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Administration report

The Board of Directors and CEO of Azelio AB (publ.), corporate identity number 556714-7607, hereby present the annual report and accounts and the consolidated financial statements for the financial year 1 January 2019 – 31 December 2019.

On 31 December 2019 the Group consisted of the parent company Azelio AB, domiciled in Gothenburg, and two subsidiaries; see also Note 39. 


Azelio AB offers a system for thermal storage of renewable energy with delivery of sustainable electricity and heat on demand, 24 hours a day, at a low cost.

The company owns all of the unique product design for its system and performs final assembly of the Stirling engine at its own plant, while subcontractors produce the system’s components and subsystems such as the storage tank. Research and development as well as sales and marketing are managed internally and in cooperation with strategic partners.

Azelio can use two distinct business models, depending on the commercial conditions and requirements specific to each individual project. Initially Azelio may run jointly owned projects in cooperation with third parties to establish the technology in the market. In the longer term – once Azelio’s system and technology have been established and proven – Azelio will act as technology provider, sell the technology and provide training in how to build a successful commercially viable project.

In smaller installations Azelio sells the system directly to the end customer, while medium to large installations are sold to companies that work on engineering, procurement and construction contracts (known as EPC contractors), which are then responsible for installation. Initially, Azelio will participate in the start-up phase of new installations to train EPC contractors in successful system installation and maintenance. In addition to system sales, Azelio also offers monitoring, maintenance, upgrading and servicing of the system.


Azelio’s system is offered to customers in the global energy market, initially to customers who are building projects in the MENA region, in sub-Saharan Africa, the Andes, Mexico, Brazil, Australia and central and western USA (where there are generally favourable conditions for concentrated solar power (CSP), photovoltaics (PV) and, in some cases, wind power) with installations of between 500 kW and 20 MW for electricity production during the day and with a storage capacity equivalent to 13 hours of electricity production at nominal output.

In the longer term Azelio intends to develop its offering and offer systems for projects from 100 kW up to 100 MW, and also to offer systems to customers in countries with demand for dispatchable electricity production based on sustainable technologies such as concentrated solar power, photovoltaics and wind power.

Significant events during the financial year

Azelio develops technology for charging the storage unit using electricity

Azelio developed its unique technology to enable the storage system to be heated by means of both concentrated solar power and electricity. As a result, Azelio’s solution can improve the productivity of installed or planned photovoltaics and wind power – for delivery on demand, around the clock, whatever the weather. The solution can also be used to take advantage of periods when demand – and thus the price of electricity – in existing grids is low, and avoid periods when prices in existing grids are high.

With this technology the total system efficiency can reach a full 90 percent from energy to energy, since the storage solution is placed on the ground and generates both electricity and heat at a temperature of around 55–65 degrees Celsius.

Expressions of interest increase to represent an order value of SEK 170 billion

Following the improvements to the energy storage solution, Azelio reviewed its previous expressions of interest and also received new expressions of interest from customers. In autumn 2019 expressions of interest were estimated to amount to around 3.9 GW, representing a potential order value of up to SEK 170 billion – many times higher than the previous assessment of 1 GW, which represents an order value of up to SEK 50 billion. It should be noted, however, that these expressions of interest are not orders and that the number of expressions of interest exceeds the company’s expected production capacity over the next five years.

Memorandums of Understanding for capacity of 159 MW

During the year Azelio signed several Memorandums of Understanding (MoU) for installations with a combined capacity of around 159 MW. These were signed in the USA, Pakistan and in prioritised markets in sub-Saharan Africa and the Middle East. Various MoUs have been signed with project development companies for the purpose of starting long-term partnerships.

The most comprehensive Memorandum of Understanding relates to around 120 MW – representing around 9,000 units – and was signed with Biodico, Inc. of California. The first project is expected to be taken into operation in 2021 and will act as a model for future projects in California. Biodico, Inc. is working to create environmentally friendly biofuel production plants that are operated locally using renewable resources.

Verification projects installed

Together with Masen (the Moroccan Agency for Sustainable Energy), Azelio took two units into operation in December 2019 at the Ouarzazate Solar Power Station in Morocco. The company also commissioned its own similar project in Åmål, Sweden, next to the company’s development centre. The units will be used in the verification project aimed at enabling customers to raise funds for Azelio’s technology. The project starts with optimising the system, after which a third party is engaged to record operating data. Data from operation in a real environment is essential for financing such types of project, and also enables more reliable investment costings to be made. The verification is initiated from Sweden due to the travelrestrictions caused by the coronavirus. 

