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BTS Group

Quarterly Report Nov 10, 2021

3018_10-q_2021-11-10_5216f163-7c3d-425e-94d4-af3b44cd1a18.pdf

Quarterly Report

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INTERIM REPORT JANUARY 1–SEPTEMBER 30, 2021

Earnings 20 percent higher than in 2019

January 1–September 30, 2021

  • Net sales amounted to MSEK 1,346 (1,042). Adjusted for changes in foreign exchange rates, sales increased 40 percent.
  • Operating profit (EBITA) increased to MSEK 238 (45). Excluding the forgiven PPP loan 188 (45).
  • The operating margin (EBITA margin) was 17.7 (4.3) percent. Excluding the forgiven PPP loan 14.0 (4.3).
  • Profit after tax increased to MSEK 156 (12). Excluding the forgiven PPP loan 106 (12).
  • Earnings per share increased to SEK 8.08 (0.60). Excluding the forgiven PPP loan 5.51 (0.60).
  • Our comparison year is 2019, since 2020 was an extraordinary year. Adjusted for changes in foreign exchange rates, net sales in the first nine months of the year increased 13 percent compared with 2019. Virtual deliveries mean that there are no expenses charged to revenue. The actual growth of the operations was approximately 18 percent.
  • Compared with the nine-month period for 2019, operating profit (EBITA) increased by 20 percent and profit before tax by 13 percent, excluding the forgiven PPP loan.

Third quarter 2021

  • Net sales amounted to MSEK 478 (347). Adjusted for changes in foreign exchange rates, sales increased 40 percent.
  • Operating profit (EBITA) increased to MSEK 114 (21). Excluding the forgiven PPP loan 64 (21).
  • The operating margin (EBITA margin) was 23.9 percent (6.0). Excluding the forgiven PPP loan 13.5 (6.0).
  • Profit after tax increased to MSEK 85 (8). Excluding the forgiven PPP loan 36 (8).
  • Earnings per share increased to SEK 4.42 (0.40). Excluding the forgiven PPP loan 1.85 (0.40).
  • Our comparison year is 2019, since 2020 was an extraordinary year. Adjusted for changes in foreign exchange rates, net sales increased 15 percent. Virtual deliveries mean that there are no expenses charged to revenue. The actual growth of the operations was approximately 20 percent.
  • Compared with the third quarter of 2019, operating profit (EBITA) increased 19 percent and profit before tax increased by 13 percent, excluding the forgiven PPP loan.

In May 2020, the US BTS subsidiary received federal COVID-19 support under the "Paycheck Protection Program" (known as PPP loans). In accordance with the guidelines from the US Authorities, this loan was written off during the third quarter of 2021 and had a positive impact of MSEK 49.7 on operating profit. For increased comparability, the outcome for 2021 is stated throughout this interim report both including and excluding the forgiven PPP loan.

Upgraded outlook for 2021

The result – excluding the forgiven PPP loan – is expected to be significantly better than 2020 and significantly better than in 2019. This deviates from the previous report when the result was expected to be significantly better than 2020 and better than in 2019.

Record quarter and improved outlook for 2021

We are delivering our best-ever third quarter.

Our long-term strategy for managing the pandemic is working and we have taken our company to a new level.

The pandemic has initiated significant changes to strategies and organizations in major companies around the world, creating increased demand for our services. BTS is an even more attractive partner for our customers today, thanks to our head start in virtual services, our continued investment in product development and the fact that we retained all of our employees during the past year.

A comparison with 2020 would be like an ice cream seller comparing sales to a rainy summer: reporting better figures is a little too easy. This is why we ourselves make all our comparisons with 2019.

Our revenue for the first nine months of the year increased 13 percent compared with 2019. Virtual deliveries mean that there are no expenses charged to revenue. The actual growth of the operations was approximately 18 percent.

Despite strong currency headwinds, our operating profit increased 20 percent compared with 2019. Discounting currency effects, our earnings increased more than 30 percent.

It should be noted that the formally reported results are MSEK 49.7 higher than my descriptions above. This is due to the announcement by the US Authorities in the third quarter that they forgive that same amount in PPP loans (the Paycheck Protection Program), the purpose of which was to support us in 2020 owing to our retaining all our personnel. This is attributable to the events of 2020, which is why it can be said that our earnings were MSEK 49.7 higher in 2020 than we could report. In accordance with the IFRS reporting standards, which we in our stock exchange contract have committed ourselves to follow, this must be reported in the business for 2021.

