Knowit : Interim report Knowit Q3 2023

THE NORDIC CONSULTANCY sector, like most other sec- tors, is affected by the weakened macroeconomy. External factors like inflation, a weakened currency, and slowdown in demand is putting greater pressure on our clients. During the third quarter of the year we have see that the effects of the recession at the start of the year is causing continued challenges in getting consultants into projects, affecting both growth and profitability. The EBITA margin was 4.8 percent, a stabilization compared with the development we saw during the second quarter, but a deterioration compared with one year ago, when the market remained strong.

A FOCUS ON PROFITABILITY AND MARGINS

In our four business areas, we have made powerful efforts during the quarter to meet the changing market circum- stances. The business area Connectivity is developing fairly well, largely thanks to hard work in adapting and transforming the operations to the current market. In other business areas, we have a way to go before we achieve satisfactory profitability levels. An important priority is to ensure that our operations are adapted for profitability rather than growth. At the same time, it is important that we are agile and use the growth opportunities given. This is achieved through thorough overview of the operations and immediate efforts to decrease general costs, for instance for travel and conferences, and through reducing the number of employees in areas where demand is weaker, and in purely administrative roles. Thus far, we have reduced the workforce by around 165 employees as a result of the weaker demand. The savings measures we have taken have already had an effect in the third quarter, but we expect further effects on operative costs during the end of the year and the start of 2024.

Retaining a strong focus on new sales and close dialogues with clients regarding existing projects has a high priority, both to increase visibility going forward and to maintain prices in an increasingly competitive situation. Furthermore, we are working hard to reallocate our resources and focus efforts on sectors and segments where demand remains strong.

While all Nordic markets are affected by weaker market conditions, we are seeing the largest challenges on the Swedish market, particularly in sectors like retail, property,

and parts of the public sector. At the same time, we are seeing continued high demand for defense solutions, cybersecurity, law, and banking and finance.

As a result of the work performed in Finland during the end of last year and the start of 2023, to improve profita- bility, our Finnish operations are succeeding fairly well in navigating on a weaker market.

DIGITALIZATION CONTINUES REGARDLESS OF THE ECONOMIC CLIMATE

Working for a sustainable and inclusive society with a focus on digitalization is a priority for us, regardless of the market situation. The need to streamline processes is becoming

• if possible - even more important for many companies and organizations on this weaker market. In the wake of an ongoing recession, our primary task is helping our clients make the right prioritizations and keep a focus on the digital initiatives that help them develop their business models and continue with their digital transformations. In the short term, both we and our clients must secure inter- nal efficiency and - by extension - profitability. In the longer term, the transition to a sustainable society through inno- vative solutions for continued digitalization is a key to success. Knowit has a strong position as a Nordic digita- lization partner, where we - in the shorter term - have high demands on our ability to continue working with all the initiatives now being implemented to increase our long- term profitability.

PER WALLENTIN

CEO and President

4 11

THE DIGITAL TRANSFORMATION means that companies and organizations are adapting their processes and business models to become entirely or partially digital and Knowit is there to support each part of this development. In a weaker market, even greater demands are made of companies regarding efficiency and resource saving, where companies' abilities to use technology are crucial. Digital solutions that Knowit has developed along with clients and partners are found throughout all parts of society, from schools, healthcare services, and authori- ties, to e-commerce,transportation, security systems in vehicles, and new energy systems.

Knowit's competence in new technology and digital solutions, such as artificial intelligence, automation, and robotization, creates good possibilities to have a positive impact on society and the climate challenges. Knowit has its largest operations in the Nordic region, with a smaller organization in Germany and operations in Poland that support the Nordic operations with expertise in program-

ming and system development. With its agile work method and client-tailored solutions, Knowit has a strong position on the Nordic digitalization market.

A STRONG CLIENT OFFERING

Knowit's four business areas build on the clients' needs for support in various parts of their organizations. The business area Solutions usually collaborates with companies' operative and IT departments. Experience's usual client group encompasses sales and marketing departments, and Connectivity's target group is mainly research and development departments. Insight mainly has corporate management and management teams as its clients.

