Registration Form • Feb 20, 2020
Registration Form
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(A private limited liability company incorporated under the laws of Norway)
This admission document (the "Admission Document") has been prepared by Quantafuel AS (the "Company" or "Quantafuel", and together with its subsidiaries, the "Group") solely for use in connection with the admission to trading of the Company's 11,167,467 shares, each with a par value of NOK 0.01 (the "Shares") on Merkur Market (the "Admission to Trading").
The Company's Shares have been admitted for trading on the Merkur Market, and it is expected that the Shares will start trading on 20 February 2020 under the ticker symbol "QFUEL-ME".
The Merkur Market is a multilateral trading facility operated by Oslo Børs ASA. The Merkur Market is subject to the rules in the Securities Trading Act and the Securities Trading Regulations that apply to such marketplaces. These rules apply to companies admitted to trading on the Merkur Market, as do the marketplace's own rules, which are less comprehensive than the rules and regulations that apply to companies listed on the Oslo Stock Exchange and Oslo Axess. The Merkur Market is not a regulated market and is therefore not subject to the Stock Exchange Act or to the Stock Exchange Regulations. Investors should take this into account when making investment decisions.
THIS ADMISSION DOCUMENT SERVES AS AN ADMISSION DOCUMENT ONLY, AS REQUIRED BY THE MERKUR MARKET ADMISSION RULES. THIS ADMISSION DOCUMENT DOES NOT CONSTITUE AN OFFER TO BUY, SUBSCRIBE OR SELL ANY OF THE SECURITIES DESCRIBED HEREIN, AND NO SECURITIES ARE BEING OFFERED OR SOLD PURSUANT HERETO.
No shares or other securities are being offered or sold in any jurisdiction pursuant to this Admission Document. Investing in the Shares involves a high degree of risk. See section 1 "Risk factors".
________________________________________________________
Merkur Advisor SpareBank 1 Market AS
17 February 2020
This Admission Document has been prepared solely by the Company, only to provide information about the Group and its business and in relation to the admission to trading on the Merkur Market. This Admission Document has been prepared solely in the English language.
For definitions of terms used throughout this Admission Document, see Section 13 "Definitions and Glossary of Terms".
The Company has furnished the information in this Admission Document. This Admission Document has been prepared to comply with the Merkur Market Admission Rules. The Oslo Stock Exchange has reviewed and approved this Admission Document in accordance with the Merkur Market Admission Rules. The Oslo Stock Exchange has not controlled or approved the accuracy or completeness of the information included in this Admission Document, but has from the Merkur Advisor received a confirmation of the Admission Document having been controlled by the Merkur Advisor. The approval by the Oslo Stock Exchange only relates to the information included in accordance with pre-defined disclosure requirements. The Oslo Stock Exchange has not made any form of control or approval relating to corporate matters described, or referred to, in this Admission Document.
All inquiries relating to this Admission Document should be directed to the Company or the Merkur Advisor. No other person has been authorized to give any information, or make any representation, on behalf of the Company and/or the Merkur Advisor in connection with the Admission to Trading, if given or made, such other information or representation must not be relied upon as having been authorized by the Company and/or the Merkur Advisor.
The information contained herein is as of the date hereof and subject to change, completion or amendment without notice. There may have been changes affecting the Company or its subsidiaries subsequent to the date of this Admission Document. Any new material information and any material inaccuracy that might have an effect on the assessment of the Shares arising after the publication of this Admission Document and before the Admission to Trading will be published and announced promptly in accordance with the Merkur Market regulations. Neither the delivery of this Admission Document nor the completion of the Admission to Trading at any time after the date hereof will, under any circumstances, create any implication that there has been no change in the Group's affairs since the date hereof or that the information set forth in this Admission Document is correct as of any time since its date.
The contents of this Admission Document shall not be construed as legal, business or tax advice. Each reader of this Admission Document should consult its own legal, business or tax advisor as to legal, business or tax advice. If you are in any doubt about the contents of this Admission Document, you should consult your stockbroker, bank manager, lawyer, accountant or other professional adviser.
The distribution of this Admission Document may in certain jurisdictions be restricted by law. Persons in possession of this Admission Document are required to inform themselves about, and to observe, any such restrictions. No action has been taken or will be taken in any jurisdiction by The Company that would permit the possession or distribution of this Admission Document in any country or jurisdiction where specific action for that purpose is required.
The Shares may be subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable securities laws and regulations. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Investors should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time.
This Admission Document shall be governed by and construed in accordance with Norwegian law. The courts of Norway, with Oslo District Court (Nw.: Oslo tingrett) as legal venue, shall have exclusive jurisdiction to settle any dispute which may arise out of or in connection with the Admission Document.
Investing in the Company's Shares involves risks. See Section 1 "Risk Factors" of this Admission Document.
The Company is a private limited liability company incorporated under the laws of Norway. As a result, the rights of holders of the Shares will be governed by Norwegian law and the Company's articles of association (the "Articles of Association"). The rights of shareholders under Norwegian law may differ from the rights of shareholders of companies incorporated in other jurisdictions.
The members of the Company's board of directors (the "Board Members" and the "Board of Directors", respectively) and the members of the Group's senior management (the "Management") are not residents of the United States of America (the "United States"), and a substantial portion of the Company's assets are located outside the United States. As a result, it may be very difficult for investors in the United States to effect service of process on the Company, the Board Members and members of Management in the United States or to enforce judgments obtained in U.S. courts against the Company or those persons, whether predicated upon civil liability provisions of federal securities laws or other laws of the United Stated (including any State or territory within the United States).
The United States and Norway do not currently have a treaty providing for reciprocal recognition and enforcement of judgements (other than arbitral awards) in civil and commercial matters. Uncertainty exists as to whether courts in Norway will enforce judgments obtained in other jurisdictions, including the United States, against the Company or its Board Members or members of Management under the securities laws of those jurisdictions or entertain actions in Norway against the Company or its Board Members or members of Management under the securities laws of other jurisdictions. In addition, awards of punitive damages in actions brought in the United States or elsewhere may not be enforceable in Norway. The United States does not currently have a treaty providing for reciprocal recognition and enforcement of judgements (other than arbitral awards) in civil and commercial matters with Norway.
Similar restrictions may apply in other jurisdictions.
| -1 | RISK FACTORS | |
|---|---|---|
| 1.1 | Introduction | |
| 1.2 | Risks associated with the Group's business and the industry in which it operates |
|
| 1.3 | Risks related to laws, regulations and litigations | |
| 1.4 | Financial risks | |
| 1.5 | Risks related to the Shares | |
| 2 | STATEMENT OF RESPONSIBILITY | |
| 3 | GENERAL INFORMATION | |
| 3.1 | Other important investor information | |
| 3.2 | Presentation of financial and other information | |
| 3.3 | Cautionary note regarding forward-looking statements | |
| 4 | REASONS FOR THE LISTING | |
| 5 | DIVIDENDS AND DIVIDEND POLICY | |
| 5.1 | Dividends policy | |
| 5.2 | Legal and contractual constraints on the distribution of dividends | |
| 5.3 | Manner of dividends payment | |
| 6 | BUSINESS OVERVIEW | |
| 6.1 | Introduction | |
| 6.2 | History and important events | |
| 6.3 | Vision and strategy | |
| 6.4 | Group structure | |
| 6.5 | PtL business | |
| 6.6 | BtL business | |
| 6.7 | Material Agreements | |
| 6.8 | Market overview | |
| 6.9 | IPR | |
| 6.10 | Dependency on contracts, patents, licences etc | |
| 6.11 | Related Party Transactions | |
| 6.12 | Legal and arbitrational proceedings | |
| $7\overline{ }$ | SELECTED AND OTHER FINANCIAL INFORMATION | |
| 7.1 | Introduction and basis for preparation | |
| 7.2 | Summary of accounting policies and principles | |
| 7.3 | Selected statement of income | |
| 7.4 | Selected statement of financial position | |
| 7.5 | Selected statement of cash flow | |
| 7.6 | Selected statement of changes in equity | |
| 7.7 | Significant changes in the Company's financial or trading position since 30 September 2019 |
|
| 7.8 | Working capital statement | |
| 7.9 | Borrowings and financial commitments | |
| 7.10 | Grants | |
| 8 | THE BOARD OF DIRECTORS, MANAGEMENT AND CORPORATE | |
| GOVERNANCE | ||
| 8.1 | Introduction | |
| 8.2 | The Board of Directors |
| 8.3 | Management | |
|---|---|---|
| 8.4 | Brief biographies of the members of the Management | |
| 8.5 | Share incentive scheme | |
| 8.6 | Benefits upon termination | |
| 8.7 | Employees | |
| 8.8 | Corporate governance requirements | |
| 8.9 | Nomination committee | |
| 8.10 | Conflicts of interests etc | |
| 9 | CORPORATE INFORMATION AND DESCRIPTION OF SHARE CAPITAL | |
| AND SHAREHOLDER MATTERS | ||
| 9.1 | Corporate Information | |
| 9.2 | Legal structure | |
| 9.3 | Share capital and share capital history | |
| 9.4 | Ownership structure | |
| 9.5 | Authorisation to issue additional shares | |
| 9.6 | Other financial instruments issued by the Company | |
| 9.7 | Shareholder rights | |
| 9.8 | The Articles of Association | |
| 9.9 | Certain aspects of Norwegian law | |
| 9.10 | Takeover bids and forced transfer of shares | |
| 9.11 | Insider trading | |
| 10 | NORWEGIAN TAXATION | |
| 10.1 | Norwegian shareholders | |
| 10.2 | Non-Resident Shareholders | |
| 11 | SELLING AND TRANSFER RESTRICTIONS | |
| 11.1 | General | |
| 11.2 | Selling restrictions | |
| 11.3 | Transfer restrictions | |
| 12 | ADDITIONAL INFORMATION | |
| 12.1 | Admission to trading on Merkur Market | |
| 12.2 | Third-party information | |
| 12.3 | Independent auditor | |
| 12.4 | Advisors | |
| 13 | DEFINITIONS AND GLOSSARY OF TERMS |
| APPENDIX A | Articles of Association of Quantafuel as of 21 October 2019 | ||||
|---|---|---|---|---|---|
| APPENDIX B | Consolidated financial statements for the year ended 31 December 2018 (with comparable | ||||
| figures for the year ended 31 December 2017) and audited unconsolidated financial | |||||
| statements for the year ended 31 December 2017 | |||||
| APPENDIX C | Interim financial statements for the three months' period ended 30 September 2019 |
Investing in the Shares involves inherent risks. Before making an investment decision, investors should carefully consider the risk factors and all information contained in this Admission Document, including the financial information and related notes. The risks and uncertainties described in this Section 1 are the principal known risks and uncertainties faced by the Group as of the date hereof that the Company believes are the material risks relevant to an investment in the Shares. An investment in the Shares is suitable only for investors who understand the risks associated with this type of investment and who can afford a loss of all or part of their investment. The absence of a negative past experience associated with a given risk factor does not mean that the risks and uncertainties described herein should not be considered prior to making an investment decision.
If any of the risks were to materialize, individually or together with other circumstances, it could have a material and adverse effect on the Company and/or its business, financial condition, results of operations, cash flow and/or prospects, which may cause a decline in the value of the Shares that could result in a loss of all or part of any investment in the Shares. The risks and uncertainties described below are not the only risks the Company may face.
Additional risks and uncertainties that the Company currently believes are immaterial, or that are currently not known to the Company, may also have a material adverse effect on its business, financial condition, results of operations and cash flow. The order in which the risks are presented below is not intended to provide an indication of the likelihood of their occurrence nor of their severity or significance.
The risk factors described in this Section 1 "Risk factors" are sorted into a limited number of categories, where the Company has sought to place each individual risk factor in the most appropriate category based on the nature of the risk it represents. The risks that are assumed to be of the greatest significance are described first. This does not mean that the remaining risk factors are ranked in order of their materiality or comprehensibility, and the fact that a risk factor is not mentioned first in its category does not in any way suggest that the risk factor is less important when taking an informed investment decision. The risks mentioned herein could materialise individually or cumulatively.
The information in this Section 1 is as of the date of this Admission Document.
There are numerous risks associated with plant construction, including risks of delay, risks of termination of the construction contracts by third parties, the risk of need for variation orders and amendments resulting in additional need for capital and the risk of failure by key suppliers to deliver necessary equipment. Should any of these circumstances occur it may affect a project's financial performance or the loss of contracts and hence the Group's potential revenue.
The Group is currently in the process of completing its first commercial plant in Skive, Denmark (the "Skive Plant"). For the Skive Plant specifically, the Group has experienced significant time and cost overruns. No assurance can be given that no additional delays or costs will be incurred prior to commencement of production. Given that the Skive Plant is the first of its kind, there is an inherent risk that the Skive Plant may require improvements or adjustments which may delay or limit operation of the plant. Further, given that it is the first of its kind, additional constructional considerations have been made to secure safe and reliable operations. There is always a risk that unforeseen events or circumstances unknown to the Group, its partners and counterparties could materialise in a manner that puts at stake important conditions for the development and commencement of production the Skive Plant. Should any such unforeseen events occur, this may affect the operations and profitability of the Skive Plant and could hence have an adverse effect on the Company's cash flows, financial condition and on the Group's business in general.
In order to be successful in future constructions, and to avoid similar cost and time overruns, it is important that the Group is able to gather experiences gained from the construction of the Skive Plant such as a proper document control system and lessons learned documentation. However, no assurance can be given that the Company has sufficient personnel resources to gather such information and to build up an internal knowledge system, nor that such measures will be sufficient to avoid cost- and time overruns on future projects.
The Company is dependent on a limited number of third-party suppliers for key production components for its plants. This includes the delivery of pyrolysis reactor systems. Any disruption or delay to supply or increase in cost could negatively impact its business through increased costs or project delays, and no assurance can be given that the Group would be able to source alternative supplies of key production components that are compatible with the Group's design, in a timely or cost-effective manner or at all.
The Group has entered into various agreements with respect to offtake from its current and future plants. Detailed terms for any offtake from the Group's plants, including from the Skive Plant, is subject to final agreement between the relevant parties. This may include elements such as price, volume and quality of the products. It is emphasised that the price that the Group will receive from the sale of its products may vary from contract to contract and will be exposed to pricing of raw materials. No assurance can be given that the price will ensure adequate profitability for the Company.
Under the terms of the offtake agreement entered into with BASF, the Company has undertaken to deliver products of a certain quality. Similar provisions are likely to be included in any future offtake agreements with respect to the products produced by the Group. As the Skive Plant is the first of its kind, certain adjustments to the process may be required in order to be able to produce products at the predefined quality, and such adjustments can be both time and cost consuming. Problems with product quality or product performance, including any defects in the Company's products, could result in material reputational challenges, significant decrease in revenues, significant unexpected expenses and loss of market share.
The Company has a limited operating history and has of today only generated limited revenues. Since its inception, the Company has incurred significant losses, and to date, the Company has financed its operations through inter alia private placements of equity. The Company expects to continue to incur significant expenses and losses until the Skive Plant is fully operational. Substantial parts of the Company's business is in its commercialisation phase relying to some extent on products and services under development. The Company's commercial success is inter alia dependent on the successful implementation of these products and services, and to become and remain profitable, the Company must succeed in commercialising its business and technologies such that they generate revenues. This will require the Company to be successful in a range of challenging activities, and the Company may never succeed in these activities and, even if it does, may never generate revenues that are significant enough to achieve profitability.
Upon commencement of production on the Skive Plant, the Group's operations will be dependent on the supply of feedstock, i.e. plastic waste. Firstly, the successful production on the Skive Plant is dependent on the quality of plastic received from suppliers. If plastic waste is not delivered according to specifications, this could cause products to not meet pre-agreed quality and consequently the Group may be in breach of its contractual obligations. A NIR (Near Infrared) scanner have been installed on the feedstock conveyor belt, enabling removal of significantly off-spec feedstock, however, no assurance can be given that this will ensure sufficient quality on the feedstock. Also, given that the Skive Plant is the first of its kind, the Group may use some time to gain sufficient knowledge and experience together with its suppliers to secure feedstock of adequate quality. The liability for suppliers of raw materials may be limited to direct loss, and such the Group may not be able to recover loss in the event of business interruption, loss of use or revenue, or loss or damage to property or equipment.
Secondly, the Group may from time to time be subject to unpredictable supplies of feedstock, and no assurance can be given that the Group would be able to source alternative or additional supplies of raw materials in the event of feedstock shortage or that there will be sufficient and adequate storage facilities available in the event of oversupply.
Lastly, no assurance can be given that the Group will receive sufficient quantity of feedstock at an acceptable price.
Any significant delay, price adjustment, lack of quality in supplies or loss of suppliers may have a material adverse effect on the Group's business, results of operations, cash flows, financial condition and prospects.
The Company is a growth company, and as such has had limited resources to optimise its operations, rights and obligations. The contracts, rights and obligations of the Company are likely to carry a higher degree of uncertainty and risk than those of mature businesses.
The Group is heavily reliant on complex machinery for its operations and the PtL-process involves a significant degree of uncertainty and risk for the Group, both in terms of operational performance and costs. The Group's plants consist of large-scale machinery combining many components which are intended to run complex production processes. The plant components may suffer unexpected malfunctions from time to time and will be dependent on repairs and spare parts to resume operations, which may not be available in the short term. Unexpected malfunctions of the plant components may significantly affect the intended operational efficiency of the plant. Operational performance and costs can be difficult to predict and is often influenced by factors outside of the Group's control, such as scarcity of natural resources, environmental hazards and remediation, costs associated with decommissioning of machines, labour disputes and strikes, difficulty or delays in obtaining governmental permits, damages or defects in electronic systems, leaks from pipelines, industrial accidents, fire, and seismic activity and natural disasters. Should any of these risks or other operational risks materialise, it may result in the death of, or personal injury to, plant workers, the loss of production equipment, damage to production facilities, the closure of mills, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all which could have a material adverse effect on the Group's business, results of operations, cash flows, financial condition or prospects.
The Group´s daily business and business strategy are tied to its technology and know-how. The Group relies on a combination of trade secrets, confidentiality procedures and contractual provisions to protect its intellectual property rights. The Group has also registered patents / patent applications and trademarks.
The Group cannot give assurances that its measures for preserving the secrecy of its trade secrets and confidentiality information are sufficient to prevent others from obtaining such information. The Group may not have adequate remedies to preserve the trade secrets or to compensate the Group fully for its loss if its employees' or other contractor's breach their confidentiality agreements with the Group. The Group cannot give assurances that its trade secrets will provide the Group with any competitive advantage, as it may become known to or be independently developed by the Group's competitors, regardless of the success of any measures the Group may take to try to preserve confidentiality.
As of the date of this admission document, the Group owns US patent no. 9199888 and US patent no. 9856426. The patents protect a combined process for utilizing synthesis gas with low CO2 emission and high energy output. In addition, the Group has submitted patent applications in Denmark, Norway and the European Union to protect the main processing steps used at the facility in Skive. The applications concern a process for production of hydrocarbon fuels from waste plastic (the "Skive process"). Any failure to protect the intellectual property related to the Skive process may have an adverse effect on the Group´s competitive position.
The Group uses specially developed software systems at the facility in Skive. The software systems are delivered by a third party, and the Group is granted non-assignable right to use the software systems for an indefinite period of time. The use of third-party suppliers could involve the risk of proprietary information being shared. The development of the software systems is based on materials delivered by a third-party consultant, and the consultancy agreement is ambiguous on the Group´s ownership and rights to exploit the materials. However, based on an interpretation of the agreement, the Group considers the planned use to be covered.
In accordance with the Group's strategy, co-operation through various forms of partnerships and investments by third parties in part of the equity of potential SPVs established to hold operating plants have been and is envisaged to be, an important element of the Group's business structure. As is currently the case for Skive, the activities of the Group are planned to be conducted through joint ventures, associated companies and/or companies where Quantafuel is not the sole shareholder. The Group's ability to receive dividends and other payments from such companies depends not only upon such companies' cash flows and profits, but also upon the terms of agreements with the shareholders of such companies. Conflict or disagreement with such shareholders may lead to deadlock and result in the Group's inability to pursue its desired strategy and/or force it to exit from such companies. Also, agreements with such shareholders, or the virtue of not being the sole shareholder, may restrict the Group's freedom to carry out its business. Each of the parties rights and obligations under agreements with other shareholders may also be vague and subject to different understandings. There can be no assurance that the Group's partners in such companies will continue their relationships with the Group in the future, that any agreements entered into have encountered for all situations or potential conflicts between shareholders or that the Group will be able to pursue its stated strategies with respect to its joint ventures and the markets in which they operate. Furthermore, the partners in such companies may (a) have economic or business interests or goals that are inconsistent with those of the Group; (b) undergo a change of control; (c) experience financial and other difficulties; or (d) be unable or unwilling to fulfil their obligations under the joint ventures, which may materially adversely affect the Group's revenues, profitability, cash flows and financial condition.
As further set out in Sections 6.5.4 and 6.5.3, the Company has entered into agreements with BASF SE ("BASF") and Vitol S.A. ("Vitol") inter alia for contemplated future collaboration with such parties. With regard to BASF, such intention is to be included in an agreement to be entered into between the parties within 6 March 2020. No assurance can be given that a final collaboration agreement will be entered into or that a collaboration agreement will be entered into on the terms currently envisaged. If a collaboration agreement has not been reached within 6 March 2020, the EUR 10 million BASF Convertible Loan (as defined below) must be repaid at 110% of the nominal value on 1 April 2021.
The Vitol Partnership Agreement includes, and future collaboration or partnership agreements may include change of control provisions being triggered in the event where any person or group of persons acting in concert gains direct or indirect control of the Company and which will give the other party a right to terminate the agreement.
The Company's future performance will depend on the successful development, introduction and market acceptance of its business and technologies. The Company cannot give any assurance that its business or technological approach will be successful or achieve broad market acceptance on a timely basis (or at all) or that other technologies or solutions will not supplant the Company's approach. The introduction of new technologies, market acceptance of new or alternative technologies, or the emergence of new industry standards could render the Company's existing technologies obsolete or make it easier for other products to compete with the Company.
The industry in which the Group operates, sees frequent changes and developments in technology. Such changes and developments can be driven by competitors of the Company with substantial greater resources than those of the Company. The Group's technology such as its proprietary catalyst, and any further technology under development may not prove to be viable or efficient, and efforts to respond to technological innovations may require significant financial investments and resources.
Failure by the Group to respond to changes in technology and innovations may render the Group's operations noncompetitive and may have a material, negative effect on the Company's results of operation, financial condition and future prospects.
The Company is subject to environmental laws and regulations, and compliance with or breach of environmental laws can be costly, expose the Company to liability and could limit its operations. The Company is further required to obtain certain permits and approvals, from governmental authorities for each of its plants. The Company's dependency on such permits and approvals represents considerable inherent risks.
Furthermore, the Groups operations and products are exposed to changes in environmental laws and qualifications thereunder. No assurance can be given that the products produced at the Group's current or future plants will qualify as sustainable products under EU Regulations or local law going forward. Also, the classification of the Group's plants or the products produced at such plants may have an implication on third party relationships, such as the ability for the Group to obtain financial support and loans from financial institutions. For example, under the terms of the loan agreement entered into between QF Skive and Danmarks Grønne Investeringsfond, the lender may require an early redemption of the loan amount should the Skive Plant be reclassified as a waste incineration plant (Nw.: avfallsforbrenningsanlegg).
The Group is dependent on current financing arrangements, renewal of these and/or obtaining new financing agreements to fund its operations, working capital or capital expenditures. The Group cannot assure that it will be able to obtain any additional financing or retain or renew current financing upon expiry on terms that are acceptable, or at all. It is emphasised that the Convertible Loan provided by BASF will fall due for payment on 1 April 2021 (at 110% of par value) should BASF and the Company not have entered into a Collaboration Agreement (as defined below) within 6 March 2020, or fall due for payment on 1 August 2021 (at 110% of par value) should the parties not have entered into a Supplier Agreement (as defined below) within 1 August 2020.
To the extent the Group does not generate sufficient cash from operations, the Company and / or the Group may need to raise additional funds through debt or additional equity financings to execute the Group's growth strategy and to fund capital expenditures. Adequate sources of capital funding may not be available when needed or may not be available on favourable terms. The Company's ability to obtain such additional capital or financing will
depend in part upon prevailing market conditions as well as conditions of its business and its operating results, and those factors may affect its efforts to arrange additional financing on satisfactory terms. If the Group raises additional funds by issuing additional shares or other equity or equity-linked securities, it may result in a dilution of the holdings of existing Shareholders.
An increase in the Group's level of debt financing may increase financing costs and reduce the Group's potential profitability. If the Group becomes unable to service its debt when due, there will be a default under the terms of these agreements, which could result in an acceleration of repayment of funds that have been borrowed and have a material adverse effect on the Group's results of operation, cash flow, financial condition and/or prospects and in worst case lead to a insolvency. The Group's current financing arrangement include, and any future financing arrangements may also include, operational, financial and "green" covenants related to its loans and other financial commitments, demanding a certain performance of the Group and setting restrictions on the Group's freedom to operate and manage the Group's business, including change of control clauses that may be triggered outside the control of the Group.
The Group presents its financial statements in NOK. The Group currently has costs and future liabilities in DKK, EUR and USD, while the Group's revenues from the Skive Plant are likely to be in EUR. Any fluctuations in exchange rates between NOK, DKK, EUR and USD could materially and adversely affect the Group's business, results of operations, cash flows, financial condition and/or prospects. The Group does currently not have any currency hedging arrangements in place to limit the exposure to exchange rate fluctuations.
The Company has received governmental grants from Skattefunn, see further Section 7.10. Recent news articles have questioned in general whether issued grants from Skattefunn to Norwegian companies might be in defiance with the governmental grant regulations in the EEA agreement. Although there are no indications that the grants which the Company has received from Skattefunn constitute illegal governmental grants, there is, in light of recent events, a risk that the Norwegian authorities will look into the grants issued by Skattefunn.
The Company has also received financial contributions from Enova SF ("Enova") to cover parts of the Group's costs on certain projects, see Section 7.10. The general terms for contributions from Enova and the contributions letter for a specific project set out certain obligations on the recipient such as the obligation to produce schedule and funding plans and accounting reporting obligations. Furthermore, Enova may withdraw any grants (in whole or in parts) should i.e. the recipient not comply with its reporting obligations or if the projects are not completed. Although the Company is determined to comply with its obligations under the relevant contribution letters and complete the relevant projects, no assurance can be given that repayment of financial contributions will not be demanded.
Further, no assurance can be given that the Company will continue to receive governmental grants in the future.
As a company with its shares listed on Merkur Market, the Company will be required to comply with Oslo Børs' reporting and disclosure requirements for companies listed on Merkur Market. The Company will incur additional legal, accounting and other expenses in order to ensure compliance with these and other applicable rules and regulations. The Company anticipates that its incremental general and administrative expenses as a company with its shares listed on Merkur Market will include, among other things, costs associated with annual and interim reports to shareholders, shareholders' meetings, investor relations, incremental director and officer liability insurance costs and officer and director compensation. In addition, the Board of Directors and management may be required to devote significant time and effort to ensure compliance with applicable rules and regulations for companies with its shares listed on Merkur Market, which may entail that less time and effort can be devoted to other aspects of the business. Any such increased costs, individually or in the aggregate, could have an adverse effect on the Company's business, financial condition, results of operations, cash flows and prospects.
Trades in the Shares have been quoted on the NOTC (a non-regulated electronic information system owned and operated by Oslo Børs for unlisted shares), but the Shares have not been traded on any stock exchange, other regulated marketplace or multilateral trading facilities. No assurances can be given that an active trading market for the Shares will develop on Merkur Market, nor sustain if an active trading market is developed. The market value of the Shares could be substantially affected by the extent to which a secondary market develops for the Shares following completion of the Listing.
The Company may in the future decide to offer additional shares or other securities. As at the date of this Admission Document, the Board of Directors has been authorised to issue up to 3,414,961 new Shares inter alia under the Company's share option programme and for establishing new collaborations under which the shareholders pre-emptive rights may be deviated from. This represents approximately 30% of the current issued share capital and may have a material dilutive effect on the Company's shareholders.
Depending on the structure of any future fund raising, existing Shareholders may not be able to purchase or subscribe for additional equity securities. If the Company raises additional funds by issuing additional shares or other equity securities, the relative holdings and voting interests and the financial interests of existing Shareholders may be diluted.
The market price of the Shares could be subject to significant fluctuations in response to actual or anticipated variations in the Company's operating results and those of its competitors, adverse business developments, changes to the regulatory environment in which the Company operates, changes in financial estimates by securities analysts and the actual or expected sale of a large number of Shares, as well as other factors.
The Board of Directors of Quantafuel AS accepts responsibility for the information contained in this Admission Document. The members of the Board of Directors confirm that, after having taken all reasonable care to ensure that such is the case, the information contained in this Admission Document is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import of this Admission Document.
Lysaker, 17 February 2020
Svein Oscar Spieler Chairperson of the Board
Thorleif Enger Per-Anders Hjort Director Director
Director Director
Ragnar Thor Grundtvig Søegaard Ann-Christin Gjerdseth Andersen
Jim Dåtland Maximilian Walter Director Director
The Company has furnished the information in this Admission Document. No representation or warranty, express or implied, is made by the Merkur Advisor as to the accuracy, completeness or verification of the information set forth herein, and nothing contained in this Admission Document is, or shall be relied upon as a promise or representation in this respect, whether as to the past or the future. The Merkur Advisor assume no responsibility for the accuracy or completeness or the verification of this Admission Document and accordingly disclaim, to the fullest extent permitted by applicable law, any and all liability whether arising in tort, contract or otherwise which they might otherwise be found to have in respect of this Admission Document or any such statement.
