B3 Consulting : Q3 2023

Interim report January - September 2023 | B3 Consulting Group

Growth -5.3% and operating margin (EBIT) 4.5% in the third quarter

Third quarter, July - September 2023

• Sales amounted to SEK 223.3 (235.8) million, corresponding to a decrease of -5.3 per cent
• The operating profit (EBIT) was SEK 10.0 (24.4) million, with an operating margin (EBIT) of 4.5 (10.3) per cent. The operating margin adjusted for non-recurring items was 5.6 per cent.
• Profit after tax was SEK 9.7 (20.8) million.
• Cash flow from operating activities for the period was SEK -41.2(-11) million.
• Earnings per share after dilution amounted to SEK 1.05 (2.14).

January - September 2023

• Sales amounted to SEK 847.2 (815.8) million, corresponding to an increase of 3.8 per cent
• The operating profit (EBIT) was SEK 72.9 (98.0) million, with an operating margin (EBIT) of 8.6 (12.0) per cent. The operating margin adjusted for non-recurring items was 9.3 per cent.
• Profit after tax was SEK 60 (80.9) million
• Cash flow from operating activities for the period was SEK 21.0 (77.3) million.
• Earnings per share after dilution amounted to SEK 6.13 (8.38).

Other events

• Long-termfinancial targets up to and including 2025 are being adjusted to annual sales of SEK 1.5 (1.7) billion and an operating margin (EBIT) of 10 per cent (12 per cent).

		Q3			Jan-Sep		Jan-Dec
Extract of B3's key figures	2023	2022	Δ%	2023	2022	Δ%	2022
Net Sales, SEK million	223,3	235,8	-5,3%	847,2	815,8	3,8%	1 148,1
EBITDA, SEK million	15,5	29,4	-47,3%	88,7	113,6	-21,9%	158,3
EBITDA margin, %	6,9%	12,5%		10,5%	13,9%		13,8%
Operating profit (EBIT), SEK million	10,0	24,4	-59,0%	72,9	98,0	-25,6%	137,7
Operating margin (EBIT), %	4,5%	10,3%		8,6%	12,0%		12,0%
Profit after tax, SEK million	9,7	20,8	-53,4%	60,0	80,9	-25,8%	114,7
Profit per share, SEK	1,05	2,17	-51,6%	6,15	8,53	-27,9%	11,83
Profit per share, SEK	1,05	2,14	-50,9%	6,13	8,38	-26,8%	11,79
Closing number of co-workers¹	793	791	0,3%	793	791	0,3%	786
Average number of co-workers¹	799	762	4,9%	796	730	9,0%	741

		Q3			Jan-Sep		Jan-Dec
Alternative key figures with B3 Poland fully consolidated²	2023	2022	Δ%	2023	2022	Δ%	2022
Net sales incl. B3 Poland, MSEK	264,0	269,0	-1,9%	963,4	900,8	6,9%	1 269,5
EBITDA incl. B3 Poland, MSEK	22,4	36,3	-38,3%	106,7	128,0	-16,6%	180,4
EBITDA margin incl. B3 Poland, %	8,5%	13,5%		11,1%	14,2%		14,2%
Operating profit (EBIT) incl. B3 Poland MSEK	16,5	31,2	-47,1%	90,2	111,9	-19,4%	159,0
Operating margin (EBIT) incl. B3 Poland, %	6,3%	11,6%		9,4%	12,4%		12,5%

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 per cent 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 third quarter net sales in B3 Poland were SEK 40.7 (33.2) million, EBITDA SEK 6.9 (6.9) million, EBIT SEK 6.5 (6.8) million, which in local currency is equivalent to net sales of PLN 15.6 (14.9) million, EBITDA of PLN 2.5 (3.6) million and EBIT of PLN 2.4 (3.6) million. In January-September net sales in B3 Poland were SEK 116.2 (85) million, EBITDA SEK 18.0 (14.4) million, EBIT SEK 17.3 (13.9) million, which in local currency is equivalent to net sales of PLN 46.4 (37.8) million, EBITDA of PLN 7.1 (6.8) million and EBIT of PLN 6.8 (6.7) 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

A challenging market gives negative growth

Growth and earnings

Sales in the second quarter were SEK 223.3 million (-5.3%). The negative growth is mainly attributable to lower capacity utilisation where we see that on average it takes longer to get consultants onto assignments. The operating profit (EBIT) was SEK 10.0 million (-59.0 per cent), and the operating margin was 4.5 per cent.

