Year-End Report 2020

ChromoGenics conducted a fully guaranteed rights issue for accelerated growth

Q4 2020

  • ChromoGenics continued to be impacted during the quarter by the coronavirus pandemic and delays in adjustments to the sputter machines, which resulted in delayed orders from the company’s customers. Order intake and invoicing were pushed back in 2020 and into 2021. Several customers are waiting until we can deliver dynamic glass with film produced in house before they place their orders.
  • In the fourth quarter, order intake amounted to SEK 6.0 (3.1) million, an increase of 93 percent compared to the corresponding period in 2019. An order was received from Vasakronan of SEK 4.3 million for Kvarteret Hästen in Uppsala and from Norge Ortun Skole of around SEK 1.0 million. Order volume for Q1 2021 amounts to SEK 8.8 (9.5) million.
  • Net sales for the period amounted to SEK 2.0 (8.1) million, and earnings amounted to SEK -8.9 (-23.2) million, which corresponds to earnings per share of SEK -0.66 (-5.77) after the rights issue in December.
  • The action plan started in early April that aims to reduce the company’s running costs had a large impact in the fourth quarter of the year. Operating costs decreased to around SEK 19.0 million compared to the corresponding quarter in 2019.
  • Operating profit amounted to SEK -8.1 (-22.4) million, which is an improvement of SEK 14.3 million compared to the corresponding period in 2019.
  • Cash and cash equivalents amounted to SEK 93.4 (24.8) million on December 31, 2020.
  • Two machines for advanced surface coating (sputtering machines) have been installed in the company’s premises in Uppsala and are fundamental for future operations. Ongoing work is focused on verifying, adjusting and fine-tuning the manufacturing process and its accompanying control system. The initial sustainability tests show good results.
  • On October 23, the Board of Directors of ChromoGenics decided to repay to the Swedish Agency for Economic and Regional Growth the furlough subsidy of SEK 2.4 million that the company had received since the company’s installation and adjustment program is a priority and it is therefore not possible to keep key staff on furlough. The company’s liquidity was negatively impacted by SEK 2.4 million. 
  • On October 28, ChromoGenics was granted a deferment until October 1, 2022, for its repayment obligation for conditional loans from the Swedish Energy Agency. This will entail liquidity relief of more than SEK 10 million for ChromoGenics. 
  • On November 6, the Board of Directors of ChromoGenics decided pursuant to the authorization granted by the Annual General Meeting on May 14, 2020, to conduct an issue of units, consisting of seven shares and two warrants, with a preferential right for existing shareholders. The rights issue was fully guaranteed and raised SEK 94.1 million for ChromoGenics before issue costs in December.
2020 2019   2020 2019
SEK million Okt-Dec Okt-Dec Jan-Dec Jan-Dec
Net sales 2,0 8,1 14,6 45,2
EBITDA -7,6 -20,4 -51,8 -67,0
Net income -8,9 -23,2 -62,5 -77,9
EPS before dilution, SEK -1,26 -5,77 -11,26 -33,83
EPS after dilution, SEK -0,66 -5,77 -5,24 -33,83
Cash and bank end of the period 93,4 24,9 93,4 24,9

Events after the end of the period

  • On February 2, 2021, ChromoGenics announced that it is finalizing negotiations with the Norwegian construction company Betonmast (AS) with Avantor (AS) as the developer for an order of ConverLight® Dynamic and ConverLight® Paragon ECO for installation in an environmentally certified building under construction at Gulhaugtorg 5 in Oslo, Norway. The order initially amounts to SEK 23.3 million and can be increased to SEK 25.0 million through an option on additional orders.
  • An important part of ChromoGenics’ future investment and development is the procurement of a new business system that supports the production process and development to an industrial company.

A word from the CEO

The year in review

The past year was a year of intense focus and work to resolve previous quality issues and install and adjust new production equipment. The coronavirus pandemic naturally had a major impact on the company and the market conditions, which meant that planned building projects and orders were postponed. Overall, this has meant that the company’s net sales fell to around one-third of its net sales in 2019. In order to adapt to the lower net sales, the operations were significantly reduced in March and April, which meant that the number of employees was reduced from 39 to 24. The effects of these measures were fully realized in late 2020.

