Q1 2021 - swedishstirling.com

Quarterly report | Jan 1 - Mar 31, 2021

Q1

2021

Swedish Stirling Group (the Company) is a Swedish cleantech company founded in 2008 with a mission to further refine the incomparable ability of the Stirling technology to convert thermal energy to electricity. The Company’s latest product, the PWR BLOK 400-F, is a unique proprietary solution for recovering energy from industrial residual and flare gases and converting them to 100 percent carbon-neutral electricity at a high rate of efficiency. According to Lloyd’s Register, an independent certification company, the PWR BLOK is the cheapest way to generate electricity that exists today, yielding greater CO2- savings per EURO invested than any other type of energy. Swedish Stirling has been a publicly listed company in Sweden since 28 November 2016 and is as of 6 November 2020 listed on Nasdaq First North Premier Growth Market.

Swedish Stirling in brief

2 Swedish Stirling AB (publ) | Q1, 2021 Swedish Stirling AB

Net sales for the period amounted to TSEK - (TSEK -). Total operating income for the quarter was TSEK 18,685 (TSEK 18,500). Earnings per share, before dilution, for the quarter was SEK -0.14 (SEK -0.14).

Swedish Stirling Swedish Stirling and SMS group signed an agreement regarding the use of the PWR BLOK technology for energy recovery projects in Europe within the ferroalloy industry. The focus of the collaboration between the companies will initially be on the Spanish market, where the first pilot project will consist of one PWR BLOK 400-F.

In the conversion of Swedish Stirling’s convertible bond KV2, TSEK 78,814 of the total loan amount of TSEK 79,505 was reported for conversion, which corresponds to approximately 99 percent. For KV3, 100 percent of the total loan amount of TSEK 53,000 was reported for the conversion.

During Q1 2021, a total of 152 subscription warrants from Swedish Stirling’s warrant program, resolved by the extraordinary general meeting held on October 10, 2014, were exercised to subscribe for 1,520,000 new shares in the company, which provided the company with approximately TSEK 3,489.

Material events January - March 2021

On 28 April Swedish Stirling AB and Glencore Merafe Venture signed an energy conversion service agreement for an installation of 25 PWR BLOK 400-Fs (10MW) at the Glencore Merafe Lion ferrochrome smelter. The term of the agreement is 8 years from the date on which the last PWR BLOK achieves commercial operation, with an option for the Glencore Merafe Venture to extend the term by 7 years. The estimated present value for the initial term of the agreement for Swedish Stirling is MZAR 700 (MSEK 413) and in order to mitigate the risk with the deal the Company has entered into a currency hedge.

3Swedish Stirling AB (publ) | Q1, 2021 Swedish Stirling AB

Amount in SEK thousands2021

Jan-Mar2020

Jan-Mar2020

Jan-Dec

Net sales - - -

Own work capitalised 18,685 18,500 53,025

Total operating income 18,730 18,747 53,395

Operating profit -4,943 -2,746 -22,951

Profit/loss after tax -14,701 -12,009 -72,877

Earnings per share (before dilution) SEK -0.14 -0.14 -0.80

Equity/asset ratio, %* 82% 61% 57%

Cash flows from operating activities -18,222 -7,020 -45,096

Cash flow for the period -33,636 36,713 104,801

Cash and cash equivalents 108,013 73,535 141,631

(*) See note 8 for definitions

First quarter 2021 in brief

Material events after the period

CEO’s statement

I have previously mentioned that Swedish Stirling’s focus in 2021 is: 1) commercial roll-out in South Africa; 2) new market launches; and 3) the start of serial production of PWR BLOK. After the year’s first quarter, I can tell you that we are following the plan to the letter.

