REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 1
Q3 INTERIM REPORTRealfiction Holding AB (publ) | 559110-4616
1 JULY – 30 SEPTEMBER 2020
Q3, 2020 (01-07-2020 – 30-09-2020)
• Revenue: TSEK 2,038 (Q3, 2019: TSEK 4,296)
• Grossprofit:TSEK1,132(Q3,2019:TSEK1,969)
• Grossprofitmargin:55.5%(Q3,2019:45.8%)
• Resultafterfinancialitems:TSEK-2,293(Q3,2019:TSEK-4,817)
• Earningspershare:SEK-0.12(Q3,2019:SEK–0.31)
• Cashflowfromoperatingactivities:TSEK-2,873(Q3,2019:TSEK-3,942)
Q1-Q3, 2020 (01-01-2020 – 30-09-2020)
• Revenue:TSEK7,431(Q1-Q3,2019:TSEK17,145)
• Grossprofit:TSEK4,105(Q1-Q3,2019:TSEK9,100)
• Grossprofitmargin:55.2%(Q1-Q3,2019:53.1%)
• Resultafterfinancialitems:TSEK-7,800(Q1-Q3,2019:TSEK-10,901)
• Earningspershare:SEK-0.42(Q1-Q3,2019:SEK-0.77)
• Cashflowfromoperatingactivities:TSEK-2,793(Q1-Q3,2019:TSEK-8,661)
Q3 INTERIM REPORT
Picture on front page and above: Dreamoc displays used by Polytech at
China Wind Power 2020 in Beijing, China REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 2
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 3
SIGNIFICANT EVENTS DURING Q3 2020
•On1September2020,RealfictionannouncedtheinitiationofastrategicreviewofitsSalesActivities(Magic-as-a-ServiceforRetail/ExhibitionsandExperiencehardwaresales)aswellasallnon-ECHOIPandhardwaredevelopment,includingthehighlyacclaimedDreamocandDeepFrameMixedRealityproductranges.Thestrategicreviewfollowsthestrongprogressachievedin2020inthedevelopmentofECHO.Potentialrecommendationsfromthestrategicreviewmayinclude,butarenotlimitedto,asale,jointventureorspin-outofany,allornoneoftheseassets.Realfictionhascontractedacorporatefinancefirmwithexpertiseinfacilitatingsuchstrategicreviewandtransactions.
•On24September2020,RealfictionannouncedthepublicationbytheWorldIntellectualPropertyOrganization(WIPO)ofthecompany’sECHOpatentapplicationandWIPO’sreportonitspatentability.ThereportreaffirmsRealfiction’sstatementinits2July2020pressreleasethatnopriortechniquethatputsthenoveltyoftheinventionintoquestionhasbeenfound.Withthepublicationofthefirstpatentapplication,and6additionalpatentapplicationsfiled,theECHOtechnologyhasastrongIPprotectionshieldpendingapprovals.
SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD•On7October2020,RealfictionheldalivevirtualeventfocusedonitsECHOdisplaytechnology.Duringavirtualpresentation,Realfiction’sDirectorofAdvancedDisplayTechnologySteenIversenexplainedthecoreprinciplesoftheECHOtechnology,aswellashowandwhyithasseveralmajoradvantagesoverthecurrentlightfieldtechnologyandholdsthepotentialforlow-costmassproduction.ThepresentationalsocoveredtheongoinginternationalpatentprocessforECHO.
•On18November2020,anExtraGeneralMeetingauthorizedtheBoardto,atoneorseveraloccasions,duringthetimeupuntilthenextAnnualGeneralMeeting,withorwithoutdeviationfromtheshareholders’preferentialrights,resolvetoissueshares,shareoptionrightsand/orconvertiblesuptoatotalof30percentofthetotalnumberofoutstandingsharesintheCompanyonthedaywhentheBoardutilizestheauthorizationthefirsttime.
•On19November2020,RealfictionannounceditsplanforcompletionoftheECHOintegrationlicensepackage,includingapotentialfurtheroptimizationforproductionwhichisexpectedtoresultinevenlowermanufacturingcostsandaslimmerformfactor.Thecompletionphaseisplannedtolast13-16monthsincollaborationwithacoupleofleadingEuropeanresearchinstitutesandfacilities.Byspring2021,Realfictionwillalsoactivelyseekaco-developmentagreementwithacommercialdisplaymanufacturertospeeduptimetomarket.
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 4
CEO COMMENTS
POSITIVE DEVELOPMENT PROGRESS COULD ENABLE EVEN CHEAPER AND SLIMMER ECHO DISPLAYS
ThedevelopmentofourECHO3Ddisplaytechnologycontinuestoprogressinaverysatisfactorymanner.Wehave recently identifiedaway topotentiallyoptimizeapartoftheECHOtechnology,pavingthewayforamore rapid integrationwitha shortertime tomarket,a slimmer form factorandcheapermanufacturing forboththeLCDandtheOLEDversions.AswearenowenteringthecompletionphaseofECHO,withtheaimtofinalize an integration licensepackage that will facilitateeasy commercialization,the first step is to conducta feasibility study to pre-validate these new findings.The feasibility study is co-funded by an InnoboostergrantfromInnovationsfondenin Denmark, and we expectto complete this study inJanuary 2021. During thespring of 2021, it is our goal to invite a strategicallyselected Asian display manufacturer to participate intheco-developmentofacentralsub-system:thedisplaybackplane.This isanaturalnextstep inmaturing thetechnologyandbringingitclosertomassproduction.
