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Karnov Group Interim / Quarterly Report 2020
3068_10-k_2021-02-25_e5874e15-cf4d-4b20-9b2f-273cda03f2c3.pdf
Interim / Quarterly Report
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Year-end report
January – December 2020
Q4
Ending the year on a positive note
Financial highlights fourth quarter
- Net sales flat at SEK 189 m (189), organic growth was 1%.
- EBITA amounted to SEK 48 m (39) with EBITA margin of 25.2% (20.6%).
- Adjusted EBITA increased by 0.6% to SEK 60 m (59) and adjusted EBITA margin was 31.7% (31.4%).
- Net result amounted to SEK 16 m (8).
- Earnings per share after dilution amounted to SEK 0.16 (0.08).
- Adjusted operating cash flow amounted to SEK 192 m (109).
Business highlights
- Karnov Group acquires the digital workflow-tool provider DIBkunnskap AS and strengthen its presence on the Norwegian market.
- The Board of Directors has appointed Pontus Bodelsson as new President and CEO, as Flemming Breinholt has announced his intention to resign. Breinholt will resign and Bodelsson will assume his position on 10 May 2021.
- Our initiatives striving for operational excellence and our process optimisation programs have contributed to increase the adjusted EBITA margin by 60 basis points for the full year. The Covid-19 pandemic has impacted full year growth negatively with approximately 1-2 percentage points.
- The Board of Directors proposes to the Annual General Meeting to resolve on a dividend of SEK 1.00 per share.
Financial highlights full year
- Net sales up 2% to SEK 771 m (757), organic growth was 2%.
- EBITA amounted to SEK 276 m (206) with EBITA margin of 35.8% (27.2%).
- Adjusted EBITA increased by 3.4% to SEK 288 m (279) and adjusted EBITA margin was 37.4% (36.8%).
- Net result amounted to SEK 100 m (3).
- Earnings per share after dilution amounted to SEK 1.02 (0.03).
- Adjusted operating cash flow amounted to SEK 414 m (287).
Key financial ratios for the Group*
| TSEK | Q4 | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | Δ% | 2020 | 2019 | Δ% | |
| Net sales | 188,742 | 189,183 | -0.2% | 771,416 | 757,087 | 1.9% |
| Organic growth, % | 1.2% | 4.1% | 2.1% | 4.0% | ||
| EBITA | 47,581 | 38,912 | 22.3% | 275,955 | 205,975 | 34.0% |
| EBITA margin, % | 25.2% | 20.6% | 35.8% | 27.2% | ||
| Adjusted EBITA | 59,784 | 59,422 | 0.6% | 288,158 | 278,630 | 3.4% |
| Adjusted EBITA margin, % | 31.7% | 31.4% | 37.4% | 36.8% | ||
| Net result | 16,110 | 7,838 | 105.5% | 100,004 | 3,480 | 2773.7% |
| Adjusted cash flow from operating activities | 191,810 | 109,459 | 75.2% | 413,761 | 286,883 | 44.2% |
- For more information see Financial definitions and Note 7f for calculations of Alternative Performance Measures.
KARNOV
GROUP
For the full year, the adjusted EBITA margin improved by 60 basis points to 37.4 percent. We are highly satisfied that our customer centricity as well as our operational excellence initiatives have led to good response.
We are also very happy about the acquisition of DIBkunnskap AS, as it gives us opportunities to grow Karnov Group in a new vertical in Norway.
Flemming Breinholt
President and CEO
Comments by the CEO
We have ended the fourth quarter on a strong note and we are content with our financial performance. We are also pleased with our acquisition of DIBkunnskap AS, which strengthens our footprint in Norway.
Improved adjusted EBITA margin and increased proposed dividend
Our organic growth in the fourth quarter was 1.2 percent, mainly due to increased online sales compared to last year. Offline sales were on the same level as last year, despite the Covid-19 pandemic. Our organic growth for the full year was 2.1 percent, slightly below our medium-term financial target. This was due to the Covid-19 pandemic's effect.
The adjusted EBITA margin was 31.7 percent in the fourth quarter, which is an improvement compared to the previous year. For the full year, the adjusted EBITA margin improved by 60 basis points to 37.4 percent. We are highly satisfied that our customer centricity as well as our operational excellence initiatives have led to good response.
Our financial performance and strong cash flow generation has allowed the Board of Directors to propose a dividend of SEK 1.00 per share. This corresponds to 38 percent of the PPA adjusted net profit.
Acquisition of DIBkunnskap AS
In December 2020, we announced our intention of acquiring DIBkunnskap AS, a market leading Norwegian digital workflow-tool provider for tax and accounting. The deal was closed in the beginning of January 2021 and strengthens our footprint in Norway.
The acquisition gives us opportunities to grow Karnov Group in a new vertical in Norway, while also allowing for expansion into Sweden and strengthening our existing tax and accounting vertical in Denmark. DIB has a strong focus on creating efficiencies in the workflows of professionals and together we will further grow this market, as DIB will leverage on existing Karnov distribution channels and capacity to drive market expansion, with a natural market fit.
DIBkunnskap AS will be consolidated in the Group's financials in the first quarter 2021. The acquisition is expected to have neutral impact on EPS in 2021 and be value accretive from 2022, while having a minor dilutive impact on Karnov Group's adjusted EBITA margin for 2021.
Update on the Covid-19 pandemic
We are pleased to see that vaccinations against the Covid-19 virus have been initiated globally, and we look forward to meeting all employees, authors, experts and customers in person again. We continue to follow the regulations and recommendations from the authorities.
In the fourth quarter, our non-subscription part of the offline business, mainly books, public trades and sales of legal training courses, as well as SME market demand and decision-making have been impacted, in line with earlier announcements. We assess this will continue also in the first half of 2021.
The Covid-19 pandemic has impacted the full year on top line growth negatively with approximately 1-2 percentage points.
KARNOV GROUP
Year-end report, January – December 2020
Karnov Group in brief
Karnov Group is a leading provider of mission critical information in the areas of legal, tax and accounting, and environmental, health and safety in Denmark, Sweden and Norway. Under a strong portfolio of brands including Karnov, Norstedts Juridik, Notisum, Legal Cross Border, Forlaget Andersen, LEXNordics and DIBkunnskap, Karnov Group delivers knowledge and insights, to more than 80,000 users – every day.
PARTNER IN INFORMATION
> Karnov Group was founded in Copenhagen in 1924 on one person’s belief that access to the law is the foundation of every great society and our legacy dates back to 1867.
> Over time, the Company has evolved from a traditional publishing company to a digital value creator.
> Karnov Group’s mission is to be an indispensable partner for all legal, tax and accounting professionals and enable its 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.
> Karnov Group’s products are largely digital, including subscription-based online solutions for law firms, tax and accounting firms, corporates and the public sector including courts, universities, public authorities and municipalities.
> Karnov Group also publishes and sells printed books and journals and hosts legal training courses.
> Karnov Group continuously adds more value through development of new verticals and investments in adjacent companies with technologies helping professionals in taking better decisions, faster.
Karnov Group’s medium-term financial targets
GROWTH
Net sales organic annual growth of 3-5% in the medium term, supplemented by selective acquisitions.