SEK 350 million rights issue

Azelio completed a rights issue which raised around SEK 350 million before transaction costs. The share issue was oversubscribed, with a total of 72 percent of the issue being subscribed for on the basis of subscription rights and the remainder by parties without rights. The result of the new share issue was announced on 30 December and the proceeds were received in January 2020.

Significant events after the closing date

Memorandum of Understanding for energy storage project in Jordan

Azelio signed a Memorandum of Understanding (MoU) with Hussein Atieh & Sons Co. (HAE) to jointly establish a small-scale project in Jordan. The project is intended to pave the way for commercial collaboration on Azelio’s energy storage technology in Jordan totalling around 25 MW by 2023.

How COVID-19 are impacting Azelio's business

At present the impact on Azelio is relatively mild, but travel restrictions mean that we cannot work at the pace nor from the places we planned for in all of our projects. Given the Swedish authorities set travel restriction to at least June 15 and the uncertainty in the development of the coronavirus, Azelio has adapted projects and optimized costs to extend its time plan with one quarter. Thereby the company's working capital is estimated to be sufficient for another quarter compared to what was previously communicated, until December 2020. The need for the next financing is thus extended accordingly.

Development of the company's operations, results and position

Group (SEK)20191) 20181)20172)20162)
Net sales1,670,0001,942,0002,921,000 3,665,000 
Operating profit/loss-160,897,000-92,004,000-97,443,000-107,740,000
Total assets865,580,000658,249,000286,794,000230,997,000
Equity/assets ratio, %82%85%83%57%

Parent company (SEK)20191) 20181)20172)20162)
Net sales1,670,0001,942,0002,921,0003,665,000
Operating profit/loss-161,932,000-96,093,000-94,230,000-105,116,000
Total assets848,908,000644,294,000289,824,000236,902,000
Equity/assets ratio, %84%88%85%58%
Definitions: see note 57

1) Calculation according to IFRS   2) Calculation according to K3

Income, expenses and profit/loss

Net sales amounted to SEK 1,670,000 (1,942,000). The decrease is due to the company having shifted its focus onto developing a solution for storage of renewable energy. Own work capitalised amounted to SEK 130,891,000 (66,392,000) for the year.

Costs amounted to SEK -293,751,000 (-162,090,000). The increase is largely attributable to personnel costs, raw materials costs and consulting costs. The company's total costs are largely attributable to development. The value of certain capitalised project costs that were de-prioritised or discontinued during the period was written down by SEK 13,331,000 (–).

The operating loss amounted to SEK -160,510,000 (-91,749,000). The net result for the period was a loss of SEK -160,897,000 (-92,004,000). Earnings per share before and after dilution amounted to SEK -3.80 (-3.54).

Cash flow and investments

Cash flow from operating activities amounted to SEK -129,853,000 (-32,254,000). Cash flow from financing activities amounted to SEK -6,352,000 (412,765,000). Investments affecting cash flow during the period amounted to SEK -139,256,000 (-67,500,000), mainly in the form of capitalised development.

Parent company

Net sales for the parent company amounted to SEK 1,670,000 (1,942,000). The operating loss amounted to SEK -156,441,000 (-87,651,000) and the net loss for the year was SEK -161,932,000 (-96,093,000).

Equity at the end of the period amounted to SEK 715,200,000 (567,274,000).

Seasonal variations

The Group is currently being built up, with preparations for volume production and commercialisation of the system, and at this stage there are no seasonal variations over the year.

The share and share capital

The shares have been listed on the Nasdaq First North Growth Market in Stockholm since 10 December 2018. In 2019 the share price rose by 23 percent, closing at SEK 12.00.

As at 31 December 2019 the share capital amounted to SEK 21,174,000 which was represented by 42,347,495 shares. After the closing date a rights issue was registered, increasing the share capital to SEK 45,876,000 and the number of shares by 49,405,405 shares to a total of 91,752,900.

At the end of the period there were 40,026,667 warrants, of which 400,000 in the process of registration, issued in eight different series with exercise prices of between SEK 10 and SEK 130. Full conversion of these warrants would increase the number of shares by 4,596,667.

Related party transactions

In 2019 an amount of SEK 12,740,000 (1,353,000) was expensed in respect of services provided in connection with the company’s demonstration plant in Ouarzazate, Morocco. The counterparty is Masen, the state-controlled Moroccan Agency for Sustainable Energy. Masen holds 16,666,667 warrants in the company and has a representative on the Board of the company. The accrued expenses amount to SEK 14,093,000 (1,353,000) in total. These services are performed on market terms.

Responsible business

The Group conducts no operations requiring a permit under the Environmental Code. See below: 

Permit or notification required by the Environmental Code

No operations requiring permit or notification according to the Environmental Code have been conducted during the financial year.

