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Net Insight
Annual Report • Feb 22, 2022
3180_10-k_2022-02-22_fabe80f2-b33c-4ca4-a925-d1bad2808654.pdf
Annual Report
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Net Insight Year-end Report January – December 2021
Net Insight AB (publ) corp.id.no. 556533–4397
October – December 2021
- Net sales amounted to SEK 107.9 (90.6) million, an increase of 19.0% year-on-year. In comparable currencies net sales increased by 17.9%.
- Operating earnings amounted to SEK 3.3 (-14.4) million, corresponding to an operating margin of 3.0% (-15.9%). Excluding foreign exchange rate differences of SEK -1.6 (-18.0) million, operating earnings were SEK 4.9 (3.5) million.
- Net income for the period for continuing operations was SEK 2.8 (-11.9) million and for the Group, including discontinued operations, SEK 2.8 (-6.8) million.
- Earnings per share diluted for the Group was SEK 0.01 (-0.02).
- Total cash flow for the Group was SEK 15.2 (18.7) million. Excluding the cash impact of the divestment of operations and repurchase of own shares, cash flow was SEK 24.9 (18.7) million.
January – December 2021
- Net sales amounted to SEK 380.7 (332.1) million, an increase of 14.6% year-on-year. In comparable currencies net sales increased by 19.1%.
- Operating earnings amounted to SEK 26.8 (-15.3) million, corresponding to an operating margin of 7.0% (-4.6%). Excluding foreign exchange rate differences of SEK 6.6 (-16.0) million, operating earnings were SEK 20.2 (0.7) million.
- Net income for the period for continuing operations was SEK 23.8 (-14.7) million. Net Income for the Group, including discontinued operations, was SEK -13.1 (237.4) million. This includes capital loss on disposal of discontinued operations of SEK -35.9 (246.4) million.
- Earnings per share diluted for the Group was SEK -0.03 (0.62).
FINANCIAL HIGHLIGHTS
• Total cash flow for the Group was SEK 71.0 (232.6) million. Excluding the cash impact of the divestment of operations and repurchase of own shares, cash flow was SEK 34.1 (-69.7) million.
Positive growth trend
in the year
Crister Fritzson, CEO, Net Insight
Significant events:
- Historical agreement in 5G synchronization
- JPEG XS: Important launch in our IP portfolio
| Oct-Dec | Jan-Dec | |||||
|---|---|---|---|---|---|---|
| SEK millions | 2021 | 2020 | Change | 2021 | 2020 | Change |
| Continuing operations | ||||||
| Net sales | 107.9 | 90.6 | 19.0% | 380.7 | 332.1 | 14.6% |
| Operating earnings | 3.3 | -14.4 | 26.8 | -15.3 | ||
| Operating margin | 3.0% | -15.9% | 7.0% | -4.6% | ||
| Net income | 2.8 | -11.9 | 23.8 | -14.7 | ||
| EBITDA | -0.2 | -15.6 | 28.1 | -19.0 | ||
| EBITDA margin | -0.2% | -17.2% | 7.4% | -5.7% | ||
| Total Group, including discontinued operations | ||||||
| Net Income | 2.8 | -6.8 | -13.1 | 237.4 | ||
| Total cash flow | 15.2 | 18.7 | 71.0 | 232.6 |
Business area Resource Optimization was divested in 2021 and Business area Streaming Solutions was divested in 2020. The divested business areas are reported separately as discontinued operations in this report.
For definitions and calculation of KPI's, see pages 16-20.
CEO´s Statement
Strong close to an eventful year
Our focus on profitable growth, development of the core operations and expansion on adjacent market segments has paid off.
Crister Fritzson, CEO Net Insight
The year was characterized by a positive growth trend that continued into the fourth quarter, with revenue up by 19% year-on-year. This was due to the strategic measures we have implemented which have generated strong sales in Europe, as well as the first delivery of synchronization products for Türk Telekom, within the framework of the agreement signed at the end of 2021.
Operating earnings were up significantly in Q4 compared to the corresponding period in the previous year, but down on the preceding quarter. This was largely due to costs associated with the establishment of the collaboration with Türk Telekom and the start-up of the new synch product, which meant that we started to strengthen our resources in development, support, marketing and sales in the quarter.
Looking back on the year, growth was higher compared to the target of average annual growth of at least 10%. This was due to strong progress in the media business, where sales increased with 8 of 10 of our strategic customers, plus the Türk Telekom agreement. The operating margin did not reach the long-term target of at least 10% on average over the period. Margins were affected by our ambitious investment in IP and cloud, and our focus in synchronization, which will contribute to reaching our target margin.
The repurchase program of own shares, which was decided at the 2021 Annual General Meeting, commenced in November and will last until the 2022 Annual General Meeting. Until the end of the year, shares amounting to a total amount of SEK 33.4 million have been repurchased.
Strategic measures implemented according to plan The agreement with Türk Telekom is part of our strategy of increasing the growth potential through expansion on new and adjacent markets. This includes the development of an entirely new product based on our existing synchronization technology. Net Insight is once again demonstrating the company's strong ability to commercialize its leading-edge technology. The agreement represents a milestone that opens up new opportunities in the rapidly expanding 5G segment.
Another cornerstone of Net Insight's strategy is the expansion of its core media operations. Accordingly, we have divided the portfolio into three areas: IP Gateways, Nimbra MSR and Cloud. Within IP Gateways, we are continuing to invest in the Nimbra 1000 series, which has strengthened our position and where we, alongside Aperi, are now seeing increased sales volumes.
The other product area Nimbra MSR is standing up well with its robust transport solutions for live events with demanding standards and where we help customers upgrade with important new functionality. One of these products was launched in Q4, the JPEG XS solution for simple video compression with low latency and high quality.
In the third area, Cloud, Nimbra Edge has taken the lead in cloudbased media solutions, also a sector undergoing rapid development. We currently have around 10 active Nimbra Edge customers: service provider The Switch with its production platform MIMiC; LinkedIn with video production; and Swiss TV company SRF with productions such as the Alpine World Ski Championships.
New pricing model for stable revenue streams
We have actively sought to increase the share of recurring revenue streams, and introduced user-based license models in the spring. The new pricing model provides Net Insight with stable revenue streams over time, and offers our customers more choice. We are now starting to see an increase in the number of Nimbra Edge customers.
Components shortages continue to generate uncertainty
Components shortages continue to generate uncertainty, and while this has previously only affected our customer deliveries marginally, in Q4 we started to see a more significant impact. We expect increased uncertainty in the first half of 2022. We foresee continued price increases for some component categories in 2022, and have adjusted prices from 1 February to offset this.
Stable foundation for growth
We consider that we have outgrown the market. During a time shaped by uncertainty, I am proud that our sales curves are pointing upwards for both IP and cloudbased solutions, particularly because we have signed a historic agreement relating to the development of an entirely new synchronization product for 5G on the global market. We are looking back at an eventful and promising year.