Our margin continued to improve: it increased approximately 2 percentage points compared with 2019, to 14 percent. The main reason for the improvement is more efficient resource usage, price optimization and reduced external costs, while increased digital investments were charged

to earnings. Our long-term goal remains to reach an EBITA margin of 15 percent.

Many of our customers have indicated that demand for physical deliveries will return when travel restrictions, and the limitations on meeting others, are lifted and that they will demand a combination of physical, virtual and digital solutions. We believe that demand for digital solutions will increase and we will be investing significantly more in product development for digital solutions in 2021. Our goal is to meet our customers' evolving needs and to increase our licensing revenue.

In the third quarter we acquired Netmind, a specialist in digital transformation that operates primarily in Spain. They have an extremely robust offering. We believe there is great demand for their products and services globally, and we regard this as an extremely attractive opportunity for growth.

BTS's ambition is to exit the 2020 pandemic and recession as a stronger company in the long term and to achieve a level of profit higher than prior to the recession, as well as sustainable growth. Our goal is to have larger and more profitable operations than before the pandemic – based on an expanded customer base, deeper customer relations, a stronger organization and increased revenue from virtual and digital solutions, combined with physical deliveries.

The outlook for 2021 is favorable; we believe that earnings – excluding the forgiven PPP loan – will be significantly higher than 2020 and significantly higher than in 2019, despite strong currency headwinds compared to 2019.

Stockholm, November 10, 2021

Henrik Ekelund

President and CEO of BTS Group AB (publ)

OPERATIONS

Sales

BTS's net sales for the nine-month period amounted to MSEK 1,346 (1,042). Adjusted for changes in foreign exchange rates, total sales increased 40 percent.

Growth varied between the units: BTS North America 51 percent, BTS Other markets 46 percent, APG 39 percent and BTS Europe 10 percent (growth measured in local currency).

Compared with the nine-month period in 2019, sales increased 13 percent, adjusted for changes in foreign exchange rates. It should be noted that the virtual deliveries meant no travel expenses were charged to customers, which is why the underlying growth in operations is approximately 5 percent higher.

Earnings

In May 2020, the US BTS subsidiary received federal COVID-19 support under the "Paycheck Protection Program" (known as PPP loans). In accordance with the guidelines from the US Authorities, this loan was written off during the third quarter of 2021 and had a positive impact of MSEK 49.7 on operating profit. For increased comparability, the outcome for 2021 is stated throughout this interim report both including and excluding the forgiven PPP loan.

Operating profit (EBITA) increased during the nine-month period to MSEK 238 (45), excluding the forgiven PPP loan MSEK 188 (45). The operating margin (EBITA margin) was 17.7 (4.3) percent, excluding the forgiven PPP loan 14.0 percent (4.3).

Compared with the nine-month period for 2019, operating profit (EBITA), excluding the forgiven PPP loan, increased by 20 percent despite strong currency headwinds. Discounting changes in foreign exchange rates, our operating profit (EBITA), excluding the forgiven PPP loan, increased more than 30 percent. The operating margin (EBITA margin) increased from 11.9 to 14.0 percent, excluding the forgiven PPP loan.

Operating profit (EBIT) increased during the nine-month period to MSEK 215 (27), excluding the forgiven PPP loan MSEK 165 (27). The operating margin (EBIT margin) was 16.0 (2.6) percent, excluding the forgiven PPP loan 12.3 percent (2.6). Operating profit (EBIT) for the nine-month period was charged with MSEK 23.0 (18.3) for amortization of intangible assets attributable to acquisitions.

The Group's earnings before tax increased to MSEK 203 (17), excluding the forgiven PPP loan MSEK 154 (17).

REVENUE BY QUARTER

PROFIT BEFORE TAX AND OPERATING MARGIN (EBITA) BY QUARTER

The Group's profitability was positively affected by improved profit in all operating units compared with last year.

Third quarter

BTS's third-quarter net sales amounted to MSEK 478 (347). Adjusted for changes in foreign exchange rates, sales increased 40 percent.

Compared with the third quarter of 2019, sales increased 15 percent adjusted for changes in foreign exchange rates. It should be noted that the virtual deliveries meant no travel expenses were charged to customers, which is why the underlying growth in operations is approximately 5 percent higher.

In May 2020, the US BTS subsidiary received federal COVID-19 support under the "Paycheck Protection Program" (known as PPP loans). In accordance with the guidelines from the US Authorities, this loan was written off during the third quarter of 2021, and had a positive impact of MSEK 49.7 on operating profit. For increased comparability, the outcome for 2021 is stated throughout this interim report both including and excluding the forgiven PPP loan.

