Annual Report • Apr 19, 2016
Annual Report
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BTS focuses on the people side of strategy working with leaders at all levels to help them make better decisions, convert those decisions to actions and deliver results. At our core, we believe people learn best by doing. For 30 years, we've been designing powerful experiences that have profound and lasting impact on people and their careers. We inspire new ways of thinking, build critical capabilities and unleash business success. It's strategy made personal.
The following are some of our service offerings:
At our core, we are focused on helping our clients with their strategy implementation needs by harnessing the power of their people. We use business simulations, experiential learning and digital tools to make strategy personal, so that each manager and employee translates it into activities and behaviors they will do, and care about – turning it into action.
Leadership development is essential to the success of any organization, yet it is a well-known fact that most corporate leadership training programs are ineffective. We have been disrupting the leadership training industry through our Define, Assess, Experience and Execute Great Approach to developing leaders.
Focused and relevant talent selection and development is critical, yet challenging when faced with a limited resource pool and a highly competitive labor market. BTS Assessment centers and services provide targeted approaches to precisely identify talent and capability gaps, enabling clients to define high performance for critical roles, select the right people and develop their capabilities at all levels.
Business acumen is the intuitive understanding of how a company makes money, and includes strategic perspective, market orientation and profit acumen. It is an essential skillset that all employees need for an organization to be effective.
Our research shows that senior-level buyers are looking for consultative sales people who will help accelerate their business results. We provide buyercentric consulting, sales transformation (planning, change management and sales training), assessment, selection and on-the-job execution tools.
We are the leader in customized cloud-based business simulations and other immersive experiences and tools that can be delivered in a classroom, virtually, or for self-paced applications. We design and implement large leadership and sales conferences using our PulseTM technology platform, which engages people, gathers their input and ensures outcomes and application back on the job.
BTS is a global professional services firm headquartered in Stockholm, Sweden, with some 450 professionals in 34 offices located on six continents.
We work with our clients to build commitment and capability to accelerate strategy execution and improve business results. Our vision is to be the global leader in turning strategy into action.
| Accenture | Salesforce.com | Unilever | Novartis |
|---|---|---|---|
| Cisco | Tencent | BBVA | Telefónica |
| HP | AT&T | GlaxoSmithKline | Xenel |
| Oracle | Ericsson | Nike | Rogers |
| ANZ | National Australia | Standard Bank | Communications |
| Coca-Cola | Bank | Wärtsilä | |
| Microsoft | Schindler | Chevron |
| Key Ratios | 2015 | 2014 |
|---|---|---|
| Net sales, MSEK | 1,043.9 | 781.5 |
| EBITA, MSEK | 113.8 | 85.0 |
| Operating profit, MSEK | 109.5 | 82.4 |
| Profit before tax, MSEK | 109.2 | 82.9 |
| Profit after tax, MSEK | 72.6 | 56.1 |
| EBITA, margin, % | 11 | 11 |
| Operating margin, % | 10 | 11 |
| Profit margin, % | 7 | 7 |
| Operating capital, MSEK | 360.4 | 320.2 |
| Key Ratios | 2015 | 2014 |
|---|---|---|
| Return on equity, % | 16 | 14 |
| Return on operational capital, % | 32 | 29 |
| Equity ratio at the end of the year, % | 60 | 64 |
| Cash flow from current operations, MSEK | 57.9 | 44.8 |
| Cash flow, MSEK | 22.6 | –9.1 |
| Liquid funds at the end of the year, MSEK | 139.5 | 114.3 |
| Average number of employees | 436 | 384 |
| Number of employees at the end of the year | 463 | 405 |
| Net turnover per employee, MSEK | 2.4 | 2.0 |
| Words from the CEO 4–5 |
|
|---|---|
| Vision, Purpose, Value Proposition, and Goals6 | |
| Strategic principles | 7 |
| Strategic Alignment & Business Acumen10–13 | |
|---|---|
| Our Approach: The Great Framework | 14–15 |
| Leadership & Management 16–17 |
|
| Sales | 18–19 |
| Innovation 20–21 |
|
| Assessment | 22–23 |
| Digital Services24–25 |
| Business Model 28–29 |
|
|---|---|
| Our Clients and Industries30–31 | |
| Growth, Profitability, and Acquisitions | 32–33 |
| Organization | 36 |
|---|---|
| Core Values 37 |
|
| Our People and Culture38–39 | |
| Corporate Social Responsibility 40–43 |
| Advantage Performance Group44–45 | ||
|---|---|---|
| ---------------------------------- | -- | -- |
| Five-Year Summary47–49 | |
|---|---|
| BTS Share information50–51 | |
| Management Report52–55 | |
| Consolidated Income Statement | 56 |
| Consolidated Statement of | |
| Comprehensive Income 56 |
|
| Consolidated Balance Sheet 57 |
|
| Changes in Consolidated Equity58 | |
| Consolidated Cash Flow Statement 59 |
|
| Parent Company's Income Statement60 | |
| Parent Company's Statement of | |
| Comprehensive Income 60 |
|
| Parent Company's Balance Sheet 61 |
|
| Parent Company's Cash Flow Statement | 62 |
| Changes in Parent Company's Equity | 63 |
| Notes to the Annual Report 64–77 |
|
| Audit Report78 |
Financial Information
| Corporate Governance Report | 79–83 |
|---|---|
| The Board of Directors and Auditor | 84 |
| Senior Management and Global partners 85 | |
| Shareholder Information 86 |
Let me start with a story.
The story of how a huge business, led by a successful CEO, almost ran into the ground.
The challenges facing the American department store chain JC Penney are similar to what many businesses are meeting today – digital disruptions, changing demographics and new consumer trends.
In 2011, JC Penney brought in the man who built the hugely successful chain of Apple's Mac stores, Ron Johnson, as the new CEO. He developed an innovative, brave and new strategy to take JC Penney into the modern world. It launched, but we will never know if it was a good strategy. There was very little alignment and motivation in the organization. The management ranks, the sales force and the majority of employees were not supporting the strategy. Execution failed. The business performance collapsed, as did the stock price. Ron Johnson was replaced after 18 months.
Often, we hear talk about visionary leadership – and how this is the key missing link.
Now, most businesses that we at BTS meet have compelling visions and strategies which hold great promises for its employees and shareholders.
However, we see quite a bit of not-so-great execution. We see non-aligned managers and employees. We see people who do not believe in the company's strategy, or who do not fully understand what it means for them. We see organizations that do not have the necessary skills to tackle a changing market or a new strategy, and we see units of organizations striving in different directions.
Research confirms this picture. On average, only 5 percent of employees in a business have a good understanding of its strategy and what it means for them. Also, two thirds of change initiatives fail because of poor execution. In addition, 70 percent of fired CEO's are terminated not because they lacked vision, but because they failed to engage the organization in making out their strategies really happen.
It is more difficult to execute a strategy than to create it.
We have learned through the years that taking a business to the next level is all about people. It's about having the right people on the team, and having an aligned team working toward a shared goal with a shared strategy. It's also about mindset – a passionate drive to win – as well as capabilities – the right skills, tools, and resources.
At BTS, we apply an effective formula with our customers to drive excellent execution; E = AMC. We believe that Excellent Execution primarily is a function of an organization's Alignment, Mindset and Capabilities.
Whether in life or in business, a person's alignment, mindset and capabilities are derived from experiences, and BTS believes that strategically relevant, "designed experiences" are proven ways to shift mindset and build new beliefs and new capabilities.
We create powerful experiences which help leaders build the future of their business. And we make strategy personal.
"The BTS simulation was a Jet-Assisted Take-off for our New Strategy," beamed the CEO of a major US financial services company. Or, as the top team of one of the world's leading software houses told us, "We couldn't have done it without you… we significantly accelerated the execution of our # 1 priority."
In the record year 2015 our sales exceeded SEK 1 billion for the first time. Revenue growth during 2015 – adjusted for currency changes – was 15 percent.
During BTS's first ten years we grew to 76 MSEK (1996), in the next decade we reached 379 MSEK (2006), after which it took us nine years to grow to over SEK 1 billion.
One more record. During 2015 the result before tax increased 32% and it was the first year in which our earnings exceeded 100 MSEK.
All of BTS's units contributed to growth and increased earnings during this record year. We had strong growth in Other Markets, which grew 25 percent, and in North America with 19 percent. Our growth in Europe was 8 percent, and with a strong final quarter showing growth of 20 percent.
BTS's competitiveness is very good; we are submitting proposals for a growing number of major projects and the proportion of business we win is increasing.
When we research our clients to find out why they buy services from us; they point at our unique expertise, very high and consistent quality, global reach, focus on creating real results, our digital capabilities and our people and culture.
Our bold vision is to become "the global leader in turning strategy into action".
No company is currently holding this position; it is an empty space waiting to be filled. We believe that we have the capabilities to get there.
We are moving towards that vision through innovation, organic growth and acquisitions.
Acquisitions can help us to faster enter a new geographical market or strengthen an existing one; as well as add a key capability. For example, the acquisitions of Fenestra circa 18 months ago rapidly built an important capability within assessments. This has helped us to win more clients, and serve our clients better. We expect continuous acquisitions over the next years.
The major investments in product development for digital solutions will continue in 2016 – with circa 3 MUSD in investments – and we expect good revenue growth within this area during the year.
We are also investing significantly in all our Practice Areas to develop and improve our offerings. For example, during 2015 we launched our new GREAT FRAMEWORK offering,
which has been highly appreciated by existing clients and has brought us a significant number of new clients.
At the same time, we continue to invest to improve our systems and processes, through our Global Operations Development team.
BTS has a positive net cash position, and a solidity of 60 percent.
BTS has for 20 years demonstrated a capability to grow, while maintaining good profit levels. Today, we are the world leader in our field, with substantial opportunities to continue our growth. The result before taxes for 2016 is expected to be better than last year.
Stockholm, April 2016
Henrik Ekelund President & CEO of BTS Group AB
BTS focuses on the people side of strategy, working with leaders at all levels to help them make better decisions, convert those decisions to actions and deliver results. At our core, we believe people learn best by doing. For 30 years, we've been designing fun, powerful experiences that have a profound and lasting impact on people and their careers. We inspire new ways of thinking, build critical capabilities and unleash business success. It's strategy made personal.
The global leader in turning strategy into action.
We inspire and equip people to do the best work of their lives, creating better businesses and a better planet.
We make strategy personal and drive great execution. Our unforgettable experiences create levels of alignment, mindset, and capability that deliver better results, faster.
BTS's financial goals shall over time be:
We focus on our world-class capability to customize and deliver discovery-based solutions that give our clients superior business results and ROI. Every new solution/service we develop shall build on the core competencies of BTS.
BTS is a global organization, providing services around the world to a client base of mainly international organizations.
BTS grows organically, building on its core competencies and customer base. Acquisitions must provide major synergies and complement new markets, new customer bases, and new areas of expertise/solutions.
BTS enters new geographic markets and new sectors through a customer-driven approach – revenues and customers first, cost second.
BTS's clients shall predominantly be high-image/large clients – and the most demanding and professional clients.
BTS establishes long-term partnerships with clients, built on delivery of top-quality and highly visible results and strong customer relations.
By leveraging our portfolio of solutions and capabilities, we build suites of solutions used throughout our clients' organizations, resulting in a recurring and growing flow of revenues over a long period of time.
BTS's services are differentiated through superior business results and ROI. Some differentiation factors for BTS are:
BTS's prices are generally fixed and are not set per unit of time.
BTS capitalizes on its IP (Intellectual Property), creating recurring revenues while striving to increase the share of total sales attributable to license revenues.
BTS continuously increases the quantity of, and improves the quality of, resources dedicated to client contacts and sales.
BTS uses independent resources and contractors – to gain access to expertise and for optimal resource planning – in order to maximize quality and productivity.
BTS builds partnerships in order to gain access to customers and to combine capabilities.
BTS has detailed processes and best practice exchanges to ensure compatible methods throughout the Group – leveraging the company's knowledge and increasing productivity. We deliver well coordinated and integrated services across the globe.
BTS invests in development to cover the key needs of our clients and to provide the best solutions. BTS adapts existing solutions and develops new solutions in joint projects with clients to secure effective and client-needs-driven innovation.
BTS's professionals are all very visible to the client, and the company spirit is a main driver of client and employee satisfaction. BTS emphasizes a positive and professional company culture expressed in six core values.
Recruitment, development, and motivation of our people – creating business-focused high performers throughout the organization – are key drivers of our growth.
| Strategic Alignment & Business Acumen | 10–13 |
|---|---|
| Our Approach: The Great Framework | 14–15 |
| Leadership and Management Development | 16–17 |
| Sales | 18–19 |
| Innovation | 20–21 |
| Assessment | 22–23 |
| Digital Services | 24–25 |
Conventional wisdom holds that poor strategies rarely yield positive results. However, good strategies can fail as well. The most common reason for this failure is that firms don't recognize, or develop, the three core drivers of exceptional execution.
Through working with many of the world's leading companies over the past 25+ years, BTS has developed a framework that captures the inner architecture of exceptional strategy execution.
Strategy execution is defined as the practice of bringing a strategy to fruition. The three forces that power exceptional execution are: Alignment, Mindset, and Capability. You achieve better and faster results when people understand the strategy and its implications at an individual level (alignment), when they are excited and passionate about the strategy (mindset), and when they have the skills and confidence (capability) to execute. These forces are influenced by how much pressure to perform is perceived within the environment.
This year, BTS and the Economist Intelligence Unit released a study titled Mindsets: Gaining Buy-in to Strategy. This survey found that firms typically find it difficult to drive buy-in of strategic direction among middleand lower-ranked employees, but topperforming companies (defined as those reporting above-average profitability relative to peers) regularly achieve widespread buy-in at all levels of the organization. BTS helps organizations increase buy-in and win the hearts and minds of their employees through customized business simulations and experiential learning tools designed to engage people more deeply in the strategy and support the skill development and behavioral change necessary for execution.
Another recent study from BTS and the Economist Intelligence Unit, titled Skills Mismatch: Business Acumen and Strategy Execution, reports that twothirds of corporate executives believe a lack of business skills or business acumen inhibits their company from meeting strategic priorities.
BTS' Strategic Alignment and Business Acumen Programs blend consultant-led workshops, online learning and interactive business simulations to create the optimal learning environment for individuals and organizations. Understanding business acumen and how it guides execution will create a stronger workforce and positive business results.
Strategy Alignment } Where to Go } Why to go } How to go
Alignment
"I entered the course a believer in the direction of the strategy for the Coca-Cola Company; I left with a strong and active conviction and sense of personal ownership to make it happen"
Participant Testimonial, RGM Simulation, Coca-Cola
"I think we can all agree that BTS provided a jet-assisted lift-off of our client-focused growth strategy."
Art Steinmetz, Chief Executive Officer, OppenheimerFunds
Business acumen is defined as an intuitive and applicable understanding of how a company makes money, and it includes three core capabilities:
| Strategic Perspective | Market Orientation | Profit Acumen |
|---|---|---|
| An overall big picture understanding of the business; the critical interdependencies across functions and divisions; the short and long-term trade-offs of decisions. |
The ability to analyze and synthesize market and competitive data; a deep understanding of the customer's business objectives and purchasing criteria; an appreciation of the value of each |
A comprehensive understanding of the drivers of growth, profitability, and cash flow; a firm's financial statements; key performance measures; implications of decisions on value creation. |
customer to the company.
"The BTS simulations and coaching brings a "real world" aspect to key points of running a successful business. While most business and financial acumen programs focus on acquiring intellectual knowledge, BTS focuses on learning with immediate application – the difference between reading about driving a car, and actually driving a car in heavy traffic. In addition to the expertise gained, there is a terrific opportunity for people to learn from each other and form lasting professional relationships. BTS is adaptive, articulate, and can bring a great deal of experience to the classroom."
Gregory L. Waters, President and CEO, Integrated Device Technology
One of the largest and most respected global asset management firms, OppenheimerFunds is deeply committed to translating uncommon wisdom into value for investors. Recognizing industry trends, fund dynamics and competitive shifts, OppenheimerFunds understands that the requirements for success are only increasing. To strengthen its competitive position, the firm is implementing a new growth
strategy based on a client-centric approach. Success depends on effective execution, a challenge requiring nearly 2,000 employees to move in the same direction.
In bringing the strategy to life, OppenheimerFunds Chairman, CEO and President Art Steinmetz needed to effectively engage the top executives in the growth strategy, drive alignment and build the capabilities critical to leading execution in all areas of the business.
To meet this challenge,
OppenheimerFunds partnered with BTS to develop a high-impact, experiential initiative to unleash leaders' talent, increase cross-functional collaboration and accelerate implementation. Targeting the most critical execution success factors, the immersive two-day program was designed to drive:
During this intense and engaging twoday experience, OppenheimerFunds' top executives were given the opportunity to step outside of their traditional roles, collaborate in new ways, and work together to deeply understand what must be done to achieve the company's growth objectives.
For the global asset manager, high expectations were exceeded. BTS's experiential solution effectively engaged the OppenheimerFunds' senior executives, developed critical on-the-job behaviors and achieved deep alignment around:
} How to translate client insights into high demand products and solutions as well as best-in-class client engagement models
} The need for focused segmentation and scale across channels and products
Going forward, the wholehearted comprehension of and strong alignment to the new growth strategy will accelerate execution and enable OppenheimerFunds' continued success in creating value for all stakeholders.
In 2015, we debuted the Great Framework: a new toolkit and way of thinking to help companies and their leaders achieve great performance and execution. Addressing both strategy implementation and leadership development initiatives, this framework spans our practice areas, from Assessment Centers to Sales to Strategy Execution.
As an article in the McKinsey Quarterly states, "Too many training initiatives rest on the assumption that one size fits all."1) Sitting at the intersection of consulting and training, we have a front row seat to our clients' business goals, strategic priorities and culture – and we have learned how deeply contextual leadership is, and how important customized learning initiatives are. We have seen leadership development and strategy implementation initiatives that boom with great impact and many others that bust. Through that experience, we have defined the success factors and a new approach that helps companies and their leaders achieve great performance and execution.
Leadership is relentlessly contextual, and every organization has leaders (and managers, salespeople, and others) who think, act and engage better than anyone else. We codify what these "great" leaders do differently and build a "great profile" for a key role, within the context of your business model, strategy and culture.
1) Pierre Gurdijan, Thomas Halbeisen, and Kevin Lane. "Why leadership development programs fail." McKinsey Quarterly, January 2014. http://www.mckinsey.com/insights/leading_in_the_21st_century/ why_leadership-development_programs_fail
Translating "great" principles into action, a leading Engineering and Construction Company recognized that the difference between a highperforming project manager and an average project manager could mean the difference between a profitable multi-billion dollar project and a non-profitable project.
Instead of sending their project managers to an executive education program at a university or teaching them one siloed subject after the other, the company defined "great" by capturing what their best project managers and mid-level managers did during the most pivotal and daily moments in a multi-year, multi-billion dollar capital project. Then they applied that playbook and designed an immersive simulation experience.
Engaged in a customized simulation, project managers practiced leading a project and were confronted by the most pivotal and common real-world challenges: setting shared objectives with their team; managing customer, supplier and safety incidents; leading team performance during a crisis; raw material commodity price increases; project overrun; designing stretch assignments; performance coaching; and onboarding new team members.
The results of this simulation experience included alignment to new "great" expectations, clarity on what "great" performance meant in the most common and pivotal challenges faced on the job, and project managers achieving "great" faster than the generation before.
We believe in objective assessment using your "great profile" and playbook of "great" behaviors. We evaluate knowledge, skills, behaviors and mindsets through real and simulated challenges for feedback, development plans and job selection.
We know people need to see, experience and try out new ideas, skills and mindsets before they believe in them, master them and become "great." Our goal is to increase the practice to performance ratio and shorten the time it takes to produce "great" performance. We create powerful experiences that enable people to practice with new approaches, tools, behaviors and actions.
It's a well-known fact that a lot of what is taught in training programs is never actually applied back on the job. We bridge this "knowing-doing" gap by supporting the on the job execution of "great" with fully integrated job tools, applications, feedback and coaching.
Leadership and management are essential to the success of any organization. No matter what measure you use, companies with effective leaders execute better and deliver long-term business results.
In fact, high-performing organizations that have continually invested in their leaders have "generated nearly 60 percent improved business growth, reported a 66 percent increase in bench strength, and showed a 62 percent improvement in employee retention."1
As constant organizational change has become the new normal, today's leaders face an increasingly steep uphill battle in their attempt to inspire, align and motivate their employees. In a world where a meagre average of 13% of employees are fully engaged in their jobs (Gallup, 2013), leaders need to be able to recharge their people's commitment and sense of optimism to boost their organizations' competitiveness. Leaders must make strategy personal, simultaneously gaining and maintaining their people's emotional and mental commitment to achieve the organizational strategy and work with change.