Developments in South Africa are still going our way. We have, throughout the period, continued our talks in a very positive spirit with Samancor, Richards Bay Alloys and Glencore about the agreements for new installations in South Africa. We were also able, thanks to reduced transmission of corona in South Africa, to hold the official inauguration of our pilot installation at TC Smelter, with both Desmond McManus, CEO of Samancor Chrome in South Africa, and Håkan Juholt, Sweden’s ambassador, as guests of honour. The discussions in South Africa on different measures to further facilitate operations for the country’s ferrochrome industry have continued to benefit us. One example is the proposal to simplify the regulatory framework for larger installations by completely removing the licence requirement for installations of less than 50MW. This corresponds to 125 PWR BLOK units, and no single project we are currently working on reaches that level.

Gunnar Larsson CEO



The Stirling technology is therefore a particularly attractive solution, as it can run on hydrogen, ethanol, biogas or other fuels. With our Stirling engines and a renewable source of energy, it is possible to generate renewable electricity 24/7, and independently of the weather and wind. No expensive or complex storage solutions are required either. The modularity of our product prevents loss of efficiency in small-scale production, which other technologies experience with combustion-based energy production. This enables our technology to produce electricity on a small-scale and locally, in places where it is not viable to extend the electrical grid or when the grid capacity is not sufficient. I know that the Stirling engine is the renewable energy source of the future, and that others are soon going to realise this. Then we make industrial history.

Gunnar Larsson CEO

Swedish Stirling AB

We also signed a declaration of intent in March with SMS Group for a pilot installation of one PWR BLOK unit in Spain. And with that, the next market we are going to launch in after South Africa is Europe. The partnership with SMS Group, which is one of the world’s leading groups of companies in the field of plant construction and machine technology for the steel and non-ferrous metals industry, also promises greater future benefits for Swedish Stirling. In SMS group, we have a partner who already has collaboration, presence and a service and maintenance network established with the global metal industry, and so we do not need to deploy such major resources in order to introduce and sell the PWR BLOK technology. Instead, we are ultimately going to be able to focus more on production and product development.

In our third area of focus, which is serial production, we have concentrated on developing and adapting our distribution chain for greater production volumes, increased our capacity and carried out long-term testing at our production facility in Sibbhult, as well as worked on development of the first version of PWR BLOK generation 3. Our first serial produced PWR BLOK will be shipped by the end of the year, according to plan.

In conclusion, I can state that discussions about the climate and the future predicted shortage of electricity have continued to gain traction during the first months of the year. The reasoning in these discussions has often been complex, and it is sometimes difficult to evaluate which measures and forms of energy are best from an environmental point of view. Presently, it seems that hydrogen is the new black (or rather green) if you are to believe the media. It is not without a certain satisfaction that I can state that PWR BLOK already operates on hydrogen as fuel today. The residual gases from the metal industry, which our Stirling engines convert into electricity, contain in extreme cases up to 50 percent hydrogen.

When I founded the company in 2008, it was with the vision of establishing Stirling technology as the best option for local, sustainable electricity generation. Our initial focus is of course on converting residual gases into electricity, but we know that more and more of the world’s electricity generation needs to be fully renewable in locally based and small-scale installations.


Market development Swedish Stirling’s assessment is that the continued increase in global demand for energy and the effort to increase the share of renewable and climate-neutral power generation methods create an attractive market for the Company. The price per MWh generated using the PWR BLOK is already very competitive without subsidies or state support. Global potential for extracting electricity from the metal and petroleum industries’ residual gas is significant. Initially, Swedish Stirling has focused on the South African ferrochrome industry, which accounts for nearly one-third of the global ferrochrome production. Since production of other ferroalloys produce similar residual gases, Swedish Stirling’s assessment is that the PWR BLOK will work for them as well, without requiring major adjustments. The agreements currently in place with the South African ferrochrome producers Glencore and Samancor has led to increased market interest for Swedish Stirling’s technology from the global metal industry, but also from other types of industries with residual gases. The MOU’s and LOI’s for orders of up to 241 PWR BLOK signed with Samancor, Richards Bay Alloys and Glencore during the third quarter of 2020 is expected to further increase interest.

