Permascand’s Annual Report and Sustainability Report for 2022 have been published and are available on the company’s website at https://permascand.com/investors/
The shareholders of Permascand Top Holding AB, Reg. No. 559227-6124 (”Permascand” or the ”company”), are hereby summoned to the Annual General Meeting on Tuesday, 9 May 2023, 15.00 CEST, at Ljungaverks Folkets Hus, Folketshusvägen 1, SE-840 10 Ljungaverk, Sweden.
The Board of Directors has, pursuant to the company’s Articles of Association, resolved that the shareholders shall have the opportunity to exercise their voting rights by postal voting prior to the Annual General Meeting. Shareholders may thus choose to attend the meeting in person, by proxy or by postal voting.
Right to attend
In order to attend the Annual General Meeting, shareholders shall be registered in the share register kept by Euroclear Sweden AB as of 28 April 2023. Further, shareholders who wish to participate in the Annual General Meeting shall give notice of participation to the company no later than 3 May 2023 or cast a postal vote in accordance with the instructions under the heading “Instructions for postal voting” in such time that the postal vote is received by the company no later than 3 May 2023. Notice of participation can be made:
• by mail: Permascand Top Holding AB, Folketshusvägen 50, SE-841 99 Ljungaverk, Sweden, or
• by e-mail: firstname.lastname@example.org.
The notice of participation must state name, personal identification number or corporate registration number, postal address, telephone number, shareholding and, where applicable, information about any proxy or shareholder assistants at the Annual General Meeting. Shareholders or its proxies may bring a maximum of two assistants, provided that their attendance is notified as above.
In order to be entitled to attend the Annual General Meeting, a shareholder whose shares are nominee-registered shall, in addition to giving notice of participation in the Annual General Meeting, register its shares in its own name so that the shareholder is registered in the share register kept by Euroclear Sweden AB as of the record date on 28 April 2023. Such registration may be temporary (so-called voting rights registration), and request for such voting rights registration shall be made to the nominee in accordance with the nominee’s routines at such a time in advance as decided by the nominee. Voting rights registrations made no later than the second banking day after 28 April 2023 are taken into account in the presentation of the share register.
Proxy and proxy form
If a shareholder is represented by proxy, a written and dated power of attorney signed by the shareholder must be issued for the proxy. The power of attorney must not have been issued more than one year before the date of the Annual General Meeting, unless the power of attorney provides for a longer period, however, not exceeding five years from issuance. The original power of attorney as well as registration certificate and other authorization documents, evidencing the authorized representative, should reach the company at the above address no later than 3 May 2023.
Proxy form is available from the company and on the company’s website, www.permascand.com, and is upon request sent to the shareholders who provide their postal address.
Instructions for postal voting
Shareholders who wish to exercise their voting rights by postal voting shall use the postal voting form available on the company’s website, www.permascand.com. The postal vote must be received by the company no later than 3 May 2023. The postal voting form shall be sent by mail or e-mail to the addresses set forth above. Submission of the postal voting form is valid as notice of participation at the Annual General Meeting.
Shareholders who wish to submit its postal vote by proxy must issue a written and dated power of attorney for their representative. If the power of attorney is issued by a legal person, a copy of the registration certificate or equivalent for the legal person must be attached.
Shareholders may not provide special instructions or conditions to the postal vote. If so, the vote (i.e., the entire postal vote) is invalid. Further instructions and conditions can be found in the postal voting form.
If a shareholder who has submitted a postal voting form attends the Annual General Meeting in person or by proxy, the postal vote lapses.
1 Opening of the Annual General Meeting.
2 Election of Chairman of the Annual General Meeting.
3 Preparation and approval of the voting list.
4 Approval of the agenda.
5 Election of one or two persons to verify the minutes in addition to the Chairman.
6 Determination as to whether the Annual General Meeting has been duly convened.
7 Presentation of the annual report and the auditor’s report, as well as the consolidated financial statements and the consolidated auditor’s report.
8 Resolution on
a. adoption of the income statement and balance sheet, as well as the consolidated income statement and consolidated balance sheet,
b. dispositions in respect of the company’s result pursuant to the adopted balance sheet, and
c. discharge from liability for the members of the Board of Directors and the Chief Executive Officer.
9 Determination of the number of members of the Board of Directors as well as auditors and deputy auditors.
10 Determination of fees to the members of the Board of Directors and the auditors.
11 Election of members of the Board of Directors as well as auditors and deputy auditors.
12 Resolution on guidelines for remuneration to senior executives.
13 Resolution on authorization for the Board of Directors to issue shares, warrants and/or convertible instruments.
14 Closing of the Annual General Meeting.
Item 2 – Election of Chairman of the Annual General Meeting
The Nomination Committee proposes that Per Lindberg, or the person appointed by the Board of Directors in the event of his impediment, be elected Chairman of the Annual General Meeting.
