Quarterly Report • May 2, 2017
Quarterly Report
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Net Insight AB (publ) reg.no. 556533–4397
"Net sales for the first quarter were SEK 110.4 million, with operating earnings of SEK 7.5 million. This was in line with the corresponding period last year. We perceive a strong demand for our network-based operations, and great interest in our live OTT offering."
| FINANCIAL SUMMARY SEK millions |
Jan–Mar 2017 |
Jan–Mar 2016 |
Change | Apr 2016– Mar 2017 |
Jan–Dec 2016 |
Change |
|---|---|---|---|---|---|---|
| Net sales by region | ||||||
| Western Europe | 48.0 | 47.8 | 0.4% | 231.6 | 231.4 | 0.1% |
| Americas | 33.8 | 35.2 | -4.0% | 161.8 | 163.2 | -0.9% |
| Rest of World | 28.6 | 26.9 | 6.3% | 110.6 | 108.9 | 1.5% |
| Net sales | 110.4 | 110.0 | 0.4% | 504.0 | 503.5 | 0.1% |
| Operating Earnings | 7.5 | 7.8 | -4.7% | 52.0 | 52.4 | -0.7% |
| Operating Margin | 6.8% | 7.1% | 10.3% | 10.4% | ||
| Net Income | 11.9 | 14.0 | -15.5% | 35.3 | 37.4 | -5.8% |
| EBITDA | -4.1 | 3.0 | 31.5 | 38.6 | -18.4% | |
| EBITDA margin | -3.7% | 2.7% | 6.3% | 7.7% | ||
| Diluted and Basic EPS, SEK | 0.03 | 0.04 | -15.2% | 0.09 | 0.10 | -5.7% |
| Total Cash Flow | 15.3 | 11.8 | 29.3% | 24.4 | 20.9 | 16.5% |
The high activity level from the end of 2016 has continued into the first quarter of 2017. We see a strong demand on our network-based offering, even if we don't have any larger international sporting events that drives sales this year. At the same time we see a great interest in Sye, our live OTT offering, where several parallel tests take place.
A number of global sporting events drove sales in 2016, as many of our customers chose to upgrade their systems ahead of the Olympics and Euro 2016 soccer championships. Even if 2017 will be less busy in terms of sporting events, we're already returning results in line with last year, which shows the strength of our business. In the first quarter, we also delivered Ultra HDTV (4K) licenses for a central European sporting league and in March Net Insight's ScheduALL Connector won the World Teleport Association's (WTA) 2017 Award for Teleport Technology of the Year.
Net sales for the first quarter were SEK 110.4 million, in line with the corresponding quarter last year (SEK 110.0 million). Operating earnings were SEK 7.5 million in the first quarter 2017, compared to SEK 7.8 million in the previous year. The quarter was characterized by normal quarterly fluctuations, strong underlying business, a stable flow of medium-sized deals, while there were no larger individual transactions in the period. Although we're not completely satisfied with the outcome for the first quarter, we feel that we're well positioned both in short and long term.
We now have a product portfolio that comprises three product lines – Nimbra, ScheduALL and Sye. Our total offering stretch "from the TV camera lens to the studio, right through to the TV viewer" has made us more relevant to our 500 customers in 60 countries. At the same time, we're continuing to strengthen our position as the global leader on a market undergoing major transformation with extensive technology shifts.
We're continuing to develop and strengthen our sales organization and improve competencies in value-based sales. This applies both to our live OTT offering and network-based solutions. We will also focus on increased marketing activities and continue the journey towards a more customer focused company.
A year ago, our product portfolio didn't include Sye, our live OTT offering – something that is hard to imagine today. Sye is now a natural part of Net Insight, and we're still the only industry operator able to offer synchronized live transmission over the internet across all screens. We're continuing to see a great interest, and are running multiple parallel tests. That means that we have come further in the test phase and that the response is positive.
The launch of Sye is proceeding with unwavering strength. The investment rate in our live OTT operations
increased by 50 percent compared to the same period previous year. However, as always, it takes time for new technology to gain a foothold on the market, particularly as we need to take a number of different stakeholders into account, who will need to understand that live OTT is able to generate new customer bases and revenue streams. It's not only broadcasters that need to adjust the technology, but production companies are also working to develop formats and contents.
In the quarter, we initiated new collaborations with companies including SIS and bet365. The fact that our first contracts were signed with betting market operators isn't unexpected, as there are numerous new revenue streams to evaluate and exploit in this arena. In addition, the gambling industry is one of the most active in terms of product development for live broadcasting of sporting events. Bet365 is a globally leading betting and gambling group, and the first part of the collaboration relates to the integration of Sye in the bet365 app. SIS is a leading supplier of products and services for the online and betting market, and the company will implement our Sye platform in its streaming service. Overall, this means that online audiences will get a better, more qualitative and synchronized gambling experience. Ultimately, this will lead to the development of new types of products and services.
We look forward to continued exciting progress in 2017.
Stockholm, May 2017
Fredrik Tumegård, CEO
" Net sales for the first quarter were SEK 110.4 million, with operating earnings of SEK 7.5 million.
