Celemi is a Swedish company specialised in learning tools. Although privately held the company has published information about its intangible assets since 1995. The Celemi Monitor below is the latest from 1999. The new unique feature is a colour coded comparison with strategic targets. Also available on-line is the first Celemi Monitor for 1995 and an article in KM World by the Celemi CEO on how measuring Intangibles supports the strategy.
Below an excerpt from the Celemi Annual Report 1999
(full Annual report available from www.celemi.com)
Analysis of our Intangible Assets
Looking at our monitor for 1999 (see pages 26-27),
our financial picture, based on our traditional financial statement, is
disappointing. Several key areas are off target due in part to significant
investments made during the year to acquire our partner company and to
develop the competence of our learning consultants. (For details, see page 2,
"Making change happen.")
Yet, Celemi is a company with a very high profit potential,
as supported
by the lead indicators in our monitor. Some highlights:
Efficiency
Many efficiency indicators are in line with our target goals, which shows we
are getting better at managing our intangible assets.
Under "Our People," both the Value-Added Margin
(now at 49%) and
Value-Added per Expert 890 (from 802) TSEK are well above our strategic
targets. These figures, on an upward trend, reveal growing competence of our
professionals.
We are selling more to each customer 367 (from 306) TSEK on
average
(under "Our Customers"), and investments made in 1997-98 to develop
new tools
and processes are now pulling our organizational efficiency out of the
"red"
(see "Our Organization"). While Revenues per Administrative Staff are
slightly below target, we expect to reach this strategic goal in the near
future.
Stability
The values highlighted in red under the stability section of "Our
Organization" indicate that our company is not yet stable, but we are
steadily moving toward our goals as the trends are moving in the right
direction in two categories. The 33% rate of administrative staff turnover is
not worrisome, as this is a very small group in Celemi, and the other
indicators are improving.
All stability indicators under "Our Customers" are
on track reflecting
the high priority we give to this most valued asset. Repeat orders are up
and customers indicate they are satisfied. In addition, Our People
Satisfaction Index under "Our People" is also high, and improving.
Although turnover is off target for professional staff, it is
still low
compared to industry standards. Expert Turnover could give rise to concern if
it continues its upward trend. The higher rate of 14% in 1999 (13% in '98)
may reflect recent strategic decisions to create a flatter organization.
Growth/Renewal
"Our Customers" continues to be one of our strongest intangible asset
categories. Although we did not reach our strategic target for revenue growth
in 1999, the trend is positive, 22% (compare 8%) and all other categories are
on or above target.
"Our Organization" has been directly influenced by
the acquisition of our
long term partner company. During 1999 we invested no less than 15% of our
revenues in intellectual property, thereof 7% in the acquisition. We are now
in a much stronger position, since we own all intellectual property rights to
a range of high-potential tools. We expect this strategic advantage to help
us boost the introduction of new products, which has been dropping since
1997. Just 17% of our revenues come from products introduced in the last 5
years, well below our strategic target.
Our restructuring impacted the values under "Our
People." The drop from
59% (in '98) to 27% (in '99) in Competence Enhancing Customers (those with
challenging projects), and the rate of Growth in Professional Competence
which is in the red, reflect changes in our measurement criteria. However, it
is important to note that Growth in Professional Competence, 39% (from 8%),
indicates that our people's competence is growing considerably and we are
much closer than last year to our strategic goal in this area.
Margareta Barchan President
Celemi's Color Coding System
At Celemi, it's our job to help people see the big picture- quickly. That's
why we have made some noticeable changes in our Monitor this year.
In order to improve our reporting of intangible assets, we
introduce
strategic comparisons for 1999. The cells in the Monitor are colored green if
the indicator is equal to or greater than Celemi's strategic plan target. Red
cells indicate values less than 80% of target. Yellow cells indicate values
in between.
In cases where lower values are considered better, as for
staff turnover,
for instance, cells are colored green if the value is equal to or less than
the strategic plan target, and red if the value is 20% higher. Staff turnover
lower or equal to 10% is green, above 12% is red and values 10.1%-12% are
yellow.
The overall rating is achieved by generating an index from
each indicator
and computing an unweighted average.
