Annual Report • Feb 20, 2009
Annual Report
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• The proposed dividend is SEK 1.20 (1.20) per share.
BTS' net turnover increased by 5 percent during the year and amounted to MSEK 548.4 (523.2). Adjusted for changes in exchange rates, growth was 8 percent. All units achieved growth in local currency terms, apart from APG; 19 percent in BTS North America, 21 percent in BTS Europe and 14 percent in BTS Other Markets. In APG, revenue decreased by 21 percent in local currency terms.
Operating profit before amortization on intangible assets (EBITA) decreased by 10 percent during the year and amounted to MSEK 79.8 (88.3). Operating profit during the year was affected by MSEK 9.3 (10.1) for amortization of intangible assets attributable to acquisitions. Operating profit (EBIT) decreased by 10 percent to MSEK 70.5 (78.2).
The operating margin before amortization of intangible assets (EBITA margin) was 15 (17) percent. The operating margin (EBIT margin) was 13 (15) percent.
Profit before tax decreased by 7 percent to MSEK 67.6 (72.8) during the year, which corresponds to the outlook provided of a profit before tax in line with the previous year.
The negative change in earnings and margin is mainly due to lower sales in the acquired APG unit, considerably lower margins in BTS Other Markets, as well as a weakening of the USD and GBP, currencies of importance for BTS. Earnings have also been negatively impacted by lower cost efficiency in BTS USA during the first half year. Measures undertaken to improve cost efficiency in BTS USA have delivered positive results during the second half year.
An action program for APG was initiated earlier in the year in order to make sales more efficient. However, the deterioration in US' market conditions has had a significant adverse effect on APG. Marketing and sales efforts have been strengthened with the aim of achieving a better development in 2009.
BTS' net turnover increased by 14 percent during the fourth quarter and amounted to MSEK 155.4 (135.9). Adjusted for changes in exchange rates, growth was 2 percent.
Growth was strong in BTS Europe, which grew by 21 percent in local currency terms. BTS USA grew by 9 percent and APG decreased by 20 percent. BTS Other Markets decreased by 32 percent, due to a very weak quarter in Australia.
BTS' earnings during the fourth quarter are in line with the previous year but with an improvement in BTS Europe and deteriorations in APG and BTS Other Markets.
Operating profit before amortization on intangible assets (EBITA) decreased by 4 percent during the fourth quarter and amounted to MSEK 23.7 (24.6). Operating profit during the fourth quarter was affected by MSEK 2.7 (2.4) for amortization of intangible assets attributable to acquisitions. Operating profit (EBIT) decreased by 5 percent to MSEK 21.0 (22.2).
The operating margin before amortization of intangible assets (EBITA margin) was 15 (18) percent. The operating margin (EBIT margin) was 13 (16) percent.
Profit before tax for the fourth quarter decreased by 3 percent and amounted to MSEK 20.6 (21.2).
Demand for training and consultancy services weakened during the fourth quarter. Demand for BTS' services continued to be positive, apart from APG, which also continued to develop negatively during the fourth quarter. APG has been more exposed to the deterioration in market conditions on account of its client and product mix.
Many of BTS' clients are significantly affected by the severe recession. BTS considers that it is in a much better position than its competitors, through a well-diversified customer base, an underweight of clients in the most exposed sectors, very competitive solutions as well as client projects of a strategic and long-term nature.
BTS has a small market share and the company sees good opportunities to increase this during the recession. BTS' recession strategy is based on:
This strategy worked during 2008, as the total market is estimated to have contracted, whereas BTS continued to grow.
BTS' offering has broadened considerably through product development and completed acquisitions and apart from world-leading business simulations also includes leading solutions within strategically important areas such as e.g. sales and management development and internet-based training solutions.
BTS offers the most comprehensive range of tailored simulation solutions on the market today, a well developed sales organization and at the same time, is the only company in the world that can serve large international companies on a global basis. BTS can to a greater extent satisfy existing clients' needs for additional solutions, which generates good growth opportunities both in the near-term and longterm.
