Number One by Nature Nelhydrogen.Com
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number one by nature Annual report 2016 nelhydrogen.com 1 2 Title: Annual Report 2016 Published date: 24.04.2017 [email protected] +47 23 24 89 50 Karenlyst allé 20, 0278 Oslo, Norway The publication can be downloaded on 3nelhydrogen.com 4 Table of contents Annual report 2016 6. Letter from the CEO 9. Report from the Board of Directors 22. Corporate Governance 26. Members of the board 27. Management 33. Financial statements 40. Notes to accounts 5 Letter from the CEO 2016 was a transitional year for Nel, in which we OnSite is recognised as the number one provider of positioned the company to take a front seat in the PEM electrolysers and fully complements Nel, both hydrogen industry as we entered 2017. Our team in terms of technology and in market outreach. The travelled the world, met with current and potential combined entity will be able to offer the full spectre of partners, armed with the Nel story, our technology and electrolysers in terms of both capacity and technology. our solutions. The acquisition will also give Nel a strong foothold in the U.S. and other markets, beyond our current position. During the course of the year we released our new Proton OnSite also has a very motivated and talented H2Station®, a hydrogen fueling station that triples organisation, and a solid backlog going into 2017. fueling capacity, while reducing footprint to one third of the previous generation. We also launched two new We expect this transaction to be concluded in the containerised, turn-key electrolysers that have received second quarter of 2017, but have already strengthened a lot of attention. At the same time, the Nel team also our financial flexibility through the NOK 177 million went back to basic and announced a new vision for the equity offering in February, adding to the NOK 225 company: Empowering generations with clean energy million in cash at the end of 2016. This shows the forever, whereby our technology allows people and continued strong support that Nel receives from the businesses to make everyday use of hydrogen, the investor community. most abundant element in the universe. Overall, Nel is well-positioned to take part in the This inspiring ambition also show the versatility of exciting times ahead within hydrogen. hydrogen as a clean energy carrier, deployable globally on multiple platforms and applications. Our broad Incorporated in 1927, Nel will this year celebrate technology platform also enables us to be invited to our ninetieth year in operation within the hydrogen some of the most interesting hydrogen projects around industry. The recent developments provide the perfect the world. backdrop for a worthy celebration of a 90-year young company with its best years ahead. At the time of writing, some of the initiatives have come to their conclusion. More will follow. It was with great We thank all our stakeholders for their efforts and pride that we announced the partnership agreement dedication during an eventful 2016. with Shell and Toyota to roll out their Californian hydrogen fueling station network. Through this potential NOK 140 million project – our largest single fueling station order ever – we will support the target of having Best regards, 100 hydrogen fueling stations in California by 2020. We also entered into an agreement with SunPower in California to build and operate the first solar-driven hydrogen production plant in the U.S. We aim to develop Jon André Løkke the project during 2017 and start marketing renewable CEO hydrogen at a very competitive price in 2018. Both the technical solution Nel is developing together with SunPower, as well as the partnership itself, will have great potential going forward. Additionally, we announced the intention to acquire Proton OnSite, creating the world’s largest electrolyser company with a global footprint. Proton 6 7 Report from the Board of Directors 8 Highlights 2016 • Nel ASA (Nel) reported full-year 2016 revenues of NOK 114.5 million, up from NOK 99.9 million • Entered into a non-binding term sheet to acquire in 2015, and a negative EBITDA* of NOK 44.9 Proton Energy Systems Inc. ("Proton OnSite"), (-2.7), reflecting a planned high activity level creating the world's largest hydrogen electrolyser within business development in new markets company with a global footprint. as California, investments, and preparation for production ramp-up, and the non-cash costs • Completed successful private placement of NOK related to the company’s stock option and share 176.7 million in gross proceeds at a price per incentive program of NOK 10.2 million. share of NOK 2.72. • Order intake of approximately NOK 160 million • Awarded contract by H2 Frontier Inc. for a during 2016 and a cash balance of NOK 225.5 H2Station® hydrogen fueling station to be million at the end of 2016. installed in Los Angeles, California. • Initiation of a NOK 85 million facility for hydrogen • Received the first purchase orders on H2Station® fueling station production in Herning, Denmark, equipment and services from Equilon Enterprises with an annual capacity to manufacture up to LLC (Royal Dutch Shell Plc) under the earlier 300 fueling stations per year when fully up announced California framework contract. and running. KEY FIGURES • Launched H2Station®, a hydrogen fueling station (FIGURES IN NOK MILLION) that triples the fueling capacity, while reducing the footprint to one third of the previous generation. 