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Net Insight
Interim / Quarterly Report • Jul 16, 2021
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Interim / Quarterly Report
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Net Insight Interim Report January – June 2021
Net Insight AB (publ) corp.id.no. 556533–4397
April – June 2021
- Net sales amounted to SEK 94.1 (88.3) million, an increase of 6.5% year-on-year. In comparable currencies net sales increased by 13.2%.
- Operating earnings amounted to SEK 8.6 (-1.7) million, corresponding to an operating margin of 9.1% (-1.9%). Excluding foreign exchange rate differences of SEK 0.8 (-7.4) million, operating earnings were SEK 7.8 (5.7) million.
- Net income for the period for continuing operations was SEK 7.0 (-0.1) million and for the Group, including discontinued operations, SEK 7.0 (1.8) million.
- Earnings per share, basic and diluted, for the Group was SEK 0.02 (0.00).
- Total cash flow for the Group was SEK 16.7 million (-10.3).
January – June 2021
- Net sales amounted to SEK 172.0 (164.3) million, an increase of 4.7% year-on-year. In comparable currencies net sales increased by 12.4%.
- Operating earnings amounted to SEK 11.7 (3.2) million, corresponding to an operating margin of 6.8% (1.9%). Excluding foreign exchange rate differences of SEK 8.4 (1.8) million, operating earnings were SEK 3.3 (1.4) million.
- Net income for the period for continuing operations was SEK 10.9 (1.1) million. Net Income for the Group, including discontinued operations, was SEK -26.1 (250.1) million. This includes capital loss on disposal of discontinued operations of SEK -35.9 million (246.4).
- Earnings per share, basic and diluted, for the Group was SEK -0.07 (0.65).
- Total cash flow for the Group was SEK 30.8 million (235.1). Excluding the cash impact of the divestment of subsidiary, cash flow was SEK 15.7 million (-67.3).
Our strategy is starting to pay off Crister Fritzson, CEO, Net Insight
Significant events:
- Third consecutive quarter with yearon-year growth
- Decision to include new technology in the Aperi portfolio
- Increased patent protection for time synchronization
| Jan-Dec | Jul 2020- | Jan-Jun | Apr-Jun | ||||
|---|---|---|---|---|---|---|---|
| 2020 Change |
Jun 2021 Change |
2020 | 2021 | Change | 2020 | 2021 | SEK millions |
| Continuing operations | |||||||
| 332,1 2,3% |
4,7% 339,8 |
164,3 | 172,0 | 6,5% | 88,3 | 94,1 | Net sales |
| -15,3 | 267,7% -6,8 |
3,2 | 11,7 | -1,7 | 8,6 | Operating earnings | |
| -4,6% | -2,0% | 1,9% | 6,8% | -1,9% | 9,1% | Operating margin | |
| -14,7 | 860,2% -4,9 |
1,1 | 10,9 | -0,1 | 7,0 | Net income | |
| -19,0 | -3,5 | -2,4 | 13,1 | -3,7 | 10,5 | EBITDA | |
| -5,7% | -1,0% | -1,5% | 7,6% | -4,2% | 11,2% | EBITDA margin | |
| Total Group, including discontinued operations |
|||||||
| 237,4 | -38,8 | 250,1 | -26,1 | 290,6% | 1,8 | 7,0 | Net Income |
| 232,6 -87,8% |
-86,9% 28,4 |
235,1 | 30,8 | -10,3 | 16,7 | Total cash flow | |
Business area Resource Optimization was divested in 2021 and Business area Streaming Solutions was divested in 2020. The divested business areas are reported separately as discontinued operations in this report.
FINANCIAL HIGHLIGHTS
CEO´s Statement
Strategic initiatives ensure continued growth
After a cautious start to the year, sales and operating earnings are now increasing yearon-year. The successful integration of Aperi has broadened our customer offering. We increased our patent protection for time synchronization over existing IP networks and further strengthened our position. We are seeing an increase in our customers' investment appetite, even if the market still remains affected by Covid-19.
We are delivering on our strategy which is focused on building a more competitive portfolio and improved commercialization. The strategy is now starting to yield results in the form of increased growth.
Our strengthened offering has attracted a positive market response. Our clear shift towards the cloud and IP–including through our platform Nimbra Edge and the acquisition of Aperi–has ensured a clearer and more future-proof roadmap.
Towards the end of the first quarter, we ended all furloughs in Sweden. Although we have increased our activity internally, efficiency gains have reduced our costs and improved profit. As part of our continued streamlining of the operations we divested ScheduALL on March 31.
We are currently in talks with operators and partners regarding time synchronization, which is becoming increasingly important in IP media and 5G. We have carried out customer tests in operator networks, improved our solutions over existing IP networks and increased our patent protection.
Covid-19 has led to a continued shortage of components. The situation is currently stable and we carefully monitor developments and proactively try to limit the impact.
Good roadmap leads to increased sales
Our clear roadmap and the accelerated development of Nimbra have been well received by the market, yielding several important deals with existing customers such as Arqiva, The Switch, Globecast UK, NEP Connect and RTVE.
Many of our customers have significant installations of our products for Euro 2020 and the summer Olympics, although revenue remained limited for the quarter seen in isolation.
The entire sector is now moving to IP-based workflows. Our broad product portfolio allows us to offer a seamless transition to IP and makes it easier for customers to upgrade their networks. This allows businesses to avoid major investments, and means that they can easily add capacity, new functionality and services as their needs increase. It is great to see that our installation of a virtualized IP media network to Shanghai Media Group has attracted the market's and our customers' attention in Q2.
Investment in the Aperi portfolio
In line with our earlier decision, our Nimbra products will use JPEG-XS and ST 2110. We have now also decided to introduce these new standards in our Aperi portfolio. The ST 2110 technology ensures more flexible management of video, audio and other media flows in remote and live production. An increasing number of TV companies are
investing in this technology for their new studios. JPEG-XS is a new standard for video compression that has been adapted for high quality and low latency, a pre-requisite for efficient remote production.
The investment is part of our strategy to offer open, automated and standardized IP solutions for all kinds of network, including cloud-based networks.
Our growth journey continues
We are continuing our journey towards strengthening Net Insight through rationalizations and clearer priorities. We have clarified our offering of IP and cloud-based services and further sharpened our focus on product development. In the period, we entered into several new strategic partnerships and won important key business.
Our performance in Q2 is the result of our employees' extensive commitment and capacity for securing deliveries. I look forward to an exciting fall.
Solna, Sweden, July 16, 2021
Crister Fritzson, CEO
EXTRAORDINARY EVENTS
Divested operations
The business area Resource Optimization (ScheduALL) was divested on March 31, 2021, and is reported as discontinued operations in this report. The transaction means that 100% of the shares in the wholly owned subsidiary VizuALL Inc was sold on a cash and debt basis, including a normalized working capital for a total of USD 6 million, of which USD 3 million in cash in connection with the transfer of ownership and the remainder as a promissory note payable over a 12 -18 months term. The transaction had a negative effect on earnings for the Group of SEK -35.9 million and a negative effect on earnings for the Parent Company of SEK -69.8 million. The divestment had a positive cash impact (net after deduction of the withheld part of the consideration and transaction cost) of SEK 15.1 million.
During the second quarter of 2021, the final costs for advisory services in connection with the divestment were determined, which resulted in a positive net effect of SEK 0.4 million compared with the previous estimate, which is presented as other operating income.
Comments in this report have reference to continuing operations, business area Media Networks, unless otherwise specified. For more information on discontinued operations, including the in 2020 divested business Streaming Solutions, see tables on page 11.
REVENUES
Net sales in the second quarter of 2021 were SEK 94.1 (88.3) million, an increase of 6.5%. In comparable currencies, sales increased by 13.2%.
Net sales for the first six months were SEK 172.0 (164.3) million, an increase of 4.7%. In comparable currencies, sales increased by 12.4%.
Net Insight's solutions are sold all over the world and we have customers in around 70 countries. Many customers are global, with central purchasing functions for subsidiaries. Revenue per region for Media Networks, our largest Business Area, varies over time depending on where events take place. Revenue per region is therefore less relevant. We report revenue by region separately (see table on page 10) but without comments.
