BGC Annual Report 2011
P l at s f ö r v i n j e t t
Contents BGC in two minutes
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Foreword from the CEO
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Payments 4 Electronic invoicing and electronic identification 8 The payment solutions of the future
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Board of Directors
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Management Team
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Directors’ Report
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Income Statement
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Balance Sheet
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Equity 22 Cash Flow Statement
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Notes 24 Auditors’ Report
Graphic production: Citat AB Printing: Åtta.45 Tryckeri AB Photography: Karl-Johan Larsson cover images, pp 4, 11, 12, 13. Anna Karlsson p 13. Robert Eldrim pp 1, 3, 6, 14, 15. Martin Källqvist pp 1, 7, 8. Copywriter: Karin Lago, pp 1-13.
We have chosen to print a smaller run of our annual report because we care about the environment.
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BGC in two minutes
BGC in two minutes BGC delivers market-leading payment solutions to banks in Sweden. This increases our customers’ competitive advantages. The highest number of payments processed via our systems in a single day is more than 40 million. On average, we process transactions with a total value of almost SEK 45 billion every day. BGC is owned by SEB, Swedbank, Handelsbanken, Nordea, Danske Bank, Skandiabanken, Ålandsbanken and Länsförsäkringar Bank. As a European clearing house, BGC falls under the supervision of the Swedish Financial Supervisory Authority and is overseen by Riksbanken (Sweden’s central bank). We provide an important function in the Swedish payment infrastructure and offer products and services for payments, electronic invoicing and secure e-identification. BGC also works with leading software suppliers in order implement our payment and information services in their systems.
Quick facts • • • • • •
Established in 1959 CEO: Birgitta Simonsson Employees: 241 Funds processed by Bankgirot in 2011: SEK 8,204 billion Number of payments via Bankgirot in 2011: 791 million Banks participating in Bankgirot: 20
companies using the service. Moreover, we simplify the processing of invoices for both senders and recipients. BGC E-invoice is a fast, modern and environmentallysound way to handle invoices, for both companies and consumers. The electronic invoicing area also includes the BGC Scanning Solution service, which is offered to all companies, government agencies and organisations operating in Sweden.
BGC’s offering Payments Payments are the original foundation stone of BGC’s offering, and remain our largest business area. The basis of the payments business area is the Bankgiro system and the associated payment services. This business area also includes clearing and settlement services for all payment products, the operation and maintenance of computerised clearing and communication services. BGC’s customers in this area are banks with operations in Sweden. At the end of 2011, 20 banks were affiliated with the Bankgiro system.
Electronic identification Electronic identification is an important cornerstone for meeting modern society’s demands for secure invoice and payments processing, as well as secure identification over the internet. Within electronic identification, BGC is responsible for the operation, administration and development of the banks’ ID service (BankID). The electronic identification services are based on PKI (Public Key Infrastructure), which guarantees security in the issue, revocation and verification of electronic identities. Electronic identification is offered to service providers such as banks and mobile phone operators. BGC also offers the BGC eID Gateway service, providing simple and secure e-identification via a web interface.
Electronic invoicing BGC owns, administers and develops the BGC E-invoice electronic invoicing service. With BGC E-invoice, we create better cash flow, and thereby better liquidity, for the
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F o r e w o r d f r o m t h e C EO
Foreword from the CEO A great deal is happening within payments, and the industry faces an exciting future. During 2011, we are prepared to continue to act as one of Sweden’s leading infrastructure suppliers within this field, and to deliver the services that make our customers competitive.
A changing market The national borders for payments are gradually being erased, new players are entering the payments market, e-commerce is increasing and we are becoming more connected. Consumers and companies have new requirements. The trend within payments is for additional demand for faster payments, improved accessibility and opening hours, and greater transparency. Within this changing market we want to be – and remain – at the cutting edge, delivering the services demanded. Payment in real time – the payments of the future In order to meet future demand, we are launching a revolutionary new payments system in 2012: Real-time Payments (BiR). The system will include new services to make everyday life easier for businesses and individuals. The main advantages of BiR are speed and accessibility. It is also a generic system which can be used by all banks and payment providers, and various services can be added. BiR will allow users to streamline existing payment solutions and create new, fast solutions. Within the next few years, we will see the emergence of solutions that businesses and individuals can use to monitor their payments, at any time and anywhere. Autogiro – simple and effective The new version of Autogiro was launched in November 2011: a modern, paper-free service with an effective web interface. The change-over process is running according to plan, and will be complete in May 2012. This will enable creditors to simplify autogiro processing. Our New Autogiro service features even more functions, making it easier to work with payments and meeting the market’s growing demands for more efficient procedures and faster access to information. The creditors that BGC has been in contact with have found that processes such as mandate administration are now simpler. New Autogiro also reduces paperwork, since the reports are now sent electronically instead of by post. E-invoice: BGC assumes product ownership The total number of E-invoice transactions was 30 million, exceeding our forecast for 2011. Our focus during 2011 was on activities resulting from taking over product ownership of E-invoice during the year. This was a natural step for us as an infrastructure supplier of overall solutions.
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Payment Services OCR is closed During 2011, a decision was made in consultation with the banks to close Payment Services OCR on 30 September 2013. Instead, customers will be offered Bankgiro Receivables, which includes the same OCR functionality whilst also providing access to all available information about the payer. Multiple OCR reference numbers can also be reported together with a payment. Over the course of the year, we have worked together with the banks to transfer customers over to the new service. Increased efficiency Each day, we process transactions with an average total value of almost SEK 45 billion. During 2011, we updated our vision and our strategic goals. We want to continue to be the best infrastructure supplier, enabling our customers to provide their end-customers with market-leading payment solutions. Our role as a clearing house involves providing high quality, secure solutions. This also means that we work with regulations and ensure that the participants in our payment systems meet the agreed participant requirements. Our main focus is on delivering 99.9 percent of transactions on time and to the right accounts. This is a target that we have reached for several years. During the past year, we have continued to carry out continuous improvement work, which means that every year we make considerable efforts to improve the efficiency of our operations. During 2012, we will be strengthening our organisation by reviewing our processes, roles and ways of working in order to boost our delivery capacity and improve our quality even more. In order to simplify and streamline our communication, we will be using Bankgirot as our brand and our company name from spring 2012 onwards. Customer satisfaction continues Banks, businesses and software companies are very satisfied with BGC, according to the latest customer survey for 2011. Compared with the average position of companies and organisations within Swedish business, we are extremely well placed. BGC’s Satisfied Customer Index for Banks was 85 on a scale of 1 to 100, remaining at the same high level as the previous year’s survey. All banks scored us highly on the quality and security of our payment services.
F o r e w o r d f r o m t h e C EO
“Within this changing market we want to be – and remain – at the cutting edge, delivering the services demanded.”
Last autumn, we welcomed the former Sparbanken Finn and Sparbanken Gripen to the Bankgiro system under a new name, Sparbanken Öresund.
The year in brief Real-time Payments
Increased market shares BGC’s sales in 2011 totalled SEK 759 million, an increase of SEK 57 million or 8 percent, while the number of giro transactions increased by 5.3 percent. The company’s profit was SEK 54.5 million. The volume of payments within the Bankgiro system continued to rise during 2011. In all, 791 million payments were processed. This represented an increase of 5 percent compared with 2010, when the volume was 751 million payments. The total value of these payments in 2011 was SEK 8,204 billion.
During 2011, we have worked to prepare for next year’s launch of a brand new system for payments, Real-time Payments.
New Autogiro The new version of Autogiro was launched in November 2011, and the change-over for all bank customers is expected to be completed in May 2012.
Customer satisfaction continues BGC’s Satisfied Customer Index for Banks was 85 on a scale of 1 to 100, remaining at the same high level as the previous year’s survey.
The payment solutions of the future The payments industry faces a paradigm shift, with brand new conditions for dealing with payments. Looking towards the year 2020, we will continue to develop and deliver the high quality, efficient and secure payment solutions that the market demands.
Healthy growth The volume of payments within the Bankgiro system continued to rise during 2011. In all, 791 million payments were processed, representing an increase of 5 percent compared with 2010. On 28 February 2011, the Bankgiro system processed 42 million transactions within the company in one day, breaking the 2009 record of 35 million transactions.
Birgitta Simonsson Chief Executive Officer, BGC
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Pay m e n t s
Market-leading payment solutions BGC delivers cutting-edge payment solutions with the aim of improving the competitiveness of the Swedish banks. During the year, we have improved our existing services and developed new ones.