The BTS approach to developing leadership and management combines our 25 years of experience working with world-class organizations with proprietary research and the findings of leading authorities. We work with business and talent leaders to develop their people at all levels using customized leadership development programs, business simulations, and experiential learning tools.
We have been disrupting the leadership training industry through our Define, Assess, Experience and Execute Great Approach. This framework helps organizations determine what "great" leadership looks like for their company and bring that to life at every level.
To maximize the impact of leadership development programs, BTS engages leaders over time, building critical leadership capability and behavior through comprehensive Learning and Execution Journey processes. While each Learning and Execution Journey is unique, the flow generally involves a series of engaging, blended experiences tailored to the individual and company's business needs. Leveraging leader involvement, high-impact experiential learning tools and a results assurance process, BTS closely links skill-building to organizational goals and priorities. The result: leadership becomes a source of strategic differentiation and competitive advantage. It has proven successful for companies as diverse as Chevron, ING, National Australian Bank, Unilever and VMware.
1 Bersin & Associates, High-Impact Leadership Development for the 21st Century, 2011.
In assessing the impact of a BTS leadership development initiative, an independent third-party evaluator determined:
The third party evaluator summarized, "The before-training dialogues between the leader and learner and the sense of accountability following the training resulted in a 70 percent training application rate. This exceptionally high impact rate attests to the thoroughness and care that the leadership team took, including special steps to ensure the program was not just a one-time classroom event, but that it included impact-enhancing tools and actions and provided additional follow-up resources and support."
A leading technology company found themselves at a critical juncture. They had made it to \$2B in revenue through a very successful innovation, and realized that they had some years of growth ahead. However, at some point, perhaps five-to-seven years into the future, if they didn't diversify and provide their customers with a broader suite of technology and services, they would reach market saturation and growth would stall. A new CEO was appointed, acquisitions were made, and the company crafted a broader vision. Products now had to evolve, go-tomarket strategies had to adapt, and sales conversations with customers needed to change.
In the past, senior leaders and members of the executive team had operated very successfully in siloed businesses and functions. Clear metrics for success and healthy competition between silos propelled the company onwards. Moving forward, in order to broaden customers' understanding of the company and grow from \$2B to \$6B, much of this needed to change.
Partnering with BTS to create a twoday simulation experience, the C-suite engaged all 500 leaders, enabled them to assume the role of the CEO, and allowed them to practice running the entire company. Inundated with customer, technology, and competitive trends, the leaders felt shareholder value creation pressures as well as employee engagement and culture realities. As the teams wrestled with the tensions and tradeoffs in evolving the company and
running the core and new businesses at the same time, the leaders matured in their understanding of why the company had to change and what it meant for them. And by strengthening their command of both business models, they were better positioned to lead teams with authenticity, passion and empathy, while finding the right speed and timing of their team's evolution to best support the company's goals.
Six months later, the question on the all-company employee survey, "I understand and believe in the company's vision and my role in making it happen," moved from the lowest scoring metric to one of the highest. At the time, the COO said, "When I was told a simulation would be the key alignment vehicle for our top 500 leaders I was skeptical…
[But] the custom business simulation accurately modeled our business challenges and anticipated our future evolution. The experience allowed our top 500 leaders to not just see the new strategy, but to practice making our strategy and vision a reality. The experience got leaders from different organizations with disparate points of view to work together and understand the real trade-offs and friction points, and provided the 'big picture' view we needed." The company later achieved its growth target with the mix of "old" and "new" revenue it was looking to balance.
A financial services firm increases new hire sales in their first year on the job by 22%. A leading industrial manufacturer increases revenue by 28% and attributes 18% of that to a sales development activities.
We view each sales execution project through three lenses:
} Top performers: We study what our clients' top-performing salespeople and sales managers do differently.
We use the Great Framework to identify and scale what is unique about our clients' high-performing sellers and sales managers.
} Define Great: We help you pinpoint your organization's custom definition of what great selling looks like and move you away from abstract and ineffective competency models.
A major media company needed to go through significant change in how they sell if they were going to stay relevant. Partnering with the BTS Sales Practice, the company designed and built out their sales enablement infrastructure in order to support this change for sales. BTS then deployed a case for change training, to begin to shift the organization's salespeoples' mindsets. Following this case was a virtual assessment that segmented their reps into newly created roles where before there had only been one. With the infrastructure in place and unparalleled insight into their people's capabilities, BTS next came in with tools to help local leaders do deep analysis to localize the strategy to their market, people, and customers. Once those hard decisions were made, and the sales leaders were able to get the right people in the right place doing the right things, customized sales training sessions were deployed in order to allow the sales reps to practice "great." Once the reps returned to the field, they continued building their capabilities with nano-sims, reference materials and tools delivered via the BTS Pulse app.
Clients come to us at different places on their path to sales excellence, so how we assist them varies. Some of our methods include:
The Evolution of Sales Keys to Great Key Account Management
The emphasis in sales moved over the last decade from a focus on products to solution selling. Today's world-class sales forces are evolving to the next stage, where they focus on accelerating the customer's overall business results.
Innovation has nothing to do with how many R&D dollars you have. It's about the people you have, how you're led, and how much you get it." Steve Jobs
Innovation is the discipline of serving needs in new ways that create value. It is a core capability that allows firms to sustain competitive advantage and grow. It is a skill that can be learned, practiced and mastered.
Innovation can be made a part of a firm's culture, but it requires openness to disciplined experimentation and uncertainty. It requires looking at customers and markets in new ways and an ability to simultaneously scale today's business model while directing resources to discover tomorrow's. Most of all, innovation requires a willingness to challenge the assumptions that may have made the company successful in the first place. BTS Innovation Practice solutions help firms build the critical leadership capabilities needed to create and advance a culture of innovation at the individual, team, business unit and enterprise level.
Through the customized programs, ranging from 2–5 days long, participants learn the essential principles, techniques and tools needed to:
We took our entire Sony Direct online web team offline for an entire day (approx. 250–300 people) to train them around innovation techniques. We baselined employees before and after the program to determine if they felt they had the tools needed to become more innovative in their roles. This course kicked off an innovation program that included topical "brain sailing" sessions every few weeks. The post workshop survey demonstrated a positive correlation between participating in this event and employee engagement/morale. In addition, the team filed several patents in the 6 weeks after this workshop, which they had not done before."
Senior Manager, Innovation Center, Sony Electronics Inc.
BTS Innovation solutions are fast-paced, hands-on experiences that combine a sequence of short, mini-lecture sessions, hands-on "table top" workshop exercises and a customized innovation simulation that compresses the months and years of high-risk innovation projects into a few short hours.
The simulation and case studies are customized to reflect the client's unique internal and external tensions that employees are experiencing today, and those they are likely to face as they advance in their careers. Regardless of length, all programs provide a visceral understanding of the interactions and challenges leaders are most likely to face as they lead innovation within their firms.
The customization of the BTS learning process was a critical enabler of our success. The relevancy of the design accompanied by a strong team of facilitators at BTS made the learning experience very rich and impactful. The multitude of tools highlighted in the session will play a key role in driving higher levels of innovative activity as they are implemented into how we lead within our organization." Chief Learning Officer,
Global Medical Technology Conglomerate
Faced with limited talent pools and a highly competitive market, companies today must have an accurate understanding of their employees' capabilities at all organizational levels, and design talent selection and development initiatives that align to the strategic needs of their business.
Identifying and developing exceptional leaders requires focusing not only on people leadership capabilities, but also on the business leadership capabilities necessary to execute on company strategy.
BTS's comprehensive suite of assessment solutions will ensure that an organization has the right people in the right roles with the right skills making the right decisions.
The BTS Assessment Practice develops and delivers custom, execution-enabling initiatives that are behavior-focused and high impact. As experts in the areas of individual and workforce assessment, our team assesses the effectiveness of people, roles and organizations to drive the talent development required for superior strategy execution. With our state-of-the-art virtual assessment centers, BTS Assessment Services can help you determine the right level of resources, knowledge and skills necessary to drive your company to its goals.
Facing the following challenges, organizations are finding assessments to be a powerful tool:
Applying an innovative approach and a deep data-focused methodology, BTS helps clients define what great execution looks like within their organization; assess talent and developmental gaps; identify and select great talent; and provide the experiences and tools to help people become great.
To accelerate strategy execution and secure a competitive advantage, companies must have an accurate depiction of their employees' capabilities and understand the skills needed to execute the company's strategic priorities. Companies are finding talent assessment solutions to be critical tools in identifying and selecting top talent and designing focused, highly effective learning and development journeys. To get better business results faster, BTS's assessment solutions provide focused, relevant and actionable development that allows corporations to effectively link learning to performance, and ultimately the bottom line.
A large financial services organization wanted to be able to attract more financial advisors and, at the same time, to reduce turnover and decrease the time required to become fully productive. The organization decided to incorporate into their already rigorous selection process a custom assessment center that would measure the critical sales-specific behaviors required for success. The simulation-based assessment process was customized to be rolespecific and behavioral.
Starting in 2011, it has been administered virtually to candidates all over the country by assessors who were trained on the client's sales process and critical behaviors. Between 4,000 and 4,500 candidates participate in the assessment each year. Analysis of the relationship of the assessment to job performance indicates a number of important results. Success on the assessment is a significant predictor of retention, demonstrating an overall reduction in turnover of 18.5%. Results also indicate that the assessment successfully identifies candidates who will generate greater financial growth; strong candidates have had over 33% more assets under care than those candidates that were identified as "Not Ready."
At BTS Digital Services, we focus on personalizing strategy and changing behavior through connected experiences, applications and facilitation. We create stories, challenges and experiences in the context of your business environment.
We leverage BTS IP while collaborating and innovating with you to provide the best of digital capabilities. BTS Digital Services comprises a global team with a full range of expertise and innovative industry leadership. Our offerings can be implemented at in-person workshops, large events or off-sites, virtually and "in the field" while on the job.
In the past year, our Digital Services have expanded greatly, reflecting the rapidly growing, constantly shifting and increasingly digital nature of the world we live in. We have launched a new series of capabilities, simulations, and platforms within our PulseTM technology, compatible across all devices in iOS, Android and Windows.
The PulseTM technology platform transforms events and allows all participants to contribute actively, facilitating knowledge, idea sharing and action planning in real time.
Through this approach, meetings become transformational, not just informational. Digital technology makes big feel small. The PulseTM platform's comprehensive processes, methods and activity templates can be easily adapted or custom developed to almost every meeting purpose and set-up.
Simulations, apps and tools make up the BTS digital ecosystem within the Pulse platform. They set participants up for success in learning experiences and daily on-the-job execution, with features designed to:
PulseTM can be set up with various apps depending on your organization's needs – for sales, leadership development, innovation, or a mix of these topics.
The following are some of the apps recently added to BTS's Pulse portfolio.
Innovation: Empathy Maps, SCAMPER, Customer Need Statement, 5 Whys, Idea Hunt Leadership: Behavioral Styles, iLead Challenges Sales: ROPE, Call Preparation, Skills for Successful Customer Meetings, Account Planning, Beginning a Customer Meeting, Understanding the Customer's Business Business Acumen: Income Statement, Balance Sheet &
Cash Flow Statement, Return on Investment
The incredible use of technology in this program has changed the way we come to work and can communicate going forward. We have become more efficient in every sense of the word. It has become a catalyst to bring people together in a cost-effective way. A great springboard to execution – don't be afraid, embrace change, use technology, be collaborative and look to the future."
CEO, Leading Global Bank
A leading United States bank has grown to become one of the largest banks its region. To drive further growth and accelerate results, the company is committed to distinguishing itself through exceptional customer experience. However, success depends on the effective implementation of the company strategy and the consistent application of sales and leadership best practices, a challenge for an increasingly expansive organization with over 14,000 employees.
Navigating from strategy to execution, the bank was challenged to effectively engage and align the company's 700 branch managers to new strategic priorities and develop the capabilities critical to their execution.
The organization partnered with BTS to develop a high impact, digital strategy execution program designed to drive employee engagement, improve channel migration, deepen sales culture, strengthen collaboration and more.
The customized digital platform included:
The immersive, interactive digital experience effectively engaged diverse groups of leaders (from branch managers to sales enablement executives), integrated their participation into a comprehensive and impactful experience, and delivered tangible value. The strategic program was a huge success from the perspective of both the participants and the broader organization, yielding strong results back on the job.
| Business Model | 28–29 |
|---|---|
| Our Clients and Industries | 30–31 |
| Growth, Profitability, and Acquisitions | 32–33 |
The foundation for growth lies in BTS's ability to create long-lasting customer relationships at different levels in the customer organization. An initial BTS assignment is often designed for, and implemented with, the client's senior executives and managers. This customization process is carried out in close cooperation with the client.
Outstanding results, well over the client's expectations in an initial project, lead to customized solutions for managers and employees at different levels throughout the organization.
BTS employs a network-based marketing approach covering a number of selected industries.
The network, composed of both those executives who make strategic decisions about change and learning initiatives and those who actually purchase solutions, helps generate opportunities for new assignments and customers. When BTS approaches a new industry, it initially focuses on a few leading companies. Once these assignments are completed, they will serve as reputation-building reference projects for new sales to other organizations in the same industry.
BTS continuously expands its business operations to new markets around the world. BTS works with multinational clients and implements projects in a large number of countries without necessarily having an established local office in every market.
Existing customer relationships make up the base when BTS starts up operations in a new market – a fact that reduces the expansion risk. In addition, BTS works hard to nurture relationships with other large corporations active in the targeted markets.
Once business has grown to sufficient volumes in a new market and the future potential appears attractive, BTS can take the logical step and establish a new, local office.
BTS's growth strategy is primarily built on organic growth. Over the past few years, the company has made a number of acquisitions in different countries.
BTS's strategy for acquisitions is built on creating a broader base for future organic growth while at the same time finding complementary acquisitions. The goal is to offer more services to both existing and new customers. All acquisitions have resulted in cross-selling. This is a result of conscious efforts to identify new business opportunities based on needs within the extended customer base. The training of account managers and the needs-focused discussions with individual clients have played an important role in this process.
BTS values its customer relations. Participants in the company's business programs are important future customers. New assignments come mostly from former buyers and program participants changing jobs or companies – and calling on BTS from their new positions.
BTS works continuously to develop and combine different methods of training delivery to ensure optimal, value-added customer benefits, and at the same time strengthen its own revenue streams and profitability.
In collaboration with customers, BTS customizes both the content and the form of its business programs. The company has successfully improved its profitability by increasing the efficiency of the customization process. This improvement is a result of advancements and fine-tuning of development methods as well as increased reuse of previous development work.
When BTS develops solutions for corporations in new industries, the cost of customization is initially high. With the later reuse of experience and skills, however, these costs subsequently fall.
Instructor-led seminars still comprise the greatest source of revenue for BTS, and they are the predominant form of business delivery. The BTS consultants are very much involved throughout the whole customization process, and, during delivery, they facilitate these solutions in seminars.
BTS also delivers its solutions via e-Learning and CD-ROM formats, and as manual board solutions. The long-term goal is to increase license revenues. License-based business simulations are very efficient learning tools for customers; they make it possible to reach larger groups of employees in organizations, all over the world and at all levels. At the same time, they are a profitable line for BTS.
During the 1990s, BTS grew rapidly in the Manufacturing, Telecom, and Information Technology Industries, with major global companies such as Philips, Ericsson, and HP as valued customers.
During the recession in the early 2000s, BTS expanded its positions by entering four additional industries: Financial Services, Pharmaceuticals & Healthcare, Retail & Logistics, and Energy.
Over the past couple of years, BTS has grown quickly into the IT Software and Equipment, Fast-Moving Consumer Goods and Service sectors.
With these recent additions, BTS now has built strong market positions within numerous industries.
About 80 percent of annual revenues normally come from customers BTS worked with during the previous year. Typical customer relationships range from 6 to 8 years – and many extend longer.
– At ING Bank, we continue a 10 year partnership. In 2015 we worked closely with the Head of Strategy and Head of HR to create a powerful experience for some of the top 500 around the Think Forward strategy and Orange Code (ING's internal leadership initiative). By integrating our SABA and leadership capabilities we created a true strategy execution initiative across all of INGs markets, building off the 'One Bank' engagement we created for the top 250 leaders in 2014. It explores the 'what' (SABA) and the 'how' (leadership) of Think Forward in an intensive 3 day experience.
– As SAP began a major strategic transformation from on premise software to the cloud, we designed and delivered an end-to-end learning journey that includes leadership, coaching, business acumen, and assessments. This global initiative targeted all five layers of leaders—from the top 250 to front-line managers.
– In order to attract, retain and develop a world-class workforce, we designed a simulation experience for MetLife to stimulate observable behaviors and assess high-potential candidates' readiness for advancement into high-profile roles. This included identifying critical skill gaps necessary for successful execution as well as identifying developmental opportunities.
– At Rogers, we began a Leadership Development Program that will be delivered for up to 2,300 frontline managers/supervisors across Canada over three calendar years. The main purpose of the program is to build deep alignment to the company's new strategy and develop the frontline manager/supervisor capabilities needed to execute this strategy.
– We've partnered with Citizens Bank to customize and deliver a set of CEO-sponsored strategy alignment and execution solutions. Initially, these programs are focused on aligning senior leadership around the firm's new strategy and developing the mindset and capabilities needed for successful strategy execution.
} Federated
– We partnered with a rapidly growing Klabin to prepare their top 80 leaders for the challenges of the future and ensure better integration and collaboration between units. Together, we created a customized business simulation experience that allowed Klabin's leadership to see the company as it is today and envision how it will be in the future, preparing the leadership for the challenges ahead.
– We are helping Microsoft execute on one of the largest transformations in their history. This year, we worked with over 800 leaders to reinvent Microsoft's business by sharpening business relevance and building a culture which fosters innovation.
– As OppenheimerFunds began implementing a new client-centric growth strategy, we developed a highimpact, immersive two-day program to drive strategy alignment, collaboration, innovation, and accountability.
– At Novartis we've been working with 900 of their experienced leaders to reignite and reinforce their leadership capabilities. This experience has driven a mindset-shift on a global basis amongst highly analytical and technically focused leaders who are now embracing their leadership role. We've also seen 98% of the population report applying their learning back in the workplace.
Manufacturing
– As Hewlett Packard Enterprise transitioned from one fiscal year to the next, they established four priorities for the new year's go-to-market strategy. BTS designed and delivered an experience that allowed around 700 people from the organization (in Brazil, Mexico, Colombia, Venezuela, Chile, Argentina, and more) to experience the execution of these priorities, ensuring alignment, engagement and the development of capacities critical to the execution of the strategy.
Growth has averaged 13 percent the last 10 years, of which 10 percent has been organic. Acquisitions have built synergies with new solutions, new markets, and new talents and have helped to drive growth.
BTS has delivered profit every year, and profit growth almost every year, irrespective of market conditions and despite substantial costs for acquisitions and investments in product development and market establishment around the world.
This development is a result of BTS's growth strategy, dynamic business model, and the entrepreneurial organization.
In the 1990s, BTS successfully managed to achieve continuous profitable growth. Good market conditions and new product initiatives, as well as new offices in the US, UK, Finland, and South Africa, played a major role in the company's growth during this period. When the market conditions worsened between 2001 and 2003, BTS managed to maintain a healthy level of revenues, despite the unfavorable business climate (particularly in the IT, Telecom, and Manufacturing industries, where BTS was predominantly active) through adhering to its successful long-term strategy.
In the difficult market conditions of 2001–2003, BTS successfully managed to reinforce the business for future growth and profitability by implementing a range of new initiatives, such as expanding into new industries and geographical markets.
BTS constantly strives to improve profitability. 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 a significant improvement in margins.
BTS's expansion strategy is primarily built on organic growth. During 2002 and 2003, BTS opened businesses in Australia and Spain. These initiatives have grown substantially and served as starting points for our offices in Asia and Latin America.
BTS's strategy for acquisitions aims to create a broader base for future organic growth by adding new markets, new valueadding products and services, and new talent.
BTS acquired The Strategic Management Group Learning Solutions in 2005 and The Advantage Performance Group and The Real Learning Company in 2006.
The new companies have added new technologies and delivery methods, a broader customer base, and a wealth of new talent.
The recession during 2008–2009 had a significant negative impact on our industry. Most companies saw their revenues decline 20–40 percent in 2009.
Our recession strategy was based on two key factors: our low market share and our highly competitive offerings. By focusing our resources on highly prioritized accounts, we were able to maintain our revenue and profit levels.
At the same time, BTS made strategic investments and progress during the recession, creating a strong foundation for growth as of 2010 and onward.
