Hello everyone, and welcome to the webinar from Polygiene Group, where we will present the second quarterly report that was released this morning. I'm sorry for the delay, but we will get started now. Go to the presentation please. To summarize the quarter, I would first like to just make an overall view, my view of the quarter, and then Nina will go more deep into the financials. As you know, we still have a turbulent market out there. There is a recession. We can see the patterns of consumers, inflation that actually hit on our partners. What we see is that some of the partners said that they have stock. They are awaiting new production a little bit. It's very uncertain to forecast for them at the moment.
We also see in China that the pandemic or the COVID is still hitting us in this area. Last year, in the end of 2021, we actually believed that China was in the forefront and that they will get really bad, really good out of the pandemic. Since they have this zero case policy, the first half year of 2022 has actually been lockdowns, or reopening and then lockdowns again. That hit both the local market for us, the local customers we have in China, but also the production where the international brands are, producing. Then on top of that, we have the Ukraine war. We have a high inflation. All this, all in all, actually we can see in the report this quarter.
Despite this, I'm happy that we actually get in line with last year's numbers for Q2. It was a quite strong quarter last year, so to hit that SEK 47.5 million is satisfying, even if it's far away from where we want to be. The good point is that we have a very strong gross margin, so it's 4.8 percentage units above last year. That's good news. We also can see that the EBIT margin, EBITDA margin is in line with the first quarter as well. Cash flow is unchanged for the period. To summarize the quarter, just very briefly, I would say it's satisfying because of the turbulence in the market.
We have still a long way to where we want to be, but I think for one, two quarters now, we will not adjust the long-term goals we have to reach SEK 1 billion in 2026, so that still remains that target. We get a lot of questions about that, but two quarters here can't define that long-term path. To look at the share between the two different business areas we got, we have the Polygiene Freshness that you could say is the textile side of the business, the old Polygiene, with 47% of the sales. Then we have the Product Protection, that is almost the hard surfaces Addmaster. That is 53%. We are basically 50% on each side. Last year it was opposite. This is the share of the sales.
If we go to the regions, the share per region, we still have Europe. It's very big. We have 54% in Europe, and that is of course because Addmaster have mainly the sales in Europe. That gives us a potential to grow the Addmaster Biomaster Protection side in U.S. and also in Asia, and especially in China. As you can see, the global sales, 8%, it reflects the distribution sales on the textile side. I want to show this growth per region. This is in SEK, and I know we have tailwinds for the strong dollars. What I want to share with you in this graph here is that we have the global sales -35%.
As I indicated in my CEO words in the report, we have a distributor that had new guidelines from their financials to say that they should reduce stock. That is basically why. It's 3 point, I think it's SEK 4 million or something that they didn't take this year like they did last year. Of course, the good thing is that the additive that we sent for mills for production, that is actually on the positive side, so we know they will refill the stocks next quarter again. Now, Nina, if you would like to go into the figures.
Yes. Thank you, Ulrika. As you see, we have net sales of SEK 47.5 million . It's an increase of 1.3% compared with the same period of last year. As Ulrika was mentioning, the global financial situation is of course having an impact on our business as well. Whilst the business area Freshness, it declined by 11%, we at the same time experienced growth within the other business area, Product Protection, which had an increase by 15%. The gross margin increased with 4.8 percentage points compared with last year. It's mainly due to higher sales of products with high margins and royalties. The OpEx, yes, we have higher cost base. The costs increased with 22.1% compared to last year.
The world is beginning to open up again, and we started to travel again. The trade shows are back. We participated in several trade shows in June. It was in Hamburg, Munich, and a couple of trade shows in the U.S. This is, of course, something that really has been on hold for the previous two years. Other strategic investments have been made this quarter. We've been working on a new branding strategy and a new graphical profile, which Ulrika will come back to with more information later on. We invested in a new website, which is about to be launched later this fall, even if the major part of the investment of the website has been activated. We have also restructured and strengthening the organization, which I will comment more on the next slide.
