BSI Annual Report And Financial Statements

‘.making excellence a habit.’ResponsibleISO 14001 helpsAlbert Bartlett know thatits corporate responsibilityis addressed in aprogressive manner‘ ISO 14001:2015will help us growoperationallywhile maintaininga firm grip on ourenvironmentalresponsibility.’ Gordon Smith Environmental ManagerAlbert Bartlett PotatoesAlbert Bartlett, the UK’s leading supplier of potatoes,has successfully transitioned to ISO 14001:2015.A careful balanceIt’s becoming more and more important that organizations prioritize theirenvironmental impact while maintaining a balance with profitability.The solutionAlbert Bartlett not only transitioned to the new standardsuccessfully, but to support its sustainability and socialresponsibility goals, it expanded its certificate fromcovering just its headquarters to include its otherseven sites. A key part of this process was to considerall of its stakeholders and partners and to analyseall of the related potential risks and opportunities.As a result everyone working at the organizationis more aware of the responsibilities Albert Bartletthas to mitigate environmental impact andstrive for continual improvement.09

Our business model continuedDOMAINSOrganizational ResilienceThe ability of an organization to anticipate, prepare for, respond to and adapt toincremental change and sudden disruptions in order to survive and prosper.We have identified three domains that are critically important in achieving this:OPERATIONAL RESILIENCEA resilient organization has a full understanding ofhow it is run and the environment in which it operates.This includes identifying operational movements across its products, services and processesin order to meet the needs of its clients over time, through to how an organization values itspeople and governs itself. It requires demonstrable evidence that an organization is notcomplacent and is always challenging itself to improve performance and grow sustainably.PRODUCETIVAPADTESSOCPRROBUSTTIONAL RESILIENCEERAOPSIENCEIE NC EAILIP EO P LECHRENRIONE SI LINFORMATOrganizationalResilienceSUPPLYA G IL ECOINFORMATIONRESILIENCEN TINU AL IM P R OVE M EIn today’s world, organizations must betrusted to safeguard sensitive information.A resilient organization must manage itsinformation – physical, digital and intellectualproperty – throughout its lifecycle, fromsource to destruction. This requires theadoption of information security-mindedpractices that allow stakeholders to gather,store, access and use information securelyand accurately.10The British Standards InstitutionAnnual report and financial statements 2016NTSUPPLY CHAINRESILIENCEAs supply chain networks increasingly spancontinents and become more complex, theability to quantify and mitigate supply chainrisk throughout the procurement,manufacturing, transportation and saleslifecycle is paramount.Organizations need to identify the criticalrisks to minimize disruption and helpglobal operational, financial andreputational exposures.

‘.making excellence a habit.’AgileThe transition toISO 9001:2015 hashelped Rescue Global’sStrategic LeadershipTeam make faster, moreinformed, decisions‘ ISO 9001:2015enables organizationalmanagement becauseyou feel betterinformed and morein control. The wholeorganization hasbecome more agile.’ Becky Jones Chief Risk OfficerRescue GlobalRescue Global, the international non-governmentalorganization specializing in disaster risk reductionand response, has successfully undertaken transitionto ISO 9001:2015.Being agile, saving livesBecause of the uncertain and potentially dangerous natureof the work that Rescue Global does, it must be highlyrisk aware, which is one of the reasons thatISO 9001:2015 appealed to it.The solutionThe integration of quality and risk in thenew ISO 9001:2015 allowed Rescue Globalto link the two without duplicating effort.ISO 9001:2015 also recognizes the morecomplex nature of supply chains, whichhas prompted a useful review of howRescue Global works with clients, partnersand suppliers. ISO 9001:2015 has not beena simple box ticking exercise. By allowingthe leadership team to make fast and betterinformed decisions, it complements theoverall company strategy.11