In Q2 we have seen an increased interest to invest among our customers although some uncertainty related to Covid-19 still remains. This in combination with our initiatives to further develop and strengthen our customer offering and improve our sales & marketing approach have had impact on our growth in the quarter. The revenue contribution from the Aperi-portfolio in Q2 was the strongest since the acquisition. A minor part of the revenue is directly related to the live sport events as the Olympics and the Euro 2020 but in general it is the customers long term investments to meet their customers increased demand and quality expectations that drive our long term growth.
EARNINGS
Gross profit for the second quarter was SEK 57.6 (58.8) million, a decrease by -2.0%. The decrease is explained by increased amortization of R&D expenditure as a consequence of the product launches done late 2020 and early 2021. Gross profit included amortization of capitalized development expenditure of SEK -11.6 (-7.1) million. Gross margin excluding and including amortization of capitalized development expenditure was 73.6% (74.6%) and 61.3% (66.6%) respectively.
Operating expenses in the second quarter of SEK -50.8 (-53.5) million a decrease by 4,9% vs Q2 previous year, mainly due to cost saving programs. For the comparing period the operating expenses was positively affected with SEK 1.6 million related to governmental Covid-19 relief support, no corresponding grants during this period.
Sales and marketing expenses were SEK -24.8 (-24.4) million, and administration expenses to SEK -13.1 (-14.3). Development expenses were SEK -12.9 (-14.8) million and the total development expenditure, i.e. before capitalization, were SEK -26.3 (-27.6) million. Other operating income and expenses were SEK 1.8 (-7.1) million, mainly related to foreign exchange rate differences of SEK 0.8 (-7.4) million and adjustment of cost provisions for advisors related to the ScheduALL divestment of SEK 0.4 (-) million. See Divested operations above.
Operating earnings were SEK 8.6 (-1.7) million, corresponding to an operating margin of 9.1% (-1.9%). Foreign exchange rate differences of SEK 0.8 (-7.4) million the operating profit amounted to SEK 7.8 (5.7) million.
EBITDA was SEK 10.5 (-3.7) million, corresponding to an EBITDA margin of 11.2% (-4.2%). The increase is attributable to the higher revenue and the reduced operating expenditures.
In the second quarter, net financial items amounted to SEK -1.0 (0.7) million.
Profit before tax for the second quarter was SEK 7.5 (-1.0) million, and net income was SEK 7.0 (-0.1) million, corresponding to a net margin of 7.4% (-0.1%). Including Discontinued operations, net income was SEK 7.0 (1.8) million.
Net sales continuing operations
Earnings trend continuing operations
Gross earnings for the six-month period were SEK 102.7 (105.6) million. Gross profit included amortization of capitalized development expenditure of SEK -21.5 (-14.4) million. Gross margin excluding and including amortization of capitalized development expenditure was 72.2% (73.1%) and 59.7% (64.3%) respectively.
Operating expenses of SEK -100.7 (-104.9) million decreased following cost reduction initiatives and reduced costs for travel exhibits etc. Operating expenses was positively affected with SEK 0.8 (1.6) million related to governmental Covid-19 relief support Operating earnings were SEK 11.7 (3.2). Foreign exchange rate differences of SEK 8.4 (1.8) million excluded the operating profit was SEK 3.3 (1.4) million. EBITDA was SEK 13.1 (-2.4) million.
Profit before tax for the first quarter was SEK 12.2 (1.3) million, and net income was SEK 10.9 (1.1) million, corresponding to a net margin of 6.3% (0.7%). Including Discontinued operations, net income was SEK -26.1 (250.1) million, including capital loss on disposal of discontinued operations of SEK -35.9 (246.4) million.
| Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| Key Ratios continuing operations |
2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Net sales, SEK millions | 94.1 | 88.3 | 172.0 | 164.3 | 339.8 | 332.1 |
| Net sales YoY, change in % | 6.5% | -17.0% | 4.7% | -17.9% | -5.6% | -12.1% |
| Gross earnings | 57.6 | 58.8 | 102.7 | 105.6 | 199.3 | 202.2 |
| Gross margin | 61.3% | 66.6% | 59.7% | 64.3% | 58.6% | 60.9% |
| Operating earnings | 8.6 | -1.7 | 11.7 | 3.2 | -6.8 | -15.3 |
| Operating margin | 9.1% | -1.9% | 6.8% | 1.9% | -2.0% | -4.6% |
| EBITDA | 10.5 | -3.7 | 13.1 | -2.4 | -3.5 | -19.0 |
| EBITDA margin | 11.2% | -4.2% | 7.6% | -1.5% | -1.0% | -5.7% |
INVESTMENTS INCLUDING DIVESTED OPERATIONS
Second quarter investments were SEK 14.3 (22.7) million, of which SEK 13.5 (20.5) million related to capitalization of expenditure for development. Depreciation and amortization in the second quarter totaled SEK -15.4 (-13.9) million, of which SEK -11.6 (-8.7) million related to amortization of capitalized expenditure for development.
Investments for the first six months were SEK 32.4 (47.1) million, of which SEK 31.0 (41.8) million related to capitalization of expenditure for development. Depreciation and amortization for the first six months totaled SEK -31.6 (-27.8) million, of which SEK -22.9 (-17.2) million related to amortization of capitalized expenditure for development.
At the end of the period, net value of capitalized expenditure for development was SEK 151.2 million. Net value of capitalized expenditure for development as of December 31, 2020, was SEK 208.9.
For continuing operations (Media Networks), capitalized expenditure for development in the second quarter amounted to SEK 13.5 (12.8) million, and amortization to SEK -11.6 (-7.1) million. For the six-month period, capitalized expenditure for development amounted to SEK 27.8 (27.4) million, and amortization to SEK -21.5 (-14.4) million.
At the end of the period, net value of capitalized expenditure for development was SEK 151.2 million, against SEK 144.8 million as of December 31, 2020.
CASH FLOW AND FINANCIAL POSITION INCLUDING DISCONTINUED OPERATIONS
From April 2021, only the continued operations (Media Networks business area) are included in the cash flow. The impact of discontinued operations on cash flow in previous periods is presented in table on page 11.
Cash flow from operating activities in the second quarter was SEK 32.9 (13.8) million. Total cash flow was SEK 16.7 (-10.3) million.
Cash flow from operating activities for the six-month period was SEK 52.1 (-16.4) million, and total cash flow was 30.8 (235.1). The divestment of Business Area Resource Optimization (last year Business Area Streaming Solutions) had a cash impact of SEK 15.1 (302.3) million. Excluding the impact from the divestment, cash flow was SEK 15.7 million (-67.3). Last year also includes SEK 2.9 million of fixed assets acquired from Aperi.
Cash and cash equivalents were SEK 314.5 million at the end of the period, against SEK 283.2 million as of 31 December 2020.
Remaining tax loss carryforwards for group companies amounted to SEK 96.2 million at the end of the period, compared to SEK 102.2 million as of December 31, 2020. Deferred tax assets have been recognized for the tax loss carryforwards. For more information, see the section Tax on page 13.
Equity was SEK 666.6 million at the end of the period, against SEK 692.6 million as of 31 December 2020. The equity/assets ratio was 83.2%, against 80.3% as of 31 December 2020. For information about warrants, share repurchases and share structure, see the section Contributed equity on page 13.
EMPLOYEES
The average number of employees and consultants at Net Insight during the second quarter and the six-month period was 151 (152) and 155 (150) respectively, of which 122 (127) and 123 (127) respectively in the parent company Net Insight AB (publ).
PARENT COMPANY
Parent company net sales were SEK 94.0 (88.2) million in the second quarter, and net income was SEK 1.7 (-2.0) million. In the second quarter, intra-group sales totaled SEK 0.0 (1.6) million, and intra-group purchases SEK -12.0 (-11.4) million.
For the six-month period, parent company net sales were SEK 171.9 (168.4) million, and net income was SEK -65.6 (198.0) million. The financial net includes result from participation in group companies of SEK -70.1 (193.8) million, which relates to capital loss/gains from divestment of subsidiary. For the six-month period, intra-group sales totaled SEK 0.0 (6.3) million, and intra-group purchases SEK -24.3 (-24.5) million.
