Quarterly Report • May 12, 2017
Quarterly Report
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Vision
The global leader in turning strategy into action.
BTS is a global professional services firm headquartered in Stockholm, Sweden, with more than 500 professionals in 35 offices located on six continents. We focus 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.
We serve a wide range of client needs, including: Assessment centers for talent selection and development, Strategy alignment and execution, Business acumen, Leadership and sales training programs, and On-the-job business simulations and application tools.
We partner with nearly 450 organizations, including over 30 of the world's 100 largest global corporations. Our major clients are some of the most respected names in business: AT&T, Chevron, Coca-Cola, Ericsson, Google, GSK, HP, HSBC, Salesforce.com, and Unilever.
1 | BTS INTERIM REPORT JANUARY 1–MARCH 31, 2017 BTS INTERIM REPORT JANUARY 1–MARCH 31, 2017 | 1 BTS is a public company listed on the Nasdaq Stockholm exchange and trades under the symbol BTS B. For more information, please visit www.bts.com.
Q1
We can report our best ever quarter. Revenue increased by 17 percent and profit by 64 percent. Revenue in our largest unit, BTS North America, increased by 8 percent and profit by 27 percent. The changes we have made in terms of marketing strategy, sales, governance and cost efficiency are generating results.
All of the four acquisitions we have made in recent years – in Italy, Australia, South Africa and Fenestra in North America – have integrated well with the company and are making positive contributions to our growth. We are continuing to seek new acquisitions that offer good opportunities to secure synergies and increase value.
Our investments in digital solutions are continuing at a high level and we are seeing a significant increase in the number of customers using our digital offering.
Stockholm, May 12, 2017
Henrik Ekelund President and CEO of BTS Group AB (publ)
BTS's net sales for the first quarter totaled MSEK 274.0 (224.1). Adjusted for changes in foreign exchange rates, growth was 17 percent.
Growth varied between the units: BTS Other markets 45 percent, BTS Europe 26 percent, BTS North America 8 percent and APG 4 percent (growth measured in local currency).
Operating profit before amortization of intangible assets (EBITA) increased by 60 percent in the first quarter to MSEK 16.4 (10.2). Operating profit for the first quarter was charged with MSEK 1.7 (1.1) for amortization of intangible assets attributable to acquisitions. Operating profit (EBIT) increased by 60 percent in the first quarter to MSEK 14.7 (9.1).
Operating margin before amortization of intangible assets (EBITA margin) was 6 percent (5). Operating margin (EBIT margin) was 5 percent (4).
Consolidated profit before tax for the first quarter increased by 64 percent to MSEK 14.5 (8.8).
Earnings were positively affected by improved profit in BTS Other markets, BTS North America and APG, while weaker earnings in BTS Europe had a negative effect.
The market for BTS's services was stable and unchanged during the period.
NET SALES BY SOURCE OF REVENUE
The recognition of net sales by type of income was further developed as of the first quarter of 2017.
A new term "program" has replaced the former term "seminars" to better reflect the terms used in the market.
Income type "licenses" has through 2016 also included licensing revenue that was included with the delivery of "programs." From the start of 2017 and onward, "licenses" includes only licensing revenue that is not part of any program deliveries. The purpose is to streamline revenue for better transparency.
PROFIT BEFORE TAX BY QUARTER
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, China, Dubai, India, Italy, Japan, Mexico, Singapore, South Africa, South Korea, Spain, Taiwan and Thailand.
APG consists of operations in Advantage Performance Group.
| MSEK | Jan–March 2017 |
Jan–March 2016 |
Apr–March 2016/17 |
Jan–Dec 2016 |
|---|---|---|---|---|
| BTS North America | 135.6 | 119.2 | 551.0 | 534.7 |
| BTS Europe | 36.6 | 30.6 | 197.7 | 191.6 |
| BTS Other markets | 70.1 | 45.4 | 295.4 | 270.7 |
| APG | 31.6 | 28.8 | 113.5 | 110.7 |
| Total | 274.0 | 224.1 | 1 157.5 | 1 107.6 |
| MSEK | Jan–March 2017 |
Jan–March 2016 |
Apr–March 2016/17 |
Jan–Dec 2016 |
|---|---|---|---|---|
| BTS North America | 13.6 | 10.7 | 61.8 | 58.9 |
| BTS Europe | –2.2 | –1.0 | 23.8 | 25.0 |
| BTS Other markets | 4.3 | 1.0 | 36.1 | 32.9 |
| APG | 0.7 | –0.5 | 1.9 | 0.7 |
| Total | 16.4 | 10.2 | 123.7 | 117.5 |
Net sales for BTS's operations in North America amounted to MSEK 135.6 (119.2) in the first quarter. Adjusted for changes in foreign exchange rates, revenue grew by 8 percent. Operating profit before amortization of intangible assets (EBITA) amounted to MSEK 13.6 (10.7) in the first quarter. Operating margin before amortization of intangible assets (EBITA margin) was 10 percent (9).
