We deliver increased net sales with a stable result, while the quarter has been shaped by the integration of the Cybercom operations into Knowit's three existing business areas, and the establishment of the new business area Connectivity. Market activity has been high during the quarter, as regards both new sales and recruitment of new employees.
DURING 2021, WE have strengthened our position, while also working to integrate the operations from Cybercom and Creuna. In September, we took another step by acquiring the management consultancy operations from Capa- cent, with acquisition finalized on October 1. The acquisition will strengthen our management offer in Sweden and Finland as of the fourth quarter.
POSITIVE NET RECRUITMENT
The market activity has been high during the quarter, with a strong underlying demand and a positive net recruitment. We could also note a somewhat increased workforce mobility after the pandemic, which has impacted on our personnel turnover, but also opened the doors to increased new recruitment.
A somewhat lower margin for the quarter is largely explained by intensive integration efforts, combined with an accrued need for investment in personnel after the pandemic, and increased new recruitment.
A NEW BUSINESS AREA
Solutions is the business area that has been affected most by the integration efforts. This makes it particularly gratifying to note that the two largest markets, Sweden and Norway, are showing a strong positive development, with high sales growth during the quarter. In southern Sweden and Oslo, the development is very strong, with several new framework agreements. Despite investments in recruitment, combined with the integration efforts, Solutions has managed to increase its net sales and EBITA as compared with the corresponding period in 2020.
The business area Experience has been affected to a very limited extent by the integration of Cybercom and has finalized the integration of Creuna during this quarter. In all locations where operations have been merged, the development has been very positive and has led to more, new client assignments. The business area increased net sales during the quarter, with high levels of new orders, and has had a positive net recruitment. However, EBITA has been affected.
Our new business area Connectivity is reported as a business area for the first time, with operations in both the Nordic region and Poland. During the quarter, activity have been high, with a number of large assignments in the tech and telecom sectors, and in the vehicle industry. We have several new assignments for some of our existing clients, which creates strong possibilities going forward. We are investing resources in recruiting new talents to our development teams.
The business area Insight is continuing its positive development with improved EBITA and a higher margin. Our operations in Gothenburg have increased their capacity utilization greatly and demand is high in the security area, especially in Stockholm. During the quarter, we have recruited in societal security through our trainee program. Demand in the area remains strong.
INCREASED CLIMATE FOCUS
We are continuing our investments into climate and environmental efforts, now with even greater ambitions as a result of our partnership with the Exponential Roadmap Initiative and Race to Zero. This means that we are committing to supporting our clients in including climate in their business strategies and digital transformations, something that is fully in line with our vision.
When I summarize the quarter, I can conclude that we have managed to both keep a focus on our business and simultaneously perform a large operative integration, showing that Knowit is a player than can continue to take market shares in a sustainable manner. This makes me proud and creates hope for the future.
CEO and President
2 KNOWIT AB INTERIM REPORT JANUARY - SEPTEMBER 2021
NORWEGIAN TAX ADMINISTRATION.
EVENTS DURING THE PERIOD
JULY - SEPTEMBER 2021
On July 1, Knowit finalized the previously announced acquisition of Cybercom and thus gained more than 1,200 new employees. A new business area, KNOWIT
CONNECTIVITY, was created.
At an extraordinary general meeting, THE BOARD WAS EXPANDED with two new board members, Olof Cato and Sofia Karlsson.
Knowit's CORPORATE MANAGEMENT TEAM WAS EXPANDED with four new members
on July 1, as a result of the finalized acquisition of Cybercom.
Knowit has been shown continued trust and an extended assignment to deliver system development, design, architecture, and other digital services to the
The extension runs through to 2025.
In the area IT consultancy services, Knowit has signed a new framework agreement
with the LEGAL, FINANCIAL AND ADMINISTRATIVE SERVICES AGENCY. The frame-
work agreement can be used by all authorities in Sweden.
Knowit Solutions is reinforcing its offer in southern Sweden by establishing operations and recruiting employees in the HELSINGBORG REGION.
In the SWEDISH DESIGN AWARDS, Knowit Experience has been nominated for client projects for the Gothenburg Opera and Sida.
Knowit has joined the EXPONENTIAL ROADMAP INITIATIVE and is thereby committing to acting in line with the 1.5° Business Playbook. This is a commitment to continually supporting clients in integrating climate matters in digital transformations.
Knowit communicated about its partnership with the ORGANIZATION CHANGERS HUB, with the ambition of jointly opening the digitalization sector to a broader group of potential employees and creating the conditions for a more inclusive society.
