B3 Consulting : Q2 2023

Interim report January - June 2023 | B3 Consulting Group

Growth 3.4 per cent and operating margin (EBIT) 7.4 in the second quarter

1. An adjustment was made for the period January-December 2022. The year-end report for 2022 incorrectly reported the opening number of co-workers as 807, which was adjusted to 786 in connection with the interim report for the first quarter of 2023.
2. The table illustrates alternative key figures as if the 50-per cent owned associated company B3 Consulting Poland (B3 Poland) had been consolidated as a subsidiary of the B3 Group. The Group's share of B3 Poland's profit after tax is currently recognised as profit from investments in associated companies under financial income and expenses. The key figures are based on the assumption of 100 % ownership and that no further amortisation/depreciation of additional assets has arisen that is linked to the intended business combination, which is the case if only goodwill is added on such a business combination. In the second quarter net sales in B3 Poland were SEK 36.9 (28.7) million, EBITDA SEK 4.8 (4.6) million, EBIT SEK 4.6 (4.4) million, which in local currency is equivalent to net sales of PLN 14.6 (12.7) million, EBITDA of PLN 1.9 (1.9) million and EBIT of PLN 1.8 (1.9) million. In January-June net sales in B3 Poland were SEK 75.5 (51.8) million, EBITDA SEK 11.1 (7.5) million, EBIT SEK 10.8 (7.1) million, which in local currency is equivalent to net sales of PLN 30.8 (22.9) million, EBITDA of PLN 4.6 (3.2) million and EBIT of PLN 4.4 (3.1) million. In January-December 2022 net sales in B3 Poland amounted to SEK 121.4 million, EBITDA SEK 22.1 million and EBIT 21.2 million.

Please see Note 3 for a full table with definitions of all key figures.

Creating opportunities together

Growth 3.4 % and operating margin (EBIT) 7.4% in the second quarter

Events

In the second quarter

• The Board of directors announced that Anette Billing will be leaving the role of President and CEO of B3 Consulting Group AB (publ) at her own request. Recruitment of a new CEO started immediately. The Board of Directors has appointed Sverre Bjerkeli as acting CEO. Daniel Juhlin has taken over as Chair of the Board.
• Christian Bratt was appointed as new CEO of B3 Consulting Group's specialist company B3 CodeRight AB. Christian Bratt is an experienced leader with a 30-year background of working in IT and the consulting industry and his most recent role was at Knowit Experience.
• Anders Nilsson was recruited as new head of the Digital Experiences & Solutions business area and member of the company's Group Management. Anders Nilsson has sound experience of the IT consulting industry, including more than 20 years at HiQ.
• On 10 May 2023 the Annual General Meeting resolved to exercise the remaining options for the subsidiary B3 Digital Worklife AB. The purchase price for 19,998 shares in B3 Digital Worklife AB was SEK 31.5 million, of which SEK 15.7 million in B3 shares and SEK 15.8 million in cash. The date of possession was 11 May 2023. In connection with possession the Board of Directors decided on a non- cash issue, which increased the share capital by SEK 10,669.60 and the number of shares by 106,696. After the non-cash issue, the total number of shares and votes in B3 was 8,869,794.
• B3 extended its collaboration with Optimizely, which provides software for digital experience platforms as a service, thus strengthening the offer to clients wishing to develop their websites and be at the forefront with their digital presence. During the quarter B3 also strengthened collaboration with Sitevision and as a new partner to Ucommerce and Litium.

In the first quarter

• B3 started a new partnership with Women In Tech, and participated in the largest Nordic technology conference for women, as Co Creating Partner.

B3 Consulting Group AB (publ) - Interim report, January - June 2023

• B3 strengthened its collaboration with AWS, Amazon Web Services and took the lead position in the AWS partner network. Tommy Liikamaa was recruited to lead the AWS initiative and to help broaden B3's Cloud business. B3 has a number of ongoing business activities in AWS including with the SGDS Group.
• B3 signed a new framework agreement with Verisure and strengthened the earlier partnership. The new framework agreement includes consulting services in systems development, project management, business intelligence and cloud and runs for three years.
• B3 extended and increased team deliveries for several clients in the public sector and eHealth in line with the new business strategy.
• Fredrik Dolléus took over as new head of B3's Digital Management business area and also as a member of the company's Group Management. Fredrik Dolléus has more than 20 years' experience of digital development in leading roles, as well as a long history in the IT consulting industry.

After the close of the period

• Johanna Eriksson will leave her role as CFO of the B3 Consulting Group at her own request. Johanna Eriksson will remain in her position until 21 July and will then be replaced by André Karlsson as acting CFO.
• B3 is starting a new company in cyber security and strengthening its offer in the security area. Emil Gullers has been recruited to lead the new company.

3 (24)

Group

April-June 2023

Revenue and profit

Sales in the second quarter amounted to SEK 299.3 (289.5) million, which corresponds to growth of 3.4 (24.0) per cent compared with the same period in the previous year. Sales growth in comparison with the same period of the previous year is attributable to an increase in the number of coworkers (about SEK +27 million), increased sales of products & licences (about SEK +4 million) and increased hourly rates (about SEK +11 million). Conversely, sales growth was negatively affected by reduced capacity utilisation (about SEK -21 million), reduced sales related to sub-consultants (about SEK -7 million) and one less working day compared with the same period in the previous year (about SEK -4 million). Sub-consultants account for a small part of sales, amounting during the quarter to 5.8 (8.2) per cent. The average number of co-workers in the quarter amounted to 803 (738), which corresponds to an increase of 65 compared with the same period in the previous year. Total operating expenses in the second quarter were SEK

277.8 (255.2) million. Staff costs were SEK 219.7 (200.4) million, corresponding to 73.4 (69.2) per cent of sales. The operating profit (EBIT) for the quarter was SEK 22.0 (34.5) million, giving an operating margin (EBIT) of 7.4 (11.9) per cent. The reduced operating margin is mainly attributable to lower capacity utilisation in comparison with the second quarter of the previous year and a non-recurring cost for B3's anniversary celebration of about SEK 3.3 million. The capacity utilisation has had a negative trend since the beginning of the year that have continued during the second quarter. The adjusted operating margin (EBIT), taking into account the non-recurring item related to the anniversary celebration was 8.4 per cent.