Item 3 – Preparation and approval of the voting list
The voting list proposed to be approved under item 3 on the agenda is the voting list prepared by the Chairman of the general meeting, based on the general meeting share register, postal votes received and shareholders having given notice of participation and being present at the meeting venue.
Item 8 b – Resolution on dispositions in respect of the company’s result pursuant to the adopted balance sheet
The Board of Directors proposes that no dividend is paid and that available profits are carried forward.
Item 9 – Determination of the number of members of the Board of Directors as well as auditors and deputy auditors
The Nomination Committee proposes that the number of members of the Board of Directors elected by the general meeting for the period until the end of the next Annual General Meeting shall be seven members, without deputies. The Nomination Committee further proposes that one registered accounting firm be elected as auditor, without deputies.
Item 10 – Determination of fees to the members of the Board of Directors and the auditors
The Nomination Committee proposes that the fees to the members of the Board of Directors shall be as set out below. The proposal means an increase of respective members’ fee in relation to the fee resolved by the Annual General Meeting 2022. Fee resolved at the Annual General Meeting 2022 is stated in parentheses.
• SEK 570,000 (550,000) to the Chairman of the Board and SEK 235,000 (225,000) to each of the other Board members elected by the Annual General Meeting who are not employed by the company; and
• SEK 115,000 (110,000) to the Chairman of the Audit Committee and SEK 30,000 (30,000) to each of the other members of the Audit Committee, and SEK 60,000 (60,000) to the Chairman of the Remuneration Committee and SEK 20,000 (20,000) to each of the other members of the Remuneration Committee.
The Nomination Committee further proposes that the auditor’s fees shall be paid as per approved invoice.
Item 11 – Election of members of the Board of Directors as well as auditors and deputy auditors
The Nomination Committee proposes re-election of the Board members Per Lindberg, Anna Alexandersson, Karl Bergman, Marie Grönborg, Mario Houde, Ingar Jensen and Johan Karlsson for the period until the end of the next Annual General Meeting. The Nomination Committee proposes re-election of Per Lindberg as Chairman of the Board.
Information on all proposed members is available at the company’s website, www.permascand.com.
The Nomination Committee further proposes, in accordance with the recommendation of the Audit Committee, re-election of the registered accounting firm KPMG AB as the company’s auditor for the period until the end of the next Annual General Meeting. KPMG AB has informed that the Authorized Public Accountant Helena Nilsson will continue to be appointed auditor in charge, should KPMG AB be elected as auditor.
Item 12 – Resolution on guidelines for remuneration to senior executives
The Board of Directors proposes, after recommendation from the Remuneration Committee, that the Annual General Meeting resolves on guidelines for remuneration to senior executives as set forth below. Compared with the current guidelines, an amendment is proposed to the effect that variable cash payments for the CEO shall entitle to pension. The Board has not received any comments from the shareholders concerning the existing guidelines for remuneration to the senior executives.
The guidelines shall apply to remuneration that has been agreed upon or to changes in already agreed remunerations after the guidelines have been adopted by the annual general meeting. The guidelines do not apply to remunerations that has been resolved by the general meeting and any remuneration through shares, warrants, convertibles or other share-related instruments such as synthetic options or employ stock options shall therefore be resolved by the general meeting.
These guidelines apply to the CEO and other senior executives in the company group and all other remuneration to members of the board except fees to the board of directors.
Regarding employment conditions that are governed by rules other than Swedish, appropriate adjustments may be made in order to comply with such mandatory rules or established local practice, whereby the general objectives of these guidelines shall, to the extent possible, be met.
The guidelines promotion of the company's business strategy, long-term interest and sustainability
For more information regarding the company's business strategy, please see www.permascand.com.
The guidelines shall contribute to the possibility to create conditions for the company to retain and recruit competent and committed senior executives in order to successfully implement the company's business strategy and meet the company's long-term interests, including sustainability. The guidelines shall further stimulate an increased interest in the business and earnings development as a whole, and to increase the motivation for the senior executives and increase positive cohesion in the company. The Guidelines shall also contribute to good ethics and corporate culture.
In order to achieve the company's business strategy, the total annual remuneration must be market-based and competitive in the employment market in which the senior executive is situated and taking into account the individual's qualifications and experience and that exceptional performance must be reflected in the total remuneration.
Each year, the board of directors evaluates whether a long-term share-related incentive program should be proposed to the annual general meeting.
The forms of remuneration etc.
