Scandinavian Enviro Systems Ab · OMXSTO:SES
Scandinavian Enviro Systems Ab — Non-Deal Roadshow (April 2023)
47 slides from Scandinavian Enviro Systems Ab's roadshow presentation, April 2023
Slide 1: Joint venture to accelerate European tire recycling plant rollout
Joint venture to accelerate European tire recycling plant rollout Enviro and Antin Infrastructure Partners to establish the world’s first large-scale recycling group in Europe, supported by Michelin The joint venture targets a 1,000,000 ton annual end-of-life tire recycling capacity by 2030 – around
Slide 2: Disclaimer
Disclaimer IMPORTANT INFORMATION You must read the following information before continuing. The following applies to this document, the oral presentation of the information in this document by Scandinavian Enviro Systems AB (publ) (the “Company”) and any other information that you receive from the C
Slide 3: Agenda
Agenda 1 Introduction and background 2 The pyrolysis technology 3 Financials 4 Market overview 5 The rollout plan 6 JV structure 7 Appendix -2-
Slide 4: Setting the stage for a circular tire industry
Setting the stage for a circular tire industry Michelin and Bridgestone believe the demand for recovered Michelin has successfully used Enviro rCB in tires for road use carbon black (rCB) to reach 1 million tons by 2030 Tire manufacturers with 100% sustainable materials as stated goal Source: Europe
Slide 5: Creating the world’s first large-scale tire recycling group
Creating the world’s first large-scale tire recycling group The world leader in tire recycling technology… …is forming a large-scale joint venture • Establish the first large-scale tire recycling platform with plants across Europe to produce sustainable raw materials including recovered carbon black
Slide 6: A Joint Venture with significant value creation potential
A Joint Venture with significant value creation potential + + Complementing resources Becoming a European Detailed plan for European Technology required and capabilities major in tire recycling rollout in place already developed Contribute to European Highly profitable Long and secure multi-year Bec
Slide 7: Ideal partners for European expansion and bringing circularity to the tire industry
Ideal partners for European expansion and bringing circularity to the tire industry EUR 31bn 5 190+ 123 125,000 100% AUM as of 31 Dec Currently managed Sustainable materials Professionals Production sites Employees globally 2022 funds by 2050 • Multinational pure-play private equity firm with focus
Slide 8: Highlights of 2022 highly positive news flow
Highlights of 2022 highly positive news flow Nov 23: Michelin and Bridgestone see potential demand for up to 1 million tons of recovered carbon black in 2030 Nov 17: Enviro receives pyrolysis oil order worth SEK 2m from Preem. The TPO is to be delivered in the first quarter of 2023 and used by Preem
Slide 9: Enviro’s foundational milestones to create the first large-scale tire recycling group
Enviro’s foundational milestones to create the first large-scale tire recycling group in the world Michelin unveils car tires approved Enviro granted environmental Start of construction at First commercial sale of rCB to Michelin launches racing tires for road use containing 45% permit, followed by
Slide 10: Key risks mitigated through JV and rollout setup
Key risks mitigated through JV and rollout setup Financial risk mitigation Operational risk mitigation Technological risk mitigation Cost coverage JV operations Previous scale-ups successful • Enviro receives service fees corresponding to all costs • Previous increases to reactor size have been succ
Slide 11: Key investment highlights
Key investment highlights Technology proven in commercial application at plant since 2016 with world-leading technology and 1 modular production process Massive market potential with around 3.5 million tons of end-of-life tires annually in Europe alone, 2 and with strong underlying growth European r
Slide 12: Agenda
Agenda 1 Introduction and background 2 The pyrolysis technology 3 Financials 4 Market overview 5 The rollout plan 6 JV structure 7 Appendix - 11 -
Slide 13: Large environmental issue set to be countered by Enviro's technology
Large environmental issue set to be countered by Enviro's technology Overview of global ELT recovery1 Environmental problems from ELT’s Nature cannot fully decompose tires, and thus consume Other (landfilled, stockpiled, 2% considerable space when landfilled or stockpiled. Furthermore, the process r
Slide 14: Current fossil carbon black production vs Enviro’s sustainable and circular solution
Current fossil carbon black production method vs Enviro’s sustainable and circular solution Current most used production method: Simplified furnace black process1 Enviro: ~93% lower CO2 emissions with recycled carbon black Air, gas and oil is mixed and ignited in the Recycled feedstock combustion ch
Slide 15: Pyrolysis – from ELTs to recovered raw materials
Pyrolysis – from ELTs to recovered raw materials Tire composition Outputs from the pyrolysis process1 Antioxidants, antiozonants, Natural Antioxidants, antiozonants, curing systems, 14% curing systems, 10% Natural rubber, 34% Product Commentary rubber, 19% 6 6 1 The polymers coupled with vulcanizati