Operating profit (EBITA) increased during the third quarter to MSEK 114 (21), excluding the forgiven PPP loan MSEK 64 (21). The operating margin (EBITA margin) was 23.9 (6.0) percent, excluding the forgiven PPP loan 13.5 percent (6.0).

Compared with the third quarter of 2019, operating profit (EBITA), excluding the forgiven PPP loan increased by 19 percent. Currency fluctuations had a negative impact of 12 percent on earnings. The operating margin increased from 11.8 to 13.5 percent, excluding the forgiven PPP loan.

Operating profit (EBIT) increased to MSEK 106 (14), excluding the forgiven PPP loan MSEK 56 (14). The operating margin (EBIT margin) was 22.2 (4.2) percent, excluding the forgiven PPP loan 11.8 percent (4.2). Operating profit for the third quarter was charged with MSEK 8.0 (6.3) for amortization of intangible assets attributable to acquisitions.

Profit before tax increased during the third quarter to MSEK 102 (11), excluding the forgiven PPP loan MSEK 52 (11).

The Group's profitability was positively affected by drastically improved profit in all operating units compared with last year.

SEGMENT REPORTING

The effects of IFRS 16 and the forgiven PPP loans are not included in the BTS Operating units reporting, which is why the effects are recognized as Group adjustments.

Operating units

BTS North America consists of BTS's operations in the USA, excluding APG but including SwissVBS with its operations in Canada and Switzerland.

BTS Europe consists of operations in France, Germany, the Netherlands, the UK and Sweden.

BTS Other markets consists of operations in Argentina, Australia, Brazil, China, Costa Rica, India, Italy, Japan, Malaysia, Mexico, Singapore, South Africa, South Korea, Spain, Taiwan, Thailand and the United Arab Emirates.

APG consists of operations in Advantage Performance Group in the USA.

NET SALES PER OPERATING UNIT

MSEK Jul–Sep 2021 Jul–Sep 2020 Jan–Sep 2021 Jan–Sep 2020 Oct–Sep 2020/21 Jan–Dec 2020 BTS North America 251 156 699 514 875 689 BTS Europe 77 76 240 224 332 316 BTS Other markets 124 93 327 240 451 363 APG 27 22 80 64 111 95 Total 478 347 1,346 1,042 1,769 1,464

OPERATING PROFIT (EBITA) PER OPERATING UNIT

MSEK Jul–Sep
2021
Jul–Sep
2020
Jan–Sep
2021
Jan–Sep
2020
Oct–Sep
2020/21
Jan–Dec
2020
BTS North America 37.6 7.0 106.5 37.1 118.2 48.8
BTS Europe 6.3 3.0 30.9 10.7 39.7 19.5
BTS Other markets 18.9 9.8 46.2 –3.2 68.9 19.4
APG 0.3 –0.7 0.6 –3.8 1.4 –2.9
EBITA per operating unit 63.1 19.2 184.2 40.8 228.2 84.8
Effects of IFRS 16 1.4 1.5 3.9 4.1 5.3 5.5
Forgiven PPP loan 49.7 49.7 49.7
Total 114.2 20.8 237.8 44.9 283.2 90.3

NET SALES BY SOURCE OF REVENUE JANUARY 1–SEPTEMBER 30, 2021 (2020)

Market development

The market performed positively during the nine-month period. The pandemic initiated significant changes to strategies and organizations in many companies, creating increased demand for our services. Virtual deliveries are now fully accepted as a replacement for physical deliveries.

BTS North America

Net sales for BTS's operations in North America amounted to MSEK 699 (514) for the nine-month period. Adjusted for changes in foreign exchange rates, revenue grew 51 percent. Operating profit (EBITA) for the nine-month period totaled MSEK 106.5 (37.1). The operating margin (EBITA margin) was 15.2 (7.2) percent.

Compared with the nine-month period in 2019, net sales adjusted for changes in foreign exchange rates increased 22 percent and operating profit (EBITA) in SEK increased 23 percent.

Net sales for the third quarter amounted to MSEK 251 (156). Adjusted for changes in foreign exchange rates, revenue grew by 65 percent. Operating profit (EBITA) amounted to MSEK 37.6 (7.0) in the third quarter. The operating margin (EBITA margin) was 15.0 (4.5) percent.

