Earnings Release • Nov 5, 2020
Earnings Release
Open in ViewerOpens in native device viewer
Q3 2020 interim report
| (unaudited amounts in NOK million) | Q3 2020 |
Q3 2019 |
Q1-Q3 2020 |
Q1-Q3 2019 |
Full year 2019 |
|---|---|---|---|---|---|
| Revenue and operating income | 147.7 | 148.9 | 422.8 | 393.9 | 569.7 |
| Operating expenses | 264.0 | 197.3 | 698.0 | 585.0 | 823.3 |
| EBITDA1) | -42.1 | -28.9 | -155.3 | -136.3 | -178.1 |
| Operating loss1) | -116.3 | -48.4 | -275.2 | -191.2 | -253.6 |
| Pre-tax income (loss)2) | -628.6 | -34.3 | -39.6 | -182.1 | -277.2 |
| Net income (loss)2) | -626.7 | -32.4 | -33.5 | -176.5 | -269.7 |
| Net cash flow from operating activities | -69.4 | -31.2 | -132.3 | -144.3 | -209.2 |
| Cash balance end of period | 2 543.6 | 651.0 | 2 543.6 | 651.0 | 526.0 |
1) The effect of the Rotolyzer® impairment and amortisation of received grants has negatively impacted operating loss by NOK -19.3 million and positively impacted EBITDA by NOK 18.7 million, respectively, in Q3 2020
2) Q3 2020 includes a negative fair value adjustment of the shareholding in Nikola Corporation of NOK -513.3 million (a value of USD 20.48 per share as of September 30, 2020). The fair value adjustment was NOK 0 in the third quarter 2019. A 10 USD increase/reduction in the share price of Nikola Corporation will lead to gains/losses of about MNOK 100.0 with a USD/NOK of 9.0
Nel revenues and operations have been and are expected to continue to be negatively impacted by disruptions in the value chain, travel restrictions and the general business slowdown caused by Covid-19. Nel remains committed to its strategy and has since 2019 taken on additional costs to prepare for future growth. The revenue shortfall and business disruptions caused by Covid-19 have impacted and will continue to impact financial results negatively throughout 2020, but have not resulted in a change of strategy for the company.
Nel reported revenue and operating income in the third quarter 2020 of NOK 147.7 million (148.9), following a development in the Fueling and Electrolyser segment of 21.8% and -17.1%, respectively, compared to the same quarter in 2019. Revenues were negatively impacted by "stay home - stay safe" policies and travel restrictions arising from the Covid-19 pandemic, both from the portion of revenues that are recognised at delivery or when commissioning is completed and from shorter lead time orders (smaller units and service).
At the end of the third quarter 2020, Nel had an order backlog of NOK 938.5 million, up from NOK 575.0 million a year earlier. Order intake is expected to vary between quarters as the order size increases.
Cost of goods sold (COGS) has decreased with 4.4% from third quarter 2019. The decreased COGS is related to the 18.6% decrease in revenue from contracts with customers and is also affected by increased costs from project execution in the Fueling and Electrolyser divisions.
Personnel expenses increased by 26.2% compared to the same quarter in 2020, which is explained by a higher number of employees, up from 297 employees by the end of third quarter 2019 to 376 at the end of third quarter 2020. Other operating expenses decreased by 1.9%. The high level of personnel and other operating costs are the results of Nel's strategic decision to pursue growth and higher activity levels.
To date, despite the ongoing, global pandemic, Nel has been able to keep all full-time employees and only reduce the number of hiredin/contracted personnel. Nel believes in the longterm growth of the hydrogen business and wants to be ready to set full operations in motion as soon as the situation begins to normalize. However, the current shortfall in revenues, combined with the pre-pandemic cost base, contributes negatively to overall results in the quarter.
Costs for the stock option- and share incentive program, which are included in personnel expenses, were NOK 0.3 million (2.3) in the quarter.
EBITDA ended at NOK -42.1 million (-28.9), while the EBITDA margin was -28.5% (-19.4%).
Depreciation, amortisation and impairment were NOK 74.2 million (19.5) in the quarter. The increase was driven by the NOK 38.0 million RotoLyzer® impairment.
Operating loss amounted to NOK -116.3 million (-48.4) in the period.
Net financial items amounted to a loss of NOK -512.4 million (14.1) and was driven by a negative fair value adjustment of the shareholding in Nikola Corporation of NOK 513.3 million (a value of USD 20.48 per share as of September 30, 2020).
Pre-tax loss was NOK -628.6 million (-34.3) in the quarter and the net loss was NOK -626.7 million, compared to a loss of NOK -32.4 million in the same quarter 2019.
Comprehensive income is negative with NOK -618.6 million (7.2). There was a positive currency translation difference, net of tax, of NOK 1.3 million in the quarter (42.3) related to converting statement of financial position from subsidiaries in USD and DKK into NOK using a higher currency rate than in the previous quarter.
Total assets were NOK 4 859.5 million at the end of the quarter, compared to NOK 2 430.7 million at the end of 2019, mainly due to an increase of cash from share capital increases in January and June, working capital and current assets. Total equity was NOK 4 221.6 million, thus, the equity ratio was 86.9%.
