Interim / Quarterly Report • Jul 20, 2018
Interim / Quarterly Report
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Net Insight AB (publ) reg.no. 556533-4397
Henrik Sund, interim CEO, Net Insight
| FINANCIAL HIGHLIGHTS | |
|---|---|
| ---------------------- | -- |
| SEK millions | Apr–Jun 2018 |
Apr–Jun 2017* |
Change | Jan–Jun 2018 |
Jan–Jun 2017* |
Change | Jul 2017– Jun 2018 |
Jan–Dec 2017* |
Change |
|---|---|---|---|---|---|---|---|---|---|
| Net sales by segment | |||||||||
| Western Europe | 53.8 | 39.9 | 35.0% | 102.0 | 87.9 | 16.1% | 208.5 | 194.4 | 7.3% |
| Americas | 31.6 | 27.9 | 13.3% | 68.5 | 61.7 | 11.0% | 140.6 | 133.8 | 5.1% |
| Rest of World | 34.1 | 27.9 | 22.3% | 59.5 | 56.5 | 5.3% | 101.8 | 98.8 | 3.1% |
| Net sales | 119.6 | 95.7 | 25.0% | 230.0 | 206.1 | 11.6% | 450.9 | 427.0 | 5.6% |
| Operating earnings | -12.9 | -21.6 | -40.3% | -10.5 | -14.9 | -29.6% | -3.1 | -7.5 | -58.3% |
| Operating margin | -10.8% | -22.6% | -4.5% | -7.2% | -0.7% | -1.8% | |||
| Net income | -9.4 | -13.1 | -28.7% | -6.4 | -2.0 | 224.9% | -0.9 | 3.5 | |
| EBITDA | -16.1 | -15.9 | 1.4% | -17.1 | -19.8 | -13.4% | -21.0 | -23.7 | -11.2% |
| EBITDA margin | -13.5% | -16.6% | -7.5% | -9.6% | -4.7% | -5.5% | |||
| Total cash flow | -15.1 | -28.5 | -46.9% | -28.6 | -13.2 | 116.5% | -52.2 | -36.8 | 41.8% |
*) Recalculated comparable periods, see page 11-12.
Sales grew by a solid 25 percent in the second quarter compared to a weak comparative period in 2017. We're now starting to see the results of the initiatives we've implemented over the past year, which is positive. By entering the value chain at an earlier stage, we're addressing more operators and generating a broader and deeper business dialogue.
First order for Nimbra 1060 The annual NAB trade fair in Las Vegas always makes the second quarter an eventful period for Net Insight. The fair is an important networking event for us and for the sector as a whole. As previously announced, we launched Nimbra 1060 at the fair, the next generation platform for media transport. The product received a very positive reception by customers, partners and industry experts, and it was awarded "Best of Show by TV Technology."
Nimbra 1060 is generating considerable market interest, and we won our first order for a European sporting league in the quarter. Sales growth in the quarter was mainly derived from more new Nimbra deals for major live sporting events. For example, we won an order for a new IP based media network for a multi-sports event in South East Asia, and for a national media network in Europe for video assistant referee network, so called VAR. We're extremely competitive when it comes to deals with a high degree of complexity and superior demands on quality, and win a significant proportion of the bids we're involved in. In order to increase the number of smaller deals we're involved in, we need to develop a more attractive offering and new revenue models that will make the Nimbra portfolio more accessible. One example is two rental deals during the period, where the customer rents our solution, i.e. without requiring any major capital investments.
In the quarter, we also launched Sye Streaming Service, which means that customers use Sye as a service in a cloud-based solution without the need for proprietary technical infrastructure. The service is mainly aimed at smaller customers and makes it easier to get started with broadcasting live events such as sporting events, news, games and auctions. We already have some customers in Sweden and the US. We've partnered with CDNetworks, a world-leading provider of live streaming, whereby Sye streaming solutions will be delivered to customers globally. These partnerships and collaborations are important to strengthening our OTT position and reach larger customers and a broader market, thus generating revenues.
Sales in the second quarter totaled SEK 120 million. Operating earnings for the quarter improved by SEK 9 million year-on-year, amounting to SEK -13 million. Earnings were charged with non-recurring costs of SEK -7 million. Our continued initiatives relating to Sye affected operating earnings by SEK -13 million. Underlying operating earnings for core products was SEK 4 million.
The global media sector continues to change rapidly. One example of the high level of activity is a trend towards relatively new media operators adding exclusive live content to their offering, such as Amazon, which has acquired exclusive rights to broadcast select Premier League matches in the UK. Our assessment is that the global media technology market will continue to change. With our customer base and strong product portfolio, we'll remain very competitive in both IP and traditional broadcasting technology.
Net Insight is also experiencing a high level of activity as we're moving in to new state-of-the-art offices in Stockholm and the US during the summer. The change will make us more efficient and provide a more accurate representation of our brand.
While we've presented a strong quarter revenue wise, improvements still need to be made and challenges remain. Net Insight has a high level of competency and highly skilled employees, a strong customer base and a competitive product portfolio, which makes us well equipped in a world that continues to change.
Stockholm July 20, 2018 Henrik Sund, interim CEO
Net sales in the second quarter of 2018 were SEK 119.6 (95.7) million, up 25.0% on the corresponding quarter in the previous year. With regard to the comparative figures, it's important to bear in mind that the second quarter 2017 was relatively weak. In comparable currencies, the increase was 21.5% as a result of a weaker SEK against the USD and EUR.
In Western Europe net sales were SEK 53.8 (39.9) million, up 35.0% year-on-year. The increase was mainly attributable to increased activity from existing customers.
Net sales in Americas were SEK 31.6 (27.9) million, up 13.3%. Here too, the increase was mainly attributable to increased activity by existing customers.
Net sales in Rest of World were SEK 34.1 (27.9) million, up 23.3%. Here, it's worth drawing attention to the previously announced Nimbra deals for a multi-sports event in Asia and VAR (video assistant referee network).
Net sales from hardware were SEK 41.7 (32.7) million, and net sales from software licenses totaled SEK 34.8 (21.8) million. The increase in hardware sales is mainly due to Western Europe and Rest of World. Net sales of support and services amounted to SEK 43.0 (41.2) million.
Net sales in the first six months of the year were SEK 230.0 (206.1) million, corresponding to an increase of 11.6%. In comparable currencies, net sales increased by 11.2%.
In Western Europe net sales were SEK 102.0 (87.9), up 16.1%.
Net sales in Americas were SEK 68.5 (61.7) million, up 11.0%.
Net sales in Rest of World were SEK 59.5 (56.5) m in the first half-year, corresponding to an increase of 5.3%.
Gross profit was SEK 70.8 (55.9) million, up significantly on the second quarter of 2017, mainly due to increased sales but also as a result of a slightly higher gross margin of 59.2% (58.4). Gross profit included amortization of capitalized development expenditure of SEK –13.7 (-15.7) million. Gross margin excluding amortization of capitalized development expenditure was 70.7% (74.8), due to a changed product mix.
Operating expenses in the second quarter were SEK 82.6 (76.3) million, up SEK 6.3 million year-on-year. This was due to increased sales resources and increased resources allocated to the commercialization of Sye. Total development expenditures have gradually decreased, amounting to SEK 34.9 (38.9) million.
Operating earnings were SEK –12.9 (-21.6) million, equating to an operating margin of –10.8% (-22.6). The change is mainly attributable to increased sales, but also a lower gross margin and increased operating expenses.
