HÖVDING INTERIM REPORT Q2 2020
April – June 2020
FINANCIAL RESULTS FOR THE PERIOD
• Number of Hövding helmets sold during the second quarter increased to 20,475 (18,435) (+11%)
• Net sales of TSEK increased to 33,493 (28,229) (+19%)
• Gross margin of 24% (29%).
• EBITDA of TSEK –9,542 (-17,892)
• Profit before tax TSEK –10,818 (-18,429)
• Profit per share SEK -0,54 (-0,83)
• Cash flow from operating activities TSEK -7,586 (-15,239)
SIGNIFICANT EVENTS AFTER THE PERIOD
Hövding Sverige AB (publ) (the “Company”), which is listed on Nasdaq First North Growth Market, announces that the Company’s Board of Directors, subject to approval of the Extraordinary General Meeting, has decided on a new share issue of approximately SEK 61 million with preferential rights for existing shareholders (the “Rights Issue”). The terms of the share issue mean that six (6) existing shares give the right to subscribe for one (1) new share at a subscription price of SEK 15.50. The Rights Issue is 100% covered by subscription and guarantee commitments from existing owners. Both the subscription and guarantee commitments are free of charge.
The issue requires approval of the Extraordinary General Meeting and shareholders are therefore called to an Extraordinary General Meeting, which will be held on August 5, 2020. Notice of the Extraordinary General Meeting is published in a separate press release. As a result of the Rights Issue, Hövding’s interim report for the second quarter has been moved forward to August 4, 2020. The previously communicated date was August 25, 2020.
CONTINUED GROWTH DESPITE PARTLY CLOSED MARKETS
After a few months of turmoil due to the outbreak of the Covid-19 pandemic we at Hövding are starting to find ourselves on more solid ground. We, together will all other, went through the spring period in some levels of uncertainty of how the pandemic was going to affect the business short and long term. With regards to the short term horizon much of the uncertainty has now passed and through these last month’s we’ve gained clarity and built a conviction. We at Hövding can adjust our commercial ways of working and become more effective as well as nimbler in our approach.
This is at the core of the new plan developed. While we continue to grow in our existing key markets, we are convinced we can expand to new markets more cost effective and faster. An ongoing pilot project in Norway shows exactly this.
At the same time these past months turmoil have led to a volume drop, lower than planned net sales and delayed cost reduction activities.
While this was the case, much of the cost in the business remained at high levels. This is why the plan incorporates an analysis of the cost structure with reductions in cost to be implemented during second half 2020. The aim is set to enter 2021 at lower operational cost together with reliable plans of growth and gross margin. A clear path towards long-term sustainable profitability.
The plan also includes a 61MSEK proposed new share issue, committed to by the 4 largest owners and guaranteed in full. This helps manage the unexpected losses during spring and gives the company security in operating during a still uncertain market situation in the near future.
Q2 shows a net sales results to some extent still marked by the pandemic. Increase in net sales is 19% versus last year. In the first part of the Q2 of our three key markets were fully or partly closed down. Hence both sales in Germany as well as in Denmark hence is below last year. Sweden on the other hand, the market affected the least, show net sales growth of 72%. One aspect during this period which also has been made clear is the openness to purchasing Hövding online. We’ve worked hard in taking our share of this trend and as a result the direct online share of total sales is up to 7% from 2% last year. This direct contact with consumers is something to build on moving forward. We started the year with a very low gross margin due to last years cost gliding into 2020. Much of this last year effect is now washed out and we land on 24% gross margin for the quarter.
Spring, with the pandemic, has affected Hövding, both negatively and positively. We have not had the chance to realize our aggressive ambitions but at the same time the situation has given reason to re-think and operationally innovate in the way we move forward. The pandemic will have positive influence on how we transport ourselves and everyday cycling is clearly accelerating. In the past Hövding has often taken a great financial burden in capitalizing on such growth. We see now however how our commercial partners, as the product becomes more established, show willingness in investing in growth to a greater extent. Our job will always be to safeguard the quality of the product and continue to innovate in product. Our job will also continue to drive commercialization in markets close by. In new markets we shall do it in partnership with relevant, financially strong commercial partners.
Hövding Sverige AB (publ)
SALES AND RESULTS
• Net sales for the period was TSEK 33,493 (28,229).
The number of helmets sold during the period reached 20,475 (18,435). Of these,
25% (31%) were sold through wholesalers, 68% (67%) through retailers and 7% (2%) through the company website. Sales share by country shows Sweden 49% (34%), Denmark 24% (34%), Germany 20% (27%), the UK 2% (1%) and for other countries 5% (4%).
The gross margin for the period amounts to 24% (29%). The gross margin is mainly affected by production costs at 83% (84%), transport and customs at 5% (4%) and provision for future and existing warranties at 12% (12%).
Our business expenses during the period reached TSEK 45,081 (46,689). Among the expenses, TSEK 9,629 (17,100) denotes miscellaneous, and TSEK 8,632 (8,808) refers to staffing costs.
EBITDA for the quarter was TSEK -9,542 (-17,892). Profit for the period before tax amounted to TSEK -10,818 (-18,429) having been burdened by write-offs and devaluations of intangible assets at TSEK -1,014 (-457) and tangible assets at TSEK -180 (-81).
No significant investments were made during the quarter.
LIQUIDITY AND FINANCING
The liquidity of the company at the end of the period amounted to TSEK 10,927 (38,246). Cash flow from the ongoing operations during the period amounted to TSEK -7,586 (-15,239). EMPLOYEES As per 30 June 2020 the number of employees was 43 (39).
Risk factors are described in Hövding’s annual report on page 52.
Västra Hamnen Corporate Finance AB is Hövding’s Certified Adviser.
DATE OF REPORT
At the end of each new quarter, Hövding publishes a financial report. The next report is scheduled for publication on
• 20 October 2020 – Interim report quarter 3 2020
This report is presented according to the Annual Accounts Act and BFNAR 2012:1 (K3).
This report has not been audited by the company’s auditor.
Hövding Sverige AB (publ), organisation number 556708-0303, is a limited liability company located in Malmö. The company’s shares are listed on Nasdaq First North Growth Market in Stockholm.
Please direct any queries regarding the content of this interim report to:
CEO Fredrik Carling
Ph: +46 40 236868
Hövding Sverige AB (publ)
214 22 Malmö
+46 40 236868
The company board and the CEO confirm that this interim report gives a fair overview of the company operations, position and results.
Fredrik Arp (ordf)
Fredrik Carling (vd)
Hövding Sverige AB (publ) is listed on the Nasdaq First North Growth Market since 2015. Västra Hamnen Corporate Finance AB is Hövding’s Certified Advisor.
E-mail: email@example.com, tel: +46 40 200250
For further information, please contact Fredrik Carling on +46 40 23 68 68 High resolution images can be downloaded here:
The information herein is provided by Hövding Sverige AB (publ) in accordance with its duties of public disclosure as stipulated by the EU regulation on marketplace misuse, and the law on the securities marketplace. The information was made public by Fredrik Carling, CEO of Hövding Sverige AB (publ), on 4 August 2020 at 08.30am CET.