Quarterly Report • Oct 22, 2010
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 October 22, 2010 at 08.30 am CET.
In the third quarter our revenues are 18 percent above the same quarter 2009 and Earnings before tax also exceeded that of last year. Revenues amounted to 68 MSEK and the gross margin was 70% excluding depreciation of capitalized R&D. This time it is worth noting the negative impact on revenues and the gross margin due to the strengthened Swedish Krona. Despite the negative currency effect, business and financial performance are stable.
During the third quarter, in line with our market expansion strategy, indirect sales exceeded 40% of total revenues for the first time. China is a market with upcoming opportunities where we have already landed significant business references and during the quarter we added a large new customer in China.
Whereas the satellite operators are often viewed as competitors to terrestrial networks, the trend that satellite operators complement their network infrastructure with terrestrial transport is clear. During the quarter we continued to win business in this growing segment. We also landed an order for a network build-out for a leading European broadcaster and a contract with a large Telco in the US that will offer contribution services to a large North American broadcaster.
Net Insight won yet another significant and strategically important DTT project this quarter, the new nationwide media network for Emitel in Poland. For this project Net Insight joined forces with Ericsson.
We are on a good path to deliver increased revenues 2010 in comparison to the previous year.
Stockholm, October 22, 2010 Fredrik Trägårdh CEO
Net Insight strengthened its position in the area of Digital Terrestrial TV networks (DTT) during the quarter through the strategic order from Emitel, the leading terrestrial radio and TV network operator in Poland. Net Insight won this order in partnership with Ericsson Poland.
In the Broadcast and Media (BMN) area several orders have been received for enabling contribution services. We see a trend that satellite operators are reducing cost by replacing satellite installations in favor of fiber networks for contribution purposes. A leading European satellite and media operator selects Net Insight for a new fiber network. Another major order within the contribution area is from a European public service broadcaster which is modernizing its contribution network. A new key account in the Chinese market was won during the quarter together with our Chinese partner CSS. One of our most significant orders this quarter comes from a leader in Broadband and other wireline and wireless communications. The company is building a new contribution network for a major North American broadcaster.
Net Insight also announced the customer name on an earlier order taken in second quarter. Dome Productions, one of Canada's leading production and broadcast service companies selected Net Insight's Nimbra platform for their new nationwide production and distribution fiber network.
Net Insight received its first commercial order on JPEG2000 on the Nimbra 600 series. JPEG2000 is a high quality compression technique perfectly suited for contribution networks, where network operators prefer it as a compression option to optimize the bandwidth utilization.
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 five new partners in Europe, the Middle East, North and South America. Two partners were phased out. Net Insight's partner network has a total of 40 business partners at the end of the quarter.
Net Insight is working actively to increase visibility of the brand and the company.
Our key marketing focus during the quarter has been our participation at the IBC Show 2010 in Amsterdam, Netherlands. IBC is a leading exhibition for professionals engaged in the creation, management and delivery of entertainment and media content worldwide. In conjunction to the IBC 2010 Show Net Insight received the CSI Award for our IP Trunk. The eighth annual CSI Awards is rewarding excellence in the cable, satellite, terrestrial broadcasting and IPTV sectors.
Net Insight also participated in SET Broadcast and Cable in Sao Paulo, Brazil. The exhibition is the major event for Television, Radio and Telecommunications Engineering in Latin America.
Together with our sales partners we have also participated in industry shows in China and Australia.
During the quarter, Net Insight launched JPEG2000 on the Nimbra 600 series as well as the capability to integrate Net Insight's Nimbra Vision and ScheduALL's ScheduLINK to provide streamlined resource booking for on-demand services in Nimbra networks. This will give network operators fully automated management capabilities that allow them to ensure smooth workflow and reduce operational costs.
During Octobe Net Insight receives a significant order for a nationwide contribution and distribution network for the Swiss Public Broadcaster SRG SSR. Net Insight won this order together with Cablecom who will deliver project management, installation and support services. Net Insight's order value exceeds 20 MSEK and the network will be operational in Q2 2011.
