Quarterly Report • Nov 20, 2014
Quarterly Report
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www.nel-hydrogen.com
The table relates to the consolidated figures for DiaGenic ASA.
| 2014 | 2013 | 2014 | 2013 | |
|---|---|---|---|---|
| (figures NOK million) | Q3 | Q3 | 9M | 9M |
| Comprehensive income | - 0.04 - | 0.13 | ||
| Total operating cost | (0.76) (9.54) (6.11) | (30.52) | ||
| Pre-tax profit (loss) | (0.48) (9.28) (5.50) | (29.93) | ||
| Net cash flow from operating activities | (1.06) (9.25) (9.00) | (29.28) | ||
| Cash balance end of period | 50.47 18.12 50.47 18.12 |
On 8 October 2014, DiaGenic signed a final share purchase agreement with the shareholders of NEL Hydrogen to acquire NEL Hydrogen. The agreement was conditional upon formal approval of the transaction andthe issue of considerations shares by an extraordinary shareholders' meeting and the approval of a prospectus in connection with the listing of these shares. All formal conditions were lifted and the acquisition was formalized in fourth quarter.
The acquisition represented a change in strategic direction for DiaGenic and as of 21 October 2014 the name of the company was changed to NEL ASA. The pharmaceutical activities remained as a separate business in the new company.
NEL Hydrogen is a global leader in the supply of hydrogen generators, water electrolyzers - which use water and electricity as feedstock and generate oxygen and hydrogen gas.
Today, hydrogen is used as an input to a number of industrial applications. For instance, it can be combined with renewably produced carbon dioxide to produce a feedstock for plastics production or it can be used to purify polysilicon for use in solar panels.
In the future, hydrogen will be used as an energy carrier in the energy systems and in fuel cells.
When it comes to power generation and distribution, hydrogen will become increasingly important, as it enables large scale energy storage from excess electricity generated by wind and solar plants.
The water electrolyzer market is today only a small fraction of the total hydrogen market, but this segment is expected to grow significantly in the coming years, hydrogen refueling and renewable energy storage being the main drivers. In 2020, 40% of renewable electricity is expected to come from wind and solar, compared with 27% in 2013 (source: IEA).
Several energy storage projects which include electrolysis have already been initiated worldwide, and NEL expects this development to continue to grow in the medium- and long term perspective.
With the commercial introduction of Fuel Cell Electric Vehicles (FCEVs), the market for hydrogen as a fuel will also grow. A FCEV is a vehicle which uses a fuel-cell stack to generate electricity from hydrogen with oxygen. The fuel cells demand very high purity hydrogen, which again favors hydrogen from water electrolysis.
NEL Hydrogen started commercial sales of electrolyzers in the 1970s, and has sold more than 500 electrolyzers in a wide array of industries across Europe, South America, Africa and Asia. The company has offices in Notodden and in Oslo, Norway and has a global reach through its own sales representatives and extensive agent network.
With no carbon footprint, hydrogen will become one of the key energy carriers of the future. Based on unique electrolyzer technology with superior energy efficiency, design and scalability, NEL aims for a profitable growth, hand in hand with the global increase in the utilization of renewable energy.
Matters discussed in this report may constitute forward-looking statements.
The forward-looking statements in this report are based on various assumptions, many of which are based upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult to predict and beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.
Oslo, 20 November 2014 The Board of Directors
We confirm to the best of our belief that the financial statements for the third quarter of 2014, that have been prepared in accordance with IAS 34 – Interim Reporting, gives a true and fair view of the company's assets, liabilities, financial position and results of operation. We also declare, to the best of our belief, that the third quarter report provides a fair view of the information required under § 5- 6 (4) of the Norwegian Securities Act.
