Interim Report for the Period January 1 – September 30, 2023

During the quarter, the world's largest shipbuilder, HD Hyundai Heavy Industries (HD-HHI), placed an order worth EUR 2.5 million, for Climeon's HeatPower 300 system. The systems will contribute to increased energy efficiency on board six vessels in AP Möller-Maersk's new container fleet. The HeatPower 300 systems that will be installed at the PET resin manufacturer NEO GROUP's facility in Lithuania are under production at Climeon's assembly partner. The units will later undergo final testing at the company's development and testing facility in Kista before delivery to the customer. Furthermore, the Company announced its intention to carry out a fully guaranteed rights issue of approximately SEK 100 million. A decision is expected to be made at an Extraordinary General Meeting on 26 October.

JULY - SEPTEMBER

• Order intake amounted to SEK 28.5 million (0.7).
• Net sales amounted to SEK 3.9 million (1.2) and were primarily attributable to the delivery of one HeatPower 150 module and aftermarket revenues.
• Operating profit/loss amounted to SEK -31.6 million (-24.0) SEK -7.9 million (-2.0) of non-recurring, non-cash generating items, mainly attributable to write-downs of inventory and increased accounts receivable provisions.
• Profit/loss after financial items amounted to SEK -37.7 million (-23.2)
• Earnings per share, before and after dilution, amounted to SEK -0.40 (-0.24)
• Cash flow from operating activities after changes in working capital amounted to SEK -16.3 million (-18.9).

IMPORTANT EVENTS DURING THE PERIOD

• HD-HHI places an order, worth EUR 2.5 million, for HeatPower 300 systems for Maersk's new fleet of container vessels.
• Climeon's Board of Directors announces its intention to carry out a fully guaranteed rights issue consisting of class B shares and warrants, initially comprising approximately SEK 100 million. The rights issue is subject to approval at an extraordinary general meeting on October 26, 2023. During the quarter, Climeon ended its credit agreement with the Swedish Export Credit Corporation by paying SEK 16.1 million and thus no longer has any bank loans left. The credit was previously recognized as a short-term liability.

JANUARY - SEPTEMBER

• Order intake amounted to SEK 41.5 million (3.0)
• Net sales amounted to SEK 5.0 million (4.9)
• Order backlog amounted to SEK 72.2 million (37.1)
• Operating profit amounted to SEK -77.5 million (-75.3), including non-recurring items of SEK -9.2 (-2.0) million.
• Profit/loss after financial items amounted to SEK -99.7 million (-87.0)
• Earnings per share, before and after dilution, amounted to SEK -1.05 (-1.05)
• Cash flow from operating activities after changes in working capital amounted to SEK -62.4 million (-44.1)
• Total cash and cash equivalents amounted to SEK 23.1 million (139.3).

A word from our CEO:
CLIMEON CONTINUES ITS COMMERCIALIZATION – CONTRACT FOR SIX HEATPOWER 300 UNITS SIGNED WITH THE WORLD'S LARGEST SHIPYARD

The commercialization of Climeon's HeatPower 300 platform continues. At the end of July, we signed a particularly important contract with the world's largest shipbuilder, HD-HHI, in South Korea. The shipyard was searching for a solution to increase energy efficiency on board the shipping company, Maersk's, new fleet of methanol-powered container ships. Our technology for producing sustainable electricity using residual heat was considered to be the most competitive on the market. In addition, as you know, the development and construction company, Termolink, signed a contract with us in May for HeatPower 300 systems to be installed at NEO GROUP’s PET resin manufacturing plant, in Lithuania.

The fact that customers have chosen us in both cases is an acknowledgment of our strategic marketing and sales efforts in combination with the targeted product and development work we have conducted to develop the next generation of HeatPower systems. HeatPower 300 is a more customer and market-adapted, as well as cost-effective, product platform for both our customers and for us. We have designed a unique and competitive product platform based on the experience and skills that Climeon has built up over many years. Through the latest customer contracts, we have taken a clear position in our focus markets; Maritime, Energy and Industry.

We see the number of customer inquiries continuing to grow. Many inquiries are projects in the initial stages, but we are also engaged in intensive dialogues regarding a several customer projects that are significantly closer to being realized. We have had customers who have conducted sanctioned audits, at our production partner, at our head office and at our development and test facility in Kista.

In parallel, we are continuing our work on production planning and streamlining our supply chain. Trials and tests are underway so that we can quickly develop and adapt the different technical variants of HeatPower 300 that are required from different markets and customers. We also continue to deliver and perform service according to the agreements we have with the customers of our previous product generation, HeatPower 150.

Simultaneously, we must strengthen our long-term financial position. Therefore, we have put forward a proposal for a fully guaranteed rights issue that will be considered at an Extraordinary General Meeting on 26 October. The Rights Issue provides us with approximately SEK 100 million before transaction costs and includes an option for additional capital in 2024. The proceeds from the issue will be used to extend marketing reach in order to increase sales, to deliver on signed orders, and strengthen the cash flow. We have paid off all credit agreements and are now at a significantly lower operating cost level than before, a level that we believe can be maintained for some time to come. Our ambition is that the proceeds from the issue will take us far in the continued commercialization and scale-up of HeatPower 300.

Now our efforts to sign further orders and to deliver in accordance with customer expectations continues!

Lena Sundquist, CEO, Climeon