BTS North America reported a positive trend during the first quarter with growth in revenue and profit, and is continuing efforts to enhance cost efficiency and intensify activity in the market.
Net sales for BTS Europe amounted to MSEK 36.6 (30.6) in the first quarter. Adjusted for changes in foreign exchange rates, revenue grew by 26 percent. Operating loss before amortization of intangible assets (EBITA) amounted to MSEK –2.2 (–1.0) in the first quarter. Operating margin before amortization of intangible assets (EBITA margin) was –6 percent (–3).
BTS Europe delivered healthy growth but incurred higher expenses, for example, for investments in personnel and for a changed product mix, which led to a decline in earnings.
Net sales for BTS Other Markets amounted to MSEK 70.1 (45.4) in the first quarter. Adjusted for changes in foreign exchange rates, revenue grew by 45 percent. Operating
profit before amortization of intangible assets (EBITA) amounted to MSEK 4.3 (1.0) in the first quarter. Operating margin before amortization of intangible assets (EBITA margin) was 6 percent (2).
BTS Other Markets continued to display a highly positive performance with favorable growth in revenues and earnings.
Net sales amounted to MSEK 31.6 (28.8) in the first quarter. Adjusted for changes in foreign exchange rates, revenue grew by 4 percent. Operating profit before amortization of intangible assets (EBITA) amounted to MSEK 0.7 (–0.5) in the first quarter. Operating margin before amortization of intangible assets (EBITA margin) was 2 percent (–2).
We are continuing to implement our strategy to achieve a positive earnings trend for APG – launching new products and recruiting additional partners.
BTS's cash flow from operating activities for the first quarter amounted to MSEK –2.9 (–9.7).
Available cash and cash equivalents amounted to MSEK 119.5 (128.0) at the end of the period. The company's interest-bearing loans attributable to previously implemented acquisitions amounted to MSEK 25.0 (16.3) at the end of the period.
BTS's equity ratio was 63 percent (68) at the end of the period.
The company has no outstanding conversion loans at the balance sheet date.
At March 31, the number of employees at BTS was 543 (473). Most of the increase in personnel was due to an acquisition in Italy in July 2016. A net 20 individuals were recruited during the first quarter of the year, the vast majority in BTS Other Markets.
The average number of employees in the first quarter was 533 (467).
The Parent Company's net sales amounted to MSEK 0.9 (0.8) and loss after net financial items amounted to MSEK –0.1 (0.1). Cash and cash equivalents amounted to MSEK 0.2 (0.6).
The result before taxes is expected to be better than last year.
No significant events occurred after the close of the period.
The Group's material risks and uncertainties include market and business risks, operational risks and financial risks. Business and market risks may relate to greater customer exposure for specific sectors and companies as well as sensitivity to market conditions. Operational risks include dependence on individuals, skills supply and intellectual property as well as BTS meeting the high quality demands of its clients. Financial risks mainly relate to foreign exchange and credit risks.
The management of risks and uncertainties is described in the 2016 Annual Report. BTS is considered to have a good spread of risks across companies and sectors and operational risks are handled in a structured manner through well-established processes. Day-to-day exposure to currency fluctuations is limited since revenues and costs are mainly in the same currency in each market, and credit risk is limited since BTS only accepts creditworthy counterparties. No new material risks or uncertainties are deemed to have arisen during 2017.
In order to prepare the financial statements in conformity with IFRS, Corporate Management is required to make estimates and assumptions that affect the application of accounting principles and the recognized amounts of assets, liabilities, revenue and costs. Estimates and assumptions are based on historical experience and a number of other factors that are regarded as reasonable under prevailing conditions. Actual outcomes can deviate from these estimates and assumptions. Estimates and assumptions are reviewed regularly.