I want to thank all our employees for their amazing endurance and commitment, which has led us to end the year on such a great note.
Solna Sweden, February 22, 2022
Crister Fritzson, CEO
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, including the in 2020 divested business Streaming Solutions, see tables on page 11.
Comments in this report have reference to continuing operations, business area Media Networks, unless otherwise specified.
REVENUES
On November 1, Net Insight signed an agreement with Turkish telecom operator Türk Telekom relating to 5G synchronization. The agreement is the first of its kind for Net Insight, and opens up a big new market, worth some SEK 220 million. In the initial phase, Net Insight receives an initial order worth SEK 25 million for existing products and approximately SEK 55 million in NRE (non-recurring engineering) fee, which gives Türk Telekom royalties on future sales of the new 5G synchronization product to other customers. The NRE fee is nonrefundable and will be recognized at a pace with development over the two-year development period. SEK 8.5 million of the initial order and SEK 4.7 million of the NRE fee was recognized in the quarter, totaling SEK 13.1 million. The remaining two thirds of the initial order are expected to be delivered in 2022. The remaining order for an entirely new product for 5G will be delivered towards the end of 2023, with delivery completed in 2026.
Net sales in the fourth quarter of 2021 were SEK 107.9 (90.6) million, an increase of 19.0%. In comparable currencies, sales increased by 17.9%.
Net sales for the twelve-months period were SEK 308.7 (332.1) million, an increase of 14.6%. In comparable currencies, sales increased by 19.1%.
During Q4, we noted a revenue increase primarily driven by continued strong development in Europe and the above-mentioned large 5G sync business (see section above). We are also seeing a modest increase in revenue from our cloud-based solution Nimbra Edge. Revenues for the quarter also consists to some extent of revenues related to the Winter Games in Beijing, but in general it is the customers long-term investments to meet their customers increased demand and quality expectations that drive our long-term growth.
In 2021, we have seen a recovery among our customers after a weak 2020, largely affected by the pandemic. In combination with our efforts in a stronger offering to our customers, this has resulted in a strong revenue development. Q4 2021 is the fifth quarter in a row with growth compared with the corresponding period last year.
EARNINGS
Gross profit for the fourth quarter was SEK 65.1 (54.6) million, an increase by 19.2%. The increase is primarily driven by the sharp increase in revenue compared to last year, but is also affected by the partly recognition of the NRE-fee from the above-mentioned 5G sync transaction. Gross profit included amortization of capitalized development expenditure of SEK -10.5 (-9.0) million. Gross margin excluding and including amortization of capitalized development expenditure was 70.1% (70.2%) and 60.4% (60.3%) respectively.
Operating expenses in the third quarter of SEK -60.0 (-51.0) million, an increase by 17.6% compared to last year. The increased operating costs relates to higher sales and marketing costs linked to the sharp increase in revenue, non-recurring costs due to the restructuring of the sales organization and costs linked to the start-up of the Türk Telecom business. For the comparing period the operating expenses was positively affected with SEK 0.9 million related to governmental Covid-19 relief support, no corresponding grants during this period.
Sales and marketing expenses were SEK -31.5 (-23.6) million, and administration expenses to SEK -13.5 (-12.9). Development expenses were SEK -14.9(-14.6) million and the total development expenditure, i.e. before capitalization, were SEK -32.4 (-28.7) million.
Other operating income and expenses were SEK -1.9 (-18.1) million, of which foreign exchange rate differences of SEK -1.6 (-18.0) million.
Operating earnings were SEK 3.3 (-14.4) million, corresponding to an operating margin of 3.0% (-15.9%). Excluding foreign exchange rate differences of SEK -1.6 (-18.0) million, operating profit amounted to SEK 4.9 (3.5) million. See also table Material profit and loss items on page 20.
EBITDA was SEK -0.2 (-15.6) million, corresponding to an EBITDA margin of -0.2% (-17.2%). The improvement is primary attributable to the higher revenue.
In the fourth quarter, net financial items amounted to SEK 0.6 (-2.4) million, of which foreign exchange rate differences of SEK 1.0 (-2.2) million.
Profit before tax was SEK 3.8 (-16.8) million, and net income was SEK 2.8 (-11.9) million, corresponding to a net margin of 2.6% (-13.1%). Including Discontinued operations, net income was SEK 2.8 (-6.8) million.
Gross earnings for the twelve-months period were SEK 228.5 (202.2) million. Gross profit included amortization of capitalized development expenditure of SEK -42.9 (-31.4) million. Gross margin excluding and including amortization of capitalized development expenditure was 71.3% (70.3%) and 60.0% (60.9%) respectively.
Operating expenses of SEK -209.1 (-202.5) million, the increase is largely attributable to the fourth quarter for the reasons described above. Operating expenses was positively affected with SEK 0.8 (3.4) million related to governmental Covid-19 relief support.
Operating earnings were SEK 26.8 (-15.3). Excluding foreign exchange rate differences of SEK 6.6 (-16.0) million, operating earnings was SEK 20.3 (0.7) million. See also table Material profit and loss items on page 20.
EBITDA was SEK 28.1 (-19.0) million, corresponding to an EBITDA margin of 7.4% (-5.7%). Profit before tax was SEK 28.7 (-20.0) million, and net income was SEK 23.8 (-14.7) million, corresponding to a net margin of 6.3% (-4.4%). Including discontinued operations, net income was SEK -13.1 (237.4) million, including capital loss on disposal of discontinued operations of SEK -35.9 (246.4) million.
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| Key Ratios continuing operations | 2021 | 2020 | 2021 | 2020 |
| Net sales, SEK millions | 107.9 | 90.6 | 380.7 | 332.1 |
| Net sales YoY, change in % | 19.0% | 3.0% | 14.6% | -12.1% |
| Gross earnings | 65.1 | 54.6 | 228.4 | 202.2 |
| Gross margin | 60.4% | 60.3% | 60.0% | 60.9% |
| Operating earnings | 3.3 | -14.4 | 26.8 | -15.3 |
| Operating margin | 3.0% | -15.9% | 7.0% | -4.6% |
| EBITDA | -0.2 | -15.6 | 28.1 | -19.0 |
| EBITDA margin | -0.2% | -17.2% | 7.4% | -5.7% |
INVESTMENTS INCLUDING DIVESTED OPERATIONS
Fourth quarter investments were SEK 18.1 (18.1) million, of which SEK 17.4 (18.0) million related to capitalization of expenditure for development. Depreciation and amortization in the fourth quarter totaled SEK -14.0 (-16.4) million, of which SEK -10.5 (-11.3) million related to amortization of capitalized expenditure for development.