Weak Swedish market, streamlining and cost savings

The weak market situation from the end of Q2 has continued into Q3. In Q3 we have therefore worked more on optimising the organisation to add the greatest possible value, but at a lower cost. We have identified and started the introduction of a cost savings programme that we call HedgeHog, aimed at achieving savings of 1.6 per cent in 2024. The full effect is expected to be reached at the beginning of Q3 in 2024, and further effects are expected in 2025. The improvement will be measured against the 2023 EBIT margin. The figure is based on 0 growth in 2024, 10 per cent organic growth in 2025 and full consolidation of the associated company B3 Consulting Poland in 2025. It is only intended as an illustration and does not represent any guidance as to volume or EBIT in 2024 and 2025, but we believe the information is useful to investors.

Adjusted targets for 2025 and introduction of a new share repurchase programme

Based on the market being tougher and earnings reflecting that situation, we have reduced our long-term financial targets for the period to 2025. We are now aiming for a volume of SEK 1.5 billion in 2025 (previously 1.7) and an EBIT margin for this three- year period of 10 per cent (previously 12 per cent). Together with these targets a new overall capital allocation policy has been adopted. It is described later in this report with information on start-ups, growth ambitions, debt levels, dividends, repurchase and our approach to M&A opportunities in the market. The Board of Directors has also decided to propose a new buy-back programme of up to SEK 25 million to buy shares to be used later in connection with our earn-out commitments (that mainly occur in 2025).

We accelerate where there is demand

While the market is weak, there are areas where demand continues to be strong. 10 of our 23 invoicing subsidiaries report stronger earnings for Q3 2023 compared with the same period in the previous year. Two of the companies that are growing and growing very well are B3 Skilled and B3 Kodify, both based in Malmö. They will participate and introduce themselves at our Q3 presentation to the market. During the quarter we have also had the pleasure of welcoming a new start-up company with a focus on maximising business benefit in terms of cloud-based standard platforms. The company will go live on 1 January 2024. There are also ongoing dialogues with several competent entrepreneurs, and we look forward to presenting more startups in future, in line with our strategy. We do not know when the market will turn, but we are working hard to adapt to the market we have now, and opportunities abound.

President and Chief Executive Officer Sverre Bjerkeli

New business and assignments

During the quarter we continued to strengthen our positions at several of Sweden's major banks with consultants from several of our specialist companies, where the team mix of expertise and background has been a sought-after asset. We also continue to grow in Sweden's regions and private care providers with assignments including development and project management. We have also recently won new framework agreements. B3 has a broad client portfolio with many strong client relations, and we work constantly to be close to our clients to quickly identify their needs and navigate to the areas where there is a demand.

B3 is the IT Consulting Company of the Year

On I September B3 was named as IT Consulting Company of the Year when Developers Day was arranged for the first time. During the quarter we also made it to the final of Career Company of the Year as one of 16 among more than 200 nominees, and Pernilla Brolin was named as HR Manager of the Year. We are very proud that B3 as a workplace is being noticed and winning awards, but we are not resting on our laurels but continuing the work of living our vision; to be Sweden's best consulting company for our co-workers, clients and owners.

