Veg of Lund AB: Interim Report, January - September 2021
Great market interest prepares the ground for the future
- Net sales for the third quarter amounted to TSEK 610 (544).
- Operating profit before depreciation and amortization (EBITDA) amounted to TSEK -5,933 (-3,671), and EBIT amounted to TSEK -6,061 (-3,788).
- Net profit amounted to TSEK -6,178 (-3,769).
- Net sales amounted to TSEK 1,269 (825).
- Operating profit before depreciation and amortization (EBITDA) amounted to TSEK -13,513 (-13,939), and EBIT amounted to TSEK -13,875 (-14,281).
- Net profit amounted to TSEK -14,035 (-14,629).
Significant events July–September 2021
- The UK’s leading online store for vegan food launched DUG®.
- Veg of Lund carried out a directed issue of units of approximately MSEK 30 and an issue of warrants to existing shareholders.
- Agreements were concluded with several of the nationwide grocery store chains and major online stores in Sweden.
- Walmart-owned Sam’s Club opened a flagship store in Shanghai, introducing DUG®.
- Member of the board Thomas Olander stepped down from the Board of Directors.
- The company conducted a directed issue of 36,822 shares following a request for conversion from lenders in the bridge facility.
- Emma Källqvist took up position as new CFO as of 1 July.
Significant events after the period
- The company conducted a directed issue of 78,080 shares following a request for conversion from lenders in the bridge facility.
- The organization was strengthened with a Supply Chain Responsible.
- UK chain Gourmet Coffee Bar & Kitchen and the coffee specialist Bean 14 introduced DUG®.
- The UK food chain Waitrose expanded its plant-based range to include DUG®.
Summary of the Group’s indicators
| Full year
|Gross margin, %||21||32||24||35||33|
|EBITDA margin, %||Neg.||Neg.||Neg.||Neg.||Neg.|
|Operating profit (EBIT)||-6,061||-3,788||-13,875||-14,281||-17,785|
|EBIT margin, %||Neg.||Neg.||Neg.||Neg.||Neg.|
|Net profit for the period||-6,178||-3,769||-14,035||-14,629||-18,348|
|Profit margin, %||Neg.||Neg.||Neg.||Neg.||Neg.|
|Earnings per share before and after dilution, SEK||-0,54||-0.36||-1,28||-1,45||-1.80|
|Equity/assets ratio, %||76||85||76||85||70|
|Equity per share, SEK||2.18||0.94||2.18||0.94||0.60|
|Balance sheet total||34,791||11,671||34,791||11,671||9,063|
|Cash flow from operating activities||-8,172||-2,913||-17,928||-15,238||-17,899|
|Average number of employees||6||3||4||2.5||2.5|
|This interim report and other financial information and press releases are available on the company's website, ir.vegoflund.se|
A word from the CEO
Ready for growing sales in additional markets
Veg of Lund and our new brand DUG® have in a short period of time won the market's clear approval as the first and only potato beverage in the world. Veg of Lund aims to be the most sustainable company in the world. That is an important undertaking, which we are proud to be guided by in our day-to-day work. We have clarified our business concept to we will offer palatable, healthy, and nutritious potato-based products to the market.
The launch of DUG onto our strategic markets Sweden and the United Kingdom and in China and other selected geographies continues. It has been an intense and really fun quarter, which gave us the operational and financial prerequisites to continue building the company. We have strengthened the organization, added more retailers, developed collaborations, and improved the production and logistics chain. This is to meet the growing demand that we expect will follow from increased visibility as we ramp up our marketing efforts. DUG is a unique brand with a clear and strong profile, based on the promise of Taste without Compromise.
In August, Veg of Lund carried out a new issue of MSEK 30, which provides us the means to increase production capacity, launch in new markets and carry out marketing activities. I and my colleagues are pleased with the confidence of the investors, and together with all of Veg of Lund’s shareholders, we will bring DUG to the consumers throughout the world.
DUG is now appearing on the shelves of more and more stores, and in several online stores. We have signed agreements with the major Swedish food chains Axfood (Hemköp, Willys and Tempo), City Gross, and ICA and with leading online stores such as Mathem, Apotea and Delitea. We are pursuing our strategy and have made our way into several independent coffee shops. As of November, we will also be carried by Gourmet Coffee Bar & Kitchen, which operates a network of coffee shops in connection with railway stations across the United Kingdom. This is the UK's leading chain of railway station coffee bars, which will give us a very high visibility, particularly in the light of the enhancing mobility as restrictions are lifted. In the United Kingdom, we have also concluded agreements with several major e-commerce stores, such as The Vegan Kind and Amazon. We also recently signed an agreement with Waitrose & Partners, one of the United Kingdom's largest and most influential food chains. We are very happy with this cooperation, as Waitrose is a trendsetter and shares our values regarding sustainability. This is a major breakthrough for us in the UK grocery market, and we are hoping for a domino effect. In China, premium chains such as Sam's Club and Ole’ are offering our range of plant-based beverages.
