BTS GROUP AB (PUBL)

INTERIM REPORT

JANUARY - MARCH 2024

Q1

January 1 - March 31, 2024

  • Net sales MSEK 619 (579) . Currency adjusted growth +7%.
  • EBITA +23%, MSEK 58 (47).
  • EBITA margin 9.5 (8.2) %.
  • Profit after tax +135%, MSEK 53 (23), excluding the reversed provision of earn-out +11%, MSEK 25 (23). 1)
  • Earnings per share +135%, SEK 2.75 (1.17), excluding the reversed provision of earn-out +11%, SEK 1.30 (1.17). 1)

"BTS's growth and profitability improved during the first quarter due to increasing sales volumes and the efficiency measures implemented during 2023."

Jessica Skon, CEO of BTS Group AB

Outlook 2024

The 2024 full-year outlook is unchanged; the result (EBITA) is expected to be better than in 2023.

FINANCIAL SUMMARY

Jan-Mar

Jan-Mar

Apr-Mar

Jan-Dec

MSEK

2024

2023

2023/2024

2023

Net sales

619

579

2,723

2,683

Currency adjusted growth

7%

2%

3%

2%

EBITA

58

47

357

346

EBITA margin

9.5%

8.2%

13.1%

12.9%

EBIT

43

36

295

288

EBIT margin

7.0%

6.3%

10.8%

10.7%

Profit after tax

53

23

245

215

Profit after tax, excluding the reversed provision of earn-out1)

25

23

189

186

Cash flow from operating activities

27

−95

287

166

Earnings per share, SEK

2.75

1.17

12.66

11.08

Net debt (+) / net cash (-)

-196

−224

-196

−230

Number of employees (EOP)

1,103

1,192

1,103

1,111

  1. During the first quarter of 2024, a provision of earn-out related to the 2020 acquisition of the American company Rapid Learning Institute (RLI) was reversed, impacting the net financial items positively by MSEK 28.2 and thereby the profit before and after tax. The reversal has no further impact on the 2024 first quarter Group income statement or the Group balance sheet per March 31, 2024. For increased comparability, the profit before and after tax in this interim report is presented, including and excluding this reversal.

Improved growth and margins, despite challenging market

BTS's growth and profitability improved during the first quarter due to increasing sales volumes and the efficiency measures implemented during 2023.

BTS's first quarter's revenue increased 7 percent, adjusted for changes in foreign exchange rates, compared with the same period 2023. BTS North America managed double-digit growth of 10 percent, followed by BTS Other markets at 8 percent, while BTS Europe continued to face a slower and more conservative market with a growth of -4 percent.

EBITA grew 23 percent during the first quarter 2024 compared with the same period previous year and the Group's EBITA margin increased to 9.5 (8.2) percent. The EBITA margin increased in all operating units except Europe; BTS North America 10.7 (9.5) percent, BTS Europe 9.6 (10.2) percent, and BTS Other markets 7.5 (5.8) percent.

Market development

BTS North America had a promising start to the year with improved profitability compared to the previous year. In terms of the overall client sentiment, for the majority of the first quarter our deal flow felt similar to the fourth quarter 2023. Towards the end of the quarter the deal flow accelerated. Our clients in the tech & software industry continued to move initiatives forward at a similar pace as during the fourth quarter 2023 and even somewhat faster towards the end of the first quarter 2024.

BTS Europe continued to experience caution in the market, especially within financial services. To some extent, this was balanced by clients in the pharmaceuticals

  • biotech and manufacturing industries who were more active, resulting in more won deals. We are working to get BTS Europe back to growth through our focused accounts initiative as well as day-to-day pipeline generation discipline. BTS Other markets saw a general improvement in
    the market. The year-long focus on key clients helped generate growth.

New client preferences - new partnering model

In the first quarter, amongst our client base, there were continued signs of organizations wanting to reduce spend on traditional strategy consultancy firms and move towards in-house solutions. There were other signs of organizations wanting to consolidate ­external learning & enablement partners for efficiencies.

In response to these needs, BTS launched a new partnering model during the quarter, BTS Total Access, that was well received. It's a more modern partnership model designed to unlock client-led alignment, practice, learning and change management at scale and on-going.

I see the trends and change in client needs as great opportunities for BTS as a non-typical consultant firm, underscored by the fact that BTS Total Access partnering model was growing in the quarter. Even though it is a new

Jessica Skon

initiative, we have seen a positive ­revenue trend and BTS Total Access now accounts for 4 percent of our revenue.

I am confident that BTS Total Access represents a ­competitive offering that can deliver change at scale, in a way that motivates the clients' workforce.

