Ranplan Group AB – Interim Report Jan - Jun 2023

2023-08-24 08:00 CET

The period in summary

First half of 2023 (first half of 2022)

• Total income amounted to SEK 11.6 million (13.8 million)1
• Net sales amounted to SEK 6.2 million (8.0 million)
• Operating income amounted to SEK -14.2 million (-13.7 million)
• Net income amounted to SEK -15.5 million (-13.7 million)
• Earnings per share amounted to SEK -0.51 (-0.45)
• Cash flow from operations amounted to -SEK 10.7 million (-13.5 million)
• Cash at the end of the period amounted to SEK 11.6 million (3.9 million)

Significant events in the first half of 2023 and year-to-date

• On 24 April 2023, at the AGM in Stockholm, it was resolved that Tomas Isaksson be re-elected as chairman, and that Jie Zhang, Wendy Yang and Jon Ullmark be re-elected as ordinary members of the board.
• On 3 July 2023, Ranplan Wireless announced a significant order related to network design services.  The order, valued at around SEK 2.5 million, is expected to be substantially revenue recognised in the second half of calendar 2023. The project – associated with additional man-hours – will be dilutive to the gross margin which absent any services elements has had a history of hovering above 95%. 

1 Total income comprises the sum of net sales (related to commercial products and services), other income (associated with research projects) and other operating income (derived from R&D tax credits).
 

Words from the CEO

An unusually soft start to the year, especially in January – February, caused a decline in net sales in the first six months of 2023.  A healthy improvement in order intake, however, was registered towards the end of the period, culminating in a ground-breaking private wireless contract in the Americas which involves the provision of not only software but also expert design services to master a prestigious project.

Income from research-related activities, as anticipated, saw a modest decrease as the positive impact of a recovery in new grants was more than offset by materially lower contribution from tax credits (as a direct effect of changes in the criteria concerning financial support, see page 18 for further clarifications).

Losses from operations, excluding the effects of the depreciation of the SEK, were essentially unchanged. Measures to contain costs in an inflationary environment and maximise efficiency gains through process refinements helped. Courtesy of a net release of working capital, cash flow from operations improved.

While cash on hand of SEK 11.6 million at the end of June, up from SEK 5.1 million six months earlier and SEK 3.9 million twelve months ago, together with the undrawn portion of the credit line of SEK 20 million, provides quite a robust cushion for the remainder of the year, the Board of Directors - authorised at the most recent AGM to decide on a directed issue - continually evaluate various sources of additional funds with the aim of realising the Company’s capacity to foster long-term shareholder value in the long-run.

Although our commercial revenues and total income diminished in the beginning of 2023, our confidence in our ability and motivity has not.  In the course of the first half of 2023, we have been reassured by several important engagements that we possess very competitive products, that we are uniquely placed to help our customers become successful in the field of Private Wireless and that we, collectively and individually, continually demonstrate (and have demonstrated) unwavering stamina (strength) to navigate with agility and speed in times better or worse.

Customer interactions, resulting in detailed case studies and field trials demonstrate vividly the attractiveness of our suite of tools, not only for in-building design but also, importantly, for an unrivalled mastery of HetNets – the sophisticated art of handling in- and outdoor networks in complete coordination and unison (for which interference analytics and utmost accuracy play pivotal roles).  Whilst the bandwagon surrounding Private Wireless (also known as dedicated (wireless) networks) has yet to obtain widespread traction, recent developments suggest that an acceleration is well underway. We will seek to stimulate this segment in close cooperation with selected partners by offering design services using both internal and external resources with documented proficiency in using our tools.

Provision of design services with the help of both internal and external resources constitutes a catalyst to creating broad market acceptance, expanding our sales trajectory, and cementing customer relationships. With the advent of 5G (and 6G in the coming) for industrial applications (including manufacturing and warehousing), customers increasingly frequently turn to us for turn-key solutions – through which a total package of products and services can be purchased. We stand well prepared to meet these requirements with a comprehensive suite of software and a large group of highly qualified radio engineers trained and certified on our tools. We can help clients get the quality right from day one.

Go-to-market partnerships constitute a centrepiece of our strategic imperatives. By liaising with commercially motivated and technically competent sales organisations and representatives (including freelancing individuals or teams), we will be able to establish a firm local presence and enhance our visibility within our niche community without much additional effort in terms of capital and physical resources. So far in 2023, we have entered into agreements with several entrenched resellers in India, Africa and the Middle East with a number of interesting prospects opening up in the near-term pipeline. 

With the help of many more ears and eyes on the ground, we will be better positioned to explore new opportunities, such as upcoming tenders, where we enjoy a competitive edge, can offer a strong value proposition and hence stand a good chance of a successful outcome. Given the diverse nature of the industry in which we operate, selectivity will remain a critical decision criterion. Experience from North-East Asia, notably China, Hongkong, Japan, South Korea and Taiwan serves to underscore these points. 

Like the information technology and wireless industry at large, we have adapted and will continue to adapt to adverse changes in the external environment.  We did so as the exceedingly business-restrictive effects of the covid-pandemic became clear; we did so again in reaction to the broader ramifications of the expanded war in Ukraine; we did so in response to the repercussions of soaring inflation and cost of capital on a global scale; and, we do so today, in a direct riposte to the reverberations of a downturn in telecom investments.  The overarching objective, in the past as well as now, is to lower our costs, bolster our productivity and sharpen our focus on profitability. In so doing, we make ourselves stronger for longer.

Whilst, as customary, we refrain from providing any guidance, we have noted considerably healthier order intake in the beginning of the second half than in the first. Therefore, barring any unforeseen events (of which there have been plenty in recent years), we would be inclined at this juncture to expect a noticeable rebound in net sales in the latter part of calendar 2023. These remarks notwithstanding, we will closely monitor the situation, embark on streamlining measures where necessary and narrow our focus in terms of product development. Thanks to the operating leverage built into our commercial model, we know that it does not take much in the way of additional contracts (of significance and scale) for us to produce cash flow margins typical of companies running a pure or nearly pure software licensing business.  In parallel, provision of network design services should be accretive to sales growth and the bottom-line. 

Per Lindberg, CEO

The complete report is attached to this press release and is available at https://www.ranplanwireless.com/gb/investors/

This disclosure contains information that Ranplan Group AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the contact person, on 24-08-2023 08:00 CET.