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Net Insight
Annual / Quarterly Financial Statement • Feb 21, 2023
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Annual / Quarterly Financial Statement
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YEAR-END REPORT JANUARY – DECEMBER 2022
October – December 2022
- Net sales amounted to SEK 125.0 (107.9) million, an increase of 15.9% year-on-year. In comparable currencies net sales increased by 3.7%.
- Operating earnings amounted to SEK 13.2 (3.3) million, corresponding to an operating margin of 10.6% (3.0%). Excluding foreign exchange rate differences of SEK -2.7 (-1.7) million and items affecting comparability of SEK 0.0 (-1.2) million, operating earnings were SEK 15.9 (6.2) million.
- Net income for the period was SEK 9.9 (2.8) million.
- Earnings per share diluted was SEK 0.03 (0.01).
- Total cash flow for the Group, including discontinued operations in 2021, was SEK 14.0 (15.2) million. Excluding the cash impact from repurchase of own shares (during 2022 and 2021) and from divestment of operations (during 2021), cash flow was SEK 37.5 (24.9) million.
January – December 2022
- Net sales amounted to SEK 475.1 (380.7) million, an increase of 24.8% year-on-year. In comparable currencies net sales increased by 13.3%.
- Operating earnings amounted to SEK 60.5 (26.8) million, corresponding to an operating margin of 12.7% (7.0%). Excluding foreign exchange rate differences of SEK -1.9 (6.5) million and items affecting comparability of SEK -2.6 (-0.7) million, operating earnings were SEK 65.0 (20.9) million.
- Net income was SEK 54.0 (23.8).
- Earnings per share diluted was SEK 0.15 (0.06).
- Total cash flow, including discontinued operations in 2021, was SEK -47.0 (71.0) million. Excluding the cash impact from repurchase of own shares (during 2022 and 2021) and from divestment of operations (during 2021, cash flow was SEK 51.3 (34.1) million.
FINANCIAL HIGHLIGHTS
SEK millions 2022 2021 Change 2022 2021 Change Continued operations Net sales 125.0 107.9 15.9% 475.1 380.7 24.8% Operating earnings 13.2 3.3 305.1% 60.5 26.8 126.0% Operating margin 10.6% 3.0% 12.7% 7.0% Net income 9.9 2.8 247.1% 54.0 23.8 126.9% EBITDA 28.7 17.3 66.3% 122.7 84.5 45.1% EBITDA margin 23.0% 16.0% 25.8% 22.2% EBITDA-2 4.1 -0.2 35.1 28.1 24.8% EBITDA-2 margin 3.3% -0.2% 7.4% 7.4% Total Group, including discontinued operations Net Income 9.9 2.8 247.1% 54.0 -13.1 Oct-Dec Jan-Dec
Total cash flow 14.0 15.2 -8.0% -47.0 71.0
Business area Resource Optimization was divested in March 2021 and is reported separately as discontinued operations in this report.
For definitions and calculation of KPI's, see pages 17-21.
Net Insight AB (publ) corp.id.no. 556533–4397
Q4 in brief
- A solid end to a strong year
- Pilot order in 5G synchronization from one of Canada's leading mobile operators
- Several important Nimbra Edge orders
CEO´s Statement
A solid end to a strong year
2022 was a successful year for Net Insight, resulting in our highest ever operating earnings for the full year. Despite challenges in the macro environment, we have maintained a focus on the strategy that underpins our growth. We developed our product portfolio and established time synchronization for 5G as one of our primary offerings.
Sales for the fourth quarter were SEK 125.0 million, an increase of 15.9% year-on-year (3.7% in comparable currencies). Several of our larger customers maintained a high level of investment during the quarter. Our cloudbased solution Nimbra Edge also continued to perform well in the fourth quarter, and several new contracts were signed.
The gross margin increased to 62.1% (60.4).
The price increases we implemented during the year compensated for higher costs. However, the effect of increased component costs is slightly delayed. The
improvement was driven by a mix of revenue, including increased sales of our newest media platform, Nimbra 1060, and positive exchange rate effects. Operating earnings totaled SEK 13.2 million, compared with SEK 3.3 million in Q4 2021.
Stable progress during the year
The performance of our core business remained stable during the year. We are seeing effects of our long-term investments in the Nimbra 1060 platform, where revenue rose significantly. We continued to sharpen our customer offerings in IP and Cloud. Our IP Media Trust Boundary application won the TVB Europe Best in Show award at the annual IBC media expo.
Activity level in 5G synchronization is high, and we secured important deals including Three Sweden and the pilot order from one of Canada's leading mobile operators. In addition, more customers carried out testing in their networks. The development of our new product for 5G synchronization is proceeding to schedule.
We conclude the full year with sales of SEK 475.1 million, corresponding to growth of 24.8% (13.3% in comparable currencies), which exceeds our long-term target of an average annual sales growth of at least 10%. The growth is attributable partly to strong performance of our media business, and partly to increased revenue from our 5G synchronization solution.
Operating margin for the full year 2022 was 12.7%, exceeding our long-term target of an average annual operating margin of at least 10%.
Review of financial targets
We continue to pursue our strategy to drive longterm profitable growth, and the result of our efforts exceeded the financial targets we set at the beginning of 2021.
Our strategy to drive profitable growth has paid off. We had recordhigh operating earnings and achieved our financial targets.
In light of our positive performance in recent years, as well as longterm strong conditions, the Board of Directors has decided to review the
financial targets. Important factors for increased growth include our newly developed synchronization product for 5G and an expanded offering of Cloud and IP Media Gateway solutions, which will be launched in 2023. A higher proportion of support and licensing revenue as well as improved scalability in our business are also expected to contribute to further strengthening our operating margin. Our new financial targets in 2023–2027 are an organic average annual growth of at least 15% and an operating margin (EBIT%) that within the period will reach 20%.
Well-equipped for the future
In 2022 we enjoyed steady growth in media, made important strides in IP and Cloud and established our position as a strong provider in 5G time synchronization. Following an intensive development phase, we now look forward to launch our new product for 5G synchronization at the Mobile World Congress in Barcelona. The first units are planned to be delivered at the end of 2023, with a gradual increase in volume during 2024.
I would like to highlight our employees' dedicated work and fantastic efforts which contributed to our strong earnings. Although we initially see challenges relating to current macroeconomic uncertainty, I am confident that we will achieve our new financial targets.
Crister Fritzson, CEO Solna, Sweden, February 21, 2023
EXTRAORDINARY EVENTS
Divested operations
The business area Resource Optimization (ScheduALL) was divested on March 31, 2021 and is reported as discontinued operations in this report. For more information on discontinued operations, see tables on page 12. Comments and tables in this report have reference to continuing operations, unless otherwise specified.
REVENUES
Net sales in the fourth quarter of 2022 were SEK 125.0 (107.9) million, an increase of 15.9%. In comparable currencies, sales increased by 3.7%.
The major initial 5G synchronization deal with Türk Telecom was signed in November 2021, which means that this is the first quarter in which the comparative period includes revenue from 5G synchronization. Revenues from 5G synchronization amounted to SEK 16.9 million in the quarter, compared to SEK 13.2 million the previous year. Currency adjusted, the development in the Media business has been weakly positive. There, we see continued positive development for our cloud solution Nimbra Edge during the fourth quarter with several newly signed agreements with larger customers and increased revenues. Our hardware and support revenues have also increased compared to the previous year, while our event-based service revenues have decreased.
Net sales for 2022 were SEK 475.1 (380.7) million, an increase of 24.8%. In comparable currencies, sales increased by 13.3%.
In 2022, despite increased uncertainty in the outside world, we have seen a continued willingness to invest among our customers. We have strengthened our offering and increased revenues from, among other things, the newest product platform in media (Nimbra 1060) and from our solution for synchronizing 5G networks. Revenues from 5G synchronization amounted to SEK 49.2 million in 2022, compared to SEK 13.2 million in 2021. Continued development of the new product for 5G synchronization is ongoing and the commercial launch is expected to take place at the end of 2023. Also, our recurring support and license revenue, primarily from our cloud solution Nimbra Edge, has increased during the year. The APAC region has had a positive development thanks to increased market processing. Americas has also had a strong development with increased sales to the largest customers, which also meant a positive exchange rate effect compared to the previous year. We have actively dealt with challenges with component shortages by, among other things, securing components with longer foresight and largely succeeding in carrying out agreed deliveries. The uncertainty regarding the availability of components is expected to gradually decrease but is expected to continue during 2023. We also see certain tendencies towards longer sales cycles.