Neither the Company nor the Merkur Advisor, or any of their respective affiliates, representatives, advisors or selling agents, is making any representation to any purchaser of the Shares regarding the legality of an investment in the Shares. Each investor should consult with his or her own advisors as to the legal, tax, business, financial and related aspects of a purchase of the Shares.
The Company's consolidated financial statements for the year ended 31 December 2018 have been prepared in accordance with International Financial Reporting Standards ("IFRS"), with converted (and comparable) numbers for 2017 (the "Annual Financial Statements"). The Company's unconsolidated financial statements for the year ended 31 December 2017 have been prepared in accordance with NGAAP, the Norwegian Accounting Act and NRS no. 8 (good accounting practice for small businesses), together with the Annual Financial Statements, the "Financial Statements"). The Financial Statements and are enclosed hereto as Appendix B. The Admission Document also contains financial statements for the three months' period ended 30 September 2019 (the "Interim Financial Information"), enclosed hereto as Appendix C.
The Financial Statements have been audited by RSM Norge AS, while the Interim Financial Statements are unaudited.
The Company presents the financial statements and interim financial statements in NOK (presentation currency).
Reference is made to Section 7 "Selected financial information and other information" for more information on the Company's financial statements.
In this Admission Document, the Company has used industry and market data obtained from independent industry publications, market research and other publicly available information. Although the industry and market data is inherently imprecise, the Company confirms that where information has been sourced from a third party, such information has been accurately reproduced and that as far as the Company is aware and is able to ascertain from information published by that third party, no facts have been omitted that would render the reproduced information inaccurate or misleading. Where information sourced from third parties has been presented, the source of such information has been identified.
Industry publications or reports generally state that the information they contain has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. The Company has not independently verified and cannot give any assurances as to the accuracy of market data contained in this Admission Document that was extracted from industry publications or reports and reproduced herein.
Market data and statistics are inherently predictive and subject to uncertainty and not necessarily reflective of actual market conditions. Such data and statistics are based on market research, which itself is based on sampling and subjective judgments by both the researchers and the respondents, including judgments about what types of products and transactions should be included in the relevant market.
As a result, prospective investors should be aware that statistics, data, statements and other information relating to markets, market sizes, market shares, market positions and other industry data in this Admission Document (and projections, assumptions and estimates based on such information) may not be reliable indicators of the Company's future performance and the future performance of the industry in which it operates. Such indicators are necessarily subject to a high degree of uncertainty and risk due to the limitations described above and to a variety of other factors, including those described in Section 1 "Risk factors" and elsewhere in this Admission Document.
Unless otherwise indicated in the Admission Document, the basis for any statements regarding the Company's competitive position is based on the Company's own assessment and knowledge of the market in which it operates.
This Admission Document includes forward-looking statements that reflect the Company's current views with respect to future events and financial and operational performance. These forward-looking statements may be identified by the use of forward-looking terminology, such as the terms "anticipates", "assumes", "believes", "can", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "should", "will", "would" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements are not historic facts. Prospective investors in the Shares are cautioned that forward-looking statements are not guarantees of future performance and that the Company's actual financial position, operating results and liquidity, and the development of the industry in which the Company operates, may differ materially from those made in, or suggested, by the forward-looking statements contained in this Admission Document. The Company cannot guarantee that the intentions, beliefs or current expectations upon which its forward-looking statements are based will occur.
By their nature, forward-looking statements involve, and are subject to, known and unknown risks, uncertainties and assumptions as they relate to events and depend on circumstances that may or may not occur in the future. Because of these known and unknown risks, uncertainties and assumptions, the outcome may differ materially from those set out in the forward-looking statements. For a non-exhaustive overview of important factors that could cause those differences, please refer to Section 1 "Risk factors".
These forward-looking statements speak only as at the date on which they are made. The Company undertakes no obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to the Company or to persons acting on the Company's behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this Admission Document.
As of the date of this Admission Document, the Company has approximately 750 registered shareholders. The main reasons for the Listing are:
The Company is currently in a pre-commercial phase and has not established any dividend policy to date. There can be no assurance that in any given year a dividend will be proposed or declared in the future.
In deciding whether to propose a dividend and in determining the dividend amount, the Board of Directors will take into account legal restrictions, as set out in Section 5.2 "Legal and contractual constraints on the distribution of dividends" below, as well as capital expenditure plans, financing requirements and maintaining the appropriate strategic flexibility.
The Company has not paid any dividends on its Shares during the financial years 2017 and 2018.
In deciding whether to propose a dividend and in determining the dividend amount in the future, the Board of Directors must take into account applicable legal restrictions, as set out in the Norwegian Private Limited Liability Companies Act of 13 June 1997 no. 44 (as amended) (the "Norwegian Private Companies Act"), the Company's capital requirements, including capital expenditure requirements, its financial condition, general business conditions and any restrictions that its contractual arrangements in force at the time of the dividend may place on its ability to pay dividends and the maintenance of appropriate financial flexibility. Except in certain specific and limited circumstances set out in the Norwegian Private Companies Act, the amount of dividends paid may not exceed the amount recommended by the Board of Directors.
Dividends may be paid in cash or in some instances in kind. The Norwegian Private Companies Act provides the following constraints on the distribution of dividends applicable to the Company:
Pursuant to the Norwegian Private Companies Act, the time when an entitlement to dividend arises depends on what was resolved by the General Meeting when it resolved to issue new shares in the company. A subscriber of new shares in a Norwegian private limited company will normally be entitled to dividends from the time when the relevant share capital increase is registered with the Norwegian Register of Business Enterprises. The Norwegian Private Companies Act does not provide for any time limit after which entitlement to dividends lapses. Subject to various exceptions, Norwegian law provides a limitation period of three years from the date on which an obligation is due. There are no dividend restrictions or specific procedures for non-Norwegian resident shareholders to claim dividends. For a description of withholding tax on dividends applicable to non-Norwegian residents, see Section 10 "Norwegian taxation".
Any future payments of dividends on the Shares will be denominated in the currency of the bank account of the relevant shareholder and will be paid to the shareholders through the VPS Registrar. Shareholders registered in the VPS who have not supplied the VPS Registrar with details of their bank account, will not receive payment of dividends unless they register their bank account details with the VPS Registrar. The exchange rate(s) that is applied when denominating any future payments of dividends to the relevant shareholder's currency will be the VPS Registrar's exchange rate on the payment date. Dividends will be credited automatically to the VPS registered shareholders' accounts, or in lieu of such registered account, at the time when the shareholder has provided the VPS Registrar with their bank account details, without the need for shareholders to present documentation proving their ownership of the Shares. Shareholders' right to payment of dividend will lapse three years following the resolved payment date for those shareholders who have not registered their bank account details with the VPS Registrar within such date. Following the expiry of such date, the remaining, not distributed dividend will be returned from the VPS Registrar to the Company.
This Section provides an overview of the Company's business as of the date of this Admission Document. The following discussion contains forward-looking statements that reflect the Company's plans and estimates, see Section 3.3 "Cautionary note regarding forward-looking statements" above, and should be read in conjunction with other parts of this Admission Document, in particular Section 1 "Risk factors".
Quantafuel AS was established in December 2014 and has developed a unique technology to chemically recycle mixed plastic waste into low carbon products. These products can be used to produce new plastic, other valuable chemical products or fuel.
The Group has tested and further improved the technology in a demonstration plant that was established in Sonora, Mexico in 2016, and is currently about to complete its first commercial plant in Skive, Denmark.
Quantafuel's headquarter is located at Lysaker in Norway and the Group has per February 2020 approximately 45 employees and full-time consultants.
The table below shows the Group's key milestones from its incorporation and to the date of this Admission Document:
| Date | Year | Main Events |
|---|---|---|
| 24 January | 2013 | US patent 9,199,888 awarded 01.12.15 with International Application Date 24.01.13 |
| 14 December | 2014 | Quantafuel AS established |
| 5 May | 2016 | Establishment of Quantafuel Mexico S.A. de C.V. "Quantafuel AS owning 50% of Quantafuel Mexico S.A. de C.V. (org. no. QME1604142T9), with KarlCo S.A. de C.V. owning the remaining 50%. Role of the company: Establish and operate the 10 MT/day PtL plant in Navojoa" |
| 11 July | 2016 | Establishment of Quantafuel UK Ltd "Quantafuel AS owning 50% of Quantafuel UK Ltd (org.no. 10 271 437), with Midas Group (controlled by Quantafuel AS shareholder Frank Ystenes) owning the remaining 50% Role of the company: Establish plant in UK" |
| 28 July | 2016 | Acquisition of Waste2Fuel Holding AB (now Quantafuel Sweden AB) "Acquisition of 100% of the shares in Waste2Fuel Holding AB (org.no. 556904-1162) (now Quantafuel Sweden AB) from BlueTrout AB. Waste2Fuel Holding AB owns 100% of the shares in Waste2Fuel AB (org. no. 556904-1170) (now Quantafuel AB) which was the registered owner of patent 9,199,888 until 23.01.2018 when the ownership of the patent was transferred to Quantafuel AS." |
| 3 October | 2016 | Establishment of Quantafuel Oslo AS "Establishment of the 100% owned subsidiary Quantafuel Oslo AS (org. no. 817 816 142) Role of the company: Establish and operate a planned 20 MT/day PtL pilot plant in/around Oslo. Formally the recipient of the PtL pilot plant grant from Enova of NOK 10,498,000" |
| 17 November | 2016 | Acquisition of Quantafuel CZ s.r.o. (Czech) Acquisition of 100% of the shares in Quantafuel CZ s.r.o. (org. no. 047 05 858) from BlueTrout AB as part of the settlement in the purchase of Waste2Fuel Holding AB. Purchase price for the shares set to zero, but took over responsibility for a company loan of EUR 90,000 |
| 2 December | 2016 | Establishment of Next Gen Energy S. de R.L. de C.V. "Quantafuel AS owning 50% of Next Gen Energy S. de R.L. de C.V. (org. no. 201608291128211107), with Tecnosilicatos de Mexico S.A. de C.V. owning the remaining 50% Role of the company: Establish and operate a planned 60 MT/day PtL plan in Mexico City at the site of the land-fill operated by the local partner" |
| 17 February | 2017 | Establishment of Quantafuel Denmark ApS (now Quantafuel Skive ApS). Quantafuel Denmark ApS (org. no. 38 40 16 37) established by now part-owner Hanne Risgaard on behalf of Quantafuel AS. |
| Date | Year | Main Events |
|---|---|---|
| 8 November | 2017 | "Completion of funding with current partners / owners and renaming of Quantafuel Denmark ApS to Quantafuel Skive ApS Final ownership stakes: Quantafuel AS with 76.1% and three local partners with ~8% each Role of the company: Establish and operate a 60 MT/day PtL plant in Skive, DK" |
| 8 November | 2017 | Set of agreements between Quantafuel AS in setting up the plant in Skive, DK, between the owners of Quantafuel Skive ApS and with Quantafuel Skive ApS |
| 11 November | 2017 | Innovation Norway grant awarded Quantafuel AS for assessing the situation, status and potential contribution towards plastic waste now ending up in nature |
| 23 January | 2018 | Transfer of US patent 9,199,888 from wholly owned subsidiary Quantafuel AB to Quantafuel AS, valued at NOK 454,350 |
| 23 March | 2018 | Signed framework agreement between Vitol and Quantafuel AS |
| May | 2018 | Completion of private placement raising NOK 150 million in gross proceeds at NOK 68 per share. |
| 27 July | 2018 | Closing-down of Quantafuel Mexico S.A. de C.V. Termination of all activities and liabilities of Quantafuel Mexico S.A. de C.V. and formal de-listing of Quantafuel Mexico S.A. de C.V. |
| 10 October | 2018 | Trademark of the name "Quantafuel" awarded Quantafuel AS in Norway and the EU. |
| 30 November | 2018 | Signed Framework agreement for delivery of complete pyrolysis reactor systems for the Company's plants. |
| 1 January | 2019 | Sale of 100% of the shares in Quantafuel CZ s.r.o. (Czech) to previous shareholder and MD of the company, Alan Svoboda, and the name was changed to Shinedown Services. |
| 18 February | 2019 | Completion of private placement raising NOK 150 million in gross proceeds at NOK 55 per share |
| 19 March | 2019 | Trademark of the name "Quantafuel" awarded Quantafuel AS in the USA. |
| 26 March | 2019 | Announcement of corporation with Geminor on plastic waste deliverables |
| 21 June | 2019 | Announcement of corporation with Avinor on the production of sustainable jet biofuel |
| 6 July | 2019 | Patent concerning specific polymer to fuel process steps filed in Norway 190706 and Denmark 180706, both pending. |
| 25 September | 2019 | Enters into the Investment- and Convertible Loan Agreement with BASF |
| 14 October | 2019 | Completion of capital increase by converting loan from Vitol of USD 3,253,417.20 at NOK 98 per share and 301,375 shares. |
| 31 January | 2020 | Amendment agreement to the BASF Investment and Convertible Loan Agreement entered into |
Quantafuel's strategy is to develop a generic module for chemical recycling of mixed plastic waste, to be deployed in scale on a global basis in a JV structure with strategic and financial partners. The plants will be sold to a partly owned joint venture company at a cost-plus model in an EPC (engineering, procurement and construction) strategy. Upon successful installation and production, this will provide the Company with steady income and cash flow through service agreements and dividends from the operations.
In January 2019, EU published its revised renewable directive, called RED 2, stating that recycled hydrocarbons, or Recycled Carbon Fuel will be an integrated part of Europe's future energy mix, where the recycling rate of plastic waste should become minimum 55% within 2025. The actual rate today is significantly lower, reports show that for example countries like Germany have a recycling rate as low as approximately 16%1 .
1 https://www.spiegel.de/wissenschaft/natur/plastikmuell-nur-16-prozent-werden-in-deutschland-wiederverwendet-a-1271125.html
Following this change of policy, leading market analysts, among them McKinsey2 , have stated that chemical recycling of plastic waste will become a 75 BUSD market within 11 years. Today this market is basically nonexisting.
Quantafuel has an early mover advantage within this market and aims to become a leading provider of chemical recycling of plastic waste on a global scale.
Quantafuel is the parent company of the Group. The Company currently has 6 subsidiaries and/or joint ventures of which Quantafuel Skive ApS ("QF Skive") is the only subsidiary with current operations. Please refer to Section 9.2 for a legal chart of the Group and a full overview of the Company's subsidiaries.
Based on the Company`s business model the plants will be delivered from the Company to the partly owned subsidiaries which will own and operate the plants through their own resources. The Company will however enter into service agreement ("Operation & Maintenance Support Agreement") to deliver technical support throughout the operation.
QF Skive is currently building the first PtL plant in Skive, Denmark. The plant is delivered from Quantafuel AS, with additional investments locally in infrastructure. Quantafuel currently holds 76.31% of the shares in QF Skive. The remaining shares are held by Hanne Risgaard Holding ApS (7.59%), Steen Ginnerup Holding ApS (8.06%) and Holdingselskabet af 15. April 1999 ApS (8.06%). The ownership interests in QF Skive is subject to a shareholders' agreement dated 8 November 2017 entered into on customary terms.
The overall goal of Quantafuel's Plastic-to-liquid ("PtL") technology is to chemically recycle mixed plastic waste into synthetic hydrocarbons with a maximized yield and quality. By utilizing Quantafuel's catalyst technology the release hydrocarbons are transformed into desirable fractions, too be further processed by the petrochemical industry into new plastic products or other chemical end-products or used in the fuel market.
2 Source: https://www.mckinsey.com/industries/chemicals/our-insights/no-time-to-waste-what-plastics-recycling-couldoffer?hlkid=3102ad8264e04466990ed3db847eca95&hctky=2115419&hdpid=795f24f3-879b-4f10-be56-be6d3fb508a4
The main process steps of Quantafuel's PtL plants are:
The plants also include feedstock reception system and balance-of-plant items. The latter includes thermal integration to facilitate heat recovery from the cooling demand downstream of the pyrolysis reactor and utilization of the recovered heat for the distillation column.
Quantafuel's PtL technology is able to utilize inhomogeneous waste plastic fractions of primarily polyethylene (HDPE and LDPE) and polypropylene (PP) and to some extent polystyrene (PS) and polyethylene terephthalate (PET).
Quantafuel is currently in the final stage of building its first commercial plant in Skive, Denmark. All major construction and installation works were completed by the end of Q4 2019 and the plant is currently planned to be in operation by the end of March 2020, subject to a successful mechanical complete process. At full operation, the plant will have a yearly capacity to transform 20,000 ton of plastic waste into 16,000 ton of high value products.
The Skive Plant is to be delivered from the Company to QF Skive under a turn-key contract dated 8 November 2018. The fixed contract price is USD 12 million, of which the Company has provided an interest free seller's credit of USD 3.6 to be repaid over three years after reaching full production. Furthermore, the Company and QF Skive has entered into a Management Service Agreement and an Operations & Maintenance Support Agreement, under which the Company will deliver certain assistance and services to QF Skive after commencement of production at the Skive Plant.
The Company has entered into a supplier agreement with a third party for the delivery of complete pyrolysis reactor systems for the Company's plants, under which four systems have been delivered to the Skive Plant.
A framework agreement for delivery of feedstock (i.e. plastic waste), including services related to negotiations with suppliers, transportation, invoicing etc. are to be delivered by Geminor AS. In December 2019, an annual delivery of 20,000 tonnes of waste plastic to the Skive Plant was agreed between the parties. In addition, the Company is in firm discussions with other potential local Danish plastic waste suppliers.
Regarding sale of products produced at the Skive Plant, BASF has, on certain conditions, a 4-year right and obligation to purchase and take delivery of all products from the Skive Plant according to certain further specifications, including quality requirements.
The Company entered into a framework agreement with Vitol in March 2018 (and as later amended) under which Vitol has a right, but no obligations, to acquire all or part of fuel of certain qualities and hydrocarbon production of any existing or future plant that is owned by the Company or its subsidiaries which commences production prior to March 2028 (the "Vitol Framework Agreement"). If such right is exercised with respect to any plant, the right will have a duration of 10 years and will be regulated by a separate supplier agreement.
Further, QF Skive and Vitol have entered into a separate offtake agreement for the Skive Plant (the "Skive Offtake Agreement"). This agreement inter alia regulated Vitol's right to purchase 100% of the fuel produced at the Skive Plant from the commencement of production.
Upon the Company signing the BASF Investment and Convertible Loan Agreement in September 2019, and as further described below, Vitol has waived its rights and obligations under the Vitol Framework Agreement and the Skive Offtake Agreement, which are in in conflict with the signature and/or full performance and implementation of the BASF Investment and Convertible Loan Agreement and the intention set out therein to execute the envisaged BASF Supplier Agreement and BASF Collaboration Agreement, on certain conditions, including:
The Vitol Framework Agreement includes a change of control provision regarding the Company, under which Vitol may terminate the agreement where any person or group of persons acting in concert gains direct or indirect control of Quantafuel (if not preapproved by Vitol, such approval not to be unreasonably withheld).
On 25 September 2019, the Company entered into an agreement with BASF with a view to establish a collaboration to develop and commercialise technology and production (as amended on 31 January 2020, the "BASF Investment and Convertible Loan Agreement"). As part of the agreement, BASF's wholly owned subsidiary, BASF Antwerpen N.V. has invested a total of EUR 20,000,000 in the Company of which EUR 10,000,000 has been invested through a private placement at a share price of NOK 118 per share (the "BASF Investment") and EUR 10,000,000 has been invested as a convertible loan (the "BASF Convertible Loan") as further described in Section 7.9 below.
The parties have agreed to negotiate in good faith to establish a collaboration for the joint development and commercialisation of the technology to produce the Product to produce chemical feedstock (the "BASF Collaboration Agreement"). It is envisaged that the term of the BASF Collaboration Agreement shall be 10 years from signing. If the BASF Collaboration Agreement has not been entered into within 6 March 2020, the BASF Convertible Loan shall be repaid at 110% of the nominal value within 1 April 2021.
Furthermore, under the terms of the BASF Investment and Convertible Loan Agreement, BASF has a right of first refusal to purchase and take all volumes of liquid hydrocarbon products produced from plastic waste from the Skive Plant, and subject to final agreement, BASF shall purchase and take all products from the Skive Plant that satisfy an agreed specification for a minimum term of four years after commercialisation. Preliminary quality specifications and fixed price apply for the initial volumes of products produced at the Skive Plant. For subsequent production volumes, the parties shall agree on the final quality specifications and price formula in in a separate agreement before 1 August 2020 (the "BASF Supplier Agreement"). If the BASF Supplier Agreement has not been entered into within 1 August 2020, the BASF Convertible Loan shall be repaid at 110% of the nominal value within 1 August 2021.
In addition to the PtL technology, the Company has also entered into a purchase agreement with Avinor AS for the establishment of a small biogas-to-liquid ("BtL") pilot plant in Norway aiming at converting biomass to biojet fuel. The development of Quantafuel's jet biofuel-technology was already started in lab-scale in 2007. Since then, the Company has developed a concept for a full and complete BtL process. The project work package 1 has started, which includes catalyst stress tests and gasifier principal design, and requirements for downstream syngas cleaning.
It is currently planned that this project will be included in a subsidiary of the Company to be incorporated and that the project will be partly financed by prepaid amounts from Avinor AS as well as Enova grants.
Neither the Company nor any other member of the Group has entered into any material contracts outside the ordinary course of business for the two years prior to the date of this Admission Document. Further, the Group has not entered into any other contract outside the ordinary course of business that contains any provision under which any member of the Group has any obligation or entitlement that is material to the Group as of the date of this Admission Document.
Quantafuel's plants use plastic waste as feedstock which are processed and recycled to various fractions of carbon fuels (C6 - C28) and Naphtha, the latter being an input for the petrochemical industry. Quantafuel is thus exposed to various markets and risks for their feedstock and products. This chapter briefly describe the key features of these various markets.
Plastic is widely used globally in countless applications and products. About 8% of the world's oil and gas production goes into producing more than 300 million tons of plastics annually. Additionally, plastic production is growing fast with about USD 186bn invested in 318 new plastic production projects over the last 8 years.
Plastic waste is a huge and growing environmental problem, as well as a wasted resource. In Europe alone about 27 million tonnes of plastic waste is generated annually, of which only one third is recycled. Traditionally, a lot of waste has been deposited in landfills, but this is now strongly discouraged, and advanced economies are moving towards sorting, reusing, recycling and energy recovery. EU has set a binding target that no more than 10 percent of household waste will be deposited in landfills by 2030.
Quantafuel's plant in Skive, Denmark will produce ~67% Diesel, ~18% Naphtha, ~6% Natural gas and a heavy oil fraction of ~9%. These products are the same supplied by the conventional oil and gas industry, meaning that Quantafuel is exposed to the world's oil and gas commodity markets.
Oil is a commodity with a well-developed global market. The prices are determined on the world's leading commodities exchanges, with New York Mercantile Exchange (NYMEX) in New York and the Intercontinental Exchange ("ICE") in London as the most important markets for the determination of global oil prices. Relative oil price differentials are primarily determined by the weight of the oil and its sulphur content, with WTI, the main benchmark for NYMEX, as the lightest and sweetest (lowest in sulphur) of the main benchmarks in oil pricing. Brent crude, the main benchmark for ICE, is slightly heavier.
Because gas is not easily transported, gas prices are not determined by a world-wide market. Gas price volatility is also significantly higher than the oil price volatility, primarily due to the fact that gas is more difficult to store than oil. Gas prices are therefore immediately affected by supply and demand within pipeline networks. Hence, regional gas prices generally correlate less than the prices for various types of oil. Gas prices are also affected by the price of other energy sources, such as the oil price, electricity and materials.
Although Quantafuel in principle is exposed to the global oil and gas markets, the Company may achieve offtake conditions more favourable than regular "market terms" as regulators and customers may recognise the positive externalities of Quantafuel's production process compared to conventional oil and gas production.
The Group registered the word-mark "QUANTAFUEL" in Norway, EU, China, Mexico and the US. In addition, the Group holds the following patents and patent applications:
| Title | Country | Registration no. / Application no. |
Status |
|---|---|---|---|
| Combined processes for utilizing synthesis gas with low CO2 | United states of | ||
| emission and high energy output | America | 9199888 | In force |
| Combined processes for utilizing synthesis gas with low CO2 | United states of | ||
| emission and high energy output | America | 9856426 | In force |
| Production of hydrocarbon fuels from waste plastic | Denmark | PA201870470 | Pending |
| Production of hydrocarbon fuels from waste plastic | Norway | 20180957 | Pending |
| Production of hydrocarbon fuels from waste plastic | WIPO | PCT/EP2019/068143 | Pending |
The Group is required to obtain various governmental permits and approvals for each of its plants, including inter alia construction permits, fire safety approvals and emission approval licenses. As of the date of this Admission Document, all permits and licences have been obtained for the Skive Plant, except for explosion safety approval and wastewater approvals which will be obtain upon completion of construction. QF Skive are in dialogue with the relevant authorities. To obtain required approvals and permits are necessary to commence construction, production and operations on any of the Group's current or future plants.
Except for the above, the Group's existing business is not dependent on any patents, licenses or other intellectual property.
Except from the BASF Investment and Convertible Loan Agreement and the Vitol Framework Agreement as further described in Section 6.5.4 and 6.5.3 respectively, it is the Company's opinion that the Group's existing business and profitability are not dependent upon any contracts.
Below is a summary of the Group's related party transactions for the periods covered by the historical financial information included in this Admission Document as Appendix B and up to the date of this Admission Document.
For further information on related party transactions of the Group, please refer to the Financial Statements (note 2 (Construction Contracts) note 10 (intercompany balances with Group companies and associates) and note 16 Transactions with close associates), included in this Admission Document as Appendix B.
As at 30 September 2019, the Company had receivables in the total amount of NOK 29,873,921 towards its subsidiary QF Skive. The amount of such receivable was NOK 6,991,172 as of 31 December 2018. In addition, the current outstanding amount under the Skive Seller's Credit is currently USD 3.6 million and USD 5.4 million of the purchase price under the sale and purchase agreement for the Skive Plant is outstanding.
In addition to his annual salary, the Company's CEO Kjetil Bøhn received a one-time bonus of NOK 1,427,695 in 2018.
An agreement was on 2 July 2018 entered into between the Company and chairman Oscar Spieler, under which Mr. Spieler delivers consultancy services to the Company for a monthly remuneration of NOK 25,000 / month in addition to his board remuneration. Year to date 2019, NOK 250,000 has been paid to Mr. Spieler under such agreement, and NOK 172,619 was paid for the year ended 31 December 2018. He was also granted 70,000 options at a strike price of NOK 68 under the above described agreement. Further, Mr. Spieler was granted 70,000 options at a strike price of NOK 46 on 19 October 2018. The terms of these options are further described in section 8.5.
The Company has entered into a partnership agreement with Midas Investment Group Ltd. for the joint shareholding (50%/50%) in Quantafuel UK. MiDas Investment Group Ltd. is an affiliated company of Midas Capital AS, being the holder 2.71% of the Shares in the Company as at the date of this Admission Document. There are currently no activities in Quantafuel UK.
Neither the Company, nor any other company in the Group is, nor has been, during the course of the preceding 12 months involved in any legal, governmental or arbitration proceedings which may have, or have had in the recent past, significant effects on the Company's and/or the Group's financial position or profitability, and the Company is not aware of any such proceedings which are pending or threatened.
The Company's audited consolidated financial statements as of and for the year ending 31 December 2018 have been prepared in accordance with IFRS and includes comparable (and converted) numbers as of and for the year ending 31 December 2017 (the Annual Financial Statements). The Company's audited unconsolidated financial statements as of and for the year ending 31 December 2017 have been prepared in accordance with NGAAP, the Norwegian Accounting Act and NRS no. 8 (good accounting practice for small businesses) (together with the Annual Financial Statements, the "Financial Statements"). The Financial Statements have been audited by RSM. And are included in Appendix B to this Admission Document.
The Company's unaudited consolidated interim financial statements as of and for the three months' period ended 30 September 2019 (the Interim Financial Statements) are included in Appendix C to this Admission Document.
The selected financial information presented in Section 7.2 to Section 7.6 below has been derived from the Annual Financial Statements and the Interim Financial Statements, and should be read in connection with, and is qualified in its entirety by reference to, the Annual Financial Statements and the Interim Financial Statements included herein as Appendix B and Appendix C, respectively.
For information regarding accounting policies and the use of estimates and judgments, please see note 1 in the Annual Financial Statements, incorporated herein as Appendix B.
