Management report
AS Bercman Technologies (hereinafter “Bercman”) announces its unaudited consolidated results for the second half and 12 months of 2022. Bercman’s sales revenue of the 2022 was 1 755 741 euros. For the comparable period in 2021, turnover was EUR 76 096. From 2022, the results of Bercman's subsidiary Krakul OÜ (hereinafter "Krakul") are reflected in the consolidated results of the Bercman Group.
New markets and expansion in existing markets
In the second half of 2022, new generation smart pedestrian crosswalks were delivered to export markets in Greece and the UK. Several smart safety systems were installed in Narva-Jõesuu, Elva and Haapsalu.
In Greece and the United Kingdom, framework agreements for the resale of in-house developed products were signed with local companies. In Greece, a five-year contract was signed with Eur.Elec Ltd, a local transport infrastructure maintenance and installation company. In the United Kingdom, a two-year resale contract was signed with Clearview Intelligence Ltd, an ITS technology company. Cooperation was launched with 1oT, a data service provider for the Internet of Things market, for the use of 1oT eSIM cards in smart transport infrastructure devices.
In a joint bid with Krakul, the Põlva Smart Road re-tender has been won, which will see the construction of a 2.5 km stretch of road in the city of Põlva with 14 smart crosswalks and average speed measurement capability. At the time of reporting, the contract for the works has not yet been signed.
Krakul continued to work with long-term customers and customer projects and companies from both Estonia and foreign markets were added to the client portfolio. IoT and autonomous systems solutions were exported to the UK, Germany, Switzerland, Finland, Latvia, Singapore and the USA.
To increase its network of contacts and export opportunities, the company's team attended the Smart City Expo World Congress in Barcelona in November, together with representatives from Krakul. Smart City Expo is one of the world's leading events on smart city developments and opportunities.
Research and development
In autumn 2022, the development project "SmartWalk", funded by the German Ministry of Transport and Infrastructure, was completed with the participation of Bercman. The project was carried out in cooperation with the University of Hamburg and technology companies NATIX GmbH, HITeC e.V. and Artificial Intelligence Center Hamburg (ARIC). During the project, a smart crosswalk with cameras and radars was installed on Lammi Road in Tartu, testing innovative artificial intelligence technologies to improve traffic safety.
During 2022, several further developments were carried out within the framework of the Estonian-Norwegian cooperation programme "Green ICT", which aims to develop an environmentally friendly demand-driven mobility platform (VEDAS). The platform is integrated into a network of smart bus stops.
Tertiary public offering of company shares
During the period from 4 to 14 October, the company carried out a tertiary public offering of shares. A total of 97 684 shares were subscribed during the offer period by 392 investors for a total value of EUR 293 052.
Economic results
The reporting period ended with a loss of 746 323 euros (12 months of 2021 a loss was EUR 593 252). Loss is due to expenses made for the growth and development of the company, the further development of its own product, and non-recurring expenses related to public offerings and admission to trading of shares.
As of 31.12.2022, the company's balance sheet total was 2 008 262 euros (31.12.2021: EUR 2 144 947). Current assets amounted to 557 671 euros (31.12.2021: EUR 659 578). Fixed assets amounted to 1 450 591 euros (31.12.2021: EUR 1 485 369). The company's equity as of 31.12.2022 was 1 468 769 euros (31.12.2021: EUR 1 644 819). As of 31.12.2022, the company had 73 658 euros in loan liabilities (31.12.2021: EUR 28 472).
As of 31.12.2022, there is one member of the Management Board, three of the Supervisory Board in Bercman, and one of the Management Board in Krakul. A total of 20 specialists works in the Bercman Group. The Group's labour costs with labour taxes amounted to EUR 1 336 499 in 2022 (12 months 2021: EUR 384 855).
In macroeconomic terms, in 2022, the company's operations were impacted by the Russian-Ukrainian war, which created uncertainty and caused delays in customer decisions and project progress. Projects already in progress were not cancelled by customers due to the instability caused by the war but some of them were postponed until 2023. The second half of the year was further impacted by accelerating inflation and rising input prices in the energy market, which were accompanied by some increases in component input prices.
The financial results for the reporting period are presented below.