Net Sales for the third quarter amounted to SEK 67.6 million (57.5), which represents a growth of 17.6%. The Swedish Krona appreciated substantially against both the Euro and the USD. For that reason the revaluation of accounts receivables stock in foreign currencies had a negative effect on Net Sales of SEK 5.9 million compared to a negative effect of SEK 3.3 million for the same period last year. The growth rate in comparable currencies amount to 33%.
The growth comes from EMEA mainly following roll-out of large DTT projects. EMEA grew by SEK 18.4 million to SEK 56.6 million. Americas showed a decline of SEK 2.7 million to SEK 7.0 million (9.7) and APAC accounted for sales of SEK 4 million (9.6).
| Q3 | Q3 | Q4 | Q1 | Q2 | Q4'09- Full Year | ||
|---|---|---|---|---|---|---|---|
| Net sales per region (MSEK) | 2010 | 2009 | 2009 | 2010 | 2010 | Q3'10 | 2009 |
| EMEA | 56.6 | 38.2 | 41.1 | 44.5 | 47.8 | 190.0 | 176.8 |
| Americas | 7.0 | 9.7 | 6.8 | 10.3 | 20.7 | 44.8 | 38,0 |
| APAC | 4.0 | 9.6 | 4.3 | 5.7 | 3.0 | 17.0 | 18,0 |
| Total | 67.6 | 57.5 | 52.2 | 60.5 | 71.5 | 251.8 | 232.8 |
Sales in the Broadcast & Media business area made up 68% (75) of total sales and DTT & Mobile TV accounted for 30% (25). IPTV/CATV accounted for 2% (0) of the turnover.
Hardware revenue increased SEK 11.4 million to SEK 56.9 million (45.5). Sales of software licenses are slightly up by SEK 2 million to 6.6 (4.6) whereas support and service revenue are in line with previous year at SEK 9.8 million (10.9). The above figures are exclusive of Other revenues of SEK -5.7 million (-3.5) which mainly consists of revaluation of the accounts receivables stock in foreign currencies.
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 | Q3 | Q3 | Jan-Sep | Jan-Sep |
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Net Sales | 67 644 | 57 515 | 199 638 | 180 569 |
| Cost of Sales | -20 190 | -13 410 | -53 853 | -41 423 |
| Gross Earnings - 2009 accounting treatment | 47 454 | 44 105 | 145 785 | 139 146 |
| Gross Margin - 2009 accounting treatment | 70,2% | 76,7% | 73,0% | 77,1% |
| Cost of Sales - R&D depreciation | -6 133 | -4 096 | -17 246 | -11 463 |
| Gross earnings - 2010 accounting treatment | 41 321 | 40 009 | 128 539 | 127 683 |
| Gross margin - 2010 accounting treatment | 61,1% | 69,6% | 64,4% | 70,7% |
With a comparable treatment of depreciation of capitalized R&D expenses based on the accounting treatment applied in 2009, the gross margin declined 6.5 percentage points to 70.2% 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 8.5 percentage points of which increased levels of R&D depreciation accounted for 3 percentage points.
As shown in the condensed income statement on page 11, the Gross margin is 61.1% (76.7).
Total operating expenses for the third quarter amounted to SEK 32.1 million (33.6). Sales and marketing expenses have increased by SEK 2.6 million mainly following increased staffing levels, marketing activities 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 3.9 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 have increased by SEK 2.2 million.
Operating earnings for the third quarter amounted to SEK 9.2 million (10.5), which corresponds to an Operating Margin of 13.7% (18.2)
The financial net amounted to SEK 0.3 million (-2.3). The improvement is due to increased interest rates. In Q3 2009, significant revaluation losses on cash held in foreign currencies were recorded which was not the case in Q3 2010.
Earnings before tax amounted to SEK 9.6 million (8.2), which corresponds to a profit margin of 14.2% (14.2).
Net Income amounted to SEK 11.1 million (5.8) resulting in a Net Profit margin of 16.4% (10.1).
Net Sales for the nine months period amounted to SEK 199.6 million (180.6), which is an improvement of 10.5% over last year. Revaluation of the accounts receivables stock had a negative impact on Net Sales of SEK 7.3 million (2.2). In comparable currencies, the growth rate was 23.5%
The EMEA region accounted for SEK 148.9 million (135.8), Americas SEK 38.0 million (31.1) and APAC SEK 12.7 million (13.6).
