Interim / Quarterly Report • Jul 22, 2010
Interim / Quarterly Report
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Net Insight AB [publ] Corporate Reg. No 556533-4397
Net Insight AB discloses the information provided herein pursuant to the Securities Market Act and/or the Financial Instruments Trading Act. The information was submitted for publication on July 22nd, 2010 at 08.30 am CET.
We are delivering a strong second quarter both from a financial and strategic perspective. Revenue is up with 14% compared to last year and 18% from the first quarter 2010. We also see a healthy operating margin of 17%.
For the first half of the year, the operating earnings are slightly down compared to last year, as a result of increased investments in sales and marketing. This in turn has led to an increased order flow and more business opportunities.
The company is progressing well towards our strategic objectives to leverage our DTT leadership, to expand our business in broadcast and media as well as finding new business in the area of CATV/IPTV.
I am very proud to count six important DTT wins over the past six months. We just recently, in the middle of July, announced a very significant win in Poland where a combined offering of Ericsson and Net Insight was the winning solution for a new DTT network. Earlier in the quarter we won what I regard as a very significant and strategic project when Teracom of Sweden selected Net Insight for the world's first all IP-based DVB-T2 network.
During the end of the quarter we have been greatly involved with the FIFA World Cup live transmissions from South Africa. The Nimbra platform was used by nine different customers to bring live TV signals to over 80 countries. For the first time ever our customer ESPN transmitted live 3D feeds from South Africa to viewers across the United States. I can also mention that our participation was successful and we have received positive feedback from our customers which holds us in good stead for the future.
In regards to the CATV/IPTV business area we received an order with a large cable operator in Canada, a new customer to Net Insight, which is encouraging for future opportunities in the cable TV market.
Geographical expansion is of strategic importance to us and during the second quarter we have entered new markets with new partners and reached new customers successfully. The new markets entered during the second quarter are the Philippines and South Africa. I am satisfied with the first half of the year and at the moment I see no lack of business opportunities for the quarters ahead.
Stockholm, July 22nd 2010 Fredrik Trägårdh CEO
Net Insight strengthened its position in the Digital Terrestrial TV networks during the quarter. Three operators decided to base their DTT-network on the Nimbra platform.
The first order relates to a new DTT network in South America. This network will include Net Insight's unique Time Transfer feature for GPS-free time synchronization.
The agreement with Teracom, a Swedish media operator, covers a nationwide IP/Ethernet distribution network and will be one of the first DVB-T2 networks in the world, enabling nationwide HD services. Cyprus Broadcasting Corporation decided during June to use Net Insight's Nimbra platform when launching the island's first HD-services through a new national DTT distribution and contribution network.
In the Broadcast and Media (BMN) area the main focus in the quarter has been live sports events. In April, in conjunction with the NAB 2010 exhibition, Net Insight issued a press release about our involvement with 2010 FIFA World Cup in South Africa. Nine of Net Insight's customers, global media operators and major rights holders, have been broadcasting from South Africa. ESPN, one of the customers, broadcasted for the first time worldwide football matches in 3D, using the Nimbra platform for their transport. In general, many of our expansion orders during the quarter are related to building media-rich networks for live events.
Following our strategy, Net Insight found business in the CATV/IPTV area. In June Net Insight won a tender from a Canadian media network operator. We have published a new success story on ZTV, a Cable TV Multiservice Operator in Japan.
Net Insight has entered new markets during the quarter, in the Philippines, South Africa and Poland.
Net Insight also received the first commercial order on channelized IP on Nimbra 600. Channelized IP on Nimbra 300 was announced early 2009 and during the quarter the same functionality was introduced into Nimbra 600.
Net Insight continues to develop the partner network to support the geographical expansion and provide local presence and support to customers. Net Insight strengthened its partner network with three new partners in Asia, Europe, the Middle East and North America, and had 37 business partners at the end of the quarter.
Net Insight is working actively to increase visibility of the brand and the company. During the quarter it has been decided to increase PR activities in Europe. The development of creating new digital channels has started by e-marketing activities, introducing e-newsletters to existing and potential customers and partners.
Our key marketing focus during the quarter has been our participation at the NAB Show 2010 in Las Vegas, US. NAB is the world's largest digital media industry event. In conjunction with the exhibition Net Insight was able to launch our cooperation with the large sports broadcaster ESPN in the US enabling us to increase publicity around the Net Insight brand in the US.