Net cash flow from operating activities in the quarter was NOK -69.4 million, compared to NOK -31.2 million in the third quarter in 2019. The development is mainly due to higher personnel and operating expenses. Net cash flow from investing activities was NOK -44.7 million (-26.4).
Nel's cash balance at the end of third quarter 2020 was NOK 2 543.6 million. The increase from end of 2019 is mainly due to raising net proceeds of NOK 818.8 million and NOK 1 265.5 million from the share capital increase in January and June, respectively. This is partly offset by negative cash flow from operations and investments.
Nel is a global, dedicated hydrogen company, delivering optimal solutions to produce, store and distribute hydrogen from renewable energy. The company serves industries, energy and industrial gas companies with leading green hydrogen production technology.
Since our origins in 1927 as part of Norsk Hydro, we have a proud history of development and continuous improvement of hydrogen technologies.
Our hydrogen solutions cover important parts of the value chain: from hydrogen production technologies to hydrogen fueling stations, enabling industries to transition to green hydrogen, and providing fuel cell electric vehicles with the same fast fueling and long range as fossilfuelled vehicles - without emissions.
Production and installation of electrolysers for hydrogen production.
Nel Hydrogen Electrolyser is the world's largest electrolyser manufacturer, offering both alkaline and PEM (proton exchange membrane) technology globally. The company's roots date to 1927, when Norsk Hydro developed large-scale electrolyser plants, providing renewable hydrogen for use in ammonia production with fertiliser as the end-product. Since then, Nel's electrolyser technology has improved continuously, delivered across the world, and has set the industry standard for performance and total cost of ownership.
Historically, hydrogen has primarily been used as an input factor for a broad spectrum of industrial applications and products, such as ammonia, refineries, methanol, edible oil, chemicals, metallurgy, glass, electronics, generator cooling, polysilicon used in photovoltaic solar panels, and other industrial applications.
Of the total global hydrogen market, only around 1% of the hydrogen is generated via water electrolysis. However, electrolysis is expected to grow in market share, mainly driven by the decreasing cost of renewable energy, increased share of intermittent (wind and solar) energy, decreasing cost of electrolysers, and an increasing focus on climate and air quality.
The overall hydrogen market is also expected to grow significantly in the coming years, with hydrogen being used as a zero-emission fuel for mobility and as a way of decarbonising various industrial sectors like the replacement of coal in the metal industry, and other hard-todecarbonise sectors. The process of converting renewable electricity to hydrogen and utilising hydrogen both in existing and new markets, is referred to as "power-to-X", were X refers to the various applications for hydrogen.
A step-change in the size of power-to-X projects is beginning worldwide, as projects are moving to megawatt-scale. This trend is welcomed by Nel, as it makes the group's portfolio of large-scale electrolyser solutions increasingly relevant.
Nel began commercial sales of electrolysers in the 1970s and has since delivered over 3500 electrolyser units in more than 80 countries. The electrolyser business area has manufacturing facilities in Notodden, Norway, and in Wallingford, Connecticut, USA. The company has a global reach through its in-house sales operation and network of agents across the globe.
Today, Nel has a complete product portfolio of both alkaline and PEM electrolysers and is also continuously developing and improving both technologies. Initiatives include a next generation large scale, pressurised alkaline electrolyser as well as larger PEM stacks, and large-scale solutions which allow for significant cost reductions on a system level.
With increasing demand for large scale electrolysers, Nel has also decided to significantly increase its manufacturing capacity of atmospheric alkaline electrolysers. In 2019 Nel secured a location for the new manufacturing plant at Herøya, Norway, and targets to have an initial capacity of 500 MW/year, more than 12 times current capacity. The capacity at the new plant can be further expanded to beyond 2 GW/year. The Herøya plant will be highly automated and significant production cost reductions are expected. These cost reductions will be important in making renewable hydrogen cost competitive with fossil hydrogen and fossil fuels.
Reduced cost and new large scale solutions should enable Nel to penetrate new markets, as well as increase its competitiveness in existing ones. And gradually, Nel aims to replace the various fossil solutions for hydrogen production on which the world currently relies.
Production of hydrogen fueling stations for cars, buses, trucks, forklifts and other applications.
Nel Hydrogen Fueling is a leading manufacturer of hydrogen fueling stations that provide FCEVs (Fuel Cell Electric Vehicles) with the same fast fueling and long range as conventional fossil fuel vehicles. Since Nel began manufacturing hydrogen fueling stations in 2003, we have invested significantly in R&D. Today, Nel is one of the global leaders on hydrogen fueling stations for mobility applications. The H2Station™ technology is now being utilized on a daily basis in several European countries as well as in South Korea and California, US, providing forklifts, passenger vehicles, buses and trucks hydrogen, driving the transition to zero emission mobility.
Nel was among the first to achieve compliance with the international hydrogen fueling standard (SAE J2601) required by major car manufacturers. With the H2Station™ technology, Nel's ambition is to maintain the position as a preferred supplier for international hydrogen fueling infrastructure operators.