We have an EBITDA amounts to SEK 9.6 million, which is corresponding to a EBITDA margin of 20.3%. The EBIT amounts to SEK 11.5 million, affected by exchange rate difference, and results in a margin of 24.3% for the period. The cash flow for the second quarter was essentially unchanged and totaled to SEK -400,000. We closed this quarter with a cash amounting to SEK 53.6 million. You have the graph in the bottom right corner, and as you can see, we have two satisfying quarters behind us. Let's see. We should have some comments here on the organization. Yes. By the end of this quarter, we are 49 employees, equivalent to working 44.1 full-time equivalents.
As I mentioned, we have been restructuring and strengthening the organization, and here are some changes of the management team. We have Sue Bethel, CTO for Addmaster, and she was in April taking the role as CTO for the Polygiene Group, replacing Dane Momcilovic, who left the group earlier this year. Sue is located in the U.K., and she leads the technical team from there. Daniel Röme is no longer a member of the management team. We freed up his time in order for him to be able to fully focus on R&D. Frank Stevens, new COO, he joined Polygiene Group in June. He's very familiar with the textile industry, and he has over 30 years of experience within the textile industry, and he's a very welcome addition to the group.
Sandrine Garnier, Managing Director of Addmaster, she's no longer a member of the management team. She had a lockup for 12 months and has now left the company as planned. As we have integrated the two companies, we decided not to replace the role as managing director. However, we needed to secure the succession. A new role, the Operation Office Manager, has been taken on by Matt Fisher, who joined Addmaster in April. Looking forward, in September, Niklas Blomstedt, new CFO, he will join Polygiene Group with solid experience in finance from Ericsson and Haldex, and I will move on to HR in September. I'm now handing over to Ulrika again.
Thanks. Yes, I would like to comment a little bit on the business and give you an update on the different business areas. I will start to present some highlights from the freshness side. During the period, we have some really nice news, some of you heard of, some of them might don't. We've got a launch with Adidas in China, and that is a milestone for us. We've been working with Adidas from the European German office, but now we actually managed to get into the Shanghai office. They are totally independent from Europe, so they have their own market. This is a huge market, and I really see that there is a huge potential for Adidas to grow as big or even bigger than in Europe.
The good thing also is that they choose to do permanent Polygiene branding. We have sewing labels with the Polygiene brand on the garments, and that is really something we fight for. That's very good job from the team in China to manage that. We have FORLOH. It's a U.S.-based hunting brand, a premium, that is actually for the love of hunting is the FORLOH. They launch with tech garments with a combination product. They use both the antimicrobial and the Odor Crunch to get a full comprehensive technology for odor. In hunting, there is huge benefits for getting rid of the smells. To the left, the picture down in the left, it's Salewa. This is actually an old Polygiene brand. I think we've been working with them for seven years.
It's an Italian outdoor brand. They've been just having a small collection, nothing happens, and they've just been there year in, year out, but nothing really happened until this year. We actually been working very tight with them with a new Polygiene brand activation program. As you know, if you look at our customer list, we have a lot of customers. You know, the penetration grade on each one is not satisfying. This is a great example what's happened when you work closely to their marketing team and really show the added value that Polygiene can give to you if you communicated on the right way. What we did last autumn was that we hired two people in Europe. It was Markus Hefter with sales director and also marketing activation person, Eva Doll.
Both of them come from ISPO, the biggest sport show in the world. They have great connections and network to the brands and get the contacts. As long as we can get into them and sit down with them and show them what we can add, this happens. Salewa actually grow four doubled the first six months, and they also will continue to move into more styles because we have shown that there is an added value, but they need to talk about it and communicate it to the end consumer. We did a lot of promo with them in the spring. We did some articles. We interviewed their marketing director. We've been doing giveaways. We have highlighted it, et cetera. This is the way forward, and this is just one example of how we will grow the existing accounts.
