Nel ASA

Annual Report (ESEF) • Feb 26, 2025

Nel ASA Annual report 2024 The future belongs to the frontrunners The publication can be downloaded on nelhydrogen.com Title: Annual report 2024 Published date: Oslo, 26 February 2025 info@nelhydrogen.com +47 23 24 89 50 Karenslyst allé 49, PB 199 Skøyen, 0212 Oslo, Norway Table of contents Annual report 2024 1 Letter from the CEO .................................................................................................. 5 2 Members of the board .............................................................................................. 9 3 Management ............................................................................................................... 10 4 Report from the Board of Directors ..................................................................... 13 4.1 Financial development ................................................................................... 16 4.2 ENVIRONMENT, SOCIAL AND GOVERNANCE (“ESG”) REPORT ..... 29 5 Board of Directors’ report in relation to the Norwegian Code of practice for corporate governance ................................. 72 6 Consolidated financial statements 2024 Nel group .......................................... 78 7 Parent company financial statements ................................................................... 142 7.1 Notes to the financial statements parent company ................................. 150 8 Alternative Performance Measures ..................................................................... 165 9 Auditor’s report .......................................................................................................... 166 Nel ASA I Annual report 2024 5 The future belongs to the frontrunners More than 120 years ago, a Norwegian entrepreneur named Sam Eyde laid the foundation for what would become an essential part of Norwegian industry. At the beginning of the twentieth century, the world faced a severe food shortage. Traditional farming methods could not keep up with a growing population. A true visionary, Eyde saw the urgent need to increase food production and found that synthetic fertilizer could be the solution. Along the way, he faced many challenges. He needed to figure out a viable way to make fertilizers, convince workers, politicians, and partners that his ideas would work, and raise sufficient capital to fund his projects. To put the last part into perspective: Mr. Eyde needed more money than the entire Norwegian national budget at the time. In the end, he succeeded. Mr. Eyde’s pioneering efforts not only led to the creation of Norsk Hydro but also paved the way for other major companies such as Elkem and Yara. I am proud to say that Nel’s history also starts with Sam Eyde’s boldness. Today, the world faces a new, immense challenge. Global warming is already disrupting our climate and weather systems, with storms, droughts, and wildfires becoming the norm in many regions. Our generation has both the knowledge of the irreversible climate risks caused by delayed action and the opportunity to mitigate them. In short, our generation has a choice - future generations are bound to live with the consequences. One way to cut carbon emissions would be to reduce industrial activity and production. The world had a test run of what this could look like under the global Covid pandemic when the inability for society to function well without a reasonable level of industrial activity and employment was laid bare. Reducing the standard of living in some countries and preventing many others from improving theirs is neither desirable nor feasible. A better option is to ensure industry provides goods and services that customers and consumers can enjoy without causing environmental harm. For this to happen we need industry to be “clean”. The obvious solution is to switch from fossil energy to renewable energy. In many cases this transition is relatively easy. But some industries, such as refineries, steel and ammonia producers, shipping companies etc. face a more challenging path toward zero emissions. These sectors cannot easily electrify their operations. Instead, they need renewable hydrogen or hydrogen derivatives to reduce and ultimately eliminate their dependence on fossil energy. Just like in Sam Eyde’s case, the hydrogen industry has experienced plenty of headwinds in recent years. Inflation, higher interest rates, and lack of standardization have driven the cost of renewable hydrogen projects up. In 2022, the most commonly asked question by green hydrogen project developers, investors, and analysts was whether Nel and its peers had sufficient production capacity to meet demand. Today, the situation has reversed, and production facilities throughout the industry are idling, waiting for demand to pick up. The near- and mid-term market is difficult to predict, influenced by factors beyond the company’s control. This year we will face the consequences of low order intake and project delays or cancellations in 2023 and 2024. Although 2025 can still be a good year for winning new business, we know from experience that it takes time from winning a contract until it impacts Nel positively. Accordingly, we have adjusted our production and organizational capacity to reflect these new market conditions. Despite a lower-than-expected order intake in the last two years, the business has improved steadily. Since 2022, we have nearly doubled our revenues, cut EBITDA losses by 60%, and significantly reduced the cash burn. With a cash position close to NOK 2 billion, Nel remains a financially robust company. When the market picks up again, we will be in position to provide market-leading products manufactured in the world’s best and only fully automated facilities for both alkaline and PEM. We have a unique position in our industry. Our technology development efforts have been accelerated. We continue to improve our existing technology platforms, both with respect to cost and performance. In parallel we advance our game-changing next-generation PEM and pressurized alkaline platforms according to plan. Moreover, in October 2024, we received news from the EU’s Innovation Fund that Nel was awarded up to 135 million Euros in grants to scale up manufacturing capacity of Nel’s new pressurized alkaline technology. 1 Letter from the CEO 6 Letter from the CEO Best regards, Håkon Volldal, CEO The rationale behind this and other grants awarded by the EU and other countries is clear: they recognize that achieving emission-reduction targets is impossible without clean hydrogen. Globally, politicians and pioneering project developers are promoting more sustainable societies where emission reductions and industrial production go hand in hand. This is also why I am confident that the hydrogen market will shift and when it does, Nel will emerge as one of the most respected and successful electrolyser OEMs. In addition to the financial performance and progress in technology development, I would like to highlight some other key achievements in 2024: • Improved safety statistics: We made safety our number one priority for 2024 and I am pleased to report that we are now performing better than relevant industry benchmarks on Total Recordable Incident Rate (TRIR) and Lost Time Injury Rate (LTIR). We will continue to put safety first to ensure that all employees can return safely home from work every single day. • A more focused company: The fueling division was spun off and listed on the Oslo Stock Exchange as Cavendish Hydrogen. This allows us to focus all our efforts on what we do best: develop and deliver world-class electrolysers. • Proven business model: In quarters with sufficient volumes, in our alkaline operations, our financials prove that the business model works. We expect a similar effect on our PEM operations and see a path to profitability with our current manufacturing capacity. • Efficient manufacturing at scale: We inaugurated the 500MW PEM production line in Wallingford, USA. Through automation and innovation, we can now produce 10 times as many stacks at a 30% lower unit cost. We also opened Line 2 at Herøya, Norway, in 2024, bringing the annual production capacity for Alkaline to 1GW. In total, Nel now has 1.5GW of real, state-of-the-art capacity. • Signing of strategic partnerships: In 2024 and early 2025, we signed several agreements with companies across the hydrogen value chain that strengthen our position as a leader in the hydrogen industry. Strategic partnerships reflect our experience that closer collaboration and integration across the value chain are crucial for reducing risk, lowering transactional costs, and ultimately achieving success in the hydrogen industry. One example is the Technology Licensing Agreement where Reliance, India’s largest privately-owned company, will manufacture and sell Nel’s alkaline technology in India and for their own projects globally. This partnership expands Nel’s market reach and supports Reliance’s high ambitions in the global hydrogen market. It also gives increased R&D leverage. I find inspiration in Sam Eyde’s determination and boldness. Where most people would have thrown in the towel, he never gave up. It is encouraging to reflect on his fantastic achievements, which laid the foundation for modern industry development in Norway. I am proud that Mr. Eyde is the founding father of Nel, and I like to think that it is in our DNA to pursue bold ideas, overcome obstacles, and positively impact society. MORE THAN 90 YEARS OF HYDROGEN INNOVATION. AND THAT’S JUST THE BEGINNING. PROVEN TECHNOLOGY, TRUSTED PARTNER - PIONEERING RENEWABLE HYDROGEN FOR MORE THAN 90 YEARS Opening of 500 MW line in Wallingford, Connecticut Started development of next generation PEM electrolyser platform with General Motors Signed the first large scale 200MW electrolyser contract Starting up the Herøya plant, first line Record order sizes within both Alkaline and PEM Nel announces construction plans for the world’s largest electrolyser manufacturing plant to accommodate multi-billion NOK orders Nel acquires Proton OnSite, adding world leading PEM electrolysis technology to product portfolio, becoming the world’s largest electrolyser company Nel becomes the first 100% dedicated hydrogen company listed on the Oslo Stock Exchange Our first pressurised electrolyser introduced to the market The world’s first electrolyser supplier to provide non-asbestos alkali electrolysers Our renowned electrolyser technology made available for other companies and other industries Complete redesign of the electrolyser unit, forming the basis for today’s atmospheric electrolyser from Nel Starts up a second large scale hydropowered electrolyser plant for supplying hydrogen to ammonia production, in Glomfjord, Norway The largest installation in the world of water electrolysers at Rjukan, Norway, with a total hydrogen production capacity exceeding 30.000 Nm3/hour, from hydropower The first small electrolyser installation at Norsk Hydro, Notodden, Norway. Testing for pure hydrogen to fertilizer production 2024 2023 2022 2021 2020 2019 2017 2014 2001 1998 1974 1959 1953 1940 1927 Nel ASA I Annual report 2024 9 OLE ENGER, CHAIR OF THE BOARD Mr. Enger (born 1948) has worked as CEO in Nordsilmel, Elkem, SAPA, REC, REC Solar and he has been in the executive management of Norsk Hydro and Orkla. Ole Enger has an educational background from Norwegian University for Environment and Life Sciences, NHH and IMDE Business School. He has board experience as both chairman and board member of a number of private and listed companies. Mr. Enger is a Norwegian citizen and lives in Oslo. He has been a member of the board since 2017 and holds 149.462 shares directly and/or indirectly in Nel ASA. HANNE BLUME, BOARD MEMBER Ms. Blume (born 1968) is Executive Vice President and Group CHRO in the Danish DLG Group. Hanne Blume has a Master of Science degree in Business Administration and Commercial Law from Aarhus School of Business. She has also supplementary leadership training from international schools INSEAD, IMD, London Business School and Wharton. She has management experience and board experience from both listed and private companies. Ms. Blume is a Danish citizen and lives in Juelsminde in Denmark. She has been a member of the board since 2019 and holds no shares in Nel ASA. CHARLOTTA FALVIN, BOARD MEMBER Ms. Falvin (born 1966) serves as a board member in several listed companies within the technology and communication industries. She has previous management positions e.g. as CEO in The Astonishing Tribe AB which were sold to Blackberry in 2010. Charlotta Falvin has a Master of Science degree in Business Administration and Economics from University of Lund. She is appointed Honorary Doctor at the Faculty of Engineering of the University of Lund. Ms. Falvin is a Swedish citizen and lives in Genarp, Sweden. She has been a member of the board since 2020 and holds 46.000 shares directly and/or indirectly in Nel ASA. ARVID MOSS, BOARD MEMBER Mr. Moss (born 1958), is an experienced executive who has been a member of Norsk Hydro’s corporate management board since 2008. Moss served as EVP for the Business Area Energy between 2010-2024. Since mid 2024 he is special advisor to Hydro’s CEO and chair of Hydro REIN, the renewable company owned by Hydro and Macquarie Asset Management. Since 2022 Mr. Moss also is the Chair of the Board in Norway’s Export Council (Norsk Eksportråd). In Norsk Hydro, he has been responsible for strategy and business development in the aluminium area and on the corporate level for several periods. He also led the process that resulted in the oil and gas merger between Norsk Hydro and Statoil in 2006. Mr. Moss also served as State Secretary and Chief of staff in the Norwegian Prime Minister’s office (1989-1990). Mr. Moss has a MSc in Economics and Business Administration (siviløkonom), Norwegian School of Economics (NHH). He has been a member of the board since 2023 and holds no shares in Nel ASA. BEATRIZ MALO DE MOLINA, BOARD MEMBER Beatriz Malo de Molina (1972) has had a 30 year career in M&A, finance and capital markets, beginning in 1994 with EY and including positions in Alvarez & Marsal, Orkla, Kistefos, McKinsey, and Goldman Sachs. Current board positions: Chairman of Otovo, and Chair of the Audit Committee of EMGS. Beatriz graduated summa cum laude from Georgetown University in Washington D.C., and has a Master’s degree from the University of Oslo. Ms. Malo de Molina is a Spanish citizen and has been a resident of Norway since 2006. She has been a member of the board since 2017 and holds no shares directly and/or indirectly in Nel ASA. 2 Members of the board 10 Members of the board HÅKON VOLLDAL, CHIEF EXECUTIVE OFFICER Håkon Volldal (born 1976) joined Nel as CEO on 1 July 2022. Mr. Volldal served as CEO of the traffic technology company Q-Free ASA from 2016 to 2022. Prior to this he held various positions during a 12-year career at TOMRA, including EVP Collection Solutions from 2013 until 2016. Mr. Volldal has also worked as a management consultant for McKinsey & Company and holds an MSc in Industrial Economics and Technology Management from the Norwegian University of Science and Technology (NTNU). He is a Norwegian citizen. KJELL CHRISTIAN BJØRNSEN, CHIEF FINANCIAL OFFICER Kjell Christian Bjørnsen (born 1976) joined Nel as CFO on 1 March 2020. Prior to this he served as Chief Financial Officer of the Kavli Group from 2014. Mr. Bjørnsen has also held positions within business development, strategy and finance in several global industrial companies, including the CFO position of REC ASA. He holds a MSc in Chemical Engineering from the Norwegian University of Science and Technology (NTNU), and is a Norwegian citizen. MARIUS LØKEN, CHIEF TECHNOLOGY OFFICER Marius Løken (born 1977) assumed his role as Chief Technical Officer (CTO) of Nel ASA in June 2023. Prior to this, he honed his leadership at TOMRA Systems ASA, ascending through positions like Head of Europe Asia Pacific, Head of Technology, and Head of Product Management. In total, Marius spent over 23 years at TOMRA, making significant contributions across various technological and commercial facets. His academic foundation is rooted in a Master of Science in Mechanical from the Norwegian University of Science and Technology (NTNU), with the master thesis conducted at Michigan Technological University. TODD CARTWRIGHT, CHIEF COMMERCIAL OFFICER Todd Cartwright (born 1966) joined Nel as Chief Commercial Officer, effective January 2nd, 2024. A US citizen with a BS in Mechanical Engineering, he brings over 30 years of energy sector experience. Mr. Cartwright has held key roles at CB&I and Technip Energies, notably as Commercial Vice President at the latter. In this role, he led business development, key account management, and strategic partnerships, and was responsible for commercial leadership of strategic projects across legacy and energy transition markets such as CCUS, Hydrogen, Ammonia, BioFuels, LNG, and Circularity. 3 Management TOM RØTJER, BOARD MEMBER Mr. Røtjer (born 1953), former Senior Vice President, Head of Projects in Norsk Hydro ASA until 2018. He served as Executive Vice President Projects (member of Corporate Management Board) in Norsk Hydro from 2007-2012. He has held previous board positions in Aibel AS , Hæhre & Isachsen Gruppen AS (Akh Gruppen AS), Det norske oljeselskap ASA (Aker BP ASA), Qatalum Ltd., and Green Energy Geothermal Ltd. Mr. Røtjer holds a master’s degree in Mechanical Engineering from the University of Trondheim, Norway. He is a Norwegian citizen and resides in Oslo, Norway. He has been a member of the board since 2020 and holds no shares in Nel ASA. JENS BJØRN STAFF, BOARD MEMBER Mr. Staff (born 1967) is the Group CEO in Skagerak Energi, a Norwegian utility company, since 2020. Mr. Staff has broad executive experience from Orkla where he served as Group CFO for 6 years and Statkraft where he was Group CFO for 3 years. He has also had several executive positions in Statoil over the course of 6 years. He has previously held board positions in Isola Holding AS, Statoil, Orkla and corporate assembly in Jotun. Mr. Staff holds an MBA from the Norwegian School of Economics (2002) and an BA from the Norwegian Business School. In addition to International Directors Program from INSEAD (2022) and the Advanced Valuation program at NYU Stern School of Business (2023). Mr. Staff holds no shares directly and/or indirectly in Nel ASA. Nel ASA I Annual report 2024 11 STEIN OVE ERDAL, SENIOR VICE PRESIDENT LEGAL AND GENERAL COUNSEL Stein Ove Erdal (born 1979) joined Nel as Vice President Legal and General Counsel in May 2019. Erdal comes from a position as an Associate General Counsel in Nexans Norway AS where he worked for nine years with complex offshore EPCI and EPC projects. He also has experience from working as a lawyer in the oil and gas division of Arntzen de Besche, as a deputy judge and as a defence counsel. Erdal holds a Cand. Jur., Qualifying Law Degree, from the University of Oslo, and is a Norwegian citizen. HANS H. HIDE, CHIEF PROJECT OFFICER Hans H. Hide (born 1965) joined Nel in March 2019. Mr. Hide has since 2012 held management positions in some of Kvaerner’s largest projects within the oil and gas sector. He has previously served as Project Portfolio Manager in ALSTOM, and as Vice President Projects in REC, where he also held several management positions in the projects covering REC’s expansion program within Solar and Silicon. He holds an MSc in Process Technology and Process Control from Telemark College of Engineering, and is a Norwegian citizen. TUSHAR GHUWALEWALA, SVP PEM OPERATIONS Tushar Ghuwalewala assumed the role of Vice President of Operations for the PEM Division in April 2020, and assumed full responsibility for PEM Operations in October 2024. Since joining Nel in 2000, Mr. Ghuwalewala has held positions across Engineering, Technical Service, and various Leadership roles. Prior to his tenure at Nel, he contributed to projects supporting NASA at ABB Lummus Global. Mr. Ghuwalewala holds both a Bachelor of Science and a Master’s degree in Mechanical Engineering from Tulane University (US), and is a US citizen. KAI RUNE HEGGLAND, SVP ALKALINE OPERATIONS Kai Rune Heggland assumed his role as Country Manager for Nel Hydrogen Electrolyser AS and Vice President of Operations for the Alkaline Division in 2022, taking full responsibility for Alkaline operations in October 2024. Prior to joining Nel, he served as Vice President of Operations at Alcoa Aluminum for Europe, the Middle East, and Australia from 2015 to 2020. His career spans from Production Manager in Statkraft, Plant Manager in Elkem Aluminum and different roles in Alcoa as well as different Country Manager responsibilities and Board Member positions in various companies. He holds a Master’s degree in Management from BI Norwegian Business School (Handelshøyskolen BI), a Master’s degree in Power Systems from the Norwegian University of Science and Technology (NTH), and a Bachelor’s degree in Electronics from Agder Ingeniør- og Distriktshøyskole, and is a Norwegian citizen. Report from the Board of Directors 13 Highlights • Revenue of NOK 1 390 million in 2024, in line with 2023. • Year-end cash balance of NOK 1 876 million (2023: 3 363). The cash balance was reduced with NOK 625 million with the spin-off of Cavendish Hydrogen ASA. • In January 2025, initiated a process to adjust capacity to demand by reducing workforce and temporarily halting production at the Alkaline production facility in Herøya, Norway. • Order intake in 2024 was NOK 977 million (2023: NOK 1 140 million) which resulted in an order backlog at end of 2024 of NOK 1 614 million, down 23% from 2023. – Alkaline electrolyser order and follow-on order from Samsung C&T, each 10MW. – PEM electrolyser received a follow-on equipment order of more than EUR 7 million for a European project – Entered into a technology licensing agreement with Reliance Industries Limited (RIL). • Received significant government support for development and industrialization – EUR 135 million in grants from EU Innovation Fund for industrialization of next-generation electrolyser technology. – USD 141 million in tax credits, cash incentives and grants for the planned production expansion in Michigan during 2024. In total, Nel has secured close to USD 170 million in accumulated support. – Nel and partners granted about USD 90 million in funding from Department of Energy for seven research and development projects. About 10 % of the work under the program will be undertaken by Nel. KEY FIGURES CONTINUING OPERATION PERFORMANCE MEASURES 2024 2023 2022 Revenue 1 390 1 350 708 EBITDA -173 -272 -428 Operating loss -389 -444 -552 Pre-tax income (loss) -264 -574 -464 Net income (loss) -258 -566 -456 Net cash flow from operating activities -83 -464 NA Cash balance end of period 1 876 3 363 3 139 Order intake 977 1 140 1 978 Order backlog 1 614 2 093 2 224 TRIR 1 5.2 19.7 11.5 Number of fatal accidents 0 0 0 Number of employees 409 418 334 Women in executive management 11.1% 11.1% 11.1% GHG intensity (excluding scope 3) 0.8 0.9 1.6 Alkaline OEE 2 65% 67% 70% Alkaline stack yield 3 97% 99% >90% PEM stack yield 4 99% 94% 95% 1 Total recordable injuries rate (TRIR) is measured as total recordable injuries per million hours worked. 2 Overall equipment effectiveness (OEE) considers all of availability, performance and quality 3 Yield is defined as a complete product that is quality approved (without repair and rework) and ready for the customer. Material from a not approved product is reused. 4 Yield is defined as a complete product that is quality approved (without repair and rework) and ready for the customer. Platinum is recovered. 4 Report from the Board of Directors Nel ASA I Annual report 2024 14 Report from the Board of Directors WHERE WE ARE Nel consists of electrolyser production facilities in Norway and Connecticut, USA, supported by headquarters in Norway. Nel has a sales and support network with global reach. Nel has historically delivered a few electrolyser systems in Russia. We have sold electrolyser systems to Ukraine during 2021. Business is currently limited in these geographical areas. MARKETS WE SERVE - A PURPLE WORLD In total, we have delivered over 3500 electrolyser solutions to over 80 countries. PEM ELECTROLYSER Wallingford, CT, USA HEADQUARTER AND ALKALINE ELECTROLYSER Oslo, Norway Our vision Abundant clean energy for all As the world’s population grows, everyone should have the opportunity to enjoy a high quality of life. Achieving this without increasing carbon emissions requires clean, thriving industries powered by renewable energy and hydrogen. Our vision is a society with abundant clean energy for all. 16 Report from the Board of Directors 4.1 Financial development Group FINANCIAL REVIEW Amounts in NOK million 2024 2023 CHANGE Revenue 1 390 1 350 3% EBITDA -173 -272 Order intake 977 1 140 -14% Order backlog 1 614 2 093 -23% Number of employees 409 418 -2% Total assets 6 304 7 046 -11% REVENUE & ORDER INTAKE, ORDER BACKLOG AND EMPLOYEES 279 436 708 1 350 1 390 0 500 1 000 1 500 2 000 2 500 2020 2021 2022 2023 2024 Revenue Order intake 621 937 2 224 2 093 1 614 0 500 1 000 1 500 2 000 2 500 2020 2021 2022 2023 2024 Order backlog 194 267 334 418 409 100 150 200 250 300 350 400 450 2020 2021 2022 2023 2024 Employees INCOME STATEMENT (comparable amounts in brackets, in NOK million) Nel is adjusting organizational and production capacity to meet expected market development, while simultaneously delivering on larger and more complex projects. This continues to impact the company’s profitability negatively. While the company has made notable improvements in ability and effectiveness, further developments are necessary to secure margins and increase profitability. Having sufficient scale is key to winning new orders and reaching profitability. Nel has therefore over the last several years invested in increased production and organizational capacity. As expected, the increased alkaline revenues in combination with solid gross margins had a positive EBITDA impact in the year. Final investment decisions on large target customer projects were pushed out in time and existing orders were delayed or became at risk of cancellation. During the year, cost reduction and capacity adjustment measures were initiated with further actions taken subsequent to the year end. These measures include a temporary shut-down of the Herøya facility. As a result of implementation time, including notice periods for terminations and temporary lay-offs, the cost reduction measures will reduce the cost base gradually over the first half of 2025. Nel reported revenue in 2024 of NOK 1 390 million, in line with NOK 1 350 million in 2023. The growth is driven by 15 % revenue increase in Nel Alkaline Electrolyser. Order intake in 2024 was NOK 977 million (1 140) which resulted in an order backlog at end of 2024 of NOK 1 614 million, down 23% from 2023. The backlog only includes firm purchase orders with agreed price, volume, timing and terms and conditions. The note on Alternative Performance Measures quantifies the distribution of backlog over time and quantifies the risk in the backlog. The decrease in order backlog is mainly explained by lower order intake combined with higher revenues from alkaline electrolyser equipment from the Herøya production facility. Nel ASA I Annual report 2024 17 Raw materials expenses totalled NOK 504 million (715), a decrease of 30% from 2023. The decrease is driven by improved margin on ongoing projects, revenue with no delivery of equipment (cancellation fees, technology licensing and engineering hours) and product mix where equipment produced by Nel has a lower material component than third party equipment. Personnel expenses amounted to NOK 646 million (546). While the number of employees went down by 9 from beginning to end of 2024, the average number of full-time employees went up from 374 employees in 2023 to 423 in 2024. Other operating expenses also increased 18% and totalled NOK 518 million (438) for the year. The high level of personnel and other operating costs are the results of Nel’s decision to continue to invest in growth and higher activity levels through 2023 and early 2024. EBITDA ended at NOK -173 million (-272), negatively impacted by costs for scaling for growth. The EBITDA is also negatively impacted by Nel’s customer projects often including new geography, customer segments, technological components and/or products leading to additional costs and risk. Depreciation, amortisation and impairment increased to NOK 216 million (172). As a result of all of the above, the operating loss amounted to NOK -389 million (-444). Net financial items amounted to NOK 125 million (-131). Nel received NOK 128 million in interest from banks in the current year in comparison to NOK 168 million in 2023, a reduction caused by the lower cash balance. The negative 2023 financial items were driven by a negative fair value adjustment of shareholdings in Everfuel, totalling NOK -304 million. Pre-tax loss totalled NOK -264 million (-574) and the net loss for the year was NOK -258 million, compared to a loss of NOK -566 million in 2023. The results of the discontinued operation are presented separately from the continuing operation as a single amount of profit that amounted to NOK 13 million. The profit includes the results of discontinued operations until distribution, net of tax, which amounted to a loss of NOK 131 million. Furthermore, a gain of NOK 144 million was recognised when distributing the discontinued operation. The gain equals the fair value of the discontinued operation less the book value of the net assets distributed, adjusted for the cumulative foreign currency translation reserve in Other Comprehensive Income recycled to the income statement. Net loss was NOK -244 million (-855). Financial position Total assets were NOK 6 304 million at the end of 2024, compared to NOK 7 046 million at the end of 2023. Total equity was NOK 4 977 million. Thus, the equity ratio was 79%. Cash flow Net cash flow from operating activities continuing operations in 2024 was NOK -83 million, compared to NOK -464 million in 2023. The development is positively impacted by the increased volumes sold, offset by higher personnel expenses. 2023 also had an increased net working capital of NOK 458 million. Net cash flow from investing activities continuing operations was NOK -548 million (-598). Nel has purchased property, plant and equipment for NOK 527 (559) million in 2024, mainly related to the alkaline expansion at Herøya, Norway, and PEM expansion in Wallingford. Nel’s cash balance at the end of 2024 was NOK 1 876 million (3 363). The decrease from end of 2023 is mainly due to NOK 625 million in connection with the spin-off of Cavendish ASA and expansion investments of about NOK 411 million. The company estimates it has sufficient working capital for the 12 months following the balance sheet date. In accordance with section 3(3a) of the Norwegian Accounting Act, the board of directors, therefore, confirms that the financial statements have been prepared on the assumption of a going concern. 18 Report from the Board of Directors Nel Alkaline Electrolyser Financial review Amounts in NOK million 2024 2023 CHANGE Revenue 1 009 876 15% EBITDA 127 -29 Order intake 577 686 -16% Order backlog 1 290 1 654 -22% Number of employees 229 243 -6% Total assets 2 508 2 028 24% REVENUE & ORDER INTAKE, ORDER BACKLOG AND EMPLOYEES 72 53 339 72 53 876 1 009 0 500 1 000 1 500 2020 2021 2022 2023 2024 Revenue Order intake 387 564 1 681 1 654 1 290 0 500 1 000 1 500 2 000 2020 2021 2022 2023 2024 Order backlog 78 120 167 243 229 0 50 100 150 200 250 300 2020 2021 2022 2023 2024 Employees Nel Alkaline Electrolyser reported strong growth, and revenues were 15% higher than in 2023. Production of electrolyser equipment at Herøya in Norway and sourced third party equipment achieved major milestone deliveries on contracts in the backlog, and a milestone was reached on the technology licensing agreement with RIL. In addition, Revenue and EBITDA this year include NOK 54 million from renegotiation of the Nikola supply agreement. The order backlog for Alkaline Electrolyser ended at NOK 1 290 million. This was down NOK 364 million from the end of 2023 due to low order intake in the past year. The note on Alternative Performance Measures quantifies the distribution of backlog over time and quantifies the risk in the backlog. Nel has secured paid front-end engineering and development studies for projects above 100 MW. These activities lay the foundation for future order intake of firm equipment orders. In 2023 and 2024 order intake was low as final investment decisions on large target customer projects were pushed out significantly in time. As a result of renewable hydrogen projects taking longer time to reach final investment decision than anticipated and existing contracts being significantly delayed or cancelled as customers fail to secure funding, Nel has an increased inventory of finished goods and lower backlog for 2025 delivery. Nel’s cost structure and the utilization of the Herøya production capacity are therefore being adjusted to market demand. However, increased fixed costs from higher production capacity will continue to negatively influence results until more orders have been secured. Number of employees decreased to 229, compared to 243 at the end of last year. Nel ASA I Annual report 2024 19 -29 -200 -150 -100 -50 0 50 100 150 2020 2021 2022 2023 2024 EBITDA -144 -184 127 -40 EBITDA for the year was NOK 127 million compared to NOK -29 million last year. The EBITDA is improving, and the Alkaline segment reported a positive EBITDA for the first time full year. In addition to the NOK 54 million from renegotiation of Nikola supply agreement, the EBITDA improved, compared to last year, by NOK 102 million driven by higher revenues, solid gross margins on equipment deliveries and technology license milestone payments. Project margins are generally up compared to previous years as contractual terms are more favourable and execution has improved. EBITDA includes R&D expenses of NOK 103 million (76) in 2024. DEVELOPMENT AND KEY PROJECTS Technology development As the renewable hydrogen industry continues to develop, Nel is at the forefront of the industrialization of electrolyser production and of product development within several electrolyser technologies. Nel is continuing to invest in the development of large-scale industrialisation of electrolyser products. Also, further development of the current atmospheric alkaline technology towards larger capacity solutions is ongoing. In addition, Nel is working to develop a pressurized alkaline electrolyser. All of these three development activities target increases in functionality and decreases in levelized cost of hydrogen for our current and future customers and are intended to increase demand for our products globally. Total technology spend for 2024 in Alkaline was NOK 225 million (152), of which NOK 121 million (76) and NOK 103 million (76) has been capitalised and expensed, respectively. Pressurised alkaline electrolyser and EU grants Nel has been developing its next-generation pressurized alkaline technology for more than six years. The technology is currently being prototyped with promising results, and the potential industrialization is being planned for the Herøya, Norway facility. For the industrialization of this next-generation pressurized alkaline technology, Nel has been selected for a grant from the EU Innovation Fund of up to EUR 135 million. The EU support will be phased with Nel’s own investments for up to 4 GW of capacity for pressurized electrolyser equipment in Norway. Decision to start building and later expand the capacity depends on achieving successful testing, market acceptance of the new technology and overall market development. Production capacity development In an effort to meet the global ambitions for renewable hydrogen, Nel initiated in 2022 a continued expansion at Herøya in Norway with an additional 500 MW alkaline production line. This line was operational from April 2024. However, due to low order intake during 2024 and delays and cancellations of projects in the order backlog, production at Herøya has been temporarily halted as of January 2025. There are no contractual commitments beyond December 2024 for the Herøya production lines. Restarting of the line and any further capacity expansion will be closely aligned with developments in our commercial backlog. Nel has completed building modifications at Herøya and received long-lead time items to prepare for further expansion when the time comes Key commercial activities • Order intake in 2024 was NOK 557 million (2023: 686) which resulted in an order backlog at the end of 2024 of NOK 1 290 million, down 22% from 2023. • Realigned the relationship with Nikola and will support Fortescue on its 80 MW Phoenix hydrogen hub, for a total consideration of approximately USD 20 million. • Entered into a technology licensing agreement with RIL. The agreement provides RIL with an exclusive license for Nel’s alkaline electrolysers in India and for captive projects globally. • Nel Alkaline Electrolyser received purchase orders for: – A 10MW alkaline electrolyser to Samsung C&T for its off-grid green hydrogen production project – Another 10MW alkaline electrolyser to Samsung C&T for nuclear integration project SUBSQUENT EVENTS • About 73% of the net trade receivables past due in group accounts note 6.2 are related to one customer. This year includes no revenue from this customer. Nel has security 20 Report from the Board of Directors for the unpaid net trade receivables from this customer in the sold goods. Subsequent to the year, on 15 January 2025, the parties agreed that Nel use the collateral as consideration for the receivables. The collateral value, i.e. the payment for the goods, will offset the receivables from this customer. • Initiated a process to adjust capacity to market demand by reducing the workforce and temporarily halting productions at the Alkaline production facility in Herøya, Norway Nel PEM Electrolyser Financial review Amounts in NOK million 2024 2023 CHANGE Revenue 381 474 -20% EBITDA -165 -130 Order intake 400 454 -12% Order backlog 324 440 -26% Number of employees 150 145 3% Total assets 1 755 1 591 10% REVENUE & ORDER INTAKE, ORDER BACKLOG AND EMPLOYEES 0 100 200 300 400 500 600 2020 2021 2022 2023 2024 Revenue Order intake 0 100 200 300 400 500 600 2020 20212022 2023 2024 Order backlog 0 20 40 60 80 100 120 140 160 2020 2021 2022 2023 2024 Employees 207 382 369 474 381 234 373 543 440 324 101 120 137 145 150 Nel PEM Electrolyser revenue in 2024 was 20% lower than in 2023 driven by lower sale of smaller systems. The PEM segment has an order backlog of NOK 324 million, down 116 million from 2023. The decrease in order backlog is mainly explained by lower order intake in 2024. Towards the end of the year, the overall demand for PEM seemed to be increasing for 2-20MW projects. The 500 MW expansion program for Wallingford facilities remains on plan and the facility is expected to be fully operational soon. The increased capacity will allow for a significant continued growth in revenues and a significant decrease in production cost per unit over time. Actual capacity utilization depends on order intake. PEM continued its scaling activities including a 3% increase in number of employees during the year. Nel ASA I Annual report 2024 21 -200 -150 -100 -50 0 2020 2021 2022 2023 2024 EBITDA -44 -66 -120 -130 -165 EBITDA for the year was NOK -165 million (-130). As for the alkaline segment, project margins are in general up compared to previous years due to more favourable terms and conditions and better execution of production and delivery projects. EBITDA includes R&D expenses of NOK 126 million (76) in 2024. DEVELOPMENT AND KEY PROJECTS Technology development As the renewable hydrogen industry continues to develop, Nel is at the forefront of the industrialization of PEM production and of product development within several electrolyser technologies. Nel is continuing to invest in the development of large-scale industrialisation of electrolyser products. In order to meet new large-scale opportunities within the PEM portfolio, Nel is developing a next generation PEM platform. All of these development activities target increases in functionality and decreases in levelized cost of hydrogen for our current and future customers and are intended to increase demand for our products globally. Total technology spend for 2024 in PEM was NOK 140 million (131), of which NOK 15 million (55) and NOK 126 million (76) has been capitalised and expensed, respectively. Production capacity development In 2023, Nel initiated expansion and automation of the PEM electrolyser production capacity in Wallingford, Connecticut. The expansion will bring annual production capacity towards 500 MW in 2025. The carrying amount for the Wallingford expansion is NOK 291 million as of 31 December 2024. Total contractual commitments beyond December 2024 for the expansion are NOK 55 million, including purchase contracts for equipment. Key commercial activities • Order intake in 2024 was NOK 400 million (2023: 454) which resulted in an order backlog at the end of 2024 of NOK 324 million, down 26% from 2023. • Nel and partners receive about USD 90 million in funding from Department of Energy (DoE) for seven research and development projects. Nel is the leading partner on one of the seven projects. Approximately 10% of the work under the R&D programs will be undertaken by Nel. • The US Department of Energy (DoE) and the state of Michigan have awarded a collective USD 75 million in cash incentives and grants for Nel’s next electrolyser production facility in Michigan. In addition, Nel has been awarded up to USD 41 million in investment tax credits for its planned manufacturing expansion in Michigan as part of the Qualifying Advanced Energy Project Tax Credit (48C) program. During 2024, including the two mentioned supports above, Nel received USD 141 million in tax credits, cash incentives and grants for the planned production expansion in Michigan. In total, Nel has secured close to USD 170 million in accumulated support for the planned Michigan facility. The factory will be built in stages in order to better align supply with demand, and investment decision for initiating construction has not been made. • Nel PEM Electrolyser received large purchase orders for a follow-on equipment order of more than EUR 7 million for a European project. • Other purchase orders during the year include multiple smaller containerized electrolysers, and industrial products. SUBSEQUENT EVENTS • On January 21, 2025, Nel received purchase order for 5 MW of containerized PEM electrolysers for approximately USD 7 million. 22 Report from the Board of Directors Corporate developments • On 7 February 2024, Nel was made aware that Iwatani Corporation of America has filed a lawsuit with claims for damages towards Nel and certain of its subsidiaries in connection with certain agreements for delivery of fueling equipment and services between Nel Hydrogen Inc. and Iwatani Corporation of America. Nel and its subsidiaries strongly reject the allegations made in the lawsuit by Iwatani Corporation of America and will vigorously oppose the allegations and the lawsuit. The lawsuit was filed with the United States District Court in the Central District of California. The relevant subsidiaries, now former subsidiaries, are now fully owned by CAVEN. • Nel completed the distribution (repayment of paid in share capital) and separate listing of Cavendish Hydrogen ASA (CAVEN) in June 2024. CAVEN and its subsidiaries have historically been reported as a separate operating segment, Nel Hydrogen Fueling, in Nel. On June 7, 2024, the distribution of the shares in CAVEN to the shareholders in Nel ASA was initiated. The shares in CAVEN were listed on the Euronext Oslo Stock Exchange 12 June 2024. SUBSEQUENT EVENTS • Nel ASA and its subsidiaries initiated a process to adjust capacity to market demand by reducing the workforce and temporarily halting production at the Alkaline production facility in Herøya, Norway SHAREHOLDERS AND FINANCING Nel’s shares are listed on the Oslo Stock Exchange under the ticker “NEL”. At the end of 2024, the company had 1 671 325 304 issued shares, each with a nominal value of NOK 0.20 per share. This comprised 1 670 907 271 outstanding shares and 418 033 treasury shares. Euronext VPS recorded 23 941 known shareholders as of 31 December 2024. In addition, a substantial number of unknown shareholders owning shares through custodians, such as Clearstream Banking. The list of known shareholders includes a considerable number of Nordic institutional investors and private investors. Regarding the unknown shareholders, Nel’s last investigation of investors owning shares through custodians indicated a large number of the shareholder base was located in Continental Europe. According to new laws, a detailed shareholder overview will be available no later than six weeks before the annual general meeting and can be requested via the company’s website. According to FactSet, which monitors filings from institutional investors (not always visible on Euronext VPS), we find the following top 20 shareholder overview (on an ultimate parent level) as of 31 December 2024. Distribution of known institutional shareholders TOP 20 INSTITUTIONAL SHAREHOLDERS % OF SHARES OUTSTANDING 1 The Vanguard Group, Inc. 3.57 2 BlackRock Fund Advisors 2.16 3 Handelsbanken Fonder AB 1.90 4 DNB Asset Management AS 1.66 5 BlackRock Advisors (UK) Ltd. 1.28 6 Storebrand Asset Management AS 1.28 7 KLP Kapitalforvaltning AS 1.27 8 Legal & General Investment Management Ltd. 1.06 9 Folketrygdfondet 1.05 10 Montpensier Finance SAS 0.99 11 Van Eck Associates Corp. 0.90 12 Global X Management Co. LLC 0.82 13 Deutscher Sparkassen-und Giroverband eV 0.39 14 Swedbank Robur Fonder AB 0.38 15 Alfred Berg Kapitalforvaltning AS 0.37 16 green benefit AG 0.35 17 Penserra Capital Management LLC 0.35 18 Dimensional Fund Advisors LP 0.28 19 BNP Paribas Asset Management Europe SAS 0.28 20 DWS Investment SA 0.27 Source: FactSet, as of 31.12.2024 Nel ASA I Annual report 2024 23 Country of known institutional shareholders/insiders according to FactSet United States 9 % Norway 6 % United Kingdom 2 % Sweden 2 % France 2 % Other know n 3 % Unidentified 76 % Source: FactSet as of 31.12.2024 The company has placed considerable emphasis on providing shareholders, capital market participants and other stakeholders with timely and relevant information about the company and its activities in compliance with applicable laws and regulations. Nel is committed to increasing awareness of the share in Norway and abroad and believe in a transparent and honest communication with the market. STRATEGY Nel has a history tracing back to 1927 and is today a leading pure play hydrogen technology company with a global presence. The company specializes in electrolyser technology for production of renewable hydrogen. Nel’s product offerings are key enablers for a renewable hydrogen economy, making it possible to decarbonize various industries such as transportation, refining, steel, and ammonia. Governments and companies continue to focus on their energy transition and greenhouse gas reduction roadmaps. For many, renewable hydrogen is an integral part of the strategy. Nel is working to meet this rising demand by investing significantly in developing reliable, efficient, and affordable energy solutions that support environmentally sustainable activities. Nel’s analysis of the market is in line with the industry trend reports, showing that investments in electrolyser projects will continue to grow significantly in the coming years. While today, some of Europe’s largest installed hydrogen plants are approximately 20 MW in size, future production plants are expected to scale to hundreds of MW and then to GWs over the next years. Nel will pursue a broad market strategy, with a view towards winning large-scale orders globally. Nel is a leading global electrolyser supplier, offering both AWE (alkaline water electrolysis) and PEM (proton exchange membrane) technology globally. Nel’s electrolyser technologies have improved continuously and set the industry standard for performance and levelized cost of hydrogen. Key to Nel’s strategy is to continue to improve and standardise current AWE and PEM products for different operating conditions, as well as to develop adjacent technologies. The fully-automated production facility in Herøya, Norway made Nel an early mover in the industrialization of electrolyser production. This has been replicated on the PEM platform in Wallingford, US in 2024. To enable future growth and decrease cost through scale, volume and automation, Nel Electrolyser plans to continue to align capacity to meet market development. Nel expects to sell and deliver directly primarily in Europe and North America, as well as other selected regions, over the next couple of years until larger projects in other projects start to materialize. As many of the largest projects are likely to be located in geographical areas with abundant resources of wind and solar energy, reducing electricity prices and carbon footprint, important export markets longer term is expected to include Asia, Middle East and Australia. Nel Electrolyser has 24 a partnership strategy and a network of agents across the globe to service other geographical markets. In addition, for larger capacity projects Nel has narrowed its scope of supply, concentrating on offering high-efficiency/low-cost cell stacks and gas separation units. Working closely with selected EPC, energy providers and downstream technology partners enables Nel to respond to customer requests outside Nel’s preferred scope. CLIMATE-RELATED SCENARIO RESILIENCE IN NEL’S STRATEGY Considering that 100 % of Nel’s revenue comes from renewable hydrogen technology, the resilience of Nel’s strategy within the different climate-related scenarios is robust. Key considerations are how fast our customers’ industries will grow and develop, how complex and price competitive this sustainable technology will be, and developments within renewable energy and the related grid. Nel’s strategy is stress-tested against different scenarios to assess parity with both fossil energy, grey and blue hydrogen. The hydrogen market is already large, but with only a fraction served by water electrolysis there are significant opportunities to transition the existing market into being increasingly renewable. In addition, we see regulations supporting the transition across the globe, with the EU and the US pledging hundreds of billions of dollars into zero- emission programs where hydrogen is the energy carrier of choice. Growth is expected not only to come from industrial applications, but also from currently transitioning diesel-based heavy-duty transportation, maritime and other hard-to-electrify applications into zero-emission hydrogen. In order to meet cost-efficiency comparisons with diesel, these developments will require low-cost electrolysis combined with low-cost clean energy. There is significant uncertainty associated with the timing and pace of the growth expected in the hydrogen industry as it relates to renewable energy (as storage or carrier) and the decarbonization of industrial activity (such as refinery, steel or fertilizer production) and transportation (airline, marine, vehicles). There is a risk that Nel is moving either too quickly or too slowly, meaning we are either over- or under investing in assets, technology and/or human capital development. Nevertheless, the global focus on addressing climate change through decarbonization is the megatrend that underpins our current strategy, and which is being supported by our increasing levels of revenue. STRATEGIC ALLIANCES Cooperation is vital in the renewable hydrogen industry. Combining resources, expertise and knowledge is a key enabler that allows us to improve our entire value chain effectively and rapidly, from engineering and procurement through installation, service, commissioning and aftersales. Strategic alliances can help shorten the timeline to achieving full competitiveness for our technologies. We are engaged in numerous strategic alliances, both domestically Report from the Board of Directors Nel ASA I Annual report 2024 25 and internationally, with partners that share our values and commitment to customer dedication. We are actively pursuing new alliances in all areas of our business. Some of our alliances include: • EPC-partners: Enabling turnkey solutions for large scale hydrogen production facilities with predictable project execution. • Energy sources: Working with solar, wind and other technology providers to optimize the interface between renewable energy and electrolysis and optimizing the cost of renewable hydrogen production through seamless operation between the power supply and the electrolysis process. • Downstream technology partners: Optimizing the total offering through technical collaboration with specialists in key customer segments such as ammonia, methanol and local back-up power. MEMBERSHIPS AND ASSOCIATIONS Nel is member of several associations with a national, European and global footprint. Our presence in these associations enables us to communicate our position, market our technologies and support the development of appropriate hydrogen legislation and regulation. Some of our memberships include: MEMBERSHIP AND ASSOCIATION ROLE Hydrogen Europe (EU) Corporate member Fuel Cell & Hydrogen Energy Association, FCHEA (US) Corporate Member Hydrogen Council (International) Corporate member Norsk Hydrogenforum (Norwegian Hydrogen Association) Corporate member Renewable Hydrogen Alliance (US) Corporate member Clean Hydrogen Futures Coalition, CHFC (US) Corporate member California Hydrogen Business Council, CHBC (US) Corporate member Ammonia Energy Association (US) Corporate member Risks and opportunities Nel’s regular business activities entail exposure to various types of risk. The company proactively manages such risks, and the board of directors regularly analyses Nel’s operating performance, and potential risk factors and takes steps to reduce and mitigate risk exposure. Nel places strong emphasis on quality assurance and has implemented quality-assurance systems in line with the requirements applicable to its business operations. Nel is operating in a rapidly-evolving global industry, with a long list of initiatives in many regions. The need to address opportunities and make investments ahead of actual market demand and revenue recognition, balanced with the need to appropriately allocate capital and demonstrate a viable business model, is a continual challenge. In this phase of development, the risks associated with technological change are higher than in more mature industries. Competitors’ or new entrants’ innovations in the hydrogen industry could make our current technologies, and those under development, less relevant for the future. Additionally, if competitors gain advantages in the performance of current or in the development of alternative electrolyser technologies, this could affect the competitive position of the group. Nel’s ability to grow depends to a substantial degree on its ability to successfully acquire new customers, and to maintain and grow its relationships with existing customers. A number of Nel’s existing and potential customers are themselves planning for substantial growth, and should these customers fail to succeed with their business plans or fail to fulfil their contracts with Nel, Nel’s sales to such customers may be adversely affected. Nel is also to a certain degree dependent on a limited number of third-party suppliers for key production components for its electrolyser products. To reduce sourcing risk, Nel’s supply chain strategy is to have dual supply chains. Nevertheless, Nel does have a few single-source components and is at risk of temporary supply chain disruptions should one or more suppliers fail to deliver. Another supply chain risk is whether suppliers can continue to operate under the uncertain market developments inherent in this industry. In addition to making its current supply chain more robust, Nel is working to facilitate volumes from important sub- suppliers. The timing of addressing such elements and risks is important, as there are risks in both overshooting and not meeting market demand adequately. 