Oslo, 20 November 2014 The Board of Directors
Hanne Skaarberg Holen Chairman
Øystein Stray Spetalen Board member
Martin Nes Board member
Lars Christian Stugaard CEO
| 2014 | 2013 | 2014 | 2013 | 2013 | ||
|---|---|---|---|---|---|---|
| (figures NOK thousands) | Note | Q3 | Q3 | 9M | 9M | FY |
| Operating income | ||||||
| Other operating income | - | 38 | - | 134 | 157 | |
| Total operating revenue | - | 38 | - | 134 | 157 | |
| Operating expenses | ||||||
| Cost of goods sold | - | 119 | - | 554 | 554 | |
| Total cost of goods sold | - | 119 | - | 554 | 554 | |
| Operating costs | ||||||
| Wages and social costs | 202 | 5 470 | 1 657 | 15 879 | 20 843 | |
| Depreciation | - | 219 | 100 | 665 | 731 | |
| Devaluation goodwill | - | 1 439 | - | 1 439 | 1 195 | |
| Other operating costs | 561 | 2 296 | 4 351 | 11 978 | 14 019 | |
| Total other operating costs | 763 | 9 424 | 6 108 | 29 961 | 36 788 | |
| Total operating costs | 763 | 9 543 | 6 108 | 30 516 | 37 342 | |
| Operating profit (loss) | (763) | (9 505) | (6 108) | (30 381) | (37 185) | |
| Financial income | 283 | 265 | 618 | 600 | 743 | |
| Financial expenses | 0 | 38 | 6 | 149 | 190 | |
| Net financial income (expense) | 283 | 227 | 612 | 451 | 553 | |
| Pre-tax profit (loss) | (480) | (9 277) | (5 496) | (29 930) | (36 633) | |
| Income tax costs (benefits) | - | - | - | - | - | |
| Net profit (loss) | (480) | (9 277) | (5 496) | (29 930) | (36 633) | |
| Other comprehensive income | - | - | - | - | 1 030 | |
| Comprehensive income | (480) | (9 277) | (5 496) | (29 930) | (37 662) | |
| Net profit per share (figures in NOK) | 3 | (0) | (1) | (0) | (5) | (6) |
| Net profit per share after delution | 3 | (0) | (1) | (0) | (5) | (6) |
| 2014 | 2013 | 2013 | ||
|---|---|---|---|---|
| (figures NOK thousands) | Note | 30 Sept | 30 Sept | 31 Dec |
| ASSETS | ||||
| Fixed assets | ||||
| Fixed assets | 0 | 165 | 335 | |
| Total non-current assets | 0 | 165 | 335 | |
| Current assets | ||||
| Trade receivables | 0 | 12 | 56 | |
| Other receivables | 2 092 | 5 012 | 3 340 | |
| Cash and cash equivalents | 50 465 | 18 116 | 11 492 | |
| Total current assets | 52 557 | 23 140 | 14 888 | |
| Total assets | 52 557 | 23 305 | 15 223 | |
| EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Share capital | 2 | 21 632 | 1 632 | 1 632 |
| Paid in equity | 2 | 35 018 | 45 394 | 44 705 |
| Retained earnings | -5 496 | -29 930 | -37 662 | |
| Total equity | 51 154 | 17 096 | 8 675 | |
| Provisions | ||||
| Pension liabilities | 0 | 827 | 0 | |
| Total provisions | 0 | 827 | 0 | |
| Liabilities | ||||
| Accounts payable | 214 | 1 043 | 277 | |
| Social security, VAT etc. payable | 217 | 825 | 1 673 | |
| Other current liabilities | 971 | 3 515 | 4 600 | |
| Total current liabilities | 1 402 | 5 383 | 6 549 | |
| Total equity and liabilities | 52 557 | 23 305 | 15 223 |
| Share | Share | Other | Other | Total | Number of | ||
|---|---|---|---|---|---|---|---|
| (figures in NOK/numbers) | Note | capital | premium | reserves | equity | equity | shares |
| As at 1st January 2012 | 13 512 | 75 979 | 237 | -34 753 | 54 975 | 27 023 652 | |
| Allocation of comprehensive loss | -34 516 | -237 | 34 753 | 0 | |||
| Fair value granted option rights | -959 | 0 | 0 | -959 | |||