| Celemi Monitor 1999 | |||||||||||||||
| Tangible Assets | Intangible Assets | ||||||||||||||
| Our Financial Capital | Our Customers | Our Organization | Our People | ||||||||||||
| (External Structure) | (Internal Structure) | (Competence) | |||||||||||||
| 1999 | 1998 | 1997 | 1999 | 1998 | 1997 | 1999 | 1998 | 1997 | 1999 | 1998 | 1997 | ||||
| (overall rating year) | 56 | 59 | 125 | (overall rating year) | 110 | 100 | 98 | (overall rating year) | 82 | 98 | 107 | (overall rating year) | 100 | 98 | 113 |
| Growth/Renewal | Growth/Renewal | Growth/Renewal | Growth/Renewal | ||||||||||||
| Equity Growth | -3% | -3% | 26% | Revenue Growth | 22% | 8% | 22% | Organization Enhancing Customers (5,18) | 21% | 51% | 49% | Average Professional Experience (3,9) | 9.2 | 8.3 | 8.2 |
| Net Investment Ratio (13,15) | 19% | 35% | 45% | Image Enhancing Customers (5,12) | 54% | 59% | 70% | Revenues from New Products (24) | 17% | 49% | 71% | Competence Enhancing Customers (4,5) | 27% | 59% | 65% |
| R&D / Revenues | 14% | 12% | 7% | Professional Competence grwth (11) | 38% | 8% | 49% | ||||||||
| Intang. Investments % Value Added (13) | 22% | 42% | 42% | Experts with Tertiary Degree (6,8) | 80% | 67% | 68% | ||||||||
| Efficiency | Efficiency | Efficiency | Efficiency | ||||||||||||
| Profit Margin (19) | 1% | 0% | 4% | Revenues per Customer (5,26) | 367 | 306 | 269 | Proportion of Admin Staff (2,21) | 20% | 25% | 25% | Value Added per Expert SEK '000 (33) | 892 | 802 | 759 |
| Net Return on Equity (16) | 8% | 1% | 25% | Revenues per Admin Staff SEK '000 (25) | 9205 | 6774 | 8478 | Value Added margin (20) | 49% | 47% | 42% | ||||
| Profit Capacity % Sales (22) | 8% | 12% | 11% | ||||||||||||
| Stability | Stability | Stability | Stability | ||||||||||||
| Customer Satisfaction Index (32) | 5.00 | 5.18 | Admin Staff Turnover (1,2) | 33% | 13% | 0% | People Satisfaction Index (31) | 5.00 | 4.62 | ||||||
| Solidity (29) | 20% | 29% | 34% | Repeat Orders (23) | 68% | 66% | 54% | Admin Staff Seniority, Years (2,28) | 3.8 | 2.6 | 2.0 | Expert Turnover (7,9) | 14% | 13% | 6% |
| Liquid Reserves N:o Days (14) | 32 | 11 | 41 | 5 Largest Customers (5,10) | 29% | 33% | 40% | Rookie Ratio (17,27) | 36% | 41% | 53% | Expert Seniority, years (9,28) | 4.0 | 3.3 | 2.8 |
| Median Age all Employees, Years (17) | 37 | 37 | 36 | ||||||||||||
Definitions
1 Administrative Staff turnover: Number of admin staff leaving divided by number of admin staff at beginning of year.
2 Administrative staff: Employees other than experts.
3 Average professional experience: Experts' average professional experience in number of years.
4 Competence enhancing customers: Share of revenues from customers with projects that Celemi's experts learn from.
5 Customers: categorized under three headings. Number excludes book customers.
6 Education level: Employees at year end with Primary education (“Grundskola”, calculated as =1), Secondary (“Gymnasium” =2) and Tertiary (“Universitet” = 3).
7 Expert turnover: Number of experts leaving divided by number of experts at beginning of year.
8 Experts with tertiary degree: Number of experts with a tertiary degree divided by total number of experts.
9 Experts: Employees working directly with customer projects. Top management are regarded as experts.
10 Five largest customers: Share of revenues from 5 largest customers.
11 Growth in professional competence: Growth over last year in total number of years of professional competence.
12 Image enhancing customers: Share of revenues from customers that improve Celemi's image or gives referrals.
13 Intangible Investments % Value Added: Investments in R&D, Marketing and IT charged as cost in normal P&L, divided by Value Added.
14 Liquid reserves: Cash reserves in number of days, assuming normal business.
15 Net investment Ratio: Investment in tangible fixed assets as % of fixed assets.
16 Net Return on Equity: Profit after 28% tax divided by average equity.
17 Number of employees: Two definitions are used: Average number employed during year for efficiency indicators, year-end numbers for growth/renewal and stability indicators.
18 Organization enhancing customers: Share of revenues from customers that improve Celemi's organization, brings R&D or projects that can be leveraged.
19 Profit Margin: Profit before tax divided by total Revenues
20 Profit/Value added: "Real" Profit divided by Value Added.
21 Proportion of admin. Staff: Number of admin. Staff divided by number of total staff at year-end.
22 Profit Capacity: Profit adjusted for R&D charged as cost in normal P&L.
23 Repeat orders: Share of revenues from customers buying from us also last year.
24 Revenues from new products: Share of revenues from products and concepts launched less than 5 years ago.
25 Revenues per admin. Staff: Total revenues divided by average number of admin. Staff.
26 Revenues per customer: Total revenues divided by total number of customers.
27 Rookie ratio: Number of employees with less than 2 years seniority.
28 Seniority: Number of years as Celemi employees.
29 Solidity: Equity divided by Total Assets.
30 Value Added: The value produced by Celemi's employees after payment to all outside vendors.
31 People Satisfaction Index. Scale 1-6 (highest)
32 Customer Satisfaction Index. Scale 1 - 6 (highest)
Minor changes in calculation principles for value added and categorisation of staff have been made. Earlier years have been adjusted accordingly.