Proact IT Group — Earnings Release 2022

Apr 26, 2022

Strong growth within both systems and services

January – March 2022

• Revenues increased by 19 per cent to SEK 1,065 million (894).
• Adjusted EBITA increased by 26 per cent and amounted to SEK 52.5 million (41.6), corresponding to an adjusted EBITA margin of 4.9 per cent (4.7).
• Profit before tax amounted to SEK 37.5 million (30.8).
• Profit after tax amounted to SEK 33.9 million (22.5).
• Profit per share amounted to SEK 1.24 (0.82).
• New contracts relating to cloud services worth SEK 122 million (78) were contracted, an increase by 56 per cent.
• Recurring revenues (revenues from cloud and support services) amounted to SEK 346 million (286), corresponding to an annualized rate of SEK 1,384 million (1,144).

Financial summary

Amounts in SEK million	Jan–Mar 2022	Jan–Mar 2021	Rolling 12 months	Jan–Dec 2021
Total revenues	1,064.5	893.6	3,695.8	3,525.0
Growth, %	19.1	5,9	0.3	–3.0
of which currency rate effects, %	4.2	–3,9	0.7	–1.2
of which effect from acquisitions and divestments %	10.0	4,0	6.7	6.3
Organic growth, % 1)	4,9	5.9	–7.1	–8.1
Adjusted EBITA 2)	52.5	41.6	215.3	204.4
Adjusted EBITA margin, %	4.9	4.7	5.8	5.8
Operating profit (EBIT)	41.4	34.0	173.7	166.2
Operating margin (EBIT), %	3.9	3.8	4.7	4.7
Profit before tax	37.5	30.8	158.5	151.9
Net margin, %	3.5	3.5	4.3	4.3
Profit after tax	33.9	22.5	128.6	117.2
Profit margin, %	3.2	2.5	3.5	3.3
Earnings per share (outstanding shares), SEK 3)	1.24	0.82	4.68	4.27
Return on capital employed, % 4)	–	–	13.7	13.4
Cash flow from operations	38.3	–56.0	397.9	303.6

1) Organic growth refers to growth excluding currency rate effects and acquired and divested companies.

2) EBITA before items affecting comparability.

3) Proact has long-term performance based share programs that could result in dilution of maximum 1.34 percent.

The comparative figures have been adjusted for the 1:3 share split that was implemented in May 2021.

The company has bought back own shares which affects the key ratios above.

4) Calculated only for full year and rolling 12 months.

Proact is Europe's leading specialist in data and information management with focus on cloud services and data centre solutions. We help our customers to store, connect, protect, secure and drive value through their data whilst increasing agility, productivity and efficiency.

We've completed thousands of successful projects around the world, have more than 4,000 customers and currently manage hundreds of petabytes of information in the cloud. We employ over 1,000 people in 13 countries across Europe and North America. Founded in 1994, our parent company, Proact IT Group AB (publ), was listed on Nasdaq Stockholm in 1999 (under the symbol PACT).

Comments from the CEO of Proact

"Strong growth within both systems and services, with good development for new managed cloud services contracts"

Revenues for the quarter amounted to SEK 1,065 million (894), which corresponds to an increase of 19 per cent. Organically, the revenue increase was 4.9 per cent, with both systems and services growing 5 per cent organically.

Our recurring revenues, defined as revenues from managed cloud services and support services, developed strongly. Growth in the quarter was 21 per cent, were the acquisition of ahd contributed strongly. Recurring revenues also grew organically with good demand both for our support and our managed cloud services. We signed contracts for managed cloud services of SEK 122 million (78), corresponding to a growth of 56 per cent. We see a strong interest for many of our offerings in most of our countries, with the largest growth in won contracts in BU West for the first quarter. The consulting business also developed well in the quarter with strong demand for our competences and.

During the first quarter we delivered a significant part of the system orders received at the end of 2021, but several of the orders we have taken during the first quarter will be delivered during the second quarter. We continue to see good underlying demand for our solutions, with a high volume of won deals. The delivery situation is unchanged without clear signs of improvement, and we thus have a larger order backlog into the second quarter than in previous years.

Adjusted EBITA during the quarter increased to SEK 52.5 million (41.6), corresponding to a margin of 4.9 per cent (4.7). The increase is a combination of higher revenues and continued good cost control. Gross margins in the quarter declined somewhat both for systems and for services. For the systems business the decline is primarily attributable to some larger customer deals with lower margins. In the services business, the margin has decline in BU Nordics & Baltics and in BU Central, primarily due to higher costs related to increased focus on quality, customer satisfaction and product development, which we expect to result in higher growth

and profitability going forward. In BU West we see a continued good margin development after the action program that was implemented during 2021.

It makes me proud to see the initiatives and so many of our employees have engaged in to support Ukraine. Proact is currently not impacted by the war in Ukraine to any significant degree, as we don't have any business or suppliers neither in Russia nor in Ukraine. However, uncertainties regarding the future global economy increases, as it relates to cost increases, inflation, and further impacts on supply chains. In addition we see an increased risk for cyber attacks, which further increases the focus on our security solutions.

