Strong growth and four acquisitions during the third quarter

Soltech continues to grow and delivers a strong third quarter with a 46 percent increase in sales and a 45 percent increase in operating profit (EBIT). During the first half of the year, we completed four acquisitions and during the third quarter, four more were completed.

CEO comment:
– We live in a new reality with the pandemic hanging over us. At Soltech, however, we see signs of an even stronger market for our competitive offerings when both
Private individuals, companies and the public sector are investing more and more in solar energy

Third quarter in brief

  • The Group's revenues in the quarter amounted to SEK 127.2 (87.3) million. An increase of 45.7%
  • Revenues in the Swedish operations grew to SEK 84 M (51.9), an increase of 61.8%
  • The Group's profit before depreciation (EBITDA) amounted to SEK 38.9 (30.2) million. An increase of 28.8%
  • The Group's operating profit (EBIT) amounted to SEK 23.1 (15.9) million. An increase of 45.3%
  • Profit for the period after tax amounted to SEK -18.1 (6.4) million. The result was affected by unrealized exchange rate differences in the Chinese operations by SEK -8.5 (10.8) million
  • The period's cash flow for the Group amounted to 85.5 (-76.3) MSEK. The cash flow for the period was, among other things, positively affected by completed new issues
  • Earnings per share amounted to -0.31 (0.13)
  • Covid-19 is estimated to have had a certain impact on the Swedish operations in the quarter, but order intake is still good
  • Operations in China have made a strong quarter with 38.4 million kWh produced. However, revenues were negatively affected in the period by approximately SEK 2 million due to temporary price reductions on electricity as a direct result of Covid-19. The quarter was also affected by unrealized price effects in the Chinese operations of a total of SEK -8.5 (10.8) million. A total of 143 MW of installed capacity (solar power plants) at the end of the quarter

First nine months in summary

  • Total operating income amounted to SEK 336.1 (236.1) million. An increase of 42.4%
  • The Group's operating profit before depreciation (EBITDA) amounted to SEK 87.3 (68.6) million. An increase of 27.3%
  • The Group's operating profit (EBIT) amounted to SEK 43.9 (38.2) million. An increase of 14.9%
  • Profit for the period after financial items, currency effects and tax amounted to SEK -60.6 (-6.2) million
  • Covid-19 had a certain impact on Swedish operations during the period. The primary effects have been deferred customer meetings and orders
  • Covid-19 is estimated to have had a negative impact on revenues in the Chinese operations during the period of approximately SEK 12.5 million. The reasons for this are due to the fact that a larger than normal share of the electricity produced has been sold to the grid instead of directly to the customer and then at a lower price per kWh. Some customers' production facilities in China were also closed until the end of May

Significant events during the period

  • During the quarter, Soltech's subsidiary in China, ASRE, signed five orders that are estimated to generate a total annual revenue of SEK 12.7 million, or approximately SEK 253.9 million under the agreements 20-year maturities
  • The Board of Directors of Soltech Energy Sweden AB (publ) decided, with the support of the Annual General Meeting's authorization, to carry out a rights issue of approximately SEK 98 million to finance continued expansion through acquisitions and to develop existing subsidiaries. In addition to the rights issue, there was an opportunity to decide on an over-allotment issue of SEK 46 million. The rights issue was oversubscribed by 590 percent, the over-allotment issue was completed in full and Soltech received a total of just over SEK 144 million before issue costs
  • Soltech acquired 60 percent of the shares in Miljö & Energi Ansvar Sverige AB with access on September 1, 2020
  • Soltech's subsidiaries, Swede Energy, Soltech Sales & Support and Measol will build Sweden's largest solar and direct current plant with Ferroamp. The order value is just over SEK 3 million
  • Soltech and PowerCell Sweden AB (publ) have signed a Nordic co-operation agreement to develop solutions for customers that include both the Soltech Group's products for solar energy and PowerCell's products for storage.
  • Soltech's subsidiary, Advanced Soltech, raises SEK 131.5 million before issue costs via subscription of newly issued preference shares. This is in order to take advantage of the business opportunities the company has in China. Soltech continues to own more than 50% of the shares in Advanced Soltech after the issue
  • In connection with the Government's budget bill, two important changes were announced for the Swedish solar energy market. The kW limit for tax liability for self-produced solar energy is proposed to be raised at the turn of the year, from the current 255 kW installed power to 500 kW. At the same time, a new deduction is also proposed for the installation of green energy (private households). This includes both solar cells and charging options for e-cars, among other things
  • Eurocommercial Properties chose Soltech's subsidiary Swede Energy Power Solutions as a partner in its investment in Solenergi. Eurocommercial Properties installs solar energy at its remaining shopping centers in Sweden and a total of 1,658 kWp of solar energy solutions will be installed, which is estimated to produce approximately 1,473,709 kWh / year
  • Soltech acquired 80 percent of the shares in Takrekond in Småland AB and 100 percent of the shares in Takrekond in Kalmar AB with access on October 1, 2020
  • Soltech acquired 60 percent of the shares in Din Takläggare i Värmland Dalsland AB with access on 1 October 2020

