Welcome to the Knowit audiocast teleconference Q4 2021. For the first part of this call, all participants will be in listen-only mode, and afterwards, there will be a question-and-answer session. Today, I'm pleased to present Per Wallentin, CEO, and Marie Björklund, CFO. Please go ahead.
Hello. Per Wallentin here, and welcome to this presentation of the year-end report 2021. And as you can see with me today, I also have Marie Björklund, our CFO. Next slide, please. Overall, the Q4 was characterized by high activity driven by good demand in our services, and by the continued integration of the acquired business Capacent and Cybercom, of course. I'm pleased that we deliver net sales of almost SEK 1.66 billion, corresponding to an increase of around 5.5%, and that's around 4% in constant currencies, including the acquired entities. We deliver an adjusted EBITDA of SEK 181.1 million, and that's our strongest quarter ever. That's with a healthy margin of 11.5%.
We can take the next slide, please. Looking back at the full year 2021, we took great steps in building a stronger Knowit. As you recall, we are now organized in four business areas. We added the new area Connectivity, and we also integrated Creuna first and then Cybercom and then Capacent into the Knowit organization. Of course, the integration work has affected all business areas. We have been able to gain from cost synergies, but we've also seen costs from the reorganization work and restructuring work because it's been a lot of changes in the organization, of course. The margin potential is in adding further competencies, allowing us to take on larger and more complex assignments. So good progress in the integration.
For the full year, we deliver annual net sales of over SEK 4.8 billion, up around 4.7%, including the development in the acquired entities, and adjusted EBITDA of SEK 488 million, corresponding to a margin of around 10.1%. Of course, it's very encouraging that we, for the eighth year in a row, are delivering an improved result. We can take the next slide, please. Our vision of a sustainable and human society is hugely important in building Knowit for the future. I think that's a key differentiator in our employee brand. We have, during the year, taken large steps in our sustainability work.
We are measuring how we help our clients to contribute to the UN Sustainable Development Goal, following the model initiated by Cybercom. It was really good to get that from the Cybercom part. We are measuring our own CO2 footprint. We are working actively to promote gender balance, as you know, since many years at all levels in our company. I think that our strategies have paid off. We enjoy top ranks in various surveys, and we have an Employee Net Promoter Score of 30, which is a lot better than average in our business. There's a lot of people working at Knowit today that gladly would recommend their peers to work at Knowit in the future.
That's extremely important going into 2022 because the battle 2022, I think will be to keep and recruit people. We can take the next slide, please. We will now take a look into our business areas more in detail. We start with Solutions, our largest business area, reporting net sales of SEK 912 million for the quarter, up by a lot 11.7% to previous year compared as if Cybercom has been included last year. We continue to grow across the board with an especially strong development in Norway and Sweden, and that's our largest market. The business area have been strengthened by consultants from Cybercom, which has been successfully integrated.
Solutions have been the business area with the most effect of the integration of Cybercom. We are pleased to note some large assignments, new assignments in both Norway and Sweden. Both in private and public sector, but we see some really large new assignments, frame agreements in public sector that are long-term as well. We can take the next slide, please. Experience reported sales of SEK 365 million in the quarter, an increase of 3.8% including acquired entities. Continued positive effect from the integration of Creuna and Cybercom. Markets were really strong in Sweden and Norway. We see new assignments generated in energy, logistics, and transportation, among others.
During the second half of the year, the personnel turnover has increased a bit. Somewhat has been met by net recruitment initiatives and increased investments in competence development. Of course, that has affected the margin, but I think that's really important going into 2022 to be able to meet up with a lot of recruitment activities now this fall. We can take the next slide, please. That's our new business area Connectivity reporting SEK 279 million in the quarter, and that's an increase of 2.3%. Connectivity strengthens our offers to R&D-intensive industries such as tech, telco, and automotive. The business area consultants are based in Sweden and Poland.
I think that the Polish presence means a lot of opportunities for further delivery capacity for all business areas in the years to come, and that's really interesting. We see a strong business flow with new assignments with new and existing large clients. We see some margin effects temporarily in Poland connected to cost increases mainly due to local regulations, and that will even out in Q1. We can take the next slide, please. Business area Insight reported sales of SEK 165 million for the Q3 , including the acquired Capacent business. We see a continued really positive trend. We see a strong margin generated from the restructuring of businesses in Stockholm and Gothenburg.
