Klimator

First quarter, January 1 – March 31, 2024

Group

• Operating revenue amounted to SEK 8,702K SEK (SEK 7,520K).
• Operating profit amounted to SEK 256K (SEK -5,567K).
• Net income amounted to SEK 151K (SEK -5,826K).
• Earnings per share after tax amounted to SEK 0.01 (SEK -0.2).
• Cash flow from operating activities amounted to SEK -1,404K (SEK -6,425K).
• Number of shares as of March 31, 2024, amounted to 28,824,751 (28,824,751).

Material events during the first three months

• In January Klimator initiates a project aiming to improve energy prediction for electric vehicles by including road weather information.

The project is carried out together with a global player within heavy transport. The value of the order is SEK 984K, of which SEK 738K is financed through FFI. The project extends over 9 months, starting in mid-December. The project aims to improve the energy consumption forecast for heavy electric vehicles by including road weather information from Klimator.

The initiative for the project has a background in investments in battery electric and fuel cell-powered vehicles.

• In March Klimator AB has applied for and been granted a loan of SEK 3 million from Almi Företagspartner.

• In March Klimators wins its first major airport agreement based on the AHEAD technology. The delivery, which is expected to take place in Q3, will be delivered to one of the largest airports in Europe. The agreement is signed by the partner SARSYS ASFT and includes two separate AHEAD systems with a total value of approximately EUR 50,000

Material events after the end of the period

• AiDEN Auto AiDEN Auto creators of the first white label and bi-directional connected services hub powered by the Android Automotive Operating System (AAOS) and Klimator, world-leading experts in road weather intelligence, will be showcasing a new collaboration during the Connected Vehicle Systems Alliance (COVESA) All Member Meeting in Gothenburg, April 16 – 18. The Demonstration will include Klimator weather alerts in multiple AiDEN-enabled passenger and commercial vehicles.

• In May Epoke, a leading equipment manufacturer of the winter industry in Europe and North America, has launched the world's first product for salt spreaders, called dynamic dosage, which means that the spreaders are controlled directly through Klimator's AI-based road weather application, Road Status Information (RSI).

Comment from the CEO
Continued focus on increased revenues and cost control, intensive sales activities and great interest in Klimator's Computer vision technology, Klimator AHEAD. Three important ingredients in the transformation of Klimator into a profitable company and continuously focus to be the most innovative company in the world with a single issue to solve; When will slippery roads occur.

At the time of writing this CEO's statement, we are twelve months into the journey of creating a profitable business. So where are we according to our internal plan established the end of May 2024? As in all companies, some parts have exceeded expectations and other parts moving slower than expected. Klimator's journey of change consists three important elements. The past, how well we have succeeded in winning and delivering our business. Present, focus on active and new customer dialogues and winning of new contracts. Future, the analysis of how our business in different markets is developing, our position and our customers' future needs, which will be reflected in upcoming quarterly reports.

The past. It is with continued pride that I can state that we continue to grow despite a reduced organization that also continues to deliver with a high quality with a high level of customer satisfaction. Transformations rarely happen because of technology – it's people who contribute to the change. During the first quarter of 2024, Klimator will continue its continuous improvement with continued growth and improved profitability. We increased our revenues by SEK 1.2 million (16%) and our net profit increased by SEK 6 million compared to 2023.

Present. Over the past year, Klimator has continued to invest smartly in our international relationships for both of our business areas. It is particularly pleasing that for the first time we have won a contract for Klimator AHEAD for one of Europe's largest airports – a segment that we believe has great future growth potential. For the quarter, Automotive participated in several important meeting places where decision-makers are looking for new solutions to detect slippery surfaces. Examples are: CES in Las Vegas, VTM in Turin, Mobility Innovation Forum in Munich and internal winter tests together with Scania in Arjeplog. At the same time, important development steps are taking place in the productization of projects carried out with, for example, Volvo Cars and Scania. For Winter Maintenance, the first and second quarters are the most important months to expand the business with existing and new customers. This is done through trade fairs, conferences and in-house arranged meeting places such as the Winter Conferences in Sweden and Denmark and Intertraffic Amsterdam with the Klimator 2nd Winter Maintenance Round Table – which brought together nine leading winter contractors from Europe.

While we are at the forefront of innovations based on real-time prediction of slippery conditions, we continue to focus on smart prioritization, balancing customers' current and future needs and how we improve our products and offerings. During the year, the Road Condition Data platform has undergone a major change to cope with future upscaling, primarily in Automotive but also in Winter Maintenance. Road Status Information celebrates ten years in 2024 as a product and has also received several improvements during the year that have been very well received by the market. The development of IoT stations continues to continuously add new types of capabilities as the market's needs grow.

Future. Our most exciting development is now taking place in the Klimator AHEAD technology, a computer vision product that is a combination of optical sensors and a camera that can "see" what type of slippery road is IN FRONT of the vehicle. Great opportunities await here in Automotive when the car can "see" the slippery road in front of the car and in Winter Maintenance to control the salt spreader in real time. The latest addition to the agreement also means that airports are a very interesting segment for future business.

