REpoRT INTERIM. Increased sales Improved profit Strong organic growth JANUARY SEPTEMBER 2018 JANUARY SEPTEMBER 2018

Transcription

1 INTERIM REpoRT JANUARY SEPTEMBER 2018 Increased sales Improved profit Strong organic growth JANUARY SEPTEMBER 2018 NET SALES INCREASED BY 13.7 PERCENT TO SEK 2,219.3 (1,952.3) MILLION THE OPERATING PROFIT (EBITA) INCREASED BY 14.9 PERCENT, TO SEK (187.1) MILLION RESULTS AFTER TAXES INCREASED TO SEK (136.3) MILLION EARNINGS PER SHARE INCREASED TO SEK 7.99 (6.90), BEFORE AND AFTER DILUTIONS THE OPERATING MARGIN (EBITA) INCREASED TO 9.7 (9.6) PERCENT CASH FLOW FROM OPERATING ACTIVITIES INCREASED TO SEK (36.3) MILLION JULY SEPTEMBER 2018 NET SALES INCREASED BY 14.5 PERCENT TO SEK (577.6) MILLION THE OPERATING PROFIT (EBITA) INCREASED BY 12.2 PERCENT, TO SEK 56.2 (50.1) MILLION RESULTS AFTER TAXES INCREASED TO SEK 42.1 (35.0) MILLION EARNINGS PER SHARE INCREASED TO SEK 2.10 (1.74), BEFORE AND AFTER DILUTIONS THE OPERATING MARGIN (EBITA) WAS 8.5 (8.7) PERCENT CASH FLOW FROM OPERATING ACTIVITIES INCREASED TO SEK 42.1 (-61.8) MILLION The information contained herein is such as shall be made public by Knowit AB (publ) in accordance with the EU Market Abuse Regulation. The information was made public through the agency of CEO and President Per Wallentin, at 8.30 AM CEST on October

2 COMMENTS FROM THE CEO Continued strong development W We are seeing a continued positive development of net sales and profit, within all of Knowit s fields, during the first nine months of the year. It is primarily Knowit Insight which shows strong growth and improved results, but Knowit Experience and Knowit Solutions also have good growth and better results. STRONG NET RECRUITMENT It is particularly gratifying that we have had a strong recruitment during the quarter. We have doubled net recruitment as compared with the corresponding period last year. In nine months, we have increased by almost 180 new employees. Having many people join us at Knowit shows that we are good at taking care of and developing our employees. This, combined with strategic employer branding efforts, creates success. SUSTAINABLE BUSINESS Knowit Experience, our digital communication agency, has taken on assignments which are entirely in line with our strategic orientation. One example is that we have been named as partner to the Oslo European Green Capital 2019, where we are contributing with competence in mobile applications. We have also deepened our strategic partnership with Vinnova by taking on the role of innovation partner. Knowit Insight, our operations in management consultancy, helps its clients to adapt both their organizations and their work methods to the increasingly fast digital development. At Volvo Cars, we have an assignment in agile transformation. And DNB Sweden is getting support in an extensive transformation project with the aim of creating greater equality at the workplace. Knowit Solutions, our operations in system development, continues to sign large deals in the public sector in Norway. Among these, we find an extension with Entur, a company offering digital ticket sales and journey planners for all public transportation companies in Norway. At Telenor, we have a deepened collaboration, in which we deliver agile teams to develop business-critical systems. NOMINATED FOR THE ALLBRIGHT AWARD The employer branding company Universum has yet again ranked Knowit as the most popular workplace out of all Swedish consultancy firms, among young professionals with a degree in IT. With the goal of creating an even more inclusive corporate culture at Knowit, we work consciously with equality matters, to retain, develop, and attract existing and new employees. As a result of these efforts, we are continuously increasing the number of female employees and managers. This makes it particularly gratifying that we are nominated for the AllBright Award IN THE SERVICE OF HUMANITY We want to be heard in societal debate. Through a series of letters to the editor, I have discussed the opportunities and pitfalls of digitalization. It is not just financial benefits which are created, but also day-to-day benefits, like a simpler and more sustainable lifestyle. But this requires dramatic changes in work methods, routines and behaviors. This is something we see in our assignments every day. We reward assignments in which we create long-term value and which are in line with our sustainability ambitions. Participating in creating a simpler day-to-day life for individuals feels important and is closely connected to our vision of a sustainable and humane society, through digitalization and innovation. Per Wallentin CEO and President 2 KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