26 Report from the Board of Directors CLIMATE-RELATED RISK FACTORS Nel assesses climate transition risks into two major categories: (1) risks related to the transition to a low-carbon economy and (2) risks related to the physical impacts of climate change. No climate related risk has been identified to affect our physical assets or operations in the short and mid-term. Climate events may increase the requirements for product safety or the water supply for production of hydrogen via electrolysis. These risks are not considered to have a severe impact to our operations, although consideration shall be taken for alternative sources of water in water stressed regions (such as water desalination) or increased product safety test against climate event (such as flooding and earthquake). The climate transition will also allow customers and governments to select the product technology that better suit their need. Nel foresee an increased risk related to product failure and technology obsolescence. The reputational damage risk from product failure and failure to meet high expectation from our customers may affect the eligibility of our equipment technology. Nel prioritize investments in R&D, allocating resources to meet regulation and market demands. Lastly, the local authorities and governments have an important role in the renewable hydrogen sector by enacting legislations that support research and innovation and scalable investments in production and infrastructure. Reduced and/or delayed support from governments will delay the developments of the renewable hydrogen industry. Political incentive schemes such as the Inflation Reduction act in the United States and the Hydrogen Bank in the EU are expected to be important contributors to developing the industry. Nel ASA I Annual report 2024 27 Outlook SUSTAINABILITY FUTURE PROSPECTS The growing urgency of shifting to a low-carbon economy is set as a high priority for several governments following the warmest year since pre-industrial era. Being accountable for our environmental footprint is emerging as a pivotal component in corporate transparency, and we aim to provide information as expected by our key stakeholders. Nel strongly believes that the renewable hydrogen market has a potential of great magnitude, supported by a wide body of research. Virtually every industry needs to realign their energy mix if we are to stand a chance of achieving the UN Sustainable Development Goals, where renewable hydrogen will be a part of the energy mix that enables the transition. With an ambitious strategy of drastically reducing the levelized cost of hydrogen (LCOH) to customers, we have established a solid framework for our technology, engineering and production divisions for the years to come. We must ensure that sustainable business practices are guiding our operations, with scalability, cost-leadership and world-class safety at our core. During the ramp-up stage of our business, taking a precautionary principal approach is necessary to promote sustainability within the organization. Moving forward, our global presence, coupled with strong financing, will help us remain the preferred partner. FINANCIAL OUTLOOK Nel’s strategy is to deliver reliable and energy-efficient electrolyser stacks and balance of stack systems to mid- and large-scale projects, initially in Europe and North America and over time in other markets. To handle the scope Nel does not cover, Nel has partnered with world-class EPC companies like Saipem. Nel is well positioned to maintain a leading role among electrolyser manufacturers. This approach allows Nel to focus its efforts and resources on improving its core technology. The company is well positioned to maintain a leading role among electrolyser manufacturers. A proven track record of delivering working electrolyser systems over several decades, a diverse product portfolio covering both alkaline and PEM solutions, and automated GW-scale production facilities are important differentiating factors. Nel also continues to make significant investments in improving the performance of current technology platforms and maturing next generation technologies, for example a pressurized alkaline system and a new PEM stack developed in collaboration with General Motors. Delays in announced government incentives, higher interest rates, and higher than expected costs for building and operating hydrogen facilities (outside of Nel’s core scope) have led to lower than expected order intake for the industry as a whole and for Nel in the last two years. Nel has a solid cash balance that allows the company to fund its growth plan even if order intake has been lower than expected and there have been delays and cancellations of already signed projects. Following the spin-off of its former Fueling division (now Cavendish Hydrogen), Nel’s operational cash burn-rate has been significantly reduced. Investments will also come down in 2025 compared to 2024 following the PEM plant expansion program in Wallingford, USA, last year. Nevertheless, to manage its cash balance responsibly and prolong its runway, Nel has downsized its organisation and reduced its manufacturing capacity utilisation. The alkaline production facility in Herøya, Norway, was temporarily shut down in the first quarter of 2025. The length of the shut-down will depend on future order intake. Several high-quality projects with reputable clients continue to mature and get closer to final investment decisions. In the near- to mid-term, Nel expects projects to be smaller than what was anticipated a few years ago. Nel is well-positioned to capture these near-term opportunities and scale with the market as it grows. The Company’s reduced cost base and reduced investment plan in 2025 can be achieved without compromising on technology development and strategic position as the company already has established significant annual production capacity available can harvest prior investments. Higher revenues in combination with more efficient execution is expected to yield profitability over time, as already been demonstrated in the alkaline segment in quarters with solid capacity utilisation. Our vision We are bold We lead the way in our industry, dare to place calculated bets and turn what used to be impossible into reality We are honest We do what we say and are open about what we do, share knowledge and experiences with our colleagues and customers, and hold ourselves accountable if we make mistakes We keep it simple We always focus on our core business targets, develop simple and time-efficient processes, and move forward at great speed Nel ASA I Annual report 2024 29 4.2 ENVIRONMENT, SOCIAL AND GOVERNANCE (“ESG”) REPORT ESG POLICY At Nel, sustainability is an integral part of the identity. The vision is to empower generations with clean energy forever. This vision is driving ambitions and priorities. Combating climate change is high on the corporate agenda, and sustainability is always incorporated into the strategic decision-making processes. The Board of Directors (BoD) is responsible for sustainability at Nel and is the owner of the ESG policy. The Board Audit, Risk and Sustainability Committee (BARSC) is the preparatory body to assist the BoD in exercising its oversight of ESG matters. Further, the Chief Executive Officer (CEO) has delegated the authority and responsibility to the Chief Financial Officer (CFO) for implementation and execution of the key principles as outlined in this policy. General follow-up and execution of daily operations is conducted by a dedicated ESG committee, consisting of members from group management and the business line. The ESG policy is available on Nel’s website. Visit www.nelhydrogen.com/sustainability. GENERAL BASIS FOR PREPARATION Nel is reporting on sustainability on a group level, and reports on metrics and targets in an integrated annual report with reference to, using certain concepts of, the GRI Sustainability Reporting Standards (GRI Standards: Core option). The report implements considerations found in Norwegian Accounting Act, Task Force on Finance Related Disclosures (TCFD), Euronext ESG Guidelines for listed companies, UN Guiding Principles on Business and Human rights, the UN Global Compact and the OECD’s Guidelines for Multinational Enterprises. In addition, this sustainability report aims to take the first steps toward Nel’s upcoming reporting in accordance with the EU Sustainability Directive (CSRD). The CSRD requirements are expected to be fully implemented for the reporting period starting as of 1 January 2025. CSRD compliance considerations The European Commission adopted legislative CSRD and its European Sustainability Reporting Standards (“ESRS”) entered into force for reporting periods starting as of 1 January 2024 in the European Union and in Norway. The date of application of these sustainability reporting requirements varies depending on the specific reporting requirement and on the category of undertaking. As these requirements are introduced by way of a Directive, the specific rules that apply to listed companies are the ones set out in the national legislation transposing the Accounting Directive as amended by the CSRD, as well as by Commission Delegated Directive (EU) 2023/277520 that has adjusted the size criteria applicable to the definition of micro, small, medium-sized and large listed companies. CSRD regulation has been enacted for Norwegian listed companies, applicable for reporting periods starting as of 1 January 2024, for large, listed companies with average employees above 500 on a full-time equivalent (FTEs) basis and revenue above NOK 320 million. In June 2024, Nel spun-off its Fueling segment, and thereby reducing the size of the group. This corporate action impacts how average FTEs are counted in 2024 for Nel. Reviewing relevant national rules in NRS 8 and IFRS 5, Nel has concluded that relevant size of the Nel ASA group should be considered on the basis of the operation it controls as 31 December 2024, i.e. the continuing operation. With reference to note 2.5 in the annual accounts, the average FTEs in 2024 is far below 500. Consequently, Nel considers itself not being part of the list of large companies on Euronext Oslo Stock Exchange subject to application of the CSRD in 2024. It is expected that the stepwise implementation of reporting requirements in Norway will become applicable for Nel in 2025, being a large enterprise with average FTEs above 250. Although Nel is not required to prepare the ESG report in 2024 in accordance with CSRD, the company has prepared an ESG report inspired by the new framework, including conducting the double materiality assessment and report on the material sustainability-related impacts, risks and opportunities. DOUBLE MATERIALITY As a key element of the work to prepare for the CSRD reporting, Nel have conducted a double materiality assessment (DMA). To do this, the company built on the approach previously taken to assess the materiality of sustainability-related matters. The company’s second DMA was conducted this year to capture learnings that will help further improve the methodology next year. Nel has applied the implementation guidance published by EFRAG and developed a step-by-step process, scoring matrices, and a model for aggregation and prioritisation. 30 Environment, Social and Governance report Environment, Social and Governance report The starting point was the impact assessment (inside-out) of Nel’s impacts on the environment and society, which builds on how the company have previously identified and assessed the sustainability-related impacts of our own operations and value chain. The company also conducted a financial assessment (outside-in) of the sustainability-related risks we are exposed to as a business. Where possible, we quantified the effects of those matters and supplemented with qualitative assessments. Double materiality assessment methodology Scope For our own operations, we identified and assessed impacts on people and the environment as well as potential risks to our business, focusing on specific activities where impacts are not relevant across technologies. Furthermore, we assessed our value chain impacts and risks for most topics, primarily focusing on our upstream activities. Value chain assessments were based on internal knowledge and mainly focused on the company’s first-tier suppliers. Scoring As per the ESRS guidance, three parameters of ‘scale’, ‘scope’, and ‘irremediable character’ have been used in the scoring of the ‘severity’ of our actual impacts: • When scoring ‘scale’, we assessed how grave the negative impact is or how beneficial the positive impact is for people or the environment • When scoring ‘scope’, we assessed how widespread the negative or positive impacts are. In the case of environmental impacts, the scope may be understood as the extent of environmental damage or a geographical perimeter. In the case of impacts on people, the scope may be understood as the number of people adversely affected. • When scoring ‘irremediable character’, we assessed whether and to what extent the negative impacts could be remediated, i.e., restoring the environment or affected people to their prior state For potential impacts, an additional parameter of ‘likelihood’ was scored. For negative actual impacts, each of the three dimensions above were scored and weighted equally for severity. For negative potential impacts, ‘severity’ and ‘likelihood’ were weighted 50/50. For positive actual impacts, ‘scale’ and ‘scope’ were scored and weighted equally for severity. For positive potential impacts, ‘likelihood’ was also considered as for negative potential impacts. The assessment also considered whether the topics, sub-topics and sub sub-topics were human rights related, for which scoring has been assessed the highest of scale, scope and irremediability. Nel ASA I Annual report 2024 31 Photo: Ferenc Horvath Stakeholder engagement Nel’s double materiality is designed for increased dialogue with stakeholders and a comprehensive due diligence process to assess how the impacts, risks and opportunities created by our business and its value chain affect people and the environment. The preferred channels to engage with stakeholders in 2023 and 2024 were meetings, conferences, peer reviews, monitoring of media and publications of organization classes and focus groups. Nel combined these methods to evaluate the scale, impact and irremediability of ESG topics that were identified during the engagement with stakeholders. The table below summarizes key methods used to engage with stakeholders in 2023 and 2024: STAKEHOLDER GROUP: METHODS OF ENGAGEMENT: MINIMAL FREQUENCY OF ENGAGEMENT: Customers • Project meetings • Site tours and audits • Tender responses and presentation Daily Suppliers • Site visits • Screening and qualification processes • Supplier Audit program Daily Employees • Code of Conduct and compliance training • Performance dialogues and reviews • Town hall meetings • Culture engagement through WinningTemp tool • Negotiation with employee representatives (labor unions or equivalents) Daily Shareholders and capital market participants • Quarterly results presentations and capital market days • Conferences, ad hoc meetings, and site visits • Stock exchange filings, press releases Quarterly, ad hoc Governments • Meetings • Site visits • Reports and websites Ad hoc Partners • Joint projects • Multi-stakeholder collaboration Weekly, ad Hoc In addition, an extensive ESG research was performed in 2023 assessing the impacts of our value chain on people and environment as well as a financial materiality assessment evaluating how our impact on people and environment that can affect Nel’s profitability, access to capital and market development. In 2024, Nel implemented a new tool for soliciting regular feedback from employees. In addition, workshops with employees directly dealing with key stakeholder groups were held. The ESG risk management process was embedded into the Enterprise Risk Management (“ERM”) program for consolidation of risk governance in a unified risk platform. As part of the ERM, key performance indicators were designed to measure and track the efficiency of ESG policies and procedures for all material risks identified in our double materiality assessment. The key performance indicators and respective targets are disclosed on the sections for each subtopic of this ESG report. We have identified our impacts on the environment and society (impact materiality assessment) as well as the sustainability-related risks that we are exposed to (financial materiality assessment). The outcome is aggregated per ESRS topic, showing that E1, E5, S1, and S2 are our most material sustainability matters. In addition, Nel identified material topics within entity-specific as innovation and R&D, sustainability in electrolyser production and cyber security. The environmental impacts and risks we have within E1 and E5 are closely linked to our strategic efforts to deliver a build- out of electrolyser manufacturing capacity to provide for equipment producing renewable hydrogen. The deployment of new electrolyser capacity mitigates climate impacts but also requires significant amounts of renewable energy sources, as well as natural resources such as metals to produce steel with indirect negative impacts on the climate and the environment. The build-out of renewable hydrogen value chain also affect people, which is reflected in the impacts and risks we have 32 Environment, Social and Governance report within S1 and S2. We focus our efforts on making the energy transition just and inclusive, including for people working across the renewable hydrogen supply chains. The summary results of our preliminary Double Materiality Assessment are disclosed in graphic format in a scoring scale of 1 (not material) to 5 (most material) for the sustainability matters: Climate impact Cyber security Product Safety Governance Innovation and R&D Environmental impact Operational Health and Safety Well -being at work Responsible Supply Chain Sustainability in Electrolyser Production Water 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 Financial materiality Impact materiality Double Materiality assessment Visit www.nelhydrogen.com/sustainability. SOURCE OF ESTIMATE OR UNCERTAINTY Stakeholder feedback for double materiality assessment The double materiality assessment relies on a streamlined process to obtain feedback from key stakeholders that acted as a sample stakeholder group communicating impacts, risks and opportunities that affected their business relationship with Nel. A sample methodology carries inherent risk of misrepresentation. Nel has in place feedback mechanisms, such as grievance mechanisms or the investor relation department, aiming to identify material discrepancies arising from inaccurate interaction with a stakeholder group representative. The summary of the stakeholder feedback and the double materiality test has been shared with and commented on by employees that are in regular contact with external stakeholders and with senior management. Key accounting estimates and judgments We use assessments and judgments for the reporting of certain data points for KPIs and scope 3 emissions. As the ESG reporting develop, such assessments and judgments are reassessed based on experience. Changes in estimates are recognized in the period in which the estimates in question are revised. For adjustments to ESG data, judgments to whether numbers should be restated is applied. Measurement of Greenhouse Emissions Nel adopts the GHG protocol as the framework for accounting of Greenhouse Gas emissions. For some categories, such as transportation and business travelling, Nel relies on CO2 emissions directly converted by vendors. In some instances, Nel does not have access to the methodology applied by vendors to convert its CO2 emissions. For some CO2 emissions, e.g. capital goods, a spend-based method has been used. Net Zero commitment Nel is committed to achieve Net Zero emission before 2050. The 2050 Net Zero commitment relies on a successful climate transition of vendors operating in hard-to-electrify industries (such as steel and shipping companies, which face a more challenging path toward zero emissions). Nel does not have sufficient control of when supply of low emissions goods and services will be available for reduction of Greenhouse Gas emissions classified in the scope 3 of its GHG inventory. STAKEHOLDER DIALOGUE Stakeholders are driving forces in Nel’s operations, and frequent stakeholder interaction is important to account for input across our value chain. Nel engages with a wide range of stakeholders. Overall, Nel experiences continuously rising expectations in all aspects of our work and we strive to address concerns that are expressed. We aim to improve our stakeholder dialogue by setting up a structured stakeholder dialogue program. Nel ASA I Annual report 2024 33 Nel’s activities show the following key stakeholders: Employees Employees generally express views related to occupational health and safety, career development, and timely two-way communication as key areas of concern. Employees are often the first to address risks and opportunities, so efficient employee dialogue is important. Feedback is also solicited electronically on a weekly basis using a combination of questions open for rating and free text field. Feedback through this mechanism may be given anonymously. Shareholders and capital market participants Our shareholders are vital contributors to the development of our company and important stakeholders with the power to influence our operations. As such, it is important to maintain regular stakeholder dialogue with our shareholders as our business develops. Quarterly presentations, annual reports, and investor relations activities are channels employed to keep an open dialogue with this group. During the year, the company arranged site visits in smaller groups for institutional investors and capital market participants to the Herøya facility and engaged with investors and capital market participants in non-deal roadshows after quarterly results, conferences, events and forums. Customers Customers’ demands typically focus on product reliability, resilience, lifetime performance and energy efficiency, while their concerns are generally with product safety, cost of ownership, responsible supply chains, the applicability of solutions, and general project execution. Our customer relations are formed on a project basis and active communication is required throughout the customer’s journey to deliver a satisfying product to the client, and to take home learnings to the organization. Suppliers Through its supply chain screening and procurement efforts, Nel sets requirements and requires insight into the ESG performance of suppliers. Also, that Nel operates honestly in-line with rules and legislations is important to our suppliers. Most of the topics Nel raised to its suppliers are related to quality, cost, delivery concerns, and alignment on ESG related topics. Another emerging topic relates to growth, and whether a supplier can, or has, the ambition to grow with Nel. Partners As we develop and mature our technologies, strategic partners are significant drivers of our progress. Their concerns are usually aligned with those raised by suppliers and customers, and our dialogue with them follows similar procedures. Governments Governments play a vital role as the regulatory body that forms policies and procedures, awards grants, and presents roadmaps for the energy transition. Regular dialogue and monitoring are necessary to ensure our product development meets the requirements set by different governments. Photo: Unsplash.com 34 Environment, Social and Governance report UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS Nel supports the United Nations Sustainable Development Goals (SDGs), and we strive to document all actions made to meet the targets. Presented in 2015, the 17 goals were developed to address the most prominent sustainability concerns the world is facing. The SDGs are the most unifying and universally accepted set of goals and aspirations that are to be met by 2030, to protect our planet and the people who inhabit it. Nel continues its commitment through investments and organisational changes to optimise the company’s contribution to this transformative agenda. The company will contribute to the industrialisation of the renewable hydrogen economy, paving the way for the development of a global hydrogen economy and the trading of sustainable hydrogen as a global commodity. Nel is fully committed to the promotion and implementation of the United Nations Sustainable Development Goals and limiting global warming to 1.5 degrees Celsius. Nel supports all of the sustainability goals outlined by the United Nations. Given our corporate areas of focus, , we have selected four SDGs where we can make a significant direct impact: Our selected goals are: Nel provides clean energy solutions to a vast range of industries and applications. Nel’s product offering is an enabler of clean energy infrastructure, and contributes to increasing adoption of renewable energy. Contributions towards SDG #7 are in line with Nel’s strategic ambitions of 1) leveraging the development of renewable energy to enable increased production of green hydrogen, and 2) to significantly decrease Levelized Cost of Hydrogen (“LCOH”) for renewable hydrogen production and enable decarbonization of heavy industry and transport. At Nel, employees should work in a safe and healthy environment, and we will never compromise on safety. The company strongly believes that this is an absolute minimum to any successful long term sustainable business. All Nel sites have management systems in place to safeguard employees’ health and safety. Nel aims to offer a workplace free of harmful incidents and injuries, and to promote a culture that identifies and creates awareness through incident reporting and self-accountability. The company has set a HQSE target of zero-tolerance for discrimination of any kind, and grievance mechanisms are in place, both direct and anonymous, should such instances occur. Nel is committed to reducing the cost of renewable hydrogen production to enable affordable and easier available renewable energy, and thus also adaptation. This is aligned with the company’s vision for abundant clean energy for all. Nel is committed to offering market-leading equipment for water electrolysis. The company is a frontrunner in technology development, efficiency, and cost reductions. Another key element is that Nel is focused on at-scale manufacturing of our products, employing manufacturing concepts that allow for further technological advancements in processes and materials over time. Nel’s vision is “abundant clean energy for all”. Our business model is built on facilitating and enabling the energy transition towards a more sustainable society, making renewable energy solutions commercially viable for implementation. Nel’s product offerings are key enablers for a renewable hydrogen economy, making it possible to decarbonize various industries such as transportation, refining, steel, and ammonia production and other carbon-intensive industries. Our aim over time is to enable the replacement of fossil-fuel consumption in a significant portion of global heavy industry. MATERIAL ISSUES IMPACTING STAKEHOLDERS Material topics have been identified by assessing relevant issues that are of importance to key stakeholders and how these issues impact Nel’s operations and strategy. Nel defines material topics as areas that have potential to substantially impact the enterprise value of the company. These material topics will be disclosed and elaborated in the following annual report sections. The material topics have been categorized within the three main sustainability categories: Environmental, Social, and Governance factors and presented in the matrix below: Nel ASA I Annual report 2024 35 ESG UNIT OF MEASUREMENT PAG E SDGS 31 DECEMBER 2024 31 DECEMBER 2023 CHANGE TARGETS 2025 E GHG Emissions 13 GHG intensity based on net revenue ktCOe2 (excluding scope 3)/net revenue in NOK million 42 0.80 0.95 -0.15 E EU Taxonomy 7, 13 Revenue eligible to EU Taxonomy % 65 90% 93% -3% >90% aligned Opex eligible to EU Taxonomy % 67 58% 44% 14% Capex eligible to EU Taxonomy % 69 96% 95% 1% E Energy 7, 13 Energy intensity based on net revenue (MWh/MNOK) MWh/net revenue in NOK million 43 13.2 10.0 3.2 E Water 7, 13 Water intensity based on net revenue Water withdraws m³/ net Revenue in MNOK 42 7.2 5.0 2.2 E Pollution 7, 13 Ni particles in water – Herøya µg/m3 42 6.2 5.4 0.6 <6 Environmental incidents Reportable event 42 None None - None E Waste 7, 13 Recycled non-hazardous waste % 43 65% 48% 17% Recycling rate above 50% E/S Sustainability in electrolysers production 9, 13 Overall equipment effectiveness (own production) - Alkaline % 46 65% 67% -2% NM Overall equipment effectiveness (own production) - PEM % 46 48% 91% -43% ~90% Product quality yield (alkaline) % 46 97% 99% -2% NM Product quality yield (PEM) % 46 99% 94% 5% >98% E/S Responsible supply chain 8, 9, 13 S/G Transparency Act 8 Supplier audits concluded within the fiscal year Supplier audits completed during the reporting period 50 20 strategic suppliers 23 strategic suppliers -3 30 strategic suppliers Integrity Due Diligences performed for suppliers with active contracts 51 80% 99.8% -19.8% 100% S Operational health and safety 8 Percentage of employees covered by Nel's health and safety systems % 49 100% 100% - 100% Total recordable injuries rate (TRIR) TRI per 1,000,000 hours worked 49 5.2 19.7 -14.5 <4 Lost time injury rate (LTIR) LTI per 1,000,000 hours worked 49 2.7 11.2 -8.5 0 Fatality rate Recordable events in the last 12 months 49 None None - None S Training programs 8 Cyber Security Training Awareness % 53 96% 100% -4% 100% Safety program awareness % 49 100% 92% 8% 100% G Innovation and R&D 9 R&D spend in % of annual revenue and other income % 60 24% 20% 4% >10% G Ethical business conduct and compliance 8 Total amount spent on fines for damages as a result of violations regarding social and human rights factors NOK 59 0 0 - 0 Expenditure with lobby and donation to political parties NOK 59 0 0 - 0 G Payment practice 9 Confirmed incidents of corruption or bribery Reportable event - per incident 59 0 0 - Number of contracts terminated due to confirmed incidents related to corruption or bribery Reportable event - per contract 59 0 0 - G Board composition 9 Non-executive board members Board member 9 7 (100% of board members) 7 (100% of board members) - (100% of board members) * Environmental incidents are defined as notice of violation, notice of non-compliance or release of pollutants beyond the limits set in the environmental permit. Members of the Board of Directors who does not have a role in the leadership team Our mission Make renewable hydrogen easy While some industries can decarbonize with clean electricity, sectors like steel, refinery, and ammonia production face greater challenges. These hard-to-electrify industries rely on renewable hydrogen to reduce emissions. Nel’s customers are game changers leading this transition, and our mission is to make their shift to renewable hydrogen easy. Nel ASA I Annual report 2024 37 Environment CLIMATE CHANGE OPPORTUNITY AND EMISSIONS AVOIDED Governments, companies, and researchers are increasingly looking into ways to accelerate the climate transition and achieve carbon neutrality in a safe and sustainable manner. In recent years, companies and policy makers have been facing increased expectations to identify viable solutions to replace the legacy systems dependent on fossil fuels to operate. Hydrogen is the most abundant element on Earth, a rich source of energy. Hydrogen also has the unique ability to carry energy. This combination of qualities places renewable hydrogen as a pivotal element in the energy transition with several possible applications. Hydrogen in its grey form (produced from natural gas or methane) has been traditionally applied on feedstock to produce ammonia, methanol, or as a reducing agent to produce iron (DRI). Its rich energy level and its ability to carry energy has allowed new applications such as a fueling for transport, for high- temperature heating in hard-to-electrify industries and for storage and generation of electricity providing energy security for renewables source with seasonal energy generation. The broader scope for hydrogen in the climate transition is forecasted to increase hydrogen demand from 95Mt in 2022 to up to 150Mt in 2030, with nearly 40% coming from new applications 1 . In addition, traditional grey hydrogen has accounted for 2.5% of global emissions in 2022, generating more than 1Gt of CO2 emissions that could have been avoided if replaced by renewable hydrogen 2 . Market development The market for electrolyser technology providers remained slow throughout 2024, with several project cancellations and delays seen. Purchase orders have been pushed out in time as projects have become larger and more complex and developers make more thorough assessments. Lack of visibility on political processes and subsidy programs (initially aimed to accelerate renewable hydrogen uptake) have also caused delays. However, during the year, governments in key markets for Nel continued to develop support mechanisms that will be important for enabling more projects to reach final investment decisions (FID). In the United States, work on the implementation of the Inflation Reduction Act progressed, with detailed rules and regulations announced in early 2025. 1 IEA (2023), Global Hydrogen Review 2023, IEA, Paris https://www.iea.org/reports/global- hydrogen-review-2023, License: CC BY 4.0 2 IEA (2023), Hydrogen Patents for a Clean Energy Future, IEA, Paris https://www.iea.org/ reports/hydrogen-patents-for-a-clean-energy-future, License: CC BY 4.0 In the European Union, a second round of the Renewable Hydrogen Bank was announced in September 2024, with a budget of EUR 1.2 billion, where the selected projects will receive a fixed premium in €/kg of renewable hydrogen produced. In addition, national programs and auctions were announced in several European countries. These important developments support offtake agreements and investment decisions, highlighting the potential of renewable hydrogen as a key enabler for decarbonizing hard-to-electrify sectors critical to society, such as personal and public transport, freight logistics, industrial heating, and industrial feedstock. The renewable hydrogen industry continues to navigate through challenges related to the size of tax incentives and unclarity of regulation for safety and infrastructure. For the climate transition to meet the pace agreed in the 1.5 Cº Paris Agreement, policymakers will have to increase the clarity of regulation in the coming years and adjust the budget for tax incentives, so projects become economically viable. Nel works at the forefront of the renewable hydrogen industry challenges towards industrial scale, cost reduction and supplying safe and efficient equipment for renewable hydrogen producers. EMISSIONS AVOIDED Nel’s mission is to unlock the potential of renewables and enable global decarbonization. Nel believes that the emissions avoided from reference hydrogen products based on comparative assessments to renewable hydrogen will be substantial. According to IEA there was demand for 95 million metric tons of hydrogen in 2022, hydrogen predominantly derived from fossil sources. Current production of grey hydrogen is responsible for more than 1 100 million tons of CO2 emissions². Water electrolysis from renewable energy can reduce these emissions substantially, a transformation is relatively easy from a technical point of view. The generally accepted accounting methodologies for measuring emissions avoided in the next years (before climate related scenario of abundance renewable energy) has not been readily available to Nel. There are several challenges related to energy source used for hydrogen production, as well as emissions from equipment used for energy generation and transportation. Nel has therefore not been able to report on the relative emissions avoided for Nel’s customers globally current year. The sections below showcase some of the significant opportunities for renewable hydrogen, with emissions avoided as the basis for such assumption. 38 Environment, Social and Governance report FOSSIL FUEL PARITY To increase the distribution and adaptation of renewable hydrogen it must be cost competitive with hydrogen made from natural gas. The hydrogen market is already massive. 94 million tonnes per year is already produced and used in various applications. According to International Renewable Energy Agency (“IRENA”), about 4% of hydrogen production comes from electrolysis, though with a global average renewable share of about 33%, about 1% of hydrogen production was derived directly from renewable sources. The rest is derived using fossil fuels, which create carbon emissions and are damaging to the environment. It will therefore be a lower hurdle for companies to reduce emissions when renewable hydrogen reaches the same price level as fossil-based hydrogen. Nel is committed to continue with cost reductions and efficiency improvements for its technology in order to enable a renewable hydrogen economy. Electrolyser climate-related opportunities Everything Nel is involved in relates to renewable hydrogen, and the energy transition. Nel’s capital expenditures and R&D investments (Investments) and operating expenditures (Opex) are all related to renewable hydrogen technology. Refer to EU Taxonomy section for further elaboration on environmentally sustainable economic activities in Nel. Case 1: Decarbonizing ammonia (“industrial application”) - How hydrogen is vital to sustainable farming Renewable hydrogen production by electrolysis is proving a viable pathway to sustainable ammonia, making fertilizer manufacturing and modern agriculture green. With hydrogen being a feedstock for ammonia production, using renewable hydrogen is critical to sustainable ammonia production. It can reduce costs, boost capacities, and achieve decarbonization for the energy, mobility, and industrial sectors. This is to the benefit of the environment, as more than 235 million tons of ammonia produced globally every year represent 1-2% of the world’s energy consumption and around 1% of all human emissions. Although hydrogen’s role in producing ammonia for fertilizer manufacturing is just one of the hundreds of current and coming uses of hydrogen, ammonia is exceptionally interesting. Apart from unlocking the decarbonization potential, it can play an essential role as a life-sustaining commodity and be a high-density carrier of hydrogen energy, allowing the exportation of hydrogen and, thereby, cost-effective energy. Furthermore, it is relatively easy to ‘crack’ the ammonia to liberate hydrogen at the point of use for various applications. Also easing the cost is the fact that a massive ammonia distribution infrastructure is already in place. Case 2: Decarbonizing refineries (“industrial application”) - How hydrogen is transforming the refining industry Refineries, major consumers of grey hydrogen, rely on hydrogen as a critical process gas for processes such as hydrocracking and desulfurization. They can reduce their carbon footprint by switching to renewable hydrogen from electrolysis. This transition lowers CO2 emissions from energy-intensive processes, contributing to global climate goals. According to the International Energy Agency (IEA), global hydrogen demand reached 95 million tons in 2022, with refineries being one of the largest consumers. This presents a significant opportunity to cut emissions, as grey hydrogen production, through steam methane reforming, contributes substantially to global CO2 emissions. Existing hydrogen infrastructure allows seamless integration of renewable hydrogen, making the shift from grey to renewable hydrogen relatively straightforward. Since the fundamental processes remain the same, refineries can utilize much of their current equipment and distribution systems, minimizing the need for extensive modifications. Coupled with declining renewable energy costs and advancements in electrolyser efficiency, durability, and scalability, refineries are well- positioned to accelerate this shift. Nel’s advanced electrolyser solutions support this transition with scalable, efficient, and cost-effective renewable hydrogen production tailored to the refining industry. 39 KEY PERFORMANCE INDICATORS UNIT OF MEASUREMENT 31 DECEMBER 2024 31 DECEMBER 2023 CHANGE TARGET 2025 GHG Emissions Scope 1 tCO2e 171 373 -202 Scope 2 - Market based tCO2e 8 002 5 905 2 097 Scope 2 - Location based tCO2e 938 1 247 -309 Scope 3 (without Capex emissions) tCO2e 13 363 15 509 -2 147 Scope 3 (with Capex emissions) tCO2e 23 259 30 344 -7 087 GHG intensity based on net revenue ktCOe2/net revenue in NOK million 17.5 19.0 -1.5 Energy consumption Purchased gas for heating MWh 1 488 2 021 -533 Purchased electricity MWh 16 883 14 708 2 175 Energy intensity based on net revenue (MWh/MNOK) MWh/net revenue in NOK million 13.2 10.0 3.2 Water Water discharge m³ 9 945 8 387 1 558 Water intensity based on net revenue Water withdraws in m³/net revenue in NOK million 7.2 5.0 2.2 Pollution Nickel particles in water - Herøya µg/m3 6.2 5.4 0.6 <6 Environmental incidents Reportable event None None - Waste Total waste Kg 2 480 084 2 561 089 -81 006 Hazardous waste Kg 2 260 154 2 405 670 -145 517 Hazardous waste treated by certified outsourced partners % 100% 100% 0% Non-hazardous waste Kg 219 930 155 419 64 511 Recycled non-hazardous waste Kg 145 809 74 709 71 000 Recycled non-hazardous waste % 66% 48% 18% >50% CLIMATE-RELATED RISK FACTORS Climate scenarios Nel’s climate-related risks are managed assessing the physical impacts that climate events can have to the operations, workforce, product safety, customer contracts, supply chain and commercialized technology. Climate scenarios were forecasted with the RCP8.5 (very high emissions) from the Intergovernmental Panel on Climate Change (“IPCC”), fifth assessment. Nel assesses climate events within time intervals defined as short term (2024), mid-term (2025-2030) and long term (2030-2040) in line with our expectations of market scaling for the Electrolyser industry. Climate risks and opportunities identified in the short and mid-term scenarios are incorporated in the Enterprise Risk Management process for risk monitoring, while a long-term scenario is forecasted for reference purposes. In our forecast, workforce and safeguard of assets were critical dependencies that could be affected by a climate event. Nel did not forecast severe chronic climate events that could require reallocation of assets nor result in constraints to its workforce. Nel facilities are leased with contracts with termination options around 2030 and located in areas with developed transport access. In case of unprecedent climate events, Nel’s operation could be reallocated to areas with higher resilience to climate events or Nel could negotiate with lessors to increase the climate resilience of the buildings. A reallocation of assets is expected to affect our highly skilled workforce, supply chain as well as could arise potential disputes with customers for liquidation damages due to delays to deliver projects. However, Nel expects the largest impact to be the opportunity to provide viable technology for production of hydrogen with a product technology that requires low carbon emission. Current climate scenario forecasts have significant complexity with a very high level of uncertainty in the outcomes for different scenarios. The climate events in the high emission scenario (RCP 8.5) could have from no economic impact to up to two times of our annual revenue invested in reallocation of assets and 40 Environment, Social and Governance report employees, and potential losses from customer contracts and production capacity. Nel has a catastrophe policy in place to manage eventual climate acute event. Our insurance policy aims to safeguard assets and resources in an efficient manner, and it is expected to cover some or all losses in case of acute climate events. The production capacity of our facilities and the technology of our products are ready to support companies in their climate transition before the long-term impacts of conduct business as usual in a high emission scenario. Policymakers, tax incentives and carbon tax schemes Policymakers such as local authorities and governments have an important role in the renewable hydrogen industry by enacting legislations that support research and innovation and scalable investment in production and infrastructure. The implementation of Carbon Emission Tax (“CET”) or Carbon Border Emission (“CBE”) will contribute to making renewable hydrogen projects economically viable due to expected increase in the cost of producing raw materials from energy sources that relies on fossil fuels. Critical minerals Critical minerals are in the spotlight due to the risk of limited available supply for crucial technologies in the climate transition. Raw materials supply issues could surface when the value chain experiences exponential growth driven by efforts to abate climate change. For example, Iridium is important for the manufacturing of PEM electrolysers. The total supply is limited and a significant reduction of Iridium consumption in PEM products and higher recycling rates will be necessary to reduce the risk. In response, Nel encourages customers to return PEM electrolysers for recycling, is gradually expanding its recycling program and is a leading contributor to a DoE-funded research initiative into recycling of electrolyser materials including Iridium. Nel continues to make significant strides in reducing precious metal loadings in our PEM electrolysers. The company is progressing well towards the 2030 target of 0.4mg PGM/W set by the Clean Hydrogen Partnership, which comprises three members: the European Commission, the hydrogen industry represented by Hydrogen Europe, and the research community represented by Hydrogen Europe Research. Nel’s roll-to-roll manufacturing process, currently being implemented at our state-of-the-art PEM production facility is projected to be well within the target with a further substantial reduction projected for the stack currently under development in collaboration with General Motors. PFAS ban in the European Union In January 2023, authorities from Denmark, Germany, the Netherlands, Norway and Sweden (the Dossier Submitters) submitted a REACH dossier for a restriction proposal for per- and polyfluoroalkyl substances (PFAS) in the EU to the European Chemicals Agency (ECHA). PFAS are a group of thousands of mainly man-made substances that are used in numerous applications in the EU. The basis for the proposed restriction is the fact that PFAS and their degradation products may persist in the environment for a very long period, longer than any other man-made chemical. Further concerns are their bioaccumulation, mobility, long range transport potential (LRTP), accumulation in plants, global warming potential and (eco)toxicological effects. The EU-wide risk arises from the continued emissions of PFAS into the environment during manufacture, the use phase, and the waste stage The materials of most concern are fluorosurfactants, which are persistent and bioaccumulate. High molecular weight fluoropolymers such as membranes that are essential to the use of Proton Exchange Membrane (PEM) electrolysers are inert and non-toxic. No alternative is foreseen to be able to substitute today or in the near future these highly specialised materials, central to the functioning of the hydrogen value chain. These PFAS are produced and used in a highly controlled industrial environment, where their emissions are negligible In Nel, PFAS is directly included in the production of electrolysers with Proton Membrane technology in the PEM electrolyser segment, and the enactment of legislations altering current PFAS regulation might affect our ability to continue the development of these equipment. Nel ASA I Annual report 2024 41 Summary of climate adaptation risks and opportunities Our most critical climate-related risks and opportunities in high emissions scenarios were summarized in the table below: CATEGORY RISK AND OPPORTUNITIES 2024 2025- 2030 2030- 2040 Policy and legal 1 Carbon Emission Tax • • • 2 Carbon Border Tax • • • 3 Tax credits enacted to producers of hydrogen with low emission • • • 4 Regulation on hydrogen production and its equipment (e.g. PFAS ban) • • • Market risk 5 Renewable Hydrogen certification • • • 6 Insufficient supply of critical minerals n.i. n.i. • Technology risk 7 Disruption in supply of fresh water can affect market development of Electrolysers n.i. n.i. • 8 Technology competition (preferred low carbon technology for production of hydrogen) • • • Reputational risk 9 Product incidents related to extreme climate events n.i. • • 10 Failure to reduce CO2 emissions n.i. n.i. • Physical climate transition risks 11 Flooding affecting production facilities n.i. n.i. • 12 Water scarcity on strategic markets n.i. n.i. • 13 Product Safety incidents arising from climate acute events n.i. • • LEGEND FOR FINDINGS: RISK OPPORTUNITY RISK CLASSIFICATION • • High • • Medium • • Low n.i. n.i. No impact 42 Environment, Social and Governance report WATER Water consumption Nel consumes 3 low amounts of water for cooling, production, cleaning and testing of equipment. Nel ensures an appropriate discharge of the water consumed in the operation with its Wastewater Treatment Plants installed in Herøya, Norway and Wallingford, United States. The QHSE department performs periodical water sampling and laboratorial sampling to control the pollutants level on the discharged water. Nel’s QHSE team works on the assumption of best available technique to ensure the correct monitoring and treatment of pollutants. HERØYA WALLINGFORD TOTAL TARGET 2024 2024 2024 2025 Water discharge (m³) 5 954 3 991 9 945 - Nickel Particles in the water (µg/m3) 6.2 * n.a. <6 Below 0.01 Nickel Particles per µg/m3 Not applicable Water discharge refers to the volume of water that is released back into the environment after it has been used in the manufacturing process, including wastewater that may contain contaminants. Water consumption and withdrawal in water-stress areas, use of sold products Based on the atomic properties of water, 1 kg of hydrogen requires 8.92 litres of water. Comparing water consumption for electrolysis with other energy processes, the water footprint of certain fossil-based pathways exceeds that of hydrogen. Crude oil recovery and diesel refining uses around 40% more water than the production of renewable hydrogen per unit of energy. 