QLEANAIR YEAR-END REPORT 2019 & FOURTH QUARTER

Oct – Dec 2019 in summary

· Order intake SEKm 102.5 (74.7)
· Sales SEKm 123.8 (103.1)
· Operating profit SEKm -25.3 (8.1)
· Adjusted EBIT SEKm 19.3 (15.6)
· Adjusted EBIT-margin 15.6 % (15.1)
· Net profit SEKm -28.3 (-2.1)
· Earnings per share SEK -2.11 (-0.16)
· Cash-flow from operations SEKm 10.2 (32.3)

Jan – Dec 2019 in summary

· Order intake SEKm 366.0 (313.4)
· Sales SEKm 456.9 (400.8)
· EBIT SEKm 32.1 (61.8)
· Adjusted EBIT SEKm 83.7 (73.1)
· Adjusted EBIT-margin 18.3 % (18.2)
· Net profit SEKm -7.5 (21.0)
· Earnings per share SEK -0.56 (1.58)
· Cash-flow from operations SEKm 62.5 (69.3)
· The Board of Directors is proposing a dividend of 0.25 SEK per share (0.00)

IMPORTANT EVENTS
· QleanAir’s share was listed on Nasdaq First North Premier Growth Market on December 12, 2019
· New financing in association with the listing and the acquisition of SFS Finance

“The fourth quarter can be summarized with a strong order intake +37% and strong sales growth +20%. The product categories developed well. Facility Solutions growth +10% mainly in Europe and Room Solutions increased +16% in the US market. Cabin Solutions had a strong quarter +23% with stable development in Europe and robust development in Japan”, comments Andreas Göth, CEO, QleanAir.

CEO comment

Strong fourth quarter 2019 QleanAir now in position for continued profitable growth
Order intake remained strong in the fourth quarter and increased to SEK 102.5 (74.7) million, an increase of 37 percent. Our investments in new product categories within clean indoor air have developed according to plan. As a result, both sales and underlying adjusted EBIT increased. Sales increased by 20 percent in the fourth quarter to SEK 123.8 (103.1) million and, adjusted for exchange rate differences, organic growth amounted to 14.3 (4.3) percent. By way of comparison, our medium-term financial goal is growth of around 10 percent per year. EBIT excluding items affecting comparability for the fourth quarter increased by 24 percent to SEK 19.3 (15.6) million, corresponding to an adjusted EBIT margin of 15.6 (15.1) percent. By way of comparison, our financial target is to achieve an adjusted EBIT margin of 15 to 20 percent in the medium term. Sales for the full year increased by 13.9 percent to SEK 456.9 (401.1) million. Adjusted for exchange rate differences, organic growth amounted 8.0 (14.0) percent. EBIT excluding items affecting comparability increased by 13 percent to SEK 83.7 (73.1) million, corresponding to an adjusted EBIT margin of 18.3 (18.2) percent. In December QleanAir successfully listed on Nasdaq First North Premier Growth Market. In connection with the listing a new financing solution was presented that creates a stable financial position for the company’s continued growth.

Our investments in new product categories provide a clear direction
Our European sales organization focus on activities designed to grow Facility Solutions within prioritized segments such as logistics, food production and lighter manufacturing. A number of new contracts were signed during the fourth quarter in Sweden and Germany. Sales of Facility Solutions in the fourth quarter increased by 10 percent to SEK 11.8 (10.7) million. In the USA, QleanAir has continued to sign contracts for clean rooms and sales of Room Solutions increased by 15.9 percent to SEK to 22.6 (19.5) million. We are in an exciting phase right now. The organization is working intensively right now in relation to the ongoing installations of clean rooms in the USA. The investment in the new product categories Facility Solutions and Room Solutions is beginning to show through in sales and earnings. The new product categories accounted for 27.8 (29.2) percent of sales in the fourth quarter. In 2019, sales from the new product categories amounted to 21.3 (21.8) percent. The strong sales growth for Cabin Solutions, especially in Japan, meant that the relative proportion of sales for the new product categories fell somewhat despite good growth in the new product areas. The underlying markets are strong. In the USA, new rules and regulations on the handling of certain drugs are driving demand for our new clean rooms at hospital pharmacies. In Europe, the need for improved work environments and demand for cleaner industrial processes is driving demand for solutions in logistics, production and food processing. Air quality is an increasingly prioritized issue for European companies.

Clean air as a service creates customer value
In 2019, the number of installed units increased by 10.5 percent to around 8.400 (7.600) at the end of the year, while the customer base consists of over 2.500 customers. In the case of Cabin Solutions, the office segment in Tokyo continued to grow strongly while at the same time Europe contributed to profits. During the fourth quarter, we received a number of larger orders for Cabin Solutions in Japan, including from a large company within the transport sector. In Japan, the market is driven by new legislation, ”the Health Promotion Act” that among other health related matters, includes tougher requirements on health and safety concerning tobacco smoking. This legislation comes into force on 1 April 2020. For us, customer value concerns the total solution, clean air as a service. QleanAir resolves customer indoor air problems by signing rental agreements with service and performance guarantees. Our customers renewed/extended and strengthened their relationship with QleanAir in 2019. The fact that the proportion of our long-term rental contracts that were renewed/extended in both the fourth quarter and for 2019 as a whole exceeded 75 percent, demonstrates the strength of our business model. The proportion of recurring revenues from units in our own balance sheet remained unchanged at 42 percent in the fourth quarter.

Profitable growth in focus
Overall, I can look back on 2019 with great satisfaction. Not only have we implemented a large number of activities for our new product categories, Facility Solution, Room Solutions, the listing on Nasdaq First North Premier Growth Market and built up our sales organization, but we have also been able to focus on profitable growth at the same time within our original product category, Cabin Solutions. QleanAir has a production partner in China that serves the Japanese market in particular but also deliver components to Europe. We are keeping a close eye on the development of the corona virus. It is too early to say how this will affect us.
In association with the listing, we renegotiated the company’s existing loan structure, which will reduce our financial costs over time and assure financial flexibility. The QleanAir share is traded since December 12, 2019, on Nasdaq First North Premier Growth Market with the ticker symbol QAIR.

QleanAir is based on creating healthy indoor environments that help improve the productivity of employees, along with products and processes. This is our mission and the basis of our company culture and the path to achieving our long-term goals. In December 2019, the Company was purifying 3.5 (2.9) m3 billion m3 of air per month, an increase of 20 percent compared to December 2018. In 2019, QleanAir as an organization has proven its capacity to live up to the values and challenges we are facing, something that makes me both proud and optimistic about the future.

A big thank you to everyone in the QleanAir team.

Andreas Göth, CEO QleanAir Holding AB

Solna on February 20, 2020