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Kyoto Group AS
Annual Report • Apr 25, 2024
3651_10-k_2024-04-25_6e4783f4-245c-447e-bc4b-389caffc930b.pdf
Annual Report
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20 23
KYOTO GROUP Annual report
TM
TM
KYOTO GROUP | ANNUAL REPORT 2023
Contents
| About Kyoto Group 03 | |
|---|---|
| Key events 2023 05 | |
| Shareholder information 06 | |
| Letter from our CEO 08 | |
| Board of Directors' report 09 | |
| Financial statements (consolidated) 15 | |
| Notes to annual financial statements (consolidated) 29 | |
| Financial statements (Kyoto Group AS) 57 | |
| Notes to annual financial statements (Kyoto Group AS) 64 |
About Kyoto Group
Kyoto Group was founded on the idea that heat is the most commonly used form of energy in industrial applications. By storing energy as heat, we can decouple the time from when energy is produced to when it is applied in industry.
Kyoto Group disconnects the time power is made from when it is used by leveraging increasing energy market fluctuations and excess power from wind and solar. We can offer reliable and efficient storage of energy and thereby stable delivery of heat to industrial customers when it is needed.
Two-thirds of industrial energy demand is tied to heat, not electricity, and only 9% of current heat generation comes from renewable sources. This is not sustainable. Our thermal battery, Heatcube, will make solar and wind more stable and reliable by adding storage to the system and has the potential to increase carbon-free renewable energy use. By enabling the reduction of power generation carbon emissions, we are supporting the ongoing global energy transition. The Heatcube technology is standardized and modular, offering the potential to rapidly scale, reduce carbon footprint and save cost.
Kyoto Group aims to capture and manage the abundant energy from variable renewable sources such as solar and wind power and apply it to reduce the CO2 footprint for industrial thermal loads, while also offering a flexible asset for the grid. The Company plans to sell and lease & operate Heatcube thermal batteries with capacity from 16MWh, enabling industrial consumption of clean and low-cost heat, sourced from excess solar and wind energy. By this, Kyoto Group is supporting the industry to decarbonize and electrify its industrial processes requiring process heat.
TM
Our product: Kyoto Heatcube
With a heart of molten salt, our thermal battery can be customized to meet the customer energy needs.
Kyoto Heatcube can be configured with storage capacities from 16 MWh to over 120 MWh, with a discharge effect for each Heatcube of up to 20 MW. It is an innovative, low-cost, and modular storage solution for thermal energy that can use multiple renewable energy sources to heat molten salt to 425 degrees Celsius. The high-temperature salt is then used to produce steam for industrial production processes.
Kyoto Heatcube is modularized and can be delivered on-site, ready to be easily integrated into your production system. Since we only use abundant, non-toxic components in our battery, Kyoto Heatcube can be recycled without leaving any harmful chemicals in the environment.
Key events 2023
First full-scale Heatcube in operation in August, Heatcube installation for KALL Ingredients initiated
- Heatcube at Norbis Park in Denmark was taken into operation early August, following the grid connection and commissioning in July, and later also qualified as a flexible asset for the frequency regulating markets
- Heatcube at Norbis Park was connected to an AI powered DataOps platform in Q4, enabling best-in-class, predictive and preventive maintenance
- Towards the end of year, the construction project for the Heatcube installation for KALL Ingredients in Hungary was initiated
- On Kyoto's Capital Markets Day in November the company outlined the commercial progress and announced an increase in the guaranteed Round-Trip Efficiency (RTE) of Heatcube, from 90% to 93%
Game-changing strategic alliances
- Strategic alliance and investment agreement with world leading electricity utility Iberdrola and global leader in thermal energy management Spirax Group to accelerate decarbonization of industrial process heat
- Iberdrola invested NOK 35.1 million in return for a 12.8 percent share of Kyoto's issued share capital, while Spirax Group invested NOK 41.0 million in return for a 15.0 percent share. Both companies joined the Kyoto board
- MoU with Iberdrola to jointly commercialize Heatcube to Iberdrola´s and Kyoto's customers.
- Partnership agreement with Spirax Group to develop world leading heater for next generation Heatcube.
- Quadrupling of the discharge capacity of its Heatcube thermal energy storage solution from 5 MW to 20 MW through strategic partnership with Steinmüller engineering
- Kyoto Group and Cognite synergize to drive digitalization and automation of renewable industrial process heat
Continued strong interest from industrial clients and trust from credible institutions and investors
- Private Placement successfully completed in January, raising NOK 60 million in gross proceeds.
- Kyoto´s management system ("Kyoto Business System") certified by DNV according to ISO 14001 and ISO 9001
- Letter of Intent (LoI) with Kaura Coproducts, Spain, to supply a Heatcube thermal energy storage solution
- EUR 4 million green debt financing approved by Nefco, the international financial institution owned by the four Nordic countries, to support the scaling up of Kyoto's thermal energy storage offering
- EUR 6.4 million commercial contract for the delivery of Heatcube to KALL Ingredients in Hungary, partnering up with Kyotherm and Energiabörze
- Klingele, one of Germany´s largest paper & packaging manufacturer signed term sheet with Kyoto Group for Heatcube installation
- Kyoto honored with prestigious Energy Transition Changemakers award at COP28
Shareholder information
Share capital
Kyoto Group's registered share capital on 31 December 2023 amounted to NOK 498 329 divided between 16 610 959 shares with a nominal value of NOK 0.03 each.
Total equity for the group on 31 December 2023 was EUR 11 651 262, corresponding to an equity ratio of 79 per cent.
Euronext Growth listing
The company's shares have been listed on Euronext Growth Oslo (ticker code: KYOTO) since 24 March 2021.
During 2023, the share price moved from NOK 12.5 to NOK 21.8. At the end of December 2023, the company's market capitalization was NOK 279 million.
Shareholder structure
At the end of December 2023, Kyoto Group had 708 shareholders, and the foreign shareholding amounted to 36.1 percent.
Spirax Group was the largest shareholder, holding 15 percent of the Kyoto shares, followed by Iberdrola (Perseo) with 12.8 percent and KM New Energy with 9 percent. 100 percent of the shares are free float. The 20 largest shareholders held a total of 79.2 percent of the company's shares at the end of December 2023.
Mandates
There is only one class of shares, and all shares have equal voting rights. The nominal amount per share is NOK 0.03. The articles of association place no restriction on voting rights. Each share carries one vote at the company's general meeting. The shares are freely transferable pursuant to the company's articles of association.
Authorization to the board of directors to increase the Company's share capital to issue shares as part of the Company's share program
At the annual general meeting on 30 June 2023, the board of directors were authorized pursuant to the Norwegian Private Limited Liability Companies Act section 10-14 (1) to increase the company's share capital by up to NOK 34 500. Subject to this aggregate amount limitation, the authorization may be used on more than one occasion. The authorization can only be used to issue shares to employees and board members as part of the company's share program. The authorization shall be valid for a period of 24 months from the date of this general meeting, i.e. until 30 June 2025. The pre-emptive rights of the shareholders under section 10-4 of the Norwegian Private Limited Liability Companies Act may be set aside. The authorization covers share capital increases against contributions in cash and contributions in kind. With effect from the time of registration of this authority with the Norwegian Register of Business Enterprises, all previous authorities to the board of directors to increase the share capital are revoked.
Authorization to the board of directors to increase the Company's share capital
At the annual general meeting on 30 June 2023, the board of directors were authorized pursuant to the Companies Act section 10-14 (1) to increase the Company's share capital by up to NOK 74 749. Subject to this aggregate amount limitation, the authority may be used on more than one occasion. The authorization may be used to issue shares for, inter alia, financing of further growth, strengthening the Company's equity, or as consideration in connection with acquisitions. The authority shall be valid until the earlier of 30 June 2024 and the annual general meeting of the Company in 2024. The pre-emptive rights of the shareholders under section 10-4 of the Companies Act may be set aside. The authority covers capital increases against contributions in cash and contributions other than in cash. The authority covers the right to incur special
obligations for the Company, ref. section 10-2 of the Companies Act. The authority covers resolutions on mergers in accordance with section 13-5 of the Companies Act.
Authorization to the board to acquire own shares
The annual general meeting on 30 June 2023 authorized the board of directors of Kyoto Group to acquire Kyoto Group's own shares. In accordance with the proposal by the board of directors, the board of directors is authorized pursuant to the Norwegian Private Limited Liability Companies Act section 9-4 to acquire shares in the company ("own shares") with an aggregate nominal value of up to NOK 15 000. When acquiring own shares, the consideration per share may not be less than NOK 10.00 and may not exceed NOK 50.00. The board of directors determines the methods by which own shares can be acquired or disposed of. The authorization shall be valid for a period of 24 months from the date of this general meeting, i.e. until 30 June 2025. With effect from the time of registration of this authority with the Norwegian Register of Business Enterprises, all previous authorities to the board of directors to acquire own shares are revoked.
Dividend policy
Kyoto Group is in a growth phase and does not expect to pay any dividends in the near future. Any future decision to pay a dividend will depend on the company's financial position, operating profit, and capital requirements.
Information and investor relations
Kyoto Group wishes to maintain open communications with its shareholders and other stakeholders. Shareholders and stakeholders are kept informed by announcements to Euronext Oslo Børs and press releases. Kyoto's website www.kyotogroup.no provides information on the company's business and financial situation. Interim financial statements are presented at meetings open to the general public and are available as webcasts at www.kyotogroup.no
Letter from our CEO
Dear Valued Stakeholders,
As we reflect on 2023, I am thrilled to highlight our strides in shaping the future of energy. This past year was truly transformative for us, marked by significant milestones and strategic partnerships. But before we look at the past year's highlights, let us put those highlights in context. The electrification of the society has started, largely through the growth of intermittent energy sources such as wind and solar. This electrification is impossible without a massive increase in energy storage.
This energy storage will take many forms. Kyoto focuses on a huge, but often overlooked, segment: industrial process heat, which accounts for about a quarter of total energy demand.
Today, virtually all process heat is based on fossil fuels. Our Heatcube changes this. It provides largescale heat storage and makes it feasible to electrify process heat. One of the standout achievements of 2023 was the successful inauguration of our first fullscale Heatcube installation, at Norbis Park in Denmark. This milestone marked the beginning of a new era, as we started to operationalize our innovative thermal energy storage technology.
In addition to establishing this operational fundament, we were proud to announce strategic partnerships with industry leaders that further solidified our position in the market. Iberdrola, the world leader in renewable energy, joined us as a shareholder, upping the game and ushering in a new chapter of collaboration. Together, we've established a business model that leverages our technology alongside Iberdrola's renewable electricity, transforming the way energy, in the form of heat, is stored and utilized by industry. Our partnership with Spirax Group, a world leader in thermal energy management for industries, is a testament to our commitment to innovation. Through this collaboration, we're spearheading the development of future electrical heaters for the Heatcube together, paving the way for enhanced efficiency and performance.
Further, in terms of technological breakthroughs, 2023 saw a significant milestone for our Steam Generator System (SGS), where we quadrupled the discharge capacity from 5 MWh to 20 MWh without significant changes to the design of Heatcube, in a partnership with Steinmüller Engineering.
Those achievements showcase our dedication to pushing boundaries and also underscore our ability to deliver tangible results.
Moreover, earning the trust and credibility of the Nordic green bank, Nefco, further validates our mission and vision. Their support through a loan to facilitate our market expansion speaks about the impact and potential of our endeavors.
As we look to the future, our momentum continues with the commencement of our second installation of a Heatcube, slated for completion later this year. This project reaffirms our commitment to delivering cutting-edge solutions that drive tangible impact and value for our customers.
In closing, I want to express my heartfelt gratitude to our shareholders, partners, and dedicated team members who have played an instrumental role in our journey thus far. Together, we will continue to push boundaries, drive innovation, and shape a brighter, more sustainable future for generations to come.
With enthusiasm and determination,
Board of Directors' Report
Business and location
Headquartered at Lysaker outside Oslo, Norway, Kyoto Group is a Norwegian company founded in 2016 with the aim to capture and manage the abundant energy from intermittent renewable sources such as solar and wind power and apply it to reduce the CO2 footprint for industrial thermal loads.
The company operates and sells Heatcube thermal batteries, enabling industrial consumption of low-cost heat sourced from excess solar and wind energy.
Heatcube is a standardized and modular thermal battery based on molten salt and may be customized to meet the industry's energy needs and offer multiple services such as the delivery of clean heat as well as being used as a flexible asset to balance the electricity grid.
Kyoto Group continues to progress its existing commercial pipeline. Strengthening the commercial organisation is a priority in the coming months to accelerate commercialization of Heatcube and meet the expected growing demand for electrification and thermal energy solutions.
The current commercial pipeline reflects Heatcubes delivered based on two commercial offerings: the Heat as a Product (HaaP) and the Heat as a Service (HaaS).
Kyoto Group expects to deliver traditional product sales, Heat as a Product (HaaP) to certain clients, with additional support, maintenance, and service agreements. In addition, we expect potential Heat as a Service (HaaS) customers with Kyoto Group and its financing partners owning and operating Heatcubes to sell heat to the end users.
The first commercial installation of Heatcube at Norbis Park has provided important technical and commercial validation for new industry partners, considering electrification and thermal energy solutions to decarbonize their energy and heat supply.
Significant events in 2023
The company continued its efforts along the long-term funding plan. A private placement was successfully completed in January, raising NOK 60 million in gross proceeds, followed by a strategic alliance with Spirax Group and Iberdrola in June, successfully raising another NOK 76 million in gross proceeds. Spirax Group and Iberdrola are now working closely together with Kyoto both on commercialization of Heatcube as well as technology development of critical equipment.
A strategic technology development partnership was also entered into with Steinmüller Engineering mid-2023, leading to a quadrupling of the discharge capacity of steam from Heatcube, from 5 MW to 20 MW.
The first full scale installation of Heatcube, at Norbis Park in Denmark, was commissioned, connected to the grid, and taken into operation in 2023, with Aalborg Forsyning starting to pay the lease fee in September. This Heatcube now serves as a demonstration unit for new industrial clients, in addition to delivering heat to Aalborg district heating system and providing operational data and key insights for Kyoto, especially in relation to operating as a flexible asset on the grid.
The company is at the doorstep of market breakthrough and has matured a commercial pipeline of more than 2 900 MWh storage during the year, representing a portfolio of more than 40 projects throughout Europe.
Towards year-end, the construction project for Heatcube for KALL Ingredients in Hungary was mobilized, following the signing of a EUR 6.4 million commercial contract for the delivery of Heatcube to KALL Ingredients, partnering up with Kyotherm and Energiabörze.
In December Kyoto Group and Klingele, one of Germany´s largest paper & packaging manufacturer signed a term sheet for a Heatcube installation, aimed at signing a commercial contract in Q2 2024.
Kyoto Group also announced the final approval of a EUR 4 million green debt financing from Nefco, the international financial institution owned by the four Nordic countries, to support the scaling up of Kyoto's thermal energy storage offering.
Kyoto has established and is now orchestrating a strong European supply chain, securing production capacity and high-quality and competitive suppliers for upcoming commercial installations.
On Kyoto's Capital Markets Day in November the company outlined the commercial progress and announced an increase in the guaranteed Round-Trip Efficiency (RTE) of Heatcube, from 90% to 93%.
Financial statements
The Board of Directors believes that the year-end financial statements provide a true and fair view of the net assets, financial position, and results of Kyoto Group for the period. The group's consolidated financial statements are presented in accordance with the International Financial Reporting Standards (IFRS).
Profit and loss
The Group had EUR 0.05 million of operating income in 2023, compared to EUR 0.03 million for the same period of 2022.
Total operating expenses for the Group in 2023 were EUR 7.4 million compared to EUR 7.2 million in 2022.
As part of the Group's planned scale-up, personnel costs increased from EUR 3.2 million to EUR 3.7 million in 2023. Other professional services amounted to EUR 2.6 million both in 2023 and 2022.
Operating loss was EUR 7.4 million in 2023, compared to a loss of EUR 7.2 million for the same period in 2022.
