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Enea Interim / Quarterly Report 2023
3042_10-q_2023-04-27_5a9e4f2b-9ca3-4323-92ff-66b95eb88dd8.pdf
Interim / Quarterly Report
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Interim Report
First Quarter 2023
ENEA
First Quarter
- Net sales amounted to SEK 247.9 million (210.8), equivalent to an 18 percent increase. Net sales increased by 13 percent in fixed exchange rates.
- Adjusted EBITDA amounted to SEK 94.4 million (56.1), corresponding to a margin of 38.1 percent (26.6).
- Operating profit was SEK 47.4 million (-9.0), corresponding to an operating margin of 19,1 percent (-4.3).
- Net profit after tax amounted to SEK 10,2 million (-13.0).
- Earnings per share were SEK 0.47 (-0.38).
- Earnings per share continued operations were SEK 0.47 (-0.61).
Significant Events During and After the End of the Quarter
- On January 13, Enea announced a frame contract for support and maintenance of operating systems with one of the company's key customers. The contract covers a period of three years and prolongs support services in former one-year agreements. The contract generates guaranteed recurring revenues of approximately SEK 20 million per year. The previous one-year agreement which expired in December 2022 yielded revenues of SEK 25 million.
- On March 31, Enea announced a contract for licenses and continued support and maintenance services for its legacy operating system OSE with another of the company's key customers. The contract covers perpetual software licenses as well as prolonged support and maintenance services over at least three years. License revenues of EUR 4.8 million are booked in the first quarter of 2023. Service revenues of EUR 1.8 million will be recognized during a three-year period. The total contract value is EUR 6.6 million.
- In April, Enea announced that the multi-year contract for the 5G Cloud Network Data Layer, signed in June 2020 with a leading European telecom operator, may be terminated by the customer before final delivery from Enea has taken place. The total contract was initially valued to EUR 24 million and has so far generated revenues amounting to EUR 14.5 million. Enea will make reservations for reported revenues but not yet received payments attributable to 2021 and 2022 amounting to 4 MEUR in the second quarter 2023.
| Key Figures | Jan-Mar | 12 months | ||
|---|---|---|---|---|
| 2023 | 2022 | R12 | 2022 | |
| Total revenue, SEK m | 254.0 | 217.0 | 1,001.8 | 964.7 |
| Net sales, SEK m | 247.9 | 210.8 | 964.7 | 927.7 |
| Growth, % | 18 | 15 | 8 | 7 |
| Growth currency adjusted, % | 13 | 10 | 8 | 1 |
| Acquired growth, SEK m | - | 33.7 | -7.9 | 77.7 |
| Adjusted EBITDA, SEK m | 94.4 | 56.1 | 265.7 | 316.3 |
| Adjusted EBITDA, % | 38.1 | 26.6 | 27.5 | 34.1 |
| EBITDA, SEK m | 94.4 | 32.5 | 354.3 | 292.4 |
| EBITDA, % | 38.1 | 15.4 | 36.7 | 31.5 |
| Operating profit, SEK m | 47.4 | -9.0 | 174.6 | 118.1 |
| Operating margin, % | 19.1 | -4.3 | 18.1 | 12.7 |
| Net profit after tax, SEK m | 10.2 | -13.0 | 132.1 | 109.0 |
| Profit discontinued operations, MSEK | - | 4.8 | - | 115.9 |
| Earnings per share, SEK | 0.47 | -0.38 | 11.26 | 10.43 |
| Earnings per share continued operations, SEK | 0.47 | -0.61 | 6.12 | 5.05 |
| Cash flow from operating activities, SEK m | 97.5 | 3.9 | 260.9 | 167.2 |
| EBITDA less capitalized development, SEK m | 63.9 | 4.6 | 222.9 | 163.6 |
| Net debt/EBITDA (12 months) | 0.74 | 1.75 | 0.74 | 1.10 |
| Cash & cash equivalents, SEK m | 258.1 | 142.5 | 258.1 | 231.3 |
INTERIM REPORT, JANUARY – MARCH 2023
CEO's Statement
New long-term agreements with key customers within operating systems contribute to revenue in the quarter and create predictability in our traditional business. Sales in cybersecurity are developing well, while the telecom market remains challenging.
Net sales in the first quarter of 2023 were SEK 248 million, which is 18 percent more than the same period last year. An operating system license contract contributed to significantly higher sales for this product group. We now have new long-term agreements with both key customers in operating systems, which provides stability and predictability for a business that is a declining part of our turnover.
Operating profit before interest, taxes, depreciation, and amortization (EBITDA) amounted to SEK 94 million, corresponding to 38 percent of net sales. The operating cash flow was SEK 98 million, thanks to high invoicing of licenses and maintenance agreements. The profit per share, which was SEK 0.47 in the quarter, was negatively affected by increased interest costs and by unrealized currency effects on assets and liabilities in foreign currency.
Growth for cybersecurity
Our acquisitions and investments in cybersecurity continued to develop well during the quarter. Awareness of cyber threats is increasing in many countries, not least because of a deteriorating geopolitical situation. Telecom operators often find it difficult to protect their customers and networks from cyber-attacks, which in several countries caused authorities and politicians to react. We are well positioned to provide solutions and expertise to mobile operators to detect and eliminate intrusion attempts in communications systems. We see good conditions for winning new customers and business over time, thanks to competitive products and a larger sales and marketing organization.
Challenges in the telecom market
The telecommunications market remains challenging, which has contributed to our network solutions business, as a whole, not developing as expected over the past two years. New 5G systems are delayed, mainly because many customers do not see sufficient revenue potential to justify large investments in new technology. Instead, they continue to use old systems and traditional suppliers, making it harder for smaller companies like Enea to break in. An example is the announcement from a European customer in data management, that the contract signed in 2020 may be terminated early. It is disappointing that we will not be able to complete this project, however it has contributed to the fact that we now have the market-leading solution for 5G Network Data Layer (NDL). During the second quarter, we will carry out a strategic review of our telecom business to assess the market development and the potential of our investments. It is too early to say what this review will result in, but we will prioritize growth areas and take the necessary steps to secure profitability.