Another important activity has been CommuniAsia 2010 in Singapore. In conjunction with the show Net Insight has successfully increased the media coverage around our cooperation with TATA Communications, India.
Together with our sales partners we have participated in industry shows in Germany, Korea and South Africa.
During the quarter, Net Insight introduced a new channelized IP Trunk Module and Performance monitoring capabilities on all Nimbra platforms. Access Bundles for the Nimbra 340 and Nimbra 680 series of multiservice switches were also launched.
In the middle of July Net Insight announced a significant order from Ericsson to implement a DTT network with contribution services for Emitel in Poland.
Net Sales for the second quarter amounted to SEK 71.5 million (62.6), which represents a growth of 14%. Revaluation of accounts receivables in foreign currencies had a positive effect on Net Sales of SEK 0.9 million compared to a negative effect of SEK 2.2 million for the same period last year.
The EMEA region accounted for SEK 47.8 million (51.1) of total sales. The Americas showed growth of SEK 12 million to SEK 20.7 million, whereas APAC is in line with previous year at SEK 3.0 million (2.8).
| Q2 | Q2 | Q3 | Q4 | Q1 Full Year Full Year | |||
|---|---|---|---|---|---|---|---|
| Net sales per segment (MSEK) | 2010 | 2009 | 2009 | 2009 | 2010 | 2009 | 2008 |
| EMEA | 47.8 | 51.1 | 38.2 | 41.1 | 44.5 | 176.8 | 136.5 |
| Americas | 20.7 | 8.7 | 9.7 | 6.8 | 10.3 | 38,0 | 80.1 |
| APAC | 3,0 | 2.8 | 9.6 | 4.3 | 5.7 | 18,0 | 57.6 |
| Total | 71.5 | 62.6 | 57.5 | 52.2 | 60.5 | 232.8 | 274.2 |
Sales in the Broadcast & Media business area made up 63% (80) of total sales and DTT & Mobile TV accounted for 37% (14). The growth in DTT business is related to a series of DTT contracts-wins announced in the quarter of which Teracom is one.
Hardware revenue increased slightly by SEK 1.8 million to SEK 50.8 million (49.0). Sales of software licenses are up by SEK 3 million to 8.5 (5.5) whereas support and service revenue are in line with previous year at SEK 10.5 million (9.8).
As reported in the 2009 Q4 report, from January 1, 2010, depreciation of capitalized R&D expenditures is recorded in cost of sales. This implies a shift of depreciation expenses from the profit and loss line "Development expenses" to "Cost of goods and services sold" and as such does not affect profit. Furthermore, this does not impact Net Insight's earnings potential on incremental sales but will impact the reported Gross margin.
| SEK thousands | Q2 | Q2 | Jan-Jun | Jan-Jun |
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Net Sales | 71 465 | 62 648 | 131 994 | 123 055 |
| Cost of Sales | -18 339 | -13 353 | -33 662 | -28 013 |
| Gross Earnings - 2009 accounting treatment | 53 126 | 49 295 | 98 332 | 95 042 |
| Gross Margin - 2009 accounting treatment | 74,3% | 78,7% | 74,5% | 77,2% |
| Cost of Sales - R&D depreciation | -5 699 | -3 961 | -11 113 | -7 367 |
| Gross earnings - 2010 accounting treatment | 47 427 | 45 334 | 87 219 | 87 675 |
| Gross margin - 2010 accounting treatment | 66,4% | 72,4% | 66,1% | 71,2% |
With a comparable treatment of depreciation of capitalized R&D expenses based on the accounting treatment applied in 2009, the gross margin declined 4.4 percentage points to 74.3% mainly as a result of a larger share of turn-key type business and currency effects.
The Gross margin, applying the 2010 accounting treatment of depreciation of capitalized R&D expenditures, declined by 6.0 percentage points of which increased levels of R&D depreciation accounted for 1.6 percentage points.
As shown in the condensed income statement on page 11, the Gross margin is 66.4% (78.7).
Total operating expenses for the second quarter amounted to SEK 35.5 million (38.3). Sales and marketing expenses have increased by SEK 3.8 million mainly following increased staffing levels and commissions to partners. Administrative expenses are lower mainly as fewer consultants have been engaged in the period. R&D expenses show a decrease of SEK 5.3 million compared to last year. The decline is related to depreciation of capitalized R&D expenditures being charged to cost of sales as of January 1, 2010. Adjusted for this, R&D expenses are in line with previous year.