Knowit's clients often have a need for services from several business areas. This means that projects can be performed with the support of multiple competencies from more than one business area. These are collaborations that develop both Knowit's and the clients' businesses.

GOOD SPREAD ACROSS

DIFFERENT CLIENT INDUSTRIES

Knowit meets clients in many different industries, where companies and organizations have the need for competent support to develop their operations and drive the change towards a digitalized society. The largest proportion of net sales is in the public sector, providing 39 percent of Knowit's total net sales. Other significant client sectors are retail and service companies, industry, and banking, finance, and insurance, which are behind 15, 15, and 11 percent of net sales, respectively.

A FOCUS ON SUSTAINABILITY

Actively contributing to the development of a sustainable and carbon-neutral society is a top priority at Knowit. Knowit has established sustainability goals that serve to ensure that the Company, along with its clients and partners, contributes to a positive environmental and climate impact, and increased inclusivity. In a digitalized society, new possibilities are created for simplified and sustainable everyday activities for both citizens and companies. The solution to many of the main challenges in society, such as climate change, is dependent on mankind's ability to use new and existing technology in a sustainable way.

MARKET AND OPERATIONS

An example of how Knowit contributes to a sounder and more sustainable society through digitalization is the app Hälsometern, which Knowit has developed together with Region Stockholm. By gathering data through the app, the region can continually monitor the health of citizens by mapping diseases and risk factors at an early stage. Thus, healthcare and health-promoting efforts can be adapted to citizens' actual needs, while researchers get data for new findings, and app users get a tool to monitor their own health.

A STRONG EMPLOYER BRAND

REGARDLESS OF MARKET CONDITIONS

A strong employer brand is important and therefore a top priority for Knowit regardless of market conditions. During the third quarter, work to adapt the capacity to the current market situation has focused on redistributing and increasing competence in areas still characterized by high demand.

Knowit's employees are specialists who helps companies and authorities develop technology and solutions in the digital transformation. As an employer, being attractive and offering great opportunities for development and interesting assignments at the cutting edge of technology, are keys to continued success. During the third quarter, Knowit was named one of the best employees in Nyckel- institute's mapping of equitable work conditions within Sweden. This is important as inclusion and diversity are high priorities within Knowit.

PRODUCT DEVELOPMENT

CONTRIBUTES TO INNOVATION

Knowit's business is based on a strong consultancy operation with a focus on supporting companies and organizations on their digitalization journeys. Further, there are a number of products and platforms, often springing from development projects, that have become important supplements to other services and offers within Knowit, both as a value creator in client relations and as a contribution to an innovative environment for Knowit's employees.

SignPort is Knowit's in-house developed service for digital signatures, which is used for example is the municipality of Uppsala's multi-year efforts in digitalizing its opera- tions. The municipality is thorough in measuring its progress in the digitalization process and the implementation of SignPort has already resulted in a significant difference, with decreased processing times and more effective errand management, as well as decreased lead times and costs for printing and sending physical letters.

FINANCIAL OUTCOME

The Group's operations are organized so that the corporate management team primarily follows four business areas: Solutions, Experience, Connectivity, and Insight.

The net sales for Solutions were SEK 884.2 (894.8) million, for Experience were SEK 331.3 (338.7) million, for Connectivity increased to SEK 252.2 (247.5) million, and for Insight to SEK 170.4 (136.0) million.

Profit before amortization of intangible assets (EBITA) for Solutions was SEK 62.3 (72.2) million, for Experience was SEK 7.4 (21.5) million, for Connectivity was SEK 26.2 (29.0) million, and for Insight was SEK -10.8(-8.3) million.

The EBITA margin for Solutions was 7.0 (8.1) percent, for Experience was 2.2 (6.3) percent, for Connectivity was 10.4 (11.7) percent, and for Insight was -6.3(-6.1) percent.

