Proact IT Group — Interim / Quarterly Report 2022

Feb 9, 2023

Strong organic growth and good profitability

October – December 2022 January – December 2022

• Revenues increased by 52.8 per cent to SEK 1,440.1 million (942.4).
• Adjusted EBITA increased by 79.6 per cent and amounted to SEK 102.2 million (56.9), corresponding to an adjusted EBITA margin of 7.1 per cent (6.0).
• Profit before tax amounted to SEK 86.0 million (37.4).
• Profit after tax amounted to SEK 64.6 million (31.0).
• Profit per share amounted to SEK 2.34 (1.12).
• New contracts relating to cloud services worth SEK 142.0 million (177.3) were contracted, a decrease by 19.9 per cent.
• Recurring revenues (revenues from cloud and support services) amounted to SEK 387.9 million (326.7), corresponding to an annualized rate of SEK 1,551.6 million (1,306.8).

• The Board has decided to update Proact's long-term target for return on capital employed to 20 per cent to better reflect the company's acquisition strategy. The targets for growth of 10 per cent and an EBITA margin of 8 per cent remain unchanged.

• Revenues increased by 34.9 per cent to SEK 4,756.8 million (3,525.0).

• Adjusted EBITA increased by 54.1 per cent and amounted to SEK 315.0 million (204.4), corresponding to an adjusted EBITA margin of 6.6 per cent (5.8).
• Profit before tax amounted to SEK 244.2 million (151.9).
• Profit after tax amounted to SEK 191.5 million (117.2).
• Profit per share amounted to SEK 6.97 (4.27).
• New contracts relating to cloud services worth SEK 563.1 million (401.9) were contracted, an increase by 40.1 per cent.
• Recurring revenues (revenues from cloud and support services) amounted to SEK 1,457,2 million (1,194.0).
• On the 1st of July the acquisition of sepago GmbH was completed with a purchase price of EUR 12 million, on a cash- and debt free basis, and with an additional earn-out of up to EUR 4 million.
• The Board of Directors proposes that the Annual General Meeting resolves on a dividend of SEK 1.85 (1.50) per share.

Financial summary

	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Amounts in SEK million	2022	2021	2022	2021
Total Revenues	1,440.1	942.4	4,756.8	3,525.0
Growth, %	52.8	-4.0	34.9	-3.0
of which currency rate effects, %	6.2	0.4	4.4	-1.2
of which effects from acquisitions and divestments, %	6.7	9.2	7.7	6.3
Organic growth, %¹	39.9	-13.7	22.8	-8.1
Adjusted EBITA²	102.2	56.9	315.0	204.4
Adjusted EBITA margin, %	7.1	6.0	6.6	5.8
Operating profit (EBIT)	88.7	41.6	260.6	166.2
Operating margin (EBIT), %	6.2	4.4	5.5	4.7
Profit before tax	86.0	37.4	244.2	151.9
Net Margin, %	6.0	4.0	5.1	4.3
Profit after tax	64.6	31.0	191.5	117.2
Profit Margin, %	4.5	3.3	4.0	3.3
Earnings per share (outstanding shares), SEK³	2.34	1.12	6.97	4.27
Return on capital employed, %⁴	-	-	17.2	13.4
Cash flow from operations	353.1	255.4	442.9	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 company has bought back own shares which affects the key ratios above. 4) Calculated only for full year and rolling 12 months

About Proact Proact is Europe's leading specialist in data and information management with a 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 have 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 1 200 people in 13 countries in Europe and in 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

A very strong fourth quarter of 2022, with continued high revenue growth and good profitability, ended a very good year for Proact. Revenues for the quarter amounted to SEK 1,440 million (942), corresponding to a growth of 53 per cent. Organically revenues increased by 40 per cent with organic growth of 65 per cent for systems and 8 per cent for services. Our recurring revenues, revenues from managed cloud services and support services, continues to develop strongly. In total they grew by 19 per cent, including the contributions from the acquired companies ahd and sepago, to an annualized rate of SEK 1,552 million (1,307) and organically they increased by 7 per cent.

In 2021, the fourth quarter was characterized by delivery delays for our systems, resulting in significantly lower revenues than normal. In accordance with our previously communicated expectations, delivery times have successively normalised during the second half of 2022, which has had a positive effect on revenues for the fourth quarter of 2022. Moreover, the demand for our system solutions remained strong during the quarter, partly as a result of postponed investments at our customers during the pandemic years, which further has contributed to the revenue growth.

The demand for our services has also continued to be good during the quarter, and we contracted cloud services contracts of SEK 142 million (177). Last year was positively impacted by a large deal in the UK, while we this year have seen good demand among many customers with particularly strong growth in BU West and in BU Nordic & Baltics during the fourth quarter. Our consulting business and our support business also show good growth, connected to the strong systems growth and thanks to good demand for our competence in among other things cloud services.

So far, we do not see a negative impact on the demand for our solutions and services as an effect of increased macroeconomic concerns. We see that inflation has led to increased costs for us, but we have so far been able to compensate ourselves through price adjustments to a high degree, thus seeing a relatively limited impact on our gross margins. Our sales and administration costs grew in the

quarter, both due to cost inflation and since the increased revenues lead to higher costs for commissions.

Adjusted EBITA during the quarter increased to SEK 102 million (57) corresponding to a margin of 7.1 per cent (6.0), primarily as a result of the increase in revenues in combination with relatively unchanged gross margins.

Our long-term targets of 10 per cent revenue growth, of which approximately half organic, and 8 per cent EBITA margin remain. The revenue growth target was significantly exceeded this year. The strong growth in the systems business during 2022 is, however, to a large extent a result of lower revenues due to delivery delays last year and careful investment decisions during the covid 19 pandemic. Although our EBITA margin improved during 2022, we still have work to do to reach the target, which we have full focus on in our strategic initiatives, for example within our managed cloud services. We have, together with our board of directors, reviewed our target for return on capital employed which we have decided to reduce from 25 to 20 per cent, which is a target better aligned with our acquisition strategy.