Operating earnings for the second quarter amounted to SEK 11.9 million (11.0), which corresponds to an Operating Margin of 16.6% (17.6)
The financial net amounted to SEK -0.2 million (0.1). The decline is due to revaluation of intercompany loans denominated in USD.
Earnings before tax amounted to SEK 11.7 million (11.1), which corresponds to a profit margin of 16.3% (17.7).
Net Income amounted to SEK 8.7 million (7.9) resulting in a Net Profit margin of 12.2% (12.7).
Net Sales for the six months period amounted to SEK 132.0 million (123.1), which is an improvement of 7.3% over last year. Revaluation of the accounts receivables stock had a negative impact on Net Sales of SEK 1.5 million (1.3).
The EMEA region accounted for SEK 92.4 million (97.5), Americas SEK 30.8 million (21.5) and APAC SEK 8.8 million (4.1).
Sales by business area are distributed between Broadcast & Media 72% (67), DTT & Mobile TV 27% (29) and IPTV/CATV 1% (4).
Hardware sales amounted to SEK 95.8 million (88.6), support and service revenue SEK 20.4 million (20.6) and software licenses SEK 14.4 million (11.6).
Applying the 2009 accounting treatment, the Gross Margin declined by 2.7 percentage points. The decrease is related to combination of change in product mix, a larger share of turn-key type business and currency effects.
The Gross margin, applying the 2010 accounting treatment of depreciation of capitalized R&D expenditures, declined by 5.1 percentage points of which increased levels of R&D depreciation accounted for 2.4 percentage points.
As shown in the condensed income statement on page 11, the Gross margin is 66.1 percent (77.2).
Operating earnings amounted to SEK 18.1 million (21.3), which corresponds to an Operating Margin of 13.7% (17.3).
The Financial Net was a negative SEK 0.4 million (-0.2).
Earnings before tax amounted to SEK 17.7 million (21.1) and the corresponding profit margin amount to 13.4% (17.2)
Net Income amounted to SEK 72.7 million (15.1). The transaction, announced in Q1, whereby Net Insights intellectual property rights are moved to a new wholly owned limited liability company gave a positive tax and cash effect of approximately SEK 60 million, while utilizing around SEK 700 million of tax losses carried forward. As a result, Net profit margin was 55.1% (12.3).
Cash flow from ongoing operations in the second quarter amounted to SEK 16.5 million (-20.2). Cash flow was mainly generated through ongoing operations as well as a decrease in other receivables. Customer receivables have remained on a stable level in the quarter despite the high levels of invoicing following solid collections. Second quarter cash flow amount to SEK 3.3 million and liquid funds at the end of the period totaled SEK 208.4 million (138.2).
Cash flow from ongoing operations for the six month period amounted to SEK 22.7 million (-8.6). The cash flow generated through ongoing operations has been partially offset by an increase in the receivables stock following higher activity levels and a general trend towards longer payment terms. The improvement in cash flow from the investment activity is related to the first quarter IPR transaction which gave a cash surplus of around SEK 60 million. Total cash flow for the six month period amounted to SEK 56.4 million (-13.5).
Shareholders' equity amounted to SEK 410.1 million (313.7) with a resulting equity ratio of 83.6% (81.9).
Second quarter investments in tangible assets amounted to SEK 0.1 million (0.4) and depreciation of tangible assets amounted to SEK 0.2 million (0.3). Capitalization of development expenditures totaled SEK 12.6 million (13.7). Depreciation of capitalized development expenditures totaled SEK 5.7 million (5.5).
Investments in tangible assets for the six months period amounted to SEK 0.3 million (1.1) and depreciation of tangible assets amounted to SEK 0.6 million (0.5). Capitalization of development expenditures totaled SEK 25.5 million (26.4). Depreciation of capitalized development expenditures totaled SEK 11.1 million (10.7).
At the end of the period, net book value of capitalized development expenditures amounted to SEK 109.7 million (83.6).
At the end of the period Net Insight had 130 (121) employees. The parent company Net Insight AB had 124 (115) employees and the US subsidiary Net Insight Inc. had 6 (6) employees.
The parent company's net sales during the second quarter were SEK 89.8 million (68.2). Net income amounted to SEK 4.4 million (7.2).
