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HMS Networks

Annual Report Feb 7, 2013

2921_10-k_2013-02-07_7eee4dee-f6ef-48d7-8fdc-af6d06589335.pdf

Annual Report

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hms networks YEAR-END REPORT 2012

JANUARY - DECEMBER 2012

  • q Net sales for the full year reached SEK 382 m (384), corresponding to a 1 % decrease. The revaluation of the Swedish currency had a minor impact on net sales
  • q Operating profit reached SEK 64 m (72), equal to a 17 % (19) operating margin
  • q Order intake for the year increased to SEK 424 m (388), corresponding to a 10 % increase in local currencies
  • q Cash flow from operating activities amounted to SEK 82 m (46)
  • q Profit after taxes totaled SEK 52 m (54) and result per share amounted to SEK 4.64 (4.84)
  • q The Board of Directors propose a dividend to the amount of SEK 2.25 (2.25)
  • q Net sales and operating result corresponds to levels indicated in the press release issued on January 17, 2013

Fourth quarter

  • q Net sales for the fourth quarter reached SEK 87 m (95) corresponding to a 8 % decrease and operating result reached SEK 6 m (10)
  • q Order intake during the fourth quarter was SEK 100 m (83)

Subsequent events

q HMS acquires German IXXAT GmbH, a leading supplier of communication technology

Comment from the CEO

The fourth quarter saw a decreased amount of delivered products which resulted in zero growth during 2012 and a 17% operating margin – far below our expectations. In spite of the weak short-term market we see an inflow of new design-wins and customer orders which allow us to continue according to our long-term strategy, but with a persisting cost-awareness. The development of new technology platforms within Safety and our new Embedded platform continue according to plan.

During the quarter, we have seen a very diversified market with a fairly positive development in North America, while the European market has slowed down. All in all, we meet a cautious market with uncertain conditions and we expect our customers to have a conservative approach until the market conditions stabilize.

Our new generation of Anybus CompactCom (in Chip, Brick and Module format) has been received positively by the market and in 2013, we will focus on securing design-wins for this new product platform.

In the beginning of 2013, HMS acquired German IXXAT GmbH, with a turnover of EUR 14 m and 85 employees. IXXAT's hi-tech products and services are great supplements to HMS's operations. Their strong position on the important German market will reinforce HMS's presence on the world's leading market for industrial communication solutions.

IXXAT is world-leading when it comes to CAN-based communication technology and they operate within business segments which will be important for HMS's future business. We also see great opportunities for synergies when it comes to development of new technology platforms, manufacturing and logistics.

Through this acquisition, HMS employs 350 employees and has a turnover of SEK 500 m. We have become more powerful and we have further established our world-leading position within industrial communication.

We will continue to focus on growth for our three brands Anybus, Netbiter and IXXAT. Our market is still uncertain in the short term, which makes it important to continually balance our long-term strategy for growth with a cautious approach when it comes to costs. In the long run, we expect the market for industrial communication and remote management to grow.

The acquisition of IXXAT means that HMS trengthens its position on the important German market, says Staffan Dahlström, CEO for HMS Networks AB. "

