Interim / Quarterly Report • Aug 24, 2023
Interim / Quarterly Report
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First Half of 2023
Vow Green Metals
Vow Green Metals is on a mission to accelerate the world's transition to renewable materials by offering viable green alternatives to replace fossil materials in the metallurgical industry.
| About Vow Green Metals Spearheading the development of a rapidly growing biocarbon industry |
3. |
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| Highlights – first half 2023 Key milestones and subsequent events |
5. |
| Financial review Results, balance sheet and cash flow |
7. |
| Operational review and outlook Creating shareholder value through circular and sustainable solutions |
9. |
| Environmental, social and governance Promoting responsible business practises and respect for the environment, people and society |
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| Financial statements first half 2023 Facts and figures Vow Green Metals Consolidated |
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1.
Half-Year Report – First Half 2023 – VOW Green Metals
Vow Green Metals' strategy is to be a leading producer of biocarbon and other carbon neutral products that enables the green transition in hard-to-abate industries. We are on a mission to accelerate the world's transition to renewable materials by offering green alternatives to replace fossil reduction agents in the metallurgical industry. The core of our business is to build, own and operate biocarbon production plants using state-of-the-art pyrolysis technology to turn biomass and biomass waste-streams into our core product, biocarbon. With our standardized solutions, unique access to proprietary technology, and a growing global pipeline of projects, we are upholding our first mover position in a growing market where speed and scale will be determining factors.
Building a Profitable Business while Meaningfully Reducing Emissions
Leading producer of advanced biocarbon and other green products enabling low-cost renewable production at scale for the metallurgical industry
Market Leader in a Rapidly Growing Market
First-mover advantage with growing global pipeline of prospects and projects a 600,000 tons of biocarbon
Proven Technology and Standardized Factory Modules in Place
Secured IP rights to standardized plant architecture and biocarbon factory modules and unique access to proprietary technology
Half-Year Report – First Half 2023 – VOW Green Metals
| Unaudited | Unaudited | Audited | |
|---|---|---|---|
| (Amounts in NOK) | 1H-2023 | 1H-2022 | 2022 |
| Statement of income | |||
| EBITDA | (9,381,574) | (6,694,048) | (17,414,579) |
| Profit for the period | (9,543,825) | (6,842,906) | (17,370,827) |
| Balance sheet | |||
| Total non-current assets | 105,348,544 | 60,651,870 | 88,100,337 |
| Total current assets | 20,463,393 | 76,839,145 | 43,562,257 |
| Total assets | 125,811,937 | 137,491,014 | 131,662,593 |
| Total equity | 116,328,789 | 134,320,664 | 125,883,753 |
| Total non-current liabilities | 83,910 | 433,607 | 178,486 |
| Total current liabilities | 9,399,237 | 2,736,743 | 5,600,354 |
| Total equity and liabilities | 125,811,937 | 137,491,014 | 131,662,593 |
Half-Year Report – First Half 2023 – VOW Green Metals
Vow Green Metals made good progress in the first half of 2023 with the commencement of construction of the Company's early production line at Follum, projected to be put in operation by the end of the third quarter this year. The Company also started the operational work on the first phase of the main project at Follum and has completed a pre-study for phase 2 of the project. Vow Green Metals also announced a new key project at Viken Park in Eastern Norway and made good progress on maturing the existing pipeline of project opportunities, currently totaling 620,000 tons of annual biocarbon production capacity.
Vow Green Metals' early production line is shaping up according to plan.
Vow Green Metals is expecting to have its early production line in operation in the third quarter, and the Company expects to ramp-up the production capacity over the following months. The early production line employs a Biogreen pyrolysis reactor, which operates solely on electric power. In March, the necessary infrastructure work was finalized, including the connection to the main transformer in the area ensuring a power supply capacity of 500 kW.
Process equipment, including the pyrolysis reactors installed.
In total, about 30 tons of process equipment has been delivered and installed onsite. Most of the installation work was done during the second quarter, including the factory building.
Remaining installation work will be completed in the third quarter. This is in line with the current plans to complete cold and hot commissioning of the early production line, followed by first biocarbon production, later in the third quarter.
In close cooperation with Treklyngen Industripark and other partners colocated at the industrial park at Follum, Eastern Norway, Vow Green Metals is building a large-scale biocarbon facility, set to become one of Europe's largest. The first phase of the biocarbon facility will have an annual production capacity of 10,000 tons of biocarbon. The project entered execution phase in 2023, and the first shipment of Biogreen pyrolysis reactors was delivered at Follum in January (the same technology installed at the early production line).
The plot at Follum was prepared for groundwork during the second quarter.
The project is forging ahead with tender for civil works and process installation nearly completed. Clearing of the plot to prepare for groundwork and construction was completed during the second quarter. The local entrepreneur, Strand og Enger, was awarded the tender for infrastructure development. In May the excavation work to establish infrastructure to the plot, including district heating pipes, power grid and water connection, started. The infrastructure project is done in collaboration with Treklyngen Industripark and different parties located in the industrial area, providing a good foundation for further collaboration to e.g. utilize excess heat. The project is proceeding according to plan, and Vow Green Metals expects to commence civil works in the fall of 2023, which will be followed by the installation of process equipment.