Exploring the potential in AI

Our people have been enjoying, in a grassroots-approach, tinkering with AI. If we add up the pockets of true productivity gains to-date, we see 0.5 percent gains across our consultant base in 2025. It's a start. Still early. As the experiments that are working take shape and we drive deeper adoption, those gains will increase. In our functional roles, the main gains to-date have been in translations and in new research benchmarking capabilities. Our clients are valuing our AI bots for practice being used in real meetings and in simulation-based practice.

Results

Overall, apart from growing sales, the profitability improvement in the quarter was mainly due to the ­measures taken during 2023, including more efficient use of resources, improved scoping, and pricing. In BTS Europe, these measures meant that the continued cautiousness in the market had a limited effect on profitability.

Outlook

The outlook for 2024 remains unchanged; we believe that the result (EBITA) will be better than 2023.

Stockholm, May 3, 2024

Jessica Skon

CEO of BTS Group AB (publ)

BTS Interim report January 1-March 31, 2024 | 2

OPERATIONS

Sales

BTS's net sales for the first quarter amounted to MSEK 619 (579). Adjusted for changes in foreign exchange rates, the net sales increased 7 percent. Growth varied between the units: APG 19 percent, BTS North America 10 percent, BTS Other markets 8 percent, and BTS Europe -4 percent.

Earnings

EBITA increased 23 percent to MSEK 58 (47) for the first quarter. The EBITA margin was 9.5 (8.2) percent.

EBIT increased 19 percent to MSEK 43 (36) for the first quarter. The EBIT margin was 7.0 (6.3) percent. EBIT for the first quarter was charged with MSEK -15(-11) for amortization of intangible assets attributable to acqui­ sitions and digital investments.

Profit before tax amounted to MSEK 64 (33) for the first quarter. During the first quarter, a provision of ­earn-out related to the acquisition of RLI was reversed, impacting the net financial items positively by MSEK 28. Excluding the provision of earn-out, the profit before tax increased 9 percent to MSEK 36 (33).

The outcome was affected positively by improved profit in BTS North America, BTS Other markets and APG, and negatively by lower profit in BTS Europe, ­compared to the same period previous year.

NET SALES

BY QUARTER

800

MSEK

700

600

500

400

300

200

100

0

20 21 22 23 24

20 21 22 23

20 21 22 23

20 21 22 23

Q1

Q2

Q3

Q4

EBITA

BY QUARTER

150

MSEK

120

90

60

30

0

20 21 22 23 24

20 21 22 23

20 211)22 23

20 21 22 23

Q1

Q2

Q3

Q4

  1. Excluding forgiven PPP loan.

NET SALES AND EBITA

EARNINGS AND DIVIDEND

ROLLING 12 MONTHS

PER SHARE

Earnings per share, SEK

Net sales, MSEK

EBITA, MSEK

Dividend per share, SEK

Dividend goal, % of net profit

3,000

400

12

80

10

70

2,400

320

60

8

50

1,800

240

6

40

1,200

160

30

4

600

80

20

2

10

0

Q1

Q2 Q3 Q4 Q1

Q2 Q31)

Q41)

Q11)

Q21)

Q3 Q4 Q1

Q2 Q3 Q4 Q1

0

0

01 02 03 04 05 06 07 08 09 10 11

12 13 14 15 16 17 18 19 20 21 22 231)

0

2020

2021

2022

2023

2024

1) Excluding forgiven PPP loan.

1) Proposed dividend.

BTS Interim report January 1-March 31, 2024 | 3

SEGMENT REPORTING

The effects of IFRS 16 are reported as Group adjustments, and do not affect the reporting of the BTS Operating units.

Operating units

BTS North America consists of BTS's operations in the U.S. (excluding APG), Canada, and Switzerland.

BTS Europe consists of operations in France, Germany, the Netherlands, Sweden, and the UK.

BTS Other markets consists of operations in Argentina, Australia, Brazil, China, Costa Rica, India, Indonesia, Italy, Japan, Malaysia, Mexico, Singapore, South Africa, South Korea, Spain, Taiwan, Thailand, and the United Arab Emirates.

APG consists of operations in Advantage Performance Group in the U.S.

NET SALES BY CATEGORY

JANUARY 1 - MARCH 31, 2024 (2023)

By source of revenue

Other revenue

Licenses 2 (2)% 10 (12)%

Programs 63 (62)%

Development 25 (24)%

Per operating unit

APG

6 (6)%

BTS Other markets 26(26)%

BTS North America 51 (50)%

BTS Europe 17 (18)%

AVERAGE GROWTH PER YEAR, 2001-2023 (CAGR)

12%

15%

Net sales growth

EBITA growth

per year 1)

per year

  1. Currency adjusted.

FINANCIAL GOALS

  • A net sales growth 1) of 20 percent, primarily organic.
  • An EBITA margin of 17 percent.
  • An equity ratio that does not fall below 50 percent over extended periods.
  • An ambition to distribute 40-65 percent of profit after tax in the long run.
  1. Currency adjusted.