Quarterly data Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
2012 2012 2012 2012 2011 2011 2011 2011
Net sales (SEK m) 87 99 99 96 95 101 97 92
Order intake (SEK m) 100 95 113 116 83 108 100 97
Operating profit (SEK m) 6 23 20 14 10 24 20 18
Gross margin (%) 57.6 59.9 60.6 61.9 60.8 60.6 61.3 59.6
Operating margin (%) 7.2 23.4 20.2 14.9 10.5 24.2 21.0 19.3
Return on capital (%) 16.3 16.2 17.7 17.6 18.6 21.6 22.1 22.6
Earnings per share (SEK) 0.86 1.49 1.36 0.94 0.71 1.67 1.34 1.11
Equity per share (SEK) 30.21 29.43 28.23 27.74 26.77 25.96 24.41 25.08
Cash flow for operating activities per share (SEK) 1.67 2.23 2.63 0.73 0.25 1.74 2.06 -0.08
Yearly data 2012 2011 2010 2009 2008 2007 2006
Net sales (SEK m) 382 384 345 245 317 270 227
Order intake (SEK m) 424 388 342 258 313 268 233
Operating profit (SEK m) 64 72 84 31 85 55 52
Gross margin (%) 60.1 60.6 60.2 58.4 57.4 52.6 50.9
Operating margin (%) 16.7 18.8 24.2 12.7 26.9 20.2 22.7
Return on capital (%) 16.3 18.6 23.2 8.8 28.6 17.5 24.3
Earnings per share (SEK) 4.64 4.84 5.41 1.88 5.43 2.81 3.21
Equity per share (SEK) 30.21 26.77 25.30 21.25 20.91 17.05 14.85
Cash flow for operating activities per share (SEK) 7.27 3.96 6.71 2.89 6.52 3.29 2.79

Net sales

Net sales for 2012 amounted to SEK 381.8 m (383.6). In total the revaluation of the Swedish currency in relation to the major HMS currencies had a SEK 2.2 m negative effect on net sales, compared to the previous year. The order intake amounted to SEK 424.1 m (387.7).

Net sales for the fourth quarter 2012 totaled to SEK 87.3 m (94.8), corresponding to a 8.0 % decrease compared to the same quarter the previous year. Adjusted for a SEK -3.7 m currency effect the volume decrease was 4.1 % in local currencies. Order intake increased with SEK 16.7 m to SEK 99.6 m (82.9), of which SEK 85.8 m will be delivered during the upcoming twelve months. In local currencies order intake increased with 24.6 %.

Operating profit

Operating profit for 2012 totaled to SEK 63.7 m (72.2), equivalent to an operating margin of 16.7 % (18.8). Currency effects had a negative impact on the operating result with SEK 0.4 m compared to the previous year.

The operating profit for the fourth quarter 2012 totaled to SEK 6.2 m (9.9), corresponding to a 7.2 % (10.5) operating margin. Changes in exchange rates had a SEK 2.1 m negative impact compared with the same period the previous year.

Tax

The tax charge for the year was SEK 13.0 m (19.8). The tax charge for the current period has been calculated on the basis of the tax situation applying to the Group at present and the profit development of the reporting entities belonging to the Group. Revaluation of deferred taxes, as a result of changes in the Swedish tax rate, had a SEK 4.4 m positive effect on the Group's tax charge.

Equity

The Group's equity amounted to SEK 342.1 m (298.5). The total number of shares at the end of the period was 11,322,400. The Group's equity/assets ratio improved to 81.9 % (76.3).

The graph shows turnover per quarter on the bars referring to the scale on the left axis. The line shows turnover for the latest 12 month period referring to the scale on the axis to the right.

The graph shows operating result per quarter in the bars referring to the scale on the left axis. The line shows operating result for the last 12 month period referring to the scale on the axis to the right.

Currency effects

Assets and liabilities in foreign currencies are revaluated at closing date. Currency hedging contracts are revaluated at the date of closing and are also affecting the result on the date of expiration. Changes in book value due to revaluation of operating balance sheet items and currency hedging contracts are disclosed as other operating income and other operating expenses. Changes in book value related to assets in foreign currencies i.e. liquid funds, are disclosed as financial income and expenses. Net sales and expenses are affected by changes in exchange rates. This will have an impact on income and costs.

Net sales for the year consist of 57 % in EURO, 25 % in USD, 10 % in Japanese Yen and 8 % in SEK and other currencies. Cost of goods sold consists of 44 % in EURO, 15 % in USD and 1 % in Japanese Yen. Operating expenses consists of 18 % in EURO, 9 % in USD, 7 % in Japanese Yen and 66 % of SEK and other currencies.

The Group applies a policy for currency hedging described in the annual report.