Comments on the income statement and balance sheet The Company’s operating income during the period January through March amounted to TSEK 18,730 (TSEK 18,747), and primarily comprised capitalised development cost in the amount of TSEK 18,685 (TSEK 18,500) related to development of PWR BLOK generation 3. Net sales amounted to TSEK - (TSEK -) and profit/loss after financial items were TSEK -14,067 (TSEK -11,847). The negative trend compared to the same period in prior year was primarily due to higher personnel cost as a result of an increase in new hires. As at the balance sheet date, capitalised development cost amounted to TSEK 360,246 (TSEK 342,769).

Changes in equity As at the balance sheet date, the Company’s equity amounted to TSEK 413,547 (TSEK 293,225). During the period January through March the Company’s equity increased by a total of TSEK 120,322 (TSEK 31,460).

The increase was mainly attributed to the conversion of convertible loans KV2 and KV3, however partially offset by the results of the period. As at the balance sheet date, there were 112,409,253 (85,090,390) shares outstanding with a quota value of SEK 0.01.

Cash flow The cash flow for the period amounted to TSEK -33,636 (TSEK 36,713). As at the balance sheet date, cash and cash equivalents amounted to TSEK 108,013 (TSEK 73,535). The negative cash flow for the period was primarily due to product development and testing costs for PWR BLOK generation 3. A higher inventory balance due to an increase in material purchase for future production also contributed to the negative cash flow.

Parent companyThe parent company’s operating income during the period January through March amounted to TSEK 16,463 (TSEK 18,156). Net sales for the period amounted to TSEK - (TSEK -) and profit/loss after financial items amounted to TSEK -15,739 (TSEK -11,614). The parent company cash balance as at the balance sheet date amounted to TSEK 107,367 (TSEK 73,192).

Transactions with related parties

Ian Curry, former board member of Swedish Stirling’s wholly owned subsidiary Swedish Stirling South Africa, 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. Curry resigned as board member in November 2020 and is not treated as related party as of this date. During the period January through March 2020, Curry received TSEK 428.

Staff and organisation

The number of employees at the end of the year was 47, of which 10 were employed in South Africa.

Shares and financing Swedish Stirling has been a publicly listed company in Sweden since 28 November 2016 and is as of 6 November 2020 listed on Nasdaq First North Premier Growth Market under the ticker symbol STRLNG and with ISIN code SE0009143993.


The below table outlines the change in issued stocks since 1 January 2020.

As at 31 March 2021, the share capital amounted to SEK 1,124,092.53 divided into 112,409,253 shares with a quota value of SEK 0.01. 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.

Warrant 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 1 November 2017 up to and including 31 October 2021. During 2020 35 warrants were converted into 350,000 new shares, which increased the Company’s share capital by SEK 3,500.

A total of 152 warrants were converted to 1,520,000 shares during the period January through March 2021, which has increased the Company’s share capital by SEK 15,200. If all remaining warrants are exercised, the Company will raise at most SEK 6,359,643, its share capital will increase by SEK 27,700 and the number of shares by 2,770,000.

The remaining shares outstanding corresponds to a shareholder dilution of around 2.4 percent. The warrants are not recorded in the securities register and expire on 31 October 2021. Convertible loan 2019/2021 (KV2)An issue of a convertible loan with preferential rights for existing shareholders in the amount of SEK 79,505,021 (STRLNG KV2) was registered on 7 March 2019. The loan carried an interest rate of 10 percent annually. The conversion price was SEK 10 per share. Requests for conversion into shares in the Company could be submitted from 1 January 2021 up to and including 15 February 2021.