Vow Green Metals has completed the feasibility study for doubling the production capacity at Follum, from 10,000 to 20,000 tons. In the second phase, the Company plans to use the large-scale pyrolysis reactor from VOW ASA and C.H. Evensen. This technology is well-suited for large-scale production of biocarbon and fits well into already planned buildings and logistics solutions The technology offers a hybrid-energy solution, providing additional flexibility as it can run on both gas and on electricity. In addition, the C.H. Evensen reactor is largely self-sufficient with power as it can run on the bioenergy it produces in the process of producing biocarbon. Consequently, the second phase expansion of the Follum project does not depend on an expansion in the power grid capacity in the area.
Infrastructure development progressing at Follum.
The pre-study of the concept commenced early in 2023 and was completed in June. The project passed its gate review in august 2023, and main study was initiated in mid-August.
In February, Vow Green Metals and Viken Park, a large upcoming industrial park in Eastern Norway, signed a Letter of Intent (LoI) to collaborate on developing a biocarbon production facility at the industrial park. The biocarbon production plant will supply the Viken Park area with bioenergy while producing biocarbon and bio-oil for industrial use, making it a key project in ensuring zero emissions industries at the industrial park.
Viken Park: Preliminary 3D layout of the plot
In the second quarter of 2023, Vow Green Metals completed a feasibility study for the project, as a first step in the Company's project model. Mapping of suitable technology concepts has been conducted in collaboration with Vow Green Metal's technology partner, Vow ASA. Before summer, Vow Green Metals decided to move the project forward, and a pre-study for a plant with potential production capacity of 30,000 tons of biocarbon commenced in August.
Viken Park Concept
Vow Green Metals is continuing to build its organization and recruiting key personnel to further strengthen the organization with operational staff, management and support functions. Six new positions were filled during the first half of 2023, majority of which included operative staff for the early production line and the first phase of the biocarbon facility at Follum. The company also strengthened its metallurgical competence through the recruitment of two key hires from the metallurgical industry. All new six hires will start their new career at Vow Green Metals during the fall of 2023. Vow Green Metals is also currently searching for a new permanent CFO, and the company expects to finalize this process by the fall of 2023.
Business development
Vow Green Metals has a total of 18 potential projects in its pipeline, in addition to the current plant construction and potential expansion at Follum. Several projects have matured during the last months. The current project pipeline has been high-graded and some new opportunities have been added. The total biocarbon production capacity is now 620,000 tons annually. Our process produces a significant amount of excess energy, and the majority of these projects are intended to be done in collaboration with large energy consumers which can be energy off-takers.
Vow Green Metals is exposed to several risks, and the Board and executive management are continuously monitoring the Company's risk exposure, working to improve its internal control processes and mitigation efforts. For a further description of the risk factors, please see an overview in the annual report for 2022, published on 27 April 2023. The report can be found here:
www.vowgreenmetals.com/investors/res ults-and-presentations
Since the launch of the European Green Deal in 2019, the metallurgical industry has increasingly been recognized as one of the most important strategic capacities of Europe, but at the same time as one of the most challenging sectors to decarbonize. In this context, the Company expects to see enhanced demand for biocarbon as a solution to decarbonize Europe's traditional metallurgical industry. As coal is phased out as an energy source, it will become increasingly difficult to source high-quality coal needed for metal production. At the same time, the green transition and other macro trends, like the rise of the middle class worldwide, are creating a pull in demand for sustainable metal-based materials to be used in transportation and electronics, and silicon-based renewable technologies, such as solar PV.
The EU ETS rose significantly through 2022 and has continued on high levels in 2023. As the cost of using fossil reduction agents increase in line with the EU ETS, the price for biocarbon will continue to be even more competitive. The same is true for the Company's other products. In its recent Global Energy and Climate Model, the International Energy Agency (IEA) projects an average price of 250 USD per ton of CO2 in advanced economies by 2050, almost tripling from today's price.
Vow Green Metals is relying on its ability to source vast amounts of feedstock and is supported by favorable regulatory tailwinds. Renewable Energy Directive III (RED III) is one of the cornerstone legislations of the Fit for 55 package which aims to ensure that climate and energy policy is fit to meet the EU's emissions reduction target of at least 55 percent by 2030. On 30 March 2023, the colegislators reached an agreement, which strengthens the sustainability criteria for biomass used for energy by legally stating that woody biomass should be used according to its highest economic and environmental added value. This promotes the recovery of wood waste for biocarbon production, which will be an enabler for expanding Vow Green Metals' biocarbon production facilities in Europe in the coming years.
The Company is in dialogue with several metallurgical companies that are actively seeking to secure access to significant volumes of biocarbon, as a response to new regulation and expectations from investors and customers. Vow Green Metals is also in dialogue with several companies with strong interest for its biooil and bioenergy products. By utilizing the energy surplus from the Company's biocarbon production process, adjacent energy intensive industries can be supplied with bioenergy. The bio-oil has a large value-creation potential and many potential uses. The Company see a strong interest from refineries, shipping, asphalt producers and more.
