3Q 2018 Summary Loudspring  Plc Including Impairment of a Portfolio Company

Company release

Loudspring Plc

Company release

31 October 2018 at 8:30 (EET)

Please note that this report is not a fully comprehensive report of all events, nor is it in any way a financial performance report. It is only a summary of the main events that have affected us and our portfolio during the quarter.

In the quarterly report we will not comment on every portfolio company but focus on our subsidiaries and core holdings. To get a comprehensive overview of individual portfolio companies’ businesses one should review additional documents such as the company description and the supplement to the company description that were published in 2016, as well as the latest annual and H1 reports. These documents are available at loudspring.earth.

SIGNIFICANT EVENTS

During the period, our efforts to support Nocart have consumed a lot of our bandwidth and resources. Because of Nocart’s situation, Loudspring’s board has decided to make an impairment of Nocart’s value to zero on Loudspring’s balance sheet. The impairment is approximately 7,3 million EUR and the effect on the profit & loss statement is approximately 0,9 million EUR. The 0,9 million EUR corresponds to the amount Loudspring has invested in total into Nocart. The rest of the impairment is made from the revaluation reserve.

Despite this we have focused our efforts into building our daughter companies’ businesses as well as supported our other core holdings. Nuuka Solutions is increasing its SaaS revenue and adding new buildings at a good pace. Eagle Filters has increased its sales resources and the company is targeting a broader customer base. The company has acquired two major new customers and it is in discussion with a large number of potential new customers. Internally we have worked on strengthening our processes and also started working with an external, independent party to develop our reporting and communications. Loudspring’s cash position at the end of Q3 was approximately 1,9 million EUR including debt facilities. In addition, Loudspring owned Enersize shares listed on Nasdaq First North Stockholm valued at 3,3 million EUR.

Loudspring Industry

Eagle Filters launched the operations of its US daughter company during Q3. In Europe, Eagle Filters made a first delivery to two new companies: AirLiquid (Netherlands), which is a world leader in industrial gas; and Enel, one of Europe’s leading energy companies. Asian sales developed slower and some orders expected in Q3 have been delayed from the original schedule. Some more competition has also emerged in the EPA filtration class.

Key opportunities include:

  • Building a high margin, recurring revenue stream from a growing base of power plant customers; and

  • Leveraging world class references to accelerate sales.

Key risks include (but are not limited to):

  • Long lead times in new customer acquisition;

  • Competitors becoming more interested in EPA filtration; and

  • Capital needs may grow especially as US expansion proceeds.

Nuuka Solutions proceeded with many customer projects in Q3. Key ongoing projects include: ICA Real Estate (Sweden), Helsinki City (Finland) and Bouwinvest (The Netherlands). After the implementation of ongoing projects, the total amount of buildings using Nuuka’s SaaS will be approximately 2500. During Q3, Nuuka also started a pilot in the US with one of the world’s leading providers of shared work places. 

 The signed SaaS revenue base (that starts after projects have been implemented) at the end of Q3 was approximately 1 million euros annually. In addition, the signed projects will bring significant project revenue for Nuuka in the implementation phase.

In Q3, the company’s founder and former CTO Mikko Maja was nominated Managing Director.

Key opportunities include:

  • High profile references create a unique opportunity for global expansion; and

  • The lifetime value of customers is very high relative to customer acquisition cost.

Key risks include (but are not limited to):

  • Competition is intensifying and many different solutions are entering the market; and

  • Increasing sales efforts and keeping ahead in technology development requires an increasing amount of capital and human resources.

Loudspring Ventures

ResQ Club sales over platform (GMV) grew to 300 000 EUR per month in September. At the same time, the company spent less than ⅕ on operational expenditure per euro earned compared to 2017. ResQ’s cooperation with grocery stores has progressed well and at the end of September over 50 K-markets in Finland were selling over the platform.

Sofi Filtration has during Q3 conducted on-board marine scrubber tests and field trials in the plastics and oil & gas industries. Each of these application areas have potential for scaling. The company is currently operating with limited human and capital resources, which limits growth.

Enersize as a Nasdaq Stockholm listed company reports independently. Enersize reports are available on Enersize’s web page www.enersize.com. At the end of Q3 2018, Loudspring owned 10 103 925 shares in Enersize, valued in total 3 268 630 EUR.

Swap.com continued to focus on margin improvements, while sales have maintained on a level that has enabled a low burn rate. After the significant cost cuts in Q2 and an internal funding round, the company is in a healthy situation for developing its business further.

Nocart has continued to struggle with its weak funding situation and project delays. Loudspring estimates that there is high risk associated with Nocart’s projects. Nocart has not received payments that it has anticipated. Because of Nocart’s situation, Loudspring’s board has decided to make an impairment of Nocart’s value to zero on Loudspring’s balance sheet. The impairment is approximately 7,3 million EUR and the effect on the profit & loss statement is approximately 0,9 million EUR. The 0,9 million EUR corresponds to the amount Loudspring has invested in total into Nocart. The rest of the impairment is made from the revaluation reserve.

Loudspring in brief

Loudspring is an industrial group focused on saving natural resources. We own and operate Nordic growth businesses that are making a big environmental impact. We have a diversified business portfolio in order to balance out the fluctuations of individual companies’ performance. Our technologies save energy, water and materials in industry, real estate and in everyday life. Our business consists of two branches: Loudspring Industry – majority owned businesses, and Loudspring Ventures – minority ownerships.

The company group is listed on First North Finland under the ticker LOUD and on First North Stockholm under the ticker LOUDS.

www.loudspring.earth

LinkedIn: https://www.linkedin.com/company/loudspring/

Twitter: @loudspring

IG: @loudspring_earth

FB: @loudspringco

Contact information:

Lassi Noponen, CEO Loudspring Plc. Tel. +358 40 501 5127, lassi.noponen@loudspring.earth

Thomas Bengtsson, Executive Chairman of Loudspring Plc. Tel. +46 70 515 40 40, thomas.bengtsson@loudspring.earth

Access Partners Oy, Certified Advisor. Tel. +358 9 682 9500