The net financial income was EUR 0.08 million in 2023, mainly reflecting foreign exchange gain, compared to a net financial income of EUR 0.03 million in 2022.
Net loss in 2023 was EUR 7.3 million compared to EUR 7.2 million in 2022.
Financial situation
As of 31 December 2023, the Group has total assets of EUR 14.7 million, compared to total assets of EUR 11.3 million as of 31 December 2022.
Total non-current assets increased from EUR 9.2 million in 2022 to EUR 12.8 million in 2023. The increase is related to machinery & equipment EUR 2.2 million in addition to research and development amounting to EUR 1.4 million.
Total current assets as per 31 December 2023 amounted to EUR 2.0 million which is at the same level as per 31 December 2022.
Total equity amounted to EUR 11.7 million on 31 December 2023, which is an increase from EUR 7.0 million on 31 December 2022.
Total liabilities were reduced to EUR 3.1 million by the end of December 2023 compared to EUR 4.3 million in 2022. The decrease is mainly related to accounts payable.
Cash flow
Net cash flow from operating activities was negative and amounted to EUR 8.3 million for 2023 compared to negative cash flow of EUR 4.8 million for 2022.
Net cash flow from investing activities was negative and amounted to EUR 3.8 million for 2023 compared to negative cash flow of EUR 5.6 million for 2022.
Net cash flow from financing activities amounted to EUR 11.9 million for 2023, an increase of EUR 12.1 million compared to 2022 and is mainly related to proceeds from equity.
Risk factors
The Group is in a scale-up stage. While Heatcube technology is proven through the successful operation
of the pilot installation, the Group has yet to install and operate the technology at a large commercial scale.
The first Heatcube thermal battery installation and operation was delayed, from initial expected start-up in Q1 2023 to Q3 2023. There are inherent technical risks connected to the installation and start-up of any such installations that may affect timing and costs, as well as operations and cash flow generation under a battery leasing revenue model. The Group is also subject to various risks, including long lead times, related to securing potential additional commercial contracts which are required to build a profitable business over time.
The Group is in a growth phase and will likely require additional equity capital in the future to finance the execution of its long-term growth strategy.
Please visit the Investor presentation from the private placement successfully executed in January 2023, which is available on the Kyoto Group website, for more detailed information about risk factors.
Research and development
Investment in research and development (R&D) is a key part of the Group's strategy. During 2023, R&D expenses of EUR 1.5 million were capitalized.
Moving forward, the Group expects R&D expenses to remain substantial.
Environment, Social and Governance
Kyoto Group is committed to Health, Safety, Security, and Environment excellence and to set health, safety, security, and environment as core elements of the Group's identity and business success.
The Group shall be recognized for its outstanding performance, demonstrating a strong sense of responsibility for people and the environment, and through innovation and efficient production, contributing to the creation of a sustainable society.
The Group supports a precautionary approach to
environmental challenges, undertakes initiatives to promote greater environmental responsibility, and encourages the development of environmentally friendly technologies.
The Group's work with sustainability is governed by our Code of Conduct which covers the company's responsibility and approach to human rights, worker's rights, working conditions, equal opportunities, and anti-corruption as well as HSE and environmental responsibility.
Health, safety, and environmental responsibilities are further described in the Kyoto Group HSE Policy.
Kyoto Group has yet to implement a complete ESG strategy, but we aim at having this done in 2024.
Environment
In line with our identity and overall strategy, we will focus on our environmental footprint, including making sure our operations are environmentally sustainable, the materials and parts used to build Heatcube are sourced responsibly, and this with as low a carbon footprint as possible.
The Group's business purpose is to enable industry with clean heat, thus contributing to reducing climate emissions from industry. Kyoto recognizes its role in contributing to a sustainable society and is committed to minimizing its environmental footprint at all stages of the thermal battery value chain.
Kyoto is working systematically to improve resource efficiency, reduce emissions and implement the waste mitigation hierarchy, working towards the concept of a circular economy.
Kyoto is also working systematically to prevent pollution and address our impacts where necessary, protecting and restoring both the environment and the value of our assets.
At this stage, the Group's activities have a limited effect on the external environment. As the company
enters a commercial production phase, it is committed to minimize its environmental footprint at all stages of the thermal battery value chain. Since the batteries only use abundant, non-toxic components, they can be recycled without leaving any harmful chemicals in the environment.
Social
Kyoto Group is dedicated to the well-being of its employees. We are dedicated to offering everyone equal opportunities irrespective of background, including ethnicity, gender, religion, sexual orientation, or age.
At the end of 2023, Kyoto Group had a total staff of 37, of which 23 was employed in Kyoto Group AS and 14 employed in Kyoto Technology Spain S.L.
67% of the staff was male, while 33% was female, up from 30% in 2022. Our office in Spain, where most of the recruitment has taken place, has 40% female employees.
The corporate management team had five male and three female members at year end. As Kyoto Group scales up going forward, diversity will continue to be a key priority in recruitment processes. At the end of December 2023, 15 nationalities were represented in Kyoto Group.
There were no serious work-related accidents in 2023 and absence due to illness was 3 percent.
All employees shall have signed and undertaken training in the code of conduct and relevant policies as part of their on-boarding training.
Kyoto Group aims to become a Great Place to Work (GPTW) by 2025 and achieve an employee Net Promoter Score (eNPS) above 50%. The eNPS was measured in January 2023 and scored 82%.
Governance
The Group's parent company, Kyoto Group is a private limited company organized under Norwegian law, with a governance structure based on Norwegian corporate law and other regulatory requirements. Kyoto Group has a strong focus on ethical leadership, that fosters a culture of ethics and integrity, promotes transparency in its decision making, and has a strong Code of Conduct.
The company has only one class of shares. All shares carry equal rights in all respects, including voting rights and rights to dividends. All shares are freely transferable, meaning that a transfer of shares is not subject to the consent of the Board of Directors or rights of first refusal.
Kyoto Group has six Board members, none of whom are members of the company's management. The Board of Directors has six male and no female members.
The majority of Board members are independent of company management and significant business partners. The board members and the Chief Executive Officer are covered by liability insurance (D&O). The insurance policy is based on market standard terms and conditions and comprises the directors' and officers' personal legal liabilities, including defense and legal costs.
Kyoto Group ambition is to follow the Norwegian Code of Practice for Corporate Governance and explain any deviations from the code. For further details, please see the Corporate Governance Report, which can be found on the Kyoto Group website.
Sustainable Development Goals
Kyoto Group's business operations contribute directly to the UN Sustainable Development Goals.
Our main contribution is to SDG 9 – Industry, target 9.4: "By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities".
We also contribute to SDG 7 – Affordable Clean Energy, target 7.a "By 2030, enhance international cooperation to facilitate access to clean energy research and technology, including renewable energy, energy efficiency and advanced and cleaner fossilfuel technology, and promote investment in energy infrastructure and clean energy technology". As the company grows and ventures into new markets, we aim at contributing more significantly to other SDGs.
Transparency Act
The Board is responsible for the Group's implementation of applicable laws and regulations, including the Transparency Act. All employees have a responsibility to protect human rights and decent working conditions. If Kyoto Group causes, contributes to, or is linked to adverse impacts on human rights, the Group will take necessary steps to cease, prevent and/or mitigate the adverse impacts. The Group will publish an account of the due diligence assessment on its webpage www.kyotogroup.no.
Going concern
The Board confirms that the conditions for the going concern assumption have been satisfied and that the financial statements for 2023 have been prepared on the basis of this assumption.
Significant events after closing
The Group announced on 26 January 2024 the signing of a loan agreement with Nefco, the Nordic Green Investment Bank for a green loan of EUR 4 million.
On 30 January 2024 the Group announced entering into a MoU with Schneider Electric to decarbonize and electrify the industry together.
On 15 March 2024 the Group announced a Directed share issue of new shares in the company to increase capital. The Board of Directors allocated subscriptions for 2 297 187 shares at a subscription price of NOK 17, raising NOK 39 million in gross proceeds.
On 21 March 2024 the Group announced that a global leader in energy management has ordered an engineering study for a Heatcube at one of their industrial sites in Europe.
On 25 April 2024 the company published that Kyoto Group and an Energy Partner jointly signed a term sheet for a Heat Purchase Agreement with global leading consumer goods company in Europe. The Heatcube at the site in Europe will be supplied with renewable electricity from an off-grid 25 MWp solar photovoltaics (PV) complemented with renewable electricity from the energy partner portfolio assets, leading to an annual CO2 reduction of more than 10,000 tons.
Allocations
The Group had a net loss of EUR 7.3 million in 2023. The Board of Directors proposes the following allocations:
Loss brought forward: EUR 7.3 million.
Outlook
The construction project for our second Heatcube in Hungary is mobilized, and the commercial installation is expected to be completed by the end of 2024. The company expect to sign a significant number of new contracts the coming two-three years, to be installed at large industrial companies. In order to handle the increased activity, the organisation is expected to still increase during the period.
Oslo, 24 April 2024 The Board of Kyoto Group AS
(Electronically signed)
Eivind Reiten Chairman
(Electronically signed)
Hans Olav Kvalvaag Board member
(Electronically signed)
Thorleif Enger Board member
(Electronically signed)
Oscar Cantalejo Board member
Camilla Nilsson CEO
(Electronically signed)
Pål Selboe Valseth
(Electronically signed)
Board member
(Electronically signed)
Christopher Molnar Board member
Financial statements
CONSOLIDATED
KYOTO GROUP | ANNUAL REPORT 2023 15
Consolidated statement of comprehensive income
1 January - 31 December
(Amounts in EUR)
| Note | 2023 | 2022 | |
|---|---|---|---|
| Lease income | 3 | 49 910 | 0 |
| Revenue | 3 | 0 | 26 860 |
| Total operating income | 49 910 | 26 860 | |
| Operating expenses | |||
| Personnel expenses | 4, 5, 6 | 3 744 438 | 3 194 591 |
| Depreciation, amortizations and impairment | 7, 8, 9 | 331 422 | 603 003 |
| Other operating expenses | 10 | 3 371 105 | 3 446 736 |
| Total operating expenses | 7 446 964 | 7 244 331 | |
| Operating profit/loss (-) | -7 397 054 | -7 217 471 | |
| Financial items | |||
| Financial income | 11 | 183 801 | 67 423 |
| Financial expenses | 11 | 103 625 | 37 006 |
| Profit/loss (-) before tax | -7 316 878 | -7 187 053 | |
| Tax expense | 12 | 2 500 | 0 |
| Profit/loss (-) | -7 319 378 | -7 187 053 | |
| Other comprehensive income | |||
| Items which may be reclassified to profit and loss in | |||
| subsequent periods | |||
| Exchange differences | -328 078 | -231 121 | |
| Total comprehensive income for the year | -7 647 456 | -7 418 174 |
Consolidated statement of comprehensive income (continued)
1 January - 31 December (Amounts in EUR)
| Note | 2023 | 2022 | |
|---|---|---|---|
| Profit/loss (-) for the year attributable to: | |||
| Equity holders of the parent company | -7 319 378 | -7 187 053 | |
| Non-controlling interests | 0 | 0 | |
| Total | -7 319 378 | -7 187 053 | |
| Total comprehensive income attributable to: | |||
| Equity holders of the parent company | -7 647 456 | -7 418 174 | |
| Non-controlling interests | 0 | 0 | |
| Total | -7 647 456 | -7 418 174 | |
| Earnings per share: | |||
| - Basic | 13 | -0,52 | -0,85 |
| - Diluted | 13 | -0,52 | -0,85 |
Consolidated statement of financial position
(Amounts in EUR)
| Note | 31.12.2023 | 31.12.2022 | |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Patents | 7, 8 | 36 884 | 26 598 |
| Intangible assets | 7 | 3 952 089 | 2 501 797 |
| Right-of-use assets | 8 | 450 734 | 572 053 |
| Machinery and equipment | 9 | 8 142 420 | 0 |
| Construction in progress | 9 | 0 | 5 925 290 |
| Other non-current assets | 14, 15 | 184 270 | 192 857 |
| Total non-current assets | 12 766 397 | 9 218 595 | |
| Current assets | |||
| Accounts receivable | 76 498 | 26 860 | |
| Other current assets | 14 | 1 020 601 | 891 805 |
| Cash and cash equivalents | 16 | 856 753 | 1 113 766 |
| Total current assets | 1 953 852 | 2 032 431 | |
| TOTAL ASSETS | 14 720 249 | 11 251 025 |
Consolidated statement of financial position (continued)
(Amounts in EUR)
| Note | 31.12.2023 | 31.12.2022 | |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Paid in capital | |||
| Issued capital | 17 | 47 180 | 25 290 |
| Share premium | 5 | 10 485 924 | 5 747 979 |
| Other capital reserves | 5 | 1 118 158 | 1 203 822 |
| Total paid in capital | 11 651 262 | 6 977 091 | |
| Total equity | 11 651 262 | 6 977 091 | |
| Non-current liabilities | |||
| Non-current lease liabilities | 15 | 234 027 | 298 383 |
| Other non-current financial liabilities | 15 | 320 720 | 477 938 |
| Total non-current liabilities | 554 747 | 776 320 | |
| Current liabilities | |||
| Current lease liabilities | 18 | 237 023 | 290 104 |
| Accounts payable | 18 | 808 204 | 1 909 334 |
| Public duties payable | 18 | 375 132 | 245 883 |
| Tax payable | 12, 18 | 2 500 | 0 |
| Other current liabilites | 18 | 1 091 381 | 1 052 292 |
| Total current liabilities | 2 514 240 | 3 497 614 | |
| Total liabilities | 3 068 987 | 4 273 934 | |
| TOTAL EQUITY AND LIABILITIES | 14 720 249 | 11 251 025 |
Oslo, 24 April 2024 The Board of Kyoto Group AS
(Electronically signed)
Eivind Reiten Chairman
(Electronically signed)
Hans Olav Kvalvaag Board member
(Electronically signed)
Thorleif Enger Board member
(Electronically signed)
Oscar Cantalejo Board member
(Electronically signed)
Pål Selboe Valseth Board member
(Electronically signed)
Christopher Molnar Board member
(Electronically signed)
Camilla Nilsson CEO
Consolidated statement of cash flows
(Amounts in EUR)
| Note | 2023 | 2022 | |
|---|---|---|---|
| Cash flow from operating activities | |||
| Profit/loss (-) before tax | -7 316 878 | -7 187 053 | |
| Depreciation, amortizations and impairments | 8, 9, 14 | 331 422 | 603 003 |
| Financial expenses | 8 | 12 067 | 19 892 |
| Share-based payment expense | 5, 7 | 130 647 | 334 966 |
| Net foreign exchange differences | -328 078 | -231 121 | |
| Change in accounts payable | 18 | -1 101 130 | 1 177 503 |
| Change in accounts receivables | 14 | -49 638 | -26 860 |
| Other changes | 14, 18 | 21 815 | 517 232 |
| Net cash flow from operating activities | -8 299 772 | -4 792 438 | |
| Cash flow from investing activities | |||
| Change in construction in progress | 9 | 0 | -3 783 306 |
| Purchase of tangible assets | 9 | -2 329 609 | 0 |
| Purchase of intangible assets | 6 | -1 464 117 | -1 773 460 |
| Net cash flow used in investing activities | -3 793 726 | -5 556 765 | |
| Cash flow from financing activities | |||
| Proceeds from equity | 12 190 979 | 0 | |
| Payment of lease installment | 8, 19 | -284 356 | -199 319 |
| Interests on lease liabilites | 8, 19 | -12 067 | -19 892 |
| Net cash flow from financing activities | 11 894 556 | -219 210 | |
| Net foregin exchange difference | -58 071 | -90 613 | |
| Net increase/(decrease) in cash and cash equvivalents | -198 943 | -10 568 412 | |
| Cash and cash equivalents at beginning of period | 1 113 766 | 11 772 792 | |
| Cash and cash equivalents at end of period | 16 | 856 753 | 1 113 766 |
Statement of changes in equity
(Amounts in EUR)
| Attributable to equity holders of the parent company | Non controlling interests |
Total equity | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Total Equity Paid in capital Other Equity holders of the parent company |
|||||||||
| Share capital |
Share premium reserve |
Treasury shares |
Other capital reserves |
Retained earnings |
Total other equity |
||||
| Equity as at 01.01 2022: | 25 290 | 13 130 572 | 0 | 712 773 | 0 | 0 | 13 868 635 | 0 | 13 868 635 |
| Effect of implementing IFRS | 35 581 | 35 581 | 35 581 | ||||||
| Adjusted equity as at 01.01 2022 | 25 290 | 13 166 153 | 0 | 712 773 | 0 | 0 | 13 904 216 | 0 | 13 904 216 |
| Profit/loss (-) | -7 187 053 | -7 187 053 | -7 187 053 | -7 187 053 | |||||
| Other comprehensive income | 39 740 | -270 861 | -270 861 | -231 121 | -231 121 | ||||
| Coverage of uncovered loss | -7 457 914 | 7 457 914 | 7 457 914 | 0 | 0 | ||||
| Purchase of own shares | -27 613 | 0 | -27 613 | -27 613 | |||||
| Sale of own shares | 27 613 | -57 | 0 | 27 556 | 27 556 | ||||
| Share subscription programme | 156 139 | 0 | 156 139 | 156 139 | |||||
| Share based payment expense | 334 966 | 0 | 334 966 | 334 966 | |||||
| Total | 0 | -7 418 174 | 0 | 491 049 | 0 | 0 | -6 927 125 | 0 | -6 927 125 |
| Equity as at 31.12 2022 | 25 290 | 5 747 979 | 0 | 1 203 822 | 0 | 0 | 6 977 091 | 0 | 6 977 091 |
| Equity as at 01.01 2023: | 25 290 | 5 747 979 | 0 | 1 203 822 | 0 | 0 | 6 977 091 | 0 | 6 977 091 |
| Effect of implementing IFRS | 0 | 0 | |||||||
| Adjusted equity as at 01.01 2023 | 25 290 | 5 747 979 | 0 | 1 203 822 | 0 | 0 | 6 977 091 | 0 | 6 977 091 |
| Profit/loss (-) | -7 319 378 | -7 319 378 | -7 319 378 | -7 319 378 | |||||
| Other comprehensive income | 317 222 | -216 312 | -428 988 | -428 988 | -328 078 | -328 078 | |||
| Coverage of uncovered loss | -7 748 366 | 7 748 366 | 7 748 366 | 0 | 0 | ||||
| Capital increase 20.01 2023 | 9 601 | 5 590 810 | 0 | 5 600 411 | 5 600 411 | ||||
| Capital increase 22.02 2023 | 386 | 218 388 | 0 | 218 774 | 218 774 | ||||
| Capital increase 05.07 2023 | 11 903 | 6 533 504 | 0 | 6 545 407 | 6 545 407 | ||||
| Share issue expenses | -173 613 | 0 | -173 613 | -173 613 | |||||
| Share subscription programmes | 200 195 | 0 | 200 195 | 200 195 | |||||
| Share based payment expense | -69 547 | 0 | -69 547 | -69 547 | |||||
| Currency adjustment | 0 | 0 | 0 | ||||||
| Total | 21 890 | 4 737 945 | 0 | -85 665 | 0 | 0 | 4 674 171 | 0 | 4 674 171 |
| Equity as at 31.12 2023 | 47 180 | 10 485 924 | 0 | 1 118 158 | 0 | 0 | 11 651 262 | 0 | 11 651 262 |
Summary of significant accounting policies
Kyoto Group AS is a limited liability company, incorporated in Norway, headquartered in Bærum and listed on the Euronext Growth, Address headquarters: Fornebuveien 1, 1366 Lysaker.