BTS Interim report January 1-March 31, 2024 | 4

NET SALES PER OPERATING UNIT

Jan-Mar

Jan-Mar

Apr-Mar

Jan-Dec

MSEK

2024

2023

2023/2024

2023

BTS North America

317.4

290.6

1,351.1

1,324.3

BTS Europe

103.0

105.4

466.1

468.5

BTS Other markets

161.6

151.6

741.9

732.0

APG

36.8

31.1

163.8

158.1

Total

618.8

578.8

2,722.8

2,682.9

EBITA PER OPERATING UNIT

Jan-Mar

Jan-Mar

Apr-Mar

Jan-Dec

MSEK

2024

2023

2023/2024

2023

BTS North America

33.8

27.5

179.1

172.8

BTS Europe

9.8

10.8

60.1

61.0

BTS Other markets

12.1

8.8

106.9

103.6

APG

-0.4

-1.5

1.3

0.2

EBITA, excluding Group adjustments

55.4

45.6

347.5

337.6

Effects of IFRS 16

3.0

1.9

9.3

8.1

EBITA

58.5

47.5

356.7

345.7

EBITA MARGIN PER OPERATING UNIT

Jan-Mar

Jan-Mar

Apr-Mar

Jan-Dec

%

2024

2023

2023/2024

2023

BTS North America

10.7

9.5

13.3

13.0

BTS Europe

9.6

10.2

12.9

13.0

BTS Other markets

7.5

5.8

14.4

14.2

APG

−1.0

−4.7

0.8

0.1

EBITA margin

9.5

8.2

13.1

12.9

BTS Interim report January 1-March 31, 2024 | 5

Market development

Activity increased in the market during the first quarter, mainly in BTS North America and some countries in BTS Other markets, while it remained cautious in large parts of BTS Europe.

The positive trend we saw in tech & software, specifically in the San Francisco office, in the end of 2023 continued during the first quarter 2024. BTS North America also saw growth in the fast-moving consumer goods (FMCG) and pharmaceuticals & biotech industries. Manufacturing was one industry that declined in the first quarter.

As in previous quarters, the differences between countries in BTS Other markets remained sizeable. Middle East, India, and Southern Europe were regions and countries where growth was stronger. In some of these markets, growth was due to demand for business and leadership capabilities whereas in other markets there was an increase in projects regarding change and culture.

A continued focus on selected industries and customers helped BTS make progress in some of the weaker markets.

BTS North America

Net sales for BTS North America amounted to MSEK 317

  1. for the first quarter. Adjusted for changes in foreign exchange rates, revenue increased 10 percent. EBITA amounted to MSEK 33.8 (27.5) in the first quarter. The EBITA margin was 10.7 (9.5) percent.
    While there were also signs of continued market
    conservatism­with hesitant customers, the overall demand increased as the first quarter evolved.
    The EBITA margin improvement was mainly due to the initiatives taken at the start of 2023 and implemented throughout last year.

BTS Europe

Net sales for BTS Europe amounted to MSEK 103 (105) for the first quarter. Adjusted for changes in foreign exchange rates, revenue decreased 4 percent. EBITA amounted to MSEK 9.8 (10.8) for the first quarter. The EBITA margin was 9.6 (10.2) percent.

BTS Europe continued to experience a hesitant market, resulting in lengthy decision-making processes and delayed implementation. There were some scope changes as companies pivot quickly due to the uncertainty in the European economic climate. However, there was also a modest uptick in deal flow overall and some significant customer agreements were signed during the quarter for delivery during the second half of the year.

Efficiency efforts made over the last couple of quarters contributed to the EBITA margin not being materially impacted, despite moderately declining revenue. Additional efficiency measures are planned.

BTS Other markets

Net sales for BTS Other markets amounted to MSEK 162

  1. for the first quarter. Adjusted for changes in foreign exchange rates, revenue increased 8 percent. EBITA amounted to MSEK 12.1 (8.8) for the first quarter. The EBITA margin was 7.5 (5.8) percent.
    The growth and profitability trend continued from last year into the first quarter 2024, with good demand in many of the markets. The positive trend in the Middle East continued from last year. Argentina, China, and South Korea among a few other countries, continued to demonstrate a weaker performance.
    The improved EBITA margin was an effect of both
    revenue­ growth as well as the effectiveness of the opera- tional efficiencies which were implemented last year, relating to better internal sharing of resources and better deal management and execution.

