Highlights H1 2014
NedSense revenue almost flat versus H1 2013, expected to pick up in second half-year due to improved pipeline Loft division;
Net loss of €1,057 thousand versus €871 thousand in H1 2013, mainly due to combination of improved NedGraphics operating result, offset by an increased Loft operating loss;
Positive operating cash flow amounts to €1,262 thousand (first half 2013: €846 thousand positive), mainly due to decreased operating expenses NedGraphics;
25th of August, NedSense announced the sale of the NedGraphics division, which is fully in line with the company’s strategy. With the divestment of NedGraphics, NedSense can now focus all its efforts and capital on the further development of LOFT.

Key Figures
Results from continued operations (in thousands of euro) H1 2014 H1 2013, restated *
Net revenue including NedGraphics 4,382 4,466
Net revenue excluding NedGraphics 271 277
Operating result including NedGraphics 756- 650-
Operating result excluding NedGraphics 1,292- 867-
Operating result discontinued operations 530 490
Net result 1,057- 871-
Cash flow 54 1,955
Earnings per share (amounts in euro) 0.03- 0.03-

Growth Strategy
After the successful launch of its highly innovative 3D customer experience technology LOFT, NedSense has continued its focus on the development of the LOFT suite of products. In line with current technology developments and on and offline customer behavior, LOFT is available through a variety of media, from in-house enterprise deployment with full functionality across the entire product range to a slim cloud-based service for more mobile use.
Customers can access and use the products through multiple internet supported devices, be it PC’s or tablets. Loft has already shown its ability to execute in furniture retail (with implementations at Crate and Barrel, Havertys, Trendhopper, Carpet Court and DFS) as well as manufacturers (with implementations at Kravet, Donghia, Leolux, Thonet and Rubelli). LOFT is continuing its growth in market share in the furniture industry.

LOFT’s strategy in Real Estate is to connect the worlds of real estate and furniture retail, enabling retailers to connect to the customer exactly when they need to; at the moment when they are looking to buy or rent a new house. At the same time, the realtor is able to provide the customer with a visualization of the house as their new home, helping swing the decision making.
The LOFT experience engine will continue to be enhanced thanks to the cooperation between the growing base of new clients, and our technology and marketing partners in the industry. The LOFT development roadmap also includes the addition of optional space planning footage like 3D scans and construction plans.
Although currently Loft’s year-over-year revenue is gradually improving, entering the Real Estate industry will enable us to monetize the LOFT technology to its full potential.
On the 25th of August NedSense announced the sale of the NedGraphics division, which is fully in line with the company’s strategy. With the divestment of NedGraphics, NedSense can now focus all its efforts and capital on the further development of LOFT.
Financial results
In June 2014, it was decided that the NedGraphics operating segment would be held for sale. The financial result of this segment is therefore presented in the statement of comprehensive income as part of discontinued operations.
NedSense ended the first half of 2014 with a net loss of €1,057 thousand (first half 2013: €871 thousand loss). The decreased result is mainly the combination of a higher NedGraphics operating profit, offset by an increased LOFT operating loss.
Including the results of NedGraphics, NedSense realized a gross profit of €4,206 thousand compared to €4,353 thousand in the first half of 2013, a decrease of 3%. The gross profit for NedGraphics was down 2% while the gross profit was down 26% for LOFT primarily due to increased cost of sales.
NedGraphics’ operating cost decrease of 5% compared to the similar period in 2013, had an immediate impact on the segment’s profit from operations, which increased from a profit of €454 thousand in the first half of 2013 to €536 thousand in the first half of 2014.
The Loft division reported sales of €271 thousand as compared to €277 thousand in the first half of 2013. Due to a combination of the increased cost of sales noted above, as well as the blended result of decreased capitalized production with higher software amortization costs for this maturing product line, the segment’s profit (loss) from operations was €683 thousand negative.
The Other operating segment includes the activities of the holding and the discontinued operation Dynamics Perspective.
Cash flow
The operational cash flow in the first half of 2014 amounted to €1,262 thousand positive (first half 2013: €846 thousand positive). The increase is mainly due to decreased operating expenses at NedGraphics. The cash flow from investments in the first half of 2014 was €1,208 thousand negative (first half 2013: €1,400 thousand negative), due to decreased investments in software development mainly in LOFT. The cash flow from financing in the first half of 2014 was €0 (first half 2013: €2,509 thousand).

The total change in cash and cash equivalents in the first half of 2014 amounted to €54 thousand positive (first half 2013: €1,955 thousand positive).
Balance sheet
As noted above, NedSense recently announced the sale of NedGraphics The assets and liabilities of this segment are therefore presented in the statement of financial position as assets held for sale as of 30 June 2014.
From 31 December 2013 intangible assets including NedGraphics increased from €10,961 thousand to €11,005 thousand. This increase is mainly due to the investment in software development for the LOFT product line. Current receivables including NedGraphics decreased from €4,449 thousand to €2,450 thousand as the Company collected most of the outstanding maintenance invoices which were submitted at year-end 2013. Primarily due to the net loss in the first half of 2014 of €1,057 thousand, total equity decreased from €6,293 thousand as of 31 December 2013 to €5,324 thousand as of 30 June 2014.
Due to negative results in the past few years, NedSense has tax losses that may be carried forward. These tax assets are not capitalized in the balance sheet as management is currently not certain that sufficient taxable profits will be made in the near future to realize the value of these tax assets.
The solvency decreased to 34.9% at 30 June 2014, from 36.8% at 31 December 2013 due to the net loss in the first half of June 2014. The number of outstanding ordinary shares, with a nominal value of €0.10 each, was 28,596,495 as of 30 June 2014 as well as 30 June 2013.
Outlook
In the second half of 2014, NedSense will continue to deploy its strategic growth plan. As the order pipeline for the Loft division has improved, NedSense expects the revenue of LOFT to rise in 2014 versus last year.
NedSense is focused on the further development and rollout of LOFT with several important milestones expected in 2014. Existing customers like Havertys, DFS and Kravet will launch their online- and mobile LOFT implementations, and new customers are expected to start LOFT implementations. In the second half of 2014, the Loft division will launch the BtC/CtC Real Estate platform. Growth acceleration is essential to maintain the current competitive advantage and secure corporate autonomy.
In the third quarter NedSense expects to finalize the NedGraphics sale. Sales of the division are expected to be on par with expectations.
NedSense’s strategy is to continue to develop its LOFT sales and marketing efforts, maintain our market knowledge, and sustain our customer base and maintenance contracts, while looking for more opportunities to expand beyond the niche in which we currently operate. We are building and investing in our knowledge heritage, so that we can innovate, lead, and create true economic value for our customers.