| Bank deposits at the end of the period | 22.6 | 57.7 | 22.6 | 57.7 | 54.4 |
| New borrowing related to leasing | - | 0.5 | - | 2.4 | 2.4 |
• 12 month rolling cash flow from operations was NOK 77 million
Dividend and own shares
- An supplementary dividend of NOK 0.10 per share based on 2020 results has been approved by the Board for payment in December. Total dividend for 2020 is NOK 0.35 per share.
- Share price was NOK 15.7 at the end of Q3 2021, an increase of 13% (17% incl. dividends) from NOK 13.95 at the end of Q3 2020.
- Current holding of own shares is 1,637,006 shares. Value at 30 September 2021 was MNOK 25.7
- Consistent high distribution of earnings
Statement of financial position
- Equity ratio of 17% (24%) per 30 September 2021
- 20% excl. IFRS 16 Leasing
- Cash balance of MNOK 23 (MNOK 58)
- Total balance reduced by MNOK 21 to MNOK 219
04 Outlook
Outlook
Attractive market driven by sustainability and digitalisation after Covid-19.
Strong position through its end-toend services, worldclass distributed delivery and industrial partnerships.
Core digital business will continue to grow at full speed. Profitable growth and cash flow are key focus areas.
Transforming own data centres to the cloud with short-term revenue drop.
Regional expansion in the Nordics for proximity to more customers and talents
Itera does not provide guidance to the market on future prospects.
32
Top 20 shareholders
| No | Name | % | Nat | Shareholding |
|---|---|---|---|---|
| 1 | MJØS AS* ARNE INVEST |
30 01 |
NOR | 24 663 031 |
| 2 | OP CAPITAL AS |
5 54 |
NOR | 4 551 083 |
| 3 | GIP AS |
5 05 |
NOR | 4 153 420 |
| 4 | EIKESTAD AS |
20 4 |
NOR | 3 450 000 |
| 5 | SEPTIM CONSULTING AS |
3 57 |
NOR | 2 930 000 |
| 6 | BOINVESTERING AS |
3 27 |
NOR | 2 686 968 |
| 7 | Bank ASA* DnB NOR |
3 16 |
NOR | 2 600 000 |
| 8 | GAMST INVEST AS |
3 06 |
NOR | 2 517 867 |
| 9 | JØSYRA INVEST AS |
2 68 |
NOR | 2 200 000 |
| 10 | ASA ITERA |
99 1 |
NOR | 637 006 1 |
| 11 | Privatbank S DZ A |
1 56 |
LUX | 280 000 1 |
| 12 | VERDIPAPIRFONDET STOREBRAND VEKST |
33 1 |
NOR | 092 539 1 |
| 13 | HØGBERG | 1 18 |
NOR | 967 959 |
| 14 | FRAMAR INVEST AS |
1 13 |
NOR | 925 000 |
| 15 | AANESTAD PANAGRI AS |
1 10 |
NOR | 900 000 |
| 16 | PROPERTY DEVELOPMENT AS ALTEA |
0 85 |
NOR | 700 000 |
| 17 | GRØSLAND | 0 77 |
NOR | 630 000 |
| 18 | JENSEN | 0 75 |
NOR | 620 460 |
| 19 | NYVANG | 0 75 |
DEN | 615 000 |
| 20 | MORTEN JOHNSEN HOLDING AS |
0 73 |
NOR | 600 000 |
| TOP 20 |
72 66 |
59 720 333 |
*Arne Mjøs Invest AS holds a future contract on 2,600,000 shares. The total controlling interest of Arne Mjøs is thus 27,263,031 shares (33.2%).
