Annual Report • Mar 31, 2023
Annual Report
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| ABOUT US: THIS IS HYDROGENPRO Key achievements |
5 6 |
|---|---|
| CEO letter | 10 |
| Chair of the Board statement | 11 |
| Hydrogen outlook and main end-user segments | 12 |
| About HydrogenPro | 16 |
| Stakeholder dialogue | 18 |
| Material ESG (environment, social and governance) topics | 20 |
| Agenda 2030: UN Sustainable Development Goals | 22 |
| Sustainability targets | 22 |
| OUR IMPACT | 25 |
| CFO message | 26 |
| Efficient technology and scalability | 27 |
| Sustainable and local manufacturing and supply chains | 31 |
| Innovative product design | 36 |
| A safe and attractive place to work | 38 |
| GOVERNANCE | 45 |
| Board of Directors Report | 46 |
| NUES Corporate Governance report | 55 |
| Board of Directors | 62 |
| Executive management | 63 |
| Ethical business conduct | 64 |
| CONSOLIDATED FINANCIAL STATEMENTS AND NOTES | 66 |
| Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position |
67 68 |
| Consolidated Statement of Changes In Equity | 70 |
| Consolidated Statement of Cash Flows | 71 |
| Notes to the Consolidated Financial Statements | 72 |
| FINANCIAL STATEMENTS AND NOTES FOR THE PARENT COMPANY | 108 |
| Statement of Profit and Loss | 109 |
| Statement of Financial Position | 110 |
| Consolidated Statement of Changes in Equity | 112 |
| Statement of Cash Flows | 113 |
| Notes to the Parent Company Financial Statements | 114 |
| APPENDIX | 139 |
| Sustainability factbook | 140 |
HydrogenPro has started recognising revenue and progressing on delivery to the Advanced Clean Energy Storage hub (ACES) project, the world's largest green hydrogen project. HydrogenPro has also signed a 10-year service and support agreement on the ACES project. HydrogenPro will complete the manufacturing of the electrolyser systems in H2 2023, followed by on-site work with completion in late 2024.
The world's largest high-pressure alkaline electrolyser was shipped from Tianjin, China to Herøya Industrial Park in July 2022. The 5.5-megawatt electrolyser has been validated to produce 1,100 Nm3/h hydrogen at normal current density. This equals 100 kg of pure green pressurised hydrogen per hour, setting a new standard for the industry. This is proof of concept that our electrolyser and gas separator technologies will produce and process hydrogen on a large scale.
HydrogenPro completed upgrade of the manufacturing plant in Tianjin, China in late 2022. The company has invested significantly in upgrades and by the end of the year, the factory had approximately 100 employees and an annual capacity of 300 MW. Manufacturing is ramping up from early 2023.
On 3 October 2022, the first trading day on the main list of the Oslo Stock Exchange took place following an uplisting from Euronext Growth. This opens a significantly larger investor base and positions the company for further growth.
HydrogenPro is chosen as the supplier for alkaline high-pressure electrolysers for DG Fuels' plant in Louisiana, USA. The contract value exceeds USD 500 million, excluding life cycle services. The final investment decision (FID) is expected in 2023, and throughout 2022 DG Fuels secured 100% offtake from its planned Louisiana plant
By year end 2022, HydrogenPro had an active sales pipeline of 18.5 GW. In addition, several FEED studies are underway, and we see a clear trend of increasing size and scope throughout 2022.
2022 was another exciting year for HydrogenPro. There is a growing focus on green hydrogen among governments, investors, and large-scale industry players. Since the company's founding in 2013, our strategy has been the same: to deliver large-scale electrolyser technology & systems, creating big impact. We anchored this strategy when we signed the largest electrolysis order on record in April 2022 – 40 electrolysers for a 220 MW electrolysis plant in collaboration with Mitsubishi.
Through the agreement for the ACES project in Utah, we have secured a solid presence in the US. Thus, we are well positioned to leverage the multinational incentive programs launched worldwide, specifically the Inflation Reduction Act in the US and the #repowerEU for the EU. Towards the end of the year, we chose to establish our own office in the US to further strengthen our presence. In 2023, we have clear ambitions to grow furtherby securing a firm purchase order from DG Fuels, converting excising pipeline into contracts as well as through our recent announcement of establishing manufacturing capacity in Texas, USA.
In line with HydrogenPro's global technology and fabrication plan, the purchase of the 300 MW factory in Tianjin was completed in April. We have made significant investments in the factory throughout 2022, and in combination with our 100% ownership of Advanced Surface Plating (ASP), we are positioned with market-leading R&D, electrode technology and significant production capacity, which gives HydrogenPro complete technology ownership. During 2022, HydrogenPro set a new industry standard with validation of production capabilities and proof of concept of the world's largest electrolyser. This further manifests HydrogenPro's position as a technology leader.
In between these events, the HydrogenPro organisation continued to grow rapidly, with the onboarding of 118 very enthusiastic employees for a total number of employees at 143 as of year-end 2022, significantly strengthening our project execution capability. HydrogenPro has furthermore expanded its global footprint with a new office in Boston, US.
It has also become increasingly evident that green hydrogen will be an essential catalyst in the ongoing energy transition. Electrolysis technology has matured to the point where green hydrogen has become commercially competitive with fossil alternatives in several regions across the globe and with our new technology and R&D leadership, Hydrogen-Pro is at the forefront of this trend. Our market-leading efficiency combined with modular and scalable design for the world's largest cell stack enable our customers to reduce their operational expenses significantly compared to our competitor's solutions. Simultaneously, we are on track for establishing our 3rd generation electrode technology, increasing operating efficiency of each unit by 14% (needing 14% less electricity for the same amount of green hydrogen). This is key, as electricity cost counts for 70-80% of the operating cost of running a green hydrogen plant.
With our position as the technology leader in the green hydrogen space, we expect 2023 to be our best year ever as we celebrate our 10-year anniversary of working towards decarbonising the future. HydrogenPro's scalability, life-cycle model and revolutionising technology, combined with our global presence, puts us in the pole position for the most exciting year in green hydrogen to date.
We used 2022 to position ourselves. Now, we have the technology, manufacturing capacity, expertise, and purchase orders to be in the forefront. Come aboard, we are about to take off!
TARJEI JOHANSEN CEO
In 2022 we proved that HydrogenPro is pioneering green hydrogen technology and systems. An ever-increasing need for cost-effective renewable solutions, available capital, and the Inflation Reduction Act in the US, pave the way for a green hydrogen revolution.
The stars align for an incredibly exiting 2023 for HydrogenPro with our market-leading large-scale electrolysis technology, a solid foundation based on key milestones reached over the last 12 months, including our uplisting to Oslo Børs in October 2022 and our growing US presence. Last year, Hydrogen-Pro secured the world's largest electrolysis order with Mitsubishi for the ACES project in Utah, US. This represented a new era within the electrolysis industry and confirmed that HydrogenPro's strategic direction since its foundation in 2013 has been right – largescale solutions are key. Our high-pressure alkaline electrolysers delivered through large-scale hydrogen plants are cost-efficient – both from a capex and operating cost perspective – forming our company's DNA, and we are observing that peers have discovered the same and are following our lead.
At HydrogenPro we know that green hydrogen has unique properties as an energy carrier that makes it a vital component in combination with renewables. Hence, our main end-user segments are large-scale segments within process manufacturing, such as ammonia, steel, and Sustainable Aviation Fuel (SAF). With a technology that is easy to scale depending on the input energy from renewables, Hydrogen-Pro's large-scale hydrogen plants and cost-effective technology has the potential to both enable and strengthen other segments in the energy transition, whether it be wind, solar and other renewable power sources. Through its unique properties as an energy carrier, we believe green hydrogen will be key in facilitating the green energy transition.
In December 2022, Tarjei Johansen joined HydrogenPro as new CEO. Tarjei brings valuable experience from leading firms within the oil and gas industry and has worked most of his career in the US, an experience we deem extremely valuable as we increase our focus on the US market. In March 2023 we announced our plan to establish manufacturing capacity in Texas combined with recruitment of a dedicated US team to further develop our presence in the US market. This will provide us with the necessary execution power to implement our current and impending US contracts, to generate increased revenues as the basis for a profitable development.
Technology is about getting more out than what you put in. This is exactly what HydrogenPro's large electrolyser technology does in combination with renewables; we deliver green hydrogen, and we secure energy 24/7 even when the wind doesn't blow and the sun doesn't shine!
We are entering 2023 with excitement.
ELLEN HANETHO Chair of the Board
2022 was a game changer for green hydrogen. The sector is expected to be the backbone of decarbonisation and energy transformation in the years to come. By 2030, green hydrogen production is expected to reach 24 million tonnes from 212 gigawatt of electrolysers (1).
Estimates have been further boosted because of the Inflation Reduction Act in the US. Through the IRA, producers of green hydrogen can receive up to USD 3 per kilogram of produced green hydrogen in tax credits. It is a requirement that the electrolysers use electricity based on wind, solar and hydropower to qualify for the maximum tax credit. Our high-pressure alkaline electrolysers are suitable for renewable energy input. This makes HydrogenPro customers eligible for maximum support. Combining this with the fact that the company is already competitive on OPEX and CAPEX, and has further efficiency potential through our electrode technology, Hydrogen-Pro appears as a highly competitive player in the US market in the coming years.
In response to the Biden administration's tax package, the EU Commission announced on March 9 2023 that they will ease the rules for subsidies to companies involved in decarbonising industrial production processes and accelerating the transition to renewable energy and energy storage. The aim is to ensure more green projects in Europe, and the rules will apply until 2025. As part of our global strategy, HydrogenPro has already business in China, the US, Denmark, and Germany, in addition to our headquarters in Norway. This makes the company well-positioned to take advantage of continental trends where they occur - both financially and regulatory-wise.
Hydrogen is a versatile fuel source that can be produced using a variety of methods. Three distinct types of hydrogen production are the most common: green, blue, and grey hydrogen.
Refineries use large amounts of hydrogen in the refinery operations, typically generated from fossil sources (natural gas). Europe's hydrogen production is currently around 9 million tonnes per year (Mt/y); according to the International Energy Agency (IEA), about half of this hydrogen is consumed by refineries.
The refinery companies are increasing their focus on green hydrogen projects, helping to reduce their carbon footprint. The introduction of hydrogen removes sulphur from raw materials for gasoline production, diesel oil and gasoline. Raw oil contains several natural sulphur compounds. Hydrogen is used for this, and the process produces hydrogen sulphide (H2 S), which ends up in the refinery's fuel gas. Direct combustion of fuel gas that contains H2 S, also known as "sour gas", results in major emissions of SO2 (Sulphur dioxide) from refineries. Therefore, the fuel gas is purified before combusted in the refinery's combustion plant. The carbon emissions come later when engines are used.
Ammonia—one nitrogen atom bonded to three hydrogen atoms—may not seem like an ideal fuel. Its energy density by volume is nearly double that of liquid hydrogen—its primary competitor as a green alternative fuel—and it is easier to ship and distribute.
You can store it, ship it, burn it, and convert it back into hydrogen and nitrogen. Around 40% of Europe's hydrogen production is consumed for ammonia production. Companies worldwide produce \$60 billion worth of ammonia from natural gas every year, primarily as fertilizer. Hydrogen from electrolysis could take large parts of this market in the long term, which today is covered by hydrogen from natural gas.
The steel industry was responsible for 2.6 gigatonnes of CO2 emissions in 2019, accounting for approximately 7% of the world's total energy-related carbon emissions. In Europe, the iron and steel sector are responsible for around 4% of anthropogenic CO2 emissions.
Replacing coal with green hydrogen in the steel production process could significantly reduce carbon emissions. The European Union estimates that using hydrogen instead of coal in steel production could reduce CO2 emissions by up to 90%.
Several steel companies have already begun exploring the use of green hydrogen in their production processes, with some even establishing pilot projects. As technology continues to advance, it is expected that the use of green hydrogen in the steel industry will become more widespread, leading to a more sustainable future for the industry.
A gas grid is more cost-effective than an electricity grid; a gas pipe can transport 10-20 times more energy than an electrical cable for the same investment. Europe has a well-developed gas grid that can be converted to accommodate hydrogen at a minimal cost.
Several European studies have concluded that up to 10 per cent hydrogen by volume can be mixed into natural gas, but that concentrations above 2% by volume will/may (recommendations differ) entail further necessary changes to components in the natural gas network (subsurface storage, analysis equipment) and equipment that utilises natural gas and gas turbines. The capacity for mixing hydrogen in gas pipelines to export natural gas to Europe may also be an option from Norway. The hydrogen/natural gas mix may be used directly like conventional natural gas, or the hydrogen may be separated from the natural gas and used as hydrogen. The challenges will be more pronounced to combust these mixes as the higher percentage of hydrogen by volume is fed into the network regionally and between countries.
Sustainable Aviation Fuel results in up to 85 per cent lower lifecycle greenhouse gas emissions versus conventional jet fuel. The market is expected to grow rapidly, and 2022 marks the take off for sustainable aviation fuel. The industry is realising the huge impact and importance of SAF, and is expected to continue to grow rapidly worldwide, in line with goals of reducing emissions.
SAF is considered more energy efficient, and provides airlines with operational advantages in addition to its environmental contributions.
To meet half of Europe's 2050 aviation energy needs would require 24% of the current European electricity generation. Combining CO2 and H2 then results in synthetic fuel, such as gasoline, diesel, gas, or even jet kerosene. Drop-in jet fuels have aggregate properties equivalent to conventional (petroleum-based) jet fuels. Such fuels are fully miscible with traditional jet fuels, and they are fully compatible with existing aircraft engines and the current fuel infrastructure.
Green hydrogen has unique properties that make it a versatile and sustainable energy carrier. It can be used as a feedstock in several energy-intensive industries, such as refining, chemical production, and steelmaking, to reduce emissions and increase efficiency.
It can also play a crucial role in the electricity sector as a storage medium for excess renewable energy. As more renewable energy sources such as wind and solar are added to the grid, green hydrogen can be produced during periods of excess generation and used to generate electricity during periods of low renewable energy production. This process, known as Power-to-Gas, has the potential to address the issue of intermittency that is associated with renewable energy and to provide a reliable and sustainable source of energy.
Overall, green hydrogen has the potential to revolutionise several industries and play a critical role in the transition to a low-carbon economy. As technology continues to advance and costs decrease, it is expected that green hydrogen will become a more accessible and widespread energy source, leading to a more sustainable future for all.
Become #1 provider of large-scale green hydrogen technology & systems
Accelerate global decarbonisation with world-class sustainable green hydrogen solutions
HydrogenPro was founded in 2013 with a mission to design and deliver green hydrogen technology & systems in collaboration with global partners and suppliers. Our core product is high-pressure alkaline electrolysers, and we are proud to have some of the most advanced technology in the industry.
Our team consists of 143 highly skilled and experienced employees, including key personnel with leading global hydrogen expertise. We are currently present with R&D, sales offices and manufacturing in Denmark, Germany, the US, and China, and aim to grow our global presence further in the years to come. Our headquarters and test facility are located at Herøya, Norway.
Our proudest achievement is the development of industry-leading high-pressure alkaline electrolysers, including our electrode technology, which makes us highly cost-competitive among peers globally.
With a technology that is easy to scale depending on the input energy from renewables. HydrogenPro's large-scale electrolysers and cost-effective technology have the potential to both enable and strengthen other segments in the energy transition, whether it be wind, solar and other renewable power sources. Through its unique properties as an energy carrier, we believe green hydrogen will be key in facilitating the green energy transition.
We are committed to being at the forefront of the green hydrogen industry, and we believe that our technology and expertise will help to drive the world towards a more sustainable future.
HydrogenPro aim to become the number one provider of large-scale green hydrogen technologies & systems. To succeed, the company has identified four strategic pillars: technology leadership, global footprint, scalability and life-cycle partner.
To succeed as a global electrolyser supplier, technology leadership is crucial. The electrolyser market will be an operational cost game, and the most efficient electrolysers will win in the long run. Thus, electrolysers with low energy losses will be a prerequisite for green hydrogen companies to succeed.
HydrogenPro is already competitive in terms of efficiency amongst peers, but we are not settling. We will continue to invest in R&D, like we did with the acquisition of Advanced Surface Plating (ASP) in Denmark in 2021. This gave us technology ownership of advanced electrode technology, called the 3rd generation electrodes, which makes us able to increase the efficiency of each unit by 14%. Testing of electrodes is ongoing and has the potential of providing HydrogenPro with a competitive edge for years to come.
To have a global footprint is critical for HydrogenPro as a global presence positions the us closer to our customers and markets. This is important both with regards to sales and local expertise, while also enabling us to qualify for the many local incentive schemes that has emerged during the last two years. Local manufacturing also reduces transportation of raw materials and goods. It also diversifies our business, mitigating geopolitical risks. We are already present in China, Denmark, US, Germany, and Norway, but aim to grow further through joint ventures, partners, and sales offices all over the world.
We firmly believe that size and scale is a key for green hydrogen to reach its potential. Our standardized electrolysers have a smart cost-efficient design and are prepared for upscaling and plant integration. Our modular design enables us to turn electrolysers on and off when needed, making it an ideal solution for using fluctuating renewable energy sources, such as wind and sun. Moreover, we do not rely on rare precious metals, reducing the risk of raw material shortages.
HydrogenPro provides solutions and services that support the full life cycle of the equipment its customers purchase, from design and installation to operation and maintenance. This ensures recurring revenue on the installed base and reduces risk in the business model.
Representatives from the Board of Directors, executive management and key personnel from the organisation have worked together to identify and evaluate all potential stakeholders of the Company. HydrogenPro engages with a wide range of stakeholders where we have our business today and where we seek to build strategic relations for the future.
As a fast-growing company in a major industry, HydrogenPro strives to meet the rising expectations from our stakeholders and to be transparent across our value chain.
Our stakeholders' contributions continue to be an integrated part of the development of the Company. The views and interests from our stakeholders are considered when defining our material topics and focus areas, as well as potential impact on the economic, environmental, and social dimension. It is equally important for HydrogenPro to gain our shareholders' understanding of our Company's plans, circumstances, and constraints. We evaluate and initiate actions where we are aware of potential negative impacts. The topics were identified and prioritised in our assessment, with further strategic initiatives proposed for execution in 2023.
Employees are at the core of the Hydrogen-Pro value creation, and we aim to build a strong company-culture aligning with our vision and values. To achieve our strategy, it is essential to attract, develop and retain talent. Our employees are on-boarded and trained according to the requirements for their role and are followed up on a regularly basis by their respective manager.
HydrogenPro emphasises the responsibility for creating long-term sustainable shareholder value. Led by the Investor Relation team, our company are available for both current and potential shareholders, as well as regular meetings with analysts and retail brokers. Our shareholders have the ability to influence our operations in Annual and Extraordinary General Meetings. We treat all shareholders equally and ensure that material information reaches the market through publishing stock exchange notices in accordance with local regulatory requirements.
Customers buy our products and solutions either directly, or indirectly through our partners. We engage with our customers through our Project and Key Account Management, both for specific project deliveries and general support. Customer involvement and feedback are a crucial asset to the optimisation of our operations, as we strive to develop and deliver products exceeding customer expectations. HydrogenPro aims to establish long-term symbiotic relations with our customers.
Suppliers provide HydrogenPro with a wide range of services and commodities, where cost, quality and reliable delivery constitute important priorities for our selection. We aim for carbon neutrality in our supply chain set-up, this includes initiatives regarding local sourcing of materials and products, emission reduction plans and the use of renewable energy. Supply chain involvements, screening and qualification processes are continuously monitored and revised accordingly. We work close to our suppliers to ensure that our Company standards are met throughout project deliveries and seek to maintain long-term relationships with those matching our growth objectives.
Governments forms the industry standard for certifications and procedures. HydrogenPro engage in regular dialogue regarding engineering, manufacturing- and assembly facilities and projects to make sure all qualifications are met by different governments. Further, industry bodies work for the development of the industry as a whole, and grants are provided to certain projects. In 2022 HydrogenPro initiated talks with the Confederation of Norwegian Enterprise (NHO), which resulted in the creation of a "National Hydrogen Alliance". The Group included all key players throughout the hydrogen value chain. Initiated under the auspices of the Confederation of Norwegian Enterprise (NHO) and the Norwegian Confederation of Trade Unions (LO), the work will lead to a proposal for a national hydrogen strategy to be presented for the government in the first half of 2023.
HydrogenPro is member of several strategic associations in the hydrogen industry. These differ from each other in the range of having either a local- or multinational focus. We believe joined efforts will be key to achieve industry goals, and HydrogenPro values the commitment from its industry peers and the importance of collaboration. Further, with presence in these arenas, Hydrogen-Pro manages to build strategic relationships, promote our business and technology, as well as encourage favorable regulations and legislations for industry growth.
HydrogenPro operates within local communities where we aim to have a positive social and environmental impact, aligning with the Company's core objectives. Local Executive Management evaluates and initiates local stakeholder engagement and report back to the Bord of Directors. We engage through dialogue and collaboration with local universities and institution, using both local talent and suppliers if suitable and possible.
In Denmark, our connection and engagement with Aarhus University Department of Biological & Chemical Engineering is a two-way positive impact collaboration. Students work at Hydrogen-Pro for training and education, while contributing to our research, development, and operation. The University receives feedback and insights into the expertise required for our operations and HydrogenPro contributes to the development of local academics.
In relation to our facility at Herøya, we build an experienced and talented engineering environment which has the potential to spur local employment. HydrogenPro engages with The University of South-Eastern Norway, Faculty of Technology, Natural Science and Maritime Sciences, regarding research and development projects. Our policy remains to collaborate as much as possible with local vendors and suppliers.
The Explorer - Powered by Innovation Norway
Materiality is the backbone of environmental, social and governance (ESG) reporting. To make sustainability and ESG reporting concrete and relevant, the concept of materiality has become the industry standard. Materiality is about identifying which ESG topics that will influence a company's ability to create value in a long-term perspective, as well as how the company impacts its surroundings through its activities and busi-
ness relationships. By determining which ESG aspects that belong to the core material for a company, the stakeholders' ability to evaluate the company's sustainability performance will significantly improve.
HydrogenPro conducted a thorough stakeholder and materiality assessment and analysis during the winter 2022/2023. The materiality assessment was carried out with two perspectives in mind:
Both potential opportunities and risks stemming from the relevant ESG topics were identified and further quantified in the materiality assessment.
To identify and rank material ESG topics, we involved several internal and external stakeholders, including investors, customers, suppliers, employees, and financial market participants. The stakeholders were interviewed to get an understanding of how they view HydrogenPro's ESG challenges and opportunities, as well as where the company can make the greatest impact. With the insights gathered through stakeholder dialogue, the company's management and Board of Directors prioritised material ESG topics based on potential impact on the company's long-term value creation.
The ESG topics material to HydrogenPro is a result of the company's business model, the activities the company executes, as well as where and how these specific activities are executed. Preserving the planet by mitigating climate change is the fundament of our business model. HydrogenPro is an original equipment manufacturer of high-pressure alkaline electrolysers for green hydrogen production, targeting the core issues of enabling various sectors to align with a greener business model. Our industry-leading technology is perfectly suited to play a significant role in accelerating the energy transition to reduce global carbon emissions transforming society and adapting to renewable green energy solutions. Our green hydrogen production plants utilise water and renewable energy to produce hydrogen gas, with oxygen gas as the only residual of the electrolysis process. Thus, HydrogenPro's business model is considered to be sustainable and suitable for the future low carbon-emitting society.
To manufacture the electrolysers, Hydrogen-Pro uses input factors such as materials, energy, and water, combined with our core technologies and our employees. This is the main business activity of the company, and the material topics are all related to this value chain.
As a result of the company's business model, business activities and stakeholder assessment, the environmental, social, and government topics as considered material to HydrogenPro are as follows:
HydrogenPro's most material impact on our surroundings stems from our business model. Through our sold products, HydrogenPro has unlimited potential to positively impact the environment by reducing CO2 emissions and contribute to mitigating climate change supporting the green transition. The magnitude of our environmental impact is determined by our ability to get our product into the market. To succeed at this, Hydrogen-Pro must have a leading technology making our product attractive for the end-user and the ability to scale up production of electrolysers to meet customer demands.
HydrogenPro's main business activity, the manufacturing of our electrolyser systems, has significant social and environmental impact on our surroundings. Therefore, sustainable and local manufacturing and supply chains are considered material for HydrogenPro. This is a broad topic containing several sub-topics, such as energy and water consumption, waste disposal, emissions, and supply chain management, including human rights and work conditions along the product value chain.
The product design determines the materials needed to manufacture the electrolysers, and how often the parts need to be overhauled, renovated, or changed. Thus, how we design our electrolysers is a material ESG topic for HydrogenPro. Material choices, and particularly choosing not to use certain noble materials, rare-earth elements, and PFAS have an environmental and social impact. The same goes for design for reuse and remanufacture, which prolongs the lifetime of the electrolyser and contributes to lower disposable waste. Lastly, innovative product design is a consequence of high focus on technology leadership and R&D, which contributes to both higher efficiency and safer products, both material ESG topics.
To be able to deliver on the strategic priorities of the company, Hydrogen-Pro must be a safe and attractive place to work. This is of material importance for us, both because our success to deliver on other material ESG topics is influenced by this, and because it has a direct social impact on work-life-balance and the commitment of the employees working in HydrogenPro. Being a safe and attractive place to work ensures that we attract and hire the best candidates. HydrogenPro is a company working with high-end technology, engineering, manufacturing, and assembly. To scale up and reach our goals, having expertise and the right knowledge and employees onboard is a prerequisite for us. To be a safe and attractive workplace, we have a high focus on occupational health and safety, training and personal development, and diversity and equal opportunities.
The ESG topics considered material to HydrogenPro, goes hand in hand with the company's strategic priorities, which are described on page17. An overview of the topics that are discontinued from the 2021 materiality assessment can be found in the Sustainability Factbook.
The 17 Sustainable Development Goals (SDGs) is at the heart of Agenda 2030; the United Nations blueprint for peace and prosperity for people and the planet, now and into the future. While the SDGs formally were adopted by the UN member states, and thus are addressing challenges at national level, it has become customary for businesses to align their sustainability strategies to support the goals. By doing so, we can be sure that we are all pulling in the same direction.
HydrogenPro respects and supports all 17 of the Sustainable Development Goals. In addition, we have identified four SDGs that are particularly relevant for our business model and activities, and where we believe we can make the greatest impact. These four goals are aligned with HydrogenPro's material ESG topics, and we work strategically to contribute positively to fulfilling these SDGs.
In the integrated report 2021, HydrogenPro presented several ambitions with relevance to environmental, social, and governance topics. We have made significant progress on some of our ambitions, while other initiatives are still yet to be launched. We will continue to strive towards reaching our ambitions, and report on our progress in a transparent and consistent matter.
| Ambition | Target | Target date | Status 2022 | Read more on page |
|---|---|---|---|---|
| Health and safety are essential for the success of HydrogenPro |
Short leave/overall leave - less than country average of our locations: • Norway 4% • China 4% • Denmark 4% |
Annually (2023) |
• Norway: 0.62% • Denmark: 0.01% • China: 3.3% |
p. 39-40 |
| Zero accidents and work-related ill health at the company |
Zero accidents and work-related ill health |
Annually (2024) |
• Three recordable work-related injuries. |
p. 42 |
| Most cost-efficient green hydrogen production technology |
Levelized cost of hydrogen at USD 1.2 per kg (assuming USD20/MWh) |
2022 | USD 1.4 pr. kg. | p. 27-30 |
| Contribute to global CO2 reduction |
Reduce CO2 emissions with at least 1.5 million tonnes annually from our installed production capacity |
2023 | Approximately 127 000 tonnes |
p. 29 |
| Global leading provider of large-scale green hydrogen production solutions for industrial applications |
>1 GW installed global production capacity by year-end 2023 |
2023 | 300 MW | p. 8 |
Preserving the planet is the fundament of our business model. At HydrogenPro we deliver large-scale green hydrogen technology & systems. We target the hard-to-abate sectors where our industry-leading solutions are perfectly suited to play a significant role in accelerating the energy transition to reduce global carbon emissions.
With global reach comes global responsibility. As a company that operates on a global scale, HydrogenPro recognises the importance of taking responsibility for its impact on the environment and society. Throughout 2022, the Company has taken several steps to enhance its sustainability efforts.
HydrogenPro has taken measures to prioritise sustainability and improve the positive impacts of our business activities, while reducing the negative impacts. The company has hired Ida Eilertsen Nygård as the new Head of Investor Relations and ESG, tasked with ensuring that sustainability remains a key priority in all aspects of the company operations. In addition, HydrogenPro has conducted a new materiality analysis, which has helped to identify the sustainability segments where the company can have the greatest impact. By focusing on these segments, HydrogenPro can work to create more sustainable solutions and limit its environmental impact. The updated materiality assessment can be found on pages 20-21. HydrogenPro has a scalable business model, and our vision is to become #1 provider of large-scale green hydrogen technology & systems. Creating shareholder value requires us to work holistically on the key areas. These go hand in hand with our focused capital deployment plan; increase global manufacturing capacity, invest in R&D to take technology leadership, scale up the organisation and the use of working capital on large-scale projects.
As part of HydrogenPro's global footprint and technology leadership, proximity and local presence are key factors. Our ESG focus must hence incorporate diligent transparency, especially with regards to the company's presence in China – and we are working every day to stay transparent and remain in control over the entire value chain.
MARTIN THANEM HOLTET CFO
To meet the commitments in the Paris Agreement and limit global warming to 1.5 degrees, the Hydrogen Council estimates a global demand of 75 million metric tonnes (Mt) of clean hydrogen by 2030, rising to 660 Mt in 2050. Realising the global ambitions for a netzero society by 2050 depends on efficient and scalable solutions for green hydrogen production. It is HydrogenPro's ambition to be a key player driving widespread deployment of electrolysers across the globe, by meeting worldwide demand for energy-efficient hydrogen production equipment. Our contribution to the environment is determined by our ability to get products out on the market. This requires that we develop competitive technology and that we are able to scale production to meet the growing worldwide demand.
HydrogenPro is an original equipment manufacturer of large-scale green hydrogen technologies and solutions. Our core technologies consist of electrolysers comprising cell stacks, gas separator including controls hereof. Together with our partners we have developed an optimized system ideal for green hydrogen production. The electrolyser system delivered by HydrogenPro is energy efficient, flexible, and well proven. Our technology is referred to as high-pressure alkaline system which delivers the hydrogen and oxygen gas with a pressure directly from the cell stack at 15 bar. The high-pressure alkaline technology is suitable for renewable energy input, and the electrolyser size we deliver is a perfect match for large-scale industrial applications such as power-to-gas, ammonia, and steel production.
Number one metric for electrolyser manufacturers is energy efficiency. It is measured by the electrolysers ability to produce hydrogen gas at a certain level of input energy. HydrogenPro's single 5.5 megawatt electrolyser has been validated to produce 1,100 Nm3/h hydrogen at normal current density, which equals ~100 kg of pure and pressurised green hydrogen per hour. This means that the world's largest high-pressure alkaline electrolyser is validated with 80% energy efficiency, setting a new global standard for large-scale production of green hydrogen.
