HALF YEAR REPORT JANUARY 1 – JUNE 30 2019 · 2019. 8. 12. · Half Year Report 2019 FINANCIAL REPORTS Swedish Stirling AB 3 First six months 2019 in brief Amounts in SEK thousands

HALF YEAR REPORT JANUARY 1 – JUNE 30 2019

2 Half Year Report 2019 | FINANCIAL REPORTS Swedish Stirling AB

Swedish Stirling AB is a Swedish clean tech company founded in 2008 with a mission to develop and commercialise the Stirling technology’s ability to convert thermal energy to electricity. The company currently produces solutions and products for generating electricity at low cost compared to other renewable and sustainable alternatives. Swedish Stirling has the clean tech market’s best Stirling engine, featuring a unique combination of both high power and efficiency. The technology is based on Kockum’s world-class Stirling engine for submarines.

The company’s latest product – the PWR BLOK 400-F – is a unique, climate-friendly solution for extracting electricity from industrial residual and flare gases at record-low prices. Manufacturing and assembly take place in Sweden. Swedish Stirling currently has operations and customers in both Europe and Africa. The company’s shares are listed in Sweden (on the NGM Nordic MTF), and also trade on the Börse Stuttgart in Germany.

Swedish Stirling AB in brief

3Half Year Report 2019 | FINANCIAL REPORTS Swedish Stirling AB

First six months 2019 in brief

Amounts in SEK thousands Apr-Jun 2019 Apr-Jun 2018 Jan-Jun 2019 Jan-Jun 2018 Jan-Dec 2018

Net turnover 12,303 16,213 20,585 29,826 58,349

Own work capitalised 12,168 16,136 20,269 29,682 57,334

Operating profit -5,477 -2,073 -13,820 -5,477 -14,453

Profit/loss after tax -11,517 -3,751 -23,986 -8,656 -22,360

Earnings per share (before dilution) SEK -0.14 -0.05 -0.30 -0.11 -0.28

Equity/asset ratio. %* 74% 89% 74% 89% 80%

Cash flows from operating activities -1,306 -4,293 -42,089 -458 7,853

Cash flow for the period -21,857 -24,406 -2,139 -39,109 -71,808

Cash and cash equivalents 27,593 62,431 27,593 62,431 29,732

(*) See note 7 for definitions

• Sven Sahle, Ulf Gundemark, Andreas Ahlström, Benedict Morgan and Gunilla Spongh were re-elected as members and Erik Wigertz was elected as new member of the Board. Sven Sahle was re-elected as Chairman of the Board.

• Authorisation for the Board of Directors to issue new shares. The Board of Directors is authorised to issue new shares up to a maximum of 20 per cent of the Company’s share capital without shareholder’s preemptive rights.

• According to the resolution from the AGM the company’s name was changed to Swedish Stirling AB.

• Lloyd’s Register has certified PWR BLOK is the cheapest way to generate electricity in existence today, and that the technology yields greater CO2 savings per Euro invested than any other type of energy source.

• Swedish Stirling has renegotiated the agreement with South African Afarak Mogale (Pty) Ltd. The new agreement implies that Afarak Mogale will buy electricity produced by the PWR BLOK instead of owning the equipment itself.

• Swedish Stirling AB plans to apply for listing on a regulated market during the first half of 2020. The Board’s decision is to apply for listing on the Nasdaq Stockholm Main Market.

Material events after the end of the period• Swedish Stirling AB has signed an exclusivity agreement with Glencore Operations South Africa. The

agreement gives Swedish Stirling exclusivity to negotiate an installation of initially up to 25 PWR BLOK 400-F to a 9.9 MW power generation facility estimated, at completion, to generate annual revenue of MSEK 40.

Material events April-June 2019


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Glencore signs deal for cleaner andcheaper alternative to Eskom power• Clean-tech firm to build a power generation facility at Lydenburg smelter

Lisa SteynMining & Energy Writer

Natural resources companyGlencore has signed a deal witha Swedish clean-tech companyto build a power-generationfacility that will cut emissionsand power costs at its ferro-chrome smelter in Lydenburg.

The rising cost of power is akey concern of the SA smeltingindustry, which is taking strainover electricity prices.

With an effective tariff hike of13.81% granted to Eskom in 2019alone — and more scheduled inthe next two years — the pres-sure is on for energy-intensivebusinesses to adapt or die.

In a statement issued bySwedish Stirling, the companysaid the facility will reduce thecarbon dioxide emissions fromthe smelter by more than80,000 tons a year.

Though it has not disclosedthe price at which the powergenerated will be sold back toGlencore, according to SwedishSterling SA’s GM, David deMattos, it will undercut the priceof Eskom’s power.

Swedish Stirling’s offering,the PWR BLOK 400-F, makesuse of Stirling engines — anexternal combustion engine asopposed to internal combustionand which is it better suited tothe volatile nature of industrialwaste gas.

MOGALE ALLOYSIt was successfully piloted atAfarak SA’s Mogale Alloys plantin Krugersdorp, where a fullydeveloped power project con-verts the ferrochrome smelter’sown waste gas into electricityfor the plant.

In May, Lloyd’s Register, a UKclassification and certification

group, certified PWR BLOK asthe cheapest way in existence togenerate electricity with greatercarbon dioxide savings in SAthan any other applicable type ofenergy source.

Swedish Stirling’s agreementwith Glencore’s alloys divisiongrants it exclusivity to negotiatean installation of a 9.9MWpower generation facility at theLydenburg smelter — enough topower 2,000 households.

The power generation facilitywill be owned and operatedthrough a special purpose vehi-cle established and controlled bySwedish Stirling.

At completion, it is estimatedit will generate annual revenueof €3.75m for the company. Theproject will also generate carboncredits during its lifetime.

