Annual Report 2007

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#LOSENESS

Annual Report 2007

www.knowit.se

Know IT AnnuAl RepoRT 2007

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Know IT AnnuAl RepoRT 2007

CONTENTS

President’s review ... 2

Business concept, targets and strategies ...4

Markets and clients ...6

Client assignment ...8

Operations ...9

Employees and structural capital ...13

The Know IT share ... 16

Corporate governance ...18

Board of Directors ...20

Senior Management ...21

Financial review ...22

Directors’ report ...23

Consolidated income statement ...26

Consolidated balance sheet ... 27

Consolidated cash flow analysis ...29

Statement of changes in equity - Group ...30

Parent Company income statement .31 Parent Company balance sheet ...32

Parent Company cash flow analysis ..34

Statement of changes in equity - Parent Company ... 35

Additional disclosures and notes ...36

Proposed distribution of earnings .... 52

Auditors’ report ... 53

Glossary ...54

Definitions ... 55

Invitation to the Annual General Meeting ...56

Priority areas

Business Intelligence, Testing and Quality Assurance, Enterprise Content Management (ECM) and Technology Management are areas with good growth prospects where Know IT has a strong position.

Read more on page 10.

Local presence as a strategy All consulting operations by their nature are small in scale. Know IT has therefore chosen to establish operations close to clients and maintain a local presence in many cities.

Continued market growth The consensus among independent observers is that IT investments will remain at a high level in 2008.

Greater precision in clients’ IT solutions

By effectively combining expertise in technical and operational development, our strategic consultation services increase the accuracy of clients’

IT solutions.

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We provide the IT expertise of a big company with the soul of a small company and commitment of the individual consultant.

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Driving force behind global auto

project

An important success factor in the AUTOSAR project was the ability to determine what was most important to Ford in a different context and to actively and successfully drive these issues as part of the development partnership.

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Know IT A-Kraft AB Platensgatan 8 SE-582 20 Linköping, Sweden

Tel: +46-13-21 05 60 Fax: +46-13-21 05 65 Know IT BI Syd Gråbrödersgatan 9B SE-211 21 Malmö, Sweden Tel: +46-40-630 24 00 Fax: +46-40-97 30 85 Know IT Candeo AB Stationsgatan 43 SE-972 33 Luleå, Sweden Tel: +46-920-157 27 Fax: +46-920-21 18 23 Storgatan 12 SE-852 30 Sundsvall, Sweden

Tel: +46-60-16 16 80 Fax: +46-60-17 36 65 Skolgatan 49

SE-903 27 Umeå, Sweden Tel: +46-90-71 21 80 Fax: +46-90-12 57 40 Strandgatan 15 SE-891 33 Örnsköldsvik, Sweden

Tel: +46-660-29 46 46 Fax: +46-660-29 46 47 Know IT Candeo Gävle AB Nygatan 34

SE-803 11 Gävle, Sweden Tel: +46-26-51 08 00 Fax: +46-26-51 08 03 Know IT Compliance

& Governance AB Klarabergsgatan 60 Box 3383

SE-103 68 Stockholm, Sweden

Tel: +46-8-700 66 00 Fax: +46-8-700 66 10

Know IT Create Beijing Technology Co Ltd Yeqing Plaza C203 Wangjing North Road No. 9 Chaoyang District, 100102 Beijing PR China

Tel: +86 1350 1252 607 (Cecilia Zhu)

Know IT Create Epireal AB

Wennerbergsgatan 2 SE-352 35 Växjö, Sweden Tel: +46-455-230 20 Know IT Create in Karlskrona AB Ronnebygatan 41 SE-371 33 Karlskrona, Sweden

Tel: +46-455-230 20 Know IT Create in Lund AB Skiffervägen 10 SE-224 78 Lund, Sweden Tel: +46-46-590 02 00 Fax: +46-46-590 02 01 Know IT Create in Ronneby AB Softcenter 7 SE-372 25 Ronneby, Sweden

Tel: +46-455-230 20 Know IT Create Information AB Gråbrödersgatan 9B SE-211 21 Malmö, Sweden Tel: +46-40-630 24 00 Fax: +46-40-97 30 85 Know IT Create Technowledge AB Klarabergsgatan 60 Box 3383

Tel: +46-8-700 66 00 Fax: +46-8-700 66 10

Know IT Dalarna AB Maskinistgatan 8 Box 182

SE-781 22 Borlänge, Sweden

Tel: +46-243-21 44 40 Fax: +46-243-79 21 01 Know IT Dataunit AB Strandbergsgatan 20 SE-112 51 Stockholm, Sweden

Know IT Estonia OÜ Toompuistee 17A EE-101 37 Tallinn, Estonia

Know IT Göteborg AB Vikingsgatan 1 SE-411 04 Göteborg, Sweden

Tel: +46-31-711 27 30 Fax: +46-31-700 87 30 Gustav Mattssons väg 2 SE-451 50 Uddevalla, Sweden

Tel: +46-522-797 30 Fax: +46-522-981 87 Know IT HRM AB Klarabergsgatan 60 Box 3383