Sales by business area are distributed between Broadcast & Media 70% (69), DTT & Mobile TV 28% (28) and IPTV/CATV 2% (3).
Hardware sales amounted to SEK 152.7 million (134.1), support and service revenue SEK 30.2 million (31.5) and software licenses SEK 21.0 million (16.2). The above figures are exclusive of Other revenues of SEK -4.2 million (-1.3) which mainly consists of revaluation of the accounts receivables stock in foreign currencies.
Applying the 2009 accounting treatment, the Gross Margin declined by 4.1 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 6.3 percentage points of which increased levels of R&D depreciation accounted for 2.9 percentage points.
As shown in the condensed income statement on page 11, the Gross margin is 64.4 percent (77.1).
Operating earnings amounted to SEK 27.4 million (31.8), which correspond to an Operating Margin of 13.7% (17.6).
The Financial Net was a negative SEK 0.1 million (-2.5).
Earnings before tax amounted to SEK 27.3 million (29.3) and the corresponding profit margin amount to 13.7% (16.2)
Net Income amounted to SEK 83.8 million (20.9). The transaction, announced in Q1, whereby Net Insights intellectual property rights were 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 42.0% (11.6).
Cash flow from ongoing operations in the third quarter amounted to SEK 8.5 million (29.2). The decrease is related to build-up of working capital, mainly accounts receivables, during the quarter. The build-up is mainly contract related. Third quarter cash flow amount to negative SEK 4.2 million and liquid funds at the end of the period totaled SEK 204.3 million (155.8).
Cash flow from ongoing operations for the nine month period amounted to SEK 31.2 million (20.3). 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 nine month period amounted to SEK 52.3 million (4.0).
Shareholders' equity amounted to SEK 420.1 million (320.2) with a resulting equity ratio of 84.2% (80.1).
Third quarter investments in tangible assets amounted to SEK 0.0 million (0.5) and depreciation of tangible assets amounted to SEK 0.2 million (0.3). Capitalization of development expenditures totaled SEK 12.4 million (11.2). Depreciation of capitalized development expenditures totaled SEK 6.1 million (6.0).
Investments in tangible assets for the nine months period amounted to SEK 0.2 million (1.6) and depreciation of tangible assets amounted to SEK 0.8 million (0.8). Capitalization of development expenditures totaled SEK 37.8 million (37.6). Depreciation of capitalized development expenditures totaled SEK 17.2 (16.8).
At the end of the period, net book value of capitalized development expenditures amounted to SEK 115.9 million (88.8).
At the end of the period Net Insight had 133 (121) employees. The parent company Net Insight AB had 124 (115) employees, Net Insight Intellectual Property AB 4 (0) and the US subsidiary Net Insight Inc. had 5 (6) employees.
The parent company's Net Sales during the third quarter were SEK 87.1 million (62.2). Net income amounted to SEK 21.4 million (4.4).
For the nine month period ending September 30th, the Net Sales amounted to SEK 243.1 (196.5) and the Net Income amounted to 213.0 (18.7). 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 135.1 million (154.6).
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 third quarter.
For a complete description of the Company's risk analysis and risk management, see page 26 and 37 in the 2009 Annual report.