For the six month period ending June 30th, the net sales was SEK 156.0 (134.2) and the Net Income amounted to 191.6 (14.2). The large increase in Net income is related to capitalized tax losses carried forward. The capitalization equates to a utilization of approximately SEK 700 million of tax losses carried forward. Liquid funds amounted to SEK 139.8 million (136.7).
Remaining tax losses carried forward amount to SEK 246 million.
Net Insight's operation and results are impacted by a number of external and internal factors. A continuous process identifies existing risks and assesses how each risk shall be managed and mitigated.
The risks to which, the company are exposed are divided into market related risks (including competition, technology development, political risks), operational risks (including product reliability, intellectual property rights, litigation, and customer dependence) and financial risks (including predominately currency exposure).
No additional significant risks or uncertainties than those described in the annual report 2009 have developed in the second quarter.
For a complete description of the Company's risk analysis and risk management, see page 26 and 37 in the 2009 Annual report.
| Q2 | Q2 | Jan-Jun | Jan-Jun Q3'09 -Q2'10 | Full Year | ||
|---|---|---|---|---|---|---|
| Amount in SEK thousands | 2010 | 2009 | 2010 | 2009 | 12 months | 2009 |
| Net Sales | 71 465 | 62 648 | 131 994 | 123 055 | 241 740 | 232 801 |
| Cost of goods & services sold | -24 038 | -13 353 | -44 775 | -28 013 | -71 727 | -54 965 |
| Gross earnings | 47 427 | 49 295 | 87 219 | 95 042 | 170 013 | 177 836 |
| Sales and marketing expenses | -25 460 | -21 673 | -48 136 | -38 901 | -90 348 | -81 113 |
| Administration expenses | -5 074 | -5 615 | -10 279 | -12 929 | -18 801 | -21 451 |
| Development expenses | -5 014 | -10 996 | -10 680 | -21 888 | -30 062 | -41 270 |
| Other operating income | 0 | 0 | 0 | 0 | 0 | 0 |
| Operating earnings | 11 879 | 11 012 | 18 124 | 21 324 | 30 802 | 34 002 |
| Net financial items | -207 | 84 | -439 | -196 | -2 629 | -2 386 |
| Earnings before tax | 11 672 | 11 096 | 17 685 | 21 128 | 28 173 | 31 616 |
| Tax | -2 961 | -3 151 | 55 042 | -5 987 | 63 771 | 2 742 |
| Net income | 8 711 | 7 945 | 72 727 | 15 141 | 91 944 | 34 358 |
| Net income for the period attributable to the stockholders of | 8 711 | 7 945 | 72 727 | 15 141 | 91 944 | 34 358 |
| the parent company | ||||||
| Earnings/loss per share , based on net profit attributable to | ||||||
| the Parent Company's shareholders during the period (in | ||||||
| SEK per share) | ||||||
| Earnings per share before dilution | 0,02 | 0,02 | 0,19 | 0,04 | 0,24 | 0,09 |
| Earnings per share after dilution | 0,02 | 0,02 | 0,19 | 0,04 | 0,24 | 0,09 |
| Average number of shares in thousands before dilution | 389 933 | 389 933 | 389 933 | 385 629 | 389 933 | 387 616 |
| Average number of shares in thousands after dilution | 389 933 | 389 933 | 389 933 | 385 629 | 389 933 | 387 616 |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||||
| Net income | 8 711 | 7 945 | 72 727 | 15 141 | 91 944 | 34 358 |
| Other comprehensive income | ||||||
| Exchange rate differences | 504 | -559 | 548 | -71 | 101 | -518 |
| Total other comprehensive income | 504 | -559 | 548 | -71 | 101 | -518 |
| Total comprehensive income for the period, net after tax | 9 215 | 7 386 | 73 275 | 15 070 | 92 045 | 33 840 |
| Total comprehensive income for the period attributable to | 9 215 | 7 386 | 73 275 | 15 070 | 92 045 | 33 840 |
| the stockholders of the parent company |
