SERSTECH AB: Half-year report 1 January – 30 June 2019
SALES INCREASE BY 200% FROM HIGHER MARKET ACCEPTANCE
Second quarter 2019 Period 1 January – 30 June 2019
• Net sales: KSEK 5 089 (1 558, +227%) • Net sales: KSEK 8 340 (2 768, +201%)
• Profit for the period: KSEK -3 349 (-2 166) • Profit for the period KSEK -7 008 (-5 599)
• Earnings per share SEK -0,05 (-0,03) • Earnings per share: SEK -0,11 (-0,09)
During Q2, we passed another set of important milestones on our way to becoming a significant player in the security industry and a more mature, professional organization. Our net sales numbers continued to move in the right direction, +227% compared to Q2 2018, and we received significant orders, expanded the reach of our sales network and signed another OEM agreement. We dramatically expanded our R&D capabilities and added dedicated roles for product management and quality assurance, both of which are imperative as our volumes continue to increase.
Our operative cash flow continues to improve and for the first half of the year our operating cash flow was around 5.5 MSEK better than for the same period 2018 1. Our cash flow less financial activities 2 was -479 KSEK in Q2, which brings us close to positive numbers. With all trends pointing in the right direction, we are confident that we are soon cash flow positive.
In May and June, we expanded our Romanian team considerably, with five people joining the team. The main reason for expanding outside our main office in Lund is that the availability of highly skilled engineers in Romania is much greater than in Sweden. A positive sideeffect is that Serstech will take on much less cost and risk than if we had recruited in Lund and we now have sufficient staff to implement our aggressive software roadmap. The roadmap includes new versions of ChemDash, the first of which will be an important component for our expansion into the pharmaceutical market in Q3 and Q4. We expect that the pharmaceutical market will have an impact on our sales numbers already this year, since the sales cycles are much shorter in the private pharmaceutical market than the public security market.
In early June, we signed our third OEM partnership agreement and the initial demo order will be shipped in Q4 2019 and Q1 2020. Our new OEM partner, Swiss company RS Dynamics, launched their new product at a tradeshow in Israel in June and we expect orders to start during the second half of 2020. RS Dynamics has an interesting portfolio of trace detectors and with the addition of our capable Raman instrument, their customers will now also be able to identify the detected substances.
Since Serstech’s management and board of directors recognize that our team is our most valuable asset, a three-year employee warrant program was introduced during the quarter. I was very happy to see that everyone in the company decided to purchase the full amount of warrants they were offered. Everyone in the company now has a financial stake in our future.
At the annual meeting, Arve Nilsson was elected to the board of directors and co-founder Thomas Pileby took on the role of chairman, as former chairman Sophie Persson declined reelection. As a consequence, our finance manager Joakim Nyström took over the CFO position from Thomas.
We reached the 2019 partner network target already in May and we now have 75 partners around the world. Due to our almost complete global partner coverage we no longer look for additional partners and focus completely on supporting the ones in place. In Q3 and Q4 we will launch both a partner development program and a partner certification program, introducing the “Serstech Certified” quality stamp on gold and platinum partners.
At the end of the quarter, our partner Hotzone Solutions received an order from the World Customs Organization (WCO), which is an important reference customer for us and our partners. WCO organizes 183 national customs authorities and its members process 98% of the world’s international trade. The order was invoiced and delivered in two parts – one in June and one in July, as requested by the customer.
With the remainder of the WCO order and a few others, we had around 3 MSEK in orders that were invoiced after the end of the quarter. By the end of June, we had finally filled all our open positions and with the many opportunities identified and pursued by our partners, we are confident that our rapid growth will continue.
Stefan Sandor, CEO
1 Difference in “Cashflow from operating activities” between 2019-06-30 and 2018-06-30 when excluding the 5 000 KSEK repayment of
bridge loan connected to the rights issue in 2018 (part of “other short-term receivables). (-772) – (-11 243 +5000) = 5 471 KSEK
2 Cashflow in Q2 – Financial activities in Q2 = 1 427 KSEK – 1 906 KSEK = -479 KSEK
Cashflow in Q2 = Cashflow jan-jun – Cashflow jan-mar = -1 336 KSEK – (-2 763 KSEK) = + 1 427 KSEK
Financial activities in Q2 = Financial activities jan-jun – Financial activities jan-mar = 1 812 KSEK – (-94 KSEK) = + 1 906 SEK
For further information, please contact:
Stefan Sandor,
CEO, Serstech AB
tel: +46 739 606067
email: ss@serstech.com
Thomas Pileby,
Chairman of the Board, Serstech AB
tel: +46 702 072643
email: tp@serstech.com
Company website: www.serstech.com
This is information that Serstech AB (publ.) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above at 08.45 CET on August 20, 2019.
Certified advisor to Serstech is Västra Hamnen Corporate Finance AB, phone: 040-20 02 50, e-mail: ca@vhcorp.se.
About Serstech
Serstech delivers solutions for chemical identifications and has customers across the world, mainly in the safety and security industry. Typical customers are customs, police authorities, security organizations and first responders. The solutions and technology are however not limited to security applications and potentially any industry using chemicals of some kind could be addressed by Serstech’s solution. Serstech is traded at Nasdaq First North and more information about the company can be found at www.serstech.com
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