Progress in the parent company in the second quarter and for the first six months largely shadowed Group progress as indicated above for the business area Media Networks (except for the effect of the sale of businesses/subsidiaries).
RISK AND SENSITIVITY ANALYSIS
Net Insight's operations and results of operations are affected by a number of external and internal factors. The company conducts a continuous process to identify all risks present, and to assess how each risk should be managed.
Primarily, the risks the company is exposed to are market-related risks (including competition, technological progress and political risks), operational risks (including product liability, intellectual property, disputes, customer dependency and contract risks) as well as financial risks.
No additional critical risks and uncertainty factors, other than those reviewed in the Annual Report for 2020, arose during the period or are anticipated in 2021.
For a complete review of the company's risk and sensitivity analysis, and its risk management process, see pages 26-28 and 45-46 of the Annual Report for 2020.
SEASONALITY
In the past three calendar years, average seasonality has been fairly modest. Net sales per quarter were approximately 25% of annual sales.
CONSOLIDATED INCOME STATEMENT, IN SUMMARY
| Apr-Jun Jan-Jun |
Jul 2020- | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Continuing operations | ||||||
| Net sales | 94,063 | 88,311 | 172,001 | 164,252 | 339,840 | 332,091 |
| Cost of sales | -36,439 | -29,486 | -69,279 | -58,643 | -140,560 | -129,924 |
| Gross earnings | 57,624 | 58,825 | 102,722 | 105,609 | 199,280 | 202,167 |
| Sales and marketing expenses | -24,824 | -24,418 | -47,839 | -47,451 | -93,104 | -92,716 |
| Administration expenses | -13,134 | -14,288 | -26,226 | -27,851 | -52,310 | -53,935 |
| Development expenses | -12,881 | -14,772 | -26,597 | -29,596 | -52,858 | -55,857 |
| Other operating income and expenses | 1,768 | -7,055 | 9,618 | 2,465 | -7,848 | -15,001 |
| Operating earnings | 8,553 | -1,708 | 11,678 | 3,176 | -6,840 | -15,342 |
| Net financial items | -1,024 | 724 | 512 | -1,920 | -2,191 | -4,623 |
| Profit/loss before tax | 7,529 | -984 | 12,190 | 1,256 | -9,031 | -19,965 |
| Tax | -572 | 861 | -1,320 | -124 | 4,092 | 5,288 |
| Net income continuing operations | 6,957 | -123 | 10,870 | 1,132 | -4,939 | -14,677 |
| Discontinued operations, net after tax | - | 1,904 | -36,926 | 249,017 | -33,883 | 252,060 |
| Net Income | 6,957 | 1,781 | -26,056 | 250,149 | -38,822 | 237,383 |
| Net income for the period attributable to the shareholders of the parent company |
6,957 | 1,781 | -26,056 | 250,149 | -38,822 | 237,383 |
| Earnings per share, based on net income attributable to the parent company's shareholders during the period |
Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 | |
| Earnings per share basic and diluted continuing operations (SEK) |
0.02 | -0.00 | 0.03 | 0.00 | -0.01 | -0.04 |
| Earnings per share basic and diluted including discontinuing operations (SEK) |
0.02 | 0.00 | -0.07 | 0.65 | -0.10 | 0.62 |
| Average number of oustanding shares in thousands, basic |
382,758 | 382,758 | 382,758 | 382,758 | 382,758 | 382,758 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Apr-Jun Jan-Jun |
Jul 2020- | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Net income | 6,957 | 1,781 | -26,056 | 250,149 | -38,822 | 237,383 |
| Other comprehensive income | ||||||
| Items that may be reclassified subsequently to the income statement |
||||||
| Translation differences | -68 | -5,579 | 12 | -136 | -9,592 | -9,740 |
| Total other comprehensive income, after tax | -68 | -5,579 | 12 | -136 | -9,592 | -9,740 |
| Total other comprehensive income for the period | 6,889 | -3,798 | -26,044 | 250,013 | -48,414 | 227,643 |
| Total comprehensive income for the period attributable to the shareholders of the parent company |
6,889 | -3,798 | -26,044 | 250,013 | -48,414 | 227,643 |
CONSOLIDATED BALANCE SHEET, IN SUMMARY
| SEK thousands | 30 Jun 2021 | 31 Mar 2021 | 31 Dec 2020 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Capitalized expenditure for development | 151 160 | 149 318 | 208 938 |
| Goodwill | 38 751 | 38 751 | 58 166 |
| Other intangible assets | 2 455 | 3 381 | 7 830 |
| Right-of-use assets | 37 419 | 39 436 | 45 231 |
| Equipment | 20 974 | 21 675 | 24 989 |
| Deferred tax asset | 20 590 | 20 956 | 27 428 |
| Deposits | 5 020 | 5 022 | 5 400 |
| Totalt non-current assets | 276 369 | 278 539 | 377 982 |
| Current assets | |||
| Inventories | 49 227 | 56 911 | 52 470 |
| Accounts receivable | 74 490 | 84 256 | 98 116 |
| Other receivables | 87 000 | 82 827 | 50 620 |
| Cash and cash equivalents | 314 546 | 298 305 | 283 184 |
| Total current assets | 525 263 | 522 299 | 484 390 |
| TOTAL ASSETS | 801 632 | 800 838 | 862 372 |
| EQUITY AND LIABILITIES | |||
| Equity attributable to parent company's shareholders | |||
| Share capital | 15 597 | 15 597 | 15 597 |
| Other paid-in capital | 1 192 727 | 1 192 727 | 1 192 727 |
| Translation reserve | -255 | -187 | -267 |
| Accumulated deficit | -541 497 | -548 454 | -515 441 |
| Total shareholders' equity | 666 572 | 659 683 | 692 616 |
| Non-current liabilities | |||
| Lease liabilities | 28 847 | 30 794 | 35 498 |
| Other liabilities | 10 561 | 11 284 | 18 230 |
| Total non-current liabilities | 39 408 | 42 078 | 53 728 |
| Current liabilities | |||
| Lease liabilities | 9 165 | 9 107 | 10 231 |
| Accounts payable | 16 651 | 14 621 | 17 093 |
| Other liabilities | 69 836 | 75 349 | 88 704 |
| Total current liabilities | 95 652 | 99 077 | 116 028 |
| TOTAL EQUITY AND LIABILITIES | 801 632 | 800 838 | 862 372 |
CHANGES IN CONSOLIDATED EQUITY, IN SUMMARY
| Attributable to parent company's shareholders | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEK thousands | Share capital |
Other paid-in capital |
Translation reserve |
Accumulated deficit |
Total shareholders' equity |
|||
| January 1, 2020 | 15,597 | 1,192,727 | 9,473 | -754,052 | 463,745 | |||
| Warrants issued | - | - | - | 1,228 | 1,228 | |||
| Total comprehensive income | - | - | -9,740 | 237,383 | 227,643 | |||
| December 31, 2020 | 15,597 | 1,192,727 | -267 | -515,441 | 692,616 | |||
| January 1, 2021 | 15,597 | 1,192,727 | -267 | -515,441 | 692,616 | |||
| Total comprehensive income | - | - | 12 | -26,056 | -26,044 | |||
| June 30, 2021 | 15,597 | 1,192,727 | -255 | -541,497 | 666,572 |
CONSOLIDATED STATEMENT OF CASH FLOWS INCLUDING DISCONTINUED OPERATIONS
| Apr-Jun Jan-Jun |
Jul 2020- | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Ongoing activities | ||||||
| Profit/loss before tax | 7 529 | 1 786 | -24 804 | 251 212 | -39 119 | 236 897 |
| Income tax paid | -193 | - | -193 | - | -506 | -313 |
| Depreciation & amortization | 15 408 | 13 929 | 31 576 | 27 838 | 63 625 | 59 887 |
| Other items not affecting liquidity | 755 | 7 183 | 28 351 | -244 726 | 43 184 | -229 893 |
| Cash flow from operating activities before changes | ||||||
| in working capital | 23 499 | 22 898 | 34 930 | 34 324 | 67 184 | 66 578 |
| Changes in working capital | ||||||
| Increase-/decrease+ in inventories | 8 206 | -4 121 | 3 561 | -19 075 | 8 967 | -13 669 |
| Increase-/decrease+ in receivables | 5 194 | 9 689 | 1 703 | -15 859 | 24 576 | 7 014 |
| Increase+/decrease- in liabilities | -4 021 | -14 618 | 11 953 | -15 765 | -16 338 | -44 056 |
| Cash flow from operating activities | 32 878 | 13 848 | 52 147 | -16 375 | 84 389 | 15 867 |
| Investment activities | ||||||
| Investment in intangible assets | -13 452 | -22 701 | -31 015 | -44 047 | -61 314 | -74 346 |