Net sales in the first quarter of 2017 were SEK 110.4 (110.0) million, which was in line with the corresponding period last year. In comparable currencies, net sales decreased by -3.6 percent. This mainly relates to a stronger USD against the SEK compared to the first quarter 2016. The quarter was characterized by normal quarterly fluctuations, strong underlying business, a stable flow of medium-sized deals, while there were no larger individual transactions in the period. In 2016, sales were positively affected by global sporting events such as the Olympics. There are fewer such major events in 2017, which means that an increased focus on local and regional sporting and live events will be important to continued growth.
Sales in the Western Europe region were SEK 48.0 (47.8) million. Sales were mainly to the company's existing customers, with Germany and Switzerland making positive progress while northern Europe was weaker than last year. Net Insight delivered Ultra HDTV (4K) licenses to a central European sporting league in the first quarter. The company is well positioned in this technology, but the market remains slightly hesitant because a full upgrade to 4K requires substantial investment by operators and broadcasters.
Net sales in the Rest of World region were SEK 28.6 (26.9) million, a 6.3 percent increase. The increase is mainly driven by positive exchange rate effects. Sales in the quarter were driven by extension deals in the Middle East, southern Africa and Australia.
Net sales in the Americas region were SEK 33.8 million (35.2) million, equivalent to a decrease of -4.0 percent. The decrease is primarily sourced from the network business and is within normal variations between quarters.
Net sales in the Broadcast & Media (BMN) business area were 92 (81) percent, in Digital Terrestrial TV (DTT) 8 (17) percent and in CATV/ IPTV 0 (2) percent of total sales. The strong increase in business transactions in BMN and the low share of DTT business are both line with a trend that has been underway for a number of years. However, the relatively sharp variation on last year can be ascribed to normal quarterly fluctuations.
Net sales from hardware were SEK 44.0 (44.7) million. Net sales from software licenses were SEK 28.3 (30.0) million, and support and services amounted to SEK 38.1 (35.5) million. The above figures exclude other operating revenue of SEK -0.0 (-0.2) million, which consists of translation differences on accounts receivable in foreign currencies.
Net Sales by Region Net Sales by Business Area Jan–Mar 2017
| Jan-Mar | Jan-Mar | |
|---|---|---|
| Key Ratios | 2017 | 2016 |
| Net sales, SEK millions | 110.4 | 110.0 |
| Gross margin | 59.7% | 61.7% |
| Operating margin | 6.8% | 7.1% |
| Opex/Net sales | 52.9% | 54.6% |
| EBITDA margin | -3.7% | 2.7% |
Gross profit in the first quarter was SEK 65.9 (67.8) million, generating a gross margin of 59.7 (61.7) percent, a reduction on the previous year. The decrease mainly relates to increased costs in the service delivery organization, which was partly offset by positive currency effects.
Operating expenses in the first quarter were SEK 58.4 (60.0) million. The decrease is due to a reduction in development expenses of SEK 5.1 to SEK 12.4 (17.5) million. The decrease is a result of increased capitalization of development projects. Total development expenditure was SEK 39.5 (37.5) million, increase attributable to more resources in live OTT. Sales and marketing expenses increased to SEK 34.3 (31.2) million as a result of slightly increased resources, mainly in live OTT, and increased costs mainly for the US organization resulting from a weaker SEK. Operating expenses decreased by SEK 1.2 (2.0) million as a result of revaluation of share-based incentive programs, see table Material profit and loss items on page 6.
Operating earnings were SEK 7.5 (7.8) million, equating to an operating margin of 6.8 percent against 7.1 percent for the comparable period in the previous year. Despite increased development expenditure, development expenses decreased by SEK 5.1 million year-on-year as a result of increased capitalization. Adjusted operating earnings, see table on page 6, was SEK 8.9 (11.2) million, corresponding to an adjusted operating margin of 8.0 (9.9) percent. The lower adjusted operating earnings figure is mainly due to a slight decrease in sales volumes and gross margin.
In the first quarter, net financial items were positively affected by SEK 6.0 (9.0) million in value changes in the synthetic options programs introduced in 2015 and 2016. Net financial items amounted to SEK 5.5 (8.5) million. Profit/loss before tax was SEK 13.0 (16.3) million.
Net earnings for the period were SEK 11.9 (14.0) million, resulting in a net margin of 10.7 (12.8) percent.
Cash flow for the first quarter was SEK 15.3 (11.8) million. The positive cash flow is primarily due to lower working capital, attributable to customer payments received. Cash and cash equivalents at the end of the quarter were SEK 230.1 (204.9) million.
Remaining tax loss carry-forwards for Group companies were SEK 45.2 (86.7) million at the end of the period.
Equity was SEK 575.8 (543.6) million, with an equity/assets ratio of 78.2 (77.8) percent.
First quarter investments were SEK 28.3 (22.4) million, of which SEK 27.1 (20.0) million related to capitalization of development expenditure. Depreciation and amortization in the period was SEK 15.5 (15.2) million, of which SEK 14.1 (14.0) million related to amortization of capitalized expenditure for development.