Vow Green Metals has high ambitions within the area of sustainability. The Company is looking back at its first full year of commercial activity, and as the business grows, the Company's efforts within the sustainability area will be progressed further to match the ambitions within the field. Vow Green Metals' business is climate friendly at the core, as the Company paves the way for increased biocarbon supply to the metallurgical industry, enabling large-scale decarbonization of this critical hard-toabate industry. Alongside progressing its core activities, Vow Green Metals promotes responsible business practices with respect to both the environment, people, and society. This means that the company works systematically on issues such as HSE (Health, safety and environment), non-discrimination, human and labour rights, anti-corruption, responsible sourcing, and responsible marketing practices. The Company respects fundamental human rights as described in international human rights conventions such as the UN Convention on Human Rights and the labour rights conventions of the International Labour Organization (ILO). To promote responsible business practices throughout the value chain, Vow Green Metals is facilitating good dialogue with its stakeholders.
Vow Green Metals is on a mission to accelerate the world's transition to renewable materials by offering viable green alternatives to replace fossil materials in the metallurgical industry. This industry accounts for close to ten percent of global CO2 emissions and is recognized as a hard-to-abate industry. Sourcing biocarbon is one of few viable solutions to decarbonize this industry. In some parts of the industry, biocarbon is the only available and viable option to decarbonize. Vow Green Metals enables the metallurgical industry to join the green transition and achieve CO2 neutrality by replacing fossil carbon with biocarbon derived from biomass and biomass waste streams such as wood waste and demolition wood.
The United Nations' Sustainable Development Goals (SDGs) are a global call of action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity. Vow Green Metals recognizes the importance of all 17 SDGs and aspires to contribute to all of them. Anchored in the Company's core business and corporate strategy, Vow Green Metals naturally prioritizes and puts special emphasis on the following four SDGs:
Vow Green Metals' circular biocarbon process produces significant amounts of clean energy, which can help decarbonize several industries, or be re-used in the Company's biocarbon production process.
Vow Green Metals is leading the way in building a biocarbon industry which enables the metallurgical industry to replace fossil reduction materials with valuable biocarbon in their metal making processes
With our environmentally friendly and circular biocarbon production process, we add value to the biomass life cycle, and thus we are enhancing circular economy. We also use SDG 12 as guidance in our procurement practices.
We are producing biocarbon and other green products to combat climate change by enabling hard-to-abate industries to decarbonize their production processes
Vow Green Metals works actively with health, safety, and environment (HSE). Already in 2023, the Company is entering operational phase with an early production line at Follum, Eastern Norway, which calls for an increased focus on HSE. Vow Green Metals is committed to comply with strict health and safety standards and is focusing on building a strong HSE culture within the organization to ensure the highest quality and safety standards. Vow Green Metals aims to be an attractive workplace, where the individual employee can use their skills and abilities.
The Company's target is to ensure that no serious accidents occur in relation to its operations. All employees shall have a good physical, psychosocial and organizational working environment, which is better or at least as good as other companies within the same. Vow Green Metals aspires to be among the leaders in the industry when it comes to ensuring the least possible negative impact on the environment.
The Company has good internal controls with a systematic, well-documented and
targeted approach to HSE with the purpose of preventing undesirable incidents and ensuring a good working environment, low absence due to illness rate, good profitability, and keeping emissions to a minimum. The Company has strict requirements for HSE in selecting various suppliers. In 2023, absence due to illness was 0.61 percent. Which is well below the 5 percent target.
The Company has established clear targets for its HSE efforts, laid down in the Company's HSE handbook:
The Company is working to prevent discrimination and to ensure equal opportunities for its employees regardless of gender, age, ethnicity, religion, belief, disability, pregnancy, parental leave, care responsibility, sexual orientation, gender identity, gender expression, or combinations of these grounds.
As of 30 June 2023, the Company had 8 employees, of which 3 women.
| Employees per 30.06.23 | Female | Male | Total |
|---|---|---|---|
| 30-50 | 2 | 3 | 5 |
| > 50 | 1 | 2¹ | 3 |
| Total | 3 | 5 | 8 |
'¹ Include a > 50 in a 20 percent position
The board of Vow Green Metals AS consists of 4 persons, of which 3 are women.
| Board of directors | Female | Male | Total |
|---|---|---|---|
| 30-50 | 1 | 0 | 1 |
| > 50 | 2 | 1 | 3 |
| Total | 3 | 1 | 4 |
With high ambitions within the area of sustainability, Vow Green Metals is committed to develop its approach to this important area as the business grows. The Company's efforts within the sustainability area will be progressed further in 2023 with a renewed materiality assessment to ensure that the sustainability work is focused on material issues based on business trends, potential risks, the interest of key stakeholders and the opportunities the business is facing. The Company will continue its efforts to get its policy framework in place to ensure that the sustainability work is implemented widely in the business.
