Annual Report 2009

2 Net INsIght

Content3 Highlights of the year4 Statement from the CEO6 Vision, business concept, objectives and strategies8 Market and trends

10 Business areas14 Nimbra at the customer16 Partners17 Corporate responsibility and sustainable development18 Technical platform20 Employees22 The Net Insight share24 Five year summary25 Administration report29 The Group32 The Parent Company35 Accounting principles and notes45 Auditors’ report46 Board of Directors47 The Board’s Corporate Governance Report50 Management51 Glossary and financial information 2010

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Annual general MeetingThe annual general meeting will be held at 10:00 a.m. on Thursday April 29, 2010 at Net Insight’s premises in Västberga. Shareholders who wish to attend and vote at the Annual General Meeting must be entered in the share register kept by Euroclear Sweden AB (formerly VPC AB) and register with the Company on April 23, 2010. Attendance at the mee-ting can be registered through mail to Net Insight, Box 42093, 126 14 Stockholm, by phone +46 (0)8 – 685 04 00, by fax +46 (0)8 – 685 04 20 or through e-mail to agm@netinsight.net In order to be entitled to attend, owners of shares registered with nominees must temporarily re-register the shares in their own name with Euroclear Sweden AB. A request for such registration must be made to the administrator of the shares in sufficient time prior to April 23, 2010.

DividendThe Board proposes that the AGM resolve that no dividend be paid for the 2009 fiscal year.

Net Insight in briefNet Insight’s products enable transport of voice and data services in customer networks without loss of quality. Optimal use of network capacity allows new revenue generating video services such as HDTV, digital TV, and video-on-demand to be launched and delivered simultaneously with tele phony and data traffic. All delivered with 100 percent Quality of Service – guaranteed. As a rule Net Insight’s products offer customers lower capital expenditures, shorter payback periods, and lower operating costs than rival products. Net Insight’s solutions are installed across the globe in Europe, Middle East, Asia, the Americas and Africa. Its customers are TV networks, broadcast and media companies, IPTV and cable TV providers, network owners, and telecom operators.

AnnuAl report 2009 3

l Salesdecreasedby15percenttoSEK232.8million(274.3).

l NetincomebeforetaxofSEK31.6million(40.9).

l TotalcashflowofSEK0.3million(23.5).

l Grossmarginremainedstrongandstableat76.4percent(72.4).

l 20newcustomerswereaddedandNetInsightestblisheditselfinsixnewcountries.

l NewIPtransportcapabilitieswereaddedtotheNimbraplatformena-blingnetworkownerstotransportsignalsoveracombinationofopticallinksandIP/Ethernetlinks.

l ContinuedordersfornewDigitalTerrestrialTVnetworksanddeliveriestoCATVandIPTVnetworks.

l Furtherexpandedpartnernetworkandinitialbusinesswontogetherwithlargeglobalsystemintegrators.

Brazil and India are two new and potentially large markets for Net Insight in which we won business with leading broadcasters and communications service providers. In the Middle East and China Net Insight continued to deliver equipment to significant TV production, contribution and distribution networks. An important step in Net Insight's expansion strategy has also been taken during the year when we won some initial business together with large global system integrators.

Key fIgures: 2009 2008 2007

Net sales MSEK 232.8 274.3 228.8

Operating earnings MSEK 34.0 37.9 32.6

Net income MSEK 34.4 67.9 34.0

Earnings per share SEK 0.09 0.18 0.09

Gross margin % 76.4 72.4 70.8

Equity/assets ratio % 82 77 69

Shareholders’ equity per share SEK 0.86 0.72 0.49

Average number of employees 116 101 93

Highlights of the yearThe macro economic down turn that continued during 2009 put a temporary break on Net Insight´s growth during the year. Despite this the company reports a net income before tax of SEK 34 million. During the year 20 custo-mers were added and the company entered six new markets while signifi-cantly enhancing the product portfolio with added IP functionality.

hIghlIghts of the yeAr

CEO Statement

”

4 Net INsIght

"During 2009 we intensified our efforts to open up new markets, gain the trust with new customer categories and close deals in new business segments. As a result we succesfully establis-hed Net Insight in six new markets and added 20 customers."

AnnuAl report 2009 5

A in terrestrial transport to manage much larger and higher quality transmissions more effectively. As regards digital terrestrial TV networks (DTT), we have an exceptional track record. We now networks (DTT), we have an exceptional track record. We now count 20 network wins with four in the last few months alone. count 20 network wins with four in the last few months alone. Many regional and nationwide DTT rollouts remain around the Many regional and nationwide DTT rollouts remain around the world as over 100 countries still need to do their analog to digital world as over 100 countries still need to do their analog to digital switchover.

Mobile TV is trying to find its way to paying users. The upMobile TV is trying to find its way to paying users. The up-take is slow but we are involved in a few early mobile TV rollouts. take is slow but we are involved in a few early mobile TV rollouts. In 2009, we also had our first significant wins in cable TV netIn 2009, we also had our first significant wins in cable TV net-works (CATV). Our newly introduced products and functionaliworks (CATV). Our newly introduced products and functionali-ties increase our competiveness in this area and we will win more ties increase our competiveness in this area and we will win more business here in the future. business here in the future.

The ultimate proof for what I outline above is when regional The ultimate proof for what I outline above is when regional or global operators decide to run their most mission-critical seror global operators decide to run their most mission-critical seror global operators decide to run their most mission-critical ser-vices across our true multiservice Nimbra platform. A relevant vices across our true multiservice Nimbra platform. A relevant case in point is when TATA Communications selected the Nimcase in point is when TATA Communications selected the Nim-bra platform. Tata Communications deliver managed solutions to multinational enterprises, broadcasters, service providers and Indian consumers based on one of the most advanced and largest submarine cable networks and a Tier-1 IP network with connecti-vity to more than 200 countries. This is just one very encouraging case where a world class IP/MPLS operator selected the Nimbra as their ideal platform for a new global video distribution network. This particular win also underscores our partnership strategy, as our recently appointed partner in India really helped in securing the trust of the customer and the contract.

Our business through partners increased to 34 percent in 2009. We strive to increase this number and have recently added 10 more partners. We are very thankful to our partners as most of them delivered real business to us in 2009.

Another key trend we are experiencing and continue to exploit is that our customers utilizing the Nimbra platform are leveraging their networks and are begining to work with each other, leading to accelerated traffic growth over Nimbra based networks. For example, several large operators are now working with Hibernia MediaXstream to create a mutual business relationship where vi-deo travels seamlessly and globally. This is slowly beginning to create what is termed a “network effect” for our customers. In essence, we believe the effect provides Net Insight with a unique opportunity to be the facilitator of a video-optimized global net-work with 100 percent QoS for new, existing and next genera-tion applications.

Net Insight is a product of genuine, high-energy teamwork between stakeholders, partners, customers and a very skilled group of people. Based on that and the fantastic feedback we re-gularly get from our customers, we are building momentum for future growth.

Thanks to all involved.

Fredrik Trägårdh,CEO – Net Insight AB

After being listed on the Stockholm Stock Exchange for 10 AAfter being listed on the Stockholm Stock Exchange for 10 Ayears, Net insight has now produced a third consecutive year Ayears, Net insight has now produced a third consecutive year Aof substantial profitability. However, in the wake of customer Aof substantial profitability. However, in the wake of customer Aproject delays, deferrals related to repeat business, and no large Aproject delays, deferrals related to repeat business, and no large Aprojects in the rollout phase, 2009 was challenging. Our reAprojects in the rollout phase, 2009 was challenging. Our reA -sponse to those challenges was to drive even harder along our Asponse to those challenges was to drive even harder along our Astrategic path to enter new geographic markets, win the trust of Astrategic path to enter new geographic markets, win the trust of Anew customers, and win business in new market segments.

The 2009 numbersNet sales amounted to SEK 233 million, which is higher than 2007 but 15 percent below net sales for 2008. Despite lower net sales, the operating result came close to that of 2008, reach-ing SEK 34 million. That represents a healthy operating margin of 14.6 percent. On a cash basis, we increased our investments compared to 2008 and increased staff by more than 10 percent, compared to 2008 and increased staff by more than 10 percent, compared to 2008 and increased staff by more than 10 percent, compared to 2008 and increased staff by more than 10 percent, mainly to strengthen our front line. An important contributor mainly to strengthen our front line. An important contributor mainly to strengthen our front line. An important contributor mainly to strengthen our front line. An important contributor to the operating result is our strong gross margin. Our gross to the operating result is our strong gross margin. Our gross to the operating result is our strong gross margin. Our gross to the operating result is our strong gross margin. Our gross to the operating result is our strong gross margin. Our gross margin has improved steadily from 63 percent in 2005 to 76 margin has improved steadily from 63 percent in 2005 to 76 margin has improved steadily from 63 percent in 2005 to 76 margin has improved steadily from 63 percent in 2005 to 76 margin has improved steadily from 63 percent in 2005 to 76 percent in 2009. The cash flow for 2009 was slightly positive, percent in 2009. The cash flow for 2009 was slightly positive, percent in 2009. The cash flow for 2009 was slightly positive, percent in 2009. The cash flow for 2009 was slightly positive, percent in 2009. The cash flow for 2009 was slightly positive, and together with the positive cash development in recent yeand together with the positive cash development in recent yeand together with the positive cash development in recent yeand together with the positive cash development in recent yeand together with the positive cash development in recent ye-ars, Net Insight benefits from a very strong financial position ars, Net Insight benefits from a very strong financial position ars, Net Insight benefits from a very strong financial position ars, Net Insight benefits from a very strong financial position with net cash of SEK 152 million and an equity ratio of 82 with net cash of SEK 152 million and an equity ratio of 82 with net cash of SEK 152 million and an equity ratio of 82 percent at the end of 2009.

Our position today and strategic vision for the futureOur strategic pillar of fundamentally and effectively solving the quality of service (QoS) bottleneck in communication networks fits extremely well with the accelerating surge in video traffic in networks around the world. Operators and network owners are rethinking their network and business models to achieve the hig-hest possible efficiency at the lowest possible risk and cost. Today we have successfully won the trust of more than 120 customers in 35 countries and, in 2009 alone we gained 20 new customers and 6 new geographic markets. Very importantly 2009 was the year we were tested and fully proven to have the ability to run traf-we were tested and fully proven to have the ability to run traf-we were tested and fully proven to have the ability to run traffic over any network architecture, including shared IP networks. Net Insight is well known for enabling customers to transport IP/Ethernet traffic with the market’s highest QoS, and now we can also improve QoS over existing IP network infrastructures by ad-ding Nimbra nodes at the network edges. We continued to invest in R&D and, as always we are developing new efficient functions to effectively address new customer demands in our core segments which will also lead to increasing business opportunities for Net Insight in new market segments. The ability of the Nimbra plat-form to run any kind of traffic over any network topology with the highest quality and bandwidth efficiency simply means, better business for our customers. Truly delivering efficiency, reliability, quality, and simplicity to our customers is what we are known for, and we will do everything we can to safeguard that position.

The broadcast and media network segment (BMN) and our addressable market continues to be growing. Within the BMN segment there is a significant amount of sports and event dri-ven business for which we have a strong track record and in that segment we also see the satellite operators continuing to invest

ceo stAtMeNt

net Insight was founded in 1997 on the vision that network traffic will increasingly be dominated by video applications such as tV, pay-per-view, video-on-demand, video confe-rences and music videos. these services demand substantially increased network capa-city and 100 percent quality of service, which is what net Insight’s products delivers. the ongoing worldwide transition from analog to digital tV distribution and the increase in high-definition (HD) content are also important market drivers.

Vision, business concept, objectives and strategies

Overarching objectives

generate return on equity and earnings per share to make the

company an attractive investment.

grow faster than the market, with good profitability.

leading global supplier of network products for

media-rich traffic.

VIsIoN, busINess coNcept, objectIVes AND strAtegIes

90 %

D perceNt

bAND trAffIc

n Videon Data/ Voice

Net Insight continues to expand it´s partner network for efficient market coverage

2008 2009

local partners 22 30

Global partners 0 2

Sales through partners 27 % 34 %

6 Net INsIght

VIDeo AND tV Are eXpecteD to AccouNt for 90 perceof All broADbAND

media-rich traffic.

Net Insight continues to expand it´s partner network for efficient market coverage

2008 2009

22 30

0 2

27 %

ocal partners

Global partners

Sales through partners

AnnuAl report 2009 7

VIsIoN, busINess coNcept, objectIVes AND strAtegIes

NBuSINESS CONCEPTNet Insight’s business concept is to develop, market and sell proNNet Insight’s business concept is to develop, market and sell proN -ducts to public and private networks that transport high-quality, Nducts to public and private networks that transport high-quality, Nmedia-rich traffic. Net Insight’s products offer customers the Nmedia-rich traffic. Net Insight’s products offer customers the Nopportunity to introduce new revenue-generating services, while Nopportunity to introduce new revenue-generating services, while Nat the same time cutting capital expenditures and operating costs. Nat the same time cutting capital expenditures and operating costs. NNimbra offers a scalable platform that is capable of handling exNNimbra offers a scalable platform that is capable of handling exNisting and added services with a minimum of manual control, best in class total cost of ownership and a guaranteed 100 percent Quality of Service (QoS). Depending on the specific needs of the individual customer, Net Insight offers either a comprehensive or a focused selection of products and services. Revenues are generated through the sale of products and licenses, support and maintenance agreements, installation services and training.

TARGET FulFIllMENTNet Insight did not provide any detailed earnings or sales fo-recast for 2009. Revenues have not been growing as planned during the year caused by three main reasons; the repeat busi-ness declined but remains substantial, there were no large pro-jects in the delivery phase and investment decisions slipped in many markets during the year. The macro economic conditions 2009 had a negative effect on the industry. Despite that, Net Insight reported positive earnings and cash flow for the full year, supported by a strong gross margin.

Compared to last year, total sales decreased 15 percent to SEK 233 million, with a net income of SEK 34 million and a positive cash flow. Net Insight closed the year with a strong ba-lance sheet, with unchanged liquid funds of SEK 152 million and an equity/asset ratio of 82 percent. The Company holds no interest-bearing liabilities, which is a strong position going forward in view of the lingering credit crunch. The majority of sales, 71 percent, derive from the professional media industry (Networks for Broadcast & Media), which is still the largest market segment. Net sales of services such as training, mainte-nance and support continued to grow to 18 percent. Indirect sales represented 34 percent during the year, which was in line with both the target and the partner strategy.

StrategyNet Insight’s strategic objective is to acquire a major share of the me-dia-rich carriage market, focusing on providing transport network products that facilitate the production, distribution and delivery of media-rich content. Net Insight will focus sales, marketing and pro-

Net Insight’s strategic objective is to acquire a major share of the media-rich carriage market by providing transport network products that facilitate the production, distri-bution and delivery of media-rich content. In order to achieve its objective, Net Insight applies detailed strategies for distribution, marketing, products, development and organization.

best in class total cost of ownership and a guaranteed 100 percent Quality of Service (QoS). Depending on the specific needs of the individual customer, Net Insight offers either a comprehensive or a focused selection of products and services. Revenues are generated through the sale of products and licenses, support and maintenance agreements, installation services and training.

TARGET FulFIllMENTNet Insight did not provide any detailed earnings or sales forecast for 2009. Revenues have not been growing as planned during the year caused by three main reasons; the repeat business declined but remains substantial, there were no large projects in the delivery phase and investment decisions slipped in many markets during the year. The macro economic conditions 2009 had a negative effect on the industry. Despite that, Net

jects in the delivery phase and investment decisions slipped in many markets during the year. The macro economic conditions 2009 had a negative effect on the industry. Despite that, Net Insight reported positive earnings and cash flow for the full year, supported by a strong gross margin.

ducts to public and private networks that transport high-quality, media-rich traffic. Net Insight’s products offer customers the opportunity to introduce new revenue-generating services, while at the same time cutting capital expenditures and operating costs. Nimbra offers a scalable platform that is capable of handling ex-isting and added services with a minimum of manual control, best in class total cost of ownership and a guaranteed 100 percent Quality of Service (QoS). Depending on the specific needs of the individual customer, Net Insight offers either a comprehen-sive or a focused selection of products and services. Revenues are generated through the sale of products and licenses, support and maintenance agreements, installation services and training.

duct excellence activities in three segments: Broadcast and Media duct excellence activities in three segments: Broadcast and Media duct excellence activities in three segments: Broadcast and Media Networks (BMN), Digital Terrestrial TV (DTT) and Mobile TV, Networks (BMN), Digital Terrestrial TV (DTT) and Mobile TV, Networks (BMN), Digital Terrestrial TV (DTT) and Mobile TV, and Cable TV and IPTV (CATV/IPTV) services. The main focus and Cable TV and IPTV (CATV/IPTV) services. The main focus and Cable TV and IPTV (CATV/IPTV) services. The main focus will lie on the first two segments, while CATV/IPTV will be purwill lie on the first two segments, while CATV/IPTV will be purwill lie on the first two segments, while CATV/IPTV will be pur-sued on a case-by-case basis. In order to achieve its objectives Net Insued on a case-by-case basis. In order to achieve its objectives Net In-sight will apply the following strategies for distribution, marketing, sight will apply the following strategies for distribution, marketing, products, development and organization during the coming year: products, development and organization during the coming year:

DISTRIBuTION AND MARKETING– Continue to expand geographically in the prioritized segContinue to expand geographically in the prioritized seg-

ments BMN and DTT/ Mobile TV.ments BMN and DTT/ Mobile TV.– Expand Net Insight’s addressable market through leveraging

newly developed IP/Ethernet functionality and create new access products to ease entry into large customers.

– Explore opportunities to capitalize on the unique Time Transfer function.

– Strengthen the position and expand from the media produc-tion and contribution (BMN) segment into the neighboring Content Delivery Networks (CDN) segment.

– Focused market activities towards all ongoing projects in Di-gital Terrestrial TV (DTT) around the world.

– Expand the company’s sales force for direct sales and marke-ting initiatives aimed at selected customer segments and to support the increasing number of partners.

– Establish additional partnerships with global and local system integrators to improve and expand market reach.

PRODuCTS AND DEVElOPMENT– Further develop existing solutions and products in close col-

laboration with the market. Examples of new products and applications in the pipeline include access products and "bundling" which will further expand Net Insoght market opportunity.

ORGANIZATION– Strive to achieve a decentralized organization in which employ-

ees have insight into and are able to influence the Company’s objectives and performance.

– Continue to develop employee skills and expertise.– Build long-term commitment among the employees through

competitive reimbursement systems and stock option pro-grams.

Market and trends

The trend towards a dramatic increase in traffic on the net continues. It is driven by an explosive growth in video streaming via popular websites like YouTube and Facebook, a general transition from analog to digital TV broadcasts, major increases in TV and video-on-demand services, and transition to HDTV quality in media production and broadcasting. Net Insight's products are specially suited for handling this increased video and media traffic.

8 Net INsIght

n Videon Data/ Voice

n Standard definition tV (SD-SDI)n High definition tV (HD-SDI)n Full high definition tV (3G-SDI)n 3D tV (full HD)

MArKet AND treNDs

n Asian europen north American other countries

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hDtV reQuuIresres MANy tIMeslArgerrger N NetetWWororK cApApAp cIty

VIDVIDeoeo AND AND tV Are eXpec-teD to AccouNt for 90 perceNt of All broAD-bAND trAffIc

NuMber of IptV users Is eXpecteD to eXceeD 80 MIllIoN by 2012

AnnuAl report 2009 9

MArKet AND treNDs

tThese market developments mean that network operators must tThese market developments mean that network operators must tThese market developments mean that network operators must These market developments mean that network operators must upgrade their networks to handle the heavily increased traffic tupgrade their networks to handle the heavily increased traffic tupgrade their networks to handle the heavily increased traffic upgrade their networks to handle the heavily increased traffic while guaranteeing the quality of these new video and media twhile guaranteeing the quality of these new video and media twhile guaranteeing the quality of these new video and media while guaranteeing the quality of these new video and media services. This generates increased demand for Net Insight's nettservices. This generates increased demand for Net Insight's nettservices. This generates increased demand for Net Insight's net-work solutions, which enable guaranteed quality in transmistwork solutions, which enable guaranteed quality in transmistwork solutions, which enable guaranteed quality in transmis-sion of traffic through the network, while bandwidth in the tsion of traffic through the network, while bandwidth in the tsion of traffic through the network, while bandwidth in the network is utilized more efficiently.

Net Insight sells its products to major network operators and, Net Insight sells its products to major network operators and, for the media segment, also directly to TV and media compafor the media segment, also directly to TV and media compa-nies. Operators increasingly wish to be involved in the entire nies. Operators increasingly wish to be involved in the entire strategic value chain, from production to distribution of TV strategic value chain, from production to distribution of TV strategic value chain, from production to distribution of TV and media. All this can be accomplished on the same platform and media. All this can be accomplished on the same platform with the help of Net Insight’s Nimbra products.with the help of Net Insight’s Nimbra products.

Net Insight – when transmission quality is crucialThe Nimbra platform is specially designed to handle major inThe Nimbra platform is specially designed to handle major in-creases in traffic with requirements for high quality. Nimbra creases in traffic with requirements for high quality. Nimbra can most simply be described as a media switch/router – a concan most simply be described as a media switch/router – a concan most simply be described as a media switch/router – a con-veyor of data and media content. A traditional router sorts trafveyor of data and media content. A traditional router sorts trafveyor of data and media content. A traditional router sorts traf-veyor of data and media content. A traditional router sorts traf-veyor of data and media content. A traditional router sorts traffic by priority, typically with telephony as the highest priority fic by priority, typically with telephony as the highest priority followed by video, business traffic, and regular broadband data. followed by video, business traffic, and regular broadband data. But if there is too much prioritized traffic at once, queues form in the network resulting in delay and packet loss. This can be compared to all cars driving in the bus lane simultaneously at rush hour.

The unique thing about Nimbra is that traffic is channeled instead. Nimbra doesn't care what the content is – it creates a separate channel for every stream. This provides more secure transmission, where traffic in one channel cannot affect an-other channel's quality or integrity. The technology also provi-des more efficient bandwidth utilization for video traffic. This unique handling of resources can be utilized to build new IP-based media networks, and can also be used over existing IP networks to improve quality and security. Channelization also enables automatic, real-time tracking of each individual stream and reduces the need for separate monitoring equipment (pro-bes), which often amount to extra costs in traditional router networks.

Both the cable TV sector and telecom companies offer triple-play services (telephony, internet, TV) in their broadband net-works. New TV and film services are also being launched direc-tly over the internet, and Skype is coming out with a video call service integrated into new TV screens. These applications also increase quality requirements in traditional broadband traffic. Corporate TV and high-quality video conferencing services have also become more essential to businesses. This is mostly driven by concerns over the environment, which demands less business travel. All these developments mean that network ope-rators are asking for products where various types of traffic can be converged on the same platform, independently of network structure, promoting sales of Nimbra solutions.

From satellite to fiber optics Another market trend is that event broadcasting is going from traditional satellite links to fiber optic networks, since they are

significantly less expensive. The sight of huge outside broadcast significantly less expensive. The sight of huge outside broadcast vehicles and long cable runs at sporting events and concerts vehicles and long cable runs at sporting events and concerts will become a rarity. EBU Eurovision, which handles broadcasts will become a rarity. EBU Eurovision, which handles broadcasts from most major international events to all large state-owned TV companies in Europe, has invested in a fiber optic network for such broadcasts that were formerly handled entirely via sa-tellite. Their whole network is constructed with Net Insight's Nimbra products. Telecom operators have also begun offering this type of media service over their networks, leading to several new business deals for Net Insight. During the 2010 Soccer World Championship in South Africa, the Nimbra platform will be used to transport broadcasts to Europe, North America, South America, and Asia.

Transition to digital TV distribution favors Net Insight A large market for Net Insight is the continued transition from analog to digital terrestrial TV distribution. A Nimbra is typi-cally needed on each large TV tower in the digital terrestrial network, and Net Insight works directly and with partners on expanding our market share in this segment. It is estimated that in the next five to seven years, about 150 countries will im-plement this transition, among them big countries like Russia, China, and India. In the last few years, Net Insight has won about 20 rollouts of these digital terrestrial television networks. Among these is one in Norway that is considered to be one of the world’s largest and most modern with its 450 transmission stations using Nimbra equipment.

The 2009 economic crisis pushed back some planned ex-pansions of digital terrestrial networks, and some major media companies also pared down their investments due to lower ad revenues. However, the underlying growth in the media indu-stry and the transition to HD, 3D and new production formats are still high. All this, combined with the fact that the deadline for digital TV transition in most countries is fixed, leads Net Insight to believe in strong growth in the near future within its primary segments.

Investing in access product initiatives and IP network quality guarantees Net Insight is also developing simpler, less expensive Nimbra products to increase its market presence in access networks. With such access products, it will also be easier to get established with new customers, which could potentially lead to larger pro-jects. Another major development focus has been on launching the unique features that guarantee quality of video transmission over IP networks – a strong growth market. During the year, the company introduced a channelized IP trunk that enables the same high quality transmission guarantee in IP networks as for traffic in fiber optic networks and telecom operators’ SDH/SONET networks. It also enables easy handling of media servi-ces when constructing large IP-based media networks.

It is gratifying to note that several market trends point toward greater demand for Net Insight's network solutions, which offer guaranteed high broadcast quality and secure transmissions.

Net Insight’s sales, marketing, and product development efforts are divided into three business areas: Broadcast and Media, Digital Terrestrial TV and Mobile TV, and Cable TV/IPTV, with current focus mainly on the first two areas.

