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Net Insight

Quarterly Report Oct 23, 2008

3180_10-q_2008-10-23_56c7ba41-0ffb-4957-998a-9b6e68ef3092.pdf

Quarterly Report

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Net Insight deliver the world's most efficient and scaleable optical transport solution for Broadcast and Media, Digital Terrestrial TV/Mobile TV and IPTV/CATV networks.

Net Insight products truly deliver 100 percent Quality of Service with three times improvement in utilization of bandwidth for a converged transport infrastructure. Net Insight's Nimbra™ platform is the industry solution for video, voice and data, reducing operational costs by 50 percent and enhancing competitiveness in delivery of existing and new media services.

World class customers run mission critical media services over Net Insight products for more than 100 million people in more than 25 countries. Net Insight is quoted on the Stockholm Stock Exchange.

For more information, visit www.netinsight.net

Interim report, January-September 2008

Net Insight AB (publ), Corporate Reg. No. 556533-4397

January - September 2008

  • Net sales increased by 22% to SEK 204.1 million (167.2).
  • Operating earnings improved by 95% to SEK 28.6 million (14.7)
  • Net income improved by 101% to SEK 31.0 million (15.4).
  • Net profit margin was 15.2% (9.2)
  • Gross margin at 71.6 % is affected by reclassification of support and training expenses. Adjusted for this item gross margin was 73.6% (70.6).
  • Software and support revenue increased to SEK 74.6 million (37.6).
  • Total cash flow amounted to SEK 4.7 million (16.6).
  • Earnings per share amounted to SEK 0.08 (0.04).

Third quarter 2008

  • Net sales increased by 14% to SEK 66.2 million (58.3).
  • Operating earnings improved by 33% to SEK 8.6 million (6.5)
  • Net income improved by 36% to SEK 9.1 million (6.7).
  • Gross margin at 74.8% is affected by reclassification of support and training expenses. Adjusted for this item gross margin was 76.8% (70.6).
  • Software and support revenue increased to SEK 33.8 million (12.6).
  • Total cash flow amounted to SEK 14.0 million (4.3).
  • Earnings per share amounted to SEK 0.02 (0.02).

CEO comments

The fundamental market drivers are strong. Broadcasters and media network operators continue the analogue switch-off, digitalization and HDTV migration processes across the world. Telcos and cable TV operators start large-scale IPTV rollouts and initial commercial Mobile TV networks are being deployed. Overall there is a huge surge in video traffic across communication networks.

The first nine months of 2008 has been our most profitable period so far with strong margins, positive cash flow and revenue growth. We have built a customer base that generates stable repeat business and we win new customers in new markets. Some larger projects sometimes have longer sales processes and we experience quarterly business fluctuations due to the timing of a number of these projects.

The Beijing Olympics is over and as communicated in the press this was the world's largest and most mission critical TV event. As previously communicated, Net Insight delivered and installed Nimbra equipment under the contract with the Host Broadcaster, BOB. This is a very important project for Net Insight and our network solution has generated strong market interest, which has already generated some new business for us.

Digital TV is on the rise in China, the world's largest TV market, and the government has set an aggressive timetable for the DTT transition process. Mobile TV is also taking off where SARFT plans to rollout Mobile TV services across China by the end of 2009. This creates new opportunities for Net Insight and during the third quarter we received a first order for a TV distribution network in China.

Today we count many telecom operators as customers. In North America, as well as in Asia, we have recently won smaller initial business with telcos but with large-scale IPTV and other networks being deployed over time, these customer relationships represent significant business potential for Net Insight.

We have invested in our sales channels to continue our expansion in our prioritized segments in Europe, Eastern Europe, Middle East and Asia. New local partners and expanded sales resources are driving new business in these areas even though it takes time to gain full speed in newly established sales channels and markets. We actively pursue many new projects in over 30 countries.

The transition to Digital Terrestrial TV continues around the world and is an important market driver for Net Insight's business with numerous business opportunities and customer wins. The size of initial individual DTT contracts has so far been smaller than we first anticipated and in some market areas the digitalization process is taking slightly longer time, but our exceptionally strong references are now a great asset for us.

Our progress in the first part of 2008 has been very encouraging and Net Insight is in a good position to capture the growth opportunities in our identified markets. Our market leading product portfolio for efficient media transport, a solid customer base, strong financial position and performance and a growing market presence represent a very good platform for the future.