STRONG RESULTS FROM RETAIL MAAS CAMPAIGNS WITH EDEKA
Withseveralmonthsofthetestlaunchat25EDEKAstoresinGermanybehindus,wehavebeenabletodocumentagenerallypositiveeffectonsalesforproductsfeaturedinthecampaigns.Thisclearlyshowsthatourconceptworksanddeliversvaluetothecustomers.Forthreerecentlyconcludedcampaigns,wesawsignificantsalesupliftsforallthreecampaignsintherangeof290%forthe
leasteffectiveand980%forthemostsuccessful.DiscussionswithEDEKAregardingapotentialscale-uptoadditionalstoresin2021isinprocessbutisslightlydelayedduetotheongoingsecondCOVID-19waveinEurope.
MAAS FOR EXHIBITIONSInQ32020,thetrendfromthepreviousquartercontinued,withsomeinflowofordersdespiteCOVID-19restrictions.WehaveforexampleseensomeeventsinChinamaterializewhereRealfictioncustomerssuchasPolytechhaveparticipated.
However,thetotalsalesvolumesarestillmuchlowercomparedtopre-pandemiclevels.Therehasalsobeenatrendofsomecustomersconvertingtheirrentalorderstopurchaseorders,thusgivingthemmorecontrolandflexibilitywhichcanbeahugeplusduringthecurrentcircumstances.Anothergeneraltrend
isthatsalesprocessestakemuchlongertimetocompleteduetotheincreaseduncertaintyinthemarket,andweexpectthistocontinueatleastuntilthespringof2021dependingontheCOVID-19situation.
EXPERIENCE (HARDWARE)AsinQ22020,weareseeingmuchlowersalesvolumescomparedtobeforetheCOVID-19pandemic.Therearehoweversomehardwareorderscomingin,includingfromcustomersconvertingfromrentaltohardwareordersasstatedabove.JustasforourMaaSforExhibitionssegment,weexpecttheloweroverallsalesvolumestocontinueatleastuntilthespringof2021.
“W e have recently identified a
way to potentially optimize a
part of the ECHO technology, paving the
way for a more rapid integration with a
shorter time to market, a slimmer form
factor and cheaper manufacturing for both
the LCD and the OLED versions.”
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 5
SIGNIFICANTLY LOWERED COSTS REDUCES RISK LEVELS
EventhoughweareseeingobviousnegativeCOVID-19effectsinsomeofoursegments,wehavebeenabletorespondforcefullybysignificantlyreducingRealfiction’snetoperatingcostsby50%comparedtoQ3,2019,andby40%comparedtoQ1-Q3,2019.ThisismainlyduetosignificantstaffreductionsinourMaaSandExperience(Hardware)segments,butwearealsopausingallmajorinvestmentsinourinternationalMaaSexpansion.Theupsideofthisisthatourburnrateismuchlowercomparedto2019,despitethelowersaleslevels.Realfictionhasastrongfinancialpositionandexpectstohavetheliquiditynecessarytosustainallitsbusinessoperations,includingthedevelopmentofECHO,wellinto2021duetothecombinedpositiveimpactofcostsavingsinitiativesfromthesimplifiedgo-to-marketmodelandthegrantingofinstallment
deferralsin2021ontheloanwithVækstfonden,thussavingliquidityforthecontinueddevelopmentofECHO.WeexpecttocompletetheprocessofsecuringtheadditionalfundingrequiredfortheECHOcompletionphasebeforetheendof2020.
ConsideringourstrongcontinuedprogressinthedevelopmentofECHO,Iamcertainthatwearemovingintherightdirectionwhenitcomestobuildingavaluablecompanyforourshareholders,whilealsodeliveringonourpromisetobringexperiencespreviouslyjustseeninsciencefictionintoreality.
Clas DyrholmCEO,RealfictionHoldingAB
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 6
LEADING MIXED REALITY PRODUCTS AND SERVICES
Realfiction develops, sells and rents out market leading Mixed Reality (MR) products and services based on innovative, as well as patent and design protected, hardware platforms that have been developed over more than a decade. The Company’s MR displays are especially well-suited for social environments as they do not require special glasses or other accessories.
Realfiction’sMRsolutionscancreateinterestforabrandoraspecificproductinaveryvisualandengagingway.Basedonthisattention,concretevaluecanbedelivered,forexampleintheformofincreasedsalesofaproductand/ortheconversionofvisitorsintomembersofbonusorloyaltyprograms.
ECHO – A GROUNDBREAKING HOLOGRAPHIC 3D TECHNOLOGY
RealfictionisdevelopingECHO,agroundbreakingpatentpendingtechnologythatenablesanewgenerationof3Dexperiencesthroughfree-floatinghologramsthatdonotrequireglassesoranyothertypeoflensesbetweentheeyeandtheeffect.