During the quarter we have also closed a number of exciting new customer engagements. The international law firm Hoyng Rokh Moengier has chosen Proact as their supplier of workplace and infrastructure solutions. We have also renewed the frame agreement with Kammarkollegiet, which enables us to continue building IT infrastructure for the Swedish public sector. We have also continued to develop our services offering and during the quarter we launched a new monitoring services, based on Artificial Intelligence for IT Operations, where we offer comprehensive integrated monitoring and alerting services.

In conclusion, we can leave a quarter with good growth and improved profitability behind us.

Kista, 26 April, 2022

Jonas Hasselberg CEO

The Group's development

Revenues and result January - March

For the first quarter, total revenues amounted to SEK 1,065 million (894), an increase by 19 per cent. Currency rate effects affected by 4 per cent, acquisitions and divestments affected by 10 per cent. Organically, revenues increased by 5 per cent.

System revenues increased by 15 per cent to SEK 614 million (535) and organically by 5 per cent, due to good underlying demand partly offset by countinued delivery delays at several of the company's suppliers. Service revenues increased by 26 per cent to SEK 451 million (358) and organically by 5 per cent, with organic growth within all service businesses. Service revenues accounted for 42 per cent (40) of the company´s total revenues for the quarter.

New contracts relating to cloud services worth SEK 122 million (78) were contracted during the quarter. The contracts normally have a term of three to five years. Total revenues from cloud services increased by 31 per cent and amounted to SEK 226 million (173). Organically they increased by 4 percent. Recurring revenues, revenues from cloud and support services, amounted to SEK 346 million (286), which corresponds to an annualized rate of SEK 1,384 million (1,144). This corresponds to an increase of 21 per cent, of which an organic increase of 3 per cent.

Gross margins decreased during the quarter compared to the same period previous year. The margin for system sales decreased as a result of some larger deals with lower margins, and the margin in the service business decreased due to an increased focus, with related costs, on quality and in customer satisfaction in business unit BU Nordics and Baltics and BU Central.

Sales and administration expenses decreased organically by 2 per cent as a result of continued good cost control.

Adjusted EBITA increased by 26 per cent compared to the same period previous year and amounted to SEK 52.5 million (41.6) as a result of increased revenues and lower sales cost. Adjusted EBITA margin was 4.9 per cent (4.7). Profit before tax amounted to SEK 37.5 million (30.8).

Revenues by industry

SEK million	Jan–Mar 2022	Jan–Mar 2021	Rolling 12 months	Jan–Dec 2021
Telecom	103	115	354	367
Bank, Finance	68	83	316	331
Oil, Energy	57	59	207	208
Manufacturing	159	103	498	442
Media	30	23	94	86
Trading & Services	187	134	682	628
Public sector	306	253	927	874
Other	154	124	618	588
Total revenue	1,065	894	3,696	3,525

Revenues Adjusted EBITA

Recurring Revenues Profit per share and return on equity, rolling 12 months, %

Amounts in SEK million	Jan–Mar 2022	Jan–Mar 2021	Rolling 12 months	Jan–Dec 2021
Total Revenues	1,064.5	893.6	3,695.8	3,525.0
Cost of goods and services sold, excl. amortizations and depreciations	–805.2	–667.0	–2,728.1	–2,589.9
Gross profit excl. amortizations and depreciations	259.2	226.6	967.7	935.1
Gross margin excl. amortizations and depreciations, %	24.4	25.4	26.2	26.5
Operational expenses excl. amortizations and depreciations	–166.5	–148.0	–598.0	–579.5
Adjusted EBITDA1)	92.7	78.6	369.7	355.5
Adjusted EBITDA margin, %	8.7	8.8	10.0	10.1
Deprecations and write-downs of tangible assets	–40.2	–36.9	–154.4	–151.2
Adjusted EBITA1)	52.5	41.6	215.3	204.4
Adjusted EBITA margin, %	4.9	4.7	5.8	5.8
Amortizations and write-downs of intangible assets	–11.0	–7.7	–34.6	–31.2
Items affecting comparability	–0.1	–	–7.0	–6.9
Operating profit/loss (EBIT)	41.4	34.0	173.7	166.2
Operating margin (EBIT), %	3.9	3.8	4.7	4.7

1) EBITDA and EBITA before items affecting comparability

Cash flow

January – March

Cash flow for the quarter was SEK –54 million (–96), of which SEK 38 million (–56) from operating activities. Cash flow from changes in working capital amounted to SEK –56 million (–131), mainly related to an increase in accounts receivable by SEK 111 million, and partly offset by an increase in accounts payable by SEK 73 million. During the period repayments of leasing liabilities were made by SEK 33 million.

Investments

During the first quarter 2022, SEK 10 million (10) has been invested in fixed assets, of which SEK 5 million (3) in Proact Finance for customer deliveries.