The good result this year is a result of both the hard work of our coworkers and the collaboration with our partners. During the quarter we received, among other things, several awards by Dell which we are very proud of. Our managed service for container development, Proact Managed Container Platform, has been certified by Kubernetes, which makes it even more attractive for potential customers.

I want to end by thanking all of our competent and dedicated coworkers for a very good 2022. In conclusion we are well positioned for the coming year, and I look forward to 2023 with confidence.

Solna 9 February, 2023

Jonas Hasselberg CEO

The Group's development October-December

Revenues and result

For the fourth quarter, total revenues amounted to SEK 1,440.1 million (942.4), an increase by 52.8 per cent. Currency rate effects affected by 6.2 per cent, and acquisitions and divestments affected by 6.7 per cent. Organically, revenues increased by 39.9 per cent.

System revenues increased by 76.9 per cent to SEK 912.7 million (515.9) and organically by 65.0 per cent, compared to the same period previous year, due to good underlying demand in all Business Units, as well as deliveries of previously ordered systems as the delivery times for systems now have normalised.

Service revenues increased by 22.7. per cent to SEK 522.0 million (425.4) and organically by 8.5 per cent, with good demand in all service areas. Service revenues accounted for 36.3 per cent (45.0) of the company´s total revenues for the quarter.

New contracts relating to cloud services worth SEK 142.0 million (177.3) were contracted during the quarter. The contracts normally have a term of three to five years. Total revenues from cloud services increased by 21.1 per cent and amounted to SEK 250.4 million (206.8). Organically they increased by 5.3 per cent. Recurring revenues, revenues from cloud and support services, amounted to SEK 387.9 million (326.7), corresponding to an annualized rate of SEK 1,551.6 million (1,306.8). This corresponds to an increase of 18.7 per cent, of which the organic increase was 6.8 per cent

The gross margin was basically unchanged in the quarter, compared to the same period previous year, with an increased gross margin within the system business, while the service margin decreased. This is partly a result of cost increases which so far have not fully been compensated by price increases, and also a consequence of an increased proportion of subcontractors as a result of lack of own qualified IT competence in some of our markets.

Sales and administration expenses increased organically by 27.8 per cent, primarily due to increased sales-related costs linked to the increased sales, but also due to inflation-driven cost increases. Adjusted EBITA increased by 79.6 per cent compared to the same period previous year and amounted to SEK 102.2 million (56.9) as a result of the increased revenues. The adjusted EBITA margin increased due to increased revenues to 7.1 per cent (6.0). Profit before tax amounted to SEK 86.0 million (37.4).

Proact reports items affecting comparability separately to show the development in the underlying business. Items affecting comparability refer to items that are non-recurring and deviate from the normal business. During the fourth quarter of 2022, non-recurring items in EBITA amounted to SEK 3.8 million, attributed to compensation from a supplier regarding consulting services. This has also led to a write-down of intangible assets of the corresponding amount, and the net of items affecting comparability in the operating profit was therefore SEK 0.1 million (5.8) and refers to transaction costs for completed acquisitions.

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

The Group's development January-December

Revenues and result

During the year, total revenues amounted to SEK 4,756.8 million (3,525.0), an increase by 34.9 per cent. Currency rate effects affected by 4.4 per cent, and acquisitions and divestments affected positively by 7.7 per cent. Organically, revenues increased by 22.8 per cent.

System revenues increased by 42.9 per cent to SEK 2,861.4 million (2,002.4) and organically the increase was 35.2 per cent. Service revenues increased by 24.3 per cent to SEK 1,889.0 million (1,519.4) and organically the increase was 6.3 per cent. Service revenues accounted for 39.7 per cent (43.1) of the company´s total revenues for the year.

New contracts relating to cloud services worth SEK 563.1 million (401.9) were contracted during the year. The contracts normally have a term of three to five years. Total revenues from cloud services increased by 30.0 per cent and amounted to SEK 943.8 million (726.0). Organically they increased by 5.4 per cent.

The gross margin decreased during the year compared to the same period previous year, primarily due to the service business where cost increases have not been fully compensated by price increases and as a result of a larger proportion of subcontractors.

Sales and administration expenses increased organically by 9.7 per cent, primarily due to increased sales related costs linked to the increased revenues, but also due to general cost increases.

Adjusted EBITA increased by 54.1 per cent compared to previous year and amounted to SEK 315.0 million (204.4). Adjusted EBITA margin was 6.6 per cent (5.8). Profit before tax amounted to SEK 244.2 million (151.9).

Revenue by industry

Amounts in	Oct-Dec		Oct-Dec Jan-Dec Jan-Dec
SEK million	2022	2021	2022	2021
Telecom	81.5	67.1	425.8	367.0
Bank, Finance	94.7	94.3	312.8	331.1
Energy	69.8	50.4	251.2	208.3
Manufacturing	208.9	118.6	675.2	441.7
Media	31.3	22.4	113.3	86.3
Trading & Services	329.8	177.3	970.3	628.4
Public sector	422.8	230.1	1,272.9	874.0
Other	201.3	182.2	735.3	588.0
Total revenue	1,440.1	942.4	4,756.8	3,525.0

For the year 2022, items affecting comparability amounted to SEK 5.8 million (6.9) and refers to transaction costs for acquisitions. In EBITA, items affecting comparability amounted to SEK 2.0 million (6.9), which also includes compensation from a supplier reported as other income, which in the operating result has been offset by the corresponding write-down of intangible assets.

