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Green Hydrogen Systems Interim / Quarterly Report 2021
3401_rns_2021-08-18_6823079a-773e-46d6-b985-fcc537cb6eed.pdf
Interim / Quarterly Report
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Interim report
Q2 2021
GREEN HYDROGEN SYSTEMS
Interim financial report
Q2 2021
Following the successful listing on Nasdaq Copenhagen in June 2021, Green Hydrogen Systems delivers strong order backlog growth while scaling the production facility to 400 MW executing as planned in line with the targets towards 2025.
Performance highlights for Q2 2021
- Converting sales pipeline to firm customer orders with backlog increase of 6.2 MW or +1,000% compared to Q2 2020
- Revenue from customer contracts of DKK 1.6 million compared to DKK 0.3 million in Q2 2020
- Gross profit of DKK 1.2 million compared to DKK 0 million in Q2 2020
- Strong investor support in the recent listing of Green Hydrogen Systems at Nasdaq Copenhagen resulting in a solid cash position of DKK 1,121 million
- Positive commercial traction:
- Three firm customer orders in Q2 2021 and further two orders in July and August 2021 totaling 4.3 MW confirming Green Hydrogen Systems' technology offering and price point in the focus markets Europe and OECD Asia
- Decision made on factory expansion to an annual production capacity of 400 MW positioning Green Hydrogen Systems as a leading, global electrolyser manufacturer
- Final grant preparation phase for a 100 MW electrolyser project as part of the EU's Horizon 2020 funding programme
- Entering Master Supply Agreement concerning supply, operation, service and maintenance of electrolyzers with up to 24 MW capacity to the GreenLab Skive project
- Continued ramp-up and onboarding of competent resources supporting the growth objectives for the company
Accounting impact, non-cash
In Q2 2021, net profit was DKK -351 million of which DKK -317 million were related to an expected non-cash fair value adjustment mechanism derived from the convertible loan facility entered in December 2020 with A. P. Møller Holding, Nordic Alpha Partners and Norlys, as described in the Prospectus. The conversion of the loan at fair value has positively impacted equity by DKK 317 million offsetting the impact on net financials.
Guidance for 2021
The full year guidance for 2021 (updated 22 July 2021) is maintained:
- Revenue DKK 40-60 million
- Gross profit Broadly neutral in absolute terms
- EBITDA DKK -105 to -115 million
- EBIT DKK -120 to -130 million
- R&D DKK 75-85 million
- CAPEX DKK 135-145 million
The guidance for 2021 assumes, that the operation will not be adversely affected by abnormal disruptions partly or fully preventing Green Hydrogen Systems from selling, producing and delivering the products and services.
Sebastian Koks Andreassen, CEO of Green Hydrogen Systems comments: "During second quarter of 2021, the green hydrogen industry experienced strong sentiment from policy makers and investors in the EU, US and Asia. Visions and declarations of intent start turning into actual regulation moving societies towards a future where green hydrogen will play a central role in a sustainable energy system. With the recent IPCC report 'Climate Change 2021' the call for action has become even more evident. I'm pleased to see, that we in Green Hydrogen Systems have experienced this momentum in our customer dialogues and order intake, and with the recent decision on expanding our production capacity to 400 MW we will be positioned to take part of the future scale-up of the global green hydrogen value chain."
GREEN HYDROGEN SYSTEMS
Interim financial report
Q2 2021
Conference call details
In connection with the announcement of the interim financial report for the first 6 months of 2021, Green Hydrogen Systems will host a conference call for existing and potential new investors. The conference call will take place 18 August 2021 at 10:30 CET. Please visit investor.greenhydrogen.dk to access the presentation used for the meeting.
Conference call details
https://webinars.on24.com/q4/
GreenHydrogen_Q2_2021
Join now
DK: +45 32714988
NO: +47 239 600 36
UK: +44 (0) 203 05958 69
Forward-looking statements
This announcement contains forward-looking statements. Words such as 'believe', 'expect', 'may', 'will', 'plan', 'strategy', 'prospect', 'foresee', 'estimate', 'project', 'anticipate', 'can', 'intend', 'outlook', 'guidance', 'target' and other words and terms of similar meaning in connection with any discussion of future operating or financial performance identify forward-looking statements. Statements regarding the future are subject to risks and uncertainties that may result in considerable deviations from the outlook set forth. Furthermore, some of these expectations are based on assumptions regarding future events which may prove incorrect.
Please also refer to the overview of risk factors in page 9-37 of the Prospectus available at greenhydrogen.dk.
Q3 2021 Trading Statement
Date
2 November 2021
Annual Report 2021
Date
2 March 2022
For more info please contact:
Investors & media:
Jens Holm Binger, Head of Investor Relations,
+45 6065 6525, [email protected]
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GREEN
HYDROGEN
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Interim financial report
Q2 2021
Key Figures
| DKK '000 | Q2 2021 | Q2 2020 | 6M 2021 | 6M 2020 | Full year 2020 |
|---|---|---|---|---|---|
| Customer orders | |||||
| Order backlog end of period | 57,000 | 6,500 | 57,000 | 6,500 | 38,500 |
| Order backlog end of period (MW) | 6.8 | 0.6 | 6.8 | 0.6 | 4.9 |
| Profit & loss | |||||
| Revenue from contracts with customers | 1,554 | 334 | 1,874 | 426 | 9,433 |
| Operating profit, EBIT | -33,454 | -10,718 | -71,642 | -18,828 | -72,689 |
| Net financials | -318,488 | -296 | -324,668 | -322 | -2,861 |
| Net profit for the period | -350,567 | -10,528 | -392,560 | -18,380 | -73,241 |
| Balance sheet | |||||
| Total assets | 1,302,548 | 47,329 | 1,302,548 | 47,329 | 232,898 |
| Equity | 1,108,643 | 2,259 | 1,108,643 | 2,259 | -4,077 |
| Cash flows | |||||
| Operating activities | -26,463 | 12,809 | -69,097 | 6,990 | -25,172 |
| Investing activities | -24,385 | -5,471 | -35,267 | -6,701 | -31,625 |
| Financing activities | 1,069,654 | -493 | 1,069,845 | -1,631 | 203,338 |
| Free cash flow | -50,848 | 7,338 | -104,364 | 289 | -56,797 |
| Cash and cash equivalents | 1,121,434 | 8,070 | 1,121,434 | 8,070 | 155,953 |
| Changes in net working capital | -4,578 | 22,065 | -15,281 | 23,875 | 31,307 |
| Employees | |||||
| Employees at the end of the period | 89 | 32 | 89 | 32 | 52 |
| Financial key ratios | |||||
| Solvency ratio (%) | 85% | 5% | 85% | 5% | -2% |
| Return on invested capital (%) | -46% | -8% | -52% | -42% | -53% |
| Return on equity (%) | -64% | 53% | -72% | -161% | -890% |
| Other performance measures | |||||
| Gross profit | 1,190 | 12 | 522 | -60 | -4,022 |
| Gross profit margin | 77% | 4% | 28% | -14% | -43% |
| Total R&D spend | 25,433 | 3,614 | 12,885 | 6,461 | 20,385 |
| EBITDA | -30,813 | -10,043 | -67,266 | -17,558 | -69,617 |
| EBITDA margin | -1,983% | -3,007% | -3,589% | -4,122% | -738% |
| Intangible CAPEX | 12,102 | 2,208 | 19,200 | 3,499 | 11,490 |
| Tangible CAPEX | 22,042 | 3,162 | 20,584 | 3,202 | 20,647 |
| Total CAPEX | 34,144 | 5,370 | 39,784 | 6,701 | 32,137 |
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Interim financial report
Q2 2021
Green Hydrogen Systems in brief
Green Hydrogen Systems is a clean technology company and an electrolyser OEM (Original Equipment Manufacturer) established in 2007, headquartered in Kolding, Denmark. The Company develops, manufactures, and markets electrolysis systems and related services for the production of green hydrogen using renewable electricity.
