BTS : Annual Report 2023 - English

BTS Group's four operational units

BTS Group's operative activities are

run through four units, and the executive management has full business and profit and loss responsibility for their respective geographical markets.

BTS North America consists of BTS's operations in the U.S., excluding APG, but including VBS with its operations in 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, Indonesia, India, Italy, Japan, Malaysia, Mexico, Singapore, South Africa, South Korea, Spain, Taiwan, Thailand, and the United Arab Emirates.

Advantage Performance Group (APG) operates in the U.S. market and delivers performance improvement through sales and leadership training that results in meaningful business impact using its Advantage WaySM implementation process.

BTS's services

BTS is a consultancy firm specializing in the people side of strategy. For over three decades we have been designing powerful experiences that have a profound and lasting impact on businesses and their people. Our next-generation approach combines deep business knowledge with transformational development to help companies and their people to evolve together and turn strategy into results. Our services include:

• Strategy execution & business transformation
• Leadership readiness & development
• Go to market
• Talent acquisition & succession

Areas of expertise

BTS has several areas of expertise.

­Specialists and thought leaders have been gathered within each area and are responsible for developing new concepts and solutions as well as ensuring the use of best practices across BTS Group:

• Strategy execution
• Leadership development
• Sales & marketing
• Assessment
• Innovation
• BTS Spark - developing educational leadership
• Business acumen
• Change & transformation
• Leadership coaching
• Executive & team performance
• Digital services
• Diversity, equity, and inclusion

Group-internal functions

Group-internal functions cover Group finance, Investor relations, ­Corporate communications, and Global operations development.

Vision

The global leader in turning strategy into action.

Value proposition

We make strategy personal and drive great

­execution. Our unforgettable experiences create levels of alignment, mindset, and capability that deliver better results, faster.

Purpose

We inspire and equip people to do the best work of their lives, creating better businesses and a better world.

Financial goals

BTS's financial goals over time are:

• A revenue growth, adjusted for changes in exchange rates, of 20 percent, primarily organic.
• An EBITA margin of 17 percent.
• An equity ratio that does not fall below

50 percent over extended periods.

BTS Group revenue remained just about flat for 2023

­compared to 2022, despite our biggest industry, tech and software, dropping double digits, and the average deal cycle time taking longer given the more conservative ­attitude of some clients. Despite starting the year with more people and historic salary raises due to the 2021 high demand for talent and high inflation, we delivered on our forecast and ended 2023 with earnings in line with the previous year.

2023 was a tough year, no doubt about it, but we finished the last quarter of the year on a much more positive note. Despite three tough quarters, the fourth quarter was the best quarter in our company's history, with EBITA growing 21 percent. Thereby we met our outlook and delivered EBITA in line with previous year.

As BTS has proven throughout our history, we never waste a tough economic year. The team tends to move faster and be more creative, and 2023 was no exception. I am truly proud of the team's accomplishments. Together, we:

• Focused on the industries, companies and CEOs that would be more likely to grow and invest in the ­people-side of change.
• Innovated new client partnering models to launch easy-­to-use at scale micro-simulations and content, and new services such as GAI training and ways of working.
• Up-skilledour talent across all markets.
• Increased cross-country collaboration to smooth out resource utilization.

We are glad that the measures we took in BTS North America and BTS Other markets early in 2023 played out so well. Not only did they help us make the fourth quarter of 2023 a record quarter, but they also set us up for better operational scale in the long-term.

Market developments

In general, the focus seems to be shifting in some client

segments,­ away from budget-freezing towards prioritizing selected initiatives. This gives us some optimism, although there still seems to be a cautious bias and slower ­movement on some corporate initiatives.

In summary, BTS North America and BTS Other markets showed improved growth sequentially in the fourth quarter and delivered on their efficiency plans. BTS Europe continued to experience a conservative market, resulting in a decrease in revenues for the full year.

BTS Other markets' revenue grew double digits in the quarter with traction coming from Southern Europe, Africa, the Middle­ East, and Southeast Asia.

Outlook

The actions taken during 2023 have set us up to scale. We will continue to drive further improvement in our internal ways of working. With the cost structure in place, we are energized and ready for growth in 2024 by building on the momentum we had in the fourth quarter. Given this, the outlook for 2024 is favorable; we believe that earnings will be better than 2023.