The consolidated financial statements of Kyoto Group AS for the fiscal year 2023 were approved in the board meeting of 24 April 2024.
The Group's activities are described in the Board of Directors Report.
Basis for preparation of the annual accounts
The Kyoto Group AS's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) which have been adopted by the EU and are mandatory for financial years beginning on or after 1 January 2023, and Norwegian disclose requirements listed in the Norwegian Accounting Act as of 31 December 2023.
The consolidated financial statements are solely based on historical cost.
Changes in accounting policies and disclosures
Changes in IAS 1 and PS 2 are implemented this financial year. The amendments have had an impact on the Group's disclosures of accounting policies, but not on the measurement, recognition, or presentation of any items in the Group's financial statements.
Functional currency and presentation currency
Functional currency
The functional currency is determined in each entity in the Group based on the currency within the entity's primary economic environment. Transactions in foreign currency are translated to functional currency using the exchange rate at the date of the transaction. At the end of each reporting period foreign currency monetary items are translated using the closing rate, non-monetary items that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction and non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. Changes in the exchange rate are recognized continuously in the accounting period.
Presentation currency
The Group's presentation currency is EUR since a large proportion of users of the consolidated financial statements relate to this currency.
The statement of financial position figures of entities with a different functional currency are translated at the exchange rate prevailing at the end of the reporting period for balance sheet items, and the exchange rate at the date of the transaction for profit and loss items. The monthly average exchange rates are used as an approximation of the transaction exchange rate. Exchange differences are recognized in other comprehensive income ("OCI").
Consolidation principles
The Group's consolidated financial statements comprise the parent company and its subsidiaries as of 31 December 2023. An entity has been assessed as being controlled by the Group when the Group is exposed for or have the rights to variable returns from its involvement with the entity and has the ability to use its power over the entity to affect the amount of the Group's returns.
Thus, the Group controls an entity if and only if the Group has all the following:
- Power over the entity
- Exposure, or rights to variable returns from its involvement with the entity; and
- The ability to use its power over the entity to affect the amount of the Group's returns.
The assessments are done for each individual investment.
The Group re-assesses whether it controls an entity if facts and circumstances indicate that there are changes to one or more of the three elements of control.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses, and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
The use of estimates and assessment of accounting policies when preparing the annual accounts
Estimates and assumptions
The management has used estimates and assumptions that have affected assets, liabilities, income, expenses, and information on potential liabilities. This particularly applies to the depreciation of fixed assets and evaluations related to acquisitions. Future events may lead to these estimates being changed. Estimates and their underlying assumptions are reviewed on a regular basis and are based on best estimates and historical experience.
Current versus non-current classification
The Group presents assets and liabilities in the consolidated statement of financial position as either current or non-current.
The Group classifies an asset as current when it:
- Expects to realize the asset, or intends to sell or consume it, in its normal operating cycle
- Holds the asset primarily for the purpose of trading
• Expects to realize the asset within twelve months after the reporting period
All other assets are classified as non-current.
The Group classifies a liability as current when it:
- Expects to settle the liability in its normal operating cycle
- Holds the liability primarily for the purpose of trading
- Is due to be settled within twelve months after the reporting period
All other liabilities are classified as non-current.
Revenue from contracts with customers
Revenue from contracts with customers is recognized when control of the services is transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those services. The Group has generally concluded that it is the principal in its revenue arrangements, because it typically controls the services before transferring them to the customer.
Revenue from sale of services
The Group recognizes revenue from rendering of services over time, because the customer simultaneously receives and consumes the benefits provided by the Group. The Group recognizes revenue over time by measuring the progress towards complete satisfaction of the services, using either an input or output method. The method applied is the one that most faithfully depicts our progress towards complete satisfaction of the performance obligation.
Income tax
The tax expense consists of the tax payable and changes to deferred tax. Deferred tax/tax assets are calculated on all differences between the book value and tax value of assets and liabilities, except for:
• Temporary differences linked to goodwill that are not tax deductible
• Temporary differences related to investments in subsidiaries, associates, or joint ventures when the Group controls when the temporary differences are to be reversed and this is not expected to take place in the foreseeable future.
Deferred tax assets are recognized when it is probable that the company will have a sufficient profit for tax purposes in subsequent periods to utilize the tax asset. The companies recognize previously unrecognized deferred tax assets to the extent it has become probable that the company can utilize the deferred tax asset. Similarly, the company will reduce a deferred tax asset to the extent that the company no longer regards it as probable that it can utilize the deferred tax asset.
Deferred tax and deferred tax assets are measured based on the expected future tax rates applicable to the companies in the Group where temporary differences have arisen.
Deferred tax and deferred tax assets are recognized at their nominal value and classified as non-current asset investments (long-term liabilities) in the balance sheet.
Taxes payable and deferred taxes are recognized directly in equity to the extent that they relate to equity transactions.
Development expenses
Expenses relating to development activities are capitalized to the extent that the product or process is technically and commercially viable and the Group has sufficient resources to complete the development work. Expenses that are capitalized include the costs of materials, direct wage costs and a share of the directly attributable common expenses. Capitalized development costs are recognized at their cost less accumulated amortization and impairment losses.
Amortization of the asset begins when development is complete, and the asset is available for use.
The development expenses are assessed annually for impairment or for a reversal of previous impairments.
Tangible assets
Tangible assets, except for investment property and buildings, are valued at their cost less accumulated depreciation and impairment losses. When assets are sold or disposed of, the carrying amount is derecognized and any gain or loss is recognized in the statement of comprehensive income.
The depreciation period and method are assessed each year. A residual value is estimated at each yearend, and changes to the estimated residual value are recognized as a change in an estimate.
The tangible assets are assessed annually for impairment or for a reversal of previous impairments.
Leases
Identifying a lease
At the inception of a contract, The Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration.
The Group as a lessee
Recognition of leases and exemptions
At the lease commencement date, the Group recognizes a lease liability and corresponding right-ofuse asset for all lease agreements in which it is the lessee, except for the following exemptions applied:
- Short-term leases (defined as 12 months or less)
- Low value assets
For these leases, the Group recognizes the lease payments as other operating expenses in the statement of profit or loss when they incur.
Lease liabilities
The lease liability is recognized at the commencement date of the lease. The Group measures the lease liability at the present value of the lease payments for the right to use the underlying asset during the lease term that are not paid at the commencement date. The lease term represents the non-cancellable period of the lease, together with periods covered by an option either to extend or to terminate the lease when the Group is reasonably certain to exercise this option.
The lease payments included in the measurement comprise of:
- Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable
- Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date
- Amount expected to be payable by the Group under residual value guarantees
- Payments of penalties for terminating the lease, if the lease term reflects the Group exercising an option to terminate the lease.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications, or to reflect adjustments in lease payments due to an adjustment in an index or rate.
The Group does not include variable lease payments in the lease liability. Instead, the Group recognizes these variable lease expenses in profit or loss. The Group presents its lease liabilities as separate line items in the statement of financial position.
Right-of-use assets
The Group measures the right-of use asset at cost, less any accumulated depreciation and impairment losses, adjusted for any remeasurement of lease liabilities. The cost of the right-of-use asset comprise:
- The amount of the initial measurement of the lease liability recognized
- Any lease payments made at or before the commencement date, less any incentives received
- Any initial direct costs incurred by the Group. An estimate of the costs to be incurred by the Group in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories.
The Group applies the depreciation requirements in IAS 16 Property, Plant and Equipment in depreciating the right-of-use asset, except that the right-of-use asset is depreciated from the commencement date to the earlier of the lease term and the remaining useful life of the right-of-use asset.
Intangible assets
Intangible assets that have been acquired separately are carried at cost. The costs of intangible assets acquired through an acquisition are recognized at their fair value in the Group's opening balance sheet. Capitalized intangible assets are recognized at cost less any amortization and impairment losses.
Internally generated intangible assets, excluding capitalized development costs, are not capitalized but are expensed as occurred.
The economic life is either definite or indefinite. Intangible assets with a definite economic life are amortized over their economic life and tested for impairment if there are any indications. The amortization method and period are assessed at least once a year. Changes to the amortization method and/ or period are accounted for as a change in estimate.
Intangible assets with an indefinite economic life are tested for impairment at least once a year, either individually or as a part of a cash-generating unit. Intangible assets with an indefinite economic life are not amortized. The economic life is assessed annually
about whether the assumption of an indefinite economic life can be justified. If it cannot, the change to a definite economic life is made prospectively.
Patents
Amounts paid for patents are capitalized and amortized in a straight line over the expected useful lifetime.
Public grants
Government grants are recognized when it is reasonably certain that the company will meet the conditions stipulated for the grants and that the grants will be received. Operating grants are recognized systematically during the grant period. The grants are recognized when the conditions from the grantor are met and accrued in step with the implementation of the grant-eligible activities.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
The Group´s financial assets are cash and cash equivalents.
The Group classified its financial assets in one category, financial assets at amortized cost.
Financial assets at amortized cost
The Group measures financial assets at amortized cost if both of the following conditions are met:
- The financial asset is held within a business model with the objective to hold financial assets to collect contractual cash flows and,
- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding
Financial liabilities
Financial liabilities are classified, at initial recognition, as loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. Derivatives are recognized initially at fair value. Loans, borrowings, and payables are recognized at fair value net of directly attributable transaction costs.
Derivatives are financial liabilities when the fair value is negative, accounted for similarly as derivatives as assets.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit or loss.
Payables are measured at their nominal amount when the effect of discounting is not material.
Cash and cash equivalents
Cash includes cash in hand and at bank. Cash equivalents are short-term liquid investments that can be immediately converted into a known amount of cash and have a maximum term to maturity of three months.
In the statement of cash flows, the overdraft facility is stated minus the balance of cash and cash equivalents.
Equity
Equity and liabilities
Financial instruments are classified as liabilities or equity in accordance with the underlying economic realities.
Costs of equity transactions
Transaction costs directly related to an equity
transaction are recognized directly in equity after deducting tax expenses.
Employee benefits
Defined contribution plans
The Group's companies have made contributions to local pension plans. These contributions have been made to the pension plan for full-time employees. The pension premiums are charged to expenses as they are incurred.
Events after the reporting period
New information on the company's financial position at the end of the reporting period which becomes known after the reporting period is recorded in the annual accounts. Events after the reporting period that do not affect the company's financial position at the end of the reporting period, but which will affect the company's financial position in the future are disclosed if significant.
Notes to the Financial Statements (consolidated)
Note 1 - Significant accounting judgement, estimates and assumptions
In the process of applying the Group's accounting policies according to IFRS, management has made several judgements and estimates. All estimates are assessed to the most probable outcome based on the managements best knowledge. Changes in key assumptions may have significant effect and may cause material adjustments to the carrying amounts of assets and liabilities, equity and the profit for the year.
The company's most important accounting estimates are the following items:
• Depreciation of tangible and intangible fixed assets.
- Machinery and equipment development and assessment of lifetime.
- Leases determining the lease term of contracts with renewal options.
- Deferred conditional payments best estimate of the expenditure required to settle the obligation at the reporting date, reflecting the current market assessments of the time value of money and risks specific to the liability.
Depreciation of tangible and intangible fixed assets
The Group applies the depreciation requirements in IAS 16 Property, Plant and Equipment in depreciating the right-of-use asset, except that the right-of-use asset is depreciated from the commencement date to the earlier of the lease term and the remaining useful life of the right-of-use asset.
All leases are balanced with the right-of-use asset and corresponding lease obligation, unless they are considered immaterial.
The depreciation period and method are assessed each year. A residual value is estimated at each year-end, and changes to the estimated residual value are recognized as a change in an estimate.
Intangible assets include cost related to research and development of new Heatcubes in addition to acquired patents and application for patents. Intangible assets are carried at cost, and recognized at their fair value. The economic life is either definite or indefinite. The management assesses the amortization method and period at least once a year.
The intangible assets are assessed annually for impairment or for a reversal of previous impairments. The patents in use are depreciated over the useful lifetime.
Machinery and equipment
Development of the Heatcube at Norbis Park (NJV) was completed with commercial handover in August 2023. The asset has been assessed and has an expected useful lifetime of 25 years. The Heatcube is assessed annually for impairment.
The Heatcube is an innovative product consisting of a number of components that have a lifespan significantly longer than 25 years. The product has only been in operation for about 6 months, and there is thus little experience with the final product. Over time, management will gain experience with the nature of the product and assess whether certain components have a shorter lifespan. The management has made an overall assessment of the product to have a lifespan of 25 years.