The deal is subject to defini-tive agreements being con-cluded between the parties and

Glencore obtaining all requiredinternal approvals.

Swedish Stirling said itintends to secure finance for thefacility in its entirety.

For one of the world’s largestcommodity companies to investin such a large commercial pro-ject is a true quality rating for theSwedish environmental tech-nology industry, Gunnar Lars-son, CEO of Swedish Stirling,said in a statement.

De Mattos noted that SA hasthe highest concentration offe r r o chrome producers in theworld with an estimated200MW of unused furnaceo f f-g a s .

“The implementation of PWRBLOK 400-F technology willprovide relief from ever-increasing energy pricing aswell as carbon emission dis-p l a ce me nt ,” he said.stey nl @ bu sinessliv e . co . z a

EDCON REVAMP

PIC deniesp o l it ic a lpressurein bailoutAlistair Anderson

The Public Investment Corpora-tion (PIC), which is the largestinvestor in SA, has responded tosuggestions that it invested inEdcon because of politicalpressure, saying that it was inthe national interest to con-tribute to the turnaround of thestruggling retailer.

“The PIC has been followingmedia reports suggesting that ithas been politically pressured toinvest in Edcon … The PIC wouldlike to state, at the outset, thatthis suggestion is misinformed.PIC ’s investment is underpinnedby sound commercial, socialand governance principles,” itsaid in a statement.

Deon Botha, head of corpo-rate affairs at the PIC, said thatthe PIC had followed the neces-sary procedures.

“From a governance point ofview, the investment in Edconwas made on behalf of theUnemployment Insurance Fund(UIF) and was in line with thec l ie nt ’s investment mandate.

“The PIC had an extensiveengagement with all the stake-holders, including the UIF,labour unions and Edcon, beforemaking the final investmentde c i s io n ,” he said.

“In making the investmentdecision, the PIC subjected thetransaction to the PIC’s rigorousinternal investment processesand did not succumb to anyexternal political or union pres-sure as suggested by somemedia houses.”

Edco n ’s debt and capitalstructure was restructured. Thisprogramme included the contri-bution of cash and rent reduc-tions, totalling about R2.7bn, intothe Edcon group, with the PICinvestment worth R1.2bn.

However, Edcon CEO GrantPattison said on Thursdayunions had played an importantrole in getting the PIC on board.He also said the recapitalisationprogramme had been a success.

“It was in the national interestto prevent job losses. The unionsdid their job in placing pressureon the PIC and others to invest inthe recapitalisation programme.We appreciated the help fromu n io n s ,” Pattison said.

Botha said the “UIF’s sociallyresponsible investment man-date allows the PIC to invest inprojects that create and sustainjobs”. He said the UIF’s invest-ment was just one component ofinterventions by multiple stake-holders aimed at preventing theloss of over 140,000 jobs acrossthe value chain of Edcon.

“The result of this is that UIFis now one of the shareholdersin Edcon. Had there been nointervention by both the UIF andother stakeholders, jobs wouldhave been lost in Edcon andcompanies that service Edcon.In the final analysis, the UIFwould have to bear the burdenof having to pay unemploymentinsurance claims,” he said.andersona @ bu sinessliv e . co . z a

LONDIWE BUTHELEZI

ON THE SPOT

How the Prudential Authorityaims to make banking safer

In 2013 the soundness ofSA banks was rankedthird in the world. Fiveyears later it fell tonumber 62 out of 142

countries, the 2018 WorldEconomic Forum GlobalCompetitiveness Surveyshows. Following recentcollapses of African Bank andVBS, it is understandable whyw e’ve fallen so hard.

Is the Prudential Authority,which was established in 2018to regulate and supervisebanks and other financialinstitutions, going to return SAto its former glory? BusinessDay spoke to SuzetteVogelsang, head of banking,insurance, co-operativefinancial institutions andfinancial market institutionssupervision during the launchof the regulator’s first annualreport on Thursday.

Prudential Authority CEOKuben Naidoo said your job isto give all South Africanspeace of mind that theirmoney is safe. Given theliquidation of small institutionsand the collapse of VBS, howcan we still have that peace ofmind? What are you doingd i f fe r e nt ly ?

First, we are looking at whathappened to these institutionsand we are seeing where weneed to adapt or change ourregulatory framework or oursupervisory approach. Theother thing is as the PrudentialAuthority we were given morecapacity than we had in thepast, both in the banking

supervision department and inthe insurance prudential side.We ’ve also developed a risk-based supervisory frameworkthat identifies the risk within theentities and then monitors howthey are mitigating those risks.We are more forward-lookingnow on what can go wrong inthese institutions.

In your annual report, yousaid you are in the process ofassessing the regulatoryframework for mutual banksand co-operatives. Howdifferent is the newframework going to be?

The regulatory frameworkfor mutual banks is very dated.If you look at VBS and Finbond,they are not large institutionsbut they have relatively largebalance sheets. So we arelooking at updating theframework to bring it more inline with what commercialbanks need to adhere to, but itwill be on a proportional basis.For example in the insurancespace we introduced a micro-insurance framework. It hasprudential requirements butlighter than those ofmainstream insurers. So that’swhat we want to try in thebanking sector, particularly for

the co-operative financialinstitutions, co-operative banksand mutual banks.

You say the mutual banks’framework is outdated. Howdifferent is it from that ofcommercial banks? And howclose is it going to be oncey ou ’ve updated it?

It ’s still work in progress. Butto give an example; thesolvency calculation is verybasic. The capital requirementsare also basic. They don’t takeinto account the risks on thebalance sheet. There is noformal liquidity testing that’s inthe legislation. So it’s thosetypes of things that we want toalign with the banking sectorbut keeping proportionality andtype of business in mind.