The company has no direct seasonal variation, however there is a certain variation in revenue between quarters due to concentration of larger deals in certain quarters.
EARNINGS
October-December
Gross profit for the fourth quarter was SEK 77.6 (65.1) million, an increase by 19.1%. The increase is primarily driven by the increase in revenue compared to last year, but also by increased margin. Gross profit included amortization of capitalized development expenditure of SEK -11.9 (-10.5) million. Gross margin excluding and including amortization of capitalized development expenditure was 71.6% (70.1%) and 62.1% (60.4%) respectively. The increase is largely due to that we have managed to achieve a good margin in our business, where, among other things, driven by a changed revenue mix with increased volume and margin from the Nimbra 1060 platform. Implemented price increases, which have so far compensated for cost increases, as well as a positive exchange rate effect also have an impact. However, the cost increases have a certain delayed effect and we do not yet see their full effect.
Operating expenses in the fourth quarter of SEK -61.6 (-60.0) million, an increase by 2.8% compared to last year. The increase includes cost increases driven by, among other things, inflation and the weakening of the Swedish Krona against the USD. Adjusted for this, operating expenses are lower than the previous year, which is largely because the fourth quarter of 2021 was burdened by start-up costs related to the deal with Türk Telecom (consulting costs, etc.). Operating expenses previous year includes costs for restructuring of SEK -0.8 million.
Sales and marketing expenses were SEK -35.3 (-31.5) million, and administration expenses to SEK -13.4 (-13.5) million. Development expenses were SEK -12.9 (-14.9) million and the total
development expenditure, i.e., before capitalization, were SEK -37.6 (-32.4) million. The increase in sales and marketing costs as well as development expenditures is partly attributable to the investment in 5G synchronization, which began in the last quarter of 2021. The sales and marketing expenses in the quarter are also affected by a negative exchange rate effect as a significant part of these costs are in USD.
Other operating income and expenses were SEK -2.8 (-1.9) million, of which foreign exchange rate differences of SEK -2.7 (-1.7) million.
Operating earnings amounted to SEK 13.2 (3.3) million, corresponding to an operating margin of 10.6% (3.0%). Excluding foreign exchange rate differences of SEK -2.7 (-1.7) million and items affecting comparability of SEK 0.0 (-1.2) million, operating earnings were SEK 15.9 (6.2) million. See also table Material profit and loss items on page 21.
The definition of EBITDA was changed from the beginning of 2022, so that capitalization of development expenditures is no longer reversed. EBITDA 2 corresponds to previous years' definition, where the capitalization of development expenditures is reversed, see also pages 17-18. EBITDA and EBITDA-2 amounted to SEK 28.7 (17.3) million and SEK 4.1 (-0.2) million, respectively, which corresponded to an EBITDA margin of 23.0% (16.0%) and an EBITDA-2 margin of 3.3% (-0.2). The strong EBITDA margin is an effect of revenue growth combined with an increased gross margin.
In the fourth quarter, net financial items amounted to SEK -0.4 (0.6) million, of which foreign exchange rate differences of SEK -1.3 (-1.0) million and net interest income of SEK 0.9 (0.1) million. The increased net interest income is due to increased interest income due to higher market interest rates. Profit before tax was SEK 12.8 (3.8) million, and net income was SEK 9.9 (2.8) million, corresponding to a net margin of 7.9% (2.6%).
January-December
Gross profit for the year was SEK 297.7 (228.4) million, an increase by 30.3%. The increase is primarily driven by the increase in revenue compared to last year but is also positively affected by an increased margin. Gross profit included amortization of capitalized development expenditure of SEK -46.2 (-42.9) million. Gross margin excluding and including amortization of capitalized development expenditure was 72.4% (71.3%) and 62.7% (60.0%) respectively. Implemented price increases to compensate for cost increases, increased support and service income and a positive exchange rate effect have contributed to increased gross margin.
Operating expenses of SEK -234.2 (-209.1) million, an increase by 12.0% year-on-year. The increase is due to the reinforcements in sales and market as well as within development, where the establishment within 5G synchronization is one initiative. Increased traveling in connection with customer events, participation in fairs has also meant increased costs compared to the previous year. The continued weakening of the Swedish krona has also contributed to the increase in costs compared to the previous year. Operating expenses includes costs for restructuring of SEK -1.2 (-0.8) million.
Sales and marketing expenses were SEK -130.0 (-104.3) million, and administration expenses to SEK -52.8 (-51.9) million. Development expenses were SEK -51.4 (-53.0) million and the total development expenditure, i.e. before capitalization, were SEK -139.0 (-109.4) million. A significant portion of the increase in sales and marketing expenses and development expenses is attributable to expansion of resources in 5G synchronization.
Other operating income and expenses were SEK -3.0 (7.5) million, of which foreign exchange rate differences of SEK -1.9 (6.5) million and impairment of development projects, as a result of a tighter integration of the Nimbra and Aperi platforms, of SEK -1.5 (-) million.
Operating earnings amounted to SEK 60.5 (26.8) million, corresponding to an operating margin of 12.7% (7.0%). Excluding foreign exchange rate differences of SEK -1.9 (6.5) million and items affecting comparability of SEK -2.6 (-0.7) million, operating earnings were SEK 65.0 (20.9) million. See also table Material profit and loss items on page 21.
EBITDA and EBITDA-2 amounted to SEK 122.7 (84.5) million and SEK 35.1 (28.1) million, respectively, which corresponded to an EBITDA margin of 25.8% (22.2%) and an EBITDA-2 margin of 7.4% (7.4). The increase in EBITDA is primarily attributable to increased sales. The increased investments, attributable to the investment in 5G synchronization, lead to an EBITDA-2 margin in line with previous year.
Net financial items for 2022 amounted to SEK 8.4 (1.9) million, of which foreign exchange rate differences of SEK 6.9 (2.7) million and net interest income of SEK 1.4 (-0.1) million.
Profit before tax was SEK 68.9 (28.7) million, and net income was SEK 54.0 (23.8) million, corresponding to a net margin of 11.4% (6.3%). In 2021, net income including discontinued
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operations was SEK -13.1 million, of which SEK -35.9 million attributable to capital loss on disposal of discontinued operations.
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| Key Ratios continued operations | 2022 | 2021 | 2022 | 2021 |
| Net sales, SEK millions | 125.0 | 107.9 | 475.1 | 380.7 |
| Net sales YoY, change in % | 15.9% | 19.0% | 24.8% | 14.6% |
| Gross earnings | 77.6 | 65.1 | 297.7 | 228.4 |
| Gross margin | 62.1% | 60.4% | 62.7% | 60.0% |
| Operating earnings | 13.2 | 3.3 | 60.5 | 26.8 |
| Operating margin | 10.6% | 3.0% | 12.7% | 7.0% |
| EBITDA | 28.7 | 17.3 | 122.7 | 84.5 |
| EBITDA margin | 23.0% | 16.0% | 25.8% | 22.2% |
| EBITDA-2 | 4.1 | -0.2 | 35.1 | 28.1 |
| EBITDA-2 margin | 3.3% | -0.2% | 7.4% | 7.4% |
INVESTMENTS
Third fourth investments were SEK 25.4 (18.1) million, of which SEK 24.6 (17.4) million related to capitalization of expenditure for development. The increase in capitalized development expenditure relates to the investment in 5G synchronization, which began in the last quarter of 2021. Depreciation and amortization in the fourth quarter totaled SEK -15.5 (-14.0) million, of which SEK -11.9 (-10.5) million related to amortization of capitalized expenditure for development.
Investments during the first nine months were SEK 90.7 (61.7) million, of which SEK 87.6 (59.6) million related to capitalization of expenditure for development. The increase in capitalized development expenditure relates to the investment in 5G synchronization, which began in the last quarter of 2021. Depreciation and amortization for the year totaled SEK -62.2 (-57.8) million, of which SEK -46.2 (-42.9) million related to amortization of capitalized expenditure for development. As a result of a tighter integration of the Nimbra and Aperi platforms, development projects of total SEK -1.5 (-) million were impaired during the year.
At year-end, net value of capitalized expenditure for development was SEK 198.2 million, against SEK 158.3 million as of December 31, 2021.
Including discontinued operations, the investments for 2021 were SEK 61.7 million, of which SEK 59.6 million related to capitalization of expenditure for development. Depreciation and amortization, including discontinued operations, during 2021 totaled SEK -60.1 million, of which SEK -44.3 million related to amortization of capitalized expenditure for development.