Tel: +46-8-700 66 00 Fax: +46-8-700 66 10 Know IT Informations- synergi AB

Brigadgatan 2 SE-587 58 Linköping, Sweden

Tel: +46-13-474 00 00 Fax: +46-13-474 00 05 Know IT Innograte AB Mäster Samuelsgatan 9 SE-111 44 Stockholm, Sweden

Tel: +46-8-700 66 00 Know IT Karlstad AB Västra Torggatan 18 SE-652 24 Karlstad, Sweden

Tel: +46-54-69 07 50 Fax: +46-54-69 07 59

Know IT Mälardalen AB Kapellgatan 10 SE-732 45 Arboga, Sweden Tel: +46-589-131 12 Kopparbergsvägen 23 SE-722 13 Västerås, Sweden

Tel: +46-21-34 99 00 Fax: +46-21-34 99 99 Järntorgsgatan 3 SE-703 61 Örebro, Sweden Tel: +46-19-12 88 00 Fax: +46-19-12 88 20 Know IT Objectnet AS Skytebanen 14A NO-4841 Arendal, Norway Tel: +47-970-90 00 Fax: +47-22-83 61 71 Ruselökkvejen 14 NO-0251 Oslo, Noway Tel: +47-970-29 000 Fax: +47-22-83 61 71 Know IT Software Solutions AB Vikingsgatan 1 SE-411 04 Göteborg, Sweden

Tel: +46-31-711 27 30 Fax: +46-31-700 87 30 Klarabergsgatan 60 Box 3383

Tel: +46-8-700 66 00 Fax: +46-8-700 66 10 Know IT Software Solutions AS Parkveien 55 Boks 2543 Solli NO-0202 Oslo, Norway Tel: +47-22-33 42 50 Fax: +47-22-33 42 51

Know IT Stockholm AB Klarabergsgatan 60 Box 3383

Tel: +46-8-700 66 00 Fax: +46-8-700 66 10 Know IT Södertälje AB Järnagatan 16 SE-151 73 Södertälje, Sweden

Tel: +46-8-700 66 00 Fax: +46-8-700 66 10 Know IT Uppsala AB Bredgränd 6

SE-753 20 Uppsala, Sweden Tel: +46-18-18 83 00 Know IT Technowledge AB Karlavagnsgatan 11 SE-417 56 Göteborg, Sweden Tel: +46-31-762 70 01 Fax: +46-31-22 76 72 Platensgatan 8 SE-582 20 Linköping, Sweden

Tel: +46-13-465 26 00 Fax: +46-13-21 05 65 Klarabergsgatan 60 Box 3383

Tel: +46-8-700 66 00 Fax: +46-8-700 66 10 Know IT Yahm AB Skiffervägen 10 SE-224 78 Lund, Sweden Tel: +46-46-590 02 00 Fax: +46-46- 590 02 01 Know IT AB (publ)

Klarabergsgatan 60 Box 3383

SE-103 68 Stockholm

Tel/fax

Tel: +46-8-700 66 00 Fax: +46-8-700 66 10 info@knowit.se

Parent Company

Subsidiaries

Production: Know IT in cooperation with Addira Photography: Michael Forster and image banks Translation: WordWise Communications, LLC Reprographics and printing: Larsson Offsettryck

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KEY RATIOS 2007

HIGHLIGHTS OF THE YEAR 1

Highlights of the year

Strong profit and good growth

In accordance with our strategy to stay close to clients, Know IT established operations in several new locations in the fall of 2007.

New companies and offices were opened in Uppsala, Örnsköldsvik and Arboga.

Through the June acquisition of Solution Point AB, which specializes in testing and quality assurance, Know IT strengthened its leading position in the area.

Know IT established a local presence in Södertälje by acquiring IT Profil AB in August.

In Tallinn, Estonia, Know IT formed a new company in September to offer Swedish clients nearshoring services and meet the needs of the expanding local market.

In September Know IT acquired 80 percent of the shares in Objectnet AS, an IT consultancy in Oslo with 80 consultants. Objectnet focuses on developing business-critical solutions for large clients primarily in the public sector.

Know IT strengthened its position in southern Sweden by acquiring the IT consultancy YAHM in Lund in November. The company has 32 consultants. During the same month Know IT also acquired Dataunit, with 53 consultants in Stockholm and Västerås, strengthening its capabilities in the defense and nuclear power segments as well as in Business Intelligence.

In December Know IT opened an office in Beijing to offer local resources to telecom clients with production in China.

Net sales for 2007 amounted to SEK 982.1 m (760.8)

Operating profit rose from SEK 68.9 m to SEK 101.5 m in 2007.

The operating margin was 10.3 percent, compared with the target through 2007 of 8 percent over a three-year period.

.ET

About Know IT

Know IT is a growing IT consultant specialized in strategic consulting services, system development and administration. Our expertise and resources are combined into a total solution suited to each client’s needs. We stay close to our clients, with around 1,000 employees in 21 offices in Sweden and in Norway, Estonia and China.

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Know IT AnnuAl RepoRT 2007 PRESIDENT’S REVIEW 3

The IT consulting market continued to devel- op very positively in 2007. It was another year with higher margins and continued growth for Know IT, like many of our colleagues in the industry.