There is a trust deficit,which might even affect thesmaller banks coming to themarket now, after VBS. Giventhe supervision steps you aretaking now, can you as thePrudential Authority assureSouth Africans that those arethings of the past?

It ’s a loaded question. We’veput measures in place to ensurethat we quickly pick upproblems and deal with them.VBS in particular hadpeculiarities with fraud, whichis very difficult for a supervisorto pick up. But with the lessonslearnt, not only locally but alsointernationally, we try to updateand better our processesinternally to pick up problemsearly enough and to intervenequickly enough to prevent orlimit losses to investors.

TURNING

WASTE

INTO POWER

Graphic: KAREN MOOLMAN Source: IRESS

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Back at the end of last year, I said that our ambition for 2019 was to prove the PWR BLOK 400-F both commercially and technically, and that the year could be a smashing success for Swedish Stirling. During the second quarter, much has happened at the company to confirm this, and I particularly want to emphasise three important events.

CEO’s statement

To begin with, during the quarter we commissioned our first commercial PWR BLOK 400-F at Afarak Mogale in South Africa, and are now producing climate-smart electricity from industrial waste gas. We anticipate that the PWR BLOK will be considered to have been commercially proven by a number of banks in the second half of the year. This allows customers who purchase our product, or who invest in projects where it is used to gain access to debt financing and thus a lower cost of capital. This is a very important factor when it comes to generating a kWh at a low price.

The second major event during the period was that Lloyd’s Register – one of the world’s largest independent certification companies – verified in its

audit of our technology what we have been saying for a long time; that the PWR BLOK is the cheapest way to generate electricity in existence today, and that the technology yields greater CO2 savings per krona invested than any other type of energy. This is a huge success for Swedish clean tech, and of course for me personally as well. When I founded Swedish Stirling just over 10 years ago, the dream was that the Stirling engine would be able to generate cheap, climate-smart electricity and make a contribution to minimising global warming. The Lloyd’s certification confirms this, and the solution is competitive without any government support or subsidies.

The third major event actually occurred two days after the close of the half year. On July 2, Swedish Stirling


and Glencore SA signed an exclusivity agreement to finalise an installation of, initially, up to 25 PWR BLOK 400-F units for a 9.9 MW power generation facility at Glencore’s smelter in Lydenburg, South Africa. For the time being, we have reached an agreement with Glencore not to communicate the details of the deal, but it gives Swedish Stirling the exclusive right to all residual gas from Lydenburg and contains agreements regarding prices, delivery criteria, emission allowances and contract length. The deal first needs to be financed, after which, final agreements need to be signed. I rate the possibilities of this coming to pass as being good, as the offer is attractive to all parties and the collaboration is working very well. When the first stage has been fully developed, the facility is expected to generate annual revenues of SEK 40 million, but we assess that it will be possible to further expand the facility over time. I can also confirm that the agreement received a great deal of coverage in the South African mass media. This was the headline that ran on the South African news website BusinessLIVE: “Glencore finds cleaner, cheaper alternative to Eskom”*. This creates good conditions for continued marketing efforts in South Africa.

The negotiations with Glencore took a little longer than we initially thought. It was not because there was any doubt on their part about our offer. Quite the opposite. In the negotiations we have made a lot more progress in matters of detail than we had imagined in this first stage. The only challenge that we deem stands in the way of a final agreement is financing, and there we have several working promising avenues, as green loans and bank financing.

Peering into the future a little, I can confirm that we have an intense and exciting half year ahead of us. We continue to work on reducing the production cost per PWR BLOK unit, and I can state even now that we have good prospects of hitting our target costs.

We will also examine the conditions for strengthening the balance sheet. Both through the mandate for targeted issues issued at the Annual General Meeting last spring and by offering green loans. As communicated in May, we plan to apply for listing on the Nasdaq Stockholm Main Market during the first half of 2020. Internal work to prepare the company ahead of this process commenced last winter and will continue into the coming fall and winter as well. A part of this effort is also the recruitment of a new CFO, which is now ongoing.

In conclusion, I can state that given the agreement with Glencore, our short-term focus on South Africa and ferroalloys is entirely appropriate. We understand the customer’s needs and have no competition, and will therefore continue working to penetrate the market over the next few years, as at least 95 per cent of its potential remains. We have undertaken commitments to finance the first two deals that we are entering into ourselves. Our long-term ambition, however, is to sell the technology and a share of the maintenance and spare parts contracts. We believe that there are good opportunities for future business where the customer or a third party handles the financing and operational components as the technology becomes established. We also believe that there is room for future price increases, as a repayment period of just over three years is quite low for equipment that will last for at least 25 years.

Gunnar Larsson CEO

SWEDISH STIRLING AB

* ESKOM is the state-owned electricity company in South Africa.


Market developmentSwedish Stirling’s assessment is that the continued increase in global demand for energy and the effort to increase the share of renewable and climate-friendly power generation methods create an attractive market situation for the company. The price per MWh generated using the PWR BLOK is already very competitive without subsidies or state support. Nor is the product weather-dependent or dependent on geographical location, which is often the case with renewables like wind and solar power. The product is also able to contribute to a significant reduction in carbon dioxide emissions. Global potential for extracting electricity from residual gas is significant. South Africa – the market that Swedish Stirling is initially focusing on – accounts for nearly one-third of global ferrochrome production. Because other areas within the metallurgical sector also produce similar residual gases, Swedish Stirling assesses that the PWR BLOK 400-F will work for them as well, without requiring major adjustments.

Comments on the income statement and balance sheets of the periodThe Group’s income during the first six months amounts to TSEK 20,585 (TSEK 29,826), and primarily comprises capitalised work for own account in the amount of TSEK 20,269 (TSEK 29,682). Net sales amount to TSEK 0 (TSEK 0) and profit/loss after financial items is TSEK -23,955 (TSEK -8,527). The loss is largely attributable to other external expenses and personnel costs. As at the end of the period, capitalised development costs amount to TSEK 295,702 (TSEK 247,689).

