Annual Report • Feb 23, 2021
Annual Report
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FINANCIAL HIGHLIGHTS
Improvements yield results
Crister Fritzson, CEO, Net Insight
| Oct-Dec | Jan-Dec | |||||
|---|---|---|---|---|---|---|
| SEK millions | 2020 | 2019 | Change | 2020 | 2019 | Change |
| Continuing operations | ||||||
| Net sales per business area | ||||||
| Media Networks | 90.6 | 88.0 | 3.0% | 331.7 | 377.8 | -12.2% |
| Resource Optimization | 16.8 | 17.2 | -2.2% | 67.2 | 70.8 | -5.1% |
| Net sales | 107.5 | 105.2 | 2.2% | 398.9 | 448.6 | -11.1% |
| Operating earnings | -4.0 | -24.1 | -4.6 | -3.6 | ||
| Operating margin | -3.7% | -22.9% | -1.2% | -0.8% | ||
| Net income | -6.8 | -20.6 | -9.2 | -4.6 | ||
| EBITDA | -5.6 | -31.9 | -16.7 | -6.6 | ||
| EBITDA margin | -5.2% | -30.3% | -4.2% | -1.5% | ||
| Total Group, including discontinued operations | ||||||
| Net Income | -6.8 | -27.6 | 237.4 | -32.2 | ||
| Total cash flow | 18.7 | -14.3 | 232.6 | -41.2 | ||
Streaming Solutions was divested in 2020 and is reported separately as discontinuing operations in this report.
Several customers show signs of increased demand for capacity
Net Insight achieved growth again in the fourth quarter and revenue increased by 2.2% year-on-year, despite negative exchange rate effects from a stronger SEK against the USD and EUR in the quarter. Adjusted for exchange rate effects, growth was 8.4% compared to the fourth quarter 2019. Net income in the quarter was negative as a result of the substantial negative exchange rate effect. Market conditions remain challenging due to the protracted pandemic. We have introduced a large number of improvements and are starting to see the positive effects on product development, sales and internal efficiency.
The reduced infection rates that we saw last summer started to head up again in the third quarter, when restrictions were tightened once more on several of our key markets. Live sports largely continued as planned in the quarter, although uncertainty about major scheduled events continued in the fourth quarter and into the new year. Our earlier assessment that Net Insight will be negatively affected by the pandemic in the first half of 2021 stands.
However, market operators are starting to adapt to the new conditions, which has led to increased interest in cloud solutions and growing demand for remote production solutions.
Net Insight's Nimbra solutions are well suited to meet the high demands associated with remote production, including factors such as reliability, flexibility and low latency. The new reality has accelerated the trend towards remote production. When media trade association IABM recently asked its members about key trends in live content, remote production was the clear leader, followed by cloud-based solutions.
We are also seeing signs that our customers are starting to need increased capacity in their global media networks as more capacity-intensive formats are introduced (4K, 8K). There is a clear need for increased capacity as TV companies, sports leagues and businesses compete with each other to provide customers with more and better content. In the fourth quarter, The Switch, a leading operator in North America and a long-term customer, selected our Nimbra solution for the expansion of its US media network. The Switch is building a new 100G network to offer increased capacity and more services. RTVE in Spain is also upgrading its media network capacity. It is pleasing that we have succeeded in winning new customers, including Shanghai Media Group (SMG) in China.
In the quarter, we launched the new version of Nimbra Edge. Market interest in cloud-based solutions is growing and more operators are testing how they can be integrated into production. Our pricing model for Nimbra Edge where we charge per stream gives the customer the opportunity to calculate and control costs in advance. Another, perhaps crucial, advantage of Nimbra Edge is that it is compatible and integrated with the existing Nimbra and Aperi platforms. Because there are an estimated 16,000 installed Nimbra units globally, Nimbra Edge becomes part of a large existing eco system. We are well positioned and have won several Nimbra Edge deals, including with LinkedIn, SRG SSR and Tata Communications as previously communicated, which have generated revenue although still on a modest scale. We anticipate substantial growth in cloud-based solutions for media content over the coming years, a development that has been further accelerated by the pandemic. Our addressable share of this market has just started to emerge. Although the market will be limited and mainly relates to smaller events in 2021, it is expanding sharply and has growth potential in the longer term. The market is driven by remote production advancing towards cloud-based solutions for flexibility, scalability and cost efficiency, but also because distribution to content owners and networks is moving from satellite to cloud-based solutions.
We have started to see the positive effects of the measures we introduced to build the foundation for our growth journey. For example, we have increased our commercial activity and maintained a high rate of product development. One step in the transition process is to introduce a pricing model based on customer value and to clarify our packaging. The aim is to simplify and reveal customer value, and to create more stable and repeat revenue streams over a longer period.
In order to speed up progress in the quarter, we reduced the rate of redundancies for our development teams and strengthened the product team through the appointment of Christer Bohm as VP Product Management.
The continued transformation of the Resource Optimization business area resulted in further cost cuts in the fourth quarter, which are below the annual average. We assess that we meet the criteria for the outstanding US government grant loan to be forgiven, which meant that the amount was recognized as other operating income in the fourth quarter and that the business area reported positive operating earnings for the full year 2020.
The Board has decided to propose that the AGM authorize the repurchase of shares. As the assessment is that the company will be negatively affected by the pandemic in the first half of 2021, it is estimated for capital redistribution to take place in October 2021 at the earliest.
We posted a strong quarter despite the challenging external conditions. We are taking steps towards increasing our competitiveness and we are seeing clear results from our improvement activities.
Solna, Sweden, 23 February 2021 Crister Fritzson, CEO
The reduced infection rates that we saw last summer started to head up again in the third quarter, when restrictions were tightened once more on several of our key markets. Live sports largely continued as planned in the quarter, although uncertainty about major scheduled events continued in the fourth quarter and into the new year. Our earlier assessment that Net Insight will be negatively affected by the pandemic in the first half of 2021 stands.
As previously mentioned, the pandemic has had a negative economic impact on the entire ecosystem of live sports (clubs, rights holders, distributors, etc.), with related effects on willingness to invest. However, market operators are starting to adapt to the new conditions, which has led to increased interest in cloud solutions and growing demand for remote production solutions.
Our travelling continues to be exceedingly limited. For staff in Sweden, the working time reduction through furloughs has decreased slightly during the fourth quarter.