Our customers appreciate New Autogiro The new version of Autogiro was launched in November 2011. This is a modern, paper-free service with an effective web interface. For creditors, this means that paperwork and manual processing have disappeared as everything is file-based or web-based. The product is fully in line with the market’s demands for more efficient procedures and faster access to information. BGC is working closely alongside the banks to migrate the 18,000 or so bankgiro numbers to the new version of Autogiro. New Autogiro, in which the web-based Autogiro Online service is the big new feature, has proved popular with those creditors who have already been using the service for a while. They like the fact that registering new mandates is now simpler. They also appreciate the reduction in paperwork, since reports are now sent electronically instead of by post. Ulrika Johanson, Finance Assistant at Point Transaction Systems, has the following to say about New Autogiro: “We have around 35,000 direct debit customers, so New Autogiro makes things much easier for us. The big difference is that we no longer use printed forms, since everything is web-based. We can stop withdrawals directly online, and we are notified immediately whether or not we have done things correctly. We’re delighted – it works extremely well!”
“We have around 35,000 direct debit customers, so New Autogiro makes things much easier for us.” Ulrika Johanson, Point Transaction Systems Real-time Payments – a world-class innovation During 2011, we developed the system for real-time payments that we plan to launch in autumn 2012. This is a new, open and generic payment system based on a new system platform, and will be able to deal with many different types of payment products. Developing this payment system was possible thanks to the task we have been entrusted with by Riksbanken: processing payments around the clock. The forthcoming payment products will be designed and developed in close cooperation with the banks. Real-time Payments makes it possible to transfer money directly from one bank account to another, even if the account is with a different bank – 24 hours a day, 365
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days a year. Mobile payments will be the first payment product to be developed in partnership with the banks. Payment Services OCR will be closed in 2013 Payment Services OCR is used less and less often each month, and now accounts for just 12 percent of incoming payment volumes. A decision was made in 2011 to close the service on 30 September 2013. Customers will be offered the Bankgiro Receivables product instead. In contrast to Payment Services OCR, Bankgiro Receivables also offers access to all other available information about the payer, such as the payer’s name, address and corporate identity number. Multiple OCR reference numbers can also be reported together with a payment. Bankgiro Receivables includes the same OCR functionality as Payment Services OCR. This means that customers can still invoice using an OCR reference number and carry out OCR reference checks.
Pay m e n t s
The Bankgiro system – Amount processed SEK billions 8000 6000 4000 2000 0
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The Bankgiro system – number of payments
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Millions 800 600 400 200 0
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In 2011, BGC processed an average of 3.1 million bankgiro payments each bank day*, or some 791 million for the entire year, with a value of SEK 8,204 billion. *Based on 253 bank days
have an index of 83 or more, which is excellent. More than nine out of ten banks believe that BGC offers payment services featuring high levels of quality and security. More and more business customers believe that BGC is a forward-looking, customer-oriented company, and that Bankgirot is a strong brand. Satisfaction with BGC’s customer service has risen markedly compared with the previous measurement.
Environmental benefits During 2011 we reduced the volume of paper reports used for bankgiro products by over 20 percent, corresponding to around 1,000 trees. We are working together with the banks to encourage more companies to choose to receive deposit details and other information electronically on file or via web services, rather than in printed form. Deposit Information volumes via the internet are continuing to increase. The number of Bankgiro Receivables transactions rose by 13 percent during 2011. This has resulted in a reduction in the number of transactions generating paperwork.
Growth The Bankgiro system is BGC’s largest service within the field of payments, and generates around 70 percent of the company’s turnover. During the past year, BGC’s volumes in the system showed growth, despite the market declining somewhat and a poor economic outlook. Growth during the year was 5.3 percent. The number of active bank customers has risen by 3.6 percent, and the volume per bank customer has increased by 1.7 percent. During the year, BGC has improved its existing services and developed a range of new services. This has strengthened our service offering to banks and bank customers.
BGC: a forward-looking, customer-oriented company Banks, businesses and software companies are very satisfied with BGC, according to the latest customer survey for 2011. BGC’s Satisfied Customer Index for Banks was 85 on a scale of 1 to 100, remaining at the same high level as the previous year’s survey. All banks
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PAYMENTS
New services for greater knowledge and customer satisfaction Here at BGC, we are constantly developing our existing and new services to meet the needs and expectations of the market. Two such services are BGC Bank-Specific Telephony Assignments and the BGC School. BGC is also dealing with the migration to New Autogiro on behalf of the banks. Proactive customer service Following requests from the banks, who want to follow up selling signals from customer calls to BGC, we launched a new service in 2011: BGC Bank-Specific Telephony Assignments. This service offers a number of advantages: • B GC has daily contact with the bank’s customers, making it easy to capture the need for change. • B GC has a high degree of expertise when it comes to bankgiro products, meaning that we can easily and clearly explain the advantages to the customer. “We receive around 1,000 calls a day,” says Annelie Deboneras, Operations Support Service Owner at BGC Customer Service. “By being proactive and suggesting improvements, we can ensure that the bank’s customers receive the best adapted and most cost-effective products and services according to their individual needs. The benefits include improved customer satisfaction.” Anna Johansson, Product Manager for bankgiro products at Swedbank, has been using the service for two years: “We want to be available to our customers in all channels, and to work where our customers are. Here, BGC represents an extension of our own services. BGC’s service, Bank-Specific Telephony Assignments, is entirely in line with the bank’s own values: simple, open and caring. We are seen to be proactive, and customer satisfaction is improved. Of the 800 selling signals captured by BGC in 2011, 675 progressed to implementation. These are
“We want to be available to our customers in all channels, and to work where our customers are. Here, BGC represents an extension of our own services.”
Anna Johansson, Swedbank
excellent figures. It also frees up time for our own staff, who can concentrate on new business.” 18,000 bankgiro numbers are migrated to New Autogiro BGC is carrying out the migration from the old version of Autogiro to New Autogiro. It is planned that all 18,000 bankgiro numbers will be migrated by May 2012. Senior Customer Advisor Manuela Valente is responsible for the Migration Group, which consists of ten dedicated customer advisors: “This is a huge project, and it’s been a fantastic, instructive journey – including for the customer advisors. We’ve dealt with as many as 5,300 bankgiro numbers in just three weeks! The atmosphere has been extremely positive, and the group is incredibly driven.”
The BGC School: training on bankgiro products Thanks to the BGC School, everyone who works with banking services can learn more about bankgiro products. During the year, we have trained around 250 people. This training has focused mainly on Bankgirot, incoming and outgoing payments and Autogiro. The participants have given the school good grades in their evaluations. Based on demand, our ambition is to be able to offer staff from all banks training on BGC’s products.
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PAYMENTS
“This is a huge project, and it’s been a fantastic, instructive journey – including for the customer advisors.” Manuela Valente, Senior Customer Advisor
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E l e c t r o n i c i n v o i c i n g a n d e l e c t r o n i c i d e n t i f i c at i o n
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E l e c t r o n i c i n v o i c i n g a n d e l e c t r o n i c i d e n t i f i c at i o n
Electronic overall solutions The market for electronic payment solutions is growing, both within Sweden and internationally. We are seeing a gradual trend whereby our product range is being developed and expanded, in close cooperation with the banks, our partners and our customers. BGC eID Gateway: the first agreements are signed In spring 2011 we launched BGC eID Gateway, a cloud service that simply and securely enables businesses and public sector bodies to identify their customers online and allow them to sign various types of document using e-identity. Via a web interface with BGC, companies can connect to check identities and use electronic signatures when interacting with customers. This launch has resulted in several agreements during the year. The first retailer agreement was signed in April, and the first transactions were carried out in September. The September to December period has been a pilot period. “Increased use of e-identity when carrying out various services online helps to make everyday life simpler and more secure for everyone,” says Johan Hedman, Partner Group Director at BGC. “One big advantage with BGC eID Gateway is that the service gives customers access to all Swedish e-identity services without them having to sign agreements with the issuers or invest in technology and expertise.”
BGC E-invoice: looking to the future BGC E-invoice offers many advantages. As well as streamlining internal processes – which can bring benefits such as faster accounting – the solution reduces the impact on the environment. On 1 January 2011, BGC assumed ownership of E-invoice, resulting in a clearer role as an infrastructure supplier. BGC currently supplies BGC E-invoice to nine Swedish banks. The total number of BGC E-invoice transactions in 2011 was 30 million. During the year, BGC signed agreements with intermediators – e-invoice exchanges – covering Finland, Norway and Denmark. This means that BGC now has a full Nordic reach. The time has now come to take the next step towards improved functionality and greater simplicity. We will therefore focus during the coming year on continuing to develop the service to give a competitive system solution with a number of modules, which the banks can build into their own solutions for their business customers. One focus area involves strengthening the service using key building blocks that enable the bank to create a complete e-invoicing offering via its online banking service. The e-invoicing services will also be packaged together with other related BGC products.
Scanning Solution: strong growth and satisfied customers BGC Scanning Solution helps businesses and organisations of all sizes to convert supplier invoices from paper format to electronic format, thereby saving both time and paper. The system allows them to take full control of the invoice flow with a fast, secure and cost-saving solution. Invoices are scanned and transferred electronically to the customer’s workflow and accounting systems. BGC Scanning Solution takes care of the entire cumbersome invoice flow: from opening envelopes to scanning, interpreting, verifying and transferring the data to the company. During 2011, Scanning Solution gained 418 new customers via partners and 14 direct customers. In Inspectum’s customer survey of service bureau scanning customers, which was carried out in spring 2011, 91 percent of BGC customers said they would recommend BGC’s scanning service to other companies. 88 percent said that BGC provides excellent or very good quality.