In my President’s review in last year’s annual report I wrote that Know IT had never been stronger. I am pleased to be able to write the same thing again. We increased our sales and operating margin and have never been stronger. Our net sales rose by just over 29 percent and the operating margin passed 10 percent.

We feel our strategy to operate close to clients is an important reason for our success. Clients appreciate being able to obtain high-quality consulting services from local firms. For Know IT, geographical expansion also means greater stability, with many local markets balancing the larger, more sensitive markets in Stockholm, Göteborg and the Öresund region.

During the year we continued to expand to new locations in Sweden, planting Know IT’s flag in Arboga, Södertälje, Upp- sala and Örnsköldsvik. In addition, we established operations in Estonia and China during the fall. The Estonian operations are growing on schedule and at the time of writing we have 14 employees there. An exciting and slightly unusual addition is the office in Beijing, which we opened because we have Swedish clients with operations in China that we can offer an even higher level of service by being local.

Nordic region: Our primary market

As an element in the strategy to grow in the Nordic region, we made a major move in Norway by acquiring Objectnet, after which we have more than 100 employees in the country and a strong base for further expansion. In 2008 we will also look at opportunities to expand to Finland and Denmark.

We are active in the entire value chain for IT consulting:

from strategic consulting through system development and administration to further development of installed solutions.

Of course some services are always in higher demand than others, and we continue to design our services to meet client needs. There are several growth areas where we are coordi- nating efforts to complement our local consulting operations and stressing them more in our marketing. We have made significant progress, for example, in Business Intelligence and Enterprise Content Management. In Business Intelligence – i.e., decision-support solutions – we are already a Scandina- vian leader. We are also giving more attention to Enterprise Content Management for web-based information systems, where we were awarded a number of major projects during the year. Two other growth areas we continue to stress more are Testing and Quality Assurance and Technology Manage- ment.

I usually say that we are the Swedish champions in frame agreements, and I think I am justified in doing so. We have

over 60 frame agreements that generate nearly 60 percent of our sales. Frame agreements are important in that they provide a steady flow of project work, while for the client they are a way to combine efficient purchasing processes with quality assurance of their suppliers. Frame agreements will become even more important if the economy slows down.

Even though we have grown partly through acquisitions, organic growth remains a priority. Despite that competition for qualified manpower was fierce during the year, we were successful in recruiting and grew significantly on an organic basis.

Satisfied employees

Improving Know IT as a workplace is an important area for us.

Our annual employee survey shows that our staff is happy.

While these results are certainly good, we are not satisfied.

We want to make Know IT an even better workplace. Con- tinuous competency training is an important part of this, alongside training to help our employees grow as consultants in accordance with the values Know IT stands for. We will continue develop our common values, which are based on closeness, knowledge and commitment.

We want to be a responsible company that places the highest demands on quality and sustainability. In 2007 the Group company Know IT Technowledge received ISO certification as a first step. Sustainability from an environmental perspective is an important issue, and even though we have long maintained an environmental policy that guides our ac- tions on issues impacting the environment, we feel we can do more. We will continue to work actively to guarantee that our operations have as little impact as possible.

Higher targets

Our target for 2007 was to continue to grow to gain market share and raise our operating margin. We have met both ob- jectives by a wide margin. Know IT’s Board of Directors felt the time was right to adjust our financial targets and raised the margin target to 10 percent over a three-year period. The target of 15 percent sales growth remains unchanged. The signals are clear; we will continue to grow, but with higher profitability than before. We will continue to develop our business so that we can live up to our vision to be the obvious choice for clients, employees and investors. This is why we are very pleased to propose a higher dividend for the fifth consecutive year.

The economic uncertainty we are seeing today gives us good reason to be cautious with the investments we make, including future acquisitions. At this point I still see strong demand for the services Know IT offers. I am convinced that we will continue to grow while remaining profitable.

I believe in Know IT and am proud to be a representative of the Company.

March 2008,

Anders Nilsson, President and CEO

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4 BUSINESS CONCEPT, TARGETS AND STRATEGIES

Local entrepreneurship and strong commitment

Know IT is an IT consultant that helps clients build their businesses by offering qualitative services through local, entrepreneurially driven firms with considerable independence and strongly committed consultants. Our culture is distinguished by expertise, personal commit- ment and a willingness to collaborate. Know IT offers total solutions as well as expertise and resources in strategic advice, system development and administration.

Vision

Our vision is to be the obvious choice for clients, employees, and investors.

Business concept

We deliver the IT expertise of a big company with the soul of a small company and commitment of the individual consultant.

We help our clients build their businesses and be more competitive through strategic IT advice and customized processes and IT solutions.

We assume long-term responsibility through administrative assignments and support commitments.

Our clients mainly consist of organizations and businesses that need IT systems that can meet strin- gent requirements on performance and accessibility from different interfaces.

Financial targets Operating margin

The operating margin, measured as operating profit before amorti- zation of intangible assets (EBITA) as a percentage of net sales, should average at least 10 percent over the next three years.

Growth

Sales growth should average at least 15 percent annually over the next three years. Growth can be achieved organically and through acquisitions.

