Waterford, Ireland16 November 2020, Kollect On Demand Holding AB (publ) (“Kollect” or the “Company”), (Nasdaq: KOLL), is pleased to publish its Q3 2020 Interim Report.

The full report in English can be viewed by clicking here and in Swedish by clicking here.

Highlights

  • Revenue for continuing operations in Q3 2020 amounted to SEK 12.1 million, corresponding to an increase of 25.5% compared to Q3 2019 which amounted to SEK 9.7 million.
  • Recurring revenue in Q3 2020 accounted for 56% of revenue from continuing operations, up 9 percentage points from 47% in Q3 2019.
  • Gross profit for continuing operations in Q3 2020 amounted to SEK 4.3 million, which is an increase of 7.8% compared to SEK 4.0 million in Q3 2019.
  • Gross margin for the quarter was 36%, compared to a gross margin of 47% in Q3 2019. The decrease is attributable to the revenue mix with an increase in recurring revenue, which generally has a lower gross margin, but a higher net margin.
  • Losses before tax amounted to SEK 4.05 million in Q3 2020 in contrast to the losses before tax of SEK 2.19 million in Q3 2019. Included in this period were costs associated with the fundraise that occurred during the quarter.
  • The Company completed a fund raise of SEK 12 million, partly to finance an acquisition by BTWL of an Irish-based company operating within the compactor bin business, which was completed after the quarter end.

CEO Comments

On the Q3 Report, CEO John O’Connor stated: “I am again pleased that we have been able to deliver strong results, despite the uncertainty and challenging conditions presented by COVID-19 and I am confident that strategic decisions that we have taken will have a significant long term benefit for the Company. Our team continues to excel and it is with great thanks to them that I present these results.

I am particularly happy that we were able to execute on a fundraise during the period, which was oversubscribed, and to complete an acquistion; our first as a public company. The fundraise showed the faith that Swedish investors have in Kollect, and, whilst directly providing proceeds for an acquisition, also strenghted our shareholder base”.

Events in the Quarter

Trading in the period

Throughout Q3 2020, the Company met headwinds with continuing adverse economic impacts caused by COVID-19 restrictions, albeit they had moderated somewhat as most businesses in Ireland – apart from public houses that did not serve food – were re-open again for most of the quarter.

Revenues from Commercial sales (Bin Collection, Skip (container) Hire and Junk Removal) were up on Q2 2020 as construction, hospitality and other businesses were operating again; revenues from Skip Bag hire and UK were also up on the prior quarter.

There were smaller increases in revenues versus prior year from Domestic Skips and Domestic Junk (reflecting the impact of the reduction in digital marketing spend on lower margin activities mentioned below). This also reflected the Company’s focus on growing recurring revenue. There was also a small decline in Waste Drop-Off versus Q3 2019, reflecting a reduction in income from holiday homes due to COVID restrictions.

The Q3 2019 revenue figure included a BIGbin software licencing agreement. As this sale of SEK 0.4 million was to the same entity that Kollect had agreed to acquire during Q3 2020, these licenses have not been renewed. Excluding this revenue, 2019 revenue from continuing operations has increased 31%.

During the period, the Company continued to mininise costs where feasible and conserve cash.

Key Figures

Key Figures (SEK ‘000s)Q3 2020Q3 2019YTD 2020YTD 2019
Revenue from continuing operations12,1679,69533,19620,983
Total Revenue12,16711,33633,19627,157
Cash10,1472,45010,1472,450
Profit/(loss) before tax(4,052)(2,196)(7,637)(4,628)
Gross Profit from Continuing Operations4,3504,04812,0738,750
Total Gross Margin36%47%36%39%

Revenue from continuing operations for Q3 2020 was up 25.5% compared with Q3 2019 and YTD 2020 was up 57.0% compared with YTD 2019. Gross Profit from Continuing Operations was up 7.8% in Q3 2020 compared to Q3 2019 and for YTD 2020 was up 58% on YTD 2019.

The Loss Before Tax in Q3 2020 of SEK 4.05 million was up 85% from a loss of SEK 2.19 million Q3 2019; while YTD 2020, it was up to SEK 7.64 million from YTD 2019 figure of SEK 4.6 million. This reflected the increase in costs driven by new hires and growth expenditure, in addition to costs of being a listed company and costs associated with the acquisition and fundraise that occurred during the quarter.

Reduction in revenues from certain lower margin sales activities

As announced in the Interim Report for Q2 2020, the Company reduced sales resources and advertising spend on certain activities with lower gross margins. The gross margins for these activities remained too low (which was adversely impacting overall gross margin rates) and costs of customer acquisition too high. In addition, these activities were taking up a disproportionate amount of management, sales and customer service time. During Q3 2020, these resources were redeployed to higher margin activities or released.

It was anticipated that this would lead to a decline in overall revenue from these verticals for a time, while the digital marketing spend on these activities was optimised.

Corporate reorganisation

In July, the Company set up a wholly-owned Irish subsidiary, BIGbin Waste Technology Limited (or “BWTL”), to acquire the assets and liabilities of the BIGbin business from Kollect On Demand Limited at book value. BWTL became the operating company for the waste drop-off business in Ireland with effect from 1 July, 2020.

Bringing an increased focus on and transparency to the economics of the waste drop-off business, the re-organisation also makes it easier to raise funding specifically to support continued growth by acquiring new bins and launching new sites and to grow the business by acquisition.

As at 1 July 2020, BTWL had 27 BIGbins and was fully operational on 15 active sites servicing a customer base of approximately 6,500 repeat customers, each returning every four weeks on average.

