· Net revenue amounted to SEK 2 947 thousand (6 443)
· Total income amounted to SEK 6 452 thousand (7 141)
· Operating profit amounted to SEK -10 320 thousand (-6 101)
· Operating profit after financial items amounted to SEK -10 323 thousand (-6 121)
· Cash flow amounted to SEK -8 685 thousand (-3 767)
· Equity-to-assets ratio amounted to 59% (77)
· Order backlog at period end amounted to EUR 4 059 thousand
SIGNIFICANT EVENTS FIRST QUARTER 2019
· Coating system order received from Beijing Shouhang Resources Saving Co., Ltd.
· Coating system order received from a Scandinavian eyewear manufacturer
· Marie Dhayer Teikmans appointed permanent CFO
SIGNIFICANT EVENTS AFTER THE PERIOD
· Delivery of coating system to Henan Yuqing Power Co., Ltd.
· Delivery of coating system to a Swiss watch manufacturer
CEO’S COMMENTARY
With the start of 2019, Impact Coatings continues to implement the strategy established during 2018. Our market focus is on decorative, metallization, and reflective coatings (D/M/R), and on the fuel cell (FC) segment. We are intensifying activities in sales and marketing, while we continue to increase efficiency and secure quality in operations, with the stated goal of creating a self-financing and growing industrial company.
During the quarter, Det Norske Veritas performed a certification audit of Impact Coatings’ quality systems, which resulted in certification according to ISO 9001:2015.
At the start of the year, the company received orders for two coating systems. One of the orders was from the publicly listed Chinese company Beijing Shouhang Resources Saving Co. Ltd, which is active in renewable energy solutions. The customer will use the equipment for both development and production of PVD coatings. The second order was from a Scandinavian eyewear manufacturer that ordered an additional coating system for production of decorative coatings. The customer manufactures and sells eyeglasses under its own brand name to primary markets in Europe, North America, the Middle East, and East Asia.
As we described in the previous quarterly report, we will from this report forward present the value of the order backlog at period end, which can then be followed from quarter to quarter. The disclosed order backlog includes coating system orders, including upcoming agreed rental income for systems. After-market sales and coating services are not included in the reported value, however.
The order backlog for coating systems amounted to just above 4 million Euro at the end of the first quarter. Two coating systems, which are included in the order backlog, have been delivered to customers during April. One system was delivered to Henan Yuqing Power Co., Ltd., and one system was delivered to a Swiss watch manufacturer, with both orders disclosed during September 2018.
During the upcoming quarters we will be fully focused on delivering the coating systems on order, and to continue making progress with our sales to both new and existing customers.
I look forward to meeting our shareholders at the annual general meeting on May 15 in Linköping. Welcome!
Torbjörn Sandberg
FINANCIAL RESULTS
First quarter 2019
Total income amounted to SEK 6 452 thousand (7 141). The decrease is partly due to the percentage completion revenue recognition method used in Q1 2018. From 2019 forward, revenue for coating machines is normally recognized upon delivery to the customer. Net revenue for the first quarter 2019 amounted to SEK 2 947 thousand (6 443).
Operating expenses amounted to SEK -16 772 thousand (-13 242). The increase is partly due to personnel costs and depreciation, which reflect investments that Impact Coatings has made to develop as an industrial company. Financial items amounted to SEK -3 thousand (-19). Operating profit after financial items amounted to SEK -10 323 thousand (-6 121).
A provision for deferred tax assets has, in line with previous financial reporting, not been recognized.
Financial position and liquidity
Cash and liquid assets at period end amount to SEK 37 984 thousand (61 620). Interest-bearing debt at period end amounted to SEK 0 thousand (0). Equity-to-assets ratio amounted to 59 % (77).
Cash flow from operations during Q1 2019 amounted to SEK -8 685 thousand (-3 767). Cash flow from investments amounted to SEK 0 thousand (0). Cash flow from financing activities amounted to SEK 0 thousand (-70). Total cash flow for the period was SEK –8 685 thousand (-3 767).
The financial status and liquidity position are good.
Order book
The value of the order backlog for coating machines was at the end of the period EUR 4 059 thousand. Two of the machines included in the order backlog were delivered after the period end.
The order backlog for coating machines excludes recurring activities from after-market sales and coating services but includes agreed rental income for coating machines.
As we communicated in the year-end report for 2018, we will disclose the period end order backlog, starting with this 2019 first quarter report, which investors and other stakeholders can then follow from quarter to quarter.
EVENTS DURING THE FIRST QUARTER
On February 4, the company disclosed an order from Beijing Shouhang Resources Saving Co., Ltd. (China). The customer, which is listed on the Shanghai stock exchange, ordered a coating system that will be used for the development and production of PVD coatings. The order value is approximately SEK 11.2 million. Impact Coatings has received pre-payment and an Irrevocable Letter of Credit that together amount to 90% of the order value. Payment of the remaining 10% will be received after machine installation and final customer approval. Delivery is planned for the third quarter of 2019.
An additional order for a coating system was disclosed on February 19. A Scandinavian eyewear manufacturer has ordered a customer-adapted INLINECOATER™D that will be used for decorative coatings. The order value is approximately SEK 10.8 million and delivery is planned for the fourth quarter 2019.
On March 19, Marie Dhayer Teikmans started as permanent CFO for the company. Marie has extensive experience in financial management and industrial production from Sweden, Italy, and France. Her most recent role was as CFO of Twister Group, an international, fast-growing company owned by Polaris Private Equity. Previously, Marie was Head of Business Controlling at Alstom Power/GE Power Services in Sweden, CFO of Whirlpool Sweden, and has a total of ten years’ experience in financial leadership and control positions with Whirlpool Corporation. Marie replaced Rosina Gartz who was interim CFO during the recruiting period.
Focused quality efforts over a long period of time have resulted in Impact Coatings now being certified under ISO 9001:2015. The certification audit and certification of the company’s quality systems were completed during the first quarter by Det Norske Veritas.
EVENTS AFTER PERIOD END
Two coating systems were delivered to customers during April, for orders both made during the third quarter 2018. One INLINECOATER™FC for coating fuel cell plates was delivered to Henan Yuqing Power Co., Ltd. (China). The other machine, an INLINECOATER™D for decorative coatings, was delivered to a well-known Swiss watch manufacturer.
AUDIT AND ACCOUNTING POLICIES
This interim report has not been subject to auditor review.
UPCOMING FINANCIAL EVENTS
Annual general meeting 2019 May 15, 2019
Interim report for the second quarter 2019 August 16, 2019
Interim report for the third quarter 2019 October 25, 2019
Year-end report 2019 February 14, 2020
For more information contact:
Torbjörn Sandberg, CEO
Tel: +46 (0)768-43 43 76
Marie Dhayer Teikmans, CFO
Tel: +46 (0)70-812 71 96
E-mail: investors@impactcoatings.se
Impact Coatings AB (publ) is required to disclose this information in accordance with EU market abuse regulations. The information was delivered, via the contact persons named above, for publication on April 25, 2019, at 8:00 a.m. CEST.
————————————————————-