Quarterly Report • Nov 7, 2023
Quarterly Report
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| About HydrogenPro 3 | |
|---|---|
| Highlights 4 | |
| Q3 2023 Highlights | 4 |
| Subsequent events | 4 |
| Financials | 4 |
| Q3 2023 Summary 5 | |
| Developments during the quarter | 5 |
| Subsequent events | 6 |
| Outlook | 6 |
| Financials 7 | |
| Income statement | 7 |
| Balance sheet | 8 |
| Cash flow | 9 |
| Consolidated statement of comprehensive income11 | |
| Consolidated balance sheet12 | |
| Cash flow statements 13 | |
| Statement of changes in equity14 | |
| Notes to the financial statements15 | |
| Note 1 – Organisation and basis for preparation | 15 |
| Note 2 – Revenue from contracts with customers and segments | 16 |
| Note 3 – Personnel expenses | 17 |
| Note 4 – Intangible assets | 17 |
| Note 5 – Property, plant, equipment and right-of-use asset | 18 |
| Note 6 – Fair value financial assets | 18 |
| Note 7 – Inventory | 19 |
| Note 8 – Provisions | 19 |
| Note 9 – Overview of Group companies | 20 |
| Alternative Performance Measures21 |
HydrogenPro designs and supplies large scale hydrogen technology & systems in collaboration with global partners and suppliers. Our core product is the alkaline high-pressure electrolyser.
The company was founded in 2013 by individuals with background from the electrolysis industry. We are an experienced engineering team of leading industry experts, drawing upon unparalleled experience and expertise in the hydrogen and renewable energy industry.
Our advanced electrode technology enables us to increase the efficiency of each unit by 14%, hence reducing electricity cost with 14%. This is a significant step forward as the cost of electric power, depending on market prices, amounts to 70-90% of the total cost of producing hydrogen, the value of such increased efficiency equals approximately the investment cost for the entire plant in a Total Cost of Operation perspective.
Unlike traditional alkaline systems, our high-pressure units (up to 30 bar) save compression costs and are superbly suited for variable loads from solar panels and wind turbines. Thus, we compare favourably to alternative technologies. We are able to produce hydrogen at a lower cost, without using noble or scarce metals, while using renewable energy sources.
The demand for green hydrogen is accelerating all over the world, and we are aiming to become the #1 large-scale hydrogen production systems player. While most analysts predict that the cost of hydrogen will be reduced to USD 1.5/kg in 2030, HydrogenPro can deliver hydrogen at about 1.2 USD/kg with the new technology (at an electricity price of USD 20/MWh).
Technology Leader Global Footprint
» Mr. Mikalsen has extensive experience as an industrial leader, investor, and founder.
Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023
BACKLOG MNOK
ADJ. EBITDA MNOK
Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023
REVENUE MNOK
The high activity level in the hydrogen market has continued in the third quarter of 2023 and large industrial players within energy and utilities are accelerating their role in shaping the large-scale green hydrogen sector.
During the last months we have seen leading players in several hard-to-abate sectors bringing their projects closer to FID by entering FEEDs as well as selecting suppliers for their long-planned projects. As the players in the industry is becoming gradually more professional, so is their expectations and requirements for counterparts. To win projects suppliers must demonstrate delivering capabilities, technical performance as well as a sound financial position.
HydrogenPro's sales pipeline growth remains robust with few project cancellations, further contributing to a growing base of large, solid projects in core markets. Historically, FEED studies are signs of mature projects being close to FID. HydrogenPro has during the last quarters intensified its focus towards securing a competitive edge by being part of early-stage FEED studies, and this have been successful by also entering new projects on such base during the last quarter, -ranging from 100 to 1,000MW in capacity.
In the USA, the inflation reduction act is continuing to progress large projects dedicated to SAF, synthetic fuels (e-fuels) and ammonia, although the projects in US also require a certain development time before a FID. HydrogenPro expects several FIDs for ongoing FEED studies to be made within the next 6 months, as well as new FEED's to be contracted in the same time span. On 13 October 2023 President Biden and Energy Secretary Jennifer Granholm announced seven regional clean hydrogen hubs that were selected to receive USD 7 billion in Bipartisan Infrastructure Law funding to accelerate the domestic market for low-cost, clean hydrogen. The hubs are created to develop a well-functioning value chain that will accelerate the ambition to reach the One dollar/One Kilo/10 years program (2031). The expected production volume is 25 million tons annually whereof 2/3 of the production will be green, based on electrolysis (approximately 16,6 million tons annually). This is expected to further increase the demand for HydrogenPro's large-scale hydrogen technology & systems.
For the European market, we see a fast-growing pipeline for our common EPC approach towards major European industrial players, especially within the steel and Power-to-X market. As number of projects in total now are reaching a critical volume, both with regards to manufacturing volumes and human resources, it will be even more imperative to properly prioritize projects based on their expected viability and likelihood for implementation.
Following the revised priorities presented by board of directors 8 August 2023, HydrogenPro re-evaluates the previously announced plan to establish a manufacturing facility in Texas. The US market is still a top priority to HydrogenPro, and the company plan to establish a strong footprint near customers with large projects, building a strong OEM position in the country.
ANDRITZ, HydrogenPro's strategic partner, announced 25 July that they have entered into an agreement with Koppö Energy on a FEED study for the establishment of a green hydrogen factory in Kristinestad, Finland. The final order for the 200 MW project is expected to be placed in the beginning of 2024.
2 August 2023 marked the 10-year anniversary for HydrogenPro. The event was celebrated in late August with employees and guests.