CASH FLOW AND FINANCIAL POSITION
From April 2021, only the continued operations are included in the cash flow. Discontinued operations (business area Resource Optimization) were included in previous periods' cash flow and its impact on cash flow is presented in table on page 12.
Cash flow from operating activities in the fourth quarter was SEK 65.2 (45.0) million. The improvement compared to the previous year is attributable to both better profitability and a reduced working capital, despite an increased inventory. The increased inventory is a consequence of that we have secured components with a longer lead time than normal, due to the component shortage. The total cash flow for the fourth quarter amounted to SEK 14.0 (15.2) million. The increased investments in development projects compared to the previous year are offset by a reduced repurchase of own shares. Last year, the parent company received the final proceeds from the divestment of the Resource Optimization Streaming Solutions business area of SEK 23.7 million. Excluding the cash impact of the divestment of operations and repurchase of own shares, cash flow fort the fourth quarter was SEK 37.5 (24.9) million. More information about divested operations can be found in tables on page 12 and more information about the buyback program can be found on page 14.
Cash flow from operating activities for 2022 was SEK 148.8 (103.7) million. The improvement compared to the previous year is attributable to both better profitability and a reduced working capital formation, despite an increased inventory. The increase in inventory is a consequence of the fact that we secured components with a longer lead time than normal due to the prevailing component shortage. Total cash flow was SEK -47.0 (71.0) million. The negative cash flow in the period, despite improved earnings, is caused by the repurchase of own shares of SEK -98.3 (-33.4) million. The cash flow effect of the investment in 5G synchronization, above all in the form of increased investments, has been partially offset by
the NRE fee and advances received from the customer. The previous year's cash impact from the disposals of the Resource Optimization and Streaming Solutions business areas was SEK 70.3 million. Excluding the cash impact of the divestment of operations and repurchase of own shares, cash flow fort the third quarter was SEK 51.3 (34.1) million. More information about divested operations can be found in tables on page 12 and more information about the buyback program can be found on page 14.
Cash and cash equivalents were SEK 308.3 million at year-end, against SEK 354.9 million as of 31 December 2021.
Remaining tax loss carryforwards for group companies amounted to SEK 12.9 million at year-end, compared to SEK 79.4 million as of December 31, 2021. Deferred tax has been recognized for the tax loss carryforwards. For more information, see the section Tax on page 14.
Equity was SEK 605.1 million at year-end, against SEK 646.5 million as of 31 December 2021. The equity/assets ratio was 71.6%, against 78.0% as of 31 December 2021. The fact that equity decreased despite a positive result during the year is due to the repurchase of own shares. For information about warrants, share repurchases and share structure, see the section Contributed equity on page 14.
EMPLOYEES
The average number of employees and consultants at Net Insight during the fourth quarter and for the year was 183 (162) and 176 (154), respectively, of which 149 (132) and 143 (125), respectively, in the parent company Net Insight AB (publ). The increase is primarily attributable to the investment in 5G synchronization, which began in the last quarter of 2021.
In September, the company announced a reorganization, where the development team of Aperi in the USA is integrated with the development organization in Stockholm and the appointment of a new CTO group with the aim of supporting the strategic direction of futureproofing the company's technology and increasing visibility in the market and with customers. As a result of the changes, the management team was also strengthened and reorganized, which as of September 8 consist of: Crister Fritzson, CEO; Joakim Schedvins, CFO; Mårten Blixt, CCO; Christer Bohm, VP Product Management; Mats Herolf, VP R&D; Per Lindgren, Group CTO, Head of Sync and Ulrik Rohne, COO & CTO Media, and CHRO Tove Bylund who joined the company on January 11, 2023.
PARENT COMPANY
Parent company net sales were SEK 124.8 (107.8) million in the fourth quarter, and net income was SEK 10.3 (2.2) million. The net financials included dividend from subsidiary of SEK 3.1 (0.0) million. In the fourth quarter, intra-group sales totaled SEK 0.0 (0.0) million, and intragroup purchases SEK -21.2 (-14.0) million.
For the year, the parent company net sales were SEK 474.7 (380.5) million, and net income was SEK 49.7 (-53.7) million. The net financials included result from participation in group companies of SEK -1.3 (-69.8) million. During the year, a consolidation of the number of legal units was carried out, which resulted in reduced shares in group companies by SEK 171.7 million, reduced liabilities to group companies by SEK 167.4 million and in a capital loss of SEK -4.3 million. During the year, the parent company received dividends from subsidiaries of SEK 3.1 million (0.0). In the previous year, the parent company made a capital loss from divestment of subsidiaries. For the year, intra-group sales totaled SEK 0.0 (0.0) million, and intra-group purchases SEK -71.5 (-51.3) million.
Progress in the parent company in the fourth quarter and for the year largely shadowed Group progress as indicated above (except for the effect of the sale of operations/subsidiaries).
RISK AND SENSITIVITY ANALYSIS
Net Insight's operations and results of operations are affected by a number of external and internal factors. The company conducts a continuous process to identify all risks present, and to assess how each risk should be managed.
Primarily, the risks the company is exposed to are market-related risks (including competition, technological progress, and political risks), operational risks (including product liability, intellectual property, disputes, customer dependency and contract risks) as well as financial and sustainability-related risks.
At the end of 2021, the current situation of component shortages has meant increased uncertainty. In 2021, we did not see any significant negative effects of this. During 2022, we worked to manage the shortage situation and we estimate that the uncertainty will continue into 2023. The war in Ukraine that began in the first quarter 2022 has contributed to increased uncertainty and risk associated with operations and the implementation of events, especially in Ukraine, Russia, and Belarus. The company's exposure to these markets is extremely limited and the decision to comply with the sanctions in force at the time of reporting is therefore not considered to have any material impact on the company's operations, assets or earnings. However, how the war develops is difficult to predict and the company makes ongoing evaluations of the need to take action.
Except for this, no additional critical risks and uncertainty factors, other than those reviewed in the Annual Report for 2021, arose during 2022 or are anticipated in 2023.
The risks and uncertainty factors are essentially the same for the parent company and the group as a whole.
For a complete review of the company's risk and sensitivity analysis, and its risk management process, see pages 46-47, 48-49 and 67-68 of the Annual Report for 2021.