Leases
The group has several offices and other facilities leases with options to extend the lease agreements. The renewal options have been included in the calculation of the lease liability if management is reasonably certain to exercise the option to renew the contract.
Management has used judgment when considering all relevant factors that create an economic incentive to extend the lease. In this assessment Management has considered the original lease term and the significance of the underlying assets, i.e. the offices and other facilities.
Deferred conditional payments
As part of the purchase agreement for the purchase of the subsidiary Kyoto Technology Spain S.L., a deferred payment has been agreed based on the number of sales generated from Spain. The seller of the company in Spain is now employed in the Spanish subsidiary, and the management has settled a deferred payment with shares in Kyoto Group AS.
Note 2 - Segment Information
Kyoto Group is still in a growth phase as per 31 December 2023. The company has finalized the project and development of the Heatcube with commercial handover in August 2023. Development is still the main segment of the group's strategy.
Development costs are considered to fulfil the criteria for capitalization in accordance with IAS 38, and are expected to provide a future financial benefit. Ongoing projects are related to following generations of Heatcubes that are under development and includes both hardware development and software development.
Please see note 7 and 9 for further information about intangible assets and property, plant and equipment.
Note 3 - Revenue and lease income from contracts with customers
Disaggregated revenue and lease income information
The Group's revenue from contracts with customers has been disaggregated and presented in the tables below:
| 2023 | 2022 |
|---|---|
| 49 910 | 0 |
| 0 | 26 860 |
| 49 910 | 26 860 |
| 49 910 | 0 |
| 0 | 26 860 |
| 49 910 | 26 860 |
| 0 | 26 860 |
| 0 | 26 860 |
Sale of services (Installation services)
The Group provide service agreements related to the Heatcube. The Group has determined that installation services should be accounted for as a separate performance obligation as the services are separately identifiable. The performance obligation is satisfied over time because the customer simultaneously receive benefits provided by the Group. The Group recognises revenue on the basis of the labour hours incurred relative to the total expected labour hours to complete the installation.
Lease income
Lease income are related to the Heatcube in Denmark, which was completed with a commercial handover in August 2023. According to the agreement, income are based on a fixed monthly fee and performance of Heatcube.
The lease agreement is considered to be an operational lease agreement. Kyoto bears the risk for the facility, and takes care of maintenance and physical operation. Kyoto is responsible for dismantling the facility at the end of the leasing period.
Note 4 - Salary and personnel expense and management remuneration
| 2023 | 2022 | |
|---|---|---|
| Salaries and holiday pay | 2 730 054 | 2 252 237 |
| Social security cost | 654 336 | 392 549 |
| Board remuneration | 31 137 | 118 174 |
| Share-based payment expenses | 158 064 | 334 966 |
| Severance payment | 44 574 | -114 968 |
| Pension costs defined contribution plans | 112 189 | 100 121 |
| Other personnel costs | 14 084 | 111 512 |
| Total salaries and personnel expense | 3 744 438 | 3 194 591 |
| The number of man-years that has been employed during the financial year: | 33,2 | 20,9 |
| Norway | 21,1 | 16,2 |
| Denmark | 0,3 | 1,0 |
| Spain | 11,8 | 3,8 |
Management remuneration
The management team consists of the group directors, who are all employed by the parent company.
| Board remuneration |
Salary | Other benefits |
Benefits in kind |
Total remuneration |
|
|---|---|---|---|---|---|
| Management | |||||
| Chief Executive Officer | 230 310 | 1 013 | 231 323 | ||
| Management Team | 1 173 463 | 7 096 | 6 051 | 1 186 610 | |
| Board of Directors | 31 137 | 31 137 | |||
| Total remuneration | 31 137 | 1 403 773 | 8 109 | 6 051 | 1 449 070 |
The company maintain an occupational pension scheme under the Mandatory Occupational Pensions Act. Kyoto Group has a defined contribution pension scheme and it satisfies the requirements of this Act. There are 22 people included in the pension scheme as of 31.12.2023. Total pension expenses in 2023 was EUR 112 189.
The current CEO is entitled to 6 months severence payment based on the annual base salary. Severance payment does not qualify for pension, nor for any holiday compensation pay or other benefits. No member of the management team has received remuneration or economical benefits from other companies in the group, other than what is stated above. No additional remuneration has been given for services outside the normal functions.
Certain employees and members of the board of directors have received share options through Share option programmes. The share option plan is further presented in note 5.
Note 5 - Share and option programmes
Subscription of shares for key personell
By subscription of shares through this model, the shares are subscribed for in a discounted price. At the subscription, the market value of the shares is considered to be the volume weighted average of the listed share price for the company's shares on Euronext Growth on the last trading day prior to the employee's subscription of shares. The residual amount between the subscription market value of the shares and the discounted price, with the addition of any interest calculated, constitutes an unconditional, deferred consideration for the shares to be paid to the company. The residual amount constitutes a receivable for the company against the employee, and it is interest bearing from the time of subscription, with an interest rate corresponding to the standard interest rate applicable according to the rules on subsidised loans under employment in the Norwegian Taxation Act section 5-12(4). The interest is calculated annually as of 31 January, and paid in arrears on 31 January of the following year, and no later than at the due date of the residual amount. As security for the residual Amount, Kyoto Group AS shall have the best available collateral in the employees shares.
Prior to 2022, Kyoto had different terms for the subscription programme agreements than those that apply now. Among other things, the residual amount was not unconditional, and thus did not fulfill the requirements for balance sheet entry. At 31.12.2023, the residual amount in balance sheet is EUR 141 653, and presented as other non-current assets in the consolidated financial statement. The residual amount comes exclusively from the subscription programme agreements in 2022 under the new conditions.
The residual amount is due for payment upon the earlier of:
- (i) 25 August 2025
- (ii) the employee's settlement on the sale of the shares
- (iii) the company's exercise of the right of purchase
As at 31.12.2023, 8 employees were included in the subscription programme, and the following was in hands of the management team;
| Name | Purchase date | Purhase price | Shares | Paid (NOK) | Rest (NOK) |
|---|---|---|---|---|---|
| Cuare Invest AS, Camilla Nilsson (CEO) | 01.02.2021 | 25 | 50 000 | 187 500 | 1 062 500 |
| Bjarke Buchbjerg | 25.02.2022 | 16,5 | 25 000 | 61 875 | 350 625 |
| Agnieszka Sledz | 25.02.2022 | 16,5 | 25 000 | 61 875 | 350 625 |
| Henrik Holck-Clausen | 25.02.2022 | 16,5 | 25 000 | 61 875 | 350 625 |
| Tim de Haas | 25.02.2022 | 16,5 | 25 000 | 61 875 | 350 625 |
| 150 000 | 435 000 | 2 465 000 |
Share option programme - Board members
In March 2021, Kyoto Group AS approved issuance of up to 300 000 share options, whereby up to 150 000 share options may be issued to the board members. One option grants the holder the right to acquire one share in the company. The subscription price per share shall equal the subscription price per share in the Private Placement, plus 10%. The options may be exercicised between 1 July 2022 and 15 May 2024.
On 1 July 2022, the Chairman of the Board and two board members were granted the share options:
| Opening balance 2023 |
Granted | Forfeited | Exercised | Ending balance 2023 |
|
|---|---|---|---|---|---|
| Eivind Reiten (Chairman of the Board) | 64 000 | 0 | 0 | 0 | 64 000 |
| Hans Olav Kvalvaag (Board member) | 32 000 | 0 | 0 | 0 | 32 000 |
| Thorleif Enger (Board member) | 32 000 | 0 | 0 | 0 | 32 000 |
| Total | 128 000 | 0 | 0 | 0 | 128 000 |
The fair value of the options is set on the grant date and expensed over the vesting period. EUR 30 315 have been expensed in 2023 (EUR 48 634 in 2022). The fair value of options granted in 2022 was NOK 6,66 per option.
No options were forfeited or exercised during 2023. The outstanding options are subject to the following conditions:
| Expiry date | Average strike price (NOK) | Number of share options |
|---|---|---|
| 15 May 2024 | 19,18 | 128 000 |
| 19,18 | 128 000 |
Share price on the grant date
The share price is set to the stock exchange price on the grant date.
Volatility
It is assumed that historic volatility is an indication of future volatility. The expected volatility is therefore stipulated to be the same as the historic volatility, which equals a volatility of 62,3%.
The term of the option
It is assumed that 100 % of the holders will exercise the options once they are exercisable. The options are expected to have a term of two years.
Dividend
Dividend is not considered in this share option programme.
Risk-free interest rate
The risk-free interest rate is set equal to the interest rate on government bonds during the term of the option, i.e. 3,95% for 2023.
Share option programme - Employees and other leading personell
In June 2023, Kyoto Group AS approved issuance of up to 250 000 share options. The options may be exercicised between 21 June 2023 and 21 June 2025.
There are 15 employees who have been granted options according to the programme. Employees in leading positions:
| Number of options | |||||
|---|---|---|---|---|---|
| Opening balance 2023 |
Granted | Forfeited | Exercised | Ending balance 2023 |
|
| Camilla Nilsson (CEO) | 0 | 100 000 | 0 | 0 | 100 000 |
| Håvard Haukdal (CFO) | 0 | 25 000 | 0 | 0 | 25 000 |
| Susanne Vinje | 0 | 25 000 | 0 | 0 | 25 000 |
| Total | 0 | 150 000 | 0 | 0 | 150 000 |
The fair value of the options is set on the grant date and expensed until 21 June 2025. EUR 201 045 have been expensed in 2023. The fair value of options granted in 2023 was NOK 7.7 per option.
No options were forfeited or exercised during 2023. The outstanding options are subject to the following conditions:
| Expiry date | Average strike price (NOK) | Number of share options |
|---|---|---|
| 21 June 2025 | 16,48 | 240 000 |
| 16,48 | 240 000 |
Share price on the grant date
The share price is set to the stock exchange price on the grant date.
Volatility
It is assumed that historic volatility is an indication of future volatility. The expected volatility is therefore stipulated to be the same as the historic volatility, which equals a volatility of 70%.
The term of the option
It is assumed that 100 % of the holders will exercise the options once they are exercisable. The options are expected to have a term of two years.
Dividend
Dividend is not considered in this share option programme.
Risk-free interest rate
The risk-free interest rate is set equal to the interest rate on government bonds during the term of the option, i.e. 3.95% for 2023.
Share option programme - Sale based
In August 2022, Kyoto Group AS acquired 100% of the voting shares in Kyoto Technology Spain S.L. for EUR 100 000. The acquisition was financed in cash consideration of EUR 100 000, and by a deferred consideration described below.
In addition to the cash consideration, it is agreed a conditional deferred payment for the shares upon the satisfaction of specific milestones on terms and conditions. The conditional deferred payment shall equal 1% of the sales price of each Heatcube sold by Kyoto Technology Spain S.L. until 31 December 2025, but maximum EUR 5,000,000 in total. The deferred payment will be settled by granting the seller options to subscribe for new shares in Kyoto Group AS. The deferred payment is therefore treated as a share based expense in accordance with IFRS 2. The expense is accrued over the period of 31 May 2022 to 31 December 2025.
To calculate the fair value of the estimated consideration per Heatcube sale at the time of allocation, the estimated price per Heatcube is discounted with a required rate of return. The interest rate requirement takes into account the uncertainty related to future sales price and time value. The discount rate is set at 8%.
Note 6 - Public grants
Innovation Norway
In 2023 Kyoto Group AS received a government grant from Innovation Norway in relation to a Heatcube project. Grants related to project cost that is capitalized is presented as deferred income in the Balance Sheet, while grants related to expensed items are treated as cost reduction.
The grant from Innovation Norway in 2023 amounts to EUR 301 442.
Tax Rebate - SkatteFUNN
In 2023 Kyoto Group AS received a government grant from the Norwegian SkatteFUNN scheme in relation to a Heatcube project. Grants related to project cost that is capitalized is presented as deferred income in the Balance Sheet, while grants related to expensed items are treated as cost reduction.
The grant from SkatteFUNN in 2023 amounts to EUR 422 579.
| Short-term receivables | 2023 | 2022 |
|---|---|---|
| SkatteFUNN | 422 579 | 371 089 |
European Union
In 2023, Kyoto has been granted support for a four-year development project from the European Union. First instalment was received in december 2023, with an amount of EUR 144 990.
| Short-term liabilities | 2023 | 2022 |
|---|---|---|
| Deferred income | 144 990 | 0 |
Note 7 - Intangible assets
| Development costs |
Patents | 2022 Total |
|
|---|---|---|---|
| Acquisition cost as of 1 January 2022 | 1 038 859 | 1 038 859 | |
| Additions | 1 773 460 | 127 000 | 1 900 460 |
| Accumulated depreciation and impairment | -310 522 | -100 402 | -410 924 |
| Carrying value as of 31 December 2022 | 2 501 797 | 26 598 | 2 528 395 |
| Development costs |
Patents | 2023 Total |
|
|---|---|---|---|
| Acquisition cost as of 1 January 2023 | 2 812 319 | 127 000 | 2 939 319 |
| Additions | 1 450 292 | 13 825 | 1 464 117 |
| Acquisition cost as of 31 December 2023 | 4 262 611 | 140 825 | 4 403 436 |
| Accumulated depreciation and impairment as of 1 January 2023 | 310 522 | 100 402 | 410 924 |
| Depreciation and impairment of the year | 3 539 | 3 539 | |
| Accumulated depreciation and impairment as of 31 December 2023 | 310 522 | 103 941 | 414 463 |
| Carrying value as at 31 December 2023 | 3 952 089 | 36 884 | 3 988 973 |
| Economic life | 8 years | ||
| Depreciation method | Linear |
Investments in development is a key part of Kyoto Group's strategy.
Capitalized costs related to projects are considered to fulfil the criteria for capitalization in accordance with IAS 38, and are expected to provide a future financial benefit. Those costs are related to development of the new generation heatcube, which includes both development of hardware and software.
Costs that are related to research are expensed while costs that are related to concrete technology development are capitalized.
Development expenses are capitalized at acquisition cost. In the event of significant impairment, capitalized development costs have been written down when impairment is due to reasons that cannot be expected to be temporary and must be considered necessary in accordance with generally accepted accounting principles.
Total capitalized development cost in the fiscal year 2023 amounts to EUR 1 450 292 and EUR 132 683 are recognized as cost in the consolidated statement of comprehensive income.
The patents in use are issued by the Spanish Patent and Trademark Office in April 2020, with a term of the utility model to be ten years from the date of issue. These patents was acquired by Kyoto in 2022 and are depreciated over the remaining useful life of 8 years.
In addition, Kyoto is developing new patents and file application for patents. The cost related to this is capitalized.
Kyoto applies the method Technology readiness level for segregating between research and development. Level 1 – 4 (from basic principles observed - technology validated in lab) are considered to be related to research and expensed. Expenses incurred related to activities after level 4 are considered to be development cost and capitalized in the Balance Sheet.