The remuneration to the senior executives in the company shall comprise of fixed salary, possible variable cash remuneration and other customary benefits as well as pension payments. The total remuneration, including pension benefits, shall, on a yearly basis, be in line with market practice and competitive on the labor market where the senior executive is based and take into account the individual responsibility and authority as well as qualifications and experiences of the senior executive as well as reflecting any notable achievements. The fixed salary shall be revised on a yearly basis.
The senior executives' fixed salary is to be competitive and based on the individual senior executive's competences, responsibilities and performance.
The senior executives may receive variable remuneration in addition to fixed salaries. Variable cash remuneration is conditional upon the fulfillment of defined and measurable goals which should be determined by results. The variable cash remuneration should to the CEO at most amount to 30 percent of the annual fixed salary and for other the senior executives amount to 20 percent of the annual fixed salary. The variable remuneration is based on the outcome in relation to individually set goals.
The variable cash remuneration shall be based on the outcome of actual pre-determined targets based on the company's business strategy and the long term business plan approved by the board of directors. The targets for receiving variable cash remuneration may include share based or financial targets, either on group or section level, operative goals and goals for sustainability and social responsibility, employee engagement or customer satisfaction. These targets are to be established and documented annually. The company has established financial targets and KPIs in relation strategic and business critical initiatives and projects which ensures alignment with the business plan and business strategy for a continued sustainable business. The variable cash remuneration shall also be designed with the aim of achieving greater community of interest between the participating senior executive and the company's shareholders in order to contribute to the company's long term interest, including sustainability.
Cash based variable remuneration calculated proportionally during the vesting year and requires continued employment and not notice of termination at the year end. Terms for variable cash remuneration should be designed so that the board of directors may limit or omit payment of variable cash remuneration, provided that exceptional economic circumstances are at hand, or if it motivated because of any other reasons, if the board of directors finds the payments unreasonable and incompatible with the company's responsible in relation to its shareholders. The board of directors shall also have the right to pay variable remuneration on individual level in special circumstances for extraordinary achievements or during the year change the criteria for fulfillment of bonus targets if special reasons for it and a deviation is necessary to ensure the company's long term interests and sustainability or to ensure the company's economic viability. Such remuneration may not exceed an amount corresponding to 50 percent of the fixed annual salary and not be paid more than once a year per individual. A resolution for such remuneration shall be made by the board after proposal from the remuneration committee. The company has no right according to agreements to reclaim variable remuneration paid in cash.
The company may provide other benefits to senior executives in accordance with local practice. Such other benefits may include company car and company healthcare etc. Such benefits may amount to a maximum of 15 percent of the fixed annual cash salary.
For executives who are stationed in a country other than their home country, additional remuneration and other benefits may be paid to a reasonable extent, taking into account the particular circumstances associated with such expatriation, whereby the overall purpose of these guidelines is to be met as far as possible. Such benefits may amount to a maximum of 50 percent of the fixed annual cash salary.
Pension benefits for the CEO and other senior executives must reflect customary market terms, compared with that which generally applies to executives in comparable positions in other companies, and should normally be based upon defined contribution pension plans. Retirement occurs at the relevant/applicable retirement age.
Pension benefits, including health insurance, must be defined in contribution schemes with respect to the CEO. Pensions payments are made corresponding to at most 30 percent of pensionable salary. Bonus is pensionable.
For other senior executives, pension benefits, including health insurance, must be defined in contribution schemes unless the employee is covered by defined-benefit pensions under compulsory collective agreement provisions. Variable cash compensation shall be pension-based only insofar as it is compelled by compulsory collective agreement provisions applicable to the senior executive. Pension premiums for defined contribution schemes shall amount to a maximum of 35 percent of the fixed annual cash salary.
Payment of consultancy fees and additional remuneration may be paid to directors after decision by the board of directors, after preparation by the remuneration committee, if a director performs services on behalf of the company, which do not constitute board work. Such remuneration shall be designed in accordance with these guidelines.
Notice of termination and severance pay
Fixed salary during the notice period and any severance pay shall in total not exceed an amount corresponding to a maximum of a two years' fixed salary. The maximum mutual notice period in any senior executive's contract may be no more than twelve months during which time salary payment will continue. The company shall not allow any additional contractual severance payments.
Deviations from the guidelines
The board of directors shall be entitled to deviate from the guidelines, for example with respect to recruitments of senior executives on the global labor market to be able to offer competitive terms and conditions], in an individual case if there are special reasons for it and a deviation is necessary to ensure the company's long term interests and sustainability or to ensure the company's economic viability. Such deviation shall also be approved by the remuneration committee. An arrangement deviating from the guidelines can be renewed but each such arrangement shall be limited in time and shall not exceed a period of 24 months and twice the remuneration that the individual would have received had no additional arrangement been made.
