Interim Report January–June 2021

ChromoGenics restarted production of dynamic glass

Q2 2021

• On May 4, ChromoGenics announced that it would start in-house production of ConverLight® Dynamic, ChromoGenics’ dynamic glass. The results of the conducted tests were so positive that ChromoGenics decided to start production on a limited scope, even if the ongoing long-term tests were not yet fully completed. Production was started slowly to reduce the risk of production disruptions. The process for tungsten oxide was established at the end of 2020, and the process for nickel oxide is now also in place. The company has now established stable sputtering processes.
• ChromoGenics completed in mid-June the long-term tests of the production of the dynamic glass ConverLight^® Dynamic using conservative power inputs. The results of the tests looked as good as the preliminary results that formed the basis for the decision at the beginning of May to start production. The next step is to increase the rate of production and ensure that the metal oxide processes can handle the increased power and thus the heat resulting from a higher rate of production.
• The first dynamic glass from ChromoGenics’ factory in Uppsala was installed at the end of June in a building in Uppsala.
• The operating loss for Q2 2021 amounted to SEK -28.8 (-15.5) million. After deducting SEK 17.2 million for redeliveries, the operating loss amounted to SEK -11.7 million, which is an improvement of SEK 3.9 million compared to the corresponding period in 2020.
• The action plan introduced in March 2020 to reduce the company’s operating costs continued to have a major impact in Q2 2021. Operating costs excluding the provision of SEK 17.2 million for faulty deliveries decreased by approximately SEK 8.2 million compared to the corresponding period in 2020.
• Order intake for the second quarter amounted to SEK 0.5 (4.6) million. An order totaling SEK 23.3 million and with delivery in the fall of 2021 was received in March from Betonmast Oslo AS in Norway for the products ConverLight® Dynamic and ConverLight® Paragon ECO for installation in an environmentally certified building that is being built at Gullhaugs Torg 5 in Oslo, Norway. Due to the low rate of production, we have intentionally not accepted new orders for the dynamic products this quarter. The order volume going into Q3 2021 amounts to SEK 28.5 (9.7) million.
• ChromoGenics continued to be impacted during the quarter by both the coronavirus pandemic and the ongoing adjustments to the sputtering machines, which resulted in delayed orders from several of the company’s customers. Several customers are waiting until it is possible for us to deliver dynamic glass with film produced in-house before they place their orders. Invoicing was postponed until later in 2021.
• Some customers have glass that was delivered before ChromoGenics started its in-house production and would like the glass to be replaced within the coming year. Because ChromoGenics would like to have good customer relationships and keep existing satisfied customers to receive new orders, agreements have been reached with them to replace unsatisfactory aesthetic glass with newly produced glass. A provision of SEK 17.2 million has been made in the semi-annual accounts for redeliveries.
• Net sales for Q2 2021 amounted to SEK 1.7 (4.0) million, and earnings amounted to SEK -29.8 (-18.9) million, which corresponds to earnings per share of SEK -4.21 (-2.68), basic, including warrants (TO3) from the unit issue in December 2020.
• Cash and cash equivalents amounted to SEK 48.5 (36.1) million on June 30, 2021.
• The Annual General Meeting was held on May 20, 2021, and due to the coronavirus (COVID-19) and the contagion risk it was held only via absentee ballot pursuant to temporary legislation.
• On June 11, Fredrik Fränding was named the new CEO of ChromoGenics. Fredrik takes over the role on August 23, and Leif Ljungqvist will retire.
• On June 30, TopRight Nordic AB withdrew its unsolicited bid to the shareholders and warrant holders of the TO-3 series in ChromoGenics as the acceptance period closed. TopRight Nordic decided not to pursue its bid due to insufficient interest.
• An important part of ChromoGenics’ investment for the future and development is the implementation of a new business system that supports ChromoGenics’ entire production process and development into an industrial company. The project was completed during the first half of the year, and the business system became operational on June 1 at a cost of around SEK 1.3 million.

EARNINGS PERFORMANCE IN SUMMARY

EVENTS AFTER THE END OF THE PERIOD

• On July 7, ChromoGenics’ Board of Directors announced that it took a positive stance to the shareholders’ decision to reject the public bid from TopRight Nordic AB. ChromoGenics is focused in the near future on increasing the rate of production and delivering dynamic glass to both existing and new customers. 