CONSOLIDATED INCOME STATEMENT, IN SUMMARY
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2022 | 2021 | 2022 | 2021 |
| Continued operations | ||||
| Net sales | 125,017 | 107,894 | 475,118 | 380,687 |
| Cost of sales | -47,441 | -42,763 | -177,454 | -152,303 |
| Gross earnings | 77,576 | 65,131 | 297,664 | 228,384 |
| Sales and marketing expenses | -35,257 | -31,535 | -130,021 | -104,308 |
| Administration expenses | -13,445 | -13,494 | -52,753 | -51,877 |
| Development expenses | -12,922 | -14,926 | -51,379 | -52,963 |
| Other operating income and expenses | -2,758 | -1,919 | -3,009 | 7,538 |
| Operating earnings | 13,194 | 3,257 | 60,502 | 26,774 |
| Net financial items | -402 | 550 | 8,380 | 1,934 |
| Profit before tax | 12,792 | 3,807 | 68,882 | 28,708 |
| Tax | -2,921 | -963 | -14,866 | -4,906 |
| Net income continued operations | 9,871 | 2,844 | 54,016 | 23,802 |
| Discontinued operations, net after tax | - | - | - | -36,926 |
| Net Income | 9,871 | 2,844 | 54,016 | -13,124 |
| Net income for the period attributable to the shareholders of the parent company | 9,871 | 2,844 | 54,016 | -13,124 |
| Earnings per share, based on net income attributable to the parent company's shareholders during the period |
Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| Earnings per share from continued operations | ||||
| -Basic, SEK | 0.03 | 0.01 | 0.15 | 0.06 |
| -Diluted, SEK | 0.03 | 0.01 | 0.15 | 0.06 |
| Earnings per share including discontinued operations | ||||
| -Basic, SEK | 0.03 | 0.01 | 0.15 | -0.03 |
| -Diluted, SEK | 0.03 | 0.01 | 0.15 | -0.03 |
| Average number of outstanding shares in thousands | ||||
| -Basic | 359,326 | 380,821 | 367,083 | 382,162 |
| -Diluted | 364,136 | 383,876 | 370,840 | 384,174 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Oct-Dec | Jan-Dec | ||
|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 |
| 9,871 | 2,844 | 54,016 | -13,124 |
| -385 | 248 | 1,321 | 450 |
| -385 | 248 | 1,321 | 450 |
| 9,486 | 3,092 | 55,337 | -12,674 |
| -12,674 | |||
| 9,486 3,092 |
55,337 |
CONSOLIDATED BALANCE SHEET, IN SUMMARY
| SEK thousands | 31 Dec 2022 | 30 Sep 2022 | 31 Dec 2021 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Capitalized expenditure for development | 198,200 | 185,455 | 158,263 |
| Goodwill | 38,751 | 38,751 | 38,751 |
| Other intangible assets | 1,673 | 1,561 | 1,950 |
| Right-of-use assets | 32,129 | 27,906 | 33,614 |
| Equipment | 16,095 | 17,214 | 19,293 |
| Deferred tax asset | 3,719 | 5,640 | 16,888 |
| Deposits | 4,902 | 4,851 | 4,784 |
| Total non-current assets | 295,469 | 281,378 | 273,543 |
| Current assets | |||
| Inventories | 84,249 | 75,746 | 53,712 |
| Accounts receivable | 129,415 | 151,040 | 106,069 |
| Other receivables | 27,716 | 24,598 | 40,436 |
| Cash and cash equivalents | 308,347 | 294,503 | 354,863 |
| Total current assets | 549,727 | 545,887 | 555,080 |
| TOTAL ASSETS | 845,196 | 827,265 | 828,623 |
| EQUITY AND LIABILITIES | |||
| Equity attributable to parent company's shareholders | |||
| Share capital | 14,750 | 14,750 | 15,597 |
| Other paid-in capital | 1,192,727 | 1,192,727 | 1,192,727 |
| Translation reserve | 1,504 | 1,889 | 183 |
| Accumulated deficit | -603,892 | -590,354 | -561,979 |
| Total shareholders' equity | 605,089 | 619,012 | 646,528 |
| Non-current liabilities | |||
| Lease liabilities | 20,733 | 18,893 | 24,914 |
| Other liabilities | 61,307 | 39,153 | 11,378 |
| Total non-current liabilities | 82,040 | 58,046 | 36,292 |
| Current liabilities | |||
| Lease liabilities | 11,434 | 9,467 | 9,286 |
| Accounts payable | 35,899 | 22,444 | 36,588 |
| Other liabilities | 110,734 | 118,296 | 99,929 |
| Total current liabilities | 158,067 | 150,207 | 145,803 |
| TOTAL EQUITY AND LIABILITIES | 845,196 | 827,265 | 828,623 |
CHANGES IN CONSOLIDATED EQUITY, IN SUMMARY
| SEK thousands | Attributable to parent company's shareholders | ||||
|---|---|---|---|---|---|
| Share capital |
Other paid-in capital |
Translation reserve |
Accumulated deficit |
Total shareholders' equity |
|
| January 1, 2021 | 15,597 | 1,192,727 | -267 | -515,441 | 692,616 |
| Repurchase of own shares | - | - | - | -33,414 | -33,414 |
| Total comprehensive income | - | - | 450 | -13,124 | -12,674 |
| December 31, 2021 | 15,597 | 1,192,727 | 183 | -561,979 | 646,528 |
| January 1, 2022 | 15,597 | 1,192,727 | 183 | -561,979 | 646,528 |
| Transfer of quota value upon cancellation of repurchased shares | -847 | - | - | 847 | - |
| Repurchase of own shares | - | - | - | -98,336 | -98,336 |
| Warrants issued | - | - | - | 1,561 | 1,561 |
| Total comprehensive income | - | - | 1,321 | 54,016 | 55,337 |
| December 31, 2022 | 14,750 | 1,192,727 | 1,504 | -603,892 | 605,089 |
CONSOLIDATED STATEMENT OF CASH FLOWS INCLUDING DISCONTINUED OPERATIONS
| SEK thousands | Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | ||
| Ongoing activities | |||||
| Profit/loss before tax | 12,792 | 3,807 | 68,882 | -8,286 | |
| Income tax paid | -280 | - | -1,378 | -782 | |
| Depreciation, amortization & impairment | 15,527 | 13,957 | 62,157 | 60,061 | |
| Other items not affecting liquidity | 1,701 | 4,165 | 5,202 | 34,599 | |
| 29,740 | 21,929 | 134,863 | 85,592 | ||
| Changes in working capital | |||||
| Increase-/decrease+ in inventories | -9,030 | -1,627 | -33,830 | -4,617 | |
| Increase-/decrease+ in receivables | 17,583 | -27,455 | -11,175 | -38,667 | |
| Increase+/decrease- in liabilities | 26,891 | 52,136 | 58,971 | 61,408 | |
| Cash flow from operating activities | 65,184 | 44,983 | 148,829 | 103,716 | |
| Investment activities | |||||
| Capitalized expenditure | -24,636 | -17,447 | -87,573 | -59,585 | |
| Investment in intangible assets | -273 | - | -575 | - | |
| Investment in tangible assets | -498 | -702 | -2,596 | -2,125 | |
| Disposal of subsidiary, net effect on cash | - | 23,660 | - | 70,342 | |
| Increase-/decrease+ in financial assets, net | -51 | - | -152 | - | |
| Cash flow from investment activities | -25,458 | 5,511 | -90,896 | 8,632 | |
| Financing activities | |||||
| Amortization leasing | -2,363 | -1,913 | -8,203 | -7,891 | |
| Warrant premiums paid | 104 | - | 1,561 | - | |
| Repurchase of own shares | -23,512 | -33,414 | -98,336 | -33,414 | |
| Cash flow from financing activities | -25,771 | -35,327 | -104,978 | -41,305 | |
| Net change in cash and cash equivalents | 13,955 | 15,167 | -47,045 | 71,043 | |
| Exchange differences in cash and cash equivalents | -111 | 146 | 529 | 636 | |
| Cash and cash equivalents at the beginning of the period | 294,503 | 339,550 | 354,863 | 283,184 | |
| Cash and cash equivalents at the end of the period | 308,347 | 354,863 | 308,347 | 354,863 |
DISAGGREGATION OF REVENUE
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2022 | 2021 | 2022 | 2021 |
| Net sales by product group | ||||
| Hardware | 63,058 | 45,165 | 226,173 | 167,424 |
| Software licenses | 22,155 | 21,930 | 85,572 | 76,930 |
| Support and Services* | 39,804 | 40,799 | 163,373 | 136,333 |
| Total | 125,017 | 107,894 | 475,118 | 380,687 |
| Net sales by region** | ||||
| EMEA | 73,986 | 69,163 | 264,442 | 227,436 |
| AM | 38,580 | 27,985 | 161,706 | 116,916 |
| APAC | 12,451 | 10,746 | 48,970 | 36,335 |
| Total | 125,017 | 107,894 | 475,118 | 380,687 |
| Timing of revenue recognition | ||||
| Products and services transferred at a point in time | 81,644 | 65,945 | 302,088 | 243,250 |
| Products and services transferred over time* | 43,373 | 41,949 | 173,030 | 137,437 |
| Total | 125,017 | 107,894 | 475,118 | 380,687 |
*) Of which NRE fee; Oct-Dec, SEK 7.1 (-) million, Jan-Dec SEK 28.2 (-) million, and SEK 4.7 million Oct-Dec 2021.
**) The regional follow-up was changed on January 1, 2022. Comparative periods have been recalculated.
FINANCIAL ASSETS AND LIABILITIES
| Group's financial instruments by category - Assets | Dec 31, 2022 | 31 Dec 2021 | ||||
|---|---|---|---|---|---|---|
| SEK thousands | Value- tier | Measured at amortized cost |
Measured at fair value through profit or loss |
Value- tier | Measured at amortized cost |
Measured at fair value through profit or loss |
| Assets in Balance Sheet | ||||||
| Derivative instruments | 2 | - | 2 | - | ||
| Accounts receivable and other receivables, excluding non-financial assets |
140,200 | 116,705 | ||||
| Cash and cash equivalents | 308,347 | 354,863 | ||||
| Total | 448,547 | - | 471,568 | - | ||
| Group's financial instruments by category - Liabilities |
Dec 31, 2022 | 31 Dec 2021 | ||||
| SEK thousands | Value- tier | Measured at amortized cost |
Measured at fair value through profit or loss |
Value- tier | Measured at amortized cost |
Measured at fair value through profit or loss |
| Liabilities in Balance Sheet | ||||||
| Derivative instruments | 2 | 787 | 2 | 2,104 | ||
| Accounts payable and other liabilities, excluding non financial liabilities |
47,368 | 41,964 | ||||
| Total | 47,368 | 787 | 41,964 | 2,104 |
Carrying value of account receivables, other receivables, cash and cash equivalents, account payables and other liabilities makes a reasonable approximation of fair value.