Confidence and high ambitions going forward

We do not yet know when the market will turn, but we are adapting our business to the prevailing situation with continued focus on accelerating and braking at the same time. B3 holds a very strong position in the market with our entrepreneur driven subsidiaries, where together we are preparing to get through tougher times to be at the forefront when the economy picks up. It is also a fact that the first nine months of 2023 gave the second best nine-month earnings of B3's 20-year history. Therefore, our high ambitions should not come as a surprise to anyone, and I look forward to the future with confidence.

Stockholm October 2023

Sverre Bjerkeli

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

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Events

In the third quarter

• B3 was named as IT Consulting Company of the Year when Developers Day was arranged for the first time on 13 September. The award aims to celebrate a company that has proved over many years to be attractive and create value for both co-workers, clients and partners.
• B3 started a new partnership with Nordic Leisure Travel Group AB (NLTG) with the brands Ving, Spies and Tjäreborg. A new framework agreement was signed and includes services provided by the entire B3 Group.
• B3 started a new company in cyber security and strengthened its offer in the security area. Emil Gullers has been recruited to lead the new company.
• B3 arranged a race for students together with Nackademin and Marathongruppen and launched the interactive app B3 Runtime.
• Johanna Eriksson left her role as CFO of the B3 Consulting Group at her own request.

In the second quarter

• The Board of directors announced that Anette Billing will leave the role of President and CEO of B3 Consulting Group AB at her own request. The Board of Directors appointed Sverre Bjerkeli as acting CEO. Daniel Juhlin took 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.
• 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.
• 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 about SEK 11 thousand 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.

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 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 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

• Daniel Cato was appointed as new CEO of B3's specialist company
  B3 Dynamics. Daniel Cato is an experienced leader with a sound background in sales and business development with more than 15 years' experience of Microsoft
  Dynamics 365.
• B3 reached the final of Career Company of the Year and Pernilla Brolin won an award as HR Manager of the Year at the Stora Karriärdagen award event.
• B3 gave notice to attend an extraordinary general meeting of shareholders in regards of a new incentive programme. In a press release, published on 25 October, it was informed that the extraordinary general meeting is cancelled. The extraordinary general meeting was planned to occur on 8 November.
• On 25 October 2023 the Board of Directors decided on new financial targets to the close of 2025, see page 9.
• The Board of Directors decided on 25 October to adopt a new capital allocation policy, see page 9.
• The Board of Directors decided on 25 October 2023, in accordance with the authorisation by the Annual General Meeting in May 2023, to initiate repurchase of own shares totalling SEK 25 million during the fourth quarter.
• André Karlsson was appointed new permanent CFO of B3. André Karlsson has worked as Head of Business Control at B3 since August 2022, as acting CFO since July 2023 and before that worked as Business Controller of Knowit and Cybercom, among others.

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

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Group

July - September 2023

Revenue and profit

Sales in the third quarter amounted to SEK 223.3 (235.8) million, which corresponds to a decrease of -5.3 (24.8) per cent compared with the same period in the previous year. The lower sales figure in comparison with the same period of the previous year is attributable to an increase in the number of co-workers (about SEK +14 million) and increased hourly rates (about SEK +7 million). Conversely, sales were negatively affected by reduced sales from products and licences (about SEK -1 million), reduced capacity utilisation (about SEK -22 million), reduced sales related to sub-consultants (about SEK -8 million) and one less working day compared with the same period in the previous year (about SEK -3 million). Sub-consultants account for a small part of sales, amounting during the quarter to 7.8 (8.3) per cent. The average number of co-workers in the quarter amounted to 799 (762), which corresponds to an increase of 37 compared with the same period in the previous year. Other operating income in the quarter amounted to 0.4 (0.1) million. Total operating expenses in the third quarter were SEK 213.7 (211.5) million. Staff costs were SEK 167.5 (160.7) million, corresponding to 75.0 (68.2) per cent of sales. The operating profit (EBIT) for the quarter was SEK 10.0 (24.4) million, giving an operating margin (EBIT) of 4.5 (10.3) per cent. The reduced operating margin is mainly attributable to lower capacity utilisation in comparison with the third quarter of the previous year and a non-recurring cost for a one-off employee benefit of about SEK 2.5 million. There has been a negative capacity utilisation trend since the start of the year that also continued into the third quarter. The adjusted operating margin (EBIT), taking into account non-recurring items was 5.6 per cent.