3 JANUARY SEPTEMBER 2018 Important events during the year Knowit has been named as partner to the OSLO EUROPEAN GREEN CAPITAL At Volvo Cars, Knowit has an assignment in AGILE TRANSFORMATION. Knowit is supporting DNB SWEDEN in a transformation project aimed at creating greater equality in the workplace. Together with several other companies, Knowit is working to contribute to a FOSSIL-FREE, CLIMATE-POSITIVE and COMPETITIVE IT consultancy industry. Knowit and TELENOR SVERIGE have initiated a deeper collaboration regarding delivery of agile teams. Knowit is developing a NEW GLOBAL SITE for Huhtamaki. Knowit has deepened its collaboration with Vinnova by taking on the role as INNOVATION PARTNER. Knowit has been nominated for the ALLBRIGHT AWARD DURING THE ALMEDALEN WEEK, Knowit participated in several events, including a debate on digitalization in the public sector. The Defence Material Administration chooses Knowit as a partner for DELIVERY OF SYSTEMS for the Swedish Royal Navy. Knowit won a SILVER LION IN THE FILM CATEGORY at the annual advertising competition Cannes Young Lions. Knowit is developing Folkhälsokollen, a digital solution providing knowledge on DEMOGRAPHY AND LIVING HABITS, which is relaunched by the Stockholm County Council. Knowit Insight has taken on a STRATEGIC ASSIGNMENT FOR BERTIL & STEEN, one of Norway s larger car retailers. Knowit Insight is a PARTNER TO SKANDIA for consultancy regarding agile transformation. Knowit is given the assignment to develop the digital platform for NORWAY S NEW NATIONAL MUSEUM in Oslo. The museum will be the Nordic region s largest art museum and is set to open in Knowit Experience establishes a NEW COMPANY IN NORTHERN SWEDEN to reinforce growth. IN DENMARK, Knowit Experience has established operations in a NEW COMPANY. A Nordic team from Knowit won FIRST PRIZE IN SAS INSTITUTE S HACKATHON COMPETITION. GROW A DEVELOPMENT PROGRAM aimed at female employees within Knowit has been initiated in Sweden. In Universum s survey of the MOST ATTRACTIVE EMPLOYERS FOR YOUNG IT PROFESSIONALS, Knowit is ranked among the top IT consultancy firms. The Norwegian property manager Malling & Co has HIRED A ROBOT, developed by Knowit. Knowit Insight is managing a project on the DIGITAL HEALTHCARE ENVIRONMENT OF THE FUTURE in Region Skåne. For the Swedish Public Employment Service, Knowit Solutions is building an Android APP FOR PLATSBANKEN. Knowit has developed a GDPR-adapted ANALYSIS SUPPORT FOR WAGE NEGOTIATION for the SWEDISH AGENCY FOR GOVERNMENT EMPLOYERS. 3 KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

4 MARKET AND OPERATIONS Sustainable assignments on a positive market 2, Q NET SALES, SEK, MILLIONS 37 Q Q Q1 Net sales, quarterly data Rolling 12-monthly Q Q1 670 Q Q ,650 Q Q EBITA, SEK, MILLIONS EBITA, quarterly data Rolling 12-monthly Q Q Q1 Q2 Q , Q1 Q2 Q KKnowit s geographic market is the Nordic region. Within a world of accelerating digitization, Knowit creates unique client values by offering services in three business fields: Experience, Insight and Solutions. It is our capacity to combine competence in design and communication, management consultancy and IT that sets us apart from other consultancy firms. The common denominator is innovation and creativity within the digital development, with the end user in mind and our ability to handle the complex market, business environment and technology of today. Within Knowit s three business fields, demand is very high overall, in all operations and on all geographic markets. EXPERIENCE We see a clear trend with ads and marketing converging with IT. Knowit has a strong position and is currently at the cutting edge of this development. With around 600 specialists in the Nordic region, we work with digitization, web and smartphone development, market communication and various forms of client/user experience. Knowit has deepened its collaboration with Vinnova by taking on the role as innovation partner. This means that Knowit Experience has implemented processes for structured horizon scanning, strategy and proactive consultancy. The project encompasses four areas incident management, lifecycle management, consultancy and development for both the external website and the intranet. Knowit will provide competence in technology, strategy, marketing, user experience, and design. Knowit Experience in Finland has recently launched the new global website for Huhtamaki.com. The continued collaboration with Huhtamäki, a global player in manufacturing of food packaging, is focused on developing the user experience of the company s various business field pages. Knowit has been named as partner to the Oslo European Green Capital The purpose is to support Oslo during the year as the European Green Capital with competence in, for instance, mobile applications. INSIGHT Knowit s more than 300 specialists work to improve the business models, methods and business-driving processes of clients, by identifying and realizing the opportunities created by new technology. We create ideas, act as advisors and develop tailored solutions. Our assignments, in which we work closely with our clients, involve strategic and tactical implementation of change and improvement projects. Knowit helps clients adapt both organizations and work methods to the fast digital development. At Volvo Cars, Knowit Insight has an assignment in agile transformation to support the organization with steering the transformation in several areas, such as new operative models, decision structures, and delivery management. Knowit is supporting DNB Sweden in a transformation project with the aim of creating greater equality in the workplace. Focus is placed on broadening the norms and creating a more inclusive culture in order to attract and develop more women within the organization. Knowit is working with the management team of DNB Sweden to create a transformation plan and drive the project forward toward the desired position. 4 KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