	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Amounts in SEK million	2022	2021	2022	2021
Total Revenues	1,440.1	942.4	4,756.8	3,525.0
Cost of goods and services sold,
excl. amortisations and depreciations	-1,077.0	-694.7	-3,557.5	-2,589.9
Gross profit excl. amortisations and depreciations	363.1	247.7	1,199.3	935.1
Gross margin excl. amortisations and depreciations, %	25.2	26.3	25.2	26.5
Operational expenses, excl. amortisations and depreciations	-215.7	-150.9	-720.4	-579.5
Adjusted EBITDA¹	143.6	96.8	475.1	355.5
Adjusted EBITDA margin, %	10.0	10.3	10.0	10.1
Depreciations and write-downs of tangible assets	-41.3	-39.9	-160.1	-151.2
Adjusted EBITA¹	102.2	56.9	315.0	204.4
Adjusted EBITA margin, %	7.1	6.0	6.6	5.8
Amortisations and write-downs of intangible assets	-17.3	-9.5	-52.5	-31.2
Items affecting comparability in EBITA	3.8	-5.8	-2.0	-6.9
Operating profit/loss (EBIT)	88.7	41.6	260.6	166.2
Operating margin (EBIT), %	6.2	4.4	5.5	4.7

1) EBITDA and EBITA before items affecting comparability

Cash flow

October - December

Cash flow for the quarter was SEK 209.3 million (136.4), of which SEK 353.4 million (255.4) from operating activities. Cash flow from changes in working capital amounted to SEK 198.8 million (143.4), primarily due to increased accounts payable and operating liabilities of SEK 519.2 million partly offset by increased accounts receivables of SEK 243.5 million.

January – December

Cash flow for the year was SEK 12.2 million (-26.3), of which SEK 443.2 million (303.6) from operating activities. Cash flow from changes in working capital amounted to SEK -20.5 million (-50.0), where the increase in accounts receivable and other operational receivables was largely offset by an increase in accounts payable and other operational liabilities. Cash flow from investing activities was SEK -94.3 million (-404.6), which primarily consisted of the purchase price paid for sepago. For 2021 the cash flow from investing activities primarily consisted of the purchase price paid for Conoa and for ahd. During the period, repayments of leasing liabilities were made by SEK 133.1 million.

Investments

During the year 2022, SEK 41.0 million (50.3) has been invested in fixed assets, of which SEK 9.8 million (16.4) in Proact Finance for customer deliveries.

Financial position

Cash and cash equivalents amounted to SEK 505.7 million as of December 31, 2022, compared to SEK 463.9 million previous year. Of the total bank overdraft facility of SEK 159.2 million, none was utilized. Bank loans amounted to SEK 440.7 million and relate to a three-year revolving credit facility that Proact concluded during the third quarter of 2021. The facility amounts to a total of SEK 600 million and can be extended up to two years. During 2022 the option to extend the facility by one year has been utilized.

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 21.8 per cent (21.0).

Net debt

		Dec 31 Sep 30		Dec 31 Sep 30
Amounts in SEK million	2022	2022	2021	2021
Cash and cash equivalents	505.7	284.9	463.9	320.6
Bank overdraft facilities	-	-	-	-
Liabilities to credit institutions, excl. liabilities related to financial
leasing	-442.1	-507.4	-484.0	-257.0
Net cash (+)/Net debt (-)
excl. financial leasing	63.6	-222.4	-20.1	63.5
Financial leasing liabilities	-290.6	-261.4	-241.2	-223.2
Net cash (+)/Net debt (-)
incl. financial leasing	-227.0	-483.9	-261.3	-159.7
Unutilized bank overdraft facility	159.2	158.9	158.2	158.0
Total bank overdraft facility	159.2	158.9	158.2	158.0

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 year amounted to SEK 52.6 million (34.7), corresponding to an efficient tax rate of 21.5 per cent (22.9).

Buy-back of own shares

The Annual General Meeting on May 5, 2022, authorized the Board to acquire up to 10.0 percent of the company's shares until the next Annual General Meeting. As of December 31, 2022, no shares have been acquired within this authorization.

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

Employees

The company had 1,253 employees (1,178) as of December 31, 2022, of which the acquisition of ahd has contributed with 113 employees and sepago has contributed with 80 employees.

Parent Company in brief

The Parent Company's total revenues for the period amounted to SEK 139.9 million (105.2). Profit before tax amounted to SEK 73.8 million (39.4).

The Parent Company's liabilities in a joint group currency account amounted to SEK 312.9 million (220.3) as of 31 December 2022.

At the end of the period, the number of people employed by the parent company totalled 18 (17).

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

Business Units

Nordic & Baltics Denmark, Estonia, Finland, Latvia, Lithuania, Norway, Sweden and the US

Revenues and result

October – December

In Nordic & Baltics, revenues increased by 52.3 per cent during the quarter and organically by 48.7 per cent, where the difference is explained by exchange rate effects. System revenues increased by 67.8 per cent and organically by 64.3 per cent. System revenues were strong in most countries, partly as a result of normalised delivery times but also due to continued high demand. Service revenues increased by 18.0 per cent and organically by 14.3 per cent, with good growth in support services, partly linked to the strong system sales, as well as continued good growth within consulting services.

Adjusted EBITA amounted to SEK 65.4 million (28.7) and the EBITA margin was 8.2 per cent (5.5) for the quarter. EBITA was positively affected primarily by the increase in revenues, which also explains the increase in the EBITA margin.

January – December

In Nordic & Baltics, revenues increased by 33.1 per cent during the year and organically the increase was 31.5 per cent. System revenues increased by 42.4 per cent and organically the increase was 42.8 per cent. System revenues developed positively in most of the countries due to strong demand and a normalisation of delivery times during the second half. Service revenues increased by 13.6 per cent and organically they increased by 7.6 per cent with good demand within all service segments, and primarily for the consulting business.

Adjusted EBITA amounted to SEK 174.1 million (115.3) and the EBITA margin was 6.9 per cent (6.1) for year. In Nordic & Baltics both EBITA and the EBITA margin were positively affected primarily by the growth in revenues.

