Hövding Sverige publ : Interim Report Q2 2020

Hövding Sverige AB (publ)	T + (46) 40 23 68 68
Bergsgatan 33, SE 214 22 Malmö	Org nr. 556708 - 0303

HÖVDING INTERIM REPORT Q2 2020

April - June 2020

Continued growth despite partly closed markets

FINANCIAL RESULTS	• Number of Hövding helmets sold during the second quarter increased to
FOR THE PERIOD	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 Hövding Sverige AB (publ) (the "Company"), which is listed on Nasdaq First

AFTER THE PERIOD 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.

Fredrik Carling

CEO

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).

INVESTMENTS

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

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

CERTIFIED ADVISER

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

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.

INFORMATION

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

Ph: [phone]

[e-mail]

Hövding Sverige AB (publ) Bergsgatan 33

214 22 Malmö

[phone]

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)	Helén Richenzhagen	Tony Grimaldi
Alexander Izosimov	Maria Minskova	Peter Svanlund
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:[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 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.

Income statement

	April - June	January - June	Full Year
(Values in TSEK)	2020	2019	2020	2019	2019
Net sales	33 493	28 229	54 446	47 869	112 919
Other operating income	852	30	887	53	286
Total operating income	34 345	28 259	55 333	47 922	113 205
Raw materials and consumables	-25 410	-20 122	-43 291	-33 599	-83 476
Other external costs	-9 629	-17 100	-17 935	-26 035	-42 801
Personnel costs	-8 632	-8 808	-18 558	-17 335	-35 256
Depreciation/amortization	-1 194	-538	-2 390	-1 069	-2 654
Other operating expenses	-216	-121	-1 711	-223	0
Total operating costs	-45 081	-46 689	-83 885	-78 261	-164 187
Operating profit (loss)	-10 736	-18 430	-28 552	-30 339	-50 982
Other interest income and similar profit (loss) items	1	1	11	34	109
Interest expense and similar profit (loss) items	-83	0	-222	-1	-55
Total financial items	-82	1	-211	33	54
Profit (loss) after financial items	-10 818	-18 429	-28 763	-30 306	-50 928
Tax on profit	0	0	0	0	0
Net profit (loss)	-10 818	-18 429	-28 763	-30 306	-50 928
Earnings per share before and after dilution *)
Earnings per share	-0,46	-0,83	-1,26	-1,36	-2,29
Number of shares, average	23 390 119	22 281 105	22 838 676	22 281 105	22 281 105
Number of shares per closing date	23 591 758	22 281 105	23 591 758	22 281 105	22 281 105

*) 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).

Balance Sheet

(Values in TSEK)	2020-06-30	2019-06-30	2019-12-31
Fixed assets
Intangible assets	14 431	5 612	15 499
Financial assets	52	52	52
Tangible assets	2 147	678	2 474
Total Fixed assets	16 630	6 342	18 025
Current assets
Inventories	29 234	2 051	20 848
Account receivable	11 991	12 953	18 019
Tax assets	644	556	775
Other receivables	645	809	159
Prepaid expenses and accrued income	1 293	717	585
Cash and bank balances	10 927	38 246	20 353
Total Current assets	54 734	55 332	60 739
Total Assets	71 364	61 674	78 764
Share capital	11 796	22 281	22 281
Development fund	11 698	3 502	13 725
Accumulated profit or loss	11 134	36 504	26 281
Net profit	-28 763	-30 306	-50 928
Total Equity	5 865	31 981	11 359
Other provisions	9 357	11 393	10 457
Total Provisions	9 357	11 393	10 457
Accounts payable	44 248	11 313	49 606
Other liabilities	5950	908	1477
Accrued expenses and deferred income	5 944	6 079	5 865
Total current liabilities	56 142	18 300	56 948
Total Equity and libilities	71 364	61 674	78 764