Reversing a negative trend is intensive work that is based on smart decisions that take place in real time. It is challenging – but at the same time a very stimulating job where all employees contribute with their unique knowledge. We are a smaller company – but have a strong brand and a particularly unique domain knowledge. A knowledge that creates opportunities both in the present and in the future.

Emil Danielsson,CEO Klimator AB

About Klimator

History

Klimator is a Swedish software company that was founded in 2001 by Torbjörn Gustafsson and Jörgen Bogren. The founders have over 30 years of research experience in applied road climatology at the University of Gothenburg. Klimator’s technology is based on years of academic research into road weather conditions. In 2020, the company acquired HedeDanmark’s connected sensors (IoT) business to expand and strengthen Klimator’s product portfolio.

Business areas

To serve the market segments and customer groups addressed, Klimator’s activities are organized into two distinct business areas:

• Business Area Winter Maintenance
• Business Area Automotive

In the Winter Maintenance business area, the company offers a web-based software application, Road Status Information (RSI), based on the company’s Road Condition Data (RCD) platform. The software is customized for the needs winter contractors face when making critical decisions about when and how to implement specific measures and how much salt or sand to lay down. Klimator’s software results in significant cost savings for an industry with annual revenues of around SEK 3 billion in Sweden alone. More efficient wintertime road maintenance also brings major environmental benefits, such as lower salt usage, lower fuel consumption, and less wear and tear on roads.

The company’s IoT sensors give contractors, municipalities, and other organizations the ability to measure road surface temperature, air temperature, air humidity, rainfall, ground moisture, groundwater level, water level, and hydraulic flow in real-timI. With the help of sensors, data is collected and stored in Klimator’s IoT platform, where customers can avail themselves of a number of different services. For the customer, it’s a simple and easy introduction to a more modern, digital way to work.

The company focuses on IoT sensors connected to winter road maintenance but offers other sensors as a service to existing customers.

After establishing the Automotive business area late in 2019, the company carried out a number of successful Proof of Concept (PoC) and developmental projects with leading European and Japanese vehicle manufacturers and suppliers. There are several highly attractive areas of application for the company’s data platform (RCD) and sensor technology (AHEAD) within the automotive industry with respect to:

• improved driver information
• improved use of Advanced Driver Assistance Systems (ADAS)
• safe and scalable Autonomous Driving technology (AD)

Product portfolio

Road Condition Data (RCD) is a cloud-based Data-as-a-Service platform (DaaS) that aggregates data from a number of different sources. Advanced climate models and Klimator’s unique classification model for the road network are used in tandem to process this data and deliver detailed real-time information and predictive forecasts about road weather conditions. This information can be applied in a number of different areas in the automotive industry, including intelligent Advanced Driver Assistance Systems (ADAS) and complex systems for autonomous vehicles (AD).

Based on RCD, Road Status Information (RSI) is a digital Software-as-a-Service (SaaS) application that provides detailed forecasts for roads, bike paths, and pedestrian walkways. These high-resolution forecasts are used by transportation agencies and winter road contractors to make critical decisions about when, where, and how to implement snow removal and de-icing measures. Klimator’s forecasts facilitate decision-making, planning, and follow-up and Ilitate more efficient use of resources, which results in significant cost savings and a lessened impact on the environment.

AHEAD is a sensor technology that analyzes road conditions and friction in front of a moving vehicle in real-time. The technology is the result of more than ten years of research and development into road condition classification. AHEAD gives vehicle system information about prevailing road conditions, which improves the functionality and utility of Advanced Driver Assistance Systems and Autonomous Driving technology.

Klimator’s IoT Road Weather Stations provides real-time information on how weather impacts local road conditions. This data will empower operators to make informed decisions on the appropriate treatments necessary. The data is easily accessible from the Road Status Information (RSI) platform. The data comes in the form of an API so can also be fed into other weather monitoring and forecasting systems if necessary.

Financial overview

Consolidated financial statements

The Interim Report relates to the group, where the parent company, Klimator AB, owns 100 percent of the shares of Klimator Danmark DK ApS (hereinafter collectively referred to as the “company”).

Accounting principles

The Interim Report has been prepared in accordance with the Annual Accounts Act (“Årsredovisningslagen”) and the BFNAR 2012:1 Annual accounts and group accounting (“K3”) general guidance from the Swedish Accounting Standards Board (BFN).

Income

Revenues

The company's total turnover increases by 15.7 % to SEK 8,702K for the first quarter of 2024, compared to the same period in 2023 (SEK 7,520K).

The company’s revenues primarily consist of licensing income for the Road Status Information service in the Winter Maintenance business area and income via IoT sensors.

The revenues also include project income from the Automotive business area regarding Proof-of-Concept and innovation projects with vehicle manufacturers, in relation to the company’s products Road Condition Data (RCD) and AHEAD. The company has increased its project income substantially for Automotive during the first quarter.

In the first quarter of 2024, net revenues amounted to SEK 6,824K, which is an increase of 4.2% compared to the prior year (SEK 6,550K). The decrease is mainly attributable to delayed deliveries of hardware for new sales.