8 August Jarle Dragvik was announced as new CEO. Mr. Dragvik came from the position as CEO of TM Holding AS, the Company's second largest shareholder. Mr. Dragvik knows HydrogenPro well as he served on the Board of Directors until May 2023 and has for years been chairman of the Company's China operations. He brings 25 years of industrial experience from companies including Norsk Hydro, Orkla/Sapa and Norske Skog. The new priorities in HydrogenPro will focus on the North American market while maintaining HydrogenPro's position as technology leader and a competent European organization.
20 September HydrogenPro announced an incoming order from ANDRITZ for 18 units of HydrogenPro's 5.5 MW cell stacks.
DG Fuels announced 12 September that Airbus has become a strategic partner and investor.
21 September Mitsubishi Power announced successful validation, installation, and operation of two large-scale HydrogenPro electrolysers, one in Herøya, Norway and one in Takasago, Japan.
In accordance with previous communication, HydrogenPro has received payments from customer after delivering to the ACES project.
4 October Ellen Hanetho, former chair of the board, decided to step down with immediate effect. Terje Mikalsen is the new chair. Mr. Mikalsen has been instrumental to HydrogenPro since 2013.
He has extensive experience as an industrial leader, investor, and founder, with experience from Norsk Data and Hafslund Nycomed, among others.
The overall outlook for the green hydrogen market which HydrogenPro operates in is developing positively, as projects and players in the industry are becoming more mature. HydrogenPro is well positioned to take advantage of these developments. As the projects are becoming larger and more complex, HydrogenPro's demonstrated ability to deliver on large-scale industrial projects makes the company a preferred partner for potential customers. Final investment decisions are still somewhat lagging, and an exponential development must be deployed the next few years to meet the expected demand for green hydrogen.
For HydrogenPro, the key to success is to see more projects crossing the FID line, with HydrogenPro as the preferred partner. Securing firm purchase orders is HydrogenPro's main priority, to generate revenues and cash flow to spur further growth.
As HydorgenPro owns the manufacturing facilities in China, manufacturing can be adjusted in accordance with demand. Following the completion of the ACES project in 2023, it is expected that manufacturing load will decrease in the beginning of 2024, with corresponding lowering of cost base.
HydrogenPro's plans for US expansion stays firm, however it is decided to re-evaluate the announced plan to build a manufacturing facility in Texas. Lessons learnt from project deliveries in the US has demonstrated challenges with regards to logistics and transportation of assembled electrolysers and gas separator skids. This, in addition to the life cycle partner strategy of HydrogenPro indicates need for assembly stations in close proximity to customer sites. Moreover, further visibility on US legislative frameworks and funding schemes is needed, including insight into decision on requirement for local US content. HydrogenPro is not actively commencing preparations for listing at the Nasdaq stock exchange but is continuously considering this as a possibility.
The Group's main risks and uncertainties are described in HydrogenPro's Annual Report for 2022. There are no significant changes in the risks and uncertainties.
| Q3 2023 | Q2 2023 | Q3 2022 NOK million | YTD 2023 |
YTD 2022 |
FY 2022 | |
|---|---|---|---|---|---|---|
| 220.5 | 137.0 | 14.6 | Revenue from contracts with customers | 440.9 | 31.1 | 56.4 |
| 198.0 | 107.5 | 11.5 | Cost of goods sold | 376.4 | 22.9 | 44.4 |
| 22.4 | 29.6 | 3.1 Gross profit/(loss) | 64.5 | 8.3 | 12.0 | |
| 24.5 | 20.9 | 16.1 | Personnel expenses | 60.0 | 33.9 | 52.4 |
| 16.9 | 13.0 | 14.4 | Other operating expenses | 43.7 | 35.2 | 53.9 |
| -19.0 | -4.4 | -27.4 Adj. EBITDA (excl. non-cash operating expenses) | -39.2 | -60.8 | -94.3 | |
| 4.5 | 0.9 | 1.5 | Non-cash cost of incentive programs/payrolls | 6.7 | 11.5 | 10.3 |
| 6.7 | 0.0 | 0.1 | Non-cash provisions with limited predictive value | 6.8 | 0.7 | 0.7 |
| -30.2 | -5.3 | -29.1 EBITDA | -52.6 | -73.0 | -105.3 | |
| 5.7 | 5.6 | 3.3 | Depreciation and amortization expenses | 16.2 | 8.5 | 14.0 |
| -35.9 | -10.8 | -32.3 EBIT | -68.8 | -81.6 | -119.2 | |
| 0.8 | 17.3 | 8.9 | Net financial income and expenses | 31.3 | 15.9 | 29.3 |
| -35.0 | 6.5 | -23.4 | Profit/(loss) before income tax | -37.5 | -65.7 | -89.9 |
| - | - | - | Income tax expense | - | 1.0 | -0.1 |
| -35.0 | 6.5 | -23.4 Profit/(loss) | -37.5 | -66.7 | -89.8 |
HydrogenPro generated revenues of NOK 220.5 million during the third quarter 2023, NOK 83.4 million (61%) higher than second quarter 2023, and NOK 205.9 million (> 14x) higher than the same period in 2022. The Group's revenue year to date 2023 was NOK 440.9 million compared to NOK 31.1 million year to date of 2022. The significant increase in revenues, both quarterly and year to date, were mainly from the progress on the delivery of the ACES project (220 MW). A further revenue breakdown is available in note 2.
Cost of goods sold include all project-related costs, e.g., raw materials, engineering, manhours, manufacturing costs and components delivered by sub-suppliers. Cost of goods sold during the quarter amounted to NOK 198.0 million vs. NOK 107.5 million in the second quarter 2023 (NOK 11.5 million in third quarter 2022). Year to date Cost of goods sold was NOK 376.4 million compared to NOK 22.9 million in the same period of 2022. Cost of goods sold reflect project progress but also increased due to temporary challenges in manufacturing and includes costs for variation orders and a write-down of obsolete inventory in the third quarter.