Financial instruments in tier 2
The fair value of derivative instruments is measured using exchange rates of currency forwards on the reporting date.
INCOME FROM DISCONTINUED OPERATIONS
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2022 | 2021 | 2022 | 2021 |
| Revenues | - | - | - | 15,101 |
| Expenses | - | - | - | -16,176 |
| Capital loss on disposal of discontinued operations | - | - | - | -35,919 |
| Loss before tax | - | - | - | -36,994 |
| Tax | - | - | - | 68 |
| Net income discontinued operations | - | - | - | -36,926 |
ASSETS HELD FOR SALE
| Jan-Dec | |
|---|---|
| SEK thousands | 2021 |
| Disposed assets and liabilities | |
| Capitalized expenditure for development | 70,198 |
| Goodwill | 22,932 |
| Other intangible assets | 3,642 |
| Right-of-use assets | 3,617 |
| Equipment | 2,688 |
| Deferred tax asset | 6,261 |
| Deposits | 407 |
| Accounts receivable | 7,916 |
| Other receivables | 1,859 |
| Cash and cash equivalents | 2,274 |
| Lease liabilities, non-current | -2,593 |
| Other liabilities, non-current | -5,862 |
| Lease liabilities | -1,291 |
| Accounts payable | -1,702 |
| Other liabilities | -32,596 |
| Net assets and liabilities | 77,750 |
| Cash consideration | 49,538 |
| Less: Escrow | -24,428 |
| Less: Cash and cash equivalents in discontinued operations | -2,274 |
| Less: Transaction costs | -7,707 |
| Effect on group's cash and cash equivalents | 15,129 |
Final settlements 55,213 Disposal of subsidiary, net effect on cash 70,342
CASHFLOW FROM DISCONTINUED OPERATIONS
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2022 | 2021 | 2022 | 2021 |
| Cash flow from discontinued operations, net | ||||
| Cash flow from operating activities | - | - | - | 899 |
| Cash flow from investment activities | - | 23,660 | - | 67,173 |
| Cash flow from financing activities | - | - | - | - |
| Cash flow from discontinued operations, net | - | 23,660 | - | 68,072 |
PARENT COMPANY INCOME STATEMENT, IN SUMMARY
| Oct-Dec | Jan-Dec | ||||
|---|---|---|---|---|---|
| SEK thousands | 2022 | 2021 | 2022 | 2021 | |
| Net sales | 124,781 | 107,836 | 474,707 | 380,453 | |
| Cost of sales | -48,005 | -45,766 | -177,684 | -152,014 | |
| Gross earnings | 76,776 | 62,070 | 297,023 | 228,439 | |
| Sales and marketing expenses | -36,176 | -18,344 | -131,021 | -107,202 | |
| Administration expenses | -13,567 | -13,320 | -52,757 | -51,479 | |
| Development expenses | -13,970 | -26,214 | -52,536 | -54,138 | |
| Other income expenses | -3,741 | -2,054 | -5,438 | 1,910 | |
| Operating earnings | 9,322 | 2,138 | 55,271 | 17,530 | |
| Net financial items | 2,895 | 837 | 8,087 | -66,615 | |
| Profit/loss before tax | 12,217 | 2,975 | 63,358 | -49,085 | |
| Tax | -1,931 | -791 | -13,693 | -4,568 | |
| Net income | 10,286 | 2,184 | 49,665 | -53,653 | |
| PARENT COMPANY BALANCE SHEET, IN SUMMARY | |||||
| SEK thousands | 31 Dec 2022 | 31 Dec 2021 |
PARENT COMPANY BALANCE SHEET, IN SUMMARY
| ASSETS | ||
|---|---|---|
| Non-current assets | ||
| Capitalized expenditure for development | 198,200 | 158,263 |
| Other intangible assets | 1,673 | 1,950 |
| Equipment | 14,670 | 17,686 |
| Participations in group companies | 3,173 | 174,895 |
| Deferred tax asset | 2,657 | 16,350 |
| Deposits | 4,628 | 4,686 |
| Total non-current assets | 225,001 | 373,830 |
| Current assets | ||
| Inventories | 84,249 | 53,712 |
| Accounts receivable | 130,180 | 106,676 |
| Receivables from group companies | 346 | - |
| Other receivables | 30,113 | 42,680 |
| Cash and cash equivalents | 300,860 | 350,422 |
| Total current assets | 545,748 | 553,490 |
| TOTAL ASSETS | 770,749 | 927,320 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Restricted equity | 277,979 | 221,277 |
| Non-restricted equity | 284,581 | 388,394 |
| Total equity | 562,560 | 609,671 |
| Non-current liabilities | ||
| Other liabilities | 60,557 | 11,190 |
| Total non-current liabilities | 60,557 | 11,190 |
| Current liabilities | ||
| Accounts payable | 35,617 | 36,376 |
| Liabilities to group companies | 7,504 | 173,810 |
| Other liabilities | 104,511 | 96,273 |
| Total current liabilities | 147,632 | 306,459 |
| TOTAL EQUITY AND LIABILITIES | 770,749 | 927,320 |
ACCOUNTING POLICIES
This Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting and applicable regulations of the Swedish Annual Accounts Act. The Interim Report of the parent company complies with chapter 9 of the Swedish Annual Accounts Act, Interim Financial Reporting, and RFR 2 Accounting for Legal Entities.
Disclosures in accordance with IAS 34 are presented in the interim financial statements and the associated notes as well as elsewhere in the interim financial report.
There are no new or amended International Financial Reporting Standards (IFRS) that have had a material impact on the Company's financial reporting.
The same accounting principles and basis of calculation as those used in the latest Annual Report have been applied to the group and parent company. For a description of these accounting principles, please refer to the Annual Report for 2021.
The preparation of the Interim Report requires management to make judgements, estimates and assumptions that affect the company's earnings and position and information presented generally. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. For a description of these estimates and assumptions, please refer to the Annual Report for 2021.
Figures in brackets in this report refer to comparison with the corresponding period or date in the previous year, if not stated otherwise. Divergences due to rounding may occur in this report.
Tax
The group reported tax of total SEK -2.9 (-1.0) million for the period October–December 2022, corresponds to an effective tax rate of -22.8 (-25.3) percent. For the period January–December 2022, the group reported tax of total SEK -14.9 (-4.9) million, corresponds to an effective tax rate of -21.6 (-17,1) percent. Including divested operations, the group reported tax of SEK -5.2 million for the period January-December 2021, corresponds to an effective tax rate of 58.3 percent. In 2021, the group recognized a capital loss from discontinued operations of SEK -35.9 million, which was nondeductible. The effective tax rate is also affected by the relative effects of foreign tax rates.
Remaining tax loss carryforwards for group companies amounted to SEK 12.9 million at year-end, compared to SEK 79.4 million as of December 31, 2021. Deferred tax has been recognized for the tax loss carryforwards.
Contributed equity
The 2022 AGM resolved to authorize the board of directors to resolve to repurchase, on one or several occasions until the next AGM, as many own shares as may be purchased without the company's holding at any time exceeding ten per cent of the total number of shares in the company. Further, the AGM resolved to authorize the board of directors to resolve on one or several occasions until the next annual general meeting, to transfer (sell) own shares.
At the Board meeting on July 19, the board of Directors of Net Insight AB decided to utilize the repurchase mandate given at the AGM on May 13, 2022 and begin repurchasing own shares. The repurchase program commenced on July 22, 2022, and will last until the AGM on May 12, 2023, and will amount to maximum SEK 70 million.
During October-December 2022, the parent company acquired 3,870,000 of its own class B shares through purchases on Nasdaq Stockholm for a total amount of SEK 23.5 million. In total, the parent company has acquired 20,130,000 of its own class B-shares on Nasdaq Stockholm during 2022 for a total amount of SEK 98.3 million.
The 2022 AGM resolved that the company's share capital shall be reduced by SEK 847,000 for allocation to unrestricted equity through cancellation of 21,175,000 own B shares held by the company. The cancellation was completed on August 31.
At the end of the year, the parent company had a total of 11,580,00 of its own class B shares, at an average cost of SEK 5.33 per share and with a par value of SEK 0.04 per share. The shares are held as own shares. The parent company has the right to reissue these shares at a later date.
