FIRST QUARTER 2018 CEO ARNE MJS CFO BENT HAMMER OSLO, 14 MAY 2018 - - PowerPoint PPT Presentation

INTERIM REPORT

FIRST QUARTER 2018

CEO ARNE MJØS CFO BENT HAMMER OSLO, 14 MAY 2018

HIGHLIGHTS OF THE FIRST QUARTER

• Revenue
• NOK 131 (119) million
• Growth of 11% y-o-y
• Gross Profit
• NOK 110 (103) million
• Growth of 8% y-o-y
• EBITDA
• EBITDA of NOK 15.2 (16.1) million, 11.6% (13.6%) margin
• EBIT
• EBIT of NOK 10.0 (11.3) million, 7.6% (9.5%) margin
• Cash flow
• NOK -8.2 (-0.8) million cash flow from operations
• Capacity
• Number of employees up by 70 last 12 months
• Dividends
• Proposed ordinary dividend of NOK 0.25 per share

EBIT

NOK million

Revenues

NOK million

FINANCIAL REVIEW

KEY FIGURES

High growth in own service revenue, especially in nearshore deliveries and outside Norway Revenue and EBIT reduced by more than MNOK 3 from Easter holidays Cash conversion lowered by 3 bank holidays end of month

STATEMENT OF INCOME

Strong growth in nearshore deliveries and markets outside of Norway Cost of sales higher due to more 3rd party subcontractors Double office rental costs in Kiev due to relocation

QUARTERLY DEVELOPMENT

Operating revenue

NOK million

EBITDA

NOK million

Employees

End of period

EBIT

NOK million Margin Margin

REVENUE

• Revenue increased by 11% y-o-y
• Service revenues from own consultants

increased by 16% to NOK 85 million

• Subscription revenue increased by 2% to

NOK 33 million

• 3rd party service revenue increased by

33% to NOK 8 million

• Other revenue, incl. HW/SW sales,

decreased by 32% to NOK 5 million

Revenue percentage split (rolling 12 months)

Revenue split (quarterly figures)

MNOK

STATEMENT OF CASH FLOW

Cash flow from operations NOK -8.2 (-0.8) million in Q1, negatively impacted by 3 bank holidays end of March 12 month rolling cash flow from operations was NOK 42 million

12 month rolling cash flow from operations (MNOK)

• The Board has recommended an ordinary dividend for 2017 of

NOK 0.25 per share (68% of net profits) and an option to pay

• ut an extraordinary dividend later in the year
• Share price was NOK 8.18 on 31 March, up NOK 1.94 (31%)

from same time in 2017

• Current holding of own shares is unchanged at 213 935 shares
• Consistent high distribution of earnings

DIVIDENDS AND OWN SHARES

STATEMENT OF FINANCIAL POSITION

• Group equity ratio of 25% (29%) per March 31.
• Cash balance of MNOK 44 (65).
• Receivables and WIP 18 MNOK higher (8 MNOK from IFRS

15 effects).

• Customer receivables high due to bank holidays period end.

Cash Equity Non-current liabilities Non-current assets Receivables and WIP Current liabilities

Assets Equity and Liabilities

IMPACT OF IFRS 15 IMPLEMENTATION

EXPECTED TO BE LOW ON REVENUE AND EARNINGS

Q1 2018 effects:

• Negative impact of MNOK 0.5 on sales revenue

(deferred income recognition)

• Positive EBIT impact of MNOK 0.4 due to

capitalisation of costs

• Book equity on Jan 1 reduced by MNOK 3.0

IFRS 15 implementation effects Q1 2018:

Affected areas for timing of revenue recognition:

• Customised development based where Itera retains

the IP will change from a point in time (at delivery) to

• ver time (over the licence contract period)
• Transition projects will be recognised when the

customer can use and benefit from the services rendered

Change in book equity during the quarter:

BUSINESS REVIEW

ITERA TOWARDS 2020

#1 in creating digital business

WE FOCUS ON OUR CUSTOMERS’ CUSTOMER WE WORK IN MULTIDISCIPLINARY TEAMS WE TAKE LIFE-CYCLE RESPONSIBILITY WE INVOLVE SEAMLESS NEARSHORING through customer journeys and lean startup combining communication & technology skills embracing cloud and data protection issues for greater scalability and cost-efficiency

LARGE TRANSFORMATION OF DIGITAL CUSTOMER CHANNELS AT KLP

• Shortly after the closing of the first quarter,

KLP announced their choice of Itera as their partner for digitalisation of KLP’s customer channels.