Financial position

Cash and cash equivalents amounted to SEK 418 million as of March 31, 2022, compared to SEK 393 million the previous year. Of the total overdraft credit facility of SEK 158 million, none was utilized. Bank loans amounted to SEK 436 million and relate to a three-year revolving credit facility that Proact concluded during the third quarter 2021. The facility amounts to a total of SEK 600 million and has a possibility of up to two years extension.

Investments in IT-equipment for the cloud operations are financed through leasing agreements. The Group's equity ratio at the end of the period was 22 per cent (21).

Net debt

SEK million	Mar 31 2022	Dec 31 2021	Mar 31 2021	Dec 31 2020
Cash and cash equivalents	418	464	393	468
Bank overdraft facilities	–	–	–	–
Liabilities to credit institutions excl. financial leasing liabilities	–436	–484	–216	–212
Net cash (+)/Net debt (–) excl. financial leasing	–18	–20	177	257
Financial leasing liabilities	–230	–241	–245	–234
Net cash (+)/Net debt (–) incl. financial leasing	–248	–261	–68	22
Unutilized bank overdraft facility	158	158	158	198
Total bank overdraft facility	158	158	158	198

Income tax

The Group's tax expense includes the sum of current tax and deferred tax calculated on the basis of current tax rates in each country. The reported tax expense for the first quarter amounted to SEK 3.6 million (8.4), corresponding to an efficient tax rate of 10 per cent (27).

Buy-back of own shares

The Annual General Meeting on May 6, 2021 authorized the Board to acquire up to 10 percent of the company's shares until the next Annual General Meeting. As of March 31, 2022, no shares have been acquired within this authorization.

As of March 31, 2022, the company holds 546,807 shares in own repository, which corresponds to 2.0 percent of the total number of shares.

Employees

The company had 1,175 employees (1,034) as of March 31, 2022, of which the acquisitions of ahd and Conoa have contributed with 147 employees.

Parent Company in brief

The Parent Company's total revenues for the first quarter amounted to SEK 32.5 million (26.5). Profit before tax amounted to SEK 14.1 million (4.7).

The Parent Company's liabilities in a joint group currency account amounted as of 31 March 2022 to SEK 257 million (270). At the end of the period, the number of people employed by the parent company totalled 18 (16).

The Parent Company's operations have remained unchanged over the period. There have been no significant transactions with related parties.

Business Units

Nordics & Baltics

Revenues and result

January - March

In Nordics & Baltics, revenues increased by 10 per cent during the quarter and organically by 2 per cent, where the acquisition of Conoa constitutes the non-organic contribution. System revenues increased by 5 per cent and organically by 0 per cent. All countries except Sweden increased their system sales, were a few orders in Sweden were not delivered in this quarter as a result of delivery delays from suppliers. Service revenues increased by 23 per cent and organically by 9 per cent, with a good organic development within all areas and especially in the consultancy business. The acquisition of Conoa contributed positively, primarily to consulting revenues.

Adjusted EBITA amounted to SEK 21.8 million (25.0) and the EBITA margin was 4.3 per cent (5.4) for the quarter. In Nordics & Baltics, EBITA was negatively affected mainly as a result of lower gross margin within the services business due to investments in the delivery organization to improve quality, customer experience and product development. The gross margin for the system business also decreased, impacted by some larger deals with margins lower than average.

SEK million	Jan–Mar 2022	Jan–Mar 2021	Change, %	Rolling 12 months	Jan–Dec 2021
System revenues	348	332	5	1,298	1,283
Service revenues	162	131	23	629	599
of which support revenue	70	65	8	274	269
of which revenue from cloud services	46	40	15	192	186
of which consulting revenue	46	26	73	164	145
Other	0	1	–45	2	2
Total revenues	510	464	10	1,930	1,884
Adjusted EBITA	21.8	25.0	–13	112.1	115.3
Margin, %	4.3	5.4		5.8	6.1

UK

Revenues and result

January – March

In UK, revenues increased by 10 per cent during the quarter and organically by 2 per cent. The difference between the organic and non-organic growth is attributed to currency rate effects. The system revenues increased by 13 per cent and organically by 4 per cent, Higher demand lead to an increase of system revenues, despite continued long delivery times. Service revenues increased by 7 per cent, and decreased organically by 1 per cent, where the decrease is due to reduced support revenue, as a result of lower system sales in 2021.

Adjusted EBITA amounted to SEK 13.4 million (12.0) and the EBITA margin was 6.4 per cent (6.3) for the quarter. EBITA increased as a resultat of a combination of higher revenues, maintained gross margins and continued cost control.

SEK million	Jan–Mar 2022	Jan–Mar 2021	Change, %	Rolling 12 months	Jan–Dec 2021
System revenues	124	110	13	323	309
Service revenues	85	79	7	327	321
of which support revenue	26	26	1	109	108
of which revenue from cloud services	49	45	9	182	177
of which consulting revenue	9	8	15	37	35
Other	–	–	–	–	–
Total revenues	209	189	10	650	630
Adjusted EBITA	13.4	12.0	12	36.2	34.7
Margin, %	6.4	6.3		5.6	5.5

Revenues Adjusted EBITA

West

Revenues and result

January – March

In West, revenues increased by 23 per cent during the quarter and organically by 19 per cent. The difference between the organic and non-organic growth is attributed to currency rate effects. System revenues increased by 57 per cent and organically by 52 per cent, where the demand recovered somewhat after a number of weak quarters in 2021. Service revenues increased by 14 per cent and organically by 10 per cent, with a strong demand for consulting services and a good development for both existing and new cloud services contracts contributing positively.