The net value of capitalized expenditure for development at the end of the period was SEK 241.9 (214.9) million.
At the end of the period, Net Insight had 211 (204) employees, of which 157 (124) were employed by parent company Net Insight AB (publ).
The parent company's net sales in the quarter were SEK 124.6 (121.7) million, and net earnings were SEK 18.2 (19.3) million.
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, those risks the company is exposed to are market-related risks (including competition, technological progress and political risks), operational risks (including product liability, intellectual property, disputes, customer dependency and contract risks) as well as financial risks.
No additional critical risks and uncertainty factors, other than those reviewed in the Annual Report for 2016, arose in 2017.
For a complete review of the company's risk and sensitivity analysis, and its risk management process, see pages 30-31 of the Annual Report for 2016.
In the past three calendar years, average seasonality has been fairly modest. Of annual net sales, the first quarter represented 22 percent, and the second, third and fourth quarters represented 26 percent each.
| Jan–Mar | Jan–Mar | Apr–Jun | Jul–Sep | Oct–Dec | Apr 2016– | Jan–Dec | |
|---|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2017 | 2016 | 2016 | 2016 | 2016 | Mar 2017 | 2016 |
| Net sales by region | |||||||
| Western Europe | 48.0 | 47.8 | 60.5 | 62.9 | 60.1 | 231.6 | 231.4 |
| Americas | 33.8 | 35.2 | 38.7 | 40.6 | 48.7 | 161.8 | 163.2 |
| Rest of World | 28.6 | 26.9 | 33.2 | 24.7 | 24.2 | 110.6 | 108.9 |
| Net sales | 110.4 | 110.0 | 132.3 | 128.2 | 133.0 | 504.0 | 503.5 |
| Net sales YoY, change in % | 0.4% | 25.3% | 42.0% | 52.1% | 20.3% | 26.6% | 34.0% |
| Income statement | |||||||
| Gross earnings | 65.9 | 67.8 | 83.1 | 81.0 | 83.7 | 313.7 | 315.7 |
| Gross margin | 59.7% | 61.7% | 62.8% | 63.2% | 62.9% | 62.2% | 62.7% |
| Operating expenses | 58.4 | 60.0 | 71.1 | 62.1 | 70.0 | 261.7 | 263.3 |
| Opex/Net sales | 52.9% | 54.6% | 53.8% | 48.5% | 52.6% | 51.9% | 52.3% |
| Operating earnings | 7.5 | 7.8 | 12.0 | 18.9 | 13.7 | 52.0 | 52.4 |
| Operating margin | 6.8% | 7.1% | 9.0% | 14.8% | 10.3% | 10.3% | 10.4% |
| Operating earnings, adjusted | 8.9 | 11.2 | 14.4 | 20.9 | 15.3 | 59.4 | 61.7 |
| Operating margin, adjusted | 8.0% | 9.9% | 10.8% | 16.1% | 11.4% | 11.7% | 12.1% |
| Profit after financial items | 13.0 | 16.3 | 8.5 | 15.3 | 6.8 | 43.6 | 46.9 |
| Net Income | 11.9 | 14.0 | 5.7 | 11.5 | 6.3 | 35.3 | 37.4 |
| Net margin | 10.7% | 12.8% | 4.3% | 9.0% | 4.7% | 7.0% | 7.4% |
| EBITDA | |||||||
| Operating earnings | 7.5 | 7.8 | 12.0 | 18.9 | 13.7 | 52.0 | 52.4 |
| Amortization of capitalized development expenditure | 14.1 | 14.0 | 14.1 | 14.4 | 14.6 | 57.2 | 57.1 |
| Other depreciation and amortization | 1.5 | 1.3 | 1.3 | 1.4 | 2.3 | 6.5 | 6.3 |
| Capitalization of development expenditure | -27.1 | -20.0 | -18.5 | -16.6 | -22.0 | -84.2 | -77.2 |
| EBITDA | -4.1 | 3.0 | 8.9 | 18.2 | 8.5 | 31.5 | 38.6 |
| EBITDA margin | -3.7% | 2.7% | 6.7% | 14.2% | 6.4% | 6.3% | 7.7% |
| Total development expenditure | |||||||
| Development expenses | 12.4 | 17.5 | 19.9 | 16.3 | 18.2 | 66.9 | 72.0 |
| Capitalization of development expenditure | 27.1 | 20.0 | 18.5 | 16.6 | 22.0 | 84.2 | 77.2 |
| Total development expenditure | 39.5 | 37.5 | 38.4 | 32.9 | 40.3 | 151.1 | 149.1 |
| Total development expenditure/Net sales | 35.8% | 34.1% | 29.0% | 25.7% | 30.3% | 30.0% | 29.6% |
| Balance sheet | |||||||
| Working capital | 44.5 | 35.7 | 43.3 | 54.2 | 54.3 | 45.7 | 47.1 |
| Working capital/Net sales | 40.3% | 32.4% | 32.7% | 42.2% | 40.8% | 9.1% | 9.3% |