All shares issued by the parent company were fully paid.
In accordance with the warrant program approved by the 2022 Annual General Meeting, management and key personnel in June acquired a total of 1,755,000 warrants for a market premium of a total of SEK 1,456,650 in December acquired a total of 50,000 warrants for a market premium of a total of SEK 104,000. The warrants have a vesting period of three years, after which the holder has the right to exercise the warrants for subscription of B shares in the parent company for a period of three months at an exercise price of SEK 5.10 and SEK 6.90 respectively.
In total, the Company has ongoing warrant programs with a total of 4,860,000 warrants. When calculating earnings per share, a dilution effect arises when the average price for the period exceeds the exercise price for the warrants. For more information about the programs and the accounting principles, see Note 7 on page 77 in the 2021 Annual Report.
| 31 Dec, 2022 | 31 Dec, 2021 | |||||
|---|---|---|---|---|---|---|
| The division of shares | A-shares | B-shares | Total | A-shares | B-shares | Total |
| Outstanding shares | 1,000,000 | 356,178,009 | 357,178,009 | 1,000,000 | 376,308,009 | 377,308,009 |
| Repurchased own shares | - | 11,580,000 | 11,580,000 | - | 12,625,000 | 12,625,000 |
| Issued shares | 1,000,000 | 367,758,009 | 368,758,009 | 1,000,000 | 388,933,009 | 389,933,009 |
TRANSACTIONS WITH RELATED PARTIES
No transactions with related parties during the period.
AUDITORS' REVIEW
This Report has not been reviewed by the company's auditors.
SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
No significant events have occurred after the end of the reporting period.
THIS IS NET INSIGHT
Business concept and model
Net Insight is defining new ways to deliver media. Net Insight is driving the transformation of video networks with open IP, virtualized and cloud solutions that enable our customers to simply and costeffectively create live experiences.
With the product area Media Networks, Net Insight is opening up new routes for customers to produce and deliver content to viewers anywhere. Revenues are generated through sales of hardware and software solutions and services.
The 5G synchronization product area enables cost-effective, more secure and faster roll-out of 5G networks.
Strategy
Net Insight wants to set the benchmark for media transport and help broadcasters, production companies, service providers and enterprises to transform their media businesses – enabling them to benefit from new software defined, virtual and distributed media workflows, without discarding their existing hardware investments. Net Insight wants to empower customers to work smarter through remote/distributed production and flexible networks.
Net Insight is technology agnostic and has built the market's most open and cloud-ready video centric media delivery platform, allowing customers to deliver content on any network, their way.
The main strategic objective is to accelerate growth, in both existing and closely related market and customer segments. This will be achieved through a combination of leveraging our unique portfolio and our industry expertise, strengthened solutions competitiveness, and improved internal execution.
For more information, please contact
Phone: +46 (0)8-685 04 00 Box 1200, 171 23 Solna, Sweden Email: [email protected] Phone: +46 (0)8 – 685 04 00
Joakim Schedvins, CFO, Net Insight AB (publ) www.netinsight.net Phone: +46 (0)8-685 04 00 Email: [email protected]
Value creators
The solutions are deployed by the world's leading media brands to keep their mission-critical media networks running smoothly. New technology is enabling these players to adopt new, more cost efficient and flexible ways to produce and deliver content.Net Insight can play an important role to support our customers making this gradual transition.
Net Insight benefits from underlying market trends like the general increase in video traffic, live streaming and file-based transfers. Other trends supporting the company's growth prospects include the broader coverage of live events, move towards remote production and increased use of Internet and cloud for media production and transport.
Reporting dates
Publishing of Annual report 2022 April 21, 2023 Interim report January – March May 3, 2023 Annual General Meeting May 12, 2023 Interim report January – June July 18, 2023 Interim report January – September November 9, 2023
Solna, Sweden, February 21, 2023
Crister Fritzson CEO
Crister Fritzson, CEO, Net Insight AB (publ) Net Insight AB (publ), corp.id.no. 556533-4397
This information is information that Net Insight AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 7:30 am CET on February 21, 2023.
FINANCIAL INFORMATION
| Oct-Dec | Jan-Dec | ||||
|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2022 | 2021 | 2022 | 2021 | |
| Earnings continued operations | |||||
| Net sales | 125.0 | 107.9 | 475.1 | 380.7 | |
| Gross earnings | 77.6 | 65.1 | 297.7 | 228.4 | |
| Operating expenses | 61.6 | 60.0 | 234.2 | 209.1 | |
| Total development expenditure | 37.6 | 32.4 | 139.0 | 109.4 | |
| EBITDA | 28.7 | 17.3 | 122.7 | 84.5 | |
| EBITDA-2 | 4.1 | -0.2 | 35.1 | 28.1 | |
| Operating earnings | 13.2 | 3.3 | 60.5 | 26.8 | |
| Profit before tax | 12.8 | 3.8 | 68.9 | 28.7 | |
| Net income | 9.9 | 2.8 | 54.0 | 23.8 | |
| Balance sheet and cash flow including discontinued operations | |||||
| Cash and cash equivalents | 308.3 | 354.9 | 308.3 | 354.9 | |
| Working capital | 102.7 | 76.8 | 76.5 | 73.1 | |
| Total cash flow | 14.0 | 15.2 | -47.0 | 71.0 | |
| The share | |||||
| Dividend per share, SEK | |||||
| Earnings per share, basic continued operations, SEK | - 0.03 |
- 0.01 |
- 0.15 |
- 0.06 |
|
| Earnings per share, diluted continued operations, SEK | 0.03 | 0.01 | 0.15 | 0.06 | |
| Earnings per share including discontinued operations, basic, SEK | 0.03 | 0.01 | 0.15 | -0.03 | |
| Earnings per share including discontinued operations, diluted, SEK | 0.03 | 0.01 | 0.15 | -0.03 | |
| Cash flow per share, basic, SEK | 0.04 | 0.04 | -0.13 | 0.19 | |
| Cash flow per share, diluted, SEK | 0.04 | 0.04 | -0.13 | 0.18 | |
| Equity per share basic , SEK | 1.68 | 1.70 | 1.65 | 1.69 | |
| Equity per share diluted, SEK | 1.66 | 1.68 | 1.63 | 1.68 | |
| Average number of outstanding shares basic, thousands | 359,326 | 380,821 | 367,083 | 382,162 | |
| Average number of outstanding shares diluted, thousands | 364,136 | 383,876 | 370,840 | 384,174 | |
| Number of outstanding shares at the end of the period, basic, thousands | 357,178 | 377,308 | 357,178 | 377,308 | |
| Number of outstanding shares at the end of the period, diluted, thousands | 361,988 | 380,363 | 361,988 | 380,363 | |
| Share price at end of period, SEK | 6.06 | 6.62 | 6.06 | 6.62 | |
| Employees and consultants continued operations | |||||
| Average number of employees and consultants | 183 | 162 | 176 | 154 | |
| KPI continued operations | |||||
| Net sales YoY, change in % | 15.9% | 19.0% | 24.8% | 14.6% | |
| Gross margin | 62.1% | 60.4% | 62.7% | 60.0% | |
| Total development expenditure/Net sales | 30.0% | 30.0% | 29.2% | 28.7% | |
| Operating margin | 10.6% | 3.0% | 12.7% | 7.0% | |
| EBITDA margin | 23.0% | 16.0% | 25.8% | 22.2% | |
| EBITDA-2 margin | 3.3% | -0.2% | 7.4% | 7.4% | |
| Net margin | 7.9% | 2.6% | 11.4% | 6.3% | |
| KPI Group including discontinued operations | |||||
| Return on capital employed | 9.0% | 4.0% | 8.9% | 3.9% | |
| Equity/asset ratio | 71.6% | 78.0% | 71.6% | 78.0% | |
| Return on equity | 8.7% | -2.0% | 8.7% | -2.0% |
ALTERNATIVE PERFORMANCE MEASURES AND OTHER DEFINITIONS
Non-IFRS financial measures are presented to enhance an investors and management possibility to evaluate the ongoing operating results, to aid in forecasting future periods and to facilitate meaningful comparison of result between periods. The APMs in this report may differ from similar-titled measures used by other companies. APMs regarding to the income statement are calculated on continuing operations unless otherwise stated. APMs regarding the balance sheet are calculated on the whole group including discontinuing operations, unless otherwise stated. The section has also been supplemented with some other definitions.