FOCUS AREAS IN 2020
ECHO: Havingalreadydeliveredabasiclaboratoryproof-of-concept,wearenowfocusedonprovingandspecifyingthescalabilityandmanufacturabilitynecessaryforafuturemassproduction,whichistheinherentstrengthofourtechnologyandwherepreviousattemptsinthehistoryof3Dhavefailed.Wehaveidentifiedaone-digitnumberofsub-projects/modulesthatneedtobeinplacetobeabletofinalizeacompleteintegrationlicensepackagethatwecanoffertoLCDandOLEDdisplaymanufacturers.Certainuse-casesmayhoweverbeprioritizedandofferedsooner.Tocompletethesesub-projects/modules,wearepursuingcollaborationwithpotentialresearchpartners,includingaleadinginternationalresearchinstituteinOrganicElectronics.In2020,wehaveadded4updatedpatentapplicationstoourECHOIPportfolioofnow6pendingpatentswithmoretocome.Wherethe
2019patentapplicationsarea“pluginthebathtub”,comprisingalargesetofpotentialvariationsdescribedinbroaderterms,preventingcompetitorsfromcomingfirstandlockingthefieldwhilewearematuringthetechnology,the2020applicationscomprisetheworkwehaveputintopreferredembodimentstodocumentthedetailedinventivestepswebelievewearethefirsttohaveovercometoenablefuturemassproduction.
Magic-as-a-Service: Realfiction’sgo-tomarketmodelhasbeenrevisedthroughlearningsfromtheinitialroll-outinDenmarkandSweden,andtheCompanyhasrefocuseditsenergyandoperationalmodelintoaleanerandsimplerorganisationalsetupthatutilisesexternalcollaboratingpartnersandindustryagents.TherevisedMagic-as-a-Serviceconcepthasbeenimplementedinatestlaunchin25EDEKA(Germany’slargestdepartmentstorecompanywithover11,000stores)storesinGermany.RealfictionisconfidentthatitisatthebrinkofrealisingthetruepotentialoftheMagic-as-a-Serviceconcept,evenwiththeCOVID-19outbreak.Afterthetemporarypauseofthetestlaunchinthefirsthalfof2020,wehaverestartedthetestlaunchinJuly2020andwelookforwardtoreceivingmorefeedbackfromstakeholdersduringtheremainderof2020.
Experience (hardware sales): Realfiction’sglobalpartnernetworkcontinuestodeliverinthehardwaresalessegment.PartnersalesremainsasahighpriorityfortheCompanyandanimportantwaytocreateglobalvisibility.
REALFICTION’S BUSINESS AND CONCEPT
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 7
DISPLAY PORTFOLIO
DREAMOC – WORLD CLASS HOLOGRAPHIC EFFECTSDreamocisaseriesofMRdisplayswithadiamondshapedglasschamberwherepicturesand3Danimationsappeartobefloatingtogetherwithrealproducts.Thecontentcanbeseeneitherfromthefrontorfromseveraldirectionssimultaneously.
Dreamoc HD3 isthesmallestandmostflexiblemodelforsingleproductsthatcanbeexperiencedfromseveraldirectionssimultaneously. Dreamoc POP3 canonlybeexperiencedfromthefrontandisespeciallywellsuitedfordisplaysonshelvesandfordisplayingseveralobjectstogether.Dreamoc XL3, XL4 and Dreamoc XXL3 are,astheirnamessuggest,largermodelsthatmakeitpossibletocreateattentionforreallylargeobjects,forinstanceatairportsorinshoppingmalls.Dreamoc Diamond isoneofRealfiction’sbiggestDreamocdisplays,andthemostelegant.ADreamocDiamondcreatesanextraordinaryexperiencethatfitsbrilliantlyintoexclusiveboutiques.
DEEPFRAME – THE WORLD’S LARGEST MIXED REALITY DISPLAY
DeepFrameistheworld’slargestMRdisplayandcancreateunbelievablerealtimeexperienceswhereholographicimagesandanimationsareprojectedoverexistingsurfacesandobjects.Itwasawardedthe“CES2018InnovationAwardsHonoree”titleatCES,theworld’slargestconsumerelectronicsshow.
DeepFrame One isaplugandplaymodelintheDeepFrameseriesthatmakesitpossibletocreateunforgettableexperiencesforshoppingmallsandshowrooms,amusementparks,museums,conferences,eventsandcarshowrooms.Otherpossibleusecasesincludevisualizationineducationandresearchaswellasinarchitecture,manufacturingandconstruction.
Picture above: Realfiction’s display portfolio
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 8
INNOVATION
Since the beginning of our journey more than a decade ago, our vision has always been about creating experiences that bring people together. At the heart of this vision sits our innovation team, a group of dedicated, like-minded individuals all sharing the belief that our technology should be about enabling magical moments that can be collectively experienced and shared with others. Positioned in the so-called Mixed Reality field, Realfiction is on the verge of taking the next step beyond the current approach of head-mounted wearables, that we believe is just the first, primitive stage.
Wehaveintensifiedourinvestmentininnovation–andwenowbelievethatwehavefoundthetechnologythatwillallowustoinventtheholygrailof3Dexperiences;free-floatinghologramsthatrequirenoglasses,devicesorotherlensesbetweenthehumaneyeandtheeffect,andwhere3Dobjectscanbeviewedandinteractedwithfromdifferentangles.Thisdisplayhasformanyyearsexistedpurelyasanitemofsciencefiction,deemed
improbabletoeversurfaceinourpresentlifetime.However,withourpatentpendingdirectionalpixeltechnology,referredtoasECHO,Realfictionisfinallyonthepathtomaterializethisdreamandbringittomarket.ECHOiscurrentlythemainfocusofourdevelopmentdepartment,withpotentialtoprovidesignificantlicensingandjointcooperationopportunitiesinthefuture.