Significant events after the reporting period

  • Soltech's subsidiary Soltech Sales & Support has received orders via Bergman and Höök Byggnads AB to deliver semi-transparent solar cells to the end customer Wallenstam. Order value approx. SEK 7 million
  • Soltech's subsidiary in China, ASRE, has signed orders that are estimated to generate annual revenues of just over SEK 1.9 million, or approximately SEK 38.7 million during the agreements' 20-year maturities

Advanced Soltech's subsidiary in China, ASRE, has signed an order with WuHu YouJu Plastic Mold Co. Ltd., and an order with Anhui QianHong Household Products Co. Ltd. The orders concern the installation of a solar power plant of 0.8 megawatts (MW) and one of 0.4 megawatts (MW). They are estimated to provide a total annual revenue of approximately SEK 1.03 million, or approximately SEK 20.6 million during the agreements' 20-year term. The investments in the facilities, which will be owned by ASRE, amount to a total of apx. SEK 6.76 million and construction is scheduled to start in the fourth quarter of 2020.

Advanced Soltechs CEO Max Metelius comments:

– We see very strong demand for our offering, and we have a well functioning sales process that continues to deliver good projects to our portfolio of solar power projects. These projects show good profitability and are carried out completely without subsidies.

About the China venture

In China ASAB operates through, its wholly owned local subsidiaries Advanced Soltech Renewable Energy (Hangzhou) Co. Ltd, ASRE and Longrui Solar Energy (Suqian) Co. Ltd. The business model consists of financing, installing, owning and managing solar energy installations on customers' roofs in China. The customer does not pay for the plant, but instead undertakes to buy the electricity that the plant produces under a 20-year agreement. Current income comes from the sale of electricity to customers and from subsidies. The goal is to have an installed capacity of 1,000 megawatts (MW) by 2023, which is fully connected to the electricity grid by 2024. ASAB is 51% owned by Soltech Energy Sweden AB (publ) and 49% by Soltech's Chinese partner, Advanced Solar Power Hangzhou Inc.

Advanced Soltech's subsidiary in China, ASRE, has signed an order with WuHu HanLong Paper Co. Ltd. The order is for the installation of a solar energy plant of 1 megawatts (MW) and is estimated to generate annual revenues of approximately SEK 0.9 million, or apx. SEK 18.07 million during the agreement's 20-year term. The investment in the facility, which will be owned by ASRE, amounts to apx. SEK 6.14 million and construction is scheduled to start in the fourth quarter of 2020.

Advanced Soltechs CEO Max Metelius comments:

– Demand has returned with full force and our team in China continues to sign orders with new stable customers. This project shows good profitability and is carried out completely without subsidies.

