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Nel ASA

Earnings Release Feb 17, 2016

3670_rns_2016-02-17_f6a12cb0-bf18-4dd2-b0f5-50f96f660ddc.pdf

Earnings Release

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NEL ASA – update February 2016 Jon André Løkke, CEO

NEL ASA

  • Established by Norsk Hydro in 1927
  • First dedicated hydrogen company on the OSE* (NEL.OSE)
  • Extensive competence in designing hydrogen energy systems and refuelling stations, through Norsk Hydro, Statoil and H2 Logic:
  • 500 large scale electrolysers sold in >50 countries

  • 28 hydrogen refuelling stations delivered to 7 countries
  • Pure play company with long track record:
  • Most energy efficient electrolysers, robust and proven technology
  • Refuelling stations with highest uptime and lowest cost of ownership
  • Long list of new technology developments that will secure a leading position

NEL ASA Q4 2015 – IN SHORT

Highlights of the quarter H2 Logic AS (unaudited)

  • Entered into a letter of intent with Uno-X Gruppen AS (Uno-X), for the rollout of minimum 20 hydrogen refuelling stations covering all the major cities in Norway within 2020
  • H2 Logic AS, was awarded a contract for one H2Station fueling station for H2 MOBILITY Deutschland GmbH & Co.KG with an option for multiple repeat-orders. The station will be one among the first in a planned staged expansion onwards 2023 of up to 400 stations in Germany and a total investment of around 400 million euro
  • Raised NOK 111 million in gross proceeds through a private placement of 30 million new shares at a price of NOK 3.70 per share
  • The cash balance at the end of the fourth quarter was NOK 313 million
2015 2014 2015 2015 2014
(Unaudited figures NOK million) Q4 Q4 YTD $YTD**$ Full year
Operational revenue 30.3 12.1 94.7 128.7 12.1
Total operating cost 39.2 19.1 116.4 144.7 25.2
EBITDA* $-4.2$ $-3.5$ $-0.5$ 7.0 $-9.5$
EBIT $-8.8$ $-7.1$ $-21.7$ $-16.1$ $-13.2$
Pre-tax profit $-7.8$ $-6.1$ $-19.5$ $-14.0$ $-11.6$
Net profit $-6.3$ $-1.0$ $-15.3$ $-11.1$ $-6.5$
Net cash flow from operating activities $-14.1$ $-14.5$ $-35.0$ 5.5
Cash balance end of period 313.0 98.5 313.0 98.5
2015 2015
(figures in NOK million) Q4 $Q3-Q4$
Total operating revenue 18.1 35.7
Total operating cost 19.6 35,6
Operating profit $-1.4$ $-0.1$
Net Financial income (expence) $-0.7$ $-0.8$
Pre- tax profit (loss) $-2.1$ -0.9

NEL Group NEL Hydrogen AS (unaudited)

2015 2015 2014
(figures in NOK million) Q4 $Q1-Q4$ Full year
Total operating revenue 13.3 60.1 69.0
Total operating cost 14.6 56.7 54,5
Operating profit $-1.3$ 3.4 14.5
Net Financial income (expence) 0.7 0.2 0,6
Pre- tax profit (loss) $-0.6$ 3.6 15.0

PROUD HISTORY & EXTENSIVE HYDROGEN KNOWHOW SINCE 1927

World's largest hydrogen electrolyser plant – 135 MW / 30,000 Nm3/h

NEL ASA – CORPORATE STRUCTURE

5

FINANCING & OWNERSHIP

TECHNOLOGY

HYDROGEN REFUELLING TECHNOLOGY

HYDROGEN STATION OWNERSHIP AND OPERATION

Upstream Downstream

PRODUCTION DIVISION – NEL HYDROGEN

ABOUT THE PRODUCTS

  • Global leader within large scale hydrogen electrolyser plants
  • Highest uptime, lowest conversion cost, robust and reliable
  • New technologies to be commercialized, NEL P60 pressurized electrolyser, operate at 60 Nm3/h
  • Container solution, pre-assembled before delivery, reduced time for installation and commissioning
  • Developing a game-changing technology named Rotolyzer

CUSTOMERS

LONG TRACK & HIGHLY SCALABLE

  • World leading supplier of technology for hydrogen production
  • Delivered >500 large scale electrolysers in >50 countries
  • Scalable production capacity for industrial and energy/transport applications

100-1.000kg/day module Flexible upgrade

Multiple modules plant Unlimited capacity

ROBUST, EFFICIENT & LARGE SCALE

1. Efficient

Efficient balance of plant + non -patented, active layer on electrodes → 3 – 15% more efficient than competitors*

2. Robust

Uncomplicated & reliable operation, stack replacement after 7 -8 years

3. Large & cost efficient

By increasing plant size from 250kW to 2.5MW, capex for production capacity reduced by >60%