Operating earnings for the second quarter were charged with SEK 7 (-) million in non-recurring costs. SEK 5 million of these related to staff terminations, including compensation to outgoing CEO, and SEK 2 million relate to provision for remaining lease for the current head office after the move.
EBITDA was SEK –16.1 (-15.9) million, corresponding to an EBITDA margin of–13.5% (-16.6). Activities in development, sales and marketing of the company's live OTT solution Sye affected
operating earnings and EBITDA by SEK -12.7 (-15.8) million and SEK –18.8 (-14.1) million respectively. In the second quarter, net financial items were positively affected by SEK 0.6 (2.3) million for the
revaluation of synthetic options programs due to a lower share price at the end of the quarter. Net financial items amounted to SEK 0.7 (1.9) million.
Profit before tax was SEK –12.2 (-19.8) million, and net income for the period was SEK –9.4 (-13.1) million, corresponding to a net margin of –7.8 (-13.7).
| Key Ratios | Apr-Jun 2018 |
Apr-Jun 2017 |
Jan-Jun 2018 |
Jan-Jun 2017 |
Jul 2017- Jun 2018 |
Jan-Dec 2017 |
|---|---|---|---|---|---|---|
| Net sales, SEK millions | 119.6 | 95.7 | 230.0 | 206.1 | 450.9 | 427.0 |
| Gross margin | 59.2% | 58.4% | 59.4% | 59.0% | 58.2% | 58.0% |
| Operating margin | -10.8% | -22.6% | -4.5% | -7.2% | -0.7% | -1.8% |
| EBITDA margin | -13.5% | -16.6% | -7.5% | -9.6% | -4.7% | -5.5% |
Net Sales by Region SEK millions by quarter 0 SEK millions rolling four quarters 20 40 60 80 100 120 140 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 0 100 200 300 400 500 600 700 Rolling four
Net Sales by Product Group
■ Americas ■ Rest of
World
quarters
■ Western Europe
Gross profit was SEK 136.7 (121.7) for the first half-year. The increase was mainly due to the higher net sales. Gross margin was 59.4% (59.0). Gross profit included amortization of capitalized development expenses of SEK –29.0 (-29.6) million. The higher gross margin was due to amortization of capitalized development expenses comprising a lower relative share of net sales, which was partly offset by lower margins in the second quarter. Gross margin excluding amortization of capitalized development expenses was down on the previous year, and amounted to 72.0% (73.4).
Operating expenses in the second half-year were SEK –147.0 (-135.8) million. Sales and marketing expenses increased by SEK –15.7 million to SEK 89.7 (74.0) million, mainly driven by the increased resources working on sales and marketing. Development expenses totaled SEK –30.0 (-36.0) million. Total development expenditures were SEK 68.3 (78.4) million. The decrease is due to lower development expenditures, mainly in connection with the launch of Nimbra 1060. The company will retain its high rate of investments in order to ensure future competitiveness.
Operating earnings for the first half-year were SEK –10.5 (-14.9) million, corresponding to an operating margin of -4.5% (-7.2). The loss is mainly due to the initiatives in Live OTT, but also the non-recurring costs outlined above.
Net financial items were SEK 2.2 (7.2) million, of which SEK 1.7 (8.4) million is attributable to the revaluation of synthetic options.
Profit before tax was SEK –8.2 (-7.7) million, and net income for the period was SEK –6.4 (-2.0) million, corresponding to a net margin of -2.8% (-1.0). For more information, see the section on Tax on page 13.
Second quarter investments were SEK 29.4 (18.1) million, of which SEK 18.4 (16.3) million related to capitalization of development expenditure. Depreciation and amortization in the period was SEK 15.1 (22.1) million, of which SEK 13.7 (15.7) million related to amortization of capitalized development expenditure.
Investments in the first half-year were SEK 51.2 (45.3) million, of which SEK 38.1 (42.4) million related to capitalized development expenditure. Depreciation and amortization in the period was SEK 31.7 (37.4) million, of which SEK 29.0 (29.6) million related to capitalized development expenditure.
At the end of the period, net value of capitalized development expenditure was SEK 261.1 million, against SEK 251.6 million as of 31 December, 2017.
Cashflow from operating activities in the second quarter was SEK 14.4 ( –11.2) million. Total cashflow for the period was SEK -15.1 (-28.5) million. The negative cashflow is due to investments in development projects and equipment, fixtures and fittings for the new offices in Stockholm and Florida. Cashflow for the six-month period was SEK –28.6 (-13.2) million. Adjusted for repurchases of own shares, with a total value of SEK 0.7 (0.0) million, cashflow was SEK –27.9 (-13.2) million.
Cash and cash equivalents were SEK 149.6 million at the end of the quarter, against SEK 177.7 million as of 31 December, 2017.
Remaining tax loss carry-forwards for group companies were SEK 71.2 million at the end of the period, against SEK 55.8 million as of 31 December, 2017. For more information, see the section Tax on page 13.
Equity was SEK 545.6 million at the end of the period, against SEK 546.1 million as of 31 December, 2017. The equity/assets ratio was 75.2%, against 78.3% as of 31 December, 2017. For more information see the section Share capital and other contributed equity on page 13.
The average number of employees and consultants in the six-month period was 244 (244), of which 152 (156) in parent company Net Insight AB (publ).
Two new members joined management in the quarter: Pelle Bourn, CFO and Henrik Sund, interim CEO.
The parent company's net sales in the second quarter were SEK 138.3 (112.9) million, and net income for the period was SEK –5.1 (-7.8) million. In the second quarter, intra-group sales totaled SEK 33.1 (36.4) million, and intra-group purchasing SEK 44.3 (40.8) million.
The parent company's net sales in the first half-year were SEK 263.4 (237.6) million, and net income for the period was SEK 2.6 (10.4) million. In the first half-year, intra-group sales totaled SEK 66.7 (71.6) million, and intra-group purchasing SEK 79.7 (65.4) million.
Progress in the parent company for the first half-year largely shadowed Group progress as indicated above.
Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 -25 -20 -15 -10 -5 0 5 10 15 20 25 -10% -5% 0% 5% 10% 15% SEK millions Earnings trend ■ Operating earnings Operating margin rolling four quarters %
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, those 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.
No additional critical risks and uncertainty factors, other than those reviewed in the Annual Report for 2017, arose to date or are anticipated in 2018.
For a complete review of the company's risk and sensitivity analysis, and its risk management process, see pages 34-35, 37-41 and 55-56 of the Annual Report for 2017.