Adjusted EBITA amounted to SEK 10.0 million (–2.6 ) and the EBITA margin was 5.3 per cent (–1.7) for the quarter.

A combination of good sales growth, higher gross margins and lower costs contributed to an increase in EBITA and EBITA margin.

Jan–Dec 2021	Rolling 12 months	Change, %	Jan–Mar 2021	Jan–Mar 2022	SEK million
180	198	57	32	51	System revenues
491	508	14	123	140	Service revenues
51	52	6	12	13	of which support revenue
316	326	12	78	88	of which revenue from cloud services
123	131	24	32	39	of which consulting revenue
–	–	–	–	–	Other
671	707	23	155	191	Total revenues
22.8	35.5	479	–2.6	10.0	Adjusted EBITA
3.4	5.0		–1.7	5.3	Margin, %

Revenues Adjusted EBITA

Central

Revenues and result

January – March

In Central, revenues increased by 79 per cent during the quarter and organically by 3 per cent. The acquisition of ahd contributed positively primarily to revenues in cloud services but also to system revenues and consulting revenues. System revenues increased by 47 per cent and organically by 6 per cent, where a couple of larger deals from 2021 were delivered in this quarter. Service revenues increased by 138 per cent while organically they decreased by 1 per cent, where a low level of new cloud contracts in 2021 had a negative effect on revenues from cloud services, to some extent offset by a good demand for consulting services.

Adjusted EBITA amounted to SEK 3.1 million (7.2) and the EBITA margin was 1.8 per cent (7.7) for the quarter.

In Central, EBITA was negatively affected by lower gross margins in both the services and the systems business, as a result of investments in quality and some larger system deals with lower margin. The acquisition of ahd contributed positively to the result, although ahd was negatively affected in the quarter by delays linked to the semiconductor shortage.

SEK million	Jan–Mar 2022	Jan–Mar 2021	Change, %	Rolling 12 months	Jan–Dec 2021
System revenues	89	60	47	249	221
Service revenues	79	33	138	211	165
of which support revenue	11	9	12	40	39
of which revenue from cloud services	56	18	216	135	96
of which consulting revenue	12	6	103	36	30
Other	0	0	–	2	3
Total revenues	168	94	79	462	388
Adjusted EBITA	3.1	7.2	–58	26.8	30.9
Margin, %	1.8	7.7		5.8	8.0

0

Proact Finance

Revenues and result

January – March

Proact Finance revenues decreased for the quarter compared to the same period previous year due to a decrease in financed volume and amounted to SEK 11 million (12). Net financial items amounted to SEK 0.8 million (0.9). Profit before tax amounted to SEK 1.6 million (4.1).

Future contracted cash flows from Proact Finance amounted to SEK 120 million (159), a decrease of 25 per cent, as a result of the decision in 2021 to offer external financing solutions to a greater extent.

SEK million	Jan–Mar 2022	Jan–Mar 2021	Change, %	Rolling 12 months	Jan–Dec 2021
Revenues	11	12	–11	50	51
EBIT	0.8	3.1	–74	4.1	6.5
Net financial items	0.8	0.9	–11	3.3	3.5
Profit before tax	1.6	4.1	–61	7.5	9.9

Operating segments

Nordics & Baltics: Denmark, Estonia, Finland, Latvia, Lithuania, Norway, Sweden and USA UK: United Kingdom West: Belgium and Netherlands

Central: Czech Republic and Germany

Proact Finance: Proact's own in-house finance company is reported separately as this company supports all geographical regions.

Jan-Mar 2022	Nordics				Proact
SEK million	& Baltics	UK	West	Central	Finance	Groupwide	Eliminations	Group
Total revenue	510	209	191	168	11	41	–65	1,064
EBITDA, before items affecting comparability	31.2	25.0	18.5	10.0	0.8	7.2	–	92.7
Depreciations and write-down on tangible fixed assets	–9.4	–11.6	–8.5	–6.9	–	–3.8	–	–40.2
EBITA, before items affecting comparability	21.8	13.4	10.0	3.1	0.8	3.4	–	52.5
Items affecting comparability	–	–	–	–0.1	–	–	–	–0.1
EBITA	21.8	13.4	10.0	3.0	0.8	3.4	–	52.5
Amortizations and write-down on intangible fixed assets	–1.4	–1.3	–2.0	–4.5	–	–1.8	–	–11.0
EBIT	20.4	12.2	8.0	–1.5	0.8	1.7	–	41.4
Net financial items	–1.1	–0.8	–0.6	–1.4	0.8	–0.9	–	–4.0
Profit before tax	19.3	11.4	7.4	–2.9	1.6	0.8	–	37.5
Tax								–3.6