GAME CHANGING TECHNOLOGY - ROTOLYZER

Rotating electrolyser – several advantages:

Optimal production and flow of hydrogen and oxygen

  • Cost efficient & Compact
  • Dramatically increased active area on electrodes → less material needed → more compact
  • Increased gas-lye separation and less distance between electrodes → increased efficiency

Pressurized stack

  • Higher pressure → more compact & no need for 1st stage compression downstream
  • Works as a centrifugal pump no need for lye pumps

*cell stack, compared to atmospheric alkaline

ABOUT THE PRODUCTS

  • World leading supplier of, H2Station®, hydrogen refuelling stations for vehicles
  • Highest uptime and low cost of ownership
  • More than 28 H2Station® solutions delivered in countries across Europe
  • Standardized and module based design
  • Preparing for release next generation refuelling station
  • Industrial production based in lean production principles
  • Basis for continuous improvements
  • Offer planning & procurement, delivery & installation, operation & maintenance incl. online live monitoring

H2STATION CAR-100 FOR CARS

  • One-module system with installation in 48 hours
  • 70MPa fuelling, up to 200kg/day capacity or ~400 vehicles in a network
  • Flexible hydrogen supply integrated onsite electrolyser or delivered
  • Patented technology

H2STATION MH-100 FOR INDUSTRIAL VEHICLES

  • Easy and fast installation
  • 35MPa fuelling, up to 200kg/day or full tank for ~7- 10 industrial vehicles or buses
  • Flexible hydrogen supply
  • Patented technology

HYDROGEN REFUELLING DIVISION – H2LOGIC

  • Operational partners include Shell, Air Liquide and leading car manufactures such as Daimler, Hyundai, Toyota, Honda and BMW
  • More than 14.000 fuelings / 29 tons of hydrogen (6.000 fuelings / 15 tons 70MPa SAE-J2601 T40)
  • Strategic collaboration with Mitsubishi for Japan
  • Currently developing market entry strategy for California

DELIVERED THE ENTIRE DANISH NETWORK

The world's first country wide network in daily operation:

  • H2 Logic services and operates the entire network
  • Operated in collaboration with leading oil, energy and gas companies*
  • 100% of hydrogen sold in Denmark is from electrolysis
  • 6 Hydrogen stations has onsite electrolysis
  • 5 Hydrogen stations will get supplied hydrogen from central NEL electrolysis
  • All stations approved by OEM's
  • Same approach in other markets
  • * Partners: Air Liquide, OK, Strandmøllen, Vestforsyning ** Under planning/construction

NEL FUEL NORWAY AS

  • Joint Venture between Uno-X Automat AS (51%) and NEL Fuel AS(49%)
  • Letter of Intent to build minimum 20 hydrogen refuelling stations w/hydrogen production units in Norway by 2020
  • Will depend on available public funding
  • NEL to provide hydrogen production and refuelling station technology
  • Uno-X will be main brand of JV
  • Ongoing dialogue with other relevant stakeholders/partners

    1. RENEWABLE ELECTRICITY IS BECOMING CHEAP
    1. GROWING NEED FOR ENERGY STORAGE SOLUTIONS
    1. HYDROGEN CARS ARE BECOMING CHEAP
    1. HIGH FOCUS ON CLEAN/ZERO EMISSION TRANSPORT

FCEVS ARE BEING INTRODUCED

  • Hyundai, Toyota, Honda, BMW, Daimler, GM, Nissan, Ford, Audi, and Volkswagen have all launched, or announced launch, of FCEVs
  • Formidable cost reductions enable introduction: "The Toyota Mirai's powertrain is 95% cheaper to build than the fuel-cell system in the 2008 Highlander fuel cell SUV" 1

COST OF PRODUCING HYDROGEN

Delivered at vehicle. Includes electrolysis, compression and cooling

Production cost versus electricity price Example: 24hr period in Germany (excess)

MAIN DRIVER WITH INCREASE IN RENEWABLES

  • Renewable hydrogen production is an increasingly hot topic
  • Can be combined with energy storage solutions
  • Size of electrolyzer matters, so does…
  • Efficiency and conversion cost
  • Robustness and ease of operation
  • Track record to simplify financing
  • DC connection will reduce capex
  • NEL is well positioned to capture this market

  • Continue to capture market share both upstream and downstream

  • Increased focus on renewable hydrogen production and energy storage
  • Execute on market penetration strategy for California, upstream and downstream
  • Work together with selected partners or directly in the market
  • Next funding round expected to be released by CEC* in next number of months
  • Launch next generation refueling station
  • Standard modular design, ideal for industrial production according to continuous improvement principles
  • Build organization, align activities and capture synergies across NEL

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