Public disclosure of inside information according to article 17 MAR
Zug (pta022/12.01.2017/16:40) - ,
* First OEM vehicles equipped with battery technology of iQ Power Licensing
* Significant step towards iQ Power Asia exiting Financial Restructuring ahead-of-schedule
* Discover Energy Group subscribes to bond as prelude to share swap between IQPLAG and IQPA
* First half results in line with expectations
Zug, Switzerland, 12 January 2017 - iQ Power Licensing AG (ISIN: CH0268536338; WKN/Security Number: A14M1C; Symbol: IQL) a developer and marketer of technologies for environmentally friendly and technologically innovative starter batteries for motor vehicles and licenses in these technologies, announces several important events of interest to investors.
The first vehicles by an automotive manufacturer using a battery containing iQ Power technology, a premium class SUV and a pick-up truck, are now being produced in series in Brazil. The battery is an EFB type battery for extra-long cycle life, because the vehicle uses an engine with start-stop technology. Use of the iQ Power Technology more than doubles the cycle life as per test results at Licensee, Moura Baterias. Contractual obligations do not allow details such as manufacturer and model name to be publicized.
In South Korea, the Court has approved the application by Discover Energy Group (DEG), Canada, which will lead to DEG obtaining majority control of iQ Power Asia Inc. (IQPA), Gwangju, Rep. of Korea. It is anticipated that, following fulfillment of all requirements, the court will exit as administrator after only one year rather than the seven years earlier than planned.
The Board of Directors of iQ Power Licensing AG (IQPLAG) has approved a subscription by Discover Energy Group, Canada (DEG), to a mandatory convertible loan of iQPLAG equaling EUR 2,5 million. The terms of the bond are similar to the existing convertible bond, ISIN: DE000A1GXE20, with the exception that DEG is obligated to convert into shares of IQPLAG at a future time. Further, the Board of Directors of iQ Power Licensing AG (IQPLAG) has approved a subscription to a non-mandatory convertible loan to DEG equaling EUR 2,5 million. Following final negotiations regarding valuation, the loan may be converted into additional shares in IQPA or IQPA's DEG controlled holding company. Due to the financial restructuring, the current shareholding of iQ Power Licensing AG (IQPLAG) has been greatly reduced through court mandated capital reductions for all shareholders.
The half-year results were in line with expectations but were negatively affected by some extraordinary expenses. The net revenue for the period was more than double the previous period, CHF 344k (vs. 1st 6 months of 2015: CHF 115k). The loss from on-going operations was around CHF 550k, which given the sales revenue and normal fixed costs, are as expected. The results for income after tax improved, with a loss of CHF 1.047k versus a loss after tax was CHF 1.377k in the 1st 6 months of 2015.
* OEM Battery debut - Status
In Brazil the first vehicles are produced in series by an OEM using batteries with technology of iQ Power Licensing being incorporated. The products manufactured by Moura are EFB batteries (Enhanced Flooded Batteries) with integrated 360-degree electrolyte circulation, a patented technology of iQ Power Licensing AG. The new products are bound for automotive manufacturers (OEM) on the Brazilian market for the use of start-stop engines. The batteries ` main characteristics is a high cycle stability.
Moura´s new start-stop EFB batteries with electrolyte mixing go into the top range of two new automobile models which have fuel saving start-stop function.
Moura´s start-stop batteries with mixing technology are targeted on the OEM market
The goal of Moura is to offer automotive manufacturers (OEMs) on the South American continent robust flooded lead/acid batteries with high cycle performance as starter batteries for fuel-saving start-stop applications. Flooded batteries are regarded as particularly robust products. Combined with an integrated electrolyte circulation, flooded batteries are durable even at high ambient temperatures since the mixing technology of iQ Power Licensing avoids the typical acid stratification which occurs in conventional flooded batteries. Acid stratification causes not only lack in capacity (Ah) performance but also sulfation and premature internal corrosion influenced also by high ambient temperature. The advantage of the acid mixing device is a high cycle stability of the lead/acid battery.
Moura ` s newly developed start-stop battery products combine the advantages of two technologies: the special EFB (Enhanced Flooded Battery) technology of Moura plus the electrolyte mixing of iQ Power Licensing using passive mixing elements inside the product.