Cash flow, investments and financial position

Cash flow from operating activities for the full year 2012 amounted to SEK 81.8 m (46.0).

The investments in tangible assets for the year totaled SEK 12.2 m (9.3). Investments in intangible assets for the period totaled SEK 30.1 m (10.7) and comprise internal development costs. The increase in intangible assets consists of continued development of our new embedded platform, new technical platforms within the safety area and customized projects.

At the end of the period the cash equivalents totaled SEK 31.5 m (26.6) and unutilized credit facilities SEK 30.5 m. The Group's net cash amounted to SEK 30.7 m (1.4). During the second quarter HMS distributed dividend payments to its shareholder equal to SEK 2.25 per share (2.00), in total SEK 25.1 m. During the third quarter a final amortization of the bank loan in the parent company was made. In total, SEK 24.1 m was amortized during 2012.

The parent company

The Parent Company's operations are primarily focused on Group-wide management and financing. Apart from the Group's CEO, the Parent Company has no employees. The operating profit for the year 2012 amounted to SEK 0.4 m (0.8). Cash and cash equivalents amounted to SEK 0.7 m (0.0) and borrowing amounted to SEK 0.0 m (24.1).

Important events

  • q In January, the Swedish headquarters were expanded with new office facilities in Halmstad.
  • q HMS received the single biggest order in the company's history (16 MSEK).
  • q HMS received an order of 2 MSEK from one of Europe's leading suppliers of industrial power metering and monitoring.
  • q The 2009 stock option program was completed and 169,500 new shares were issued.
  • q HMS delivered the 2,000,000th Anybus module.
  • q HMS signed a framework agreement worth 6 MSEK with one of Europe's leading manufacturers of automation equipment.
  • q The annual Shareholders' General Meeting was held at HMS's facilities in Halmstad.
  • q HMS signed a global supply agreement with a worldleading supplier of telecom base station technology.
  • q HMS received an order for 7 MSEK from one of Japan's leading suppliers of drives.
  • q The King and Queen of Sweden paid a visit to HMS's office in Halmstad.
  • q At the SPS/IPC/Drives event in Nuremberg, Germany, HMS displayed an impressive "Wall of Fame" with customers using Anybus and Netbiter.
  • q HMS launched a new Anybus CompactCom module with M12 connectors for installations in harsh industrial environments.
  • q HMS presented its new network processor the Anybus NP40 which will be used in the next generation of Anybus CompactCom.
  • q HMS received an order of 2.4 MSEK regarding Profibus Master modules from a world-leading manufacturer with in industrial automation.
  • q HMS received an order worth 3.3 MSEK over the forthcoming 24 months regarding welding control equipment within the automotive industry.
  • q HMS received an order of 2.5 MSEK from a leading supplier of industrial automation equipment regarding customizations for an Anybus EtherNet/IP communication module.
  • q HMS received a volume commitment worth 3.5 MSEK during the next two years regarding Profibus modules.
  • q HMS launched a share savings program for staff more than 60 % of the employees joined the program.

Outlook

The Group's long-term growth is supported by a wider product offering, development of new technology generations, a strengthened customer focus and an expansion of HMS's sales channels in line with the established strategy.

The acquisition of IXXAT is an important supplement to HMS's business and strengthens HMS's position on the German market. HMS can also widen the market for IXXAT's product offering to new geographical markets where HMS already has market presence.

The global market for HMS's products is expected to be continually weak in the short term. The effects of the weak market and currency fluctuations are hard to predict but in the long run, we expect the market for industrial communication and remote management to grow. HMS's long-term goals are unchanged: a long-term growth of 20% on average and an operating margin of more than 20%.

HMS Networks AB's share

HMS Networks AB (publ) is listed on the Nasdaq OMX Stockholm Small Cap list, in the Information Technology sector. The total number of shares amounted to 11,322,400. During the second quarter participants in the stock option program decided by the 2009 Annual General Meeting subscribed to 169,500 new shares in the Company. The subscription price for each share was SEK 90.20 and the total dilution amounted to 1.5 %.

