Pryme N.V. — Management Reports 2022

Feb 23, 2022

BUSINESS REVIEW: ACHIEVEMENTS IN Q4 2021

Construction update

Our first industrial scale pilot plant is being built under the PlantOne umbrella permit in the port of Rotterdam. It will have an annual plastic intake capacity of about 40'000 tonnes.

During the fourth quarter management concluded to tailor the lease and services agreements with Plant One to the relative size of the Pryme operations.

Negotiations were started in November and were concluded in February. A better framework for cooperation is now in place and as a result, Pryme will have more control on the commercial aspect of its operations.

Main terms:

• Lease has been renewed for a full 5-year term, with a 5-year extension option subject to mutual consent
• Pricing of power and gas now priced on wholesale prices + markup
• Change of scope and control: Pryme now responsible to build and finance items such as chillers, coolers, tank storage, flare, gas infrastructure
• Clear protocol on structural involvement of operators from PlantOne in plant operations
• Better use of advantages of the PlantOne model (shared resources, in house knowledge applicable to Pryme, umbrella permit geared toward testing of new technologies)
• Long-term positioning of Rotterdam plant as our competence center for industrial-scale technology developments

Due to resulting change in scope and delays on some machinery, the start of commissioning is now planned for Q3 and start of production for Q4.

In line with this revised planning, construction of the steel structure will start in March.

Strategic agreements

The strategic cooperation with Shell was further matured, with initial focus on coordination of feedstock procurement. Through this cooperation, and the corresponding volume commitment, Pryme is well positioned to secure significant long-term plastic waste supply.

We continue to see significant interest for our future production from across the petrochemical industry. These discussions are steadily progressing towards potential collaborations.

Rollout

As part of our strategy, we continue to look for potential locations to build future plants. Over the course of Q4 three options became more concrete:

We are in discussion for a site in Rotterdam with good logistics and a strong partner where we could build significant capacity. Expectation is that a conclusion on feasibility will be reached by end of Q1, which could lead to the start of the permitting phase.

In Amsterdam an opportunity was spotted in November, when a site became available through an administrator. The site in the port of Amsterdam contains a new concrete slab of 3.500 m2 as well as a permit for a 35'000 mt pyrolysis plant.

The third option concerns a site at a petrochemical park in Port Jerome, on the Seine in North-West France. This would be a co-development with a waste sorting plant, hence with a certain amount of captive supply. This option is being matured and we expect more clarity on feasibility in the coming months.

Plastic feedstock

One of the long-term value drivers of the company lies in the ability to secure plastic feedstock.

Short term focus is on procurement of multiple flows from diverse sources to build up a knowledge base on quality, processing dynamics and resulting pyrolysis oil. Sample material from an industrial supplier is currently tested at our extruder manufacturer and this source alone would secure up to 50% of the annual Rotterdam intake.

Long term focus is on securing plastic feedstock supply in significant quantities from different sources. The potential quantity of available plastic waste is enormous and will come in evidence once pricing becomes structurally positive in combination with long-term commitments from reliable offtake partners. Currently there is limited chemical recycling capacity installed, hence this dynamic is still in the early stages, with Pryme at its front.

The main source of plastic waste for chemical recycling will be flows that currently go into incineration (mostly Western Europe) or landfill (mostly Eastern Europe).

Re-allocation of existing waste sorting installations to this new application is technically feasible with some additional investments. We are exploring such sources of supply. We are also in talks with potential partners that focus on industrial flows, for which new capacity would need to be built.

Apart from economics, an important factor in attracting these flows will be EU regulation that obliges sorting companies to look for circular solutions before sending plastic waste to incineration. We are currently involved in a project that would facilitate such diversion.

Lab scale plant – University of Ghent

To make continuous improvements to its processes and to proactively establish the chemical link between different sources of feedstock and pyrolysis oil output, Pryme is building its own R&D facility at the University of Ghent, which will become operational in Q2.

The lab is expected to provide valuable insights into the link between specific plastic feedstock and the expected pyrolysis oil quality, ahead of the startup of our first plant.

Together with the University of Ghent, other academic institutions, and several industrial partners (including a petrochemical major as well as a provider of renewable energy) Pryme has submitted an EU Horizon call for subsidy to support a 4-year development project to achieve a fully electrified process to make plastics circular through chemical recycling and subsequent cracking. This application has been awarded and we are now in the contractual phase with Pryme as its coordinator. Both the Ghent lab and the Rotterdam plant will feature in this project.

Organization

Caroline Lievens has been contracted in Q4 to lead the R&D department and has started work in February.