Business activities during the third quarter

During the third quarter, Net Insight continued to win new customers in our core market segments and the current customer base continued to generate a substantial volume of expansion orders.

Net Insight received its first order from Teracom for delivery of Nimbra equipment to a media contribution network in Sweden. Teracom is Sweden's first media operator, and the new network will interconnect its media contribution networks in Stockholm, Gothenburg and Malmo for simultaneous transport of uncompressed and compressed video.

US media operator HTN Communications continued to expand its Nimbra based transport network across several locations in the United States.

Net Insight received a first order for a TV distribution network in China. The network includes a combination of Nimbra 360 switches with the GPS independent Time

Transfer function and a powerful multicast engine for TV distribution to fixed
television, buses, vehicles and mobile handsets.
Broadcast Service Danmark (BSD) selected Net Insight for an expansion of the
Digital Terrestrial TV distribution network in Denmark. BSD's DTT network is built on
the Nimbra platform and has been operational since March 2006 and this new
expansion enables BSD to support new customers with media transmission services.
An existing North American customer continued to expand their media transport
network to carry media services for professional media companies across the U.S.
The network offer high capacity transmissions to deliver uncompressed and
compressed HD and SD video services over the Nimbra platform.
A global news agency network operator selected Net Insight to deliver a video
contribution network. This new customer delivers news content to broadcasters
around the world and will use the Nimbra platform to carry video, voice and data from
key sites of its global network.
Partnerships Net Insight continued to develop the partner network, e.g. in Asia, to further support
sales growth and local support to customers.
Marketing activities At IBC2008 in Amsterdam Net Insight demonstrated the full Nimbra range including
world leading DTT and Mobile TV transport solutions, multi-service contribution for
the Broadcast & Media industry and a unique combination of QoS, scalability and
flexibility for IPTV and CATV networks.
In a joint demonstration Net Insight showcased a live demonstration of holographic
appearing telepresence. The demonstration showed a remote-based presenter
projected as a holographic-appearing image on a DVE podium. TeliaSonera
International Carrier transported the data stream over its switched European media
network from Stockholm to the IBC show floor in Amsterdam using Net Insight's
high-capacity Nimbra switches. The final effect simulated reality, permitting video
images of people to appear to be positioned in the actual room.
In cooperation with TeliaSonera International Carrier, Panasonic Professional
Plasma Displays and Digital Video Systems, Net Insight also delivered a first-of-its
kind demonstration, where uncompressed 1080p50 video was streamed over a
switched media network from Stockholm to Amsterdam. The showcases generated
extensive trade press coverage and demonstrated how the Nimbra platform enables
the most advanced video applications.
New product
introductions
In conjunction with the IBC exhibition, Net Insight announced the availability of the
Nimbra 688 multi-service switch. Based on the Nimbra 600 series, the Nimbra 688
switch is especially aimed at fulfilling the highest demands in terms of capacity and
availability of the professional media industry, telco and CATV / IPTV networks,
offering twice the access and trunk port count of Net Insight's Nimbra 680.
Significant events
after the end of
the period
Net Insight received an order from KPN to expand its existing national multi-service
media network which has been operational since the beginning of 2006 and provides
services like video, data and audio connectivity between all major TV-studios in the
Netherlands as well as all TV feeds for the digital terrestrial TV and KPN's mobile TV
services. KPN Broadcast Services will now deploy a new solution for TV coverage of
18 top football stadiums based on Net Insight's Nimbra platform.
Outlook The Board is pleased with the progress for the first nine month period 2008 and
remains confident that the positive development will continue, with quarterly
fluctuations.

Sales and earnings

Nine months

Net sales for the nine months period increased by 22% to SEK 204.1 million (167.2). Sales of software, support, and services increased to SEK 74.6 million (37.6) and accounted for 37% (22) of total sales. This increase is mainly related to the leasing agreement with Beijing Olympic Broadcasting for equipment to the Olympic games, which expired September 30th. The EMEA region accounted for SEK 96.5 million (134.1) of total sales. The temporary decrease is mainly related to the completion of the main project with Norkring in 2007. The North America and the APAC regions both accounted for a strong growth for the nine months period, which more than offset the lower volumes in the EMEA region. North America sales increased to SEK 55.2 million (29.0) and APAC sales increased to SEK 52.4 million (4.1). The Broadcast & Media Networks segment represented approx. 85% of total sales and Digital Terrestrial TV & Mobile-TV Networks 15%.