In addition to optimising our existing high-pressure alkaline technology, we are on track to establish what we call 3rd generation electrodes. This is new electrode coating included in the existing high-pressure alkaline system based on novel research, which is currently being developed by HydrogenPro's daughter company in Aarhus, Denmark. Initial tests show that the 3rd generation technology can deliver an impressive energy efficiency of 93%, which is a 14% improvement from today's technology. The efficiency gain is due to improved performance of the used electrodes obtained through a surface coating on the electrodes. This implies that the splitting of water molecules into oxygen and hydrogen is done in a more efficient manner lowering the overall voltage for hydrogen and oxygen formation.
One of the commonly cited critiques of a hydrogen-based economy is the high energy consumption involved in conversion of electricity into hydrogen. The energy efficiency that HydrogenPro can offer with the 3rd generation electrolyser technology will potentially be a game changer for global deployment of hydrogen as a clean energy carrier. It means that we can mitigate climate change and replace hydrocarbons with significantly higher energy efficiency - lower energy usage - and corresponding economic burden than what today's solutions are capable of.
The 3rd generation electrodes will reduce end-customers' operational costs of electrolysis significantly. As electricity costs are around 75% of the levelised cost of hydrogen production, a 14% reduction of electricity need over a 30-year lifetime is a significant cost saving. The 3rd generation electrodes represent a revolutionary technology within the green hydrogen transition. This is good news for the planet and will undoubtly ensure Hydrogen-Pro a superior position in the market.
Avoided GHG (greenhouse gas) emissions Our greatest sustainability contribution is that our product is a key enabler for the global society to reach a decarbonised energy system. We contribute directly to reduced greenhouse gas emissions by offering technology to produce clean fuel that can replace fossil fuels in large parts of the energy economy. The ACES-project (see fact box) with a staggering 220 MW electrolyser capacity is estimated to help prevent 127,000 tonnes of CO2 from reaching the atmosphere annually, based on the difference in emission profiles between using natural gas and green hydrogen as fuels. Our short-term goal is to abate 1.5 million tonnes of CO2 emissions from an installed production capacity of 6 gigawatt by the end of 2027. To read about GHG emissions from our own operations, please see page 31-32.
In addition to the direct contribution to abatement of greenhouse gas emissions, green hydrogen plays a crucial role in allowing for a decentralised and resilient energy system that can be completely based on renewables. Hydrogen is offering a clean energy storage solution that can be used to buffer intermittent renewable energy sources and stabilise the grid both locally and regionally. Hydrogen is thus indirectly enabling this green shift, allowing for an energy system based on production of large-scale renewable energy from various sources. Renewable energy is the most critical component of a future net zero society and for the world to reach the Paris Agreement.
Hydrogen is also a contributor to energy security, as green hydrogen can be produced and stored domestically. It will reduce the countries' dependence on foreign energy sources, and thus, reduce society's vulnerability to lack of energy supplies. In 2022, the global energy crisis emerged as a historic turning point that has been on top of mind among all state leaders. The governments around the world are now working for a cleaner and more secure energy system.
https://aces-delta.com/
https://www.energy.gov/lpo/advanced-clean-energy-storage
The Advanced Clean Energy Storage (ACES) project is world's largest renewable energy storage hub. The facility in Utah will combine a 220 megawatt bank of alkaline electrolysers delivered from HydrogenPro and a storage capacity of 4.5 million barrel salt caverns to store clean hydrogen. ACES will capture excess renewable energy when it is most abundant, store it as hydrogen and then deploy it as fuel in a combined natural gas and hydrogen power plant to produce electricity for Western United States. ACES will help decarbonize the region, with an ambition of incrementally being 100% fueled by clean hydrogen by 2045. The scale of deployed electrolysers and the use of salt caverns to store hydrogen are both significant innovations. HydrogenPro will complete manufacturing of the electrolyser systems in H2 2023, followed by installment and commissioning on-site completed in late 2024. HydrogenPro has also signed a 10-year service and support agreement.
The most significant way we can contribute positively to the environment is by bringing our product out on the market. If succeeding with our ambitions of global deployment of the HydrogenPro electrolyser, we are enabling customers around the globe to operate largescale hydrogen production facilities that can buffer renewables and replace fossil fuels – and they can do this with significantly lower energy consumption compared to alternative technologies.
At closing of 2022, the active sales pipeline in HydrogenPro consisted of 18.5 gigawatt of electrolyser capacity. We are eager to fulfil those orders, and to further upscale our manufacturing capabilities. Today, HydrogenPro has manufacturing facilities in Tianjin, outside of Beijing in China, with a capacity of producing 300 megawatt per year. In addition to the China manufacturing facility, we have announced an ambition to establish an additional 1 gigawatt manufacturing capacity by the end of 2023, preferably split between Europe and the US. Our goal is to reach an annual production capacity of more than 5 gigawatt within 2027. We are right now creating the foundation for successful growth, by ensuring financial robustness and by building a responsible and resilient organisation and value chain along with our growth strategy. In March 2023, HydrogenPro announced our plans to expand in the US with a new plant in Texas with a manufacturing capacity of 500 megawatt. T he site will have the option to significantly scale up the capacity to several gigawatts in due time.
The growth of a new hydrogen economy will require use of natural resources and will thus have an impact on the environment. Our internal climate and resource footprint will grow hand in hand with the upscaling of our company, and our customers will depend on renewable energy in order to enable the production of green hydrogen based on our technology. There are potential nature-related impacts associated with hydrogen production that we want to approach with awareness and precautionary measures. Our mission is to ensure that our positive impact on the environment outweighs the negative impact we may have.
Large-scale green hydrogen production is based on renewable energy infrastructure such as wind turbines or solar panels that may require vast amounts of land. This can lead to displacement of wildlife habitats and potentially harm biodiversity. We recognise that we are part of an industry quickly evolving, and that we need to collaborate closely with partners and industry peers to ensure that biodiversity and wildlife habitats are taken into the equation. We will strive to promote the most sustainable solutions both for today and the years to come for development of new renewable power production.
To produce green hydrogen, the electrolysis process uses renewable energy to split water molecules into hydrogen and oxygen. The process is regarded as environmentally friendly, but it requires large amounts of water and can thus be challenging in regions where water is scarce. In addition to the water used in the electrolysis process, we are dependent on cooling water to keep the electrolyser at the right temperature in steady state production. Regional considerations are therefore important when planning for green hydrogen production. A holistic perspective on the pros and cons for the local community will always be on top of mind when collaborating with regions with limited water resources.
With the HydrogenPro electrodes' capabilities to greatly reduce energy consumption during green hydrogen production, we have the potential to contribute positively to the environment as the hydrogen economy continues to grow. The main innovation with the new electrode technology is a reduction of the power consumption of 14%, based on the same current density as with the existing configuration. Reducing the needs for renewable energy will have the potential to limit the build-out of new wind and solar power plants, which again will reduce local land-use and loss of nature. In addition, it will reduce the material and resource footprint of renewables manufacturing. Another benefit of our 3rd generation electrolyser is that it will reduce the need for cooling water by up to 75% since less energy is needed implying that less heat will be produced. This means that our technology is limiting water withdrawal – making it suitable also in regions of the world where water is not an abundant natural resource.
The most substantial environmental and societal impact of HydrogenPro's activities is through the products we sell. However, it is clear that manufacturing electrolysers has both an environmental and social impact on our surroundings. We are entering a phase of rapid scaling of our manufacturing activity, and we will establish new manufacturing sites in both Europe and the US in the years to come. The timing is just right for taking a responsible role working proactively to mitigate potential negative impacts caused by our own operations and operations in our supply chain.
The HydrogenPro electrolysers are today manufactured in Tianjin, outside of Beijing in China. At this site, we have a manufacturing capacity of 300 megawatt per year. The manufacturing activities in Tianjin have been established through the second half of 2022. Covid19 was still creating an enormous burden on the Chinese society in 2022, and not until December were all workers physically present. After updating the manufacturing equipment, the manufacturing process was successfully initiated in autumn of 2022. The manufacturing process is now ongoing to deliver on awarded purchase orders. The next step for HydrogenPro is the announced establishment of additional 500 MW of manufacturing capacity in Texas, USA.
A vital part of our global expansion strategy is to build local manufacturing and supply chains, close to where the electrolysers are operated. By manufacturing close to our customers, we ensure faster delivery times and lower transportation costs and emissions. It can also help us to understand customer needs better, which enables us to respond more quickly to changes in demand. Offering customisation and flexibility when we deliver products and services can give us a competitive advantage. By building a local supply chain, we can work more closely with our suppliers. We can innovate new solutions together that enhance product quality, and we can set requirements on reduced resource footprint or enhanced worker rights. A local supply chain will strengthen the local economy and give us a more resilient supply that can quickly be adapted to changes in circumstances.
Although our product is having a significantly larger positive impact on reducing greenhouse gas emissions compared to our own climate footprint, we believe that everyone must take part in decarbonizing own industry. We strive to minimise emissions from our own manufacturing sites and to create a foundation for green growth of our operations. To achieve this, we aim to reduce emissions generated both when establishing new manufacturing sites and when operating them. This will empower us to adopt a focused and efficient strategy to reduce our own climate footprint. It is also important for us to set requirements and collaborate closely with our suppliers to pinpoint and alleviate significant sources of emissions.
Steel usage is the major contributor to HydrogenPro's carbon footprint, constituting 36 % of our total greenhouse emissions (Scope 1, 2 and 3). Steel production is a carbon-intensive process that is emitting greenhouse gas during several steps of the production process. The most effective short-term action we can perform is to reduce our steel scrap during manufacturing of electrolysers. For further details on how we approach this topic, see chapter Innovative product design. We have chosen a steel supplier that works proactively with ESG topics as part of their corporate strategy and corporate development. A major part of our supplier's work on ESG is their low-carbon transformation strategy. Starting from an estimated peak carbon emission intensity in 2030 of 1.65 ton CO2 / ton steel, the supplier aim to reduce their carbon emission intensity by 20% within 2035 and by 80% within 2060. In their ESG report of 2021, they published their first GHG accounts, revealing a significant lower carbon emission intensity compared to the rest of China's steel industry.
HydrogenPro's absolute greenhouse gas emissions are expected to increase in the short term. Scaling operations and building a global organisation with several manufacturing sites will increase our climate footprint. However, doing this is a necessary step to succeed with our mission offer energy-efficient hydrogen production that can realise a zero-carbon future. With a high focus on energy-efficient operations and taking advantage from economies of scale, we aim to reduce the carbon emission intensity going forward, measured as our total greenhouse gas emissions divided by number of electrolysers manufactured.
Scope 1 emissions included combustion from one company-owned vehicle. Scope 1 emissions were of 2.3 ton CO2 . Scope 2 emissions included consumption of electricity for the manufacturing process and consumption of district heating for warming of facility space. All manufacturing processes except welding are based on electricity as energy input and are therefore already compatible with a decarbonised energy system, with an electricity grid based on renewables. Scope 2 emissions were of 141.3 ton CO2 and is calculated based on a location-based method.
Scope 3 emissions included business travels, waste generation in operations, upstream leased assets, upstream transport and distribution and purchased goods and services. Scope 3 emissions were of 5921.5 ton CO2 . The most significant contributor to scope 3 emissions and to HydrogenPro's greenhouse gas emissions in general is the category "Purchased goods and services" of 5628.6 ton CO2 . This category covers all activities in China, as the scope 3 calculations are spend-based and derived from the accounts of HydrogenPro ASA in Norway. 37 % of the scope 3 emissions origins from steel usage. The rest of the emissions will be mapped during 2023, in order for us to establish a targeted climate mitigation strategy for the manufacturing activities in China. Read more about how our technology enables avoided emissions in chapter Efficient technology and scalability. The full greenhouse gas emissions accounting can be found in Sustainability factbook.
In HydrogenPro we use innovation as a tool to increase value creation and reduce the utilisation of natural resources. We work to establish a culture with sustainability champions in all parts of our organisation, where creativity and idea creation is used continuously to maximise technology and process efficiency and minimise our environmental footprint.
Scaling of production capacity requires infrastructure and buildings where the job can be done. HydrogenPro aims to situate new operations in established industry parks or existing facilities to promote sharing of infrastructure and reduce need for occupying land. We have good experience with today's manufacturing activities being located inside industry parks, where infrastructure is in place for us to build robust spill-protection, water recycling and environmental safety barriers. We work to ensure that all manufacturing processes are compatible with high environmental standards and that we meet expectations from our own employees and external stakeholders. One of the proactive steps we are taking involves seeking a ISO14001 certification for Environmental Management Systems at our manufacturing facility in Tianjin, China. This certification process is ongoing and is creating ambassadors among our employees with regard to environmental sustainability and responsible manufacturing practices.
In the manufacturing process of electrolysers for green hydrogen production, relatively small amounts of water are needed. Water is used only for cleaning and cooling and can be recycled and reused. None of our current sites are operating in regions where water is scarce. Our location in China is not using water in the manufacturing process, while our location in Denmark has a water recycling facility that can recycle more than 90% of the water used. Our location in Norway uses water for testing of the electrolysers.
As all facilities only use electricity as energy source in the manufacturing process, the emission to air at the manufacturing sites is limited. The manufacturing process at our site in China emits particle dust from a welding machine, but installation of an exhaust treatment system is in process.
All chemical waste is collected and handled by specialised companies at all three sites, releasing no pollutants into air or water. The manufacturing site in China is located at a government-owned industry park, with strict regulations when it comes to spill-protection and environmental safety. To prevent any leakages and discharge into water, the floors are designed without connection to the sewage system.
We can contribute to reduced depletion of natural resources by reducing waste from our manufacturing process. Our main waste fractions are steel scrap and chemicals (alkaline water, mineral oils and cutting fluids). In addition, we have office waste and packaging materials that are sorted and recycled according to local legislations and property owner procedures (paper, plastic, food waste, and residual waste).
The steel that is used for the manufacturing process is of high quality and the steel cut off from our manufacturing process is therefore of high value. We collaborate closely with the steel producer and deliver the steel scrap back to their site so that they can sell it further. Thus, we avoid involving a third party that processes and trades recycled steel.
HydrogenPro Activities
Our daily efforts are focusing on creating a strong and resilient network of suppliers that match our material quality requirements, delivery times, and capacity needs in the scale-up phase we have ahead of us. As an industrial company with advanced technology, we highly depend on suppliers that can meet our technical specs and standards. Therefore, the process of sourcing from a new supplier requires a thorough assessment that involves close communication with the supplier management and visits to their manufacturing sites. When we approach new suppliers, environmental and social sustainability are always topics we address. We are committed to driving positive change not only in our own operations, but also through collaboration with our suppliers.
The supply chain management process was established in September 2021 and is currently being rolled out throughout the company. The process focuses on quality, certifications, capacity, company reputation, and transparent communication. 20 compa nies, both existing and new suppliers, were screened between January and October 2022 using a supplier questionnaire mostly focused on collecting commercial, financial, and ISO certification information. After Hydrogen - Pro uplisted to the main list on Oslo Børs in the beginning of October 2022, our supplier screening process was updated and is now involving more robust qualification proce dures. These are used both to prequalify and to re-approve suppliers.
The HydrogenPro supplier policy is based on a newly developed Supplier Code of Con duct. The Supplier Code of Conduct will be implemented and shared with our suppli ers throughout 2023. It defines mandatory requirements we expect all suppliers and business partners to adhere to concerning their responsibilities towards their stake holders and the environment. Regarding societal aspects, the policy covers topics such as anti-corruption and bribery, human and labour rights including working condi tions, working hours and wages, non-dis crimination, prohibition of child labour and forced labour, conflict minerals and health and safety of employees. Regarding environ mental aspects, the policy covers topics such as environmental management systems, pollution prevention and environmental protection.
Together with our Supplier Code of Con duct, we have established a robust supplier qualification checklist and supplier qualifica tion questionnaire. Requirements and spec ifications regarding technical aspects will be adjusted and customised to each purchase, while following social and environmental standards are mandatory for every supplier. The supplier qualification process involves an in-depth review where suppliers are asked to elaborate on general information, man agement systems, compliance and corporate responsibility, and supply chain management. Documentation of such policies and systems needs to be presented. Health and safety topics that are covered are among others risk assessment processes, training of employ ees, preventive actions, follow-up routines of incidents, as well as incidents reported. Envi ronmental topics that are covered are among others emission reduction and sustainability targets, waste management systems, envi ronmental certifications, and statistics of accidents.
It is important for us to meet our suppliers in person, to get to know them and to build a foundation for trust. This is a crucial aspect in order for us to innovate together with our suppliers on technology development, mate rial use, and sustainability aspects of our shared value chain. The updated supplier qualification process involves factory inspec tions and audits. This is contributing to build ing trust and a good collaboration environ ment, and it is necessary to make sure that requirements are followed. We maintain a permanent dialogue with preferred suppliers and potential new ones for the main sourcing categories, discussing strategic procurement and supply chain topics, such as electrolyser technology and requirements, product devel opment, partnership agreements, supply chain risks and efficiency, global production capacity, customer support services, quality, manufacturing processes and certification.
The updated supplier qualification process is undergoing pilot testing, learning and adap tation during winter 2022/2023. Between October and December 2022, three suppliers were screened according to the new proce dure, while another five suppliers have been screened in the first quarter of 2023. Learn ings from implementation of the updated supplier qualification process will strengthen HydrogenPro's sourcing routines and will be useful when adopting a shared policy and process for the whole group.
Despite challenges due to Covid19, Hydrogen - Pro has accomplished establishing manufac turing activities in Tianjin, China with remark able speed during the latter half of 2022. To deliver on awarded purchase orders, a strong emphasis has been put on quality, price, and capacity requirements in dialogue with suppli ers. The core objective has been to establish a good relationship, involving efficient com munication, shared culture and values, as well as predictability. As we move into 2023, a full implementation of HydrogenPro's supply
chain management process in our Chinese operations will take place. HydrogenPro China's general terms and conditions for purchase cover topics such as environmental management, health and safety, compliance, and business ethics.
With regards to the environmental impact of the supply chain, all the suppliers to HydrogenPro China fulfil Chinese government's requirements of wastewater treatment and pollution. However, as we aim to take a proactive role and minimise our negative impact, we are continuously looking for new suppliers to ensure an even higher level of environmental standards. A challenge for the procurement team in China is the fact that many of the key suppliers are single source, meaning they are the only ones that can deliver the materials, components and processes that are needed in the manufacturing process. The technology team and the procurement team are working together to find alternative suppliers and to assess whether HydrogenPro can establish own production and start to insource critical processes that are outsourced today. An example of a process that HydrogenPro wants to insource in time is nickel coating. A dialogue is established to find a suitable industry park, and planning of environmental analysis by consultancy agencies is next in line.
With regards to the social impact of the supply chain, routines are being implemented to screen for corruption, child or forced labour, and worker's health and safety. As a mitigating effort, we have visited all the key suppliers, and no corruption or violations of human or worker rights have been discovered.
The procurement team in China is recruiting to build capacity for a more thorough assessment and audit of suppliers with regards to social and environmental aspects. This will also involve adoption of the supply chain management processes that will be implemented on group level through 2023.
The supplier qualification process is also undergoing adaptions related to the Norwegian Transparency Act ("Åpenhetsloven"). This legislation establishes requirements for Norwegian enterprises to carry out due diligence of fundamental human rights and decent working conditions in own operations, in supply chain and among business partners, and to report on the due diligence activities they have carried out. HydrogenPro has started this work and is preparing for reporting on the Transparency Act during first half of 2023.
HydrogenPro is built on an innovative culture with employees continuously looking for improvements and new technology opportunities. As a new and fast-moving actor in the hydrogen sector, we have the potential to bring with us a circular economy right from the beginning. We work to establish a product design process where the customer's expectations of functionality as well as circular principles of product design are top of mind. The seven EU Taxonomy design principles are useful guidelines in our innovation process: (1) Design for long lifetime, (2) design for repair and guarantee, (3) design for remanufacturing, (4) design for dismantling, (5) design for recyclability, (6) proactive substitution of hazardous substances and (7) information to customers. Our long-term goal is that all components and parts in our electrolysers easily can be dismantled, repaired, and reused.
When developing our 3rd generation electrodes, it has been important for us to create plug-and-play technologies that allow for the new electrodes to easily be installed in old cell stack designs during overhaul. We also design the electrolysers so that the bipolar steel plates can easily be dismantled, returned, and replaced. Today, our service agreements with customers cover repair and refurbishment of 40% of the bipolar plates after 10 years, and additional 60% of the plates after 20 years. All other steel parts in the electrolyser, that is end plates, mid plate, and bolts, are reused. Refurbishment can be done as long as the steel components meet the quality requirements, which can be up to 30 years. We are exploring new business models where we offer "electrolysers as a service". This implies that whenever an electrolyser needs overhaul (preferably on a 10-year frequency) our customer can just exchange it with another electrolyser that is already refurbished by us.
Innovative product design is a consequence of the high focus on technology leadership and R&D in the organisation. Moving forward, we will enhance our circularity capabilities and infrastructure in order to reduce our environmental footprint and enhance the potential of our business model.
All raw materials are valuable resources that should be spent wisely and with moderation. We select raw materials with care, taking into account the environmental footprint following from extraction, processing and disposal of the raw material. We are continuously balancing material performance and customer requirements with out aim to reduce spent resources.
There is a limited number of input materials that are needed to produce Hydrogen-Pro electrolysers. Our main material inputs are steel, polymers, and nickel, in addition to some chemicals and lye. Our electrode technology does not rely on any noble metals, rare-earth elements, or PFAS.
This winter we have taken great steps when it comes to product design and material use. We have experienced that by experimenting with the nickel coating thickness of our electrodes, we can reduce the nickel usage significantly and at the same time optimise the electrolyser performance. Reducing nickel consumption has several environmental benefits, such as reduced land-use, energy consumption, and local pollution.
Steel is the major material input in the manufacturing of HydrogenPro electrolysers.
The steel plates that we purchase are not delivered in the exact shapes and sizes that we need for our electrolysers. This leads to a considerable quantity of steel scrap, which has attracted significant attention within our technology department. We are in close contact with our steel supplier to explore different possibilities to minimise steel scrap. As they will need to invest in new equipment to deliver new shapes, the crucial factor is when we are in a position to commit to sourcing a sufficient quantity of steel plates in the right dimension. This requires that we reach a certain company size and that we have sufficient financial predictability and backing. We are determined to increase material efficiency and reduce scrap. For further details on how we approach our steel usage, see chapter on Sustainable and local manufacturing.
To increase circularity and minimise waste across the whole value chain, it is important to us to work closely with both suppliers and customers. Empowering customers to take wise decisions during operations greatly enhances the lifespan of the equipment. Therefore, we ensure that our customers are well informed on how to operate the electrolyser, how they treat the different components, and what procedures should be followed to perform preventive maintenance routinely. We are working to develop customer documentation systems that include detailed sourcing and quality documentation for all raw materials and components. We are also developing customer guidelines and criteria for refurbishment and material recycling. We aim to provide service and maintenance to our customers in an efficient manner that enhances the circularity of our products, and work to establish procedures and infrastructures that are needed to succeed.
People and people capabilities are at the centre of value creation, culture, and performance. To be able to deliver on the strategic priorities of the company, HydrogenPro needs to employ the right people. To do so, we must be a safe and attractive place to work. This is of material importance for us, both because our success at delivering on other material ESG topics is influenced by this, and because it has a direct social impact on the people working in HydrogenPro. Being a safe and attractive place to work ensures that we can attract and hire the best candidates. HydrogenPro is a company working with high-end technology, engineering, manufacturing, research & development (R&D) and assembly. To scale up and reach our goals, having expertise and the right knowledge available is mandatory and a prerequisite for our success. To be a safe and attractive workplace, we have high focus on occupational health and safety, training and development, diversity, openness, and equal opportunities.
HydrogenPro aims to become a world-leading provider of high-pressure alkaline electrolyser technologies and solutions that meet the highest standards for safety, reliability, and long service life. Our employees are HydrogenPro's most important asset, and the key factor to reach our strategic ambitions and creating shareholder value. As HydrogenPro is in a rapid scale-up phase there has been several hirings to the team in 2022. The total number of employees increased from 25 in 2021 to 143 at year-end 2022. Across all geographies we see that we have a low turnover, and that the people we hire tend to stay with us. We
strive to have a company culture that is characterised by our values: courage, integrity, collaboration, and innovation. Every employee is an important contributor for HydrogenPro to reach our ambitious goals.
14 new employees started their roles at HydrogenPro ASA in 2022 in a mix of junior and senior positions including executive management. Getting access to the best candidates with the right key knowledge profile has been challenging, especially when it comes to the more technical fields. This has led to a more offensive hiring process, where we combine company marketing and search for candidates. For most roles we offer the possibility to work either at our Porsgrunn office, or in Oslo, as some candidates are more easily accessible in the capital area. The total number of full-time employees at year end was 34. Sick leave for 2022 ended at 0.65%, well below the company target of 4%. Our Oslo office was expanded from one to five employees, and we moved into a more suitable office space. We established an occupational health service in the company during 2022 and made an agreement with "Bedriftshelsen AS" to provide these services.
In 2021 we decided to conduct a culture and employee study of our Norwegian operations during 2022. This is important as a part of improving the insights and understanding of where we stand today on various HR-related parameters, and we wanted to compare our workplace with other great workplaces. Because of that, we have entered a long-term cooperation with the Great Place
to Work® Institute. All employees in the Norwegian organisation were invited to participate in a survey (all personal responses were confidential) answering 60 statements measuring the level of Trust, Pride and Camaraderie at the workplace. The survey was conducted in December 2022. The response rate was 83% which is very good and above average for similar surveys.
The overall Trust Index came in at a score of 67. The "Nasjonal Tillitsindex" (all companies in Norway) is approximately at the same Trust Index score as HydrogenPro. The score of the top 10 companies within the same company size range as HydrogenPro, was 90. Thus, HydrogenPro has room for improvements.
The results have been assessed and discussed within the various departments, where the 3-4 key priority areas have been identified and an action plan for improvement has been agreed upon within each department. The management team has, based on the input and feedback from the organisation as well as its own assessment of the results, defined 3-4 key priority areas for the company with an overall action plan for improvement during 2023.
The target for a new survey to be conducted by the end of 2023 is a Trust Index of 90 and will be evaluated in December 2023 .
In Denmark, HydrogenPro was a total of five full-time employees at year-end, same as in 2021. In addition, three part-time workers were hired, and two full-time consultants. Through collaboration with Aarhus University, two industrial PhD students from Biological & Chemical Engineering have been employed. Hereto comes an additional PhD student on flow cell modelling through a granted Eurostars project. In total, 11 R&D projects were granted in 2022 in Denmark which will lead to several shared students in 2023 as well as new full-time employees. HydrogenPro Denmark, Advanced Surface Plating, is considered an attractive employer. Hence, getting access to skilled labour has been easy through existing employee networks and our increasing research activities. The sick leave in HydrogenPro Denmark was as low as 0.1% in 2022.
All 105 employees in China are full-time workers and were hired in the period June-September 2022. Approximately 30 people work as staff, the rest are employed in manufacturing. Some of the new hires are engineers with experience in electrolyser manufacturing, however, it has been particularly difficult to get access to skilled labour in this region. This has required extensive training of the new hires. Building a factory and an organisation from scratch has required high focus on developing a culture based on trust, tolerance, and transparency. The team is growing dynamically, and the organisational structure is coming together piece by piece. The sick leave for the last four months of 2022 was 3.3%, mainly driven by covid19.
At HydrogenPro there are no employees covered by collective bargaining agreements. We do inform our employees about the possibilities to participate in unions and collective bargaining agreements. When operating in countries where the right to freedom of association and collective bargaining is limited through local legislation, we inform our employees about their rights in the personnel handbook.
In the event of operational changes, we ensure that we are compliant with local legislation and give employees notice in due time. We are compliant with The Working Environment Act in Norway and local legislation in the other countries where we operate. In 2022, HydrogenPro joined forces with other industry companies in The Federation of Norwegian Industries (Norsk Industri), the largest association within the overall Confederation of Norwegian Enterprises (NHO).
We value diversity in our team at Hydrogen-Pro. Our recruitment policies are inclusive and designed to guide our recruitment towards reaching our strategic goals. As communicated in our 2021 Annual Report, we have an ambition to have a minimum of 25% females by 2025 across all geographies. In 2021, the female ratio reached 15%. During 2022 we have had strong focus on finding and recruiting highly qualified females and we came in at 24% by the end of year 2022. Thus, we have taken significant steps towards reaching our 2025 ambition. We will continue to engage with local universities and educational organiations to encourage females to pursue a career within the hydrogen industry, to increase the diversity in HydrogenPro and the industry at whole. In addition to gender diversity, we are striving to have cultural diversity at all locations, and to make sure all employees are feeling included and valued.
We follow our governance and compensation routines for all employees with equal pay for equal work and with zero tolerance for discrimination. Our compensation average is well above the minimum wage rules for all geographic locations, and we are competitive in attracting both talent and experienced resources to HydrogenPro. In 2022, the remuneration ratio of men to women was 1.09 in our Norwegian operations and 1.13 for our Chinese operations. In Denmark, only men were employed by year-end 2022.
People are our core resource, and we have the health and safety of our employees as a top priority. We have a strategic ambition to have zero accidents and work-related injuries in HydrogenPro. As we are ramping up manufacturing and testing of electrolysers, we see that the number of injuries has increased, too. In 2022, we had three recordable injuries, one in Norway at our testing facilities at Herøya, and two at our manufacturing plant in China. No accidents were reported for Denmark. In addition, we had eight first aid injuries, three in Norway and five in China. The incidents were related to chemical burns from KOH (lye), as well as small scratch from sharp blades and iron fillings. To mitigate chemical burns from lye, we have implemented changes in our training programs, as well as increased emergency preparedness. This includes adhering to routines and processes, such as wearing necessary safety equipment, including helmets, gloves, and glasses. Our zero accidents and work-related injuries ambition is ongoing as a top priority for HydrogenPro.
HydrogenPro ASA in Norway has been ISO45001-certified, covering an occupational health and safety management system. HydrogenPro China is currently working to get the ISO45001-certificate. An important part of ensuring occupational health and safety for all our employees is to perform thorough risk identification and assessment procedures to continuously improve our safety routines and standards. In case of incidents, an important part of the risk assessment process is to conduct thorough investigations to get a better understanding of how such incidents can be avoided. This has been done both in Norway and in China. HydrogenPro China has also developed environmental and safety emergencies plans, which are centered around the manufacturing process. In case of changes in the manufacturing process, the emergency plans will be updated accordingly.