Joeri Dieltjens, responsible for the rollout, has now also assumed the role of CTO.

Stephan Anzenhofer, CFO, has given notice to end his contract and a search for a new CFO has been started.

Pascal Spiekerman started work in Q4 and will be responsible for SHEQ, regulatory compliance and permits.

Our HR capabilities have now been setup, with the aim to hire personnel for our future plant.

Subsequent events

In February the company has acquired the lease of an industrial site in the port of Amsterdam (as discussed earlier under 'rollout'). We intend to submit a request for extension of the permit for a 160'000 mt plant.

In February the renewed lease and services agreements with PlantOne in Rotterdam were executed. One of the results is an amendment in the approach for the project, where the company has decided to make certain capital investments that were originally planned to be executed by Plant One as the site owner. This deeper involvement in the Rotterdam site is expected to bring technological, operational and longer-term financial benefits to the company. This change in approach implies an additional CAPEX of EUR 6 million.

The combination of these events, in combination with the delays in the Rotterdam project, has led to additional funding needs.

These undertakings and the associated funding need are described in the Q4 2021 presentation of 24 February 2022.

Next steps

The focus remains on the timely construction and successful startup of the first plant, for which we are now aligned with PlantOne through an updated framework.

Over the coming months the outline of the plant will become visible as construction progresses.

The much-anticipated validation of our technology on industrial scale will shift the focus to further rollout.

FINANCIAL STATEMENTS

During Q4 we have spent € 6.1 million cash. Of this € 5.2 million was spent on CAPEX for our Rotterdam plant (of which € 1.3 million is reflected in the lower accounts payable at the end of Q4 compared to Q3, due to a large CAPEX invoice being included at the end of Q3).

The remaining € 0.9 million was spent on OPEX. The OPEX run rate was impacted by higher legal fees because of the discussions with PlantOne and the Amsterdam purchase for a total of € 0,1 million.

The personnel expenses also include some incidental timing impacts related to the full annual cost of several board members. The impact on our run rate of these is another € 0,1 million.

A normalized returning run rate for our OPEX therefore is about € 0.7 million per quarter going forward. The increase in run rate compared to prior quarter numbers largely reflects our continuing growth in personnel to support our ambitions.

Profit & Loss Statement		31.12.20		Q1		Q2		Q3		Q4	31.12.21
Operating revenue	€		€		€		€		€		€
Cost of Sales	€		€		€		€		€	-	€
Gross Margin			€		€		€	-	€	-	€
Operating expenses
Wages & Salaries	€	11'778	€	3'000	€	2'700	€	16'472	€	38.819	€	60.991
Oher expenses employee benefits	€	212'500	€	157'302	€	219'866	€	228'076	€	489'567	€	1'094'811
Housing expenses	€	89'311	€	42'557	€	50'411	€	64'027	€	71'843	€	228 838
Audit & Accounting	€	101'262	€	23 109	€	29.339	€	13,552	€	25'970	€	91'970
Legal advisory	€	81'922	€	25'744	€	149'893	€	22'633	€	112'148	€	310'418
Insurances	€	62.295	€		€		€	30'482	€	10'843	€	41'325
Other operating expenses	€	28 644	€	12 333	€	56'467	€	200'962	€	196'610	€	466'372
Total opering expenses		587'712	€	264'045	€	508'676	€	576'204	€	945 800	€	2 294 725
Depreciation			€	67	€	170	€	1'493	€	-1730	€
Operating result		-587'712	€	-264'112	€	-508'846	€	-577'697	€	-944'070	€	-2'294'725
Financial income / (expense)		1'846	€	-11'792	€	-19,093	€	-17'699	€	-13'346	€	-62'830
EBIT		-285,866	€	-275'904	€	-528,839	€	- ਦੇਰੇਵ 396	€	-957'416	€	-2'357'555
Income tax expense			€		€		€		€		€
Total of result after tax		-585,866	€	-275'904	€	-528'839	€	-295,396	€	-957'416	€	-2'357'555

