Interim / Quarterly Report • Aug 21, 2008
Interim / Quarterly Report
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BTS' net turnover increased by 2 percent during the first half-year and amounted to MSEK 270.5 (265.4). Adjusted for changes in exchange rates, growth was 12 percent. Growth in local currency terms was strong in all units with the exception of APG: BTS North America grew by 22 percent, BTS Europe grew by 20 percent, BTS Other markets grew by 33 percent, while APG decreased by 12 percent.
The operating profit before amortization on intangible assets (EBITA) decreased by 14 percent during the first half-year and amounted to MSEK 41.1 (47.6). The operating profit was affected by MSEK 4.3 (5.2) during the first half-year for amortization of intangible assets attributable to acquisitions. The operating profit (EBIT) decreased by 13 percent to MSEK 36.8 (42.4).
The operating margin before amortization on intangible assets (EBITA margin) was 15 (18) percent. The operating margin (EBIT margin) was 14 (16) percent.
Profit before tax for the first half-year decreased by 11 percent to MSEK 35.1 (39.5).
The negative change in earnings and margin was principally attributable to decreased sales in the acquired APG unit. The earnings was also impacted negatively by investments made for growth purposes and lower cost efficiency within BTS USA and a weakening of the USD and GBP, currencies of importance for BTS. Measurements to improve cost efficiency in BTS USA have been launched.
An action program for APG was initiated earlier in the year in order to make sales more efficient. This contributed to a comparative improvement during the second quarter compared with the first quarter, and is expected to continue to improve earnings during the remaining part of the year.
BTS' net turnover increased by 5 percent during the second quarter and amounted to MSEK 148.2 (141.7). Adjusted for changes in exchange rates, growth was 16 percent.
The operating profit before amortization on intangible assets (EBITA) decreased by 6 percent during the second quarter and amounted to MSEK 27.6 (29.5). The operating profit during the second quarter was affected by MSEK 2.1 (2.6) for amortization of intangible assets attributable to acquisitions. The operating profit (EBIT) decreased by 5 percent to MSEK 25.5 (26.9).
The operating margin before amortization on intangible assets (EBITA margin) was 19 (21) percent. The operating margin (EBIT margin) was 17 (19) percent.
Profit before tax for the second quarter decreased by 2 percent and amounted to MSEK 24.9 (25.3).
The demand for BTS services continued to be good in all markets. A number of sectors in the US have weakened considerably – including retail, the automotive sector and certain parts of the housing and construction market and financial sectors, BTS has a limited exposure to these sectors. BTS experienced two years of zero growth in connection with the economic downturn during the period 2001–2003. However, at that time, over 80 percent of BTS' revenue came from the three hardest hit sectors (IT, telecommunications and manufacturing industry). Today, BTS' operations are significantly more diversified and only a limited share of revenue comes from the sectors that are currently experiencing weakness.
Companies in BTS' target group, large international companies and organizations, tend to have to deal with a faster rate of change, new technologies and new competition. As a result they tend to invest more in business development and training. For many years, BTS has been the leading player on the market for training conducted through tailor-made business simulations and currently has commissions from 26 of the 100 largest companies in the world.
According to the research firm, Bersin & Associates, the total training market in the US is estimated to be worth approx USD 58 billion (including costs for internal training resources). Approximately USD 16 billion of external services are purchased, of which BTS' market segment – training services to managers and sales staff - is estimated to be worth approx. USD 5 billion. This means that BTS currently has approx. 1 percent market share in its North America segment, a market that is expected to grow by approximately 5 percent annually.
BTS is currently seeing increased global demand for it services, a continued positive market development in the US and a rapid expansion within the world's growth markets. BTS expects that the market segment for training based on simulation technology will grow more rapidly than the market in general.
During the four-year period, 2004-2007, BTS has increased revenue by 3.5 times, adjusted for changes in exchange rates, while at the same time, the operating profit has increased more than eight-fold. The revenue increase was approximately 40 percent organic, and about 60 percent acquired.