Half-Year Report – First Half 2023 – VOW Green Metals
| Unaudited | Unaudited | Audited | ||
|---|---|---|---|---|
| (Amounts in NOK) | Note | H1 2023 | H1 2022 | 2022 |
| Employee expenses | 2 | (2,435,211) | (3,474,294) | (10,136,346) |
| Other operating expenses | 3 | (6,946,363) | (3,219,754) | (7,278,233) |
| EBITDA | (9,381,574) | (6,694,048) | (17,414,579) | |
| Depreciation | 8, 11 | (145,327) | (131,870) | (270,056) |
| EBIT | (9,526,901) | (6,825,918) | (17,684,636) | |
| Finance income | 56 | 0 | 342,594 | |
| Finance expense | (16,980) | (16,988) | (28,785) | |
| Interest expense | 0 | 0 | 0 | |
| Interest expenses - leasing | 0 | 0 | 0 | |
| Other financial expense | 0 | 0 | 0 | |
| Net financial items | (16,924) | (16,988) | 313,809 | |
| Profit before tax | (9,543,825) | (6,842,906) | (17,370,827) | |
| Income tax expenses | 0 | 0 | 0 | |
| Profit for the period | (9,543,825) | (6,842,906) | (17,370,827) | |
| Total comprehensive income for the year | (9,543,825) | (6,842,906) | (17,370,827) |
|---|---|---|---|
| Total other comprehensive income, net of tax | 0 | 0 | 0 |
| Other comprehensive income | 0 | 0 | 0 |
| Profit for the period | (9,543,825) | (6,842,906) | (17,370,827) |
| (Amounts in NOK) |
| Unaudited | Unaudited | Audited | ||
|---|---|---|---|---|
| (Amounts in NOK) | Note | 30/06/23 | 30/06/22 | 31/12/22 |
| ASSETS | ||||
| Non-current assets | ||||
| Property, plant and equipment | 8 | 82,809 | 66,681 | 53,994 |
| Intangible assets | 9 | 4,407,972 | 968,859 | 1,711,502 |
| Other intangible assets | 9 | 4,078,468 | 1,213,890 | 3,461,733 |
| Investment in subsidiaries | 0 | 0 | 0 | |
| Assets under construction | 10 | 96,433,054 | 57,808,990 | 82,406,376 |
| Right-of-use assets | 11 | 346,240 | 593,450 | 466,732 |
| Total non-current assets | 105,348,544 | 60,651,870 | 88,100,337 | |
| Current assets | ||||
| Receivables from associates | 0 | 0 | 0 | |
| Other receivables | 10 | 10,163,140 | 800,963 | 1,010,940 |
| Cash and cash equivalents | 4 | 10,300,253 | 76,038,182 | 42,551,317 |
| Total current assets | 20,463,393 | 76,839,145 | 43,562,257 | |
| Total assets | 125,811,937 | 137,491,014 | 131,662,593 | |
| EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Share capital | 5 | 1,073,976 | 1,071,809 | 1,073,976 |
| Share premium | 149,871,822 | 149,487,322 | 149,871,822 | |
| Other reserves | 3,042,799 | 1,332,885 | 3,042,799 | |
| Retained earnings | (37,659,807) | (17,571,352) | (28,104,843) | |
| Total equity | 116,328,789 | 134,320,664 | 125,883,753 | |
| Liabilities Non-current liabilities |
||||
| Non-current lease liabilities | 11 | 83,910 | 433,607 | 178,486 |
| Total non-current liabilities | 83,910 | 433,607 | 178,486 | |
| Current liabilities | ||||
| Trade creditors | 6,284,274 | 284,306 | 1,925,313 | |
| Payables to associates | 6 | 968,859 | 968,859 | 968,859 |
| Public duties payable | 7 | 708,822 | 877,075 | 977,891 |
| Current lease liabilities | 11 | 267,810 | 181,960 | 279,575 |
| Other current liabilities | 7 | 1,169,473 | 424,543 | 1,448,717 |
| Total current liabilities | 9,399,237 | 2,736,743 | 5,600,354 | |
| Total liabilities | 9,483,147 | 3,170,350 | 5,778,840 | |
| Total equity and liabilities | 125,811,937 | 137,491,014 | 131,662,593 |
Lysaker, 23 August 2023
Narve Reiten Chairman
Line Tønnessen Board member
Cecilie Jonassen Chief Executive Officer
Kari Stine Tærum Board member
Trude Sundset Board member
| Total | ||||
|---|---|---|---|---|
| equity | ||||
| 1,073,976 | 149,871,822 | 3,042,799 | (28,104,843) | 125,883,753 |
| - | - | - | (9,554,964) | (9,554,964) |
| 1,073,976 | 149,871,822 | 3,042,799 | (37,659,807) | 116,328,789 |
| Share | Share | Other | Retained | Total |
| capital | premium | reserves | earnings | equity |
| 1,071,809 | 149,487,322 | 1,332,885 | (10,728,446) | 141,163,570 |
| - | - | - | (17,376,397) | (17,376,397) |
| - | ||||
| 386,666 | ||||
| 1,709,914 | - | 1,709,914 | ||
| 1,073,976 | 149,871,822 | 3,042,799 | (28,104,843) | 125,883,753 |
| Share capital - 2,167 |
Share premium - 384,500 |
Other reserves - - |
Retained earnings - - |
* Stock options were exercised in September 2022 in connection with employee stock option program.