5 MARKET AND OPERATIONS, CONTINUED SALES PER SEGMENT JANUARY SEPTEMBER 2018 Solutions 63% (65) Experience 24% (23) Insight 13% (12) SALES PER INDUSTRY FIELD JANUARY SEPTEMBER 2018 Public sector 35% (36) Retail 16% (14) Banking, finance and insurance 15% (13) Industry 13% (14) Telecommunications operators 6% (7) Energy 5% (5) Media, education and gaming 2% (3) Telecommunications industry 2% (2) Pharmaceuticals 1% (1) Other 5% (5) SALES PER COUNTRY JANUARY SEPTEMBER 2018 Sweden 57% (61) Norway 36% (32) Finland 5% (5) Other 2% (2) SOLUTIONS In the business field Solutions, we have 1,300 consultants working in development projects with high requirements on traceability, performance and accessibility. We offer services for all aspects of the development process from project steering and architecture to programming, testing and security. Entur delivers services making it easy to travel with all public transportation companies in Norway. Knowit is developing a system portfolio for Entur s adaptation toward international competition, new sales channels and simpler administration. Knowit and Telenor Sweden have initiated a deepened collaboration on the delivery of agile teams. This entails Knowit taking responsibility for resource and competence delivery of a number of cross-functional teams which will further develop the client s business-critical IT systems. Client industry fields BANKING AND FINANCE Traditional banking is facing competition from parties using new digital business models and the emerging possibilities of technology. The development has created a new competitive situation, where brands and Guser experiences are more important than ever. We offer services in innovation, user experiences, system and process changes, brand development and marketing. Our clients include B3-Sparebanker, DNB, LF Bank, Nordea, and Santander. RETAIL Knowit has over the course of many years amassed a wide knowledge from various fields and today supplies services and solutions to many leading retail companies and chains of stores. With deep knowledge in e-commerce, purchasing, logistics systems, client management and business intelligence, we contribute to heightening our clients competitiveness. We offer competence, solutions and services in, for instance, IT use online, automation and optimization of mature IT processes through application management and offshoring support. Clients include ApoHem, Circle K, HM, Systembolaget, and Volvo Car Retail Solutions. MANUFACTURING INDUSTRY In the manufacturing industry, digital transformation is an important driving force for streamlining and renewal. For instance, in the vehicle industry, digital transformation and the IoT are having a huge effect both in the vehicles themselves, which can have up to 100 embedded processors, and in the infrastructure being developed around vehicles to support connections, maintenance and repair. Knowit supports clients with methods and architecture for faster, more efficient product development. We also contribute in procurement processes and collaboration with suppliers, to maximize benefits for our clients. In the manufacturing sector we have clients like Altibox, Saab, Sick IVP, Suzuki Garphyttan, and Volvo Cars. PUBLIC SECTOR Within the public sector, there is a goal of streamlining operations and simplifying communications with citizens. Examples of solutions we develop include web solutions, mobile solutions, intranets, errand and document management solutions, archiving solutions and operational systems connected to specific needs. Knowit works in all these areas and thanks to its long experience in the public sector has a strong position, which we continuously develop through competence expansion and knowledge transfer from other fields. Knowit has framework agreements with many large organizations in the sector, including the Legal, Financial and Administrative Services Agency (Kammarkollegiet) in Sweden and Hansel in Finland. Examples of clients include the City of Malmö, the Finnish Social Insurance Institution, the Swedish Pensions Agency, the Norwegian Public Roads Administration, the Stockholm County Council, and the Swedish Association of Local Authorities and Regions. 5 KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