Comprehensive training of employees was conducted in 2022, especially at our manufacturing facilities in China. As the whole work force was hired in 2022, the first months of operations comprised extensive training of all the new employees. A total of 2592 hours of training was conducted by the workers at the Tianjin facility in 2022, and additionally, 487 hours by management. All employees at the Chinese part of the company went through basic training, including HR introduction and HSE (health, safety, and environment) training covering safety in the offices and manufacturing facilities. The training was concluded with an exam. Factory workers participate in more comprehensive training, particularly within safety, as well as skills specific programs such as e.g. how to drive a forklift, electrical permission training, etc. The manufacturing workers are categorised into 5 distinct levels based on their respective skills. When basic training is conducted, the workers are at level 3, and they are allowed to participate in the production process under supervision. When they reach level 4, they can perform standard operating procedures unsupervised, while employees at level 5 have supervisory responsibilities and may also help train new workers. The skill categories are also linked to the employee's base salary. In addition to manufacture-related training, necessary first aid training has been initiated, and we are well on our way to achieving a first aid certificate at company level. All first aid training is carried out by a third party, having the necessary qualifications for such work in accordance with local regulations. All training is reported to local governments in accordance with regulatory requirements.
In Norway, we plan to conclude our competency and development mapping of all employees during 2023 which will be structured in our management system. This mapping will be the foundation to ensure a structured approach to train and develop as a team and as individuals and will be included in the annual employee review. We established and implemented management systems for training of all our new employees during 2022, and all new employees underwent training that typically lasted about two hours per person. New personnel working with electrical, hazardous, and chemical processes conducted training of up to 5 hours per person. All relevant employees (new and existing) went through first aid training in 2022 to enable early response to health and safety issues.
Ongoing development of our personnel is important to ensure a sustainable and increasingly educated workforce. Along with our growth in employees, we will seek to develop a systematic approach to ensure optimal training and personal development. As we scale up, employees will be trained both in HydrogenPro general topics and in specific topics according to the employee's tasks and roles. Our ambition is to have one culture, one set of attitudes, be compliant with local legislations and ensure a holistic governance across all facilities including occupational
health service functions. We want to be a learning organisation where the skills of our employees are constantly improving.
To ensure a coherent business and social conduct there are two main structures that will empower employees to behave and perform their work appropriately: The quality management system, TQM, and the personnel handbook. The procedures established, along with the ISO9001 certification, guide employees to implement the organisation's policies and practices for responsible business conduct including how to potentially raise concerns through an established whistleblowing process.
These guiding mechanisms and procedures are informed about and demonstrated at the very start of every employment through routine team meetings, one-to-one dialogue between the employee and their closest manager and on HydrogenPros's intranet. Through the same fora and information channels, the employees can seek advice and discuss the topics as desired. The personnel handbook provides clear instructions on how to address and report critical concerns to the executive level and Board level, through an established whistleblowing policy. Through the onboarding process and information provided annually, all employees are encouraged to report incidents of concern as an important tool to develop our structures, performance, and culture. Issues can be reported anonymously, and the matter will be handled at Board level. For the reporting period (2022), there were one reported incident of concern in Norway that has been handled and closed.
We aim to implement our whistleblower policy in our international operations during 2023.
2022 marks the take-off for green hydrogen both on a global scale and for HydrogenPro. It has been a defining and transformative year, positioning HydrogenPro as one of the leading companies within the green hydrogen space, setting a new industry standard with our large-scale green hydrogen technology & systems.
HydrogenPro has been chosen as the exclusive electrolyser supplier for the world's largest green hydrogen project to date, the 220MW Advanced Clean Energy Storage (ACES) project in Utah, USA. The scope of delivery extends into 2H 2023 followed by on-site work with completion in late 2024, and HydrogenPro started to recognise some revenues already in 2022. Hydrogen-Pro has also signed a 10-year service and support agreement for the ACES project, demonstrating our strategy to be an integrated life cycle partner to our customers.
During 2022, HydrogenPro established and completed our production plant in Tianjin, China. The plant is 75% owned by HydrogenPro ASA, and the company has full ownership of the technology. The plant has an annual capacity of 300 MW and is already producing electrolysers to supply the ACES project in Utah. The establishment of this plant represents a first and important manufacturing footprint for HydrogenPro.
The initial testing of the world's largest high-pressure alkaline electrolyser at Herøya Industrial Park is completed. The 5.5-megawatt electrolyser has been validated to produce 1,100 Nm3/h hydrogen at normal current density. This equals 100 kg of pure green pressurised hydrogen per hour, setting a new standard for the industry, and verifying that our electrolyser and gas separator technologies will produce hydrogen on a large scale.
HydrogenPro is chosen as supplier for alkaline high-pressure electrolysers for DG Fuels' 840 MW plant in Louisiana, USA. This contract value for HydrogenPro is >USD 500 million, excluding life cycle services. A final investment decision (FID) is expected in 2023. The plant has secured off-take agreements for 100% of its capacity. With satisfactory raise of capital, DG Fuels expects to establish similar projects in other US states, announcing a land agreement in Maine in November 2022. HydrogenPro is an attractive supplier in these projects.
We have established and opened offices in Boston, USA and in Duisburg, Germany, ramping up presence and sales in line with our strategy on global footprint. The number of employees has increased to 143, up from 10 employees at the IPO in October 2020.
HydrogenPro's advanced electrode technology has been tested for the first 1000-hour run, and the first results are showing significant performance efficiency improvements, marking the start of our 3rd generation electrolyser technology.
HydrogenPro completed a successful uplisting to the main list at Oslo Børs, marking the start of a new era effective 3 October 2022.
Tarjei Johansen was appointed new Chief Executive Officer of HydrogenPro in November. He brings extensive experience from executive positions in Schlumberger, Kemira and Bureau Veritas, and is a merited leader, fit to develop HydrogenPro into a global player within the green hydrogen space.
In August 2022, President Biden signed the Inflation Reduction Act, making the US an epicenter for green hydrogen. This has created unique opportunities for HydrogenPro, with our strategic focus on large-scale solutions combined with our current projects in the US, positioning us well into 2023 and beyond.
We ended 2022 with a backlog of NOK 747 million and an active sales pipeline of 18.5GW of electrolyser capacity. We are ready for 2023.
In accordance with the provisions of the Norwegian Accounting Act, the Board of Directors confirms that the accounts have been prepared on a going concern basis and that the going concern assumption applies. Pursuant to Section 3-9 of the Norwegian Accounting Act, HydrogenPro prepares consolidated annual accounts in accordance with IFRS (International Financial Reporting Standards), approved by the EU. The statutory accounts of HydrogenPro ASA have been prepared in accordance with the Norwegian regulations concerning annual accounts.
| NOK MILLION | 2022 | 2021 |
|---|---|---|
| Revenue from contracts with customers | 56.4 | 20.0 |
| Cost of goods sold | 44.4 | 11.6 |
| Personnel expenses | 52.4 | 17.9 |
| Other operating expenses | 53.9 | 27.2 |
| ADJ. EBITDA (EXCL. NON-CASH OPERATING EXPENSES) | -94.3 | -36.7 |
| Non-cash cost of incentive programs/payrolls | 10.3 | 15.0 |
| Non-cash accruals/provisions | 0.7 | 3.6 |
| EBITDA | -105.3 | -55.2 |
| Depreciation and amortization expenses | 14.0 | 5.2 |
| EBIT | -119.3 | -60.5 |
| Net financial income and expenses | 29.3 | 3.1 |
| Profit/(loss) before income tax | -89.9 | -57.4 |
| Income tax expense | -0.1 | -1.0 |
| PROFIT/(LOSS) | -89.8 | -56.4 |
HydrogenPro generated revenues of NOK 56.4 million in 2022 (NOK 20.0 million in 2021) which was mainly related to the purchase order from Mitsubishi Power for the world's largest single stack high-pressure alkaline electrolyser system and the ACES project.
Cost of goods sold amounted to 44.4 million (NOK 11.6 million in 2021) in raw materials and consumables, all related to purchase orders from Mitsubishi Power.
Personnel expenses increased from 17.9 million in 2021 to 52.4 million in 2022 as the number of employees went from 25 at year end 2021 to 143 at year end 2022. The large increase in number of employees is both related to ongoing activity to deliver onexisting contracts and upscaling for future growth.
Other operating expenses amounted to 53.9 million (NOK 27.2 million in 2021), mainly related to consultancy fees and external personnel. The increase in operating costs reflects a continued build-up of the organization and systems needed to execute and deliver high quality products and services. Throughout the year there was an ongoing project implementing a new ERP-system with external personnel and consultants, in addition external support related to the up-listing to Oslo Stock Exchange.
Depreciation & amortisation expenses of NOK 14.0 million (NOK 5.2 million in 2021).
Operating profit was NOK -119.3 million.
| NOK MILLION 2022 |
2021 |
|---|---|
| Interest gain/-expense 3.4 |
2.1 |
| Net foreign exchange gain/-expense 4.2 |
2.3 |
| Other finance income/-expense 21.7 |
-1.3 |
| NET FINANCIAL ITEMS 29.3 |
3.1 |
Net financial income and expenses amounted to NOK 29.3 million, which consisted of NOK 40.4 million as financial income and NOK 11.0 million as financial cost. The increase in other finance income is mainly due to the fair value adjustment for financial instrument, refer to note 3.4 in the financial statement.
The Company has not entered into any financial instruments for hedging purposes.
Tax on ordinary result was NOK -0.1 million (NOK –1.0 million in 2021), mainly related to deferred tax assets on depreciation of technology.
Annual net profit for the year ended at NOK -89.8 million (NOK –56,4 million in 2021) and will be transferred to other equity
| NOK MILLION | 31.12.2022 | 31.12.2021 |
|---|---|---|
| ASSETS | ||
| Intangible assets | 64.4 | 49.0 |
| Property, plant and equipment | 55.5 | 22.6 |
| Financial fixed assets | 74.5 | 53.3 |
| Total Fixed Assets | 194.5 | 124.9 |
| Current operating assets | 121.7 | 20.9 |
| Cash and cash equivalents | 257.0 | 382.3 |
| Total Current Assets | 378.7 | 403.2 |
| Total Assets | 573.2 | 528.1 |
| EQUITY AND LIABILITIES | ||
| Total equity | 437.8 | 511.3 |
| Total long-term liabilities | 11.3 | 1.4 |
| Total short-term liabilities | 124.0 | 15.5 |
| Total liabilities | 135.3 | 16.8 |
| Total equity and liabilities | 573.2 | 528.1 |
Total assets as of 31 December 2022 were NOK 573.2 million, whereof NOK 378.7 million in current assets (NOK 257.0 million in cash and deposits, NOK 85.9 million in total debtors and NOK 35.8 million in inventories) and NOK 194.5 million in non-current assets, whereof NOK 64.4 million in intangible assets, NOK 55.5 million in tangible fixed assets and NOK 74.5 million in financial fixed assets.
The development in intangible assets and property, plant and equipment are mainly due to the acquisition of HydrogenPro Tianjin Ltd. For more information, see note 3.1, 3.2, 3.3 and 4.2 in the financial statement.
On 29 October 2021 HydrogenPro invested USD 3 million (recognised to NOK 25 million at date of transaction) in a convertible note to DG Fuels LLC. DG Fuels LLC develops a sustainable aviation fuel (SAF) project in Louisiana, US which requires approx. 840 MW of electrolysis capacity where HydrogenPro is the selected supplier. The fair value assessment per 31 December 2022 is 52.1 MNOK. For further details, please see note 3.4 in the financial statements.
Total equity amounted to NOK 437.8 million and total liabilities of NOK 135.3 million, whereof NOK 124.0 million in short-term liabilities and NOK 11.3 million in long-term liabilities/provisions.
The equity ratio as of 31 December 2022 was 76%.
| NOK MILLION | 2022 | 2021 |
|---|---|---|
| Cash balance start of period | 382.3 | 506.1 |
| Net cash flow from operating activities | -69.4 | -47.5 |
| Net cash flow from investing activities | -51.9 | -78.1 |
| Net cash flow from financing activities | -4.0 | 1.7 |
| Total changes in cash | -125.3 | -123.9 |
| Cash balance end of period | 257.0 | 382.3 |
Net cash flow from operating activities was NOK -69.4 million, compared to -47,5 million in 2021 The development is mainly due to higher personnel expenses driven by increase in full-time employees.
Net cash flow from investing activities of NOK -51.9 million. This includes NOK 32.5 million related to the acquisition of HydrogenPro China and NOK 9.7 million invested in the manufacturing capacity. These investments have secured an annual manufacturing capacity of 300 MW, and enables the Company to manufacture the awarded purchase orders, published on 4 April 2022 and 19 April 2022, respectively. Add as NOK 4.0 million related to the completion of the full-scale electrode fabrication facility in Aarhus, Denmark
More details regarding investment, refer to note 3.1, 3.2, 3.4 and 4.2 in the financial statements.
Net cash flows from financing activities were NOK -4.0 million, and the increase is mainly due to lease payments.
HydrogenPro is listed on Oslo Stock Exchange under the ticker "HYPRO".
As of 31 December 2022, the number of shares outstanding was 58,028,171 each with a par value of NOK 0,02/share. All shares are of the same class and with equal voting and dividend rights.
The market capitalization as of year-end 2022 was NOK 1 679.9 million vs. NOK 868.1 million as of year-end 2021, i.e. an increase of 93.5% during 2022.
Given the Company's early stage of development and strategic ambitions, the Board of Directors does not recommend a dividend for the year 2022.
Through its ordinary operating activities, the Company is exposed to various types of risk and the exposure to risk has increased during 2022 as the Company has a manufacturing site in Tianjin, China in operation. The Company is proactively working to identify risks and taking risk-mitigating initiatives to the extent this is practicable and appropriate.
Below follows a description of the Company's main risks and uncertainties. Additional risks and uncertainties that the Company currently believes are of less importance or that are currently not known to the Company, may also have a material adverse effect on the Company's business, financial condition, results of operations and cash flow.
Demand for hydrogen and thus the interest in acquiring the Company's services, may be volatile and are affected by numerous factors beyond the Company's control. Some of these relate to the cost of producing and delivering hydrogen, expectations regarding future energy prices, governmental laws, regulations and permissions, local and international energy and climate policies and economic conditions, technological changes, delivery and schedule risks, transport risks, Covid 19 lockdown, etc.
Furthermore, the Company depends on its' ability to ensure sufficient product quality and performance of the electrolyser systems to meet the customer's expectations and to remain competitive.
Violations of and/or changes in laws and regulations, including environmental laws could increase costs or change the way the Company does business. Similarly, changes in laws could make operating the Company's business more expensive or require the Company to change the way in which it conducts its business. The hydrogen industry is in its development phase and is not currently subject to industry-specific government regulations in all regions.
Disruptions of deliveries by the Company's suppliers could increase operating costs, decrease revenues and adversely impact the Company's operations. Commodity price risk, especially steel and nickel prices, may affect production costs, product pricing, earnings, and credit availability. The Company seeks to mitigate raw material price risk and foreign exchange risk through clauses in contracts, financial instruments, or fixed prices with suppliers to reduce the Company's exposure.
The Company may be subject to litigation that could have an adverse effect on the Company's business, results of operations, cash flows, financial condition and/or prospects. There are inherent risks related to the Company's business which may expose the Company to litigation, including personal injury litigation, environmental litigation, contractual litigation with clients or other contract counterparties, intellectual property litigation and tax or securities litigation. The Company is not involved in any litigation.
A further spread of the corona virus (COVID-19) or a similar pandemic could potentially have a material adverse effect on the Company.
The Company uses information technology systems to conduct its business, and disruption, failure or security breaches of these systems could materially and adversely affect its business and results of operations.
The Company's functional currency is NOK. The Company operates globally and is therefore exposed to currency fluctuations, mainly related to USD, EUR and CNY. The Company's exposure to interest rates was mainly related to interest earned on the Company's cash position with banks. The Company's exposure to currencies and interest rates is managed on a continuous basis.
The Company is exposed to credit risk. Any failure in the ability or willingness of a counterparty to fulfil its contractual obligations may have a significant adverse effect on the Company's business, prospects, financial results and/or results of operations.
The Company may require additional capital in the future to execute its strategy or for other purposes, which may not be available on favourable terms, or at all.
HydrogenPro ASA has purchased and maintains a Directors and Officers Liability Insurance on behalf of the members of the Board of Directors and CEO. The insurance additionally covers any employee acting in a managerial capacity and includes subsidiaries owned with more than 50%. The insurance policy is issued by a reputable, specialized insurer with appropriate rating. Directors' & Officers' Liability Insurance provides financial protection to HydrogenPro's directors, officers, and any employees that can incur personal liability for claims made against them in respect of acts committed, or alleged to have been committed, in their capacity as such and as a result of an error, omission or breach of duty.
The Board is responsible for the Company's sustainability strategy and reporting, while the day-to-day responsibility for managing impacts, both financial, environmental, and social, is delegated to the Executive Management. In 2022 HydrogenPro hired a Head of Investor Relation and ESG, who reports to the CFO.
Our sustainability efforts and corporate social responsibility work are thoroughly described in this report. In chapter 2 we elaborate on our impact on the environment and social factors, and topics such as work environment (including work related injuries and sick leave), non-discrimination (including diversity and inclusion), and human rights are covered. Anti-bribery and corruption in the supply chain are described in chapter 2, and our internal work on ethical business conduct is elaborated on in Chapter 3, Governance. The Company is preparing to report in accordance with the Transparency Act, and the report will be published on the Company's web site during first half of 2023.
The Board of Directors considers ESG risks as a part of the risk management process, with a particular focus on climate risk and opportunities (see page 27-30 for information regarding climate opportunities).
Physical risks involve risks caused by climate change. This will include risks to facilities and infrastructure, impact on operations, water and raw material availability and supply chain disruptions1. HydrogenPro is exposed to different types of physical climate risk. In the short term, we see water availability being the greatest physical climate risk to our operations. Green hydrogen production needs water, both as an input factor in the production and as cooling water to reduce the electrolyser temperature during production. In areas where water is a scarce resource following climate changes, this may reduce the attractiveness of our products as water may be reserved for other purposes.
Water consumption from production of hydrogen is the same, independent of electrolysis manufacturer, as it takes one water molecule (H2O) to produce one hydrogen gas molecule (H2). However, the need for cooling water differs between the different electrolysers in the market. We aim to reduce the need for cooling water in our electrolyser by developing 3rd generation electrodes technology, where the cooling water need is significantly reduced due to higher energy efficiency and lower power consumption. On the longer horizon, HydrogenPro's facilities could be at risk for extreme weather events because of climate change. All our facilities as of now are located in established industry parks with flood and fire protection etc. We take this risk into consideration when deciding on establishing new offices and manufacturing facilities.
Transition risks typically refer to risks associated with transition to a low carbon economy. This transition can entail extensive policy, legal, technology and market changes to address mitigation and adaptation requirements related to climate changes that might impact our ability to do business1 . Hydrogen-Pro is exposed to several types of transition risks, both in the short, medium, and long term. In the short term, we are facing the risk of moving too fast or too slow to meet customer demands and potentially becoming an early mover with no customers, or a follower that is too slow to catch up. This risk is a result of the rapid and unclear development of the green hydrogen space, where customer demand and competition composition evolve weekly. The regulatory landscape and incentive programs in Europe and the US are to a high extent driving the evolution of the new hydrogen economy. Our response to this is to follow the market closely and seek to maintain a flexible cost structure while at the same time build our manufacturing capacity.
On a medium-term outlook, HydrogenPro is exposed to the risk that green hydrogen's importance in a low-carbon society could change significantly, and by that, the customer demand for electrolysers could fall. This could follow from technological breakthroughs for other low-carbon hydrogen solutions, such as blue hydrogen using carbon capture and storage, or alternatives to hydrogen, such as batteries for deep-sea shipping and longhaul transportation. This is not something HydrogenPro works to mitigate, as these technologies would be important steps to mitigate climate change and reach the 2050 net zero targets. Instead, we aim to diversify our customer base to reduce the potential impact of such technological breakthroughs by being a relevant supplier for several types of end-users. As an example, our high-pressure alkaline electrolysers are a perfect fit for clean energy storage, where excess renewable energy is captured when it is most abundant and stored as hydrogen. As the world depends on renewable energy to reach the Paris agreement, we believe this is a market where green hydrogen will be of high importance.
A final transition risk that has become of higher relevance in the first months of 2023 is the risk of reduced development of renewable energy due to environmental considerations besides climate change. This could result in less hydropower to preserve rivers or fewer wind farms to preserve land and biodiversity. Social considerations can also play an important role, as seen in Norway following the Indigenous Sámi protest against the Fosen windmills in March 2023. Wind farms have been constructed in the Sámi areas at the Fosen peninsula, threatening the right to practice the culture of the Indigenous Sámi people in the area. While HydrogenPro does not develop renewable energy, our customers are dependent on renewable energy as a critical input factor to produce green hydrogen. Therefore, we consider this a risk to our business model. Mitigating efforts are hard to implement. However, we recognise that we are part of an industry quickly evolving, and that we need to collaborate closely with partners and industry peers to ensure that environmental and social considerations are taken into the equation. We will strive to find the most sustainable solutions both for today and the years to come for development of new renewable power production.
Our ambition is to become #1 provider of large-scale hydrogen technology & systems. This entails strong commitments to high standards relating to working environment and personnel welfare, environmental impact, and business practices.
Following the IPO on Euronext Growth in October 2020, the Company implemented guidelines, policies and procedures relating to human rights, employee rights and social matters including prevention of corruption, harassment, and discrimination.
This has been further enhanced following the Company's uplisting to the main board on Oslo Stock Exchange on 3 October 2022, with the establishment of an audit and risk committee, nomination committee and remuneration committee. The Remuneration Report is publicly available on the Company web site.
For further information on corporate governance, please see Corporate Governance Report in the next main section.
On 20 March 2023 HydrogenPro announced plans to establish a 500 megawatt manufacturing facility in Texas, USA. With this, HydrogenPro will take a market-leading position and become the only viable large-scale player providing high-pressure alkaline electrolyser technology and systems in the US. This move will increase HydrogenPro's manufacturing capacity to 800 megawatt in total and represents a big step in establishing a global presence. The estimated total investment will be up to USD 50 million. The investment cost includes a separate advanced electrode manufacturing facility, representing a technology game changer in the HydrogenPro solutions offering. The new site will have the option to significantly scale up the capacity to several gigawatts in due time and the US organization will be ramped-up in parallel with the manufacturing expansion.
With the significant increase in the active sales pipeline and contract awards, the outlook for the Company's services is strong. The purchase order with Mitsubishi Power Americas, Inc. announced on 4 April 2022 is one of the world's largest electrolyser systems contracts ever placed. This was an important milestone, and the Company sees a strong demand for its services with an active sales pipeline of 18.5 GW at end of 2022. HydrogenPro sees a strong demand for its early phase and front-end engineering studies. Clients continue to mature projects and financing and move towards final investment decision. The outlook for the Company's services continues to strengthen, as shown with a significant increase in the active sales pipeline and recent contract awards.
The main objective of the Company's global expansion plan is to become a global leading supplier with industry-leading technology. The new manufacturing facility in Texas will be a bridgehead into the North American market and another major step in establishing a global footprint.
One of the Company's top strategic priorities is to maintain a constant focus on technology and innovation in order to reinforce its position as a technology leader. This is evidenced by the Company's R&D pipeline of approx.. NOK 150 million. The third-generation electrolyser technology with the advanced electrodes will undergo further validation during 2023 and several other innovative efforts will be carried out to maintain cost leadership. With the new technology, the Company will be able to deliver a Levelised Cost of Hydrogen ("LCOH") of USD 1.20 per kg (assumed electricity price of USD20/MWh).
HydrogenPro is attractively positioned in this developing market due to its proven high-pressure alkaline technology in combination with energy-efficient electrode technology.
(All signatures electronically signed)
Ellen Merete Hanetho Chair of the Board
Donna Rennemo Board member
Jarle Tautra Board member Vivian Espeseth Board member
Jarle Dragvik Board member
Tarjei Johansen CEO
HydrogenPro and its subsidiaries (the "Company" or "HydrogenPro") aims to become a world-leading provider of high-pressure alkaline electrolyser technologies & solutions that meet the highest standards for safety, reliability, and long service life. Hydrogen-Pro is committed to high standards relating to working environment and personnel welfare, environmental impact, and business practices. We endevaour to complying with principles of corporate responsibility in our daily operations that demonstrate integrity and transparency. HydrogenPro reports and has policy commitments for a responsible business conduct in accordance with the Norwegian Accounting Act § 3-3b, c, OECD guidelines for Multinational Enterprises, sustainability, human rights, employee rights and social matters including prevention of corruption, labour violations, harassment, and discrimination.
The Corporate Governance addresses the framework of guidelines and principles regulating the interaction between the Company's shareholders, the Board of Directors (the "Board"), the Chief Executive Officer (the "CEO") and the Company's executive management team.
As a listed Company, HydrogenPro will comply with applicable provisions of the Norwegian Securities Trading Act, the Market Abuse Regulation (MAR), the Continuing obligations for companies listed on Oslo Stock Exchange, the Norwegian Private Limited Liability Companies Act. The Company will work closely with suppliers to ensure the same integrity, transparency and compliance as expected of HydrogenPro. HydrogenPro's Board and executive management is committed to follow The Norwegian Code of Practice for Corporate Governance and will provide explanations of any non-compliance with the Code. The corporate governance document for Hydrogen-Pro covers all sections of The Norwegian Code of Practice for Corporate Governance and is available in the Annual report and on the Company website www.hydrogen-pro.com. For the reporting period of 2022, Hydrogen-Pro provides an integrated financial and sustainability report addressing topics according to the Global Reporting Initiative ("GRI") core standards.
HydrogenPro was founded in 2013 with a mission to design and deliver green hydrogen technology solutions in collaboration with global partners and suppliers. The Company's core product is high-pressure alkaline electrolysers, including one of the most advanced technologies in the industry. HydrogenPro employed 143 highly skilled and experienced people at year end 2022, including key personnel with leading global hydrogen expertise. The Company is currently present in Denmark, Germany, US, and China with operations that include R&D, sales offices and production, and aims to grow the global presence further in the years to come. Headquarters and test facility are located at Herøya, Norway. In 2020, HydrogenPro was listed on Euronext Growth, and in October 2022, the Company was uplisted to the main list of the Oslo Stock Exchange.
HydrogenPro has developed industry-leading high-pressure alkaline electrolysers, including the Company´s 3rd generation electrode technology, with the potential to increase efficiency of the electrolysis process by 14 percentage points. This breakthrough was made possible through our subsidiary Advanced Surface Plating in 2021. The technology aims to lower operational expenses of hydrogen production making HydrogenPro highly cost-competitive relative to peers globally. With a technology that is easy to scale depending on the input energy from renewables, HydrogenPro's large-scale electrolysers and cost-effective technology has the potential to both enable and strengthen other segments in the energy transition, whether it be wind, solar and other renewable power sources. Through its unique properties as an energy carrier, hydrogen will be key in facilitating the green energy transition.
The Board aims to ensure that the Company has a capital structure that is appropriate for the Company's objective, strategy, and risk profile, to ensure an appropriate balance between equity and other sources of financing, where relevant. The Board will continuously assess the Company's capital requirements related to the Company's objective, strategy, and risk profile. The Company is committed to creating long-term value for its shareholders. The Company intends to retain future earnings and cash to finance future growth, and therefore does not anticipate paying any cash dividends in the foreseeable future. The background for any proposal to the general meeting to approve the distribution of dividends will be explained. General authorisations for the Board to increase the share capital and buy own shares will normally be restricted to defined purposes and will, in general, be limited in time to no later than the date of the next annual general meeting of the Company.
HydrogenPro upholds equal treatment of its shareholders and potential investors. HydrogenPro has implemented a process for handling sensitive information to ensure that the Company, its employees, and representatives fulfil their obligations regarding the handling and publication of sensitive information.
There is only one class of shares in the Company and all shares carry equal rights. All shareholders will be treated on an equal basis unless there is a just cause for treating them differently in accordance with applicable laws and regulations. In the event of an increase in the share capital of the Company through the issuance of new shares, a decision to waive the existing shareholders' pre-emptive rights to subscribe for shares will be justified. If the Board resolves to issue new shares and waive the pre-emptive rights of existing shareholders pursuant to a Board authorisation granted by the general meeting, the justification will be publicly disclosed in a stock exchange announcement issued in connection with the shares issue. The reasons for any deviation from equal treatment of all shareholders in capital transactions will be included in the stock exchange announcement made in connection with the transaction. Any transactions carried out by the Company in the Company's own shares will be carried out through Oslo Stock Exchange and in any case at prevailing stock exchange prices. In the event that there is limited liquidity in the Company's shares, the Company will consider other ways to ensure equal treatment of shareholders. Any transactions in own shares will be evaluated in relation to the rules on the duty of disclosure as well as in relation to the prohibition against illegal insider trading and market manipulation, the requirement for equal treatment of all shareholders, and the prohibition of unreasonable business methods.
All shares in HydrogenPro carry one vote and are freely transferable. The Company will not limit any party's ability to own, trade or vote for shares in the Company. The Company will provide an account of any restrictions on owning, trading, or voting for shares in the Company.
All shareholders have the right to participate in the general meetings of the Company, which exercise the highest authority of the Company. The annual general meeting will normally be held before 30 June each year.
The general meeting shall handle the matters set out in the Norwegian Public Limited Liability Companies Act, in addition to those laid down in the Company's articles of association, including, among others:
The full notice for general meetings shall be sent to shareholders no later than 21 calendar days prior to the meeting. The notices for such meetings shall include documents providing the shareholders with comprehensive, specific, and sufficient details for the shareholders to form a view of all the cases to be considered as well as all relevant information regarding procedures of attendance and voting. The notice and the documents may be sent to or made available to the shareholders through electronic communication and any deadline for shareholders' notice of their intention to attend the meeting shall be set as close to the date of the meeting as possible.
The Board shall ensure that the Chair of the Board and the Chair of the nomination committee attend the general meetings. The general meeting will normally be chaired by the Chair of the Board or an individual appointed by the Chair of the Board. Having the Chair of the Board or a person appointed by same chairing the general meetings simplify the preparations for the general meetings significantly. In the Company's experience, its procedures for the chairmanship and execution of general meetings have proven satisfactory. The Company's auditor will normally be present.
Notices for general meetings shall provide information on the procedures to be observed by shareholders in order to participate in and vote at the general meeting. The notices will also set out: (i) the procedure for representation at the meeting through a proxy, including a form to appoint a proxy, and (ii) the right for shareholders to propose resolutions in respect of matters to be dealt with by the general meeting. Shareholders shall have the right to attend by electronic means unless the Board has sufficient cause to refuse electronic participation. In addition, the shareholders have the right to vote during a specific period in advance of the general meeting to the extent allowed in the Company's article of association. Shareholders in the Company will be able to vote on each individual matter, including on each individual candidate nominated for election. Shareholders who cannot attend the meeting will be given the opportunity to vote. The Company will design the form for the appointment of a proxy to make voting on each individual matter possible and will nominate a person who can act as a proxy for shareholders.
