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Karnov Group Interim / Quarterly Report 2020
3068_10-q_2020-05-05_a05b95a7-6474-4a88-827c-18754dc1e1ae.pdf
Interim / Quarterly Report
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Interim report
January – March 2020
Q1
New investments in line with growth strategy
Financial highlights first quarter
- Net sales up 3% to SEK 212 m (205), organic growth was 2%.
- EBITA amounted to SEK 88 m (68) with EBITA margin of 41.6% (32.9%).
- Adjusted EBITA increased by 3% to SEK 88 m (85) and adjusted EBITA margin was 41.6% (41.6%).
- Operating profit (EBIT) amounted to SEK 51 m (37).
- Earnings per share after dilution amounted to SEK 0.30 (0.15).
- Adjusted operating cash flow improved by 4% to SEK 170 m (163).
Business highlights first quarter
- Karnov Group invests in the Danish legal tech start-up Ante ApS. The investment is part of Karnov Group’s strategy of establishing a broad technology platform that creates increased relevance and efficiency for professionals working with legal information.
- Karnov Group acquires 60 percent of the shares in LEXNordics AB, with the aim of accelerating sales of the cloud-based LEX247 practice management solution in the Nordic region.
- Karnov Group enters the Norwegian market by acquiring 40 percent of the shares in Strawberry Law AS (now renamed to Karnov Group Norway AS). This company will provide digital subscription-based legal information to the Norwegian market. Market launch is expected to be in second half of 2021.
- Karnov Group appoints new CEOs for Norstedts Juridik AB in Sweden and for Karnov Group Denmark A/S.
- The Group has, in a special section of its online platform, started to provide regulatory information related to the Covid-19 pandemic, both in Sweden and Denmark.
Key financial ratios for the Group*
| TSEK | Q1 | Δ% | Jan-Dec | |
|---|---|---|---|---|
| 2020 | 2019 | 2019 | ||
| Net sales | 211,961 | 204,931 | 3.4% | 757,087 |
| Organic growth, % | 2.3% | 3.2% | 4.0% | |
| EBITA | 88,218 | 67,501 | 30.7% | 205,975 |
| EBITA margin, % | 41.6% | 32.9% | 27.2% | |
| Adjusted EBITA | 88,218 | 85,331 | 3.4% | 278,630 |
| Adjusted EBITA margin, % | 41.6% | 41.6% | 36.8% | |
| Net result | 29,084 | 7,852 | 270.4% | 3,480 |
| Adjusted cash flow from operating activities | 170,348 | 163,384 | 4.3% | 286,883 |
- For more information see Financial definitions and Note 6 for calculations of Alternative Performance Measures.
KARNOV GROUP
KARNOV GROUP
Interim report, January – March 2020
During the first quarter, we have succeeded in further expanding our business by investments in both Denmark, Sweden and our new market Norway.
We have also strengthened our management team by recruiting new local CEOs for Norstedts Juridik AB and Karnov Group Denmark A/S.
Flemming Breinholt
President and CEO
Comments by the CEO
Karnov Group has during the first quarter expanded its business through three new investments in line with the strategy and entered a new market. The financial results are in line with expectations.
Preparing for future growth
During the first quarter, we have succeeded in further expanding our business by investments in both Denmark, Sweden and our new market Norway which will bring more value to our customers:
- Ante ApS, with new technologies that are expected to be implemented in our digital platform over time. Ante ApS applies automated editorial processes and AI-based search technology to legal information sources.
- LEXNordics AB, offering the product LEX247, a cloud-based legal enterprise practice management solution that represents a way for us to deliver even more value to our customers.
- Strawberry Law AS (now renamed Karnov Group Norway AS), our way to enter the Norwegian market. Our legal platform solution in Norway will be based on a collaboration with Lovdata which runs the most widely used legal information solution in the Norwegian market. We will launch our offering in Norway in the second half of 2021.
We have also strengthened our management team by recruiting new local CEOs for Norstedts Juridik AB and Karnov Group Denmark A/S. This will enable us to focus even more on our future growth.
Financial results in line with expectation
Our organic growth in the first quarter was 2.3 percent, despite the Covid-19 pandemic that affected our offline business that typically has its highest sales in the first quarter. The Group's sales were driven by strong performance in the online market and we are satisfied that top-line growth is in line with expectations.
The adjusted EBITA margin was 41.6 percent and unchanged compared to last year. The first quarter is typically our strongest quarter of the year.
Our cash flow generation was also off to a good start of the year with a 4 percent increase in adjusted operating cash flow.
The Covid-19 pandemic
We are pleased that none of our employees have been seriously affected by the Covid-19 pandemic, and that is most important.
As to the effect on our business, approximately 80 percent of our revenues in the first quarter are subscription-based and all our online business is subscriptions. Therefore, the pandemic has had insignificant impact on our online revenue in the first quarter and we expect the situation for our online services to remain unchanged on a short-term basis. Our non-subscription part of the offline business, mainly books and sales of legal training courses, has to some extent been impacted in the first quarter. We expect that this will be partly offset by timing during later periods of the year.
Karnov Group’s financial targets:
| Growth | Profitability | Capital structure | Dividend policy |
|---|---|---|---|
| Net sales organic annual growth of 3-5% in the medium term, supplemented by selective acquisitions. | Increased Adjusted EBITA margin in the medium term. | Ratio of Net debt to Adjusted EBITDA of no more than 3.0. This level may temporarily be exceeded, for example as a result of acquisitions. | The objective is to distribute 30–50% of the purchase price allocation (PPA) adjusted net profit, taking investment opportunities and financial position into consideration. |
KARNOV GROUP
Interim report, January – March 2020
Net sales by country per first quarter,%
Net sales growth
Net sales per quarter, SEKm
Adjusted EBITA, SEKm and margin, % per quarter
Group financial performance
First quarter
| TSEK | Q1 | Jan-Dec | ||
|---|---|---|---|---|
| 2020 | 2019 | Δ% | 2019 | |
| Net sales | 211,961 | 204,931 | 3.4% | 757,087 |
| Organic growth, % | 2.3% | 3.2% | 4.0% | |
| EBITA | 88,218 | 67,501 | 30.7% | 205,975 |
| EBITA margin, % | 41.6% | 32.9% | 27.2% | |
| Adjusted EBITA | 88,218 | 85,331 | 3.4% | 278,630 |
| Adjusted EBITA margin, % | 41.6% | 41.6% | 36.8% |
Net sales and growth
For the three-month period, January-March 2020, net sales increased by 3.4 percent to SEK 212 m (205) compared with the corresponding quarter last year. Organic growth on a constant currency basis was 2.3 percent, while currency effects had a positive impact on net sales of 1.1 percent.
The online business continued its steady sales growth, and despite the trend of a declining offline market, which was further impacted by the Covid-19 pandemic in the latter part of the quarter, the positive trend in total sales growth continued. The Covid-19 pandemic is assessed to have impacted top-line growth by slightly more than one percentage point. For instance, book shops have been closed in Denmark during the majority of March.
The continued growth in online sales is the result of Karnov's strategy to continuously invest in more and better content in its online subscription offerings to increase the customer value. Both Denmark and Sweden contributed to the sales increase.
Operating income
EBITA for the quarter amounted to SEK 88 m (68) and EBITA margin amounted to 41.6 (32.9) percent.
Adjusted EBITA improved by 3.4 percent to SEK 88 m (85) and adjusted EBITA margin was unchanged at 41.6 (41.6) percent, despite personnel expenses increased in this quarter as the split between internal hours spent on maintenance and capitalized development is back to normal.