Investments for the twelve-months period were SEK 61.7 (77.4) million, of which SEK 59.6 (71.9) million related to capitalization of expenditure for development. Depreciation and amortization for the twelve-months totaled SEK -60.1 (-59.9) million, of which SEK -44.3 (-38.5) million related to amortization of capitalized expenditure for development.
At the end of the period, net value of capitalized expenditure for development was SEK 158.3 million, against SEK 208.9 million as of December 31, 2020.
For continuing operations (Media Networks), capitalized expenditure for development in the fourth quarter amounted to SEK 17.4 (14.1) million, and amortization to SEK -10.5 (-9.0) million. For the twelve-month period, capitalized expenditure for development amounted to SEK 56.4 (50.5) million, and amortization to SEK -42.9 (-31.4) million.
At the end of the period, net value of capitalized expenditure for development was SEK 158.3 million, against SEK 144.8 million as of December 31, 2020.
CASH FLOW AND FINANCIAL POSITION INCLUDING DISCONTINUED OPERATIONS
From April 2021, only the continued operations (Media Networks business area) are included in the cash flow. The impact of discontinued operations on cash flow in previous periods is presented in table on page 11.
Cash flow from operating activities in the fourth quarter was SEK 45.0 (38.9) million. Total cash flow was SEK 15.2 (18.7) million. During the quarter, SEK 28.2 million (-) was received for half the NRE-fee from the 5G sync business mentioned in Revenue, a prepaid revenue that is recognized as revenue during the development of the new products for 5G synchronization. Payment of the second half of the NRE-fee was received at the beginning of 2022. During the quarter, the parent company also received the final payment from the divestment of the Resource Optimization business area of SEK 23.7 million (-) and started a major repurchase program of own shares, which negatively affected cash flow by -33.4 MSEK (-). More information about discontinued operations can be found in tables on page 11 and more information about the repurchase program can be found on page 13.
Excluding the cash impact of the divestment of operations and repurchase of own shares, cash flow was SEK 24.9 (18.7) million. The improvement is primarily driven by improved earnings.
Cash flow from operating activities for the twelve-month period was SEK 103.7 (15.9) million, and total cash flow was 71.0 (232.6). The divestments of Business Areas Resource Optimization and Streaming Solutions had cash impact of SEK 70.3 (302.3) million. The parent company also started a major repurchase program of own shares during the fourth quarter, which negatively affected cash flow by -33.4 MSEK (-). For information about share repurchase program, see the section Contributed equity on page 13. Excluding the cash impact of the divestment of operations and repurchase of own shares, cash flow was SEK 34.1 (-69.7) million. The improvement is primarily driven by improved earnings, received NRE-fee (see above) and reduced tied-up capital. Last year also includes SEK -12.7 million of assets acquired from Aperi.
Cash and cash equivalents were SEK 354.9 million at the end of the period, against SEK 283.2 million as of 31 December 2020.
Remaining tax loss carry-forwards for group companies amounted to SEK 79.4 million at the end of the period, compared to SEK 101.6 million for continuing business as of December 31, 2020. Deferred tax has been recognized for the tax loss carry-forwards. For more information, see the section Tax on page 13.
Equity was SEK 646.5 million at the end of the period, against SEK 692.6 million as of 31 December 2020. The equity/assets ratio was 78.0%, against 80.3% as of 31 December 2020. For information about warrants, share repurchases and share structure, see the section Contributed equity on page 13.
EMPLOYEES
The average number of employees and consultants at Net Insight during the fourth quarter and the twelve-month period was 162 (155) and 154 (152) respectively, of which 132 (129) and 125 (127) respectively in the parent company Net Insight AB (publ).
PARENT COMPANY
Parent company net sales were SEK 107.8 (93.0) million in the fourth quarter, and net income was SEK 2.2 (-19.5) million. The net financials include result from participation in group companies of SEK 0.0 (2.9) million, attributable to dividend SEK 0.0 (2.2) and capital gains from an intra-group restructuring SEK 0 (0.7) million. In the fourth quarter, intra-group sales totaled SEK 0.0 (0.9) million, and intra-group purchases SEK -14.0 (-25.0) million.
For the twelve-month period, parent company net sales were SEK 308.5 (340.7) million, and net income was SEK -53.7 (174.3) million. The net financials include result from participation in group companies of SEK -69.8 (199.5) million, attributable capital gains from divestment of subsidiaries of SEK -69.8 (197.2) million and to dividend SEK 0.0 (2.2). For the twelve-month period, intra-group sales totaled SEK 0.0 (8.0) million, and intra-group purchases SEK -51.3 (-62.8) million.
Progress in the parent company in the fourth quarter and for the full 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 risks.
At the end of 2021, the current situation of component shortages has meant increased uncertainty. In 2021, we do not see any significant negative effects of this, but we do see increased uncertainty ahead of 2022. Except for this, no additional critical risks and uncertainty factors, other than those reviewed in the Annual Report for 2020, arose during the period or are anticipated in 2022.
For a complete review of the company's risk and sensitivity analysis, and its risk management process, see pages 26-28 and 45-46 of the Annual Report for 2020.
SEASONALITY
In the past three calendar years, average seasonality has been fairly modest.