| Transaction cost | 0 | 367 | 0 | 367 | |||
| Princple change pension liabilities | -2 007 | 0 | 0 | -2 007 | |||
| Comprehensive income 1.1.-31.12.2012 | 0 | 0 | -35 927 | -35 927 | |||
| As at 31st December 2012 | 13 512 | 38 497 | 368 | -35 927 | 16 450 | 27 023 652 | |
| Allocation of comprehensive loss | -35 559 | -368 | 35 927 | 0 | |||
| Fair value granted option rights | 0 | -310 | 0 | -310 | |||
| Transaction cost | -2 547 | 0 | 0 | -2 547 | |||
| Increase of capital 8.4.13 | 25 000 | 5 000 | 0 | 0 | 30 000 | 50 000 000 | |
| Increase of capital 8.5.13 | 2 288 | 458 | 0 | 0 | 2 745 | 4 575 078 | |
| Reduction of share capital 16.8.13 (10:1) | -39 167 | 39 167 | 0 | 0 -73 438 857 | |||
| Comprehensive income 1.1.-31.12.2013 | 0 | 0 | -37 662 | -37 662 | |||
| As at 1st January 2014 | 1 632 | 45 016 | -310 | -37 662 | 8 675 | 8 159 873 | |
| Allocation of comprehensive loss | -37 972 | 310 | 37 662 | 0 | |||
| Transaction cost | -2 025 | 0 | -2 025 | ||||
| Increase of capital 15.4.14 | 20 000 | 30 000 | 50 000 100 000 000 | ||||
| Comprehensive income 1.1.-30.9.2014 | 0 | -5 496 | -5 496 | ||||
| As at 30th September 2014 | 21 632 | 35 018 | 0 | -5 495 | 51 154 108 159 873 |
| 2014 | 2013 | 2014 | 2013 | 2013 | ||
|---|---|---|---|---|---|---|
| (figures NOK thousands) | Note | Q3 | Q3 | 9M | 9M | FY |
| Cash flow from operating activities | ||||||
| Pre-tax profit (loss) | (480) | (9 277) | (5 496) | (29 930) | (37 662) | |
| Income taxes paid | - | - | - | - | - | |
| Ordinary depreciation | - | 219 | 235 | 665 | 731 | |
| Impairment of fixed assets | - | 1 439 | 100 | 1 439 | 1 195 | |
| Fair value granted option rights | - | 82 | - | 378 | (310) | |
| Loss on sale of fixed assets | - | - | - | - | - | |
| Change in pension scheme liabilities | - | (156) | - | (467) | (1 294) | |
| Change in inventories, accounts | ||||||
| receiveable and accounts payable | 106 | (1 700) | (7) | 178 | 924 | |
| Change in other short-term | ||||||
| receivables and other short-term | ||||||
| liabilities | (684) | 140 | (3 835) | (1 542) | 923 | |
| Net cash flow from operating activities | (1 058) | (9 253) | (9 002) | (29 278) | (35 493) | |
| Cash flow from investment activities | ||||||
| Proceeds from sale of fixed assets | - | - | - | - | 8 | |
| Net cash flow from investing activities | - | - | - | - | 8 | |
| Cash flow from financing activities | ||||||
| Contribution of share capital | - | - | 47 975 | 30 198 | 30 198 | |
| Payment of short and long term liabilities | - | (417) | - | (1 250) | (1 667) | |
| Net cash flow from financing activities | - | (417) | 47 975 | 28 948 | 28 531 | |
| Net change in cash and cash equivalents | (1 058) | (9 670) | 38 973 | (330) | (6 953) | |
| Cash and cash equivalents | 50 465 | 18 116 | 50 465 | 18 116 | 11 492 |
The financial information is prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" ("IAS 34"). This financial information should be read together with the financial statements for the year ended 31st of December 2013 prepared in accordance with International Financial Reporting Standards ("IFRS").
The accounting policies used and the presentation of the Interim Financial Statements are consistent with those used in the latest Annual Financial Statements.