Preparation, decision processes etc.
Decisions regarding salary and other remuneration to the managing director and other senior executives are prepared, within the scope of the guidelines resolved upon by the annual general meeting, by the remuneration committee and resolved on by the board of directors.
The remuneration committee shall also prepare the board of directors' decisions on issues concerning principles for remuneration. The remuneration committee shall also monitor and evaluate programs for variable remuneration, both ongoing and those that have ended during the year, for the senior executives and monitor and evaluate the application of these guidelines for remuneration to the senior executives, as well as and current remuneration structures and levels in the company.
The board of directors shall prepare proposals for new guidelines at least every four years and submit the proposal for resolution at the annual general meeting. The guidelines shall apply until new guidelines have been adopted by the annual general meeting.
The guidelines shall be applied in relation to every commitment on compensation to senior executives and every change in such commitment, which is resolved after the annual general meeting at which the guidelines were adopted. Thus, the guidelines have no impact on already pre-existing contractually binding commitments. Guidelines resolved upon may also be amended by way of a resolution by any other general meeting.
Within the scope and on the basis of the guidelines, the board of directors shall annually decide on the specific revised remuneration terms for each senior executive and make such other decisions on compensation to senior executives that may be required. The CEO or other senior executives shall not participate in the remuneration committee's and the board of directors' processing of and resolutions regarding remuneration-related matters in so far as they are affected by such matters.
When the measurable period for fulfilment of the criteria for payment of variable cash compensation has ended, the extent to which the criteria have been met shall be determined. The board of directors, after following recommendation by the remuneration committee, is responsible for the assessment of variable cash remuneration to the CEO and the CEO is responsible for the assessment of variable cash remuneration to other executives. With respect to financial targets the evaluation shall be based on the company's latest publicly available financial information.
Day to day costs such as travel expenses for the CEO are approved by the chairman of the board. New recruitments, salary changes and other significant changes for other senior executives than the CEO are subject to approval from the chairman of the board of directors, whereas minor adjustments, and day to day costs are approved by the CEO. Payout of fixed base pay is prepared by local payroll departments and are approved before payout by the local HR representative. Payout of short-term variable remuneration to senior executives and the CEO is subject to approval from the remuneration committee. Eligibility for share-related incentive program must be approved by the board of directors based on the proposal approved at the annual general meeting.
Compliance with guidelines is controlled annually through the following activities:
• Collection of documented annual targets for short-term variable pay
• Random samples of salary payout approvals
• Sample reports from payroll systems to identify any out of the ordinary payouts
The results of the controls are summarized and reported to the Remuneration Committee.
The company has received benchmark data from third party sources to secure that compensation to the CEO and other senior executives reflects what is offered to executives in comparable positions in other companies. Market rate is also secured through recruitment processes, in the cases where executives are recruited externally.
In the preparation of the board of directors’ proposal for these guidelines for compensation to the CEO and other senior executives, salary and employment conditions for employees of the company have been taken into account by including information on the employees’ total remuneration, the components of the remuneration and increase and growth rate over time, in the board of directors’ basis of decision.
The board of directors considers that the guidelines on remuneration to senior executives are proportionate in relation to salary levels, remuneration levels and conditions for other employees in the group.
Item 13 – Resolution on authorization for the Board of Directors to issue shares, warrants and/or convertible instruments
The Board of Directors proposes that the Annual General Meeting resolves to authorize the Board of Directors to, on one or several occasions during the period up until the next Annual General Meeting, resolve on issue of shares, warrants and/or convertible instruments, with or without deviation from the shareholders’ preferential rights. The total number of shares that are issued by support of the authorization, including shares that may be issued after exercise of warrants or conversion of convertible instruments issued by support of the authorization, may correspond to at most ten (10) percent of the total number of shares in the company at the time of the first utilization of the authorization. Payment may, in addition to cash payment, be made in kind or by set-off, or otherwise with conditions.
The purpose of the authorization and the reasons for any deviation from the shareholders’ preferential rights is to increase the company’s financial flexibility and the Board’s room for maneuver to raise capital in a time- and cost-effective manner and/or complement the shareholder base with new shareholders of strategic importance for the company, and enable the company to, fully or partially, finance any company acquisitions or acquisitions of businesses by issuing financial instruments as payment in connection with acquisitions, or to raise capital for such acquisitions. Issues made with deviation from the shareholders’ preferential rights shall take place at a subscription price in line with market conditions, including any discount in line with market conditions where applicable. If the Board of Directors deems it appropriate in order to enable the delivery of shares in connection with an issue as described above, the issue may be done at a subscription price equal to the quota value of the share.
