Hövding Sverige : Interim report Q2 2021

Hövding Sverige AB

Quarterly Report April - June 2021

New level of gross margin

Financial results for the period

• Number of Hövding helmets sold during the second quarter increased to 22,087 (20,475) (+8%)
• Net sales increased to TSEK 36,990 (33,493) (+10%)
• Gross margin of 30% (24%)
• EBITDA of TSEK -5 ,973(-9,542)
• Profit before tax TSEK -7,110(-10,818)
• Profit per share SEK -0,26(-0,46)
• Cash flow before changes in working capital TSEK -5,489(-9,812)
• Cash flow after changes in working capital TSEK -24,517(-7,586) mainly driven by increased stock level and decrease in payables

	APR-JUN	APR-JUN		JAN-JUN	JAN-JUN
	2021		2020	%		2021		2020		%
Net sales, KSEK	36	990	33	493		+10.4	70	174	54	446	+28.9
EBITDA, KSEK	-5 973	-9 542		+37.4	-13 470	-26 162	+48.5
Net income, KSEK	-7	110	-10	818		+34.3	-15	967	-28	763	+44.5
Earnings per share, SEK	-0,26	-0,46		+44.6	-0,58	-1,26	+54.3
Cash flow from operating activities, KSEK	-24	517	-7	586		-223.2	-33	313	-31	700	-5.1

QUARTERLY NET SALES AND EBITDA 12 MONTHS ROLLING

												165	168
										146	153
							113	114	119
				104	107
					96
			93
		85
	70
56
												-16%	-13%
											-23%
										-26%
				-38%
	-51%	-43%	-42%	-39%	-51%	-43%	-48%	-42%
-60%
Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2
		2018				2019				2020			2021

		Net sales SEKm		EBITDA % (excl. restrucuring costs
1				HÖVDING ÅRSREDOVISNING 20191

HÖVDING SVERIGE AB INTERIM REPORT Q2 2021

New level of gross margin

The number of Hövding helmets sold during the second quarter 2021 increased by 8% compared to the same period last year. Net sales increased by 10% to 36 990 TSEK.

We continue to implement the plan set to reach sustainable profitability through increased sales, improved gross margin and cost control. EBITDA for the period is -5 973 TSEK vs last year -9 542 TSEK and rolling twelve months improved from -42% to -13% of net sales.

Net sales in this period primarily consist of our three key markets Sweden, Denmark and Germany. Previously highlighted market France is noteworthy as it quadrupled its sales and now represent 12% of the overall net sales.

Adjustment of the consumer price, now €349, was gradually implemented in the market during the quarter. We increased the price on our web which motivated our retailers to follow step by step. For a period of time hovding.com offered a higher price than rest of market which impacted sales. As expected, sales in our web channel have been lower during the transition. In all other sales channels Sweden grew 4%, Denmark 28%. Germany is the market in which the pandemic has continued to affect sales most notably. Restrictions in cycling stores were only lifted June 1 which in combination with the price implementation led to a temporary halt of growth in the quarter.

The gross margin was 30%. This higher level is the result of the execution of the plan that was set in motion during last autumn. Some activities decided or implemented are yet to give full effect. Full adjustment of price being one as well as various sourcing and product design initiatives. At the same time the pandemic is affecting supply chain to some extent. The global logistical situation in particular remains challenging.

Cost control remains the third important leg in our plan towards sustainable profitability and this quarter's cost was 16 943 (18 477) KSEK. Other costs at 7 642 (9 629) KSEK continue to be focused on building markets, developing the business and product. Product development is primarily aimed at cost reduction and/or quality enhancing coupled with important research-oriented initiatives for future developments.

The first 6 months of the year show development in the right direction. +29% net sales growth, 26 (20)% gross margin and EBITDA margin at -19 (42)%. At the same time several important initiatives are in progress to secure continued growth, increased efficiency and improved profitability.

Right now, we are moving the company to a more digital platform with implementation during fall this year. The work covers several aspects of the business. Chatbot for efficient customer service and moving the app for Hövding 3 to a more prominent part of owning and using Hövding to mention a few. A direct relationship with the customer enables better quality and control in all relationships with the user including claim handling. It also acts as a direct sales channel for new services providing a carefree ownership of Hövding.

The business model for the German market is also under review for 2022. There are opportunities for increased penetration via changing the current approach. Sales are now at a level where other models, where we are directly involved in the market, are of interest.

A lot has been done so far and it is motivating to see how much more we are underway at bringing to the market in the near future.

Fredrik Carling, CEO

Hövding Sverige AB (publ)

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HÖVDING SVERIGE AB INTERIM REPORT Q2 2021

Sales and results

• Net sales for the period were TSEK 36,990 (33,493).