6 CORPORATE DEVELOPMENT Strong organic growth During the period, Knowit has had a net recruitment of 176 employees. The increase from the last of June is 128 employees. This organic growth is in line with Knowit s strategy of primarily developing its existing operations and growing organically. Knowit has joined the initiative Fossil-free Sweden, gathering around 40 companies in the IT consultancy sector in Sweden to draw up a plan for achieving a fossil-free, climate-positive, and competitive IT consultancy sector by A FOCUS ON THE WORKING ENVIRONMENT The employer branding company Universum has once again published the results of its annual survey of the Nordic region s most popular employers among young professionals, graduates who have been working for 1 8 years. Knowit was in sixteenth place and thus the most popular Swedish IT consultancy firm. In Finland, Knowit is taking part in the campaign #isähaaste ( The Dad Challenge ), as one of the first challenger companies. The campaign is organized by Fambition, which is an organization that aims at finding better ways to merge working and family life. The idea of the challenge is to challenge employers in Finland to take part in a working life campaign to create more dad-friendly work environments, and to support dads in taking more time off with their families and children. NOMINATED FOR ALLBRIGHT AWARD Knowit has been nominated for the AllBright Award It is awarded by the AllBright foundation, which works for equality and diversity in managerial positions in the Swedish private sector. With a basis in its information security offering, Knowit has performed a survey showing that 78 percent of Swedes are familiar with the concept fake news. Half of the people interviewed said that they read fake news at least once a week. Almost one in five, 19 percent, said they did so every day. Knowit s CEO and President, Per Wallentin, says: IT technology and newer technologies like artificial intelligence are all well and good, but the human aspect of digitalization will be the next big trend. STRATEGY FOR GROWTH Thanks to Knowit s corporate structure with three business fields where the operative subsidiaries collaborate regardless of geographic location, there is room for investing in certain parts of the group, while streamlining others. Knowit s strategy for expansion and increased growth is mainly to develop the existing operations, supplemented with recruitments and establishing new firms or acquiring companies. It is important that the people we recruit, the companies we establish and recruit all share the culture that characterizes Knowit. 6 KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

7 THE GROUP Strong development on all markets Net sales and profit JANUARY SEPTEMBER Net sales increased to SEK 2,219.3 (1,952.3) million, an increase by 13.7 percent as compared with the corresponding period last year. Net sales increased to SEK 1,256.9 (1,160.5) million in Sweden, SEK (640.8) million in Norway and SEK (102.4) million in Finland. Sales per employee increased to SEK 1,103 (1,054) thousand. The operating profit before amortization of intangible assets (EBITA) increased to SEK (187.1) million, an increase by 14.9 percent as compared with the corresponding period last year. In Sweden, EBITA increased to SEK (131.9) million, in Norway to SEK 94.4 (72.4) million, and in Finland to SEK 11.7 (8.6) million. The operating margin (EBITA) increased to 9.7 (9.6) percent. Amortization of intangible assets amounted to SEK -4.5 (-4.1) million. The operating profit after financial items increased to SEK (174.2) million. The financial net was SEK -2.7 (-8.8) million. The financial net was affected by costs for interest relating to bank loans and leasing, as well as costs for synthetic options. The results after taxes increased to SEK (136.3) million. Tax for the period amounted to SEK (-37.9) million. The non-controlling interests share of profit for the year increased to SEK 6.3 (5.3) million. Earnings per share increased to SEK 7.99 (6.90). THE THIRD QUARTER Net sales increased to SEK (577.6) million, an increase by 14.5 percent as compared with the corresponding period last year. Net sales increased to SEK (333.5) million in Sweden, SEK (195.7) million in Norway and SEK 33.0 (32.4) million in Finland. Sales per employee increased to SEK 330 (311) thousand. The operating profit before amortization of intangible assets (EBITA) increased to SEK 56.2 (50.1) million, an increase by 12.2 percent as compared with the corresponding period last year. In Sweden, EBITA increased to SEK 34.3 (26.6) million, in Norway to SEK 28.6 (23.3) million, and in Finland EBITA totaled SEK 2.3 (2.6) million. The operating margin (EBITA) was 8.5 (8.7) percent. Amortization of intangible assets amounted to SEK -1.3 (-1.3) million. The operating profit after financial items increased to SEK 53.7 (46.6) million. The financial net was SEK -1.2 (-2.2) million. The financial net was affected by costs for interest relating to bank loans and leasing, as well as costs for synthetic options. The results after taxes increased to SEK 42.1 (35.0) million. Tax for the period amounted to SEK (-11.6) million. The non-controlling interests share of profit for the year was SEK 1.7 (1.8) million. Earnings per share increased to SEK 2.10 (1.74). ACQUISITIONS AND SALES OF OPERATIONS As of January , Knowit AB sold Knowit Estonia OÜ, which has been part of Knowit for ten years. The sale gives Knowit the opportunity to make clear its strategy of being a leader primarily in the Nordic countries. The company will continue to collaborate with Knowit. Knowit Estonia OÜ operates in Tallinn and has fourteen employees. The sale has affected EBITA positively by SEK 0.2 million. Segments JANUARY SEPTEMBER The group s operations are organized so that the corporate management mainly follows up on three business fields: Experience, Insight, and Solutions. Net sales for the segment Experience increased to SEK (463.0) million, for the segment Insight they increased to SEK (254.0) million and for the segment Solutions they increased to SEK 1,471.9 (1,343.8) million. The operating profit before amortization of intangible assets (EBITA) increased to SEK 47.5 (45.3) million for the segment Experience, to SEK 43.9 (27.5) for the segment Insight and to SEK (155.4) for the segment Solutions. The EBITA margin was 8.6 (9.8) percent for the segment Experience, increased to 14.3 (10.8) percent for the segment Insight and was 11.4 (11.6) percent for the segment Solutions. The parent company s results and the company sales are not included in segment reporting. Cash flow and financial position JANUARY SEPTEMBER Cash flow from operating activities was SEK (36.3) million, where the change in working capital is affected by increased accounts receivable and decreased shortterm liabilities. Cash flow from investment activities totaled SEK (-27.0) million, affected mainly by consideration for acquisitions made in past years, which totaled SEK (-16.3) million. Cash flow from financing activities was SEK (-43.9) million, affected 7 KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