EVENTS AFTER THE END OF THE PERIOD
Through Knowit's acquisition of the SUBSIDIARIES IN CAPACENT that conduct operations in management consulting, the business area Insight will grow by around 50 employees as of October 1. Insight is getting a stronger position in Helsinki and Stockholm through the acquisition. Capacent supplements Insight's offer with services mainly in finance, pricing strategy, and operating capital optimization.
3 KNOWIT AB INTERIM REPORT JANUARY - SEPTEMBER 2021
THE PERIOD IN BRIEF
New business area and strong growth
JANUARY - SEPTEMBER 2021
The acquisition of Cybercom and new business area
On July 1, 2021, Knowit finalized the acquisition of Cybercom, creating a Nordic powerhouse for the digital solutions of the future. The new group is expected to jointly create the conditions for a continued growth and sound profitability development.
In connection with the acquisition, a fourth business area - Connectivity - was created. The new business area Connectivity contributes to streamlining companies and organizations by developing and implementing embedded systems and cloud applications. Out of Cybercom's approximately 1,250 employees at the time of the acquisition, around 620 employees are included in the new business area Connectivity, while around 510 have moved to Solutions, around 30 to Experience, and around 50 to Insight. Thus, the acquisition of Cybercom had its main impact on the new business area Connectivity and on the existing business area Solutions. In addition to the above, the business areas have during the quarter been affected by a reorganization, with around 40 employees moved from the business area Solutions to Connectivity. The comparative figures have therefore been recalculated and can, for the quarter and interim period, be found on page 21-22 in this report.
Acquisition of subsidiaries in Capacent
Knowit announced the acquisition of the subsidiaries within Capacent that conduct operations in management consulting. Capacent supplements Knowit's offer with services mainly in finance, pricing strategy, and operating capital optimization, and will be part of Knowit's business area Insight. Knowit Insight's operations in management consulting are growing by around 50 employees and through the acquisition gain a stronger position in Sweden and Finland, with almost 400 consultants. The acquisition is finalized on October 1, 2021.
NET SALES, SEK, MILLIONS
ADJUSTED EBITA PROFIT,
SALES PER COUNTRY
Net sales, quarterly data
JANUARY - SEPTEMBER 2021
Adjusted EBITA profit, quarterly data
Rolling 12 months
Rolling 12 months
4 KNOWIT AB INTERIM REPORT JANUARY - SEPTEMBER 2021
THE PERIOD IN BRIEF
JANUARY - SEPTEMBER 2021
Increased net sales
The net sales for the period increased to SEK 3,236.0 (2,455.3), affected by the acquisitions of Cybercom and Creuna. Profit before amortization of intangible assets (EBITA) increased to SEK 270.4 (226.7) million. The adjusted EBITA profit increased to SEK 306.9 (226.7) million, adjusted for acquisition and integration costs of SEK 36.5 million. Compared with the corresponding period last year, exchange rate developments had a negative effect on EBITA totaling SEK -0.1 million. In the previous year, Knowit received support in the form of reduced employer contributions of SEK 26 million and furlough support of SEK 13 million. In total, this meant reduced personnel costs of SEK 39 million at the end of the third quarter. Knowit has not received any support during 2021.
Cash flow from operating activities was SEK 195.5 (264.4) million, where the change in operating capital had an impact of SEK -102.6 (85.2) million. The change in operating capital in the previous year was positively affected by one-off effects connected to personnel debts and accounts receivable.
The below table shows financial history that includes the acquisitions of Creuna and Cybercom for comparable periods, to facilitate for the reader to follow the development. See more information on page 28 in this report.
Sales, Creuna and Cybercom
Sales, incl. Creuna and Cybercom
Sales, change, %
of which is exchange rate effect, %
Adjustments relate to addition of net sales in Cybercom and Creuna for the period July-September 2020, when they were not included in regulatory financial reports.
Adjustments relate to addition of net sales in Cybercom for the period July-September 2020, and Creuna for the period January-September 2020, when they were not included in regulatory financial reports.
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.
Adjusted EBITA profit
EBITA margin, %
Adjusted EBITA margin, %
Cash flow from operating activities
Number of employees
at the end of the period
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.
Adjusted EBITA profit in relation to the net sales of the period.
5 KNOWIT AB INTERIM REPORT JANUARY - SEPTEMBER 2021
This is an excerpt of the original content. To continue reading it, access the original document here.