This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as endorsed by the EU, RFR 1 Supplementary Accounting Rules for Groups, and the Swedish Annual Accounts Act. The parent company's statements are prepared in accordance with RFR 2 Accounting for Legal Entities and the Annual Accounts Act. No new or revised IFRSs that took effect in 2017 impacted the Group. The accounting policies and basis of calculation were unchanged compared with the 2016 Annual Report. Significant accounting policies and valuation principles are found on pages 64–67 of the 2016 Annual Report.
IFRS 15 Revenue from Contracts with Customers takes effect on January 1, 2018. BTS will apply IFRS 15 from January 1, 2018 and in 2018 will restate the financial statements for 2017 in accordance with IFRS 15. BTS has commenced a review of the effects that the transition to IFRS 15 will have on the financial statements, but no quantitative assessments or calculations had been made as at March 31, 2017. The fair value of financial assets and liabilities is considered to correspond to the carrying amount.
| Interim report Apr – June 2017 | August 22, 2017 |
|---|---|
| Interim report July – September 2017 | November 21, 2017 |
| Year-end report 2017 | February 20, 2018 |
Stockholm, May 12, 2017
Henrik Ekelund CEO
This report has not been reviewed by BTS's auditors.
| Henrik Ekelund CEO | Tel: +46 8 587 070 00 | |
|---|---|---|
| Stefan Brown | CFO | Tel: +46 8 587 070 62 |
| Michael Wallin Head of Investor | Tel: +46 8 587 070 02 | |
| Relations | Mobile: +46 70 878 80 19 | |
For further information, visit our website www.bts.com
BTS Group AB (publ) Grevgatan 34 SE-114 53 Stockholm SWEDEN
Tel. +46 8 587 070 00 Fax. +46 8 587 070 01 Company registration number: 556566-7119
| KSEK | Jan–March 2017 |
Jan–March 2016 |
Apr–March 2016/17 |
Jan–Dec 2016 |
|---|---|---|---|---|
| Net sales | 273,959 | 224,067 | 1,157,537 | 1,107,644 |
| Operating expenses | –255,037 | –212,167 | –1,024,991 | –982,121 |
| Depreciation of property, plant, and equipment |
–2,530 | –1,662 | –8,884 | –8,016 |
| Amortization of intangible assets | –1,723 | –1,094 | –6,437 | –5,808 |
| Operating profit | 14,669 | 9,143 | 117,225 | 111,699 |
| Net financial items | –189 | –305 | –676 | –792 |
| Profit before tax | 14,481 | 8,838 | 116,549 | 110,907 |
| Taxes | –5,172 | –3,149 | –39,111 | –37,088 |
| Profit for the period | 9,309 | 5,689 | 77,438 | 73,818 |
| attributable to the shareholders of the parent company |
9,309 | 5,689 | 77,438 | 73,818 |
| Earnings per share, before dilution of shares, SEK |
0.50 | 0.31 | 4.15 | 3.96 |
| Number of shares at end of the period | 18,646,370 | 18,646,370 | 18,646,370 | 18,646,370 |
| Average number of shares before dilution | 18,646,370 | 18,646,370 | 18,646,370 | 18,646,370 |
| Earnings per share, after dilution of shares, SEK |
0.50 | 0.31 | 4.15 | 3.96 |
| Average number of shares after dilution | 18,646,370 | 18,646,370 | 18,646,370 | 18,646,370 |
| Dividend per share, SEK | 2.50* |
* Proposed dividend.
