Knowit : Interim Report Knowit Q2 2022 (PDF)

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COMMENTS FROM THE CEO

A strong first six months for Knowit

We are still seeing a positive market with a high demand for Knowit's services and we are pleased to present strong growth and an improved profit during the second quarter of the year. Our position as a digitalization partner to Nordic companies is strong and our four business areas are developing well, despite the uncertainty and concerning events characterizing the outside world.

CONTINUED GROWTH AND an improved result. During the first six months of the year, we have met with very strong demand, which means that we can show continued positive growth. Net sales during the second quarter increased by 59.1 percent, driven by continued organic growth and the positive effects of the acquisitions integrated during 2021 and early 2022. We work continually to increase efficiency and improve our deliveries to clients, with the goal of strengthening our results further in the future.

A DRIVING FORCE IN NORDIC CONSOLIDATION

Knowit's growth strategy is based on a combination of organic growth supplemented with strategic acquisitions. Sound organic growth is a fundamental requirement for a consultancy firm to develop and retain its attractive power for both clients and employees. Acquisitions help strengthen the Company as regards both competence and geography.

The Nordic market for services in digitalization is characterized by a few larger suppliers and a large number of smaller, niche players. With a clear acquisition agenda, Knowit has grown into one of the larger players and is part of driving the Nordic consolidation forward. During the quarter, Knowit has announced the acquisitions of the software developers Swedspot in Sweden and Miracle in Denmark, as well as the strategy agency Marketing Clinic in Finland, with a total of around 230 employees. All acquisitions reinforce our position further, both geographically and as regards competence.

AN ATTRACTIVE WORKPLACE

ON A HOT MARKET

The second quarter of the year is characterized by continued strong demand for competence. At Knowit, we can see this through strong demand for our services, which creates good conditions for continued, sound organic growth. We also see that our skilled consultants are in demand and the ongoing work of developing Knowit as a workplace has high priority on our agenda. During the quarter, we have had a positive trend regarding net recruitment, which is very pleasing.

We are working proactively for many years to make Knowit one of the industry's most attractive workplaces. I am proud that our regular employee surveys show that are continually developing and that more employees are saying that they would recommend Knowit as a work-

place. Having existing employees recommend people in their networks to join Knowit will always be one of our most effective and secure recruitment paths.

Knowit's strong employer brand gained attention be the LinkedIn Top Companies Sweden, which was published for the first time this quarter. We are also very proud to climb to the top ten among the most attractive workplaces in the Nordic region, according to a fresh ranking from Universum.

AN ACTIVE FORCE IN THE CLIMATE SHIFT

Participating in the shift to a society without carbon dioxide emissions is an urgent and significant matter for both individuals and companies. Digitalization is an important tool in these efforts, as automated processes, new types of energy systems, decreased travel, and changed consumer behavior all contribute to decresing the total carbon dioxide emissions worldwide. At Knowit, we have the ambition to actively contribute to the UN Agenda 2030 by constantly working, with our clients and partners, to promote positive climate impact and increased inclusivity. An important parameter in this work is the sustainability goals announced earlier this year, which are an important steering mechanism for us to approach our vision of contributing to a sustainable and humane society.

PER WALLENTIN

CEO and President

2 KNOWIT AB INTERIM REPORT JANUARY - JUNE 2022

EVENTS DURING THE PERIOD

APRIL - JUNE 2022

Knowit has ACQUIRED SWEDSPOT, a company with a strong focus on software deve- lopment for the car industry, with around 40 employees. Swedspot will be part of Knowit Connectivity and supplements the existing offers in embedded systems with both broad competence in software development and a unique platform with smart services for connected vehicles.

Knowit has initiated a collaboration with SustainLab, a SWEDISH STARTUP WITH A UNIQUE SUSTAINABILITY PLATFORM that automates data management and gives companies and organizations valuable insights into their sustainability efforts.

Knowit has, in collaboration with Health Integrator, developed an improved method and higher accuracy tool for identifying individuals living at risk of developing type

2 diabetes, with improved accuracy. THE TOOL COMBINES MEDICAL SCIENCE AND

DATA ANALYSIS, which leads to improved quality of life and decreased costs in healthcare.

Knowit is SELLING THE GROUP'S NON-CONTROLLINGINTERESTS in the Norwegian

fintech company Stacc AS. The disposal is occurring at valuation of NOK 73 million for Knowit's holdings.

Knowit has been given the confidence of serving as a strategic partner in the

FURTHER DEVELOPMENT OF INERA'S APPLICATION SERVICES. The framework

agreement encompasses most of Inera's services, including important national services in Sweden, such as 1177.

In May, Knowit participated in the annual WOMEN IN TECH SWEDEN conference, with the aim to highlight and support women's possibilities and interest in the tech field. This year's theme focused on the need for continuous development and how everyone can and should take both individual and shared responsibility for a better future.