Two deals from previous periods have been reversed following the postponement of the Olympics until 2021. This has affected operating earnings in the second quarter with SEK -3.5 million. Operating earnings for the fourth quarter and for the twelve-month period have been positively affected with SEK 9.9 million and SEK 13.1 million respectively for Covid-19 related government grants, of which SEK 0.9 and SEK 3.4 respectively is attributable to Sweden. For the US operations we received a non-interest-bearing loan in just under USD 1 million under the US Covid-19 government grants program. The loan will be forgiven if certain criteria are met. We assess that we meet the criteria for the outstanding US government loan to be forgiven off, which meant that the amount was as other operating income in the fourth quarter, with a positive effect of MSEK 9.1. Operating earnings for the last six months have been charged with SEK -0.3 million for provisions for expected bad debt because of Covid-19.
Despite a negative development regarding increased spread of infection at the end of the year, our main scenario is still a gradual and slow recovery going forward, but we estimate that the company will be negatively affected during the first half of 2021. At the time of this report, we estimate that Covid-19 does not have or will have any material impact on the company's assets. However, the Covid-19 development is hard to predict, and the company continuously evaluates the situation and need for measures. Net Insights overall strategy for this extraordinary situation is to weather the storm – prioritizing R&D and continue to drive strategic development projects, protect the financial position through active cost control and prepare a rapid activity level increase when we see signs of recovery in the market.
Net sales in the fourth quarter of 2020 were SEK 107.5 (105.2) million, an increase of 2.2%. In comparable currencies, sales increased by 8.4%.
Net sales for the twelve-month period were SEK 398.9 (448.6) million, a decrease of - 11.1%. In comparable currencies, sales decreased by -10.0%. Net sales in the first three quarters were lower than last year, while they were higher than last year in the last quarter.
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 11) but without comments.
Net Insight has the following Business Areas: Media Networks and Resource Optimization. See also comments in CEO's statement.
Media Networks encompasses the Nimbra portfolio. A Nimbra solution normally consists of software as well as hardware and support. Customers with existing software licenses sometimes purchases only hardware, which means the mix between software and hardware revenues may vary over time. Revenues are mainly driven by events and specific larger deals can have a significant impact on quarterly revenue. There is no clear seasonality, why revenue on a rolling 12-month basis is a better indicator than a single quarter.
Revenues for the fourth quarter were SEK 90.6 (88.0) million, an increase of 3.0%. The increase is largely attributable higher customer activity and higher number of deals in the quarter.
Revenues for the twelve-month period were SEK 331.7 (377.8) million, a decrease of -12.2%. Revenues decreased mainly for hardware, but also for software and services.
Net sales continuing operations
Resources Optimization encompasses ScheduALL, a pure software solution. Revenues are derived from software licenses sales, support and professional services. The business model for ScheduALL Evolution, which was launched during the quarter, will primarily be SaaS, Software as a Service and is expected to start generating revenue during the first quarter of 2021.
Revenues for the fourth quarter were SEK 16.8 (17.2) million, a decrease of -2.2%. The decrease is attributable mainly to software licenses and exchange rate fluctuations, while support revenue has increased.
Revenues for the twelve-month period were SEK 67.2 (70.8) million, a decrease of -5.1%, mainly attributable to software licenses and exchange rate fluctuations.
Gross profit for the fourth quarter was SEK 65.5 (66.3) million, a decrease by -1.2%. Gross profit includes amortization of capitalized development expenditure of SEK -11.3 (-9.0) million. Gross margin excluding and including amortization of capitalized development expenditure was 71.4% (71.6%) and 60.9% (63.0%) respectively.
Operating expenses in the fourth quarter of SEK -60.2 (-69.2) million deceased with about -13.1% YoY, primarily due to temporary Covid-19 related cost reductions and lower costs in Resource Optimization because of the restructuring. Operating expenses has been positively affected with SEK 0.9 (-) million related to Covid-19 related government grants.
Sales and marketing expenses were SEK -28.1 (-34.5) million, and administration expenses to SEK -14.8 (-16.5). Development expenses were SEK -17.2 (-18.2) million. Total development expenditure, i.e. before capitalization, were SEK -35.2 (-40.3) million. Other operating income and expenses were SEK -9.3 (-21.2) million, mainly related to foreign exchange rate differences and items affecting comparability.
Operating earnings were SEK -4.0 (-24.1) million, corresponding to an operating margin of -3.7% (22.9%). Excluding foreign exchange rate differences of SEK -18.2 (-5.5) million, primarily related to unrealized translation differences, and items affecting comparability of SEK 8.0 (-20.1) million, operating earnings were SEK 6.2 (1.5) million.
EBITDA was SEK -5.6 (-31.9) million, corresponding to an EBITDA margin of -5.2% (-30.3%). The decrease is attributable to the lower operating earnings.
In the fourth quarter, net financial items amounted to SEK -2.7 (-2.3) million. Profit before tax for the fourth quarter was SEK -6.7 (-26.5) million, and net income was SEK -6.8 (-20.6) million, corresponding to a net margin of -6.4% (-19.5%). Including
Discontinued operations, net income was SEK -6.8 (-27.6) million. The fourth quarter includes SEK -5.6 million in exchange rate differences from currency
derivatives referrable to previous periods 2020. Gross earnings for the twelve-month period were SEK 243.7 (282.3) million. The decrease
relates to lower revenue for both Media Networks and Resource Optimization. Gross profit includes amortization of capitalized development expenditure of SEK -38.5 (-39.6) million. Gross margin excluding and including amortization of capitalized development expenditure was 70.8% (71.8%) and 61.1% (62.9%) respectively.
Operating expenses of SEK -242.4 (-266.9) million, decreased following cost reduction initiatives. Operating earnings were SEK -4.6 (-3.6). Excluding foreign exchange rate differences of SEK -16.0 (-3.2) million, and items affecting comparability of SEK 7.3 (-24.9) million operating earnings were SEK 4.1 (24.6) million. EBITDA was SEK -16.7 (-6.6) million. The decrease is attributable to the lower operating earnings and an increase of total development expenditures, i.e. before capitalizations.
Net Income for the period for Continuing operations was SEK -9.2 (-4.6) million. Net Income for the period including Discontinued operations was SEK 237.4 (-32.2) million. This includes capital gains on disposal of Discontinued operations during the first quarter of SEK 246.6 (-) million.