ECHO – TRANSFORMING SCIENCE FICTION INTO REALITY
Picture above: Illustration of ECHO in a museum
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 9
DEVELOPMENT IN Q3 AND Q1–Q3, 2020Income Statement
COVID-19continuestocausesignificantdeclineinsalesduringQ3.However,duetocostsavingsfromthesimplifiedgo-to-marketmodelandgovernmentalfinancialsupportpackages,theimpactontheresultandliquidityoftheGroupisnotasnegativeasifwehadnotimplementedsuchmeasures.
GroupnetrevenueamountstoTSEK2,038forQ3,2020,representingadeclineof53%fromQ3,2019(TSEK4,296),whileTSEK7,431forQ1-Q3,2020(TSEK17,145)representadeclineof57%comparedtoQ1-Q3,2019.ThemajorpartofnetrevenueinQ3andQ1-Q3,2020consistsofproductsalesfromtheDreamocandDeepFramecategory,whilesalesfromourMagic-as-a-ServiceconceptaccountforTSEK549(TSEK524)andTSEK1,453(TSEK2,842)respectively.Adjustedforcurrencyconversioneffects,theCompany’srevenueinthethirdquarterof2020declinedby61%toTDKK1,466comparedtotheaveragequarterlyrevenueof2019(TDKK3,776).
CostofgoodssoldamountstoTSEK906and3,326forQ3,2020andQ1-Q3,2020respectively,comparedtoTSEK2,327forQ3,2019and8,045forQ1-Q3,2019.Thus,ourgrossprofitinQ3,2020decreasedtoTSEK1,132from1,969inQ3,2019andresultedinanincreasedgrossprofitmargininQ3,2020of55.5%(45.8%)andinQ1-Q3,2020of55.2%(53.1%).TheincreaseinthegrossprofitmargininQ3,2020isattributabletothedecreaseinsalescombinedwithafewmoreprofitableorders.
InQ3,2020theCompanyhascapitalizeddevelopmentexpenditurerelatingtoECHOthatfulfilstherequirementsofthecapitalizationaccountingprinciple.Assuch,theQ3,2020operatingresultispositivelyimpactedbyTSEK693(TSEK980)fromthecapitalizationofsalaries
andinternalexpensesrelatingtoECHO,whiletheQ1-Q3,2020resultispositivelyimpactedbyTSEK2,579(TSEK2,242).
OtherexternalcostsdecreasedtoTSEK1,154inQ3,2020from2,723inQ3,2019,andtoTSEK4,289inQ1-Q3,2020from7,592inQ1-Q3,2019.Thedecreaseisprimarilyduetothesimplifiedandlowcostgo-to-marketmodelforourMaaSconcept,andduetolowerdevelopmentcostsasthefocusofourinnovationdepartmentistosucceedwiththeECHOtechnology.
Thesimplifiedgo-to-marketmodelforourMaaSconceptentailsthatwehavereducedtheworkforcefromDecember,2019totheendofJune2020.ThusresultinginsignificantlylowerpersonnelcostsofTSEK2,624inQ3,2020(TSEK4,703)andTSEK9,479(TSEK13,478)inQ1-Q3,2020.
Allinall,wereducedournetoperatingcostbyTSEK3,362inQ3,2020toTSEK3,330fromTSEK6,692inQ3,2019andbyTSEK7,679inQ1-Q3,2020toTSEK11,687fromTSEK19,366inQ1-Q3,2019.
GroupnetfinancialcostsconsistofinterestontheloanwithVækstfonden,whiletheQ1-Q3,2019financialcostsincludeinterestonabridgeloan.
ThenetresultfortheGroupinQ3,2020amountstoTSEK-1,892(TSEK-4,350)andTSEK-6,481(TSEK-9,660)inQ1-Q3,2020.
Supplementary Income Statement
Onpage17wepresentoursupplementaryincomestatementwithourtwomainactivities;Innovation&DevelopmentandSales.
InQ3,2020,wecontinuedinvestinginInnovation&DevelopmentActivities,withtheprimaryfocuson
FINANCIAL REVIEW
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 10
ECHO.TheECHOtechnologyaimsatinventingtheholygrailof3Dexperiences:Free-floatinghologramsthatrequirenoglasses,devicesorotherlensesbetweenthehumaneyeandtheeffect,andwhere3Dobjectscanbeviewedandinteractedwithfromdifferentangles.
OurgrossexpenditureinInnovation&DevelopmentActivitiesamountedtoTSEK1,099inQ3,2020comparedtoTSEK1,922inQ3,2019andTSEK3,785inQ1-Q3,2020comparedtoTSEK4,800inQ1-Q3,2019.TheQ3,2020operatingresultfromourSalesActivitiesimprovedtoalossofTSEK1,792comparedtoalossofTSEK3,798inQ3,2019,whiletheQ1-Q3,2020resultimprovedtoalossofTSEK6,384fromalossofTSEK7,753inQ1-Q3,2019.TheimprovementsinQ3andQ1-Q3,2020wereprimarilyduetocostsavingsfromthesimplifiedgo-to-marketmodel.
Balance Sheet
Realfiction’stotalassetsat30September2020amounttoTSEK32,079comparedtoTSEK37,834of31December2019.Inventoryat30September2020amountstoTSEK7,098comparedtoTSEK7,242at31December2019.
Tradereceivablesarelowerthanlastyearduetothedecreaseinsales.