The factors behind BTS' growth are as follows:
BTS drives this growth through:
BTS' offering has broadened considerably through product development and completed acquisitions and apart from world-leading business simulations also includes leading solutions within strategically important areas such as e.g. sales and management development and internet-based training solutions.
BTS offers the most comprehensive range of tailored simulation solutions on the market today and at the same time, is the only company in the world that can serve large international companies within these sectors on a global basis. BTS' sales organization is being developed and is growing rapidly. This means that BTS to a greater extent, can satisfy existing clients' needs for additional solutions, which generates significant growth opportunities both in the near-term and long-term.
New clients secured during the first half-year included Alcoa, Deloitte, Conoco-Philips, Deutsche Bank and National Foods Limited, among others.
Revenue by source of revenue January 1 - June 30, 2008
| Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | rolling 12-month |
Full-year | |
|---|---|---|---|---|---|---|
| MSEK | 2008 | 2007 | 2008 | 2007 | 2008/2007 | 2007 |
| North America* | 98.8 | 99.3 | 183.7 | 193.0 | 359.1 | 368.4 |
| Europe | 38.1 | 32.5 | 67.2 | 57.3 | 126.9 | 117.0 |
| Other markets | 11.3 | 9.9 | 19.6 | 15.1 | 42.3 | 37.8 |
| Total | 148.2 | 141.7 | 270.5 | 265.4 | 528.3 | 523.2 |
| * North America | ||||||
| BTS | 66.0 | 59.3 | 121.8 | 113.1 | 228.1 | 219.4 |
| APG | 32.8 | 40.0 | 61.9 | 79.9 | 131.0 | 149.0 |
| Total | 98.8 | 99.3 | 183.7 | 193.0 | 359.1 | 368.4 |
| Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | rolling 12-month |
Full-year | |
|---|---|---|---|---|---|---|
| MSEK | 2008 | 2007 | 2008 | 2007 | 2008/2007 | 2007 |
| North America* | 15.5 | 20.7 | 25.1 | 36.5 | 49.8 | 61.2 |
| Europe | 10.3 | 7.0 | 14.2 | 9.7 | 25.6 | 21.1 |
| Other markets | 1.8 | 1.8 | 1.8 | 1.4 | 6.4 | 6.0 |
| Total | 27.6 | 29.5 | 41.1 | 47.6 | 81.8 | 88.3 |
| * North America | ||||||
| BTS | 14.0 | 17.4 | 22.3 | 30.1 | 40.0 | 47.8 |
| APG | 1.5 | 3.3 | 2.8 | 6.4 | 9.8 | 13.4 |
| Total | 15.5 | 20.7 | 25.1 | 36.5 | 49.8 | 61.2 |
The operations - APG and RLC, which were acquired during 2006, are reported geographically within North America. Apart from APG, other units have been combined in an organizational and legal entity and are reported as BTS from the beginning of 2008. Comparative figures in respect of the previous year have been adjusted to the new operating structure.
Net turnover for BTS' North American operations amounted to MSEK 121.8 (113.1) during the first half-year. Adjusted for currency effects, revenue increased by 22 percent. The operating profit before amortization on intangible assets (EBITA) amounted to MSEK 22.3 (30.1) during the first half-year. The operating margin before amortization on intangible assets (EBITA margin) was 18 (27) percent.
Net turnover amounted to MSEK 66.0 (59.3) during the second quarter. Adjusted for currency effects, revenue increased by 28 percent. The operating profit before amortization on intangible assets (EBITA) amounted to MSEK 14.0 (17.4) during the second quarter. The operating margin before amortization on intangible assets (EBITA margin) was 21 (29) percent.
Growth continued to be good during the first half-year. However, BTS sales via APG declined considerably resulting in a deterioration in earnings and a lower margin. Earnings were also affected by investments for growth purposes, including, in a larger organization and marketing and lower cost efficiency. Measurements to improve cost efficiency have been launched.