January - September 2023

Revenue and profit

Sales in the period January-September amounted to SEK 847.2 (815.8) million, which corresponds to growth of 3.8 (25.4) 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 7.8 (8.3) per cent. The average number of co-workers in the period amounted to 796 (730), which corresponds to an increase of 66 compared with the same period in the previous year. Other operating income in the period amounted to 1.5 (2.2) million. Total operating expenses in the period January-September were SEK 775.8 (720.0) million. The cost rate has risen, given the investments made. Staff costs were SEK 611.7 (560.7) million, corresponding to 72.2 (68.7) per cent of sales. The operating profit (EBIT) for the period was SEK 72.9 (98.0) million, giving an operating margin (EBIT) of 8.6 (12.0) per cent The reduced operating margin is mainly attributable to lower capacity utilisation in comparison with the same period in the previous year and non-recurring costs for B3's anniversary celebration of about SEK 3.5 million, as well as a one-off employee benefit corresponding to about SEK 2.5 million. The adjusted operating margin (EBIT), taking into account non-recurring items was 9.3 per cent.

Sales per quarter and R12 (SEK million)

1 180

1 087

804 869 872

216,8	207,0	176,6	239,1	247,8	218,6	163,5	221,5	227,8	233,5	189	271,6	290,5	289,5	235,8	332,3	324,6	299,3	223,3
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
	2019			2020			2021			2022		2023

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

126 113

											49
		39				44
15,3	3,4	5,6	7,0	19,4	9,6	7,5	5,9	11,8	16,0	15,0	27,8	39,1	34,5	24,4	39,7	40,9	22,0	9,9
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
	2019			2020				2021			2022		2023
Operating margin (EBIT) per quarter (%)
												13,5%			12,6%
												11,9%	11,9%
										7,9%			10,3%
			7,8%
7,1%								10,2%
							6,9%
						4,6%	5,2%							7,4%
															4,5%
	3,2%	4,4%
		2,9%
	1,6%				2,7%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
	2019			2020				2021		2022		2023

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

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Financial position and cash flow

The Group's cash flow in the third quarter 2023 was SEK -35.6(-20.2) million. Cash flow from operating activities in the third quarter 2023 was SEK -41.2(-11) million, where the operations had a positive cash flow of SEK 1.5 (24.4) million and working capital changed by

SEK -42.7(-35.4) million. Cash flow from investing activities was SEK -0.8(-1) million and is mainly attributable to acquisition of non-current assets. Financing activities affected the cash flow by SEK 6.4 (-8.2) million, which is mainly attributable to amortisation of loans and utilisation of the Group's bank overdraft facility.

The Group's cash flow in the period January-September 2023 was SEK -83.4 (19.5) million. Of this, dividend to shareholders is SEK 67.7 million. Cash flow from operating activities in the period January-September 2023 was SEK 21.0 (77.3) million, where the operations had a positive cash flow of SEK 53.0 (102) million and working capital changed by SEK -32(-24.7) million. Cash flow from investing activities was SEK 1.5 (-1.1) 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 -105.9(-56.7) million, which is mainly attributable to dividends and acquisition of shares in subsidiaries.

The Group's cash and cash equivalents as at 30 September 2023 amounted to SEK 0 (73.7) million. During the quarter the Group extended its overdraft facility from SEK 35 million to SEK 50 million. As at 30 September 2023, SEK 15.5 million of this credit had been utilised.

Equity as at 30 September 2023 amounted to SEK 191.1 (244.2) million. As at 30 September 2023 the Group had a net debt (+)/net cash balance (-), excluding impact of IFRS 16 Leases, of SEK 35.4 (-37.7) million. Net debt (excluding IFRS 16)/EBITDA on rolling 12-month basis amounts to SEK 0.3. The equity/assets ratio is 35.2 (41.3) 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 and/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 about SEK 11 thousand 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 employed consultants. As at 30 September 2023 the number of co-workers was 793 (791).