The table below sets out selected data from the Company's unaudited consolidated interim income statement for the three months' period ended 30 September 2019, and from the consolidated audited statement of income for the years ended 31 December 2018 and 2017:
| Three months ended 30 September |
Year ended 31 December |
||
|---|---|---|---|
| 2019 | 2018 | 2017 | |
| NOK | (unaudited) | (audited) | (audited) |
| Revenue | - | 102 285 | 2 187 491 |
| Other income | 496 761 | 121 365 | 1 457 274 |
| Operating revenue | 496 761 | 223 650 | 3 644 765 |
| Cost of sales | -1 586 404 | -167 689 280 | -3 747 620 |
| Salaries and personnel costs | -49 746 898 | -22 505 787 | -11 225 226 |
| Depreciation and amortisation | -103 911 | -596 127 | -818 196 |
| Other operating expenses | -14 378 116 | -12 822 661 | -17 193 702 |
| Total operating expenses | -65 815 329 | -203 613 854 | -32 984 744 |
| Operating profit (or loss) | -63 318 568 | -203 390 204 | -29 339 979 |
| Interest income (1) Income from subsidiaries and other group entities |
- - |
226 672 - |
34 282 - |
| Exchange currency gains/loss | -13 375 251 | -2 529 738 | 225 662 |
| Interest expense (1) | -2 221 356 | -3 810 399 | -1 555 354 |
| Other financial expenses (1) | -7 690 191 | -9 275 128 | -3 470 613 |
| Net financial income / expense (-) | -23 286 798 | -15 388 593 | -4 766 024 |
| -218 778 797 -34 106 003 |
|---|
| 843 313 38 871 |
| -217 935 484 -34 067 132 |
| - - |
| 727 063 34 844 |
| 217 208 421 34 032 288 |
| -34 067 132 -217 935 484 |
| -92 343 -99 004 |
| -218 027 827 -34 166 136 |
The table below sets out selected data from the Company's unaudited consolidated interim balance sheet as at 30 September 2019, and from the consolidated audited statement of financial position as at 31 December 2018 and 2017:
| As of 30 September | As of 31 December | ||
|---|---|---|---|
| 2019 | 2018 | 2017 | |
| NOK | (unaudited) | (audited) | (audited) |
| Assets | |||
| Goodwill | - | - | |
| Other intangible assets | 18 181 009 | 9 208 867 | 560 920 |
| Deferred tax asset | - | - | |
| Total intangible assets | 18 181 009 | 9 208 867 | 560 920 |
| Property, plant and equipment | 181 910 766 | 38 732 466 | 25 302 920 |
| Investments in Associates | - | - | |
| Other non-current receivables | 3 244 691 | 3 261 584 | - |
| Total financial non-current assets | 3 244 691 | 3 261 584 | - |
| Total non-current assets | 203 336 466 | 51 202 918 | 25 863 840 |
| Accounts receivable | - | 913 889 | 619 561 |
| Other receivables | 12 951 987 | 17 935 491 | 13 598 478 |
| Total receivables | 12 951 987 | 18 849 380 | 14 218 039 |
| Bank deposits, cash etc. | 40 419 784 | 86 052 946 | 21 339 852 |
| Total current assets | 53 371 771 | 104 902 326 | 35 557 892 |
| Total assets | 256 708 236 | 156 105 243 | 61 421 732 |
| Equity | |||
| Share capital | 102 966 | 72 679 | 40 604 |
| Premium reserve | 439 237 078 | 235 368 187 | 41 925 839 |
|---|---|---|---|
| Uncovered loss (2) | -359 253 917 | -270 177 512 | -52 587 598 |
| Total equity | 80 086 127 | -34 736 646 | -10 621 155 |
| Minority interests | 9 765 502 | 727 063 | - |
| Total equity | 89 851 629 | -34 009 583 | -10 621 155 |
| Liabilities | |||
| Deferred tax | - | - | |
| Loans to financial institutions | 16 795 978 | 1 095 | 642 |
| Other non-current liabilities | 13 059 401 | 13 565 566 | |
| Total non-current liabilities | 16 795 978 | 13 060 496 | 13 566 208 |
| Accounts payable | 31 414 284 | 18 607 885 | 11 287 879 |
| Trade, other payables and provision | 24 200 211 | ||
| Finance debt | |||
| Other current liabilities | 94 446 135 | 158 446 447 | 47 188 800 |
| Total current liabilities | 150 060 631 | 177 054 332 | 58 476 679 |
| Total liabilities | 166 856 608 | 190 114 828 | 72 042 888 |
| Total equity and liabilities (1) Shareholders' equity in interim reporting |
256 708 237 | 156 105 245 | 61 421 732 |
(2)Retained earnings in interim reporting
The table below sets out selected data from the Company's unaudited consolidated cash flow statement for the three months' period ended 30 September 2019, and from the consolidated audited cash flow statement for the years ended 31 December 2018 and 2017:
| For the three months ended 30 September |
For the year ended 31 December |
||
|---|---|---|---|
| NOK | 2019 (unaudited) |
2018 (audited) |
2017 (audited) |
| Cash flow from operating activities | |||
| Net income/loss (-) before tax | -35 429 536 | -218 778 796 | -34 106 003 |
| Depreciation and amortization | 50 561 | 596 127 | 818 196 |
| Adjustments to net income | -4 706 994 | 805 226 | 30 611 781 |
| Adjustments to Accrued expenses | 37 335 445 | 84 719 935 | 1 364 445 |
| Changes in inventories, receivables and payables | -6 257 977 | 7 492 311 | |
| Changes in other accruals | 5 420 311 | -2 450 796 | 693 082 |
| Net cash flow from operating activities | -3 588 190 | -134 894 813 | 6 873 812 |
| Cash flow from investment activities | |||
| Investments in subsidiaries | - | - | - |
| Net investments in tangible fixed assets | -63 131 606 | -21 803 794 | -25 008 874 |
| Investments in intangibles | -3 213 518 | -75 142 | 705 268 |
| Net cash flow from investment activities | -66 345 124 | -21 878 937 | -24 303 606 |
| Cash flow from financing activities | |||
| Dividends paid | - | - | |
| Capital placement | 29 534 751 | 177 304 858 | 17 755 445 |
| Net proceeds from borrowings | -25 917 300 | 44 181 985 | 13 565 566 |
| Other cash flows from financing activities | 9 317 292 | ||
|---|---|---|---|
| Net cash flow from financing activities | 12 934 743 | 221 486 843 | 31 321 011 |
| Effect of exchange rate changes | -139 596 | ||
| Net change in cash and cash equivalents | -57 138 167 | 64 713 093 | 13 891 217 |
| Cash and cash equivalents at beginning of period | 97 557 951 | 21 339 852 | 7 448 635 |
| Cash and cash equivalents at end of period | 40 419 784 | 86 052 946 | 21 339 852 |
Changes in equity is presented in the equity note in the financial statements as of and for the year ending 31 December 2018 and 2017. An overview is included below:
| Issued capital | Share premium | Retained earnings | Total equity | |
|---|---|---|---|---|
| Equity as of 1 January 2017 | 38 156,00 | 40 867 059,00 | (31 103 922,00) | 9 801 293,00 |
| Capital increase | 2 448,00 | 1 058 779,00 | - | 1 061 227,00 |
| Equity as of 31 December 2017 | 40 604,00 | 41 925 838,00 | (52 587 597,00) | (10 621 155,00) |
| Equity as of 1 January 2018 | 40 604,00 | 41 925 838,00 | (52 587 597,00) | (10 621 155,00) |
| Capital increase 5 June 2018 | 22 060,00 | 149 985 940,00 | - | 150 008 000,00 |
| Capital increase 6 August 2018 | 10 015,00 | 40 852 409,00 | - | 40 862 424,00 |
| Equity at 31 December 2018 | 72 679,00 | 235 368 187,00 | (270 177 512,00) | (34 009 583,00) |
On 25 September 2019, the Company signed the BASF Investment and Convertible Loan Agreement as further described in Section 6.5.4 above, and as approved by the general meeting on 7 October 2019. The EUR 10 million Convertible Loan was disbursed on 24 October 2019, and the share capital increase pertaining to the EUR 10 million BASF Investment was registered with the Norwegian Register of Business Enterprises on 15 November 2019. The BASF Investment and Convertible Loan Agreement was subsequently amended on 31 January 2020.
On 7 October 2019, the Company further announced that Vitol had agreed to convert the then outstanding debt owed to Vitol in the aggregate amount of USD 3,253,417.20 (including accrued interest) at a price per share of NOK 98.00. The subscription price of NOK 98.00 was based on the price of the Company's shares on the NOTC prior to the notice of the annual general meeting granting the board authorisation. The loan from Vitol was originally a short term loan disbursed to the Company in connection with the entering into of the Vitol Framework Agreement, secured inter alia by a share pledge over the Company's shares in QF Skive, and which fell due for payment in April 2019. As at the date of this Admission Document, the share pledge has not yet been released.
The Company is of the opinion that the working capital available to the Group is sufficient for the Group's present requirements, for the period covering at least 12 months from the date of this Admission Document.
Except for the BASF Convertible Loan, the facility agreement entered into with Danmarks Grønne Investeringsbank and the guarantees provided by the Company and as described below, the Group has no interestbearing debt with banks or credit institutions and no significant liabilities, and no debt financing is planned as of the date of this Admission Document.
The following key terms of the BASF Convertible Loan are set out in the BASF Investment and Convertible Loan Agreement (as amended):
The BASF Convertible Loan was issued by the Board of Directors on 7 October 2019, based on an authorisation to the Board of Directors granted by the extraordinary general meeting on 7 October 2019, and took effect from the registration of the authorisation in the Register of Business Enterprises on 15 October 2019.
QF Skive has entered into a loan agreement with Danmarks Grønne Investeringsfond as part of the financing of the Skive Plant. The loan has a limit of DKK 53 million of which DKK 13 million has been disbursed. The remaining DKK 40 million is to be drawn at the commencement of operation of the Skive Plant, of which DKK 15 million will be held in deposit (the "DGI Loan").
The DGI Loan is subject to customary financial covenants, including QF Skive's obligation from ultimo 2020 to have a net debt-to-EBITDA ratio of no higher than 3 and a debt service coverage ratio of no lower than 2. Further, the interest rate for the DGI Loan is 8.18% p.a.
In the event of a substantial change of ownership in QF Skive or its assets without the prior approval from Danmarks Grønne Investeringsfond, Danmarks Grønne Investeringsfond has the right to demand repayment of the DGI Loan. Substantial change of ownership includes direct and indirect transfer of (i) minimum 25% of QF Skive's capital investment, (ii) minimum 25% of the financial rights to the capital investment of QF Skive, (iii) the controlling interest in QF Skive, or (iv) QF Skive's assets (including ownership of subsidiaries) which are not in the ordinary course of business and where the transferred amount is higher than the amount of the DGI Loan.
Parts of the DGI Loan is inter alia secured by pledge over trade receivables, inventories and operating equipment. In addition, the Company has provided a guarantee (Nw.: selvskyldnergaranti) for the fulfilment of all of QF Skive's obligations under the loan agreement, including payment of the performance fee (as described below).
In addition to interest, Danmarks Grønne Investeringsfond is entitled to a one time performance fee from QF Skive, calculated on the basis of the accumulated EBITDA of QF Skive in the financial years 2019 – 2022. Such performance fee shall not exceed DKK 7 million.
The Company (as Lender) and QF Skive entered into an agreement on 28 November 2018, under which, the Company shall make available to QF Skive a credit facility in an aggregate amount of DKK 25 million. The amount of the yearly loans (limited to the period from 2019 – 2023) are calculated on the basis of the deficit of QF Skive for the preceding year as reflected in its audited financial statements (subtracted the expected deficits of DKK 3 million and DKK 1 million in 2019 and 2020, respectively). The debt (meaning the aggregate sum of the loans provided) will become due for repayment by QF Skive upon approval of the audited annual accounts for 2022, and shall, if the accumulated deficits for the financial years 2018 – 2022 is negative either be (i) repaid as shareholder contribution to QF (no shares to be issued) or (ii) forgiven. Any part of the debt not settled as described, shall be repaid to the Company in cash. The loans are interest free.
The Company has provided an irrevocable and unconditional parent company guarantee for the due and punctual performance by any of its subsidiaries' present or future obligations to make payment of monies (including, but not limited to, the obligation to make payment of any damagers following breach of contract or otherwise) under inter alia any offtake agreements entered into under the Vitol Framework Agreement (as further described in Section 6.5.3). As at the date of this Application, no such payment obligations exist.
The Company has guaranteed for the payment obligations of QF Skive under a lease agreement entered into between Steen Ginnerup Ejendomme ApS and QF Skive with a yearly rent of approximately DKK 4.2 million. The Company has guaranteed for the payment obligations of QF Skive until 31 December 2021. The lease agreement is entered into for an initial period of 15 years upon which the agreement may be terminated by either of the parties upon a 12 months' prior written notice.
The Group has been granted the following funding from Enova:
In addition, Quantafuel has received four grants from SkatteFunn of which two projects are currently ongoing.
The General Meeting is the highest decision-making authority of the Company. All shareholders of the Company are entitled to attend and vote at General Meetings and to table draft resolutions for items to be included on the agenda for a General Meeting.
The overall management of the Company is vested with its board of directors (the "Board of Directors", and each of the members thereof, a "Board Member") and its executive management team (the "Management"). In accordance with Norwegian law, the Board of Directors is responsible for, among other things, supervising the general and day-to-day management of the Company's business ensuring proper organization, preparing plans and budgets for its activities ensuring that the Company's activities, accounts and assets management are subject to adequate controls and undertaking investigations necessary to perform its duties.
The Management is responsible for the day-to-day management of the Company's operations in accordance with Norwegian law and instructions set out by the Board of Directors. Among other responsibilities, the Company's Chief Executive Officer (the "CEO"), is responsible for keeping the Company's accounts in accordance with existing Norwegian legislation and regulations and for managing the Company's assets in a responsible manner. In addition, the CEO must, according to Norwegian law, brief the Board of Directors about the Company's activities, financial position and operating results at a minimum of one time per month.
The Company's articles of association (the "Articles of Association") provide that the Board of Directors shall comprise between three and eight board members, as elected by the Company's shareholders in an ordinary or extraordinary general meeting (as applicable).
The Company's registered business address, Vollsveien 13H, 1366 Lysaker, serves as business address for the members of the Board of Directors in relation to their directorship in the Company.
The table below sets out the names of the current Board Members.
| Name | Position | Served since | Term expires |
|---|---|---|---|
| Mr. Svein Oscar Spieler | Chairperson | 21 June 2019 | Next AGM |
| Mr. Thorleif Enger | Director | 21 June 2019 | Next AGM |
| Mr. Per-Anders Hjort | Director | 21 June 2019 | Next AGM |
| Mr. Ragnar Thor Grundtvig Søegaard | Vice-Chairperson | 21 June 2019 | Next AGM |
| Mrs. Ann-Christin Gjerdseth Andersen | Director | 21 June 2019 | Next AGM |
| Mr. Jim Dåtland | Director | 21 June 2019 | Next AGM |
| Mr. Maximilian Walter | Director | 7 October 2019 | Next AGM |
Set out below are brief biographies of the Board Members, including their managerial expertise and experience, in addition to an indication of any significant principal activities performed by them outside of the Company.
Oscar Spieler was previously CEO Golar LNG management and has experience as CEO of Frontline Management, Sea Production. Mr Spieler has previous Board experience from Jasper Investments, Archer and North Atlantic Drilling and are currently chairman in Energy Drilling LTD. Mr Spieler hold a MSc in Engineering from Norwegian University of Science& Technology within Naval Architecture.
Dr. Thorleif Enger was CEO of Yara International. Dr. Enger was the EVP of Hydro Oil and Gas before taking over the responsibility for Hydro Agri, which was demerged to create Yara in 2004. Dr. Enger has been president of the International Fertilizer Industry Association, and has been a chairman or non-executive director of several boards, including Telenor, Spring Energy, HitecVision, FMC Technologies and Marine Harvest and several others. Dr. Enger is educated at the University of Colorado where he earned his PhD in Structural Engineering.
Mr. Per-Anders Hjort was CEO of DSV Miljø after serving as CEO of SITA UK and President of Miljøservice. Mr. Hjort has board experience from Norsk Gjenvinning, SITA Sweden and Suez Environment and several others. Mr. Hjort is educated as a Geologist from the University in Gothenburg.
Ragnar Søegaard is the CEO of Clean Energy Group, which is developing a 400 MW hydropower plant in Georgia, and holds several board positions in Norway. Mr. Søegaard has more than 20 years of experience in the power sector including as CFO of E-CO, the second largest power company in Norway, and CEO of Viken Fjernvarme. Mr. Søegaard is also a professor at the Asian Institute of Technology in Bangkok. Mr. Søegaard is a Norwegian citizen living in Oslo.
Ms Ann-Christin Andersen is an executive with more than 30 years' experience from the oil&gas industry. She has been Chief Digital Officer, Managing Director, and held SVP/Vice President roles for Projects and Products. She has served as chair and non-executive director of several boards the last decades, and in now on the board of Rotork Plc, Quantafuel and Glitre Energi. Ann Christin also works as a strategic advisor in her new start-up 4ADA AS. Ann-Christin has a Bachelor degree with 1st Class Honors in Offshore Electrical Engineering from Heriot Watt University, UK and an Executive MBA with Honors at IMD University in Lausanne, Switzerland.
Mr. Jim Dåtland is CFO and Investment Director at the family office of T.D. Veen AS. He has a significant corporate- and capital markets experience from various positions in stock exchange listed offshore drilling companies including Seadrill Ltd. Mr. Dåtland holds a master's degree in finance from Norwegian School of Economics (NHH) and is a Norwegian citizen based in Stavanger, Norway.
Dr. Maximilian Walter is SVP of BASF's Global Technology Petrochemicals department. He has quite extensive experience in operations of petrochemical plants. In his operational career his focus was to enhance performance of plants like steamcrackers and synthesis gas. He has been with BASF since 1990. He holds a Ph.D from Technology University in Aachen, Germany. He is citizen of Germany and lives in Neustadt/ Germany.
| Name | Position | Shares | Options |
|---|---|---|---|
| Mr. Svein Oscar Spieler | Chairperson | 180,860(1) | 140,000 |
| Mr. Thorleif Enger | Director | 12,930(2) | 8,000 |
| Mr. Per-Anders Hjort | Director | - | 8,000 |
| Mr. Ragnar Thor Grundtvig Søegaard | Vice-Chairperson | 54,203(3) | 20,000 |
| Mrs. Ann-Christin Gjerdseth Andersen | Director | - | 8,000 |
| Mr. Jim Dåtland | Director | - | 8,000 |
| Mr. Maximilian Walter | Director | - | - |
(1) 63,843 Shares directly held and 117,017 Shares held through SOS Shipping AS, in which Mr. Speiler has 60% ownership. (2) Shares held through Thoeng AS
(3) Shares held through RS Consult AS
The Company has entered into consultancy agreements with Board Members Oscar Spieler and Per-Anders Hjort, under which they deliver consultancy services to the Company. Consequently, they are not considered as being independent of the Company's management. Maximilian Walter is elected to the Board of Directors as a representative of BASF.
Other than as described above, all of the Board Members are considered as independent of the Management, larger shareholders and material business contacts.
The Company has established an audit committee currently consisting of Ragnar Thor Grundtvig Søegaard and Jim Dåtland.
As of the date of this Admission Document, the Company's senior management team consists of the following persons:
| Name | Position | Employed since | Shares | Options(5) |
|---|---|---|---|---|
| Kjetil Bøhn | CEO | December 2014 | 443,205(1) | 60,000 |
| Jens Petter Broby | CFO(2) | 1 January 2019 | 6,364 | 20,000 |
| Bjørn Arild Dahlen | CTO | 1 November 2018 | 5,000 | 25,000 |
| Olav Stadaas(3) | Plant Development Director | November 2018 | 8,000 | 20,000 |
| Thomas Steenbuch Tharaldsen(4) | CSO | 1 September 2019 | 30,000 | 27,500 |
| Winifred Patricia Johansen | CCO(6) | 1 October 2019 | 68 | 10,000 (7) |
(1)Shares held through KB Management
(4)CCO from 2017 to October 2019
(5)Please refer to Section 8.5 for a description of the terms of options
(6) Chairperson of the Board of QF Skive
(7) Under the terms of the employment agreement, Mrs. Johansen has a right to receive 10,000 additional options after 12 months employment.
The Company's registered business address, Vollsveien 13H, 1366 Lysaker, serves as business address for the members of the Management in relation to their position with the Company.
(2) Board member QF Skive
(3) Board member QF Skive
Kjetil Bøhn is the founder of Agrinos AS, a leading biology company within the agricultural sector with 150 employees in 10 countries. He was previously CEO and Vice Chairman of the Board of the company. Mr. Bøhn has been an entrepreneur for 15 years, and holds a Master's degree from the Norwegian School of Economics in Bergen. Mr. Bøhn has extensive international experience from several board positions in both Norwegian and international companies. Mr. Bøhn is a Norwegian citizen living in Oslo.
Jens Petter Broby has more than 20 years of experience from finance positions within the oil & gas industry, mainly in start-up and growth companies. His experience includes positions as CFO in Sea Production, VP Finance in Aquamarine AS and VP Project Service in EMAS AMC. Mr. Broby holds a Master`s degree from Norwegian School of Economics. Mr. Broby is a Norwegian citizen living in Oslo.
Bjørn Arild Dahlen, CTO, holds a MsD (siv. ing.) from the Norwegian University of Science and Technology (NTNU). Mr. Dahlen has 20 years of experience in global management of project execution, engineering, procurement and construction of large-scale industrial projects. Mr. Dahlen is a Norwegian citizen living in Oslo.
Olav Stadaas, Plant Development Director, has +30 years of experience within Technology and Business Development, Process Engineering and Project execution within aluminium in Hydro, automotive and oil & gas in Aker Solutions. Mr. Stadaas holds a MSc in Process Engineering from NTNU. Mr. Stadaas is a Norwegian citizen living in Oslo.
Thomas Steenbuch Tharaldsen, Chief Strategic Officer, has extensive experience from the biofuels markets. He has previously worked on introducing second generation synthetic alternative fuels and biofuels in Norway for road transport and industrial heating applications. He contributed to and led the introduction of the first 100% renewable fuel stations in Norway and contributed to establishing the first marine vessels fully operated on renewable synthetic fuels. Thomas has a degree in management and strategy from the Norwegian Business School and experience in commercial law from the University of Oslo. Mr. Tharaldsen is a Norwegian citizen living in Oslo.
Winifred Patricia Johansen, Chief Commercial Officer, has extensive international commercial and technical experience. She has previously worked with sales, business development and technical validation of subsea control umbilicals. She has also worked with product development in the automotive sector. Winifred holds a master's degree in mechanical engineering from the Norwegian University of Science and Technology (NTNU), a Master degree in Oil and Gas Management from Robert Gordon University, Aberdeen and is a pursuing an Extramural Doctorate Degree in Leadership at the University of Bradford, UK. Mrs. Johansen is a Norwegian citizen living in Oslo.
The Company has implemented a share option programme for its Group employees and Board Members. As of the date of this Admission Document, the Company has 495,500 options outstanding. Each option gives the right to subscribe for one share. The Board of Directors may at any time resolve to terminate all issued options against a cash consideration equal to the market value of the option shares at the time of termination, less the exercise price for such options.
The terms of the outstanding options are set out below:
178,000 options with exercise price of NOK 46.00 granted on 19 October 2018. All options vested on the date of grant, and the exercise period is 36 months thereafter (i.e. will expire on 19 October 2021), after which the options will lapse. The following options have been granted to current members of the Management and Board Members:
| Option holder | Position | Number of Options |
|---|---|---|
| Oscar Spieler | Chairperson | 70,000 |
| Thomas S Tharaldsen | CSO | 20,000 |
| Ragnar Søegaard | Vice-chairperson | 20,000 |
94,000 options with exercise price of NOK 68.00, granted on 19 October 2018. All options vested on the date of grant, and the exercise period is 36 months thereafter (i.e. will expire on 19 October 2021), after which the options will lapse. The following options have been granted to current members of the Management and Board Members:
| Option holder | Position | Number of Options |
|---|---|---|
| Oscar Spieler | Chairperson | 70,000 |
| Thorleif Enger; | Board member | 8,000 |
| Per-Anders Hjort; | Board member | 8,000 |
98,000 options with exercise price of NOK 60.00, granted on 15 March 2019. All options vested on the date of grant, and the exercise period is 36 months thereafter (i.e. will expire on 15 March 2022), after which the options will lapse. The following options have been granted to current members of the Management and Board Members:
| Option holder | Position | Number of Options |
|---|---|---|
| Olav Stadaas; | Plant Development Director | 20,000 |
| Bjørn Arild Dahlen; | CTO | 20,000 |
| Jens Petter Broby; | CFO | 20,000 |
| Kjetil Bøhn; | CEO | 30,000 |
36,500 options with exercise price of NOK 109.00 granted on 12 June 2019. The options will be vested with 1/3 after 12 months, 1/3 after 24 months and 1/3 after 36 months. The exercise period is 48 months from 12 June 2019, after which the options will lapse. The following options have been granted to current members of the Management and Board Members:
| Option holder | Position | Number of Options |
|---|---|---|
| Thomas S Tharaldsen | CSO | 7,500 |
| Bjørn Arild Dahlen; | CTO | 5,000 |
16,000 options with exercise price of NOK 135.00, granted on 21 June 2019. The option will be vested with 1/3 after 12 months, 1/3 after 24 months and 1/3 after 36 months. The exercise period is 48 months from 21 June 2019, after which the options will lapse. The following options have been granted to current members of the Management and Board Members:
| Option holder | Position | Number of Options |
|---|---|---|
| Ann-Christin Gjerdseth Andersen; | Board member | 8,000 |
| Jim Dåtland; | Board member | 8,000 |
10,000 options with exercise price of NOK 160.00, granted to Winifred Patricia Johansen (CCO) on 1 October 2019. The options will be vested with 1/3 after 12 months, 1/3 after 24 months and 1/3 after 36 months. The exercise period is 48 months from the 1 October 2019, after which the options will lapse.
30,000 options with exercise price of NOK 175.00, granted to Kjetil Bøhn (CEO) on 22 November 2019. The options will be vested with 1/3 after 12 months, 1/3 after 24 months and 1/3 after 36 months. The exercise period is 48 months from the 22 November 2019, after which the options will lapse.
33,000 options with an average exercise price of NOK 174.00, granted in the period from December 2019 to January 2020 to five new employees of the Group. The options will be vested with 1/3 after 12 months, 1/3 after 24 months and 1/3 after 36 months. The exercise period is 48 months from the date options granted, after which the options will lapse.
There are no benefits upon termination for the Company's employees, board members or members of the management.
The Company has, per February 2020, approximately 45 employees and full-time consultants. The table below sets out the Group's average number of full-time employees for the financial years ended 31 December 2018 and 2017:
| QF AS | Group Total | |
|---|---|---|
| 2017 | 10 | 10 |
| 2018 | 14 | 18 |
| 2019 | 24 | 41 |
The Board has a responsibility to ensure that the Company has good corporate governance.
As the Company is not listed on any regulated market, no mandatory corporate governance code applies. The trading of the Company's shares on Merkur Market does not provide specific requirements in terms of corporate governance code, such as the Norwegian Code of Practice. However, the Company intends to maintain a high level of corporate governance standards and will consider the implications of the Norwegian Code of Practice going forward.
At the ordinary general meeting held on 21 June 2019 it was decided that the Company shall have a nomination committee consisting of at least three members elected by the general meeting. Bård Mikkelsen was appointed as chairman of the nomination committee, and was granted authorisation to appoint the two additional members to the nomination committee. The additional members shall be independent from the Board of Directors and executive personnel.
The nomination committee shall prepare the election of board members. The general meeting may adopt rules of procedure for the work of the election committee.
Kjetil Bøhn was board member in AJ Hus og Hytter AS and Liåsen Utvikling AS which were declared bankrupt in 2018 and 2019, respectively.
Except from the above, during the last five years preceding the date of this Admission Document, no Board Member or member of the Management has (i) any convictions in relation to indictable offences or convictions in relation to fraudulent offences; (ii) received any official public incrimination and/or sanctions by any statutory or regulatory authorities (including designated professional bodies) or ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a Corporation or from acting in the management or conduct of the affairs of any Corporation; or (iii) been declared bankrupt or been associated with any bankruptcy, receivership or liquidation in his or her capacity as a Sponsor, director or senior manager of a Corporation.
There are no family relationships between any of the persons listed above.
The legal and commercial name of the Company is Quantafuel AS. The Company is a private limited liability company (Nw.: aksjeselskap) validly incorporated and existing under the laws of Norway and in accordance with the Norwegian Private Companies Act. The Company is registered with the Norwegian Register of Business Enterprises with company registration number 915 119 484. The company was incorporated on 15 December 2014.
The Company's registered business address is Vollsveien 13H, 1366 Lysaker, Norway, which is also its principal place of business. The website for the Company is https://quantafuel.com/.
The Shares are registered in book-entry form with VPS under ISIN NO0010785967. The Company's register of shareholders in VPS is administrated by the VPS Registrar, DNB Bank ASA, Registrar Department, Dronning Eufemias gate 30, NO-0191 Oslo, Norway. The Company's LEI-code is 549300V6BLI7Z2UYNG15.
The Company is the parent company of Quantafuel Skive ApS (JV), Quantafuel Oslo AS, Quantafuel Sweden AB, Quantafuel AB, Quantafuel UK (JV) and QF Mexico City (JV). Please see section 6.4 for further information about regarding the organisational structure of the Group.
The below table sets out brief information about the Company's subsidiaries at the date of this Admission Document:
| Company Name | Registrered office | Activity | Ownership held |
|---|---|---|---|
| Quantafuel Skive ApS (JV) | Skive, Denmark | The Company is currently | 76% |
| building the first PtL plant in | |||
| Skive Denmark. | |||
| Quantafuel Oslo AS | Vollsveien 13 H, 1366 Lysaker, | There has been no activities in | 100% |
| Norway | this company during 2019. | ||
| Quantafuel Sweden AB | Gothenburg, Sweden | No activities in this company | 100% |
| during 2019 | |||
| Quantafuel AB | Gothenburg, Sweden | There have been no activities in | 100% (held through Quantafuel Sweden AB) |
| this company during 2019. | |||
| Quantafuel UK (JV) | London, England | There has been some activities | 50% |
| in this company during 2019. | |||
| Next Gen Energy S. de R.L. de C.V. (JV) (QF Mexico City). |
Mexico City, Mexico | There has been no activities in | 50% |
| this company during 2019. |
The following chart sets out the Group's legal structure as of the date of this Admission Document:
The registered share capital of the Company at the date of this Admission Document is NOK 111,674.67, divided into 11,167,467 Shares, each with a par value of NOK 0.01. All of the Shares have been created under the Norwegian Private Companies Act, and are validly issued and fully paid.