Cash flowThe cash flow for the first six months amounts to TSEK -2,139 (TSEK -39,109) and during the second quarter TSEK -21,857 (TSEK -24,406). As at the balance sheet date, cash and cash equivalents amounted to TSEK 27,593 (TSEK 62,431). The negative cash flow is largely attributable to product development costs, which have been capitalised.

Changes in equityAs at the balance sheet date, the company’s equity amounted to TSEK 281,056 (TSEK 294,298). During the period, the company’s equity has been reduced by a total of TSEK -23,986 (TSEK -8,656), i.e. by the

earnings for the period. As at the balance sheet date, there are 79,505,021 (79,505,021) outstanding shares having a quota value of SEK 0.01 (SEK 0.01).

Parent companyThe parent company’s sales for the first quarter amounted to TSEK 0 (TSEK 0) and profit/loss after financial items amounted to TSEK -24,055 (TSEK -8,985). Cash flow at the end of the period amounted to TSEK 27,267 (TSEK 62 202).

Transactions with related partiesBoard member Gunilla Spongh has, in addition to her directorship, provided consulting services to the company to assist with preparations for a planned listing on a regulated marketplace and compliance with the enhanced requirements that follow such a listing. Her assignment runs until September 12, 2019, and the fee is limited to SEK 250,000. During the first half of the year, Spongh has billed the Company an amount of TSEK 156 (TSEK 0).

Ian Curry, board member of Swedish Stirling’s wholly owned subsidiary in South Africa Ripasso SA, has on a consulting basis acted as an advisor to both the subsidiary and parent company in connection with the intensification of the company’s South African business. During the first half of 2019, Curry received via his company TSEK 148 (TSEK 0)

Staff and organisationThe number of employees at the end of the first half of the year was 31, of which 5 were in South Africa.

SharesSwedish Stirling has been publicly listed in Sweden since November 28, 2016. Its shares trade on the NGM Nordic MTF under the ticker symbol STRLNG MTF and with ISIN code SE0009143993. The shares also trade on Börse Stuttgart in Germany. As at December 31, 2018, the share capital amounted to SEK 795,000, divided into 79,505,021 shares with a quota value of SEK 0.01. On January 19, 2018, an increase in the number of shares was registered in the amount of 18,347,312. All shares confer equal rights to the company’s assets and profits and entitle their holders to one vote at the General Assembly. At the General Assembly, each shareholder with voting


rights may vote the full number of shares owned and represented by such party without any restrictions on voting rights.

Convertible loansSwedish Stirling conducted a convertible bond issue in the autumn of 2017. The nominal amount of the convertible loan is SEK 25.1 million, allocated across 61,157,709 convertible bonds (STRLNG KV1). Each convertible bond is in a nominal amount of SEK 0.41. The convertible bonds have a duration of two years, with an interest rate of 10 percent per annum. Interest is payable quarterly in arrears. The conversion rate has been recalculated in accordance with the terms and conditions due to the recently closed issue of convertible bonds. The new conversion rate is SEK 4.4 per share, meaning that the company’s share capital may increase by a maximum of SEK 56,988, and the number of shares in the company may increase by a maximum of 5,698,787 shares. At full conversion this corresponds to shareholder dilution of around 6.7 percent.

An issue of convertible bonds with preferential rights for existing shareholders in the amount of SEK 79.5 million (STRLNG KV2) was completed on 26 February 2019. The loan carries an interest rate of ten (10) percent annually. The conversion price is SEK 10 per share. Requests for conversion into shares in the company may be submitted beginning on January 1, 2021 up to and including February 15, 2021. Assuming full conversion of all convertible bonds, the company’s share capital may increase by a maximum of SEK 79,505.02, and the number of shares in the company may be increased by a maximum of 7,950,502 shares. At full conversion this corresponds to shareholder dilution of around 9.1 percent.

Option programIn 2014, it was resolved to issue 464 warrants to the company’s employees. Payment was made in a total amount of SEK 3,119,008. This program is not subsidised by the company, and the company is not expected to incur any material expenses in connection with the program. One (1) warrant entitles the holder to subscribe for ten thousand (10,000) new shares for approximately SEK 2.30 per share from November 1, 2017 up to and including October 31, 2021. If all warrants are exercised, the company will raise approximately SEK 10.7 million, and its share capital

will increase by SEK 46,400. The 4,640,000 shares thus issued currently correspond to around 7 percent of the Company’s share capital. The warrants are not recorded in the securities register and expire on October 31, 2021.

RisksThe group’s business consists mainly of developing and commercialising new technology. The group’s development is thus associated with technical, financial and regulatory risks. For more detailed information about the group’s risks, please refer to the 2018 annual report. The annual reports are available on the company’s website.

AuditThis interim report has not been audited.

Accounting policiesThe interim report has been prepared in accordance with the Swedish Annual Accounts Act and IAS 34 Interim Financial Reporting. The consolidated accounts have been prepared in accordance with the Swedish Annual Accounts Act and International Financial Reporting Standards (IFRS) as adopted by the EU and the Swedish Financial Reporting Board (RFR1 Supplementary Accounting Rules for Groups). The parent company’s accounts have been prepared in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board (RFR2 Accounting for Legal Entities). For more detailed information on the Group’s accounting principles, please refer to the first quarterly report 2019, January - March, which is available on the company’s website.

Financial calendar

• The first six months 2019 will be published on August 13, 2019.

• The quarterly report for 3Q 2019 will be published on November 12, 2019.

• The results for 4Q 2019 will be published on February 18, 2020.