During the years 2010–2015 BTS's revenues grew by an average of 9 percent annually (currency adjusted) with growth in all regions, and at high speed in Asia and Latin America.
We grow the average size of our projects by offering global services and more-complete solutions delivering increased results for our customers.
During 2013, BTS acquired all the business operations in the Danish company Wizerize A/S. The acquisition created new opportunities to offer digital-enabled solutions that are built on current and future social and mobile IT platforms. These solutions supplement and strengthen 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 will strengthen BTS's position in the fast-growing market for services and technology within assessment services.
In 2015 BTS acquired the South African company AVO Vision, which provides BTS och AVO with major opportunities in the fast-growing and important African market with an enormous need of talent development. All the business operations in the Australian company Synergy Group Pty Ltd were also acquired in 2015. This represents a significant strengthening of BTS's operations in Australia and will increase BTS's delivery capacity and create a considerably stronger and broader offering in Australia.
| Organization | 36 |
|---|---|
| Core Values | 37 |
| Our People and Culture | 38–39 |
| Corporate Social Responsibility | 40–43 |
BTS Group's operative activities are run through four units, and the executive management has full business and P&L responsibility for their respective geographical markets.
Austin, Brooklyn, Chicago, Los Angeles, New York, San Francisco, Scottsdale, and Stamford.
Amsterdam, Brussels, Helsinki, London, Munich, Paris, and Stockholm.
Bangalore, Bangkok, Bilbao, Dubai, Johannesburg, Madrid, Melbourne, Mexico City, Milan, Mumbai, Sao Paolo, Seoul, Shanghai, Singapore, Sydney, Taipei, and Tokyo.
APG operates in the US market and delivers performance improvement through sales and leadership training that results in meaningful business impact using its Advantage WaySM implementation process.
BTS has two product-specific units that work with new concepts and the production of solutions, as well as provide active sales support to the customers of the three operational units.
BTS Digital Services is responsible for connected learning and online and virtual solutions.
BTS Board Simulations is responsible for manual board business simulations.
BTS has five practice areas. Specialists and thought leaders have been gathered within each practice area and are responsible for developing new concepts and solutions as well as ensuring the use of best practices across the BTS Group:
Group-internal functions cover Group Finance, Investor Relations, Corporate Communications, and Global Operations Development.
E
During the year, we expanded our employee base to 460 professionals. We work hard to develop, engage and retain our employees. Our culture is the key reason why worldleading companies do business with us and it is why our employees consider BTS a great place to work.
The very nature of our work is fun. We engage in sophisticated, bottom-line oriented business simulations with some of the smartest people in the business world; our clients are managers and executives of leading companies across the globe. Leading 25 top executives through a 2–3 day simulation experience is an adventure that BTS'ers liken to being a tour guide on an "intellectual white water rafting trip."
We believe that if you find the right people, and give them freedom and responsibility, they will achieve great things. Our consultants work with the top talent of world-class corporations. Whether we are on stage in front of senior executive, engaged in a client development meeting with a C-level executive or creating an innovation new simulation application, we believe in delivering excellence. With very little direction or mandate, our unique culture nurtures consultants who are highly motivated to pursue high levels of achievement and excellence.
BTS gives high levels of autonomy to our consultants. They have the independence to manage their own time when they are on the road, at client sites and in the office. The flip side of this freedom is an enormous amount of client-facing responsibility. Within weeks of beginning at BTS, new consultants lead manager and executives at world-class companies through BTS simulations and experiential learning solutions.
Every company will tell you it has a great culture, or that it only hires the smartest people, but you really believe that with BTS. The company is a collection of subject matter experts, driven creative types and natural collaborators."
As Henrik [Ekelund, BTS CEO] wrote to the company in a Chatter post recently, 'culture is key for both business success and happiness.' In the nine months that I have been at BTS, I can easily say that BTS has the most welcoming and exciting culture I've ever experienced in a work environment. Regardless of role or level, everybody is passionate, collaborative, and, most of all, fun. I can now understand why people come here and stay for decades – with a team like this, why leave?"
My favorite part of BTS is, undoubtedly, the culture. The fact that I can walk into a global partner's office to ask a quick question without fear of being reprimanded says a lot. BTSers realize that we are on the same team and we help each other out. Not to mention, everyone is brilliant and definitely knows how to have fun!"
BTS has one of the best cultures I have ever experienced at any company around the world. The employees are smart, driven and most importantly, fun to work with. I look forward to going into the office, delivering large programs and traveling with colleagues because of the great culture we have. And culture is the #1 thing that will keep me at BTS for a long time."
| KEY FIGURES, EMPLOYEES | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Number of employees at the end of the year |
463 | 405 | 370 | 385 | 335 |
| Of whom women, %1 | 44 | 40 | 40 | 38 | 37 |
| Net turnover per employee, KSEK |
2,394 2,035 | 1,830 | 2,111 | 2,147 |
1 Yearly average number
Corporate social responsibility has long been a fundamental part of the BTS company culture and values. This belief has guided us for more than 25 years, and it continues to shape our environmental and social responsibility.
At BTS, corporate social responsibility is an active companywide initiative and a dynamic grassroots affair. As a company, we strive to practice environmental sustainability, promote economic development, empower our employees' personal volunteering activities, and develop thought leadership. As individuals, our people at all levels pursue the causes that empower them most and motivate the rest of us to get involved and make a difference.
At BTS, we identify environmental sustainability as a pressing priority, and we continue to take action towards creating a greener planet. We are committed to reducing greenhouse gas emissions from daily operations and embedding sustainability into our communities.
Since 2010, BTS USA has partnered with Rainforest Trust, a leading organization in the protection of tropical ecosystems and wildlife, on sustainability campaigns to preserve threatened rainforest and offset our carbon emissions. Rainforests are one of the largest carbon sinks on the planet and they are disappearing at an alarming rate. Our annual donations have helped to establish the Las Tangaras Natural Reserve in Colombia, one of the most vital rainforest sites on earth and home to a high concentration of biodiversity. In addition to safeguarding the habitat and exotic species, the Las Tangaras Nature Reserve will also protect the watershed of the Rio Atrato, the region's most important river, which serves as a vital economic resource for tens of thousands of inhabitants living in poor, rural communities.
In 2015, BTS supported Rainforest Trust in a variety of initiatives. In August, BTS sponsored the second round of the Rainforest Trust #SkiptoSave campaign, supporting Rainforest Trust's 2020 Initiative to protect 20 million acres of rainforest by 2020. Every time somebody used #SkipToSave on Twitter, an acre in Lomami, Democratic Republic of Congo was protected in their honor. BTS was the corporate sponsor for the second round of the campaign, which was extraordinarily successful and surpassed goals by 266% (reaching 2,271,889 people on social networks and protecting 2,043,563 acres). BTS donations also assisted with expanding Colombia's El Jaguar Reserve by 5,421 acres.
Over the last five years, BTS has demonstrated an inspiring commitment to protecting our planet's most endangered species and the threatened forests that they depend upon for survival. We applaud the strong example BTS USA sets for environmental action in the business community and look forward to continuing our conservation efforts with the company in the years to come," said Christine Hodgdon, International Conservation Manager for Rainforest Trust.1)
1) https://www.rainforesttrust.org/news/bts-usa-saves-colombian-rainforest/
At BTS, we believe that companies have the same moral responsibilities to a community as individuals have. This belief has guided us for more than 25 years, and it continues to shape our social and environmental policies and efforts today.
As of June 2015, programs had been held for more than 45,000 women and men entrepreneurs in 12 developing countries.
We actively seek to make real, lasting change in people's lives. This is why we have our One for One Ambition: Our long term goal is that for every participant we educate at BTS, we offer a person in a transitioning or developing region free training using our learning materials.
In 2007, in partnership with the Savings Bank for International Cooperation (a non-profit organization within Sparkassenstiftung), BTS developed a business simulation program to teach business and financial acumen in developing nations. As of June 2015, programs had been held for more than 45,000 women and men entrepreneurs in 12 developing countries.
The program focuses on five key categories: record keeping, employment of staff, banking, investments, and separation of family and business accounts. The results of the program show significant, measurable impacts in increased revenues and improved cash flow, and we are excited to follow-up on these results in different parts of the world.
During 2015 BTS also partnered with SBFIC to launch the Savings Game, a program developed to target savings mobilization and financial literacy amongst students, private individuals and young households. After a successful pilot in Armenia, the program has been run in Kazakhstan and is now being demanded in countries such as Ecuador, the Philippines, and Russia. To make sure local trainers are set up for success and can lead the solution themselves, the developers of the program have been focusing on making the program available in a variety of languages and organized a "train-thetrainer program" in September 2015.
Hand in Hand, an organization first founded more than 20 years ago, fights poverty through education and training by helping women to start their own businesses. So far, more than 1.67 million women have been trained, leading to the development of 1.19 million micro-businesses (which in turn have improved the living conditions of more than 3 million people).
BTS supports Hand in Hand operations in the village of Thenputhur, India. The main objectives of this engagement include fighting child labor by investing in a new school, improving nutrition and hygiene, building infrastructure and supporting entrepreneurship. After a recent visit, Stefan Hellberg, BTS Executive Vice President, said, "I visited a new school in Thenputhur, and the cheers from 40 young students, all huddled on the sand floor, were incredibly inspiring and rewarding. The commitment in the villages, mostly among the women responsible for the development projects, is strong and the progress is great. We are very grateful to Hand in Hand for enabling us to help in such a concrete way."
BTS additionally supports Hand in Hand with a learning initiative, initially developed and delivered in 2011. A customized board simulation focused on building business literacy and the experience of starting a service center, this initiative continues to teach hundreds of women the critical rules of business.
In 2015, BTS delivered a solution at a large conference for 1,500 women with technological expertise. The solution was focused on providing insights into leadership and business acumen for women starting and running a business. This conference marked the beginning of cooperation initiative that BTS will continue to further develop.
In March 2015, BTS acquired AVO Vision, a leading South Africa-based company focused on corporate and community learning and development.
These community-focused offerings, designed to empower people in both urban and rural communities through building their leadership, management, self-mastery and sales execution skills, are a key part of the AVO Vision business portfolio. In 2014 and 2015, 57,000 individuals were trained through these programs – including 32,000 women, 1,014 small businesses, and thousands of school children.
Every year, an employee from BTS Northern Europe is awarded the honor of Northern Europe Employee of the Year. Their prize? A two-week pro bono work opportunity in any transitioning or developing country in the world. Past locations include Tanzania, Nepal, New Zealand, and Borneo.
From July 20–31st, 2015, BTS senior consultant Annelien Degadt left the Brussels office to travel to Livingstone, Zambia as the recipient of this award. Degadt spent her time in Livingstone teaching a class of 45 teenagers as well as engaging in community projects, from after-school care to reading classes for adults. Writes Degadt, "My main takeaway was inspired by Ghandi: 'It's the action, not the fruit of the action, that's important. You may never know what results come from your action. But if you do nothing, there will be no result.'"
Advantage Performance Group specializes in helping organizations accelerate positive business results by focusing on three main areas:
Advantage Performance Group (APG) is a wholly owned subsidiary of BTS in North America that serves clients in complementary ways to the traditional BTS organization and consulting team. APG is organized around a multitude of client needs mostly connected to shifts in their business.
In addition to offering many of BTS's core competencies, APG has a team of highly experienced consultants and
relationships with thought leaders and resources other than BTS that allow clients to gain additional value from our collaborations, for example:
APG's key differentiators, as recently defined by our clients, are:
} An insightful organization that serves as a single source of world class thought leadership. We orchestrate expertise to deliver business results.
APG guided my team toward the right solutions and made sure all the content was relevant and completely customized to our audience. I am very glad I made the decision to work with them for this project, it made all the difference!"
Associate Director, Global Leadership Development, Global Pharmaceutical Organization
Over a decade ago, we partnered with Dr. Robert Brinkerhoff around his groundbreaking work on High Impact Learning and Success Case Methodologies. This partnership has grown over the years and resulted in APG's acquiring the full rights to thought leadership that is the one and only piece of proprietary content owned by APG and also leveraged by BTS: the Advantage WaySM.
The Advantage WaySM methodology creates measurable business impact from every learning initiative. When clients implement the Advantage WaySM system, their organizations achieve documented business results as well as improved job performance. They are able to measure the business impact
of the implementation of various solutions – solid proof of its value to their organization.
The Advantage WaySM continues to evolve at APG and BTS. In addition to laying the groundwork for how we do business and deliver results, we are actively working on building out a set of digitally based execution tools that can accompany any learning or change initiative in an organization. More exciting things to come in the future as we partner with our clients and Dr. Rob once again to build out Advantage WaySM 2.0.
APG's 2016 strategic direction will focus on three aspects of the current business environment that are a particularly good fit for the firm:
We sought a partner who would be hands-on, seek to know the causes of our pain, bring discernment and understanding into resolving our problem, and suggest complementary resources to meet our challenges with measurable ideas. Advantage delivered on all of this and more."
Director of Learning and Development, North American Food Distributer
We consider Advantage to be a partner, not a vendor. It never feels like they are trying to sell us something. We talk about what we need and their design team works with us to develop it. Even when working with competing vendors, it's always collaborative. There's a huge level of trust in our relationship."
Senior Director, Learning and Organizational Effectiveness, Global Medical Device Firm
| Five-Year Summary47–49 |
|---|
| BTS Share information 50–51 |
| Management Report 52–55 |
| Consolidated Income Statement 56 |
| Consolidated Statement of |
| Comprehensive Income 56 |
| Consolidated Balance Sheet 57 |
| Changes in Consolidated Equity 58 |
| Consolidated Cash Flow Statement 59 |
| Parent Company's Income Statement 60 |
| Parent Company's Statement of |
| Comprehensive Income60 |
| Parent Company's Balance Sheet 61 |
| Parent Company's Cash Flow Statement 62 |
| Changes in Parent Company's Equity 63 |
| Notes to the Annual Report64–77 |
| Audit Report 78 |
| SEK millions | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Net sales | 1,043.9 | 781.5 | 688.2 | 770.5 | 697.7 |
| Operating profit (EBIT) | 109.5 | 82.4 | 69.8 | 97.4 | 89.2 |
| Operating margin (EBIT margin), % | 10.5 | 10.5 | 10.1 | 12.6 | 12.8 |
| Operating profit before amortization of intangible assets (EBITA) |
113.7 | 85.0 | 71.5 | 98.8 | 91.6 |
| Operating margin before amortization of intangible assets (EBITA margin), % |
10.9 | 10.9 | 10.4 | 12.8 | 13.1 |
| Profit margin, % | 7.0 | 7.2 | 7.0 | 8.3 | 8.3 |
| Earnings per share, SEK | 3.89 | 3.01 | 2.57 | 3.53 | 3.20 |
| Return on equity, % | 15.8 | 14.2 | 14.0 | 19.6 | 19.6 |
| Return on operating capital, % | 32.2 | 29.1 | 29.3 | 42.4, | 40.1 |
| Operating capital | 360.4 | 320.2 | 246.9 | 229.8 | 222.6 |
| Equity | 483.3 | 434.5 | 355.8 | 326.6 | 310.2 |
| Equity per share, SEK | 25.92 | 23.30 | 19.14 | 18.08 | 17.19 |
| Equity/assets ratio, % | 59.6 | 63.7 | 68.6 | 63.0 | 60.0 |
| Dividend per share, SEK | 2.351 | 1.75 | 1.75 | 1.75 | 1.60 |
| Cash flow | 22.6 | –9.1 | 19.3 | 17.4 | –3.9 |
| Cash and cash equivalents | 139.5 | 114.3 | 108.8 | 94.9 | 84.4 |
| Number of employees at year-end | 463 | 405 | 370 | 385 | 335 |
| Average number of employees | 436 | 384 | 376 | 365 | 325 |
| Annual net turnover per employee | 2.4 | 2.0 | 1.8 | 2.1 | 2.1 |
1 Proposed dividend.
Operating profit after amortization/ depreciation as a percentage of net sales.
Operating profit before amortization of intangible assets as a percentage of net sales.
Profit for the period as a percentage of net sales.
Earnings attributable to the Parent Company's shareholders divided by the number of shares.
Profit after tax on an annual basis as a percentage of average equity.
Operating profit as a percentage of average operating capital.
Balance sheet total less cash and cash equivalents, other interestbearing assets, and non-interestbearing liabilities.
Equity excluding non-controlling interests divided by the number of shares at the end of the year.
Equity as a percentage of the balance sheet total.
Dividends proposed or adopted, divided by the number of shares at year-end.
Net sales for the whole year, divided by the average number of employees.
Price per share divided by earnings per share.
Consolidated income statements in summary
| SEK millions | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Net sales | 1,043.9 | 781.5 | 688.2 | 770.5 | 697.7 |
| Operating expenses | –922.5 | –690.0 | –610.4 | –666.0 | –602.1 |
| Depreciation of property, plant, and equipment | –7.7 | –6.5 | –6.3 | –5.8 | –4.0 |
| Amortization of intangible assets | –4.3 | –2.6 | –1.7 | –1.4 | –2.4 |
| Operating profit | 109.5 | 82.4 | 69.8 | 97.4 | 89.2 |
| SEK millions | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| BTS North America | 528.6 | 362.2 | 311.5 | 385.8 | 345.8 |
| BTS Europe | 178.9 | 153.8 | 134.1 | 125.4 | 104.1 |
| BTS Other markets | 222.7 | 168.4 | 151.1 | 156.7 | 127.7 |
| APG | 113.7 | 97.1 | 91.5 | 102.6 | 120.1 |
| Total | 1,043.9 | 781.5 | 688.2 | 770.5 | 697.7 |
| SEK millions | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| BTS North America | 60.6 | 42.5 | 35.6 | 63.2 | 58.7 |
| BTS Europe | 23.3 | 19.8 | 22.7 | 17.6 | 8.0 |
| BTS Other markets | 27.3 | 20.1 | 13.8 | 18.6 | 20.2 |
| APG | 2.6 | 2.6 | –0.6 | –0.6 | 4.7 |
| Total | 113.8 | 85.0 | 71.5 | 98.8 | 91.6 |
BTS North America consists of BTS's operations in North America excluding APG.
BTS Europe consists of operations in Belgium, Finland, France, Germany, the Netherlands, Sweden and the UK. BTS Other markets consists of operations in Australia, Brazil, Dubai, India, Italy, Japan, China, Mexico, Singapore, Spain, South Africa, South Korea, Taiwan and Thailand.
APG consists of operations in Advantage Performance Group.
Consolidated balance sheets in summary
| SEK millions | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Assets | |||||
| Non-current assets | 278.9 | 261.4 | 181.4 | 174.0 | 174.4 |
| Accounts receivable | 276.8 | 239.0 | 156.0 | 158.5 | 196.9 |
| Other current assets | 115.8 | 67.2 | 72.6 | 91.1 | 61.9 |
| Cash and cash equivalents | 139.5 | 114.3 | 108.8 | 94.9 | 84.4 |
| Total assets | 811.0 | 681.9 | 518.9 | 518.5 | 517.6 |
| Equity and liabilities | |||||
| Equity | 483.3 | 434.5 | 355.8 | 326.6 | 310.2 |
| Interest-bearing liabilities | 12.5 | – | – | – | 9.3 |
| Non-interest-bearing liabilities | 315.2 | 247.4 | 163.1 | 191.9 | 198.1 |
| Total equity and liabilities | 811.0 | 681.9 | 518.9 | 518.5 | 517.6 |
Consolidated cash flow in summary
| SEK millions | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Cash flow from operating activities | 57.9 | 44.8 | 47.6 | 59.7 | 49.3 |
| Cash flow from investing activities | –19.0 | –21.0 | –15.7 | –14.4 | –7.9 |
| Cash flow from financing activities | –16.3 | –32.9 | –12.6 | –27.9 | –45.3 |
| Cash and cash equivalents, start of year | 114.3 | 108.8 | 94.9 | 84.4 | 88.4 |
| Cash flow for the year | 22.6 | –9.1 | 19.3 | 17.4 | –3.9 |
| Translation differences in cash and cash equivalents | 2.6 | 14.6 | –5.4 | –6.9 | –0.1 |
| Cash and cash equivalents, end of year | 139.5 | 114.3 | 108.8 | 94.9 | 84.4 |
On June 6, 2001, the BTS share was floated on NASDAQ OMX Stockholm in connection with the issue of new stock, raising capital for the Company of SEK 78.1 million after issue expenses.
The share capital totals SEK 6,215,457, distributed among 853,800 Class A shares and 17,792,570 Class B shares, each with a quotient value of SEK 0.33. Each Class A share entitles the holder to ten votes, each Class B share one vote. All shares carry equal rights to participate in the Company's assets and profits.
