Interim / Quarterly Report • Apr 29, 2020
Interim / Quarterly Report
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Net Insight AB (publ) corp.id.no. 556533–4397
Continuing to build the future, despite turbulent times
Crister Fritzson, CEO, Net Insight
| Jan-Mar | Apr 2019- | |||||
|---|---|---|---|---|---|---|
| SEK millions | 2020 | 2019 | Change | Mar 2020 | 2019 | Change |
| Continuing operations | ||||||
| Netsales per business area | ||||||
| Media Networks | 76.0 | 93.6 | -18.8% | 360.2 | 377.8 | -4.7% |
| Resource Optimization | 18.0 | 15.1 | 19.5% | 73.7 | 70.8 | 4.2% |
| Net sales | 94.0 | 108.7 | -13.5% | 433.9 | 448.6 | -3.3% |
| Operating earnings | 8.3 | -4.5 | 9.2 | -3.6 | ||
| Operating margin | 8.8% | -4.1% | 2.1% | -0.8% | ||
| Net income | 3.9 | -2.7 | 2.0 | -4.6 | ||
| EBITDA | 1.0 | 2.5 | -8.2 | -6.6 | ||
| EBITDA margin | 1.0% | 2.3% | -1.9% | -1.5% | ||
| Total group including discontinued operations | ||||||
| Net Income | 250.5 | -8.5 | 226.8 | -32.2 | ||
| Total cash flow | 245.4 | -32.0 | 236.1 | -41.2 |
Streaming Solutions was divested in 2020 and is reported separately as discontinuing operations in this report.
Continuing to build the future, despite turbulent times
At the start of the quarter we saw a positive trend, and we implemented a number of measures aimed at strengthening the Media Networks business. We acquired Aperi's product portfolio, won our first deal for the Nimbra Edge cloudbased solution, and product development accelerated further according to plan. Towards the end of the quarter, the world's focus shifted towards the global outbreak of the Covid-19. The market disruption had a negative impact on revenue towards the end of the quarter, which settled at SEK 94 million, down -14% on Q1 2019. Operating earnings were SEK 8 million and was positively affected by currency effects.
Covid-19 negatively impacted Net Insight's business in Asia for most of the quarter, and in the US and Europe towards the end of the period. Thanks to active cost-management, a good result was achieved despite the challenging conditions. The impact on our ability to deliver products and services was limited, and our accelerated product development was largely unchanged in the quarter. We plan to retain the same level of activity and investments in Q2.
As part of the strategy to strengthen the Media Networks business, Net Insight acquired Aperi Corporation's IP product portfolio for SEK 13 million. The transaction included the full product portfolio, brand, inventory, and accounts receivable. The new products and some unique tech solutions complement and strengthen Net Insight's existing media transport portfolio. This means that we can cover more use cases and increase sales to new and existing customers. Aperi's R&D team and offices in California also strengthen Net Insight's presence on the important US market. The open, flexible products built on a virtualized software architecture will help realize Net Insight's strategy of an open and complete media transport portfolio. The first smaller Aperi deal was won after the close of the quarter.
During the quarter, we won our first commercial deal for Nimbra Edge with a larger customer in North America. For this customer, Net Insight's cloud solution will be used for primary distribution for a SVOD service (Subscription Video On Demand), at substantially lower cost compared to the existing distribution solution. The development and commercialization of Nimbra Edge remains a strategic priority. Virtualized cloud-based solutions are increasingly adapted, for both cost and flexibility reasons, and this is an attractive emerging market for Net Insight. Particularly in these times, with travel restrictions, our customers are increasingly focusing on cloud-based solutions, also because of the
challenges of testing, installing, and upgrading physical products.
The modernization of ScheduALL is proceeding largely according to plan and the commercial launch of the cloud-based SaaS solution is scheduled in the first half of the year.
Towards the end of the first quarter, the spread of the Covid-19 accelerated on a global scale. Generally high uncertainty, combined with canceled and / or postponed live events and leagues, has affected customers and the business sentiment in all our main markets. Travel restrictions have also contributed to difficulties in working with new customers. Our assessment is that the revenue decrease in the quarter was due to Covid-19 effects.
Net Insight actively monitors developments and has implemented measures to mitigate the effects on our staff, customer operations and earnings. Our main scenario assumes continued restrictions with related business impact during the second quarter, followed by a gradual recovery. Future predictions are difficult, and the company continuously evaluates the situation. Net Insight's strategy is to prioritize R&D and strategic development projects, protect the company's financial position through active cost management and prepare to rapidly increase activity level when we see signs of recovery. For more information about the Covid-19 situation, see the section on extraordinary events.
I am confident about working with our employees and management to build a successful and growing company. The first step is to ensure internal efficiency and clarify priorities and drive growth on existing core markets. Over time, we will identify and evaluate the potential for expansion in adjacent segments.
Solna, Sweden, April 29, 2020 Crister Fritzson, CEO
The business area Streaming Solutions (the Sye consumer streaming business) was divested on January 3, 2020 and is reported as discontinued operations in this report. The consideration amounted to SEK 348.0 million, whereof 10% will be paid in the beginning of July 2021. The divestment generated a capital gain of SEK 246.6 million and a cash impact (net after deduction of the withheld part of the consideration and transaction cost) of SEK 302.3 million.
Comments in this report have reference to continuing operations, business areas Media Networks and Resource Optimization, unless otherwise specified. For more information on discontinued operations, see tables on page 11.