8 THE GROUP, CONTINUED by dividends to shareholders in Knowit AB and non-controlling interests in group companies and amortization of bank loans. Total cash flow was SEK (-34.6) million. Cash and cash equivalents were SEK 57.6 (10.9) million as per September Goodwill and other intangible assets amounted to SEK (905.2) million, of which goodwill was SEK (896.4) million, and other intangible assets was SEK 18.9 (8.8) million. Equity increased to SEK 1,058.1 (891.5) million. Interest-bearing liabilities totaled SEK 88.2 (187.1) million on September , of which SEK 46.5 (81.4) million were long-term and SEK 41.7 (105.7) million were short-term. Bank loans decreased to SEK 12.5 (26.7) million, a used overdraft facility totaled SEK 0 (0) million of a granted overdraft facility of SEK (170.0) million, financial leases totaled SEK 27.1 (26.7) million and liabilities related to future consideration and synthetic options in subsidiaries totaled SEK 48.6 (82.3) million. The equity ratio increased to 57.3 (53.2) percent as per September THE SHARE In May, 81,702 shares were issued, with a waiver of the shareholders' preferential rights, in accordance with the resolution of the AGM on an offset share issue. The issue performed is directed at the sellers of shares of Knowit Dataess AS, Norway, as partial consideration for acquisition of that company, and acquisition of non-controlling interest shares in Knowit Experience AS, Norway, and redemption of synthetic options in Knowit Experience AS, Norway. The outstanding shares in Knowit AB total 19,139,217 before the new issue. Following the issue, the number of shares totals 19,220,919. Employees JANUARY SEPTEMBER On September , a total of 2,241 (2,039) people were employed by the group. The number of employees has increased by 176 persons during Excluding the sale of Knowit Estonia OÜ, the number of employees has increased by 190 persons during The average number of employees during the period increased to 2,012 (1,852). The average number of employees in Sweden increased to 1,240 (1,178), in Norway to 625 (521) and in Finland to 109 (100). PARENT COMPANY Results and financial position JANUARY SEPTEMBER The operating profit before amortization of intangible assets (EBITA) totaled SEK (-34.1) million. The financial net was SEK 5.5 (12.2) million, affected mainly by dividends to subsidiaries and interest costs for bank loans. The result after financial net was SEK (-21.9) million. As per September , equity was SEK (300.2) million. Untaxed reserves, mainly accrual funds, were SEK 78.5 (60.3) million. 8 KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