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| Key Ratios continuing operations | 2020 | 2019 | 2020 | 2019 |
| Net sales, SEK millions | 107.5 | 105.2 | 398.9 | 448.6 |
| Net sales YoY, change in % | 2.2% | -0.7% | -11.1% | -0.2% |
| Gross earnings | 65.5 | 66.3 | 243.7 | 282.3 |
| Gross margin | 60.9% | 63.0% | 61.1% | 62.9% |
| Operating earnings | -4.0 | -24.1 | -4.6 | -3.6 |
| Operating margin | -3.7% | -22.9% | -1.2% | -0.8% |
| EBITDA | -5.6 | -31.9 | -16.7 | -6.6 |
| EBITDA margin | -5.2% | -30.3% | -4.2% | -1.5% |
Earnings trend continuing operations
Operating earnings for Media Networks for the fourth quarter increased and amounted to SEK 5.6 (3.6) million, corresponding to an operating margin of 6.1% (4.1%). The earnings increase is mainly attributable to the increased revenue in the period but also an effect of lower costs. The Aperi operation, which was acquired during the first quarter, affected Operating earnings with SEK -2.4 (-) million. Total development expenditure decreased in the quarter and amounted to SEK -35.3 (-40.3) million.
Operating earnings for the twelve-month period were SEK 6.8 (46.5) million, corresponding to an operating margin of 2.0% (12.3%). The decrease is primarily attributable to Covid-19 impact on revenue. The Aperi operation affected operating earnings with SEK -6,7 MSEK (-). Total development expenditure increased because of further portfolio investments, including the Aperi acquisition, and amounted to SEK -105.9 (-85.8) million.
For Resource Optimization, operating earnings for the fourth quarter amounted to SEK 8.7 (-6.4), a clear improvement versus the corresponding period. This is due to a decrease of operating expenses, primarily due to efficiency measures and the recognition of the US governmental support loan (Covid-19) as other operating income in the fourth quarter (see page 4). Total development expenditure decreased and amounted to MSEK -7.0 (-14.4).
Operating earnings for the twelve-month period were MSEK 4.1 (-31.8). This is due to higher gross margin as well as to a decrease of operating expenses, primarily due to efficiency measures but also to decreased development expenditure and the effect of the US governmental support loan. Total development expenditure and amounted to SEK -35.5 (-48.2).
Fourth quarter investments were SEK 18.1 (30.0) million, of which SEK 18.0 (28.9) million related to capitalization of expenditure for development. Depreciation and amortization in the fourth quarter totaled SEK 16.4 (19.2) million, of which SEK 11.3 (14.0) million related to amortization of capitalized expenditure for development.
Investments for the twelve-month period were SEK 77.4 (92.1) million, of which SEK 71.9 (89.4) million related to capitalization of expenditure for development. Depreciation and amortization for full year 2020 totaled SEK -59.8 (-77.8) million, of which SEK -38.5 (-57.3) million related to amortization of capitalized expenditure for development.
At the end of the period, net value of capitalized expenditure for development was SEK 208.9 million. Net value of capitalized expenditure for development as of December 31, 2019, was SEK 184.6 million for continuing operations and SEK 264.3 million for the Group, including divested operations.
Investments per Business Area only reflects capitalized expenditure for development.
Capitalized expenditure for development in the fourth quarter amounted to SEK 14.1 (13.7) million, and amortization to SEK -9.0 (-8.0) million. For the twelve-month period, capitalized expenditure for development amounted to SEK 50.5 (37.3) million, and amortization to SEK -31.4 (-34.4) million.
At the end of the period, net value of capitalized expenditure for development was SEK 144.8 million, against SEK 126.0 million as of December 31, 2019.
Capitalized expenditure for development in the fourth quarter amounted to SEK 3.8 (8.4) million, and amortization to SEK -2.4 (-1.1) million. For the twelve-month period, capitalized expenditure for development amounted to SEK 21.4 (25.9) million, and amortization to SEK -7.1 (-5.3) million.
At the end of the period, net value of capitalized expenditure for development was SEK 64.2 million, against SEK 58.5 million as of December 31, 2019.
Cash flow from operating activities in the fourth quarter was SEK 38.8 (18.2) million. Total cash flow was SEK 18.7 (-14.3) million.
Cash flow from operating activities for the twelve-month period was SEK 15.7 (60.8) million, and total cash flow was 232.6 (-41.2). The divestment of Business Area Streaming Solutions in the first quarter had a cash impact of SEK 302.3 (-) million. Total cash flow for the period includes a US Covid-19 government grant loan in the second quarter of 9.1 MSEK, see section on Covid-19 on page 4 for more information on the support program.
Cash and cash equivalents were SEK 283.2 million at the end of the period, against SEK 52.3 million as of 31 December 2019.
Remaining tax loss carryforwards for group companies amounted to SEK 108.8 million at the end of the period, compared to SEK 102.8 million as of December 31, 2019. Deferred tax assets have been recognized for the tax loss carryforwards. For more information, see the section Tax on page 15.
Equity was SEK 692.6 million at the end of the period, against SEK 463.7 million as of 31 December 2019. The equity/assets ratio was 80.3%, against 67.6% as of 31 December 2019. For information about warrants, share repurchases and share structure, see the section Contributed equity on page 15.
The average number of employees and consultants at Net Insight during the fourth quarter and the twelve-month period was 199 (190) and 198 (189) respectively, of which 129 (117) and 127 (113) respectively in the parent company Net Insight AB (publ).
During the quarter Christer Bohm assumed the VP Product management position and is part of the management team.
Parent company net sales were SEK 93.0 (98.1) million in the fourth quarter, and net income was SEK -19.5 (-97.7) million. The financial net includes result from participation in group companies of SEK 2.9 (-81.8) million, attributable to dividend SEK 2.2 (-) million and capital gains from an intra-group restructuring SEK 0.7 (-) million. Last year, an impairment of SEK -81.8 million of impairment in participation in a subsidiary was recognized in the period due to an intra-group restructuring.
In the fourth quarter, intra-group sales totaled SEK 0.9 (9.5) million, and intra-group purchases SEK -25.0 (-14.0) million.
For the twelve-month period, parent company net sales were SEK 340.7 (487.3) million, and net income was SEK 174.3 (-88) million. The financial net includes result from participation in group companies of SEK 199.5 (-80.0) million, which for 2020 relates to capital gains from divestment of subsidiary SEK 197.2 (-) million, and from dividend from subsidiary SEK 2.2 (1.8) million and last year the above mentioned write down of shares in subsidiary impairment in participation in a subsidiary of SEK -81.8 million. For the twelvemonth period, intra-group sales totaled SEK 8.0 (100.1) million, and intra-group purchases SEK -62.8 (-139.3) million.
Intra-group sales and purchases have decreased due to the intra-group restructuring that was done during the last quarter of 2019, including the parent company acquisition of all immaterial rights related to Nimbra from a subsidiary.
Progress in the parent company in the fourth quarter and the full year largely shadowed Group progress as indicated above for the business area Media Networks.
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.
See page 4 for Covid-19 and impact on business.
No additional critical risks and uncertainty factors, other than those reviewed in the Annual Report for 2019, 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 28–30 and 49–50 of the Annual Report for 2019.
