For more information contact:
Torbjörn Sandberg, CEO +46 768 43 43 76
Peter Högfeldt, VP Marketing +46 708 87 44 34
E-mail: investors@impactcoatings.se
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In the Balance sheet (page 7), Paid pre-payments from customers as of September 30, 2018 should be SEK 22 277 thousand, and Invoiced but not paid pre-payments from customers as of September 30, 2018 should be SEK 3 650 thousand. The sum of Paid and Invoiced but not paid pre-payments from customers is unchanged following these corrections.
In the table Summary of financial development (page 9), Pre-payment from customers for the period January-September 2018 should be SEK 25 927 thousand, and Short term liabilities for the period January-September 2018 should be SEK 8 047 thousand.
The corrected interim report for July-September is included as an appendix to this press release.
For more information, contact:
Torbjörn Sandberg, CEO Tel: +46 76 843 43 76
Rosina Gartz, CFOTel: +46-70-659 36 09
The information was delivered, via the contact persons named above, for publication on October 29, 2018, at 1:30 p.m. CET.
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· Net sales amounted to SEK 5 305 thousand (6 964) · Operating profit amounted to SEK -8 758 thousand (-4 103) · Net income after financial items amounted to SEK -8 760 thousand (-4 898) · Cash flow amounted to SEK 7 037 thousand (-11 719) · Equity-to-assets ratio amounted to 62.5% (42.7)
FINANCIAL RESULTS JANUARY-SEPTEMBER 2018
· Net sales amounted to SEK 16 469 thousand (28 198) · Operating profit amounted to SEK -28 385 thousand (-18 505) · Net income after financial items amounted to SEK -28 406 thousand (-19 306) · Cash flow amounted to SEK -8 427 thousand (-19 941) · Equity-to-assets ratio amounted to 62.5% (42.7)
SIGNIFICANT EVENTS THIRD QUARTER 2018
· Orders for two coating machines from existing customers in the Decorative, Metallization and Reflective coatings segments (DMR) · Order for one coating machine for fuel cells, which involves the re-allocation of an already-completed coating machine · Classification of orders from China Hydrogen Energy and Huaqing Power Technology as no longer valid, following a thorough review · Previous CEO terminated following preliminary results of independent accounting investigation · Extraordinary general meeting of shareholders resolved to elect a new auditor
SIGNIFICANT EVENTS AFTER PERIOD-END
· Torbjörn Sandberg appointed new ordinary CEO and Rosina Gartz appointed new interim CFO · Report from independent investigation of previous CEO confirms preliminary results and is handed over to the Swedish Economic Crime Authority
CEO’S COMMENTARY
During the third quarter, we have continued our work in structuring the business, in line with the goal of lifting Impact Coatings from a development company to one that is fully industrialized. Reaching that goal requires commercial discipline, continued technical leadership, clear processes for sales and production, and world-class quality. Considering our current state and the level of competence we have internally, I am convinced that we have a strong starting position.
We are focused on the future and have during the quarter presented the company’s updated strategy as well as a stream of positive news items connected to orders, which are in line with our new direction. We are focusing now on growing revenues and becoming profitable, while we are pleased to show positive cash flow for the third quarter, which is partly based on customer pre-payments.
The updated strategy was described briefly in the prior quarterly report and in more detail during the webcast at the end of September. For a complete picture, please visit our homepage and view the webcast in its entirety.
During the quarter we disclosed two new deals with repeat customers in the Decorative, Metallization, and Reflective coatings segments (DMR). Varioplast (Germany), which already uses our coating technology, has ordered an INLINECOATER™M for delivery early 2019. We have also received an order from a well-known Swiss watch manufacturer for an INLINECOATER™D with delivery planned for the first half of 2019.
In addition, we have quickly re-allocated an already-completed coating machine for fuel cells that has been available for sale. It was produced for one of the orders from China that were early in the period determined to be no longer valid. The new customer, Henan Yuqing Power Co., Ltd. (China), has pre-paid 80% of the order value. This approach is fully in line with our enhanced focus on commercial discipline and reliable analysis of customers in new markets.