Operating profit (EBIT) was SEK 51 m (37) for the quarter. The corresponding period last year included a SEK 18 m in cost for items affecting comparability (see table below). Excluding these items, adjusted EBIT declined by SEK 4 m due to increased amortisations following finalisation of the investments in the JUNO solution and the integration of Norstedts Juridik.
Net sales split per first quarter, %
42%
Adjusted EBITA margin
173%
Cash conversion, Q1 2020
| Items affecting comparability | Q1 | Jan-Dec | |
|---|---|---|---|
| TSEK | 2020 | 2019 | 2019 |
| Acquisition costs | - | - | 750 |
| Integration costs | - | 3,485 | 14,673 |
| IPO costs | - | 14,345 | 38,209 |
| Write down of subsidiaries | - | - | 19,023 |
| Other | - | - | - |
| Total | - | 17,830 | 72,655 |
Net financial items
Net financial items for the quarter amounted to SEK -16 m compared to SEK -26 m for the corresponding quarter of 2019.
This improvement is a result of the new financing structure following the IPO in April last year, with lower debt and interest. During the quarter, the exchange rate for SEK/DKK has changed significantly, mainly in the latter part of March, causing an unrealized negative currency effect of SEK 11 m (-5) relating to long-term loans in DKK.
Profit before and after tax, Earnings per share
Profit before tax increased by SEK 25 m to SEK 36 m (11) compared to the corresponding quarter of 2019.
Profit after tax improved to SEK 29 m (8). Taxes for the quarter are SEK 6 m while taxes for the corresponding quarter of 2019 were SEK 3 m.
Earnings per share after dilution was SEK 0.30 (0.15).
Cash flow and investments
Cash flow from operating activities for the quarter increased by SEK 36 m to SEK 166 m (130). The increase reflects a SEK 28 m positive effect from working capital whereof SEK 52 m relates to increase from receivables and SEK 10 m from reduced interest payments. These effects are partially offset by SEK 26 m increase in payables.
Total investments for the quarter amounted to SEK 31 m (180), of which SEK 18 m (139) was related to investments in subsidiaries and associated companies and SEK 13 m (41) was investments in intangible assets mainly related to the business' online platform.
The cash conversion rate was 173 (168) percent for the quarter.
| Cash conversion | Q1 | Jan-Dec | |
|---|---|---|---|
| TSEK | 2020 | 2019 | 2019 |
| Adjusted EBITDA | 98,285 | 97,237 | 323,947 |
| Adjusted cash flow from operating activities | 170,348 | 163,384 | 286,883 |
| Cash conversion, % | 173.3% | 168.0% | 88.6% |
KARNOV GROUP
Interim report, January – March 2020
2.3
Leverage
Financial position
| Net Debt | Q1 | Jan-Dec | |
|---|---|---|---|
| TSEK | 2020 | 2019 | 2019 |
| Total borrowings | 1,249,155 | 1,763,029 | 913,317 |
| Cash and cash equivalents | 493,933 | 144,810 | 52,008 |
| Net debt | 755,222 | 1,618,218 | 861,309 |
| Leverage ratio | 2.3 | 5.3 | 2.7 |
| Equity | 1,618,794 | 643,413 | 1,526,769 |
| Equity/asset ratio, % | 42.8% | 19.1% | 44.9% |
Net debt was SEK 755 m (1,618) at the end of the period. The significant decrease was mainly due to the net proceeds of SEK 670 m from the IPO in the second quarter of 2019, as well as to loans of SEK 206 m from related parties being converted to equity in connection with the IPO.
The leverage at the end of the period was 2.3 (5.3) times and the equity ratio was 42.8 (19.1) percent with an equity of SEK 1,619 m (643). These improvements are primarily a result of the IPO and the conversion of loans to equity in the second quarter last year.
Cash and cash equivalents at the end of the period amounted to SEK 494 m (145) and the Group had unutilized credit lines of SEK 200 m (2). The credit facilities drawn in the first quarter makes the Group financially prepared for additional investments and acquisitions.
KARNOV GROUP
Interim report, January – March 2020
Covid-19
More than 60 new laws, changes in laws and regulations and numerous guidelines and advices related to the pandemic have been implemented in Sweden and Denmark.
Significant events
First quarter
- Karnov Group invests in the Danish legal tech start-up Ante ApS. The investment is part of Karnov Group’s strategy of establishing a broad technology platform that creates increased relevance and efficiency for professionals working with legal information.
- Olov Sundström, CEO of Norstedts Juridik and Head of the Swedish operations of Karnov Group, gives notice that he has decided to step down after 32 years of service to the company and leave the company in April 2020.
- Alexandra Äquist is appointed new CEO of Norstedts Juridik and will assume her new position in May.
- The Board of Directors proposes a dividend of SEK 0.45 per share to be approved by the Annual General Meeting on May 5th, 2020 to be paid on May 12 to shareholders as of record May 7.
- Niels Munk Hansen is appointed new CEO of Karnov Group Denmark and assumed his new position in April.
- Karnov Group acquires 60 percent of the shares in LEXNordics AB, with the aim of accelerating sales of the LEX247 practice management solution in the Nordic region.
- Karnov Group acquires 40 percent of the shares in Strawberry Law AS (now renamed to Karnov Group Norway AS) and enters the Norwegian market. The company will provide digital subscription-based legal services to the Norwegian market and is based in Oslo. Market launch is expected to be in second half of 2021.
- The Group has, in a special section of its online platform, started to provide regulatory information related to the Covid-19 pandemic, both in Sweden and Denmark.
Events after the end of the period
- In line with what was stated in the IPO prospectus last year, the Board of Directors resolves to issue 378,837 shares of series C and to immediately repurchase all such shares. The issue and repurchase of shares of series C are carried out in order to secure the Company’s obligations under its share-related incentive program LTIP 2019 for employees.
KARNOV GROUP
Interim report, January – March 2020
Segment performance
Denmark
The Danish segment offers a wide range of online and offline solutions for legal, tax and accounting professionals, assisting them in their research and providing qualitative advisory services. The segment includes Karnov Group Denmark, Forlaget Andersen and Legal Cross Border.
Net sales per quarter, SEKm
Adjusted EBITA, SEKm and margin,% per quarter
| TSEK | Q1 | Δ% | Jan-Dec | |
|---|---|---|---|---|
| 2020 | 2019 | 2019 | ||
| Net sales | 112,928 | 108,946 | 3.7% | 420,656 |
| Organic growth, % | 1.5% | 2.0% | 2.7% | |
| EBITA | 48,012 | 36,920 | 30.0% | 123,515 |
| EBITA margin, % | 42.5% | 33.9% | 29.4% | |
| Adjusted EBITA | 48,012 | 44,483 | 7.9% | 165,189 |
| Adjusted EBITA margin, % | 42.5% | 40.8% | 39.3% |
Net sales and growth
Net sales for the quarter increased by 3.7 percent to SEK 113 m (109) driven by organic growth of 1.5 percent and currency effects of 2.2 percent. Organic growth was mainly driven by upselling to existing customers and according to expectations. The organic growth rates are still in the lower end as the product development focus has been on Sweden for the past two years. However, the split on development activities is now back to normal with more resources working on providing new solutions to support the future growth in Denmark compared to the past two years. Also, the Covid-19 pandemic has had a smaller impact on the offline sales, as the bookstores in Denmark have been closed during the majority of March.
Operating income
EBITA amounted to SEK 48 m (37) and EBITA margin to 42.5 (33.9) percent.