At December 31, 2015, there were 1,105 (863) shareholders in the Company. Since 2002, BTS Group AB has worked to promote depth in share trading. As part of this strategy, a market maker has been engaged to work to increase interest and trading in BTS' shares.
The Company's goal is to distribute 40%–65% of profit after tax in the long run.
| SEK | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Share price at December 31 | 77.50 | 59.50 | 59.00 | 61.25 | 46.00 |
| Earnings per share | 3.89 | 3.01 | 2.57 | 3.53 | 3.20 |
| Price/earnings ratio, December 31 | 19.9 | 19.8 | 23.0 | 17.4 | 14.4 |
| Cash and cash equivalents per share, December 31 | 7.48 | 6.13 | 5.85 | 5.25 | 4.68 |
| Equity per share, December 31 | 25.92 | 23.30 | 19.14 | 18.08 | 17.19 |
| Dividend per share | 2.351 | 1.75 | 1.75 | 1.75 | 1.60 |
| 1 Proposed dividend. |
| Year | Transaction | Increase in share capital, SEK |
Share capital, SEK |
Class A shares | Class B shares | Total no. of shares |
Par value per share, SEK |
|---|---|---|---|---|---|---|---|
| Formation of | |||||||
| 1999 | the Company | 100,000 | 100,000 | 439,900 | 560,100 | 1,000,000 | 00:10 |
| 1999 | New issue | 8,200 | 108,200 | 82,000 | 1,082,000 | 00:10 | |
| 2001 | Stock dividend issue |
4,219,800 | 4,328,000 | 1,082,000 | 04:00 | ||
| 2001 | 4:1 split | 4,328,000 | 1,319,700 | 1,926,300 | 4,328,000 | 01:00 | |
| 2001 | Conversion of Class A to Class B shares |
–1,475,000 | 1,475,000 | 4,328,000 | 01:00 | ||
| 2001 | New issue | 1,500,000 | 5,828,000 | 1,500,000 | 5,828,000 | 01:00 | |
| 2002 | New issue | 69,300 | 5,897,300 | 69,300 | 5,897,300 | 01:00 | |
| 2006 | 3:1 split | 5,897,300 | 569,200 | 11,225,400 | 17,691,900 | 00:33 | |
| 2006 | New issue | 118,800 | 6,016,100 | 356,400 | 18,048,300 | 00:33 | |
| 2012 | New issue | 5,922 | 6,022,022 | 17,765 | 18,066,065 | 00:33 | |
| 2013 | New issue | 174,601 | 6,196,623 | 523,805 | 18,589,870 | 00:33 | |
| 2014 | New issue | 18,834 | 6,215,457 | 56,500 | 18,646,370 | 00:33 |
| Name | No. of Class A shares |
No. of Class B shares |
Holding | Pctg. holding | Pctg. votes |
|---|---|---|---|---|---|
| Henrik Ekelund incl. companies | 816,000 | 3,189,034 | 4,005,034 | 21.5 | 43.1 |
| Stefan af Petersens incl. companies | 37,800 | 2,293,095 | 2,330,895 | 12.5 | 10.1 |
| Placeringsfond Småbolagsfond Norden | 0 | 2,015,342 | 2,015,342 | 10.8 | 7.7 |
| Lannebo Micro Cap. | 0 | 1,731,206 | 1,731,206 | 9.3 | 6.6 |
| Swedbank Robur Småbolagsfond Norden | 0 | 1,321,230 | 1,321,230 | 7.1 | 5.0 |
| Lannebo Microcap II | 0 | 989,848 | 989,848 | 5.3 | 3.7 |
| Stefan Hellberg incl. companies | 0 | 893,994 | 893,994 | 4.8 | 3.4 |
| Nordea Småbolagsfond Sverige | 0 | 520,307 | 520,307 | 2.8 | 2.0 |
| Jonas Åkerman | 0 | 579,350 | 579,350 | 3.1 | 2.2 |
| AMF Aktiefond Småbolag | 0 | 384,007 | 384,007 | 2.1 | 1.5 |
| Total for 10 largest shareholders | 853,800 | 13,917,413 | 14,771,213 | 79.2 | 85.3 |
| Other shareholders | 0 | 3,875,157 | 3,875,157 | 20.8 | 14.7 |
| Total | 853,800 | 17,792,570 | 18,646,370 | 100.0 | 100.0 |
The Board of Directors and CEO of BTS Group AB (publ), corporate identity number 556566-7119, hereby submit their annual accounts and consolidated financial statements for the fiscal year 2015. The consolidated income statement and balance sheet as well as the Parent Company's income statement and balance sheet will be submitted to the Annual General Meeting for adoption.
BTS Group AB is an international consulting and education firm which focuses on the employees when organizations are executing strategic changes and works with leaders at all levels to help them make better decisions, progress from decision to action and deliver results. For 30 years, BTS has been creating motivational and effective programs which make a profound and lasting impact on their participants and their careers by inspiring new ways of thinking and enhancing the critical capabilities that employees and leaders need to achieve improved corporate performance.
BTS has a broad range of services which meet needs within strategy execution and talent development with services that monitor the employee from evaluation for selection and development, to strategic consensus and strategy implementation. This is achieved through programs in business acumen, leadership and sales and include the aid of business simulations and other forms of experiential learning and implementation tools. Most BTS clients are major corporations.
BTS's net sales increased by 34% during the year, to SEK million 1,043.9 (781.5). Adjusted for changes in exchange rates, revenues increased by 15%.
Operating profit before amortization of intangible assets (EBITA) increased by 34% during the year, to SEK 113.8 million (85.5). Operating profit was charged with SEK 4.3 million (2.6) for amortization of intangible assets attributable to acquisitions. Operating profit increased by 33% in 2015, to SEK 109.5 million (82.4).
The operating margin before amortization of intangible assets (EBITA margin) was 11% (11). The operating margin (EBIT margin) was 10% (11). Consolidated profit before tax for the year increased by 32%, to SEK 109.2 million (82.9).
Net sales for BTS's operations in North America totaled SEK 528.6 million (362.2) in 2015. Adjusted for changes in exchange rates, revenues increased by 19%. Operating profit before amortization of intangible assets (EBITA) totaled SEK 60.6 million (42.5). The operating margin before amortization of intangible assets (EBITA margin) was 11% (12).
Net sales for Europe totaled SEK 178.9 million (153.8) in 2015. Adjusted for changes in exchange rates, revenues increased by 8%. Operating profit before amortization of intangible assets (EBITA) totaled SEK 23.3 million (19.8) in 2015. The operating margin before amortization of intangible assets (EBITA margin) was 13% (13).
Net sales for BTS Other markets totaled SEK 222.7 million (168.4) in 2015. Adjusted for changes in exchange rates, revenues increased by 25%. Operating profit before amortization of intangible assets (EBITA) totaled SEK 27.3 million (20.1) in 2015. The operating margin before amortization of intangible assets (EBITA margin) was 12% (12).
Net sales for APG reached SEK 113.7 million (97.1) in 2015. Adjusted for changes in exchange rates, revenues decreased by 5%. Operating profit before amortization of intangible assets (EBITA) totaled SEK 2.6 million (2.6) in 2015. The operating margin before amortization of intangible assets (EBITA margin) was 2% (3).
At the end of the period, cash and cash equivalents were SEK 139.5 million (114.3). The Group's interest-bearing loans, attributable to previously completed acquisitions, totaled SEK 16.7 million (0.0) at the end of the period. Equity totaled SEK 483.3 million (434.5) at year-end, and the equity/assets ratio was 60% (64). BTS's cash flow from operating activities for the year was SEK 57.7 million (44.8).
The Board has decided to change the company's financial targets. The new financial targets over time are:
Most of BTS's sales increases have been organic and this aim remains unchanged. The company now has increased opportunities for acquisitions that complement products/ services, markets and resources. Taken overall, the growth target on this basis – including acquired sales – is set at 20 percent per annum.
The margin target of 15 percent remains unchanged. This target could not be met in recent years due among other things to major initiatives for establishment in new geographic markets and for development of new digital solutions. Going forward, the company sees rising economies of scale that will allow a steady increase in margin.
The Board has also decided on a new dividend policy. The company's goal is to distribute 40 to 65 percent of profit after tax in the long run.
In 2015 BTS acquired the South African company AVO Vision, which provides BTS och AVO with major opportunities in the fast-growing and important African market with an enormous need of talent development. The acquisition was made by BTS's South African subsidiary acquiring the shares in AVO Vision.
All the business operations in the Australian company Synergy Group Pty Ltd were also acquired in 2015. This represents a significant strengthening of BTS's operations in Australia and will increase BTS's delivery capacity and create a considerably stronger and broader offering in Australia. This acquisition is an asset deal and was carried out via BTS's subsidiary BTS Australasia PTY Ltd.
The Board of Directors proposes that the 2015 Annual General Meeting does not change the guidelines for determining salaries and other compensation to the CEO and other senior executives. For the guidelines decided by the 2015 AGM, see Note 6.
The number of employees in BTS Group AB at December 31, 2015 was 463 (405). The average number of employees during the year was 436 (384).
The total number of shares outstanding is 18,646,370, consisting of 853,800 Class A and 17,792,570 Class B shares. Each Class A share entitles the holder to 10 votes per share, each Class B one vote per share. The Company's articles of association contain no restrictions on the transfer of shares. The Company has two shareholders, Henrik Ekelund and Stefan af Petersens, whose holdings each exceeded 10% of votes at year-end 2015. Some employees own shares in the Company, but the employees as a whole have no investment through any pension fund or the like. The Company is not aware of any agreements between shareholders that would restrict the right to transfer shares. Neither is there any agreement to which the Company is a party that would take effect, be changed, or cease to apply if control of the Company changed as a result of a public takeover bid.
The activities of the Parent Company, BTS Group AB, consist exclusively of tasks internal to the Group. The assets of the Parent Company consist primarily of shares in subsidiaries and cash and cash equivalents. The Company's net sales totaled SEK 1.9 million (1.9), and profit after financial items SEK 40.1 million (30,0). Cash and cash equivalents were SEK 0.1 million (2.2).
Profit before tax is expected to be better than the preceding year's.
The market for BTS's services was stable during the period and unchanged compared with the previous year. Our assessment is that BTS's competitiveness has improved, we are invited to submit tenders for more large projects and the proportion of business won is rising.
Sensitivity to economic conditions
Demand for training is sensitive to economic fluctuations. Slower growth and costcutting programs affect corporate training budgets negatively. Similarly, economic recovery increases willingness to invest in training.
BTS's ten largest customers accounted for 23% of its sales in2015. By striving for a broad customer base, BTS limits its dependence on individual customers.
BTS customers are mainly active in nine business sectors: Manufacturing, Telecommunications, Information Technology, Financial Services, Pharmaceuticals & Biotechnology, Retail & Distribution, Services, Energy, and Fast-Moving Consumer Goods (FMCG). The global distribution of its customers' operations helps reduce BTS's exposure to fluctuations in sspecific industries.
51% of BTS's sales in 2015 were in the North America operative unit, Other markets represented 21%, Europe accounted for 17% and APG 11%. In recent years, BTS has enhanced its presence in markets in Asia, Australia, South Africa, and Latin America, which in the long run will reduce dependency on North American and European markets.
The market for corporate training and management is fragmented. BTS encounters different competitors in different markets and has no global competitor.
BTS builds its marketing on network-based sales developed over the years by good customer relationships, which are brought about by high demands on the quality of BTS deliveries. BTS minimizes the risk of dissatisfied customers by recruiting and cultivating qualified consultants and by ensuring that all development and all deliveries adhere to established processes. BTS also follows up on quality in every project.
BTS owns all rights to the business simulations it develops for clients, thus retaining the right to reuse general intellectual property, such as software and adaptations, when developing new simulations. For license-based products and solutions, the client purchases the number of licenses needed for the employees participating.
Rapid growth requires intensive recruiting and training of employees. At the same time, it is essential to retain competent personnel. To meet these requirements, BTS follows an established model for recruiting and skills development.
To reduce dependence on individual employees and to insure the long-term quality of BTS training courses, methods, technologies, and business simulations are well documented.
Performance for the past five fiscal years is presented below.
Effective and systematic assessments of financial and commercial risks are vital to BTS. The Group's financial policy specifies guidelines and objectives for managing financial risks within the Group.
Financing and risk management have been gathered under the Group finance function. The subsidiaries manage all foreign exchange dealings and credit to clients within the framework of the policy. For details, see Note 2, Significant accounting policies, and Note 18, Financial instruments and financial risk management.
The currencies with the greatest impact on BTS's earnings are the U.S. dollar (USD), the euro (EUR), and the pound Sterling (GBP). The day- to-day exposure to fluctuations in exchange rates is limited, as revenues and expenses are primarily in the same currency in each market. BTS does not normally hedge its foreign exchange exposure. The sensitivity analysis below shows the effects on operating profits of changes in the value of USD, EUR, and GBP in relation to the Swedish krona (SEK), when one of these currencies varies while the other rates are unchanged.
| Percentage change |
SEK thousands |
|
|---|---|---|
| SEK/USD | +/–10% | 7,149 |
| SEK/EUR | +/–10% | 1,032 |
| SEK/GBP | +/–10% | 1,327 |
BTS only accepts creditworthy counterparties. BTS's accounts receivable are distributed among a large number of companies operating in different sectors. The maximum credit risk at
| SEK thousands | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Sales | 1,043,900 | 781,454 | 688,234 | 770,548 | 697,730 |
| Operating expenses | –922,473 | –690,035 | –610,439 | –665,972 | –602,116 |
| Depreciation of property, plant, and equipment | –7,688 | –6,464 | –6,267 | –5,761 | –4,036 |
| Amortization of intangible assets | –4,286 | –2,568 | –1,685 | –1,418 | –2,409 |
| Operating profit | 109,452 | 82,387 | 69,842 | 97,396 | 89,169 |
| Operating margin, EBIT, % | 10 | 11 | 10 | 13 | 13 |
| Number of employees at year-end | 463 | 405 | 370 | 385 | 335 |
| Average number of employees | 436 | 384 | 376 | 365 | 325 |
| Net sales per employee | 2,394 | 2,035 | 1,830 | 2,111 | 2,147 |
year-end was SEK 10,407 thousand (16,520), which corresponds to the largest credit exposure to any single group.
BTS manages liquidity risk by maintaining sufficient cash and cash equivalents and a reserve in the form of an approved overdraft facility. BTS may borrow funds only with the approval of the Board of Directors. Any excess liquidity in subsidiaries is initially to be used to repay loans. Interest rates on the Group's financial assets and liabilities are usually fixed for short periods. Interest rate risk refers to changes in market rates that could adversely affect BTS, either through increased costs of borrowing for the Company or through fluctuations in returns on the funds invested at variable interest rates.
The development that BTS has conducted during the year is essentially related to customer-specific product development, which has been expensed directly. Any research has not occurred. For a more detailed description, see Note 2 Accounting principles.
No material events occurred after the close of the fiscal year up until the Board's signing of the annual report, thus none have affected the preparation of the balance sheets and income statements.
| Total | 63,528,843 |
|---|---|
| Profit for the year | 39,305,206 |
| Profit brought forward | 24,223,637 |
The Board of Directors proposes that earnings be appropriated as follows.
| Total | 63,528,843 |
|---|---|
| To be carried forward | 19,709,873 |
| SEK 2.35 per share totaling | 43,818,970 |
| To be distributed to shareholders: |
It is proposed that the dividend be paid on May 17, 2016.
The proposed dividend to shareholders will reduce the Parent Company's equity/assets ratio to 80%, and the Group's equity/ assets ratio to 57%. The equity/assets ratio as well as the cash situation is considered satisfactory.
The Board of Directors is of the opinion that the proposed dividend will not prevent the Company from fulfilling its obligations in the short or long run nor from making the requisite investments. Thus the proposed dividend is justifiable in terms of the provisions of Chapter 17, section 3, paragraphs 2–3 of the Swedish Companies Act (prudence rule).
Regarding the operations of the Group and the Parent Company in other respects, please refer to the following income statements and balance sheets and to the cash flow statements and accompanying notes.