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Know IT AnnuAl RepoRT 2007 BUSINESS CONCEPT, TARGETS AND STRATEGIES 5

Strategies

To achieve these targets, Know IT has the following strategies:

Keep operations close to clients

By its nature, all consulting is small in scale. Know IT has therefore decided to establish operations close to clients and maintain a broad-based local presence. Today you will find us in 21 locations in Sweden, as well as Arendal and Oslo, Norway; Tallinn, Estonia; and Beijing, China. This ensures clients of a local contact and local resources for their projects – consultants familiar with them and their businesses and committed to quality and reliability. They also have access to all the specialized expertise throughout the Group.

Create an

entrepreneurial culture

Know IT’s decentralized organization allows each company to develop its business based on local market conditions. With clear goals and incentives for profitability and growth, we pave the way for the success of employees who work close to clients and in this way cultivate a culture of entrepreneurship.

Safeguard our independence

Our clients are always offered the best solution for them. We have therefore opted not to develop our own standardized products and instead remain independent of any particular suppliers.

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Assume long-term responsibility for the IT solutions we develop

We offer strategic IT advice, participate in development and provide customized IT solutions. Our goal is to always assume administrative responsibility for our clients’ solutions. In this way, we secure longer projects and gain greater knowledge about clients’ businesses, which makes our offerings more cost-effective.

Growth through recruitment and acquisitions

Know IT will grow by recruiting new employees and through acquisitions of IT consultants. Our acquisition model is based on identifying companies that are active in markets where we lack a local presence or have specialized expertise we need.

The common denominator is that they all have a culture and operations that fit Know IT. Acquisitions should contribute long-term value for employees, clients and shareholders. Em- ployees get more interesting assignments, clients get access to new expertise and Know IT’s shareholders see the value of their holdings rise.

Grow in our primary market, the Nordic region

We will generally remain a local player in the Nordic region, our primary market. It is where our growth will principally be achieved. When our clients ask for our expertise and delivery capacity in other markets, we may establish a local presence to meet that demand.

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6 MARKET AND CLIENTS

Despite higher demand, fees did not rise until late 2007, which was because the majority of projects were extensions of existing contracts. In connection with renegotiations and new agreements, fees have been raised. As long-term agreements expire and are revised or renegotiated, Know IT tries to adjust its fees to reflect demand and any cost increases.

Know IT’s Board has decided to raise the operating margin target from 8 to 10 percent, reflecting its strong confidence in the Company’s ability to raise cost-effectiveness and increase sales of high-margin services.

Continued growth expected

Looking ahead to 2008, most independent analysts, including Radar Group and Gartner Group, feel that IT investments will remain high. In general, IT investments are expected to rise by 3–5 percent and investments in IT services by 3–6 percent.

According to the polling company Radar Group, turnover in the Swedish market for IT services is estimated at SEK 45 bil- lion in 2008.

There is some concern, however, that an economic slowdown could hurt demand for IT consulting services. On the other hand, it has also been noted that IT has become such an important strategic resource for businesses in most sectors that any falloff in investments would probably be limited.

Know IT sees no indications of a major slowdown in demand in 2008. In 2007 sales increased by 29 percent, mainly in Sweden and Norway. We gained market share and strengthened our position among publicly listed IT consultants in Sweden. We expect growth again in 2008.

Strong demand and increased IT investments

In 2007 the market for IT consulting services was generally very good with strong demand. Businesses and organizations increased their IT investments during the year. Many IT consultants have reported their highest sales and earnings ever.

Shortage of specialists

One factor limiting the market’s development is a shortage of skilled IT specialists. This has impacted both clients and providers and could lead to higher salaries, which in turn would push fees higher. In the salary negotiations Know IT conducted in 2007 and early 2008, salary increases have been in balance with the fees for the services Know IT offers.

Important frame agreements

A growing number of companies that buy consulting services are now relying on fewer providers, which is one way to quality assure providers and create efficient procurement processes. The winners will be IT consulting firms that position themselves as preferred suppliers and those successful in securing frame agreements – usually consultants that spe- cialize or are of substantial size. Other companies often serve as sub-consultants, reducing their margin in the process. For many years Know IT has been very successful with regard to frame agreements and qualifies for clients’ short lists of providers. Know IT has over 60 frame agreements with direct access to hundreds of companies and organizations.

Limited offshoring

Offshoring and nearshoring, i.e., providing IT consulting services for Swedish clients in low-cost countries in Asia and Eastern Europe, for example, account for a modest share of the Nordic IT market. The main drivers of the offshoring and nearshoring market are price and the shortage of skilled IT specialists.

In 2007 international offshoring players were not especially

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Know IT AnnuAl RepoRT 2007 MARKET AND CLIENTS 7

active in the Swedish IT consulting market, with the excep- tion of a few isolated acquisitions. The main reason is that they were busy in larger European markets.

During the year Know IT established operations in Tallinn, Estonia, primarily to increase delivery capacity by offering Swedish clients skilled Estonian consultants. Late in the year Know IT opened an office in Beijing to offer Swedish clients with operations in China a local provider.