Slide 16: Sophisticated pyrolysis technology with history of capacity increases
Sophisticated pyrolysis technology with history of capacity increases Successful historical stepwise scaling of reactor size indicating limited technical risk in final scale-up 2008 2005 2007 2009 2013 2025 5-liter 25-liter 250-liter 1,000-liter 14m3 24m3 5x 10x 4x 14x <2x reactor reactor reactor re
Slide 17: Validated technology and position – set to enable circularity
Validated technology and position – set to enable circularity Michelin as owner and partner Certified sustainable solution Proven commercial viability • Michelin has been Enviro's principal owner since 2020 • ISCC is a global sustainability certification system for • Commercial deliveries from Åsens
Slide 18: Agenda
Agenda 1 Introduction and background 2 The pyrolysis technology 3 Financials 4 Market overview 5 The rollout plan 6 JV structure 7 Appendix - 17 -
Slide 19: Substantial financial upside for Enviro – three main income streams
Substantial financial upside for Enviro – three main income streams and infrastructure valuation 1 2 3 Service fees Asset fees Value creation from 30% ownership1 JV launch Scaling with JV, ~2025 At scale Following successful rollout of its first plants and P Provides Enviro with full cost-coverage f
Slide 20: Previously communicated illustrative financials of a 30,000-ton ELT plant (I/II)
Previously communicated illustrative financials of a 30,000-ton ELT plant (I/II) • Please note that the previously communicated Capex Example calculation from a potential MSEK project in Europe for a 30.000 ton/year illustrative financials have not been updated or Total investment 398 plant adjusted
Slide 21: Previously communicated illustrative financials of a 30,000-ton ELT plant (II/II)
Previously communicated illustrative financials of a 30,000-ton ELT plant (II/II) Assumptions: base and full potential Illustrative capex for a 30k ton plant, SEKm CAPEX excl. working capital MSEK o • Base case: rCB 15% discount against vCB, 767 € for oil Land 0 • Full potential: rCB no discount, 10
Slide 22: Attractive offtake contracts to ensure stable revenue base in the JV
Attractive offtake contracts to ensure stable revenue base in the JV • Take-or-pay contracts obligate customers to either buy the agreed-on volumes or pay a penalty Take-or-pay Stable and predictable • Common in the energy sector, allow for sharing of risk of investment • Quality seal for Enviro’s r
Slide 23: Agenda
Agenda 1 Introduction and background 2 The pyrolysis technology 3 Financials 4 Market overview 5 The rollout plan 6 JV structure 7 Appendix - 22 -
Slide 24: End-of-life tire (ELT) market overview
End-of-life tire (ELT) market overview Introduction to the ELT market Considerable European ELT volumes The ELT market encompasses the handling of disposed tires. Method varies greatly between regions and Country ELT volume (Metric tons, 2019) 2018 existing infrastructure – from energy recovery and
Slide 25: The carbon black market offers an attractive position for Enviro
The carbon black market offers an attractive position for Enviro Global market for carbon black, USDbn Global carbon black demand by application1 5.5% CAGR 21.9 20.7 5% 19.6 18.6 Tires 17.6 20% 15.8 16.7 2 14.2 15.0 MRG 13.5 Polymer Other 74% targets all applications 2021 2022E 2023E 2024E 2025E 202
Slide 26: Tire pyrolysis oil as a valid complement and replacement to fossil alternatives
Tire pyrolysis oil as a valid complement replacement and replacement to fossil alternatives Introduction to Enviro’s recycled oil TPO tested by customers • Tire pyrolysis oil (“TPO”) is the largest output by volume from Enviro’s pyrolysis technology Commercial1 Production testing • Enviro’s TPO is o
Slide 27: Enviro holds a robust ISCC-certificate portfolio
Enviro holds a robust ISCC-certificate portfolio study Company Certificate Scope Raw material Valid to Input material Output material Add-ons ISCC EU waste process applied EU-ISCC 1 Collecting point Renewable component of Refined oil (renewable component of GHG option: The raw material meets the def
Slide 28: Structural focus on access to circular and sustainable value and supply chains
Structural focus on access to circular and sustainable value and supply chains - 27 -
Slide 29: Agenda
Agenda 1 Introduction and background 2 The pyrolysis technology 3 Financials 4 Market overview 5 The rollout plan 6 JV structure 7 Appendix - 28 -
Slide 30: High-level overview of rollout steps
High-level overview of rollout steps 2024/2025 2022 2023 2023-2024 2025+ Commissioning Preparations JV setup Construction Scale of Uddevalla Administrative preparations Launch of JV and related Construction of Uddevalla Process fine tuning and Full scale rollout finalized/being finalized processes p
Slide 31: Partners provide important experience in developing, operating and supporting similar assets
Partners provide important experience in developing, operating and supporting similar assets Selection of Antin’s other investments1 Michelin is a production giant North America 38 production sites Europe 43 production sites LSRC – Lake State Blue Elephant Energy Indaqua Railway Company Vicinity Ene
Slide 32: The Uddevalla plant will be the steppingstone for European plant rollout