Leader in cloud technology
One of the trends at MWC, the big mobile trade fair in Barcelona, was that the major providers of cloud platforms, Microsoft, Amazon Web Services and Google, are increasing their focus on communication systems with a clear ambition to take market share in cloud infrastructure for 5G systems. This is positive for us because our software products, unlike many competitors, are built to execute on different cloud platforms. We were one of the first to start certifying telecom applications on Microsoft's new Nexus platform, launched at MWC in partnership with AT&T. The certification means that our solutions for data management and NDL will be available in Microsoft's business system for all operators who choose to use Nexus as the basis for their networks.
Outlook
Our ambition is to develop Enea into the leading challenger for specialized software in the cybersecurity and telecom market. We are already established with large customers, and we gain new market shares through innovative solutions for the open, cloud-based systems of the future. We compete with large companies by being focused, faster and more agile, and we can attract the best talent. Our goal in the coming years is to generate double-digit growth in Network Solutions, an EBITDA margin over 35 percent, and strong cash flows. Over time, we also aim to make complementary acquisitions to further strengthen our market position.
Significant uncertainty in the global environment and challenges in the telecom market affect our business. However, our objective for 2023 is to achieve a turnover and an EBITDA result in line with the previous year.
Jan Häglund
President and CEO
ENEA
INTERIM REPORT, JANUARY - MARCH 2023
Financial Summary
Profit and loss items are compared to the corresponding period of the previous year. Balance sheet and cash flow items are for the financial position at period end and are compared to the corresponding point of the previous year.
First Quarter, January - March 2023
Revenue
Total revenue in the first quarter amounted to SEK 254.0 million (217.0), consisting of net sales of SEK 247.9 million (210.8) and other operating revenue of SEK 6.1 million (6.1). Other operating revenue includes a SEK 0 million (2.1) R&D grant for 5G development. Net sales increased by 18 percent on the corresponding period of the previous year, a currency-adjusted increase of 13 percent. Currency-adjusted organic growth was 13 percent (7). Acquired growth amounted to SEK 0 million (33.7)
Enea's offering is divided into two product groups: Network Solutions and Operating System Solutions.
Network Solutions
Sales of the Network Solutions product group amounted to SEK 164.2 million (177.7) and decreased by 8 percent in the quarter, or by 13 percent currency adjusted. Currency-adjusted organic growth was -13 percent. This product group was 66 percent (84) of total net sales in the quarter and represents Enea's main revenue stream.
Operating Systems Solutions
Operating Systems sales amounted to SEK 83.6 million (33.1) and increased by 153 percent in the quarter. The increase is mainly driven by a license revenue from one of the key accounts, where sales increased by 228 percent, and were 85 percent (66) of sales for the product group. The Operating Systems Solution product group represented 34 percent (16) of net sales in the quarter.
EMEA
INTERIM REPORT, JANUARY - MARCH 2023
Expenses and Earnings
Costs of Goods and Services Sold
In the first quarter of 2023, Enea's cost of goods and services sold totaled SEK 50.7 million (47.9), equivalent to a gross margin of 80.0 percent (77.9). Gross margin was positively affected by the deal with one key costumer for licenses and support & maintenance for the operating system OSE.
Operating Expenses
In the first quarter, operating expenses amounted to SEK 155.8 million (178.1). Expenses for share-based incentive programs were SEK -3.3 million (3.5) for the quarter, with this expense varying with the share price. Restructuring costs amounted to SEK 0 million (23.6). Depreciation and amortization of SEK 46.6 million (42.3) was charged to operating expenses.
Sales and Marketing Expenses
Sales and marketing expenses were SEK 60.2 million (61.8) in the first quarter, or 24.3 percent (29.3) of net sales. Restructuring expenses were SEK 0 million (11.3) in the quarter. Depreciation and amortization of SEK 0.1 million (0.4) was charged to sales and marketing expenses.
Product Development Expenses
Product development expenses were SEK 73.7 million (90.8) in the first quarter, or 29.7 percent (43.1) of net sales. SEK 30.5 million (27.9) was capitalized in the quarter. Depreciation and amortization of SEK 40.5 million (36.3) were charged to product development expenses, of which amortization of acquisition-related and capitalized development expenses were SEK 39.6 million (34.5).
Product development expenses affecting cash flow, excluding restructuring costs, amounted to SEK 64.6 million (72.2) corresponding to 26.1 percent (34.2), of net sales in the quarter. Restructuring costs were SEK 0 million (12.0).
Administrative Expenses
Administrative expenses were SEK 21.8 million (25.5), representing 8.8 percent (12.1) of net sales in the quarter. Depreciation and amortization of SEK 6.1 million (4.4) was charged to administrative expenses.
EBITDA
EBITDA was SEK 94.4 million (32.5), representing an EBITDA margin of 38.1 percent (15.4).
Adjusted for non-recurring items, EBITDA was SEK 94.4 million (56.1), corresponding to an adjusted EBITDA margin of 38.1 percent (26.6).
Operating Profit/Loss
Operating profit/loss was SEK 47.4 million (-9.0), equivalent to an operating margin of 19.1 percent (-4.3).
Adjusted for non-recurring items, operating profit amounted to SEK 47.4 million (14.6), corresponding to an adjusted operating margin of 19.1 percent (6.9).
Net Financial Income/Expense
Net financial income/expense was SEK -24.4 million (-4.7). External interest income/expense were SEK -7.0 million (-3.4). Unrealized exchange rate fluctuations on financial assets and liabilities had a negative impact of SEK -17.4 million (-1.3) in the quarter.
Tax
The tax expense/income in the quarter was SEK -12.9 million (0.7). The effective tax rate is 56 per cent (0). Tax cost for the quarter is affected by profits in Swedish units that cannot be offset by losses in foreign units.
Profit/Loss for the Quarter
Profit/loss after tax amounted to SEK 10.2 million (-13.0) in the first quarter. Earnings per share amounted to SEK 0.47 (-0.38).
INTERIM REPORT, JANUARY - MARCH 2023
Cash Flow and Financial Position
Cash Flow
The group generated cash flow from operating activities of SEK 97.5 million (3.9) in the quarter. Cash flow from investing activities amounted to SEK -32.9 million (-30.1), of which investments in intangible assets amounted to SEK -30.5 million (-27.9) and purchases of property, plant and equipment amounted to SEK -2.6 million (-2.2). Cash flow from financing activities was SEK -40.7 million (-46.3). Purchases of treasury shares were SEK 0 million (-0.3). Total cash flow for the period amounted to SEK -24.2 million (-72.5).