| Q3 | Q3 | Jan-Sep | Jan-Sep | Q4'09 -Q3'10 | Full Year | |
|---|---|---|---|---|---|---|
| Amount in SEK thousands | 2010 | 2009 | 2010 | 2009 | 12 months | 2009 |
| Net Sales | 67 644 | 57 515 | 199 638 | 180 569 | 251 870 | 232 801 |
| Cost of goods & services sold | -26 323 | -13 410 | -71 099 | -41 423 | -84 641 | -54 965 |
| Gross earnings | 41 321 | 44 105 | 128 539 | 139 146 | 167 229 | 177 836 |
| Sales and marketing expenses | -22 344 | -19 743 | -70 480 | -58 644 | -92 949 | -81 113 |
| Administration expenses | -4 827 | -5 050 | -15 105 | -17 979 | -18 577 | -21 451 |
| Development expenses | -4 914 | -8 831 | -15 594 | -30 719 | -26 145 | -41 270 |
| Other operating income | 0 | 0 | 0 | 0 | 0 | 0 |
| Operating earnings | 9 236 | 10 481 | 27 360 | 31 804 | 29 558 | 34 002 |
| Net financial items | 344 | -2 308 | -95 | -2 504 | 23 | -2 386 |
| Earnings before tax | 9 580 | 8 173 | 27 265 | 29 300 | 29 581 | 31 616 |
| Tax | 1 490 | -2 364 | 56 531 | -8 352 | 67 625 | 2 742 |
| Net income | 11 070 | 5 809 | 83 796 | 20 948 | 97 206 | 34 358 |
| Net income for the period attributable to the stockholders of | 11 070 | 5 809 | 83 796 | 20 948 | 97 206 | 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 | 0,03 | 0,01 | 0,21 | 0,05 | 0,25 | 0,09 |
| Earnings per share after dilution | 0,03 | 0,01 | 0,21 | 0,05 | 0,25 | 0,09 |
| Average number of shares in thousands before dilution | 389 933 | 389 933 | 389 933 | 386 920 | 389 933 | 387 616 |
| Average number of shares in thousands after dilution | 389 933 | 389 933 | 389 933 | 386 920 | 389 933 | 387 616 |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||||
| Net income | 11 070 | 5 809 | 83 796 | 20 948 | 97 206 | 34 358 |
| Other comprehensive income | ||||||
| Exchange rate differences | -1 024 | -645 | -476 | -716 | -278 | -518 |
| Total other comprehensive income, net after tax | -1 024 | -645 | -476 | -716 | -278 | -518 |
| Total comprehensive income for the period | 10 046 | 5 164 | 83 320 | 20 232 | 96 928 | 33 840 |
| Total comprehensive income for the period attributable to | 10 046 | 5 164 | 83 320 | 20 232 | 96 928 | 33 840 |
| the stockholders of the parent company |
| Q3 | Q3 | Jan-Sep | Jan-Sep | Q4'09- Q3'10 | Full year | |
|---|---|---|---|---|---|---|
| Amount in SEK thousands | 2010 | 2009 | 2010 | 2009 | 12 mths | 2009 |
| Ongoing operations | ||||||
| Net income before tax | 9 580 | 8 173 | 27 265 | 29 300 | 29 581 | 31 616 |
| Depreciation | 6 555 | 6 325 | 18 688 | 17 590 | 25 953 | 24 855 |
| Other items not affecting liquidity | -1 124 | 856 | 797 | 2 363 | 2 769 | 4 335 |
| Cash flow from ongoing operations | ||||||
| before change in working capital | 15 011 | 15 354 | 46 750 | 49 253 | 58 303 | 60 806 |
| Change in working capital | ||||||
| Increase-/decrease+ in inventories | -25 | -204 | 1 776 | 8 710 | -3 468 | 3 466 |
| Increase-/decrease+ in receivables | -5 420 | 8 509 | -24 130 | -29 647 | -17 122 | -22 639 |
| Increase+/decrease- in current liabilities | -1 075 | 5 553 | 6 761 | -8 057 | 3 726 | -11 092 |
| Cash flow from ongoing operations | 8 491 | 29 212 | 31 157 | 20 259 | 41 439 | 30 541 |
| Investment activity | ||||||
| Acquisitions of intangible fixed assets | -12 671 | -11 232 | -38 523 | -37 644 | -51 818 | -51 672 |
| Acquisitions of tangible fixed assets | 0 | -527 | -236 | -1 612 | -979 | -1 622 |
| Acquistion of net assets | 0 | 0 | 59 990 | 0 | 59 990 | 0 |
| Increase-/decrease+ in long-term receivables | 28 | 114 | -117 | 136 | -142 | 111 |
| Cash flow from investment activity | -12 643 | -11 645 | 21 114 | -39 120 | 7 051 | -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 | -4 152 | 17 567 | 52 271 | 4 036 | 48 490 | 255 |