Compared with the third quarter of 2019, net sales, adjusted for changes in foreign exchange rates, increased 24 percent and operating profit (EBITA) increased 28 percent in SEK.

The market in North America has developed positively and BTS has been extremely successful with sales and deliveries of virtual services. The margin improved due to more efficient resource usage, price optimization and lower external costs.

BTS Europe

Net sales for BTS Europe amounted to MSEK 240 (224) for the nine-month period. Adjusted for changes in foreign exchange rates, revenue grew 10 percent. Operating profit (EBITA) for the nine-month period totaled MSEK 30.9 (10.7). The operating margin (EBITA margin) was 12.9 (4.8) percent.

Compared with the nine-month period in 2019, net sales, adjusted for changes in foreign exchange rates, decreased 5 percent and operating profit (EBITA) decreased 8 percent in SEK.

Net sales for the third quarter amounted to MSEK 77 (76). Adjusted for changes in foreign exchange rates, revenue remained unchanged. Operating profit (EBITA) amounted to MSEK 6.3 (3.0) in the third quarter. The operating margin (EBITA margin) was 8.2 (4.0) percent.

NET SALES PER OPERATING UNIT JANUARY 1–SEPTEMBER 30, 2021 (2020)

Compared with the third quarter of 2019, net sales, adjusted for changes in foreign exchange rates, decreased 18 percent and operating profit (EBITA) decreased 56 percent in SEK.

The negative trend in BTS Europe can be attributed entirely to a drastic reduction of revenue in BTS Germany due to the completion of two major projects during the second quarter. We believe that the operation in Germany will stabilize and grow again starting in 2022.

BTS Other markets

Net sales for BTS Other markets amounted to MSEK 327 (240) for the nine-month period. Adjusted for changes in foreign exchange rates, revenue grew 46 percent. Operating profit (EBITA) for the nine-month period amounted to MSEK 46.2 (–3.2). The operating margin (EBITA margin) was 14.1 (–1.4) percent.

Compared with the nine-month period in 2019, net sales, adjusted for changes in foreign exchange rates, increased 10 percent and operating profit (EBITA) increased 39 percent in SEK.

Net sales for the third quarter amounted to MSEK 124 (93). Adjusted for changes in foreign exchange rates, revenue grew by 35 percent. Operating profit (EBITA) amounted to MSEK 18.9 (9.8) in the third quarter. The operating margin (EBITA margin) was 15.3 (10.5) percent.

Compared with the third quarter of 2019, net sales, adjusted for changes in foreign exchange rates, increased 23 percent and operating profit (EBITA) increased 93 percent in SEK.

BTS Other markets was hit the first and the hardest by the pandemic during the first half of 2020 but is now showing a positive revenue trend for the last five quarters. The margin improved due to more efficient resource usage, price optimization and lower external costs.

APG

Net sales for APG amounted to MSEK 80 (64) in the nine-month period. Adjusted for changes in foreign exchange rates, revenue grew 39 percent. Operating profit (EBITA) for the nine-month period amounted to MSEK 0.6 (–3.8). The operating margin (EBITA margin) was 0.7 (–5.9) percent.

Compared with the nine-month period in 2019, net sales, adjusted for changes in foreign exchange rates, increased 8 percent and operating profit (EBITA) increased from MSEK 0.0 to 0.6.

Net sales for the third quarter amounted to MSEK 27 (22). Adjusted for changes in foreign exchange rates, revenue grew by 24 percent. Operating profit (EBITA) amounted to MSEK 0.3 (–0.7) in the third quarter. The operating margin (EBITA margin) was 1 (–3.1) percent.

Compared with the third quarter of 2019, net sales, adjusted for changes in foreign exchange rates, increased 23 percent and operating profit (EBITA) increased from MSEK –0.3 to 0.3.

OTHER INFORMATION

Financial position

BTS's cash flow from operating activities amounted to MSEK 163 (154) in the nine-month period.

Available cash and cash equivalents amounted to MSEK 513 (574) at the end of the period. The company's interest-bearing loans amounted to MSEK 330 (276) at the end of the period.

BTS's equity ratio was 39 percent (42) at the end of the period.

The company had no outstanding conversion loans at the balance sheet date.

Employees

Per September 30, the number of employees at BTS was 1,025 (842). Out of the staff increase of 183 employees, 22 were added through the acquisition of Bates, 63 through the acquisition of Netmind and 52 were added in BTS Digital.

The average number of employees for the nine-month period was 902 (847).