| Return on capital employed | 9.3% | 3.9% | 5.2% | 6.9% | 9.6% | 9.3% | 9.6% |
| Equity/asset ratio | 78.2% | 77.8% | 77.3% | 77.9% | 77.4% | 78.2% | 77.4% |
| Return on equity | 6.3% | 2.2% | 2.6% | 3.5% | 6.8% | 6.3% | 6.8% |
| Cash and cash equivalents | 230.1 | 204.9 | 195.0 | 207.3 | 214.9 | 230.1 | 214.9 |
| Total cash flow | 15.3 | 11.8 | -10.5 | 12.3 | 7.3 | 24.4 | 20.9 |
| The share | |||||||
| Dividend per share, SEK | – | – | – | – | – | – | – |
| Earnings per share diluted and basic, SEK | 0.03 | 0.04 | 0.01 | 0.03 | 0.02 | 0.09 | 0.10 |
| Cash flow per share, SEK | 0.04 | 0.03 | -0.03 | 0.03 | 0.02 | 0.06 | 0.05 |
| Equity per share basic and diluted, SEK | 1.49 | 1.40 | 1.43 | 1.44 | 1.47 | 1.49 | 1.47 |
| Average number of oustanding shares in thousands, | 385,658 | 387,158 | 387,158 | 386,356 | 386,658 | 386,207 | 386,582 |
| basic and diluted | |||||||
| Share price at end of period, SEK | 7.20 | 4.74 | 6.00 | 7.05 | 8.90 | 7.20 | 8.90 |
| Employees | |||||||
| No. of employees at the end of the period | 211 | 204 | 202 | 207 | 215 | 211 | 215 |
For definitions, see page 12.
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:
| SEK millions | Note | Jan–Mar 2017 |
Jan–Mar 2016 |
Apr–Jun 2016 |
Jul–Sep 2016 |
Oct–Dec 2016 |
Apr 2016– Mar 2017 |
Jan–Dec 2016 |
|---|---|---|---|---|---|---|---|---|
| Accounting effects due to the acquisition of ScheduALL in October 2015 |
||||||||
| Deferred revenue | (a) | -0.7 | -2.6 | -1.8 | -1.2 | -0.9 | -4.6 | -6.5 |
| Amortization on intangible assets | (b) | -0.7 | -0.7 | -0.7 | -0.7 | -0.7 | -2.9 | -2.8 |
| -1.4 | -3.3 | -2.5 | -1.9 | -1.6 | -7.5 | -9.4 | ||
| Effects of the Net Insight share price development during the period |
||||||||
| Share-based benefits | (c) | 1.2 | 2.0 | -0.9 | -0.8 | -1.4 | -1.7 | -1.0 |
| Synthetic opitons, change in value | (d) | 6.0 | 9.0 | -2.7 | -3.2 | -6.3 | -6.1 | -3.2 |
| 7.3 | 11.0 | -3.6 | -3.9 | -7.6 | -7.8 | -4.1 | ||
| Other | ||||||||
| Restructuring | (e) | – | -3,4 | – | – | – | – | -3.4 |
| 0.0 | -3.4 | 0.0 | 0.0 | 0.0 | 0.0 | -3.4 |
(a) Support revenues that ScheduALL would have recognized if they had remained a stand-alone entity, but that Net Insight is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. The effects of these business combination rules will gradually decrease.
(b) Amortizations related to the intangible assets – trademark and customer relations – that Net Insight recognized under IFRS as a result of business combination accounting rules, but that ScheduALL would not have recognized if they had remained a stand-alone entity. These amortizations will continue to affect the income over time.
(c) Share-based benefits are value changes in amounts held in escrow for participation in the synthetic share program.
We believe that the disclosed supplemental non-IFRS financial information provides useful information to investors because management uses this information, in addition to financial data prepared in accordance with IFRS, to attain a more transparent understanding of Net Insight's
(d) During the second quarter of 2015 and 2016, after decision at the AGM, Net Insight introduced 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.
e) Development expenses in the first quarter of 2016 was charged with an expense of SEK 3.4 million as a result of a minor reorganization of the R&D operations aimed at rationalizing the development process.
performance during the first quarter of 2017. The adjustments below refers to some of the items listed in the section Material profit and loss items above and the notes refers to this section. Corresponding adjustments have been made for the comparative periods.
