Interim report, 1 January to 30 June 2021

20 August 2021

Record quarter in sales and earnings - continued focus on increased profitability

Second quarter, April - June 2021

  • Sales amounted to SEK 233.5 (218.6) million, giving growth of 6.8 (5.6) per cent
  • Excluding restructuring costs of SEK 3.3 million, the operating profit (EBIT) for the second quarter is SEK 19.3 (9.6) million with an operating margin of 8.3 (4.4) per cent. Including restructuring costs of SEK 3.3 million, the operating profit (EBIT) was SEK 15.0 million, giving an operating margin of 6.9 per cent.
  • Profit after tax was SEK 12.2 (6.5) million.
  • Earnings per share before and after dilution amount to SEK 1.37 (0.76)

First half year, January - June 2021

  • Sales amounted to SEK 461.3 (466.4) million, giving falling sales of 1.1 per cent. In the same period last year B3 grew by 10.1 per cent
  • Excluding restructuring costs of 3.3 million, the operating profit (EBIT) was SEK 31.1 (29.0) million, giving an operating margin of 6.7 (6.2) per cent. Including restructuring costs of SEK 3.3 million, the operating profit (EBIT) was SEK 27.8 million, giving an operating margin of 6.0 per cent.
  • Profit after tax is SEK 19.7 (19.7) million.
  • Earnings per share before and after dilution amounted to SEK 2.07 (2.09)

Second quarter, April - June

First half year, Jan - June

Full

2020

Change

2020

Change

Net sales, SEK million

218.6

6.8%

466.4

-1.1%

EBITDA, SEK million

16.4

34.1%

42.7

-7.7%

EBITDA margin

7.5%

9.2%

Operating profit (EBIT), SEK million

9.6

66.7%

29.0

-4.1%

Operating margin (EBIT))

4.4%

6.2%

Profit after tax, SEK million

6,5

87.7%

19.7

0%

Profit per share, SEK

0.76

80.3%

2.09

-0.1%

Closing number of co-workers

678

-6.9%

678

-6,9%

Average number of co-workers

631

685

-7.9%

634

694

-8.6%

673

The table shows an extract from B3's key figures. See Note 3 for a table and definitions of key figures.

For further information please contact:

Sven Uthorn, Co-founder and Chief Executive Officer, +46 70 899 36 70

Harriet Piscator, CFO, +46 70 317 47 99

Katarina Lundqvist, Investor Relations, + 46 72 216 11 00, katarina.lundqvist@b3.se

This information is information that B3 Consulting Group AB (publ) is obliged to disclose pursuant to the EU Market Abuse Regulation and the Securities Market Act. The information was released for public disclosure, through the agency of the contact persons above on 20 August 2021 at 08.00 CET.

Co-founder and Chief Executive Officer Sven Uthorn:

Enhanced earnings in focus

We close Q2 as the 71st profitable quarter in a row since the company started, with revenues of SEK 233.5 million and growth of 6.8 per cent. Operating profit of SEK 16.0 million charged with restructuring costs of SEK 3.3 million.

Operating profit before restructuring costs was SEK 19.3 million, compared with the corresponding period last year of SEK 9.6 million, when earnings were augmented by temporary government support of SEK 5 million.

The operating margin of 6.9 per cent means on the one hand a substantial improvement after the dip we have experienced, but indicates on the other hand that we have a good way to go to meet our target level of two-figure annual rate profitability. To put further focus on improving profitability we have therefore initiated an accelerated action programme aimed at ensuring that we reach the 10 per cent target in 2022, even within the framework of our current business activities and size.

The measures primarily concern:

SEK 16 million

Operating profit

6.9%

Operating margin

  1. Adapting managerial density in the Group. This is done by reducing the number of managers and involving more managers in chargeable assignments.
  2. Reducing overheads in the parent company.
  3. Adapting other overheads such as rents, IT etc.

All in all measures already initiated are expected to contribute to improved earnings of about SEK 30 million per year with full effect from Q2 2022.