PKI Services: continued growth in volumes PKI Services ensures that the right parties communicate with each other, and that no unauthorised persons gain access to the communication. We offer a comprehensive solution for issuing, blocking and checking electronic certificates, around the clock and in the most secure manner possible. The service offers Sweden’s most widely used form of electronic identity, BankID, in partnership with Finansiell ID-Teknik BID AB. Volumes within PKI Services rose by 23 percent in 2011, thanks largely to the increased use of BankID.
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T h e pay m e n t s o l u t i o n s o f t h e f u t u r e
Looking towards the future Payment harmonisation within Europe and far-reaching technological developments are transforming the payment landscape. National borders are gradually being erased. The fight for mobile payments is growing tougher. Consumers and companies have new requirements. Meet BGC’s new Head of Business Development, Håkan Ygberg, who has his sights set on 2020. You are the new Head of Business Development. Are you enjoying your new role? Yes, my job is a bit like being an architect. I’m essentially a road and water engineer, but now instead of building roads I’m helping to build the infrastructure for payments in Sweden. We build electronic roads for transaction packages instead of for cars. It’s all about building efficiently, and with a high level of quality and security. And BGC is an infrastructure supplier with the task of linking together the banks and other payment providers.
hours. Our aim is to tie this all together and make it easy for banks and payment providers to package their own products. Because of this, we’re developing a new platform for real-time payments. This represents a paradigm shift for payments. Suddenly, payments can be made between individuals and businesses in real time. Brand new possibilities are created, and this is apparent not least in the significant interest from the market.
What will the payment market look like in 2020? Right now there’s a lot of hype about payments, especially mobile payments. Banks and card companies want to reach customers in their everyday lives using mobile phones as a means of payment for other services. At the same time, the phone companies are positioning themselves with mobile phones as a hub. PayPal, Google and other players want to repeat their successes in the digital world by offering payments in the physical world. Technological developments mean that users are becoming increasingly connected. Everything should happen here and now, and expectations and demands are heightened. This consumer behaviour spills over to the banks, and to us as an infrastructure supplier. We maintain a dialogue with banks and payment providers, both because their customers demand new opportunities and because it creates new opportunities. New players will enter the field, but I find it hard to envisage an ecosystem without the banks. Regardless of what happens, the developments during the coming years will be positive for both consumers and businesses. Alongside this, harmonisation work has taken place over the last decade within the EU to create better mobility, for example SEPA (the Single Euro Payments Area). Payments are becoming borderless within EMU. It should be just as easy to make a payment to a country as within a country. Sweden needs to move in the same direction, since we are so heavily dependent on Europe and the rest of the world as consumers, businesses and banks.
Will mobile phones replace cash now? Mobile phones will lead to a reduction in the need for cash. In the future, we’ll be able to do things like splitting the bill and paying money into the class kitty by just pressing a couple of buttons on our mobile phones. Society and citizens need to prepare for a cash-free society. But cash will survive for a good while yet.
How is BGC addressing this trend? What role will you play? We need to follow the European trend and create more standardised payments. We also need to make payments more accessible, in terms of both location and opening
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Three trends in the payment market 1. Standardised payments We are moving from a national to a Nordic and European payment market. In the future, payments will be more borderless. 2. We are becoming more connected By 2013, nine out of ten Swedes are expected to own a smartphone. Consumers are placing new demands on traditional services. Thanks to new technology, building payment solutions has become cheaper and this has resulted in more players entering the market. 3. E-commerce is growing Shopping via digital channels is increasing. We now buy even more things via our computers, mobile phones and TVs.
T h e pay m e n t s o l u t i o n s o f t h e f u t u r e
“So who will win the battle for customers’ everyday lives? New players will enter the field, but I find it hard to envisage an ecosystem without the banks. Regardless of what happens, the developments during the coming years will be positive for both consumers and businesses.” Håkan Ygberg, Head of Business Development at BGC
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T h e pay m e n t s o l u t i o n s o f t h e f u t u r e
Real-time Payments Real-time Payments (BiR) is a brand new system for payments that BGC plans to launch in autumn 2012. This is a world-class innovation, according to Product Manager Camilla Bäck, who says she has the best job in the world. What’s it like working at BGC? It’s a great workplace in which to develop. I started working for customer service in 1998, and have had a number of different roles since then. I’m now Product Manager for our new payment system, BiR. It’s the best job in the world! I can make a difference and I get to work with both long-term strategies and short-term action plans. You’re Product Manager for a product that doesn’t exist yet. What’s that like? Yes, it’s a little unusual. We’re building something brand new. I work with product specialists and supervisors, who are part of my team, but I also work together with the whole of BGC to ensure that everything works. It’s a matter of building up the components for what’s coming, so that everything is in place once the payment system is launched. We’re working within two different projects: one devising the actual payment system, and one developing the first product to be linked to the system. Why is BGC developing Real-time Payments? We can do most things here and now. There are apps for everything, most people have mobiles and everything’s online. Except when it comes to payments. We need to meet the market’s expectations when it comes to payments, too.
For example, there’s a need to be able to make a payment in order to get quick delivery. Many companies want to receive payment before goods are delivered. Now the mobile phone companies are taking over part of the role of the banks, and are working together to find a common solution for mobile payments. This means increased competition for the banks. And then there’s a national interest, too. We want to reduce cash handling, which is expensive for society. But so far there hasn’t been a good alternative to cash. As an infrastructure supplier, BGC can help the banks to meet the existing customer demand. What new opportunities does BiR offer? BiR is like motorway that can also deal with bicycles and aeroplanes, as well as cars that are limited to a maximum of 70 miles an hour. We’re currently building an infrastructure for all means of transport. But the value will only be realised once you start driving the vehicle. The main advantages of BiR are speed and accessibility. The payment system will be able to deal with payments 24 hours a day, all year round, in a matter of seconds. BiR is also generic, and works with different segments, channels and degrees of payment information. Different products are then linked to the system. How will our view of payments change once they can be made at any time and in any place? Money will become more accessible. We won’t need to go to ATMs any more, and it’ll be easier to make payments. For example, if you’re out at a restaurant and want to split the bill, you’ll be able to use your phone to transfer the money directly to the other person, without using any account numbers and without any delay. There’s also less risk of robberies and less time is taken up with cash handling. For example, how much time do we currently spend cashing up tills in stores? You now have a new commission from Riksbanken. What does that involve? BGC has dealt with clearing and settlement for Riksbanken for several years now. We’ve now also been entrusted with dealing with round-the-clock payments, so that transactions can take place even when Riksbanken is closed. It’s unheard of for a payment provider to be given such a commission by Riksbanken. It shows that they have confidence in BGC, and that we are in a strong position.
Camilla Bäck, Product Manager for Real-time Payments
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T h e pay m e n t s o l u t i o n s o f t h e f u t u r e
New Autogiro May 2012 sees all autogiro companies in Sweden gaining access to a new, modern version of Autogiro. Rosel Johard is Product Manager for Autogiro at BGC.
Tell us about your background, Rosel I trained as a mechanical engineer, and I’ve worked for BGC for nine years within various different areas. Recently I’ve been working full time with New Autogiro, which was launched during 2011. We also have four product specialists, all with different specialisations within Autogiro. Why is BGC developing New Autogiro? Autogiro is a secure and stable payment solution that has existed in the Swedish market for a long time. It was time to get an overall grip in order to meet the market’s requirement for modern processing and faster updating of accounting systems, and to provide better opportunities for good customer service. We also needed to come closer to European transaction prices. As well as financial benefits, there are also environmental benefits since there is less paperwork involved. What’s the difference between the old and new versions of Autogiro? The party making the payment won’t notice any difference at all. For banks and creditors, however, there’s a vast improvement, with the Autogiro Online web service being the main new feature. Autogiro has existed for a long time, and has been largely paper-based. In other words, it has involved a lot of manual work for companies. Paper administration to and from BGC has now been eliminated, as everything is file-based or web-based. Customers can deal with registration and reporting themselves via the web interface, such as registering mandates.
Rosel Johard, Product Manager for Autogiro
What will happen in the future? We will develop new services and improve direct debit payments in Sweden. For example, we want to develop an “Autogiro Light” service, so that even small companies and associations can register direct debit payments. The next natural step will be to standardise Autogiro within the Nordic region. And there we should take a look at the European standard.
BGC’s new HR Manager, Elisabeth Fallberg, is focusing on skills development How do you build up the skills needed to meet the demands of the future? It’s important to work with strategic skills provision in order to support our goals based on a long-term perspective. Right now we’re concentrating on carrying out a skills analysis, which involves linking together roles and skills to see where the gaps are.