As part of the strategy to grow the core Media Networks business, Net Insight acquired assets from Aperi Corporation for SEK 12.7 million, including transaction costs of SEK 1.4 million. The acquisition includes the full Aperi product portfolio, intellectual property rights, trademarks, fixed assets, inventory and accounts receivable. The purchase price has been allocated to the following balance sheet items: fixed assets SEK 2.9 million, inventories SEK 7.9 million and accounts receivable SEK 2.3 million. Following the acquisition, Net Insight hired seven previous Aperi employees in the USA. Consequently, operating cost for the first quarter was affected with SEK -0.9 (-) million.
At the end of the first quarter, the global spread of Covid-19 accelerated, which has affected customers on all our main markets. This had a negative impact on earnings for the first quarter. It is not possible to determine the exact impact, but the revenue decrease can largely be attributed to Covid-19 effects.
Net Insight is monitoring the development closely and has initiated actions to mitigate the impact on staff, customer operations and financial result. We are observing the directives from local authorities, including travel restrictions, work from home and general health advice. Staff in Sweden will from mid-April temporarily reduce working time with 20% with the possibility to rapidly return to full working time as soon as the market situation improves. We prioritize to drive strategic development projects with as little disruption as possible. We have also taken actions to reduce non staff cost and to secure the supply chain to ensure deliveries to our customers. Ongoing and planned actions are not expected to materially affect Net Insights ability to deliver products and services.
The Covid-19 situation will as previously communicated likely have a significant negative impact on earnings for the second quarter. Our main scenario assumes continued restrictions with related business impact during the second quarter, followed by a gradual recovery from the third quarter. At the time of this report, we estimate that Covid-19 does not have any material impact on the company's assets. However, the large uncertainty makes predictions on future development difficult, 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 first quarter of 2020 were SEK 94.0 (108.7) million, a decrease of -13.5%. In comparable currencies, sales decreased by -17.6%.
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.
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. Revenue on a rolling 12-month basis has been largely unchanged during the last year.
Revenues for the first quarter were SEK 76.0 (93.6) million, a decrease of -18.8%. The decrease is largely attributable to the Covid-19 pandemic's impact on business. Revenue decreased for all revenue types.
Resources Optimization encompasses ScheduALL, a pure software solution. Revenues are derived from software licenses sales, support and professional services. The business model for the coming solution is SaaS, Software as a Service.
Revenues for the first quarter were SEK 18.0 (15.1) million, an increase of 19.5%. The increase is attributable both to software licenses and maintenance.
Gross profit for the first quarter was SEK 58.2 (65.9) million, a decrease by -11.7%. The decrease is explained by the lower revenue for Media Networks, partially offset by lower amortization of R&D expenditure. Gross profit included amortization of capitalized development expenditure of SEK -8.4 (-11.7) million. Gross margin excluding and including amortization of capitalized development expenditure was 70.9% (71.5%) and 61.9% (60.7%) respectively.
Operating expenses in the first quarter of SEK -63.2 (-70.9) million were SEK 7.7 million lower compared to the corresponding period of the previous year because of the cost saving program initiated during the first quarter of 2019 and a higher capitalization rate for development expenditures.
Sales and marketing expenses were SEK -28.6 (-32.2) million, and administration expenses to SEK -15.8 (-18.2). Development expenses were SEK -18.9 (-20.4) million. The decrease was due to a higher capitalization rate. Total development expenditure, i.e. before capitalization, increased to SEK -40.1 (-30.2) million, primarily because of increased efforts for the Nimbra portfolio. Other operating income and expenses were SEK 13.3 (0.4) million, related to foreign exchange rate gains.
Operating earnings were SEK 8.3 (-4.5) million, corresponding to an operating margin of 8.8% (-4.1%). Excluding foreign exchange rate differences of SEK 13.0 (0.4) million, operating earnings were unchanged at SEK -5.0 (-4.9) million despite the lower revenue, because of the above-mentioned cost saving program.
EBITDA was SEK 1.0 (2.5) million, corresponding to an EBITDA margin of 1.0% (2.3%).
In the first quarter, net financial items were positively affected by SEK 0.1 (0.2) million for the revaluation of synthetic options programs due to a lower share price at the end of the quarter. Net interest expenses were SEK -0.8 (-0.4) million, and net foreign exchange rate differences were SEK -2.1 (1.4) million. Net financial items amounted to SEK -2.8 (1.2) million.
Profit before tax for the first quarter was SEK 5.5 (-3.3) million, and net income was SEK 3.9 (-2.7) million, corresponding to a net margin of 4.2% (-2.5%). Including Discontinued operations, net income was SEK 250.5 (-8.5) million, including capital gain on disposal of discontinued operations of SEK 246.4 million (-).
| Jan-Mar | Apr 2019- | Jan-Dec | ||
|---|---|---|---|---|
| Key Ratios continuing operations | 2020 | 2019 | Mar 2020 | 2019 |
| Net sales, SEK millions | 94.0 | 108.7 | 433.9 | 448.6 |
| Net sales YoY, change in % | -13.5% | -1.6% | -3.1% | -0.2% |
| Gross earnings | 58.2 | 65.9 | 274.6 | 282.3 |
| Gross margin | 61.9% | 60.7% | 63.3% | 62.9% |
| Operating earnings | 8.3 | -4.5 | 9.2 | -3.6 |
| Operating margin | 8.8% | -4.1% | 2.1% | -0.8% |
| EBITDA | 1.0 | 2.5 | -8.2 | -6.6 |
| EBITDA margin | 1.0% | 2.3% | -1.9% | -1.5% |
Earnings trend continuing operations
Operating earnings for Media Networks for the first quarter decreased and amounted to SEK -3.3 (5.9) million, corresponding to an operating margin of -4.3% (6.3%). The earnings decrease is attributable to Covid-19 impact on revenue. Total development expenditure increased because of further portfolio efforts including the Aperi acquisition and amounted to SEK -29.4 (-21.1) million.