New clients secured during the fourth quarter included Konecranes, Mass Mutual, Munters MCS, MySpace, Repsol and Subaru North America, among others.
| Net turnover per operative unit | Oct-Dec | Oct-Dec | Full-year | Full-year |
|---|---|---|---|---|
| MSEK | 2008 | 2007 | 2008 | 2007 |
| North America* | 102.3 | 85.8 | 369.4 | 368.4 |
| Europe | 45.6 | 38.0 | 138.2 | 117.0 |
| Other markets | 7.5 | 12.1 | 40.8 | 37.8 |
| Total | 155.4 | 135.9 | 548.4 | 523.2 |
| *North America | ||||
| BTS | 72.8 | 55.2 | 254.2 | 219.4 |
| APG | 29.5 | 30.6 | 115.2 | 149.0 |
| Total | 102.3 | 85.8 | 369.4 | 368.4 |
Operating profit before amortization of intangible assets (EBITA) per operative unit
| Oct-Dec | Oct-Dec | Full-year | Full-year | |
|---|---|---|---|---|
| MSEK | 2008 | 2007 | 2008 | 2007 |
| North America* | 11.6 | 11.9 | 46.7 | 61.2 |
| Europe | 14.5 | 10.4 | 30.5 | 21.1 |
| Other markets | -2.4 | 2.3 | 2.6 | 6.0 |
| Total | 23.7 | 24.6 | 79.8 | 88.3 |
| *North America | ||||
| BTS | 11.2 | 9.8 | 43.8 | 47.8 |
| APG | 0.4 | 2.1 | 2.9 | 13.4 |
| Total | 11.6 | 11.9 | 46.7 | 61.2 |
The operations - APG and RLC, which were acquired during the fall of 2006, are reported geographically within North America. Since the beginning of 2008, RLC is combined in the same organizational and legal entity as BTS. Comparative figures in respect of the previous year have been adjusted to the new operating structure.
Net turnover for BTS' North American operations amounted to MSEK 254.2 (219.4) during the year. Adjusted for currency effects, revenue increased by 19 percent. Operating profit before amortization of intangible assets (EBITA) amounted to MSEK 43.8 (47.8) during the year. The operating margin before amortization of intangible assets (EBITA margin) was 17 (22) percent.
Net turnover amounted to MSEK 72.8 (55.2) during the fourth quarter. Adjusted for currency effects, revenue increased by 9 percent. Operating profit before amortization of intangible assets (EBITA) amounted to MSEK 11.2 (9.8) during the fourth quarter. The operating margin before amortization of intangible assets (EBITA margin) was 15 (18) percent.
Growth was positive during the year. However, BTS' sales via APG declined considerably resulting in deterioration in earnings and lower margin. Earnings have also been negatively impacted by lower cost efficiency in BTS USA during the first half year. Measures undertaken to improve cost efficiency in BTS USA have delivered positive results during the second half year.
Net turnover for APG amounted to MSEK 115.2 (149.0) during the year. Adjusted for currency effects, revenue decreased by 21 percent. Operating profit before amortization of intangible assets (EBITA) amounted to MSEK 2.9 (13.4) during the year. The operating margin before amortization of intangible assets (EBITA margin) was 3 (9) percent.
Net turnover amounted to MSEK 29.5 (30.6) during the fourth quarter. Adjusted for currency effects, revenue decreased by 20 percent. Operating profit before amortization of intangible assets (EBITA) amounted to MSEK 0.4 (2.1) during the fourth quarter. The operating margin before amortization of intangible assets (EBITA margin) was 1 (7) percent.
The negative change in earnings and margin was principally attributable to decreased sales in comparison with the previous year.
An action program for APG was initiated during the year in order to make sales more efficient. The deterioration in US' market conditions has had a significant adverse effect on APG. Marketing and sales efforts have been strengthened with the aim of achieving a better development and measures have also been taken to reduce the cost level in APG during 2009.
Net turnover for Europe amounted to MSEK 138.2 (117.0) during the year. Adjusted for currency effects, revenue increased by 21 percent. Operating profit before amortization of intangible assets (EBITA) amounted to MSEK 30.5 (21.1) during the twelve-month period. The operating margin before amortization of intangible assets (EBITA margin) was 22 (18) percent.
Net turnover amounted to MSEK 45.6 (38.0) during the fourth quarter. Adjusted for currency effects, revenue increased by 21 percent. Operating profit before amortization of intangible assets (EBITA) amounted to MSEK 14.5 (10.4) during the fourth quarter. The operating margin before amortization of intangible assets (EBITA margin) was 32 (27) percent.
Net turnover for Other markets amounted to MSEK 40.8 (37.8) during the year. Adjusted for currency effects, revenue increased by 14 percent. Operating profit before amortization of intangible assets (EBITA) amounted to MSEK 2.6 (6.0) during the twelve-month period. The operating margin before amortization of intangible assets (EBITA margin) was 6 (16) percent.
Net turnover amounted to MSEK 7.5 (12.1) during the fourth quarter. Adjusted for currency effects, revenue decreased by 32 percent. Operating profit before amortization of intangible assets (EBITA) amounted to MSEK -2.4 (2.3) during the fourth quarter. The operating margin before amortization of intangible assets (EBITA margin) was -32 (19) percent.
The deterioration in earnings was due to a very weak fourth quarter in BTS Australia. A new organization and more efficient processes have been introduced, and BTS Australia is expected to return to a positive development from the first quarter 2009.