| Q2 | Q2 | Jan-Jun | Jan-Jun | Q3'09- Q2'10 | Full year | |
|---|---|---|---|---|---|---|
| Amount in SEK thousands | 2010 | 2009 | 2010 | 2009 | 12 mths | 2009 |
| Ongoing operations | ||||||
| Net income before tax | 11 672 | 11 096 | 17 685 | 21 128 | 28 173 | 31 616 |
| Depreciation | 6 109 | 5 736 | 12 133 | 11 265 | 25 723 | 24 855 |
| Other items not affecting liquidity | 644 | 774 | 1 645 | 1 827 | 4 153 | 4 335 |
| Cash flow from ongoing operations | ||||||
| before change in working capital | 18 425 | 17 606 | 31 463 | 34 220 | 58 049 | 60 806 |
| Change in working capital | ||||||
| Increase-/decrease+ in inventories | -412 | 3 743 | 1 802 | 8 914 | -3 646 | 3 466 |
| Increase-/decrease+ in receivables | 8 821 | -32 426 | -18 710 | -38 156 | -3 193 | -22 639 |
| Increase+/decrease- in current liabilities | -10 285 | -9 169 | 8 146 | -13 610 | 10 664 | -11 092 |
| Cash flow from ongoing operations | 16 549 | -20 246 | 22 701 | -8 632 | 61 874 | 30 541 |
| Investment activity | ||||||
| Acquisitions of intangible fixed assets | -13 045 | -13 736 | -25 852 | -26 412 | -51 112 | -51 672 |
| Acquisitions of tangible fixed assets | -68 | -391 | -271 | -1 085 | -808 | -1 622 |
| Acquistion of net assets | 0 | 0 | 59 990 | 0 | 59 990 | 0 |
| Increase-/decrease+ in long-term receivables | -142 | -105 | -145 | -299 | 265 | 111 |
| Cash flow from investment activity | -13 255 | -14 232 | 33 722 | -27 796 | 8 335 | -53 183 |
| Financing activity | ||||||
| New share issued - employee stock option program | 0 | 0 | 0 | 22 897 | 0 | 22 897 |
| Cash flow from financing activity | 0 | 0 | 0 | 22 897 | 0 | 22 897 |
| Increase/decrease in liquid funds | 3 294 | -34 478 | 56 423 | -13 531 | 70 209 | 255 |
| Liquid funds, opening balance | 205 128 | 172 691 | 151 999 | 151 744 | 138 213 | 151 744 |
| Liquid funds, closing balance | 208 422 | 138 213 | 208 422 | 138 213 | 208 422 | 151 999 |
| Amount in SEK thousands | Jun 30, 2010 | Jun 30, 2009 | Dec 31, 2009 |
|---|---|---|---|
| ASSETS | |||
| Intangible assets | |||
| Capitalized expenditure for development | 109 661 | 83 560 | 95 329 |
| Goodw ill | 4 354 | 4 354 | 4 354 |
| Other intangible assets | 2 282 | - | 2 257 |
| Tangible fixed assets | |||
| Equipment | 1 885 | 4 366 | 2 031 |
| Equipment for leasing | 296 | - | 517 |
| Financial assets | |||
| Deferred tax asset | 24 871 | 21 091 | 29 820 |
| Deposits paid, long-term | 393 | 337 | 248 |
| Total fixed assets | 143 742 | 113 708 | 134 556 |
| Current assets | 0 | ||
| Inventory | 24 868 | 21 222 | 26 670 |
| Customer receivables | 101 011 | 100 573 | 87 007 |
| Other receivables | 12 766 | 10 011 | 8 060 |
| Cash and bank balances | 208 422 | 138 213 | 151 999 |
| Total current assets | 347 067 | 270 019 | 273 736 |
| Total assets | 490 809 | 383 727 | 408 292 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Shareholders' equity | |||
| Restricted shareholders' equity | |||
| Share capital | 15 597 | 15 597 | 15 597 |
| Other contributed capital | 1 192 727 | 1 200 259 | 1 192 727 |
| Translation difference | -700 | -801 | -1 248 |
| Accumulated deficit | -797 528 | -901 348 | -871 843 |
| Total shareholders' equity | 410 096 | 313 708 | 335 233 |
| Long-term liabilities | |||
| Long-term liabilities | 458 | 1 252 | 869 |
| Provisions | 7 320 | 5 776 | 7 299 |
| Total long-term liabilities | 7 778 | 7 028 | 8 168 |
| Current liabilities | |||
| Accounts payable | 21 515 | 14 618 | 24 259 |
| Other liabilities | 51 420 | 48 373 | 40 632 |
| Total current liabilities | 72 935 | 62 991 | 64 891 |
| Total liabilities and equity | 490 809 | 383 727 | 408 292 |