Adjusted EBITA increased by 8 percent to SEK 48 m (44) and adjusted EBITA margin to 42.5 (40.8) percent. The driver for the improvement in results in Denmark is a combination of higher sales, product mix and cost efficiency.
Operating profit (EBIT) increased to SEK 32 m (21) for the quarter, due to reasons mentioned above and no items affecting comparability (IAC) in contrast to the first quarter of 2019 when the IAC's had a SEK 8 m negative effect.
KARNOV GROUP
Interim report, January – March 2020
The Swedish segment is specialised in online and offline legal solutions; the environmental, health and safety compliance; legal classroom training and e-courses. The segment provides online tools for the broad legal services market, including contract templates. The segment includes Norstedts Juridik, VJS, Notisum and LEXNordics.
Net sales per quarter, SEKm
Adjusted EBITA, SEKm and margin, % per quarter
Segment performance (cont.)
Sweden
| TSEK | Q1 | Jan-Dec | ||
|---|---|---|---|---|
| 2020 | 2019 | Δ% | 2019 | |
| Net sales | 99,033 | 95,985 | 3.2% | 336,431 |
| Organic growth, % | 3.2% | 4.0% | 5.6% | |
| EBITA | 40,206 | 30,581 | 31.5% | 82,461 |
| EBITA margin, % | 40.6% | 31.9% | 24.5% | |
| Adjusted EBITA | 40,206 | 40,848 | -1.6% | 113,441 |
| Adjusted EBITA margin, % | 40.6% | 42.6% | 33.7% |
Net sales and growth
Net sales for the quarter increased by 3.2 percent to SEK 99 m (96). Organic growth was driven by strong online sales, upselling to existing customers and sales of new products to both existing and new customers. During the quarter we have deployed numerous enhancements on JUNO, in close cooperation with our customers. Offline sales declined due to the ordinary market trend and partly due to a negative impact from the Covid-19 pandemic mainly in the latter part of March.
When the Covid-19 pandemic started to affect the Swedish market we changed the classroom courses to online courses with positive feedback from customers and users.
The Swedish Law Book (Sveriges Rikes Lag) was published as normally done in the first quarter and is still seen as an important tool for lawyers.
Operating income
In the quarter EBITA amounted to SEK 40 m (31) and the EBITA margin to 40.6 (31.9) percent.
Adjusted EBITA was SEK 40 m (41) driven by higher net sales, partially offset by higher personnel expenses in this quarter as the split between internal hours spent on maintenance and capitalized development is back to normal as well as higher cost for consultancy. Adjusted EBITA margin was 40.6 (42.6) percent.
Operating profit (EBIT) was SEK 20 m (16) despite increased depreciations and amortisations of SEK 4 m. The first quarter last year was impacted by SEK 11 m in costs for items affecting comparability.
KARNOV GROUP
Interim report, January – March 2020
Other information
Risks and uncertainties
Karnov Group is exposed to different risks through its operations, which can give rise to fluctuations in earnings and cash flow. Material risks and uncertainties include sector and market-related risks, business-related risks and financial risks.
The current Covid-19 pandemic is expected to affect all global markets. The Group is following the situation on continuously basis. The Group operates in the legal and tax professional market in Denmark and Sweden. These markets encompass, among other things, online information database services, printed information sources, legal practice management software and legal training courses. The products and services are generally offered to law firms, tax and accounting firms, corporates in a wide range of industries and the public sector, including courts, libraries, universities and other public authorities and municipalities.
The nature of the market and the products offered in combination with the Group’s business model with approximately 85% subscription-based revenue, the Group assess that the virus will have no impact on online revenue on a short-term basis. For the Group’s non-subscription based offline business, mainly books and sales of legal training courses, it is expected that the virus will have some effect on a short-term basis. However, the effect is expected to have a non-significant impact which to some extent will be offset by timing for later periods.
Karnov’s significant risks and risk management are described on page 53-54 of the 2019 Annual report, available at the Company’s website www.karnovgroup.com.
Seasonal variations
Typically, a significant proportion of Karnov Group’s online contracts is renewed and invoiced during the fourth quarter, impacting cash flow during the fourth and first quarters. Online net sales are accrued according to the terms of the agreement and therefore are not exposed to any seasonality. Offline net sales are exposed to seasonality where the first quarter is significantly stronger, driven by a higher share of book sales early in the year.
Employees
Average number of Full-Time Employees (FTEs) declined to 240 (243) compared to the first quarter of 2019 and declined by approx. 4 percent compared to the fourth quarter of 2019. The decline is due to synergies in Sweden and completion of the rollout of JUNO in Sweden. On average during the first quarter of 2020 49% (51%) of the FTEs were males and 51% (49%) females.
Shares, share capital and shareholders
Karnov Group’s share was listed on Nasdaq Stockholm on 11 April 2019, Mid Cap segment, under the ticker KAR. On 31 March 2020, the total number of shares and votes in Karnov Group AB (publ) was 97,670,567, each with a quotient value of approximately SEK 0.015385. After the end of the period, the Company has issued and repurchased 378,837 shares of series C to fulfil its obligations under its LTIP 2019 program. A detailed description of changes in the share capital is available on the Company’s website, www.karnovgroup.com/en/share-capital-development/.
On 31 March 2020, the Company had 804 known shareholders. The five largest shareholders with 5% or more of the shares outstanding in Karnov Group AB were Kayne Anderson Rudnick, M&G Investment Management, Vind LV AS, Lazard Asset Management and Columbia Threadneedle.
Incentive program
An Extraordinary General Meeting on 10 April 2019 resolved to implement a long-term incentive program in the form of a share savings program. The purpose of the program is to encourage a broad ownership amongst the Company’s employees, retain competent employees, facilitate recruitment, increase the alignment of interest between the employees and the Company’s shareholders and increase motivation to reach or exceed the Company’s financial targets. 151 employees in Karnov have chosen to invest in Karnov and participate in the share savings program.
The employees participate in the program by allocating acquired or already held ordinary shares to the program (so-called savings shares). The maximum investment permitted in savings shares depends on the category of the participant. The participants have allocated a total of 128,163 savings shares to the program. Full allotment would mean that the total number of shares under the program will amount to no more than 378,837 ordinary shares, corresponding to approximately 0.4 per cent of the total number of shares outstanding in the Company. For more information see www.karnovgroup.com/en/incentive-program/
KARNOV GROUP
Interim report, January – March 2020
ⅢKARNOV GROUP
Interim report, January – March 2020
Related-party transactions
The Group has not carried out any related-party transactions during Q1 2020.
Parent Company
Net sales for the quarter amounted to SEK 0 m (0). Operating profit for the quarter amounted to SEK -7 m (-3).
Outlook
Karnov does not provide financial forecasts.
Review
This interim report has not been subject to a review by the Company's auditors.
Disclosure
This interim report contains inside information that Karnov Group AB (publ) is required to make public pursuant to the EU Market Abuse Regulation (MAR). The information was submitted for publication by the contact person below on 5 May 2020 at 10.45 am CEST.