Parent Company

The Parent Company's net sales in the nine-month period amounted to MSEK 2.6 (2.5) and profit before tax totaled MSEK 33.6 (15.2). Cash and cash equivalents amounted to MSEK 0.8 (21.0).

Acquisitions

On September 16, 2021, BTS acquired Netmind SL, as communicated in a press release on the same date. The acquisition encompasses all operations including employees, technology, intellectual property, customer relations, brands and equipment.

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

Netmind partners with some of the world's leading companies to succeed in the digital field using Netmind's innovative solutions, proprietary concepts and methods, in-house models for agile change and an extensive library of courses and training. Netmind's customer base has only a limited overlap with BTS, which offers significant potential for synergies.

The acquisition includes an initial purchase consideration in cash and a new issue of BTS shares. Further purchase considerations will be paid between 2023 and 2025, provided Netmind meets specific targets in the period from 2022 to 2025

Preliminary acquisition calculation ratified at the date of acquisition, translated at the exchange rate per September 30, 2021

MSEK
Tangible assets 3.5
Intangible assets 40.7
Receivables 17.8
Cash and cash equivalents 7.4
Non-current liabilities –3.9
Current liabilities –11.9
Identifiable assets 53.6
Goodwill 160.7
Total purchase price 214.2
Estimated additional cash purchase price –3.3
Fair value of future share issue –5.1
Provision for conditional purchase price –148.1
Purchase price paid in cash 57.7

Goodwill consists of expected future synergy effects in the form of an expanded product range and more services. Alongside synergy effects, the addition of qualified employees and future profitability components are included in the goodwill item.

Impact of the COVID-19 pandemic Operations

As previously communicated, a number of strategic measures have been adopted to evolve operations to handle the effects of the pandemic. BTS is following the recommendations of the authorities. However, the health and well-being of our employees and customers has the highest priority for us, which is why in some cases we follow stricter rules than what the authorities recommend.

Support measures

During the nine-month period the Group has, to a very limited extent, benefited from local support measures which have reduced personnel costs by a total of MSEK 0.6. No employees were affected by any furloughs during the nine-month period.

Risks and uncertainties

The Group's material risks and uncertainties include, among others, market and business risks, operational risks and financial risks. Business risks include significant exposure to individual customers or markets as well as the negative influence of changes in the economy. Operational risks include dependence on key individuals, insufficient skills supply and an inability to take advantage of intellectual property, as well as BTS not meeting the stringent requirements of its clients. Financial risks mainly relate to foreign exchange rates and credit risks. The management of risks and uncertainties is described in the 2020 Annual Report.

The COVID-19 pandemic is having a significant impact on the general market climate and global economy. Initially, the pandemic negatively impacted the Group's sales and earnings, which was the effect of severe restrictions on freedom of movement in several countries where BTS operates. Over time however, demand for the Group's services, primarily virtual, has increased as a result of the strategic change needs that have arisen among the world's major companies due to the pandemic. Group management and the Board are continuously analyzing and evaluating the underlying market trends and changes that may affect the Group – negatively or positively – and are developing appropriate action plans.

Critical accounting estimates and assumptions

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.

Accounting principles

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 have been prepared in accordance with RFR 2 Accounting for Legal Entities and the Annual Accounts Act.

Financial calendar

Year-end report February 23, 2022 Interim report Jan–Mar 2022 May 13, 2022

Stockholm, November 10, 2021

Henrik Ekelund CEO

This report has not been reviewed by BTS's auditors.

Contact information

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 www.bts.com

BTS Group AB (publ) Grevgatan 34 SE-114 53 Stockholm SWEDEN

Tel: +46 8 587 070 00 Company registration number: 556566-7119

BTS is a global professional services firm headquartered in Stockholm, Sweden. BTS has more than 1 000 professionals in 36 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 35 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: Strategy execution, Leadership development programs, Assessment, Developing business acumen, Transforming sales organizations, Coaching, and Digital solutions, events and services.

We partner with nearly 450 organizations, including over 30 of the world's 100 largest global corporations. Our major clients are e.g.: ABB, Chevron, Coca-Cola, Ericsson, EY, HP, Mercado Libre, Salesforce.com, SAP and Tencent.

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.

