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 It was produced for one of the orders from China that were early in the period determined to be no longer valid.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).

Provisions for deferred tax assets have, as in previous years’ accounts, not been accounted for.

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.

For more information, contact:

Torbjörn Sandberg, CEO
Tel: +46 768 43 43 76, E-mail: torbjorn.sandberg@impactcoatings.se

Rosina Gartz, CFO
Tel: +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.

—————————————————–

IMPACT COATINGS AB - INTERIM REPORT JULY-SEPTEMBER 2018

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.

For more information contact:

Mark H. Shay, CFA
Chairman of the Board
Tel: +46 765 96 62 38 or e-mail: mark@accendofund.com

—————————————————

Release

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 SIF
Torsten Rosell, own representation
Hans Österberg, own representation
Mark 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.

For more information contact:

Peter Högfeldt, VP Marketing
+46 708 87 44 34

E-mail: investors@impactcoatings.se

————————————————-

Release

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.

For more information, contact:

Torbjörn Sandberg
CEO
Tel: +46 76 843 43 76 or e-mail: torbjorn.sandberg@impactcoatings.se

Mark H. Shay, CFA
Chairman of the Board
Tel: +46 765 96 62 38 or e-mail: mark@accendofund.com

The information was delivered, via the contact persons named above, for publication on October 5, 2018, at 8:00 a.m. CEST.

—————————————————————————-

Release

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.

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

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.

—————————————————————–

Release

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 34
E-mail: investors@impactcoatings.se

—————————————————–

PR Invitation strategy presentation

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, CFA
Chairman
Tel: +46 765 96 62 38 or e-mail: mark@accendofund.com

————————————————————————-

Release

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.

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

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.

———————————————————————-

Release

Right to attend

Shareholders who wish to attend the EGM shall both be registered in the shareholder registry maintained by Euroclear Sweden AB by Wednesday, 5 September 2018, and notify attendance to the company latest Wednesday, 5 September 2018 via e-mail to anmalan@impactcoatings.se or post to Impact Coatings AB (publ), Westmansgatan 29G, 582 16 Linköping.

Notification of attendance shall include name, person- or organization number, shareholdings, address, telephone number, and information in the case of representatives. If participation is by proxy, relevant credentials must be submitted before the EGM. Credentials may not be more than one year old, unless a longer period of validity (maximum five years) is stated in the credentials documentation. If the shareholder represented by proxy is a legal entity, the representative must present proof of registration or other documentation that confirms the signatory’s authority. A proxy form will be available from the company’s web page www.impactcoatings.com latest from three weeks before the EGM until the day of the EGM and will be sent to those shareholders who request it and provide a postal address.

Shareholders that have chosen to register shares with a custodian must, in order to participate in the EGM, temporarily re-register their shares under their own name with Euroclear Sweden AB sufficiently in advance so that the re-registration is completed latest Wednesday, 5 September 2018. In order for this to occur, a request for such re-registration must reach the custodian well in advance of the date above.

Proposed agenda

1. The meeting is called to order.
2. Election of the meeting chairman.
3. Presentation and approval of the voting list.
4. Approval of the agenda.
5. Election of one or two people to approve the minutes.
6. Determination of whether the meeting has been duly convened.
7. Election of new auditor.
8. Meeting is adjourned.

Proposal for resolution

Item 7 – Election of new auditor

The board of directors proposes that the EGM resolve in accordance with the board’s proposal to choose Öhrlings PricewaterhouseCoopers AB (”PwC”) org.nr 556029-6740, with by PwC suggested lead auditor Johan Palmgren, as the new auditing company for the company from the date of the EGM, see Appendix 1.

______________

Linköping, August 2018
Impact Coatings AB (publ)
The board of directors

For more information contact: 
Mark H. Shay, CFA
Chairman
Phone: +46 765 96 62 38, or e-mail: mark@accendofund.com 

This information was submitted under responsibility of the contact person named above, for publication 17 August 2018 at 08:15 a.m.

About Impact Coatings

Impact Coatings develops and delivers world-leading technology for industrial PVD-coatings with a focus on fuel cell, decorative, metallization, and reflector applications. PVD is a method of, under vacuum, producing thin layers of metals and ceramics – surface coatings that maximize performance and durability. Impact Coatings markets coating equipment under the trade name INLINECOATER™ and coatings under MAXPHASE™.

The company’s shares trade on the Nasdaq First North exchange (Nasdaq OMX Nordic). The company’s Certified Adviser is Redeye AB.

______________

Appendix 1

Item 7 – Election of new auditor

The board of directors proposes that the EGM resolve in accordance with the board’s proposal to choose Öhrlings PricewaterhouseCoopers AB (”PwC”) org.nr 556029-6740, with lead auditor Johan Palmgren, as the new auditor for the company from the date of the EGM.