Q3 Q3 Q1-Q3 Q1-Q3 Q407-Q308 Full year
Net sales per region (MSEK) 2008 2007 2008 2007 12 months 2007
EMEA 32.3 41.3 96.5 134.1 137.6 175.2
North America 15.2 13.9 55.2 29.0 67.2 41.0
APAC 18.7 3.1 52.4 4.1 60.9 12.6
Total 66.2 58.3 204.1 167.2 265.7 228.8

For the nine months period gross margin continued to be strong and stable at 71.6% (70.6%). Effective from January 1, 2008, accounting of cost of sold services (support, services and training expenses) was reclassified from operating expenses to direct costs of goods sold.

Q3 Q3 Q1-Q3 Q1-Q3 Q407-Q308 Full year
Comparison of gross margin 2008 2007 2008 2007 12 months 2007
Gross margin incl cost of sold services 74.8% 68.6% 71.6% 68.7% 71.0% 68.8%
Gross margin excl cost of sold services 76.8% 70.6% 73.6% 70.6% 73.1% 70.8%

Operating expenses for the nine months period amounted to SEK 121.0 million (105.2), an increase by 15%. The reclassification of support, services and training expenses has affected operating expenses by SEK 4.0 million. Operating expenses before depreciation and capitalization of development expenditures increased by 10%, which is in line with the Company's growth plan where new resources have been added to sales, marketing, professional services and development. Compared to the nine months period 2007 the average number of employees has increased by eleven. Capitalization of development expenditures was SEK 30.8 million (32.8). Depreciation of capitalized development expenditures was SEK 34.3 million (28.3). Expenses for the employee stock option program and provision for the long-term variable compensation program totaled SEK 9.1 million.

Other operating revenue of SEK 3.4 million (1.9) is made up of premiums for exercising of options under the employee option programs.

Operating earnings for the nine months period amounted to SEK 28.6 million (14.7). The financial net amounted to SEK 2.4 million (0.7). Net income amounted to SEK 31.0 million (15.4), which corresponds to a net profit margin of 15.2% (9.2).

Third quarter

Net sales for the third quarter increased by 14% to SEK 66.2 million (58.3). During the quarter, the Euro and USD significantly strengthened versus the Swedish Krona, which affected net sales positively by SEK 3.3 million. Sales of software, support, and services increased to SEK 33.8 million (12.6) and accounted for 51% of total revenue. This increase is mainly related to the equipment leased to Beijing Olympic Broadcasting for the Olympic games. The EMEA region accounted for SEK 32.3 million (41.3), North America SEK 15.2 million (13.9), and Asia SEK 18.7 million (3.1) respectively. The Broadcast & Media Networks segment represented approx. 85% of total sales and Digital Terrestrial TV & Mobile-TV Networks 15%.

The gross margin for the third quarter was 74.8% (70.6%). The strong margin for the quarter is driven by generally good business supported by the positive currency effects.

Operating expenses for the third quarter amounted to SEK 38.9 million (34.7). The reclassification of support, services and training expenses has affected operating expenses by SEK 1.3 million. Capitalization of development expenditures was SEK 8.4 million (8.3). Depreciation of capitalized development expenditures was SEK 11.5 million (10.0).

Operating earnings for the quarter amounted to SEK 8.6 million (6.5). The financial net amounted to SEK 0.4 million (0.2). Net income amounted to SEK 9.1 million (6.7), which corresponds to a net profit margin at 13.7% (11.5).

Quarterly revenue and net income

Revenue Net income Net income including other operating income Note1: Adjusted for other operating revenue of SEK 13.5 million, net income in Q4 2006 was SEK 3.4 million. Note2: Adjusted for other operating revenue of SEK 10.0 million, net income in Q4 2007 was SEK 8.3 million