| SEK thousands | NOTE | 2015 | 2014 |
|---|---|---|---|
| Net sales | 9 | 1,043,900 | 781,454 |
| Operating expenses | |||
| Other external expenses | 3, 4, 5 | –439,499 | –333,692 |
| Employee benefit expenses | 6 | –482,974 | –356,343 |
| Depreciation of property, plant, and equipment and amortization of intangible assets | 7, 8 | –11,975 | –9,031 |
| Total operating expenses | –934,448 | –699,066 | |
| OPERATING PROFIT | 9 | 109,452 | 82,388 |
| Financial items | 10 | ||
| Financial income | 503 | 857 | |
| Financial expenses | –766 | –355 | |
| Total gain/loss on financial items | –263 | 502 | |
| PROFIT AFTER FINANCIAL ITEMS | 109,189 | 82,890 | |
| Tax on profit for the year | 11 | –36,635 | –26,805 |
| PROFIT FOR THE YEAR | 72,554 | 56,085 | |
| Profit for the year attributable to: Parent Company's shareholders | 72,554 | 56,085 | |
| Earnings per share (profit for the year attributable to Parent Company shareholders) | 12 | ||
| Basic and diluted earnings per share, SEK | 3,89 | 3.01 | |
| No. of shares at year-end | 18,646,370 | 18,646,370 | |
| Proposed dividend per share, SEK | 13 | 2.35 | 1.75 |
| SEK thousands | NOTE | 2015 | 2014 |
|---|---|---|---|
| PROFIT FOR THE YEAR | 72,554 | 56,085 | |
| Other comprehensive income | |||
| Items that later could be reclassified to profit or loss | |||
| Translation differences in equity | 17 | 7,982 | 52,474 |
| Other comprehensive income for the year, net after tax | 7,982 | 52,474 | |
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR | 80,536 | 108,559 | |
| portion attributable to Parent Company shareholders | 80,536 | 108,559 |
| SEK thousands | NOTE | 12-31-15 | 12-31-14 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | |||
| Goodwill | 7 | 222,959 | 207,045 |
| Other intangible assets | 7 | 30,625 | 31,702 |
| Property, plant, and equipment | |||
| Equipment | 8 | 15,232 | 13,927 |
| Financial assets | |||
| Deferred tax assets | 15 | 3,120 | 2,041 |
| Other non-current receivables | 18 | 6,944 | 6,704 |
| Total non-current assets | 278,880 | 261,419 | |
| Current assets | |||
| Current receivables | |||
| Accounts receivable | 18 | 276,812 | 239,005 |
| Other receivables | 18 | 10,373 | 5,045 |
| Prepaid expenses and accrued income | 16 | 105,364 | 62,112 |
| Total current receivables | 392,549 | 306,162 | |
| Cash and cash equivalents | 139,547 | 114,293 | |
| Total current assets | 532,096 | 420,455 | |
| TOTAL ASSETS | 810,976 | 681,874 | |
| EQUITY AND LIABILITIES | |||
| Equity | 17 | ||
| Share capital | 6,215 | 6,215 | |
| Other paid-in capital | 62,692 | 62,692 | |
| Reserves | 2,314 | –5,668 | |
| Retained earnings, including profit for the year | 412,034 | 371,266 | |
| Total equity | 483,255 | 434,505 | |
| Non-current liabilities | |||
| Other liabilities | 18, 19 | 12,529 | 153 |
| Total non-current liabilities | 12,529 | 153 | |
| Current liabilities | |||
| Accounts payable | 18 | 21,465 | 22,458 |
| Tax liabilities | 37,257 | 28,693 | |
| Other current liabilities | 18, 19 | 51,289 | 55,126 |
| Accrued expenses and prepaid income | 21 | 205,181 | 140,939 |
| Total current liabilities | 315,192 | 247,216 | |
| TOTAL EQUITY AND LIABILITIES | 810,976 | 681,874 | |
| Pledged assets | 23 | 10,000 | 10,000 |
| Contingent liabilities | 24 | – | – |
Attributable to Parent Company
| Share | Other paid-in |
Retained | Total | |||
|---|---|---|---|---|---|---|
| SEK thousands | NOTE 17 | capital | capital | Reserves | earnings | equity |
| Opening balance at January 1, 2014 | 6,197 | 60,015 | –58,142 | 347,713 | 355,783 | |
| Comprehensive income | ||||||
| Profit for the year | 56,085 | 56,085 | ||||
| Other comprehensive income | ||||||
| Translation differences | 52,474 | 52,474 | ||||
| Total comprehensive income | 0 | 0 | 52,474 | 56,085 | 108,559 | |
| Transactions with shareholders | ||||||
| New issue | 18 | 2,677 | 2,695 | |||
| Dividends to shareholders | –32,532 | –32,532 | ||||
| Total transactions with shareholders | 18 | 2,677 | 0 | –32,532 | –29,837 | |
| Closing balance at December 31, 2014 | 6,215 | 62,692 | –5,668 | 371,266 | 434,505 | |
| Opening balance at January 1, 2015 | 6,215 | 62,692 | –5,668 | 371,266 | 434,505 | |
| Comprehensive income | ||||||
| Profit for the year | 72,554 | 72,554 | ||||
| Other comprehensive income | ||||||
| Translation differences | 7,982 | 7,982 | ||||
| Total comprehensive income | 0 | 0 | 7,982 | 72,554 | 80,536 | |
| Transactions with shareholders | ||||||
| Share-based payment according to IFRS 2 | 845 | 845 | ||||
| Dividends to shareholders | –32,631 | –32,631 | ||||
| Total transactions with shareholders | 0 | 0 | 0 | –31,786 | –31,786 | |
| Closing balance at December 31, 2015 | 6,215 | 62,692 | 2,314 | 412,034 | 483,255 |
| SEK thousands | NOTE | 2015 | 2014 |
|---|---|---|---|
| Operating activities | |||
| Operating profit | 109,452 | 82,388 | |
| Adjustments for non-cash items | |||
| Depreciation and amortization | 11,974 | 9,031 | |
| Financial items | 10 | –183 | 502 |
| Tax paid for the year | –28,318 | –19,466 | |
| Cash flow from operating activities before changes in working capital | 92,925 | 72,455 | |
| Cash flow from changes in working capital | |||
| Change in accounts receivable | –31,183 | –54,628 | |
| Change in other operating receivables | –34,461 | 1,768 | |
| Change in accounts payables and other operating liabilities | 30,583 | 25,218 | |
| Cash flow from changes in working capital | –35,061 | –27,642 | |
| Cash flow from operating activities | 57,864 | 44,813 | |
| Investing activities | |||
| Acquisition of property, plant, and equipment | –8,896 | –4,719 | |
| Acquisition of intangible assets | 22 | –10,124 | –16,322 |
| Cash flow from investing activities | –19,020 | –21,041 | |
| Financing activities | |||
| Repayment of loan | –152 | –339 | |
| Borrowings | 16,490 | – | |
| Dividends to shareholders | –32,631 | –32,532 | |
| Cash flow from financing activities | –16,293 | –32,871 | |
| Cash flow for the year | 22,551 | –9,099 | |
| Cash and cash equivalents, start of year | 114,293 | 108,833 | |
| Translation differences in cash and cash equivalents | 2,703 | 14,559 | |
| Cash and cash equivalents, end of year | 139,547 | 114,293 |
| SEK thousands | NOTE | 2015 | 2014 |
|---|---|---|---|
| Net turnover | 3 | 1,855 | 1,885 |
| Operating expenses | |||
| Other external expenses | 3, 4 | –1,067 | –739 |
| Employee benefit expenses | 6 | –1,150 | –973 |
| Total operating expenses | –2,217 | –1,712 | |
| OPERATING PROFIT | –362 | 173 | |
| Financial items | 10 | ||
| Gains/losses on other securities and receivables held as non-current assets | 40,483 | 29,797 | |
| Interest income and similar profit/loss items | 252 | 8 | |
| Interest expenses and similar profit/loss items | –322 | – | |
| Total gain/loss on financial items | 40,413 | 29,805 | |
| PROFIT AFTER FINANCIAL ITEMS | 40,051 | 29,978 | |
| Tax on profit for the year | 11 | –746 | –678 |
| PROFIT FOR THE YEAR | 39,305 | 29,300 |
| SEK thousands | NOTE | 2015 | 2014 |
|---|---|---|---|
| PROFIT FOR THE YEAR | 39,305 | 29,300 | |
| Other comprehensive income | – | – | |
| TOTAL COMPREHENSIVE INCOME | 39,305 | 29,300 | |
| Attributable to Parent Company shareholders | 39,305 | 29,300 |
| SEK thousands | NOTE | 12-31-15 | 12-31-14 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Financial assets | 14 | ||
| Participations in Group companies | 101,976 | 101,976 | |
| Total non-current assets | 101,976 | 101,976 | |
| Current assets | |||
| Current receivables | |||
| Receivables from Group companies | 26,258 | 984 | |
| Total current receivables | 26,258 | 984 | |
| Cash and cash equivalents | 124 | 2,227 | |
| Total current assets | 26,382 | 3,211 | |
| TOTAL ASSETS | 128,358 | 105,187 | |
| EQUITY AND LIABILITIES | |||
| Equity | 17 | ||
| Restricted equity | |||
| Share capital | 6,215 | 6,215 | |
| Statutory reserve | 41,390 | 41,390 | |
| Total restricted equity | 47,605 | 47,605 | |
| Non-restricted equity | |||
| Retained earnings | 24,224 | 27,555 | |
| Profit for the year | 39,305 | 29,300 | |
| Total non-restricted equity | 63,529 | 56,855 | |
| Total equity | 111,134 | 104,460 | |
| Non-current liabilities | |||
| Other non-current liabilities | 12,529 | – | |
| Total non-current liabilities | 18, 19 | 12,529 | – |
| Current liabilities | |||
| Accounts payable | 46 | 174 | |
| Tax liabilities | 110 | 149 | |
| Other current liabilities | 18 | 4,180 | 16 |
| Accrued expenses and prepaid income | 21 | 359 | 388 |
| Total current liabilities | 4,695 | 727 | |
| TOTAL EQUITY AND LIABILITIES | 128,358 | 105,187 | |
| Pledged assets | 23 | – | – |
| Contingent liabilities | 24 | 4,698 | 4,394 |
| SEK thousands | NOTE | 2015 | 2014 |
|---|---|---|---|
| Operating activities | |||
| Operating profit | –362 | 173 | |
| Financial income and expense | 10 | 9 | 8 |
| Tax paid for the year | –782 | –631 | |
| Cash flow from operating activities before changes in working capital | –1,135 | –450 | |
| Cash flow from changes in working capital | |||
| Change in operating receivables | –25,129 | –931 | |
| Change in accounts payables and other operating liabilities | –181 | 1,330 | |
| Cash flow from changes in working capital | –25,310 | 399 | |
| Cash flow from operating activities | –26,445 | –51 | |
| Investing activities | |||
| Dividends received from subsidiaries | 37,158 | 26,897 | |
| Cash flow from investing activities | 37,158 | 26,897 | |
| Financing activities | |||
| Group contributions | 3,325 | 2,900 | |
| Borrowings | 16,490 | – | |
| Dividends to shareholders | –32,631 | –32,532 | |
| Cash flow from financing activities | –12,816 | –29,632 | |
| Cash flow for the year | –2,103 | –2,786 | |
| Cash and cash equivalents, start of year | 2,227 | 5,013 | |
| Cash and cash equivalents, end of year | 124 | 2,227 |
| Share | Other paid-in |
Retained | Total | |||
|---|---|---|---|---|---|---|
| SEK thousands | NOTE 17 | capital | capital | Reserves | earnings | equity |
| Opening balance at January 1, 2014 | 6,197 | 41,390 | 43,814 | 13,596 | 104,997 | |
| Appropriation of earnings according to AGM | ||||||
| Transfer to retained earnings | 13,596 | –13,596 | 0 | |||
| Total comprehensive income for the period | 29,300 | 29,300 | ||||
| Transactions with shareholders | ||||||
| Dividends to shareholders | –32,532 | –32,532 | ||||
| New issue | 18 | 2,677 | 2,695 | |||
| Closing balance at December 31, 2014 | 6,215 | 41,390 | 27,555 | 29,300 | 104,460 | |
| Opening balance at January 1, 2015 | 6,215 | 41,390 | 27,555 | 29,300 | 104,460 | |
| Appropriation of earnings according to AGM | ||||||
| Transfer to retained earnings | 29,300 | –29,300 | 0 | |||
| Total comprehensive income for the period | 39,305 | 39,305 | ||||
| Transactions with shareholders | ||||||
| Dividends to shareholders | –32,631 | –32,631 | ||||
| Closing balance at December 31, 2015 | 6,215 | 41,390 | 24,224 | 39,305 | 111,134 |
The Parent Company is a public limited liability company registered and headquartered in Stockholm, Sweden, at Grevgatan 34, SE-114 53 Stockholm. The Parent Company is listed on Nasdaq Stockholm. BTS is an international consulting and education firm which focuses on individuals when organizations are executing strategic changes and works with leaders at all levels to help them make better decisions, progress from decision to action and deliver results. BTS has a broad range of services which meet needs within both strategy execution and talent development with services that monitor the employee from evaluation for selection and development, to strategic consensus and strategy implementation. This is achieved through programs in business acumen, leadership and sales with the aid of business simulations and other forms of experiential learning and implementation tools. Most BTS clients are major corporations.
The annual report and consolidated financial statements were approved for publication by the Board of Directors on April 11, 2016.
Amounts are stated in SEK thousands unless otherwise stated. BTS prepares its consolidated financial statements in compliance with the Annual Accounts Act (ÅRL), the Swedish Financial Reporting Board's recommendation RFR 1, Supplementary Accounting Regulations for Groups, and the International Financial Reporting Standards (IFRS) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) as approved by the European Union. Unless otherwise stated, these principles were also applied for the multiple year reviews presented.
The Parent Company has followed the provisions of the ÅRL and RFR 2, Accounting for Legal Entities. The Parent Company's shareholdings in subsidiaries are reported using the cost method.
The Parent Company recognizes group contributions in the income statement which deviates from the accounting policies applied in the Group.
The most important accounting principles applied in the preparation of the consolidated financial statements are described below. These policies were applied consistently for all years presented, unless otherwise stated.
None of the new and amended standards and interpretations applied for the first time in the financial year beginning January 1, 2015, have had a material impact on the Group's financial statements.
New and amended standards and interpretations that have been issued but are effective for annual periods beginning after January 1, 2015, are specified below. None of these has been applied prospectively. No new or amended IFRSs or IFRIC interpretations that are mandatory for the financial year that starts on January 1, 2016, or later and has been approved by the EU is expected to have a material impact on the consolidated financial statements. IASB
has published several new and amended accounting principles which have not yet been approved by the EU but which might possibly have a material impact on the consolidated financial statements in the event of future approval. BTS thus intended to pay attention to these principles but does not intend, where the opportunity exists, to apply these accounting principles prospectively.
IFRS 9 Financial instruments was issued in a complete version in July 2014 and is intended to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 combines all aspects of recognition of financial instruments (with the exception of macro hedges): classification, measurement, impairment and hedge accounting. Classification and measurement: The categories for classification of financial assets in IAS 39 will be replaced by two categories, where measurement will be made a fair value or amortized cost.
The impairment model which in IAS 39 was based on incurred losses is based in IFRS 9 on expected credit losses which requires a more timely recognition of credit losses. Hedge accounting is improved in IFRS 9 so that the effects of how an entity manages the risks in its financial instruments is reflected more clearly in the financial statements. This standard will be applied retroactively and is mandatory for application in the financial year beginning on January 1, 2018, or later but is available for earlier application. The Group has not yet evaluated the effects of introduction of the standard.
IFRS 15 Revenue from Contracts with Customers which was issued by IASB in May 2014 is a comprehensive, principles-based standard for all revenue recognition, regardless of type of transaction or sector which replaces all previously published standards and interpretations related to revenue recognition. The standard will be applied retroactively and is mandatory for application in the financial year beginning on January 1, 2018, or later but is available for earlier application. The Group has not yet evaluated the effects of introduction of the standard.
IFRS 16 Leases was issued by IASB in January 2016 and is intended to replace IAS 17 Leases and related interpretations IFRIC 4, SIC-15 and SIC-27. The standard requires all assets and liabilities attributable to all leases, with a few exceptions, be recognized in the balance sheet. Lessor accounting is substantially unchanged. The standard is mandatory for application in the financial year beginning on January 1, 2019, or later. Early application is permitted. The EU has not yet approved the standard. The Group has not yet evaluated the effects of introduction of IFRS 16.
No other issued IFRSs or IFRIC interpretations not yet approved by the European Commission are expected to be relevant to the consolidated financial statements.
Subsidiaries are all companies (including structured entities) over which the Group has control. The Group controls a company when it is exposed to or entitled to variable returns from its holding in the company and is able to influence returns through its influence in the company. Subsidiaries are included in the consolidated financial statements from and including the date control was transferred to the Group. They are excluded from the consolidated financial statements from and including the date control ceases.
The Group's annual accounts have been prepared according to the acquisition method. A subsidiary's purchase price consists of the fair value of the transferred assets, liabilities and the shares issued by the Group. The purchase price also includes the fair value of all the assets or liabilities that result from a contingent purchase price agreement. Acquisition-related costs are expensed as they occur. Identifiable acquired assets and assumed liabilities in a business combination are initially valued at fair value on the acquisition date, based on a market evaluation performed at the time of the acquisition. The acquired subsidiaries' equity is completely eliminated, which means that only the portion of the subsidiary's equity that was gained after the acquisition is included in Group equity.
If the consolidated acquisition value of the subsidiary's shares exceed the net value of identified acquired assets and assumed liabilities recorded in an acquisition analysis, the difference is recognized as goodwill.
Companies acquired during the fiscal year are included in the consolidated financial statements beginning on the date the Group began to exercise control over the company, with the amounts referring to the period after this date.
When the Group no longer has control each remaining holding is measured at fair value on the date control no longer applies. Change in carrying amount is recognized in profit or loss. Fair value is used as the initial recognized value and provides the basis for continued recognition of the remaining holding as an associate, joint venture or financial asset. All amounts relating to the disposed unit previously recognized in other comprehensive income are recognized as if the Group had directly disposed of the attributable assets or liabilities. This can result in amounts previously recognized in other comprehensive income being reclassified to profit or loss.
Intra-group transactions and balance sheet items, as well as intra-group profits or losses are eliminated in full.
All transactions with non-controlling interests are recognized in equity as long as they do not cause any change in control. These transactions do not create goodwill or gains or losses.
The accounting principles for subsidiaries have been amended where appropriate in order to guarantee the consistent application of the Group's principles.
Exchange rates for currencies relevant to the Group:
| Average 2015 |
December 31, 2015 |
Average 2014 |
December 31, 2014 |
|
|---|---|---|---|---|
| USD | 8.43 | 8.35 | 6.85 | 7.81 |
| EUR | 9.36 | 9.14 | 9.09 | 9.52 |
| GBP | 12.89 | 12.38 | 11.28 | 12.14 |
| AUD | 6.35 | 6.09 | 6.17 | 6.37 |
| SGD | 6.14 | 5.91 | 5.41 | 5.91 |
| ZAR | 0.67 | 0.54 | 0.63 | 0.67 |
| MXN | 0.53 | 0.48 | 0.52 | 0.53 |
Other currencies have not had a material impact on the consolidated balance sheets or income statements.
Revenue is recognized on delivery of services to clients based on agreements signed.
Income from completed customization/development assignments and the expenses attributable to the assignment are recognized as revenue and expenses, respectively, in proportion to the degree of completion of the assignment at the end of the reporting period (percentage of completion method). The degree of completion of an assignment is determined by comparing the expenses paid up to the end of the reporting period with estimated total expenditure for the assignment. If the outcome of a service assignment cannot be reliably calculated, the revenue from that assignment is recognized only to the extent corresponding to the assignment expenses incurred that are likely to be covered by the client. Anticipated losses on assignments are recognized directly as expenses.
When educational services, "seminars", are delivered to a client, they are recognized as revenue immediately after the implementation.
Revenues for licenses, i.e. the customer's right to independently use the materials and solutions for a certain period and/or a certain number of occasions, are recognized when a binding agreement has been reached and BTS has fulfilled its obligations to the client, and the amount of the revenue is known.
Expenditure for customer-specific product development is expensed directly. Expenditure related to development projects (attributable to the development and testing of new or improved products) is capitalized as an intangible asset to the extent such expenditure can be expected to generate future economic benefits. The company has not conducted any research. The development normally conducted by BTS is customer-specific.
The Group has different pension plans in different countries. All are defined-contribution plans, and the assets are managed by external parties. The Company pays fixed fees and has thereby fulfilled its obligations. The costs are charged to consolidated earnings as pension rights are vested.
BTS Group Ab issued employee stock options to the Group's employees in 2015. The program enables employees to acquire stock in the company. The fair value of the allocated stock options is recognized as an employee benefit expense with a corresponding increase in equity. The fair value of the allocated stock options is calculated using the Black and Scholes model and taking into consideration the conditions prevailing at the time of allocation. The cost recognized corresponds to the fair value of the estimated number of stock options and shares expected to be vested. Social security contributions attributable to share-based payments to employees as compensation for purchased services are expensed and distributed over the periods during which the services are performed. Provisions for social security contributions are based on the stock options' fair value at the time of the report. The fair value is calculated using the same valuation model and parameter values used when the stock options were issued.
Borrowing expenses are charged to earnings for the period to which they refer.
Borrowings are recognized initially at the amount received less transaction costs. After the date of acquisition, the loan is measured at amortized cost as per the effective interest method. The effective interest method distributes interest income and expenses over the relevant period. The effective interest is the interest rate that exactly discounts the estimated future disbursements to the financial liability's net carrying amount.
Non-current liabilities are liabilities with an anticipated duration longer than 12 months. All others are current liabilities.
Income taxes recognized comprise taxes for the current year that are to be paid or received as well as changes in deferred tax. All tax liabilities and claims are measured at their nominal amounts
according to the tax rules and tax rates that have been decided or announced and that most probably will be adopted. Tax effects associated with items recognized in the income statement are also recognized in the income statement. Tax effects associated with items recognized in equity are also recognized in equity.
Current tax is the tax to be paid or received for the current year. This includes adjustments of current tax attributable to prior periods.
According to the balance sheet method, deferred tax is calculated on all temporary differences between the carrying amount and tax base of assets and liabilities. Deferred tax assets relating to loss carryforwards or other future tax-effective deductions are recognized to the extent that it is likely they can be used to offset profits for future taxation.
Operating segments are reported in a manner that agrees with internal reporting that is provided to the chief operating decision maker. The chief operating decision maker is the function responsible for allocation of resources and assessment of operating segments' earnings. In the Group it is the Parent Company's CEO who makes strategic decisions. BTS's operating segments consist of the Group's operating units BTS North America, BTS Europe, BTS Other Markets and APG. Each subsidiary's share of consolidated sales is used as a weight for allocation of Group wide overhead.
When a lease entitles the Company as lessee to all financial benefits and risks attributable to the leased asset, the asset is recognized as a non-current asset in the balance sheet. The corresponding obligation to pay lease charges in the future is recognized as a liability. Assets are depreciated at a rate corresponding to their expected useful life.
A lease in which a significant portion of the risks and benefits associated with ownership are retained by the lessor is classified as an operating lease. Payments made during the term of the lease are expensed in the income statement on a straight-line basis over the period of the lease.
Property, plant and equipment are recognized at acquisition cost less accumulated depreciation and impairment losses, if any. The acquisition cost includes expenses directly attributable to the acquisition of the asset. Planned depreciation is charged on a straight-line basis based on the acquisition cost and the estimated useful life. The following depreciation periods apply for existing assets:
• Equipment and installations, 3–6 years
The residual value and useful life are tested annually and adjusted as necessary.
Goodwill is initially valued as the amount by which a total purchase price of the acquired net assets exceed the fair value of the identifiable acquired assets and assumed liabilities. If the purchase price is lower than the fair value of acquired net assets, the difference is recorded directly in the income statement. Impairment tests are conducted annually or more frequently if there are indications of a decline in value.
Acquired products, technology, and software have a limited useful life and are recognized at acquisition cost less accumulated amortization and any impairment losses. Amortization is charged on a straight-line basis during the estimated useful life (2–9 years).
Acquired franchise contracts have a limited useful life and are recognized at acquisition cost less accumulated amortization and any impairment losses. Amortization is charged on a straight-line basis during the estimated period of use (10 years).
Acquired customer contracts have a limited useful life and are recognized at acquisition cost less accumulated amortization and any impairment losses. Amortization is charged on a straight-line basis during the estimated useful life (2–15 years).
Acquired brands with an indefinite useful life are recognized at acquisition cost less accumulated impairment losses as required. Impairment tests are performed annually or more frequently if impairment is indicated.
Acquired brands with a limited useful life are recognized at acquisition cost less accumulated amortization and any impairment losses. Amortization is charged on a straight-line basis during the estimated useful life (10 years).
When there are indications that the carrying amount of any property, plant, equipment, or intangible asset, exceeds its recoverable amount, an impairment test is performed. The recoverable amount is the higher of an asset's net realizable value and value in use. If it cannot be determined for an individual asset, the recoverable amount of the smallest cash-generating unit to which the asset belongs is calculated.