In the past three calendar years, average seasonality has been fairly modest. Net sales for continuing operations in the first, second, third and fourth quarter has been on average approximately been 25% of annual sales respectively.
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2020 | 2019 | 2020 | 2019 |
| Continuing operations | ||||
| Net sales | 107,491 | 105,217 | 398,948 | 448,550 |
| Cost of sales | -42,040 | -38,948 | -155,240 | -166,251 |
| Gross earnings | 65,451 | 66,269 | 243,708 | 282,299 |
| Sales and marketing expenses | -28,139 | -34,526 | -111,354 | -128,816 |
| Administration expenses | -14,803 | -16,460 | -61,970 | -67,355 |
| Development expenses | -17,229 | -18,244 | -69,086 | -70,776 |
| Other operating income and expenses | -9,271 | -21,169 | -5,909 | -18,952 |
| Operating earnings | -3,991 | -24,130 | -4,612 | -3,600 |
| Net financial items | -2,679 | -2,346 | -5,134 | -3,009 |
| Profit/loss before tax | -6,670 | -26,476 | -9,746 | -6,609 |
| Tax | -161 | 5,926 | 549 | 1,965 |
| Net income continuing operations | -6,831 | -20,550 | -9,197 | -4,644 |
| Discontinued operations, net after tax | - | -7,050 | 246,580 | -27,543 |
| Net Income | -6,831 | -27,600 | 237,383 | -32,187 |
| Net income for the period attributable to the shareholders of the parent company | -6,831 | -27,600 | 237,383 | -32,187 |
| Earnings per share, based on net income attributable to the | Oct-Dec | Jan-Dec | ||
| parent company's shareholders during the period | 2020 | 2019 | 2020 | 2019 |
| Earnings per share basic and diluted continuing operations (SEK) | -0.02 | -0.05 | -0.02 | -0.01 |
| Earnings per share basic and diluted including discontinuing operations (SEK) | -0.02 | -0.07 | 0.62 | -0.08 |
| Average number of oustanding shares in thousands, basic | 382,758 | 382,758 | 382,758 | 382,812 |
| Oct-Dec | Jan-Dec | ||||
|---|---|---|---|---|---|
| SEK thousands | 2020 | 2019 | 2020 | 2019 | |
| Net income | -6,831 | -27,600 | 237,383 | -32,187 | |
| Other comprehensive income | |||||
| Items that may be reclassified subsequently to the income statement | |||||
| Translation differences | -7,182 | -3,170 | -9,740 | 3,904 | |
| Total other comprehensive income, after tax | -7,182 | -3,170 | -9,740 | 3,904 | |
| Total other comprehensive income for the period | -14,013 | -30,770 | 227,643 | -28,283 | |
| Total comprehensive income for the period attributable to the shareholders of the | |||||
| parent company | -14,013 | -30,770 | 227,643 | -28,283 |
| SEK thousands | Dec 31, 2020 | Sep 30, 2020 | 31 Dec 2019 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Capitalized expenditure for development | 208,938 | 208,677 | 184,582 |
| Goodwill | 58,166 | 63,421 | 65,582 |
| Other intangible assets | 7,830 | 9,578 | 10,560 |
| Right-of-use assets | 45,231 | 48,026 | 52,394 |
| Equipment | 24,989 | 26,582 | 29,531 |
| Deferred tax asset | 27,428 | 27,798 | 26,997 |
| Deposits | 5,400 | 5,166 | 5,186 |
| Totalt non-current assets | 377,982 | 389,248 | 374,832 |
| Current assets | |||
| Inventories | 52,470 | 58,423 | 44,584 |
| Accounts receivable | 98,116 | 124,225 | 103,771 |
| Other receivables | 50,620 | 47,849 | 17,179 |
| Cash and cash equivalents | 283,184 | 265,309 | 52,280 |
| Assets held for sale | - | - | 93,840 |
| Total current assets | 484,390 | 495,806 | 311,654 |
| TOTAL ASSETS | 862,372 | 885,054 | 686,486 |
| EQUITY AND LIABILITIES | |||
| Equity attributable to parent company's shareholders | |||
| Share capital | 15,597 | 15,597 | 15,597 |
| Other paid-in capita | 1,192,727 | 1,192,727 | 1,192,727 |
| Translation reserve | -267 | 6,915 | 9,473 |
| Accumulated deficit | -515,441 | -508,888 | -754,052 |
| Total shareholders' equity | 692,616 | 706,351 | 463,745 |
| Non-current liabilities | |||
| Lease liabilities | 35,498 | 38,029 | 41,517 |
| Other liabilities | 18,230 | 15,858 | 20,649 |
| Total non-current liabilities | 53,728 | 53,887 | 62,166 |
| Current liabilities | |||
| Lease liabilities | 10,231 | 10,270 | 10,586 |
| Accounts payable | 17,093 | 18,990 | 35,821 |
| Other liabilities | 88,704 | 95,556 | 111,173 |
| Liabilities directly associated with assets held for sale | - | - | 2,995 |
| Total current liabilities | 116,028 | 124,816 | 160,575 |
| TOTAL EQUITY AND LIABILITIES | 862,372 | 885,054 | 686,486 |
| Attributable to parent company's shareholders | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| SEK thousands | Share capital |
Other paid-in capital |
Translation reserve |
Accumulated deficit |
Total shareholders' equity |
||||
| January 1, 2019 | 15,597 | 1,192,727 | 5,569 | -720,028 | 493,865 | ||||
| Repurchase of own shares | - | - | - | -1,837 | -1,837 | ||||
| Total comprehensive income | - | - | 3,904 | -32,187 | -28,283 | ||||
| December 31, 2019 | 15,597 | 1,192,727 | 9,473 | -754,052 | 463,745 | ||||
| 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 |
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2020 | 2019 | 2020 | 2019 |
| Ongoing activities | ||||
| Profit/loss before tax | -6,670 | -35,445 | 236,897 | -41,651 |
| Income tax paid | -266 | - | -313 | -371 |
| Depreciation, amortization & impairment | 16,393 | 19,216 | 59,887 | 77,848 |
| Other items not affecting liquidity | 5,911 | 12,094 | -229,893 | 15,229 |
| Cash flow from operating activities before changes in working capital | 15,368 | -4,135 | 66,578 | 51,055 |
| Changes in working capital | ||||
| Increase-/decrease+ in inventories | 5,461 | -5,374 | -13,669 | -2,682 |
| Increase-/decrease+ in receivables | 24,054 | 10,233 | 7,014 | -1,572 |
| Increase+/decrease- in liabilities | -5,943 | 17,427 | -44,056 | 14,043 |
| Cash flow from operating activities | 38,940 | 18,151 | 15,867 | 60,844 |
| Investment activities | ||||
| Investment in intangible assets | -17,971 | -29,142 | -74,346 | -90,159 |
| Investment in tangible assets | -122 | -902 | -3,062 | -1,930 |
| Disposal of subsidiary, net effect on cash | - | - | 302,348 | - |
| Increase-/decrease+ in financial assets, net | -278 | -2 | -278 | 46 |
| Cash flow from investment activities | -18,371 | -30,046 | 224,662 | -92,043 |
| Financing activities | ||||
| Amortization leasing | -2,181 | -2,357 | -9,134 | -8,154 |
| Warrant premiums paid | 278 | - | 1,228 | - |
| Repurchase of own shares | - | - | - | -1,837 |
| Cash flow from financing activities | -1,903 | -2,357 | -7,906 | -9,991 |
| Net change in cash and cash equivalents | 18,666 | -14,252 | 232,623 | -41,190 |
| Exchange differences in cash and cash equivalents | -791 | -303 | -1,769 | 627 |
| Cash and cash equivalents at the beginning of the period | 265,309 | 66,885 | 52,330 | 92,893 |
| Cash and cash equivalents at the end of the period | 283,184 | 52,330 | 283,184 | 52,330 |
The company's segments are the business areas Media Networks and Resource Optimization. The business area Streaming Solutions was divested in 2020, hence the business area is reported separately as discontinuing operations and are excluded from the segment reporting.