| SEK millions (if not defined differently) | Note | Jan–Mar 2017 |
Jan–Mar 2016 |
Apr–Jun 2016 |
Jul–Sep 2016 |
Oct–Dec 2016 |
Apr 2016– Mar 2017 |
Jan–Dec 2016 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 110.4 | 110.0 | 132.3 | 128.2 | 133.0 | 504.0 | 503.5 | |
| Deferred revenue | (a) | 0.7 | 2.6 | 1.8 | 1.2 | 0.9 | 4.6 | 6.5 |
| Net sales, adjusted | 111.1 | 112.6 | 134.1 | 129,5 | 133.9 | 508.6 | 510.1 | |
| Net sales adjusted YoY, change in % | -1.3% | 28.3% | 43.9% | 21.0% | 58.9% | 29.8% | 34.5% | |
| Cost of sales | -44.5 | -42.1 | -49.2 | -47.2 | -49.3 | -190.3 | -187.9 | |
| Gross earnings, adjusted | 66.6 | 70.5 | 84.9 | 82.3 | 84.6 | 318.3 | 322.2 | |
| Gross margin, adjusted | 59.9% | 62.6% | 63.3% | 63.6% | 63.2% | 62.6% | 63.2% | |
| Operating expenses | -58.4 | -60.0 | -71.1 | -62.1 | -70.0 | -261.7 | -263.3 | |
| Amortization intangible assets, | ||||||||
| business combinations | (b) | 0.7 | 0.7 | 0.7 | 0.7 | 0.7 | 2.9 | 2.8 |
| Operating earnings, adjusted | 8.9 | 11.2 | 14.4 | 20.9 | 15.3 | 59.4 | 61.7 | |
| Operating margin, adjusted | 8.0% | 9.9% | 10.8% | 16.1% | 11.4% | 11.7% | 12.1% | |
| Net financial items | 5.5 | 8.5 | -3.4 | -3.7 | -6.8 | -8.4 | -5.4 | |
| Synthetic options, change in value | (d) | -6.0 | -9.0 | 2.7 | 3.2 | 6.3 | 6.1 | 3.2 |
| Profit/loss before tax, adjusted | 8.4 | 10.7 | 13.7 | 20.3 | 14.7 | 57.1 | 59.5 |
| Apr 2016– | ||||
|---|---|---|---|---|
| SEK thousands | Jan–Mar 2017 | Jan–Mar 2016 | Mar 2017 | Jan–Dec 2016 |
| Net sales | 110,410 | 109,955 | 503,977 | 503,522 |
| Cost of sales | -44,517 | -42,131 | -190,258 | -187,872 |
| Gross earnings | 65,893 | 67,824 | 313,719 | 315,650 |
| Sales and marketing expenses Administration expenses |
-34,342 -11,690 |
-31,186 -11,323 |
-140,250 -54,616 |
-137,094 -54,249 |
| Development expenses | -12,408 | -17,498 | -66,863 | -71,953 |
| Operating earnings | 7,453 | 7,817 | 51,990 | 52,354 |
| Net financial items | 5,530 | 8,494 | -8,393 | -5,429 |
| Profit before tax | 12,983 | 16,311 | 43,597 | 46,925 |
| Tax | -1,131 | -2,283 | -8,331 | -9,483 |
| Net income | 11,852 | 14,028 | 35,266 | 37,442 |
| Net income for the period attributable to the shareholders of the parent company |
11,852 | 14,028 | 35,266 | 37,442 |
| Earnings/loss per share, based on net profit attributable to the parent company's shareholders during the period |
||||||||
|---|---|---|---|---|---|---|---|---|
| Earnings per share, basic (SEK) | 0.03 | 0.04 | 0.09 | 0.10 | ||||
| Earnings per share, diluted (SEK) | 0.03 | 0.04 | 0.09 | 0.10 | ||||
| Average number of oustanding shares in thousands, basic | 385,658 | 387,158 | 386,207 | 386,582 | ||||
| Average number of oustanding shares in thousands, diluted | 385,658 | 387,158 | 386,207 | 386,582 |
| Apr 2016– | ||||
|---|---|---|---|---|
| SEK thousands | Jan–Mar 2017 | Jan–Mar 2016 | Mar 2017 | Jan–Dec 2016 |
| Net Income | 11,852 | 14,028 | 35,266 | 37,442 |
| Other comprehensive income | ||||
| Items that may be reclassified subsequently | ||||
| to the income statement | ||||
| Translation differences | -1,394 | -1,993 | 7,218 | 6,619 |
| Total other comprehensive income, after tax | -1,394 | -1,993 | 7,218 | 6,619 |
| Total other comprehensive income for the period | 10,458 | 12,035 | 42,484 | 44,061 |
| Total comprehensive income for the period attributable | ||||
| to the shareholders of the parent company | 10,458 | 12,035 | 42,484 | 44,061 |
| SEK thousands | Mar 31, 2017 | Dec 31, 2016 |
|---|---|---|
| ASSETS | ||
| Intangible assets | ||
| Capitalized expenditure for development | 241,894 | 228,867 |
| Goodwill | 63,060 | 64,136 |
| Other intangible assets | 25,503 | 26,037 |
| Tangible assets | ||
| Equipment | 3,109 | 3,123 |
| Financial fixed assets | ||
| Deferred tax asset | 14,290 | 15,520 |
| Deposits | 310 | 309 |
| Totalt non-current assets | 348,166 | 337,992 |
| Current assets | ||
| Inventories | 48,344 | 47,065 |
| Accounts receivable | 95,085 | 111,121 |
| Other receivables | 14,871 | 19,198 |
| Cash and cash equivalents | 230,146 | 214,943 |
| Total current assets | 388,446 | 392,327 |
| TOTAL ASSETS | 736,612 | 730,319 |