In the past three calendar years, average seasonality has been fairly modest. In the first, second and third quarters, net sales were 24 percent respectively, and in the fourth quarter 28 percent of yearly sales.
| SEK thousands | Apr–Jun 2018 |
Apr–Jun 2017* |
Jan–Jun 2018 |
Jan–Jun 2017* |
Jul 2017– Jun 2018 |
Jan–Dec 2017* |
|---|---|---|---|---|---|---|
| Net sales | 119,566 | 95,677 | 230,041 | 206,117 | 450,947 | 427,023 |
| Cost of sales | -48,728 | -39,817 | -93,343 | -84,449 | -188,309 | -179,415 |
| Gross earnings | 70,838 | 55,860 | 136,698 | 121,668 | 262,638 | 247,608 |
| Sales and marketing expenses | -49,682 | -39,694 | -89,745 | -74,036 | -160,394 | -144,685 |
| Administration expenses | -16,393 | -14,026 | -27,320 | -25,716 | -51,301 | -49,697 |
| Development expenses | -16,559 | -22,576 | -29,951 | -35,990 | -56,346 | -62,385 |
| Other operating income and expenses | -1,107 | -1,195 | -138 | -786 | 2,259 | 1,611 |
| Operating earnings | -12,903 | -21,631 | -10,456 | -14,860 | -3,144 | -7,548 |
| Net financial items | 716 | 1,881 | 2,241 | 7,193 | 7,901 | 12,853 |
| Profit/loss before tax | -12,187 | -19,750 | -8,215 | -7,667 | 4,757 | 5,305 |
| Tax | 2,830 | 6,631 | 1,818 | 5,698 | -5,658 | -1,778 |
| Net income | -9,357 | -13,119 | -6,397 | -1,969 | -901 | 3,527 |
| Net income for the period attributable to the | ||||||
| shareholders of the parent company | -9,357 | -13,119 | -6,397 | -1,969 | -901 | 3,527 |
| Earnings per share, based on net income attributable to the parent company's shareholders during the period |
Apr–Jun 2018 |
Apr–Jun 2017 |
Jan–Jun 2018 |
Jan–Jun 2017 |
Jul 2017– Jun 2018 |
Jan–Dec 2017 |
|---|---|---|---|---|---|---|
| Earnings per share, basic (SEK) | -0.02 | -0.03 | -0.02 | -0.01 | 0.00 | 0.01 |
| Earnings per share, diluted (SEK) | -0.02 | -0.03 | -0.02 | -0.01 | 0.00 | 0.01 |
| Average number of oustanding shares in thousands, basic | 383,458 | 385,658 | 383,498 | 385,658 | 383,977 | 385,057 |
| Average number of oustanding shares in thousands, diluted | 383,458 | 385,658 | 383,498 | 385,658 | 383,977 | 385,057 |
| SEK thousands | Apr–Jun 2018 |
Apr–Jun 2017 |
Jan–Jun 2018 |
Jan–Jun 2017 |
Jul 2017– Jun 2018 |
Jan–Dec 2017 |
|---|---|---|---|---|---|---|
| Net income | -9,357 | -13,119 | -6,397 | -1,969 | -901 | 3,527 |
| Other comprehensive income Items that may be reclassified subsequently to the income statement |
||||||
| Translation differences | 5,267 | -3,848 | 6,598 | -5,242 | 4,315 | -7,525 |
| Total other comprehensive income, after tax | 5,267 | -3,848 | 6,598 | -5,242 | 4,315 | -7,525 |
| Total other comprehensive income for the period | -4,090 | -16,967 | 201 | -7,211 | 3,414 | -3,998 |
| Total comprehensive income for the period attributable to the shareholders of the parent company |
-4,090 | -16,967 | 201 | -7,211 | 3,414 | -3,998 |
| SEK thousands | Jun 30 2018 |
Mar 31 2018 |
Dec 31 2017* |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Capitalized expenditure for development | 261,060 | 256,434 | 251,622 |
| Goodwill | |||
| 63,234 | 59,289 | 58,452 | |
| Other intangible assets | 17,541 | 18,168 | 19,458 |
| Equipment | 17,195 | 6,396 | 4,636 |
| Deferred tax asset | 16,584 | 13,394 | 14,285 |
| Deposits | 4,798 | 4,870 | 4,911 |
| Totalt non-current assets | 380,412 | 358,551 | 353,364 |
| Current assets | |||
| Inventories | 42,270 | 40,835 | 43,598 |
| Accounts receivable | 128,310 | 112,042 | 106,186 |
| Other receivables | 24,618 | 21,367 | 16,551 |
| Cash and cash equivalents | 149,649 | 164,569 | 177,745 |
| Total current assets | 344,847 | 338,813 | 344,080 |
| TOTAL ASSETS | 725,259 | 697,364 | 697,444 |
| 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 | 5,465 | 198 | -1,133 |
| Accumulated deficit | -668,238 | -658,881 | -661,102 |
| Total shareholders' equity | 545,551 | 549,641 | 546,089 |
| Non-current liabilities | |||
| Other liabilities | 21,183 | 19,458 | 19,738 |
| Total non-current liabilities | 21,183 | 19,458 | 19,738 |
| Current liabilities | |||
| Accounts payable | 25,827 | 14,075 | 21,841 |
| Other liabilities | 132,698 | 114,190 | 109,776 |
| Total current liabilities | 158,525 | 128,265 | 131,617 |
| TOTAL EQUITY AND LIABILITIES | 725,259 | 697,364 | 697,444 |
*) Recalculated comparable periods, see page 11-12.
| Attributable to parent company's shareholders | |||||
|---|---|---|---|---|---|
| SEK thousands | Share capital |
Other paid-in capital |
Translation reserve |
Accumulated deficit |
Total shareholders' equity |
| January 1, 2017 | 15,597 | 1,192,727 | 6,392 | -653,385 | 561,331 |
| Repurchase of own shares | - | - | - | -11,244 | -11,244 |
| Total comprehensive income | - | - | -7,525 | 3,527 | -3,998 |
| December 31, 2017 | 15,597 | 1,192,727 | -1,133 | -661,102 | 546,089 |
| January 1, 2018 | 15,597 | 1,192,727 | -1,133 | -661,102 | 546,089 |
| Repurchase of own shares | - | - | - | -739 | -739 |
| Total comprehensive income | - | - | 6,598 | -6,397 | 201 |
| June 30, 2018 | 15,597 | 1,192,727 | 5,465 | -668,238 | 545,551 |
| Apr–Jun | Apr–Jun | Jan–Jun | Jan–Jun | Jul 2017– | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK thousands | 2018 | 2017 | 2018 | 2017 | Jun 2018 | 2017 |
| Ongoing activities | ||||||
| Profit/loss before tax | -12,187 | -19,750 | -8,215 | -7,667 | 4,757 | 5,305 |
| Income tax paid | - | - | - | - | -247 | -247 |
| Depreciation, amortization & impairment | 15,146 | 22,053 | 31,701 | 37,428 | 65,427 | 71,154 |
| Other items not affecting liquidity | 3,149 | -797 | 2,697 | -6,777 | -2,874 | -12,348 |
| Cash flow from operating activities before | ||||||