| Investment in tangible assets | -826 | -2 | -1 378 | -3 028 | -1 412 | -3 062 |
| Disposal of subsidiary, net effect on cash | - | - | 15 129 | 302 348 | 15 129 | 302 348 |
| Increase-/decrease+ in financial assets, net | - | - | - | - | -278 | -278 |
| Cash flow from investment activities | -14 278 | -22 703 | -17 264 | 255 273 | -47 875 | 224 662 |
| Financing activities | ||||||
| Amortization leasing | -1 889 | -2 400 | -4 079 | -4 781 | -8 432 | -9 134 |
| Warrant premiums paid | - | 950 | - | 950 | 278 | 1 228 |
| Cash flow from financing activities | -1 889 | -1 450 | -4 079 | -3 831 | -8 154 | -7 906 |
| Net change in cash and cash equivalents | 16 711 | -10 305 | 30 804 | 235 067 | 28 360 | 232 623 |
| Exchange differences in cash and cash equivalents q g g |
-470 | -1 196 | 558 | -720 | -491 | -1 769 |
| period | 298 305 | 298 178 | 283 184 | 52 330 | 286 677 | 52 330 |
| Cash and cash equivalents at the end of the period | 314 546 | 286 677 | 314 546 | 286 677 | 314 546 | 283 184 |
DISAGGREGATION OF REVENUE
| Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Net sales by product group | ||||||
| Hardware | 42,794 | 36,264 | 77,649 | 68,613 | 146,494 | 137,458 |
| Software licenses | 18,268 | 22,737 | 33,582 | 38,322 | 76,186 | 80,926 |
| Support and Services | 33,001 | 29,310 | 60,770 | 57,317 | 117,160 | 113,707 |
| Total | 94,063 | 88,311 | 172,001 | 164,252 | 339,840 | 332,091 |
| Net sales by region | ||||||
| WE | 53,395 | 31,575 | 94,035 | 70,643 | 181,367 | 157,975 |
| AM | 26,579 | 34,745 | 51,827 | 58,966 | 110,067 | 117,206 |
| RoW | 14,089 | 21,991 | 26,139 | 34,643 | 48,406 | 56,910 |
| Total | 94,063 | 88,311 | 172,001 | 164,252 | 339,840 | 332,091 |
| Timing of revenue recognition | ||||||
| Products and services transfered at a point in time | 61,067 | 59,009 | 111,268 | 106,955 | 222,724 | 218,411 |
| Services transferred over time | 32,996 | 29,302 | 60,733 | 57,297 | 117,116 | 113,680 |
| Total | 94,063 | 88,311 | 172,001 | 164,252 | 339,840 | 332,091 |
FINANCIAL ASSETS AND LIABILITIES
| Group's financial instruments by category - Assets | Jun 30, 2021 | 31 Dec 2020 | |||
|---|---|---|---|---|---|
| SEK thousands | Value Measured at tier amortized cost |
Measured at fair value through profit or loss |
Value Measured at tier amortized cost |
Measured at fair value through profit or loss |
|
| Assets in Balance Sheet | |||||
| Derivative instruments | 2 | - | 2 | - | |
| Accounts receivable and other receivables, excluding excluding non-financial assets |
128 968 | 130 667 | |||
| Cash and cash equivalents | 314 546 | 283 184 | |||
| Total | 443 514 | - | 413 851 | - |
| Group's financial instruments by category - Liabilities | Jun 30, 2021 | 31 Dec 2020 | |||||
|---|---|---|---|---|---|---|---|
| SEK thousands | Value tier |
Measured at amortized cost |
Measured at fair value through profit or loss |
Value tier |
Measured at amortized cost |
Measured at fair value through profit or loss |
|
| Liabilities in Balance Sheet | |||||||
| Synthetic options | 2 | - | 2 | - | |||
| Derivative instruments | 2 | - | 2 | - | |||
| Accounts payable and other liabilities, excluding non financial liabilities |
24,895 | 22,763 | |||||
| Lease liabilities | 38,013 | 45,728 | |||||
| Total | 62,908 | - | 68,492 | - |
Financial instruments in tier 2
The fair value of derivative instruments is measured using exchange rates of currency forwards on the reporting date. The closing balance for synthetic options represents the total assessed value of a number of outstanding options, which has been measured on the basis of accepted market principles and are based on Net Insight's share price.
INCOME FROM DISCONTINUED OPERATIONS
| Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Revenues | - | 16,646 | 15,101 | 34,324 | 47,259 | 66,482 |
| Expenses | - | -13,877 | -16,176 | -30,719 | -41,427 | -55,970 |
| Capital gain on disposal of discontinued operations | - | - | -35,919 | 246,350 | -35,919 | 246,350 |
| Profit/loss before tax | - | 2,769 | -36,994 | 249,955 | -30,087 | 256,862 |
| Tax | - | -865 | 68 | -938 | -3,796 | -4,802 |
| Net income discontinuing operations | - | 1,904 | -36,926 | 249,017 | -33,883 | 252,060 |
ASSETS HELD FOR SALE
| SEK thousands | Mar 2021 | Jan 2020 |
|---|---|---|
| Disposed assets and liabilities | ||
| Capitalized expenditure for development | 70,198 | 79,756 |
| Goodwill | 22,932 | - |
| Other intangible assets | 3,642 | - |
| Right-of-use assets | 3,617 | - |
| Equipment | 2,688 | 250 |
| Deferred tax asset | 6,261 | 13,598 |
| Deposits | 407 | - |
| Accounts receivable | 7,916 | - |
| Other receivables | 1,859 | 186 |
| Cash and cash equivalents | 2,274 | 1,533 |
| Lease liabilities, non-current | -2,593 | - |
| Other liabilities, non-current | -5,862 | - |
| Lease liabilities | -1,291 | - |
| Accounts payable | -1,702 | - |
| Other liabilities | -32,596 | -2,875 |
| Net assets and liabilities | 77,750 | 92,448 |
| Cash consideration | 49,538 | 348,002 |
| Less: Escrow | -24,428 | -34,917 |
| Less: Cash and cash equivalents in discontinued operations | -2,274 | -1,533 |
| Less: Transaction costs | -7,707 | -9,204 |
| Effect on group's cash and cash equivalents | 15,129 | 302,348 |
CASHFLOW FROM DISCONTINUED OPERATIONS
| Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Cash flow from discontinued operations, net | ||||||
| Cash flow from operating activities | - | 14,480 | 899 | 17,459 | 4,895 | 21,455 |
| Cash flow from investment activities | - | -7,658 | 11,960 | 288,009 | 4,889 | 280,938 |
| Cash flow from financing activities | - | - | - | - | - | - |
| Cash flow from discontinued operations, net | - | 6,822 | 12,859 | 305,468 | 9,784 | 302,393 |
PARENT COMPANY INCOME STATEMENT, IN SUMMARY
| Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Net sales | 94,005 | 88,242 | 171,884 | 168,437 | 344,110 | 340,663 |
| Cost of sales | -35,368 | -29,592 | -67,136 | -58,716 | -139,868 | -131,448 |
| Gross earnings | 58,637 | 58,650 | 104,748 | 109,721 | 204,242 | 209,215 |
| Sales and marketing expenses | -30,120 | -25,766 | -58,531 | -50,612 | -117,754 | -109,835 |
| Administration expenses | -12,878 | -14,671 | -26,156 | -28,587 | -53,340 | -55,771 |
| Development expenses | -9,771 | -13,794 | -20,184 | -28,867 | -47,419 | -56,102 |
| Other income expenses | -3,425 | -7,983 | 4,342 | 1,537 | -12,385 | -15,190 |
| Operating earnings | 2,443 | -3,564 | 4,219 | 3,192 | -26,656 | -27,683 |
| Net financial items | -390 | 1,108 | -68,664 | 195,370 | -67,833 | 196,201 |
| Profit/loss before tax | 2,053 | -2,456 | -64,445 | 198,562 | -94,489 | 168,518 |
| Tax | -403 | 454 | -1,111 | -547 | 5,210 | 5,774 |
| Net income | 1,650 | -2,002 | -65,556 | 198,015 | -89,279 | 174,292 |
PARENT COMPANY BALANCE SHEET, IN SUMMARY
| SEK thousands | 30 Jun 2021 | 31 Mar 2021 | 31 Dec 2020 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Capitalized expenditure for development | 151 160 | 149 318 | 144 776 |
| Other intangible assets | 2 455 | 3 381 | 3 981 |
| Equipment | 19 215 | 19 745 | 20 407 |
| Participations in group companies | 174 895 | 174 895 | 246 400 |
| Deferred tax asset | 19 807 | 20 210 | 20 919 |
| Deposits | 4 927 | 4 927 | 4 927 |
| Total non-current assets | 372 459 | 372 476 | 441 410 |
| Current assets | |||
| Inventories | 49 227 | 56 911 | 52 470 |
| Accounts receivable | 74 920 | 84 721 | 90 453 |
| Other receivables | 88 324 | 84 278 | 50 520 |
| Cash and cash equivalents | 298 074 | 273 958 | 263 558 |
| Total current assets | 510 545 | 499 868 | 457 001 |
| TOTAL ASSETS | 883 004 | 872 344 | 898 411 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Restricted equity | 255 925 | 248 106 | 200 181 |