The Board of Directors, or the person appointed by the Board of Directors, shall have the right to make the minor adjustments to the above resolution that may prove necessary in connection with registration with the Swedish Companies Registration Office.
Prior to the Annual General Meeting, the company’s Nomination Committee has consisted of Trond Bjørnøy (Chairman), representing Norvestor VI LP, Fredrik Herlitz, representing 5J Holding AB, Ingar Jensen, representing Ulven Invest AB, Erik Hallengren, representing SEB Fonder and the Chairman of the Board, Per Lindberg.
Resolution pursuant to item 13 is valid only when supported by shareholders representing no less than two-thirds of both the votes cast and the shares represented at the Annual General Meeting.
Number of shares and votes in the company
At the time of issuance of this notice, the total number of shares in the company, as well as the total number of voting rights, amounts to 59,313,529. The company holds no treasury shares.
Shareholders’ right to receive information
The Board of Directors and the Chief Executive Officer shall, if any shareholder so requests and the Board of Directors believes that it can be done without material harm to the company, provide information at the Annual General Meeting about circumstances that may affect the evaluation of an item on the agenda, circumstances that may affect the evaluation of the company’s or subsidiaries’ financial position and the company’s relation to other group companies.
The Nomination Committee’s and the Board of Directors’ complete proposals are set out in this notice, which is available from the company and on its website stated below.
Accounting documents and auditor’s report will be available from the company no later than three weeks prior to the Annual General Meeting. The documents will also be available on the company’s website, www.permascand.com.
Copies of the above documents are also sent to the shareholders who so request and provide their postal address. The documents will also be presented at the Annual General Meeting.
Information on all proposed members of the Board of Directors as well as the Nomination Committee’s complete proposals and the Nomination Committee’s reasoned opinion regarding proposal for the Board of Directors is available on the company’s website, www.permascand.com.
Processing of personal data
For information about how your personal data are processed, see https://www.euroclear.com/dam/ESw/Legal/Privacy-notice-bolagsstammor-engelska.pdf.
Ånge in April 2023
Permascand Top Holding AB
The Board of Directors
Q4 2022: Robust order intake and profitable growth demonstrate the strength of Permascand’s business
Year-end report 2022
Q4 2022 (Q4 2021)
- Order intake increased 43 per cent year-on-year to SEK 107 million (74)
- Sales increased 13 per cent to SEK 147 million (130)
- Operating profit totalled SEK 18 million (30), corresponding to 12 per cent (23) of revenue
- Adjusted operating profit totalled SEK 14 million (32)
- Profit after tax totalled SEK 15 million (21)
- Earnings per share amounted to SEK 0.25 (0.35)
- Cash flow from operating activities totalled SEK -5 million (33)
Jan–Dec 2022 (Jan–Dec 2021)
- Order intake increased 35 per cent, totalling SEK 508 million (377). Taking into account the write-down of a previous order, net order intake amounted to SEK 445 million.
- Sales increased 41 per cent to SEK 569 million (405)
- Operating profit totalled SEK 105 million (38), corresponding to 18 per cent (9) of revenue
- Adjusted operating profit totalled SEK 95 million (60)
- Earnings after tax totalled SEK 81 million (20)
- Earnings per share before and after dilution amounted to SEK 1.37 (0.37)
- Cash flow from operating activities totalled SEK 113 million (11)
Events during the fourth quarter of 2022
- On 15 December, Permascand announced the signing of a master supply agreement to deliver service and refurbishment of electrochemical cells to a significant client. The estimated value of the agreement is in the range of SEK 30–45 million per year for a period of two years.
The strength of Permascand’s business clearly showed through in the fourth quarter of 2022, where profitable growth and robust order intake were the result of broad and growing demand for the company’s products and solutions in combination with flexible, efficient production capacity.
2022 added up to a record-setting year where we increased sales by 40 per cent compared with full-year 2021. At the same time, we took some key strategic steps on our journey of growth, including through attractive partnership agreements and exciting customer projects.
Order intake for the fourth quarter totalled SEK 107 million. This is an increase of 43 per cent year-on-year. Order placement was primarily in Electrification & Renewables and Industrial Solutions.
Sales totalled SEK 147 million during the quarter, up 13 per cent year-on-year. Sales for the quarter were driven primarily by Industrial Solutions, where we successfully delivered on the robust order intake in late 2021 and early 2022. During the quarter, new patterns in our business segments emerged, as decreased sales and order intake in Water Treatment were offset by a strong quarter in Industrial Solutions, and Electrification & Renewables picked up momentum. This is a sign of strength showing that with efficient, flexible, and scalable production we can meet reduced demand in a segment by switching over and meeting increased demand in other segments.