| Oct-Dec 2020 | Oct-Dec 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK thousands | Media Networks | Optimization Resource |
Unallocated items & eliminations |
Total | Media Networks | Optimization Resource |
Unallocated items & eliminations |
Total |
| Net Sales | 90,648 | 16,843 | - | 107,491 | 87,988 | 17,229 | - | 105,217 |
| Gross earnings | 54,524 | 10,918 | 9 | 65,451 | 55,129 | 11,116 | 24 | 66,269 |
| Net margin | 60.1% | 64.8% | 60.9% | 62.7% | 64.5% | 63.0% | ||
| Operating earnings | 5,561 | 8,669 | -18,221 | -3,991 | 3,622 | -6,745 | -21,007 | -24,130 |
| Gross margin | 6.1% | 51.5% | -3.7% | 4.1% | -39.1% | -22.9% | ||
| Net financial items | -2,679 | -2,679 | -2,346 | -2,346 | ||||
| Jan-Dec2020 | Jan-Dec2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK thousands | Media Networks | Optimization Resource |
Unallocated items & eliminations |
Total | Media Networks | Optimization Resource |
Unallocated items & eliminations |
Total |
| Net Sales | 331,744 | 67,204 | - | 398,948 | 377,764 | 70,786 | - | 448,550 |
| Gross earnings | 201,524 | 42,108 | 76 | 243,708 | 242,357 | 39,850 | 92 | 282,299 |
| Gross margin | 60.7% | 62.7% | 61.1% | 64.2% | 56.3% | 62.9% | ||
| Operating earnings | 6,763 | 4,138 | -15,513 | -4,612 | 46,479 | -31,759 | -18,320 | -3,600 |
| Gross margin | 2.0% | 6.2% | -1.2% | 12.3% | -44.9% | -0.8% | ||
| Net financial items | -5,134 | -5,134 | -3,009 | -3,009 | ||||
| Profit/loss before tax continuing operations | -9,746 | -6,609 |
| Oct-Dec 2020 | Oct-Dec 2019 | Jan-Dec 2020 | Jan-Dec 2019 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SEK thousands | Networks Media |
Optimization Resource |
Total | Networks Media |
Optimization Resource |
Total | Networks Media |
Optimization Resource |
Total | Networks Media |
Optimization Resource |
Total |
| Net sales by product group | ||||||||||||
| Hardware | 37,907 | - | 37,907 | 36,625 | - | 36,625 | 137,111 | - | 137,111 | 171,739 | - | 171,739 |
| Software licenses | 23,702 | 1,132 | 24,834 | 22,325 | 1,633 | 23,958 | 80,926 | 3,997 | 84,923 | 87,134 | 6,282 | 93,416 |
| Support and Services | 29,039 | 15,711 | 44,750 | 29,038 | 15,596 | 44,634 | 113,707 | 63,207 | 176,914 | 118,891 | 64,504 | 183,395 |
| Total | 90,648 | 16,843 | 107,491 | 87,988 | 17,229 | 105,217 | 331,744 | 67,204 | 398,948 | 377,764 | 70,786 | 448,550 |
| Net sales by region | ||||||||||||
| WE | 46,390 | 2,870 | 49,260 | 35,722 | 4,543 | 40,265 | 157,628 | 15,535 | 173,163 | 168,300 | 17,906 | 186,206 |
| AM | 31,379 | 9,340 | 40,719 | 32,375 | 9,825 | 42,200 | 117,206 | 37,887 | 155,093 | 137,551 | 42,008 | 179,559 |
| RoW | 12,879 | 4,633 | 17,512 | 19,891 | 2,861 | 22,752 | 56,910 | 13,782 | 70,692 | 71,913 | 10,872 | 82,785 |
| Total | 90,648 | 16,843 | 107,491 | 87,988 | 17,229 | 105,217 | 331,744 | 67,204 | 398,948 | 377,764 | 70,786 | 448,550 |
| Timing of revenue recognition | ||||||||||||
| Products and services transfered at a point in time |
61,613 | 1,132 | 62,745 | 58,952 | 1,633 | 60,585 | 218,064 | 3,997 | 222,061 | 258,922 | 6,282 | 265,204 |
| Services transferred over time | 29,035 | 15,711 | 44,746 | 29,036 | 15,596 | 44,632 | 113,680 | 63,207 | 176,887 | 118,842 | 64,504 | 183,346 |
| Total | 90,648 | 16,843 | 107,491 | 87,988 | 17,229 | 105,217 | 331,744 | 67,204 | 398,948 | 377,764 | 70,786 | 448,550 |
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2020 | 2019 | 2020 | 2019 |
| Revenues | - | 690 | -376 | 9,510 |
| Expenses | - | -9,659 | 668 | -44,552 |
| Capital gain on disposal of discontinued operations | - | - | 246,350 | - |
| Profit/loss before tax | - | -8,969 | 246,643 | -35,042 |
| Tax | - | 1,919 | -63 | 7,499 |
| Net income discontinuing operations | - | -7,050 | 246,580 | -27,543 |
| SEK thousands | Jan 2020 | 31 Dec 2019 |
|---|---|---|
| Disposed assets and liabilities | ||
| Capitalized expenditure for development | 79,756 | 79,756 |
| Equipment | 250 | 250 |
| Deferred tax asset | 13,598 | 13,598 |
| Other receivables | 186 | 186 |
| Cash and cash equivalents | 1,533 | 50 |
| Other liabilities | -2,875 | -2,995 |
| Net assets and liabilities | 92,448 | 90,845 |
| Cash consideration | 348,002 | - |
| Less: Escrow | -34,917 | - |
| Less: Cash and cash equivalents in discontinued operations | -1,533 | - |
| Less: Transaction costs | -9,204 | - |
| Effect on group's cash and cash equivalents | 302,348 | - |
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2020 | 2019 | 2020 | 2019 |
| Cash flow from discontinued operations, net | ||||
| Cash flow from operating activities | - | -4,037 | 293 | -17,424 |
| Cash flow from investment activities | - | -6,840 | 302,348 | -26,109 |
| Cash flow from financing activities | - | - | - | - |
| Cash flow from discontinued operations, net | - | -10,877 | 302,641 | -43,533 |
| Group's financial instruments by category - Assets | Dec 31, 2020 | 31 Dec 2019 | |||
|---|---|---|---|---|---|
| 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 |
130,667 | 110,147 | |||
| Cash and cash equivalents | 283,184 | 52,280 | |||
| Total | 413,851 | - | 162,427 | - |
| Group's financial instruments by category - Liabilities | Dec 31, 2020 | 31 Dec 2019 | |||||
|---|---|---|---|---|---|---|---|
| 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 | 68 | |||
| Derivative instruments | 2 | - | 2 | - | |||
| Accounts payable and other liabilities, excluding non financial liabilities |
22,763 | 46,689 | |||||
| Lease liabilities | 45,729 | 52,103 | |||||
| Total | 68,492 | - | 98,792 | 68 |
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.