The preparation of the Interim Financial Statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure of contingent liabilities at the date of the Interim Financial Statements. If in the future such estimates and assumptions, which are based on management's best judgment at the date of the Interim Financial Statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change.
The financial statement is presented on the going concern assumption under International Financial Reporting Standards.
As per the date of this report the Company has sufficient working capital for its planned business activities over the next twelve month period. The Company will also have a capital increase in Q4 of a total of NOK 70 million to increase the working capital.
The following table shows the changes in the number of shares in 2014:
| Ordinary shares | |
|---|---|
| Number of shares as of 1st of January | 8 159 873 |
| Share issue 16th of April | 100 000 000 |
| Number of shares as of 30th of September | 108 159 873 |
| Average number of shares per 30th of September | 69 698 335 |
On 8 October, the Company signed a final share purchase agreement with the shareholders of NEL Hydrogen to acquire NEL Hydrogen. The agreement was subject to certain conditions, including approval of the transaction and the issue of consideration shares by the extraordinary general meeting as well as the approval of a prospectus in connection with the listing of the consideration shares by the Financial Supervisory Authority of Norway (Finanstilsynet).
The Company acquired 100% of the shares in NEL Hydrogen for a total consideration of NOK 120 million. The acquisition was financed through NOK 40 million in cash and NOK 80 million in new shares. The consideration shares issued were valued at NOK 0.65 per share. The shares of NEL Hydrogen were transferred to the Company on 9 October 2014.
The consideration shares are subject to an extensive lock up. 27,692,308 shares held by key employees have a total lock up of four years and 27,692,307 held by these key employees have a total lock up of two years. 6,153,846 shares held by management shareholders have a lock up until 1 September 2016 and 61,538,462 shares held by non-management shareholders have a lock up of one year.
NEL Hydrogen is a global leader in the supply of hydrogen-based electrolyzer plants and hydrogen fuelling stations. The company dates back to the 1920s when Norsk Hydro established its first hydrogen generation installation for use in ammonia fertilizer production.
The company began commercial sales of electrolyzers in the 1970s, and has sold more than 500 electrolyzers in a wide array of industries across Europe, South America, Africa and Asia. The company has locations in Notodden, Norway and has a global reach through its own sales representatives and extensive agent network. The company has 22 employees. For further information regarding NEL Hydrogen, please refer to the company's webpage www.NEL-hydrogen.com.
NEL Hydrogen's board of directors consists of Martin Nes (chairman), Øystein Stray Spetalen, Lars Markus Solheim and Ole Arnt Lindgren. The CEO of NEL Hydrogen is Lars Markus Solheim and CFO Erik Evju. Martin Nes and Øystein Stray Spetalen also serve on the board of the Company.
In connection with the acquisition of NEL Hydrogen, a Purchase Price Allocation (PPA) will be completed. During the work with the PPA, values related to customers and technology that are not part of the goodwill are identified.
At mid November 2014, the net cash balance in NEL ASA was approximately NOK 75 million.
| (figures NOK thousands) | 2014 Q3 |
2014 9M |
|---|---|---|
| Total operating revenue | 19 068 | 57 259 |
| Total operating costs | 13 983 | 42 866 |
| Operating profit (loss) | 5 085 | 14 393 |
| Net financial income (expense) | -17 | -17 |
| Pre-tax profit (loss) | 5 048 | 14 376 |
| 2014 | |
|---|---|
| (figures NOK thousands) | 30 Sept |
| ASSETS | |
| Non-current assets | 2 729 |
| Current assets | 40 201 |
| Total assets | 42 930 |
| EQUITY AND LIABILITIES | |
| Equity | 24 551 |
| Liabilities | 18 379 |
| Total equity and liabilities | 42 930 |
Phone: +47 35 09 38 38 E-mail: [email protected] Web: www. nel-hydrogen.com
Address: P.O. Box 24, NO-3671 Notodden, Norway Visitor address: Heddalsvegen 11, Notodden, Norway
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