Othershort-termreceivablesarelowerthanlastyearandcurrentliabilitiesdecreasedtoTSEK5,474at30September2020comparedtoTSEK6,519at31December2019duetoacombinationofanextensionofaninstallmentdeferralontheloanwithVækstfondenandfinancialsupportfromgovernmentalCOVID-19supportpackages.
Investments
InQ3,2020andQ1-Q3,2020,theCompanyhascapitalizedadditionaldevelopmentexpenditureofTSEK1,418(TSEK1,503)andTSEK4,808(TSEK3,179)respectively,relatingtothepatent-pendingECHOtechnology.Developmentprojectsthatfulfiltherequirementsofthecapitalizationaccountingprinciplearepresentedasintangibleassetsandaremeasuredatcost(orfairvalueiflower)untiltheprojecthasbeencompleted.
Cash Flow and Liquidity
Realfiction’sliquidityat30September2020amountstoTSEK9,738comparedtoTSEK17,240at31December2019.CashflowfromoperatingactivitiesforQ3,2020improvedtoTSEK-2,873comparedtoTSEK-3,942forQ3,2019andimprovedtoTSEK-2,793inQ1-Q3,2020fromTSEK-8,661inQ1-Q3,2019.TheimprovementsinQ3andQ1-Q3,2020areprimarilycausedbytheinvestmentsintheECHOtechnology,costsavingsduetothesimplifiedgo-to-marketmodelandgovernmentalCOVID-19supportpackages.
Realfictionhasastrongfinancialpositionandexpectstohavetheliquiditynecessarytosustainallitsbusinessoperations,includingthedevelopmentofECHO,wellinto2021.
The Share
RealfictionHoldingAB’ssharewaslistedonNasdaqStockholmFirstNorth14July2017.TheshareistradedwiththetickerREALFIanditsISIN-codeisSE0009920994.On30September2020,thenumberofsharesinRealfictionHoldingABamountsto15,610,613.TheCompanyhasoneshareclass.Allshareshaveequaldividendrights.
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 11
Group structure
RealfictionHoldingABhastwofullyownedsubsidiaries,RealfictionApSandRealfictionLabApS.Allbusinessactivitiesarecarriedoutinthesubsidiaries.InearlyJanuary2020,RealfictionLabApSpurchasedtheECHOtechnologyfromRealfictionApS.RealfictionHoldingABdoesnotownsharesinothercompanies.
Operational risks & uncertainties
TherisksanduncertaintiesthatRealfiction’soperationsareexposedtoareconcentratedinthe
categoriesofcompetition,technologydevelopment,patents,governmentrequirements,capitalrequirements,currenciesandinterestrates.Duringthecurrentperiod,nosignificantchangesregardingriskoruncertaintyfactorshaveoccurred.Formoredetailedreportingofrisksanduncertainties,refertothepreviouslypublishedCompanydescription,publishedinthe2019AnnualReport.
OWNERSHIP STRUCTURE ThetablebelowshowskeyshareholdersinRealfictionHoldingABat30September2020.
Name Number of shares Ownership (in %)
CerancoEquityS.C.S 3,194,447 20.46
ClapeHoldingApS1 2,725,000 17.46
AmTRANTechnologyCo.Ltd.2 1,983,768 12.71
Försäkringsaktiebolaget,AvanzaPension 841,669 5.39
Othershareholders(morethan4,200) 6,865,729 43.98
Total 15,610,613 100.00
1.50%ownedbyCEOandboardmemberClasDyrholmand50%ownedbyboardmemberPeterSimonsen.Inaddition,CLAPEHOLDINGApSowns280,000warrants.2.AmTRANisalargeOEMproducerofLCDTV’sandotherconsumerelectronics.
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 12
Audit/review
TheQ3InterimReporthashasnotbeenauditedorreviewedbytheCompany’sindependentauditors. TheAnnualReport2019forRealfictionApShasbeenaudited.
Accounting policies
RealfictionHoldingABappliestheAnnualAccountsActandtheBoardofDirectors’GeneralAdviceBFNAR2012.1(K3)inthepreparationofitsSwedishfinancialreports. Financial Calendar:
Year-endReport2020: 25March2021AnnualReport2020: 20May2021AnnualGeneralMeeting2021: 15June2021
TheabovereportswillbeavailablefordownloadfromtheCompany’swebsite(www.realfiction.com)[email protected].
Certified Adviser
MangoldFondkommissionABistheCompany’[email protected]+46850301550.
For further information, please contact:
ClasDyrholm,CEOTelephone:+4570206490E-mail:[email protected]
The Board of Directors and the CEO declare that to the best of their knowledge, the Q3 Interim Report 2020 presents a fair view of the financial position of the Company at 30 September 2020 as well as of the results of the Group operations
and cash flows for the period 1 January – 30 September 2020.
Helsingborg, 19 November 2020Realfiction Holding AB
Board of Directors and CEO
ThisinformationisinformationthatRealfictionHoldingABisobligedtomakepublicpursuanttotheSwedishSecuritiesMarketAct(Lagen(2007:528)omvärdepappersmarknaden).Theinformationwassubmittedforpublication,throughtheagencyofthecontactpersonsetoutabove,on19November2020.
