Promovec Group A/S

Management's review

MANAGEMENT'SREVIEWGROUPOVERVIEWPromovec A/SDevelopment, sales and service of e-bikes & e-kits for global brands.Batribike Limited Sales and service of e-bikes to dealers in UK.Pro-Movec GmbH Sales and service of e-bikes & e-kits to dealers in Germany.Promovec America Inc. Sales and service of e-bikes & e-kits todealers in USA and Canada.Viridus A/SHolding company.Viridus Manufacturing A/SDanish battery manufacturing facility.BikeRep A/SAftersales service for end users.Promovec Properties A/SReal estate.COMPANY HIGHLIGHTSheadquarters in Aarhus N. It will Full ownership of market share in the UK. new brand identity. our customers. Principal ownership of Viridus Manufacturing A/S Refurbishment of batteryMANAGEMENT'S REVIEW Key activitiesThe Group’s activities comprise development, pro- duction, sale and servicing of electric bikes, drive- lines and batteries for electric bikes. The parent’s activity is to invest in shares and other securities. Development in the yearThe income statement of the Group for 2022/23 shows a profit of DKK 16,034,648, and at 30 June 2023 the balance sheet of the Group shows positive equity of DKK 79,495,682. The past year and follow-up on development expectations from last yearConsidering the difficult market situation that has characterized this past year, our result must be de- scribed as satisfactory, even though our targets for the year have not been met.We have been able to act according to the situation and adjust throughout the year. In the beginning of the year, we bought the last 50% of our company Batribike Limited, giving us full ownership. In Janu- ary, we also bought 26% of our joint venture com- pany Viridus Manufacturing A/S, thereby owing 75%. During spring, we sold our new sustainabili- ty-certified property on a sale and lease back agre- ement, giving us the necessary strength to develop our business.Furthermore, we have been able to adapt and reor- ganize the organization to ensure we have the right focus on sale, quality and service, and product de- velopment.Due to the above, our overall solvency has been strengthened considerably, giving us the strength to resist the uncertainties in a continued difficult market.Special risks - operating risks and financial risksBecause of its operations, investments and finan- cing, the Group is exposed to changes in the level of interest and exchange rates. The parent Com- pany manages the financial risks of the Group cen- trally and coordinates the cash management of the Group, including funding and investment of surplus liquidity. The Group pursues a Board-approved fi- nance policy operating with a low risk profile so that currency exposure, interest rate exposure and credit risks arise only based on commercial matters.Foreign exchange risksThe Group is affected by changes in exchange rates as foreign subsidiaries’ results and equity at year- end are translated into DKK based on average ex- change rates and the exchange rate at the balance sheet date, respectively. The Group does most of its trade in foreign currencies. The Group evaluates on a current basis the need for use of financial in- struments to hedge net positions and future transa- ctions. The Group’s currency exposure is primarily covered by an internal cash pool.Liquidity risksManagement assesses that the Group has the ne- cessary funds available to meet the continued de- velopment of its activities. Targets and expectations for the year aheadIn general, we are in a line of business with a posi- tive development, but the slowdown in the market will continue longer than expected, which will in- fluence us. As a result, we expect our revenue and profit to be receding the coming year. Therefore, our focus next year will also be on re- duction of stock and bringing supplier prices back to normal conditions, together with a continued long-term growth focus, by ensuring our internati- onal sales expansion through strategic customers and our product developments. Overall, the profit before tax in 2023/24 is expe- cted to be DKK minus 4-6 million, with a negative cash flow. Uncertainty relating to recognition and mea- surementThere has been no uncertainty regarding recogniti-on and measurement in the Annual Report. Unusual events The financial position on 30 June 2023 of the Group and the results of the activities and cash flows of the Group for the financial year of 2022/23 have been positively affected by profit on the sale of property and exchange adjustment, etc., of MDKK 20,7. Subsequent eventsNo events materially affecting the assessment of the Annual Report have occurred after the balance sheet date.e-mobility. We focus on sustainability, quali- to support and supply greener urbanization. on functionality, design, and quality. We are with ambitious and sustainable strategies. in new and innovative ways. COMPANY HISTORYPromovec was established in 2001, selling aids to el- derly. During the first years, the company experienced a greater demand for e-bikes and started to import these from China.As the interest in the market grew, Promovec began to investigate the potential of developing and manufactu- ring the e-bikes ourselves, and in 2008 the first self-pro- duced e-bike was sold in Denmark by Promovec. As pioneers on the Danish market, our competencies within the e-bike business were noticed. During 2009 the focus on the OEM markets increased and from then on, our focus was to provide complete e-bike solutions, from design and development to production and deli- very.In 2008 Pro-Movec GmbH was established and in the coming years, our international focus became stronger. In 2017 we united with UK e-bike distributor Batribike Li- mited, which had and still has a strong position on the British e-bike market.Promovec is thinking green and is at the forefront of re- sponsible production. This focus on green mobility led to the opening of Viridus Manufacturing in 2019 on Da- nish grounds. The factory produces high-quality, high- performing battery packs for the e-mobility industry, focusing on intelligent technologies and green initiati- ves, striving towards zero-emission production and sup- ply more green energy