The last one is the Australian Workwear Group, and that is a new partner. We haven't press released it yet. I think we will do it any day. This is a very interesting partner. They are doing workwear, and they are a big company, and they started out doing medical workwear, so they are in scrubs. This quarter it was top five customers, so this is a really good, interesting project. We will talk more about that later when they will approve our press release first. If we move into the protection side, we had really interesting things going on and a lot because of this. I come back to the trade shows after. In the quarter, I would just highlight these four collaborations. We had an award-winning antimicrobial shopping bags launched with Tesco.
This is our partner, Asda, that we've been doing other things for supermarkets before. We've been doing these trolley handles. We've been doing other kind of surfaces in the supermarkets. Now they launched this Bag For Life. It's an antimicrobial-treated shopping bag to reduce disposable plastic bags. In July, there was a huge campaign called Plastic Free July, where this was highlighted. I really believe in this kind of product moving forward, not only in U.K., but also if we look at U.S. and other parts of Europe. Then we had the launch of the NIO, the electric car in China. They built in the antimicrobial surface in the seats, and this is just the first step.
We have tested and been approved for other materials and surfaces in the car, like the steering wheel and the panels and et cetera. This is really exciting moving forward. As, when we launched this press release, we had over 30 visitors from other car companies coming into the webpage looking at our technologies. This is a great news to present for us. We have this Pylon Coatings, and I wanted to highlight this one. It's a coating company from Australia that has its own range of protecting coatings, so they call it Bio-Guard. The interesting thing here is that they also incorporated Verimaster. I will present for you a little bit later about Verimaster and how we can cross-sell that into the freshness side as well.
The last one is from Ricardo Beverly Hills, and this is a customer we acquired from SteriTouch. In the beginning of the year, I think SteriTouch just agreed with them to do a premium line of suitcases. Now when they have, they moved into the Polygiene Group, SteriTouch, we can actually add value with our great marketing team. Now we connected the people in U.S. with the brand together with the salesperson U.K. and the marketing team, and now we will go big with these guys. I think that is because I get questions about SteriTouch, and I can just elaborate a little bit about that. We took over this in the beginning of February, and what we would try to do is to get the synergies out.
We want to transform these customers to using Biomaster product because that's more scalable for us. That took a bit time, so the start has been a bit slow. We need to do new testings when we switch the technologies, so we need to wait for the test results. We can see it's picking up now. Damien, who is the person who followed acquisition, is doing a great job. He's really doing well. I'm hoping that we can see growth from SteriTouch for the second half year. It's not satisfying at this moment, but we still believe that the four or five biggest, we can grow them. We stick with the forecast, and let's follow it.
What we also will do in the future is also to keep the SteriTouch brand for now, but maybe in the future we will move them on to Biomaster product instead. Also in this quarter, we did a name change, and I got questions, "Why did you change name to Polygiene Group?" That is actually mainly because we want to diversify it from the brand Polygiene, and Polygiene Group is the company, the legal entity who holds all the other legal entities. This is also an indication of that we will have more legal entities in the group in the future. That's why we want to distinguish what is the company and what is the brand. As Nina mentioned, we've been working hard on the branding strategy.
We started last year, and then we make a pause because we're waiting for the new CMO, and then we intensify the work from this year, and now it's finished. As you can see, we have a new visual identity. If you can see on the presentation now, we have a different graphic design. We also have the product platform in place, so we know what is freshness and what is protection. All this work has been finalized now. We will launch the new website in September. It's working very intense with it now, but I think it's gonna be super good to have both the old Addmaster website and the Polygiene website under the same umbrella, so we can work very efficient when we do the SEO marketing, when we do the Google Adwords. It's gonna be really, really good.