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 13
ThedevelopmentintheCompany’squarterlyrevenue,grossprofitandgrossprofitmarginisillustratedbelow:
TheGroup’srevenueandgrossprofitisfullyearnedintheDanishsubsidiaryRealfictionApS.Assuch,andtoavoidthatcurrencyfluctuationsbetweenDKKandSEKdistortthepresentationofrevenueandgrossprofit,theaboveillustrationispreparedonthebasisofRealfictionApS’DKKfigures.
FINANCIAL HIGHLIGHTS AND KEY RATIOSSelected Financial Highlights and Key Ratios – Group
SEK ‘000
Q3-2020 01-07-2020
-30-09-2020 3 months
Q3-2019 01-07-2019
-30-09-2019 3 months
Q1-Q3-2020 01-01-2020
-30-09-2020 9 months
Q1-Q3-2019 01-01-2019
-30-09-2019 9 months
201901-01-2019-31-12-2019
12 months
Netrevenue 2,038 4,296 7,431 17,145 21,357
Grossprofit 1,132 1,969 4,105 9,100 11,367
Resultafterfinancialitems -2,293 -4,817 -7,800 -10,901 -14,792
TotalAssets 32,079 27,473 32,079 27,473 37,834
Cashflowfromoperatingactivities -2,873 -3,942 -2,793 -8,661 -11,013
Cashatbankandinhand 9,738 7,912 9,738 7,912 17,240
Solvencyratio(%) 68.1 62.9 68.1 62.9 74.7
Averagenumberofemployees 11 19 14 17 17
Grossprofitmargin(%) 55.5 45.8 55.2 53.1 53.2
Earningspershare(SEK) -0.12 -0.31 -0.42 -0.77 -1.00
Averagenumberofshares 15,610,613 14,057,908 15,554,700 12,567,976 12,943,521
Numberofsharesattheendoftheperiod 15,610,613 14,057,908 15,610,613 14,057,908 14,057,908
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Revenue 4 435 4 510 4 064 4 207 5 033 4 094 3 014 2 961 2 488
Gross profit 1 744 2 266 2 067 2 215 2 827 2 242 1 382 1 595 1 343
Gross profit margin 39% 50% 51% 53% 56% 55% 46% 54% 54%
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Revenue 4 435 4 510 4 064 4 207 5 033 4 094 3 014 2 961 2 488
Gross profit 1 744 2 266 2 067 2 215 2 827 2 242 1 382 1 595 1 343
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Revenue 4 435 4 510 4 064 4 207 5 033 4 094 3 014 2 961 2 488
Gross profit 1 744 2 266 2 067 2 215 2 827 2 242 1 382 1 595 1 343
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2 000
3 000
4 000
5 000
6 000
Q1-2018
Q2-2018
Q3-2018
Q4-2018
Q1-2019
Q2-2019
Q3-2019
Q4-2019
Q1-2020
Q2-2020
Q3-2020
Revenue 4 435 4 510 4 064 4 207 5 033 4 094 3 014 2 961 2 488 1 309 1 466Gross profit 1 744 2 266 2 067 2 215 2 827 2 242 1 382 1 595 1 343 755 815Gross profit margin 39% 50% 51% 53% 56% 55% 46% 54% 54% 58% 56%
Gros
s pro
fit m
argi
n
Reve
nue
and
Gros
s pro
fit in
TDK
K
Quarterly key earnings parameters
30%
35%
40%
45%
50%
55%
60%
-
1 000
2 000
3 000
4 000
5 000
6 000
Q1-2018
Q2-2018
Q3-2018
Q4-2018
Q1-2019
Q2-2019
Q3-2019
Q4-2019
Q1-2020
Q2-2020
Revenue 4 435 4 510 4 064 4 207 5 033 4 094 3 014 2 961 2 488 1 309Gross profit 1 744 2 266 2 067 2 215 2 827 2 242 1 382 1 595 1 343 755Gross profit margin 39% 50% 51% 53% 56% 55% 46% 54% 54% 58%
Gros
s pro
fit m
argi
n
Reve
nue
and
Gros
s pro
fit in
TDK
K
Quarterly key earnings parameters
30%
35%
40%
45%
50%
55%
60%
-
1 000
2 000
3 000
4 000
5 000
6 000
Q1-2018
Q2-2018
Q3-2018
Q4-2018
Q1-2019
Q2-2019
Q3-2019
Q4-2019
Q1-2020
Q2-2020
Revenue 4 435 4 510 4 064 4 207 5 033 4 094 3 014 2 961 2 488 1 309Gross profit 1 744 2 266 2 067 2 215 2 827 2 242 1 382 1 595 1 343 755Gross profit margin 39% 50% 51% 53% 56% 55% 46% 54% 54% 58%
Gros
s pro
fit m
argi
n
Reve
nue
and
Gros
s pro
fit in
TDK
K
Quarterly key earnings parameters
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 14
Income Statement (condensed) – Group
SEK ‘000
Q3-2020 01-07-2020
-30-09-2020 3 months
Q3-2019 01-07-2019
-30-09-2019 3 months
Q1-Q3-2020 01-01-2020
-30-09-2020 9 months
Q1-Q3-2019 01-01-2019
-30-09-2019 9 months
201901-01-2019-31-12-2019
12 months
Netrevenue 2,038 4,296 7,431 17,145 21,357
Costofgoodssold -906 -2,327 -3,326 -8,045 -9,990
Gross profit 1,132 1,969 4,105 9,100 11,367
Capitalizedownworkperformed 693 980 2,579 2,242 3,427
Otherexternalcosts -1,154 -2,723 -4,289 -7,592 -9,899
Personnelcosts -2,624 -4,703 -9,479 -13,478 -18,149
Depreciationoftangiblefixedassets -246 -372 -1,063 -891 -1,334
Otherincomeandexpenses 1 126 565 353 489
Operating result -2,198 -4,723 -7,582 -10,266 -14,099
