Net Insight AB [publ] Corporate Reg. No 556533-4397

Fourth Quarter 2012

·         Net Sales of SEK 68.3 million (80.3) a decrease of 14.9% compared to the same period previous year. In comparable currencies the decrease was 13.5%.

·         Operating earnings, adjusted for restructuring expenses of SEK 3.0 million, amounted to SEK 0.8 million (16.1), corresponding to an adjusted operating margin of 1.2% (20.0)

·         Earnings per share of SEK -0.01 (0.06).

·         Total cash flow of SEK -4.7 million (0.8).

January – December 2012

·         Net sales of SEK 280.3 million (294.5) corresponding to a decrease of 4.8% compared to the same period previous year. The decrease in comparable currencies amounts to 3.5%.

·         Operating earnings, adjusted for restructuring expenses of SEK 3.0 million, amounted to SEK 5.7 million (42.8), corresponding to an operating margin of 2.1% (14.5).

·         Earnings per share of SEK 0.03 (0.13).

·         Total cash flow of SEK -10.4 million (-39.6).

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
February 14, 2012 at 08.45 am CET.

A WEAK QUARTER ENDING A CHALLENGING YEAR

FOURTH QUARTER

Revenues of 68 MSEK (80 MSEK) are 15 % below the same period in the previous year. The revenue decline is driven by the same events as explained in the full year comment below. In summary it relates to project delays in Eastern Europe, Middle East and Africa while Western Europe and APAC performed well and ahead of previous year. The gross margin reached 59 % (62 %) a difference mainly due to increased depreciation of capitalized R&D. The fourth quarter result is affected by a one-time restructuring charge of 3 MSEK. Excluding the restructuring charge the operating earnings reached 1 MSEK (17 MSEK). The restructuring charge relates to the efficiency and cost reduction program announced in October that reduces our total cost base by 25 MSEK for 2013.

During the quarter we had a good flow of repeat business from customers across the world but it was the first quarter in a long time where we actually did not close any large single projects, which of course affects the result negatively. As communicated earlier, single large projects will have a significant effect on our quarterly financial performance.

FULL YEAR 2012

Already the first three quarters indicated relatively flat revenues and, with a weak top line in the fourth quarter, we end the full year with total revenues of 280 MSEK (295 MSEK). The reported decline is 5 % and currency adjusted the decline would be 3.5 %. The gross margin reached 60 % (62 %) and the slight decline is mainly due to increased depreciations on capitalized R&D. The full year operating result, excluding the restructuring charge of 3 MSEK, reached 6 MSEK (43 MSEK). The decline is explained by; 22 MSEK of increased Operating Expenses, increased depreciation on R&D by 11 MSEK and lower revenues.
There are three main reasons why we were not able to grow in 2012. Projects identified and targeted for 2012 in Eastern Europe, Middle East and Africa did not materialize as planned and were delayed, but not lost. Secondly, five of our ten largest target project opportunities were DTT-projects, none of which materialized during the year, again not lost but delayed. Thirdly and consequently, the average order size declined significantly meaning more efforts to reach “flat” revenues.
Nevertheless, we had very important customer wins and we launched many new products. Overall we did business with over 100 of our total 175 customers around the world. We did business with over 25 new customers globally. We continued to win the DTT expansions and increase our business and presence in important countries like China and Brazil. The projects became smaller than expected but just as an example, we already count 20 different customers in China where we recently strengthened our presence.
The industry perception of a company is very important and as per recent report, Devoncroft “The Big Broadcast Survey 2012, Net Insight has improved its perception measurably over the last few years.
The market and technical trends that we have predicted are continuing in a way that increases our credibility and relevance for future video and data intensive network roll outs. During the year we also doubled the capacity of our core switches, we launched three new access products and we introduced a cost efficient possibility for network owners to improve picture quality over unmanaged public internet connections. We also did significant business and had very good market response for our new video compression module (JPEG2000).
We were not able to deliver a satisfactory result. In summary 2012 was a year when; we won business with over 100 existing customers and 25 new ones. We actually concluded 30 % more business transactions and we introduced more new products than ever before. Net Insight is very well positioned with medium and large size network operators to win larger projects, and to get back to profitable growth again.

Stockholm, February 14, 2013
Fredrik Trägårdh

Chief Executive Officer

For more information, please contact:

Fredrik Trägårdh, CEO Net Insight AB
Tel: +46 (0) 8-685 04 00, email: fredrik.tragardh@netinsight.net

Thomas Bergström, CFO Net Insight AB
Tel: +46 (0) 8-685 06 05, email: thomas.bergstrom@netinsight.net

Net Insight AB
Box 42093
126 14 Stockholm
Tel +46 (0) 8 685 04 00
www.netinsight.net
Corporate Reg. No. 556533-4397

Net Insight delivers the world’s most efficient and scalable 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 Insight’s Nimbra(TM) 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.

More than 175 world class customers run mission critical video services over Net Insight products in over 60 countries. Net Insight is quoted on the NASDAQ OMX, Stockholm.
For more information, visit www.netinsight.net