| KSEK | Jan–March 2017 |
Jan–March 2016 |
Apr–March 2016/17 |
Jan–Dec 2016 |
|---|---|---|---|---|
| Profit for the period | 9,309 | 5,689 | 77,438 | 73,818 |
| Items that will not be reclassified to profit or loss |
– | – | – | – |
| – | – | – | – | |
| Items that may be reclassified to profit or loss |
||||
| Translation differences in equity | –6,359 | –11,012 | 33,184 | 28,531 |
| Other comprehensive income for the period, net of tax |
–6,359 | –11,012 | 33,184 | 28,531 |
| Total comprehensive income for the period | 2,950 | –5,324 | 110,623 | 102,349 |
| attributable to the shareholders of the parent company |
2,950 | –5,324 | 110,623 | 102,349 |
| KSEK | 31 March 2017 |
31 March 2016 |
31 Dec 2016 |
|---|---|---|---|
| Assets | |||
| Goodwill | 268,286 | 218,084 | 272,488 |
| Other intangible assets | 39,311 | 28,865 | 41,448 |
| Tangible assets | 32,417 | 13,819 | 22,009 |
| Property, plant, and equipment | 10,334 | 10,237 | 10,168 |
| Trade receivables | 277,393 | 192,112 | 361,021 |
| Other current assets | 115,119 | 110,825 | 101,092 |
| Cash and cash equivalents | 119,499 | 127,964 | 135,433 |
| Total assets | 862,359 | 701,905 | 943,659 |
| Equity and liabilities | |||
| Equity | 546,254 | 478,364 | 543,094 |
| Interest bearing – non-current liabilities | 20,549 | 16,294 | 20,728 |
| Interest bearing – current liabilities | 4,467 | – | 4,549 |
| Non-interest bearing – current liabilities | 291,089 | 207,247 | 375,289 |
| Total equity and liabilities | 862,359 | 701,905 | 943,659 |
| KSEK | Jan–March 2017 |
Jan–March 2016 |
Jan–Dec 2016 |
|---|---|---|---|
| Cash flow from operating activities | –2,850 | –9,652 | 47,485 |
| Cash flow from investing activities | –13,032 | –409 | –26,470 |
| Cash flow from financing activities | – | – | –36,498 |
| Cash flow for the period | –15,883 | –10,061 | –15,482 |
| Cash and cash equivalents, opening balance | 135,433 | 139,547 | 139,547 |
| Translation differences in cash and cash equivalents |
–51 | –1,522 | 11,369 |
| Cash and cash equivalents, closing balance | 119,499 | 127,964 | 135,433 |
| KSEK | Total equity 31 March 2017 |
Total equity 31 March 2016 |
Total equity 31 Dec 2016 |
|---|---|---|---|
| Opening balance | 543,094 | 483,255 | 483,255 |
| Dividend to shareholders | – | – | –43,819 |
| Other | 210 | 432 | 1,309 |
| Total comprehensive income for the period | 2,950 | –5,324 | 102,349 |
| Closing balance | 546,254 | 478,364 | 543,094 |
| KSEK | Jan–March 2017 |
Jan–March 2016 |
Apr–March 2016/17 |
Jan–Dec 2016 |
|---|---|---|---|---|
| Net sales, KSEK | 273,959 | 224,067 | 1,157,537 | 1,107,644 |
| EBITA (Profit before interest, tax and amortization), KSEK |
16,393 | 10,238 | 123,662 | 117,507 |
| EBIT (Operating profit), KSEK | 14,669 | 9,143 | 117,225 | 111,699 |
| EBITA margin (Profit before interest, tax and amortization margin), % |
6 | 5 | 11 | 11 |
| EBIT margin (Operating margin ), % | 5 | 4 | 10 | 10 |
| Profit margin, % | 3 | 3 | 7 | 7 |
| Operating capital, KSEK | 447,304 | 432,937 | ||
| Return on equity, % | 14 | 14 | ||
| Return on operating capital, % | 27 | 28 | ||
| Equity ratio, at end of the period, % | 63 | 68 | 63 | 58 |
| Cash flow, KSEK | –15,883 | –10,061 | –21,304 | –15,482 |
| Cash and cash equivalents, at end of the period, KSEK |
119,499 | 127,964 | 119,499 | 135,433 |
| Average number of employees | 533 | 467 | 507 | 498 |
| Number of employees at end of the period | 543 | 473 | 543 | 523 |
| Revenues for the year per employee, KSEK | 2,284 | 2,224 |
| KSEK | Jan–March 2017 |
Jan–March 2016 |
Apr–March 2016/17 |
Jan–Dec 2016 |
|---|---|---|---|---|
| Net sales | 930 | 765 | 2,240 | 2,075 |
| Operating expenses | –793 | –551 | –2,151 | –1,909 |
| Operating profit | 137 | 214 | 89 | 166 |
| Net financial items | –195 | –123 | 42,312 | 42,384 |
| Profit before tax | –58 | 91 | 42,402 | 42,550 |
| Taxes | 0 | 0 | –747 | –747 |
| Profit for the period | –58 | 91 | 41,655 | 41,803 |
| KSEK | 31 March 2017 | 31 March 2016 | 31 Dec 2016 |
|---|---|---|---|
| Assets | |||
| Financial assets | 101,976 | 101,976 | 101,976 |
| Other current assets | 32,278 | 26,830 | 32,725 |
| Cash and cash equivalents | 179 | 622 | 182 |
| Total assets | 134,434 | 129,427 | 134,884 |
| Equity and liabilities | |||
| Equity | 109,060 | 111,225 | 109,118 |
| Liabilities | 25,374 | 18,202 | 25,766 |
| Total equity and liabilities | 134,434 | 129,427 | 134,884 |
Earnings attributable to the parent company's shareholders divided by number of shares.