BTS' cash flow from operating activities amounted to MSEK 32.3 (45.2) during the year.
The increase in goodwill is entirely contributed to changes in exchange rates.
Accounts receivables has as of December 31.st 2008 increased with 31.2 MSEK which predominantly is due to changes in exchange rates and a larger than normal volume of customer invoices in December.
Cash and cash equivalents amounted to MSEK 65.9 (67.5) at the end of the period. The Company's interest-bearing loans, which relate to previously completed acquisitions, amounted to MSEK 81.7 (62.6) at the end of the period. Loans denominated in Swedish kronor have increased due to the change in the dollar rate on December 31, 2008 compared with the previous year. No currency risk is considered to exist as amortization and interest payments are made with cash flow generated in the US.
BTS solidity was 56 (50) percent at the end of the period.
The Company had no outstanding conversion loans at the balance sheet date.
The number of employees in BTS Group AB as of December 31 was 267 (230). The average number of employees during the period was 249 (211).
The Company's net turnover amounted to MSEK 2.2 (2.6) and the profit after net financial items amounted to MSEK 10.3 (11.9). Cash and cash equivalents amounted to MSEK 0 (0).
Due to the overall economic situation the assessment for 2009 is more uncertain than usual. The result before tax is expected to be in line with the previous year.
The Annual General Meeting will be held on Wednesday, April 29, 2009 at 09:30 at BTS' head office, Grevgatan 34, Stockholm.
The Board of Directors has proposed a dividend of SEK 1.20 per share.
This interim report has been prepared in accordance with IAS 34 Interim Reporting and the Annual Accounts Act. The accounting principles and calculation methods applied are in line with the accounting principles used in the preparation of the most recent financial statements. BTS has, however, elected to apply IFRS 8 – Operating Segments, in advance. IFRS 8 enters into force for annual periods starting January 1, 2009 or later. The new standards mean that segment information is to be presented based on the management approach, which implies that it should be presented in the manner which is used in the internal reporting. BTS' operations are managed and reported per geographical market and the operative units - BTS North America, BTS Europe and BTS Other Markets constitute BTS' operating segments. Internally, operations are managed and reported within these segments. Consequently, this means that BTS' previous reporting does not deviate from the standard. As the identified operating segments in accordance with IFRS 8 do not deviate from IAS 14, no differences between the years arise.
Annual Report 2008 Released in April 2009 Interim Report Jan – Mar April 29, 2009 Interim Report Apr - Jun August 18, 2009 Interim Report Jul – Sep November 5, 2009
Stockholm, February 20, 2009
Henrik Ekelund Chief Executive Officer
We have conducted a review of the accompanying interim report for BTS Group AB for the period January 1 to December 31, 2008. The board of directors and the president are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the Swedish Standard on Review Engagements SÖG 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing in Sweden, RS, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Stockholm, February 20, 2009
Öhrlings PricewaterhouseCoopers
Magnus Thorling
| Contact information. | ||
|---|---|---|
| Henrik Ekelund CEO | Phone: | 08-5870 7000 |
| Stefan Brown CFO |
Phone: | 08-5870 7062 |
| Thomas Ahlerup | Phone: | 08-5870 7002 |
| Senior Vice President Corporate Communications | Mobile: | 076 – 800 5755 |
For additional information please visit our home page www.bts.com
BTS Group AB (publ) Grevgatan 34 114 53 Stockholm SWEDEN
Corporate registration number: 556566-7119 Phone. +46 8 587 070 00 Fax. +46 8 587 070 01
BALANCE SHEET , Summary
| Dec 31 2008 |
Dec 31 2007 |
Dec 31 2008 |
Dec 31 2007 |
|
|---|---|---|---|---|
| Revenue | 155,382 | 135,802 | 548,370 | 523,161 |
| Operating expenses | -131,036 | -110,651 | -466,183 | -432,693 |
| Depreciation tangible assets | -639 | -548 | -2,369 | -2,174 |
| Amortization intangible assets | -2,731 | -2,420 | -9,356 | -10,107 |
| Operating result | 20,976 | 22,183 | 70,462 | 78,187 |