The Company has a nomination committee. The general meeting shall stipulate guidelines for the duties of the nomination committee, elect the chairperson and members of the nomination committee, and determine the committee's remuneration. The members of the nomination committee shall be elected to consider the interests of shareholders in general, and the majority of the nomination committee members shall be independent of the Board and the executive management team. Members of the Board and the executive management team shall not be members of the nomination committee. Instructions for the nomination committee shall be approved by the Company's general meeting. The nomination committee's duties shall be to propose candidates for election to the Board and the nomination committee. The nomination committee shall have contact with the shareholders, the Board, and the company's executive personnel as part of its work on proposing candidates for election to the Board. Furthermore, the nomination committee shall justify separately why it is proposing each candidate. The Company shall provide information on the members of the committee and any deadline for proposing candidates. Information regarding the nomination committee is publicly available on HydrogenPro's website.
The board members, including the Chair of the Board, are elected by the General Meeting. The composition of the Board is structured to represent the interests of all shareholders, meet the Company's need for expertise, capacity, balanced decision-making, diversity, and to navigate the Company in a sustainable manner. Pursuant to Article 5 of the Articles of Association, the Board of Directors shall consist of 3-7 members elected by the General Meeting. The current Board of Directors consists of five members, three women and two men. All members are elected for a term of two years and may be re-elected. Board members are encouraged to own shares in HydrogenPro, please see an overview of shareholdings by each board member included in the notes in the Annual Report. The board includes executive personnel due to the nature of the Company and its strategic development. According to the development and evolving nature of the Company, the Board intends to be an independent function of the Company. It is of utmost importance to the Board o to be compliant with prevailing laws, regulatory frameworks, and legislations regarding transactions, impartiality, instructions, and the work of the Board. The Board functions as an effective collegiate body through frequent board meetings handling of relevant and strategically important matters. The Board operates independently of any special interests. An overview of the Board can be found in the annual report and on the Company website.
The Board of Directors ensures that the Company's business is properly organised with its purpose, values, objectives, strategies and policies developed and managed and that plans and budgets are prepared. The Board's rules of procedure and board meeting agenda address any material interests pertaining to e.g. the Company's financial position, business and asset management, accounts subject to controls, tax governance and sustainability topics including health and safety, quality, human rights, and environmental topics. This work includes management of material environmental topics, potential risks and opportunities and the Company´s potential impact on the economy, environment, and social dimension. Evaluation and initiatives required to address the impact of material topics are delegated to the executive management at HydrogenPro, led by the CEO. The CEO, or any person in which the delegation is given, has the responsibility of reporting back to the Board in a timely and frequent manner, ensuring information, transparency, and management of the topic at the highest governmental level. The Board of Directors has issued instructions for its own work and for the executive management with emphasis on their responsibilities and duties. The instructions state how the Board and executive management should handle agreements with related parties, including whether an independent valuation must be obtained.
In accordance with Norwegian law, the Board is responsible for among other things, supervising the general and day-to-day management of the Company's business. This includes ensuring proper organisation, preparing plans and budgets for its activities ensuring that the Company's activities, accounts, and assets management are subject to adequate controls and investigations necessary to perform its duties. The Board is responsible for controlling and approving of financial and ESG reports. In the event of impartiality matters, especially considering the Chair of the Board, such matters are chaired by any other member of the Board. The Board evaluates its composition, collective knowledge, and board-work at least once per year. The evaluation may also cover the way in which the Board functions, at both individual and group level, in relation to the objectives that have been set for its work, including financial and non-financial matters like sustainability, diversity, human rights and environmental issues. Board matters for decision are informed about and handled in accordance with the Norwegian Private Limited Liability Companies Act and potential incapacity. When identifying a potential conflict of interest, the Board maps the extent and potential impact of the conflict of interest and implements measures to avoid this. In situations where the conflict of interest is resolved by a board member not participating in the consideration and decision that has an impact on his or her own part or related parties, this board member is excluded.
Any transactions, agreements or arrangements between the Group and the Company's shareholders, members of the Board, members of the executive management team or close associates of any such parties may only be entered into as part of the ordinary course of business and on arm's length market terms. All such transactions shall, where relevant, comply with the procedures set out in the Norwegian Public Limited Liability Companies Act. The Board shall, in principle, arrange for a valuation to be obtained from an independent third party for transactions with related parties, including agreements that are considered immaterial or covered by section 3-16 of the Norwegian Public Limited Liability Companies Act. The Company's financial statements shall provide further information about transactions with related parties in accordance with applicable accounting principles. The Company may engage in business activities with, or in cooperation with, its shareholders. Such activities shall be handled at Board level with a view to securing a foreseeable and consistent practice which prevents potential conflict of interest situations, arm's-length treatment, and sound governance. Board members shall immediately notify the Board and members of the executive management team shall immediately notify the CEO (who, where relevant, will notify the Board) if they have any material direct or indirect interest in any transaction entered by the Company.
Risk management and internal controls are important to HydrogenPro and enable the Company to achieve its strategic objectives in a sustainable, safe, and quality oriented manner. Risk management is an integral part of the Board's and executive management's decision-making processes, organisational structure, and internal procedures and systems. Risk management and internal control requirements are frequently, and at least annually, evaluated by the Board of Directors and the executive management, implementing risk-reducing initiatives and establishing appropriate procedures.
HydrogenPro ASA, the Norwegian part of the company, has a management system, which includes routines, descriptions, and procedures which all employees have access to and are trained in. The same management system, ISO9001, is currently being implemented in HydrogenPro, Tianjin. It is of strategic importance that employees or stakeholders in general report any noncompliance, critical concerns or grievances. All concerns reported are managed according to established routines, making sure the Board is involved accordingly. Health, safety and risk mitigation is a mandatory topic in board, management, and operational meetings with learning processes to increase knowledge and make revisions of existing procedures. In the situation of any negative impact, the Board of is committed and responsible for cooperation in the process of remediation of the impact and addressing the grievances in an appropriate manner. HydrogenPro's regular business activities and operations entail exposure to various types of risks and actions to remedy the risks experienced. The Company intends to be compliant with local laws, regulations and legislation. The process of identifying, evaluating and implementing risk-reducing initiatives in relation to financials, tax, financial implications and other risks and opportunities due to climate change,
health and safety, environmental issues, operations and suppliers assessed for risks related to corruption, child- and forced labour, and the freedom of association and collective bargaining is open, transparent and regulated in the management system. The Board is responsible for monitoring the process and the management of the risks assessed. The Company also engages with external expertise to ensure tax compliance in the countries where it operates.
The remuneration of the members of the Board comprises a fixed annual amount which will be proposed by the Remuneration Committee and approved by the annual general meeting.
The Remuneration Committee of HydrogenPro shall be comprised of at least three directors. The quorum necessary for the transaction of business shall be three. The chair and the members of the Committee shall be appointed by the Company's Board of Directors. The Committee shall review and recommend to the Board the remuneration policies/framework for the Group's executive/ senior management, as follows:
■ Review and recommend for the Board's approval the terms of employment contracts and other benefits/compensation arrangements.
When preparing recommendations on benefits/compensation arrangements, the Committee shall take into account all factors which it deems necessary. The objective shall be to ensure that executive/senior management are provided with appropriate incentives to encourage enhanced performance and are being rewarded in a fair and responsible manner for their individual contributions to the success of the Group. Further, due consideration shall be taken to the Group's reputation. No director or manager shall be involved in any decisions as to their own remuneration. The Committee shall consider such other matters as may be requested by the Board.
HydrogenPro has a remuneration policy established in accordance with the Norwegian Public Limited Liability Companies Act (the "Companies Act") Section 6-16a and related regulations for remuneration of executive management. The policy has been prepared by the Board of Directors of HydrogenPro. The principles in this policy apply for the executive management of the Group as defined in Section 6-16a of the Companies Act, as well as the members of the Board of Directors. The executive management currently consists of the CEO, CFO, CPO, CLO, CCO and CBDO of the Group. The Board has taken an active role in establishing, reviewing, and executing these guidelines. The Board shall prepare a proposal for guidelines for resolution by the general meeting at least every fourth year. The general meeting shall decide on such proposals. Resolved guidelines may also be amended by way of resolution of subsequent general meetings. The guidelines approved by the general meeting shall be published on the Company's website.
The remuneration for the executive management consists of fixed salary, short-term variable performance related salary and a long-term retention scheme consisting of a share option programme awarded based on performance. Remuneration of executive management is a strategic tool for the Group to achieve its financial and operational goals while staying within its risk appetite to maximise shareholder value. The evaluation process covered by these guidelines relates to fixed cash salary, variable cash salary, benefits, and participation in stock option incentive programmes.
HydrogenPro complies with all applicable disclosure laws and practices, seeks transparency, and is committed to providing its shareholders with precise and relevant information to ensure that the Company's share price reflects its true value and prospects. The Board of Directors has established guidelines for the Company's reporting of financial, environmental, social, and governance-related information based on transparency and the requirement for equal treatment of all participants in the securities market. The Investor Relations ("IR") activities are conducted by the IR team with delegated responsibility from the Board. The IR team includes the CEO, the CFO, Head of IR as well as other personnel appointed by the team. The IR team and the Communications Director can act as spokespersons on behalf of the Company. The Company has implemented a process for handling sensitive information to ensure that the Company, its employees, and representatives fulfil their obligations regarding the handling and publication of sensitive information. HydrogenPro's financial calendar, press releases and stock exchange notices are published on Oslo Børs' platform Newsweb and is made available on the Company website. The insider lists are maintained by the CFO.
In a take-over process, should it occur, the Board and the executive management team each have an individual responsibility to ensure that the Company's shareholders are treated equally and that there are no unnecessary interruptions to the Company's business activities. The Board has a particular responsibility in ensuring to the extent possible that the shareholders have sufficient information and time to assess the offer.
ny's operations or shares unless there are particular reasons for doing so.
In the event of a take-over bid, the Board will in addition to complying with relevant legislation and regulations seek to comply with the recommendations in the Norwegian Code of Practice for Corporate Governance unless there are particular reasons not to. This includes obtaining a valuation from an independent expert. On this basis, the Board will seek to make a recommendation as to whether the shareholders should accept the bid. Any transaction that is in effect a disposal of the Company's activities shall be decided by a general meeting.
HydrogenPro's auditor is BDO AS. The partners of BDO AS are members of The Norwegian Institute of Public Accountants (Nw.: "Den Norske Revisorforeningen"). The auditor provides a statement each year confirming its independence (see "Independent Auditor's Report"). The fee payable to the auditor is specified in the notes on the financial statement. The sustainability report is not subject to assurance/audit for the reporting period of 2022. The auditor attends the Board meeting at which the annual financial statements are approved. The auditor presents an annual audit plan to the Board. The Board has adopted guidelines on the management's use of the auditor for services other than auditing. The Board reviews the Company's internal control procedures with the auditor at least once a year, including weaknesses identified by the auditor and proposals for improvement.
Ellen Hanetho Chair
Ellen Hanetho has been on the HydrogenPro's Board of Directors since August 2019. She has 20 years' experience from executive positions in investment banking and private equity in corporations such as Frigaard Invest, Credo Partners, Goldman Sachs Investment Banking Division in London and New York, and the Brussels Stock Exchange and Citibank in Brussels. She is founder and chairperson of Cercis, a cleantech investment company established in 2020. Ms. Hanetho holds a BSBA from Boston University and an MBA from Solvay University, in addition to executive training from INSEAD and Harvard Business School. She is a Norwegian national, non-executive, independent and holds an additional six positions as chairperson for other Norwegian companies.
Jarle Tautra Board member
Jarle Tautra has been on the HydrogenPro's Board of Directors since October 2021. He has held multiple executive management positions in energy-related powerhouses, such as CEO of Eureka Pumps, a Norwegian pump supplier operating in the oil & gas and marine industry. Furthermore, Mr. Tautra held the position as Executive Vice President for Process and Construction and Energy, Development and Services in Aker Solutions, as well as Executive Vice President for Aker Kvaerner E & C Europe. Mr. Tautra has also served as Executive Vice president for Aker Oil & Gas in Aker Maritime ASA. Prior to Mr. Tautra's time in the Aker Group, he held several positions in Norsk Hydro ASA. He has gained significant commercial, strategic, and capital market expertise, as well as extensive international experience in project execution. Mr. Tautra holds a master's degree in Chemical Engineering from the Norwegian Institute of Technology in Trondheim (NTNU). He is a Norwegian national, non-executive, independent and holds two positions as chairperson at other Norwegian companies.
Donna Rennemo Board member
Donna Rennemo has been on the HydrogenPro's Board of Directors since May 2022. She has worked the last 11 years in WindSim AS, a leading provider and pioneer of tools utilized for the design of on- and offshore wind farms. First as CEO of WindSim Americas Inc., followed by WindSim AS and WindSim Power Inc. since 2021. Prior to working within the renewable energy sector, Ms. Rennemo has spent several years working within the computer software industry in International Sales and Marketing positions in companies including ASK/Proxima ASA, Trend Micro Inc and Statoil/NEL Hydrogen. She holds a bachelor's honors degree from Cal State Fullerton, College of Business and Economics. Donna is a Norwegian based-US citizen, non-executive and independent.
Jarle Dragvik Board member
Jarle Dragvik is the CEO of TM Holding AS, a major shareholder of HydrogenPro AS and has been on the HydrogenPro's Board of Directors since October 2021. He has extensive experience from numerous of senior international management positions and board memberships in companies such as Norske Skog, Norsk Hydro and Sapa AS. He has also spent five years in China during his career evidencing his international expertise and experience. Mr. Dragvik holds a master's degree in Management & Marketing from BI Norwegian Business School. He has also completed several management programs i.e., Orkla Top Management Program in Oslo/Shanghai, IMD Global Strategy Execution Program in Lausanne, as well as IFL Management Program in Stockholm. Mr. Dragvik is a Norwegian national, non-executive, non-independent and holds five additional positions as chairperson at other Norwegian companies.
Vivian Espeseth Board member
Vivian Espeseth is the co-founder of HydrogenPro. She has more than 15 years of practice in supply chain operation and consulting. Ms. Espeseth started her career in China where she focused on cross-border project deliveries in multinational companies such as IBM, SAP, Accenture, and REC. She holds a bachelor's degree in Computer Science from Fudan University and an MBA from MIT Sloan School of Management. Vivian is a Norwegian national, non-executive and non-independent.
Tarjei Johansen Chief Executive Officer
Martin Thanem Holtet Chief Financial Officer
Erik Chr. Bolstad Chief Commercial Officer
Karoline Aafos Chief Project Officer
Tarjei Johansen joined HydrogenPro as CEO in December 2022. Mr. Johansen has previous experience as Vice President North America Offshore at Schlumberger, President Americas Region at Kemira, as well as SVP & COO at Bureau Veritas. Mr. Johansen holds an MSc in Petroleum Engineering from Texas A&M University.
Martin Thanem Holtet joined HydrogenPro as CFO in March 2021. Mr. Holtet came from the position as VP, Head of Treasury and IR in Hurtigruten. Prior to this, he worked with strategy and M&A in Yara International and Corporate Finance in Carnegie. Mr. Holtet holds an MSc in Economics and Business Administration from Norwegian School of Economics (NHH).
Erik Chr. Bolstad joined HydrogenPro as CCO in September 2021. Mr. Bolstad has more than 20 years' experience from various management positions within ABB and others. He has held positions within Commercial, Sales & Marketing functions, especially B2B within the global shipping and shipbuilding industry. Mr. Bolstad holds a BSc in Electronic engineering from University of South-Western Norway.
Karoline Aafos joined HydrogenPro in 2019 and was appointed CPO in August 2022. Ms. Aafos has more than ten years' experience in various management and business development positions within ABB, Schneider Electric and others. She has held positions within Commercial, Sales, Marketing and Service functions with a long experience in the global maritime oil and gas industry. Ms. Aafos holds a BSc in Marketing from BI Norwegian Business School, as well as additional Economics studies at Bocconi University and postgraduate organizational studies at Edinburgh Business School.
Tormod Kløve Chief Legal Officer
Richard Espeseth Head of Business Development and Technology
Tormod Kløve joined HydrogenPro as CLO in November 2022. Mr. Kløve came from the position as Senior Legal Counsel in PGS and has also served as Senior Lawyer in the law firm Wikborg Rein. He has considerable international experience from numerous countries, including three years in Japan. Tormod started his career as a junior research fellow at the University of Oslo and has also served as a deputy judge at district court level in Norway. He holds a Master of Laws from the University in Oslo.
Richard Espeseth founded HydrogenPro in 2013. Mr. Espeseth has 25 years international industry experience from Norsk Hydro, Statoil, ABB and RPR, with more than 10 years of experience from the hydrogen electrolyser business. He holds a MSc in Mechanical Engineering from South Dakota School of Mine & Technology.
HydrogenPro's business is characterised by high ethical and moral standards, where security is the top priority. We care about our employees, partners, suppliers, investors, other stakeholders, and the world around us. We take responsibility for the impact we have on the environment, the community and our customers' business in the longer term. Operations shall be conducted in a professional, safe, and environmentally friendly manner that meets all requirements of applicable laws, industry regulations, and agreements. We hold ourselves to a high ethical standard and aim to live up to our values: cour-
age, integrity, collaboration, and innovation. HydrogenPro ASA and HydrogenPro China has developed Code of Conducts that sets out expectations, commitments, and requirements for ethical conduct. The Code of Conduct developed for our Norwegian operations has been approved by the Board of Directors.
HydrogenPro has a zero tolerance for corruption in connection with our operations. We are careful in our selection of business partners and implement follow-up measures in order to avoid the risk of being engaged in indirect corruption. HydrogenPro updated the anti-bribery and corruption policy in February 2023. The policy covers the following topics:
Employees are encouraged to reach out to the Chief Legal Officer if they have questions regarding assessments of what constitutes corruption, or if they have reason to suspect wrongdoing. The policy also clearly states that there will be no retaliation against reporting of suspicions of wrongdoing, non-compliance, or illegal activities. Anti-bribery and corruption are also covered in the personnel handbook for HydrogenPro Norway and HydrogenPro China, and all employees will be trained in these topics during 2023.
| Consolidated Statement of Comprehensive Income | 67 |
|---|---|
| Consolidated Statement of Financial Position | 68 |
| Consolidated Statement of Changes In Equity | 70 |
| Consolidated Statement of Cash Flows | 71 |
| Notes to the Consolidated Financial Statements | 72 |
| Note 1.1 Corporate information | 72 |
| Note 1.2 Basis of preparation | 72 |
| Note 1.4 General accounting policies | 73 |
| Note 1.3 Significant accounting judgements, estimates, etc. | 73 |
| Note 2.1 Operational Segments | 79 |
| Note 2.2 Revenue from contracts with CUSTOMERS | 80 |
| Note 2.3 Cost of goods sold | 82 |
| Note 2.4 Personnel expenses | 82 |
| Note 2.5 Pensions | 85 |
| Note 2.6 Other operating expenses | 86 |
| Note 2.7 Financial income and expenses | 87 |
| Note 2.8 Income tax | 87 |
| Note 3.1 Intangible assets | 89 |
| Note 3.2 Property, plant and equipment | 91 |
| Note 3.3 Right-of-use assets | 92 |
| Note 3.4 Other long term receivables | 94 |
| Note 4.1 Overview of group | 95 |
| Note 4.2 Business combination | 95 |
| Note 5.1 Inventory | 97 |
| Note 5.2 Trade and other receivables | 98 |
| Note 5.3 Trade creditors and other current liabilities | 98 |
| Note 6.1 Overview of financial instruments and risk management | 99 |
| Note 6.2 Cash and cash equivalents | 101 |
| Note 6.3 Share capital and shareholders | 102 |
| Note 6.4 Earnings per share | 103 |
| Note 7.1 Remuneration and board management | 104 |
| Note 8 Alternative Performance Measures |
106 |
| NOK '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Operating income and operating expenses | |||
| Revenue from contracts with customers | 2.2 | 56 414 | 20 036 |
| Total revenue | 56 414 | 20 036 | |
| Cost of goods sold | 2.3 | 44 372 | 11 632 |
| Personnel expenses | 2.4, 2.5, 7.1 | 62 768 | 32 878 |
| Depreciation and amortisation expense | 3.1, 3.2, 3.3 | 13 990 | 5 215 |
| Other operating expenses | 2.6 | 54 526 | 30 772 |
| Operating profit/(loss) | -119 242 | -60 461 | |
| Fair value adjustment for financial instruments | 3.4 | 22 485 | - |
| Financial income | 2.7 | 17 874 | 4 374 |
| Financial expenses | 2.7 | 11 016 | 1 321 |
| Net financial income and expenses | 29 343 | 3 053 | |
| Profit/(loss) before income tax | -89 899 | -57 408 | |
| Income tax expense | 2.8 | -80 | -975 |
| Profit/(loss) for the year | -89 819 | -56 433 | |
| Profit/(loss) attributable to: | |||
| Equity holders of the parent company | -84 888 | -56 433 | |
| Non-controlling interest | -4 931 | 0 | |
| Other comprehensive income: | |||
| Items that may be reclassified to profit or loss: | |||
| Exchange difference on translation of foreign operations | -415 | 337 | |
| Net Other comprehensive income | -415 | 337 | |
| Total comprehensive profit/(loss) for the year | -90 234 | -56 096 | |
| Total comprehensive profit (loss) for the year attributable to: | |||
| Equity holders of the parent company | -85 303 | -56 096 | |
| Non-controlling interest | -4 931 | 0 | |
| Basic earning pr share | 6.4 | -1.46 | -0.97 |
| Diluted earnings pr share | 6.4 | -1.46 | -0.97 |
as of 31 December
| NOK '000 | Note | 2022 | 2021 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 3.1 | 64 415 | 48 970 |
| Property, plant and equipment | 3.2 | 55 537 | 22 637 |
| Right of use assets | 3.3 | 17 625 | 2 975 |
| Non-current tax asset | 2.8 | 0 | 975 |
| Financial assets | 3.4 | 52 056 | 26 458 |
| Other receivables | 3.4 | 4 820 | 22 874 |
| Total non-current assets | 194 453 | 124 889 | |
| Current assets | |||
| Inventories | 5.1 | 35 762 | 308 |
| Trade receivables | 5.2 | 38 413 | 13 042 |
| Other receivables | 5.2 | 47 514 | 7 594 |
| Cash and bank deposits | 6.2 | 257 022 | 382 255 |
| Total current assets | 378 711 | 403 199 | |
| TOTAL ASSETS | 573 164 | 528 088 |
as of 31 December
| NOK '000 | Note | 2022 | 2021 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| EQUITY | |||
| Share capital | 6.3 | 1 161 | 58 |
| Share premium account | 6.3 | 575 039 | 576 141 |
| Other equity contributed | 6.3, 2.8 | 34 162 | 26 800 |
| Other equity | 6.3 | -176 919 | -92 081 |
| Currency translation difference | -588 | 336 | |
| Equity attributable to HydrogenPros shareholders | 432 855 | 511 254 | |
| Non-controlling interest | 4 963 | ||
| TOTAL EQUITY | 437 818 | 511 254 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Non-current lease liabilities | 3.3 | 11 332 | 1 365 |
| Total non-current liabilities | 11 332 | 1 365 | |
| Current liabilities | |||
| Current lease liabilities | 3.3 | 5 124 | 1 610 |
| Trade creditors | 5.2 | 20 578 | 3 290 |
| Public duties payable | 5.2 | 10 797 | 5 244 |
| Other short term liabilities | 5.2 | 87 515 | 5 325 |
| Total current liabilities | 124 014 | 15 469 | |
| TOTAL LIABILITIES | 135 346 | 16 833 | |
| TOTAL EQUITY AND LIABILITIES | 573 164 | 528 088 |
Porsgrunn/Oslo, 30 March 2023
(All signatures electronically signed)
Ellen Merethe Hanetho Chair of the Board
Donna Rennemo Board member
Jarle Tautra Board member Vivian Espeseth Board member
Jarle Dragvik Board member
Tarjei Johansen CEO
| Share capital |
Share premium account |
Other equity contrib. |
Currency translat. difference |
Other equity |
Equity attrib. to share- holders |
Non controlling interest |
Total equity |
|---|---|---|---|---|---|---|---|
| 57 | 542 170 | 9 098 | -35 648 | 515 677 | 0 | 515 677 | |
| 336 | -56 433 | -56 096 | -56 096 | ||||
| 1 | 33 971 | 33 972 | 33 972 | ||||
| 17 702 | 17 702 | 17 702 | |||||
| 58 | 576 142 | 26 800 | 336 | -92 081 | 511 254 | 0 | 511 254 |
| -415 | -84 888 | -85 303 | -4 931 | -90 234 | |||
| 1 103 | -1 103 | ||||||
| 7 362 | 7 362 | 7 362 | |||||
| -509 | 51 | -458 | 9 894 | 9 436 | |||
| 1 161 | 575 039 | 34 162 | -588 | -176 919 | 432 855 | 4 963 | 437 818 |
| Attributable to equity holders of the parent company |
| NOK '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Net Income / (Loss) before tax | -89 899 | -57 408 | |
| Depreciation, amortisation & impairment | 3.1, 3.2, 3.3 | 13 990 | 5 215 |
| Option cost no cash effect | 2.4 | 8 592 | 18 533 |
| Fair value adjustment for financial instruments | 3.4 | -22 485 | 0 |
| Change in accounts receivable | 5.2 | -25 371 | -9 859 |
| Change in inventory | 5.1 | -35 455 | 0 |
| Change in accounts payable | 5.3 | 17 222 | -3 894 |
| Write-down shares | 0 | 7 | |
| Effect of foreign currency translation | -183 | 337 | |
| Change in other accruals | 5.2, 5.3 | 64 230 | -395 |
| Net cash flows from operating activities | -69 359 | -47 464 | |
| Cash flows from investing activities | |||
| Purchases of tangible assets | 3.2 | -14 701 | -20 793 |
| Purchases of intangible assets | 3.1 | 0 | -8 079 |
| Acquisition of subsidiary, net of cash acquired | 3.1, 4.2 | -32 454 | -17 934 |
| Change in other investing activities | 3.4 | -4 716 | -31 244 |
| Net cash flows from investing activities | -51 871 | -78 050 | |
| Cash flows from financing activities | |||
| Payment on lease liabilities | 3.3 | -5 175 | -154 |
| Repayment of loans to associates | 1 172 | 0 | |
| Proceeds from Equity Issue | 6.3 | 0 | 1 812 |
| Net cash flows from financing activities | -4 003 | 1 658 | |
| Cash balance start of period | 382 255 | 506 111 | |
| Net change in cash | -125 233 | -123 856 | |
| Cash balance end of period | 257 022 | 382 255 | |
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.
HydrogenPro ASA designs and supplies large scale hydrogen production plants in cooperation 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 plan in a Total cost of Operation perspective.
Unlike traditional alkaline systems, our high-pressure units (up to 30 bar) save compression cost and are superbly suited for variable loads from solar panels and wind turbines. Thus, we compare favourable to alternative technologies. We are
able to produce hydrogen at a lower cost, without using noble or scarce metals, while using renewable energy sources.
HydrogenPro ASA is listed on Oslo Stock Ex-change under the ticker "HYPRO".
The consolidated financial statements of HydrogenPro ASA for the fiscal year 2022 were approved in the board meeting at 30.03.2023.
The consolidated financial statements of HydrogenPro ASA and its subsidiaries (collectively "the Group", or "HydrogenPro") comprise consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and related notes.
The group's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU.
The consolidated financial statements have been prepared on a historical cost basis except the convertible rights to DG Fuels, which is recognized at fair value. (Note 3.4)
Further, the consolidated financial statements are prepared based on the going concern assumption.
The consolidated financial statements are presented in Norwegian kroner ("NOK"). For each entity, the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency. HydrogenPro ASA has Norwegian krone ("NOK") as its functional currency.
For presentation purposes, balance sheet items are translated from functional currency to presentation currency by using exchange rates at the reporting date. Items within total comprehensive income are translated from functional currency to
presentation currency by applying yearly average exchange rates. The resulting translation differences are recognized in other comprehensive income.
All values are rounded to the nearest thousand, unless when indicated otherwise. As a result of rounding differences numbers of percentages may not add up to the total.
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 ditfer 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:
A detailed description of the significant estimates and assumptions are included in the individual note referenced above.
HydrogenPro has selected a presentation in which the description of accounting policies as well as estimates, assumptions and judgemental considerations are disclosed in the accounting policy note. If not, it is disclosed in the specific notes to which the policies relate. A thorough summary of the Group's general accounting policies not disclosed in the notes, are presented below:
Subsidiaries are all entities which the Group has control. Control of an entity occurs when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the day on which control is transferred to the Group. They are also eventual deconsolidated from the date that control ceases.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group's accounting principles.
Non-controlling interest is when less than 100 % of the interest is acquired in an entity. Non-controlling interest is recognised and measured at the proportional share of net identifiable assets.
The Group presents assets and liabilities in the statement of financial position based on current/ non-current classification.
An asset is current when it is:
■ Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non- current.
A liability is current when:
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The consolidated statement of cash flows is prepared using the indirect method.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. 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 at year-end exchange rates are recognised in profit or loss.
The revenue in HydrogenPro is from sale of both hydrogen electrolyser systems and engineering services, including installation, commissioning, and long-term service agreements. Project execution is key in HydrogenPro's construction projects.
The group's revenues result from the sale of goods or services and reflect the consideration to which the group is and expect to be entitled. IFRS 15 requires the group to assess revenue recognition based on a fivestep model. For its customer contracts, the group identifies the performance obligations (goods or services), determines the transaction price, allocates the contract transaction price to the performance obligations and recognises the revenue when (or as) the performance obligations are satisfied.
Revenue recognition is determined on a contract-by-contract basis by determining the terms and performance obligations given in a specific contract. Based on the specific contract and its obligations, revenue under IFRS 15 is either recognised at a point in time or over time. Revenue is recognised over-time using the method that best depicts the pattern of the transfer of control over time. The method applied is the cost-to-cost input method to determine the percentage of completion. This method includes adjustments of time and goods that are delivered to the customer. Contract costs are expensed as incurred.
The Group applied the following judgements that significantly affect the determination of the timing of revenue recognition and amounts of revenue contracts with customers:
In determining whether revenue from specific contract can be classified as customised and in turn recognised using a progress-based measurement, several criteria must be evaluated.
The first criterion is related to alternative use. Manufacturing a customised product or piece of equipment for a specific customer that would require significant cost to modify to be able to transfer it to another a customer, then the contract would likely meet the criteria of alternate use. The other important criterion is that an enforceable right to payment exists in the contract between the group and the customer. Right to payment entails that the group has a right to receive payment from the customer if the contract would be terminated. Upon termination at a certain time, the group should be able to recover costs incurred and a reasonable margin.
In a customised customer project, HydrogenPro uses cost-to-cost input method when measuring progress; thus, the total cost estimates can significantly impact measured progress and revenue recognition. The total project cost comprises estimates on the ability to execute the planned engineering and design phase, the availability of skilled resources, performance of subcontractors, foreign currency and HydrogenPro's manufacturing capacity, productivity and quality.
LDs are penalties for not achieving defined milestones on time. LDs are common in construction contracts. As the payment
to the customer is not in exchange for a distinct good or service that transfers to HydrogenPro, LDs must be accounted for as a reduction revenue. If a project does not meet the defined milestone in a contract, a provision reducing the transaction price is made unless it is highly probable that LD will not be imposed. The estimated LD provision is highly judgemental. HydrogenPro estimates variable consideration using the most likely amount.
