MSAB: Interim Report January - June 2016

Stable sales and strong turnover in Q2

Second quarter

• Net sales increased 0.9 percent to SEK 52.0 (51.5) million (4.3 percent in local currencies)
• EBIT decreased to SEK 8.5 (10.1) million
• The EBIT margin reached 16.3 (19.5) percent (18.0 percent in local currencies)
• Profit after tax was SEK 6.5 (6.1) million
• Earnings per share were SEK 0.35 (0.34)
• Cash flow from operational activities was SEK 3.3 (6.0) million

January - June

• Net sales decreased -3.2 percent to SEK 98.8 (102.1) million (-1.0 percent in local currencies)
• EBIT decreased to SEK 13.8 (22.9) million
• The EBIT margin reached 14.0 (22.4) percent (15.3 percent in local currencies)
• Profit after tax was SEK 9.8 (17.2) million
• Earnings per share were SEK 0.54 (0.95)
• Cash flow from operational activities was SEK 8.5 (22.7) million
• Cash and cash equivalents and short-term investments amounted to SEK 78.6 (70.2) million at the end of the period

Comments from the CEO

Sales for the first six months of the year reached SEK 98.8 (102.1) million. EBIT amounted to SEK 13.8 (22.9) million, which corresponded to an operating margin of 14.0 (22.4) percent. During the second quarter, sales reached SEK 52.0 (51.5) million. This is the largest, second quarter sales volume in the Company’s history. Adjusted for local currencies, sales grew 4.3 percent during the second quarter.

We launched MSAB Ecosystem at the beginning of the year − a product family which enables a holistic approach to mobile forensics. The spring and early summer have been a very intensive period for us, where we’ve participated in several exhibitions as well as other activities for the purpose of introducing MSAB Ecosystem. Reception has been very positive. That there just isn’t enough time for forensic labs to read as many phones as they would like is a fact. They see our offering, which can help them become even more efficient, as a smart and effective solution.

There are few things which have given the police such good possibilities for securing evidence as the mobile phone. At the same time, nothing has probably ever challenged them as much either. To maximise the advantages provided by the content on mobile devices, it is no longer enough that forensic labs handle seized mobile phones. All departments within police agencies need access to the results of data readings.

Our calculations show that even if the police need, or might need, access to the content of seized mobile telephones in 90 percent of cases, authorities invest only a few percent of their budgets in mobile forensics. Prioritisation has simply not kept up with the rapid pace of development in this field. I understand that it takes time to change an organisation and to re-prioritise resources to ensure maximum benefit. That’s why we are currently trying to influence, now more than ever, decision-makers higher up in organisations, so they have a greater understanding for how they can better prioritise their efforts.

It’s exciting and rewarding working with our customers on an increasingly strategic level. The work is long-term and necessary. I believe that there isn’t a single police organisation that will not need to review its processes for handling of mobile phones.

Working to convince various authorities of the need to change their ways of working takes time. Even if many feel that MSAB Ecosystem would be a good solution for them, fast change is difficult to implement.

Some customers have taken the lead and are already thinking along these lines. One of these is the London Metropolitan Police and several others are on the way. 

Encryption is another major challenge that our customers must deal with. Today, many phones encrypt information in a way that makes it more difficult to access the content. This challenge must be handled in different ways. We supply increasingly advanced solutions − just as we’ve always done − and through our solutions, our customers can access the content on an increasing number of encrypted mobile phones.

We continue to lobby decision-makers in Europe and the USA for a standard that deals with both the challenge of protecting personal integrity while simultaneously making it possible to access the content of all seized mobile phones.

Our solution for such a standard is called FACT, and I believe it is the most serious proposal thus far. It resolves the dilemma decision-makers face when balancing personal integrity and law and order.

I’m looking forward to the second half of 2016 which will continue to be challenging but at the same time ripe with new possibilities.

Stockholm, July 2016

Joel Bollö

Chief Executive Officer