About the China venture

In China ASAB operates through, its wholly owned local subsidiaries Advanced Soltech Renewable Energy (Hangzhou) Co. Ltd, ASRE and Longrui Solar Energy (Suqian) Co. Ltd. The business model consists of financing, installing, owning and managing solar energy installations on customers' roofs in China. The customer does not pay for the plant, but instead undertakes to buy the electricity that the plant produces under a 20-year agreement. Current income comes from the sale of electricity to customers and from subsidies. The goal is to have an installed capacity of 1,000 megawatts (MW) by 2023, which is fully connected to the electricity grid by 2024. ASAB is 51% owned by Soltech Energy Sweden AB (publ) and 49% by Soltech's Chinese partner, Advanced Solar Power Hangzhou Inc.

On 29 September 2020, Soltech Energy Sweden AB (publ) signed an agreement to acquire 60 percent of the shares in the roofing company Din Takläggare i Värmland Dalsland AB with effect from 1 October 2020. Din Takläggare has its registered office in Arvika and the company has a total of 15 employees and is estimated to have sales of SEK 35 million in 2020 with a positive operating profit of approximately 9 percent. Together with Soltech, the plan is to increase sales to a total of SEK 50 million by 2023 with good profitability.

The acquisition of Din Takläggare is a continued investment in solar energy by acquiring expertise and business in the waterproofing roof industry. In order to deliver the highest quality, it is of utmost importance to have deep expertise in roofing work when building a successful solar energy group. With Din Takläggare, we still add companies in roofing alongside NP Gruppen, Takorama and Takrekondbolagen. Soltech has an option to acquire the remaining 40 percent of the shares in Din Takläggare 2024.

Din Takläggare is a very reputable company in Värmland / Dalsland and the plan is now to gradually expand the business, while maintaining a good profit margin, from current levels of approximately SEK 35 million to approximately SEK 50 million in 2023. The increase in business volume is expected to come from organic growth in combination with that Din Takläggare adds solar energy to its product and service range. In addition, Soltech expects that synergy effects within the Group in terms of joint purchasing, warehousing & logistics, marketing, HR, finance and administration will have a positive effect on earnings. The acquisition of Din Takläggare is financed entirely from its own cash and with newly issued shares in Soltech Energy.

Stefan Ölander, CEO of Soltech Energy in a comment:
– Just like Monday's acquisition of Takrekondbolagen, Din Takläggare has a tradition of high quality and profitability. Now we will together take the company into the future by adding solar energy to their range. We look forward to a successful development together.

Håkan Wennberg, CEO of Din Takläggare in a comment:
– Almost all customers are asking for solar energy today and the decision to sell to Soltech therefore feels completely right. Now we can use our deep expertise in waterproofing roofs to, together with our sister companies, take a good share of the solar energy market in our region.

Eurocommercial Properties' very high sustainability goals puts solar energy in focus and now the company is installing solar energy at its remaining shopping centers in Sweden. Soltech Energy's subsidiary Swede Energy Power Solutions has been chosen as a partner and a total of 1,658 kWp of solar energy solutions will be installed, which is estimated to produce approximately 1,473,709 kWh / year.

Eurocommercial is one of Europe's most experienced real estate investors with shopping centers in Belgium, France, Italy and Sweden with over 130 million visits to the malls. The business is concentrated in shopping centers in attractive locations and with a long-term sustainable strategy and high goals for renewable energy. In Sweden, the goal is to get 100% electricity from renewable energy sources on both roofs and parking areas. It is a fantastic project that leads to a greatly reduced climate impact from the large facilities at the same time as Eurocommerical in Sweden gets a cost-effective solution to its energy needs.

– “With this large expansion, we will have solar cells at 100% of shopping centers in Sweden. To be able to do this together with such an experienced and serious supplier as Swede Energy should not only be an exciting journey, we also value the importance the work has for our environment, not at least locally where we have our tenants and visitors. Now the stores not only get green fossil-free electricity but also locally produced, says Patrik Sörnell, Director, Asset Management at Eurocommercial Properties.