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O r g a n i s at i o n
Board of Directors
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Leif Karlsson Swedbank
Anders Borgcrantz Länsförsäkringar Bank
Lennart Söderberg Handelsbanken
Johan Löfgren Danske Bank
Nils-Fredrik Nyblaeus SEB, Chairman
Olle Nylund BGC, Staff Representative
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O r g a n i s at i o n
Management Team
Ulf Sandegren HR Director
Gunnar Ölundh Infrastructure Director
Arne Gustafsson IT Service Director
Elisabeth Fallberg HR Manager
Birgitta Simonsson CEO
Christina Friberg Marketing Director
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T h e pa s t y e a r
Directors’ Report Annual Report 2011 BGC Holding AB
The Board of Directors and Chief Executive Officer of BGC Holding AB hereby submit the annual report and consolidated accounts for the 2011 financial year. Directors’ Report BGC Holding AB BGC Holding is the parent company of the following wholly-owned companies: • Bankgirocentralen BGC AB • Devise Business Transactions Sweden AB Business activities consist of directly or indirectly owning and managing: • companies with clearing operations and closely related activities • companies with connections to such financial activities BGC Holding AB does not conduct any operational activities. Such activities are performed within the subsidiary Bankgirocentralen BGC AB. The ownership structure of BGC Holding AB is as follows: Skandinaviska Enskilda Banken, 33.1 percent, Swedbank, 29.2 percent, Svenska Handelsbanken, 25.4 percent, and Nordea, 10 percent. The remaining 2.3 percent is owned by Danske Bank, Skandiabanken, Ålandsbanken Sverige and Länsförsäkringar Bank. Bankgirocentralen BGC AB Operations Bankgirocentralen BGC AB is a wholly-owned subsidiary of BGC Holding AB. The company carries out clearing operations as referred to in chapter 19 and chapter 1, §§ 5, 6a and 6c of the Swedish Securities Market Act (2007:528), as well as related activities and other activities pursuant to chapter 20, § 7, paragraph 3 of the same act, on the condition that the Swedish Financial Supervisory Authority permits such activities. In the case of BGC, this consists of electronic invoicing (E-invoice), scanning operations (Scanning Solution), certificates for secure identification (PKI Services) and secure verification of electronic signatures (eID Gateway). Market and customers BGC delivers market-leading payment solutions with the aim of improving the competitiveness of the Swedish banks. BGC currently has three product areas: Payments, Electronic Invoicing and Electronic Identification. Payments Giro transfers is BGC’s largest service within the field of payments, and generates about 70 percent of the
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company’s turnover. During the past year, BGC’s volumes in the system developed well, despite the market declining to a certain degree and a weaker economic outlook. Growth in the number of payments for the year was 5.3%, compared with 7.7% in 2010. During 2011, the number of active bank customers rose by 4.6%, while the volume per bank customer increased by 2%. The overall growth is mainly dependent on the volume per company. This growth means that Bankgirot continued to strengthen its position in 2011 as the leading payment system in Sweden. During the year, BGC improved existing and services developed a number of new services, strengthening the service we provide to banks and bank customers. A new participant joined the Bankgiro system in 2011, Sparbanken Öresund, which was affiliated in November. The volume of paper reports used for bankgiro products decreased again during the year. The reduction during 2011 was over 20%, corresponding to more than 1,000 trees. Electronic invoicing and electronic identification Demand for the services BGC offers outside the Bankgiro system continued to increase in 2011. In three years, BGC’s income for these areas has risen by approximately 48%. The E-invoice product area is continuing to show strong growth, and the number of transactions rose by almost 30% compared with the previous year. During the year, BGC has worked with a concept called E-invoice 2.0, with the aim of improving the product. The concept includes even better quality and an overview of the platform for continued development of the service’s functionality. BGC has also continued to develop its service and support services for banks and their customers. During the year, BGC’s scanning service, Scanning Solution, was repackaged with the aim of boosting sales. Volumes within BGC’s Scanning Solution grew by 16% over the course of the year, with very high quality operations. BGC Scanning Solution took part in Inspectum’s supplier evaluation during March, and its average results exceeded the industry index in all areas. Volumes within the identification service that BGC develops and hosts on behalf of Finansiell ID-Teknik AB increased by 167% during the year as a result of more and more banks using BankID for logging in to online banking services. BankID i Mobil (WPKI) was closed down in December, in favour of the new Mobile BankID service. Mobile BankID and the Central Issuing function were launched during the year, and already had 60,000 users by the end of the year. In spring 2011, BGC launched the new eID Gateway service. The first retailer agreement was signed in April, and the first transactions were carried out in September. A number of retailer agreements were also signed during
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the year. The first bank is planned to go into production in January 2012.
transaction costs within the Bankgiro system and increase the percentage of income from customers outside the Bankgiro system.
Service and services BGC’s strategy of offering more customised service and adapted product and sales support remains, and BGC has worked together with the banks in 2011 to develop new services based on the banks’ needs. The aim is that BGC, in its payment infrastructure capacity, should be able to offer the banks cost-effective products and services that the banks can integrate into their service offering for their customers. During 2011, BGC also started a number of projects and pilot studies in order to be able to offer both standardised payment solutions and the option of self-service, information services and archiving solutions in coming years.
Objectives for 2012 Increased customer benefits through more efficient payment products The migration of customers to New Autogiro will be completed during the first half of 2012. New Autogiro will bring increased customer benefits through expanded and improved functionality for creditors. As a complement to New Autogiro and a replacement for today’s printed reports, a web-based product – AG Online – has been launched, providing creditors with the option of extended self-service and internet-based access to payment information. During 2012, BGC will be able to offer additional redemption opportunities for Bankgirot’s money orders through cooperation with Svensk Kuponginlösen. In order to refine and simplify its product portfolio and offer more effective products for business customers, BGC will also start to migrate customers who currently use the Payment Services OCR product to the more effective, more modern Bankgiro Receivables product. During the year, BGC plans to launch a platform for processing payments in real time. This platform, which is being developed in close cooperation with the banks, is the only solution of its kind in the world. The platform will allow BGC’s customers to streamline existing payment solutions and create new, effective and fast solutions. For E-invoice, the main goal for the year is to launch an offering based on a new platform. Cooperation with various partners will also be strengthened by increasing the number of exchanges and developing a service bureau solution. The plans also include streamlining the connection process and packaging the service together with Scanning Solution. The service offering will continue to be developed in consultation with customers. In terms of Scanning Solution, BGC will continue to increase volumes during 2012 and to position the product as a natural part of banks’ and electronic invoice management suppliers’ offering. Within eID Gateway, the focus is on boosting growth and continuing to develop the service offering.
Quality Quality and security are two of BGC’s cornerstones. The banks and their customers should be able to rely on BGC’s systems functioning every day of the year. Just as before, BGC demonstrated very high quality in all delivered services within all product areas. BGC meets tough market demands thanks to active and continuous quality assurance in cooperation with customers. The customer surveys carried out by BGC during the year with banks, businesses and software companies show that 85% are satisfied or very satisfied with BGC’s product offering, quality and service. Investments in new technical platform The project carried out by BGC to upgrade and futureproof Bankgirot’s technical platform by migrating bankgiro products to the British company VocaLink’s platform was completed in 2011. The parties agreed to end the project after the initial phase, in which the New Autogiro and Dividend Payments products were migrated to VocaLink’s platform, and have agreed on the contractual and financial consequences of this. At the end of 2011, BGC started to migrate direct debit customers to VocaLink’s platform, together with VocaLink. The customer migration is expected to be fully completed in May 2012. Sales and profit BGC’s sales in 2011 totalled SEK 759 million, an increase of SEK 57 million or 8%, while the number of giro transactions increased by about 6%. Compensation was received during the year in the form of a one-off payment from a supplier in connection with an unfulfilled supplier undertaking totalling SEK 69 million, which is included in the company’s income for 2011. The company’s profit was SEK 54.5 million (19.9). Sales and profit, excluding the compensation received, are in line with BGC’s long-term goal to drastically reduce
Continued growth and volume development in the Bankgiro system The process of cultivating the payments market together with the banks will continue in 2012, with the aim of increasing volumes in the Bankgiro system. Product development will be intensified during the year in order to meet new customer and market needs as the payment market becomes increasingly internationalised and standardised. The existing bankgiro products will be
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simplified, optimised and made less paper-dependent, alongside a sharper focus on developing new, more standardised products in accordance with European standards and formats. BGC’s long-term strategy also includes increasing access to online information and thereby reducing the use of paper-based services. As such, the company is working actively to develop web services which are cost-effective and environmentallyfriendly. Greater efficiency and high delivery quality In 2012, BGC will continue with its ongoing improvement plan, which has been under way for several years and which means that each year the company makes considerable efforts to further rationalise its operations, to ensure ever-increasing delivery quality, to increase delivery capacity and to improve customer service. BGC’s main focus is on delivering 99.9 percent of each day’s transactions on time, and 99.99 percent of transactions to the right account. These are goals that BGC has been achieving for many years. In 2012, BGC will continue to develop new secure infrastructure solutions in the fields of e-identity and e-invoicing, in order to facilitate secure communication between banks and their end-customers.
