Year-end report 2022

Financial overview, the Group

We continue our growth journey in 2022 and stick to our strategy to build our knowledge house in AI/Deep Learning, applied AI and advanced IT infrastructure and we do it profitably!

• Turnover increases by SEK 23.3 million to SEK 162.3 million (SEK 139 million in the same period last year). Right now the delivery times are around 6 months in the affected areas and I estimate that by H2 2023 we should be back at previous levels around 6 to 8 weeks from order to delivery. My belief is that the component shortage will not affect our growth plans in 2023.

• Annual recurring revenue (ARR) from current operations increases by 2.75% and amounts to SEK 26.2 million (SEK 25.5 million in the same period last year).

• The gross margin for current operations increases by 1.95 percent and lands at 29.6 percent (29 percent).

• EBITDA amounts to SEK 5.76 million (SEK 4.92 million), which corresponds to an increase of 14.5 percent. For Q4, EBITDA lands at SEK 672 thousand (SEK 1.3 million in the same period last year).

• CGit has a positive cash flow from current operations, which enables continued growth-creating investments in the area of AI solutions and Deep Learning as well as applied AI. The investment is deliberate and part of the company’s long-term plan. Cash and bank for 2022 is SEK 7.1 million (SEK 5.9 million in the same period last year).

• The group’s earnings per share in 2022 amount to SEK 0.81 (SEK 0.63 in the same period last year). For the fourth quarter of 2022, it amounts to SEK –0.22 (0.21 SEK).

Calendar

Annual Report 2023     Interim report Q1 2023   Half-year report 2023

May 16, 2023                     May 23, 2023              August 18, 2023

Words from CEO

CGit makes growth with positive results! Q4 ends in the same way as marked the entire year 2022, with component shortages and increased electricity costs. However, we have been very marginally affected by other crises in the world. We have decided to have a mindset that means we will not participate in the recession! We will continue to grow and build our knowledge base in order to be properly equipped when the economy turns. We can state that we are growing on all levels. We grow in terms of personnel and we grow in terms of turnover and we do it profitably!

I will touch on some of the investments we made in 2022 that we will see the effect of in 2023 and beyond:

Aixia

Aixia, which is a subsidiary of CGit AB, develops smart tools and software that help companies and organizations realize, grow and accelerate their AI projects. Aixia is from the beginning a joint venture between CGit AB and Asymptotic AB.

CGit is now a fully owned company in the CGit group. The buyout has affected our result in 2022 but is an important component in the continued growth journey that we are in the middle of.

OTC Markets

CGit Holding AB (publ) is in the final phase of being approved for share trading on the OTCQX trading platform in the USA. Trading of the stock on OTCQX will start in Q1 2023.

OTCQX is an American trading platform operated by OTC Markets Group for securities not listed on a national exchange. The purpose of listing on OTCQX is to accommodate increasing interest from US investors and to increase accessibility to the US capital market. We see an increasing interest from North American investors, for CGit and not least for our AI related services, concepts and solutions and we want to be able to make it possible for these investors to trade in the stock. Through OTCQX, we facilitate international investors and institutions.

AI as a Service

As we communicated earlier, our investment in AI as a Service continues. During Q4, we have increased our focus on applied AI for industrial companies, which has given a great response. Today, we work with a number of customers to solve challenges such as quality control that, until today, have not been possible to solve with traditional systems.

Our approach to explaining how AI can help businesses and how CGit can make the use of the technology a reality has generated a massive response. My assessment is that the market has taken a step forward in its degree of maturity and the desire to embrace and incorporate the technology into traditional operations is becoming more and more widespread.

AiQu

AiQu is an easy-to-use orchestrar that helps companies utilize their resources, primarily GPUs, more efficiently. This means that the development work goes faster and thus also becomes more cost efficient. The tools traditionally used for scheduling and orchestrating CPU-based HPC environments are no longer the optimal choice for GPU-based systems. Organizations want their very valuable investments in both hardware and personnel to be used as efficiently as possible. That’s why we, CGit, have developed AiQu which is a versatile tool to help maximize your organization’s AI initiatives. AiQu is today a ready-made global product that is used and has been purchased by several large organizations, and in line with the increased use of applied AI, AiQu will really make a difference.

Modern Workplace

Since 2007 when the company was started, CGit has worked with automated IT operation for both data centers, networks and clients. Although the technology has changed since then, the concept is still alive and the business model looks about the same. What has changed, however, is the outside world we live in, and that means we invested heavily in the area of IT operations. The number of cyber attacks increases by around 300% annually and the attacks are becoming increasingly civilized. A worrying trend is also that more and more of the attacks are directed at small and medium-sized companies that lack, or at best have insufficient understanding and/or knowledge of IT security.

Even the way we work has fundamentally changed in recent years. Work is no longer a place, it is something we do. Our customers expect to be able to work wherever they are, using whatever device is in their hand, whether it’s a client computer or a smartphone. With our concept, we help companies, not only by offering a secure and fully managed client operation service, but we also help our customers by strategically working with collaboration and further development of both the service and the collaboration in general. The result during the year has been Modern Workplace! I claim that Modern Workplace is one of the safest services on the market in the field.

Consultants

During the second half of 2022, we were able to ascertain that the component shortage affects us in that deliveries have gone from about 6-8 weeks to a forecast of about 1.5-2 years for some of the product solutions we work with. (Important to emphasize is that the majority of our product solutions are not affected by component defects at all). The direct consequence of that meant that we continued to do business but that they will be delivered in the coming year. We then quickly began an expansion of our consulting corps to be able to compensate with resource-related consulting assignments. It has yielded results, even if it took longer than we expected. Today, we have an incredibly competent and well-functioning consulting team, and even if it cannot compensate in terms of turnover for postponed solution deals that were affected by the component shortage, we have created a prosperous income leg that supplements. We can also be happy that the peak of the component shortage is over and we are starting to see a recovery already now even if we are not back to normal levels yet.

In summary, I state that we continue to grow and we do so profitably! Our strategy, our approach and our offer and delivery are standing up well despite all the clouds of worry and exceptional impacts that the outside world has suffered in the past year. We enter 2023 with a stronger and better equipped organization to continue our growth journey according to the previous plan and although we intend not to participate in the recession, we are also reviewing our cost structure to manage the business through 2023 to be properly equipped for the growth journey ahead of us.

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Mattias Bergkvist, CEO

FOR MORE INFORMATION

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Contact the company:
Mattias Bergkvist , CEO
Phone: +4631–762 02 40
info@cgit.se
www.cgit.se

CGit Holding AB
Taljegårdsgatan 11C
431 53 Mölndal - Sweden

This information is information that CGit Holding AB (publ) is required to make public pursuant to the EU Market Abuse Regulation.
The information was provided by the above contact, for publication 3/2/2023.

CGit is a specialist, innovative and solutionoriented IT company based in Gothenburg and forms part of a group that specialize in data centers, AI/Deep Learning platforms, secure management, hosting, networking and communications. Our vision is that tomorrow’s challenges cannot be met with yesterday’s technology and cooperation with CGit will always be valuable, profitable and prompt. Today we have about 35 employees and about 120 clients across Scandinavia in a wide range of industries. CGit was founded in 2007 and our parent company CGit Holding AB (publ) has been listed on Spotlight Stockholm since 2018.