| Liquid funds, opening balance | 208 422 | 138 213 | 151 999 | 151 744 | 155 780 | 151 744 |
| Liquid funds, closing balance | 204 270 | 155 780 | 204 270 | 155 780 | 204 270 | 151 999 |
| Amount in SEK thousands | Sep 30, 2010 | Sep 30, 2009 | Dec 31, 2009 |
|---|---|---|---|
| ASSETS | |||
| Intangible assets | |||
| Capitalized expenditure for development | 115 893 | 88 762 | 95 329 |
| Goodw ill | 4 354 | 4 354 | 4 354 |
| Other intangible assets | 2 372 | - | 2 257 |
| Tangible fixed assets | |||
| Equipment | 1 702 | 4 597 | 2 031 |
| Equipment for leasing | 238 | - | 517 |
| Financial assets | |||
| Deferred tax asset | 26 361 | 18 726 | 29 820 |
| Deposits paid, long-term | 365 | 223 | 248 |
| Total fixed assets | 151 285 | 116 662 | 134 556 |
| Current assets | |||
| Inventory | 24 894 | 21 426 | 26 670 |
| Customer receivables | 109 046 | 90 579 | 87 007 |
| Other receivables | 10 151 | 11 496 | 8 060 |
| Cash and bank balances | 204 270 | 155 780 | 151 999 |
| Total current assets | 348 361 | 279 281 | 273 736 |
| Total assets | 499 646 | 395 943 | 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 | 1 192 727 | 1 192 727 |
| Translation difference | -1 724 | -1 446 | -1 248 |
| Accumulated deficit | -785 778 | -886 631 | -871 843 |
| Total shareholders' equity | 420 822 | 320 248 | 335 233 |
| Long-term liabilities | |||
| Long-term liabilities | 229 | 1 071 | 869 |
| Provisions | 6 856 | 6 080 | 7 299 |
| Total long-term liabilities | 7 085 | 7 151 | 8 168 |
| Current liabilities | |||
| Accounts payable | 26 258 | 21 705 | 24 259 |
| Other liabilities | |||
| Total current liabilities | 45 481 71 739 |
46 839 68 544 |
40 632 64 891 |
| 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 | - | - | -716 | 20 948 | 20 232 |
| New shares issued - employee stock options | 402 | 22 495 | - | - | 22 897 |
| Employee stock option program: | |||||
| Value of employees' services | - | - | - | 2 645 | 2 645 |
| 2009-09-30 | 15 597 | 1 192 727 | -1 446 | -886 631 | 320 248 |
| Total comprehensive income | - | - | 198 | 13 410 | 13 608 |
| New shares issued - employee stock options | - | - | - | - | - |
| Employee stock option program: | |||||
| Value of employees' services | - | - | - | 1 378 | 1 378 |
| 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 | - | - | -476 | 83 796 | 83 320 |
| New shares issued - employee stock options | - | - | - | - | - |
| Employee stock option program: | |||||
| Value of employees' services | - | - | - | 2 268 | 2 268 |
| 2010-09-30 | 15 597 | 1 192 727 | -1 724 | -785 778 | 420 822 |
| SEK million | Q3 2010 | Q3 2009 | Jan-Sep 2010 | Jan-Sep 2009 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EMEA | APAC | AM | Total | EMEA | APAC | AM | Total | EMEA | APAC | AM | Total | EMEA | APAC | AM | Total | |
| Net Sales | 57 | 4 | 7 | 68 | 38 | 10 | 10 | 58 | 149 | 13 | 38 | 200 | 135 | 14 | 31 | 181 |
| Regional Contribution | 17 | 0 | 2 | 19 | 19 | 2 | 4 | 24 | 48 | -2 | 12 | 58 | 69 | 0 | 12 | 81 |
| Regional Contribution% | 31% | -6% | 25% | 28% | 50% | 19% | 37% | 42% | 32% | -14% | 32% | 29% | 51% | -3% | 39% | 45% |
| Adjusted for R&D Depreciation | 5 | 0 | 1 | 6 | 13 | 1 | 3 | 17 | ||||||||
| Adjusted Regional Contribution | 23 | 0 | 2 | 25 | 61 | -1 | 15 | 75 | ||||||||
| Adjusted Regional Contribution% | 40% | 3% | 34% | 37% | 50% | 19% | 37% | 42% | 41% | -5% | 41% | 38% | 51% | -3% | 39% | 45% |
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-Sep | Jan-Sep | |||||
|---|---|---|---|---|---|---|---|
