Nel ASA — Interim / Quarterly Report 2015

Feb 17, 2016

NEL ASA – update February 2016 Jon André Løkke, CEO

NEL ASA

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

• 500 large scale electrolysers sold in >50 countries

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

NEL ASA Q4 2015 – IN SHORT

Highlights of the quarter H2 Logic AS (unaudited)

• Entered into a letter of intent with Uno-X Gruppen AS (Uno-X), for the rollout of minimum 20 hydrogen refuelling stations covering all the major cities in Norway within 2020
• H2 Logic AS, was awarded a contract for one H2Station fueling station for H2 MOBILITY Deutschland GmbH & Co.KG with an option for multiple repeat-orders. The station will be one among the first in a planned staged expansion onwards 2023 of up to 400 stations in Germany and a total investment of around 400 million euro
• Raised NOK 111 million in gross proceeds through a private placement of 30 million new shares at a price of NOK 3.70 per share
• The cash balance at the end of the fourth quarter was NOK 313 million

	2015	2014	2015	2015	2014
(Unaudited figures NOK million)	Q4	Q4	YTD	$YTD**$	Full year
Operational revenue	30.3	12.1	94.7	128.7	12.1
Total operating cost	39.2	19.1	116.4	144.7	25.2
EBITDA*	$-4.2$	$-3.5$	$-0.5$	7.0	$-9.5$
EBIT	$-8.8$	$-7.1$	$-21.7$	$-16.1$	$-13.2$
Pre-tax profit	$-7.8$	$-6.1$	$-19.5$	$-14.0$	$-11.6$
Net profit	$-6.3$	$-1.0$	$-15.3$	$-11.1$	$-6.5$
Net cash flow from operating activities	$-14.1$	$-14.5$	$-35.0$		5.5
Cash balance end of period	313.0	98.5	313.0		98.5

	2015	2015
(figures in NOK million)	Q4	$Q3-Q4$
Total operating revenue	18.1	35.7
Total operating cost	19.6	35,6
Operating profit	$-1.4$	$-0.1$
Net Financial income (expence)	$-0.7$	$-0.8$
Pre- tax profit (loss)	$-2.1$	-0.9

NEL Group NEL Hydrogen AS (unaudited)

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

PROUD HISTORY & EXTENSIVE HYDROGEN KNOWHOW SINCE 1927

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

NEL ASA – CORPORATE STRUCTURE

5

FINANCING & OWNERSHIP

TECHNOLOGY

HYDROGEN REFUELLING TECHNOLOGY

HYDROGEN STATION OWNERSHIP AND OPERATION

Upstream Downstream

PRODUCTION DIVISION – NEL HYDROGEN

ABOUT THE PRODUCTS

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

CUSTOMERS

LONG TRACK & HIGHLY SCALABLE

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

100-1.000kg/day module Flexible upgrade

Multiple modules plant Unlimited capacity

ROBUST, EFFICIENT & LARGE SCALE

1. Efficient

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

2. Robust

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

3. Large & cost efficient

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

GAME CHANGING TECHNOLOGY - ROTOLYZER

Rotating electrolyser – several advantages:

Optimal production and flow of hydrogen and oxygen

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

Pressurized stack

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

*cell stack, compared to atmospheric alkaline

ABOUT THE PRODUCTS

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

H2STATION CAR-100 FOR CARS

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

H2STATION MH-100 FOR INDUSTRIAL VEHICLES

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

HYDROGEN REFUELLING DIVISION – H2LOGIC

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

DELIVERED THE ENTIRE DANISH NETWORK

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

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

NEL FUEL NORWAY AS

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

• Ongoing dialogue with other relevant stakeholders/partners

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

FCEVS ARE BEING INTRODUCED

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

COST OF PRODUCING HYDROGEN

Delivered at vehicle. Includes electrolysis, compression and cooling

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

MAIN DRIVER WITH INCREASE IN RENEWABLES

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

• NEL is well positioned to capture this market

• Continue to capture market share both upstream and downstream

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