We have determined that it makes better business sense not to move a coating machine to Borit in Belgium as planned to start coating production there, which is explained in more detail below. Under our new management, discussion also continue with Optorun regarding how the relationship can best be aligned with Impact Coatings’ updated strategy.
Structure and discipline in operations and in our business relationships form a cornerstone as we continue developing the company according to our updated strategy and towards new goals. I am confident in what we can accomplish during the coming years.
Torbjörn Sandberg
FINANCIAL RESULTS
Third quarter 2018
Third quarter revenue amounted to SEK 5 305 thousand (6 964) and operating profit was SEK -8 754 thousand (-4 103). Operating profit before depreciation and other operating costs amounted to SEK -6 642 thousand (-3 826). Earnings before tax amounted to SEK -8 760 thousand (-4 898). The difference in operating profit compared to the third quarter 2017 is primarily due to lower sales, higher depreciation, currency losses, and impairment of inventory.
Cash flow during the period amounted to SEK 7 037 thousand (-11 719). Cash flow from operations amounted to SEK 7 037 thousand (-7 941). Cash flow from investments amounted to SEK 0 thousand (-3 778).
Two machines that have been produced for the now invalid orders from China Hydrogen Energy and Huaqing Power Technology have been booked over time under the heading “Accrued revenue” with a total value of SEK 15 158 thousand. One unit is now used in production for fuel cell customers. The other unit has been booked as finished goods inventory and has been available for sale.
The machine that is used in fuel cell production has been re-classified to production assets with a value of SEK 7 579 thousand.
The second machine has been re-classified to inventory with a value of SEK 7 579 thousand, which does not include costs for customer specific adaptation. When the machine is sold for a value exceeding its booked value, revenue and profit from the sale will be recognized. This machine has now been ordered by Henan Yuqing Power Co., Ltd. (China).
During 2016 and 2017, SEK 15 158 thousand in total was recognized as revenue for these machines, which reflects Impact Coatings’ costs and does not reflect any profit. Because the transactions in accounting terms should be viewed as capitalized costs for own account, there will be no revenue restatement for these periods.
Since both machines have been booked at a value corresponding to manufacturing cost and excluding any profit, and since both are deemed fully valued assets considering market activities and commercial demand, there are for the time being no impairments or other re-valuations planned.
The re-classifications described above have no effect on cash flow.
Provisions for deferred tax assets have, as in previous years’ accounts, not been accounted for.
January – September 2018
Revenue during the period January-September amounted to SEK 16 469 thousand (28 198) and operating profit amounted to SEK -28 385 thousand (-18 505). Gross profit amounted to SEK 6 348 thousand, 38,5% of sales (8 168, 29,0%). Operating profit before depreciation and other operating costs amounted to SEK -24 645 thousand (-17 325). Earnings before tax amounted to SEK -28 406 thousand (-19 306).
Cash flow during the period amounted to SEK -8 427 thousand (-19 941). Cash flow from operations amounted to SEK -8 357 thousand (-14 824). Cash flow from investments amounted to SEK 0 thousand (-5 117). Cash flow from financing amounted to -70 thousand (0).
Financial position and liquidity
At the end of the period, liquid assets amounted to 56 959 thousand (2 206).
Equity-to-assets ratio amounted to 68,4% (83,3).
EVENTS DURING THE THIRD QUARTER
The company received three coating system orders during the period:
Varioplast GmbH (Germany) ordered an INLINECOATER™M. The machine will be used for metallization of plastic components for the automotive industry. Varioplast already uses coating technology from Impact Coatings. The order value is approximately SEK 6 million. Delivery is planned for the beginning of 2019.
An additional existing customer, a well-known Swiss watch manufacturer, ordered an INLINECOATER™D for decorative coatings of watch components. The order value is of the order SEK 7 million and delivery is planned for the first half of 2019.
