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 toSEK 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 toSEK 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 ofSEK 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
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
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
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
During the period, the Company continued to mininise costs where feasible and conserve cash.
Q3 2020 | Q3 2019 | YTD 2020 | YTD 2019 | |
Revenue from continuing operations | 12,167 | 9,695 | 33,196 | 20,983 |
Total Revenue | 12,167 | 11,336 | 33,196 | 27,157 |
Cash | 10,147 | 2,450 | 10,147 | 2,450 |
Profit/(loss) before tax | (4,052) | (2,196) | (7,637) | (4,628) |
Gross Profit from Continuing Operations | 4,350 | 4,048 | 12,073 | 8,750 |
Total Gross Margin | 36% | 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
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,
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
Fundraise
On
In addition, the Company also entered into a bridging loan agreement of
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
Warrants will, upon full exercise, give the Company the opportunity to raise up to a maximum of approximately
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
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
New products
The Skip Bag offering introduced in
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
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
The Company also announced that Co-Founder
For further information, please contact:
John O’Connor, CEO
+353 871 218 907
john@kollect.ie
www.kollect.ie
About Kollect
Founded in
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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