| 30.06.2022 | |||||
|---|---|---|---|---|---|
| Share | Share | Other | Retained | Total | |
| (Amounts in NOK) | capital | premium | reserves | earnings | equity |
| Equity at 31.12.2021 | 1,071,809 | 149,487,322 | 1,332,885 | (10,728,446) | 141,163,570 |
| Profit for the period | 0 | 0 | 0 | (6,842,906) | (6,842,906) |
| Equity at 30.06.2022 | 1,071,809 | 149,487,322 | 1,332,885 | (17,571,352) | 134,320,664 |
| Unaudited | Unaudited | Audited | ||
|---|---|---|---|---|
| (Amounts in NOK) | Note | H1 2023 | H1 2022 | 2022 |
| Cash flow from operating activities | ||||
| Result before income tax | (9,543,824) | (6,842,906) | (17,370,827) | |
| 0 | 0 | 0 | ||
| Adjustments: | 0 | 0 | 0 | |
| Depreciation | 8, 11 | 72,587 | 131,870 | 270,056 |
| Interest | 0 | 0 | (339,767) | |
| Valuation outstanding options | 0 | 0 | 1,709,914 | |
| Changes in other receivables | (1,310,421) | 507,376 | 297,398 | |
| Change in current liabilities | (500,492) | (426,917) | 2,333,509 | |
| Net cash flow from operating activities | (11,282,151) | (6,630,577) | (13,099,716) | |
| Cash flow from investing activities | ||||
| Investments in tangible assets | 8 | (35,160) | (76,163) | (66,684) |
| Investments in intangible assets | 9 | (3,313,205) | (1,213,890) | (4,204,376) |
| Investments in assets under construction | 10 | (17,568,458) | (22,531,442) | (47,128,828) |
| Net cash flow from investing activities | (20,916,823) | (23,821,495) | (51,399,888) | |
| Cash flow from financing activities | ||||
| Current loan to associates | 0 | 0 | 0 | |
| Interest received | 0 | 0 | 339,767 | |
| Share capital reduction | 0 | 0 | 0 | |
| Share capital increase | 0 | 0 | 0 | |
| Proceeds from issuing stock | 0 | 0 | 386,666 | |
| Leasing obligations | (52,090) | (115,033) | (280,800) | |
| Proceeds from Enova Grant | 10 | 0 | 38,472,510 | 38,472,510 |
| Net cash flow from financing activities | (52,090) | 38,357,477 | 38,918,144 | |
| Net change in cash and cash equivalents | (32,251,064) | 7,905,405 | (25,581,460) | |
| Cash and cash equivalents at start of period | 42,551,317 | 68,132,777 | 68,132,777 | |
| Cash and cash equivalents at end of period | 10,300,253 | 76,038,182 | 42,551,317 | |
| Non-restricted cash | 9,937,177 | 75,449,790 | 42,037,446 | |
| Restricted cash | 363,076 | 588,392 | 513,871 | |
| Cash and cash equivalents at end of period | 10,300,253 | 76,038,182 | 42,551,317 |
Vow Green Metals AS was incorporated on 14.01.2021.
Vow Green Metals was demerged from the parent company Vow ASA on 09.07.2021 in a subsequent listing on Euronext Growth on 12.07.2021.
Vow Green Metals Follum AS, a wholly owned subsidiary of Vow Green Metals AS, was established in May 2022. Vow Green Metals Follum AS will own the building and infrastructure related to the production plant at Follum, Norway.
VGM Operatør AS, a wholly owned subsidiary of Vow Green Metals AS, was established in June 2023, to own and operate the process related to Vow Green Metals AS' production plant at Follum, Norway.
The consolidated financial statements have been prepared in accordance with the Norwegian Accounting law and regulations for simplified International Financial Reporting Standards (IFRS). This generally implies that recognition and measurement are aligned with international accounting principles (IFRS), while presentation and disclosures are in accordance with the Norwegian Accounting Act and good accounting practice.
Sales of goods are recognised when the goods are delivered, and title has passed to the customer. Revenue is measured at the fair value of the consideration received or receivable.
Revenue is recognised when the service is performed. Revenue is measured at the fair value of the consideration received or receivable.
Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase.
In principle, cost of sales and other expenses are recognised in the same period as the revenue to which they relate. In instances where there is no clear connection between the expense and revenue, the apportionment is estimated. Other exceptions to the matching criteria are disclosed where appropriate.
The functional currency and the presentation of the company is Norske Kroner (NOK). Foreign currency transactions are translated into the functional currency using the exchange rates at the transaction date. Monetary balances in foreign currencies are translated into the functional currency at the exchange rates on the date of the balance sheet. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
Tax expenses are matched with operating income before tax. Tax related to equity transactions e.g. group contribution, is recognised directly in equity.
Tax expense consists of current income tax expense and change in net deferred tax. The tax expense is allocated to ordinary income and the effect of extraordinary items in accordance with the respective taxable income. Deferred tax liabilities and deferred tax assets are presented net in the balance sheet.
Assets intended for permanent ownership or use in the business are classified as non-current assets. Other assets are classified as current assets. Receivables due within one year are classified as current assets. The classification of current and non-current liabilities is based on the same criteria.
Current assets are valued at the lower of historical cost and fair value.
Fixed assets are carried at historical cost but are written down to their recoverable amount if this is lower than the carrying amount and the decline is expected to be permanent. Fixed assets with a limited economic life are depreciated in accordance with a reasonable depreciation schedule.