Business areas

broADcAst AND MeDIA The Broadcast and Media busi-ness area comprises network solutions for production and contribution of media services. For production, Net Insight’s products for transmitting TV images and sound from sports arenas, concerts, and other events to TV and media com-pany studios are used.

DIgItAl tV AND MobIle tVThe Digital Terrestrial TV business area comprises dist-ribution of TV programs from a central location, a headend, to transmission towers within a country or region. Terrestrial mobile TV is a similar appli-cation in which the receiving device is a mobile phone.

cAble tV AND IptVNetworks for cable TV and IPTV are principally used for distributing TV and video along with broadband and telephony to households. TV programs are distributed with the help of point-to-multipoint links, so-called multicasting.

10 Net INsIght

busINess AreAs

intäkter per produktgruppssAlesles per regIoNn ApAC 8pAC 8p %n north and South America 16%n eMeA 76 %

reVeNues per busINess AreAn IptV/Cable tV 2%n Digital terrestrial tV and Mobile tV 27%n Broadcast & Media 71 %

reVeNuesues per proDuct groupn other 1%n Support and services 18%n licensing 9%n Hardware 72%

Most of Net Insight’s sales consist of hardware sales in the Broadcast and Media busi-Most of Net Insight’s sales consist of hardware sales in the Broadcast and Media busi-Most of Net Insight’s sales consist of hardware sales in the Broadcast and Media busi-Most of Net Insight’s sales consist of hardware sales in the Broadcast and Media busi-ness area. Europe, the Middle East, and Africa (EMEA) comprise Net Insight’s largest ness area. Europe, the Middle East, and Africa (EMEA) comprise Net Insight’s largest ness area. Europe, the Middle East, and Africa (EMEA) comprise Net Insight’s largest region in terms of sales.

AnnuAl report 2009 11

busINess AreAs

BROADCAST AND MEDIA

The Broadcast and Media business area comprises network so-lutions for production and contribution of media services. For production, Net Insight’s products are used for transmitting TV pictures and sound from sports arenas, concerts, and other events to TV and media company studios. For contribution, TV companies exchange media content between central stu-dios, regional and international studios, other TV companies, production companies, etc. before the finished TV programs are ready for distribution. The sheer quantity of produced media has shown explosive growth in recent years, helping to expand has shown explosive growth in recent years, helping to expand the market for Net Insight’s products in this business area.the market for Net Insight’s products in this business area.

Broadcast and Media was the largest market area for Net Broadcast and Media was the largest market area for Net Insight in 2009, and its share of the company’s collective reInsight in 2009, and its share of the company’s collective re-venues was 71 percent. According to industry organization venues was 71 percent. According to industry organization IABM, the total communications market for broadcast and IABM, the total communications market for broadcast and media amounts to about SEK 16 billion, of which Net Insight’s media amounts to about SEK 16 billion, of which Net Insight’s media amounts to about SEK 16 billion, of which Net Insight’s addressable market for current products amounts to about SEK addressable market for current products amounts to about SEK addressable market for current products amounts to about SEK 2.5 billion annually.2.5 billion annually.

Net Insight’s customers in this business area are to an inNet Insight’s customers in this business area are to an inNet Insight’s customers in this business area are to an in-creasing degree telecom operators and satellite operators, concreasing degree telecom operators and satellite operators, concreasing degree telecom operators and satellite operators, con-tributing to market growth while increasing Net Insight’s postributing to market growth while increasing Net Insight’s postributing to market growth while increasing Net Insight’s pos-sibilities for synergy revenues in other business areas. Operators sibilities for synergy revenues in other business areas. Operators sibilities for synergy revenues in other business areas. Operators usually build large networks that can be used to offer services usually build large networks that can be used to offer services to several TV and media companies simultaneously. However, to several TV and media companies simultaneously. However, direct sales to TV and media companies continue to be an imdirect sales to TV and media companies continue to be an im-portant source of income for Net Insight.portant source of income for Net Insight.

More media via fiber opticsTraditionally, most media traffic went via satellite. With a fiber Traditionally, most media traffic went via satellite. With a fiber Traditionally, most media traffic went via satellite. With a fiber optic based terrestrial solution, TV and production companies optic based terrestrial solution, TV and production companies optic based terrestrial solution, TV and production companies can now exchange high-quality, uncompressed material in real can now exchange high-quality, uncompressed material in real time at a lower cost and independent of geographic distance, time at a lower cost and independent of geographic distance, which can also optimize their production processes. All data and telephony can be transported in the same network, redu-cing total communication costs significantly. Transmission via fiber optics also has lower delay than satellite communication, which is especially important for media contribution. From being previously considered an item in the overhead budget, a supplementary fiber optic network enables new services and,

consequently, new sources of income for satellite operators.consequently, new sources of income for satellite operators.Another reason that many operators and media companies Another reason that many operators and media companies

choose Net Insight’s network solutions is that the products ofchoose Net Insight’s network solutions is that the products of-choose Net Insight’s network solutions is that the products of-choose Net Insight’s network solutions is that the products offer a better utilization of network capacity and a simple transifer a better utilization of network capacity and a simple transi-tion from standard definition (SD) to high definition (HD) tion from standard definition (SD) to high definition (HD) and 3D. The Nimbra platform is designed to handle producand 3D. The Nimbra platform is designed to handle produc-tion, contribution, and distribution on the same platform and tion, contribution, and distribution on the same platform and to offer cost-effective transport of compressed and uncompresto offer cost-effective transport of compressed and uncompres-sed video signals. Studio equipment and servers can be directly sed video signals. Studio equipment and servers can be directly sed video signals. Studio equipment and servers can be directly connected to standard video and audio interfaces in the platconnected to standard video and audio interfaces in the platconnected to standard video and audio interfaces in the plat-form, thus reducing costs. The low delay and high transmission form, thus reducing costs. The low delay and high transmission form, thus reducing costs. The low delay and high transmission quality mean that even if you work with equipment remotely, it quality mean that even if you work with equipment remotely, it quality mean that even if you work with equipment remotely, it seems like you are sitting on site. All this enables more efficient seems like you are sitting on site. All this enables more efficient use of studio resources and shorter production schedules for use of studio resources and shorter production schedules for TV companies.

Tata opens up India and South Asia to NimbraTata Communications is an example of a major global tele-Tata Communications is an example of a major global tele-com operator that chose Net Insight’s Nimbra equipment for com operator that chose Net Insight’s Nimbra equipment for expanding into the media segment in 2009. Tata has utilized its global fiber optic network to implement a global Nimbra solution in which several cities in India are linked together with other countries in Asia, Australia, Europe, and North America. Aldeavision is a major media operator that replaced its media networks in North and South America with the Nimbra plat-form in 2009. Among the large media companies that selected the Nimbra platform for their entire contribution solution is Danmarks Radio. Europe’s largest IPTV operator built a mas-sive contribution network between its major transmission sites. Net Insight got this order via its partner Nokia-Siemens Net-works. Other major European customers continued to upgrade their networks with more Nimbra nodes. Swedish media ope-rator Teracom is expanding its media network between major Scandinavian cities. EBU is expanding its Eurovision network to more sites in Asia, and former satellite operator Globecast ordered several Nimbra products. In Asia, Japanese operator KDDI and Chinese TV company CCTV continued to expand their international networks.

12 Net INsIght

busINess AreAs

DIGITAl TERRESTRIAl TV AND MOBIlE TV

The Digital Terrestrial TV business area comprises distribution of TV programs from a central location, a headend, to trans-mission towers within a country or region. Terrestrial mobile TV is a similar application in which the receiving device is a mobile phone. The difference is that the recipient of the radio signals from the transmission tower in this case is a cell phone or other handheld device instead of a regular TV antenna. The transition to digital terrestrial networks frees up more frequen-cies for mobile applications like wireless broadband and mobile TV, which pushes national regulators to speed up the digital transition.

This market area made up 27 percent of Net Insight's sa-les in 2009. It is a market currently valued at about SEK 800 million annually in the company's product areas. According to IMS Research, the digital TV market is expanding rapidly, with annual growth of more than 40 percent. The number of hous-eholds with digital terrestrial TV is expected to triple globally over the next five years.

Net Insight's customers in this business area are either media companies or telecom operators who need an efficient, scalable national infrastructure for transporting TV programs to trans-mission towers. The ongoing transition from analog to digital TV distribution and the transition from SD to HD programs are important incentives for Net Insight's products. Digital TV provides better picture and sound quality and offers more op-tions. For operators, the technology leads to lower operating costs and the opportunity to offer more TV channels and new services to their subscribers.

Freed up frequencies for saleAnalog broadcasts take four to five times as much frequency space as digital broadcasts. That is why governments around the world are pushing to implement the transition to digital TV. They can then sell the freed frequencies to various players on the market, bringing in billions to public treasuries. The EU has set a deadline for member countries to have completed the

shutdown of analog networks by 2012.An important product property that has made Net Insight

even more competitive in this market area is the time trans-fer function. It eliminates the need for costly and potentially vulnerable GPS receivers for the often entirely necessary time synchronization of transmission towers. With the Nimbra plat-form, this time information can be sent with a high degree of security and accuracy over the same network that transmits TV signals.

More channels over the same infrastructureAs in the Broadcast and Media business areas, the Nimbra

platform's support for many different services is important to operators of TV distribution networks. The same network built for distribution of digital TV can also be used to offer other ser-vices and generate new revenues. This includes mobile TV, di-gital radio, monitoring services, video and audio contributions from regional studios, contributions from sports arenas, and more. The high degree of utilization in the Nimbra platform often enables 15-20 percent more TV channels to be sent over the same infrastructure, reducing expansion costs and increa-sing revenues for pay-TV services.

One of Net Insight's more recent contracts was for expan-sion of Slovakia's digital terrestrial network. Another country in Western Europe also chose the Nimbra platform in 2009 for its national digital terrestrial television network. China, with the world's largest TV market, also set up an ambitious plan for transition to digital TV. Net Insight won contracts in three Chinese regions for their transition to digital TV distribution. The good results of Net Insight's broadcasts of the 2008 Pe-king Olympics contributed to the early success in China. In Korea, a major TV company built a regional Nimbra network for distribution of digital and mobile TV in 2009. Last year, the company also won a breakthrough order in Latin America for Brazilian TV company Globo for their digital terrestrial network.

AnnuAl report 2009 13

busINess AreAs

CABlE TV AND IPTV

Networks for cable TV and IPTV are principally used for dist-ributing TV and video along with broadband and telephony to households. TV programs are distributed with the help of point-to-multipoint links, so-called multicasting. It occurs from a central location (headend) to local stations where the fiber optic network switches over to copper. All services are transmit-ted in IP/Ethernet format except for older cable TV networks in which TV and video are transmitted as ASI signals.

Cable TV and IPTV is Net Insight's smallest business area, representing 2 percent of total sales in 2009. In Q4, this fi-gure rose to 8 percent due to several successful product re-leases during the year that improved the competitiveness of Net Insight's solutions within this business area. This area has enormous potential but is also more competitive than the other business areas. Download sites like YouTube and social communities like Facebook have caused explosive growth in network traffic. According to Bell Labs Research, TV and vi-deo will represent 90 percent of broadband traffic by 2012. Therefore, the market for offering new products and services to businesses and households in broadband networks is expected to increase sharply over the next few years. According to ana-lysis company IDC, global sales of equipment for this type of network amounted to about SEK 16 billion in 2009.

More customers means more services Net Insight's customers in this business area are chiefly telecom and cable TV operators. When cable operators began launching broadband services and telephony, telecom operators were for-ced to match this by also offering TV and video services. To increase revenues per customer and reduce churn, cable and telecom operators began offering triple-play packages (telepho-ny, broadband, digital TV). Besides the rising amount of video in broadband networks, commercial video traffic has also in-creased in recent years. This is due to the transition to HDTV and expanded pay-TV and on-demand services, such as renting a film or watching any TV program you want, whenever you

want. More video in networks enhances the competitive edge of Net Insight's Nimbra platform.

A key to success for Net Insight in IPTV is to be able to guarantee transmission quality of TV and video. Most IPTV networks still have a limited number of TV and video custo-mers, so they have been able to implement solutions over tradi-tional data networks. When the number of customers increases and video traffic grows, demand from telecom operators for solutions with guaranteed quality of service will most likely increase. This favors Net Insight, which also has strong solu-tions for primary distribution from studio to regional play-outs (head-ends).

Enhanced solutions for cable TV and IPTVTransmission solutions for cable TV are very similar to IPTV, so the Nimbra platform's 100 percent guarantee for quality of service is a crucial feature. For cable TV, the unique time trans-fer function can also be used to achieve more efficient distribu-ted solutions. The Nimbra 680's expanded support for Ether-net services with integrated Ethernet switching, introduced in 2009, enhanced our solutions for cable TV as well as IPTV, thus increasing revenues in this business area.

Net Insight won several substantial orders in 2009 in this expanding business area. In Japan, a regional cable TV operator chose the Nimbra platform for its new distribution network from regional exchanges to hub nodes. Net Insight received an order for delivery of a national core network for cable TV from a North African country. The customer, a national tele-com operator, will distribute TV through the network with 100 percent quality of service between 15 regional localities along with locally produced video content. WIN Networks in the US built an IPTV network based on the Nimbra 680 with the new Ethernet switching function. WIN also chose the Nimbra plat-form for an IPTV distribution network to American military facilities in Japan from its exchange in the US.

NIMBRA at the customer NIMBRA at the customer NIMBRA at the customer

lIVElIVE HD FROM NEw YORKORK TO STOCKHOlM INMIllISECONDS

Telia Sonera International Carrier (IC) owns and operates more Telia Sonera International Carrier (IC) owns and operates more than 43,000 kilometers of fiber network, covering more than than 43,000 kilometers of fiber network, covering more than 100 points of presence in 35 countries across Europe, the US 100 points of presence in 35 countries across Europe, the US and Asia. With Net Insight as sole equipment vendor Telia Soand Asia. With Net Insight as sole equipment vendor Telia So-nera IC built its Media Connect network to offer cost-effective nera IC built its Media Connect network to offer cost-effective nera IC built its Media Connect network to offer cost-effective distribution of media content and virtually unlimited banddistribution of media content and virtually unlimited band-width to broadcasters and content providers.

“We trust our most rigorous and important media network transport to Net Insight on the basis of the unmatched qua-lity and flexibility that Nimbra offers for live, uncompressed video,” says Åsa Boström, Senior Manager CDN and Media, Telia Sonera IC.

Media companies are facing a major challenge in distributing content over a number of different platforms with high quality. Media Connect offers a complete platform for distributing high quality broadcasts over fiber. Designed specifically for interna-tional contribution and distribution services to the professional media industry, the network carries all types of professional vi-deo content, from live transmission and real-time playout to less time-critical contribution traffic.

In 2009, TeliaSonera IC incorporated the Nimbra platform into its contribution network to transport uncompressed stan-dard-definition (SD) video from all 16 arenas in the Swedish premier football league, Allsvenskan, to a central production and editing facility.

“Sweden’s largest football league and its fan base rely on us to provide an optimal viewing experience for all televised games. We wouldn’t trust this transport task to anyone other than Net Insight,” says Boström and explains that the major advantages of Nimbra compared to satellite distribution are the superior speed and unlimited bandwidth.

As a result, the traditional delay experienced in live broadAs a result, the traditional delay experienced in live broadAs a result, the traditional delay experienced in live broad-casts via satellite becomes a thing of the past and viewers enjoy casts via satellite becomes a thing of the past and viewers enjoy casts via satellite becomes a thing of the past and viewers enjoy a better real-time experience. The capability of Media Connect a better real-time experience. The capability of Media Connect to deliver live High Definition (HD) programming at very high to deliver live High Definition (HD) programming at very high speed allowed the live television broadcasts of the major Swe-dish entertainment show “Söndagsparty” (Sunday Party) with well-known hosts Filip Hammar and Fredrik Wikingsson from New York to Sweden in just 55 milliseconds.

“Having a media network that is specifically designed to reliably transport real-time 1080p HDTV and ultra 4K video gives us an advantage in the industry,” says Boström. “From the moment we began working with Net Insight we have continued to gain new opportunities from the flexibility and reliability our global network provides. Without the Nimbra platform, we wouldn’t have experienced such tremendous growth or deli-vered the quality of service demanded by our customers today. Net Insight has been an exceptional partner who has matched our level of innovation and market expertise, driven the expan-sion of our next-generation media network and provided an unprecedented level of service and support that any customer would value.”

INDIA GOES GlOBAl wITH NET INSIGHT

Tata Communications is part of one of India’s largest business conglomerates and a leading global communications provider that delivers managed solutions to multinational enterprises, service providers and households in India and abroad. The Tata Global Network includes one of the world’s largest submarine cable networks and a Tier-1 IP network with connectivity to more than 200 countries across 400 points of presence.

In order to expand the service offering to include compre-hensive support for professional media services, Tata Commu-nications began planning for a new global media network in

14 Net INsIght

"wwe selected the Nimbra platform given Net e selected the Nimbra platform given Net e selected the Nimbra platform given Net e selected the Nimbra platform given Net Insight¹s track record as a preferred provider Insight¹s track record as a preferred provider Insight¹s track record as a preferred provider Insight¹s track record as a preferred provider Insight¹s track record as a preferred provider of video delivery product in the broadcast of video delivery product in the broadcast of video delivery product in the broadcast of video delivery product in the broadcast distribution space."distribution space."Scott Hoffmann, Scott Hoffmann, Scott Hoffmann, Scott Hoffmann, wwIN

"we trust our most rigorous e trust our most rigorous and important media network and important media network transport to Net Insight." Åsa Boström, Telia Sonera IC

"Net Insight has a proven com-"Net Insight has a proven com-petence in this field wich makes petence in this field wich makes them the ideal platform for our them the ideal platform for our global video distribution network."global video distribution network."global video distribution network."global video distribution network."Genius Genius wong, Tata Communicationsong, Tata Communications

NIMNIMNIMbrbrbrAAA AAAt the custot the custot the custot the custoMMerer

AnnuAl report 2009 15

NIMbrA At the custoMer

2008, which would cover the major cities in India and offer 2008, which would cover the major cities in India and offer international connectivity.international connectivity.

Tata Communications turned to Net Insight for advice on Tata Communications turned to Net Insight for advice on Tata Communications turned to Net Insight for advice on how the Nimbra platform had offered other international nethow the Nimbra platform had offered other international nethow the Nimbra platform had offered other international nethow the Nimbra platform had offered other international net-work operators a decisive competitive advantage. Following work operators a decisive competitive advantage. Following work operators a decisive competitive advantage. Following evaluation and testing Net Insight was selected to deliver the evaluation and testing Net Insight was selected to deliver the evaluation and testing Net Insight was selected to deliver the solution for the new global media network for broadcasters solution for the new global media network for broadcasters solution for the new global media network for broadcasters and service providers. The skills and expertise offered by Net and service providers. The skills and expertise offered by Net and service providers. The skills and expertise offered by Net and service providers. The skills and expertise offered by Net Insight’s Indian partner HBE was instrumental to the contract Insight’s Indian partner HBE was instrumental to the contract Insight’s Indian partner HBE was instrumental to the contract win.win.

The first phase of the network, consisting of more than fifty The first phase of the network, consisting of more than fifty Nimbra 300 switches, was installed during the fourth quarter Nimbra 300 switches, was installed during the fourth quarter and successfully launched in December 2009. The network has and successfully launched in December 2009. The network has and successfully launched in December 2009. The network has already attracted customers such as media operators and local already attracted customers such as media operators and local already attracted customers such as media operators and local already attracted customers such as media operators and local broadcasters, who are able to exchange content between India, broadcasters, who are able to exchange content between India, broadcasters, who are able to exchange content between India, Europe, USA, Australia, and other countries in Asia. The world’s Europe, USA, Australia, and other countries in Asia. The world’s Europe, USA, Australia, and other countries in Asia. The world’s Europe, USA, Australia, and other countries in Asia. The world’s second most populous country, India has large contingents of second most populous country, India has large contingents of second most populous country, India has large contingents of second most populous country, India has large contingents of second most populous country, India has large contingents of second most populous country, India has large contingents of overseas expatriates who are interested in Indian media contents.overseas expatriates who are interested in Indian media contents.overseas expatriates who are interested in Indian media contents.overseas expatriates who are interested in Indian media contents.overseas expatriates who are interested in Indian media contents.overseas expatriates who are interested in Indian media contents.overseas expatriates who are interested in Indian media contents.overseas expatriates who are interested in Indian media contents.

PlANNING FORFOR NETNETwORKORK ExPANSIONThe comprehensive set of network restoration options that The comprehensive set of network restoration options that The comprehensive set of network restoration options that The comprehensive set of network restoration options that enables the implementation of different service classes was a enables the implementation of different service classes was a enables the implementation of different service classes was a major reason why Tata Communications chose the Nimbra major reason why Tata Communications chose the Nimbra platform. Since service availability is an important parameter platform. Since service availability is an important parameter for broadcast customers, the company wanted a solution that for broadcast customers, the company wanted a solution that supports a range of service classes with varying availability. supports a range of service classes with varying availability. supports a range of service classes with varying availability. Tata’s premium service, for example, offers full hardware and Tata’s premium service, for example, offers full hardware and Tata’s premium service, for example, offers full hardware and Tata’s premium service, for example, offers full hardware and Tata’s premium service, for example, offers full hardware and network redundancy.

Another key reason for choosing Nimbra was the end-to-end Another key reason for choosing Nimbra was the end-to-end provisioning capabilities and graphical overview of the Nimbra Vision management system, which makes it easy to manage and monitor the network and allows for easy setup of services with either pre-defined or dynamic allocation of bandwidth.

Due to the highly positive reception of the new network, coupled with ever-increasing bandwidth demands from custo-mers, a second phase of the network deployment is already be-ing planned. This network expansion will tentatively include 15 Nimbra 680 switches at major points of presence.

“We have chosen the Nimbra platform to launch the service Tata communication Video Connect, a network solution that has been developed to enable broadcasters, studios and production companies to deliver video content in a cost effective and flexible manner to media hubs across the world” says Genius Wong, vice CEO at Global Network Services Tata Communications. “Net Insight has a proven competence in this field which makes them the ideal platform for our video distribution network”

Tata communications being part of the Tata group, one of India´s leading conglomerates with a turnover exceeding USD 60 billion makes this one of Net Insight's more important cont-racts closed in Asia during 2009.

NIMBRA BRINGS TRANS-PACIFIC-PACIFIC-P IPTV TO THEuS AIR FORCE

Formed in 1997 by seven independent local telephone compa-nies in northwestern Wisconsin, Wisconsin Independent Net-

work (WIN) provides digital TV services to communications providers through its part-owned subsidiary Midwest Video So-lutions (MVS). Nimbra has been chosen as platform for a state-of-the-art fiber optic network covering Wisconsin, Minnesota, and Illinois.

The reasons for choosing Nimbra include its multicast abi-lity and the recently introduced Ethernet Switching Features, which makes it easy to distribute IPTV. In 2009, WIN decided to use the Nimbra 360 to deliver digital TV services to soldiers stationed in Japan via a virtual head-end feed from its facilities in Westby, Wisconsin, to the US Air Force base in Yokota.

“The Nimbra platform has significantly reduced bit error rates in our service, allowing us to deliver a pristine IPTV service half-in our service, allowing us to deliver a pristine IPTV service half-in our service, allowing us to deliver a pristine IPTV service halfway around the world,” says Marty Snustead, Executive Director of MVS.

PROFECTION AGAINST POwER INTERuPTIONThe head-end equipment of MVS is geographically diverse for better protection against regional outages and other service-affecting issues. The company today operates twenty video ser-vice providers receiving signals from either of the two individual head-end facilities.

Head-end facilities are critical, capital-intensive elements re-quired for deploying high-quality video services to subscribers. By coordinating video signals from two geographically diverse downlink facilities and transporting the aggregated video streams to other providers over a redundant fiber optic network, MVS is able to offer an IPTV solution that would be prove cost prohibi-tive for a single telephone company to build on its own.

With over 200 channels of TV and digital music to choose from, video service providers have a wide selection of content to choose from. An expanding line-up of HD channels helps providers compete with traditional cable companies and satellite providers. Adding additional channels down the road becomes less of a hassle in terms of capital investment and implementa-tion timeframes.

ETHERNET ENABlE VAluE ADDING SERVICESTo Net Insight, the WIN network represents the first-ever de-ployment of Nimbra in an Ethernet-only network. The new Ethernet Switching Feature was introduced into the Nimbra platform late 2009 to further expand its usability for IP network-based contribution and distribution in response to the increased importance of IP for broadcasters. Service providers, network aggregators and operators may use the new Ethernet Switching Feature to form virtual networks.

At WIN, Executive Director Scott Hoffmann confirms: “We are currently using the new Ethernet Switching Feature as part of our premium Ethernet service offering, including IPTV dist-ribution, and like the Nimbra platform for its ability to affor-dably deliver other Ethernet services on the same platform. We selected the Nimbra platform given Net Insight¹s track record as a preferred provider of video delivery product in the broadcast distribution space.”

Partners help us growPartners help us grow

THE GATEwAY TO INDIA

Following several years of robust growth, India has become the world’s fourth largest economy. In order to secure a presence on this important market, Net Insight has teamed up with Hori-zon Broadcast Electronics (HBE), a systems integrator and one of the country’s most respected value-added resellers.

