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Directors’ report
The Board of Directors and the Chief Executive Officer of MIPS AB, Company reg. no. 556609-0162, hereby issue the annual report for the Group and the parent company for 2020. General information MIPS is the market leader in helmet solutions designed to protect against harmful rotational motion transferred to the brain from angled impacts to the head. MIPS’ patented safety system can be integrated in a variety of different types of helmets for both consumers (e.g. bicycle, skiing, motorcycle, as well as equestrian and team sports) and professional users (e.g. industry, military, police, search and rescue). MIPS employs an “ingredient brand” business model, which means that the company sells its products and licenses its technology to other companies that manufacture, market and sell helmets to end-users. As an ingredient brand, MIPS does not sell or market its own helmets and therefore does not sell its products to end consumers. Several world-leading helmet brands have launched helmets with MIPS’ safety system and market them to end-customers on a global basis. The company’s technology and patents are based on more than 20 years of research and development at the Royal Institute of Technology and the Karolinska Institute in Sweden, as well as on MIPS’ own research and development. Several scientific articles validating the company’s technology have been published and about 40,000 helmet tests have been carried out. A number of third-party tests have also been conducted that have confirmed the efficacy of the MIPS safety system. Key events during the fiscal year The company continued to expand its operations by increasing penetration of helmet models among existing customers, as well as by adding new customers that have launched helmets with MIPS’ safety system during the year. The company continued to develop new solutions during the year with the aim of offering its products at different price points. The company also continued to strengthen the organization, primarily in marketing and sales.
Financial performance: Group operations, earnings and financial position* NET SALES AND PROFIT/LOSS
Net sales for the full year 2020 amounted to SEK 365m (268), up 36 percent. Adjusted for currency effects, the increase was 43 percent. The increase was primarily due to higher demand from current customers, with growth mainly in the Sports and Moto categories. Gross profit rose 34 percent to SEK 265m (198). Gross margin declined by 1.3 percentage points to 72.8 percent (74.1). The change in gross margin can mainly be attributed to the change in the sales mix. Operating profit rose to SEK 167m (108), corresponding to an operating margin of 45.8 percent (40.3). Items affecting comparability had a negative impact of SEK 1m (2) on profit for the year. Adjusted operating profit was therefore SEK 168m (110) and adjusted operating margin 46.2 percent (41.2). Operating profit was positively impacted by higher sales, but negatively impacted by currency fluctuations and higher expenses related to strengthening the organization and marketing initiatives. Selling expenses amounted to SEK 42m (35), where the increase was largely attributable to increased marketing efforts and strengthening of the organization. Administrative expenses during the period amounted to SEK 35m (31), where the increase was largely the result of strengthening the organization. Research and development expenses increased to SEK 18m (15), which was the result of product development initiatives. Other operating expenses decreased to SEK 4m (10), mainly due to lower exchange rate losses. Reported tax for the period amounted to SEK –36m (–24), corresponding with an effective tax rate of 22 percent (22). LIQUIDITY AND FINANCIAL POSITION
On 31 December 2020, the Group’s total assets amounted to SEK 517m (343). Current investments of SEK 181m (146) are invested in their entirety in interest-bearing funds. The equity ratio was 82 percent (87). Cash and cash equivalents, including current investments, totaled SEK 272m (192) on 31 December 2020.
*For definitions and alternative performance measures, see pages 108–109.
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MIPS — ANNUAL REPORT 2020