| Non-restricted equity | 375 257 | 381 426 | 496 557 |
| Total equity | 631 182 | 629 532 | 696 738 |
| Non-current liabilities | |||
| Other liabilities | 10 655 | 11 519 | 11 357 |
| Total non-current liabilities | 10 655 | 11 519 | 11 357 |
| Current liabilities | |||
| Accounts payable | 16 651 | 14 621 | 15 557 |
| Liablities to group companies | 158 272 | 150 318 | 120 390 |
| Other liabilities | 66 244 | 66 354 | 54 369 |
| Total current liabilities | 241 167 | 231 293 | 190 316 |
| TOTAL EQUITY AND LIABILITIES | 883 004 | 872 344 | 898 411 |
ACCOUNTING POLICIES
This Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting and applicable regulations of the Swedish Annual Accounts Act. The Interim Report of the parent company complies with chapter 9 of the Swedish Annual Accounts Act, Interim Financial Reporting, and RFR 2 Accounting for Legal Entities.
Disclosures in accordance with IAS 34 are presented in the interim financial statements and the associated notes as well as elsewhere in the interim financial report.
IFRS Interpretations Committee (IFRIC) has issued a new final agenda decision on cloud computing arrangements. This update discusses how an entity which incurs cloud computing arrangement costs, including implementation costs, may account for those costs – i.e. capitalize or expense. An entity should evaluate whether the rights granted in a cloud computing arrangement are within the scope of IAS 38 Intangible Assets or IFRS 16 Leases. Otherwise, the arrangement is likely to be a service contract.
After evaluation, the company found that 0,2 MSEK of what according to previous assessments had been capitalized should have been expensed when applying the new IFRIC. Since this is not considered significant, everything was expensed in June 2021 without retrospective adjustments. The new IFRIC has also resulted in the company expensing implementation costs for ongoing implementations of cloud computing arrangements during the period, which according to the previous assessments should have been capitalized.
There are no other new or amended International Financial Reporting Standards (IFRS) that have had a material impact on the Company's financial reporting.
Business area Resource Optimization (ScheduALL) was divested on March 31, 2021, and business area Streaming Solutions (Sye) was divested on January 3, 2020. Hence, Net Insight has now only one business area and segment. The divested business areas are presented in the report as discontinued operations. As a result of the divestment, certain costs for central functions have been reallocated between the various business areas. Most of these costs are fixed and do not accompany the divested operations. In the report, some minor adjustments to the presentation of what is continued and discontinued operations have been made for the comparison year 2020 compared with what was presented in the report for the period January-March 2021.
Except for stated above, the same accounting principles and basis of calculation as those used in the latest Annual Report have been
applied to the group and parent company. For a description of these accounting principles, please refer to the Annual Report for 2020.
The preparation of the Interim Report requires management to make judgements, estimates and assumptions that affect the company's earnings and position and information presented generally. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. For a description of these estimates and assumptions, please refer to the Annual Report for 2020.
Figures in brackets in this report refer to comparison with the corresponding period or date in the previous year, if not stated otherwise. Divergences due to rounding may occur in this report.
TAX
The group reported tax of total SEK -1.3 (-1.1) million for the period January–June 2021, of which SEK -1.3 (-0.1) million relates to continuing operations. Reported tax corresponds to an effective tax rate of 5.0 (-0.4) percent and -10.8 (-9.9) percent, respectively. The group recognized a capital loss/gain from discontinued operations of SEK -35.9 (246.4) million, which is a non taxable income. The effective tax rate is also affected by the relative effects of foreign tax rates and temporary differences.
Remaining tax loss carry-forwards for group companies amounted to SEK 96.2 million at the end of the period, compared to SEK 102.2 million for continuing business as of December 31, 2020. Deferred tax has been recognized for the tax loss carry-forwards.
CONTRIBUTED EQUITY
The AGM resolved to authorize the board of directors to resolve to repurchase, on one or several occasions until the next annual general meeting, as many own shares as may be purchased without the company's holding at any time exceeding ten per cent of the total number of shares in the company. Further, the AGM resolved to authorize the board of directors to resolve, on one or several occasions until the next annual general meeting, to transfer (sell) own shares.
No own shares have been repurchased during January-June 2021. At the end of the reporting period, the parent company had a total of 7,175,000 of its own class B shares, at an average cost of SEK 4.44 per share and with a par value of SEK 0.04 per share. The shares are held as own shares. The parent company has the right to reissue these shares at a later date.
All shares issued by the parent company were fully paid.
| 30 Jun, 2021 | 31 Dec, 2020 | ||||||
|---|---|---|---|---|---|---|---|
| The division of shares | A-shares | B-shares | Total | A-shares | B-shares | Total | |
| Outstanding shares | 1,000,000 | 381,758,009 | 382,758,009 | 1,000,000 | 381,758,009 | 382,758,009 | |
| Repurchased own shares | - | 7,175,000 | 7,175,000 | - | 7,175,000 | 7,175,000 | |
| Issued shares | 1,000,000 | 388,933,009 | 389,933,009 | 1,000,000 | 388,933,009 | 389,933,009 |
TRANSACTIONS WITH RELATED PARTIES
No transactions with related parties during the period.
SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
No significant events have occurred after the end of the reporting period.
AUDITORS' REVIEW
This Report has not been reviewed by the company's auditors.
THIS IS NET INSIGHT
Business concept and model
Net Insight is defining new ways to deliver media. Net Insight is driving the transformation of video networks with open IP, virtualized and cloud solutions that enable our customers to simply and costeffectively create live experiences. With the product area Media Networks, Net Insight is opening up new routes for customers to produce and deliver content to viewers anywhere. Revenues are generated through sales of hardware and software solutions and services.
Strategy
Net Insight wants to set the benchmark for media transport and help broadcasters, production companies, service providers and enterprises to transform their media businesses – enabling them to benefit from new software defined, virtual and distributed media workflows, without discarding their existing hardware investments. Net Insight wants to empower customers to work smarter through remote/distributed production and flexible networks.
Net Insight is technology agnostic and has built the market's most open and cloud-ready video centric media delivery platform, allowing customers to deliver content on any network, their way.
The main strategic objective is to accelerate growth, in both existing and closely related market and customer segments. This will be achieved through a combination of leveraging our unique portfolio and our industry expertise, strengthened solutions competitiveness, and improved internal execution.
