The BI Norwegian Business School institution delivered good financial results also in 2015. BI’s total turnover was NOK 1 451 million in 2015, compared to NOK 1 407 million in the preceding year.
The Group
At the beginning of 2014, the Foundation BI Norwegian Business School acquired the D block in the BI building in Nydalen by assuming all shares in the building’s holding company and domestic company. The holding company, BI Bygget D-blokka AS, is a leasing business and has a substantial balance sheet value as owner of the section. The Foundation has full control over the company, which is considered not to be of an insignificant value, ergo triggering a requirement for consolidated financial statements.
The BI Norwegian Business School Group consists of the parent company - the Foundation BI Norwegian Business School - as well as the wholly owned subsidiaries BI Bygget D-blokka AS, Sandakerveien D-blokka AS, Bedriftsøkonomisk Institutt AS, Sandakerveien 116-118 AS, and Studentenes Hus Nydalen AS.
The Group’s turnover in 2015 was NOK 1 475 million. The operating profit ended at NOK 93 million.
The Group’s real estate investments are financed through mortgages in DNB ASA. At year-end 2015, the remaining balance on the mortgage was NOK 1 253 million. The Foundation has granted a subordinated loan to subsidiary BI Bygget D-blokka AS. At year-end 2015, the remaining balance on the subordinated loan was NOK 174 million. The loan was granted on commercial terms. Total financial costs for the Group amounted to NOK 49 million. Real value of Campus Nydalen is estimated at just over NOK 2.5 billion.
The year’s profit before tax amounted to NOK 49.2 million. Tax costs for the year totalled NOK 1.6 million, and are related to the leasing activity in BI Bygget D-blokka AS. Net profit thus amounted to NOK 47.5 million for 2015.
The Group has the ambition to generate a positive cash flow over time. BI delivers satisfactory cash flow generated from operations. Depreciations are higher than before due to historic investment levels. The overall increase in net liquid assets was NOK 66 million. The Group has satisfactory liquidity.
As of 31 December 2015, the Group’s book equity was NOK 715 million.
Foundation BI Norwegian Business School
In 2015, BI Norwegian Business School achieved a total turnover of NOK 1 451 million, compared with NOK 1 407 million the year before. This is an increase of just above three per cent. The turnover figures include invoiced rent and overhead costs for tenants. State contributions of NOK 264 million were received in 2015, amounting to 18.2 % of the operating revenues (NOK 258 million and 18.3 % in 2014).
The operating profit for 2015 was NOK 79,7 million. This is substantially lower than in 2014. Challenging times in the Norwegian energy sector led to the loss of income from already planned courses and programmes for central business players. Income growth was somewhat reduced for this reason. An extraordinary, one-year plan change in the Norwegian Public Service Pension Fund (SPK) in 2014, reduced the pension cost significantly. For 2015 the pension cost is back on a normal track, and is increased with NOK 34,2 million. Depreciation for the year increased by NOK 11.1 million due to considerable investments in digitalisation of both students’ interaction with the school and of processes associated with planning, implementation, as well as supplementary work relating to examinations.
The Foundation granted a subordinated loan to a subsidiary. Of this, NOK 6.1 million have been charged in interest for 2015. Net financial items are a cost of NOK 37.7 million compared with a cost of NOK 27.1 million in 2014.
The year’s pre-tax profit amounted to NOK 42.0 million. There was no tax cost for 2015, due to no payable taxes and no recording of deferred taxes on losses carried forward. The annual profit after taxes was thus NOK 42.0 million. The corresponding figure for 2014 was NOK 106.9 million.
BI Norwegian Business School has the ambition for the Foundation to generate positive cash flow. Investments in fixed assets were somewhat lower in 2014 compared with previous years. The overall increase in net liquid assets was NOK 66 million. The Foundation has satisfactory liquidity.
The Foundation follows a financial hedging strategy. This entails that between 33 % and 67 % of the mortgage must always be hedged with fixed interest agreements. At year-end, the degree of hedging was 44 %. The Foundation is exposed to limited currency risk. Transactions of a substantial size are hedged according to the strategy.
As a consequence of being financed by student tuition, BI Norwegian Business School is exposed to significant market risk. The Foundation depends on a large volume of students at bachelor level and a steady inflow of students. BI’s management continuously addresses market exposure and is certain that the organisation is equipped to handle this correctly, and that the Foundation is robust enough to withstand fluctuations in results.
As of 31 December 2015, the Foundation’s equity was NOK 706 million, compared with NOK 490 million as of 31 December 2014. This year’s deviations from estimated pension costs amounts to NOK 174 million (NOK -165 million in 2014) and has been recognised against the Foundation’s equity (cf. Note 14). The deviation is largely explained by the significantly higher discount rate, but also by lowered future wage adjustment expectations.
The Nydalen building has been depreciated by 1.5 % in 2015. Other fixed assets have also been depreciated according to the same principles as in previous years.
Of the outstanding balance of NOK 1 253 million, annual instalments amount to NOK 90.5 million. The remaining balance falls due on 20 December 2018. BI has the opportunity to pay instalments of at least NOK 10.0 million between due dates. BI Norwegian Business School satisfies the lender’s requirements for safeguarding the terms.
In accordance with Section 3-3 a of the Norwegian Accounting Act, we confirm that the going concern assumptions have been met.
ANNUAL PROFIT AND ALLOCATIONS:
| This year's allocation (use) of research development funds | MNOK (13.2) |
| This year's allocation (use) of funds for MSc and PhD scholarships | MNOK (5.8) |
| Transfer to other equity | MNOK 61.0 |
| TOTAL ALLOCATIONS | MNOK 42.0 |
| Foundation capital | MNOK 1.3 |
| Research development fund | MNOK 31.4 |
| Fund for MSc and PhD scholarships | MNOK 0.0 |
| Other equity | MNOK 673.5 |
| TOTAL EQUITY | MNOK 706.2 |
Allocation of research development funds takes place through the annual budget process. Designated guidelines have been prepared for allocation of the fund for MSc and PhD scholarships.