Devise Business Transactions Sweden AB The company does not conduct any business activities. Consolidated profits and financial position
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674.1
732.0
836.1
Profit after financial items, SEK millions
53.4
20.9
10.8
43.4
76.0
Total assets, SEK millions
375.6
305.1
279.7
296.4
290.3
Investments, SEK millions*
26.7
60.0
48.6
70.9
17.0
Average no. of employees
214
202
195
246
340
*Relates to property, plant and equipment and intangible fixed assets. See Notes 6-9.
Proposed appropriation of profits The following earnings are at the disposal of the Annual General Meeting of Shareholders: Retained earnings
1,750,989.18
Profit for the year
14,003,664.22
SEK
15,754,653.40
The Board of Directors proposes that the earnings be appropriated as follows: Dividend to shareholders: SEK 140 per share Carried forward
Information about risks and uncertainties During the first half of 2012, new regulations for payment systems – New Principles from the Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) for infrastructure systems, issued by the Bank for International Settlements – are expected to be published. Among other things, these regulations will include rules on the amount of equity held. It is currently unclear whether this will necessitate additional equity for BGC. During 2010, a new Swedish Payment Services Act (2010:751), adapted to European regulations (Directive 2007/64/EC), was introduced in Sweden. The amended legislation opened up the Swedish payments market to other European players. Together with its subcontractors, BGC has implemented extensive structural changes to maintain its position as a competitive and attractive alternative for new and existing customers. The plan is for development to continue over the coming years, and this will mean that BGC’s role in the European payments market will be strengthened through continued adaptation of existing products and the launch of new products and services.
2011 2010 2009 2008 2007
Operating revenue, SEK millions 758.7 702.2
SEK
14,000,000.00 1,754,653.40 15,754,653.40
The Board’s comments on the proposed dividend The proposed dividend to the shareholders will reduce the Parent Company’s equity/assets ratio to 49 percent and the Group’s equity/assets ratio to 59 percent. Since the operations of the Group and the company continue to be profitable, the equity/assets ratios are satisfactory. Our assessment of liquidity in the company and the Group is that this too can be maintained at satisfactory levels. The opinion of the Board is that the proposed dividend will not prevent the company, or other group companies, from fulfilling their obligations in either the long term or the short term, or from implementing any necessary investments. Consequently, the proposed dividend can be supported and is in compliance with the stipulations of chapter 17, § 3, paragraphs 2 and 3 of the Swedish Companies Act (due caution stipulation). According to the consolidated balance sheet, the Group’s equity amounts to SEK 144.1 million (105.2). With regard to the financial performance and position of the Parent Company and the Group for the financial year, the reader is referred to the following income statements and balance sheets.
the year in figures
Income Statement Group Parent Company SEK thousands Note 2011 2010 Note 2011 2010
1 1
OPERATING INCOME Net sales Other operating income
688,889
3
69,910
Total operating income
758,799
700,813
–
–
1,415
–
–
702,228
–
–
OPERATING COSTS Other external costs
4, 10
-497,710
-485,755
–
–
Personnel costs
5, 15
-181,406
-165,372
–
–
6, 7, 8, 9
-15,958
-30,014
–
–
22
-12,863
-537
4
-21
-54
Total operating costs
-707,937
-681,678
-21
-54
OPERATING PROFIT
50,862
20,550
-21
-54
–
Impairment losses and depreciation Other operating costs
FINANCIAL ITEMS Dividend on participating interests in subsidiaries
–
–
14,000
Interest income and similar items
11
2,613
382
31
7
Interest expenses and similar items
11
-75
-74
-3
-2
RESULT AFTER FINANCIAL ITEMS
53,400
20,858
14,007
-49
Tax for the year
12
-14,498
-6,056
12
-3
Profit for the year 38,902 14,802 14,004
13 -36
B G C A n n ua l R e p o r t 2 0 1 1
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the year in figures
Balance Sheet Group Parent Company SEK thousands Note 31/12/2011 31/12/2010 Note 31/12/2011 31/12/2010
Assets
1 1
Non-current assets Intangible fixed assets Capitalised expenditure for development work
9
133,290
120,797
133,290 120,797
–
–
–
–
Property, plant and equipment Plant and machinery
6
757
965
–
–
Fixtures and fittings
7
8,777
12,409
–
–
Costs incurred in third-party properties
8
8,016
9,797
17,550 23,171
–
–
–
–
Financial non-current assets Participating interests in Group companies
–
–
21
11,579
11,579
Deferred tax claims
14
Other long-term receivables
16
5,317
4,748
–
–
9,633
2,734
–
–
–
–
14,950 7,482
TOTAL NON-CURRENT ASSETS 165,790 151,450 11,579 11,579 Current assets
Current receivables Receivables from group companies
–
–
14,000
Customer accounts receivable
23,544
11,760
–
–
Tax claims
21
1,564
21
11
Other receivables
134
130
–
–
13
102,376
76,201
–
–
Prepaid expenses and accrued income
126,075 89,655 Cash and bank balances
17
83,770
64,020
17
100
1,952
Total current assets 209,845 153,675 15,973
1,887 1,998
Total assets 375,635 305,125 27,552 13,577
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the year in figures
Group Parent Company SEK thousands Note 31/12/2011 31/12/2010 Note 31/12/2011 31/12/2010
Equity and liabilities 1 Equity 2 Share capital
100
100
100
100
Restricted reserves
89,825
89,825
–
–
Non-restricted reserves
105,222
90,420
1,751
1,787
Contribution issue
–
–
11,679
11,679
Profit for the year
38,902
14,802
14,004
-36
Total equity 234,049 195,147 27,534 13,530 Provisions Provisions for pensions
5, 15
9,633
1,653
–
14
8,221
8,505
–
–
Total provisions
17,854
10,158
–
–
18
645
1,290
–
–
Total long-term liabilities
645
1,290
–
–
–
Provisions for deferred tax
–
Long-term liabilities Other long-term liabilities
Current liabilities Supplier accounts payable
58,539
42,740
–
Tax liabilities
7,710
–
–
–
Other liabilities
5,058
4,701
–
–
19
51,780
51,089
18
47
Total current liabilities
123,087
Accrued expenses and deferred income
98,530 18 47
Total equity and liabilities 375,635 305,125 27,552 13,577 Pledged assets
20
Endowment insurance policies
9,633
9,076
Contingent liabilities
None
None
None
None
None
None
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the year in figures
Equity Share Changes in equity, SEK thousands reserves
Restricted Non-restricted Total reserves reserves equity
Group Equity at 31 December 2009 Profit for the year Equity at 31 December 2010 Profit for the year Equity at 31 December 2011
100
89,825
90,420
180,345
–
–
14,802
14,802
100
89,825
105,222
195,147
–
–
38,902
38,902
100
89,825
144,124
234,049
11,679
1,713
13,492 100
The share capital consists of 100,000 shares with a par value of SEK 1 each.
Parent Company Equity at 31 December 2009
100
Group contributions received
–
–
100
Tax effect on group contributions received
–
–
-26
-26
Profit for the year
–
–
-36
-36
100
11,679
1,751
13,530
–
–
14,004
14,004
100
11,679
15,755
27,534
Equity at 31 December 2010 Profit for the year Equity at 31 December 2011
The share capital consists of 100,000 shares with a par value of SEK 1 each. The proposed but not yet adopted dividend to shareholders amounts to SEK 14,000,000 (0).
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the year in figures
Cash Flow Statement Group Parent Company SEK thousands Note 2011 2010 Note 2011 2010
Current operations Profit after financial items Adjustment for non-cash items, etc. Impairment losses/depreciation Decrease/increase in provision for pensions Capital gain on sale/disposal of non-current assets
53,400
20,858
7
6, 7, 8, 9
15,958
30,013
–
–
1,081
-987
–
–
22
–
–
–
70,461 49,884 Paid income tax
-49
7
-49
-6,098
-2,316
-13
-16
Cash flow from current operations before changes in working capital
64,363
47,568
-6
-65
–
Cash flow from changes in working capital Decrease (+)/increase (-) in operating receivables
-37,964
18,167
100
Decrease (-)/increase (+) in operating liabilities
16,847
10,439
-29
7
CASH FLOW FROM CURRENT OPERATIONS
43,246
76,174
65
-58
Investment operations Acquisition of intangible fixed assets Acquisition of property, plant and equipment Sale of property, plant and equipment
9
-18,973
-49,452
–
–
6, 7, 8
-3,878
-10,586
–
–
823
–
–
-59,215
–
–
–
CASH FLOW FROM INVESTMENT OPERATIONS
-22,851
Financing operations Decrease (+)/increase (-) in long-term receivables
18
-645
-644
–
–
CASH FLOW FROM FINANCING OPERATIONS
-645
-644
–
–
CASH FLOW FOR THE YEAR
19,750
16,315
65
-58
LIQUID FUNDS AT BEGINNING OF THE YEAR
64,020
47,705
1,887
1,945
LIQUID FUNDS AT END OF THE YEAR
83,770
64,020
1,952
1,887
Interest received amounted to SEK 2,613,000 (382,000) and interest paid amounted to SEK 13,000 (13,000) (Group). Interest received amounted to SEK 31,000 (7,000) and interest paid amounted to SEK 0 (0) (Parent Company).