The company’s revenues from Winter Maintenance, now also including the sensor business, are normally accrued evenly throughout the year since the business model typically entails a one-year subscription or for the winter season. In addition to this, the company normally charges a start-up fee. Invoices and payments are often sent or received in advance.

Capitalized developmental work and proprietary fixed assets

The company capitalizes expenses attributable to the mapping of new geographic areas in its data platform.
In the first quarter of 2024, the company capitalized SEK 119K of developmental expenses for the above-mentioned projects.

Other operating income

The company occasionally receives research and development grants from authorities such as the EU and Vinnova that are reported as Other operating income.

In the first quarter of 2024, Other operating income amounted to SEK 1,759K compared to SEK 826K for the same period the prior year, which is an increase of 113%. The increase is mainly attributable to extended collaboration with vehicle manufacturers and authorities within winter maintenance. The purpose is that these collaborations shall lead to commercial contracts and also to develop the products of the company.

Costs

Direct costs

Cost of sales primarily refers to data traffic, server capacity, and hardware costs associated with the sale of sensors and AHEAD systems.

In the first quarter of 2024, direct costs amounted to SEK 1,370K (2,414K). The decrease of 43% is mainly attributable to decreased cost for data due to implementation of the efficiency program.

Other external costs

Other external costs primarily include rental costs for the premises, IT services, marketing, travel and consulting fees.

In the first quarter of 2024, other external costs amounted to SEK 1,680K, which is a decrease of 34% compared to the prior year (SEK 2,536K). The reduction is mainly attributable to lower rental costs, car costs, consulting costs and generally reduced costs due to a lower number of employees than in 2024.

Compensation and benefits

At the end of the first quarter, the company employed 17 individuals in business management, sales/business development, administration, and product development/project management.

In the first quarter of 2024, compensation and benefits amounted to SEK 5,121K (SEK 7,934K), which is 36% less compared to the same period previous year and due to fewer employees compared to 2023.

Depreciation and amortization

The company amortizes the goodwill from the acquisition of the Danish business and OmniKlima (merged subsidiary) as well as capitalized development expenses over a period of 5 years.

In the first quarter of 2024, the company’s depreciation and amortization amounted to SEK 275K (SEK 203K).

Other items

Intangible assets

At the end of the first quarter, the company’s intangible fixed assets amounted to SEK 2,972K, which included SEK 2,080K in capitalized development, SEK 475K for patents and SEK 417K in goodwill.

The acquisition cost of an internally developed fixed asset includes all directly related expenses.

Intangible fixed assets are linearly depreciated over the estimated useful life of the asset, which is reassessed on each balance sheet date. Currently, the useful life is estimated at five years for all intangible fixed assets.

Cash and cash equivalents

At the end of the first quarter, the company had cash and cash equivalents of SEK 3,216K. The company also has an unused bank overdraft facility of SEK 1,700K. In April the company received the payment for the loan from Almi Företagsparner of SEK 3,000K.

Cash flow

For the first nine months, cash flow from operating activities amounted to SEK -1,404K (SEK -6,425K).

Interest-bearing long-term debt

The company’s liabilities amounted to SEK 782K in the form of a loan from Almi Företagspartner. Of this amount, SEK 313K is long-term debt. The loan was assumed in spring 2020 in connection with the COVID-19 pandemic. The loan has a term of 60 months and an annual interest rate of 8.2 percent. Repayment of the principal began in August 2021.

Interest-bearing short-term debt

The short-term portion of the loan from Almi Företagspartner amounts to SEK 469K.

The company has received a Covid-19 related support by a temporary return of paid taxes from the tax authorities of approximately SEK 4,800K. The return payment shall be done in August 2024 and the annual interest rate is 5%. The support can possibly be extended for another year until August 2025

Equity

As of March 31th, 2024, the equity of the mother company amounted to SEK 4,296K while the group equity amounted to SEK -328K by March 30th.

Equity ratio

At the end of the first quarter, the mother company equity ratio was 27 percent, and the group equity ratio was -1.8 percent.

Stock-based incentive plans

At the extraordinary general meeting on November 30, it was decided on a long-term incentive program of series 2023-2026:1, through targeted issue and transfer of a maximum of 960,000 warrants to employees and key persons in a leading position in the company, as well as incentive program of series 2023-2026:2, through a directed issue and transfer of a maximum of 240,000 warrants to board members in the company. If fully utilised, the number of shares can increase by 1,200 shares in 2026.

Convertible notes and new share issue

No events during the period.

Number of shares in the company

At the end of the first quarter 2024, Klimator had 28,824,751 shares outstanding, compared to 28,824,751 shares outstanding in the first quarter 2023.

During the first quarter 2024 the average number of shares amounted to 28,824,751. During the first quarter of 2023, the average number of shares amounted to 22,166,418 shares.

Profit per share

Profit per share for the first quarter 2024 amounted to SEK 0.01 (-0.20).

Auditor’s review

This Interim Report has not been reviewed by the company’s auditor.

Next report

The next report is the company's interim report Q2, which will be published on August 31th, 2024.