and and a los a loss a loss a loss a loss a lossa la la proposes and the land			32.000 € 4	SU.UO.C.			SU.U. September 1998 - 1998 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999		and and a may been a love a love a love a love a love a love
€		€					2'290'674	E	3'148'210
€	8729'086	€	11 646 775	€	14'407'587	€	16'480'255	€	19'550'504
€	2'500	€	5,836	€	14'269	€	22'929	€
€	37'303	€	37'303	€	42'194	€	44'894	€	50'752
€	11'059'563	€	13'980'588	€			18'838'752	€	22'749'466
€	1'105'942	€	1'091'528	€	1'231'125	€	1265 816	€	1'279'160
€	154	€	19'683'092	€	15932 694	€	14'321'640	€	8'240'674
€	12'165'659	ਵ	34'755'209	ਵ	33,918,543	€	34'426'208	€	32'269'300
€	6'469'699	€							26'758'639
€	4'991'511	€		€	4'991'511	€	4'991'511	€	4'991'511
€	585'297	€	733'759	€	473'879	ਵ	1613'139	€	350,561
€	119'152	€	127'304	€	92'684	€	110'628	€	168'589
€	12'165'659	€	34'755'209	€	33'918'543	€	34'426'208	€	32'269'300
		2'290'674			2'290'674 € 28'902'635 € 4'991'511		2'290'674 € 16754724 € 28 360 469 €		27'710'930 €

CASHFLOW STATEMENT
		31.12.20		Q1		Q2		Q3		Q4		31.12.21
Cash flow from operating activities
Operating result	€	-587'712	€	-264'112	€	-508'846	€	-577'697	€	-944'070	€	-2'294'725
Adjustments for
Depreciation	€		€	67	€	170	€	1 493	€	-1730 €
Changes in working capital
Movements accounts receivable	€	331'229	€	14'414	€	-139,596	モ	-34'692	€	-13'344	车	-173'218
Movements in other payables	€	155'131	€	156'614	€	-294'500	€	1'157'204	€	-1'204'618	€	-185'300
Total cash flows from operations	€	-101'352	€	-93'017	€	-942 772	€	546'308	€	-2'163'762	€	-2 653 243
Financial income	€	1'846	€	-11'792	€	-19'993	€	-17'699	€	-13'346	€	-62'830
Total cash flow from operating activities	€	-99,506	€	-104'809	€	-962 765	€	528'609	€	-2'177'108	€	-2 716'073
Cash flow from investment activities
Purchase of intangible fixed assets	€								€	-857'536	દિ	-857'536
Purchase of tangible fixed assets	€	-471 873	€	-2'921'092	€	-2'769'415	€	-2'082'821	€	-3'045'590	€	-10'818'918
Purchase of financial fixed assets	€	-138	€		€	-4'891	€	-2'700	€	-5'858	€	-13'449
Total cash flow from investment activities	€	-472'011	€	-2'921'092	€	-2'774'306	€	-2'085'521	€	-3'908'984	દ	-11'689'903
Cash flow from financing activities
Public placement	€		€	24'820'419	€	-5 '000	€	5'000 €			€	24'820'419
Expenses relating to public placement	€		€	-2'11'579	€	-8'327	€	-59'143	€	5'126	€	-2'173'923
Total cash flow from financing activities	€		€	22'708'840	€	-13'327	€	-54'143	€	5'126	€	22'646'496
Total cash flow	દ	-571'517	€	19'682'939	દ	-3'750'398	દ	-1'611'055	€	-6,080,066	€	8'240'520
Cash and cash equivalents at the beginning of the period	€	571 671	€	154	€		€		€		€	154
Total cash flow in the period	€	-571'517	€	19'682'939	€	-3'750'398	€	-1'611'055	€	-6'080'966	€	8'240'520
Cash and cash equivalents at the end of the period	€	154	€	19,683,092	€	-3'750'397	€	-1,611,055	ਵ	-6,080,066	€	8'240'674

Statement by the Management Board

The Management Board has today considered and approved this Business Review report of Pryme B.V. (collectively "the Group") for the period January 1, 2021, up to December 31, 2021.

We confirm, to the best of our knowledge, that the financial information contained in the Business Review for the period January 1, 2021, to December 31, 2021, has been prepared in accordance with Dutch accounting principles and gives a true and fair view of Pryme BV and its Group companies' assets, liabilities, financial position and profit or loss as a whole.

We also confirm, to the best of our knowledge, that the Business Review includes a fair review of important events that have occurred during the fourth quarter of the financial year 2021 and their impact on the condensed set of consolidated financial statements is reflected adequately.

About Pryme | www.pryme-cleantech.com

Pryme BV is an innovative cleantech company focused on converting plastic waste into valuable products through chemical recycling on an industrial scale. Its efficient and scalable technology is based on a proven pyrolysis process that has been further developed and enhanced with proprietary characteristics. The company is currently building its first plant in the port of Rotterdam with an initial annual intake of about 40,000 tonnes, which will start production in 2022.

Pryme's ambition is to contribute to a low-carbon, circular plastic economy and to realize the enormous rollout potential of its technology through the development of a broad portfolio of owned-operated plants with strategic partners.

The company is listed on the Oslo Euronext Growth Exchange.