Net turnover for APG amounted to MSEK 61.9 (79.9) during the first half-year. Adjusted for currency effects, revenue decreased by 12 percent. The operating profit before amortization on intangible assets (EBITA) amounted to MSEK 2.8 (6.4) during the first half-year. The operating margin before amortization on intangible assets (EBITA margin) was 5 (8) percent.
Net turnover amounted to MSEK 32.8 (40.0) during the second quarter. Adjusted for currency effects, revenue decreased by 6 percent. The operating profit before amortization on intangible assets (EBITA) amounted to MSEK 1.5 (3.3) during the second quarter. The operating margin before amortization on intangible assets (EBITA margin) was 5 (8) percent.
The negative change in earnings and margin was principally attributable to decreased sales in comparison with the strong first half-year performance of the previous year.
An action program for APG was initiated earlier in the year in order to make sales more efficient. This contributed to a comparative improvement during the second quarter compared with the first quarter, and is expected to continue to improve earnings during the remaining part of the year.
Net turnover for Europe amounted to MSEK 67.2 (57.3) during the first half-year. Adjusted for currency effects, revenue increased by 20 percent. The operating profit before amortization on intangible assets (EBITA) amounted to MSEK 14.2 (9.7) during the first half-year. The operating margin before amortization on intangible assets (EBITA margin) was 21 (17) percent.
Net turnover amounted to MSEK 38.1 (32.5) during the second quarter. Adjusted for currency effects, revenue increased by 21 percent. The operating profit before amortization on intangible assets (EBITA) amounted to MSEK 10.3 (7.0) during the second quarter. The operating margin before amortization on intangible assets (EBITA margin) was 27 (22) percent.
Net turnover for Other markets amounted to MSEK 19.6 (15.1) during the first halfyear. Adjusted for currency effects, revenue increased by 33 percent. The operating profit before amortization on intangible assets (EBITA) amounted to MSEK 1.8 (1.4) during the first half-year. The operating margin before amortization on intangible assets (EBITA margin) was 9 (9) percent.
Net turnover amounted to MSEK 11.3 (9.9) during the second quarter. Adjusted for currency effects, revenue increased by 20 percent. The operating profit before amortization on intangible assets (EBITA) amounted to MSEK 1.8 (1.8) during the second quarter. The operating margin before amortization on intangible assets (EBITA margin) was 16 (18) percent.
Growth was good in both Australia and South Africa during the first half-year. Investments in personnel and marketing activities have been carried out during the half-year period in order to strengthen growth further.
BTS' cash flow from operating activities amounted to MSEK 8.7 (-14.0) during the first half-year.
Cash and cash equivalents amounted to MSEK 46.4 (30.1) at the end of the halfyear period. The Company's interest-bearing loans, which relate to previously completed acquisitions, amounted to MSEK 75.5 (83.8) at the end of the period.
BTS' solidity was 51 (49) percent at the end of the period.
The Company had no outstanding conversion loans at the balance sheet date.
The number of employees in BTS Group AB as of June 30 was 243 (206). The average number of employees during the period was 240 (200).
The Company's net turnover amounted to MSEK 0.5 (0) and the profit after net financial items amounted to MSEK 2.9 (2.9). Cash and cash equivalents amounted to MSEK 0 (0).
Based on continued strong market conditions for BTS, the profit before tax is expected to be in line with the previous year.
This interim report has been prepared in accordance with IAS 34 Interim Reporting and RR 31 Interim Reporting for Groups. The accounting principles and calculation methods applied are in line with the accounting principles used in the preparation of the most recent financial statements. Future IFRS that have been approved by IASB but have not yet come into effect are currently evaluated as having no material effect on the Group's income statement and balance sheet.
Interim Report Jul – Sep November 5, 2008 Year-end Report February, 2009
The board of directors and chief executive officer affirm that the interim report provides a true and fair view of the Company's and Group's operations, financial position and results and describes significant risks and uncertainties faced by the Company and the companies that make up the Group.