The number of helmets sold during the period reached 22,087 (20,475). Of these, 32% (25%) were sold through distributors, 66% (68%) through retailers and 2% (7%) through the company website. The company's own webshop was affected negatively by the transition to higher recommended retail prices in Q2. The price increases are expected to be fully implemented in all markets in Q3. Sales share by country shows Sweden 39% (49%), Denmark 28% (24%), Germany 16% (20%), France 12% (3%) and for other countries 5% (4%).

The gross margin for the period amounted to 30% (24%). The increased gross margin was driven by price increases, product development and supply chain improvements. Measures taken in Q2 are expected to have full impact in Q3. Costs affecting gross margin, as a percentage of net sales, were production 58% (63%), transport and customs 3% (4%), obsolete stock 1% (0%) and warranties 9% (9%). Warranty costs are primarily made up of an estimate based on historical warranty costs during the past 24 months.

Operating expenses during the period reached TSEK 16,943 (18,477). TSEK 9,436 (8,632) were personnel costs. Personnel costs were affected by temporary furloughs last year. TSEK 7,642 (9,629) were other costs. Other costs are primarily external costs for marketing and product development.

EBITDA for the quarter was TSEK -5,973(-9,542). Profit before tax for the period amounted to TSEK -7,110(-10,818) including amortisation of intangible assets of TSEK -975(-1,014) and write downs of tangible assets of TSEK -159(-180).

Investments

No significant investments were made during the quarter.

Liquidity and financing

Cash flow before changes in working capital during the period amounted to TSEK -5,489(-9,812).

A decrease in payables and increase in inventory resulted in Cash flow after changes in working capital amounting to TSEK -24,517(-7,586). Liquidity at the end of the period amounted to

TSEK 28,237 (10,927).

Employees

As per 30 June 2021 the number of employees was 37 (43).

Risk factors

Risk factors are described in Hövding's annual report on page 52.

Certified Advisers

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

• 22 October - Interim report quarter 3 2021

Accounting principles

This report is presented according to the Annual Accounts Act and BFNAR 2012:1 (K3).

Auditor

This report has not been audited by the company's auditor.

Corporation details

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.

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HÖVDING SVERIGE AB INTERIM REPORT Q2 2021

Information

Please direct any queries regarding the content of this interim report to:

CEO Fredrik Carling Ph: 040 - 236868 [e-mail]

Hövding Sverige AB (publ) Bergsgatan 33

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 (Chairman)	Helen Richenzhagen	Tony Grimaldi
Sandra Gadd	Petr Zhukov
Fredrik Carling (CEO)

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:[e-mail], tel: [phone]

For further information, please contact Fredrik Carling on [phone]

High resolution images can be downloaded here: www.mynewsdesk.com/se/hovding

The information herein is provided by Hövding Sverige AB (publ) in accordance with its duties of public disclosure as stipulated by the EU Market Abuse Regulation, and the Securities Markets Act. The information was made public by Fredrik Carling, CEO of Hövding Sverige AB (publ), on 3 August 2021 at 08.30am CET.

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HÖVDING SVERIGE AB INTERIM REPORT Q2 2021

Income statement

	APR-JUN	APR-JUN	JAN-JUN	JAN-JUN	JAN-DEC
(VALUES IN KSEK)	2021		2020		2021		2020		2020
Net sales	36	990	33	493	70	174	54	446	152	517
Other operating income		-1		852		23		887	1	172
TOTAL OPERATING INCOME	36	989	34	345	70	197	55	333	153	689
Raw materials and consumables	-26 019	-25 410	-51 892	-43 291	-118 071
Other external costs	-2	614	-4	142	-5	429	-8	557	-16	578
Personnel costs	-9 436	-8 632	-17 406	-18 558	-37 094
Depreciation/amortization	-1	134	-1	194	-2	434	-2	390	-5	193
Other operating expenses		134		-216	-1 225	-1 711	-1 278
TOTAL OPERATING COSTS	-44 096	-45 081	-86 101	-83 885	-197 440
OPERATING PROFIT (LOSS)	-7 107	-10 736	-15 904	-28 552	-43 751
Other interest income and similar profit (loss) items		5		1		5		11		32
Interest expense and similar profit (loss) items		-8		-83		-68		-222		-528
TOTAL FINANCIAL ITEMS		-4		-82		-63		-211		-496
PROFIT (LOSS) AFTER FINANCIAL ITEMS	-7 110	-10 818	-15 967	-28 763	-44 247
Tax on profit		0		0		0		0		0
NET PROFIT (LOSS)	-7 110	-10 818	-15 967	-28 763	-44 247
Earnings per share before and after dilution *
Earnings per share	-0.26	-0.46	-0.58	-1.26	-1.82
Number of shares, average	27 730	100	23 390	119	27 730	100	22 838	676	24 368	053
Number of shares per closing date	27 730	100	23 591	758	27 730	100	23 591	758	27 730	100

Rounding differences may affect the summations.

*) There are warrants that can result in dilution, but since the result for the period is negative no dilution effect occurs (see definition of earnings per share after dilution).

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