Gross profit during the quarter was NOK 22.4 million vs. NOK 29.6 million in second quarter 2023 (NOK 3.1 million in third quarter 2022.). Year to date the Group's Gross profit was NOK 64.5 million compared to NOK 8.3 million in the same period of 2022. Gross
profit was affected by the increase in cost of goods sold during the quarter, as previously described.
Personnel expenses increased from NOK 20.9 million in second quarter 2023 to NOK 24.5 million in third quarter 2023 (NOK 16.1 million in third quarter 2022). The increase is mainly due to an increase in number of employees, related to both ongoing activities to deliver on existing contracts and upscaling for future growth.
Other operating expenses amounted to NOK 16.9 million in third quarter 2023 compared to NOK 13.0 million in second quarter 2023 (NOK 14.4 million in third quarter 2022). The increase is mainly due to an increase in provisions for warranty accruals, partly offset by recognition of R&D grants.
The decrease in gross profit and increase in other operating expenses resulted in an adjusted EBITDA of NOK -19.0 million in third quarter 2023 compared to NOK -4.4 million in second quarter 2023 (NOK -27.4 million in third quarter 2023). Adjusted EBITDA year to date 2023 was NOK -39.2 million compared to NOK -60.8 year to date 2022.
In the third quarter HydrogenPro recognised NOK 4.5 million in costs for incentive programs and payroll settlement. The Group also made other provisions totalling NOK 6.7 million, mainly related to the settlement with customer to buy back an electrolyser unit.
EBITDA ended at NOK -30.2 million in third quarter 2023 vs. NOK - 5.3 million during second quarter 2023 (NOK -29.1 million in third quarter 2022). EBITDA was NOK -52.6 million year to date 2023, compared with NOK -73.0 million year to date 2022.
EBIT in third quarter 2023 amounted to NOK -35.9 million vs. NOK –10.8 million in second quarter 2023 (NOK -32.3 million in third quarter 2022). Year to date in 2023 EBIT was NOK -68.8 million compared to NOK -81.6 in the same period in 2022.
Depreciation & amortization expenses was NOK 5.7 million in third quarter 2022 vs. NOK 5.6 million in second quarter 2023 (NOK 3.3 million in third quarter 2022).
Net profit/(loss) (after tax) for the third quarter 2023 ended at NOK - 35.0 million vs. a profit of NOK 6.5 million in second quarter 2023 (NOK –23.4 million in third quarter 2022). The Group's net profit/(loss) year to date ended at a loss of NOK -37.5 million compared to a loss of NOK -66.7 million year to date 2022.
The order backlog amounted to NOK 322 million as of 30 September 2023 vs. NOK 548 million as of 30 June 2023 (747 million as of 31 December 2022).
| Q3 2023 | Q2 2023 | Q3 2022 NOK million | YTD 2023 |
YTD 2022 |
FY 2022 | |
|---|---|---|---|---|---|---|
| 0.6 | 0.7 | 0.8 | Interest income | 2.5 | 1.9 | 3.4 |
| 0.5 | -4.5 | 8.2 | Net foreign exchange | 8.0 | 14.3 | 4.2 |
| -0.3 | 21.2 | -0.1 | Other finance income/(expense) | 20.8 | -0.3 | 21.7 |
| 0.8 | 17.3 | 8.9 Net financial items | 31.3 | 15.9 | 29.3 |
Net financial items in third quarter 2023 amounted to NOK 0.8 million vs NOK 17.3 million in second quarter 2023 (NOK 8.9 in third quarter 2022). Net financial items year to date 2023
amounted to NOK 31.3 million compared to NOK 15.9 million year to date 2022. The change is mainly due to a fair value adjustment for financial instrument, refer to note 6.
| NOK million | 30 Sep 2023 |
30 Jun 2023 | 31 Dec 2022 |
|---|---|---|---|
| Assets | |||
| Intangible assets | 59.6 | 61.2 | 64.4 |
| Plant, machinery and equipment | 63.4 | 65.6 | 55.5 |
| Financial fixed assets | 101.3 | 106.9 | 74.5 |
| Total fixed assets | 224.3 | 233.7 | 194.5 |
| Current operating assets | 351.0 | 266.7 | 121.7 |
| Cash and cash equivalents | 133.0 | 182.7 | 257.0 |
| Total current assets | 484.0 | 449.4 | 378.7 |
| Total Assets | 708.3 | 683.1 | 573.2 |
| Equity and liabilities | |||
| Total equity | 526.7 | 557.2 | 437.8 |
| Total long-terms liabilities | 15.2 | 15.5 | 11.3 |
| Total short-term liabilities | 166.3 | 110.4 | 124.0 |
| Total liabilities | 181.5 | 125.9 | 135.3 |
| Total equity and liabilities | 708.3 | 683.1 | 573.2 |
Total assets as of 30 September 2023 amounted to NOK 708.3 million. Total fixed assets amounted to NOK 224.3 million, whereof NOK 59.6 million in intangible assets, NOK 63.4 million in plant, machinery, and equipment and NOK 101.3 million in financial fixed assets.
Total current assets amounted to NOK 484.0 million, whereof NOK 133.0 million in cash and deposits and NOK 351.0 million in other current assets. The increase in current assets was mainly due to an increase in contract assets related to the ACES project.
Total equity amounted to NOK 526.7 million. The book equity ratio as of 30 September 2023 was 74.4% compared to 81.6% on 30 June 2023 (76.4% as of 31 December 2022).