Karnov Group AB (publ)
Stockholm, 5 May 2020
Flemming Breinholt
President and CEO
| For further information, please contact: | Q1 presentation teleconference | Financial calendar 2020 |
|---|---|---|
| Flemming Breinholt, President and CEO | ||
| +45 3374 1202 | ||
| [email protected] | Karnov will present the first quarter results for analysts and investors via a webcast teleconference on 5 May at 1.00 pm CEST. | |
| To participate, use the following link: | ||
| https://tv.streamfabriken.com/karnov-group-q1-2020 | ||
| or dial-in numbers: | ||
| SE: +46 8 566 427 04 | ||
| DK: +45 7 815 0107 | ||
| UK: +44 333 300 92 67 | ||
| US: +1 833 249 8403 | ||
| The presentation will also be available on www.financialhearings.com | Interim report April-June 2020 | |
| 26 August, 2020 | ||
| Interim report July-September 2020 | ||
| 5 November, 2020 | ||
| Erik Berggren, Investor Relations Specialist | ||
| +45 5219 6552 | ||
| [email protected] | ||
| IR related questions: | ||
| +46 8 32 91 99 |
Consolidated statement of comprehensive income
| Q1 | Jan-Dec | |||
|---|---|---|---|---|
| TSEK | Note | 2020 | 2019 | 2019 |
| Net sales | 5 | 211,961 | 204,931 | 757,087 |
| Total revenue | 211,961 | 204,931 | 757,087 | |
| Goods for resale | -37,348 | -38,630 | -135,194 | |
| Employee benefit expenses | -53,594 | -47,104 | -222,994 | |
| Depreciations and amortisations | -47,025 | -42,341 | -171,111 | |
| Other operating expenses | -22,734 | -39,790 | -147,607 | |
| Operating profit | 51,261 | 37,066 | 80,181 | |
| Financial income | 56 | 11 | 14,425 | |
| Financial expenses | -15,769 | -25,956 | -84,409 | |
| Net financial items | -15,713 | -25,945 | -69,984 | |
| Write down of associated companies | - | - | -7,102 | |
| Profit before income tax | 35,548 | 11,121 | 3,095 | |
| Income tax expense | -6,464 | -3,269 | 385 | |
| Net result | 29,084 | 7,852 | 3,480 | |
| Other comprehensive income: | ||||
| Items that may be reclassified to profit or loss: | ||||
| Exchange differences on translation of foreign operations | 61,675 | 10,352 | 13,989 | |
| Total comprehensive income for the period | 90,759 | 18,204 | 17,469 | |
| Profit for the period is attributable to: | ||||
| Owners of Karnov Group AB | 29,133 | 6,930 | 2,621 | |
| Non-controlling interest | -49 | 922 | 859 | |
| Net result | 29,084 | 7,852 | 3,480 | |
| Total comprehensive income for the period is attributable to: | ||||
| Owners of Karnov Group AB | 90,808 | 17,282 | 16,610 | |
| Non-controlling interest | -49 | 922 | 859 | |
| Total comprehensive income | 90,759 | 18,204 | 17,469 | |
| Earnings per share, basic, SEK | 4 | 0.30 | 0.15 | 0.03 |
| Earnings per share, after dilution, SEK | 0.30 | 0.15 | 0.03 |
The above table shows a pro forma calculation of earnings per share based on the number of shares at end of the period. For further information and details on earnings per share please refer to note 4.
KARNOV GROUP
Interim report, January – March 2020
Consolidated balance sheet
| TSEK | Note | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
|---|---|---|---|---|
| ASSETS: | ||||
| Goodwill | 1,727,739 | 1,674,592 | 1,656,311 | |
| Other intangible assets | 1,278,859 | 1,298,339 | 1,263,117 | |
| Right-of-use assets | 111,296 | 102,047 | 112,477 | |
| Property, plant and equipment (PPE) | 5,188 | 5,125 | 5,434 | |
| Investments in associated companies | 63,821 | 8,650 | 5,778 | |
| Loans to associated companies | 3,172 | - | 2,937 | |
| Deposits | 2,900 | 2,685 | 2,729 | |
| Deferred tax assets | - | 17 | 425 | |
| Total non-current assets | 3,192,975 | 3,091,455 | 3,049,208 | |
| Inventories | 15,083 | 13,520 | 13,097 | |
| Trade receivables | 3 | 58,046 | 59,323 | 209,672 |
| Prepaid expenses | 10,902 | 19,194 | 8,391 | |
| Other receivables | 14,411 | 4,522 | 14,387 | |
| Tax receivable | - | 35,537 | 51,894 | |
| Cash and cash equivalents | 3 | 493,933 | 144,810 | 52,008 |
| Total current assets | 592,375 | 276,906 | 349,449 | |
| TOTAL ASSETS | 3,785,350 | 3,368,361 | 3,398,657 | |
| TSEK | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 | |
| EQUITY AND LIABILITIES: | ||||
| Capital and reserves attributable to equity holders of the company | ||||
| Share capital | 1,503 | 688 | 1,503 | |
| Share premium | 2,062,361 | 798,472 | 2,062,361 | |
| Reserves | -258,645 | 40,884 | -320,320 | |
| Retained earnings including net profit for the year | -186,651 | -216,086 | -217,050 | |
| Total equity attributable to the parent company's shareholders | 1,618,568 | 623,958 | 1,526,494 | |
| Non-controlling interest | 226 | 19,455 | 275 | |
| Total equity | 1,618,794 | 643,413 | 1,526,769 | |
| Borrowing from credit institutions | 3 | 865,425 | 1,392,006 | 838,317 |
| Borrowing from related parties | 3 | - | 224,158 | - |
| Lease liabilities | 101,723 | 89,045 | 102,783 | |
| Deferred tax liability | 170,299 | 251,343 | 170,551 | |
| Provisions | 5,847 | 5,315 | 5,456 | |
| Other non-current liabilities | 38,907 | - | - | |
| Total non-current liabilities | 1,182,201 | 1,961,867 | 1,117,107 | |
| Borrowing from credit institutions | 3 | 383,730 | 100,836 | 75,000 |
| Borrowing from related parties | 3 | - | 46,028 | - |
| Trade payables | 3 | 11,465 | 25,567 | 12,477 |
| Current tax liabilities | 25,917 | 26,740 | 71,860 | |
| Accrued expenses | 132,029 | 159,488 | 126,239 | |
| Prepaid income | 394,999 | 345,937 | 399,586 | |
| Lease liabilities | 12,125 | 13,197 | 11,622 | |
| Other current liabilities | 24,090 | 45,288 | 57,997 | |
| Total current liabilities | 984,355 | 763,081 | 754,781 | |
| TOTAL EQUITY AND LIABILITIES | 3,785,350 | 3,368,361 | 3,398,657 |
KARNOV GROUP
Interim report, January – March 2020
Consolidated statement of changes in equity
Equity attributable to the parent company's shareholders
| TSEK | Share capital | Share premium | Reserves | Retained earnings | Equity attributable to the parent company's shareholders | Non-controlling interest | Total equity |
|---|---|---|---|---|---|---|---|
| Balance at January 1, 2019 | 688 | 798,472 | 30,532 | -223,016 | 606,676 | 18,533 | 625,209 |
| Net result | - | - | - | 6,930 | 6,930 | 922 | 7,852 |
| Other comprehensive income for the period | - | - | 10,352 | - | 10,352 | - | 10,352 |
| Total comprehensive income/loss | - | - | 10,352 | 6,930 | 17,282 | 922 | 18,204 |
| Transaction with shareholders in their capacity as owners | |||||||
| Total transaction with shareholders | - | - | - | - | - | - | - |