Otherfinancialincome 7 27 50 76 91
Otherfinancialcosts -102 -121 -268 -711 -784
Result after financial items -2,293 -4,817 -7,800 -10,901 -14,792
Taxontheprofitoftheperiod 401 467 1,319 1,241 1,845
Net result for the period -1,892 -4,350 -6,481 -9,660 -12,947
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 15
Balance Sheet (condensed) - Group
SEK ‘000 30-09-2020 30-09-2019 31-12-2019
Assets
Non-current assets
Developmentprojectsunderconstruction 10,334 3,168 5,451
Total intangible assets 10,334 3,168 5,451
Otherproperty,plantandequipment 1,089 1,870 2,225
Total tangible assets 1,089 1,870 2,225
Otherlong-termreceivables 1,594 1,580 323
Total financial assets 1,594 1,580 323
TOTAL NON-CURRENT ASSETS 13,017 6,618 7,999
Current assets
Inventories 7,098 8,027 7,242
Total inventories 7,098 8,027 7,242
Tradereceivables 1,298 2,453 2,275
Othershort-termreceivables 508 869 930
Prepaidexpenses 420 617 327
Taxreceivable 0 977 1,821
Total short-term receivables 2,226 4,916 5,353
Cash at bank and in hand 9,738 7,912 17,240
TOTAL CURRENT ASSETS 19,062 20,855 29,835
TOTAL ASSETS 32,079 27,473 37,834
Liabilities and Equity
Equity
Sharecapital 1,561 1,406 1,406
Otherreservesincl.retainedearnings 20,299 15,886 26,866
TOTAL EQUITY 21,860 17,292 28,272
Creditinstitutions 4,039 3,119 3,043
Prepaidincome 706 0 0
Non-current liabilities 4,745 3,119 3,043
Short-termpartofnon-currentliabilities 0 941 918
Tradepayables 1,089 2,349 1,648
Prepaidincome 975 616 504
Otherpayables 3,410 3,156 3,449
Total current liabilities 5,474 7,062 6,519
TOTAL LIABILITIES 10,219 10,181 9,562
TOTAL LIABILITIES AND EQUITY 32,079 27,473 37,834
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 16
Cash Flow Statement (condensed) – Group
SEK ‘000
Q3-2020 01-07-2020
-30-09-2020 3 months
Q3-2019 01-07-2019
-30-09-2019 3 months
Q1-Q3-2020 01-01-2020
-30-09-2020 9 months
Q1-Q3-2019 01-01-2019
-30-09-2019 9 months
201901-01-2019-31-12-2019
12 months
Operating result -2,198 -4,723 -7,582 -10,266 -14,099
Depreciation 246 372 1,063 891 1,334
Paidfinancialcosts -95 -94 -219 -606 -695
Taxpayments 1,819 0 1,819 0 979
Cash flow from operating activities before changes in operating capital -228 -4,445 -4,919 -9,981 -12,481
Operating activities
Changeininventories 239 -389 255 1,237 1,842
Changeincurrentreceivables -596 383 1,389 -18 303
Changeincurrentliabilities -2,288 509 482 101 -677
Cash flow from operating activities -2,873 -3,942 -2,793 -8,661 -11,013
Purchaseoftangibleassets 0 -132 -30 -986 -1,845
Saleoftangibleassets 96 0 136 0 0
Proceedsfromfinancialassets -8 0 51 0 0
Purchaseofintangibleassets -1,418 -1,503 -4,808 -3,179 -5,603
Cash flow from investing activities -1,330 -1,635 -4,651 -4,165 -7,448
Financing activities
Bridgeloan 0 0 0 -6,405 -6,405
Capitalincrease,netofcosts 0 -110 -66 21,975 36,691
Cash flow from financing activities 0 -110 -66 15,570 30,286
Cash flow for the period -4,203 -5,687 -7,510 2,744 11,825
Cash and cash equivalents at period start 13,950 13,581 17,240 5,140 5,140
Exchangeraterecalculationdifference– cashandcashequivalents
-9 18 8 28 275
Cash and cash equivalents at period end 9,738 7,912 9,738 7,912 17,240
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 17
Statement of Changes in Equity (condensed) - Group
SEK ‘000
Q3-2020 01-07-2020
-30-09-2020 3 months
Q3-2019 01-07-2019
-30-09-2019 3 months
Q1-Q3-2020 01-01-2020
-30-09-2020 9 months
Q1-Q3-2019 01-01-2019
-30-09-2019 9 months
201901-01-2019-31-12-2019
12 months
Equity at period start 23,662 21,643 28,272 4,680 4,680
Exchangeadjustments 90 109 135 297 -152
Capitalincrease,netofcosts 0 -110 -66 21,975 36,691
Netresultfortheperiod -1,892 -4,350 -6,481 -9,660 -12,947
Equity at period end 21,860 17,292 21,860 17,292 28,272
Supplementary Income Statement (condensed) - GroupKeyfiguresfromtheincomestatementfortheGrouparepresentedbelowonthebasisoftheunderlyingactivities.Realfictionhastwomainactivities;1)Innovation&Developmentactivities,includingalldirectlyrelatedexpensesincurredinconnectionwiththeInnovation&DevelopmentactivitiesintheGroupand2)Salesactivities,includingallotheractivitiesintheGroup.