| EQUITY AND LIABILITIES | ||
| Equity attributable to parent company's shareholders | ||
| Share capital | 15,597 | 15,597 |
| Other paid-in capital | 1,192,727 | 1,192,727 |
| Translation difference | 4,498 | 6,392 |
| Accumulated deficit | -637,060 | -649,412 |
| Total shareholders' equity | 575,762 | 565,304 |
| Non-current liabilities | ||
| Other liabilities | 35,950 | 43,222 |
| Total non-current liabilities | 35,950 | 43,222 |
| Current liabilities | ||
| Accounts payable | 11,791 | 14,996 |
| Other liabilities | 113,109 | 106 ,797 |
| Total current liabilities | 124,900 | 121,793 |
| TOTAL EQUITY AND LIABILITIES | 736,612 | 730,319 |
| Attributable to parent company's shareholders | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| SEK thousands | Share capital |
Other paid-in capital |
Translation differences |
Accumulated deficit |
Total share holders' equity |
||||
| January 1, 2016 | 15,597 | 1,192,727 | -227 | -676,547 | 531,550 | ||||
| Repurchase of own shares | – | – | – | – | 0 | ||||
| Total comprehensive income | – | – | -1,993 | 14,028 | 12,035 | ||||
| March 31, 2016 | 15,597 | 1,192,727 | -2,220 | -662,519 | 543,585 | ||||
| April 1, 2016 | 15,597 | 1,192,727 | -2,220 | -662,519 | 543,585 | ||||
| Repurchase of own shares | – | – | – | -10,307 | -10,307 | ||||
| Total comprehensive income | – | – | 8,612 | 23,414 | 32,026 | ||||
| December 31, 2016 | 15,597 | 1,192,727 | 6,392 | -649,412 | 565,304 | ||||
| January 1, 2017 | 15,597 | 1,192,727 | 6,392 | -649,412 | 565,304 | ||||
| Repurchase of own shares | – | – | – | – | 0 | ||||
| Total comprehensive income | – | – | -1,394 | 11,852 | 10,458 | ||||
| March 31, 2017 | 15,597 | 1,192,727 | 4,998 | -637,560 | 575,762 |
| Jan–Mar | Jan–Mar | Apr 2016– | Jan–Dec | |
|---|---|---|---|---|
| SEK thousands | 2017 | 2016 | Mar 2017 | 2016 |
| Ongoing activities | ||||
| Profit before tax | 12,983 | 16,311 | 43,597 | 46,925 |
| Income tax paid | 0 | 0 | -701 | -701 |
| Depreciation and amortization | 15,520 | 15,232 | 63,756 | 63,468 |
| Other items not affecting liquidity | -5,980 | -9,737 | 21,616 | 17,859 |
| Cash flow from operating activities before changes in working capital | 22,523 | 21,806 | 128,268 | 127,551 |
| Changes in working capital | ||||
| Increase-/decrease+ in inventories | -1,430 | 941 | 48 | 2,419 |
| Increase-/decrease+ in receivables | 20,362 | -15,238 | 3,764 | -31,836 |
| Increase+/decrease- in liabilities | 2,072 | 26,722 | -10,678 | 13,972 |
| Cash flow from operating activities | 43,527 | 34,231 | 121,402 | 112,106 |
| Investment activities | ||||
| Investment in intangible assets, net | -27,920 | -21,538 | -86,154 | -79,772 |
| Investment in tangible assets, net | -354 | -853 | -1,704 | -2,203 |
| Investment in financial assets, net | -1 | -44 | 113 | 70 |
| Cash flow from investment activities | -28,275 | -22,435 | -87,745 | -81,905 |
| Financing activities | ||||
| Option premium | – | – | 1,001 | 1,001 |
| Repurchase of own shares | – | – | -10,307 | -10,307 |
| Cash flow from financing activities | 0 | 0 | -9,306 | -9,306 |
| Net change in cash and cash equivalents | 15,252 | 11,796 | 24,351 | 20,895 |
| Exchange differences in cash and cash equivalents | -49 | -562 | 945 | 432 |
| Cash and cash equivalents at the beginning of the period | 214,943 | 193,616 | 204,850 | 193,616 |
| Cash and cash equivalents at the end of the period | 230,146 | 204,850 | 230,146 | 214,943 |
| Jan–Mar 2017 | Jan–Mar 2016 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK millions | WE | AM | RoW | Total | WE | AM | RoW | Total |
| Net sales | 48 | 34 | 29 | 110 | 48 | 35 | 27 | 110 |
| Regional contribution | 17 | 9 | 6 | 32 | 18 | 13 | 5 | 37 |
| Regional contribution margin | 35% | 26% | 21% | 29% | 38% | 38% | 19% | 33% |
| Administration expenses | -12 | -11 | ||||||
| Development expenses | -12 | -17 | ||||||
| Net financial items | 6 | 8 | ||||||
| Profit before tax | 13 | 16 |
Regional Contribution is defined as Gross earnings less Sales and marketing expenses. The CEO reviews the business from Western Europe (WE), Americas (North and South America, AM) and Rest of World (RoW) geographic perspectives.