	Oct-Dec	Oct-Dec	Change,	Jan-Dec	Jan-Dec	Change,
Amounts in SEK million	2022	2021	%	2022	2021	%
Sytem revenues	608.4	362.6	67.8	1,825.9	1,282.6	42.4
Service revenues	192.4	163.1	18.0	680.7	599.0	13.6
of which support revenue	82.7	68.2	21.2	303.6	268.7	13.0
of which revenue from cloud services	52.9	49.2	7.6	197.4	185.6	6.4
of which consulting revenue	56.8	45.7	24.3	179.6	144.7	24.1
Other	0.5	0.5	-1.6	1.6	2.2	-27.7
Total Revenues	801.2	526.2	52.3	2,508.2	1,883.8	33.1
Adjusted EBITA	65.4	28.7	127.7	174.1	115.3	50.9
Margin, %	8.2	5.5		6.9	6.1

October – December

In UK, revenues increased by 37.8 per cent during the quarter and organically by 30.8 per cent, where the difference is explained by currency rate effects. System revenues increased by 84.5 per cent and organically by 75.1 per cent. The increase in revenues is mainly due to a higher sales pace than previous year as well as the impact of delivery delays during the last quarter of the previous year. Service revenues increased by 8.7 per cent and increased organically by 3.1 per cent. Revenues from cloud services grew due to contract starts at new customers, while the support revenues declined organically due to weaker systems sales earlier in the year. The consulting business grew due to good demand.

Adjusted EBITA amounted to SEK 6.3 million (3.0) and the EBITA margin was 3.5 per cent (2.3) for the quarter. Both EBITA and EBITA margin increased as a result of increased revenues, partly offset by lower services gross margins.

January – December

In UK, revenues increased by 12.9 per cent during the year, with revenues organically increasing by 6.9 per cent, where the difference is explained by currency rate effects. System revenues increased by 20.5 per cent, and organically by 14.1 per cent, with a generally stronger demand in 2022 than previous years, as well as a normalisation of delivery times in the second half of the year. Service revenues increased by 5.4 per cent, while decreasing organically by 0.2 per cent, with cloud services showing good growth, offset primarily by reduced support revenues linked to previously weak system sales.

Adjusted EBITA amounted to SEK 36.4 million (34.7) and the EBITA margin was 5.1 per cent (5.5) for the year. EBITA was positively affected by the increased revenue, while the EBITA margin was negatively affected by reduced gross margins within the service business.

	Oct-Dec	Oct-Dec	Change,	Jan-Dec	Jan-Dec	Change,
Amounts in SEK million	2022	2021	%	2022	2021	%
Sytem revenues	91.0	49.3	84.5	372.4	309.1	20.5
Service revenues	88.8	81.7	8.7	338.4	321.1	5.4
of which support revenue	27.2	26.6	2.3	104.1	108.2	-3.8
of which revenue from cloud services	51.7	46.6	11.0	196.2	177.5	10.6
of which consulting revenue	9.9	8.5	16.2	38.1	35.4	7.5
Other	0.8	-	-	0.8	-	-
Total Revenues	180.7	131.1	37.8	711.6	630.2	12.9
Adjusted EBITA	6.3	3.0	140.4	36.4	34.7	4.7
Margin, %	3.5	2.3		5.1	5.5

Revenues Adjusted EBITA

October – December

In West, revenues increased by 44.4 per cent during the quarter and increased organically by 34.6 per cent, where the difference is due to currency rate effects. System revenues increased by 131.1 per cent and organically by 117.3 per cent where a number of large deals were delivered during the quarter after several quarters with low system revenues. Service revenues increased by 15.8 per cent and organically by 7.3 per cent where especially the cloud services continue to show good organic growth as a result of strong demand.

Adjusted EBITA amounted to SEK 13,7 million (12.3) and the EBITA margin was 5,5 per cent (7.1) for the quarter. EBITA increased due to the increased revenues, but lower gross margins and increased sales and administration costs led to a decrease in the EBITA margin.

January – December

In West, revenues increased by 20.2 per cent during year and organically the increase was 14.7 per cent. System revenues increased by 33.9 per cent and organically by 27.8 mainly due to the strong sales in the fourth quarter. Service revenues increased by 15.2 per cent and organically the increase was 9.9 per cent with a high underlying demand mainly for cloud and consulting services.

Adjusted EBITA amounted to SEK 45,3 million (22.8) and the EBITA margin was 5,6 per cent (3.4) for the year.

The improvement in profitability is a result of both higher revenues and the efficiency program that was implemented at the beginning of 2021.

	Oct-Dec	Oct-Dec	Change,	Jan-Dec	Jan-Dec	Change,
Amounts in SEK million	2022	2021	%	2022	2021	%
Sytem revenues	98.7	42.7	131.1	240.9	179.8	33.9
Service revenues	149.8	129.3	15.8	564.9	490.5	15.2
of which support revenue	14.1	13.2	6.8	54.9	50.9	7.9
of which revenue from cloud services	97.5	80.6	21.0	368.7	316.4	16.5
of which consulting revenue	38.2	35.5	7.5	141.3	123.3	14.6
Other	-	-0.2	-111.6	-	-	-
Total Revenues	248.4	172.0	44.4	805.8	670.6	20.2
Adjusted EBITA	13.7	12.3	11.4	45.3	22.8	98.7
Margin, %	5.5	7.1		5.6	3.4

Revenues Adjusted EBITA

October – December

In Central, revenues increased by 80.4 per cent during the quarter and organically by 16.0 per cent. The acquisition of ahd contributed positively primarily to revenues in cloud services but also to system revenues and consulting revenues and sepago contributed positively primarily to consulting revenues but also to system and cloud services. System revenues increased by 92.6 per cent and organically by 26.9 per cent, where several larger deals were delivered during the quarter. Service revenues increased by 71.1 per cent and organically they increased by 7.1 per cent due to good underlying demand for consulting and cloud services.

Adjusted EBITA amounted to SEK 15.8 million (11.3) and the EBITA margin was 7.1 per cent (9.1) for the quarter. In Central, EBITA was positively affected by the contribution of ahd and sepago, while the EBITA margin decreased due to lower gross margins as well as increased sales costs linked to the revenue growth and due to increased administration costs.