Stockholm, August 21, 2008
| Dag Sehlin | Mariana Burenstam Linder | Stefan Gardefjord |
|---|---|---|
| Chairman of the Board | Member of the Board | Member of the Board |
Henrik Ekelund Chief Executive Officer Member of the Board
This report has not been the subject of separate examination by BTS' auditor
Contact information
Henrik Ekelund CEO Phone: +46 8 5870 7000 Stefan Brown CFO Phone: +46 8 5870 7062 Thomas Ahlerup Senior Vice President Corporate Communications Phone: +46 8 5870 7002, Cell: +46 768 966 300
For additional information please visit our home page www.bts.com
BTS Group AB (publ) Grevgatan 34 114 53 Stockholm SWEDEN
Corporate identity number: 556566-7119
| Phone:. | +46 8 5870 7000 |
|---|---|
| Fax: | +46 8 5870 7001 |
| INCOME STATEMENT, Summary | ||||||
|---|---|---|---|---|---|---|
| KSEK | 3 months ended | 6 months ended | 12 months ended | |||
| Jun 30 | Jun 30 | Jun 30 | Jun 30 | Jun 30 | Dec 31 | |
| 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |
| Revenue | 148,215 | 141,748 | 270,530 | 265,453 | 528,238 | 523,161 |
| Operating expenses | -120,038 | -111,722 | -228,362 | -216,706 | -444,349 | -432,693 |
| Depreciation tangible assets | -538 | -496 | -1,044 | -1,119 | -2,099 | -2,174 |
| Amortization intangible assets | -2,136 | -2,554 | -4,361 | -5,175 | -9,293 | -10,107 |
| Operating result | 25,503 | 26,976 | 36,763 | 42,453 | 72,497 | 78,187 |
| Financial income and expenses | -576 | -1,699 | -1,702 | -2,955 | -4,168 | -5,421 |
| Result before tax | 24,927 | 25,277 | 35,061 | 39,498 | 68,329 | 72,766 |
| Taxes | -8,067 | -9,385 | -11,483 | -15,046 | -20,374 | -23,937 |
| Result for the period | 16,860 | 15,892 | 23,578 | 24,452 | 47,955 | 48,829 |
| attributable to equity holders of the parent | 16,860 | 15,892 | 23,578 | 24,452 | 47,955 | 48,829 |
| Earnings per share, before dilution of shares, SEK | 0.93 | 0.88 | 1.31 | 1.35 | 2.66 | 2.71 |
| Number of shares at end of the period | 18,048,300 | 18,048,300 18,048,300 18,048,300 | 18,048,300 | 18,048,300 | ||
| Average number of shares before dilution of shares | 18,048,300 | 18,048,300 18,048,300 18,048,300 | 18,048,300 | 18,048,300 | ||
| Earnings per share, after dilution of shares, SEK | 0.93 | 0.88 | 1.31 | 1.35 | 2.66 | 2.70 |
| Average number of shares after dilution of shares | 18,048,300 | 18,114,361 18,048,300 18,114,361 | 18,048,300 | 18,074,696 | ||
| Dividend per share | 1.20 |
| BALANCE SHEET , Summary | |||
|---|---|---|---|
| KSEK | 06/30/08 | 06/30/07 | 12/31/07 |
| Assets | |||
| Goodwill | 135,756 | 152,612 | 145,093 |
| Other intangible assets | 26,370 | 40,149 | 33,048 |
| Tangible assets | 5,908 | 4,846 | 5,317 |
| Other fixed assets | 4,882 | 3,814 | 4,343 |
| Accounts receivable | 121,631 | 109,131 | 115,955 |
| Other current assets | 30,948 | 27,680 | 25,187 |
| Cash and bank | 46,391 | 30,134 | 67,473 |
| Total assets | 371,886 | 368,366 | 396,416 |
| Equity and liabilities | |||
| Equity | 188,969 | 182,171 | 198,603 |
| Non interest bearing - non current liabilities | 84 | 43 | 120 |
| Interest bearing - current liabilities | 75,667 | 83,823 | 62,856 |