alternatives. In 2020 Promovec America Inc. was founded and in 2022 we took full ownership of Batribike Limited. In July 2022, we moved into our new headquarters. The building will reach a DGNB-gold certification, which is a sustainable certification approaching the entire lifecyc- le of the building through construction, operational life, and end-of-life recyclability.In the beginning of 2023, we got a remarkable mar- ket share in the Benelux countries and are in general strongly represented at the European market.At Promovec, it is all about creating a sustainable mindset throughout our business. MISSION & VISIONOUR MISSION Promovec Group offers e-mobility solutions to retail, wholesale, bike brands & assemblers with focus on quality, on time delivery, unique service and innovative concepts. OUR VISION Promovec Group will create the sustainable e-mobility solution of the future. COMPANY VALUES RESPECT We respect each other, our customers, and what we do. We understand and accept thatemployees, customers, and business partners are different and should be respected in every way.We are present and service-minded. We listen to and acknowledge each other, our customers and partners. RESPONSIBILITYWe are quality conscious and trustworthy in everything we do and committed to making a difference. We are loyal to each other, our customers, and partners and take responsibility for constantly improving ourselves. COURAGEWe dare to enter new projects and explore new business areas independently or with customers, suppliers, and other partners.We are development-oriented and adaptable in our work and dare to be creative and think differently in every part of the organization.TECHNOLOGYPRODUCT HIGHLIGHTS 2022-2023Graphic SlimGraphic Slim combines the functionalities of Connect+ and Graphic display, which gives a sleek and functional display. The display offers a high-contrast display with access to different driving modes and valuable information. Smart GripThe Smart grip is a new solution, bringing the e-bike under more user control than ever. Handing the control to the fingers is a pleasant and convenient experience. The new functionality of the Smart Grip is simple and intuitive. The grip is beautifully integrated into the bike handle. New e-CargoDynamic Cargo is equipped with specially hand-picked components from the exclusive shelves.The cabin’s construction is well thought out down to the smallest detail and is designed with a high hood, which ensures you the most flexible cargo bike with room for everything. New cell formatWe have upgraded our battery assembly with a production line that can produce battery packs with a larger cell format, 21700. We look forward to being able to offer that to our customers. The cell format is distinguished by having more charging cycles and a greater energy density compared to the current 18650 designs. Invisible batteryOur new Invisible battery comes with state-of-the-art technology, which includes the new 21700 cell type. Combined with a high level of equip- ment, the battery is elegantly integra- ted into the frame, which gives a slim look. DIGITAL TRANSFORMATIONDigital company presentation The digital landscape is constantly evolving in today's fast-paced, interconnected world. To remain competitive and relevant, companies must embrace digital transformation. At Pro- movec Group, we have worked hard to convert physical materials into digital material. Our digitization involves converting traditio- nal paper-based or offline documentation into digital formats. This process has helped us streamline information access, reduce paper waste, and makes it easier to share our profiles electronically. It's an essential step in our stra- tegy to stay competitive and accessible to a broader audience.Strong online setup To help our dealers worldwide, we have made significant online solutions on our website and de- aler site. A game-changer is our new Bike Look- up. Bike Look-up contains information about ele- ctric bicycles produced by Promovec Group from 2008 until today.Furthermore, we have increased our focus on on- line services to help our dealers. These new ini- tiatives include service videos on our products, a new complaint handling system, and webinars.OUR SERVICE SETUP Strenghtening relations through customer serviceAt Promovec Group we have a strong ser- vice set-up, we offer service to more than 1500 dealers across the world with on-lo- cation service facilities, service hotline support, webinars, video materials, trai- ning courses and online service dialogue.We seek individual solutions and appro- aches in our service set-up, because few customers are faced with the same chal- lenges. Maintaining an open and collabo- rative dialogue allows us to understand the needs and preferences on the market better. With this dialogue we always seek to improve our service quality and build up strong relationships with our custo- mers and partners.We are constantly improving and evalu- ating the quality of our products and the service of these. This is done by recruiting top talent and ensuring all materials and products adhe- re to and pass international tests. TESTING ANDQUALITYOur approachPromovec Group offers our customers high-quality products. Our test depart- ment regularly performs tests on both complete e-bikes and individual compo- nents.Doing so gives us a good indication of the product quality and allows us to take ac- tion if we find any manufacturing defects. The test department, which has a wide range of test equipment, is also essential in the ongoing efforts to improve and de- velop our bikes. Carefully testedBefore we start using newly developed components, we carry out several tests. We only put new components on the market when we have assessed and ap- proved all test results."We always have the users needs in mind when we test. For example, for bicycles targeting the older segment, the controller needs to be less aggressive, so the electric bike has a slower start than a mountain bike for young people, which also needs to have a sportier design. In other words, we always make sure that the systems fit the users."Thomas Hansen Technical Electronic Manager