Green hydrogen can play a central role at the heart of a future sustainable energy system covering all parts of global societies. Green hydrogen is an efficient, highly versatile, and completely carbon neutral energy carrier. Due to these characteristics, it can be used directly or indirectly in sectors which are otherwise hard to decarbonize, and it can be used to efficiently store and transport renewable energy. As a result, the demand for green hydrogen is surging, requiring a significant scale-up of electrolysis capacity.
Strong societal and political push to limit CO2 emissions
Globally there is a common goal of reducing CO2 emissions to curb climate change. 196 UN member states have signed the Paris Agreement to limit global warming. In Europe, the European Commission has increased its targets, and now require a 55% CO2 reduction by 2030. In Denmark, the similar target is to reduce emissions by 70% in 2030. At the time of the 2019 UN Climate Summit, 66 countries had announced net-zero carbon emissions targets by 2050.
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Interim financial report
Q2 2021
Regulatory push in national hydrogen strategies
Governments are increasingly recognizing hydrogen's role in reaching CO2 reduction targets, particularly in sectors that are difficult to decarbonise. As a result, green hydrogen policies and strategies are adopted in many countries around the world. In 2020, France, Germany, the Netherlands, UK, Norway, Italy, Spain and Portugal announced ambitious national hydrogen strategies.
On top of this, EU announced a hydrogen strategy targeting 6 GW of installed green hydrogen capacity by 2024, and 40 GW by 2030, compared with the current around 0.3 GW installed green hydrogen capacity in the EU today. The EU estimates that reaching the green hydrogen targets for 2030 will require investments in electrolyzers of between EUR 24-42 billion.
Scaling production capacity to meet surging demand
Based on the growth in political and industrial interest, Green Hydrogen Systems is experiencing solid commercial momentum and with multiple installations already operating in Northern Europe, the company is scaling its operations to accommodate further growth. Green Hydrogen Systems has already been selected as electrolysis system provider in several projects involving well-reputed green energy companies.
Green Hydrogen Systems operates a 4,500 m2 facility built to provide the highest levels of efficiency, quality and safety. The expected production capacity from the current factory is 75 MW per year by the end of 2021 while the recently decided second expansion phase will increase the capacity to 400 MW per year over the next years.
A product strategy with three main pillars
Competitive technology – Green Hydrogen Systems has explored different technologies and has decided to fully prioritise pressurised alkaline electrolysis as its core technology, which is well-positioned in terms of reliability, efficiency and physical footprint. It can operate dynamically at variable loads with fast ramp-up and down, which is key for integration with renewable power. Another advantage is that the electrolyzers do not require scarce, emission intensive and price-sensitive materials like iridium and platinum.
Modular and versatile solutions suited for serial production – Green Hydrogen Systems' standardised electrolyzers are based on a modular design, and each module can be used as a stand-alone electrolyser or combined in clusters for larger multi-MW and GW applications. All modules are pre-tested at the factory in Kolding before being shipped to the customer which allows for rapid deployment on-site. Furthermore, the standard modular design is suited for serial manufacturing at industrial scale which enables to drive down the costs for electrolyzers considerably.
Significant potential to reduce cost of hydrogen – While Green Hydrogen Systems has no influence over the cost of renewable energy, it can influence other factors affecting the cost of hydrogen for end-users. This includes cost of the electrolyser, installation, maintenance and energy conversion efficiency and continuously progressing to reduce costs of hydrogen to make it an even more compelling choice.
GREEN HYDROGEN SYSTEMS
Interim financial report
Q2 2021
Business highlights
Customer orders
In Q2 2021 three orders totaling 2.0 MW were signed. The orders were signed with end-customers in United Kingdom, Australia and Chile, underlining the global focus and momentum in green hydrogen. The three orders were won in public tenders which further substantiates the competitiveness of Green Hydrogen Systems' technology and price point.
| 0.9 MW
United Kingdom based customer
Capacity: 2x HyProvide A90 containerized electrolyzers with a combined capacity of 0.9 MW
Application: Transportation
Other: Support services including on-site maintenance and remote monitoring as part of a 3 year service agreement
| Read more |
|---|
| 0.6 MW |
Chile based customer
Capacity: 2x HyProvide A60 containerized electrolyzers with a combined capacity of 0.6 MW
Application: Transportation
| Other: Support services including on-site maintenance and remote monitoring as part of a 3 year service agreement |
|---|
| 0.5 MW |
Hydrogen Fuels Australia
Capacity: 1x HyProvide A90 containerized electrolyzers with a combined capacity of 0.5 MW
Application: Transportation
Other: Support services including on-site maintenance and remote monitoring as part of a 3 year service agreement
| Read more |
|---|
The signed orders during Q2 2021 increased the total equipment backlog to 6.8 MW by the end of Q2 2021 – an increase of 6.2 MW or 1,000% compared to Q2 2020. A substantial part of the backlog of 6.8 MW is expected to be delivered in 2021 and corresponds to a total contract value of around DKK 57 million.
Order backlog
Megawatt (MW)
The commercial traction has continued during July and August where additional contracts of 2.3 MW have been signed with two new customers based in Germany and United Kingdom.
Both the signed orders in Q2 2021 and the recent two orders are entered outside Denmark on commercial terms underlining Green Hydrogen Systems as a well-positioned global electrolyser manufacturer.
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Interim financial report
Q2 2021
Pipeline building up
In July 2020, the European Commission presented 'A hydrogen strategy for a climate-neutral Europe (the EU Green Deal)' to support the EU's commitment to reach carbon neutrality by 2050. Green hydrogen is set to be a key element to achieve Europe's clean energy transition with specific targets for green hydrogen production defined towards 2050. In 2020, a total electrolyser capacity of 0.2 GW was operating in Europe. Already by 2024, the capacity is expected to increase to 6 GW and further to 40 GW by 2030. Similar ambitions to the implementation of green hydrogen in national or regional energy strategies are present in Green Hydrogen Systems' other focus markets in OECD Asia covering Australia, Japan and South Korea.