PROFITABILITY
Increased Adjusted EBITA margin in the medium term.
CAPITAL STRUCTURE
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.
DIVIDEND POLICY
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
Year-end report, January – December 2020
Group financial performance
Net sales by country per fourth quarter,%
Net sales growth YTD
Net sales per quarter, SEKm
Adjusted EBITA, SEKm and margin, % per quarter
Fourth quarter and full year period
| TSEK | Q4 | Δ% | Jan-Dec | Δ% | ||
|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||
| Net sales | 188,742 | 189,183 | -0.2% | 771,416 | 757,087 | 1.9% |
| Organic growth, % | 1.2% | 4.1% | 2.1% | 4.0% | ||
| EBITA | 47,581 | 38,912 | 22.3% | 275,955 | 205,975 | 34.0% |
| EBITA margin, % | 25.2% | 20.6% | 35.8% | 27.2% | ||
| Adjusted EBITA | 59,784 | 59,422 | 0.6% | 288,158 | 278,630 | 3.4% |
| Adjusted EBITA margin, % | 31.7% | 31.4% | 37.4% | 36.8% |
Net sales and growth
For the three-month period, October-December 2020, net sales were flat at SEK 189 m (189) compared with the corresponding quarter last year. Organic growth on a constant currency basis was 1.2 percent, currency effects had a negative impact on net sales of -1.7 percent and acquired growth accounted for 0.3 percent. Our subscription based online sales corresponds to approximately 82 percent of the total revenue in the fourth quarter.
For the full-year period, the Group's net sales increased by 1.9 percent to SEK 771 m (757). Organic growth on a constant currency basis was 2.1 percent, currency effects had an impact on net sales of -0.5 percent and acquired growth accounts for 0.2 percent. The Covid-19 pandemic is estimated to have impacted top-line growth by approximately 1-2 percentage points.
Operating income
EBITA for the quarter amounted to SEK 48 m (39) and EBITA margin amounted to 25.2 percent (20.6).
Adjusted EBITA improved by 0.6 percent to SEK 60 m (59) and adjusted EBITA margin amounted to 31.7 percent (31.4). The improved margin was due to our continued strive for operational excellence.
Operating profit (EBIT) was SEK 12 m (6) for the quarter. Operating profit was impacted by a cost of SEK 5 m (19) related to a write down of the value of one of the Group's products. The write down is due to revenues being below expectations for the product, and is part of our ongoing process of evaluating our products.
The period includes SEK 12 m in cost for item affecting comparability while the corresponding period last year included SEK 21 m (see table below). The SEK 12 m items affecting comparability is related to the acquisition of DIBkunnskap AS and optimisation of our organisation.
For the full-year period, EBITA amounted to SEK 276 m (206) and EBITA margin amounted to 35.8 percent (27.2). Adjusted EBITA improved by 3.4 percent to 288 m (279) and adjusted EBITA margin amounted to 37.4 percent (36.8).
Operating profit (EBIT) increased by SEK 51 m to SEK 131 m (80) for the same reasons as mentioned above. EBIT was impacted by SEK 12 m in cost for items affecting comparability while last year was impacted by SEK 73 m (see table below).
| Items affecting comparability | Q4 | Jan-Dec | ||
|---|---|---|---|---|
| TSEK | 2020 | 2019 | 2020 | 2019 |
| Acquisition costs | 4.165 | 750 | 4.165 | 750 |
| Restructuring costs | 8.038 | 1.929 | 8.038 | 14.673 |
| IPO costs | - | -1.192 | - | 38.209 |
| Write down of subsidiaries | - | 19.023 | - | 19.023 |
| Total | 12.203 | 20.510 | 12.203 | 72.655 |
KARNOV GROUP
Year-end report, January – December 2020
Net sales split per fourth quarter, %
37%
Adjusted EBITA margin YTD
124%
Cash conversion, YTD
Net financial items
Net financial items for the quarter amounted to SEK 6 m (8) whereof SEK 5 m (0) is income from adjustment of earn-out liability.
Net financial items for the full year amounted to SEK -10 m compared to SEK -70 for the corresponding period last year. This improvement is a result of the new financing structure following the IPO in April 2019, with lower debt and interest. Currency effect for the full year was SEK 9 m (-17).
Profit before and after tax, Earnings per share
Profit before tax increased by SEK 12 m to SEK 18 m (6) compared to the corresponding quarter of 2019. The quarter was negatively impacted by SEK 12 m (21) costs for items affecting comparability.
Profit after tax increased to SEK 16 m (8). Taxes for the quarter are SEK 2 m (-2).
Profit before tax for the full year increased by SEK 117 m to SEK 120 m (3) compared to the corresponding period last year.
Profit after tax for the full year improved by SEK 97 m to SEK 100 m (3).
Earnings per share after dilution was SEK 0.16 (0.08) for the quarter and SEK 1.02 (0.03) for the full year.
Cash flow and investments
Cash flow from operating activities for the quarter increased by SEK 112 m to SEK 163 m (51). The increase reflects a SEK 112 m positive effect from working capital, which mainly relates to timing of invoicing effecting receivables and prepaid income.
Total investments for the quarter amounted to SEK 23 m (25), mostly related to investments in intangible assets related to the Group's online platform.
Total financing for the quarter amounted to SEK -3 m (-14) related to changes in lease liabilities.
For the full year, operating cash flow amounted to SEK 379 m (137), while total investments in intangible assets for the same period amounted to SEK 80 m (121). Investments in intangible assets are related to the business' online platform. Cash flow from financing was SEK 235 m (-19) mainly from the drawdown of SEK 300 m on borrowings in Q1.
The cash flow generation was positive in the fourth quarter, with an increase of SEK 83 m to SEK 192 m (109) on adjusted cash flow from operating activities in the quarter compared to last year. The increase predominantly relates to increased inflow of cash from receivables due to the high invoicing in the quarter. For the full year, adjusted operating cash flow increased 44 percent compared to last year.
The cash conversion rate was 262.7 percent (155.5) in the fourth quarter and 124.0 percent (88.6) for the full year.
| Cash conversion | Q4 | Jan-Dec | ||
|---|---|---|---|---|
| TSEK | 2020 | 2019 | 2020 | 2019 |
| Adjusted EBITDA | 73,023 | 70,406 | 333,634 | 323,947 |
| Adjusted cash flow from operating activities | 191,810 | 109,459 | 413,761 | 286,883 |
| Cash conversion, % | 262.7% | 155.5% | 124.0% | 88.6% |
KARNOV GROUP
Year-end report, January – December 2020
1.9
Leverage
Financial position
Net debt was SEK 643 m (861) at the end of the period.