Integrated part of operations

IT investments are expected to deliver value in two strategic dimensions: cost-effectiveness and business development.

The demands on IT to meet business needs are growing. IT is now an integral part of business processes and ultimately an issue that can determine a company’s success.

To meet demand for IT services that clearly support clients in their businesses, Know IT has invested in expertise in areas such as Business Intelligence, Enterprise Content Management, Testing and Quality Assurance, and Technology Management. In these growth areas, Know IT is striving to establish itself as a leading provider in the Nordic market.

Competitors

We are active in 21 locations in Sweden, Norway, Estonia and China. This means that we face different competitors de- pending on the location. Those we usually meet also have broad geographical coverage. This includes Logica, Sogeti, Sigma, Acando and HiQ. We may also compete with smaller, local consultants specialized in specific industries or areas of expertise.

• ACEI Interactive

• AstraZeneca

• Banverket

• Swedish Rail Administration

• Swedish Social Insurance Agency

• Handelsbanken

• IKEA

• Intrum Justitia

• Karolinska University Hospital

• Swedish Police Service

• Saab

• SEB

• TeliaSonera

• Tele2

• UIQ

• Volvo Cars

• Swedish National Road Administration

• Western Götaland region OUR LARGEST CLIENTS INCLUDE:

The ten largest clients account for 43.8 percent of the Group’s sales.

The 20 largest clients account for 57.1 percent of the Group’s sales.

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8 CLIENT ASSIGNMENT – OMX

“Structured, thorough testing is critical if we are going to maintain our position as a leading supplier of integrated technological solutions to stock exchanges around the world,” say Sven Tapper and Anna Sundin. “We supply solutions to over 60 exchanges in more than 50 countries. The demands on the reliability of our systems are higher than even for telecom or electrical power applications.”

“Testing has always been important for OMX and is a natural part of the development and quality assurance of our trading systems,” says Sven Tapper. “We are now in the process of developing Genium, the next-generation trading system, and around a third of those involved in the project work with testing.”

Stronger testing expertise

“Our systems are highly complex and require sophisticated technological expertise on the part of our testers,” says Anna Sundin. “The collaboration with Know IT was started just over a year ago, when we had to recruit more testers and wanted to strengthen our expertise in testing.”

Testing is an area that only recently has attracted much attention. This makes it hard to find experienced testers, and the competition is fierce. Testing is not part of the college-level curriculum in Sweden, either. OMX and Know IT decided to do something about it by going directly to colleges together to recruit recent engineering and computer science graduates and offer them training in testing.

Joint recruiting

Of the 50-odd applicants, six were hired: three by OMX and three by Know IT. The three hired as consultants by Know IT are guaranteed at least a one-year assignment in OMX’s testing operations. All of them also receive training in Know IT’s Test Academy™, a concept Know IT developed for training, certification and support in the testing area. Courses include basic testing methodologies, certification, testing design, management and psychology, and test processes. In addition, Know IT can offer long-term company-specific or individualized mentoring for testers. The concept can easily be customized to any client’s needs. About half the training is operations-oriented. In OMX’s case, this part of the training has been in the financial domain and OMX’s development platform.

Successful results

The joint recruitments by OMX and Know IT have proven very successful.

“All of them are doing very well. The competence injection from the program has created more pride in the position and greatly improved our testing operations,”

say Sven and Anna. “Know IT’s strong commitment and documented know-how in testing were decisive when we created this partnership. They have a leading position in testing and a proven concept in Test Academy™. The way we work together in recruiting and training has spurred both parties’ success.”

Testing in complex environments

Know IT’s strong commitment and documented know-how in testing were decisive when OMX decided to establish a partnership.

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“We can’t stress enough how important the testing process is to our complex operations,” say Sven Tapper and Anna Sundin, the managers of Genium Trading and Genium Verification & Documentation at OMX.

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Know IT AnnuAl RepoRT 2007 OPERATIONS 9

In 2007 we acquired five companies, one of which was in Norway and the rest in Sweden. Offices were opened in four new locations in Sweden as well as in Estonia and China. At year-end 2007 we had offices in 21 locations in Sweden, two in Norway and one office each in Estonia and China.

The acquisitions during the year have strengthened our position and expertise in the defense and nuclear power industries as well as Business Intelligence and multimedia technologies.

Offering

Know IT’s offering is continuously adapted to market demand.

We carefully monitor various trends so that we can further develop an offering that ranks among the market’s best. We are proactive and help our clients to be more competitive.

We offer both standardized solutions and those designed specifically for a client’s requirements and needs. Our success and that of our clients is based on an ability to maintain a comprehensive perspective and effectively integrate IT and business operations. The solutions and services we provide

Advice, development and maintenance

make clients more efficient and support their business ob- jectives. Know IT’s offerings can be divided into three main groups: strategic consulting services, which account for about 20 percent of the Group’s sales, system development, which accounts for about 60 percent, and administration and development, which generate the remaining 20 percent.

Strategic consultation

By effectively combining expertise in technical and operational development, our strategic consultation services increase the accuracy of clients’ IT solutions. Our extensive experience in IT-driven operational development ensures that improvements in central processes are achieved through customized IT support.