CONSOLIDATED INCOME STATEMENT, IN SUMMARY
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 |
| Continuing operations | ||||
| Net sales | 107,894 | 90,648 | 380,687 | 332,091 |
| Cost of sales | -42,763 | -36,009 | -152,303 | -129,924 |
| Gross earnings | 65,131 | 54,639 | 228,384 | 202,167 |
| Sales and marketing expenses | -31,535 | -23,595 | -104,308 | -92,716 |
| Administration expenses | -13,494 | -12,853 | -51,877 | -53,935 |
| Development expenses | -14,926 | -14,554 | -52,963 | -55,857 |
| Other operating income and expenses | -1,919 | -18,056 | 7,538 | -15,001 |
| Operating earnings | 3,257 | -14,419 | 26,774 | -15,342 |
| Net financial items | 550 | -2,420 | 1,934 | -4,623 |
| Profit/loss before tax | 3,807 | -16,839 | 28,708 | -19,965 |
| Tax | -963 | 4,965 | -4,906 | 5,288 |
| Net income continuing operations | 2,844 | -11,874 | 23,802 | -14,677 |
| Discontinued operations, net after tax | - | 5,043 | -36,926 | 252,060 |
| Net Income | 2,844 | -6,831 | -13,124 | 237,383 |
| Net income for the period attributable to the shareholders of the parent company | 2,844 | -6,831 | -13,124 | 237,383 |
| Earnings per share, based on net income attributable to the parent company's | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| shareholders during the period | 2021 | 2020 | 2021 | 2020 |
| Earnings per share from continuing operations | ||||
| -Basic, SEK | 0.01 | -0.03 | 0.06 | -0.04 |
| -Diluted, SEK | 0.01 | -0.03 | 0.06 | -0.04 |
| Earnings per share including discontinuing operations | ||||
| -Basic, SEK | 0.01 | -0.02 | -0.03 | 0.62 |
| -Diluted, SEK | 0.01 | -0.02 | -0.03 | 0.62 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 |
| Net income | 2,844 | -6,831 | -13,124 | 237,383 |
| Other comprehensive income | ||||
| Items that may be reclassified subsequently to the income statement | ||||
| Translation differences | 248 | -7,182 | 450 | -9,740 |
| Total other comprehensive income, after tax | 248 | -7,182 | 450 | -9,740 |
| Total other comprehensive income for the period | 3,092 | -14,013 | -12,674 | 227,643 |
| Total comprehensive income for the period attributable to the shareholders of the parent company |
3,092 | -14,013 | -12,674 | 227,643 |
CONSOLIDATED BALANCE SHEET, IN SUMMARY
| SEK thousands | 31 Dec 2021 | 30 Sep 2021 | 31 Dec 2020 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Capitalized expenditure for development | 158,263 | 151,305 | 208,938 |
| Goodwill | 38,751 | 38,751 | 58,166 |
| Other intangible assets | 1,950 | 2,203 | 7,830 |
| Right-of-use assets | 33,614 | 35,516 | 45,231 |
| Equipment | 19,293 | 19,937 | 24,989 |
| Deferred tax asset | 16,888 | 17,903 | 27,428 |
| Deposits | 4,784 | 5,022 | 5,400 |
| Totalt non-current assets | 273,543 | 270,637 | 377,982 |
| Current assets | |||
| Inventories | 53,712 | 54,507 | 52,470 |
| Accounts receivable | 106,069 | 84,972 | 98,116 |
| Other receivables | 40,436 | 57,708 | 50,620 |
| Cash and cash equivalents | 354,863 | 339,550 | 283,184 |
| Total current assets | 555,080 | 536,737 | 484,390 |
| TOTAL ASSETS | 828,623 | 807,374 | 862,372 |
| EQUITY AND LIABILITIES | |||
| Equity attributable to parent company's shareholders | |||
| Share capital | 15,597 | 15,597 | 15,597 |
| Other paid-in capital | 1,192,727 | 1,192,727 | 1,192,727 |
| Translation reserve | 183 | -65 | -267 |
| Accumulated deficit | -561,979 | -531,409 | -515,441 |
| Total shareholders' equity | 646,528 | 676,850 | 692,616 |
| Non-current liabilities | |||
| Lease liabilities | 24,914 | 26,888 | 35,498 |
| Other liabilities | 11,378 | 10,552 | 18,230 |
| Total non-current liabilities | 36,292 | 37,440 | 53,728 |
| Current liabilities | |||
| Lease liabilities | 9,286 | 9,225 | 10,231 |
| Accounts payable | 36,588 | 23,099 | 17,093 |
| Other liabilities | 99,929 | 60,760 | 88,704 |
| Total current liabilities | 145,803 | 93,084 | 116,028 |
| TOTAL EQUITY AND LIABILITIES | 828,623 | 807,374 | 862,372 |
CHANGES IN CONSOLIDATED EQUITY, IN SUMMARY
| Attributable to parent company's shareholders | |||||||
|---|---|---|---|---|---|---|---|
| SEK thousands | Share capital |
Other paid-in capital |
Translation reserve |
Accumulated deficit |
Total shareholders' equity |
||
| January 1, 2020 | 15,597 | 1,192,727 | 9,473 | -754,052 | 463,745 | ||
| Warrants issued | - | - | - | 1,228 | 1,228 | ||
| Total comprehensive income | - | - | -9,740 | 237,383 | 227,643 | ||
| December 31, 2020 | 15,597 | 1,192,727 | -267 | -515,441 | 692,616 | ||
| 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 |
CONSOLIDATED STATEMENT OF CASH FLOWS INCLUDING DISCONTINUED OPERATIONS
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 |
| Ongoing activities | ||||
| Profit/loss before tax | 3,807 | -6,670 | -8,286 | 236,897 |
| Income tax paid | - | -266 | -782 | -313 |
| Depreciation & amortization | 13,957 | 16,393 | 60,061 | 59,887 |
| Other items not affecting liquidity | 4,165 | 5,911 | 34,599 | -229,893 |
| Cash flow from operating activities before changes in working capital | 21,929 | 15,368 | 85,592 | 66,578 |
| Changes in working capital | ||||
| Increase-/decrease+ in inventories | -1,627 | 5,461 | -4,617 | -13,669 |
| Increase-/decrease+ in receivables | -27,455 | 24,054 | -38,667 | 7,014 |
| Increase+/decrease- in liabilities | 52,136 | -5,943 | 61,408 | -44,056 |
| Cash flow from operating activities | 44,983 | 38,940 | 103,716 | 15,867 |
| Investment activities | ||||
| Investment in intangible assets | -17,447 | -17,971 | -59,585 | -74,346 |
| Investment in tangible assets | -702 | -122 | -2,125 | -3,062 |
| Disposal of subsidiary, net effect on cash | 23,660 | - | 70,342 | 302,348 |
| Increase-/decrease+ in financial assets, net | - | -278 | - | -278 |
| Cash flow from investment activities | 5,511 | -18,371 | 8,632 | 224,662 |
| Financing activities | ||||
| Amortization leasing | -1,913 | -2,181 | -7,891 | -9,134 |
| Warrant premiums paid | - | 278 | - | 1,228 |
| Repurchase of own shares | -33,414 | - | -33,414 | - |
| Cash flow from financing activities | -35,327 | -1,903 | -41,305 | -7,906 |
| Net change in cash and cash equivalents | 15,167 | 18,666 | 71,043 | 232,623 |
| Exchange differences in cash and cash equivalents | 146 | -791 | 636 | -1,769 |
| Cash and cash equivalents at the beginning of the period | 339,550 | 265,309 | 283,184 | 52,330 |
| Cash and cash equivalents at the end of the period | 354,863 | 283,184 | 354,863 | 283,184 |
DISAGGREGATION OF REVENUE
| Oct-Dec | Jan-Dec | ||||
|---|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 | |
| Net sales by product group | |||||
| Hardware | 45,165 | 37,907 | 167,424 | 137,458 | |
| Software licenses | 21,930 | 23,702 | 76,930 | 80,926 | |
| Support and Services* | 40,799 | 29,039 | 136,333 | 113,707 | |
| Total | 107,894 | 90,648 | 380,687 | 332,091 | |
| Net sales by region | |||||
| WE | 51,905 | 46,390 | 194,758 | 157,975 | |
| AM | |||||
| RoW | 27,985 | 31,379 | 116,846 | 117,206 | |
| 28,004 | 12,879 | 69,083 | 56,910 | ||
| Total | 107,894 | 90,648 | 380,687 | 332,091 | |
| Timing of revenue recognition | |||||
| Products and services transfered at a point in time | 67,110 | 61,613 | 244,415 | 218,411 | |
| Services transferred over time* | 40,784 | 29,035 | 136,272 | 113,680 | |
| Total | 107,894 | 90,648 | 380,687 | 332,091 | |
| *) Of which 4.7MSEK refers to the NRE fee in both the quarter and the full year. | |||||
| FINANCIAL ASSETS AND LIABILITIES | |||||
| Group's financial instruments by category - Assets |
FINANCIAL ASSETS AND LIABILITIES
| Dec 31, 2021 | 31 Dec 2020 | ||||
|---|---|---|---|---|---|
| SEK thousands | Value Measured at tier amortized cost |
Measured at fair value through profit or loss |
Value Measured at tier amortized cost |
Measured at fair value through profit or loss |
|
| Assets in Balance Sheet | |||||
| Derivative instruments | 2 | - | 2 | - | |
| Accounts receivable and other receivables, excluding excluding non-financial assets |
91,669 | 130,667 | |||
| Cash and cash equivalents | 354,863 | 283,184 | |||
| Total | 446,532 | - | 413,851 | - | |
| Group's financial instruments by category - Liabilities | Dec 31, 2021 | 31 Dec 2020 |
| Dec 31, 2021 | 31 Dec 2020 | |||||
|---|---|---|---|---|---|---|
| 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 | ||||||
| Synthetic options | 2 | - | 2 | - | ||
| Derivative instruments | 2 | 2,104 | 2 | - | ||
| Accounts payable and other liabilities, excluding non financial liabilities |
41,964 | 22,763 | ||||
| Lease liabilities | 34,200 | 45,729 | ||||
| Total | 76,164 | 2,104 | 68,492 | - |
Financial instruments in tier 2
The fair value of derivative instruments is measured using exchange rates of currency forwards on the reporting date. The closing balance for synthetic options represents the total assessed value of a number of outstanding options, which has been measured on the basis of accepted market principles and are based on Net Insight's share price.
