Elmo Rent
Interim information

ELMO Rent AS unaudited interim financial statements for the six months period ended 31 December 2023

Management report

ELMO Rent AS (hereinafter referred to as ELMO Rent) has, since the Supervisory Board's decision dated 22.12.2022, begun separating its short-term rental and remote-control technology business lines into subsidiaries. This initiative aims to clarify business directions, facilitate capital infusion according to the business model, and enhance sustainability. 

While technology development and sales have transitioned to separate subsidiary companies with ongoing active investment inflow, the rental aspect remains partly within ELMO Rent. The expansion of the rental business line has heavily relied on raising own funds and financial resources, which, given the current challenging financial landscape, has not secured sufficient additional capital. 

Coupled with the postponement of the 2023 peak season by about a month due to general changes in consumer behavior, this has led the rental business line to incur larger losses. Despite somewhat increased revenue per car and a justification for the revised business strategy (delivering rental cars directly to customers doorsteps), the overall income has not risen as planned. Additionally, losses have expanded due to significantly increased costs related to the car fleet, operations, and the development of the necessary IT system. 

ELMO Rent has begun searching for a partner or buyer for the short-term rental business line. Until a new partner is found, ELMO Rent has reorganized and implemented measures to reform the short-term rental service, now focusing solely on serving long-term rental and courier service customers. At the year's end, with the begging of the slow season, the company paused the service of short-term sharing and pre-ordering freely rented cars, during which it also reduced its fleet from 120 to 50 in a short period. That lead to the return of most cars to lessors and resulting in additional lost sales profit on self- sales of the cars (since the secondary market for electric cars has been inactive from the end of 2022, often resulting in the lease balance being higher or equivalent to the car sales prices on the market). 

On November 18, 2023, ELMO Rent submitted an application to the Harju County Court to initiate a restructuring process, which was approved by the court on December 6, 2023.  

ELMO Rent applied for the initiation of the restructuring process for the following reasons: 

• The expansion of the rental business line, which has depended on additional equity and financial resources, and the smaller amount raised has led to an increase in losses in the rental business line; 
• High development and sales costs of the technology business line, which have not yet been covered by revenues; 
• Delay in the ongoing raising of additional investments (planned closing August 2023).  

As a result of the above, ELMO Rent's consolidated unaudited revenue decreased in the second half of 2023 compared to the second half of 2022, from 873 051 euros to 209 054 euros, a decrease of 76%. The sales revenue from rental services was most affected by the discontinuation of the sharing and pre-ordering service of freely rentable cars, which caused a decrease in short-term rental sales revenue of 80.8% (97 291 euros in the second half of 2023 versus 506 927 euros in the second half of 2022). The significant decrease in turnover was also caused by the lower sales of older cars, i.e., a decrease in the sales revenue of older car fleet (88 090 euros in the second half of 2023 versus 364 910 euros in the second half of 2022, a decrease of 75.9%). The total loss for the period was 1 630 878 euros (the same period in 2022 -739 753 euros).  

The balance sheet total of ELMO on 31.12.2023 was 3 548 122 euros (31.12.2022: 3 625 569 euros), a decrease of 2% compared to the same period in 2022. Current assets comprised 351 777 euros of the total assets (31.12.2022: 747 216 euros), i.e 9.9% of total assets. Fixed assets comprised 3 196 345 euros (31.12.2022: 2 878 353 euros), i.e 90.1% of the balance sheet total. The liabilities of ELMO Rent totalled 4 336 461 euros (31.12.2022: 3 047 577 euros) and the company's equity amounted to -788 339 euros (31.12.2022: 577 992 euros).  

The company reduced its workforce by 40% during the optimization of the rental business line. In the second half of 2023, the company had an average of 21 employees. Labor costs (including taxes) in the second half of 2023 amounted to 365 205 euros (compared to 487 113 euros in the second half of 2022). 

Activities of 2024 

The goals of ELMO Rent are:

• Streamlining the environmentally friendly vehicle sharing service and selecting a new partner to ensure the sustainability of the company and to revive and expand the rapidly growing new business strategy of "doorstep delivery service"; 
• Continuing the development and sales acceleration of remote-control technology in the subsidiary, maintaining the achieved international momentum, and securing additional capital from investors. 

ELMO Rent has contributed and will continue to actively contribute through the subsidiary company to the development of remote technology with the introduction of the service on public streets, which provides a prerequisite for strong sales growth in the future and for selling on international markets. 

ELMO Rent also works actively with companies in the field, the Transport Administration, the Ministry of Economic Affairs and Communications, the Police and Border Guard Board, and others in the steering group of the Traffic Act and technical conditions concerning remote-control and self-driving vehicles, with the aim of establishing new requirements. The amendments to the Act and the requirements also serve as an input to the same documents to be drawn up by the EU Commission. In addition, ELMO Rent continues to actively contribute to obtaining special permits in all target countries and cities. 

Consolidated balance sheet

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Consolidated income statement

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Consolidated statement of cash flows

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Consolidated statement of changes in equity

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A more detailed overview of the results of ELMO Rent AS for the second half of 2023 can be found in the attached document.

Additional information:

Priit Haljak

Member of the Advisory Board

Enn Laansoo Jr

Member of the Management Board

enn@elmorent.ee