For Resource Optimization, operating earnings for the first quarter of SEK -1.9 (-11.0) were clearly improved versus the corresponding period. This is due to higher revenue and gross earnings as well as to lower operating expenses. Total development expenditure increased somewhat and amounted to SEK -10.8 (-9.2).
First quarter investments were SEK 24.4 (17.5) million, of which SEK 21.3 (17.2) million related to capitalization of expenditure for development and SEK 2.9 (-) million of fixed assets acquired from Aperi.
Depreciation and amortization in the first quarter totaled SEK 13.9 (19.8) million, of which SEK 8.4 (11.7) million related to amortization of capitalized expenditure for development.
At the end of the period, net value of capitalized expenditure for development was SEK 202.5 million. Net value of capitalized expenditure for development was SEK 184.6 million as of December 31, 2019.
Investments per Business Area only reflects capitalized expenditure for development.
Capitalized expenditure for development in the first quarter amounted to SEK 14.6 (5.9) million, and amortization to SEK -7.3 (-10.2) million.
At the end of the period, net value of capitalized expenditure for development was SEK 133.4 million, against SEK 126.0 million as of December 31, 2019.
Capitalized expenditure for development in the first quarter amounted to SEK 6.7 (3.9) million, and amortization to SEK -1.1 (1.6) million.
At the end of the period, net value of capitalized expenditure for development was SEK 69.1 million, against SEK 58.5 million as of December 31, 2019.
Cash flow from operating activities in the first quarter was SEK -30.2 (-10.7) million. Total cash flow was SEK -14.3 (-18.5) million. The divestment of Business Area Streaming Solutions had a cash impact of SEK 302.3 (-) million. Total cash flow for the period was SEK 245.4 (-32.0) million. Excluding the divestment impact, cash flow was SEK -57.0 (-32.0) million. Cash flow was affected negatively with SEK -12.7) by the acquisition of the Aperi product portfolio.
Cash and cash equivalents were SEK 298.2 million at the end of the period, against SEK 52.3 million as of 31 December 2019.
Remaining tax loss carry-forwards for group companies amounted to SEK 102.0 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 SEK 99.5 (102.8) million of the tax loss carry-forwards. For more information, see the section Tax on page 14.
Equity was SEK 717.0 million at the end of the period, against SEK 463.7 million as of 31 December 2019. The equity/assets ratio was 76.7%, against 67.6% as of 31 December 2019. For more information about share repurchases and share structure, see the section Contributed equity on page 14.
The average number of employees and consultants at Net Insight during the first quarter was 198 (193) of which 128 (139) in the parent company Net Insight AB (publ).
Crister Fritzson assumed the CEO position on April 1.
Filippa Hasselström, Vice President of Streaming Solutions, left the management team in connection with the divestment of the business area on January 3, 2020.
Parent company net sales were SEK 80.2 (129.5) million in the first quarter, and net income was SEK 199.4 (5.7) million. The financial net includes result from participation in group companies of SEK 193.8 (1.8) million, which for 2020 relates to capital gains from divestment of subsidiary, and for 2019 from dividend from subsidiary. In the first quarter, intra-group sales totaled SEK 4.7 (34.0) million, and intra-group purchases SEK -13.1 (-40.9) million. Intra-group sales and purchases have decreased due to the intra-group restructuring that was done during the last quarter of 2019, where the parent company acquired all immaterial rights related to Nimbra from a subsidiary.
Progress in the parent company in the first 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 2020.
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 were 24% of annual sales in the first, second and third quarter respectively, and 28% of annual sales in the fourth quarter.
| Jan-Mar | Apr 2019- | Jan-Dec | ||
|---|---|---|---|---|
| SEK thousands | 2020 | 2019 | Mar 2020 | 2019 |
| Continuing operations | ||||
| Net sales | 93,995 | 108,658 | 433,887 | 448,550 |
| Cost of sales | -35,815 | -42,735 | -159,331 | -166,251 |
| Gross earnings | 58,180 | 65,923 | 274,556 | 282,299 |
| Sales and marketing expenses | -28,614 | -32,234 | -125,196 | -128,816 |
| Administration expenses | -15,758 | -18,222 | -64,891 | -67,355 |
| Development expenses | -18,835 | -20,411 | -69,200 | -70,776 |
| Other operating income and expenses | 13,335 | 449 | -6,066 | -18,952 |
| Operating earnings | 8,308 | -4,495 | 9,203 | -3,600 |
| Net financial items | -2,820 | 1,230 | -7,059 | -3,009 |
| Profit/loss before tax | 5,488 | -3,265 | 2,144 | -6,609 |
| Tax | -1,574 | 564 | -173 | 1,965 |
| Net income continuing operations | 3,913 | -2,701 | 1,970 | -4,644 |