A press release from Impact Coatings on 24 July 2018 states:

“An independent accounting investigation of the period January 2016-June 2018, conducted by PWC at the request of the Impact Coatings board of directors, has reached the preliminary conclusion that a substantial portion of travel-related and out-of-pocket expense reimbursement claims by former CEO Henrik Ljungcrantz are not business-related and/or lack required supporting documentation.

An analysis by a separate and independent firm has found similar improper handling of expenses during 2012-2015. Periods prior to 2012 have not been considered. Henrik Ljungcrantz was CEO of Impact Coatings during the period 2002-2014, and again during the period May 2017-May 2018.

Pending further investigation and based on preliminary data, it is reasonable to expect approximately SEK 1-3 million in improper expense reimbursements to be confirmed for the period 2012-2018, plus approximately SEK 1 million in costs for the investigation itself, all of which the company will seek to recover.

The board of directors has, after meeting with Henrik Ljungcrantz today, resolved to terminate his employment with immediate effect. He will after today not receive further severance payments described in the company’s 27 May 2018 announcement.

The board of directors will submit the final investigation report with supporting documentation to the Swedish Economic Crime Authority.”

Based on the number of incorrect transactions, the amounts in question, and the period during which the errors have occurred, it is the judgment of the board of directors that election of a new auditor is warranted.

The departing auditor Ernst & Young AB (“EY”) with lead auditor Magnus Eriksson, has on 15 August 2018 informed the board of directors and the Swedish Companies Registration Office that they choose to resign as auditor of Impact Coatings effective 11 September 2018.

––––––––––––

PR 2018-08-17 - Call to EGM

CEO’s COMMENTARY

I started as interim CEO of Impact Coatings at the end of May. During the more than two months that have passed, my conviction has grown stronger that the company has very good potential to establish itself as a leading supplier of coatings for fuel cells, reflectors and exclusive consumer products. I am very impressed by the competence, energy, and ambition of the Impact Coatings team.

Our customers are clearly satisfied with our offering and with us as a company. The German company Varioplast has after the period end ordered an additional coating machine from us, and at the end of the quarter we delivered a coating machine to Xin Point in southern China – in both cases the result of several years’ evaluation of our production solution for metallization on plastic.

At the same time one can see that better commercial processes and a more efficient organization will be required to increase value creation over time. To this end, a review of the company’s customers, partners and suppliers is being carried out.

In connection with my starting, an objective review of the company was carried out to identify both strengths and areas needing development. Given that there were two major orders from China that had been delayed on several occasions, it was necessary to initiate a dedicated investigation concerning their status. The conclusion was that they can no longer be considered valid, since the customers could not demonstrate when payment could take place. In one case, a deposit had been paid, which will not be refunded. The situation with the two orders is highly regrettable, and is a clear signal to the company about the importance of risk assessment and commercial discipline that we will carry forward into future negotiations.

We see great interest in our offering for Decorative, Metallization and Reflective coatings. We estimate that the potential in the short and medium term is high in this segment, and that it offers the fastest path to profitability. We will therefore add additional resources in this area to be able to capitalize on the opportunities.

We will continue to work strategically with fuel cells, focusing on the industry-leading companies in the fuel cell industry, car manufacturers, and those suppliers on which car manufacturers have chosen to focus. We will not, however, work with companies that lack long-term financing, have an appreciably high commercial risk profile, or otherwise cannot be considered a strategic future customer or business partner.

A renewed contact at management level has been initiated with Optorun (Japan), with which we have distribution and supply agreements, to evaluate the future business potential. Previously communicated sales estimates connected to these agreements are being reviewed.

Impact Coatings is a company with great potential, and we will work hard over the long term, in a structured and goal-oriented manner, to grow and become profitable. To succeed, we will do all we can to recruit employees who have the same capacity and professionalism as our staff today.

Torbjörn Sandberg

FINANCIAL RESULTS

Second quarter 2018

Revenue for the second quarter amounted to SEK 2,648 thousand (2,783) and operating profit was SEK -13,258 thousand (-13,998). Profit before depreciation and other operating expenses was SEK -12,717 thousand (-13,493). Profit before tax amounted to SEK -13,527 thousand (-14,403). Cash flow amounted to SEK -11 698 thousand (3 937).

Cash flow from operating activities during the period amounted to SEK -11 698 thousand (3 937).

Cash flow from investing activities amounted to SEK 0 thousand (-1 340).

Cash flow from financing activities amounted to SEK 0 (0). Total cash flow for the period was SEK -11,698 thousand (-3,937).

During the period, a machine under production and part of the inventory of raw materials and consumables have been revalued. The net effect of the revaluation has been a reduction in operating profit for the period by SEK -2,780 thousand.

Provisions for deferred tax assets have, as in previous years’ accounts, not been made.