Subsidiaries and investments in associates are carried at cost in the parent company accounts. A write-down to fair value will be performed if the impairment is not considered to be temporary, and an impairment charge is deemed necessary according to generally accepted accounting principles. Dividends and group contributions are recognised as other financial income.
Expenses relating to the development of intangible assets are recognised in the income statement as incurred.
Intangible assets that are acquired separately, are recognised at historical cost. Intangible assets acquired in a business combination, are recognised at historical cost when the criteria for balance sheet recognition have been met.
Intangible assets with a limited economic life are amortised on a systematic basis. Intangible assets are written down to the recoverable amount if the expected economic benefits are not covering the carrying amount and any remaining development costs.
At each year end, the company assess whether there is any indication that the asset may be impaired. If there is any indication of impairment, an impairment test is performed, and the assets or the cash generating unit's recoverable amount is calculated. When the recoverable amount is less than the carrying amount, an impairment loss is recognised in the income statement.
Tangible assets, with the exception of investment property and buildings, are valued at their cost less accumulated depreciation and impairment losses.
Assets under construction are classified as non-current assets and recognised at cost until the production or development process is completed. Assets under construction are not depreciated until the asset is taken into use.
The company has a defined contribution plan for its employees. The company's payments are recognised in the income statement as employee benefits expense for the year to which the contribution applies.
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. The company has a share-based option plan covering certain employees in senior positions. The method of settlement is at the discretion of the company, and which is described in more detail in note 2. The share option plan is recognised as equity settled share-based payments as the practice of the group is to settle in shares and not in cash.
The group leases cars. Rental contracts are typically made for fixed periods of three to five years but may have extension options. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
● fixed payments (including in-substance fixed payments), less any lease incentives receivable
● variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date
● amounts expected to be payable by the group under residual value guarantees
● the exercise price of a purchase option if the group is reasonably certain to exercise that option, and
● payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the company, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
The group determines the incremental borrowing rate based on the company's recent third-party financing in connection with the company's operations, together with an assessment of the nature of the asset.
The company is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
● the amount of the initial measurement of lease liability
● any lease payments made at or before the commencement date less any lease incentives received
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straightline basis. If the group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss.
Government grants are recognised 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 recognised systematically during the grant period. Grants are deducted from the cost which the grant is meant to cover. Investment grants are capitalised and recognised systematically over the asset's useful life. Investment grants are recognised either as deferred income or as a deduction of the asset's carrying amount.
The accounting policies adopted are consistent with those of the previous financial year, except for the amendments to IFRS which have been implemented by the company during the current financial year. Below we have listed the amendments in IFRS which have been applicable for the company's 2023 consolidated financial statements, as well as the effect of the amendments, have been listed.
The International Accounting Standards Board has issued Disclosure of Accounting policies (amendments to IAS 1 and IFRS Practice Statement 2) with amendments that are intended to help preparers in deciding which accounting policies to disclose in their financial statements.
The amendments to IAS 1 require companies to disclose their material accounting policy information rather than their significant accounting policies. The amendments to IFRS Practice Statement 2 provide guidance on how to apply the concept of materiality to accounting policy disclosures.
The amendments are effective for annual periods beginning on or after 1 January 2023. The group will assess the implications of the amendments and make the necessary adjustments in the consolidated financial statements for 1H 2023.
| (Amounts in NOK) | H1 2023 | H1 2022 | 2022 |
|---|---|---|---|
| Salaries | 5,078,130 | 4,402,492 | 10,160,026 |
| Social security tax | 694,127 | 634,376 | 1,656,180 |
| Pension cost | 307,433 | 306,401 | 616,045 |
| Other benefits | 51,457 | 10,050 | 3,033,420 |
| Total employee expenses | 6,131,146 | 5,353,319 | 15,465,671 |
| Employee expenses capitalised to investment projects | (3,695,935) | (1,879,025) | (5,329,325) |
| Total costs recognised as employee expenses | 2,435,211 | 3,474,294 | 10,136,346 |
| (Amounts in NOK) | H1 2023 | H1 2022 | 2022 |
|---|---|---|---|
| Legal | 464,915 | 187,775 | 103,125 |
| Audit fees | 375,071 | 198,669 | 464,849 |
| Consultant fees | 4,322,427 | 1,242,993 | 3,086,421 |
| Listing fees | 332,197 | 365,831 | 973,009 |
| Other expenses | 1,451,752 | 1,224,487 | 2,650,829 |
| Total other operating expenses | 6,946,363 | 3,219,754 | 7,278,233 |
| (Amounts in NOK) | H1 2023 | H1 2022 | 2022 |
|---|---|---|---|
| Bank deposits¹ | 9,937,177 | 75,449,790 | 42,037,446 |
| Restricted cash² | 363,076 | 588,392 | 513,871 |
| Total cash and cash equivalents | 10,300,253 | 76,038,182 | 42,551,317 |
1) Enova grants of NOK 7 841 779 has been accrued in June 2023 and received early July 2023 2) Restricted cash comprise of withheld taxes from employee salaries.