The conversion period for KV2 ended on 15 February 2021. Of the total outstanding loan amount of SEK 79,505,021 an amount of SEK 78,814,050 was converted, which corresponds to approximately 99 percent and a dilution of 7.5 percent. Convertible loan 2019/2021:2 (KV3)On 26 November 2019, an issue of a convertible loan was registered with deviation from the shareholders’ preferential right in the amount of SEK 53,000,000 (KV3). The convertible loan carried an interest rate of 9 percent per annum and fell due on 28 February 2021. On 22 December 2020 at the Extraordinary General Meeting, it was resolved to amend the conversion price for convertible bonds 2019/2021:2 (KV3) from SEK 10 per share to SEK 9 per share. Requests for conversion into shares in the Company could be submitted from 1 January 2021 up to and including 15 February 2021.

The conversion period for KV3 ended on 15 February 2021. Of the total outstanding loan amount of SEK 53,000,000 a full 100 percent was converted in accordance with previously received conversion commitments, which corresponds to a dilution of 5.7 percent.

Convertible loan 2020/2025 (KV4)On 1 July 2020, an issue of a convertible loan with deviation from the shareholders’ preferential right in the amount of SEK 100,000,000 (KV4) was registered. The convertible loan carries an interest rate of 14 percent per annum and falls due on 30 June 2025. Conversion requests can be issued from 2 May 2025 up to and including 16 June 2025.

Stocks issued

Opening balance as at 1 January 2020 85,090,390

New share issue March 6,678,571

Conversion of warrants 350,000

New share issue December 5,000,000

Closing balance as at 31 December 2020

97,118,961

Conversion of convertible bonds 13,770,292

Conversion of warrants 1,520,000

Closing balance as at 31 March 2021 112,409,253


The conversion rate is SEK 8 per share. At full conversion the Company’s share capital may increase by a maximum of SEK 125,000, and the number of shares in the Company may increase by a maximum of 12,500,000 shares. This corresponds to a dilution of approximately 10.0 percent. There is no intention to list the convertible loan on any marketplace.

Risks

The Company’s business consists mainly of developing and commercialising new technology. The Company’s development is thus associated with technical, financial, and regulatory risks. For more detailed information about the Company’s risks, please refer to the 2020 annual report available on the Company’s website www.swedishstirling.com

The risks associated with the corona pandemic have primarily resulted in certain project delays for Swedish Stirling, due to the lockdown in South Africa. The Company has not incurred any additional costs as a result of the pandemic and has implemented an action program that ensures future cost savings. The Company has also successfully implemented a number of measures to ensure employees’ and customers’ safety.

Audit

This interim report has not been subject to review by the company’s auditors.

Accounting policies

The 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 Company’s accounting principles, please refer to the annual report 2020, which is available on the Company’s website.

Financial calendar

• The semi-annual report for 2021 will be published on 18 August 2021.

• The quarterly report for Q3 2021 will be published on 2 November 2021.

• The results for Q4 2021 will be published on 16 February 2022.

• The annual report for 2021 will be published on 18 March 2022.


The CEO warrants that the interim report for the period January through March 2021 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.

Gunnar LarssonCEO

Gothenburg, 12 May 2021

Contact Gunnar Larsson, CEO, [email protected]

Swedish Stirling headquarters: +46 (0)31-385 88 30 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 12 May 2021, 12:00 CET.


Amount in SEK thousands Note 2021 Jan-Mar

2020 Jan-Mar

2020 Jan-Dec

Net sales - - -


Other operating income 2 45 247 370

Total 18,730 18,747 53,395

Raw materials and consumables -5,137 -5,325 -18,240

Other external expense -7,192 -6,472 -20,717

Costs of personnel -10,502 -8,853 -34,593

Depreciation of tangible fixed assets and right-of-use assets -792 -575 -2,694

Other operating expenses -50 -268 -102

Total -23,673 -21,493 -76,346


Financial income 356 - -

Financial cost 3 -9,480 -9,101 -48,489

Financial items - net -9,124 -9,101 -48,489

Net income before tax -14,067 -11,847 -71,440

Tax -634 -162 -1,437

Profit/loss for the period -14,701 -12,009 -72,877

Other comprehensive income:

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

Exchange rate differences from foreign operations -281 -9 -22

Other comprehensive income for the period -281 -9 -22

Total comprehensive income for the period -14,982 -12,018 -72,899

Consolidated statement of profit and lossand comprehensive income

Amount in SEK2021

Jan-Mar2020

Jan-Mar2020

Jan-Dec

Earnings per share prior to dilution -0.14 -0.14 -0.80

Diluted earnings per share -0.14 -0.14 -0.80

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

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


ASSETS

Amount in SEK thousands Note 31-03-2021 31-03-2020 31-12-2020

Intangible fixed assets

Capitalised expenditures for development work 360,246 292,908 342,769

Total 360,246 292,908 342,769

Tangible fixed assets

Leasehold improvements 791 677 859

Machinery and other technical assets 20 37 24

Property, plant and equipment 4,254 3,086 4,191

Vehicles 848 187 851

Right-of-use assets 3,026 3,987 3,319

Total 8,939 7,974 9,244

Financial fixed assets

Other long-term receivables 39 100 37

Deferred tax asset 42 34 44

Total 81 134 81

Total fixed assets 369,266 301,016 352,094

Current assets

Inventories 21,510 14,037 17,570

Work in progress 204 11,881 148

Total 21,714 25,918 17,718

Current receivables

Current tax receivables 799 - 606

Other receivables 4 934 627

Prepaid expenses 1,575 933 773

Total 2,378 1,867 2,006


Total current assets 132,105 101,320 161,355

TOTAL ASSETS 501,371 402,336 513,449

Consolidated balance sheet


EQUITY AND LIABILITIES


Equity

Share capital 1,124 918 971

Share premium reserve 567,756 367,148 431,583

Other reserves -304 -10 -23

Retained earnings -155,029 -120,998 -139,306

Total equity attributable to the parent company’s shareholders

413,547 247,058 293,225

Long-term liabilities

Convertible loans 60,227 110,347 59,129

Lease liabilities 1,797 2,874 2,096

Other long-term loans 10,000 10,000 10,000

Deferred tax 2,826 914 2,194

Total 74,850 124,135 73,419

Current liabilities

Convertible loans - - 127,895

Accounts payable 5,346 4,819 5,498

Leasing liabilities 1,236 1,078 1,231

Other current liabilities 1,146 21,659 7,531

Accrued expenses and deferred income 5,246 3,587 4,650

Total 12,974 31,143 146,805

TOTAL EQUITY AND LIABILITIES 501,371 402,336 513,449

Consolidated balance sheet


2020 Equity attributable to parent company shareholders

Amount in SEK thousandsShare

capitalOther capital contributions Reserves

Retained earnings including profit/

loss for the periodTotal

equity

Opening balance as at 1 January 2020 851 323,737 32 -109,022 215,598

Profit/loss for the period -72,877 -72,877

Other comprehensive income for the period -55 33 -22

Total comprehensive income for the period

-55 -72,844 -72,899

Transactions with shareholders in their capacity as owners

New share issue, net of transaction costs 117 106,811 106,928

Conversion of warrants 3 1,035 -235 803

Option component convertible loan 42,795 42,795

Total transactions with shareholders 120 107,846 42,560 150,526

Closing balance as at 31 December 2020 971 431,583 -23 -139,306 293,225

Consolidated changes in equity



capitalOther capital contributions Reserves



equity

Opening balance as at 1 January 2021 971 431,583 -23 -139,306 293,225


Other comprehensive income for the period -281 -281

Total comprehensive income for the period

-281 -14,701 -14,982


Conversion of convertible loan to stocks 138 131,677 131,815

Conversion of warrants 15 4,496 -1,022 3 489

Total transactions with shareholders 153 136,173 -1,022 135,304

Closing balance as at 31 March 2021 1,124 567,756 -304 -155,029 413,547


Amount in SEK thousands Note2021

Jan-Mar2020

Jan-Mar2020

