Many changes and better business models

2009 was a challenging year for Morphic. The business has been streamlined, which meant that a number of non-strategic and loss-making subsidiaries have been sold. The headquarter was moved from Karlskoga to Sundbyberg, and number of staff has greatly been reduced to only three full-time employees. The property in Karlskoga will be hired out. Overall, the Group's fixed costs have been reduced with over 35 million SEK for the first quarter relative to the same period in 2009, which implies a halving of the Group's costs. 2010 would also be a year of continuing challenges, but with a significantly lower risk profile.

Dynawind changed its business model during the end of 2009 and established itself as an independent supplier of towers for wind turbines and service & maintenance of wind turbines. The Swedish wind energy market is expected to grow strongly in coming years and with Dynawind's new business model the company is well placed to grow organically. The old business model with full commitment towards end-customer will end with the Uljabuouda project completed during the year.

Accagen had very low turnover during the last year. Since late 2008, the market for electrolyzer - equipment to produce hydrogen – more or less stopped, as the industry and energy sector came to a halt due to financial crisis. The beginning of this year has started better for Accagen and we see signs of recovery in 2010.

Cell Impact has developed its technology further, but even here, demand was low due to the low growth of the fuel cell industry. By widening the product range and also include graphite, in addition to the plate, we believe that the company will reach profitability faster. We work alongside to find new markets for Cell Impacts patented production technology and to adapt the business model.

The demand of Exergy's products is high and especially for the Max-E-3600 from customers in the leisure segment. The first customer installations have been made but further modifications of the product to meet the new requirements have resulted in a delay of market introduction. Even for other more powerful products, e.g., Mira 6, we see an increased interest.

The market for reformers for hydrogen production from different fuels has not been developed as expected. Therefore, we considered that it would be too costly for Morphic to get Helbio profitable and therefore the company was sold during the quarter. In what follows, we refer instead to meet this demand through purchasing, to the extent that the product is needed.

With the revised business models and to a large extent new leadership and with significantly lower fixed costs, we are investing in 2010 onwards with the sole focus to win new orders and create profitable business. Major challenges remain undeniable but the team is better equipped than before. 

Sundbyberg in April 2010
Martin Valfridsson, President and CEO