Comprehensive income for the period 33.9

Jan-Mar 2021	Nordics				Proact
SEK million	& Baltics	UK	West	Central	Finance	Groupwide	Eliminations	Group
Total revenue	464	189	155	94	12	34	–54	894
EBITDA, before items affecting comparability	34.8	24.1	5.6	10.0	3.1	0.9	–	78.6
Depreciations and write-down on tangible fixed assets	–9.7	–12.1	–8.3	–2.8	–	–4.0	–	–36.9
EBITA, before items affecting comparability	25.0	12.0	–2.6	7.2	3.1	–3.1	–	41.6
Items affecting comparability	–	–	–	–	–	–	–	–
EBITA	25.0	12.0	–2.6	7.2	3.1	–3.1	–	41.6
Amortizations and write-down on intangible fixed assets	–	–3.2	–2.0	–0.4	–	–2.0	–	–7.7
EBIT	25.0	8.7	–4.6	6.8	3.1	–5.2	–	34.0
Net financial items	–0.8	–0.8	–0.7	–0.4	0.9	–1.3	–	–3.1
Profit before tax	24.2	7.9	–5.3	6.4	4.1	–6.5	–	30.8
Tax								–8.4
Comprehensive income for the period								22.5

Market Review

Proact actively monitors the market development and regularly interviews customers to make sure the company positions itself correctly, develops new business opportunities and reinforces its competitiveness. With the knowledge gained from these observations, Proact has identified several megatrends and customer priorities that the company is working strategically to leverage, including helping customers to enable digital transformation and innovation, to leverage on the advantages of hybrid cloud and to ensure strong cyber-security.

Digital transformation and innovation

Although digitalisation has been a mega-trend over a long period of time, it has been accelerated during the covid-19 pandemic. Businesses has seen new needs for digitalisation, data accessibility and security as our way of working has changed. More types of businesses and sectors are exploring innovative ways to analyse and process ever-larger data volumes — often with the assistance of IT-driven artificial intelligence (AI), automation and data analytics. At the same time, IT departments are battling with redundancy, complexity and resource constraints while also attempting to meet increasingly stringent user demands within tight budgets. A clear trend to cope with these opportunities and challenges is a balance between traditional IT infrastructure and a future-oriented cloud strategy. This balance allows customers to gain the best of both worlds as they ensure security, enable resources,

reduce cost and open up new possibilities to move data quickly and enable faster innovation.

Hybrid cloud

To better facilitate their own delivery of IT, companies and the public sector are increasingly choosing hybrid cloud solutions combining different types of cloud services and on-premises infrastructure. This allows a faster, more secure and efficient response to business needs as well as prepares organisations for new territory such as edge computing.

IT security

Information security is highly prioritised at all companies and organisations, where threats from cyberattacks and other vulnerabilities are growing. In connection with Russia's invasion of Ukraine, the security situation for IT and information security has come even more into focus. This, in combination with the regulatory and commercial requirements for secure data management, means that investments in security solutions and skills will increase. Many companies and organisations do not have their own resources to handle current security threats, so they risk missing out on business opportunities, losing sales, harming the company's reputation, or potentially having to deal with dissatisfied customers. This shortage of resources in the market increases the willingness to adopt security services.

Other information

Proposed appropriations of profits

The Board will propose a dividend of SEK 1.50 (1.50) per share to the Annual General Meeting for the 2021 financial year.

Events after the balance sheet date

No events of significance to the Group have occurred since the end of the report period.

Transactions with related parties

No transactions between Proact and related parties, which have significantly affected the Group's position and profits, have taken place during the quarter.

Risks and uncertainty factors within the enterprise

In the short term, Proact is not significantly affected by Russia's invasion of Ukraine. In the longer term, the impact on the global economy, in the form of inflation, exchange rate fluctuations, lower economic growth and disturbances in supply chains, could affect Proact.

Delivery disruptions linked to the global semiconductor shortage also contiune to negatively affect the ability for Proact to deliver customer orders received. Otherwise, no risks or uncertainties have changed in comparison to those described in the most recent submitted annual report. For a more detailed description of significant risks and uncertainty factors, please see Proact's annual report for 2021.

Alternative Performance Measures

The company presents financial key figures in the interim report that are not defined according to IFRS. The company believes that these key figures provide valuable supplementary information to investors and the company's management. For definitions of the financial ratios, see the Annual Report 2021.

Annual General Meeting

The Annual General Meeting will be held on May 5, 2022. The Annual Report and other documents for the Annual General Meeting are availible on Proact's website, www.proact.eu. The Board of Directors have decided that the Annual General Meeting will take place without physical attendance of shareholders, representatives or third parties on account of the coronavirus, and that shareholders will only have the opportunity to exercise their voting rights by post prior to the meeting. Information on the decisions made by the Annual General Meeting will be published on 5 May 2022 as soon as the outcome of the postal vote has been finalised.