| Group's financial instruments by category |
Mar 31, 2017 | Dec 31, 2016 | ||||
|---|---|---|---|---|---|---|
| SEK thousands | Value tier |
Loan receivables and accounts receivables |
Assets measured at fair value through profit or loss |
Value tier |
Loan receivables and accounts receivables |
Assets measured at fair value through profit or loss |
| Assets in Balance Sheet | ||||||
| Derivative instruments | 2 | – | 0 | 2 | – | 975 |
| Accounts receivable and other receiva bles, excluding interim receivables |
99,724 | – | 121,056 | – | ||
| Cash and cash equivalents | 230,146 | – | 214,943 | – | ||
| Total | 329,870 | 0 | 335,999 | 975 |
| Group's financial instruments by category |
Mar 31, 2017 | Dec 31, 2016 | |||||
|---|---|---|---|---|---|---|---|
| SEK thousands | Value tier |
Other financial liabilities |
Liabilities measured at fair value through profit or loss |
Value tier |
Other financial liabilities |
Liabilities measured at fair value through profit or loss |
|
| Liabilities in Balance Sheet | |||||||
| Synthetic options | 2 | – | 10,757 | 2 | – | 16,782 | |
| Derivative instruments | 2 | – | 118 | 2 | – | – | |
| Accounts payable and other liabilities, excluding non-financial liabilities |
15,782 | – | 18,856 | – | |||
| Total | 15,782 | 10,875 | 18,856 | 16,782 |
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 | Jan–Mar | Apr 2016– | Jan–Dec | |
|---|---|---|---|---|
| SEK thousands | 2017 | 2016 | Mar 2017 | 2016 |
| Net sales | 124,598 | 121,694 | 570,855 | 567,951 |
| Cost of sales | -42,971 | -46,016 | -238,395 | -241,440 |
| Gross earnings | 81,627 | 75,678 | 332,460 | 326,511 |
| Sales and marketing expenses | -24,128 | -23,994 | -113,495 | -113,361 |
| Administration expenses | -9,704 | -7,475 | -46,636 | -44,407 |
| Development expenses | -31,415 | -30,253 | -119,045 | -117,883 |
| Operating earnings | 16,380 | 13,956 | 53,284 | 50,860 |
| Net financial items | 5,357 | 8,335 | -6,683 | -3,704 |
| Profit before tax | 21,737 | 22,291 | 46,601 | 47,156 |
| Tax | -3,546 | -2,992 | -1,115 | -561 |
| Net income | 18,191 | 19,299 | 45,486 | 46,595 |
| SEK thousands | Mar 31, 2017 | Mar 31, 2016 |
|---|---|---|
| ASSETS | ||
| Intangible assets | ||
| Other intangible assets | 6,015 | 5,477 |
| Tangible fixed assets | ||
| Equipment | 2,919 | 2,918 |
| Financial assets | ||
| Participations in group companies | 295,102 | 299,243 |
| Deferred tax asset | – | 185 |
| Deposits | 163 | 161 |
| Total non-current assets | 304,199 | 307,984 |
| Current assets | ||
| Inventories | 48,344 | 47,065 |
| Accounts receivable | 83,343 | 100,883 |
| Receivables from group companies | 133,899 | 111,348 |
| Other receivables | 9,674 | 21,405 |
| Cash and cash equivalents | 213,528 | 194,423 |
| Total current assets | 488,788 | 475,124 |
| Total assets | 792,987 | 783,108 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Restricted equity | 128,419 | 128,419 |
| Non-restricted equity | 546,695 | 532,645 |
| Total equity | 675,114 | 661,064 |
| Non-current liabilities | ||
| Deferred tax liabilities | 3,362 | – |
| Other liabilities | 25,301 | 34,483 |
| Total non-current liabilities | 28,663 | 34,483 |
| Current liabilities | ||
| Accounts payable | 10,432 | 13,269 |
| Other liabilities | 78,778 | 74,292 |
| Total current liabilities | 89,210 | 87,561 |
| Total equity and liabilities | 792,987 | 783,108 |
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 34.16A are presented in the interim financial statements and the associated notes as well as elsewhere in the interim financial report.
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.
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.
Figures in brackets in this report refer to comparison with the corresponding period or date in the previous year. Divergences due to rounding may occur in this report.
At the end of the reporting period, the parent company had a total of 4,275,000 of its own class B shares, at an average cost of SEK 4.22 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.
Total amount of class B shares in Net Insight are 388,933,009. At the end of the reporting period, there were 1,000,000 class A shares and 384,658,009 class B shares outstanding. All shares issued by the parent company were fully paid.
No significant events have occurred after the end of the reporting period.
This Report has not been reviewed by the company's auditors.
Västeuropa (WE) Western Europe. Americas (AM) North and South America. Rest of World (RoW) Countries outside of Western Europe and Americas.
Alternative performance measures (APM) Non-IFRS financial measures are presented to enhance an investor's 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.