• The annual report for 2019 will be published on March 24, 2020.


The Board of Directors and the CEO warrant that the interim report for the periods January-June 2019 provides a true and fair view of the parent company’s and the group’s operations, financial position and earnings, and describes material risks and uncertainties faced by the parent company and the companies that form part of the group.

Sven SahleCHAIRMAN OF THE BOARD

Erik WigertzBOARD MEMBER

Benedict MorganBOARD MEMBER

Gunnar LarssonCEO

Andreas AhlströmBOARD MEMBER

Ulf GundemarkBOARD MEMBER

Gunilla SponghBOARD MEMBER

Gothenburg, 13 August 2019

ContactGunnar Larsson, CEO, [email protected] Stirling headquarters: +46 (0)722-32 39 01

Swedish Stirling AB (publ) is required to disclose this information in accordance with the EU Market Abuse Regulation. The information was submitted for publication at the initiative of the above contact person on 13 August 2019, 08:00 CET.


Amounts in SEK thousands Note Apr-Jun 2019

Apr-Jun 2018

Jan-Jun 2019

Jan-Jun 2018

Jan-Dec 2018

Net sales - - - - -


Other operating income 135 77 316 144 1,015

Total 2 12,303 16,213 20,585 29,826 58,349

Raw materials and consumables -4,117 -12,232 -7,545 -22,810 -41,049

Other external expense 4 -5,432 -3,010 -11,646 -6,644 -15,928

Costs of personnel -7,778 -2,751 -14,309 -5,380 -14,504

Depreciation/amortisation of tangible fixed assets -436 -199 -838 -268 -969

Other operating expenses -17 -94 -67 -201 -352

Total expense -17,780 -18,286 -34,405 -35,303 -72,802


Financial income - - - - -

Financial cost 3 -6,027 -1,548 -10,135 -3,050 -7,809

Financial items - net -6,027 -1,548 -10,135 -3,050 -7,809

Net income before tax -11,504 -3,621 -23,955 -8,527 -22,262

Income tax -13 -130 -31 -129 -98

Profit/loss for the period -11,517 -3,751 -23,986 -8,656 -22,360

Other comprehensive income:

Items that may be classified to profit/loss for the period:

Exchange rate differences when translating for-eign operations

55 -24 55 -24 -22

Other comprehensive income for the period 55 -24 55 -24 -22

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

-11,462 -3,775 -23,931 -8,680 -22,382

Consolidated statement of income

The profit/loss for the period and total comprehensive income for the period are attributable in their entirety to the parent company’s shareholders.

Amounts in SEK Apr-Jun 2019 Apr-Jun 2018 Jan-Jun 2019 Jan-Jun 2018 Jan-Dec 2018

Earnings per share prior to dilution -0.14 -0.05 -0.30 -0.11 -0.28

Diluted earnings per share -0.14 -0.05 -0.30 -0.11 -0.28

Earnings per share, based on the profit/loss for the period attributable to the parent company’s shareholders:


Amounts in SEK thousands Note 30-06-2019 30-06-2018 31-12-2018

Fixed assets

Intangible fixed assets - - -

Capitalised expenditures for development work 295,702 247,689 275,433

Total 295,702 247,689 275,433

Tangible fixed assets

Leasehold improvements 476 586 523

Machinery and other technical assets 665 735 358

Property, plant and equipment 2,763 855 2,629

Right-of-use assets 2,928 3,351 2,989

Total 6,832 5,527 6,499

Financial fixed assets

Shares in subsidiaries 66 68 63

Other long-term receivables 22 4 13

Total 88 72 76

Total fixed assets 302,622 253,288 282,008

Current assets

Inventories, etc. - - -

Work in progress 44,756 7,803 32,055

Total 44,756 7,803 32,055

Current receivables

Receivables from subsidiaries - - -

Current tax receivables 360 360 233

Other receivables 3,130 5,006 4,234

Prepaid expenses 377 353 254

Total 3,867 5,719 4,721

Cash and cash equivalents 27,593 62,431 29,732

Total current assets 76,216 75,953 66,508

TOTAL ASSETS 378,838 329,241 348,516

Consolidated balance sheet

ASSETS



Equity

Share capital 795 795 795

Share premium reserve 299,217 299,217 299,217

Other reserves 33 -24 -22

Profit/loss for the period -18,989 -5,690 -19,394

Total equity attributable to the parent company's shareholders

281,056 294,298 280,596

Provisions

Deferred tax 151 133 111

Total 151 133 111

Long-term liabilities -

Convertible loans 81,320 19,856 21,089

Lease liabilities 2,152 2,901 2,533

Total 83,472 22,757 23,622

Current liabilities

Prepayments from customers 305 305 305

Accounts payable 4,523 8,847 13,006

Leasing liabilities 750 345 394

Other current liabilities 3,931 235 26,889

Accrued expenses and deferred income 4,650 2,321 3,593

Total 14,159 12,053 44,187

TOTAL EQUITY AND LIABILITIES 378,838 329,241 348,516

EQUITY AND LIABILITIES


2018 Equity attributable to parent company shareholders

Consolidated changes in equity

Amounts in SEK thousandsShare

capitalOther capital contributions Reserves

Retained earnings inluding profit/loss

for the periodTotal

equity

Opening balance as at 1 January 2018 612 299,400 2,966 302,978

Profit/loss for the period -22,360 -22,360

Other comprehensive income for the period -22 -22

Total comprehensive income for the period -22 -22,360 -22,382

Transactions with shareholders in their capacity as owners

Registration of new share issue 183 -183

Total transactions with shareholders 183 -183 -

CLOSING BALANCE AS AT 31 DECEMBER 2018 795 299,217 -22 -19,394 280,596


Amounts in SEK thousandsShare

capitalOther capital contributions Reserves

Retained earnings inluding profit/loss

for the periodTotal

equity

Opening balance as at 1 January 2019 795 299,217 -22 -19,394 280,596


Changes directly to equity

Market value option component convertible loan 24,391 24,391

Other comprehensive income for the period 55 55

Total comprehensive income for the period 55 405 460


Registration of new share issue -

Total transactions with shareholders -

CLOSING BALANCE AS AT 30 JUNE 2019 795 299,217 33 -18,989 281,056



Apr-Jun 2018

Jan-Jun 2019

Jan-Jun 2018

Jan-Dec 2018

Operating activities

Profit/loss after financial items -11,504 -3,621 -23,955 -8,527 -22,262

Adjustments for items not included in cash flow, etc. 3,788 1,028 5,956 1,865 4,425