Nel's H2Station™ manufacturing plant is located in Herning, Denmark. It has a capacity of 300 H2Station™ modules per year, leaving room for significant growth. Combining technology innovations with increased manufacturing capacity should enable Nel to further reduce the cost of our leading hydrogen fueling station solutions.
Our target is to enable hydrogen to outcompete fossil fuels for an increasing number of applications, and eventually to become a preferred fuel alternative. Increased activities in the heavy-duty segment (buses, trucks etc.) has encouraged Nel to step up technology developments, and to launch new products, better suited for heavy-duty applications. Significant technology developments will continue going forward to support these new applications.
All in all, our combined electrolyser and fueling activities are supporting our vision:
Nel Hydrogen Electrolyser reported revenue and operating income of NOK 71.8 million in the third quarter of 2020, a decrease of 17% from NOK 86.6 million in the same quarter 2019. Norway has an increase of 224% from higher sales of alkaline electrolysers and amortisation of grants, while the US has a decrease of 49% from sales of PEM electrolysers. Nel Hydrogen Electrolyser has been particularly negatively impacted by the general business slow down and delay in closing orders resulting from Covid-19.
EBITDA was NOK -16.4 million in the third quarter of 2020, positively impacted by NOK 18.7 million amortisation of earlier received technology development grants, but overall a decrease from NOK -5.1 million in the same quarter in 2019. The reduction of NOK 11.3 million was mainly due to higher costs levels and somewhat lower margins in Norway and US as well as a general negative impact on operations due to Covid-19.
Employees in Nel Hydrogen Electrolyser has increased from 147 employees by the end of third quarter 2019 to 176 at the end of third quarter 2020, driven by increase in project and production personnel.
Nel continues to develop step-change enabling technologies and products, as well as improving current platforms and investigating several different types of products with the ambition to provide a superior value proposition to its customers. As a result, the RotoLyzer® development activity has been reduced and in the short-term. Instead Nel is prioritising other research and development projects. This has increased the uncertainty of the timing of future commercialisation of the RotoLyzer® product. Nel will continue to develop the RotoLyzer® at a slower pace to further assess the commercial feasibility, and due to the increased timing uncertainty, Nel has recognised an impairment of NOK 38.0 million this quarter.
Nel has previously received NOK 18.7 million in government grants for the RotoLyzer® technology previously recognised as deferred income. The income is amortised over the useful life of the related assets, thus, Nel has recognised the entire NOK 18.7 million within 'other operating income' this quarter.
Nel has been awarded a NOK 16.0 million grant from the Research Council of Norway for a research project which seeks to further improve the efficiency and cost of next generation, pressurised alkaline electrolyser platform
Nel has been awarded a USD 4.4 million grant by the US Department of Energy (DOE) for development of advanced components and manufacturing methods to enable low cost hydrogen from electrolysis
On October 22, Nel received a purchase order with a value of about USD 2 million for a 1.25 megawatt (MW) containerised Proton PEM® electrolyser from the National Renewable Energy Laboratory (NREL). The electrolyser will be used use in the U.S. Department of Energy-supported AIRES research initiative at the NREL campus in Boulder, CO.
On October 30, Nel announced a Letter of Intent with Statkraft to supply up to 50 MW of alkaline electrolyser capacity for a fossil free steel project in Norway. The green hydrogen produced by the plant will be used in a production process of steel reinforcing products as an alternative to fossil fuels, and hence lower the carbon footprint of the process.
On November 3, Nel was selected by Iberdrola as the preferred supplier for a 20 MW PEM solution for a green fertilizer project in Spain. Contract award is subject to mutual agreement on the final commercial terms. The hydrogen plant is scheduled to commence operations in 2021.
Nel Hydrogen Fueling reported revenue and operating income of NOK 75.9 million in the third quarter 2020, a growth of 22% from NOK 62.3 million in the same quarter 2019.
EBITDA of NOK -13.8 million in the third quarter of 2020 has decreased from NOK -11.6 million in the same quarter in 2019.
Nel Hydrogen Fueling has seen a large increase in the utilisation of many of the stations already installed, this enables accelerated learnings and improvements in both within product maturity and overall reliability. Fueling a hydrogen car needs to be as easy and reliable as fueling a gasoline or diesel vehicle. A hydrogen fueling station is a complex and relatively new technology and the hydrogen industry, incl. Nel, still has some way to go in maturing the technology as well as investing in service and maintenance, robustness and reliability. Nel will continue to incur costs related to these activities. In addition, the third quarter 2020 has been negatively impacted in general by the Covid-19 situation.
Employees in Nel Hydrogen Fueling has increased from 141 employees by the end of third quarter 2019 to 186 at the end of third quarter 2020, driven by increase in service technicians and development personnel.
On October 5, Nel received a purchase order from Everfuel Europe A/S (Everfuel) for an H2Station™ hydrogen fueling station which will be used to fuel zero emission hydrogen buses in the Netherlands. The value of the purchase order is around EUR 1.6 million, and the station is scheduled to be operational by the end of 2021.