| Non interest bearing - current liabilities | 107,166 | 102,329 | 134,837 |
| Total equity and liabilities | 371,886 | 368,366 | 396,416 |
| CASH FLOW STATEMENT, Summary | |||
| KSEK | Jan-Jun | Jan-Jun | Jan-Dec |
| 2008 | 2007 | 2007 | |
| Cash flow from current operations | 8,690 | -13,970 | 45,219 |
| Cash flow from investment activities | -19,888 | -4,604 | -12,219 |
| Cash flow from financing operations | -4,642 | -23,614 | -32,802 |
| Change in liquid funds | -21,082 | -41,920 | -4,581 |
| Liquid funds, opening balance | 67,473 | 72,054 | 72,054 |
| Liquid funds, closing balance | 46,391 | 30,134 | 67,473 |
| Effect of exchange rate changes on cash | -5,242 | 268 | -4,779 |
| Total Equity | Total Equity | Total Equity | ||
|---|---|---|---|---|
| 06/30/08 | 06/30/07 | 12/31/07 | ||
| Opening balance | 198,603 | 175,171 | 175,171 | |
| Dividend to shareholders | -21,658 | -18,048 | -18,048 | |
| Conversion differences | -11,916 | 375 | -8,073 | |
| Change minority interest | - | -508 | -508 | |
| Miscellaneous | 362 | 729 | 1,232 | |
| Result for the period | 23,578 | 24,452 | 48,829 | |
| Closing balance | 188,969 | 182,171 | 198,603 |
| KEY RATIOS | 3 months ended | 6 months ended | 12 months ended | |||
|---|---|---|---|---|---|---|
| Jun 30 | Jun 30 | Jun 30 | Jun 30 | Jun 30 | Dec 31 | |
| 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |
| Revenues, KSEK | 148,215 | 141,748 | 270,530 | 265,453 | 528,238 | 523,161 |
| EBITA (Earnings before interest, tax and amortisation), | ||||||
| KSEK | 27,639 | 29,530 | 41,124 | 47,628 | 81,790 | 88,294 |
| EBIT (Operating result), KSEK | 25,503 | 26,976 | 36,763 | 42,453 | 72,497 | 78,187 |
| EBITA margin (Earnings before interest, tax and | ||||||
| amortisation margin), % | 19 | 21 | 15 | 18 | 15 | 17 |
| EBIT margin (Operating margin ), % | 17 | 19 | 14 | 16 | 14 | 15 |
| Profit margin, % | 11 | 11 | 9 | 9 | 9 | 9 |
| Operational capital, KSEK | 218,245 | 193,896 | ||||
| Return on equity, % | 25 | 26 | ||||
| Return on operational capital, % | 35 | 41 | ||||
| Solidity at end of the period, % | 51 | 49 | 51 | 49 | 51 | 50 |
| Cash flow, KSEK | 2,942 | -2,890 | -21,082 | -41,920 | 16,257 | -4,581 |
| Liquid funds at end of the period, KSEK | 46,391 | 30,134 | 46,391 | 30,134 | 46,391 | 67,473 |
| Average number of employees | 243 | 205 | 240 | 200 | 229 | 211 |
| Number of employees at end of the period | 243 | 206 | 243 | 206 | 243 | 230 |
| Revenues for the year per employee, KSEK | 2,306 | 2,479 |
Earnings attributable to the parent company´s shareholders divided by number of shares
Operating result before interest, tax and amortisation as a percentage of revenues.
Operating result after depreciation as a percentage of revenues.
Result for the period as a percentage of revenues.
Total balance sheet reduced by liquid funds and other interest bearing assets and reduced by non-interest bearing liabilities.
Result for the period (converted into whole year) as a percentage of average equity.
Operating result as a percentage of average operational capital.
Equity as a percentage of total balance sheet.
Growth excluding aquisition
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