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Azelio: Year-end report 2021

Tiedotteet 25.02.2022 9:00 Azelio AB

Significant events

Q4: Oct - Dec 2021
  • The leading certification body, DNV, issued a validation report showing that the TES.POD[®] energy storage system performs in all aspects in accordance with the technical performance specification. As part of the validation, DNV performed a due diligence of Azelio's technology, production, R&D and test facilities, as well as partaking of operational data relating to production and storage capacity, system efficiency and response times.
  • An order was received for 1.3 MWh of renewable electricity supply, corresponding to eight TES.POD[®] units, from the South Africa-based agricultural company, Wee Bee Ltd. The order has a value of approximately SEK 11 million over a period of 15 years.
  • TES.POD[®] units were delivered for installations in Masdar City in Abu Dhabi and Coligny, Northwest Province, South Africa.
  • To enhance the efficiency of the supply chain, it was decided to establish a unit in Vaggeryd to consolidate peripheral production processes for the storage production. Operations at the unit are scheduled to commence in the autumn of 2022.
  • Lars Murgård was appointed new VP Development. Lars, who has a solid background in automotive, joined the company from Jaguar Land Rover where he was Chief Program Engineer, Powertrain Systems Engineering. He has also held senior positions, including at Volvo Cars.
  • Azelio was part of the launch of the Long Duration Energy Storage Council during COP26 in Glasgow together with 24 other technology companies, users and investors. The Council will accelerate the transition towards grid net-zero by 2040 through energy storage for use over a long time.
Events after the end of period
  • In order not to jeopardize the commercial breakthrough for TES.POD[®] and the opportunities for strong growth, we have initiated a process to strengthen our financial position in 2022. In total, the capital need is estimated to 300-500 MSEK and we are now evaluating different options including both debt and equity.
 
  • Together with Khalifa University and Masdar, Azelio inaugurated the two commercial TES.POD[®] units that have supplemented the installation in Masdar City, Abu Dhabi. The units will be demonstrated and evaluated by Khalifa University for inclusion in the Masdar product portfolio.

Group financial development

Q4: Oct - Dec 2021
  • Net sales amounted to kSEK 44 (451)
  • Operating profit/loss (EBIT) amounted to kSEK -108,277 (-49,001) after depreciation and amortisation of kSEK -38,901 (-4,993)
  • Earnings per share before and after dilution totalled SEK -0.94 (-0.47)
  • Profit/loss for the period amounted to kSEK -108,925 (-49,141)
  • Cash flow for the period amounted to kSEK -114,263 (-84,469)
  • Cash and bank balances amounted to kSEK 503,388 (332,463)
Full-year 2021
  • Net sales amounted to kSEK 1,162 (1,074)
  • Operating profit/loss (EBIT) amounted to kSEK -364,175 (-191,939) after depreciation and amortisation of kSEK -112,332 (-20,702)
  • Earnings per share before and after dilution totalled SEK -3.23 (-2.03)
  • Profit/loss for the period amounted to kSEK -365,872 (-192,572)
  • Cash flow for the period amounted to kSEK 170,787 (276,905)

Comments from the CEO

Important milestones achieved - challenges remain

Azelio achieved several key milestones in the past year. We final­ised the technology development and completed the TES.POD[®] system for volume production. The technology, production, R&D and test facilities were validated by the leading certification body DNV, which in December issued a validation report showing that the system delivers according to the technical performance spec­ification. The validation is of great importance in the commer­cialization of the product as it serves as documentation for cus­tomers seeking external financing of projects with the tech­nology. The final major milestone that we achieved in 2021 was that we were able to deliver TES.POD[®] units to the commercial project in South Africa.

The pandemic creates challenges and a need to strengthen financing

The ongoing pandemic has resulted in major challenges in the form of restrictions and component shortages. The lack of com­ponents has been noticeable to us overall and the situation de­teriorated during the fourth quarter. We have also identified a need to take control of central technology for coating the storage tank, which requires investments in Vaggeryd, Sweden.

We engage in dialogues with a large number of customers, among them are those who have signed MoU agreements as well as other parties. Difficulties to visit customers and project sites have been particularly challenging as we are introducing a new tech­nology, resulting in delays, also delaying getting reference projects in place. However, we are now beginning to see light at the end of the tunnel with the newly completed DNV technical report as well as the easing of travel restrictions  

We still expect the pandemic to continue to affect compo­nent supply, order intake and cash flow during large parts of 2022, despite the fact that we have recently begun to get more positive indications from subcontractors and that travel possibilities are improving.

In order not to jeopardize the commercial breakthrough for TES.POD[®] and the opportunities for strong growth, we have initiated a process to strengthen our financial position in 2022. In total, the capital need is estimated to 300-500 MSEK and we are now evaluating different options, including both debt and equity.

Measures to speed up processes

Our goal is to become a technology supplier, but initially we also assume the role of joint owners in projects, designing them together with partners, establishing them and then selling their production as EaaS (Energy-as-a-Service). Due to the prevailing inertia in the market, we have decided to invest more in these types of projects than was originally planned. Short term, this re­quires capital, however, it gives us valuable reference projects that can serve as models for other projects with similar condi­tions. We can also gain valuable insight into the system's use by end users, which contributes to strengthening our offering to the mar­ket.

Success by local presence

Another measure we have taken to manage the effects of the pan­demic is to hire country managers locally in Australia and South Africa. One positive outcome of this strategy is the deal with the South African agricultural com­pany Wee Bee Ltd. The deal makes us owner of a project company that supplies electricity to Wee Bee Ltd, reduc­ing their energy costs and emissions, and bringing significantly higher reliability to their energy supply. There are many similar farms in the re­gion that suffer from unstable electricity supply and are attracted by lower energy costs that TES.POD[®] can provide. The project with Wee Bee Ltd is an important refer­ence project for additional business.

Different types of agricultural activities are also in focus in Aus­tralia. The system's competitiveness in the sector is reinforced by the fact that the heat generated has very good applications in sustainable agriculture, among others for heating animal stables and greenhouses. Heat is also a field that is increasingly gaining attention in the green energy transition. The Long Duration Energy Storage Council has accordingly recently added the "Net-zero heat" area to its operations.

In focus for 2022

Despite a challenging situation, in 2021 we developed a supply chain and began production of TES.POD[®] units in volume design. We reached the goal of securing and initiating delivery of a pro­ject in the size of 100 kW or larger. The pandemic with associated restrictions continues to be a challenge for us, as it impacts sub­contractors' supply ability and creates inertia in sales. Although there are many indications that the situation is set to improve during the year, we will face continued challenges for a period. This means that the increase in volumes may take longer than previously expected, but we still aim to reach high volumes by the end of 2022. As the world continues the quest for more sustainable energy solutions, I remain confident that we are well placed for the long game.

For more information, please contact

Jonas Eklind - CEO
Email: [email protected]
Tel: +46 709 40 35 80

Fredrik Wäppling - CFO
Email: fredrik.wä[email protected] (fredrik.w%C3%[email protected])
Tel: +46 709 91 12 34

This disclosure contains information that Azelio AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on February 25, 08:00 CET.

Azelio is a Swedish company in the game of changing the future of solar energy. A Swedish Stirling manufacturer, already a leading supplier of Stirling engine-based renewable energy solutions, we now put an even greater focus on distributed and dispatchable solar electricity.