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2020 | 2019 | 2020 | 2019 |
| Net sales | 92,972 | 98,147 | 340,663 | 487,319 |
| Cost of sales | -36,693 | -36,261 | -131,448 | -207,349 |
| Gross earnings | 56,279 | 61,886 | 209,215 | 279,970 |
| Sales and marketing expenses | -35,903 | -32,572 | -109,835 | -119,586 |
| Administration expenses | -13,584 | -14,029 | -55,771 | -55,491 |
| Development expenses | -14,827 | -20,644 | -56,102 | -104,133 |
| Other income expenses | -17,486 | -20,916 | -15,190 | -18,406 |
| Operating earnings | -25,521 | -26,275 | -27,683 | -17,646 |
| Net financial items | 822 | -83,732 | 196,201 | -80,506 |
| Profit/loss before tax | -24,699 | -110,007 | 168,518 | -98,152 |
| Tax | 5,213 | 12,260 | 5,774 | 10,113 |
| Net income | -19,486 | -97,747 | 174,292 | -88,039 |
| SEK thousands | Dec 31, 2020 | Sep 30, 2020 | 31 Dec 2019 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Capitalized expenditure for development | 144,776 | 140,048 | 126,049 |
| Other intangible assets | 3,981 | 4,661 | 3,234 |
| Equipment | 20,407 | 21,158 | 25,576 |
| Participations in group companies | 246,400 | 246,455 | 243,777 |
| Deferred tax asset | 20,919 | 15,705 | 15,144 |
| Deposits | 4,927 | 4,649 | 4,649 |
| Total non-current assets | 441,410 | 432,676 | 418,429 |
| Current assets | |||
| Inventories | 52,470 | 58,423 | 44,584 |
| Accounts receivable | 90,453 | 115,307 | 98,100 |
| Receivables from group companies | - | - | 20,826 |
| Other receivables | 50,520 | 47,565 | 15,055 |
| Cash and cash equivalents | 263,558 | 240,970 | 40,849 |
| Total current assets | 457,001 | 462,265 | 219,414 |
| TOTAL ASSETS | 898,411 | 894,941 | 637,843 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Restricted equity | 200,181 | 175,734 | 142,075 |
| Non-restricted equity | 496,557 | 540,213 | 379,143 |
| Total equity | 696,738 | 715,947 | 521,218 |
| Non-current liabilities | |||
| Other liabilities | 11,357 | 8,118 | 12,611 |
| Total non-current liabilities | 11,357 | 8,118 | 12,611 |
| Current liabilities | |||
| Accounts payable | 15,557 | 16,892 | 32,381 |
| Liablities to group companies | 120,390 | 104,940 | - |
| Other liabilities | 54,369 | 49,044 | 71,633 |
| Total current liabilities | 190,316 | 170,876 | 104,014 |
| TOTAL EQUITY AND LIABILITIES | 898,411 | 894,941 | 637,843 |
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.
There are no new or amended International Financial Reporting Standards (IFRS) that have had a material impact on the Company's financial reporting.
The fourth quarter includes SEK -5.6 million in exchange rate differences from currency derivatives referrable to previous periods 2020 (SEK 2.0 million referrable to Q1, SEK -3.9 million to Q2 and SEK -3.8 to Q3).
In connection with the Covid-19 outbreak, the reporting of government grants has become relevant, as the Group receives state support from countries around the world linked to the measures introduced due to the outbreak. A government grant is reported in the Group's balance sheet and the Group's report on comprehensive income when there is reasonable assurance that the Group fulfills the conditions associated with the grants and that the grants will be received. Contributions attributable to expenses are reported as other income or reduction of expenses in the Group's report on comprehensive income, depending on the nature of the grant, and are reported during the same period as the costs the contributions are intended to offset. Grants in the form of cost compensation for personnel who do not work, and thus do not create any value for the company, are reported as a reduction of employee expenses. Grants for personnel and other resources that still contribute to creating value for the company are reported as other operating income.
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 2019.
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 2019.
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.
The group reported tax of total SEK 0.5 (9.6) million for the period January–December 2020, of which SEK 0.5 (2.0) million relates to continuing operations. Reported tax corresponds to an effective tax rate of -0.2 (22.7) percent and 5.6 (29.7) percent, respectively. The group recognized a capital gain from discontinued operations of SEK 246.4 million, which is a nontaxable income. This item has had a big impact on the effective tax rate during 2020. The effective tax rate is also affected by the relative effects of foreign tax rates and temporary differences.
Remaining tax loss carryforwards for group companies amounted to SEK 108.8 million at the end of the period, compared to SEK 102.8 million as of December 31, 2019. Deferred tax assets have been recognized for the tax loss carryforwards.