9 OTHER INFORMATION Nomination committee appointed NOMINATION COMMITTEE In accordance with the resolution of the Annual General Meeting on April , the nomination committee for the AGM 2019 shall consist of a representative for each of the three largest registered shareholders in numbers of votes as per September , and the chairman of the board, who shall convene the nomination committee to its first meeting. The Nomination committee for the AGM 2019 consists of: Lennart Francke, Swedbank Robur fonder, Malin Björkmo, SHB fonder, Jan Särlvik, Nordea Funds and Mats Olsson, Chairman of the Board and convener. The duties of the Nomination committee are to propose, at the AGM 2019, the Chairman of the AGM, the Board members, the Chairman of the Board, the auditors, Directors fees, auditors fees and the Nomination committee s procedures. Shareholders who wish to make suggestions to the nomination committee can do so via to valberedning@knowit.se. AGM The AGM will take place on Friday April at 1 PM in the Company s offices at Klarabergsgatan 60, Stockholm. Notice to attend will be announced in a press release, in the newspapers Post och Inrikes Tidningar and Dagens Industri, and on Knowit s website. Essential risks and uncertainty factors Knowit s general essential business risks consist of reduced demand for consultancy services, problems attracting and retaining skilled personnel, price pressures and financial risks related to credit and exchange rates and, to a lesser extent, risks related to fixed price projects. For a comprehensive description of the essential risks and uncertainty factors, see Knowit s annual report for 2017, pages No significant changes have occurred since. Accounting principles This report has been prepared in accordance with IAS 34, Interim Financial Reporting, and the Swedish Annual Accounts Act. The interim report for the Parent company has been prepared in accordance with the Chapter 9 of the Swedish Annual Accounts Act, Interim Reporting. For the group and the parent company, the same accounting principles and bases for calculation have been applied as in the latest annual report, excepting the altered accounting principles described below. Information in accordance with IAS 34.16A appears in the financial reports and connected notes, as well as in other parts of the interim report. ALTERED ACCOUNTING PRINCIPLES IFRS 9, Financial Instruments This standard applies for annual periods beginning on or after January Knowit will apply IFRS 9 as of January Knowit has analyzed the effects of IFRS 9 and the results show that the new rules do not significantly affect the group s financial position and profit. Knowit has also made the assessment that the credit loss reserve will not be significantly affect as compared with under the former standard. As regards the changes of the principles for securities, but may have an effect on future securities setups. IFRS 15, Revenue from Contracts with Customers The standard is applicable to fiscal years starting after January Knowit will apply IFRS 15 as of January Knowit has analyzed the group s client agreements and identified the revenue categories: Fee revenue, Licensing revenue and Other revenue. Most of the group s revenue falls into the category Fee revenue. Revenue from service contracts are reported in the period that the services are performed or when a project is finalized. If there are different performance commitments in a contract, the transaction price is divided over the different performance commitments. In cases where the transaction price contains variable remunerations, these are estimated and taken into account in the transaction price, to the degree they will most likely not need to be redeemed. The conclusion of the analysis performed is that IFRS 15 will not have any significant on the group s reporting of revenue, aside from increased requirements on information. NEW ACCOUNTING PRINCIPLES NOT YET APPLIED BY THE GROUP IFRS 16, Leases The standard is applicable to fiscal years starting after January Knowit will apply IFRS 16 as of January IFRS 16 is a new leasing standard which will replace IAS 17 Leases. The standard requires that all assets and liabilities attributable to all leases, with some exceptions, will be presented in the balance sheet. The group has begun the work of evaluating the effects of IFRS 16, the standard will mainly affect reporting of the group s operational leasing agreement, such as rental agreements and the like. 9 KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

10 OTHER INFORMATION CONTINUED DISCLOSURE REQUIREMENTS PER QUARTER IN ACCORDANCE WITH IFRS Financial instruments reported at other than actual value There are no significant differences between reported values and actual values for financial instruments in the balance sheet. Alternative key figures IIn this interim report, we are using the following alternative key figures, as we believe they are relevant in follow-up of our long-term financial targets and to give a fair idea of Knowit s results and financial position. The Board has, among other things, determined that the EBITA profit should exceed the net debt, that the EBITA margin should exceed a 10 percent average over a period of five years and that equity should exceed the intangible assets. We also monitor capital employed, as it is an important aspect of the working capital turnover. For more information on our longterm financial targets and further definitions of key figures, see the annual report for 2017, pages 10 and 87. EBITA profit The profit before amortization of intangible assets. EBITA margin The profit before amortization of intangible assets (EBITA) in relation to the turnover of the period. Net liabilities Interest-bearing liabilities less financial interest-bearing assets. Average equity The average of the opening equity of the period and the closing equity of the period. Earnings on equity The profit after taxes in percent of average equity including non-controlling interest shares. Capital employed Total assets less non-interest-bearing liabilities and provisions. Earnings on capital employed Profit after financial items plus financial costs in percent of average capital employed. Forward-looking information Forward-looking information in this report is based on the expectations of Knowit s management team at the time of the report. While Knowit s management team assesses these expectations to be reasonable, there is no guarantee that these expectations are or will turn out to be correct. Consequently, future outcomes may vary significantly compared with what is presented in the futureoriented information, depending for example on changed market conditions for the Knowit corporation s offerings and more general conditions related to economy, market, competition, regulatory changes and other alterations in policy, as well as variations on exchange rates. Knowit does not commit to update or correct such forward-looking information beyond what is required by law. Financial calendar February AM Year-end report 2018 April AM Interim report Q1 April PM AGM July PM Interim report Q2 October AM Interim report Q3 February AM Year-end report 2019 Certification Stockholm, October Per Wallentin CEO Address and contact information Knowit AB, (Company reg.no ) Box 3383, Stockholm Visiting address: Klarabergsgatan 60 Phone:+ 46 (0) , Fax: +46 (0) knowit.eu. FOR MORE INFORMATION, PLEASE CONTACT Per Wallentin, President and CEO, Knowit AB (publ), , eller Christina Johansson, CCO, Knowit AB (publ), eller , eller Anna Jennehov, CFO, Knowit AB (publ), Knowit AB (publ) Knowit AB (publ) is a consultancy firm that creates unique customer values by offering digital and crossfunctional solutions from three business areas: Experience, Insight and Solutions. It is the capacity to combine competencies within IT, design and communication and management consultancy that sets us apart from other consultancy firms. Our culture is characterized by openness, understanding of the client s business, high competence and a drive to constantly develop. Knowit was founded in 1990 and currently has around 2,200 employees in 14 locations in Sweden, five locations in Norway, and one each in Denmark, Finland, and Germany. Knowit AB (publ) is quoted on NASDAQ OMX in Stockholm. For further information about Knowit, please visit knowit.eu. 10 KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