Gross profit for the quarter totalled SEK 45 million, corresponding to a gross margin of 31 per cent. It is gratifying to once again report stronger profitability after lower capacity utilisation and disruptions to operations temporarily burdened profitability in the third quarter.
Electrification & Renewables
Electrification & Renewables returned one of its strongest quarters in the company’s history, with good sales and a robust order intake as a result of the high level of activity in previous quarters. We enter 2023 with a strong order book, demand that continues to increase, and an excellent outlook in the segment.
Our initiative to establish a technology and innovation hub to develop, and be a leader in, the field of hydrogen gas made tremendous steps during the quarter and continues to develop in accordance with plans. Completion of the research center, and the facility where we are introducing a new coating method, is estimated for the summer. As part of this same strategic plan, this spring we will be launching a research partnership with Umeå University and the Swedish Foundation for Strategic Research (SSF in Swedish) with a focus on producing green hydrogen without or with the reduced use of precious metals, with lowered production costs and reduced climate impact as goals. We are continuing to invest in the organization and in our plant to secure our leading position and to enhance the efficiency of our processes and working methods. Naturally, this will have some impact on our profitability over the short term, but this way we will be ready for commercial orders for hydrogen – the first of which is expected to come in during the year. The partnership with RES was strengthened during the year after signing a declaration of intent in April on the joint development of a commercial research center in a new production facility in the town of Alby in Ånge Municipality. This partnership strengthens our prospects for building up a customer portfolio in Sweden and the Nordic region – a welcome contribution to the base of international customers we have today.
The green transition pushed the growing demand in Industrial Solutions at a faster pace than previously expected. Here, we have won new customers while demand grows among existing customers. One successful advance was the two-year framework agreement for service and recoating of electrochemical cells that we signed with a major existing customer. The agreement is estimated to be worth between SEK 30–45 million per year, with an option to extend for an additional two years.
We experienced a slowdown in Water Treatment during the quarter. The order pattern in marine transport has changed, as order placement today is more frequent at shorter notice and with less scope than in previous years when customers often placed orders on an annual basis. This, combined with a more competitive market with increased price pressures, gave rise to some challenges that we are meeting with the next generation of water purification cells so as to best confront the final phase of the installation cycle, which is expected to reach its peak in 2024.
Given a high level of activity, we expect the robust order intake in Industrial Solutions to continue and an increase in Electrification & Renewables. We therefore expect that these segments will offset the slowing growth in Water Treatment for ballast water until the segment’s aftermarket business is expected to achieve significant revenue after 2026. We are also seeing growing interest in industrial water purification, though levels remain low. The total ballast water treatment market is expected to remain the same size as before, and our market shares unchanged. In our opinion, orders for remaining installations will be placed at shorter intervals before installation compared to previously. So far, production for Electrification & Renewables is generally in smaller series compared with production in Water Treatment, which initially requires larger production adjustments with lower efficiency as a result. Over the short term, this could lower profitability before larger orders come in and production can take place in larger series and thus with stronger profitability.
We leave a year with record-setting sales, strong profitability, and several key strategic successes behind us. We enter 2023 with confidence owing to the high level of activity with more customer inquiries as well as a strong order book that is more equally divided among our business segments. In conclusion, I would like to extend a warm thanks to all our customers, suppliers, partners, and especially our fantastic employees for their impressive efforts that allow Permascand to continue to develop and facilitate the global green transformation.
Peter Lundström, CEO
CEO Peter Lundström and CFO Linda Ekman will present the report in a conference call today 9 February at 10:30 CET. The presentation will be held in English and will conclude with a Q&A session.
Link to presentation: https://ir.financialhearings.com/permascand-top-holding-q4-2022
To participate via telephone please dial-in on the numbers below:
US: +1-412-317-6300 , Pin code: 0469191#
Link to report
The report is attached to this announcement and can be found at: https://permascand.com/investors/financial-reports/
Interim report January-September 2022
Q3 2022 (Q3 2021)
- Order intake decreased 30 per cent year-on-year to SEK 143 million (203)
- Sales increased 57 per cent to SEK 120 million (76)
- Operating profit totalled SEK 11 million (14), corresponding to 11 per cent (18) of revenue
- Adjusted operating profit totalled SEK 6 million (14)
- Profit after tax totalled SEK 8 million (10)
- Earnings per share amounted to SEK 0.13 (0.18)
- Cash flow from operating activities totalled SEK 39 million (32)
Events during the third quarter of 2022
On 23 September, Permascand announced that the partnership with Verdagy for the joint development of a new electrochemical cell for the production of green hydrogen had reached an important milestone in the form of successful pilot tests that validate the technology’s durability and scalability.