Share Savings Program

In accordance with the decision of the Annual General Meeting 2012, all employees of the HMS Group have been offered to participate in a share savings program. The application period took place during December and about 60 % of the employees have chosen to participate. The share savings program means that employees will initiate savings in HMS shares during 2013.

Nomination committee

In accordance with principles adopted at HMS 2012 annual general meeting, the following persons have been assigned to be a part of the Nomination Committee: Nicolas Hassbjer representing 29 % of the shares, Jan Svensson, Investment AB Latour, representing 22 % of the shares, Evert Carlsson, Swedbank Robur Fonder AB representing 10 % of the shares and Urban Jansson, Chairman of the Board. The Nomination Committee has appointed Jan Svensson as its Chairman.

Dividend

The Board of Directors proposes a dividend to the amount of SEK 2.25 (2.25).

Annual General Meeting

The Annual General Meeting will be held at the Company's head office on Friday April 19, 2013 at 10.30 am. The 2012 Annual Report (in the Swedish language) will be available on

HALMSTADGOTHENBURGPUNE COVENTRYBEIJINGTOKYO COPENHAGENKARLSRUHE MILANOMULHOUSECHICAGO 5

the Company's homepage four weeks previous to the date of the Annual General Meeting. A printed version of the 2012 Annual Report can be ordered by sending name and address to [email protected].

Short of the company Strategies

Growth strategy - HMS's main focus is on organic growth. Expansion on existing markets will be through improved and extended product ranges, new technology, high level of service and new sales channels. A certain degree of growth can be through the selective acquisition of businesses that will be a valuable complement to the company's organic growth strategy.

Development strategy - Through high core competence deliver industrial communication solutions with high customer value.

Product strategy - HMS markets three product lines, which to a certain degree are based on a common technical platform:

q Anybus Embedded - Embedded network interface cards

q Anybus Gateways - Communication translators between different networks

q Netbiter Remote Management - Remote monitoring and controlling of industrial devices

Production strategy - HMS maintains an in-house low-volume production of Anybus products in Halmstad. Volume production takes place in close partnership with subcontractors in Europe and Asia in order to achieve flexible costs and to make use of economies of scale.

Marketing strategy - The Anybus network interface cards are marketed and sold to players in industrial and infrastructure automation and Anybus Gateways to system integrators, machine manufacturers and end-users in industrial and infra-structure automation. Netbiter products are marketed and sold to a wide range of customers, from device manufacturers to owners of installations in need of remote management.

Sales strategy - Sales take place via the company's sales offices on defined key markets in 10 countries. Sales on the company's other markets, in some 50 countries, takes place via agents/ distributors.

Business model

HMS has designed its business models to fit each market and product line. For the Embedded market, most business is via framework agreements (i.e. design-wins). The sales cycle is relatively long and the design phase is performed in close cooperation with the customer. After that, there is steady revenue over a long period of time. For Gateways and Remote Management, the business model is more traditional, with a short business cycle and manufacturing based on customer orders.

Accounting policies

This report has been prepared in accordance with International Financial Reporting Standards (IFRS) and IAS 34, for Interim Reporting. Amendments to existing standards, new interpretations and new standards that came into effect as of January 1, 2012 did not affect the Groups reporting as of December 31, 2012.

As of the first quarter 2012 customer orders related to development projects including future volume commitments and blanket agreements with estimated future volumes, are included in the period's order intake. As clarification, information about which part of the order intake that will be shipped during the following twelve months, is disclosed.

HMS continues to apply the same accounting principles and valuation methods as those described in the most recent Annual Report. The parent company report is prepared in accordance with RFR 2, accounting for legal entities, and the Swedish Annual Accounts Act and accounting principles and the valuation methods as those described in the most recent Annual Report.