Total liabilities amounted to NOK 181.5 million as of 30 September 2023, whereof 166.3 million in short-term liabilities and NOK 15.2 million in long-term liabilities. The increase in short-term liabilities is primarily due to an increase in trade payables and other short-term liabilities, including current provisions for warranty accruals as a consequence of project activity (see note 8). This is partly offset by a decrease in contract liabilities.
| Q3 2023 | Q2 2023 | Q3 2022 NOK million | YTD 2023 |
YTD 2022 |
FY 2022 | |
|---|---|---|---|---|---|---|
| 182.7 | 208.0 | 435.3 Cash balance start of period | 257.0 | 382.3 | 382.3 | |
| -48.5 | -133.4 | -71.9 | Net cash flow from operating activities | -224.4 | 4.3 | -69.4 |
| -1.2 | -5.4 | -20.2 | Net cash flow from investing activities | -12.1 | -42.7 | -51.9 |
| -0.0 | 113.5 | -0.4 | Net cash flow from financing activities | 112.5 | -1.1 | -4.0 |
| -49.7 | -25.3 | -92.5 Total changes in cash | -124.0 | -39.5 | -125.2 | |
| 133.0 | 182.7 | 342.8 Cash balance end of period | 133.0 | 342.8 | 257.0 |
Net change in cash position during third quarter 2023 was NOK - 49.7 million compared to NOK -25.3 million in the second quarter 2023 (NOK -92.5 million in third quarter 2022). Year to date 2023 net change in cash position was NOK -124.0 million compared to NOK -39.5 million in the same period of 2022.
Net cash flow from operating activities was NOK -48.5 million in third quarter 2023 compared to NOK -133.4 million in second quarter 2023 (NOK -71.9 million in third quarter 2022), mainly due to an increase in contract assets, partly offset by an increase in accruals. The ACES project has been invoiced in line with payment milestones. Cash inflow is expected in accordance with contractual terms and the project is expected to generate positive cash flow from operating activities in the second half-year of 2023. By the end of October 2023 cash balance was NOK 235.3 million.
During the third quarter 2023 net cash flow from investing activities was NOK -1.2 million vs NOK -5.4 million in second quarter 2023 (NOK -20.2 million in third quarter 2022).
Net cash flow from financing activities was NOK -0.0 million compared to NOK 113.5 million in second quarter 2023 (NOK -0.4 million in third quarter 2022), mainly due to net proceeds from equity issue in June 2023.
| Q3 2023 | Q3 2022 NOK '000 | Notes | YTD 2023 |
YTD 2022 |
FY 2022 | |
|---|---|---|---|---|---|---|
| Operating income and operating expenses | ||||||
| 220 461 | 14 572 | Revenue from contracts with customers | 2 | 440 926 | 31 133 | 56 414 |
| 220 461 | 14 572 Total revenue | 440 926 | 31 133 | 56 414 | ||
| 198 033 | 11 493 | Cost of goods sold | 376 425 | 22 858 | 44 372 | |
| 29 048 | 17 617 | Personnel expenses | 3 | 66 659 | 45 403 | 62 768 |
| 5 680 | 3 254 | Depreciation and amortization expenses | 4, 5 | 16 246 | 8 546 | 13 990 |
| 23 571 | 14 534 | Other operating expenses | 8 | 50 416 | 35 913 | 54 526 |
| -35 872 | -32 326 Operating profit / (loss) | -68 821 | -81 587 | -119 242 | ||
| - | - | Fair value adjustment for financial instruments | 6 | 21 479 | - | 22 485 |
| 8 362 | 9 185 | Financial income | 6 | 24 370 | 18 380 | 17 874 |
| 7 532 | 268 | Financial expenses | 14 550 | 2 492 | 11 016 | |
| 830 | 8 917 | Net financial income and expenses | 31 299 | 15 888 | 29 343 | |
| -35 042 | -23 409 | Profit / (loss) before income tax | -37 522 | -65 699 | -89 899 | |
| - | -18 | Income tax expense | - | 957 | -80 | |
| -35 042 | -23 391 Profit / (loss) for the year | -37 522 | -66 656 | -89 819 | ||
| Other comprehensive income: | ||||||
| Items that may be reclassified to profit or loss: | ||||||
| 531 | -724 | Exchange difference on translation of foreign operations | 2 616 | 1 182 | -415 | |
| 531 | -724 | Net Other comprehensive income | 2 616 | 1 182 | -415 | |
| -34 511 | -24 115 Total comprehensive profit / (loss) for the year | -34 906 | -65 474 | -90 234 | ||
| -32 613 | -22 109 | Equity holders of the parent company | -32 014 | -63 287 | -85 303 |
|---|---|---|---|---|---|
| -1 898 | -2 007 | Non-controlling interest | -2 892 | -2 187 | -4 931 |
| Earnings per share (in NOK) | |||||
| -0.52 | -0.38 | Basic and diluted earnings per ordinary share1) | -0.58 | -1.09 | -1.46 |
| 1) Based on average 59.94 million shares outstanding for the purpose of earnings per share |
| NOK '000 | Note | 30 Sep 2023 |
31 Dec 2022 |
|---|---|---|---|
| Assets | |||
| Intangible assets | 4 | 59 552 | 64 415 |
| Property, plant and equipment | 5 | 63 361 | 55 537 |
| Right of use assets | 5 | 17 138 | 17 625 |
| Financial assets | 6 | 79 244 | 52 056 |
| Other receivables | 4 967 | 4 820 | |
| Total non-current assets | 224 262 | 194 453 | |
| Current assets | |||
| Inventories | 7 | 20 328 | 35 762 |
| Trade receivables | 18 290 | 18 585 | |
| Contract assets | 2 | 248 496 | 19 828 |
| Other receivables | 63 907 | 47 514 | |
| Cash and bank deposits | 133 016 | 257 022 | |
| Total current assets | 484 037 | 378 711 | |
| Total assets | 708 299 | 573 164 | |