Each year the Group performs impairment tests on goodwill or brands according to the following principle:
The recoverable amounts are based on value in use, calculated as the present value of future growth and earnings forecasts during multiple years, taking into account extrapolated cash flows beyond this multiyear period. Impairment tests are carried out on the operating segment level, which is the lowest level in the company at which goodwill is monitored.
Any impairment is recognized immediately as an expense and not reversed.
To prepare the financial statements in accordance with IFRS, executive management must make judgments, estimates, and assumptions that affect the application of the accounting policies and the amounts recognized as assets, liabilities, income, and expenses. The estimates and assumptions are based on historical experience and various other factors that appear reasonable in the prevailing circumstances. The results of these estimates and assumptions are then used to judge the carrying amounts of assets and liabilities that would not be evident from other sources. Actual outcomes may deviate from these estimates and judgments. Estimates and judgments are periodically reviewed. Changes in estimates are recognized in the period in which the change is made if the change affected only that period.
Impairment tests on goodwill and intangible assets with indefinite useful life
Each year the Group performs impairment tests on goodwill and intangible assets with indefinite useful life in accordance with the principle described above. Recoverable amounts for cash-generating units have been determined by calculating the value in use. Certain estimates must be made for these calculations; please see Note 7.
To determine anticipated additional consideration, the Group makes realistic estimates of future growth and earnings for multiple years, separately for each subsidiary acquired.
Financial assets and liabilities are recognized in the balance sheets whenever there is a contractual right or obligation to receive or remit cash or other financial assets from or to another party, or to exchange one financial instrument for another.
The Group classifies and measures financial instruments in the following categories:
Refers to non-derivative financial assets that are not listed on an active market but have payments that can be determined. These items are included in current assets unless due more than 12 months after the end of the reporting period, in which case they are recognized as non-current assets. BTS's loan and trade receivables are recognized at amortized cost using the effective interest method, less any provisions for impairment. Current receivables such as accounts receivable are deemed as nominal value and as reasonably approximate to their fair value, so they are not discounted to present value.
A provision is made for impairment of an account receivable when objective evidence indicates that BTS will not be able to secure payment of the entire amount due as per the original terms of the receivable. Significant financial difficulties of a debtor – for example the probability of the debtor declaring bankruptcy or undergoing a financial reconstruction – are regarded as indications of the possible impairment of an account receivable. The size of the provision is based on the difference between the carrying amount of the asset and the estimated future cash flows. Provisions are made for doubtful accounts receivable after tests in each individual case.
Cash and cash equivalents are cash and demand deposits at banks and similar institutions, plus current liquid investments with a duration less than three months from the date of acquisition.
Financial liabilities held during the year are measured at amortized cost using the effective interest method. Current liabilities such as trade payables are deemed reasonably approximate to their fair value, so they are not discounted to present value.
Items in the financial statements for the various units in the Group are measured in the currency used in the economic environment in which the company conducts its main business activities (functional currency). Swedish krona (SEK), which is the Group's presentation currency, is used in the consolidated financial statements.
Transactions in foreign currency are translated into the functional currency at the exchange rate prevailing on the transaction date or the date the items are remeasured.
Currency gains and currency losses that arise from payment of such transactions or translation of assets and liabilities in foreign currency at the exchange rate at the end of the reporting period, are recognized in profit or loss.
Profit or loss and financial position for all Group companies whose functional currency is different from the presentation currency are translated to the Group's presentation currency as follows:
Goodwill and fair value adjustments arising at acquisition of foreign operations are treated as assets and liabilities of those operations and translated at the exchange rate at the end of the reporting period. Exchange differences are recognized in other comprehensive income.
The cash flow statement is prepared according to the indirect method. The reported cash flow comprises only transactions that entail incoming and outgoing payments. Cash flow is reported divided into continuing operations, investing activities and financing activities.
Cash and cash equivalents are cash and demand deposits at banks and similar institutions, plus current liquid investments with a duration less than three months from the date of acquisition.
The Parent Company has a close relationship with its subsidiaries, see Note 14. Except for transactions between Group companies, related-party (the Board, the CEO and other senior executives) transactions took place as shown in Note 6.
The subsidiary in the UK has also acquired services from a related party with a value of SEK 9.0 million on market terms and conditions.
Market terms and conditions apply to the supply of services between subsidiaries. The value of these are shown in Note 9.
Receivables and liabilities between Group companies are attributable exclusively to selling and purchasing transactions between the companies. The value of these is specified in Note 9. The liabilities are interest-free.
Of the Parent Company's total purchasing expenses and sales income, 0% (0) of purchases and 100% (100) of sales refer to other Group companies.
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK thousands | 2015 | 2014 | 2015 | 2014 |
| Öhrlings PricewaterhouseCoopers |
||||
| Audit assignments | 413 | 492 | 167 | 282 |
| Other assignments | 55 | – | 55 | – |
| Other auditors | ||||
| Audit assignments | 895 | 717 | – | – |
| Other assignments | 540 | 367 | – | – |
| 1,903 | 1,576 | 222 | 282 |
The Group has no financial leases. Expenses for operating leases totaled till 31,494 (26,154) for the year. Future leasing and rental fees for operating leases are as follows.
| Total | 62,205 |
|---|---|
| Later | 2,165 |
| 2020 | 2,787 |
| 2019 | 4,490 |
| 2018 | 9,230 |
| 2017 | 14,965 |
| 2016 | 28,568 |
The majority of the Group's lease agreements concern premises and office and IT equipment. The Group's operating lease agreements do not contain any variable fees of material value. The agreements do not contain any restrictions.
| Group | 2015 | 2014 | |||
|---|---|---|---|---|---|
| Number of employees |
Of which men |
Number of employees |
Of which men |
||
| Subsidiaries | |||||
| Sweden | 24 | 15 | 23 | 14 | |
| Denmark | 1 | 1 | 2 | 1 | |
| Finland | 4 | 3 | 4 | 3 | |
| Belgium | 3 | 1 | 4 | 2 | |
| Germany | 1 | 1 | 3 | 1 | |
| France | 5 | 3 | 4 | 2 | |
| Switzerland | 2 | 1 | 2 | 1 | |
| Spain | 34 | 18 | 30 | 17 | |
| United Kingdom | 36 | 19 | 32 | 16 | |
| The Netherlands | 4 | 4 | 3 | 3 | |
| United States | 205 | 116 | 179 | 112 | |
| Australia | 17 | 12 | 17 | 13 | |
| Mexico | 11 | 6 | 11 | 6 | |
| Brazil | 6 | 3 | 8 | 4 | |
| Singapore | 14 | 6 | 12 | 5 | |
| South Africa | 27 | 9 | 16 | 6 | |
| Japan | 4 | 3 | 5 | 4 | |
| India | 25 | 15 | 17 | 12 | |
| South Korea | 4 | 2 | 3 | 2 | |
| Taiwan | 3 | 1 | 3 | 1 | |
| China | 5 | 2 | 5 | 3 | |
| Thailand | 1 | 1 | 1 | 1 | |
| Total for the Group | 436 | 242 | 384 | 229 |
| 2015 | 2014 | ||||
|---|---|---|---|---|---|
| Women | Men | Women | Men | ||
| CEO and other senior executives (excl. the Board) |
0 | 100 | 0 | 100 | |
| Board Parent Company | 20 | 80 | 20 | 80 | |
| Board Group | 0 | 100 | 0 | 100 |
In this context, "other senior executives"refers to the two people who, together with the CEO, constitute the Group management team.
The Parent Company had no employees in 2015.
| Group | 2015 | 2014 | ||
|---|---|---|---|---|
| SEK | Salaries and | Social security contributions of which pension Salaries and |
Social security contributions of which pension |
|
| thousands | compensation | expenses | compensation | expenses |
| Subsidiaries | 432,915 | 65,671 | 313,801 | 49,030 |
| 14,837 | 10,015 |
Pension expenses for employees who are president of or a member of the board of a Group company totaled 3,015 (1,916). All pension plans are defined-contribution plans.
he CEO is a member of the Board but receives no Board fee. Other members of the Board in the Parent Company have received compensation only in the form of Board fees.
| SEK thousands | 2015 | 2014 | |
|---|---|---|---|
| Michael Grindfors | Chairman of the Board | 331 | 275 |
| Mariana Burenstam Linder |
Member | 162 | 125 |
| Stefan Gardefjord | Member | 208* | 170* |
| Dag Sehlin | Member | 208* | 170* |
| Total | 909 | 740 |
* of which committee fee 45 (45)
For the CEO, see the figures for compensation to senior executives below.
| Group | 2015 | 2014 | |||
|---|---|---|---|---|---|
| SEK thousands | Board and CEO |
Other employees |
Board and CEO |
Other employees |
|
| In Sweden | |||||
| Parent Company | 909 | – | 740 | – | |
| Subsidiaries | 2,036 | 20,281 | 2,870 | 21,379 | |
| Total Sweden | 2,945 | 20,281 | 3,610 | 21,379 | |
| Outside Sweden | |||||
| United States | 9,698 | 261,449 | 7,076 | 183,430 | |
| Europe | 13,002 | 54,754 | 12,981 | 31,690 | |
| Other | 6,009 | 64,777 | 4,586 | 49,049 | |
| Total outside Sweden | 28,709 | 380,980 | 24,643 | 264,169 | |
| Total for the Group | 31,654 | 401,261 | 28,253 | 285,548 |
other terms of employment for senior executives
The Company shall employ persons under conditions and at salaries commensurate with the market to be able to recruit and retain employees with excellent skills and of a high caliber to reach the Company's objectives. When employing persons outside Sweden, the Company shall comply with each country's generally accepted terms of employment and good practice.
Forms of compensation are intended to achieve a consensus on the long-term view of operations by rewarding performance that benefits the Company and thus the shareholders. Compensation paid to individual employees will be based on their position and tasks, performance, skills, and experience. Compensation will normally consist of a fixed basic salary and defined-contribution pension benefits, the latter no more than 30% of the fixed basic salary. When deemed appropriate, the basic salary and pension benefit can be augmented by variable compensation, other benefits, and participation in incentive programs.
The Board is entitled to deviate from the above policies in individual cases under special circumstances. The Board intends to propose to the AGM that the policies remain unchanged in 2016. Compensation and benefits of the senior executives Compensation includes basic salary, other benefits, variable compensation, and pension expenses.
Other benefits consist exclusively of company cars. The sum total of compensation paid to senior executives was 16,020 (11,680), of which pension expenses were 2,556 (1,464). All pension plans are defined-contribution plans.
The CEO Henrik Ekelund was paid salary and other benefits totaling 4,851 (3,516), including 353 (317) in variable compensation. Variable compensation is calculated using a model that triggers payment when Group earnings exceed predefined profitability targets. The CEO has a defined-contribution pension entitlement equal to 25% (25) percent of his fixed salary, paid in the form of pension insurance entitling the CEO to a pension from the age of 65.
The CEO's employment contract states a mutual period of notice of six months. In addition, if the Company terminates the CEO's employment contract, the CEO is entitled to a severance package corresponding to 12 months' salary. None of the other senior executives is entitled to a severance package.
Other senior executives have been paid salaries and other benefits totaling 8,613 (6,699), of which variable remuneration was 3,220 (2,317). Variable compensation is based on targets achieved by the Company and the individual. Provisions to pensions are made individually at 13–30% of the fixed salary and paid in the form of pension insurance entitling the executive to a pension from the age of 65.
Employee stock option program 2015/2019
The 2015 Annual General Meeting resolved on an employee stock option program 2015/2019. Allocation to be a maximum of 40,000 stock options per employee. A maximum total of 150 people could be allocated stock options. Board members elected by the Annual General Meeting and who are not also employees of the company or another group company or the Parent Company's CEO, are not allocated any stock options.
The 2015/2019 employee stock option program comprises a maximum total of 840,000 stock options, entitling to acquisition of a corresponding number of Class B shares in BTS Group AB.
Each stock option allocated to an employee entitles the holder to acquire one Class B share in BTS at an exercise price of SEK 82.30. Each stock option is valid for four years. The options have vesting conditions such that they can be exercised successively for three years after the allocation, with normally 1/3 of the total number of allocated stock options per year, provided certain financial targets set by the Board are attained. The Company's Board has set as a target that the operating margin before amortization of intangible assets (EBITA margin) for each year shall amount to at least 12% for all the stock options for each year to be exercised. If the EBITA margin is less than 12%, the number of options available for exercise is reduced. If the EBITA margin is less than 10%, no exercise of the options will be allowed. Stock options that cannot be exercised are forfeited.
Exercise of stock options is contingent on continued employment on the exercise date and can take place after the options are exercisable between September 1, 2016 and June 30, 2019, both dates inclusive.
The value of employee stock options has been calculated using the Black & Scholes valuation model based on the share price and other market conditions on July 6, 2015, without taking vesting limitations into account. Considering performance conditions and assuming an annual employee turnover of 5%, the compensation
expense is estimated to total SEK 2.9 million which according to IFRS 2 is recognized in installments over the vesting period. The expense for the fiscal year amounted to 845. Other key parameters in the model were the volume-weighted average price paid during the 10 trading days prior to allocation of SEK 64.12, the above exercise price, volatility of 30%, anticipated dividend of SEK 2.2, as well as a risk-free interest of –0.35% for maturities of 2.5 years, –0.25% for 3.0 years and –0.15% for 3.5 years.
Social security contributions are recognized as an expense during the vesting period and a provision for these is accumulated as necessary during the vesting period. The value of this provision and thus the expense recognized are remeasured continuously based on changes in the value of the employee stock options. Employee stock options allocated to American employees may be ISO options, which means that this, according to current legislation, do not incur social security contributions.
To be able to carry out the employee stock option plan in a cost-effective and flexible manner and to cover future expenses, mainly social security contributions, the Annual General Meeting held on May 7, 2015, also resolved on a private placement of warrants with the wholly owned Swedish subsidiary BTS Sverige AB, reg. no. 556566-7127, carrying entitlement to subscribe for a maximum total of 966,000 Class B shares with a right and obligation for BTS Sverige AB to transfer or otherwise dispose of the warrants in order to fulfill the commitments of the Company or another employer company in the Group and to cover future costs resulting from the employee stock option plan.
Assuming that all warrants as above are exercised for subscription of new shares, the Company's share capital will increased by SEK 322,000 and result in a dilution equivalent to approximately 5% of the share capital and a maximum of approximately 4% of the voting rights for all shares.
| Goodwill | ||
|---|---|---|
| SEK thousands | 12-31-15 | 12-31-14 |
| Accumulated acquisition cost, opening balance |
210,771 | 146,759 |
| Purchases | 2,269 | 37,402 |
| Translation difference | 13,645 | 26,610 |
| Accumulated acquisition cost, closing balance |
226,685 | 210,771 |
| Accumulated impairments, opening balance | –3 726 | –3,726 |
| Accumulated impairments, closing balance | –3 726 | –3,726 |
| Carrying amount, closing balance | 222,959 | 207,045 |
| 12-31-15 | 12-31-14 |
|---|---|
| 50,918 | 34,812 |
| 390 | 9,133 |
| 3,524 | 6,973 |
| 54,832 | 50,918 |
| 35,535 | 28,386 |
| 1,509 | 708 |
| 2,448 | 6,441 |
| 39,492 | 35,535 |
| 15 340 | 15,383 |
| 12-31-15 | 12-31-14 |
| 4,015 | |
| 2,784 | |
| 804 | |
| 8,519 | 7,603 |
| 3,194 | 2,259 |
| 693 | 364 |
| 210 | 571 |
| 4,097 | 3,194 |
| 4,422 | 4,409 |
| 12-31-15 | 12-31-14 |
| 9,805 | |
| 2,784 | |
| 1,964 | |
| 15,755 | 14,553 |
| 6,976 | 5,532 |
| 1,389 | 931 |
| 472 | 513 |
| 8,837 | 6,976 |
| 6,918 | 7,577 |
| 30,625 | 31,702 |
| 7,603 390 526 14,553 195 1,007 |
Goodwill and other intangible assets are allocated among the cash-generating units expected to benefit from the synergies of business acquisitions. The recoverable amounts are based on the value in use, calculated as the present value of future growth and earnings forecast for four years, and on cash flows extrapolated beyond that four-year period. Impairment tests are carried out on the operating segment level, which is the lowest level in the company at which goodwill is monitored.
Material assumptions used to calculate values in use:
The budgeted operating margin has been determined based on previous performance and expectations of future market trends. To extrapolate cash flows beyond the budget period, a growth rate of 3–4 % (3–4) was assumed, which is judged to be a conservative estimate. Also, an average discount rate in local currency after tax was used for the calculations. The discount rate used is 9.0 % (9.5).
Following impairment tests and sensitivity analyses, no impairment was indicated at December 31, 2015.
These calculations are hypothetical and should not be seen as any indication that these factors are more or less likely to change. The sensitivity analyses should therefore be interpreted with caution. None of the cases above would indicate impairment of any individual unit.
| Group SEK thousands 12-31-15 |
North America |
Europe | Other markets |
APG | Total |
|---|---|---|---|---|---|
| Goodwill | 182,165 | – | 12,419 | 28,375 222,959 | |
| Franchise contracts |
3,945 | 3,945 | |||
| Customer contracts |
4,032 | 390 | 4,422 | ||
| Technology, Products & Software |
14,950 | 390 | 15,340 | ||
| Brands | 6,723 | 195 | 6,918 |
| SEK thousands 12-31-15 |
North America |
Europe | Other markets |
APG | Total |
|---|---|---|---|---|---|
| Total | 207,870 | – | 13,394 | 32,320 253,584 | |
| SEK thousands | North | Other | |||
| 12-31-14 | America | Europe | markets | APG | Total |
| Goodwill | 170,357 | – | 10,150 | 26,538 207,045 | |
| Franchise contracts |
4,333 | 4,333 | |||
| Customer contracts |
4,409 | 4,409 | |||
| Technology, Products & |
|||||
| Software | 15,383 | 15,383 | |||
| Brands | 7,577 | 7,577 | |||
| Total | 197,726 | – | 10,150 | 30,871 238,747 |
| Equipment SEK thousands |
12-31-15 | 12-31-14 |
|---|---|---|
| Accumulated acquisition cost, | ||
| opening balance | 54,154 | 44,608 |
| Purchases | 8,896 | 5,140 |
| Disposals | –1,752 | –2,720 |
| Translation difference | 1,732 | 7,126 |
| Accumulated acquisition cost, | ||
| closing balance | 63,030 | 54,154 |
| Accumulated depreciation, opening balance | 40,227 | 30,891 |
| Disposals | 7,688 | 6,464 |
| Depreciation for the year | –1,382 | –2,720 |
| Translation difference | 1,265 | 5,592 |
| Accumulated depreciation, closing balance | 47,798 | 40,227 |
| Carrying amount, closing balance | 15,232 | 13,927 |
The Group's operations are managed and reported by the operating units BTS North America, BTS Europe, BTS Other markets, and APG, who are the Group's segments. BTS Other Markets consists of operations in Australia, Asia, Latin America and South Africa, and APG has operations in North America. Operating units invoice one another for services based on time expended and on market terms. Shared Group expenses are invoiced, and amortization of intangible assets is distributed among the operating units.
| Eliminations | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| North America | Europe | Other markets | APG | & unallocated | Group | |||||||
| SEK thousands | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 |
| Income | ||||||||||||
| External sales | 528,602 | 362,225 | 178,875 | 153,780 | 222,693 | 168,371 | 113,730 | 97,078 | 1,043,900 | 781,454 | ||
| Internal sales | 94,945 | 67,035 | 23,716 | 25,255 | 15,323 | 16,803 | 362 | 829 | –134,346 | –109,922 | 0 | 0 |
| Total income | 623,547 | 429,260 | 202,591 | 179,035 | 238,016 | 185,174 | 114,092 | 97,907 | –134,346 | –109,922 | 1,043,900 | 781,454 |
| Operating profit | 53,951 | 42,115 | 2,766 | 13,960 | 45,720 | 20,404 | 7,015 | 5,909 | 109,452 | 82,388 | ||
| Financial income | 503 | 857 | 503 | 857 | ||||||||
| Financial expenses | –766 | –355 | –766 | –355 | ||||||||
| Tax on profit for the year |
–36,635 | –26,805 | –36,635 | –26,805 | ||||||||
| Profit for the year | 72,554 | 56,085 | ||||||||||
| Other information | ||||||||||||
| Assets | 570,012 | 451,287 | 131,029 | 121,360 | 150,970 | 121,605 | 47,004 | 35,873 | –88,039 | –48,251 | 810,976 | 681,874 |
| Liabilities | 232,918 | 182,362 | 99,228 | 47,150 | 54,375 | 44,292 | 29,239 | 21,815 | –88,039 | –48,251 | 327,721 | 247,368 |
| Investments | 13,681 | 18,823 | 794 | 462 | 4,451 | 1,709 | 94 | 47 | 19,020 | 21,041 | ||
| Depreciation of property, plant, and equipment |
–4,622 | –4,226 | –950 | –841 | –2,063 | –1,370 | –53 | –27 | –7,688 | –6,464 | ||
| Amortization of intangible assets |
–3,591 | –2,003 | – | – | – | – | –695 | –565 | –4,286 | –2,568 |
The Group's total sales are distributed by the following sources of revenue: Development 211,450 (189,979), Seminars 595,982 (421,580), Lincenses 151,237 (114,782) and Other revenues 85,231 (55,113).