Note 8 - Leases
The Group as a lessee
Right-of-use assets
The Group leases several assets such as offices and other facilities, machinery and equipment. The Group's right-of-use assets are categorised and presented in the table below:
| Right-of-use assets | Property | Non-property | Total |
|---|---|---|---|
| Acquisition cost 1 January 2022 | 236 563 | 108 164 | 344 727 |
| Addition of right-of-use assets | 628 420 | 15 647 | 644 067 |
| Disposals | -229 042 | -229 042 | |
| Currency exchange differences | -945 | -5 401 | -6 346 |
| Acquisition cost 31 December 2022 | 634 996 | 118 410 | 753 406 |
| Accumulated depreciation and impairment 1 January 2022 | 225 208 | 7 546 | 232 755 |
| Depreciation | 161 766 | 30 313 | 192 079 |
| Disposals | -229 042 | -229 042 | |
| Currency exchange differences | -12 900 | -1 540 | -14 440 |
| Accumulated depreciation and impairment 31 December 2022 | 145 033 | 36 319 | 181 352 |
| Carrying amount of right-of-use assets 31 December 2022 | 489 963 | 82 091 | 572 053 |
| Lower of remaining lease term or economic life | 1-2 years | 3 years | |
| Depreciation method | Linear | Linear |
| Right-of-use assets | Property | Non-property | Total |
|---|---|---|---|
| Acquisition cost 1 January 2023 | 634 996 | 118 410 | 753 406 |
| Disposals | -61 236 | -102 763 | -163 999 |
| Transfers and reclassifications | 154 156 | 154 156 | |
| Currency exchange differences | 18 497 | 18 497 | |
| Acquisition cost 31 December 2023 | 746 412 | 15 647 | 762 059 |
| Accumulated depreciation and impairment 1 January 2023 | 145 033 | 36 319 | 181 352 |
| Depreciation | 210 481 | 4 922 | 215 403 |
| Disposals | -39 404 | -35 848 | -75 251 |
| Transfers and reclassifications | -14 786 | -14 786 | |
| Currency exchange differences | 4 608 | 4 608 | |
| Accumulated depreciation and impairment 31 December 2023 | 305 932 | 5 394 | 311 325 |
| Carrying amount of right-of-use assets 31 December 2023 | 440 481 | 10 253 | 450 734 |
| Lower of remaining lease term or economic life | 1 year | 2 years | |
| Depreciation method | Linear | Linear |
Lease liabilities
| Undiscounted lease liabilities and maturity of cash outflows | Total |
|---|---|
| Less than 1 year | 0 |
| 1-2 years | 558 068 |
| 2-3 years | 57 667 |
| 3-4 years | 0 |
| 4-5 years | 0 |
| More than 5 years | 0 |
| Total undiscounted lease liabilities at 31 December 2022 | 615 735 |
| Undiscounted lease liabilities and maturity of cash outflows | Total |
|---|---|
| Less than 1 year | 333 575 |
| 1-2 years | 133 044 |
| 2-3 years | 15 923 |
| 3-4 years | 0 |
| 4-5 years | 0 |
| More than 5 years | 0 |
| Total undiscounted lease liabilities at 31 December 2023 | 482 542 |
| Summary of the lease liabilities | Total |
|---|---|
| At initial application 01.01.2022 | 116 990 |
| Net new lease liabilities recognised in the year | 681 617 |
| Cash payments for the principal portion of the lease liability | -199 319 |
| Interest expense on lease liabilites | 19 892 |
| Currency exchange differences | -30 694 |
| Total lease liabilities at 31 December 2022 | 588 486 |
| Current lease liabilities | 290 104 |
| Non-current lease liabilities | 298 383 |
| Total lease liabilities | 588 487 |
| Summary of the lease liabilities | Total |
| At initial application 01.01.2023 | 588 487 |
| Transfers and reclassifications | 154 156 |
| Cash payments for the principal portion of the lease liability | -284 356 |
| Interest expense on lease liabilites | 12 067 |
| Currency exchange differences | 696 |
| Total lease liabilities at 31 December 2023 | 471 050 |
| Current lease liabilities | 237 023 |
| Non-current lease liabilities | 234 027 |
| Total lease liabilities | 471 050 |
The leases do not contain any restrictions on the Group's dividend policy or financing. The Group does not have significant residual value guarantees related to its leases to disclose.
| Summary of other lease expenses recognised in profit or loss | 2022 |
|---|---|
| Variable lease payments expensed in the period | 79 034 |
| Operating expenses in the period related to short-term leases (including short-term low value assets) | 55 485 |
| Operating expenses in the period related to low value assets (excluding short-term leases included above) | 31 117 |
| Total lease expenses included in other operating expenses | 134 519 |
| Summary of other lease expenses recognised in profit or loss | 2023 |
| Variable lease payments expensed in the period | 29 280 |
| Operating expenses in the period related to short-term leases (including short-term low value assets) | |
| Operating expenses in the period related to low value assets (excluding short-term leases included above) | |
| 34 917 |
Practical expedients applied
The Group also leases personal computers, IT equipment and machinery with contract terms up to 3 years. The Group has elected to apply the practical expedient of low value assets for some of these leases and does not recognise lease liabilities or right-of-use assets. The leases are instead expensed when they incur. The Group has also applied the practical expedient to not recognise lease liabilities and right-of-use assets for short-term leases, presented in the table above.
Variable lease payments
In addition to the lease liabilities above, the Group is committed to pay variable lease payments for some of their leases. The variable lease payments are expensed as incurred.
Extension options
Kyoto Group's lease agreements of buildings involves a right of renewal which may be exercised during the last period of the lease. The Group assesses at the commencement whether it is reasonably certain to exercise the renewal right.
Purchase options
The Group leases machinery and equipment with lease terms of up to 3 years. Some of these contracts includes a right to purchase the assets at the end of the contract term. The Group assesses at the commencement whether it is reasonably certain to exercise the purchase option.
Note 9 - Property, plant and equipment
| Equipment | Machinery | Construction in progress |
Total | |
|---|---|---|---|---|
| Acquisition cost as of 1 January 2022 | 8 139 | 2 141 984 | 2 150 123 | |
| Additions | 3 783 306 | 3 783 306 | ||
| Impairment | -8 139 | -8 139 | ||
| Acquisition cost as of 31 December 2022 | 0 | 0 | 5 925 290 | 5 925 290 |
| As at 1 January 2022 | ||||
| Acquisition cost | 8 139 | 2 141 984 | 2 150 123 | |
| Additions | 3 783 306 | 3 783 306 | ||
| Accumulated depreciation and impairment | -8 139 | -8 139 | ||
| Carrying amount as of 31 December 2022 | 0 | 0 | 5 925 290 | 5 925 290 |
| Equipment | Machinery | Construction in progress |
Total | |
|---|---|---|---|---|
| Acquisition cost as of 1 January 2023 | 0 | 0 | 5 925 290 | 5 925 290 |
| Additions | 47 768 | 2 281 841 | 2 329 609 | |
| Reclassification | 5 925 290 | -5 925 290 | 0 | |
| Acquisition cost as of 31 December 2023 | 47 768 | 8 207 131 | 0 | 8 254 899 |
| Accumulated depreciation and impairment as of 1 January 2023 |
||||
| Depreciation and impairment of the year | 3 051 | 109 428 | 0 | 112 479 |
| Accumulated depreciation and impairment as of 31 December 2023 |
3 051 | 109 428 | 0 | 112 479 |
| Carrying amount as of December 31 2023 | 44 717 | 8 097 703 | 0 | 8 142 420 |
| Economic useful life | 3-5 years | 25 years | ||
| Depreciation method | Linear | Linear |
The construction in progress refers to the development and commissioning of the Heatcube at Norbis Park(NJV), that was completed with commercial handover in August 2023. The Heatcube is estimated to have a useful lifetime of 25 years, and has been depreciated from September 2023.
Note 10 - Other Operating Expenses
| Other operating expenses | 2023 | 2022 |
|---|---|---|
| Advertising | 72 660 | 328 475 |
| Rental and leasing costs | 64 197 | 134 519 |
| Travel costs | 212 443 | 170 804 |
| Consultancy fees and external personnel | 2 545 755 | 2 402 969 |
| Office expenses | 252 832 | 264 531 |
| Other employee benefits | 223 218 | 145 439 |
| Total operating expenses | 3 371 105 | 3 446 736 |
| Specification auditor's fee | 2023 | 2022 |
|---|---|---|
| Statutory audit | 113 962 | 87 962 |
| Other non-assurance services | 33 131 | 9 956 |
| Total | 147 094 | 97 919 |
VAT is not included in the fees specified above.
Note 11 - Financial income and expenses
| Fincancial income | 2023 | 2022 |
|---|---|---|
| Interest on loans and receivable | 7 860 | 339 |
| Foreign exchange gains | 175 715 | 66 713 |
| Other financial income | 227 | 371 |
| Total financial income | 183 801 | 67 423 |
| Fincancial expenses | 2023 | 2022 |
|---|---|---|
| Interest of lease liabilities | 12 067 | 19 892 |
| Foreign exchange losses | 67 656 | 15 362 |
| Other financial expenses | 23 901 | 1 752 |
| Total financial expenses | 103 625 | 37 006 |
Note 12 - Tax expense
The tax effect of temporary differences and loss to be carried forward that has formed the basis for deferred tax expense and deferred tax income, specified on type of temporary differences:
| 2023 | 2022 | Change |
|---|---|---|
| -146 132 | -399 902 | -253 770 |
| -315 662 | -259 792 | 55 870 |
| -461 795 | -659 694 | -197 900 |
| -20 591 799 | -14 096 852 | 6 494 947 |
| -21 053 594 | -14 756 546 | 6 297 047 |
| 21 053 594 | 14 756 546 | -6 297 047 |
| 0 | 0 | 0 |
| 0 | 0 | 0 |
Deferred tax is not included in the balance sheet as the requirements for capitalization are not fulfilled.
| Taxable income | 2023 | 2022 |
|---|---|---|
| Profit/loss (-) | -7 316 878 | -7 187 053 |
| Permanent differences | 591 520 | -13 778 |
| Changes in temporary differences | -197 900 | 579 421 |
| Foreign currency impact | 428 311 | -39 153 |
| Taxable income | -6 494 947 | -6 660 563 |
(*) Kyoto Technology ApS had a positive taxable income of EUR 11 367 in 2023. Tax expense and payable tax (22%) amounts to EUR 2 500.
| Income tax expense | 2023 | 2022 |
|---|---|---|
| Payable tax (22%) (*) | 2 500 | 0 |
| Changes in deferred tax assets | 0 | 0 |
| Total tax expense (*) | 2 500 | 0 |
| Calculation of effective tax rate | 2023 | 2022 |
|---|---|---|
| Profit/loss (-) | -7 316 878 | -7 187 053 |
| Calculated tax on profit before tax (22%) | -1 609 713 | -1 581 152 |
| Tax effect of permanent differences | 130 134 | -3 031 |
| Change in deferred tax not included in the balance sheet | 1 385 350 | 1 592 796 |
| Other differences | 96 728 | -8 614 |
| Total | 2 500 | 0 |
| Effective tax rate | 0% | 0% |
Note 13 - Earnings per share
The basic earnings per share are calculated as the ratio of the profit for the year that is due to the shareholders of the parent of EUR -7 319 378 (EUR -7 187 053 in 2022) divided by the weighted average number of ordinary shares outstanding, 16 610 959 (8 420 560 in 2022).
When calculating the diluted earnings per share, the profit that is attributable to the ordinary shareholders of the parent and the weighted average number of ordinary shares outstanding are adjusted for all the dilution effects relating to share options. In the calculations, share options are assumed to have been converted/ exercised on the first date in the fiscal year.
Share options issued this year are assumed to be converted/ exercised at the date of issue/ grant date. The dilution effect on share options are calculated as the difference between average fair value in an active market and the sum of not recognised cost portion of the options.
| Profit for the year due to holders of ordinary shares | 2023 | 2022 |
|---|---|---|
| Profit/loss (-) | -7 319 378 | -7 187 053 |
| Profit for the year due to the holders of ordinary shares | -7 319 378 | -7 187 053 |
| Average number of shares outstanding (Note 17) | 2023 | 2022 |
| Effect of dilutive potential ordinary shares: | ||
| Ordinary shares | 16 610 959 | 8 420 560 |
| Share options | 368 000 | 128 000 |
| Diluted average number of shares outstanding | 16 978 959 | 8 548 560 |
| Earnings per share: | ||
| - Basic | -0,52 | -0,85 |
| - Diluted | -0,52 | -0,85 |
Note 14 - Other current and non-current assets
| Other non-current assets | 2023 | 2022 | |
|---|---|---|---|
| Receivables on subscription programme | Reference to note 17 | 141 653 | 147 294 |
| Long-term deposit | 42 617 | 45 563 | |
| Total other non-current assets | 184 270 | 192 857 | |
| Other current assets | 2023 | 2022 | |
| Deposit | 35 970 | 27 107 | |
| Government Grants (SkatteFunn) | 422 579 | 371 089 | |
| VAT receivable | 211 798 | 312 864 | |
| Prepaid expenses | 234 397 | 10 938 | |
| Other current assets | 115 857 | 169 807 | |
| Total other current assets | 1 020 601 | 891 805 |
Note 15 - Long-term debt
| Carrying amount | ||||
|---|---|---|---|---|
| Effective interest rate | Maturity | 2023 | 2022 | |
| Secured | ||||
| Obligations under leases | 2025/2026 | 234 027 | 298 383 | |
| Deferred income (Tax rebate) | 320 720 | 249 666 | ||
| Loan from Innovation Norway | 1,70% | May 2024 | 0 | 228 271 |
| Total secured long-term debt | 554 747 | 776 320 |
Reference to note 26 for fair value evaluation of the liabilities.
In 2020, Kyoto Group AS received a loan of NOK 2 400 000 from Innovation Norway. The loan is treated as a serial loan and is to be repaid by May 2024. The loan is interest bearing with a nominal rate of 4,2% and a effective rate of 1,7% per year. The loan is free for installments for the first 15 terms and free of interest for the first 10 terms, with each term covering three months. The first payment was due in February 2023.
In 2023, the loan from Innvoation Norway has been reclassified to current liability.
Reference to note 6 for unearned income from the Tax Rebate - SkatteFUNN.
Note 16 - Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 31 December:
| 2023 | 2022 | |
|---|---|---|
| Bank deposit | 698 256 | 981 074 |
| Restricted funds deposited in the tax deduction account | 158 497 | 132 692 |
| Cash and cash equivalents in the balance sheet | 856 753 | 1 113 766 |
Note 17 - Share capital, shareholder information and dividend
| 2023 | 2022 | |
|---|---|---|
| Ordinary shares, nominal amount NOK 0,03 per share | 16 610 959 | 8 420 560 |
| Total number of shares | 16 610 959 | 8 420 560 |
All issued shares have equal voting rights and the right to receive dividend.
The 20 largest shareholders at 31.12.2023 are:
| Number of shares: | Ownership %: | |
|---|---|---|
| SPIRAX-SARCO ENGINEERING PLC | 2 489 580 | 14,99 |
| IBERDROLA * | 2 131 066 | 12,83 |
| KLAVENESS MARINE ** | 1 490 249 | 8,97 |
| VALINOR AS | 1 208 600 | 7,28 |
| ALTITUDE CAPITAL AS *** | 1 160 323 | 6,99 |
| KB MANAGEMENT AS | 900 760 | 5,42 |
| MØSBU AS | 816 457 | 4,92 |
| KONGSBERG INNOVASJON AS | 485 161 | 2,92 |
| CLEARSTREAM BANKING S.A. **** | 387 729 | 2,33 |
| ASIJU INVEST AS | 369 081 | 2,22 |
| Société Générale | 278 457 | 1,68 |
| AS CLIPPER | 272 285 | 1,64 |
| INTERTRADE SHIPPING AS | 240 000 | 1,44 |
| STELLA INDUSTRIER AS | 219 614 | 1,32 |
| OSLO IDEATION AS | 139 889 | 0,84 |
| CACEIS Bank Spain SA | 130 626 | 0,79 |
| UBS Switzerland AG | 128 224 | 0,77 |
| NORDNET LIVSFORSIKRING AS | 114 981 | 0,69 |
| U.S. Bank National Association **** | 99 200 | 0,60 |
| SKATTUM INVEST AS | 98 571 | 0,59 |
| Total owned by largest shareholders | 13 160 853 | 79.2 % |
| Other shareholders | 3 450 106 | 20,8 % |
| Total numbers of shares | 16 610 959 | 100,0 % |
* Iberdrola's investment vehichle Inversiones Financieras Perseo, S.L. represented through the nominee account in The Bank of New York Mellon SA/NV.
** Klaveness Marine shareholding includes the shareholding of KM New Energy AS and Klaveness Marine Finance AS.
*** Altitude Capital also includes the investment through the nominee account in DNB Bank ASA.
**** Investments by US-based Racon Capital Partners represented in two investment nominee accounts; Clearstream Banking S.A and U.S. Bank National Association.