Paid income tax - - - - -

Cash flow from operating activities before chang-es in working capital

-7,716 -2,593 -17,999 -6,662 -17,837

Cash flow from changes in working capital

Increase (-) / decrease (+) in inventories, etc. -3,859 -3,725 -12,701 -4,870 -29,122

Increase (-) / decrease (+) in operating receivables -90 -143 854 -48 950

Increase (-) / decrease (+) in operating liabilities 2,643 -425 -30,242 4,460 36,025

Total cash flow from operating activities -1,306 -4,293 -42,089 -458 7,853

Investing activities

Investments in intangible assets -12,173 -16,137 -20,269 -29,682 -57,426

Investments in tangible fixed assets -434 -1,279 -849 -2,151 -3,824

Investment in financial fixed assets - - - - -

Cash flow from investing activities -12,607 -17,416 -21,118 -31,833 -61,250

Financing activities

New share issue - - - - -

Shareholders' contributions - - - - -

Financial leasing -228 -104 -437 -156 -574

Borrowings - - 79,504 - -

Cash flow from financing acitivites -228 -104 79,067 -156 -574


CASH AND CASH EQUIVALENTS AT THE BE-GINNING OF THE PERIOD

49,450 86,837 29,732 101,540 101,540

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

27,593 62,431 27,593 62,431 29,732

Consolidated cash flow statement

The cash flow presentation for prior periods has been restated in accordance with IFRS 16.



Apr-Jun 2018

Jan-Jun 2019

Jan-Jun 2018

Jan-Dec 2018

Operating income

Net sales - - - - -


Other operating income 135 77 316 144 1,015

Total income 12,303 16,213 20,585 29,826 58,349

Operating expense

Raw materials and consumables -5,099 -12,805 -9,432 -23,383 -43,409

Other external expense -5,198 -3,081 -11,248 -6,767 -15,321

Costs of personnel -7,338 -2,692 -13,447 -5,321 -13,773

Depreciation/amortisation of tangible fixed assets -215 -102 -406 -125 -418

Other operating expenses -17 -94 -67 -201 -352

Total expense -17,867 -18,774 -34,600 -35,797 -73,273


Profit/loss from financial items

Interest income and similar items - - - - -

Interest expense and similar items -5,979 -1,524 -10,040 -3,014 -7,674

Profit/loss from financial items -5,979 -1,524 -10,040 -3,014 -7,674


Income tax - - - - -

PROFIT/LOSS FOR THE PERIOD -11,543 -4,085 -24,055 -8,985 -22,598

Parent company’s income statement

In the parent company, no items are recognised as other comprehensive income, for which reason total comprehensive income for the period corresponds to the profit/loss for the period.