4 From a circular economy perspective, hydrogen technology does not consume water as water is produced, in its purest form, at the end of the cycle. It also avoids water contamination associated with various fossil-fuel processes. Water is also produced as a biproduct when hydrogen is used in mobility applications. However, distribution of water could offer a challenge. Currently, electrolyser technology uses highly purified water. This does not mean, however, additional strain on freshwater systems. The water needed for large-scale electrolysis, can be provided by any water resource (sea water, wastewater, etc.) once demineralised via reverse osmosis (RO) plants. 5 Continuous development of adjoint water desalination plants, alternative modes of low-grade and saline surface 3 Water consumption/withdrawal refers to the total volume of water taken from natural sources for use in the manufacturing process. 4 (PDF) Development of a Life Cycle Inventory of Water Consumption Associated with the Production of Transportation Fuels (researchgate.net) 5 Quantification of freshwater consumption and scarcity footprints of hydrogen from water electrolysis: A methodology framework - ScienceDirect water electrolysis 6 , and water provision via wastewater treatment plants provide evidence of their feasibility and cost- effectiveness. Water stress can also be minimised by adding desalination plants at the electrolyser site. This investment acts as a precautionary instrument to shield local population from water resource deprivation. In fact, should the need exist, water desalination plants for electrolysis could be planned to produce water not just for the production of hydrogen, but also for local use as a freshwater resource for human consumption and/or irrigation, thus creating multiple benefits to the local area. GREENHOUSE GAS (“GHG”) EMISSIONS Nel strives to be transparent with regards to our impact on the environment and continue to improve the internal process for collecting data that provides an overview of our emissions and their origins. Data collection for accounting of CO2 emissions occurs at report from supplier, in-house conversion of CO2 emissions based on metrics of product consumption or conversion of nominal expense into average CO2 emissions. Nel’s accounting policies for GHG inventory is inspired by the Greenhouse Gas protocol, with full compliance to be achieved in the annual report of 2025. 6 Electrolysis of low-grade and saline surface water | Nature Energy Nel ASA I Annual report 2024 43 PEM AWE CORPORATE Scope 1 Yes Yes Ye s Scope 2 Yes Yes Ye s Scope 3 Yes Yes Ye s Business travel Yes Yes Ye s Capital goods Yes Yes Ye s Waste Yes Yes Immaterial Purchased goods and services Yes Yes Immaterial Transportation and distribution Yes Yes Immaterial Use of sold products Yes Yes Immaterial yes = data points have been included in the reported scope 1-3 emissions, while blank means it has not been included. All other scope 3 emissions categories not listed has not been included in the scope 1-3 GHG inventory reported in 2023. While there will be emissions in all categories, Nel is a global company with global distribution and therefore estimates that transportation (inbound and outbound) is the main data point missing for complete data. Purchased goods and services includes the emissions from significant raw materials. Greenhouse Gas accounting - consolidation method The Greenhouse Gas emissions disclosed in this report were consolidated using the control approach. Under the control approach, a company accounts for 100% of the GHG emissions from operations over which it has control. Subsidiaries with less than 10 employees have not been consolidated as aggregated emissions from these legal entities are estimated to have immaterial contribution to the consolidated GHG inventory (estimated at lower than 1% of total CO2 emissions inventory). Nel estimates its total CO2 emissions in the reporting period as follows: Greenhouse Gas emissions in ktCO2e 2024 2023 Change Scope 1 0.2 0.4 -0.2 Scope 2 0.9 1.2 -0.3 Scope 3 23.3 30.3 -7.0 Total 24.4 32.0 -7.6 Scope 1 The emissions within scope 1 arise from the fueling of cars and forklifts, and facility heating. Scope 2 The majority of emissions from scope 2 of 937 t CO2e is the use of electricity from grid connected production in company owned or leased locations. The electrolyser division consumes energy while performing tests on our products before they are shipped to our customers. Nel’s absolute emissions the next years will correlate with the activity level achieved. An increase will occur if Nel continue to increase production capacity. Nel’s goal is to decrease the CO2 footprint per product produced. We will achieve this by improving the stability and scalability of our production processes. In addition, Nel pledges to become fully electrified and use renewable energy to the extent available. The measurement of the reported greenhouse gases is the energy consumption multiplied with emissions factor for the relevant connected grid. Nel’s manufacturing facilities are connected to the grid in Norway, and Connecticut, United States. Each grid has its own emission factor based on location- and marked based emissions. These emissions factors are updated regularly by the source provider. Norway The manufacturing facility in Herøya is connected to the grid in price area NO1. Norway’s energy production mix comprise of over 90% of hydro power, however Norway is connected to the European continent by power cables resulting in a lower percentage of renewable energy in the mix. Nel has decided to not purchase green certificates for its electricity, and has therefore used a ”Nordic Mix” to measure its CO2 emissions from energy consumption in Norway. The emission factor for the energy use in Norway is measured at 0.0070 kgCO2/kWh. Connecticut, United States The facility in Wallingford, Connecticut, has an energy mix that consists of approximately gas, nuclear, hydro, wind and biomass. In total, about 20% of the fuel mix is renewable. The emission factor for the energy use in Wallingford is measured at 0.24519 kgCO2/kWh. 44 Environment, Social and Governance report TOTAL GHG EMISSIONS, EXCLUDING EMISSIONS FROM CAPEX (IN TCO2E) Scope 3 without CO2 emissions from Capital Goods (Capex) Scope 2 Scope 1 0,4 0,1 0,4 1,2 1,2 0,9 7.3 15,5 13,4 0,0 2,0 4,0 6,0 8,0 10, 0 12, 0 14, 0 16, 0 18, 0 . 2022 2023 2024 Scope 3 Purchased goods A significant portion of Nel’s greenhouse gas inventory stems from purchased goods, such as metals, steel, nickel, platinum and iridium. Transportation Nel engages freight forwarders to arrange transportation of goods. Nel prioritizes rail and shipping transportation types due to lower CO2 emissions. Currently, Nel has limited intercontinental shipping of goods being most of the emissions incurred in 2024 related to transport of goods inside the European Union and the United States. Capital goods Nel accounts for the CO2 emissions from factory expansion applying an average emission factor for each nominal capital expenditure. The CO2 conversion in Wallingford, United States was measured at 0.221 kgCO2/USD and 0.023 kgCO2/ NOK in Norway. Nel expects to have seasonal peaks of emissions from acquisition or construction of capital goods as a result of the workings for expansion of production capacity to meet the forecast for market demand before 2030. Use of sold products Energy consumption The alkaline and PEM electrolyser equipment produced by Nel have no emissions in use when connected to renewable power sources like wind, solar, or hydro power, either grid- connected or off-grid. Nel has no control over the renewable energy mix in its customers production facilities, and this will not be 100% emission free until there is sufficient energy production from renewable sources. All customers producing hydrogen from water electrolysis has its plan to produce from renewable energy sources to reduce the carbon footprint from its operations. Nel has in the scope 3 reporting assumed zero emissions from use of sold products. GHG intensity The GHG intensity is presented excluding scope 3 as the complete scope 3 has not yet been included. The scope 3 emissions increase annually from continuing completeness; therefore, the intensity is not comparable between fiscal years, if scope 3 is included. The GHG intensity excluding scope 3 has decreased in 2024 compared to prior years as a result of increased revenue in the group from particular the increased production in Norway. Norway has low GHG emission, below the group’s average. For GHG intensity, Nel calculates its turnover as the sum of revenue from customer contracts as applied to its Income Statements in accordance with IFRS 15. Our products and projects are enablers of the climate transition in hard-to-electrify industries. Nel has not implemented internal carbon prices in its decision-making process as everything we do is for a successful off taking of renewable hydrogen industry. 1,64 0,96 0,80 0,00 0,20 0,40 0,60 0,80 1,00 1,20 1,40 1,60 1,80 2022 2023 2024 GHG intensity (excluding scope 3) tCO2e/MNOK turnover Nel ASA I Annual report 2024 45 NET ZERO 2050 - GHG TRAJECTORY The outlook for scope 1-3 in Nel includes several forward- looking data points with significant estimation uncertainty and involves risk of low reliability and/or comparability. Nel does not provide any guiding on production volume or revenues, therefore, Nel has not been able to show the detailed absolute emission trajectory towards net zero. Nel reported that GHG emissions this year is not significant, however, it is evident that the renewable hydrogen industry will witness increasing GHG emissions when going through industrialisation, while the total absolute annual GHG emissions should be very limited comparing to conventional technology. Thus, the emissions avoided is significant, refer section “Climate change opportunity and emissions avoided” above. Nel’s ESG policy approved by the Board include a pledge to reduce greenhouse gas emissions per produced unit by 25%, 50% and 100% within 2030, 2035 and 2050, respectively, compared to 2020. Nel will monitor the reduction plan by improved reporting procedures and data quality for material scope 1, 2 and 3 emissions. The majority of GHG emissions in Nel would be categorised as Scope 3 emissions, where reductions will mainly come from purchased goods and transportation. An example of significant purchased good in Nel is steel. The timing of decarbonization of the steel industry is uncertain but roadmaps already include likely decarbonization from sustainable amendments in steel production (hot direct reduced iron, hot briquetted DRI and blast furnace). It is therefore expected that a certain volume will be available before 2030. Nel’s GHG reduction trajectory includes estimates that the volume of commercialised renewable steel will increase from 2030-2040. The steel production market is a climate-related opportunity for Nel. In addition to reductions within purchased goods, Nel estimate GHG reductions in the transportation industry when the mobility fleets become more sustainable (electrification, e-fuels and biofuels). Also in this spectrum, Nel’s GHG reduction trajectory estimate the majority of these reductions become visible beyond 2030. Nel also estimates that GHG reductions per unit will be achieved by increased volumes produced, as some GHG emissions are not fully variable and correlated to the production volume. Our net zero commitment does not forecast the use of carbon offset schemes. Greenhouse gas emissions per GW capacity Base year Stability and scalability Electrification Green steel (5%-10%) Green steel (50%-75%) Green steel (5%-25%) Transport (5%-25%) Transport (75%-100%) Transport (5%-10%) 2035 2050 2030 Stability and scalability Electrification Other emissions Other emissions 46 Environment, Social and Governance report SUSTAINABILITY IN ELECTROLYSER PRODUCTION Nel is committed through its company ESG Policy to state- of-the-art sustainable production facilities for both current productions, committed expansions and potential further scaling up. In 2024, Nel concluded the factory expansions at Herøya, Norway and the manufacturing capacity expansion in Wallingford, Connecticut will be completed in early 2025. These capacity expansions were designed with fully automated manufacturing processes to enable efficient and scalable production of electrolysers. The environmental footprint of a product throughout its lifetime, factoring the hydrogen output and production costs, is markedly reduced by utilizing hydrogen solutions compared to traditional energy sources. This does not mean that the production of our applications is entirely carbon neutral as CO2 is emitted with manufacturing of equipment and its transportation. Nel is certified on ISO 9001 and ISO 14001 in the Alkaline business unit for the scope of Technology R&D, Product Development, Procurement, Inbound and Outbound Logistics, Manufacturing, Sales, Delivery Projects, Installation, Commissioning and Servicing of Atmospheric Alkaline Hydrogen water electrolysers and Hydrogen Plant system solutions. Nel is certified on ISO 9001, ISO 14001 and ISO 45001 in the PEM business unit for the scope of Design, Manufacture and Servicing of Proton Exchange Membrane Electrolysis Systems. RESILIENCE IN ELECTROLYSER MANUFACTURING FACILITIES In 2023, Nel announced Plymouth Charter Township, a suburb of Detroit, Michigan as the selected site for a factory of Alkaline and PEM electrolysers with up to 4GW in production capacity. The expansion is currently delayed due to a slower than expected growth in the electrolyser market in the United States. The capacity expansion in Herøya, Norway to 1 GW and Wallingford, United States to 500 MW are important steps in preparation for large-order intakes and represent the first industrial-scale production of the most efficient electrolysers on the market, at a game-changing low production cost. Sustainability in electrolyser production metrics and future targets: KPI 2024 2023 CHANGE 2025 TARGET 7 Electrolyser production, Alkaline Stack yield 97% 99% -2% NM Overall equipment effectiveness 65% 67% -2% NM Electrolyser production, PEM Stack yield 99% 94% 5% >98% Overall equipment effectiveness 48% 8 91% -43% >90% 7 Targets in Alkaline suspended for 2025 as production is temporarily halted. 8 The PEM operations had a low work load in the financial year. Costs and phasing in new production equipment was prioritized over achieving a high OEE. Nel ASA I Annual report 2024 47 48 Environment, Social and Governance report Social ORGANISATION AND OCCUPATIONAL HEALTH AND SAFETY At Nel, Organisation and Occupational Health and Safety is a top priority. Nel focus on safety is integrated in the company- wide culture program to foster a zero-tolerance attitude towards QHSE incidents. In 2024 we continued to have safety as our number one priority and focus efforts to improve results. Our overall goal was to significantly reduce the number of lost time and recorded safety incidents in Nel. • The Lost Time Injury Rate (LTIR), which measures the number of incidents that result in time away from work, dropped from about 11 at the beginning of the year to 2.7 at the end of the year, a reduction of almost 80%. • The Recordable Incident Rate (TRIR), which measures the number of lost time + restricted work + medical treatment cases, dropped from about 20 at the beginning of the year to 5.2 at the end of the year, a reduction of almost 75%. Nel recognises that ensuring i) workplace, ii) stakeholder and iii) product safety in a diligent manner is a license to operate within the Hydrogen industry. The above three categories will have the following focus areas: 1. Continue a “HSE-first” mindset and development of a commitment culture 2. Ongoing development and implementation of a Nel HSE management system 3. Standardization of programme activities where relevant throughout the organization 4. Training and evaluation of the organization and system effectiveness The progress Nel made last year has not come down to one single factor. It is rather the result of many reinforcing initiatives: • Putting safety first in terms of our priorities • Finding ways to measure status and developing leading safety indicators • Implementing several company-wide programs such as safety observation tours and digital reporting of hazards (Short-Term Incentive scheme of employees qualifiable to a financial bonus in 2024) • Improving our safety training courses, including HSE day at Herøya production facility with focus on practical topics like behaviours, rescuing confined space, hazard recognition and working environment • Developing and distributing root cause analyses of lost time incidents internally Nel production facilities have dedicated QHSE resources reporting to the VP of Operations about safety incidents, preventive safety actions and implemented responses to incidents occurred in accordance with Nel’s procedure for incident handling. Nel requires that all employees and contractors in the production sites receive appropriate safety training and equipment. In addition, Nel imposes restrict access to hazardous areas such as areas with handling of harmful chemicals. Nel’s Alkaline business unit is ISO 45001 certified within the scope of Technology R&D, Product Development, Procurement, Inbound and Outbound Logistics, Manufacturing, Sales, Delivery Projects, Installation, Commissioning and Servicing of Atmospheric Alkaline Hydrogen water electrolysers and Hydrogen Plant system solutions. Nel’s PEM business unit is ISO 45001 within the scope of Design, Manufacture and Servicing of Proton Exchange Membrane Electrolysis Systems. Organisation and Occupational Health and Safety targets for 2025: • LTIR = 0 • TRIR <4 • 100% completion of obligatory safety training • Four Safety Observation Tours to be completed for all managers and above. Nel ASA I Annual report 2024 49 Key Performance Indicators related to Health and Safety KEY PERFORMANCE INDICATORS UNIT OF MEASUREMENT 2024 2023 CHANGE 2025 TARGETS Percentage of employees covered by Nel's health and safety management systems % 100% 100% 0% 100% Total recordable injuries rate (TRIR) TRI per 1,000,000 hours worked 5.2 19.7 -14.5 <4 Lost time injury rate (LTIR) LTI per 1,000,000 hours worked 2.7 11.2 -8.5 0 H1 – injury-related absence from work Recordable events in the last 12 months 2 12 -10 0 H2 – recordable injury events Recordable events in the last 12 months 4 21 -17 <4 Fatality rate Recordable events in the last 12 months None None None None PRODUCT SAFETY Safety is the number one priority in Nel. Management and all employees are strongly committed to the company’s promise of delivering fail-safe products to the customers. The product safety risks include the risk range from major accidents to near misses related to malfunctions in our products and/ or insufficient service during operations and maintenance. Each division and legal entity in Nel are responsible for the development, implementation and maintenance of risk management framework and system within each discipline. In our development of products, Nel diligently works to never compromises on safety requirements, codes and standards. Nel’s equipment follows a Failure Mode, Effects & Criticality Analysis (“FMECA”) approach for risk assessment at product level, and a Hazard and Operability Analysis (“HAZOP”) at system level. The Engineering departments of each business unit are responsible for the technology platforms and product safety, supported by the QHSE/Product Compliance department, ensure code compliant and safe product development. The QHSE directors and their departments are the primary resources involved with the investigation of product defects and implement corrective measures where applicable reporting to the VP of Operations. In addition, a QHSE committee that works across the organizations and consists of participants from each legal entity, as well as the corporate function, ensures collaborative learning and implementation of best practices to prevent incidents. Where applicable, safety requirements include third-party product certification for design and manufacturing. Third- party experts are involved as subject matter experts when applicable. External consultants are involved on regular tests for emergency response. In case applicable, the Board of Directors review the remediation plan for product safety incidents involving leakage of hydrogen with explosions or fatalities and/or material cost impact. In 2024, our employees participated in product safety trainings for basic knowledge of hydrogen risks, common pitfalls on handling and storage of hydrogen, and best practice to avoid incidents in the production and storage of hydrogen. As mentioned in the section “Sustainability in Electrolyser Production”, the R&D department works on product designs and safety applications to reduce the product safety risks such as explosion or hydrogen leakage. During 2025, Nel will continue the collaboration between R&D, Engineering and QHSE/Product Compliance departments to increase the product safety program with implementation of even more rigorous methodologies, e.g., a review system where specific areas will be assessed to identify areas of improvements. Nel is certified at product level with several certifications, including ISO 22734:2019 - hydrogen generators using water electrolysis for the M-Series PEM electrolysers. Product safety targets for 2025: • Zero product-related incidents, including at sites with Nel equipment • Recognized safety leader within the industry, setting new industry safety standards across the value chain 50 Environment, Social and Governance report RESPONSIBLE SUPPLY CHAIN Upholding a responsible and efficient supply chain is pivotal to our business resilience, sustainability agenda and goals. Nel operates in a complex global market and ensuring business resilience while at same time meeting the highest standards of business integrity and human rights pose challenges to our value chain and business partners. During the reporting period, approximately NOK 1.8 billion were spent across 40 countries in 5 continents. Despite the global presence, Nel concentrates its supply chain near to its production facilities or within the European Union where business governance and human rights practices are well developed and widely implemented. The continued effort for transparency and resilience is done in conjunction with reinforcing ties with existing partners. Suppliers that comply to human rights frameworks are fundamental to cultivate a resilient long-term relationship. In 2025, our supply chain department will continue the preparedness working anticipating the expected business growth in the coming years. Our approach Nel expects that any business relationship with internal or external partners are conducted with the highest standards of business integrity. The pre-qualification of vendors is performed with an integrity due diligence (“IDD”) check and the review of a self-assessment prepared by our vendors. Nel also sets clear expectations for our business partners with respect to business integrity. Transparency is important when setting the minimal compliance requirements expected in our business relationships. Nel’s supply chain has in place an awareness program to distribute Nel’s code of conduct and Nel’s human right policy to business partners, and we also have these policies available on our website. In addition, a supplier quality, health, safety & environmental manual with clear guidance on these areas is distributed to vendors where relevant. Furthermore, a Supplier Declaration formalizing the minimal requirements for human rights, business integrity, compliance with laws and regulations and health and safety are requested from vendors with which Nel has substantial business activities during the reporting period. The Supplier Declaration is expected to cascade to business partners a formal requirement of the lowest acceptable level of compliance in critical business areas. Ongoing monitoring Through our Supplier Audit Program, we audit strategic suppliers on aspects such as human rights, business integrity, health and safety, quality management systems, and operational matters. The Supplier Audit Program uses a risk-based approach where vendors are classified based on an evaluation of, inter alia, Nel’s business dependency on the vendor, the effort required to replace the vendor if necessary and any risks in respect of business integrity or human rights. In 2024, Nel’s Supply Chain department audited 20 suppliers. The supply chain department aims to increase the target to 30 supply audits of suppliers in 2025. TRANSPARENCY ACT According to the Norwegian Transparency Act which entered into force July 1st, 2022, Nel has a duty to carry out a due diligence assessment related to fundamental human rights and decent working conditions in its own businesses and supply chains. As referred to above, Nel conducts a thorough pre-qualification process before entering a contractual relationship with new suppliers. This prequalification process includes an integrity due diligence (“IDD”) check of the supplier. The IDD procedure is mandatory in Nel for any contractual relationship and red flags are handled in collaboration between the supply chain and compliance departments. In severe cases, the procurement process may be stopped, and the supplier disqualified from being part of Nel’s supply chain. If the procurement process is not stopped as a result of the finding, adequate measure will be put in place to prevent, monitor and/or mitigate the risk. Suppliers which Nel has substantial business activities during the reporting period are required to sign a Supplier Declaration. The Supplier Declaration formalizes the minimal requirements we expect and demand all suppliers in our value chain to meet, including respect for fundamental human rights. The Supplier Declaration establishes specific contractual obligations between Nel and the supplier within the area of compliance. These obligations come in addition to obligations in Nel’s supply chain contracts. General Supply Chain Risk Assessment of Nel’s Supply Chain The supply chain department manages the Supply Chain Due Diligence procedure with support from the compliance department. Nel has adopted a risk-based approach when it performs the due diligence of its value chain as required by the Transparency Act. The supply chain department performs a risk assessment to evaluate our business dependency on the suppliers and our ability to find suitable alternative suppliers. After initial due diligence of suppliers, they are classified as non-critical, bottleneck, leverage or strategic. When a supplier with high risk of non-compliance is identified, the Supply Chain department performs a thorough supply audit program including steps to Nel ASA I Annual report 2024 51 assess Corporate Social Responsibility. A calibration process will be agreed for suppliers with high-risk findings, however no high- risk finding have been identified in 2024. Integrity Due Diligence Check High risk findings Low risk findings only Yes No High risk finding s Low risk findings Findings Assessement Calibration process Strategic Supplier? Sampled in the Supplier Audit Program No further action No further action The due diligence is performed independently by each business unit. We have assessed country risk in the supply chain of each business unit, across all business units and the result of this assessment is shown in the diagrams below. Alkaline electrolysers: • 75-100 88% • 50-75 11% • 25-50 1% • 0-25 0% PEM electrolysers: • 75-100 99.6% • 50-75 0.1% • 25-50 0.3% • 0-25 0% The figures above show that overall Nel predominantly has suppliers from low-risk jurisdictions. About 99% of Nel’s suppliers are within the top two intervals and there are no suppliers in the bottom interval. Based on an overall assessment of country risk, risk of violations of fundamental human rights and decent working conditions in Nel’s Supply chain is considered to be low. Top 5 country expenditure in 2024: COUNTRY OF INCORPORATION % CORRUPTION INDEX (CI) CI RANK ITUC United States 37% 69 24 Systematic violation of rights Norway 29% 84 4 Sporadic violation of rights Sweden 11% 82 6 Sporadic violation of rights Denmark 5% 90 1 Sporadic violation of rights Germany 5% 78 9 Sporadic violation of rights Top 5 representation 88% 11 % 1 % Supplier Expenditure – Alkaline Division 88 % Top 25th percentile 25th-50th percentile 50th-75th percentile 75th-100th percentile Supplier Expenditure - Proton Membrane Division Top 25th percentile 25th-50th percentile 50th-75th percentile 75th-100th percentile 99.6% 0.1% 0.3% 52 Environment, Social and Governance report Labour rights Some of Nel’s strategic suppliers operate in countries classified with systematic violations or regular violations of labour rights in accordance with the International Trade Union Confederation (“ITUC”). Employees in our value chain working in these specific countries have a higher risk to be employed in companies that do not comply with the minimal requirements required in Nel’s Human Rights policy for employment security and reasonable working hours. Nel monitors its value chain with site visits to strategic suppliers and educate its value chain with policies and supplier declaration available on Nel’s website. Conflict minerals Nel’s Alkaline electrolysers contain steel and nickel, the PEM electrolyser contain steel, aluminium, nickel, copper, platinum, titanium and iridium. Although none of these minerals are on the European Union list of conflict minerals, Nel understands that the value chain of mineral and steel suppliers has particular complexity due to a complex cross border process of production and transportation of minerals to Europe and United States. These suppliers are continuously monitored by our Integrity Due Diligence checks. Overall assessment No case of violation to Labour Rights, Code of Conduct or Nel’s Human Rights policy have been identified in the due diligence procedure performed during 2024. General Supply Chain Risk assessment for own operations Nel has its production facilities and almost all its employees in the United States, and Norway. Norway has historically been assessed as having a low risk for Human Rights and Corruption, ranked top 4 in the Corruption Perception Index. The United States has also been assessed at low risk, placed in the 24th position of Corruption Perception Index (“CPI”) and 20th position in the HDI (“Human Development Index”). During our review of internal risks that could affect Nel business and its value chain, we have identified opportunities of improvement for reduction of frequency of safety incidents at workplace and implementation of a policy for diversity and equality. Safety at workplace Nel’s operations have an inherent risk of incidents relating to health and safety mainly caused by handling of chemicals, weight handling or working at height. Health and safety incidents are managed by the safety committee and local QHSE departments and tracked in the LTIF (Lost-time Incidents Frequency) and TRIF (Total Recordable Injuries Frequency). Safety is our number one priority, and this is reflected in our culture, training programs, and monitored by the Nel’s safety program. The safety responses implemented to address the risks and opportunities related to safety at workplace is described in the section “Organisation and Occupational Health and Safety”. Diversity and equality Nel has a diverse workforce strengthened by the knowledge and experience from different working backgrounds, cultures, beliefs, and races. Nel acknowledges the importance of a culture that foster Diversity and Integrity providing equal opportunity regardless of gender, culture background or race. In response, Nel publicly commits in its job advertisements to be an equal opportunity employer. The Human Resources department is involved in the hiring process advising hiring managers and ensuring that candidates are equally treated in all steps of the recruitment process. Job advertisements for our operations in Norway are posted in the English language to ensure a broader outreach and welcome highly skilled immigrants to apply to open positions. In 2024 Nel implemented a global Diversity and Equality policy in accordance with the conventions of the International Labour Organization consolidating the minimal procedures expected from the local human resource departments. Duty to provide information Nel has a whistleblowing channel where concerns related to our value chain can be submitted anonymously for investigation. Contact details / instructions for how to report a concern are found on our website’s Ethics and Compliance section. No report was received in 2024. Nel ASA I Annual report 2024 53 Key performance indicators for responsible supply chain: KEY PERFORMANCE INDICATOR UNIT OF MEASUREMENT 31 DECEMBER 2024 31 DECEMBER 2023 CHANGE KPI TARGET FOR 2025 Supplier audits concluded within the fiscal year Supplier audits completed during the reporting period 20 23 -3 30 Site visits during supplier audit program Reportable event 20 23 -3 Number of suppliers not renewed due to breaches to compliance policy Number of contracts not renewed due to breaches of compliance None None Integrity Due Diligences ("IDD") performed in suppliers with active contracts IDD performed 80% 99.8% -19.8% 100% of active suppliers shall have IDDs performed. Total suppliers with active contracts Suppliers with active expenditure during the year 698 1 039 -341 Information Security Cyber security threats have continuously increased in scale and sophistication in recent years. Nel has established a strong information security program designed to protect the confidentiality, integrity, and availability of data. By implementing advanced security protocols and conducting continuous monitoring, we proactively address threats and minimize vulnerabilities. Our approach is rooted in industry best practices and a commitment to maintaining trust with stakeholders. To stay ahead of evolving cyber threats, we regularly assess and enhance our security measures. Ongoing investments in advanced technologies and regular audits ensure our defenses remain resilient. This proactive strategy has been instrumental in maintaining our record of zero data breaches, even as global cyberattacks continue to rise. In 2024, we have further strengthened our capabilities by hiring a Security Architect and an operational technology (OT) Security Analyst to expand our expertise and focus on emerging areas. In an effort to support our customers with NIS2 compliance, all our security measures have been implemented in alignment with NIS2 requirements. Responding to information security threats Acknowledging that some attacks may be unavoidable, Nel has partnered with an industry-leading incident response provider to ensure swift and effective handling of any potential incidents. This collaboration gives us access to cutting-edge expertise and tools, enabling rapid detection, containment, and investigation of security events. Such measures are key to minimizing impact and ensuring a swift recovery. Culture and training We emphasize the importance of human vigilance in our security efforts. Nel security awareness program achieves a participation rate of over 96%, reflecting its effectiveness in fostering a culture of security. Regular training ensures employees are equipped to recognize and respond to potential threats, reinforcing our defences at every level of the organization. Looking ahead, we are committed to increasing adherence to industry standards, such as ISO 27001 and IEC 62443, to further strengthen our cybersecurity framework. Directors & officers insurance (D&O) Based on requirements brought by the Norwegian Accounting Act section 3-3a, information about our D&O insurance is provided. Nel has entered into a D&O liability insurance. This insurance is meant to prevent employees and members of the Board at Nel from being held personally responsible for decisions made by the company. The insurance applies to all material decisions made by employees on behalf of Nel. Human Capital The workforce is the most valuable resource in Nel. The highly skilled characteristic of our workforce makes employment retention and well-being at workplace critical dependencies to our operations. On the other hand, the ability to absorb skilled personnel from industries highly related on fossil fuels is a relevant opportunity to local communities and labour market in a business scenario with Net Zero Emission. The global 54 Corporate governance human resource department is committed with the highest HR standards for talent attraction and retention, and well- being at workplace. During 2024, our talent retention was tested in a competitive labour market in the United States and Europe, recording the lowest employment rates in the last two decade. The turnover rate increased from 11% to 15%. In 2024, Nel implemented a feedback calibration process ensuring that employees received timely feedback during the year, therefore allowing employee development before the annual performance appraisal. All employees in Nel participated in the appraisal process in 2024. In 2025, Nel’s HR will develop a comprehensive talent mapping system that provides a holistic overview of organizational roles, job titles, and hierarchical levels. In addition to implementing a manager program to enhance leadership capabilities. During 2024 it has been a high focus on safety training in addition to other global mandatory trainings. AVERAGE TRAINING HOURS, PER EMPLOYEE 2024 2023 Male 06:40 7:20 Female 06:40 7:20 In Nel, we prioritize an active two-way dialogue with our workforce. The human resource department of each facility engage in active feedback with employee’s representatives and organization classes. The proactive engagement allows Nel to better understand the concerns of its workforce and to negotiate balanced resolutions to impacts, risks and opportunities affecting employees. Nel’s leadership have open communication with employees through several mechanisms, including town-hall meetings with at least quarterly occurrence. Employees are also encouraged to anonymously report unmanaged concerns in one of the grievance mechanisms available in Nel (whistleblowing channel, ethics hotline, direct report to HR managers or direct report to line manager). The grievance mechanisms are promoted on Nel’s intranet, at workspace, commented on mandatory trainings, and townhall meetings. The legal and compliance department addresses the reports received in the whistleblowing channel or ethics hotline, with summary of cases reported to the Board Audit, Risk and Sustainability Committee (“BARSC”). All whistle-blowers are protected against retaliation under Nel’s Ethics Hotline policy. In 2024, Nel’s HR implemented two initiatives to enhance employee experience and integration across international markets. First, the company introduced Winningtemp, an engagement index survey tool, to assess and improve workplace satisfaction. Concurrently, Nels HR successfully launched a global onboarding process to efficiently integrate new team members worldwide. Nel is an equal opportunity employer and acknowledges the relevance of integrate and represent its diverse workforce. In all job advertised, Nel publicly states its commitment to be an equal employer without discriminate employees due to racial and ethnic origin, colour, sex, sexual orientation, gender identity, disability, age, religion, political opinion, national extraction or social origin, or other forms of discrimination covered by Union regulation and national law. In 2025, Nel plans to implement a policy for Diversity and Equality in compliance with the conventions of International Labour Organization. Human Resources targets for 2025 • Develop and implement a manager training program • Create an organizational overview with competency matrices and succession plans • Implement global policy for Diversity and Equality WELL-BEING AT WORK In 2024, Nel implemented a global onboarding program where new hires are introduced company strategy and specific challenges and characteristics of each business division. The onboarding program is providing easier integration of new hires promoting better adaptability to our workplace. After implementing an engagement index survey tool, Nel has achieved positive initial results, with satisfying workplace temperature metrics. These promising early indicators suggest a strong engagement and positive workplace sentiment among Nel’s team members. In 2025, Nel will maintain a rigorous approach to tracking and analysing these survey results. WORKING HOUR POLICY Nel strives to ensure that employees do not exceed reasonable working hours to provide a balance between work and personal life. All managers in Nel are responsible for monitoring the working hours of their direct reports, making sure these are within acceptable limits and complying with statutory rights for holiday, parental leave, or any other employee right for work-absence. In addition, Nel has in-place a working hours policy describing the statutory rights for employees, the policy in place for shift work, overtime policy and requirements for passive service in case of emergency issues. Although Nel’s workforce is placed in countries with strong labour unions and statutory labour laws, Nel has the ambition to increase steering on the working hours in the coming years with implementation of a working hours systems for improved reporting of work shifts. Nel ASA I Annual report 2024 55 Employees are also encouraged to access the employee handbook on Nel’s intranet containing a detailed description of internal human resource policies and legislation guidelines regarding employee benefits, expected working hours, labour statutory rights and grievance mechanisms. TALENT DEVELOPMENT AND RETENTION PROGRAMS Throughout 2024 Nel has onboarded approximately 64 new employees. Nel’s Human Resource strategy is anchored on talent attraction and retention. Among the actions for talent attraction, Nel has implemented partnerships with well-known universities, attended career fairs and events in relevant institutions targeting a higher outreach of apprentices. Nel has implemented a formal internship program with a structured learning experience program, including the allocation of a dedicated mentor with relevant expertise on the subject covered during the internship. For talent retention, Nel has a common HR-system, optimising the HR processes and allowing increased learning and comparison of results. The common HR-system support the performance evaluation process, where targets are cascaded from the department team-leader to its team members. Employees are also encouraged by team leaders to contribute with the definition of some targets describing areas of self- development and career goals. The performance evaluation program requires interim feedback ensuring both talent development and corrective actions in appropriate time. In Nel, managers have the mandate to monitor the needs for on- the-job training, knowledge adoption and further competence development needs through the new appraisal and goals setting process. The purpose is to ensure that development activities help employees in their current and/or future role. Based on identified needs, some employees have been assigned to specific external learning sessions. In addition, the Human Resource department is delivering behavioural trainings with dilemma situations to further develop managers in their daily challenges to develop and steer their team members. Absolute number and rate of employment Permanent and temporary employees, by region and gender PERMANENT EMPLOYEES, BY REGION AND GENDER FEMALE (%) FEMALE MALE TOTAL 2024 2023 Norway 50 198 248 20.2% 21.1% United States 36 110 146 24.7% 23.4% Other 1 2 3 33.3% 11.5% Total 87 310 397 21.9% 20.5% Employees that defines themselves as non-binary or undefined are excluded due to privacy concerns.. TEMPORARY EMPLOYEES, BY REGION AND GENDER FEMALE (%) FEMALE MALE TOTAL 2024 2023 Norway 9 30 39 23.1% 44.4% United States 2 5 7 28.6% 0.0% Other 0 3 3 0.0% 0.0% Total 11 38 49 22.4% 44.4% Permanent employees: Employees under work contracts that are renewed before a notice of termination. Temporary employees: Employees with fixed-term work contracts. Employees that defines themselves as non-binary or undefined are excluded due to privacy concerns. We strive to increase our gender balance across the different locations, we have a focus on diversity through recruitment ensuring we offer equal opportunity to all relevant applicants. Women in executive management is 1, or 11.1%. Women in the Board of Directors is 3, or 42.9%. Gender pay gap MALE-FEMALE PAY GAP PERMANENT Norway 10% United States 16% 56 Corporate governance The male-female pay gap is the difference between average gross hourly earnings of male paid employees and of female paid employees expressed as a percentage of average gross hourly earnings of male paid employees. The high discrepancy on temporary employees is caused by the small population of temporary employees resulting in disproportional comparison of salaries from senior positions to junior positions. 