INCOME FROM DISCONTINUED OPERATIONS
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 |
| Revenues | - | 16,844 | 15,101 | 66,482 |
| Expenses | - | -6,675 | -16,176 | -55,970 |
| Capital gain/loss on disposal of discontinued operations | - | - | -35,919 | 246,350 |
| Profit/loss before tax | - | 10,169 | -36,994 | 256,862 |
| Tax | - | -5,126 | 68 | -4,802 |
| Net income discontinuing operations | - | 5,043 | -36,926 | 252,060 |
ASSETS HELD FOR SALE
| SEK thousands | Mar 2021 | Jan 2020 |
|---|---|---|
| Disposed assets and liabilities | ||
| Capitalized expenditure for development | 70,198 | 79,756 |
| Goodwill | 22,932 | - |
| Other intangible assets | 3,642 | - |
| Right-of-use assets | 3,617 | - |
| Equipment | 2,688 | 250 |
| Deferred tax asset | 6,261 | 13,598 |
| Deposits | 407 | - |
| Accounts receivable | 7,916 | - |
| Other receivables | 1,859 | 186 |
| Cash and cash equivalents | 2,274 | 1,533 |
| Lease liabilities, non-current | -2,593 | - |
| Other liabilities, non-current | -5,862 | - |
| Lease liabilities | -1,291 | - |
| Accounts payable | -1,702 | - |
| Other liabilities | -32,596 | -2,875 |
| Net assets and liabilities | 77,750 | 92,448 |
| Cash consideration | 49,538 | 348,002 |
| Less: Escrow | -24,428 | -34,917 |
| Less: Cash and cash equivalents in discontinued operations | -2,274 | -1,533 |
| Less: Transaction costs | -7,707 | -9,204 |
| Effect on group's cash and cash equivalents | 15,129 | 302,348 |
CASHFLOW FROM DISCONTINUED OPERATIONS
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 |
| Cash flow from discontinued operations, net | ||||
| Cash flow from operating activities | - | 4,273 | 899 | 21,455 |
| Cash flow from investment activities | 23,660 | -3,872 | 67,173 | 280,938 |
| Cash flow from financing activities | - | - | - | - |
| Cash flow from discontinued operations, net | 23,660 | 401 | 68,072 | 302,393 |
PARENT COMPANY INCOME STATEMENT, IN SUMMARY
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK thousands | 2021 | 2020 | 2021 | 2020 |
| Net sales | 107,836 | 92,972 | 380,453 | 340,663 |
| Cost of sales | -45,766 | -36,693 | -152,014 | -131,448 |
| Gross earnings | 62,070 | 56,279 | 228,439 | 209,215 |
| Sales and marketing expenses | -18,344 | -35,903 | -107,202 | -109,835 |
| Administration expenses | -13,320 | -13,584 | -51,479 | -55,771 |
| Development expenses | -26,214 | -14,827 | -54,138 | -56,102 |
| Other income expenses | -2,054 | -17,486 | 1,910 | -15,190 |
| Operating earnings | 2,138 | -25,521 | 17,530 | -27,683 |
| Net financial items | 837 | 822 | -66,615 | 196,201 |
| Profit/loss before tax | 2,975 | -24,699 | -49,085 | 168,518 |
| Tax | -791 | 5,213 | -4,568 | 5,774 |
| Net income | 2,184 | -19,486 | -53,653 | 174,292 |
| PARENT COMPANY BALANCE SHEET, IN SUMMARY | ||||
| SEK thousands | 31 Dec 2021 | 30 Sep 2021 | 31 Dec 2020 |
PARENT COMPANY BALANCE SHEET, IN SUMMARY
| ASSETS | |||
|---|---|---|---|
| Non-current assets | |||
| Capitalized expenditure for development | 158,263 | 151,305 | 144,776 |
| Other intangible assets | 1,950 | 2,203 | 3,981 |
| Equipment | 17,686 | 18,247 | 20,407 |
| Participations in group companies | 174,895 | 174,895 | 246,400 |
| Deferred tax asset | 16,350 | 17,141 | 20,919 |
| Deposits | 4,686 | 4,927 | 4,927 |
| Total non-current assets | 373,830 | 368,718 | 441,410 |
| Current assets | |||
| Inventories | 53,712 | 54,507 | 52,470 |
| Accounts receivable | 106,676 | 85,493 | 90,453 |
| Other receivables | 42,680 | 59,675 | 50,520 |
| Cash and cash equivalents | 350,422 | 332,741 | 263,558 |
| Total current assets | 553,490 | 532,416 | 457,001 |
| TOTAL ASSETS | 927,320 | 901,134 | 898,411 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Restricted equity | 221,277 | 210,038 | 186,525 |
| Non-restricted equity | 388,394 | 430,863 | 510,213 |
| Total equity | 609,671 | 640,901 | 696,738 |
| Non-current liabilities | |||
| Other liabilities | 11,190 | 10,504 | 11,357 |
| Total non-current liabilities | 11,190 | 10,504 | 11,357 |
| Current liabilities | |||
| Accounts payable | 36,376 | 23,099 | 15,557 |
| Liablities to group companies | 173,810 | 169,447 | 120,390 |
| Other liabilities | 96,273 | 57,183 | 54,369 |
| Total current liabilities | 306,459 | 249,729 | 190,316 |
| TOTAL EQUITY AND LIABILITIES | 927,320 | 901,134 | 898,411 |
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.