| Other | Total | ||||
|---|---|---|---|---|---|
| Share | contributed | Translation | Accumulated | shareholders' | |
| Amount in SEK thousands | capital | capital | difference | deficit | equity |
| 2009-01-01 | 15 196 | 1 170 232 | -730 | -910 224 | 274 474 |
| Total comprehensive income | - | - | -71 | 15 141 | 15 070 |
| New shares issued - employee stock options | 402 | 22 495 | - | - | 22 897 |
| Employee stock option program: | |||||
| Value of employees' services | - | - | - | 1 267 | 1 267 |
| 2009-06-30 | 15 597 | 1 192 727 | -801 | -893 816 | 313 708 |
| Total comprehensive income | - | - | -447 | 19 217 | 18 770 |
| New shares issued - employee stock options | - | - | - | - | - |
| Employee stock option program: | |||||
| Value of employees' services | - | - | - | 2 756 | 2 756 |
| 2009-12-31 | 15 597 | 1 192 727 | -1 248 | -871 843 | 335 233 |
| 2010-01-01 | 15 597 | 1 192 727 | -1 248 | -871 843 | 335 233 |
| Total comprehensive income | - | - | 548 | 72 727 | 73 275 |
| New shares issued - employee stock options | - | - | - | - | - |
| Employee stock option program: | |||||
| Value of employees' services | - | - | - | 1 588 | 1 588 |
| 2010-06-30 | 15 597 | 1 192 727 | -700 | -797 528 | 410 096 |
| SEK million | Q2 2010 | Q2 2009 | Jan-Jun 2010 | Jan-Jun 2009 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EMEA | APAC | AM | Total | EMEA | APAC | AM | Total | EMEA | APAC | AM | Total | EMEA | APAC | AM | Total | |
| Net Sales | 48 | 3 | 20 | 71 | 51 | 3 | 9 | 63 | 92 | 9 | 31 | 132 | 98 | 4 | 21 | 123 |
| Regional Contribution | 14 | -1 | 9 | 22 | 25 | -1 | 3 | 28 | 31 | -1 | 10 | 39 | 50 | -3 | 9 | 56 |
| Regional Contribution% | 29% | -27% | 44% | 31% | 50% | -28% | 35% | 44% | 33% | -17% | 33% | 30% | 51% | -81% | 43% | 46% |
| Adjusted for R&D Depreciation | 4 | 0 | 2 | 6 | 8 | 1 | 3 | 11 | ||||||||
| Adjusted Regional Contribution | 18 | -1 | 11 | 28 | 38 | -1 | 13 | 50 | ||||||||
| Adjusted Regional Contribution% | 37% | -19% | 52% | 39% | 50% | -28% | 35% | 44% | 41% | -9% | 41% | 38% | 51% | -81% | 43% | 46% |
Regional Contribution is defined as Gross earnings less Marketing expenses. AM is short for Americas.
Adjusted Regional Contribution is according to 2009's accounting treatment of R&D depreciation.
| Condensed consolidated income | Jan-Jun | Jan-Jun | |||||
|---|---|---|---|---|---|---|---|
| statement and key figures, SEK m | Q2 2010 | Q2 2009 | Q3 2009 | Q4 2009 | Q1 2010 | 2010 | 2009 |
| Net sales | 71.5 | 62.6 | 57.5 | 52.2 | 60.5 | 132.0 | 123.1 |
| Gross earnings | 47.4 | 49.3 | 44.1 | 38.7 | 39.8 | 87.2 | 95.0 |
| Gross margin | 66.4% | 78.7% | 76.7% | 74.1% | 65.8% | 66,1% | 77,2% |
| Operating earnings | 11.9 | 11.0 | 10.5 | 2.2 | 6.2 | 18.1 | 21.3 |
| Operating margin | 16.6% | 17.6% | 18.2% | 4.2% | 10.2% | 13,7% | 17,3% |
| Pretax profit | 11.7 | 11.1 | 8.2 | 2.3 | 6.0 | 17.7 | 21.1 |
| Net income | 8.7 | 7.9 | 5.8 | 13.4 | 64.0 | 72.7 | 15.1 |
| Net margin | 12,2% | 12.7% | 10.1% | 25.7% | 105.8% | 54,7% | 12,3% |
| SEK thousands | Q2 | Q2 | Jan-Jun | Jan-Jun | Q3'09-Q2'10 | Q3 | Q4 | Full Year |
|---|---|---|---|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | 12 mths | 2009 | 2009 | 2009 | |
| Net Sales | 71 465 | 62 648 | 131 994 | 123 055 | 241 740 | 57 515 | 52 232 | 232 801 |
| Cost of Sales | -18 339 | -13 353 | -33 662 | -28 013 | -60 614 | -13 410 | -13 542 | -54 965 |
| Gross Earnings - 2009 accounting treatment | 53 126 | 49 295 | 98 332 | 95 042 | 181 126 | 44 105 | 38 690 | 177 836 |
| Gross Margin - 2009 accounting treatment | 74,3% | 78,7% | 74,5% | 77,2% | 74,9% | 76,7% | 74,1% | 76,4% |