2024 2023 Pay gap to highest paid individual and the median remuneration for permanent employees (excluding highest paid individual) 473% 480% Nel’s remuneration policy was approved by the General Meeting 15th of April 2021. Refer to remuneration report 2024 which describes how the policy has been applied during 2024. Employee turnover and new employee hire Diversity focus including gender balance is included in our recruitment and sourcing activities. TURNOVER RATES PERMANENT TEMPORARY Employee turnover rate 17.2% 145.0% Voluntarily turnover rate 15.0% 100.0% ** Nel has a small headcount of temporary employees with contract duration shorter than 12 months. The small population and the preference for short term contracts are the main contributor to the high percentages identified in the report. Movement in employee headcount by gender FEMALE MALE TOTAL Total headcount end of 2024 87 310 397 Opening count 2024 100 353 453 Rate of change -15% -14% -14% Employees that defines themselves as non-binary or undefined are excluded due to privacy concerns. AGE DISTRIBUTION OF WORKFORCE PERMANENT EMPLOYEES, AGE GROUP <31 31-49 50+ 31.12.2024 66 220 115 01.01.2024 85 241 127 Age group % of change -29% -10% -10% TEMPORARY EMPLOYEES, AGE GROUP <31 31-49 50+ 31.12.2024 15 6 4 Nel ASA I Annual report 2024 57 PARENTAL LEAVE Nel facilitates for all female and male to take out parental leave and assure them to be employed after their leave as it is important for our employees in terms of work-life balance and well-being. MALE FEMALE Took parental leave 14 4 Percentage of entitled employees that took parental leave 100% 100% Returned to work after parental leave ended 11 1 SICK LEAVE SICK LEAVE COVERAGE PERMANENT Sick-leave rate 3.49% Sick-leave days paid out to employees 63% Coverage of employees 100% Sick leave days paid to employees in Norway and US is 100% and 0%, respectively. COLLECTIVE BARGAINING AGREEMENTS COLLECTIVE BARGAINING AGREEMENTS 2024 2023 Norway 86% 86% USA 0% 0% Other 0% 0% Nel operates in countries with strong social development, competitive labour markets and available benefits for social protection in case of temporary unemployment, sick leave, or illness. Nel holds a group policy to financially support employees in case of major life incidents including covering for medical disability, occupational disability, or death.h. APPRAISAL DIALOGUE APPRAISAL DIALOGUE 2024 % Permanent employees 401 100% 58 Corporate governance Governance ETHICAL BUSINESS CONDUCT AND COMPLIANCE Nel conducts business on all continents and the demand for Nel’s hydrogen solutions is growing. Through the expanding portfolio of international projects, Nel has a significant number of third-party relationships, and frequently collaborates with other companies operating in the hydrogen industry. For businesses with a significant international footprint, a robust culture of compliance is vital to achieve sustainable value creation and success. In 2024, the Board of Directors and the executive management team have continued their work to strengthen Nel’s compliance system. The Board of Directors approves the content of the overall compliance program and the individual compliance policies. The individual procedures are approved by the CEO. The Board of Directors and the executive management team are enrolled in the compliance training program and their training is monitored and followed up in the same manner as for other employees. The purpose of the compliance program is to prevent and mitigate compliance risks by enabling all persons and entities working for or on behalf of Nel to understand, observe, and adhere to Nel’s governance framework. All Nel’s activities must comply with national, regional, and international laws. Through the Nel Code of Conduct, we stipulate the essential requirement that all Nel’s activities should be conducted in an ethical and sustainable manner. Notable developments in 2024 include improving the compliance training program by, inter alia, increasing the course portfolio with courses which are more specifically customized for Nel. Furthermore, the language options for the compliance e-learning were expanded to include Norwegian and the most common languages globally allowing our employees to conduct training in their native language. Although English is our working language, the ability to conduct training in the employees native language will increase our ability to efficiently train all parts of the Nel organization. Training of employees is crucial for an effective compliance program, and in Nel we conduct our compliance training in accordance with an Annual Compliance Wheel. The Annual Compliance Wheel provides a yearly compliance training program for the BoD and all employees, and the number of courses and type of training will differ depending on the role the employee has in Nel. Compliance e-learning courses are supplemented by face-to-face training conducted by Group Legal and Compliance. The compliance training covers topics such as anti-bribery and corruption, sexual harassment, economic sanctions, competition law and introduction to data protection and privacy. All compliance training is mandatory and closely monitored and a failure to complete compliance training will result in a reduction in the employee’s variable compensation. For 2024 compliance with the training program can be summarized as follows: • 94% of the employees have completed training in accordance with the Annual Compliance Wheel. This is an increase of 1% from 2023. • 100 % of Nel’s executive management and Board of Directors have completed the training in accordance with Annual Compliance Wheel. This is an improvement from 2023 where the executive management and the BoD combined for a 93% completion percentage. Whistleblowing The company’s whistleblowing channel – the Nel Ethics Hotline – has been operational since September 2020. The whistleblowing channel is operated by a third-party service provider ensuring full anonymity for the reporter. In addition to English, the channel is also available in Norwegian ensuring a low language barrier for reporting a concern. The whistleblowing channel is open for third parties/external stakeholders as well as employees of Nel and a link to the whistleblowing channel is published on Nel’s official website. From the inception the vast majority of reports are received from within the organisation, however, the fact that we have also received reports from outside the organization documents that there is awareness of the whistleblowing channel also with external stakeholders. During 2024 there has been no cases reported through the whistleblower channel. This is a significant reduction compared to the two previous years. 7 cases were reported in 2023 and 15 cases were reported in 2022. Nel believes this steady reduction in part can be ascribed to specific initiatives in 2023 and 2024 which were targeted to improve the work environment in Nel. An example of this is a customized behavioural training program which was launched during the first quarter of 2023. Furthermore, during 2024 the Human Resources department also launched an initiative where all employees are required to report weekly on issues related to the work environment. The consequence is that potential conflicts and issues are discovered early thereby facilitating Nel ASA I Annual report 2024 59 early intervention by the Human Resources department which prevents the conflict or issue from escalating. In addition, the spin-off of Nel’s fueling division in June 2024 resulted in an approx. 35% reduction of employees, which may also have contributed to the reduction of cases reported, All reports of concerns received through Nel’s Ethics Hotline are handled in accordance with Nel’s Ethics Hotline Procedure and Nel’s Investigation Procedure. According to the procedures all reports of concern are received by a team consisting of three people – the ethics hotline team – which will initiate the investigation of the report. Depending on the category of the case, subject matter experts will be involved on a case-by-case basis. All received reports are kept confidential and investigated in accordance with fundamental principles of due process. The extent of management involvement in a specific case will be determined on each case dependent on a specific risk assessment. Compliance targets for 2025: • 100% of relevant Nel employees to have completed e-learning compliance training in accordance with the Annual Compliance Wheel. • 100% of Nel’s executive management team and Board of Directors to have completed the anti-bribery and corruption training during 2025. Key performance indicators related to Governance: KEY PERFORMANCE INDICATOR UNIT OF MEASUREMENT 31 DECEMBER 2024 KPI TARGET FOR 2025 Ethical business conduct and compliance Compliance training (“Board of Directors and Management”) % 100% 100% Compliance training (“Nel employees”) % 94% 100% Total amount spent on fines for damages as a result of violations regarding social and human rights factors NOK 0 0 Expenditure with lobby and donation to political parties NOK 0 0 Whistleblower channel Total number of reported concerns – YTD None Not applicable Of which are related to business ethics and corruption Reportable event - per incident None Of which related to discrimination Reportable event - per incident None Others Reportable event - per incident None Investigations and inquiries initiated by compli- ance team in the reporting year Reportable event - per incident None Cases open at beginning of reporting period Reportable event under investigation None Cases open at end of reporting period Reportable event with investigation concluded None Payment practice Confirmed incidents of corruption or bribery Reportable event - per incident None Not applicable Number of contracts terminated due to con- firmed Reportable event - per contract None corruption or bribery incidents Standard contract term 30-60days Average payment term agreed with suppliers Non-executive board members Board member 7 - Executive board members Board member None - Gender diversity (female board members) Female board members (%) 43% - 60 Corporate governance INNOVATION AND TECHNOLOGY FINANCIAL INVESTMENT CONTRIBUTION (NOK million) AWE PEM GROUP 2024 Research and maintenance 103 126 229 Capitalised development 121 15 136 Total R&D spend (NOK millions) 225 140 365 R&D spend in % of annual revenue and other income 22% 29% 24% 2023 Research and maintenance 76 76 152 Capitalised development 76 55 131 Total R&D spend (NOK millions) 152 131 283 R&D spend in % of annual revenue and other income 17% 24% 20% At Nel, being “number one by nature” will always be our strategic ambition, and consistent R&D is necessary to maintain and develop this position further. The technology portfolio includes several development programs for current and future generations of electrolysers. Nel has an active IP protection strategy and has more than 100 active patents. Nel’s IPR strategy is managed and further developed by a Nel IPR committee that works across the organization and meets bi-weekly. ELECTROLYSER The Research and Development (“R&D”) team is the steward of the product portfolio working to implement an eco-design and the highest technology and safety standards. Electrolysers can have increased acceptance in the climate transition if achieving optimal utilization of physical space, and reduced complexity on commission and transportation of equipment. In 2023, Nel announced the development of a pressurized alkaline technology with potential to unlock improvements to critical indicators of stack cost, stack efficiency and a simplified design. In the Proton Membrane division, the partnership with General Motors continues to be a contributor to the development of a new cell stacks series with improvements on production efficiency, equipment durability and consequential reduction of Levelized Cost of Hydrogen (“LCOH”). The partnership was designed with a series of seven milestones of which two of them were achieved in 2023, and further expected to be achieved in 2025. CIRCULAR ECONOMY Nel has conducted analysis of eco-design in current products and products under development. The analysis includes the end-of-life treatment and recyclability of significant bill of material items. Nel’s Alkaline technology is an electrolyser consisting of nickel-coated steel plates. The nickel-coated steel plates can be recycled. Nel’s PEM electrolyser contains of platinum and iridium, both which can be recycled end-of-life. All Nel’s electrolysers are designed for a lifetime of 7 years or above depending on operational pattern. The surrounding plant has a longer lifetime. Customers will therefore replace stacks that reach the end of their economic life with new or refurbished stacks or extend the life with replacing only a few components depending on operational pattern, wear and economic considerations. Nel has a history of supporting its customers with such replacements and repairs across all its product platforms and continues to develop its after-sales business. The concept of “decoupling” has gained significant attention in recent years as a framework for promoting sustainable resource management. Decoupling refers to the idea that economic growth and increasing consumption do not necessarily have to be accompanied by parallel increases in resource extraction and the associated environmental degradation. By making more efficient use of physical materials, such as steel and other metals, through increased recycling, it is possible to decouple consumption from resource use. Recycling plays a key role in this decoupling effort by reducing the need for resource extraction, requiring Nel ASA I Annual report 2024 61 less energy consumption compared to processing virgin raw materials, and resulting in lower emissions and other environmental impacts Recycling electrolysers is not a unique challenge. Nel provides guidance to its customers for handling of end-of-life handling of consumables and equipment. For the alkaline product, the current assessment is that existing commercially available recycling and end-of-life handling providers are the best way of addressing the challenge. For the PEM platform, recycling of especially Iridium still needs to be developed further. Nel therefore offers to take back the core components for end- of-life treatment and recycling. Nel participates in industry initiatives to improve the material recycling supply chain for electrolysers. Innovation and technology targets for 2025: • 10 % of revenue to be spent on Innovation and Technology • Five new innovative ideas and two new patent applications/trade secrets to be developed in 2025. EU Taxonomy SUBSTANTIAL CONTRIBUTION TO CLIMATE MITIGATION The EU Taxonomy is the cornerstone of EU’s sustainable finance framework and an important market transparency tool to channel capital towards climate-friendly investments. The Norwegian Parliament resolved to include the EU Taxonomy Regulation in the EEA Agreement on 29 April 2022. The Norwegian government established the regulation as part of Norwegian law as of 1 January 2023, which imply mandatory reporting from the reporting period of 2023. Nel conducted a thorough assessment of revenue, operational expenditure and capital expenditure to identify the percentage of its operations aligned (contributing) to the EU Taxonomy goals and complying with the EU Taxonomy safeguards. For 2024, Nel decided to disclosure its potential alignment to the EU Taxonomy before assurance from third party specialists. The EU Taxonomy is organized by economic activities where revenue, operational expenditure and capital expenditure are assessed if Taxonomy-aligned, Taxonomy-eligible, or not eligible. The pivotal criteria to qualify the revenue stream is to have substantial contribution in at least one of the six environmental objectives listed in the Taxonomy without cause significant harm to the criteria not addressed. Moreover, the Taxonomy has safeguards related to human rights, tax policy and fair competition. Nel manufacture electrolysers for hydrogen production, which is classified within EU Taxonomy economic activity 3.2 “Manufacture of equipment for the production and use of hydrogen”. To achieve the criteria for this activity type, Nel’s equipment must provide technology where the hydrogen for the production of which equipment is manufactured complies with the technical screening criteria 1 resulting in life cycle GHG emissions lower than 3 tCO2e/tH2. Life-cycle emissions is defined in the second act as well-to-gate emissions and emissions from transportation type used for delivery of hydrogen. Nel’s electrolyser equipment produces hydrogen from water electrolysis resulting in nearly nil emissions from the utilization of the equipment when connected to renewable energy sources and therefore demonstrating potential to 1 Technical screening criteria in hydrogen economic activity 3.10: The life cycle GHG emissions savings requirement of 73.4 % [resulting in life-cycle GHG emissions lower than 3 tCO2e/tH2] and of 70% for hydrogen-based synthetic fuels relative to a fossil fuel comparator of 94g CO2e/MJ in analogy to the approach set out in Article 25(2) of and Annex V to Directive (EU) 2018/2001 of the European Parliament and of the Council. 62 EU Taxonomy the substantial contribution to the requirement of life-cycle emissions lower than 3 tCO2e/tH2. The GHG emissions in the production of renewable hydrogen is mainly linked to the type of energy source used as electricity to operate the hydrogen production plant and eventual CO2 emitted during transportation of final goods (e.g., fuel, chemicals, fertilizers) to end-users. Nel’s technology for electrolysers have nearly no GHG emissions for hydrogen production and therefore contributes to climate change adaption providing equipment that enable hydrogen production without emitting CO2 in the production process. In addition, Nel provides engineering services in form of FEED (“Front-End Engineering Design”) and pre-FEED studies assisting customers in the development of Engineering, Procurement and Construction (“EPC”) and Balance-of-Plant activities for a complete renewable hydrogen plant. Nel provides FEED studies to projects with installation of Alkaline or PEM electrolysers. These scopes set the boundaries for consulting projects with renewable hydrogen production. Nel concludes that its FEED studies comply with the activity “ 9.1. Engineering activities and related technical consultancy dedicated to adaptation to climate change ”. DO NO SIGNIFICANT HARM (“DNSH”) ANALYSIS Climate change adaptation Nel’s manufacturing facilities are in industrial parks with lease term expiring in between 5 to 7 years. Nel have assessed and confirmed resilience towards different chronic and extreme climate hazards and their future development. Nel does not forecast climate change risks affecting its operation within this timeframe for its locations. It is also possible to reallocate the assets and operations, should the risk become material, to areas with lower climate risk, or negotiation with building owners to implement climate security measures in accordance with most recent climate forecast for the lease term. Facilities located close to the sea have increased risk of flooding in case the precipitation pattern suffers substantial increase in the coming years. For now, the precipitation forecast does not outcome in major risks of flooding, however, Nel has in place an emergency policy for incident handling in case of an acute climate catastrophe. Nel did not identify any significant harm to the climate change adaptation objective in accordance with the criteria described in the EU Taxonomy. It is assessed that all relevant eligible activities comply with the criteria set out in appendix A to annex I of the Climate Delegated Act. Further reasonable assurance will be acquired from external specialist during 2025. Sustainable use and protection of water and marine resources Nel has a Wastewater Treatment policy in place aimed to make the best possible usage of water resources and ensure that its Wastewater Treatment Plants manage water discharge within unharmful levels of contamination in line with local laws, regulations and permits. Nel’s Wastewater Treatment policy is mentioned in the criteria for “pollution prevention and control”. Nel’s QHSE team has a thorough process of water monitoring in place with periodical testing of water samples in laboratorial analysis. Nel does not have operational facilities in water-stressed regions. Nel did not identify any significant harm to the sustainable use and protection of water and marine resources objective in accordance with the criteria described in the EU Taxonomy. It is assessed that all relevant eligible activities comply with the criteria set out in appendix B to annex I of the Climate Delegated Act. Further reasonable assurance will be acquired from external specialist during 2025. Transition to a circular economy Nel’s technologies are developed prioritizing the lifetime of the equipment, as well as applying state of art techniques when applying raw materials and resources onto the manufacturing of equipment. Nel’s electrolysers equipment have a lifetime estimated between 7-10 years. The estimated lifetime is factored in Nel’s Research and Development (“R&D”) process as an important assumption for a net zero benefit to customers and the environment. Nel is constantly working to increase the durability and recyclability of its products. Nel’s Technology department aims to optimize products for highest performance efficiency with reduced consumption of raw materials and minerals, and optimal land utilization. Nel’s products have steel as its primarily raw material which have an active market for recycling. Nel encourages customers to return end-of-life equipment for thorough recycling process and R&D initiatives on the end-of-life cycle supporting a circular economy. Nel did not identify any significant harm to the transition to a circular economy objective in accordance with the criteria described in the EU Taxonomy. It is assessed that all relevant eligible activities comply with the criteria set out in appendix C to annex I of the Climate Delegated Act. Further reasonable assurance will be acquired from external specialist during 2025. Nel ASA I Annual report 2024 63 Pollution prevention and control Nel complies with the environmental laws and regulations in the countries where its facilities are located, working to prevent that air, noise, and water pollution can affect local communities, partners, or its workforce. Nel’s facilities have local environmental policies for management of water discharge and waste treatment. Nel’s QHSE teams implement thresholds below the requirement imposed by local environmental authorities aimed to preventively identify deviations in water quality prior major catastrophes. Nel’s environmental policies require application of best available techniques to mitigate risks of major disasters in a preventive manner. Nel understands that the correct workforce to monitor and prevent harmful release of pollutants is an important part of the process to implement the correct environmental policies and procedures. Nel facilities have an appointed QHSE director reporting to the management about the compliance and efficiency of environmental policies. Nel’s Alkaline and PEM divisions are certified with ISO 14001. Water discharge points have approval from environmental authorities before release. Where relevant, Nel has in place a Wastewater Treatment Plants to manage the water quality prior the discharge points. Nel’s environmental assessment did not identify material soil and noise pollution risks, such that could affect local communities or neighbours outside the industrial parks where our factories are located. Where Nel operates chemical baths for production, a policy for air pollution management is in place ensuring an appropriate process for air filtering. Nel workforces must work with safety equipment to protect from loud machinery or hazardous in the workplace. The waste management process in Nel has in place procedures to log and dispose waste accordingly to the waste type. Local QHSE teams have in place procedures to maximize the recycling of non-hazardous waste. The management of hazardous waste is outsourced with environmental certified partners. Waste Management recommendations are sent to customers, including classification of substances and mixtures in the product based on the Classification, Labelling and Packaging regulations in the EU. Nel did not identify any significant harm to the pollution prevention and control in accordance with the criteria described in the EU Taxonomy. It is assessed that all relevant eligible activities comply with the criteria set out in appendix C to annex I of the Climate Delegated Act. Further reasonable assurance will be acquired from external specialist during 2025. Protection and restoration of biodiversity and ecosystems Nel’s facilities are in industrial parks selected due to their location outside conservation areas, complying with environmental laws and regulations. Nel does not operate in locations within the red list from the International Union for Conservation of Nature’s Red List of Threatened Species (“IUCN”) or in natural areas protected by the UNESCO’s World Heritage list. In addition, the environmental impact assessment performed by the NGI (“Norwegian Geotechnical Institute”) have not identified specific risks to biodiversity and ecosystem in Herøya, Norway. Nel’s factories are in industrial parks preventively located in areas outside of critical biodiversity and ecosystems. Nel did not identify any significant harm the protection and restoration of biodiversity and ecosystems objective in accordance with the criteria described in the EU Taxonomy. It is assessed that all relevant eligible activities comply with the criteria set out in appendix D to annex I of the Climate Delegated Act. Further reasonable assurance will be acquired from external specialist during 2025. Minimum safeguards Human Rights The Norwegian Transparency Act entered into force in July 2022 to establish and promote enterprises’ respect to fundamental human rights and decent working conditions. Nel has in-place a Human Rights Policy reassuring its commitment to the most established Human Rights framework, including UN Guiding Principles on Business and Human Rights and OECD’s guidelines for multinational enterprises, including the principles of the Declaration of the International Labour Organization on Fundamental Principles and Rights at Work and the International Bill of Human Rights, both in our own operations and supply chain. Nel’s supply chain teams, with support from the compliance team, carefully screen suppliers and business partners before engaging in commercial partnerships. Nel’s integrity due diligence check is a continuous process aimed to identify risks and implement suitable measures to prevent adverse impacts based on the most established Human Right’s frameworks. The complete list of Human Right’s framework can be found in the Human Right’s policy available in the Ethics and Compliance page of Nel’s website. Nel believes to be compliant with the minimum safeguard for Human Rights aligned to the EU taxonomy. Further reasonable assurance will be acquired from external specialist during 2025. 64 EU Taxonomy Corruption Nel Anti-Bribery and Corruption Policy sets out requirements and responsibilities relating to the prevention of bribery and corruption in Nel’s business dealings. Employees and representatives are obliged to follow the strictest anti-bribery and corruption standards when making their business decisions. Nel does not tolerate corruption in any form, and we are committed to conduct our business in an honest and ethical manner in accordance with applicable law. The purpose of our Anti-Bribery and Corruption Policy is to prevent bribery and corruption throughout Nel’s business activities, and it applies to all employees and business partners working for or on behalf of Nel. To foster a culture of zero tolerance against bribery and corruption, Nel has in- place an annual wheel of compliance training’s that includes modules to increase awareness and prevention in this area. Nel also have available an ethics hotline and a whistleblowing channel where internal and external stakeholders can anonymously report the cases of concern for investigation. Nel believes to be compliant with the minimum safeguard for corruption aligned to the EU taxonomy. Further reasonable assurance will be acquired from external specialist during 2025. Ta x Nel has an international presence delivering projects in Europe, Asia, Africa, and North America. Nel adopts a responsible approach to taxation implementing its Tax Policy in compliance with the local tax regulation and where applicable, aligned with OECD Transfer Pricing guidelines. In the fiscal year that ended 31 December 2024, Nel did not operate in tax heavens nor countries where the domestic legislation is not consistent with the OECD Transfer Pricing guidelines. Moreover, Nel has a centralized tax accounting team implementing tax risk strategies and processes aimed at mitigating the risk of non-compliance with tax legislation of countries where Nel’s holds employment, revenue, or operations. Nel believes to be compliant with the minimum safeguard for tax aligned to the EU taxonomy. Further reasonable assurance will be acquired from external specialist during 2025. Fair Competition Nel carries out its activities in a manner consistent with all applicable competition laws and regulations, complying with the requirements in the jurisdictions of commercial activity. Nel requires all employees to read and comply with its Code of Conduct which, inter alia, addresses fair competition in such a way to foster in the corporate culture the best behaviour towards business practice. Management prohibits all type of anti-competitive practices, including agreements on prices between competitors, bid rigging/market sharing, or to limit or restrict supply to customers. Nel believes to be compliant with the minimum safeguard for fair competition aligned to the EU taxonomy. Further reasonable assurance will be acquired from external specialist during 2025. EU TAXONOMY – ACCOUNTING POLICY Turnover EU Taxonomy eligible Nel is a manufacturer of PEM Electrolysers and Alkaline Water Electrolysers (collectively “Electrolysers”) for production of renewable hydrogen. The technology of these equipment enables the climate mitigation with supply of renewable hydrogen. These equipment are EU Taxonomy eligible under activity 3.2 (applying technical screening criteria in 3.10) due to its substantial contribution to the climate mitigation of energy-intense industries: • Manufacture of equipment to produce renewable hydrogen (“Electrolyser equipment”) Nel provides consulting hours to design the concept of renewable hydrogen projects. The income from engineering consulting hours is covered within EU Taxonomy under activity 9.1 Engineering activities and related technical consultancy dedicated to adaptation to climate change dedicated to adaptation to climate change: • Engineering consulting hours (“FEED Concept Studies”) dedicated for renewable hydrogen EU Taxonomy non-eligible Nel has not assessed whether related revenue to equipment sales is eligible within economic activity 3.2, therefore, reported as non-eligible in 2024. • Framework termination fee • Technology licence agreement Turnover numerator The turnover numerator has been determined excluding non- operational activities listed as eligible by the EU Taxonomy. For the reporting period ended as of 31 December 2024, Nel scoped out income from government grants for technology research and development, research study papers and other income totalling NOK 105 million. Nel ASA I Annual report 2024 65 Proportion of turnover from products or services associated with taxonomy-aligned economic activities SUBSTANTIAL CONTRIBUTION CRITERIA DNSH CRITERIA Absolute turnover Proportion of turnover Minimal safe- guards Taxonomy aligned proportion of tunover Category (enabling activity) mNOK % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N Percent E A: TAXONOMY-ELIGIBLE ACTIVITIES A.1 Environmentally sustainable activities (Taxonomy-aligned) 3.2 Manufacture of equipment for production and use of green hydrogen 1 194 139 994 85,9% 100% - - - - - Y Y Y Y Y Y Y 85,9% E 9.1 FEED Concept Studies 63 013 991 4,5% 4,5% E Total turnover of Taxonomy-eligible activities 1 257 153 985 90,4% 90,4% 90,4% B. TAXONOMY NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-noneligible activities (B) 132 755 015 9,6% Total (A+B) 1 389 909 000 100 % 66 EU Taxonomy Capital expenditure (CapEx) and operating expenditure (OpEx) The EU Taxonomy defines the methods for calculating Taxonomy-aligned proportions (KPIs). By analogy, Nel allocates capital and operating expenditure that can be aligned with EU taxonomy aligned with sales of the activity or represent individual capital expenditure that is not associated with an activity intended to be marketed under the delegated regulation of the EU Taxonomy. Operating expenditure (OpEx) The denominator for operating expenditure is determined with nominal value of the IFRS expenses for research and development incurred on development of technologies aligned with the EU Taxonomy, or expenses for building renovation, short-term lease, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment to ensure the continued and effective functioning of such assets. This approach scopes out of the analysis expenditures directly related to the sale of equipment or services and depreciation of assets to avoid double counting of expenses incurred to generate income or from expenditure previously reported within the capital expenditure KPI. The numerator for operating expenditure includes expenditure related to assets or processes associated with Taxonomy-aligned economic activities, including training and other human resources adaptation needs, and research and development expenditure not capitalizable under the IFRS requirements. Nel does not include in the numerator corporate expenses directly linked to sales of equipment or services, administrative activities, corporate expenses, travelling expenses or meals and entertainment. Although these expenditures have indirect contribution to the development of technologies and income eligible in accordance with the EU Taxonomy, Nel understands that these expenditures may not be allocated to specific assets as the benefits from administrative efforts are seen pervasively in the business. Nel ASA I Annual report 2024 67 Proportion of OpEx from products or services associated with taxonomy-aligned economic activities SUBSTANTIAL CONTRIBUTION CRITERIA DNHS CRITERIA Absolute OpEx Proportion of OpEx Minimal safeguards Taxonomy aligned proportion of tunover Category (enabling activities) mNOK % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N Percent E A: TAXONOMY-ELIGIBLE ACTIVITIES A.1 Environmentally sustainable activities (Taxono- my-aligned) 3.2 Manufacture of equipment for the production and use of hydrogen 236 484 949 52 % 100 % - - - - - Y Y Y Y Y Y Y 52 % E 9.1 FEED Concept Studies 25 576 179 6 % 100 % - - - - - Y Y Y Y Y Y Y 6 % E Total OpEx of Taxonomy-eligible activities 262 061 128 58 % 58 % 58 % B. TAXONOMY NON-ELIGIBLE ACTIVITIES OpEx of Taxonomy-noneligible activities (B) 191 925 089 42 % Total (A+B) 453 986 217 100 % ¹ Front-end Engineering Studies for Hydrogen plant projects 68 EU Taxonomy Capital expenditure (CapEx) The denominator of the Capital Expenditure KPI covers additions to Property, Plant and Equipment and intangible assets (including internally generated intangible assets) during the financial year considered before depreciation, amortisation revaluations and impairments. The denominator includes increases in right-of-use assets for leases accounted for in accordance with IFRS 16. The denominator covers additions to tangible and intangible assets resulting from business combinations. The additions should reconcile to intangible assets in note 3.1, property, plant and equipment in note 3.2 and right-of-use assets in note 3.3. The numerator of the Capital Expenditure KPI equals the capital expenditure included in the denominator that is related to assets or processes associated with economic activities aligned with the EU Taxonomy. The numerator includes capitalised development expenditures disbursed on Nel’s taxonomy eligible activities, such as purchase of production tools and manufacturing equipment for expansion of production capacity in Herøya, Norway and Wallingford, United States, and costs capitalised for development and quality enhancement of product related technologies. . Nel ASA I Annual report 2024 69 Proportion of CapEx from products or services associated with taxonomy-aligned economic activities SUBSTANTIAL CONTRIBUTION CRITERIA DNHS CRITERIA Absolute CapEx Proportion of CapEx Minimal safeguards Taxonomy aligned proportion of tunover Category (enabling activities) mNOK % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N Percent E A: TAXONOMY-ELIGIBLE ACTIVITIES A.1 Environmentally sustainable activities (Taxono- my-aligned) 3.2 Manufacture of equipment for the production and use of hydrogen 645 437 076 96 % 100 % - - - - - Y Y Y Y Y Y Y 96 % E Total CapEx of Taxonomy-eligible activities 645 437 076 96 % 96 % 96 % B. TAXONOMY NON-ELIGIBLE ACTIVITIES CapEx of Taxonomy-noneligible activities (B) 30 302 924 4 % Total (A+B) 675 740 000 100 % 70 RESPONSIBILITY STATEMENT We confirm that, to the best of our knowledge, the financial statements for the period from 1 January 2024, up to and including 31 December 2024, have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the company, and that the directors’ report includes a fair review of the development and performance of the business and the position of the company as a whole together with a description of the principal risks and uncertainties the company faces. OSLO, 25 FEBRUARY 2025 THE BOARD OF DIRECTORS Ole Enger Beatriz Malo de Molina Charlotta Falvin Chair Board member Board member (Electronically signed) (Electronically signed) (Electronically signed) Arvid Moss Hanne Blume Tom Røtjer Board member Board member Board member (Electronically signed) (Electronically signed) (Electronically signed) Jens Bjørn Staff Håkon Volldal Board member CEO (Electronically signed) (Electronically signed) 72 Corporate governance 5 Board of Directors’ report in relation to the Norwegian Code of practice for corporate governance 1. Report on corporate governance The Board of Directors (also, the board) and management of Nel are committed to maintaining high ethical standards and promoting good corporate governance. The company believes that good corporate governance builds confidence among shareholders, employees, partners, customers, and other stakeholders, and thereby supports maximum value creation over time. The equal treatment of all shareholders lies at the heart of the company’s corporate governance policy. Nel’s Corporate Governance Report is based on the Norwegian Code of Practice for Corporate Governance (“the code” from NUES), dated 17 October 2018 and its amendments. The code is available on www.nues.no Observance of the recommendations is based on the “comply or explain” principle. Nel’s board and management have resolved to follow the recommendations of the Code to the extent deemed reasonable in view of the company’s size and stage of development. 2. Business Nel ASA’s business purpose is defined in the company’s Articles of Association, section 3: “The Company’s business is to conduct business, invest in and/or own rights in production and sale of hydrogen plants, hydrogen fueling stations, or other related areas.” Nel is a leading pure play hydrogen technology company with a global footprint, developing optimal solutions to produce, store and distribute hydrogen from renewable energy. Our hydrogen solutions cover important parts of the value chain: enabling decarbonization of industries such as cement, steel and fertilizer production, while also providing fuel cell electric vehicles with the same fast fueling and long driving range as fossil-fuelled vehicles - without any emissions. Nel is committed to create value for shareholders in a sustainable manner. 3. Capital and dividend The company’s registered share capital as of 31 December 2024 consisted of 1 671 325 304 shares, including both outstanding shares and treasury shares, with a par value of NOK 0.20 per share. The company has in place a shareholder return policy. The distribution of dividends and repurchase of shares are subject to the discretion of the Board of Directors at Nel ASA. Nel ASA is currently in a growth phase, with substantial investments directed towards capacity expansions and organizational development. Considering the company’s state, shareholder returns in the form of dividends or share buy-backs are currently not prioritized. 4. Equal treatment of shareholders and transactions with related parties All shares in Nel carry one vote, and the shares are freely transferable. The company has only one share class, and all shareholders have equal rights. Existing shareholders are given priority in the event of share capital increases unless special circumstances warrant deviation from this principle. At the annual general meeting on 23 April 2024, the board was granted authorisation to increase the share capital with up to NOK 33 426 506 through one or several capital increases. In addition, a separate authorisation to increase the share capital of up to NOK 3 342 651 for issue of shares in connection with incentive programs for employees. The board has also been granted authorisation to acquire shares in Nel on behalf of the company, for a total nominal value not exceeding 9% of the share capital at any given time. Transactions between the company and related parties, including members of the board or persons employed by the company either personally or through companies belonging to related parties, must be based on terms achievable in an open, free and independent market, or on a third-party valuation. Nel ASA I Annual report 2024 73 Major transactions with related parties must be approved by the general meeting. 5. Free transferability The company’s shares are listed on the Oslo Stock Exchange under the ticker “NEL” and are freely transferable. The Articles of Association contain no restrictions on transferability. 6. General meeting Shareholders can exercise their rights at general meetings, and the company wants general meetings to be a meeting place for shareholders and the board. The company will seek to enable as many shareholders as possible to participate in general meetings. Meeting documents will be published on the company’s website no later than 21 days before a general meeting. The company endeavours to ensure that meeting documents are sufficiently detailed to enable shareholders to take a view on all matters to be considered. The deadline for notifying attendance at a general meeting is set as close to the meeting as possible. Shareholders who are unable to participate themselves may vote by proxy. The proxy form will be designed so that it can be used to vote on all matters up for consideration, and on candidates for election. In 2024, the annual general meeting was held on 23 April and 11.84 percent of the total share capital was represented. The annual general meeting was conducted digitally, with a live webcast and electronic voting on each item. The company encourages board members and nomination committee to attend general meetings. The external auditors are also invited to attend. In accordance with the articles of association, general meetings are chaired by the board chair if no-one else is elected to do so. Minutes of general meetings are published in the form of stock exchange notifications and on the company’s website. 7. Nomination committee In accordance with Nel’s articles of association, the general meeting shall establish a nomination committee comprising of three to five members. These must be shareholders or representatives of shareholders. The nomination committee evaluates and proposes board members to the general meeting and makes recommendations on director remuneration. No board members or representatives of company management are members of the nomination committee. Nomination committee members are elected for a one-year term. At the general meeting on 23 April 2024, the following persons were elected to the nomination committee and serve until the 2025 annual general meeting: • Eivind Sars Veddeng, chair • Mai-Lill Ibsen, member • Andreas Poole, member • Nanna Sjaastad, member 8. Board composition and independence The board members and chair of the board are elected by the general meeting. The board’s composition is designed both to represent the interests of all shareholders and meet the company’s need for expertise, capacity, and balanced decision-making. The board should function as an effective collegiate body. The board is elected for a one-year term, and board members may stand for re-election. The CEO is not a member of the board. According to its articles of association, Nel’s board must have between four and seven members. At the annual general meeting 23 April 2024, Ole Enger, chair of the board, Hanne Blume, Beatriz Malo de Molina, Charlotta Falvin, Tom Røtjer, Arvid Moss and Jens Bjørn Staff were all re-elected to the board. Each of the board members are considered independent from the company’s day-to-day management. The board is qualified to assess the day-to-day management and significant contracts entered into by the company on an independent basis. See also note 7.4 (group) and note 12 (parent company) for transactions with related parties. 9. The work of the Board A plan for the boards’ work is prepared every year. The board has also adopted instructions for the board and CEO, detailing the work and responsibilities of the board and CEO, respectively. The board ensures the company’s business is properly organised and that plans and budgets are prepared. The board’s plans and rules of procedure ensure the board is kept informed of the company’s financial position and that the business, asset management, and accounts are subject to controls. 74 Corporate governance Nel’s Code of Conduct includes guidelines for how conflicts of interests that may arise should be handled with. The code applies to all members of the board and employees of Nel. The board are not aware of any transactions that were material between the group and its shareholders, board members, executive management or related parties in 2024, save any listed under item 8 independence. The chair of the board ensures the proper functioning of the board. The chair of the board leads the board meetings and prepares board matters in cooperation with the CEO. The CFO keeps minutes of board meetings, which are approved and signed by all board members. In addition to ordinary board meetings, annual strategy meetings are held, devoted to the in- depth assessment of major challenges and opportunities for the company. The board manages the company’s strategic planning and assesses its strategy regularly. The board evaluates its composition and the board work at least once per year. The evaluation may also cover the way in which the board functions, at both individual and group level, in relation to the objectives that have been set for its work. The evaluation reports are presented to the nomination committee. In 2024, the board conducted 12 board meetings with 100% meeting attendance. The meetings were held at group headquarters in Oslo, one meeting at the Norwegian subsidiary and/or virtual meetings due to travel convenience, and also treated a number of issues by circulation of documents. The company has an audit committee consisting of 2 members from the board, which is governed by the Norwegian Public Limited Liability Companies Act. The audit committee assist the board in exercising its oversight responsibility with respect to the integrity of the company’s financial statements, financial reporting processes and internal controls, risk management, compliance system and the company’s environmental, social and governance (“ESG”) reporting. With the broader mandate, the committee is referred to as Board Audit, Risk and Sustainability Committee. The members of the audit committee are appointed by and from the members of the board, and currently consist of Beatriz Malo de Molina as chair and Charlotta Falvin as member. Current members are independent of the company’s management. The audit committee conducted 7 meetings with 100% meeting attendance in 2024. The company has a remuneration committee, which consist of 2 members from the board. The committee shall assist the board in exercising its oversight responsibility, in particular to compensation matters pertaining to the CEO and other members of the executive management, compensation issues of principal importance and strategic people process in the company, in particular related to succession, recruitment, talent and diversity and inclusion. The committee currently consist of Hanne Blume as chair and Ole Enger as member. The committee has held 4 meeting with 100% meeting attendance in 2024. The committee was also involved in discussions related to the recruitment of strategic positions for Nel and key organisational adjustments through the year. 10. Risk management and internal controls Risk management and internal controls are important to Nel. They enable the company to achieve its strategic objectives, and are an integral part of management decision- making processes, the organisational structure, and internal procedures and systems. Nel’s enterprise risk management process is value driven and aims to identify, assess and manage risk factors that could impact the value of the company. The process is to mitigate potential damages and loss, and to explore business opportunities. The enterprise risk management function has the responsibility to facilitate the legal and operational risk management activities and develop risk policies and tools as well as maintaining an aggregated view of risk exposure. The function reports to the CFO, with active involvement by Nel’s General Counsel. Risk management and internal control requirements have been evaluated by management and the board, and a set of appropriate procedures and our established framework is inspired by the Committee of Sponsoring Organisations of the Treadway Commission (COSO) ERM framework and the ISO 31000 risk management standard. The materiality of each risk factor is determined by assessing the likelihood and consequence. Risks are evaluated to determine whether the level is acceptable or unacceptable and to prioritise those that have the greatest potential to impact our value. We implement mitigating strategies to ensure that each risk is optimally managed. Risk mitigation plans are based on evaluations of the cost of control and potential impacts relative to the benefits of reducing the risk. The operating segments are responsible to maintain business continuity plans. The post-mitigation residual risks are continually monitored by the operating segments. The mitigation strategies, residual risks and risk appetite are reviewed and updated by the executive management during bi-yearly dedicated business review meetings. The board believes that expressing the company’s risk appetite within important areas of its business activity helps to convey how the company approaches and evaluates risk to investors, customers and Nel ASA I Annual report 2024 75 society at large. The audit committee performs ongoing evaluations of the Company’s Enterprise Risk Management process. In this context, emphasis is also given to ensuring that the company operates in accordance with accepted ethical guidelines and values, including guidelines on how employees can communicate matters relating to illegal or unethical behaviour on the company’s part to the board. Nel believes that its values and control procedures meet requirements found within the environmental, social, and governance domain, and are proportionate to the scope and nature of its business. Nel’s regular business activities entail exposure to various types of risk. The company proactively manages such risks, and the board regularly analyses its operations and potential risk factors and takes steps to reduce risk exposure. Nel places a strong emphasis on quality assurance, and has quality systems implemented, or under implementation, in line with the requirements applicable to its business operations. The full range of risk factors is discussed in more detail in the notes 6.1-6.4 to the annual accounts. The company’s financial reporting complies with the laws and regulations applicable to companies listed on the Oslo Stock Exchange. The board reviews the company’s financial position frequently through reporting and reviews at board meetings and reviews the financial statements at the end of every quarter. At least once per year, the board assesses the company’s risk profile by reference to strategic, operational, and transactional factors. As a listed company, Nel has a special responsibility relating to the insider trading rules, the provision of information, and share trading. The company has guidelines to ensure board members, senior management, and other insiders comply with relevant legislation and rules relating to insider trading in the company’s shares. 11. Board remuneration Nel’s general meeting determines the remuneration of the board based on a recommendation by the nomination committee. Board remuneration must reflect the board’s expertise and time investment, as well as the complexity of the business and the fact that Nel is a listed company. Remuneration takes the form of a fixed annual amount and is not tied to the company’s performance or share price. An assessment regarding the independence of the directors and chair of the board is set out in section 8 above. The board remuneration for 2024 is outlined in note 7.4 to the annual accounts. 12. Remuneration of senior management The board prepares guidelines on the remuneration of the company’s senior management. These guidelines, as well as details of the remuneration packages and incentive schemes of the CEO and other senior executives, are set out in the note 7.2 to the annual accounts. The guidelines on the remuneration of senior management must be submitted to the general meeting. The remuneration policy was approved by the shareholders at the general meeting held in 2021. The board considers that the remuneration paid to senior management reflects market practice and that the remuneration packages do not include any unreasonable terms, for example in connection with resignation or termination of employment. In accordance with section 6-16b of the Norwegian Public Limited Liability Companies Act, the board has prepared a report on salary and other remuneration to the executive management. The remuneration report for 2024 will be presented to the general meeting in 2025 for an advisory vote. The remuneration report will become available during March 2025, on www.nelhydrogen.com. The shareholdings of executive management are outlined in note 7.2 (group). 