IFRS Interpretations Committee (IFRIC) has issued a new final agenda decision on cloud computing arrangements. This update discusses how an entity which incurs cloud computing arrangement costs, including implementation costs, may account for those costs – i.e. capitalize or expense. An entity should evaluate whether the rights granted in a cloud computing arrangement are within the scope of IAS 38 Intangible Assets or IFRS 16 Leases. Otherwise, the arrangement is likely to be a service contract.
After evaluation, the company found that 0,2 MSEK of what according to previous assessments had been capitalized should have been expensed when applying the new IFRIC. Since this is not considered significant, everything was expensed in June 2021 without retrospective adjustments. The new IFRIC has also resulted in the company expensing implementation costs for ongoing implementations of cloud computing arrangements during the period, which according to the previous assessments should have been capitalized.
There are no other new or amended International Financial Reporting Standards (IFRS) that have had a material impact on the Company's financial reporting.
Business area Resource Optimization (ScheduALL) was divested on March 31, 2021, and business area Streaming Solutions (Sye) was divested on January 3, 2020. Hence, Net Insight has now only one business area and segment. The divested business areas are presented in the report as discontinued operations. As a result of the divestment, certain costs for central functions have been reallocated between the various business areas. Most of these costs are fixed and do not accompany the divested operations.
Except for stated above, 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 2020.
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 2020.
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 -5.2 (0.5) million for the period January–December 2021, of which SEK -4.9 (5.0) million relates to continuing operations. Reported tax corresponds to an effective tax rate of 58.3 (0.2) percent and -17.1 (-26.5) percent, respectively. The group recognized a capital loss/gain from discontinued operations of SEK -35.9 (246.4) million, which is a non-taxable income. The effective tax rate is also affected by the relative effects of foreign tax rates and temporary differences.
Remaining tax loss carry-forwards for group companies amounted to SEK 79.4 million at the end of the period, compared to SEK 101.6 million for continuing business as of December 31, 2020. Deferred tax has been recognized for the tax loss carry-forwards.
CONTRIBUTED EQUITY
The AGM resolved to authorize the board of directors to resolve to repurchase, on one or several occasions until the next annual general meeting, 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 November 8, the board of Directors of Net Insight AB decided to utilize the repurchase mandate given at the AGM and begin to repurchase own shares. The repurchase commenced on November 11, 2021, and will last until the AGM on May 13, 2022, and will amount to at most 16 million shares or SEK 70 million.
During the period November-December, the parent company acquired 5,450,000 of its own class B shares through purchases on Nasdaq Stockholm for a total amount of SEK 33.4 million, corresponding to the total purchases during 2021. At the end of the reporting period, the parent company had a total of 12,625,000 of its own class B shares, at an average cost of SEK 5.17 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. The Company has two warrant programs where management and key personnel acquired a total of 3,055,000 warrants for a market premium. 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 2.80 and SEK 2.00 respectively. 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 in the 2020 Annual Report.
| 31 Dec, 2021 | 31 Dec, 2020 | |||||
|---|---|---|---|---|---|---|
| The division of shares | A-shares | B-shares | Total | A-shares | B-shares | Total |
| Outstanding shares | 1,000,000 | 377,308,009 | 378,308,009 | 1,000,000 | 381,758,009 | 382,758,009 |
| Repurchased own shares | - | 12,625,000 | 12,625,000 | - | 7,175,000 | 7,175,000 |
| Issued shares | 1,000,000 | 389,933,009 | 390,933,009 | 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.
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.
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
Publish of Annual Report 2021 April 22, 2022 Interim report January – March April 29, 2022 Annual General Meeting May 13, 2022 Interim report January – June July 20, 2022 Interim report January – September November 8, 2022
Solna, Sweden, February 22, 2022
Crister Fritzson CEO
This interim report has been prepared in Swedish and translated into English. In the event of any discrepancies between the Swedish interim report and the English translation the former shall have precedence.
For more information, please contact:
Crister Fritzson, CEO, Net Insight AB (publ) Phone: +46 (0)8-685 04 00 Email: [email protected]
Joakim Schedvins, CFO, Net Insight AB (publ) Phone: +46 (0)8-685 04 00 Email: [email protected]
Net Insight AB (publ), corp.id.no. 556533-4397 Box 1200, 171 23 Solna, Sweden Phone. +46 (0)8–685 04 00 www.netinsight.net
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 8:45 am CET on February 22, 2022.
FINANCIAL INFORMATION
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK millions (if not defined differently | 2021 | 2020 | 2021 | 2020 |
| Earnings continuing operations | ||||
| Net sales | 107.9 | 90.6 | 380.7 | 332.1 |
| Gross earnings | 65.1 | 54.6 | 228.4 | 202.2 |
| Operating expenses | 60.0 | 51.0 | 209.1 | 202.5 |
| Total development expenditure | 32.4 | 28.7 | 109.4 | 106.4 |
| EBITDA | -0.2 | -15.6 | 28.1 | -19.0 |
| Operating earnings | 3.3 | -14.4 | 26.8 | -15.3 |
| Profit/loss before tax | 3.8 | -16.8 | 28.7 | -20.0 |
| Net income | 2.8 | -11.9 | 23.8 | -14.7 |
| Balance sheet and cash flow including discontinued operations | ||||
| Cash and cash equivalents | 354.9 | 283.2 | 354.9 | 283.2 |
| Working capital | 76.8 | 78.3 | 73.1 | 57.8 |
| Total cash flow | 15.2 | 18.7 | 71.0 | 232.6 |
| The share | ||||
| Dividend per share, SEK | - | - | - | - |
| Earnings per share, basic continuing operations, SEK | 0.01 | -0.03 | 0.06 | -0.04 |
| Earnings per share, diluted continuing operations, SEK | 0.01 | -0.03 | 0.06 | -0.04 |
| Earnings per share including discontinuing operations, basic, SEK | 0.01 | -0.02 | -0.03 | 0.62 |
| Earnings per share including discontinuing operations, diluted, SEK | 0.01 | -0.02 | -0.03 | 0.62 |
| Cash flow per share, basic, SEK | 0.04 | 0.05 | 0.19 | 0.61 |
| Cash flow per share, diluted, SEK | 0.04 | 0.05 | 0.18 | 0.61 |
| Equity per share basic , SEK | 1.70 | 1.81 | 1.69 | 1.81 |
| Equity per share diluted, SEK | 1.68 | 1.81 | 1.68 | 1.81 |
| Average number of outstanding shares basic, thousands | 380,821 | 382,758 | 382,162 | 382,758 |
| Average number of outstanding shares diluted, thousands | 383,876 | 382,758 | 384,174 | 382,758 |
| Number of outstanding shares at the end of the period, basic, thousands | 377,308 | 382,758 | 377,308 | 382,758 |
| Number of outstanding shares at the end of the period, diluted, thousands | 380,363 | 382,758 | 380,363 | 382,758 |
| Share price at end of period, SEK | 6.62 | 1.58 | 6.62 | 1.58 |
| Employees and consultants continuing operations | ||||
| Average number of employees and consultants | 162 | 155 | 154 | 152 |
| KPI continuing operations | ||||
| Net sales YoY, change in % | 19.0% | 3.0% | 14.6% | -12.1% |
| Gross margin | 60.4% | 60.3% | 60.0% | 60.9% |
| Total development expenditure/Net sales | 30.0% | 31.6% | 28.7% | 32.0% |
| Operating margin | 3.0% | -15.9% | 7.0% | -4.6% |
| EBITDA margin | -0.2% | -17.2% | 7.4% | -5.7% |
| Net margin | 2.6% | -13.1% | 6.3% | -4.4% |
| KPI Group including discontinued operations | ||||
| Return on capital employed | 4.0% | -0.6% | 3.9% | -0.6% |
| Equity/asset ratio | 78.0% | 80.3% | 78.0% | 80.3% |
| Return on equity | -2.0% | 36.0% | -2.0% | 36.0% |
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.