| Equity | |||
| Equity attributable to HydrogenPro's shareholders | 524 678 | 432 855 | |
| Non-controlling interest | 2 071 | 4 963 | |
| Total equity | 526 749 | 437 818 | |
| Non-current lease liabilities | 10 624 | 11 332 | |
| Non-current provisions | 8 | 4 596 | - |
| Total non-current liabilities | 15 221 | 11 332 | |
| Current liabilities | |||
| Current lease liabilities | 6 137 | 5 124 | |
| Trade creditors | 84 183 | 20 578 | |
| Contract liabilities | 2 | 1 760 | 65 691 |
| Public duties payable | 5 885 | 10 797 | |
| Other short term liabilities | 8 | 68 363 | 21 824 |
| Total current liabilities | 166 329 | 124 014 | |
| Total liabilities | 181 549 | 135 346 | |
| Total equity and liabilities | 708 299 | 573 164 |
| Q3 2023 | Q3 2022 NOK '000 | Notes | YTD 2023 |
YTD 2022 |
FY 2022 | |
|---|---|---|---|---|---|---|
| Cash flows from operating activities | ||||||
| -35 042 | -23 409 | Profit / (loss) before income tax | -37 522 | -65 699 | -89 899 | |
| 5 680 | 3 254 | Depreciation, amortization & impairment | 16 246 | 8 546 | 13 990 | |
| 2 131 | 1 787 | Option cost no cash effect | 6 974 | 9 831 | 8 592 | |
| - | - | Fair value adjustment for financial instruments | 6 | -21 479 | - | -22 485 |
| -128 201 | -13 792 | Change in accounts receivable and contract assets | -228 373 | -8 751 | -25 371 | |
| 21 754 | -6 992 | Change in inventory | 15 434 | -6 997 | -35 455 | |
| 12 941 | 2 168 | Change in accounts payable and contract liabilities | -326 | 2 043 | 17 222 | |
| 2 707 | 361 | Effect of foreign currency translation | -5 023 | -3 762 | -183 | |
| 69 552 | -35 283 | Change in other accruals | 29 684 | 69 122 | 64 230 | |
| -48 478 | -71 905 Net cash flows from operating activities | -224 385 | 4 332 | -69 359 | ||
| Cash flows from investing activities | ||||||
| -1 153 | -9 631 | Purchases of tangible assets | 5 | -12 082 | -13 420 | -14 701 |
| - | -8 067 | Acquisition of subsidiary, net of cash acquired | - | -22 914 | -32 454 | |
| - | -2 511 | Change in other investing activities | - | -6 347 | -4 716 | |
| -1 153 | -20 210 Net cash flows from investing activities | -12 082 | -42 681 | -51 871 | ||
| Cash flows from financing activities | ||||||
| -1 936 | -375 | Payment of lease liabilities | -4 402 | -1 114 | -5 175 | |
| - | - | Prepayments of loans to associates | - | 1 172 | ||
| 1 903 | - | Proceeds from Equity Issue | 116 863 | - | - | |
| -33 | -375 Net cash flows from financing activities | 112 461 | -1 114 | -4 003 | ||
| 182 680 | 435 282 | Cash balance start of period | 257 022 | 382 256 | 382 255 | |
| -49 664 | -92 490 | Net change in cash | -124 006 | -39 464 | -125 233 | |
| 133 016 | 342 792 Cash balance end of period | 133 016 | 342 792 | 257 022 |
| NOK '000 | Share capital |
Share premium account |
Other equity contrib. |
Currency translat. Difference |
Other equity | Equity attrib. to share holders |
Non controlling interest |
Total equity |
|---|---|---|---|---|---|---|---|---|
| Equity as at 1 Jan 2022 | 58 | 576 142 | 26 800 | 336 | -92 081 | 511 254 | - | 511 254 |
| Total comprehensive income | - | - | - | -1 182 | -64 469 | -65 652 | -2 187 | -67 839 |
| Issue of share capital | 1 102 | -1 102 | - | - | - | - | - | - |
| Cost of share-based payment | - | - | 8 621 | - | - | 8 621 | - | 8 621 |
| Non controlling interest by acquisition |
- | - | - | - | -510 | -510 | 10 205 | 9 516 |
| Equity as at 30 Sep 2022 | 1 160 | 575 039 | 35 421 | -1 356 | -156 550 | 453 715 | 7 838 | 461 553 |
| Equity as at 1 Jan 2023 | 1 161 | 575 039 | 34 162 | -588 | -176 919 | 432 855 | 4 963 | 437 818 |
| Total comprehensive income | - | - | - | 2 616 | -34 630 | -32 014 | -2 892 | -34 906 |
| Issue of share capital1) | 105 | 116 758 | - | - | - | 116 863 | - | 116 863 |
| Cost of share-based payment | - | - | 6 974 | - | - | 6 974 | - | 6 974 |
| Equity as at 30 Sep 2023 | 1 266 | 691 797 | 41 136 | 2 028 | -211 549 | 524 678 | 2 071 | 526 749 |
1) Includes net proceeds from private placement of NOK 120 million
HydrogenPro ASA ("the Company") is a public limited company, incorporated in Norway, headquartered in Porsgrunn and listed on Oslo Stock Exchange. Address headquarters: Hydrovegen 6, 3933 Porsgrunn, Norway.
The Company was established in 2013 by individuals with background from the electrolysis industry which was established in Telemark, Norway by Norsk Hydro in 1927. HydrogenPro comprises an experienced engineering team of leading industry experts, drawing upon unparalleled experience and expertise within the hydrogen and renewable sectors. By combining in-depth knowledge with innovative design, the company continuously aspire to pioneer game-changing ideas and solutions to realize and maximize new opportunities in a smarter, sustainable, hydrogen powered future. HydrogenPro designs and supplies customized hydrogen plants in cooperation with global partners and suppliers, all ISO 9001, ISO 45001 and ISO 14001 certified. The core product is the alkaline high-pressure electrolyser.