| Closing balance at March 31, 2019 | 688 | 798,472 | 40,884 | -216,086 | 623,958 | 19,455 | 643,413 |
Equity attributable to the parent company's shareholders
| TSEK | Share capital | Share premium | Reserves | Retained earnings | Equity attributable to the parent company's shareholders | Non-controlling interest | Total equity |
|---|---|---|---|---|---|---|---|
| Balance at January 1, 2020 | 1,503 | 2,062,361 | -320,320 | -217,050 | 1,526,494 | 275 | 1,526,769 |
| Net result | - | - | - | 29,133 | 29,133 | -49 | 29,084 |
| Other comprehensive income for the period | - | - | 61,675 | - | 61,675 | - | 61,675 |
| Total comprehensive income/loss | - | - | 61,675 | 29,133 | 90,808 | -49 | 90,759 |
| Transaction with shareholders in their capacity as owners | |||||||
| Sharebased payment | - | - | - | 1,266 | 1,266 | - | 1,266 |
| Total transaction with shareholders | - | - | - | 1,266 | 1,266 | - | 1,266 |
| Closing balance at March 31, 2020 | 1,503 | 2,062,361 | -258,645 | -186,651 | 1,618,568 | 226 | 1,618,794 |
KARNOV GROUP
Interim report, January – March 2020
Consolidated statement cash flow
| Q1 | Jan-Dec | ||
|---|---|---|---|
| TSEK | 2020 | 2019 | 2019 |
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Operating profit | 51,266 | 37,059 | 80,181 |
| Adjustments: | |||
| Non-cash items | 36,464 | 42,341 | 190,217 |
| Effect of changes in working capital: | |||
| Increase/decrease in inventories | -1,985 | -1,887 | -1,460 |
| Increase/decrease in receivables | 148,920 | 97,156 | -43,923 |
| Increase/decrease in trade payables and other payables | -47,219 | -21,310 | -50,903 |
| Increase/decrease in prepaid income | -4,587 | -563 | 53,091 |
| Interest paid | -4,907 | -14,458 | -31,878 |
| Income tax paid | -11,671 | -8,101 | -58,049 |
| Net effect of changes in working capital | 78,551 | 50,837 | -133,122 |
| Cash flow from operating activities | 166,281 | 130,236 | 137,276 |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Acquisition of participations in associated companies | -3,743 | - | -4,282 |
| Acquisition of subsidiaries | -14,094 | -138,965 | -138,940 |
| Loan to subsidiaries | -235 | - | -2,981 |
| Acquisition of intangible assets | -13,109 | -41,221 | -120,672 |
| Acquisition of PPE | - | -79 | -3,940 |
| Cash flow from investing activities | -31,181 | -180,265 | -270,815 |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Increase/decrease in short term borrowings | 308,730 | 12,008 | -59,603 |
| Increase/decrease in lease liabilities | -4,154 | - | -14,731 |
| Principal payments on long-term debt | - | - | -1,459,831 |
| Increase/decrease in long-term debt | - | -16,680 | 844,200 |
| Transactions with non-controlling interest | - | - | -97,478 |
| Proceeds from IPO | - | - | 768,217 |
| Cash flow from financing activities | 304,577 | -4,672 | -19,226 |
| Cash flow for the period | 439,677 | -54,701 | -152,765 |
| Cash and cash equivalents at the beginning of the period | 52,008 | 201,797 | 201,797 |
| Exchange-rate differences in cash and cash equivalents | 2,248 | -2,286 | 2,975 |
| Cash and cash equivalents at the end of the period | 493,933 | 144,810 | 52,008 |
KARNOV GROUP
Interim report, January – March 2020
Parent company income statement
| Q1 | Jan-Dec | ||
|---|---|---|---|
| TSEK | Note | 2020 | 2019 |
| Employee benefit expenses | -2,149 | - | -7,440 |
| Other operating expenses | -4,409 | -3,429 | -28,948 |
| Operating profit | -6,558 | -3,429 | -36,388 |
| Financial income | 5,905 | 4,942 | 25,351 |
| Financial expenses | -9 | -5,318 | -9,071 |
| Net financial items | 5,896 | -376 | 16,280 |
| Profit before income tax | -662 | -3,805 | -20,108 |
| Income tax expense | - | - | - |
| Net result | -662 | -3,805 | -20,108 |
| Total comprehensive income | -662 | -3,805 | -20,108 |
KARNOV GROUP
Interim report, January – March 2020
15
Parent company balance sheet
| TSEK | Note | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
|---|---|---|---|---|
| ASSETS: | ||||
| Investments in group enterprises | 1,143,458 | 759,500 | 1,143,458 | |
| Receivables from group enterprises | 792,757 | 188,191 | 800,852 | |
| Total non-current assets | 1,936,215 | 947,691 | 1,944,310 | |
| Receivables from group enterprises | - | 17,639 | - | |
| Other receivables | 9,119 | 2,235 | 8,874 | |
| Current tax receivable | 41,634 | 23,332 | 38,306 | |
| Cash and cash equivalents | 4,537 | 642 | 156 | |
| Total current assets | 55,290 | 43,848 | 47,336 | |
| TOTAL ASSETS | 1,991,505 | 991,539 | 1,991,646 | |
| TSEK | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 | |
| EQUITY AND LIABILITIES: | ||||
| Restricted equity | ||||
| Share capital | 1,503 | 688 | 1,503 | |
| Non-restricted equity | ||||
| Share premium | 2,062,361 | 798,472 | 2,062,363 | |
| Retained earnings including net profit for the year | -74,416 | -58,111 | -73,752 | |
| Total equity | 1,989,448 | 741,049 | 1,990,114 | |
| Borrowing from related parties | - | 224,158 | - | |
| Total non-current liabilities | - | 224,158 | - | |
| Borrowing from credit institutions | - | 1 | - | |
| Trade payables | 94 | 528 | 88 | |
| Trade payables from group companies | 13 | 12,438 | 11 | |
| Accrued expenses | 1,883 | 13,317 | 1,388 | |
| Other current liabilities | 67 | 48 | 45 | |
| Total current liabilities | 2,057 | 26,332 | 1,532 | |
| TOTAL EQUITY AND LIABILITIES | 1,991,505 | 991,539 | 1,991,646 |
KARNOV GROUP
Interim report, January – March 2020
Notes
Note 1. Accounting policies
The consolidated interim financial statements for Karnov Group AB have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, RFR 1 Supplementary Accounting Regulations for Groups and the Swedish Annual Accounts Act. The interim financial statements for the parent company have been prepared in accordance with RFR 2, Accounting for Legal Entities, and the Swedish Annual Accounts Act.
The accounting policies for the consolidated financial statements are unchanged compared to the Annual Report 2019.
Note 2. Critical estimates and judgements
Preparation of financial statements requires the company management to make assessments and estimations along with assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. The actual outcome may differ from these estimates. The critical assessments and sources of uncertainty in the estimates are the same as in the most recent annual report. See the Annual report 2019 Note 4, page 72, for further details regarding critical estimates and judgements.