Investments
Investments in the quarter amounted to SEK 33.1 million (30.0). Depreciation, amortization, and impairment was SEK 42.7 million (37.6). Capitalized product development expenses amounted to SEK 30.5 million (27.9), and the related amortization and impairment was SEK 24.8 million (20.5). Depreciation of leased assets was SEK 4.3 million (3.9) for the quarter.
Financial Position
At end of the quarter, net debt amounted to SEK 262.9 million (554.4), cash and cash equivalents were SEK 258.1 million (142.5), and interest-bearing bank debt amounted to 521.0 million (696.9). Interest-bearing liabilities were divided between non-current liabilities of SEK 521.0 million (474.4), and current liabilities of SEK 0 million (222.6).
The equity ratio was 68.9 percent (59.6), and total assets amounted to SEK 3,347.9 million (3,035.8) at period end. Net debt/EBITDA (12 months) was 0.74 (1.75).
Financing
Enea has a SEK 70 million overdraft facility, of which SEK 0 million had been utilized at the end of the quarter. 2022 Enea entered into three-year facility agreements with a fixed term loan facility of EUR 40 million and a revolving credit facility of SEK 350 million with DnB Bank ASA and Svensk Exportkredit (publ) as lenders. The facilities include customary covenants. The covenants were satisfied as of 31 March 2023. The remaining liability as of 31 March was SEK 521 million.
ENEA
INTERIM REPORT, JANUARY – MARCH 2023
Other Disclosures
Parent Company
The parent company's net sales for January to March amounted to SEK 17.0 million (11.0) and profit/loss before appropriations and tax was SEK 2.2 million (-19.1). The parent company's net financial income/ expense was SEK 1.9 million (-0.1), and cash and cash equivalents were SEK 23.7 million (0) at period end. The parent company's investments in the quarter were SEK 1.0 million (0.1). The parent company had 19 (19) employees at the end of the period. The parent company is non-operational, and its risks primarily relate to the operations of subsidiaries.
Employees
At the end of the quarter, the group had 528 (724) employees. Decrease of staff related to divested operations amounts to 141.
Share-based incentive programs
Enea has one outstanding long-term incentive program.
LTIP21 was approved by the AGM in 2021 and includes approximately 30 senior executives and key employees. Granting of shares is based on Enea's growth of earnings per share in the financial years 2021-2024. Maximum granting in LTIP21 is 243,000 shares, according to AGM resolution.
The provision for expenses related to these programs amounted to SEK 9.3 million (3.5) in the quarter.
Repurchase of Treasury Shares
Enea held 255,952 treasury shares at the end of the period, or 1.2 percent of the total number of shares. No treasury shares were purchased in the period.
The Share and Shareholders
Enea is listed on Nasdaq Stockholm [ENEA]. There is a total of 21,615,231 ordinary shares outstanding and 243,000 class C shares.
The company's largest shareholders are Per Lindberg (34.1 percent), Första AP Fonden (7.8 percent), Handelsbanken Fonder (6.9 percent), and C WorldWide Asset Management (4.9) percent. The 20 largest shareholders hold a total of 73.1 percent of the capital and 72.5 percent of the votes of the company. There were no significant changes of the ownership since end of the previous quarter.
Annual General Meeting
The AGM 2023 will be held on 4 May 4:30 in Kista Science Tower, Färögatan 33, Kista. The notice convening the AGM was published on Enea's website on 31 March 2023.
Nomination Committee
In consultation with the largest shareholders, the Chairman of the Board of Enea AB has established a Nomination Committee for the AGM 2023. The members of the Nomination Committee are: Per Lindberg (own mandate), Niklas Johansson (Handelsbanken Fonder), Sophie Larsén (Första AP-fonden), Henrik Söderberg (C WorldWide Asset Management) and Anders Lidbeck (Chairman of Enea AB). The Nomination Committee has appointed Per Lindberg as Chairman. The duty of the Nomination Committee is to submit proposals for the Chairman and other members of the Board, and fees and other compensation for work on the Board to each of the Board members, to the AGM. The Nomination Committee should also submit proposals on the election and remuneration of auditors. The Nomination Committee should also submit proposals on the process for appointing a nomination committee for the AGM 2024.
Financial Assets and Liabilities
The group applies IFRS 13. This Standard requires disclosures regarding uncertainty in valuations based on the three levels used for financial instruments.
Level 1: Fair value of financial instruments traded on an active market is based on listed market prices on the reporting date. A market is regarded as active if listed prices from a stock exchange, broker, industry group, pricing service or supervisory authority are readily and regularly available and if these prices represent actual and regularly occurring arm's length market transactions. The listed market price used for the group's financial assets is the current purchase price for corporate bonds. These are level 1 instruments.
Level 2: Fair value of financial instruments not traded on an active market (e.g., OTC derivatives are measured with the aid of valuation techniques). The group uses currency derivatives for hedging purposes. Currency hedges are measured at market value by conducting an early allocation of the currency hedge to determine what the forward price would be if the maturity were at the reporting date. As of 31 March 2023, the group's currency hedges amounted to a liability of SEK 0.4 million, which is the total of level 2.
Level 3: The group does not report any financial instruments at level 3 as of 31 March 2023.
For other financial assets and liabilities, carrying amount is consistent with fair value.
| Allocation by level in fair value measurement: 31 March, SEK m | Level1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Derivative instruments used for hedging purposes: | ||||
| Currency derivatives | - | 0.4 | - | 0.4 |
| Total | - | 0.4 | - | 0.4 |
Accounting Policies
This Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting, which is consistent with Swedish legislation by applying RFR's (the Swedish Financial Reporting Board) recommendation RFR 1, Supplementary Accounting Rules for Groups, and RFR 2, Accounting for Legal Entities, for the parent company. The same accounting policies, definitions of key figures and computation methods have been applied as in the most
ENEA
INTERIM REPORT, JANUARY – MARCH 2023
recent annual accounts of the group and the parent company, unless otherwise stated below.
Material Risks and Uncertainties
Enea is mainly active in cybersecurity and telecommunication. The corona pandemic is having a major negative impact on the global economy, affecting some customers' risk appetites and willingness to invest. For Enea, this means some projects being delayed or aborted. Meanwhile, the underlying drivers of telecommunication, involving a continued focus on virtualization, 5G and increased network capacity, remain. One effect of the corona pandemic has been traffic volumes in networks increasing, as many students and business employees work from home. This effect is likely to be partly transient, even if more widespread usage of digital tools and remote working do become a permanent change.