HydrogenPro is listed on Oslo Stock Exchange under the ticker "HYPRO".
The quarterly statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" (IAS 34). The quarterly financial information does not include all information and disclosures required in the annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2022, which have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (IFRS).
The accounting policies applied in the preparation of the quarterly financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2022.
The preparation of the consolidated financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and the underlying assumptions are reviewed on an ongoing basis.
The accounting policies applied by management which includes a significant degree of estimates and assumptions or judgments that may have the most significant effect on the amounts recognized in the financial statements, are summarized below:
Refer to the annual report of 2022 for more details related to key judgement and estimations.
Geographical region
| Q3 2023 | Q3 2022 NOK '000 | YTD 2023 |
YTD 2022 |
FY 2022 | |
|---|---|---|---|---|---|
| Geographical region | |||||
| 2 274 | 1 119 | Norway | 3 176 | 2 289 | 4 885 |
| 3 165 | 100 | Europe | 3 908 | 212 | -13 |
| 210 498 | 12 408 | America | 414 089 | 27 016 | 41 370 |
| 4 524 | 944 | Asia Pacific | 19 752 | 1 616 | 10 172 |
| 220 461 | 14 572 Total revenue | 440 926 | 31 133 | 56 414 |
The Group recognise revenue according to IFRS 15 and applies judgement that significantly affect the determination of timing and amounts of revenue from contracts with customers.
Each contract is assessed with respect to whether the revenue can be classified as customised and in turn recognised using percentage of completion method. The degree of completion is calculated as expenses incurred as a percentage of estimated total expenses. Total expenses are reviewed on a regular basis. If the projects are expected to result in losses the total estimated loss is recognised immediately.
Liquidated Damages (LDs) are penalties for not achieving defined milestones on time. Total liquidated damages are considered variable payments in a contract. At each reporting period HydrogenPro reassess expected variable payment and consider if any or whole is constrained. Expected variable payment is estimated based on facts and circumstances, including past performance. The Group only include the amount (some or all) in
the transaction price if it is highly probable that there won't be a significant change in the revenue recognised once the uncertainty is resolved (referred to as constraint).
The Group's revenue from contracts with customers are recognised from two principal sources: sale of electrolyser systems, and sale of engineering services. The sale of engineering services are either in combination with sale of electrolyser systems or as a separate service, as in FEED studies. All project contracts recognised in 2023 were assessed to be customised and recognised over time. The significant increase in revenues, were mainly from the progress on the delivery of the ACES project (220 MW).
Revenue recognised at point of time was mainly related to the resale of surplus materials from production.
The Groups revenue and expenses are not allocated to different segments, and this is consistent with the internal reporting provided to the chief operating decision maker.
| Q3 2023 | Q3 2022 NOK '000 | YTD 2023 |
YTD 2022 |
FY 2022 | |
|---|---|---|---|---|---|
| 219 719 | 13 955 | Revenue recognized over time | 437 649 | 30 108 | 56 051 |
| 742 | 616 | Revenue recognized at point of time | 3 276 | 1 025 | 363 |
| 220 461 | 14 572 Total revenue | 440 926 | 31 133 | 56 414 |
| Q3 2023 | Q3 2022 NOK '000 | YTD 2023 |
YTD 2022 |
FY 2022 | |
|---|---|---|---|---|---|
| 214 280 | 13 352 | Revenue from sale of electrolyser system | 433 209 | 28 635 | 51 521 |
| 6 181 | 1 219 | Revenue from sale of FEED and case-studies | 7 716 | 2 498 | 4 893 |
| 220 461 | 14 572 Total revenue | 440 926 | 31 133 | 56 414 |
| NOK '000 | 30 Sep 2023 |
31 Dec 2022 |
|---|---|---|
| Contract assets | ||
| Balances start of period (01 Jan) | 19 828 | 456 |
| Transfers from contract assets recognised at the beginning of the period to receivables | -19 828 | -456 |
| Increases due to measure of progress in the period | 248 496 | 19 828 |
| Balances end of period | 248 496 | 19 828 |
| Contract liabilities | ||
| Balances start of period (01 Jan) | 65 691 | 1 348 |
| Revenue from amounts included in contract liabilities at the beginning of the period | -65 691 | -1 259 |
| Billing and advances received not recognised as revenue in the period | 1 760 | 65 602 |
| Balances end of period | 1 760 | 65 691 |
The company has a share option programme covering board members and employees in senior positions. The total personnel expense recognised for the share-based programs, excluding social security, was NOK 1.7 million in third quarter 2023 and NOK 6.0 million year to date (NOK 7.4 million for the year 2022). This included an expense of NOK 1.5 million related to the extension of
expiration date for 1.706.000 options held by Ellen Hanetho (formerly Chair of Board of Directors), decided by the Board of Directors 8 May 2023 and 5 July 2023 as well as NOK 0.1 million related for 163.005 options held by TM Holding AS (owned by Terje Mikalsen, Chair of Board of Directors) decided by the Board of directors 5 July 2023.
| NOK '000 | Technology | Patent and licenses |
Goodwill | Total |
|---|---|---|---|---|
| Purchase cost 1 Jan 2023 | 41 366 | 11 742 | 21 935 | 75 043 |
| Acquisition of subsidiary | - | |||
| Impairment | - | |||
| Disposals | ||||
| Purchase cost 30 Sep 2023 | 41 366 | 11 742 | 21 935 | 75 043 |
| Accumulated depreciation 1 Jan 2023 | 8 279 | 2 348 | - | 10 627 |
| Depreciation year to date 2023 | 3 102 | 1 761 | - | 4 863 |
| Net book value 30 Sep 2023 | 29 985 | 7 633 | 21 935 | 59 552 |
| Economic life | 5 years | 5 years | ||
| Depreciation method | linear | linear |
The Group's Intangible assets comprises technology following the acquisition of HydrogenPro Denmark (Advance Surface Plating ApS), patent and licences relating to FEED-studies to be used in the further development of 100 MW production plants and goodwill
following the acquisition of 75 per cent of the shares of HydrogenPro Tianjin CO Ltd.