| Discontinued operations, net after tax | 246,580 | -5,833 | 224,870 | -27,543 |
| Net Income | 250,493 | -8,534 | 226,840 | -32,187 |
| Net income for the period attributable to the shareholders of the parent company | 250,493 | -8,534 | 226,840 | -32,187 |
| Earnings per share, based on net income attributable to the | Jan-Mar | Apr 2019- | Jan-Dec | |
| parent company's shareholders during the period | 2020 | 2019 | Mar 2020 | 2019 |
| Earnings per share basic and diluted continuing operations (SEK) | 0.01 | -0.01 | 0.01 | -0.01 |
| Earnings per share basic and diluted including discontinuing operations (SEK) | 0.65 | -0.02 | 0.59 | -0.08 |
| Average number of oustanding shares in thousands, basic | 382,758 | 382,933 | 382,758 | 382,812 |
| Jan-Mar | Apr 2019- | Jan-Dec | ||
|---|---|---|---|---|
| SEK thousands | 2020 | 2019 | Mar 2020 | 2019 |
| Net income | 250,493 | -8,534 | 226,840 | -32,187 |
| Other comprehensive income | ||||
| Items that may be reclassified subsequently to the income statement | ||||
| Translation differences | 2,739 | 2,769 | 3,874 | 3,904 |
| Total other comprehensive income, after tax | 2,739 | 2,769 | 3,874 | 3,904 |
| Total other comprehensive income for the period p p |
253,232 | -5,765 | 230,714 | -28,283 |
| parent company | 253,232 | -5,765 | 230,714 | -28,283 |
| SEK thousands | Mar 31, 2020 | 31 Dec 2019 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Capitalized expenditure for development | 202,461 | 184,582 |
| Goodwill | 70,575 | 65,582 |
| Other intangible assets | 9,939 | 10,560 |
| Right-of-use assets | 50,326 | 52,394 |
| Equipment | 31,478 | 29,531 |
| Deferred tax asset | 26,469 | 26,997 |
| Deposits | 5,224 | 5,186 |
| Totalt non-current assets | 396,472 | 374,832 |
| Current assets | ||
| Inventories | 58,568 | 44,584 |
| Accounts receivable | 115,923 | 103,771 |
| Other receivables | 65,381 | 17,179 |
| Cash and cash equivalents | 298,178 | 52,280 |
| Assets held for sale | - | 93,840 |
| Total current assets | 538,050 | 311,654 |
| TOTAL ASSETS | 934,522 | 686,486 |
| EQUITY AND LIABILITIES | ||
| Equity attributable to parent company's shareholders | ||
| Share capital | 15,597 | 15,597 |
| Other paid-in capita | 1,192,727 | 1,192,727 |
| Translation reserve | 12,212 | 9,473 |
| Accumulated deficit | -503,559 | -754,052 |
| Total shareholders' equity | 716,977 | 463,745 |
| Non-current liabilities | ||
| Lease liabilities | 39,721 | 41,517 |
| Other liabilities | 22,414 | 20,649 |
| Total non-current liabilities | 62,135 | 62,166 |
| Current liabilities | ||
| Lease liabilities | 10,469 | 10,586 |
| Accounts payable | 30,319 | 35,821 |
| Other liabilities | 114,622 | 111,173 |
| Liabilities directly associated with assets held for sale | - | 2,995 |
| Total current liabilities | 155,410 | 160,575 |
| TOTAL EQUITY AND LIABILITIES | 934,522 | 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 | |||||
| Repurchase of own shares | - | - | - | - | - | |||||
| Total comprehensive income | - | - | 2,739 | 250,493 | 253,232 | |||||
| March 31, 2020 | 15,597 | 1,192,727 | 12,212 | -503,559 | 716,977 |
| Jan-Mar | Apr 2019- | Jan-Dec | ||
|---|---|---|---|---|
| SEK thousands | 2020 | 2019 | Mar 2020 | 2019 |
| Ongoing activities | ||||
| Profit/loss before tax | 252,130 | -10,686 | 221,165 | -41,651 |
| Income tax paid | - | - | -371 | -371 |
| Depreciation, amortization & impairment | 13,909 | 19,752 | 72,005 | 77,848 |
| Other items not affecting liquidity | -254,613 | -364 | -239,020 | 15,229 |
| Cash flow from operating activities before changes in working capital | 11,426 | 8,702 | 53,779 | 51,055 |
| Changes in working capital | ||||
| Increase-/decrease+ in inventories | -14,954 | -6,650 | -10,986 | -2,682 |
| Increase-/decrease+ in receivables | -25,548 | -39,458 | 12,338 | -1,572 |
| Increase+/decrease- in liabilities | -1,147 | 26,714 | -13,818 | 14,043 |
| Cash flow from operating activities | -30,223 | -10,692 | 41,313 | 60,844 |
| Investment activities | ||||
| Investment in intangible assets | -21,346 | -17,215 | -94,290 | -90,159 |
| Investment in tangible assets | -3,026 | -315 | -4,641 | -1,930 |
| Disposal of subsidiary, net effect on cash | 302,348 | - | 302,348 | - |
| Increase-/decrease+ in financial assets, net | - | - | 46 | 46 |
| Cash flow from investment activities | 277,976 | -17,530 | 203,463 | -92,043 |
| Financing activities | ||||
| Amortization leasing | -2,381 | -1,908 | -8,627 | -8,154 |
| Repurchase of own shares | - | -1,837 | - | -1,837 |
| Cash flow from financing activities | -2,381 | -3,745 | -8,627 | -9,991 |
| Net change in cash and cash equivalents | 245,372 | -31,967 | 236,149 | -41,190 |
| Exchange differences in cash and cash equivalents | 476 | 466 | 637 | 627 |
| Cash and cash equivalents at the beginning of the period | 52,330 | 92,893 | 61,392 | 92,893 |
| Cash and cash equivalents at the end of the period | 298,178 | 61,392 | 298,178 | 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.