With over 30 years of experience behind it, Swede Energy has knowledge of which constructions, elements and installations need to be made to have a future-proof plant. Everything from drawings, strength calculations, construction and engineering has been done by the solar engineers with great accuracy. Several of the shopping centers that receive solar energy on the roof have a few years on their necks and then it is extra important to take into account the strength of the roofs as all panels must load the roof. Today, with current solar panels, Eurocommercial has an annual production capacity of almost 500,000 KWh / year in Sweden. With this investment, capacity will be increased to as much as 2,000,000 KWh / year.

– “Working with the type of forces to which a roof is exposed is not something that can be taken lightly. It is both a question of personal safety in, for example in snowy winters, but also a question of the plant producing efficiently throughout its life, which is often over 20 years, says Christoffer Caesar, CEO of Swede Energy”.

More about Sweden Energy Power Solutions:
Swede Energy has over 30 years of experience in developing innovative and renewable energy plants with a unique design strategy that creates profitable and future-proof electricity production for industrial and commercial properties. www.swedeenergy.se

More about Eurocommercial:
Eurocommercial Properties (Eurocommercial) is a long-term investor and manager of mainly retail properties in Belgium, France, Italy and Sweden with assets over EUR 4 billion. The company was founded in 1991 and is a Euronext listed company with a broad shareholder base. https://www.eurocommercialproperties.com/property/sweden

On 28 September 2020, Soltech Energy Sweden AB (publ) signed an agreement to acquire 80 percent of the shares in the roofing company Takrekond i Småland AB and 100 percent of the roofing company Takrekond i Kalmar AB with access on 1 October 2020. Takrekond is headquartered in Växjö and Kalmar and the companies have a total of 15 employees and are expected to have sales of SEK 25 million in 2020 with a positive operating profit of approximately 10 percent. Together with Soltech, the plan is to increase sales to a total of SEK 55 million by 2023 with good profitability.

The acquisition of Takrekond is a continued investment in solar energy by acquiring expertise and business in the waterproofing roof industry. In order to deliver the highest quality, it is of utmost importance to have deep expertise in roofing work when building a successful solar energy group. With Takrekond in Småland and in Kalmar, we are adding two companies in roofing alongside NP Gruppen and Takorama. Soltech has an option to acquire the remaining 20 percent of the shares in Takrekond Småland 2024.

Takrekond has long been a partner of Soltech's subsidiary Takorama and the plan is now to gradually expand the business, while maintaining a good profit margin, from current levels of approximately SEK 25 million to approximately SEK 55 million in 2023. The increase in business volume is expected to come from organic growth in combination with adding solar energy to the product and service offering. In addition, Soltech expects that synergy effects within the Group in terms of joint purchasing, warehousing & logistics, marketing, HR, finance and administration will have a positive effect on earnings. The acquisition of Takrekond is financed entirely from its own cash and with newly issued shares in Soltech Energy.

Stefan Ölander, CEO of Soltech Energy in a comment:
– The Takrekond companies have a tradition of high quality and profitability. Now we will together take the companies into the future by adding solar energy to their range. In this way, we are really changing society in a sustainable direction.

Nils Jansson, CEO of Takrekondbolagen in a comment:
– We at Takrekond notice an ever-increasing demand from our customers to be able to deliver both roof and solar energy systems and have therefore, after more than 30 years of clean roofing operations, chosen to be part of the Soltech Energy Group and thereby broaden our offering with solar cells. For me and all the employees, this step feels really exciting and inspiring.

There has been great interest in taking advantage of Advanced Soltech's offer to subscribe for newly issued preference shares. In total, new shares have been subscribed for SEK 131.5 million. The purpose of the issue prior to the planned listing of Advanced Soltech's shares on First North Growth Market is to be able to take advantage of the good business opportunities that the Company now has in China. Following the issue, Soltech will own more than 50% of Advanced Soltech and will therefore continue to consolidate the company's accounts.