The political focus on implementing green hydrogen in the energy systems is reflected in the continuous announcements of green hydrogen projects globally. With the current product offerings within the A-Series and the planend launch of the X-Series, Green Hydrogen Systems is able to target a wide range of projects focused on different end-use applications. This is also reflected in Green Hydrogen Systems' project pipeline with customer dialogs on projects varying from 0.5 MW to +1,000 MW.
Organisation, safety and employees
By the end of Q2 2021, Green Hydrogen Systems employed a total of 89 employees. This is an increase of 178% or 57 employees compared to Q2 2020. The rapid organisational growth is in line with the business plan of reaching more than 300 employees in 2025 as demand for Green Hydrogen Systems' product offering continues to grow. It is crucial for the ongoing product development and competitiveness to secure a strong technical capability in the organisation. The focus in technical and scientific competencies is reflected in the employee composition where approximately 50% of the employees are employed in highly technical functions including R&D and technical aspects of operations such as production technology, test and service.
Safety and health of Green Hydrogen Systems' employees and other stakeholders is the uncompromising priority number one. Green Hydrogen Systems continuously promotes an organizational culture with the safety mindset "take care" in all production processes in order to maintain awareness and take actions for a safe working environment. The Company monitors safety on a daily basis, and registers and handles potential incidents to track and improve health and safety aspects across the organisation – a crucial focus also in a fast growing organisation.
Interim financial report
Q2 2021
Other commercial highlights
Expansion of production facilities to 400 MW
During Q2 2021, Green Hydrogen Systems has explored opportunities of expanding its current manufacturing, R&D, and office facilities. A decision on a second expansion phase was made in July 2021 will lead to a production capacity increase from 75 MW to 400 MW. Further, the expansion will accommodate the expected organisational growth from 89 employees end of Q2 2021 to more than 300 employees by 2025.
The new facilities will optimise the production and accommodate the increasing demand for large-scale projects and significantly speed up the development and launch of the new product range called the X-Series positioning Green Hydrogen Systems as a leading, global electrolyser manufacturer.
In addition to the expansion project, Green Hydrogen Systems has decided to acquire full ownership of both current facilities and land as well as the surrounding land for future expansion phases. As part hereof, Green Hydrogen Systems will also take ownership of the new facilities during the phase 2 construction. Importantly, this ownership structure will provide maximum control, flexibility and independence to continue the company's growth.
☐ existing premises
☐ expansion 2022
☑ further expansion possibilities
GreenHyScale – a 100 MW electrolyser project as part of the EU's Horizon 2020 funding programme
In collaboration with a consortium of partners, Green Hydrogen Systems has applied for a grant under the EU's Horizon 2020 Framework Programme (H2020) to support a planned large-scale green hydrogen project called GreenHyScale. The project is currently in the grant preparation phase awaiting final confirmation from EU's representatives. As a first step in the project, a 6 MW electrolyser system will be demonstrated which subject to satisfactory performance may be expanded to a total of 100 MW capacity electrolysis plant. Green Hydrogen Systems will also develop and deliver a 7.5 MW electrolysis system for offshore deployment. The electrolysis plant will be located on or nearby the GreenLab Skive facility in Denmark. A potential grant agreement may provide an approximate 50% EU funding rate for Green Hydrogen Systems' development activities in the GreenHyScale project. If the full 100 MW electrolysis capacity is to be delivered to the GreenHyScale project, Green Hydrogen Systems will be the sole supplier of such electrolysis capacity.
Read more in the press release here: https://greenhydrogen.dk/greenhyscale/
GreenLab Skive – 24 MW Master Supply Agreement
In May 2021, Green Hydrogen Systems entered into a Master Supply Agreement concerning supply, operation, servicing and maintenance of electrolyzers with up to 24 MW capacity split in two phases to the GreenLab Skive project in Denmark. Green Hydrogen Systems expects to deliver 29 A-Series A90 electrolyser units for the first phase in Q4 2022 and 26 A-Series A90 electrolyser units for the second phase in Q1 2023. For the first phase covering the initial 24 months of operation, Green Hydrogen Systems will be responsible for the operation of the 29 A90 electrolyzers. 24 months after delivery, expectedly in Q4 2024, the project partners Lhyfe and Eurowind Energy will take over ownership and operational responsibility for the initial 29 A90 electrolyzers. Ownership and operational responsibility for the second phase delivery of 26 A90 electrolyzers is to transfer to Lhyfe and Eurowind Energy on delivery expectedly in Q1 2023. Equipment, service and other supplementary agreements are expected to be finalized in Q3 2021.
Read more in the press release here: https://greenhydrogen.dk/partnership-with-eurowind-and-lhyfe/
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Interim financial report
Q2 2021
ISO certification
In July 2021, Green Hydrogen Systems achieved certification for the following ISO standards with expected release of certificates in September 2021:
- ISO9001 Quality management systems
- ISO14001 Environmental Management
- ISO45001 Occupational health and safety management systems
The adaptation and implementation of safety, health, environment and quality management processes in compliance with said standard helps ensure Green Hydrogen Systems to develop, produce, test, deliver, install and service world class efficient and reliable electrolyzer system for the benefit of the customers, while protecting the environment and keeping employees and users safe at all time. Furthermore, a standardized system forms the basic for continually improving systems and performance, while addressing and mitigating risks.
Medium-term targets 2025
Based on the expected development in the market for production of electrolysers and use of green hydrogen, Green Hydrogen Systems has established financial growth targets towards 2025. By 2025, Green Hydrogen Systems expects to deliver +200 MW of electrolyser capacity (6-7 MW in 2021) combined with service & maintenance activities for an install base of 300-400 MW resulting in an expected revenue of DKK +1,000 million. This corresponds to an average growth of more than 100% per year from 2020 to 2025 with the highest growth rates in the middle to the later part of the period.
Based on the realisation of cost efficiencies and scaling benefits following the increased demand for electrolyser capacity, Green Hydrogen Systems targets to realise a steady improvement in gross profit margin reaching a level of around 25% by 2025.
In line with the business plan, substantial investments will be targeted toward the continuation of R&D efforts, production scale-up and organisational ramp-up. These investments are expected to impact EBITDA the coming two to three years, leading to a planned decline in the absolute EBITDA level before gradual improvements that support the aspiration of reaching a high single-digit EBITDA margin in 2025.
Interim financial report
Q2 2021
Financial performance
Profit & loss
| DKK '000 | Q2 2021 | Q2 2020 | 6M 2021 | 6M 2020 | Full year 2020 |
|---|---|---|---|---|---|
| Profit & loss | |||||
| Revenue from customer contracts | 1,554 | 334 | 1,874 | 426 | 9,433 |
| Gross profit | 1,190 | 12 | 522 | -60 | -4,022 |
| Gross profit margin | 77% | 3.6% | 28% | -14% | -43% |
| EBITDA | -30,813 | -10,043 | -67,266 | -17,558 | -69,617 |
| Operating profit, EBIT | -33,454 | -10,718 | -71,642 | -18,828 | -72,689 |
| Net financials | -318,488 | -296 | -324,668 | -322 | -2,861 |
| Net profit for the period | -350,567 | -10,528 | -393,560 | -18,380 | -73,241 |
Revenue
In Q2 2021, revenue from customer contracts was DKK 1.6 million. This is an increase of DKK 1.3 million compared to Q2 2020. The revenue in Q2 2021 was mainly derived from a cancelled order entered in 2018.