Henan Yuqing Power Co., Ltd. (China) ordered a coating system, which includes an INLINECOATER™FC machine and licensing agreement. The coating system will be used for coating bipolar plates for fuel cells using Ceramic MAXPHASE™. The customer will primarily deliver fuel cell stacks to the rail transport industry and has for this application a close cooperation with well-regarded Tongji University in Shanghai. The order value is on the order of SEK 12 million and the customer has pre-paid 80% of the order value. Delivery is planned for the first half of 2019. The order involves re-allocating a coating machine for fuel cells that was completed for one of the now invalid orders from China (see below) and has therefore become available for sale.
The coating machine that was planned to be moved to Borit in Belgium will until further notice stay at Impact Coatings. According to the agreement described in the press release dated February 24, 2016, Impact Coatings intended to own the machine and receive revenues from coating production services carried out at Borit’s premises. We have now jointly determined that it makes more business sense for the machine to stay at Impact Coatings. The revised approach is not yet finalized but will in any case not affect income. Impact Coatings will continue to sell coating services for Borit’s production of fuel cell plates.
At the start of the period, we disclosed the result of a review carried out under Impact Coatings’ new leadership regarding previously communicated orders from China Hydrogen Energy and Huaqing Power Technology. The review concluded that the likelihood of the customers’ meeting their contractual obligations was sufficiently low that the orders should be considered no longer valid.
Early in the period we disclosed that previous CEO Henrik Ljungcrantz was terminated without further severance payments. The reason was an ongoing investigation by PwC, at the instruction of the board of directors, which indicated that Henrik Ljungcrantz has violated rules for expense reimbursement over several years. It was also communicated that the board would hand over the final investigation report to the Swedish Economic Crime Authority and call shareholders to an extraordinary general meeting to elect a new auditor.
On September 11, an extraordinary general meeting of shareholders was held in Stockholm. In line with the recommendation of the board of directors, PwC was elected new company auditor as of the date of the meeting.
The company’s updated strategy was presented via live webcast on September 26. The webcast can be viewed in its entirety via the company’s homepage, http://www.impactcoatings.com/strategy_webcast_2018.
EVENTS AFTER PERIOD END
After the period end, Torbjörn Sandberg was appointed and began as the company’s ordinary CEO, after having been interim CEO since May 28, 2018. At the same time, it was announced that Rosina Gartz will join as interim CFO from October 22. She replaces Anders Nilsson, who will retire.
PwC delivered its final report regarding the investigation into expense reimbursements to former CEO Henrik Ljungcrantz. The final report confirms the preliminary results. The board of directors has submitted the report to the Swedish Economic Crime Authority for further processing and will seek to recover the expense reimbursements the investigation identified as incorrectly paid out as well as the costs for the investigation itself.
AUDIT AND ACCOUNTING POLICIES
This interim report has not been subject to auditor review.
UPCOMING FINANCIAL EVENTS
Year-end report for 2018 15 February 2019
Interim report for the first quarter 2019 25 April 2019
Annual general meeting 2019 15 May 2019
Visit also Redeye Tech Day 2018 in Stockholm on November 20 (also broadcast as a webcast), where we will present the company, our technology, markets, and the company’s updated strategy.
Torbjörn Sandberg, CEOTel: +46 768 43 43 76, E-mail: torbjorn.sandberg@impactcoatings.se
Rosina Gartz, CFOTel: +46 70 659 36 09, E-mail: rosina.gartz@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 October 26, 2018, at 8:00 a.m. CEST.
The board of directors, in line with what was stated in the July 24 press release, has submitted the investigation report to the Swedish Economic Crime Authority for further processing, and will seek to recover the reimbursed expenses identified by the investigation as incorrectly paid out plus costs for the investigation itself.
Mark H. Shay, CFAChairman of the BoardTel: +46 765 96 62 38 or e-mail: mark@accendofund.com
If any of the three largest shareholders decides not to exercise the right to appoint a representative on the nomination committee, the right is passed on to the next largest shareholder. The nomination committee consists of:
Kai Tavakka, Chairman, appointed by Accendo Capital SICAV SIFTorsten Rosell, own representationHans Österberg, own representationMark Shay, Chairman of the Board
The AGM will be held in Linköping on May 15, 2019.
The proposals of the nominating committee will be published in the invitation to the AGM and will be made available on the company web site, www.impactcoatings.com.