Fixed assets

Intangible fixed assets - - -

Capitalised expenditures for development work 295,702 247,689 275,433

Total 295,702 247,689 275,433

Tangible fixed assets

Leasehold improvements 476 586 523

Property, plant and equipment 3,063 1,260 2,619

Total 3,539 1,846 3,142

Financial fixed assets

Shares in subsidiaries - - -

Other long-term receivables 66 68 63

Total 66 68 63

Total fixed assets 299,307 249,603 278,638

Current assets

Inventories, etc. - - -

Work in progress 44,756 7,803 32,055

Total 44,756 7,803 32,055

Current receivables

Receivables from subsidiaries - - -

Current tax receivables 360 360 233

Other receivables 2,983 5,006 4,119

Prepaid expenses 505 475 375

Total 3,848 5,841 4,727

Cash and cash equivalents 27,267 62,202 29,666

Total current assets 75,871 75,846 66,448

TOTAL ASSETS 375,178 325,449 345,086

The parent company’s balance sheet

ASSETS



EQUITY

Restricted equity

Share capital 795 795 795

Not registered share capital - - -

Fund for development costs 131,675 53,979 111,406

Total 132,470 54,774 112,201

Unrestricted equity

Share premium reserve 299,217 299,217 299,217

Retained earnings -126,916 -51,013 -108,440

Profit/loss for the period -24,055 -8,985 -22,598

Total 148,246 239,219 168,179

Total equity attributable to the parent company's shareholders

280,716 293,993 280,380

LIABILITIES

Long-term liabilities

Convertible loans 81,320 19,856 21,089

Total 81,320 19,856 21,089

Current liabilities

Prepayments from customers 305 305 305

Accounts payable 4,394 8,797 12,914

Other current liabilities 3,793 177 26,805

Accrued expenses and deferred income 4,650 2,321 3,593

Total 13,142 11,600 43,617

TOTAL EQUITY AND LIABILITIES 375,178 325,449 345,086

EQUITY AND LIABILITIES



Parent company changes in equity

Amounts in SEK thousands

Share capital

Non registered

share capital

Development reserve Reserves

Retained earnings including

profit/loss for the period

Total equity

Opening balance as at 1 January 2018 612 183 53,979 299,217 -51,013 302,978


Provisions for development reserve -57,427 - -57,427 -

Other comprehensive income for the period

Total comprehensive income for the period

57,427 -80,025 -22,598


Registration of new share issue 183 -183 -

Total transactions with shareholders 183 -183 -

CLOSING BALANCE AS AT 31 DECEMBER 2018

795 - 111,406 299,217 -131,038 280,380


Amounts in SEK thousands

Share capital

Non registered

share capital

Development reserve Reserves

Retained earnings including

profit/loss for the period

Total equity

Opening balance as at 1 January 2019 795 - 111,406 299,217 -131,038 280,380


Provisions for development reserve 20,269 -20,269 -

Changes directly to equity -

Market value option component convertible loan

24,391 24,391

Other comprehensive income for the period -

Total comprehensive income for the period

20,269 -19,933 336


-

Registration of new share issue -

Total transactions with shareholders -

CLOSING BALANCE AS AT 30 JUNE 2019

795 - 131,675 299,217 -150,971 280,716



Apr-Jun 2018

Jan-Jun 2019

Jan-Jun 2018

Jan-Dec 2018

Operating activities


Adjustments for items not included in cash flow, etc. 3,568 931 5,524 1,722 3,874

Paid income tax - - - - -

Cash flow from operating activities before changes in working capital

-7,975 -3,154 -18,531 -7,263 -18,724

Cash flow from changes in working capital

Increase (-) / decrease (+) in inventories, etc. -3,859 -3,724 -12,701 -4,870 -29,122

Increase (-) / decrease (+) in operating receivables -114 -248 879 -152 966

Increase (-) / decrease (+) in operating liabilities 2,473 -429 -30,478 4,445 35,836

Total cash flow from operating activities -1,500 -4,401 -42,300 -577 7,680

Investing activities

Investments in intangible assets -12,168 -16,137 -20,269 -29,682 -57,426

Investments in tangible fixed assets -410 -943 -803 -1,816 -3,404

Investment in financial fixed assets - - - - -

Cash flow from investing activities -12,578 -17,080 -21,072 -31,498 -60,830

Financing activities

New share issue - - - - -

Shareholder's contribution - - - - -

Borrowings - - 79,504 - -

Cash flow from financing acitivites - - 79,504 - -


CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD

49,320 86,837 29,666 101,540 101,540

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

27,267 62,202 27,267 62,202 29,666

Parent company cash flow statement


Notes

Amounts in SEK thousands Apr-Jun 2019

Apr-Jun 2018

Jan-Jun 2019

Jan-Jun 2018

Jan-Dec 2018


Currency gains 113 59 60 85 903

Other commission income 22 18 255 59 112

Total 12,303 16,213 20,585 29,826 58,349

Amounts in SEK thousands 30-06-2019 30-06-2018 31-12-2018

Debt component 23,254 19,229 21,088

Equity component 1,821 5,846 3,987

Nominal amounts 25,075 25,075 25,075

Amount in SEK thousands Apr-Jun 2019

Apr-Jun 2018

Jan-Jun 2019

Jan-Jun 2018

Jan-Dec 2018

Interest expense 2,674 719 5,017 1,453 4,353

Revaluation of convertible loans 3,353 829 5,118 1,597 3,456

Total financial expenses 6,027 1,548 10,135 3,050 7,809

Convertible loan KV1

Note 3 Financial cost

Convertible debt instruments include both a debt component and an equity component. Swedish Stirling has two outstanding convertible loans of TSEK 25,075 (STRLNG KV1) and TSEK 79,505 (STRLNG KV2). For detailed accounting principles for the convertible loans, see Note 2 - 2.17 in the Q1 2019 report.

Swedish Stirling is in an expansion phase where revenues from sale of the product have yet to be reported. As the risk is considered to be greater in a company that has not yet secured significant sales volumes compared to a mature company, the yield requirements have also been adjusted accordingly. In light of this, a discount rate of 35% has been used to determine the market value of the loan and option component, and the interest effect of the period’s revaluation of the convertible loan.

Note 1 General information

Swedish Stirling AB (publ) (”Swedish Stirling”) – previously Ripasso Energy AB, corporate identity number 556760-6602, is a parent company registered in Sweden with its headquarters in Gothenburg, with the address Gruvgatan 35B, SE-421 30 Västra Frölunda, Sweden.

Unless otherwise specified, all amounts are reported in thousands of SEK (TSEK). Information appearing in parentheses refers to the comparison year.

Note 2 Net turnover

Net turnover comprises of the following:

Amounts in SEK thousands 30-06-2019 30-06-2018 31-12-2018

Debt component 58,067 - -

Equity component 21,438 - -

Nominal amounts 79,505 - -

Convertible loan KV2


Amounts in SEK thousands Apr-Jun 2019

Apr-Jun 2018

Jan-Jun 2019

Jan-Jun 2018

Jan-Dec 2018

G Spongh Förvaltning AB - - 156 - -

Fox Energy Ltd 109 148 - -

Total 109 - 304 - -

Apr-Jun 2019

Apr-Jun 2018

Jan-Jun 2019

Jan-Jun 2018

Jan-Dec 2018

SEK

Earnings per share prior to dilution -0.14 -0.05 -0.30 -0.11 -0.28

Diluted earnings per share -0.14 -0.05 -0.30 -0.11 -0.28

Earnings measurements used in the calculation of earnings per shar

Earnings attributable to the parent company's shareholders used in the calculation of earnings per share before and after dilution

-11,517 -3,751 -23,986 -8,656 -22,360

Earnings attributable to the parent company's shareholders, TSEK

-11,517 -3,751 -23,986 -8,656 -22,360

Amounts

Weighted average number of common shares when calculating earnings per share before dilution