The leverage at the end of the period was 1.9 (2.7) times and the equity ratio was 42.0 (44.9) percent with an equity of SEK 1,551 m (1,527).
| Net Debt | Q4 | Jan-Dec | ||
|---|---|---|---|---|
| TSEK | 2020 | 2019 | 2020 | 2019 |
| Total borrowings | 1,196,087 | 913,317 | 1,196,087 | 913,317 |
| Cash and cash equivalents | 552,921 | 52,008 | 552,921 | 52,008 |
| Net debt | 643,166 | 861,309 | 643,166 | 861,309 |
| Leverage ratio | 1.9 | 2.7 | 1.9 | 2.7 |
| Equity | 1,550,840 | 1,526,769 | 1,550,840 | 1,526,769 |
| Equity/asset ratio, % | 42.0% | 44.9% | 42.0% | 44.9% |
Cash and cash equivalents at the end of the period amounted to SEK 553 m (52) and the Group had unutilized credit lines of SEK 247 m (525). The strong cash balances and credit lines at the end of the period was part of the preparation for the acquisition of DIBkunnskap AS in early January 2021.
KARNOV GROUP
Year-end report, January – December 2020
KARNOV GROUP
Year-end report, January – December 2020
DIB
The latest member of the Karnov Group family
Significant events
Fourth quarter
- Karnov Group announced planned acquisition in beginning of 2021 of the market leading Norwegian knowledge workflow-tool supplier DIBkunnskap AS.
Events after the end of the period
- On 5 January 2021 Karnov Group closed the acquisition of market leading Norwegian knowledge workflow-tool supplier DIBkunnskap AS. The acquisition further strengthens Karnov Group’s position as a leading supplier of legal knowledge management solutions in Scandinavia.
- The Board of Directors of Karnov Group AB (publ) appoints Pontus Bodelsson as the new President and CEO of Karnov Group. The decision follows Flemming Breinholt’s desire to resign from his position. Flemming Breinholt will resign and Pontus Bodelsson will assume his position on 10 May 2021.
- The Board of Directors proposes a dividend of SEK 1.00 per share to be resolved by the Annual General Meeting on 5 May 2021.
- Karnov Group acquires the Danish legal tech start-up Onlaw Aps. The acquisition 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.
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
Segment performance
Denmark
| TSEK | Q4 | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | Δ% | 2020 | 2019 | Δ% | |
| Net sales | 100,104 | 102,553 | -2.4% | 419,207 | 420,656 | -0.3% |
| Organic growth, % | 0.8% | 3.3% | 0.5% | 2.7% | ||
| EBITA | 31,009 | 12,563 | 146.8% | 165,782 | 123,515 | 34.2% |
| EBITA margin, % | 31.0% | 12.3% | 39.5% | 29.4% | ||
| Adjusted EBITA | 32,718 | 33,982 | -3.7% | 167,491 | 165,189 | 1.4% |
| Adjusted EBITA margin, % | 32.7% | 33.1% | 40.0% | 39.3% |
Net sales and growth
Organic growth for the quarter amounted to 0.8 percent. However, net sales for the quarter decreased by 2.4 percent to SEK 100 m (103) due to currency effects having a negative impact of -3.2 percent. The organic growth is due to upselling to existing customers and sales of new products partly offset by a decline in offline sales. We still expect offline sales and SME market demand as well as decision-making processes will be impacted for the first half of 2021 due to the Covid-19 pandemic.
Karnov has now soft launched its new improved platform in Denmark and ensured that users have access to both the new and old platform, and easily can change between the two. More than 10,000 users are currently onboarded, and we will continuously onboard users the coming months. The current platform will be closed after a transition period to ensure an optimal user experience.
For the full year, net sales decreased by 0.3 percent to SEK 419 m (421). Organic growth was 0.5 percent and currency effects accounted for -0.8 percent.
Operating income
EBITA amounted to SEK 31 m (13) and EBITA margin to 31.0 percent (12.3).
Adjusted EBITA decreased by 3.7 percent to SEK 33 m (34) and adjusted EBITA margin to 32.7 percent (33.1).
Operating profit (EBIT) for the quarter increased to SEK 17 m (-1). EBIT was impacted by SEK 2 m (21) in cost for items affecting comparability. Operating profit was further impacted by a cost of SEK 5 m (19) related to write down of the value of one of the Group's products. The cost of SEK 5 m for the write-down is recognised in the profit and loss in other operational expenses, while the reduced earn-out related to the product had a positive impact on financial income of SEK 5 m. The write down is due to revenues being below expectations for the product.
For the full year, EBITA increased to SEK 166 m (124) and the EBITA margin was 39.5 percent (29.4). Adjusted EBITA was SEK 167 m (165) and the adjusted EBITA margin was 40.0 percent (39.3).
Operating profit (EBIT) for the full year was SEK 105 m (65).
KARNOV GROUP
Year-end report, January – December 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, Notisum and LEXNordics.
Net sales per quarter, SEKm
Adjusted EBITA, SEKm and margin, % per quarter
Segment performance (cont.)
Sweden
| TSEK | Q4 | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | Δ% | 2020 | 2019 | Δ% | |
| Net sales | 88,638 | 86,631 | 2.3% | 352,209 | 336,431 | 4.7% |
| Organic growth, % | 1.6% | 5.0% | 4.2% | 5.6% | ||
| EBITA | 16,572 | 26,350 | -37.1% | 110,173 | 82,461 | 33.6% |
| EBITA margin, % | 18.7% | 30.4% | 31.3% | 24.5% | ||
| Adjusted EBITA | 27,066 | 25,440 | 6.4% | 120,667 | 113,441 | 6.4% |
| Adjusted EBITA margin, % | 30.5% | 29.4% | 34.3% | 33.7% |
Net sales and growth
Net sales for the quarter increased by 2.3 percent to SEK 89 m (87). Organic growth was 1.6 percent driven by online sales, upselling to existing customers and sales of new products to both existing and new customers. Our earlier announced initiatives to strengthen our customer centricity to secure even stronger customer excellence and focus been well received. During the fourth quarter, we have seen good development in municipalities and the public sector. Offline sales declined as expected due to the ordinary market trend and partly due to a negative impact from the Covid-19 pandemic.
Acquired growth accounts for 0.7 percent (0.0) in the quarter.
For the full year, net sales increased by 4.7 percent to SEK 352 m (336) whereof 0.5 percent (0.0) was acquired growth. The main driver was the online business, partially offset by the expected decline in the offline business due the ordinary market trend and Covid-19 impact. We have seen good progress in the market demand for our EHS (Environmental, Health and Safety) solution during the year.
Operating income
In the fourth quarter EBITA amounted to SEK 17 m (26) and the EBITA margin to 18.7 percent (30.4).
Adjusted EBITA was SEK 27 m (25) driven by the increase in net sales. Adjusted EBITA margin was 30.5 percent (29.4). The driver for the increase in operating income in Sweden is our continued focus on growth in net sales in combination with good customer centricity and operational excellence.
Operating profit (EBIT) for the fourth quarter was SEK -4 m (7). EBIT was impacted by SEK 10 m in cost for items affecting comparability while last year was impacted by SEK 0 m.
For the full year, EBITA increased to SEK 110 m (82) and the EBITA margin was 31.3 percent (24.5). Adjusted EBITA increased to SEK 121 m (113) and the adjusted EBITDA margin was 34.3 percent (33.7).
Operating profit (EBIT) for the full year was SEK 27 m (15).