| Financial income and expenses | -336 | -963 | -2,876 | -5,421 |
| Result before tax | 20,640 | 21,220 | 67,586 | 72,766 |
| Taxes | -6,925 | -4,680 | -22,548 | -23,937 |
| Result for the period | 13,715 | 16,540 | 45,038 | 48,829 |
| attributable to equity holders of the parent | 13,715 | 16,540 | 45,038 | 48,829 |
| Earnings per share, before dilution of shares, SEK | 0.76 | 0.92 | 2.50 | 2.71 |
| Number of shares at end of the period | 18,048,300 | 18,048,300 | 18,048,300 | 18,048,300 |
| Average number of shares before dilution of shares | 18,048,300 | 18,048,300 | 18,048,300 | 18,048,300 |
| Earnings per share, after dilution of shares, SEK | 0.76 | 0.92 | 2.50 | 2.70 |
| Average number of shares after dilution of shares | 18,048,300 | 18,074,696 | 18,048,300 | 18,074,696 |
| Proposed dividend per share | 1.20 | 1.20 |
| KSEK | 12/31/08 | 12/31/07 | ||
|---|---|---|---|---|
| Assets | ||||
| Goodwill | 161,216 | 145,093 | ||
| Other intangible assets | 28,612 | 33,048 | ||
| Tangible assets | 8,727 | 5,317 | ||
| Other fixed assets | 5,003 | 4,343 | ||
| Accounts receivable | 147,184 | 115,955 | ||
| Other current assets | 34,904 | 25,187 | ||
| Cash and bank | 65,887 | 67,473 | ||
| Total assets | 451,533 | 396,416 | ||
| Equity and liabilities | ||||
| Equity | 250,908 | 198,603 | ||
| Non interest bearing - non current liabilities | 450 | 120 | ||
| Interest bearing - non current liabilities | 166 | - | ||
| Interest bearing - current liabilities | 81,690 | 62,856 | ||
| Non interest bearing - current liabilities | 118,319 | 134,837 | ||
| Total equity and liabilities | 451,533 | 396,416 | ||
| CASH FLOW STATEMENT, Summary | ||||
| KSEK | Jan-Dec | Jan-Dec | ||
| 2008 | 2007 | |||
| Cash flow from current operations | 32,298 | 45,219 | ||
| Cash flow from investment activities | -28,572 | -12,219 | ||
| Cash flow from financing operations | -15,967 | -32,802 | ||
| Change in liquid funds | -1,586 | -4,581 | ||
| Liquid funds, opening balance | 67,473 | 72,054 | ||
| Liquid funds, closing balance | 65,887 | 67,473 | ||
| Effect of exchange rate changes on cash | 10,655 | -4,779 |
| Total Equity | Total Equity | |
|---|---|---|
| 12/31/08 | 12/31/07 | |
| Opening balance | 198,603 | 175,171 |
| Dividend to shareholders | -21,658 | -18,048 |
| Conversion differences | 28,342 | -8,073 |
| Change minority interest | - | -508 |
| Miscellaneous | 583 | 1,232 |
| Result for the period | 45,038 | 48,829 |
| Closing balance | 250,908 | 198,603 |
| KEY RATIOS | 3 months ended | 12 months ended | |||
|---|---|---|---|---|---|
| Dec 31 | Dec 31 | Dec 31 | Dec 31 | ||
| 2008 | 2007 | 2008 | 2007 | ||
| Revenues, KSEK | 155,382 | 135,802 | 548,370 | 523,161 | |
| EBITA (Earnings before interest, tax and amortization), | |||||
| KSEK | 23,707 | 24,603 | 79,818 | 88,294 | |
| EBIT (Operating result), KSEK | 20,976 | 22,183 | 70,462 | 78,187 | |
| EBITA margin (Earnings before interest, tax and | |||||
| amortization margin), % | 15 | 18 | 15 | 17 | |
| EBIT margin (Operating margin ), % | 13 | 16 | 13 | 15 | |
| Profit margin, % | 9 | 12 | 8 | 9 | |
| Operational capital, KSEK | 266,877 | 193,896 | |||
| Return on equity, % | 20 | 26 | |||
| Return on operational capital, % | 31 | 41 | |||
| Solidity at end of the period, % | 56 | 50 | 56 | 50 | |
| Cash flow, KSEK | 4,351 | 29,631 | -1,586 | -4,581 | |
| Liquid funds at end of the period, KSEK | 65,887 | 67,473 | 65,887 | 67,473 | |
| Average number of employees | 259 | 225 | 249 | 211 | |
| Number of employees at end of the period | 267 | 230 | 267 | 230 | |
| Revenues for the year per employee, KSEK | 2,202 | 2,479 |
Earnings attributable to the parent company´s shareholders divided by number of shares
Operating result before interest, tax and amortization as a percentage of revenues.
Operating result after depreciation as a percentage of revenues.
Result for the period as a percentage of revenues.
Total balance sheet reduced by liquid funds and other interest bearing assets and reduced by non-interest bearing liabilities.
Result for the period (converted into whole year) as a percentage of average equity.
Operating result as a percentage of average operational capital.
Equity as a percentage of total balance sheet.
Growth excluding aquisition
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