The group generates revenue from customer contracts from two principal sources: i) Equipment and projects and ii) R&D, FEED-studies, service and aftermarket. The equipment and projects sales are generated from both standard and customised electrolysers and gas separators.
In the event, the company deliver on standard equipment, the group recognises revenue at the point in time at which it satisfies a performance obligation by transferring the control of a good or service to the customer. Generally, this upon agreed incoterms, which is mainly at shipment. The customer has control of a good or service when it has the ability to direct the use of and obtain substantially all of the remaining benefits from the good or service.
Most of HydrogenPro's revenue until now stems from sale of customisation of the equipment. Such sale of customised equipment is recognised as revenue over-time if the equipment cannot be sold to other customers without significant re-work and HydrogenPro has an enforceable right to payment for performance completed to date.
Revenue from sale of customised equipment and projects is determined to be a bundle of goods where all of the components constitute the combined output, i.e. one performance obligation. The performance obligation is satisfied over time and HydrogenPro recognise revenue over the period the performance obligation is satisfied, using a cost-to-cost input method that best depicts the pattern of the transfer of control over time. The progress-based measurement of revenue has been the main method of recognising revenue from electrolyser projects of large- scale electrolyser systems.
Revenue from engineering services such as design, documentation, drawings for customers can either be recognised over-time measuring progress using input method cost-to-cost, or at point- in time, where the performance obligation is put to an hourby-hour basis.
For both revenue streams, if there are circumstance that the unavoidable costs directly related to project is expected to exceed the economic benefits expected to be received under the contract, the estimated loss on the contract will be recognised in its entirety in the period when such loss is identified.
Equipment contracts with a customer will usually have milestone payments with variable structures. The contract price will be invoiced when certain criteria are met. A typical milestone structure could be contract acceptance, placement of major supplier purchases, delivery/ shipment and complete installation and commissioning. The payment structure of the contracts typically results in advance payments and progress billings exceed the satisfaction of performance obligations in progress. Consequently, creating a net contract liability. Or, in the opposite event, if the group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a
contract asset is recognised for the earned consideration that is conditional.
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. As of the balance sheet date, the cumulative costs incurred plus recognised profit (less recognised loss) on each contract is compared against the advances and progress billings. Where the cumulative costs incurred plus the recognised profits (less recognised losses) exceed advances and progress billings, the balance is presented as due from customers on construction contracts within "contract assets". When the contract assets become an unconditional right to consideration they are reclassified and presented separately as trade receivables, usually when invoices are issued to the customers.
A contract liability is the obligation to transfer goods or services to a customer for which the group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the group transfers goods or services to the customer, a contract liability is recognised when the payment is made, or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the group performs under the contract. Where advances and progress billings exceed the cumulative costs incurred plus recognised profits (less recognised losses), the balance is presented as due to customers on construction contracts within "contract liabilities".
Please find illustrative tables from the nature of revenues for HydrogenPro in Note 2.2.
The group recognises right-of-use assets and lease liabilities for all lease contracts, except leases that are considered shortterm (lease term of 12 months or less), or for which underlying assets are of a low value when new.
The group recognises right-of-use asset at the lease commencement date. The right-of-use assets are initially measured at cost, which comprises the initial amount of the lease liabilities adjusted for any lease payments made at or before the commencement date, adjusted for initial direct costs and lease incentives received. The right-of-use assets are subsequently depreciated using the straight-line method over the shorter of the lease term or the useful life of the underlying asset. In addition, the right-of-use assets are reduced by any impairment charges and adjusted for certain remeasurements of the lease liabilities.
The group recognises a lease liability at the lease commencement date. The lease liabilities are measured at the present value of future lease payments at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group's incremental borrowing rate. HydrogenPro utilises the incremental borrowing rate as the discount rate for virtually all lease agreements. Lease payments included in the measurement of the lease liabilities comprise the following:
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 and index or rate.
The Group presents its lease liabilities as separate line items in the consolidated statement of financial position.
The Group does not act as a lessor. See note 12 for more information.
Share-based compensation benefits are provided to employees via the share option plan. Information relating to the options scheme is set out in note 2.4.
The employee option plan is regarded as equity settled share-based payments. The fair value of options granted under the share option plan is recognised as an employee benefits expense or other operating cost (if it is given to external consultants) with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
For further information refer note 2.4 (Personnel expenses).
The tax expense in the consolidated statement of comprehensive income 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, with the exception of:
Deferred tax assets are recognised when it is probable that the company will have sufficient profit in the future to utilise the deferred tax asset. The companies recognise previously unrecognised deferred tax assets to the extent it has become probable that the company can utilise 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 utilise the deferred tax asset.
Deferred tax and deferred tax assets are measured on the basis of the expected future tax rates applicable to the companies in the Group where temporary differences have arisen.
Deferred tax and deferred tax assets are recognised at their nominal value and classified as non-current assets and/or current liabilities in the consolidated statement of financial position.
Taxes payable and deferred taxes are recognised directly in equity to the extent that they relate to equity transactions.
Deferred tax liabilities and assets are offset if
■ The entity has a legally enforceable right to set off current tax liabilities and assets; and
■ The deferred tax liabilities and assets relate to income taxes levied by the same authority on either the same taxable entity, or on difference taxable entities, but these entities intend to settle current tax liabilities and assets on a net basis, or their tax assets and liabilities will be realised simultaneously.
See note 2.8 for tax.
Property, plant and equipments are valued at their cost less accumulated depreciation and impairment losses. When assets are sold or disposed of, the carrying amount is derecognised and any gain or loss is recognised in the statement of comprehensive income.
The depreciation period and method are assessed each year.
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.
Goodwill acquired through business combinations is included in intangible assets. Goodwill is recorded at cost less accumulated impairment losses and is subject to annual impairment testing or more frequently if events or changes in circumstances indicate that it might be impaired.
Research costs related to internal projects is recognised in profit or loss as incurred. Development costs is capitalised only if the expenditure attributable to the intangible asset can be measured reliably and there is an intention and ability to complete and make the intangible asset commercially
available for sale or own use which will generate probable future economic benefits. If condition for capitalisation is not met, the costs is recognised in profit or loss as incurred. Subsequent to initial recognition intangible assets is measured at cost less accumulated amortisation and any accumulated impairment loss.
Patents, licenses and technology acquired is measured at cost less accumulated amortisation and any accumulated impairment loss.
Refer to note 3.1 for details about amortisation methods.
The acquisition of subsidiaries is accounted for using the acquisition method. Identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition are recognized at their fair values at the acquisition date. The acquisition date is the date when the acquirer obtains control of the acquiree. Any contingent consideration will be recognized at fair value at the acquisition date. Additional value that cannot be allocated to identifiable assets and liabilities are allocated to goodwill. Non-controlling interest is measured based on the proportionate interest in the recognized amount of the identifiable net asset.
Acquisition-related costs incurred are expensed and included in operating expenses.
Government grants are recognized when it is reasonably certain that the group will meet the conditions stipulated for the grants and that the grants will be received.
Government grants related to construction of an asset is recognized as reduction of
the acquisition cost. Grants related to R&D project that are expended are recognizes as a reduction of cost.
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 and financial liabilities are recognized in the Group's statement of financial position when The Group becomes a party to the contractual provisions of the instrument.
The Group's financial instruments are grouped as:
The carrying amount of the Group's financial assets and liabilities are presented in note 6,1 (Financial instruments), along with descriptions of the key risk areas and exposure for HydrogenPro.
Financial instruments are measured at amortised cost or fair value through profit or loss.
Financial assets are measured at amortised cost if the objective is to hold and collect contractual cash flows and contractual cash flows consist solely of principal and interest on the principal amount outstanding. If both conditions are not met, the financial asset is measured at fair value trough profit or loss.
Measurements of financial assets at fair value through profit or loss is based on the fair value hierarchy:
Refer to note 3.4 for classification of financial assets in the fair value hierarchy.
Financial liabilities are initially measured at fair value of the amount required to settle the associated obligation. Subsequently the financial liabilities are measured at amortized cost using the effective interest rate method.
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.
Financial instruments are classified as liabilities or equity in accordance with the underlying economic realities.
Interest, dividend, gains and losses relating to a financial instrument classified as a liability will be presented as an expense or income. Amounts distributed to holders of financial instruments that are classified as equity will be recorded directly in equity.
Transaction costs directly related to an equity transaction are recognised directly in equity after deducting tax expenses.
Translation differences arise in connection with exchange-rate differences of consolidated foreign entities.
Exchange-rate in monetary amounts (liabilities or receivables) which are in reality a part of a company's net investment in a foreign entity are also included as translation differences.
The group have recognised inventory in 2022. These are measured and valued at the lower of cost or net realisable value. Net realisable value is the estimated future sales price of the product the group expects to realise when the product is processed and sold, less estimated costs to complete production and bring the product to sale.
The group recognise a provision when a legal or constructive obligation exists as a result of past events, it is more likely than not that a transfer of financial resources will be required to settle the obligation, and the amount of the obligation can be reliably estimated. When the group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. When the effect is significant, provisions are calculated by discounting expected cash flows at a pre-tax rate that reflects the time value of money and if appropriate the risks specific to the liability. Increase in provisions as a result of time passing, is presented as interest expense.
An onerous contract is a contract in which the unavoidable costs (i.e. the lower of the cost of fulfilling the contract and any compensation or penalties arising from failure to fulfil it) exceed the economic benefits expected to be received under the contract. For all contracts that are onerous, the present obligation under the contract is recognised and measured as a provision.
Social security stock options are the provision for social security payable in Norway, calculated at the intrinsic value at year end. The provision fluctuates with the number of active options, timing of exercise and the share price. See note 18 for further information on share option program.
Earnings per share are calculated by dividing the profit/loss for the year by the corresponding weighted average of the number of outstanding shares during the reporting period. 'Diluted earnings per share' is based on the same calculation as for earnings per share, but it also considers all potential shares with dilutive effect that have been outstanding during the period. Potential shares relate to agreements that confer the right to issue shares in future. Options are excluded if their effect would have been anti-dilutive.
Earnings per share is calculated as profit/ (loss) attributable to the equity holders of the parent company divided by the average number of shares outstanding.
See note 6.4 for more details about earnings per share.
The consolidated financial statement is presented on the going concern assumption under International Financial Reporting Standards. As per the date of this report the group has sufficient working capital for its planned business activities over the next twelve-month period.
The Board of Directors confirmed on this basis that the going concern assumption is valid, and that financial statements are prepared in accordance with this assumption.
New information on the group's financial position on 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 group's financial position on the end of the reporting period, but which will affect the company's financial position in the future are disclosed if significant. For further information refer to the Board of Directors report regarding:
* The 20th of March, HydrogenPro announced our plans to expand in the US with a new plant in Texas with a manufacturing capacity of 500 MW.
Operating segments are identified on the basis of internal reports that the entity's Chief Operating Decision Maker (CODM) regularly reviews in allocating resources to segment and in assessing their performance. The CODM is defined as the executive management group.
For HydrogenPro Group the business is treated as one single operating segment. This is consistent with internal reporting provided to the CODM.
| Property, | |||
|---|---|---|---|
| NOK '000 | Intangible assets |
plant and equipment |
Right of use assets |
| Norway | 9 393 | 5 708 | 1 423 |
| Europe | 33 087 | 18 673 | 980 |
| Asia Pacific | 21 935 | 31 156 | 15 222 |
| Carrying amount at 31.12.2022 | 64 415 | 55 537 | 17 625 |
| equipment | use assets |
|---|---|
| 6 401 | 2 975 |
| 16 236 | 0 |
| 22 637 | 2 975 |
Refer to note 2.2 for revenue presented by segments.
The Group recognise revenue according to IFRS 15 and applies the following judgement that significantly affect the determination of timing and amounts of revenue from contracts with customer:
Each contract is assessed with respect to whether the revenue can be classified as customised and in turn recognised using percentage of completion method. There are several criteria that must be evaluated.
Alternative use: If the product made for a specific customer require significant cost to modify to be able to transfer it to another customer, the contract would likely meet the criteria of alternate use.
Enforceable right to payment: If the contract gives the Group right to payment that recover costs incurred and a reasonable margin upon termination, the contract would likely meet the criteria of enforceable right to payment.
To determine the revenue from contracts recognised as customised HydrogenPro use the 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.
The Group's revenue from contracts with customers are recognized 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
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.
For more details, see note 1.4 General accounting policies.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Norway | 4 885 | 258 |
| Europe | -13 | 799 |
| America | 41 370 | 16 053 |
| Asia Pacific | 10 172 | 2 926 |
| Total | 56 414 | 20 036 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Revenue recognised over time | 56 051 | 20 019 |
| Revenue recognised at point in time | 363 | 17 |
| Total revenue | 56 414 | 20 036 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Revenue from sale of electrolyser system | 51 521 | 19 676 |
| Revenue form sale of Feed and case-studies | 4 893 | 360 |
| Total revenue | 56 414 | 20 036 |
The groups major customer is Mitsubishi Power America Inc and Mitsubishi Heavy Industries Ltd with 73 and 18 percent of revenues in the year 2022. Corresponding figures for 2021 where 80 and 15 percent.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Included in trade receivables | ||
| Contract assets | 19 828 | 456 |
| Included other short term liabilities | ||
| Contract liabilities (incl. prepayment from customers) | 65 691 | 1 348 |
| Contract assets | ||
| Balances as of 01.01 | 456 | 0 |
| Transfers from contract assets recognised at the beginning of the period to receivables | -456 | 0 |
| Increases due to measure of progress in the period | 19 828 | 456 |
| Balances as of 31.12 | 19 828 | 456 |
| Contract liabilities | ||
| Balances as of 01.01 | 1 348 | 787 |
| Revenue from amounts included in contract liabilities at the beginning of the period | -1 259 | -698 |
| Billing and advances received not recognised as revenue in the period | 65 602 | 1 259 |
| Balances as of 31.12 | 65 691 | 1 348 |
The performance obligation in contracts with customers vary from a few months to 10 months.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Partly unsatisfied performance obligations | 746 965 | 33 341 |
| AS of 31.12.12 | 746 965 | 33 341 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Cost of goods sold | 43 221 | 11 333 |
| Cost of handling and freight | 787 | 204 |
| Other cost of gods sold | 364 | 95 |
| Total cost of gods sold | 44 372 | 11 632 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Salaries | 47 051 | 13 353 |
| Social security tax | 5 270 | 2 522 |
| Option cost | 6 697 | 12 328 |
| Pension costs defined contribution plans | 3 030 | 1 445 |
| Other personnel costs | 719 | 3 230 |
| Total salaries and personnel expense | 62 768 | 32 878 |
Option cost related to hired personnel are expensed as other operating expenses.
| 2022 | 2021 | |
|---|---|---|
| Norway | 27 | 15 |
| Europe | 3.5 | 1 |
| China | 70 | 0 |
| Total | 100.5 | 16 |
The company has a share option programme covering certain employees in senior positions.
At 2019, employees, board members and guarantorer were included in the option programme. Granted options are generally vested or earned during a period of three years according to a predetermined schedule. Options vested and earned can be exercised and must be exercised at latest four years after grant. The vesting requires continued employment or association with the company.
The purpose of the establishment of the options program is to attract and retain key personnel. The fair value and annual expense/costs of the options are calculated based on the Black- Scholes model, and expensed over the vesting period. The annual costs calculated for the option program for 2022 are based on the Black & Scholes formula with input factors as a risk free interest rate, volatility factor and share price at grant date. The fair value of the individual options at grant date, are then distributed over the vesting schedule agreement.
Social security tax provisions are accrued on a quarterly basis and becomes payable at exercise of the options. The social security tax provisions are estimated based on the intrinsic value multiplied with the relevant social security tax rate.
The total expense recognised for the share-based programs, excluding social security, during 2022 was NOK 7.4 (18.1) million. The total social security accruals at the end of the year are NOK 1.6 million. The total accumulated cost expensed related to share-based payments are NOK 34.2 (26.8) million as of 31 December 2022.
| Quantity 01.01.22 |
Granted in period |
Terminated in period |
Cancelled in period |
Quantity 31.12.22 |
Cost for the period |
|---|---|---|---|---|---|
| 2 143 170 | 0 | 0 | 0 | 2 143 170 | 2 226 975 |
| 450 000 | 0 | -243 750 | 0 | 206 250 | 671 023 |
| 1 500 000 | 0 | -178 755 | 0 | 1 321 245 | 905 882 |
| 100 000 | 0 | 0 | 0 | 100 000 | 333 121 |
| 100 000 | 0 | -42 604 | 0 | 57 396 | -176 924 |
| 150 000 | 150 000 | 0 | -150 000 | 150 000 | 2 046 804 |
| 150 000 | 0 | -81 250 | 0 | 68 750 | -525 354 |
| 0 | 400 000 | 0 | 0 | 400 000 | 233 702 |
| 163 005 | 0 | 0 | 0 | 163 005 | 0 |
1) 1490 000 of Ellen Hanetho's options hare held by Opulentia Invest AS which is owned 100% by Ellen Hanetho.
| NOK '000 | 2022 |
|---|---|
| Total cost | 7 362 |
| Total Social security provisions | 7 993 |
| Instrument | Option |
|---|---|
| Quantity 31.12.2022 (instruments) | 550 000 |
| Quantity 31.12.2022 (shares) and Board of Directors | 550 000 |
| Contractual life * | 5.11 |
| Strike price * | 31.30 |
| Share price * | 31.01 |
| Expected lifetime * | 3.57 |
| Volatility * | 63.24% |
| Interest rate * | 2.961% |
| Dividend * | 0.00 |
| FV per instrument * | 14.96 |
* Weighted average parameters at grant of instrument
| 01.01.2022 - 31.12.2022 | ||||
|---|---|---|---|---|
| Activity | Number of instruments |
Weighted aver. strike price |
||
| Outstanding OB (01.01.2022) | 5 463 591 | 13.91 | ||
| Granted | 550 000 | 31.30 | ||
| Exercised | 0 | 0.00 | ||
| Released | 0 | 0.00 | ||
| Adjusted | 0 | 0.00 | ||
| Performance Adjusted | 0 | 0.00 | ||
| Cancelled | -150 000 | 42.35 | ||
| Terminated | -565 746 | 20.97 | ||
| Expired | 0 | 0.00 | ||
| Outstanding CB (31.12.2022) | 5 297 845 | 14.15 | ||
| Vested CB | 4 424 701 | 11.38 |
| Outstanding Instruments | Vested Instruments | ||||
|---|---|---|---|---|---|
| Strike price | Number of instruments |
Weighted Average remaining contractual life |
Weighted Average Strike Price |
Vested instruments 31.12.2022 |
Weighted Average Strike Price |
| 7.00 | 3 284 409 | 1.25 | 7.00 | 3 283 703 | 7.00 |
| 16.80 | 206 250 | 2.84 | 16.80 | 206 250 | 16.80 |
| 17.24 | 337 170 | 2.80 | 17.24 | 182 635 | 17.24 |
| 17.66 | 170 000 | 2.75 | 17.66 | 92 084 | 17.66 |
| 18.78 | 150 000 | 2.17 | 18.78 | 50 001 | 18.78 |
| 20.65 | 100 000 | 2.67 | 20.65 | 56 252 | 20.65 |
| 26.15 | 506 266 | 2.38 | 26.15 | 431 896 | 26.15 |
| 32.45 | 68 750 | 2.34 | 32.45 | 68 750 | 32.45 |
| 36.00 | 400 000 | 5.92 | 36.00 | 0 | 0.00 |
| 66.00 | 75 000 | 2.09 | 66.00 | 53 130 | 66.00 |
| 5 297 845 | 4 424 701 |
The Group's companies in Norway have defined contribution plans in accordance with Pension Act of Norway. The contribution plan covers employees who work more than 20% FTE and amounts between 1 G and 12 G of the salary. The percent of the salary is 7%.
The employees may influence the investment management though an agreement with Gjensidige AS. The contribution is expended when its accrued. Prepaid contribution are recognised as an asset to the extent that a cash refund or a reduction in the future payment is available. The parent company have pension plans that meets the requirements in Norway. The foreign subsidiary's have pension plans that meet the requirements in their respective countries.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Employees covered by the scheme | 36 | 20 |
| Contribution recognised as expense | 3 030 | 1 445 |
| Contribution to CEO | 69 | 25 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Advertising and direct sale cost | 1 087 | 290 |
| Repair and maintenance costs | 1 530 | 137 |
| Rental costs | 1 660 | 1 784 |
| Travel costs | 2 194 | 817 |
| Consultancy fees and external personnel | 36 528 | 19 720 |
| Provision bad debts | 1 194 | 0 |
| Other operating costs | 10 333 | 8 024 |
| Total operating expenses | 54 526 | 30 772 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Statutory audit | 1 212 | 564 |
| Other assurance services | 0 | 12 |
| Other non-assurance services | 736 | 332 |
| Total | 1 948 | 908 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Statutory audit | 81 | 769 |
| Other assurance services | 0 | 12 |
| Other non-assurance services | 22 | 138 |
| Tax consultant services | 0 | 138 |
| Total | 103 | 1057 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Interest income | 3 434 | 2 056 |
| Foreign exchange gain | 14 420 | 2 319 |
| Other financial income | 19 | 0 |
| Total financial income | 17 874 | 4 375 |
| Interest on debt and borrowings | 307 | 49 |
| Interest expense lease liabilities | 368 | 0 |
| Foreign exchange losses | 10 143 | 557 |
| Other financial expenses | 199 | 715 |
| Total financial expenses | 11 016 | 1 321 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Income tax payable | 0 | 0 |
| Changes in deferred tax | -80 | 0 |
| Total income tax expense | -80 | 0 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Profit / loss (-) before taxes | -89 899 | -57 408 |
| Permanent differences | 0 | -986 |
| Currency translation and other differences | 636 | 0 |
| Changes in temporary differences | -23 499 | -1 072 |
| Basis for tax payable | -112 696 | -59 466 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Tax on profit before taxes (22%) | -19 778 | -12 630 |
| Tax on permanent differences | 66 | -219 |
| Foreign tax rate and currency translation differences | 990 | 0 |
| Change in not recognised deferred tax assets | 18 694 | 12 849 |
| Tax expense | -80 | 0 |
| Effective tax rate | -0.09% | 0.00% |
| NOK '000 | 2022 | 2021 | Change |
|---|---|---|---|
| Intangible assets | 33 087 | 37 229 | 4 142 |
| Property, Plant and Equipment | 11 590 | 5 126 | -6 464 |
| Right of use assets | 24 547 | 2 975 | -21 572 |
| Financial assets | 26 940 | 1 371 | -25 569 |
| Other receivables | 8 791 | - | -8 791 |
| Production contracts | 1 504 | 5 210 | 3 706 |
| Lease liability | -23 445 | -2 975 | 20 470 |
| Provisions | -6 564 | -200 | 6 364 |
| Other accruals | 0 | -7 | -7 |
| Tax loss carry forwards 1) | -220 859 | -108 162 | 112 697 |
| Total | -144 409 | -59 433 | 84 976 |
| Temporary differences not recognised as deferred tax assets/liabilities | 33 087 | 37 229 | 4 142 |
| Deferred tax assets | 39 049 | 21 266 | -17 783 |
| Deferred tax not recognised in the Statement of financial position | 39 049 | 21 266 | - 17 783 |
| Deferred tax in the Statement of financial position | 0 | 0 | 0 |
1) Tax carry forward for 2021 has been adjusted due to correction of error. This correction does not impact tax expense in the statement of comprehensive income, or deferred tax in the statement of financial position.
The majority of the deferred tax asset is related to loss carry forward. As of 31 December 2022 it is considered not likely that the tax loss carry forward will be utilised in the near future, therefore the deferred tax assets is not capitalised.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Norway | -179 467 | -98 681 |
| Denmark | -23 859 | -9 481 |
| China | -17 533 | - |
| Balance as of 31.12 | -220 859 | -108 162 |
At the end of 2022, HydrogenPro had tax loss carry forwards of NOK 221 million. Of the total, NOK 203 million is without expiration. The tax carry forwards with an expiry date expire after 2027.
| Patents and | 2021 Total |
||
|---|---|---|---|
| 36 545 | 8 456 | 45 001 | |
| 4 821 | 3 285 | 8 106 | |
| 41 366 | 11 741 | 53 107 | |
| 4 137 | 0 | 4 137 | |
| 0 | 0 | 0 | |
| 37 229 | 11 741 | 48 970 | |
| 10 years | 5 years | ||
| Linear | Linear | ||
| Patents and | 2022 | ||
| Technology | licences | Goodwill | Total |
| 41 366 | 11 741 | 0 | 53 107 |
| 21 935 | 21 935 | ||
| 41 366 | 11 741 | 21 935 | 75 042 |
| 4 137 | 0 | 0 | 4 137 |
| 4 136 | 2 348 | 0 | 6 484 |
| 6 | 0 | 0 | 6 |
| 33 087 | 9 393 | 21 935 | 64 415 |
| 10 years | 5 years | ||
| Linear | Linear | ||
| Technology | licences |
For the purposes of impairment testing, goodwill has been allocated to the following cash generating units ("CGUs").
| NOK '000 | 2022 |
|---|---|
| HydrogenPro Tianjin CO Ltd | 21 935 |
| Total | 21 935 |
The groups of CGUs that include goodwill are tested for impairment annually or when impairment triggers have been identified. CGUs are tested using the value-in-use approach determined by discounting expected future cash flows. Impairment losses are recognized for assets in CGUs where the recoverable amount is lower than book value
The discounted cash flow analysis is based on management's forecast for the period 2023 to 2027. The forecasted cash flows are based on signed contracts and identified prospects in addition to other expected revenue. Management has defined the EBITDA margin, discount rate and revenue growth as the most sensitive assessment in the value-in-use calculation.
Estimated future cash flows are discounted to their present value. The discount rate is derived using capital asset pricing model. The asset beta is based on industry data, and the risk-free rate is based on a Chinese 10-year government bond.
The discount rate is not adjusted for IFRS 16 lease liabilities. An effective tax rate of 25% is applied in the discounted cash flow calculation.
When estimating the revenue growth and EBITDA margins, management has utilized forecasts based on existing contracts and current production capacity.
Several sensitivity analysis have been performed on the key assumptions in the value-in-use calculation . This sensitivity analysis of goodwill includes changing various assumptions to consider other potential alternative market conditions. This includes analysing the impact on the value-in-use calculation when changing the EBITDA margin, discount rate and revenue growth. The recoverable amounts exceeded book values for all scenarios in the sensitivity analysis.
The discount rate used in the impairment testing of goodwill is shown below.
| NOK '000 | 2022 |
|---|---|
| HydrogenPro Tianjin CO Ltd | 21.8 % |
HydrogenPro Tianjin CO Ltd. Is assumed to achieve a steady state in 2027 with a long-term growth rate of 2.0%.
HydrogenPro has performed an annual impairment test in December 2022. The recoverable amounts exceed book values for the CGU in the goodwill impairment testing and as such no impairment losses recognised in 2022.
The Technology cost corresponds to the acquisition of the subsidiary Advance Surface Plating ApS (ASP) The useful lifetime is expected to be 10 years. The acquisition date was 22th of December 2020, and depreciation was effective from January 2021. The Group has assessed the carrying value of the development cost as of 31.12.2022 and consider it to be intact. The conclusion is based on:
As of 31.12.2022 the Group has capitalized NOK 11,7 relating to the FEED (front end and engineering study) to be used in the further development of 100 MW production plants. Useful lifetime is expected to be 5 years, and depreciation was effective from January 2021.
| NOK '000 | Plant and machinery |
Moveables | Machinery and plant in progress |
2021 Total |
|---|---|---|---|---|
| Accumulated cost 01.01.2021 | 3 017 | 147 | 3 164 | |
| Additions | 14 162 | 2 627 | 5 207 | 21 996 |
| Skattefunn (tax compensations) | 0 | 0 | -1 185 | -1 185 |
| Disposals | 0 | 0 | 0 | 0 |
| Exchange differences | 0 | 0 | 0 | 0 |
| Accumulated cost 31.12.2021 | 17 179 | 2 774 | 4 022 | 23 975 |
| Accumulated depreciation 01.01.2021 | 302 | 106 | 0 | 408 |
| Depreciation for the year | 865 | 60 | 0 | 925 |
| Exchange differences | 4 | 1 | 0 | 5 |
| Carrying amount at 31.12.2021 | 16 008 | 2 607 | 4 022 | 22 637 |
| Expected useful life | 5 years | 5-10 years | ||
| Depreciation method | Linear | Linear | ||
| NOK '000 | Plant and machinery |
Moveables | Machinery and plant in progress |
2022 Total |
|---|---|---|---|---|
| Accumulated cost 01.01.2022 | 17 179 | 2 774 | 4 022 | 23 975 |
| Additions | 11 852 | 1 829 | 876 | 14 557 |
| From Machinery and plant in progress | 4 301 | 0 | -4 301 | 0 |
| Acquisition in subsidiary | 22 384 | 0 | 0 | 22 384 |
| Exchange differences | -212 | 83 | 0 | -129 |
| Accumulated cost 31.12.2022 | 55 503 | 4 686 | 597 | 60 786 |
| Accumulated depreciation 01.01.2022 | 1 171 | 167 | 0 | 1 337 |
| Depreciation for the year | 3 393 | 456 | 0 | 3 849 |
| Exchange differences | 55 | 8 | 0 | 62 |
| Carrying amount at 31.12.2022 | 50 885 | 4 055 | 597 | 55 537 |
| Expected useful life | 5 years | 5-10 years | ||
| Depreciation method | Linear | Linear |
The Technology centre at Herøya comprises two containers located close to HQ of HydrogenPro in Porsgrunn. The additions in 2022 corresponds to 0.28 MNOK. The containers are subject for 5 years straight line depreciation during 2022. The work to set up the technology centre, have been subject for support from Skattefunn during 2021. The purchase cost is reduced accordingly.
Additions in 2022 are equivalent to 3.3 MNOK in plant and machinery and 0.1 MNOK in movables. These are costs incurred to establish the production plant facility in Aarhus.
On the 9th of June HydrogenPro acquired 75% of the shares of HydrogenPro Tianjin CO Ltd. ("Tianjin"). Tianjin is reported as a part of the HydrogenPro Group form June 2022. The fair value of the identifiable property, plant, and equipment of Tianjin as the date of the acquisition were 22,4 MNOK. Additions in 2022 after this date are equivalent to 8,5 MNOK in plant and machinery, 1,4 MNOK in movables and 0,6 MNOK in machinery and plant in progress. These are cost incurred to establish the production plant facility in Tianjin, China.
At inception of a contract, the Group assesses whether a 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 of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16.
As a result of these assessments the Group has considered leasing for vehicles and the rental contract for office space as leasing according to IFRS 16.