| Cost of Sales - R&D depreciation | -5 699 | -3 961 | -11 113 | -7 367 | -19 971 | -4 095 | -4 762 | -16 225 |
| Gross earnings - 2010 accounting treatment | 47 427 | 45 334 | 87 219 | 87 675 | 161 155 | 40 010 | 33 928 | 161 611 |
| Gross margin - 2010 accounting treatment | 66,4% | 72,4% | 66,1% | 71,2% | 66,7% | 69,6% | 65,0% | 69,4% |
| Q2 | Q2 | Jan-Jun | Jan-Jun | Q3'09 -Q2'10 | Full Year | |
|---|---|---|---|---|---|---|
| Amount in SEK thousands | 2010 | 2009 | 2010 | 2009 | 12 months | 2009 |
| Net Sales | 89 819 | 68 247 | 155 980 | 134 210 | 275 879 | 254 109 |
| Cost of goods & services sold | -47 983 | -19 797 | -72 797 | -40 100 | -110 793 | -78 096 |
| Gross earnings | 41 836 | 48 450 | 83 183 | 94 110 | 165 086 | 176 013 |
| Sales and marketing expenses | -25 529 | -21 773 | -48 287 | -39 098 | -90 645 | -81 456 |
| Administration expenses | -5 074 | -5 409 | -10 279 | -12 723 | -18 737 | -21 181 |
| Development expenses | -5 014 | -10 996 | -10 680 | -21 888 | -30 062 | -41 270 |
| Operating earnings | 6 219 | 10 272 | 13 937 | 20 401 | 25 642 | 32 106 |
| Net financial items | -258 | 84 | -489 | -196 | -2 678 | -2 385 |
| Earnings before tax | 5 961 | 10 356 | 13 448 | 20 205 | 22 964 | 29 721 |
| Tax | -1 537 | -3 151 | 178 139 | -5 987 | 186 868 | 2 742 |
| Net income | 4 424 | 7 205 | 191 587 | 14 218 | 209 832 | 32 463 |
| PARENT COMPANY BALANCE SHEET | |
|---|---|
| ------------------------------ | -- |
| Amount in SEK thousands | Jun 30, 2010 | Jun 30, 2009 | Dec 31, 2009 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Intangible assets | |||
| Capitalized expenditures for development | 109 661 | 83 560 | 95 329 |
| Other intangible assets | 2 282 | - | 2 257 |
| Tangible fixed assets | |||
| Equipment | 1 885 | 4 366 | 2 031 |
| Equipment for leasing | 296 | - | 517 |
| Financial assets | |||
| Shares in group companies | 18 398 | 18 398 | 18 398 |
| Deferred tax asset | 207 959 | 21 091 | 29 820 |
| Deposits paid, long-term | 393 | 337 | 248 |
| Total fixed assets | 340 874 | 127 752 | 148 600 |
| Current assets | |||
| Inventory | 24 868 | 21 222 | 26 670 |
| Customer receivables | 101 011 | 100 573 | 87 007 |
| Other receivables | 39 161 | 24 322 | 8 060 |
| Cash and bank balances | 139 841 | 136 655 | 148 540 |
| Total current assets | 304 881 | 282 772 | 270 277 |
| TOTAL ASSETS | 645 755 | 410 524 | 418 877 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Shareholders' equity | |||
| Restricted shareholders' equity | |||
| Share capital | 15 597 | 15 597 | 15 597 |
| Other contributed capital | 302 207 | 180 464 | 276 968 |
| Non-restricted equity/Accumulated deficit | 200 399 | 107 967 | 32 463 |
| Total shareholders' equity | 518 203 | 304 028 | 325 028 |
| Long term liabilities | |||
| Long term liabilities | 458 | 1 252 | 869 |
| Other provisions | 7 320 | 5 776 | 7 299 |
| Total long-term liabilities | 7 778 | 7 028 | 8 168 |
| Current liabilities | |||
| Accounts payable | 21 515 | 14 583 | 24 259 |
| Liabilities, subsidaries | 52 814 | 38 736 | 22 071 |
| Other liabilities | 45 445 | 46 149 | 39 351 |
| Total liabilities | 119 774 | 99 468 | 85 681 |
| TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY | 645 755 | 410 524 | 418 877 |
Net Insight has earlier communicated its information policy in the interim report for Q1 2007. Net Insight has now revised its information policy and the new one is valid from July 22nd, 2010. Net Insight's information policy adheres to the requirements for listed companies at the NASDAQ OMX Stockholm.