| H1 2023 | H1 2022 | 2022 | |
|---|---|---|---|
| Number of outstanding shares at 1 January | 165,227,092 | 164,893,759 | 164,893,759 |
| Share capital reduction | - | - | - |
| Share capital increase | - | - | - |
| Share capital increase - demerger | - | - | - |
| Share capital increase - employee stock options | - | - | 333,333 |
| Number of outstanding shares at 31 December / 30 June | 165,227,092 | 164,893,759 | 165,227,092 |
| Nominal value NOK per share at 31 December / 30 June | 0.0065 | 0.0065 | 0.0065 |
| Share capital NOK at 31 December / 30 June | 1,073,976 | 1,071,809 | 1,073,976 |
Vow Green Metals AS has one class of shares with equal rights of all shares.
| a) Balance with related parties: | ||||
|---|---|---|---|---|
| (Amounts in NOK) | H1 2023 | H1 2022 | 2022 | |
| Liabilities | ||||
| Vow ASA | Intangible assets | 968,859 | 968,859 | 968,859 |
| Total payables to associates | 968,859 | 968,859 | 968,859 |
Payables to Vow ASA of NOK 968,859 is related to the acquisition of the value of the development cost for the new planned biocarbon plant at Follum. Please see Note 9.
Vow ASA will deliver process equipment and engineering support to Vow Green Metals' biocarbon plant at Follum in Norway. Please see Note 10.
Other transactions with related parties is related to a service agreement entered into with Scanship AS, which is the subsidiary of its largest shareholder, Vow ASA. The servise comprise accounting, IT and administration services. In addition, Scanship AS re-invoices Vow Green Metals AS quarterly for shared office space at Lysaker Torg 12.
The following subsidiary is included in the consolidated financial statements:
| Company | Date of acquisition/incor poration |
Country of incorporation |
% Equity and voting share |
|---|---|---|---|
| Vow Green Metals Follum AS | 31/05/2022 | Lysaker, Norway | 100% |
| VGM Hjelpeselskap AS | 23/06/2023 | Lysaker, Norway | 100% |
| VGM Operatør AS | 23/06/2023 | Lysaker, Norway | 100% |
For further info. Please see Note 1.
| (Amounts in NOK) | H1 2023 | H1 2022 | 2022 |
|---|---|---|---|
| Public duties payable | |||
| Employee witholding tax | 363,076 | 588,392 | 513,871 |
| Social security tax | 345,746 | 288,683 | 464,020 |
| Total public duties payable | 708,822 | 877,075 | 977,891 |
| Other current liabilities | |||
| Accrued holiday pay | 415,121 | 394,543 | 956,410 |
| Other accrued expenses | 754,351 | 30,000 | 492,307 |
| Other current liabilities | 1,169,473 | 424,543 | 1,448,717 |
| 30/06/23 | |
|---|---|
| (Amounts in NOK) | Office, furniture and equipment |
| Cost: | |
| At 1 January 2023 | 66,684 |
| Additions | 41,659 |
| At 30 June 2023 | 108,343 |
| Depreciation and impairment: | |
| At 1 January 2023 | (12,690) |
| Depreciation this year | (12,844) |
| At 30 June 2023 | (25,534) |
| Carrying amount at 30 June 2023 | 82,809 |
| Useful life | 3 years |
| Depreciation method | Linear |
| 30/06/22 | |
| (Amounts in NOK) | Office, furniture and equipment |
| Cost: | |
| At 1 January 2022 | - |
| Additions | 66,684 |
| At 30 June 2022 | 66,684 |
| Depreciation and impairment: | |
| At 1 January 2022 | - |
| Depreciation this year | - |
| At 30 June 2022 | - |
| Carrying amount at 30 June 2022 | 66,684 |
| Useful life | 3 years |
| Depreciation method | Linear |
| 31/12/22 | |
| (Amounts in NOK) | Office, furniture and equipment |
| Cost: | |
| At 1 January 2022 | - |
| Additions | 66,684 |
| At 31 December 2022 | 66,684 |
| Depreciation and impairment: | |
| At 1 January 2022 | - |
| Depreciation this year | (12,690) |
| At 31 December 2022 | (12,690) |
| Carrying amount at 31 December 2022 | 53,994 |
| Useful life | 3 years |
| Depreciation method | Linear |
The company has acquired the value of the development cost for the new planned biocarbon plant at Follum. Depreciation will start once the Follum plant is starting production. The technical and system solutions know-how developed in the R&D project was acquired from Vow ASA with effect from 1 April 2021. The company implemented during 2022 a new ERP system. When the project is completed, the asset will be depreciated in accordance with applicable rules.