Cash flow and Liquid funds at the end of the period totaled SEK 133.0 million (94.3).
financial position Cash flow from ongoing operations for the nine months period amounted to SEK
43.1 million (42.3) whereas total cash flow amounted to SEK 4.7 million (16.6).
Cash flow from ongoing operations for the third quarter amounted to SEK 25.8
million (25.3) whereas total cash flow amounted to SEK 14.0 million (4.3).
Shareholders' equity was SEK 224.0 million (160.4) with an equity/assets ratio of
78.5% (74.6%). On the balance sheet date, Net Insight had unutilized credit and
factoring facilities of SEK 75 million.
Investments Investments in tangible assets during the nine months period amounted to SEK 12.7
million (7.9). Depreciation of tangible assets for the nine months period amounted to
SEK 8.0 million (1.4). Capitalized development expenditures for the nine months
period, reported as intangible assets, amounted to SEK 30.8 million (32.8).
Depreciation of capitalized development expenditures was SEK 34.3 million (28.3).
At the end of the period, net book value of capitalized development expenditures
amounted to SEK 65.7 million (63.9).
Employees At the end of the period Net Insight had 102 (95) employees. The parent company
Net Insight AB had 96 (87) employees whereof four employees are based in
Singapore. The US subsidiary Net Insight Inc. had 6 (8) employees.
Parent company The parent company's net turnover was SEK 229.7 million (195.6). Net income
amounted to SEK 33.3 million (4.8). Liquid funds amounted to SEK 131.0 million
(92.5). The tax loss carry-forward at the reporting date is approximately SEK 1 007
million, which means that the potential value of the deferred tax asset is
approximately SEK 282 million.
Risk and
sensitivity
Net Insight's operation and results are impacted by a number of external and internal
factors. A continuous process identifies all existing risks and assesses how each risk
shall be managed and mitigated.
analysis The risks to which the company is exposed are divided into market related risks
(including competition, technology development, political risks), operational risks
(including product liability, intellectual property rights, litigation, customer
dependence) and financial risks (including predominately currency exposure).
The company estimates that no additional significant risks or uncertainties than those
described in the annual report 2007 have developed during the nine months period.
For a complete description of the Company's risk analysis and risk management,
please see pages 26-27 and 36 in the 2007 Annual report.

CONSOLIDATED INCOME STATEMENT

Q3 Q3 Jan-Sep Jan-Sep Q407-Q308 Full Year
Amount in SEK thousands 2008 2007 2008 2007 12 months 2007
Net Sales 66 193 58 317 204 134 167 181 265 717 228 764
Cost of goods & services sold -16 712 -17 171 -57 936 -49 171 -75 553 -66 788
Gross earnings 49 481 41 146 146 198 118 010 190 164 161 976
Marketing expenses -14 858 -15 535 -48 925 -47 595 -66 247 -64 917
Administration expenses -5 522 -5 038 -17 820 -17 195 -23 571 -22 946
Development expenses -18 503 -14 090 -54 223 -40 428 -67 165 -53 370
Other operating income -1 989 12 3 419 1 919 13 398 11 898
Operating earnings 8 609 6 495 28 649 14 711 46 579 32 641
Net financial items 443 192 2 350 694 2 974 1 318
Earnings before tax 9 052 6 687 30 999 15 405 49 553 33 959
Tax 0 0 0 0 0 0
Net income 9 052 6 687 30 999 15 405 49 553 33 959
Earnings per share 0,02 0,02 0,08 0,04 0,13 0,09
Earnings per share after dilution 0,02 0,02 0,08 0,04 0,13 0,09
Average number of shares in thousands 374 522 369 929 373 806 369 051 374 118 369 363
Average number of shares in thousands after dilution 381 580 379 287 381 537 379 481 383 528 381 472

CONSOLIDATED CASH FLOW STATEMENT

Sep 30, 2008 Sep 30, 2007 Q407-Q308 Dec 31, 2007
Amount in SEK thousands 9 months 9 months 12 months 12 months
Ongoing operations
Net income before tax 30 999 15 405 49 553 33 959
Depreciation 42 271 29 665 53 986 41 380
Other items not affecting liquidity 693 1 293 9 921 10 521
Cash flow from ongoing operations
before change in working capital 73 963 46 363 113 460 85 861
Change in working capital
Increase-/decrease+ in inventories 2 659 -2 951 5 974 364
Increase-/decrease+ in receivables -18 356 9 861 -27 997 220
Increase+/decrease- in current liabilities -15 180 -11 011 7 665 11 834
Cash flow from ongoing operations 43 086 42 262 99 102 98 279
Investment activity
Acquisitions of intangible fixed assets -30 778 -32 767 -47 031 -49 020
Acquisitions of tangible fixed assets -12 650 -7 939 -13 736 -9 025
Increase-/decrease+ in long-term receivables -77 -95 -98 -116
Increase+/decrease- in long-term liabilities -4 255 8 219 -10 286 2 188
Cash flow from investment activity -47 760 -32 581 -71 151 -55 973
Financing activity
New share issue - employee stock option program 9 417 6 921 10 741 8 245
Cash flow from financing activity 9 417 6 921 10 741 8 245
Increase/decrease in liquid funds 4 743 16 602 38 692 50 551
Liquid funds, opening balance 128 233 77 682 94 284 77 682
Liquid funds, closing balance 132 976 94 284 132 976 128 233