System development

In system development we offer expertise in a number of technology platforms and methodologies and can staff any role, from architecture and system designed to testing and installation.

Interest in system development projects based on standardized products is high. This makes it important to us as an independent provider to maintain partnerships with a number of different vendors in order to ensure our delivery capacity without jeopardizing our independence.

Administration, maintenance and development We build long-term relationships with clients to help them adapt their IT solutions as their business changes. A good IT solution has to be flexible enough to continuously develop, so that new technologies can benefit the client in the best way possible. We see administration and development - both functional and technological - as important parts of our business.

››

Business Intelligence Enterprise Content Technology Management

Management (ECM) Testing and

Quality Assurance

In accordance with our strategy, we operate close to clients and grow both organically and through acquisitions.

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10 OPERATIONS

Business Intelligence

Business Intelligence involves managing and analyzing extremely large amounts of data and then using that information to make businesses more efficient. Existing data is gathered and compiled in a systematic, structured manner to serve as reliable decision support for clients.

Better informed decisions help businesses to improve and become more cost effective.

Rapid growth in this area is being driven by the rising number of companies and organizations that realize the benefits of Business Intelligence as well as an expanding number of applications.

Services and solutions:

• Statistical models

• Future scenarios

• Forecast solutions

• Analysis of buying habits

• Campaign management

• Basel 2 compliance Competitive advantages:

Know IT is a Scandinavia leader in this area. We are also familiar with a variety of industries, so we understand the specific needs of each. Know IT has been active in Business Intelligence since the early 1990s, giving us extensive, documented experience.

Clients:

Our Business Intelligence clients are primarily in banking and finance, insurance, manufacturing, pharmaceuticals and the public sector.

Testing and Quality Assurance

Major quality improvements can be achieved in projects by incorporating testing at the specifications stage. Sys- tematic, structured testing produces more efficient ways of working with products and services that meet clients’

expectations in terms of quality and performance. Using a unique concept of its own design called Test Academy™, Know IT can help clients improve their quality assurance through structured competency training for their organization. Test Academy™ includes a unique mentoring offering that helps clients conduct their quality assurance as efficiently as possible and maximize quality.

The growing awareness of the importance of quality assurance is evident in the share of Know IT’s clients that increasingly ask for advanced consulting services rather than traditional testing.

• Organizational development – Test Academy™

• Support services in the areas of requirements and testing

• Test management

• Specifications and testing consultants

• Processes and methods

• Mentoring

Competitive advantages:

By incorporating specifications and testing at the start of a project, we can significantly reduce a client’s costs.

With our expertise and Test Academy™ concept, we help them improve their competence, so that they can do their own testing efficiently and with better results. Know IT has extensive experience and knows how the market’s leading testing tools can best be used, which strengthens the quality of our services.

Clients:

Our clients in the area of Testing & Quality Assurance are mainly in banking and finance, insurance, telecom, retail and the public sector.

Growth areas

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Know IT AnnuAl RepoRT 2007 OPERATIONS 11

Enterprise Content Management (ECM)

ECM is the technologies that make it possible for multiple users to manage enormous amounts of unstructured information easily and intuitively, and to easily work together in teams.

Internet services are business-critical to both the public and private sector, which is helping to drive demand.

Information and services are expected to be accessible quickly and smoothly any time of day. Web-based services are necessary to be competitive, and for Swedish authorities they are a requirement to meet E-Government stan- dards. The target audiences are numerous and often large in size: consumers, clients, employees, suppliers, students and citizens in general want access to online information and services when it suits them.

• Web publishing with content management

• Navigation and search

• “Project places” to manage documents

• IT support for workflows/processes

• Document management from start to finish

• Self-service applications

• Managing audio, images and video Competitive advantages:

Know IT’s strength is its extensive expertise in a variety of disciplines, which means we are familiar with the underlying systems businesses use and can take a comprehensive approach. We have also developed expertise in building online services that people really use and that create value. With our experience, we can support clients in everything from advice and development to implementation and administration. Practically all ECM solutions are developed with the help of platforms, and Know IT has documented experience with EPiServer, OpenText and MOSS.

Clients:

Clients are mainly in the public sector, traditional industry, real estate, pharmaceuticals and the tourism industry.

Technology Management

In Technology Management we support clients that develop products relying on software. We help them in operational development by combining a deep understanding of their business with a deep understanding of technology. Know IT offers a service package with various com- ponents clients need to improve their businesses. Usually it is a question of evaluating how a business works and then drafting and implementing an improvement plan.

Examples of this include the design of product families or efficiency improvements to software and hardware development processes.

Demand is driven by the constant need for higher ef- ficiencies and reduced lead times, at the same time that complexity is growing. Companies have to do more – and more difficult – things in less time, which means they have to work smarter with more efficient methods.

Services and methods:

• Operational analysis

• Change management

• Project management

• Technology strategies and product architecture

• Quality assurance and safety engineering

• Test management Competitive advantages:

Know IT is a leader in several disciplines of Technology Management. We have years of experience in all these areas. To ensure we can retain our leadership position while helping to drive future developments, we have systematic collaborations with various colleges. We also have an extensive network of contacts with internation- ally recognized authorities in the areas where we work and we are active in several important international standardization projects.