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

Number of co-workers on 30 September 2019-2023

704	644	657	791	793
2019	2020	2021	2022	2023

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Clients

At the close of the third quarter 2023, B3 had no individual client that represents more than five per cent of the Group's total sales. B3's ten largest clients together account for about 29 per cent of the Group's sales and the 40 next largest clients represent about 39 per cent of sales. About 50 per cent of B3's sales are related to industries with low or moderate cyclical dependence. In addition, revenues from our own framework agreements constitute about 27 per cent of the Group's sales.

During the quarter we continued to strengthen our positions at several of Sweden's major banks with consultants from several of our specialist companies, where the team mix of expertise and background has been a sought-after asset. Several new assignments have also been started in Sweden's regions as well as private care providers including development and project management. B3 has signed new agreements and started assignments at several member organisations. During the quarter B3 has also won new assignments with clients such as Preem, Almi, Parks&Resorts and Filmstaden. B3 has also been awarded a new framework agreement in the area of app development in SVT's (Swedish public television company) procurement of IT consultants and was recently awarded a contract in SVT's procurement of IT consultants in Operations.

Share of revenue per industry sector, Jan-Sep 2023 (Jan-Sep 2022)

Banking, finance, insurance 20% (20%)

Government agencies, municipalities 15%

(15%) Industry 13% (13%)

Care 10% (10%)

IT, media, entertainment 9% (9%)

Retail 8% (8%)

Transport, logistics 6% (6%)

Telecom 3% (4%)

Membership organisations, associations 5%

(5%) Other 11% (10%)

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

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Segment reporting

As of January 2023, B3 has changed the names of its business areas as well as restructuring three subsidiaries between business areas to streamline our service offer better. The change is not deemed to have any material impact on the financial statements. For a detailed list of the segments' revenue and profit with restated comparative figures, please see Note 2.

Digital Experience & Solutions business area

(formerly Digital Innovation)

The business area focuses on development of applications, digital customer experiences, products and services. Digital Experience & Solutions accounts for 38.5 (41.3) per cent of the Group's sales in a rolling twelve-month period, October 2022 - September 2023.

In the third quarter of 2023 sales amounted to SEK 85.9 (102.7) million, corresponding to a decrease of -16.4 (17.1) per cent. The operating profit (EBIT) was SEK 3.3 (11.8) million, giving an operating margin (EBIT) of 3.8 (11.5) per cent.

The reduced sales and operating margin in the year's third quarter is mainly attributable to lower capacity utilisation.

Sales in the period January-September amounted to SEK 337.9 (352.8) million, corresponding to a decrease of -4.2 (18.7) per cent. The operating profit (EBIT) was SEK 25.7 (42.4) million, giving an operating margin (EBIT) of 7.6 (12.0) per cent.

Sales, share per business area, R12. Q4 22-Q3 23 (Q4 21-Q3 22)

Digital Experience & Solutions 38,5% (41,3%) Digital Management 30,2% (30,1%)

Cloud & Technology Platforms 31,3% (28,6%)

EBIT, share per business area, R12 Q4 22-Q3 23 (Q4 21-Q3 22)

Digital Management business area

The business area focuses on services in digitalisation and operations development, agile transformation, change leadership, security, decision support and eHealth. Digital Management accounts for 30.2 (30.1) per cent of the Group's sales in a rolling twelvemonth period, October 2022 - September 2023.

In the third quarter 2023 sales amounted to SEK 69.9 (64.5) million, corresponding to an increase of8.4 (29.1) per cent. The operating profit (EBIT) was SEK 2.7 (7.3) million, giving an operating margin (EBIT) of 3.9 (11.3) per cent.