CONSOLIDATED BALANCE SHEET

Amount in SEK thousands Sep 30, 2008 Sep 30, 2007 Dec 31, 2007
ASSETS
Fixed assets
Intangible assets
Capitalized expenditure for development 65 702 63 895 69 194
Goodwill 4 354 4 354 4 354
Tangible fixed assets
Equipment 4 046 2 718 3 465
Equipment for leasing 8 932 5 305 4 864
Financial assets
Deposits paid, long-term 264 166 187
Total fixed assets 83 298 76 438 82 064
Current assets
Inventory 17 852 23 826 20 511
Customer receivables 42 219 10 381 20 010
Other receivables 8 906 10 135 10 147
Cash and bank balances 132 976 94 284 128 233
Total current assets 201 953 138 625 178 901
Total assets 285 251 215 064 260 965
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Restricted shareholders' equity
Share capital 15 006 14 805 14 828
Other contributed capital 1 164 430 1 150 909 1 153 294
Translation difference -2 052 -2 316 -2 478
Accumulated deficit -953 430 -1 002 983 -984 429
Total shareholders' equity 223 954 160 415 181 215
Long term liabilities
Long-term liabilities 2 188 2 188 2 188
Provisions 4 864 6 031 8 287
Total provisions 7 052 8 219 10 475
Current liabilities
Accounts payable 10 681 12 691 16 255
Other liabilities 43 564 33 739 53 020
Total current liabilities 54 245 46 430 69 275
Total liabilities and equity 285 251 215 064 260 965

CHANGES IN GROUP SHAREHOLDERS' EQUITY

Other Total
Share contributed shareholders'
Amount in SEK thousands capital capital Reserves Net earnings equity
07-01-01 14 710 1 142 247 -1 773 -1 018 388 136 796
Translation difference for the period 0 0 -543 0 -543
Total transactions reported directly in sharholders' equity 0 0 -543 0 -543
Net earnings 0 0 0 15 405 15 405
Total revenue/expenses for the period 0 0 -543 15 405 14 862
Non-registered share capital 2 50 0 0 52
New shares issued - employee stock options 93 6 776 0 0 6 869
Employee stock option program:
Value of employees' services 0 1 836 0 0 1 836
07-09-30 14 805 1 150 909 -2 316 -1 002 983 160 415
Translation difference for the period 0 0 -162 0 -162
Total transactions reported directly in sharholders´ equity 0 0 -162 0 -162
Net earnings 0 0 0 18 554 18 554
Total revenue/expenses for the period 0 0 -162 18 554 18 392
Non-registered share capital 2 206 0 0 208
New shares issued - employee stock options 21 1 095 0 0 1 116
Employee stock option program:
Value of employees' services 0 1 084 0 0 1 084
07-12-31 14 828 1 153 294 -2 478 -984 429 181 215
08-01-01 14 828 1 153 294 -2 478 -984 429 181 215
Translation difference for the period 0 0 426 0 426
Total transactions reported directly in sharholders' equity 0 0 426 0 426
Net earnings 0 0 0 30 999 30 999
Total revenue/expenses for the period 0 0 426 30 999 31 425
Non registered share-capital 7 589 0 0 596
New shares issued - employee stock options 171 8 650 0 0 8 821
Employee stock option program:
Value of employees' services 0 1 897 0 0 1 897
08-09-30 15 006 1 164 430 -2 052 -953 430 223 954
Consolidated condensed income statement
and key figures, SEK m Q3 2008 Q3 2007 Q4 2007 Q1 2008 Q2 2008
Net sales 66.2 58.3 61.6 64.7 73.2
Gross earnings 49.5 41.1 44.0 44.7 52.2
Gross margin 74.8% 70.6% 71.4% 69.0% 71.3%
Operating earnings 8.6 6.5 17.7 5.5 14.5
Operating margin 13.0% 11.1% 28.8% 8.5% 19.9%
Pretax profit 9.1 6.7 18.3 6.2 15.8
Net income 9.1 6.7 18.3 6.2 15.8
Net margin 13.7% 11.5% 29.8% 9.5% 21.6%