KARNOV GROUP
Year-end report, January – December 2020
Other information
Risks and uncertainties
Through its operations Karnov Group is exposed to different risks, 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 continues to affect all global markets and 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 85-90% 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, the Covid-19 has as expected had a negative impact on sales. However, the effect is expected to have a non-significant impact.
Karnov's significant risks and risk management are described on page 52-53 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) in the fourth quarter amounted to 255 (250). On average during the fourth quarter, 48% (50%) of the workforce were males and 52% (50%) females.
Annual General Meeting (AGM)
The AGM for 2021 will be held on 5 May 2021. Place and time will be announced in connection with the notice of the AGM.
Annual Report
The 2020 Annual Report, Sustainability Report and Corporate Governance Report is planned to be published on 31 March 2021. The report will be available on the company's website www.karnovgroup.com, and kept available in the company's office.
Proposed dividend
The Board of Directors has decided to propose to the Annual General Meeting on 5 May 2021 a dividend of SEK 1.00 per share.
The dividend is to be paid to shareholders who are included in the Company's shareholder record, kept by Euroclear Sweden AB, on 7 May 2021. Payment is made in Swedish kronor (SEK).
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 18 November 2020 the issue and repurchase of 46,510 shares of series C were carried out in order to secure the Company's obligations under its share-related incentive program LTIP 2020 for employees.
On 31 December 2020, the total number of shares and votes in Karnov Group AB (publ) amounts to 98,095,914 shares and 97,713,101.7 votes. Each share has a quotient value of approximately SEK 0.015385. The total number of shares consists of 97,670,567 ordinary shares, which carry one vote per share, and 425,347 shares of series C, which carry one-tenth of a vote per share. 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 December 2020, the Company had 1,387 known shareholders. The five largest shareholders in Karnov Group AB (publ) were Kayne Anderson Rudnick, M&G Investment Management, Lazard Asset Management, The Fourth Swedish National Pension Fund and KIRKBI Invest.
Incentive programs
Karnov Group has implemented two long-term incentive programs in the form of share savings programs. The purpose of the programs 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. 153 employees in Karnov have chosen to invest in Karnov and participate in the share savings programs.
The employees participating in the programs have allocated 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 137,465 savings shares to the program. Full allotment would mean that the total number of shares under the program will amount to no more than 425,347 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
Year-end report, January – December 2020
ⅢKARNOV GROUP
Year-end report, January – December 2020
Related-party transactions
Karnov Group did not undertake any significant transactions with related parties in 2020 except from compensation and benefits to the Board members and managing director received as a result of their membership of the Board, employment with Karnov or shareholdings in Karnov Group AB.
Parent Company
Net sales for the quarter amounted to SEK 0 m (0). Operating profit for the quarter amounted to SEK -10 m (-6).
Outlook
Karnov does not provide financial forecasts.
Review
This year-end report has not been subject to a review by the Company's auditors.
Disclosure
This year-end 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 25 February 2021 at 8.00 am CEST.
Karnov Group AB (publ)
Stockholm, 25 February 2021
Flemming Breinholt
President and CEO
For further information, please contact:
Flemming Breinholt, President and CEO
+45 3374 1202
[email protected]
Dora Brink Clausen, CFO
+45 3374 1248
[email protected]
Erik Berggren, Investor Relations Specialist
+45 5219 6552
[email protected]
Q4 presentation webcast
Karnov will present the fourth quarter and full-year results for analysts and investors via a webcast teleconference on 25 February at 10.00 am CET.
To participate, use the following link:
https://tv.streamfabriken.com/karnov-group-q4-2020
or dial-in numbers:
SE: +46 8 505 583 50
DK: +45 7 815 0109
NO: +47 2 350 0236
UK: +44 333 300 92 69
US: +1 833 526 8395
The presentation will also be available on www.financialhearings.com
Financial calendar 2021
Annual Report 2020
31 March, 2021
Interim report January-March 2021 and Annual General Meeting
5 May, 2021
Half-year report January-June 2021
26 August, 2021
Interim report January-September 2021
4 November, 2021
Consolidated statement of comprehensive income
| TSEK | Note | Q4 | Jan-Dec | ||
|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | ||
| Net sales | 5 | 188,742 | 189,183 | 771,416 | 757,087 |
| Total revenue | 188,742 | 189,183 | 771,416 | 757,087 | |
| Goods for resale | -31,984 | -33,494 | -131,754 | -135,194 | |
| Employee benefit expenses | -66,240 | -62,741 | -234,667 | -222,994 | |
| Depreciations and amortisations | -48,443 | -44,189 | -190,389 | -171,111 | |
| Other operating expenses | -29,698 | -43,052 | -83,564 | -147,607 | |
| Operating profit | 12,377 | 5,707 | 131,042 | 80,181 | |
| Financial income | 14,333 | 14,070 | 14,503 | 14,425 | |
| Financial expenses | -8,450 | -6,482 | -24,970 | -84,409 | |
| Net financial items | 5,883 | 7,588 | -10,467 | -69,984 | |
| Write down of associated companies | - | -7,102 | - | -7,102 | |
| Profit before income tax | 18,260 | 6,193 | 120,575 | 3,095 | |
| Income tax expense | -2,150 | 1,645 | -20,571 | 385 | |
| Net result | 16,110 | 7,838 | 100,004 | 3,480 | |
| Other comprehensive income: | |||||
| Items that may be reclassified to profit or loss: | |||||
| Exchange differences on translation of foreign operations | -51,499 | -31,429 | -43,352 | 13,989 | |
| Total comprehensive income for the period | -35,389 | -23,591 | 56,652 | 17,469 | |
| Profit for the period is attributable to: | |||||
| Owners of Karnov Group AB | 16,164 | 7,656 | 99,903 | 2,621 | |
| Non-controlling interests | -54 | 182 | 101 | 859 | |
| Net result | 16,110 | 7,838 | 100,004 | 3,480 | |
| Total comprehensive income for the period is attributable to: | |||||
| Owners of Karnov Group AB | -35,335 | -23,773 | 56,548 | 16,610 | |
| Non-controlling interests | -54 | 182 | 104 | 859 | |
| Total comprehensive income | -35,389 | -23,591 | 56,652 | 17,469 | |
| Earnings per share, basic, SEK | 4 | 0.17 | 0.08 | 1.02 | 0.03 |
| Earnings per share, after dilution, SEK | 4 | 0.16 | 0.08 | 1.02 | 0.03 |
For further information and details on earnings per share please refer to note 4.
