The Foundation BI Norwegian Business School achieved good financial results in 2017 with a profit of NOK 65.1 million. BI’s total turnover in 2017 was NOK 1 569 million, compared to NOK 1 514 million in 2016.

The Group

The Foundation BI Norwegian Business School is the parent company in a group structure consisting of the subsidiaries BI-Bygget D-Blokka AS, Sandakerveien D-Blokka as, Sandakerveien 116-118 AS, Bedriftsøkonomisk Institutt AS and Studentenes Hus AS. Nydalsveien 37, Oslo is the business address for all of the companies. Of the subsidiaries, only BI-Bygget D-Blokka AS had activity in 2017 through the lease of premises in D-Blokka. The Group’s turnover in 2017 was NOK 1 590 million, and the operating profit ended at NOK 140.9 million.

The Group’s real estate investments are financed through a mortgage in DNB BANK ASA, with security in all of the real estate in Nydalen. Considerable changes were made to the Group’s loan structure in 2017. NOK 90.5 million was paid in ordinary instalments, and an extraordinary payment of NOK 550.0 million was paid at the same time as drawing rights of NOK 400.0 million and a mortgage loan of NOK 150.0 million were established. The establishment of the drawing rights will reduce the Group’s annual financial costs, and will make it possible to exploit the Group’s varying liquidity during the year in a more beneficial manner. At the beginning of 2017, a loan in the amount of NOK 174.0 million was granted from the parent company to the subsidiary BI-Bygget D-Blokka as. This loan was repaid in 2017 and a loan in the amount of NOK 150.0 million was established between BI-Bygget D-Blokka AS and DNB. In 2017, the Group redeemed the negative value of one of the interest rate swap agreements, and two other interest rate swap agreements were declared ineffective and the negative value linked to them has been recorded as costs. In total, the costs recorded in connection with this amount to NOK 28.0 million. Overall, the Group’s financial items constituted NOK 62.9 million in 2017. The real value of the buildings in Nydalen is expected to be well above the book value.

The year’s profit before tax for the Group came to NOK 78.1 million. The year’s tax cost was NOK 3.0 million and this is mainly related to the leasing activity in the subsidiary BI-Bygget D-Blokka AS. Net profit after tax thus amounted to NOK 75.1 million.

The cash flow for the year’s activities is negative due to the modification of the Group’s loan structure, and ended at NOK -239.4 million in 2017. At year-end, NOK 111.0 million of the Group’s drawing rights of NOK 400 million had been used. The Group’s book equity at 31 December 2017 was NOK 807.5 million.

Foundation BI Norwegian Business School

BI Norwegian Business School achieved an income increase of NOK 54.7 million from 2016 to 2017. The increase constitutes about 3.6% growth and resulted in a total turnover of NOK 1 569 million. Of this, state contributions made up NOK 303.0 million, or 19.3% of the turnover. Education revenues rose by 2.8% to NOK 1 191 million and income from externally funded research declined by 4.2% from NOK 32.5 million to NOK 31.1 million. Other revenues amounted to NOK 43.6 million, of which NOK 25 million was revenues related to leasing premises.

The operating profit came to NOK 123.6 million, which is virtually identical to the result in 2016. The main reason for the unchanged operating profit is low pension costs in 2016 due to a change in the company’s pension scheme, as well as weaker enrolment to full-time studies in 2017 compared to 2016. IT costs increased by 14.1% in 2017, this is particularly related to the purchase of IT services for external operation of, among other things, the digital examination solution. The costs related to the collaboration agreement with Fudan University also rose due to increased turnover in the collaboration programme, as well as a weak Norwegian krone at the end of 2017.

Depreciation declined by NOK 7.2 million from 2016. This is due to lower investments in both 2016 and 2017 compared with previous years. In 2017, investments constituted NOK 35.1 million, of which NOK 17.9 million was related to software and digital infrastructure, and NOK 17.2 million was invested in inventory and modifications with a new student service centre, research lab and production area for Learning Lab’s activities related to use of digital learning tools.

Net financial items (cost) were significantly higher than in 2016. As previously mentioned, this is due to the expensing of the negative value of interest rate swaps in connection with the redemption of an interest rate swap and the declaration of two other interest rate swaps as ineffective. In total, this amounted to NOK 28.0 million and will be a one-time expense in 2017 which will result in lower financial costs in upcoming years. In total, NOK 90.5 million was paid in ordinary instalments on the mortgage loan with DNB in 2017, while an extraordinary payment of NOK 550 million was also made. Of the extraordinary payment of NOK 550 million, NOK 400.0 million was established as drawing rights to exploit seasonal liquidity fluctuations in a more financially beneficial manner. The subsidiary BI-Bygget D-Blokka AS also redeemed the mortgage loan of NOK 150.0 million that was given by the parent company. The Foundation follows a financial hedging strategy which entails that at least 33% of the mortgage loan must always be hedged with fixed interest agreements. On the balance sheet date, the percentage of the loan that is bound by fixed interest agreements amounts to NOK 450 million. The degree of hedging as of the balance sheet date is 67%. The fixed interest agreements have varying durations, and the first will expire in April 2018, while the longest expires in 2028.

The cash flow for the year’s activities is very negative due to the changes in the company’s loan portfolio. The cash flow from operational activities is NOK 10.3 million weaker than in 2016, but the major change comes from changes in the investment and financing activities in 2017. At year-end 2017, cash reserves are NOK 45.6 million and NOK 111.0 million of the company’s drawing rights of NOK 400.0 million was used. The Foundation is considered to have satisfactory liquidity.

As a consequence of being financed by student payments, BI Norwegian Business School is exposed to significant market risk. The Foundation depends on a large volume at a 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.

The company’s financial risk is monitored and analysed continuously. Financial risk comprises credit risk, liquidity risk and interest rate risk. Credit risk is primarily accounts receivable, and this risk is considered small as the company has good routines for collecting outstanding claims. Net loss on claims has been stable for several years, and there is no reason to believe that this will change significantly. Liquidity risk is considered low as the company’s liquidity flow is stable and predictable. Interest rate risk is considered moderate. The company currently has an interest-bearing mortgage loan of NOK 672 million, where NOK 450 million is hedged with interest rate swap agreements. The used portion of the drawing rights comes in addition to the mortgage loan, and this will vary considerably during the year.

BI Norwegian Business School’s equity rose to NOK 782.1 million in 2017. The result for the year contributed to an increase of NOK 65.1 million. Estimate deviations related to the pension scheme went the opposite way and reduced equity by NOK 33.7 million.

The Nydalen building has been depreciated by 1.5% in 2017 and had a book value of NOK 1 483 million at the end of the year. Other fixed assets have been depreciated according to the same principles as in previous years.

The outstanding debt on the balance sheet date amounts to NOK 632.0 million, including NOK 111.0 million in used drawing rights. The remaining balance falls due on 18 January 2019, but the company finds it highly probable that financing will be granted for a new loan term. In addition to ordinary instalments, the Foundation has the opportunity to pay additional instalments of at least NOK 10.0 million between due dates. The Foundation satisfies the lender’s covenant requirement on the balance sheet date.

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

The Board of Trustees proposes the following allocation of the annual profit:

This year’s allocation /(use) of research development funds

NOK 1.6 million

Transfer to other equity

NOK 63.5 million

Total allocations

NOK 65.1 million


The Foundation’s equity constitutes the following at 31 December 2017

Foundation capital

NOK 1.3 million

Research development fund

NOK 23.9 million

Other equity

NOK 756.9 million

Total equity

NOK 782.1 million