As you know, we have worked a lot with the organization, internal organization, during 2020 and beginning of 2021, and that paid off now. We see new assignments in security and digital transformation in the automotive industry, et cetera, et cetera. We can take the next slide, please. That was a brief look into our four business areas. Now I would like to turn over to Marie to go deeper into the financials.
Next slide, please.
We can take the next slide. Yeah.
Well, thank you, Per. Now getting back to Knowit Group, the whole group, we delivered sales of approximately SEK 1.6 billion in the Q2 , compared to a little more than SEK 900 million reported for the same quarter in 2020. Same as last quarter, of course, the sales increase was mainly impacted by the acquisition of Cybercom. This quarter, we also consolidated Capacent, the acquisition made on October first. But more importantly, we can also see a growth in our existing businesses, which we're very proud of. Our adjusted EBITA increased to SEK 181 million for the quarter, which also means an increase of almost 70%. The adjustment we're making since the Q2 is related to acquisition and integration costs and amounts to around SEK 13 million in the Q4 .
The currency effect has a positive impact on the EBITA of around SEK 2 million. This is the last quarter I'm commenting on the allowances from the government, which was minor in the Q4 of 2020 and amounted to around SEK 1 million. We ended the request for support in November last year. All in all, our adjusted EBITA margin was 11.5%, almost in line with last year. Next slide, please. Since we're now also ending our full year of 2021, I want to take the opportunity to comment on the total as well.
We're glad to present a growth of net sales of more than 40%, amounting to SEK 4.8 billion. The adjusted EBITA margin adjusted with SEK 49 million of acquisition and integration costs amounts to SEK 488 million, which is an increase of 46%. Summing up the year, it was about the integration of Creuna, but of course then also Cybercom, both in preparations of the transaction, but also extensive work done on the integration during the fall. So far, I have to say we're very pleased with the outcome. This is reflected in our figures explaining the increase in sales and also EBITA. On a full year basis, we can also rely on a steady growth in our existing businesses, which is of great importance to us since our goal is to grow sustainable by acquisitions, but also organically.
The formally communicated annual cost synergies totaling SEK 45 million have now been achieved on a yearly basis. The last three months of the year, we consolidated Capacent, as mentioned, and we're also proud to announce the acquisition of Strømlin and 1508. Just to remind you, those two companies are not consolidated in our figures until January 1st 2022. Support from the government amounted to SEK 40 million the full year of 2020. In total, we're finishing the year with an adjusted EBITA margin of 10.1%, which is slightly up from 9.9% last year. Next slide, please. This slide shows our adjusted EBITA development in which you can see how much the result has grown over the years.
We're ending the year with a rolling twelve months and also full year, of course, of SEK 488 million. Next slide, please. Commenting on the cash flow, we can see that we have a healthy cash flow and continue to have a very solid financial position. Cash flow from operation was improved to SEK 267 million due to a stronger result and lower working capital investments, and this was mainly due to increased short-term debt. Cash flow from investing activities was impacted by the financing of the acquisition of Capacent. At all quarters, we have an effect from amortization of recent debt impacting the financing activities with SEK 35 million.
All in all, this resulted in a positive cash flow of SEK 62.8 million for the quarter, leaving a net debt amounting to SEK 41.5 million as of December 31st 2021. This corresponds to a net debt to EBITDA ratio of around 0.07, which is well within our financial targets, and we are happy to still possess a solid financial position and end the year with a very strong balance sheet. With that, I leave it to you, Per, to say some final words. Next slide, please.
Thank you, Marie. To summarize, we are, as you probably can understand, delighted to present another solid quarter with high activity in all areas. During an intense work with the integration across the whole group, we have managed to stay focused on the business and deliver growing net sales and stable margins. The integration work is promising, completing, and strengthening our business. After the year-end, we have also completed an acquisition in Denmark to be consolidated in Q1. I'm of course very pleased that the board can propose a dividend for 2021 of 7 SEK per share to the shareholder. Looking ahead, we see good signs of a stable demand in the market, and we are very well positioned for continued profitable growth and look forward to exciting opportunities ahead.
With that, I open up for questions.
We have a first question. It's from Daniel Thorsson, ABG. The line is now open for you.