January-June 2023

Revenue and profit

Sales in the period January-June amounted to SEK 623.9 (580.0) million, which corresponds to growth of 7.6 (25.7) per cent compared with the same period in the previous year. Sales growth in comparison with the same period of the previous year is mainly attributable to the increase in the number of co-workers and hourly rates, while reduced capacity utilisation had a negative impact on sales growth. Sub-consultants account for a small part of sales, amounting during the quarter to 5.8 (8.2) per cent. The average number of co-workers in the period amounted to 797 (710), which corresponds to an increase of 87 compared with the same period in the previous year. Total operating expenses in the period January-June were SEK 562.1 (508.5) million. The expenses have increased given the investments that have been carried out. Staff costs were SEK 444.2 (400.0) million, corresponding to 73.4 (69.2) per cent of sales. The operating profit (EBIT) for the period was SEK 62.9 (73.6) million, giving an operating margin (EBIT) of 10.1 (12.7) per

B3 Consulting Group AB (publ) - Interim report, January - June 2023

cent. The reduced operating margin is mainly attributable to lower capacity utilisation in comparison with the same period in the previous year and a non-recurring cost for B3's anniversary celebration of about SEK 3.5 million. The adjusted operating margin (EBIT), taking into account the non-recurring item related to the anniversary celebration was 10.6 per cent.

Sales per quarter and R12 (SEK million)

Operating profit (EBIT) per quarter and R12 (SEK million)

Operating margin (EBIT) per quarter (%)

4 (24)

Financial position and cash flow

The Group's cash flow in the second quarter 2023 was SEK -69.9 (7.1) million. Cash flow from operating activities in the second quarter 2023 was SEK 25.3 (48.2) million, where the operations had a positive cash flow of SEK 8.9 (30.8) million and working capital changed by SEK 16.4 (17.4) million. Cash flow from investing activities was SEK 3.9 (0.5) million and derives mainly from dividends received from associated companies. Financing activities affected the cash flow by SEK -99.1 (- 41.6) million, which is mainly attributable to dividends and acquisition of shares in subsidiaries.

The Group's cash flow in the period January-June 2023 was SEK -47.8 (39.7) million. Cash flow from operating activities in the period January-June 2023 was SEK 62.2 (88.3) million, where the operations had a positive cash flow of SEK 51.5 (77.6) million and working capital changed by SEK 10.7 (10.7) million. Cash flow from investing activities was SEK 2.3 (-0.1) million and derives mainly from dividends received from associated companies and shareholder's contributions paid to associated companies. Financing activities affected the cash flow by SEK -112.3 (- 48.5) million, which is mainly attributable to dividends and acquisition of shares in subsidiaries.

The Group's cash and cash equivalents as at 30 June 2023 amounted to SEK 35.6 (93.9) million.

Equity as at 30 June 2023 amounted to SEK 182.1 (223.4) million. As at 30 June 2023 the Group had a net cash balance (+)/net debt (-), excluding impact of IFRS 16 Leases, of SEK 11.6 (53.9) million. The Net debt (excluding IFRS 16)/EBITDA ratio on a rolling 12-month basis is -0,1. The equity/assets ratio is 32.1 (36.9) per cent.

Associated companies

B3's growth strategy is partly based on growth through acquisition and through establishment of entrepreneur-driven companies (called start-ups). For these an agreement on options on remaining holdings is normally made between B3 and the entrepreneurs concerned. The purchase price for these holdings is based on the performance of the company in question for a three-to-five-year period and can be paid either in cash or in the form of shares in B3.

The entrepreneur-driven companies start as associated companies. As associated companies, the results of these investments are recognised in the B3 Group's net financial income with B3's shareholding in accordance with the equity method.

Companies that report particularly good growth and profitability potential are consolidated into the Group in the long term as B3 gradually increases its shareholding. See page 1 and Note 3 for alternative performance measures linked to associated companies.

Subsidiaries

On 10 May 2023 the Annual General Meeting resolved to exercise the remaining options for the subsidiary B3 Digital Worklife AB. The purchase price for 19,998 shares in B3 Digital Worklife AB was SEK 31.5 million, of which SEK 15.7 million in B3 shares and SEK 15.8 million in cash. The date of possession was 11 May 2023. In connection with possession the Board of Directors decided on a non-cash issue, which increased the share capital by SEK 10,669.60 and the number of shares by 106,696. After the non-cash issue, the total number of shares and votes in B3 was 8,869,794.

Co-workers

Since the turn of the year B3 has continued to report growth in the number of co- workers, mainly consisting of an increase in the number of consultants. As at 30 June 2023 the number of co-workers was 804 (733).

B3 Consulting Group AB (publ) - Interim report, January - June 2023

Number of co-workers on 30 June 2019- 2023

5 (24)