APG

Net sales for APG amounted to MSEK 37 (31) for the first quarter. Adjusted for changes in foreign exchange rates, revenue increased 19 percent. EBITA amounted to MSEK −0.4 (−1.5) for the first quarter. The EBITA margin was −1.0 (−4.7) percent.

Activity among clients picked up during the quarter, increasing the demand for leadership development support. Updates of existing programs and content as well as the inclusion of AI coaches to extend the learning, resulted in renewed interest in the APG offering.

BTS Interim report January 1-March 31, 2024 | 6

CASH FLOW

BTS's cash flow from operating activities for the first

­quarter amounted to MSEK 27 (−95). The cash flow from changes in working capital amounted to MSEK -19 (−138).

The cash flow from investing activities for the first quarter amounted to MSEK -62 (−20). Investments in tangible and intangible non-current assets, excluding acquisitions, amounted to MSEK −8 (−10) for the first quarter. Investments in acquisitions of businesses amounted to MSEK -54 (−10) for the first quarter, fully attributable to earn-out payments.

Cash flow from financing activities amounted to MSEK 54 (−10). The change between the quarters is attributable to new loans during 2024.

Total cash flow the first quarter amounted to MSEK

18 (−125).

FINANCIAL POSITION

Available cash and cash equivalents amounted to MSEK 570 (449) at the end of the period.

Interest-bearing loans amounted to MSEK 374 (225) at the end of the period. The company had no conversion loans outstanding at the balance sheet date.

Net debt, that is interest-bearing liabilities reduced by liquid funds, amounted to MSEK −196 (−224) at the end of the period and the net debt ratio was -15(-19) percent.

BTS's equity ratio was 48 (51) percent at the end of the period.

DEPRECIATIONS AND AMORTIZATIONS

of which depreciations of Right-of-use assets in accordance with IFRS 16 were MSEK -17(-14). Amortization of intangible assets amounted to MSEK -15(-11) for the first quarter, of which amortizations related to acquisitions were MSEK -9(-6).

OTHER INFORMATION

Employees

As of March 31, 2024, the number of employees at BTS was 1,103 (1,192).

The average number of employees for the first quarter was 1,101 (1,185).

Parent company

The Parent company's net sales during the first quarter amounted to MSEK 1.6 (0.9) and profit before tax totaled MSEK −0.4 (−1.3). Cash and cash equivalents amounted to MSEK 46.7 (0.9).

Transactions with related parties

A limited number of transactions with related parties, with the exception of transactions between Group companies, have taken place and in that case under prevailing market conditions.

Events after the end of the period

No significant events occurred after the close of the period.

Depreciations of property, plant and equipment amounted to MSEK -21(-18) for the first quarter,

BTS AROUND THE WORLD

BTS is a global professional services firm headquartered in Stockholm, Sweden, with about 1,100 professionals in 38 offices located on six continents.

Stockholm

Cologne

Amsterdam

London

Portsmouth

San Rafael

Toronto

Paris

Seoul

San Francisco

St. Gallen

New York

Bilbao

Tokyo

Phoenix

Philadelphia

Madrid

Shanghai

Cincinnati

Barcelona

Taipei

Chicago

Milan (2)

Bangkok

Houston

Mexico City

Dubai

Kuala Lumpur

Mumbai (2)

Singapore

Jakarta

Sao Paulo

Johannesburg

Sydney

Buenos Aires

Melbourne

BTS Interim report January 1-March 31, 2024 | 7

Risks and uncertainties

The Group's material risks and uncertainties include market and business risks, operational risks and financial risks. Business risks include significant exposure to individual customers or markets, as well as the negative influence of changes in the economy. Operational risks include dependence on key individuals, insufficient skills supply, and an inability to take advantage of intellectual property, as well as if BTS does not meet the stringent quality requirements of its ­clients. Financial risks mainly relate to foreign exchange rates and credit risks. The management of risks and uncertainties is described in the 2023 Annual report.

Critical accounting estimates and assumptions

In order to prepare the financial statements in conformity with IFRS, Corporate management is required to make estimates and assumptions that affect the application of accounting principles and the recognized amounts of assets, liabilities, revenues, and costs. Estimates and assumptions are based on historical experience, and a number of other factors that are regarded as reasonable under prevailing conditions. Actual outcomes can deviate from these estimates and assumptions. Estimates and assumptions are reviewed regularly.