Founded in 1997 with the vision of delivering state-of-the-art broadcasting solutions, HBE has diversified into high tech-nology areas such as avionics and electronic security systems. With headquarters in New Delhi and offices around the sub-continent, the company offers a wide range of products and serves as an important door opener for Net Insight. HBE was, for example, instrumental in securing the contract between Net Insight and Tata Communications for a new global media net-work in 2009.

At the SCaT India ’09 trade fair in October, HBE show-cased Net Insight’s portfolio by demonstrating Nimbra 360 and Nimbra 340. Ashok Kilam, technical director at HBE, said at the fair: “Nimbra is an all-in-one media transport platform with highest quality of service, improved network utilization and unique time and sync distribution.”

Tata Communications is part of the Tata Group, the largest private corporate group in India and one of the most respected companies in the world. With interests in steel, automobiles, information technology, communication, power, tea and hos-pitality, the Group has operations in more than 85 countries across six continents and its companies export products and services to 80 nations.

uNIQuElYlYl COMPETENT PARTNER IN JAPAN

In Japan, which is undoubtedly Asia’s most sophisticated com-munications market, Net Insight enjoys a rewarding coopera-tion with systems integrator Itochu Cable Systems (ICS) since 2006.

With headquarters in Tokyo and a staff of nearly one-hund-red, ICS brings considerable competence in the field of broad-cast technologies and cable TV applications. The partnership with ICS has greatly facilitated Net Insight’s penetration of the Japanese cable TV segment and the company was crucial in landing Net Insight’s first contract in cable TV distribution in Japan with the major regional operator ZTV.

ZTV chose Nimbra because of its technical superiority and the availability of Nimbra Vision. Other reasons included the opportunities for IP/Ethernet switching, which will facilitate the offering of broadband and data services to households and business users. Another major contract win where ICS provi-ded important input was the deal with KDDI, a leading tele-com operator in Japan.

ICS is a subsidiary of the major industrial conglomerate Itochu Corporation, formerly known as C. Itoh & Co. Tracing its operations back to a trading company established in 1858, Itochu is today a globally integrated corporation with offices in over 80 countries and operations that cover a broad spectrum of industries. Annual revenues place Itochu among the world's largest corporations of any type.

Broadcasters and network operators around the world leverage the Nimbra platform by Broadcasters and network operators around the world leverage the Nimbra platform by Broadcasters and network operators around the world leverage the Nimbra platform by Broadcasters and network operators around the world leverage the Nimbra platform by introducing profitable new services to gain marketshares.introducing profitable new services to gain marketshares.introducing profitable new services to gain marketshares.

ITOCHu CABlE SYSTEMS (ICS)

HORIZON BROADCASTBROADCAST ElECTRONICSECTRONICS (HBE)

16 Net INsIght

pArtNers

corporAte respoNsIbIlIty AND sustAINAble DeVelopMeNt

Corporate responsibility and sustainable development

Net Insight's code of conduct for responsible business means handling environmental, ethical and social aspects in a manner that enables the creation of superior value for its customers, owners and society as a whole. The executive management team coordinates Net Insight's strategic efforts in CSR and sets policies and directives of environmental, social, ethical and economic governance.

årSreDoVISnInG 2009 17

Corporate responsibilityNet Insight's business is characterized by respect for our custo-

mers, business partners and employees. The business is always mers, business partners and employees. The business is always conducted in accordance with the legislation in each country and consistent with accepted principles of fair competition and good business practice.

Net Insight will not permit any form of price collusion, cartels or abuse of market dominance. Net Insight supports, in all areas of our business, an accurate and comprehensive competition re-garding bids, tenders, contracts and purchases.

All Net Insight's contacts with customers and business partners should be characterized by professionalism, respect and high ethi-cal standards. The contacts should be treated as strictly business relationships in order to avoid any suspicions of irregularities.

Our approach to customers, business partners and employees must be characterized by the due sense of social responsibility and build on the principles of fairness and good faith. Our approach should not, under any circumstances, be unethical or question the dignity or integrity of people.

All employees of Net Insight are informed of the company's business ethical guidelines when they commence employment and receive from their immediate supervisor guidelines to clarify the individual responsibility to act in accordance with our poli-cies. Approval authority and purchasing procedures are available on the company intranet.

Sustainable development The overall ambition to meet and exceed customer requirements and expectations in every aspect of our delivery is at core of what Net Insight represents. In that light, and in line with an ever-incre-asing awareness of the environmental effects of new investments, we are pleased to represent an alternative that meets the environ-mental vision of our customer base. This is mainly completed by two key elements of the solution. First and foremost, Net Insight’s entire solution is tailored to handle all types of media traffic in a way that guarantee a quality delivery of each individual media ser-vice. In combination with new and more advanced tele-presence solutions that are available on the market, a network from Net In-sight will provide a good alternative to real face to face meetings, resulting in less business travels. The second environmental aspect where the Nimbra product series contributes in a significant way relates to the power consumption. Compared to commonly used network equipment at the market, the Nimbra solution lowers the power consumption with more than 50 percent.

The manufacturing of Net Insight's products is outsourced to external business partners, mainly in Sweden, and has little envi-

ronmental impact on the company's own activities. Net Insight requires its main suppliers that they are environmentally certified according to ISO 14001 and the products support the 5-RoHS according to ISO 14001 and the products support the 5-RoHS directive. Net Insight also requires that providers require contrac-tors to pass RoHS-5.

Environmental impacts from the use of Net Insight's products are mainly related to how much energy they consume when they are in operation, as well as with materials management and re-cycling. These aspects are duly taken into consideration in con-nection with the in-house product development and the products support RoHS-5 and meets the requirements of WEEE.

Responsibility towards employees Since the company operates in a global market, Net Insight's staff must be open to other cultures and other ways of doing business. Net Insight is seeking diversity in the workforce refer-ring to background and experience and offers its employees equal treatment, regardless of age, gender, ethnicity, religion, sexual orientation or anything else that does not affect an individual's ability to perform his job.

Responsibility towards the employees is also about providing a working environment characterized by a high standard of physical as well as psycho-social perspective. Net Insight will not tolerate discrimination, bullying, sexual or physical harassment. The work environment policy and activities are based on the laws and regu-lations that exist in the market. No work-related incidents were reported during the year.

Gender main streaming is important for Net Insight as the company operates in a male dominated industry. The proportion of women in the company is equivalent to 13 percent. Out of the employees who were recruited during 2009, 25 percent of them were women, which is in line with business objectives to increase the proportion of female employees. During 2009, the company has also participated in Womentor, a mentoring program for wo-men leaders, started by the IT & telecom companies in Almega.

Equality at Net Insight also means creating conditions for em-ployees to balance work and private life. For example, the com-pany offers flexible hours and ability to work from home.

Net Insight has a flat organization which aims to reduce the distance between management and employees. The company’s goals and objectives are communicated to all employees so that everyone is working towards the same goal and share the same vision. The company encourages creativity and listens carefully to its employees, in order to keep ahead of its competitors and in order to offer an attractive workplace.

Technical platform, products and development

The Nimbra platform combines optical network transport technology with carrier-class Ethernet, multiservice functionality and with an automated control plane. The result is a solid platform for enhanced service offerings with lower capital and operational expenditures, since operators and users can merge everything from media services to Ethernet services onto a single platform.

18 Net INsIght

pAteAteA Nts protect INNoVAtVAtVA IoNs

Net Insight’s products and solutions are highly innovative, placing them on the cutting edge of technology. This technological advantage is secured by a number of patents that prevent technology plagiarism and protect technology plagiarism and protect knowledge. On December 31, 2009, knowledge. On December 31, 2009, Net Insight had 44 approved patents Net Insight had 44 approved patents Net Insight had 44 approved patents grouped into 27 approved and one grouped into 27 approved and one grouped into 27 approved and one registered patent families. registered patent families. registered patent families.

uNIQue tIMe trANsfer fuNctIoN

Most DTT and mobile TV networks Most DTT and mobile TV networks are single frequency networks in are single frequency networks in are single frequency networks in which the transmitter stations must which the transmitter stations must which the transmitter stations must be synchronized to send their signals be synchronized to send their signals be synchronized to send their signals at exactly the same time to avoid at exactly the same time to avoid at exactly the same time to avoid interference from nearby anteninterference from nearby anten-nas. The Nimbra platform offers the nas. The Nimbra platform offers the nas. The Nimbra platform offers the unique time transfer function, which unique time transfer function, which allows highly accurate distribution of allows highly accurate distribution of real time over the existing network, thus eliminating the need to add costly and potentially vulnerable GPS receivers to the network.

NIMbrA AND etherNet/Ip/Mpls

The Nimbra platform’s unique properties and extensive Ethernet functionality, recently enhanced with a unique IP trunk solution, pro-vide excellent QoS for transport of IP traffic. Net Insight will continue to focus on developing IP/Ethernet to focus on developing IP/Ethernet functionality that enables custofunctionality that enables custo-mers to gain unique advantages, mers to gain unique advantages, allowing them to use both optical allowing them to use both optical transport networks and IP/MPtransport networks and IP/MPlS networks for efficient video and networks for efficient video and media transport.media transport.media transport.

techNIcAl plAtforM

AnnuAl report 2009 19

tforMtechNIcAl plAtfor

FlExIBlE TOPOlOGY OVER OPTIONAl TRANSMISSION lINKS All network configurations are possible with Nimbra, including All network configurations are possible with Nimbra, including ring, star, point-to-point, mesh or any combination of these ring, star, point-to-point, mesh or any combination of these ring, star, point-to-point, mesh or any combination of these structures. Freedom of configuration simplifies network planstructures. Freedom of configuration simplifies network planstructures. Freedom of configuration simplifies network plan-ning and allows for a very flexible build-as-you-grow strategy.ning and allows for a very flexible build-as-you-grow strategy.ning and allows for a very flexible build-as-you-grow strategy.

NIMBRA OPTIMIZES uTIlIZATION OF ClIENT NETwORKSNet Insight’s customers include the most demanding players Net Insight’s customers include the most demanding players on the media market with extremely high requirements for on the media market with extremely high requirements for transport of high-quality video material. Net Insight’s Nimbra transport of high-quality video material. Net Insight’s Nimbra platform provides clients with the most future-oriented and platform provides clients with the most future-oriented and cost-effective network solutions available today, allowing higcost-effective network solutions available today, allowing hig-her revenues and lower costs – higher revenues because addiher revenues and lower costs – higher revenues because addi-tional services can be launched in the same network and lower tional services can be launched in the same network and lower costs for operation and maintenance when a single platform costs for operation and maintenance when a single platform handles all services. handles all services.

High bandwidth utilization means cost-effective operation and superior quality of service means reliable revenues for the customer, without requiring unnecessary excess capacity.

DEVElOPMENTSResearch and development focuses on developing international-ly competitive, market-leading products for defined market seg-ments. Recently introduced products and functionalities have strengthened Nimbra’s competitiveness.

FuRTHER STRENGTHENED IP INTEROPERABIlITYAs the migration toward all-IP continues, Net Insight is consis-tently developing the capability of Nimbra to handle IP traffic in a seamless fashion on a converged platform.

In 2009, the Nimbra product portfolio was supplemented with additional switching and transport functionality for en-hanced handling of IP/Ethernet traffic. These new IP transport capabilities enable network owners to transport signals over a combination of optical links and IP/Ethernet links. This re-duces network complexity and operational costs for network operators and enables new revenue generating services.

The 3 x IP/Ethernet Trunk Module for the Nimbra One and Nimbra 300 series enhances multiservice transport over any network architecture. The new Nimbra IP Module is now installed in multiple pilot networks, providing operators with the option of creating next generation media networks over ex-isting IP, SDH/SONET, WDM or fiber.

The new Ethernet switching feature for the Nimbra 600 series 8 x Gigabit Ethernet Access Module delivers an unpre-cedented level of flexibility. It allows customers to transport any service to any network location and form virtual networks for any application, such as QoS multicast transport of IPTV/CATV traffic, distributed office LAN applications, file trans-fers, or live broadcast video, and can be combined with native video/audio/telecom services. The new Ethernet switching fea-ture is in full operation in live networks.

NNimbra is equally well suited for high-end video production NNimbra is equally well suited for high-end video production Nand event networks that require 100 percent quality of service Nand event networks that require 100 percent quality of service N(QoS), such as transporting uncompressed video and HDTV N(QoS), such as transporting uncompressed video and HDTV Nstreams, and distributing hundreds of ASI or IP MPEG streams Nstreams, and distributing hundreds of ASI or IP MPEG streams Non IPTV, CATV, digital terrestrial or mobile TV networks. Non IPTV, CATV, digital terrestrial or mobile TV networks. NThe products feature true media-centric, multiservice capaNThe products feature true media-centric, multiservice capaN -bilities with built-in data, telephony and video interfaces, such bilities with built-in data, telephony and video interfaces, such as gigabit Ethernet, 10/100 Ethernet, E1/T1, E3/DS3, STM-as gigabit Ethernet, 10/100 Ethernet, E1/T1, E3/DS3, STM-N/OC-N, DVB-ASI, SDI, HD-SDI, 3G-SDI and AES-EBU. N/OC-N, DVB-ASI, SDI, HD-SDI, 3G-SDI and AES-EBU. All services can be multicast for efficient distribution over any All services can be multicast for efficient distribution over any All services can be multicast for efficient distribution over any network topology.

Net Insight offers a powerful solution for operators and serNet Insight offers a powerful solution for operators and ser-vice providers that want to implement multiservice networks, vice providers that want to implement multiservice networks, while cutting operating costs, creating new business opportuwhile cutting operating costs, creating new business opportu-nities and fully supporting any necessary network migration. nities and fully supporting any necessary network migration. Some of the key characteristics that make Nimbra unique are:Some of the key characteristics that make Nimbra unique are:

SuPERIOR QuAlITY OF SERVICE The Nimbra platform offers resource allocation by separating The Nimbra platform offers resource allocation by separating different types of traffic into secure, logical channels. As a redifferent types of traffic into secure, logical channels. As a re-sult, real-time critical services like HD video and audio are sult, real-time critical services like HD video and audio are transported without any packet loss or distortion, ensuring 100 transported without any packet loss or distortion, ensuring 100 percent QoS for all kinds of services.percent QoS for all kinds of services.

MAxIMuM CAPACITY uTIlIZATION Channelization of traffic enables Nimbra to maximize bandChannelization of traffic enables Nimbra to maximize band-width utilization efficiently. This best-in-class resource allocawidth utilization efficiently. This best-in-class resource alloca-tion methodology guarantees QoS even at a network load of 95 tion methodology guarantees QoS even at a network load of 95 percent or more. Each channel may be set up and configured percent or more. Each channel may be set up and configured with sub-Mbps granularity, and may be either symmetrical or with sub-Mbps granularity, and may be either symmetrical or asymmetrical as needed. All Nimbra switches, from the smalasymmetrical as needed. All Nimbra switches, from the smal-lest access elements to the highest capacity core nodes, support lest access elements to the highest capacity core nodes, support full connectivity, maximum granularity, and any combination full connectivity, maximum granularity, and any combination of unicast and multicast connections. of unicast and multicast connections.

DYNAMIC PROVISIONING OF SERVICESWith the help of a signaling protocol, channels automatically find their way through the network. When extending the net-work, new nodes are identified automatically and the dynamic routing protocol considers new pathways through the network. This enables provisioning of services in a simple one-step pro-cess and automatic rerouting during network failures.

MulTICAST FOR MORE EFFICIENT DISTRIBuTION With support for multicasting all kinds of services, the Nimbra platform efficiently distributes TV, radio and video simultan-eously. Multicasting of all services, including Ethernet traffic, means that hundreds of IPTV channels may be broadcast with efficient use of bandwidth and without disrupting other traffic on the same link. Nimbra also assures instant, dynamic fault restoration if fiber cuts or other disturbances occur.

Employees

Net Insight is a highly customer and technology driven company. The success of the company relies on the expertise, creativity and commitment of its employees.

By year’s end, Net Insight had 120 employees, including 6 at the US subsidiary, Net Insight Inc., 4 at the Singapore sales of-the US subsidiary, Net Insight Inc., 4 at the Singapore sales of-the US subsidiary, Net Insight Inc., 4 at the Singapore sales office, 1 in Dubai and 1 in the UK.

ExpertiseAn innovation-based, high-tech company like Net Insight is characterized by a high level of education among its employees. More than 80 percent of the staff has a university degree. Since Net Insight’s unique solutions challenge many established in-dustry concepts, the company needs people with cutting-edge skills who are able to come up with solutions that add customer value.

Net Insight places strong emphasis on each employee’s abi-lity to take responsibility and resolve issues that arise in their daily work. This places great demands on individual employees while providing opportunities for personal development and a company-wide commitment.

Commitment and recognitionAlmost half the work force has been with Net Insight more than five years, and many have been with the company since its

establishment in 1997. This is a high figure in the fast-moving technology sector and provides Net Insight with valuable con-tinuity. The sense of loyalty is generally very high and the com-pany strives to create a work environment where all employees feel involved.

Objectives and strategies are broken down at the individual level in order to be clear and measurable. Individual skills, expe-rience, duties and responsibilities form the basis for salaries and allowances. Employees receive cash bonuses related to corporate goals in terms of growth and profitability as a reward for perso-nal efforts and initiatives.

Health and job satisfactionEmployee health and job satisfaction are top priorities. Net In-sight offers an attractive workplace where employees perceive their jobs as rewarding and challenging. The firm promotes wellness programs and employees receive an annual subsidy for exercise and fitness activities. Sickness absence is a low 2.3 percent (1.9). There were no work-related incidents reported during the year.

ålderanst tid utbildning

områdekvinnor/män

ålderanst tid utbildning

områdekvinnor/män ålderanst tid utbildning

områdekvinnor/män

ålderanst tid utbildning

områdekvinnor/män

AVAVA erAge leNgth of eMployMeNtn > 5 years 48 %n 3–4 years 12 %n 1-2 years 23 %n < 1 years 17 %

eMployees per AreAn research and development 48 %n Business development and sales 39 %n Administration and logistics 13 %

Age DIstrIbutIoNn 24–35 years 20 %n 36–45 years 48 %n > 45 years 32 %

leVel of eDucAtAtA IoNn university degree 83 %n upper secondary education 17 %

employee numbers 2009 2008 2007 2006

Average number of employees 116 101 93 80

Number of women, % 13 11 12 12

Staff turnover, % 7.6 6.6 7.6 11

Sickness absence(see Note 7), % 2.3 1.9 3.0 2.7

Cost/employee for skillsdevelopment, SEK 2,257 3,427 1,281 4,656

Value added/employee:*SEK thousand 1,377 1,604 1,540 993

*Definition: rörelseresultat plus löne- och lönebikostnader i förhållande till antalet anställda i genomsnitt.

20 Net INsIght

eMployees

AnnuAl report 2009 21

liselott Johansson is the proud founder of Net Insight Academy, where customers, partners and sales professionals learn how to realize the unique benefits of Nimbra solutions.

”The challenge of each unique situation is attractive to me. The rapid technical development of the industry is really ex-citing, too. When I started out here nine years ago, for instance, no one worked with HD files. Now it’s becoming the norm”.

“The participants learn how to quickly set up a new ser-vice and they are able to practice fault management. By simu-lating network or node failure by pulling a plug, we are able to demonstrate Nimbra’s redundancy. We also demonstrate the transfer of live HD footage in real time.”

Johansson says the courses do not require a technical back-ground, “but some basic IP knowledge is always a good idea”.

The third level at Net Insight Academy covers the Nimbra Vision management system, from setup to daily use, service setup, backup and trouble-shooting. Net Insight also offers a growing number of customer-specific training programs car-ried out on-site with the customer. Given that Net Insight has customers in all corners of the world, Johansson and her train-ing colleagues spend a lot of time on the road.

Steady stream of positive feedback“This year alone, I have held training sessions in Germany, India, Italy, Norway and the UK,” says Johansson. “And my colleagues have conducted on-site training in Canada, China, Mexico and the US.”

Before Net Insight, Johansson, who is 41 years old, worked with training at TAC (now Schneider Electric), a systems in-tegrator. A graduate engineer who has worked with technical communication throughout her professional life, Johansson says that the best thing about her job at Net Insight is the steady stream of positive feedback she gets from course participants.

“Most people find the products and the platform surprisingly uncomplicated and straightforward. Even those who find things a bit tricky on the first day conclude the next day’s sessions by claiming ‘this is really cool, efficient and simple’.”

Summing up the qualities of Nimbra, Johansson points out that the platform is scalable, non-hierarchical and able to host many services and transport channels at once.

“Adding new cards, modules and areas is really simple and ease of use is probably the single most frequent response from course participants. Network or service expansion is so easy, and the training programs here at the academy let us demon-strate and validate these benefits.”

For Johansson, another positive aspect about the job is meet-ing people and customers from many different cultures, profes-sional backgrounds and diverse industries.

eMployee INterVIeW

fFounded in 2001, Net Insight Academy offers a comprehenfFounded in 2001, Net Insight Academy offers a comprehenf -sive training program that covers the entire range of Nimbra fsive training program that covers the entire range of Nimbra fproducts and offers in-depth product and technical knowledge fproducts and offers in-depth product and technical knowledge ffor field engineers, network designers, product experts and opeffor field engineers, network designers, product experts and opef -rations personnel. frations personnel. fAn increasingly diverse product range has led to a significant fAn increasingly diverse product range has led to a significant fgrowth in training programs over the years. This year, a record fgrowth in training programs over the years. This year, a record f100 attendees participated in Net Insight Academy programs, an increase from 36 in 2008 and 34 in 2007.

“Training is very important to both customers and part-ners, and we are now able to offer more internal and external programs than ever,” says Liselott Johansson, training mana-ger. “We also deliver more on-site customer training programs around the world than ever.” Johansson was recruited to esta-blish the company’s training operations in 2001.

The curriculum covers many programs of varying length and scope, and courses span one-day introductions of the Nimbra technology to longer courses in network planning, installation and maintenance. Course modules follow a logical series of steps, where knowledge from one course facilitates participa-tion at the next level. For homogenous training groups with participants from the same customer or users of the same type of product solution, course modules may be customized to fo-cus on the products that are most relevant for that group.

“The overriding goal is to give customers, service providers and other stakeholders an opportunity to get the most out of our solutions,” says Johansson. “Solid training also adds va-lue to the user’s Nimbra experience and reduces future support needs from us or our partners.”

For the past year, Net Insight has offered a popular web-based introduction to its products and technologies, attracting some 50 participants. There is also a one-day introductory course held at Net Insight in Stockholm aimed at both customers and partners. A dedicated one-day sales course geared specifically to partners and distributors is also available.

Hands-on training in a real setting The two-day course in configuration and services offers hands-on training in a real network setting where participants learn the unique characteristics of a Nimbra node. Hands-on labora-tory experiments and training are important for users to grasp the benefits and ease of use that characterize Nimbra, according to Johansson.

22 Net INsIght

OwNERSHIPThe company had 12,633 shareholders on December 31, 2009, compared with 13,725 the previous year. Net Insight’s three founders remain as shareholders with 1.7 percent (1.9) of capital and 4.5 percent (6.8) of the votes. As of December 31, 2009, the 20 largest shareholders account for 59.5 percent of capital and 60.7 percent of votes. The major shareholders primarily consist of strong institutions and funds. Foreign ownership made up 23.5 percent of capital, compared with 22.7 percent the previous year.

PRICE MOVEMENTSThe share price increased by 41 percent during the year. The highest price during the fiscal year, SEK 5,95, was quoted on June 1, 2009, and the lowest, SEK 3,09, on March 19, 2009. Net Insight’s total market capitalization was about SEK 1,846 million as of December 31, 2009, an increase compared with the previous year when it was SEK 1,255 million.

TRADING VOluME – NASDAQ OMxIn total about 205 million shares were sold at a total value of al-most SEK 914 million, corresponding to a 53 percent turnover rate for 2009. On average 816 thousand shares were traded per trading day during the fiscal year, which is a 26 percent decline from the previous year. On five Multilateral Trading Facilities 3,722 shares were traded during the year. In 2008 267 million shares were sold for a total value of SEK 1,232 million, with an average volume of 1.1 million shares per day.

wARRANTSIn connection with Constellation Ventures (Bear Stearns Asset Management Fund) going in as the largest shareholder of Net

Net Insight was first listed in 1999 and has been listed on the Nasdaq OMx Nordic Exchange Midcap (NETI B) since July 1, 2007.

Insight AB in April 2004, 9,790,000 warrants (Warrants 7b) were issued with a private placement. Under the terms, Cons-tellation Ventures could redeem the warrants at SEK 2.28 per share and thereby obtain 1.06 shares per warrant until April 1, 2009. At the end of 2008, there were 9,474,000 warrants outstanding and in March 2009, Constellation Growth Capital exercised warrants equal to 10 042 440 number of Net Insight shares of class B.

EMPlOYEE STOCK OPTIONSThe company has two outstanding employee stock option pro-grams, which were implemented in 2007 and 2009. The An-nual General Meeting 2009 resolved to approve the employee stock option plan 2009/2013 including an issuance of warrants carrying rights to subscribe for new shares and approval of dis-posal of the warrants under the employee stock option plan. In 2009, no employee stock options were exercised. The maxi-mum dilution effect of outstanding employee stock options is about 4.1 percent of the number of shares in the Company.

SHARE CAPITAlShare capital was SEK 15,597,320 as of December 31, 2009. There were 1,300,000 Class A shares, and 388,633,009 Class B shares, for a total of 389,933,009 shares.