Consolidated statement of financial position
(in Euros)
| 31.12.2022 | 30.06.2022 | 31.12.2021 | 30.06.2021 | |
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | 260 157 | 309 473 | 378 023 | 825 715 |
| Receivables and prepayments | 206 665 | 239 958 | 158 412 | 12 088 |
| Inventories | 90 849 | 84 396 | 123 143 | 74 940 |
| Total current assets | 557 671 | 633 827 | 659 578 | 912 743 |
| Non-current assets | ||||
| Property, plant and equipment | 32 175 | 39 092 | 37 110 | 27 866 |
| Intangible assets | 1 418 416 | 1 488 443 | 1 448 259 | 145 872 |
| Total non-current assets | 1 450 591 | 1 527 535 | 1 485 369 | 173 738 |
| Total assets | 2 008 262 | 2 161 362 | 2 144 947 | 1 086 481 |
| Liabilities and equity | ||||
| Liabilities | ||||
| Current liabilities | ||||
| Loan liabilities | 73 658 | 210 797 | 28 472 | 42 891 |
| Payables and prepayments | 417 715 | 430 882 | 462 666 | 240 704 |
| Provisions | 44 295 | 41 809 | 4 168 | 4 168 |
| Total current liabilities | 535 668 | 683 488 | 495 306 | 287 763 |
| Non-current liabilities | ||||
| Loan liabilities | 3 825 | 7 384 | 4 822 | 0 |
| Government grants | 0 | 0 | 0 | 23 310 |
| Total non-current liabilities | 3 825 | 7 384 | 4 822 | 23 310 |
| Total liabilities | 539 493 | 690 872 | 500 128 | 311 073 |
| Equity | ||||
| Equity held by shareholders and partners in parent company | ||||
| Issued capital | 143 903 | 134 135 | 129 847 | 119 847 |
| Unregistered equity | 0 | 0 | 0 | 0 |
| Share premium | 2 412 758 | 2 129 474 | 1 868 788 | 1 097 788 |
| Other reserves | 486 169 | 474 792 | 473 922 | 156 |
| Retained earnings (loss) | -827 738 | -827 738 | -234 486 | -234 486 |
| Annual period profit (loss) | -746 323 | -440 173 | -593 252 | -207 897 |
| Total equity held by shareholders and partners in parent company | 1 468 769 | 1 470 490 | 1 644 819 | 775 408 |
| Total equity | 1 468 769 | 1 470 490 | 1 644 819 | 775 408 |
| Total liabilities and equity | 2 008 262 | 2 161 362 | 2 144 947 | 1 086 481 |
Consolidated income statement
(In Euros)
| 2022 |
2022 01.07-31.12 |
2021 |
2021 01.07-31.12 |
|
| Revenue | 1 755 741 | 962 306 | 76 096 | 72 981 |
| Other income | 17450 | 17 450 | 51 150 | 31 282 |
| Work performed by entity and capitalised | 157 075 | 53 949 | 130 178 | 85 388 |
| Raw materials and consumables used | -587 847 | -348 816 | -146 345 | -134 037 |
| Other operating expense | -506 627 | -217 638 | -231 571 | -138 001 |
| Employee expense | -1 336 499 | -621 792 | -384 855 | -240 553 |
| Depreciation and impairment loss (reversal) | -224 870 | -136 840 | -75 938 | -55 280 |
| Other expense | -5 705 | -4 491 | -1 796 | -212 |
| Operating profit (loss) | -731 282 | -295 872 | -583 081 | -378 432 |
| Interest expenses | -14 741 | -10 293 | -8 870 | -6 407 |
| Other financial income and expense | -300 | 15 | -1301 | -516 |
| Profit (loss) before tax | -746 323 | -306 150 | -593 252 | -385 355 |
| Annual period profit (loss) | -746 323 | -306 150 | -593 252 | -385 355 |
| Profit (loss) from shareholders and partners in parent company | -746 323 | -306 150 | -593 252 | -385 355 |
Consolidated statement of cash flows
(in Euros)
| 2022 |
2022 01.07-31.12 |
2021 |
2021 01.07-31.12 |
|
| Cash flows from operating activities | ||||
| Operating profit (loss) | -731 282 | -295 872 | -583 081 | -378 432 |
| Adjustments | ||||
| Depreciation and impairment loss (reversal) | 224 870 | 136 840 | 75 938 | 55 280 |
| Profit (loss) from the sale of fixed assets | 1 317 | 0 | 0 | 0 |
| Other adjustments | -4 674 | -5 496 | -39 770 | -20 116 |
| Total adjustments | 221 513 | 131 344 | 36 168 | 35 164 |
| Changes in receivables and prepayments related to operating activities | -48 253 | 33 293 | -52 517 | -40 929 |
| Changes in inventories | 32 294 | -6 453 | -19 994 | -13 939 |
| Changes in payables and prepayments related to operating activities | -17 512 | -20 070 | 48 715 | 5 374 |
| Interest received | 34 | 18 | 24 | 24 |
| Proceeds from government grants | 16 920 | 16 920 | 38 596 | 7 972 |
| Total cash flows from operating activities | -526 286 | -140 820 | -532 089 | -384 766 |
| Cash flows from investing activities | ||||
| Purchase of property, plant and equipment and intangible assets | -187 749 | -59 896 | -178 807 | -119 735 |
| Received from property, plant and equipment and intangible assets | 83 | 0 | 0 | 0 |