Our strategic initiativesOur strategic visionTo become the global business improvement partner of choice.OrganizationalResilienceDevelop leadershipunder the theme ofOrganizationalResiliencePosition BSI as aglobal standardsorganizationDevelop ourStandardsPublishingbusiness intoa knowledgesolutions providerBuild asustainable,higher margin,SystemsCertificationbusinessHow we’ll achieve this Improve our offeringto our members so thatwe continue to sharea mutually beneficialrelationship.How we’ll achieve this Extend our knowledgeservices across standards,guidance and compliancerelated information tosupport clients at keypoints in their productlifecycle and supply chains.How we’ll achieve this Continue to invest intechnology and trainingto ensure that we havethe best and mostappropriate serviceoffering that meets ourclients’ needs. Further invest intechnology solutions toprovide ever improving‘smart’ services andresponsive content. Optimize processes,ensuring effectiveoperations andfurther enhancedclient satisfaction.How we’ll achieve thisDevelop leadership in our focussectors of Healthcare, Food,the Built Environment, andAerospace and Automotive.Develop leadership in ourdomains of Operational,Information and SupplyChain Resilience.Develop our approach to socialresponsibility under the banner,‘enabling a resilient world’.How we’ll measure thisThrough a series of financialand non-financial keyperformance indicatorsthat will track our progresstowards our financial targetsand targets relating to clientand employee satisfaction. Expand our NationalStandards Body servicesby partnering withthought leaders in theUK and abroad.Read more on p1412The British Standards InstitutionAnnual report and financial statements 2016

Expand our globalTraining businessand improveits marginsGlobalize ourProductCertificationofferingBuild ourProfessionalServices offeringStrategic report‘We aim to be the knowledge leader providing the most relevant smartcontent, the most trusted authority for approving products and processes,the leading provider of organizational learning and development and themost innovative developer of expertise for continual improvement.’Develop a resilientBSI for the futureWe need to be resilientourselves if we want tocontinue to be able to helpour clients build theirown resilience.Develop our strategicresource planningPlan to recruit, train,empower and engageemployees to ensure asustainable world‑classworkforce throughoutour regions, streams,sectors and domains.How we’ll achieve this Continue to invest inour Training Academymodel to drive scale andprofitability in establishedmarkets and criticalmass in smaller markets. Embed commercial bestpractice processes andsystems to deliver abest‑in-class clientexperience withincreased effectivenessand efficiency.How we’ll achieve this Concentrating on ourchosen sectors, invest indedicated resources inselected BSI businessunits around the world.How we’ll achieve this Augment our organicallydeveloped expertise withselected acquisitions aswe grow our consultancybusiness globally. Implement our globaloperating system andcommunications networkto streamline tradingbetween internal andexternal laboratoriesand business streammanagement. Continue to developour Supply ChainSolutions and businessimprovement software toensure that these remaincutting edge.Develop resilient businessprocesses and IT systemsOptimize the client journeyand the employee journeywith BSI to ensure that bothare excellent experiences.Develop strategic marketingContinue to develop our globalmarketing and selling toolsto optimize client experienceand gain further synergyand efficiency.AcquisitionsContinue to complementour organic growthwith carefully selected,accretive acquisitions.www.bsigroup.com Annual report and financial statements 201613

Key performance indicatorsTracking progressOur financial objective is to reach revenue of 500m by 2018 withenhanced profitability, balancing our global portfolio of business streamsand chosen domains.FinancialRevenue ( m)Underlying operating profit ( m) 401.8m 50.1m 73m 21% 42% 128%16 401.8 500 Target by 201816 50.115 331.115 35.4 50014 287.1Revenue from acquisitions ( m)Target by 2018 5014 29.1Our target revenue of 500m by 2018 willrequire organic growth, complemented byacquisitions, which will help us to build ourcritical mass across geographies, businessstreams, sectors and domains.16 73 1514 100 32Target by 2018 100 10Our revenue growth will be profitable sothat we can generate cash to reinvest intoour business.We will continue to make targeted, accretiveacquisitions to build critical mass in ourexisting business streams and experienceand expertise in our newer ventures.Clients (’000)Client retention (%)NPS** client satisfaction81k64%50 1%Unchanged-1%Non-financial16 81 9515 80Target by 2018 9514 7716 646615 64Target by 20186614 6516 50 5115 51Target by 2018 5114 51As we grow we will expand our client baseand intend to deliver more of our businessstreams to each of our clients, increasingour ARPA*.It is important that our clients appreciateour services and keep coming back, yearafter year, so that we can build long-termrelationships with them.Our NPS remains at an extremely highlevel and it is important that we maintainit, proving that our clients like workingwith us and will keep coming back.OSAT*** client satisfactionEmployee engagement (%)* ARPA: average revenue per account.8.765%** NPS: net promoter score.UnchangedUnchanged16 8.7 8.8Target by 2018 8.815 6515 8.715 6514 8.714 63Our OSAT is high and we will continue towork to improve this further so that ourclients continue to do business with us.14The British Standards Institution***OSAT: overall satisfaction.Target by 201870We have improved our employee engagementscore over recent years and aspire to beone of the top quartile of employers inthe Hay index. We complete this surveybiennially, with the next due in 2017.Annual report and financial statements 2016