No additions of intangible assets have been recognised year to date 2023.
| NOK '000 | Plant and machinery |
Movables | Machinery and plant in progress |
Right-of-use assets |
Total |
|---|---|---|---|---|---|
| Purchase cost 1 Jan 2023 | 55 503 | 4 686 | 597 | 21 405 | 82 191 |
| Additions | 11 889 | 192 | - | 6 898 | 18 980 |
| Remeasurements/Modifications | -2 554 | -2 554 | |||
| From Machinery and plant in progress | 636 | - | -636 | - | |
| Acquisition of subsidiary | - | - | - | - | |
| Disposals | - | - | - | - | |
| Exchange differences | 1 601 | 275 | 39 | 460 | 2 375 |
| Purchase cost 30 Sep 2023 | 69 629 | 5 153 | - | 26 209 | 100 991 |
| Accumulated depreciation 1 Jan 2023 | 4 618 | 630 | - | 3 780 | 9 028 |
| Depreciation year to date 2023 | 5 574 | 556 | - | 5 253 | 11 383 |
| Exchange differences | 37 | 7 | - | 37 | 81 |
| Net book value 30 Sep 2023 | 59 400 | 3 961 | - | 17 138 | 80 499 |
| Economic life | 5-10 years | 5-10 years |
|---|---|---|
| Depreciation method | linear | linear |
Property, plant and equipment and right of use assets mainly relate to the production plant facility in Tianjin China and Aarhus, Denmark, the Technology Centre at Herøya, Norway and office facilities in Norway, Denmark and China.
Total additions year to date in 2023 were NOK 19.0 million. Additions of NOK 11.9 million in Plant and machinery were mainly
HydrogenPro has joined as a co-investor by financing DG Fuels LLC's ("DG Fuels") sustainable aviation fuel (SAF) project. The convertible receivable is measured at fair value through profit or loss based on the level 3 in the fair value hierarchy.
related to investments made to increase manufacturing capacity in China. NOK 6.9 million were recognised as right-of-use assets following a new lease for office space in Oslo, Norway. The lease term was adjusted in the third quarter due to termination of the contract.
Level 3 has been defined as follows:
▪ Value measurements of assets or liabilities that are not based on observed market values.
| NOK '000 | 30 Sep 2023 |
31 Dec 2022 |
|---|---|---|
| Fair value measurement categorized as level 3 | ||
| Convertible receivables start of period (01 Jan) | 52 056 | 26 458 |
| Unrealised change in value for the period recognized in the income statement | 21 479 | 22 485 |
| Effect of foreign currency translation | 5 708 | 3 113 |
| Convertible receivables end of period | 79 244 | 52 056 |
The initial closing date was 29 October 2021, and HydrogenPro's contribution was NOK 25.0 million (USD 3 million). The fair value valuation of the conversion note is done by the Group in connection with external advisor.
During the second quarter of 2023, DG Fuels issued new convertible bonds, secured financing and entered FEED-phase (FEL 3). The positive development had an effect on the fair value measurement of the convertible and a change in fair value of NOK
21.5 million was recognised through profit and loss. Strategic partners and investors, including Airbus, was announced in the third quarter. No other events have occurred in the third quarter, which have had significant effect on the fair value measurement of the convertible note.
The fair value of the conversion rights has been calculated to be NOK 51.5 million (USD 4.8 million) as at 30 September 2023. The significant unobservable inputs used in the fair value measurement are price of the underlying and implied volatility. Total value of the
convertible receivable is the sum of bond and convertible rights and amounts to NOK 79.2 million (USD 7.5 million).
Based on changes in price of the underlying ranging from NOK 70.0 million to NOK 116.6 million (USD 6.6 million to USD 11.0 million) and changes in volatility ranging from 24% to 34%, the value of the conversion rights is calculated in an interval from NOK 28.5 million to NOK 74.8 million (USD 2.7 million to USD 7.0 million).
| NOK '000 | 30 Sep 2023 |
31 Dec 2022 |
|---|---|---|
| Inventory | ||
| Work in progress | - | 2 861 |
| Raw material | 20 328 | 32 901 |
| Carrying amount | 20 328 | 35 762 |
Inventories comprises purchased raw material and work in progress. Raw material includes parts that become an integrated part of finished goods.
Obsolescence is considered for inventories and as of 30 September 2023 there were write-downs of obsolete goods of NOK 8.8 million (no write-downs as of 31 December 2022).
| NOK '000 | Accrued Warranty |
Other provisions |
30 Sep 2023 |
31 Dec 2022 |
|---|---|---|---|---|
| Provisions | ||||
| Balances start of period (01 Jan) | - | - | - | - |
| Additions | 11 491 | 6 318 | 17 809 | - |
| Used during the year | - | - | - | - |
| Changes in estimates | - | - | - | - |
| Exchange differences | - | - | - | - |
| Balances end of period | 11 491 | 6 318 | 17 809 | - |
| Current provisions | 6 895 | 6 318 | 13 213 | - |
| Non-current provisions | 4 596 | - | 4 596 | - |
Estimated warranty obligations are recorded in the period in which the related revenue is recognised or when a project is installed or commissioned. Warranty is based on both contractual commitments and caused by liability under background law.
The Groups warranties provides assurance that the electrolysers are not defect and complies with required specifications and is accounted for under IAS 37 as a provision and an other operating expense. Accrued warranty provision is normally based on
experience and provision often comprises a percentage of revenue from contracts with customers.