38,115 (49,221) of the Group's total revenue refers to the domicile country, Sweden. The value of the Group's assets in Sweden amounted to 24 (47).
| Group SEK thousands |
2015 | 2014 |
|---|---|---|
| Interest income | 503 | 857 |
| Total financial income | 503 | 857 |
| Foreign exchange losses | –311 | –240 |
| Interest expenses | –455 | –115 |
| Total financial expenses | –766 | –355 |
| Total gain/loss on financial items | –263 | 502 |
| Parent Company SEK thousands |
2015 | 2014 |
|---|---|---|
| Gains/Losses on other securities and receivables held as non-current assets |
||
| Dividends from subsidiaries | 37,158 | 26,897 |
| Group contributions | 3,325 | 2,900 |
| 40,483 | 29,797 | |
| Interest income | 252 | 8 |
| Interest expenses | –322 | – |
| Total gain/loss on financial items | 40,413 | 29,805 |
| Group SEK thousands |
2015 | 2014 |
|---|---|---|
| Income tax as recognized in the income | ||
| statement | –36,635 | –26,805 |
| Current tax expense | –37,370 | –28,430 |
| Current tax attributable to previous years | 114 | 979 |
| Postponed tax income/expense (+/–) | 621 | 646 |
| Tax for the year | –36,635 | –26,805 |
| Parent Company SEK thousands |
2015 | 2014 |
| Current tax for the year | –746 | –678 |
| Reconciliation of effective tax Group SEK thousands |
2015 | 2014 |
| Profit before tax | 109,190 | 82,890 |
| Tax expense based on Swedish income tax rates, 22% |
–24,022 | –18,236 |
| Effects of different tax rates | –12,200 | –8,516 |
| Non-deductible expenses | –1,897 | –1,507 |
| Non-taxable income | 1,370 | 475 |
| Tax attributable to previous years | 114 | 979 |
| Effective tax recognized | –36,635 | –26,805 |
| Effective tax rate | 33.6% | 32.3% |
| Parent Company SEK thousands |
2015 | 2014 |
| Profit before tax | 40,051 | 29,978 |
| Tax expense based on Swedish income tax rates, 22% |
–8,811 | –6,595 |
| Dividends from subsidiaries | 8,175 | 5,917 |
| Effective tax recognized | –746 | –678 |
| Effective tax rate | 1.9% | 2.3% |
Basic earnings per share are calculated by dividing the profit attributable to Parent Company shareholders with the weighted average number of common stock on issue during the period.
| 2015 | 2014 | |
|---|---|---|
| Profit for the year attributable to Parent | ||
| Company shareholders, SEK thousands | 72,554 | 56,085 |
| Average number of shares, basic (thousands) | 18,646 | 18,646 |
| Basic and diluted earnings per share, SEK | 3.89 | 3.01 |
Dividends paid in 2015 totaled SEK 32,631 thousand (SEK 1.75 per share). Dividends paid 2014 totaled SEK 32,532 thousand (SEK 1.75 per share). At the AGM to be held May 10, 2016, a dividend for fiscal 2015 of SEK 2.35 per share, totaling SEK 43,819 thousand, will be proposed. The proposed dividend was not recognized as a liability in these financial statements.
Participations in Group companies
| SEK thousands | No. of shares | Pctg. equity | Carrying amount 12-31-15 |
Carrying amount 12-31-14 |
|---|---|---|---|---|
| Parent Company holdings | ||||
| BTS Sverige AB | 5,000 | 100 | 7,456 | 7,456 |
| Corp. id. no. 556566-7127 | ||||
| Domicile: Stockholm | ||||
| BTS USA, Inc. | 1,000 | 100 | 77,430 | 77,430 |
| Corp. id. no. 06-1356708 | ||||
| Domicile: Connecticut | ||||
| BTS in London Ltd. | 5,000 | 100 | 6,833 | 6,833 |
| Corp. id. no. 577 1376 13 | ||||
| Domicile: London | ||||
| Business Training Systems AS | 100 | 100 | 94 | 94 |
| Corp. id. no. 957 694 187 | ||||
| Domicile: Oslo | ||||
| Catalysts for profitability and growth Ltd | 1,000 | 100 | 1 | 1 |
| Corp. id. no. 1998/010779/07 | ||||
| Domicile: Centurion | ||||
| BTS Finland AB | 1,000 | 100 | 100 | 100 |
| Corp. id. no. 556583-1673 | ||||
| Domicile: Stockholm | ||||
| BTS Asia Pacific PTE Ltd | 50,000 | 100 | 237 | 237 |
| Corp. id. no. 2008114642 | ||||
| Domicile: Singapore | ||||
| Business Training Solutions S.L. | 1,031 | 100 | 7,911 | 7,911 |
| Corp. id. no. B95138160 | ||||
| Domicile: Bilbao | ||||
| BTS Management SA | 1,000 | 100 | 673 | 673 |
| Corp. id. no. 01 73.802 11 | ||||
| Domicile: Geneva | ||||
| Business Game Factory Oy | 90,750 | 100 | 654 | 654 |
| Corp. id. no. 1807788-2 | ||||
| Domicile: Helsinki | ||||
| BTS Brussels NV | 620,000 | 100 | 587 | 587 |
| Corp. id. no. 878.155.648 | ||||
| Domicile: Brussels | ||||
| Total shares in subsidiaries | 101,976 | 101,976 |
| Group | ||
|---|---|---|
| SEK thousands | 2015 | 2014 |
| Opening balance, net | 2,041 | 1,201 |
| Recognized in profit for the year | 621 | 646 |
| Acquisitions of Group companies | 559 | – |
| Translation differences | –101 | 194 |
| Closing balance, net | 3,120 | 2,041 |
The amount concerns unused loss carry-forwards in subsidiaries which are expected to be utilized during 2016.
| Group SEK thousands |
12-31-15 | 12-31-14 |
|---|---|---|
| Accrued income | 70,778 | 39,347 |
| Prepaid rent | 2,898 | 2,781 |
| Other items | 31,688 | 19,984 |
| Total | 105,364 | 62,112 |
The share capital consists of 853,800 Class A shares and 17,792,570 Class B shares, totaling 18,646,370 shares with a total value of SEK 6,215,457. Each share has a quotient value of SEK 0.33. Each Class A share entitles the holder to ten votes per share, each Class B one vote per share.
The equity in all Group companies that have a functional currency different from the reporting currency is translated into the reporting currency (SEK). Translation differences arise if the SEK exchange rate for a functional currency at the end of the period is different from its rate at the start of the period. These translation differences have no effect on taxes. Closing accumulated translation differences recognized directly in equity totaled 2,314. Opening accumulated differences totaled –5,668.
The Board directs and monitors BTS's financing activities and financial risks. Financing and risk management are gathered under the Group finance function and conducted in compliance with a financial policy adopted by the Board of Directors that stresses low risk. The aim of the Company's risk management is to optimize the Group's cost of capital and, in a deliberate manner, to manage and control the Group's financial risks. Hedging instruments may be used within given parameters. Future payments are not normally hedged. Cash and cash equivalents may be invested in interestbearing accounts or in interest-bearing securities carrying low credit risk. The duration of the investment portfolio must not exceed nine months.
During the year, BTS's holdings of financial instruments were limited to primary instruments such as accounts receivable, trade payables, and the like. Customer contracts contain no currency clauses or anything that could be considered embedded derivatives. No hedging instruments are held or have been purchased or sold during the year, the same applies for the previous year.
| Group SEK thousands |
12-31-15 | 12-31-14 |
|---|---|---|
| Other non-current receivables | 232 | 6,935 |
| Accounts receivable | 276,812 | 239,005 |
| Cash and cash equivalents | 139,547 | 114,293 |
| Total financial assets | 416,591 | 360,233 |
| Other non-current liabilities | 16,705 | 153 |
| Accounts payable | 21,465 | 22,458 |
| Total financial liabilities | 38,170 | 22,611 |
Loan and accounts receivable
Other non-current receivables chiefly consist of rental deposits and interest-bearing financial claims on various counterparts.
Rental deposits have a maturity corresponding to their respective leases.
Reported value is deemed equivalent to the fair value. Accounts receivable denominated in foreign currencies are measured at the closing rate. Accounts receivable in the BTS North America operating unit constitute 56% (47) of the Group's total accounts receivable. The table below shows the distribution of accounts receivable by currency.
| SEK thousands | 12-31-15 | 12-31-14 |
|---|---|---|
| SEK | 9,608 | 10,608 |
| USD | 173,772 | 131,530 |
| GBP | 41,074 | 32,814 |
| EUR | 31,522 | 42,871 |
| Other currencies | 20,836 | 21,182 |
| Total accounts receivable | 276,812 | 239,005 |
Historically the Group has had very low credit losses on accounts receivable. The spread of risk is good among companies, sectors and geographic markets. Fair value agrees with carrying amount and no significant impairment of accounts receivable has been recognized during the year, same principle as in the previous year.
At December 31, 2015, accounts receivable totaling 48,160 (36,197) were more than 30 days past due; this excludes accounts receivable for which provisions had been made.The structure of due dates is shown in the table below.
| SEK thousands | 12-31-15 | 12-31-14 |
|---|---|---|
| Total accounts receivable | 276,812 | 239,005 |
| more than 30 days overdue | 21,586 | 20,078 |
| more than 60 days overdue | 29,574 | 16,119 |
At the end of the reporting period, there was only cash in hand and bank balances.
Financial liabilities held during the year are measured at the amortized cost using the effective interest method. At year-end 2015 the financial liabilities consisted of accounts payable and non-current liabilities.
Accounts payable are deemed reasonably approximate to their fair value. All accounts payable fall due within 12 months, of which most are due within a month, why they are not discounted to present value.
The Group is exposed to foreign exchange risks associated with the translation of foreign subsidiaries, thus influencing profit and equity in the Group. The currencies that have the greatest influence are USD, EUR, and GBP. Transaction exposure is limited, because revenues and expenses are primarily denominated in the same currency in each market. BTS does not normally hedge its foreign exchange exposure. The sensitivity analysis below shows the effects on operating profits based on BTS's 2015 income statement and should only be seen as an indication of the significance of the different currencies.
| Percentage change |
Change, SEK thousands, full-year 2015 |
Change, SEK thousands, full-year 2014 |
Change in equity, SEK thousands 2015 |
Change in equity, SEK thousands 2014 |
|
|---|---|---|---|---|---|
| SEK/ USD |
+/–10% | 7,149 | 8,744 | 31,333 | 28,323 |
| SEK/EUR | +/–10% | 1,032 | 1,561 | 3,629 | 3,819 |
| SEK/ GBP |
+/–10% | 1,327 | 1,161 | 3,923 | 3,521 |
Credit risk refers to companies not getting paid, fully or partly, for their accounts receivable from customers. BTS only accepts creditworthy counterparties in financial transactions, and the limit is determined individually for each customer. Creditworthy refers to companies that have undergone customary credit checks with satisfactory results. The intention is for credit limits to reflect the solvency of each customer. BTS has sufficiently diversified risk. BTS's accounts receivable and sales are spread among a large number of companies operating in a variety of sectors.
The maximum credit risk exposure on accounts receivable at year end was 276,812 (239,005). Fair value agrees with book value.
BTS manages liquidity risk by maintaining sufficient cash and cash equivalents including unutilized part of approved overdraft facility. Interest rates on the Group's financial assets and liabilities are usually fixed for short periods. Interest rate risk refers to changes in the market interest rate that affect BTS's results negatively.
| Percentage change in market interest rate |
Change in interest expense, SEK thousands, 2015 |
|
|---|---|---|
| Interest bearing liabilities |
+/–10% | 46 |
BTS's policy is to allow borrowing with the Board's approval. Any surplus cash in subsidiaries should first of all be used to repay loans, which was done during the year. Interest risk for interest income is limited to the fluctuating return on cash and cash equivalents invested at variable rates.
| Group SEK thousands |
12-31-15 | 12-31-14 |
|---|---|---|
| Cash and cash equivalents | 139,547 | 114,293 |
| Unutilized portion of bank overdraft facility |
19,564 | 19,159 |
| Cash and cash equivalents available | 159,111 | 133,452 |
BTS's goal for its capital structure is to safeguard the Group's ability to continue and expand its operations, so that they continue to generate a return for shareholders and benefit other stakeholders, at the same time as the cost of capital is kept at a reasonable level.
To maintain or change the capital structure, the dividends can be raised or lowered, shares can be issued or repurchased, and assets can be bought or sold.
BTS's financial objective – and a measure of its capital risk – is that its equity/assets ratio never remains less than 50%. At year-end, the Group's equity/assets ratio was 60% (64).
Non-current liabilities refer to interest-bearing loans from credit institutions which will be repaid as follows.
| SEK thousands |
|
|---|---|
| 2017 | 4,176 |
| 2018 | 4,176 |
| 2019 | 4,177 |
| Total | 12,529 |
| Group SEK thousands |
12-31-15 | 12-31-14 |
|---|---|---|
| Approved credit limit | 19,564 | 19,159 |
| Unutilized portion | –19,564 | –19,159 |
| Credit utilized | 0 | 0 |
| Parent Company SEK thousands |
12-31-15 | 12-31-14 |
|---|---|---|
| Approved credit limit | 3,300 | 3,300 |
| Unutilized portion | –3,300 | –3,300 |
| Credit utilized | 0 | 0 |
| Group SEK thousands |
12-31-15 | 12-31-14 |
|---|---|---|
| Accrued salaries | 82,714 | 51,101 |
| Accrued social security contributions | 2,478 | 2,060 |
| Prepaid income | 95,536 | 61,112 |
| Other items | 24,453 | 26,666 |
| Total | 205,181 | 140,939 |
| Parent Company SEK thousands |
12-31-15 | 12-31-14 |
| Other items | 359 | 389 |
Since the acquisitions of AVO Vision and The Synergy Group Pty Ltd are not significant to the Group, disclosure of the acquisition balance sheet is omitted.
| Group SEK thousands |
12-31-15 | 12-31-14 |
|---|---|---|
| Guarantee commitments on behalf of subsidiaries |
||
| Company mortgages | 10,000 | 10,000 |
| SEK thousands | 12-31-15 | 12-31-14 |
|---|---|---|
| Guarantee commitments on behalf | ||
| of subsidiaries | 4,698 | 4,394 |
The Board of Directors and Chief Executive Officer affirm that the consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) and that the annual report was prepared in accordance with generally accepted accounting principles in Sweden. The annual report and consolidated financial statements, respectively, provide a true and fair view of the Parent Company's and the Group's financial positions and earnings.
The management report for the Parent Company and the Group provides a fair review of developments in the Parent Company's and the Group's operations, financial position, and earnings and describes the material risks and uncertainties facing the Parent Company and the companies that are part of the Group.
The consolidated income statement and balance sheet as well as the Parent Company's income statement and balance sheet will be submitted for adoption to the Annual General Meeting of May 10, 2016.
Stockholm, Sweden, April 11, 2016
Michael Grindfors Chairman of the Board
Henrik Ekelund Chief Executive Officer
Mariana Burenstam Linder Member of the Board
Stefan Gardefjord Member of the Board
Dag Sehlin Member of the Board
Our audit report was submitted on April 13, 2016 Öhrlings PricewaterhouseCoopers AB
Sten Håkansson Authorized Public Accountant
We have audited the annual accounts and consolidated accounts of BTS Group AB for the year 2015. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 52–77.
Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accounts The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these annual accounts in accordance with the Annual Accounts Act and of the consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2015 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2015 and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting
Standards, as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.
We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the group.
In addition to our audit of the annual accounts and consolidated accounts, we have also audited the proposed appropriations of the company's profit or loss and the administration of the Board of Directors and the Managing Director of BTS Group AB for the year 2015.
The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss, and the Board of Directors and the Managing Director are responsible for administration under the Companies Act.
Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company's profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.
As a basis for our opinion on the Board of Directors' proposed appropriations of the company's profit or loss, we examined the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.
As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also examined whether any member of the Board of Directors or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
We recommend to the annual meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year
Stockholm, April 13, 2016
Öhrlings PricewaterhouseCoopers AB Sten Håkansson Authorized Public Accountant
BTS Group AB is a public limited liability company based in Stockholm, Sweden, and listed on NASDAQ Stockholm. Consequently the BTS Group's corporate governance is based on Swedish legislation and regulations such as the Companies Act, the listing agreement, the Swedish Code of Corporate Governance, and the Company's own articles of association.
The Swedish Code of Corporate Governance (the Code) is a set of rules and regulations for listed companies and complements legislation, companies' own articles of association, and other rules by specifying a norm for good corporate governance. The Code deals with the systems and corporate and decision-making bodies through which owners directly or indirectly control their company and is intended to safeguard the investments of shareholders and the assets of a group as well as to insure that the financial information provided by a company is reliable. The code is based on the principle of comply or explain, which means that a company that applies may deviate from individual rules, but is required to explain the reasons for each deviation.
| The corporate bodies of BTS Group AB comprise the following. | |
|---|---|
| Annual General Meeting (AGM) | – highest decision-making |
| body | |
| Board of Directors | – has ultimate responsibil |
| ity for the Company's | |
| organization and man | |
| agement | |
| Chief Executive Officer (CEO) | – has responsibility for day |
| to-day management | |
| Auditors | – audit the Board of Direc |
| tors' and CEO's manage | |
| ment at the request of | |
| the shareholders/Annual | |
| General Meeting. | |
The total number of shares outstanding is 18,646,370, consisting of 853,800 Class A and 17,792,570 Class B shares. Each Class A share entitles the holder to ten votes per share, each Class B one vote per share.
At December 31, 2015, BTS Group AB had 1,105 shareholders. The ten largest shareholders had total shareholdings corresponding to 79.2 % of shares and 85.3 % of votes. A list of the largest shareholders is found on page 51 of the annual report.
BTS's highest decision-making body is the Annual General Meeting (AGM). Notice of the AGM shall be published no earlier than six weeks and no later than four weeks before the AGM and shall appear in Post- och Inrikestidningar and Svenska Dagbladet. All shareholders entered in the share register on the record date who have notified the Company in time of their intention to participate in the AGM may do so. Shareholders unable to attend can be represented by proxy.
The AGM elects the Company's Board and the Chairman of the Board. The business of the AGM includes
The 2015 AGM was held on Thursday, May 7, 2015, at the Company's offices in Stockholm. 26 shareholders attended, representing 77.0% of the number of shares outstanding and 83.7% of the votes. All members of the Board and the Company's auditor participated in the AGM. Decisions made included the following.
} Mariana Burenstam Linder, Henrik Ekelund, Stefan Gardefjord, Michael Grindfors and Dag Sehlin were reelected to the Board for the period until the next AGM. Michael Grindfors was re-elected Chairman of the Board.
} Instructions for the nominating committee, such that the committee be made up of representatives from the two shareholders controlling the most votes, based on Euroclear Sweden AB's data at September 30, 2015, and the Chairman of the Board.
The nominating committee has the task of preparing and submitting proposals to the AGM concerning the following, when relevant.
A nominating committee for BTS Group AB was appointed on November 5, 2015. BTS's two largest shareholders in consultation with Michael Grindfors, Chairman of the Board, appointed Anders Dahl (representing Henrik Ekelund), Stefan af Petersens, Ulf Hjalmarsson (representing Lannebo Fonder) and Michael Grindfors to the committee. Anders Dahl was appointed chairman of the nominating committee.
Shareholders in BTS Group AB have been able to contact the nominating committee to propose candidates to the Board.
All of the nominating committee's candidates based on the above will be announced in the notice for the 2016 AGM. The nominating committee's statement supporting its proposal for the Board of Directors of BTS Group AB as well as the information about the candidates recruited by the committee will be published on BTS's web site when the proposal is announced.
The Board of Directors has ultimate responsibility for the Company's organization and management and is appointed by the shareholders at each AGM for the period from that AGM until the end of the next. BTS's Board decides on issues such as strategic direction, acquisitions, investments, financing, and Group-wide policies. BTS's Board shall also insure proper disclosure to BTS's various stakeholders.
The articles of association specify that BTS's Board shall consist of no fewer than three and no more than eight members. The AGM held on May 7, 2015, decided that for the period until the next AGM the Board would consist of five members and no deputy members.