First half 2018

Revenue for the period January-June amounted to SEK 9 788 thousand (21 234). Gross profit amounted to SEK 4,097 thousand, 41.9% of sales (3,352, 15.8%). Operating expenses amounted to SEK -29,416 thousand (-35 636). Earnings before depreciation and other operating expenses amounted to SEK -18,004 thousand (-13,498). Profit before tax amounted to SEK -19,647 thousand (-14,408). Cash flow amounted to SEK -15,446 thousand (-8,222).

Cash flow from operating activities amounted to SEK -15,394 thousand during the period (-6,882).

Cash flow from investing activities amounted to SEK 0 thousand (-1 340).

Cash flow from financing activities amounted to SEK -70 thousand (0). Total cash flow for the period amounted to SEK -15,464 thousand (-8,222).

Provisions for deferred tax assets have, as in previous years’ accounts, not been made.

Financial position and liquidity

Liquid assets at period end amounted to SEK 49 922 thousand (13 925).

Equity-to-assets ratio amounted to 77.9% (77.6%).

EVENTS DURING THE SECOND QUARTER

The AGM was held in Linköping on May 17. At the AGM three new members were elected to the board of directors, Mark H. Shay (Chairman), Tanja Vainio and Lars-Gunnar Skötte, and two members were re-elected, Jan-Eric Sundgren and Christian Sahlén.

With the goal of helping the company become financially self-sufficient, the board of directors on May 27 replaced the company CEO and co-founder Henrik Ljungcrantz. Torbjörn Sandberg was appointed interim CEO, with qualifications as CEO of both publicly listed and privately-owned technology companies. The process to recruit a permanent CEO has started, with the goal of filling the role by year-end.

During June, an INLINECOATER™M was delivered according to plan to the Chinese producer of automotive components Xin Point. The coating machine, which was ordered in October 2017, will be used for decorative plastic components. The customer paid upon delivery in accordance with the sale agreement. Final acceptance and final payment will occur after completed installation.

EVENTS AFTER PERIOD END

After the period end, Varioplast GmbH (Germany) ordered an INLINECOATER™M coating machine. Varioplast has since 2013 been using coating equipment from Impact Coatings for metallization of plastic components for the automotive industry, which is the intended purpose of the new machine as well.

Under Impact Coatings’ new leadership, the previously communicated orders from China Hydrogen Energy and Huaqing Power Technology were subject to review. The review concluded that the likelihood of the customers fulfilling their obligations in the agreements is sufficiently low that the orders should be considered no longer valid. The was communicated in a press release on July 12.

On July 24 the company communicated that former CEO Henrik Ljungcrantz was terminated with immediate effect and without further severance payments. The reason was an ongoing investigation by PWC, at the request of the board of directors, which indicates that Henrik Ljungcrantz violated rules concerning reimbursement of expenses during several years. The board will hand over the final investigation report, expected during September 2018, to the Swedish Economic Crime Authority and will call shareholders to an extraordinary general meeting whose purpose will be the replacement of the company auditor.

BUSINESS DEVELOPMENT

The Impact Coatings board of directors has together with the executive management following the AGM in May updated the company’s strategy. The new direction can be summarized in three main points:

1) Impact Coatings will build a profitable and long-term sustainable business around Decorative, Metallization, and Reflective coatings (D/M/R), where the company has a clear offering and competitive advantages. The company has satisfied customers, of which several are repeat-customers, and a good balance of price vs. costs, which means the board and management see the potential to realize margins that can help the company become financially self-sufficient.

2) The Fuel Cell (FC) segment has significant growth potential, which we will exploit leveraging the unique qualities of Impact Coatings’ technology. The company will focus its sales activities on a prioritized group of fuel cell industry leaders.

3) Production capacity, final assembly, and test will be developed internally to build knowledge and retain margins.

The updated strategy will be presented in further detail via a webcast during September. A separate invitation will be published in the coming weeks.

The internal coating business is increasing in importance, both with respect to coating services and customer samples. Order flow and inquiries about coating of fuel cell plates are increasing. To meet demand, one of the INLINECOATER FC machines that was initially built for delivery to China has been moved to the internal coating operation.

The coating machine developed under the EuroStar Pro-FC program continues to be optimized at Impact Coatings’ premises and will be relocated to Borit NV (Belgium) at a time still to be determined.

AUDIT AND ACCOUNTING POLICIES

With the transition to serial production, revenue and profit from machine sales will be recognized upon delivery to the customer.

This interim report has not been subject to auditor review.

UPCOMING FINANCIAL EVENTS

Strategy webcast:                                          September 2018 (date TBD)
Interim report for the third quarter 2018:       26 October 2018
Year-end report for 2018:                              15 February 2019

For more information contact:

Torbjörn Sandberg, CEO
Tel: +46 768 43 43 76, E-mail: torbjorn.sandberg@impactcoatings.se

Anders Nilsson, CFO
Tel: +46 702 59 28 76, E-mail: anders.nilsson@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 17 August 2018, 8:00 a.m. CET.

———————————————————————

IMPACT COATINGS AB - INTERIM REPORT 1 APRIL-30 JUNE 2018