Note 3. Fair value of financial instruments
| TSEK | Carrying amount | Fair value | ||||
|---|---|---|---|---|---|---|
| 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 | |
| FINANCIAL ASSETS | ||||||
| Financial assets at amortised cost | ||||||
| Trade receivables | 58,046 | 59,323 | 209,672 | 58,046 | 59,323 | 209,672 |
| Cash and cash equivalents | 493,933 | 144,810 | 52,008 | 493,933 | 144,810 | 52,008 |
| Total financial assets | 551,979 | 204,133 | 261,680 | 551,979 | 204,133 | 261,680 |
| FINANCIAL LIABILITIES | ||||||
| Financial liabilities at fair value through profit or loss (FVPL) | ||||||
| Contingent considerations | 14,439 | 32,508 | 18,533 | 14,439 | 32,508 | 18,533 |
| Liabilities at amortised cost | ||||||
| Trade payables | 11,465 | 25,567 | 12,477 | 11,465 | 25,567 | 12,477 |
| Non-current borrowing from credit institutions | 865,425 | 1,392,006 | 838,317 | 865,425 | 1,392,006 | 838,317 |
| Current borrowings from credit institutions | 383,730 | 100,836 | 75,000 | 383,730 | 100,836 | 75,000 |
| Deferred payments | - | - | - | - | - | - |
| Non-current borrowings from related parties | - | 224,158 | - | - | 224,158 | - |
| Current borrowing from related parties | - | 46,028 | - | - | 46,028 | - |
| Total financial liabilities | 1,275,059 | 1,821,103 | 944,327 | 1,275,059 | 1,821,103 | 944,327 |
Trade receivables
Due to the short-term nature of current receivables, their carrying amount is considered to be the same as their fair value.
Cash and cash equivalents
Cash and cash equivalents are unsecured with a short credit period and are therefore considered to have a fair value equal to the carrying amount. These are classified at level 2 in the fair value hierarchy.
KARNOV GROUP
Interim report, January – March 2020
Contingent consideration
The carrying amounts of contingent considerations are considered to be the same as the fair value. The fair value of the contingent considerations was estimated by calculating the present value of the future expected cash flows. The estimates are based on discount rates between 7 percent and 10 percent. These are classified at level 3 in the fair value hierarchy.
Trade payables
Trade payables are unsecured and are usually paid within 30 days of recognition. Due to the short-term nature of trade payables, their carrying amounts are considered to be the same as their fair value.
Non-current borrowing from credit institutions
The carrying amount of non-current borrowings is considered to be the same as their fair values, since interest payable on those borrowings is close to current market rates. These are classified at level 2 in the fair value hierarchy.
Current borrowings from credit institutions
The fair value of current borrowings is considered to be the same as the carrying amount since the interest payable on those borrowings is either close to current market rates or the borrowings are of a short-term nature. They are classified at level 2 in the fair value hierarchy.
Deferred payments
Deferred payments are related to contractual undertakings to pay the full sum in future periods, and therefore the carrying amount is the same as the fair value. These are classified at level 2 in the fair value hierarchy.
Non-current borrowings from related parties
The fair values of related party borrowings are based on discounted cash flows using a current borrowing rate. They are classified at level 2 in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.
Current borrowings from related parties
The fair value of current borrowings from related parties is considered to be the same as the carrying amount since the interest payable is either close to current market rates or the borrowings are of a short-term nature
Note 4. Earnings per share
| Q1 | Jan-Dec | ||
|---|---|---|---|
| TSEK | 2020 | 2019 | 2019 |
| Earnings attributable to shareholders | 29,133 | 6,930 | 2,621 |
| Weighted average numbers of outstanding shares: | |||
| Basic | 97,670,567 | 44,724,680 | 84,434,095 |
| Diluted | 97,997,733 | 44,724,680 | 84,761,261 |
| Earnings per share, basic, SEK | 0.30 | 0.15 | 0.03 |
| Earnings per share, after dilution, SEK | 0.30 | 0.15 | 0.03 |
Earnings per share before and after dilution is affected by the incentive program for the employees. The formula for calculating earnings per share: earnings per share = (total profit for the period – dividend on preference shares)/average number of outstanding common shares.
Note 5. Segment reporting and disaggregated revenue
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The CEO has been identified as the chief operating decision maker and assesses the financial performance and position of the Group and makes strategic decisions. Within Karnov Group, operating segments are defined by geography and are monitored down to EBIT level. Below EBIT level and on balance sheet and cash flow statements the assessment of financial performance and position is conducted entirely on Group level. Karnov's business operations are media independent and the Company monitors the overall net sales distribution trend between online and offline products at Group level.
KARNOV GROUP
Interim report, January – March 2020
| TSEK | Denmark | Sweden | Total | ||||
|---|---|---|---|---|---|---|---|
| Q1 | Q1 | Q1 | Jan-Dec | ||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2019 | |
| Online | 152,530 | 140,096 | 581,673 | ||||
| Offline | 59,431 | 64,835 | 175,414 | ||||
| Total net sales | 112,928 | 108,946 | 99,033 | 95,985 | 211,961 | 204,931 | 757,087 |
| EBITDA | 49,917 | 38,756 | 48,368 | 40,651 | 98,285 | 79,407 | 251,292 |
| EBITA | 48,012 | 36,920 | 40,206 | 30,581 | 88,218 | 67,501 | 205,975 |
| EBIT | 31,754 | 21,328 | 19,506 | 15,738 | 51,261 | 37,066 | 80,181 |
| Net financial items | -15,713 | -25,945 | -69,984 | ||||
| Profit before tax | 35,548 | 11,121 | 3,095 | ||||
| Income tax expenses | -6,464 | -3,269 | 385 | ||||
| Net result | 29,084 | 7,852 | 3,480 |
Note 6. Alternative performance measures
Karnov's financial statements include alternative performance measures, which complement the measures that are defined or specified in applicable rules for financial reporting. Alternative performance measures are presented since, in their context, they provide clearer or more in-depth information than the measures defined in applicable rules for financial reporting. The alternative
performance measures are derived from the Group's consolidated financial reporting and are not measured in accordance with IFRS.
Karnov's definition of these measures, which are not described under IFRS, is provided in the section Financial definitions. Reconciliation of the alternative performance measures is presented below.