Clients:

The client base is broad, but we primarily focus on product-oriented companies. Our clients are mainly in the automotive, telecom, aerospace and defense industries.

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12 CLIENT ASSIGNMENT – VäSTTRAFIK

Västtrafik, Sweden’s second-largest provider of mass transit services, had outgrown its existing web solution in several respects. Performance had to be improved, the communication platform modernized and the technol- ogy updated.

Västtrafik’s website has countless visitors every day who want information on de- partures, timetables, routes, etc., so it is critical that the site is informative, quick, easy to navigate and can handle heavy traffic.

Prior to the European Athletics Championship in Göteborg in 2006, Know IT won a competitive order to develop a web solution for Västtrafik. The results were highly successful and, together with our expertise and highly qualified consultants, helped us to secure another project to create a web solution for the entire company.

Previous experience proves valuable

We began with a pilot study and held a workshop together with the client to pro- duce requirements specifications. Know IT helped to specify requirements by utiliz- ing previous experience from similar projects.

Know IT assumed project management responsibility. We adapted the system and integrated it with other parts of the traffic system that have to work online to give travelers the information they want. We were also responsible for testing.

Demands are high on a website like this, which gets around 40,000 visitors every day. Periodically – during major holidays, for example – traffic increases to upwards of 60,000 visitors. The web solution therefore has to accommodate this direct load as well as the traffic in underlying systems.

When the tests were completed, we took care of installation, implementation and training. The system has been up and running since spring 2007.

Mobile website

Part of the assignment was to adapt the system to also work as a mobile website, so that travelers can access the same information by mobile phone as they do by computer. The mobile solution was delivered at year-end 2007.

The system Know IT supplied is based on the EPiServer web content management tool. Consultants from Know IT with expertise in project management, system development, integration and architecture, testing and training were involved in the project.

Long-term administration assignment

“The collaboration between Västtrafik and Know IT works very well,” says Mikael Faleke, the web editor at Västtrafik. “Throughout the project, we have done periodic evaluations to ensure it was progressing according to plan. Both parties have listened to what the other wants and what is technically feasible.”

The project has now become an administration assignment and the relation- ship with Västtrafik continues. This assignment is an example of how we work with everything from concept and development to implementation before eventually taking long-term responsibility for functionality and quality by managing the systems.

Throughout the project, we have done periodic evaluations to ensure it was progressing according to plan.

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Mobile web applications

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Know IT AnnuAl RepoRT 2007 EMPLOYEES AND STRUCTURAL CAPITAL 13

Because of the long-term nature of our assignments, we have built up a wealth of knowledge about our clients’ businesses.

On average, Know IT’s consultants have 11.8 years of industry experience.

Know IT has a decentralized organization and encourages an entrepreneurial spirit. Emphasis is placed on the ability of each employee to take responsibility and resolve the issues that arise on a day-to-day basis. While this places high demands on our employees, it also creates opportunities for personal development and gives them the chance to have an impact.

Values

Our goal is to develop in accordance with the values associ- ated with our history and corporate culture and which guide us in how we work and shape the future. It is important that our business is conducted with an emphasis on closeness, knowledge and commitment:

Closeness – Know IT has a tradition of close cooperation with our clients, between our companies and units and between our employees. Knowledge grows the more people that are exposed to it, and our working methods are based

Closeness, knowledge and commitment

on close contacts internally, with partners and with clients.

This is why we try to establish operations close to clients.

Knowledge – Our consultants have extensive technical ex- pertise that they develop through demanding assignments, specialist networks and training. We can therefore offer clients extensive knowledge in new areas of technology.

Commitment – Our operations are distinguished by the commitment of our employees to clients, colleagues and their own development. A large part of that commitment stems from our belief in delegated power and responsibility, a small-scale approach and that the best results are achieved by working close to clients.

Popular workplace

Know IT wants to be a popular workplace and part of our

Our consultants’ competence and ability to build long-term relationships is critical to our future success. Know IT’s consultants are experts with extensive experience in IT as well as their clients’

industries.

Ninety-four percent of Know IT’s consultants have postsecond- ary educations and 85 percent have a university education.

Computer sciences and engineering are the most common academic backgrounds among consultants.

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Eighty percent of employees are men and 20 percent women.

The average age of our male employees is 38.5, while the average for females is 37.1. For all employees, the average is 38.2.

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14 EMPLOYEES AND STRUCTURAL CAPITAL

vision is to be the obvious choice for competent employees.

Periodic employee surveys are a tool in a continuous effort to improve Know IT as a workplace. With the help of the results, areas of improvement are identified, increasing the accuracy of the activities implemented to ensure that we remain an attractive employer. The overall results of the surveys that have been conducted have been very high, and Know IT is seen as a very good workplace.

Many assignments are handled by employees in our clients’ offices. In our own offices we work actively to create a positive environment based on our working environment policy and internal controls.

A work-life balance is important to keep employees happy, and to support this effort employees have access to subsi- dized wellness programs and periodic checkups. Absentee- ism represented 3.1 percent of available working hours in 2007.