Financial calendar

5 May 2022	Annual General Meeting 2022
14 Jul 2022	Interim Report Q2 2022
25 Oct 2022	Interim Report Q3 2022
9 Feb 2023	Year-end Report 2022

Kista 26 April 2022 Proact IT Group AB (publ)

Jonas Hasselberg CEO

This interim report has not been audited.

Note

The information in this interim report is such information as Proact IT Group (publ) is obliged to publish pursuant to the EU Market Abuse Regulation, the Securities Market Act, and/or the Act on Trading in Financial Instruments. This information was submitted for publication at 08:00 (CET) on 26 April 2022.

Contact

Jonas Hasselberg, CEO +46 722 13 55 56 jonas.hasselberg@proact.eu Kistagången 2, Kista Linda Höljö, CFO +46 725 07 40 85 linda.holjo@proact.eu Tel. +46 8 410 666 00

Proact IT Group AB

www.proact.eu

Org.no: 556494-3446 Reg. Office: Stockholm

Financial reports

Consolidated statement of comprehensive income

Amounts in SEK million	Jan–Mar 2022	Jan–Mar 2021	Rolling 12 months	Jan–Dec 2021
System income	613.6	535.4	2,080.6	2,002.4
Service income	450.5	357.5	1,612.4	1,519.4
of which support revenue	119.9	113.4	474.6	468.1
of which revenue from cloud services	226.4	172.9	779.5	726.0
of which consulting revenue	104.2	71.3	358.2	325.3
Other operating income	0.3	0.7	2.8	3.2
Total income	1,064.5	893.6	3,695.8	3,525.0
Cost of goods and services sold	–841.5	–697.3	–2,857.7	–2,713.5
Gross profit	223.0	196.3	838.1	811.4
Sales and marketing expenses	–109.6	–98.4	–395.0	–383.8
Administration expenses	–71.9	–63.9	–262.5	–254.5
Items affecting comparability	–0.1	–	–7.0	–6.9
Operating profit/loss (EBIT)	41.4	34.0	173.7	166.2
Net financial items	–4.0	–3.1	–15.2	–14.3
Profit before tax	37.5	30.8	158.5	151.9
Income tax	–3.6	–8.4	–30.0	–34.7
Comprehensive income for the period	33.9	22.5	128.6	117.2
Other comprehensive income
Items which may be reversed later in the income statement
Change of hedging reserve (net investment in foreign operations)	3.3	10.1	4.7	11.5
Tax effect of change of reserve (net investment in foreign operations)	–0.7	–2.2	–0.9	–2.4
Translation differences from remaining foreign operations	7.4	19.8	10.6	23.0
Total items which may be reversed later in the income statement	10.1	27.8	14.4	32.1
Total comprehensive income for the period	44.0	50.3	143.0	149.3
Comprehensive income attributable to:
Shareholders of the Parent company	34.1	22.6	128.6	117.1
Holdings without a controlling influence	–0.2	–0.2	0.0	0.0
Total comprehensive income for the period attributable to:
Shareholders of the Parent company	44.1	50.4	142.8	149.1
Holdings without a controlling influence	–0.1	–0.1	0.2	0.2

Data per share 1)

	Jan-Mar 2022	Jan-Mar	Rolling 12	Jan-Dec 2021
		2021	months
Earnings per share for the period attributable to
the shareholders of the parent company, SEK	1.24	0.82	4.68	4.27
Equity per share attributable to the shareholders of the parent company, SEK	27.49	23.78	27.49	25.88
Cash flow from operations per share, SEK	1.39	–2.04	14.49	11.06
Number of outstanding shares at end of period	27,454,851	27,454,851	27,454,851	27,454,851
Weighted average number of outstanding shares	27,454,851	27,454,851	27,454,851	27,454,851

1) Proact has long-term performance based share programs that could give rise to dilution of maximum 1.34 percent. The comparative figures have been adjusted for the 1:3 share split that was implemented in May 2021.

Consolidated Balance Sheet in Brief

Amounts in SEK million	31 Mar 2022	31 Mar 2021	31 Dec 2021
ASSETS
Fixed assets
Goodwill	826.4	573.4	820.7
Other intangible fixed assets	216.0	109.8	224.9
Tangible fixed assets	306.9	324.2	322.9
Other long-term receivables	425.6	430.4	412.3
Deferred tax receivables	23.5	17.8	16.9
Current assets
Inventories	20.2	25.3	15.6
Trade and other receivables	1,270.7	1,194.0	1,117.8
Cash and cash equivalents	418.3	392.7	463.9
Total assets	3,507.6	3,067.6	3,395.0
EQUITY AND LIABILITIES
Equity attributable to the shareholders of the parent company	754.7	652.9	710.6
Equity attributable to holdings without a controlling influence	3.2	3.0	3.3
Total equity	757.9	655.9	713.9
Long-term liabilities
Long-term liabilities, interest-bearing	563.8	370.4	620.8
Long-term liabilities, non-interest-bearing	515.9	509.1	496.3
Deferred tax liabilities	63.3	33.9	69.2
Short-term liabilities
Short-term liabilities, interest-bearing	130.9	141.0	133.3
Short-term liabilities, non-interest-bearing	1,475.8	1,357.3	1,361.5
Total equity and liabilities	3,507.6	3,067.6	3,395.0