Nel issued 6.05 million new shares through the exercise of employee share options during the quarter. The options were exercised at an average strike price per share of NOK 3.23. Obtained selling price was NOK 20.8, and as maximum gain for employees is NOK 5.0 per share option, Nel raised NOK 86.6 million in gross proceeds and added 391 147 shares to Nel's holding of treasury shares.
On October 21, Everfuel successfully completed a private placement issuing 13 200 000 new shares at a price of NOK 22 per share. Total number of issued shares after the transaction is 73 200 000 valuing Everfuel at NOK 1 610.4 million at the offer price. Everfuel was subsequently listed on Merkur Markets on October 29. Nel has been allocated 398 624 shares at a price of NOK 22 per share and a total purchase price of NOK 8.8 million. Nel has, subsequent to the private placement, a shareholding of 12 338 624 shares, or 16.86%.
| (unaudited amounts in NOK thousands) | Q3 2020 |
Q3 2019 |
Q1-Q3 2020 |
Q1-Q3 2019 |
Full year 2019 |
|---|---|---|---|---|---|
| Finance income | |||||
| Interest income | 3 642 | 2 679 | 10 275 | 5 991 | 9 515 |
| Change in fair value equity instruments | -513 286 | 0 | 170 962 | 0 | 1 771 |
| Other | -743 | 57 | 22 793 | 146 | 1 357 |
| Interest income and other finance income (loss) | -510 386 | 2 736 | 204 030 | 6 137 | 12 643 |
| Finance costs | |||||
| Interest expense | -2 283 | -974 | -7 193 | -3 158 | -5 922 |
| Net foreign exchange gain (loss) | -425 | 13 375 | 36 243 | 9 701 | -1 351 |
| Capitalised interest | 1 297 | 0 | 3 800 | 0 | 1 207 |
| Other | 48 | -124 | -201 | -341 | -435 |
| Interest expense and net foreign exchange gain (loss) | -1 363 | 12 277 | 32 649 | 6 203 | -6 500 |
| Net finance income (cost) | -511 749 | 15 014 | 236 679 | 12 339 | 6 142 |
Nel reported finance income of NOK -510.4 million in the third quarter 2020. The decrease in finance income compared with third quarter 2019 is mainly due to a change in fair value of Nel's shareholding in Nikola Corporation of NOK 513.3 million (a value of USD 20.48 per share as of September 30, 2020). The fair value adjustment was NOK 0 in the third quarter 2019. The Nikola shares are subject to a lock-up expiring on November 30, 2020.
Finance costs in third quarter 2020 was NOK -1.4 million compared to 12.3 million in third quarter 2019. Third quarter 2020 include NOK -1.5 (13.6) million in unrealised currency exchange gain (loss) resulting from revaluing internal loans.
Nel is exposed to risk and uncertainty factors, which may affect some or all of the group's activities. Nel is exposed to financial, market and operational risk. In addition, there is risk related to technology, implementation and execution of current and future products, and the Covid-19 situation. There are no significant changes in the risks and uncertainty factors described in our Annual Report for 2019.
The global outbreak of Covid-19 is expected to continue to cause disruptions in Nel´s operations and financial performance as "stay home – stay safe" policies and the general business slowdown impacts production, order intake, customer dialogue, installations and commissioning and associated revenue recognition.
Nel remains committed to its strategy and has since 2019 taken on additional employees and costs to prepare for future growth. The revenue shortfall and business disruptions caused by Covid-19 have impacted and will continue to impact financial results negatively into 2021:
Nel has implemented and enforced strict Covid-19 measures to ensure the safety for employees and partners across locations. In October 2020, a Covid-19 situation was recorded at Notodden, Norway, with the deployment of contingency plans in close cooperation with local healthcare and administrative authorities. Affected individuals were quarantined, and the situation is normalized primo November 2020.
Nel reiterates the confidence in the long-term potential for the industry, supported by the "green recovery" outlined by various governmental initiatives.
Nel aims to capitalise on the emerging opportunities within hydrogen by leveraging on the position as a technology front-runner, continued high focus on safety, global presence, cost leadership, strong financing and preferredpartner status for industry participants:
Nel targets to maintain its current leading position in the electrolysis sector, continuing to develop both PEM and alkaline technologies to satisfy specific customer needs and preferences.
As markets in which Nel operates are developing towards lager scale, it is increasingly important to be a financially strong counterpart, especially for larger contracts.
