Year-end report Scandinavian Enviro Systems AB (publ) January – December 2016

2017-02-28

Signed MoU with a Chilean investor

N.B. The English text is an in-house translation of the original Swedish text. Should there be any disparities between the Swedish and the English text, the Swedish text shall prevail.

Q4 2016

  • Net revenues for the period were MSEK 0.1 (0.0).
  • Earnings after tax for the period were MSEK -12.7 (-8.3).
  • Earnings per share for the period (before dilution) was SEK -0.13 (-0.13).
  • Cash flow for the period was MSEK -10.7 (-6.8).
  • Signed MoU (Memorandum of Understanding) with Chilean investor regarding one or more installations in Chile.
  • An oversubscribed new share issue with preferential rights of MSEK 52.4 was fully registered.
  • Awarded “Waste Management of the Year” in the Swedish Recycling Awards
  • Pegroco Venture AB has become the biggest shareholder in the company after acquiring all the shares of KL Ventures AB.

January – December 2016

  • Net revenues for the period were MSEK 0.2 (0.2).
  • Earnings after tax for the period were MSEK -34.5 (-27.3).
  • Earnings per share for the period (before dilution) was SEK -0.49 (-0.60).
  • Cash flow for the period was MSEK -30.2 (-28.5).
  • Notification that our patent application for APR (a technology that reinforces our previous EHD patent) will be approved.
  • Finding that our recycled oil contains up to 79% bio-oil.
  • Granted project support from the Chilean government for establishing a Basic Design.
  • Commercial deliveries of recycled carbon black.
  • Thomas Sörensson has started as CEO and Urban Folcker has started as CFO.

Significant events after the year-end

  • Positive response from a global tire manufacturer after testing the company’s recycled carbon black
  • Approved EU trademark

CEO statement

Dear shareholders,

The company actively shifted focus over the year from development to commercialisation of our installation technology, and the material we produce at the Åsensbruk plant. That this refocusing is both customer and business driven is naturally a positive development for the future, and we hope to be able to implement several of the activities started during the spring of 2017. A concrete example of this is the queries we are receiving from installation customers, which has driven development of a Basic Design for the next generation of plants. We have refined our experiences from the Åsensbruk plant in preparation for being able to present more quickly and professionally tenders and product documentation in early stages.

Moreover, we have structured plans for broadening the assortment of material a plant can generate, paying greater attention to material development relating to both carbon black and oil to provide a more attractive market offering. We recruited for a new position in material development and quality that was filled 1 February 2017. We sense greater interest from manufacturers in recycled material, and we have received strong response to our reference cases. We can also now deliver continual high quality from our plant. We initiated recruitment to a sales position aiming to increasing our market presence leading into the summer. We were awarded the ‘Water Management of the Year’ prize at the Swedish Recycling Awards, which was an honour that gave well-deserved recognition from the industry showing we are an important partner for the future.

Our new share issue with preferential rights was over-subscribed by 16%, and we are very satisfied with the interest shown in the company.

Plant sales
Current installation processes are proceeding as expected and Basic Design is becoming an important tool for us in acquiring our first sale. Everyone who has followed us with interest in recent years knows that we have had expressions of interest from around the world, and that these discussions have taken time. We have great respect for this type of investment requiring thorough analysis in all aspects regarding the market, and timing is extremely important. The interested investors who have proceeded farthest in the process are those in Chile, with whom we have an advantage in relation to several important parameters.

We are working intensively with our activities regarding our technology, and commercially, to establish the prerequisites for concluding an agreement that fulfils their producer’s responsibility for mining tyres and similar. There are several interesting investors with varying characteristics and from different markets, where we look positively to future opportunities related to several applications and customers of the material our installations can produce. Media reports are filled with information and discussion related to current options regarding recycling tyres, as with incineration, and with granulation for sports fields or similar. We closely monitor these reports, and see a growing potential for our technology since many conventional methods are now being rightly questioned in a world where greater material recycling is necessary.

Carbon black
Our current customers have steadily increased volumes over our first year of commercial deliveries, showing growing confidence in the quality and continuity we provide. This is an important foundation our future customers and references. We have seen growing interest from current and potential customers in recent months as oil prices started to climb again. Our material has been tested in several applications and we look forward to approval for delivery in early 2017. In earlier communications, I noted that our initial focus will be on general rubber applications rather than tyres, since these are significantly more complicated products with much tougher requirements and testing. Along with this focus, we have ongoing testing of our material at several of the largest tyre manufactures, who are showing significantly greater interest, in my judgement. Approvals of this kind take a year or more, but can also generate global scale potential. One of the largest manufacturers recently assessed our material as being equivalent with or better than virgin material with comparable characteristics.

The Åsensbruk plant
The greater portion of development activities for the year were concluded, bringing several improvements including to cycle times from new extraction and separation equipment which were positive. We still have certain optimisation and trimming in to do as we increase the pace of production. Our objective is for higher sales volumes for carbon black, oil, and steel for the year to raise our contribution margins, while we retain capacity for the material development projects needed to broaden our assortment.

Thomas Sörensson

CEO

For more information, please contact:
Thomas Sörensson, CEO, tel: +46 735-10 53 43, thomas.sorensson@envirosystems.se
Stig-Arne Blom, Board Chairman, tel: + 46 705-25 16 15, stigarne@blom.pp.se

Scandinavian Enviro Systems AB
Regnbågsgatan 8C
SE-417 55 Gothenburg
info@envirosystems.se
https://www.envirosystems.se/en/

This information is information that Scandinavian Enviro Systems AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 08:30 CET on February 28th, 2017.

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