• On July 26, ChromoGenics communicated that customers that previously received faulty deliveries have submitted requests to have the glass replaced in the next year as ChromoGenics’ production and deliveries of dynamic glass pick up speed. Because ChromoGenics would like to have good customer relationships and keep existing satisfied customers in order to receive new orders, agreements have been reached to replace unsatisfactory aesthetic glass with newly produced glass. ChromoGenics will make a provision of around SEK 17 million in the semi-annual accounts for 2021 that will have a negative impact on earnings for the period. 

Comments from the CEO

It is with great happiness and confidence that I took over as CEO on August 23. I would like to take this opportunity to thank Leif Ljungqvist for the fantastic work over the past year, as a result of which we have now started our own production. Leif will remain in the company for a while and contribute with his expertise.

The first half of the year, and the second quarter in particular, entailed a positive restart for the company. We have now started our own production of dynamic glass, and the results from the demanding long-term tests are very positive. Our employees have done a fantastic job getting the equipment and processes to work.

We have also started to deliver. In June I had the honor of being present during the delivery and installation of the first dynamic glass from our own production line. The glass was installed in a property in Uppsala that would like to lower its environmental impact and improve the indoor environment.

During the second quarter, we started production for deliveries to the Norwegian project Gullhaugs Torg 5 in Oslo. The project corresponds to an order value of SEK 23.3 million, and final delivery is planned for the fall of 2021. The project has been slightly delayed due to coronavirus-related problems at several of our subcontractors, which will mean that invoicing to the customer will be postponed. We do not expect there to be an impact on our cash flow on an annual basis.

The restart of production has begun at a slow rate, and the speed will increase during the fall. We have had some minor problems, which were adjusted, and during the fall we will make minor investments with the aim of simplifying production and increasing the speed. The focus will be on developing our sputtering processes, but we will also make improvements to our glass lamination.

Net sales during the second quarter were SEK 1.7 (4.0) million and refer primarily to the sale of ConverLight® Static, with some sales of ConverLight® Energy. Earnings for the second quarter less provisions for faulty deliveries correspond to SEK -12.6 (-18.9) million. The improvement in earnings of SEK 6.3 million is attributable to the action plan the Board adopted in the spring of 2020. Earnings including provisions for faulty deliveries amounted to SEK -29.8 million.

The order backlog consists primarily of the Norwegian project and currently amounts to SEK 28.5 million. During the fall, we will increase the rate of sales. The intention is also to begin to replace the glass at customers who lodged complaints regarding previous glass deliveries due to poor quality.

The results from the first half of the year have provided us with a platform from which we can continue to build, and the goal in the long run is to create a profitable international industrial company based on our scalable and sustainable business idea. Our focus in the near future is to increase the capacity of our in-house production, increase the rate of sales and marketing, and accelerate the transformation into an industrial company.

Fredrik Fränding, CEO

For more information, please contact:
Fredrik Fränding, CEO: Tel: +46 (0)722 492 462
Lars Ericsson, CFO & Head of Communications: +46 (0)18 430 0430
E-mail: info@chromogenics.com
http://www.chromogenics.com
 

This information constitutes such information that ChromoGenics AB (publ) is obligated to disclose in accordance with the EU Market Abuse Regulation. The information was submitted by the above-mentioned contact persons for publication on August 26, 2021, at 08:30 CET.

This statement has been made in a Swedish and English version. In the event of any discrepancies between the Swedish and English text, the Swedish text shall prevail.

About ChromoGenics
ChromoGenics is a property technology company providing smart dynamic glass for real estate. The company’s product ConverLight® Dynamic controls indoor comfort with high daylight input, good views and solar heat blocking and thereby reduces the costs of cooling. ConverLight® Dynamic is based on a patented solution where electrochromic coatings are laminated in plastic film and then laminated between glass. The plastic film is easy to transport, which is why long shipments of bulky glass can be avoided. ChromoGenics also offers static glass, ConverLight® Static, and the facade glass solution ConverLight® Energy. ChromoGenics share was listed on Nasdaq First North Growth Market 2017 and the company has provided smart glass solution to a wide range of real estate companies.

ChromoGenics is based in Uppsala and is a spin-off from the world-class research at the Ångström Laboratory at Uppsala University. The company’s production facilities have been financed in part by a conditional loan from the Swedish Energy Agency. ChromoGenics’ share (CHRO) is listed on Nasdaq First North Growth Market, and Erik Penser Bank AB is the Certified Adviser.