11 OTHER INFORMATION CONTINUED Auditor s report To the Board of Directors of Knowit AB Corp. id INTRODUCTION We have reviewed the condensed interim financial information (interim report) of Knowit AB as of 30 September 2018 and the nine-month period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review. SCOPE OF REVIEW We conducted our review in accordance with International Standard on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing practices and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. CONCLUSION Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act. Stockholm 23 October 2018 KPMG AB Helena Arvidsson Älgne Authorized Public Accountant 11 KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

12 Consolidated income statement in summary SEK M Jul-Sep 2018 Jul-Sep 2017 Jan-Sep 2018 Jan-Sep 2017 Jan-Dec 2017 Net sales , , ,733.5 Profit on disposal of operations , , ,440.0 Depreciation of tangible fixed assets OPERATING RESULT BEFORE DEPRECIATIONS OF INTANGIBLE ASSETS (EBITA) Depreciation of intangible fixed assets OPERATING RESULT (EBIT) Financial income Financial cost RESULT AFTER FINANCIAL ITEMS Income taxes RESULT FOR THE PERIOD Result for the period assignable to shareholders in Parent Company Result for the period assignable to non-controlling interests holdings Earnings per share Earnings per share before dilution (SEK) Earnings per share after dilution (SEK) Other total result in summary SEK M Jul-Sep 2018 Jul-Sep 2017 Jan-Sep 2018 Jan-Sep 2017 Jan-Dec 2017 Other total result Result for the period Items that may be reclassified subsequently to profit or loss Hedging of net investment Tax effect hedging of net investment Exchange rates difference OTHER TOTAL RESULT FOR THE PERIOD, NET AFTER TAX Total result for the period Total result assignable to shareholders in Parent Company Total result assignable to non-controlling interests holdings KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

13 Consolidated balance sheet SEK M Assets Intangible fixed assets Tangible fixed assets Financial fixed assets Deferred tax assets Current assets Liquid funds Assets in disposal groups held for sale 4.3 TOTAL ASSETS 1, , ,794.0 Equity and liabilities Share capital Other paid-up capital and other provisions Recognized profits including result for the period EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF PARENT COMPANY 1, Non-controlling interests holdings TOTAL EQUITY 1, Long-term provisions Interest-bearing long-term liabilities Interest-bearing short-term liabilities Other short-term liabilities Liabilities in disposal groups held for sale 1.2 TOTALE QUITY AND LIABILITIES 1, , ,794.0 Key figures Jul-Sep 2018 Jul-Sep 2017 Jan-Sep 2018 Jan-Sep 2017 Jan-Dec 2017 Average number of employees 2,003 1,857 2,012 1,852 1,864 Sales per average number of employees (000s) ,103 1,054 1,466 Result after financial items per average number of employees (000s) Return on total capital % Return on equity % Return on capital employed % EBITA margin % Equity ratio % Data per share Earnings per share (SEK) Jul-Sep 2018 Jul-Sep 2017 Jan-Sep 2018 Jan-Sep 2017 Jan-Dec 2017 Before dilution After dilutions Equity per share (SEK) Before dilution After dilutions Average number of shares (000s) Before dilution 19,221 19,079 19,180 18,998 19,028 After dilutions 19,221 19,079 19,180 18,998 19,028 Average number of shares (000s) Before dilution 19,221 19,079 19,221 19,079 19,139 After dilutions 19,221 19,079 19,221 19,079 19, KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

14 Consolidated cash flow analysis SEK M Jul-Sep 2018 Jul-Sep 2017 Jan-Sep 2018 Jan-Sep 2017 Jan-Dec 2017 Cash flow current operations before changes in working capital Change in working capital CASH FLOW FROM CURRENT OPERATIONS Cash flow from investing activities Cash flow from financing activities CASH FLOW FOR THE PERIOD Opening balance Exchange rates differences CLOSING BALANCE The closing balance January to December 2017 includes SEK 2.1 million which in the balance sheet is reclassified to 'Assets in disposal group held for sale'. Statement of changes in equity Group SEK M Jul-Sep 2018 Jul-Sep 2017 Jan-Sep 2018 Jan-Sep 2017 Jan-Dec 2017 Opening balance 1, Exchange rates differences Hedging of net investment Tax effect hedging of net investment Result for the period TOTAL RESULT FOR THE PERIOD TOTAL BEFORE TRANSACTIONS WITH SHAREHOLDERS 1, , ,033.6 Non-controlling interests' holdings -0.7 Additional capital from non-controlling interests' holdings Dividend payment New issue in connection with acquisitions 9.4 Share issue for the acquisition of non-controlling interests CLOSING BALANCE 1, , KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

