INVESTORSMESSAGE FROM CEO
Turning point 2020
– the dawn of a new era
Net sales amounted to MSEK 83.9 (68.8), an increase of 22% compared to 2019. In 2020 growth, adjusted for currency effects, was 28%. Operating profit before tax amounted to MSEK -1.1 (-6.6), weighed down by non-recurring costs of MSEK 2.6 for the acquisition of Addmaster. Cash flow from operating activities was positive, and total cash flow amounted to MSEK -0.4, including new investments of MSEK 3.6.
Initially a tough start
Like most businesses around the world, 2020 was an eventful year for Polygiene. Without exception, the COVID-19 pandemic has affected us all in some way. Amid great uncertainty about the pandemic impact on global business, we initially experienced shutdowns, delayed or missed production deadlines, and logistics challenges. As a result, there were sharp declines in production volumes that affected our core business. Travel restrictions and lockdowns were introduced; trade fairs and business meetings were cancelled and moved onto digital platforms. Business conditions at the outset of 2020 were far from promising. With the launch of ViralOff®, however, we managed to reverse the trend and ended the year with one new sales record after another.
ViralOff – award-winning anti-viral technology
During the SARS epidemic in the 2000s, Polygiene had tested and documented efficacy against the coronavirus on hard surfaces. This gave birth to the business idea for testing anti-viral protection on textiles. After achieving very good test results, ViralOff was launched as one of the world’s first anti-viral textile treatments. Well received across the global market, the product became an instant success.
After thorough testing at an accredited laboratory, ViralOff proved effective against SARS-CoV-2, the virus that causes Covid-19. The product has been further refined since its launch. Beginning in 2021, we will sell an updated version that remains active on textiles for at least 30 washes according to ISO 18184:2019. In 2020, ViralOff accounted for 23% of sales, a strong result given the short time the product has been on the market and the long sales cycles that typically characterize our industry.
Moreover, ViralOff has opened the door to new product areas, such as cleaning supplies, accessories, sprays and floors. These are new product areas for Polygiene since the company has primarily focused on odor control from the sustainability perspective, ‘Wear More, Wash Less’. It was, however, a natural next step to expand business beyond textiles due to the increased demand for protective anti-viral treatment of hard surfaces and materials. Polygiene signed in 2020 more than 100 new agreements, most of which are tied to ViralOff technology.
An organization strengthened
During 2020, restructuring took place withing the management team, with new hires assuming key roles. At the beginning of the year, Nina Forsvall was appointed as the CFO, filling a key managerial role that had been vacant for most of 2019. Andreas Holm joined the team, initially to strengthen the sales organization due to the success of the ViralOff launch, but now as global sales manager. This prompted a downsizing of the management team, with regional managers now reporting to Andreas and able to focus fully on the commercial sales in their respective regions. Since November 2020, Andreas has also been acting CMO since Mats Georgson left the company.
Dane Momcilovic was appointed as CTO, enabling Daniel Röme, who had been acting CTO to return his focus last September to product development and innovation. R&D is a priority area at Polygiene, and I am pleased that the work with R&D can intensify once again. As a result of the reorganization, the management team in place at the head office in Malmö is both leaner and more closely knit. This will enable the team to run the company more efficiently at this critical stage of growth.
Addmaster – a strategic acquisition
On one of the last days of the year, shareholders at our general meeting unanimously voted to support financing the acquisition of Addmaster. Addmaster and Polygiene share a long and solid history, with collaboration stretching back to the early days of our company. From a strategic perspective, the acquisition is a sound and logical decision. The companies complement each other well, given the great synergies that exist. Addmaster founder Paul Morris, now Polygiene’s majority shareholder, serves as a valued external consultant. Addmaster’s Sandrine Garnier remains in her role as Managing Director, thereby providing continuity and security going forward.
Due to the acquisition, Polygiene shares increased by approximately 15 million shares, a dilution of 70%. The issuance of new shares has given the company several new shareholders, largely institutional investors, both Swedish and international, thereby creating both stability and long-term perspective.
Since the completion of the transaction, intensive work to integrate the companies has been initiated. While we would like to extract synergies immediately, we also have a deep respect for preventing business disruption and ensuring continuity. Cross-selling has begun, enabling Polygiene to broaden its product portfolio with Addmaster technologies. The Polygiene sales organization and network has a golden opportunity to extend the reach of our business significantly and almost immediately. We are at work to gain a better understanding of the business models employed, which are markedly different. In the long run, there are opportunities for streamlining; resource reallocation within the Group and the doing away with functional redundancies will contribute to achieving and maintain commercial success in a rapidly expanding market.
To enable stable and profitable growth in the future, we have undertaken a project to set up a clear brand architecture. After proper evaluation and analysis, the natural next step is to develop a common company profile, structure and organization for the long term.
For Polygiene, 2020 has been a year like no other, and one where we have been able to establish a unique position with ViralOff® as the driving force. This forward momentum shows no signs of slowing. There is a continued and strong demand for antimicrobial treatments ¬– both from a sustainability perspective with textiles as well as from a perspective to protect hard surfaces from the effects of bacteria and viruses in a post-coronavirus world. Here, Polygiene and Addmaster can make valuable contributions and encourage others to do the same, supporting solutions for a more sustainable world.
Finally, I would like to give a big round of applause to all my talented colleagues at Polygiene and Addmaster for the fantastic work they do every day. I would also like to thank all our customers and the business partners we work with. And a huge thanks to all board members for their support, especially over the past year, and to all shareholders for your continued trust in 2021.