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Published: 2021-08-31 07:36:49 CEST
Elmo Rent
Annual report

ELMO Rent AS unaudited Interim Financial Statements for the Six Months Period Ended 30 June 2021

ELMO Rent AS has been doing better than planned this year. Thanks to the successful IPO, the company exceeded its investment plan for the first half of 2021 and therefore increased its sales revenue by 126%.

ELMO Rent's environmentally friendly vehicles sharing, mainly in the streets of Tallinn, Tartu and Pärnu, resulted in keeping unreleased of 87,181 kg of CO2 into the air in the first half of 2021, which is also a significant increase of 127% compared to the previous year.

Thanks to the successful IPO, ELMO Rent increased investments in its technology solutions, such as fleet management software, car controller and a remote-controlled car. The best domestic environmentally friendly car sharing app was also developed in the first half of 2021, the time of market entry of the app will be announced in September.

Thanks to investing in the development of technologies, the use of the company's services will become even easier than before, the communication of campaigns to customers will be more efficient and it will make coming up with new services easier in the future. The development of promising technological solutions provides the company with a competitive advantage for sustainable growth both in the domestic market and when entering new markets.

But growth and development were not limited to software. In the first six months of 2021, ELMO Rent's vehicle fleet grew up to 121 units. Compared to the first six months of 2020, the growth was 101%. Therefore, the company's fixed assets increased by 62% and made 1.97 million euros compared to the end of the year.

The growth of fixed assets was financed primarily with funds received from the IPO and leveraged with loans and leases, which increased the company's debt burden by 0.4 million euros up to 1.8 million euros by the end of the period.

ELMO Rent sales revenue increased by 126% in the first six months of 2021. While the sales revenue of the first six months of 2020 was 134,000 euros, this year 303,000 euros were earned during the same period. This is within the planned scope, because although the preconditions for exceeding the plan were created, our operations were affected by the following circumstances:

1) Manufacturers’ delivery delays of electric cars and e-motorcycle. The new vehicles arrived and started earning revenue only at the end of June, therefore their impact on rental sales will not become apparent until the second half of the year.

2) Longer preparation time of the new vehicles than planned. It took more time than expected to get to know the new vehicles, install the controllers and interface them, due to the increased volume and insufficient human resources.

3) To increase market share and revenue, we launched electric motorcycles in June, and in August also premium cars. Their impact on turnover will become clear during this half-year. However, investments necessary to launch both new business lines we made in the first half of the year.

Expansion of the fleet with the new environmentally friendly vehicles also directly affected the availability and quality of ELMO Rent's services. ELMO Rent vehicles covered CO2-free kilometers mostly in Tallinn, Tartu and Pärnu. If last year a total of 313,476 kilometers were covered during the first six months of the year, then this year 714,604 kilometers within six months. 87181 kg of CO2, which is also a significant increase of 127% compared to the previous year.

After the successful IPO, ELMO Rent recruited new people for its team, which was inevitably reflected in the company's cost base. The following growth items mainly increased the cost base:

1) Labor costs amounted to 35,700 euros in the first half of 2021, while labor costs for the whole of 2020 were 39,000 euros. Today, the company has ten employees with employment contracts and five employees with service contracts. The supervisory board of the company's shareholders is also engaged full-time. Within half a year, the ELMO Rent’s team has doubled, and the company will continue to create new jobs while growing.

2) To grow its vehicle fleet, ELMO Rent has taken additional financial liabilities, which has also led to an increase in interest expenses. The interest expense for the first half of 2021 was 59,500 euros, while the total interest expense for 2020 was 77,000 euros. To optimize this cost, the company has started also refinacing expensive interest rates.

3) Investing into new business lines. However, initially the inclusion of private cars in the vehicle fleet resulted in a loss of EUR 11,000 in the first half of the year. This was mainly due to:

a) Starting a new business line in the low season

b) In order to attract new and attractive cars to the vehicle fleet, we launched an aggressive "1000 euro per month campaign", ie during the first three months ELMO Rent guaranteed owners of the shared cars a payment of 1000 euros per month, regardless of the rental income actually earned by the car.

c) The techincal integration of some new models into our fleet and sharing service turned to be more difficult than expected. It took significantly more time than we planned, which meant unearned income for us from the parked cars. 

In conclusion, ELMO Rent evaluates the costs and difficulties of starting the new business line as a valuable experience and investment in the future. There is still potential for this business line, business line growth is increasing monthly and new opportunities appear for faster business growth. Moreover, the involvement of private cars ensures growth without raising additional capital.

In summary, ELMO Rent EBITDA for the first half of the year amounted to minus 9,500 euros, while EBITDA for the whole of 2020 was 194,000 euros.

The management and the supervisory board of ELMO Rent are of the common opinion that due to the preliminary work in the first half of 2021 (investments, growth of assets, expansion of the team and bearing of losses), the company will exceed its plans for the second half of the year. This is confirmed by the financial results of the first two months, July and August, of the second half of the year.