15 Group revenue from contracts with customers SEK M Jul-Sep 2018 Jul-Sep 2017 Jan-Sep 2018 Jan-Sep 2017 Jan-Dec 2017 GEOGRAPHICAL Fee revenue Sweden , , ,571.7 Norway Finland Other TOTAL , , ,640.0 Other revenue Sweden Norway Finland Other TOTAL TOTAL NET SALES , , ,733.5 SEK M Jul-Sep 2018 Jul-Sep 2017 Jan-Sep 2018 Jan-Sep 2017 Jan-Dec 2017 SEGMENT Fee revenue Experience Insight Solutions , , ,812.0 Parent company/group adj TOTAL , , ,640.0 Other revenue Experience Insight Solutions Parent company/group adj TOTAL TOTAL NET SALES , , ,733.5 Revenue category License revenue is reported under the Other income category, as the total sums are not significant. For more information, see Note 1 Accounting and Valuation Principles, pages of the Annual Report KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

16 Financial assets and liabilities Loans and Accrued accounts acquisition cost Fair value receivables Fair value SEK M Assets in balance sheet Other long-term securities holdings Other long-term receivables Accounts receivable and other receivables Cash TOTAL Other financial Other financial liabilities Fair value liabilities Fair value SEK M Liabilities in the balance sheet Interest-bearing liabilities Accounts payable Other liabilities TOTAL Reported value of the Group s financial assets and liabilities, divided into valuation category in accordance with IFRS 9 for 2018 and IAS 39 for 2017 are presented in the above table. No financial assets or liabilities are reported at a value that significantly deviates from fair value. 16 KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

17 Income statement Parent company SEK M Jul-Sep 2018 Jul-Sep 2017 Jan-Sep 2018 Jan-Sep 2017 Jan-Dec 2017 Net sales Operating costs Depreciation of tangible fixed assets OPERATING RESULT BEFORE DEPRECIATIONS OF INTANGIBLE ASSETS (EBITA) Depreciation of intangible fixed asset OPERATING RESULT (EBIT) Financial items RESULT AFTER FINANCIAL ITEMS Appropriations Income taxes RESULT FOR THE PERIOD Balance sheet Parent company SEK M Assets Intangible fixed assets Tangible fixed assets Financial fixed assets Current assets Liquid funds TOTAL ASSETS 1, ,019.1 Equity and liabilities Share capital Statutory reserve Fund for development costs Unrestricted share capital including result for the period TOTAL EQUITY Untaxed reserves Interest-bearing long-term liabilities Long-term provision Interest-bearing short-term liabilities Other liabilities TOTAL EQUITY AND LIABILITIES 1, , KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

18 Segment reporting Group Parent company / SEK M, Jul-Sep 2018 Experience Insight Solutions group adj. Total External net sales Net sales between segments NET SALES Operating result before depreciations of intangible fixed assets (EBITA) Depreciation of intangible fixed assets OPERATING RESULT (EBIT) Result after financial items 53.7 PROFIT FOR THE PERIOD 42.1 EBITA margin, % Average numbers of employees , ,003 Parent company / SEK M, Jan-Sep 2018 Experience Insight Solutions group adj. Total External net sales , ,219.3 Net sales between segments NET SALES , ,219.3 Operating result before depreciations of intangible fixed assets (EBITA) Depreciation of intangible fixed assets OPERATING RESULT (EBIT) Result after financial items PROFIT FOR THE PERIOD EBITA margin, % Average numbers of employees , ,012 Intangible fixed assets Tangible assets KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018

19 Segment reporting Group, continued Parent company / SEK M, Jul-Sep 2017 Experience Insight Solutions group adj. Total External net sales Net sales between segments NET SALES Operating result before depreciations of intangible fixed assets (EBITA) Depreciation of intangible fixed assets OPERATING RESULT (EBIT) Result after financial items 46.6 PROFIT FOR THE PERIOD 35.0 EBITA margin, % Average numbers of employees , ,857 Parent company / SEK M, Jan-Sep 2017 Experience Insight Solutions group adj. Total External net sales , ,952.3 Net sales between segments NET SALES , ,952.3 Operating result before depreciations of intangible fixed assets (EBITA) Depreciation of intangible fixed assets OPERATING RESULT (EBIT) Result after financial items PROFIT FOR THE PERIOD EBITA margin, % Average numbers of employees , ,852 Intangible fixed assets Tangible assets The group s operations are organized such that the corporate management primarily follows up on sales, EBITA profit and average number of employees per group segment. Excluding intangible assets, no other balance sheet items per operating segment are followed up on by the corporate management. Non-distributed costs consist of the parent company s corporate-wide costs for management, financing and marketing. 19 KNOWIT AB INTERIM REPORT JANUARY SEPTEMBER 2018