We once again posted robust sales in the third quarter, delivering on our strong order book. It is gratifying to see that in just the first three quarters of 2022, our sales have already surpassed full-year 2021. This is further proof that we are continuing to deliver according to our growth ambition.
Order intake for the quarter totalled SEK 143 million. Despite lower order intake than in the year-earlier quarter, order intake is one of the strongest we have recorded in a quarter, and our order intake for the January to September period was greater than in the corresponding year-earlier period. We are pleased to see that order intake once again picked up speed after the lower level in the second quarter. An important reason for this is falling prices in the global market for materials and raw materials. The year-earlier quarter was an exceptional period, where the entire annual order intake from one of our largest customers was concentrated in one and the same quarter.
Sales totalled SEK 120 million during the quarter, up 57 per cent year-on-year. Sales were primarily driven by sales in Water Treatment, where we successfully delivered on our order book, primarily derived from the strong order intake in Q3 2021 and on an ongoing basis in 2022. Industrial Solutions also performed favourably while sales in Electrification & Renewables were in line with the year-earlier quarter.
The recent turmoil in the global market has led to a shift in market dynamics meaning that the time between order intake and delivery has become shorter. Now our customers place several smaller orders rather than fewer large ones, which can sometimes entail variations that result in misleading comparative quarterly figures. Permascand’s performance should be viewed in the context of longer cycles. There it is clear that we are demonstrating a positive trend over time.
Gross profit for the quarter totalled SEK 26 million. Changes in capacity utilization have temporarily affected the result and reported gross margin negatively. The gross margin in the quarter was also negatively impacted by increased pricing pressure in Water Treatment.
Furthermore, during the quarter we encountered some operational challenges that disrupted our normally efficient operations and production. These included delayed deliveries of spare parts for machinery, employee absenteeism and disruptions to the power supply from a failing switchyard. Increased costs resulting from the interruptions have, to a certain extent, been reflected in the somewhat lower profitability for the quarter. Despite these challenges, we delivered solid figures and profitable growth and we are continuously reviewing our processes to further strengthen our supply chain and create better stability and resilience against long lead times and volatile prices.
Electrification & Renewables
The level of activity remains high and new milestones are continuously being reached. One of these is our partnership with Verdagy, where we successfully worked together to develop a new electrochemical cell for producing green hydrogen. During the quarter, we could announce successful pilot tests that validated the technology’s durability and scalability, which is a precondition for taking the next step and reaching a commercial scale. We look forward to the first commercial order in hydrogen, which is expected to come in 2023. In the area of power transmission, we are seeing increased interest in our expertise in corrosion protection related to investments in green electricity supply.
In line with previous assessments, the activity level and demand remained high in Industrial Solutions, with a strong order intake and sales for the quarter as a result. We have a strong order book in the segment and several future new-build projects are being evaluated.
We once again reported favourable order intake and strong sales in Water Treatment for the quarter, in parallel with the start of several new customer projects. We have an overall strong position in the market together with our customers, enabling us to continue to capitalise on the installations required in order for marine transport to meet regulatory requirements. It is also gratifying that we delivered our first order for industrial water treatment during the quarter.
We are still experiencing a high level of activity among our customers and we have great expectations that ongoing projects will lead to order placements towards the end of the year and in the beginning of 2023. In line with the previous year, we expect stronger order intake in the fourth quarter for delivery next year, and negotiations involving several customer projects are in their final stage. With an impressive sales record on an annualised basis, robust order books and strong finances, we are continuing to develop on our profitable journey of growth and achieving our financial targets as we progress.
Peter Lundström, CEO Permascand
CEO Peter Lundström and CFO Linda Ekman will present the report in a conference call today 11 November at 10:30 CET. The presentation will be held in English and will conclude with a Q&A session.
To participate via telephone please dial-in on the numbers below.
US: 1-412-317-6300, Pin code: 9111060#
Link to report
The report is attached to this announcement and can be found at: https://permascand.com/investors/financial-reports/
Interim report January-June 2022
Q2 2022 (Q2 2021)
- Order intake decreased 91 per cent year-on-year to SEK 4 million (41). Impairment of previous orders had a negative impact on order intake
- Sales increased 33 per cent to SEK 163 million (123)
- Operating profit totalled SEK 45 million (-3), corresponding to 28 per cent (-2) of revenue
- Adjusted operating profit totalled SEK 45 million (12)
- Earnings after tax totalled SEK 35 million (-5)
- Earnings per share amounted to SEK 0.58 (-0.1)
- Cash flow from operating activities totalled SEK 58 million (-39)
Events during the second quarter of 2022
- On 29 June, Permascand announced a write-down of one order, which decreased the value of the order backlog by approximately SEK 63 million. The order, which was placed in 2018, will not be delivered. The delivery of the order was previously estimated for the second quarter of 2023, which implies that sales for the current calendar year will not be negatively affected.