In 2019, the company decided to invest in its own sputtering capacity to rectify the issues with the product ConverLight®Dynamic caused by insufficient quality at one of the company’s suppliers. During the summer of 2020, the installation of the first sputtering machine was completed. The installation took longer than planned, primarily due to the coronavirus pandemic making it impossible for the British consultants who were going to install the equipment to travel to Sweden. The installation was completed thanks to the fantastic efforts of the company’s own employees. Sputter I has been undergoing adjustments since the summer, and in November the process for tungsten oxide, one of the two coating processes that are necessary for the company’s product, electrochromic glass, was established. In November and December 2020, the operations focused on establishing the process for nickel oxide, which has taken longer than planned.

During the year, the sales and marketing activities focused on the company’s other products: ConverLight®Static and ConverLight®Energy. The company has also maintained its relationships with dynamic glass customers for new installation deliveries in late 2021 and early 2022 and replacement of earlier faulty installations. This work resulted in part in an order for dynamic glass of SEK 4.3 million for one of Vasakronan’s properties in Uppsala. Alongside the sales of its ordinary products, the company also started marketing its overcapacity in Sputter II.

In December, ChromoGenics conducted a rights issue. The issue, which was fully guaranteed, raised SEK 78.3 million after issue costs. The proceeds from the issue will used for the final steps in the completion of both Sputter I and Sputter II, the development of the first external hub, and the expansion of the company’s production facilities and to secure working capital for ChromoGenics’ pending operational expansion.

Start of 2021 and the future

During the early months of the year, the work to establish the nickel oxide process in Sputter I continued with good results.

The company is now implementing the final adjustments to the nickel oxide process. Once the process has been established, tungsten oxide and nickel oxide will be produced in order to be able to conduct the final sustainability tests before ConverLight®Dynamic is once again released on the market. The tests that will be conducted are extensive and will be run for a period of 90 days. While the tests are ongoing, the company can regularly evaluate the product and assess its sustainability. The product’s quality will already become apparent after around 60 days.

The installation of Sputter II is progressing parallel to the adjustment of the processes, and installation is estimated to be completed in H1 2021. The sale of the overcapacity in Sputter II has begun and discussions are being held with around 35 potential customers. Sputter I will be dedicated to production of material for dynamic glass, while the capacity in Sputter II will be available for contract manufacturing, primarily to actors in the electronics and Med Tech industries.

The company is currently finalizing negotiations with the Norwegian company Betonmast for delivery of ConverLight® Dynamic and ConverLight® Paragon ECO for installation in an environmentally certified building under construction at Gulhaugtorg 5 in Oslo, Norway. The order initially amounts to SEK 23.3 million and can be increased to SEK 25.0 million through an option on additional orders. The negotiations are expected to be finalized in February 2021. The order is part of the ongoing discussions with a number of customers that are expected to be closed within six months and refer to orders of more than SEK 50 million.

The focus in 2021 is to continue to transition ChromoGenics from being a development company to becoming an industrial company within cleantech. This includes securing the quality of the dynamic glass and structuring the operations internally in order to meet the requirements for ISO 9000 certification through, for example, improved IT support in the form of a new ERP system. This strategic focus also entails preparing for an international launch of the dynamic products by adopting a business model for international expansion and establishing procedures for the technology transfer to international partners.

ChromoGenics has a climate-smart product that creates energy savings and an improved indoor climate, which contributes to sustainable development in the real estate sector. Through its scalable business model, the company is addressing a global market for glass that is estimated to grow to USD 181 billion in 2024 with annual growth of 9.3 percent.

Leif Ljungqvist, CEO

Contact:
Leif Ljungqvist, CEO
Tel: +46 (0)70 594 94 01

Lars Ericsson, CFO and Head of Communications
Tel: +46 (0)18 430 0430
E-mail:
info@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 February 19, 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 offers dynamic glass with controllable heat- and light transmission and static glass with world leading performance. The company’s unique technology ConverLight® provides sustainable solar control for increased indoor comfort and energy efficiency. ConverLight also contributes to Green Building certifications. In 2016 the company started commercial sales to real estate projects in Scandinavia.

ChromoGenics is located in Uppsala, Sweden, and the technology is derived from the world leading research center at Ångström Laboratory at Uppsala University. The plant has been partly financed by a conditional loan from the Swedish Energy Agency. ChromoGenics share (CHRO) is listed on Nasdaq First North Growth Market with Erik Penser Bank as Certified Adviser, e-mail: certifiedadviser@penser.se, tel.: +46 (0) 8 463 83 00. http://www.chromogenics.com

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