| Net cash flow from acquisition of subsidiaries and operating activities | 0 | 0 | 65 095 | 65 095 |
| Total cash flows from investing activities | -187 666 | -59 896 | -113 712 | -54 640 |
| Cash flows from financing activities | ||||
| Loans received | 200 000 | 0 | 156 100 | 0 |
| Repayments of loans received | -156 061 | -138 796 | -114 346 | -16 830 |
| Interest paid | -2 387 | -955 | -3 642 | -1 456 |
| Repayments of finance lease liabilities | -3 492 | -1 901 | 0 | 0 |
| Proceeds from issuing shares | 558 026 | 293 052 | 975 985 | 10 000 |
| Total cash flows from financing activities | 596 086 | 151 400 | 1 014 097 | -8 286 |
| Total cash flows | -117 866 | -49 316 | 368 296 | -447 692 |
| Cash and cash equivalents at beginning of period | 378 023 | 309 473 | 9 727 | 825 715 |
| Change in cash and cash equivalents | -117 866 | -49 316 | 368 296 | -447 692 |
| Cash and cash equivalents at end of period | 260 157 | 260 157 | 378 023 | 378 023 |
Consolidated statement of changes in equity
(in Euros)
| Equity held by shareholders and partners in parent company | ||||||
| Issued capital | Unregistered equity | Share premium | Other reserves | Retained earnings (loss) | Total | |
| 31.12.2021 | 129 847 | 0 | 1 868 788 | 473 922 | -827 738 | 1 644 819 |
| Annual period profit (loss) | -440 173 | -440 173 | ||||
| Issue of equity | 4 288 | 260 686 | 264 974 | |||
| Changes in reserves | 870 | 870 | ||||
| 30.06.2022 | 134 135 | 0 | 2 129 474 | 474 792 | -1 267 911 | 1 470 490 |
| Annual period profit (loss) | -306 150 | -306 150 | ||||
| Issue of equity | 9 768 | 283 284 | 293 052 | |||
| Changes in reserves | 11 377 | 11 377 | ||||
| 31.12.2022 | 143 903 | 0 | 2 412 758 | 486 169 | -1 574 061 | 1 468 769 |
Estimation revision
Company's Management Board has decided to lower the consolidated turnover forecast presented on 04.10.2022 for 2023 from EUR 3,1 million to EUR 2,1 million and the turnover forecast for 2024 from EUR 6,53 million to EUR 2,5 million. The company is revising its forecasts published in 2022 based on a pessimistic overall economic outlook, a slowdown in economic growth and uncertainty caused by the Russian-Ukrainian war.
Due to the tight economic situation, there is currently less receptivity to the introduction of new solutions, and local authorities have put the brakes on investments. As a result, the company does not expect a big increase in turnover from the sale of transport infrastructure solutions this year, but it does expect the realisation of the projects prepared last year as planned. In development services, sales are expected to grow steadily through the addition of new customer projects.
Mart Suurkask, CEO of Bercman: “Although 2022 was a challenging year, we finished on track with the turnover forecast we set last year. We have decided not to raise any additional money from the stock exchange this year and plan to manage the year within our resources. To optimise operating costs, we changed the company's structure and are focusing on sales of proprietary products and development services. In the current economic situation, it is necessary to revise the forecasts for 2023 and 2024, as last year's recession and analysts' rather pessimistic outlook for the current year do not give reason to expect a big increase in sales of own products. However, we see some turnover growth compared to 2022 through the addition of new development service customers, and we will continue to work towards steady growth. There is a lot of uncertainty in the economy today, but we are resilient and continue to focus on growth opportunities, and as the economic environment stabilises, we are ready to set new, more ambitious targets for our business.”
Bercman is a technology company founded in 2016 that focuses on developing and selling smart city and mobility technologies and products to European markets. Bercman's subsidiary Krakul is a developer of Internet of Things and autonomous mobility systems, founded in 2013. Krakul and Bercman together form the Bercman Group. Together, they implement the Bercman Group's development objectives, bring cost-effective product solutions to more markets and reach out with development services to the fast-growing and promising areas of smart cities and smart living in general.
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