In the second quarter of the year, we once again achieved record sales alongside high levels of customer activity. We are still benefiting from streamlining and scalability in our production, which resulted in a gross margin of 38 per cent during the quarter.
The value of incoming orders amounted to SEK 67 million, an increase of 63 per cent over the year-earlier period. After the write-down of one order during the quarter, net order intake totalled SEK 4 million. Customer activity levels are generally high in all of our business segments. At the same time, we can note that there was a certain amount of passivity among some customers in the quarter in terms of placing new orders.
Sales totalled SEK 163 million, up 33 per cent year-on-year and approximately 17 per cent stronger than the previous record-breaking quarter, Q1 2022. Strong sales were once again driven primarily by the Water Treatment business segment, where we continued to deliver on our strong order book. While the other segments accounted for a smaller portion of sales in the quarter, the trend has been positive and sales met expectations.
The gross profit for the quarter totalled SEK 62 million, an increase of SEK 31 million over the year-earlier period. We are following our growth plan and managed to deliver good profitability thanks to our efficient and scalable production.
In large portions of our projects, our strong buffer inventory of raw material and materials provide flexibility and stability, as volatile prices for materials and raw materials or unpredictable supply chains otherwise can lead to uncertainty.
In the end of the quarter, we decided to write down parts of one order, which entailed an approximately SEK 63 million decrease in the value of the order backlog. A change entailing the cancellation of a project for our customer meant that the order, originally placed in 2018, would not be delivered. As previously announced, the delivery of the order was previously estimated for the second quarter of 2023, which implies that sales for the current calendar year will not be negatively affected. Otherwise, the order book remains stable and other orders will be delivered as expected.
Electrification & Renewables
The activity level remained high and our assessment is that several companies in green hydrogen are accelerating their processes and moving projects ahead of schedule to reach commercialisation.
Our partnership agreement with Verdagy is based on development where we work together to develop a new electrochemical cell for producing green hydrogen. Like several other partners, Verdagy is accelerating its investments, which can be seen in the form of an intensified level of activity where the next step is to ramp up the demonstration facilities so they reflect the production capacity required in a commercial environment. When our partners then receive commercial orders from their customers, we are ready to do our part and deliver components that make these projects possible.
We noticed that customer activity also remained high in this segment and we expect it to begin to transition into major orders in autumn 2022. One of the high points of the quarter was an order for continued capacity expansion, which we expect to deliver before the end of the year. In addition to the expansion, demand is strong in maintenance of industrial facilities, where Permascand continuously supports customers in maximising production performance and efficiency. There are currently no signals that demand will slow down in this segment.
Sales in the Water Treatment segment accounted for the majority of the company’s sales in the quarter. We broke a new sales record in a single quarter. Increased costs and falling prices for shipping, signs of a challenging global market, impact ship owners and put pressure on treatment equipment suppliers. At the same time, negotiations intensified concerning volumes and prices, indicating that there is uncertainty among our end customers.
Furthermore, we see an opening in new use areas. For example, we have now received our first order in the water treatment segment within industry and public water distribution, where our electrochemical methods are effective. Growing regulatory requirements and expectations regarding sustainability mean that companies around the world are increasingly demanding efficient methods for treating water in these areas as well. This means that we can offer the same kind of technology we use for ballast water in new use areas in a growing end market.
We are closing out the first half of the year with record sales and good earnings, while we also foresee continued high customer activity levels for the rest of 2022 that are expected to result in new orders. However, we can note that the global market has grown more difficult during the quarter, with increased caution among customers as a result. Thus, it is relatively more difficult to predict the market situation beyond the end of the year. Nonetheless, there are no signs that the global green transition will slow down – the reverse, in fact – and we are convinced that the companies that can enable this transition will benefit. Permascand is one of those companies. With strong financial earnings behind us and several exciting customer projects on the activity list, we look forward to continued strong development at the company during the second half of 2022.
Peter Lundström, CEO Permascand
CEO Peter Lundström and CFO Linda Ekman will present the report in a conference call today 18 August at 11:00 CEST. The presentation will be held in English and will conclude with a Q&A session.
To participate via telephone please dial-in on the numbers below.
US: +1-412-317-6300, Pin code: 2717689#
Link to report
The report is attached to this announcement and can be found at: https://permascand.com/investors/financial-reports/