The Company has one class of shares, and accordingly there are no differences in the voting rights among the Shares. The Company's shares are freely transferable, meaning that a transfer of Shares is not subject to the consent of the Board of Directors or rights of first refusal. Pursuant to the Articles of Association, the Company's shares shall be registered in the Norwegian Central Securities Registry ("VPS").
The table below shows the development in the Company's share capital for the period covered by the Financial Statements to the date of the Admission Document. There have not been any other capital increases in the Company other than as set out in the table below, neither by way of contribution in cash or in kind for the period covered by the Financial Statements until the date of this Admission Document.
| Date | Event | Capital increase /decrease |
Par value (NOK) |
Share price |
Total share capital (NOK) |
New shares issued |
Total no. of Shares |
|---|---|---|---|---|---|---|---|
| (NOK) | |||||||
| 27.03.2017 | Conversion of loan | Capital increase | 0.01 | 46.00 | 40,604.26 | 23,071 | 4,060,426 |
| 18.06.2018 | Private placement | Capital increase | 0.01 | 68.00 | 62,664.26 | 2,206,000 | 6,266,426 |
| 06.08.2018 | Loan conversion | Capital increase | 0.01 | 40.80 | 72,679.56 | 1,001,530 | 7,267,956 |
| 12.03.2019 | Private placement | Capital increase | 0.01 | 55.00 | 99,952.28 | 2,727,272 | 9,995,228 |
| 25.09.2019 | Vitol Conversion | Capital increase | 0.01 | 98.00 | 102,966.03 | 301,375 | 10,296,603 |
| 07.10.2019 | BASF Investment | Capital increase | 0.01 | 118.00 | 111,434.67 | 846,864 | 11,143,467 |
| 21.10.2019 | Exercise of options | Capital increase | 0.01 | 46.00 / | 111,674.67 | 24,000 | 11,167,467 |
| 68.00 |
As of 14 February 2020, the Company had a total of 820 registered shareholders in the VPS. The Company's 20 largest shareholders as of the same date are presented in the table below.
| # | Shareholder | Number of shares | % |
|---|---|---|---|
| 1 | BASF ANTWERPEN N.V. | 846,864 | 7.583 |
| 2 | T.D. VEEN AS | 523,636 | 4.689 |
| 3 | KB MANAGEMENT AS | 443,205 | 3.969 |
| 4 | VERDIPAPIRFONDET NORDEA NORGE VERD | 357,783 | 3.204 |
| 5 | FAREID HOLDING AS | 340,686 | 3.051 |
| 6 | Heorot AB | 315,193 | 2.822 |
| 7 | DB London (Inv. Serv.) Nominees Lt | 301,375 | 2.699 |
| 8 | PRO AS | 300,023 | 2.687 |
| 9 | MIDAS CAPITAL AS | 261,000 | 2.337 |
| 10 | HANDELSBANKEN Nordiska Smabolag | 252,603 | 2.262 |
| 11 | AS CLIPPER | 250,000 | 2.239 |
| 12 | VERDIPAPIRFONDET NORDEA KAPITAL | 243,299 | 2.179 |
| 13 | MØSBU AS | 221,209 | 1.981 |
| 14 | Citibank, N.A. | 216,076 | 1.935 |
| 15 | VERDIPAPIRFONDET NORDEA AVKASTNING | 193,813 | 1.735 |
| 16 | VERDIPAPIRFONDET DELPHI NORGE | 177,500 | 1.589 |
| 17 | STRANDEN INVEST AS | 177,058 | 1.585 |
| 18 | EQUINOR PENSJON | 172,444 | 1.544 |
| 19 | Alta Invest SA | 167,024 | 1.496 |
| 20 | KLP ALFA GLOBAL ENERGI | 155,000 | 1.388 |
| Total 20 largest shareholders | 5,915,791 | 52.973 | |
| Total shareholdings in VPS | 11,167,467 | 100.000 |
As of the date of this Admission Document, no shareholders other than BASF Antwerpen N.V holds more than 5% of the issued Shares.
As of the date of this Admission Document, the Company does not hold any treasury shares.
There are no arrangements known to the Company that may lead to a change of control in the Company.
As at the date of this Admission Document, the general meeting of the Company has granted the following authorisations to increase the Company's share capital to the Board of Directors:
be used to establish or implement incentive arrangements for the employees and board members of the Company or its subsidiaries (300,000 options maximum) that have been approved by the board, as generally applicable or as agreed individually. The new Shares may be issued at market value or a lower subscription price. The terms of the options granted to employees and Board Members are set out in section 8.5 above.
Except for the share options described in Section 8.5 "Share incentive schemes", and the BASF Convertible Loan as described in Section 7.9.1, neither the Company nor any of the Company's subsidiaries has issued any options, warrants, convertible loans or other instruments that would entitle a holder of any such instrument to subscribe for any shares in the Company or its subsidiaries.
The Company has one class of shares in issue and all Shares provide equal rights in the Company, including the rights to any dividends. Each of the Company's shares carries one vote. The rights attached to the Shares are further described in Section 9.8 "The Articles of Association" and Section 9.9 "Certain aspects of Norwegian corporate law".
The Articles of Association are enclosed in Appendix A to the Admission Document. Below is a summary of provisions of the Articles of Association last updated on 21 October 2019.
Pursuant to section 3, the objective of the Company is to develop, produce and sell components and products which transform organic material into liquid carbon compounds by chemical processes, as well as sell the end products of these processes. The Company may also participate in other companies, invest in securities, as well as own, rent and operate real estate. The Company shall negotiate and enter into agreements with regards to purchasing real estate.
Pursuant to article section 4, the Company's share capital is NOK 111,674.67 divided into 11,167,467 shares, each with a nominal value of NOK 0.01. The Shares shall be registered with a central securities depository (the Norwegian Central Securities Depository (VPS)). The Company's shares carry equal rights.
Pursuant to section 5, the Board of Directors shall consist of between three and eight board members.
The Company shall have a nomination committee consisting of minimum three members elected by the general meeting. The nomination committee shall prepare for election of board members. The general meeting may adopt instructions for the nomination committee.
The Articles of Association do not provide for any restrictions on the transfer of Shares.
Documents relating to matters to be dealt with by the Company's general meeting, including documents which pursuant to law shall be included in or attached to the notice of the general meeting, do not need to be sent to the shareholders if such documents have been made available on the Company's website.
The annual general meeting shall deal with and decide the following matters:
Through the general meeting, shareholders exercise supreme authority in a Norwegian private limited liability company. In accordance with Norwegian law, the annual general meeting of shareholders is required to be held each year on or prior to 30 June. Norwegian law requires that a written notice of annual general meetings setting forth the time of, the venue for and the agenda of the meeting is sent to all shareholders with a known address no later than seven days before the annual general meeting of a Norwegian private limited liability company shall be held, unless the articles of association stipulate a longer deadline, which is not currently the case for the Company.
A shareholder may vote at the general meeting either in person or by proxy (the proxy holder is appointed at their own discretion). Although Norwegian law does not require the Company to send proxy forms to its shareholders for general meetings, the Company plans to include a proxy form with notices of general meetings. All of the Company's shareholders who are registered in the shareholders' register kept and maintained with VPS as of the date of the general meeting, or who otherwise have reported and documented ownership of shares in the Company, are entitled to participate at general meetings, without any requirement of pre-registration.
Apart from the annual general meeting, extraordinary general meetings of shareholders may be held if the board of directors considers it necessary. An extraordinary general meeting of shareholders shall also be convened if, in order to discuss a specified matter, the auditor or shareholders representing at least 10% of the share capital demands such in writing. The requirements for notice and admission to the annual general meeting also apply to extraordinary general meetings.
Each Share carries one vote. In general, decisions shareholders are entitled to make under Norwegian law or the articles of association may be made by a simple majority of the votes cast. In the case of elections or appointments (e.g. to the board of directors), the person(s) who receive(s) the greatest number of votes cast is elected. However, as required under Norwegian law, certain decisions, including resolutions to waive preferential rights to subscribe or shares in connection with any share issue in the Company, to approve a merger or demerger of the Company, to amend the articles of association, to authorize an increase or reduction of the share capital, to authorize an issuance of convertible loans or warrants by the Company or to authorize the Board of Directors to purchase Shares and hold them as treasury shares or to dissolve the Company, must receive the approval of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds of the share capital represented at the general meeting in question. Moreover, Norwegian law requires that certain decisions, i.e. decisions that have the effect of substantially altering the rights and preferences of any shares or class of shares, receive the approval by the holders of such shares or class of shares as well as the majority required for amending the articles of association.
Decisions that (i) would reduce the rights of some or all of the Company's shareholders in respect of dividend payments or other rights to assets or (ii) restrict the transferability of the Shares, require that at least 90% of the share capital represented at the general meeting in question vote in favour of the resolution, as well as the majority required for amending the articles of association.
In general, only a shareholder registered in VPS is entitled to vote for such Shares. Beneficial owners of the Shares that are registered in the name of a nominee are generally not entitled to vote under Norwegian law, nor is any person who is designated in the VPS register as the holder of such Shares as nominees.
There are no quorum requirements that apply to the general meetings.
If the Company issues any new Shares, including bonus share issues, the Company's articles of association must be amended, which requires the same vote as other amendments to the articles of association. In addition, under Norwegian law, the Company's shareholders have a preferential right to subscribe for new Shares issued by the Company. The preferential rights may be deviated from by a resolution in the general meeting passed with the same vote required to amend the articles of association. A deviation of the shareholders' preferential rights in respect of bonus issues requires the approval of all outstanding Shares.
The general meeting may, by the same vote as is required for amending the articles of association, authorize the board of directors to issue new Shares, and to deviate from the preferential rights of shareholders in connection with such issuances. Such authorisation may be effective for a maximum of two years, and the nominal value of the Shares to be issued may not exceed 50% of the registered par share capital when the authorisation is registered with the Norwegian Register of Business Enterprises.
Under Norwegian law, the Company may increase its share capital by a bonus share issue, subject to approval by the Company's shareholders, by transfer from the Company's distributable equity or from the Company's share premium reserve and thus the share capital increase does not require any payment of a subscription price by the shareholders. Any bonus issues may be affected either by issuing new shares to the Company's existing shareholders or by increasing the nominal value of the Company's outstanding Shares.
Issuance of new Shares to shareholders who are citizens or residents of the United States and other jurisdictions upon the exercise of preferential rights may require the Company to file a registration statement or prospectus in the United States under United States securities laws or in such other jurisdictions under the laws of such jurisdictions. Should the Company in such a situation decide not to file a registration statement or prospectus, the Company's U.S. shareholders and shareholders in such other jurisdictions may not be able to exercise their preferential rights. To the extent that shareholders are not able to exercise their rights to subscribe for new shares, the value of their subscription rights will be lost and such shareholders' proportional ownership interests in the Company will be reduced.
Norwegian law sets forth a number of protections for minority shareholders of the Company, including, but not limited to, those described in this paragraph and the description of general meetings as set out above. Any of the Company's shareholders may petition Norwegian courts to have a decision of the board of directors or the Company's shareholders made at the general meeting declared invalid on the grounds that it unreasonably favours certain shareholders or third parties to the detriment of other shareholders or the Company itself. The Company's shareholders may also petition the courts to dissolve the Company as a result of such decisions to the extent particularly strong reasons are considered by the court to make necessary dissolution of the Company.
Minority shareholders holding 10% or more of the Company's share capital have a right to demand in writing that the Board of Directors convenes an extraordinary general meeting to discuss or resolve specific matters. In addition, any of the Company's shareholders may in writing demand that the Company place an item on the agenda for any general meeting as long as the Company is notified in time for such item to be included in the notice of the meeting. If the notice has been issued when such a written demand is presented, a renewed notice must be issued if the deadline for issuing notice of the general meeting has not expired.
The share capital of the Company may be reduced by reducing the nominal value of the Shares or by cancelling Shares. Such a decision requires the approval of at least two-thirds of the aggregate number of votes cast and at least two-thirds of the share capital represented at a general meeting. Redemption of individual Shares requires the consent of the holders of the Shares to be redeemed.
The Company may purchase its own Shares provided that the Board of Directors has been granted an authorisation to do so by a general meeting with the approval of at least two-thirds of the aggregate number of votes cast and at least two-thirds of the share capital represented at the meeting. The aggregate nominal value of treasury shares so acquired, and held by the Company must not lead to the share capital with deduction of the aggregate nominal of the holding of own shares is less than the minimum allowed share capital of NOK 30,000, and treasury shares may only be acquired if the Company's distributable equity, according to the latest adopted balance sheet, exceeds the consideration to be paid for the shares. The authorisation by the general meeting of the Company's shareholders cannot be granted for a period exceeding two years.
A decision of the Company's shareholders to merge with another company or to demerge requires a resolution by the general meeting passed by at least two-thirds of the aggregate votes cast and at least two-thirds of the share capital represented at the general meeting. A merger plan, or demerger plan signed by the board of directors along with certain other required documentation, would have to be sent to all the Company's shareholders, or if the articles of association stipulate that, made available to the shareholders on the Company's website, at least one month prior to the general meeting to pass upon the matter.
Board members owe a fiduciary duty to the Company and its shareholders. Such fiduciary duty requires that the board members act in the best interests of the Company when exercising their functions and exercise a general duty of loyalty and care towards the Company. Their principal task is to safeguard the interests of the Company.
Board members may each be held liable for any damage they negligently or wilfully cause the Company. Norwegian law permits the general meeting to discharge any such person from liability, but such discharge is not binding on the Company if substantially correct and complete information was not provided at the general meeting passing upon the matter. If a resolution to discharge the Board Members from liability or not to pursue claims against such a person has been passed by a general meeting with a smaller majority than that required to amend the articles of association, shareholders representing more than 10% of the share capital or, if there are more than 100 shareholders, more than 10% of the shareholders may pursue the claim on the Company's behalf and in its name. The cost of any such action is not the Company's responsibility but can be recovered from any proceeds the Company receives as a result of the action. If the decision to discharge any of the Board Members from liability or not to pursue claims against the Board Members is made by such a majority as is necessary to amend the articles of association, the minority shareholders of the Company cannot pursue such claim in the Company's name.
Neither Norwegian law nor the articles of association contains any provision concerning indemnification by the Company of the board of directors. The Company is permitted to purchase insurance for the board members against certain liabilities that they may incur in their capacity as such.
Under Norwegian law, the Company may be wound-up by a resolution of the Company's shareholders at the general meeting passed by at least two-thirds of the aggregate votes cast and at least two-thirds of the share capital represented at the meeting. In the event of liquidation, the Shares rank equally in the event of a return on capital.
The Company is not subject to the takeover regulations, applicable only to companies with shares listed on a Norwegian regulated market, set out in the Norwegian Securities Trading Act, or otherwise.
The Shares are, however, subject to the provisions on compulsory transfer of shares as set out in the Norwegian Private Companies Act. If a private limited liability company alone, or through subsidiaries, owns 9/10 or more of the shares in the subsidiary, and may exercise a corresponding part of the votes that may be cast in the general meeting, the board of directors of the parent company may resolve that the parent company shall take over the remaining shares in the company. Each of the other shareholders in the subsidiary have the right to require the parent company to take over the shares. The parent company shall give the shareholders a redemption offer pursuant to the provisions of the Norwegian Private Companies Act. The redemption amount will in the absence of agreement or acceptance of the offer be fixed by a discretionary valuation.
According to Norwegian law, subscription for, purchase, sale or exchange of financial instruments that are admitted to trading, or subject to an application for admission to trading on a Norwegian regulated marketplace or a Norwegian multilateral trading facility, or incitement to such dispositions, must not be undertaken by anyone who has inside information. The same applies in the case of financial instruments that are admitted to trading on a Norwegian multilateral trading facility. Inside information is defined in Section 3-2 of the Norwegian Securities Trading Act and refers to precise information about financial instruments issued by the Company admitted to trading, about the Company admitted trading itself or about other circumstances which are likely to have a noticeable effect on the price of financial instruments issued by the Company admitted to trading or related to financial instruments issued by the Company admitted to trading, and which is not publicly available or commonly known in the market. Information that is likely to have a noticeable effect on the price shall be understood to mean information that a rational investor would probably make use of as part of the basis for his investment decision. The same applies to the entry into, purchase, sale or exchange of options or futures/forward contracts or equivalent rights whose value is connected to such financial instruments or incitement to such dispositions. Breach of insider trading obligations may be sanctioned and lead to criminal charges.
This Section describes certain tax rules in Norway applicable to shareholders who are resident in Norway for tax purposes ("Norwegian Shareholders") and to shareholders who are not resident in Norway for tax purposes "Non-Resident Shareholders"). The statements herein regarding taxation are based on the laws in force in Norway as of the date of this Admission Document and are subject to any changes in law occurring after such date. Such changes could possibly be made on a retrospective basis. The following summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of the Shares. Investors are advised to consult their own tax advisors concerning the overall tax consequences of their ownership of Shares. The statements only apply to shareholders who are beneficial owners of Shares. Please note that for the purpose of the summary below, references to Norwegian Shareholders or Foreign Shareholders refers to the tax residency rather than the nationality of the shareholder.
Norwegian corporate shareholders (i.e. limited liability companies and similar entities) ("Norwegian Corporate Shareholders") are comprised by the Norwegian participation exemption. Under the exemption, only 3% of dividend income on shares in Norwegian limited liability companies is subject to tax as ordinary income (22% flat rate as of 2020), implying that such dividends are effectively taxed at a rate of 0.66%.
Dividends distributed to Norwegian individual shareholders (i.e. other shareholders than Norwegian Corporate Shareholders) ("Norwegian Individual Shareholders") are grossed up with a factor of 1.44 before taxed as ordinary income (22% flat rate, resulting in an effective tax rate of 31.68%) to the extent the dividend exceeds a tax-free allowance.
The tax-free allowance is calculated on a share-by-share basis for each individual shareholder on the basis of the cost price of each of the Shares multiplied by a risk-free interest rate. The risk-free interest rate is based on the effective rate of interest on treasury bills (Nw.: statskasseveksler) with three months maturity plus 0.5 percentage points, after tax. The tax-free allowance is calculated for each calendar year and is allocated solely to Norwegian Individual Shareholders holding Shares at the expiration of the relevant calendar year. Norwegian Individual Shareholders who transfer Shares will thus not be entitled to deduct any calculated allowance related to the year of transfer. Any part of the calculated tax-free allowance one year exceeding the dividend distributed on the Share ("unused allowance") may be carried forward and set off against future dividends received on (or gains upon realization of, see below) the same Share. Any unused allowance will also be added to the basis of computation of the tax-free allowance on the same Share the following year.
The Shares will not qualify for Norwegian share saving accounts (Nw.: aksjesparekonto) for Norwegian Individual Shareholders as the shares are listed on Merkur Market (and not Oslo Børs).
Sale, redemption or other disposal of Shares is considered as a realization for Norwegian tax purposes.
Capital gains generated by Norwegian Corporate Shareholders through a realization of shares in Norwegian limited liability companies, such as the Company, are comprised by the Norwegian participation exemption and therefore tax exempt. Net losses from realization of Shares and costs incurred in connection with the purchase and realization of such Shares are not tax deductible for Norwegian Corporate Shareholders.
Norwegian Individual Shareholders are taxable in Norway for capital gains derived from realization of Shares, and have a corresponding right to deduct losses. This applies irrespective of how long the Shares have been owned by the individual shareholder and irrespective of how many Shares that are realized. Gains are taxable as ordinary income in the year of realization and losses can be deducted from ordinary income in the year of realization. Any gain or loss is grossed up with a factor of 1.44 before taxed at a rate of 22% (resulting in an effective tax rate of 31.68%. Under current tax rules, gain or loss is calculated per Share, as the difference between the consideration received for the Share and the Norwegian Individual Shareholder's cost price for the Share, including costs incurred in connection with the acquisition or realization of the Share. Any unused tax-free allowance connected to a Share may be deducted from a capital gain on the same Share, but may not lead to or increase a deductible loss. Further, unused tax-free allowance related to a Share cannot be set off against gains from realization of other Shares.
If a Norwegian shareholder realizes Shares acquired at different points in time, the Shares that were first acquired will be deemed as first sold (the "first in first out"-principle) upon calculating taxable gain or loss. Costs incurred in connection with the purchase and sale of Shares may be deducted in the year of sale.
A shareholder who ceases to be tax resident in Norway due to domestic law or tax treaty provisions may become subject to Norwegian exit taxation of capital gains related to shares in certain circumstances.
The value of Shares is taken into account for net wealth tax purposes in Norway. The marginal net wealth tax rate is currently 0.85% of the value assessed. The value for assessment purposes for the Shares is equal to 75% of the total tax value of the Company as of 1 January of the year before the tax assessment year. However, if the share capital in the Company has been increased or reduced by payment from or to shareholders in the year before the tax assessment year, the value for assessment purposes for the Shares is equal to 75% of the total tax value of the Company as of 1 January of the tax assessment year. The value of debt allocated to the Shares for Norwegian wealth tax purposes is reduced correspondingly (i.e. to 75%).
Norwegian limited liability companies and similar entities are exempted from net wealth tax.
Dividends paid from a Norwegian limited liability company to Non-Resident Shareholders are subject to Norwegian withholding tax at a rate of 25% unless the recipient qualifies for a reduced rate according to an applicable tax treaty or other specific regulations. The shareholder's country of residence may give credit for the Norwegian withholding tax imposed on the dividend.
If a Non-Resident Shareholder is carrying on business activities in Norway and the Shares are effectively connected with such activities, the Non-Resident Shareholder will be subject to the same taxation of dividend as a Norwegian Shareholder, as described above.
Non-Resident Shareholders that are corporate shareholders (i.e. limited liability companies and similar entities) ("Foreign Corporate Shareholders") resident within the EEA are exempt from Norwegian withholding tax pursuant to the Norwegian participation exemption provided that the Foreign Corporate Shareholder is genuinely established and carries out genuine economic activities within the EEA. UK has left the EU (and EEA) as of 31 January 2020, but shall in a transitional period until at least 31 December 2020 be treated as a EU/EEA member.
Dividends paid to Non-Resident Shareholders that are individual shareholders (i.e. other shareholders than Foreign Corporate Shareholders) ("Foreign Individual Shareholders") are as the main rule subject to Norwegian withholding tax at a rate of 25%, unless a lower rate has been agreed in an applicable tax treaty. If the individual shareholder is resident within the EEA, the shareholder may apply to the tax authorities for a refund of an amount corresponding to the calculated tax-free allowance on each individual share, see Section 10.1.1 "Taxation of dividends". However, the deduction for the tax-free allowance does not apply in the event that the withholding tax rate, pursuant to an applicable tax treaty, leads to a lower taxation on the dividends than the withholding tax rate of 25% less the tax-free allowance.
In accordance with the present administrative system in Norway, a distributing company will generally deduct withholding tax at the applicable rate when dividends are paid directly to an eligible Foreign Shareholder, based on information registered with the VPS. Foreign Corporate and Individual Shareholders must document their entitlement to a reduced withholding tax rate by (i) obtaining a certificate of residence issued by the tax authorities in the shareholder's country of residence, confirming that the shareholder is resident in that state and (ii) providing a confirmation from the shareholder that the shareholder is the beneficial owner of the dividend. In addition, Foreign Corporate Shareholders must also present either (i) an approved withholding tax refund application or (ii) an approval from the Norwegian tax authorities confirming that the recipient is entitled to a reduced withholding tax rate or a withholding tax exemption. Such documentation must be provided to either the nominee or the account operator (VPS). Dividends paid to Non-Resident Shareholders in respect of nominee registered shares are not eligible for reduced treaty withholding tax rate at the time of payment unless the nominee, by agreeing to provide certain information regarding beneficial owner, has obtained approval for reduced treaty withholding tax rate from the Norwegian tax authorities. The withholding obligation lies with the company distributing the dividends and the Company assumes this obligation.
Foreign Individual and Corporate Shareholders who have suffered a higher withholding tax than set out in an applicable tax treaty may apply to the Norwegian tax authorities for a refund of the excess withholding tax deducted. The same will apply to Foreign Corporate Shareholders that have suffered withholding tax although qualifying for the Norwegian participation exemption.
Non-Resident Shareholders should consult their own advisers regarding the availability of treaty benefits in respect of dividend payments.
Gains from realization of Shares by Non-Resident Shareholders will not be subject to tax in Norway unless the Non-Resident Shareholders are holding the Shares in connection with business activities carried out or managed from Norway. Such taxation may be limited according to an applicable tax treaty or other specific regulations.
Non-Resident Shareholders are not subject to Norwegian net wealth tax with respect to the Shares, unless the shareholder is an individual, and the shareholding is effectively connected with a business which the shareholder takes part in or carries out in Norway. Such taxation may be limited according to an applicable tax treaty.
No transfer taxes, stamp duty or similar taxes are currently imposed in Norway on purchase, issuance, disposal or redemption of shares. Further, there is no VAT on transfer of shares.
As a consequence of the following restrictions, prospective investors are advised to consult legal counsel prior to making any offer, resale, pledge or other transfer of the Shares admitted to listing on Merkur Market.
The Company is not taking any action to permit a public offering of the Shares in any jurisdiction. Receipt of this Admission Document does not constitute an offer and this Admission Document is for information only and should not be copied or redistributed. If an investor receives a copy of this Admission Document, the investor may not treat this Admission Document as constituting an invitation or offer to it, nor should the investor in any event deal in the Shares, unless, in the relevant jurisdiction, the Shares could lawfully be dealt in without contravention of any unfulfilled registration or other legal requirements. Accordingly, if an investor receives a copy of this Admission Document, the investor should not distribute or send the same, or transfer Shares, to any person or in or into any jurisdiction where to do so would or might contravene local securities laws or regulations.
The Shares have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction in the United States, and may not be offered or sold except: (i) within the United States to QIBs in reliance on Rule 144A or pursuant to another available exemption from the registration requirements of the U.S. Securities Act; or (ii) outside the United States to certain persons in offshore transactions in compliance with Regulation S under the U.S. Securities Act, and, in accordance with any applicable securities laws of any state or territory of the United States or any other jurisdiction. Accordingly, the Merkur Market Advisor has represented and agreed that it has not offered or sold, and will not offer or sell, any of the Shares as part of its allocation at any time other than (i) within the United States to QIBs in accordance with Rule 144A or (ii) outside of the United States in compliance with Rule 903 of Regulation S. Transfer of the Shares will be restricted and each purchaser of the Shares in the United States will be required to make certain acknowledgements, representations and agreements, as described under Section 11.3.1 "United States".
The Merkur Market Advisor has represented, warranted and agreed that:
a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 ("FSMA") in connection with the issue or sale of any Shares in circumstances in which Section 21(1) of the FSMA does not apply to the Company; and
b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Shares in, from or otherwise involving the United Kingdom.
In no member state (each a "Relevant Member State") of the European Economic Area (the "EEA") have Shares been offered and in no Relevant Member State other than Norway will Shares be offered to the public pursuant to an offering, except that Shares may be offered to the public in that Relevant Member State at any time in reliance on the following exemptions under the EU Prospectus Regulation:
a) to persons who are "qualified investors" within the meaning of Article 2(e) in the EU Prospectus Regulation;
b) to fewer than 150 natural or legal persons (other than qualified investors as defined in the EU Prospectus Regulation) per Relevant Member State, with the prior written consent of the Merkur Market Advisor for any such offer; or
c) in any other circumstances falling under the scope of Article 3(2) of the EU Prospectus Regulation;
provided that no such offer of Shares shall result in a requirement for the Company or Merkur Market Advisor to publish a prospectus pursuant to Article 3 of the EU Prospectus Regulation or supplementary prospectus pursuant to Article 23 of the EU Prospectus Regulation.
For the purpose of this provision, the expression an "offer to the public" in relation to any Shares in any Relevant Member State means a communication to persons in any form and by any means presenting sufficient information on the terms of the an offering and the Shares to be offered, so as to enable an investor to decide to acquire any Shares.
This EEA selling restriction is in addition to any other selling restrictions set out in this Admission Document.
The Shares may not be offered, sold, resold, transferred or delivered, directly or indirectly, in or into, Switzerland, Japan, Canada, Australia or any other jurisdiction in which it would not be permissible to offer the Shares.
In jurisdictions outside the United States and the EEA where an offering would be permissible, the Shares will only be offered pursuant to applicable exceptions from prospectus requirements in such jurisdictions.
The Shares have not been, and will not be, registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction in the United States, and may not be offered or sold except: (i) within the United States only to QIBs in reliance on Rule 144A or pursuant to another exemption from the registration requirements of the U.S. Securities Act; and (ii) outside the United States in compliance with Regulation S, and in each case in accordance with any applicable securities laws of any state or territory of the United States or any other jurisdiction. Terms defined in Rule 144A or Regulation S shall have the same meaning when used in this Section.
Each purchaser of the Shares outside the United States pursuant to Regulation S will be deemed to have acknowledged, represented and agreed that it has received a copy of this Admission Document and such other information as it deems necessary to make an informed investment decision and that:
The purchaser is, and the person, if any, for whose account or benefit the purchaser is acquiring the Shares, was located outside the United States at the time the buy order for the Shares was originated and continues to be located outside the United States and has not purchased the Shares for the account or benefit of any person in the United States or entered into any arrangement for the transfer of the Shares or any economic interest therein to any person in the United States.
The purchaser is not an affiliate of the Company or a person acting on behalf of such affiliate, and is not in the business of buying and selling securities or, if it is in such business, it did not acquire the Shares from the Company or an affiliate thereof in the initial distribution of such Shares.
Each purchaser of the Shares within the United States purchasing pursuant to Rule 144A or another available exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act will be deemed to have acknowledged, represented and agreed that it has received a copy of this Admission Document and such other information as it deems necessary to make an informed investment decision and that:
facility, so long as such Shares are "restricted securities" within the meaning of Rule 144(a) (3) under the U.S. Securities Act.
