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
(euros)
| 31.12.2023 | 31.12.2022 | ||||
| Assets | |||||
| Current assets | |||||
| Cash | 27 979 | 31 850 | |||
| Receivables and prepayments | 306 286 | 689 055 | |||
| Inventories | 17 512 | 26 311 | |||
| Total current assets | 351 777 | 747 216 | |||
| Fixed assets | |||||
| Property, plant and equipment | 1 348 868 | 2 661 318 | |||
| Intangible assets | 1 847 477 | 217 035 | |||
| Total fixed assets | 3 196 345 | 2 878 353 | |||
| Total assets | 3 548 122 | 3 625 569 | |||
| Liabilities and equity | |||||
| Payables | |||||
| Current liabilities | |||||
| Loans payable | 1 185 739 | 941 237 | |||
| Payables and prepayments | 1 173 106 | 632 646 | |||
| Total current liabilities | 2 358 845 | 1 573 883 | |||
| Long-term liabilities | |||||
| Loans payable | 1 977 616 | 1 473 694 | |||
| Total long-term liabilities | 1 977 616 | 1 473 694 | |||
| Total liabilities | 4 336 461 | 3 047 577 | |||
| Equity | |||||
| Share capital at nominal value | 245 636 | 245 636 | |||
| Share premium | 2 286 645 | 2 286 645 | |||
| Other reserves | 10 000 | 10 000 | |||
| Retained loss | -1 699 742 | -1 224 536 | |||
| Profit (loss) for financial year | -1 630 878 | -739 753 | |||
| Total equity held by shareholders of parent company | -788 339 | 577 992 | |||
| Total equity | -788 339 | 577 992 | |||
| Total liabilities and equity | 3 548 122 | 3 625 569 | |||
Consolidated income statement
(euros)
| 01.07.2023-31.12.2023 | 01.07.2022-31.12.2022 | ||
| Sales revenue | 209 054 | 873 051 | |
| Other operating revenue | 13 418 | 55 607 | |
| Goods, raw material and services | -418 153 | -670 434 | |
| Other operating expenses | -353 505 | -158 927 | |
| Staff costs | -365 205 | -487 113 | |
| Depreciation and impairment of fixed assets | -246 972 | -254 999 | |
| Other operating expenses | -345 345 | -32 423 | |
| Operating profit (loss) | -1 506 708 | -675 238 | |
| Interest expenses | -124 170 | -64 006 | |
| Other financial income and expenses | 0 | -509 | |
| Profit (loss) before income tax | -1 630 878 | -739 753 | |
| Income tax | 0 | 0 | |
| Profit (loss) for reporting period | -1 630 878 | -739 753 |
Consolidated statement of cash flows
(euros)
| 01.07.2023-31.12.2023 | 01.07.2022-31.12.2022 | ||||
| Cash flows from operating activities | |||||
| Operating profit (loss) | -1 506 708 | -675 238 | |||
| Adjustments | |||||
| Depreciation and impairment of fixed assets | 246 972 | 254 999 | |||
| Profit (loss) on sales of non-current assets | 370 400 | 27 065 | |||
| Total adjustments | 617 372 | 282 064 | |||
| Change in receivables and prepayments related to operating activities | 147 700 | 128 059 | |||
| Change in inventories | 16 992 | 15 858 | |||
| Change in liabilities and advances relating to operating activities | 424 604 | 459 441 | |||
| Total cash flow from operating activities | -300 040 | 210 184 | |||
| Cash flow from investing activities | |||||
| Paid upon acquisition of tangible and intangible assets | -67 428 | -416 220 | |||
| Proceeds from sale of property, plant and equipment and intangible assets | 0 | 61 826 | |||
| Total cash flow from investing activities | -67 428 | -354 394 | |||
| Cash flow from financing activities | |||||
| Borrowings | 1 056 582 | 518 956 | |||
| Repayments of borrowings | -420 933 | -222 137 | |||
| Finance lease principal repayment | -158 000 | -162 588 | |||
| Interest paid | -124 170 | -63 966 | |||
| Total cash flow from financing activities | 353 479 | 70 265 | |||
| Total cash flow | -13 989 | -73 945 | |||
| Cash and cash equivalents at beginning of period | 41 968 | 105 795 | |||
| Net change in cash and cash equivalents | -13 989 | -73 945 | |||
| Cash and cash equivalents at end of period | 27 979 | 31 850 | |||
Consolidated statement of changes in equity
(euros)
| Share capital at nominal value | Share premium | Other reserves | Retained profit (-loss) | Total | |
| 30.06.2022 | 245 636 | 2 286 645 | 10 000 | -1 224 536 | 1 317 745 |
| Profit (-loss) for the reporting period | 0 | 0 | 0 | -739 753 | -739 753 |
| 31.12.2022 | 245 636 | 2 286 645 | 10 000 | -1 964 289 | 577 992 |
| Profit (-loss) for the reporting period | 0 | 0 | 0 | 264 547 | 264 547 |
| 30.06.2023 | 245 636 | 2 286 645 | 10 000 | -1 699 742 | 842 539 |
| Profit (-loss) for the reporting period | 0 | 0 | 0 | -1 630 878 | -1 630 878 |
| 31.12.2023 | 245 636 | 2 286 645 | 10 000 | -3 330 620 | -788 339 |
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