Our objective is to give all market participants simultaneous access to any price sensitive information about the company. The information shall be correct, relevant, clear and timely. Following the operational development of the company over the past years the order values earlier communicated are no longer valid to whether a press release will be issued or not.
This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and applicable rules in the Annual Accounts Act. The interim report for the parent company was prepared in accordance with Chapter 9 of the Annual Accounts Act, interim report. The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2009, as described in those annual financial statements.
The standards, amendments to standards and interpretations that are mandatory for the first time for the financial year beginning 1 January 2010, are not currently relevant for the group.
Following a new analysis of the research and development expenses, the assessment for which projects the depreciation of capitalized expenditures should be reported as cost of goods sold and for which projects depreciation should be continued to be reported as research and development expenses, will lead to a change from January 1, 2010. This implies a shift of depreciation expenses from the profit and loss line "Development expenses" to "Cost of goods and services sold", which has no impact on profit. Furthermore, it does not impact the Company's earnings potential on incremental sales but will impact the gross margin.
The company's auditors have not examined this report.
The Board of Directors and the CEO certify that the Interim report for the period January - June 2010 gives a true and fair overview of the Parent Company Net Insight AB and the Group's operations, their financial position and results of operations, and describes significant risks and uncertainties facing the Parent Company and other companies in the Group.
Interim report for January – October 2010: 22nd October 2010 Year-end report for 2010 18th February 2011
Stockholm, July 22nd, 2010
Lars Berg Bernt Magnusson Chairman of the Board Board member Ragnar Bäck Clifford H Friedman Board member Board member Gunilla Fransson Arne Wessberg Board member Board member Anders Harrysson Fredrik Trägårdh
Board member Chief Executive Officer
Fredrik Trägårdh, CEO Net Insight AB Tel: +46 (0) 8-685 0400, [email protected]
Thomas Bergström, CFO, Net Insight AB Tel.: +46 (0) 8-685 04 00, email:[email protected]
Net Insight AB Box 42093 126 14 Stockholm Tel +46 (0) 8 685 04 00 www.netinsight.net Corporate Reg. No. 556533-4397
Net Insight delivers the world's most efficient and scalable optical transport solution for Broadcast and Media, Digital Terrestrial TV/Mobile TV and IPTV/CATV networks.
Net Insight products truly deliver 100 percent Quality of Service with three times improvement in utilization of bandwidth for a converged transport infrastructure. Net Insight's Nimbra™ platform is the industry solution for video, voice and data, reducing operational costs by 50 percent and enhancing competitiveness in delivery of existing and new media services.
World class customers run mission critical media services over Net Insight products for more than 100 million people in more than 40 countries. Net Insight is quoted on the Stockholm Stock Exchange.
For more information, visit www.netinsight.net
Net Insight AB • Box 42093 • SE-126 14 Stockholm • Sweden Phone: + 46 (0)8 685 04 00 • Fax: + 46 (0)8 685 04 20 • E-mail: [email protected]
Net Insight, Inc. • PO Box 691825 • West Hollywood, CA 90069 • USA Phone: + 1-866-217-9705 • E-mail: [email protected]
Net Insight • Penthouse Level • Suntec Tower Three • 8 Temasek Boulevard • Singapore 038988 Phone: + 65-6866-3830 • Fax: + 65-6866-3838 • E-mail: [email protected]
Net Insight • Dubai Internet City • DIC Building 12, Dubai • United Arab Emirates Phone: +971 50 654 90 40 • E-mail: [email protected]
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