Redan’s financial performance has been steadily improving. In the first three quarters of 2021, its sales margin rose 54% year on year. Despite an improvement in gross loss by PLN 1.6 million, gross profit is yet to be achieved. In the third quarter of 2021, the Company acquired its first external customer other than Top Secret, to which it started to provide e-commerce order management services. The Management Board of Redan intends to increase the scale of logistics operations and acquire further customers.
Operations related to the Top Secret brand were in the first three quarters of 2021, and will remain, the core business of Redan. They drove 88% of revenue and 88% of the sales margin. They primarily included logistics operations supporting distribution channels in Poland. Products of this brand were also sold to foreign customers. Redan also provided specialist services to the Top Secret Group and TXM.
“In the first three quarters of the year, we significantly improved our financial performance, but we are still below break-even. After a slower beginning of the year, when trade bans in shopping centres were in force, since May we’ve seen a rebound in sales. As a result, in the first nine months of the year sales of merchandise to the Top Secret Group increased 8% year on year, despite its network cutbacks also by 8%. A strong improvement of Redan’s results was also driven by the change of the rules of cooperation with Top Secret implemented last year. It contributed to an increase in our margin on the sales of Top Secret-branded products to customers in Poland from 7.3% to 11.2%. We also increased foreign sales of the brand’s products by PLN 3.9 million, achieving sales growth of as much as 147%. The business generates a significantly higher sales margin, with a low risk of receivables and relatively low operating costs. That is why in subsequent quarters we will continue to intensify the growth of that part or our business,” said Bogusz Kruszyński, the President of the Redan Management Board.
In total, in the first three quarters of 2021 Redan earned PLN 68.6 million in revenue, more by 14% relative to the corresponding period of the previous year (to ensure a better comparability of results, the PLN 7.7 million impairment loss recognised in September 2020 for unpaid sales to Top Secret following the opening of restructuring proceedings against that company was omitted; had not the impairment loss been omitted, the revenue growth rate would have been 30%). The sales margin increased by 54%, to PLN 10.6 million. In consequence, given a rise in distribution costs and administrative expenses by 18%, the Company’s gross loss was reduced by PLN 1.6 million, to PLN -3.4 million. The decline in net profit/loss to PLN -5 million in the first three quarters of 2021 (from PLN -1.6 million a year before) resulted from a drop in net finance income/costs and expected credit losses. In 2020, net finance income was attributable chiefly to a PLN 5.0 million decrease in provisions for liabilities and impairment losses related to Top Secret.
Since the beginning of the year Redan has carried out activities necessary for the launch of logistics services for external entities other than Top Secret. A WMS (Warehouse Management System) IT system has been deployed as a necessary tool supporting such operations and warehouse space has been adapted accordingly. “In the third quarter, we acquired our first external customer and we began to provide e-commerce order management services to it. We are currently optimising the efficiency of warehouse processes and updating our capacities to better use our asset base to increase the scale of operations and acquire further customers,” added Mr Kruszyński.