DIVIDEND POlICYWhere appropriate the board will make proposals regarding dividends, upon which the AGM will decide.

ShArEPrICEmoVEmENTS

The Net Insight share and shareholders

the Net INsIght shAre

oWNershIp structure, (cApItAtAt l %)n Swedish banks and institutions, 41.9%n other Swedish legal entities, 5.0%n Swedish natural persons, 29.7%n Foreign investors, 23.5%

NuMber of oWNers

(coNceNtrAtAtA IoN, %)n Sweden, 96.6%n USA, 0.4%n other, 3.0%

NuMber of oWNers (cApItAtAt l, %)n Sweden, 76.5%n USA, 12.9%n other, 10.6%

NuMber of oWNers

20 lArgest oWNers As of Dec 31, 2009

yearyeary transaction class A shares

class b shares Number of shares

par value (seK)

share capital (seK)

2002 new share issue 3,600,000 65,155,020 68,755,020 0.04 2,750,2012002 new share issue 3,600,000 133,910,040 137,510,040 0.04 5,500,4022003 new share issue 3,600,000 179,746,720 183,346,720 0.04 7,333,8692003 new share issue 3,600,000 225,583,400 229,183,400 0.04 9,167,3362003 new share issue 3,600,000 253,083,400 256,683,400 0.04 10,267,3362004 new share issue 3,600,000 284,083,400 287,683,400 0.04 11,507,3362004 new share issue 3,600,000 286,583,400 290,183,400 0.04 11,607,3362004 options redeemed 3,600,000 287,405,345 291,005,345 0.04 11,640,2142005 new share issue 3,600,000 360,332,660 363,932,660 0.04 14,557,3062005 options redeemed 3,600,000 364,157,010 367,757,010 0.04 14,710,2802007 options redeemed 3,600,000 367,002,820 370,602,820 0.04 14,824,113

2007Conversion of Class A share to Class B share 1,900,000 368,702,820 370,602,820 0.04 14,824,113

2008 options redeemed 1,900,000 377,990,569 379,890,569 0.04 15,195,623

2009Conversion of Class A share to Class B share 1,300,000 378,590,569 379,890,569 0.04 15,195,623

2009 options redeemed 1,300,000 388,633,009 389,933,009 0.04 15,597,320

DIstrIbutIoN of shAre cApItAl

oWNershIp structure – clAss b shAres Per Dec 31, 2009

clAss of shAres

classofstock

Number ofshares

Number ofvoting rights

equity,%

Votes,%

A 1,300,000 13,000,000 0.3 3.2

B 388,633,009 388,633,009 99.7 96.8

total 389 933 009 401 633 009 100 100

shareholding, Number of shares

percentage of shareholders

percentage of share capital

1–1,000 43.2 0.6

1,001–10,000 40.3 5.5

10,001– 15,000 3.8 1.6

15,001–20,000 3.0 1.8

20,001+ 9.8 90.6

total 100 100

NAMe class A shares class b shares holdings (%)

Votes (%)

Market value seK '000'

1 Bear Sterns & Co., W9 0 48,132,491 12.3 12 228,6292 Lannebo fonder 0 44,578,495 11.4 11.1 211,748

3 Swedbankrobur fonder 0 35,857,766 9.2 8.9 170,3244 AmF – Försäkring och fonder 0 20,094,050 5.2 5.0 95,4475 Alecta PensionsförsäkringPensionsförsäkring 0 17,050,000 4.4 4.3 80,9886 Dexia Bil customer Account 0 10,342,267 2.7 2.6 49,1267 Lars Gauffin 600,000 3,124,636 1.0 2.3 14,8428 JPmorgan Bank 0 8,501,823 2.1 2.1 40,3849 Försäkringsaktiebolaget,

Avanza Pension 0 7,807,594 2.0 1.9 37,086

10 Nordnet PensionsförsäkringPensionsförsäkring AB 0 7,469,524 1.9 1.9 35,48011 Lindgren Per 400,000 2,000,000 0.6 1.5 9,50012 Banco Fonder 0 4,872,104 1.3 1.2 23,14213 Davegård & Kjäll Fonder AB 0 4,218,526 1.1 1.1 20,03814 Karl-otto Wikander m bolag 0 3,322,915 0.9 0.8 15,78415 Bohm, Christer 300,000 10,000 0.1 0.8 4816 Länsförsäkringar Skåne 0 3,000,000 0.8 0.8 14,25017 Skandia Fonder 0 2,960,400 0.8 0.7 14,06218 robur försäkring 0 2,637,119 0.7 0.7 12,52619 Fjärde AP-fonden 0 2,433,800 0.6 0.6 11,56120 Carlson fonder AB 0 2,278,553 0.6 0.6 10,823

total of the 20 largest ownersotal of the 20 largest ownersotal of the 20 largest owners 1,300,000 230,692,063 59.5 60.7 1,095,787Total other owners 0 157,940,946 40.5 39.3 750,220

total 1,300,000 388,633,009 100 100 1,846,007

total number of shares 389,933,009total number of votes 401,633,009

NuNuMMber of ober of oWNWNers ers (Votes , %)n Sweden, 77.2%n USA, 12.5%n other, 10.3%

årSreDoVISnInG 2009 23

the Net INsIght shAre

24 Net INsIght

fIVe yeAr suMMAry

Income statement, seK millions 2009 2008 2007 2006 2005

Netsales 232.8 274.3 228.8 134.8 90.9

operatingearnings 34.0 37.9 32.6 -11.4 -60.8

Profit/lossafterfinancialitems 31.6 40.9 34.0 -10.2 -59.6

Net Income 34.4 67.9 34.0 -10.2 -59.6

balance sheet, seK millions

Fixedassets 134.6 103.5 82.1 65.3 49.0

Currentassets 273.7 254.3 178.9 128.9 141.6

total assets 408.3 357.8 261.0 194.2 190.6

Shareholder'sequity 335.2 274.5 181.2 136.8 147.7

Liabilities 73.1 83.3 79.8 57.4 42.9

total equity and liabilities 408.3 357.8 261.0 194.2 190.6

Key ratios

Grossmargin(%) 76 72 71 71 63

Capitalexpenditures,SEKmillions 53.3 45.7 49.0 44.7 39.5

returnoncapitalemployed(%) 12 19 21 Neg. Neg.

returnonequity(%) 11 30 21 Neg. Neg.

operatingmargin(%) 15 14 14 Neg. Neg.

Earningspershare

-basic,SEK 0.09 0.18 0.09 -0.03 -0.17

-diluted,SEK 0.09 0.18 0.09 -0.03 -0.17

Dividendpershare 0 0 0 0 0

Cashflowpershare,SEK 0.16 0.26 0.23 0.05 -0.10

Equity/assetratio(%) 82 77 69 70 77

Netassetvaluepershare,SEK

-beforedilution,SEK 0.86 0.72 0.49 0.37 0.40

-afterdilution,SEK 0.86 0.71 0.49 0.37 0.40

NumberofemployeesasofDecember31 120 108 98 82 77

Addedvalueperemployee,KSEK 1,377 1,604 1,540 993 194

SharepriceasofDecember31,SEK 4.75 3.36 4.34 8.00 2.53

NumberofsharesasofDecember31 389,933,009 379,890,569 370,602,820 367,757,010 291,005,345

Five year summary

Return on equityNet income as a percentage of average shareholders’ equity.

Return on capital employedOperating earnings after financial items plus financial expenses in relation to average capital employed. Capital employed is the balance sheet total less non-interest bearing liabilities including deferred tax liabilities.

Gross marginGross earnings as a percentage of net sales.

Added value per employeeOperating earnings plus salaries and fringe benefits relative to the average number of employees.

Cash flow per shareCash flow from operating activities before changes in operating capital divided by average number of shares issued.

Earnings per share, dilutedNet income for the year divided by average number of shares issued during the year (for more information please see under accounting principles).

Earnings per share, basicNet income for the year divided by the average number of shares during the year.

Operating marginCalculated on profit before net financial items and before taxes.

Equity/assets ratioShareholders’ equity divided by the balance sheet total.

Net asset value per share, basicShareholders’ equity plus undisclosed reserves in assets with an objective market value less deferred tax divided by number of shares during the year.

Net asset value per share, dilutedShareholders’ equity plus undisclosed reserves in assets with an objective market value less deferred tax divided by number of shares during the year (for more information please see accounting principles).

Definitions

AnnuAl report 2009 25

ADMINIstrAtIoN report

Administration report Net Insight AB (publ) Corp. ID No. 556533-4397

Events during the year Net Insight develops, markets, and sells media-rich transport so-lutions for broadcast, IP media, TV distribution, and broadband TV networks. Net Insight’s network equipment allows service providers and network owners to deliver video and media servi-ces from the core backbone to the end customer with 100 percent quality of service and optimum network utilization. In addition to helping attract and retain customers, the Nimbra platform reduces network complexity, offering network operators lower capital and operating expenditures.

The majority of Net Insight’s sales are in Europe, the Middle East, North America and Asia to customers such as broadcast and media companies, cable TV providers, network owners, and tele-com operators. Founded in 1997, Net Insight has 120 employees in Stockholm, Singapore, and the US and is listed on the Mid Cap (NETI B) list for Swedish shares on the NASDAQ OMX Stockholm Stock Exchange.

SAlESSales presented a challenge in 2009. Net Insight was affected by the global downturn, and net sales amounted to SEK 233 mil-lion, a decrease of 15 percent compared to 2008. On a more po-sitive note, the gross margin rose four percentage points to 76.4 percent.

During the year, Net Insight broke into new important mar-kets and continued to win new customers in its prioritized seg-ments, while upgrading and expanding existing Nimbra networks across the globe.

In Eastern and Central Europe, Net Insight was selected to provide the Nimbra platform to national DTT networks with scalable multicast capabilities, the Time Transfer feature for GPS-free time synchronization.

Net Insight continued to win new customers in Europe for deli-very of broadcast and media transport networks. In Denmark, Net Insight received an order from Danmarks Radio for a contribution network linking eight different sites. In Italy, Net Insight won a new customer when Telespazio selected the Nimbra platform to link seve-ral sites in Italy with mission critical video services such as ASI video and Ethernet data. A large broadband and multimedia services pro-vider in southern Europe placed an order for a contribution network to distribute multimedia services. This order was won in collabora-tion with a new project partner, Nokia Siemens Networks.

Among our large European customers, network expansions and upgrades have continued. Levira, an Estonian media network ope-rator, ordered a major upgrade and expansion of its Nimbra-based network for contribution, production, and distribution of digital terrestrial TV. Swedish media operator Teracom ordered additional Nimbra equipment for an expansion to interconnect its media contri-bution networks in major Scandinavian cities. EBU substantially ex-panded its global Eurovision network into more locations in Asia, and a European media network operator further extended its internatio-nal media network across Eastern Europe. An extension was delivered

to a Nimbra-based contribution network for a public radio and TV broadcaster in Europe, and another large European media network continued to expand its network with additional Nimbra nodes to efficiently transport media traffic for a European TV network.

Continuous extensions are also made to the installed base of di-gital terrestrial TV networks, and upgrades are made to include Net Insight’s unique Time Transfer feature for GPS-free time synchroni-zation. An Eastern European country continued with its expansion to the next phase of its digital terrestrial TV distribution network, and Rundfunk-Anstalt Südtirol upgraded and extended its network with additional transmitter sites, now reaching about 30 transmitters in the Südtriol area.

The Nimbra platform has proven to be an efficient and reliable media transport platform for live event video transport applications following the successful 2008 Beijing Olympics installation. TeliaSo-nera International Carrier selected the Nimbra platform to support live sports broadcast transmissions from all 16 arenas in Sweden’s premier football league, Allsvenskan. Multiple European broadcas-ters selected Net Insight to supply equipment for a contribution net-work to carry video feeds from the 2010 Olympic Winter Games in Vancouver, Finland and another European media operator deployed a contribution network for live transmissions of a European football league carrying video feeds from multiple venues to a central pro-duction facility.

In 2008, Net Insight established a foothold in the Middle East, which was followed by a new order for significant TV production and contribution networks in 2009, including a first regional build-out of a national SFN digital terrestrial TV network.

Net Insight was also selected to supply the backbone network for cable TV distribution in an African country. The national telecom operator is deploying a cable TV distribution network to initially multicast IPTV services between 15 regional sites and carry regional-ly inserted native video content with 100 percent quality of service.

In Asia, the important Indian market opened up when TATA Communications selected Net Insight to deliver the Nimbra plat-form to an international video contribution network connecting In-dia with major cities in the United States, Europe, and Pacific Asia.

Net Insight continued to win orders for digital TV distribution networks in Asia. A Korean broadcaster deployed a terrestrial TV distribution network combining mobile TV and digital terrestrial TV services in South Korea based on the Nimbra platform. A Chinese broadcaster ordered Nimbra equipment for a digital TV network as well. Elsewhere in Asia, a media network operator ordered Nimbra equipment for a TV distribution network, and a large communica-tions company ordered a media contribution network. A major Chi-nese broadcaster continued to expand its media contribution network with additional international links to cater to traffic growth.

In North America, Net Insight continued to win orders for media-rich networks in the professional media industry. Canadian AldeaVi-sion selected Net Insight to strengthen its international video transmis-sion network to serve their customers across North and Latin America. Midwest Video Solutions selected Net Insight to provide trans-Paci-

26 Net INsIght

ADMINIstrAtIoN report

fic video transmission feeds from their virtual head end facility in Wisconsin to a US military base in Japan.

A large sports broadcaster incorporated additional Nimbra 680 nodes into its high-traffic production and distribution networks to accommodate increasing demand from customers and HTN con-tinued the expansion of its extensive US network to support new customers.

A global tier1 telecom operator selected Net Insight for a US multi-service backhaul network. The operator deployed Nimbra switches to provide standard definition and high definition video transport as well as IT data services between Los Angeles and New York.

A first important step was also taken in Latin America when Net Insight received an order from BrazilianTV Globo for a digital ter-restrial TV distribution network.

PARTNERSHIPS Net Insight continues to develop its partner network to further support sales growth and provide local support to customers. During the year, the partner network played an important role in winning large new customers and establishing a presence in new geographic markets.

To complement its established local partner network, Net In-sight initiated partnerships with large, global system integrators, which generated some initial business during the year.

Net Insight strengthened its partner network with eight new partners in Asia, Europe, the Middle East and South America and had 32 business partners at the end of the year. Indirect sales in-creased to 34 percent (27) of total sales in 2009.

MARKETING ACTIVITIESDuring the year, Net Insight was present at a number of trade shows.

At the IBC2009 exhibition, Net Insight demonstrated the full Nimbra product range. For the first time, Net Insight exhibited in Brazil at the SET 2009 Broadcast & Cable Show and at Cab-Sat in Dubai.

In Asia, Net Insight participated in multiple exhibitions with its own stand, but was also represented via business partners, including CommunicAsia in Singapore. Net Insight’s business partner NDT was awarded the BIRTV Award for the implemen-tation of a Nimbra-based network. At the NABShow2009, Net Insight introduced new Nimbra functionality, and in the US, Net Insight exhibited at the VSF/Vidtrans conference, HD World in New York, and TelcoTV in Orlando.

In support of activities on the DTT market, Net Insight par-ticipated and presented at multiple conferences. During the Di-gital Switchover Strategies 09 conference in London, Norkring received the Best Technical Solution award for its Norwegian Nimbra-based DTT network.

In 2009, Net Insight also introduced a new website as an en-hanced market communications tool and to support to its part-ner network.

RESEARCH AND DEVElOPMENTDuring 2009, the Nimbra product portfolio was supplemented with additional switching and transport functionality for en-hanced handling of IP/Ethernet traffic. These new IP transport

capabilities enable network owners to transport signals over a combination of optical links and IP/Ethernet links. This reduces network complexity and operational costs for network operators and enables new revenue generating services.

The 3 x IP/Ethernet Trunk Module for the Nimbra One and Nimbra 300 series enhances multi-service transport over any net-work architecture. The new Nimbra IP Module is now installed in multiple pilot networks, providing operators with the option of creating next generation media networks over existing IP, SDH/SONET, WDM or fiber networks.

The new Ethernet switching feature of the Nimbra 600 series 8 x Gigabit Ethernet Access Module delivers an unprecedented level of flexibility that allows customers to transport any service to any network location and form virtual networks for any app-lication. This includes QoS multicast transport of IPTV/CATV traffic, distributed office LAN applications, file transfers, and live broadcast video. It can also be combined with native video/au-dio/telecom services. The new Ethernet switching feature is in full operation in live networks.

Nimbra Vision, a comprehensive network management tool, has been further enhanced with support for end user subnet ma-nagement, giving Net Insight’s operator customers the opportu-nity to let their end-customers view and manage a defined subset of the operator’s network in Nimbra Vision.

PATENTSA high degree of innovation has brought Net Insight’s products and solutions to the cutting edge of technology. Consequently, using patents to prevent technology plagiarism and to protect knowledge and expertise is crucial if the Company is to retain its technological advantage. So far, 28 families of patents have been filed in one or more countries with 26 patents registered.

ITNet Insight’s IT environment consists mainly of PC-based systems using different operating systems, such as Windows and Linux, with a network environment based on switched gigabit Ethernet. Internet connections are protected by a firewall, and VPN over the Internet is used to enable remote access when needed.

New investments mainly cover an expansion of network capa-city, increased computer capacity, replacement of old equipment such as printers, and upgrades to some existing computers and software. Total IT spending during the year amounted to SEK 1.2 million (0.9).

RISK AND SENSITIVITY ANAlYSISSince a number of external and internal factors influence Net Insight’s operations and results, the Company relies on a conti-nuous process of identifying existing risks and assessing how each risk should be managed. The risks to which the company is expo-sed include customer dependence, technology development, and financial risks (predominately currency exposure). Financial risks are described under the Accounting Principles section and in the notes.

MARKET-RElATED RISKSCompetition and technology developmentOperating in a dynamic industry characterized by rapid techno-

AnnuAl report 2009 27

ADMINIstrAtIoN report

logical development, Net Insight needs to remain at the cutting edge of development in order to provide the most attractive and competitive offering to its customers. Failing to keep pace with technological developments or making incorrect technological investments would put pressure on revenues.

Net Insight’s Board and management consider the risk of an unexpected forward leap in technology rendering the Company’s products out of date or obsolete as low. The risk of making erro-neous technological investments is also considered low. The skills and competence of the development staff combined with com-prehensive market analysis, close competitor tracking, and inti-mate collaborations with large customers help keep Net Insight well informed and up to date on relevant trends in technology and markets.

Political risksMost of Net Insight’s customers are located in the Nordic countri-es, Europe, the United States, and Asia. The countries in which Net Insight currently does the majority of its business are not seen as presenting any significant political risks. As geographical expansion is part of Net Insight’s strategy, entry into new markets is preceded by a risk identification process in which instruments and commercial conditions are evaluated to mitigate risks to the furthest possible extent, including working with partners who have considerable knowledge of local conditions, letters of credit, and prepayment.

RISKS RElATED TO THE OPERATIONProduct liability, intellectual property rights, and litigationWhile potential defects in Net Insight’s products could lead to claims for compensation and damages, the Board is of the opi-nion that the Company has adequate product liability insurance coverage, so direct risks are considered limited.

Since Net Insight continuously seeks to protect its company name, brands, and trademarks, it is well prepared for any infring-ement litigation through insurance coverage and with the help of internal expertise in the corporate legal department and external legal consultants. Neither Net Insight nor its subsidiaries are cur-rently involved in any litigation processes, legal procedures, or ar-bitrations. The Board is not aware of any other circumstances that could lead to a dispute capable of damaging Net Insight’s financial position to any significant degree.

Customer dependency and contract risksShould one of Net Insight’s larger customers become insolvent or switch to a different supplier, it would have a manageable impact on Net Insight’s earnings. The growing number of large custo-mers and the relatively high cost to customers of changing supp-liers significantly limits this risk.

The risk of a major customer becoming insolvent is also limi-ted, as Net Insight’s customers are generally very well established media and telecom operators in the private and the public sec-tors. To further limit customer risks, Net Insight continuously strives to exceed customer expectations concerning the techno-logical performance and quality of the Company’s products as well as the level of customer service. Dependence on individual customers is decreasing as our customer base of well-established operators grows.

RISK ASSESSMENT SuMMARYThe following table is an attempt to assess the likelihood of Net Insight being affected by the various operational risks described in this section and the impact of those risks. The assessment does not claim to be exhaustive; it is merely intended to serve as an illustration.

Net Insight RisksRisk Probability Impact

Product fault leading to product liability low low Intellectual property dispute low low Major customer becomes insolvent low MediumMajor customer leaves Net Insight for competitor Medium MediumNet Insight’s technology becomes outdated low HighNet Insight makes incorrect technology investment low HighAdverse political changes in politically unstable countries Medium low

Guidelines for remuneration for senior execu-tivesThe most recently adopted guidelines for remuneration of senior executives are described in Note 7. At the 2010 Annual General Meeting, there will be a proposal to extend the current guidelines until the next Annual General Meeting. The Board of Directors may deviate from the guidelines under special circumstances in individual cases.

Sales and earningsNet sales for the twelve-month period amounted to SEK 232.8 million (274.3), representing a decline of 15.1 percent. Revalua-tion of sales in foreign currencies had a negative effect of SEK 0.7 million (7.9) Hardware revenue decreased by 5.4 percent during the period, mainly related to lower volumes in the Americas and APAC, partially offset by a strong growth in EMEA. Software licenses declined 23.1 percent, mainly due to lower volumes in the Americas. Support and service revenue continues to grow and shows an increase of 20.3 percent. The growth comes predomi-nately from the EMEA region. Other revenue declined by 95.3 percent as the leasing setup with the Beijing Olympic Games last year was reported under this heading.

The EMEA region accounted for SEK 176.8 million (136.5) of total sales. The improvement is mainly related to geographi-cal expansion. The Americas region reported a decline in sales to SEK 38.0 million (80.1). The Americas in particular have been negatively affected by the recession. APAC has still not fully made up for last year’s large order intake and reports a sales drop to SEK 18.0 million (57.6).

The Broadcast & Media Networks segment represented 71 percent (73), Digital Terrestial TV & Mobile TV Networks 27 percent (25), and IPTV/CATV 2 percent (2).

The gross margin remains stable at a strong 76.4 percent (72.4), partially making up for the lower sales volumes recorded in 2009 compared to last year.

Total operating expenses for the twelve-month period amoun-ted to SEK 143.8 million (164.5). The lower expense levels are mainly driven by a change in the depreciation period for capitali-

28 Net INsIght

ADMINIstrAtIoN report

zed development expenditures from three years to five years based on a reassessment of the expected useful life of the products. The extension from three to five years affected the results positively by SEK 23.8 million. Marketing expenses increased according to plan, mainly related to the hiring of sales, pre-sales, and customer support staff. Administrative expenses are down from last year, mainly due to fewer consultants and lower bonus provisions.

Operating earnings for the twelve-month period amounted to SEK 34.0 million (37.9).

The financial net amounted to SEK -2.4 million (3.0). The negative financial net is explained by realized and unrealized cur-rency losses in Euros and US dollars combined with lower inte-rest rates on short-term investments.

Earnings before tax amounted to SEK 31.6 million (40.9), which corresponds to a profit margin of 13.6 percent (14.9).

Net income after tax amounted to SEK 34.4 million (67.9). Capitalization of tax loss carry forwards during the year of SEK 11.8 million (27.1) gave a positive tax of SEK 2.7 (27.1).

Net profit margin was 14.8 percent (24.8).

CASH FlOw AND FINANCIAl POSITION At the end of the year, liquid funds totaled SEK 152.0 million (151.7). This year’s cash flow from ongoing operations amounted to SEK 30.5 million (51.5) whereas total cash flow amounted to SEK 0.3 million (23.5). Working capital totaled SEK 208.8 million (177.7). The build-up is mainly related to an increase in accounts receivables. Ongoing investments in intangible assets affected cash flow by SEK -51.7 million (-44.5). Ongoing investments in tangible assets have affected cash flow negatively by SEK 1.6 million (3.7).

Shareholders’ equity totaled SEK 335.2 million (274.5), resul-ting in an equity ratio of 82.1 percent (76.7). On the balance sheet date, Net Insight had unutilized credit and factoring facilities of SEK 55 million.

INVESTMENTSInvestments in tangible assets during 2009 amounted to SEK 1.6 million (3.7). Depreciation of tangible assets for the twelve-month period amounted to SEK 0.9 million (8.2). Capitalized development expenditures for the twelve-month period, repor-ted as intangible assets, amounted to SEK 50.9 million (44.5). Depreciation of capitalized development expenditures was SEK 23.4 million (45.8). At the end of the period, the net book value of capitalized development expenditures amounted to SEK 95.3 million (67.9).

EMPlOYEESAt the end of the period, Net Insight had 120 (108) employees. The parent company, Net Insight AB, had 114 (102) employees. The US subsidiary, Net Insight Inc., had 6 (6) employees.

PARENT COMPANYThe parent company’s net turnover was SEK 254.1 million (307.7). Net income amounted to SEK 32.5 million (61.4). Li-quid funds amounted to SEK 148.5 million (149.9).

Significant events after the periodIn January, a media network operator running a global satellite and fiber network upgraded part of its European network with 10

Gbps capacity links.GlobeCast, a subsidiary of France Telecom, modernized and

upgraded its media contribution network in Paris with Nimbra 680 switches to meet the new requirements of its customers, such as rapidly increasing use of HD.