Enea's business strategy is based on developing new products and refining existing solutions, which means substantial investments. At quarter-end, capitalized development expenses amounted to SEK 343.4 million (281.0).
Investments target markets with high growth and profitability potential, after thorough analysis. If despite this, products fail to achieve technical or financial success, the company's business and financial position may be negatively affected. This may lead to changes in strategies and priorities.
Since there were no other significant changes to material risks and uncertainties in the quarter, the reader is referred to the review on pages 44-46 of the most recent Annual Report.
Significant events after the end of the period
In April, Enea announced that the multi-year contract for the 5G Cloud Network Data Layer, signed in June 2020 with a leading European telecom operator, may be terminated by the customer before final delivery from Enea has taken place. The total contract was initially valued to EUR 24 million and has so far generated revenues amounting to EUR 14.5 million. Enea will make reservations for reported revenues but not yet received payments attributable to 2021 and 2022 amounting to 4 MEUR in the second quarter 2023.
Strategic analysis of product segments
Given the weak development of the telecom part within the network solutions product group, the company will during the second quarter carry out a strategic review of the telecom business in order to assess the market development and the potential of completed investments.
Long-term Ambition
Our ambition is to develop Enea into the leading challenger for specialized software in the cybersecurity and telecom market. We are already established with large customers, and we gain new market shares through innovative solutions for the open, cloud-based systems of the future. We compete with large companies by being focused, faster and more agile, and we can attract the best talent. Our goal in the coming years is to generate double-digit growth in Network Solutions, an EBITDA margin over 35 percent, and strong cash flows. Over time, we also aim to make complementary acquisitions to further strengthen our market position.
Outlook for 2023
Significant uncertainty in the global environment and challenges in the telecom market affect our business. However, our objective for 2023 is to achieve a turnover and an EBITDA result in line with the previous year.
The Board of Directors
Kista, Sweden April 27, 2023
This Interim Report has not been examined by the company's Auditors. This document is a translation of the original Swedish interim Report, which was formally approved by the Board of Directors
This is information that Enea AB (publ) is required to publish under the EU Market Abuse Regulation. The information was submitted for publication on the authority of Jan Häglund on 27 April 2023 at 7:20 a.m.
ENEA
INTERIM REPORT, JANUARY - MARCH 2023
Consolidated Statement of Comprehensive Income
| SEK m | Jan-Mar | 12 months | Full year | |
|---|---|---|---|---|
| 2023 | 2022 | Apr-Mar | 2022 | |
| Net sales | 247.9 | 210.8 | 964.7 | 927.7 |
| Other operating revenue | 6.1 | 6.1 | 37.1 | 37.1 |
| Total revenue | 254.0 | 217.0 | 1,001.8 | 964.7 |
| Cost of goods and service sold | -50.7 | -47.9 | -216.5 | -213.7 |
| Gross profit | 203.3 | 169.0 | 785.3 | 751.1 |
| Sales and marketing costs | -60.2 | -61.8 | -230.8 | -232.3 |
| R&D costs | -73.7 | -90.8 | -281.6 | -298.6 |
| General and administration costs | -21.8 | -25.5 | -98.3 | -102.0 |
| Operating profit 1) 2) 3) 4) | 47.4 | -9.0 | 174.6 | 118.1 |
| Net financial income/expense | -24.4 | -4.7 | -36.8 | -17.2 |
| Profit before tax | 23.1 | -13.7 | 137.8 | 101.0 |
| Tax | -12.9 | 0.7 | -5.6 | 8.0 |
| Profit after tax continued operations | 10.2 | -13.0 | 132.1 | 109.0 |
| Profit discontinued operations | - | 4.8 | 111.0 | 115.9 |
| Net profit for the period | 10.2 | -8.2 | 243.2 | 224.8 |
| OTHER COMPREHENSIVE INCOME | ||||
| Items that may be reclassified to profit or loss | ||||
| Change in hedging reserve, after tax | 0.3 | -0.4 | -0.4 | -1.2 |
| Exchange rate differences | 9.2 | 37.5 | 251.1 | 279.3 |
| Items that will not be reclassified to profit or loss | ||||
| Pension obligations | 0.2 | - | 6.0 | 5.8 |
| Total comprehensive income for the period, net of tax | 19.9 | 28.9 | 499.9 | 508.8 |
| Profit for the period attributable to equity holders of the parent company | 10.2 | -8.2 | 243.2 | 224.8 |
| parent company | 19.9 | 28.9 | 499.9 | 508.8 |
| 1) including depreciation and write-down of tangible assets | 3.0 | 3.0 | 12.1 | 12.2 |