The terms of the issue of preference shares have been formulated with a forthcoming listing in mind. JOOL Corporate Finance AB has acted as the Company's Corporate Finance advisor in the transaction. SIP Nordic Fondkommission AB has been the organizer and Roschier Advokatbyrå AB legal advisor.

Advanced Soltech's CEO, Max Metelius comments:

  • It is very gratifying to see the great interest in investing in Advanced Soltech and we welcome our new shareholders on our continued growth journey. We have a very strong order book and the capital from the issue will primarily be invested in new solar energy facilities, but we will also invest in strengthening important functions within the company prior to the listing. Work on the listing is proceeding according to plan.

Advanced Soltech's Certified Adviser is FNCA, Tel: 08-528 00 399 E-mail: info@fnca.se

About the Operations in China
The operations in China are conducted in Advanced SolTech Renewable Energy (Hangzhou) Co. Ltd, ASRE, its wholly owned local subsidiaries and in Longrui Solar Energy (Suqian) Co. Ltd. The business model consists of financing, installing, owning and managing solar energy installations on customers' roofs in China. The customer does not pay for the plant, but instead undertakes to buy the electricity that the plant produces under a 20-year agreement. Current income comes from the sale of electricity to customers and from various forms of subsidies per kilowatt hour (kWh) of solar produced. The goal is to have an installed capacity of 1,000 megawatts (MW) by 2023, which is fully connected to the electricity grid by 2024.

Advanced Soltech’s subsidiary in China, ASRE, has signed an order with Anhui ShunFu Auto parts Technology Co Ltd. The order concerns the installation of a solar energy plant of 0.9 megawatts (MW) and is estimated to generate annual revenues of SEK 0.75 million, or SEK 15 million during the agreement’s 20-year term. The investment in the facility, which will be owned by ASRE, amounts SEK 5.05 million and construction is scheduled to start in the fourth quarter of 2020.

Advanced Soltechs CEO Max Metelius comments:

  • We are very pleased to see a strong demand for green energy solutions in China, which gives a good inflow of new projects with good profitability to ASAB

About the China venture

In China ASAB operates through, its wholly owned local subsidiaries Advanced Soltech Renewable Energy (Hangzhou) Co. Ltd, ASRE and Longrui Solar Energy (Suqian) Co. Ltd. The business model consists of financing, installing, owning and managing solar energy installations on customers’ roofs in China. The customer does not pay for the plant, but instead undertakes to buy the electricity that the plant produces under a 20-year agreement. Current income comes from the sale of electricity to customers and from subsidies. The goal is to have an installed capacity of 1,000 megawatts (MW) by 2023, which is fully connected to the electricity grid by 2024. ASAB is 51% owned by Soltech Energy Sweden AB (publ) and 49% by Soltech’s Chinese partner, Advanced Solar Power Hangzhou Inc.
Om Verksamheten i Kina

Advanced Soltech's subsidiary in China, ASRE, has signed an order with Wuhu Rongchuan Mechanical & Electrical Technology Co. The order concerns the installation of a solar energy plant of 1.7 megawatts (MW) and is estimated to generate annual revenues of SEK 1.37 million, or SEK 27.4 million during the agreement's 20-year term. The investment in the facility, which will be owned by ASRE, amounts SEK 9.42 million and construction is scheduled to start in the fourth quarter of 2020.

Advanced Soltechs CEO Max Metelius comments:
– Our team in China continues to sign orders with new customers. This project is carried out completely without any subsidies and shows a profitability well within our goals.

About the China venture
In China ASAB operates through, its wholly owned local subsidiaries Advanced Soltech Renewable Energy (Hangzhou) Co. Ltd, ASRE and Longrui Solar Energy (Suqian) Co. Ltd. The business model consists of financing, installing, owning and managing solar energy installations on customers' roofs in China. The customer does not pay for the plant, but instead undertakes to buy the electricity that the plant produces under a 20-year agreement. Current income comes from the sale of electricity to customers and from subsidies. The goal is to have an installed capacity of 1,000 megawatts (MW) by 2023, which is fully connected to the electricity grid by 2024. ASAB is 51% owned by Soltech Energy Sweden AB (publ) and 49% by Soltech's Chinese partner, Advanced Solar Power Hangzhou Inc.