Dialog Telekom, a leading broadcaster and satellite operator in Sri Lanka, implemented a first phase of Net Insight’s Nimbra platform in a digital terrestrial TV distribution network from the head end to four transmitter sites.

In addition to providing connectivity for the World Cup in South Africa, Aldea Vision, a Canadian based innovative pro-vider of broadcast quality video services and solutions for the television, film and media industries has placed orders signifi-cantly expanding their existing Nimbra network using a com-bination of Nimbra 360 and Nimbra 680 products.

DividendThe Board will propose a dividend when appropriate about which the Annual General Meeting (AGM) will make a decision. The board proposes that the AGM resolve that no dividend be paid for the 2009 financial year.

Proposed distribution of earningsThe following funds are at the disposal of the parent company:

Premium reserve KSEK 51,296Retained earnings KSEK 112,849Profit for the year KSEK 32,463Total KSEK 196,608

The Board of Directors proposes that funds be disposed of as follows:

To be brought forward: KSEK 196,608.With regard to the general earnings and position of the Group

and parent company, please refer to the following balance sheets, income statements, and cash flow statements and their accompa-nying notes.

BOARD’S ASSuRANCEThe board and CEO confirm that the Group accounts were pre-pared in compliance with IFRS and that they give a true and fair view of the Group’s financial position and performance. The Ad-ministration Report covering the parent company and the Group gives a true and fair view of their activities, financial position, and performance and discusses material risks and exposed areas in the parent company and Group companies.

AnnuAl report 2009 29

group

Group CONSOlIDATED INCOME STATEMENT

Amount in seK thousands Note 2009 2008

NetSales 5 232,801 274,305Costofgoodssold 9,11 –54,965 –75,691

gross earnings 177,836 198,614

marketingexpenses 7,10,11 –81,113 –66,689Administrationexpenses 7,9,10,11,12 –21,451 –26,341Developmentexpenses 7,8,9,10,11 –41,270 –71,517otheroperatingincome 0 3,822operating earnings 6 34,002 37,889

result from financial investmentsFinancialincome 13 1,648 6,216Financialexpenses 13 –4,034 –3,243result from financial investments – 2,386 2,973

profit before tax 31,616 40,862Tax 14,15 2,742 27,078Net earnings 34,358 67,940Net earnings for the period attributable to the stockholders of the parent company 34,358 67,940Earningspersharebeforedilution 16 0.09 0.18Earningspershareafterdilution 16 0.09 0.18

consolidated statement of comprehensive IncomeAmountinSEKthousands NoTE 2009 2008Netearnings 34,358 67,940othercomprehensiveincomeExchangeratedifferences –518 1,748

other comprehensive income for the year, after taxtotal comprehensive income for the year

– 51833,840

1,74869,688

total comprehensive income for the year attributable to the stockholders of the parent company

33,840 69,688

30 Net INsIght

group

CONSOlIDATED BAlANCE SHEET

Amount in seK thousands Note 31 dec 2009 31 dec 2008AssetsIntangible fixed assetsCapitalizedexpenditurefordevelopment 17 95,329 67,864Goodwill 17 4,354 4,354otherintangibleassets 17 2,257 0tangible fixed assetsEquipment 18 2,031 3,830Equipmentforleasing 18 517 0financial fixed assetsDeferredtaxasset 15 29,820 27,078Deposits,longterm 19 248 359total fixed assets 134,556 103,485

current assetsInventories 20 26,670 30,136Accountsreceivables 21 87,007 62,608otherreceivables 21 3,148 5,186Prepaidexpensesandaccruedincome 21 4,912 4,634Cashandcashequivalents 22 151,999 151,744total current assets 273,736 254,308

total assets 408,292 357,793

lIAbIlItIes AND shAreholDers´ eQuItIyshareholders´ equityequity attributable to the parentSharecapital 24 15,597 15,196restrictedreserves 1,192,727 1,170,232Translationdifference –1,248 –730Netearnings –871,843 –910,224total shareholders´ equity 335,233 274,474

long term liabilitiesLongtermliabilities 869 1,551otherprovisions 25 7,299 5,168total provisions 8,168 6,718

current liabilitiesotherprovisions 25 8,625 9,243Accountspayable 24,259 26,411otherliabilities 26 5,757 3,504Accruedexpenses 27 26,250 37,443total liabilities 64,891 76,601total liabilities and shareholders´ equity 408,292 357,793

AnnuAl report 2009 31

group

CONSOlIDATED CASH FlOw STATEMENT

Amount in seK thousands Note 2009 2008ongoing operationsprofit before tax 31,616 40,862Depreciation 9 24,855 54,036otheritemsnotaffectingliquidity 28 4,335 1,150cash flow from ongoing operations 60,806 96,048

change in working capitalIncrease(-)/Decrease(+)ininventories 3,466 –9,625Increase(-)/Decrease(+)inreceivables –22,639 –42,271Inrcrease(+)/Decrease(-)incurrentliabilities –11,092 6,689cash flow from ongoing operations 30,541 50 841

INVestMeNt ActIVItyAcquisitionsofintangibleassets 17 –51,672 –44,469Acquisitionsoftangiblefixedassets 18 –1,622 –3,731Increase(-)/Decrease(+)inlong-termassets 111 –172cash flow from investment activity – 53,183 – 48 372

fINANcINg ActIVItyoptionprograms 22,897 21,042cash flow from financing activity 22,897 21,042

Increase/decreaseinliquidfunds 29,30 255 23,511Liquidfunds,openingbalance 29,30 151,744 128,233liquid funds, closing balance 151,999 151,744

CHANGES IN GROuP SHAREHOlDERS' EQuITY

Amount in seK thousands share capitalother contributed

capitaltranslation

differenceAccumulated

deficit

"total shareholders'

equity"

08-01-01 14,828 1,149,558 –2,478 –980,693 181,215Totalcomprehensiveincome 0 0 1,748 67,940 69,688Newsharesissued-employeestockoptions 368 20,674 0 0 21,042Employeestockoptionprogram:Valueofemployees'services 0 0 0 2,529 2,5292008-12-31 15,196 1,170,232 – 730 – 910,224 274,474

09-01-01 15,196 1,170,232 –730 –910,224 274,474Totalcomprehensiveincome 0 0 –518 34,358 33,840Newsharesissued-employeestockoptions 402 22,495 0 0 22,897Employeestockoptionprogram:Valueofemployees'services 0 0 0 4,023 4,02309-12-31 15,597 1,192,727 – 1,248 – 871,843 335,233

32 Net INsIght

pAreNt coMpANy

Parent companyCONSOlIDATED INCOME STATEMENT

Amount in seK thousands Note 2009 2008NetSales 5 254,109 307,712Costofgoodssold 9 –78,096 –99,544gross earnings 176,013 208,167

marketingexpenses 7,10,11 –81,456 –67,135Administrationexpenses 7,9,10,11,12 –21,181 –27,431Developmentexpenses 7,8,9,10,11 –41,270 –72,659operating earnings 6 32,106 40,943

result from financial investmentsresultpercentagefrompartnership 23 0 –9,551Financialincome 13 1,648 6,189Financialexpenses 13 –4,033 –3,243result from financial investments – 2,385 – 6,605

earnings before tax 29,721 34,337Tax 14,15 2,742 27,078Net earnings 32,463 61,415

AnnuAl report 2009 33

pAreNt coMpANy

PARENT COMPANY BAlANCE SHEET

Amount in seK thousands Note 31 dec 2009 31 dec 2008AssetsIntangible fixed assetsCapitalizedexpenditurefordevelopment 17 95,329 67,864otherintangibleassets 17 2,257 0tangible fixed assetsEquipment 18 2,031 3,830Equipmentforleasing 18 517 0financial fixed assetsSharesingroupcompanies 23 18,398 18,398Deferredtaxasset 15 29,820 27,078Deposits,longterm 19 248 359total financial assets 148,600 117,529

current assets

Workinprogress 20 395 900Finishedgoods 20 26,275 29,236receviablesAccountsreceivables 21 87,007 62,608Currentreceivables 21 3,148 5,072Prepaidexpensesandaccruedincome 21 4,912 4,634Liquidassets 22 148,540 149,880total current assets 270,277 252,330totAl Assets 418,877 369,859

lIAbIlItIes AND shAreholDers´ eQuItIyshareholders´ equityrestricted equitySharecapital 24 15,597 15,196Legalreserve 112,822 112,822Non-restricted equity/Accumulated deficitSharepremiumreserve 51,296 28,801retainedEarnings 112,850 47,412NetIncome 32,463 61,415total shareholders´ equity 325,028 265,646

provisionsotherprovisions 25 7,299 5,168total provisions 7,299 5,168

long-term liabilitiesLongtermliabilities 869 1,551total long-term liabilities 869 1,551

current liabilitiesotherprovisions 25 8,625 9,243Accountspayable 24,259 26,411Liabilities,subsidaries 22,071 22,513otherliabilities 26 5,757 3,504Accruedexpenses 27 24,969 35,824total liabilities 85,681 97,495totAl lIAbIlItIes AND shAreholDers´ eQuIty 418,877 369,859

Pledgedassets 29 0 189Contingentliabilities None None

34 Net INsIght

pAreNt coMpANy

PARENT COMPANY CASH FlOw STATEMENT

Amount in seK thousands Note 2009 2008ongoing operationsloss before tax 29,721 34,337Depreciation 9 24,855 54,036otheritemsnotaffectingliquidity 28 4,853 10,611"cash flow from ongoing operationsbefore change in working capital" 59,429 98,984

ChangeinworkingcapitalIncrease(-)/decrease(+)ininventories 3,466 –9,625Increase(-)/decrease(+)inreceivables –22,753 –40,188Increase(+)/decrease(-)incurrentliabilities –11,196 –391cash flow from ongoing operations 28,946 48,780

INVestMeNt ActIVItyAcquisitionsofintangibleassets 17 –51,672 –44,476Acquisitionsoftangiblefixedassets 18 –1,622 –3,731Increase(-)/decrease(+)inlong-termassets 111 –172Increase(+)/Decrease(-)inlong-termliabilities 0 –637cash flow from investment activity – 53,183 – 49,016

fINANcINg ActIVItyWarrantsprograms 22,897 21,042Groupcontributionreceived 0 2,092cash flow from financing activity 22,897 23,134

Increase/decreaseinliquidfunds 29,30 –1,340 22,898Liquidfunds,openingbalance 29,30 149,880 126,982liquid funds, closing balance 148,540 149,880

CHANGES IN PARENT COMPANY SHAREHOlDERS' EQuITY

Amount in KseKshare

capitallegal

reserveshare premium

reserveretained earnings Net income

total share - holders' equity

january 1, 2008 14,828 112,822 8,127 5,828 32,333 173,938Transferofnetincome 0 0 0 32,333 –32,333 0Excersizedoptions 368 0 20,674 0 0 21,042Groupcontribution 0 0 0 6,722 0 6,722Employeestockoptionprogram:Valueofemployees'services 0 0 0 2,529 0 2,529Netincome 0 0 0 0 61,415 61,415December 31, 2008 15,196 112,822 28,801 47,412 61,415 265,646

january 1, 2009 15,196 112,822 28,801 47,412 61,415 265,646Transferofnetincome 0 0 0 61,415 –61,415 0Excersizedoptions 402 0 22,495 0 0 22,897Groupcontribution 0 0 0 0 0 0Employeestockoptionprogram:Valueofemployees'services 0 0 0 4,023 0 4,023Netincome 0 0 0 0 32,463 32,463December 31, 2009 15,597 112,822 51,296 112,850 32,463 325,028

AnnuAl report 2009 35

Notes

NOTESNote 1 General informationNetInsightdevelopsandsellsnetworkequipmentforfiberopticnetworksthattransmitvoice,data,andvideo.WiththeNimbraproductfamily,trafficinthenetworkcanbetransmittedwith100percentqualityofservicewhilefully utilizing the network’s capacity, resulting inmajor operational andcapital expenditure savings for customers. TheCompany sells primarilyinNorthAmerica,Europe,andAsiatotelevisionbroadcasters,productioncompanies,cableTV,andtelecommunicationoperators.Net Insightwasfoundedin1997andhas120employeesinSweden,theUS,andSingapore.NetInsightenteredtheStockholmStockExchangein1999andhasbeenlistedontheNastaq,omXNordicExchangemidcapsinceJuly1,2007.

Note 2 Summary of important accounting policiesTheprincipalaccountingpoliciesappliedinthepreparationofthesecon-solidatedfinancialstatementsaresetoutbelow.Thesepolicieswerecon-sistentlyappliedtoallyearspresented,unlessotherwisestated.

2.1 bAsIs for the report’s prepArAtIoNTheconsolidatedfinancialstatementswereprepared inaccordancewiththe Annual Accounts Act, International Financial reporting Standards(IFrS), and interpretational statements from the International FinancialreportingInterpretationsCommittee(IFrIC)asadoptedbytheEuropeanCommission. TheSwedishFinancial AccountingStandardsCouncil’s re-commendationrr1.1,SupplementalAccountingregulationsforGroups,wasalsoapplied.

TheGroupadopted the followingnewandamended IFrS itemsasofJanuary1,2009:•IFrS8,operatingsegmentsoperatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtothechiefoperatingdecision-maker.Thechiefopera-tingdecision-makeristheCEo,whomakesstrategicdecisions.Segmentinformation is presented in a tablewith three geographic areas: EmEA,APAC,andtheAmericas.•IAS1(revised),presentationoffinancialstatementsThe revised standard prohibits the presentation of items of income andexpenses (non-ownerchanges inequity) in thestatementof changes inequity,requiring“non-ownerchangesinequity”tobepresentedseparatelyfromownerchanges inequity inastatementofcomprehensive income.The Group has implemented the changes and added the ConsolidatedStatementofComprehensiveIncome.Comparativeinformationhasbeenre-presentedsothatitalsoisinconformitywiththerevisedstandard.Thechangesonlyaffectthepresentationofthefinancialstatements;theydonotaffectearningspershare.•IASBannualimprovementprojectsTheGroupfollowstheoutcomeoftheISABannualimprovementprojects,whicharetheminorchangestoIFrSamendments.Thefollowingamendmenttoexistingstandardswaspublishedandisman-datoryfortheGroup’saccountingperiodsbeginningonorafterJanuary1,2010,butithasnotbeenadoptedyet.•IFrS3(revised),businesscombinationsTheGroupwilladoptthestandardasofJanuary1,2010,ifnewacquisitionsoccur.Therevisedstandardcontinuestoapplytheacquisitionmethodtobusiness combinations with some significant changes. For example, allpayments topurchaseabusinessare toberecordedat fairvalueat theacquisitiondate,withcontingentpaymentsclassifiedasdebtsubsequentlyre-measuredthroughtheincomestatement.Allacquisition-relatedcostswillbeexpensed.•IASBannualimprovementprojectsTheGroupfollowstheoutcomeoftheISABannualimprovementprojects,whicharetheminorchangestoIFrSamendments.otheramendmentstoexistingstandardsshouldnothaveaneffectontheconsolidatedfinancialstatements.EffectivefromJanuary1,2010:Followinganewanalysisofresearchanddevelopment expenses, a reassessment was done to determine whichprojectdepreciationshouldbereportedascostofgoodssoldandwhichshouldcontinuetobereportedasresearchanddevelopmentexpenses.Asaresult,therewillbeareclassificationofdepreciationofcapitalizedde-velopmentexpendituresfortheproductssoldcontinuouslytocustomers.For researchanddevelopmentprojects that lead to completedproductswithcontinuoussales,thedepreciationwillbereportedascostofgoods

sold.Thisimpliesashiftofexpensesfromtheresearchanddevelopmentexpenselinetocostofgoodssoldandhasnoimpactonprofit.ThiswillnotinfluencetheGroup’searningspotentialonadditionalsales.

2.2 coNsolIDAtIoNsubsidiariesSubsidiariesareallcompanies(includingspecialpurposecompanies)forwhichtheGroupisentitledtogovernfinancialandoperationalstrategiesinamannerusuallypursuanttoshareholdingsthatamounttomorethanhalfofthevotingrights.TheoccurrenceandeffectofpotentialvotingrightsthatarecurrentlyutilizableorconvertibleareobservedintheassessmentofwhethertheGroupexercisescontroloveranothercompany.

AsubsidiaryistobeincludedintheconsolidatedfinancialstatementsasofthedatethatcontrolistransferredtotheGroup.Asubsidiaryisde-consolidatedfromthedatethatcontrolceases.Thepurchasemethodofaccounting isused toreport theGroup’sacquisitionofsubsidiaries.Thepurchasecostofanacquisitioncomprisesthefairvalueofassetsprovidedaspayment,issuedequityinstruments,andliabilitiesarisingorassumedasofthedateoftransfer,pluscostsdirectlyattributabletotheacquisition.Identifiableacquiredassets,assumedliabilities,andcontingentliabilitiesinacorporateacquisitionareinitiallyvaluedatfairvalueasofthedateofacquisition regardless of the extent of a potentialminority interest. Thesurplus,consistingofthedifferencebetweenthepurchasecostandthefairvalueoftheGroup’sshareofidentifiableacquirednetassets,isreportedasgoodwill.Ifthepurchasecostislessthanthefairvalueoftheacquiredsubsidiary’snet assets, thedifference is reporteddirectly in the incomestatement.

2.3 segMeNt reportINgoperatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtothechiefoperatingdecision-maker.Thechiefopera-tingdecision-makeristheCEo,whoisresponsibleforallocatingresour-cesandassessingtheperformanceoftheoperatingsegmentsandmakingstrategicdecisions.Segmentinformationispresentedinthreegeographicareas:EmEA,APAC,andtheAmericas).

2.4 trANslAtIoN of foreIgN curreNcIesA. Functional currency and reporting currencyItemsincludedinthefinancialstatementsforthedifferentunitsintheGro-uparevaluedinthecurrencyusedintheeconomicenvironmentinwhichtherespectivecompaniesareprimarilyactive(functionalcurrency).Intheconsolidatedfinancialstatementsandtheparentcompany’sfinancialsta-tements,Swedishkronor (SEK)areused,which is theparentcompany’sfunctionalandtheGroup’sreportingcurrency.

B. Transactions and balance sheet itemsForeigncurrencytransactionsaretranslatedtothefunctionalcurrencyattheexchangeratesapplicableonthetransactiondate.Exchangegainsandlossesarisingonpaymentofsuchtransactionsandintranslationofmo-netaryassetsandliabilitiesinforeigncurrenciesarereportedasfollowsintheincomestatement:

•Translationofaccountsreceivablesarereportedasnetsales.

•Translationofaccountspayablesarereportedascostofsales.

•Translationofmonetaryassetsandforeignsubsidiarydebtstotheparentcompanyarereportedasnetfinancialitems..

C. Group companiesThefinancialpositionandperformanceofforeignsubsidiariesthathaveadifferentfunctionalcurrencythanthereportingcurrencyaretranslatedtotheGroup’sreportingcurrencyasfollows:•Assetsandliabilitiesonthebalancesheetaretranslatedattheclosingrateofthebalancesheetdate.• Incomeandexpensesare translatedat theaverageexchange rate forthequarter.•Allexchangeratedifferencesthatarisearereportedasaseparatecom-ponentofequityandincomprehensiveincome.

2.5. tANgIble AssetsTheCompany’stangiblefixedassetsarecarriedatpurchasecostwithde-ductionsfordepreciation.Includedinthepurchasecostareexpensesthat

36 Net INsIght

Notes

2.11 AccouNts pAyAbleAccountspayablesare initially recognizedat fair valueand thereafteratamortizedcostusingtheeffectiveinterestmethod.

2.12 cAsh AND cAsh eQuIVAleNtsCashandcashequivalentsincludecash,bankbalances,andotherinvest-mentswithmaturitydatesoflessthanthreemonths.

2.13 shAre cApItAlordinarysharesareclassifiedasequity.Transactioncoststhatcanbedi-rectlyattributedtotheissueofnewsharesoroptionsarereportedinGroupequityasadeduction from the issue funds. In theparentcompany, thistransactioncostisreportedontheincomestatement.

2.14 eMployee coMpeNsAtIoNA. BonusesTheCompanyreportsaliabilityandanexpenseforbonusesbasedongoalfulfillmentwith regard to achieved sales, earnings trends, and achievedmarketobjectives.

B. Pension commitmentsTheCompanyonlyhasdefinedcontributionpensionplans,whichareexpen-sedasneeded.TheCompanyhasnoobligationafterthepensionpremiumispaid.

C. Share-related benefitsThe Group has share-related compensation plans in which payment ismadewithshares.Thefairvalueoftheservicethatentitlesemployeestoallocationofoptionsisexpensed.Thetotalamounttobeexpensedduringthevestingperiodisbasedonthefairvalueoftheallocatedoptions,ex-cludingpotentialimpactfromnon-market-relatedtermsforvesting,e.g.,profitabilityandobjectivesforsalesincreases.Non-market-relatedtermsforvestingareobserved in theassumptionabouthowmanyoptionsareexpected to be redeemable. Every reporting date, the Company revisesitsassessmentsofhowmanysharesareexpectedtoberedeemable.Therevision’spotentialimpactontheoriginalassessmentsisreportedintheincomestatementdividedover the remainderof the vestingperiod, andcorrespondingadjustmentsaremadeinequity.

D. Compensation on terminationCompensationonterminationispaidwhenanemployee’semploymentisterminatedpriortonormalretirementageorwhenanemployeevoluntarilyresignsfromemploymentinexchangeforsuchcompensation.TheGroupreportsseverancepaywhenitisdemonstrablyobligedeithertoterminateemployees according to a formal detailed planwithout the possibility ofrevocation, or to provide compensation upon termination resulting fromoffersmadetoencouragevoluntaryresignationfromemployment.

2.15 proVIsIoNsProvisionsaremadewhenalegalorinformalobligationarisesasaresultofpastevents.Itisprobablethatanoutflowofresourceswillberequiredtosettletheobligationandtheamounthasbeenreliablyestimated.TheCompanymakesprovisionsforwarrantycoststhatwillprobablyarise.TheproductwarrantyprovisionisbasedonhistoricaloutcomesandisplacedinrelationtotheCompany’ssales.Ifthereareseveralsimilarcommitments,itislikelythatanoutflowofresourceswillprobablyberequireduponsett-lementforthisentiregroupofcommitments.Aprovisionisreported,alt-houghtheprobabilityofanoutflowissmall.

2.16 reVeNue recogNItIoNrevenuesincludethefairvalueofgoodsandservicessoldexcludingvalueaddedtaxanddiscounts,andintheGroupaftereliminationofintra-Groupsales.revenuesarerecognizedasfollows:

A. Sales of goodsrevenuesmainlyconsistofhardwaresales.Therevenuespertainentirelytotheparentcompanyandarereportedondeliverywhenriskandowner-shiprightstransfertothebuyer.Incaseswherethesaleinvolvessignificantinstallationorintegrationaswellasfinalacceptancefromthecustomer,revenuesarerecognizeduponacceptance.Expectedoutstandingrevenuesarealsoconsidered,andreservesaresetasideforestimatedoutstandingexpenses.

B. Revenue from licenses, support, and servicesSupport agreements are recognized as revenue on a straight-line basisoverthetermofthecontract.

canbedirectlyattributedtotheacquisitionoftheasset.Thestraight-linedepreciationmethodisappliedtoalltypesofassetsovertheirestimatedusefullives,whichisthreetofiveyearsforequipment.Theassets’residualvaluesandusefullivesarereviewedannuallyandadjustedifappropriate.

2.6. INtANgIble Assets A.Costsdirectlylinkedtothedevelopmentofproductstobesoldarerecog-nizedasintangibleassets.TheyarecapitalizedwhentheprojectreachesacertaincontrolpointandtheIFrScriteriaaremet.Developmentexpensesinclude internal employee expenses arising through the development ofproductsandareasonableproportionofdirectand indirectcosts.otherdevelopmentexpensesare reportedas incurred.Developmentexpensesthatwerepreviouslyreportedasacostarenotreportedasanassetinanensuingperiod.Capitalizeddevelopmentexpenditureswithalimitedusefullifearedepreciatedstraight-linefromthetimethatthecommercialpro-ductionof theproduct is initiated.Depreciationoccursover itsexpecteduseful life. The depreciation periodwas three years until December 31,2008.ThiswaschangedtofiveyearsstartingJanuary1,2009.

Animpairmenttestisdoneattheendofeachperiod,andifanasset’scarryingamountexceeds itsestimatedrecoverableamount, theasset isimpairedtoitsrecoverableamount.B.GoodwillconsistsoftheamountbywhichthepurchasecostexceedsthefairvalueoftheGroup’sshareoftheacquiredsubsidiary’sidentifiablenetassetsatthetimeofacquisition.Goodwillonacquisitionofsubsidiariesisincludedinintangibleassetsandhasanindefiniteusefullife.Goodwillistestedatleastannuallytoidentifypotentialimpairmentrequirementsandisreportedatpurchasecostlessaccumulatedimpairmentlosses.Gainsor lossesondisposalofaunit includeresidualcarryingamountsof thegoodwillpertainingtothedisposedunit.

2.7 IMpAIrMeNtNon-financialassetsthathaveanindefiniteusefullifearereviewedannu-allyforpotentialimpairmentrequirementsandarenotsubjecttoamorti-zation.Assetsthataresubjecttoamortizationarereviewedforimpairmentwhenevereventsorchanges incircumstances indicate that thecarryingamountmaynotberecoverable.

