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.
3
Continuous development
of adjoint water desalination plants, alternative modes
of low-grade and saline surface water electrolysis,
4
and
water provision via wastewater treatment plants provide
evidence of their feasibility and cost-effectiveness.
5
Water stress can also be minimised by adding
desalination plants at the electrolyser site.
6
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.
7
1 Water statistics - Statistics Explained (europa.eu)
2 (PDF) Development of a Life Cycle Inventory of Water Consumption Associated
with the Production of Transportation Fuels (researchgate.net)
3 Quantification of fresh water consumption and scarcity footprints of hydrogen
from water electrolysis: A methodology framework - ScienceDirect
4 Electrolysis of low-grade and saline surface water | Nature Energy
5 Resolução do Conselho de Ministros n.º 63/2020 | DRE
6 Shipping Sunshine | TU Delft Repositories
7 Hydrogen Production & Water Consumption, Hydrogen Europe, December 2020
32
Report from the Board of Directors
ENVIRONMENTAL IMPACT, ENERGY AND
DIRECT GHG EMISSIONS
Addressing Nel’s efforts to combat climate change
requires looking at both our contribution to the overall
energy transition, as well as the emissions we generate
in the manufacturing stage.
OUR CONTRIBUTION
The Alkaline electrolysers and PEM electrolyser
equipment produced by Nel has no emissions in use
when connected to renewable power sources like wind,
solar, or hydro power, either grid-connected or off-grid. In
fueling, our dispensers unlock the potential to decrease
dependence on fossil-based solutions for mobility, thus
contributing to the decarbonization of one of the most
polluting industries. The flexibility of hydrogen as a
fueling source in fuel cell electric vehicles is evidenced
in its applicability in both passenger cars, heavy-duty
vehicles, buses, train, marine transport, as well as a vast
array of industrial and construction equipment vehicles.
EU TAXONOMY REGULATION
The EU Taxonomy Regulation entered into force on
12 July 2020. The EU Taxonomy Regulation requires
mandatory compliance for certain market participants
and is considered highly relevant for most others.
The purpose of the framework is to give all market
participants common definitions for what constitutes
‘sustainable activity’. The delegated acts on the various
climate-related objectives apply from January 1,
2022 (climate change mitigation and climate change
adoption) and January 1, 2023 (remaining objectives).
Nel’s business activities are covered by the EU
Taxonomy on Sustainable activities for climate change
mitigation. During the course of 2022, Nel will report on
the percentage of its activities that are taxonomy aligned
after completing the necessary Do No Significant Harm
and Social Safeguards analyses. All of Nel’s current
activities have the potential to be taxonomy aligned;
thus, Nel regards the potential for full alignment with
the EU taxonomy as high. Nel will from 2022 report
magnitude of EU taxonomy-compliant share of revenue
in accordance with relevant reporting standards. In
addition, both capital expenditure and operating expense
aligned with the EU taxonomy.
Photo: Melissa Rose
Nel ASA
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Annual report 2021
33
CARBON FOOTPRINT
We strive to be transparent with regards to our impact
on the environment and continue to improve the internal
process for collecting data that provides a relative
overview of our emissions and their origins.
The main contributor towards our carbon footprint is
related to scope 2 emissions. The electrolyser division
consumes energy while performing product testing
prior to customer delivery. Other inputs include water
and chemicals. Nel’s absolute emissions will grow as
the company’s activities continue to grow. Our goal is to
decrease our CO2 footprint and water consumption per
product produced. We will achieve this by improving the
stability and scalability of our production processes, as
well as our overall production efficiency.
Our goal and ambition are to report complete and
accurate quantitative data on scope 1 and 2 from 2022.
The inclusion of scope 3 emissions is dependent on
data from several sources, e.g., travel agencies, freight
forwarders, other logistics and meters. To date, this is
not included in our calculation of CO2 intensity as it has
been challenging to gather complete and accurate data.
For next year’s report, we aim to extend our reporting
scope and include a selection of scope 3 emissions.
These have been identified to be air travel, waste and
downstream distribution.
365 363
372
1 665
902
1 039
-
500
1 000
1 500
2 000
2 500
202120202019
tCO2e
tCO2e (scope 1 and 2)
tCO2e (scope 1)tCO2e (scope 2)
The tCOe from Nel operating activities in scope 1 and
scope 2 have short payback period when Nel equipment
replace fossil fuel equipment in commercial operation.
2,69
2,19
2,72
-
0,50
1,00
1,50
2,00
2,50
3,00
202120202019
tCO2e/MNOK revenue
CO intensity (scope 1 and scope 2)
*
tCO2e/MNOK revenue
*
CO2 intensity is calculated as the sum of scope 1 and 2 emissions (tCO2e) over
revenue in NOK million.