Green Hydrogen Systems has been developing and testing the HyProvide A60 and A90 electrolyser models with planned commercial launch and delivery from second half 2021. Consequently and as planned, no customer orders have been delivered and revenue recognized in the first six months of 2021. However, a substantial part of the backlog of 6.8 MW is expected to be delivered and revenue recognized in the second half of 2021.
Gross profit
Gross profit was DKK 1.2 million corresponding to a gross profit margin of 77%. Gross profit was up by DKK 1.2 million compared to Q2 2020. Revenue from the cancelled order positively impacted gross profit as the equipment in question is capitalized for use in the R&D process hence not impacting direct costs and gross profit in Q2 2021.
EBITDA
In Q2 2021, EBITDA was DKK -31 million compared to DKK -10 million in Q2 2020. The negative development in EBITDA was a direct consequence of the planned upscaling of the organisation which has grown by 57 employees or 178% compared to Q2 2020. Further, in Q2 2021 EBITDA is negatively impacted by IPO related costs of DKK 10-15 million.
Net financials and net profit
In Q2 2021, net financial was DKK -318 million due to a non-cash fair value adjustment of a convertible loan facility entered in December 2020 with A. P. Møller Holding, Nordic Alpha Partners and Norlys. The risk of a non-cash adjustment impacting net financials was described in the Annual Report 2020 in note 21 and note 22. In Q2 2020 net financials were DKK -0.3 million.
Net profit was DKK -351 million in Q2 2021 compared to DKK -11 million in Q2 2020.
GREEN HYDROGEN SYSTEMS
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Balance sheet
| DKK '000 | Q2 2021 | Q2 2020 | 6M 2021 | 6M 2020 | Full year 2020 |
|---|---|---|---|---|---|
| Balance sheet | |||||
| Total assets | 1,302,548 | 47,329 | 1,302,548 | 47,329 | 232,898 |
| Equity | 1,108,643 | 2,259 | 1,108,643 | 2,259 | -4,077 |
| Free cash flow | -50,848 | 7,334 | -104,364 | 289 | -56,797 |
| Cash and cash equivalents | 1,121,434 | 8,070 | 1,121,434 | 8,070 | 155,953 |
Balance Sheet
As of 30 June 2021, total assets were DKK 1,303 million compared to DKK 47 million as of 30 June 2020. The increase was mainly driven by proceeds from Green Hydrogen Systems' listing at Nasdaq Copenhagen. Further, total assets have increased due to additions in intangible assets (R&D, product development), PPE and right-of-use assets. Likewise, equity increased by DKK 1,106 million compared to 30 June 2020 mainly due to proceeds from share issues in connection with the listing at Nasdaq Copenhagen.
Free cash flow and cash balance
In Q2 2021, free cash flow was DKK -51 million compared to DKK 7 million in Q2 2020. The negative free cash flow development of DKK 58 million was mainly due to an increase in inventories, negative development in net profit and additions to tangible and intangible assets. In Q2 2021, net cash flow was DKK 1,019 million as a result of proceeds from the share issue. Additional proceeds of DKK 165m from the IPO overallotment option in connection with the share issue was recognized in July 2021, hence not included in Q2 2021 cash flows. By the end of Q2 2021, cash and cash equivalents were DKK 1,121 million.
For details on related party transactions please refer to note 14.
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Management's statement
The Executive Management and Board of Directors of Green Hydrogen Systems A/S have today considered and adopted the Interim Financial Statements for the first six months of 2021. The financial report has not been audited or reviewed by the Company's independent auditors.
The Interim Financial Statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU.
In our opinion the Interim Financial Statements give a true and fair view of the financial position at 30 June 2021 of the Company and of the results of the Company operations for the first six months of 2021.
In our opinion, Management's Review includes a true and fair account of the development in the operations and financial circumstances of the Company, of the results for the period and of the financial position of the Company as well as a description of the most significant risks and elements of uncertainty facing the Company.
Kolding, 18 August 2021
Executive Management
Sebastian Koks Andreassen
Kenneth Bergstrøm-Andersen
Board of Directors
Thyge Boserup (Chairman)
Troels Øberg (Vice Chairman)
Lars Valsøe Bertelsen
Christian Clausen
Thomas Thune Andersen
Jakob Fuhr Hansen
Simon Krogsgaard Ibsen
Karen-Marie Katholm
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Q2 2021
Financial statements
Statement of profit or loss
| DKK '000 | Notes | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | FY 2020 |
|---|---|---|---|---|---|---|
| Revenue from contracts with customers | 4 | 1,554 | 334 | 1,874 | 426 | 9,433 |
| Other operating income | 363 | 260 | 638 | 1,601 | 2,793 | |
| Total revenue & operating income | 1,917 | 594 | 2,512 | 2,027 | 12,226 | |
| Changes in inventory of finished goods and work in progress | 9,582 | 876 | 10,558 | 1,574 | 36 | |
| Raw materials and consumables used | -14,293 | -832 | -17,539 | -4,015 | -17,208 | |
| Work performed by the Company and capitalised | 10,251 | 2,077 | 16,804 | 3,268 | 10,485 | |
| Employee costs | -25,518 | -7,330 | -48,613 | -12,036 | -39571 | |
| Other operating expenses | 6 | -12,752 | -5,428 | -30,988 | -8,376 | -35,585 |
| Operating profit / (loss) before depreciation, amortisation and impairment losses (EBITDA) | -30,813 | -10,043 | -67,266 | -17,558 | -69,617 | |
| Depreciation and amortisation | 9, 10, 11 | -2,641 | -675 | -4,376 | -1,270 | -3,072 |
| Operating profit/(loss) (EBIT) | -33,454 | -10,718 | -71,642 | -18,828 | -72,689 | |
| Financial income | 0 | 0 | 0 | 0 | 2 | |
| Financial expenses | -318,488 | -296 | -324,668 | -322 | -2,861 | |
| Profit/(loss) before tax | -351,942 | -11,014 | -396,310 | -19,150 | -75,548 | |
| Income tax | 1,375 | 486 | 2,750 | 770 | 2,307 | |
| Profit/(loss) for the period | -350,567 | -10,528 | -393,560 | -18,380 | -73,241 | |
| Earnings per share attributable to shareholders | -8.10 | -0.47 | -9.82 | -0.83 | -2.47 | |
| Diluted earnings per share attributable to shareholders | -8.10 | -0.47 | -9.82 | -0.83 | -2.47 |
Statement of comprehensive income
| DKK '000 | Notes | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | FY 2020 |
|---|---|---|---|---|---|---|
| Profit / (loss) for the period | -350,567 | -10,528 | -393,560 | -18,380 | -73,241 | |
| Total comprehensive income for the period | -350,567 | -10,528 | -393,560 | -18,380 | -73,241 |