In addition we expect further positive earnings effects from B3's resumed growth. Since the close of the first quarter we have seen vigorously increased activity in the client market, which meant that the primary focus of most of our companies is on recruiting more consultants to meet increasing demand. It is therefore gratifying that we, as a result of active recruitment in the spring, can welcome 50 new coworkers who will start after the summer.

New future opportunities are opening up for us due to framework agreements we have won. During the second quarter we signed new framework agreements with the Church of Sweden, the municipality of Sundsvall and a new partnership with the Swedish Transport Agency. Now in August we have also signed an important framework agreement with the Legal, Financial and Administrative Services Agency concerning IT consultant solutions. This creates opportunities for new business in the government sector for us in that we regard this as a milestone in our development.

Even if the pandemic continues to create some uncertainty, we can note that the economy is at full speed. Digitalisation as a megatrend seems to be continuing as the primary motor for our clients and our business. With a combination of an efficiency focus and external offensive efforts in both the client and recruitment markets we are entering the next phase of B3's development, aiming to be Sweden's best consulting company for our employees, our clients and our shareholders.

The time has come to round off my role of CEO of B3 after 18 years of building the company. I look forward to handing over the helm to a worthy successor and it is my intention to continue to support the company's subsequent journey towards greater heights in my role of Board member and shareholder

Stockholm, August 2021

Sven Uthorn

B3 CONSULTING GROUP AB (publ) Interim report April - June 2021 2

Events

In Q2

New client contracts and engagements

  • B3 started a new partnership with the Swedish Transport Agency in Örebro.
  • B3 awarded two new framework agreements with Sundsvall municipality One framework agreement covers consultancy support in digitalisation and the other covers consultancy support in Business Intelligence, Data Warehouse and Master Data Management.
  • B3's subsidiary Rebel and Bird started a new partnership with the paint and wallpaper chain Happy Homes
  • B3 has signed a new framework agreement with the Church of Sweden for consulting services in a broad area including leadership and strategy as well as procurement, implementation and contract follow-up.

New companies and units

  • B3 combines forces in Skåne by merging the development companies B3 Third Base and B3 Nuway under

joint management, forming the company B3 Skilled.

Awards

  • B3 is one of the finalists when Feelgood nominates Sweden's healthiest company Other events
  • The Annual General Meeting elects Sverre Bjerkeli as new Chair of the Board of B3. The members of the Board Alf Blomqvist, Sven Uthorn, Kristin Lindmark, Marika Skärvik, Mikael Cato and Anna Söderblom are reelected while Anna Hjertstedt has declined reelection to the Board.
  • The Annual General Meeting resolved that SEK 0.90 per share is to be distributed as dividend to shareholders for the 2020 financial year.
  • The Annual General Meeting resolved to approve the company's use of options and acquires the outstanding subsidiary shares from the minority shareholders of the subsidiary B3 Dynamics AB through a non-cash issue. As a result of this the company's share capital increases by SEK 16,839 through a new issue of 168,390 shares.
  • B3's Board of Directors announces preparations for a changeover of CEO, as the company's current CEO and co-founder Sven Uthorn has decided to step down from the role of CEO after 2021
  • B3 held an extraordinary general meeting of shareholders on Friday 9 April 2021, where the Board of Directors' proposed decisions on acquisition from and transfer to related parties, as well as a non-cash issue in a subsidiary, were approved.

After the close of the period

  • Framework agreement with the Legal, Financial and Administrative Services Agency concerning IT consultant solutions creates new opportunities for B3 in the government sector.