We will also launch the new concept of Polygiene Group for Mindful Living, but we will come back to that. Just some slides to show you. This is just sneak peeks from the new website, but I just want to show you how we think about the future. We will have one landing page, polygiene.com. Here, if you move forward in, we will have all the new categories. We have 10 categories. As you see here, we have sports and outdoor, home, transport, et cetera. The good thing to have a landing page for each of them is that we can drive traffic specific, specifically for one category. You don't talk in the same way with transport customers as you talk to people in the sport outdoor industry, so we need to have it more customized for the category we work with.
If you click down, this is the sport category. You go down, you can have all the information about what technology is fitting what, testimonials from other brands, et cetera. If you dig deeper down, you come to the tech page, you will have all the technologies. It's very clean. It's gonna be much more content. We have the other webpage on hold for one year because we didn't want to put money and develop it. Now we have a very good platform to be even better to communicate. We also have very easy access to contact us. We will have for this, it's categories for healthcare, and then you have Maria here. You can easily access to get inquiries in, so this is gonna be perfect for getting new leads on board.
Moving on to other highlights. During the quarter, we had a lot of trade shows. As you said, AIX was a great success. We had, I think there were more than 300 people visiting the landing page before. We had a lot of meetings scheduled in advance, and now we follow up on all these new leads. Super interesting. We had a very nice booth. We invested quite a lot of money, but I think it's a good investment for growing this category in transport. We have a lot of traditional outdoor sports shows and been very successful. I mean, the people have been waiting for two and a half years to get together, so we could see very, very positive outcome from these fairs. Everybody's so happy to finally meet. So were we.
In June, we gathered all the company here in Malmö. We were almost 45 people here. The Chinese people couldn't make it due to COVID restrictions, but the other one came here and it was such a good two, three days of meetings, talking strategies. We energized the team. What I believe now, I never felt this confident with the team I have. We've never been so strong together, and we are very well positioned now to drive growth forward, moving forward. Just a small comment on the LCA study because it's finished. We are working on it for a long time, but it's a lot of data to collect.
What we did with a third party, it's Sweco in Sweden, it's a consultant company, have made an independent study of a treated garment compared to a non-treated garment and the footprint of that. We can actually prove that we have a positive life cycle if you use Polygiene-treated garments and skip one wash. We can show this with facts and data. This will be published in August, September, and we have so many big brands waiting for this study that been asking for it. This is gonna be great for us and a good tool that we can add value to our brand partners. We continue with measuring our carbon footprint. We had the first scope ready, and that is the direct impact we have. It's all our business travels.
It's our transport of freight we send out from the offices in U.K. and in Sweden. Next step will be to measure the indirect impact. It's actually all the goods that are shipped to the distributors, to the customers from the third party here. That's gonna be huge work, but we will move forward because this is gonna be super important for us as a company moving forward. Now I would like to show you, because I also sometimes people ask what happens with the cross-selling, what happen with these technologies, and I would just like to take the opportunity to introduce you to Verimaster because this is super interesting.
Verimaster is an anti-counterfeit additive for brand protection, and it could be protection to a luxury brand who want to protect their bags or clothes or shoes from copies, but it could also be to verify that the antimicrobial treatment is in a product, because it's an invisible technology, and to be able to see if this table is treated or not, we can actually use Verimaster for that. This is very easy. You have a product that has this technology built in inside, and if you flash with a UV light, you will see a color or a light coming up, and then you know, okay, this is the right, correct one. If you flash with the lights and there is nothing happening. It's a fake, it's not the original.
Of course, this is a technology that we want to market, but the customers who use it don't want to reveal it because they want to. This is their secret. Because we don't want anybody to, even if it's hard, we don't want anybody to know because then they can copy that as well. But we will start to use. Yeah, that's just to show how you do it with a pen, or you can also do it with audio when you verify. It can goes into all kind of materials. We have, I mean, plastic and papers. We have, fabrics and, paints and et cetera.