13. Information and communication The company publishes a financial calendar on an annual basis, which includes the dates of general meetings and dates for the presentation of interim reports. Presentation of the quarterly reports are broadcasted through webcasts. Press releases and stock exchange notifications are typically posted on the company’s website, www.nelhydrogen.com. All stock exchange notifications are also available at www.newsweb.no. The company complies with all applicable disclosure laws and practice, including equal treatment requirements. The ability to provide information about the company in addition to published reports is restricted under stock exchange regulations. Inside information is only released to persons other than primary insiders when the company considers it necessary, and then only in accordance with a system of insider declarations and insider lists. The insider lists are maintained by the CFO. 76 Corporate governance Notice to general meetings of shareholders is sent directly to shareholders with known addresses unless they have consented to receive these documents electronically. All information sent to the shareholders is made available on www.nelhydrogen.com when distributed. Nel wishes to maintain a constructive, open dialogue with its shareholders, analysts, and the stock market in general. The company holds regular presentations for investors, analysts, and shareholders. The company’s CEO is responsible for external communication and investor relations. The CEO and chair of the board are both authorised to speak on behalf of the company and may delegate their authority in this regard as they consider appropriate. 14. Company takeovers In the event of a takeover situation, the company’s board and management will endeavour to ensure the equal treatment of shareholders. The board will ensure that shareholders are given information and time to evaluate any bona fide bid and will endeavour to provide a recommendation to shareholders as to whether or not the bid should be accepted. The board and management will help ensure that there are no unnecessary disruptions to the business in the event of a takeover. Moreover, such a situation will be governed by the provisions applicable to listed companies. 15. Auditor The external auditor attends the board meeting at which the annual financial statements are approved. As part of the approval, the board should at least once a year review the company’s internal control procedures with the external auditor, including weaknesses identified by the auditor and proposals for improvement. The external auditor participates in all meetings of the audit committee. The auditor presents an annual audit plan to the audit committee. The board has adopted guidelines on management’s use of the auditor for services other than auditing. The Public Audit Act entered into force on January 1, 2021. Extended tasks including purchase of non-audit services and follow-up of the external auditor are considered by the audit committee. Non- audit services are subject to pre-approval as defined by the audit committee. The fee payable to the auditor is specified in note 7.3 to the annual accounts and is categorised under the items statutory audit, attestation and non-auditing services. The board submits proposals regarding the fees payable for the statutory audit to the general meeting for approval. Nel ASA I Annual report 2024 77 OSLO, 25 FEBRUARY 2025 THE BOARD OF DIRECTORS Ole Enger Beatriz Malo de Molina Charlotta Falvin Chair Board member Board member (Electronically signed) (Electronically signed) (Electronically signed) Arvid Moss Hanne Blume Tom Røtjer Board member Board member Board member (Electronically signed) (Electronically signed) (Electronically signed) Jens Bjørn Staff Håkon Volldal Board member CEO (Electronically signed) (Electronically signed) 78 6 Consolidated financial statements 2024 Nel group Nel ASA I Annual report 2024 79 Consolidated statement of comprehensive income ...................................................................................................................................... 80 Consolidated statement of financial position as of 31 December .............................................................................................................. 81 Consolidated statement of cash flows ............................................................................................................................................................... 83 Consolidated statement of changes in equity ................................................................................................................................................. 84 Note 1.1 Corporate information ................................................................ ....................................................................................................... 86 Note 1.2 Basis of preparation ............................................................................................................................................................................ 86 Note 1.3 Significant accounting policies......................................................................................................................................................... 87 Note 1.4 Changes in accounting policies ................................................................................................................................ ....................... 88 Note 1.5 Significant accounting judgements and estimation uncertainty ............................................................................................. 88 Note 2.0 Discontinued operation ................................................................ ..................................................................................................... 88 Note 2.1 Revenue from contracts with customers ................................................................................................................................ ....... 94 Note 2.2 Other income ................................................................ ....................................................................................................................... 98 Note 2.3 Segment information ......................................................................................................................................................................... 98 Note 2.4 Raw materials ....................................................................................................................................................................................... 101 Note 2.5 Personnel expenses ............................................................................................................................................................................ 101 Note 2.6 Other operating expenses ................................................................................................................................................................ 104 Note 2.7 Finance income and cost .................................................................................................................................................................. 104 Note 2.8 Income taxes ........................................................................................................................................................................................ 105 Note 2.9 Earnings per share .............................................................................................................................................................................. 107 Note 3.1 Intangible assets ................................................................ .................................................................................................................. 108 Note 3.2 Property, plant and equipment ....................................................................................................................................................... 115 Note 3.3 Leases .................................................................................................................................................................................................... 116 Note 3.4 Investments in associated companies and joint ventures ......................................................................................................... 120 Note 3.5 Non-current financial assets ............................................................................................................................................................. 121 Note 4.1 Inventories ............................................................................................................................................................................................ 122 Note 4.2 Trade receivables ................................................................................................................................................................................. 122 Note 4.3 Prepaid expenses and other current assets.................................................................................................................................. 123 Note 4.4 Cash and cash equivalents ............................................................................................................................................................... 123 Note 5.1 Share capital and shareholders ....................................................................................................................................................... 124 Note 5.2 Long-term debt ................................................................ ................................................................................................................... 125 Note 5.3 Deferred income ................................................................................................................................................................................. 125 Note 5.4 Other liabilities ..................................................................................................................................................................................... 126 Note 5.5 Provisions .............................................................................................................................................................................................. 126 Note 6.1 Operational risk factors ..................................................................................................................................................................... 127 Note 6.2 Financial risk factors ........................................................................................................................................................................... 130 Note 6.3 Market risk factors .............................................................................................................................................................................. 132 Note 6.4 Climate-related risks and opportunities ........................................................................................................................................ 133 Note 6.5 Hedge accounting .............................................................................................................................................................................. 133 Note 6.6 Financial instruments .......................................................................................................................................................................... 136 Note 6.7 Contractual commitments and commitments for future investments ................................................................................. 137 Note 7.1 Composition of the group ................................................................................................................................................................ 138 Note 7.2 Executive management remuneration .......................................................................................................................................... 138 Note 7.3 External audit remuneration ............................................................................................................................................................. 139 Note 7.4 Related parties ..................................................................................................................................................................................... 140 Note 7.5 Events after the balance sheet date ................................................................................................................................ ............... 141 Note 7.6 Going concern ..................................................................................................................................................................................... 141 80 Consolidated financial statements Consolidated statement of comprehensive income (Amounts in NOK thousands) Nel group (01.01-31.12) NOTE 2024 2023 1 Revenue from contracts with customers 2.1, 2.3 1 389 909 1 349 802 Other income 2.2 105 024 77 341 Total revenue and income 1 494 933 1 427 143 Raw materials 2.4 503 976 715 136 Personnel expenses 2.5 645 586 545 660 Depreciation and amortisation 3.1, 3.2 216 486 170 268 Impairment of tangible and intangible assets 3.1, 3.2 0 1 424 Other operating expenses 2.6 518 313 438 175 Total operating expenses 1 884 361 1 870 663 Operating loss -389 428 -443 520 Finance income 2.7 132 076 173 755 Finance costs 2.7 -6 833 -300 787 Share of profit (loss) from associates and joint ventures 3.4 0 -3 714 Pre-tax income (loss) -264 185 -574 266 Tax expense (-income) 2.8 -6 554 -8 162 Net income (loss) from continuing operation -257 631 -566 104 Net income (loss) from discontinued operation 2.0 13 289 -289 092 Net income (loss) attributable to equity holders of the company -244 342 -855 196 OTHER COMPREHENSIVE INCOME THAT ARE OR MAY SUBSEQUENTLY BE RECLASSIFIED TO PROFIT OR LOSS (NET OF TAX) Currency translation differences 92 554 -1 253 Cash flow hedges, effective portion of changes in fair value 6.5 -52 108 -18 504 Cash flow hedges, reclassified 6.5 43 244 34 417 Comprehensive income attributable to equity holders of the company -160 652 -840 536 Earnings per share (NOK) attributable to Nel shareholders 2.9 -0.15 -0.52 Diluted earnings per share (NOK) attributable to Nel shareholders 2.9 -0.15 -0.52 The accompanying notes are an integral part of the consolidated financial statements. 1 The comparative information is restated due to a discontinued operation, refer to note 2.0 for additional information. Nel ASA I Annual report 2024 81 (Amounts in NOK thousands) Nel group ASSETS NOTE 2024 2023 NON-CURRENT ASSETS Technology 3.1 617 420 631 521 Customer relationship 3.1 0 8 220 Goodwill 3.1 411 753 375 305 Property, plant and equipment 3.2, 3.3 1 664 079 1 305 678 Investments in associates and joint ventures 3.4 100 100 Non-current financial assets 3.5 203 169 159 259 Total non-current assets 2 896 521 2 480 083 CURRENT ASSETS Inventories 4.1 531 748 703 990 Trade receivables 4.2 700 679 812 407 Contract assets 2.1 24 155 49 767 Other current assets 4.3 275 529 447 342 Cash and cash equivalents 4.4 1 875 580 3 363 431 Total current assets 3 407 691 5 376 937 TOTAL ASSETS 6 304 212 7 857 020 The accompanying notes are an integral part of the consolidated financial statements. Consolidated statement of financial position as of 31 December 82 Consolidated financial statements (Amounts in NOK thousands) Nel group EQUITY AND LIABILITIES NOTE 2024 2023 EQUITY Share capital 5.1 334 265 334 265 Treasury shares 5.1 -84 -84 Share premium 5.1 7 598 563 8 661 090 Other capital reserves 5.1 68 647 65 928 Retained earnings 5.1 -3 242 343 -2 998 001 Other components of equity 5.1 218 228 134 538 Total equity 4 977 276 6 197 736 NON-CURRENT LIABILITIES Deferred tax liabilities 2.8 34 813 38 436 Long-term debt 5.2 0 22 458 Lease liabilities 3.3 215 523 199 136 Deferred income 5.3 69 279 66 243 Other non-current liabilities 5.4 5 263 4 860 Total non-current liabilities 324 878 331 133 CURRENT LIABILITIES Trade payables 110 742 204 863 Lease liabilities 3.3 44 479 38 067 Contract liabilities 2.1 583 392 715 288 Other current liabilities 5.4 173 795 238 216 Provisions 5.5 89 650 131 717 Total current liabilities 1 002 058 1 328 151 Total liabilities 1 326 936 1 659 284 TOTAL EQUITY AND LIABILITIES 6 304 212 7 857 020 The accompanying notes are an integral part of the consolidated financial statements. Consolidated statement of financial position as of 31 December Nel ASA I Annual report 2024 83 (Amounts in NOK thousands) Nel group NOTE 2024 2023 1 CASH FLOWS FROM OPERATING ACTIVITIES Pre-tax income (loss) -264 185 -574 266 Net income (loss) from discontinued operation 2.0 13 289 -289 092 Adjustments for interest expense 2.7 16 481 15 461 Depreciation, amortisation and impairment 3.1, 3.2 216 486 225 785 Change in fair value equity instruments 2.7 2 650 342 213 Equity-settled share-based compensation expense 2.5 2 766 4 030 Change in provisions 5.5 3 044 -21 723 Change in inventories 4.1 -110 057 -199 395 Change in trade receivables and contract balances 2.1, 4.2 84 123 -262 120 Change in trade payables -68 382 3 119 Changes in other balances 4.3, 5.4 -137 797 86 320 Net cash flow from operating activities -241 581 -669 668 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment 3.2 -534 230 -573 589 Payments for capitalised technology 3.1 -146 076 -166 242 Purchase of other investments 3.5, 4.3 -137 918 -92 219 Investments in associates and joint ventures 0 -973 Proceeds from sales of other investments 3.5, 4.3 236 314 186 211 Net cash flow from investing activities -581 910 -646 812 CASH FLOWS FROM FINANCING ACTIVITIES Interests paid 2.7 -16 481 -15 461 Gross cash flow from share issues 5.1 0 1 609 200 Transaction costs from share issues 5.1 0 -24 696 Dividends paid (spin-off) 2.0 -625 420 - Payment of lease liabilities 3.3 -23 328 -25 773 Payment of non-current liabilities -759 -1 533 Net cash flow from financing activities -665 988 1 541 737 Effect of exchange rate changes on cash 1 628 -376 Net change in cash and cash equivalents -1 487 851 224 881 Cash balance as of 01.01 4.4 3 363 431 3 138 550 Cash balance as of 31.12 4.4 1 875 580 3 363 431 The accompanying notes are an integral part of the consolidated financial statements. 1 2023 has not been restated while Consolidated statement of comprehensive income has been restated due to a discontinued operation, refer to note 2.0 for additional information. Consolidated statement of cash flows 84 Consolidated financial statements (Amounts in NOK thousands) Nel group SHARE CAPITAL TREASURY SHARES SHARE PREMIUM OTHER RESERVE RETAINED- EARNINGS CURRENCY TRANSLATION DIFFERENCE HEDGING RESERVE TOTAL EQUITY Equity as of 31.12.2022 312 665 -84 7 098 186 61 768 -2 142 805 128 512 -8 634 5 449 608 Total comprehensive income -855 196 -1 253 15 913 -840 536 Increase of capital 2023 21 600 1 562 904 1 584 504 Options and share program 4 160 4 160 Equity as of 31.12.2023 334 265 -84 8 661 090 65 928 -2 998 001 127 259 7 279 6 197 736 Total comprehensive income -244 342 92 554 -8 864 -160 652 Increase of capital 2024 0 Options and share program 2 719 2 719 Distribution of shares in Cavendish Hydrogen ASA (Note 2.0) -1 062 527 -1 062 527 Equity as of 31.12.2024 334 265 -84 7 598 563 68 647 -3 242 343 219 813 -1 585 4 977 276 Consolidated statement of changes in equity OSLO, 25 FEBRUARY 2025 THE BOARD OF DIRECTORS Ole Enger Beatriz Malo de Molina Charlotta Falvin Chair Board member Board member (Electronically signed) (Electronically signed) (Electronically signed) Arvid Moss Hanne Blume Tom Røtjer Board member Board member Board member (Electronically signed) (Electronically signed) (Electronically signed) Jens Bjørn Staff Håkon Volldal Board member CEO (Electronically signed) (Electronically signed) 86 Notes to the consolidated financial statements 2024 1.1 Corporate information Nel ASA (Nel) is a global, dedicated hydrogen company, delivering optimal solutions to produce, store and distribute hydrogen from renewable energy. The company is domiciled in Norway. The company specializes in electrolyser technology for production of renewable hydrogen. Nel’s product offerings are key enablers for a renewable hydrogen economy, making it possible to decarbonize various industries such as transportation, refining, steel, and ammonia. The group has two divisions: Nel Alkaline Electrolyser and Nel PEM Electrolyser. The ultimate parent of the group Nel ASA (org. no 979 938 799) was formed in 1998, incorporated in Norway. Nel ASA is a Norwegian public limited liability company listed on the Oslo Stock Exchange. The group’s head office is in Karenslyst allé 49, N-0279 Oslo, Norway. 1.2 Basis of preparation The group’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). Accounts are based on the principle of historical cost, except for certain financial instruments, which are measured at fair value. The consolidated financial statements are presented in Norwegian kroner (NOK). The functional currency of Nel ASA is NOK. All values are rounded to the nearest thousand, unless when indicated otherwise. As a result of rounding differences numbers or percentages may not add up to the total. The financial statements are prepared based on a going concern assumption. The consolidated financial statements were approved by the Board of Directors and the Chief Executive Officer on February 25, 2025. DEFINITION AND APPLYING OF MATERIALITY JUDGEMENTS IN PREPARATION OF THESE CONSOLIDATED FINANCIAL STATEMENTS These consolidated financial statements aim to provide useful financial information which increase the understandability of Nel and its performance. To meet the information needs of its primary users, Nel apply materi¬ality judgments which are necessary to meet this objective, and Nel has made such judgments related to recognition, measurement, presentation and disclosures. Within these consolidated financial statements information is considered material if omitting, misstating or obscuring it could reasonably be expected to influence decisions taken by primary users based on the information provided. In practice this will lead to Nel omitting certain information if it is assessed it will obscure the material information. The materiality judgments are reassessed at each reporting date and updated based on changed facts and Nel specific circumstances. BASIS OF CONSOLIDATION The consolidated financial statements comprise the financial statements of the parent company and its subsidiaries as of 31 December 2024. Consolidation of a subsidiary begins when the group obtains control over the subsidiary and ceases when the group loses control of the subsidiary. Control is achieved if, and only if, the group has power over the investee, is exposed to, or has rights to, variable returns from its involvement with the investee, and has the ability to affect those returns through its power over the investee. Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the group has less than a majority of the voting or similar rights of an investee, the group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: i) The contractual arrangement with the other vote holders of the investee, ii) Rights arising from other contractual arrangements and iii) The group’s voting rights and potential voting rights. The group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Assets, liabilities, income and expenses of a subsidiary acquired or Notes to the consolidated financial statements Nel ASA I Annual report 2024 87 disposed of during the year are included in the consolidated financial statements from the date the group gains control until the date the group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the group. There are no non-controlling interests in the Group as all subsidiaries are 100 % owned. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the group are fully eliminated upon consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities and other components of equity while any transaction gain or loss is recognised in the statement of comprehensive income. FOREIGN EXCHANGE AND CURRENCY Transactions and balances Transactions in foreign currencies are converted to functional currency to the exchange rate on the transaction date. Exchange rate gains and losses are recognised within ‘finance cost’ in the profit or loss. Foreign currency monetary items are translated into functional currency using the balance sheet closing rates. Non-monetary items that are measured in terms of historical cost in a foreign currency continue to be translated using the exchange rate that prevailed at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates that prevailed at the date when the fair value was measured. All foreign currency translations are recognised in profit or loss as finance cost except for foreign currency translations where a hedging relationship exists, and hedge accounting has been applied. Additional information is provided in note 6.2 and 6.5. Consolidation of subsidiaries The individual financial statements of a subsidiary are prepared in the subsidiary’s functional currency. In preparing the consolidated financial statements, the statement of comprehensive income items from the subsidiaries are converted to NOK using the respective monthly average exchange rates, while statement of financial position items is converted using the rate at year-end. Exchange rate gains and losses are recognised net within Other comprehensive income and accumulated in Currency translation differences in ‘Other components of equity’. STATEMENT OF COMPREHENSIVE INCOME The Group present a single statement of ‘Consolidated statement of comprehensive income’ which comprise all components of profit or loss, OCI and the comprehensive income for the period. STATEMENT OF CASH FLOWS The Group uses the indirect method for the presentation of the cash flow statement. 1.3 Significant accounting policies Accounting policies and estimate uncertainty are largely incorporated into the individual notes. Table of contents for where the significant policies are elaborated. Revenue from contracts with customers 2.1Research and development 3.1Goodwill 3.1Property, plant and equipment 3.2Leases 3.3Investment in associates and joint ventures 3.4Inventories 4.1Trade receivables 4.2Impairment of non-derivative financial assets 4.4Government grants 5.3Provisions 5.5Derivative financial instruments and hedge accounting 6.5 88 Notes to the consolidated financial statements 2024 1.4 Changes in accounting policies A few amendments to IFRS have been issued and effective January 1, 2024. These are implemented for the first time in the current year: Amendments to IFRS 16 Leases— Lease liability in a sale-and- leaseback The amendments to IFRS 16 require a seller-lessee to account for variable lease payments that arise in a sale-and-leaseback transaction. Seller-lessees are required to reassess and potentially restate sale-and-leaseback transactions entered into since the implementation of IFRS 16 in 2019. The adoption of the amendments to IFRS 16 did not have any material impact in the group consolidated financial statements. Amendments to IAS 1 Presentation of Financial Statements — Classification of liabilities as current or non-current and non-current liabilities with covenants The group has adopted the amendments to IAS 1 for the first time in the current year. The group does not have any liabilities with covenants and therefore, the adoption of this definition did not have any material impact in the group consolidated financial statements. Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial instruments: Disclosures — Supplier Finance Arrangements The group has no supplier finance arrangements and therefore, the amendments to IAS 7 and IFRS 7 did not have any material impact in the group consolidation financial statements. 1.5 Significant accounting judgements and estimation uncertainty The preparation of financial statements requires management to make judgements and estimates that influence amounts recognised in certain accounts for assets, liabilities, income and expenses. The actual results may deviate from such assumptions. Estimates and underlying assumptions are subject to continuous assessment. JUDGEMENTS The following are Nel’s accounting policies that involves significant judgement and complexity which have most significant effect on the amounts recognised in the consolidated financial statements, including reference to where it is discussed: Revenue recognition 2.1Deferred tax assets 2.8Development costs 3.1Leases 3.3 ASSUMPTIONS AND ESTIMATION UNCERTAINTY Revenue recognition 2.1Share-based payments 2.5Impairment of goodwill and intangible assets 3.1 2.0 Discontinued operation Nel completed the distribution (repayment of paid-in share capital) and separate listing of Cavendish Hydrogen ASA (CAVEN) in June 2024. CAVEN and its subsidiaries have historically been reported as a separate operating segment within Nel, Nel Hydrogen Fueling. On June 7, 2024, the shares in CAVEN were distributed to shareholders in Nel ASA. Shareholders of Nel received one CAVEN share for every 50 shares held in Nel, with rounding to the nearest whole share. The shares in CAVEN were listed on the Euronext Oslo Stock Exchange on 12 June 2024. Following the distribution, Nel’s ownership in CAVEN was reduced from 100% to 0%. Considering a loss of control, the CAVEN group is no longer consolidated as part of Nel group from 7 June 2024. The comparative condensed consolidated statement of comprehensive income has been restated to show the discontinued operation separately from continuing operations. There was no public offering of shares in CAVEN in connection with the listing that priced the non-cash dividend. The fair value based on non-observable market assumptions of the net assets distributed to the shareholders was NOK 1 063 million (approximately NOK 0.63 of non-cash dividend distributed per share held in Nel), compared to a book value of NOK 970 million. A gain from the distribution of Nel ASA I Annual report 2024 89 discontinued operation of NOK 93 million was recognised in 2024. The cumulative exchange differences related to a foreign operation that have been included in the foreign currency translation reserve are reclassified to profit or loss when the foreign operation is distributed. A total exchange gain of NOK 51 million has been reclassified from OCI to the income statement on distribution of the foreign operations in CAVEN. RESULTS OF DISCONTINUED OPERATION (Amounts in NOK thousands) 01.01.-07.06.2024 FULL YEAR 2023REVENUE AND INCOMERevenue from contracts with customers 157 220 331 269Other income 2 084 14 664Total revenue and income 159 304 345 933OPERATING EXPENSESRaw materials 73 048 141 788Personnel expenses 107 605 275 643Depreciation, amortisation and impairment 23 884 54 094Other operating expenses 84 854 130 391Total operating expenses 289 391 601 916Operating loss -130 087 -255 983Finance income 2 590 1 750Finance cost -3 685 -44 036Share of loss from associates and joint ventures 0 0Net financial items -1 095 -42 286Pre-tax income (loss) -131 182 -298 269Tax expense (income) -280 -9 177Results of discontinued operation, net of tax -130 902 -289 092Reclassification of foreign currency translation reserve 51 337 0Gain related to distribution of discontinued operation 92 854 0Net income (loss) from discontinued operation 13 289 -289 092 90 Notes to the consolidated financial statements 2024 CASH FLOWS FROM/(USED IN) DISCONTINUED OPERATION (Amounts in NOK thousands) 2024 2023CASH FLOW FROM OPERATING ACTIVITIESContinuing operation -82 836 -463 931Discontinued operation -158 745 -205 737Net cash flow from operating activities -241 581 -669 668CASH FLOW FROM INVESTING ACTIVITIESContinuing operation -548 205 -597 734Discontinued operation -33 705 -49 078Net cash flow from investing activities -581 910 -646 812CASH FLOW FROM FINANCING ACTIVITIESContinuing operation -37 109 1 548 962Discontinued operation -3 459 -7 225Dividends paid (spin-off) -625 420 0Net cash flow from financing activities -665 988 1 541 737NET CHANGE IN CASH AND CASH EQUIVALENTSContinuing operation -666 521 486 921Discontinued operation -195 910 -262 040Dividends paid (spin-off) -625 420 0Net change in cash and cash equivalents -1 487 851 224 881Cash flows from discontinued operation includes consolidated cash flows until 7 June 2024. Nel ASA I Annual report 2024 91 EFFECT OF DISTRIBUTION OF THE FINANCIAL POSITION AT THE DATE OF DISTRIBUTION (Amounts in NOK thousands) 7 JUNE 2024ASSETSTechnology -114 598Customer relationship -364Property, plant and equipment -131 180Non-current financial assets -11 736Inventories -248 292Trade receivables -78 231Contract assets -2 311Other current assets -38 706LIABILITIESDeferred tax liabilities 721Long-term debt 22 543Non-current lease liabilities 5 501Non-current deferred income 14 352Trade payables 13 394Current lease liabilities 4 467Current contract liabilities 125 570Other current liabilities 42 494Provisions 52 121Net assets and liabilities -344 253Cash distributed -625 420Equity impact -969 673Fair value dividend adjustment 92 854Fair value dividend paid 1 062 527 92 Notes to the consolidated financial statements 2024 ALTERNATIVE PERFORMANCE MEASURES (APMS) FROM DISCONTINUED OPERATION (Amounts in NOK thousands) 2023Order intake 289 696Order backlog 364 205EBITDA -201 890 EFFECT OF DISTRIBUTION OF THE FINANCIAL POSITION OPENING BALANCE 2024 (Amounts in NOK thousands) ASSETS 2023 Non-current assetsTechnology 97 605 Property, plant and equipment 133 541 Non-current financial assets 11 637 Total non-current assets 242 783 Current assetsInventories 282 299 Trade receivables 80 777 Contract assets 10 325 Receivables group 72 521 Other current assets 29 742 Cash and cash equivalents 92 648 Total current assets 568 311 TOTAL ASSETS 811 094 Nel ASA I Annual report 2024 93 EQUITY AND LIABILITIES EquityShare capital 45 666 Share premium 1 728 013 Other capital reserves 35 605 Retained earnings OB (1 247 994)Retained earnings YTD (302 000)TOTAL EQUITY 259 289 Non-current liabilitiesDeferred tax liabilities 1 152 Long-term debt 22 458 Long term debt group 154 768 Non current lease liabilities 6 742 Non current deferred income 15 642 Other non-current liabilities 144 Total non-current liabilities 200 907 Current liabilitiesTrade payables 25 739 Short term liabilities group 87 935 Current lease liabilities 4 951 Current contract liabilities 169 781 Other current liabilities 17 381 Provisions 45 111 Total current liabilities 350 898 TOTAL LIABILITIES 551 806 TOTAL EQUITY AND LIABILITIES 811 094 94 Notes to the consolidated financial statements 2024 Significant accounting judgements – revenue recognitionThe Group applied the following judgements that The other important criterion is that an enforceable right significantly affect the determination of the timing of to payment exists in the contract between the group and revenue from contracts with customers: the customer. Right to payment entails that the group has a right to receive payment from the customer if the contract would be terminated. Upon termination at a certain time, Performance obligationsthe group should be able to recover costs incurred and a In determining whether revenue from a specific contract reasonable margin.can be classified as customised and in turn recognised using a progress-based measurement, several criteria must Determining whether revenue from a contract should be evaluated. The first criterion is related to alternative use. be recognised over time or at point in time could have a Manufacturing a customised product or piece of equipment significant effect on the financial statements and is to some for a specific customer that would require significant cost to extent dependent upon judgements from management. modify to be able to transfer it to another customer, then the contract would likely meet the criteria of no alternative use. 2.1 Revenue from contracts with customers The revenue in Nel is from sale of hydrogen electrolyser equipment including installation, commissioning, and long- term service agreements. Additionally, Nel earns revenue from replacement parts and accessories in the aftermarket, and from engineering studies. Project execution is key in Nel’s large construction projects. The group’s revenues result from the sale of goods or services and reflect the consideration to which the group is and expect to be entitled. IFRS 15 requires the group to assess revenue recognition based on a five-step model. For its customer contracts, the group identifies the performance obligations (goods or services), determines the transaction price, allocates the contract transaction price to the performance obligations, and recognises the revenue when (or as) the performance obligations are satisfied. Revenue recognition is determined on a contract-by-contract basis by determining the terms and performance obligations given in a specific contract. Based on the specific contract and its obligations, revenue under IFRS 15 is either recognised at a point in time or over time, 31% (35%) and 69% (65%) of revenue in 2024 (2023), respectively. Revenue is recognised over-time using the method that best depicts the pattern of the transfer of control over time. The method applied is the cost-to-cost input method, adjusted as time and goods are delivered to the customer. Contract costs are expensed as incurred. Revenue this year include NOK 54 million from renegotiation of the Nikola supply agreement, and a milestone was reached on the technology licensing agreement. Both which had no expenses direct raw material expenses. Nel ASA I Annual report 2024 95 Estimation uncertainty – revenue recognitionThe Group applied the following estimations that ii) Amountsignificantly affect the determination of the i) timing and ii) Liquidated damages (LDs)amount of revenue from contracts with customers:LDs are pre-defined penalties for breaches of contract. LDs are most commonly used with respect to delay. As i) Timingthe payment to the customer is not in exchange for a distinct good or service that transfers to Nel, LD’s must be Total contract costsaccounted for as a reduction of revenue. If a project does In a customised customer project, Nel uses cost-to-cost not meet the defined milestone in a contract, a provision input method when measuring progress; thus, the total reducing the transaction price is made unless it is highly cost estimates can significantly impact measured progress probable that LD will not be imposed. The estimated LD and revenue recognition. The total project cost comprises provision is highly judgmental. The assessment of the LD estimates on the ability to execute the planned engineering provision is based on experience from similar LD situations and design phase, the availability of skilled resources, in addition to client relationship, contractual position and performance of subcontractors, commodity prices, foreign status on negotiations. Nel estimates variable consideration currency and Nel’s manufacturing capacity, productivity and using the most likely amount.quality. TYPE OF GOODS OR SERVICES The group generates revenue from customer contracts from two principal sources: i) Equipment and projects and ii) Service and aftermarket. The equipment and projects sales are generated from both standard and customised equipment. Standard equipment The group recognises revenue at the point in time at which it satisfies a performance obligation by transferring the control of a good or service to the customer, generally this upon agreed incoterms, which is mainly at shipment. The customer has control of a good or service when it has the ability to direct the use of and obtain substantially all of the remaining benefits from the good or service. If customer acceptance of products is not assured, revenue is recorded only upon formal customer acceptance. The point in time measurement basis for standard equipment has been the main method of recognising revenue in segment PEM Electrolyser and the aftermarket in the segment Alkaline Electrolyser. Customised equipment Most of Nel’s revenue stems from standard equipment, however, in certain contracts the customisation required qualifies customised equipment. Customised equipment occurs when Nel is creating a good that it cannot sell to another customer without significant re-work and Nel would incur significant economic losses to direct the asset for another use. Such sale of customised equipment is recognised as revenue over-time if Nel has an enforceable right to payment for performance completed to date. Projects The project contracts typically comprise • equipment (standard product or customised), • supervision of installation and commissioning of the equipment • engineering services, sold separately or part of the project Most projects are determined to be a bundle of goods where all of the components constitute the combined output, i.e. one performance obligation. The performance obligation is satisfied over time and Nel recognise revenue over the period the performance obligation is satisfied, using a cost-to-cost input method that best depicts the pattern of the transfer of control over time. The contracts have mainly firm contract price including clauses for penalties (LDs). Additionally, contracts usually include service agreement and extended warranty for a specific period. Both service and extended warranty are separate performance obligations satisfied over 12 months or more, refer service and aftermarket. The progress-based measurement of revenue has been the main method of recognising revenue from electrolyser projects of large-scale electrolyser systems. Service and aftermarket Service and aftermarket comprise operations and maintenance (O&M), extended warranty, repair, replacement parts and accessories. For separately sold operating and maintenance contracts where the group has agreed to provide routine maintenance services over a period of time for a fixed price, revenue is recognised on a straight-line basis over the contract period as the stand-ready obligation is time elapsed. 96 Notes to the consolidated financial statements 2024 For sales of replacement cell stacks and accessories, revenue is recognised when performance obligation is satisfied, generally upon delivery of the replacement parts and accessories. The following table show the revenue from contracts with customers by type of goods or service: 2024 2023SEGMENTS PEM ALKALINE TOTAL PEM ALKALINE TOTALType of goods or serviceEquipment and projects 315,593 970,461 1,286,054 424,135 796,282 1,220,417Service and aftermarket 64,956 38,898 103,855 50,034 79,351 129,385TOTAL Revenue from contracts with customers 380,549 1,009,360 1,389,909 474,169 875,633 1,349,802Timing of revenue recognitionRevenue recognised at point in time 252,419 181,731 434,150 398,801 79,065 477,866Revenue recognised over time 128,130 827,629 955,759 75,368 796,567 871,935TOTAL Revenue from contracts with customers 380,549 1,009,360 1,389,909 474,169 875,632 1,349,802 Onerous contracts. In the circumstance that the unavoidable costs directly related to project is expected to exceed the economic benefits expected to be received under the contract, the estimated loss on the contract will be recognised in its entirety in the period when such loss is identified. Additional information for onerous contracts is disclosed in note 5.5 ‘Provisions’. CONTRACT BALANCES Equipment contracts with a customer will have milestone payments with variable structures. The contract price will be invoiced when certain criteria are met. A typical payment structure could be at the milestones; contract acceptance, placement of major supplier purchases, prior to delivery/ shipment of equipment and complete installation and commissioning. The payment structure of the contracts typically results in advance payments and progress billings exceed the satisfaction of performance obligations in progress. Consequently, creating a net contract liability. In certain circumstances based on the order value, credit worthiness of geographic location, the group may require payment in advance of shipment. Expect for performance requirements, agreed liquidated damages and warranty, the group does not accept returns of product or provide customers refunds or other similar concessions. Contract assets A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. As of the balance sheet date, the cumulative costs incurred plus recognised profit (less recognised loss) on each contract is compared against the advances and progress billings. Where the cumulative costs incurred plus the recognised profits (less recognised losses) exceed advances and progress billings, the balance is presented as due from customers on construction contracts within “contract assets”. When the contract assets become an unconditional right to consideration they are reclassified and presented separately as trade receivables, usually when invoices are issued to the customers. Contract liabilities A contract liability is the obligation to transfer goods or services to a customer for which the group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the group transfers goods or services to the customer, a contract liability is recognised when the payment is made, or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the group performs under the contract. Where advances and progress billings exceed the cumulative costs incurred plus recognised profits (less recognised losses), the balance is presented as due to customers on construction contracts within “contract liabilities”. Nel ASA I Annual report 2024 97 2024 2023CONTRACT CONTRACT CONTRACT CONTRACT CONTRACT BALANCESASSETSLIABILITIES TOTALASSETSLIABILITIES TOTALRights to consideration on contracts in progress381 457 -159 913 221 545 382 621 910 532 1 293 153Less - advances and progress billings -357 303 -423 480 -780 782 -332 854 -1 625 820 -1 958 674TOTAL Contract assets (liabilities) 24 155 -583 392 49 767 -715 288CONTRACT LIABILITIES 2024 2023Balance as of 01.01. -715 288 -672 291Revenue from amounts included in contract liabilities at the beginning of the period 419 690 492 165Billings and advances received not recognised as revenue in the period -460 192 -554 127Discontinued operation 119 764 0Basis adjustment - effect of hedge accounting 52 634 18 966Balance as of 31.12. -583 392 -715 288CONTRACT ASSETS 2024 2023Balance as of 01.01.49 76796 322Transfers from contract assets recognised at the beginning of the period to receivables -35 778 -84 288Increases due to measure of progress in the period 22 175 46 747Revenue recognised in the period from performance obligations satisfied in previous periods -4 312 -5 793 Discontinued operation -10 325 0Revaluation 2 627 -3 221 Balance as of 31.12. 24 155 49 767 Order backlog The performance obligations in contracts with customers vary from a few months to 4 years. The order backlog as of December 31, 2024, was NOK 1 614 million (2023: NOK 2 093 million). The order backlog in Alkaline and PEM is NOK 1 290 million and NOK 324 million, respectively. Refer to the “Alternative performance measures” section for full definitions of backlog and reconciliations. The transaction price allocated to the remaining performance obligations is illustrated in table below: AS OF 31.12.2024 2025 2026 2027 2028 OR LATER TOTAL BACKLOGPartly unsatisfied performance obligations484 893 361 123 380 587 66 586 1 292 189Unsatisfied performance obligations115 408 0 79 503 126 910 321 821TOTAL backlog600 301 361 123 460 090 192 496 1 614 010AS OF 31.12.2023 2024 2025 2026 2027 OR LATER TOTAL BACKLOGPartly unsatisfied performance obligations1 469 651 363 735 54 748 0 1 888 135Unsatisfied performance obligations205 323 0 0 0 205 323TOTAL backlog1 674 974 363 735 54 748 0 2 093 458 98 Notes to the consolidated financial statements 2024 2.2 Other income (Amounts in NOK thousands) OTHER INCOME 2024 2023Government grants4 570 2 953Research and design study reports93 593 69 891Insurance compensation0 4 078Other income6 861 419TOTAL Other income105 024 77 341 Research and design study reports comprise contracts with Department of Energy in the PEM electrolyser segment. The performance is delivery of research reports and has been assessed as not part of ordinary course of business selling electrolyser equipment. While the income from such services can increase and decrease based on contracts and has been somewhat recurring over several years, it does not have the same characteristics as equipment sale and related services. Therefore, the income is reported as other income. Government grants within ‘other income’ SEGMENT COUNTRY 2024 2023Alkaline Norway4 570 2 953TOTAL4 570 2 953Government grants related to assets, amortised4 570 2 953TOTAL4 570 2 953 2.3 Segment information Nel operates within two operating segments, Nel Alkaline Electrolyser and Nel PEM Electrolyser. The identification of segments in the group is made based on the different products the division offers as well as geographical areas the divisions have their production facilities and majority of employees in. The executive management group is the chief operating decision maker (CODM) and monitors the operating results of its operating segments separately for the purpose of making decisions about resource allocation and performance assessment. During 2024, the former segment Electrolyser has been split into PEM Electrolyser and Alkaline Electrolyser. Although both PEM and Alkaline electrolysers have the same output, their production relies on different inputs and production facilities have lines of production entirely segregated. The disaggregated electrolyser segment is of relevance to the CODM. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements. Billing of goods and services between operating segments are effected on an arm’s length basis. NEL ALKALINE ELECTROLYSER The Nel Alkaline Electrolyser division is a global supplier of hydrogen production equipment based on alkaline water electrolysis technology. Nel Alkaline Electrolyser currently has production facilities in Herøya, Norway. NEL PEM ELECTROLYSER The Nel PEM Electrolyser division is a global supplier of hydrogen production equipment based on PEM water electrolysis technology. Nel PEM Electrolyser currently has production facilities in Wallingford, Connecticut, USA. Nel ASA I Annual report 2024 99 2024 OPERATING SEGMENTSREVENUES BY GEOGRAPHIC REGION 1)BASED ON CUSTOMER LOCATION PEM ALKALINE OTHER TOTALNorway1 98334 759 0 36 743United States 155 866 0 0 155 866North America ex United States 8 245 500 262 0 508 507Asia 52 935 142 621 0 195 556Europe ex Norway 95 604 319 380 0 414 984Middle East 9 771 0 0 9 771Africa 1 798 6 544 0 8 341South America 2 136 5 793 0 7 930Oceania 52 210 0 0 52 210TOTAL REVENUE FROM CONTRACTS WITH CUSTOMERS 380 549 1 009 360 0 1 389 909Other operating income 99 655 3 177 2 192 105 024Operating expenses excluding depreciation, amortisation and impairment -645 088 -885 865 -136 922 -1 667 875EBITDA -164 884 126 672 -134 730 -172 942Depreciation and amortisation-99 045-110 188 -7 253 -216 486Impairment of tangible and intangible assets 0 0 0 0OPERATING LOSS -263 929 16 484 -141 983 -389 428Finance income 354 775 130 947 132 076Finance costs -3 662 -6 572 3 401 -6 833Share of loss from associates and joint ventures 0 0 0 0Tax income (expense) 5 861 0 693 6 554NET INCOME (LOSS) -261 376 10 687 -6 942 -257 631TOTAL ASSETS 1 755 003 2 508 284 2 040 925 6 304 212TOTAL LIABILITIES 404 971 854 859 67 106 1 326 936Capital expenditures 225 506 421 038 646 5441) Other comprises parent company, holding entity, excess values on intangible assets and related depreciation and tax expense (income) derived from the consolidation of the financial statements not allocated to the operating segments. In 2024, the group recognised revenue from three single customers which individually each is above 10% of total revenues. The amounts recognised from the three customers are NOK 339 million, NOK 145 million and NOK 144 million, all related to delivery of Alkaline Electrolysers. In 2023, revenue from single customers above 10% of total revenues include NOK 430 million in revenues from a single customer 100 Notes to the consolidated financial statements 2024 (Amounts in NOK thousands) 2023 OPERATING SEGMENTSREVENUES BY GEOGRAPHIC REGION CONTINUING 1)BASED ON CUSTOMER LOCATION PEM ALKALINE OTHER OPERATIONSNorway7 00435 575 0 42 579United States 274 495 469 163 0 743 657North America ex United States 15 180 0 0 15 180Asia 83 783 61 625 0 145 408Europe ex Norway 32 516 296 341 0 328 857Middle East 45 718 0 0 45 718Africa 1 271 11 312 0 12 584South America 7 648 1 616 0 9 264Oceania 6 555 0 0 6 555TOTAL REVENUE FROM CONTRACTS WITH CUSTOMERS 474 170 875 632 0 1 349 802Other operating income 76 398 943 0 77 341Operating expenses excluding depreciation, amortisation and impairment -680 338 -905 389 -113 243 -1 698 970EBITDA-129 771 -28 814-113 243 -271 828Depreciation and amortisation-90 980-71 000 -8 288 -170 268Impairment of tangible and intangible assets 0 -1 424 0 -1 424OPERATING LOSS -220 751 -101 238 -121 531 -443 520Finance income 400 2 945 170 409 173 754Finance costs -8 096 -23 943 -268 746 -300 785Share of loss from associates and joint ventures 0 0 -3 714 -3 714Tax income (expense) 7 237 0 924 8 161PRE-TAX INCOME (LOSS) -221 210 -122 236 -222 658 -566 104TOTAL ASSETS 1 591 380 2 028 033 3 426 513 7 045 926TOTAL LIABILITIES 475 056 794 575 62 432 1 332 063Capital expenditures 251 811 439 098 0 690 9091) Other comprises parent company, holding entity, excess values on intangi-ble assets and related depreciation and tax expense (income) derived from the consolidation of the financial statements not allocated to the operating segments. PROPERTY, PLANT AND EQUIPMENT GEOGRAPHICAL AREA 2024 2023Norway 1 147 001 906 172Denmark 0 114 157USA 517 078 282 856South Korea 0 2 493Balance as of 31.12. 1 664 079 1 305 678 Nel ASA I Annual report 2024 101 2.4 Raw materials (Amounts in NOK thousands)2024 2023Raw material 503 355 705 086Freight expense 572 6 714Other consumables 48 3 336TOTAL 503 976 715 136 In addition to products produced internally, Nel also delivers equipment produced using Nel’s design or sourced based on a functional design. The ratio of raw material expense to revenues will depend not only on improvements leading to lower raw material spend or on the cost price of raw materials used in production, but also on the share of revenue generated by equipment sourced from third parties. 2.5 Personnel expenses (Amounts in NOK thousands)2024 2023Salaries 545 753 442 823Social security tax 67 757 59 008Pension expense 26 710 18 5791)Other payroll expenses 34 925 38 596Capitalised salary to technology development -29 559 -13 346TOTAL 645 586 545 6601) Included here are expenses amounting to NOK 2.7 million (4.2 in 2023) related to the Group’s share option program. 2024 2023Average number of full time employees 423 374Hereof women 90 81 SHARE OPTION PROGRAM UNTIL END OF 2021 Nel compensate employees with share options as part of a program to incentivize and retain key employees. The share option program was distributed groupwide until end of 2021 and granted shares to all employees employed in the group during 2021 on certain tenure conditions. When granted, there is only service-time based vesting conditions. Vesting requires the option holder to still be an employee in the Group. The share-based payment is equity-settled. Each option, when exercised, will give the right to acquire one share in the Group. The options are granted without consideration. The share option program for all employees was terminated in 2022 and was replaced by a Short term incentive (STI) in the form of an annual bonus scheme linked to employee performance and Nel’s financial performance. Options granted July 2021: A total of 7.8 million share options were granted. Pursuant to the vesting schedule, 40% of the options will vest two years after the day of grant, and 60% of the options will vest three years after the day of grant. The exercise price is equal NOK 15.125 per share based on the average price of the Nel ASA share price the five trading days before grant date (NOK 14.00) and including an 8% premium. Gain per instrument is capped at NOK 10.00 maximum per share option. The options that have not been exercised will lapse 4 years after the date of grant. Share option program beyond 2022: All options have only service-time based vesting conditions. Vesting requires the option holder still to be an employee in the company. Specifically, options do not vest after the date the employee serves his or her notice to terminate the engagement with the company or has been notified in writing of the termination of employment by the company. The strike price 102 Notes to the consolidated financial statements 2024 is a premium of 8 % over the highest of the closing share price on grant date and the volume-weighted average price over the past 5 preceding trading days. Options granted 2023: Options were awarded in 2023 based on 2022 employment for a selection of employees. A total of 1.4 million share options were granted, with a 3-year vesting period, 5-year expiry and a cap on gain per option of 10 NOK per share. Options granted 2024: Options were awarded in 2024 based on 2023 employment for a selection of employees. A total of 1.65 million share options were granted, with a 3-year vesting period, 5-year expiry and a cap on gain per option of 10 NOK per share. CEO OPTIONS The CEO was awarded 500.000 options. Each option vests after three years of grant and may, subject to continued employment, be exercised over a two-year period thereafter. Each option entitles him to acquire one new share of the Company at an exercise price equal to the listed price at the date of grant plus 10%. A maximum profit level has been implemented which limits the accumulated profit for all options to NOK 25 million, and to NOK 30 per option. Assumptions, costs and social security provisions The Group uses the Black-Scholes-Merton option pricing model at time of grant to determine the impact of stock option grants in accordance with IFRS 2 - Share-based payment. The model utilises the following parameters as input: • the company’s share price • the strike price of the options • the expected lifetime of the options • the risk-free interest rate equalling the expected lifetime • the volatility associated with the historical price development of the underlying share As all employee options granted are “non-transferable”, and the gains are taxed with personal income tax (higher), whereas gains on ordinary shares are taxed with capital gains tax (lower), it is reasonable to assume that participants tend to exercise early. Hence estimated lifetime of the options is expected to be shorter than the time from grant until expiry. However, exercise patterns are monitored and expected option lifetime for future grants will reflect exercise behaviour. To estimate the volatility in the option pricing model comparable companies have been used. Nel has been through a rapid development in recent years and the assumption made at grant was that traded history the previous years was not the best estimate for the future years. Hence, volatility input to the Black-Scholes-Merton model is based on a group of peer companies. Further the total fair value of the share-based instruments is amortised over the vesting period of the instrument. IFRS 2 presumes that the fair value of the services expected to be received is the same as the fair value of the equity instruments granted at grant date. Therefore, although the services are recognised over the vesting period, they are measured only once, at grant date, unless the arrangement is modified. Social security tax provisions are accrued on a quarterly basis and becomes payable at exercise of the options. The social security tax provisions are estimated based on the gain on the share-based instruments multiplied with the relevant social security tax rate. The total expense recognised for the share-based programs, excluding social security, during 2024 was NOK 2.7 (4.2) million. The total social security accruals at the end of the year are NOK 0.0 (0.0) million (social security costs are zero because none of the options are in-the-money at the end of 2024). The total intrinsic value of the company’s share-based instruments is NOK 0.0 (0.0) million as of 31 December 2024. Key assumptions option pricing model per share option program2024 2023Volatility 65.86% 67.59%Interest rate 3.72% 3.56%Dividend 0.00 0.00 Nel ASA I Annual report 2024 103 ESTIMATION UNCERTAINTY - Share-based paymentsEstimating fair value for share-based payment transactions requires determination of the most appropriate evaluation model, which depends on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option or appreciation right, volatility and dividend yield and making assumptions about them. The groups’ equity-settled share-based payments are measured at fair value at the grant date. 2) (amounts in NOK thousands and number of options/shares in thousands)REMAINING SHARE OPTION OPENING CLOSING STRIKE CONTRACTUAL 1)PROGRAMBALANCE GRANTED EXERCISED FORFEITEDBALANCEPRICE VALUE LIFE2020 Share Option Plan7,9890 0 -7,989 0 7.80 - - 2021 Share Option Plan 5,693 0 0 -2,287 3,405 15.13 - 0.64 2023 Share Option Plan 1,220 0 0 -490 730 17.02 - 3.17 2024 Share Option Plan 0 1,650 0 -450 1,200 5.32 - 4.16 2023 CEO 500 0 0 0 500 13.85 - 3.50 2024 CEO 0 500 0 0 500 6.16 - 4.50 TOTAL 15,402 2,150 0 -11,217 6,335SHARE OPTIONS HELD BY MEMBERS OF GROUP MANAGEMENT2)EXPIRY VESTED EXPENSE FOR THE 3) NAME 2023 2024 2025 2026 2027 TOTAL 2025 2026 2027 2028 2029PERIOD Håkon Volldal00 0 500 500 1,000 0 0 0 500 500 694 Kjell Christian Bjørnsen 62 93 0 150 150 455 155 0 0 150 150 176 Marius Løken 0 0 0 0 150 150 0 0 0 0 150 48 Tushar Ghuwalewala 25 38 0 40 50 153 63 0 0 40 50 40 Kai Rune Heggland 18 27 0 40 50 135 45 0 0 40 50 51 Hans Hide 64 96 0 150 150 460 160 0 0 150 150 177 Stein Ove Erdal 64 96 0 150 150 460 160 0 0 150 150 177 Todd Cartwright 0 0 0 0 150 150 0 0 0 0 150 48 Other employees 1,763 1,060 0 200 350 3,373 2,823 0 0 200 350 1,308 TOTAL 1,996 1,410 0 1,230 1,700 6,335 3,405 0 0 1,230 1,700 2,7181) The value of the share options equals share price less strike price, capped at 10.0 for 2021, 2023. 2024 and CEO program.2) All share options are granted, vested and expired at the beginning of March in a given fiscal year, except for share option program 2021 which is August and CEO which is July.3) Cost of period does not include social security. The total social security accruals at the end of the year are NOK 0.0 (0.0) million as none of the options are in-the-money. Share options program 2020 expired during the period, and 5 191 042 vested options expired during the period without any payment. Next expiry date is 19 August 2025 for options granted 2021. Pensions The group has defined contribution pension scheme for its employees. This scheme is funded through payments to insurance companies. A defined contribution plan is one under which the group pays fixed contributions to a separate legal 104 Notes to the consolidated financial statements 2024 entity. The group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. For defined contribution plans, the group pays contribution to publicly or privately administered pension insurance plans on an obligatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognised as a salary expense when they fall due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. The parent company and the Norwegian subsidiaries have pension plans that meet the requirements of the Pension Act of Norway. The US subsidiary have pension plans that meet their respective requirements. 2.6 Other operating expenses (Amounts in NOK thousands) 2024 2023Research and development expenditure41 589 43 264Utilities21 344 23 031Professional fees98 919 84 703Travel expenses24 554 27 106IT and communication costs46 475 25 955Changes in provisions63 450 32 071Repair and maintenance13 724 15 030Premises costs 18 901 22 898Sub supplier services 127 699 62 472Freight19 433 28 387Other expenses42 224 73 256TOTAL Other operating expenses518 313 438 175 2.7 Finance income and cost (Amounts in NOK thousands) 2024 2023Interest income 127 764 166 850Change in fair value financial instruments 0 592Other 4 312 6 313Finance income 132 076 173 755Interest expense 0 649Interest expense lease liabilities 16 481 14 251Net foreign exchange loss -13 566 -26 547Change in fair value financial instruments 2 650 311 559Other 1 269 875Finance cost 6 833 300 787Net finance income (cost) 125 243 -127 032 The change in fair value financial instruments in 2023 was mainly due to change in fair value of Nel’s shareholdings in Everfuel of NOK -304 million. The shareholdings in Everfuel were also sold in 2023, and there are limited equity instruments in the group in 2024, therefore limited impact on the financial results. Nel ASA I Annual report 2024 105 2.8 Income taxes TAX The tax expense in the statement of comprehensive income comprises of the tax payable for the period and of the change in deferred tax. Deferred tax is calculated at the prevailing tax rate in the respective countries where the parent company and subsidiaries are tax resident. Deferred tax is calculated based on temporary differences that exist between accounting and tax values, as well as any tax loss carry forward at the end of the financial year. The deferred tax asset is recognised if it is probable that the company will have a sufficient tax profit to be able to utilise the tax asset. Significant accounting judgements - Deferred tax assetDeferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.The group has NOK 2 332 million of tax amounts from tax losses carried forward (NOK 1 818 million in 2023). These losses relate to subsidiaries that have a history of losses, and to some extent may not be used to offset taxable income elsewhere in the group. While the losses do not expire, the group has determined that it cannot recognise deferred tax assets from the tax losses carried forward based on its history of losses. Deferred tax assets not recognised in the statement of financial statement amount to NOK 520 million in 2024 (412 in 2023) related to tax losses carry forward. CALCULATIONS OF THE TAX BASE FOR THE YEAR 2024 2023 RESTATEDIncome (loss) before tax -264 185 -574 266Permanent differences 69 312 402 732Change in temporary differences -170 061 22 220Use of tax losses carried forward -143 689 -127 462The year's taxable income -508 623 -276 776RECONCILIATION OF TAX EXPENSE TO NORWEGIAN NOMINAL STATUTORY TAX RATE 2024 2023 RESTATEDNominal tax rate 22 %22 %Income (loss) before tax -264 185 -574 266Tax this years income (loss), estimated -58 121 -126 339Tax effect of: Tax rates different from Norway 2 863 2 386Permanent differences 10 366 83 904Change in deferred tax -6 554 -8 160Change in not recognized deferred tax assets (tax liabilities) 33 474 38 108Other differences 11 418 1 941Income tax expense -6 554 -8 162INCOME TAX EXPENSE COMPRISE 2024 2023 RESTATEDIncome tax payable00Change in deferred tax -6 554 -8 162Total income tax expense (income) -6 554 -8 162 106 Notes to the consolidated financial statements 2024 TAX EFFECTS OF TEMPORARY DIFFERENCES 2024 2023 RESTATEDTrade receivables and customers contracts-16 989-6 554Intangible assets 1 158 26 524Property, plant and equipment 46 962 23 204Inventories -206 558Accrued warranty -13 217 -11 233Leases -9 755 -8 047Deferred income -17 374 -13 478Other accruals -13 000 -38 506Tax losses carry forward -519 562 -411 854Deferred tax asset, net -515 983 -439 385RECONCILIATION TO STATEMENT OF FINANCIAL POSITION 2024 2023 RESTATEDDeferred tax asset, net -515 983 -439 385Deferred tax asset not recognised in statement of financial position 550 796 477 822Deferred tax liability in the statement of financial position 34 813 38 436CHANGES IN RECOGNISED DEFERRED TAX LIABILITY 2024 2023 RESTATEDBalance as of 01.01. 38 436 45 529Recognised in the income statement -6 554 -8 160Translation differences on deferred taxes 3 652 1 069Discontinued operation -721 0Balance as of 31.12. 34 813 38 436 Table below show net operating losses carried forward by country multiplied with the tax rate, the deferred tax asset from historical losses not recognised. TAX LOSSES CARRY FORWARD BY COUNTRY 2024 2023Norway 283 092 240 470United States 236 471 171 385Balance as of 31.12. 519 562 411 854 Nel ASA I Annual report 2024 107 2.9 Earnings per share Earnings per share are calculated by dividing the profit/loss for the year by the corresponding weighted average of the number of outstanding shares during the reporting period. ‘Diluted earnings per share’ is based on the same calculation as for earnings per share, but it also considers all potential shares with dilutive effect that have been outstanding during the period. Potential shares relate to agreements that confer the right to issue shares in future. Options are excluded if their effect would have been anti-dilutive. Earnings per share is calculated as profit/(loss) attributable to the equity holders of the parent company divided by the average number of shares outstanding. (Amounts in NOK thousands) 2024 2023Net loss attributable to the equity holders of the parent company and for the purpose of basic and diluted shares -257 631 -855 196Basic earnings per shareIssued ordinary shares at 1 January 1 671 325 1 563 325Share options exercised 0 0Share issued 0 108 000Issued ordinary shares at 31 December 1 671 325 1 671 325Effect of weighting (share options exercised and share issued during the year) 0 -19 500Weighted-average number of shares outstanding for the purpose of basic earnings per share 1 671 325 1 651 825Basic earnings per share for loss attributable to the equity holders of the parent company (NOK) -0,15 -0,52Diluted earnings per shareWeighted-average number of shares outstanding for the purpose of basic earnings per share 1 671 325 1 651 8251)Effect of share options on issue 0 0Weighted-average number of shares outstanding for the purpose of diluted earnings per share 1 671 325 1 651 825Diluted earnings per share for loss attributable to the equity holders of the parent company (NOK) -0,15 -0,521) As of 31 December, 2024, 6 335 431 weighted-average options were excluded from the diluted weighted-average number of ordinary shares calculation because their effect would have been anti-dilutive (earnings per share is negative). 108 Notes to the consolidated financial statements 2024 3.1 Intangible assets RESEARCH AND DEVELOPMENT Research Research activities are defined as activities whose purpose is to generate new technological understanding or knowledge. Research costs are expensed as incurred. Development Capitalised development costs are recognised at historical cost after the deduction of accumulated amortisations and impairments. The capitalised value is amortised over the period of expected future earnings from the related project on a straight-line basis. Technology As an indication of the level of internal technology costs, Nel currently has 69 and 47 full time employees working directly with R&D in the Alkaline and PEM division, respectively. Nel invests in development of large-scale industrialisation of Electrolyser products. ALKALINE In its Alkaline division, Nel prioritizes the development of a pressurized alkaline Electrolyser targeting 1000Nm3/h single cell stack to increase product efficiency and safety. In addition, Nel’s electrolyser divisions initiated the development of product concepts to larger sized projects meeting the requirements of a more sophisticated and complex electrolyser system. The Alkaline segment has recognised on the statement of financial position, capitalized technology from internal development of NOK 311.4 (211.8) million as of 31.12.2024. PEM In the Proton Membrane division, the R&D team focused on the collaboration with General Motors applying the know- how acquired from the development of fuel cells into the development of a new electrolyser cell stack series. The PEM segment has recognised on the statement of financial position, capitalized technology from internal development of NOK 104.5 (117.4) million as of 31.12.2024. Significant accounting judgements - Development costsDevelopment expenditures on an individual project are recognised as an intangible asset when the group can demonstrate:• The technical feasibility of completing the intangible asset so that the asset will be available for use or sale• How the asset will generate future economic benefits• Its intention to complete and its ability and intention to use or sell the asset• The availability of resources to complete the asset• The ability to measure reliably the expenditure during developmentTo demonstrate technical feasibility and availability of resources, it should be a high certainty that Nel have the intention and ability to complete. Nel categorise its intention and ability to complete in a matrix with the overarching risk to complete buckets low, medium and high. In the phase of a project where the risk of completing is medium to high, then the development costs are expensed as incurred. A capitalised development project commence amortisation when a succesful pilot is demonstrated. After a succesful pilot, the technology is in the condition necessary for it to be capable of operating in the manner indented by management and enters ‘ramp-up’ stage. Subsequent expenditure is maintenance of existing technology (expensed). Total technology spend for 2024 was NOK 364.7 (318.1) million, of which NOK 136.0 (118.3) million and NOK 228.7 (151.9) million has been capitalised and expensed, respectively. Nel ASA I Annual report 2024 109 USEFUL LIFE, AMORTISATION PLAN • Technology has a useful life of 3-7 years • Customer relationship has a useful life of 7-10 years • Goodwill has indefinite life CUSTOMER RELATIONSHIP Customer relationship is acquired through business combinations. Customer relationship is initially measured at cost and subsequently amortised over useful life, using the straight-line method. At period end customer relationship is recognised at historical cost after the deduction of accumulated depreciation and impairments. GOODWILL Goodwill recognised in the statement of financial positions has been acquired through business combinations. Goodwill occurs as the residual in the business combination, being the excess of the aggregate of the consideration transferred and any previous interest held, over the net identifiable assets acquired and liabilities assumed. Goodwill is initially measured at cost which is net of tax amount. Subsequent to initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the group’s cash-generating units (CGUs) that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquire are assigned to those units. (Amounts in NOK thousands) CUSTOMER TECHNOLOGY RELATIONSHIP GOODWILL TOTALAcquisition cost as of 01.01.2023886 556 99 195 662 485 1 648 237Additions from internal development 163 940 0 0 163 940Additions acquired separately 2 302 0 0 2 302Disposals -34 356 0 0 -34 356Currency effects 22 651 1 039 9 725 33 415Acquisition cost as of 31.12.2023 1 041 094 100 234 672 210 1 813 538Additions from internal development 119 194 0 0 119 194Discontinued operation -210 341 -3 011 -213 352Currency effects 46 194 121 36 448 82 763Acquisition cost as of 31.12.2024 996 142 97 343 708 658 1 802 143Accumulated amortisation and impairment as of 01.01.2023 339 169 77 705 296 905 713 779Amortisation 96 175 14 308 0 110 483Reversed amortisation disposals -34 356 0 0 -34 356Impairment 1 424 0 0 1 424Currency effects 7 161 0 0 7 161Accumulated amortisation and impairment as of 31.12.2023 409 572 92 013 296 905 798 491Amortisation 72 167 7 843 0 80 010Discontinued operation -113 234 -2 513 -115 747Currency effects 10 215 0 0 10 215Accumulated amortisation and impairment as of 31.12.2024 378 721 97 343 296 905 772 970Carrying value as of 31.12.2023 631 521 8 220 375 305 1 015 046Carrying value as of 31.12.2024 617 420 0 411 753 1 029 173 Impairment loss NOK 0.0 (1.4) million, from categories Technology and Goodwill, is included within “Impairment of tangible and intangible assets” in profit or loss. The impairment of technology in 2023 is related to not material development projects in Alkaline segment. 110 Notes to the consolidated financial statements 2024 Specification of carrying amount 2024(Amounts in NOK thousands) TECHNOLOGY GOODWILL TOTALInternal development415 880 0 415 880Acquired separately35 763 0 35 763Acquired through business combinations165 777 411 753 577 530Carrying value as of 31.12.2024 617 420 411 753 1 029 1732023(Amounts in NOK thousands) CUSTOMER TECHNOLOGY RELATIONSHIP GOODWILL TOTALInternal development 446 220 0 0 446 220Acquired separately 209 0 0 209Acquired through business combinations185 092 8 220 375 305 568 618Carrying value as of 31.12.2023631 521 8 220 375 305 1 015 046 ESTIMATION UNCERTAINTY - Impairment of goodwill and intangible assetsImpairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget and strategy forecasts for the next five years and do not include restructuring activities that the group is not yet committed to or significant future investments which has not commenced that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are disclosed and further explained in this note. Nel ASA I Annual report 2024 111 GOODWILL AND INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES - IMPAIRMENT CONSIDERATIONS Goodwill, and CGUs where goodwill has been allocated, are required to be tested for impairment annually. The group performed its annual impairment test in December yearly. Impairment losses are recognised where the recoverable amount is less than the carrying amount. The group has not recognised goodwill impairment expense this year. ANNUAL IMPAIRMENT TEST - ASSUMPTIONS CGU The annual impairment test is performed for all the Group’ Cash Generating Units (CGUs). A CGU is defined as the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups thereof. The way management monitors operations assisted in the judgements of identifying the CGUs. The Group’ CGUs are • Electrolyser Norway and • Electrolyser US SPECIFICATION OF ALLOCATED GOODWILL PER CGU 2024 2023Electrolyser US350 389 313 941Electrolyser Norway61 364 61 364Balance as of 31.12.411 753 375 305 Market capitalisation The group considers the relationship between its market capitalisation and its book value, among other factors, when reviewing indicators of impairment. As of 31 December 2024, the market capitalisation of the group was about equal to the book value of equity, indicating no impairment of goodwill and impairment of the assets. In 2023 the market capitalisation was 3 times above the book value of equity, indicating a decline in value in the last twelve months. Key assumptions The calculations of value in use are sensitive to several assumptions, the following are assessed key assumptions in the measured value: • Revenue growth and gross margin • EBITDA margins • Discount rate / Weighted average cost of capital (WACC) Forecast period For each CGU, a recoverable amount has been measured. The impairment test has been based on the business and strategy plans approved by the Board of Directors and management’s best estimate of cash flows. The recoverable amount is based on a discounted cash flow model determined value in use, which are based on the following: i) the future expectations reflected in the current budget and strategy over the next 5-year period (forecast period); and ii) Terminal value beyond year 2029 applying a growth rate of 2.0% Discount rate Discount rates represent the current market assessment of the risks, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the group and its operating segments and is derived from its weighted average cost of capital (WACC). The WACC considers the cost of debt and equity. The cost of equity is derived from the expected return on investment by the group’s investors. The cost of debt is based on the interest- bearing borrowings the group is obliged to service. Segment specific risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available market data. Adjustments to the discount rate are made to factor in the specific amount and timing of the future cash flows to reflect a pre-tax nominal discount rate. Pre-tax nominal discount rate is in the range of 13.9 % to 14.3 %. 112 Notes to the consolidated financial statements 2024 ANNUAL IMPAIRMENT TEST – RESULTS AND SENSITIVITY The impairment test has been prepared in accordance with IAS 36 impairment of non-financial assets following the discounted cash flow methodology for value in use within the standard. The cash flows projections relate to the cash-generating unit in the current condition which means future investments not commenced has not been included in the valuation. It excludes cash inflows and investments forecasted to meet the market demand before 2030. In addition, the standard encourages a conservative valuation to ensure that assets are not carried at more than their recoverable amount. (Amounts in NOK thousands) ELECTROLYSER ELECTROLYSER USNORWAYGoodwill 350 389 61 364Other intangible assets 303 722 300 424Other invested capital 623 555 1 505 216Carrying value 1 277 666 1 867 004Recoverable amount 1 339 079 2 919 817Headroom 61 413 1 052 813Pre-tax nominal discount rate 14,3 % 13,9 %Terminal growth rate 2,0 % 2,0 % ELECTROLYSER US Electrolyser US is the Group’ segment for the PEM electrolyser technology. The CGU covers the production and manufacturing of PEM electrolyser equipment in Wallingford, Connecticut, US. The operations consist of both assembly of electrolyser, marketing activities and product development. The table below show the sensitivity analysis for the range of +/-2 percentage points in WACC and +/-4 percentage points in EBITDA margin. Sensitivity in headroom(amounts in NOK million) PERCENTAGE POINT CHANGE IN EBITDA MARGIN-4,0%-2,0% 0,0% 2,0% 4,0%-2,0% -264 147 556 965 1 373 -1,0% -444 -81 279 640 999 0,0% -585 -261 61 384 705 CHANGES IN WACC1,0% -699 -406 -114 177 467 2,0% -792 -524 -259 7 272 * Represents headroom in impairment calculation for the CGU. Negative numbers in the table indicate impairment Nel ASA I Annual report 2024 113 ELECTROLYSER NORWAY Electrolyser Norway is the Group’ segment for the Alkaline electrolyser technology. The CGU covers the production, manufacturing and development of both atmospheric alkaline and pressurised alkaline electrolyser equipment in Herøya and Notodden, Norway. The operations consist of both assembly of electrolyser, marketing activities and product development. The table below show the sensitivity analysis for the range of +/-2 percentage points in WACC and +/-4 percentage points in EBITDA margin. Sensitivity in headroom(amounts in NOK million) PERCENTAGE POINT CHANGE IN EBITDA MARGIN-4,0% -2,0% 0,0% 2,0% 4,0%-2,0% 1 003 1 643 2 278 2 911 3 544 -1,0% 479 1 036 1 589 2 140 2 691 CHANGES IN WACC0,0% 71 564 1053 1 540 2 026 1,0% -253 188 625 1 060 1 495 2,0% -517 -118 277 670 1 063 * Represents headroom in impairment calculation for the CGU. Negative numbers in the table indicate impairment. Additional sensitivities –assumptions The sensitivities in the table show the change in assumptions that results in zero headroom, at perpetuity growth 2.0%, all else being equal. The table shows the sensitivities for the WACC used, but also for WACC +/- one percentage point: KEY ASSUMPTION ASSUMPTION CHANGERevenue growth -41 million -925 millionWACCGross margin -1,7% -5,7%Free cash flow margin -0,4% -4,5% If revenue assumption in terminal changes with the assumption change, the headroom is zero.If average gross margin rate assumption in the CGU is reduced with this percentage point in the terminal, the headroom is zero.If free cash flow margin rate assumption in the CGU is reduced with this percentage point in the terminal, the headroom is zero. 114 Notes to the consolidated financial statements 2024 Further elaboration to the table above, for the CGU Electrolyser US: The sensitivity table above shows that if the revenue assumption in terminal year 2030 in the impairment test is reduced by NOK 41 million, the headroom is 0 all other equal. Additionally, the sensitivity in the impairment test shows that if the gross margin assumption in terminal year 2030 is reduced by 1.7%, the headroom is zero all other equal. Finally, it shows that if the free cash flow margin assumption in terminal year 2030 is reduced by 0.4%, the headroom is zero all else equal. The following tables show the same sensitivities in scenarios where WACC is +/- 1. KEY ASSUMPTION ASSUMPTION CHANGERevenue growth 87 million -633 millionWACC +1%Gross margin 3,6% -3,9%Free cash flow margin 0,9% -3,1%Revenue growth -159 million -1 196 millionWACC -1Gross margin -6,6% -7,4%Free cash flow margin -1,7% -5,8% If revenue assumption in terminal changes with the assumption change, the headroom is zero.If average gross margin rate assumption in the CGU is reduced with this percentage point in the terminal, the headroom is zero.If free cash flow margin rate assumption in the CGU is reduced with this percentage point in the terminal, the headroom is zero. Nel ASA I Annual report 2024 115 3.2 Property, plant and equipment Property, plant and equipment comprise owned and leased assets. Property, plant and equipment are measured using the cost model; thus, recognised at cost price after deduction for accumulated depreciation and any impairment. Cost prices include purchase price and costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended. The assets are depreciated using the straight-line method over the expected useful life of the asset. Costs of direct maintenance on the operating assets are expensed as incurred. Additional investments and improvements are added to the asset’s cost price and depreciated in line with the remaining useful life of the asset. (Amounts in NOK thousands)OFFICE MACHINES RIGHT-OF-ASSET UNDER AND OTHER PRODUCTION TECHNICAL USE ASSETS CONSTRUCTIONEQUIPMENTEQUIPMENT BUILDINGSINSTALLATIONS(NOTE 3.3) TOTALAcquisition cost as of 01.01.202381 614 107 614 440 535 125 218 12 139 232 833 999 953Additions 482 427 60 420 22 173 3 778 4 791 31 397 604 986Disposals 0 -2 936 0 0 0 0 -2 936Reclassification -5 658 486 5 172 0 0 0 0Remeasurement 0 0 0 0 0 28 661 28 661Currency effects -6 200 4 545 -2 005 6 033 34 1 459 3 866Acquisition cost as of 31.12.2023 552 183 170 128 465 875 135 029 16 964 294 350 1 634 529Additions 362 760 37 321 125 491 1 107 672 29 196 556 546Disposals 0 -116 0 0 0 0 -116Reclassification -604 363 131 001 464 223 0 9 139 0 0Remeasurement 0 0 0 0 0 22 353 22 353Discontinued operation 0 -84 121 -9 638 -96 429 -546 -26 927 -217 660Currency effects 25 550 12 004 13 366 0 0 5 691 56 611Acquisition cost as of 31.12.2024 336 129 266 217 1 059 318 39 707 26 229 324 663 2 052 263Accumulated depreciation as of 0 49 562 82 656 18 001 2 343 61 902 214 46401.01.2023Depreciation 0 29 146 46 866 4 674 826 31 820 113 331Impairment 0 0 360 187 0 0 547Reversed depreciation disposals 0 -2 936 0 0 0 0 -2 936Currency effects 0 1 672 860 911 2 0 3 445Accumulated depreciation as of 0 77 443 130 742 23 774 3 171 93 722 328 85131.12.2023Depreciation 0 20 378 84 187 633 1 544 29 734 136 476Discontinued operation 0 -42 860 -7 317 -19 437 -58 -14 454 -84 127Currency effects 0 3 259 3 725 0 0 0 6 984Accumulated depreciation as of 0 58 219 211 337 4 970 4 656 109 002 388 18431.12.2024Carrying value as of 31.12.2023 552 183 92 685 335 134 111 255 13 793 200 628 1 305 678Carrying value as of 31.12.2024 336 129 207 997 847 981 34 737 21 573 215 662 1 664 079Useful life 3-5 years 3-8 years 30-40 years 15-20 years 2-10 yearsDepreciation plan Straight-line Straight-line Straight-line Straight-line Straight-line Property, plant and equipment is included in ‘other invested capital’ allocated to the differenct CGU’s. See note 11 for impairment considerations for other invested capital. 116 Notes to the consolidated financial statements 2024 USEFUL LIFE, DEPRECIATION PLAN • Office machines and other equipment has a useful life of 3-5 years • Production equipment has a useful life of 3-8 years • Buildings has a useful life of 30-40 years • Technical installations have a useful life of 15-10 years • Right of use assets has a useful life of 2-10 years Alkaline Herøya expansion n 2024, Nel continued executing the expansion at Herøya in Norway with the opening of an additional 500 MW alkaline production line, to a total of 1 000 MW capacity. There is no contractual commitment related to the production lines at Herøya beyond 2024. Subsequent to 2024, the production at Herøya is temporarily halted. A re-opening is dependent on order intake for Alkaline electrolysers. PEM Wallingford expansion In 2024, Nel expanded its electrolyser manufacturing facility in Wallingford, Connecticut. The expansion will bring annual production capacity towards 500MW in 2025. The carrying amount for the PEM expansion is NOK 291 million as of 31 December 2024. Total contractual commitments beyond December 2024 for the PEM expansion are NOK 55 million, including purchase contracts for all the physical equipment needed. Impairment An assessment of impairment of property, plant and equipment is made if there is an indication of impairment. If the impairment test reveals that an asset’s carrying amount is higher than the recoverable amount, an impairment loss will be recognised. Property, plant and equipment is included in ‘other invested capital’ allocated to the respective CGU’s for the annual impairment test where goodwill is allocated. See note 3.1 for impairment considerations for other invested capital. 3.3 Leases At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16. AS A LESSEE At commencement date or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component based on its relative stand-alone prices. The Group has not chosen to follow the practical expedient to account for the lease and non-lease components as a single component. Non-lease components are treated separately in other standards than IFRS 16. The group recognise a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease, or if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. Refer to section significant accounting judgements – estimating the incremental borrowing rate (IBR) for additional information. Lease payments included in the measurement of the lease liability comprise the following: i) fixed payments and ii) variable lease payments that depend on an index, initially measured using the index or rate as at the commencement date. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset. Payments for insurance, property tax and VAT are excluded from the lease payments amount as they are defined as variable lease payments. The Group presents right-of-use assets in ‘property, plant and equipment’ and the lease liabilities within ‘lease liabilities’, divided into current and non-current portions. Short-term leases and leases of low value assets Nel have elected the practical expedient of treating short- term leases and low value assets outside the scope of IFRS 16 Nel ASA I Annual report 2024 117 Significant accounting judgements - Estimating the incremental borrowing rate (IBR)The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its IBR to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group ‘would have to pay’, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions). The Group determines its incremental borrowing rate by considering various interest rates (risk free rate as 10-year government bonds, and risk premiums) and makes certain adjustments to reflect the terms of the lease, the type of the asset leased and certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating). The group has lease contracts for various items like manufacturing facilities, offices, warehouse, parking, vehicles and other equipment used in its operations. Leases of manufacturing facilities generally have lease terms between 10 and 15 years, while offices, warehouse and parking have about 5 years and motor vehicles, and other equipment generally have lease terms between 3 and 5 years. The Group’s obligations under its leases are secured by the lessor’s title to the leased assets. ‘Manufacturing facilities’ comprise the Group’s two significant leases in the manufacturing facilities at Herøya (Alkaline Norway) and Wallingford (PEM US). Right-of-use assets(Amounts in NOK thousands)OFFICE, MANUFACTUR-WAREHOUSE MOTOR ING FACILITIESAND PARKINGVEHICLES EQUIPMENT TOTALAs of 01.01.2023124 06144 839 1 608 423 170 931Additions 0 23 756 7 641 0 31 397Remeasurement 7 542 21 013 94 13 28 661Depreciation -14 487 -15 283 -1 913 -137 -31 820Translation difference 875 670 -116 30 1 459As of 31.12.2023 117 990 74 994 7 314 329 200 628Additions 5 137 24 059 0 0 29 196Remeasurement 18 208 4 145 0 0 22 353Depreciation -15 659 -13 905 -170 0 -29 734Discontinued operation 0 -5 368 -6 775 -329 -12 473Translation difference 2 711 2 975 5 0 5 691As of 31.12.2024 (note 3.2) 128 387 86 900 375 0 215 662 From June 2024, the group remeasured the lease term within the lease agreement of Wallingford (US), as the lease was extended by 7 years by exercise of options. The extension was based on an evaluation of Nel’s plan to increase the production capacity in the United States, including the budget planned for capital expenditure in 2024 and 2025, and economic incentives to not reallocate skilled staff and its fixed assets to a new production facility. Nel has another option to further extend the lease term beyond May 2031. As of 31 December 2024, the economic incentives for the extension due in May 2031 were considered unclear and not 118 Notes to the consolidated financial statements 2024 reasonably certain due to the uncertainties about the size of the capacity expansion, total investment and location. Nel is not reasonably certain to exercise such option, and potential lease payments beyond May 2031 has not been recognised as right of use assets or lease liabilities. The remeasurements resulted in an increase of the right-of- use assets and lease liabilities of NOK 15.0 million in 2024. Lease liabilities The table below show the carrying amounts of lease liabilities (both current and non-current portion) and the movements during the period: (Amounts in NOK thousands)2024 2023Balance as of 01.01. 237 203 200 615Additions 29 196 31 397Remeasurement 22 353 28 661Accretion of interest 16 481 14 812Lease payments -39 809 -40 585Discontinued operation -11 693 0Translation differences 6 270 2 304Balance as of 31.12. 260 002 237 203Current44 479 38 067Non-current 215 523 199 136Balance as of 31.12.260 002 237 203 Maturity analysis of undiscounted cash flow in lease liabilities: 2025 2026 2027 2028 >2028 TOTAL Lease liabilities 45 726 45 227 40 518 39 871 173 199 344 540 The difference between discounted cash flows and undiscounted cash flows (discount effect) is NOK 84.5 (86.5) million as of 31.12.2024. The discount effect is mainly related to manufacturing facility at Herøya, Norway, with included lease term until 2035 and manufacturing facility in Wallingford, US, with included lease term until 2031. Reconciliation of liabilities arising from financing activities in statement of cash flows, split in cash flows and non-cash changes.(Amounts in NOK thousands)2024 2023Balance as of 01.01.237 203 200 615Cash flows principal amount-23 328 -25 773Cash flows interests-16 481 -14 812Non-cash changes:Additions and remeasurements51 549 60 058Accretion of interest expense16 481 14 812Discontinued operation-11 693 0Foreign currency effects6 270 2 304Balance as of 31.12.260 002 237 203 Nel ASA I Annual report 2024 119 Amounts recognised in profit or loss (Amounts in NOK thousands)2024 2023Depreciation expense of right-of-use assets-29 734 -31 820Interest expense on lease liabilities-17 710 -16 041Expense relating to leases of low-value assets-146 -241Expense relating to short-term leases, excluding short-term leases of low-value assets-1 953 -885TOTAL amount recognised in profit or loss-49 544 -48 987 Other informationTotal cash outflow for leases as a lessee41 908 41 711Weighted incremental borrowing rate used as discount rate for the measuring of lease liabilities6,6 % 6,7 % Extension and termination options The Group has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Group’s business needs. Significant accounting judgements - Determining the lease term of contracts with renewal and termination options - Group as a lessee.The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Group has several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.In general, the renewal periods for leases of manufacturing facilities, offices, warehouse and parking with longer non-cancellable periods (i.e. 6-10 years) are not included as part of the lease term as these are not reasonably certain to be exercised. In addition, the renewal options for leases of motor vehicles are not included as part of the lease term because the Group typically leases motor vehicles for not more than three years and, hence is not exercising any renewal options. The periods covered by termination options are included as part of the lease term only when they are reasonably certain not to be exercised. 120 Notes to the consolidated financial statements 2024 Set out below are the material undiscounted potential future rental payments relating to periods following the exercise date of extension and termination options that are not included in the lease term. 2025 2026 2027-2029 >2029Extension options not reasonably certain to exercise0 0 0 67 180Termination options expected to be exercised0 0 0 0TOTAL0 0 0 67 180 AS A LESSOR The group have no leases as lessor except for sub-lease. All sub-leases are office space that has been presented as right- of-use assets as part of the property, plant and equipment. When considering the lease term of the sub-lease and the head lease a major part of the economic life of the asset is retained by the Group. All sub-leases have been classified as operating leases and the lease payments received is recognised on a straight-line basis over the lease term as part of ‘other operating income’. 3.4 Investments in associated companies and joint ventures An associate is an entity where the group has significant influence, but not control or joint control. A joint venture is an entity where the group has joint control contractually together with one or several other parties, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. The group’s investments in its associates and joint ventures are accounted for using the equity method. They are initially recognised at cost, which includes transaction costs. The statement of profit or loss reflects the group’s share of the profit or loss in equity-accounted investees. Any change in OCI of those investees are presented as part of the group’s OCI. No dividends have been received during 2024 or 2023. The group is not committed to financing the losses and has not provided any guarantee of equity-accounted investees’ obligations. This means that if equity in any of the equity- accounted investees are negative, Nel recognise book value of shares as NOK 0 at the end of the year, without any provisions for liabilities. (Amounts in NOK thousands) ACQUISITION COST CARRYING VALUESCOUNTRY SEGMENT OWNERSHIP TYPE 2024 2023 2024 2023Sagim SAS France Alkaline 37.0% Associate 100 100 100 100SUM associated companies 100 100 100 100TOTAL associated companies and joint ventures 100 100 100 100 Nel ASA I Annual report 2024 121 3.5 Non-current financial assets (Amounts in NOK thousands)2024 2023Investment in equity instruments 0 9 800Long-term investments 203 010 147 053Fair value of derivatives 0 407Prepayments 159 161Other non-current financial assets 0 1 837Balance as of 31.12. 203 169 159 259 LONG-TERM INVESTMENTS Nel occasionally enters contracts with customers with specific guarantee clauses that require Nel to purchase certain performance bonds or advance payment guarantee products from financial institutions. The products are secured by cash collateral. In addition, Nel has some lease agreements which require deposits in a restricted bank account throughout the lease term. Both cash collateral and deposits are assessed as investments (i.e. not cash or cash equivalents) as the maturity exceeds 3 months. Long-term investments include the investments that exceed 12 months. Performance and warranty bonds NOK 96.3 (66.4) million relates to outstanding irrevocable letters of credit used as assurance for bid and contract performance, these letters of credit mature between 31 December 2024 and 31 January 2027. As of 31 December 2024, the customers have drawn NOK 0.0 (0.0) million on the letters of credit. Advance payment guarantee Generally, in the contracts with customers, Nel receives advance payments. As of 31 December 2024, Nel has NOK 54.3 (9.5) million as cash collateral for irrevocable letters of credit issued for advance payment guarantees with financial institutions. As of 31 December 2024, the customers have drawn NOK 0.0 (0.0) million on the letters of credit. Lease payments guarantee (deposits) and other collateral Deposits for lease payments comprise security for lease payments throughout the lease terms for cars, office premises and manufacturing facilities. In addition, collateral for bank credit lines. As of 31 December 2024, the Group has NOK 44.9 (67.1) million in such deposits. 122 Notes to the consolidated financial statements 2024 4.1 Inventories Inventories comprises purchased raw materials, work in progress and finished goods. Obsolescence is considered for inventories, and write-down is performed on obsolete goods. Inventories are measured under the weighted-average cost formula. The cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items bought or produced during the period. The average is calculated on a quarterly basis. (Amounts in NOK thousands)2024 2023Raw material66 842 39 496Work in progress102 787 126 111Finished goods375 919 261 274Allowance for obsolete inventory-13 799 -5 189Discontinued operation0 282 298Balance as of 31.12.531 748 703 990 Inventories are measured at the lowest of cost and net realisable value less costs to sell. In both 2024 and 2023, all items of inventories are measured at cost. The amount of inventories recognised as an expense was NOK 584.0 (783.0) million during the period. 4.2 Trade receivables Trade receivables are initially recognised at their transaction price, i.e. the amount of consideration to which Nel expects to be entitled for transferring the promised goods or services to the customer. Trade receivables are subsequently accounted for at amortised cost and are reviewed for impairment on an ongoing basis. Trade receivables are generally not discounted. Trade receivables are presented net of expected credit losses. Changes in the expected credit loss are recognised within other operating expenses in statement of comprehensive income. (Amounts in NOK thousands)2024 2023Receivables from third-party customers777 685 843 964Receivables from a joint venture0 0Receivables from an associate0 0Gross trade receivables 777 685 843 964Allowance for expected credit losses-77 006 -31 557Balance as of 31.12.700 679 812 407 Trade receivables are non-interest bearing and are generally on terms 30 to 60 days Movements in the allowance for impairment in respect of trade receivables (Amounts in NOK thousands)2024 2023Balance as of 01.01.31 557 2 270Discontinued operation-22 408Net remeasurement of loss allowance67 857 29 287Balance as of 31.12.77 006 31 557 See Note 6.2 on credit risk of trade receivables, which explains how the group manages and measures expected credit loss of trade receivables that are neither past due nor impaired. Nel recognises loss allowances for ‘Expected Credit Loss’ (ECL) on: a) Financial assets measured at amortised cost; and b) Contract assets Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECLs. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment, that includes forward-looking information. MEASUREMENT OF ECLs ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to Nel in accordance with the contract and the cash flows that Nel expects to receive). PRESENTATION OF ALLOWANCE FOR ECL IN THE STATEMENT OF FINANCIAL POSITION Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. Nel ASA I Annual report 2024 123 4.3 Prepaid expenses and other current assets (Amounts in NOK thousands)2024 2023VAT net receivable32 034 41 623Short-term investments2 260 24 013Prepayments230 731 214 855Other current assets7 052 145 456Fair value of derivatives3 451 21 396Balance as of 31.12.275 529 447 342 SHORT-TERM INVESTMENTS Performance and warranty bonds, advance payment guarantee and lease payments guarantee (deposits) Guarantees are included as short-term investments with NOK 2.3 (24.0) million. This is the short-term equivalent to the long-term investments, see note 3.5 for additional information. 4.4 Cash and cash equivalents Cash and cash equivalents include cash, bank deposits and all other monetary items due within three months or less. (Amounts in NOK thousands)2024 2023Cash and cash equivalents1 856 388 3 347 803Restricted bank deposits for employees' withheld taxes at 31.1219 193 15 628Balance as of 31.12.1 875 580 3 363 4312024 2023Norwegian Kroner 1 831 126 3 096 630US Dollars 55 827 132 411Danish Kroner -7 316 57 406Swedish Kroner -26 275 5 557Euro 10 835 54 429GB Pounds 11 379 11 174Korean Won 0 5 815Polish Zloty 6 9Balance as of 31.12. 1 875 580 3 363 431 Cash and cash equivalents are 98% (92%) in the Norwegian Krone (NOK) at the end of 2024. NOK 1 564 million is placed in 30-days locked interest accounts in a portfolio of banks. 124 Notes to the consolidated financial statements 2024 5.1 Share capital and shareholders SHARE CAPITAL The share capital comprises the number of shares multiplied by their par value and are classified as equity. Expenses which can be attributed directly to the issue of new shares or options (less tax) are recognised in equity as a reduction in the proceeds received. As of 31 December 2024, the group’s share capital was NOK 334.3 (334.3) million, consisting of 1 671 325 304 (1 671 325 304) shares each with a par value of NOK 0.20 (0.20). The parent company has only one share class and no special regulations relating to the shares; thus, one share represents one vote. As of 31 December 2024, Nel ASA owns 418 033 treasury shares which are recognised at par value NOK 0.20 within ‘treasury shares’ as a reduction of share capital and total equity. SHAREHOLDERS AS OF 31.12.2024 COUNTRY NUMBER OF SHARES OWNERSHIPThe Vanguard Group, Inc. United States 63 343 459 3,79 %BlackRock, Inc. United States 58 407 373 3,49 %Svenska Handelsbanken AB Sweden 30 050 347 1,80 %Storebrand ASA Norway 21 355 002 1,28 %DNB Bank ASA Norway 20 509 252 1,23 %KLP Kapitalforvaltning Norway 20 930 000 1,25 %Mirae Asset Global Investments Co., Ltd. United Kingdom 18 551 741 1,11 %Legal & General Group Plc United Kingdom 17 658 530 1,06 %Folketrygdfondet Norway 17 505 000 1,05 %Montpensier Finance SAS France 16 611 599 0,99 %Van Eck Associates Corp. United States 16 355 528 0,98 %BNP Paribas SA France 10 794 117 0,65 %Deutsche Bank AG Germany 7 836 687 0,47 %SAS Rue la Boetie France 6 795 582 0,41 %Deutscher Sparkassen-und Giroverband eV Germany 6 534 530 0,39 %Swedbank AB Sweden 6 196 169 0,37 %green benefit AG Germany 5 789 841 0,35 %Penserra Capital Management LLC United States 5 781 371 0,35 %Dimensional Holdings, Inc. United States 5 207 156 0,31 %Assicurazioni Generali SpA Italy 4 018 000 0,24 %Total 20 largest shareholders 360 231 284 21,55 %Total remaining shareholders 1 311 094 020 78,45 %Total number of shares 1 671 325 304 100,00 % Nel ASA I Annual report 2024 125 5.2 Long-term debt (Amounts in NOK thousands) LONG-TERM DEBT - LENDER 2024 2023Discontinued operation 0 22 458Balance as of 31.12. 0 22 458 The reconciliation of lease liabilities arising from financing activities and maturity analysis for lease liabilities are disclosed in note 3.3 leases. 5.3 Deferred income (Amounts in NOK thousands)2024 2023Government grants69 279 50 601Discontinued operation0 15 642TOTAL deferred income69 279 66 243 GOVERNMENT GRANTS Government grants are recognised where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with. When the grants relate to an expense item, it is normally recognised as other operating income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. Grants received that relate to an acquisition or development of assets has been presented “gross” in Nel’s financial statements. A gross presentation entails that the grant received is presented separately as deferred income. The deferred income is presented as a non-current liability and is amortised over the useful life of the related asset. The amortised part of the deferred income is presented as other operating income in the statement of comprehensive income. (Amounts in NOK thousands)GOVERNMENT GRANTS 2024 2023As of 31.12. 66 243 64 049Grants received 23 247 9 280Income recognised within 'other income' in 2024 (note 2.2) -4 570 -2 953Discontinued operation -15 642 -9 075Translation difference 0 4 942As of 31.12. 69 279 66 243 The aging schedule shows the remaining governments grants divided in the year the grants was initially received. DEFERRED INCOME AGING SCHEDULE <2021 2021 2022 2023 2024 SUMGovernment grants as of 31.12.202425 302 12 174 4 489 8 636 18 677 69 279Government grants as of 31.12.202325 302 12 174 4 489 8 636 50 601 The table below show the split of deferred income (government grant) per operating segment. OPERATING SEGMENT COUNTRY 2024 2023Alkaline Norway 69 279 50 601Discontinued operation Denmark 0 15 642Balance as of 31.12. 69 279 66 243 The group is not aware of any unfulfilled conditions associated with these grants 126 Notes to the consolidated financial statements 2024 5.4 Other liabilities OTHER CURRENT LIABILITIES (Amounts in NOK thousands)2024 2023Vacation allowance and other salary related accruals 60 500 58 502Public duties payable 44 462 35 606Other current liabilities 59 596 127 985Fair value of derivatives 9 237 16 123Balance as of 31.12. 173 795 238 216 OTHER NON-CURRENT LIABILITIES (Amounts in NOK thousands)2024 2023Contingent liabilities 5 263 4 860Balance as of 31.12. 5 263 4 860 5.5 Provisions PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS The group makes provisions when a legal or constructive obligation exists as a result of past events, it is more likely than not that a transfer of financial resources will be required to settle the obligation, and the amount of the obligation can be reliably estimated. When the group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. When the effect is significant, provisions are calculated by discounting expected cash flows at a pre-tax rate that reflects the time value of money and if appropriate the risks specific to the liability. Increase in provisions as a result of time passing, is presented as interest expense. Information regarding significant contingent liabilities is disclosed. A contingent asset is not recognised, but information is disclosed if there is a possibility that a significant advantage will accrue to the group. (Amounts in NOK thousands)ACCRUED EMPLOYEE SETTLEMENT ONEROUS WARRANTYBENEFITSAND CLAIMSCONTRACTS TOTALAs of 01.01.2023 68 546 21 792 21 762 41 340 153 440Additions 44 902 36 896 0 23 249 105 047Used during the year -40 056 -13 490 -1 000 -37 769 -92 315Reversal of unused provisions -15 131 0 -22 434 -2 441 -40 006Foreign currency translation 1 551 1 261 1 672 1 067 5 551As of 31.12.2023 59 812 46 458 0 25 446 131 717Additions 24 562 26 602 0 7 518 58 682Used during the year -15 721 -22 904 0 -18 818 -57 443Reversal of unused provisions 0 -1 519 0 0 -1 519Discontinued operation -24 355 -14 640 0 -6 164 -45 159Foreign currency translation 1 180 1 517 0 674 3 371As of 31.12.2024 45 478 35 515 0 8 657 89 650 Nel ASA I Annual report 2024 127 ACCRUED WARRANTY The groups warranty to customers is limited to replacement parts and services and generally expires one year from the date of shipment or contract completion. Such warranties are limited in time, for most products not exceeding 12 months. Warranty is based on both contractual commitments and caused by liability under background law. Estimated warranty obligations are recorded in the period in which the related revenue is recognised or when a project is installed or commissioned. The group quantifies and records an estimate for warranty related costs, which is principally based on historical experience. The accounting for warranties requires the Group to make assumptions and apply judgments when estimating product failure rates and expected material and labour costs. The group adjusts accruals as warranty claim data and historical experience warrant. If actual results are not consistent with the assumptions and judgments used to calculate the warranty liability because either failure rates or repair costs differ from the groups assumptions, the group may be exposed to gains or losses that could be material. Accrued warranty provision is based on experience assumptions and provision comprises a percentage of revenue from contracts with customers, in the range of 3% to 5%. EMPLOYEE BENEFITS Nel has short term incentive bonuses in place for all employees. The provision for bonus incurred in 2024 to be finally measured and paid in 2025 is 35.5 NOK (46.5) million. In addition, the employee benefits include provision for social security on stock options for social security payable in Norway, calculated at the intrinsic value at year end. The provision fluctuates with the number of active options, timing of exercise and Nel ASA share price. See note 2.5 for further information on share option program. SETTLEMENT AND CLAIMS Settlement and claims comprise disputes, claims and fines where cash outflow is assessed probable (more likely that not to occur). At the end of 2024, Nel have no provisions for settlement and claims. Nel ASA is one of three corporate defendants in a law suit initiated by Iwatani Corporation of America. The matter is currently in an early stage of the discovery phase which is expected to continue throughout 2025. Nel has so far seen a limited amount of basis for the different claims, including but not limited to evidence and witness statements. A potential court case is expected at the earliest in the second half of 2026. Nel and the other defendants strongly reject the allegations made in the law suit. Based on the facts of the matter, the chance of the future event occurring is remote to reasonable possible. Nel has currently not made any provision related to the claim. ONEROUS CONTRACTS An onerous contract is a contract in which the unavoidable costs (i.e. the lower of the cost of fulfilling the contract and any compensation or penalties arising from failure to fulfil it) exceed the economic benefits expected to be received under the contract. For all contracts that are onerous, the present obligation under the contract is recognised and measured as a provision. 6.1 Operational risk factors OBJECTIVES, POLICIES AND PROCESSES FOR MANAGING CAPITAL The group’s objective is to manage the capital structure to safeguard its ability to continue as a going concern, develop the business to provide long-term returns for shareholders and provide benefits for other stakeholders. The group sets and adjusts the targeted size of capital based on business strategy, risk and financial market conditions. The risk assessment includes risk associated with market development, product development and risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the group may adjust the amount of new share issue or increase the debt by taking up loans. A failure to adequately assess the capital structure requirements of its business or inability to deliver on the targeted capital structure may have a material adverse effect on Nel. Technological change The renewable hydrogen industry in which Nel operates targets markets where abatement of climate emissions is hard. While many applications currently have no credible alternative for large-scale decarbonization other than through the use of renewable hydrogen, there is a risk that other technologies may emerge that better addresses climate change. The renewable hydrogen market relies on continued availability of renewable energy at acceptable costs. Disruptions in the value chain for renewable energy assets or an insufficient build-out rate of renewable energy may significantly delay the market potential for renewable hydrogen. Along with the significant market potential of the renewable hydrogen market comes increased competition. This also results in increased activity n research and development across the hydrogen industry. Nel’s electrolyser technology consist of both Alkaline and PEM. Currently, Nel’s Alkaline technology platform presents the advantage of having the better solution 128 Notes to the consolidated financial statements 2024 for large scale installations based on lowest cost and the highest efficiency. Nel’s PEM technology platform has the advantage of being more compact and easier to integrate into turnkey deliveries and having a dynamic response suitable for intermittent operation, making it a better solution for small- and mid-sized installations. Both technology platforms require continued development and cost reduction efforts to become commercially viable in large market segments without government incentives. It is a risk that one or both of the existing technologies in Nel becomes obsolete, or that competitors develop fundamentally better versions of PEM or Alkaline technology. In addition, Nel continuously monitors the developments and possibilities of a disruptive technology emerging. Today, Anion Exchange Membrane (AEM) and Solid Oxide (SOEL) represent possible disruptors. While all technologies can potentially co-exist, the competing technology and sharing market potential, including the required investment in new technology constitutes a material risk for Nel. There are risks associated with technological change, both related to technology elements within the field of hydrogen as well as technology elements outside the field of hydrogen that potentially could make renewable hydrogen less relevant for the future. If any of these circumstances materialize in a negative direction, it may have a significant adverse effect on the group’s business, prospects, financial results or results of operations. Expansion risk The uneven pace of Nel’s anticipated expansion in facilities, staff and operations may place serious demands on the group’s managerial, technical, financial, and other resources. The organisation is currently relatively small and there is no guarantee that the group will be able to build a capable organisation at a speed that is required to meet the demands of its customers or potential customers. Nel’s failure to manage its growth effectively or to implement its strategy in a timely manner may significantly harm its ability to achieve profitability. Dependence of third parties in manufacturing The group’s electrolyser manufacturing operations rely on external subcontractors and suppliers of services and goods. This operating model inherently contains a risk to the group’s ability to deliver to customers, its goodwill and branding. If suppliers fail to deliver or to meet agreed or generally accepted standards in areas such as environmental compliance, human rights, labor relations and product quality, this could have a significant adverse effect on the group’s business, prospects, financial results and results of operations. The company aims at addressing reputational risk through supplier selection. The majority of the external spending is directed towards large industrial companies with full ISO compliance and smaller vendors that are in compliance with local legislation. Further, Nel conducts regular quality reviews, including production site visits for risk assessment. Nel is dependent on a limited number of third-party sub-suppliers for its electrolyser equipment. Contract manufactured or purchased components are designed and selected in order to reduce the risk of a critical supply situation. However, if Nel fails to develop or maintain its relationships with its suppliers or such suppliers are prevented from supplying, Nel may be unable to deliver on the agreed time, quality and cost and may experience order cancellations, additional costs, customer claims and loss of market share. To reduce the sourcing risk Nel’s supply chain strategy is to have dual supply chains on all components. Nel currently has few components with single source. Another supply chain risk is whether the suppliers can follow the expected growth of the industry. In addition to making its current supply chain more robust, Nel is working to facilitate increasing volumes from important sub-suppliers. Project risk Nel participates in large commercial projects. Large commercial projects are subject to risks of delay and cost overruns inherent in any large construction project from numerous factors, including: • unexpectedly long delivery times for, or shortages of, key equipment, parts and materials; • unforeseen design and engineering problems leading to delays; • labor disputes and work stoppages; • HSE accidents/incidents or other safety hazards; • disputes with suppliers; • last minute changes to the customer’s specifications; • adverse weather conditions or any other force majeure events; and • inability or delay in obtaining regulatory approvals or permits Failure to complete a commercial project on time may result in delays, renegotiation or cancellation of the contract. Further, significant delays could have a negative impact on Nel’s reputation and customer relationships. Nel could also be exposed to contractual penalties for failure to complete the project and commence operations in a timely manner, all of which would aadversely affect Nel’s business, financial condition and results of operations. Nel ASA I Annual report 2024 129 Key personnel The successful development and performance of the group’s business depends on the group’s ability to attract and retain skilled professionals with appropriate experience and expertise. Further, if the group loses the service of its senior management or key personnel, it may not be able to execute its business strategy. There is no assurance that the group will be able to attract or retain such personnel on acceptable terms or at all. Any failure to attract or retain such personnel could have a material adverse effect on the group’s business and operations. Customer risk Nel’s ability to grow and generate incremental revenue depends on its ability to successfully acquire new customers, and to maintain and grow its relationships with existing customers. There can be no assurance that Nel will be able to secure new customers, or maintain its relationships with existing customers, in the future. Further, a number of Nel’s existing and potential customers are themselves planning substantial growth, and should these customers fail to succeed with their business plans or fail to fulfill their contracts with Nel, Nel’s sales to such customers may be adversely affected, and Nel’s revenues and results may suffer as a result. Intellectual property rights Nel seeks to protect important proprietary manufacturing processes, documentation and other written materials, and other intellectual property primarily under patent, trade secret and copyright laws. It also typically requires employees, consultants and companies that have access to its proprietary information to execute confidentiality agreements. The steps taken by Nel to protect its proprietary information may not be adequate to prevent misappropriation of its technology. In addition, Nel’s proprietary rights may not be adequately protected because: • third parties may not be deterred from misappropriating its technologies despite the existence of laws or contracts prohibiting misappropriation: • policing unauthorised use of Nel’s intellectual property is difficult, expensive and time-consuming, and the group may be unable to determine the extent of any unauthorised use; and • the laws and legislation of countries in which the group sells or plans to sell its products may offer little or no protection for its proprietary technologies. Unauthorised copying or other misappropriation of Nel’s proprietary technologies could enable third parties to benefit from its technologies without paying for doing so. Any inability to adequately protect its proprietary rights could harm the group’s ability to compete, to generate revenue and to grow its business. This could have a significant adverse effect on the group’s business, prospects, financial results and results of operations. Some of the group’s patents are due to expire within the next couple of years, which means that the group will lose the sole right to certain technology in certain areas. Although the company believes that this will have little effect on the company’s competitive position, no assurance can be made to this point. The group may not obtain sufficient patent protection on the technology embodied in its products and production processes, which could significantly harm its competitive position. Patents may provide only limited protection for its technology and may not be sufficient to provide competitive advantages. For example, competitors could be successful in challenging any issued patents or, alternatively, could develop similar or more advantageous technologies on their own or design around the group’s patents. Also, patent protection in certain countries may not be available, be limited in scope and/or not be readily enforceable, making it difficult for the group to effectively protect its intellectual property from misuse or infringement. Any inability to obtain and enforce intellectual property rights could have a significant adverse effect on the group’s business, prospects, financial results and results of operations. In addition, given the costs of obtaining patent protection and the sometimes limited potential for protection, the group may choose not to protect certain innovations that later turn out to be important. There is also a general risk that the group receives information subject to confidentiality agreements, regarding other parties’ know- how and trade secrets in relation to technology which may hinder the group from development of similar intellectual assets. Adverse publicity and product liability Product liability claims against the group could result in adverse publicity and potentially monetary damage. It is possible that its products could result in injury, whether by product malfunctions, defects, improper installation or other causes. The successful assertion of product liability claims against the group could result in potentially significant monetary damage, which could have a significant adverse effect on the group’s business, prospects, financial results and results of operations. 130 Notes to the consolidated financial statements 2024 6.2 Financial risk factors The key financial risks the group is exposed to are related to liquidity, currency, interest rate, and credit risk. Liquidity risk Liquidity risk is the potential loss that occurs when the group fails to fulfil its contractual obligations when they fall due. Nel is operating in a fast-growing, emerging market, with a long list of initiatives in many regions. The need to address growth opportunities ahead of actual market demand, balanced with the need to conserve cash, is a continual challenge. The timing of addressing such elements and risks is important. Moving too fast could result in an unnecessarily high cost level, with cash requirements beyond the current financing plan. However, the group has a strong liquidity position, NOK 1 875.6 million, as per 31.12.2024. The strong cash position is a good basis for the group’s growth strategy. The group monitors its risks associated with lack of capital up against the company’s planned activities. The group will, if necessary, attempt to raise capital through private placements, debt financing, partnerships, and strategic alliances or from other sources. The group may fail to raise capital on acceptable terms, or not do it at all, and this can result in a liquidation of the group. Currency risk Nel operates internationally and is subject to currency risks arising from foreign currency transactions and exposures. As the group presents its consolidated results in NOK, any change in exchange rates between NOK and its subsidiaries’ functional currencies, primarily with respect to changes in USD, affects its consolidated statement of income and consolidated statement of financial position. As the group expands its operations with projects in new markets the currency risk exposure increases. The group is on an overall level managed as a NOK company for currency risk management purposes with primary focus on NOK cash flow. The group’s gross foreign currency risk exposure is significant, with the majority of revenue and expenses denominated in foreign currency. The group mitigates the currency risk exposure by entering into forward currency contracts with financial institutions. The group has a residual net currency risk exposure considering hedging which is considered low to medium. (Amounts in thousands)PROFIT AND LOSS CHANGES IN EXCHANGE RATE NOK/FOREIGN CURRENCIESNET PROFIT IN VALUE IN VALUE IN FOREIGN CURRENCIESCURRENCYNOK-10% -5% +5% +10%DKK -1 180 -1 840 184 92 -92 -184 USD -6 747 -72 484 7 248 3 624 -3 624 -7 248 SEK -132 471 -134 776 13 478 6 739 -6 739 -13 478 GBP 4 150 57 020 -5 702 -2 851 2 851 5 702 EUR 33 020 383 938 -38 394 -19 197 19 197 38 394 Effect on net income (loss) -23 186 -11 593 11 593 23 186 STATEMENT OF FINANCIAL POSITIONNET RECEIVABLES/LIABILITIES IN FOREIGN CURRENCIESUSD 9 432 107 083 -10 708 -5 354 5 354 10 708 SEK -8 173 -8 413 841 421 -421 -841 GBP 934 13 289 -1 329 -664 664 1 329 EUR 53 528 631 368 -63 137 -31 568 31 568 63 137 Effect on net income (loss) -74 333 -37 166 37 166 74 333 Total effect on Net income (loss) and Equity -97 519 -48 759 48 759 97 519 The table shows the gross foreign currency exposure based on each entity in the group’s functional currency, before hedging. Nel’s hedging strategy and designated instruments are elaborated and disclosed in note 6.5. The figures exclude translation of intercompany loans in Nel ASA. Nel ASA I Annual report 2024 131 Interest rate risk The group does not have any interest-bearing long-term debt. Due to the low amount of debt in the group it is assessed that a change in interest rates will not have a material effect on the financial statements. Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Nel is exposed to credit risk from its operating activities (primarily trade receivables and contract assets) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The carrying amounts of financial assets and contract assets represent the maximum credit exposure. Expected credit loss assessment The Group uses an allowance matrix to measure the ECLs of trade receivable from individual customers, which comprise a very large number of small balances. Loss rates are calculated using a factor method based on the probability of a receivable progressing through successive stages of delinquency to write-off. Roll rates are calculated separately for exposures in different segments based on the following common credit risk characteristics - geographic region, age of customer relationship and type of products purchased. The following table provides information about the exposure to credit risk and ECLs for trade receivables from individual customers as of 31 December 2024 and 2023. Loss rates are based on actual credit loss experience over the past two years. These rates are multiplied by a factor to reflect differences between economic conditions during the period over which the historical data has been collected, current conditions and Nel’s view of economic conditions over the expected lives of the receivables. WEIGHTED-AVERAGE GROSS CARRYING 12024LOSS RATEAMOUNT LOSS ALLOWANCECurrent (not past due) 0,1 % 186 526 31 775 1-30 days past due 0,2 % 127 316 318 31-60 days past due 0,5 % 4 990 27 61-90 days past due 2,0 % 4 330 89 91 days to one year past due 30,0 % 51 269 15 381 More than one year past due 7,3 % 403 254 29 416 Total 777 685 77 006 9,9 %WEIGHTED-AVERAGE GROSS CARRYING 2023LOSS RATEAMOUNT LOSS ALLOWANCECurrent (not past due) 0,1 % 183 159 184 1-30 days past due 0,2 % 135 484 271 31-60 days past due 0,5 % 127 945 640 61-90 days past due 2,0 % 29 066 581 91 days to one year past due 8,1 % 368 310 29 881 More than one year past due 10,0 % - - Total 843 964 31 557 3,7 % 1 A customer of Nel entered administration in November 2024. A provision for expected credit losses has been recognised at the end of this year, adding to the loss allowance in the current (not past due) bucket. 132 Notes to the consolidated financial statements 2024 6.3 Market risk factors Market development risk Significant markets for renewable hydrogen products or renewable energy as a major source for hydrogen production may develop more slowly than the group anticipates. This would significantly harm Nel’s revenues and may cause Nel to be unable to recover the expenditure it has incurred and expects to incur in terms of the development and industrialization of its products. Regulatory issues The group’s operations are subject to numerous environmental requirements. Such laws and regulations govern, among other matters, air pollution emissions, wastewater discharges, solid and hazardous waste management, and the use, composition, handling, distribution and transportation of hazardous materials. Many of these laws and regulations are becoming increasingly stringent. The cost of compliance with these requirements can be expected to increase over time. The group’s electrolyser production depends on discharge permits. From time to time, breaches of the allowed emission limits set out in such permits may occur. If such limits of the relevant permits should be exceeded or the permits adjusted or revoked, this may have a significant effect on the group’s operations and result, as the group may be ordered to permanently or temporarily halt production, be subject to fines and/or need to take on additional costs to undertake corrective measures. The group cannot predict the impact of new or changed laws or regulations relating to health, safety, the environment or other concerns or changes in the ways that such laws or regulations are administered, interpreted or enforced. To the extent that any of these requirements impose substantial costs or constrain the group’s ability to expand or change its processes, the group’s business, prospects, financial results and results of operations could suffer. The renewable hydrogen industry is in its development phase and is not currently subject to industry specific government regulations in the European Union, Asia and the United States, as well as other jurisdictions, relating to matters such as design, storage, transportation and installation of renewable hydrogen infrastructure products. However, given that the production of electrical energy has typically been an area of significant government regulation, the Company expects it will encounter industry specific government regulations in the future in the jurisdictions and markets in which it operates. For example, regulatory approvals or permits may be required for the design, installation and operation of Nel’s products. To the extent there are delays in gaining such regulatory approval, Nel’s development and growth may be constrained. Nel’s business will suffer if environmental policies change and no longer encourage the development and growth of clean power technologies. Nel depends substantially on government subsidies. Political developments could lead to a material deterioration of the conditions for, or a discontinuation of, the subsidies for its technology. It is also possible that government financial support for Nel’s technology will be subject to judicial review and determined to be in violation of applicable constitutional or legal requirements or be significantly reduced or discontinued for other reasons. Without government subsidies, or with reduced government subsidies, the availability of profitable investment opportunities for Nel would be significantly lower, which could have a material adverse effect on Nel’s business, financial condition, results of operations and cash flows. Competition The group competes with a large number of competitors. Many competitors are developing and are currently producing products based on technologies that may have costs similar to, or lower than, the group’s projected costs. Many of the group’s existing and potential competitors may have longer operating histories, greater name recognition, structurally better cost positions through geographical location or agreements with local authorities (including direct and indirect subsidies), better access to skilled personnel, better access to research and development partners, access to larger customer bases and significantly greater financial, sales and marketing, manufacturing, distribution, technical and other resources than the group. As a result, they may be able to respond more quickly than the group to the changing customer demands or to devote greater resources to the development, promotion and sales of their products. The group’s business relies on sales of its products, and competitors with more diversified product offerings may be better positioned to withstand a decline in the demand for products of the types that the group offers. It is possible that new competitors or alliances among existing competitors could emerge and rapidly acquire a significant market share, which would harm the group’s business. If the group fails to compete successfully, it could have a significant adverse effect on the group’s business, prospects, financial results and results of operations. Nel ASA I Annual report 2024 133 6.4 Climate-related risks and opportunities Climate-related opportunities Nel is a pure play renewable hydrogen company. Climate- related opportunities are the driver for the revenue and activity growth included in the company’s impairment tests. In addition, the climate-related opportunities also impact the assessment of probable future economic benefits from capitalised technology development. Climate-related risks The company pursue solely climate-related opportunities; therefore, the company does not have any transformation of any legacy business negatively impacted by the climate- related scenarios. Further analysis of the climate-related risks below: Regulatory risks and Geopolitics While climate change is the megatrend, the anticipated role of renewable hydrogen as a sustainable activity contributing to climate change mitigation could change. How geopolitics will impact and shape climate policies going forward constitutes a risk for Nel. We would not be significantly impacted by the introduction of a potential carbon tax or restrictions on the use of carbon-intensive assets. Further, we do not consume products from conflict areas and our consumption of rare materials is limited. However, we identify opportunities in the enactment of a low carbon economy. Reputation Risk Nel recognizes the importance of maintaining a strong brand in the developing renewable hydrogen industry. Reputational risk comprises: i) any damage to brand value that will cause lost opportunities, ii) challenges in recruiting and retaining talent that in turn could halt technology developments and damage customer experience, and iii) challenges in attracting investors due to damaged reputation which could affect the going concern status of the group. Physical Risk None of our manufacturing facilities are located in environments overly exposed to physical risks. Relatedly, our facilities are not located in the areas most exposed to sustained long-term shifts in climate patterns. However, our delivered solutions require continuous access to water and electricity, a shortage of which could impact our products’ performance. 6.5 Hedge accounting DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING The Group holds derivative financial instruments to hedge its foreign currency risk exposures. Derivatives are both initially and subsequently to initial recognition measured at fair value, and changes therein are generally recognised in profit or loss. The group designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with firm commitments and highly probable forecast transactions arising from changes in foreign exchange rates. At the inception of designated hedging relationships, the Group documents the risk management objective and strategy for undertaking the hedge. The group also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other. Cash flow hedges For the purpose of hedge accounting, hedges are classified as cash flow hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or a highly probable forecast transaction. Nel accounts for a hedge of foreign currency risk as a cash flow hedge, including also exposures to an unrecognised firm commitment. When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in OCI and accumulated in the hedging reserve. The effective portion of changes in the fair value of the derivative that is recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. The group designates the currency forward contracts on a ‘forward basis’, which includes both the spot element and the forward element. Then the full fair value of the hedging instrument is used in measuring ineffectiveness. The amount accumulated in the hedging reserve is reclassified to profit or loss in the same period or periods during which the hedged expected future cash flows affect profit or loss. If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, 134 Notes to the consolidated financial statements 2024 the amount that has been accumulated in the hedging reserve remains in equity until it is reclassified to profit or loss in the same period or periods as the hedged expected cash flows affect profit or loss. The Group is exposed to certain risk relating to its ongoing business operations. In 2024, foreign exchange forward contracts are designated as hedging instruments in cash flow hedges of firm sale commitment in U.S. dollar, Euro and British pound. In addition, highly probably forecast transactions in Euro and Swedish Krona. The foreign exchange forward contract balances vary in particular with the magnitude of firm commitment foreign currency sales and changes in foreign exchange forward rates. As of 31 December 2024, the Group held the following instruments to hedge exposures to changes in foreign currency. MORE THAN MATURITY/HEDGING INSTRUMENTS 2025-Q1 2025-Q2 2025-Q3 2025-Q4ONE YEAR TOTALUSD forward contracts, net00 0 0 0 0Average NOK:USD forward contracts rate 0,00 0,00 0,00 0,00 0,00 0,00USDHedged NOK, net (nominal amount) 0 0 0 0 0 0Fair value USD forward contracts 0 0 0 0 0 0SEK forward contracts, net00 0 0 0 0Average NOK:SEK forward contracts rate 0,00 0,00 0,00 0,00 0,00 0,00SEKHedged NOK, net (nominal amount) 0 0 0 0 0 0Fair value SEK forward contracts 0 0 0 0 0 0GBP forward contracts, net0773 0 0 0 773Average NOK:GBP forward contracts rate 0,00 13,41 0,00 0,00 0,00 13,41GBPHedged NOK, net (nominal amount) 0 10 366 0 0 0 10 366Fair value GBP forward contracts -86 -631 0 0 0 -716EUR forward contracts, net52 6515 980 9 217 7 223 0 75 071Average NOK:EUR forward contracts rate 11,78 11,78 11,93 11,90 0,00 11,81EURHedged NOK, net (nominal amount) 619 997 70 447 109 951 85 959 0 886 354Fair value EUR forward contracts -1 755 -706 -74 -775 0 -3 310TOTAL hedged NOK, net (nominal amount)619 99780 813 109 951 85 959 0 896 720TOTAL fair value, NOK -1 841 -1 336 -74 -775 0 -4 026 The effects that hedge accounting has had on the statement of financial position, statement of profit or loss and OCI and statement of changes in equity Hedging instruments are measured at fair value and recognised in the statement of financial position as either an asset or a liability depending on the whether the instrument has a positive or negative value. The fair values recognised represents unrealised gains/losses driven by the changes in foreign exchange rates. Statement of financial position The table below show the fair value of forward exchange contracts designated as hedging instruments in the statement of financial position. Nel ASA I Annual report 2024 135 (Amounts in NOK thousands)CURRENT NON-CURRENT OTHER CURRENT NON-CURRENT TYPE OF HEDGE ITEMSASSETSASSETSLIABILITESLIABILITIES TOTALRevenue11 877407 -16 123 0 -3 839Raw materials 6 070 0 0 0 6 070As of 31.12.2023 17 948 407 -16 123 0 2 232Revenue 3 452 0 -7 477 0 -4 025As of 31.12.2024 3 452 0 -7 477 0 -4 025 Profit or loss and OCI The table below includes the reconciliation of movements in hedging reserve, cash flow hedges, in OCI during the year. (Amounts in NOK thousands)PROPERTY PLANT AND REVENUE RAW MATERIALS FINANCE COSTSEQUIPMENT TOTALAs of 01.01.2023-6 502-2 132 0 0 -8 634Effective portion of changes in fair value -13 236 -3 938 -1 330 0 -18 504Reclassified to profit or loss 6 042 0 1 330 0 7 372Reclassified to statement of financial positions 27 045 0 0 0 27 045(basis adjustment)As of 01.01.2024 13 350 -6 070 0 0 7 279Effective portion of changes in fair value -47 623 10 084 -14 570 0 -52 108Reclassified to profit or loss -4 438 0 14 570 0 10 132Reclassified to statement of financial positions 37 126 -4 014 0 0 33 112(basis adjustment)As of 31.12.2024 -1 585 0 0 0 -1 585 During the year, a hedging gain of NOK 4.4 (-6.0) million has been realised and reclassified to profit or loss within ‘Revenue from contracts with customers’. The timeline below illustrates when the unrealised changes in fair value of the foreign currency forward contracts may be reclassified to profit or loss and statement of financial position. (Amounts in NOK thousands)2024 2025 2026 2027 TOTALRevenue 12 943 407 0 0 13 350Raw materials -6 070 0 0 0 -6 070As of 31.12.2023 7 279Revenue -1 585 0 0 -1 585As of 31.12.2024 -1 585 136 Notes to the consolidated financial statements 2024 Economic relationship and effectiveness The hedged item creates an exposure to buy a foreign currency and sell the functional currency. The forward contract is to sell foreign currency and buy the functional currency. As the hedged exposure is exactly matched by the currency leg of the forward contract (i.e. they are the same amount of currency with the same payment date), there is a clear economic relationship between the hedging instrument and the hedged item. Hedging less than 100 % is considered when natural hedge positions could occur during the hedging period, or to limit the risk of over-hedging given the inherent uncertainties in any estimated cash flow. If there’s no change in the hedge item cash magnitude (e.g. contract termination or amendment) the hedge would be effective as long as the timing of the hedge instrument and hedge item are aligned. The company has recognised ineffectiveness in the income statement in 2024 of about NOK 2 (0) million in finance costs. The Group does not have any fair value hedge or net investment hedge. 6.6 Financial instruments Nel uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: Inputs are quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. Level 2: The fair value of financial instruments that are not quoted in an active market is determined using valuation techniques which maximise the use of observable market price and rely as little as possible on entity-specific estimates. Level 3: Unobservable inputs are used to measure fair value to the extent that relevant observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. Techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data. FINANCIAL INSTRUMENTS AND FAIR VALUES 2024CARRYING AMOUNT FAIR VALUEFAIR VALUE MANDATORILY FINANCIAL ASSETS - HEDGING AT FVTPL AND LIABILTIES AT INSTRUMENTS- OTHERSAMORTISED COST TOTAL LEVEL 1 LEVEL 2 LEVEL 3 TOTALAssetsFinancial assets measured at fair valueForward exchange contracts used for hedging3 452 3 452 3 452 3 452SUM 3 452 3 452 3 452 3 452LiabilitiesFinancial liabilities measured at fair valueForward exchange contracts used for hedging-7 477 -7 477 -7 477 -7 477SUM -7 477 -7 477 -7 477 -7 477 Nel ASA I Annual report 2024 137 2023CARRYING AMOUNT FAIR VALUEFAIR VALUE MANDATORILY FINANCIAL ASSETS - HEDGING AT FVTPL AND LIABILTIES AT INSTRUMENTS- OTHERSAMORTISED COST TOTAL LEVEL 1 LEVEL 2 LEVEL 3 TOTALAssetsFinancial assets measured at fair valueForward exchange contracts used for hedging18 354 0 0 18 354 0 18 354 0 18 354Financial asset - equity instruments0 9 800 0 9 800 0 0 9 800 9 800SUM 18 354 9 8000 28 155 0 18 354 9 800 28 155LiabilitiesFinancial liabilities measured at fair valueForward exchange contracts used for hedging-16 123 0 0 -16 123 0 -16 123 0 -16 123SUM -16 1230 0 -16 123 0 -16 123 0 -16 123Financial liabilities not measured at fair valueLong-term debt0 0 22 458 22 458 0 22 458 0 22 458SUM0 0 22 458 22 458 0 22 458 0 22 458 The management assessed that cash and short-term deposits, trade receivables, other current assets, trade payables and other current liabilities’ carrying amounts is a reasonable approximation of their fair value largely due to the short-term maturities of these instruments. Nel enters into forward exchange contracts with financial institutions, where the fair value of such instruments is based on valuation techniques including market observable inputs. The most frequently applied valuation techniques include forward pricing and swap models using net present value calculations. The models used incorporate various inputs, including the credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves. The valuation is performed by banks or external valuation providers. For recurring fair value measurements using significant unobservable inputs (Level 3), the effect of the measurements on profit or loss for the period has been 0.0 (0.0) million. 6.7 Contractual commitments and commitments for future investments Nel is committed to future investments for PEM expansion in Wallingford, Connecticut, see note 3.2 for additional information. 138 Notes to the consolidated financial statements 2024 7.1 Composition of the group The following subsidiaries are included in the consolidated financial statements: COUNTRY OF CONSOLIDATED OWNERSHIP/ OWNERSHIP/ COMPANYINCORPORATION MAIN OPERATIONSFROM:VOTES 2024VOTES 2023Nel Hydrogen Electrolyser AS Norway Alkaline electrolysers 01.10.2015 100 % 100 %Nel Hydrogen A/S Denmark Hydrogen fueling stations 01.07.2015 0 % 100 %Nel Fuel AS Norway Investment/holding 01.07.2015 100 % 100 %Proton Energy Systems Inc United States PEM electrolysers 01.07.2017 100 % 100 %Nel Korea Co. Ltd South Korea Service of H2Station® 01.07.2018 0 % 100 %Nel Hydrogen Inc United States Service of H2Station® 01.01.2019 0 % 100 %Nel US Holding Inc United States Investment/holding 23.05.2024 100 % naNel Hydrogen Electrolyser Germany GmbH Germany Electrolysers sales office 24.10.2022 100 % 100 %Nel Hydrogen Electrolyser Belgium BV Belgium Electrolyser sales office 27.09.2021 100 % 100 %Nel Austria GmbH Austria Fueling sales office 30.03.2022 0 % 100 %Nel Hydrogen Chile SpA Chile Electrolyser sales office 01/06/2023 100 % 100 %Nel Electrolyser Inc United Stattes Electrolyser distributor 24.05.2024 100 % na All subsidiaries are 100 % owned. There is no uncertainty about control and no restrictions on the ability to access or use assets and settle liabilities in the group. 7.2 Executive management remuneration Nel Executive Management Compensation and number of shares owned 2024(Amounts in NOK thousands)PENSION OTHER TOTAL NUMBER OF 1)REMUNERATION OF MANAGEMENT 2024 SALARY BONUSEXPENSEREMUNERATION REMUNERATIONSHARES2)Håkon Volldal, CEO 4 762 1 550 202 0 6 514 0Kjell Christian Bjørnsen, CFO 3 152 933 202 0 4 287 20 000Marius Løken, CTO 2 869 502 202 0 3 573 03)Esa Laukkanen, former COO 3 130 620 0 1 639 5 389 0Kai Rune Heggland, SVP Alkaline operations 2 104 103 115 0 2 322 8 766Tushar Ghuwalewala, SVP PEM operations 2 609 364 78 0 3 051 0Todd Cartwright, CCO 3 405 0 90 645 4 140 0Hans Hide, SVP Projects 2 362 419 202 0 2 983 30 000Stein Ove Erdal, Chief Legal Officer 2 569 619 202 0 3 390 04)Anne Liberg, CHRO 1 438 0 151 0 1 589 05)Caroline Duyckaerts, former CHRO 1 412 348 142 1 457 3 359 0TOTAL 29 812 5 458 1 586 3 741 40 597 58 7661) Other remuneration is mainly related to share option program and severance pay2) Has a six months notice period, plus is entitled to six months severence pay.3) Left Nel end of October 20244) Employed in Nel from April 20245) Left Nel end of May 20242023 Nel ASA I Annual report 2024 139 2023(Amounts in NOK thousands)PENSION OTHER TOTAL NUMBER OF 1)REMUNERATION OF MANAGEMENT 2023 SALARY BONUSEXPENSEREMUNERATION REMUNERATIONSHARES2)Håkon Volldal, CEO 4 364 589 201 0 5 154 0Kjell Christian Bjørnsen, CFO 3 011 116 201 0 3 328 20 0003)Marius Løken, CTO 1 432 0 102 0 1 534 04)Anders Søreng, former CTO 712 0 32 0 744 naEsa Laukkanen, COO 2 964 55 0 0 3 019 0Robert Borin, SVP Nel Hydrogen Fueling 3 231 106 304 0 3 641 05)Filip Smeets, former CCO 2 603 69 91 2 180 4 943 0Hans Hide, SVP Projects 2 268 85 201 0 2 554 30 000Stein Ove Erdal, Senior Vice President Legal and General Counsel 2 371 126 201 0 2 698 0Caroline Duyckaerts, Chief Human Resources Officer 1 937 67 201 0 2 204 0TOTAL 24 893 1 214 1 534 2 180 29 821 50 0001) Other remuneration is mainly related to share option program and severance pay2) Has a six months notice period, plus is entitled to six months severence pay.3) Employed in Nel from June 20234) Left Nel end of March 20235) Left Nel end of December 2023 The Board of Directors determines the remuneration of the CEO based on a proposal from the Remuneration Committee and approves the general terms of the company’s incentive plans for Executive Management and other key employees. The CEO determines the compensation to the other members of Nel’s Executive Management. Nel’s approach is to provide the CEO and other members of Nel’s executive Management as well as employees with a market competitive offer for our renewable industry. The compensation should be: • attractive to recruit and retain executives and other talents to Nel; • market competitive in the respective locations but not market leading, fitting for our renewable industry; • Support the creation of sustainable value to Nel’s shareholders Total compensation for each member of Executive Management is compared to the relevant market on a regular basis. Nel’s remuneration of the Executive Management includes the Base Salary, Bonus, Share Option Program, Pension (defined contribution plans) and other compensation elements such as car, cell phone and internet connection. 7.3 External audit remuneration FEES TO THE GROUP AUDITOR 2024 2023Statutory auditing services 3 395 2 949Attestation services 218 103Non-auditing services 267 512TOTAL 3 880 3 564 In addition to the fees included in the remuneration table above, the group incurred NOK 1.9 (1.2) million in 2024 of attestation services and non-auditing services provided by companies other than EY, the group auditor. FEES TO OTHER AUDITORS ELECTED BY SUBSIDIARIES 2024 2023Statutory auditing services 0 0Attestation services 1 909 1 217Non-auditing services00TOTAL 1 909 1 217 140 Notes to the consolidated financial statements 2024 7.4 Related parties EXECUTIVE MANAGEMENT Information on key management compensation is disclosed in note ‘7.2 executive management remuneration’. ASSOCIATED AND JOINT VENTURES Nel’s significant transactions with associated companies and joint ventures are described in note 3.4 Investments in associated companies and joint ventures. Transactions with related parties are at arm’s length principles. BOARD OF DIRECTORS Members of Nel’s Board of Directors’ remuneration and share ownership are disclosed in the tables below. 