In Q1

  • B3 was awarded a new framework agreement with Region Jönköping County for delivery and provision of IT consulting services
  • B3's subsidiary Rebel and Bird launched an app for cinema visits in Norway together with ODEON Kino and Filmstaden.
  • B3 was awarded a framework agreement with one of the leading commercial banks in Sweden. The framework agreement covers several different consulting roles and is valid for three years.
  • B3 was awarded a new framework agreement with the Dental and Pharmaceutical Benefits Agency, TLV. The framework agreement covers administration and development of TLV's Business Intelligence system based on the Oracle platform.
  • B3 future-proofs FAR's working method by establishing new system support.
  • B3 forms a Healthtech company and strengthens its offer to the healthcare sector.
  • B3 strengthens its offer in app development by starting the company B3 Mobile, which offers clients app development specifically adapted to iOS and Android.
  • B3 wins an award as Sweden's third best workplace according to Great Place To Work and B3's Head of HR Anne Ek is voted HR Personality of the Year.

B3 CONSULTING GROUP AB (publ) Interim report April - June 2021 3

Group

Second quarter, April - June 2021

Revenue and profit

Sales in the quarter were SEK 233.5 (218.6) million. Growth was 6.8 (5.6) per cent. Sub-consultants are used for a small part of the business, amounting during the quarter to 7.4 (8.9) per cent of sales. After a period of falling sales the second quarter again reports growth. Since the second quarter of 2020 the number of co-workers has decreased by 47 people compared with the second quarter of 2020, which shows that growth comes from higher capacity utilisation.

Sales SEK million per quarter and R12

EBIT SEK million per quarter and R12

Total operating expenses in the quarter were SEK 218.4 (211.0) million. Staff costs were SEK 168.9 (165.7) million, corresponding to 72.3 (75.8) per cent of sales. The operating profit for the quarter amounted to SEK 16.0 (9.6) million. This corresponds to an operating margin of 6.9 (4.4) per cent. The staff costs for the second quarter of 2021 were charged with SEK 3.3 million in the form of a provision for restructuring linked to B3's action programme. In the same period of the previous year staff costs were reduced by about SEK 5 million in government support. The higher capacity utilisation, together with cost reducing measures, has resulted in a stronger performance and improved profit margin.

Operating margin

B3 CONSULTING GROUP AB (publ) Interim report April - June 2021 4

In order to further improve earnings and ensure that the profit margin is continually within the framework of the financial targets set, the Board has adopted an accelerated action programme. The programme has three main tracks:

  1. Adapting managerial density in the Group. This is done by reducing the number of managers and involving more managers in chargeable assignments.
  2. Reducing overheads in the parent company.
  3. Adapting other overheads such as rents, IT etc.

The action programme is expected to improve earnings on an annual basis by about SEK 30 million with full effect from the second quarter of 2022.

Implementation of measures (about SEK 30 million)

First half year, January - June 2021

Revenue and profit

During the period sales were SEK 461.3 (466.4) million. Growth was -1,1 (10.1) per cent. Sub- consultants are used for a small part of the business, amounting during the period to 7.8 (8.3) per cent of sales.

Total operating expenses in the period were SEK 435.0 (439.7) million. Staff costs were SEK 335.9 (345.1) million, corresponding to 72.8 (74.0) per cent of sales. The staff costs for 2021 have been charged with SEK 3.3 million in the form of a provision for restructuring linked to B3's action programme. In the same period of the previous year staff costs were reduced by about SEK 5 million in government support

The operating profit for the period is SEK 27.8 (29.0) million. The operating margin is 6.0 (6.2) per cent. The underlying profit margin excluding restructuring costs is 6.7 per cent.

Seasonal variations

In general the first and second quarters have a relatively even work rate. The third quarter includes most of the holiday period and the fourth quarter is the most work-intensive. The number of working days in the first half year of 2021 was 123, compared with 123 in the same period of the previous year. One working day changes revenue by about SEK 3.3 million and earnings by about SEK 1.1 million.

Segment reporting

A general description of the business areas is given below. For a detailed list of the segments' revenue and profit, please see Note 2.

B3 CONSULTING GROUP AB (publ) Interim report April - June 2021 5

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B3 Consulting Group AB published this content on 20 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 August 2021 06:43:03 UTC.