Impairment is applied in the amount by which the asset’s carryingamount exceeds its recoverable amount. The recoverable amount is thehigherofanasset’sfairvaluelesssellingcostsandvalueinuse.

Forthepurposesofassessing impairment,assetsaregroupedat thelowestlevelsforwhichthereareseparatelyidentifiablecashflows(cash-generatingunits).NetInsightisonecash-generatingunit.

2.8 fINANcIAl INstruMeNtsFinancialinstrumentsreportedonthebalancesheetincludecashandcashequivalents,financialreceivables,accountsreceivable,accountspayable,anddepositspaid.TheGroupclassifiesitsfinancialinstrumentsintwoca-tegories:accountsreceivableandfinancialliabilitiesasdescribedin2.10and2.11,respectively.AfinancialassetorliabilityiscarriedonthebalancesheetwhentheCompanybecomesapartytotheinstrument’scontractualterms.Afinancialassetisremovedfromthebalancesheetwhentherightsintheagreementarerealized,lapse,orthecompanylosescontrolofthem.Afinancialliabilityisde-recognizedfromthebalancesheetwhentheobli-gationsofthecontractarefulfilledordischargedinsomeotherway.Thecarryingvaluelessanyimpairmentprovisiononaccountsreceivableandaccountspayableareassumedtoapproximatetheirfairvaluesduetotheshort-termnatureofaccountsreceivablesandaccountspayables.

2.9 INVeNtorIesInventoryisreportedatthelowerofthepurchasecostandthenetsellingprice.ThepurchasecostisdeterminedbyusingFIFo.Thenetsellingpriceistheestimatedsellingpriceintheoperatingactivitieslessapplicableva-riablesellingexpenses.

2.10 AccouNts receIVAbleAccountsreceivablesarereportedinitiallyatfairvalueandsubsequentlymeasuredatamortizedcostusingtheeffectiveinterestmethod.Aprovi-sionforaccountsreceivablebaddebtsisappliedwhenthereisobjectiveproofandother indicationsthat theGroupwillnotbeabletorecoverallamountsdueunderthereceivables’originalterms.Thereservedamountisrecognizedintheincomestatementunderthemarketingexpensesitem.

TheCompanyhasanagreement relating to loansonaccounts recei-vables.Theownershipright to theaccountsreceivableremainswith theCompanyalongwiththeriskofpotentiallossesonaccountsreceivables.Thisagreementwasnotusedin2009(2008).

AnnuAl report 2009 37

Notes

outgoinginthesamecurrency,andhedginglargercontractsinforeigncur-rency.In2009,NetInsighthedgedUSD1.1million,buttherewasnohedgingactivityin2008.

IftheSEKhadstrengthened/weakenedby5percentagainsttheEUr,allothervariablesremainingconstant,2009’srevenuewouldhavebeenSEK9million lower/higher. If the SEK had strengthened/weakened by 5 percentagainst the USD, all other variables remaining constant, 2009’s revenueswouldhavebeenSEK3millionlower/higher.TheexposureagainsttheEUrincreasedin2009becausetheEUrrepresentedalargerportionofnetsalesthanin2008.

3.2 lIQuIDIty rIsKLiquidity riskmeans thatNet Insight cannot sell a financial instrumentatmarketpriceoronlywithunnecessarily increasedcosts.NetInsight’spolicyistoonlyinvestliquidassetsinbanksorfinancialinstitutionswithacreditratingofat leastP1orA+ (moodysorequivalent).Liquiditymaynotbeinvestedformorethan12months,andinvestmenttermsmustatalltimesreflectthecapitalneedsoftheCompany.Allreportedaccountspayablesareduewithinoneyearandshowtheundiscountedamount.

3.3 cApItAl rIsKTheGroup’scapitalstructureobjectivesaretosecurecontinuousopera-tions,generatereturnsforshareholdersandbenefitsforotherstakehol-ders,and tomaintainanoptimalcapitalstructure tokeepcapitaldown.Thepurposeofthisistomaintainoradjustthecapitalstructure,repayca-pitaltoshareholders,issuenewshares,orsellassetstoreduceliabilities.TheGroup’stargetisforitsequityratiotobeatleast65percent.

3.4 INterest rIsKInterestriskistheriskthatthevalueofafinancialinstrumentvariesduetochangesinmarketrates.NetInsight’sinterestriskislowbecausetheneedforexternalfinancinghasbeenlimited.TheCompany’sadvanceonreceiva-bleswasnotutilizedin2008or2009.Cashandcashequivalentsareusuallyinvestedwithafixedinterestperiodfromtwoweeksuptosixmonths.

3.5 creDIt rIsKCreditriskmeansthatapartyinatransactionwithafinancialinstrumentcannotfulfillitscommitment.NetInsightdidnothaveanycreditlossesin2008 or 2009. TheCompany’s customers are generally large,well-esta-blishedcompanieswithstrongpaymentcapacity,distributedoverseveralgeographicmarkets.There isnosignificantconcentrationofcreditriskseithergeographicallyortoaparticularcustomersegment.Inordertolimittherisksofpotentialcredit losses, theCompany’screditpolicy includesguidelinesandregulationsfornewcustomers,termsofpayment,andpro-ceduresforhandlingunpaidclaims.

Note 4CriticalaccountingestimatesandjudgmentsEstimatesandjudgmentsareevaluatedonanongoingbasis,basedonhis-toricalexperienceandotherfactors,includingexpectationsoffutureeventsthatareconsideredreasonableundertheprevailingcircumstances.

TheGroupmakesestimatesandassumptionsaboutthefuture,buttheresultingaccountingestimatesseldomequaltherelatedactualresult.Theestimatesandassumptionsthatentailasignificantriskofmaterialadjust-mentsincarryingamountsforassetsandliabilitiesduringthenextfiscalyeararediscussedbelow

A. Assessment of impairment requirements for goodwillTheGroupassessesifanyimpairmentrequirementsexistforgoodwillonanannualbasisinaccordancewiththeaccountingprincipledescribedinclause 2.7. The recoverable amount for theCompany’s cash-generatingunitwasestablishedbycalculatingitsvalueinuse.Forthesecalculations,certainestimatesmustbemade(Note17).

B. Assessment of impairment requirements for capitalized development expendituresCostsarisingindevelopmentprojectsarereportedasintangiblefixedassetswhen it isprobablethat theprojectwillbesuccessful in termsof itscom-mercialandtechnicalpotentialandwhenthecostscanbemeasuredreliably.Ateachreportingperiod,theCompanyassessesifanyimpairmentrequire-mentsexistwithincapitalizeddevelopmentexpenditures.Thismeansthatacompletereviewoftheseproductsisperformedwithregardtoeconomiclifeandtheproducts’profitability.Theproducts’lifetimesvaryandaregenerallyfromfivetoeightyears.Adepreciationrateofthreeyearsforcapitalizeddeve-

2.17 leAsINgAleaseforwhichasignificantpartoftherisksandbenefitsofownershipisretainedbythelessorisclassifiedasanoperatinglease.Paymentsmadeduringtheleasetermareexpensedstraight-lineintheincomestatementovertheleaseterm.Whenassetsareleasedoutasanoperatinglease,theasset is reportedon thebalancesheet in therelevantassetclass.Leaseincomeisrecognizedonastraight-linebasisoverthetermofthelease.

2.18 curreNt AND DeferreD INcoMe tAXThe tax expense for theperiod comprises current anddeferred tax. Taxisrecognizedintheincomestatement.ThecurrentincometaxchargeiscalculatedonthebasisofthetaxlawsenactedorsubstantivelyenactedatthebalancesheetdateinthecountrieswheretheCompany’ssubsidiariesandassociatesoperateandgeneratetaxableincome.

Deferredincometaxisdeterminedusingtaxrates(andlaws)thatwereenacted or substantially enacted by the balance sheet date and are ex-pectedtoapplywhentherelateddeferredincometaxassetisrealizedorthedeferredincometaxliabilityissettled.Deferredincometaxassetsarerecognizedonlytotheextentthatitisprobablethatfuturetaxableprofitwillbeavailable,againstwhichthetemporarydifferencescanbeapplied.

2.19 cAsh floW stAteMeNtThecashflowstatement ispreparedaccording to the indirectmethod.Thereportedcashflowonlyincludestransactionsinvolvingdepositsorpayments.Cashandbankbalancesareclassifiedasliquidassets,asareshort-termfi-nancial investments,whichareonlyexposedtoaninsignificantriskofvaluefluctuationand:•aretradedontheopenmarketforknownamounts,or•havearemainingdurationoflessthanonemonthfromtheirpurchasedate.

2.20 AccouNtINg polIcIes – pAreNt coMpANyTheparentcompany’sannualreportwaspreparedinaccordancewithrr2.1andtheAnnualAccountsAct.TheparentcompanyfollowstheGrouppoliciesstatedabovewithexceptionsasstatedbelow.Thesepolicieswereappliedconsistentlyforallyearsrepresentedunlessotherwisestated.Segment reportingNetsalesarereportedbyproductgroupandgeographicmarket.Reporting formatTheincomestatementandbalancesheetareformattedaccordingtotheAnnualAccountsAct.leasingAllleasingagreements,whetherfinancialoroperatingleases,arerecogni-zedasoperatingleasesintheparentcompany.Shares and participations in subsidiariesShares and participations in subsidiaries are reported at historical costafterdeductionforpossibleimpairments.Ifthereisanindicationthatthesharesorparticipationshavelostvalue,therecoverablevalueiscalcula-ted,andifitisbelowhistoricalcost,theimpairmentistaken.Group contributions and shareholder contributionsTheCompanyreportsshareholdercontributionsasanincreaseintheva-lueofsharesandparticipations.Sharesandparticipationsarethentestedfor impairment. Group contributions are recognized based on economicsubstance;inotherwords,directlyagainstprofit/lossbroughtforwardafterdeductionforthecurrenttaxeffect.GroupcontributionsreceivedthatareequivalenttodividendsarerecognizedasdividendsfromGroupcompaniesintheincomestatement.AGroupcontributionthatisequivalenttoashare-holders’contributionisreported,takingintoaccountthecurrenttaxeffect,accordingtotheprincipleforshareholdercontributionsstatedabove.

Note 3 FinancialrisksNet Insight isexposed toa varietyoffinancial risks:market risk (inclu-dingcurrencyrisk,fairvalueinterestrisk,cashflowinterestrisk,andpricerisk),creditrisk,andliquidityrisk.TheforeigncurrencyriskdominatesandtheBoardassessesthatNetInsightisprimarilyexposedtothefollowingfinancialrisks:

3.1 curreNcy rIsKCurrencyriskisdefinedastheriskofadecreasingresultand/orcashduetochangesinexchangerates.NetInsighthasastronginternationalcharacterwithmostof itssales inEUrandUSD.ComponentsaremainlypurchasedinSwedishkronor(SEK)butarelinkedtoUSDthroughcurrencyclausesthatareregularlyadjusted.CurrencyrisksaremanagedaccordingtothefinancepolicyestablishedbytheBoard.TheriskoftransactionexposureismanagedbyregularlyupdatingthepricelistsinEUrandUSD,matchingingoingand

38 Net INsIght

Notes

Note 7EmployeesAveragenumberofemployees,salaries,otherbenefits,andsocialsecuritycontributions.

Average number of employees of which men %Sweden 110(95) 88(87)USA 6(6) 92(84)

Forinformationregardingtheparentcompany,seeSwedenabove.Atyear-end,thenumberofemployeeswas114(102) intheparentcom-panyand6(6)inthesubsidiary.Absenceduetosickleaveamountedto2.3percent(1.9)oftotalordinaryworkhoursintheCompany.ofabsencesduetosickleave,1.4percent(1.0)wereconsecutiveabsencesofmorethan60days,i.e.,sickleaveabsencesexcludinglong-termabsencesamountedto0.9percent(0.9).Women’sabsencesamountedto1.3percent(1.2)oftotalworkhours in theCompany. In the 30-49agegroup, sick leavewas0.5percent (1.0)of totalordinaryworkhours,while in the50-65agegroup,sickleavewas5.7percent(5.2).Theotheragegroupsincludefewerthan10people,whichiswhytheyarenotreportedseparately.

Number of directors and senior executives

group (inkl subsidiary)Dec 31,

2009of wich

menDec 31,

2008of wich

menBoardmembers 9 89% 8 88%Chiefexecutiveofficeranotherseniorexecutives 7 86% 5 100%parent companyBoardmembers 6 83% 6 83%Chiefexecutiveofficeranotherseniorexecutivese 7 86% 5 100%

compensation and other benefits

styrelseNKseK styrelsearvode 2009 2008LarsBerg(Chairman) 350 350ragnarBäck 150 150Cliffordh.Friedman 150 150Berntmagnusson 150 150GunillaFransson 150 150ArneWessberg 150 150total 1,100 1,100

Theamountsrefertofeesfortheparentcompanyasapprovedatthe2009(2008)AnnualGeneralmeeting(AGm).

group

DistributedamongtheCEo,VP,otherseniorexecutives,andotheremploy-ees (Approved compensation excluding pension costs and share-relatedcompensationinaccordancewithIFrS2).

2009 KseK salary

Variable compen-

sation

other bene-

fitspension expense

share-based

compen-sation total

FredrikTrägårdh(CEo) 1,750 875 0 642 358 3,625AndersPersson(VP) 1,500 450 0 259 317 2,526otherseniorexecutives(5) 4,203 1,273 0 874 684 7,034otheremployees 60,739 8,957 606 9,575 2,665 82,542total 68,192 11,555 606 11,350 4,023 95,726

2008 KseK salary

Variable compen-

sation

other bene-

fitspension expense

share-based

compen-sation total

FredrikTrägårdh(CEo) 1,750 3,500 0 647 2,785 8,682AndersPersson(VP) 1,500 1,265 0 388 1,336 4,489otherseniorexecutives(5)

2,652 748 0 664 821 4,885

otheremployees 52,862 7,905 470 8,878 6,186 76,301total 58,764 13,418 470 10,577 11,128 94,357

'otherbenefitsreferstohealthinsurance.

lopmentexpenseswasappliedthroughDecember31,2008.Areassessmentofexpectedusefulliferesultedintheextensionofthedepreciationperiodforcapitalizedexpenditurestofiveyears,effectiveJanuary1,2009.

C. Deferred taxDeferredtaxclaimspertainingtolosscarry-forwardsarerecognizedtotheextentthatitisprobablethatfuturetaxableprofitwillbeavailableagainstwhichunused tax lossescanbeapplied. In2009,Net InsightcapitalizedanadditionalSEK11.8million(27.1)indeferredtaxclaims,correspondingtotaxlossdeductionsofSEK45million(103).Thecapitalizationisbasedonthepreviousyear’searningsalongwithanexpectedpositivelong-termearningstrend.

Note 5Netsalesandsegmentinformationmanagement determined the operating segments based on reports re-viewedbytheCEo,whomakesstrategicdecisions.TheCEoreviewsthebusiness from theEmEA,Americas,andAPACgeographicperspectives.Theoperatingsegmentsaremeasured in termsof regionalcontributiondefinedasgrossearningslessmarketingexpenses. Intheregionalcon-tributionreport,centralizedmarketingandsalesexpensesareallocatedbasedonnetsales.ThesegmentinformationprovidedtotheCEofortheyearendedDecember31,2009,isasfollows:

seK Million 2009 2008EmEA APAC Am TOTAl EmEA APAC Am TOTAl

NetSales 177 18 38 233 137 58 80 274regionalContribution 86 –3 14 97 72 16 44 132regionalContribution% 48% –14% 36% 42% 53% 28% 55% 48%

Netsalesarereportedbyproductgroup,butdonotqualifyasareportableoperatingsegment(IFrS8),asnoothermeasurementsarereported.

Net sales per product group, KseK 2009 2008hardware 168,509 178,086Softwarelicenses 21,214 27,495Supportandservices 41,543 34,477otherrevenue 1,534 34,247Total 232,801 274,305

Allinvoicingisdonefromtheparentcompany,whereallrevenuesarere-ported.Thefollowingindicatesthedistributionofnetsales:

group parent companyKseK 2009 2008 2009 2008Sweden 23,214 3,316 44,522 36,723EmEAexclSweden 153,617 136,118 153,617 136,118Americas 37,947 78,662 37,947 78,662APAC 18,023 56,209 18,023 56,209total 232,801 274,305 254,109 307,712

Norevenuefromasinglecustomerexceeds10percentoftotalrevenue.Internal invoicing for services received in the form of further deve-

lopmentofproductsand foradministrativeservices to thesubsidiarybytheparentcompanyhasoccurredsince2004.Thesubsidiaryinvoicestheparentcompanymonthly fora license fee forusing intellectualpropertyrights.Duringtheyear,invoicestothesubsidiaryamountedtoSEK21,308thousand(33,407).This invoicingpertainstofurtherdevelopmentofpro-ductslicensedtotheparentcompanyandadministrativecostsincurredbyNetInsightABonthepartnership’sbehalf.

Internal transactions 2009 2008SalestoNIIPhB 21,308 33,407InköpfrånNIIPhB 23,131 23,853

Note 6 Exchangeratedifferencesoperatingexchangerategainsandlossesareincludedinoperatingear-nings.

operating exchange rate differences

group parent company2009 2008 2009 2008

Exchangerategains 24,679 15,255 24,679 15,255Exchangeratelosses 25,565 7,354 25,565 7,354Netexchangeratedifferences –886 7,901 –886 7,901

hedgeaccountingisnotapplied; instead,thetotaleffectofratefluctua-tionsisreporteddirectlyintheincomestatement.

AnnuAl report 2009 39

Notes

Severance payAmutualperiodofnoticeofsixmonthsappliesbetweentheCompanyandtheCEo.IftheCompanyterminates,severancepayof18months’salaryispaidwithnoobligationfortheCEotoworkfromtheendofthetermofnotice.AnysalaryorotherremunerationthattheCEoreceives inanewpositionorinacompanythattheCEorunsduringthe18monthsfollowingtheperiodofnoticewillbedeductedfromtheseverancepay.ThecontractbetweentheCompanyandtheothermanagementemployeesissubjecttothreetosixmonths’noticebyeitherparty.TheBoardreservestherighttodepartfromtheproposedguidelinesinparticularcases.

Financial instrumentsonDecember31,2009,theCEohad1,235,000employeestockoptions,theVPhad1,085,000employeestockoptions,andtheotherseniorexecutiveshad2,150,000employeestockoptions.

Number of employee stock options held by senior executives as of De-cember 31, 2009

employee stock options 2007

employee stock options 2009

ceoBeginningbalance 750,000 0Changefortheyear 0 485,000Endingbalance 750,000 485,000Value 1,192,500 790,550VpBeginningbalance 650,000 0Changefortheyear 0 435,000Endingbalance 650,000 435,000Value 1,034,000 709,050other senior executivesBeginningbalance 1,100,000 0Changefortheyear –10,000 1,060,000Endingbalance 1,090,000 1,060,000Value 1,733,000 1,727,800

Valueinthetableabovereferstotheestimatedmarketvalueatthegrantdateofthe2009and2007stockoptionplans.Themarketvaluewascal-culatedusingtheBlack&Scholesvaluationmodel.Basedonananaly-sisofthehistoricalvolatilityoftheCompany’sshareprice,theexpectedvolatilityisestimatedtobe50percentfor2009and40percentfor2007.however, the disposition restrictions that apply to employee stock op-tionshaveavalue-reducingeffectthatiscalculatedbasedonanticipatedemployeeturnoverandtheprobabilityofredemptionoftheinstrumentsbefore theirexpirationdates.Thevalue-reducingeffect isestimatedat30percent(2009)and35percent(2007)comparedtotheestimatedvalueoftheemployeeoptioninaccordancewiththeBlack&Scholesvaluationmodel.Possiblefuturedividendswerenottakenintoaccount.Thevalueperemployeestockoptionasof thegrantdatewascalculatedasSEK1.63(2009)andSEK1.59(2007).TheGrouphasnolegalorconstructiveobligationtorepurchaseorsettletheoptionsincash.

Preparatory and decision-making processCompensationpaidtotheCEoforthe2009fiscalyearwasapprovedbytheBoardofDirectors.CompensationtootherseniorexecutiveswasapprovedbytheremunerationCommitteeafterconsultationwiththeCEo.

Related party transactionsrelatedpartytransactionswereonlycarriedoutwithsubsidiariesduring2009,asspecifiedinNote5.Cliffordh.Friedman,whorepresentsConstel-lationGrowthCapital,thelargestowner,isalsoamemberoftheboardofhiberniaAtlantic,oneofNetInsight'smajorcustomersthroughtheacqui-sitionofmediaXtreameinDecember2009.ConstellationGrowthCapitalisalsoamajorownerofhiberniaAtlantic.

Employee stock option programsTheAGmapprovedemployeestockoptionprogramsfor2007and2009.The2009AGmresolvedtoissueemployeestockoptionsthatallowallemployeesintheGrouptoacquireClassBshareswithagrantdateofmay28,2009.Thevestingscheduleissuchthatone-thirdisvestedoneyearafterthegrantdateandanadditionalthirdateachofthefollowinganniversarydates.Exerciseofthe2009programisalsolinkedtothefulfillmentofcustomer-relatedtechni-caldevelopmentobjectivesdeterminedbytheBoardofDirectors.Uponter-minationofemployment,employeestockoptionsnormallyexpireiftheycannolongerbeutilized.Employeestockoptionsareallocatedwithoutfeesandmaynotbetransferred.Terms,redemptionprices,andnumberofallocatedandoutstandingoptionsarelistedbelow.Theemployeestockoptionprogram

2009

KseK salary

Variable compen-

sationother

benefitspension expense

share-based

compen-sation

social expence total

Sweden 62,632 10,310 0 11,350 4,023 23,721 112,036USA 5,560 1,245 606 0 0 526 7,937

2008

KseK salary

Variable compen-

sationother

benefitspension expense

share-based

compen-sation

social expence total

Sweden 53,667 10,995 0 10,576, 11,128 26,343 112,709USA 5,097 2,423 470 0 0 485 8,475

'otherbenefitsreferstohealthinsurance.Forinformationregardingtheparentcom-pany,seeSwedenabove.

The board of directors’ of Net Insight AB proposal for resolution regar-ding guidelines for remuneration and other terms of employment for senior executivesThere has been no deviation from the resolution at the annual generalmeeting 2009 regarding the senior executives termsand remunerationsand general remuneration principles during 2009 except for the GlobalheadofSaleswhohasacompensationmodelwherethevariableremune-rationis100percentbasedonnetsales.

Theboardofdirectorsproposesthattheannualgeneralmeetingresolvestoapprove theboardofdirectors’proposal regardingguidelines for remu-nerationandothertermsofemploymentforseniorexecutivesassetforthbelow.

Differencesbetween2009-and2010-yearsguidelinesforremunerationare:variablecompensationforotherseniorexecutiveshaschangedfrom10-40percentto30-60percent;Globalheadofsales’variablecompensa-tionisbasedto100percentonnetsales;anadditionalpersonhasbeenaddedtothelong-termincentiveprogramwhereinthemultiplierstartsatasharepriceofSEK6andmaximumofSEK12.50.

Employment conditions and compensation for senior management and general compensation principlesThecompanyofferssalariesandremunerationsbasedonfixedandava-riablecomponentswhichareinlinewithmarketpracticesasdeterminedbyexternalcompensationexpertise.remunerationtotheCEoandseniorexecutivesconsistofbasesalary,variableremuneration,employeestockoptionsandpensionbenefits.“Seniorexecutives”referstotheCEoandtheothermembersof themanagement team,which inaddition to theCEo,consistsofsixpersons.Thedivisionbetweenfixedandvariableremune-rationisinproportiontotherespectivemanager’sresponsibilityandaut-hority.Thevariable remuneration isbasedonacombinationof revenue,resultsandactivitytargets.

FortheCEotheannualvariableremunerationiscappedat100percentandforotherseniorexecutives,notincludingtheglobalheadofsales,at30-60percentofthebasesalary.70percentofthevariableremunerationisbasedonmeasurablefinancialtargets.Fortheglobalheadofsalesapp-liesacompensationmodelwherethevariableremunerationis100percentbasedonnetsales.

For certain senior executives, the agreed base salary is fixed during2009, 2010 and 2011. half of the outcome of the variable remunerationduring2009, 2010and2011 isput inescrowandpaidout inApril 2012,afterapplyingamultiplierontheaccumulatedamountinescrow.Themul-tiplier isdependenton the increaseof thecompany’smarketcapitaliza-tioncompared to theaveragemarketcapitalduring the6months, fromandincludingoctober2011uptoandincludingmarch2012.Thisvariableremunerationispaidoutifthecompany’smarketcapitalizationasabovecorrespondstoasharepriceofnotlowerthanSEK6andwithacapdeter-minedatSEK12.50.Anyoutcomeoftheemployeestockoptionplans2007and2009issetofffromtheresultingamount.

Almosttheentirepersonnelhavesomekindofvariableremunerationandtheentirepersonnelparticipateinemployeestockoptionplans.

reservation of all variable remuneration aswell as social charges ismadeintheaccounts.

Pension commitmentsTheCompany’spensioncommitmentsfortheCEoamountto35percentofannualsalaryexcludingbonuses.Forotherseniorexecutives,pensioncommitmentsamounttobetween12percentand35percentofannualsa-lary.Allpensionplansaredefinedcontributionplans.TheretirementagefortheCEoandotherseniorexecutivesis65.