Jan-Dec

Operating activities

Profit/loss after financial items -14,067 -11,847 -71,440

Adjustments for items not included in cash flow 4 6,358 6,532 33,677

Cash flow from operating activities before changes in working capital

-7,709 -5,315 -37,763

Increase (-) / decrease (+) in inventories -4,010 -2,328 -12,006

Increase (-) / decrease (+) in operating receivables -129 1,833 924

Increase (-) / decrease (+) in operating liabilities -6,374 -1,210 3,749

Cash flow from changes in working capital -10,513 -1,705 -7,333

Total cash flow from operating activities -18,222 -7,020 -45,096

Investing activities

Investments in intangible assets -17,477 -19,082 -53,155

Investments in tangible fixed assets -434 -393 -3,491

Cash flow from investing activities -17,911 -19,475 -56,646

Financing activities

New share issue - 43,477 106,927

Conversion of warrants 3,489 - 804

Amortisation of lease debt -301 -269 -1,188

Repayment of convertible loan -691 - -

New loans - 20,000 -

New convertible loans - - 100,000

Cash flow from financing activities 2,497 63,208 206,543


CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD

141,631 36,862 36,862

Exchange rate differences in cash and cash equivalents 18 -40 -32

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

108,013 73,535 141,631

Consolidated cash flow statement



Jan-Mar2020

Jan-Mar2020

Jan-Dec

Operating income

Net sales - - -


Other operating income 34 247 348

Total 16,463 18,156 50,975

Operating expense

Raw materials and consumables -4,827 -5,299 -18,231

Other external expense -7,743 -6,738 -21,977

Costs of personnel -9,876 -8,385 -32,643

Depreciation of tangible fixed assets -422 -259 -1,294

Other operating expenses -35 -57 -83

Total -22,903 -20,738 -74,228


Profit/loss from financial items

Interest income 161 - 495

Interest expense -9,460 -9,032 -48,186

Financial items - net -9,299 -9,032 -47,691

Net income before tax -15,739 -11,614 -70,944

Income tax - - -5


Parent company income statement

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


ASSETS


Intangible fixed assets

Capitalised expenditures for development work 350,177 289,630 334,955

Total 350,177 289,630 334,955

Tangible fixed assets

Leasehold improvements 791 677 859

Property, plant and equipment 4,120 3,004 4,051

Total 4,911 3,681 4,910

Financial fixed assets

Shares in subsidiaries 0 0 0

Receivables from subsidiaries 7,944 - 6,085

Other long-term receivables - 63 -

Total 7,944 63 6,085

Total fixed assets 363,032 293,374 345,950

Current assets

Inventory 21,510 14,037 17,570

Work in progress 204 11,881 148

Total 21,714 25,918 17,718

Current receivables

Receivables from subsidiaries 161 1,227 551

Current tax receivables 799 - 539

Other receivables 4 933 330

Prepaid expenses 1,729 1,100 960

Total 2,693 3,260 2,380


Total current assets 131,774 102,370 161,676

TOTAL ASSETS 494,806 395,744 507,626

The parent company balance sheet


EQUITY AND LIABILITIES


Equity

Restricted equity

Share capital 1,124 918 971

Fund for development costs 187,400 96,281 170,928

Total 188,524 97,199 171,899

Unrestricted equity

Share premium reserve 567,756 367,147 431,583

Retained earnings -327,897 -207,367 -239,454


Total 224,120 148,166 121,180

Total equity attributable to the parent company’s shareholders

412,644 245,365 293,079

Long-term liabilities

Convertible loans 60,227 110,346 59,129

Other long-term loans 10,000 10,000 10,000

Total 70,227 120,346 69,129

Current liabilities

Convertible loans - - 127,895

Accounts payable 5,230 4,789 4,983

Other current liabilities 1,459 21,657 7,907

Accrued expenses and deferred income 5,246 3,587 4,633

Total 11,935 30,033 145,418

