Reasons for the difference between the projected and actual results of AS Bercman Technologies for the 2021 financial year.
AS Bercman Technologies' (hereinafter Bercman) estimated sales turnover published in June 2021 for the financial year was 309 921 euros. On the basis of the 12 month interim report published on 5th of April 2021, the actual sales turnover was 76 096 euros.
The company hereby provides an explanation of the difference between the projections and the actual result. Bercman did not meet the projections planned for 2021 due to the change in the circumstances that led to the projections, changes in the business model and macroeconomic reasons.
The projections took into account the potential sales turnover of known procurements which, for various reasons beyond Bercman's control, were either delayed to the next financial year or otherwise lost.
In addition, the company changed the business model on which it was based, according to which operations in foreign markets were carried out through resellers, and direct sales continued only in Estonia. Based on previous direct sales experience, Bercman expected the dealer network to be activated more quickly, but the sales cycle turned out to be longer than expected and thus the sales performance postponed to the next financial year. Since Bercman's main product the smart pedestrian crosswalk is novel and innovative solution, it is necessary to obtain approvals for the use of the device in public spaces in foreign markets. These processes can be time-consuming, above all because of the appropriate administrative procedures needed. However, all markets have previously received the corresponding approvals, so there is no reason to assume that it will become a substantive obstacle in the future. Bercman has made efforts to ensure that the product meets all known requirements. Currently, the company estimates the period of 6-12 months to reach sales results with new resale partners. In 2022, it is planned to expand to new markets in Europe. Sales communication is underway in 16 new markets to find distribution partners and to start pilot projects.
As regards the projections, it was also assumed that a higher number of product units would be shipped in 2021. Macro-economically, the availability of product components was somewhat hampered and delivery deadlines extended due to the negative impact of the coronavirus (COVID-19) pandemic on the global economy. As a result, the deadlines for fulfilling the sales targets were partly extended and the planned deliveries to customers were partly shifted to the current year. Thus, in the first quarter of this year, the installation of smart pedestrian crosswalk took place in Tallinn on the Tehnopol and Ülemiste campus and in Haapsalu. Also, the smart pedestrian crosswalk devices were delivered to Switzerland and Lithuania at the beginning of 2022 instead of the previously planned end of 2021.
The company's reporting period in 2021 ended with a loss of 593 252 euros. In the forecasts published in June 2021, Bercman estimated the loss at 93 783 euros.
Losses were higher due to expenses made for the growth and development of the company, the further development of its own product, investments in intangible assets and non-recurring expenses related to the initial public offering and admission to trading of shares. The work revealed the need for additional professional competencies, which were previously lacking in Bercman and for which new employees were recruited. Losses were also projected before the company took a decision on the acquisition of Krakul OÜ. This decision also entailed one-off costs for the preparation and execution of the transaction.
Bercman is a high-tech company founded in 2016, whose main activity is the development and sale of products and services that increase traffic safety. Bercman’s mission is to eliminate road deaths, and its vision is to become an internationally leading partner in the market for smart city solutions. In addition, the company wishes to contribute to the spread of self-driving vehicles. Considering the prospects regarding the distribution of automatic and autonomous vehicles, the company believes that the development of the field is promising and offers good opportunities for the company's rapid global expansion. The Bercman group includes the development company of the Internet of Things and autonomous systems Krakul OÜ.
Additional Information:
Mart Suurkask, CEO
AS Bercman Technologies
Telephone: +37 253 402 902
E-mail: mart.suurkask@bercman.com
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