Parent company

No operations requiring permit or notification according to the Environmental Code have been conducted during the financial year.

Significant risks and uncertainties

The current valuation of the company’s assets in the form of capitalised development costs and inventory is based on adherence to the prepared business plan. The Board expects the future sales volumes to be so extensive that the discounted cash flows generated will justify the current valuation with a good margin. The Board believes there is good potential to implement the business plan and that capitalised development costs are likely to lead to future economic benefits.

The company’s capitalised development costs relate to various technologies. All are linked to the Stirling engine and the energy storage solution, the technologies upon which the company has built its business. The Board believes that, due to technical synergies, the current Stirling engine was made possible by the development of the gas engine. Due to the close relationship between these technical solutions, the machines are not assigned to separate cash-generating units. The engine is a further development of earlier technology and thus no impairment losses have been reported on development costs for earlier versions. On the other hand, inventory disposals and provisions have been made on an ongoing basis for components that were unique to previous versions of the product.

Following authorisation by the general meeting, the Board made the decision to carry out a rights issue at the end of December 2019. The share issue was oversubscribed and was registered in January 2020. The company received proceeds of SEK 350 million from the share issue before transaction costs. The Board is of the opinion that the share issue secures the capital required based on the revised business and liquidity plans. The Board expects further injections of capital to be required in 2020 to finance the company’s industrialisation and commercialisation, including production facilities. This work has been started and it is therefore the Board’s view that there is substantial interest in the company’s technology among both investors and potential customers, and that the company has a strong ownership structure. The potential for implementing future comprehensive financing plans is therefore considered to be good.

It follows from the accounting principle regarding continued operation (the "survival principle") according to the Swedish Annual Accounts Act that it is a basic assumption, among other things, for the valuation of a company's assets. In terms of activated development, there are further assumptions about the required financing of the continued development required as well as commercial realization. It is therefore natural that a valuation made without these assumptions would have resulted in a different valuation of the company's assets. The Board of Directors agrees behind the aforementioned assumptions and judges that the necessary conditions are at hand. The Board is aware that uncertainty factors exist when it comes to estimating time and cost savings to implement full-scale commercialization and industrialization of the company's product. This has been taken into account in the company's planning and forecasts by the Board working actively on the basis of alternative scenarios and having a preparedness to deal with these types of challenges. This includes various short- and long term financing solutions and flexibility in the development plans. Thus, the company's survival is not deemed to be threatened in 2020.

For financial risks, see note 4


On 31 December 2019 the number of employees was 117 (68), of which 94 (56) are men and 23 (12) women. The average number of employees in the organisation in 2019 was 105 (68).


The Board of Directors proposes to the annual general meeting that no dividend is paid for the 2019 financial year.


A systematic approach to work environment must be a natural part of our business in order to achieve efficiency and quality. For us at Azelio, this means that we actively work to minimize the risks of occupational injuries, accidents and incidents. We make sure to work with activities that promote employees' health, job satisfaction and efficiency. One step in this is ongoing work with our processes, which aims to improve employees' everyday work in order to be able to focus on the right tasks. All emplyee managers are trained in the areas of work environment and psychosocial work environment (AFS 2015:4). We continuously review the need for education related to work environment.

Legislation and party agreements are minimum requirements. It is in Azelio's interest to maintain higher standards than this. We see it as a profitable investment for the future where high work motivation and low sick leave are the direct benefits. We have signed a healthcare insurance for our employees with access to fast support and specialist care. Azelio is affiliated with Teknikföretagen and has collective agreements with the Union, Ledarna, Sveriges Ingenjörer and IF Metall.

Azelio should be an attractive and developing workplace for both women and men, working to ensure that all work teams consist of both women and men. The wage survey in 2019 regarding comparisons of work that is to be considered as equal or equivalent did not show any unreasonable wage differences between women and men. As an employer, we will pursue a goal-oriented work to promote gender equality and diversity. This means that we must prevent and counteract discrimination, safeguard everyone's competence and respect differences irrespective of gender, age, ethnic or cultural background, religion or other belief, disability, gender-crossing identity or sexual orientation. We evaluate all our suppliers according to the Azelio Ethics standard.

The company intends to follow the UN guidelines on sustainable business and measure according to the UN standard, Global Reporting Initiative (GRI).

Proposed appropriation of profit or loss

At the disposal of the annual general meeting (SEK):

Share premium reserve 1,577,096,000

Loss brought forward -1,091,981,000

Profit/loss for the year -161,932,000

Total 323,183,000

The Board of Directors proposes that the unrestricted equity of SEK 323,183,000 is carried forward.