TOTAL EQUITY AND LIABILITIES 494,806 395,744 507,626

The parent company balance sheet




capitalDevelopment

reserve Reserves



equity

Opening balance as at 1 January 2020 851 78,372 323,737 -189,458 213,502


Provisions for development reserve 92,556 -92,556 -

Total comprehensive income for the period 92,556 -163,505 -70,949


New share issue, net of transaction costs 117 106,811 106,928

Conversion of warrants 3 1,035 -235 803

Option component convertible loan 42,795 42,795

Total transactions with shareholders 120 107,846 42,560 150,526

Closing balance as at 31 December 2020 971 170,928 431,583 -310,403 293,079

Parent company changes in equity



capitalDevelopment

reserve Reserves



equity

Opening balance as at 1 January 2021 971 170,928 431,583 -310,403 293,079


Provisions for development reserve 16,472 -16,472 -

Total comprehensive income for the period 16,472 -32,211 -15,739


Conversion of convertible loan to stocks 138 131,677 131,815

Conversion of warrants 15 4,496 -1,022 3,489

Total transactions with shareholders 153 136,173 -1,022 135,304

Closing balance as at 31 March 2021 1,124 187,400 567,756 -343,636 412,644



Jan-Mar2020

Jan-Mar2020

Jan-Dec

Operating activities

Profit/loss after financial items -15,739 -11,614 -70,944

Adjustments for items not included in cash flow, etc. 6,714 5,282 31,806

Cash flow from operating activities before changes in working capital

-9,025 -6,332 -39,138

Increase (-) / decrease (+) in inventories -4,010 -5,067 -9,390

Increase (-) / decrease (+) in operating receivables -343 946 1,486

Increase (-) / decrease (+) in operating liabilities -6,095 -360 3,712

Cash flow from changes in working capital -10,448 -4,481 -4,192

Total cash flow from operating activities -19,473 -10,813 -43,330

Investing activities

Investments in intangible assets -15,222 -15,752 -50,645

Investments in tangible fixed assets -422 -357 -2,622

Cash flow from investing activities -15,644 -16,109 -53,267

Financing activities

New share issue - 43,477 106,927

Conversion of warrants 3,489 - 804

Repayment of convertible loan -691 - -

New loans - 20,000 -

New convertible loans - - 100,000

Loans issued to subsidiaries -1,892 - -6,193

Cash flow from financing activities 906 63,477 201,538


CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD

141,578 36,637 36,637

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

107,367 73,192 141,578

Parent company cash flow statement


Note 1 General information Swedish Stirling AB (publ) (”Swedish Stirling”), 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 which, for income statement and cash flow, represent prior year-to-date for the same period and for balance sheet and equity, prior year ending balance.

Note 2 Operating income

Operating income comprises of the following:


Jan-Mar2020

Jan-Mar2020

Jan-Dec

Currency gains 43 230 323

Other income 2 - 29

Invoiced cost - 17 18

Total 45 247 370

Note 3 Financial cost Convertible debt instruments include both a debt component and an equity component. Swedish Stirling has one outstanding convertible loan of TSEK 100,000 (KV4). For detailed accounting principles for the convertible loans, see Note 2 - 2.16 in the 2020 annual report.

Swedish Stirling is in an expansion phase where revenues from sale of the product have not been reported. As the risk is considered greater in a company that has yet to secure 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.

Notes


Jan-Mar2020

Jan-Mar2020

Jan-Dec

Interest convertible loans 9,208 8,199 44,250

Other interest expense 272 902 4,239

Total financial expenses 9,480 9,101 48,489

During the period January through March 2021, interest payments amounted to TSEK 10,192 (TSEK 6,374).