| 30/06/23 | |||
|---|---|---|---|
| (Amounts in NOK) | Proof of Concept | Factory module | Computer software |
| Cost: | |||
| At 1 January 2023 | 742,643 | 968,859 | 3,461,733 |
| Additions | 743,402 | 1,953,068 | 616,735 |
| At 30 June 2023 | 1,486,045 | 2,921,927 | 4,078,468 |
| Depreciation and impairment: | |||
| At 1 January 2023 | - | - | - |
| Depreciation this year | - | - | - |
| At 30 June 2023 | - | - | - |
| Useful life | 10 years | 10 years | 7 years |
| Depreciation method | Linear | Linear | Linear |
| Carrying amount at 30 June 2023 | 1,486,045 | 2,921,927 | 4,078,468 |
| 30/06/22 | |||
| (Amounts in NOK) | Proof of Concept | Factory module | Computer software |
| Cost: | |||
| At 1 January 2022 | - | 968,859 | - |
| Additions | - | - | 1,213,890 |
| At 30 June 2022 | - | 968,859 | 1,213,890 |
| Depreciation and impairment: | |||
| At 1 January 2022 | - | - | - |
| Depreciation this year | - | - | - |
| At 30 June 2022 | - | - | - |
| Useful life | 10 years | 10 years | 7 years |
| Depreciation method | Linear | Linear | Linear |
| Carrying amount at 30 June 2022 | - | 968,859 | 1,213,890 |
| 31/12/22 (Amounts in NOK) |
Proof of Concept | Factory module | Computer software |
| Cost: | |||
| At 1 January 2022 | - | 968,859 | - |
| Additions | 742,643 | - | 3,461,733 |
| At 31 December 2022 | 742,643 | 968,859 | 3,461,733 |
| Depreciation and impairment: | |||
| At 1 January 2022 | - | - | - |
| Depreciation this year | - | - | - |
| At 31 December 2022 | - | - | - |
| Useful life | 10 years | 10 years | 7 years |
| Depreciation method | Linear | Linear | Linear |
| Carrying amount at 31 December 2022 | 742,643 | 968,859 | 3,461,733 |
Vow Green Metals is currently building their first biocarbon plant, at Follum, Norway. Vow ASA will deliver process equipment and engineering. The contract is valued at NOK 215 million.
| 30/06/23 | |
|---|---|
| (Amounts in NOK) | Assets under construction |
| Cost: | |
| At 1 January 2023 | 82,406,376 |
| Additions | 21,868,458 |
| Enova Grant | (7,841,779) |
| At 30 June 2023 | 96,433,054 |
| Carrying amount at 30 June 2023 | 96,433,054 |
| 30/06/22 | |
| (Amounts in NOK) | Assets under construction |
| Cost: | |
| At 1 January 2022 | 73,750,057 |
| Additions | 22,531,442 |
| Enova Grant | (38,472,510) |
| At 30 June 2022 | 57,808,990 |
| Carrying amount at 30 June 2022 | 57,808,990 |
| 31/12/22 | |
| (Amounts in NOK) | Assets under construction |
| Cost: | |
| At 1 January 2022 | 73,750,057 |
| Additions | 47,128,828 |
| Enova Grant | (38,472,510) |
| At 31 December 2022 | 82,406,376 |
| Carrying amount at 31 December 2022 | 82,406,376 |
Enova has confirmed a government grant to support the company's project for industrial production of biocarbon for metallurgical industry at Follum. The grant is for 40 % of the total approved project cost, but limited to NOK 80.7 million. Grants will be paid in arrears based on agreed progress milestones in the project. 20% of the grant will be withheld until the final report has been submitted and approved by Enova. Grants of NOK 38,472,510 has been received in June 2022 and grants of NOK 7,841,779 has been accrued in June 2023 and received early July 2023. This sums up to total grants of NOK 46,314,289.
| 30.06.2023 | |
|---|---|
| (Amounts in NOK ) | Cars |
| At 1 January 2023 | 466,732 |
| Additions | - |
| Depreciation | (132,637) |
| Carrying amount at 30 June 2023 | 346,240 |
Lease liabilities are discounted with an interest rate of 3.3 per cent.
| (Amounts in NOK) | 6/30/2023 |
|---|---|
| Current lease liabilities | 267,810 |
| Non-current lease liabilities | 83,910 |
| Total | 351,720 |
| (Amounts in NOK) | |
|---|---|
| 2023 | 134,507 |
| 2024 | 217,212 |
Leases with a lease term less than 12 months are accounted for as short-term leases.
| (Amounts in NOK ) | Cars |
|---|---|
| At 1 January 2022 | 138,001 |
| Additions | 577,837 |
| Depreciation | (122,388) |
| Carrying amount at 30 June 2022 | 593,450 |
Lease liabilities are discounted with an interest rate of 3.3 per cent.
| (Amounts in NOK) | 6/30/2022 |
|---|---|
| Current lease liabilities | 181,960 |
| Non-current lease liabilities | 433,607 |
| Total | 615,567 |
| 130,302 |
|---|
| 267,518 |
| 217,747 |
Leases with a lease term less than 12 months are accounted for as short-term leases.
| (Amounts in NOK ) | Cars |
|---|---|
| At 1 January 2022 | 138,001 |
| Additions | 586,098 |
| Depreciation | (257,366) |
| Carrying amount at 31 December 2022 | 466,732 |
Lease liabilities are discounted with an interest rate of 3.3 per cent.
| (Amounts in NOK) | 12/31/2022 |
|---|---|
| Current lease liabilities | 279,575 |
| Non-current lease liabilities | 178,486 |
| Total | 458,061 |
| (Amounts in NOK) | |
|---|---|
| 2023 | 279,575 |
| 2024 | 178,486 |
Leases with a lease term less than 12 months are accounted for as short-term leases.
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