KARNOV GROUP
Year-end report, January – December 2020
Consolidated balance sheet
| TSEK | Note | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|---|
| ASSETS: | |||
| Goodwill | 1,623,978 | 1,656,311 | |
| Other intangible assets | 1,149,935 | 1,263,117 | |
| Right-of-use assets | 95,545 | 112,477 | |
| Property, plant and equipment (PPE) | 6,280 | 5,434 | |
| Investments in associated companies | 70,347 | 5,778 | |
| Loans to associated companies | 3,036 | 2,937 | |
| Deposits | 2,528 | 2,729 | |
| Deferred tax assets | - | 425 | |
| Total non-current assets | 2,951,649 | 3,049,208 | |
| Inventories | 10,011 | 13,097 | |
| Trade receivables | 3 | 148,214 | 209,672 |
| Prepaid expenses | 7,556 | 8,391 | |
| Other receivables | 986 | 14,387 | |
| Tax receivable | 17,446 | 51,894 | |
| Cash and cash equivalents | 552,921 | 52,008 | |
| Total current assets | 737,134 | 349,449 | |
| TOTAL ASSETS | 3,688,783 | 3,398,657 | |
| TSEK | 31 Dec 2020 | 31 Dec 2019 | |
| EQUITY AND LIABILITIES: | |||
| Share capital | 1,509 | 1,503 | |
| Share premium | 2,062,361 | 2,062,361 | |
| Treasury shares | -6 | - | |
| Reserves | -363,675 | -320,320 | |
| Retained earnings including net profit for the year | -156,585 | -217,050 | |
| Total equity attributable to the parent company’s shareholders | 1,543,604 | 1,526,494 | |
| Non-controlling interest | 7,236 | 275 | |
| Total equity | 1,550,840 | 1,526,769 | |
| Borrowing from credit institutions | 3 | 1,196,087 | 838,317 |
| Lease liabilities | 86,539 | 102,783 | |
| Deferred tax liability | 153,239 | 170,551 | |
| Provisions | 5,454 | 5,456 | |
| Other non-current liabilities | 38,612 | - | |
| Total non-current liabilities | 1,479,931 | 1,117,107 | |
| Current liabilities | |||
| Borrowing from credit institutions | 3 | - | 75,000 |
| Trade payables | 3 | 12,395 | 12,477 |
| Current tax liabilities | 10,595 | 71,860 | |
| Accrued expenses | 136,585 | 126,239 | |
| Prepaid income | 428,436 | 399,586 | |
| Lease liabilities | 12,842 | 11,622 | |
| Other current liabilities | 3 | 57,159 | 57,997 |
| Total current liabilities | 658,012 | 754,781 | |
| TOTAL EQUITY AND LIABILITIES | 3,688,783 | 3,398,657 |
KARNOV GROUP
Year-end report, January – December 2020
Consolidated statement of changes in equity
Equity attributable to the parent company's shareholders
| TSEK | Share capital | Share premium | Treasury shares | Reserves | Retained earnings | Equity attributable to the parent company's shareholders | Non-controlling interest | Total equity |
|---|---|---|---|---|---|---|---|---|
| Balance at January 1, 2019 | 688 | 798,472 | 0 | 30,532 | -223,017 | 606,675 | 18,534 | 625,209 |
| Net result | - | - | - | - | 2,621 | 2,621 | 859 | 3,480 |
| Other comprehensive income for the period | - | - | - | 13,989 | - | 13,989 | - | 13,989 |
| Total comprehensive income/loss | - | - | - | 13,989 | 2,621 | 16,610 | 859 | 17,469 |
| Transaction with shareholders in their capacity as owners: | ||||||||
| Issue of ordinary shares due to conversion of debt | 74 | 209,186 | - | - | - | 209,260 | - | 209,260 |
| Purchase of shares from non-controlling interest | 102 | 286,378 | - | -364,841 | - | -78,361 | -19,118 | -97,478 |
| Issue of ordinary shares to new investors | 639 | 768,325 | - | - | - | 768,964 | - | 768,964 |
| Sharebased payment | - | - | - | - | 3,346 | 3,346 | - | 3,346 |
| Total transaction with shareholders | 815 | 1,263,889 | - | -364,841 | 3,346 | 903,209 | -19,118 | 884,092 |
| Closing balance at December 31, 2019 | 1,503 | 2,062,361 | - | -320,320 | -217,050 | 1,526,494 | 275 | 1,526,769 |
Equity attributable to the parent company's shareholders
| TSEK | Share capital | Share premium | Treasury shares | 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 | 0 | -320,320 | -217,050 | 1,526,494 | 275 | 1,526,769 |
| Net result | - | - | - | - | 99,903 | 99,903 | 101 | 100,004 |
| Other comprehensive income for the period | - | - | - | -43,355 | - | -43,355 | 3 | -43,352 |
| Total comprehensive income/loss | - | - | - | -43,355 | 99,903 | 56,548 | 104 | 56,652 |
| Transaction with shareholders in their capacity as owners: | ||||||||
| Issue of C-shares | 6 | - | - | - | - | 6 | - | 6 |
| Acquisition of treasury shares | - | - | -6 | - | - | -6 | - | -6 |
| Non-controlling interests share of acquisitions and capital increase | - | - | - | - | - | - | 6,857 | 6,857 |
| Sharebased payment | - | - | - | - | 4,514 | 4,514 | - | 4,514 |
| Dividend paid | - | - | - | - | -43,952 | -43,952 | - | -43,952 |
| Total transaction with shareholders | 6 | - | -6 | - | -39,438 | -39,438 | 6,857 | -32,581 |
| Closing balance at December 31, 2020 | 1,509 | 2,062,361 | -6 | -363,675 | -156,585 | 1,543,604 | 7,236 | 1,550,840 |
KARNOV GROUP
Year-end report, January – December 2020
Consolidated statement of cash flows
| TSEK | Q4 | Jan-Dec | ||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Operating profit | 12,377 | 5,707 | 131,042 | 80,181 |
| Adjustments: | ||||
| Non-cash items | 58,102 | 63,213 | 199,968 | 190,217 |
| Effect of changes in working capital: | ||||
| Increase/decrease in inventories | 1,281 | -387 | 3,085 | -1,460 |
| Increase/decrease in receivables | -68,554 | -115,541 | 75,694 | -43,923 |
| Increase/decrease in trade payables and other payables | 31,157 | -9,219 | 19,218 | -50,903 |
| Increase/decrease in prepaid income | 160,944 | 146,311 | 28,850 | 53,091 |
| Interest paid | -4,699 | -4,672 | -19,156 | -31,878 |
| Income tax paid | -27,888 | -34,195 | -59,710 | -58,049 |
| Net effect of changes in working capital | 92,241 | -17,703 | 47,981 | -133,122 |
| Cash flow from operating activities | 162,720 | 51,217 | 378,991 | 137,276 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||
| Acquisition of participations in associated companies | -3,020 | -4,282 | -25,466 | -4,282 |
| Acquisition of subsidiaries | - | 48 | -4,245 | -138,940 |
| Loan to associated companies | - | -55 | - | -2,981 |
| Acquisition of intangible assets | -17,089 | -18,188 | -79,690 | -120,672 |
| Acquisition of PPE | -2,947 | -2,794 | -2,947 | -3,940 |
| Cash flow from investing activities | -23,056 | -25,271 | -112,348 | -270,815 |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Increase/decrease in borrowings | - | -5,278 | 294,297 | -59,603 |
| Increase/decrease in lease liabilities | -3,324 | -8,656 | -14,891 | -14,731 |
| Principal payments on long-term debt | - | - | - | -1,459,831 |
| Increase/decrease in long-term debt | - | - | - | 844,200 |
| Transactions with non-controlling interest | - | - | - | -97,478 |
| Proceeds from IPO | - | - | - | 768,217 |
| Dividend paid | - | - | -43,952 | - |
| Cash flow from financing activities | -3,324 | -13,933 | 235,454 | -19,226 |