Risk management

The HMS Group is exposed to business and financial risks through its operations. These risks have been described at length in the Company's annual report 2011. In addition to the risks described in these documents, no additional significant risks have been identified.

Reporting occasions

  • q Q1 Report 2013 will be published on April, 19, 2013
  • q Annual General Meeting will be held on April 19, 2013
  • q Half-year Report 2013 will be published on July 23, 2013
  • q Q3 Report 2013 will be published on October 29, 2013

Halmstad February 7, 2013

Staffan Dahlström Chief Executive Officer

This Year-End Report has not been reviewed by the Company's auditor.

Further information can be obtained from: CEO Staffan Dahlström, telephone +46 (0) 35-17 29 01 or CFO Gunnar Högberg, telephone +46 (0) 35-17 29 95

Financial accounts

Q4
2012
Q4
2011
Q1-Q4
2012
Q1-Q4
2011
Net increase in revenue (%) -8.0 3.5 -0.5 11.3
Gross margin (%) 57.6 60.8 60.1 60.6
Operating margin EBIT (%) 7.2 10.5 16.7 18.8
Return on capital employed (%)* 19.7 23.2 19.7 23.2
Return on total equity (%)* 16.3 18.6 16.3 18.6
Working capital in relation to sales (%)* 9.2 8.3 9.2 8.3
Capital turnover rate 0.94 0.98 0.94 0.98
Debt/equity ratio -0.09 0.00 -0.09 0.00
Equity/assets ratio (%) 81.9 76.3 81.9 76.3
Capital expenditure in property. plant and equipment
(SEK 000s)
1,428 1,914 12,202 9,341
Capital expenditure in intagible fixed assets (SEK 000s) 11,245 3,144 30,108 10,744
Depreciation of property. plant and equipment (SEK 000s) -1,614 -1,064 -6,240 -4,661
Amortisation of intangible fixed assets (SEK 000s) -1,229 -1,557 -4,553 -5,539
Number of employees (average) 251 227 241 213
Revenue per employee (SEK m)* 1.5 1.7 1.6 1.8
Total equity per share, SEK 30.21 26.77 30.21 26.77
Total equity per share, diluted, SEK 30.21 26.76 30.21 26.76
Cash flow from operations per share before dilution, SEK 1.67 0.41 7.27 4.13
Cash flow from operations per share after dilution, SEK 1.67 0.41 7.27 4.12
Basic number of shares. average, thousands 11,323 11,153 11,252 11,153
Number of shares. diluted average, thousands 11,323 11,158 11,254 11,169

* The key ratio has been translated into 12 months rolling value when applicable.

Income statements

(SEK 000s) Q4
2012
Q4
2011
Q1-Q4
2012
Q1-Q4
2011
Revenue 87,265 94,848 381,804 383,592
Cost of goods and services sold -36,996 -37,162 -152,433 -151,099
Gross profit 50,269 57,686 229,371 232,493
Sales and marketing costs -31,853 -28,112 -105,962 -92,543
Administrative expenses -7,654 -7,755 -32,997 -30,643
Research and development costs -5,284 -9,642 -26,476 -36,725
Other operating income 1,498 0 3,960 1,120
Other costs -728 -2,252 -4,169 -1,490
Operating profit 6,248 9,925 63,726 72,213
Financial income 767 1,119 1,926 2,591
Financial costs -14 -329 -456 -1,036
Profit before tax 7,001 10,715 65,197 73,768
Tax 2,689 -2,807 -13,024 -19,839
Profit for the period 9,690 7,908 52,173 53,929
Basic earnings per share, SEK 0.86 0.71 4.64 4.84
Earnings per share, diluted, SEK 0.86 0.71 4.64 4.83