| 2) Including amortization and write-down of intangible assets | 39.7 | 34.6 | 151.9 | 146.8 |
| 3) Including amortization of right-to-use assets | 4.3 | 3.9 | 15.7 | 15.3 |
| 4) Non-recurring items included in operating profit | ||||
| Operating profit including non-recurring items | 47.4 | -9.0 | 174.6 | 118.1 |
| Restructuring costs | - | 23.6 | 0.3 | 23.9 |
| Operating profit excluding non-recurring items | 47.4 | 14.6 | 174.9 | 142.1 |
Key Figures - Income Statement
| SEK m | Jan-Mar | 12 months | Full year | |
|---|---|---|---|---|
| 2023 | 2022 | Apr-Mar | 2022 | |
| Earnings per share (SEK) | 0.47 | -0.38 | 11.26 | 10.43 |
| Earnings per share after full dilution (SEK) | 0.47 | -0.38 | 11.26 | 10.43 |
| Earnings per share continued operations (SEK) | 0.47 | -0.61 | 6.12 | 5.05 |
| Earnings per share after full dilution continued operations (SEK) | 0.47 | -0.61 | 6.12 | 5.05 |
| Average number of shares before dilution (million) | 21.6 | 21.5 | 21.6 | 21.6 |
| Average number of shares after dilution (million) | 21.6 | 21.5 | 21.6 | 21.6 |
| Net sales growth (%) | 18 | 15 | 8 | 7 |
| Gross margin (%) | 80.0 | 77.9 | 78.4 | 77.9 |
| EBITDA (SEK m) | 94.4 | 32.5 | 354.3 | 292.4 |
| Operating costs as % of revenue | ||||
| - Sales and marketing costs | 24.3 | 29.3 | 23.9 | 25.0 |
| - R&D costs | 29.7 | 43.1 | 29.2 | 32.2 |
| - G&A costs | 8.8 | 12.1 | 10.2 | 11.0 |
| Operating margin excl. non-recurring items (%) | 19.1 | 6.9 | 18.1 | 15.3 |
| Operating margin (%) | 19.1 | -4.3 | 18.1 | 12.7 |
ENEA
INTERIM REPORT, JANUARY - MARCH 2023
Consolidated Statement of Financial Position
| SEK m | 31 Mar 2023 | 31 Mar 2022 | 31 dec 2022 |
|---|---|---|---|
| ASSETS | |||
| Intangible assets | 2,491.9 | 2,338.9 | 2,493.7 |
| - goodwill | 1,738.8 | 1,620.9 | 1,737.1 |
| - capitalized development | 343.2 | 281.0 | 338.3 |
| - product rights | 56.2 | 66.4 | 59.6 |
| - customer contracts | 281.6 | 307.0 | 290.7 |
| - trademarks | 29.1 | 27.0 | 29.2 |
| - right-to-use assets | 41.3 | 36.0 | 37.1 |
| - other intangible assets | 1.6 | 0.5 | 1.7 |
| Inventories, tools and installations | 21.4 | 24.6 | 21.5 |
| Deferred tax assets | 21.9 | 19.9 | 22.4 |
| Other fixed assets | 3.4 | 4.3 | 3.6 |
| Total fixed assets | 2,538.7 | 2,387.8 | 2,541.2 |
| Current receivables | 551.1 | 505.4 | 545.4 |
| Cash and cash equivalents | 258.1 | 142.5 | 231.3 |
| Total current assets | 809.2 | 648.0 | 776.7 |
| Total assets | 3,347.9 | 3,035.8 | 3,318.0 |
| EQUITY and LIABILITIES | |||
| Equity | 2,308.0 | 1,809.4 | 2,291.2 |
| Provisions | 4.0 | 2.6 | 4.5 |
| Long-term liabilities | |||
| Deferred tax liabilities | 116.2 | 125.4 | 116.3 |
| Long-term liabilities, interest-bearing | 521.0 | 474.4 | 545.1 |
| Long-term liabilities, non-interest-bearing | 17.5 | 22.9 | 17.0 |
| Long-term liabilities, leasing | 26.6 | 20.8 | 23.4 |
| Total long-term liabilities | 681.4 | 643.4 | 701.8 |
| Current liabilities | |||
| Current liabilities, interest-bearing | 0.0 | 222.6 | 6.6 |
| Current liabilities, non-interest-bearing | 338.8 | 341.6 | 299.2 |
| Current liabilities, leasing | 15.7 | 16.1 | 14.5 |
| Total current liabilities | 354.5 | 580.3 | 320.4 |
| Total equity and liabilities | 3,347.9 | 3,035.8 | 3,318.0 |
Consolidated Statement of Changes in Equity
| SEK m | 31 Mar 2023 | 31 Mar 2022 | 31 dec 2022 |
|---|---|---|---|
| At beginning of period | 2,291.2 | 1,776.0 | 1,776.0 |
| Total comprehensive income for the period | 19.9 | 28.9 | 508.8 |
| New share issue | - | 0.3 | 0.3 |
| Share saving program | -3.1 | 4.5 | 6.3 |
| Repurchasing of own shares | - | -0.3 | -0.3 |
| At end of period | 2,308.0 | 1,809.4 | 2,291.2 |
IENEA
INTERIM REPORT, JANUARY - MARCH 2023
Consolidated Statement of Cash Flows
| Jan-Mar | Full year | ||
|---|---|---|---|
| SEK m | 2023 | 2022 | 2022 |
| Profit before tax | 23.1 | -8.3 | 218.0 |
| Adjustment for non-cash items | 49.4 | 48.6 | 69.7 |
| Tax paid/received | -2.9 | -1.0 | -7.3 |
| Operating cash flow before changes in working capital | 69.5 | 39.2 | 280.4 |
| Cash flow from changes in working capital | 28.1 | -35.4 | -113.2 |
| Cash flow from operating activities | 97.5 | 3.9 | 167.2 |
| Cash flow from investing activities | -32.9 | -30.1 | -138.8 |
| Cash flow from acquisition of operations, net | - | -0.0 | - |
| Cash flow from divestment of operations, net | - | - | 173.2 |
| Cash flow from financing activities, raising of loans | 0.2 | 4.7 | 82.8 |
| Cash flow from financing activities, amortization of loans | -36.6 | -46.4 | -272.3 |
| Cash flow from financing activities, amortization of lease liability | -4.1 | -4.6 | -16.4 |
| Cash flow from financing activities, repurchase of shares | - | -0.3 | -0.3 |