Each person in a Relevant Member State who receives any communication in respect of, or who acquires any Shares under, the offers contemplated in this Admission Document will be deemed to have represented, warranted and agreed to and with the Merkur Market Advisor and the Company that:
a) it is a qualified investor within the meaning of Articles 2(e) of the EU Prospectus Regulation; and
b) in the case of any Shares acquired by it as a financial intermediary, as that term is used in Article 1 of the EU Prospectus Regulation, (i) the Shares acquired by it in an offer have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the EU Prospectus Regulation, or in circumstances in which the prior consent of the Merkur Market Advisor has been given to the offer or resale; or (ii) where Shares have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those Shares to it is not treated under the EU Prospectus Regulation as having been made to such persons.
For the purpose of this representation, the expression an "offer to the public" in relation to any Shares in any Relevant Member State means a communication to persons in any form and by any means presenting sufficient information on terms of an offering and the Shares to be offered, so as to enable an investor to decide to acquire any Shares.
On 17 February 2020, the Oslo Stock Exchange approved the Company's application for Admission to Merkur Market. The first day of trading on Merkur Market is expected to be 20 February 2020.
Neither the Company nor any other entity of the Group have securities listed on any stock exchange or other regulated marketplace. However, prior to the Admission, trades in the Company's Shares have been quoted on the NOTC, a non-regulated information system for unlisted shares owned by Oslo Børs ASA.
Throughout this Admission Document, we have used industry and market data obtained from independent industry publications, market research, internal surveys and other publicly available information. Industry publications generally state that the information they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of such information is not guaranteed. We have not independently verified such data. Similarly, whilst we believe that our internal surveys are reliable, they have not been verified by independent sources and we cannot assure you of their accuracy. Thus, we do not guarantee or assume any responsibility for the accuracy of the data, estimates, forecasts or other information taken from sources in the public domain. The information in this Admission Document that has been sourced from third parties has been accurately reproduced and, as far as the Company is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.
The Company's independent auditor is RSM Norge AS, with registered address Filipstad Brygge 1, NO-0252 Oslo, Norway. RSM Norge AS is a member of Den Norske Revisorforeningen (the Norwegian Institute of Public Accountants). RSM Norge AS has been the Company's independent auditor since 27 March 2017.
The Company has engaged SpareBank 1 Markets AS (business registration number 992 999 101, and registered business address at Olav V's gate 5, NO-0161 Oslo, Norway, as Merkur Advisor.
Wikborg Rein Advokatfirma AS (business registration number 916 782 195, and registered business address at Dronning Mauds gate 11, NO-0250 Oslo, Norway is acting as Norwegian legal counsel to the Company.
| Admission Document | This Admission Document dated 17 February 2020 |
|---|---|
| Admission to Trading | The admission to trading of the Company's shares on Merkur Market |
| Annual Financial Statements | The Group's consolidated financial statements for the year ended 31 December 2018 |
| Articles of Association | Articles of Association of the Company as of 21 October 2019. |
| BASF | BASF SE |
| BASF Convertible Loan | Investment as a convertible loan as part of the BASF Investment and Convertible Loan Agreement |
| BASF Collaboration Agreement | A collaboration agreement to be entered into between the Company and BASF to develop technology to produce liquid hydrocarbon products produced from plastic waste to produce chemical feedstock. |
| BASF Investment | BASF's investment as part of the BASF Investment and Convertible Loan Agreement. |
| BASF Investment and Convertible Loan Agreement |
The agreement with BASF entered into on 25 September 2019. |
| Board of Directors | The Board of Directors of the Company |
| Board Member | Member of the Board of Directors |
| BtL | Biogas-to-Liquid |
| CEO | Chief Executive Officer. |
| Company | Quantafuel AS |
| Corporate Governance Code | The Norwegian Code of Practice for Corporate Governance last updated 17 October 2018. |
| DGI Loan | The DKK 53 million loan from Danmarks Grønne Investeringsbank to QF Skive, of which DKK 13 million has been disbursed |
| DKK | Danish Kroner, the lawful currency of Denmark |
| QF Skive | Quantafuel Skive ApS |
| EEA | European Economic Area. |
| Enova | Enova SF |
| EU Prospectus Regulation | Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, as amended, and as implemented in Norway. |
| Foreign Corporate Shareholders | Non-Resident Shareholders that are corporate shareholders (i.e. limited liability companies and similar entities). |
| Foreign Individual Shareholders | Non-Resident Shareholders that are individual shareholders (i.e. other shareholders than Foreign Corporate Shareholders). |
| FSMA | Financial Services and Markets Act 2000. |
| Group | The Company and its subsidiaries |
| IFRS | International Financial Reporting Standards as adopted by the European Union |
| Interim Financial Statements | The Group's consolidated financial statements for the three months' period ended 30 September 2019 |
| Management | The members of the Company's executive management. |
| Merkur Advisor | SpareBank 1 Markets AS |
| Merkur Market | A multilateral trading facility operated by Oslo Børs ASA |
| NOK | Norwegian kroner, the lawful currency of Norway |
| Non-Resident Shareholders | Shareholders who are not resident in Norway for tax purposes. |
|---|---|
| Norwegian Accounting Act | The Norwegian Accounting Act of 17 July 1998 no 56. |
| Norwegian Corporate Shareholders | Shareholders who are limited liability companies (and certain similar entities) domiciled in Norway for tax purposes |
| Norwegian Individual Shareholders | Norwegian Shareholders other than Norwegian Corporate Shareholders. |
| Norwegian Private Companies Act | The Norwegian Private Limited Liability Companies Act of 13 June 1997 no. 44 (as amended) |
| Norwegian Securities Trading Act | The Norwegian Securities Trading Act of 28 June 2007 (Nw.: verdipapirhandelloven) |
| Norwegian Shareholders | Shareholders who are resident in Norway for tax purposes |
| PtL | Plastic-to-liquid technology |
| Quantafuel | The Company |
| RED 2 | The revised renewable energy directive 2018/2001/EU |
| Relevant Member State | Each Member State of the European Economic Area which has implemented the EU Prospectus Regulation. |
| Share(s) | The shares of the Company, consisting as at the date of this Admission document of 11,167,467 ordinary shares each with a par value of NOK 0.01. |
| Skive Offtake Agreement | An offtake agreement entered into between QF Skive and Vitol with respect to offtake from the Skive Plant. |
| Skive Plant | The Group's first commercial plant in Skive, Denmark |
| United States | The United States of America |
| USD | United States Dollar, the lawful currency in the United States |
| Vitol Framework Agreement | A framework agreement entered into between the Company and Vitol S.A. in March 2018 |
| VPS Registrar | DNB Bank ASA |
| VPS | The Norwegian Central Securities Registry |
Vollsveien 13H NO-1366 Lysaker Norway https://quantafuel.com
Dronning Mauds gate 11 NO-0250 Oslo Norway Phone: +47 22 82 75 00 www.wr.no
Olav V's gate 5 NO-0161 Oslo Norway Phone: +47 24 14 74 00 https://www.sb1markets.no/ Appendix A – Articles of Association
Selskapets foretaksnavn skal være: Quantafuel AS. Selskapet er et aksjeselskap og skal være registrert i Verdipapirsentralen (VPS)
§ 2.
Selskapet skal ha sitt forretningskontor i Bærum kommune
Selskapets virksomhet vil være å utvikle, produsere, markedsføre og selge komponenter og produkter som omformer organisk materiale til flytende karbonforbindelser ved hjelp av kjemiske prosesser, samt selge sluttprodukter fra disse prosessene. Selskapets kan i tillegg delta i andre selskaper, investering i verdipapirer, samt eie, leie, utleie og drive fast eiendom. Selskapets skal forhandle og inngå avtaler vedrørende kjøp av fast eiendom.
Aksjekapitalen skal være på kr 111 674,67 a 11 167 467 aksjer hver pålydende kr 0,01 og lydende på navn. Alle aksjer har like rettigheter.
Selskapets styre skal ha 3 til 8 medlemmer.
Selskapet skal ha en valgkomité bestående av minst 3 medlemmer som skal velges av generalforsamlingen. Valgkomiteen skal forberede valg av styremedlemmer. Generalforsamlingen kan vedta instruks for valgkomiteens arbeid.
_
På den ordinære generalforsamlingen skal følgende spørsmål behandles og avgjøres:
Når dokumenter som gjelder saker som skal behandles på generalforsamlingen er gjort tilgjengelige for aksjeeierne på selskapets internettsider, gjelder ikke aksjelovens krav om at dokumentene skal sendes til aksjeeierne. Dette gjelder også dokumenter som etter lov skal inntas i eller vedlegges innkallingen til generalforsamlingen
Aksjene i Selskapet er fritt omsettelige, herunder gjelder det ingen forkjøpsrett eller styresamtykke etter aksjeloven eller øvrige omsetningsbegrensninger ved eierskifte av aksjer
15.12.2014: Stiftelse av selskapet.
30.06.2015: §1 VPS Registrering, §3 Presisering av tekst, § Økning fra maks 5 til maks 7 styremedlemmer
_______________________________________________________________________
18.05.2016 Sletting av §10 «Det kreves flertall av totalt utestående aksjer for å endre selskapets vedtekter.», endring Aksjekapital.
29.08.2016 Endring Aksjekapital ihht styrefullmakt
18.10.2016 Endring Aksjekapital ihht styrefullmakt
27.02.2016 Endring Aksjekapital ihht Generalforsamling §6 endring av tekst, §7 sletting av «Aksjonærer med mer enn 15% eierandel kan kreve at selskapet har årlig revisjon», §9 slettes i sin helhet
05.06.18 Endring i Aksjekapital ihht Generalforsamling, emisjon I
05.06.18 Endring i Aksjekaptial iht Generalforsamling, Emisjon II og konvertering av lån ihht Styremøte #3 2018
25.02.19 Nytt punkt §9 Aksjenes omsettelighet
25.02.19 Endring i Aksjekapital ihht Generalforsamling
21.06.19 Slettet eksisterende §6 og la inn ny §6 ang valgkomitee
21.06.19 Slettet §7
21.06.19 Endret §8 til §7, samt tillagt tekst
25.09.19 Endring aksjekapital ihht styrefullmakt
07.10.19 Endring i antall styremedlemmer fra 3-7 til 3-8
07.10.19 Endring aksjekapital ihht styrefullmakt
21.10.19 Endring aksjekapital ihht styrefullmakt
Appendix B – Financial Statements
QUANTAFUEL AS 915 119 484
01.01.2018 - 31.12.2018
| Income statement | |||||
|---|---|---|---|---|---|
| Quantafuel AS | Notes | Quantafuel Group | |||
| 2018 | 2017 | NOK | 2018 | 2017 | |
| 31 010 693 | 2 187 491 | Revenue | 2:3 | 102 285 | 2 187 491 |
| 121 365 | 1457274 | Other income | 3 | 121 365 | 1 457 274 |
| 31 132 058 | 3 644 765 | Operating revenue | 223 650 | 3 644 765 | |
| $-167598801$ | $-3747620$ | Cost of sales | $\overline{2}$ | $-167689280$ | $-3747620$ |
| $-20884407$ | $-11225226$ | Salaries and personnel costs | 4 | $-22505787$ | $-11225226$ |
| $-540.014$ | $-196668$ | Depreciation and amortisation | 7:8 | $-596$ 127 | $-818$ 196 |
| $-11433335$ | $-16416471$ | Other operating expenses | 4:11 | $-12822661$ | $-17$ 193 702 |
| $-200$ 456 537 | $-31585985$ | Total operating expenses | $-203613854$ | $-32984744$ | |
| $-169324.479$ | $-27941220$ | Operating profit (or loss) | $-203390204$ | $-29339979$ | |
| 226 645 | 29 473 | Interest income | 226.672 | 34 282 | |
| Income from subsidiaries and other group entities | ×. | ×. | |||
| $-2529738$ | 225 662 | Exchange currency gains/loss | $-2529738$ | 225 662 | |
| $-2275236$ | $-1555354$ | Interest expense | $-3810399$ | -1 555 354 | |
| $-8152715$ | $-3316.193$ | Other financial expenses | $-9275128$ | $-3470613$ | |
| $-12731044$ | $-4616412$ | Net financial income / expense (-) | 5 | $-15388593$ | -4766024 |
| $-182055523$ | $-32557632$ | Net income / loss (-) before taxes | $-218778797$ | $-34$ 106 003 | |
| Tax expense | $\epsilon$ | 843 313 | 38.871 | ||
| $-182055523$ | $-32557632$ | Net income / loss (-) | $-217935484$ | $-34.067$ 132 | |
| Brought forward | |||||
| $\Omega$ | Net loss attributable to minority interests | 727 063 | 34 844 | ||
| 182 055 523 | 32 557 632 | Loss brought forward | 217 208 421 | 34 032 288 | |
| $-182055523$ | -32 557 632 | Net brought forward | 15 | $-217935484$ | $-34067132$ |
| Other comprehensive income | |||||
| Items that may be reclassified subsequently to profit or loss | |||||
| Foreign currency translation | $-92343$ | $-99004$ | |||
| -182 055 523 | -32 557 632 | Total comprehensive income for the year | -218 027 827 | -34 166 136 |
Financial Statements
| Balance Sheet | |||||||
|---|---|---|---|---|---|---|---|
| Quantafuel AS | Notes | Quantafuel Group | |||||
| 2018 | 2017 | 01.01.2017 | NOK | 2018 | 2017 | 01.01.2017 | |
| Assets | |||||||
| Goodwill | |||||||
| 9018493 | 106 570 | 106 570 | Other intangible assets | $\overline{7}$ | 9 208 867 | 560 920 | 1 128 053 |
| Deferred tax asset | |||||||
| 9018493 | 106 570 | 106 570 | Total intangible assets | 9 208 867 | 560 920 | 1 128 053 | |
| 308 890 | 275 338 | 472 006 | Property, plant and equipment | 8 | 38 732 466 | 25 302 920 | 1778 455 |
| 17 155 512 | 17 653 546 | 4 400 794 | Investments in Associates | 2,9 | |||
| Other non-current receivables | 11 | 3 261 584 | |||||
| 17 155 512 | 17 653 546 | 4 400 794 | Total financial non-current assets | 3 261 584 | |||
| 26 482 895 | 18 035 454 | 4979370 | Total non-current assets | 51 202 918 | 25 863 840 | 2906 508 | |
| Inventories | 12 | ||||||
| 18 281 677 | 76 066 | 9738350 | Accounts receivable | 10:18 | |||
| 6730 284 | 4 347 338 | 2 153 681 | Other receivables | 11,18 | 913 889 17 935 491 |
619 561 13 598 478 |
7 254 299 |
| 25 011 961 | 4 423 404 | 11892031 | Total receivables | 18 849 380 | 14 218 039 | 4 642 026 11 896 325 |
|
| 70 600 639 | 12 491 820 | 6721393 | Bank deposits, cash etc. | 13 | 86 052 946 | 21 339 852 | 7 561 701 |
| 95 612 600 | 16915224 | 18 613 424 | Total current assets | 104 902 326 | 35 557 892 | 19 458 026 | |
| 122 095 495 | 34 950 678 | 23 592 794 | Total assets | 156 105 243 | 61 421 732 | 22 364 534 | |
| Quantafuel AS | Notes | Quantafuel Group | |||||
|---|---|---|---|---|---|---|---|
| 2018 | 2017 | 01.01.2017 | NOK | 2018 | 2017 | 01.01.2017 | |
| Equity | |||||||
| 72679 | 40 604 | 38 156 | Share capital | 14:15 | 72679 | 40 604 | 38 156 |
| 235 368 187 | 41 925 839 | 40 867 059 | Premium reserve | 15 | 235 368 187 | 41 925 839 | 40 867 059 |
| -250 820 077 | -68 764 555 | -31 103 922 | Uncovered loss | 4,15 | -270 177 512 | $-52587598$ | -33 165 504 |
| $-15379211$ | $-26798112$ | 9 801 293 | Total equity | -34 736 646 | $-10621155$ | 7739711 | |
| Minority Interests | 15 15 | 727 063 | 5718 | ||||
| $-15379211$ | $-26798112$ | 9801293 | Total equity | $-34009583$ | $-10621155$ | 7745429 | |
| Liabilities | |||||||
| ۰ | × | Deferred tax | 6 | ||||
| ٠ | Loans to financial institutions | 11 | 1095 | 642 | |||
| Convertible debt | |||||||
| 13 565 566 | 1 506 624 | Other non-current liabilities | 2:11 | 13 059 401 | 13 565 566 | 657986 | |
| ٠ | 13 565 566 | 1 506 624 | Total non-current liabilities | 13 060 496 | 13 566 208 | 657986 | |
| 15043614 | 4 264 628 | 2 472 945 | Accounts payable | 10 | 18 607 885 | 11 287 879 | 2 465 231 |
| 122 431 092 | 43 918 596 | 9811932 | Other current liabilities | 10;11 | 158 446 447 | 47 188 800 | 11 495 889 |
| 137 474 706 | 48 183 224 | 12 284 877 | Total current liabilities | 177 054 332 | 58 476 679 | 13 961 120 | |
| 137 474 706 | 61 748 790 | 13 791 501 | Total liabilities | 190 114 828 | 72042888 | 14 619 105 | |
| 122 095 495 | 34 950 678 | 23 592 794 | Total equity and liabilities | 156 105 245 | 61 421 732 | 22 364 534 |
Date and place: Lysaker, 12.06.2019
$\mathcal{L}_U$ MΓ Oscar Spieler - O ikman Ű а Jens Engy Dag-Erk Rasmussen - Board Member è Per-Anders Hjort - Board Member
Bård Mikkelsen - Board Member
Trage Ragnar Seegaard - Board Member
Thorleif Enger - Boa rd Memb
Ç
Λ Kjetil Bøhn - CEO
| Quantafuel AS | Quantafuel Group | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Issued capital |
Share | Retained | Issued | Retained | Currency translation |
Total shareholders' |
Minority | ||||
| premium | earnings | Total | NOK | capital | Share premium earnings | differences | equity | Interests | Total equity | ||
| 38 156 | 40 B67 059 | $-31$ 103 922 | 9 801 293 Balance at 1 January 2017 Adjustment for change in accounting policy |
38 156 | 40.867 059 | -31 103 922 | 9801293 | 9 801 293 | |||
| 38 156 | 40 867 059 | $-31$ 103 922 | 9 801 293 Balance at 1 January 2017 - restated | 38 156 | 40 867 059 | $-31$ 103 922 | . . | 9801293 | 14 | 9 801 293 | |
| $-32557632$ $-5$ 103 000 |
-32 557 632 Profit after income tax expense for the year -5 103 000 Other comprehensive income for the year, net and łax |
× | $-32557632$ 11 073 957 |
$-32557632$ 11 073 957 |
i s | $-32557632$ 11 073 957 |
|||||
| 38 156 | 40 867 059 | -68 764 554 | -27 859 339 Total comprehensive income for the year | 38 156 | 40 867 059 | $-52587597$ | $-11682382$ | $-11682382$ | |||
| 2 4 4 8 | 1058779 | Transactions with owners in their capacity as owners: 1 061 227 Contributions of equity, net of transaction costs Dividends paid |
2 4 4 8 | 1058779 | 1061227 | 1061227 | |||||
| 40.604 | 41 925 838 | -68 764 554 | -26 798 112 Balance at 31 December 2017 | 40 604 | 41 925 838 | $-52587597$ | $\sim$ | $-10621155$ | $\sim$ | $-10621155$ | |
| 40 604 | 41 925 838 | -68 764 554 | -26 798 112 Balance at 1 January 2018 | 40 604 | 41 925 838 | $-52587597$ | $-10621155$ | $-10621155$ | |||
| $-182$ 055 523 | -182 055 523 Profit after income lax expense for the year Other comprehensive income for the year, net and tax |
-217 935 484 345 569 |
$-217935484$ 345 569 |
727 063 | $-217208421$ 345 569 |
||||||
| 40 604 | 41 925 838 | -250 820 077 | -208 853 635 Total comprehensive income for the year | 40 604 | 41 925 838 | -270 177 512 | × | $-228211070$ | 727 063 | $-227484007$ | |
| 32.075 | 190 838 349 2 604 000 |
Transactions with owners in their capacity as owners: 190 870 424 Contributions of equity, net of transaction costs 2 604 000 Accrued option costs Dividends paid |
32 075 | 190 838 349 2 604 000 |
190 870 424 2 604 000 |
190 870 424 2 604 000 |
|||||
| 72 679 | 235 368 187 | $-250820077$ | -15 379 211 Balance at 31 December 2018 | 72679 | 235 368 187 | -270 177 512 | $-34736646$ | 727 063 | $-34009583$ |
| Financial Statements | ||||||
|---|---|---|---|---|---|---|
| Cash flow statement | ||||||
| Quantafuel AS | Notes | Quantafuel Group | ||||
| 2018 | 2017 | NOK. | 2018 | 2017 | ||
| Cash flow from operating activities | ||||||
| $-182055523$ | $-32557632$ | Net income/loss (-) before tax | $-218778796$ | $-34$ 106 003 | ||
| 540 014 | 196 668 | Depreciation and amortization | 596 127 | 818 196 | ||
| $-30908408$ | 30 611 781 | Adjustments to net income | 805 226 | 30 611 781 | ||
| 84 719 935 | 1 364 445 | Adjustments to Accrued expenses | 84 719 935 | 1 364 445 | ||
| $-7426625$ | 7 796 886 | Changes in inventories, receivables and payables | 213 491 | 7 492 311 | ||
| $-1997273$ | 604 468 | Changes in other accruals | $-2450796$ | 693 082 | ||
| -137 127 880 | 8016616 | Net cash flow from operating activities | -134 894 813 | 6873812 | ||
| Cash flow from investment activities | ||||||
| $-16870535$ | Investments in subsidiaries | |||||
| $-8585863$ | Net investments in tangible fixed assets | $-21803794$ | $-25008874$ | |||
| $-780410$ | Investments in intangibles | $-75142$ | 705 268 | |||
| $-9366273$ $-16870535$ |
Net cash flow from investment activities | $-21878937$ | $-24303606$ | |||
| Cash flow from financing activities | ||||||
| Dividends paid | ||||||
| 177 304 858 | 1 058 780 | Capital placement | 177 304 858 | 17 755 445 | ||
| 27 298 114 | 13 565 566 | Net proceeds from borrowings | 44 181 985 | 13 565 566 | ||
| Proceeds from minority interest shareho | 15 | |||||
| Proceeds from issuance of shares | 15 | |||||
| 204 602 972 | 14 624 346 | Net cash flow from financing activities | 221 486 843 | 31 321 011 | ||
| 58 108 819 | 5770427 | Net change in cash and cash equivalents | 64 713 093 | 13 891 217 | ||
| 12 491 820 | 6721393 | Cash and cash equivalents at beginning of period | 21 339 852 | 7 448 635 | ||
| 70 600 639 | 12 491 820 | Cash and cash equivalents at end of pe | 13 | 86 052 946 | 21 339 852 |
General
Quantafuel (the Group) consists of Quantafuel AS and its subsidiaries. Quantafuel AS is a private limited company incorporated in Norway. The company's registered office is at Vollsveien 13H, Lysaker, Norway,
The Company and consolidated entity ("Group") have been prepared in accordance with the the Accounting Standards and Interpretations issued by the International Accounting Standards Board ("JASB")
IAS has been adopted from 1 January 2017, and the adoption has had no effect on the equity
The Group's accounts are presented in Norwegian kroner which is the Group's reporting currency.
Shares in subsidiaries and associated companies: See note 9 for an overview of subsidiaries.
Subsidiaries are companies which the parent company has a controlling influence on the entity's financial and operational strategy, ordinarily through agreements or ownership of more than 50 percent of the voting shares.
Companies over which the Group has a controlling influence are consolidated from the time when control is transferred to the Group (the date of acquisition). Partly owned subsidiaries are incorporated in the consolidated accounts in their entirety. The non-controlling share of the subsidiary's equity constitutes part of the Group's equity. The share of the profit attributable to non-controlling interests is included in the consolidated profit for the year. The non-controlling share of the profit and equity are presented as separate items in the accounts.
Acquired subsidiaries are accounted for in the Group financial statements on the basis of the parent company's consideration transferred. The consideration transferred in a business combination is measured at fair value of identifiable assets and liabilities in the subsidiary, and presented in the Group financial statements at fair value on the date of acquisition. Shares have been assessed at cost also in the event that equity is lower when the acquisition has been considered a long term investment with unexploited potential, and future return on investment is expected.
A final allocation of these define amounts has been determined and is presented in note 9. Any excess values that cannot be attributed to identifiable assets and liabilities are recorded in the balance sheet under goodwill. Goodwill is treated as a residual value and is recorded on the balance sheet at the amount observed at the time of the acquisition. Excess values in the Group financial statements are amortized over the purchased assets' expected useful economic life.
Changes in Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transaction.
In the Group financial statements the item "shares in subsidiaries" is replaced by "investments in associates". The Group financial statements are prepared as if the Group was a single economic unit. Transactions, unrealized internal gains and intra-group balances between companies in the Group are eliminated.
The individual financial statements of a subsidiary company are prepared in the company's functional currency, normally the local currency where the company is located. In preparing the consolidated financial statements, the balance sheets are translated using the exchange rates prevailing at year-end, and the income statements are translated using the yearly average exchange rates. Any material transactions are translated at the prevailing exchange rate on the date of the transaction. All translation adjustments are recognized directly in equity.
General rules for the valuation and classification of assets and liabilities
An asset is classified as current when it is expected to be realised or is intended for sale or consumption within twelve months after the reporting date. Other assets are classified as non-current. A liability is classified as current when it is expected to be settled within twelve months after the reporting period. All other liabilities are classified as non-current.
Revenue is, in accordance with IFRS 15, recognised at an amount that reflects the consideration to which the Company is expected to be entitled in exchange for transferring goods or services to a customer. For each contract the Company, identifies the contract, identifies the performance obligations, determines the transaction price , allocates the transaction price
to the separate obligations/deli services promised
Construction contracts is. In accordance with IAS 11, recognised in the income statement with revenue and cost (and hence profit) based on the Stage of Completion of the contract. If a net loss is expected under the contract, the entire loss is recognised immediately in the income statement.
Separately acquired intangible assets or assets acquired as a result of contracts or legal rights are recognized at cost at the time of acquisition. Goodwill arises on the acquisition of a business. Goodwill is not amortised, but tested annually for impairment, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are laken to profit or loss and are not subsequently reversed. Development costs are capittalised when it is probable that the project will be profitable considering its commercial and technical feasibility the concolidated entity is able to use or sell the asset, the consolidated entity has sufficient resources and intent to complete the development and its costs can be measured reliably. Intangible assets are amortised on a stright line basis over its estimated useful life. Research costs are expensed in the period in which they are incurred.
Tangible fixed assets are measured at historic cost and depreciated on a straight-line basis over the expected useful economic life of the assets, Costs associated with direct maintenance of the assets are expensed on an ongoing basis under operating expenses. Additions or improvements that materially extend the life of the asset are capitalized and depreciated at the same rate as the underlying asset. Fixtures and fittings in leased premises are carried on the balance sheet and depreciated over the period of the lease. The assets are tested for impairment annually
Leases are accounted for as operating lease. Payments are recognized as an expense over the lease term.
Inventories consist of goods and equipment purchased or produced for resale. Current assets are valued at the lower of cost and fair value. Short ferm liabilities are reflected at nominal value.
Finished goods and work in progress are valued at full absorption cost. Impairment charges are made if fair value less cost to sell is lower than the cost orice. Sales costs includes all remaining sales -, administrative- and storage costs. Inventories consist of accumulated costs regarding service provided in Norway.
Trade and other receivables are recognized in the balance sheet at nominal value after deduction of provision for bad debts. The provision for bad debts is estimated on the basis of an individual assessment of each major receivable. In addition, for the remainder of the receivables, a general provision is made based on estimated expected losses. VAT receivables and payables are recorded in the financial statements if they are related to the Norwegian operations.
Cash and cash equivalents include cash, bank deposits and monetary items which are due in less than three months. Cash items in foreign currency are translated at the exchange rate on the balance sheet date.
Group companies have only defined contribution pension plans. For defined contribution plans, the Group pays contributions to publicly or privately administrated pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expenses when they are due. Prepaid contributions are recognized as an asset to the extent that the cash refund or a reduction in future payments is available.
The company's share option program uses the intrinsic value method of accounting. The intrinsic value of the options are expensed directly to equity while related social taxes are expensed in the income statement. Liabilities related to share option program are classified as other current liabilities, and is value at The valuation of the share option program is based on the market trading price of the share on the balance sheet day.
Estimated costs for future quarantee work relating to sales/completed projects is embedded in the contract.
Items denominated in foreign currencies are translated into Norske Kroner at the exchange rate on the balance sheet date
Tax
Tax in the income statement comprises both current tax payable and changes in deferred tax. The tax currently payable is based on taxable profit for the year. Deferred tax is recognized on differences between the carrying amounts of assets and liabilities and the corresponding tax base used in the computation of taxable profit and on the basis of any accumulated tax loss at the end of the financial year. Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are not recognized. Deferred tax assets and liabilities are offset when there is legally enforceable right to offset tax assets against tax liabilities and the Group is able and intends to settle the net tax assets and liabilities
The Cash flow statement has been prepared using the indirect method. The company has held all liquidity in the form of cash in bank accounts
The company recognises revenue when it is realised or realisable and earned.
