Finance Monthly CFO Awards 2018 Winners Edition

Finance Monthly CFO Awards 2018 www.finance-monthly.com 28 Can you tell us about the idea behind OXE the need for a high-powered diesel outboard engine? Since its introduction in the 1920s, the marine outboard motor has not changed its configuration of using a bespoke gasoline engine which sits vertically and a crankshaft that drives a small dog clutch and bevel gear (see comparison illustration). This is suitable for low powered outboards. For higher powered units, the conventional outboard is reaching its technical capabilities of delivering power to the dog clutch and bevel gears – its size is limited (around the size of a tennis ball) due to the gear being under the water line, and therefore causing drag, alongside the prop shaft. In addition, higher torque is limited as it could cause the gear to fail. The engines are rated with limited warranty and not for commercial use. Most commercial and governmental users tend to use diesel inboards, which are expensive to build and maintain. The traditional vertical engine is developed only for outboard marine application. Compared to the automotive engine, the cost of developing a new lighter, stronger and particularly lower emission outboard engine is too prohibitive – this would run to millions of Euros, something which the automotive industry has continually invested. For the outboard manufacturer, such an investment would be unviable given the size of their market and lack of alternative use of its engine. As a result, the industry has been given dispensation to allow it to continue producing engines that are highly pollutive. OXE diesel on the other hand, is based on amodular system, whereby it uses an automotive engine (it currently uses a Opel 2 liter turbo diesel engine), powering a hydraulic gearbox (a concept which is well tested – used as automatic gearboxes in cars) whilst the delivery of power from the engine through to the propeller uses carbon fiber belts (used for many industrial applications). The overall OXE concept is patented by Cimco. By using best in class systems, it has produced an outboard engine which many commercial and governmental organisations see as a solution for their need: robust, lower life cycle cost, environmentally cleaner and safer to use (using diesel as a less combustible fuel when compared to gasoline). The OXE is a technological disrupter in the marine outboard market. What makes it a winning concept? First and foremost, we have a very strong patent family protecting our product competitiveness with over 25 years in the US and the EU, which also provides future license fee opportunities. We’ve also seen massive demand for the product, however, we don’t have any competitors at present and this is likely to be the case for a number of years. Legislation such as Single Fuel directive by Nato and more stringent emission regulations are driving interest in the OXE due to the lack of any alternatives. Furthermore, Firm Profile Cimco Marine AB developed and launched the world’s first high powered diesel outboard motor – the OXE diesel outboard. The company’s main market segment is the commercial and governmental sector. Its key technology, which was spun out of Volvo-Penta and VW, includes the following: • Patented Belt Propulsion Unit (“BPU”); • Automotive engine with a horizontal mounting • Hydraulic clutch/gear system It currently produces a 150hp and 200hp outboard motor, using a GM 2 litre four cylinder turbo diesel engine and is working on marinising BMW’s latest 3 litre six cylinder twin turbo engine which will produce 300hp. Its product road map is to produce diesel engines in the 100hp to 400hp range. The company has a significant order book in excess of 1,000 units. Its long- term target is to sell 7,700 units a year, which equates to 10% of its addressable market. Based in Angelholm, Sweden, the company has raised over €38million in equity and corporate bonds since 2016. SWEDEN CFO & Executive Vice President at Cimco Marine AB Myron Mahendra Finance Monthly CFO Awards 2018