PARENT COMPANY INCOME STATEMENT

Q3 Q3 Jan-Sep Jan-Sep Q407-Q308 Full Year
Amount in SEK thousands 2008 2007 2008 2007 12 months 2007
Net Sales 75 110 69 513 229 739 195 647 303 822 269 730
Cost of goods & services sold -21 563 -28 675 -75 361 -87 668 -98 935 -111 242
Gross earnings 53 547 40 838 154 378 107 980 204 886 158 488
Marketing expenses -15 318 -15 204 -49 713 -46 902 -65 579 -62 768
Administration expenses -6 416 -6 631 -18 714 -22 314 -26 413 -30 013
Development expenses -19 295 -12 518 -55 016 -34 621 -66 267 -45 872
Other operating income 0 0 0 0 9 806 9 806
Operating earnings 12 518 6 485 30 935 4 142 56 434 29 641
Net financial items 437 174 2 330 652 4 370 2 692
Earnings before tax 12 955 6 659 33 265 4 795 60 803 32 333
Tax 0 0 0 0 0 0
Net income 12 955 6 659 33 265 4 795 60 803 32 333

PARENT COMPANY BALANCE SHEET

Amount in SEK thousands Sep 30, 2008 Sep 30, 2007
ASSETS
Fixed assets
Intangible assets
Capitalized expenditures for development 65 702 63 552
Tangible fixed assets
Equipment 4 046 2 667
Equipment for leasing 8 932 5 305
Financial assets
Shares in group companies 3 387 225
Deposits paid, long-term 264 166
Total fixed assets 82 331 71 915
Current assets
Inventory 17 852 23 826
Customer receivables 42 218 10 381
Other receivables 8 528 8 645
Receivable other group companies 22 121 131 126
Cash and bank balances 131 013 92 522
Total current assets 221 732 266 499
TOTAL ASSETS 304 063 338 414
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Restricted shareholders' equity
Share capital 15 006 14 805
Other contributed capital 168 156 122 302
Group contribution 2 092 0
Non-restricted equity/Accumulated deficit 33 265 13 282
Total shareholders' equity 218 519 150 389
Long term liabilities
Long term liabilities
2 188 2 188
Guarantee provisions 4 864 6 031
Total long-term liabilities and provisions 7 052 8 219
Current liabilities
Accounts payable 10 682 12 691
Liabilities, subsidaries 25 564 134 713
Other liabilities 42 246 32 402
Total liabilities 78 492 179 806
TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY 304 063 338 414

This interim report has been prepared in accordance with International Financial Reporting Standards (IFRS) and the structure follows IAS 34 Interim Financial Reporting. IFRS standards and interpretations, which have been published but not yet have come into effect, and are expected to have an effect on Net Insight's financial reporting but not yet are applied are IFRS 8 Operating Segments and IAS 1 Presentation of Financial Statements. For information on the accounting principles applied, see the 2007 Annual Report. The accounting principles are unchanged, compared with those applied in 2007.

The company's auditors have not examined this report.

Reporting dates

Year-end report 2008: 20 February 2009 Annual General Meeting: 28 April 2009 Interim report for January – March 2009: 13 May 2009

Additional information: nomination committee

The Chairman of the Board of Directors of Net Insight AB, in consultation with the four largest shareholders (voting rights), has established a nomination committee.

Net Insight's nomination committee for the 2009 Annual General Meeting consists of Cliff Friedman (Constellation Growth Capital), Åsa Nisell (Swedbank Robur), Ramsay Brufer (Alecta), Christer Bohm (representing the three founders) and Lars Berg (Chairman of the Net Insight Board and European Venture Partner Constellation Growth Capital). The nomination committee appointed Lars Berg to serve as Chairman of the Committee.

The nomination committee's task is to present proposals prior to the General Meeting in regards to the Chairman of the Board of Directors and members of the Board of Directors, as well as fees and other remuneration to each member of the board. The nomination committee is also to make proposals on the election and remuneration of the company auditor.

Shareholders wishing to make proposals to the nomination committee can do so by e-mail to: [email protected].

Stockholm, 23 October 2008

Fredrik Trägårdh

Chief Executive Officer

For more information, please contact:

Fredrik Trägårdh, CEO Net Insight AB Tel.: +46 (0) 8-685 04 00, email: [email protected]

Lars Kevsjö, CFO Net Insight AB Tel.: +46 (0) 8-685 04 00, email: [email protected]

Net Insight AB Box 42093 126 14 Stockholm Tel +46 (0) 8 685 04 00 www.netinsight.net Corporate Reg. No. 556533-4397

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