2016 2015 2014 • Launched two new containerized, turn-key Operating revenue 114.5 99.9 12.1 electrolysers. Total operating costs 169.8 118.2 25.2 • Uno-X Hydrogen AS, a Nel joint venture, announced the initiation of the Norwegian hydrogen fueling EBITDA -44.9 -0.6 -9.5 station network with the opening of the first of the 20 stations planned before 2020. EBIT -55.3 -18.3 -13.2 SUBSEQUENT EVENTS Pre-tax profit -62.6 -27.8 -11.6 • Entered into an agreement with SunPower to Net profit -55.8 -21.7 -6.5 build and operate the first solar-driven hydrogen production plant in the U.S. Net cash flow from operating activities -34.2 -37.8 3.3 • Entered into a Letter of Intent (LoI) with Hexagon Composites ASA and PowerCell Sweden AB to Cash balance end of period 225.5 313.0 98.5 establish a joint venture (JV) for the development of integrated hydrogen projects. • Awarded frame contract for multiple hydrogen *EBITDA is in the table and in the report defined as fueling stations in California by Royal Dutch Shell earnings (or net profit/loss) before interest (and other net Plc with a potential value in excess of NOK 140 financial items), taxation, depreciation and amortization. million depending of number of H2Stations and scope of equipment and services. 9 Financial development Nel reported revenues in 2016 of NOK 114.5 million, up (435.0). The company had cash and cash equivalents from NOK 99.9 million in 2015, following an increased of NOK 225.5 million (313.0), in addition to inventories interest in hydrogen solutions as fueling stations, and trade receivable of NOK 36.3 million (15.0) and electrolysers and integrated systems. 35.0 million (40.4) respectively. The underlying project-development pipeline is strong, Based on the strategy and ramp-up plan for the and the company continues to experience a high company, the board has proposed to not dividend pay activity level for its prospects and ongoing tender for 2016. processes. The planned high activity level within business development in new markets like California, CASH FLOW investments, and preparation for production ramp-up developed as expected. Net cash flow from operating activities was NOK -34.2 million (-37.8), while net cash flow from investments Costs of goods sold increased to NOK 60.8 million activities totalled NOK -60.2 (-83.8). Net cash flow from (42.1), while operating costs totalled NOK 108.9 million financing activities ended at NOK 6.8 million (336.1), (76.1). Salaries and social costs expenses amounted to bringing the cash balance on 31 December 2016 to NOK 60.3 million (29.9) and other operating expenses NOK 225.5 million (313.0). increased to NOK 38.3 million (30.6). Operating profit ended at NOK -55.3 million (-18.3). The financial results were impacted by non-cash costs related to the company’s stock option- and share Strategy incentive program of NOK 10.2 million. The 2017 costs for the current stock option- and share incentive programs are expected at an average of approximately Nel is a global, dedicated hydrogen company, delivering NOK 3.0 million per quarter. optimal solutions to produce, store and distribute hydrogen from renewable energy. The company serves Net financial income amounted to NOK -7.3 million various industries and energy with leading (-9.5), while pre-tax income totalled NOK -62.6 million hydrogen technology. Since its foundation in 1927, (-27.8). Comprehensive income equalled NOK -75.5 Nel has a proud history of development and continual million (-1.5). improvement of hydrogen plants. Our hydrogen solutions cover the entire value chain from hydrogen The Board of Directors proposes that the loss for 2016, production technologies to manufacturing of hydrogen which totals NOK 75.5 million, to be covered by transfers fueling stations, providing all fuel cell electric from the share premium account, or other reserves. vehicles with the same fast fueling and long range as conventional vehicles today. FINANCIAL POSITION The company has three divisions, covering the entire Total assets were NOK 762.9 million (815.6), including hydrogen value chain: Nel Hydrogen Electrolyser, Nel intangible assets of NOK 403.3 million (411.2).