Group income statement, summary

KSEK Jul–Sep
2021
Jul–Sep
2020
Jan–Sep
2021
Jan–Sep
2020
Oct–Sep
2020/21
Jan–Dec
2020
Net sales 478,152 347,004 1,346,064 1,041,524 1,768,695 1,464,155
Operating expenses –396,972 –310,542 –1,111,443 –947,729 –1,472,441 –1,308,726
Forgiven PPP loan1) 49,694 49,694 49,694
Depreciation of property, plant
and equipment
–16,696 –15,699 –46,486 –48,878 –62,731 –65,123
Amortization of intangible assets –7,984 –6,328 –23,049 –18,333 –30,416 –25,700
Operating profit 106,193 14,436 214,780 26,585 252,803 64,607
Net financial items –4,115 –3,858 –11,645 –9,919 –15,633 –13,907
Associated company, profit after tax –107 548 185 94 445 353
Profit before tax 101,971 11,126 203,320 16,760 237,614 51,053
Estimated tax –16,513 –3,410 –47,163 –5,080 –57,910 –15,826
Profit for the period 85,458 7,716 156,157 11,680 179,704 35,226
Attributable to the shareholders
of the parent company
85,458 7,716 156,157 11,680 179,704 35,226
Earnings per share, before dilution
of shares, SEK
4.42 0.40 8.08 0.60 9.30 1.82
Number of shares at end of the period 19,338,328 19,318,292 19,338,328 19,318,292 19,338,328 19,318,292
Average number of shares before dilution 19,324,971 19,318,292 19,320,518 19,318,292 19,319,962 19,318,292
Earnings per share, after dilution
of shares, SEK
4.42 0.40 8.08 0.60 9.30 1.82
Average number of shares after dilution 19,324,971 19,318,292 19,320,518 19,318,292 19,319,962 19,318,292
Dividend per share, SEK 1.20

1) In May 2020, the US BTS subsidiary received federal COVID-19 support under the "Paycheck Protection Program" (known as PPP loans). In accordance with the guidelines from the US Authorities, this loan was written off during the third quarter of 2021 and had a positive impact of MSEK 49.7 on operating profit. For increased comparability, the outcome for 2021 is stated throughout this Interim Report both including and excluding the forgiven PPP loan.

Group statement of comprehensive income

KSEK Jul–Sep
2021
Jul–Sep
2020
Jan–Sep
2021
Jan–Sep
2020
Oct–Sep
2020/21
Jan–Dec
2020
Profit for the period 85,458 7,716 156,157 11,680 179,704 35,226
Items that will not be reclassified
to profit or loss
Items that may be reclassified
to profit or loss
Translation differences in equity 17,946 –25,224 46,544 –42,013 –6,841 –95,397
Other comprehensive income for
the period, net of tax
17,946 –25,224 46,544 –42,013 –6,841 –95,397
Total comprehensive income for the period 103,404 –17,508 202,700 –30,333 172,863 –60,171
Attributable to the shareholders
of the parent company
103,404 –17,508 202,700 –30,333 172,863 –60,171

Group balance sheet, summary

KSEK 30 Sep
2021
30 Sep
2020
31 Dec
2020
Assets
Goodwill 735,383 576,139 548,759
Other intangible assets 197,295 81,700 75,219
Tangible assets 168,732 202,681 185,382
Financial assets 17,161 14,327 16,782
Total non-current assets 1,118,572 874,847 826,143
Trade receivables 418,597 288,332 408,549
Other current assets 268,490 176,657 134,224
Cash and cash equivalents 513,158 573,523 591,171
Total current assets 1,200,245 1,038,512 1,133,943
TOTAL ASSETS 2,318,817 1,913,359 1,960,087
Equity and liabilities
Equity 905,046 808,890 709,857
Provisions 231,434 150,246 27,841
Non-current liabilities 320,081 321,417 402,749
Current liabilities 862,256 632,807 819,639
Total liabilities 1,413,771 1,104,469 1,250,229
TOTAL EQUITY AND LIABILITIES 2,318,817 1,913,359 1,960,087

Group cash flow statement, summary

KSEK Jan–Sep
2021
Jan–Sep
2020
Jan–Dec
2020
Cash flow before changes in working capital 220,223 73,161 99,929
Cash flow from changes in working capital –57,200 80,908 142,177
Cash flow from operating activities 163,024 154,070 242,106
Acquisition related –164,459 –34,879 –125,718
Other1 –17,743 –16,569 –21,931
Cash flow from investing activities –182,202 –51,449 –147,649
Dividend –11,591 –69,546
Other –71,710 167,612 282,572
Cash flow from financing activities –83,301 167,612 213,026
Cash flow for the period –102,480 270,233 307,484
Cash and cash equivalents, opening balance 591,171 316,388 316,388
Translation differences in cash and cash equivalents 24,466 –13,099 –32,701
Cash and cash equivalents, closing balance 513,158 573,523 591,171

Acquisition of assets.