The increased sales in the third quarter are mainly due to the increased number of coworkers and higher hourly rates. The reduced operating margin is mainly attributable to lower capacity utilisation.

Sales in the period January-September amounted to SEK 261.7 (249.2) million, corresponding to an increase of 5.0 (29.1) per cent. The operating profit (EBIT) was SEK 18.1 (28.6), giving an operating margin (EBIT) of 6.9 (11.5) per cent.

Cloud & Technology Platforms business area

(formerly Cloud & Tech)

The business area focuses on services relating to effective, secure, scalable and accessible infrastructure. The market is largely driven by the transfer of new and existing solutions to the cloud, where IT security issues are in focus. Cloud & Technology Platforms accounts for

31.3 (28.6) per cent of the Group's sales in a rolling twelve-month period, October 2022 - September 2023.

In the third quarter of 2023 sales amounted to SEK 75.7 (77.5) million, corresponding to a decrease of -2.3 (36.9) per cent. The operating profit (EBIT) was SEK 3.7 (8.9) million, giving an operating margin (EBIT) of 4.9 (11.5) per cent.

The reduced sales and operating margin in the year's third quarter is mainly attributable to lower capacity utilisation.

Sales in the period January-September amounted to SEK 275.9 (253.3) million, corresponding to an increase of 8.9 (39.6) per cent. The operating profit (EBIT) was SEK 27.3 (33.9) million, giving an operating margin (EBIT) of 9.9 (13.4) per cent.

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

Digital Experience & Solutions 36,4% (39,6%) Digital Management 26,2% (27,8%)

Cloud & Technology Platforms 37,5% (32,7%)

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Parent company

The B3 Consulting Group AB (publ), corporate identity number 556606-3300, is the parent company for the operations in all the subsidiaries. The parent company is responsible for group-wide services such as IT, accounting, administration, employer branding, HR, business development and marketing. The parent company is also responsible for the overall offer in relation to major framework agreement clients.

July - September 2023

Revenue and profit

The parent company's net sales in the third quarter amounted to SEK 56.2 (58.1) million, which derives from framework agreements with clients common to the Group and invoiced via B3 Consulting Group AB. The parent company's total operating income amounted to SEK 90.1 (79.6) million. The difference between the parent company's sales and total operating income consists of re-invoicing to subsidiaries of group-wide services. The operating profit (EBIT) in the third quarter amounted to SEK -0.6(-3.4) million.

January - September 2023

Revenue and profit

The parent company's net sales in the period January- September amounted to SEK 209.4 (197.0) million, which derive from framework agreements with clients common to the Group and invoiced via B3 Consulting Group AB. The parent company's total operating income amounted to SEK

302.1 (266.4) million. The difference between the parent company's sales and total operating income consists of re- invoicing to subsidiaries of group-wide services. The operating profit (EBIT) for the period January-September was SEK -0.8(-7.2) million.

Financial position

Cash and cash equivalents amounted to SEK 0 (73.7) million as at 30 September 2023. The parent company has overdraft facilities with a limit of SEK 50.0 (35.0) million, of which SEK

15.5 (0.0) million has been used. The company has a loan raised in 2021 for SEK 48 million. The loan will be amortised over a three-year period. As at 30 September 2023 the remaining debt is SEK 20 million. The interest expense is based on STIBOR plus 2.25 per cent. The parent company's equity as at 30 September 2023 amounted to SEK 200.2 (223.1) million.

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

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Other information

Outlook and financial targets

The B3 Group will develop in pace with improved delivery capacity as a result of recruitment, start-ups and company acquisitions, based on client demand and the general investment climate. The Group makes no forecasts.

The market was very favourable in 2022 and market prospects have weakened more than could be foreseen. In view of this, the Board of Directors has decided to adjust the financial targets for the period 2023-2025. Previous target within brackets.