| Jan-Mar 2020 | Jan-Mar 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK thousands | Networks Media |
Optimization Resource |
eliminations Unallocated items & |
Total | Networks Media |
Optimization Resource |
eliminations Unallocated items & |
Total |
| Net Sales | 75,971 | 18,024 | - | 93,995 | 93,579 | 15,079 | - | 108,658 |
| Gross earnings | 46,751 | 11,408 | 21 | 58,180 | 59,668 | 6,234 | 21 | 65,923 |
| Net margin | 61.5% | 63.3% | 61.9% | 63.8% | 41.3% | 60.7% | ||
| Operating earnings | -3,297 | -1,887 | 13,493 | 8,308 | 5,862 | -10,957 | 600 | -4,495 |
| Gross margin | -4.3% | -10.5% | 8.8% | 6.3% | -72.7% | -4.1% | ||
| Net financial items | -2,820 | -2,820 | 1,230 | 1,230 | ||||
| Profit/loss before tax continuing operations | 5,488 | -3,265 |
| Apr 2019-Mar 2020 | Jan-Dec 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK thousands | Networks Media |
Optimization Resource |
eliminations Unallocated items & |
Total | Networks Media |
Optimization Resource |
eliminations Unallocated items & |
Total |
| Net Sales | 360,156 | 73,731 | - | 433,887 | 377,764 | 70,786 | - | 448,550 |
| Gross earnings | 229,440 | 45,024 | 92 | 274,556 | 242,357 | 39,850 | 92 | 282,299 |
| Gross margin | 63.7% | 61.1% | 63.3% | 64.2% | 56.3% | 62.9% | ||
| Operating earnings | 37,320 | -22,689 | -5,428 | 9,203 | 46,479 | -31,759 | -18,320 | -3,600 |
| Gross margin | 10.4% | -30.8% | 2.1% | 12.3% | -44.9% | -0.8% | ||
| Net financial items | -7,059 | -7,059 | -3,009 | -3,009 | ||||
| Profit/loss before tax continuing operations | 2,144 | -6,609 |
| Jan-Mar 2020 | Jan-Mar 2019 | Apr 2019-Mar 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 | 32,379 | - | 32,379 | 42,297 | - | 42,297 | 161,821 | - | 161,821 | 171,739 | - | 171,739 |
| Software licenses | 15,585 | 1,232 | 16,817 | 19,230 | - | 19,230 | 83,489 | 7,514 | 91,003 | 87,134 | 6,282 | 93,416 |
| Support and Services | 28,007 | 16,792 | 44,799 | 32,052 | 15,079 | 47,131 | 114,846 | 66,217 | 181,063 | 118,891 | 64,504 | 183,395 |
| Total | 75,971 | 18,024 | 93,995 | 93,579 | 15,079 | 108,658 | 360,156 | 73,731 | 433,887 | 377,764 | 70,786 | 448,550 |
| Net sales by region | ||||||||||||
| WE | 39,098 | 4,996 | 44,094 | 38,543 | 3,936 | 42,479 | 168,855 | 18,966 | 187,821 | 168,300 | 17,906 | 186,206 |
| AM | 24,221 | 9,482 | 33,703 | 40,087 | 9,739 | 49,826 | 121,685 | 41,751 | 163,436 | 137,551 | 42,008 | 179,559 |
| RoW | 12,652 | 3,546 | 16,198 | 14,949 | 1,404 | 16,353 | 69,616 | 13,014 | 82,630 | 71,913 | 10,872 | 82,785 |
| Total | 75,971 | 18,024 | 93,995 | 93,579 | 15,079 | 108,658 | 360,156 | 73,731 | 433,887 | 377,764 | 70,786 | 448,550 |
| Timing of revenue recognition | ||||||||||||
| Products and services transfered at a point in time | 47,976 | 1,232 | 49,208 | 61,542 | - | 61,542 | 245,356 | 7,514 | 252,870 | 258,922 | 6,282 | 265,204 |
| Services transferred over time | 27,995 | 16,792 | 44,787 | 32,037 | 15,079 | 47,116 | 114,800 | 66,217 | 181,017 | 118,842 | 64,504 | 183,346 |
| Total | 75,971 | 18,024 | 93,995 | 93,579 | 15,079 | 108,658 | 360,156 | 73,731 | 433,887 | 377,764 | 70,786 | 448,550 |
| Jan-Mar | Apr 2019- | Jan-Dec | ||
|---|---|---|---|---|
| SEK thousands | 2020 | 2019 | Mar 2020 | 2019 |
| Revenues | -376 | 2,666 | 6,469 | 9,510 |
| Expenses | 668 | -10,087 | -33,797 | -44,552 |
| Capital gain on disposal of discontinued operations | 246,350 | - | 246,350 | - |
| Profit before tax | 246,643 | -7,421 | 219,022 | -35,042 |
| Tax | -63 | 1,588 | 5,848 | 7,499 |
| Net income discontinuing operations | 246,580 | -5,833 | 224,870 | -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 | - |
| Jan-Mar | Apr 2019- | Jan-Dec | ||
|---|---|---|---|---|
| SEK thousands | 2020 | 2019 | Mar 2020 | 2019 |
| Cash flow from discontinued operations, net | ||||
| Cash flow from operating activities | 293 | -4,500 | -12,632 | -17,424 |
| Cash flow from investment activities | 302,348 | -7,394 | 283,635 | -26,109 |
| Cash flow from financing activities | - | - | - | - |
| Cash flow from discontinued operations, net | 302,641 | -11,894 | 271,004 | -43,533 |
| Group's financial instruments by category - Assets | Mar 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 |
167,441 | 110,147 | |||
| Cash and cash equivalents | 52,280 | 52,280 | |||
| Total | 219,721 | - | 162,427 | - |
| Group's financial instruments by category - Liabilities | Mar 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 | 12 | 2 | 68 | ||
| Derivative instruments | 2 | 1,691 | 2 | - | ||
| Accounts payable and other liabilities, excluding non financial liabilities |
48,258 | 42,955 | ||||
| Lease liabilities | 50,189 | 52,103 | ||||
| Total | 98,447 | 1,703 | 95,058 | 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.