Calculation of performance measures not included in IFRS framework, and some other definitions.
| Performance measures | Various types of performance measures and margin measures as a percentage of sales. | |||
|---|---|---|---|---|
| Non-IFRS performance measures |
Description | Reason for use of the measure | ||
| Gross margin | Gross earnings as a percentage of net sales. | The gross margin is of major importance, showing | ||
| Gross margin excl. amortization of capitalized development |
Gross earnings excl. amortization of capitalized development as a percentage of net sales. |
the margin for covering the operating expenses., supplemented by the margin to cover the operating expenses as well as the cost of amortization of capitalized development expenditures. |
||
| Operating expenses | Sales and marketing expenses, administration expenses and development expenses. |
Shows the company's total operating expenses. Putting them in relation to net sales shows the |
||
| Operating expenses/net sales | Operating expenses as a percentage of net sales. | company's cost efficiency. | ||
| Operating earnings | Calculated as operating earnings before financial items and tax. |
Operating earnings provides an overall picture of earnings generated in the operating activities. |
||
| Operating margin | Operating earnings as a percentage of net sales. | The operating margin is a key measure together with sales growth and capital employed for monitoring value creation. |
||
| Net sales YoY, change in % | The relation between net sales for the period and the corresponding sales for the comparative period in previous year. |
The sales growth is a key measure together with operating margin and capital employed for monitoring value creation. |
||
| Change in Net sales in comparable currencies |
The relation between the net sales for the period, recalculated using the foreign currency exchange rates from the comparative period, and the corresponding sales for the comparative period in previous year. Only sales from business combinations that has been part of the Group for the whole comparative period are recalculated. |
This measure is of major importance for management in its monitoring of underlying sales growth driven by changes in volume, price and product mix for comparable exchange rates between different periods. |
||
| Net margin | Net Income as a percentage of net sales. | The net margin shows the remaining share of net sales after all the company's costs have been deducted. |
||
| Total development (R&D) | Development expenses and capitalized | The measure is a good complement to | ||
| expenditure | expenditures for development. | development expenses, as it shows the company's | ||
| Capitalization rate | Capitalized development expenditures as a percentage of total development expenditures. |
total expenditure in development. The development expenditures effect on income, |
||
| Total development (R&D) expenditure/net sales |
Total development expenditure as percentage of net sales. |
financial position, and presentation in the statement of cashflow is affected by the periods level of capitalized development expenditures. |
||
| EBITDA | Operating earnings before depreciation and amortization. |
Complementing EBITDA with EBITDA-2, where capitalized development expenditures are |
||
| EBITDA-2 | Operating earnings before depreciation and amortization and capitalization of development expenditure. |
reversed, provides a good complement to operating earnings and margin as it, simplified, shows the earnings-generated cash flow in the |
||
| EBITDA & EBITA-2 margin | EBITDA & EBITDA-2 as a percentage of net sales. | operation and it shows operating earnings without influence of variations in the level of capitalized development expenditures in the company's development projects. |
||
| Regions | Definition of regions for designation of revenue: • EMEA – Europe, the Middle East and Africa. • Americas (AM) - North and South America. • APAC – Asia and Pacific. |
The regional follow-up was changed on 1 January 2022. Comparative periods have been recalculated. |
| Change in net sales in comparable currencies | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2022 | 2021 | 2022 | 2021 |
| Net sales | 125.0 | 107.9 | 475.1 | 380.7 |
| Net currency effect of comparable currencies | -13.1 | -1.0 | -43.7 | 14.9 |
| Net sales in comparable currencies | 111.9 | 106.9 | 431.5 | 395.6 |
| Change in net sales in comparable currencies | 3.7% | 17.9% | 13.3% | 19.1% |
| KPI Income Statement | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2022 | 2021 | 2022 | 2021 |
| Continued operations | ||||
| Net sales | 125.0 | 107.9 | 475.1 | 380.7 |
| Net sales YoY, change in % | 15.9% | 19.0% | 24.8% | 14.6% |
| Cost of sales ex. amortization of capitalized development | -35.6 | -32.3 | -131.3 | -109.4 |
| Gross earnings ex. amortization of capitalized development | ||||
| 89.5 | 75.6 | 343.8 | 271.3 | |
| Gross margin ex. amortization of capitalized development | 71.6% | 70.1% | 72.4% | 71.3% |
| Cost of sales amortization of capitalized development | -11.9 | -10.5 | -46.2 | -42.9 |
| Gross earnings | 77.6 | 65.1 | 297.7 | 228.4 |
| Gross margin | 62.1% | 60.4% | 62.7% | 60.0% |
| Sales and marketing expenses | -35.3 | -31.5 | -130.0 | -104.3 |
| Administration expenses | -13.4 | -13.5 | -52.8 | -51.9 |
| Development expenses | -12.9 | -14.9 | -51.4 | -53.0 |
| Operating expenses | -61.6 | -60.0 | -234.2 | -209.1 |
| Operating expenses/net sales | 49.3% | 55.6% | 49.3% | 54.9% |
| Other operating income and expenses | -2.8 | -1.9 | -3.0 | 7.5 |
| Operating earnings | 13.2 | 3.3 | 60.5 | 26.8 |
| Operating margin | 10.6% | 3.0% | 12.7% | 7.0% |
| Net financial items | -0.4 | 0.6 | 8.4 | 1.9 |
| Profit before tax | 12.8 | 3.8 | 68.9 | 28.7 |
| Tax | -2.9 | -1.0 | -14.9 | -4.9 |
| Net income continued operations | 9.9 | 2.8 | 54.0 | 23.8 |
| Net margin continued operations | 7.9% | 2.6% | 11.4% | 6.3% |
| Discontinued operations, net after tax | - | - | - | -36.9 |
| Net Income | 9.9 | 2.8 | 54.0 | -13.1 |
| EBITDA margin continued operations |
| Oct-Dec | Jan-Dec | ||||
|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2022 | 2021 | 2022 | 2021 | |
| Net sales | 125.0 | 107.9 | 475.1 | 380.7 | |
| Operating earnings | 13.2 | 3.3 | 60.5 | 26.8 | |
| Amortization of capitalized development expenditure | 11.9 | 10.5 | 46.2 | 42.9 | |
| Other depreciation & amortization | 3.6 | 3.5 | 14.5 | 14.8 | |
| Impairment | - | - | 1.5 | - | |
| EBITDA | 28.7 | 17.3 | 122.7 | 84.5 | |
| EBITDA margin | 23.0% | 16.0% | 25.8% | 22.2% | |
| Capitalization of development expenditure | -24.6 | -17.4 | -87.6 | -56.4 | |
| EBITDA-2 | 4.1 | -0.2 | 35.1 | 28.1 | |
| EBITDA-2 margin | 3.3% | -0.2% | 7.4% | 7.4% | |
| Development expenditure continued operations | Oct-Dec | Jan-Dec |
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2022 | 2021 | 2022 | 2021 |
| Development expenses | 12.9 | 14.9 | 51.4 | 53.0 |
| Capitalization of development expenditure | 24.6 | 17.4 | 87.6 | 56.4 |
| Total development expenditure | 37.6 | 32.4 | 139.0 | 109.4 |
| Capitalization rate | 65.6% | 53.9% | 63.0% | 51.6% |
| Net Sales | 125.0 | 107.9 | 475.1 | 380.7 |
| Total development expenditure/net sales | 30.0% | 30.0% | 29.2% | 28.7% |
| CAPITAL AND RETURN | SHOWS HOW CAPITAL IS UTILIZED AND THE COMPANY'S FINANCIAL STRENGTH. RETURN IS A | |||
|---|---|---|---|---|
| MEASURES | FINANCIAL TERM THAT DESCRIBES HOW MUCH THE VALUE OF AN ASSET CHANGES FROM AN | |||
| EARLIER POINT IN TIME. | ||||
| Non-IFRS performance | ||||
| measure | Description | Reason for use of the measure | ||
| Working capital | Current assets less cash and cash equivalents, accounts payable and other interest-free current liabilities. The Company has no interest-bearing liabilities, excluding lease liabilities. Changes in working capital in the cash flow statement also includes adjustments for items not affecting liquidity and changes in non-cur- rent operating assets and liabilities. |
This measure shows how much working capital that is tied up in the operations and can be put in relation to sales to under-stand how effectively tied up working capital is used. |
||
| Capital employed | The Company capital employed is calculated as an average of total assets, less total liabilities, excluding interest-bearing liabilities. The Company has no interest-bearing liabilities, excluding lease liabilities. |
