Polygiene Group AB

Good morning and welcome to PolyGene Group's presentation of the fourth quarter. I am Ulrika Bjork and I'm the CEO of Group.

And I'm Niklas Bromstedt and I am the CFO.

So we're going to introduce to you the fourth quarter from 2024 and I'm very happy to see how the company has performed during full 2024. So I will start to give you some highlights of the quarter and then Niklas will give you the financial performance. And then I will give you an update on PolyGene and AdMaster, some updates from the quarter and also where we are in the different segments. And then we're going to have a Q&A in the end as we normally do. So let's start with some highlights. As you know, 2024 has been a comeback year for the group. We have strong results and also the conclusion of the year, we ended up with a very strong growth, 45%. And we also have proven the scalability of the business. So we're delivering very good results overall in the year. We can also see that all the other key numbers has also been pointing at the right directions and we continue to improve on all areas. As a result of these good key numbers, the board has also decided to propose for the AGM a dividend and an update on the dividend policy. And the policy is actually a proposal to give back around 40% of the result after tax, which should amount to 0.05 SEC for 2024. And that will be decided on the AGM 8 May. We're also expanding our agent and distributor network, both in PolyGene and AdMaster. We have some new agents and distributors, and this is part of the future growth strategies to extend these networks. We also had some interesting breakthroughs in CentMaster, which I will come back to. And then also I will give you an update on the Shed Guard project that we now are in collaboration with the University of Manchester, which has been giving the project another dimension. But first, some numbers from Uniclass.

Yes, if we look at the numbers, then a short summary, we can see that in the quarter we had sales of 44.7 million SEK versus 30.9 in the quarter last year. Full year we are having 156.9 versus 113.5. We had a strong gross margin of 76.1 versus 70.6 and the full year it was 70.8 versus 73.2. We had operating cost of minus 25.1 versus 25.3 last year. Full year amount was 85.1 versus 88.1. An EBITDA of 5.9 in the quarter versus minus 6. And for the full year, 19 versus minus 12.2. With an EBIT of 4.4 versus minus 302.4. For the full year, it was 13.2 versus 312.6. We had a strong cash flow of 9.4 million second quarter versus minus 2.3. And the full year, we had 21.4 versus minus 3.7. At the end of the year, we had the cash of 68.7 versus 44.1. And as Ulrika said, the board has proposed a dividend of 0.05 SEK per share or 5 öre per share. If we go in a little bit more into the sales, we can see that sales was up 45% versus last year. That's included the 1% FX impact. And the sales in the quarter four is also better than we had in quarter three. During the quarter, we'll have a stock buildup at the distributors in PolyGene and over approximately 5 million SEC. And that's partly driven that the Chinese New Year is fairly early in 2025. Looking on the shares of sales, PolyGene is now up to 57% in the quarter because PolyGene increased with 55% during the quarter versus last year. Admaster increased 32%, so their part of the share is 43% in Q4. From a region point of view, we saw that the strongest increase was in EMEA with 39%, followed up by Americas with 33%, while we have a small decrease in APEC with 7%. If we then look on the numbers, other numbers, we can see at the strong gross margin of 76.1 versus the 70.6. It's partly driven by FX, around one percentage unit. And also that we have a good mix with more polygene sales in the quarter with high margin. And in the last year, we had an inventory adjustment of 0.7 million SEK. The operating costs include in the quarter a bonus of 1.7 million. Last year we had 2.5 million SEK for ending consulting contracts. The operating cost is also including variable sales costs and for this quarter it was 4.8 million versus 3 million SEK last year and this is driven by the increased sales. EBITDA, as we said, 5.9 versus minus 6, and EBIT 4.4 versus minus 300, 2.4. And the last year, we had the write-down of goodwill over around 295 million SEK. The strong cash flow on 9.4 was driven partly by contribution on operating activities, strength of working capital, and reduced investments during the period. We have had some small shortages on the supply during the quarter, so we had to do some air transport, and that air transport comes with shorter payment terms versus the sea transport. So that has a positive impact on the strength of working capital. And as we said, we have a strong cash of 68.7, and the dividend of 0.05 sec is approximately 1.9 million sec.