What we believe now, with the extensive network that Polygiene have in the fashion industry, we will launch this technology to the fashion industry and also to the sport industry because they are suffering quite a lot from the counterfeit and the pirate copies. We did a sneak pre-launch now and tested it in the PERFORMANCE DAYS and then Functional Fabric Fair in New York a couple of weeks ago, and response was very positive. The brands want to know more. If you follow the papers, you can see that brands like Nike or Adidas or other have a huge problem with pirate copies. We think this could be very, very interesting. We have the inroads, we have the contacts to these brands.
This is part of the synergies from the acquisition of Addmaster, that now we can bring this great technology into the textile world as well. They've never been sold into the textile world before actively. This is very exciting. I think the time is running, so maybe we go to the questions now. There were quite a lot of questions.
Thanks. We're back. Thank you, Ulrika. We had some questions here, and we have of course some questions related to the silver and the silver debate. Let's start with them. Do you have any update on the EU regulation for using silver chloride?
No. I refer to the press release that we sent out of these false articles. They are at least four years down the road until we have a decision, and the outcome of that decision, we don't know. Nobody knows. We can just speculate. We have no idea. The person we talked to, who is very close to ECHA, who take the decisions, there is nothing yet. There is no update, and I don't think there will be an update until a couple of years down the road. Just to comment on what we do now and the strategy, we've been discussing this internally with the board in the management team. We also have external crisis experts, media experts, how we should handle this. The advice we get over and over again is to don't take any legal action.
Don't start to fight this. We'd rather put the resources on developing our business because that's most important. None of our business have been affected by these articles coming in April. There was no reaction. If we would go out and go to trial and do legal action against them, that would be picked up by the media and the industry, and we don't want this to get out in the industry among our customers to make them worried because there is nothing to worry about. I think to be a chemical company could never win the moral fight of a company that call themselves Svenskt Vatten. Even if they are just a lobby and we know that, 100% we will be right in court, we will never win the fight. If you understand what I mean.
We actually decided that the silent treatment is the best, and as long as the business is not hurt, I think that is the right way to go. If it would be opposite, that the share price still stay, but the business will be damaged, I mean, that's worse. That is the response I have for that. We just focus 100% on the business, and with studies like LCA, we're showing them the data and partner strong with our brands and with the customers we have. They will, and they already do, trust us because they know that Polygiene is a company that they can count on doing the right thing 100%. Yeah.
Which means that we are not planning any proactive actions against Svenskt Vatten.
What we need to be better is to educate and inform our shareholders and investors, so when this happens, we don't have this crazy reaction we had in April. That was. It was an overreaction that I think could be avoided if the shareholders was better informed and educated. I mean, this is part of that, what I talk to you now and also with the studies we will present to show that we have science data that this is a positive life cycle to treat garments.
Another question on the silver debate is, "Has the focus on the environmental effect of silver had any impact on our customer interest?
No. As I said, nothing. It haven't reached them. It's a local Swedish thing. One, I think one or two customers in Scandinavia just asked, "What is this?" We just explained, and they said, "Okay." They continue as nothing. So for this articles, nothing has impacted.
Thank you. We have a question here on the gross margin. We have a strong gross margin this quarter, and also in the previous quarter, in Q1. Is it affected by the current sales mix, and will this be a normal level going forward?
It is a sales mix, and as you said before, it's a mix between if we have a sales to the distributors or if it's royalties. With royalties is, of course, 100% margin on that one. It's a sales mix, but I think, moving forward, it could go up and down, but around these levels, I would say, on a year-to-date basis.
A little bit on the future, are you considering changing or adjusting the financial targets you communicated?
No, I said that before, that no, we're not doing that because we have two modest quarters in a row. This is a five-year plan, and it's not only organic growth we presented. This could be acquisition in combination with organic growth.
Mm-hmm.
Yep.
Going forward, what kind of products will have the largest potential on future sales increase, and then what new collaboration this quarter will have the largest long term? Let's start with what kind of products will have the largest potential for future?