January – December

In Central, revenues increased by 103.3 per cent during the year and organically they increased by 18.5 per cent, as a result of good underlying demand. System revenues increased by 88.8 per cent and organically the revenues increased by 29.8 per cent as a result of both normalised delivery times and a good underlying demand. Service revenues increased by 125.6 per cent and organically by 4.8 per cent due to good growth for support and consulting services.

Adjusted EBITA amounted to SEK 45.7 million (30.9) and the EBITA margin was 5.8 per cent (8.0) for the year. In Central, EBITA was positively affected primarily by the acquisitions of ahd and sepago. The EBITA margin decreased as a result of reduced gross margins and increased sales and administration costs.

	Oct-Dec	Oct-Dec	Change,	Jan-Dec	Jan-Dec	Change,
Amounts in SEK million	2022	2021	%	2022	2021	%
Sytem revenues	113.5	59.0	92.6	416.4	220.6	88.8
Service revenues	109.7	64.1	71.1	372.3	165.0	125.6
of which support revenue	13.5	10.2	33.1	48.9	38.7	26.4
of which revenue from cloud services	65.3	42.5	53.6	242.2	96.3	151.6
of which consulting revenue	30.9	11.4	169.7	81.2	30.1	170.1
Other	0.3	0.9	-61.1	0.5	2.6	-80.6
Total Revenues	223.6	123.9	80.4	789.2	388.2	103.3
Adjusted EBITA	15.8	11.3	40.5	45.7	30.9	47.8
Margin, %	7.1	9.1		5.8	8.0

October – December

Proact Finance revenues increased somewhat for the quarter compared to the same period previous year and amounted to SEK 13.9 million (13.2). Net financial items amounted to SEK 0.5 million (0.8). Profit before tax amounted to SEK -0.4 million (0.4).

January – December

Proact Finance revenues decreased for the year compared to last year due to a decrease in financed volume, as a result of the decision during 2021 to offer external financing solutions to a larger extent and amounted to SEK 43.1 million (51.4). Net financial items amounted to SEK 2.6 million (3.5). Profit before tax amounted to SEK 5.3 million (9.9). Future contracted cash flows from Proact Finance amounted to SEK 100.7 million (129.4), a decrease of 22.2 per cent.

	Oct-Dec	Oct-Dec	Change,	Jan-Dec	Jan-Dec	Change,
Amounts in SEK million	2022	2021	%	2022	2021	%
Revenues	13.9	13.2	4.8	43.1	51.4	-16.2
EBIT	-0.9	-0.4	110.0	2.7	6.5	-58.9
Net financial items	0.5	0.8	-44.8	2.6	3.5	-25.2
Profit before tax	-0.4	0.4	-196.4	5.3	9.9	-47.2

Operating segments

Nordics & Baltics: Denmark, Estonia, Finland, Latvia, Lithuania, Norway, Sweden and USA | UK: United Kingdom | West: Belgium and the 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-Dec 2022					Proact
Amounts in SEK million	Nordics	UK	West	Central	Finance	Groupwide	Eliminations	Group
Total revenue	2,508.2	711.6	805.8	789.2	43.1	171.7	-272.7	4,756.8
EBITDA before items affecting
comparability	209.7	83.6	78.8	73.6	2.7	26.3	-	475.1
Depreciations and write-downs on tangible
fixed assets	-35.6	-47.2	-33.5	-27.9	-	-15.8	-	-160.1
EBITA before items affecting comparability	174.1	36.4	45.2	45.7	2.7	11.0	-	315.1
Items affecting comparability	-	-	-	-5.8	-	3.8	-	-2.0
EBITA	174.1	36.4	45.2	39.9	2.7	14.8	-	313.1
Amortisations and write-downs on
intangible fixed assets	-5.7	-5.1	-7.9	-23.1	-	-10.7	-	-52.5
EBIT	168.4	31.3	37.3	16.9	2.7	4.1	-	260.6
Net Financial Items	-3.1	-3.0	-2.9	-4.2	2.6	-5.7	-	-16.4
Profit before tax	165.2	28.3	34.4	12.6	5.3	-1.6	-	244.2
Tax								-52.6

Comprehensive income for the period 191.5

Jan-Dec 2021					Proact
Amounts in SEK million	Nordics	UK	West	Central	Finance	Groupwide	Eliminations	Group
Total revenue	1,884.0	630.0	671.0	388.0	51.0	134.0	-233.0	3,525.0
EBITDA before items affecting
comparability	155.2	84.1	55.9	45.0	6.5	9.0	-	355.5
Depreciations and write-downs on tangible
fixed assets	-39.8	-49.3	-33.1	-14.0	-	-14.9	-	-151.2
EBITA before items affecting comparability	115.3	34.8	22.8	30.9	6.5	-5.9	-	204.4
Items affecting comparability	-1.2	-	-	-5.8	-	-	-	-6.9
EBITA	114.2	34.8	22.8	25.2	6.5	-5.9	-	197.5
Amortisations and write-downs on
intangible fixed assets	-4.3	-6.9	-7.9	-4.3	-	-7.8	-	-31.2
EBIT	109.9	27.8	14.9	20.8	6.5	-13.7	-	166.2
Net Financial Items	-13.0	-3.3	-2.5	-1.6	3.5	2.7	-	-14.3
Profit before tax	96.9	24.5	12.4	19.2	9.9	-11.0	-	151.9
Tax								-34.7
Comprehensive income for the period								117.2

Market review

The market in which Proact operates and the clients we work with are influenced by several long-term trends. We actively monitor market developments and regularly interview our customers to ensure that we are positioning ourselves correctly, developing new business opportunities and strengthening our competitiveness.