Oslo, 5 November 2020 The Board of Directors
| Ole Enger | Beatriz Malo de Molina | Charlotta Falvin |
|---|---|---|
| Chair | Board member | Board member |
| (Sign) | (Sign) | (Sign) |
| Finn Jebsen | Hanne Blume | Tom Røtjer |
|---|---|---|
| Board member | Board member | Board member |
| (Sign) | (Sign) | (Sign) |
Jon André Løkke
CEO
(Sign)
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Full year | ||
|---|---|---|---|---|---|---|
| (amounts in NOK thousands) | Note | 2020 | 2019 | 2020 | 2019 | 2019 |
| Revenue and operating Income | ||||||
| Revenue from contracts with customers | 118 501 | 145 549 | 372 874 | 375 595 | 519 050 | |
| Other operating income | 29 217 | 3 359 | 49 926 | 18 261 | 50 657 | |
| Total revenue and operating income | 3 | 147 718 | 148 908 | 422 800 | 393 855 | 569 707 |
| Operating expenses | ||||||
| Cost of goods sold | 81 162 | 84 931 | 244 354 | 229 463 | 342 374 | |
| Personnel expenses | 78 670 | 62 340 | 234 612 | 174 212 | 243 194 | |
| Depreciation, amortisation and impairment | 4, 5 | 74 185 | 19 523 | 119 892 | 54 812 | 75 500 |
| Other operating expenses | 29 957 | 30 523 | 99 138 | 126 530 | 162 234 | |
| Total operating expenses | 263 973 | 197 317 | 697 996 | 585 017 | 823 302 | |
| Operating loss | -116 255 | -48 409 | -275 196 | -191 161 | -253 595 | |
| Finance income | -510 386 | 2 736 | 204 030 | 6 137 | 12 643 | |
| Finance cost | -1 363 | 12 277 | 32 649 | 6 203 | -6 500 | |
| Share of loss from associates and joint ventures | -637 | -866 | -1 036 | -3 307 | -29 786 | |
| Net financial items | -512 386 | 14 148 | 235 643 | 9 032 | -23 643 | |
| Pre-tax income (loss) | -628 641 | -34 261 | -39 553 | -182 129 | -277 238 | |
| Tax expense (income) | -1 951 | -1 893 | -6 067 | -5 589 | -7 529 | |
| Net income (loss) | -626 690 | -32 368 | -33 485 | -176 540 | -269 710 | |
| Items that are or may subsequently be reclassified to income statement: | ||||||
| Currency translation differences | 1 307 | 42 288 | 83 549 | 21 602 | 2 240 | |
| Cash flow hedges, effective portion of changes in fair value | 8 454 | -3 157 | 630 | -3 971 | -2 388 | |
| Cash flow hedges, reclassified to income statement | -1 667 | 459 | 2 994 | 844 | 1 602 | |
| Other comprehensive income | 8 094 | 39 589 | 87 173 | 18 475 | 1 453 | |
| Total comprehensive income | -618 596 | 7 221 | 53 687 | -158 065 | -268 256 | |
| Basic EPS (figures in NOK) 1) | -0.47 | -0.03 | -0.02 | -0.15 | -0.22 | |
| Diluted EPS (figures in NOK) 1) | -0.47 | -0.03 | -0.02 | -0.15 | -0.22 | |
| Weighted average number of outstanding shares (million) | 1 327 | 1 218 | 1 314 | 1 199 | 1 211 |
1) Basic and diluted earnings per share are computed using the weighted average number of ordinary shares outstanding.
The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited).
| (amounts in NOK thousands) | Note | 30.09.2020 | 31.12.2019 |
|---|---|---|---|
| ASSETS | |||
| Intangible assets | 4 | 1 197 047 | 1 118 075 |
| Property, plant and equipment | 5 | 322 216 | 256 170 |
| Other non-current assets | 45 799 | 66 089 | |
| Total non-current assets | 1 565 061 | 1 440 334 | |
| Inventories | 284 512 | 205 234 | |
| Trade receivables | 91 758 | 183 333 | |
| Contract assets | 52 717 | 37 103 | |
| Other current assets | 321 839 | 38 688 | |
| Cash and cash equivalents | 2 543 616 | 525 982 | |
| Total current assets | 3 294 442 | 990 340 | |
| TOTAL ASSETS | 4 859 503 | 2 430 673 | |
| EQUITY AND LIABILITIES | |||
| Shareholders' equity | 4 221 565 | 1 846 618 | |
| Total equity | 4 221 565 | 1 846 618 | |
| Deferred tax liability | 63 746 | 63 343 | |
| Long-term debt | 32 682 | 30 577 | |
| Lease liabilities | 78 484 | 79 121 | |
| Other non-current liabilities | 76 285 | 70 605 | |
| Total non-current liabilities | 251 197 | 243 646 | |
| Trade payables | 66 821 | 92 197 | |
| Lease liabilities | 13 179 | 12 066 | |
| Contract liabilities | 177 984 | 147 481 | |
| Other current liabilities | 128 756 | 88 666 | |
| Total current liabilities | 386 741 | 340 409 | |
| Total liabilities | 637 938 | 584 055 | |
| TOTAL EQUITY AND LIABILITIES | 4 859 503 | 2 430 673 |
The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited).