| statement and key figures, SEK m | Q3 2010 | Q3 2009 | Q4 2009 | Q1 2010 | Q2 2010 | 2010 | 2009 |
| Net sales | 67.6 | 57.5 | 52.2 | 60.5 | 71.5 | 199.6 | 180.6 |
| Gross earnings | 41.3 | 44.1 | 38.7 | 39.8 | 47.4 | 128.5 | 139.1 |
| Gross margin | 61.1% | 76.7% | 74.1% | 65.8% | 66.4% | 64.4% | 77,0% |
| Operating earnings | 9.2 | 10.5 | 2.2 | 6.2 | 11.9 | 27.4 | 31.8 |
| Operating margin | 13.6% | 18.2% | 4.2% | 10.2% | 16.6% | 13.7% | 17,6% |
| Pretax profit | 9.6 | 8.2 | 2.3 | 6.0 | 11.7 | 27.3 | 29.3 |
| Net income | 11.1 | 5.8 | 13.4 | 64.0 | 8.7 | 83.8 | 20.9 |
| Net margin | 16.4% | 10.1% | 25.7% | 105.8% | 12.2% | 42.0% | 11,6% |
| SEK thousands | Q3 | Q3 | Jan-Sep | Jan-Sep | Q4'09-Q3'10 | Q4 | Full Year |
|---|---|---|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | 12 mths | 2009 | 2009 | |
| Net Sales | 67 644 | 57 515 | 199 638 | 180 569 | 251 870 | 52 232 | 232 801 |
| Cost of Sales | -20 190 | -13 410 | -53 853 | -41 423 | -67 395 | -13 542 | -54 965 |
| Gross Earnings - 2009 accounting treatment | 47 454 | 44 105 | 145 785 | 139 146 | 184 475 | 38 690 | 177 836 |
| Gross Margin - 2009 accounting treatment | 70,2% | 76,7% | 73,0% | 77,1% | 73,2% | 74,1% | 76,4% |
| Cost of Sales - R&D depreciation | -6 133 | -4 096 | -17 246 | -11 463 | -22 008 | -4 762 | -16 225 |
| Gross earnings - 2010 accounting treatment | 41 321 | 40 009 | 128 539 | 127 683 | 162 467 | 33 928 | 161 611 |
| Gross margin - 2010 accounting treatment | 61,1% | 69,6% | 64,4% | 70,7% | 64,5% | 65,0% | 69,4% |
| Q3 | Q3 | Jan-Sep | Jan-Sep | Q4'09-Q3'10 | Full Year | |
|---|---|---|---|---|---|---|
| Amount in SEK thousands | 2010 | 2009 | 2010 | 2009 | 12 months | 2009 |
| Net Sales | 87 089 | 62 248 | 243 069 | 196 458 | 300 720 | 254 109 |
| Cost of goods & services sold | -45 495 | -19 502 | -118 292 | -59 602 | -136 786 | -78 096 |
| Gross earnings | 41 594 | 42 746 | 124 777 | 136 856 | 163 934 | 176 013 |
| Sales and marketing expenses | -21 339 | -19 821 | -69 626 | -58 919 | -92 163 | -81 456 |
| Administration expenses | -4 826 | -4 986 | -15 105 | -17 709 | -18 577 | -21 181 |
| Development expenses | -4 914 | -8 831 | -15 594 | -30 719 | -26 145 | -41 270 |
| Operating earnings | 10 515 | 9 108 | 24 452 | 29 509 | 27 049 | 32 106 |
| Net financial items | 240 | -2 307 | -249 | -2 503 | -131 | -2 385 |
| Earnings before tax | 10 755 | 6 801 | 24 203 | 27 006 | 26 918 | 29 721 |
| Tax | 10 614 | -2 365 | 188 753 | -8 352 | 199 847 | 2 742 |
| Net income | 21 369 | 4 436 | 212 956 | 18 654 | 226 765 | 32 463 |
| Amount in SEK thousands | Sep 30, 2010 | Sep 30, 2009 | Dec 31, 2009 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Intangible assets | |||
| Capitalized expenditures for development | 115 893 | 88 762 | 95 329 |
| Other intangible assets | 2 372 | - | 2 257 |
| Tangible fixed assets | |||
| Equipment | 1 702 | 4 597 | 2 031 |
| Equipment for leasing | 238 | - | 517 |
| Financial assets | |||
| Shares in group companies | 18 398 | 18 398 | 18 398 |
| Deferred tax asset | 218 573 | 18 726 | 29 820 |
| Deposits paid, long-term | 365 | 223 | 248 |
| Total fixed assets | 357 541 | 130 706 | 148 600 |
| Current assets | |||
| Inventory | 24 894 | 21 425 | 26 670 |
| Customer receivables | 109 046 | 90 579 | 87 007 |
| Receivables, subsidiaries | 56 199 | 0 | 0 |
| Other receivables | 10 054 | 32 694 | 8 060 |
| Cash and bank balances | 135 141 | 154 596 | 148 540 |
| Total current assets | 335 334 | 299 294 | 270 277 |
| TOTAL ASSETS | 692 875 | 430 000 | 418 877 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Shareholders' equity | |||