| changes in working capital | 6,108 | 1,506 | 26,183 | 22,984 | 67,063 | 63,864 |
| Changes in working capital | ||||||
| Increase-/decrease+ in inventories | -2,277 | -6,840 | 705 | -8,270 | 9,081 | 106 |
| Increase-/decrease+ in receivables | -20,859 | -13,264 | -32,141 | 7,098 | -29,792 | 9,447 |
| Increase+/decrease- in liabilities | 31,473 | 7,442 | 28,636 | 9,545 | 16,940 | -2,151 |
| Cash flow from operating activities | 14,445 | -11,156 | 23,383 | 31,357 | 63,292 | 71,266 |
| Investment activities | ||||||
| Investment in intangible assets | -18,354 | -16,726 | -38,057 | -43,632 | -84,494 | -90,069 |
| Investment in tangible assets | -11,073 | -1,327 | -13,094 | -1,681 | -14,319 | -2,906 |
| Increase-/decrease+ in financial assets, net | 72 | -23 | 113 | -24 | -4,465 | -4,602 |
| Cash flow from investment activities | -29,355 | -18,076 | -51,038 | -45,337 | -103,278 | -97,577 |
| Financing activities | ||||||
| Option premiums paid | 1,197 | 763 | 1,197 | 763 | 1,197 | 763 |
| Final settlemets options | -1,415 | - | -1,415 | - | -1,415 | - |
| Repurchase of own shares | - | - | -739 | - | -11,983 | -11,244 |
| Cash flow from financing activities | -218 | 763 | -957 | 763 | -12,201 | -10,481 |
| Net change in cash and cash equivalents | -15,128 | -28,469 | -28,612 | -13,217 | -52,187 | -36,792 |
| Exchange differences in cash and cash equivalents | 208 | -270 | 516 | -319 | 429 | -406 |
| Cash and cash equivalents at the beginning of the period | 164,569 | 230,146 | 177,745 | 214,943 | 201,407 | 214,943 |
| Cash and cash equivalents at the end of the period | 149,649 | 201,407 | 149,649 | 201,407 | 149,649 | 177,745 |
| Apr–Jun 2018 | Apr–Jun 2017 | Jan–Jun 2018 | Jan–Jun 2017 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SEK millions | WE | AM | RoW | Total | WE | AM | RoW | Total | WE | AM | RoW | Total | WE | AM | RoW | Total |
| Net sales | 53.8 | 31.6 | 34.1 | 119.6 | 39.9 | 27.9 | 27.9 | 95.7 | 102.0 | 68.5 | 59.5 | 230.0 | 87.9 | 61.7 | 56.5 | 206.1 |
| Regional contribution | 14.1 | 5.2 | 1.8 | 21.2 | 10.4 | 2.3 | 3.4 | 16.2 | 29.4 | 12.6 | 4.9 | 47.0 | 27.2 | 11.1 | 9.4 | 47.6 |
| Regional contribution margin |
26% | 17% | 5% | 18% | 26% | 8% | 12% | 17% | 29% | 18% | 8% | 20% | 31% | 18% | 17% | 23% |
| Administration expenses | -16.4 | -14.0 | -27.3 | -25.7 | ||||||||||||
| Development expenses | -16.6 | -22.6 | -30.0 | -36.0 | ||||||||||||
| Other operation income | ||||||||||||||||
| & expenses | -1.1 | -1.2 | -0.1 | -0.8 | ||||||||||||
| Net financial items | 0.7 | 1.9 | 2.2 | 7.2 | ||||||||||||
| Loss before tax | -12.2 | -19.8 | -8.2 | -7.7 |
Regional Contribution is defined as Gross earnings less Sales and marketing expenses. The CEO reviews the business from Western Europe (WE), Americas (North and South America, AM) and Rest of World (RoW) geographic perspectives.
| Apr–Jun 2018 | Apr–Jun 2017 | Jan–Jun 2018 | Jan–Jun 2017 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SEK Millions | WE | AM | RoW | Total | WE | AM | RoW | Total | WE | AM | RoW | Total | WE | AM | RoW | Total |
| Net sales by product group |
||||||||||||||||
| Hardware | 22.1 | 5.4 | 14.3 | 41.7 | 14.9 | 7.4 | 10.4 | 32.7 | 37.9 | 17.7 | 23.2 | 78.8 | 35.8 | 17.5 | 23.4 | 76.7 |
| Software licenses | 12.5 | 9.3 | 12.9 | 34.8 | 7.3 | 5.0 | 9.5 | 21.8 | 26.0 | 18.1 | 21.0 | 65.1 | 17.2 | 14.0 | 19.0 | 50.1 |
| Support and services | 19.2 | 16.9 | 7.0 | 43.0 | 17.7 | 15.5 | 8.0 | 41.2 | 38.2 | 32.7 | 15.3 | 86.2 | 34.9 | 30.3 | 14.1 | 79.3 |
| Total | 53.8 | 31.6 | 34.1 | 119.6 | 39.9 | 27.9 | 27.9 | 95.7 | 102.0 | 68.5 | 59.5 | 230.0 | 87.9 | 61.7 | 56.5 | 206.1 |
| Timing of revenue recognition |
||||||||||||||||
| Products and services transfered at a point |
||||||||||||||||
| in time | 34.7 | 14.8 | 27.2 | 76.8 | 22.2 | 12.7 | 19.9 | 54.9 | 64.2 | 36.0 | 44.3 | 144.4 | 53.1 | 31.8 | 42.5 | 127.3 |
| Services transferred | ||||||||||||||||
| over time | 19.1 | 16.8 | 6.9 | 42.8 | 17.6 | 15.2 | 8.0 | 40.8 | 37.8 | 32.6 | 15.2 | 85.6 | 34.8 | 30.0 | 14.1 | 78.8 |
| Total | 53.8 | 31.6 | 34.1 | 119.6 | 39.9 | 27.9 | 27.9 | 95.7 | 102.0 | 68.5 | 59.5 | 230.0 | 87.9 | 61.7 | 56.5 | 206.1 |
| Group's financial instruments by category |
Jun 30, 2018 | Dec 31, 2017 | ||||||
|---|---|---|---|---|---|---|---|---|
| SEK thousands | Value tier |
Loan receivables and accounts receivables |
Assets measured at fair value through profit or loss |
Value tier |
Loan receivables and accounts receivables |
Assets measured at fair value through profit or loss |
||
| Assets in Balance Sheet | ||||||||
| Derivative instruments | 2 | - | - | 2 | - | 556 | ||
| Accounts receivable and other receivables, excluding excluding non-financial assets |
134,932 | - | 112,031 | - | ||||
| Cash and cash equivalents | 149,649 | - | 177,745 | - | ||||
| Total | 284,581 | 0 | 289,776 | 556 |
| Group's financial instruments by category |
Jun 30, 2018 | Dec 31, 2017 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| SEK thousands | Value tier |
Loan receivables and accounts receivables |
Assets measured at fair value through profit or loss |
Value tier |
Loan receivables and accounts receivables |
Assets measured at fair value through profit or loss |
|||
| Liabilities in Balance Sheet | |||||||||
| Synthetic options | 2 | - | 1,123 | 2 | - | 3,003 | |||
| Derivative instruments | 2 | 1,220 | - | 2 | - | - | |||
| Accounts payable and other liabilities, excluding non-financial liabilities |
39,841 | - | 29,169 | - | |||||
| Total | 41,061 | 1,123 | 29,169 | 3,003 |
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.