Innovation & Development ActivitiesSEK ‘000
Q3-2020 01-07-2020
-30-09-2020 3 months
Q3-2019 01-07-2019
-30-09-2019 3 months
Q1-Q3-2020 01-01-2020
-30-09-2020 9 months
Q1-Q3-2019 01-01-2019
-30-09-2019 9 months
201901-01-2019-31-12-2019
12 months
Capitalizedownworkperformed 693 980 2,579 2,242 3,427
Otherexternalcosts -163 -733 -668 -1,301 -1,138
Personnelcosts -930 -1,183 -3,099 -3,481 -4,775
Depricationoftangiblefixedassets -6 -6 -18 -18 -24
Otherincomeandexpenses 0 17 8 45 62
Operating result -406 -925 -1,198 -2,513 -2,448
Sales Activities SEK ‘000
Q3-2020 01-07-2020
-30-09-2020 3 months
Q3-2019 01-07-2019
-30-09-2019 3 months
Q1-Q3-2020 01-01-2020
-30-09-2020 9 months
Q1-Q3-2019 01-01-2019
-30-09-2019 9 months
201901-01-2019-31-12-2019
12 months
Gross profit 1,132 1,969 4,105 9,100 11,367
Otherexternalcosts -991 -1,990 -3,621 -6,291 -8,761
Personnelcosts -1,694 -3,520 -6,380 -9,997 -13,374
Depreciationoftangiblefixedassets -240 -366 -1,045 -873 -1,310
Otherincomeandexpenses 1 109 557 308 427
Operating result -1,792 -3,798 -6,384 -7,753 -11,651
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 18
Income Statement (condensed) – Parent company
SEK ‘000
Q3-2020 01-07-2020
-30-09-2020 3 months
Q3-2019 01-07-2019
-30-09-2019 3 months
Q1-Q3-2020 01-01-2020
-30-09-2020 9 months
Q1-Q3-2019 01-01-2019
-30-09-2019 9 months
201901-01-2019-31-12-2019
12 months
Operating income
Netrevenue(groupinternal) 150 150 450 450 600
Operating costs
Externalcosts -378 -237 -865 -602 -767
Personnelcosts -68 -194 -214 -477 -649
Operating result -296 -281 -629 -629 -816
Otherfinancialcosts 0 -17 0 -410 -410
Net result for the period -296 -298 -629 -1,039 -1,226
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 19
Balance Sheet (condensed) – Parent company
SEK ‘000 30-09-2020 30-09-2019 31-12-2019
Non-current assets
Financial assets
Sharesinsubsidiary 44,842 26,911 44,842
Total financial assets 44,842 26,911 44,842
TOTAL NON-CURRENT ASSETS 44,842 26,911 44,842
Current assets
Intercompanyreceivables 4,932 11,406 0
Otherreceivables 65 65 63
Prepaidexpenses 118 116 82
Total short-term receivables 5,115 11,587 145
Cash at bank and in hand 8,966 6,926 14,975
TOTAL CURRENT ASSETS 14,081 18,513 15,120
TOTAL ASSETS 58,923 45,424 59,962
Liabilities and Equity
Equity
Sharecapital 1,561 1,406 1,406
Otherreserves 57,538 44,269 58,985
Netresultoftheperiod -629 -1,039 -1,226
TOTAL EQUITY 58,470 44,636 59,165
Tradepayables 163 0 0
Otherpayables 290 788 797
Total short-term liabilities 453 788 797
TOTAL LIABILITIES 453 788 797
TOTAL EQUITY AND LIABILITIES 58,923 45,424 59,962
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 20
DEFINITIONS Solvency ratio:Equityasapercentageofthebalancesheettotal.KeyratiosofequityarepresentedtoprovideabetterunderstandingofRealfiction’slong-termabilitytopayitsdebt.Earnings per share:Netresultoftheperioddividedwithaveragenumberofsharesfortheperiod.Earningspershareforperiodsarenegative,thereforenodilution.Gross profit:Netturnoveraftercostsforgoodssold.Gross profit margin:GrossprofitasapercentageofNetrevenue.Net operating cost: ItemsbetweenGrossprofitandOperatingresultintheincomestatement.
”Realfiction” or the ”Company” referstotheGroup,namelyRealfictionHoldingAB(registeredundercompanyregistrationnumber559110-4616)anditswhollyownedsubsidiariesRealfictionApSandRealfictionLabApS.RealfictionApSandRealfictionLabApS,theGroup’soperatingsubsidiaries,werefoundedin2008and2019.RealfictionHoldingABwasformedinApril2017bywayofanon-cashissueinwhichthesharesinRealfictionApSwereexchangedforsharesinRealfictionHoldingAB,whichresultedintheGrouprelationship.
Picture above: Dreamoc XL3 used by Polytech at China Wind Power 2020 in Beijing, China
REALFICTION HOLDING Q3 INTERIM REPORT 2020 / 21
CREATING MAGICAL MOMENTS THROUGH TECHNOLOGY
RealfictionHoldingAB|Terminalgatan1,25278Helsingborg|Sweden|+4570206490|[email protected]|www.realfiction.com