Change in Net sales in comparable currencies The relation between the Net sales for the period, excluding Other revenues, recalculated using the foreign currency rates from the comparative period and the corresponding sales for the comparative period. Other revenue is in all material respect related to translation differences on unhedged accounts receivable in foreign currencies. Only sales from business combinations that's been part of the Group for the whole comparative period are recalculated.
Organic growth Net sales for the period in relation to Net sales for the comparative period, excluding Net sales from business combinations that not been part of the Group for the whole comparative period. Reconciliations, see table Five-year summary on previous page. Gross margin Gross earnings as a percentage of net sales. Operating margin Operating earnings as a percentage of net sales.
Net margin Net Income as a percentage of net sales.
EBITDA Operating earnings before depreciation and amortization and capitalization of development expenditure.
Reconciliations, see table Financial information on page 5. EBITDA margin EBITDA as a percentage of net sales.
Adjusted financial items See table Consolidated Income Statement, Adjusted on page 6.
Operating expenses Sales and marketing expenses, Administration expenses and Development expenses.
Total development (R&D) expenditure Development expenses and capitalized expenditures for development.
Reconciliations, see table Financial information on page 5. 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 Current assets less cash and cash equivalents, ac-
counts payable and other interest-free current liabilities. The Company has no interest-bearing liabilities. Changes in working capital in the cash flow statement also includes adjustments for items not affecting liquidity and changes in non-current operating assets and liabilities.
Equity/asset ratio Shareholders' equity divided by the balance sheet total.
Return on capital employed Operating earnings plus interest income in relation to average capital employed, rolling four quarters. Capital employed is total assets less non-interest bearing liabilities, including deferred tax liabilities. The Company has no interest-bearing liabilities. Slightly updated definition from previous reports, comparable periods has also been updated.
Return on equity Net income as a percentage of average shareholders' equity, rolling four quarters. Slightly updated definition from previous reports, comparable periods has also been updated.
Earnings per share (EPS) diluted and basic Net income divided by the average number of outstanding shares during the period.
Cash flow per share Total cash flow, excluding acquisition of group companies, divided by average number of outstanding shares during the period.
Equity per share diluted and basic Shareholders' equity divided by number of outstanding shares at the end of the period.
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).
Industry terms See Glossary on page 86 in the 2016 Annual Report.
The Annual Shareholders' Meeting of Net Insight AB (publ) will be held on Tuesday May 9, 2017, at 10 am by the company's offices, Västberga Allé 9, Hägersten, Stockholm.
Shareholders who wish to participate in the annual general meeting must be included in the shareholders' register maintained by Euroclear Sweden AB as of Wednesday, May 3, 2017. And notify the company of their participation in the annual general meeting no later than 4.00 p.m. on Wednesday, May 3, 2017.
Net Insight AB (publ), Attn: Susanne Jonasson, Box 42093, SE-126 14 Stockholm, via telephone: +46 8-685 04 00, via fax: +46 8-685 04 20 via e-mail: [email protected]
Name, Personal/corporate identity number, address, Telephone number Shareholding
When applicable, should state information about representatives, counsels and assistants. When applicable, complete authorization documents, such as registration certificates and powers of attorney for representatives and counsels, shall be appended the notification.
Read more at: https://investors.netinsight.net/corporate-governance/
Stockholm May 2, 2017
Fredrik Tumegård, CEO
Net Insight delivers products, software and services for effective, high-quality media transport, coupled with the effective management of resources, all, which creates an enhanced TV experience. Net Insight's offerings stretch from the TV camera lens to the studio, right through to the TV viewer. Net Insight's solutions offer network operators, TV and production companies the benefit of lower total cost of ownership and the potential for effective new media service launches.
Revenues are generated through direct and indirect sales of hardware, software and services. Revenues are primarily sourced from hardware sales, although revenues from software and services have increased in recent years.
Our ambition is to be a growth company, and our target is to create profitable growth. On a market in fundamental transformation, we create growth and profitability through close and strategic partnerships with customers. We create innovative solutions together that make our customers successful and generate business benefit. To grow for the long term, we need to transform Net Insight into a customer and market-oriented company.
Value drivers affect Net Insight's progress and can be divided into three groups: market transformation, innovative technology and global reach. Net Insight benefits from the general increase in video traffic, live streaming and file transfers, the adoption of remote production and workflows, more widespread TV broadcasting over the internet and wider coverage of live events.
Annual General Meeting May 9, 2017 Interim report January – June July 21, 2017 Interim report January – September October 27, 2017
Fredrik Tumegård, CEO, Net Insight AB (publ) Phone: +46 (0)8-685 04 00 Email: [email protected]
Thomas Bergström, CFO, Net Insight AB (publ) Telefon: +46 (0)8-685 06 05 Email: [email protected]
Net Insight AB (publ), reg.no 556533-4397 Box 42093 126 14 Stockholm Tel. +46 (0)8 – 685 04 00 netinsight.net
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 2017. Net Insight AB (publ), Sweden. All rights reserved. Net Insight, Nimbra, Sye and ScheduALL are trademarks of Net Insight Intellectual Property AB, Sweden. All other registered trademarks are the property of their respective owners.
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