The way market trends affect our customers largely drives our strategic direction and day-to-day operations. The three major customer trends are:

• Digitalisation and value creation from data
• The use of hybrid clouds to enable more flexible and agile IT delivery
• Growing concerns about cyber-attacks and security risks in increasingly complex IT environments

Business trend: Digitalisation

Digitalisation is a result of the digital transformation of society and has created new customer needs, behaviours, and requirements. As a result, businesses need to digitalise in order to streamline business processes, maintain market share and not risk losing revenue, customers and employees. In addition, rapid digitalisation is paving the way for new types of IT and data-driven business models where companies are discovering new opportunities to drive growth and develop their businesses. For example, digitisation is enabling new ways to analyse and process data — often using IT-driven automation and artificial intelligence (AI). IT departments need to balance these opportunities with risks around increased complexity, resource constraints, and tightening IT budgets.

Technology trend: Hybrid clouds

Different types of business data, workflows and applications have

different requirements. At the same time businesses need to evaluate their needs for scalability, flexibility, availability, security and legal aspects when defining which type of solution is best for them. By combining different types of delivery models, more and more businesses are now starting to build hybrid cloud solutions that seamlessly combine different types of private, managed, and public cloud services. A well-deployed hybrid IT environment enables faster, more secure, and more efficient response to business needs, whilst providing organisations with new opportunities to drive innovation, increase agility, more easily move data and applications, as well as more quickly allocate IT resources. How businesses balance the use of different IT delivery models varies by industry, skills availability and the strategic goals and direction of the business.

Security trend: Increasing cyber threats and data breaches

Failures in IT security can lead to business disruptions with catastrophic consequences. The number of cyber threats and data breaches has increased dramatically due to rapid technological developments and increased digitalisation. Businesses are now struggling with the increase in security threats as well as tightened regulatory and commercial requirements since the GDPR was introduced in 2018. These development forcing businesses to ensure strict control over their data management and data placement. With increased digitisation and a more complex world where distributed and unstructured data is increasing due to "Internet of things" devices and edge computing, the number of potential attack points that enable security breaches is also increasing.

Many businesses lack the resources to deal with security threats, putting them at risk of missing out on business opportunities, losing sales, damaging their reputation or potentially having to deal with dissatisfied customers.

Other information

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 at present have a limited effect on Proact, as the situation has normalised during the second half of 2022, but new disturbances could 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 recently published 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.

Proposed appropriations of profits

The Board proposes a dividend of SEK 1.85 (1.50) per share to the Annual General Meeting for the 2022 business year, corresponding to SEK 51 million (41). This corresponds to 27 per cent (35) of the year's net profit, in line with Proact's dividend policy to distribute 25 – 35 per cent of profits after tax.

Annual General Meeting

The Annual General Meeting will be held at 4 pm on May 4, 2023 in Stockholm. The annual report will be published and be made available on Proact's webpage, www.proact.eu during the second week of April.

The work of the Nomination Committee before the Annual general Meeting has not yet been completed. For more information, see the company's website, www.proact.eu.

Financial calendar

4 May 2023	Interim Report Q1 2023
4 May 2023	Annual General Meeting 2023
14 July 2023	Interim Report Q2 2023
27 Oct 2023	Interim Report Q3 2023
8 Feb 2024	Interim Report Q4 2023

Solna 9 February, 2023 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 8:00 (CET) on 9 February, 2023.

Jonas Hasselberg, CEO +46 722 13 55 56 jonas.hasselberg@proact.eu Frösundaviks Allé 1, Solna

CONTACT Proact IT Group AB

Linda Höljö, CFO +46 725 07 40 85 linda.holjo@proact.eu Tel. +46 8 410 666 00 www.proact.eu

Org.nr: 556494-3446 | Reg Office: Stockholm

Financial reports

Consolidated statement of comprehensive income

Amounts in SEK million 2022 2021 2022 2021 System income 912.7 515.9 2,861.4 2,002.4 Service income 522.0 425.4 1,889.0 1,519.4 of which support revenue 137.5 119.9 513.3 468.1 of which revenue from cloud services 250.4 206.8 943.8 726.0 of which consulting revenue 134.1 98.7 431.8 325.3 Other operating revenue 5.4 1.1 6.4 3.2 Total income 1,440.1 942.4 4,756.8 3,525.0 Cost of goods and services sold -1,115.3 -728.8 -3,704.2 -2,713.5 Gross profit 324.7 213.6 1,052.7 811.4 Sales and marketing expenses -141.5 -98.3 -466.8 -383.8 Administration expenses -94.5 -68.0 -319.5 -254.5 Items affecting comparability -0.1 -5.8 -5.8 -6.9 Operating profit/loss (EBIT) 88.7 41.6 260.6 166.2 Net financial items -2.7 -4.2 -16.4 -14.3 Profit before tax 86.0 37.4 244.2 151.9 Income tax -21.4 -6.4 -52.6 -34.7 Comprehensive income for the period 64.6 31.0 191.5 117.2 Other comprehensive income Items which may be reveresed later in the income statement Change of hedging reserve (net investment in foreign operations) 6.7 3.2 29.9 11.5 Tax effect of change of reserve (net investment in foreign operations) -1.4 -0.7 -6.2 -2.4 Translation differences from remaining operations 8.9 7.4 29.8 23.0 Total items which may be reversed later in the income statement 14.2 9.9 53.6 32.1 Total comprehensive income for the period 78.8 40.9 245.1 149.3 Comprehensive income attributable to: Shareholders of the Parent company 64.4 30.9 191.3 117.1 Holdings without a controlling influence 0.2 0.1 0.3 0.0 Total comprehensive income for the period attributable to: Shareholders of the Parent company 78.5 40.7 244.5 149.1 Holdings without a controlling influence 0.4 0.2 0.6 0.2 Data per share¹ Earnings per share for the period attributable to the shareholders of the parent company, SEK 2.34 1.12 6.97 4.27 Equity per share attributable to the shareholders of the parent company, SEK 33.49 25.88 33.49 25.88 Cash flow from operations per share, SEK 12.86 9.30 16.13 11.06 Number of outstanding shares at end of period 27,454,851 27,454,851 27,454,851 27,454,851 Weigthed average number of outstanding shares 27,454,851 27,454,851 27,454,851 27,454,851	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec

1) Proact has a long-term performance-based share program that could give rise to dilution of maximum 1.34 percent.