Solutions

1) No acquisitions have had an impact between July and September 2022.

With a strong presence in the Nordic region and around 1,900 employees, the business area Solutions is well- positioned to deliver high-quality digital solutions for companies and organizations and thereby support them on their digitalization journeys. By working close to its clients and using the latest technologies and methods, Solutions is an important partner to companies that want to future- proof their digital platforms and ensure a more data-driven operation. Solutions contributes with cutting-edge competence in all parts of the systems development process: from idea, architecture and project governance, to prog- ramming, implementation, testing, and security.

Solutions has the largest share of its clients in the public sector. Examples of clients include the Norwegian transport group VY (formerly NSB), several larger companies in retail and e-commerce, and leading companies in the telecommunications sector, such as Telia and Telenor. Examples of interesting organizations to which Solutions has delivered communication solutions include the aid organization Sida and SOS Alarm.

COMMENTS FROM THE EVP OF SOLUTIONS

The challenges that the business area has faced earlier during the year have continued into the third quarter, but without increasing further. We are impacted by weaker demand, in particular in Sweden, whereas developments in Finland and Denmark have been more positive thanks to measures implemented earlier during the year.

During the quarter, we have consolidated operations in Stockholm to increase efficiency in sales efforts and create a clearer position on the market.

" Our work with reallocating resources and decreasing costs has lead to some improvements and a more robust organization. Still, our utilization is not yet at a satisfactory level, so the work with streamlining and increasing sales activities on the market continues," says Åsa Holmberg.

KNOWIT - A SIGNIFICANT PIECE OF THE PUZZLE IN THE MUNICIPALITY OF UPPSALA'S SUSTAINABILITY TRANSFORMATION

For several years, the municipality of Uppsala has been working to digitalize its operations in order to become more sustainable. This journey started with an analysis of the current situation and setting clear, measurable goals for the process. One aspect identified at an early stage was the need to decrease the municipality's use of paper and Knowit's inhouse developed product, SignPort, was the solution to this challenge.

SignPort is a reliable and complete service for digital signatures. The e-signature service is well-adapted for use in the Swedish public sector and larger companies that require both internal and external signatures. Shifting to signing and managing contracts and documents in SignPort means that the operations are making both a sustainable and a secure choice.

The municipality of Uppsala is thorough in measuring its progress in the digitalization process and the implementation of SignPort has already resulted in a significant difference, with decreased processing times and more effective errand management. Furthermore, as lead times and costs for printing and sending physical letters have decreased, as has the time-consuming work of following up to ensure that the recipient has actually received the information. In addition, digital management promotes the rule of law in errand management and communication with citizens.

PUBLIC HEALTH APP KEEPS TRACK OF STOCK- HOLMERS' HEALTH AND THE CARE THEY NEED

Through data collection in the app Hälsometern, Region Stockholm can measure citizens' health to map illnesses and risk factors at an early stage. Thus, healthcare and health-promoting efforts can be adapted to Stockholmers' actual needs, while researchers get data for new health findings and app users get a tool to monitor their health.

Hälsometern, which the Center for Epidemiology and Community Medicine (CES) within Region Stockholm has developed together with Knowit, is available for both iPhone and Android phones. Responses about health and living habits are given through surveys in the app, while data on physical activity are gathered using integrations against Health (iPhone) and Google Fitness (Android) in order to get the most correct values pos- sible. The app replaces the pen-and-paper survey that CES sends out every fourth year to 50,000 randomly selected Stockholmers, to gather health data.

Using the app, Region Stockholm can learn more about different living habits, diseases, and symptoms. This can provide information about why health problems arise, how they affect the population, and how they can be prevented.

The app user, for their part, gets an overview of their diet and exercise habits and can follow health developments over time.

The longitudinal data gathered can also be used for research. Currently, CES is working on a scientific publication showing how Stockholmers' physical activity was affected by the COVID-19 pandemic. The number of steps from walks and runs registered in Hälsometern are the basis for the results and conclusions presented.