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.
| NOK '000 | Buildings | Vehicles | 2021 Total |
|---|---|---|---|
| Accumulated cost 01.01.2021 | 0 | 334 | 334 |
| Additions | 2 795 | 0 | 2 795 |
| Accumulated cost 31.12.2021 | 2 795 | 334 | 3 129 |
| Accumulated depreciation 01.01.2021 | 0 | 0 | 0 |
| Depreciation for the year | 0 | 154 | 154 |
| Carrying amount at 31.12.2021 | 2 795 | 180 | 2 975 |
| Economic life | 2 years | 2 years | |
| Depreciation method | Linear | Linear |
| Plant and | 2022 | |
|---|---|---|
| machinery | Moveables | Total |
| 2 795 | 334 | 3 129 |
| 18 276 | 0 | 18 276 |
| 21 071 | 334 | 21 405 |
| 0 | 154 | 154 |
| 3 472 | 154 | 3 626 |
| 17 599 | 26 | 17 625 |
| 2 years | 2 years | |
| Linear | Linear | |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Balance as of 01.01. | 2 975 | 334 |
| Additions | 18 276 | 2 795 |
| Lease payments | -5 175 | -154 |
| Accretions of interest | 367 | 0 |
| Exchange differences | 13 | 0 |
| Carrying amount at 31.12. | 16 456 | 2 975 |
| Undiscounted lease liabilities and maturity of cash outflows | ||
| Less than 1 year | 5 124 | 1 610 |
| 1-3 years | 9 915 | 1 365 |
| 4-5 years | 1 417 | 0 |
| Total lease liabilities as of 31.12. | 16 456 | 2 975 |
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.
The Group has elected to apply the practical expedient of treating short-term leases and low value assets outside the scope of IFRS 16.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Receivables from associated companies | 4 308 | 4 444 |
| Other receivables | 512 | 495 |
| Long term investments | 0 | 17 934 |
| Convertible receivables | 52 056 | 26 458 |
| Carrying amount at 31.12 | 56 876 | 49 332 |
Pre-paid 17 934 as part of the capital injection in HydrogenPro Tianjin. This transaction was completed in 2022, see details in note 4.2
29 October 2021 HydrogenPro announced that it will join 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. The valuation of the convertible rights is based on a value calculation made on stand-alone basis.
As the agreement and payment was made late in 2021, the face value was considered also to represent the fair value as at 31.12.2021.
For the fair value measurement of the conversion rights performed as at 31.12.2022, management has applied the volatility implied from the inception value and the application of Black and Scholes formula for European call options. Management calculates the value of the conversion rights to be USD 2.9 million.
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 right, and amounts to NOK 52 million. The change in fair value has amount to NOK NOK 22 million has been recognised through profit and loss.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Opening balance 1. January | 26 458 | |
| Initial recognition | 25 087 | |
| Unrealised change in value for the period recognised in the income statement | 22 485 | |
| Translation effect | 3 113 | 1 371 |
| Balance at 31 December | 52 056 | 26 458 |
Unrealised gain for the period has been recognised in the line item "Fair value adjustment for financial instruments" in the income statement.
In accordance with IFRS, HydrogenPro has chosen to provide information about market risk and potential loss from changes in the fair value of convertible receivable through sensitivity analysis. For changes in price of the underlying ranging from USD 4.9 million to USD 8.2 and changes in volatility ranging from 28% to 38%, the value of the conversion rights is calculated in an interval from million USD 1.4 million to USD 4.5 million.
Refer to note 6.1 for reconciliation of the financial instruments.
| Country of | Main | Ownership interest |
Voting power |
Ownership interest |
Voting power |
|
|---|---|---|---|---|---|---|
| Company | incorporation | operations | 2022 | 2022 | 2021 | 2021 |
| Advanced Surface Plating ApS | Denmark | Technology industries |
100% | 100% | 100% | 100% |
| HydrogenPro Tianjin CO Ltd | China | Technology industries |
75% | 75% | ||
| Kvina Energy AS | Norway | Technology industries |
50% | 50% | 50% | 50% |
| Hydrogenpro France | France | Technology industries |
100% | 100% | 100% | 100% |
| Hydrogenpro Inc | USA | Technology industries |
100% | 100% |
On the 9th of June 2022 HydrogenPro acquired 75% of the shares and voting rights of HydrogenPro Tianjin CO Ltd ("Tianjin"). Tianjin has been consolidated by the company form the same date and the business combination is reflected in the consolidated financial position as from 30 June 2022.
In 2021 HydrogenPro engaged in strategic business relation with Tianjin HQY Machinery Co. Ltd ("THM") with the intention to establish an entity of HydrogenPro in China in 2022. In this process, HydrogenPro reached an agreement with THM in November 2021 to contribute NOK 18 million to the financing of a production line of electrolysers. This prepayment to THM was classified as other long-term receivables as at 31.12.2021. As a part of HydrogenPro's acquisition of Tianjin, the production line mentioned above was transferred to Tianjin as a contribution in kind.
HydrogenPro Tianjin is a provider of electrolyzer systems, headquartered in Tianjin, China. HydrogenPro Tianjin specializes in manufacturing and assembly of hydrogen systems, including steel system structures and high-pressure piping, and has its production facilities also in Tianjin, China. HydrogenPro Tianjin brings significant systems assembly capacity and know-how and complement the capabilities of the Group, improving control of the value chain and accelerating time to market.
HydrogenPro Tianjin was determined to be a "business" since it is capable of being conducted and managed for the purpose of providing goods to customers generating a net income. Reference was made to the definition of a "business" in IFRS 3 and the description above. The acquisition was therefore accounted for as a "business combination" when applying the acquisition method.
For the period between the date of acquisition and 31 December 2022, Tianjin contributed NOK 0 million to HydrogenPro's revenues as all production was delivered to HydrogenPro and negative NOK 19.2 million to net loss.
The cash consideration for the 75 percent stake in Tianjin was NOK 50.4 million.
The table below summarizes the acquisition date fair value of each major class of consideration transferred.
| NOK '000 | 2022 |
|---|---|
| Total consideration | 50 389 |
| Consideration in cash 2022 | 32 454 |
| Consideration in cash 2021 | 17 935 |
| Net cash outflow | 50 389 |
Transaction costs incurred by HydrogenPro related to the acquisition of Tianjin amounted to NOK 1.7 million. These costs have been recognized as operating expenses and payroll expenses.
| NOK '000 | 2022 |
|---|---|
| Assets | |
| Property,plant and equipment | 22 384 |
| Cash and cash equivalents | 11 890 |
| Other current assets | 18 073 |
| Total assets | 52 347 |
| NOK '000 | 2022 |
| Liabilities | |
| Deferred tax liability | -1 055 |
| Other long-term liabilities | -721 |
| Other short term liabilities | -12 634 |
| Total liabilities | -14 410 |
| Net identifiable assets (100%) | 37 937 |
The majority of the identified assets relates to production lines and machinery.
The valuation technique used for measuring the fair value of fixed assets acquired is the cost approach, where the fair values are set equal to the appraisal value or purchase price. The cost approach relies on substitution principle where the price that would be received for an asset is based on the cost to a market participant buyer acquire or construct a substitute asset of comparable utility, adjusted for obsolescence.
The fair value of all other assets and liabilities are assumed to equal book values.
The trade receivables comprise gross contractual amounts due of NOK 18 million, of which nil was expected to be uncollectible at the date of acquisition.
Fair value is measured on a provisional basis. The figures will be revised if new information is obtained within one year of the date of acquisition concerning facts and circumstances, or additional provisions, that existed on the date of acquisition.
| NOK '000 | 2022 |
|---|---|
| Consideration transferred | 50 389 |
| Non-controlling interest | 9 484 |
| Fair value of net identified assets (100%) | 37 937 |
| Goodwill | 21 935 |
Goodwill amounting to NOK 22 million recognised from the acquisition is mainly related to the scalable platform for new production facilities based on experience from Tianjin.
Non-controlling interest is measured based on the proportionate interest in the recognised amount of the identifiable net assets of the acquire.
None of the goodwill recognized is expected to be deductible for tax purposes.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Work in progress | 2 861 | 0 |
| Raw material | 32 901 | 308 |
| Balance as of 31.12 | 41 762 | 308 |
Inventories comprises purchased raw materials and work in progress. Raw materials include parts that become an integrated part of final finished goods. Obsolescence is considered for inventories and as of 31.12.2022 there are no write-downs performed on obsolete goods. Inventories are measured under the weighted-average cost formula.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Receivables related to revenue from contract with customers - external | 19 730 | 12 586 |
| Contract asset | 19 829 | 456 |
| Total accounts receivables (Gross) | 39 558 | 13 042 |
| Allowance for expected credit losses | 1 145 | 0 |
| Balance as of 31.12 | 38 413 | 13 042 |
The allowance for expected credit losses covers the amounts that is more than 30 days past due, and that are assessed as uncertain.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Pre-paid costs | 1 906 | 3 335 |
| Pre-paid raw material | 26 970 | 0 |
| Pre-paid tangible assets | 7 926 | 0 |
| VAT net receivables | 7 573 | 2 305 |
| Other current receivables | 3 139 | 1 954 |
| Balance as of 31.12 | 47 514 | 7 594 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Trade creditors | 20 578 | 3 290 |
| Government taxes, tax deductions etc. | 10 797 | 5 244 |
| Contract liabilities (incl. prepayment from customers) | 76 182 | 907 |
| Other liabilities | 11 333 | 4 418 |
| Balance as of 31.12 | 118 891 | 13 858 |
Trade payables are non-interest bearing and are normally settled on 30-days terms.
Contract liabilities is primarily due to a prepayment from Mitsubishi, that is to be recognized as revenue in 2023 depending on performance obligations.
Through its activities, the Group will be exposed to different types of financial risks: market risk, credit risk and liquidity risk. This note presents information related to the Group's exposure to such risks, the Group's objectives, policies and procedures for risk management and handling, as well as the Group's management of capital. Additional quantitative information is included in these consolidated financial statements.
The Group's overall risk management plan is to ensure the ongoing liquidity in the group, defined as to being able to meet its obligations at any time. The Group do not have any external bank borrowings, and therefore no covenants related to borrowings.
Risk management of the group is maintained by the operational executives as CEO and CFO along with the Board. This includes tasks to identify, measure, mitigate and report on financial risks in close cooperation with the various operating units. Risk management policies and procedures are reviewed regularly to take into account changes in the market and the Group's activities.
The Group's main goal is to maximize shareholder value while ensuring the Group's ability to continue operations. The Group has a target to maintain a capital structure that gives the Group an optimal capital binding given the current market situation. The Group makes the necessary changes to their capital structure based on an ongoing assessment of the business' financial situation and future prospects in the short and medium term.
2022
| NOK '000 | Financial assets measured at amortized cost |
Financial liabilities measured at amortized cost |
Financial assets measured at fair value (level 3) |
Total carrying amount 31.12.2022 |
|---|---|---|---|---|
| Other non current receivables | 4 820 | 4 820 | ||
| Convertible receivables | 52 056 | 52 056 | ||
| Accounts receivables | 38 413 | 38 413 | ||
| Cash and cash equivalents | 257 022 | 257 022 | ||
| Total financial assets | 300 255 | 52 056 | 352 311 | |
| Non-current lease liabilities | 11 332 | 11 332 | ||
| Trade an other payables | 20 578 | 20 578 | ||
| Current lease liabilities | 5 124 | 5 124 | ||
| Total financial liabilities | 37 034 | 37 034 |
| 2021 | ||||
|---|---|---|---|---|
| NOK '000 | Financial assets measured at amortized cost |
Financial liabilities measured at amortized cost |
Financial assets measured at fair value (level 3) |
Total carrying amount 31.12.2021 |
| Other non current receivables | 22 874 | 22 874 | ||
| Convertible receivables | 26 458 | 26 458 | ||
| Accounts receivables | 13 042 | 13 042 | ||
| Cash and cash equivalents | 382 255 | 382 255 | ||
| Total financial assets | 418 171 | 26 458 | 444 629 | |
| Non-current lease liabilities | 1 365 | 1 365 | ||
| Trade an other payables | 3 290 | 3 290 | ||
| Current lease liabilities | 1 610 | 1 610 | ||
| Total financial liabilities | 6 265 | 6 265 | ||
Through its ordinary operating activities, the Group is exposed to various types of risk and this exposure to risk is expected to increase as HydrogenPro gradually becomes more involved in the actual delivery and system integration of large-scale electrolyser plants. The Group is proactively working to identify risks and taking risk mitigating initiatives to the extent this is practicable and appropriate.
Below follows a description of the Group's main types of risks;
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the group by failing to settle its obligations.
The group is exposed to credit risks in conducting its ordinary activities. The credit risk primarily relates to its trade receivables and its cash and cash equivalents. As our customer base mainly consist of large industrial Groups, the credit risk related to trade receivables are considered limited.
The following table provides information about the exposure to credit risk for trade receivables from customers as of 31st of December:
| 2022 | 2021 | ||||
|---|---|---|---|---|---|
| NOK '000 | Gross carrying amount |
Provision bad dept |
Gross carrying amount |
Provision bad dept |
|
| Current (not past due) | 9 093 | 0 | 5 313 | 0 | |
| 1-30 days past due | 9 484 | 0 | 6 189 | 0 | |
| More than one year past due | 1 145 | 1 145 | 1 085 | 0 | |
| Total | 19 722 | 1 145 | 12 586 | 0 |
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Group manages its liquidity with a high level of prudency, with rules and policies that ensure an adequate amount of cash and cash equivalents to meet the immediate needs of resources both in the short and long term. Liquidity forecasts are regularly monitored against the contractual maturities or lease liabilities. Financial liabilities are specified in note 19. All financial liabilities are due within one year.
Maturity analysis for lease liability are included in note 3.3.
Marked risk is the risk that the fair value or future cash flow of a financial instrument will fluctuate because of changes in market prices. Market risks for the Group comprise of the following three types of risk: foreign exchange risk, interest rate risk and raw materials risk.
The Group's functional currency is NOK. The Group operates globally and is therefore exposed to currency fluctuations, mainly related to USD, EUR and CNY. As of today, the Group does not hedge currency, but this is an issue that is being considered.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Cash | ||
| Short-term bank deposits | 257 022 | 382 255 |
| Cash and cash equivalents in the balance sheet | 257 022 | 382 255 |
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 31 December:
The Group has no credit facilities. Restricted bank deposit 3 026 1 745
| Shareholder | Number of shares |
Ownership interest |
|---|---|---|
| Richard Espeseth | 11 424 125 | 19.69% |
| TM Holding AS | 9 635 182 | 16.60% |
| Clearstream Banking S.A. | 6 280 423 | 10.82% |
| Mitsubishi heavy Industries Ltd | 5 381 165 | 9.27% |
| Vivan Espeseth | 3 173 571 | 5.47% |
| Citibank Europe plc | 1 600 000 | 2.76% |
| Avanza Bank AB | 1 523 731 | 2.63% |
| Eneren Invest AS | 1 506 966 | 2.60% |
| Tor Danielsen | 1 373 571 | 2.37% |
| Jan Fredrik Garvik | 1 337 411 | 2.30% |
| DZ Privatbank S.A. | 1 322 981 | 2.28% |
| VERDIPAPIRFONDET DNB SMB | 1 174 894 | 2.02% |
| Nordnet Bank AB | 872 205 | 1.50% |
| VERDIPAPIRFONDET PARETO INVESTMENT | 841 000 | 1.45% |
| BARCLAYS CAPITAL SEC. LTD FIRM | 745 934 | 1.29% |
| Nordea Bank Abp | 727 783 | 1.25% |
| VPF NORGE SELEKTIV | 604 914 | 1.04% |
| Goldman Sachs & Co. LLC | 415 629 | 0.72% |
| LJM AS | 350 000 | 0.60% |
| The Bank of New York Mellon SA/NV | 335 335 | 0.58% |
| 50 626 820 | 87.25% | |
| Total other shareholders | 7 401 351 | 12.75% |
| Total number of shares | 58 028 171 | 100.00% |
As of 31 December 2022, the group's share capital was NOK 1 161 (0.058) TNOK, consisting of 58 028 171 (58 028 171) shares each with a par value of NOK 0,02 (0,001).
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Basic earnings per share | ||
| Profit/(loss) for the year attributable to ordinary shares | -84 888 | -56 096 |
| Issued shares as of 1 January | 58 028 171 | 57 169 312 |
| Share issued | 0 | 858 859 |
| Issued ordinary shares at 31 December | 58 028 171 | 58 028 171 |
| Effect of weighting | 0 | 0 |
| Weighted average number of shares outstanding for the purpose of basic earnings per share | 58 028 171 | 57 598 742 |
| Basic earnings per share for income attributable to the equity holder of the parent company | -1.46 | -0.97 |
| Diluted earnings per share | ||
| Weighted average number of shares outstanding for the purpose of diluted earnings per share | 58 028 171 | 57 598 742 |
| Diluted earnings per share for income attributable to the equity holder of the parent company | -1.46 | -0.97 |
| 2022 | |||||||
|---|---|---|---|---|---|---|---|
| NOK '000 | Salary and invoiced fees |
Bonus | Benefits in kind |
Pension expense |
Total remun- eration |
Number of shares |
Owner ship Interest |
| Tarjei Johansen (CEO) 1) | 250 | 1 | 8 | 259 | |||
| Martin Thanem Holtet (CFO) | 1 591 | 14 | 91 | 1 696 | |||
| Richard Espeseth (CBDO) 2) | 2 225 | 413 | 14 | 93 | 2 745 | 11 424 125 | 19.69% |
| Erik Chr Bolstad (CCO) | 1 331 | 75 | 14 | 93 | 1 513 | ||
| Karoline Aafos (CPO) 3) | 499 | 7 | 38 | 544 | |||
| Tormod Kløve (CLO) 4) | 211 | 1 | 12 | 224 | |||
| Mårten Lunde (ex CEO), through Enern Invest AS 5) |
2 184 | 2 184 | |||||
| Elling Nygaard (ex CEO) 6) | 2 004 | 10 | 69 | 2 083 | 10 | 0.00% | |
| Sindre Utne (ex COO) 7) | 1 739 | 180 | 4 | 53 | 1 976 | 4 270 | 0.01% |
1) Johansen started his employment as CEO 1th of December 2022.
5) Lunde ended his management for hire 31th December 2021. De had a 12 month termination period ended 31th of December 2022.
6) Nygaard resigned his position 21th of June 2022, and his employment 30th of September 2022. He will receive severance pay up to and including June 2023.
7) Utne ended his employment 30th April 2022. He will receive severance pay up to and including January 2023.
| 2021 | |||||||
|---|---|---|---|---|---|---|---|
| NOK '000 | Salary and invoiced fees |
Bonus | Benefits in kind |
Pension expense |
Total remun- eration |
Number of shares |
Owner ship Interest |
| Elling Nygaard (CEO) | 360 | 3 | 25 | 388 | 10 315 | 0.02% | |
| Martin Thanem Holtet (CFO) | 1 050 | 11 | 72 | 1 133 | |||
| Richard Espeseth (CBDO) | 1 781 | 12 | 88 | 1 881 | 11 424 125 | 19.69% | |
| Erik Chr Bolstad (CCO) | 450 | 7 | 29 | 486 | |||
| Sindre Utne (COO) | 948 | 8 | 58 | 1 014 | 4270 | 0.01 | |
| Mårten Lunde (ex CEO), through Enern Invest AS |
2 479 | 800 | 3 279 |
| 2022 | |||||
|---|---|---|---|---|---|
| NOK '000 | Consultant fees |
Board fee | Total remun- eration |
Number of shares |
Owner ship Interest |
| Ellen Hanetho (Chair) | 275 | 703 | 978 | ||
| Jarle Tautra 1) | 126 | 126 | 1 000 | 0.00% | |
| Jarle Dragvik 2) | 126 | 126 | 7 700 | 0.01% | |
| Vivian Espeseth | 3 173 571 | 5.47% | |||
| Donna Rennemo | |||||
| Kermit Nash (ex member) | 213 | 213 | |||
| Terje Mikalsen (ex member) | 227 | 227 | |||
1) Held trough the controlled company Jasmig AS
2) Held by the controlled company Jardis Invest AS. In addition 9.635.182 shares held by TM Holding, where Jarle Dragvik is CEO, but does not own any share.
| NOK '000 | Consultant fees |
Board fee | Other 1) | Total remun- eration |
Number of shares |
Owner ship Interest |
|---|---|---|---|---|---|---|
| Ellen Hanetho (Chair) | 316 | 227 | 545 | |||
| Richard Espeseth | 11 424 125 | 19.69% | ||||
| Jarle Tautra 2) | 1 000 | 0.00% | ||||
| Kermit Nash | 96 | 96 | ||||
| Jarle Dragvik 3) | 2200 | 0.00% | ||||
| Walter H Qvam (ex member) | 450 | 1 214 | 1 664 | 170 713 | 0.29% | |
| Terje Mikalsen (ex member) |
1) Other compensation includes exercised options during the period.
2) Held trough the controlled company Jasmig AS.
3) Held by the controlled company Jardis Invest AS. In addition 9.635.182 shares held by TM Holding, where Jarle Dragvik is CEO, but does not own any share.
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 the IFRS.
HydrogenPro's financial APMs:
| EBITDA | is defined as earnings before interest, tax, depreciation, amortisation and impairment, corresponding to operating profit/(loss) plus depreciation, amortisation and impairment. |
|---|---|
| Adjusted EBITDA | excludes special items, e.g. non-cash impact of incentive program, to better present the underlying performance in the reported period. |
| Net investments 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 combina tions for continuing operations. |
|
| Order intake | is defined as firm purchase order with agreed price, volume, timing, term and conditions entered within a given period. The order intake includes both contracts and change order. For service contracts and contract with uncertain transac tion price, the order intake is based on estimated revenue. The measure does not include potential change order. |
| Backlog | is defined as a firm purchase order with agreed price, volume, timing, term and condition and where revenue is yet to |
recognize. The backlog includes both contracts and change order. For service contracts and contract with uncertain transaction price, the backlog is based on estimated revenue. The measure does not include potential change order.
| Statement of Profit and Loss | 109 | |
|---|---|---|
| Statement of Financial Position | 110 | |
| Consolidated Statement of Changes in Equity | 112 | |
| Statement of Cash Flows | 113 | |
| Notes to the Parent Company Financial Statements | 114 | |
| Note 1 | General accounting principles | 114 |
| Note 2 | Revenue from contracts with customers | 117 |
| Note 3 | Cost of goods sold | 117 |
| Note 4 | Personnel expenses | 118 |
| Note 5 | Pensions | 120 |
| Note 6 | Other operating expenses | 120 |
| Note 7 | Financial income and expenses | 121 |
| Note 8 | Income tax | 121 |
| Note 9 | Intangible assets, property, plant and equipment | 123 |
| Note 10 | List of subsidiaries, joint ventures, and associates | 124 |
| Note 11 | Convertible receivable DG Fuels | 125 |
| Note 12 | Other receivables | 125 |
| Note 13 | Inventory | 126 |
| Note 14 | Accounts receivables and contract assets | 126 |
| Note 15 Cash and cash equivalents | 126 | |
| Note 16 Share capital, shareholder information and dividend | 127 | |
| Note 17 | Shareholder option plan | 129 |
| Note 18 | Trade payables and other current liabilities | 131 |
| NOK '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Revenue | 56 353 | 19 936 | |
| Total revenue | 2 | 56 353 | 19 936 |
| Cost of goods sold | 3 | 46 813 | 11 179 |
| Personnel expenses | 4, 16 | 50 895 | 29 520 |
| Depreciation and amortisation expense | 9 | 3 663 | 604 |
| Other operating expenses | 6 | 44 737 | 29 736 |
| Operating profit/(loss) | -89 755 | -51 104 | |
| Financial income | 7 | 17 452 | 4 790 |
| Financial expenses | 7 | 10 163 | 1 274 |
| Net financial income and expenses | 7 289 | 3 516 | |
| Profit/(loss) before income tax | -82 466 | -47 588 | |
| Income tax expense | 0 | 0 | |
| Profit/(loss) for the year | -82 466 | -47 588 | |
| To/(from) other equity | -82 466 | -47 588 | |
| Total allocated and equity transfers | -82 466 | -47 588 |
as of 31 December
| NOK '000 | Note | 2022 | 2021 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 9 | 9 393 | 11 742 |
| Property, plant and equipment | 9 | 5 366 | 6 401 |
| Investments in subsidiaries | 10 | 117 095 | 66 020 |
| Loan to group companies | 10 | 13 051 | 1 056 |
| Investment in shares | 1 | 1 | |
| Convertible receivable DG Fules | 11 | 29 571 | 26 458 |
| Other receivables | 12 | 4 766 | 21 644 |
| Total non-current assets | 179 243 | 133 322 | |
| Current assets | |||
| Inventories | 13 | 13 500 | 0 |
| Trade receivables | 14 | 38 406 | 13 042 |
| Other receivables | 12 | 66 490 | 6 168 |
| Cash and bank deposits | 15 | 247 632 | 380 692 |
| Total current assets | 366 028 | 399 902 | |
| TOTAL ASSETS | 545 271 | 533 224 |
as of 31 December
| NOK '000 | Note | 2022 | 2021 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| EQUITY | |||
| Share capital | 16 | 1 161 | 58 |
| Share premium account | 16 | 575 039 | 576 141 |
| Other equity contributed | 17 | 34 162 | 26 800 |
| Other equity | 16 | -165 702 | -83 236 |
| TOTAL EQUITY | 444 660 | 519 763 | |
| LIABILITIES | |||
| Current liabilities | |||
| Trade creditors | 18 | 12 698 | 3141 |
| Public duties payable | 18 | 6 331 | 5071 |
| Other short term liabilities | 18 | 81 582 | 5249 |
| Total current liabilities | 100 611 | 13 461 | |
| TOTAL LIABILITIES | 100 611 | 13 461 | |
| TOTAL EQUITY AND LIABILITIES | 545 271 | 533 224 |
Porsgrunn/Oslo, 30 March 2023
(All signatures electronically signed)
| Ellen Merethe Hanetho |
|---|
| Chair of the Board |
Donna Rennemo Board member
Jarle Tautra Board member Vivian Espeseth Board member
Jarle Dragvik Board member
Tarjei Johansen CEO
| Attributable to equity holders of the parent company | ||||||
|---|---|---|---|---|---|---|
| NOK '000 | Share capital |
Share premium account |
Other equity contributed |
Uncovered loss |
Total other equity |
Total equity |
| Equity as at 01.01 2021 | 57 | 542 170 | 9 098 | -35 648 | -35 648 | 515 677 |
| Profit for the period | -47 588 | -47 588 | -47 588 | |||
| Issue of share capital | 1 | 33 971 | 33 972 | |||
| Cost of share-based payment | 17 702 | 17 702 | ||||
| Equity as at 31.12 2020 | 58 | 576 141 | 26 800 | -83 236 | -83 236 | 519 763 |
| Adjusted equity as at 01.01 2022 | 58 | 576 141 | 26 800 | -83 236 | -83 236 | 519 763 |
| Profit for the period | -82 466 | -82 466 | -82 466 | |||
| Issue of share capital | 1 103 | -1 103 | ||||
| Cost of share-based payment | 7 362 | 7 362 | ||||
| Equity as at 31.12 2021 | 1 161 | 575 039 | 34 162 | -165 702 | -165 702 | 444 660 |
| NOK '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Net Income / (Loss) before tax | -82 466 | -47 588 | |
| Depreciation, amortisation & impairment | 9 | 3 663 | 604 |
| Option cost no cash effect | 7 362 | 16 291 | |
| Change in inventory | -13 500 | 0 | |
| Change in accounts receivable | 11 | -25 364 | -9 404 |
| Change in accounts payable | 16 | 9 557 | -4 036 |
| Write-down shares | 0 | 7 | |
| Effect of foreign currency translation | -3 113 | 0 | |
| Change in other accruals | 12 | 16 918 | 1 922 |
| Net cash flows from operating activities | -86 942 | -42 204 | |
| Cash flows from investing activities | |||
| Change in tangible assets | 9 | -280 | -5 752 |
| Change in intangible assets | 9 | 0 | -3 285 |
| Acquisition of subsidiary, net of cash acquired | -32 964 | -17 934 | |
| Change in other investing activities | -879 | -58 231 | |
| Net cash flows from investing activities | -34 123 | -85 203 | |
| Cash flows from financing activities | |||
| Increase of loan to subsidiaries | -11 995 | 0 | |
| Transaction not recognized over P&L | 0 | 176 | |
| Proceeds from Equity Issue | 0 | 1 812 | |
| Net cash flows from financing activities | -11 995 | 1 988 | |
| Cash balance start of period | 380 692 | 506 111 | |
| Net change in cash | -133 060 | -125 419 | |
| Cash balance end of period | 247 632 | 380 692 |
Hydrogenpro ASA is a public limited company, incorporated in Norway, headquartered in Porsgrunn and listed on Oslo Stock Exchange, Address headquarters: Hydrovegen 6, 3933 Porsgrunn, Norway.
HydrogenPro ASA designs and supplies large scale hydrogen production plants in cooperation 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 plan in a Total cost of Operation perspective.
Unlike traditional alkaline systems, our high-pressure units (up to 30 bar) save compression cost and are superbly suited for variable loads from solar panels and wind turbines. Thus, we compare favourable to alternative technologies. We are able to produce hydrogen at a lower cost, without using noble or scarce metals, while using renewable energy sources.
HydrogenPro ASA designs and supplies large scale hydrogen production plants in cooperation 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.
HydrogenPro ASA is listed o at Oslo Stock Exchange under the ticker "HYPRO".
The financial statements of Hydrogenpro ASA for the fiscal year 2022 were approved in the board meeting at 30.03.2023.
The Hydrogenpro AS's financial statements have been prepared in accordance with the Norwegian Accounting Act of 1998 and Norwegian Generally Accepted Accounting Principles (NGAAP).
The financial statements are based on historical cost.
The financial statements have been prepared on the basis of uniform accounting principles for similar transactions and events under otherwise similar circumstances.
Functional currency and presentation currency.
The Company's presentation and functional currency is NOK.
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 nonmonetary 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 recognised continuously in the accounting period.
The use of estimates and assessment of accounting policies when preparing the annual accounts
The management has used estimates and assumptions that have affected assets, liabilities, incomes, expenses and information on potential liabilities. This particularly applies to the depreciation of tangible fixed assets, intangible assets, sharebased payments 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. Changes in accounting estimates are recognised during the period when the changes take place. If the changes also apply to future periods, the effect is divided among the present and future periods.
The management has, when preparing the financial statements; made certain significant assessments based on critical judgment when it comes to application of the accounting principles. The following notes include the Company's assessments regarding:
Current versus non-current classification The presents assets and liabilities in the statement of financial position as either current or non-current.
The Company classifies an asset as current when it:
All other assets are classified as non-current, including deferred tax assets. The Company classifies a liability as current when it:
All other liabilities are classified as non-current, including deferred tax liabilities.
The revenue in HydrogenPro is from sale of Hydrogen electrolyser systems and engineering services. Long term fixes-price contracts are valued to the percentage of completion method. The degree of completion is calculated as expenses incurred as a percentage of estimated total expense. Total expenses are reviewed on a regular basis. If projects are expected to result in losses, the total estimated loss is recognised immediately.