Consolidated Statement of Changes in Equity

	Jan–Mar	Jan–Mar	Jan–Dec
Amounts in SEK million	2022	2021	2021
At beginning of period	713.9	605.0	605.0
Total comprehensive income for the period	44.0	50.3	149.3
Dividend	–	–	–41.2
Dividend to holdings without a controlling influence	–	–	–
Financial liability to holdings without a controlling influence	–	–	–
Share savings and share option programs	0.0	0.6	0.8
At end of period	757.9	655.9	713.9

Holdings without a controlling influence: Proact Lietuva UAB 26.14 percent and Proact Czech Republic, s.r.o. 14.7 percent.

Consolidated Cash Flow Statement in Brief

Amounts in SEK million	Jan–Mar 2022	Jan–Mar 2021	Rolling 12 months	Jan–Dec 2021
Cash flow from operating activities before changes in working capital	94.0	74.5	373.1	353.6
Cash flow from changes in working capital	–55.8	–130.5	24.8	–50.0
Cash flow from operating activities	38.3	–56.0	397.9	303.6
Cash flow from investing activities	–9.0	–9.6	–404.0	–404.6
Cash flow from financing activities	–83.1	–30.5	22.1	74.7
Total cash flow for the period	–53.9	–96.2	16.0	–26.3
Cash and cash equivalents at beginning of the period	463.9	468.3	392.7	468.3
Currency translation difference in cash and cash equivalents	8.2	20.6	9.6	21.9
Cash and cash equivalents at end of the period	418.3	392.7	418.3	463.9

Key ratios

	Jan–Mar 2022	Jan–Mar 2021	Rolling 12 months	Jan–Dec 2021
Total revenue, SEK millions	1,065	894	3,696	3,525
of which attributable to acquisition and divestments, SEK millions	89	33	246	255
of which currency effects, SEK millions	38	–33	27	–44
Total revenue, organic, SEK million	937	893	3,422	3,314
Organic growth total revenue, %	4.9	5.9	–7.1	–8.1
System revenue, SEK millions	614	535	2,081	2,002
of which attributable to acquisition and divestments, SEK millions	32	24	120	155
of which currency effects, SEK millions	22	–17	20	–18
Total system revenue, organic, SEK million	560	529	1,941	1,866
Organic growth system revenue, %	4.8	10.5	–13.7	–14.0
Service revenue, SEK millions	451	357	1,612	1,519
of which attributable to acquisition and divestments, SEK millions	60	8	127	98
of which currency effects, SEK millions	16	–16	7	–25
Total service revenue, SEK millions	374	366	1,478	1,446
Organic growth service revenue, %	5.1	–0.2	3.3	0.8
EBITDA, SEK million	92.7	78.6	362.7	348.6
EBITDA margin, %	8.7	8.8	9.8	9.9
Depreciation and write-down on tangible assets, SEK million	–40.2	–36.9	–154.4	–151.2
EBITA, SEK million	52.5	41.6	208.3	197.5
EBITA margin, %	4.9	4.7	5.6	5.6
Depreciation and write-down on intangible assets, SEK million	–11.0	–7.7	–34.6	–31.2
EBIT, SEK million	41.4	34.0	173.7	166.2
EBIT margin, %	3.9	3.8	4.7	4.7
Profit before tax, SEK million	37.5	30.8	158.5	151.9
Net margin, %	3.5	3.5	4.3	4.3
Profit after tax, SEK million	33.9	22.5	128.6	117.2
Profit margin, %	3.2	2.5	3.5	3.3
Equity	757.9	655.9	757.9	713.9
Total assets	3,507.6	3,067.6	3,507.6	3,395.0
Equity ratio, %	21.6	21.4	21.6	21.0
Capital turnover rate, times	0.3	0.3	1.1	1.1
Return on equity, % 1)	–	–	18.2	17.8
Financial costs included in net financial items, SEK million	5.0	4.5	21.3	19.8
Capital employed	1,452.6	1,167.2	1,452.6	1,467.9
Return on capital employed, % 1)	–	–	13.7	13.4
Investments in fixed assets, SEK million	30.4	44.9	536.3	550.7
Profit before tax per employee, SEK thousands	33.1	31.0	154.3	147.9
Average number of employees	1,133	994	1.060	1,027

1) Calculated only for full year and rolling 12 months.

For a five-year summary, see Note 2. Definitions of key ratios, see Annual Report 2021. Key figures Proact reports and monitors the business by are common key figures used by the industry and by companies' listed on Nasdaq Stockholm.