| SEK thousands | Apr–Jun 2018 |
Apr–Jun 2017 |
Jan–Jun 2018 |
Jan–Jun 2017 |
Jul 2017– Jun 2018 |
Jan–Dec 2017 |
|---|---|---|---|---|---|---|
| Net sales | 138,300 | 112,943 | 263,371 | 237,565 | 513,985 | 488,179 |
| Cost of sales | -60,944 | -50,370 | -106,802 | -93,602 | -214,577 | -201,377 |
| Gross earnings | 77,356 | 62,573 | 156,569 | 143,963 | 299,408 | 286,802 |
| Sales and marketing expenses | -39,172 | -29,583 | -72,852 | -53,711 | -149,185 | -130,044 |
| Administration expenses | -15,266 | -12,071 | -25,095 | -21,775 | -46,768 | -43,448 |
| Development expenses | -29,455 | -31,765 | -57,774 | -63,179 | -117,103 | -122,508 |
| Other income and expenses | -989 | -1,621 | -201 | -1,259 | 1,949 | 891 |
| Operating earnings | -7,526 | -12,467 | 647 | 4,039 | -11,699 | -8,307 |
| Net financial items | 938 | 1,853 | 2,382 | 7,084 | 8,026 | 12,728 |
| Profit/loss before tax | -6,588 | -10,614 | 3,029 | 11,123 | -3,673 | 4,421 |
| Tax | 1,489 | 2,821 | -420 | -725 | 2,114 | 1,809 |
| Net income | -5,099 | -7,793 | 2,609 | 10,398 | -1,559 | 6,230 |
| Jun 30 | Mar 31 | Dec 31 | |
|---|---|---|---|
| SEK thousands | 2018 | 2018 | 2017 |
| ASSETS | |||
| Non-current assets | |||
| Other intangible assets | 5,788 | 6,167 | 6,875 |
| Equipment | 16,478 | 6,174 | 4,414 |
| Participations in group companies | 295,068 | 295,068 | 295,068 |
| Deferred tax asset | 1,574 | 84 | 1,994 |
| Deposits | 4,695 | 4,737 | 4,736 |
| Total non-current assets | 323,603 | 312,230 | 313,087 |
| Current assets | |||
| Inventories | 42,270 | 40,835 | 43,598 |
| Accounts receivable | 119,574 | 102,263 | 86,438 |
| Receivables from group companies | 141,011 | 140,923 | 132,978 |
| Other receivables | 17,577 | 13,364 | 13,809 |
| Cash and cash equivalents | 140,020 | 153,011 | 166,200 |
| Total current assets | 460,452 | 450,396 | 443,023 |
| TOTAL ASSETS | 784,055 | 762,626 | 756,110 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Restricted equity | 128,419 | 128,419 | 128,419 |
| Non-restricted equity | 529,501 | 534,600 | 527,631 |
| Total equity | 657,920 | 663,019 | 656,050 |
| Non-current liabilities | |||
| Other liabilities | 11,009 | 7,103 | 9,246 |
| Total non-current liabilities | 11,009 | 7,103 | 9,246 |
| Current liabilities | |||
| Accounts payable | 23,454 | 12,649 | 20,284 |
| Other liabilities | 91,672 | 79,855 | 70,530 |
| Total current liabilities | 115,126 | 92,504 | 90,814 |
| TOTAL EQUITY AND LIABILITIES | 784,055 | 762,626 | 756,110 |
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. Effective January 1, 2018, Net Insight applies the following new or amended International Financial Reporting Standards (IFRS):
IFRS 9 Financial Instruments addresses the classification, measurement, recognition, impairment and de-recognition of financial instruments as well as hedge accounting. The effect from applying IFRS 9 does not have any material impact on the group's or parent company's results or financial position and there was no opening balance adjustment in 2018.
IFRS 15 Revenue from Contracts replaces IAS 18 and IAS 11 and establishes a new mindset for revenue recognition. The new standard is based on the principle that revenue is recognized when control of a good or service transfers to a customer, i.e. under IFRS 15 there is a focus on the 'transfer of control' instead of 'transfer of risks and rewards' under current standards. Net Insight adopted IFRS 15 with full retrospective application. The impact on the group's earnings and financial position for the period January – June, 2017, are presented in the restated income statements and balance sheets below. The net reduction of at January 1, 2017 was SEK -1.7 million. Applying IFRS 15 also includes extended disclosure requirements, hence the table Disaggregation of revenue on page 9.
Effective January 1, 2018, Net Insight presents exchange gains and losses from operating receivables and liabilities in the Income Statement as Other operating income and expenses. Exchange gains and losses from Cash and cash equivalents are, as before, presented as Net financial items. For a description of previous accounting principles, please refer to the note 1.4B in the Annual Report for 2017. The impact on the group's earnings for the for the period January – June, 2017, are presented in the restated income statements below.
The Company adjusted in the last quarter of 2017 its calculation method for capitalized development expenditure in certain development projects. The adjustments have been applied retroactively. The impact on the group's earnings for the period for the period January – June, 2017, are presented in the restated income statements below.
| Restated consolidated income statement | Apr-Jun 2017 | |||||
|---|---|---|---|---|---|---|
| SEK thousands | Previously reported |
Impact of IFRS 15 |
Adjustment development |
Reclassification Income statement |
Restaded Income statement |
|
| Net sales | 93,504 | 360 | 1,813 | 95,677 | ||
| Cost of sales | -39,695 | 188 | -310 | -39,817 | ||
| Gross earnings | 53,809 | 360 | 188 | 1,503 | 55,860 | |
| Sales and marketing expenses | -39,694 | -39,694 | ||||
| Administration expenses | -14,026 | -14,026 | ||||
| Development expenses | -21,620 | -1,020 | 64 | -22,576 | ||
| Other operating income and expenses | -1,195 | -1,195 | ||||
| Operating earnings | -21,531 | 360 | -832 | 371 | -21,631 | |
| Net financial items | 2,252 | -371 | 1,881 | |||
| Profit before tax | -19,279 | 360 | -832 | 0 | -19,750 | |
| Tax | 6,528 | -79 | 182 | 6,631 | ||
| Net income | -12,751 | 281 | -650 | 0 | -13,119 |
| Restated consolidated income statement | Jan-Jun 2017 | |||||
|---|---|---|---|---|---|---|
| SEK thousands | Previously reported |
Impact of IFRS 15 |
Adjustment development |
Reclassification Income statement |
Restaded Income statement |
|
| Net sales | 203,914 | 329 | 1,874 | 206,117 | ||
| Cost of sales | -84,212 | 333 | -570 | -84,449 | ||
| Gross earnings | 119,702 | 329 | 333 | 1,304 | 121,668 | |
| Sales and marketing expenses | -74,036 | -74,036 | ||||
| Administration expenses | -25,716 | -25,716 | ||||
| Development expenses | -34,028 | -2,034 | 72 | -35,990 | ||
| Other operating income and expenses | -786 | -786 | ||||
| Operating earnings | -14,078 | 329 | -1,701 | 589 | -14,860 | |
| Net financial items | 7,782 | -589 | 7,193 | |||
| Profit before tax | -6,296 | 329 | -1,701 | 0 | -7,667 | |
| Tax | 5,397 | -72 | 373 | 5,698 | ||
| Net income | -899 | 257 | -1,328 | 0 | -1,969 |
| Restated consolidated balance sheet | Jun 30, 2017 | Dec 31, 2017 | |||||
|---|---|---|---|---|---|---|---|
| SEK thousands | Earlier reported |
Impact of IFRS 15 |
Adj Dev |
Restated balance sheet |
Earlier reported |
Impact of IFRS 15 |
Restated balance sheet |
| ASSETS | |||||||
| Non-current assets | |||||||
| Capitalized expenditure for development | 245,473 | -4,618 | 240,855 | 251,622 | 251,622 | ||
| Goodwill | 60,008 | 60,008 | 58,452 | 58,452 | |||
| Other intangible assets | 17,287 | 17,287 | 19,458 | 19,458 | |||
| Equipment | 4,042 | 4,042 | 4,636 | 4,636 | |||
| Deferred tax asset | 20,068 | 406 | 1,016 | 21,490 | 13,756 | 529 | 14,285 |
| Deposits | 333 | 333 | 4,911 | 4,911 | |||
| Total non-current assets | 347,211 | 406 | -3,602 | 344,015 | 352,835 | 529 | 353,364 |
| Current assets | 378,741 | 378,741 | 344,080 | 344,080 | |||
| TOTAL ASSETS | 725,952 | 406 | -3,602 | 722,756 | 696,915 | 529 | 697,444 |
| EQUITY AND LIABILITIES | |||||||
| Shareholders'equity | 559,163 | -1,439 | -3,602 | 554,122 | 547,966 | -1,877 | 546,089 |
| Non-current liabilities | 28,955 | 28,955 | 19,738 | 19,738 | |||
| Current liabilities | 137,834 | 1,845 | 139,679 | 129,211 | 2,406 | 131,617 | |
| TOTAL EQUITY AND LIABILITIES | 732,947 | 406 | -3,602 | 722,756 | 696,915 | 529 | 697,444 |
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 2017.