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the year in figures
Notes (SEK thousands) Note 1 Accounting and valuation principles The annual report for BGC Holding AB has been prepared in accordance with the Swedish Annual Accounts Act, the Swedish Financial Accounting Standards Council’s (FASC) recommendations and interpretations issued by the Council’s Emerging Issues Task Force. Company’s registered office, etc. BGC Holding AB pursues operations as a limited liability company and is domiciled in Stockholm, Sweden. The head office is located at Palmfeltsvägen 5, 105 19 Stockholm. Classification, etc. Non-current assets, long-term liabilities and provisions consist in all essentials entirely of amounts that are expected to be recovered or paid more than twelve months after the balance sheet date. Current assets and liabilities consist in all essentials entirely of amounts that are expected to be recovered or paid within twelve months of the balance sheet date. Valuation principles Receivables have been recognised at the amounts expected to be received. Liabilities are recognised at their nominal amounts. Intangible fixed assets Research and development expenditure is recognised in accordance with FASC’s recommendation RR 15 on Intangible Fixed Assets. Intangible fixed assets are only recognised when the asset is identifiable, there is control over the asset and it is expected to be of future benefit. Development expenditure is only recognised as an asset on the condition that, in addition to the above-mentioned general requirements being satisfied, the aim and assumption is for the asset to be used in the business, or sold, and that the value can be calculated in a reliable manner. Property, plant and equipment Property, plant and equipment are recognised as assets in the balance sheet when, on the basis of the information available, it is likely that the future financial benefit that is linked to the holding will accrue to the company and the cost of the asset can be calculated in a reliable manner. Property, plant and equipment are stated at cost less depreciation. Subsequent expenditure Subsequent expenditure is capitalised to the extent that the asset’s performance improves in relation to the level that applied when it was originally acquired. All other subsequent expenditure is recognised as a cost during the period that it arises. Depreciation principles for property, plant and equipment and intangible fixed assets Depreciation is based on the original cost, less the estimated residual value. Property, plant and equipment are depreciated systematically over the asset’s estimated useful life. The following depreciation periods are applied: Plant and machinery
3 to 5 years
Fixtures and fittings
5 years
Costs incurred in third-party properties Intangible fixed assets
10 years
are depreciated over the duration of the contract
Impairment losses The carrying amounts of the company’s assets are tested for impairment on each balance sheet date. If impairment losses have arisen, the asset’s recoverable amount is calculated at the higher of the asset’s value in use and net realisable value. An impairment loss is recognised if the recoverable amount is less than the carrying amount of an asset. When assessing value in use, the estimated future cash flows are discounted to their present value using an interest rate that reflects current market assessments of the time value of money and the risks specific to the asset. An asset that is dependent on other assets is not regarded as generating any independent cash flows. Such assets are instead assigned to the smallest cash-generating unit where independent cash flows can be established. An impairment loss is reversed if there has been a change in the
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calculations used to determine the recoverable amount. An impairment loss is only reversed to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, less depreciation, if no impairment loss had been recognised. Financial instruments Financial instruments recognised in the balance sheet comprise, on the assets side, liquid funds, customer accounts receivable and current investments that are interest-bearing instruments. Supplier accounts payable are found under liabilities and equity. Changes in value are recognised in the income statement under the items “Interest income and similar items” and “Interest expenses and similar items”. A financial asset or financial liability is recognised in the balance sheet when the company becomes a party to the contractual provisions of the instrument. Customer accounts receivable are recognised in the balance sheet upon issuance of the invoice. Supplier accounts payable are recognised upon receipt of the invoice. A financial asset is derecognised from the balance sheet when the rights under the agreement are realised, or have expired, or the company loses control over them. The same applies for portions of a financial asset. A financial liability is removed from the balance sheet when the obligation specified in the contract is discharged or otherwise expires. The same applies for parts of a financial liability. Liquid funds Liquid funds comprise cash balances and call deposits with banks. These items are generally valued at the accrued cost. Financial investments Current investments have been recognised as current assets and holdings in interest-bearing instruments have been recognised at fair value (market value). Customer accounts receivable Customer accounts receivable are recognised at the amount expected to be paid after deductions for bad debts assessed on a case-by-case basis. Customer accounts receivable are of short duration, which is why the value is recognised at the nominal amount without discounting. Supplier accounts payable Supplier accounts payable are of short duration and are valued without discounting at the nominal amount. Employee benefits From 2011, pension obligations are no longer calculated in accordance with FASC’s recommendation RR 29. There are several pension plans within the Group, both defined contribution and defined benefit plans. Defined contribution pensions The Group’s obligation for each period consists of those amounts that the Group is obliged to contribute for the current period. Consequently, no actuarial assumptions are required in order to calculate the obligation or cost, and there are no opportunities for any actuarial gains or losses. The obligation is calculated without discounting, except in those cases where it does not fall due for payment in its entirety within twelve months following the end of the period during which the employees carry out the related services. Defined benefit pensions The pension cost and pension obligation for defined benefit pension plans is calculated according to the Projected Unit Credit Method. The method allocates the pension cost concurrently with the employees carrying out services for the company that increase their entitlement to future benefits. The company’s commitment is calculated annually by independent actuaries. The commitment comprises the present value of expected future disbursements. The discount rate that is used corresponds to the rate for AA credit rated corporate bonds or government bonds that have a maturity date that is equivalent to the average maturity date for the obligations and currency. The key actuarial assumptions are stated in Note 16. In measuring the present value of pension obligations and the fair value of pension plan assets, actuarial gains and losses may arise. These arise either because the actual outcome differs from earlier assumptions or because the assumptions have been changed. The portion of the aggregate actuarial gains and losses at the close of the previous year that
the year in figures
exceeds the greater of 10 percent of the present value of the obligations and 10 percent of the fair value of pension plan assets is recognised under profit or loss over the remaining expected average service period for the plan participants. In the consolidated balance sheet, the estimated present value of the obligations and fair value of plan assets are reported net, either as a provision or as a long-term financial receivable. A provision (receivable) is recognised as a special employer’s contribution in those cases where the pension cost established in accordance with FASC’s recommendation RR 29 is higher (lower) than the pension cost recognised in the financial statements of an entity. The provision (receivable) is based on the difference between these amounts. Such calculation is not discounted to present value.
company indirectly acquires the subsidiary’s assets and assumes its liabilities. The acquired company’s earnings and expenditure, identifiable assets and liabilities, and any goodwill or negative goodwill, are included in the consolidated financial statements as of the date of acquisition. Elimination of transactions between group companies Intragroup receivables and liabilities and transactions between companies in the Group, as well as the related unrealised gains, are eliminated in their entirety. Unrealised losses are eliminated in the same way as unrealised gains, provided that there is no evidence of impairment. Group information In the case of buying and selling between group companies, the same principles are applied for pricing as for transactions with external parties.
Revenue Revenue recognition is carried out in the income statement when it is likely that the future financial benefits will accrue to the company and these benefits can be calculated in a reliable manner. Transaction revenue is recognised concurrently with the services being used. Remuneration in the form of interest as a result of others’ use of the company’s assets is recognised as revenue when it is likely that the financial benefits that are linked with the transaction will accrue to the company and can be calculated in a reliable manner.
Group contributions The company reports group contributions in accordance with the interpretation from the Swedish Financial Accounting Standards Council’s Emerging Issues Task Force. Group contributions are recognised in accordance with their financial substance. This means that group contributions that are submitted with the aim of minimising the Group’s total income tax burden are reported directly in retained earnings, less the related tax effect.
Leasing – lessee The Swedish Financial Accounting Standards Council’s recommendation RR 6:99 is applied. In the consolidated financial statements, leases are classified as either finance leases or operating leases. Finance leases transfer the bulk of the economic risks and rewards of ownership to the lessee. If that is not the case, the lease is classified as an operating lease. Assets leased under finance lease agreements are recognised as assets in the consolidated balance sheet. The obligation to pay future leasing fees is reported as long-term and current liabilities. The leased assets are systematically depreciated, while the leasing fees are recognised as interest and repayment of debts. Operating leases are leases where the leasing fee is charged to income over the duration based on use, which can differ from the leasing fee that is actually paid during the year.