Chairman’s statementSir David Brown, ChairmanStrategic reportBSI performed stronglyin 2016BSI’s high reputation continues to be maintained and thepower of its brand continues to strengthen.I am pleased to be able to report that BSIperformed strongly in 2016, recording higherlevels of revenue and profit than ever beforein its 115 years. Our established strategy ofpursuing a judicious blend of organic andacquisitive growth is continuing to enableus to enhance the value we deliver to ourclients both in our long-establishedmarkets and in markets new to us, withoutcompromising BSI’s financial strength.Economic conditions were reasonablystable in the majority of our markets in2016, although more macro-economicnervousness developed during the yearagainst the backcloth of the UK referendumon European Union membership, the USpresidential election, changing global oilprices and uncertainty about the futureof the Chinese economy. In consequenceBSI began in 2016 to navigate througha combination of global conditionsunprecedented in modern times butnevertheless ended the year in robustfinancial health. We continue to realize thebenefits of having invested strongly in ourbusiness in recent years, both throughoutthe downturn in the global economy and inthe more recent somewhat improved climate,delivering growth in underlying revenue forthe seventeenth consecutive year, of 21% yearon year to 401.8m, and growth in underlyingoperating profit of 42% to 50.1m.The five acquisitions in 2016 were madewithout recourse to external debt and weended the year with 48.1m in cash, only 2.9m lower than the level at the start ofthe year.Every year we seek to strike a careful balancebetween managing BSI’s finances withproper near-term caution and making theplanned investments required to continueto secure BSI’s longer-term health. Thestrategic and operational investments wemade during 2016 built on those we madein prior years to keep BSI at the forefront ofstandards making, such that our vital role inthe global standards community is as strongas ever it has been.Those investments have also deepened oursector and domain knowledge and increasedthe effectiveness with which we deliver thebenefits of it to our clients everywhere. Inconsequence, BSI’s high reputation continuesto be maintained and the power of its brandcontinues to strengthen.The Board is conscious that suchachievements were made possible by thesustained investments we have made formany successive years, and will continueto make, in BSI’s richly diverse and talentedglobal team; in the effectiveness andefficiency of our operating processes;and in the strategic initiatives necessaryto ensure that we continue to meet ourclients’ evolving needs excellently.Sir David BrownChairman‘BSI recorded higher levels ofrevenue and profit than everbefore in its 115 years’‘Our vital role in the globalstandards community is asstrong as it has ever been’As a Royal Charter Company with noshareholders and therefore no stockexchange listing, BSI is not required toapply the UK Corporate Governance Code.However, consistent with our unique statusas the UK National Standards Body and ourcommitment to our members, we neverthelessapply the principles of the Code whereapplicable and, in doing so, have establishedinternal governance processes that reflectbest practice in business today. The ultimateaccountability for the governance of BSI lieswith our widely experienced Board of Directors,which has a majority of Non-Executive Directors.The Board is supported by Audit, Remuneration,Nominations and Social ResponsibilityCommittees, which are chaired by, andprimarily consist of, Non-executive Directors.These formal Committees are complementedby the Standards Policy and Strategy Committee,which does invaluable work in gatheringand distilling the views of those interestedin standards and advising the Board.Underpinning this governance framework,our structure of internal controls andfinancial management and, indeed, everythingthat every BSI employee does, whereverthey do it, is the BSI Code of BusinessEthics. It sets the ethical values and highstandards of integrity that apply to everyaspect of the way that we do business.www.bsigroup.com Annual report and financial statements 201615