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.
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.
During the period February 16-23, the parent company acquired 160,000 of its own class B shares through purchases on Nasdaq Stockholm. The total amount paid to acquire the shares, net of income tax, was SEK 0.7 million. This corresponds to the total number of shares that the parent company has repurchased during the year.
At the end of the reporting period, the parent company had a total of 6,475,000 of its own class B shares, at an average cost of SEK 4.64 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.
| Jun 30, 2018 | Dec 31, 2017 | |||||
|---|---|---|---|---|---|---|
| The division of shares | A-shares | B-shares | Total | A-shares | B-shares | Total |
| Outstanding shares | 1,000,000 | 382,458,009 | 383,458,009 | 1,000,000 | 382,618,009 | 383,618,009 |
| Repurchased own shares | - | 6,475,000 | 6,475,000 | - | 6,315,000 | 6,315,000 |
| Issued shares | 1,000,000 | 388,933,009 | 389,933,009 | 1,000,000 | 388,933,009 | 389,933,009 |
The group reported tax of SEK 1.8 (5.7) million for the period January – June, 2018. Reported tax corresponds to an effective tax rate of 22 (74) percent. Profit before tax of SEK -8.2 (-7.7) million includes value changes on synthetic options of SEK 1.7 (8.4) million. The value change on synthetic options is not taxable if an income, or tax deductible if a cost. Hence, the relative share the value change on synthetic options is of profit/loss before tax has a significant effect on the differences in the effective tax
During the second quarter of 2018, after decisions at the AGM, Net Insight introduced a synthetic option program, where the participants acquired the synthetic options at market price. The program addresses employees in Sweden. The terms and the accounting policies for the program corresponds to the years-2015 & 2017 program, see pages 61–62 of the
rates between periods. 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 71.2 million at the end of the period, compared to SEK 55.8 million as of December 31, 2017. Deferred tax assets has been recognized for the tax loss carry-forwards and the new tax rates in Sweden from January 2019 have been taken into account in the valuation.
Annual Report for 2017. The calculation of the fair value on the grant date was based on the conditions stated in the table below.
During the second quarter of 2018, the 2015 program was settled.
| Synthetic options, the calculation of the fair value on the grant date | |
|---|---|
| was based on the following conditions: | Sweden |
| Averaged volume-weighted price paid for the Net Insight B shares, SEK | 4.36 |
| Strike price, SEK | 5.20 |
| Assuemed volatility 1 | 36% |
| Term | 3 years |
| Risk-free interest | -0.39% |
| Adjusment of fair value due to CAP, SEK | -0.02 |
| Fair value, SEK | 0.76 |
| Number of options issued, thousands | 1,575 |
1) The assumed volatility was based on future forecasts based on the historical volatility of Net Insight B shares and other public shares, which are considered comparable with Net Insight.
This Report has not been reviewed by the company's auditors.
No significant events have occurred after the end of the reporting period.
Net Insight delivers products, software and services for effective, high-quality media transport, coupled with the effective management of resources, all which creates an enhanced TV experience. Net Insight's offerings stretch from the TV camera lens to the studio, right through to the TV viewer.
Net Insight's solutions offer network operators, TV and production companies the benefit of lower total cost of ownership and the potential for effective new media service launches.
Revenues are generated through direct and indirect sales of hardware, software and services. Revenues are sourced from hardware sales, software licenses, support and services.
Net Insight's ambition is to be a growth company, and the target is to create profitable growth. On a market in fundamental transformation, growth and profitability are created through close and strategic partnerships with customers. Innovative solutions are created together that generate business benefit. To grow for the long term, we need to transform Net Insight into a more customer and market-oriented company.
Value drivers affect Net Insight's progress and can be divided into three groups: market transformation, innovative technology and global reach. Net Insight benefits from the general increase in video traffic, live streaming and file transfers, the adoption of remote production and workflows, more widespread TV broadcasting over the internet and wider coverage of live events.
Interim report January – September October 26 2018 Year-end report 2018 February 15, 2019
Henrik Sund, interim CEO, Net Insight AB (publ) Phone: +46 (0)8-685 04 00 Email: [email protected]
Pelle Bourn, CFO, Net Insight AB (publ) Phone: +46 (0)8-685 04 00 Email: [email protected]
Net Insight AB (publ), reg.no 556533-4397 Box 42093 126 14 Stockholm Tel. +46 (0)8 – 685 04 00 www.netinsight.net
The Board of Directors and the CEO certify that the Interim report for the period January – June 2018 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.
Stockholm, July 20, 2018
Gunilla Fransson Chairman
Jan Barchan Board member Crister Fritzson Board member
Anders Harrysson Board member
Charlotta Falvin Board member
Henrik Sund interim CEO
| SEK millions (if not defined differently) | Apr–Jun 2018 |
Apr–Jun 2017 |
Jan–Jun 2018 |
Jan–Jun 2017 |
Jul 2017– Jun 2018 |
Jan–Dec 2017 |
|---|---|---|---|---|---|---|
| Income Net sales by segment |
||||||
| Western Europe | 53.8 | 39.9 | 102.0 | 87.9 | 208.5 | 194.4 |
| Americas | 31.6 | 27.9 | 68.5 | 61.7 | 140.6 | 133.8 |
| Rest of World | 34.1 | 27.9 | 59.6 | 56.5 | 101.8 | 98.8 |
| Net sales | 119.6 | 95.7 | 230.0 | 206.1 | 450.9 | 427.0 |
| Gross earnings | 70.8 | 55.9 | 136.7 | 121.7 | 262.6 | 247.6 |
| Operating expenses | 82.6 | 76.3 | 147.0 | 135.7 | 268.0 | 256.8 |
| Total development expenditure | 34.9 | 38.9 | 68.3 | 78.4 | 139.6 | 149.7 |
| EBITDA | -16.1 | -15.9 | -17.1 | -19.8 | -21.0 | -23.7 |
| Operating earnings | -12.9 | -21.6 | -10.5 | -14.9 | -3.1 | -7.5 |
| Profit/loss before tax | -12.2 | -19.8 | -8.2 | -7.7 | 4.8 | 5.3 |
| Net income | -9.4 | -13.1 | -6.4 | -2.0 | -0.9 | 3.5 |
| Balance sheet and cashflow | ||||||
| Working capital | 355.5 | 466.0 | 367.1 | 472.5 | 392.9 | 446.0 |
| Cash and cash equivalents | 149.6 | 201.4 | 149.6 | 201.4 | 149.6 | 177.7 |
| Total cash flow | -15.1 | -28.5 | -28.6 | -13.2 | -52.2 | -36.8 |
| The share | ||||||
| Dividend per share, SEK | - | - | - | - | - | - |
| Earnings per share diluted and basic, SEK | -0.02 | -0.03 | -0.02 | -0.01 | 0.00 | 0.01 |
| Cash flow per share, SEK | -0.04 | -0.07 | -0.07 | -0.02 | -0.14 | -0.10 |
| Equity per share basic and diluted, SEK | 1.42 | 1.44 | 1.42 | 1.31 | 1.42 | 1.42 |
| Average number of oustanding shares, basic and diluted, | ||||||
| thousands | 383,458 | 385,658 | 383,498 | 385,658 | 383,977 | 385,057 |
| Number of oustanding shares at the end of the period, | ||||||
| basic and diluted, thousands | 383,458 | 385,658 | 383,458 | 385,658 | 383,458 | 383,618 |
| Share price at end of period, SEK | 4.20 | 6.55 | 4.20 | 6.55 | 4.20 | 4.73 |
| Employees and consultants | ||||||
| Employees and consultants during the period | 241 | 245 | 244 | 244 | 246 | 245 |
| KPI | ||||||
| Net sales YoY, change in % | 25.0% | -27.7% | 11.6% | -14.9% | -3.5% | -15.2% |
| Gross margin | 59.2% | 58.4% | 59.4% | 59.0% | 58.2% | 58.0% |
| Total development expenditure/Net sales | 29.2% | 40.6% | 29.7% | 38.0% | 31.0% | 35.0% |
| Operating margin | -10.8% | -22.6% | -4.5% | -7.2% | -0.7% | -1.8% |
| EBITDA margin | -13.5% | -16.6% | -7.5% | -9.6% | -4.7% | -5.5% |
| Net margin | -7.8% | -13.7% | -2.8% | -1.0% | -0.2% | 0.8% |
| Return on capital employed | -0.6% | 3.0% | -0.6% | 3.0% | -0.6% | -1.4% |
| Equity/asset ratio | 75.2% | 76.7% | 75.2% | 76.7% | 75.2% | 78.3% |
| Return on equity | -1.7% | -2.3% | -1.2% | -0.3% | -0.2% | 0.6% |
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.