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Financial statements
Balance Sheet
| Assets, DKK '000 | Notes | 30 June 2021 | 30 June 2020 | 31 December 2020 |
|---|---|---|---|---|
| Intangible assets | 9 | 34,138 | 9,547 | 16,459 |
| Property, plant and equipment | 10 | 40,062 | 3,340 | 20,635 |
| Right-of-use assets | 11 | 37,577 | 1,421 | 14,535 |
| Income tax receivables | 2,750 | 0 | 0 | |
| Deposits | 7,152 | 3,222 | 6,205 | |
| Total non-current assets | 121,679 | 17,530 | 57,834 | |
| Inventories | 42,080 | 14,202 | 7,611 | |
| Trade receivables | 886 | 856 | 4,052 | |
| Income tax receivables | 2,527 | 2,145 | 2,527 | |
| Prepayments | 1,962 | 147 | 227 | |
| Other receivables | 11,980 | 4,379 | 4,694 | |
| Cash and cash equivalents | 1,121,434 | 8,070 | 155,953 | |
| Total current assets | 1,180,369 | 29,799 | 175,064 | |
| Total assets | 1,302,548 | 47,329 | 232,898 | |
| Liabilities, DKK '000 | Notes | 30 June 2021 | 30 June 2020 | 31 December 2020 |
| Share capital | 77,862 | 22,204 | 36,805 | |
| Share premium | 1,579,914 | 18,115 | 39,328 | |
| Reserve for treasury shares | 0 | -1,050 | 0 | |
| Reserve for development costs | 23,036 | 7,059 | 12,147 | |
| Accumulated deficit | -572,169 | -44,069 | -92,357 | |
| Total equity | 1,108,643 | 2,259 | -4,077 | |
| Borrowings | 19,392 | 2,988 | 170,287 | |
| Lease liabilities | 11 | 32,944 | 817 | 12,303 |
| Other payables | 1,350 | 1,033 | 1,350 | |
| Total non-current liabilities | 53,686 | 4,838 | 183,940 | |
| Borrowings | 7,215 | 509 | 4,089 | |
| Trade payables | 17 | 95,966 | 6,943 | 25,358 |
| Lease liabilities | 11 | 5,053 | 602 | 2,228 |
| Contract liabilities | 14,718 | 5,645 | 7,889 | |
| Deferred income | 2,445 | 3,191 | 3,239 | |
| Provisions | 2,976 | 485 | 984 | |
| Other payables | 11,846 | 22,857 | 9,248 | |
| Total current liabilities | 140,219 | 40,232 | 53,035 | |
| Total liabilities | 193,905 | 45,070 | 236,975 | |
| Total equity and liabilities | 1,302,548 | 47,329 | 232,898 |
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Interim financial report
Q2 2021
Financial statements
Statement of changes in equity
| DKK '000 | Notes | Share capital | Share premium | Reserve for treasury shares | Reserve for development costs | Accumulated deficit | Total equity |
|---|---|---|---|---|---|---|---|
| Equity at 1 January 2020 | 22,204 | 18,115 | 0 | 5,002 | -24,787 | 20,534 | |
| Profit / (loss) for the period | 0 | 0 | 0 | 2,057 | -20,437 | -18,380 | |
| Total comprehensive income for the period | 0 | 0 | 0 | 2,057 | -20,437 | -18,380 | |
| Transactions with owners in their capacity as owners | |||||||
| Purchase of treasury shares | 0 | 0 | -1,050 | 0 | 0 | -1,050 | |
| Share-based payments | 5 | 0 | 0 | 0 | 0 | 1,155 | 1,155 |
| Total transactions with owners | 0 | 0 | -1,050 | 0 | 1,155 | 105 | |
| Equity at 30 June 2020 | 22,204 | 18,115 | -1,050 | 7,059 | -44,069 | 2,259 | |
| Equity at 1 January 2021 | 36,805 | 39,328 | 0 | 12,147 | -92,357 | -4,077 | |
| Profit / (loss) for the period | 0 | 0 | 0 | 10,889 | -404,449 | -393,560 | |
| Total comprehensive income for the period | 0 | 0 | 0 | 10,889 | -404,449 | -393,560 | |
| Transactions with owners in their capacity as owners | |||||||
| Capital increase, cash | 12 | 27,556 | 1,073,193 | 0 | 0 | 0 | 1,100,750 |
| Conversion of loan into shares, non-cash | 12 | 12,047 | 465,258 | 0 | 0 | 0 | 477,305 |
| Exercise of warrants | 12 | 1,453 | 2,135 | 0 | 0 | 0 | 3,588 |
| Share-based payments | 5 | 0 | 0 | 0 | 0 | 14,243 | 14,243 |
| Transaction costs for equity issuance | 0 | 0 | 0 | 0 | -89,606 | -89,606 | |
| Total transactions with owners | 41,056 | 1,540,586 | 0 | 0 | -75,363 | 1,506,280 | |
| Equity at 30 June 2021 | 77,862 | 1,579,914 | 0 | 23,036 | -572,169 | 1,108,643 |
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HYDROGEN
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Interim financial report
Q2 2021
Financial statements
Cash flow statement
| DKK '000 | Notes | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | FY 2020 |
|---|---|---|---|---|---|---|
| Profit/(loss) for the period | -350,566 | -10,529 | -393,560 | -18,380 | -73,241 | |
| Changes in net working capital | 16 | -4,578 | 22,065 | -15,281 | 23,875 | 31,307 |
| Adjustments | 16 | 330,628 | 1,472 | 342,527 | 1,819 | 15,957 |
| Interests paid | -1,948 | -207 | -2,783 | -324 | -572 | |
| Income taxes paid/received | 0 | 0 | 0 | 0 | 1,372 | |
| Net cash flow from operating activities | -26,463 | 12,805 | -69,097 | 6,990 | -25,172 | |
| Payment for property, plant and equipment | -12,968 | -3,162 | -17,353 | -3,202 | -20,647 | |
| Payment for development costs and other intangibles | -11,417 | -2,309 | -17,914 | -3,499 | -10,978 | |
| Net cash flow from investing activities | -24,385 | -5,471 | -35,267 | -6,701 | -31,625 | |
| Principal elements of lease payments | -763 | -166 | -1,322 | -254 | -1,008 | |
| Proceeds from borrowings | 6,537 | 0 | 6,537 | 0 | 202,997 | |
| Repayment of borrowings | -1,562 | -327 | -1,562 | -327 | -745 | |
| Proceeds from share issues | 1,103,588 | 0 | 1,104,338 | 0 | 3,144 | |
| Transaction costs for equity issuance | -38,146 | 0 | -38,146 | 0 | 0 | |
| Purchase of treasury shares | 0 | 0 | 0 | -1,050 | -1,050 | |
| Net cash flow from financing activities | 1,069,654 | -493 | 1,069,845 | -1,631 | 203,338 | |
| Net cash flow for the period | 1,018,805 | 6,841 | 965,481 | -1,342 | 146,541 | |
| Cash and cash equivalents, beginning of the period | 102,629 | 1,229 | 155,953 | 9,412 | 9,412 | |
| Effects of exchange rate changes on cash and cash equivalents | 0 | 0 | 0 | 0 | 0 | |
| Cash and cash equivalents at end of the period | 1,121,434 | 8,070 | 1,121,434 | 8,070 | 155,953 |
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HYDROGEN
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Interim financial report
Q2 2021
Notes
Notes
- Basis of preparation of the interim financial report
- Critical accounting estimates and judgements
- Operating segments
- Revenue from contracts with customers
- Share-based payment plans
- Other operating expenses
- Financial income and expenses
- Income taxes
- Intangible assets
- Property, plant end equipment
- Leases
- Share capital
- Fair value measurement of financial instruments
- Related party transactions
- Events after the balance sheet date
- Cash flow specifications
- Trade payables
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Interim financial report
Q2 2021
Notes
1. Basis of preparation of the interim financial report
This condensed interim financial report for the first half year of 2021 presented in accordance with IAS 34 Interim Financial Reporting as endorsed by the EU.
The interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the IFRS financial statements for the year ended 31 December 2020.
The accounting policies adopted are consistent with those of the previous financial year, except for the adoption of new and amended standards as set out below. The financial statements for 2020 of the Company provides a full description of the Company's accounting policies.
Transaction costs related to equity issuance
Qualifying transaction costs incurred in connection with issuance of equity instruments are deducted from equity. Transaction costs incurred in anticipation of an issuance of equity instruments are deducted from equity as incurred. If the equity instruments are not subsequently issued, the transaction costs will be recognised as an expense. Where the qualifying transaction costs relate to listing of existing and new shares, the part of the total transaction costs deducted from equity are based on a ratio between management's expectations about the number of new shares compared to the number of existing shares.
Changes in accounting policies
As of 30 June 2021, the Company has implemented all new or amended accounting standards to the International Financial Reporting Standards effective as of 1 January 2021 as adopted by the EU. None of the new or amended standards are expected to have a significant impact on the financial statements.
In April 2021, the IASB ratified the IFRS Interpretations Committee's agenda decision regarding configuration and customisation costs in cloud computing arrangements. The agenda decision clarifies when a customer would be able to recognise an intangible asset for the configuration and customisation costs incurred. Green Hydrogen Systems are in the process of implementing a new ERP cloud solution that will support the Company's expected growth and the execution of the Company's strategy. During the first six month of 2021 the Company has incurred configuration and customisation costs related to its cloud based SAP implementation of DKK 1 million, which has been recognised as an intangible asset and presented within Intangible assets. As of 30 June 2021, the accumulated costs recognised in the balance sheet amounts to DKK 1.5 million. The Company is in the process of assessing the impact from this IFRIC agenda decision on its financial statements. The assessment is expected to be completed during the third quarter of 2021.
New accounting standards
The IASB has issued several new standards and amendments not yet in effect or endorsed by the EU and therefore not relevant for the preparation of the H1 2021 interim financial report. None of these are currently expected to have any significant impact on the financial statements of the Company when implemented.
2. Critical accounting estimates and judgements
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company's accounting policies.
The judgments, estimates and the related assumptions made are based on historical experience and other factors that Management considers to be reliable, but which by their very nature are associated with uncertainty and unpredictability. These assumptions may prove incomplete or incorrect, and unexpected events or circumstances may arise. Estimates and judgements are continually evaluated.
Primary financial statement line items in which more significant accounting estimates are applied are listed in note 2 Critical accounting estimates and judgements of the financial statements for 2020.
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Notes
3. Operating segments
Green Hydrogen Systems A/S serves one segment, which is inherent in the way Executive Management considers and operates the Company. The costs related to the main nature of the business, being development and production of electrolysers for on-site hydrogen production, are not attributable to any specific revenue stream or customer type and are therefore borne centrally. The results of the single reporting segment, comprising the entire company, are shown in the statements of comprehensive income.
4. Revenue from contracts with customers
The following table displays revenue by product offering:
| DKK '000 | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 |
|---|---|---|---|---|
| Product revenue | 1,494 | 334 | 1,754 | 356 |
| Service and other revenue | 60 | 0 | 120 | 70 |
| Total revenue by product offering | 1,554 | 334 | 1,874 | 426 |
| Revenue recognised at a point in time | 1,494 | 334 | 1,754 | 356 |
| Revenue recognised over time | 60 | 0 | 120 | 70 |
The following table displays revenue by product application:
| DKK '000 | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 |
|---|---|---|---|---|
| Power-to-X* | 0 | 0 | 0 | 0 |
| Transportation | 60 | 334 | 120 | 404 |
| Industry | 1,494 | 0 | 1,754 | 22 |
| Total revenue by product application | 1,554 | 334 | 1,874 | 426 |
*Power-to-X relates to products for indirect use as the basis for the production of green fuels.
The following table displays external revenue by geographical areas:
| DKK '000 | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 |
|---|---|---|---|---|
| Europe | 1,554 | 334 | 1,874 | 426 |
| Asia-Pacific | 0 | 0 | 0 | 0 |
| Rest of the world | 0 | 0 | 0 | 0 |
| Total revenue by geographical area | 1,554 | 334 | 1,874 | 426 |
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Notes
5. Share-based payment plans
Green Hydrogen Systems A/S established the 2020 warrant program as an incentive for members of the Board of Directors, Executive Management and selected key employees. Refer to note 7 in the 2020 financial statements for further details of the warrant program.
The warrant activity in the first six months of 2021 and 2020, respectively, is outlined below:
| DKK '000 | Number of warrants (thousands) | |
|---|---|---|
| H1 2021 | H1 2020 | |
| Outstanding warrants at 1 January | 3,454 | 0 |
| Granted during the period | 133 | 0 |
| Exercised during the period | -1,453 | 0 |
| Forfeited during the period | -199 | 0 |
| Outstanding warrants at 30 june | 1,935 | 0 |
The outstanding warrants are exercisable as of 17 June 2022.
For warrants exercised during the first six months of 2021, the weighted-average share price at the date of exercise was DKK 40. The weighted-average exercise prices of warrants exercised were DKK 2.47.
In February 2021, 132,701 warrants (Q1 2020: nil) were granted with a weighted average exercise price of DKK 2.47 per warrant (Q1 2020: DKK nil) and a weighted average Black-Scholes fair market value of DKK 10.83 per warrant (Q1 2020: DKK nil).
The Company has in addition established a Restricted Stock Unit program as an incentive to the Company's executive board member. Refer to note 7 in the 2020 financial statements for further details.
Share-based compensation expenses related to the warrant program and RSU-program for the first six months of 2021 totaled DKK 14,244 thousand.