In accordance with the warrant program approved by the 2020 Annual General Meeting, management and key personnel in June and November acquired a total of 3,055,000 warrants for a market premium of a total of SEK 1,277,850. The warrants have a vesting period of three years, after which the holder has the right to exercise the warrants for subscription of B shares in the parent company for a period of three months at an exercise price of SEK 2.80 and SEK 2.00 respectively. Premiums received for the warrants have been reported against equity. When calculating earnings per share, a dilution effect arises when the average price for the period exceeds the exercise price for the warrants.
A sum corresponding to half of the participants' paid premium for the warrants, net after tax, is paid as a variable remuneration to the participant two equal payments provided that the participant is employed within the Net Insight Group at the time of payment.
No own shares have been repurchased during January-September 2020. 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.
| 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 |
The Board of Directors appointed the Board member Anders Harrysson, through his company GEB Rand AB, as interim CEO of the parent company Net Insight AB during the transition period between the leaving and the appointed new CEO (November 2019 - April 2020). During January-March 2020, fees from GEB Rand AB of SEK 0.9 (-) million were expensed, after which no more fees has been originated.
The Board has decided to propose that the AGM authorize the repurchase of shares. As the assessment is that the company will be negatively affected by the pandemic in the first half of 2021, it is estimated for capital redistribution to take place in October 2021 at the earliest.
No significant events have occurred after the end of the reporting period.
This Report has not been reviewed by the company's auditors.
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 two product areas Media Networks and Resource Optimization, 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.
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.
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.
Interim report January – March April 20, 2021 Annual General Meeting May 7, 2021 Interim report January – June July 16, 2021 Interim report January – September November 9, 2021
Solna, Sweden, February 23, 2021
Crister Fritzson CEO
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.
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
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 CET on February 23, 2021.
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK millions (if not defined differently | 2020 | 2019 | 2020 | 2019 |
| Earnings continuing operations | ||||
| Netsales per business area | ||||
| Media Networks | 90.6 | 88.0 | 331.7 | 377.8 |
| Resource Optimization | 16.8 | 17.2 | 67.2 | 70.8 |
| Net sales | 107.5 | 105.2 | 398.9 | 448.6 |
| Gross earnings | 65.5 | 66.3 | 243.7 | 282.3 |
| Operating expenses | 60.2 | 69.2 | 242.4 | 266.9 |
| Total development expenditure | 35.2 | 40.3 | 141.0 | 134.0 |
| EBITDA | -5.6 | -31.9 | -16.7 | -6.6 |
| Operating earnings | -4.0 | -24.1 | -4.6 | -3.6 |
| Profit/loss before tax | -6.7 | -26.5 | -9.7 | -6.6 |
| Net income | -6.8 | -20.6 | -9.2 | -4.6 |
| Balance sheet and cash flow including discontinued operations | ||||
| Cash and cash equivalents | 283.2 | 52.3 | 283.2 | 52.3 |
| Working capital | 78.3 | 29.6 | 57.8 | 46.8 |
| Total cash flow | 18.7 | -14.3 | 232.6 | -41.2 |
| The share | ||||
| Dividend per share, SEK | - | - | - | - |
| Earnings per share basic and diluted continuing operations, SEK | -0.02 | -0.05 | -0.02 | -0.01 |
| Earnings per share basic and diluted discontinuing operations, SEK | - | -0.02 | 0.64 | -0.07 |
| Earnings per share basic and diluted total, SEK | -0.02 | -0.07 | 0.62 | -0.08 |
| Cash flow per share, SEK | 0.05 | -0.04 | 0.61 | -0.11 |
| Equity per share basic and diluted, SEK | 1.81 | 1.21 | 1.81 | 1.21 |
| Average number of outstanding shares basic and diluted, thousands | 382,758 | 382,758 | 382,758 | 382,812 |
| Number of outstanding shares at the end of the periodbasic and diluted, thousands | 382,758 | 382,758 | 382,758 | 382,758 |
| Share price at end of period, SEK | 1.58 | 2.30 | 1.58 | 2.30 |
| Employees and consultants continuing operations | ||||
| Average number of employees and consultants | 199 | 190 | 198 | 189 |
| KPI continuing operations | ||||
| Net sales YoY, change in % | 2.2% | -0.7% | -11.1% | -0.2% |
| Gross margin | 60.9% | 63.0% | 61.1% | 62.9% |
| Total development expenditure/Net sales | 32.7% | 38.3% | 35.3% | 29.9% |
| Operating margin | -3.7% | -22.9% | -1.2% | -0.8% |
| EBITDA margin | -5.2% | -30.3% | -4.2% | -1.5% |
| Net margin | -6.4% | -19.5% | -2.3% | -1.0% |
| KPI Group including discontinued operations | ||||
| Return on capital employed | -0.6% | -7.4% | -0.6% | -7.4% |
| Equity/asset ratio | 80.3% | 67.6% | 80.3% | 67.6% |
| Return on equity | 36.0% | -6.6% | 36.0% | -6.6% |
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. |
| Change in net sales in comparable currencies | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2020 | 2019 | 2020 | 2019 |
| Net sales | 107.5 | 105.2 | 398.9 | 448.6 |
| Net currency effect of comparable currencies | 6.6 | -4.4 | 5.0 | -24.4 |
| Net sales in comparable currencies | 114.0 | 100.9 | 403.9 | 424.2 |
| Change in net sales in comparable currencies | 8.4% | -4.9% | -10.0% | -5.6% |
| KPI Income Statement Oct-Dec |
Jan-Dec | |||
|---|---|---|---|---|
| SEK millions (if not defined differently | 2020 | 2019 | 2020 | 2019 |
| Continuing operations | ||||
| Net sales | 107.5 | 105.2 | 398.9 | 448.6 |
| Net sales YoY, change in % | 2.2% | -0.7% | -11.1% | -0.2% |
| Cost of sales ex. amortization of capitalized development | -30.7 | -29.9 | -116.7 | -126.6 |
| Gross earnings ex. amortization of capitalized development | 76.7 | 75.3 | 282.3 | 321.9 |
| Gross margin ex. amortization of capitalized development | 71.4% | 71.6% | 70.8% | 71.8% |
| Cost of sales amortization of capitalized development | -11.3 | -9.0 | -38.5 | -39.6 |
| Gross earnings | 65.5 | 66.3 | 243.7 | 282.3 |
| Gross margin | 60.9% | 63.0% | 61.1% | 62.9% |
| Sales and marketing expenses | -28.1 | -34.5 | -111.4 | -128.8 |