Soltech Energy Sweden AB's (publ) new share issue with preferential rights for shareholders has been completed. The rights issue was oversubscribed by 590 percent. In total, shares were subscribed for for more than SEK 676 million, which is why Soltech has decided to also carry out a directed Over-allotment Issue. Soltech will thus receive a total of just over SEK 144 million before issue costs.

CEO Stefan Ölander in a comment:
– We are humbly grateful for the trust existing and new shareholders have shown us in this new share issue. We now have the funds we need to exploit the potential of the rapidly growing market and to continue our successful acquisition strategy.

Number of shares and Over-allotment
A total of 7,759,307 shares were subscribed for with the support of subscription rights, corresponding to approximately 95 percent of the Rights Issue, and 48,607,379 shares without the support of subscription rights, corresponding to approximately 595 percent of the Rights Issue. The rights issue was thus oversubscribed by 590 percent.

To enable allotment to those stakeholders who have not been allotted in the Rights Issue and for the purpose of broadening and strengthening the Company's ownership base, the Board has decided to issue an additional 3,840,000 shares in an Over – allotment issue. This is done at a subscription price of SEK 12 per share, which gives approximately SEK 46 million, and on the terms stated in the prospectus regarding the Rights Issue, which gives approximately SEK 98 million.

Through the Rights Issue and the Over-allotment Issue, a total of 12,012,423 shares will be issued and the Company will thus receive SEK 144,149,076 million before issue costs.

Allocation in the Rights Issue
The persons who have subscribed for shares on the basis of subscription rights have been allotted BTA in connection with simultaneous payment. Notice of allotment to the persons who have subscribed for shares without the support of subscription rights is expected to be distributed on 10 September 2020 by sending a settlement note. Allocation to the persons who have subscribed for shares via the nominee is expected to be visible in the account around 15 September 2020. Nominee-registered shareholders will be notified of the allotment in accordance with the respective nominee's routines. Subscribed and allotted shares must be paid for in cash no later than the settlement date, 15 September 2020, in accordance with the instructions on the settlement note. Only those who receive an award will be notified.

Allocation in the Over-Allocation Issue
Notice of allotment to the persons who have subscribed for shares without the support of subscription rights is expected to be distributed on 10 September 2020 by sending a settlement note.

Three groups of investors will be allotted shares in the Over-allotment Issue:

The Board has decided to give a large number of new owners the opportunity to participate in the over-allotment issue with a small investment to further broaden the shareholder base in the Company.

In order to open up a new circle of owners of professional investors, the Board has also decided to give investors who have shown special interest in Soltech, and who are judged to be able to contribute strategically to the Company's development, a certain opportunity to participate in the allotment issue.

Finally, it has been decided that key personnel within all ten of the Soltech Group will be given the opportunity to participate in the over-allotment issue in order to create loyalty, long-term perspective and commitment.

Share capital and number of shares
Following the registration of the Rights Issue and the Over-allotment Issue with the Swedish Companies Registration Office, the Company's share capital will increase by SEK 600,621 to a total of SEK 3,460,969. The number of shares in the Company will thereafter increase by an additional 12,012,423 shares to a total of 69,219,387 shares.

Paid subscribed shares, BTA
Subscription of shares with and without preferential rights took place during the period 24/8 – 7/9 2020. As soon as the share capital increase has been registered with the Swedish Companies Registration Office, paid subscribed shares (BTA) in the rights issue will be converted into new shares. Until then, trading with BTA on the Nasdaq First North Growth Market. Trading in new shares is expected to begin on Nasdaq First North Growth Market around week 41 2020. The persons allotted shares in the directed Over-allotment Issue will not receive BTA but will instead be allotted shares after the share capital increase has been registered with the Swedish Companies Registration Office. This is expected to take place around week 40 2020.