NILAR INTERNATIONAL AB INTERIM REPORT Q2 2022

CEO'S comments: several important milestones during this quarter

The second quarter represented a great and important step forward in the implementation of Nilar's new strategy and business plan, presented earlier this year. In the result for the quarter we can see the effects of cost control initiated in Q4 2021 and now the focus is on improving our products according to plan and preparing to scale up our production to be able to deliver our next-generation batteries from the fourth quarter.

During this quarter, the first batteries made with Nilar’s patented oxygen refilling technology were produced. This event is a large step forward and means that our battery now would last 3-4 times longer than its predecessor ensuring sustainability over an extended period. At the same time, the needs of batteries in society have become clearer than ever.

Batteries increasingly important to meet the global energy crisis

Today, the electricity price in Germany is 500 percent higher than a year ago³ and here in Sweden the cost of running a tumble dryer can cost as much as SEK 70. At the same time several countries, including Sweden, are planning for controlled power outages in the coming autumn and winter. The energy crisis clearly shows that planning society's energy consumption will become increasingly important in the future.

In order to reduce dependence on fossil energy sources, the pace of the energy transition in the EU has also increased. A strong expansion of solar and wind power is taking place all over Europe, not least in Sweden were the green industrialization drives the increased need for large amounts of sustainable energy.

At the same time, more solar and wind power lead to greater fluctuations in power and to create a steady supply of energy, stationary batteries will have a decisive role. Intelligent storage systems including batteries can be charged at night, when electricity is cheaper, and used when the energy is needed.

The market for smart battery solutions will therefore grow explosively. Nilar and other battery manufacturers have an important role to play in meeting that demand. Both in Sweden and globally, there are many manufacturers of batteries for vehicles. But the current severe energy crisis has taught us that stationary batteries will be needed in every rental property, every factory, every office building and every house.

Nilar has a strong offer

Nilar meets the market's demand with a strong offer: Our high-performance, safe and sustainable batteries can be adapted to the customer's specific needs and the advanced bipolar Nickel-Metal Hydride technology has several advantages compared to other solutions. We develop and produce competitive batteries, battery management systems and oxygen refilling technology that enable end-of-life batteries to be reused.

Tailor-made battery solutions together with Enequi

In line with the new strategy, our sales are driven through a few, carefully selected partners who deliver customized and complete solutions to property owners. On May 16, a strategic partnership with Enequi was announced with the focus of develop and deliver tailor-made solutions for energy systems with stationary batteries on the European market. Enequi supplies the full system solution QuiPower, which gives property owners access to clean and environmentally friendly energy through intelligent energy storage and energy control, where Nilar’s new batteries are combined with Enequi’s software for controlling and optimizing energy consumption.

A new, large order will be the starting point for increased production

Nilar and Enequi have also agreed on an initial order of 800 batteries with associated software, with a total capacity of 1.15 MWh. The order value is MSEK 10 with start of delivery during the third quarter. For Nilar, this will initiate an upscaling of the production.

Rights issue completed

On June 20, the outcome of the fully guaranteed rights issue that was carried out during the second quarter was presented. In a tough market climate, 78 percent of the shares were subscribed by existing and new shareholders. Together with commitments from guarantees, the rights issue generated a capital injection of approximately MSEK 273 before deductions of attributed costs. The aim was to ensure financing of Nilar's new strategy and business plan and, together with existing cash, the net proceeds from the rights issue are expected to be sufficient to finance Nilar's business plan until the end of 2023.

New member of the board

At the annual meeting in June, Peter Wesslau was elected director of the board. With his long experience from the energy sector and in his current role as CEO of the energy company Rabbalshede Kraft, Peter Wesslau brings valuable industrial expertise and insights into the conditions of the green transition to the Company.

Stationary batteries play a critical role in the energy transition we are in, both in the short and long term, and I am grateful to lead Nilar on the exciting and important journey ahead of us.

Erik Oldmark, CEO Nilar
Täby August 29 2022

Sources:
1) Alternative key ratios. See page 17 for further explanations. Applies to this and all subsequent alternative key ratios in the report.
2) For Average number of shares and Earnings per share after dilution, the option rights in the EIB loan have not been taken into account, as that would have resulted in a small negative result per share.
3) https://www.bloomberg.com/news/articles/2022-08-16/german-power-prices-hit-fresh-record-as-gas-continues-to-surge