Our aim is to maintain diversity in the background and experience of our employees and to treat everyone equally regardless of age, gender, ethnic background, religious affilia- tion, etc. All salaries, other remuneration and training reflect each individual’s duties, expertise, experience and areas of responsibility. Since we operate in a male-dominated industry, gender equality work is especially important to us. This work is based on our gender equality policy and related gender equality plan. Twenty percent of employees were women in 2007.

Competency training

The expertise of our employees is critical to our ability to develop as a company. In addition to various types of competency training, consultants develop through client assignments. An internal expert network to share experience and knowledge is also important to competency development.

Individualized competency training is planned with each employee during a performance review with their super- visor at least once a year. Individual targets established at these meetings are followed up periodically. The targets can change over the course of the year in consultation, but are always tied to clients’ needs and Know IT’s strategies. Compe- tency training can take the form of individual studies, outside coursework or participation in projects.

The Know IT Academy offers internal training on the role of consultants in terms of demands, ethics, capabilities, etc.

Training is also an important element in building support for our values and the continuous improvement process under way every day at Know IT.

Structural assets

By structural capital we refer to our assets independent of individual employees. It is what sets us apart structurally from the competition, including our culture, values, working models, methods, partnerships and client agreements.

A significant part of our structural capital is the close, long-term relationships with clients. By taking administrative responsibility for our clients’ IT solutions, we generate assignments that often extend over several years. Our strategy to stay close to clients geographically means we understand local conditions. This local presence is important to these relationships.

The 60-odd frame agreements we have with companies, organizations and public authorities are part of this structural capital. The frame agreements are a way for clients to assure the quality of suppliers and provide a stable, long- term inflow of project queries.

By structuring the company’s working models and methods, we become more efficient and less dependent on individual employees, at the same time that the quality of our services rises. In many projects and assignments we use methods and processes selected by the client, but in projects we manage ourselves we use Pejl® and RUP®, both of which have been adapted to Know IT’s operations and ways of working. Partnerships with various suppliers of standardized tools are also part of our structural capital. These partnerships al- low us to be an independent provider while always supplying the best solution for each client. They are also a way to gain knowledge and access the latest technology.

Know IT has grown strongly in recent years. In 2007 the number of employees rose by 36 percent, of whom 11 percent were new hires; 25 percent joined Know IT through acquisitions.

.UMBER

Number of employees

Consultants Other employees

Number of employees 2007 2006 2007 2006

Operating units 851 631 95 64

Parent Company – – 8 7

Total employees 851 631 103 71

Know IT has 954 employees, of whom 851 are consultants.

Other employees work in sales, accounting, administration and Group-wide functions.

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Know IT AnnuAl RepoRT 2007 CLIENT ASSIGNMENT AUTOSAR 15

Driving force behind global auto project

Imagine buying a different computer for every software program you want to run.

That is basically what automakers do today. A new car usually has around 50 computers! The Automotive Open System Architecture, AUTOSAR, will make it easier to share computers between applications, at the same time that an array of software platforms are combined into a standardized solution – a “Windows” for cars, you might say.

AUTOSAR was launched in Germany in 2002 and since then an overwhelming majority of the world’s leading automakers have joined the project. Major progress has been made and the project has now reached a stage where it is time to focus on applications. Know IT has played an important role in this work.

Ford’s representative in global consortium

Ford gave its subsidiary Volvo Cars responsibility to represent it on the project.

Volvo Cars and Know IT have long maintained a close, productive collaboration, and we were asked to take part in AUTOSAR. Know IT was able to provide exactly the expertise needed. A project manager with extensive experience in the automotive and software industries and international assignments joined the project, along with five other consultants with automotive experience and expertise in software, system architecture and specific methods and tools. The project manager was responsible for Ford’s internal working group, which, in addition to Know IT’s consultants, consisted of a team from Volvo Cars and the rest of Ford and was Ford’s representative on the project. AUTOSAR has ten core partners, one of which is Ford.

Each partner has a project manager in the consortium.

Strategic development project

An important success factor in the AUTOSAR assignment was the ability to correctly determine the key aspects for Ford and actively drive these issues within the consortium. This required broad-based knowledge of the auto industry, coupled with important specialties. With this extensive expertise, the group was able to effectively identify the risks and difficulties in the project and take a proactive approach to drive the work forward.

Know IT’s responsibility

Volvo Cars gave Know IT great responsibility, which made it possible to jointly determine which expertise was needed when and get the right people involved in time. Know IT was able to quickly secure the right expertise when needed and thereby deliver critical value to Ford.

On behalf of Volvo Cars, Know IT has been a driving force in the last three years in the AUTOSAR project, which now enters a new phase: a first industry-wide release with a focus on automotive applications.

The assignment for Volvo Cars is a good example of the type of project where Know IT takes on complex problems that require a thorough understanding of the client’s business situation and the technology used to support the client’s development.

A revolution is under way among the world’s car makers as they create a standardized platform for automotive software systems. This is a huge step for the industry that is expected to lead to restructurings and new business models.

With this broad base of expertise, the group was able to effectively iden- tify the risks and difficulties in the project and take a proactive approach to drive the work forward.