Shares owned by leading personnel:
| Number of shares: | Ownership %: | |
|---|---|---|
| Asiju Invest AS, Arne Erik Kristiansen (Former board member) | 369 081 | 2,22% |
| Cuare Invest AS, Camilla Nilsson (CEO) | 50 000 | 0,30% |
| Agnieszka Sledz (Management team) | 42 142 | 0,25% |
| Henrik Holck-Clausen (Management team) | 29 285 | 0,18% |
| Bjarke Buchbjerg (Management team) | 26 428 | 0,16% |
| Tim de Haas (Management team) | 30 714 | 0,18% |
| Thoeng AS, Thorleif Enger (Board member) | 24 000 | 0,14% |
| Mocca Invest AS, Eivind Kristofer Reiten (Chairman of the board) | 9 040 | 0,05% |
Note 18 - Short-term loans and other payables
| Other non-current liabilities | Due date | 2023 | 2022 |
|---|---|---|---|
| Trade accounts payables | 808 204 | 1 909 334 | |
| Social security provision | 15/01/2024 | 150 876 | 97 604 |
| Tax payable | 20/11/2024 | 2 500 | 0 |
| Withheld tax on payroll | 15/01/2024 | 224 256 | 173 888 |
| Current lease liabilities | 237 023 | 290 104 | |
| Provision for holiday pay | 30/06/2024 | 270 245 | 185 044 |
| Provision for severance pay | 0 | 72 949 | |
| Loan from Innovation Norway | 30/06/2024 | 213 514 | 0 |
| Other current liabilities | 607 623 | 768 690 | |
| Total | 2 514 240 | 3 497 614 |
Trade payables are non-interest bearing and are normally settled on 30-day terms.
Note 19 - Reconciliation for liabilities arising from financing activities
Reconciliation of changes in liabilities arising from financing activities is shown in the tables below:
| 01.01.2022 | Cash flows | Fair values changes |
New leases | Interests | Change in exchange rate |
31.12.2022 | |
|---|---|---|---|---|---|---|---|
| Loan from Innovation Norway | 240 269 | -11 998 | 228 271 | ||||
| Lease liabilities | 116 991 | -199 319 | - | 681 617 | 19 892 | -30 694 | 588 487 |
| Total liabilities from financing activities |
357 260 | -199 319 | 0 | 681 617 | 19 892 | -42 692 | 816 758 |
| 01.01.2023 | Cash flows | Fair values changes |
New leases | Interests | Change in exchange rate |
31.12.2023 | |
|---|---|---|---|---|---|---|---|
| Loan from Innovation Norway | 228 271 | -14 758 | 213 514 | ||||
| Lease liabilities | 588 487 | -284 356 | 154 156 | 0 | 12 067 | 695 | 471 049 |
| Total liabilities from financing activities |
816 758 | -284 356 | 154 156 | 0 | 12 067 | -14 063 | 684 563 |
Note 20 - Financial instruments - Financial risk and management objectives and policies
The Group's principal financial liabilities comprise loans and borrowings, and trade and other payables. The main purpose of these financial liabilities is to finance the Group's operations. The Group's principal financial assets include trade receivables, cash and cash equivalents that derive directly from its operations.
The Group is exposed to market risk, credit risk and liquidity risk. The Group's senior management oversees the management of these risks. The Board of Directors reviews and agrees policies for managing market risk, credit risk, liquidity risk and equity price risk.
Market risk
Market risk is the risk that the future cash flows or fair value of a financial instrument will fluctuate because of changes in market prices. Market risk includes interest risk and currency risk. Financial instruments affected by market risk include loans and borrowings, deposits and debt.
Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's long-term debt obligations with floating rates.
Interest rate sensitivity
The company has a very low exposure to interest rate sensitivity, and see note 18 for loan conditions.
Foreign currency risk
Foreign currency risk is the risk that the future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group is exposed to changes in the value of EUR relative to other currencies, primarily to the Group`s operating activities (i.e. when revenue or expense is dominated in a foreign currency). Due to the low activity of the operations, the currency risk is assessed to be low.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to fulfill its financial obligation as they fall due. The Groups approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Groups reputation.
The table below sets out the maturity profile of the Groups for financial liabilities based on contractual undiscounted payments. When a counterparty has a choice of when an amount is paid, the liability is included on the basis of the earliest date on which the entity can be required to pay. Financial liabilities that can be required to be repaid on demand are included in the "within 1 year" column.
| Period left | |||||||
|---|---|---|---|---|---|---|---|
| 31.12.2022 | Less than 1 year |
1-2 years | 2-3 years | 3-4 years | More than 5 years |
Total | |
| Financial liabilities (non-derivatives) |
|||||||
| Loan from Innovation Norway | 228 271 | 228 271 | |||||
| Accounts payable | 1 909 334 | 1 909 334 | |||||
| Total | 1 909 334 | 228 271 | 0 | 0 | 0 | 2 137 605 |
| Period left | ||||||
|---|---|---|---|---|---|---|
| 31.12.2023 | Less than 1 year |
1-2 years | 2-3 years | 3-4 years | More than 5 years |
Total |
| Financial liabilities (non-derivatives) |
||||||
| Loan from Innovation Norway | 213 514 | 213 514 | ||||
| Accounts payable | 808 204 | 808 204 | ||||
| Total | 1 021 718 | 0 | 0 | 0 | 0 | 1 021 718 |
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities and from its financing activities, including deposits with banks and financial institutions. The credit risk is concidered low due to low activity and few outstanding receivables.
Capital management
For the purpose of the Group's capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders of the parent.
The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, issue new shares, or repay or issue new debt.
| 2023 | 2022 | |
|---|---|---|
| Interest-bearing loans and borrowings | 213 514 | 228 271 |
| Accounts payable | 808 204 | 1 909 334 |
| Unrestricted cash and cash equivalents | 856 753 | 1 113 766 |
| Net debt | 164 965 | 1 023 840 |
Net debt is calulated to determine the debt in relation to the Group's liquid assets.
| Equity | 11 651 262 | 6 977 091 |
|---|---|---|
| Total capital | 14 720 249 | 11 251 025 |
| Sum capital and net debt | 14 885 214 | 12 274 865 |
| Equity ratio | 79% | 62% |
Note 21 - Categories of financial assets and financial liabilities
| 31.12.2022 | Financial instruments at amortised cost |
|---|---|
| Assets | |
| Other non-current assets | 0 |
| Other current assets | 169 807 |
| Unrestricted cash and cash equivalents | 1 113 766 |
| Total Financial assets | 1 283 573 |
| Liabilities | |
| Other non-current financial liabilities | 228 271 |
| Trade payables | 1 909 334 |
| Total financial liabilities | 2 137 605 |
| 31.12.2023 | Financial instruments at amortised cost |
| Assets | |
| Other non-current assets | 0 |
| Other current assets | 115 857 |
| Unrestricted cash and cash equivalents | 856 753 |
| Total Financial assets | 972 609 |
| Liabilities | |
| Other non-current financial liabilities | 0 |
| Trade payables | 808 204 |
| Total financial liabilities | 808 204 |
The carrying amount of cash and cash equivalents is approximately equal to fair value since these instruments have a short term to maturity. Similarly, the carrying amount of account receivables and other current receivables and payables is approximately equal to fair value since they are short term and entered into on "normal" terms and conditions. The carrying amount of bank loans are assessed to be approximately equal to fair value because the floating interest rate are adjusted to reflect current conditions.
| 2023 | 2022 | |||
|---|---|---|---|---|
| Book value | Fair value | Book value | Fair value | |
| Cash and cash equivalents | 856 753 | 856 753 | 1 113 766 | 1 113 766 |
| Total financial assets | 856 753 | 856 753 | 1 113 766 | 1 113 766 |
| Interest bearing loans and borrowings | ||||
| Interest-bearing loans and borrowings | 213 514 | 213 514 | 228 271 | 228 271 |
| Other financial liabilities | ||||
| Trade and other payables | 808 204 | 808 204 | 1 909 334 | 1 909 334 |
| Total financial liabilities | 1 021 718 | 1 021 718 | 2 137 605 | 2 137 605 |
Note 22 - List of subsidiaries
The following subsidiaries are included in the consolidated financial statements:
| Company | Country of incor poration |
Functional currency |
Business | Ownership interest 2023 |
Voting power 2023 |
Ownership interest 2022 |
Voting power 2022 |
|---|---|---|---|---|---|---|---|
| Kyoto Group AS (parent company) | Norway | NOK | Energy production |
- | - | - | - |
| Kyoto Technology Spain S.L. | Spain | EUR | Energy production |
100% | 100% | 100% | 100% |
| Kyoto Technology Denmark ApS | Denmark | DKK | Energy production |
100% | 100% | 100% | 100% |
Note 23 - Transactions with related parties
All the transactions with related parties have been carried out as part of the ordinary operations and at arms-length prices. The most significant transactions are as follows:
| Purchase of services | Services | Relation | 2023 | 2022 |
|---|---|---|---|---|
| Asiju Invest AS, Arne Erik Kristiansen | Advisory services | Investor, former board member | 0 | 14 552 |
| Vulcanic Termoelectrica S.L.U. | Materials | Subsidiary of majority shareholder | 572 859 | 499 161 |
| Heatcube (NJV) | Spirax-Sarco Engineering PLC, | |||
| represented in the board of | ||||
| directors by: Christopher Molnar |
| Intercompany transactions | Services | Relation | 2023 | 2022 |
|---|---|---|---|---|
| Kyoto Technology Spain S.L. | Reimbursement personnel cost | Subsidiary | 1 149 327 | 184 887 |
| Kyoto Technology Spain S.L. | Purchase of patent | Subsidiary | 30 000 | 0 |
| Kyoto Technology Denmark ApS | NJV transfer agreement | Subsidiary | 697 161 | 0 |
| Kyoto Technology Denmark ApS | Pass-trough costs | Subsidiary | 422 335 | 0 |
See note 4 for information on remuneration to management and the board.
Note 24 - Events after the balance sheet date
The Group announced on 26 January 2024 the signing of a loan agreement with Nefco, the Nordic Green Investment Bank for a green loan of EUR 4 million.
On 30 January 2024 the Group announced entering into a MoU with Schneider Electric to decarbonize and electrify the industry together.
On 15 March 2024 the Group announced a Directed share issue of new shares in the company to increase capital. The Board of Directors allocated subscriptions for 2 297 187 shares at a subscription price of NOK 17, raising NOK 39 million in gross proceeds.
On 21 March 2024 the Group announced that a global leader in energy management has ordered an engineering study for a Heatcube at one of their industrial sites in Europe.
On 25 April 2024 the company published that Kyoto Group and an Energy Partner jointly signed a term sheet for a Heat Purchase Agreement with global leading consumer goods company in Europe. The Heatcube at the site in Europe will be supplied with renewable electricity from an off-grid 25 MWp solar photovoltaics (PV) complemented with renewable electricity from the energy partner portfolio assets, leading to an annual CO2 reduction of more than 10,000 tons.
There have been no other events to date in 2024 that significantly affect the result for 2023 or valuation of the company's assets and liabilities at the balance sheet date.
Note 25 - Funding plans and going concern
The company pursues funding efforts to secure the growth ambitions as Kyoto now accelerates the commercialization. This implies to secure a robust cash runway through a combination of equity from strategic industrial partners, corporate debt solutions, public funding and various working capital options, maximizing the value for Kyoto's shareholders.
The financial statements for 2023 have been prepared on the conditions for the going concern assumption.
Financial statements
KYOTO GROUP AS
KYOTO GROUP | ANNUAL REPORT 2023 57
Statement of income
KYOTO GROUP AS
| Note | 2023 | 2022 | |
|---|---|---|---|
| OPERATING INCOME AND OPERATING EXPENSES | |||
| Lease income | 1 | 561 663 | 0 |
| Revenue | 1 | 0 | 282 401 |
| Total operating income | 561 663 | 282 401 | |
| Personnel expenses | 2, 3 | 44 781 045 | 25 694 889 |
| Depreciation, amortizations and impairment | 4, 5 | 1 250 645 | 3 264 766 |
| Other operating expenses | 2, 3, 6, 7 | 46 270 795 | 36 956 281 |
| Total operating expenses | 92 302 485 | 65 915 935 | |
| Operating profit/loss (-) | -91 740 822 | -65 633 535 | |
| FINANCIAL INCOME AND EXPENSES | |||
| Interest income from group companies | 7, 8 | 717 127 | 94 482 |
| Other interest income | 8 | 87 998 | 3 399 |
| Other financial income | 8 | 2 641 460 | 717 036 |
| Other financial expenses | 8 | 2 304 408 | 881 188 |
| Net financial items | 1 142 176 | -66 271 | |
| Net profit/loss (-) before tax | -90 598 646 | -65 699 806 | |
| Income tax expense | 9 | 0 | 0 |
| Net profit/loss (-) after tax | -90 598 646 | -65 699 806 | |
| Net result | -90 598 646 | -65 699 806 | |
| ATTRIBUTABLE TO | |||
| Loss brought forward | 10 | 90 598 646 | 65 699 806 |
| Total | -90 598 646 | -65 699 806 |
Statement of financial position
KYOTO GROUP AS
| Note | 2023 | 2022 | |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| INTANGIBLE ASSETS | |||
| Development | 3, 4 | 41 479 607 | 25 142 028 |
| Patents | 4 | 429 098 | 0 |
| Total intangible assets | 41 908 705 | 25 142 028 | |
| PROPERTY, PLANT AND EQUIPMENT | |||
| Construction in progress | 4 | 0 | 54 051 942 |
| Machinery and equipment | 5 | 86 565 372 | 0 |
| Total property, plant and equipment | 86 565 372 | 54 051 942 | |
| NON-CURRENT FINANCIAL ASSETS | |||
| Investments in subsidiaries | 11 | 4 141 171 | 4 056 254 |
| Loan to group companies | 12 | 3 602 633 | 13 234 319 |
| Other non-current assets | 13 | 2 071 289 | 2 027 655 |
| Total non-current financial assets | 9 815 093 | 19 318 228 | |
| Total non-current assets | 138 289 170 | 98 512 197 | |
| CURRENT ASSETS | |||
| DEBTORS | |||
| Account receivable | 859 880 | 282 401 | |
| Other current assets | 3 | 11 537 814 | 7 481 116 |
| Total receivables | 12 397 694 | 7 763 516 | |
| Cash and cash equivalents | 14 | 7 943 338 | 11 097 013 |
| Total current assets | 20 341 032 | 18 860 529 | |
| Total assets | 158 630 201 | 117 372 726 |
Statement of financial position (continued)
KYOTO GROUP AS
| Note | 2023 | 2022 | |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| EQUITY | |||
| PAID-IN CAPITAL | |||
| Issued capital | 10, 15, 16 | 498 329 | 252 617 |
| Share premium | 10, 16 | 111 729 514 | 65 868 306 |
| Other paid-in capital | 10, 13, 16 | 14 033 225 | 12 188 529 |
| Total paid-in equity | 126 261 067 | 78 309 452 | |
| Total equity | 126 261 067 | 78 309 452 | |
| LIABILITIES | |||
| OTHER NON-CURRENT LIABILITIES | |||
| Other provisions | 3 | 3 605 055 | 2 624 941 |
| Other non-current financial liabilities | 17 | 0 | 2 400 000 |
| Total non-current liabilities | 3 605 055 | 5 024 941 | |
| CURRENT LIABILITIES | |||
| Accounts payable | 7 885 503 | 19 113 500 | |
| Public duties payable | 2 935 099 | 2 028 637 | |
| Liabilities to group companies | 12 | 4 885 034 | 0 |
| Other current liabilities | 17 | 13 058 442 | 12 896 197 |
| Total current liabilities | 28 764 079 | 34 038 333 | |
| Total liabilities | 32 369 134 | 39 063 274 | |
| Total equity and liabilities | 158 630 201 | 117 372 726 |
Oslo, 24 April 2024 The Board of Kyoto Group AS
(Electronically signed)
Eivind Reiten Chairman of the board
(Electronically signed)
Hans Olav Kvalvaag Member of the boardr
(Electronically signed)
Thorleif Enger Member of the board
(Electronically signed)
Oscar Cantalejo Member of the board
(Electronically signed)
Camilla Nilsson General Manager
(Electronically signed)
Pål Selboe Valseth Member of the board
(Electronically signed)
Christopher Molnar Member of the board
Statement of cash flows
KYOTO GROUP AS
| 2023 | 2022 | |
|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES | ||
| Profit/loss before tax | -90 598 646 | -65 699 806 |
| Depreciation, amortizations and write downs | 1 250 645 | 3 264 766 |
| Share based payments expense | 2 202 546 | 511 146 |
| Change in accounts receivable | -577 479 | -282 401 |
| Change in accounts payable | -11 227 997 | 11 803 388 |
| Other changes | -1 517 090 | 8 786 121 |
| Net cash flow from operating activities | -100 468 023 | -41 616 786 |
| CASH FLOW FROM INVESTMENT ACTIVITIES | ||
| Capitalized development expenses | -16 337 579 | -50 600 708 |
| Payments to buy shares and participations in other companies | 0 | -1 049 307 |
| Purchase of intangible assets | -509 940 | 0 |
| Purchase of tangible assets | -33 683 232 | 0 |
| Net cash flow from investment activities | -50 530 751 | -51 650 015 |
| CASH FLOW FROM FINANCING ACTIVITIES | ||
| Changes in intercompany balances | 11 139 533 | -13 234 319 |
| Proceeds from equity | 136 705 566 | 273 300 |
| Repayments of equity | 0 | -271 232 |
| Net cash flow from financing activities | 147 845 099 | -13 232 251 |
| Net change in cash and cash equivalents | -3 153 675 | -106 499 052 |
| Cash and cash equivalents at the start of the period | 11 097 013 | 117 596 065 |
| Cash and cash equivalents at the end of the period | 7 943 338 | 11 097 013 |
Accounting principles
The annual accounts have been prepared in conformity with the Norwegian Accounting Act and generally accepted accounting principles.