Consolidated Balance Sheet in brief

	Dec 31	Dec 31
Amounts in SEK million	2022	2021
ASSETS
Fixed assets
Goodwill	983.6	820.7
Other intangible fixed assets	230.7	224.9
Tangible fixed assets	366.8	322.9
Other long-term receivables	548.2	412.3
Deferred tax receivables	25.6	16.9
Current assets
Inventories	64.1	15.6
Trade and other receivables	1,517.1	1,117.8
Cash and cash equivalents	505.7	463.9
Total assets	4,241.9	3,395.0
EQUITY AND LIABILITIES
Equity attributable to the shareholers of the parent company	919.5	710.6
Equity attributable to holdings without a controlling influence	3.9	3.3
Total equity	923.4	713.9
Long-term liabilties
Long-term liabilties, interest-bearing	631.3	620.8
Long-term liabilties, non-interest-bearing	737.0	496.3
Deferred tax liabilities	73.1	69.2
Short-term liabilities
Short-term liabilities, interest-bearing	118.7	133.3
Short-term liabilities, non-interest-bearing	1,758.4	1,361.5
Total equity and liabilities	4,241.9	3,395.0

Consolidated statement of changes in Equity

	31 dec	31 dec
Amounts in SEK million	2022	2021
At beginning of period	713.9	605.0
Total comprehensive income for the period	245.1	149.3
Dividend	-41.2	-41.2
Share savings and share option programs	6.0	0.8
At end of period	923.4	713.9

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

Consolidated Cash Flow Statement in brief

	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Amounts in SEK million	2022	2021	2022	2021
Cash flow from operating activities before changes in working capital	154.6	112.0	463.7	353.6
Cash flow from changes in working capital	198.8	143.4	-20.5	-50.0
Cash flow from operating activities	353.4	255.4	443.2	303.6
Cash flow from investing activities	-39.3	-292.7	-194.6	-404.6
Cash flow from financing activities	-104.8	173.7	-236.3	74.7
Total cash flow for the period	209.3	136.4	12.2	-26.3
Cash and cash equivalents at beginning of the period	284.9	320.6	463.9	468.3
Currency translation difference in cash and cash equivalents	11.4	6.9	29.5	21.9
Cash and cash equivalents at end of the period	505.7	463.9	505.7	463.9

Key ratios

	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Amounts in SEK million	2022	2021	2022	2021
Total revenue	1,440.1	942.4	4,756.8	3,525.0
of which attributable to acquisition and divestments	63.4	115.0	271.0	254.5
of which currency effects	58.6	4.0	156.4	-43.9
Total revenue, organic	1,278.7	823.0	4,174.0	3,314.3
Organic growth total revenue, %	39.9	-13.7	22.8	-8.1
System revenue	912.7	515.9	2,861.4	2,002.4
of which attributable to acquisition and divestments	30.0	64.0	69.5	154.6
of which currency effects	31.2	4.0	84.5	-18.5
Total system revenue, organic	851.4	448.0	2,707.4	1,866.2
Organic growth system revenue, %	65.0	-24.2	35.2	-14.0
Services revenue	522.0	425.4	1,889.0	1,519.4
of which attributable to acquisition and divestments	33.3	51.0	201.6	98.4
of which currency effects	27.3	-	71.8	-25.3
Total service revenue, organic	461.5	374.0	1,615.7	1,446.3
Organic growth service revenue, %	8.5	4.0	6.3	0.8
EBITDA	147.3	91.0	473.2	348.6
EBITDA margin, %	10.2	9.7	9.9	9.9
Depreciation and write-down on tangible assets	-41.3	-39.9	-160.1	-151.2
EBITA	106.0	51.2	313.1	197.5
EBITA margin, %	7.4	5.4	6.6	5.6
Amortization and write-down on intangible assets	-17.3	-9.5	-52.5	-31.2
EBIT	88.7	41.6	260.6	166.2
EBIT marginal, %	6.2	4.4	5.5	4.7
Profit before tax	86.0	37.4	244.2	151.9
Net margin, %	6.0	4.0	5.1	4.3
Profit after tax	64.6	31.0	191.5	117.2
Profit margin, %	4.5	3.3	4.0	3.3
Equity	923.4	713.9	923.4	713.9
Total assets	4,241.9	3,395.0	4,241.9	3,395.0
Equity ratio, %	21.8	21.0	21.8	21.0
Capital turnover rate, times¹	-	-	1.2	1.1
Return on equity, %¹	-	-	23.4	17.8
Financial costs included in net financial items	9.1	5.8	26.7	19.8
Capital employed	1,673.4	1,467.9	1,673.4	1,467.9
Return on capital employed, %¹	-	-	17.2	13.4
Investments in fixed assets	84.8	325.3	397.5	550.7
Profit before tax per employee, SEK thousands	71.7	34.8	210.6	147.9
Average number of employees	1,199.2	1,074.7	1,159.5	1,027.3

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

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

Parent Company's Income Statement, in brief

	Jan-Dec	Jan-Dec
Amounts in SEK million	2022	2021
Net sales	139.9	105.2
Cost of goods and services sold	-	-
Gross profit	139.9	105.2
Administration expenses	-144.4	-120.0
Operating profit	-4.5	-14.8
Net financial items	78.3	44.2
Profit efter financial items	73.8	29.4
Provisions	-	10.0
Profit before tax	73.8	39.4
Income tax	-5.1	-0.9
Comprehensive income for the period	68.8	38.5

Parent Company's Balance Sheet, in brief

	Dec 31	Dec 31
Amounts in SEK million	2022	2021
ASSETS
Fixed assets	1,204.0	1,058.7
Current assets	108.9	119.5
Total assets	1,312.9	1,178.2
EQUITY AND LIABILITIES
Restricted Equity	81.7	80.5
Non-restricted Equity	345.6	313.2
Equity	427.3	393.7
Long-term liabilities	453.2	495.1
Short-term liabilities	432.3	289.4
Total equity and liabilities	1,312.9	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,