| Jan-Mar | Apr 2019- | Jan-Dec | ||
|---|---|---|---|---|
| SEK thousands | 2020 | 2019 | Mar 2020 | 2019 |
| Net sales | 80,195 | 129,543 | 437,971 | 487,319 |
| Cost of sales | -29,124 | -53,297 | -183,176 | -207,349 |
| Gross earnings | 51,071 | 76,246 | 254,795 | 279,970 |
| Sales and marketing expenses | -24,846 | -29,145 | -115,287 | -119,586 |
| Administration expenses | -13,916 | -14,951 | -54,456 | -55,491 |
| Development expenses | -15,073 | -28,557 | -90,649 | -104,133 |
| Other income expenses | 12,224 | 545 | -6,727 | -18,406 |
| Operating earnings | 9,460 | 4,138 | -12,324 | -17,646 |
| Net financial items | 191,558 | 3,151 | 107,901 | -80,506 |
| Profit/loss before tax | 201,018 | 7,290 | 95,576 | -98,152 |
| Tax | -1,580 | -1,604 | 10,137 | 10,113 |
| Net income | 199,438 | 5,686 | 105,713 | -88,039 |
| SEK thousands | Mar 31, 2020 | Dec 31, 2019 | 31 Dec 2019 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Capitalized expenditure for development | 133,375 | 126,049 | |
| Other intangible assets | 2,812 | 3,234 | |
| Equipment | 24,414 | 25,576 | |
| Participations in group companies | 246,630 | 243,777 | |
| Deferred tax asset | 13,565 | 15,144 | |
| Deposits | 4,649 | 4,649 | |
| Total non-current assets | 425,445 | 418,429 | |
| Current assets | |||
| Inventories | 58,568 | 44,584 | |
| Accounts receivable | 101,722 | 98,100 | |
| Receivables from group companies | - | 20,826 | |
| Other receivables | 65,324 | 15,055 | |
| Cash and cash equivalents | 282,405 | 40,849 | |
| Total current assets | 508,019 | 219,414 | |
| TOTAL ASSETS | 933,464 | 637,843 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Restricted equity | 156,698 | 142,075 | |
| Non-restricted equity | 563,958 | 379,143 | |
| Total equity | 720,656 | 521,218 | |
| Non-current liabilities | |||
| Other liabilities | 12,157 | 12,611 | |
| Total non-current liabilities | 12,157 | 12,611 | |
| Current liabilities | |||
| Accounts payable | 22,156 | 32,381 | |
| Liablities to group companies | 104,658 | - | |
| Other liabilities | 73,837 | 71,633 | |
| Total current liabilities | 200,651 | 104,014 | |
| TOTAL EQUITY AND LIABILITIES | 933,464 | 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.
In connection with the Covid-19 outbreak, the reporting of government grants has become relevant, as the Group may receive 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.
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 -1.6 (2.2) million for the period January–March 2020, of which SEK -1.6 (0.6) million relates to continuing operations. Reported tax corresponds to an effective tax rate of 1 (20) percent and 29 (17) percent respectively. The group recognized a capital gain from discontinued operations of SEK 246.4 million, which is a none taxable income. During 2020, no capitalization of deferred tax assets on tax loss carry-forwards of SEK 0.6 (-) million has been recognized for a subsidiary in US. These two items have 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, which had a big impact on the effective tax rate during 2019.
Remaining tax loss carry-forwards for group companies amounted to SEK 102.0 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 SEK 99.5 (102.8) of the tax loss carryforwards.
No own shares have been repurchased during January-March 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 Mar, 2020 | 31 Dec, 2019 | |||||
|---|---|---|---|---|---|---|
| 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.
To reduce the financial impact of Covid-19, from April 14, the Swedish staff is on a short-term layoff, where the staff temporarily reduce their working time by 20% with the possibility to rapidly return to full working time as soon as the market situation improves. We prioritize to drive strategic development projects with as little disruption as possible. We have also taken actions to reduce non staff cost and to secure the supply chain to ensure deliveries to our customers. Ongoing and planned actions are not expected to materially affect Net Insights ability to deliver products and services. Crister Fritzson assumed the role as CEO on April 1, 2020.
AUDITORS' REVIEW
This Report has not been reviewed by the company's auditors.
With its deep market knowledge and insight, genuine customer focus and world-leading innovative technology, Net Insight makes it easier to create and deliver better media content in a simpler and more effective way.
With the two business areas Media Networks and Resource Optimization, Net Insight offers solutions that enable network operators and media companies the benefit of lower costs and the potential for effective new media service launches. Revenues are generated through sales of hardware and software solutions and services.
Net Insight is driven by the idea that everything can always be done smarter, for both its customers and their customers. Net Insight's long-term view of the media market of tomorrow is a global, fully connected world where new technology enables direct, intelligent and seamless exchange of content between producers, distributors and consumers.
The strategy is to offer competitive and future-proof solutions that meet these customer demands, by continuously develop solutions that make customers even more relevant and competitive in the media landscape of tomorrow.
The value-creating factors affect Net Insight's development and are divided into three groups: market transformation, innovative technology and global scope. Net Insight benefits from the general increase in video traffic, live streaming and file-based transfers, the use of remote production, increased distribution over the internet and broader coverage of live events.