| Performance measures | Various types of performance measures and margin measures as a percentage of sales. | |||||
|---|---|---|---|---|---|---|
| Non-IFRS perfomance 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 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 monitor ing value creation. |
||||
| Change in Net sales in compara ble 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's 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 compa rable 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 of the company's costs have been deducted. |
||||
| Total development (R&D) ex penditure |
Development expenses and capitalized expenditures for development. |
The measure is a good complement to development expenses, as it shows the company's total expenditure |
||||
| Total development (R&D) expen diture/net sales |
Total development expenditure as percentage of net sales. |
in development. The development expenditures effect on income, financial position and presentation in the statement of cashflow is affected by the periods level of capitali zed development expenditures. |
||||
| EBITDA | Operating earnings before depreciation and amortiza tion and capitalization of development expenditure. |
The measures are good complements to operating earnings and margin as it, simplified, shows the |
||||
| EBITDA margin | EBITDA as a percentage of net sales. | earnings-generated cash flow in the operation and it shows operating earnings without influence of variations in the level of capitalized development expenditures in the company's development projects. |
||||
| Segment | Region corresponds to an operating segment under IFRS 8. • Western Europe (WE). • Americas (AM), North and South America. • Rest of World (RoW), countries outside of Western Europe and Americas. |
| EBITDA margin SEK millions (if not defined differently) |
Apr-Jun 2018 |
Apr-Jun 2017 |
Jan-Jun 2018 |
Jan-Jun 2017 |
Jul 2017- Jun 2018 |
Jan-Dec 2017 |
|---|---|---|---|---|---|---|
| Operating earnings | -12.9 | -21.6 | -10.5 | -14.9 | -3.1 | -7.5 |
| Amortization of capitalized development expenditure |
13.7 | 15.7 | 29.0 | 29.6 | 60.0 | 60.7 |
| Other depreciation, amortization & impairment | 1.4 | 6.4 | 2.7 | 7.9 | 5.4 | 10.5 |
| Capitalization of development expenditure | -18.4 | -16.3 | -38.4 | -42.4 | -83.3 | -87.3 |
| EBITDA | -16.1 | -15.9 | -17.1 | -19.8 | -21.0 | -23.7 |
| Net sales | 119.6 | 95.7 | 230.0 | 206.1 | 450.9 | 427.0 |
| EBITDA margin | -13.5% | -16.6% | -7.5% | -9.6% | -4.7% | -5.5% |
| KPI Income Statement SEK millions (if not defined differently) |
Apr-Jun 2018 |
Apr-Jun 2017 |
Jan-Jun 2018 |
Jan-Jun 2017 |
Jul 2017- Jun 2018 |
Jan-Dec 2017 |
|---|---|---|---|---|---|---|
| Net sales | 119.6 | 95.7 | 230.0 | 206.1 | 450.9 | 427.0 |
| Net sales YoY, change in % | 25.0% | -27.7% | 11.6% | -14.9% | -3.5% | -15.2% |
| Cost of sales ex. amortization of capitalized development |
-35.0 | -24.1 | -64.4 | -54.9 | -128.3 | -118.8 |
| Gross earnings ex. amortization of capitalized development |
84.6 | 71.5 | 165.7 | 151.2 | 322.7 | 308.3 |
| Gross margin ex. amortization of capitalized development |
70.7% | 74.8% | 72.0% | 73.4% | 71.6% | 72.2% |
| Cost of sales amortization of capitalized | ||||||
| development | -13.7 | -15.7 | -29.0 | -29.6 | -60.0 | -60.7 |
| Gross earnings | 70.8 | 55.9 | 136.7 | 121.7 | 262.6 | 247.6 |
| Gross margin | 59.2% | 58.4% | 59.4% | 59.0% | 58.2% | 58.0% |
| Sales and marketing expenses | -49.7 | -39.7 | -89.7 | -74.0 | -160.4 | -144.7 |
| Administration expenses | -16.4 | -14.0 | -27.3 | -25.7 | -51.3 | -49.7 |
| Development expenses | -16.6 | -22.6 | -30.0 | -36.0 | -56.3 | -62.4 |
| Operating expenses | -82.6 | -76.3 | -147.0 | -135.7 | -268.0 | -256.8 |
| Operating expenses/net sales | 69.1% | 79.7% | 63.9% | 65.9% | 59.4% | 60.1% |
| Other operating income & expenses | -1.1 | -1.2 | -0.1 | -0.8 | -2.3 | 1.6 |
| Operating earnings | -12.9 | -21.6 | -10.5 | -14.9 | -3.1 | -7.5 |
| Operating margin | -10.8% | -22.6% | -4.5% | -7.2% | -0.7% | -1.8% |
| Net financial items | 0.7 | 1.9 | 2.2 | 7.2 | 7.9 | 12.9 |
| Profit/loss before tax | -12.2 | -19.8 | -8.2 | -7.7 | 4.8 | 5.3 |
| Tax | 2.8 | 6.6 | 1.8 | 5.7 | -5.7 | -1.8 |
| Net income | -9.4 | -13.1 | -6.4 | -2.0 | -0.9 | 3.5 |
| Net margin | -7.8% | -13.7% | -2.8% | -1.0% | -0.2% | 0.8% |
| Change in net sales in comparable currencies SEK millions (if not defined differently) |
Apr-Jun 2018 |
Apr-Jun 2017 |
Jan-Jun 2018 |
Jan-Jun 2017 |
Jan-Dec 2017 |
|---|---|---|---|---|---|
| Net sales | 119.6 | 95.7 | 230.0 | 206.1 | 427.0 |
| Net currency effect of comparable currencies | -3.4 | -4.7 | -0.9 | -9.2 | -2.1 |
| Net sales in comparable currencies | 116.2 | 90.9 | 229.1 | 196.9 | 425.0 |
| Change in net sales in comparable currencies | 21.5% | -32.1% | 11.2% | -19.2% | 31.1% |
| Total development expenditure/ net Sales SEK millions (if not defined differently) |
Apr-Jun 2018 |
Apr-Jun 2017 |
Jan-Jun 2018 |
Jan-Jun 2017 |
Jul 2017- Jun 2018 |
Jan-Dec 2017 |
|---|---|---|---|---|---|---|
| Development expenses | 16.6 | 22.6 | 30.0 | 36.0 | 56.3 | 62.4 |
| Capitalization of development expenditure* | 18.4 | 16.3 | 38.4 | 42.4 | 83.3 | 87.3 |
| Total development expenditure | 34.9 | 38.9 | 68.3 | 78.4 | 139.6 | 149.7 |
| Net Sales | 119.6 | 95.7 | 230.0 | 206.1 | 450.9 | 427.0 |
| Total development expenditure/net sales | 29.2% | 40.6% | 29.7% | 38.0% | 31.0% | 35.0% |
*) During the period January – March 2018, SEK 0.4 million was reclassified from Other intangible fixed assets to Capitalized
expenditure for development, which are i included in the item Capitalization of development expenditure but not in Investments.