Stockholm, April, 2024

Jessica Skon

CEO of BTS Group AB (publ)

The early years

In 1986, BTS's Chairman of the Board and former CEO, Henrik Ekelund took a look at the management ­consulting space and had a vision of the future. While many firms were able to help their clients find the right strategy, their clients often still struggled to execute. And Henrik knew why. The best strategy in the world will fail if it doesn't consider the business's most valuable asset: Its people.

Henrik founded BTS to do things differently, to create a human-centered consulting firm. Unlike other consultancies, BTS doesn't believe in cookie-cutter solutions to business problems. With a relentless focus on quality, we create deeply customized, fun, and powerful experiences that provide clients with the tools they need to deliver results in the real world.

More than 35 years later, BTS has grown from its modest start in Stockholm, Sweden, to become a global player and now serves 40 of the world's 100 largest companies and 60 of the Fortune 100. Below we present selected parts of this exciting journey - and we're only just getting started.

Continuous growth and profit during the 1990s

BTS has delivered profit every year and profit growth almost every year, irrespective of market conditions and despite ­substantial costs for acquisitions, investments in product development, and market establishment around the world.

This development is a result of BTS's growth strategy, dynamic business model, and its entrepreneurial organizational culture. The strategy to generate growth focuses on growing revenue and share of wallet per customer account by offering innovative digital solutions and content in BTS's programs. Furthermore, BTS aims to expand to new geographies ­organically as well as through acquisitions.

In the 1990s, BTS successfully managed to achieve continuous profitable growth. Favorable market conditions and new product initiatives, as well as new offices in the U.S., the UK, ­Finland, and South Africa, played a major role in the company's growth during this period.

­initiatives, such as expanding into new industries and geographical markets.

BTS constantly strives to improve profitability, therefore the main focus during these years was to continuously improve billability, project execution, systems, and processes to reduce overhead; and by optimizing pricing, increasing licensing, and adding recurring revenue services. The changes and initiatives implemented during the period of consolidation between 2001 and 2003 have, in combination with a focus on raising the

proportion­ of revenues from licensing, led to improvements in margins.

During 2002 and 2003, BTS opened businesses in Australia and Spain. These new offices grew substantially and served as starting points for several new offices in Asia and Latin America.

Acquisitions in 2005 and 2006

BTS's strategy for acquisitions aims to create a broader base for future organic growth by adding new markets, new value-­ adding products and services, and new talent.

BTS acquired The Strategic Management Group Learning Solutions Inc. in 2005 and The Advantage Performance Group Inc. and The Real Learning Company Inc. in 2006. The acquisitions have added new technologies and delivery methods, a broader customer base, and a wealth of new talent to BTS.

The 2008-2009 recession

The recession during 2008 and 2009 had a significant negative impact on the industry. Most companies saw their revenues decline by 20 to 40 percent in 2009.

BTS's recession strategy was based on two key factors: the company's low market share and highly competitive offerings.

Average growth per year, 2001-2023 (CAGR)

New initiatives and increased profits during the early 2000s

When the market conditions worsened between 2001 and 2003, BTS managed to maintain a healthy level of revenue, despite the unfavorable business climate (particularly in the IT, telecom, and manufacturing industries, where BTS was ­predominantly active) by adhering to its successful long-term strategy. BTS successfully reinforced the business for future growth and profitability by implementing a range of new

1. Currency adjusted.

By focusing its resources on highly prioritized accounts, BTS was able to maintain its revenue and profit levels.

At the same time, BTS made strategic investments and progress during the recession, creating a strong foundation for growth from 2010 onward.

Growth from 2010 to 2019

During the years 2010 to 2019, BTS's revenue grew by an ­average of 10 percent annually (currency adjusted) with growth in all regions. BTS grew the average size of its projects by offering global services and more complete solutions, thereby delivering improved results for customers.

In 2013, BTS acquired all the business operations of the Danish company Wizerize A/S. The acquisition created new opportunities to offer digitally enabled solutions that were built on current and future social and mobile IT platforms. These solutions supplemented and strengthened BTS's existing offerings very well.

In 2014, BTS acquired all the businesses of the American companies Sandra Hartog Associates Inc. and Fenestra Inc., which strengthened BTS's position in the fast-growing market for services and technology within assessment services.

In 2015, BTS acquired the South African company Avocado Vision Pty Ltd., which provided BTS and Avo Vision with major opportunities in the fast-growing and important African ­market, which had an enormous need for talent development. All the business operations in the Australian company Synergy Group Pty Ltd. were also acquired in 2015. This represented

a significant strengthening of BTS's operations in Australia, increased BTS's delivery capacity, and created a considerably stronger and broader offering in Australia.