Statements of comprehensive income

(SEK 000s) Q4
2012
Q4
2011
Q1-Q4
2012
Q1-Q4
2011
Profit for the period 9,690 7,908 52,173 53,929
Other comprehensive income
Income/expense recognized directly in equity
Cash flow hedges -1,139 1,184 2,205 -1,035
Translation differences -56 237 -480 94
Income tax relating to components of other comprehen
sive income
300 -311 -580 273
Other comprehensive income for the period, net of tax -896 1,110 1,145 -668
Total comprehensive income for the period 8,794 9,018 53,318 53,261

Balance Sheets

(SEK 000s) Dec 31 2012 Dec 31 2011
ASSETS
Goodwill 236,071 236,071
Other intangible assets 48,910 23,353
Property, plant and equipment 21,106 15,347
Deferred tax assets 852 770
Total fixed assets 306,939 275,541
Inventories 26,843 35,584
Trade and other receivables 35,501 42,781
Other current receivables 16,845 10,634
Cash and cash equivalents 31,487 26,573
Total current assets 110,676 115,572
TOTAL ASSETS 417,615 391,113
EQUITY AND LIABILITIES
Equity 342,056 298,543
Liabilities
Non-current liabilities 787 25,192
Deferred income tax liabilities 23,168 20,705
Total non-current liabilities 23,955 45,897
Trade payables 25,462 22,216
Other current liabilities 26,142 24,457
Total current liabilities 51,604 46,673
TOTAL EQUITY AND LIABILITIES 417,615 391,113

Cash flow statements

(SEK 000s) Q4
2012
Q4
2011
Q1-Q4
2012
Q1-Q4
2011
Cash flow from operating activities before changes in
working capital
9,204 5,884 65,257 64,986
Cash flow from changes in working capital 9,715 -1,346 16,523 -18,977
Cash flow from operating activities 18,919 4,538 81,780 46,009
Cash flow from investing activities -12,800 -5,057 -42,944 -37,114
Cash flow from financing activities 0 -3,892 -33,923 -37,306
Cash flow for the period 6,120 -4,411 4,914 -28,411
Cash and cash equivalents at beginning of the period 25,367 30,984 26,573 54,984
Cash and cash equivalents at end of period 31,487 26,573 31,487 26,573

Changes in current receivables/liabilities related to derivate financial instruments are reported as cash flow from operating activities before changes in working capital.

Quarterly data

Revenue,per,region
(SEK,000s)
Q4
2012
Q3
2012
Q2
2012
Q1
2012
Q4
2011
Q3
2011
Q2
2011
Q1
2011
Q4
2010
Q3
2010
Q2
2010
Q1
2010
EMEA 52,971 60,049 59,169 60,387 55,876 64,900 61,757 60,379 55,109 57,441 53,697 47,979
Americas 19,686 22,687 20,813 20,429 20,330 18,844 17,418 17,167 19,354 15,715 14,206 12,611
Asia 14,608 16,408 18,920 15,677 18,642 16,976 17,322 13,981 17,184 14,423 21,339 15,471
Income,statement,
(SEK,000s)
Q4
2012
Q3
2012
Q2
2012
Q1
2012
Q4
2011
Q3
2011
Q2
2011
Q1
2011
Q4
2010
Q3
2010
Q2
2010
Q1
2010
Revenue,(SEK,m) 87,265 99,144 98,902 96,493 94,848 100,720 96,498 91,527 91,647 87,579 89,242 76,061
Gross,profit 50,269 59,382 59,953 59,766 57,686 61,062 59,193 54,552 55,385 53,931 53,723 44,518
Gross,margin 57,6% 59.9% 60.6% 61.9% 60.8% 60.6% 61.3% 59.6% 60.4% 61.6% 60.2% 58.5%
Operating,profit 6,248 23,186 19,953 14,338 9,925 24,360 20,224 17,704 19,848 23,502 22,242 17,932
Operating,margin 7,2% 23.4% 20.2% 14.9% 10.5% 24.2% 21.0% 19.3% 21.7% 26.8% 24.9% 23.6%
Profit,before,tax 7,001 23,100 20,810 14,286 10,715 25,544 20,536 16,973 20,232 22,702 22,834 18,295

Sales

Sales by geographical area for the first nine months 2012 are presented in the graph to the right.