Group changes in consolidated equity

KSEK 30 Sep
2021
30 Sep
2020
31 Dec
2020
Opening balance 709,857 839,678 839,678
Dividend to shareholders –11,591 –69,546
New issue 4,248
Other –168 –455 –104
Total comprehensive income for the period 202,700 –30,333 –60,171
Closing balance 905,046 808,890 709,857

Parent Company's income statement, summary

KSEK Jul–Sep
2021
Jul–Sep
2020
Jan–Sep
2021
Jan–Sep
2020
Oct–Sep
2020/21
Jan–Dec
2020
Net sales 985 655 2,645 2,475 3,530 3,360
Operating expenses –1,358 –476 –2,378 –2,694 –5,755 –6,071
Operating profit –373 179 267 –219 –2,225 –2,711
Net financial items 33,599 –1,736 33,300 15,454 72,742 54,896
Profit before tax 33,225 –1,558 33,568 15,235 70,517 52,184
Estimated tax –3,209 –3,209
Profit for the period 33,225 –1,558 33,568 15,235 67,308 48,975

Parent Company's balance sheet, summary

KSEK 30 Sep
2021
30 Sep
2020
31 Dec
2020
Assets
Financial assets 370,349 302,568 301,460
Other current assets 113,131 160,795 143,070
Cash and cash equivalents 809 20,988 44,041
Total assets 484,290 484,351 488,571
Equity and liabilities
Equity 160,943 170,525 134,719
Non-current liabilities 168,687 136,128 187,247
Current liabilities 154,659 177,699 166,605
Total equity and liabilities 484,290 484,351 488,571

Group consolidated key ratios

KSEK Jul–Sep
2021
Jul–Sep
2020
Jan–Sep
2021
Jan–Sep
2020
Oct–Sep
2020/21
Jan–Dec
2020
Net sales 478,152 347,004 1,346,064 1,041,524 1,768,695 1,464,155
Operating profit (EBITA) 114,178 20,764 237,829 44,918 283,218 90,306
Operating margin (EBITA margin), % 23.9 6.0 17.7 4.3 16.0 6.2
Operating profit (EBIT) 106,193 14,436 214,780 26,585 252,803 64,607
Operating margin (EBIT margin), % 22.2 4.2 16.0 2.6 14.3 4.4
Profit margin, % 17.9 2.2 11.6 1.1 10.2 2.4
Operating capital1 721,468 522,988
Return on operating capital, % 41 12
Return on equity, % 22 5
Equity ratio, at end of the period, % 39 42 39 42 39 36
Cash flow –94,470 –3,537 –102,480 270,233 –65,229 307,484
Cash and cash equivalents, at end
of the period
513,158 573,523 513,158 573,523 513,158 591,171
Average number of employees 957 847 902 847 888 843
Number of employees at end of the period 1,025 842 1,025 842 1,025 821
Revenues for the year per employee 1,993 1,736

1 The calculation included the item of non-interest-bearing liabilities amounting to KSEK 1,084 (828) .

Net sales according to business model

MSEK Jan–Sep
2021
Jan–Sep
2020
BTS North
America
BTS
Europe
BTS Other
markets
APG Total BTS North
America
BTS
Europe
BTS Other
markets
APG Total
Programs 385 159 240 71 856 188 107 153 58 505
Development 210 59 75 0 343 218 91 66 0 375
Licenses 103 21 10 8 142 100 21 16 6 142
Other revenue 1 1 2 1 6 9 5 5 0 19
TOTAL 699 240 327 80 1,346 514 224 240 64 1,042

DEFINITIONS

Earnings per share

Earnings attributable to the parent company's shareholders divided by number of shares before dilution.

Operating margin (EBITA margin)

Operating profit before interest, tax and amortization as a percentage of net sales.

Operating margin (EBIT margin)

Operating profit after depreciation as a percentage of net sales.

Profit margin

Profit for the period as a percentage of net sales.

Operating capital

Total balance sheet reduced by liquid funds and other interest-bearing assets and reduced by non-interest bearing liabilities.

Return on operating capital

Operating profit (EBIT) as a percentage of average operating capital.

Return on equity

Profit after tax as a percentage of average equity.

Equity ratio

Equity as a percentage of the total balance sheet.