The Board of Directors has communicated the following financial targets:

• Reach SEK 1.5 (1.7) billion in annual sales at the close of 2025.
• Report a 10 (12) per cent operating margin (EBIT) over time.
• Borrowings should normally be less than 2.0 (1.5) times
  EBITDA.
• The aim of the company is to distribute annually up to 50 per cent (2/3) of the company's profit after tax attributable to shareholders in the B3 Consulting Group AB. However, taking into account the Group's capital requirements to deal with changes in working capital and for investments, mainly acquisitions.
• In addition, the company, via the authorisation of the Annual General Meeting, can distribute value to the shareholders via buy back of own shares. The purpose is to give the Board of Directors greater room for manoeuvre in working on the company's capital structure, as well as the ability to manage supplementary purchase prices.

Due to the prevailing market situation, with reduced sales and lower margins, the Group has introduced a cost savings programme called HedgeHog. The programme aims to achieve an annual cost saving of about SEK 33 million by 2025. The programme target is that costs for group-wide functions should not exceed 6 per cent of the year's sales. To achieve the target the Group has taken measures in the form of resource optimisation and staff reductions in the sales, people & culture, accounting and IT functions, among others.

At the same time, the Group is investing in marketing and start-up functions by recruiting a coordinator for digital marketing channels and investing in new start-ups. Apart from the above, Group Management roles are being reviewed and consolidated.

Together with these targets, a new overall

capital allocation policy has been adopted. The new policy consists of the following components in the model below.

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Risks and uncertainties

In its operations the B3 Group may be exposed to various risks. Some of these the company can control while others lie outside the control of the company. The Group's material business risks consist of reduced demand for consulting services in the client market, price pressure and the ability to recruit and retain competent co-workers. The B3 Group is also subject to financial risks such as currency risk, interest rate risk, credit risk, liquidity risk and risk of cost increases linked to high inflation. The B3 Group makes regular assessments of its risk exposure and works to minimise it. Material risks and uncertainties are described in the Annual Report for 2022 in the section "Risks and risk management" in the administration report and under Note 3.

The war in Ukraine with subsequent energy crisis, increased inflation and higher interest rates, as well as other unrest in the world that may impact financial stability, are generating major uncertainty in many sectors. B3's assessment is that the consequent market situation has deteriorated since the turn of the year. The Board of Directors and Group Management are following developments carefully and will take action as needed.

The B3 share

The B3 share has been listed on Nasdaq Stockholm since December 2016. On 30 September 2023 there was a total of 8,869,794 shares, of which 300,229 shares held by the company. In May 2023 the Annual General Meeting resolved to authorise the Board of Directors for the period up to the

next Annual General meeting to decide on acquisition and transfer of the company's own shares. The number of shares held by the company may not exceed 10 per cent of the company's total issued shares. Each share entitles the holder to one vote. The shares are distributed among 5,903 owners as at 30 September 2023. The share capital amounted to SEK 886,979.4.

Annual General Meeting

The Annual General Meeting for 2023 will take place on 8 May 2024, at 14.00 at B3's premises in Stockholm. Notice to attend the Annual General Meeting will be published at the latest four weeks before that date on the company's website and in Post & Inrikes Tidningar (the Swedish Official Gazette) and announced in Dagens Industri. Ahead of the coming Annual General Meeting a Nominations Committee has been appointed in accordance with a resolution on procedure made by B3's Annual General Meeting on 10 May 2023. The Nominations Committee consists of Dag Mauris Nereng, representative of Protector Forsikring ASA, David Bjerkeli, representative of Hvaler invest AS, Claes Wiberg, representative of Claes Wiberg AB and Daniel Juhlin, Chair of the Board of B3 Consulting Group AB. The Nominations Committee thus corresponds to about 38 per cent of the total number of outstanding shares and votes. Shareholders who wish to submit proposals to B3's Nominations Committee can do so by 31 January 2024 at the latest, via email to [e-mail] or by letter to B3 Consulting Group AB, Att: Nominations Committee, P.O. Box 8, SE 101 20 Stockholm.

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