Alle construction contracts are related parties.
| 2018 | 2017 | 2016 | |
|---|---|---|---|
| Invoiced Revenues | 19 725 241 | 41 181 900 | |
| Earned Revenues not yet invoiced | 11 183 167 | 1 042 000 | |
| Invoiced, not completed work (incl short-term liabilities) | $-35714781$ | ||
| Loss on construction contracts | $-3279628$ | ||
| Recognized revenue on construction contracts | 30 908 408 | 2 187 491 | 1042000 |
| Cost of project execution | 167 598 801 | 5710425 | 12 605 940 |
| Contract profit/loss | $-136690393$ | $-3522934$ | $-11563940$ |
| Total profit (loss) for 2018, 2017, 2016 | $-149384767$ | $-12694374$ | $-9171440$ |
During 2018 there were no construction activites other than on the Skive project. Income in 2018 was NOK 30 908 508, and cost NOK 167 597 801. A loss of NOK 136 690 293 has been recognized as an expense in 2018
The Skive contract has a total value of USD 12 000 000 ( NOK 102 452 700) and with a total estimated cost of NOK 239 143 093, hence a loss recognized as NOK 136 690 293. The progress is as per end of the year 36.9 %. The progress is recognized using actual cost against total forcasted cost are observed by eventual served as NON 150 000 280.
The progress is as per end of the year 36.9 %. Th
Refer to note 10 for intercompany transactions not included in construction contracts.
These assessments are based on management's best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these assessments.
| Geographical distribution: | ||||
|---|---|---|---|---|
| Quantafuel AS | Quantafuel Group | |||
| NOK | 2018 | 2017 | 2018 | 2017 |
| Revenues: | ||||
| Norway | $\overline{0}$ | |||
| Rest of the world | 31 010 693 | 2 187 491 | 102 285 | 2 187 491 |
| Total | 31 010 693 | 2 187 491 | 102 285 | 2 187 491 |
| Other Income: | ||||
| Norway | 121 365 | 1457274 | 121 365 | 1457274 |
| Rest of the world | 0 | |||
| Total | 121 365 | 457 274 | 121 365 | 1 457 274 |
Other Income
In addition NOK 121 365 is funding from Enova SF, and NOK 102 285 from other sales.
Salary and personnel costs:
| Quantafuel AS | Quantafuel Group | |||
|---|---|---|---|---|
| NOK | 2018 | 2017 | 2018 | 2017 |
| Salaries | 14 906 759 | 9 266 760 | 16 274 271 | 9 266 760 |
| Payroll tax | 2 535 520 | 1377351 | 2 535 520 | 1 377 351 |
| Payroll tax - stock rights | 0 | |||
| Pension costs | 342 193 | 161 012 | 500 944 | 161 012 |
| Other benefits | 3099935 | 420 103 | 3 195 052 | 420 103 |
| Total | 20 884 407 | 11 225 226 | 22 505 787 | 11 225 226 |
| Annual full-time equivalent employees | 14 | 10 | 18 | 10 10 |
The parent company has defined contribution plans in accordance with local legislation. The defined contribution plans cover full-time employees and contributions comprise 4% of salaries.
| Chief Executive Officer: | ||
|---|---|---|
| NOK | 2018 | 2017 |
| Salary | 2627695 | 600 000 |
| Pension costs | 30 729 | 10 704 |
| Other benefits | 1863 | |
| Total | 2 658 424 | 612 567 |
The salary of the CEO, Kjetil Bøhn is NOK 1 200 000,00 pr year. In addition in 2018 the CEO received a bonus of NOK 1 427 695,00. Kjetil Bøhn is a major shareholder in KB Management AS, which again is a major shareholder in Quantafuel AS. The Board of Directors received personal remuneration of NOK 700 000,00
Stock rights, options etc:
Options: A share-based incentive program for the company's executive management, the employees, the Chairman and the Board has been established, which enables the Board to compensate current and future executives and employees through warrants to acquire shares in the company. The company's current and future Directors will aslo be permitted to participate
In the program. The program for the the option agreement.
| NOK | Opening balance Granted Options |
Granted options |
Returned options |
Ending balance Granted Options |
Total vested options |
Exercised options |
Average exercise price (A) |
|---|---|---|---|---|---|---|---|
| Board | 200 000 | 200 000 | |||||
| Chief Executive Officer | |||||||
| Employees | 96 000 | 96 000 | |||||
| Total | 296 000 | 296 000 |
Specification of auditor's fee:
| Quantafuel AS | Quantafuel Group | |||
|---|---|---|---|---|
| NOK | 2018 | 2017 | 2018 | 2017 |
| Statutory audit fees | 228 600 | 134 006 | 266 388 | 137 131 |
| Other assurance services | 89 094 | 43 631 | 89 094 | 43 631 |
| Tax advisory fees | ||||
| Other services | ||||
| Total fee to auditor | 317 694 | 177 637 | 355 482 | 180 762 |
VAT is not included in the fees specified above.
| Finance income | |||||
|---|---|---|---|---|---|
| Quantafuel AS | Quantafuel Group | ||||
| NOK | 2018 | 2017 | 2018 | 2017 | |
| Interest income from group companies | 20 033 | × | |||
| Other interest income | 226 645 | 9 4 4 0 | 226 672 | 34 28 2 | |
| Other financial income (agio) | 225 662 | ||||
| Total financial income | 226 645 | 255 135 | 226 672 | 34 282 | |
| Finance expense | |||||
| Quantafuel AS | Quantafuel Group | ||||
| NOK | 2018 | 2017 | 2018 | 2017 | |
| Interest expenses from group companies | |||||
| Other interest expenses | $-2275236$ | $-1555354$ | $-3810399$ | $-1555354$ | |
| Other financial expenses/ disagio. | $-10682453$ | $-3316193$ | $-11804866$ | $-3244951$ | |
| Intel financial expenses | $-12057699$ | $-4.971.517$ | 15.615.265 | $A$ 900 305 |
The group net currency exchange gains and losses for the year of 2018 are effects due to the weakening of the reporting currency NOK against USD, EUR and DKK. Since a significant
amount of Quantafuel AS receivables and lia
The Company had in 2018 an interest expense of NOK 1 252 651 for the loan of USD 3 000 000 from Vitol S.A. In addition the Company had interest expenses of NOK 998 114 on convertible loans and NOK 24 471 in other interest expenses was NOK 24 471 in relation to suppliers interest.
On Group level DKK 871 777 (NOK 1 122 413) in interest on the loan from DGI is recognized (ref note 11), and NOK 1 560 575 i
| Income tax expense | |||||
|---|---|---|---|---|---|
| Quantafuel AS | Quantafuel Group | ||||
| NOK | 2018 | 2017 | 2018 | 2017 | |
| Tax payable | |||||
| Changes in deferred tax | $\overline{\phantom{a}}$ | Ð | |||
| Total income tax expense. | ٠ | - 4 | c. | × | |
| Tax base calculation | |||||
| Profit before income tax | $-182055523$ | $-32557632$ | -218 778 797 | $-34$ 106 003 | |
| Permanent differences | $-2773006$ | 1770089 | $-2770755$ | 1770 089 | |
| Temporary differences | 136 844 115 | 289 196 | 136 631 305 | 289 196 | |
| Tax base | -47 984 414 | $-30498347$ | -84 918 246 | $-32046718$ | |
| Temporary differences: | |||||
| Receivables | ÷ | ||||
| Inventories | |||||
| Non current assets | 413 850 | $-77093$ | 413 850 | $-77093$ | |
| Provisions and contracts | $-137603193$ | $-268$ 138 | $-137603193$ | $-268$ 138 | |
| Foreign exchange rate gains (losses) | ä | ٠ | ٠ | ||
| Losses carried forward | $-110712685$ | $-62728272$ | $-117526037$ | -63 597 837 | |
| Total | $-247902028$ | $-63073503$ | -254 715 380 | ||
| Deferred tax liability (asset) | œ | ||||
| Deferred tax asset not recognized | ٠ | ||||
| Deferred tax liability (asset) | $-0$ | ÷. | |||
| Effective tax rate | Quantafuel AS | Quantafuel Group | |||
| Expected income taxes at statutory tax rate | |||||
| Permanent differences | $-637791$ | 424 821 | 843 313 | $-38871$ | |
| Change in allowance for taxes carried forward not recognized | 637 791 | $-424821$ | |||
| Income tax expense | $-0$ | $\circ$ | 843 313 | $-38871$ | |
| Effective tax rate in % | 0.0% | 0.0% | 0.0% | 0.0% |
Differences of taxable income and net income before tax as reported in the income statement are due to items of income or expense that are taxable or deductible.
In future years (temporary differences), and excluded Items
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is more likely than not that future tax
advantages will not be available to allow all of the asset to be r
| Quantafuel AS | ||||||
|---|---|---|---|---|---|---|
| NOK | Goodwill. | Research and Development cost |
Other intangibles |
Acquired rights/Patents |
Total | |
| Acquisition cost 01.01. | 106 570 | 106 570 | ||||
| Additions | 8911923 | 454 350 | 9 366 273 | |||
| Disposals | ||||||
| Acquisition cost 31.12. | 8911923 | 560 920 | 9 472 843 | |||
| Accumulated amortisation at 31.12. | ۰ | $-454350$ | $-454350$ | |||
| Accumulated impairment loss 31.12. | $\overline{\phantom{a}}$ | ٠ | ||||
| Reversed impairments 31.12. | ×. | |||||
| Net carrying value at 31.12. | 8911923 | 106 570 | 9018493 | |||
| write downs for the year | $-454350$ | $-454350$ | ||||
| Impairment loss for the year | ۰ |
| Research and | |||||
|---|---|---|---|---|---|
| Development | Other | Aquired | |||
| NOK | Goodwill | cost | Intangibles | Rights/Patents | Total |
| Acquisition cost 01.01. | 1 461 333 | 106 570 | 567903 | ||
| Additions | 8911923 | 454 350 | 9 366 273 | ||
| Disposals | $-1080569$ | $-1080569$ | |||
| Translation adjustments | |||||
| Acquisition cost 31.12. | 8911923 | 380 764 | 560 920 | 9 853 607 | |
| Accumulated amortisation at 31.12. | $-565692$ | $-454350$ | $-1020042$ | ||
| Accumulated impairment loss 31.12. | |||||
| Reversed impairments 31.12. | 375 302 | 375 302 | |||
| ٠ | |||||
| Net carrying value at 31.12. | 8911923 | 190 373 | 106 570 | 9 208 866 | |
| Amortisation for the year | $-454350$ | $-454350$ | |||
| Impairment for the year | u. |
The Company activated in 2018 NOK 8 585 863 of engineering costs in regards to construction, and NOK 326 060 in acquired rights. The activation of NOK 8 585 863 will not be amortised
as it is costs related to the generic c
Both the parent company and the group use 10 years straight line amortisation for acquired rights and other intangibles.
Acquired rights was purchased with a remaining life of 17 years, and amortisation was set to 17 years
| Quantafuel AS | |
|---|---|
| Property and | Machinery and | |||
|---|---|---|---|---|
| NOK | Vehicles | plant | equipment | Total |
| Acquisition cost at 01.01. | 629 340 | 629 340 | ||
| Additions | 119 216 | 119 216 | ||
| Disposals | $\sim$ | |||
| Acquisition cost 31.12. | ÷ | 748 556 | 748 556 | |
| Accumulated depreciation 31.12. | ÷ | $\overline{\phantom{a}}$ | $-439666$ | $-439666$ |
| Accumulated impairment loss 31.12. | ||||
| Reversed impairment loss 31.12. | ||||
| Net carrying value at 31.12. | 308 890 | 308 890 | ||
| Depreciation for the year | 85 664 | 85 664 | ||
| Impairment loss for the year | $\overline{\phantom{a}}$ | $\sim$ |
| NOK | Vehicles | Property and plant |
Machinery and equipment |
Total |
|---|---|---|---|---|
| Acquisition cost at 01.01. | ÷. | 25 241 539 | 629 340 | 25 870 879 |
| Additions | ۰ | 13 171 647 | 185 550 | 13 357 197 |
| Disposals | ||||
| Translation adjustments | ||||
| Acquisition cost 31.12. | 38 413 185 | 814 890 | 39 228 075 | |
| Accumulated depreciation 31.12. | $-48695$ | $-446915$ | $-495609$ | |
| Accumulated impairment loss 31.12. | × | |||
| Reversed impairment loss 31.12. | ||||
| Net carrying value at 31.12. | ۰ | 38 364 490 | 367 976 | 38 732 466 |
| Depreciation for the year | $\sim$ | 12 372 | 129 405 | 141 777 |
| Impairment loss for the year (incl. reversals) | ×. | ۰ | ||
| Both the parent company and the group use linear depreciation for all tangible assets |
| The useful economic life is estimated to be: | |||
|---|---|---|---|
| The useful economic life is estimated to be: | Years |
|---|---|
| * Buildings and other real estate | $20 - 50$ |
| * Machinery and equipment | $3 - 15$ |
| * Land | No depreciation |
| Subsidiaries | Capital | Est year | Prosentage | Investments 18 |
|---|---|---|---|---|
| Quantafuel Sweden AB | Stockholm | 2015 | 100% | 249 448 |
| Quantafuel INC | Washington D.C. | 2015 | 100% | |
| Quantafuel UK Itd | London | 2015 | 50 % | 5525 |
| Quantafuel Oslo AS | Oslo | 2016 | 100 % | 30 000 |
| Quantafuel CZ s.r.o | Praha | 2016 | 100% | |
| Next Gen Energy S.A. de C.V. | Mexico City | 2016 | 50 % | |
| Quantafuel Mexico S.A. de C.V. | Mexico City | 2015 | 50% | |
| Quantafuel Skive ApS* | Copenhagen | 2017 | 76 % | 16870535 |
| Quantafuel Skive ApS | Amount |
|---|---|
| Fixed Assets | 41 685 160 |
| Current assets | 17 656 171 |
| Non-current liabilities | 13 060 496 |
| Current liabilities | 15623478 |
| Operating revenue | |
| Operating profit (or loss) | $-2718276$ |
| Net income / loss (-) | $-3029429$ |
| Amount in NOK - 100 % |
The Company is currently building the first PTL plant in Skive Denmark. The plant is delivered from Quantafuel AS, with additional investments locally in infrastructure. The plant is planned to be in operation in 2019. The minority shareholders have equal rights according to the percentage of shares.
There has been no activites in this company during 2018.
The Company has initiated a project for a PTL plant development in Norway, but this has had limited progress due to the group's focus on commercialization of the Skive plant. Further activities/progress are planned after the Skive plant is put into operation. The Company has been granted funding support from Enova SF to develop the project.
The operations executed in Quantafuel Sweden AB was significantly scaled back and the planned activity and expected cost reduced to a minimum in 2018.
The company was closed down in 2018.
There has been no activites in this company during 2018. The shareholders have equal rights according to the percentage of shares.
All activities in the company was suspended in Q1 2018 and the company was closed down during 2018.
There has been now activites in this company during 2018. The shareholders have equal rights according to the percentage of shares.
As there have been no planned activities in the company, the US shell company has been closed down.
Quantafuel AS
| Receivables: | Quantafuel AS | |
|---|---|---|
| NOK | 2018 | 2017 |
| Loans to group companies | ÷ | ÷ |
| Allowance of loans to group companies | ||
| Net value of loans to group companies | ٠ | ÷ |
| Accounts receivable | 18 281 677 | 76.066 |
| Allowance for accounts receivable group companies | ||
| Net value of accounts receivable | 18 281 677 | 76 066 |
| Other receivables | ||
| Total | 18 281 677 | 76 066 |
| Payables: | ||
| NOK | 2018 | 2017 |
| Accounts payable | 1 406 | 1 396 328 |
| Other short term payables | ||
| Total | 1406 | 396 328 |
The Company had by year end 2018 a intercompany balance of NOK 6 991 172 towards Quantafuel Skive, which is planned to be settled during 2019. The intercompany balance of NOK 11 290 505 is between the Company and Quantafuel Oslo AS, and will be settled when further progress on the development on the PTL plant is materialized (note 9). The above transactions were to interest.
Refer to note 2 for intercompany transactions related to construction contracts.
Amounts in NOK
Non - current receivables
| Quantafuel AS | Quantafuel Group | ||||
|---|---|---|---|---|---|
| NOK | 2018 | 2017 | 2018 | 2017 | |
| Other non-current receivables Non-current receivables - deposit Quantafuel Skive ApS Allowance of non-current receivables |
6730284 | 4 3 4 7 3 3 8 | 14 673 907 3 261 584 |
13 598 478 | |
| Net non-current receivables | 6730284 | 4 347 338 | 17 935 491 | 13 598 478 |
Quantafuel AS other non-current receivables are refund of Norwegian and Danish VAT and Skattefunn
Non- current liabilities
| Quantafuel AS | Quantafuel Group | |||
|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | |
| $-13060496$ | $-13566208$ | |||
| $-13565566$ | ||||
| $-13565566$ | $-13060496$ | $-13566208$ | ||
Quantafuel Skive ApS has been granted a loan from Danmarks Grønne Investeringsfond ("DGI") of DKK 53,000,000, of which DKK 13 000 000 (net of fees DKK 12 673 340) is drawn
at 31.12.2018. The remaining will be drawn when th
| Secured debts: | |
|---|---|
| Pladnad geeate |
Pledged assets:
Property and plant
Total
| Curront lightlities | |
|---|---|
| CONTROLLIBOURDER | Quantafuel AS | Quantafuel Group | |||
|---|---|---|---|---|---|
| NOK | 2018 | 2017 | 2018 | 2017 | |
| Taxes payable | |||||
| Accrued commissions | $-15043614$ | $-4264628$ | $-18607885$ | $-11287879$ | |
| VAT and Fees payable | |||||
| Accrued earn-out payments | $\sim$ | ||||
| Accrued stock options | |||||
| Current intercompany liabilities | $-912800$ | $-268$ 135 | $-912800$ | $-268$ 135 | |
| Group provisions | |||||
| Unearned revenue | |||||
| Other current liabilities | $-121518292$ | $-43650461$ | -157 533 647 | $-46920665$ | |
| Total | -137 474 706 | -48 183 224 | $-177054332$ | $-58476679$ |
Other current liabilities consists of loan of USD 3 000 000 from Vitol S.A, accrued income from construction plant of NOK 89 526 408 and other public duties of NOK 5 926 384 The addition for Group DKK 2 870 457 (NOK 3 824 023) current part of loan from DGI, other current liabilities for subsidiaries NOK 1 857 672 and internal profit elimination from QF Skive of NOK 5 926 384
NOK 30 908 408.
The company has no inventory as of 31.12.2018
Amounts in NOK
| Quantafuel AS | Quantafuel Grour | |||
|---|---|---|---|---|
| NOK | 2018 | 2017 | 2018 | 2017 |
| Employees salary taxes, deposited in a separate bank account | 602 421 | 647 099 | 602 421 | 647 099 |
| Security deposit rent / other designated funds | ||||
| Total | 602 421 | 647 099 | 602 421 | 647 099 |
Amounts in NOK
| shares | Face value | NOK | |
|---|---|---|---|
| Share Ca. _________ |
7267956 | 0.07 | 72 680 |
At 31.12.2018 Quantafuel AS had 191shareholders. Issued capital consists of one class of shares and all issued shares have the same voting rights.
The 20 largest shareholders as of 31 December 2018 were:
| Name | Related party | No of shares | Ownership |
|---|---|---|---|
| SVENSKA HANDELSBANKEN AB | 1 119 357 | 15,40 % | |
| KB MANAGEMENT | CEO | 495 023 | 6.81% |
| FAREID HOLDING AS | Employee | 460 686 | 6,34 % |
| DOMAREN I GØTEBORG AB | 270 841 | 3,73 % | |
| BLAAIS HOLDING AS | 243 490 | 3,35 % | |
| VPF NORDEA NORGE VERDI | 216 500 | 2,98 % | |
| MIDAS CAPITAL AS | 209 827 | 2,89 % | |
| Skandinaviska Enskilda Banken AB | 184 056 | 2,53 % | |
| Jefferies LLC | 161 603 | 2.22% | |
| T.D. VEEN AS | 160 000 | 2,20% | |
| STATOIL PENSJON | 151 180 | 2,08 % | |
| PRO AS | 144 000 | 1.98% | |
| TELECOM AS | 143812 | ||
| STRANDEN INVEST AS | 128 749 | 1,98% | |
| VPF NORDEA KAPITAL | 1,77% | ||
| MULTIMED AS | 120 954 | 1,66 % | |
| VERDIPAPIRFONDET DNB MILJØINVEST | 115 540 | 1,59% | |
| VPF NORDEA AVKASTNING | 111 070 | 1,53 % | |
| Alta Invest SA | 103 800 | 1,43% | |
| 96 000 | 1,32% | ||
| FJELLSETH HOLDING AS | 90 980 | 1,25 % | |
| Other | 2 540 488 | 34,95% | |
| Total number of shares issued and outstanding | 7267956 | 100,0% |
Total number of shares authorized, but not issued
Total number of shares issued and authorized
Amounts in NOK
| Quantafuel AS | ||||
|---|---|---|---|---|
| NOK | Issued capital | Share premium | earnings | Total |
| Equity 01.01.17 | 38 156 | 40 867 059 | $-31$ 103 922 | 9801293 |
| Capital increase | 2 448 | 1058779 | 061 227 | |
| Capital increase | ||||
| Accrued option costs | ||||
| Net profit for the year | $-32557632$ | $-32557632$ | ||
| Correction beginning balance | $-5103000$ | $-5103000$ | ||
| Equity 31.12.2017 | 40 604 | 41 925 838 | $-68$ 764 554 | $-26798112$ |
| Equity 01.01.2018 | 40 604 | 41 925 838 | $-68764554$ | $-26798112$ |
| Capital increase 050618 | 22 060 | 149 985 940 | 150 008 000 | |
| Capital increase 060818 | 10015 | 40 852 409 | 40 862 424 | |
| Accrued option costs | 2 604 000 | 2 604 000 | ||
| Net profit for the year | $-182055523$ | $-182055523$ | ||
| Adjustment change in employee stock rights | ||||
| Equity 31.12.2018 | 72 679 | 235 368 187 | -250 820 077 | $-15379211$ |
The Company had a capital increase of NOK 150 008 000 in June, and converted the loans of NOK 40 862 424 to qeuity in august 2018.
The negative equity is due to increase in project cost for Skive (Note 2) where the cost ha
Quantafuel Group
| NOK | Issued capital Share premium | Retained earnings |
Currency translation differences |
Total shareholders' equity |
Minority Interests |
Total equity | |
|---|---|---|---|---|---|---|---|
| Equity 01.01.2017 | 38 156 | 40 867 059 | -31 103 922 | ×. | 9801293 | 9801293 | |
| Capital increase | 2 4 4 8 | 1058779 | 1 061 227 | 1 061 227 | |||
| Capital increase | |||||||
| Net loss for the year | $-32557632$ | $-32557632$ | |||||
| Share capital increase in subsidiary minority interest | |||||||
| Currency translation differences | |||||||
| Adjustment beginning balance | 11 073 957 | 11 073 957 | 11 073 957 | ||||
| Equity 31.12.2017 | 40 604 | 41 925 838 | $-52587597$ | ×. | $-10621155$ | $-10621155$ | |
| Equity 01.01.2018 | 40 604 | 41 925 838 | $-52587597$ | $-10621155$ | 1999 | $-10621155$ | |
| Capital increase 050618 | 22 060 | 149 985 940 | 150 008 000 | 150 008 000 | |||
| Convertible Ioan 060818 | 10015 | 40 852 409 | 40 862 424 | 40 862 424 | |||
| Accrued option cost | 2 604 000 | 2 604 000 | 2 604 000 | ||||
| Net loss for the year | $-217935484$ | $-217935484$ | 727 063 | $-217208421$ | |||
| Share capital increase in subsidiary minority interest | |||||||
| Currency translation differences | |||||||
| Adjustment beginning balance | 345 569 | 345 569 | 345 569 | ||||
| Equity 31.12.2018 | 72679 | 235 368 187 | $-270$ 177 512 | $-34736646$ | 727 063 | $-34009583$ | |
| The summarized as $\mathbf{F} \mathbf{F} \mathbf{F} \mathbf{F}$ as $\mathbf{F} \mathbf{A} \mathbf{F}$ as $\mathbf{A} \mathbf{F} \mathbf{A} \mathbf{F} \mathbf{F}$ . If $\mathbf{F} \mathbf{F} \mathbf{F}$ |
The conversion to IFRS as of 01.01.2017 has had no effect on equity.
7 267 956
The CEO is a shareholder in KB Management. KB Management is a major shareholder in Quantafuel AS, holding as per 31.12.2018 - 495 023 shares
Erik Fareid, an employee in Quantafuel AS, is also a major shareholder through his company Fareid Holding AS, which had 460 686 shares in Quantafuel AS pr 31.12.2018
The company has not amortisation of goodwill
| Current receivables | ||||
|---|---|---|---|---|
| Quantafuel AS | Quantafuel Group | |||
| NOK | 2018 | 2017 | 2018 | 2017 |
| Accounts receivables | 18 281 677 | 76 066 | 913 889 | 619 561 |
| Allowance for uncollectible accounts | ||||
| Net accounts receivable | 18 281 677 | 76 066 | 913889 | 619 561 |
| Taxes and fees receivable | 6 193 956 | 4 244 015 | 6 193 956 | |
| Prepaid expenses | 336 328 | 84 656 | 336 328 | |
| Loans to external distributors | $\sim$ | $\overline{\phantom{a}}$ | ||
| Other current receivables | 200 000 | 18 667 | 11 405 207 | 13 598 478 |
| Total | 25 011 961 | 4 423 404 | 18 849 380 | 14 218 039 |
Taxes and fees receivable includes NOK 2 884 965 from Skattefunn, NOK 3 309 000 in VAT receivables and NOK 536 328 in other prepayments.
The company has included a description of risks related to the business in the Board of Directors report.
The company operates business units in several countries with currency risk associated with currency exposure mainly related to cash-flows in local currency and capital funded in NOK. No currency hedges have been executed that may mitigate this exposure.
Liquidity is deposited in bank accounts in NOK, USD and EUR.
The Company rent its headquarter in Lysaker, Norway. The lease was renewed in January 2018 for another 5 years. The Group rents property and plant in Skive, starting 2018 for 15 years.
| Quantafuel AS Quantafuel Group |
||||
|---|---|---|---|---|
| NOK | 2018 | 2017 | 2018 | 2017 |
| Offices rental | 1 142 589 | 926 935 | 1314212 | 926 935 |
| Warehouse lease | ||||
| Vehicle cost (leasing) | ||||
| Total annual lease cost | 1 142 589 | 926 935 | 1314212 | 926 935 |
At year end, the group has outstanding commitments under non-cancellable operating leases that fall due as follows:
| Quantaruel AS | Quantafuel Group | |||
|---|---|---|---|---|
| NOK | 2018 | 2017 | 2018 | 2017 |
| Within one year | ||||
| Later than one year but within five years | ||||
| Later than five years | 50 962 245 | |||
| Total annual commitment | 50 962 245 |
The Company had an equity increase of NOK 150 000 000 in February, inviting both existing shareholders and new investors to participate.
The CEO was awarded 30 000 options 15.03.2019.
At the end of the year the loss for the Skive contract was estimated to be NOK 92 261 400. Based on the activity in the project from year end to the signing of the accounts, this estimated loss has been updated with additi NOK 136 690 293,- (note 2)
There has been no other incidents/happenings after year end.
With reference to equity increase and strengthening of the balance sheet, please see elaboration in Note 15 and Note 21
The Company is in a position to continue as a going concern.
Quantafuel is a technology-based energy company converting waste plastics back into low-carbon synthetic oil products replacing virgin oil products. Quantafuel is planning to establish, operate and own dedicated plastic-toliquid (PtL) plants and plans to establish several plants throughout Europe and beyond.
Quantafuel has commenced the building of the its first commercial production plant in Skive, Denmark, through its subsidiary (76% owned) Quantafuel Skive ApS. The plant is planned to be set into production in 2019.
For Quantafuel AS, the net loss for the year was NOK 182 055 523,-, and for the Group NOK 217 935 484,-, Revenue for the Company was NOK 31 132 058,- and for the Group NOK 223 650,-. The main revenue in Quantafuel AS is the sale of the production plant to Quantafuel Skive ApS.
The Company has received grants from Innovasjon Norge and Enova and have during 2018 had activities for these projects;
The "Innovasjon Norge" project mapped and analyzed the availability of eligible plastic waste in Norway. The knowledge acquired through extensive lab testing of numerous plastic waste streams, laid the basis for further testing and development of process equipment. Such as new preprocessing modules, ultimately enabling Quantafuel's Plastic to Liquid plants ability to process a wider range of plastic waste compositions. The research project results are a part of Quantafuel's managements Norwegian investment feasibility study. In total NOK 500 000,- has been received in total for this project, of this NOK 0,- was received in 2018 and the corresponding cost was NOK 967 273,- in 2018. The total project cost for this project was NOK 1 302 939,82.
The grant from Enova is in support to a pilot project of new energy- and climate technology in relations to highefficiency production of bio-jet fuel from Norwegian forest. In 2018 the Company received NOK 121 365,- from Enova and the corresponding cost was NOK 269 700,-
The Company currently has two projects with support from Skattefunn; 1) Experimental development for optimization of PtL plants, which will develop a more robust and safer PtL plant with more strong operation and increased tolerance for available raw material and 2) Industrial research for optimization of PtL plants, which will secure a better energy utilization and more robust operation.
The Company had a net increase in cash of NOK 58 108 819,- for the year, while the Group had an increase of NOK 64 713 094,-. The operational cashflow for the Company was negative NOK 137 127 880,-, and for the Group negative NOK 134 894 813,-. Net investment was NOK 9 366 273,- for the Company, and NOK 21 878 937,- for the Group. Net proceeds from capital placement and new debt was NOK 204 602 972.- (Company) and NOK 221 486 843,- (Group). The cash balance at the end of the year was NOK 70 600 639,- (Company) and NOK 86 052 946,-(Group).