Thank you, Niklas. And I will move in to talk a little bit about Polygene, the textile segment of our business. There is a good trend, there's a good drive in the textile business at the moment. As we can see, there was a strong growth of 55%. The share of sales for the full group was 57%, which also triggered the higher margins of the quarter. The sales within PolyGene is mainly driven from Europe and EMEA and the Americas this quarter. And we can see a lot of our customers that declined during 2023 are back on track again, like Acterix on running at Bauer and Adidas. We can see they picked up volumes again. That is really, really positive. But we also have new brands coming on board. For instance, we have this prestigious brand Passenger from UK, which is an outdoor brand. we have a lot of focus on sustainability. So PolyGene fits very well in with their message. Yes, and then I want to update you on Shedguard. And Shedguard is an innovation project that has been running for 1.5 years. It's a long-term project. We are in a phase now where we are going to test more fabrics. We're going to treat more fabrics and send for new tests. and we're gonna have those results by end of quarter one. Meanwhile, we have this partnership with the University of Manchester who came in with extensive knowledge of microfibers. They have equipments, they have labs, So this collaboration with Polygene's experience in textile applications is a super good match. And the project is funded for around nine months. And this is super interesting. So meanwhile, we are waiting for the test results from phase two. The university is now conducting 250 wash tests. That is a large number of analysis going to be made now to find out what are the common patterns to see on what fabrics, what kind of fabrics, if the water has an impact, if it's normal filter water or the ionized water. Also looking at detergents, if that have an impact. So there's a lot of analysis going to be made now. We're going to have the results from these washing tests within the next coming weeks here. So it's going to be super interesting to see. how this project is going to work and it's not only about to have good test results it's about to have consistent good test results for it to be a viable commercial product so that's why we have to do all this work now if we're going to be able to put this on the market or not but so far it seems positive i would like to say so we have all reasons to come back to the shed god project when we are introducing you to the q1 in april As I said before, part of our strategic growth is that we have to partner up with other partners in the network like distributors and agents because we are not many in the organization. We have 45 people. We have to have arms out there. So we onboarded Weishartz in US to have one salesperson in the West Coast and one on the East Coast. And Weishartz is the agency that we also work with in Germany. So they belong to the same group. And Weishartz is also the company who are doing all these big trade shows. So they are super connected to all the brands and all the industries. So it's a perfect match for us. And after around a couple of months now, we can already see very, very good results from them with incoming leads, with prospects and projects. So this has been really good for the apology in Americas now. And then also we're looking for technologies, tomorrow's technologies to extend the technology portfolio. So we have worked very hard the last couple of months here to try to find something that could be complementary to our stay fresh technologies. And the R&D team has worked really, really hard the last months here. And then also another positive note on Polygen is that we have a healthier customer structure. By analyzing the customers, we can see that there are more tier one brand partners than before, and that is minimizing the risk. If somebody will change technology or do other changes, we still have more of the bigger customers now, which is very, very good to realize now. Then moving into AdMaster, the protection side of the business, the hard surfaces. And they also had a great quarter. I mean, 32% is a good growth. We can also see that it's existing customers picking up volumes again, but we also have new customers coming on board continuously. And the share of sales was 43%. And I think if we look earlier, I think it's more around 50-50, but a little bit upper side on PolyGene this year. And EMEA is still the largest region with 61%, and the full year is 70%. So we can see that we have growth in Americas, for instance, and hopefully we can see that APEC is picking up as well. The Americas doubled the sales in Q4, but that is from small volumes, but it's also a signal of that US is a future market for us, for AdMaster. And the same as with Polygene, we have to extend our networks. So we have signed on a new global distributor. It's a German global company that have facilities in China. So they are going to promote and sell Admasters technologies from this year. So that's also exciting to follow how that will develop. And then we had a presentation at this conference. It's a big import exhibition that happens every year. And we had the stage where we could introduce and present AdMaster for a big audience. So that was really fantastic too. And then we have launched with ScentMaster. And ScentMaster is quite a small part of the product portfolio so far. It's mainly about Biomaster and antimicrobials, but we also believe that the ScentMaster has a great potential. So now we have launched oral products and other personal hygiene essentials like razors and shavers. We have toothpicks. We have other kind of personal hygiene where you need an antimicrobial to add a value to the technologies. And we have several companies that have launched with oral products. I think it's two, three different customers from different regions that has picked up this. And it makes sense to to have a scent with mint or lemon or anything else something like that in these toothpicks so so it's a great match and i think we can see more from this area moving forward and then there is another positive note on the geotextiles so we have partnered up with A big partner is one of the largest geotextile in the world. And now they are relaunching GeoClean, the textiles where Polygyn and Admaster Polygyn group is included. And they are going to launch that under the name Osmoria. So you can go into the website and see how nicely they are presenting these aqua textiles. And we were there on an innovation workshop with them to try to find more technologies that we could add to these geotextiles. These were quite a good workshop, very positive, good partnership. And I think they also mentioned that they now have signed on Brussels airport with these aqua textiles, which is quite interesting. And they are only launching this in Europe so far. So, I mean, it's a global company. They have Asia, US, there are lots of other markets where this can be introduced in the future. So very exciting to follow this as well. Yes, and then there's another interesting thing I want to mention is that AdMaster has its 25 years anniversary in 2025. The business was started by Paul Morris in year 2000, and we are going to highlight this during the year with a lot of PR. We're going to do a lot of events and also include our customers and partners in this. So it's gonna be an exciting year for AdMaster for sure. And then we have a very busy spring here. We're gonna go out and promote Polydyn Group as a good investment case. We believe that we are in a place now that we are confident that we are stable So we have a huge schedule here in March. We're going on a road trip across Europe. We're going to visit funds and investors in London, Paris, Frankfurt, Zurich, and Copenhagen. We're going to do lunch presentations. We have evening events. And we're also going to do one-to-one presentations that we have been signed up to. And we have We have produced this one pager. It's like a folder that we're going to ship out both physically, but we're also going to email to 500 contact investors, both private but also institutions, so we can now for real go out and promote us to the stock exchange market. Yes, I think that was all from me, and if you want to go deeper in, you read the full report, and I think I'm ready for some questions.