Operating profit before interest, tax and amortization as a percentage of net sales.
Operating profit after depreciation as a percentage of net sales.
Profit for the period as a percentage of net sales.
Total balance sheet reduced by liquid funds and other interest-bearing assets and reduced by non-interest bearing liabilities.
Profit after tax as a percentage of average equity.
Operating profit as a percentage of average operating capital.
Equity as a percentage of total balance sheet.
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 over time are to reach:
BTS AMSTERDAM 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
BTS BRUSSELS Rue d'Arenberg 44 1000 Brussels Belgium Tel. +32 (0) 2 27 415 10
Pohjoinen Makasiinikatu 6 A 00130 Helsinki Finland Tel. +358 50 524 5874
1 Queen Caroline Street London W6 9YN UK Tel. +44 20 7368 4180
Theresienhoehe 28 80339 Munich Germany Tel. +49 89 244 40 7036
BTS PARIS 57, rue de Seine 75006 Paris France Tel. +33 1 40 15 07 43
Head office Grevgatan 34 114 53 Stockholm Sweden Tel. +46 8 58 70 70 00 Fax. +46 8 58 70 70 01
PERFORMANCE GROUP 100 Smith Ranch Road, Suite 306 San Rafael, CA 94903 USA Tel. +1 800 494 6646 Fax. +1 415 925 9512
BTS AUSTIN Frost Bank Building 401 Congress Avenue Suite 2740 Austin, Texas 78701 USA Tel. +1 512 474 1416 Fax. +1 512 474 1433
Fax . +1 718 832 2899
BTS CHICAGO 200 South Wacker Drive Suite 925 Chicago, IL 60606 USA Tel. +1 312 509 4750 Fax. +1 312 509 4781
BTS LOS ANGELES P.O. Box 10366 Marina del Rey, CA 90295 USA Tel. +1 424 202 6952
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
BTS PHOENIX 4742 N. 24th St., Suite 120 Phoenix, AZ 85016 USA Tel. +1 480 948 2777 Fax. +1 480 948 2928
Tel. +1 415 362 4200 Fax. +1 415 449 6119
BTS BANGALORE
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
BTS BILBAO c/o Simon Bolivar 27-1, Office No. 4 Bilbao 48013 Spain Tel. +34 94 423 5594 Fax. +34 94 423 689
10th Floor, Swiss Tower Jumeirah Lakes Towers Dubai, United Arab Emirates Tel. +971 4 279 8341 Fax. +971 4 279 8399
267 West Avenue, 1st Floor Centurion 0046, Gauteng South Africa Tel. +27 12 663 6909 Fax. +27 12 663 6887
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
Viale Fulvio Testi 223 20162 Milan, Italy Tel. +39 02 6611 6364 Fax +39 02 642 6058
We create powerful experiences that help leaders build the future of their business
www.bts.com
Viale Abruzzi, 13 20131 Milan, Italy Tel. +39 02 6901 5719 Fax. +39 02 6078 1483
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
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
1st Floor Wonseo Building 13, Changdeokgung 1-gil Jongo-gu, Seoul South Korea 03058 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
1 Finlayson Green #07-02 Singapore 049246 Tel. +65 6221 2870 Fax. +65 6224 2427
Level 6 10 Barrack St Sydney NSW 2000 Australien 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
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