Raising our game

Stronger together:
This is the Intellecta Group

In 2013 we set our course to become a focused consulting organization, divesting our printing business in order to accomplish this aim. Today, Intellecta Group is on the way to even greater heights. By combining the power of 11 leading-edge agencies, we are setting the standard for ground-breaking communications in the digital age.

Ours is a people business. We are around 550 consultants, and together we cover a wide range of communications competencies - from insight, strategy and concepts to design, activation, events, campaigns, digital production and follow-up. We combine these competencies as required in order to match the needs of every assignment.

A new level

2014 was a year in which Intellecta truly raised its game. We took great strides when it comes to sharpening our offering, cross-selling between agencies, attracting and retaining talent, improving quality and delivering on our financial goals.

I’m very happy to say that we delivered on our short-term financial prognosis for 2014, and are well on our way to reaching our goal of generating around 60% of agency income from business area Digital.

Taking the lead

Our ambition is to be among the first and best in everything we do. During the year we realized our strategy to become a global market leader in the fast-growing open-source/Drupal CMS consulting market. We achieved this by initiating the acquisition of US company Blink Reaction, and merging Bysted Copenhagen with Propeople Denmark.

We also took steps to advance our position in two more digital growth areas: motion media and games for marketing. To do this, we created two new companies. Motion media company Unreel was spun off from Rewir, and ISBIT GAMES from River Cresco.

Organic growth is another essential part our plans, and we have created outstanding growth potential by following existing clients into new markets. In 2014, we opened new offices in Berlin (Propeople), Amsterdam (River) and Shanghai (Hilanders).

Strong client portfolio

Good business comes from successful customers. Our 500-strong client list includes some of the most notable companies in the Nordics and worldwide, such as Nike, Björn Borg, Scandinavian Airlines (SAS), Swedish real estate magazine Fastighetstidningen, Norwegian multinational telecoms company Telenor, and Copenhagen Municipality.

Intellecta’s customer base is not industry specific. Among our top 30 customers, 83% of the business is generated from the private sector and 17% from the public sector. Looking at our entire customer base, we work with B2B and B2C customers, the public sector as well as non-profit organizations.

In 2014, 30% of our top 30 customers were served through collaboration between two or more of our agencies, up from 10% in 2012.

An international player

We are present in 13 markets on three continents (Sweden, Denmark, Austria, Germany, the Netherlands, United Kingdom, Bulgaria, Moldova, Ukraine, USA, Brazil, Vietnam and China). Close to one-third of our business is now international, and we aim to reach 50% toward the end of 2015.

Supporting communities: the Gundua Foundation

Intellecta is the initiator and proud supporter of the Gundua Foundation in Northern Kenya. The foundation runs two schools and a health clinic with the aim of making a difference for the local children and communities. Intellecta donates a lump sum every year. Many of our employees also donate and give time to the foundation.

We achieved a great deal during 2014, including new computers and a new basketball court for Gundua Secondary School. Gundua Primary School was named best school in the Buuri District 2014, and the Secondary School retains its place in the top three. We have been able to send seven of our top students on to University through the Gundua Grant. Children attending the schools now outnumber the Intellecta Group’s employees!

During 2014, the Gundua Health Centre delivered 55 babies, received 5,500 patients, treated 1,100 dental patients, carried out 260 HIV tests and held 180 family planning sessions.

In a world where the digital revolution is about to fundamentally transform our clients’ business models, Intellecta is now well positioned to meet our clients’ needs with strategic, creative and digital offerings. Together with our very talented consultants, I am looking forward to continue to develop our offerings for the benefit of our clients.

Best regards,

Yann Blandy

Yann Blandy, CEO

A brave new world: Our business landscape

The main feature of today’s business landscape is the pace of digital transformation. Everyone’s talking about it, but few have really grasped the implications.

Digital transformation is not a shift - it’s more like an earthquake. Five years from now, many of the products, services and methods we have taken for granted for the last 20 years will have radically changed. What will replace them? Nobody knows (though many are happily guessing).

Creating markets

New business models are replacing the old ones at a pace some find alarming. But digital pioneers are not just taking over existing business - they are carving out entirely new markets for products and services never previously conceived of.

"Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate."
Senior vice president of strategy and innovation at Havas Media

It affects every area of our lives and society. A nugget of information can now reach millions around the world in under a second - word of mouth at close to the speed of light. We entrust our treasured memories to a cloud. We expect to have more but own less, and to pay for outcomes instead of products.

Digital mindset

Communication is one of the areas where this change is happening most rapidly. It’s at the epicentre of the digital earthquake. There are incredible possibilities for those with the understanding and creativity to master digital transformation - extended reach, truly personalised service, supercharged productivity, and much more. And in these turbulent economic times, it can mean the difference between success and failure.

So this is our landscape. It’s why digital excellence is such a big part of our focus. And why our specialized agency strategy is so vital. We can’t predict the future, but we can prepare for it by having top rated competence in key areas at our disposal, with the flexibility to combine it to match customer needs.

Tooling up for success in the digital era

While there are many dimensions to successful communications in the digital transformation age, we have noted some attributes that are increasingly essential:

Relevant content and personalization - The explosion in content marketing has led to a deluge of irrelevant material. Brands who truly understand their audiences and how to personalize their messages are rising above their competition.

Digital business models - Using business innovation to re-imagine and digitalize traditional business models has become a key priority. How to “uberize” your business model is becoming an increasingly important question to answer.