Cash flow statement

	April - June	January - June	Full Year
(Values in TSEK)	2020	2019	2 020	2 019	2 019
Cash flow from operating activities before interest and income
tax paid	-9 812	-17 810	-27 342	-30 055	-50 246
Increase/ decrease inventories	6 587	5 543	-8 386	3 962	-14 836
Increase/ decrease receivables	-5 981	-6 417	4 834	826	-3 459
Increase/ decrease accounts payable	-4 398	2 506	-5 358	-3 688	34 605
Increase/ decrease other current liabilities	6 018	939	4 552	776	1 131
Cash flow from operating activities	-7 586	-15 239	-31 700	-28 179	-32 805
Aquisition of intangible assets	0	0	-959	0	-11 137
Purchase of property, plant and equipment	-36	0	-36	-192	-2 322
Cash flow from investing activities	-36	0	-995	-192	-13 459
New share issues after issue expenses	0	0	23 269	0	0
Subscribed capital new share issue Q1 paid Q2	12 902	0	0	0	0
Share warrant	0	153	0	153	153
Cash flow from financing activities	12 902	153	23 269	153	153
Cash flow for the period	5 280	-15 086	-9 426	-28 218	-46 111
Cash and cash equivalents at the beginning of the year/ period	5 647	53 332	20 353	66 464	66 464
Cash and cash equivalents at the end of the year/ period	10 927	38 246	10 927	38 246	20 353

Changes in equity

	January - June	Full Year
(Values in TSEK)	2020	2019	2019
Equity at the beginning of the period	11 359	62 134	62 134
New share issue	24 903	0	0
Issue expense	-1 634	0	0
Share warrant	0	153	153
Profit (loss)	-28 763	-30 306	-50 928
Equity at the end of the period	5 865	31 981	11 359

Key ratio

	April - June	January - June	Full Year
	2020	2019	2020	2019	2 019
Net sales	33 493	28 229	54 446	47 869	112 919
Gross margin	8 083	8 107	11 155	14 270	29 443
EBITDA	-9 542	-17 892	-26 162	-29 270	-48 328
Operating profit/loss (EBIT)	-10 736	-18 430	-28 552	-30 339	-50 982
Balance sheet total	71 364	61 674	71 364	61 674	78 764
Cash equivalents	10 927	38 246	10 927	38 246	20 353
Interest-bearing net debt	N/A	N/A	N/A	N/A	N/A
Net sales growth (%)	19%	N/A	14%	N/A	22%
Gross margin (%)	24%	29%	20%	30%	26%
EBITDA margin (%)	-28%	-63%	-48%	-61%	-43%
Operating margin (%)	-28%	-63%	-47%	-61%	-45%
Equity ratio (%)	8%	52%	8%	52%	14%
Debt equity ratio	N/A	N/A	N/A	N/A	N/A
Number of employees at the end of the period	43	39	43	39	41

Definitions

Net sales growth (%) Gross margin Gross margin (%) Operating profit/loss (EBIT) Operating margin (%)

EBITDA EBITDA-margin (%) Equity ratio (%) Debt equity ratio Interest bearing net debt

Earnings per share before dilution Earnings per share after dilution

change in Net sales in relation to the corresponding period last year Net sales reduced by Cost of goods sold

Gross profit as a percentage of Net sales Profit (loss) before interest and taxes

Operating profit as a percentage of total operating income

Operating profit (loss) (EBIT) before interest, taxes, depreciation and amortization EBITDA as a percentage of net sales

Equity at the end of the period as a percentage of Total Assets at the end of the period Interest bearing liabilities divided by Equity

Interest bearing liabilities reduced by Cash and cash equivalents Net profit divided by the average number of shares

Net profit divided by the average number of shares, where the average number of shares increased by the number of shares that entail dilution effects.

Options and share warrants have a dilution effect when they would lead to an issue of ordinary shares at a price that is lower than the average price of ordinary shares during the period. Furthermore, ordinary shares only give rise to dilution effects in the event of a conversion of them leads to a lower profit or higher loss per share.