| Total net sales | Q1 | Jan-Dec | |
|---|---|---|---|
| TSEK | 2020 | 2019 | 2019 |
| Organic business | 209,652 | 200,350 | 743,861 |
| Acquired business | - | - | - |
| Currency | 2,309 | 4,581 | 13,226 |
| Total net sales | 211,961 | 204,931 | 757,087 |
| Total net sales split, % | Q1 | Jan-Dec | |
| TSEK | 2020 | 2019 | 2019 |
| Organic growth, % | 2.3% | 3.2% | 4.0% |
| Acquired growth, % | - | - | - |
| Currency effect, % | 1.1% | 2.3% | 1.8% |
| Total growth, % | 3.4% | 5.5% | 5.8% |
KARNOV GROUP
Interim report, January – March 2020
| Group | Q1 | Jan-Dec | |
|---|---|---|---|
| TSEK | 2020 | 2019 | 2019 |
| Net sales | 211,961 | 204,931 | 757,087 |
| EBITDA | 98,285 | 79,407 | 251,292 |
| EBITDA margin, % | 46.4% | 38.7% | 33.2% |
| Items affecting comparability | - | 17,830 | 72,655 |
| Adjusted EBITDA | 98,285 | 97,237 | 323,947 |
| Adjusted EBITDA margin, % | 46.4% | 47.4% | 42.8% |
| Depreciations and amortisations | -10,067 | -11,906 | -45,317 |
| EBITA | 88,218 | 67,501 | 205,975 |
| EBITA margin, % | 41.6% | 32.9% | 27.2% |
| Adjusted EBITA | 88,218 | 85,331 | 278,630 |
| Adjusted EBITA margin, % | 41.6% | 41.6% | 36.8% |
| Amortisation (acquisitions) | -36,957 | -30,435 | -125,794 |
| EBIT | 51,261 | 37,066 | 80,181 |
| Denmark | Q1 | Jan-Dec | |
| TSEK | 2020 | 2019 | 2019 |
| Net sales | 112,928 | 108,946 | 420,656 |
| EBITDA | 49,917 | 38,756 | 131,396 |
| EBITDA margin, % | 44.2% | 35.6% | 31.2% |
| Items affecting comparability | - | 7,563 | 41,675 |
| Adjusted EBITDA | 49,917 | 46,319 | 173,071 |
| Adjusted EBITDA margin, % | 44.2% | 42.5% | 41.1% |
| Depreciations and amortisations | -1,905 | -1,836 | -7,881 |
| EBITA | 48,012 | 36,920 | 123,515 |
| EBITA margin, % | 42.5% | 33.9% | 29.4% |
| Adjusted EBITA | 48,012 | 44,483 | 165,189 |
| Adjusted EBITA margin, % | 42.5% | 40.8% | 39.3% |
| Amortisation (acquisitions) | -16,257 | -15,592 | -58,558 |
| EBIT | 31,754 | 21,328 | 64,957 |
KARNOV GROUP
Interim report, January – March 2020
Sweden
| TSEK | 2020 | 2019 | 2019 |
|---|---|---|---|
| Net sales | 99,033 | 95,985 | 336,431 |
| EBITDA | 48,368 | 40,651 | 119,896 |
| EBITDA margin, % | 48.8% | 42.4% | 35.6% |
| Items affecting comparability | - | 10,267 | 30,980 |
| Adjusted EBITDA | 48,368 | 50,918 | 150,876 |
| Adjusted EBITDA margin, % | 48.8% | 53.0% | 44.8% |
| Depreciations and amortisations | -8,162 | -10,070 | -37,435 |
| EBITA | 40,206 | 30,581 | 82,461 |
| EBITA margin, % | 40.6% | 31.9% | 24.5% |
| Adjusted EBITA | 40,206 | 40,848 | 113,441 |
| Adjusted EBITA margin, % | 40.6% | 42.6% | 33.7% |
| Amortisation (acquisitions) | -20,700 | -14,843 | -67,237 |
| EBIT | 19,506 | 15,738 | 15,224 |
Return on capital
| TSEK | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
|---|---|---|---|
| EBIT | 51,261 | 37,066 | 80,181 |
| Total assets | 3,785,350 | 3,368,361 | 3,398,657 |
| Return on capital, % | 1.4% | 1.1% | 2.4% |
Net working capital
| TSEK | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
|---|---|---|---|
| Current assets | 592,375 | 276,906 | 349,449 |
| Current liabilities | 984,355 | 763,081 | 754,781 |
| Net working capital | -391,980 | -486,175 | -405,332 |
Cash conversion
| Q1 | Jan-Dec | ||
|---|---|---|---|
| TSEK | 2020 | 2019 | 2019 |
| Adjusted EBITDA | 98,285 | 97,237 | 323,947 |
| Cash flow from operating activities | 166,281 | 130,236 | 137,276 |
| Interest paid | 4,907 | 14,458 | 31,878 |
| Income tax paid | 11,671 | 8,101 | 58,049 |
| Items affecting comparability | - | 17,830 | 72,655 |
| Capex related to new product development | -12,511 | -7,241 | -12,975 |
| Adjusted cash flow from operating activities | 170,348 | 163,384 | 286,883 |
| Cash conversion, % | 173.3% | 168.0% | 88.6% |
KARNOV GROUP
Interim report, January – March 2020
Net debt
| TSEK | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
|---|---|---|---|
| Non-current borrowing from credit institutions | 865,425 | 1,392,006 | 838,317 |
| Non-current borrowings from related parties | - | 224,158 | - |
| Current borrowing from credit institutions | 383,730 | 100,836 | 75,000 |
| Current borrowing from related parties | - | 46,028 | - |
| Cash and cash equivalents | 493,933 | 144,810 | 52,008 |
| Net debt | 755,222 | 1,618,218 | 861,309 |
Leverage ratio
| TSEK | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
|---|---|---|---|
| Adjusted EBITDA LTM | 324,997 | 305,179 | 323,947 |
| Net debt | 755,222 | 1,618,218 | 861,309 |
| Leverage ratio | 2.3 | 5.3 | 2.7 |
Equity/asset ratio
| TSEK | 31 Mar 2020 | 31 Mar 2019 | 31 Dec 2019 |
|---|---|---|---|
| Equity | 1,618,794 | 643,413 | 1,526,769 |
| Total assets | 3,785,350 | 3,368,361 | 3,398,657 |
| Equity/asset ratio, % | 42.8% | 19.1% | 44.9% |
KARNOV GROUP
Interim report, January – March 2020
22
Quarterly overview
| TSEK | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
|---|---|---|---|---|---|
| Income statement | |||||
| Net sales | 211,961 | 189,183 | 189,533 | 173,440 | 204,931 |
| EBITDA | 98,285 | 49,896 | 79,787 | 42,203 | 79,407 |
| EBITDA margin, % | 46.4% | 26.4% | 42.1% | 24.3% | 38.7% |
| EBITA | 88,218 | 38,912 | 69,106 | 30,458 | 67,501 |
| EBITA margin, % | 41.6% | 20.6% | 36.5% | 17.6% | 32.9% |
| Adjusted EBITA | 88,218 | 59,422 | 73,756 | 60,123 | 85,331 |
| Adjusted EBITA margin, % | 41.6% | 31.4% | 38.9% | 34.7% | 41.6% |
| EBIT | 51,261 | 5,707 | 37,969 | -560 | 37,066 |
| EBIT, margin % | 24.2% | 3.0% | 20.0% | -0.3% | 18.1% |
| Net financial items | -15,713 | 7,588 | -5,805 | -45,822 | -25,945 |
| Net result | 29,084 | 7,838 | 32,093 | -44,303 | 7,852 |
| Balance sheet | |||||
| Non-current assets | 3,192,975 | 3,049,208 | 3,132,158 | 3,114,226 | 3,091,455 |
| Current assets | 592,375 | 349,449 | 191,354 | 224,392 | 276,906 |
| Cash and cash equivalents | 493,933 | 52,008 | 38,180 | 78,092 | 144,810 |
| Equity | 1,618,794 | 1,526,769 | 1,549,329 | 1,497,238 | 643,413 |
| Non-current liabilities | 1,182,201 | 1,117,107 | 1,185,611 | 1,183,305 | 1,961,867 |
| Current liabilities | 984,355 | 754,781 | 588,572 | 658,075 | 763,081 |
| Total assets | 3,785,350 | 3,398,657 | 3,323,512 | 3,338,618 | 3,368,361 |
| Cash flow | |||||
| Cash flow from operating activities | 166,281 | 51,217 | -18,931 | -19,251 | 130,236 |
| Cash flow from Investing activities | -31,181 | -25,271 | -26,427 | -38,852 | -180,265 |
| Cash flow from financing activities | 304,577 | -13,933 | -1,056 | 4,486 | -4,672 |
| Cash flow for the period | 439,677 | 12,012 | -46,414 | -53,618 | -54,701 |
| Key ratios | |||||
| Net working capital | -391,980 | -405,332 | -397,218 | -433,684 | -486,175 |
| Return on capital, % | 1.4% | 0.2% | 1.1% | 0.0% | 1.1% |
| Equity/asset ratio, % | 42.8% | 44.9% | 46.6% | 44.8% | 19.1% |
| Cash conversion, % | 173.3% | 155.5% | 2.3% | 25.2% | 168.0% |
| Net debt | 755,222 | 861,309 | 891,880 | 840,527 | 1,618,218 |
| Share data: | |||||
| Basic | 97,670,567 | 97,670,567 | 80,021,938 | 71,197,461 | 44,724,680 |
| Diluted | 97,997,733 | 97,670,567 | 80,349,104 | 71,524,627 | 44,724,680 |
| Earnings per share, basic, SEK | 0.30 | 0.08 | 0.40 | -0.62 | 0.15 |
| Earnings per share, after dilution, SEK | 0.30 | 0.08 | 0.40 | -0.62 | 0.15 |
KARNOV GROUP
Interim report, January – March 2020
Financial definitions and alternative performance measures
This interim report contains references to a number of performance measures. Some of these measures are defined in IFRS standards, while others are alternative measures, which are not reported in accordance with applicable financial reporting frameworks or other legislation. These measures are used by Karnov to help both investors and management to analyse the Group's operations. The measures used in this interim report are described below, together with definitions and the reason for their use.