| 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. | ||
| Operating expenses | Sales and marketing expenses, administration expenses and development expenses. |
|||
| Operating expenses/net sales | Operating expenses as a percentage of net sales. | Used in charts to illustrate trend. | ||
| 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 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 currency 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) expenditure |
Development expenses and capitalized expenditures for development. |
The measure is a good complement to 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, financial position, and presentation in the |
||
| Total development (R&D) expenditure/net sales |
Total development expenditure as percentage of net sales. |
statement of cashflow is affected by the periods level of capitalized development expenditures. |
||
| EBITDA | Operating earnings before depreciation and amortization and capitalization of development expenditure. |
The measures are good complements to operating earnings and margin as it, simplified, shows the earnings-generated cash flow in the operation and |
||
| EBITDA margin | EBITDA as a percentage of net sales. | it shows operating earnings without influence of variations in the level of capitalized development expenditures in the company's development projects. |
||
| Region | Region. • Western Europe (WE). • Americas (AM), North and South America. • Rest of World (RoW), countries outside of Western Europe and Americas. |
Calculation of performance measures not included in IFRS framework
| Change in net sales in comparable currencies | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2021 | 2020 | 2021 | 2020 |
| Net sales | 107.9 | 90.6 | 380.7 | 332.1 |
| Net currency effect of comparable currencies | -1.0 | 6.0 | 14.9 | 5.7 |
| Net sales in comparable currencies | 106.9 | 96.6 | 395.6 | 337.7 |
| Change in net sales in comparable currencies | 17.9% | 9.8% | 19.1% | -10.6% |
| KPI Income Statement | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently | 2021 | 2020 | 2021 | 2020 |
| Continuing operations | ||||
| Net sales | 107.9 | 90.6 | 380.7 | 332.1 |
| Net sales YoY, change in % | 19.0% | 3.0% | 14.6% | -12.1% |
| Cost of sales ex. amortization of capitalized development | -32.3 | -27.0 | -109.4 | -98.5 |
| Gross earnings ex. amortization of capitalized development | 75.6 | 63.6 | 271.3 | 233.6 |
| Gross margin ex. amortization of capitalized development | 70.1% | 70.2% | 71.3% | 70.3% |
| Cost of sales amortization of capitalized development | -10.5 | -9.0 | -42.9 | -31.4 |
| Gross earnings | 65.1 | 54.6 | 228.4 | 202.2 |
| Gross margin | 60.4% | 60.3% | 60.0% | 60.9% |
| Sales and marketing expenses | -31.5 | -23.6 | -104.3 | -92.7 |
| Administration expenses | -13.5 | -12.9 | -51.9 | -53.9 |
| Development expenses | -14.9 | -14.6 | -53.0 | -55.9 |
| Operating expenses | -60.0 | -51.0 | -209.1 | -202.5 |
| Operating expenses/net sales | 55.6% | 56.3% | 54.9% | 61.0% |
| Other operating income and expenses | -1.9 | -18.1 | 7.5 | -15.0 |
| Operating earnings | 3.3 | -14.4 | 26.8 | -15.3 |
| Operating margin | 3.0% | -15.9% | 7.0% | -4.6% |
| Net financial items | 0.6 | -2.4 | 1.9 | -4.6 |
| Profit/loss before tax | 3.8 | -16.8 | 28.7 | -20.0 |
| Tax | -1.0 | 5.0 | -4.9 | 5.3 |
| Net income continuing operations | 2.8 | -11.9 | 23.8 | -14.7 |
| Net margin conutinuing operaitons | 2.6% | -13.1% | 6.3% | -4.4% |
| Discontinued operations, net after tax | - | 5.0 | -36.9 | 252.1 |
| Net Income | 2.8 | -6.8 | -13.1 | 237.4 |
| EBITDA margin continuing operations | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2021 | 2020 | 2021 | 2020 |
| Operating earnings | 3.3 | -14.4 | 26.8 | -15.3 |
| Amortization of capitalized development expenditure | 10.5 | 9.0 | 42.9 | 31.4 |
| Other depreciation, amortization & impairment | 3.5 | 3.9 | 14.8 | 15.4 |
| Capitalization of development expenditure | -17.4 | -14.1 | -56.4 | -50.5 |
| EBITDA | -0.2 | -15.6 | 28.1 | -19.0 |
| Net sales | 107.9 | 90.6 | 380.7 | 332.1 |
| EBITDA margin | -0.2% | -17.2% | 7.4% | -5.7% |
| Development expenditure continuing operations | Oct-Dec | Jan-Dec |
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2021 | 2020 | 2021 | 2020 |
| Development expenses | 14.9 | 14.6 | 53.0 | 55.9 |
| Capitalization of development expenditure | 17.4 | 14.1 | 56.4 | 50.5 |
| Total development expenditure | 32.4 | 28.7 | 109.4 | 106.4 |
| Capitalization rate | 53.9% | 49.2% | 51.6% | 47.5% |
| Net Sales | 107.9 | 90.6 | 380.7 | 332.1 |
| Total development expenditure/net sales | 30.0% | 31.6% | 28.7% | 32.0% |
| Capital and return measures | Shows how capital is utilized and the company's financial strength. Return is a 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. |
|
| Investments | Investments in intangible and tangible assets. | ||
| Total cash flow | Change in cash and cash equivalents during the period, excluding exchange differences in cash and cash equivalents. |
| Working capital | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions | 2021 | 2020 | 2021 | 2020 |
| Current assets | 534.2 | 458.3 | 491.7 | 424.3 |
| Cash and cash equivalents | -347.2 | -274.2 | -318.1 | -237.1 |
| No interest-bearing short term liabilities | -110.2 | -105.7 | -100.5 | -129.4 |
| Working capital | 76.8 | 78.3 | 73.1 | 57.8 |
In current assets, assets held for sale of December 31, 2019, are excluded as, as they mainly relate to capitalized development expenses.