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Full year | |
|---|---|---|---|---|---|
| (amounts in NOK thousands) | 2020 | 2019 | 2020 | 2019 | 2019 |
| Cash flow from operating activities | |||||
| Pre-tax income (loss) | -628 641 | -34 261 | -39 553 | -182 129 | -277 238 |
| Depreciation, amortisation and impairment | 74 185 | 19 523 | 119 892 | 54 812 | 75 500 |
| Change in net working capital | -4 159 | -15 719 | 7 951 | -50 638 | -71 637 |
| Other adjustments 1) | 489 178 | -709 | -220 577 | 33 606 | 64 147 |
| Net cash flow from operating activities | -69 437 | -31 166 | -132 287 | -144 348 | -209 228 |
| Cash flow from investment activities | |||||
| Purchases of property, plant and equipment | -29 555 | -6 953 | -75 909 | -25 307 | -49 913 |
| Payments for capitalised technology | -14 797 | -11 580 | -59 909 | -36 795 | -68 949 |
| Purchases of other investments 2) | 0 | 0 | -56 638 | 0 | 0 |
| Investments in other financial assets | 0 | -7 849 | -12 998 | -7 849 | -7 849 |
| Loan given to associates and joint ventures | 0 | 0 | 0 | -5 000 | -5 975 |
| Investments in associates and joint ventures | -300 | 0 | -567 | 0 | -3 085 |
| Sale of subsidiaries | 0 | 0 | 0 | 0 | 1 653 |
| Acquisition of subsidiaries, net of cash acquired | 0 | 0 | 26 022 | 0 | 0 |
| Net cash flow from investing activities | -44 652 | -26 382 | -179 998 | -74 950 | -134 118 |
| Cash flow from financing activities | |||||
| Interest paid | -1 036 | -1 104 | -3 390 | -3 053 | -4 715 |
| Interest received | 3 297 | 2 806 | 10 319 | 6 249 | 9 515 |
| Gross cash flow from share issues | 86 574 | 12 387 | 2 378 413 | 544 942 | 545 984 |
| Transaction costs connected to share issues | -164 | -818 | -68 266 | -20 324 | -20 426 |
| Proceeds from new loan | 0 | 0 | 16 395 | 0 | 0 |
| Payment of lease liabilities | -2 616 | -2 165 | -7 891 | -5 724 | -8 163 |
| Payment of non-current liabilities | -451 | -256 | -1 738 | -1 612 | -2 700 |
| Net cash flow from financing activities | 85 604 | 10 850 | 2 323 841 | 520 477 | 519 496 |
| Foreign currency effects on cash | 6 033 | 7 | 6 078 | 35 | 86 |
| Net change in cash and cash equivalents | -22 451 | -46 691 | 2 017 635 | 301 213 | 176 235 |
| Cash and cash equivalents beginning of period | 2 566 068 | 697 651 | 525 982 | 349 747 | 349 747 |
| Cash and cash equivalents | 2 543 616 | 650 960 | 2 543 616 | 650 960 | 525 982 |
1) Q3 2020 includes a negative fair value adjustment of the shareholding in Nikola Corporation of NOK 513.3 million (USD 20.48 per share as of September 30, 2020). The fair value adjustment was NOK 0 in Q3 2019.
2) Purchases of other investments comprises bank deposits and advance payment guarantees with a maturity longer than three months at the date of purchase.
| Other | ||||||
|---|---|---|---|---|---|---|
| Share | Share | Treasury | components | Retained | Total | |
| (amounts in NOK thousands) | capital | premium | shares | of equity | earnings | equity |
| Equity as of 01.01.2019 | 222 710 | 1 585 570 | -12 | 50 196 | -279 486 | 1 578 978 |
| Net loss | 0 | -269 710 | -269 710 | |||
| Currency translation differences | 2 240 | 2 240 | ||||
| Hedging reserve | -786 | -786 | ||||
| Capital increase | 21 710 | 503 848 | 525 558 | |||
| Options and share program | -2 | 6 312 | 6 310 | |||
| Other changes | 4 028 | 4 028 | ||||
| Equity as of 31.12.2019 | 244 421 | 2 089 418 | -14 | 51 649 | -538 855 | 1 846 618 |
| Net loss | -33 485 | -33 485 | ||||
| Currency translation differences | 83 549 | 83 549 | ||||
| Hedging reserve | 3 624 | 3 624 | ||||
| Capital increase | 37 068 | 2 273 078 | 2 310 147 | |||
| Options and share program | 65 | -65 | 5 604 | 5 604 | ||
| Other changes | 5 509 | 5 509 | ||||
| Equity as of 30.09.2020 | 281 489 | 4 362 562 | -79 | 138 822 | -561 227 | 4 221 565 |
Nel is a global, dedicated hydrogen company, delivering optimal solutions to produce, store, and distribute hydrogen from renewable energy. We serve industries, energy, and gas companies with leading hydrogen technology. Our roots date back to 1927, and since then, we have had a proud history of development and continuous improvement of hydrogen technologies. Today, our solutions cover the entire value chain: from hydrogen production technologies to hydrogen fueling stations, enabling industries to transition to green hydrogen, and providing fuel cell electric vehicles with the same fast fueling and long range as fossil-fueled vehicles - without the emissions. The group has two divisions: Nel Hydrogen Electrolyser and Nel Hydrogen Fueling.