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, with the exception of:
■ temporary differences related to investments in subsidiaries, associates, or joint ventures when the Company 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 recognised when it is probable that the company will have a sufficient profit for tax purposes in subsequent periods to utilise the tax asset. The companies recognise previously unrecognised deferred tax assets to the extent it has become probable that the company can utilise 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 utilise the deferred tax asset.
Deferred tax and deferred tax assets are measured on the basis of the expected future tax rates applicable to the companies in the Company where temporary differences have arisen.
Deferred tax and deferred tax assets are recognised at their nominal value and classified as non-current asset investments (long-term liabilities) in the balance sheet.
Taxes payable and deferred taxes are recognised directly in equity to the extent that they relate to equity transactions.
Expenses relating to research activities are recognised in the statement of comprehensive income as they incur. Expenses relating to development activities are capitalised to the extent that the product or process
is technically and commercially viable and the Company has sufficient resources to complete the development work. Expenses that are capitalised include the costs of materials, direct wage costs and a share of the directly attributable common expenses. Capitalised development costs are recognised at their cost minus accumulated amortisation and impairment losses.
Property, plant and equipment are valued at their cost less accumulated depreciation and impairment losses. When assets are sold or disposed of, the carrying amount is derecognised and any gain or loss is recognised in the statement of profit and loss.
The depreciation period and method are assessed each year.
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.
Amounts paid for patents and licenses are capitalised and amortised in a straight line over the expected useful life. The expected useful life of patents and licenses varies from 5 til 10 years.
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 Company´s financial assets are: nonlisted equity instruments, trade receivables and cash and cash equivalents.
The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Company's business model for managing them. With the exception of trade receivables that do not contain a significant financing component, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
Financial liabilities are classified, at initial recognition, as loans and borrowings, or payables, as appropriate. Loans, borrowings, and payables are recognised at fair value net of directly attributable transaction costs.
Payables are measured at their nominal amount when the effect of discounting is not material.
The company have recognized inventory in 2022. These are measured and valued at the lower of cost or net realisable value. Net realisable value is the estimated future sales price of the product the company expect to realise when the product is processed and sold, less estimated cost to complete production an bring the product to sale.
Subsidiaries are entities controlled by HydrogenPro ASA. Subsidiaries and investment in associated companies are accounted for using the cost method and are recognised as cost less impairment.
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.
Wages, salaries, bonuses, pension, and social security contributions, paid annual leave and sick leave are accrued in the period in which the associated services are rendered by employees of the Company. The Company has pension plans for employees that are classified as defined contribution plans. Contributions to defined contribution schemes are recognised in the statement of profit or loss in the period in which the contribution amounts are earned by the employees.
The Company has an option-program, including employees, board members and Guarantors. The programs are measured at fair value at the date of the grant, using an appropriate valuation model. That cost is recognised in personnel expenses, together with a corresponding increase in equity over the vesting period. Granted options are generally vested or earned during a period of three years according to a predetermined schedule. Options vested or earned can be exercised at any time and must be exercised latest four years after award. The vesting requires continued employment or association with the company.
Social security tax on options is recorded as a liability and is recognised over the estimated vesting period.
For further information refer note 4 (salary and benefit) and 15 (share option plan).
Contingent liabilities are not recognised in the annual accounts. Significant contingent liabilities are disclosed, with the exception of contingent liabilities that are unlikely to be incurred.
Contingent assets are not recognised in the annual accounts but are disclosed if there is a certain probability that a benefit will be added to the Company.
The cash flow statement is prepared using the indirect method.
The financial statement is presented on the going concern assumption. As per the date of this report HydrogenPro ASA has sufficient working capital for its planned business activities over the next twelvemonth period.
The Board of Directors confirmed on this basis that the going concern assumption is valid, and that financial statements are prepared in accordance with this assumption.
New information on the company's financial position on 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 on the end of the reporting period, but which will affect the company's financial position in the future are disclosed if significant. For further information refer to the Board of Directors report regarding:
The 20th of March 2023, HydrogenPro announced our plans to expand in the US with a new plant in Texas with a manufacturing capacity of 500 MW.
The Group's revenue from contracts with customers has been disaggregated and presented in the tables below:
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Norway | 4 866 | 259 |
| Europe | 0 | 698 |
| America | 41 370 | 16 053 |
| Asia Pacific | 10 117 | 2 926 |
| Total revenue | 56 353 | 19 936 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Revenue from sale of electrolyser system | 51 468 | 19 677 |
| Revenue form sale of Feed and case-studies | 4 885 | 259 |
| Total revenue | 56 353 | 19 936 |
The revenue in HydrogenPro is from sale of Hydrogen electrolyser systems and engineering services. Long term fixes-price contracts are valued to the percentage of completion method. The degree of completion is calculated as expenses incurred as a percentage of estimated total expense. Total expenses are reviewed on a regular basis. If projects are expected to result in losses, the total estimated loss is recognised immediately.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Cost of goods sold | 45 661 | 11 043 |
| Cost of handling and freight | 787 | 136 |
| Other cost of gods sold | 364 | 0 |
| Total cost of gods sold | 46 813 | 11 179 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Salaries | 35 300 | 12 479 |
| Sosial security tax | 5 270 | 2 522 |
| Option cost | 6 697 | 12 292 |
| Pension costs defined contribution plans (note 17) | 3 030 | 1 441 |
| Other personnel costs | 597 | 786 |
| Total salaries and personnel expense | 50 895 | 29 520 |
In addition, some invoices have been received for fees and bonuses, and these are included in other operating expenses. Option cost related to hired personnel is expended as other operating expenses.
| 2022 | 2021 | |
|---|---|---|
| Average number of full time employees | 27 | 15 |
| NOK '000 | Salary and invoiced fees |
Bonus | Benefits in kind |
Pension expense |
Total remunerat. 2022 |
Total remunerat. 2021 |
|---|---|---|---|---|---|---|
| Tarjei Johansen (CEO) 1) | 250 | 1 | 8 | 259 | ||
| Martin Thanem Holtet (CFO) | 1 591 | 14 | 91 | 1 696 | 1 133 | |
| Richard Espeseth (CBDO) 2 | 2 225 | 413 | 14 | 93 | 2 745 | 1 881 |
| Erik Chr Bolstad (CCO) | 1 331 | 75 | 14 | 93 | 1 513 | 486 |
| Karoline Aafos (CPO) 3) | 499 | 7 | 38 | 544 | ||
| Tormod Kløve (CLO) 4) | 211 | 1 | 12 | 224 | ||
| Mårten Lunde (ex CEO), through Enern Invest AS 5) |
2 184 | 2 184 | 3 279 | |||
| Elling Nygaard (ex CEO) 6) | 2 004 | 10 | 69 | 2 083 | 388 | |
| Sindre Utne (ex COO) 7) | 1 739 | 180 | 4 | 53 | 1 976 | 1 014 |
1) Johansen started his employment as CEO 1th of December 2022.
2) Espeseth was Acting CEO in the period 21th of June 2033 - 30th of November 2022. In addition to shares held by Richard Espeseth, 3.173.571 shares are held by his spouse. They are not included in the table above.
3) Aafos started her employment as CPO 15th of August 2022.
4) Kløve started his employment as CLO 14th of November 2022.
5) Lunde ended his management for hire 31th December 2021. De had a 12 month termination period ended 31th of December 2022.
6) Nygaard resigned his position 21th of June 2022, and his employment 30th of September 2022. He will receive severance pay up to and including June 2023.
7) Utne ended his employment 30th April 2022. He will receive severance pay up to and including January 2023.
| NOK '000 | Board fees |
Salary and invoiced fees |
Total remunerat. 2022 |
Total remunerat. 2021 |
|---|---|---|---|---|
| Ellen Hanetho (Chair) | 703 | 275 | 978 | 544 |
| Jarle Tautra | 126 | 126 | ||
| Jarle Dragvik | 126 | 126 | ||
| Vivian Espeseth | ||||
| Donna Rennemo | ||||
| Kermit Nash (ex member) | 213 | 213 | 96 | |
| Terje Mikalsen (ex member) | 227 | |||
| Walter H Qvam (ex member) | 450 |
No loans/sureties have been granted to the CEO, Chair, or other related parties.
| Name | Quantity 01.01.22 |
Granted in period |
Terminated in period |
Cancelled in period |
Quantity 31.12.22 |
Cost for the period |
|---|---|---|---|---|---|---|
| Ellen Hanetho 1) | 2 143 170 | 0 | 0 | 0 | 2 143 170 | 2 226 975 |
| Elling Nygaard | 450 000 | 0 | -243 750 | 0 | 206 250 | 671 023 |
| Enern Invest AS (Mårten Lunde) | 1 500 000 | 0 | -178 755 | 0 | 1 321 245 | 905 882 |
| Erik Christian Bolstad | 100 000 | 0 | 0 | 0 | 100 000 | 333 121 |
| Karoline Aafos | 100 000 | 0 | -42 604 | 0 | 57 396 | -176 924 |
| Martin Thanem Holtet | 150 000 | 150 000 | 0 | -150 000 | 150 000 | 2 046 804 |
| Sindre Utne | 150 000 | 0 | -81 250 | 0 | 68 750 | -525 354 |
| Tarjei Johansen | 0 | 400 000 | 0 | 0 | 400 000 | 233 702 |
| TM Holding (Terje Mikalsen) | 163 005 | 0 | 0 | 0 | 163 005 |
1) 1 490 000 of Ellen Hanetho's options are held by Opulentia Invest AS which is owned 100% by Ellen Hanetho.
Granted options are generally vested or earned during a period of three years according to a predetermined schedule. Options vested or earned can be exercised at any time and must be exercised latest four years after award. The vesting requires continued employment or association with the company.
For more details regarding stock option plan - see note 17.
The Group's companies in Norway, have defined contribution plans in accordance with local laws. The contribution plan covers employees who work more than 20% FTE and amounts between 1 G and 12 G of the salary. The percent of the salary is 7%.
The employees may influence the investment management through an agreement with Gjensidige AS. The contribution is expensed when it is accrued. As of 31.12.2022 there were 36 members covered by the scheme.
The contributions recognised as expenses equalled TNOK 3 030 in 2022 and TNOK 1 445 in 2021. The contributions to CEO were TNOK 69 in 2022 and TNOK 25 in 2021.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Advertising and direct sale cost | 207 | 229 |
| Repair and maintenance costs | 659 | 135 |
| Rental and leasing costs | 3 935 | 1 241 |
| Travel costs | 2 118 | 708 |
| Consultancy fees and external personnel | 31 362 | 20 009 |
| Provision bad debts | 1 194 | 0 |
| Other operating costs | 5 263 | 7 413 |
| Total operating expenses | 44 737 | 29 736 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Statutory audit | 0 | 769 |
| Other assurance services | 0 | 12 |
| Other non-assurance services | 0 | 138 |
| Total | 0 | 919 |
Statuary audit includes technical assistance with financial reporting.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Other financial income | 19 | 0 |
| Interest income | 3 434 | 2 278 |
| Foreign exchange gains | 13 999 | 2 511 |
| Total financial income | 17 452 | 4 790 |
| Financial expenses | ||
| NOK '000 | 2022 | 2021 |
| Interest on debts and borrowings | 26 | 49 |
|---|---|---|
| Foreign exchange losses | 9 915 | 539 |
| Other financial expenses | 222 | 685 |
| Total financial expenses | 10 163 | 1 274 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Income tax payable | 0 | 0 |
| Changes in deferred tax | 0 | 0 |
| Total income tax expense | 0 | 0 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Profit / loss (-) before taxes | -82 485 | -47 588 |
| Permanent differences | 59 | -986 |
| Changes in temporary differences | 1 640 | 24 868 |
| Basis for tax payable | -80 786 | -23 715 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Tax on profit before taxes (22%) | -18 147 | -10 469 |
| Tax on permanent differences (22%) | 13 | -219 |
| Change in not recognised deferred tax assets | 18 134 | 10 688 |
| Tax expense | 0 | 0 |
| Effective tax rate | 0.00% | 0.00% |
| NOK '000 | 2022 | 2021 | Change |
|---|---|---|---|
| Property, Plant and Equipment | 1 082 | 1 310 | 228 |
| Provisions | -1 709 | -200 | 1 509 |
| Non current receivables or liabilities in other currencies | 5 174 | 1 371 | -3 803 |
| Production contracts | 1 504 | 5 210 | 3 706 |
| Tax loss carried forward 1) | --179 467 | -98 681 | 80 786 |
| Total | -173 415 | -90 989 | 82 426 |
1) Tax carry forward for 2021 has been adjusted due to correction of error.
| NOK '000 | 2022 | 2021 | Change |
|---|---|---|---|
| Deferred tax assets (22%) | 38 151 | 20 017 | -18 134 |
| Deferred tax not recognised in the Statement of financial position | 38 151 | 20 017 | -18 134 |
| Deferred tax in the Statement of financial position | 0 | 0 | 0 |
The majority of the deferred tax asset is related to loss carry forward. As of 31 December 2022, it is considered not likely that the tax loss carry forward will be utilised in the near future, therefore the deferred tax assets is not capitalised. The tax losses carried forward have no expiry date.
| NOK '000 | Intangible assets - Patents and licenses |
Plant and machinery |
Moveables | Machinery and plant in progress |
Total |
|---|---|---|---|---|---|
| Accumulated cost 01.01.2021 | 8 456 | 3 017 | 147 | 11 620 | |
| Additions | 3 286 | 227 | 5 206 | 8 719 | |
| Skattefunn (Tax compensations) | -1 185 | -1 185 | |||
| Accumulated cost 31.12.2021 | 11 742 | 3 017 | 374 | 4 021 | 19 154 |
| Accumulated depreciation 01.01.2021 | 301 | 106 | 407 | ||
| Depreciation for the year | 604 | 604 | |||
| Carrying value 31.12.2021 | 11 742 | 2 112 | 268 | 4 021 | 18 143 |
| Economic life | 5 years | 5-10 years | 5 years | ||
| Depreciation method | linear | linear | linear | ||
| Accumulated cost 01.01.2022 | 11 742 | 3 017 | 374 | 4 021 | 19 154 |
| Additions | 280 | 280 | |||
| From machinery and plant in progress | 4 301 | -4 301 | |||
| Accumulated cost 31.12.2022 | 11 742 | 7 318 | 374 | 0 | 19 434 |
| Accumulated depreciation 01.01.2022 | 905 | 106 | 1 011 | ||
| Depreciation for the year | 2 349 | 1 249 | 66 | 3 664 | |
| Carrying value 31.12.2022 | 9 393 | 5 164 | 202 | 0 | 14 759 |
| Economic life | 5 years | 5-10 years | 5 years | ||
| Depreciation method | linear | linear | linear |
The Technology centre at Herøya comprises two containers located close to HQ of HydrogenPro in Porsgrunn. The additions in 2022 corresponds to 0,28 MNOK. The container that HP acquired in 2020 have been subject for 5 years straight line depreciation from 2021. The additions have been subject for 5 years straight line depreciation from 1ht of April 2022. The work to set up the technology centre, have been subject for support from Skattefunn during 2021. The purchase cost is hereby reduced accordingly.
The company has assessed the carrying value of the development cost recognized as intangible assets as of 31.12.2022 and consider it to be intact.
The table below shows ownership in subsidiaries. Ownership interest corresponds to voting interest if not otherwise stated.
| Company | Ownership | Registered office | Carrying value NOK 2022 |
Carrying value NOK 2021 |
|---|---|---|---|---|
| Advanced Surface Plating ApS | 100% | Denmark | 65 919 | 65 919 |
| HydrogenPro France | 100% | France | 50 | 50 |
| HydrogenPro Inc | 100% | United States of America | 177 | |
| HydrogenPro Tianjin Co Ltd | 75% | China | 50 898 | |
| Kvina Energy AS | 50% | Norway | 51 | 51 |
| Total | 117 095 | 66 020 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Advanced Surface Plating ApS | 11 379 | 423 |
| Kvina Energi AS | 1 672 | 500 |
| HydrogenPro France | 0 | 134 |
| Total | 13 051 | 1 057 |
| NOK '000 | Purchase | Interest | Pre-payments |
|---|---|---|---|
| HydrogenPro Tianjin CO Ltd | 8 791 | 0 | 55 974 |
| Advanced Surface Plating ApS | 0 | 203 | 0 |
| Kvina Energy AS | 0 | 72 | 0 |
| Total | 8 791 | 275 | 55 974 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Convertible receivable DG Fuels | 29 571 | 26 458 |
In October 2021 HydrogenPro announced that it will join as a co-investor by financing DG Fuels LLC's ("DG Fuels") sustainable aviation fuel (SAF) project.
The convertible agreement is entered into between HydrogenPro Energy Vault Inc, Black Veatch Corporation and DG Fuels, where DG Fuels is the issuer.
The convertible receivable is recognized in the balance sheet at nominal value less provision for expected losses.
The maturity of the convertible is estimated to 4 years.
HydrogenPro has estimated a fair value of the convertible receivable equal to NOK 52 million.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Receivables from associated companies | 4 766 | 3 710 |
| Long term investment | 0 | 17 934 |
| Total other long term current assets as of 31.12 | 4 766 | 21 644 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Pre-paid costs associated companies | 55 974 | 4 558 |
| Other pre-paid cost | 3 285 | 0 |
| VAT net receivables | 7 231 | 1 610 |
| Total other current assets short term as of 31.12 | 66 490 | 6 168 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Raw material | 13 500 | 0 |
| Balance as of 31.12 | 13 500 | 0 |
Inventories comprises purchased raw material. Raw materials include parts that become an integrated part of final finished goods. Obsolescence is considered for inventories and as of 31.12.2022 there are no write-downs performed on obsolete goods. Inventories are measured under the weighted-average cost formula.
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Receivables related to revenue from contracts with customers - external | 19 722 | 12 586 |
| Receivables, accrued, not invoiced | 19 829 | 456 |
| Total accounts receivables (Gross) | 39 551 | 13 042 |
| Allowance for expected credit losses | 1 145 | 0 |
| Total accounts receivables (Net) as of 31.12 | 38 406 | 13 042 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Cash | ||
| Short-term bank deposits | 247 632 | 380 692 |
| Cash and cash equivalents in the balance sheet | 247 632 | 380 692 |
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 31 December:
The Group has no credit facilities.
| Restricted bank deposit | 2 814 | 1 540 |
|---|---|---|
| Shareholder | Number of shares |
Ownership interest |
|---|---|---|
| Richard Espeseth | 11 424 125 | 19.69% |
| TM Holding AS | 9 635 182 | 16.60% |
| Clearstream Banking S.A. | 6 280 423 | 10.82% |
| Mitsubishi heavy Industries Ltd | 5 381 165 | 9.27% |
| Vivan Espeseth | 3 173 571 | 5.47% |
| Citibank Europe plc | 1 600 000 | 2.76% |
| Avanza Bank AB | 1 523 731 | 2.63% |
| Eneren Invest AS | 1 506 966 | 2.60% |
| Tor Danielsen | 1 373 571 | 2.37% |
| Jan Fredrik Garvik | 1 337 411 | 2.30% |
| DZ Privatbank S.A. | 1 322 981 | 2.28% |
| VERDIPAPIRFONDET DNB SMB | 1 174 894 | 2.02% |
| Nordnet Bank AB | 872 205 | 1.50% |
| VERDIPAPIRFONDET PARETO INVESTMENT | 841 000 | 1.45% |
| BARCLAYS CAPITAL SEC. LTD FIRM | 745 934 | 1.29% |
| Nordea Bank Abp | 727 783 | 1.25% |
| VPF NORGE SELEKTIV | 604 914 | 1.04% |
| Goldman Sachs & Co. LLC | 415 629 | 0.72% |
| LJM AS | 350 000 | 0.60% |
| The Bank of New York Mellon SA/NV | 335 335 | 0.58% |
| 50 626 820 | 87.25% | |
| Total other shareholders | 7 401 351 | 12.75% |
| Total number of shares | 58 028 171 | 100.00% |
| Management and board of directors | Number of shares |
Ownership interest |
|---|---|---|
| Tarjei Johansen (CEO) | ||
| Martin Thanem Holtet (CFO) | ||
| Richard Espeseth (CBDO) | 11 424 125 | 19.69% |
| Erik Chr Bolstad (CCO) | ||
| Karoline Aafos (CPO) | ||
| Tormod Kløve (CLO) | ||
| Ellen Hanetho (Chair) | ||
| Jarle Tautra 1) | 1 000 | 0.00% |
| Jarle Dragvik 2) | 7 700 | 0.01% |
| Vivian Espeseth | 3 173 571 | 5.47% |
| Donna Rennemo |
1) Held trough the controlled company Jasmig AS.
2) 7700 shares are held by the controlled company Jardis Invest AS. In addition 9.635.182 shares hold by TM Holding, where Jarle Dragvik is CEO, but does not own any share.
The company has a share option programme covering certain employees in senior positions.
At 2019, employees, board members and guarantors were included in the option programme. Granted options are generally vested or earned during a period of three years according to a predetermined schedule. Options vested or earned can be exercised at usually one year after it is granted and must be exercised latest four years after. The vesting requires continued employment or association with the company.
The purpose of the establishment of the options program is to attract and retain key personnel. The fair value and annual expense/costs of the options are calculated based on the Black- Scholes model and expensed over the vesting period. The annual costs calculated for the option program for 2022 are based on the Black & Scholes formula with input factors as a risk-free interest rate, volatility factor and share price at grant date. The fair value of the individual options at grant date, are then distributed over the vesting schedule agreement.
Social security tax provisions are accrued on a quarterly basis and becomes payable at exercise of the options. The social security tax provisions are estimated based on the gain on the share-based instruments multiplied with the relevant social security tax rate.
The total expense recognised for the share-based programs, excluding social security, during 2021 was NOK 7,4 (18,1) million. The total social security accruals at the end of the year are NOK 1.6 (0,4) million. The total accumulated cost expensed related to share-based payments are NOK 34.2 (26.8) million as of 31 December 2022.
| NOK '000 | 2022 |
|---|---|
| Total cost 2022 | 7 362 |
| Total Social security provisions 2022 | 7 993 |
| 01.01.2022 - 31.12.2022 | |
|---|---|
| Number of instruments |
Weighted aver. strike price |
| 5 463 591 | 13.91 |
| 550 000 | 31.30 |
| 0 | 0.00 |
| 0 | 0.00 |
| 0 | 0.00 |
| 0 | 0.00 |
| -150 000 | 42.35 |
| -565 746 | 20.97 |
| 0 | 0.00 |
| 5 297 845 | 14.15 |
| 4 424 701 | 11.38 |
| Instrument | Option |
|---|---|
| Quantity 31.12.2022 (instruments) | 550 000 |
| Quantity 31.12.2022 (shares) and Board of Directors | 550 000 |
| Contractual life * | 5.11 |
| Strike price * | 31.30 |
| Share price * | 31.01 |
| Expected lifetime * | 3.57 |
| Volatility * | 63.24% |
| Interest rate * | 2.961% |
| Dividend * | 0.00 |
| FV per instrument * | 14.96 |
* Weighted average parameters at grant of instrument
| Outstanding Instruments | Vested Instruments | ||||
|---|---|---|---|---|---|
| Strike price | Number of instruments |
Weighted Average remaining contractual life |
Weighted Average Strike Price |
Vested instruments 31.12.2022 |
Weighted Average Strike Price |
| 7.00 | 3 284 409 | 1.25 | 7.00 | 3 283 703 | 7.00 |
| 16.80 | 206 250 | 2.84 | 16.80 | 206 250 | 16.80 |
| 17.24 | 337 170 | 2.80 | 17.24 | 182 635 | 17.24 |
| 17.66 | 170 000 | 2.75 | 17.66 | 92 084 | 17.66 |
| 18.78 | 150 000 | 2.17 | 18.78 | 50 001 | 18.78 |
| 20.65 | 100 000 | 2.67 | 20.65 | 56 252 | 20.65 |
| 26.15 | 506 266 | 2.38 | 26.15 | 431 896 | 26.15 |
| 32.45 | 68 750 | 2.34 | 32.45 | 68 750 | 32.45 |
| 36.00 | 400 000 | 5.92 | 36.00 | 0 | 0.00 |
| 66.00 | 75 000 | 2.09 | 66.00 | 53 130 | 66.00 |
| 5 297 845 | 4 424 701 |
| NOK '000 | 2022 | 2021 |
|---|---|---|
| Trade accounts payables | 12 698 | 3 141 |
| Pre-payment from customers | 65 691 | 1 348 |
| Government taxes, tax deductions etc. | 6 331 | 5 071 |
| Other liabilities | 15 891 | 3 901 |
| Total | 100 611 | 13 461 |
Trade payables are non-interest bearing and are normally settled on 30-day terms. Interest payable is normally settled quarterly.
We hereby confirm that the annual accounts for the Group and the Company for 2022 to the best of our knowledge have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the Company taken as a whole. The Directors' report gives a true and fair view of the development and performance of the business and the position of the Group and the Company, as well as a description of the principal risks and uncertainties facing the Group.
Porsgrunn/Oslo, 30 March 2023
| Ellen Merethe Hanetho |
|---|
| Chair of the Board |
Donna Rennemo Board member
Jarle Tautra Board member
Vivian Espeseth Board member
Tarjei Johansen CEO Jarle Dragvik Board member
BDO AS Munkedamsveien 45 Postboks 1704 Vika 0121 Oslo
To the Annual Shareholders meeting of Hydrogenpro ASA
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Hydrogenpro ASA.
The financial statements comprise:
Our opinion is consistent with our additional report to the Audit Committee.
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 as required by 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.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided.
BDO AS, et norsk aksjeselskap, er deltaker i BDO International Limited, et engelsk selskap med begrenset ansvar, og er en del av det internasjonale nettverket BDO, som består av uavhengige selskaper i de enkelte land. Foretaksregisteret: NO 993 606 650 MVA. side 1 av 4
Penneo Dokumentnøkkel: FM6PJ-YLPYA-YF0OZ-72D06-I5323-6J0JH
We have been the auditor of Hydrogenpro ASA for 5 years from the election by the general meeting of the shareholders on 22 November 2018 for the accounting year 2018.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
| Description of the key audit matter | How the key audit matter was addressed in the audit |
|---|---|
| The Group derives a significant part of its revenues from sale of customized products and equipment. Such projects involve revenue recognition over time based on measuring the progress towards complete completion of the performance obligation. |
We assessed the application of accounting policies in line with IFRS 15 and procedures for monitoring and progress reporting internally related to the customized products and equipment sales. |
| The assessment of measuring progress requires subjectivity and professional judgement and is therefore subject to uncertainty and potential misstatements. The main risks include |
We inquired about the status of contracts with management and finance and technical staff and tied estimated revenues and cost to budgets. |
| management's use of estimates and judgments in relation to progress, including determining the contract's total revenues, expected costs to complete and estimated project margin. |
For new contracts, we tested the estimated revenue against contracts. We have also recalculated the measurement of progress and performed test of details e.g., vouching to invoices and hours incurred on the projects. |
| We consider this a key audit matter because of the significant amounts and the significant judgement applied. |
We refer to the Groups disclosures included in note 1.4 (General accounting policies) and 2.2 in the consolidated financial statements. |
| Description of the key audit matter | How the key audit matter was addressed in the audit |
|---|---|
| The carrying amount of goodwill as at 31 December 2022 was NOK 22 million, approximately 4 % of total assets. The Group performed an impairment test to determine the recoverable amounts. Estimating the recoverable amount of the assets tested for |
For the relevant cash generating unit, we evaluated the assumptions based on the development in the market and compared the cash-flow projections in the impairment calculation to budgets. |
BDO AS, et norsk aksjeselskap, er deltaker i BDO International Limited, et engelsk selskap med begrenset ansvar, og er en del av det internasjonale nettverket BDO, som består av uavhengige selskaper i de enkelte land. Foretaksregisteret: NO 993 606 650 MVA. side 2 av 4
impairment requires management judgment including estimates of future sales, gross margins, operating expenses, growth rates, capital expenditures and discount rate.
Management's annual impairment assessment was a key audit matter because the assessment requires significant judgment and includes estimation uncertainties.
We assessed the budgets and discussed the reality of projected cash flows with existing and future contracts. We evaluated the applied valuation methodology, and we compared the risk premiums in the weighted average cost of capital with external market data.
Furthermore, we considered management's adjustments for company specific factors. We also tested the mathematical accuracy of the valuation model and performed sensitivity analysis of the assumptions used. We assessed the Group's disclosures included in note 1.4 and 3.1 in the consolidated financial statements about those assumptions to which the outcome of the impairment test is most sensitive.
The Board of Directors and the Managing Director (management) are responsible for the other information. The other information comprises the Board of Directors' report and other information in the Annual Report, but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated 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 there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, in our opinion the Board of Directors' report
Responsibilities of the Board of Directors and the Managing Director for the Financial Statements
Management is responsible for the preparation of financial statements 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 and fair presentation of the financial statements of the Group in accordance with International Financial Reporting Standards as adopted by the EU, and 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.
BDO AS, et norsk aksjeselskap, er deltaker i BDO International Limited, et engelsk selskap med begrenset ansvar, og er en del av det internasjonale nettverket BDO, som består av uavhengige selskaper i de enkelte land. Foretaksregisteret: NO 993 606 650 MVA. side 3 av 4
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern. The financial statements of the Company use the going concern basis of accounting insofar as it is not likely that the enterprise will cease operations. The financial statements of the Group use the going concern basis of accounting unless management either intends to liquidate 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.
For further description of Auditor's Responsibilities for the Audit of the Financial Statements reference is made to: https://revisorforeningen.no/revisjonsberetninger
As part of the audit of the financial statements of Hydrogenpro ASA we have performed an assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual report, with the file name 549300EW945NUS7PK214-2022-12-31-en (1), have been prepared, in all material respects, in compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the consolidated financial statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with the ESEF Regulation.
Management is responsible for the preparation of the annual report in compliance with the ESEF Regulation. This responsibility comprises an adequate process and such internal control as management determines is necessary.