Accounting principles

This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as endorsed by the EU, RFR 1 Supplementary Accounting Rules for Groups, and the Swedish Annual Accounts Act. The Parent company's statements have been prepared in accordance with RFR 2 Accounting for Legal Entities and the Annual Accounts Act.

Financial calendar

Interim report Jan-Jun 2024

August 15, 2024

Interim report Jan-Sep 2024

November 8, 2024

Year-end report Jan-Dec 2024

February, 2025

Stockholm, May 3, 2024

Jessica Skon, CEO

Contact information

Jessica Skon, CEO

+46

8 587 070 00

Stefan Brown, CFO

+46

8 587 070 62

Michael Wallin, Investor Relations

+46

70 878 80 19

BTS Group AB (publ)

Grevgatan 34

SE-114 53 Stockholm, Sweden

Phone: +46 8 587 070 00

Company registration number: 556566-7119

For further information, visit www.bts.com

BTS Interim report January 1-March 31, 2024 | 8

FINANCIAL INFORMATION

GROUP INCOME STATEMENT, SUMMARY

Jan-Mar

Jan-Mar

Apr-Mar

Jan-Dec

KSEK

2024

2023

2023/2024

2023

Net sales

618,775

578,841

2,722,825

2,682,892

Operating expenses

−539,004

−512,923

−2,287,057

−2,260,975

Depreciation of property, plant and equipment

−21,279

−18,445

−79,045

−76,211

EBITA

58,491

47,473

356,723

345,706

Amortization of intangible assets

−15,312

−11,082

−61,885

−57,656

EBIT

43,180

36,391

294,839

288,050

Net financial items

−6,844

−3,389

−24,673

−21,218

Reversed provision of earn-out

28,155

-

56,497

28,342

Associated company, profit after tax

−156

56

−251

−39

EBT

64,335

33,058

326,411

295,134

Estimated tax

−11,035

−10,413

−80,941

−80,320

Net profit

53,300

22,645

245,470

214,815

attributable to the shareholders of the parent company

53,300

22,645

245,470

214,815

Earnings per share, SEK

2.75

1.17

12.66

11.08

Number of shares at end of the period 1)

19,396,819

19,374,347

19,396,819

19,396,819

Average number of shares 1)

19,396,819

19,374,347

19,390,666

19,384,610

Dividend per share, SEK

5.70 2)

  1. Before and after dilution of shares.
  2. Proposed dividend.

GROUP STATEMENT OF COMPREHENSIVE INCOME

Jan-Mar

Jan-Mar

Apr-Mar

Jan-Dec

KSEK

2024

2023

2023/2024

2023

Profit for the period

53,300

22,645

245,470

214,815

Items that will not be reclassified to profit or loss

−

-

−

−

−

-

−

−

Items that may be reclassified to profit or loss

Translation differences in equity

67,832

217

34,472

−33,142

Other comprehensive income for the period, net of tax

67,832

217

34,472

−33,142

Total comprehensive income for the period

121,132

22,862

279,942

181,673

attributable to the shareholders of the parent company

121,132

22,862

279,942

181,673

BTS Interim report January 1-March 31, 2024 | 9

GROUP BALANCE SHEET, SUMMARY

KSEK

31 Mar 2024

31 Mar 2023

31 Dec 2023

ASSETS

Goodwill

1,160,664

909,524

1,103,993

Other intangible assets

152,298

115,708

153,592

Tangible assets

211,179

183,546

180,410

Financial assets

29,358

27,000

28,474

Total non-current assets

1,553,499

1,235,778

1,466,468

Trade receivables

513,287

482,872

714,315

Other current assets

318,605

281,356

243,324

Cash and cash equivalents

570,170

449,239

532,315

Total current assets

1,402,063

1,213,466

1,489,953

TOTAL ASSETS

2,955,561

2,449,245

2,956,421

EQUITY AND LIABILITIES

EQUITY

1,422,786

1,237,581

1,300,653

LIABILITIES

Acquisition-relatednon-current liabilities

341,137

164,647

324,823

Interest-bearingnon-current liabilities

132,550

77,753

57,753

Other non-current liabilities

242,349

196,065

209,138

Non-current liabilities

716,036

438,464

591,714

Acquisition-related current liabilities

15,991

118,367

94,835

Interest-bearing current liabilities

241,172

147,357

244,577

Other current liabilities

559,576

507,475

724,641

Current liabilities

816,739

773,199

1,064,053

TOTAL LIABILITIES

1,532,775

1,211,663

1,655,767

TOTAL EQUITY AND LIABILITIES

2,955,561

2,449,245

2,956,421

BTS Interim report January 1-March 31, 2024 | 10

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BTS Group AB published this content on 03 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 May 2024 05:56:07 UTC.