Value creators
The solutions are deployed by the world's leading media brands to keep their mission-critical media networks running smoothly. New technology is enabling these players to adopt new, more cost efficient and flexible ways to produce and deliver content.
Net Insight can play an important role to support our customers making this gradual transition.
Net Insight benefits from underlying market trends like the general increase in video traffic, live streaming and file-based transfers. Other trends supporting the company's growth prospects include the broader coverage of live events, move towards remote production and increased use of Internet and cloud for media production and transport.
REPORTING DATES
Interim report January – September November 9, 2021
This interim report has been prepared in Swedish and translated into English. In the event of any discrepancies between the Swedish interim report and the English translation the former shall have precedence.
For more information, please contact:
Crister Fritzson, CEO, Net Insight AB (publ) Phone: +46 (0)8-685 04 00 Email: [email protected]
Joakim Schedvins, CFO, Net Insight AB (publ) Phone: +46 (0)8-685 04 00 Email: [email protected]
Net Insight AB (publ), corp.id.no. 556533-4397 Box 1200, 171 23 Solna, Sweden Phone. +46 (0)8–685 04 00 www.netinsight.net
CERTIFICATION BY THE BOARD OF DIRECTORS AND CEO
The Board of Directors and the CEO certify that the Interim report for the period January – June 2021 gives a true and fair overview of the Parent Company Net Insight AB (publ) and the Group's operations, their financial position and results of operations, and describes significant risks and uncertainties facing the Parent Company and other companies in the Group.
Solna, July 16, 2021
Gunilla Fransson Chairman
Kjell Arvidsson Board member
Jan Barchan Board member
Mathias Berg Board member
Anders Harrysson Board member
Charlotta Falvin Board member
Crister Fritzson CEO
This information is information that Net Insight AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 8:45 am CEST on July 16, 2020.
FINANCIAL INFORMATION
| Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Earnings continuing operations | ||||||
| Net sales | 94.1 | 88.3 | 172.0 | 164.3 | 339.8 | 332.1 |
| Gross earnings | 57.6 | 58.8 | 102.7 | 105.6 | 199.3 | 202.2 |
| Operating expenses | 50.8 | 53.5 | 100.7 | 104.9 | 198.3 | 202.5 |
| Total development expenditure | 26.3 | 27.6 | 54.4 | 57.0 | 103.8 | 106.4 |
| EBITDA | 10.5 | -3.7 | 13.1 | -2.4 | -3.5 | -19.0 |
| Operating earnings | 8.6 | -1.7 | 11.7 | 3.2 | -6.8 | -15.3 |
| Profit/loss before tax | 7.5 | -1.0 | 12.2 | 1.3 | -9.0 | -20.0 |
| Net income | 7.0 | -0.1 | 10.9 | 1.1 | -4.9 | -14.7 |
| Balance sheet and cash flow including discontinued operations |
||||||
| Cash and cash equivalents | 314.5 | 286.7 | 314.5 | 286.7 | 314.5 | 283.2 |
| Working capital | 73.3 | 65.7 | 70.6 | 47.1 | 76.4 | 57.8 |
| Total cash flow | 16.7 | -10.3 | 30.8 | 235.1 | 28.4 | 232.6 |
| The share | ||||||
| Dividend per share, SEK | - | - | - | - | - | - |
| Earnings per share basic and diluted continuing | ||||||
| operations, SEK | 0.02 | -0.00 | 0.03 | 0.00 | -0.01 | -0.04 |
| Earnings per share basic and diluted discontinuing operations, SEK |
- | 0.00 | -0.10 | 0.65 | -0.09 | 0.66 |
| Earnings per share basic and diluted total, SEK | 0.02 | 0.00 | -0.07 | 0.65 | -0.10 | 0.62 |
| Cash flow per share, SEK | 0.04 | -0.03 | 0.08 | 0.61 | 0.07 | 0.61 |
| Equity per share basic and diluted, SEK | 1.74 | 1.87 | 1.74 | 1.87 | 1.74 | 1.81 |
| Average number of outstanding shares basic and diluted, thousands |
382,758 | 382,758 | 382,758 | 382,758 | 382,758 | 382,758 |
| Number of outstanding shares at the end of the periodbasic and diluted, thousands |
382,758 | 382,758 | 382,758 | 382,758 | 382,758 | 382,758 |
| Share price at end of period, SEK | 2.94 | 2.56 | 2.94 | 2.56 | 2.94 | 1.58 |
| Employees and consultants continuing operations | ||||||
| Average number of employees and consultants | 151 | 152 | 155 | 150 | 169 | 152 |
| KPI continuing operations | ||||||
| Net sales YoY, change in % | 6.5% | -17.0% | 4.7% | -17.9% | -5.6% | -12.1% |
| Gross margin | 61.3% | 66.6% | 59.7% | 64.3% | 58.6% | 60.9% |
| Total development expenditure/Net sales | 28.0% | 31.2% | 31.7% | 34.7% | 30.5% | 32.0% |
| Operating margin | 9.1% | -1.9% | 6.8% | 1.9% | -2.0% | -4.6% |
| EBITDA margin | 11.2% | -4.2% | 7.6% | -1.5% | -1.0% | -5.7% |
| Net margin | 7.4% | -0.1% | 6.3% | 0.7% | -1.5% | -4.4% |
| KPI Group including discontinued operations | ||||||
| Return on capital employed | -1.4% | -3.1% | -1.4% | -3.5% | -1.4% | -0.6% |
| Equity/asset ratio | 83.2% | 78.2% | 83.2% | 78.2% | 83.2% | 80.3% |
| Return on equity | -5.6% | 39.0% | -5.6% | 39.0% | -5.6% | 36.0% |
ALTERNATIVE PERFORMANCE MEASURES AND OTHER DEFINITIONS
Non-IFRS financial measures are presented to enhance an investors and management possibility to evaluate the ongoing operating results, to aid in forecasting future periods and to facilitate meaningful comparison of result between periods. The APMs in this report may differ from similar-titled measures used by other companies. APMs regarding to the income statement are calculated on continuing operations unless otherwise stated. APMs regarding the balance sheet are calculated on the whole group including discontinuing operations, unless otherwise stated.