2024BOARD AUDIT REMUNERATION NUMBER OF BOARD OF DIRECTORS 2024MEMBERCOMMITTEECOMMITTEE TOTALSHARES OWNERSHIPOle Enger - Chair of the Board 731 0 75 806 149 462 0,01 %Tom Røtjer 391 0 0 391 0 0,00 %Beatriz Malo de Molina 391 125 0 516 0 0,00 %Charlotta Falvin 391 90 0 481 46 000 0,00 %Hanne Blume 391 0 105 496 0 0,00 %Jens Bjørn Staff 391 0 0 391 0 0,00 %Arvid Moss 391 0 0 391 0 0,00 %TOTAL 3 075 215 180 3 470 195 462 0,01 %2023AUDIT REMUNERATION NUMBER OF BOARD OF DIRECTORS 2023 REMUNERATIONCOMMITTEECOMMITTEE TOTALSHARES OWNERSHIPOle Enger - Chair of the Board 672 0 65 737 149 462 0,01 %Tom Røtjer 366 0 0 366 0 0,00 %Beatriz Malo de Molina 366 115 0 481 0 0,00 %Charlotta Falvin 366 80 0 446 46 000 0,00 %Hanne Blume 366 0 95 461 0 0,00 %2)Jens Bjørn Staff 234 0 0 234 0 0,00 %2)Arvid Moss 234 0 0 234 0 0,00 %1),2)Finn Jebsen 131 0 0 131 na na2)Jon André Løkke 131 0 0 131 na naTOTAL 2 866 195 160 3 221 195 462 0,01 %1) Consisting of shares held through Fateburet AS2) At the Annual General Meeting in 2023, Jens Bjørn Staff and Arvid Moss were elected as board members, replacing Finn Jebsen and Jon André Løkke. Nel ASA I Annual report 2024 141 7.5 Events after the balance sheet date Information about the group’s financial position that has occurred after the balance sheet date is disclosed if the information is considered to be significant for the group’s current financial statements and future position. • About 73% of the net trade receivables past due in group accounts note 6.2 are related to one customer. This year includes no revenue from this customer. Nel has security for the unpaid net trade receivables from this customer in the sold goods. Subsequent to the year, on 15 January 2025, the parties agreed that Nel use the collateral as consideration for the receivables. The collateral value, i.e. the payment for the goods, will offset the receivables from this customer. • Initiated a process to adjust capacity to market demand by reducing the workforce and temporarily halting productions at the Alkaline production facility in Herøya, Norway 7.6 Going concern The financial statement is presented on the going concern assumption under International Financial Reporting Standards. As per the date of this report the group has sufficient working capital for its planned business activities over the next twelve-month period. Parent company financial statements 142 7 Parent company financial statements Nel ASA I Annual report 2024 143 Statement of comprehensive income ................................................................................................................................................................ 148 Statement of financial position as of 31 December ....................................................................................................................................... 149 Statement of cash flows ........................................................................................................................................................................................ 147 Statement of changes in equity .......................................................................................................................................................................... 148 Note 1 Company information ......................................................................................................................................................................... 150 Note 2 Basis for preparation and significant accounting principles ...................................................................................................... 150 Note 3 Revenue from contracts with customers ........................................................................................................................................ 153 Note 4 Personnel expenses ............................................................................................................................................................................. 153 Note 5 Property, plant and equipment......................................................................................................................................................... 154 Note 6 Other operating expenses ................................................................................................................................................................. 154 Note 7 Finance income and cost ................................................................................................................................................................... 155 Note 8 Subsidiaries, associates and joint ventures .................................................................................................................................... 155 Note 9 Income taxes ......................................................................................................................................................................................... 156 Note 11 Other investments ................................................................................................................................................................................ 157 Note 13 Cash and cash equivalents ................................................................................................................................................................. 160 Note 14 Share capital and shareholders......................................................................................................................................................... 160 Note 15 Lease liabilities ....................................................................................................................................................................................... 160 Note 16 Financial risk and derivatives ............................................................................................................................................................. 161 Note 17 Financial instruments ........................................................................................................................................................................... 162 Note 18 Guarantees ............................................................................................................................................................................................. 163 Note 19 Subsequent events ............................................................................................................................................................................... 163 144 Parent company financial statements Statement of comprehensive income (Amounts in NOK thousands) Nel ASA NOTE 2024 2023 Revenue from contracts with customers 3 103 396 77 757 Other operating income 2 192 2 010 Total revenue and operating income 105 588 79 767 Personnel expenses 4 75 715 67 541 Depreciation and amortisation 5 4 102 4 089 Other operating expenses 6 65 280 52 423 Total operating expenses 145 097 124 053 Operating loss -39 509 -44 286 Finance income 7 205 145 235 809 Finance costs 7 -876 204 -198 475 Net financial items -671 059 37 333 Pre-tax income (loss) -710 568 -6 952 Tax expense 9 0 0 Net income (loss) attributable to equity holders of the company -710 568 -6 952 Other comprehensive income 0 0 Comprehensive income (loss) attributable to equity holders of the company -710 568 -6 952 Appropriation of comprehensive income (loss) and equity transfers Dividends proposed 0 0 Retained earnings -710 568 -6 952 Total appropriation -710 568 -6 952 Nel ASA I Annual report 2024 145 Statement of financial position as of 31 December (Amounts in NOK thousands) Nel ASA ASSETS NOTE 2024 2023 NON-CURRENT ASSETS Property, plant and equipment 5 7 949 11 857 Investments in subsidiaries 8 3 759 355 3 989 624 Non-current financial assets 10, 16, 17 158 750 104 076 Long-term receivables group 12 104 135 266 259 Total non-current assets 4 030 189 4 371 816 CURRENT ASSETS Trade receivables 10 410 29 Other current assets 10, 11, 16, 17 9 502 49 150 Cash and cash equivalents 13 1 830 512 3 204 108 Receivables group 12 238 913 159 673 Total current assets 2 089 337 3 412 960 TOTAL ASSETS 6 119 526 7 784 776 146 Parent company financial statements Statement of financial position as of 31 December (Amounts in NOK thousands) Nel ASA EQUITY AND LIABILITIES NOTE 2024 2023 EQUITY Paid in capital Share capital 14 334 265 334 265 Treasury shares 14 (84) (84) Share premium 14 7 598 562 8 661 089 Other capital reserves 14 68 645 65 927 Accumulated deficits / Retained earnings 14 (2 149 059) (1 438 491) Total equity 5 852 330 7 622 707 NON-CURRENT LIABILITIES Lease liabilities 15 3 610 7 025 Long-term debt group 12 186 944 72 447 Total non-current liabilites 190 554 79 472 CURRENT LIABILITIES Trade payables 10 465 5 559 Lease liabilities 15 3 902 3 826 Provisions 7 659 8 047 Short-term liabilities group 12 13 146 29 551 Other non-current liabilities 10, 16, 17 41 470 35 615 Total current liabilities 76 642 82 597 Total liabilities 267 196 162 069 TOTAL EQUITY AND LIABILITIES 6 119 526 7 784 776 Nel ASA I Annual report 2024 147 (Amounts in NOK thousands) Nel ASA NOTE 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax (710 568) (6 952) Adjustments for interest expense 7 536 532 Adjustments interests received 7, 12 (41 916) (69 806) Equity-settled share-based compensation expense 4 481 1 080 Depreciation 5 4 102 4 089 Impairment of financial assets 7 876 031 233 390 Change in fair value equity instruments 11 (23 372) 7 387 Change in provisions (388) 5 647 Change in trade receivables, group receivables (89 621) (11 609) Change in trade payable and group payables (11 499) 9 203 Changes in other current assets and other liabilities (681 675) (30 064) Net cash flow from operating activities (677 889) 142 899 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment 5 (34) (584) Disposal of property, plant and equipment 12 220 - Loan given to subsidiaries 7 (673 505) (1 528 531) Investments in other financial assets 10 (137 918) (92 219) Proceeds from sales of other investments 10 119 682 170 479 Net cash flow from investing activities (691 556) (1 450 854) CASH FLOWS FROM FINANCING ACTIVITIES Interests paid 7 (536) (532) Gross cash flow from share issues 14 - 1 609 200 Transaction costs related to capital increases 14 - (24 696) Payment of lease liabilities 15 (3 615) (3 415) Net cash flow from financing activities (4 152) 1 580 556 Net change in cash and cash equivalents (1 373 596) 272 601 Cash balance as of 01.01 13 3 204 108 2 931 508 Cash balance as of 31.12 13 1 830 512 3 204 108 Statement of cash flows 148 Parent company financial statements (Amounts in NOK thousands) Nel ASA SHARE CAPITAL SHARE PREMIUM OTHER RESERVE TREASURY SHARES RETAINED EARNINGS TOTAL EQUITY Equity as of 31.12.2022 312 665 7 098 185 61 764 -84 -1 431 539 6 040 992 Increase of capital 2023 21 600 1 562 904 1 584 504 Options and share program 4 163 4 163 Total comprehensive income -6 952 -6 952 Equity as of 31.12.2023 334 265 8 661 089 65 927 -84 -1 438 491 7 622 707 Increase of capital 2024 0 0 0 Options and share program 2 719 2 719 Distribution of shares in Cavendish Hydrogen ASA -1 062 527 -1 062 527 Total comprehensive income -710 568 -710 568 Equity as of 31.12.2024 334 265 7 598 562 68 646 -84 -2 149 059 5 852 330 Statement of changes in equity Nel ASA I Annual report 2024 149 OSLO, 25 FEBRUARY 2025 THE BOARD OF DIRECTORS Ole Enger Beatriz Malo de Molina Charlotta Falvin Chair Board member Board member (Electronically signed) (Electronically signed) (Electronically signed) Arvid Moss Hanne Blume Tom Røtjer Board member Board member Board member (Electronically signed) (Electronically signed) (Electronically signed) Jens Bjørn Staff Håkon Volldal Board member CEO (Electronically signed) (Electronically signed) 150 Notes to the financial statements parent company Note 1 Company information Nel ASA (Nel) is a global, dedicated hydrogen company, delivering optimal solutions to produce, store and distribute hydrogen from renewable energy. The company is domiciled in Norway. The company specializes in electrolyser technology for production of renewable hydrogen. Nel’s product offerings are key enablers for a renewable hydrogen economy, making it possible to decarbonize various industries such as transportation, refining, steel, and ammonia. The group has two divisions: Nel PEM Electrolyser and Nel Alkaline Electrolyser. Nel ASA (org. no 979 938 799) was formed in 1998 and is a Norwegian public limited company listed on the Oslo Stock Exchange. The company’s head office is in Karenslyst allé 49, N-0279 Oslo, Norway. The parent company financial statements were approved by the Board of Directors on 25 February 2025. Note 2 Basis for preparation and significant accounting principles STATEMENT OF COMPLIANCE The financial statements of Nel ASA have been prepared and presented in accordance with simplified IFRS pursuant to section 3-9 of the Norwegian Accounting Act. BASIS FOR PREPARATION These financial statements have been prepared on a historical cost basis, except for certain financial instruments, which are measured at fair value. ACCOUNTING ESTIMATES AND JUDGEMENTS In preparing the financial statements, assumptions and estimates that have had effect on the amounts and presentation of assets and liabilities, income and expenses and contingent liabilities must be made. Actual results could differ from these assumptions and estimates. FOREIGN CURRENCY TRANSLATION The functional currency and presentation currency of the company is Norwegian kroner (NOK). Transactions in foreign currency are translated at the rate applicable on the transac¬tion date. Monetary items in a foreign currency are translated into NOK using the exchange rate applicable on the balance sheet date. Non-monetary items that are measured at their historical cost expressed in a foreign currency are trans¬lated into NOK using the exchange rate applicable on the transaction date. Non-monetary items that are measured at their fair value expressed in a foreign currency are translated at the exchange rate applicable on the balance sheet date. CHANGES IN ACCOUNTING POLICIES A few amendments to IFRS have been implemented for the first time in 2024. The amendments did not have any material impact for the parent company. In addition, several amendments to IFRS are issued up to the date of issuance of these financial statements but are not yet effective. The company has not applied the new IFRSs and the impact of applying the amendments is not expected to have a material impact on the Company’s financial statements. DEFINITION AND APPLYING OF MATERIALITY JUDGEMENTS IN PREPARATION OF THESE FINANCIAL STATEMENTS The financial statements aim to provide useful financial information which increase the understandability of Nel and its performance. To meet the information needs of its primary users, Nel apply materi¬ality judgments which are necessary to meet this objective, and Nel has made such judgments related to recognition, measurement, presentation and disclosures. Within these financial statements information is considered material if omitting, misstating or obscuring it could reasonably be expected to influence decisions taken by primary users based on the information provided. In practice this will lead to Nel omitting certain information if it is assessed it will obscure the material information. The 7.1 Notes to the financial statements parent company Nel ASA I Annual report 2024 151 materiality judgments are reassessed at each reporting date and updated based on changed facts and Nel specific circumstances. SEGMENT INFORMATION Nel ASA operates with only one operating segments, providing management services to subsidiaries. A separate disclosure for segment information is therefore not applicable. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATION UNCERTAINTY The preparation of financial statements requires management to make judgements and estimates that influence amounts recognised in certain accounts for assets, liabilities, income and expenses. The actual results may deviate from such assumptions. Estimates and underlying assumptions are subject to continuous assessment. REVENUE FROM CONTRACTS WITH CUSTOMERS In general, revenue comprises sale of intercompany services. These are recognized when the services are delivered based on intragroup allocation of costs. PERSONNEL EXPENSES Wages, salaries, bonuses, pension and social security contributions, paid annual leave and sick leave are accrued in the period in which the associated services are rendered by employees of the company. The company has pension plans for employees that are classified as defined contribution plans. Contributions to defined contribution schemes are recognised in the statement of comprehensive income in the period in which the contribution amounts are earned by the employees. The company has an equity-settled share option program for all employees. The Company uses the Black-Scholes-Merton option pricing model at time of grant to determine the impact of stock option grants in accordance with IFRS 2 – Share- based payment. Refer to group financial statements note 2.5 for further accounting policies, including assumptions and social security provisions. For further information refer note 4 – Personnel expenses. FINANCIAL INSTRUMENTS AND FAIR VALUE Nel uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: Inputs are quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. Level 2: The fair value of financial instruments that are not quoted in an active market is determined using valuation techniques which maximise the use of observable market price and rely as little as possible on entity-specific estimates. Level 3: Unobservable inputs are used to measure fair value to the extent that relevant observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. Techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data. The Company has assessed that cash and short-term deposits, trade receivables, other current assets, trade payables and other current liabilities’ carrying amounts is a reasonable approximation of their fair value largely due to the short-term maturities of these instruments. The Company enters into forward exchange contracts with financial institutions, where the fair value of such instruments is based on valuation techniques including market observable inputs. The most frequently applied valuation techniques include forward pricing and swap models using net present value calculations. The models used incorporate various inputs, including the credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves. The valuation is performed by banks or external valuation providers. INTEREST INCOME AND EXPENSES Interest income and expenses are recognised in the statement of comprehensive income within ‘finance income’ and ‘finance cost’ as they are accrued, based on the effective interest method. INCOME TAX EXPENSE Income tax expense in the statement of comprehensive income for the year comprises current tax and changes in deferred tax. Income tax expense is recognised in the statement of comprehensive income. 152 Notes to the financial statements parent company Current tax is the expected tax payable on the taxable income for the year and any adjustment to tax payable in respect of previous years. Uncertain tax positions and potential tax exposures are analysed individually and the best estimate of the probable amount for liabilities to be paid (unpaid potential tax exposure amounts, including penalties) and virtually cer¬tain amounts for assets to be received (disputed tax positions for which payment has already been made) in each case are recognised within current tax or deferred tax as appropriate. Deferred tax assets and liabilities are recognised for the future tax consequences attributable to differences between financial statements and their respective tax bases, subject to the initial recognition exemption. The amount of deferred tax provided is based on the expected manner of utilized on or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. For a deferred tax asset to be recognised based on future taxable profits, convincing evidence is required. SUBSIDIARIES Subsidiaries are all entities controlled by Nel ASA. Control is achieved when the company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Shares in subsidiaries are presented according to the cost method. Shares in subsidiaries are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may exceed the fair value of the investment. Indications may be operating losses or ad¬verse market conditions. Fair value of the investment is estimated based on valuation model techniques. If it is considered probable that the fair value is below Nel’s carrying value, the investment is impaired. The impairment is reversed if the impairment situation is no longer present. INVESTMENT IN ASSOCIATED COMPANIES AND JOINT VENTURES The company’s investments in its associates and joint ventures are accounted for using the equity method. An associate is an entity where the company has significant influence. A joint venture is an entity where the company has joint control contractually together with one or several other parties. CASH AND CASH EQUIVALENTS Cash includes cash in hand and at bank. Cash equivalents are short-term liquid investments that can be immediately converted into a known amount of cash and have a maximum term to maturity of three months. EVENTS AFTER THE REPORTING PERIOD New information on the company’s financial position on the end of the reporting period which becomes known after the reporting period, is recorded in the annual accounts. Events after the reporting period that do not affect the company’s financial position on the end of the reporting period, but which will affect the company’s financial position in the future are disclosed, if significant. STATEMENT OF CASH FLOW The cash flow statement is prepared using the indirect method. Nel ASA I Annual report 2024 153 Note 3 Revenue from contracts with customers (Amounts in NOK thousands) REVENUES BY GEOGRAPHIC REGION BASED ON CUSTOMER LOCATION 2 024 2 023 Norway 58 549 34 665 United States 35 171 27 070 Denmark 9 345 15 299 South Korea 332 723 Total 103 396 77 757 All revenues in 2024 and 2023 are internal revenue from management services. Revenues are recognised over time based on the cost-to-cost input method. Billings occur at the end of each year for all cumulative costs incurred plus recognised profit, thus, there are no contract balances at year end. Both contract assets and the billings are recognised as current assets within ‘Receivables Group’ in the statement of financial position and is an unconditional right to payment. Note 4 Personnel expenses (Amounts in NOK thousands) SALARIES AND PERSONNEL EXPENSES 2024 2023 Salaries 55 349 48 894 Social security tax 11 432 9 072 Pension expense 6 162 4 686 Other payroll expenses** 2 773 4 889 Total 75 715 67 541 * Social security tax includes provisions for social security related to the share option program. ** Included in this amount are expenses amounting to NOK 1.3 (1.1) million related to the share option program. Remuneration and direct ownership of shares of the Chairperson and of the Board of Directors are disclosed in Nel Remuneration Report for 2024. The full report can be found at www.nelhydrogen.com. Remuneration to CEO and Nel management are disclosed in the Nel Remuneration Report for 2024. The company has a share option program for all employees. For information of the company’s share option program refer to group accounts disclosure 2.5. Average number of FTEs 30 32 Pension The company has a defined contribution pension plan for its employees that meet the requirements of the Pension Acts of Norway. 154 Notes to the financial statements parent company Note 5 Property, plant and equipment PROPERTY, PLANT AND EQUIPMENT COMPRISE OWNED AND LEASED ASSETS OFFICE MACHINES AND OTHER EQUIPMENT TECHNICAL INSTALLATIONS RIGHT-OF-USE ASSETS TOTAL Carrying amount as of 31.12.2023 1 447 38 10 372 11 857 Carrying amount as of 31.12.2024 874 23 7 053 7 949 Useful life 3 years 5 years 5 years Depreciation plan Straight-line Straight-line Straight-line Note 6 Other operating expenses SPECIFICATION OF OTHER OPERATING EXPENSES: 2 024 2 023 Hardware and common cost office premises 1 426 1 596 Administrative costs 19 848 15 216 Professional fees 40 019 30 816 Travel expenses 3 987 4 794 Total 65 280 52 423 Auditor fees FEES TO THE AUDITOR 2 024 2 023 Statutory auditing services 1 754 1 612 Attestation services 0 25 Non-auditing services 0 225 Total 1 754 1 862 Amounts are exclusive VAT Nel ASA I Annual report 2024 155 Note 7 Finance income and cost 2024 2023 Internal interest income 41 916 66 071 Internal guarantee premium 3 532 3 734 Interest income 130 948 164 468 Gain on sale of subsidiaries 23 372 - Other 5 378 1 536 Finance income 205 145 235 809 Internal interest cost (5 758) (512) Interest expense (166) (31) Interest expense lease liabilities (371) (501) Impairment shares in subsidiaries (876 031) (195 869) Net foreign exchange gain/(loss) 6 435 43 547 Expected credit loss receivables from subsidiaries - (37 521) Change in fair value equity instruments - (7 387) Other (313) (201) Finance cost (876 204) (198 475) Net finance income (cost) (671 059) 37 333 Gain on sale of subsidiaries stems from the companies Nel Hydrogen A/S, which was fully distributed as part of the spin-off of Cavendish Hydrogen ASA during 2024. Shares in subsidiary Proton Energy Systems Inc have been impaired in 2024 and an impairment expense of NOK 876 million has been recognized as finance cost. The net foreign exchange gain(loss) is mainly the unrealised currency exchange effectes related to internal loans. Note 8 Subsidiaries, associates and joint ventures SUBSIDIARIES COMPANY NAME OWNERSHIP REGISTERED OFFICE FUNCTIONAL CURRENCY TOTAL EQUITY IN 2024 (FUNCTIONAL CURRENCY THOUSANDS) NET INCOME(LOSS) 2024 (FUNCTIONAL CURRENCY THOUSANDS) CARRYING VALUE 2024 (NOK THOUSANDS) CARRYING VALUE 2023 (NOK THOUSANDS) Nel Hydrogen Electrolyser AS 100% Norway NOK 1 345 274 (78 236) 2 412 300 1 912 006 Proton Energy Systems Inc 100% USA USD 71 874 (26 647) 1 310 000 1 721 703 Nel Fuel AS 100% Norway NOK 177 044 4 799 37 055 37 055 Total 3 759 355 3 670 763 Nel Hydrogen A/S 1) 100% Denmark DKK - - - 318 860 Nel Hydrogen Inc 1) 100% USA USD - - - - Nel Korea Co. Ltd 1) 100% South Korea KRW - - - - Total 3 759 355 3 989 624 The increase in book value of shares in subsidiaries are mainly debt conversions. Refer note 12 for additional information of debt conversions. In addition, there is an increase in book value from the established group share option program. Shares in subsidiary Proton Energy Systems Inc have been impaired in 2024 and an impairment expense of NOK 876 million has been recognized as finance cost. 1) The companies Nel Hydrogen A/S, Nel Hydrogen Inc and Nel Korea Co.Ltd. were fully distributed as part of the spin-off of Cavendish Hydrogen ASA during 2024. 156 Notes to the financial statements parent company Note 9 Income taxes CALCULATIONS OF THE TAX BASE FOR THE YEAR 2024 2023 Income (loss) before tax (710 568) (6 952) Permanent differences 854 266 242 299 Change in temporary differences -159 6 146 Use of tax losses carried forward (143 540) (241 492) The year's taxable income (0) - Tax rate 22 % 22 % Income (loss) before tax (710 568) (6 952) Tax this years loss, estimated (156 325) (1 530) Tax effect of: Permanent differences 187 939 53 210 Prior years adjustment (5 433) 43 Change in not recognised deferred tax assets (tax liabilities) (26 181) (51 724) Total income tax expense (income) (0) - Income tax expense (income) comprises Income tax payable - - Change in deferred tax - - Total income tax expense (income) - - Specification of temporary differences: Property, plant and equipment and goodwill (442) (373) Leases (459) (479) Provisions for liabilities (10 454) (10 662) Tax losses carry forward (14 539) (133 383) Basis for deferred tax asset (25 894) (144 897) Nominal tax rates for next year 22 % 22 % Deferred tax asset (5 697) (31 877) Deferred tax asset not recognised in Statement of financial position (5 697) (31 877) Deferred tax asset in the Statement of financial position - - The majority of the deferred tax assets are related to loss carry forward. As of 31 December 2024, it is considered not likely that the tax loss carry forward will be fully utilised in the near future, therefore, the deferred tax assets are not capitalised. Nel ASA I Annual report 2024 157 Note 10 Specification of balance sheet items SPECIFICATION OF OTHER CURRENT ASSETS: 2 024 2 023 Other short-term investments 2 260 24 013 Prepayments 3 863 3 678 Fair value of currency contracts 3 451 21 396 Other current receivables (72) 63 Total 9 502 49 150 SPECIFICATION OF NON-CURRENT FINANCIAL ASSETS: 2 024 2 023 Other non-current investments 158 750 103 670 Fair value of currency contracts 0 407 Total 158 750 104 076 SPECIFICATION OF OTHER CURRENT LIABILITIES: 2 024 2 023 Vacation allowance and other salary related accruals 14 491 9 416 VAT net payables 17 116 6 834 Fair value of currency contracts 9 236 16 123 Other current liabilities 627 3 243 Total 41 470 35 615 Note 11 Other investments The fair value of former shareholdings in Hyon AS was 0 million per 31.12.2023. The shares were disposed of on the 24th of January 2023 for consideration of NOK 7.04 million with a gain in financial income presented in the 2023 comparable amounts. 158 Notes to the financial statements parent company Note 12 Transactions with related parties LONG TERM INTEREST BEARING RECEIVABLES GROUP 2 023 LOAN ISSUE DEBT CONVERSION ACCRUED INTEREST FX TRANSLATION EFFECTS OTHER 2 024 Nel Hydrogen Electrolyser AS 161 098 396 002 (500 000) 28 071 - - 85 171 Proton Energy Systems Inc 57 504 392 655 (464 080) 12 015 1 908 - 1 Nel Hydrogen A/S 1) 22 684 - - 1 439 - (24 123) - Nel Hydrogen Inc 1) - - - - - - - Nel Korea Co. Ltd 1) - - - - - - - Nel Hydrogen Electrolyser Belgium BV 5 929 1 029 - 391 507 - 7 856 Total 247 215 789 686 (964 080) 41 916 2 414 (24 123) 93 027 In the course of ordinary business, intercompany financing is provided by Nel ASA to its subsidiaries. Long-term financing is an interest bearing and priced at arm’s length terms using a risk-free rate in relevant currencies + 3%-point margin. 1) The companies Nel Hydrogen A/S, Nel Hydrogen Inc and Nel Korea Co.Ltd. were fully distributed as part of the spin-off of Cavendish Hydrogen ASA during 2024. LONG TERM INTEREST BEARING PAYABLES GROUP 2 023 LOAN ISSUE DEBT CONVERSION ACCRUED INTEREST FX TRANSLATION EFFECTS OTHER 2 024 Nel Fuel AS 54 503 116 181 - 5 435 - - 176 119 Total 54 503 116 181 - 5 435 - - 176 119 LONG-TERM RECEIVABLE FINANCIAL LIABILITY FINANCIAL GUARANTEES 2 024 2 023 2 024 2 023 Nel Hydrogen Electrolyser AS 10 781 17 608 10 781 16 699 Proton Energy Systems Inc 326 262 44 106 Nel Hydrogen A/S - 89 - 862 Nel Korea Co. Ltd - 1 086 - 276 Total 11 108 19 045 10 825 17 944 Refer note 18 for additional information of financial guarantees. Nel ASA I Annual report 2024 159 CURRENT ASSETS 2024 2023 Nel Hydrogen Electrolyser AS 189 783 103 317 Proton Energy Systems Inc 43 317 26 127 Nel Hydrogen A/S 0 18 912 Nel Hydrogen Inc 0 3 404 Nel Korea Co. Ltd - 7 478 Nel Fuel AS 5 813 435 Total 238 913 159 673 CURRENT LIABILITIES 2024 2023 Nel Hydrogen Electrolyser AS 10 566 21 354 Nel Hydrogen A/S - 4 347 Nel Hydrogen Electrolyser Belgium BV 2 581 3 850 Total 13 146 29 551 Current liabilities are mainly related to the fair value of hedging instruments offered to subsidiaries. See Note 16 for additional information. All related party transactions have been carried out as part of the normal course of business and at arm’s length. Nel ASA has during 2024 charged NOK 103 (78) million for corporate services provided to its subsidiaries. The management services are priced with the cost-plus method applying a 5 % mark-up for low value services. The management fee has been allocated to the subsidiaries based on revenue, operating expenses and capital expenditure as allocation keys. INTERNAL REVENUES 2024 2023 Nel Hydrogen Electrolyser AS 58 549 34 665 Proton Energy Systems Inc 33 694 23 712 Nel Hydrogen A/S 9 345 15 299 Nel Hydrogen Inc 1 477 3 358 Nel Korea Co. Ltd 332 723 Total 103 396 77 757 Board of Directors Remuneration of the Board of Directors is disclosed in note 7.4 in the consolidated financial statements. 160 Notes to the financial statements parent company Note 13 Cash and cash equivalents 2024 2023 Cash and cash equivalents 1 823 521 3 201 223 Restricted cash (witheld employee taxes) 6 991 2 885 Total 1 830 512 3 204 108 Cash and cash equivalents are 99% in the Norwegian Krone (NOK) at the end of 2024. Approximately NOK 1.6 billion is placed in 30-days locked interest accounts in several different banks. Note 14 Share capital and shareholders For information on shareholders as of 31 December 2024, shares hold by executive management and the board of directors please refer to Note 7.2 and 7.4, respectively, in the consolidated financial statements. For information of top 20 shareholders in Nel ASA refer to note 5.1 in the consolidated financial statements. Note 15 Lease liabilities Set out below are the carrying amounts of lease liabilities (included under other long-term debt and other current liabilities) and the movements during the period: 2024 2023 1. January 10 851 13 205 Additions - 106 Remeasurement 277 955 Accretion of interest 371 501 Lease payments (3 986) (3 916) Balance as of 31.12. 7 512 10 851 Current 3 902 3 826 Non-current 3 610 7 025 Balance as of 31.12. 7 512 10 851 Nel ASA I Annual report 2024 161 Maturity analysis for lease liabilities (undiscounted cash flows) 2 025 2 026 >2026 TOTAL Lease liabilities 3 539 292 - 3 831 (Amounts in NOK thousands) 2 024 2 023 Balance as of 01.01. 10 851 13 205 Cash flows principal amount (3 615) (3 415) Cash flows interests (371) (501) Non-cash changes: Additions and remeasurements 277 1 061 Accretion of interest expense 371 501 Balance as of 31.12. 7 512 10 851 Note 16 Financial risk and derivatives Financial risks in Nel and the use of derivative instruments are described in note 6.1 to the consolidated financial statement. Nel ASA offers currency derivatives to subsidiaries using such instruments for risk management. The derivatives are measured at fair value (level 2 in fair value hierarchy), using valuation techniques which maximise the use of observable market price. The contracts with financial institutions are back-to-back with subsidiaries, thus, the contract has no P&L impact for Nel ASA. At the end of 2024 and 2023, Nel is committed to the following outstanding forward foreign exchange contracts with subsidiaries: FORWARD FOREIGN EXCHANGE CONTRACTS (NEL GROUP INTERNAL), NOTIONAL AMOUNT: 2024 2023 Current assets 3 451 21 396 Non-current assets - 407 Current liabilities (9 236) (16 123) Total (5 785) 5 680 The contracts represent the subsidiaries exposure in US dollars, Euro, Swedish Krone and British pounds. The contracts mature no later than 2025. 162 Notes to the financial statements parent company Note 17 Financial instruments Financial instruments and fair values 2024 CARRYING AMOUNT FAIR VALUE FAIR VALUE - HEDGING INSTRUMENTS MANDATORILY AT FVTPL - OTHERS FINANCIAL ASSETS AND LIABILTIES AT AMORTISED COST TOTAL LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Assets Financial assets measured at fair value Forward exchange contracts 3 451 3 451 3 451 3 451 SUM 3 451 - 3 451 - 3 451 - 3 451 Liabilities Financial liabilities measured at fair value Forward exchange contracts (9 236) (9 236) (9 236) (9 236) SUM (9 236) (9 236) (9 236) (9 236) 2023 CARRYING AMOUNT FAIR VALUE FAIR VALUE - HEDGING INSTRUMENTS MANDATORILY AT FVTPL - OTHERS FINANCIAL ASSETS AND LIABILTIES AT AMORTISED COST TOTAL LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Assets Forward exchange contracts 21 802 21 802 21 802 21 802 SUM 21 802 0 21 802 0 21 802 - 21 802 Liabilities Financial liabilities measured at fair value Forward exchange contracts (16 123) (16 123) (16 123) (16 123) SUM (16 123) (16 123) (16 123) (16 123) Nel ASA I Annual report 2024 163 Note 18 Guarantees Nel provides guarantees arising in the ordinary course of business including stand-by letters of credit, performance bonds and various payment, financial guarantees and parent company guarantees. All commercial guarantees are on behalf of subsidiaries. Total financial guarantees recognised as financial liability are NOK 10.8 (17.9) million as of 31. December 2024. The financial liabilities will be amortised over the lifetime of the guarantees, which is in the range of 1-7 years. Note 19 Subsequent events Nel ASA and its subsidiaries initiated a process to adjust capacity to market demand by reducing the workforce and temporarily halting productions at the Alkaline production facility in Herøya, Norway. Nel ASA I Annual report 2024 165 Nel discloses alternative performance measures (APMs) in addition to those normally required by IFRS. This is based on the group’s experience that APMs are frequently used by analysts, investors and other parties as supplemental information. The purpose of APMs is to provide an enhanced insight into the operations, financing and future prospect of the group. Management also uses these measures internally to drive performance in terms of monitoring operating performance and long-term target setting. APMs are adjusted IFRS measures that are defined, calculated and used in a consistent and transparent manner over the years and across the group where relevant. Financial APMs should not be considered as a substitute for measures of performance in accordance with the IFRS. NEL’S FINANCIAL APMs EBITDA: is defined as earnings before interest, tax, depreciation, amortisation and impairment. EBITDA corresponds to operating profit/(loss) plus depreciation, amortisation and impairment. EBITDA margin: is defined as EBITDA divided by revenue and income. Equity ratio: is defined as total equity divided by total assets. Order intake: is defined as firm purchase orders with agreed price, volume, timing, terms and conditions entered within a given period. The order intake includes both contracts and change orders. For service contracts and contracts with uncertain transaction price, the order intake is based on estimated revenue. The measure does not include potential change orders. Order backlog: is order intake where revenue is yet to be recognised. (Amounts in NOK thousands) ALKALINE PEM SUM Planned delivery 2025 276 324 600 Delivery 2026 or later 361 0 361 Significant risk of delay or cancellation 653 0 653 Order backlog as of 31.12.2024 1 290 324 1 614 8 Alternative Performance Measures 9 Auditor’s report Statsautoriserte revisorer Ernst & Young AS Stortorvet 7, 0155 Oslo Postboks 1156 Sentrum, 0107 Oslo Foretaksregisteret: NO 976 389 387 MVA Tlf: +47 24 00 24 00 www.ey.no Medlemmer av Den norske Revisorforening A member firm of Ernst & Young Global Limited To Annual Shareholders' Meeting of Nel ASA INDEPENDENT AUDITOR'S REPORT Report on the audit of the financial statements Opinion We have audited the financial statements of Nel ASA (the Company) which comprise:  The financial statements of the company, which comprise statement of financial position as at 31 December 2024 and the statement of comprehensive income, statement of cash flows and statement of changes in equity for the year then ended and notes to the financial statements, including a summary of significant accounting policies, and  The consolidated financial statements of the group, which comprise the statement of financial position as at 31 December 2024, statement of comprehensive income, statement of cash flows and statement of changes in equity for the year then ended and notes to the financial statements, including material accounting policy information. In our opinion:  the financial statements comply with applicable statutory requirements,  the financial statements give a true and fair view of the financial position of the company as at 31 December 2024 and its financial performance and cash flows for the year then ended in accordance with simplified application of international accounting standards according to section 3-9 of the Norwegian Accounting Act, and  the consolidated financial statements give a true and fair view of the financial position of the group as at 31 December 2024 and its financial performance and cash flows for the year then ended in accordance with IFRS Accounting Standards as adopted by the EU. Our opinion is consistent with our additional report to the audit committee. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Company and the Group in accordance with the requirements of the relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. Other matters Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for 2024. These matters were addressed in the context of our audit of the 2 Independent auditor's report - Nel ASA 2024 A member firm of Ernst & Young Global Limited financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Revenue from sale of customised equipment and projects Basis for the key audit matter The Group derives a significant part of its revenues from sale of customised equipment and projects. Such projects involve revenue recognition over time based on measuring the progress towards complete satisfaction of the performance obligation. The assessment of measuring progress requires subjectivity and professional judgement and is therefore subject to uncertainty and potential misstatements. The main risks include management’s use of estimates and judgments in relation to measuring progress, including determining the contract’s total revenues, expected costs to complete and estimated project margin. We consider this a key audit matter because of the significant amounts and the management judgement applied in the estimates. Our audit response We assessed the application of accounting principles and procedures for monitoring the customised equipment and project sales. We discussed the status of contracts with management, finance and technical staff and reconciled estimated revenues and cost to budgets. For new contracts we tested the estimated revenue against agreements. We have also recalculated the measurement of progress and performed test of details e.g., vouching to invoices and hours incurred on the projects. We refer to the Groups disclosures included in note 1.5 and 2.1 in the consolidated financial statements. Assessment of impairment of goodwill Basis for the key audit matter At 31 December 2024, the recorded amount of goodwill was NOK 412 million, approximately 7 % of total assets. Estimating the recoverable amount of the goodwill requires management judgment including estimates of future sales, gross margins, operating expenses, growth rates, capital expenditures and discount rate. Management’s annual impairment assessment is a key audit matter because the assessment requires significant judgment and includes estimation uncertainties. Our audit response For each cash generating unit, we evaluated the assumptions based on the development in the market and compared the cash-flow projections in the impairment calculation to board approved budgets. We considered the accuracy of management’s prior year estimates and evaluated the level of consistency applied in the valuation methodology from previous years. Furthermore, we compared the risk premiums in the weighted average cost of capital with external data and considered management’s adjustments for company specific factors. We also tested the mathematical accuracy of the valuation model and performed sensitivity analysis of the assumptions used. We assessed the Group's disclosures included in note 1.5 and 3.1 in the consolidated financial statements about those assumptions to which the outcome of the impairment test is most sensitive. 3 Independent auditor's report - Nel ASA 2024 A member firm of Ernst & Young Global Limited Other information The Board of Directors and the Managing Director (management) are responsible for the information in the Board of Directors’ report and the other information presented with the financial statements. The other information comprises the letter from the CEO, Report from the Board of Directors, Environment, Social and Governance (“ESG”) report and the Board of Director's report in relation to the Norwegian code of practice for corporate governance. Our opinion on the financial statements does not cover the information in the Board of Directors’ report and the other information presented with the financial statements. In connection with our audit of the financial statements, our responsibility is to read the information in the Board of Directors’ report and for the other information presented with the financial statements. The purpose is to consider if there is material inconsistency between the information in the Board of Directors’ report and the other information presented with the financial statements and the financial statements or our knowledge obtained in the audit, or otherwise the information in the Board of Directors’ report and for the other information presented with the financial statements otherwise appears to be materially misstated. We are required to report that fact if there is a material misstatement in the Board of Directors’ report and the other information presented with the financial statements. We have nothing to report in this regard. Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report  is consistent with the financial statements and  contains the information required by applicable statutory requirements Our statement on the Board of Directors’ report applies correspondingly for the statement on Corporate Governance. Responsibilities of management for the financial statements Management is responsible for the preparation of the financial statements of the Company that give a true and fair view in accordance with simplified application of international accounting standards according to section 3-9 of the Norwegian Accounting Act, and for the preparation of the consolidated financial statements of the Group that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU. Management is responsible for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or the Group, or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 4 Independent auditor's report - Nel ASA 2024 A member firm of Ernst & Young Global Limited As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s and the Group’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.  Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s and the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern.  Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.  Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the board of directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on other legal and regulatory requirement Report on compliance with regulation on European Single Electronic Format (ESEF) Opinion As part of the audit of the financial statements of Nel ASA we have performed an assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual report, with the file name NELASA-2024-12-31-0-en.zip, have been prepared, in all material respects, in compliance 5 Independent auditor's report - Nel ASA 2024 A member firm of Ernst & Young Global Limited with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the consolidated financial statements. In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with the ESEF Regulation. Management’s responsibilities Management is responsible for the preparation of the annual report in compliance with the ESEF Regulation. This responsibility comprises an adequate process and such internal control as management determines is necessary. Auditor’s responsibilities Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all material respects, the financial statements included in the annual report have been prepared in accordance with the ESEF Regulation. We conduct our work in accordance with the International Standard for Assurance Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of historical financial information”. The standard requires us to plan and perform procedures to obtain reasonable assurance about whether the financial statements included in the annual report have been prepared in accordance with the ESEF Regulation. As part of our work, we perform procedures to obtain an understanding of the company’s processes for preparing the financial statements in accordance with the ESEF Regulation. We test whether the financial statements are presented in XHTML-format. We evaluate the completeness and accuracy of the iXBRL tagging of the consolidated financial statements and assess management’s use of judgement. Our procedures include reconciliation of the iXBRL tagged data with the audited financial statements in human-readable format. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Oslo, 26 February 2025 E RNST & YOUNG AS The auditor's report is signed electronically Asbjørn Ler State Authorised Public Accountant (Norway) info@nelhydrogen.com +47 23 24 89 50 www.nelhydrogen.com Office address: Karenslyst all é 49, 0279 Oslo, Norway 549300G6XN5IXMRKEG372024-01-012024-12-31549300G6XN5IXMRKEG372023-01-012023-12-31549300G6XN5IXMRKEG372024-12-31549300G6XN5IXMRKEG372023-12-31549300G6XN5IXMRKEG372022-12-31549300G6XN5IXMRKEG372022-12-31ifrs-full:IssuedCapitalMember549300G6XN5IXMRKEG372023-01-012023-12-31ifrs-full:IssuedCapitalMember549300G6XN5IXMRKEG372023-12-31ifrs-full:IssuedCapitalMember549300G6XN5IXMRKEG372022-12-31ifrs-full:TreasurySharesMember549300G6XN5IXMRKEG372023-12-31ifrs-full:TreasurySharesMember549300G6XN5IXMRKEG372022-12-31ifrs-full:SharePremiumMember549300G6XN5IXMRKEG372023-01-012023-12-31ifrs-full:SharePremiumMember549300G6XN5IXMRKEG372023-12-31ifrs-full:SharePremiumMember549300G6XN5IXMRKEG372022-12-31ifrs-full:CapitalReserveMember549300G6XN5IXMRKEG372023-01-012023-12-31ifrs-full:CapitalReserveMember549300G6XN5IXMRKEG372023-12-31ifrs-full:CapitalReserveMember549300G6XN5IXMRKEG372022-12-31ifrs-full:RetainedEarningsMember549300G6XN5IXMRKEG372023-01-012023-12-31ifrs-full:RetainedEarningsMember549300G6XN5IXMRKEG372023-12-31ifrs-full:RetainedEarningsMember549300G6XN5IXMRKEG372022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300G6XN5IXMRKEG372023-01-012023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300G6XN5IXMRKEG372023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300G6XN5IXMRKEG372022-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300G6XN5IXMRKEG372023-01-012023-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300G6XN5IXMRKEG372023-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300G6XN5IXMRKEG372024-12-31ifrs-full:IssuedCapitalMember549300G6XN5IXMRKEG372024-12-31ifrs-full:TreasurySharesMember549300G6XN5IXMRKEG372024-01-012024-12-31ifrs-full:SharePremiumMember549300G6XN5IXMRKEG372024-12-31ifrs-full:SharePremiumMember549300G6XN5IXMRKEG372024-01-012024-12-31ifrs-full:CapitalReserveMember549300G6XN5IXMRKEG372024-12-31ifrs-full:CapitalReserveMember549300G6XN5IXMRKEG372024-01-012024-12-31ifrs-full:RetainedEarningsMember549300G6XN5IXMRKEG372024-12-31ifrs-full:RetainedEarningsMember549300G6XN5IXMRKEG372024-01-012024-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300G6XN5IXMRKEG372024-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300G6XN5IXMRKEG372024-01-012024-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300G6XN5IXMRKEG372024-12-31ifrs-full:ReserveOfCashFlowHedgesMemberiso4217:NOKiso4217:NOKxbrli:shares