Note 2 Shareholders’ equity Restricted reserves Value transfer may not be carried out if, after the change in value, there is insufficient full coverage for the company’s restricted equity. Legal reserve The purpose of the legal reserve is to reserve part of retained net profits to cover an accumulated deficit. Non-restricted reserves Retained earnings Retained earnings comprise the previous year’s accumulated earnings, less any dividend distributed to the shareholders. Together with the year’s earnings, retained earnings consist of total non-restricted equity, that is, the amount available for distribution to the shareholders. The Board of Directors proposes that the accumulated earnings be used in part to pay a dividend of SEK 14,000,000 to the shareholders.
Tax Recognised income tax comprises tax that is to be paid or received for the current year, adjustments in respect of previous years, and deferred tax. Nominal amounts are used in the assessment of all tax liabilities/receivables, with such assessment conducted in accordance with the fiscal regulations and tax rates that have been enacted or that have been announced and are highly likely to be implemented. Items recognised in the income statement also include related tax effects. Tax effects for items recognised directly against equity are recognised against equity. Deferred tax is calculated using the balance sheet liability method on all temporary differences that arise between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount is calculated based on the expected manner of settlement of the temporary differences, using those tax rates and fiscal regulations enacted or announced at the balance sheet date. Temporary differences have arisen as a result of provisions for pensions, as well as in relation to plant and machinery. The deferred tax liability on untaxed reserves for an entity is recognised as a portion of the untaxed reserves, due to the close link between financial reporting and taxation. Deferred tax receivables relating to deductible temporary differences and net operating losses are only recognised to the extent that it is probable that these will result in lower tax payments in the future.
Note 3 Other operating income Group 2011 2010
Other operating income
69,910
1,415
Total
69,910
1,415
Note 4 KPMG AB
Consolidated financial statements The consolidated financial statements have been prepared in accordance with the Swedish Financial Accounting Standards Council’s recommendation RR 1:00.
Company
Subsidiaries Subsidiaries are companies in which the Parent Company, either directly or indirectly, has more that 50 percent of the votes, or in some other way has a controlling influence over the operational and financial management of the company. Acquisitions of subsidiaries are normally reported in accordance with the purchase method. The purchase method means that the acquisition of a subsidiary is regarded as a transaction wherein the parent
Auditing assignments
2011 2010
2011 2010
313
313
15
15
Assignments other than auditing assignments
72
11
–
–
Tax consultation
40
66
6
–
–
989
–
39
425
1,379
21
54
Other assignments Total
Group Parent
B G C A n n ua l R e p o r t 2 0 1 1
25
the year in figures
Note 5 Employees
Note 6 Plant and machinery
All staff in the Group are employed by the subsidiary Bankgirocentralen BGC AB. The average number of employees by gender is as follows:
Group 2011 2010
Group 2011 2010
Opening accumulated costs
Purchases
488
530
Sales/disposals
-1,460
-3,713
Women Men
115
113
99
89
Company total
214
202
Salaries and remuneration amounted to: Board of Directors CEO
–
–
3,228
2,762
(of which variable remuneration to CEO)
(500)
(300)
Other employees
102,374 96,078 105,602 98,840
Statutory social security costs
33,396 31,353
Pension costs
29,395 26,137
(of which to Board of Directors)
(of which to CEO)
(–)
(–)
Closing accumulated costs Opening accumulated depreciation
Sales/disposals
Impairment losses/depreciation for the year
21,825 22,797 -21,832 -22,235 1,438
2,890
-674 -2,487
Closing accumulated depreciation
-21,068 -21,832
Closing net book value
757
965
Note 7 Fixtures and fittings
(1,359) (1,252)
Group 2011 2010
62,791 57,490
Opening accumulated costs
Total salaries, remuneration, social security costs
168,393 156,330
Purchases
Sales/disposals
-2,543 -1,643
Closing accumulated costs
65,442 64,815
Bonus costs of SEK 2,027,000 (1,092,000) are in addition to the salaries, remuneration and social security costs in the table above. Pension costs include costs relating to collective agreement occupational pensions amounting to SEK 0 (1,341,000), of which the special employer’s contribution amounted to SEK 0 (262,000). The CEO’s pension costs amount to SEK 1,359,000 (1,252,000), of which the special employer’s contribution was SEK 265,000,000 (244,000,000). SEK 5,975,000 (4,336,000) of the salaries and remuneration disbursed to other employees in the Group relates to other senior executives besides the CEO. An agreement has been reached with the Chief Executive Officer regarding severance pay, which amounts to 12 months’ pay. In addition to this, an agreement has been reached concerning pension criteria. In the case of retirement before the age of 65 years, though no earlier than age 61, BGC shall continue to pay premiums to the BTP plan and alternative BTP plans for the time up until the age of 65 years. In addition to this, the CEO’s pension comprises a defined contribution plan, the premiums for which are paid regularly throughout the period of employment. An agreement has been reached with other senior executives besides the CEO regarding severance pay amounting to a maximum of 12 months’ pay.
Opening accumulated depreciation
Sales/disposals
Impairment losses/depreciation for the year
3,170
8,234
-52,406 -47,772 2,543
1,643
-6,802 -6,277
Closing accumulated depreciation
-56,665 -52,406
Closing net book value
8,777 12,409
Note 8 Costs incurred in third-party properties Group 2011 2010
Opening accumulated costs
Purchases
221
1,821
Sales/disposals
–
14,308 12,487 –
Closing accumulated costs
14,529 14,308
Opening accumulated depreciation
-4,511
Sales/disposals
–
–
-2,002
-1,716
Closing accumulated depreciation Closing net book value
B G C A n n ua l R e p o r t 2 0 1 1
64,815 58,224
Impairment losses/depreciation for the year
26
22,797 25,980
-2,795
-6,513 -4,511 8,016
9,797
the year in figures
Note 9 Capitalised expenditure for development work
Operating lease agreements Leasing expenditure relating to operating lease agreements attributable to property, plant and equipment amounted to SEK 4,579,000 (4,693,000) for the year. Remaining operating lease fees are due for payment as follows:
Group 2011 2010
Opening accumulated costs
Purchases
18,973 49,452
Closing accumulated costs
159,303 140,330
Opening accumulated depreciation
-19,533
–
Sales/disposals
–
–
Impairment losses/depreciation for the year
Company
140,330 90,878
-6,480 -19,533
Closing accumulated depreciation
-26,013 -19,533
Closing net book value
133,290 120,797
–
Due 2013
3,683
1,188
–
– –
Due 2014
2,773
–
–
–
2,613
382
Total 2,613 382 Interest expenses and similar items
Total
-75
-74
-75 -74
Note 12 Tax for the year Company
Current tax for the year Current tax for paid group contributions recognised directly against equity Deferred tax Total Difference between the Group’s tax expense and tax expense based on current tax rate
Group Parent
2011 2010
-15,351 -6,099
2011 2010
-3
-13
26
–
–
–
853
43
–
–
-3
13
-14,498 -6,056
Group Parent
Company
Finance lease agreements The Group’s property, plant and equipment include leasing assets that are held in accordance with finance lease agreements according to the following:
Result before tax
Acquisition Accumulated cost impairment losses/ depreciation
163,910 140,330
4,794
Interest income and similar items
Lease agreements where the Group as lessee in all essentials enjoys the economic rewards and bears the economic risks attributable to the leasing asset are classified as finance leases and the asset is recognised as an intangible fixed asset in the consolidated balance sheet. The corresponding obligation to pay future leasing fees is reported as a liability. At the beginning of the lease period, the asset and liability are recognised at the lower of the leasing asset’s fair value and the present value of the minimum lease fees. In lease agreements where the economic rewards and risks attributable to the leasing asset in all essentials remain with the lessor, the lease is classified as an operating lease. Payments in accordance with these agreements are charged on a straight-line basis over the term of the lease. In the subsidiary, all lease agreements are recognised as rental agreements (operating lease agreements), regardless of whether they are finance or operating leases. The leasing fee is charged on a straight-line basis over the term of the lease.
Intangible fixed assets
2011 2010
3,864
Group 2011 2010
Note 10 Lease agreements
2011 2010
2011 2010
Due 2012
Note 11 Interest income, interest expenses and similar items
Capitalised expenditure relates in its entirety to the development of the new platform. The asset has been acquired via a finance lease. Parts of the project have been brought into use, and depreciation has started during the year. Delays and increased costs in the migration project initiated in 2008 in order to process bankgiro transactions at VocaLink have resulted in the depreciation of capitalised expenditure for development work in the amount of SEK 19.5 million. Depreciation of SEK 8.5 million has been applied during the year, due to changed circumstances and plans.