Knowit has initiated a collaboration with the INNOVATIVE STARTUP COMPANY GAIA GEN, which offers climate calculations for companies and organizations that want an improved ability to keep track of the IT operation's carbon dioxide emissions.

In June, KNOWIT ANNOUNCED THE ACQUISITION OF MIRACLE, with around 130 emp-

loyees - a Danish consultancy company with well-positionedoperations in system development, consultancy, and a high competence in open source platforms.

In June, the ACQUISITION OF THE STRATEGY AGENCY MARKETING CLINIC with

roughly 60 consultants, primarily in Helsinki, was also announced. Through the acquisition, Insight's position on the Finnish market is strengthened with a broader offer in growth and business development strategies.

3 KNOWIT AB INTERIM REPORT JANUARY - JUNE 2022

THE QUARTER IN BRIEF

Continued growth during the second quarter

APRIL - JUNE 2022

THE QUARTER IS characterized by continued strong demand for Knowit's services, with high growth and an improved profit.

In June, the acquisition of Swedspot AB, a company with a strong focus on software development for the vehicle industry, was finalized. The company has around 40 employees and has added to Knowit's business area Connectivity by supplementing existing offers in embedded services, with both broad competence in software development and a unique platform with smart services for connected vehicles. In June, the acquisitions of Danish Miracle, with around 130 employees, and Marketing Clinic, with around 60 employees in Helsinki, were also announced. These acquisitions supplement Knowit's geographic breadth and its offers in the business areas Solutions and Insight and will be consolidated as of July 1, 2022.

								6,107
																	621
				3,630
3,411
													368
									322
858	661	924	1,011	1,034	1,191	1,576	1,695	1,645	73	59	108	103	98	105	181	194	141
Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2
2020	2020	2020	2021	2021	2021	2021	2022	2022	2020	2020	2020	2021	2021	2021	2021	2022	2022

NET SALES, SEK, MILLIONS	ADJUSTED EBITA PROFIT,
Net sales, quarterly data	SEK, MILLIONS
Adjusted EBITA profit, quarterly data
Rolling 12 months
	Rolling 12 months

8	3
9
		49
31
SALES PER COUNTRY
APRIL - JUNE 2022
Sweden		49%	(51)
Norway		31%	(40)
Finland		9%	(4)
Denmark		8%	(4)
Poland		3%	(0)
Other		0%	(0)

4 KNOWIT AB INTERIM REPORT JANUARY - JUNE 2022

THE QUARTER IN BRIEF

APRIL - JUNE 2022

Financial development

During the quarter, net sales increased to SEK 1,644.7 (1,033.7) million, affected by the acquisitions of Cybercom, Capacant, 1508.dk, Strømlin, and Swedspot. Earnings before amortization of intangible assets (EBITA) increased to SEK 136.4 (72.6) million. Adjusted EBITA profit increased to SEK 140.5 (98.3) million, adjusted for acquisition and integration costs of SEK 4.1 million.

Compared with the corresponding quarter last year, the exchange rate development had a positive impact of SEK 30.3 million on net sales. Cash flow from operating activities was SEK 130.7 (74.5) million, where the change in operating capital had an impact of SEK 31.2 (9.0) million.

The below table shows financial history that includes the acquisitions of Cybercom, Capacent, 1508.dk, Strømlin, and Swedspot for comparable periods, to facilitate for the reader to follow the development. See more information on page 26 in this report.

SEK, MILLIONS	APR-JUNE 2022	APR-JUNE 2021
Sales	1,644.7	1,033.7
Sales, acquisitions		499.8	1)
Sales, including acquisitions	1,644.7	1,533.5
Sales, change, %	7.2
of which is exchange rate effect, %	2.0

1. Adjustments relate to addition of net sales in Cybercom, Capacent, 1508.dk, and Strømlin for the period April-June 2021, and Swedspot for the period June 2021.

In the below table, EBITA is adjusted for items that impair comparability between different periods, to enable increased understanding for the Group's underlying operations.

SEK, MILLIONS	APR-JUNE 2022	APR-JUNE 2021
EBITA	136.4		72.6
Adjusted EBITA profit	140.5	1)	98.3	1)
EBITA margin, %	8.3		7.0
Adjusted EBITA margin, %	8.5	2)	9.5	2)
Cash flow from operating activities	130.7		74.5
Intangible assets	4,066.5		1,394.2
Number of employees at the end of the period	3,933		2,549

1. EBITA is adjusted for items that impair comparability between different periods, to improve the understanding of the Group's underlying operations. Comparison-impairing items include costs connected to acquisitions and sales and costs for restructuring and integration programs.
2. Adjusted EBITA profit in relation to the net sales of the period.

5 KNOWIT AB INTERIM REPORT JANUARY - JUNE 2022