For a description of the auditor's responsibilities when performing an assurance engagement of the ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger
BDO AS
Espen Åsulfsen State Authorised Public Accountant (This document is signed electronically)
BDO AS, et norsk aksjeselskap, er deltaker i BDO International Limited, et engelsk selskap med begrenset ansvar, og er en del av det internasjonale nettverket BDO, som består av uavhengige selskaper i de enkelte land. Foretaksregisteret: NO 993 606 650 MVA. side 4 av 4
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HydrogenPro ASA has reported in accordance with the following standards for the period from 1 January 2022 to 31 December 2022: Global Reporting Initiative (GRI) Standards (2016, core option), Task Force on Climate-related Financial Disclosures (TCFD) and the EU Taxonomy for sustainable activities. All subsidiaries of HydrogenPro ASA are covered by the report.
| Energy consumption by source [kWh] | 2021 | 2022 |
|---|---|---|
| Fuels for transportation | ||
| Motor gasoline | 10 634 | |
| Indirect energy | ||
| Electricity | 34 829 | 1 548 546 |
| Share renewable | 88 % | 80 % |
| Heat | 67 185 | 161 087 |
| Share renewable | 79 % | 86 % |
| Materials procured by type [tonnes] | 2021 | 2022 |
|---|---|---|
| Raw materials | ||
| Steel | - | 79.42 |
| Associated processing materials | ||
| Cutting fluid | - | 0.50 |
| Chemicals | - | 0.02 |
| Lye (KOH) | - | 75.78 |
| Water withdrawal [m3] | 2021 | 2022 |
|---|---|---|
| From municipal water supplies - surface water | 23 | 519 |
| From municipal water supplies - ground water | 125 | 122 |
| Waste disposal [tonnes] | 2021 | 2022 |
|---|---|---|
| Non-hazardous waste | ||
| Paper/cardboard | 0.5 | 1.5 |
| Plastic | 0.05 | 0.35 |
| Residual waste | - | 1.68 |
| Biological/food waste | - | 0.32 |
| Glass | 0.05 | 0.73 |
| Steel | 0.1 | 53.08 |
| Packaging (styroform) | - | 0.1 |
| 100 % of all waste categories are diverted from disposal | ||
| Hazardous waste | ||
| Water-diluted lye | 2 | 26 |
| Mineral oils | - | 0.18 |
| Cutting fluids | - | 0.56 |
Handled by specialized waste disposal contractors
| CO2 emissions [tonnes CO2e] | 2021 | 2022 |
|---|---|---|
| Direct emissions (scope 1) | 0.0 | 2.3 |
| Mobile combustion | 2.3 | |
| Indirect emissions (scope 2) | 7.2 | 141.3 |
| Purchased electricity | 111.3 | |
| Purchased heat | 30.0 | |
| Indirect emissions from the supply chain (scope 3) | - | 5 921.5 |
| Purchased goods and services | 5 628.6 | |
| Upstream transport and distribution | 279.3 | |
| Waste generated in operations | 0.7 | |
| Business travel | 10.3 | |
| Upstream leased assets | 2.6 | |
| Total emissions | 6 065.0 |
| Employees by region and gender | Norway | Denmark | China | Total |
|---|---|---|---|---|
| Female | 10 | - | 24 | 34 |
| Male | 24 | 5 | 80 | 109 |
| Total | 34 | 5 | 104 | 143 |
| Employees by age group and gender | <30 years | 30-50 years | >50 years | Total |
|---|---|---|---|---|
| Female | 3 | 26 | 5 | 34 |
| Male | 23 | 69 | 17 | 109 |
| Total | 26 | 95 | 22 | 143 |
| Employees by age group and level | <30 years | 30-50 years | >50 years | Total |
|---|---|---|---|---|
| Leadership positions | 0 | 6 | 6 | 12 |
| Other | 26 | 89 | 16 | 131 |
| Total | 26 | 95 | 22 | 143 |
| Board of directors by age group and gender | <30 years | 30-50 years | >50 years | Total |
|---|---|---|---|---|
| Female | 0 | 1 | 2 | 3 |
| Male | 0 | 0 | 2 | 2 |
| Total | 0 | 1 | 4 | 5 |
| Employees by gender and level | Female | Male | Total |
|---|---|---|---|
| Leadership positions | 2 | 10 | 12 |
| Other | 32 | 99 | 131 |
| Total | 34 | 109 | 143 |
| Employees by employment type and gender | Full time | Part time | Total |
|---|---|---|---|
| Female | 34 | 0 | 34 |
| Male | 108 | 1 | 109 |
| Total | 142 | 1 | 143 |
| Women-to-men ratio of salary by age group and region | <30 years | 30-50 years | >50 years | All age groups |
|---|---|---|---|---|
| Norway | n/a | 1.03 | 1.82 | 1.09 |
| Denmark | n/a | n/a | n/a | n/a |
| China | 0.64 | 1.40 | 1.15 | 1.13 |
| Work-related injuries and ill health | Own workers | External workers |
|---|---|---|
| Recordable work-related injuries | 3 | 2 |
| High-consequence recordable work-related injuries | 0 | 1 |
| Total hours worked | 96 555 | n/a |
| Total recordable injuries (TRI) frequency rate | 6.21 | n/a |
| Total high-consequence injuries frequency rate | 0 | n/a |
| Average training hours per employee by level and gender | Leadership positions |
Other | Total |
|---|---|---|---|
| Female | 124.25 | 43.13 | 47.90 |
| Male | 44.85 | 14.45 | 17.24 |
| Total | 84.55 | 28.79 | 24.53 |
Please see our voluntary reporting under Article 8 of the EU taxonomy regulation on page 159 in the Sustainability Factbook.
HydrogenPro's environmental key data encompass an operational control perspective (including owned and leased assets) to ensure a complete and precise statement of these figures.
Electricity data from Herøya office in November and December 2022 is estimated based on a monthly average, due to lack of data. The share of renewable electricity is reported based on a location-based method, where data is collected from Electricity Maps the 23rd of March 2023.
None of the input materials are from recycled sources. All materials are non-renewable.
Scope 2 Purchased electricity is calculated using a location-based method. Scope 3 includes the daughter company HydrogenPro China.
Employee numbers are denoted as headcount
Frequency rates are calculated using a work hour factor of 200 000 hours. For external workers only the number of cases is reported and not frequency rates, as data on hours worked by external workers is not available.
Abbreviations: IR – Integrated Report 2022
| Code | GRI disclosure title | References or additional information | Page |
|---|---|---|---|
| GRI 2: General disclosures | |||
| 2-1 | Organizational details | HydrogenPro ASA | |
| 2-2 | Entities included in the organization's sustainability reporting |
HydrogenPro ASA and all subsidiaries | |
| 2-3 | Reporting period, frequency and contact point | 2022, annual, Ida Eilertsen Nygård/ir@hydrogen-pro. com |
|
| 2-4 | Restatements of information | No information has been restated | |
| 2-5 | External assurance | No external assurance | |
| 2-6 | Activities, value chain and other business relationships | IR, About HydrogenPro, Efficient technology and scalability |
16-19, 29 |
| 2-7 | Employees | 143 | |
| 2-8 | Workers who are not employees | Sustainability factbook, Key Sustainability Data |
143 |
| 2-9 | Governance structure and composition | IR, Board of Directors report, NUES Corporate Governance, Board of Directors |
50, 58, 62 |
| 2-10 | Nomination and selection of the highest governance body |
IR, NUES Corporate Governance Nomination committee mandate and procedure as well as current members can be found here: Corporate Governance - HydrogenPro (hydrogen-pro.com) |
67 |
| 2-11 | Chair of the highest governance body | IR, Board of Directors | 62 |
| 2-12 | Role of the highest governance body in overseeing the management of impacts |
IR, Board of Directors Report, NUES Corporate Governance |
50, 58-59 |
| 2-13 | Delegation of responsibility for managing impacts | IR, Board of Directors Report | 50 |
| 2-14 | Role of the highest governance body in sustainability reporting |
IR, Material ESG topics, Board of Directors Report, NUES Corporate Governance |
20, 50, 58 |
| 2-15 | Conflicts of interest | IR, NUES Corporate Governance | 58 |
| Code | GRI disclosure title | References or additional information | Page |
|---|---|---|---|
| 2-16 | Communication of critical concerns | IR, A safe and attractive place to work | 43 |
| 2-17 | Collective knowledge of the highest governance body | No measures taken in 2022 | |
| 2-18 | Evaluation of the performance of the highest governance body |
IR, NUES Corporate Governance | 60 |
| 2-19 | Remuneration policies | Remuneration policy for executive personnel can be found here: Corporate Governance - HydrogenPro (hydrogen pro.com) |
|
| 2-20 | Process to determine remuneration | IR, NUES Corporate Governance. Remuneration report for 2022 can be found here: Reports and presentations - HydrogenPro (hydrogen-pro.com) |
60 |
| 2-21 | Annual total compensation ratio | Sustainability Factbook, Key Sustainability Data |
143 |
| 2-22 | Statement on sustainable development strategy | IR, Chapter 1-3 | 1-65 |
| 2-23 | Policy commitments | IR, Sustainable and local manufacturing and supply chains, A safe and attractive place to work, Ethical business conduct. Code of Conduct, Personnel handbook, Supplier Code of Conduct are not publicly available. |
34, 43, 64 |
| 2-24 | Embedding policy commitments | IR, Sustainable and local manufacturing and supply chains, A safe and attractive place to work, Ethical business conduct |
34, 43, 64 |
| 2-25 | Processes to remediate negative impacts | IR, A safe and attractive place to work, NUES Corporate Governance, Ethical business conduct |
43, 59, 64 |
| 2-26 | Mechanisms for seeking advice and raising concerns | IR, A safe and attractive place to work, NUES Corporate Governance, Ethical business conduct |
43, 59, 64 |
| 2-27 | Compliance with laws and regulations | No significant instances of non compliance during the reporting period. No monetary fines for instances of non compliance paid. |
|
| 2-28 | Membership associations | IR, Stakeholder dialogue, Material ESG topics |
18-19 |
| Code | GRI disclosure title | References or additional information | Page |
|---|---|---|---|
| 2-29 | Approach to stakeholder engagement | IR, Stakeholder dialogue, Material ESG topics |
18-21 |
| 2-30 | Collective bargaining agreements | IR, A safe and attractive place to work | 41 |
| GRI 3: Material Topics | |||
| 3-1 | Process to determine material topics | IR, Stakeholder dialogue, Material ESG topics |
18-21 |
| 3-2 | List of material topics | IR, Stakeholder dialogue, Material ESG topics |
20-21 |
| 3-3 | Management of material topics | IR, Efficient technology and scalability, Sustainable and local manufacturing and supply chains, Innovative product design, A safe and attractive place to work |
26-43 |
| GRI 201: Economic Performance | |||
| 201-2 | Financial implications and other risks and opportunities due to climate change |
IR, Material ESG topics, Efficient technology and scalability, Board of Directors report, NUES Corporate Governance. For TCFD Index, see Sustainability Factbook |
20-21, 28-29, 49-51, 59 152-153 |
| GRI 205: Anti-corruption 2016 | |||
| 205-1 | Operations assessed for risks related to corruption | IR, NUES Corporate Governance Report, Ethical business conduct |
59, 64 |
| 205-2 | Communication and training about anti-corruption policies and procedures |
IR, NUES Corporate Governance Report, Ethical business conduct |
59, 64 |
| 205-3 | Confirmed incidents of corruption and actions taken | No confirmed incidents of corruption in 2022 |
|
| GRI 301: Materials 2016 | |||
| 301-1 | Materials used by weight or volume | Sustainability factbook, Key Sustainability data |
140 |
| 301-2 | Recycled input materials used | None of the input materials are from recycled sources. |
|
| 301-3 | Reclaimed products and their packaging materials | Not applicable. Will be calculated for 2023. |
| Code | GRI disclosure title | References or additional information | Page |
|---|---|---|---|
| GRI 302: Energy 2016 | |||
| 302-1 | Energy consumption within the organization | Sustainability factbook, Key Sustainability data |
140 |
| 302-2 | Energy consumption outside of the organization | Data not available for 2022 report. | |
| 302-3 | Energy intensity | Not applicable. Will be calculated for 2023. |
|
| 302-4 | Reduction of energy consumption | Data not available for 2022 report. | |
| 302-5 | Reductions in energy requirements of products and services |
IR, CEO Letter, About HydrogenPro, Efficient technology and scalability |
10, 16-17, 28 |
| GRI 303: Water and Effluents 2018 | |||
| 303-1 | Interactions with water as a shared resource | IR, Efficient technology and scalability, Sustainable and local manufacturing and supply chains |
30,32, 35 |
| 303-2 | Management of water discharge-related impacts | IR, Sustainable and local manufacturing and supply chains |
32, 35 |
| 303-3 | Water withdrawal | Sustainability factbook, Key Sustainability data |
140 |
| 303-4 | Water discharge | Water discharge equals water withdrawal, except neglectable amounts of evaporated water. All wastewater is treated by public treatment facilities. |
|
| 303-5 | Water consumption | Water management in the manufacturing process is not a prioritised material topic for HydrogenPro, as manufacturing requires minimal water, and regions of operation do not face water scarcity issues. |
|
| GRI 305: Emissions 2016 | |||
| 305-1 | Direct (Scope 1) GHG emissions | IR, Sustainable and local manufacturing and supply chains. Sustainability factbook, Key Sustainability data |
31-32, 141 |
| 305-2 | Energy indirect (Scope 2) GHG emissions | IR, Sustainable and local manufacturing and supply chains. Sustainability factbook, Key Sustainability data |
31-32, 141 |
| Code | GRI disclosure title | References or additional information | Page |
|---|---|---|---|
| 305-3 | Other indirect (Scope 3) GHG emissions | IR, Sustainable and local manufacturing and supply chains. Sustainability factbook, Key Sustainability data |
31-32, 141 |
| 305-4 | GHG emissions intensity | Not applicable. Will be calculated in 2023. | |
| 305-5 | Reduction of GHG emissions | Data not available for 2022 report, will be collected in 2023. Read about the measures taken in IR, Sustainable and local manufacturing and supply chains. |
31-32 |
| 305-6 | Emissions of ozone-depleting substances (ODS) | No emissions of ozone-depleting substances |
|
| 305-7 | Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions |
No significant amounts of other air emissions |
|
| GRI 306: Waste 2020 | |||
| 306-1 | Waste generation and significant waste-related impacts |
IR, Sustainable and local manufacturing and supply chains. Sustainability factbook, Key Sustainability data |
33 141 |
| 306-2 | Management of significant waste-related impacts | IR, Sustainable and local manufacturing and supply chains, Innovative product design. Waste data is collected from waste handling contractors. |
33, 36-37 |
| 306-3 | Waste generated | Sustainability factbook, Key Sustainability data |
141 |
| 306-4 | Waste diverted from disposal | Sustainability factbook, Key Sustainability data |
141 |
| 306-5 | Waste directed to disposal | Sustainability factbook, Key Sustainability data |
141 |
| GRI 308: Supplier Environmental Assessment 2016 | |||
| 308-1 | New suppliers that were screened using environmental criteria |
IR, Sustainable and local manufacturing and supply chains |
34-35 |
| 308-2 | Negative environmental impacts in the supply chain and actions taken |
IR, Sustainable and local manufacturing and supply chains |
34-35 |
| Code | GRI disclosure title | References or additional information | Page |
|---|---|---|---|
| GRI 403: Occupational Health and Safety 2018 | |||
| 403-1 | Occupational health and safety management system | IR, A safe and attractive place to work | 42 |
| 403-2 | Hazard identification, risk assessment, and incident investigation |
IR, A safe and attractive place to work | 42 |
| 403-3 | Occupational health services | IR, A safe and attractive place to work No established occupational health service in Denmark and China |
39 |
| 403-4 | Worker participation, consultation, and communication on occupational health and safety |
IR, A safe and attractive place to work | 39-40, 42-43 |
| 403-5 | Worker training on occupational health and safety | IR, A safe and attractive place to work | 42 |
| 403-6 | Promotion of worker health | IR, A safe and attractive place to work No established occupational health service in Denmark and China |
39 |
| 403-7 | Prevention and mitigation of occupational health and safety impacts directly linked by business relationships |
IR, Sustainable and local manufacturing and supply chains |
34-35 |
| 403-8 | Workers covered by an occupational health and safety management system |
All employees and workers who are not employees in Norway and China are covered by an occupational health and safety management system. Operations in Denmark does not have an occupational health and safety management system. |
|
| 403-9 | Work-related injuries | Sustainability factbook, Key Sustainability data |
143 |
| 403-10 | Work-related ill health | Sustainability factbook, Key Sustainability data |
143 |
| GRI 404: Training and Education 2016 | |||
| 404-1 | Average hours of training per year per employee | IR, A safe and attractive place to work Sustainability factbook, Key Sustainability data |
42, 143 |
| 404-2 | Programs for upgrading employee skills and transition assistance programs |
IR, A safe and attractive place to work | 42 |
| 404-3 | Percentage of employees receiving regular performance and career development reviews |
No routine in place in 2022. New routine developed and piloted in Norway Q4 2023 |
| Code | GRI disclosure title | References or additional information | Page |
|---|---|---|---|
| GRI 405: Diversity and Equal Opportunity 2016 | |||
| 405-1 | Diversity of governance bodies and employees | IR, A safe and attractive place to work Sustainability factbook, Key Sustainability data |
41, 142-143 |
| 405-2 | Ratio of basic salary and remuneration of women to men |
IR, A safe and attractive place to work Sustainability factbook, Key Sustainability data |
41, 142-143 |
| GRI 414: Supplier Social Assessment 2016 | |||
| 414-1 | New suppliers that were screened using social criteria | IR, Sustainable and local manufacturing and supply chains |
34-35 |
| 414-2 | Negative social impacts in the supply chain and actions taken |
IR, Sustainable and local manufacturing and supply chains |
34-35 |
Disclose the organisation's governance around climate-related risks and opportunities.
| TCFD Recommended Disclosures | References | |
|---|---|---|
| IR, Material ESG topics, page 21 | ||
| Describe the board's oversight of climate-related risks and opportunities |
IR, Board of Directors report, page 51 | |
| IR, NUES Corporate Governance report, page 59 | ||
| IR, Material ESG topics, page 21 | ||
| Describe management's role in assessing and managing climate-related risks and opportunities |
IR, Board of Directors report, page 51 | |
| IR, CFO message, page 27 |
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation's businesses, strategy, and financial planning where such information is material.
| TCFD Recommended Disclosures | References | |
|---|---|---|
| Describe the climate-related risks and opportunities | IR, Board of Directors report, page 51 | |
| the organisation has identified over the short, medium, and long term. |
IR, Efficient technology and scalability, page 29 | |
| Describe the impact of climate-related risks and | IR, Material ESG topics, page 21 | |
| opportunities on the organisation's businesses, | IR, About HydrogenPro, page 16-17 | |
| strategy, and financial planning. | IR, Board of Directors report, page 51 | |
| Describe the resilience of the organisation's strategy, | IR, Material ESG topics, page 21 | |
| taking into consideration different climate-related scenarios, including a 2°C or lower scenario. |
IR, Board of Directors report, page 51 |
Disclose how the organisation identifies, assesses, and manages climate-related risks.
| TCFD Recommended Disclosures | References | |
|---|---|---|
| IR, Material ESG topics, page 21 | ||
| Describe the organisation's processes for identifying | IR, CFO message, page 27 | |
| and assessing climate-related risks. | IR, Board of Directors report, page 51 | |
| IR, NUES Corporate Governance report, page 59 | ||
| IR, CFO message, page 27 | ||
| Describe the organisation's processes for managing climate-related risks. |
IR, Board of Directors report, page 51 | |
| IR, NUES Corporate Governance report, page 59 | ||
| Describe how processes for identifying, assessing, and | IR, Board of Directors report, page 51 | |
| managing climate-related risks are integrated into the organisation's overall risk management. |
IR, NUES Corporate Governance report, page 59 |
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
| TCFD Recommended Disclosures | References |
|---|---|
| Disclose the metrics used by the organisation to | IR, Sustainability targets, page 22 |
| assess climate-related risks and opportunities in line | IR, Efficient technology and scalability, page 29 |
| with its strategy and risk management process. | IR, Sustainability Factbook, page 141 |
| Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks. |
IR, Sustainability Factbook, page 141 |
| Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. |
IR, Sustainability targets, page 22 |
| Describe the resilience of the organisation's strategy, | IR, Material ESG topics, page 21 |
| taking into consideration different climate-related scenarios, including a 2°C or lower scenario. |
IR, Board of Directors report, page 51 |
This report provides a detailed inventory of the company's emission sources and associated greenhouse gas emissions for the period 1. Jan 2022 - 31. Dec 2022. The emissions are quantified according to the Greenhouse Gas (GHG) Protocol, which is the most widely used and recognized standard for corporate carbon footprint accounting. The company's activities and transactions are calculated into tonnes of CO 2- equivalents using emission factors from vetted sources.
A greenhouse gas inventory allows companies to identify emission hot-spots in their operations and in their value chain, and consequently to initiate measures to mitigate their contribution to climate change. This annual report allows the company to measure their emissions over time and thereby manage their progress.
This report comprises all company emissions. HydrogenPro ASA has chosen the Operational Approach when calculating their inventory.
| Emission source | Emissions (tCO2e) | Percent of total |
|---|---|---|
| Mobile combustion | 2.3 | 0.0% |
| Purchased Gases | 14.0 | 0.2% |
| Scope 1 Total | 16.3 | 0.3% |
| Purchased electricity ¹ | 111.3 | 1.8% |
| Purchased heat | 30.0 | 0.5% |
| Scope 2 Total | 141.3 | 2.3% |
| Purchased good and services | 5 614.7 | 92.6% |
| Fuel and energy related emissions | 0.0 | 0.0% |
| Upstream transport and distribution | 279.3 | 4.6% |
| Waste generated in operations | 0.7 | 0.0% |
| Business travel | 10.3 | 0.2% |
| Upstream leased assets | 2.6 | 0.0% |
| Scope 3 Total | 5 907.5 | 97.4% |
| Scope 1, 2 and 3 Total | 6 065.0 | 100% |
1 Electricity is calculated using location-based method. Read more about location-based and market-based method under Methods in this report.
| Emission source | Emissions (tCO2e) | Percent of total |
|---|---|---|
| Electricity market-based method¹ | 383.9 | 6.1% |
| Scope 2 market-based method total | 388.9 | 6.2% |
| Scope 1, 2 and 3 Total market-based method | 6 312.6 | 100% |
1 Electricity is calculated using . Read more about location-based and market-based method under methods in this report.
The inventory includes all material emission sources in Scope 1 & 2. 91,1% of our emissions in Scope 1 & 2 is calculated based on bottom-up activity data, while 8,9% is calculated based on top-down transaction data (read more about types of data in the Methodology chapter of this report).
We did not have any biogenic emissions during the reporting period.
For the reporting period we have been able to include the following categories: Mobile combustion, Purchased Gases, Purchased electricity, Purchased heat, Purchased good and services, Fuel and energy related emissions, Upstream transport and distribution, Waste generated in operations, Business travel, Upstream leased asset. We will continue to improve and expand our Scope 3 inventory to include all material categories in the near future.
0,1% of our emissions in Scope 3 is calculated based on bottom-up activity data, while 99,9% is calculated based on top-down transaction data (read more about types of data in the Methodology chapter of this report).
Figure 2: All scopes emissions per year (tCO2e), Location-Based Method
| Emission source | Base year 2022 |
2020 | 2021 | 2022 | % change from last year |
% change from base year |
|---|---|---|---|---|---|---|
| Mobile combustion | 2.3 | 0 | 0 | 2.3 | 0.0% | |
| Purchased Gases | 14.0 | 0 | 0 | 14.0 | 0.0% | |
| Scope 1 total | 16.3 | 0 | 0 | 16.3 | 0.0% | |
| Purchased electricity | 111.3 | 0 | 0 | 111.3 | 0.0% | |
| Purchased heat | 30.0 | 0 | 0 | 30.0 | 0.0% | |
| Scope 2 total | 141.3 | 0 | 0 | 141.3 | 0.0% | |
| Purchased good and services | 5 614.7 | 0 | 1 200.3 | 5 614.7 | 367.8% | 0.0% |
| Fuel and energy related emissions | 0.0 | 0 | 0 | 0.0 | 0.0% | |
| Upstream transport and distribution | 279.3 | 0 | 1.4 | 279.3 | 756.5% | 0.0% |
| Waste generated in operations | 0.7 | 0 | 0.3 | 0.7 | 124.8% | 0.0% |
| Business travel | 10.3 | 0 | 0 | 10.3 | 0.0% | |
| Upstream leased assets | 2.6 | 0 | 0 | 2.6 | 0.0% | |
| Scope 3 total | 5 907.5 | 0 | 1 202.0 | 5 907.5 | 391.5% | 0.0% |
| Marked-Based Method Emissions Development | ||
|---|---|---|
| Emission source | Base year 2022 |
2020 | 2021 | 2022 | % change from last year |
% change from base year |
|---|---|---|---|---|---|---|
| Electricity market-based method | 383.9 | 0 | 0 | 383.9 | 0.0% | |
| Scope 2 market-based method total | 388.9 | 0 | 0 | 388.9 | 0.0% | |
| Scope 1, 2 and 3 total market based method |
6 312.6 | 0 | 1 202.0 | 6 312.6 | 425.2% | 0.0% |
This Greenhouse Gas Inventory is prepared in accordance with the Greenhouse Gas Protocol (GHG Protocol) Corporate Accounting and Reporting Standard, and its related updates and guidelines. The GHG Protocol is a partnership between the World Resource Institute (WRI) and the World Business for Sustainable Development (WBCSD) that provides standards, guidance, tools and training for business and government to measure and manage climate-warming emissions.
The standard covers the accounting and reporting of the seven greenhouse gases covered by the Kyoto Protocol – carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PCFs), and sulphur hexafluoride (SF6). The emissions of each GHG (CO2, CH4, N2O, etc.) are calculated separately and then converted to CO2 equivalents on the basis of their global warming potential.
The inventory is based on the [operational control] approach. The GHG Protocol differentiates between two approaches for consolidating the inventory: the equity share approach and the control approach. The control approach can be defined as operational control or financial control.
In line with the GHG Protocol, the inventory divides greenhouse gas emissions, calculated into CO2 equivalents, into three scopes, where Scope 1 & 2 are deemed mandatory by the Protocol, while Scope 3 is encouraged but voluntary.
Scope 1: Direct GHG emissions from sources that are owned or controlled by the company. These sources are categorized in four groups: mobile combustion (e.g. company-owned vehicles), stationary combustion (e.g. furnace heating of facilities), process emissions (e.g. emissions from chemical production), and fugitive emissions (e.g. leakage of refrigerants).
Direct CO2 emissions from the combustion of biomass, also called biogenic emissions, shall not be included in Scope 1 but should be reported separately.
Scope 2: Indirect GHG emissions from the generation of purchased electricity consumed by the company. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organizational boundary of the company. Scope 2 emissions physically occur at the facility where electricity is generated. The Protocol mandates that Scope 2 emissions must be reported in two ways: with locationbased method and market-based method.
Location-based method reflects the average emissions intensity of grids on which energy consumption occurs, which is usually a mix between renewable and non-renewable energy sources. It derives emission factors mostly from grid-averages for defined geographic locations, including local, subnational, or national boundaries.
Market-based method reflects emissions from electricity that companies have purposefully chosen (or not chosen). It derives emission factors from contractual instruments, such as Guarantees of Origin (GoOs), Renewable Energy Certificates (RECs) and Power Purchase Agreements (PPAs). If the company has purchased such contractual instruments, the market-based emissions will reflect this, whereas if such instruments are not purchased, the market-based emissions will reflect the residual emissions of the unclaimed electricity mix (often referred to as the "residual mix"), which tends to be much higher than the location-based emission factors.
Scope 3: Other indirect GHG emissions that occur upstream and downstream of the company's activities. These emissions occur as a consequence of the activities of the company, but stem from sources not owned or controlled by the company. Scope 3 emissions are divided into 15 categories (see diagram below).
The input data used to calculate emissions in the three scopes can either be primary data in the form of activity data that the company retrieves itself or supplier-specific activity data that is retrieved from suppliers, or it can be secondary data in the form of averages for similar activities or transaction data retrieved through accounting systems. The GHG Protocol prefers activity data to be used for calculating emissions in Scope 1 & 2, as activity data will allow for a more granular analysis that will enable decision- making. However, activity data is hard to come by for Scope 3, which leads to incomplete inventories. Thus, average and transaction-based data can be used to populate the inventory.
In addition to allowing for input of activity data, our tool enables the calculation of transaction-based emissions using an environmentallyextended multi-regional input-output model (EE-MRIO) which estimates emissions resulting from the production and upstream supply chain activities of different sectors and products based on their geographical location. EEIO models are derived by allocating direct sectoral GHG emissions and relate these to the output level in the sector (sectoral intensities or sectoral Scope 1 emissions). All sectoral intensities are further interlinked with material and service input and output relations of all sectors in the world (66 individual economies + ROW group). By combining this model with company business data, we provide estimated cradle-to-gate GHG emissions, and these are particularly useful when screening emission hot-spots in a global value-chain perspective.
This dual approach - a bottom-up activity-based approach combined with a top-down transaction-based approach - allows companies to harness the combined strength of accuracy and completeness in their GHG inventory, thereby maximizing their ability to use the inventory for strategic decision-making in planning their decarbonization. Our SaaS platform always ensures that the GHG emissions are captured either with activity data or by the transaction-based method, double counting will not occur.
The Taxonomy is a classification system created by the European Union (EU) that determines which economic activities are to be considered environmentally sustainable for investment purposes. In Norway, the EU Taxonomy is incorporated into Norwegian law through the Act on Disclosure of Sustainability-related Information in the Financial Sector that entered into force 1 January 2023. HydrogenPro is not required to report in accordance with the EU Taxonomy, as we do not qualify for the Non-Financial Reporting Directive's definition of a large company of public interest. However, we acknowledge that this information is of interest to many of our stakeholders and have chosen to do a preliminary voluntary reporting of our taxonomy eligible activities for 2022. We will continue to follow best practice with respect to ESG reporting while waiting for harmonized disclosure rules for all non-financial companies. We welcome the Corporate Sustainability Reporting Directive and European Sustainability Reporting Standards coming into effect for accounting year 2024.
HydrogenPro has identified two economic activities described in the EU Taxonomy Climate Delegated Act that are of relevance for our company. Most of our business activities are taxonomy eligible under the activity 3.2 Manufacturing of equipment for hydrogen production, while we have a small portion of R&D and engineering studies that meet the description stated in activity 9.1 Close to market research, development, and innovation. We have identified the part of our turnover, capital expenditures (CapEx) and operational expenditures (OpEx) that are taxonomy eligible for the accounting year of 2022.
Further down the line, we will start to assess what part of our activities that are taxonomy aligned. This is particularly interesting for activity 3.2, which covers the majority of our business. To meet the technical screening criteria set out for taxonomy aligned activities under 3.2 Manufacturing of hydrogen equipment, the equipment manufactured must produce hydrogen in accordance with the requirements set out in activity 3.10 Production of hydrogen. Activity 3.10 states that for hydrogen production to be taxonomy aligned, life cycle GHG emissions must be lower than 3tCO2e/tH2, equaling a life cycle GHG emission saving of 73,4%. We expect that our equipment meets the current technical screening criteria for life-cycle emissions posted in 3.10 Production of hydrogen, as our high-pressure alkaline electrolysers run on renewable energy. We will take further steps to assess and include the "do no significant harm" and "minimum social safeguard" criteria in our taxonomy reporting for the accounting year 2023.
We conducted our first materiality assessment in 2021. Several of the topics identified as material then are continued also in the materiality assessment we did in 2022. Some topics have been considered less material this year, either due to HydrogenPro's impact on the topic, or the topics impact on HydrogenPro. In addition, this year's materiality assessment has included a broader selection of stakeholders, some representing other views.
Material topics continued from 2021, now grouped in the following categories:
The following topics are discontinued:
Hydrovegen 6, 3933 Porsgrunn, Norway
hydrogen-pro.com [email protected] Tel: +47 990 79 500
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