Group Parent
7
-49
-2
13
Representation
-205
-241
–
–
Association fees
-41
-68
–
–
–
-25
–
–
-42
-47
-1
–
-168
-189
–
–
2
–
–
–
Tax on the year’s result according to income statement -14,498 -6,056
-3
13
Miscellaneous Standard income pension fund Interest income
-30,620 -19,533
2011 2010
Tax according to current tax rate -14,044 -5,486
Pensions
2011 2010
2011 2010
53,400 20,858
B G C A n n ua l R e p o r t 2 0 1 1
27
the year in figures
Note 13 Prepaid expenses and accrued income
Defined benefit pension plans
Group 2011 2010
Accrued income
73,422 49,475
Prepaid expenses, lease, rental and licensing agreements
22,539 22,186
Other prepaid expenses
Total
6,415
4,540
102,376 76,201
2010
Present value of funded obligations
–
7,032
Fair value of plan assets
–
-7,903
Total
– -871
Unrecognised actuarial gains (+) and losses (–)
–
Net liability attributable to defined benefit plans
– -1,081
Total
1
– -1,081
Note 14 Deferred tax
Liabilities calculated according to local principles The net amount is recognised in the following items in the consolidated balance sheet:
Group Deferred tax claims 2011 2010
Other pension provisions linked to endowment insurance
9,633
Opening deferred tax claims
Net liability in the balance sheet
9,633
1,653
Net receivable in the balance sheet
–
1,081
Pension costs
2011
2010
–
-794
4,748
4,444
Change in deferred tax related to pension provisions
182
163
Change in deferred tax related to underdepreciation
387
141
Closing deferred tax claims
4,748
8,505
8,245
Total costs for defined contribution plans
-284
260
Costs for special employer’s contribution
Closing deferred tax liabilities
8,221
8,505
Opening deferred tax liabilities
Total costs for defined benefit plans
Change in deferred tax in untaxed reserves
1,653
Total pension costs recognised in personnel costs in the consolidated income statement are as follows:
5,317
Deferred tax liability
Total pension costs Defined benefit pension plans, %
23,953 21,348 5,442
4,596
29,395 25,150 2011
2010
3.5
Note 15 Pension provisions
Key actuarial assumptions on the balance sheet date (expressed as weighted average)
Group 2011 2010
Discount rate
–
Expected rate of return on plan assets
–
4.0
Inflation
–
2.0
Life expectancy
–
FFFS 2007:31
Opening balance
1,653
1,157
Liabilities calculated according to local principles
557
496
7,423
–
Reclassification
Total
9,633 1,653
Pension insurance with SPP The retirement pensions and family pensions for workers in Sweden, the BTP plan, are covered via insurance with SPP. The pension plan is a defined benefit plan, which covers several employers. The Group has not had access to information for the 2009 and 2010 financial years that would facilitate the reporting of this plan as a defined benefit plan. The pension plan is therefore reported as a defined contribution plan. SPP’s surplus may be distributed to the members of the plan and/or to the plan participants. Since 1 January 2006, SPP has been reorganised into a profit distributing life insurance company and therefore no longer discloses a collective consolidation ratio. Instead, the insurance capital is disclosed for each employer at agreement level. The previous CEO had a defined benefit pension plan, which has been redeemed and replaced with a defined contribution pension.
28
2011
The amounts that are recognised in the consolidated balance sheet have been calculated as follows:
B G C A n n ua l R e p o r t 2 0 1 1
The above assumptions were applied in 2010 for the benefit plan that has now been concluded.
the year in figures
Note 16 Other long-term receivables
Note 21 Breakdown of the Parent Company’s participating interests in Group companies
Group 2011 2010
Carrying Share of equity/ Number value, SEK thousands voting rights
Accumulated costs At start of year
2,734
1,251
Net receivable defined benefit pension plans
–
987
Incoming payments for the year
557
496
Change on reclassification
6,342
–
Total
9,633 2,734
Bankgirocentralen BGC AB Swedish CIN 556047-3521
50,540
Devise Business Transactions Sweden AB Swedish CIN 556564-5404
11,479
100%
1,000
100
100%
Closing value
11,579
All companies are domiciled in Stockholm. For a breakdown, see Note 15 regarding defined benefit pension plans (2010). Other amounts are attributable to endowment insurance policies linked to defined contribution pensions.
Participating interests in Group companies 31/12/2011
31/12/2010
Accumulated costs At start of year
Note 17 Bank overdraft facility
11,579
11,579
Carrying amount at close of period 11,579 11,579
The granted overdraft facility for the Group amounts to SEK 70 million (70) and for the Parent Company to SEK 0 million (0). The utilised amount for the Group amounts to SEK 0 million (0).
Note 22 Financial instruments and financial risk management Note 18 Other long-term liabilities
Finance policy BGC Holding AB has an investment policy with the purpose of establishing and clarifying the way in which the BGC Group and its various companies are to manage their liquidity. The aim is to create the best possible return within the framework of the policy. The investment policy is determined by the Board of Directors. Investments are made in accordance with the established liquidity forecast, in order that the duration of the investment corresponds to future expenditure. Excess liquidity may only be invested according to the statements below. In those cases where BGC has no more than SEK 10 million invested in a security that drops to a rating lower than that specified below, the CEO and the CFO shall jointly decide whether to retain the security until maturity or to dispose of it at an earlier date. The decision shall be reported to the Board of Directors as soon as possible, and no later than at the following board meeting. Investments in excess of SEK 10 million that drop to a rating lower than that specified below shall be disposed of immediately. The maximum amount that is permitted in a particular type of security is defined as a percentage of the permitted liquidity in the portfolio. The maximum amount that is permitted per issuer is defined as a nominal amount and must also be kept within the permitted limitations for the type of security to which it relates. Investments may only be made in Swedish securities, and the duration may not exceed one year.
Group 2011 2010
At start of year
1,290
1,934
Change for the year
-645
-644
Total
645 1,290
Note 19 Accrued expenses and deferred income Group 2011 2010
Accrued personnel costs
Accrued social security costs
Accrued bonus costs
Other accrued expenses
Other prepaid income
Total
8,179
8,803
13,149 11,976 2,027
1,092
26,255 28,541 2,170
677
51,780 51,089
Note 20 Pledged assets Group 2011 2010
Endowment insurance
9,633
9,076
B G C A n n ua l R e p o r t 2 0 1 1
29
the year in figures
Maximum permitted Maximum Lowest rating liquidity permitted according to Standard of total amount per Securities & Poor’s liquidity issuer
Treasury bills Securities issued by government offices and companies guaranteed by the Swedish state
100%
Unlimited
100%
Unlimited
Deposit in Swedish bank
A
100%
Unlimited
Deposit in Swedish bank
A-
100% SEK 10 million
K-1/A-1* AAA/Aaa**
80% SEK 30 million
K-1/A-1
80% SEK 30 million
Promissory notes issued by Swedish mortgage institutions Certificates issued by Swedish county councils and municipalities *Refers to certificates **Refers to secured bonds
Liquidity risks The investments’ due dates are determined based on the company’s future liquidity requirements, which in turn are determined by liquidity forecasts. BGC Holding AB and Devise Business Transactions Sweden AB should have a liquidity level that is sufficient to cover current costs. If there are current transactions between Group companies and transactions of a lower value, these must be settled via clearing accounts between the companies. In the case of larger amounts (over SEK 20 million), promissory notes shall be drawn up between the companies. Interest rate risks In order to minimise the interest rate risk in investments, the duration of the security may not exceed one year. Investments may be made in accordance with the table in Note 22. Credit risks In order to minimise the counterparty risk with investments, buying and selling is only permitted via banks with an A- rating or higher. In order to minimise the credit risk in investments, permitted investments have been divided up according to the table in Note 22. Currency risk In order to minimise the currency risk, a futures agreement was entered between Skandinaviska Enskilda Banken AB and Bankgirocentralen BGC AB. This futures agreement covered the sale of SEK 125 million for the purchase of GBP, which was to finance the development of a new platform in partnership with VocaLink. The futures agreement was ended on 4 May 2011. The cost of redeeming the futures agreement early was SEK 12.6 million. Since the futures agreement was entered into to hedge operational expenditure, the amount has been reported as Other operating expense.
30
B G C A n n ua l R e p o r t 2 0 1 1
Note 23 Members of the Board and senior executives Company
Group/ Group/ Parent Company Parent
Number Of which Number Of which 31/12/2011 men 31/12/2010 men
Members of the Board
6
100%
6
100%
Chief Executive Officer and other senior executives
6
50%
5
60%
the year in figures
Stockholm, 5 March 2012 Nils-Fredrik Nyblaeus Anders Borgcrantz Chairman
Johan Löfgren Lennart Söderberg
Leif Karlsson
Birgitta Simonsson Chief Executive Officer
Olof Nylund Employee representative
Our Auditors’ Report was submitted on 5 March 2012. KPMG AB
Anders Malmeby Chartered Accountant The income statements and the balance sheets of the Group and the Parent Company are subject to adoption by the Annual Meeting of Shareholders.
B G C A n n ua l R e p o r t 2 0 1 1
31
AU D I TO R S ’ R E P O R T
Auditors’ Report
32
B G C a n n ua l r e P o r t 2 0 1 1
BG605 eng
Bankgirocentralen BGC AB 105 19 Stockholm Phone 08-725 60 00 www.bgc.se