| Performance measures | Various types of performance measures and margin measures as a percentage of sales. | |||||
|---|---|---|---|---|---|---|
| Non-IFRS performance measures |
Description | Reason for use of the measure | ||||
| Gross margin | Gross earnings as a percentage of net sales. | The gross margin is of major importance, showing | ||||
| Gross margin excl. amortization of capitalized development |
Gross earnings excl. amortization of capitalized development as a percentage of net sales. |
the margin for covering the operating expenses. | ||||
| Operating expenses | Sales and marketing expenses, administration expenses and development expenses. |
|||||
| Operating expenses/net sales | Operating expenses as a percentage of net sales. | Used in charts to illustrate trend. | ||||
| Operating earnings | Calculated as operating earnings before financial items and tax. |
Operating earnings provides an overall picture of earnings generated in the operating activities. |
||||
| Operating margin | Operating earnings as a percentage of net sales. | The operating margin is a key measure together with sales growth and capital employed for monitoring value creation. |
||||
| Net sales YoY, change in % | The relation between net sales for the period and the corresponding sales for the comparative period in previous year. |
The sales growth is a key measure together with operating margin and capital employed for monitoring value creation. |
||||
| Change in Net sales in comparable currencies |
The relation between the net sales for the period, recalculated using the foreign currency rates from the comparative period, and the corresponding sales for the comparative period in previous year. Only sales from business combinations that has been part of the Group for the whole comparative period are recalculated. |
This measure is of major importance for management in its monitoring of underlying sales growth driven by changes in volume, price and product mix for comparable currency rates between different periods. |
||||
| Net margin | Net Income as a percentage of net sales. | The net margin shows the remaining share of net sales after all the company's costs have been deducted. |
||||
| Total development (R&D) expenditure |
Development expenses and capitalized expenditures for development. |
The measure is a good complement to development expenses, as it shows the company's |
||||
| Capitalization rate | Capitalized development expenditures as a percentage of total development expenditures. |
total expenditure in development. The development expenditures effect on income, financial position, and presentation in the |
||||
| Total development (R&D) expenditure/net sales |
Total development expenditure as percentage of net sales. |
statement of cashflow is affected by the periods level of capitalized development expenditures. |
||||
| EBITDA | Operating earnings before depreciation and amortization and capitalization of development expenditure. |
The measures are good complements to operating earnings and margin as it, simplified, shows the earnings-generated cash flow in the operation and |
||||
| EBITDA margin | EBITDA as a percentage of net sales. | it shows operating earnings without influence of variations in the level of capitalized development expenditures in the company's development projects. |
||||
| Region | Region. • Western Europe (WE). • Americas (AM), North and South America. • Rest of World (RoW), countries outside of Western Europe and Americas. |
Calculation of performance measures not included in IFRS framework
| Change in net sales in comparable currencies | Apr-Jun | Jan-Jun | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2021 | 2020 | 2021 | 2020 |
| Net sales | 94.1 | 88.3 | 172.0 | 164.3 |
| Net currency effect of comparable currencies | 5.9 | -0.6 | 12.7 | -4.3 |
| Net sales in comparable currencies | 100.0 | 87.7 | 184.7 | 159.9 |
| Change in net sales in comparable currencies | 13.2% | -17.6% | 12.4% | -20.0% |
| KPI Income Statement | Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Continuing operations | ||||||
| Net sales | 94.1 | 88.3 | 172.0 | 164.3 | 339.8 | 332.1 |
| Net sales YoY, change in % | 6.5% | -17.0% | 4.7% | -17.9% | -5.6% | -12.1% |
| Cost of sales ex. amortization of capitalized | ||||||
| development | -24.8 | -22.4 | -47.8 | -44.3 | -102.1 | -98.5 |
| Gross earnings ex. amortization of capitalized | ||||||
| development Gross margin ex. amortization of capitalized |
69.2 | 65.9 | 124.2 | 120.0 | 237.8 | 233.6 |
| development | 73.6% | 74.6% | 72.2% | 73.1% | 70.0% | 70.3% |
| Cost of sales amortization of capitalized | ||||||
| development | -11.6 | -7.1 | -21.5 | -14.4 | -38.5 | -31.4 |
| Gross earnings | 57.6 | 58.8 | 102.7 | 105.6 | 199.3 | 202.2 |
| Gross margin | 61.3% | 66.6% | 59.7% | 64.3% | 58.6% | 60.9% |
| Sales and marketing expenses | -24.8 | -24.4 | -47.8 | -47.5 | -93.1 | -92.7 |
| Administration expenses | -13.1 | -14.3 | -26.2 | -27.9 | -52.3 | -53.9 |
| Development expenses | -12.9 | -14.8 | -26.6 | -29.6 | -52.9 | -55.9 |
| Operating expenses | -50.8 | -53.5 | -100.7 | -104.9 | -198.3 | -202.5 |
| Operating expenses/net sales | 54.0% | 60.6% | 58.5% | 63.9% | -58.3% | 61.0% |
| Other operating income and expenses | 1.8 | -7.1 | 9.6 | 2.5 | -7.8 | -15.0 |
| Operating earnings | 8.6 | -1.7 | 11.7 | 3.2 | -6.8 | -15.3 |
| Operating margin | 9.1% | -1.9% | 6.8% | 1.9% | -2.0% | -4.6% |
| Net financial items | -1.0 | 0.7 | 0.5 | -1.9 | -2.2 | -4.6 |
| Profit/loss before tax | 7.5 | -1.0 | 12.2 | 1.3 | -9.0 | -20.0 |
| Tax | -0.6 | 0.9 | -1.3 | -0.1 | 4.1 | 5.3 |
| Net income continuing operations | 7.0 | -0.1 | 10.9 | 1.1 | -4.9 | -14.7 |
| Net margin conutinuing operaitons | 7.4% | -0.1% | 6.3% | 0.7% | -1.5% | -4.4% |
| Discontinued operations, net after tax | - | 1.9 | -36.9 | 249.0 | -33.9 | 252.1 |
| Net Income | 7.0 | 1.8 | -26.1 | 250.1 | -38.8 | 237.4 |
| EBITDA margin continuing operations | Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Operating earnings | 8.6 | -1.7 | 11.7 | 3.2 | -6.8 | -15.3 |
| Amortization of capitalized development expenditure | 11.6 | 7.1 | 21.5 | 14.4 | 38.5 | 31.4 |
| Other depreciation, amortization & impairment | 3.8 | 3.8 | 7.8 | 7.5 | 15.8 | 15.4 |
| Capitalization of development expenditure | -13.5 | -12.8 | -27.8 | -27.4 | -50.9 | -50.5 |
| EBITDA | 10.5 | -3.7 | 13.1 | -2.4 | -3.5 | -19.0 |
| Net sales | 94.1 | 88.3 | 172.0 | 164.3 | 339.8 | 332.1 |
| EBITDA margin | 11.2% | -4.2% | 7.6% | -1.5% | -1.0% | -5.7% |
| Development expenditure continuing operations | Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Development expenses | 12.9 | 14.8 | 26.6 | 29.6 | 52.9 | 55.9 |
| Capitalization of development expenditure | 13.5 | 12.8 | 27.8 | 27.4 | 50.9 | 50.5 |
| Total development expenditure | 26.3 | 27.6 | 54.4 | 57.0 | 103.8 | 106.4 |
| Capitalization rate | 51.1% | 46.5% | 51.1% | 48.1% | 49.1% | 47.5% |
| Net Sales | 94.1 | 88.3 | 172.0 | 164.3 | 339.8 | 332.1 |
| Total development expenditure/net sales | 28.0% | 31.2% | 31.7% | 34.7% | 30.5% | 32.0% |
| Capital and return measures | Shows how capital is utilized and the company's financial strength. Return is a financial term that describes how much the value of an asset changes from an earlier point in time. |
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|---|---|---|---|---|---|
| Non-IFRS performance measure |
Description | Reason for use of the measure | |||
| Working capital | Current assets less cash and cash equivalents, accounts payable and other interest-free current liabilities. The Company has no interest-bearing liabilities, excluding lease liabilities. Changes in working capital in the cash flow statement also includes adjustments for items not affecting liquidity and changes in non-cur- rent operating assets and liabilities. |
This measure shows how much working capital that is tied up in the operations and can be put in relation to sales to under-stand how effectively tied up working capital is used. |
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| Capital employed | The Company capital employed is calculated as an average of total assets, less total liabilities, excluding interest-bearing liabilities. The Company has no interest-bearing liabilities, excluding lease liabilities. |
Return on capital employed is the central ratio for measuring the return on the capital tied up in operations. |
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| Return on capital employed | Operating earnings plus interest income, in relation to average capital employed, rolling four quarters. |
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| Equity/asset ratio | Shareholders' equity divided by the balance sheet total. |
A traditional measure for showing financial risk, expressing the ratio of the assets that is financed by the owners. |
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| Return on equity | Net income as a percentage of average share holders' equity, rolling four quarters (R4Q). |
Return on equity shows the total return on shareholders' capital and reflects the effect of the company's profitability as well as the financial leverage. The measure is primarily used to analyze shareholder profitability over time. |
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| Investments | Investments in intangible and tangible assets. | ||||
| Total cash flow | Change in cash and cash equivalents during the period, excluding exchange differences in cash and cash equivalents. |
| Working capital | Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Current assets | 468.0 | 493.6 | 463.4 | 401.7 | 465.2 | 424.3 |
| Cash and cash equivalents | -306.4 | -292.4 | -298.7 | -212.4 | -286.9 | -237.1 |
| No interest-bearing short term liabilities | -88.2 | -135.4 | -94.1 | -142.2 | -101.9 | -129.4 |
| Working capital | 73.3 | 65.7 | 70.6 | 47.1 | 76.4 | 57.8 |
In current assets, assets held for sale of December 31, 2019, are excluded as, as they mainly relate to capitalized development expenses.