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 of goods 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 amortised 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

	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec	Jan-Dec
Amounts in SEK million	2022	2021	2020	2019	2018
Total revenue	4,756.8	3,525.0	3,633.1	3,407.9	3,317.7
EBITDA	473.2	348.6	369.6	271.7	231.1
EBITDA margin, %	9.9	9.9	10.2	8.0	7.0
EBITA	313.1	197.5	216.7	134.2	200.5
EBITA margin, %	6.6	5.6	6.0	3.9	6.0
EBIT	260.6	166.2	182.1	105.4	164.5
EBIT margin, %	5.5	4.7	5.0	3.1	5.0
Profit before tax	244.2	151.9	167.7	101.7	167.8
Net margin, %	5.1	4.3	4.6	3.0	5.1
Profit after tax	191.5	117.2	132.3	80.2	127.3
Profit margin, %	4.0	3.3	3.6	2.4	3.8
Equity ratio, %	21.8	21.0	20.7	18.3	21.2
Capital turnover rate, times	1.2	1.1	1.3	1.3	1.6
Return on equity, %	23.4	17.8	23.4	16.1	29.8
Return on capital employed, %	17.2	13.4	17.1	13.2	29.5
Dividend to shareholders of the Parent company¹	41.2	41.2	22.9	38.0	34.3
Investments in fixed assets	397.5	550.7	269.1	440.7	83.8
Financial costs included in net financial items	26.7	19.8	20.7	11.3	3.9
Profit before tax per employee, SEK thousands	210.6	147.9	172.3	122.0	210.5
Average number of employees	1,159.5	1,027.3	973.4	833.5	797.2
Earnings per share for the period, SEK²	6.97	4.27	4.80	2.92	4.62

1) Relates to the year in which the dividend was executed. For the fiscal year 2021 a dividend of SEK 1.50, total SEK 41.2 million, was made.

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 per cent.

Note 3. Acquired company's net assets at the time of acquisition

	Jul
sepago GmbH	2022
Amounts in SEK million	Amount
Intangible fixed assets	0.0
Tangible fixed assets	18.0
Financial fixed assets	0.2
Trade and other receivables	39.4
Cash and cash equivalents	5.0
Long-term liabilties	-
Accounts payable and other short-term liabilities	-56.0
Net identifiable assets	6.7
Goodwill	100.0
Fair value adjustment acquired intangbile assets	41.5
Deferred tax related to acquired assets	-12.3
Purchase price	135.9
Deduct:
Acquired cash	-5.0
Deferred payment of part of consideration Own shares used in acquisition	-15.4-
Net outflow of cash	115.6

	Oct
Ahd GmbH & Co. KB	2021
Amounts in SEK million	Amount

Net identifiable assets	32.0
Accounts payable and other short-term liabilities	-66.3
Long-term liabilties	-
Cash and cash equivalents	14.0
Trade and other receivables	40.0
Financial fixed assets	-
Tangible fixed assets	33.5
Intangible fixed assets	10.9

Net outflow of cash	258.4
Own shares used in acquisition	-
Acquired cash Deferred payment of part of consideration	-14.0-
Deduct:
Purchase price	272.3
Deferred tax related to acquired assets	-27.7
Fair value adjustment acquired intangbile assets Fair value short-term liabilities	93.6-
Goodwill	174.4

The acquisition relates to the purchase of 100 per cent of the shares and votes in sepago GmbH. The acquisition was completed on July 1, 2022. Total acquisition costs charged to earnings in 2022 amount to SEK 4.1 million.

During the fourth quarter of 2022, the preliminary purchase price allocation was updated, see table. The main difference to the previously reported amounts for the purchase price allocation is a reduction in goodwill of SEK 18.2 million based on an updated net present value calculation of the earn-out, as well as a reduction in the adjustment for acquired intangible fixed assets by SEK 8.3 million based on an updated valuation of these. The change has had no impact on the result.

Of the total purchase price of SEK 135.9 million, SEK 120.3 million was paid in cash at the time of acquisition and the remaining earn-out will be paid out over a period of 2.5 years provided that sepago reaches the expected EBITA and established operational targets.

In the acquisition, the purchase price exceeded the recognised assets of the acquired business, which resulted in a purchase price allocation giving rise to intangible assets.

Goodwill in this acquisition is motivated by the fact that the acquisition is an important part of Proact's growth strategy with the ambition to broaden the offering and expand its presence in the company's key markets. The acquisition of sepago strengthens Proact's position on the German market and expertise in delivering public cloud transformation and IT consultancy capabilities to large and medium-sized enterprise segment on the German market, which are in line with the company's long-term strategy to grow within hybrid cloud services.

sepago, founded in 2002, is a privately-owned company with 82 employees based in Germany with its head office in Cologne. The company has a customer base and an offer that complements Proact's well.

The acquisition was completed on July 1, 2022, and for the year 2022 sepago has contributed with SEK 55.0 million in revenues and SEK -3.8 million in operating profit. If Proact had owned sepago for the full year, sepago would have contributed with approximately SEK 119.1 million to the Group's revenues and with approximately SEK -5.1 million in operating profit.

The acquisition relates to 100 percent of the shares and votes in ahd GmbH & Co KB. The acquisition was completed on October 26, 2021.

Total acquisition costs charged to earnings in 2021 amounted to SEK 5.7 million.

The purchase price of SEK 272.3 million was paid in cash.

In the acquisition, the purchase price was higher than the recognised assets of the acquired business, which resulted in the acquisition analysis giving rise to intangible assets.

During third quarter 2022, the balance sheet items for the purchase price allocation were determined definitively, see table.

The main difference between preliminary and definitive values for the purchase price allocation is an increase in goodwill of SEK 13.0 million with a corresponding decrease in other receivables. The change had no impact on the result.