Annual General Meeting May 8, 2020 Interim report January – June July 21, 2020 Interim report January – September November 4, 2020
Solna, April 29, 2020
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]
Pelle Bourn, 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 CEST on April 29, 2020.
| Jan-Mar | Apr 2019- | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently | 2020 | 2019 | Mar 2020 | 2019 |
| Earnings continuing operations | ||||
| Netsales per business area | ||||
| Media Networks | 76.0 | 93.6 | 360.2 | 377.8 |
| Resource Optimization | 18.0 | 15.1 | 73.7 | 70.8 |
| Net sales | 94.0 | 108.7 | 433.9 | 448.6 |
| Gross earnings | 58.2 | 65.9 | 274.6 | 282.3 |
| Operating expenses | 63.2 | 70.9 | 259.3 | 266.9 |
| Total development expenditure | 40.1 | 30.2 | 143.9 | 134.0 |
| EBITDA | 1.0 | 2.5 | -8.2 | -6.6 |
| Operating earnings | 8.3 | -4.5 | 9.2 | -3.6 |
| Profit/loss before tax | 5.5 | -3.3 | 2.1 | -6.6 |
| Net income | 3.9 | -2.7 | 2.0 | -4.6 |
| Balance sheet and cash flow including discontinued operations | ||||
| Cash and cash equivalents | 298.2 | 61.4 | 298.2 | 52.3 |
| Working capital | 56.7 | 49.2 | 58.7 | 46.8 |
| Total cash flow | 245.4 | -32.0 | 236.1 | -41.2 |
| The share | ||||
| Dividend per share, SEK | - | - | - | - |
| Earnings per share basic and diluted continuing operations, SEK | 0.01 | -0.01 | 0.01 | -0.01 |
| Earnings per share basic and diluted discontinuing operations, SEK | 0.65 | -0.02 | 0.59 | -0.08 |
| Earnings per share basic and diluted totalt, SEK | 0.66 | -0.03 | 0.60 | -0.10 |
| Cash flow per share, SEK | 0.64 | -0.08 | 0.62 | -0.11 |
| Equity per share basic and diluted, SEK | 1.87 | 1.27 | 1.87 | 1.21 |
| Average number of outstanding shares basic and diluted, thousands | 382,758 | 382,933 | 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 | 1.75 | 2.06 | 1.75 | 2.30 |
| Employees and consultants discontionued operations | ||||
| Average number of employees and consultants | 198 | 193 | 190 | 189 |
| KPI continuing operations | ||||
| Net sales YoY, change in % | -13.5% | -1.6% | -3.1% | -0.2% |
| Gross margin | 61.9% | 60.7% | 63.3% | 62.9% |
| Total development expenditure/Net sales | 42.7% | 27.8% | 33.2% | 29.9% |
| Operating margin | 8.8% | -4.1% | 2.1% | -0.8% |
| EBITDA margin | 1.0% | 2.3% | -1.9% | -1.5% |
| Net margin | 4.2% | -2.5% | 0.5% | -1.0% |
| KPI Group including discontinued operations | ||||
| Return on capital employed | -2.9% | -17.3% | -11.4% | -7.4% |
| Equity/asset ratio | 76.7% | 66.9% | 76.7% | 67.6% |
| Return on equity | 42.8% | -13.3% | 42.8% | -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 | Jan-Mar | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2020 | 2019 | 2019 | |
| Net sales | 94.0 | 108.7 | 448.6 | |
| Net currency effect of comparable currencies | -4.4 | -8.4 | -24.4 | |
| Net sales in comparable currencies | 89.6 | 103.0 | 424.2 | |
| Change in net sales in comparable currencies | -17.6% | -6.8% | -5.6% | |
| KPI Income Statement | Jan-Mar | Apr 2019- | Jan-Dec | |
| SEK millions (if not defined differently | 2020 | 2019 | Mar 2020 | 2019 |
| Continuing operations | ||||
| Net sales | 94.0 | 108.7 | 433.9 | 448.6 |
| Net sales YoY, change in % | -13.5% | -1.6% | -3.1% | -0.2% |
| Cost of sales ex. amortization of capitalized development | -27.4 | -31.0 | -123.0 | -126.6 |
| Gross earnings ex. amortization of capitalized development | 66.6 | 77.7 | 310.9 | 321.9 |
| Gross margin ex. amortization of capitalized development | 70.9% | 71.5% | 71.7% | 71.8% |
| Cost of sales amortization of capitalized development | -8.4 | -11.7 | -36.3 | -39.6 |
| Gross earnings Gross margin |
58.2 61.9% |
65.9 60.7% |
274.6 63.3% |
282.3 62.9% |
| Sales and marketing expenses | -28.6 | -32.2 | -125.2 | -128.8 |
| Administration expenses | -15.8 | -18.2 | -64.9 | -67.4 |
| Development expenses | -18.8 | -20.4 | -69.2 | -70.8 |
| Operating expenses | -63.2 | -70.9 | -259.3 | -266.9 |
| Operating expenses/net sales | 67.2% | 65.2% | -59.8% | 59.5% |
| Other operating income and expenses | 13.3 | 0.4 | -6.1 | -19.0 |
| Operating earnings | 8.3 | -4.5 | 9.2 | -3.6 |
| Operating margin | 8.8% | -4.1% | 2.1% | -0.8% |
| Net financial items | ||||
| Profit/loss before tax | -2.8 | 1.2 | -7.1 | -3.0 |
| 5.5 | -3.3 | 2.1 | -6.6 | |
| Tax | -1.6 | 0.6 | -0.2 | 2.0 |
| Net income continuing operations | 3.9 | -2.7 | 2.0 | -4.6 |
| Net margin conutinuing operaitons | 4.2% | -2.5% | 0.5% | -1.0% |
| Discontinued operations, net after tax | 246.6 | -5.8 | 224.9 | -27.5 |
| Net Income | 250.5 | -8.5 | 226.8 | -32.2 |
| EBITDA margin continuing operations | Jan-Mar | Apr 2019- | Jan-Dec | |
| SEK millions (if not defined differently) | 2020 | 2019 | Mar 2020 | 2019 |
| Operating earnings | 8.3 | -4.5 | 9.2 | -3.6 |
| Amortization of capitalized development expenditure | 8.4 | 11.7 | 36.3 | 39.6 |