| Non-IFRS perfomance | ||
|---|---|---|
| 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 inte rest-bearing liabilities. Changes in working capital in the cash flow sta tement 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 Com pany has no interest-bearing 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. . |
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 profita bility 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 Working capital |
Apr-Jun 2018 |
Apr-Jun 2017 |
Jan-Jun 2018 |
Jan-Jun 2017 |
Jul 2017- Jun 2018 |
Jan-Dec 2017 |
|---|---|---|---|---|---|---|
| Current assets | 341.8 | 383.6 | 342.6 | 386.5 | 351.7 | 371.2 |
| Cash and cash equivalents | 157.1 | 215.8 | 164.0 | 215.5 | 178.1 | 204.3 |
| Short term liabilities | -143.4 | -133.4 | -139.5 | -129.5 | -137.0 | -129.4 |
| Working capital | 355.5 | 466.0 | 367.1 | 472.5 | 392.9 | 446.0 |
| Return on capital employed SEK millions (if not defined differently) |
Apr-Jun 2018 |
Apr-Jun 2017 |
Jan-Jun 2018 |
Jan-Jun 2017 |
Jul 2017- Jun 2018 |
Jan-Dec 2017 |
|---|---|---|---|---|---|---|
| Capital employed | ||||||
| Total balance | 711.3 | 728.5 | 706.7 | 728.3 | 708.6 | 716.5 |
| Non-interest liabilities | -163.7 | -165.8 | -159.6 | -165.6 | -159.0 | -159.1 |
| Capital employed | 547.6 | 562.6 | 547.1 | 562.7 | 549.6 | 557.4 |
| Operating earings less interest income RQ4 | ||||||
| Operating earnings RQ4 | -3.1 | 16.9 | -3.1 | 16.9 | -3.1 | -7.5 |
| Interest income RQ4 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.1 |
| Operating earnings less interest income RQ4 | -3.3 | 16.7 | -3.3 | 16.7 | -3.3 | -7.6 |
| Return on capital employed | -0.6% | 3.0% | -0.6% | 3.0% | -0.6% | -1.4% |
| Equity/asset ratio SEK millions (if not defined differently) |
Apr-Jun 2018 |
Apr-Jun 2017 |
Jan-Jun 2018 |
Jan-Jun 2017 |
Jul 2017- Jun 2018 |
Jan-Dec 2017 |
|---|---|---|---|---|---|---|
| Equity | 545.6 | 554.1 | 545.6 | 554.1 | 545.6 | 546.1 |
| Total equity and liabilities | 725.3 | 722.8 | 725.3 | 722.8 | 725.3 | 697.4 |
| Equity/asset ratio | 75.2% | 76.7% | 75.2% | 76.7% | 75.2% | 78.3% |
| Return on equity SEK millions (if not defined differently) |
Apr-Jun 2018 |
Apr-Jun 2017 |
Jan-Jun 2018 |
Jan-Jun 2017 |
Jul 2017- Jun 2018 |
Jan-Dec 2017 |
|---|---|---|---|---|---|---|
| Net income | -9.4 | -13.1 | -6.4 | -2.0 | -0.9 | 3.5 |
| Average equity | 547.6 | 562.6 | 547.9 | 562.7 | 549.6 | 557.4 |
| Return on equity | -1.7% | -2.3% | -1.2% | -0.3% | -0.2% | 0.6% |
| Shareholders' information | Measures related to the share. | |||
|---|---|---|---|---|
| Non-IFRS perfomance 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 |
||
| 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. | business to the owners, per share. |
||
| 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 com- pany, less the number of group companies' holdings of shares in the Parent company (own/treasury shares). |
| Employees Non-IFRS perfomance measure |
Measures related to employees. Description |
Reason for use of the measure |
|---|---|---|
| Average number of employees and consultants/co-workers |
The average number of employees and consul tants for non-temporary positions (longer than nine months) and who don't 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. |
| Average number of employees and consultants |
Apr-Jun 2018 |
Apr-Jun 2017 |
Jan-Jun 2018 |
Jan-Jun 2017 |
Jul 2017- Jun 2018 |
Jan-Dec 2017 |
|---|---|---|---|---|---|---|
| Average number of employees | 206 | 210 | 209 | 209 | 209 | 208 |
| Average number of consultants | 35 | 35 | 36 | 35 | 37 | 36 |
| Average number of employees | 241 | 245 | 244 | 244 | 246 | 245 |
| and consultants |
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:
| SEK millions | Note | Apr-Jun 2018 |
Apr-Jun 2017 |
Jan-Jun 2018 |
Jan-Jun 2017 |
Jul 2017- Jun 2018 |
Jan-Dec 2017 |
|---|---|---|---|---|---|---|---|
| Effects of the Net Insight share price development during the period |
|||||||
| Share-based benefits | (a) | -0.1 | 0.6 | 0.2 | 1.8 | 1.8 | 3.4 |
| Synthetic opitons, change in value | (b) | 0.6 | 2.3 | 1.7 | 8.4 | 7.8 | 14.5 |
| Total | 0.6 | 2.9 | 1.9 | 10.2 | 9.7 | 18.0 |
All items in the table above effects operating earnings, except for (b) that effects net financial items.
(a) Support revenues that ScheduALL would have recognized if they had remained a stand-alone entity, but that Net Insight is not permitted to recognizeas revenue under IFRS as a result of business combination accounting rules. The effects of these business combination rules will gradually decrease.
(b) Amortizations related to the intangible assets — trademark and customer relations — that Net Insight recognized under IFRS as a result of business combination accounting rules, but that ScheduALL would not have recognized if they had remained a stand- alone entity. These amortizations will continue to affect the income over time.
Phone: +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 2018. Net Insight AB (publ), Sweden. All rights reserved. Net Insight, Nimbra, Sye and ScheduALL are trademarks of Net Insight Intellectual Property AB, Sweden. All other registered trademarks are the property of their respective owners.
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