| Cash flow for the period | 136,340 | 12,012 | 502,097 | -152,765 |
| Cash and cash equivalents at the beginning of the period | 420,946 | 38,180 | 52,008 | 201,797 |
| Exchange-rate differences in cash and cash equivalents | -4,365 | 1,815 | -1,184 | 2,975 |
| Cash and cash equivalents at the end of the period | 552,921 | 52,008 | 552,921 | 52,008 |
KARNOV GROUP
Year-end report, January – December 2020
Parent company income statement
| Q4 | Jan-Dec | |||
|---|---|---|---|---|
| TSEK | Note | 2020 | 2019 | 2020 |
| Employee benefit expenses | -1,583 | -1,839 | -8,817 | -7,440 |
| Other operating expenses | -8,902 | -4,409 | -20,810 | -28,948 |
| Operating profit | -10,485 | -6,248 | -29,627 | -36,388 |
| Financial income | 3,648 | -10,394 | 18,874 | 25,351 |
| Financial expenses | -223 | -104 | -355 | -9,071 |
| Net financial items | 3,425 | -10,498 | 18,519 | 16,280 |
| Profit before income tax | -7,060 | -16,746 | -11,108 | -20,108 |
| Income tax expense | - | 1,768 | - | - |
| Net result | -7,060 | -14,978 | -11,108 | -20,108 |
| Total comprehensive income | -7,060 | -14,978 | -11,108 | -20,108 |
KARNOV GROUP
Year-end report, January – December 2020
Parent company balance sheet
| TSEK | Note | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|---|
| ASSETS: | |||
| Investments in group enterprises | 1,149,925 | 1,143,458 | |
| Receivables from group enterprises | 747,793 | 800,852 | |
| Total non-current assets | 1,897,718 | 1,944,310 | |
| Receivables from group enterprises | 206 | - | |
| Other receivables | 1,007 | 8,874 | |
| Current tax receivable | - | 38,306 | |
| Cash and cash equivalents | 41,033 | 156 | |
| Total current assets | 42,246 | 47,336 | |
| TOTAL ASSETS | 1,939,964 | 1,991,646 | |
| TSEK | 31 Dec 2020 | 31 Dec 2019 | |
| EQUITY AND LIABILITIES: | |||
| Restricted equity | |||
| Share capital | 1,509 | 1,503 | |
| Non-restricted equity | |||
| Share premium | 2,062,355 | 2,062,363 | |
| Retained earnings including net profit for the year | -128,354 | -73,755 | |
| Total equity | 1,935,510 | 1,990,114 | |
| Trade payables | 407 | 88 | |
| Trade payables from group companies | - | 11 | |
| Accrued expenses | 3,989 | 1,388 | |
| Other current liabilities | 58 | 48 | |
| Total current liabilities | 4,454 | 1,535 | |
| TOTAL EQUITY AND LIABILITIES | 1,939,964 | 1,991,646 |
KARNOV GROUP
Year-end report, January – December 2020
Notes
Note 1. Accounting policies
The consolidated interim financial statements for Karnov Group AB have been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, RFR 1 Supplementary Accounting Regulations for Groups and the Swedish Annual Accounts Act.
The accounting policies used for this interim report 2020 are the same as the accounting policies used for the annual report 2019 to which we refer for a full description.
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.
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 Dec 2020 | 31 Dec 2019 | 31 Dec 2020 | 31 Dec 2019 | |
| FINANCIAL ASSETS | ||||
| Financial assets at amortised cost | ||||
| Trade receivables | 148,214 | 209,672 | 148,214 | 209,672 |
| Cash and cash equivalents | 552,921 | 52,008 | 552,921 | 52,008 |
| Total financial assets | 701,135 | 261,680 | 701,135 | 261,680 |
| FINANCIAL LIABILITIES | ||||
| Financial liabilities at fair value through profit or loss (FVPL) | ||||
| Contingent considerations | 9,537 | 18,533 | 9,537 | 18,533 |
| Liabilities at amortised cost | ||||
| Trade payables | 12,395 | 12,477 | 12,395 | 12,477 |
| Non-current borrowing from credit institutions | 1,196,087 | 838,317 | 1,196,087 | 838,317 |
| Current borrowings from credit institutions | - | 75,000 | - | 75,000 |
| Total financial liabilities | 1,218,019 | 944,327 | 1,218,019 | 944,327 |
Trade receivables
Due to the short-term nature of trade 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.
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 a discount rate at 7 percent. These are classified at level 3 in the fair value hierarchy.
KARNOV GROUP
Year-end report, January – December 2020
IARNOV GROUP
Year-end report, January – December 2020
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.
Note 4. Earnings per share
| Q4 | Jan-Dec | |||
|---|---|---|---|---|
| TSEK | 2020 | 2019 | 2020 | 2019 |
| Earnings attributable to shareholders | 16,164 | 7,656 | 99,903 | 2,621 |
| Weighted average number of ordinary shares | 97,670,567 | 97,670,567 | 97,670,567 | 84,434,095 |
| Diluted | 98,071,381 | 97,997,733 | 97,959,396 | 84,761,261 |
| Earnings per share, basic, SEK | 0.17 | 0.08 | 1.02 | 0.03 |
| Earnings per share, after dilution, SEK | 0.16 | 0.08 | 1.02 | 0.03 |
19
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.
| TSEK | Denmark | Sweden | Total | |||
|---|---|---|---|---|---|---|
| Q4 | Q4 | Q4 | ||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |
| Online | 155,017 | 149,890 | ||||
| Offline | 33,725 | 39,293 | ||||
| Total net sales | 100,104 | 102,553 | 88,638 | 86,631 | 188,742 | 189,183 |
| EBITDA | 35,514 | 14,469 | 25,306 | 35,427 | 60,820 | 49,896 |
| EBITA | 31,009 | 12,563 | 16,572 | 26,350 | 47,581 | 38,912 |
| EBIT | 16,765 | -1,333 | -4,388 | 7,040 | 12,377 | 5,707 |
| Net financial items | 5,883 | 7,588 | ||||
| Write down of associated companies | - | -7,102 | ||||
| Profit before tax | 18,260 | 6,193 | ||||
| Income tax expenses | -2,150 | 1,645 | ||||
| Net result | 16,110 | 7,838 | ||||
| TSEK | Denmark | Sweden | Total | |||
| --- | --- | --- | --- | --- | --- | --- |
| Jan-Dec | Jan-Dec | Jan-Dec | ||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |
| Online | 615,319 | 581,673 | ||||
| Offline | 156,097 | 175,414 | ||||
| Total net sales | 419,207 | 420,656 | 352,209 | 336,431 | 771,416 | 757,087 |
| EBITDA | 176,029 | 131,396 | 145,402 | 119,896 | 321,431 | 251,292 |
| EBITA | 165,782 | 123,515 | 110,173 | 82,461 | 275,955 | 205,975 |
| EBIT | 104,527 | 64,957 | 26,515 | 15,224 | 131,042 | 80,181 |
| Net financial items | -10,467 | -69,984 | ||||
| Profit before tax | 120,575 | 3,095 | ||||
| Income tax expenses | -20,571 | 385 | ||||
| Net result | 100,004 | 3,480 |
KARNOV GROUP
Year-end report, January – December 2020
Note 6. Business combinations and similar transactions
On 24 March 2020, Karnov Group entered into an agreement with the Swedish company LEX247 Cloud Services AB to accelerate the go-to-market of the LEX247 solution in the Nordic region. The parties have formed a new company LEXNordics AB with a split ownership of 60% owned by Karnov Group and 40% owned by LEX247 Cloud Services AB. The existing customer base of LEX247 in the Nordic Region is transferred to LEXNordics AB and the company has going forward exclusive rights to market the product in the Nordic region.