Sweden Head Office Grevgatan 34 114 53 Stockholm Tel: +46 8 587 070 00

Argentina Reconquista 657 PB 3 CP1003 CABA. Buenos Aires Tel: +54 911 5795 5721

Australia Level 24, 570 Bourke Street Melbourne VIC 3000 Tel: +61 3 7001 1811

Level 6 10 Barrack Street Sydney NSW 2000 Tel: +61 02 8243 0900

Brazil

Rua Geraldo Flausino Gomes, 85, cj 42 04575-060 São Paulo – SP Tel: +55 (11) 5505 2070

Canada

SwissVBS 460 Richmond Street W. Suite 700 Toronto, ON M5V 1Y1 Tel: +1 416 848 3744

China

1376 West Nanjing Road Suite 531, East Office Tower Shanghai Centre Shanghai 200040 Tel: +86 21 6289 8688

France 57 Rue de Seine 75006 Paris Tel: +33 1 40 15 07 43

Germany

Ritterstraße 12 D-50668 Cologne Tel: +49 221 270 70 763

India

801, 8th Floor, DLH Park Near MTNL Staff quarters, S.V. Road, Goregaon (West). Mumbai - 400062 Maharashtra Tel: +91 22 6196 6800

10th Floor, Parinee Crescenzo, G block, Bandra Kurla Complex, Bandra East, Mumbai- 400051 Tel: +91 98 1993 4615

Italy Corso Venezia 7 20121 Milan Tel: +39 02 6611 6364

BTS Design innovation Viale Abruzzi, 13 20131 Milan Tel: +39 02 69015719

Japan

TS Kojimachi Bldg. 3F 6-4-6 Kojimachi Chiyoda-ku Tokyo 102-0083 Tel: +81 (3) 6272 9973

Malaysia

Unit No 20-01, level 20, Menara Centara No.360 Jalan Tuanku Abdul Rahman 50100 Kuala Lumpur

Mexico

Edificio Torre Moliere Calle Moliere 13 – PH Col Chapultepec Polanco C.P. 11560 México, D.F. Tel: +52 (55) 52 81 69 72

The Netherlands

Barbara Strozzilaan 201 1083 HN Amsterdam Tel: + 31 (0)20 615 15 14

Singapore 1 Finlayson Green Suite 16-01 Singapore 049246 Tel: +65 63043032

Spain

Simon Bolivar 27-1, Office No. 4 Bilbao 48013 Tel: +34 94 423 5594

Calle José Abascal 55, piso 3ºDcha 28003 Madrid Tel: +34 91 417 5327

Netmind SL. Carrer dels Almogàvers 123 08018 Barcelona Tel: +34 93 304 1720

South Africa 267 West Avenue, 1st Floor Centurion 0046, Gauteng

Tel: +27 12 663 6909 South Korea

Wonseo Building Room 103, 1st Floor 13, Changdeokgung 1-gil Jongnogu Seoul 03058 Tel: +82 2 539 7676

Switzerland

SwissVBS Winkelriedstrasse 35 9000 St. Gallen Tel: +41 71 845 5936

Taiwan

7 F., No. 307, Dun-Hua, North Road Taipei 105 Tel: +886 2 8712 3665

Thailand

128/27 Phyathai Plaza Building (4th Floor) Phyathai Rd. Kwaeng Thung Phyathai Khet Ratchathewi Bangkok 10400 Tel: +66 2 216 5974

UK

1 Queen Caroline Street London W6 9YN Tel: +44 20 7368 4180

United Arab Emirates

14th floor, Suite 1401, Reef Tower Cluster O, Jumeirah Lakes Towers Dubai Tel: +971 4 589 6143

USA

200 South Wacker Drive Suite 850 Chicago, IL 60606 Tel: +1 312 509 4750

PO Box 951 Woodstock, GA 30188

350 Fifth Avenue Suite 5020 New York, NY 10118 Tel: +1 646 378 3730

4742 N. 24th Street Suite 120 Phoenix, AZ 85016 Tel: +1 480 948 2777

222 Kearny Street Suite 1000 San Francisco, CA 94108 Tel: +1 415 362 4200

Rapid Learning Institute 435 Devon Park Drive, Bldg. 510, Wayne, PA 19087 Tel: (toll free) +1 877 792 2172

Bates Communications Inc. 40 Walnut Street Suite 302 Wellesley, MA 02481 Tel: +1 800 908 8239

Advantage Performance Group

100 Smith Ranch Road, Suite 306 San Rafael, CA 94903 USA Tel: +1 800 494 6646

Strategy made

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