40 Net INsIght

Notes

Note 10operatingleasesThenominal valueof future leasing fees (including rent forpremises) fornon-terminableleasesisdistributedasfollows:

group parent company2010 5,881 5,8812011 5,083 5,0832012 5,046 5,0462013 5,034 5,0342014 5,034 5,034total 26,078 26,078

LeasingcostsfortheyeartotaledSEK6,655thousand(5,461)forboththeparent company and theGroup.No single contract has a termof threeyearsormoreexceptfortheleasefortheCompany’spremises,whichwasextendedin2009andhasatenureof60months.

Note 11Expensesbynature group parent company2009 2008 2009 2008

goods of resale:Costforsales 54,965 75,691 78,096 99,544expense type:

Salaryandsalaryrelatedexpenses 120,442 115,731 111,789 109,975

Salesandmarketingexpenses 11,024 5,256 22,748 16,592Travelandentertainmentexpenses 9,051 8,528 7,092 6,518officeexpenses 10,973 8,909 10,526 8,303

otheradministrativeexpenses 587 2,781 459 2,635Externalservices 7,157 6,994 6,693 6,854Developmentexpenses,gross 10,874 14,161 10,874 14,161Capitalization –50,868 –44,476 –50,868 –44,476Depreciation 24,594 46,663 24,594 46,663total expenses 198,799 240,238 222,003 266,769

Note 12FeesandremunerationsTheGroupandparentcompanyexpensedSEK240,000(231,000)forauditservicesandSEK440,000(422,000)forothertasksperformedbyÖhrlingsPricewaterhouseCoopersAB.

Note 13Financialincomeandcostsgroup parent company

2009 2008 2009 2008

financial incomeInterestincome 1,139 4,981 1,139 4,954Exchangeratedifferencesoncurrentreceivables 0 1,235 0 1,235

Exchangeratedifferences 461 0 461 0

otherfinancialincome 48 0 48 0Financialincome 1,648 6,216 1,648 6,189

financial costsInterestexpenses –156 –,20 –155 –20

Exchangeratedifferencesoncurrentreceivables –3,878 0 –,3,878 0Costofcreditfacilities 0 –1,574 0, –1,574Exchangeratedifferences 0 –1,649 0 –1,649Financialexpenses –4,034 –3,243 –4,033 –3,243

Netfinancialincome/costs –2,386 2,973 –2,385 2,946

isintendedtobeanincentiveforGroupemployees,therebycontributingtotheGroup’scontinueddevelopment.

employee stock option plan 2007Maturity date April 26, 2011 2009 2008AsofJanuary1 6,325,000 6,285,000Allocated 250,000 250,000Forfeited –123,333 –210,000Utilized 0 0Expired 0 0AsofDecember31 6,451,667 6,325,000Possibletoexcerise 4,301,111 0Totalnumberofoptions 9,900,000 9,900,000redemptionprice 7.10 7.10Numberofsharesperoption 1.00 1.00

employee stock option plan 2009Maturity date May 28, 2013 2009 2008AsofJanuary1 0 -Allocated 6,195,000, -Forfeited –15,000 -Utilized 0 -Expired 0 -AsofDecember31 6,180,000 -Possibletoexcerise 0 -Totalnumberofoptions 8,500,000 -redemptionprice 5.70 -Numberofsharesperoption 1.00 -

In2009,noemployeestockoptionswereexercised

Social security contributionsNetInsightConsultingAB,awhollyownedsubsidiary,holds4,400,000war-rantsthatmaybeusedtoavoidanypotentialimpactoncashflowfromsocialsecuritycontributionsthatmayarisefrombothemployeestockoptionpro-grams.Intheeventoffullutilizationofalloutstandingsubscriptionoptionsissuedinconjunctionwiththeemployeestockoptionprograms,dilutioniscalculated to be approximately 4.1 percent of the total number of sharesandapproximately4.0percentofthetotalnumberofvotesintheCompany.Dilutioneffectswerecalculatedbydividingthetotalnumberofexercisableshares/votesfromemployeestockoptionprogramsbythetotalnumberofshares/votesafterthewarrantsareexercised.

Note 8DevelopmentexpensesDevelopmentexpensesprimarilyconsistofsalaries,productdevelopment,components,patentapplications,licenses,andotherdevelopment-relatedexpenses.

Note 9Depreciationoftangibleandintangiblefixedassetsgroup - Depreciation Dec 31, 2009 Dec 31, 2008

Capitalizeddevelopmentexpenditures 23,404 45,806otherintangibleassets 521 0Equipmentforleasing 222 7,373Equipment 708 857total 24,855 54,036

parent company - Depreciation Dec 31, 2009 Dec 31, 2008

Capitalizeddevelopmentexpenditures 23,404 45,806otherintangibleassets 521 0Equipmentforleasing 222 7,373Equipment 708 857total 24,855 54,036

AnnuAl report 2009 41

Notes

Note 17Intangiblefixedassetsandgoodwillgroup parent company

Dec 31, 2009 Dec 31, 2008 Dec 31, 2009 Dec 31, 2008

Accumulatedpurchasecostsatthebeginningoftheyear 212,422 167,946 177,876 133,400Newpurchases 51,673 44,476 51,673 44,476Disposal 0 0 0 0reclassification 2,270 0 2,270 0total 266,365 212 422 231,819 177,876Accumulateddepre-ciationcostsatthebeginningoftheyear –144,558 –98,752 –110,012 –64,206Depreciationfortheyear –23,924 –45,806 –23,924 –45,806Disposal 0 0 0 0reclassification –296 –296total – 168,778 – 144 558 – 134,232 – 110,012residualvalueaccordingtoplanbyyearend 97,587 67,864 98,587 67,864

mostdepreciationpertainingtointangiblefixedassets,bothintheparentcompanyandtheGroup,areincludedindevelopmentexpenses.TheErPsystem was reclassified from a tangible to an intangible fixed asset in2009.

goodwill groupDec 31, 2009 Dec 31, 2008

Accumulatedpurchasecostsatthebeginningoftheyear 4,354 4,354residual value according to plan by year end 4,354 4,354

Assessment of impairment requirements for goodwill and capitalized assets TheacquisitionoftheQ2LabGroupinmarch2004resultedingoodwillofSEK4,354thousand.TheGrouphasonlyonecash-generatingunit(CGU)withinwhichgoodwillisreported.TherecoverableamountfortheGroup’sCGUisestablishedbasedoncalculationsofvalueinuse.Thesecalcula-tionsarebasedonestimatedfuturecashflowbasedonfinancialforecastsapprovedbymanagementthatcoverafive-yearperiod.Cashflowbeyondthefive-yearperiod isextrapolatedwith thehelpofanassessedgrowthrate.Thegrowthratedoesnotexceedthelong-termgrowthrateforthetelecommunicationsmarketinwhichtheCGUinquestionisactive.

managementestablishedthebudgetedgrossmarginbasedonearlierresults and its market development expectations. The average annualgrowth rate is estimated at about 10 percent over a 10-year period and5percentthereafter.Theweightedaveragecostofcapital(WACC)usedis9percentaftertax.Itreflectsthespecificrisksthatapplytothesegmentinwhichthecompanyhasoperations.AchangeinWACCof3percentagepointsdoesnotgiverisetoanyimpairmentrequirements.Achangeines-timatedEBITDAof2percentagepointsdoesnotresultinanyimpairmentrequirements.Achangeinestimatedgrossmarginsof3percentagepointsdoesnotgiverisetoanyimpairmentrequirements.Basedonthis,noim-pairmentofassetswasdeemednecessary.

Note 18Tangiblefixedassetsgroup parent company

Dec 31, 2009 Dec 31, 2008 Dec 31, 2009 Dec 31, 2008Accumulatedpurcha-secostsatbeginningoftheyear 10,247 15,449 9,665 14,867Newpurchases 1,622 12,663 1,622 12,663reclassifications –2,270 –17,865 –2,270 –17,865total 9,599 10,247 9,017 9,665

Accumulateddepreciationatbeginningoftheyear –6,417 –7,120 –5,835 –6,538Depreciationfortheyear –930 –8,229 –930 –8,229reclassificationsr 296 8,932 296 8,932total – 7,051 – 6,417 – 6,469 – 5,835

Note 14Incometaxexpensegroup parent company

group (KseK) 2009 2008 2009 2008

Currenttax:Currenttaxonprofitsfortheyear –9,023 0 –9,023 0Totalcurrenttax –9,023 0 –9,023 0Deferredtax(note15) 11,765 27,078 11,765 27,078Totaldeferredtax 11,765 27,078 11,765 27,078Incometaxexpense 2,742 27,078 2,742 27,078

group parent company2009 2008 2009 2008

Difference between reported tax expense and tax expense based on applicable tax rate

reportednetincomebeforetax 31,616 40,862 29,721 34,337Taxaccordingtocurrenttaxrate –8,315 –11,338 –7,817 –9,614Effectofforegintaxrates 91 - - -Taxeffectfromnon-deductibleexpensesandnon-taxablerevenue –799 611 –1,206 –1,108reversalofpreviousyears’non-deductiblecosts - 110,052 - 110,052Non-reportedeffectoflosscarry-forwards 11,765 –72,247 11,765 –72,247Taxonprofit/lossfortheyearaspertheincomestatement 2,742 27,078 2,742 27,078

Note 15Deferredtaxassetsgroup parent company

2009 2008 2009 2008

openingbalance 27,078 - 27,078 -recognizedintheincomestatement 2,742 27,078 2,742 27,078Closingbalance 29,820 27,078 29,820 27,078

Deferredtaxclaimspertainingtolosscarry-forwardsarerecognizedtotheextentthatitisprobablethatfuturetaxableprofitwillbeavailableagainstwhichtheunusedtax lossescanbeapplied.Net InsightcapitalizedSEK11,765thousand(27,078)indeferredtaxclaims,correspondingtotaxlossdeductionsofSEK44,734thousand(102,958).Thecapitalizationisbasedonthepreviousyear’searningsalongwithanexpectedpositivelong-termearnings trend. There are also loss carry-forwards amounting to SEK948,535thousandthatwerenotvaluedasdeferredtaxclaims.NetInsightABholdsthelosscarry-forwards,whichareSwedishlosscarry-forwardsofunlimitedduration.

group parent company2009 2008 2009 2008

Losscarry-forward 945,964 980,206 937,152 979,231

Note 16EarningspershareEarningspersharewerecalculatedbydividingprofitfortheyearwiththeweightednumberofregisteredshares.

profit for the year attributable to 2009 2008

ParentCompanyshareholders 34,358 67,940Averagenumberofshares 387,615,523 374,306,574Earningspersharebeforedilution 0.09 0.18

Inthecalculationofdilutedearningspershare,theregisterednumberofshares isadjustedfor thewarrantsthatcouldhavebeenconverted.Thefairvaluewascalculatedastheaveragevalueoftheshare,whichwasSEK4.50for2009.Adilutiveeffectarisesifthepresentvalueofthewarrantsislessthanthefairvalueoftheshare.In2009,allemployeestockoptionshadaredemptionpricethatwashigherthanthisvalue,therebygivingnodilution.

profit for the year attributable to 2009 2008

ParentCompanyshareholders 34,358 67,940Averagenumberofshares 387,615,523 379,480,711Earningspershareafterdilution 0.09 0.18

42 Net INsIght

Notes

residualvalueaccordingtoplanbyyear-end 2,548 3,830 2,548 3,830

DepreciationincludedinCostofSales –222 –7,372 –222 –7,372Depreciationincludeddevelpomentexpense –657 –561 –657 –561Depreciationincludedinadministrativeexpense –51 –296 –51 –296total depreciation – 930 – 8,229 – 930 – 8,229

Note 19DepositspaidTheamountpertainstodepositsinconnectionwiththeestablishmentofasalesofficeinSingapore.

Note 20Inventoriesgroup parent company

Dec 31, 2009 Dec 31, 2008 Dec 31, 2009 Dec 31, 2008

Productsinprogress 395 900 395 900FinishedGoods 26,275 29,236 26,275 29,236total 26,670 30,136 26,670 30,136

The expensed inventories are included in the cost of goods sold itemandamountstoSEK43,970thousand(57,149).InventoriesvaluedatSEK45,030thousand(50,334)wereimpairedatanassessednetsellingpriceofSEK26,670thousand(30,136).ImpairmentlossofinventoriesfortheyearamounttoSEK2,751thousand(10,189)and isrecorded incostofgoodssold.

Note 21Accountsreceivableandotherreceivablesgroup parent company

Dec 31, 2009 Dec 31, 2008 Dec 31, 2009 Dec 31, 2008Accountsreceivable 89,504 62,835 89,504 62,608Provisionforimpair-mentofreceivables –2,497 -228 –2,497 -Accountsreceivable,net 87,007 62,608 87,007 62,608Currentreceivables 3,148 5,186 3,148 5,072Prepaidexpensesandaccruedincome 4,912 4,634 4,912 4,634Carryingamountofaccountsreceivableandotherreceivables 95,067 72,428 95,067 72,314

TheGroupdidnotreportanylossesonaccountsreceivablein2009(2008).Belowisanaginganalysisofaccountsreceivablesdueandrelatedreser-ves.

Invoices past due (KseK) 2009 2008Lessthan3months 19,168 21,6933-6months 9,686 204morethan6months 6,621 0total 35,475 21,897

change in provision for bad debts 2009 2008AsofJanuary1 –228 0Unusedamountsreversed 228 0Provisionforbaddebts –2,497 –228As of December 31 – 2,497 – 228

the group's accounts receivable and other receivables in carrying amount by currency 2009 2008SEK 6,792 29,994USD 35,313 18,834EUr 52,457 23,600SGD 310 0AED 195 0total 95,067 72,428

TheseamountsweretranslatedtoSEKatthebalancedaterate.TheCom-panyhasanagreementrelatingtoloansonaccountsreceivable.Theloanamountis80percentuptoamaximumofEUr5,370,569.Atyear-end,noloanshadbeentakenoutonaccountsreceivable.

Currentreceivablescontainthefollowingmajoritems.

group parent companyDec 31, 2009 Dec 31, 2008 Dec 31, 2009 Dec 31, 2008

VATclaims 2,243 4,633 2,243 4,604other 905 553 905 468total 3,148 5,186 3,148 5,072

Accruedincomeandprepaidexpensesincludethefollowinglargeitem:

group parent companyDec 31, 2009 Dec 31, 2008 Dec 31, 2009 Dec 31, 2008

rentforthefirstquarterof2010(2009) 1,476 1,382 1,476 1,382Prepaidlicense-/ser-vicefees 335 477 335 477

Prepaidinsurance 1,586 1,572 1,586 1,572

Prepaidexhibition 524 406 524 406Accruedinterest 81 98 81 98otheritems 910 699 910 699total 4,912 4,634 4,912 4,634

Note 22Liquidassetsgroup parent company

Dec 31, 2009 Dec 31, 2008 Dec 31, 2009 Dec 31, 2008Cashandbankbalances 74,999 51,744 71,540 49,880

Investments 77,000 100,000 77,000 100,000total cash equivalents 151,999 151,744 148,540 149,880ofwhichinblockedaccount 0 189 0 189

Theaverageinterestrateoninvestmentsduringtheyearwas1.07percent(4.42).

Note 23SharesinGroupcompanies

parent company

propor-tion of

equity %

propor-tion of

votes %Number of

sharesbook value

share-holder's

equityNetInsightIncDomicile:DelawareUSA 100 100 1,000 2,777 6,955NetInsightConsultingABCorp.ID.No.556583-7365Domicile:Stockholm,Sweden 100 100 5,000 500 493Q2LabsABCorp.ID.No.556640-8570Domicile:Stockholm,Sweden 100 100 142,864 15,021 1,700TenTechABCorp.ID.No.556669-4559Domicile:Stockholm,Sweden 100 100 1,000 100 91

purchase costs Dec 31, 2009 Dec 31, 2008Accumulatedpurchasecostsatthebeginningoftheyear 18,398 3,387Q2Labs'purchaseshares 0 11ShareholdercontributiontoNIIPhBbeforetransfertoQ2Labs 0 15,000total share in group companies 18,398 18,398

AnnuAl report 2009 43

Notes

Note 24SharecapitalSharecapitalamountstoSEK15,597thousanddistributedover389,933,009shareswithanominalvalueofSEK0.04pershare.oneA-seriesshareen-titlestheholdertoten(10)votesandoneB-seriesshareentitlestheholdertoone(1)vote.Distributionofthedifferentclassesofsharesisasfollows:

Antal aktierDec 31, 2009

Antal aktierDec 31, 2008

optionerDec 31, 2009

optionerDec 31, 2008

UnrestrictedA-shares 1,300,000 1,900,000UnrestrictedB-shares 388,633,009 377,990,569

Warrants7B 0 9,474,000Warrants2007/2011 9,900,000 9,900,000Warrants2009/2013 8,500,000 -total 389,933,009 379,890,569 18,400,000 19,374,000

Note 25otherprovisionsshort-term provisions

long-term provisions

group As of 1 jan 2008

Warrantyprovision

otherprovi-sions

Warrantyprovision

Cashincentiveprogramprovision total

Beginningbalance 4,032 3,575 4,032 4,255 15,894

-additionalprovisions 1,136 4,075 1,136 0 6,347-reversedunusedamounts 0 –3,575 0 –4,255 –7,830As of 31 dec 2008 5,168 4,075 5,168 0 14,411

groupAs of 1 jan 2009

Beginningbalance 5,168 4,075 5,168 0 14,411

-additionalprovisions 912 1,508 912 1,219 4,551-reversedunusedamounts 0 –3,038 0 0 –3,038As of 31 dec 2009 6,080 2,545 6,080 1,219 15,924

short-term provisions

long-term provisions

parent companyAs of 1 jan 2008

Warrantyprovision

otherprovi-sions

Warrantyprovision

Cashincentiveprogramprovision total

Beginningbalance 4,032 3,575 4,032 4,255 15,894

-additionalprovisions 1,136 4,075 1,136 0 6,347-reversedunusedamounts 0 –3,575 0 –4,255 –7,830As of 31 dec 2008 5,168 4,075 5,168 0 14,411

As of 1 jan 2009

Beginningbalance 5,168 4,075 5,168 0 14,411

-additionalprovisions 912 1,508 912 1,219 4,551-reversedunusedamounts 0 –3,038 0 0 –3,038As of 31 dec 2009 6,080 2,545 6,080 1,219 15,924

Productwarrantyprovisionsweremadetocoveranyanticipatedexpensesthatmayarisefrombusinesstransactionsthatarecarriedout.Provisionsforthecashincentiveprogramweremadetocoverprobablefuturecom-pensation.

Note 26otherliabilitiesotherliabilitiesincludethefollowingitems:

group parent companyDec 31, 2009 Dec 31, 2008 Dec 31, 2009 Dec 31, 2008

Prepaidextendedwarranty,short-term 750 701 750 701Specialemployer'scontribution 451 202 451 202Taxatsource 1,859 2,594 1,859 2,594othercurrentliabiltities 2,697 7 2,697 7

total current liabilities 5,757 3,504 5,757 3,504

Note 27AccruedexpensesAccruedexpensescontainthefollowingmajoritems:

group parent companyDec 31, 2009 Dec 31, 2008 Dec 31, 2009 Dec 31, 2008

Vacationpayliability 4,834 4,826 4,465 4,384Socialsecuritycontribution 5,274 8,301 5,274 8,301Accruedbonus 10,365 18,179 9,936 17,250Accruedconsultingfees 0 157 0 157Prepaidrevenuefromcustomer 3,374 0 3,374 0other 2,402 5,980 1,919 5,732total accrued expenses 26,250 37,443 24,969 35,824

Note 28Itemsnotaffectingliquiditygroup parent company

2009 2008 2009 2008Translationdifference –518 1,649 0 1,649Profit/lossinpartnership 0 0 0 9551Provisions 830 –3,119 830 –3,119Adjustmentsforemployeestockoptions 4,023 2,530 4,023 2,530otheritems 0 90 0 90total 4,335 1,150 4,853 10,611

Note 29PledgedassetsTheamountpertainstoblockedbankbalancesofSEK0thousand(189).

Note 30 CashflowstatementLiquidassetsatthebeginningoftheyearandattheendoftheyeararerelatedtobankbalancesforbothyears.ofthetotalliquidassetsintheGroupin2009,SEK3,292thousand(1,698)pertaintoliquidassetsintheNetInsightInc.subsidiary.

Note 31operatingleasesoperatingleasesinwhichaGroupcompanyisthelessor.Futureminimumleasefeesthatrefertonon-cancellableoperatingleasesareasfollows:

KseK 2009 2008Within1year 984 0Between1-5years 0 0total 984 0

Note 32Significanteventsaftertheperiod–InJanuary,amedianetworkoperatorrunningaglobalsatelliteandfibernetworkupgradedpartofitsEuropeannetworkwith10Gbpscapacitylinks.

–GlobeCast,asubsidiaryofFranceTelecom,modernizedandupgradeditsmediacontributionnetworkinPariswithNimbra680switchestomeetthenewrequirementsofitscustomers,suchastherapidlyincrea-singuseofhD.

–DialogTelekom,aleadingbroadcasterandsatelliteoperatorinSriLanka,implementedafirstphaseofNetInsight’sNimbraplatforminadigitalterrestrialTVdistributionnetworkfromtheheadendtofourtransmittersites.

–InadditiontoprovidingconnectivityfortheWorldCupinSouthAfrica,AldeaVision,aCanadianbasedinnovativeproviderofbroadcastqualityvideoservicesandsolutionsforthetelevision,filmandmediaindustrieshasplacedorderssignificantlyexpandingtheirexistingNimbranetworkusingacombinationofNimbra360andNimbra680products.

44 Net INsIght

bestyrKANDerApport

The income statement and balance sheet will be submitted to the Annual Genereal Meeting on April 29 for adoption.

Stockholm Februari 18, 2010.

Lars Berg Clifford H Friedman Chairman

Ragnar Bäck Bernt Magnusson

Gunilla Fransson Arne Wessberg

Fredrik Trägårdh Chief Executive Officer

Our auditors report was submitted on March 5, 2010.

Sten Håkansson Authorized Public Accountant

AnnuAl report 2009 45

AuDItor's report

Auditors’ report

To the annual meeting of the shareholders of Net Insight AB (publ)Corporate identity number 556533-4397

We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors and the CEO of Net Insight AB (publ) for the year 2009. The company’s annual accounts and the consolidated accounts are included in the printed version on pages 25-44. The Board of Directors and the CEO are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when pre-paring the annual accounts and the application of international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the Board of Directors and the CEO and significant estimates made by the Board of Directors and the CEO when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the CEO. We also examined whether any board member or the CEO has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.

The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the company’s financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act and give a true and fair view of the Group’s financial position and results of operations. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts.

We recommend to the Annual General Meeting of shareholders that the income statements and balance sheets of the Parent company and the Group be adopted, that the profit of the Parent com-pany be dealt with in accordance with the proposal in the administration report and that the mem-bers of the Board of Directors and the CEO be discharged from liability for the financial year.

Stockholm 5th of March 2010

Öhrlings PricewaterhouseCoopers AB

Sten Håkansson Authorized Public Accountant

46 Net INsIght

boArD of DIrectors

RAGNAR BäCKBoardmember

Bornin1944mSinEngineering.Boardmembersince2006BäckhaspreviouslyworkedatEricssonwhereheheldseveralexecutivepositionssuchasCEoinItalyandintheNetherlands,ExecutivemanagerfortheAsian/PacificregioninhongKong,andExecutivemanagerforWesternEuropeinLondon.BäckisaBoardmemberofTodos,Unfors,NordiaInnovationandNGB(NextGenerationBroadcasting).IndependentinrelationtotheCompanyandinrelationtomajorshareholdersoftheCompany.

Shareholdings in Net Insight:20000ClassBshares.Presence at board meetings 2009:5/5

ClIFFORD H FRIEDMANBoardmember

Bornin1959.BachelorofScienceinElectricalEngineering,masterofScienceinElectroPhysicsandmBAinFinanceandInvestments.Boardmembersince2004.Cliffordh.FriedmanismanagingDirectorforhighbridgePrincipleStrategiesandConstellationGrowthCapital.hehasover25yearsofexperienceinfinanceandventurecapi-talandthetechnologyandmediaindustries.CliffordisaBoardmemberofTVoNE,AirPlusTVAB/DahliaTVItaly,hiberniaAtlantic,WidevineTechnologies.IndependentinrelationtotheCompany.representsthelargestshareholderConstellationGrowthCapital.

Shareholdings in Net Insight:0shares.Presence at board meetings 2009:5/5

BERNT MAGNuSSONBoardmember

Bornin1941.masterofArts(Politics).Boardmembersince1997.ChairmanoftheBoardofKwintetandABPharmaduleAB;memberoftheBoardsofVolvoCarCorp.,FareofficeAB,höganäsAB,CoorServicemanagementAB,NordiaInnovationAB,STCInterfinansandPricerAB.PreviouspositionsincludeChairmanoftheBoardsofSwedishmatch,NobelIndustrierAB,AssiDomänAB,SkandiaAB,NCCABandCEoNordstjernanAB.Independentinrela-tiontotheCompanyandinrelationtomajorshareholdersoftheCompany.