Parent Company´s Income Statement, in brief

	Jan–Mar	Jan–Mar 2021	Jan–Dec 2021
Amounts in SEK million	2022
Net sales	32.5	26.5	105.2
Cost of goods and services sold	–	–	–
Gross profit	32.5	26.5	105.2
Administration expenses	–31.9	–31.8	–120.0
Operating profit	0.6	–5.3	–14.8
Net financial items	13.5	9.9	44.2
Profit after financial items	14.1	4.7	29.4
Provisions	–	–	10.0
Profit before tax	14.1	4.7	39.4
Income tax	–0.8	–1.0	–0.9
Comprehensive income for the period	13.4	3.7	38.5

Parent Company´s Balance Sheet, in brief

	31 Mar	31 Mar 2021	31 Dec 2021
Amounts in SEK million	2022
ASSETS
Fixed assets	1,077.7	851.1	1,058.7
Current assets	113.3	108.4	119.5
Total assets	1,191.0	959.5	1,178.2
EQUITY AND LIABILITIES
Restricted Equity	80.9	78.1	80.5
Non-restricted Equity	326.3	321.8	313.2
Equity	407.1	400.0	393.7
Long-term liabilities	446.9	228.0	495.1
Short-term liabilities	336.9	331.5	289.4
Total equity and liabilities	1,191.0	959.5	1,178.2

Explanatory information

Note 1 Accounting principles

The consolidated accounts for the interim report have been compiled in accordance with IAS 34 and the Swedish Annual Accounts Act. The Parent Company's accounts have been compiled in accordance with the Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2 (Accounting for Legal Entities). The Group applies the same accounting principles as those described in the annual report for 2021, with the exception of the additional accounting principle for government grants. Government grants are reported in the financial statements when there is reasonable certainty the grant will be received and that the company will meet the conditions associated with the grant. Government grants relating to cost coverage are systematically accrued and reported as income in the profit for the year in the same way and over the same periods as the costs the grants are intended to compensate for. The grants are reported as deductions from corresponding costs such as cost reduction.

Financial instruments

Proact's financial instruments consist of derivatives, accounts receivable, cash and cash equivalents, accounts payable, accrued trade creditors and interest-bearing liabilities. Derivative instruments are recognized in the balance sheet as per the contract date and are valued at fair value, both initially and in subsequent revaluations. All derivatives are reported continuously at fair value with the value changes reported in the statement of comprehensive income within cost sold for those derivatives that are linked to accounts payable and financial items for the derivatives that are linked to financial leasing contracts. Derivatives are valued at fair value within level 2, i.e. fair value determined on the basis of valuation techniques with observable market data, either directly (as price) or indirectly (hence to price). All other financial assets have been classified as loans and receivables, which includes accounts receivable and cash and cash equivalents. All other financial liabilities have been classified as other financial liabilities valued at amortized cost, which includes accounts payable, accrued supplier costs and liabilities to credit institutions. Liabilities to credit institutions run at variable interest rates, and reported interest rates are on a par with current interest on liabilities to credit institutions and other financial assets and liabilities with short maturities. Based on this, the book values of all financial assets and liabilities are judged to be a reasonable estimate of fair value.

Note 2 Five-year summary

	Apr–Mar 2021/2022	Jan–Dec 2021	Jan–Dec 2020	Jan–Dec 2019	Jan–Dec 2018
Total revenue, SEK million	3,696	3,525	3,633	3,408	3 318
EBITDA, SEK million	362.7	348.6	369.6	271.7	231.1
EBITDA margin, %	9.8	9.9	10.2	8.0	7.0
EBITA, SEK million	208.3	197.5	216.7	134.2	200.5
EBITA margin, %	5.6	5.6	6.0	3.9	6.0
EBIT, SEK million	173.7	166.2	182.1	105.4	164.5
EBIT margin, %	4.7	4.7	5.0	3.1	5.0
Profit before tax, SEK million	158.5	151.9	167.7	101.7	167.8
Net margin, %	4.3	4.3	4.6	3.0	5.1
Profit after tax, SEK million	128.6	117.2	132.3	80.2	127.3
Profit margin, %	3.5	3.3	3.6	2.4	3.8
Equity ratio, %	21.6	21.0	20.7	18.3	21.2
Capital turnover rate, times	1.1	1.1	1.3	1.3	1.6
Return on equity, %	18.2	17.8	23.4	16.1	29.8
Return on capital employed, %	13.7	13.4	17.1	13.2	29.5
Dividend to shareholders of the Parent company, SEK million 1)	41.2	41.2	22.9	38.0	34.3
Investments in fixed assets, SEK million	536.3	550.7	269.1	440.7	83.8
Financial costs included in net financial items, SEK millions	21.3	19.8	20.7	11.3	3.9
Profit before tax per employee, SEK thousands	150	148	172	122	211
Average number of employees	1,060	1,027	973	834	797
Earnings per share for the period, SEK 2)	4.68	4.27	4,80	2,92	4,62

1) Relates to the year in which the dividend was executed. For the fiscal year 2020 a dividend of SEK 1.50, total SEK 41.2 million, was made.

The Board of Directors has proposed to the Annual General Meeting a dividend of SEK 1.50 per share for the fiscal year 2021.

2) Calculated on the basis of the weighted average number of outstanding shares. The comparative figures have been adjusted for the 1:3 share split

that was implemented in May 2021. Proact has long-term performance based share programs that could give rise to dilution of maximum 1.34 percent.