We had some questions here before, that was sent in before. Something was a little bit about, it's been a little bit quiet, not so much news about products. I think you mentioned a little bit about it, that there are some exciting things coming up. Do you want to say something more, Ulrik, about that, or...?

Not for now, but I think, as I said, we are looking into the future and what is tomorrow's technologies. So I'm sure we will announce something when we are ready for that.

There were also some questions about Shedguard and Study Fresh Bio.

Shedguard, as I mentioned, it is an innovation project, so it's still ongoing. It's absolutely alive and positive. For the Stay Fresh Bio, we launched that last year. It has been some struggling because it's a new technology. We need to have registrations. You have to have the compliance in place. And also, of course, testing. So we have tested with customers during 2024. And let's see what we bring in now in 2025.

also there's been some questions about some competitors there has to be some struggles in in the market how we would sort of have a view on on on that from a customer point of view or acquisition point of view yeah so there is a consolidation in the market for sure um they have been companies i mean it's been tough years in the back so there is a consolidation in general in the market and polygine group is always open to

evaluate and to check what's out there. We do our due diligence. And if something is interesting, we will strike. But if it's not, it's not interesting. So we keep our eyes open and are updated on the market.

And then there were a question about the bonus. And what we can say about is the bonus is for everyone in the company. So all of the employees are part of the bonus program. It's both sales and the EBIT. So it's a combination of that. And based upon that, you have to do an overachievement versus the budget. So that's the sort of the background on how the bonus is built up. But as Borte said, it's for everyone in the company. And there's not that much new questions. No, I think the ones we have, new ones we already sort of answered in the ones we had before.

They've been covered in the presentation. That's good. Yes. And I don't think we have anything more to add. I can just like on a Some people ask, how do you feel about the first quarter? It's very early. We have the Chinese New Year much earlier. So, of course, we can't compare January to January. We have to look January and February together. I think in March will be the month when we know, because then we can see how much we can pick up from the first two months. But it's too early. But we have a very positive feeling. The company, within the company, the... super good aligned, the full team we are focusing. We know that strategy and focus is one of the success factors here during 2024 to be aligned and to just like do the right things. And of course, there has been a recovery as well for existing customers. So we like following their trends. In general, I think we picked some market shares during 2024. We have a bigger growth than the industry in general. So I think we are in a good place. So I really hope that we can continue on this path moving forward.