Shareholdings in Net Insight:Berntmagnussonandwife,1232947ClassBshares.Presence at board meetings 2009:5/5

GuNIllA FRANSSONBoardmember

Bornin1960.masterandTech.LicinNuclearScience.Boardmembersince2008.GunillaFranssonistheSeniorVPandGeneralmanagerofSaabSecurityandDefenceSolutions.Gunillahasover20yearsofexperiencefromthetelecommunicationsindustry.Shehasheldvari-ousleadingpositionswithintheEricssonGroupwhereshemostrecentlywasheadofportfolioatEricssonmultimediaandheadofProductmanagementatEricssonEnterprisebetween2005and2008.PreviouspositionsatEricssonincludeVPmobileInternetSolutions,VPStrategicBusinessDevelopmentatCoreUnitServiceLayerandVPProductDevelopmentUnitmobileInternetApplications.IndependentinrelationtotheCompanyandinrelationtomajorshareholdersoftheCompany.

Shareholdings in Net Insight:4000ClassBshares.Presence at board meetings 2009:5/5

lARS BERGChairmanoftheBoard

Bornin1947.BachelorofBusinessAdministration.ChairmanoftheBoardsince2001(boardmembersince2000).mainassignment:EuropeanVenturePartner,ConstellationGrowthCapital,NewYork.othersignificantBoardassignments.ChairmanoftheBoardofEniro,ViamareandDahliaTelevisión.BoardmemberofratosandKPN/onePhone.Previouspositionsincludememberofmannesmann'sexecutiveboardwithresponsibil-ityfortheTelecomDivision,PresidentandCEoofTelia,andvariousexecutivepositionswithintheEricssonGroup.IndependentinrelationtotheCompany.EuropeanVenturePartner,represent-ingConstellationGrowthCapital.

Shareholdings in Net Insight:1008332ClassBshares.Presence at board meetings 2009:5/5

ARNE wESSBERGBoardmember

Bornin1943.StudiesinEconomicsatTammerforsUniversity.Boardmembersince2008.ArneWessbergisPresidentofPrixEuropaandthePresidentofIIC(InternationalInstituteofCommunications)andChairmanoftheBoardofDigiTVPlusoy.hehasalongstandingandsolidexperi-encefromthemediaandcommunicationsindustry.Between2000and2006,hewasPresidentoftheEBU(EuropeanBroadcastingUnion)andduringmorethantenyearsArneWessbergwasDirectorGeneralofYLE(theFinnishbroadcastingcompany)inwhichhealsostartedhiscareerwithinthebroadcastingindustryinthebeginningofthe1970’s.Between1999and2003,ArneWessbergwasChairmanoftheBoardofDigitaoyandalsoservedontheBoardofDirectorsoftheNokiaCorporationduringfiveyearsuntil2006.IndependentinrelationtotheCompanyandinrelationtomajorshareholdersoftheCompany.

Shareholdings in Net Insight:0shares.Presence at board meetings 2009:5/5

Board of directors

AnnuAl report 2009 47

the boArD's corporAte goVerNANce report

The board’s corporate governance reportNet Insight AB (publ) is a public stock company domiciled in Stockholm. Net Insight’s stock is listed on the Nasdaq OMX Nordic Exchange Midcap Stockholm. The basis for governance of the Company and Group includes its Articles of Association, the Swedish Companies Act and the regulations of the Stock-holm Stock Exchange, including the Swedish Code of Corporate Governance as of July 1, 2008. This report does not constitute a formal part of the annual report and as such is not audited.

INTRODuCTIONNet Insight follows the Swedish Code of Corporate Governance, deviating from the code in two respects:

rule Deviation explanation

2.4 TheNominationCom-mitteeincludesmorethanoneBoardmember(two),andbothofthemaredependentinrelationtothelargestsharehol-der.ThechairmanoftheNominationCommitteeisChairmanoftheBoardaswell.

TheChairmanoftheBoardisrepre-sentedontheNominationCommitteeduetohisexperienceandmanyyearswiththeCompany;heservesastheChairmanoftheNominationCommit-teeforthesamereasons.ThefactthattheprincipalownerisamemberoftheNominationCommitteeaswellastheBoardofDirectorsisanexpressionofactiveownership.

ARTIClES OF ASSOCIATIONThe Articles of Association describe the business of the Compa-ny, its share capital, the number and types of shares, allocation of votes, the number of directors and auditors, notices of and matters to be dealt with at the Annual Shareholders’ Meeting, and the requirement that this meeting be held in Stockholm.

During the period between Annual Shareholders’ Meetings, Net Insight’s Board of Directors is the highest decision-making body in the Company. The duties of the Board are regulated in the Companies Act and the Articles of Association.

The current Articles of Association were adopted at the Annu-al Shareholders’ Meeting held on April 26, 2007. The Articles of Association are available in their entirety at www.netinsight.net.

ANNuAl SHAREHOlDERS’ MEETINGThe Annual Shareholders’ Meeting of Net Insight AB (publ) was held on April 28, 2009. The Company’s Nomination Committee is responsible for proposing a chairman for the AnnualShareholders’ Meeting. Lars Berg was elected chairman of the meeting.

The Annual Shareholders’ Meeting made the following decisions:• Adoption of annual financial statements, allocation of profits

and discharge from liability for board of directors and CEO. • Lars Berg, Clifford H. Friedman, Bernt Magnusson, Ragnar

Bäck, Gunilla Fransson and Arne Wessberg were re-elected to the Board. Lars Berg was re-elected Chairman of the Board.

• Approval of the Board of Directors’ proposal regarding guideli-nes for remuneration and other terms of employment for group management.

• Approval of the employee stock option plan 2009/2013.• Amendment of the summons procedure for general meetings

in the Articles of Association. The AGM’s resolution is con-ditional upon an amendment to the summons procedure for general meetings in the Swedish Companies Act coming into force, entailing that the proposed wording conforms with the Swedish Companies Act.

The complete minutes of the Annual Shareholders’ Meeting, as well as the underlying documentation, is available at: www.netin-sight.net/ corporate_governance.asp

NOMINATION COMMITTEEThe Nomination Committee is responsible for submitting no-minations for the chairman and other members of the Board, as well as fees and other compensation to each member for their Board duties. The Nomination Committee is also responsible for submitting proposals for the election of the auditor and auditors’ fees. The members of the Nomination Committee should be ap-pointed, or the method for appointing the members should be decided, at the annual meeting. In accordance with the decision of the annual meeting, Net Insight’s Nomination Committee consists of the Chairman of the Board of Net Insight AB and the company’s four largest shareholders as of September 30 each year, who are then each entitled to appoint a representative for membership on the Nomination Committee. The composition of the Nomination Committee was published on October 21, 2009. Net Insight’s nomination committee for the 2010 Annual Shareholders’ Meeting is as follows: Cliff Friedman (Constella-tion Growth Capital), Lars Bergkvist (Lannebo Fonder), Ingemar Syréhn (Swedebank Robur fonder), Peter Lindell (AMF – För-säkring och Fonder), and Lars Berg (Chairman of the Board of Net Insight AB and European Venture Partner of Constellation Growth Capital). The Nomination Committee elected Lars Berg as its chairman. The Nomination Committee has held 3 meetings in preparation for the 2010 Annual Shareholders’ Meeting.

Net Insight deviates from the Swedish Code of Corporate Go-vernance concerning the composition of the Nomination Com-mittee in that the Chairman of the Board is also the Chairman of the Nomination Committee, and the two Board members who are also members of the Nomination Committee are dependent on the Company’s largest shareholder.

BOARD OF DIRECTORSThe Board administers the Company’s affairs in the interests of the Company and all of its shareholders. The size and com-position of the Board guarantees its ability to administer the Company’s affairs effectively and with integrity. The Board’s tasks include establishing business goals and strategies, deciding on acquisitions and divestitures, capitalization of the company, appointing, evaluating and determining the compensation of the CEO, ensuring that there are effective systems to monitor and control the Company’s business, ensuring that the necessary ethical guidelines for the Company’s conduct are established, and evaluating the Board’s work. The Board’s work plan is establis-

48 Net INsIght

the boArD's corporAte goVerNANce report

hed annually at the Statutory Board Meeting or when necessary. In addition to the assignments mentioned above, the work plan stipulates items including Board meeting procedures, instructions for the Company’s CEO, decision-making procedures within the Company, allocation of work, and the provision of information between the Company and the Board.

The Board monitors the CEO’s performance, including imple-mentation of the Board’s decisions and guidelines, and evaluates his efforts annually. The Board held five meetings during the year, not counting two per capsulam meetings. At these meetings, the Board considered standing agenda items for each Board meeting such as the state of the business, year-end and interim reports, budgets, etc. General issues such as the prevailing economic si-tuation, long-term strategies, business plans and partners were also considered. At the Statutory Board Meeting, the Board con-sidered and adopted the work plan for the Board and instruc-tions for the CEO. Fees to the Board totaled KSEK 1.1, of which SEK 350,000 was paid to the Chairman of the Board and SEK 150,000 each to the other Board members.

INDEPENDENCE OF THE BOARDThe Board occupies an independent position vis-à-vis the Com-pany since all its members are also independent in relation to the Company. Four Board members are independent of the company’s principal owners. None of Net Insight’s Board members work for the company in an operative capacity.

Clifford H. Friedman, who represents Constellation Growth Capital, the largest owner, is also a member of the board of Hi-bernia Atlantic, one of Net Insight’s major customers through the acquisition of MediaXtreme in December 2009. Constellation Growth Capital is also a major owner of Hibernia Atlantic.

For information about the Board members and CEO, see page 46 and 50.

COMPENSATION COMMITTEEThe Board’s overall responsibility cannot be delegated, but it has instituted a compensation committee charged with preparing questions concerning salaries, compensation and other terms of employment for the CEO, as well as compensation programs of a broader nature, such as option programs, for final decision by the Board. The Compensation Committee resolves questions regar-ding salaries and compensation and other terms of employment for all direct reports to the CEO. The committee reports to the Board on a continuous basis.

The compensation committee consists of Chairman of the Board Lars Berg and Board member Bernt Magnusson. During the year, the committee held four meetings at which minutes were kept, discussing the following matters: the CEO’s variable compensation for 2008 to be decided by the Board; a decision on variable compensation for 2008 for the rest of the manage-ment team; the CEO’s business goals for 2009; the allotment of options to management and the salary structure for the rest of the management team.AuDIT PROCESS AND AuDITORSNet Insight’s Board of Directors has chosen not to have a separate audit committee; instead, the full Board handles audit issues. The

Board has chosen this approach since it is suitable as long as the company has a relatively uncomplicated business and audit struc-ture. In consultation with the company’s auditors, the Board has also proactively discussed new accounting recommendations that may affect future company accounting and reporting. Twice a year, the auditors report in person to the Board of Directors about their audit reviews and their assessment of internal controls. In addition to normal auditing functions, Öhrlings Pricewaterhous-eCoopers also provides Net Insight with general accounting and tax advice. It is the responsibility of ÖhrlingsPricewaterhouse-Coopers to ensure its independence as auditors in its role as advisor. The legally mandated term of auditors is four years. The Company’s auditor, Öhrlings PricewaterhouseCoopers AB, was re-elected at the 2007 Annual Shareholders’ Meeting for a term lasting until the 2011 annual meeting. Sten Håkansson was appointed the new auditor in charge.

Twice a year, after the third and fourth quarter closing of the books, the Group’s auditors report their observations from their audit to the entire Board. These meetings also serve the purpose of keeping the board informed of the direction and scope of the audit, as well as discussing the coordination of the external audit, internal controls and the auditor’s views of risks in the Company. During one of these meetings, the auditors present and discuss their views without the presence of Company management.

Attendance by each Board member is presented below.

2009 ATTENDANCE

Namepresence atboard meetings

compensation committee

LarsBerg 5/5 4/4*

Berntmagnusson 5/5 4/4*

Cliffordh.Friedman 5/5

ragnarBäck 5/5

GunillaFransson 5/5

ArneWessberg 5/5

*One meeting was held via telephone

BOARD’S REPORT ON INTERNAl CONTROlS REGARDING FINANCIAl REPORTINGNet Insight’s Board is responsible for ensuring that the inter-nal controls of its financial reporting meet the standards of the Swedish Companies Act and Swedish Code of Corporate Gover-nance.

For Net Insight, internal controls of financial reporting are an integral part of corporate governance. These controls contain pro-cesses and methods to safeguard the Group’s assets and accuracy in financial reporting, in order to protect the owners’ investment in the Company.

The Board supervises the quality of financial reporting in se-veral ways. The Board establishes a work plan every year, which regulates the work of the Chairman of the Board and the CEO, among other things. According to his instructions, the CEO is responsible for reviewing and ensuring the quality of all financial reporting, as well as ensuring that the Board otherwise receives the reports it needs to be able to continually assess the Group’s financial position. The CEO’s instructions stipulate the issues for

AnnuAl report 2009 49

the boArD's corporAte goVerNANce report

which the CEO may exercise his authority to act on behalf of the Company after receiving authorization or approval from the Board. This instruction is reviewed annually. Net Insight has per-formed a risk analysis of its financial reporting and initiated a re-view and verification of existing governance and internal controls, in order to provide the Board with a basis for establishing the level of internal governance and controls. The internal reporting and control system builds upon annual financial planning, monthly reports and daily monitoring of key business ratios.

The Group’s finance department inspects and monitors re-porting, as well as compliance with internal and external regu-lations. Besides laws and regulations, internal policies and gui-delines include finance policies, authorization rules, a financial handbook, credit policy, accounting policy and documented pro-cedures for the most important tasks of the finance department. These policies and guidelines are updated regularly. Identified risks concerning financial reporting are managed through the Company’s control activities. For example, the IT system has au-tomated controls that manage access rights and signatory authori-ty, as well as manual controls such as duality, in both current and closing entries of transactions. The business-specific controls are complemented by detailed financial analyses of company results and follow-up checks against the budget and forecasts, which pro-vides an overall confirmation of the quality of reporting. Because the Board does not have an audit committee, the full Board en-sures that financial reporting maintains a high standard of qua-lity. The Board monitors and evaluates quality assurance through quarterly reports on the Company’s business and earnings trends, and by considering the Group’s financial situation at every regular Board meeting.

Every year the Board evaluates whether there is a need to esta-blish a special internal review office (internal audit). The Board determined that there was no need for this in 2009. In their rea-soning, the Board noted that internal controls were principally performed through:

• The central finance department.• Supervisory controls by management.

Due to these factors and the size and limited complexity of the Company, it is the Board’s view that having an additional office cannot be justified financially at present.

50 Net INsIght

MANAgeMeNt

Executive management

MARIE KJEllBERGhrDirector

Born:1958marieKjellbergjoinedNetInsightin2008ashrDirector.Shehasasolidexperiencefromabroadvarietyofhrroles,15yearsatDigitalEquipmentABandmostrecently8yearsashrDirectoratTeleoptiAB.mariehasaB.Sc.inhumanresourcesDevelopmentandLabourrelationsfromtheUniversityofStockholm.Shareholdings in Net Insight: 130000employeestockoptions

STIG STÅlNACKESeniorVicePresidentandGlobalheadofSales

Born:1958masterofScienceinEngineering.StigStålnackewasappointedSeniorVicePresidentandGlobalheadofSalesinfebruary2009.StigStålnackecomefromalongcareerwithCiscowhereheheldseveralseniorpositionswithinsales.mostrecentlyStig,asclientdirector,waspartofCiscoSweden'smanagementteamwithresponsibilityforlargetelecomcustomers.Shareholdings in Net Insight: 500000employeestockoptions

THOMAS BERGSTRöMChiefFinancialofficer

Born:1968masterofScienceinBusinessAdministration.ThomasBergströmbecametheCFoofNetInsightinAugust2009.hehas14yearsofexperiencefromabroadvarietyoffinancerolesinaninternationalenvironmentprimarilywithinthetelecomsector.ThomaswasmostrecentlyCFoatAastraTelecomSwedenandhaspreviouslyheldvariousfinanceandmanagementpositionswithintheEricssongroupinSwedenandAustralia.Shareholdings in Net Insight: 100000employeestockoptions

Back row from left: Fredrik Trägårdh, Anders Persson, Per lindgren and Stig Stålnacke. Front row from left: Thomas wahlund, Marie Kjellberg and Thomas Bergström.

ANDERS PERSSONExecutivevicepresidentandDirectorofProductDevelop-ment

Born:1957.masterofScienceinEngineering.Employedsince2000.AndersPerssonhasmanyyearsofexpe-riencewiththeEricssonGroup,wherehislatestpositionwasGeneralmanagerforNetworkDesignandPerformanceImprovement.Inaddition,AndershasheldanumberofotherleadingmanagementpositionsatEricsson.Shareholdings in Net Insight: mrandmrsAndersPersson220000ClassBshares1085000employeestockoptions

THOMAS wAHluNDDirectorofoperations

Born:1969masterofScienceinEngineering.ThomasstartedatNetInsightin1997andsince1999hehasbeenresponsibleforbuildinguptheoperationsorganization,includingresponsibilityforsalessup-port,customersupport,servicesandtraining.heholdsanmScdegreefromtheroyalInstituteofTechnology,Stockholmandhasextensiveindustryexperienceinnetworkplanning.Shareholdings in Net Insight: 46582ClassBshares435000employeestockoptions

FREDRIK TRäGÅRDHChiefExecutiveofficer

Born:1956.masterofBusinessAdministration.Employedsince2002,thenastheCFo.TookofficeasCEoinFebruary2006.FredrikTrägårdhpreviouslyworkedatGermanDaimlerChryslerrailSystemsasseniorvicePresidentandDirectorofGroupFinance.Fredrikhasextensiveinternationalexperienceandhaspreviouslyheldmanagementposi-tionswithinABBFinancialServices.Shareholdings in Net Insight: 343332ClassBshares1235000employeestockoptions

PER lINDGRENDirectorofBusinessDevelopmentandmarketing

Born:1967PhD.Employedsince1997.PerLindgrenhasaPh.D.intelecom-municationsandhaspreviouslyservedasanAssistantProfessoratKTh(royalInstituteofTechnology,Stockholm),whereheworkedwithopticalnetworks,EUprojectsrelatedtonewbroadbandservices,etc.Shareholdings in Net Insight: 400000ClassAshares2000000ClassBshares985000employeestockoptions

AnnuAl report 2009 51

glossAry

Access NetWorKThepartofthepublicnetworkclosesttoend-users.ConsistsofcopperlinesinthetelephonenetworkandcoaxialcableforcableTV.Fiberandwirelesssolutionsarealsoincreasinglybeingused.

AsI(AsynchronousserialInterface).Astandardizedphysicalinterfaceforcompressedvideo.UsedwithinthemediaindustrytotransportcontentbetweengeographicallyremoteproductionunitsandincableTVnetworks.

AtAtA M(Asynchronoustransfermode).Packet-switchedtechnologyfordatatraffic.

bANDWIDthmeasureofhowmuchinformationcanbesentoveraline.measuredinbitspersecond,bps.

broADbAND NetWorKNetworkwithextremelyhighcapacity,atleast2mbpstoeachend-user.

broADcAstTransmissionfromasinglesendertoallpossiblerecipientsinanetwork.

coNteNtContentthatisdistributedinthenetwork.

coNtrIbutIoNCommunicationforproductionandprocessingofmaterialbeforeitistransmittedtotheend-user.

coreLargertransportnetworksbetweencitiesandbackbonenetworks.

Dtt(DigitalTerrestrialTelevision).NamefordigitalterrestrialTVtoordinaryTVreceiversequippedwith”set-topboxes”.AlsocalledDVB-T.

DVb(DigitalVideoBroadcast)Standardfortransmissionofdigitalvideoovervariouskindsofmedia.

DVb-h(DigitalVideoBroadcast–handheld).AstandardfordigitalterrestrialTVtomobilereceivers,suchasacellphoneorothermobileunitwithascreen.

DVb-t(DigitalVideoBroadcast–Terrestrial).NameofthestandardfordigitalterrestrialTVtoordinaryTVreceiversequippedwith”set-topboxes”.AlsocalledDTT.

etherNetThemostcommontechnologyforcommunicationinlocalareanetworks,LAN.Transmissionspeedsof10/100mbps,1Gbpsand10Gbps.

gIgAbIt etherNetDevelopmentoftheEthernetprimarilyusedinlargeLANandbackbonenetworks.Canhandletransmissionspeedsofupto1,000mbps.

grANulArItyresolution.

hD(highDefinition).highresolution.hDTV(highDefinitionTV).highresolutionTV.

INteroperAbIlItyTwodevicesoperatingtogether.

Ip(InternetProtocol)ProtocolusedfordatatransmissionovertheInternet.AllInternettrafficistransmittedinIPpackets.

IptVTelevisionthatisbroadcastoverIP(broadband).

lAN(LocalAreaNetwork).Smallerlocalnetworksfordatacom-municationwithinadepartment,buildingorblock.

Mpls(multiProtocolLabelSwitching).minutesforefficientmana-gementofconnectionsoverapackage-switchednetwork.

MultIcAstTransmitsthesamemessagetoalargenumberofrecipientswithoutneedingtobeaddressedtoeverysingleindividual(unicast)orsenttoallpossiblerecipients(broadcast).

NeXt geNerAtAtA IoN sDh/soNetSDh/SoNETenhancedwithfunctionsbasedonGFP,LCASandVCAT(seeelsewhereintheglossaryforexplanation).

NgNNextGenerationNetworksorNextGenerationNetwork.Generalconceptforthedevelopmentofnetworksand/orastandardizationframeworktoenablenewservicesandinte-gratefixedandmobileservicesovercommoninfrastructureinfuturenetworks.

NoDeAunitthatisconnectedtoanetwork,eitherasasender/receiver,ortoconnecttogetherdifferentnetworks.

pApAp yAyA -per-VIeWPayonlyforwhatyouwatch.Unlikevideo-on-demand,theprogramsorfilmsmustbeviewedatsettimes.

post proDuctIoNPostproductionofe.g.TVprogramsorfilms.

protocolAnagreedsetofrulesastohowdifferentnetworkequipmentshouldcommunicatewitheachother.

pVr(PersonalVideorecorder).Network-basedvideorecorder.

Qos(QualityofService).Nameforthequalityofservice(thatcanbeprovidedbyanetwork).VideorequireahigherQoS.QoSisachievedinanetworkeitherbyseparatingtrafficsothatin-terferencecannotoccurorbyprioritizationwherethehighestpriorityissentfirst.

reAl-tIMeImmediatetransmissionofmaterialwithoutdelay.

routerAunittoguideandforwarddatapackets,forexample,intheInternet.

routINgGuidingandforwardingdatapacketsthroughacomputernetwork.

sDh/soNetCircuit-switchedtechnologyforcommunicationinopticalbackbonenetworks.SDhistheEuropeanstandardandSonetistheAmericanstandard.SDI(SerialDigitalInterface).Aphysicalstandardforprofessional,uncompressed270mbpsvideo.Isusedinthemediaindustrytoconnectsoundandimageequipmentinproductionareas.

Metro AreA NetWorKAhigh-capacitynetworkthatlinkstogetheranurbanorre-gionalarea.oftenreferredtoasametropolitanAreaNetwork,mAN.

bAcKboNe NetWorK high-capacitynetworklinkingtogethergeographicallyre-moteareasoranumberofsmallernetworkswithinanarea.Alsoknownasatransportnetworkorbackbone.

stuDIo QuAlItyThequalityobtainedifstudioproductionequipmentisconnectedtogetherlocally.CanbeachievedwithaloworconstantdelayoveranetworkwithanextremelyhighQoS.

telepreseNceNextgenerationvideoconferencingsolution.

topologyInnetworks,thetopologydescribeshowthenodesarelinkedtogether,forexample,inaringorstarwhereallnodesareswitcheddirectlytoacentralnode,oramesh,anirregularstructurewithmultipleswitchesbetweenmanynodes.

trIple plAyAyAAtechnologyusedforthetransportofTV/video,dataandtelephonyviaasinglenetwork.

uplINK stA stA st tAtA IoNsWherethecontentinafiberopticnetworkorotherterrestri-al-basednetworkcontactsasatellitenetwork.Forexample,whenprogrammingcompaniesbroadcasttheircontentfordistribution.

VcAtAtA(VirtualConcatenation)Facilitytocombinedifferentnon-contiguousdatacontainers(SDh/SoNETcontainers).

VIDeo-oN-DeMANDEnablesdigitaldeliveryoffilmsoverabroadbandnetwork.The”videostore”onthenetworkmeansthatthereisalwaysacopyavailableevenofthemostpopularmoviethatcanbeorderedatanytime.

VpN(VirtualPrivateNetwork)TechnologyforsettingupasecureprivatenetworkwithinthepublicnetworkbyusingInternetinfrastructure.

sWItchUsedtodirectinformationbetweendifferentnetworklinksandusers

51

financial information 2010Annual General Meeting: April 29Interim report January–March: May 7Interim report January–June: july 22Interim report January–September: october 22net Insight’s financial information is available in both

Swedish and english. the reports are most conveniently available from the net Insight web site www.netinsight.net.reports can also be ordered by e-mail: info@netinsight.net, or by telephone +46 (0)8 – 685 04 00.

Glossary

Nimbra platform, area of usage

Illustration shows transport of media from production to end-user.

Production

Primary Distribution Secondary Distribution

PrimaryDistribution

Contribution Distribution

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obileTV

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DTT

CATV

mobileTV

IPTV

DTT

CATV

obileTV

IPTV

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et Insight in cooperation with P

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Net Insight ANet Insight AbHead office in StockholmHead office in StockholmCompany registered in SwedenCompany registered in SwedenBox 420 93Se-126-126 14 Stockholm, Sweden14 Stockholm, Swedenpphone: +46hone: +46 (0)8 685 04 00, Fax: +46 (0)8 685 04 20info@netinsight.netwww.netinsight.net