Nel (org. no 979 938 799) was formed in 1998 and is a Norwegian public limited company listed on the Oslo Stock Exchange. The group's head office is in Karenslyst allé 20, N-0278 Oslo, Norway. The condensed interim consolidated financial statements were authorised for issue by the Board of Directors on 5 November 2020.
The financial information is prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" (IAS 34). This financial information should be read together with the annual report for the year ended 31 December 2019 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).
The accounting policies adopted in the preparation of the condensed interim consolidated financial statements are consistent with those used in the preparation of the group's annual consolidated financial statements for the year ended 31 December 2019.
As a result of rounding differences numbers or percentages may not add up to the total.
The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure of contingent liabilities at the date of the interim financial statements. If in the future such estimates and assumptions, which are based on management's best judgment at the date of the interim financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change.
In the process of applying the group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the condensed interim financial statements:
The estimates and underlying assumptions are reviewed on an ongoing basis, considering the current and expected future market conditions. Changes in accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Refer to the annual report of 2019 for more details related to key judgements and estimation.
As a result of the outbreak of Covid-19 during the first half of 2020, all significant estimates and underlying assumptions have been reviewed in the light of this new situation. Nel has focused on the estimates related to expected credit loss on trade receivables and contract assets, reviewing credit risk and risk of default including the loss given default. Nel has not identified any significant Covid-19 related impact to these condensed consolidated financial statements as of 30 September 2020.
Nel identifies its reportable segments and discloses segment information under IFRS 8 Operating Segments. This standard requires Nel to identify its segments according to the organisation and reporting structure used by management. See Nel's Annual Report 2019 note 3 Business segments information for a description of Nel's management model and segments, including a description of Nel's segment measures and accounting principles used for segment reporting.
The executive management group is the chief operating decision maker (CODM) and monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements. Nel operates within two business segments, Nel Hydrogen Electrolyser and Nel Hydrogen Fueling. For more information on the segments operation, see section 'Nel in brief' on pages 6-7.
Billing of goods and services between operating segments are effected on an arm's length basis.
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | |||
|---|---|---|---|---|---|---|
| (amounts in NOK thousands) | 2020 | 2019 | Change | 2020 | 2019 | Change |
| Revenue and operating income | ||||||
| Nel Hydrogen Electrolyser | 71 773 | 86 573 | -17% | 211 922 | 218 969 | -3% |
| Nel Hydrogen Fueling | 75 945 | 62 335 | 22% | 210 878 | 174 886 | 21% |
| Total | 147 718 | 148 908 | -1% | 422 800 | 393 855 | 7% |
| EBITDA | ||||||
| Nel Hydrogen Electrolyser | -16 441 | -5 064 | -60 961 | -26 891 | ||
| Nel Hydrogen Fueling | -13 846 | -11 614 | -53 259 | -72 826 | ||
| Other and eliminations1) | -11 784 | -12 208 | -41 084 | -36 632 | ||
| Total | -42 070 | -28 886 | -155 304 | -136 349 | ||
| Investments2) | ||||||
| Nel Hydrogen Electrolyser | 34 439 | 12 488 | 176% | 99 018 | 42 620 | 132% |
| Nel Hydrogen Fueling | 9 912 | 13 893 | -29% | 49 797 | 32 330 | 54% |
| Total | 44 352 | 26 382 | 68% | 148 816 | 74 950 | 99% |
| Total assets3) | ||||||
| Nel Hydrogen Electrolyser | 1 309 788 | 1 079 310 | 21% | |||
| Nel Hydrogen Fueling | 1 022 316 | 751 378 | 36% | |||
| Other and eliminations1) | 2 527 399 | 663 208 | 281% | |||
| Total | 4 859 503 | 2 493 895 | 95% | |||
The following table includes information about Nel's operating segments.
1) Other and eliminations comprises parent company and elimination of intercompany transactions.
2) Investments comprise intangible assets, property, plant and equipment, associates and joint ventures and equity instruments.
3) Total assets per segment includes excess values on intangible assets derived from the consolidation of the financial statements.
| Property, Plant and Equipment by geographical area | Full year | ||||
|---|---|---|---|---|---|
| (amounts in NOK thousands) | 30.09.2020 | 30.09.2019 | Change | 2019 | Change |
| Norway | 150 937 | 49 767 | 203% | 113 167 | 33% |
| Denmark | 116 702 | 89 272 | 31% | 93 589 | 25% |
| USA | 50 904 | 48 060 | 6% | 47 332 | 8% |
| South Korea | 3 672 | 2 332 | 57% | 2 082 | 76% |
| Total | 322 216 | 189 431 | 70% | 256 170 | 26% |
| Customer | ||||
|---|---|---|---|---|
| (amounts in NOK thousands) | Goodwill | Technology | relationship | Total |
| Carrying amount of 01.01.2020 | 609 154 | 451 736 | 57 185 | 1 118 075 |
| Additions | 0 | 59 909 | 0 | 59 909 |
| Amortisation | 0 | -36 347 | -9 943 | -46 291 |
| Impairment | 0 | -38 386 | 0 | -38 386 |
| Currency translation differences | 59 953 | 39 227 | 4 559 | 103 740 |
| Carrying amount as of 30.09.2020 | 669 108 | 476 138 | 51 801 | 1 197 047 |
An impairment expense of NOK 38.4 million has been recognised in the quarter which includes impairment of the RotoLyzer® technology of NOK 38.0 million and consequently the recognised value of the RotoLyzer® technology is NOK 0 in the statement of financial position. Nel continues to develop the RotoLyzer® to further assess the commercial feasibility. However as there is increased uncertainty in the timeline for completing the RotoLyzer®, Nel has recognised an impairment expense even as the development continues.