Yes. Hi. Thank you very much. First one on group organic growth. It was 4% in Q4, slightly weaker than I expected. At the same time, you highlight that Radar is expecting Swedish and Norwegian IT services markets to grow between six percent and eight percent in 2022. Is that the level we should expect for Knowit as well, given your exposure? Or are you significantly larger now, making it more difficult to reach the market growth? Or how should we think about that?
I think that we will be able to grow in line with the market. Of course, it's impossible to predict exactly what the market will grow in 2022. I think I'm actually quite pleased with the trend that we have. If we look back to 2020, we saw that we have an effect, of course, of the slower pace contrasted to the pandemic. We stopped growing in the first half of the year 2020. We had stopped in the second half of the year 2020.
The same thing, third, half, or the first half of the year 2021, and then we have a significantly better situation in the second half of 2021, even if we are in that half of the year integrating Cybercom and restructuring quite a lot. You have to bear in mind that this half of the year, second half of the year is a lot about integrating parts, and actually we are less overhead people than before in the Knowit group, non-billable.
Okay. That's fair. Secondly, on the margin side, you say in your comment that we should see clear effects on profit and margins in 2022 when those integrations are fully finalized. When should we expect to see that? Is that enough to take you to the 12% financial margin target, or will it just take you a little bit above the current 10%? Just to understand the magnitude here.
I don't think that is enough for 2022 to get to those 12%. We have to continue to work during a couple of years to get up to those 12%. I think that we will see an effect of the integration, and we already see that, as you recall, from 9.9% to 10.1% this year.
Yeah. That's clear. Finally, what is the first impression of employee turnover from the acquired companies? Have you seen larger than expected levels or lower than expected in the fallout from people leaving, Cybercom and Capacent, for example?
It's actually lower than what I had anticipated and expected. We can't see any differences in the employee turnover in the different parts of the Knowit group compared to Capacent or Cybercom, and that's very promising.
Okay. That's very clear. Thanks.
The next question is by Viktor Lindholm, Pareto Securities. The line is now open for you.
Thank you. Good morning. Another question on the profitability target. I mean, you have improved recently in Insight, and you have also perhaps seen some lower costs during the pandemic. I'm curious to hear, I mean, in what part of the business or in which segment you see the greatest potential going forward, in order to reach the profitability target a few years ahead?
I don't think that to look at Insight, we saw, as you mentioned, that we had the problem with the profitability back in 2020 in Insight, and we have been able to adjust that with a lot of internal work. That was a problem that we now have somewhat solved, at least to some extent. I think that the next steps that we take now, both connected to the integration and the lower overhead that we have in the years to come connected to that will take us one little step. I also think that we have to work with a lot of different activities both on the cost side and the revenue side to get up to those 12%.
If you would have asked me one year ago, I would have talked about Insight and the problem we had there with our margin. Now it's more about small steps in all areas.
All right. Thank you. A question related to salaries. If you look into 2022, could you comment anything about what you believe in terms of potential salary inflation and how confident you are that you could compensate for that through potential price increases?
I think that we will have a salary inflation in 2022. We have had a very calm situation both 2020 and 2021 due to the pandemic. It's obvious that will come in 2022. We also see already now that when we take on new frame agreements now in November, December, and when we renegotiate existing frame agreements with our larger customers, and talk about the price level for 2022, we are able to take out that in higher prices. I'm actually quite confident that we will be able to take out the price or the salary inflation with a price increase.
Okay. Thank you. Last question from my side. I can see that you report a financial income in the quarter of roughly
17 million, which is higher than it usually is. Could you comment on what that relates to? I couldn't find anything in the comments in the report.
Maybe you could take that question, Marie.
Yeah. It's mainly a revaluation of additional purchase prices. This quarter it was the Capacent. We had an additional purchase price there which they didn't receive. We didn't pay that to Capacent. That is the explanation.
All right. Thank you.
As a reminder, if you want to ask a question, please press zero and one on your telephone keypad now to enter the queue. There are no further questions at this time. Please go ahead, speakers.
We do have a question from the mail, which is from Mario Tejeda on the sick leave is exploding at the moment. How do you think you will be impacted in Q1 from the sick leave? Per, would you?
Yes. We didn't see that big effect of sick leave in Q4. I think that we will be affected a little bit in Q1. That is probably the case, but I don't think that it will be a huge effect. To some extent I think that we will be affected, yes. All right. Do you have some more questions by mail there, Kiki?
No.
It's time to thank you all for attending this meeting and wish you a good Friday and thank you.