| Cash flow for the period | 24.2 | -72.5 | -4.2 |
| Cash and cash equivalents at the beginning of period | 231.3 | 211.4 | 211.4 |
| Exchange rate difference in cash and cash equivalents | 2.6 | 3.6 | 24.1 |
| Cash and cash equivalents at the end of period | 258.1 | 142.5 | 231.3 |
Key Figures - Balance Sheet and Cash Flow Statement
| Jan-Mar | 12 months | Full year | ||
|---|---|---|---|---|
| SEK m | 2023 | 2022 | Apr-Mar | 2022 |
| Cash and cash equivalents (SEK m) | 258.1 | 142.5 | 258.1 | 231.3 |
| Equity ratio (%) | 68.9 | 59.6 | 68.9 | 69.1 |
| Equity per share (SEK) | 106.8 | 84.2 | 106.8 | 106.1 |
| Cash flow from operating activities per share (SEK) | 4.5 | 0.2 | 12.1 | 7.8 |
| Net debt (SEK m) | 262.9 | 554.4 | 262.9 | 320.5 |
| Number of employees at end of period | 528 | 724 | 528 | 543 |
| Return on equity (%) | 11.8 | 11.1 | ||
| Return on capital employed (%) | 16.2 | 14.7 | ||
| Return on assets (%) | 13.8 | 12.6 |
Parent Company
Income Statement
| Jan-Mar | Full year | ||
|---|---|---|---|
| SEK m | 2023 | 2022 | 2022 |
| Revenue | 17.0 | 11.0 | 42.2 |
| Operating costs | -16.7 | -30.0 | -99.4 |
| Operating profit | 0.3 | -19.0 | -57.1 |
| Financial net | 1.9 | -0.1 | -4.7 |
| Profit/loss after financial net | 2.2 | -19.1 | -61.8 |
| Appropriations | - | - | 55.9 |
| Profit/loss before tax | 2.2 | -19.1 | -5.9 |
| Tax | -0.2 | 3.9 | - |
| Net profit/loss for the period | 2.0 | -15.2 | -5.9 |
Balance Sheet
| 31 Mar | 31 Dec | ||
|---|---|---|---|
| SEK m | 2023 | 2022 | 2022 |
| ASSETS | |||
| Fixed assets | 214.6 | 212.9 | 214.0 |
| Current assets | 1,281.0 | 1,369.0 | 1,244.6 |
| Total assets | 1,495.6 | 1,581.9 | 1,458.6 |
| EQUITY AND LIABILITIES | |||
| Equity | 831.8 | 821.8 | 833.0 |
| Untaxed reserves | 0.9 | 2.7 | 0.9 |
| Long-term liabilities, interest-bearing | 519.3 | 474.4 | 543.2 |
| Current liabilities, interest-bearing | - | 221.8 | - |
| Current liabilities, other | 143.5 | 61.2 | 81.5 |
| Total equity and liabilities | 1,495.6 | 1,581.9 | 1,458.6 |
EMEA
INTERIM REPORT, JANUARY – MARCH 2023
Quarterly Data*
| SEK m | 2023 | 2021 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | |
| INCOME STATEMENT | ||||||||||
| Net sales | 247.9 | 271.0 | 229.3 | 216.6 | 210.8 | 252.3 | 229.5 | 198.0 | 183.5 | 217.7 |
| Other operating revenue | 6.1 | 2.1 | 23.6 | 5.2 | 6.1 | 14.1 | 2.3 | 5.3 | 2.6 | 4.4 |
| Cost of goods and services sold | -50.7 | -64.5 | -53.6 | -47.6 | -47.9 | -48.6 | -40.4 | -28.1 | -25.4 | -30.6 |
| Gross profit | 203.3 | 208.6 | 199.3 | 174.2 | 169.0 | 217.8 | 191.4 | 175.1 | 160.6 | 191.5 |
| Sales and marketing costs | -60.2 | -61.5 | -61.4 | -47.7 | -61.8 | -45.1 | -46.4 | -39.8 | -42.7 | -45.6 |
| R&D costs | -73.7 | -67.2 | -69.9 | -70.8 | -90.8 | -92.8 | -64.9 | -54.7 | -53.8 | -62.8 |
| General and administration costs | -21.8 | -22.1 | -27.0 | -27.4 | -25.5 | -22.3 | -37.2 | -23.0 | -24.4 | -23.1 |
| Operating profit | 47.4 | 57.8 | 41.0 | 28.3 | -9.0 | 57.5 | 42.9 | 57.7 | 39.7 | 60.0 |
| Net financial income/expense | -24.4 | -34.8 | 14.4 | 7.9 | -4.7 | -4.5 | 8.8 | -3.5 | 3.8 | -15.1 |
| Profit before tax | 23.1 | 23.0 | 55.4 | 36.2 | -13.7 | 53.0 | 51.8 | 54.2 | 43.5 | 44.9 |
| Tax | -12.9 | 16.1 | -18.8 | 10.0 | 0.7 | -0.6 | -6.2 | -5.8 | -4.5 | -1.1 |
| Profit after tax | 10.2 | 39.2 | 36.6 | 46.2 | -13.0 | 52.5 | 45.6 | 48.4 | 39.0 | 43.9 |
| Result from discontinued operations | - | 0.2 | 15.8 | 95.1 | 4.8 | 2.1 | 4.6 | 3.6 | 4.5 | 4.6 |
| Net profit for the period | 10.2 | 39.3 | 52.4 | 141.3 | -8.2 | 54.5 | 50.2 | 52.0 | 43.6 | 48.5 |
| Other comprehensive income | 9.8 | -50.5 | 134.8 | 162.6 | 37.0 | 37.9 | 27.7 | -30.2 | 71.3 | -113.4 |
| Total comprehensive income | 19.9 | -11.1 | 187.2 | 303.9 | 28.9 | 92.4 | 77.9 | 21.8 | 114.9 | -66.0 |
| BALANCE SHEET | ||||||||||
| Intangible assets | 2,491.9 | 2,493.7 | 2,546.2 | 2,435.0 | 2,338.9 | 2,313.4 | 2,305.5 | 1,777.6 | 1,801.9 | 1,734.5 |
| Other fixed assets | 43.3 | 43.9 | 34.9 | 39.1 | 44.6 | 50.3 | 36.3 | 35.5 | 39.1 | 40.7 |
| Other financial fixed assets | 3.4 | 3.6 | 4.1 | 3.4 | 4.3 | 4.3 | 5.0 | 5.1 | 5.0 | 6.1 |
| Current receivables | 551.1 | 545.4 | 509.3 | 518.0 | 505.4 | 454.0 | 461.0 | 353.0 | 379.5 | 357.5 |
| Cash and cash equivalents | 258.1 | 231.3 | 264.0 | 218.0 | 142.5 | 211.4 | 176.4 | 250.5 | 236.9 | 195.1 |
| Total assets | 3,347.9 | 3,318.0 | 3,358.5 | 3,213.5 | 3,035.8 | 3,033.3 | 2,984.1 | 2,421.7 | 2,462.5 | 2,334.0 |
| Shareholders' equity | 2,308.0 | 2,291.2 | 2,301.8 | 2,116.1 | 1,809.4 | 1,776.0 | 1,699.4 | 1,629.2 | 1,606.0 | 1,487.5 |
| Long-term liabilities, interest-bearing | 547.7 | 568.6 | 563.1 | 593.7 | 495.2 | 491.2 | 592.1 | 181.2 | 315.5 | 317.7 |