Fundraise

On 26 August 2020, Kollect completed a Directed Issue of 900 000 units (each unit consisting of one (1) share and one (1) warrant). The subscription price was SEK 10 per unit, corresponding to SEK 10 per share, while the warrants were issued free-of-charge. The Company received SEK 9 million before deduction of transaction costs.

In addition, the Company also entered into a bridging loan agreement of SEK 3 million with Formue Nord Fokus A/S (”the Lender”). As part of the loan, the Lender received 300,000 warrants. The Loan will be repaid with the proceeds from the exercise of the warrants in August 2021.

In addition, Kollect also issued warrants to existing shareholders in Kollect to compensate - to some extent - shareholders for the dilution from the Directed Issue. The shareholders received one (1) warrant for every two (2) held shares on the record day.

The rationale for the fundraise was to secure financing in a timely and cost-effective manner, and to diversify the shareholder base. The Company intends to use the proceeds primarily to acquire a company active in waste disposal (see under ‘Acquisition’ below). The acquisition enables Kollect to strengthen its market position and increase revenue within the waste drop-off segment.

The Directed Issue entailed a dilution of 15.3 percent of the number of shares and votes in the Company.

Information regarding the Warrants

A total of 3,692,805 warrants of series TO1 were issued, including 900,000 to investors in the Directed Issue, 300,000 to the Lender and 2,492,805 to current shareholders.

Each warrant gives the holder the right to subscribe for one (1) new share in Kollect at a subscription price corresponding to 70 percent of the average volume-weighted share price according to Nasdaq First North Growth Market’s official price statistics during the period from July 26, 2021 to August 6, 2021. The subscription price, however, shall not exceed SEK 15.00 per new share (which is 50% above the subscription price in the Directed Issue), and not be less than the nominal value of the Company’s share. The exercise period to subscribe for new shares by exercising warrants will be from 9 August 2021 to 20 August 2021.

Warrants will, upon full exercise, give the Company the opportunity to raise up to a maximum of approximately SEK 55.4 million, at a subscription price of SEK 15. Upon full exercise of the warrants, the dilution will amount to approximately 38.6%.

The warrants are now trading on Nasdaq First North Growth Market.

Acquisition

On 26 August, the Company also announced that it had entered into a Letter of Intent with the shareholders of an Irish-based company operating within the compactor bin business for BWTL to acquire their business (the “Acquisition”).

The business being acquired had annual revenues of approximately SEK 3.75 million and a net profit of SEK 1.84 million in the period 1 July 2019 to 30 June 2020. The purchase price amounted to SEK 4.99 million and was financed from the fundraise described above.

The Acquisition gives BWTL an additional 12 existing sites, all of which are established and revenue-generating, along with 23 compactor bins. Furthermore, it expands BWTL’s market share within the compactor bin business.

Waste drop-off

Revenue from BTWL was down by 8% in Q3 2020 (2% in operational currency terms) compared to Q3 2019. This was due to a reduction in income from holiday homes, arising from COVID restrictions.

The rollout of new sites for waste drop-off services in Q3 2020 continued to be delayed due to Covid-19 and BWTL was only able to add one new BIGbin site in Circle K Tallaght, in August 2020. This brought the number of operational sites in Q3 2020 up to 15, of which 5 are Circle K forecourts.

New products

The Skip Bag offering introduced in April 2020 has been successful and already become a significant revenue line in a short space of time.

While the Company tested the market for hygiene services among its corporate clients, it has not seen the same traction and has ceased to market these services after quarter end. Also, the Company continues to explore the market for the development of a franchise programme for Junk removal providers before the end of H2 2020.

Sustainability

Under the “Irish Tech goes Carbon Neutral” programme, all collections made by Kollect are carbon neutral. The total kilometers of travel that were offset during the quarter was 169,000 km.

Irish Government COVID-19 employment support payments

The Company is in discussions with the Revenue Commissioners regarding eligibility for Government employment support payments during Q2 and Q3 2020. While it is possible that the Revenue Commissioners will rule that Kollect was ineligible for some or all of these payments and seek repayment, the Company believes that it was eligible and is making its case.

Working capital

The Company had SEK 10 million cash on hand at the end of Q3 2020, which was up from SEK 4 million at the end of Q2 2020.

Exchange rate

The Company has also been negatively impacted by exchange rates between Swedish Krona and the Euro in the year from Q3 2019 to Q3 2020.

Since the Quarter End

Since the end of Q3 2020, the Company has completed the Acquistion and integrated these assets into the Group. The Company also continued to invest in rolling out new BIGbin sites and has launched two more sites (one in Waterford and the other in Sligo), which including the 12 sites purchased in the Acquisition, takes the total sites to 29. At the end of Q3 2020, the Company had 15 sites.

The Company also announced that Co-Founder Robbie Skuse has been appointed as Head of UK in a move that highlights the Company’s commitment to growing its footprint in the UK.

For further information, please contact:
John O’Connor, CEO
+353 871 218 907
john@kollect.ie
www.kollect.ie

About Kollect

Founded in Waterford, Ireland, Kollect is an innovator and disruptor in the waste industry listed on the Nasdaq First North Growth Market (symbol: KOLL). Mangold Fondkommission AB is the Company’s acting Certified Adviser (Tel. + 46 8 5030 1550, CA@mangold.se, www.mangold.se).

The Company services two types of customers: those who arrange to have waste collected (bins, skips and skip bags or junk removal) via the online Kollect booking engine; and those who use BIGbin smart compactor bins for waste drop-off.

The services include domestic door-to-door bin collection, commercial bin collection, skip (container) hire, skip bags and junk removal such as furniture and other large objects.

For more information, visit www.kollect.ie.

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