For the Company, the equity was negative NOK 15 379 211,- at the end of 2018. For the year, the equity increased with NOK 11 418 901.-, which came from a net increase in the Share capital and premium reserve of NOK 193 474 424,- but less the net uncovered loss for the year of NOK 182 055 523,-.
The Group had a negative equity of NOK 34 736 646,- at the end of 2018, and decrease of NOK 24 115 491,- for the year.
The negative equity was being addressed in February 2019, with a capital increase inviting existing shareholders and new investors to participate. The Company raised gross proceeds of NOK 150 000 000, - in new equity and further strengthening the balance sheet.
In the Board's opinion, the information in the financial statements give a true and fair view of the company's assets, debts and financial situation.
The main activity in the Group in 2018 has been to build the Skive plant. The plant was sold on a firm turnkey contract in 2017 with a fixed price of USD 12,000,000 (NOK 102 452 700,-) from Quantafuel AS to the subsidiary Quantafuel Skive ApS. The cost in Quantafuel AS for the delivery was at the end of the 2018 estimated to be NOK 194 714 100,-, with a loss of NOK 92 261 400,-,
During First Half 2019 further delays in the project was experienced and an increased cost of NOK 44 428 993,was estimated for the completion of the plant based on the end Q1 2019 result, to a total loss of NOK 136 690 393,for the internal delivery of the plant to Quantafuel Skive ApS (total delivery cost of NOK 239 143 093,-).
In accordance with IAS 11 - "Recognition of loss in Construction Contracts" and IAS 10 - "Events after the reporting period", the estimate from the end of the year has then been revised and the newly disclosed cost increase included in the 2018 estimate for the completion of the Skive project.
As a consequence, the total loss for the project is now incorporated in the 2018 accounts with NOK 136 690 393,-, of which NOK 84 720 033,- is accruals for cost to come in 2019.
In February 2019 the Company carried out a successful private placement of gross proceeds of NOK 150 000 000,in new equity to enable the Company to complete the project and commence commercial production in 2019.
Despite the increased cost to complete the first plant, the Board remains positive for the development of the company and its good prospects of profitable operation and growth going forward.
In accordance with the Accounting Act § 3-3, the Board confirm that the Financial Statements have been prepared under the assumption of going concern.
The Company's net loss for the year was NOK 182 055 523, - which the Board recommends being allocated against uncovered loss:
Quantafuel AS
Uncovered loss
NOK 182 055 523, -
The Company has 14 full-time employees, and the group 18 at the end of the year, 12 (15) men and 2 (3) women. The Board is composed by 7 men.
The Company has implemented routines against discrimination and has a continuous focus to prevent any discrimination within the Group.
The Board considers the working environment in the Company and the Group to be good, and no measures have been needed to address the issue.
The sick leave for the Group is low and below 1%.
There have not been any incidents causing injuries on personnel during 2018.
The Company do not have any operations with could cause any pollution to the external environment. Quantafuel Skive ApS which has carry out the building project during 2018, has implemented routines to mitigate pollution risk during the construction period. There have not been any incidents during the year.
To ensure a good process of mitigating the risks in the Group, measures are initiated to have a systematic approach to risk handling and mitigation at all level in the Group
The Group's ability to carry out project at profitable margin is important to meet the Group's business goals. Focus in the first project has been, in addition to the execution itself, to improve all aspects of the project execution and control. A full evaluation is further planned to be carried out at conclusion of the construction project before the commencement of the next planned construction project to use the experience from the first project as basis for the forthcoming projects.
The Company has in 2018 not have any external sale and thus there are no market risk connected to the operation for the year.
The Group has in February 2019 concluded a successful private placement. The major use of available funds is to conclude the Skive project. Based on the current plan and cost estimate, the Group will be able to complete the project and set the plant in commercial operation with available funds and drawdown on existing bank facility. The Group has a defined growth strategy and will be seeking additional funding to build the Company further. Based on the successful private placements in 2018 and in 2019, where the Company has proven its ability to attract investors, combined with recent increased interest and focus among investors, it is believed that as soon as the first plant is in operation additional funding opportunities will be possible.
The Credit risk in the Company is limited as the revenue mainly derives from group internal revenue from the sale of the Skive plant.
The Group has currency risk mainly between DKK, EUR, USD and NOK for the Skive project. No hedging agreements have been entered for the project. The Company will, however, implement a hedging policy when the ordinary operations commence. For the forthcoming projects, each project will have a defined hedging strategy to mitigate any currency fluctuation in the coming projects.
There is a general growing focus on sustainability and environment, hereunder for the treatment of plastic waste. Quantafuel has solutions for the challenges of recycling of plastic by applying a unique pyrolysis process. The plant in Skive in Denmark will when it is operational create further business opportunities for the company.
It is the Company's ambition to become the leading provider of low carbon products produced from waste plastic, and when Skive is operational the Company will have the foundation to achieve that ambition.
The Board takes the opportunity to thank the employees and the management for their hard efforts and diligent work in a challenging phase for the company.
The Board of Directors Quantafuel AS Lysaker, 12. June 2019
Oscar Spieler-Chairman
Jens Engwall - Board/Member
Dag-Erik Rasmussen - Board Member
Per-Anders Hjort - Board Member
Bård Mikkelsen - Board Member
Ragnar Søegaard - Board Member
Thorleif Enger - Board Member
Kjetil Bøhn - CEO
Filipstad Brygge 1, 0252 Oslo Pb 1312 Vika, 0112 Oslo Org.nr: 982 316 588 MVA
T+47 23 11 4 2 0 0 F +47 23 11 42 01
Til generalforsamlingen i Quantafuel AS
Vi har revidert Quantafuel AS' årsregnskap, som består av:
Etter vår mening:
Vi har gjennomført revisjonen i samsvar med lov, forskrift og god revisjonsskikk i Norge, herunder de internasjonale revisjonsstandardene International Standards on Auditing (ISA-ene). Våre oppgaver og plikter i henhold til disse standardene er beskrevet i Revisors oppgaver og plikter ved revisjon av årsregnskapet. Vi er uavhengige av selskapet og konsernet slik det kreves i lov og forskrift, og har overholdt våre øvrige etiske forpliktelser i samsvar med disse kravene. Etter vår oppfatning er innhentet revisjonsbevis tilstrekkelig og hensiktsmessig som grunnlag for vår konklusjon.
Ledelsen er ansvarlig for øvrig informasjon. Øvrig informasjon omfatter informasjon i årsrapporten bortsett fra årsregnskapet og den tilhørende revisjonsberetningen.
Vår uttalelse om revisjonen av årsregnskapet dekker ikke øvrig informasjon, og vi attesterer ikke den øvrige informasjonen.
I forbindelse med revisjonen av årsregnskapet er det vår oppgave å lese øvrig informasjon med det formål å vurdere hvorvidt det foreligger vesentlig inkonsistens mellom øvrig informasjon og årsregnskapet, kunnskap vi har opparbeidet oss under revisjonen, eller hvorvidt den tilsynelatende inneholder vesentlig feilinformasjon. THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING
RSM Norge AS is a member of the RSM network and utades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM retrictivity when may not the RSM retries in many accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
Dersom vi konkluderer med at den øvrige informasionen inneholder vesentlig feilinformasion er vi pålagt å rapportere det. Vi har ingenting å rapportere i så henseende.
Styret og daglig leder (ledelsen) er ansvarlig for å utarbeide årsregnskapet i samsvar med lov og forskrifter, herunder for at det gir et rettvisende bilde i samsvar med International Financial Reporting Standards som fastsatt av EU. Ledelsen er også ansvarlig for slik intern kontroll som den finner nødvendig for å kunne utarbeide et årsregnskap som ikke inneholder vesentlig feilinformasjon, verken som følge av misligheter eller utilsiktede feil.
Ved utarbeidelsen av årsregnskapet er ledelsen ansvarlig for å ta standpunkt til selskapets og konsernets evne til fortsatt drift, og på tilbørlig måte å opplyse om forhold av betydning for fortsatt drift. Forutsetningen om fortsatt drift skal legges til grunn for årsregnskapet med mindre ledelsen enten har til hensikt å avvikle konsernet eller å legge ned virksomheten, eller ikke har noe realistisk alternativ til dette.
Vårt mål med revisjonen er å oppnå betryggende sikkerhet for at årsregnskapet som helhet ikke inneholder vesentlig feilinformasjon, verken som følge av misligheter eller utilsiktede feil, og å avgi en revisjonsberetning som inneholder vår konklusjon. Betryggende sikkerhet er en høy grad av sikkerhet, men ingen garanti for at en revisjon utført i samsvar med lov, forskrift og god revisjonsskikk i Norge, herunder ISA-ene, alltid vil avdekke vesentlig feilinformasjon som eksisterer. Feilinformasjon kan oppstå som følge av misligheter eller utilsiktede feil. Feilinformasjon blir vurdert som vesentlig dersom den enkeltvis eller samlet med rimelighet kan forventes å påvirke økonomiske beslutninger som brukerne foretar basert på årsregnskapet.
For videre beskrivelse av revisors oppgaver og plikter vises det til: https://revisorforeningen.no/revisionsberetninger
Basert på vår revisjon av årsregnskapet som beskrevet ovenfor, mener vi at opplysningene i årsberetningen om årsregnskapet, forutsetningen om fortsatt drift og forslaget til resultatdisponering er konsistente med årsregnskapet og i samsvar med lov og forskrifter.
Basert på vår revisjon av årsregnskapet som beskrevet ovenfor, og kontrollhandlinger vi har funnet nødvendig i henhold til internasjonal standard for attestasjonsoppdrag (ISAE) 3000 «Attestasjonsoppdrag som ikke er revisjon eller forenklet revisorkontroll av historisk finansiell informasjon», mener vi at ledelsen har oppfylt sin plikt til å sørge for ordentlig og oversiktlig registrering og dokumentasjon av selskapets regnskapsopplysninger i samsvar med lov og god bokføringsskikk i Norge.
Oslo, 13. juni 2019 RSM Norge AS
auto Lars Løyning Statsautorisert revisor
$\mathbb{R}^2$
for
Org.no: 915 119 484
Reporting period: $01.01.2017 - 31.12.2017$
$\frac{1}{3}$
Quantafuel AS, Vollsveien 13H, 1366 Lysaker Org.nr 915 119 484 mva www.quantafuel.com
$\bar{1}$
| Year Ended, | 2017 | 2016 | |
|---|---|---|---|
| Revenue | $\overline{2}$ | 2 187 491 | 1042000 |
| Other Income | 1457274 | ||
| Totalt revenue | 3 644 765 | 1042000 | |
| Cost of sales | 2,3 | -3 747 620 | |
| Gross profit | $-102855$ | 1042000 | |
| Operating expenses: | |||
| Payroll expenses | 4 | $-11225226$ | $-5799696$ |
| Depreciation | 5 | $-196668$ | $-157334$ |
| Other operating expenses | 2,3,4,6,7 | $-16416471$ | $-21564270$ |
| Total operating expenses | -27 838 365 | -27 521 300 | |
| Operating profit (or loss) | -27 941 220 | -26 479 300 | |
| Interest income | 8 | 29 4 73 | 29 14 1 |
| Income from subsidiaries and other group entities | 91868 | ||
| Exchange currency gains | 8 | 225 662 | 2887 |
| Interest expense | 8 | $-1555354$ | $-1056571$ |
| Other financial expenses | 8 | $-3316193$ | $-114799$ |
| Net financial gain/(loss) | $-4616412$ | $-1047474$ | |
| Operating result before tax | -32 557 632 | $-27526774$ | |
| Tax on ordinary result | 9 | ||
| Profit (or loss) for the year | -32 557 632 | $-27526774$ | |
| Brought forward | |||
| Loss brought forward | 10 | 32 557 632 | 27 526 774 |
| Net brought forward | -32 557 632 | $-27526774$ |
Quantafuel AS, Vollsveien 13H, 1366 Lysaker
Org.nr 915 119 484 mva
www.quantafuel.com
| Year Ended, | 12.31.2017 | 12.31.2016 | |
|---|---|---|---|
| Assets | |||
| Non-Current Assets (Fixed Assets) | |||
| Property, Plant and Equipment (PPE) | 5 | 275 338 | 472 006 |
| Investment Securities (Available for sale/Held-to-maturity) | |||
| Investments in Associates | 11 | 17 653 546 | 4 400 794 |
| Intangible Assets (Patent, Copyright, Trademark, etc.) | 12 | 106 570 | 106 570 |
| Less: Accumulated Amortization | 12 | ||
| Other Non-Current Assets, e.g. Deferred Tax Assets, Lease Receivable | |||
| Total Non-Current Assets | 18 035 454 | 4979370 | |
| Current Assets | |||
| Accounts Receivable (Debtors) | 13 | 76066 | 9738350 |
| Other Receivable (Debtors) | 13 | 4 347 338 | 2 153 681 |
| Cash and Cash Equivalents | 14 | 12 491 820 | 6721393 |
| Total Current Assets | 16915224 | 18 613 424 | |
| Total assets | 34 950 678 | 23 592 794 |
Quantafuel AS, Vollsveien 13H, 1366 Lysaker
Org.nr 915 119 484 mva
www.quantafuel.com
Year Ended,
Liabilities and Equity
| Equity | |||
|---|---|---|---|
| Paid-in Capital | 10.15 | 40 604 | 38 1 56 |
| Share Capital (Ordinary Shares) | 10 | 41 925 839 | 30 667 027 |
| Share Premium | 10 200 032 | ||
| Share Capital (reg in Brreg 25.01.2017) | 41 966 443 | 40 905 215 | |
| Total Paid-in Capital | |||
| Retained Earnings | |||
| Revaluation Reserve | 10 | $-68764555$ | -31 103 922 |
| Uncovered loss | $-68764555$ | -31 103 922 | |
| Total Retained Earnings | |||
| Revaluation Reserve | |||
| Total Non-Controlling Interest | |||
| Total shareholders' Equity | $-26798112$ | 9801293 | |
| Liabilities | |||
| Current Liabilities (Creditors: amounts falling due within one year) | 13 | 4 264 628 | 2 472 945 |
| Accounts Payable | |||
| Current Income Tax Payable | |||
| Current portion of Loans Payable | |||
| Short-term Provisions | 1 506 624 | ||
| Convertible debt | 18 | 43 918 596 | 9811932 |
| Other Current Liabilities, e.g. Unearned Revenue, Security Deposits | 2,13,19 | 48 183 224 | 13 791 501 |
| Total Current Liabilities | |||
| Non-Current Liabilities (Creditors: amounts falling due after more than one year) | 13 565 566 | ||
| Convertible debt | 13 565 566 | ||
| Total Non-Current Liabilities | 13 | ||
| Total liabilities | 61 748 790 | 13 791 501 | |
| Total Liabilities and Equity | 34 950 678 | 23 592 794 |
Date and place: Lysaker, 29.05.2018
$\mathbf{d}$ DC ٠ nan Board Member gwalk-Je Terje OkolumBsthe Board Memb
Bård Mikkelsen - Board Member
Rolf O' CUM
$\overline{4}$
ar Per Graff - Board Membe
Quantafuel AS: Vollsveien 13H, 1366 Lysaker
Org nr 915 119 484 mva
www.quantafuel.com
12.31.2017 12.31.2016
The financial statements have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway. Reporting currency is Norske Kroner (NOK). The Accounting Act's rules for small enterprises have been used.
The general revenue principle is running costs without profit.
When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs associated with the construction contract are recognized as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting period. An expected loss on the construction contract is recognized as an expense immediately in.
For other sales revenue are recognized at time of sale.
Inventories consist of goods and equipment purchased or produced for resale. Current assets are valued at the lower of cost and fair value. Short term liabilities are reflected at nominal value. The company has no fixed assets.
Finished goods and work in progress are valued at full absorption cost. Impairment charges are made if fair value less cost to sell is lower than the cost price. Sales costs includes all remaining sales -, administrative- and storage costs. Inventories consist of accumulated costs regarding service provided in Norway.
Trade and other receivables are recognized in the balance sheet at nominal value after deduction of provision for bad debts. The provision for bad debts is estimated on the basis of an individual assessment of each major receivable. In addition, for the remainder of the receivables, a general provision is made based on estimated expected losses. VAT receivables and payables are recorded in the financial statements if they are related to the Norwegian operations.
Estimated costs for future guarantee work relating to sales/completed projects is embedded in the contract.
Items denominated in foreign currencies are translated into Norske Kroner at the exchange rate on the balance sheet date.
The tax expense in the income statement consists both of taxes payable for the accounting period, and the period's changes in deferred tax. Deferred tax is calculated as 23% (2017) and 24% (2016) of the temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Temporary differences. both positive and negative, are offset within the same period. Deferred tax assets are recorded in the balance sheet when it is more likely than not that the tax assets will be utilized. Deferred tax assets and deferred tax liabilities are presented net in the balance sheet.
Alle construction contracts are related parties
| 2017 | 2016 | 2015 |
|---|---|---|
| 29 047 900 | 12 134 000 | 1 281 406 |
| 1042000 | 2 3 1 3 6 9 4 | |
| $-23580781$ | $-12$ 134 000 | |
| $-3279628$ | ||
| 2 187 491 | 1042000 | 3 595 100 |
| 5710425 | 12 605 940 | 898 775 |
| -3 522 934 | $-11563940$ | 2 3 9 2 5 0 0 |
| $-12694374$ | $-9171440$ | |
During 2017 the process of closing down the Quantafuel Mexico plant was initiated and the loss of NOK 3 522 934 in 2017 and total loss of NOK 12 694 374 are related to this plant.
The plant has been valuable as a pilot plant for testing of differenct processes in regards to taking plastic and turning it into diesel, however, no more activites has been planned for this plant, therefore closing the plant down.
Other income and costs of NOK 5 467 119 is from QF Skive and QF Oslo. As these projects are recorded on a cost method, meaning ongoing settlement without profit, the recognised profit of these projects equal 0.
Total value inluced in short-term liabilities is NOK 35 714 781
Refer to Note 3 for intercompany transactions not included in constrcution contracts.
Quantafuel AS, Vollsveien 13H, 1366 Lysaker Org.nr 915 119 484 m www.quantafuel.com
$\overline{5}$
| Quantafuel AS | |||
|---|---|---|---|
| 2017 | 2016 | ||
| Purchases for resale | |||
| Operating Expense | 2460537 |
Refer to Note 2 for intercompany transactions related to construction contracts.
| Current year | Previous Year | |
|---|---|---|
| Salary | 9 266 760 | 4710683 |
| Social security | 1377351 | 814 674 |
| Pension | 161 012 | 93 273 |
| Other benefits | 420 103 | 181067 |
| Total Payroll expenses | 11 225 226 | 5 799 696 |
| Average full-time equivalent | 10 |
The defined contribution plans cover full-time employees and contributions comprise 2 % of salaries up to 12G.
| 2017 | 2016 | |
|---|---|---|
| Salary | 600 000 | |
| Pension costs | 10704 | |
| Other benefits | 1863 | |
| Total | 612 567 |
The CEO was engaged as a consultant through KB Management AS, a company which he owns 100%, up until 01.07.2017 when Kjetil Bøhn was hired as CEO. KB Management is also a shareholder in Quantafuel AS. KB Management AS' total consultancy fee in 2017 was NOK 600 000 until 30.06.17.
The Board of Directors have received personal remuneration with NOK 373 333 in 2017.
At the end of 2017 Quantafuel had no investments in tangible assets.
| Equipment/Machinery | Plant/Factory | Total | |
|---|---|---|---|
| Acquisition cost at 01.01. | 629 340 | 629 340 | |
| Additions | |||
| Disposals | |||
| Acquisition cost 31.12. | 629 340 | $\mathbf{0}$ | 629 340 |
| Accumulated depreciation 31.12. | $-354002$ | $-354002$ | |
| Accumulated impairment loss 31.12. | |||
| Reversed impairment loss 31.12. | |||
| Net carrying value at 31.12. | 275 338 | o | 275 338 |
| Depreciation for the year | 196 668 | 196 668 | |
| Impairment loss for the year | 0 |
Both the parent company and the group use linear depreciation for all tangible assets
| The useful economic life is estimated to be: | Years |
|---|---|
| * Buildings and Processing Plants | 20-50 |
| * Machinery and equipment | $3 - 15$ |
| * Land | No depreciation |
Quantafuel AS, Vollsveien 13H, 1366 Lysaker Org.nr 915 119 484 mva www.quantafuel.com
6
Selling, general and administrative expenses
| 2017 | 2016 | |
|---|---|---|
| Payroll Expense | $-11225226$ | $-5799696$ |
| Rental costs | $-1206125$ | $-771483$ |
| Consultancy Expense | $-9980417$ | $-8170633$ |
| Travel Expense | $-1161915$ | $-1787118$ |
| Other Operating Expenses | $-4068014$ | $-13952578$ |
| Total Selling, general and administrative expenses | $-27641697$ | $-30481508$ |
Specification of auditor's fee:
In 2017 auditors fee was NOK 134 006. Other expenses from auditor was NOK 43 631
The company rents its headquarter at Lysaker, Norway. The lease was renewed in January 2018 for another 5 years.
| 2017 | 2016 | |
|---|---|---|
| Offices rental | 1 206 125 | 771483 |
| Plant and production facility lease | ||
| Vehicle cost (leasing) | ||
| Total annual lease cost | 1 206 125 | 771 483 |
At year end, the company has outstanding commitments under non-cancellable operating leases that fall due as follows:
| 2017 | 2016 | |
|---|---|---|
| Within one year | 500 000 | |
| Later than one year but within five years | 200 000 | |
| Later than five years | ||
| Total commitment | 700 000 |
| 2017 | 2016 | |
|---|---|---|
| Interest income | 29 4 73 | 29 14 1 |
| Other financial income | ||
| Unrealized Currency gain | ||
| Realized currency gain | 225 662 | 2887 |
| Total financial income | 255 135 | 32 028 |
| 2017 | 2016 | |
|---|---|---|
| Interest expenses loan | $-1555354$ | $-1031068$ |
| Other financial expenses | $-3316193$ | $-25502$ |
| Unrealized Currency loss | ||
| Realized currency loss | $-114799$ | |
| Total financial expenses | $-4871547$ | $-1171369$ |
The group net currency exchange gains and losses in the year of 2017 are effects due to the weakening of the reporting currency NOK against USD. Since a significant amount of Quantafuel AS receivables and liabilities are held and settled in USD these assets and liabilities have effects against the reporting currency NOK.
Quantafuel AS, Vollsveien 13H, 1366 Lysaker
Org.nr 915 119 484 mva www.quantafuel.com
| 2017 | 2016 | |
|---|---|---|
| 2017 | 2016 | |||
|---|---|---|---|---|
| Ordinary result before tax | $-32557632$ | $-27526774$ | ||
| Changes in temporary differences | 289 196 | 954 807 | ||
| Permanent differences in taxable result | 1770089 | $-1269943$ | ||
| Received group contribution | 91868 | |||
| Taxable result of the year | $-30498348$ | $-27750042$ |
| 01.01 | 31.12 | Change | |
|---|---|---|---|
| Assets | 31 4 68 | $-77093$ | $-108561$ |
| Goods | |||
| Receivables | $-87500$ | $-268$ 135 | $-180635$ |
| Liabilities/Construction in progress | |||
| Total temporary differences | $-56032$ | $-345228$ | $-289196$ |
| Loss brought forward | $-32229924$ | $-62728272$ | $-30498348$ |
| Basis for deferred tax asset/liability | $-32285956$ | $-63073500$ | $-30787544$ |
| Deferred tax asset/liability (24%/23%) | 7748629 | 14 506 905 | 6758276 |
| Deferred tax asset not recorded | 7748629 | 14 506 905 | 6758276 |
Differences of taxable income and net income before tax as reported in the income statement are due to items of income or expense that are taxable or deductible in future years (temporary differences), and excluded items that are not taxable or deductible (permanent differences). The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is more likely than not that future tax advantages will not be available to allow all of the asset to be recovered.
In 2017 Quantafuel AS tax rate for future taxes is set at 23%. (24% in 2016)
| Share capital | Share premium reserve |
Other equity | Total equity | |
|---|---|---|---|---|
| Equity 01.01 | 38 156 | 40 867 059 | $-31$ 103 922 | 9 801 293 |
| Capital increase | 2448 | 1058779 | 1061227 | |
| Reversal of previously reported sales | $-5103000$ | $-5103000$ | ||
| Current year result | $-32557632$ | $-32557632$ | ||
| Equity 31.12 | 40 604 | 41 925 839 | $-68764554$ | $-26798112$ |
With the increasing focus on larger plants located close to or at port, parts of historic plant sales to subsidiaries has been corrected to better reflect the situation leading to a reversal of previously reported plant sales of NOK 5 103 000. The plant sales was classified as a cost reduction in 2016 and reversed in 2017 due to lack of costs regarding the plant.
Quantafuel AS, Vollsveien 13H, 1366 Lysaker Org.nr 915 119 484 mva
www.quantafuel.com
| Subsidiaries | Est year | Prosentage | Investments 17 |
|---|---|---|---|
| Quantafuel Sweden AB | 2015 | 100% | 747 482 |
| Quantafuel INC | 2015 | 100 % | |
| Quantafuel UK Itd | 2015 | 50 % | 5525 |
| Quantafuel Oslo AS | 2016 | 100% | 30 000 |
| Quantafuel CZ s.r.o | 2016 | 100% | |
| Next Gen Energy S.A. de C.V. | 2016 | 50 % | |
| Quantafuel Mexico S.A. de C.V. | 2015 | 50 % | |
| Quantafuel Skive ApS | 2017 | 76 % | 16 870 535 |
Quantafuel Skive ApS was funded with an equity placement of USD 2 000 000 from Quantafuel AS, with an additional funding of USD 1955 000 provided by the local partners. This investment in the plant-owning entity for the Skive plant represented a break-through for Quantafuel AS with the first commercial plant now in construction.
Quantafuel Sweden AB received NOK 747 482 in order to cover operational expenses. The operations executed in Quantafuel Sweden AB was significantly scaled back in the later part of 2017, and the planned activity level and expected cost base have been reduced to an absolute minimum with the office rent ending 31.06.18 as the last remaining significant cost.
Quantafuel Mexico has conducted important development of technology and verification, but due to the finalisation of the development programme and that further commercial plants are going to be substantially larger in capacity, there are no more activities planned in the company and the company is therefore being closed down.
As part of the closure, all assets will be liquidated, expectedly at a low value to be determined, and all employees will be terminated. It is not expected that there will be any residual value from the asset sale after payment of outstanding obligations and closure costs.
Furthermore, NOK 3 279 628 of the total plant sales of NOK 4 637 100 has been credited and written off for 2017, so that the expected remaining exposure should be limited.
All activities in the company has been suspended in Q1 2018, so there are no assets or substance left in the company. In this process, the 70 kEUR loan provided by Quantafuel AS to Quantafuel CZ s.r.o. has been remitted, and the company will be finally closed during 2018.
The long-term assets in Quantafuel Sweden AB has been reviewed and some overdue write down has been implemented in addition to planned depreciation of the patent. The adjustment in book value has been incorporated into Quantafuel AS's balance sheet.
As there have been no planned activities in the company, the US shell company has been closed down.
Quantafuel AS, Vollsveien 13H, 1366 Lysaker Org.nr 915 119 484 mya www.quantafuel.com
| Acquired Rights | Patents | Total | |
|---|---|---|---|
| Acquisition cost 01.01. | 106 570 | 106 570 | |
| Additions | |||
| Disposals | |||
| Acquisition cost 31.12. | 106 570 | 0 | 106 570 |
| Accumulated amortization at 31.12. | |||
| Accumulated impairment loss 31.12. | |||
| Reversed impairments 31.12. | |||
| Net carrying value at 31.12. | 106 570 | 106 570 | |
| Amortization for the year | |||
| Impairment loss for the year | O |
| 2017 | 2016 | |
|---|---|---|
| Accounts receivables | 76 066 | 9738350 |
| Accrued customer receivables | ||
| Allowance for uncollectible accounts | ||
| Net accounts receivable | 76 066 | 9738350 |
| Value added tax receivable | ||
| Prepaid expenses | ||
| Other current receivables | 4 347 338 | 2 153 681 |
| Total Current Receivables | 4 4 2 3 4 0 4 | 11892031 |
| 2017 | 2016 | ||
|---|---|---|---|
| Other non-current receivables | |||
| Allowance of non-current receivables | |||
| Net non-current receivables |
| 2017 | ||
|---|---|---|
| 2016 | ||
| Accounts Payable | $-4264628$ | $-2472945$ |
| Unearned revenue | $-35714781$ | |
| Payroll Accruals | $-936234$ | $-574422$ |
| Taxes payable | $-647099$ | |
| VAT and Fees payable | $-300734$ | $-1402937$ |
| Convertible debt | ||
| Other Provisions | ||
| Accrued Interest | ||
| Other current liabilities | $-6319748$ | $-9341197$ |
| Total Current Liabilities | $-48$ 183 224 | $-13791501$ |
| Liabilities to financial institutions | ||
|---|---|---|
| Convertible Bond | $-1356556$ | |
| Other non-current liabilities | ||
| Total non-current liabilities | $-13565566$ |
The are no secured debts.
There are no pledged assets.
Quantafuel AS, Vollsveien 13H, 1366 Lysaker
Org.nr 915 119 484 mva
www.quantafuel.com
The company has restricted funds of NOK 647 099 (accrued employee withholding tax).
The company's share capital is NOK 40 604, represented by 4 060 400 shares at NOK 0,01 per share. At 31.12.2017 Quantafuel AS had over 20 shareholders Issued capital consists of one class of shares and all issued shares have the same voting rights.