Return on capital employed is the central ratio for measuring the return on the capital tied up in operations. |
||
| Return on capital employed | Operating earnings plus interest income, in relation to average capital employed, rolling four quarters. |
|||
| Equity/asset ratio | Shareholders' equity divided by the balance sheet total. |
A traditional measure for showing financial risk, expressing the ratio of the assets that is financed by the owners. |
||
| Return on equity | Net income as a percentage of average share holders' equity, rolling four quarters (R4Q). |
Return on equity shows the total return on shareholders' capital and reflects the effect of the company's profitability as well as the financial leverage. |
||
| The measure is primarily used to analyze shareholder profitability over time. |
Definitions to rows in the cash flow statement. | |||
| Investments | Investments in intangible and tangible assets. |
| Working capital | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions | 2022 | 2021 | 2022 | 2021 |
| Current assets | 547.8 | 534.2 | 548.4 | 491.7 |
| Cash and cash equivalents | -301.4 | -347.2 | -328.4 | -318.1 |
| No interest-bearing short term liabilities | -143.7 | -110.2 | -143.5 | -100.5 |
| Working capital | 102.7 | 76.8 | 76.5 | 73.1 |
| Return on capital employed including discontinued operations | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2022 | 2021 | 2022 | 2021 |
| Capital employed | ||||
| Total balance | 836.2 | 817.8 | 831.1 | 820.1 |
| No interest-bearing liabilities | -193.9 | -121.2 | -175.5 | -112.9 |
| Capital employed | 642.3 | 696.7 | 655.6 | 707.1 |
| Operating earnings less interest income R4Q | ||||
| Operating earnings R4Q | 60.5 | 28.7 | 60.5 | 28.7 |
| Interest income R4Q | 2.4 | 1.1 | 2.4 | 1.1 |
| Operating earnings less interest income R4Q | 58.1 | 27.6 | 58.1 | 27.6 |
| Return on capital employed | 9.0% | 4.0% | 8.9% | 3.9% |
| Equity/asset ratio | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2022 | 2021 | 2022 | 2021 |
| Equity | 605.1 | 646.5 | 605.1 | 646.5 |
| Total equity and liabilities | 845.2 | 828.6 | 845.2 | 828.6 |
| Equity/asset ratio | 71.6% | 78.0% | 71.6% | 78.0% |
| Return on equity including discontinued operations | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2022 | 2021 | 2022 | 2021 |
| Net income - R4Q | 54.0 | -13.1 | 54.0 | -13.1 |
| Average equity - R4Q | 624.2 | 668.5 | 624.2 | 668.5 |
| Return on equity | 8.7% | -2.0% | 8.7% | -2.0% |
| SHAREHOLDERS' INFORMATION Non-IFRS performance |
MEASURES RELATED TO THE SHARE. | |
|---|---|---|
| measure | Description | Reason for use of the measure |
| Average number of outstanding shares |
Total number of shares in the Parent company, less the number of group companies' holdings of shares in the Parent company (own/treasury shares). |
Definitions of IFRS performance measures. Measures showing the return of the business to the owners, per share. |
| Dividend per share | Dividend divided by the average number of outstanding shares during the period. |
|
| Earnings per share (EPS) | Net income divided by the average number of outstanding shares during the period. |
|
| Cash flow per share | Total cash flow, divided by average number of outstanding shares during the period. |
Measures showing the return of the business to the owners, per share. |
| Equity per share | Shareholders' equity divided by number of out standing shares at the end of the period. |
| Employees | Measures related to employees. | |
|---|---|---|
| Non-IFRS performance measure |
Description | Reason for use of the measure |
| Average number of employees and consultants/co-workers |
The average number of employees and consultants for non-temporary positions (longer than nine months) and who do not replace absent employees, in FTE (Full-time equivalent). |
To supplement the number of employees with consultants gives a better measure of the Company's cost. |
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| Average number of employees and consultants | 2022 | 2021 | 2022 | 2021 |
| Average number of employees | 138 | 129 | 131 | 139 |
| Average number of consultants | 45 | 33 | 45 | 26 |
| Total average number of employees and consultants | 183 | 162 | 176 | 165 |
| Average number of employees and consultants discontinued operations | - | - | - | -11 |
| Net Average number of employees and consultants continued operations | 183 | 162 | 176 | 154 |
MATERIAL PROFIT AND LOSS ITEMS
The group has identified a number of items which are material due to the significance of their nature and/or amount. These are listed separately here to provide a better understanding of the financial performance of the group:
| Material profit and loss items, continued operations Oct-Dec |
Jan-Dec | ||||
|---|---|---|---|---|---|
| SEK millions | Note | 2022 | 2021 | 2022 | 2021 |
| Exchange rate differences | |||||
| Part of Other operating income & expenses | -2.7 | -1.7 | -1.9 | 6.5 | |
| Part of Net Financial Items | -1.3 | 1.0 | 6.9 | 2.7 | |
| Total Exchange rate differences | -4.0 | -0.7 | 5.1 | 9.2 | |
| Government grants Covid-19 | |||||
| Reduction of employee expenses | - | - | - | 0.8 | |
| Other operating income | - | -0.4 | 0.1 | -0.2 | |
| Total | - | -0.4 | 0.1 | 0.6 | |
| Items affecting comparability | |||||
| Restructuring | (a) | - | -0.8 | -1.2 | -0.8 |
| Government grants Covid-19, other operating income | (b) | - | -0.4 | 0.1 | -0.2 |
| Impairment of intangible assets | (c) | - | - | -1.5 | - |
| Adjustment cost for advisory services disposal of discontinued operations | (d) | - | - | - | 0.4 |
| Total | - | -1.2 | -2.6 | -0.7 | |
| Operating earnings excluding items affecting comparability | |||||
| Operating earnings | 13.2 | 3.3 | 60.5 | 26.8 | |
| Items affecting comparability, as per above | - | 1.2 | 2.6 | 0.7 | |
| Total | 13.2 | 4.5 | 63.1 | 27.4 | |
| Operating earnings excluding exchange rate differences | |||||
| Operating earnings | 13.2 | 3.3 | 60.5 | 26.8 | |
| Exchange rate differences, as per above | 2.7 | 1.7 | 1.9 | -6.5 | |
| Total | 15.9 | 5.0 | 62.4 | 20.3 | |
| Operating earnings excluding exchange rate differences & items affecting comparability |
|||||
| Operating earnings | 13.2 | 3.3 | 60.5 | 26.8 | |
| Exchange rate differences, as per above | 2.7 | 1.7 | 1.9 | -6.5 | |
| Items affecting comparability, as per above | - | 1.2 | 2.6 | 0.7 | |
| Total | 15.9 | 6.2 | 65.0 | 20.9 | |
| Cash Flow excluding disposal of subsidiary, net effect on cash, and repurchase of own shares |
(e) | ||||
| Net change in cash and cash equivalents | 14.0 | 15.2 | -47.0 | 71.0 | |
| Disposal of subsidiary, net effect on cash | - | -23.7 | - | -70.3 | |
| Repurchase of own shares | 23.5 | 33.4 | 98.3 | 33.4 | |
| Total | 37.5 | 24.9 | 51.3 | 34.1 |
All items in the table above effects operating earnings, except for (e) that effects cash flow.
(a) Severance pay in due to structural changes.
(b) Covid-19 related government grants for personnel and other resources that still contribute to creating value for the Company.
(c) During the third quarter of 2022, a restructuring was carried out, among other things to achieve a tighter integration of the Nimbra and Aperi platforms. As a consequence, some development projects were cancelled.
(d) During the second quarter of 2021, the final costs for advisory services in connection with the divestment of business area Resource Optimization (ScheduALL), which is presented as other operating income.
(e) Presenting the cash flow without effects from divestments of the Resource Optimization (ScheduALL operations) and Streaming Solutions (Sye operations) business areas and the repurchase program of own shares provides a better understanding and comparison of the underlying operations' cash flow.
Net Insight AB (publ), corp.id.no. 556533-4397
Telephone: +46 (0)8 685 04 00, [email protected], www.netinsight.net
The information presented in this document may be subject to change without notice. For further information on product status and availability, please contact [email protected] or visit www.netinsight.net ©Copyright 2023. Net Insight AB (publ), Sweden. All rights reserved. Net Insight and Nimbra are trademarks of Net Insight AB, Sweden. All other registered trademarks are the property of their respective owners.