| Return on capital employed including discontinued | ||||||
|---|---|---|---|---|---|---|
| operations | Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | ||
| SEK millions (if not defined differently) | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Capital employed | ||||||
| Total balance | 801.2 | 924.7 | 821.5 | 845.1 | 851.5 | 856.6 |
| No interest-bearing liabilities | -99.1 | -155.4 | -107.4 | -162.4 | -116.8 | -148.3 |
| Capital employed | 702.1 | 769.3 | 714.1 | 682.7 | 734.7 | 708.3 |
| Operating earings less interest income R4Q | ||||||
| Operating earnings R4Q | -9.3 | -23.1 | -9.3 | -23.1 | -13.8 | -4.3 |
| Interest income R4Q | 0.6 | 0.5 | 0.6 | 0.5 | 0.3 | 0.2 |
| Operating earnings less interest income R4Q | -9.9 | -23.6 | -9.9 | -23.6 | -14.2 | -4.5 |
| Return on capital employed | -1.4% | -3.1% | -1.4% | -3.5% | -1.9% | -0.6% |
| Equity/asset ratio | Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Equity | 666.6 | 714.7 | 666.6 | 714.7 | 666.6 | 692.6 |
| Total equity and liabilities | 801.6 | 914.3 | 801.6 | 914.3 | 801.6 | 862.4 |
| Equity/asset ratio | 83.2% | 78.2% | 83.2% | 78.2% | 83.2% | 80.3% |
| Return on equity including discontionued operations | Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Net income - R4Q | -38.8 | 224.3 | -38.8 | 224.3 | -38.8 | 237.4 |
| Average equity - R4Q | 688.0 | 575.8 | 688.0 | 575.8 | 688.0 | 659.0 |
| Return on equity | -5.6% | 39.0% | -5.6% | 39.0% | -5.6% | 36.0% |
| Shareholders' information | Measures related to the share. | |
|---|---|---|
| Non-IFRS performance measure |
Description | Reason for use of the measure |
| Dividend per share | Dividend divided by the average number of outstanding shares during the period. |
Measures showing the return of the business to the owners, per share. |
| Earnings per share (EPS) | Net income divided by the average number of outstanding shares during the period. |
|
| Cash flow per share | Total cash flow, divided by average number of outstanding shares during the period. |
|
| Equity per share | Shareholders' equity divided by number of out standing shares at the end of the period. |
|
| Average number of outstanding shares |
Total number of shares in the Parent company, less the number of group companies' holdings of shares in the Parent company (own/treasury shares). |
|
| Employees | Measures related to employees. |
| Non-IFRS performance measure |
Description | Reason for use of the measure | ||||
|---|---|---|---|---|---|---|
| Average number of employees and consultants/co-workers |
The average number of employees and consultants for non-temporary positions (longer than nine months) and who do not replace absent employees, in FTE (Full-time equivalent). |
To supplement the number of employees with consultants gives a better measure of the Company's cost. |
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| Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| Average number of employees and consultants | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Average number of employees | 129 | 166 | 174 | 166 | 172 | 168 |
| Average number of consultants | 22 | 32 | 25 | 32 | 35 | 30 |
| Total average number of employees and consultants | 151 | 198 | 199 | 198 | 207 | 198 |
| Average number of employees and consultants | ||||||
| discontinued operations | - | -46 | -44 | -48 | -38 | -46 |
| Net Average number of employees and consultants | ||||||
| continuing operations | 151 | 152 | 155 | 150 | 169 | 152 |
MATERIAL PROFIT AND LOSS ITEMS
The group has identified a number of items which are material due to the significance of their nature and/or amount. These are listed separately here to provide a better understanding of the financial performance of the group:
| Material profit and loss items, continued operations |
Apr-Jun | Jan-Jun | Jul 2020- | Jan-Dec | |||
|---|---|---|---|---|---|---|---|
| SEK millions | Note | 2021 | 2020 | 2021 | 2020 | Jun 2021 | 2020 |
| Effects of the Net Insight share price development during the period |
|||||||
| Share-based benefits | (a) | 0.0 | -0.1 | -0.1 | -0.1 | -0.1 | -0.0 |
| Synthetic opitons, change in value | (b) | - | -0.1 | - | -0.0 | 0.1 | 0.1 |
| Total | 0.0 | -0.2 | -0.1 | -0.1 | -0.0 | 0.0 | |
| Exchange rate differences | |||||||
| Part of Other operating income & expenses | 0.8 | -7.4 | 8.4 | 1.8 | -9.5 | -16.0 | |
| Part of Net Financial Items | -1.1 | 0.8 | 0.7 | -1.2 | -1.7 | -3.5 | |
| Total Exchange rate differences | -0.3 | -6.5 | 9.1 | 0.6 | -11.1 | -19.5 | |
| Government grants Covid-19 | |||||||
| Reduction of employee expenses | - | 1.6 | 0.8 | 1.6 | 2.6 | 3.4 | |
| Other operating income | 0.1 | 0.3 | 0.2 | 0.3 | 0.6 | 0.7 | |
| Total | 0.1 | 1.9 | 1.0 | 1.9 | 3.1 | 4.1 | |
| Items affecting comparability | |||||||
| Restructuring | (c) | - | -0.4 | - | -0.4 | -0.5 | -0.9 |
| Government grants Covid-19, other operating income |
(d) | 0.1 | 0.3 | 0.2 | 0.3 | 0.5 | 0.7 |
| Adjustment cost for advisory services disposal of discontinued operaitons |
(e) | 0.4 | - | 0.4 | - | 0.4 | - |
| Total | 0.5 | -0.1 | 0.6 | -0.1 | 0.4 | -0.3 | |
| Operating earnings excluding items affecting comparability |
|||||||
| Operating earnings | 8.6 | -1.7 | 11.7 | 3.2 | -6.8 | -15.3 | |
| Items affecting comparability, as per above | -0.5 | 0.1 | -0.6 | 0.1 | -0.4 | 0.3 | |
| Total | 8.1 | -1.6 | 11.1 | 3.3 | -7.2 | -15.1 | |
| Operating earnings excluding exchange rate differences |
|||||||
| Operating earnings | 8.6 | -1.7 | 11.7 | 3.2 | -6.8 | -15.3 | |
| Exchange rate differences, as per above | -0.8 | 7.4 | -8.4 | -1.8 | 9.5 | 16.0 | |
| Total | 7.8 | 5.7 | 3.3 | 1.4 | 2.6 | 0.7 | |
| Operating earnings excludingexchange rate differences & items affecting comparability |
|||||||
| Operating earnings | 8.6 | -1.7 | 11.7 | 3.2 | -6.8 | -15.3 | |
| Exchange rate differences, as per above | -0.8 | 7.4 | -8.4 | -1.8 | 9.5 | 16.0 | |
| Items affecting comparability, as per above | -0.5 | 0.1 | -0.6 | 0.1 | -0.4 | 0.3 | |
| Total | 7.3 | 5.8 | 2.7 | 1.5 | 2.3 | 1.0 |
All items in the table above effects operating earnings, except for (b) that effects net financial items.
(a) Share-based benefits are value changes in amounts held in escrow for participation in the synthetic share program.
(b) During 2015-2019, Net Insight issued synthetic option programs. The synthetic options are revaluated on a current basis to fair value by applying an options valuation model. The changes in value during the term of the options, 3 years, are presented as a financial item. To financially hedge future cash flow effects of the company's commitments in the synthetic option programs, if the share price would exceed the strike price, the parent company has repurchased its own shares. The repurchased of own shares is deducted from equity, retained earnings, and are not revaluated to fair value on a current basis.
(c) Severance pay in due to structural changes.
(d) Covid-19 related government grants for personnel and other resources that still contribute to creating value for the Company.
(e) During the second quarter of 2021, the final costs for advisory services in connection with the divestment of business area Resource Optimization (ScheduALL), which is presented as other operating income. See also section Divested operations on page 4.
Net Insight AB (publ) Telephone: +46 (0)8 685 04 00, [email protected], www.netinsight.net
The information presented in this document may be subject to change without notice. For further information on product status and availability, please contact [email protected] or visit www.netinsight.net ©Copyright 2021. Net Insight AB (publ), Sweden. All rights reserved. Net Insight and Nimbra are trademarks of Net Insight AB, Sweden. All other registered trademarks are the property of their respective owners.