| bearing | 137.7 | 137.8 | 155.2 | 149.2 | 150.8 | 147.9 | 146.6 | 116.2 | 116.1 | 115.0 |
| Current liabilities, interest-bearing | 15.7 | 21.1 | 10.9 | 13.8 | 238.7 | 285.8 | 240.2 | 247.3 | 163.0 | 159.0 |
| bearing | 338.8 | 299.2 | 327.5 | 340.7 | 341.6 | 332.4 | 305.9 | 247.7 | 262.0 | 254.9 |
| Total equity and liabilities | 3,347.9 | 3,318.0 | 3,358.5 | 3,213.5 | 3,035.8 | 3,033.3 | 2,984.1 | 2,421.7 | 2,462.5 | 2,334.0 |
| CASH FLOW | ||||||||||
| Cash flow from operating activities | 97.5 | -2.1 | 92.1 | 73.3 | 3.9 | 142.4 | 28.3 | 94.3 | 68.8 | 61.5 |
| Cash flow from investing activities | -32.9 | -34.2 | -36.4 | -38.2 | -30.1 | -38.3 | -34.8 | -33.1 | -32.3 | -31.2 |
| Cash flow from financing activities | -40.4 | 1.4 | -34.5 | -126.4 | -46.3 | -73.5 | 310.2 | -44.6 | -0.5 | 86.7 |
| Cash flow for the period | 24.2 | -34.9 | 21.2 | -91.3 | -72.5 | 30.6 | 303.7 | 16.6 | 36.0 | 116.9 |
| Cash flow for the period, from acquisition/divestment of operation | - | -0.1 | 14.6 | 158.8 | 0.0 | -0.0 | -379.3 | - | - | -90.5 |
| Total cash flow for the period | 24.2 | -35.0 | 35.9 | 67.4 | -72.5 | 30.6 | -75.7 | 16.6 | 36.0 | 26.5 |
IENEA
INTERIM REPORT, JANUARY - MARCH 2023
Five-year Summary*
| SEK m | 2022 | 2021 | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|
| INCOME STATEMENT | |||||
| Net Sales | 927.7 | 863.2 | 780.6 | 846.2 | 679.3 |
| Other operating revenue | 37.1 | 24.3 | 13.7 | 17.1 | 17.5 |
| Operating expenses | -846.6 | -689.7 | -620.9 | -615.4 | -510.5 |
| Operating profit | 118.1 | 197.8 | 173.4 | 247.9 | 186.3 |
| Net financial income/expense | -17.2 | 4.7 | -24.1 | -52.0 | -28.1 |
| Profit before tax | 101.0 | 202.5 | 149.4 | 195.9 | 158.2 |
| Tax | 8.0 | -17.0 | -19.5 | -31.0 | -18.0 |
| Profit after tax continued operations | 109.0 | 185.5 | 129.8 | 164.9 | 140.2 |
| Profit discontinued operations | 115.9 | 14.8 | 12.5 | 4.8 | 1.4 |
| Net profit for the period | 224.8 | 200.3 | 142.3 | 169.7 | 141.7 |
| BALANCE SHEET | |||||
| Intangible assets | 2,493.7 | 2,314.4 | 1,734.5 | 1,672.3 | 1,381.4 |
| Other fixed assets | 43.9 | 49.3 | 40.7 | 27.6 | 33.7 |
| Other financial fixed assets | 3.6 | 4.3 | 6.1 | 3.4 | 3.1 |
| Current receivables | 545.4 | 454.0 | 357.5 | 364.3 | 426.8 |
| Cash and cash equivalents | 231.3 | 211.4 | 195.1 | 146.1 | 74.7 |
| Total assets | 3,318.0 | 3,033.3 | 2,334.0 | 2,213.8 | 1,919.7 |
| Shareholders' equity | 2,291.2 | 1,776.0 | 1,487.5 | 1,481.3 | 985.8 |
| Long-term liabilities, interest-bearing | 545.1 | 469.8 | 291.7 | 263.0 | 539.8 |
| Long-term liabilities, non-interest-bearing | 161.3 | 169.3 | 141.0 | 119.6 | 86.8 |
| Current liabilities, interest-bearing | 6.6 | 268.8 | 142.2 | 99.1 | 94.3 |
| Current liabilities, non-interest-bearing | 313.8 | 349.3 | 271.7 | 250.8 | 212.9 |
| Total equity and liabilities | 3,318.0 | 3,033.3 | 2,334.0 | 2,213.8 | 1,919.7 |
| CASH FLOW | |||||
| Cash flow from operating activities | 167.2 | 333.7 | 274.2 | 245.2 | 168.6 |
| Cash flow from investing activities | -138.8 | -138.4 | -130.9 | -90.9 | 30.5 |
| Cash flow from investing activities-divestment of operation | 173.2 | - | - | - | - |
| Cash flow from investing activities-acquisition of operation | - | -379.4 | -90.5 | -47.1 | -954.4 |
| Cash flow from financing activities | -205.9 | 191.5 | 8.9 | -35.9 | 514.2 |
| Cash flow for the period | -4.2 | 7.5 | 61.6 | 71.2 | -241.1 |
| KEY FIGURES | |||||
| Net sales growth, % | 7 | 11 | -8 | 25 | 50 |
| Operating margin, % | 12.7 | 22.9 | 22.2 | 29.3 | 27.4 |
| Profit margin, % | 10.9 | 23.5 | 19.1 | 23.1 | 23.3 |
| Return on capital employed, % | 11.1 | 13.2 | 10.4 | 15.2 | 16.7 |
| Return on equity, % | 14.7 | 12.3 | 9.6 | 13.8 | 16.3 |
| Return on total capital, % | 12.6 | 11.1 | 8.8 | 12.9 | 13.6 |
| Interest coverage ration, multiple | 1.3 | 3.1 | 3.9 | 3.8 | 4.0 |
| Equity ratio, % | 69.1 | 58.6 | 63.7 | 66.9 | 51.4 |
| Liquidity, % | 242.4 | 107.6 | 133.5 | 145.9 | 163.2 |
| EBITDA | 292.4 | 352.6 | 275.4 | 328.5 | 225.5 |
| Net debt/EBITDA | 1.10 | 1.50 | 0.87 | 0.66 | 2.48 |
| Average number of employees | 619 | 504 | 403 | 389 | 298 |
| Net sales per employee, SEK m | 1.5 | 1.7 | 1.9 | 2.2 | 2.3 |
| Net asset value per share, SEK | 106.06 | 82.21 | 69.09 | 69.54 | 50.99 |
| Earnings per share, SEK | 10.43 | 9.30 | 6.63 | 8.47 | 7.33 |
| Earnings per share continued operations, SEK | 5.05 | 8.61 | 6.05 | 8.23 | 7.25 |
IENEA
INTERIM REPORT, JANUARY – MARCH 2023
Financial Definitions
Acquired growth
Revenues in the period from acquired entities not included. In the corresponding period of the previous year.