Operating revenues
Revenue from contracts with customers is recognised when control of the services is transferred to the customer at an amount that reflects the consideration to which the company expects to be entitled in exchange for those services. The company has generally concluded that it is the principal in its revenue arrangements, because it typically controls the services before transferring them to the customer.
Tax
The tax charge in the profit and loss account consists of tax payable for the period and the change in deferred tax. Deferred tax is calculated at the tax rate at 22 % on the basis of tax-reducing and tax-increasing temporary differences that exist between accounting and tax values, and the tax loss carried forward at the end of the accounting year. Tax-increasing and taxreducing temporary differences that reverse or may reverse in the same period are set off and entered net.
Classification and valuation of fixed assets
Fixed assets include assets included for long-term ownership and use. Fixed assets are valued at acquisition cost. Property, plant and equipment are entered in the balance sheet and depreciated over the asset's economic lifetime. Property, plant and equipment are written down to a recoverable amount in the case of fall in value which is expected not to be temporary. The recoverable amount is the higher of the net sale value and value in use. Value in use is the present value of future cash flows related to the asset. Write-downs are reversed when the basis for the write-down is no longer present.
Direct maintenance of fixed assets is expensed on an ongoing basis under operating costs, while costs or improvements are added to the fixed asset's cost price and depreciated accordingly.
Classification and valuation of current assets
Current assets and short-term liabilities normally include items that fall due for payment within one year of the balance sheet date, as well as items that relate to the operating cycle. Current assets are valued at the lower of acquisition cost and fair value.
Shares in subsidiaries
Subsidiaries are valued using the cost method in the company accounts. The investment is valued at acquisition cost for the shares unless a write-down has been necessary. A write-down to fair value is made when a fall in value is due to reasons that cannot be expected to be temporary and such write-down must be considered as necessary in accordance with good accounting practice. Write-downs are reversed when the basis for the write-down is no longer present.
Dividends, group contributions and other distributions from subsidiaries are posted to income in the same year as provided for in the distributor's accounts. To the extent that dividends/ group contributions exceed the share of profits earned after the date of acquisition, the excess amounts represents a repayment of invested capital, and distributions are deducted from the investment's value in the balance sheet of the parent company.
Classification
Assets intended for permanent ownership or use, as well as receivables maturing more than one year after the balance sheet date are included as fixed assets. Other assets are classified as current assets. Debts that fall due later than one year after the end of the accounting period are listed as long-term debt.
Intangible assets
Development expenses are capitalized to the extent that a future economic benefit related to the development of an identifiable intangible asset can be identified and the expenses can be measured reliably. Otherwise, such expenses are expensed on an ongoing basis. Capitalized development is depreciated on a
straight-line basis over its economic life.
Cash flow statement
The cash flow statement has been prepared using the indirect method. Cash and cash equivalents consist of cash, bank deposits and other short-term, liquid investments.
Receivables
Receivables from customers and other receivables are entered at par value after deducting a provision for expected losses. The provision for losses is made on the basis of an individual assessment of the respective receivables.
Pension liabilities
Pension liabilities financed over operations are calculated and entered on the balance sheet under the provision for liabilities. Pension schemes financed through insured schemes are not entered on the balance sheet. The pension premium is treated in these cases as a pension cost and classified together with wage costs.
Foreign currency
Foreign currency transactions are translated at the exchange rate on the date of the transaction. Monetary foreign currency items are translated to NOK at the exchange rate on the balance sheet date. Nonmonetary items that are measured at historical cost in a foreign currency are translated to NOK using the exchange rate on the transaction date. Non-monetary items that are measured at fair value in a foreign currency are translated to NOK using the exchange rate on the measurement date. Exchange rate fluctuations are posted to the profit and loss account as they arise under other financial items.
Public Grants
Public grants related to project costs that are recognized in the balance sheet are presented as deferred income in the balance sheet. Grants for the part of the project costs that are expensed are entered as cost reduction.
Note 1 - Revenue and lease income from contracts with customers
| Activity distribution | 2023 | 2022 |
|---|---|---|
| Leasing income | 561 663 | 0 |
| Revenues from services performed | 0 | 282 401 |
| Total | 561 663 | 282 401 |
| Geographical distribution | 2023 | 2022 |
| Hungary | 0 | 282 401 |
| Denmark | 561 663 | 0 |
| Total | 561 663 | 282 401 |
| Salary costs | 2023 | 2022 | |
|---|---|---|---|
| Salaries and holiday pay | 36 370 262 | 18 872 678 |
Note 2 - Salary costs and benefits, remuneration to the chief executive, board and auditor
| Number of man-years employed during the financial year | 21,1 | 16,2 |
|---|---|---|
| Total | 44 781 045 | 25 694 889 |
| Other benefits | 2 237 463 | 2 315 061 |
| Pension costs | 1 283 087 | 1 001 944 |
Social security cost 4 890 233 3 505 205
Pension liabilities
The company is liable to maintain an occupational pension scheme under the Mandatory Occupational Pensions Act. Kyoto has a defined contribution pension scheme and it satisfies the requirements of this Act. There are 22 people included in the pension scheme as of 31.12.2023. Total pension expenses in 2023 was 1 283 087.
| Remuneration to leading personnel | General Manager | Board |
|---|---|---|
| Salaries | 2 630 276 | 0 |
| Board remuneration | 0 | 350 000 |
| Pension costs | 75 768 | 0 |
| Other remuneration | 11 572 | 0 |
| Total | 2 717 616 | 350 000 |
The CEO is entitled to 6 months severence payment based on the annual base salary. Severance payment does not qualify for pension, nor for any holiday compensation pay or other benefits.
Auditor
Audit fees expensed for 2023 amount to 1 538 765 exclusive VAT, with the following split between statutory audit fees and other non-assurance services.
| Specification auditor's fee | 2023 | 2022 |
|---|---|---|
| Statutory audit | 1 170 000 | 890 400 |
| Other non-assurance services | 366 765 | 100 480 |
| Total | 1 536 765 | 990 880 |
Note 3 - Public grants
Innovation Norway
In 2023 Kyoto Group AS received a government grant from Innovation Norway in relation to a Heatcube project. Grants related to project cost that is capitalized is presented as deferred income in the Balance Sheet, while grants related to expensed items are treated as cost reduction. The grant from Innovation Norway in 2023 amounts to NOK 3 500 000.
Tax Rebate - SkatteFUNN
In 2023 Kyoto Group AS received a government grant from the Norwegian SkatteFUNN scheme in relation to a Heatcube project. Grants related to project cost that is capitalized is presented as deferred income in the Balance Sheet, while grants related to expensed items are treated as cost reduction.
The annual grant from SkatteFunn is a total of NOK 4 750 000.
| Short-term receivables | 2023 | 2022 |
|---|---|---|
| Tax rebate - SkatteFUNN | 4 750 000 | 3 901 551 |
European Union
In 2023, Kyoto has been granted support for a four-year development project from European Union. First payment was received in December 2023, with an amount of NOK 1 629 740.
| Short-term liabilities | 2023 | 2022 |
|---|---|---|
| Deferred income | 1 629 740 | 0 |
Note 4 - Intangible assets
| Patents | Development expences | Total | |
|---|---|---|---|
| Acquisition cost 01.01 | 0 | 29 175 604 | 29 175 604 |
| Additions | 509 940 | 16 337 579 | 16 847 519 |
| Acquisition cost 31.12 | 509 940 | 45 513 183 | 46 023 123 |
| Acc. depreciation/ impairment 31.12 | -80 842 | -768 810 | -849 652 |
| Write downs | -3 264 766 | -3 264 766 | |
| Book value 31.12 | 429 098 | 41 479 607 | 41 908 705 |
| Depreciation in the year | 80 842 | 0 | 80 842 |
| Amortisation plan | Linear | ||
| Economic useful life | 8 year |
Costs related to projects that are expected to provide a future financial benefit have been capitalized. Those cost are related to development of the new generation heatcube, which includes both development of hardware and software.
Development expenses are capitalized at acquisition cost. In the event of significant impairment, capitalized development costs have been written down when impairment is due to reasons that cannot be expected to be temporary and must be considered necessary in accordance with generally accepted accounting principles.
Total capitalized development expenses in the fiscal year 2023 amounts to NOK 16 337 579 and NOK 1 431 012 are entered into the profit and loss statement.
In addition, Kyoto is developing new patents. The cost related to this is capitalized.
Note 5 - Tangible assets
| Construction in progress | Machinery | Total | |
|---|---|---|---|
| Acquisition cost 01.01.2023 | 54 051 942 | 0 | 54 051 942 |
| Additions | 0 | 33 683 232 | 33 683 232 |
| Reclassification | -54 051 942 | 54 051 942 | 0 |
| Acquisition cost 31.12 | 0 | 87 735 174 | 87 735 174 |
| Acc. depreciation/ impairment 31.12 | 0 | -1 169 802 | 1 169 802 |
| Book value 31.12 | 0 | 86 565 372 | 86 565 372 |
| Depreciation in the year | 0 | 1 169 802 | 1 169 802 |
| Depreciation plan | Linear | ||
| Economic useful life | 25 year |
The construction in progress refers to the development and commissioning of the Heatcube at Norbis Park (NJV), that was completed with commercial handover in August 2023. The heatcube is estimated to have a useful lifetime of 25 years, and has been depreciated since September 2023.
Note 6 - Leasing and rent
In 2023, Kyoto Group had operational leasing agreements for tenancy and for hardware. The expense related to this was NOK 3 584 508. The duration of the leasing agreements varies between 1-3 years.
Note 7 - Related party transactions
| Related-party transactions: | 2023 | 2022 | ||
|---|---|---|---|---|
| Purchase of services: | Relation | Services | ||
| Asiju Invest AS | Former board Member | Advisory | 0 | 147 328 |
| services | ||||
| Interest income from intercompany loans | Relation | |||
| Kyoto Technology Denmark ApS | Subsidiary | 544 380 | 56 116 | |
| Kyoto Technology Spain S.L. | Subsidiary | 172 747 | 38 367 | |
| Total | 717 127 | 94 482 |
| Intercompany transactions | Relation | Services | ||
|---|---|---|---|---|
| Kyoto Technology Denmark ApS | Subsidiary | NJV transfer agreement |
7 836 438 | 0 |
| Kyoto Technology Denmark ApS | Subsidiary | Pass-through costs |
4 747 258 | 0 |
| Kyoto Technology Spain S.L. | Subsidiary | Operating costs |
16 191 164 | 1 943 867 |
| Kyoto Technology Spain S.L. | Subsidiary | Patent | 351 120 | 0 |
| Total | 29 125 981 | 1 943 867 |
All transactions have been carried out as part of the ordinary operations and at arm's length prices.
See note 2 for information on remuneration to management and the board.
Note 8 - Specification of financial income and financial expenses
| Financial income | 2023 | 2022 |
|---|---|---|
| Interest income from group companies | 717 127 | 94 482 |
| Other interest income | 87 998 | 3 399 |
| Other financial income | 2 634 | 3 555 |
| Currency exchange gain | 2 638 826 | 713 481 |
| Total financial income | 3 446 584 | 814 917 |
| Financial expenses | 2023 | 2022 |
|---|---|---|
| Other financial expenses | 255 422 | 16 589 |
| Currency exchange loss | 2 048 986 | 864 599 |
| Total financial expenses | 2 304 408 | 881 188 |
Note 9 - Tax
| This year's tax expense | 2023 | 2022 |
|---|---|---|
| Entered tax on ordinary profit/loss: | ||
| Payable tax | 0 | 0 |
| Changes in deferred tax assets | 0 | 0 |
| Tax expense on ordinary profit/loss | 0 | 0 |
| Taxable income: | ||
| Ordinary profit/loss (-) before tax | -90 598 646 | -65 699 806 |
| Permanent differences | -2 371 035 | -3 171 462 |
| Changes in temporary differences | -1 391 582 | 5 849 593 |
| Taxable income | -94 361 264 | -63 021 675 |
| Payable tax in the balance: | ||
| Payable tax on this year's result | 0 | 0 |
| Total payable tax in the balance | 0 | 0 |
The tax effect of temporary differences that has formed the basis for deferred tax and deferred tax advantages, specified on type of temporary differences:
| 2023 | 2022 | Difference | |
|---|---|---|---|
| Tangible assets | -1 668 916 | -4 040 612 | -2 371 696 |
| Allocations and more | -3 605 055 | -2 624 941 | 980 114 |
| Total | -5 273 971 | -6 665 553 | -1 391 582 |
| Accumulated loss to be brought forward | -232 971 330 | -138 610 066 | 94 361 264 |
| Not included in the deferred tax calculation | 238 245 301 | 145 275 620 | -92 969 681 |
| Deferred tax assets (22 %) | 0 | 0 | 0 |
Deferred tax is not included in the balance sheet as the requirements for capitalization are not fullfilled.
Note 10 - Equity capital
| Issued capital | Share premium |
Other paid-in capital |
Total equity | |
|---|---|---|---|---|
| As at 01.01.2023 | 252 617 | 65 868 306 | 12 188 529 | 78 309 452 |
| Capital increase 20.01.2023 | 102 857 | 59 897 143 | 60 000 000 | |
| Capital increase 22.02.2023 | 4 235 | 2 392 330 | 2 396 565 | |
| Capital increase 05.07.2023 | 138 619 | 76 030 381 | 76 169 000 | |
| Share issue expenses | -1 860 000 | -1 860 000 | ||
| Share based payment expense | -932 459 | -932 459 | ||
| Share subscription programmes | 2 777 155 | 2 777 155 | ||
| Coverage of uncovered loss | -90 598 646 | -90 598 646 | ||
| As at 31.12.2023 | 498 329 | 111 729 514 | 14 033 225 | 126 261 067 |
Note 11 - Investments in subsidiaries
Investments in subsidiaries are booked according to the cost method.
| Company | Location | Ownership/ voting rights |
Acquistion cost |
Result 2023 | Equity 2023 |
|---|---|---|---|---|---|
| Kyoto Technology Spain S.L. | Spain | 100 % | 4 086 499 | 344 305 | 1 085 403 |
| Kyoto Technology Denmark ApS | Denmark | 100 % | 54 672 | 1 841 573 | 147 472 |
| Total | 4 141 171 |
The acquisition cost of Kyoto Technology Spain S.L. of NOK 4 086 499 includes a variable consideration of NOK 3 091 864, ref. note 13. The reason for this is that the seller of Kyoto Technologies Spain S.L. is employed by this company and the shares linked to the deferred consideration are issued by Kyoto Group AS.