Embedded products reached 68 % of the Group's total sales, Gateway products 25 % and Remote Management amounted to 4 %.

All product groups are based on a common technology platform and are marketed and sold in the common sales channels. Therefore, no complete segment reporting is disclosed.

Parent company income statements

(SEK 000s) Q4
2012
Q4
2011
Q1-Q4
2012
Q1-Q4
2011
Revenue 1,748 1,605 7,995 7,428
Cost of sales and services 0 0 0 0
Gross profit 1,748 1,605 7,995 7,428
Administrative expenses -1,750 -1,472 -7,642 -6,589
Operating profit -2 133 353 839
Interest expense and similar items 2 -189 -353 -839
Profit before tax 0 -56 0 0
Tax -7 -8 -7 -8
Profit for the period -7 -64 -7 -8

Parent company balance sheets

(SEK 000s) Dec 31 2012 Dec 31 2011
ASSETS
Financial fixed assets 244,039 244,039
Total financial fixed assets 244,039 244,039
Other receivables 955 444
Cash and cash equivalents 684 18
Total current assets 1,639 462
TOTAL ASSETS 245,678 244,501
EQUITY AND LIABILITIES
Equity 123,285 133,098
Untaxed reserves 8 8
Liabilities
Non-current liabilities 0 24,118
Trade payables 1,277 525
Liabilities to Group companies 120,073 85,769
Other current liabilities 1,035 983
Total current liabilities 122,385 87,277
TOTAL EQITY AND LIABILITIES 245,678 244,501

Definitions

Return on shareholders' equity

Share of profit after tax attributable to the parent company's shareholders in relation to the average shareholders' equity excluding non-controlling interests.

Return on capital employed

Share of the profit after financial income in relation to the average capital employed.

Capital employed

Total assets less non interest bearing current liabilities and provisions, as well as total deferred tax liabilities.

Capital turnover rate

Operating income in relation to total assets.

Earnings per share

Share of the profit after tax attributable to the parent company's shareholders in relation to the average number of outstanding shares.

Earnings per share after dilution

Share of the profit after tax attributable to the parent company's shareholders in relation to the average number of outstanding shares with addition for the average number of shares that are added when converting the outstanding number of convertible securities and options.

Working capital

Current assets less cash equiva-lents and current liabilities.

Operating margin

Operating income in relation to net sales.

Equity/assets ratio

Shareholders' equity in relation to total assets.

Net debt

Long-term and current financial liabilities less financial assets.

Net debt/equity ratio

Net debt in relation to shareholders' equity including noncontrolling interests.

Total equity per share

Total equity attributable to the parent company's shareholders in relation to total outstanding shares by the end of the period.

HMS Networks (publ) is a world-leading supplier of communication technology for industrial automation. Sales for 2012 totaled SEK 382 million. Over 90% of these sales were to customers located outside Sweden. All product development and parts of the manufacturing are performed at the head office in Halmstad. Sales offices are located in Tokyo, Beijing, Karlsruhe, Chicago, Milan, Mulhouse, Pune, Coventry and Copenhagen. HMS has 250 employees and produces network interface cards and Gateways to interconnect different networks under the trademark Anybus® and products for remote management under the trademark Netbiter®. HMS is listed on the Nasdaq OMX Stocholm Small Cap list, in the Information Technology sector.

Our vision

"The vision of HMS is that all automation devices will be intelligent and networked. HMS shall be the market leader in connectivity solutions for industrial devices".

Our purpose

"To create long term value for our customers, employees and investors".

Our mission

"We provide world class solutions to connect industrial devices to networks and products enabling interconnection between different industrial networks".

HMS Networks AB (publ) Org.Nr. 556661-8954 Box 4126 | 300 04 Halmstad | Sweden Tel: +46 35 172 900 Fax: +46 35 172 909 http://investors.hms.se

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