| Return on capital employed including discontinued operations | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2021 | 2020 | 2021 | 2020 |
| Capital employed | ||||
| Total balance | 817.8 | 873.6 | 820.1 | 856.6 |
| No interest-bearing liabilities | -121.2 | -122.8 | -112.9 | -148.8 |
| Capital employed | 696.7 | 750.8 | 707.1 | 707.8 |
| Operating earings less interest income R4Q | ||||
| Operating earnings R4Q | 28.7 | -4.3 | 28.7 | -4.3 |
| Interest income R4Q | 1.1 | 0.2 | 1.1 | 0.2 |
| Operating earnings less interest income R4Q | 27.6 | -4.5 | 27.6 | -4.5 |
| Return on capital employed | 4.0% | -0.6% | 3.9% | -0.6% |
| Equity/asset ratio | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2021 | 2020 | 2021 | 2020 |
| Equity | 646.5 | 692.6 | 646.5 | 692.6 |
| Total equity and liabilities | 828.6 | 862.4 | 828.6 | 862.4 |
| Equity/asset ratio | 78.0% | 80.3% | 78.0% | 80.3% |
| Return on equity including discontionued operations | Oct-Dec | Jan-Dec | ||
|---|---|---|---|---|
| SEK millions (if not defined differently) | 2021 | 2020 | 2021 | 2020 |
| Net income - R4Q | -13.1 | 237.4 | -13.1 | 237.4 |
| Average equity - R4Q | 668.5 | 659.0 | 668.5 | 659.0 |
| Return on equity | -2.0% | 36.0% | -2.0% | 36.0% |
| Shareholders' information | Measures related to the share. | |
|---|---|---|
| Non-IFRS performance measure |
Description | Reason for use of the measure |
| Dividend per share | Dividend divided by the average number of outstanding shares during the period. |
Measures showing the return of the business to the owners, per share. |
| 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. |
|
| Equity per share | Shareholders' equity divided by number of out standing shares at the end of the period. |
|
| 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). |
|
| 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 | 2021 | 2020 | 2021 | 2020 |
| Average number of employees | 129 | 170 | 138 | 168 |
| Average number of consultants | 33 | 29 | 27 | 30 |
| Total average number of employees and consultants | 162 | 199 | 165 | 198 |
| Average number of employees and consultants discontinued operations | - | -44 | -11 | -46 |
| Net Average number of employees and consultants continuing operations | 162 | 155 | 154 | 152 |
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 | 2021 | 2020 | 2021 | 2020 |
| Effects of the Net Insight share price development during the period | |||||
| Share-based benefits | (a) | -0.2 | -0.1 | -0.4 | -0.0 |
| Synthetic opitons, change in value | (b) | -0.5 | 0.0 | -0.6 | 0.1 |
| Total | -0.7 | -0.1 | -1.1 | 0.0 | |
| Exchange rate differences | |||||
| Part of Other operating income & expenses | -1.6 | -18.0 | 6.6 | -16.0 | |
| Part of Net Financial Items | 1.0 | -2.2 | 2.7 | -3.5 | |
| Total Exchange rate differences | -0.6 | -20.2 | 9.3 | -19.5 | |
| Government grants Covid-19 | |||||
| Reduction of employee expenses | - | 0.9 | 0.8 | 3.4 | |
| Other operating income | -0.4 | -0.0 | -0.2 | 0.7 | |
| Total | -0.4 | 0.9 | 0.6 | 4.1 | |
| Items affecting comparability | |||||
| Restructuring | (c) | -0.8 | -0.5 | -0.8 | -0.9 |
| Government grants Covid-19, other operating income | (d) | -0.4 | -0.0 | -0.2 | 0.7 |
| Adjustment cost for advisory services disposal of discontinued operaitons | (e) | - | - | 0.4 | - |
| Total | -1.2 | -0.5 | -0.7 | -0.3 | |
| Operating earnings excluding items affecting comparability | |||||
| Operating earnings | 3.3 | -14.4 | 26.8 | -15.3 | |
| Items affecting comparability, as per above | 1.2 | 0.5 | 0.7 | 0.3 | |
| Total | 4.5 | -13.9 | 27.4 | -15.1 | |
| Operating earnings excluding exchange rate differences | |||||
| Operating earnings | 3.3 | -14.4 | 26.8 | -15.3 | |
| Exchange rate differences, as per above | 1.6 | 18.0 | -6.6 | 16.0 | |
| Total | 4.9 | 3.5 | 20.2 | 0.7 | |
| Operating earnings excludingexchange rate differences & items affecting comparability |
|||||
| Operating earnings | 3.3 | -14.4 | 26.8 | -15.3 | |
| Exchange rate differences, as per above | 1.6 | 18.0 | -6.6 | 16.0 | |
| Items affecting comparability, as per above | 1.2 | 0.5 | 0.7 | 0.3 | |
| Total | 6.1 | 4.1 | 20.8 | 1.0 | |
| Cash Flow exkluding disposal of subsidiary, net effect on cash, and repurchase of own shares |
(f) | ||||
| Net change in cash and cash equivalents | 15.2 | 18.7 | 71.0 | 232.6 | |
| Disposal of subsidiary, net effect on cash | -23.7 | - | -70.3 | -302.3 | |
| Repurchase of own shares | 33.4 | - | 33.4 | - | |
| Total | 24.9 | 18.7 | 34.1 | -69.7 |
All items in the table above effects operating earnings, except for (b) that effects net financial items and (f) that effects cash flow.
(a) Share-based benefits are value changes in amounts held in escrow for participation in the synthetic share program.
- (b) During 2015-2019, Net Insight issued synthetic option programs. The synthetic options are revaluated on a current basis to fair value by applying an options valuation model. The changes in value during the term of the options, 3 years, are presented as a financial item. To financially hedge future cash flow effects of the company's commitments in the synthetic option programs, if the share price would exceed the strike price, the parent company has repurchased its own shares. The repurchased of own shares is deducted from equity, retained earnings, and are not revaluated to fair value on a current basis.
- (c) Severance pay in due to structural changes.
- (d) Covid-19 related government grants for personnel and other resources that still contribute to creating value for the Company.
- (e) 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.
- (f) 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) 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 2022. 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.