Intangible assets are reviewed each quarter for impairment indicators, including market changes, technological development, order backlog and other changes that might potentially reduce the value of the assets. For goodwill, impairment tests are performed annually at year-end, and if impairment indicators are identified.
Goodwill is tested using the 'value in use' approach determined by discounting expected future cash flows. If the impairment test reveals that an asset's carrying amount is higher than its value in use, an impairment loss will be recognised.
Impairment tests are performed on three Cash Generating Units (CGUs). Goodwill and intangible assets are related to CGU Electrolyser Norway, CGU Electrolyser US and CGU Fueling.
Property, plant and equipment comprise owned and leased assets
| (amounts in NOK thousands) | Land, buildings and equipment |
Right-of-use assets | Total |
|---|---|---|---|
| Carrying amount as of 01.01.2020 | 171 829 | 84 341 | 256 170 |
| Additions | 79 709 | 1 244 | 80 953 |
| Remeasurements | 0 | 674 | 674 |
| Depreciation | -11 726 | -10 682 | -22 408 |
| Impairment | -12 807 | 0 | -12 807 |
| Currency translation differences | 17 367 | 2 267 | 19 634 |
| Carrying amount as of 30.09.2020 | 244 372 | 77 844 | 322 216 |
| USD/per | |||||
|---|---|---|---|---|---|
| (amounts in thousands) | Shareholding1) | share | USD value2) | USD/NOK | Book value |
| Carrying amount as of 01.01.20192) | 582 073 | 8.59 | 5 000 | 8.43 | 42 131 |
| Fair value adjustment 2019 | 0 | 0.00 | 0.35 | 1 771 | |
| Carrying amount as of 01.01.2020 | 582 073 | 8.59 | 5 000 | 8.78 | 43 902 |
| Fair value adjustment Q1 2020 | 0 | 0.00 | 1.73 | 8 627 | |
| Fair value adjustment Q2 2020 | 524 447 | 58.94 | -0.76 | 675 620 | |
| Fair value adjustment Q3 2020 | 0 | -47.05 | -0.26 | -513 286 | |
| Carrying amount as of 30.09.2020 | 1 106 520 | 20.48 | 22 662 | 9.48 | 214 863 |
1) Nel received 1.901 shares in Nikola Corporation per share in Nikola Motor Company Inc. as share consideration following the listing of Nikola on Nasdaq on June 4, 2020
2) Acquisition cost of USD 5.0 million.
| NOK/per | |||
|---|---|---|---|
| (amounts in thousands) | Shareholding | share | Value |
| Carrying amount as of 30.09.2020 | 11 940 000 | 0.14 | 1 728 |
| Fair value adjustment listing 21 October 2020 | 0 | 21.86 | 260 952 |
| Private placement, allocation of shares at NOK 22 per share | 398 624 | 0.00 | 8 770 |
| Fair value at price per share in private placement 21 October 2020 | 12 338 624 | 22.00 | 271 450 |
1) As of 30. September 2020, Nel held 19.90 ownership in Everfuel (11 940 000 shares of 60 000 000). The investment is recognised as an equityaccounted investee with a book value of NOK 1.7 million within 'other non-current assets' in the Q3 2020 report.
2) On October 21, Everfuel successfully placed a private placement, issuing 13 200 000 new shares at a price of NOK 22 per share. Total shares after the transaction is 73 200 000 and Nel has a shareholding of 12 338 624 shares, or 16.86%. Subsequent to the listing of Everfuel shares, the equity instrument will be presented as 'current assets' in the statement of financial position and changes in fair value within 'finance income'.
Nel discloses alternative performance measures (APMs) in addition to those normally required by IFRS. 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.
EBITDA: is defined as earnings before interest, tax, depreciation, amortisation and impairment. EBITDA corresponds to operating profit/(loss) plus depreciation, amortisation and impairment.
EBITDA margin: is defined as EBITDA divided by revenue and operating income.
Equity ratio: is defined as total equity divided by total assets.
Order backlog: is defined as firm purchase orders with agreed price, volume, timing, terms and conditions and where revenue is yet to be recognised.
Title: Nel ASA
Published date: 05.11.2020
[email protected] +47 23 24 89 50
Karenslyst allé 20, PB 199 Skøyen, 0212 Oslo, Norway
The publication can be downloaded on nelhydrogen.com
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.