| Key ratio | Definition | Reason for use |
|---|---|---|
| Acquired growth | Change in net sales during the current period attributable to acquired units, excluding currency effects, in relation to net sales for the corresponding period of the preceding year. Net sales of acquired units are defined as acquired growth during a period of 12 months commencing the respective acquisition date. | The measure is used as a complement to organic growth and provides an improved understanding for Karnov's growth. |
| Adjusted EBITA | EBITA adjusted for the impact of items affecting comparability. | The measure shows the profitability from the business, adjusted for the impact of items affecting comparability and amortisation of capital expenditures related to acquisitions. |
| Adjusted EBITA margin | Adjusted EBITA as a percentage of net sales. | The measure shows the underlying profitability generated from the current operations over time, adjusted for items affecting comparability. |
| Adjusted EBITDA | EBITDA excluding items affecting comparability. | The measure is used since it facilitates the understanding of the operating profit, excluding items affecting comparability, financing, depreciation and amortisation. |
| Adjusted EBITDA margin | Adjusted EBITDA as a percentage of net sales. | The measure shows operational profitability over time, excluding items affecting comparability, financing, depreciation and amortisation. |
| Adjusted cash flow from operating activities | Adjusted EBITDA plus changes in net working capital less capital expenditure related to new product development and enhancement of existing products and business systems. | The measure is used to calculate one component in the cash conversion. |
| Average number of full-time employees (FTEs) | Average number of full-time employees during the reporting period. | Non-financial key ratio. |
| Cash conversion (%) | Adjusted cash flow from operating activities as a percentage of Adjusted EBITDA. | The measure is used since it shows how efficiently adjusted cash flow from operating activities is translated into a concrete contribution to Karnov's financing. |
| Earnings per share | Earnings per share for the period in SEK attributable to the parent company's shareholders, in relation to weighted average number of outstanding shares before and after dilution. | IFRS key ratio. |
| EBITA | Earnings before financial items and taxes, excluding acquisition related purchase price allocation (PPA) amortisation. | The measure shows the profitability from the business, adjusted for acquisition related purchase price allocation (PPA) amortisation. |
| EBITA margin | EBITA as a percentage of net sales. | The measure shows the profitability over time for the underlying business (i.e., excluding PPA amortisation) in relation to net sales. |
| EBITDA | Earnings before depreciation and amortisation, financial items, and taxes. | The measure shows the operating profitability before depreciation and amortisation. |
KARNOV GROUP
Interim report, January – March 2020
| Key ratio | Definition | Reason for use |
|---|---|---|
| EBITDA margin | EBITDA as a percentage of net sales. | The measure shows operational profitability over time, regardless of financing, depreciation and amortisation. |
| Equity/asset ratio (%) | Equity divided by total equity and liabilities. | The measure can be used to assess Karnov’s financial stability. |
| Items affecting comparability | Items affecting comparability includes items of a significant character that distort comparisons over time. | The measure is used for understanding the financial performance over time. |
| Net debt/adjusted EBITDA LTM | Net debt on the balance sheet date divided by adjusted EBITDA for the last twelve months (LTM). | Relevant to analyse to ensure that Karnov has an appropriate financing structure and is able to fulfil its financial obligations under its loan agreement. |
| Net debt | Total net borrowings including capitalised bank costs and excluding lease liabilities from IFRS16 less cash and cash equivalents. | The measure is used since it allows for an assessment of whether Karnov has an appropriate financing structure and is able to fulfil its commitments under its financing agreements. |
| Net sales (online) | Net sales from online products. | The measure is used since it facilitates the understanding of total net sales and the breakdown of net sales. |
| Net sales (offline) | Net sales from printed products and training. | The measure is used since it facilitates the understanding of total net sales and the breakdown of net sales. |
| Net working capital (NWC) | Current assets less current liabilities. | The measure shows the tie-up of short-term capital in the operations and facilitates the understanding of changes in the cash flow from operating activities |
| Operating profit (EBIT) | Profit for the period before financial items and taxes. | The measure is used since it enables comparisons of the profitability regardless of the capital structure or tax situation. |
| Organic growth | Change in net sales during the current period, excluding acquisitions and currency effects, in relation to net sales for the corresponding period of the preceding year. Acquisitions are included in organic net sales after a period of 12 months. | The measure is used since it shows Karnov’s ability to generate growth through increases of, among other things, volume and price in its existing business. |
| Return on capital | Operating profit for the period divided by total assets. | The measure shows the operating return on capital that owners and lenders have invested. |
Currency rates
| | Closing rate
31 Mar 2020 | Average rate
Jan-Mar 2020 | Closing rate
31 Mar 2019 | Average rate
Jan-Mar 2019 | Closing rate
31 Dec 2019 | Average rate
Jan-Dec 2019 |
| --- | --- | --- | --- | --- | --- | --- |
| 1 DKK is equivalent to SEK | 1.4840 | 1.4268 | 1.3963 | 1.3962 | 1.3968 | 1.4180 |
KARNOV GROUP
Interim report, January – March 2020
About Karnov Group
60,000+
Users
1,500+
Specialists
240+
Employees
Karnov Group (publ) is a leading provider of information solutions for professionals in the areas of legal, tax and accounting, and environmental, health and safety in Denmark and Sweden. Karnov was founded on one man's belief that access to the law is the foundation of every great society and our legacy dates back to 1867. Over time, the Karnov Group has evolved from a traditional publishing company to a digital information provider.
Our mission is to be an indispensable partner for all legal, tax and accounting professionals and enable our users to make better decisions, faster by delivering the highest quality of content within a state-of-the-art user experience to support their workflow efficiency.
Our solutions are largely digital and we offer subscription-based online solutions for law firms, tax and accounting firms, corporates and the public sector including courts, universities, public authorities and municipalities. Karnov also publishes and sells books and journals and hosts legal training courses.
With strong brands such as Karnov, Norstedts Juridik, VJS, Notisum, Legal Cross Border and Forlaget Andersen, Karnov Group delivers knowledge and insights to more than 60,000 users.
Karnov's is organised into two geographical financial reporting segments and the product offering, subject to a few variations, is similar in both countries.
Denmark: Legal, tax and accounting online and offline products and solutions
Sweden: Legal online and offline products, compliance solutions and legal training
With offices in Copenhagen, Stockholm, and Malmo, Karnov Group employs around 240 people.
The Karnov share is listed on Nasdaq Stockholm, Mid Cap segment, under the ticker "KAR".
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Karnov Group AB (publ) Corp. Id. 559016-9016 Registered office: Stockholms län
Head office: Warfvinges väg 39, 112 51 Stockholm, Sweden
Tel: +46 8 587 670 00 www.karnovgroup.com
KARNOV
GROUP