Chairman’s statement continuedI am pleased to report that there were nochanges to the Board of Directors during2016 and none are foreseen in 2017.Each year my role presents me withopportunities to work with BSI peopleeverywhere, and 2016 was no exception.Always I am struck by their deep knowledge,energy, integrity and infectious enthusiasmfor what BSI does. They, and the very manyBSI Committee Members and SubscribingMembers, are the heart of BSI. Withoutthem BSI could not still be one of the mostprominent and respected standards bodiesin the world today.As we begin our 116th year, the Board isconfident that 2017 will be another year inwhich, together with all BSI’s stakeholders,we can look forward to both capitalizing onour profound strength and continuing toinvest in building the capacity to deliver yetmore for all those who depend on BSI, allaround the world, and to continue to earnthe trust they place in us.‘As we begin our 116th year,the Board is confident that2017 will be another year inwhich, together with all BSI’sstakeholders, we can lookforward to both capitalizingon our profound strength andcontinuing to invest inbuilding the capacity todeliver yet more for all thosewho depend on BSI, all aroundthe world, and to continue toearn the trust they place in us’Underlying revenue ( m) 401.8m 21%16 401.815 331.114 287.113 271.812 254.611 244.910 235.309 222.808 202.307 179.0Underlying operating profit ( m) 50.1m 42%16 50.115 35.414 29.1Sir David BrownChairman23 March 201713 28.312 31.211 28.710 27.309 26.208 24.807 21.416The British Standards InstitutionAnnual report and financial statements 2016

Chief Executive’s reviewHoward Kerr, Chief ExecutiveStrategic reportProviding a healthy base forour long-term developmentOur strong financial results have enabled us to invest further in thebusiness, accelerating the strategy to take advantage of the manyopportunities facing us.SummaryOver the past few years BSI has become anintegrated global enterprise, able to serveclients across the world from our growingnetwork of offices. We are able to provideclients with geographical coverage acrosseach of our business streams and arecontinuing to focus on industry sectors andbusiness domains where we are particularlystrong and emerging as thought leaders.We have a specialized product and serviceoffering, combining our business streams ofKnowledge, Assurance and Compliance toensure that our clients’ businesses becomemore resilient and are better able to standthe test of time. In 2015 we introduced thisconcept of ‘Organizational Resilience’ as thenatural consequence of the building blocksof the strategy we have been putting in placeover recent years. I wrote last year that wewere to accelerate the implementation ofthis strategy. This process has continuedin 2016 with our strong financial resultsenabling us to invest further in the business,accelerating while fine-tuning the strategyto take advantage of the many opportunitiesfacing BSI to provide a healthy base for ourown long-term development. OrganizationalResilience remains the cornerstone of thatstrategy, not only to ensure that BSI remainsa resilient business as it has done throughoutits 115-year history, but also as we continueto expand our range of products andservices to help our clients advance theirown Operational, Information and SupplyChain Resilience.2016 was another unprecedented year interms of global events. Our home market,the United Kingdom, elected to leave theEuropean Union in a referendum in June.This result led to a significant weakeningof Sterling, which has continued thereafter.The UK stock markets surged due to thenon-Sterling earnings of their componentcompanies and the markets waited to seethe longer-term, perhaps more permanent,effects of Brexit. Across the Atlantic, the USwaited for its new Republican president tobe inaugurated in early 2017 and the world,again, waited to see which policies will beHoward KerrChief Executive‘BSI delivered record results in2016 in a period of significanteconomic, political andsocial uncertainty’implemented from his manifesto. Oil andgas prices remained low compared to historicvalues, but actually almost doubled during2016. The medium-term resilience of theChinese economy was questioned. Terrorismand human migration provided a socialbackdrop to all of this. Many of our listedand private competitors in the testing,inspection and certification (TIC) sectorcontinued to disappoint market

Annual report and financial statements 2016 The British Standards Institution Annual report and financial statements 2016. Making excellence a habit . Smith & Nephew Medical Ltd., a global manufacturer