| Other depreciation, amortization & impairment | 5.5 | 5.1 | 21.0 | 20.6 |
| Capitalization of development expenditure | -21.3 | -9.8 | -74.7 | -63.2 |
| EBITDA | 1.0 | 2.5 | -8.2 | -6.6 |
| Net sales | ||||
| 94.0 | 108.7 | 433.9 | 448.6 | |
| EBITDA margin | 1.0% | 2.3% | -1.9% | -1.5% |
| Development expenditure continuing operations | Jan-Mar | Apr 2019- | Jan-Dec | |
| SEK millions (if not defined differently) | 2020 | 2019 | Mar 2020 | 2019 |
| Development expenses | 18.8 | 20.4 | 69.2 | 70.8 |
| Capitalization of development expenditure | 21.3 | 9.8 | 74.7 | 63.2 |
| Total development expenditure | 40.1 | 30.2 | 143.9 | 134.0 |
| Capitalization rate | 53.1% | 32.5% | 51.9% | 47.2% |
| Net Sales | 94.0 | 108.7 | 433.9 | 448.6 |
| Total development expenditure/net sales | 42.7% | 27.8% | 33.2% | 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. . |
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 | Jan-Mar | Apr 2019- | Jan-Dec | |
|---|---|---|---|---|
| SEK millions | 2020 | 2019 | Mar 2020 | 2019 |
| Current assets | 377.9 | 275.2 | 308.8 | 255.0 |
| Cash and cash equivalents | -175.3 | -77.1 | -105.5 | -64.5 |
| No interest-bearing short term liabilities | -146.0 | -148.9 | -144.6 | -143.8 |
| Working capital | 56.7 | 49.2 | 58.7 | 46.8 |
In current assets, assets held for sale are excluded, as they mainly relate to capitalized development expenses.
| Return on capital employed including discontinued operations | Jan-Mar | Apr 2019- | Jan-Dec | |
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2020 | 2019 | Mar 2020 | 2019 |
| Capital employed | ||||
| Total balance | 810.5 | 688.3 | 751.9 | 695.0 |
| No interest-bearing liabilities | -167.5 | -169.1 | -167.0 | -165.3 |
| Capital employed | 643.0 | 519.2 | 584.9 | 529.7 |
| Operating earings less interest income R4Q | ||||
| Operating earnings R4Q | -18.1 | -89.5 | -18.1 | -38.6 |
| Interest income R4Q | 0.6 | 0.4 | 0.6 | 0.7 |
| Operating earnings less interest income R4Q | -18.7 | -89.8 | -66.5 | -39.3 |
| Return on capital employed | -2.9% | -17.3% | -11.4% | -7.4% |
| Equity/asset ratio | Jan-Mar | Apr 2019- | Jan-Dec | |
| SEK millions (if not defined differently) | 2020 | 2019 | Mar 2020 | 2019 |
| Equity | 717.0 | 486.3 | 717.0 | 463.7 |
| Total equity and liabilities | 934.5 | 726.7 | 934.5 | 686.5 |
| Equity/asset ratio | 76.7% | 66.9% | 76.7% | 67.6% |
| Return on equity including discontionued operations | Jan-Mar | Apr 2019- | Jan-Dec | |
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2020 | 2019 | Mar 2020 | 2019 |
| Net income - R4Q | 226.8 | -69.7 | 226.8 | -32.2 |
| Average equity - R4Q | 530.0 | 523.2 | 530.0 | 485.4 |
| Return on equity | 42.8% | -13.3% | 42.8% | -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 |
To supplement the number of employees with consultants gives a better measure of the |
| Jan-Mar | Apr 2019- | Jan-Dec | ||
|---|---|---|---|---|
| Average number of employees and consultants | 2020 | 2019 | Mar 2020 | 2019 |
| Average number of employees | 166 | 192 | 177 | 183 |
| Average number of consultants | 32 | 30 | 35 | 34 |
| Total average number of emplyees and consultants | 198 | 222 | 211 | 217 |
| Average number of employees and consultants continuing operations | - | -29 | -21 | -28 |
| Net Average number of employees and consultants continuing operations | 198 | 193 | 190 | 189 |
Company's cost.
than nine months) and who do not replace absent
employees, in FTE (Full-time equivalent).
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 | Jan-Mar | Apr 2019- | Jan-Dec | ||
|---|---|---|---|---|---|
| SEK millions | Note | 2020 | 2019 | Mar 2020 | 2019 |
| Effects of the Net Insight share price development during the period | |||||
| Share-based benefits | (a) | 0.1 | 0.0 | 0.1 | 0.0 |
| Synthetic opitons, change in value | (b) | 0.1 | 0.2 | 0.0 | 0.2 |
| Total | 0.1 | 0.3 | 0.1 | 0.3 | |
| Items affecting comparability | |||||
| Restructuring | (C) | -0.9 | -5.5 | -7.5 | -12.0 |
| Strategic advisory services and preperation for capital injection | (d) | - | - | -15.8 | -15.8 |
| Total | -0.9 | -5.5 | -23.2 | -27.8 | |
| Operating earnings excluding items affecting comparability continuting operations |
|||||
| Operating earnings | 8.3 | -4.5 | 9.2 | -3.6 | |
| Items affecting comparability, as per above | 0.9 | 5.5 | 23.2 | 27.8 | |
| Items affecting comparability discontinuing operations | - | -2.1 | -0.8 | -2.9 | |
| Operating earnings excluding items affecting comparability | 9.3 | -1.1 | 31.7 | 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) Net Insight has 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 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) Telefon: +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 2020. 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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