Once each fiscal year, the work of the Board is assessed, either by the Board alone or with external assistance, providing a basis for the Board's procedures in the future.
The Board is deemed to comply with the Nasdaq Stockholm marketplace rules and the Swedish Code of Corporate Governance regarding requirements on independence of members of the Board in relation to the Company and Company management.
Information about the Board of Directors is to be found on page 83 in the Annual Report.
In addition to legislation and recommendations, a written set of procedures adopted annually governs the work of the Board. The Board's set of procedures is intended to clarify and regulate the Board's tasks and how it works as well as the division of responsibilities among the Chairman, other Board members, and the CEO. According to these procedures, the Board shall normally hold a minimum of four ordinary meetings. At each of these meetings, the Board deals with issues of material significance to the Company. In addition, the Board receives reports from senior management about current business conditions in the Group's market segments.
Board meetings are held periodically in connection with the Company's financial reports. The Board deals with the yearend report and proposed appropriation of earnings in February, interim reports in April, August, and October–November, and the budget for the coming year in December. Occasionally, an issue is delegated to the Chairman of the Board and the CEO for joint deliberation. The Company's CFO serves as
| Member | Position | Elected | Committee work | Independent | Board meeting attendence |
|---|---|---|---|---|---|
| Michael Grindfors | Chairman of the Board | 2009 | Yes | 8/9 | |
| Mariana Burenstam Linder |
Member | 2004 | Yes | 9/9 | |
| Henrik Ekelund | Member | 1986 | No1 | 9/9 | |
| Stefan Gardefjord | Member | 2003 | Audit committee | Yes | 9/9 |
| Dag Sehlin | Member | 2003 | Audit committee | Yes | 9/9 |
1 Henrik Ekelund is the largest shareholder and is President and CEO of BTS Group.
Board secretary. During the past year, eleven meetings were held.
Every year the Board makes an evaluation of the work of the Board. The Nomination Committee has been informed of the contents in the 2015 evaluation. It is e.g. used as basic data when next year's work of the Board is planned.
The AGM held on May 7, 2015, approved a total of SEK 875,000 in fees to be paid to those Board members who receive no salary from the Company or any of its subsidiaries, such that SEK 350,000 be paid to the Chairman and SEK 175,000 each to the members. The AGM also approved a total of SEK 90,000 in fees for work on Board committees.
The AGM also determined that auditors' fees will be paid based on approved invoices.
Members of the Board in the Parent Company have received compensation only in the form of Board fees. The Members of the Board are not included in any incentive programs for Group employees that are based on shares or share prices.
The compensation committee has the task of reviewing and recommending to the Board policies for compensation, including performance-based payments and pension benefits for the Company's senior executives. Issues concerning the CEO's terms of employment, compensation, and benefits are prepared by the compensation committee and decided by the Board. The duties of the compensation committee were performed during the year by the Board as a whole excluding the CEO.
The Board will propose policies for compensation and other terms of employment for the Company's senior executives for the approval of the AGM on May 10, 2016.
More information about compensation to senior executives is found in Note 6 of the annual report.
The task of the audit committee is to prepare the Board's work assuring the quality of the Company's financial reports. The audit committee also adopts guidelines on services other than auditing that the Company may purchase from the Company's auditors. The committee is also tasked with providing the nominating committee with an assessment of the audit work and of assisting the nominating committee in preparing the nominating committee's proposal to the AGM for the election of auditors as well as the size of the audit fee. The Company's CFO, also the Board secretary, prepared the business for the meetings.
The auditors examine the management of the Company by the Board and CEO and the quality of the Company's accounts and they report the results of their audit to the shareholders through the audit report, which is submitted at the AGM. In addition, the auditor participates in the Board meeting when the final accounts are presented and submits
a report on the audit of the Company's earnings, financial position, and internal control. The Company's auditor may also submit a statement of his/her findings directly to the Chairman of the Board, if deemed necessary.
The auditor is elected by the AGM for a period of four years. The 2015 AGM re-elected the registered public accounting firm Öhrlings PricewaterhouseCoopers and to managing auditor Sten Håkansson for the period until the end of 2016 AGM.
More information about compensation to auditors is found in Note 4 of the annual report.
For 2015, the Company's auditors did not review BTS's semiannual report or the nine-month interim report, which deviates from the Code. The Board has determined to date that the additional costs of such reviews have not been justifiable.
BTS's senior executives include:
Henrik Ekelund, President & CEO of BTS Group AB, Stefan Brown, CFO and Vice President of BTS Group AB, and Jonas Åkerman, President of BTS USA Inc.
More information about senior executives is found on page 84 of the annual report.
The AGM held on May 7, 2015, adopted policies for compensation to senior executives such that BTS shall employ persons on terms and at salaries commensurate with the market to be able to recruit and retain employees with excellent skills and of a high caliber to reach the Company's goals. When employing persons in different countries, the Company shall comply with each country's generally accepted forms of employment and good practice.
Forms of compensation are intended to achieve a consensus on the long-term view of operations by rewarding performance that benefits the Company and thus the shareholders. Compensation paid to individual employees will be based on their position and tasks, performance, skills, and experience. Compensation will normally consist of a fixed basic salary and defined-contribution pension benefits, the latter no more than 30% of the fixed basic salary. When deemed appropriate, the basic salary and pension benefit can be augmented by variable compensation, other benefits, and participation in incentive programs. Only the CEO in the Parent Company is entitled to a severance package, corresponding to 12 months' salary if the Company terminates his employment contract.
The Board is entitled to deviate from the principles above in individual cases under special circumstances.
The overall goal of BTS's communication is to provide shareholders and employees, actors in the market, and other stakeholders with an up-to-date, true, and fair view of the Company and its business operations. Communication shall be correct, credible, characterized by close relationships with the Company's stakeholders, and based on frequent contact, clarity, and good ethics. BTS believes that high-quality communication efforts
actively help bolster confidence in the Company and management, making it easier to achieve business objectives.
BTS publishes up-to-date information about the Company on its web site. Interim reports and annual reports are published in Swedish and English. Events that could be expected to affect the share price are announced in press releases. In addition, the Company communicates with mass media, capital markets, and shareholders when interim reports are published and also participates in other activities on an ongoing basis.
The Board of Directors' description of internal control concerning financial reports
Good corporate governance is about organization and routine, the proper handling of financial information, and minimizing risk. A good control environment is also based on an organizational structure with explicit and documented delegation of decision-making authority, straightforward guidelines and policies, and a corporate culture with common values.
Internal control at BTS is based on a control environment embracing the organization, lines of decision-making, authority, and responsi-bility. The Board of Directors has a written set of procedures that clarifies the Board's responsibility and regulates how Board tasks are delegated. The set of procedures also specifies which issues are submitted to the Board for a decision. How roles are divided between the Board and the CEO is described in the Board's set of procedures and its instructions to the CEO. The CEO also manages the business with reference to the Companies Act, other laws and regulations, rules and regulations for stock market companies, and the Code, for example.
The Company has established policies in areas such as financial reporting, IT and IT security, and human resources (compensation to senior executives, the work environment, equal opportunity). The Board's instructions to the CEO specify financial responsibilities and authority, as do procedures adopted for signing off. To limit and control financial risk, the Board has adopted a financial policy.
The Company's operating organization is communicated through an organization chart augmented by the assignment of roles and responsibilities.
The Board of Directors follows up to insure that policies adopted for financial reporting and internal control are adhered to and maintains appropriate relationships with the Company's auditors. Company management is responsible for the system of internal controls required for managing significant risks in operating activities.
The Board of Directors has ultimate responsibility for risk management. A well-defined organization and decision-making procedure are intended to foster prudent risk taking and good awareness of risk among employees. To insure that internal routines and controls have worked adequately and uniformly, the most important processes have procedural descriptions. Built-in checkpoints also minimize the risk of errors in accounting. Likewise, procedures for the Company's accounting and consolidation systems have been documented. Ongoing activities aim at maintaining good internal control, thus avoiding and detecting risks.
Significant guidelines, manuals, and such that affect financial reporting are updated and communicated on an ongoing basis to personnel in the Group affected. Formal as well as informal channels to Company management and the Board exist to transmit significant information from employees. For external communication, the Company follows the governing regulations discussed above.
The Board of Directors continuously evaluates the information provided by Company management. The work of the Board includes insuring that actions are taken concerning any deficiencies or proposals for corrective action arising from external audits.
BTS has no internal audit unit of its own, based on the assessment that there are no special circumstances in operating activities according to Group size, organization and reporting structure or other conditions to justify such a unit.
To the annual meeting of the shareholders of BTS Group AB (publ) corporate identity number 556566-7119
It is the Board of Directors who is responsible for the Corporate Governance Statement for the year 2015 on pages 79–82 and that it has been prepared in accordance with the Annual Accounts Act.
We have read the corporate governance statement and based on that reading and our knowledge of the company and the group we believe that we have a sufficient basis for our opinions. This means that our statutory examination of the Corporate Governance Statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden.
In our opinion, the Corporate Governance Statement has been prepared and its statutory content is consistent with the annual accounts and the consolidated accounts.
Stockholm, April 13, 2016 Öhrlings PricewaterhouseCoopers AB
Sten Håkansson Authorized Public Accountant
Born 1956. Chairman of the Board of directors of BTS Group AB since 2009.
Shareholdings in BTS Group AB: 50,420 class B shares.
Michael Grindfors is member of the board of AlixPartners where he previously was CEO. He has also held senior executive positions in New York and the Nordic countries in companies such as Boston Consulting Group, Goldman Sachs and Puma-Etonic-Tretorn. Michael Grindfors graduated in business administration at the Stockholm School of Economics.
Independent of the Company and its major shareholders.
Born 1957. Member of the Board of BTS Group AB since 2004.
Managing Partner in Burenstam & Partners AB. Other assignments: Member of the board of Latour AB and Resurs Holding AB.
Shareholdings in BTS Group AB: 22,100 Class B shares.
Mariana Burenstam Linder has extensive experience from management positions in several Swedish companies. Former positions include CEO of Ainax, Head of Enskilda Banken with global responsibility for Private Banking, deputy CEO of SEB, CIO of Trygg-Hansa and later the SEB group, CEO of ABB Financial Consulting and CEO of Nordic Management AB. Mariana Burenstam Linder graduated in business administration at the Stockholm School of Economics.
Independent of the Company and its
Born 1955. President and CEO of BTS Group AB.
Shareholdings in BTS Group AB (including companies): 816,000 Class A shares, 3,189,034 Class B shares, totally 4,005,034 shares.
Henrik Ekelund is the founder of BTS and has been its CEO since its inception in 1986.
Henrik Ekelund has comprehensive experience as a board member and owner of high-growth enterprises, including Jobline AB, Image Publications AB and Universum AB. Henrik Ekelund graduated in business administration at the Stockholm School of Economics.
Not independent of the Company or its major shareholders.
Born 1958. Member of the Board of BTS Group AB since 2003.
President and CEO of Swedish Space Corporation.
Shareholdings in BTS Group AB: 20,000 Class B shares.
Stefan Gardefjord has been CEO of Logica Sverige AB and member of the executive management of Logica. He has since 1987 held several senior positions in the WM-data group, including CEO of different subsidiaries, business area head, and group director of marketing, sales, and information. Stefan Gardefjord graduated upper secondary school in business.
Independent of the Company and its major shareholders.
Born 1945. Member of the Board of BTS Group AB since 2003, Chairman of the Board 2003–2008.
Shareholdings in BTS Group AB (including related parties): 16,000 Class B shares.
Dag Sehlin has long-term experience in senior positions in the Swedish financial sector. Previous positions include CFO and deputy CEO of Posten AB, deputy CEO of the OM Group, and prior to that various positions in accounting and finance at several Swedish companies. He also has long-term experience from work as an independent consultant and member of the board of various listed companies and other enterprises. Dag Sehlin graduated in business administration at the Stockholm School of Economics.
Independent of the Company and its major shareholders.
Öhrlings PricewaterhouseCoopers AB. Managing Auditor: Magnus Thorling, Authorized Public Accountant.
major shareholders. The above information on shareholdings was correct at December 31, 2015.
Henrik Ekelund Global Partner Born 1955. President and CEO of BTS Group AB. See Board of Directors on the preceding page.
Stefan Brown
Born 1963. CFO and Vice President of BTS Group AB. Employed by BTS since 1990. Options and shareholdings in BTS Group AB: 1,190 Class B shares and employee stock options corresponding to 12,000 shares of Class B.
Jonas Åkerman Global Partner Born 1963. Executive Vice President. President and CEO of BTS North America. Employed by BTS since 1991. Options and shareholdings in BTS Group AB: 579,350 Class B shares.
Rommin Adl Global Partner Born 1964. Executive Vice President. Employed by BTS since 1994.
Philios Andreou Global Partner Born 1967. Executive Vice President. President and CEO of BTS Other Markets. Employed by BTS since 2003.
Todd Ehrlich Global Partner Born 1968. Executive Vice President. Employed by BTS since 1995.
Stefan Hellberg Global Partner Born 1957. Executive Vice President. Employed by BTS since 1986.
Peter Mulford Global Partner Born 1968. Executive Vice President. Employed by BTS since 1997.
Dan Parisi Global Partner Born 1968. Executive Vice President. Employed by BTS since 1995.
Jessica Parisi Global Partner Born 1977. Executive Vice President. Employed by BTS since 1999.
Lou Schachter Global Partner Born 1964. Executive Vice President. Employed by BTS since 2006.
Joel Sigrist Global Partner Born 1972. Executive Vice President. President and CEO of BTS Europe. Employed by BTS since 2003.
Steve Toomey Global Partner Born 1963. Executive Vice President. Employed by BTS since 1995.
Advantage Performance Group Inc.
Jonathan Hodge Born 1972. President and CEO of APG. Employed by BTS since 2006.
The above information on options and shareholdings was correct at December 31, 2015.
Shareholders in BTS Group AB (publ) are invited to the AGM on Tuesday, May 10, 2016, at 9.30 a.m. at the Company's premises, Grevgatan 34, 5th floor, Stockholm.
Shareholders wishing to participate must be entered in the share register maintained by Euroclear Sweden AB no later than Tuesday, May 3, 2016, and must have notified BTS Group AB no later than Tuesday, May 3, 2016.
Shareholders may notify the Company by phone at +46 8 58 70 70 00, fax +46 8 58 70 70 01, or e-mail at [email protected].
The notification should include the shareholder's name, personal identification number or corporate identification number, address, phone number, and the number of shares held.
To participate in the AGM, shareholders who have registered their shares under the name of a trustee must temporarily register them with Euroclear Sweden AB under their own name. Any such re-registration request should be made well in advance of Tuesday, May 3, 2016.
The Board of Directors proposes a dividend of SEK 2.35 per share.
| Interim reports: | |
|---|---|
| January–March | May 10, 2016 |
| April–June | August, 2016 |
| July–September | November, 2016 |
| Year-end report | February 2017 |
The above reports can be ordered from BTS Group AB, Grevgatan 34, SE-114 53 Stockholm, phone +46 8 58 70 70 00, fax +46 8 58 70 70 01, or e-mail [email protected]. Financial information from BTS Group AB is also published on www.bts.com.
BTS Group AB, BTS Group AB (publ), BTS, the Company BTS Group AB with or without the Group's subsidiaries (unless otherwise indicated by the context).
Every care has been taken in the translation of this Annual Report. In the event of discrepancies, however, the Swedish original will supersede the English translation.
Production: BTS Group AB. Images used under license from Shutterstock.com, iStock and employees of BTS Group. Printer: Strokirk-Landströms, Lidköping, Sweden, April 2016.
Grevgatan 34 114 53 Stockholm Sweden Tel. +46 8 58 70 70 00 Fax. +46 8 58 70 70 01
Rieker business park John M. Keynesplein 13 1066 EP Amsterdam The Netherlands Tel. + 31 (0)20 615 15 14 Fax. +31 (0)20 388 00 65
Frost Bank Building 401 Congress Avenue Suite 2740 Austin, Texas 78701 USA Tel. +1 512 474 1416 Fax. +1 512 474 1433
Vatika Business Center Divyashree Chambers, 2nd Floor, Wing A O'Shaugnessy Road, Langford Town Bangalore 560025 India Tel. +91 80 4291 1111 Ext 116 Fax. +91 40 4291 1222
128/27 Phyathai Plaza Building (4th Floor) Phyathai Rd. Kwaeng Thung Phyathai Khet Ratchathewi Bangkok 10400 Thailand Tel. +66 2 216 5974
c/o Simon Bolivar 27-1, Office No. 4 Bilbao 48013 Spain Tel. +34 94 423 5594 Fax. +34 94 423 689
Brooklyn, NY 11215 USA Tel. +1 718 832 2118 Fax . +1 718 832 2899
Rue d'Arenberg 44 1000 Brussels Belgium Tel. +32 (0) 2 27 415 10 BTS CHICAGO
200 South Wacker Drive Suite 925 Chicago, IL 60606 USA Tel. +1 312 509 4750 Fax. +1 312 509 4781
10th Floor, Swiss Tower Jumeirah Lakes Towers Dubai, United Arab Emirates Tel. +971 4 279 8341 Fax. +971 4 279 8399
Iso Roobertinkatu 4-6 00120 Helsinki Finland Tel. +358 9 4245 0330
267 West Avenue, 1st Floor Centurion 0046, Gauteng South Africa Tel. +27 12 663 6909 Fax. +27 12 663 6887
37 Kensington High Street London W8 5ED UK Tel. +44 207 348 18 00 Fax. +44 207 348 18 01
P.O. Box 10366 Marina del Rey, CA 90295 USA Tel. +1 424 202 6952
BTS MADRID Calle José Abascal 55, piso 3ºDcha 28003 Madrid Spain Tel. +34 91 417 5327 Fax. +34 91 555 2433
198 Harbour Esplanade, Suite 404 Docklands VIC 3008 Australia Tel. +61 3 9670 9850 Fax. +61 3 9670 9569
Edificio Torre Moliere Calle Moliere 13 – PH Col Chapultepec Polanco C.P. 11560 México, D.F. Tel. +52 (55) 52 81 69 72 Fax. +52 (55) 52 81 69 72
BTS MILAN Via Giuseppe Revere 16 20123 Milan Italy Tel. +39 06 4227 2308
1404 and 1405A, 14th Floor, DLH Park, Opposite MTNL Staff quarters, S.V. Road, Goregaon (West), Mumbai - 400062 Maharashtra, India Tel. +91 22 6196 6800
Theresienhoehe 28 80339 Munich Germany Tel. +49 89 244 40 7036
60 E. 42nd Street, Suite 2434 New York, NY, 10165 USA Tel. +1 646 378 3730 Fax. +1 646 378 3731
57, rue de Seine 75006 Paris France Tel. +33 1 40 15 07 43
101 West Elm St Suite 310 Conshohocken, PA 19428 USA Tel. (toll free) +1 800 445 7089 Tel. +1 484 391 2900 Fax. +1 415 362 4270
222 Kearny Street, Ste 1000 San Francisco, CA 94108 USA Tel. +1 415 362 4200 Fax. +1 415 449 6119
Rua Geraldo Flausino Gomes, 85, 4o andar Brooklin Novo 04575-060 Sao Paulo-SP Brazil Tel. +55 11 5505 2070 Fax. +55 11 5505 2016
9455 E. Ironwood Square Drive, Ste. 100 Scottsdale, AZ 85258 USA Tel. +1 480 948 2777 Fax. +1 480 948 2928
7th Floor Hanvit Building 107 Sajik-ro Jongo-gu, Seoul South Korea 03041 Tel. +82 2 539 7676 Fax. +82 2 2233 4451
1376 West Nanjing Road Suite 531, East Office Tower Shanghai Centre Shanghai 200040 China Tel. +86 21 6289 8688
110 Amoy Street #02-00 Singapore 069930 Tel. +65 6221 2870 Fax. +65 6224 2427
300 First Stamford Place Stamford, CT 06902 USA Tel. +1 203 316 2740 Fax. +1 203 316 2750
Suite 2, Level 9, 39 Martin Place Sydney, NSW, 2000, Australia Tel. +61 02 8243 0900 Fax. +61 02 9299 6629
7 F., No. 307, Dun-Hua, North Road Taipei 105 Taiwan Tel. +886 2 8712 3665
Kojimachi Brighton Bldg 2F 6-4-17 Kojimachi Chiyoda-ku, Tokyo 102-0083, Japan Tel. +81 03 6272 9973 Fax. +81 03 6672 9974
PERFORMANCE GROUP 100 Smith Ranch Road, Suite 306 San Rafael, CA 94903 USA Tel. +1 800 494 6646 Fax. +1 415 925 9512
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