Cash flow from operating activities per share
Cash flow from operating activities in relation to the average number of shares.
Capital employed
Total assets less non-interest-bearing liabilities including deferred tax liabilities. Average capital employed is computed as opening plus closing capital employed divided by two.
Debt service ratio
Cash flow from operating activities - ongoing investment + total financial expenses) in relation to the principal and total financial expenses over a reference period of twelve (12) months.
Dividend per share
Dividend for the current financial year divided by the number of shares on the reporting date.
Earnings per share
Profit after tax in relation to the average number of shares.
EBITDA
(Earnings before interest, taxes, depreciation and amortization)
Earnings before financial items plus depreciation.
Adjusted EBITDA
EBITDA adjusted for non-recurring items.
EBITDA less capitalized development costs
EBITDA minus capitalized development expenses in the period.
Equity per share
Equity in relation to the total number of shares outstanding.
Equity ratio
Equity including minority interests in relation to total assets.
Gross margin
Gross profit in relation to revenue.
Interest coverage ratio
Profit after financial items plus financial expenses in relation to financial costs.
Liquidity
Cash and cash equivalents, including current investments and receivables, in relation to current liabilities after financial items.
Net asset value per share
Net asset value, equivalent to equity, in relation to the total number of shares outstanding.
Net debt
Interest-bearing liabilities and non-contingent acquisition related liabilities less cash and cash equivalents and financial investments, i.e. negative net cash.
Net sales growth
Revenue in the period in relation to the previous period's revenue.
Net sales per employee
Revenue in relation to the average number of employees.
Non-recurring items
Items of a non-repeating nature in normal operating activities. Non-recurring items include restructuring expenses, non-recurring write-downs, expenses for legal consulting relating to major disputes and transaction and integration expenses for major acquisitions. Transaction expenses include costs for legal and financial consulting but exclude financing expenses. Reversed contingent consideration are also included in non-recurring items. The purpose of specifying these items is to clarify the progress of underlying operations.
Operating margin
Operating profit in relation to revenue.
Operating profit excl. non-recurring items
Profit from operations before financial items and tax, adjusted for non-recurring items.
Profit margin
Profit/loss after financial items in relation to revenue.
Return on capital employed
Operating profit plus financial income related to average capital employed.
Return on equity
Operating profit plus financial income related to average capital employed.
Return on total capital
Profit after financial items plus financial costs in relation to average total assets.
ENEA
INTERIM REPORT, JANUARY – MARCH 2023
Alternative Performance Measures
This Interim Report uses non-IFRS measures that Enea and other parties use to evaluate Enea's results of operations. These measures provide management and investors with significant information to analyze trends in the company's business operations. These non-IFRS measures are intended to complement, but not replace, financial measures presented in accordance with IFRS.
| Jan-Mar | Full year | ||
|---|---|---|---|
| 1. Reconciliation of net sales growth | 2023 | 2022 | 2022 |
| Net sales, SEK million | 247.9 | 210.8 | 927.7 |
| Net sales growth, SEK million | 37.0 | 27.3 | 64.5 |
| Net sales growth, % | 18 | 15 | 7 |
| Currency effect, unchanged exchange rates compared to previous year, SEK m | 9.5 | 9.5 | 59.9 |
| Currency effect, unchanged exchange rates compared to previous year, % | 5 | 5 | 7 |
| Net sales growth, unchanged exchange rates compared to previous year, SEK m | 27.6 | 17.8 | 4.6 |
| Net sales growth, unchanged exchange rates compared to previous year, % | 13 | 10 | 1 |
| Jan-Mar | Full year | ||
| --- | --- | --- | --- |
| 2. Reconciliation of financial income/expense | 2023 | 2022 | 2022 |
| Financial income, SEK million | 72.6 | 64.8 | 282.0 |
| Financial expense, SEK million | -97.0 | -69.5 | -299.1 |
| Reported financial income/expense | -24.4 | -4.7 | -17.2 |
IENEA 14
INTERIM REPORT, JANUARY – MARCH 2023
About Enea
Enea is one of the world's leading providers of software products for telecommunication and cybersecurity. These products, which are created for cloud-native platforms, support and protect services across enterprise networks, mobile systems (4G and 5G), as well as Wi-Fi networks. Over four and a half billion people rely on Enea's technology every day when using their mobile phones or connecting to the Internet.
Enea has development centers and sales offices in Europe, North America, and Asia. A high share of revenue is sourced from the Network Solutions product area, which includes mobile and fixed line communication, as well as enterprise networks, and the software Enea delivers enables a raft of critical functions. For example, mobile operators can enhance network security, ensure consistent high quality of different types of service, and process large data volumes efficiently. These products and solutions are sold direct to network operators and can also integrate into solutions from system vendors. Enea also has a global services organization developing software on assignment from customers in different sectors subject to stringent performance and reliability standards, including solutions for medical devices, the automotive industry and telecommunication.
Being selective and focusing on market segments with good profitability and growth potential is an important component of Enea's strategy. Investments target those sectors where Enea has the greatest potential to evolve from disrupter to market leader. Cybersecurity and traffic management for mobile networks, and classification of network traffic are three segments where Enea has achieved world leadership.
Enea is listed on Nasdaq Stockholm [ENEA], and its head offices are in Kista, Stockholm.
For More Information:
Jan Häglund, President and CEO
email: [email protected]
Ola Burmark, CFO
email: [email protected]
Enea AB (556209-7146)
Jan Stenbecks Torg 17
P.O. Box 1033
SE-164 21 Kista, Sweden
Financial calendar and AGM:
Annual General Meeting 4 May 2023
Interim Report, January – June 18 July 2023
Interim Report, January – September 26 October 2023
Annual Statement 1 February 2024
Financial information is also available on Enea's website www.enea.com