6. Other operating expenses
| DKK '000 | H1 2021 | H1 2020 |
|---|---|---|
| Sales and marketing costs | 724 | 648 |
| Administration costs | 8,949 | 1,664 |
| Consultancy services costs | 13,239 | 3,676 |
| Other general costs | 8,076 | 2,388 |
| 30,988 | 8,376 |
The increase in consultancy services costs incurred in the first six months of 2021 amounting to DKK 13,239 thousand (H1 2020: DKK 3,676 thousand) relate to non-recurring cost for external consultants in respect of the Company's initial puplic offering. Other general costs have increased over the period due to the increase of business activities and number of employees.
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Notes
7. Financial expenses
| DKK '000 | H1 2021 | H1 2020 |
|---|---|---|
| Interest expense on borrowings | 7,566 | 572 |
| Interest expenses on lease liabilities | 1,006 | 26 |
| Foreign exchange rate adjustments, net | -59 | 14 |
| Fair value loss on derivatives at fair value through profit or loss | 317,439 | 0 |
| Total financial expenses | 325,952 | 612 |
| Of which capitalized | -1,284 | -291 |
| Net financial income and expenses | 324,668 | 322 |
The fair value loss on derivatives relates to change in fair value of the conversion option liability on the EUR-denominated loan facility as well as the exit-payment derivative on the loans from the Danish Green Investment Fund. For further details about the derivatives, reference is made to note 21 to the 2020 financial statements.
8. Income taxes
Current tax on losses for the periods are originating from the tax credit scheme for research and development costs, under which the tax value of accumulated tax losses up to DKK 25 million are paid to the Company. As Management expects the Company to incur research and development costs amounting to at least 25% of the DKK 25 million limit each quarter, the related income tax benefit is recognised on a straight-line basis.
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Notes
9. Intangible assets
The intangible assets held by the Company increased primarily as a result of an increase in development projects in progress and acquisition of new software licenses.
| DKK '000 | Completed development projects | Other intangibles | Development projects in progress | Total |
|---|---|---|---|---|
| At 31 December 2020 | ||||
| Cost | 5,511 | 1,518 | 11,899 | 18,928 |
| Accumulated amortisation and impairment | -1,837 | -632 | 0 | -2,469 |
| Carrying amount 31 December 2020 | 3,674 | 886 | 11,899 | 16,459 |
| Six months ended 30 June 2021 | ||||
| Cost: | ||||
| At 1 January 2021 | 5,511 | 1,518 | 11,899 | 18,928 |
| Additions during the period | 3,190 | 4,055 | 11,955 | 19,200 |
| At 30 June 2021 | 8,701 | 5,573 | 23,854 | 38,128 |
| Accumulated amortisation and impairment: | ||||
| At 1 January 2021 | -1,837 | -632 | 0 | -2,469 |
| Amortisation for the period | -1,184 | -337 | 0 | -1,521 |
| At 30 June 2021 | -3,021 | -969 | 0 | -3,990 |
| Carrying amount 30 June 2021 | 5,680 | 4,604 | 23,854 | 34,138 |
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Interim financial report
Q2 2021
Notes
10. Property, plant and equipment
| DKK '000 | Plant and machinery | Other fixtures and fittings, tools and equipment | Leasehold improvements | Assets under construction | Total |
|---|---|---|---|---|---|
| At 31 December 2020 | |||||
| Cost | 0 | 11,043 | 10,198 | 0 | 21,241 |
| Accumulated depreciations | -551 | -55 | -606 | ||
| Carrying amount 31 December 2020 | 0 | 10,492 | 10,143 | 0 | 20,635 |
| Six months ended 30 June 2021 | |||||
| Cost: | |||||
| At 1 January 2021 | 0 | 11,043 | 10,198 | 0 | 21,241 |
| Additions during the period | 3,669 | 1,215 | 13,105 | 2,595 | 20,584 |
| Transfers between categories | 5,472 | -9,738 | 68 | 4,198 | 0 |
| At 30 June 2021 | 9,141 | 2,520 | 23,371 | 6,793 | 41,825 |
| Accumulated depreciations: | |||||
| At 1 January 2021 | 0 | -551 | -55 | 0 | -606 |
| Depreciations for the period | -698 | -265 | -194 | 0 | -1,157 |
| Transfers between categories | -261 | 264 | -3 | 0 | 0 |
| At 30 June 2021 | -959 | -552 | -252 | 0 | -1,763 |
| Carrying amount 30 June 2021 | 8,182 | 1,968 | 23,119 | 6,793 | 40,062 |
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Notes
11. Leases
The Company has recognised the following amounts relating to leases:
| DKK '000 | 30 June 2021 | 31 December 2020 |
|---|---|---|
| Right-of-use assets | ||
| Properties | 33,202 | 12,285 |
| Vehicles | 2,381 | 2,250 |
| Other equipment | 1,994 | 0 |
| 37,577 | 14,535 | |
| Additions to the right-of-use assets were | 24,320 | 15,167 |
The additions to the right-of-use assets that occurred during the first six months of 2021 primarily related to the lease of the Company's new administrative building of DKK 19,806 thousand with commencement date in February 2021.
| DKK '000 | 30 June 2021 | 31 December 2020 |
|---|---|---|
| Lease liabilities | ||
| Current | 5,053 | 2,228 |
| Non-current | 32,944 | 12,303 |
| 37,997 | 14,531 |
The contractual maturities of the lease payments are as follows:
| DKK '000 | Less than 1 year | Between 1 and 5 year | More than 5 years | Total |
|---|---|---|---|---|
| As at 30 June 2021 | ||||
| Lease liabilities, current and non-current | 5,378 | 17,619 | 32,922 | 55,919 |
| DKK '000 | Less than 1 year | Between 1 and 5 year | More than 5 years | Total |
| As at 31 December 2020 | ||||
| Lease liabilities, current and non-current | 2,283 | 6,330 | 12,432 | 21,045 |
| DKK '000 | H1 2021 | H1 2020 | ||
| --- | --- | --- | ||
| Depreciation charge of right-of-use assets | ||||
| Properties | 1,143 | 62 | ||
| Vehicles | 487 | 26 | ||
| Other equipment | 133 | 0 | ||
| 1763 | 88 |
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Interim financial report
Q2 2021
Notes
12. Share Capital
| Number '000 | A Shares | B Shares | ||
|---|---|---|---|---|
| 30 june 2021 | 31 December 2020 | 30 june 2021 | 31 December 2020 | |
| Number of shares | Number of shares | Number of shares | Number of shares | |
| Changes in share capital | ||||
| Opening balance | 10,231 | 9,891 | 26,574 | 12,313 |
| Capital increase, cash | 27,556 | 621 | 0 | 616 |
| Exercise of warrants | 1,453 | 739 | 0 | 0 |
| Conversion of loan into shares | 12,047 | 0 | 0 | 13,645 |
| Conversion of shares | 26,574 | 0 | -26,574 | 0 |
| Cancellation of treasury shares | 0 | -1,020 | 0 | 0 |
| Total | 77,862 | 10,231 | 0 | 26,574 |
27,500,000 shares of the capital increase in cash relate to the IPO in June 2021. In connection with the IPO the B shares where converted into A shares.