Note 12 - Intercompany balances
| Receivables (Non-current): | 2023 | 2022 |
|---|---|---|
| Kyoto Technology Denmark ApS | 0 | 8 083 148 |
| Kyoto Technology Spain S.L. | 3 602 633 | 5 151 171 |
| Total | 3 602 633 | 13 234 319 |
| Payables (Current): | 2023 | 2022 |
| Kyoto Technology Denmark ApS | 1 507 848 | 0 |
| Kyoto Technology Spain S.L. | 3 377 186 | 0 |
| Total | 4 885 034 | 0 |
Note 13 - Share and option programmes
Subscription of shares for key personell
By subscription of shares through this model, the shares are subscribed for in a discounted price. At the subscription, the market value of the shares is considered to be the volume weighted average of the listed share price for the company's shares on Euronext Growth on the last trading day prior to the employee's subscription of shares. The residual amount between the subscription market value of the shares and the discounted price, with the addition of any interest calculated, constitutes an unconditional, deferred consideration for the shares to be paid to the company. The residual amount constitutes a receivable for the company against the employee, and it is interest bearing from the time of subscription, with an interest rate corresponding to the standard interest rate applicable according to the rules on subsidised loans under employment in the Norwegian Taxation Act section 5-12(4). The interest is calculated annually as of 31 January, and paid in arrears on 31 January of the following year, and no later than at the due date of the residual amount. As security for the residual Amount, Kyoto Group AS shall have the best available collateral in the employees shares.
Prior to 2022, Kyoto had different terms for the subscription programme agreements than those that apply now. Among other things, the residual amount was not unconditional, and thus did not fulfill the requirements for balance sheet entry. At 31.12.2023, the residual amount in balance sheet is NOK 1 592 249 , and presented as other non-current assets in the financial statement. The residual amount comes exclusively from the subscription programme agreements in 2022 under the new conditions.
The residual amount is due for payment upon the earlier of:
- (i) 25 August 2025
- (ii) the employee's settlement on the sale of the shares
- (iii) the company's exercise of the right of purchase
As at 31.12.2023, 8 employees were included in the subscription programme, and the following was in hands of the management team;
| Name | Purchase date | Purhase price | Shares | Paid (NOK) | Rest (NOK) |
|---|---|---|---|---|---|
| Cuare Invest AS, Camilla Nilsson (CEO) | 01.02.2021 | 25 | 50 000 | 187 500 | 1 062 500 |
| Bjarke Buchbjerg | 25.02.2022 | 16,5 | 25 000 | 61 875 | 350 625 |
| Agnieszka Sledz | 25.02.2022 | 16,5 | 25 000 | 61 875 | 350 625 |
| Henrik Holck-Clausen | 25.02.2022 | 16,5 | 25 000 | 61 875 | 350 625 |
| Tim de Haas | 25.02.2022 | 16,5 | 25 000 | 61 875 | 350 625 |
| 150 000 | 435 000 | 2 465 000 |
Share option programme - Board members
On March 2021, Kyoto Group AS approved issuance of up to 300 000 share options, whereby up to 150 000 share options may be issued to the board memebers. One option grants the holder the right to acquire one share in the company. The subscription price per share shall equal the subscription price per share in the Private Placement, plus 10%. The options may be exercised between 1 July 2022 and 15 May 2024.
On 1 July 2022, the Chairman of the Board and two board members were granted the share options:
| Opening balance 2023 |
Granted | Forfeited | Exercised | Ending balance 2023 |
|
|---|---|---|---|---|---|
| Eivind Reiten (Chairman of the Board) | 64 000 | 0 | 0 | 0 | 64 000 |
| Hans Olav Kvalvaag (Board member) | 32 000 | 0 | 0 | 0 | 32 000 |
| Thorleif Enger (Board member) | 32 000 | 0 | 0 | 0 | 32 000 |
| Total | 128 000 | 0 | 0 | 0 | 128 000 |
The fair value of the options is set on the grant date and expensed over the vesting period. EUR 30 315 have been expensed in 2023. The fair value of options granted in 2022 was NOK 6,66 per option.
No options were forfeited or exercised during 2023. The outstanding options are subject to the following conditions:
| Expiry date | Average strike price (NOK) | Number of share options |
|---|---|---|
| 15 May 2024 | 19,18 | 128 000 |
| 19,18 | 128 000 |
The fair value of the options has been calculated using Black & Scholes option-pricing model.
The calculations are based on the following assumptions:
Share price on the grant date
The share price is set to the stock exchange price on the grant date.
Volatility
It is assumed that historic volatility is an indication of future volatility. The expected volatility is therefore stipulated to be the same as the historic volatility, which equals a volatility of 62,3%.
The term of the option
It is assumed that 100 % of the holders will exercise the options once they are exercisable. The options are expected to have a term of two years.
Dividend
Dividend is not considered in this share option programme.
Risk-free interest rate
The risk-free interest rate is set equal to the interest rate on government bonds during the term of the option, i.e. 3,95% for 2023.
Share option programme - Employees and other leading personell
On June 2023, Kyoto Group AS approved issuance of up to 250 000 share options. The options may be exercised between 21 June 2023 and 20 June 2025.
There are 15 employees who have been granted options according to the programme. Employees in leading positions:
| Number of options | |||||
|---|---|---|---|---|---|
| Opening balance 2023 |
Granted | Forfeited | Exercised | Ending balance 2023 |
|
| Camilla Nilsson (CEO) | 0 | 100 000 | 0 | 0 | 100 000 |
| Håvard Haukdal (CFO) | 0 | 25 000 | 0 | 0 | 25 000 |
| Susanne Vinje | 0 | 25 000 | 0 | 0 | 25 000 |
| Total | 0 | 150 000 | 0 | 0 | 150 000 |
The fair value of the options is set on the grant date and expensed over the vesting period. NOK 2 277 289 have been expensed in 2023. The fair value of options granted in 2023 was NOK 7.7 per option.
No options were forfeited or exercised during 2023. The outstanding options are subject to the following conditions:
| Expiry date | Average strike price (NOK) | Number of share options |
|---|---|---|
| 21 June 2025 | 16,48 | 240 000 |
| 16,48 | 240 000 |
Share price on the grant date
The share price is set to the stock exchange price on the grant date.
Volatility
It is assumed that 100 % of the holders will exercise the options once they are exercisable. The options are expected to have a term of two years.
Dividend
Dividend is not considered in this share option programme.
Risk-free interest rate
The risk-free interest rate is set equal to the interest rate on government bonds during the term of the option, i.e. 3.95% for 2023.
Share option programme - Sale based
In August 2022, Kyoto Group AS acquired 100% of the voting shares in Kyoto Technology Spain S.L. for EUR 100 000. The acquisition was financed in cash consideration of EUR 100 000, and by a deferred consideration described below.
In addition to the cash consideration, it was agreed a conditional deferred payment for the shares upon the satisfaction of specific milestones on terms and conditions. The conditional deferred payment shall equal 1% of the sales price of each Heatcube sold by Kyoto Technology Spain S.L. until 31 December 2025, but maximum EUR 5,000,000 in total. The deferred payment will be settled by granting the seller options to subscribe for new shares in Kyoto Group AS. The deferred payment is therefore treated as a share based expense in accordance with IFRS 2. The expense is accrued over the period of 31 May 2022 to 31 December 2025.
To calculate the fair value of the estimated consideration per Heatcube sale at the time of allocation, the estimated price per Heatcube is discounted with a required rate of return. The interest rate requirement takes into account the uncertainty related to future sales price and time value. The discount rate is set at 8%.
Note 14 - Restricted bank deposits, cash in hand etc.
| 2023 | 2022 | |
|---|---|---|
| Bank deposit | 6 161 757 | 9 701 918 |
| Restricted funds deposited in the tax deduction account | 1 781 581 | 1 395 095 |
| Total cash in hand and restricted funds | 7 943 338 | 11 097 013 |
Note 15 - Shareholders
The share capital in Kyoto Group AS as of 31.12.2023 consist of:
| Total | Face value | Entered |
|---|---|---|
| 16 610 959 | 0,03 | 498 329 |
| 16 610 959 | 498 329 | |
The 20 largest shareholders as of 31.12.2023 are:
| Ordinary | Owner interest | Share of votes | |
|---|---|---|---|
| SPIRAX-SARCO ENGINEERING PLC | 2 489 580 | 14,99 | 14,99 |
| IBERDROLA * | 2 131 066 | 12,83 | 12,83 |
| KLAVENESS MARINE ** | 1 490 249 | 8,97 | 8,97 |
| VALINOR AS | 1 208 600 | 7,28 | 7,28 |
| ALTITUDE CAPITAL AS *** | 1 160 323 | 6,99 | 6,99 |
| KB MANAGEMENT AS | 900 760 | 5,42 | 5,42 |
| MØSBU AS | 816 457 | 4,92 | 4,92 |
| KONGSBERG INNOVASJON AS | 485 161 | 2,92 | 2,92 |
| CLEARSTREAM BANKING S.A. **** | 387 729 | 2,33 | 2,33 |
| ASIJU INVEST AS | 369 081 | 2,22 | 2,22 |
| Société Générale | 278 457 | 1,68 | 1,68 |
| AS CLIPPER | 272 285 | 1,64 | 1,64 |
| INTERTRADE SHIPPING AS | 240 000 | 1,44 | 1,44 |
| STELLA INDUSTRIER AS | 219 614 | 1,32 | 1,32 |
| OSLO IDEATION AS | 139 889 | 0,84 | 0,84 |
| CACEIS Bank Spain SA | 130 626 | 0,79 | 0,79 |
| UBS Switzerland AG | 128 224 | 0,77 | 0,77 |
| NORDNET LIVSFORSIKRING AS | 114 981 | 0,69 | 0,69 |
| U.S. Bank National Association **** | 99 200 | 0,60 | 0,60 |
| SKATTUM INVEST AS | 98 571 | 0,59 | 0,59 |
| Total owned by largest shareholders | 13 160 853 | 79.2 % | 79.2 % |
| Total other | 3 450 106 | 20,8 % | 20,8 % |
| Total number of shares | 16 610 959 | 100,0 % | 100,0 % |
* Iberdrola's investment vehichle Inversiones Financieras Perseo, S.L. represented through the nominee account in The Bank of New York Mellon SA/NV.
** Klaveness Marine shareholding includes the shareholding of KM New Energy AS and Klaveness Marine Finance AS.
*** Altitude Capital also includes the investment through the nominee account in DNB Bank ASA.
**** Investments by US-based Racon Capital Partners represented in two investment nominee accounts; Clearstream Banking S.A and U.S. Bank National Association.
Shares owned by leading personnel:
| Position | Ordinary | |
|---|---|---|
| Asiju Invest AS, Arne Erik Kristiansen | Former board member | 369 081 |
| Cuare Invest AS, Camilla Nilsson | CEO/General Manager | 50 000 |
| Agnieszka Sledz | Management team | 42 142 |
| Henrik Holck-Clausen | Management team | 29 285 |
| Bjarke Buchbjerg | Management team | 26 428 |
| Tim de Haas | Management team | 30 714 |
| Thoeng AS, Thorleif Enger | Board member | 24 000 |
| Mocca Invest AS, Eivind Kristoffer Reiten | Chairman of the board | 9 040 |
| Total number of shares | 580 690 |
Note 16 - Funding plans and going concern
The company pursues funding efforts to secure the growth ambitions as Kyoto now accelerates the commercialization. This implies to secure a robust cash runway through a combination of equity from strategic industrial partners, corporate debt solutions, public funding and various working capital options, maximizing the value for Kyoto's shareholders.
The financial statements for 2023 have been prepared on the conditions for the going concern assumption.
Note 17 - Current liabilities
In 2020, Kyoto Group AS received a loan of NOK 2 400 000 from Innovation Norway. The loan has been treated as a serial loan and is to be repaid in full by May 2024. The loan is interest bearing with a nominal rate of 4,2% and a effective rate of 1,7% per year. The loan has been free for installments for the first 15 terms and free of interest for the first 10 terms. Each term consists of three months and the first payment of interest was due in February 2023.
In 2023 the loan has been reclassified to current liability.
Note 18 - Events after the balance sheet date
The Group announced on 26 January 2024 the signing of a loan agreement with Nefco, the Nordic Green Investment Bank for a green loan of EUR 4 million.
On 30 January 2024 the Group announced entering into a MoU with Schneider Electric to decarbonize and electrify the industry together.
On 15 March 2024 the Group announced a Directed share issue of new shares in the company to increase capital. The Board of Directors allocated subscriptions for 2 297 187 shares at a subscription price of NOK 17, raising NOK 39 million in gross proceeds.
On 21 March 2024 the Group announced that a global leader in energy management has ordered an engineering study for a Heatcube at one of their industrial sites in Europe.
On 25 April 2024 the company published that Kyoto Group and an Energy Partner jointly signed a term sheet for a Heat Purchase Agreement with global leading consumer goods company in Europe. The Heatcube at the site in Europe will be supplied with renewable electricity from an off-grid 25 MWp solar photovoltaics (PV) complemented with renewable electricity from the energy partner portfolio assets, leading to an annual CO2 reduction of more than 10,000 tons.
There have been no other events to date in 2024 that significantly affect the result for 2023 or valuation of the company's assets and liabilities at the balance sheet date.
Statsautoriserte revisorer Ernst & Young AS
Dr Hanstensgate 13, 3044 Drammen Postboks 560, Brakerøya, 3002 Drammen Foretaksregisteret: NO 976 389 387 MVA Tlf: +47 24 00 24 00
www.ey.no Medlemmer av Den norske Revisorforening
INDEPENDENT AUDITOR'S REPORT
To the Annual Shareholders' Meeting of Kyoto Group AS
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Kyoto Group AS (the Company) which comprise the financial statements of the Company and the consolidated financial statements of the Company and its subsidiaries (the Group). The financial statements of the Company comprise the balance sheet as at 31 December 2023, the income statement and statement of cash flows for the year then ended and notes to the financial statements, including a summary of significant accounting policies. The consolidated financial statements of the Group comprise the balance sheet as at 31 December 2023, the income statement, statement of comprehensive income, statement of cash flows and statement of changes in equity for the year then ended and notes to the financial statements, including material accounting policy information.
In our opinion
- the financial statements comply with applicable legal requirements,
- the financial statements give a true and fair view of the financial position of the Company as at 31 December 2023 and its financial performance and cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway,
- the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2023 and its financial performance and cash flows for the year then ended in accordance with IFRS Accounting Standards as adopted by the EU.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company and the Group in accordance with the requirements of the relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other information
Other information consists of the information included in the annual report other than the financial statements and our auditor's report thereon. Management (the board of directors and the general manager) is responsible for the other information. Our opinion on the financial statements does not cover the other information, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information, and, in doing so, consider whether the board of directors' report contains the information required by applicable legal requirements and whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that the other information is materially inconsistent with the financial statements, there is a material misstatement in this other information or that the information required by applicable legal requirements is not included in the board of directors' report, we are required to report that fact.
We have nothing to report in this regard, and in our opinion, the board of directors' report is consistent with the financial statements and contain the information required by applicable legal requirements.
Responsibilities of management for the financial statements
Management is responsible for the preparation of the financial statements of the Company that give a true and fair view in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation of the consolidated financial statements of the Group that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU. Management is responsible for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's and the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or the Group, or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's and the Group's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's and the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Drammen, April 24th 2024 ERNST & YOUNG AS
The auditor's report is signed electronically
Thomas Karlsen State Authorised Public Accountant (Norway)
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KYOTO GROUP | ANNUAL REPORT 2023 81