Note 4 Adjustments for items not included in cash flow


Jan-Mar2020

Jan-Mar2020

Jan-Dec

Discount rate convertible loans 5,708 5,018 24,491

Amortisation of tangible fixed assets 792 575 2,694

Stock obsolence reserve and scrapped material 13 - 2,091

Accrued interest 206 832 4,312

Unrealised currency translation adjustment -361 107 89

Total 6,358 6,532 33,677

Note 5 Transactions with related parties Ian Curry, former board member of the wholly owned subsidiary Swedish Stirling South Africa, has through his company Fox Energy Ltd acted as an advisor to both the subsidiary and parent company in connection with the intensification of the Company’s South African operations. Curry resigned as board member in November 2020 and is not treated as related party as of this date.

Below transactions were based on market value.


Jan-Mar2020

Jan-Mar2020

Jan-Dec

Fox Energy Ltd - 428 1,178

Total - 428 1,178

Note 6 Earnings per share2021

Jan-Mar2020

Jan-Mar2020

Jan-Dec

SEK

Earnings per share prior to dilution -0.14 -0.14 -0.80

Diluted earnings per share -0.14 -0.14 -0.80

Earnings measurements used in the calculation of earnings per share

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

-14,701 -12,009 -72,877

Amount

Weighted average number of common shares when calculatingearnings per share before dilution

102,428,173 86,851,771 91,020,971

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

102,428,173 86,851,771 91,020,971

No dilutive effect as the earnings are negative


Note 7 Subsequent eventsOn 28 April Swedish Stirling AB and Glencore Merafe Venture signed an energy conversion service agreement for an installation of 25 PWR BLOK 400-Fs (10MW) at the Glencore Merafe Lion ferrochrome smelter. The term of the agreement is 8 years from the date on which the last PWR BLOK achieves commercial operation, with an option for the Glencore Merafe Venture to extend the term by 7 years. The estimated present value for the initial term of the agreement for Swedish Stirling is MZAR 700 (MSEK 413) and in order to mitigate the risk with the deal the Company has entered into a currency hedge.

Note 8 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 Company’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 ratioEquity as a percentage of total assets.

Equity ratio is relevant for investors and other stakeholders who want to assess the Company’s financial stability and ability to cope in the long term.

Quick ratioCurrent assets, excluding inventories, divided by current liabilities including proposed dividends.

The key figure gives an idea of the Company’s payment readiness in the short term. At a cash flow about 100% the Company manages to pay all their short-term debts.


Amount in SEK thousand2021

Jan-Mar2020

Jan-Mar2020

Jan-Dec

Profitability

Operating income 18,730 18,747 53,395


Operating profit, after tax -14,701 -12,009 -72,877

Return on equity * -4% -5% -25%

Capital structure

Equity/asset ratio * 82% 61% 57%

Quick ratio * 851% 242% 98%

Weighted average outstanding shares 102,428,173 86,851,771 91,020,971

- Outstanding warrants (**) 2,770,000 4,640,000 4,290,000

- Convertible loans (***) 10,000,000 13,250,502 23,250,502

Number of shareholders (**) 15,570 7,786 10,402

Earnings per share in SEK -0.14 kr -0.14 kr -0.80 kr

Diluted earnings per share in SEK -0.14 kr -0.14 kr -0.80 kr

Dividend per share - - -

Employees

Average number of employees 43 32 34

Personnel costs 10,502 8,853 34,593

(*) See note 8 for definitions (**) At the balance sheet date

(***) Estimated number based on a conversion rate of KV2: SEK 10.0 per share, KV3: 9.0 per share and KV4: 8.0 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 Equity as a percentage of total assets.

Quick ratioCurrent assets, excluding inventories, divided by current liabilities including 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 shareThe profit/loss for the period divided by the weighted average of outstanding shares.

Diluted earnings per shareThe 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 costsPersonnel costs during the period, including wages, salaries, other benefits and social welfare costs.

Key ratio definitions


ONLINEwww.swedishstirling.com

[email protected]

ORG. NR556760-6602

ADRESSSwedish Stirling AB

Gruvgatan 35B 421 30 Västra Frölunda

Sweden

Documents

Q1 2021 - swedishstirling.com