79,505,021 79,505,021 79,505,021 79,505,021 79,505,021

Adjustment for calcuation of diluted earnings per share 18,289,289 10,338,787 18,289,289 10,338,787 10,338,787

- Outstanding options 4,640,000 4,640,000 4,640,000 4,640,000 4,640,000

- STRLNG KV1* 5,698,787 5,698,787 5,698,787 5,698,787 5,698,787

- STRLNG KV2** 7,950,502 - 7,950,502 - -

Total weighted average number of common shares when calculating earnings per share after dilution

97,794,310 89,843,808 97,794,310 89,843,808 89,843,808

Options and convertible loans

Weighted average number of common shares and potential commnon shares used as the denominator when calculating diluted earnings per share

No dilutive effect as the earnings are negative

(*) Estimated number based on the conversion rate STRLNG KV1: SEK 4.4 per share(**) Estimated number based on the conversion rate STRLNG KV2: SEK 10.00 per share

Note 5 Earnings per share

Note 4 Transactions with related parties

Board member Gunilla Spongh has, in addition to her directorship, provided consulting services to the Company to assist with preparations for a planned listing on a regulated marketplace and compliance with the enhanced requirements that follow such a listing.

Ian Curry, board member of Swedish Stirling’s wholly-owned subsidiary in South Africa Ripasso SA, has on a consulting basis acted as an advisor to both the subsidiary and parent company in connection with the intensification of the company’s South African operations.


Note 6 Subsequent events

July 2 - Swedish Stirling AB (“Swedish Stirling”) has signed an exclusivity agreement with Glencore Operations South Africa Proprietary Limited (Alloys Division) (“Glencore”). The agreement gives Swedish Stirling exclusivity to negotiate an installation of initially up to 25 PWR BLOK 400-F to a 9.9 MW power generation facility which, at completion, is estimated to generate annual revenue of MSEK 40 (3.75 MEUR).

Note 7 Financial ratios

In addition to the financial ratios prepared in accordance with IFRS, Swedish Stirling presents financial ratios that have not been defined in accordance with IFRS, for example equity and quick ratio. These alternative ratios are considered important earnings and performance indicators for investors and other users of the interim report. The alternative ratios should be considered a complement to, but not a substitute for, the financial information prepared in accordance with IFRS. The Swedish Stirling Group’s definitions of these measures, not defined in accordance with IFRS, are described in this note.

Financial ratio Definition Purpose

Equity/asset ratio in % Profit after tax in relation to equity. The ratio shows the return on the owners’ invested capital.

Equity ratio Adjusted equity as a percentage of total assets. Adjusted equity refers to taxed equity with the addition of untaxed reserves reduced by deferred tax liability.

Equity ratio is relevant for investors and other stake-holders who want to assess the company’s finan-cial stability and ability to cope in the long term.

Quick ratio Current assets, excluding inventories, divided by current liabilities incl. proposed dividends.

The key figure gives an idea of the company’s pay-ment readiness in the short term. At a cash flowabout 100% the company manages to pay all their short-term debts.


Amounts in SEK thousand Jan-Jun 2019 Jan-Jun 2018 Jan-Dec 2018

Profitability

Operating income 20,585 29,826 58,349

Operating profit -13,820 -5,477 -14,453

Operating profit, after tax -23,986 -8,656 -22,360

Return on equity * -9% -3% -8%

Capital structure

Equity/asset ratio * 74% 89% 80%

Quick ratio * 222% 565% 78%

Weighted average outstanding shares 79,505,021 79,505,021 79,505,021

- Outstanding warrants (**) 4,640,000 4,640,000 4,640,000

- New issue in progress - - -

- Convertible loans (***) 13,649,289 5,698,787 5,763,607

Number of shareholders (**) 7,156 5,380 5,862

Earnings per share -0.30 SEK -0.11 SEK -0.28 SEK

Diluted earnings per share -0.30 SEK -0.11 SEK -0.28 SEK

Dividend per share - - -

Employees

Average number of employees 27 9 17

Personnel costs 14,309 5,380 14,504

(*) See note 7 for definitions (**) At the balance sheet date(***) Estimated number based on a conversion rate of SEK: STRLNG KV1:SEK 4.4 per share, STRLNG KV2: SEK 10.0 per share

Key ratios


Operating income All revenue, including capitalised work for own account.

Operating profit Profit/loss after amortisation and depreciation.

Operating profit, after tax Profit after tax.

Return on equity Profit after tax divided by equity.

Equity/asset ratio Adjusted equity as a percentage of total assets. Adjusted equity is defined as the taxed equity, plus untaxed reserves less deferred tax liabilities.

Quick ratio Current assets, excluding inventories, divided by current liabilities incl. proposed dividends.

Weighted average outstanding shares Outstanding shares at the beginning of the period adjusted for newly issued shares during the period, multiplied by a time-weighting factor.

Potential shares attributable to outstanding warrants

Outstanding warrants at the end of the period converted into potential shares.

Earnings per share The profit/loss for the period divided by the weighted average of outstanding shares.

Diluted earnings per share The profit/loss for the period divided by the weighted average of outstanding shares and potential shares attributable to outstanding warrants and convertibles.

Dividend per share Established dividend per eligible share.

Average number of employees Average number of employees during the period.

Personnel costs Personnel costs during the period, including wages, salaries, other benefits and social welfare costs.

Key ratio definitions

ONLINE

www.swedishstirling.com [email protected]

PHONE

+46 31 385 88 30

ADDRESS

Swedish Stirling AB Gruvgatan 35B

421 30 Västra Frölunda SWEDEN

Documents

HALF YEAR REPORT JANUARY 1 – JUNE 30 2019 · 2019. 8. 12. · Half Year Report 2019 FINANCIAL REPORTS Swedish Stirling AB 3 First six months 2019 in brief Amounts in SEK thousands