We have signed agreements during the third quarter, which are expected to generate sales as of the fourth quarter. We continue to have ongoing discussions with various categories of customers in the catering, food retail, and coffee shop industries.
Production and logistics
DUG is a new brand and a unique product. It will take some time to raise awareness and induce consumers to dare to try. Our assessment is that the demand for DUG will grow, and we have therefore evaluated the possibilities to scale up production in additional facilities, apart from the existing one in the United Kingdom.
We are at an advanced stage of discussion with producers and raw material suppliers in Europe and new partners in North America. Consequently, we will soon be closer to the consumers, which entails that we will be able to launch in more markets, deliver more quickly, and reduce our climate footprint further.
We take pride and pleasure in what Veg of Lund and DUG have accomplished thus far, but we have only taken the tiny first steps. We have a lot ahead of us, and we are now aiming to introduce DUG in the important US market, the third of our strategic markets. The US launch will follow the same strategy as previously. Negotiations are under way with a North American producer with capacity to scale up in step with rising demand. We already have an agreement in place with Organic Food Brokers, a sales broker which has prepared a plan for the initial marketing activities. Sales presentations are projected to commence in early 2022.
Patents and products
Veg of Lund is a company based on patents and products that benefit the planet. We already have a solid patent protection for the stable plant-based emulsion and the method to manufacture it on which Veg of Lund was established.
In addition to dairy product categories, we have an ongoing project involving potato-based meat. This is a research and development project in cooperation with Scandi Standard, where we aim to introduce a novel alternative meat by the end of 2022.
Veg of Lund's organization consists of six employees, and we recently had the pleasure of welcoming Per Henrik Johnson, who will be responsible for the company's manufacturing, sourcing, and logistics from December onwards. We will continue to strengthen the organization to achieve our growth plans. In addition, we have a network of consultants and specialists in research & development and marketing, sales brokers in the United Kingdom and the United States, and strategic partners in China and selected European countries.
During the quarter, Veg of Lund’s net sales amounted to TSEK 610, a 12 percent increase over the corresponding quarter last year. The sales of DUG to customers in Sweden and the United Kingdom account for the great majority of the total. Due to bottlenecks in the logistical chain, we have not been able to sell to customers in China during the quarter. We have taken determined action towards finding transport options, and it is gratifying that we will be able to resume deliveries from the middle of the fourth quarter.
Veg of Lund’s brand DUG is off to an excellent start. In a short period of time, we have attracted significant attention and established trust in our products. This was due to DUG’s small climate footprint, neutral taste, absence of allergens, high nutritional value, and versatile use in many dishes. To ensure this position, we will bring our existing and future products together under the DUG brand, and that means that My Foodie will be relaunched under the DUG brand. Shortley, DUG will gain greater visibility in the Swedish market through a number of channels.
Veg of Lund is in a remarkable position. We have patents that give us the opportunity to produce unique plant-based foods. We have a tailwind in the form of the sharp increase in demand for sustainable, nutritious, and delicious products with a minimized climate footprint. We have products awakening the curiosity of consumers and a plan for how to make DUG a favourite among consumers in more and more countries, and we are strengthening our production and logistics to reach them.
For more information, please contact:
Cecilia Lindwall, CEO
Tel: +46 765 014 809
Malmö, 9 November 2021
Veg of Lund AB
The Board of Directors
This information is such that Veg of Lund AB (publ) is obligated to disclose pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 8:00 a.m. CEST on 9 November 2021.
About Veg of Lund
Veg of Lund is a scientific food company imbued with sustainability. The company has roots in research at Lund University and owns patented methods for developing new food categories in the fast-growing market for plant-based foods. Veg of Lund’s climate-smart and tasty products are sold in Europe and Asia under the DUG® brand. The company’s shares were listed on the Nasdaq First North Growth Market under ticker VOLAB. Read more at ir.vegoflund.se. Eminova Fondkommission AB is the company’s Certified Adviser and can be contacted via telephone: +46 8 684 211 10 or e-mail: firstname.lastname@example.org.
This disclosure contains information that Veg of Lund is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 09-11-2021 08:00 CET.