As historical experience is limited, the Group considers, and estimate based on available industry data, any documented product failure rates and expected material and labour costs for the project.
Other provisions include provisions for settlements and claims.
| Ownership interest | Voting power | |||||
|---|---|---|---|---|---|---|
| Company | Country | Main operations | 30 Sep 2023 |
31 Dec 2022 |
30 Sep 2023 |
31 Dec 2022 |
| Advanced Surface Plating ApS | Denmark | Technology industries | 100 % | 100 % | 100 % | 100 % |
| HydrogenPro Tianjin CO Ltd | China | Technology industries | 75 % | 75 % | 75 % | 75 % |
| HydrogenPro Shanghai CO Ltd | China | Technology industries | 100 % | 100 % | ||
| Kvina Energy AS | Norway | Technology industries | 50 % | 50 % | 50 % | 50 % |
| HydrogenPro France* | France | Technology industries | 100 % | 100 % | 100 % | 100 % |
| HydrogenPro Inc* | United States of America | Technology industries | 100 % | 100 % | 100 % | 100 % |
*The company is excluded from the consolidation as this is a company without significant assets or operating assets that provides services to the group that would have been consolidated.
HydrogenPro discloses alternative performance measures. This is based on the group's experience that APMs are frequently used by analysts, investors and other parties as supplemental information. The purpose of APMs is to provide an enhanced insight into the operations, financing and future prospect of the group. Management also uses these measures internally to drive performance in terms of monitoring operating performance and long-term target setting. APMs are adjusted IFRS measures that are defined, calculated and used in a consistent and transparent manner over the years and across the group where relevant. Financial APMs should not be considered as a substitute for measures of performance in accordance with IFRS.
HydrogenPro's financial APMs:
█ Adjusted EBITDA excludes special items, e.g., non-cash impact of incentive program and other accruals/provisions, to better present the underlying performance in the reported period.
█ Net investments are additions to property, plant and equipment (capital expenditures), plus long-term securities, intangible assets, long-term advances and investments in equity accounted investments, including amounts recognised in business combinations for continuing operations.
Reconciliations of the APMs to the most directly reconcilable line item, subtotal or total presented in the financial statements are presented below:
| Q3 2023 | Q3 2022 | NOK million | YTD 2023 |
YTD 2022 |
FY 2022 | |
|---|---|---|---|---|---|---|
| 220.5 | 14.6 | Revenue from contracts with customers | 440.9 | 31.1 | 56.4 | |
| 198.0 | 11.5 | - | Cost of goods sold | 376.4 | 22.9 | 44.4 |
| 22.4 | 3.1 = Gross profit/(loss) | 64.5 | 8.3 | 12.0 | ||
| 22.4 | 3.1 | Gross profit/(loss) | 64.5 | 8.3 | 12.0 | |
| 220.5 | 14.6 | / | Revenue from contracts with customers | 440.9 | 31.1 | 56.4 |
| 10.2 % | 21.1 % = Gross profit margin | 14.6 % | 26.6 % | 21.3 % | ||
| 22.4 | 3.1 | Gross profit/(loss) | 64.5 | 8.3 | 12.0 | |
| 29.0 | 17.6 | - | Personnel expenses | 66.7 | 45.4 | 62.7 |
| 23.6 | 14.5 | - | Other operating expenses | 50.4 | 35.9 | 54.6 |
| -30.2 | -29.1 = EBITDA | -52.6 | -73.0 | -105.3 | ||
| -30.2 | -29.1 | EBITDA | -52.6 | -73.0 | -105.3 | |
| 4.5 | 1.5 | + | Non-cash cost of incentive programs/payrolls | 6.7 | 11.5 | 10.3 |
| 6.7 | 0.1 | + | Non-cash provisions with limited predictive value | 6.8 | 0.7 | 0.7 |
| -19.0 | -27.4 = Adj. EBITDA (excl. non-cash operating expenses) | -39.2 | -60.8 | -94.3 | ||
| -30.2 | -29.1 | EBITDA | -52.6 | -73.0 | -105.3 | |
| 5.7 | 3.3 | - | Depreciation and amortization expenses | 16.2 | 8.5 | 14.0 |
| -35.9 | -32.3 = Operating profit/(loss) (EBIT) | -68.8 | -81.6 | -119.2 |
| Q3 2023 | Q3 2022 | NOK million | YTD 2023 |
YTD 2022 |
FY 2022 | |
|---|---|---|---|---|---|---|
| 1.2 | 9.6 | Purchases of tangible assets | 12.1 | 13.4 | 14.7 | |
| 0.0 | 0.0 | + | Purchases of intangible assets | 0.0 | 0.0 | 0.0 |
| 1.2 | 9.6 | = Investments before aquisitions | 12.1 | 13.4 | 14.7 | |
| 0.0 | 8.6 | + | Investments due to acquisitions | 0.0 | 22.9 | 32.5 |
| 1.2 | 18.2 | = Investments after aquisitions | 12.1 | 36.3 | 47.2 | |
| 548.1 | 794.0 | Order backlog start of period | 747.0 | 33.3 | 33.3 | |
| 7.0 | 3.2 | + | Order intake | 14.0 | 776.2 | 773.0 |
| -219.7 | -14.6 | - | Revenue from project contracts with customers | -438.2 | -31.1 | -56.1 |
| -13.3 | 66.4 | +/- | Revaluation | -0.8 | 70.6 | -3.3 |
| 322 | 849 | = Order backlog end of period | 322 | 849 | 747 |
Hydrovegen 6, 3933 Porsgrunn, Norway hydrogen -pro.com info@hydrogen -pro.com Tel: +47 990 79 500
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