Year-end Report 2020/21

CEO commentary

The conventional way of selling advanced scientific instrumentation has been for independent distributors to market, resell and service the product in an agreed geographical market. Until the pandemic, nobody in the industry really questioned this business model. It was simply how capital equipment was sold. However, the model is costly and resource-demanding, and sales will only be as good as the distributors.

Therefore, as soon as they can muster the investment, larger companies establish subsidiaries in the important markets to not remain dependent on the whims of independent distributors. The way out for smaller companies that cannot afford subsidiaries across the globe is to make themselves attractive for the larger companies. However, the larger companies know their value and ask a lot in return to channel products through their distribution network, no matter how novel and exciting the product is.

The “New Normal”

As we all know, digital sales & marketing have been around for some time. However, until the pandemic, it had a limited impact on the traditional distributor business model, as it remained unthinkable for customers to purchase advanced technical equipment “over the Internet”.

The widespread use of video communications during the pandemic has changed this. Now when we have gotten used to it and realized how much more efficient and climate-friendly it is, more and more people prefer that product demonstrations and training occur online rather than in physical meetings. This small but significant change in behavior is likely to transform our industry and how capital goods are sold.

Together with advanced digital marketing, the change allows smaller companies to more efficiently sell, distribute and service advanced equipment over a large geographical area without a traditional distribution network.

In other words, a consequence of the pandemic is that innovative smaller companies such as PHI can establish their products on the market on their own. With a well-established product, these companies can then and on more equal terms negotiate partnerships with the major players to further expand the market reach.

The Fluorescence Project

The development work of providing HoloMonitor with fluorescence capability is proceeding according to plan. Recently the project entered the second and possibly the final internal testing phase. For more information concerning the project, see Interim Report 3 2020/21.

The Organization

The strategic decision first outlined in Interim Report 3 2019/20 to focus on digital sales & marketing led to organizational changes during the year. In particular, digital marketing requires a different skill set than marketing through tradeshows and other traditional marketing activities. For an overview of the new organization, see PHI Management and Board.

Peter Egelberg, CEO

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Rolling 12-month sales with trendline

Consolidated – PHI Group

Income statement (KSEK)

	Q4	Q4	FY	FY
	2020/21	2019/20	2020/21	2019/20
Net sales	1 910	557	3 637	3 803
Cost of products sold	-647	-225	-1 346	-1 500
Gross profit	1 263	332	2 291	2 303
Gross margin	66%	60%	63%	61%
Selling expenses	-3 511	-2 211	-8 773	-8 756
Administrative expenses	-1 775	-1 576	-7 084	-6 428
R&D expenses	-2 571	-3 388	-11 720	-13 538
Operating income		367	1 972	367
Operating result (EBIT)	-6 594	-6 476	-23 314	-26 052
Financial net	-190	-62	-195	-261
Result before tax (EBT)	-6 784	-6 538	-23 509	-26 313
Net Result (EAT)	-6 784	-6 538	-23 509	-26 313

Balance sheet (KSEK)

	FY	FY
	2020/21	2019/20
ASSETS
Non-current assets
Intangible assets	14 823	16 735
Tangible assets	337	704
Total non-current assets	15 160	17 439
Current Assets
Inventory	1 334	1 530
Short-term receivables	2 938	2 590
Cash and equivalents	2 256	14 484
Total current assets	6 528	18 604
Total assets	21 688	36 043
EQUITY AND LIABILITIES
Equity	5 384	28 896
Financial liabilities	7 400	1 125
Operating liabilities	8 904	6 022
Total equity and liabilities	21 688	36 043

Changes in equity (KSEK)

	FY	FY
	2020/21	2019/20
Opening Balance	28 896	37 653
Equity issues, net		17 487
Net profit	-23 509	-26 313
Translation difference	-3	69
Closing balance	5 384	28 896
Equity ratio	25%	80%

Cash flow analysis (KSEK)

	Q4	Q4	FY	FY
	2020/21	2019/20	2020/21	2019/20
Operating activities
Net result	-6 784	-6 538	-23 509	-26 313
Depreciation	1 035	1 839	6 541	7 360
Translation difference	-7		-4	79
Operating cash flow	-5 756	-4 699	-16 972	-18 874
Increase (-)/decrease (+) in inventories	327	190	196	-148
Increase (-)/decrease (+) in operating receivables	-392	-190	-348	-9
Increase (+)/decrease (-) in operating liabilities	3 100	-935	2 882	-1 272
Change in working capital	3 035	-935	2 730	-1 429
Cash flow from operating activities	-2 721	-5 634	-14 242	-20 303
Investing activities
Development expenses	-1 384	-714	-4 091	-2 729
Patents	-170	-62	-170	-266
Tangible assets		-197		-197
Cash flow after investments	-4 275	-6 607	-18 503	-23 495
Financing activities
Net proceeds from equity issues		53		17 566
Increase (+)/decrease (-) in borrowings	3 150	375	6 275	-750
Cash flow from financing activities	3 150	428	6 275	16 816
Cash flow for the period	-1 125	-6 179	-12 228	-6 847
Cash and cash equivalents at the beginning of the period	3 381	20 663	14 484	21 331
Cash and cash equivalents at the end of the period	2 256	14 484	2 256	14 484
Incl. unutilized credits	35 506	16 484	35 506	16 484

Data per share

	Q4	Q4	FY	FY
	2020/21	2019/20	2020/21	2019/20
Earnings per Share, SEK	-0.47	-0.45	-1.63	-1.83
Equity per share, SEK	0.37	2.01	0.37	2.01
Number of Shares, end of period	14 394 971	14 394 971	14 394 971	14 394 971
Average number of shares	14 394 971	14 394 971	14 394 971	14 386 521
Share price at end of the period, SEK	25.00	31.80	25.00	31.80