| Purchase price, TSEK | 31 Dec 2020 |
|---|---|
| Cash on closing date | 10.000 |
| Total purchase price | 10.000 |
| Reported amounts, TSEK | |
| Intangible assets: Customer relations | 10,000 |
| Total identified assets | 10,000 |
| Non-controlling interests | -7,000 |
| Goodwill | 7,000 |
| Total | 10,000 |
Revenue, income as well as assets and liabilities belonging to the newly formed company LEXNordics AB are fully consolidated in Karnov Group from 24 March 2020 with 40% of net result and equity of LEXNordics AB being reported as non-controlling interests.
On 27 March 2020, Karnov Group concluded an agreement to invest in the Norwegian company Strawberry Law AS and acquired 40% of the shares in the company. At the same time the name of the company was changed to Karnov Group Norway AS. The purpose of the investment is to expand the Karnov Group's activities to the Norwegian market. Karnov Group Norway AS will provide digital subscription-based legal services to the Norwegian market. Karnov Group Norway AS will have access to selected parts of the content in other entities within Karnov Group.
| Purchase price, TSEK | 31 Dec 2020 |
|---|---|
| Cash on closing date | 14,250 |
| Contract liability | 38,732 |
| Total purchase price | 52,982 |
The transaction is treated as an investment in associated companies and not a business combination under IFRS3.
The investment is measured at the sum of the cash payment at transaction date and the estimated value of brand and content.
The estimated value of brand and content SEK 39 m is included in Other non-current liabilities and will be amortised over the contract period.
KARNOV GROUP
Year-end report, January – December 2020
Note 7. 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 | Q4 | Jan-Dec | ||
|---|---|---|---|---|
| TSEK | 2020 | 2019 | 2020 | 2019 |
| Organic business | 191,422 | 186,139 | 773,317 | 743,861 |
| Acquired business | 594 | 0 | 1,531 | 0 |
| Currency | -3,274 | 3,044 | -3,432 | 13,226 |
| Total net sales | 188,742 | 189,183 | 771,416 | 757,087 |
| Total net sales split, % | Q4 | Jan-Dec | ||
| --- | --- | --- | --- | --- |
| TSEK | 2020 | 2019 | 2020 | 2019 |
| Organic growth, % | 1.2% | 4.1% | 2.1% | 4.0% |
| Acquired growth, % | 0.3% | 0.0% | 0.2% | 0.0% |
| Currency effect, % | -1.7% | 1.7% | -0.5% | 1.8% |
| Total growth, % | -0.2% | 5.8% | 1.8% | 5.8% |
| Group | Q4 | Jan-Dec | ||
| --- | --- | --- | --- | --- |
| TSEK | 2020 | 2019 | 2020 | 2019 |
| Net sales | 188,742 | 189,183 | 771,416 | 757,087 |
| EBITDA | 60,820 | 49,896 | 321,431 | 251,292 |
| EBITDA margin, % | 32.2% | 26.4% | 41.7% | 33.2% |
| Items affecting comparability | 12,203 | 20,510 | 12,203 | 72,655 |
| Adjusted EBITDA | 73,023 | 70,406 | 333,634 | 323,947 |
| Adjusted EBITDA margin, % | 38.7% | 37.2% | 43.2% | 42.8% |
| Depreciations and amortisations | -13,239 | -10,984 | -45,476 | -45,317 |
| EBITA | 47,581 | 38,912 | 275,955 | 205,975 |
| EBITA margin, % | 25.2% | 20.6% | 35.8% | 27.2% |
| Adjusted EBITA | 59,784 | 59,422 | 288,158 | 278,630 |
| Adjusted EBITA margin, % | 31.7% | 31.4% | 37.4% | 36.8% |
| Amortisation (acquisitions) | -35,203 | -33,205 | -144,913 | -125,794 |
| EBIT | 12,377 | 5,707 | 131,042 | 80,181 |
KARNOV GROUP
Year-end report, January – December 2020
| Denmark | Q4 | Jan-Dec | ||
|---|---|---|---|---|
| TSEK | 2020 | 2019 | 2020 | 2019 |
| Net sales | 100,104 | 102,553 | 419,207 | 420,656 |
| EBITDA | 35,514 | 14,469 | 176,029 | 131,396 |
| EBITDA margin, % | 35.5% | 14.1% | 42.0% | 31.2% |
| Items affecting comparability | 1,709 | 21,420 | 1,709 | 41,675 |
| Adjusted EBITDA | 37,223 | 35,889 | 177,738 | 173,071 |
| Adjusted EBITDA margin, % | 37.2% | 35.0% | 42.4% | 41.1% |
| Depreciations and amortisations | -4,504 | -1,906 | -10,247 | -7,881 |
| EBITA | 31,009 | 12,563 | 165,782 | 123,515 |
| EBITA margin, % | 31.0% | 12.3% | 39.5% | 29.4% |
| Adjusted EBITA | 32,718 | 33,982 | 167,491 | 165,189 |
| Adjusted EBITA margin, % | 32.7% | 33.1% | 40.0% | 39.3% |
| Amortisation (acquisitions) | -14,244 | -13,895 | -61,255 | -58,558 |
| EBIT | 16,765 | -1,333 | 104,527 | 64,957 |
| Sweden | Q4 | Jan-Dec | ||
| --- | --- | --- | --- | --- |
| TSEK | 2020 | 2019 | 2020 | 2019 |
| Net sales | 88,638 | 86,631 | 352,209 | 336,431 |
| EBITDA | 25,306 | 35,427 | 145,402 | 119,896 |
| EBITDA margin, % | 28.6% | 40.9% | 41.3% | 35.6% |
| Items affecting comparability | 10,494 | -910 | 10,494 | 30,980 |
| Adjusted EBITDA | 35,801 | 34,517 | 155,895 | 150,876 |
| Adjusted EBITDA margin, % | 40.4% | 39.8% | 44.3% | 44.8% |
| Depreciations and amortisations | -8,735 | -9,077 | -35,228 | -37,435 |
| EBITA | 16,572 | 26,350 | 110,173 | 82,461 |
| EBITA margin, % | 18.7% | 30.4% | 31.3% | 24.5% |
| Adjusted EBITA | 27,066 | 25,440 | 120,667 | 113,441 |
| Adjusted EBITA margin, % | 30.5% | 29.4% | 34.3% | 33.7% |
| Amortisation (acquisitions) | -20,959 | -19,310 | -83,659 | -67,237 |
| EBIT | -4,388 | 7,040 | 26,515 | 15,224 |
| Return on capital | ||||
| --- | --- | --- | ||
| TSEK | 31 Dec 2020 | 31 Dec 2019 | ||
| EBIT | 131,042 | 80,181 | ||
| Total assets | 3,688,783 | 3,398,657 | ||
| Return on capital, % | 3.6% | 2.4% |
KARNOV GROUP
Year-end report, January – December 2020
Net working capital
| TSEK | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|
| Current assets | 737,134 | 349,449 |
| Current liabilities | 658,012 | 754,781 |
| Net working capital | 79,122 | -405,332 |
Cash conversion
| Q4 | Jan-Dec | |||
|---|---|---|---|---|
| TSEK | 2020 | 2019 | 2020 | 2019 |