In 2016, BTS acquired all business operations of the Italian companies Cesim Italia Srl. and Design Innovation Srl.,

which significantly strengthened BTS's position in southern Europe through the addition of several major Italian customers, and also reinforced BTS's Italian operations by supplementing them with further expertise and innovative solutions. Further­ more, the acquisitions also provided a good opportunity to help many of the major Italian companies globally.

In 2017, BTS acquired all the businesses of the English company Coach in a Box Holdings Ltd. and its subsidiaries, as well as the German company MTAC GmbH.

Coach in a Box helps leaders at all levels to improve and change using a coaching approach that is virtual, affordable, scalable, and fast. BTS and Coach in a Box's combined services strengthened the customer offering and made the companies stronger partners in the market, thus creating synergies and significant growth opportunities.

MTAC works with some of the largest organizations in the German-speaking part of Europe with innovative education and simulation-based services for strategy implementation, business acumen, leadership, and marketing. The acquisition provided BTS with a base in German-speaking countries, which easily now makes it the largest market in Europe. It also allowed BTS to serve existing global clients better, and creates significant growth potential. In addition, MTAC added top knowledge in the area of marketing expertise, which is now a new area of expertise for BTS.

In 2019, BTS acquired all the businesses of the American company Polaris Assessment Systems Inc., the company SwissVBS AG. and its subsidiaries, and the Swedish company Samsari AB.

Polaris offers candidate evaluation and interviewing ­techniques and services, as well as methods that enable

customers­ to effectively recruit, develop, and promote

­employees. Through the acquisition of Polaris, BTS gained

BTS Annual report 2023 | 7

two business advantages: new industry-leading services that gave access to a new market segment worth approximately USD 2 billion globally, and secondly, we brought on board three influential thought leaders in this market segment.

SwissVBS provides high-impact digital learning solutions for the modern corporate learner. It operates primarily in the European and North American markets, bringing thought leadership and creative solutions to clients through digital journeys as well as learning reinforcement methods. The SwissVBS team brings world-class expertise in digital learning and performance support. This means that BTS can offer

clients­ a wider range of solutions and become even more

­competitive as an end-to-end talent partner. SwissVBS also brought over clients with whom the company had developed strong relationships and won awards - making BTS stronger in the Canadian and German-speaking markets.

SwissVBS was established in St. Gallen in 2001 as an offspring of the University of St. Gallen. Since then it has successfully grown into a respected provider of customized digital learning for some of the world's largest corporations.

The acquisition of Samsari brought years of experience to BTS through a strong and dynamic team with skills in change management, transformation projects, and communication

• skills that will become increasingly important and thus strengthen the BTS service offering as a whole. The acquisition also contributed to broadening the BTS customer base in the Nordic market.

The COVID-19 pandemic 2020

The entire industry faced an enormous challenge early in 2020 when all physical training was canceled - wiping out 70 percent of BTS's revenue. In addition, many companies stopped or reduced investments in all forms of training.

8 | BTS Annual report 2023

To address this challenge, BTS decided on a strategy to become stronger in the long-term, allowing BTS to continue to increase revenue and earnings for the years ahead.

With BTS's rapid re-focus on virtual and digital solutions, BTS managed to compensate for almost three quarters of the

70 percent revenue loss in 2020. BTS also took an important lead. The changes in the market will be lasting, even now when the COVID-19 crisis is over, and a significant share of demand will center on virtual and digital solutions.

Overall, BTS tackled the potential crisis for the industry, brought about by the 2020 pandemic very well.

2021 - Post pandemic, coming out strong

The pandemic initiated significant changes to strategies and organizations in major companies around the world, creating an increased demand for BTS's services and making BTS an even more attractive partner for customers today.

In 2021, BTS acquired the American company Bates Communications Inc. and all the businesses of the Spanish company Netmind SL.

Bates helps some of the top companies in the world to ­execute their strategies, primarily in the U.S., and the client portfolio has only a limited overlap with that of BTS. Bates' senior talent and consultants have brought complementary and sought-after capabilities to BTS. Their team members have backgrounds and significant experience in business, strategy, corporate communication, and management

psychology­ . The acquisition created the preconditions for the original operations in both companies to develop major synergies in their service offerings and customer bases.

The acquisition of Netmind enabled BTS to considerably strengthen its position in the Spanish-speaking markets. With its focus on digital and agile change solutions, Netmind's offering complements BTS, which thus strengthens its position