| Restricted shareholders' equity | |||
| Share capital | 15 597 | 15 597 | 15 597 |
| Other contributed capital | 302 888 | 266 779 | 276 968 |
| Non-restricted equity/Accumulated deficit | 221 767 | 27 466 | 32 463 |
| Total shareholders' equity | 540 252 | 309 842 | 325 028 |
| Long term liabilities | |||
| Long term liabilities | 229 | 1 071 | 869 |
| Other provisions | 6 468 | 6 080 | 7 299 |
| Total long-term liabilities | 6 697 | 7 151 | 8 168 |
| Current liabilities | |||
| Accounts payable | 26 258 | 21 705 | 24 259 |
| Liabilities, subsidaries | 77 831 | 46 374 | 22 071 |
| Other liabilities | 41 837 | 44 928 | 39 351 |
| Total liabilities | 145 926 | 113 007 | 85 681 |
| TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY | 692 875 | 430 000 | 418 877 |
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.
In accordance with the decision on the Annual General Meeting held on April 29th, 2010 the members of the nomination committee shall be nominated by the four largest shareholders (voting rights). In addition, the company's Chairman of the board shall be part of the nomination committee.
Net Insight's nomination committee for the 2011 Annual General Meeting consists of Lars Bergkvist (Lannebo Fonder), Clifford H. Friedman (Constellation Growth Capital), Åsa Nisell (Swedbank Robur fonds), Ramsay Brufer (Alecta) and Lars Berg (Chairman of the Net Insight Board and European Venture Partner for Constellation Growth Capital). The nomination committee appointed Lars Bergkvist (Lannebo Fonder) to serve as Chairman of the Committee.
The nomination committee's task is to present proposals to the Annual General Meeting for Chairman of the Annual General Meeting, Chairman of the Board of Directors, members of the Board of Directors and auditors, as well as fees and other remuneration to each member of the board and any remuneration for committee work and audit fees. Furthermore, the nomination committee shall make a proposal regarding the composition of the nomination committee and its tasks for the Annual General Meeting 2012.
Year-end report for 2010 February 18, 2011 Annual General Meeting 2011 April 28, 2011
Stockholm, October 22, 2010
Fredrik Trägårdh Chief Executive Officer
Fredrik Trägårdh, CEO Net Insight AB Tel: +46 (0) 8-685 04 00, email: [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
We have reviewed this report for the period 1 January 2010 to 30 September 2010 for Net Insight AB (publ). The board of directors and the CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the Swedish Standard on Review Engagements SÖG 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing in Sweden, RS, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Stockholm, October 22, 2010
ÖhrlingsPricewaterhouseCoopers
Sten Håkansson Authorised Public Accountant
Net Insight delivers the world´s most efficient and scalable transport solution for Broadcast and IP 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 Insights 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 video services over Net Insight products for more than 100 million people in more than 40 countries. Net Insight is quoted on the NASDAQ OMX Nordic Exchange, Stockholm.
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. • 433 N. Camden Drive, 6th floor • Beverly Hills, CA 90210 • USA Phone: + 1 310 887 1300 • E-mail: [email protected]
Net Insight AB (RO) • 9 Temasek Boulevard • 31/F Suntec Tower 2 • Singapore 038989 Phone: + 65 6559 5303 • Fax: + 65 6336 6610 • 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]
www.netinsight.net
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