The Uddevalla plant will be the steppingstone for European plant rollout • Enviro’s previously planned plant in Uddevalla will be owned by the JV and will be the first plant to be constructed and commissioned • Detailed construction plan completed in 2022 and all permits and plans in place to start
Slide 33: Handpicked JV management team with invaluable experience to execute the rollout
Handpicked JV management team with invaluable experience to execute the rollout Overview of collective experience to benefit the JV Selected previous experiences Renewables EU policy Joint Engineering ventures Operations Oil & gas Finance management Highly experienced top management with relevant ba
Slide 34: Considerable comfort in approach developed with Antin
Considerable comfort in approach developed with Antin Comprehensive protection from SHA – select highlights Option to acquire 30% of shares in the JV for 24 month Board representation Veto right on certain key matters. Certain minority rights given ownership above given threshold Antin cannot sell s
Slide 35: Looking beyond Europe – targeting a global circular tire industry
Looking beyond Europe – targeting a global circular tire industry Significant untapped market potential outside of Europe Commentary • When the practical aspects of the European rollout have been de- risked, Enviro recognizes the massive potential in a global rollout • The JV has exclusivity in Euro
Slide 36: Agenda
Agenda 1 Introduction and background 2 The pyrolysis technology 3 Financials 4 Market overview 5 The rollout plan 6 JV structure 7 Appendix - 35 -
Slide 37: Rapid commercialization through fully financed joint venture with Antin and supported by Michelin
Rapid commercialization through fully financed joint venture with Antin and supported by Michelin The JV in brief Key resources, know-how and reputation among founding partners • Enviro has formed a joint venture with Antin Infrastructure Partners, which will utilize Enviro’s pyrolysis technology in
Slide 38: Operationally independent JV with key support from owners and partners
Operationally independent JV with key support from owners and partners Simplified corporate structure Commentary • Enviro to remain technology owner and responsible for R&D as well as marketing and sales. Enviro will also provide certain services to the JV • Antin to provide capital and important gu
Slide 39: Agenda
Agenda 1 Introduction and background 2 The pyrolysis technology 3 Financials 4 Market overview 5 The rollout plan 6 JV structure 7 Appendix - 38 -
Slide 40: Comprehensive protection of IP and technological position
Comprehensive protection of IP and technological position Granted patents Extensive Know-how • Main patent is plant and process for recovery of coal and hydrocarbon • Enviro has more than two decades of know-how within the recovery of carbon compounds from organic input material through pyrolysis bl
Slide 41: Group Management
Group Management Thomas Sörensson Chief Executive Officer Staffan Kullberg Chief Financial Officer Urban Folcker Business Controller study Shareholding: 370,480 shares Shareholding: 0 shares Shareholding: 1,098,041 shares Total options: 1,794,754 Total options: 0 Total options: 1,346,066 Joined Envi
Slide 42: Board of Directors
Board of Directors Alf Blomqvist Chairman of the Board Nina Macpherson Board Member study Shareholding: 2,100,000 shares Shareholding: 210,000 shares Total options: 2,563,934 Total options: 1,281,966 Board Member since: 2017 Board Member since: 2020 Education: Stockholm School of Economics Education
Slide 43: The Enviro share and shareholder list
The Enviro share and shareholder list Share information and shareholder list Market Capitalization1 study SEK 1,150m Trading Venue Nasdaq Stockholm First North Ticker SES Shareholder2 No. Shares2 Capital/Votes2 Michelin Ventures S.A.S 131,323,118 20.00% Avanza Pension 50,362,416 7.67% Nordnet Pensio
Slide 44: Income statement
Income statement study Income statement, SEKk Q4 2022 Q4 2021 2022 2021 Net sales 2,011 1,046 7,976 7,592 Other operating income 38 323 221 403 Changes in stocks of finished goods (68) 123 (538) 586 1,981 1,493 7,660 8,581 Operating expenses Raw materials and consumables (249) (539) (1,527) (1,493)
Slide 45: Balance sheet
Balance sheet study Balance sheet, SEKk 2022-12-31 2021-12-31 Assets Fixed assets Intangible fixed assets 53,034 42,232 Property, plant and equipment 78,764 70,672 Financial non-current assets 0 148 Total fixed assets 131,798 113,052 Current assets Inventories 2,091 2,298 Current receivables 6,977 4
Slide 46: Cash flow statement
Cash flow statement study Cash flow statement, SEKk Q4 2022 Q4 2021 2022 2021 Operating Activities Operating profit/loss (24,981) (18,007) (83,783) (56,900) Adjustments for items not part of the cash flow 3,622 3,421 14,031 13,446 Interest received 68 95 407 163 Interest paid (87) (179) (212) (298)
Slide 47: Joint venture to accelerate European tire recycling plant rollout
Joint venture to accelerate European tire recycling plant rollout Enviro and Antin Infrastructure Partners to establish the world’s first large-scale recycling group in Europe, supported by Michelin The joint venture targets a 1,000,000 ton annual end-of-life tire recycling capacity by 2030 – around
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