| Administration expenses | -14.8 | -16.5 | -62.0 | -67.4 |
| Development expenses | -17.2 | -18.2 | -69.1 | -70.8 |
| Operating expenses | -60.2 | -69.2 | -242.4 | -266.9 |
| Operating expenses/net sales | 56.0% | 65.8% | 60.8% | 59.5% |
| Other operating income and expenses | -9.3 | -21.2 | -5.9 | -19.0 |
| Operating earnings | -4.0 | -24.1 | -4.6 | -3.6 |
| Operating margin | -3.7% | -22.9% | -1.2% | -0.8% |
| Net financial items | -2.7 | -2.3 | -5.1 | -3.0 |
| Profit/loss before tax | -6.7 | -26.5 | -9.7 | -6.6 |
| Tax | -0.2 | 5.9 | 0.5 | 2.0 |
| Net income continuing operations | -6.8 | -20.6 | -9.2 | -4.6 |
| Net margin conutinuing operaitons | -6.4% | -19.5% | -2.3% | -1.0% |
| Discontinued operations, net after tax | - | -7.0 | 246.6 | -27.5 |
| Net Income | -6.8 | -27.6 | 237.4 | -32.2 |
| EBITDA margin continuing operations | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2020 | 2019 | 2020 | 2019 |
| Operating earnings | -4.0 | -24.1 | -4.6 | -3.6 |
| Amortization of capitalized development expenditure | 11.3 | 9.0 | 38.5 | 39.6 |
| Other depreciation, amortization & impairment | 5.1 | 5.2 | 21.3 | 20.6 |
| Capitalization of development expenditure | -18.0 | -22.1 | -71.9 | -63.2 |
| EBITDA | -5.6 | -31.9 | -16.7 | -6.6 |
| Net sales | 107.5 | 105.2 | 398.9 | 448.6 |
| EBITDA margin | -5.2% | -30.3% | -4.2% | -1.5% |
| Development expenditure continuing operations | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2020 | 2019 | 2020 | 2019 |
| Development expenses | 17.2 | 18.2 | 69.1 | 70.8 |
| Capitalization of development expenditure | 18.0 | 22.1 | 71.9 | 63.2 |
| Total development expenditure | 35.2 | 40.3 | 141.0 | 134.0 |
| Capitalization rate | 51.1% | 54.8% | 51.0% | 47.2% |
| Net Sales | 107.5 | 105.2 | 398.9 | 448.6 |
| Total development expenditure/net sales | 32.7% | 38.3% | 35.3% | 29.9% |
| 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. |
|
|---|---|---|
| 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. |
| 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. |
| Return on capital employed | Operating earnings plus interest income, in relation to average capital employed, rolling four quarters. |
|
| 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. |
| 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. |
| 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 | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions | 2020 | 2019 | 2020 | 2019 |
| Current assets | 458.3 | 231.6 | 424.3 | 255.0 |
| Cash and cash equivalents | -274.2 | -59.6 | -237.1 | -64.5 |
| No interest-bearing short term liabilities | -105.7 | -142.4 | -129.4 | -143.8 |
| Working capital | 78.3 | 29.6 | 57.8 | 46.8 |
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 | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2020 | 2019 | 2020 | 2019 |
| Capital employed | ||||
| Total balance | 873.6 | 694.6 | 856.6 | 695.0 |
| No interest-bearing liabilities | -122.0 | -162.0 | -148.3 | -165.3 |
| Capital employed | 792.0 | 532.6 | 708.3 | 529.7 |
| Operating earings less interest income R4Q | ||||
| Operating earnings R4Q | -4.3 | -38.6 | -4.3 | -38.6 |
| Interest income R4Q | 0.2 | 0.7 | 0.2 | 0.7 |
| Operating earnings less interest income R4Q | -4.5 | -39.3 | -4.5 | -39.3 |
| Return on capital employed | -0.6% | -7.4% | -0.6% | -7.4% |
| Equity/asset ratio | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2020 | 2019 | 2020 | 2019 |
| Equity | 692.6 | 463.7 | 692.6 | 463.7 |
| Total equity and liabilities | 862.4 | 686.5 | 862.4 | 686.5 |
| Equity/asset ratio | 80.3% | 67.6% | 80.3% | 67.6% |
| Return on equity including discontionued operations | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2020 | 2019 | 2020 | 2019 |
| Net income - R4Q | 237.4 | -32.2 | 237.4 | -32.2 |
| Average equity - R4Q | 659.0 | 485.4 | 659.0 | 485.4 |
| Return on equity | 36.0% | -6.6% | 36.0% | -6.6% |
| 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. |
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| Average number of employees and consultants | 2020 | 2019 | 2020 | 2019 |
| Average number of employees | 170 | 178 | 168 | 183 |
| Average number of consultants | 29 | 41 | 30 | 34 |
| Total average number of employees and consultants | 199 | 219 | 198 | 217 |
| Average number of employees and consultants continuing operations | - | -29 | - | -28 |
| Net Average number of employees and consultants continuing operations | 199 | 190 | 198 | 189 |
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 | Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|---|
| SEK millions | Note | 2020 | 2019 | 2020 | 2019 |
| Effects of the Net Insight share price development during the period | |||||
| Share-based benefits | (a) | -0.1 | -0.1 | -0.0 | 0.0 |
| Synthetic opitons, change in value | (b) | 0.0 | -0.3 | 0.1 | 0.2 |
| Total | -0.1 | -0.4 | 0.0 | 0.3 | |
| Exchange rate differences | |||||
| Part of Other operating income & expenses | -18.2 | -5.5 | -16.0 | -3.2 | |
| Part of Net Financial Items | -2.2 | -0.6 | -3.5 | 0.9 | |
| Total Exchange rate differences | -20.4 | -6.1 | -19.5 | -2.3 | |
| Government grants Covid-19 | |||||
| Reduction of employee expenses | 0.9 | - | 3.4 | - | |
| Other operating income | 9.1 | - | 9.7 | - | |
| Total | 9.9 | - | 13.1 | - | |
| Items affecting comparability | |||||
| Restructuring | (c) | -1.1 | -4.3 | -2.4 | -12.0 |
| Government grants Covid-19, other operating income | (d) | 9.1 | - | 9.7 | - |
| Strategic advisory services and preperation for capital injection | (e) | - | -15.8 | - | -15.8 |
| Total | 8.0 | -20.1 | 7.3 | -27.8 | |
| Operating earnings excluding items affecting comparability continuting operations |
|||||
| Operating earnings | -4.0 | -24.1 | -4.6 | -3.6 | |
| Items affecting comparability, as per above | -8.0 | 20.1 | -7.3 | 27.8 | |
| Items affecting comparability discontinuing operations | - | - | - | -2.9 | |
| Operating earnings excluding items affecting comparability | -12.0 | -4.0 | -11.9 | 21.3 |
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) Costs for strategic advisory services and preparation for capital injection, which were interrupted as a result of the divestment of the Sye business.
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.
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