Shareholders who wish to submit proposals to the nomination committee may do so via e-mail to investors@impactcoatings.se no later than February 1, 2019.
Peter Högfeldt, VP Marketing+46 708 87 44 34
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Torbjörn Sandberg has served as interim CEO since May 28, 2018. He has a background as CEO of publicly listed and privately held companies including Sensys Gatso Group AB (publ), Birdstep Technology ASA (publ), Netadmin Systems, and ServiceFactory.
“I am excited and honored to have been chosen as CEO and look forward to working with the company’s competent team to realize the long-term potential of Impact Coatings,” said Torbjörn Sandberg.
“Torbjörn Sandberg has over the past four months established trust and credibility with Impact Coatings employees, customers, and the board of directors. With clarity and humility, he has helped Impact Coatings define a new business strategy and has the operational skills to make it a reality,” said Mark Shay, Chairman of the Board.
Rosina Gartz has more than 20 years of experience in corporate financial management and industrial operations from companies including Assa Abloy, Svenska Cellulosa (SCA), NASDAQ, Hilding Anders International, and Ovako Group.
“Rosina Gartz has relevant experience and leadership skills in financial management from a wide range of industries, with a clear emphasis on production companies. She brings to Impact Coatings an entrepreneurial energy, which will help drive our progress toward becoming a mid cap listed industrial company. We thank Anders Nilsson for his valuable contribution to Impact Coatings since joining in June 2017, and wish him all the best in the future,” said Torbjörn Sandberg.
Torbjörn SandbergCEOTel: +46 76 843 43 76 or e-mail: torbjorn.sandberg@impactcoatings.se
The information was delivered, via the contact persons named above, for publication on October 5, 2018, at 8:00 a.m. CEST.
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The coating system will be used for coating metallic bipolar plates for fuel cells using Ceramic MAXPHASE™. The customer will primarily deliver fuel cell stacks to the rail transport industry and is for this application working in close cooperation with highly regarded Tongji University in Shanghai.
Henan Yuqing Power Co., Ltd. registered as a company in 2016 and demonstrates a solid financial profile according to a search with the Chinese company registry.
Impact Coatings has received pre-payment amounting to 80% of the order value. The remaining payments will be made upon delivery and upon final customer acceptance.
An already completed INLINECOATER™FC that can be modified to fit the customer’s specific requirements is available for the current order. Delivery is planned for the first half of 2019.
As with all exports from the EU, an export license will be required for the order to be valid.
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 September 25, 2018, at 10:15 a.m. CET.
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The purpose of the presentation is to provide further details on Impact Coatings’ updated strategy, which was summarized in the most recent interim report. The presentation is in English and will be concluded by a Q&A session. Presentation material will be published on the company’s website at 8.30 CEST on September 26.
Webcast link: https://digital.vevent.com/rt/fronto2~impactcoatings-180926
Participants in the conference call, who will be able to ask questions during the Q&A session, are asked to register in advance via: http://emea.directeventreg.com/registration/4636857 (for some web browsers it is better to copy the link to the web browser’s address bar). Conference ID: 4636857. Upon registering, a confirmation e-mail will be sent to the provided e-mail address.
For more information contact:Peter Högfeldt, VP Marketing+46 708 87 44 34E-mail: investors@impactcoatings.se
The reason for the called EGM was the proposal by the board of directors to elect a new company auditor. At the EGM, 4 individuals attended representing 6,0% of the total outstanding share capital and votes.
The EGM decided, in accordance with the proposal from the board of directors, to elect Öhrlings PricewaterhouseCoopers AB (”PwC”) org.nr 556029-6740, with lead auditor Johan Palmgren, as company auditor effective the date of the EGM.
For more information contact:Mark H. Shay, CFAChairmanTel: +46 765 96 62 38 or e-mail: mark@accendofund.com
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The customer is a well-known watch manufacturer that ordered its first coating machine from Impact Coatings in 2016. The new machine will be delivered during the first half of 2019. The order value, which depends on configuration and customer’s specific requirements, is approximately EUR 700,000.
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 September 3, 2018, at 8:30 a.m. CET.
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