• Responsibility for the design and

development of the future digital customer experiences to

• 900,000 members
• 403 municipalities
• 16 county municipalities
• 24 health companies
• 2500 companies

Sverre Thornes, Chief Executive KLP, Marianne Sevaldsen, EVP KLP and Rune Hørnes, CIO KLP Photo: KLP

Event after the reporting period

FAST AND HYBRID

Nordic presence

Specialists in creating digital business

Ideate Prototype Design Customer Journeys Continuous innovation Disruptive Technology

Continuous delivery

Using digital platforms, DevOps and hybrid cloud solutions, we provide capabilities along the whole lifecyle for digital solutions including GDPR and data protection issues

Cross-border delivery

Work are done where it make sense, executed by cross border delivery management

HYBRID

Customer centric

Through human-centered, cross-functional teams and co-creative processes, we identify new opportunities, digitize processes and create great experiences that engage people

Time to market

FAST

Hybrid capabilities

High quality services, efficiency and scalability

SAMMEN MED OSS SKAPER DERE DIGITAL FORRETNING SOM ENGASJERER FOLK

VÅRT BIDBRAG

WE CREATE DIGITAL BUSINESS THAT REALLY ENGAGES PEOPLE

DIGITAL BUSINESS & EXPERIENCE

OVER 50 SPECIALISTS CREATE MAGIC TOGETHER

DIGITAL BUSINESS & EXPERIENCE

CONTENT DESIGN AND BRANDING

► We inspire interest and

create engaging content that meets the company's brand and their customers’ demands.

BUSINESS DESIGN

► We specialize in designing

digital strategies, new business models and realizing business

• pportunities.

SERVICE DESIGN

► We create innovative services

through customer-centric methods and insights that meet the full spectrum of customer demands.

Design Thinking Lean Startup Business Model Canvas

DESIGN (IxD/UX)

► We design digital and future-

• riented user experiences that

functionally, emotionally and visually touch the hearts of the users.

PUSHING TOWARDS INNOVATIVE PROCESSES IS KEY

• Human-centered & time to market
• Experiment & learn
• Autonomy & alignment
• Value to the customer & the

customer’s customer

Build Explore Prototype Critique Idea Test Learn Measure SPRINT SERVICE DESIGN LEAN STARTUP

Olena the Organiser Project Manager Christian the Customer’s friend Designer Sarah the Strategist Business Ellen the Engager Content Birger the Bug finder Test Tony the Tech Magician Developer

One team - Same goal - Across borders

CROSS-FUNCTIONAL TEAMS DRIVE INNOVATION AND TIME TO MARKET

• Engaged by Europe’s number 1

to shape the future of parking

• The new automated parking

solution is using machine learning (Automatic Number Plate Recognition) and cameras to start and stop the parking.

• Better customer experience and

more efficient operations

• No more fines!
• Strong results and fast scaling
• f the solution

DELIVERING THE NEW EXPERIENCE

Outstanding experiences Open & scalable cloud platform Data driven intelligence DevOps: Continuous innovation Cloud platforms Azure, Amazon, Google 150+ consultants DevOps & Hybrid Cloud 100+ consultants Digital Business & Experience 50+ consultants

Initiatives

• Book-to-bill ratio*) of 1.3 in Q1 2018

ORDER INTAKE

Order intake from existing and new customers

*) The book-to-bill ratio is the ratio of orders received to the amount of revenue for a specific period for Itera units

CUSTOMER DEVELOPMENT

• New business
• Existing clients accounted for 95.0% of

revenues in Q1 2018

• New customers won over the past year

generated revenues of NOK 6.5 million in Q1 2018

Revenue customers split

MNOK

Share of revenue

• Increasing visibility
• Share of revenue from top 30 customers up by 3

points y-o-y to 80%

• Benefits of higher revenue per customer:
• Increased revenue visibility
• Improved operational efficiency
• Lower sales and overhead costs

* Existing customers defined as customers that were invoiced in the corresponding quarter last year ** New customers (Rolling Twelve Months) defined as customers won since end of corresponding quarter last year

NEARSHORE RATIO

• Nearshore ratio of 44 % in Q1.
• Target >50%
• Mixed teams of onshore and nearshore are increasing our price

flexibility as well as providing access to a very large resource pool

Nearshore ratio

% of all staff located nearshore

NEW OFFICE FACILITIES IN KIEV

• Construction and re-

allocation into new professional office facilities in Kiev in Q1

• About 230 working seats

in one floor, with option for another 130 seats.

• Additional possibilities

for growth in the same business centre.

OUTLOOK

OUTLOOK

• Customer demand remains strong in all Nordic markets
• Profitable growth and cash flow are key focus areas
• Digitalisation creates a strong market demand in all sectors

where Itera is operating

• Larger projects and customers expected to continue to increase

revenue visibility, efficiency and scalability Itera does not provide guidance to the market on future prospects

TOP 20 SHARE- HOLDERS

*Arne Mjøs Invest AS holds a future contract expiring 13 June 2018 on 3 700 000 shares currently owned by DNB Nor Bank ASA. The total controlling interest of Arne Mjøs Invest AS is thus 24 327 688 (29.6%).

*