New regulatory requirements in Brazil with regards to lower CO2 emissions of new vehicles require fuel-saving measures such as start-stop engines by the automotive manufacturers also in Brazil. Here, EFB batteries with electrolyte mixing offer the OEM a cost-effective alternative to the more expensive, complex and temperature sensitive AGM batteries (Absorbent Glass Mat), especially for the Brazilian market of compact class vehicles and in the South Americas.
The privately held company Acumuladores Moura S.A. is the largest battery manufacturer in South America, with six large battery factories in Brazil and Argentina and producing over 7,5 million batteries per year. Moura has more than 70 commercial distribution centers and is the largest supplier to OEMs in South America, with a market share of more than 50% of the OEM market in South America. Customers of Moura include the world's biggest auto manufacturers such as General Motors, Volkswagen, Ford, Iveco, and Fiat-Chrysler among others. Moura also produces batteries for mobile applications (traction), for marine purposes as well as for telecommunications and solar. The company has won many excellence awards.
* IQ Power Asia Inc. - Status
In 2016, DEG funded many improvements at the factory, including additional equipment for the current production. The demand from North America has been very good and has required a more limited expansion in other markets, such as Europe and Asia. Limited amounts of batteries have been sourced from the Bangladesh factory for certain Asian customers. Further increases to production capacity of iQ Power Asia through a 2nd assembly line are now being intensively discussed.
Several new products are now being developed for release in Q2, 2017. These include high cycle batteries for the recreational vehicle market, new battery sizes for special markets such as Australia and later in 2017, a new line of super heavy duty, vibration resistant batteries for the construction industry and off-road heavy vehicles.
* Exchange of Convertible Loans - Status
The exchange of loans between DEG and IQPLAG underscores DEG's confidence in the technology of IQPLAG. At the same time, the exchange also shows the commitment of IQPLAG to support the key Licensee, DEG, and the newest member of the DEG Group, IQPA.
The conversion of the DEG loan into IQPLAG shares is anticipated for the first of half of 2017. The implicit share increase also was key to securing a solid balance sheet for IQPLAG for year-end 2016 following the reduction of the shareholding of IQPLAG in IQPA.
* Financial Results
The half-year results were in line with expectations but were negatively affected by some extraordinary expenses. The net revenue for the period was CHF 344k (vs. 1st 6 months of 2015: CHF 115k). The increase was due to the increased sales of the strategic licensee, DEG. The sales increased month-to-month during the first 6 months as customers were able to end previous purchase commitments in order to purchase from iQ Power Asia.
The net revenues are a combination of sales margin from the plastic mixing parts and license income. Since the cost of plastic material was deducted from the net revenue figure, the gross sales were higher. Due to contractual confidentiality commitments, the revenue per licensee may not be disclosed.
The loss after tax was reduced to CHF 1.047k versus a loss after tax was CHF 1.377k in the 1st 6 months of 2015. The loss from on-going operations was around CHF 550k, which given the sales revenue and normal fixed costs, are as expected. Due to several non-operational effects this loss was higher than would normally be anticipated. These negative profit events included a not anticipated expense of CHF 180k from a prior period due to currency loss. In addition, higher than anticipated patent costs, which can not be capitalized, caused a further one-time expense of over CHF 100k. Finally financial expenses net, mainly interest on the convertible bond, added CHF 122k to the losses.
The total assets of the company were largely unchanged at CHF 5,06 million. The equity as a percent of total assets remained largely unchanged at 35% (versus 30.Dec.2015: 38%). The cash balance of the company was adequate at CHF 358k.
About the iQ Power Technology
Batteries with iQ Power technology are designed to generate better performance in Start-Stop applications and to meet the growing demands of electronic usage in vehicles today, is the first significant innovation to the flooded starter battery in decades. Automatic mixing of electrolyte inside the battery ensures uniform acid density for higher sustained performance throughout the entire life of the battery. This prolongs plate life by eliminating acid stratification and thermal gradients, delivering greater material utilization for a lower cost per cycle over conventional batteries. The patented technology was awarded the coveted Automechanika innovation award 1st prize in 2010.
emitter: iQ Power Licensing AG
address: Metallstrasse 6, 6304 Zug
contact person: Dr. Eva Reuter
phone: +49 251 9801560
ISIN(s): CH0268536338 (share)
stock exchanges: open market in Berlin