Shareholders:
| Name | No. of shares | Ownership % | Positions |
|---|---|---|---|
| Heorot AB | 656 437 | 16,2 % Henrik Selstam, consultant | |
| Faried Holding AS | 601 522 | 14,8 % Erik Fareid, consultant | |
| KB Management AS | 517 208 | 12.7 % CEO | |
| Ditowin | 458 492 | 11,3% | |
| Other shareholders | 1826741 | 45,0 % | |
| Total issued and outstanding shares | 4 060 400 | 100,0 % |
The CEO was engaged as a consultant through KB Management AS, up until 01.07.2017 when Kjetil Bøhn was hired as CEO. KB Management is also a shareholder in Quantafuel AS. KB Management AS' total consultancy fee in 2017 was NOK 600 000 until 30.06.17.
Henrik Selstam in the capacity of Business Development Manager, has invoiced NOK 1 237 404 through the consultancy company Heorot AB. Henrik Selstam is also a shareholder of the company Bluetrout AB and through his company Heorot AB.
Erik Fareid in the capacity of engineer has invoiced NOK 1 200 000 through the consultancy company EicChem Fareid and Fareid Technologies AS (from 01.11.2017). Erik faired is also a shareholder of the company Bluetrout AB and his company Fareid Holding AS.
Inge Berge is an employee and also a shareholder of Quantafuel AS through Blaais Holding AS.
The company operates business units in several countries with currency risk mainly related to cash flows in local currency and capital funded in NOK. No currency hedges have been executed that may mitigate this exposure.
Liquidity is deposited in bank accounts in NOK while the company in 2017 has had significant expenses in NOK, SEK and USD.
Quantafuel AS, Vollsveien 13H, 1366 Lysaker Org.nr 915 119 484 mva www.guantafuel.com
During the last quarter of 2017, Quantafuel established a convertible loan facility which is used for ongoing liquidity management. This convertible loan was fully subscribed by the end of the first quarter of 2018, thus securing the company's liquidity situation going forward.
The process of inviting investors to a larger equity increase securing long-term strengthening of the balance sheet has started. The equity increase is also expected to trigger conversion of the convertible loan into equity, further strengthening the balance sheet.
The process of closing down three daughter companies: Quantafuel Mexico and Quantafuel CZ s.r.o has been initiated, while Quantafuel Inc. has been liquidated.
There has been no other incidents/happenings after year end.
With reference to the negative equity and strengthening of the balance sheet, please see elaboration in Note 10 and Note 18.
The company is in a position to continue as a going concern.
Quantafuel AS, Vollsveien 13H, 1366 Lysaker Org.nr 915 119 484 mva
Www.quantafuel.com
Quantafuel AS
| Year Ended, | 2017 | 2016 |
|---|---|---|
| Net income | -32 557 632 | $-27526774$ |
| Operating activities, cash flows provided by or used in: | ||
| Depreciation and amortization | 196 668 | 157334 |
| Adjustments to net income | 30 611 781 | |
| Adjustments to Accrued expenses | 1 364 445 | 10 953 277 |
| Decrease (increase) in accounts receivable | 7447849 | $-8245925$ |
| Increase (decrease) in liabilities (A/P, taxes payable) | 349 037 | 305 670 |
| Decrease (increase) in inventories | ||
| Increase (decrease) in other operating activities | 604 468 | $-355574$ |
| Net cash flow from operating activities | 8016616 | -24 711 992 |
| Investing activities, cash flows provided by or used in: | ||
| Capital expenditures | ||
| Investments | -16 870 535 | |
| Other cash flows from investing activities | -5 030 134 | |
| Net cash flows from investing activities | $-16870535$ | -5 030 134 |
| Financing activities, cash flows provided by or used in: | ||
| Dividends paid | ||
| Capital plancement | ||
| Sale (repurchase) of stock | 1058780 | 40 875 215 |
| Increase (decrease) in debt | ||
| Other cash flows from financing activities | 13 565 566 | $-7166532$ |
| Net cash flows from financing activities | ||
| 14 624 346 | 33 708 683 | |
| Effect of exchange rate changes | ||
| Net increase (decrease) in cash and cash equivalents | 5770427 | 3966557 |
| Cash at period beginning | 6721393 | 2754836 |
| Cash at period end | 12 491 820 | 6721393 |
Quantafuel AS, Vollsveien 13H, 1366 Lysaker
Org.nr 915 119 484 mva www.quantafuel.com
Quantafuel AS operations consists of establishing and installing waste to fuel process plants, and ensure safe and optimised operations and sales of high quality, synthetic fuel. Quantafuel AS has offices in Lysaker, Norway.
In accordance with the Accounting Act § 3-3 we confirm that the Financial Statements have been prepared under the assumption of going concern.
During the last quarter of 2017, Quantafuel established a convertible loan facility which is used for ongoing liquidity management. This convertible loan was fully subscribed by the end of the first quarter of 2018, thus securing the company's liquidity situation going forward.
The process of inviting investors to a larger equity increase securing long-term strengthening of the balance sheet has started. The equity increase is also expected to trigger conversion of the convertible loan into equity, further strengthening the balance sheet.
The Board of Directors confirms that the company is in a position to continue as a going concern.
Quantafuel Mexico has conducted important development of technology and verification, but due to the finalisation of the development programme and that further commercial plants are going to be substantially larger in capacity, there are no more activities planned in the company and the company is therefore being closed down. As part of the closure, all assets will be liquidated, expectedly at a low value to be determined, and all employees will be terminated. It is not expected that there will be any residual value from the asset sale after payment of outstanding obligations and closure costs.
In our opinion the information in the financial statements give a true and fair view of the company's assets, debts and financial position. The loss in 2017 of NOK 32 557 632 is recommended to be transferred to uncovered loss.
The company had ten full-time employees at the end of 2017. The working environment is considered to be good, and no injuries or accidents have been reported The company's Board of Directors consist of six men.
The activities of the company do not have harmful impact on the environment, nor does the company believe that any products or services may cause environmental hazard.
Date and place: Lysaker, 29.05.2018
Bård Mikkelsen - Board Meml Fenar Søega iman $\varphi$ Per Graff - Board Me lens Bo Rolf Olar arsen - Board memb Board Member $CFO$ Kie
Quartafuel AS, Vollsveien 13H, 1366 Lysakor
Orgint 915 119 484 mya www.quantafuel.com
$\overline{14}$
Filipstad Brygge 1, 0252 Oslo Pb. 1312 Vika, 0112 Oslo Org.nr: 982 316 588 MVA
T+47 23 11 42 00 F+47 23 11 42 01
www.rsmnorge.no
Til generalforsamlingen i Quantafuel AS
Vi har revidert Quantafuel AS' årsregnskap som viser et underskudd på kr 32 557 632. Årsregnskapet består av balanse per 31. desember 2017, resultatregnskap og kontantstrømoppstilling for regnskapsåret avsluttet per denne datoen og noter til årsregnskapet, herunder et sammendrag av viktige regnskapsprinsipper.
Etter vår mening er det medfølgende årsregnskapet avgitt i samsvar med lov og forskrifter og gir et rettvisende bilde av selskapets finansielle stilling per 31. desember 2017, og av dets resultater og kontantstrømmer for regnskapsåret avsluttet per denne datoen i samsvar med regnskapslovens regler og god regnskapsskikk i Norge.
Vi har gjennomført revisjonen i samsvar med lov, forskrift og god revisjonsskikk i Norge, herunder de internasjonale revisjonsstandardene International Standards on Auditing (ISA-ene). Våre oppgaver og plikter i henhold til disse standardene er beskrevet i Revisors oppgaver og plikter ved revisjon av årsregnskapet. Vi er uavhengige av selskapet slik det kreves i lov og forskrift, og har overholdt våre øvrige etiske forpliktelser i samsvar med disse kravene. Etter vår oppfatning er innhentet revisjonsbevis tilstrekkelig og hensiktsmessig som grunnlag for vår konklusjon.
Ledelsen er ansvarlig for øvrig informasjon. Øvrig informasjon består av årsberetningen, men inkluderer ikke årsregnskapet og revisionsberetningen.
Vår uttalelse om revisjonen av årsregnskapet dekker ikke øvrig informasjon, og vi attesterer ikke den øvrige informasionen.
I forbindelse med revisionen av årsregnskapet er det vår oppgave å lese øyrig informasion med det formål å vurdere hvorvidt det foreligger vesentlig inkonsistens mellom øvrig informasjon og årsregnskapet, kunnskap vi har opparbeidet oss under revisionen, eller hvorvidt den tilsynelatende inneholder vesentlig feilinformasion.
Dersom vi konkluderer med at den øvrige informasionen inneholder vesentlig feilinformasion er vi pålagt å rapportere det. Vi har ingenting å rapportere i så henseende.
Styret og daglig leder (ledelsen) er ansvarlig for å utarbeide årsregnskapet i samsvar med lov og forskrifter, herunder for at det gir et rettvisende bilde i samsvar med regnskapslovens regler og god regnskapsskikk i Norge. Ledelsen er også ansvarlig for slik internkontroll som den finner nødvendig for å kunne utarbeide et årsregnskap som ikke inneholder vesentlig feilinformasjon, verken som følge av misligheter eller utilsiktede feil.
Mediem av Den Norske Revisorforening.
Ved utarbeidelsen av årsregnskapet må ledelsen ta standpunkt til selskapets evne til fortsatt drift og opplyse om forhold av betydning for fortsatt drift. Forutsetningen om fortsatt drift skal legges til grunn for årsregnskapet så lenge det ikke er sannsynlig at virksomheten vil bli avviklet.
Vårt mål med revisjonen er å oppnå betryggende sikkerhet for at årsregnskapet som helhet ikke inneholder vesentlig feilinformasjon, verken som følge av misligheter eller utilsiktede feil, og å avgi en revisjonsberetning som inneholder vår konklusjon. Betryggende sikkerhet er en høy grad av sikkerhet, men ingen garanti for at en revisjon utført i samsvar med lov, forskrift og god revisjonsskikk i Norge, herunder ISA-ene, alltid vil avdekke vesentlig feilinformasion som eksisterer. Feilinformasion kan oppstå som følge av misligheter eller utilsiktede feil. Feilinformasion blir vurdert som vesentlig dersom den enkeltvis eller samlet med rimelighet kan forventes å påvirke økonomiske beslutninger som brukerne foretar basert på årsregnskapet.
Som del av en revisjon i samsvar med lov, forskrift og god revisjonsskikk i Norge, herunder ISA-ene, utøver vi profesjonelt skjønn og utviser profesjonell skepsis gjennom hele revisjonen. I tillegg:
Vi kommuniserer med styret blant annet om det planlagte omfanget av revisjonen og til hvilken tid revisjonsarbeidet skal utføres. Vi utveksler også informasjon om forhold av betydning som vi har avdekket i løpet av revisjonen, herunder om eventuelle svakheter av betydning i den interne kontrollen.
Revisors beretning 2017 for Quantafuel AS
Basert på vår revisjon av årsregnskapet som beskrevet ovenfor, og kontrollhandlinger vi har funnet nødvendig i henhold til internasjonal standard for attestasjonsoppdrag (ISAE) 3000 «Attestasjonsoppdrag som ikke er revisjon eller forenklet revisorkontroll av historisk finansiell informasjon», mener vi at ledelsen har oppfylt sin plikt til å sørge for ordentlig og oversiktlig registrering og dokumentasjon av selskapets regnskapsopplysninger i samsvar med lov og god bokføringsskikk i Norge.
Oslo, 29. mai 2018 RSM Norge AS
Lars Løyning Statsautorisert revisor
Appendix C – Interim Financial Statements
(NOTC: QFUEL)
is a Norwegian technology based energy company converting under-utilised hydrocarbon resources into high-quality fuel products.
Visit www.quantafuel.com for more information
Financial statement and review
Reporting period: for Quantafuel AS
In the third quarter, Quantafuel negotiated a breakthrough partnership agreement with BASF, the world largest chemical company, investing 20 MEUR in Quantafuel`s strive to become the leading provider of chemical recycling on a global basis. At the same time the company was working to complete the Skive plant with expected mechanical completion within the fourth quarter and start of operation in first quarter 2020.
Following a rising concern for the environmental consequences of plastic waste entering the oceans, changes in the European legislation regarding recycled hydrocarbons, and tougher demands for recycling of plastic waste, the interest for Quantafuel`s unique solutions reached new proportions during the quarter.
Following a thorough technical, financial and legal due diligence conducted by several companies in parallel, Quantafuel chose to sign a partnership agreement with BASF, the world largest chemical company with more than 122,000 employees on a global basis. In addition to the 20 MEUR investment, in equity and a convertible loan (concluded in Q4), the main reason for selecting BASF as a partner, was access to BASF´s industrial-, technicaland chemical resources and know-how. BASF`s vast experience will contribute to a safe and controlled start-up in Skive, and further development of the technology towards an industrial scalable solution with the clear intention to build out production capacity together in a 50/50 JV structure.
BASF, as one of the founding members of the Alliance to End Plastic Waste (AEPW), has stated a strong commitment to engage in chemical recycling of plastic waste, and publicly announced that their ambition is to
turn 1.6 million tons of their annual consumption of 20 million ton of naphtha to recycled naphtha. This is equivalent to 100 times the production capacity of the Skive plant.
An important aspect of the partnership agreement with BASF is that it is exclusive only with regard to joint development of improved technology , and entered in understanding with Quantafuel`s longstanding partner, Vitol, that still has an ambition to build out large production capacity together with Quantafuel, starting in Antwerp. As part of this understanding Vitol converted its 3 MUSD loan plus accrued interests to shares in Quantafuel in the third quarter.
Furthermore, with the support from BASF, Quantafuel has maintained the discussions with other major petrochemical companies with the aim to agree terms for one or more commercial partnership in the near future.
All technical resources have through the quarter been directed at completing the plant in Skive, Denmark, now in collaboration with recourses with extensive experience from starting chemical process facilities which BASF has made available to Quantafuel.
While completing the last remaining systems in the plant, we have been running precommissioning on those production steps already completed. Through this process we have encountered several issues that needed to be addressed and corrected. Most of these issues have been minor, but some have required more extensive rework, before another pre-commissioning run could be performed. Our ambition has all the way been to have completed pre-commissioning on as many parts of the process facility as possible, while working towards mechanical completion.
Quantafuel Third Quarter 2019 Page | 2
This has in periods been challenging, and we had to reassess the balance between resources used and efficiency on site on a number of occasions. Extensive rework on some parts of the system and the installation of additional safety and utility systems have delayed the process, but by the end of November we are only weeks away from mechanical completion.
While completing the plant, we are now preparing for a safe and controlled start-up of operations, in a close working relationship with experts from BASF. Operating procedures are being implemented, safety and emergency procedures are being controlled and retested and our local operators are being trained in all aspects of plant operations.
After mechanical completion we will start final commissioning of the complete process facility before entering hot commissioning with plastic waste. We will start with clean and uniform plastic in one reactor before gradually implementing more capacity, more challenging raw materials and the different upgrading steps throughout the first quarter next year.
The plant in Skive has become more advanced and sophisticated than the one we initially set out to build one and half year ago as new features and upgrading steps have been introduced along the way. As we reach mechanical completion, Quantafuel is proud to state that we have built a state-of-the-art production plant for chemical recycling of waste plastic, which we strongly believe, as several major petrochemical companies already have discovered, is unmatched in terms of flexibility and capabilities. We believe that the plant in Skive, despite its many challenges in the building process, will set us apart from the competition in a market expected to grow from zero to 75 BUSD (Mc Kinsey) over the next 10 years.
Rework, changes in scope, double shifts and an extended commissioning period have resulted in a cost increase of MNOK 59 (MUSD 6.5), bringing the total CAPEX to MUSD 37.7. from MUSD 31.2, which was predicted in the second quarter 2019 report. (Given the current currency exchange at the date of this report, comparable CAPEX would be 36,1 MUSD (MNOK 332)).
With the investment from BASF, Quantafuel is in a strong financial position and has the necessary resources to complete the plant in Skive, strengthen the organization as planned and fully engage in all further development activities to rapidly industrialize the technology with the keen ambition to become the leading provider of chemical recycling of plastic waste on a global basis.
The Skive plant is where we demonstrate our technology in scale in a commercial operation, and where we invite current and potential new partners and other key stakeholders to see how chemical recycling of plastic waste can be done.
The next steps for the Company are to implement the experience to date from the Skive process into a generic module that can be deployed in scale through an EPC strategy.
At the same time, we do take the organization through a transition phase from a start-up to an industrial company capable of delivering standardized, high performing process facilities. As part of this process will we over the next few month's welcome between 10 and 15 new colleagues, many with a long and extensive track records from the process industry. We are also proud that many of these new colleagues find it meaningful and have motivation to work for Quantafuel at reduced salaries from previous positions, and that they bring with them the drive, attitude and competence that we are certain will help
Quantafuel in becoming the leading provider of chemical recycling of plastic waste on a global scale.
There has been no reported HSE incidents at Quantafuel, either of the subsidiaries or any of the contractors in the period.
The total cost estimate for the delivery of the first plant from Quantafuel AS to Quantafuel Skive ApS (Danish 76% owned subsidiary) is now MUSD 37.7 (MNOK 332), (Q219; MUSD 31.2).
| Quantafuel financial highlights unaudited figures in USD if not stated otherwise |
Q3 2019 Company |
YTD Q3 2019 Company |
Q3 2019 Group |
YTD Q3 2019 Group |
|---|---|---|---|---|
| Operating income | 308,834 | 5,465,533 | 2,742 | 57,817 |
| EBITDA | -8,837,536 | -15,397,694 | -2,462,541 | -7,487,467 |
| Net result | -10,348,866 | -18,570,354 | -3,997,270 | - 10,916,421 |
| Total assets | 12,438,786 | 12,438,786 | 28,248,810 | 28,248,810 |
| Cash and cash equivalents | 3,529,957 | 3,529,957 | 4,447,893 | 4,447,893 |
As the company foresee an increased cost for concluding the Skive project, a provision of MUSD 6.5 (MNOK 59) is booked in the Company accounts ("cost of sales"). In total provisions of MUSD 25.7 (MNOK 225) is accounted for in the Company for the delivery (loss) of the Skive plant to the Danish subsidiary. No further accruals are done on consolidated level in Q3 based on a preliminary assessment of the value for the plant on Group level. A final assessment of the book value on Group and Company level will be done at finalization of the plant.
Payroll expenses of MUSD 1.6 (MNOK 14.2) includes accrual for the company employee option program of MUSD 1.2 (MNOK 10.6). The cost of the option program is recognised in the accounts on a continuous basis based on the actual share price, as the options are fully vested.
Average G&A cost ("Other operating & payroll expenses") for the period has been MUSD 0.3 (MNOK 2.7) per month (Q2 MUSD 0.25 per. month). This represent a slight increase due to increased activity in the Company.
As there are increased activity in Skive towards the start-up of the plant, MUSD 0.35 (MNOK 3.2) is recognized as operation expenses / cost of sales for Q3, an increased from last quarter where MUSD 0.25 (MNOK 2.1) was used for the quarter.
Quantafuel Third Quarter 2019 Page | 4
This gives an EBITDA of MUSD -8.8 (Company) and MUSD -2.5 for the Group.
Net financial items include MNOK 11 in currency adjustments under the Skive delivery due to increased cost in NOK for committed cost items denominated in foreign currency.
As major changes in the quarter, the non-current assets on Group level have increased with MNOK 70, of which MNOK 66 is related to the building of the Skive plant. On the liability side, the Vitol loan of MUSD 3.3 (including accrued interest) was converted into equity in the period.
| Statement of Cash flow unaudited figures in kUSD |
Q3 2019 Company |
Q2 2019 Company |
Q3 2019 Group |
Q2 2019 Group |
|---|---|---|---|---|
| Cash flow from operations | -7,564 | -10,525 | -405 | -7,871 |
| Cash flow from investing | -521 | -301 | -7,485 | -3,246 |
| Cash flow from financing | 1,459 | 2,849 | 1,459 | 2,849 |
| Effect of exchange rate change | -504 | 430 | -574 | 445 |
| Net change in cash & cash eq. | -7,129 | -7,547 | -7,005 | -7,823 |
| Cash and cash eq. EOQ | 3,530 | 10,659 | 4,448 | 11,453 |
Net cash flow from operating activities was MUSD -7.6 (MUSD -0.4 Group).
MUSD 7.5 is invested in the Skive plant.
Net financing activities of MUSD 1.5 include the conversion of the Vitol loan, together with the increased accrual for options program (increase in the equity and reflected in "Cashflow from financing "(while the cost of the increase is booked through the P&L and included in "Cashflow from operations")).
The Company's holding of cash and cash equivalents was MUSD 3.5 at the end of the period, and MUSD 4.5 at Group level.
Third Quarter 2019 (July-September)
| Quantafuel Statement of Operations |
Q3 2019 | YTD Q3 2019 | Q3 2019 | YTD Q3 2019 | YTD Q3 2019 |
|---|---|---|---|---|---|
| Company | Company | Group | Group | Group | |
| (Unaudited figures, NOK/USD exchange rate quarter 8,8634) |
(kNOK) | (kNOK) | (kNOK) | (kNOK) | (kUSD) |
| Revenues | 2 713 | 46 668 | 0 | 0 | 0 |
| Other income | 24 | 497 | 24 | 497 | 58 |
| Total revenues and other income | 2 737 | 47 164 | 24 | 497 | 58 |
| Cost of sales | -62 403 | -123 770 | -1 538 | -1 586 | -179 |
| Payroll expenses | -14 183 | -46 713 | -15 488 | -49 747 | -5 713 |
| Other operating expenses | -4 482 | -11 688 | -4 825 | -14 378 | -1 653 |
| Depreciation | -51 | -104 | -51 | -104 | -12 |
| Total operating expenses | -81 119 | -182 275 | -21 901 | -65 815 | -7 557 |
| Operating profit (/loss) | -78 381 | -135 111 | -21 877 | -65 319 | -7 499 |
| Net financial items | -13 345 | -21 735 | -13 828 | -23 287 | -1 373 |
| Net financial gain (/loss) | -13 345 | -21 735 | -13 828 | -23 287 | -1 373 |
| Profit (/loss) before taxes | -91 726 | -156 846 | -35 705 | -88 605 | -8 872 |
| Tax on ordinary result | 0 | 0 | 0 | 0 | 0 |
| Net profit (/loss) | -91 726 | -156 846 | -35 705 | -88 605 | -8 872 |
| Other comprehensive income | |||||
| Foreign currency translation | 0 | 0 | 275 | -471 | -2 044 |
| Total comprehensive income for the year |
-91 726 | -156 846 | -35 430 | -89 076 | -10 916 |
| Quantafuel Balance sheet | Q3 2019 | Q2 2019 | Q3 2019 | Q2 2019 | Q3 2019 |
|---|---|---|---|---|---|
| (Unaudited figures, NOK/USD exchange rate 30.09: 9,0874) |
Company | Company | Group | Group | Group |
| (kNOK) | (kNOK)) | (kNOK) | (kNOK) | (kUSD) | |
| Assets | |||||
| Property, plant and equipment | 1 638 | 287 | 181 911 | 115 001 | 20 018 |
| Investment in Associates | 17 156 | 17 156 | 0 | 0 | 0 |
| Intangible assets | 17 991 | 14 777 | 18 181 | 14 967 | 2 001 |
| Other non-current assets | 0 | 0 | 3 245 | 3 180 | 357 |
| Total non-current assets | 36 784 | 32 220 | 203 336 | 133 148 | 22 376 |
| Accounts receivables | 0 | 4 000 | 0 | 4 000 | 0 |
| Other receivables | 42 594 | 7 580 | 12 952 | 19 715 | 1 425 |
| Other current assets | 0 | 0 | 0 | 0 | 0 |
| Cash and cash equivalents | 32 078 | 90 798 | 40 420 | 97 558 | 4 448 |
| Total current assets | 74 672 | 102 378 | 53 372 | 121 273 | 5 873 |
| Total assets | 111 457 | 134 598 | 256 708 | 254 421 | 28 249 |
| Equity and Liabilities | |||||
| Shareholders' equity Retained earnings |
448 235 -407 666 |
409 383 -315 940 |
439 340 -359 254 |
401 147 -323 824 |
48 346 -39 533 |
| -Non-controlling interests | 0 | 0 | 9 766 | 8 895 | 1 075 |
| Total equity | 40 569 | 93 443 | 89 852 | 86 218 | 9 887 |
| Loans to financial institutions | 0 | 0 | 16 796 | 16 460 | 1 848 |
| Total non-current liabilities | 0 | 0 | 16 796 | 16 460 | 1 848 |
| Accounts payable | 30 374 | 7 225 | 31 414 | 42 581 | 3 457 |
| Trace, other payables and provisions | 23 644 | 1 560 | 24 200 | 1 928 | 2 663 |
| Finance debt | 0 | 25 917 | 0 | 25 917 | 0 |
| Other current liabilities | 16 870 | 6 453 | 94 446 | 81 317 | 10 393 |
| Total current liabilities | 70 888 | 41 155 | 150 061 | 151 743 | 16 513 |
| Total equity and liabilities | 111 457 | 134 598 | 256 708 | 254 421 | 28 249 |
| Quantafuel Statement of Cash flow |
Q3 2019 | Q2 2019 | Q3 2019 | Q2 2019 | Q3 2019 |
|---|---|---|---|---|---|
| Company | Company | Group | Group | Group | |
| (Unaudited figures, NOK/USD exchange rate quarter 8,8634) |
(kNOK) | (kNOK)) | (kNOK) | (kNOK) | (kUSD) |
| Cash flows from operation | |||||
| Net profit (/loss) | -91 726 | -52 724 | -35 430 | -38 156 | -3 997 |
| Depreciations, amortisations and net impairment losses |
51 | 27 | 51 | 27 | 6 |
| Adjustments to net income | -13 543 | -27 614 | -4 707 | -20 735 | -531 |
| Adjustments to Accrued expenses | 37 335 | -13 640 | 37 335 | -13 640 | 4 212 |
| Changes in inventories, accounts payable and receivables |
-4 577 | 10 428 | -6 258 | 11 919 | -706 |
| Changes in other current balance sheet items |
5 420 | -4 230 | 5 420 | -4 230 | 612 |
| Cash flows provided by (/used in) operating activities |
-67 040 | -87 753 | -3 588 | -64 814 | -405 |
| Cash flows from investing activities | |||||
| Net investments in tangible fixed assets |
-4 615 | -2 599 | -66 345 | -28 066 | -7 485 |
| Cash flows used in investing activities | -4 615 | -2 599 | -66 345 | -28 066 | -7 485 |
| Cash flows from financing activities | |||||
| Issuing (/repurchase) of shares | 29 535 | 0 | 29 535 | 0 | 3 332 |
| Increase (/repayment) of finance debt | -25 917 | 24 626 | -25 917 | 24 626 | -2 924 |
| Other cash flows from financing activities |
9 317 | 0 | 9 317 | 0 | 1 051 |
| Cash flows provided by (/used in) financing activities |
12 935 | 24 626 | 12 935 | 24 626 | 1 459 |
| Effect of exchange rate changes | 0 | 0 | -140 | -303 | -574 |
| Cash balance | |||||
| Net increase (/decrease) in cash and cash equivalents |
-58 720 | -65 727 | -57 138 | -68 556 | -7 005 |
| Cash and cash equivalents at the beginning of the period |
90 798 | 156 525 | 97 558 | 166 114 | 11 453 |
| Cash and cash equivalents at the end of the period |
32 078 | 90 798 | 40 420 | 97 558 | 4 448 |
This report contains certain forward-looking statements that involve risks and uncertainties. In some cases, we use words such as "ambition", "continue", "could", "estimate", "expect", "believe", "focus", "likely", "may", "outlook", "plan", "strategy", "will", "guidance" and similar expressions to identify forward-looking statements. All statements other than statements of historical fact, including, among others, statements regarding plans and expectations with respect to Quantafuel's development and returns, balance sheet and long-term underlying earnings growth; market outlook and future economic projections and assumptions; capital expenditure guidance; production guidance; development and construction activities; projected unit of production cost; accounting decisions and policy judgments, ability to put new plants into profitable production, and the impact thereof; expected dividend payments; estimated provisions and liabilities; implementation of IFRS, and the impact thereof; planned acquisitions and divestments; and the projected impact or timing of administrative or governmental rules, standards, decisions or laws, including with respect to and future impact of legal proceedings are forward-looking statements.
You should not place undue reliance on these forward- looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons.
These forward-looking statements reflect current views about future events and are, by their nature, subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including levels of industry product supply, demand and pricing; price and availability of alternative fuels; currency exchange rate and interest rate fluctuations; the political and economic policies of operating countries; general economic conditions; political and social stability and economic growth in relevant areas of the world; global political events and actions; economic sanctions, security breaches; changes or uncertainty in or non-compliance with laws and governmental regulations; the timing of bringing new plants on stream; an inability to exploit growth or investment opportunities; material differences from reserves estimates; an inability to find and develop new plants; ineffectiveness of crisis management systems; adverse changes in tax regimes; the development and use of new technology; geological or technical difficulties; operational problems; operator error; inadequate insurance coverage; the lack of necessary transportation infrastructure when a field is in a remote location and other transportation problems; the actions of competitors; the actions of partners; the actions of governments; counterparty defaults; natural disasters and adverse weather conditions, climate change, and other changes to business conditions; an inability to attract and retain personnel; relevant governmental approvals; industrial actions by workers and other factors discussed elsewhere in this report.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our future results, level of activity, performance or achievements will meet these expectations. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by applicable law, we undertake no obligation to update any of these statements after the date of this report, whether to make them either conform to actual results or changes in our expectations or otherwise.
Org.no: 915 119 484
Address: Vollsvn. 13H 1366 Lysaker Norway
www.quantafuel.com
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