| Adjusted EBITDA | 73,023 | 70,406 | 333,634 | 323,947 |
| Cash flow from operating activities | 162,720 | 51,217 | 378,991 | 137,276 |
| Interest paid | 4,699 | 4,672 | 19,156 | 31,878 |
| Income tax paid | 27,888 | 34,195 | 59,710 | 58,049 |
| Items affecting comparability | 12,203 | 20,510 | 12,203 | 72,655 |
| Capex related to new product development | -15,700 | -1,135 | -56,299 | -12,975 |
| Adjusted cash flow from operating activities | 191,810 | 109,459 | 413,761 | 286,883 |
| Cash conversion, % | 262.7% | 155.5% | 124.0% | 88.6% |
Net debt
| TSEK | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|
| Non-current borrowing from credit institutions | 1,196,087 | 838,317 |
| Current borrowing from credit institutions | 0 | 75,000 |
| Cash and cash equivalents | 552,921 | 52,008 |
| Net debt | 643,166 | 861,309 |
Leverage ratio
| TSEK | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|
| Adjusted EBITDA LTM | 333,634 | 323,949 |
| Net debt | 643,166 | 861,309 |
| Leverage ratio | 1.9 | 2.7 |
Equity/asset ratio
| TSEK | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|
| Equity | 1,550,840 | 1,526,769 |
| Total assets | 3,688,783 | 3,398,657 |
| Equity/asset ratio, % | 42.0% | 44.9% |
KARNOV GROUP
Year-end report, January – December 2020
Quarterly overview
| TSEK | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 |
|---|---|---|---|---|---|
| Income statement | |||||
| Net sales | 188,742 | 192,755 | 177,958 | 211,961 | 189,183 |
| EBITDA | 60,820 | 88,375 | 73,952 | 98,285 | 49,896 |
| EBITDA margin, % | 32.2% | 45.8% | 41.6% | 46.4% | 26.4% |
| EBITA | 47,581 | 76,899 | 63,259 | 88,218 | 38,912 |
| EBITA margin, % | 25.2% | 39.9% | 35.5% | 41.6% | 20.6% |
| Adjusted EBITA | 59,784 | 76,899 | 63,259 | 88,218 | 59,422 |
| Adjusted EBITA margin, % | 31.7% | 39.9% | 35.5% | 41.6% | 31.4% |
| EBIT | 12,377 | 40,377 | 27,029 | 51,261 | 5,707 |
| EBIT, margin % | 6.6% | 20.9% | 15.2% | 24.2% | 3.0% |
| Net financial items | 5,883 | -6,287 | 5,650 | -15,713 | 7,588 |
| Net result | 16,110 | 27,953 | 26,858 | 29,084 | 7,838 |
| Balance sheet | |||||
| Non-current assets | 2,951,649 | 3,059,839 | 3,071,186 | 3,192,975 | 3,049,208 |
| Current assets | 737,134 | 586,406 | 534,659 | 592,375 | 349,449 |
| Cash and cash equivalents | 552,921 | 420,946 | 443,183 | 493,933 | 52,008 |
| Equity | 1,550,840 | 1,584,940 | 1,541,508 | 1,618,794 | 1,526,769 |
| Non-current liabilities | 1,479,931 | 1,148,061 | 1,151,415 | 1,182,201 | 1,117,107 |
| Current liabilities | 658,012 | 913,244 | 912,922 | 984,355 | 754,781 |
| Total assets | 3,688,783 | 3,646,245 | 3,605,845 | 3,785,350 | 3,398,657 |
| Cash flow | |||||
| Cash flow from operating activities | 162,720 | -570 | 47,354 | 166,281 | 51,217 |
| Cash flow from Investing activities | -23,056 | -18,404 | -39,902 | -31,181 | -25,271 |
| Cash flow from financing activities | -3,324 | -3,494 | -56,182 | 304,577 | -13,933 |
| Cash flow for the period | 136,340 | -22,468 | -48,730 | 439,677 | 12,012 |
| Key ratios | |||||
| Net working capital | 79,122 | -326,838 | -378,263 | -391,980 | -405,332 |
| Return on capital, % | 0.3% | 1.1% | 0.7% | 1.4% | 0.2% |
| Equity/asset ratio, % | 42.0% | 43.5% | 42.8% | 42.8% | 44.9% |
| Cash conversion, % | 262.7% | -0.7% | 66.2% | 173.3% | 155.5% |
| Net debt | 643,166 | 801,624 | 774,861 | 755,222 | 861,309 |
| Share data: | |||||
| Weighted average number of ordinary shares | 97,670,567 | 97,670,567 | 97,670,567 | 97,670,567 | 97,670,567 |
| Earnings per share, basic, SEK | 0.17 | 0.28 | 0.27 | 0.30 | 0.08 |
| Earnings per share, after dilution, SEK | 0.16 | 0.28 | 0.27 | 0.30 | 0.08 |
KARNOV GROUP
Year-end report, January – December 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
Year-end report, January – December 2020
KARNOV GROUP
Year-end report, January – December 2020
Currency rates
| | Closing rate
31 Dec 2020 | Average rate
Jan-Dec 2020 | Closing rate
31 Dec 2019 | Average rate
Jan-Dec 2019 |
| --- | --- | --- | --- | --- |
| 1 DKK is equivalent to SEK | 1.3492 | 1.4070 | 1.3968 | 1.4180 |
| 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 assets. | 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 (Leverage ratio) | 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. |
| PPA adjusted net profit | Net profit adjusted for items affecting comparability and amortisations of acquired businesses. | The measure is used to show Karnov’s financial performance without the influence of items affecting comparability and amortisations of acquired businesses. |
| Return on capital | Operating profit (EBIT) for the period divided by total assets. | The measure shows the operating return on capital that owners and lenders have invested. |
Karnov Group today
80,000+
Users
1,500+
Specialists
280+
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, Notisum, Legal Cross Border, Forlaget Andersen, LEXNordics and DIBkunnskap, Karnov Group delivers knowledge and insights to more than 80,000 users.
Karnov's is organised into two geographical financial reporting segments and the product offering, subject to a few variations, is similar in all countries.
Denmark: Legal, tax and accounting online and offline products and solutions
Sweden: Legal online and offline products, compliance solutions and legal training
Norway: Tax and accounting online workflow-tools – legal online product to be launched
With offices in Copenhagen, Stockholm, Oslo and Malmo, Karnov Group employs around 280 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