Big data - It is essential to know how to use advanced and predictive analytics to find the relevant areas connected to what consumers do online in order to serve our customers going forward.

Tech mastery - You have to know the tools and be able to use them expertly in the right context.

So what does this mean for us?

We believe delivering on these attributes demands that a group like Intellecta can master three types of creativity:

Business innovation - new approaches and models for digital service design.

Communication and design - strong communication concepts that move people.

Digital customer journey - delivering the right experience to the right person at the right time across the many digital touch points of the journey.

Part of our strategy is for Intellecta Group as a whole to master all three dimensions of creativity. For that to happen, each individual agency must master at least two dimensions.

Internationally local

We strive for strong foundations in our local markets, and we build on these to increase our international presence. So a well-established agency in a particular region can become a ‘hub’ that enables other agencies in our network to get established in this market.

One example is how Rewir’s presence in Shanghai paved the way for Hilanders to open there during 2014. In this way, we create business connections that act like neural pathways, ensuring that we think and act global and local at the same time. The more pathways, the stronger the Group.

Strategic priorities for 2015

Live up to our vision to capitalize on market trends

Raise our game by sharpening our creative edge

Increase growth and profitability in the existing portfolio

Integrate Blink Reaction into the Intellecta Group

Our business model

We deliver services that fall on a scale from unique or complex assignments to standardized solutions. We have different approaches to pricing depending on the complexity.

Value-based pricing

Unique and complex assignments - such as analysis, strategy, concept and business development based on true business understanding - generate income by value-based pricing for each case.

Hourly-based pricing

Intellecta’s most frequently offered communications services, with earnings mainly generated from hourly-based pricing.

Modular-based pricing

Earnings from more standardized and packaged products and communications services are generated from modular-based pricing.

Unique or complex projects typically include analysis, strategy, concept and business development, based on a deep understanding of the client’s world. Here, pricing is often based on the value the project creates.

At the other end of the scale are standardized solutions. These are repeatable solutions to a larger extent. They can be packaged and delivered on a larger scale, with charging based on fixed prices, modules, or hourly rates.

Moving forward

We have already delivered on three of our strategic milestones. The two remaining ones will be a key focus for us during 2015 and 2016:

Doubling of revenues on yearly basis from second half 2015 through organic growth and acquisitions within targeted areas (24 months post divestment of Infolog)

Reach all financial targets from the second half 2016.

We have completed our restructuring and are now on course to achieve our financial goals. Each of our agencies has unique competencies that are critical to effective communication in this digital age. Going forward we will increase the degree of cross-selling and collaboration even further. The skills we can bring together for our customers give us a truly unique advantage in our marketplaces.

Strategic change creates platform to reach financial targets

2014 was the year when we conducted the last major changes to fully implement our new strategy and create a platform to reach our long-term financial targets following the acquisition of Blink Reaction and the Bysted/ Propeople merger. Operating income before non-recurring items increased in line with the prognosis. Net sales for 2014 reached MSEK 387.9 (270.1), which is an increase of 43.6 percent. Agency income increased by 72.4 percent to MSEK 291.1 (168.9).

Operating profit was 1.6 (-18.3), an increase of around MSEK 20, and pre-tax earnings were MSEK 2.9 (-17.9) before non-recurring items, which is an increase of MSEK 20.8. Non-recurring items, i.e. restructuring costs related to personnel, amounted to MSEK -15.4 (-43.8).

Net Sales

2013 270.1
2014 387.9

Agency Income

2013 168.9
2014 291.1


2013 -18.3
2014 1.6

*Excluding one-off items

Equity/assets ratio

Year %
2013 53
2014 51

Sales outside Sweden increased by 4.1 points to 31.8 (27.7) percent. The number of joint projects between agencies is increasing and represents a growing proportion of our revenues and profit.

We now have the position and platform needed to reach our two remaining strategic milestones. This will be made possible by increased profitability in the existing portfolio, as well as the acquisition and integration of Blink Reaction as of 1 April 2015.

Including Blink Reaction for the period March to December 2015 Intellecta expects revenues of close to MSEK 500 for 2015. The revenue mix and EBIT towards the end of the year will be as follows

Business area Digital will generate close to 60 per cent of Intellecta’s agency income, with annual growth of approximately 20-30 per cent and an operating margin on agency income of approximately 15 per cent.

Agency income will get closer to 80 per cent as a share of total revenue.

EBIT margin on agency income will get closer to 10 per cent.

Revenues from markets outside Sweden will get closer to 50 per cent. From the second half of 2015 around 35-40 per cent of the Group’s net sales and agency income will be generated from our fast growing digital companies in the US.

Intellecta key figures 2014

MSEK 2014 2013
Revenue1 387.9 270.1
Agency income 291,1 168.9
Operating profit excluding non-recurring items 1.6 -18.3
Operating income -13.8 -62.1
Operating margin of agency income excluding non-recurring items, % 0.6 -10.8
Operating margin of agency income, % -4.7 -38.8
Profit before tax -12.5 -61.7
Profit after tax -11.3 -58.8
Earnings per share for continuing operations, SEK2 -4.05 -14.05
Equity per share, SEK 40.25 50.65
Equity ratio, % 51 53
Return on capital employed, % -4.6 26.03
Return on equity, % -9.0 30.53
  1. Includes changes in inventory of work in progress.
  2. There was no dilution during the given periods
  3. Including discontinued operations, Infolog as of Aug 31, 2013

More information

Please visit our website, intellecta.com, or download our legal annual report for more detailed information regarding our result and other financial figures.