I don't know if they mean existing portfolio or the new one, so I can just talk about. I think they discussed maybe for the future, so I would say that, of course, Polygiene is working hard with R&D, and as we said, we moved Daniel, 100% of his time now focus on R&D, and using him for strategic decisions. I think, he don't have a team under him, so he to be in the management team listening to all the other operational question.
I put him 100% focus on the R&D of his time, and we deal with our own innovations, our own developments, but we also do collaborations, and this is something we will focus on and use along the road four years down the road, if something will happen with the silver, we will be ready to have something to change. Also to offer already now to customers who, for some reason, don't want to work with the silver, I mean, there are companies set non-metal policies, then we could offer something else that's not silver-based. I think that will be maybe for the future interesting, but still, the silver still has many years left.
What new collaboration this quarter, you mentioned FORLOH, Hotsuit, NIO, will have the largest long-term potential? Could you shed some more light on these?
Of the ones I presented here?
For example.
As I said, I think Adidas China has a huge potential. I mean, it's the biggest market of Adidas, I think. It's huge, and if we can just get in and show the value we can add to them and work very, very close to them, I think that's a big potential. I also see the suitcases with SteriTouch with the Beverly Hills. That could be really, really good as it's a great company to work with. I mean, there's so many NIO car, as I said, this NIO could open up for other car brands interested in us. I think it's been a good quarter in that sense that we got so many good launches that we could publish, and that is the best marketing tool we have to attract new leads.
How is SteriTouch developing is a question that came in here.
Yeah, I touched a little bit about it before that we said a slow start, and that's due to the structure that we took over, and we wanted to transform to Biomaster because of the synergies. They have different formulations, and instead of that we will find suppliers and purchase it and get new articles in, we try to get the same effect with Biomaster. In the same time, that takes new tests, and test takes quite a long time to verify technologies. We are doing that slowly, and as I said, also, we will see, I think, on the five, six of the customers that came with acquisition could be developing really good future. It's been a slow start. I'm not worried in long term.
It was a good acquisition, great customers, and a quite good price we paid for it as well.
A question here regarding Polygiene is essentially an ingredient brand, and we need to create both the pull and push strategies to get the customers on board, and the key aspect is, of course, the partnerships with the brand. Can we say anything about this part of the chain? Are there some major wins that can be announced of the apparel and product brands?
This is also to get back to the new website that we can now, instead of having one size fits all, now we will diversify into the categories, and we will work differently in the different categories. Ingredient brand has been strong in the sports and the fashion industry for Polygiene, the textiles, but ingredient brand has not been built in the same way in Biomaster yet. It doesn't look the same if you work with transport companies or if you work with industrial flooring and paintings. It's another way. Now we can actually get the resources in the right place, and as I said, with the brand activation program that we work in the textile, that is something we can actually strengthen the brand and the ingredient brand strategy.
Here's a question, comment on the increasing inventory, if that's a long-term goal, and how long do you expect and will take on the increasing inventory? I believe, yes, we have increased the inventory and during the last six months, and I believe that has to do that we also, we no longer only have the inventory at Addmaster. We have it in an inventory now here in Sweden, that's due to the Brexit. A final question on the organization, Sandrine has been leaving, as I mentioned, Addmaster and as a managing director, who will take over her roles and not the role, but the responsibilities.
Yes. I mean, all in all, I'm responsible for the group. Addmaster is just a prolonged arm of Polygiene. We call it Polygiene U.K. internally, but it's a legal entity, of course, but we will not have a MD as replacing Sandrine one-to-one, so I'm responsible overall, and then we will have Matt Fischer now as the operations overseeing the everyday business in the office. So I think it worked out very well, and I'm really happy for Sandrine's work and been part of the integration process, and now that's finished, it feels okay. Yep.
I believe this was the final question.
Okay. We are in time, so it's good. Okay. We would like to say thank you for listening, and we'll see you soon again, and have a nice summer. Bye.
Thank you.
Thanks.