The company has in connection with the completed IPO incurred transaction cost for advisory, fees to Joint Global Coordinators etc. amounting to DKK 103 million of which DKK 90 million have been deducted to equity. As the listing included existing and new shares the part of the qualifying transaction costs deducted from equity is based on the ratio between the number of new and existing shares.
H
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HYDROGEN
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Interim financial report
Q2 2021
Notes
13. Fair value measurement of financial instruments
This note provides an update on the judgements and estimates made by the group in determining the fair values of the financial instruments since the 2020 financial statements of the Company.
To provide an indication about the reliability of the inputs used in determining fair value, the Company classifies its financial instruments into the three levels prescribed under the accounting standards. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for the Company's derivative financial liabilities:
The following table presents the Company's financial liabilities measured and recognised at fair value at 30 June 2021, 31 December 2020 and 30 June 2020 on a recurring basis:
| DKK '000 | 30 June 2021 | 31 December 2020 | 30 June 2020 |
|---|---|---|---|
| Financial liabilities measured at fair value (recurring basis) | |||
| Conversion option liability | 0 | 4,591 | 0 |
| Exit-payment derivatives | 3,399 | 3,411 | 0 |
| 3,399 | 8,002 | 0 |
For financial assets and liabilities of short-term nature, such as trade receivables and trade payables, the carrying amount approximates their fair value. For borrowings, the fair values are not materially different from their carrying amounts, since the interest payable on those borrowings is close to current market rates.
Conversion option liability
As described in note 21 to the Company's financial statements for 2020, the Company entered into a convertible loan facility in December 2020. The loan was convertible into B-shares with a fixed conversion rate of EUR 1.79 per B-share of nominally DKK 1 and is convertible upon discretion of the lenders as well as in certain exit scenarios. The loan was converted into 12,047,404 shares on 3 June 2021. At the date of conversion, the carrying amount of the loan, including the conversion option liability, was DKK 160.2 million.
Exit-payment derivatives
Exit-payment derivatives relate to the loans from Danmarks Grønne Investeringsfond and as a result of the IPO the Company is obligated to pay an Exit-fee. The fair value of the exit-payment derivatives (presented within borrowings in the balance sheet) are based on the probability weighted discounted cash flows reflecting possible triggering events, the probability and expected timing.
- Probability weighted cash flows: DKK 3,750,000
- Probability weighted time to maturity: 0.11 (3/12 = 0,25)
An increase in the probability weighted time to maturity will reduce the fair value of the exit-payment liability. However, Management does at the end of the reporting period not consider any significant change in the expected maturity to be a realistic alternative. The probability weighted cash flows reflects the maximum amount payable, which Management considers being the most realistic outcome.
The recurring fair value measurement required for the Company's financial liabilities are monitored by Management. The significant unobservable inputs are updated at least by the end of each reporting period to reflect Management's most recent expectations. There were no changes made to any of the valuation techniques applied as of 31 December 2020.
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Notes
13. Fair value measurement of financial instruments (continued)
The following table presents the changes in level 3 items for the first half of 2021:
| DKK '000 | Conversion option liability | Exit-payment derivative | Total |
|---|---|---|---|
| Opening balance 1 January 2021 | 4,591 | 3,410 | 8,001 |
| Fair value losses recognised in financial expenses* | 317,100 | -11 | 317,089 |
| Excercise of conversion option | -321,691 | 0 | -321,691 |
| Closing balance 30 June 2021 | 0 | 3,399 | 3,399 |
- includes unrealised losses recognised in profit or loss attributable to balances held at the end of the reporting period
14. Related party transactions
Part of the capital increase that occurred during the first six months of 2021 amounting to DKK 10,388 thousand was made by members of the Board of Directors.
The Company entered into a convertible loan facility in December 2020. Nordic Alpha Partners Fund I K/S which was the controlling party at the beginning of the year converted a loan amounting to DKK 38.6 million in June 2021. An entity with significant influence also converted a loan amounting to DKK 115.8 million in June 2021. Refer to note 13 for further description of the loans.
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Notes
15. Events after the balance sheet date
On July 22 2021 the Board of Directors has in line with the company's strategy approved its planned second expansion phase of its current combined manufacturing, R&D, and office facilities in Kolding, Denmark.
In addition to the expansion project the company has decided to acquire full ownership of both current facilities and land as well as the surrounding land for future expansion phases. As part hereof, Green Hydrogen Systems will also take ownership of the new facilities during the phase 2 construction. This ownership structure is a change from the current lease model, however, whereas it will provide a short-term increase of CAPEX, it will importantly also provide maximum control, flexibility and independence to continue the company's growth and to position Green Hydrogen Systems as a leading, global electrolyser manufacturer.
The Company has after the balance sheet date signed agreements amounting to DKK 213 million and expects over a three year period to invest DKK 250 – 300 million in acquiring the existing facilities and land and in construction of the phase 2 expansion whereof around DKK 105 million will have effect in 2021. The 2021 expenditure is mainly related to acquisition of current facilities and land as well as the surrounding land for future expansion phases. Following the acquisition of current facilities, the company's 15-year lease agreement will be terminated.
The improved control, flexibility and independence from bringing real estate assets on the balance sheet will impact the company's financial guidance for 2021 where material CAPEX is increased from DKK 30 – 35 million to DKK 135 – 145 million.
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Notes
16. Cash flow specifications
| DKK '000 | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 |
|---|---|---|---|---|
| Changes to net working capital | ||||
| Decrease/(increase) in trade receivables | -508 | 629 | 3,166 | 11,745 |
| Decrease/(increase) in deposits | 0 | 0 | -947 | -3,177 |
| Decrease/(increase) in other assets | -31,323 | -5,197 | -44,938 | -8,907 |
| Decrease/(increase) in prepayments | -780 | 75 | -1,735 | 79 |
| Decrease/(increase) in trade payables | 19,374 | 4,354 | 20,540 | 1,302 |
| Decrease/(increase) in other liabilities | 6,296 | 22,204 | 1,804 | 22,833 |
| Decrease/(increase) in contract liabilities | 2,363 | 0 | 6,829 | 0 |
| -4,578 | 22,065 | -15,281 | 23,875 | |
| Adjustments | ||||
| Income tax | -1,375 | -486 | -2,750 | -770 |
| Amortization of intangible assets | 970 | 481 | 1,520 | 963 |
| Depreciations of tangible assets and right-of-use assets | 1,671 | 218 | 2,856 | 307 |
| Share-based payment | 6,018 | 1,149 | 14,244 | 1,155 |
| Finance expenses, net | 318,488 | 296 | 324,668 | 322 |
| Other | 4,856 | -186 | 1,992 | -158 |
| 330,628 | 1,472 | 342,527 | 1,819 |
17. Trade payables
Trade payables include payables relating to the IPO amounting to DKK 61 million. Refer to note 6 and 12 and further information.
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