IMPROVING SUSTAINABILITY IN
PRODUCTION
The environmental footprint of a product throughout its
lifetime, factoring in 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, however. Sustainability in
production is a vast topic and is necessary to address
in more detail. In our decision to report in accordance
with established international sustainability standards
lies an important commitment to increase our focus on
sustainability in our actions, not just in the opportunities
that arise from our products in operation. This requires
an organizational adjustment, and we will continuously
pursue improvements in all of our operating activities
going forward. Among other initiatives, we are working
on phasing out the use of hazardous chemicals in
production and have set KPIs directly aimed at reducing
the carbon footprint at the individual manufacturing
facilities. We also aim to address reduction of
emissions in the logistics of our supply chain, as well
as the shipment of outgoing products. See additional
information on the selection of our suppliers in section
‘Responsible supply chain’.
In 2022, we aim to implement direct targets and
measurable metrics to reduce emissions. We will
improve on emission reporting, formalise initiatives
through policies and procedures, and encourage
dialogue across divisions to identify key areas of
improvement. In addition, we aim to implement targets
for million tonnes CO2 equivalents avoided from our
products and analyse CO2 payback time.
34
Report from the Board of Directors
Social
ORGANISATION AND OCCUPATIONAL
HEALTH AND SAFETY
At Nel, social responsibility refers to how we address
social issues that ultimately impacts our contribution
to society at large. Nel’s focus on safety is integrated
into a company-wide programme initiated in 2020.
The purpose of the programme is to foster a common,
sustainable safety culture that drives a zero-tolerance
attitude towards HSE incidents for all Nel employees. This
ongoing effort drives a culture of continuous improvement
and a sustainable safety culture at Nel. The approach is
anchored with Nel’s executive management team and
Board of Directors and is reviewed on an annual basis.
The programme will focus on the following three areas:
• Product safety, which relates to Nel’s ability to ensure
methods and tools for how to design products safely.
The safety programme will investigate product
design tools across the group, including common
design criteria
• Workplace safety, which relates to ensuring a
transparent governance structure, including updated
standards and procedures for working safely, both
at Nel sites and externally. It deals with the whole
organization around HSE initiatives and activities, at
both the global and local levels
• Stakeholder safety relates to suppliers, contractors,
customers and partners that Nel engages with. All
should be brought up to a minimum knowledge in
Nel’s safety procedures and rules of conduct at our
locations
Nel recognises that ensuring workplace, stakeholder
and 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. Transition to 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
As part of Nel’s response to the COVID-19 pandemic,
the company established a task force team with
representatives from Nel’s main sites. This team
developed guidelines for preventive measures to ensure
Nel employees’ health. During the critical moments of
the pandemic throughout much of 2021, the number of
on-site employees was reduced to a minimum to keep
the business operational. As the different Covid variants
developed and affected the regions where we are in
operation or have client relationship, Nel was careful to
follow national authorities’ recommended guidelines and
mandates.
Following HSE and quality being #1 priorities within Nel,
all Nel sites have management systems in place that
safeguard our employees’ health and safety. Ensuring
that employees work in a safe and healthy environment
is the key for a successful business. Nel aims to provide
a workplace for everyone that is free of incidents and
injuries, and to promote a culture of hazard identification
and awareness through incident reporting and self-
accountability. Employees are provided with appropriate
training and equipment to perform their job safely. The
guiding principles for workplace safety are laid out in the
Nel Code of Conduct.
Each Nel location has a management team member
assigned to ensure that all mandated health and safety
guidelines are followed. Relevant indicators on work
related injuries and illness are monitored and reported at
a corporate, divisional and local level.
0 fatal accidents
36
Report from the Board of Directors
Total recordable injuries frequency (TRIF) in 2021 is 4.9
(2020: 11.2). TRIF is measured as total recodable injuries
per million hours worked.
Occupational health and safety targets for 2022:
• QHSE target of zero incidents, including at sites with
Nel equipment
• Recognized safety leader within the industry, setting
new industry safety standards across the value chain
PRODUCT SAFETY
Safety has first priority at Nel. Management and all
employees are strongly committed to the company’s
promise of delivering fail-safe products to our
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 never compromises on
safety requirements, codes and standards.
Where applicable, safety requirements include third-
party product certification for design and manufacturing.
In addition, a Nel HSE committee that works across the
organization and consists of participants from each legal
entity, as well as the corporate function, ensures learning
across sites and the establishment of best practice.
Third-party experts are involved as subject matter
experts when applicable. In 2022, Nel will continue the
implementation of even more rigorous methodologies,
e.g., a review system where specific areas will be
assessed to identify areas of improvements.
In 2021, Nel adopted the strategic decision to establish
the Nel Business System (NBS). NBS will be implemented
across Nel in 2022. NBS focuses on how Nel will achieve
customer satisfaction and have HSE, quality and ethics
as first priorities to achieve this. The introduction and
training for both leadership and Nel as a whole for this
initiative will be conducted in 2022. The Nel Business
System will be a part of our employee value programme.
Product safety targets for 2022:
• 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
RESPONSIBLE SUPPLY CHAIN
A well-functioning supply chain is determined to be
one of Nel’s key success factors. Nel’s yearly spend on
purchasing goods and services is a significant part of
total revenue, equalling approximately NOK 562 million.
Nel expects that the total spend will increase in line with
Nel’s increased activity level. A responsible supply chain
is therefore an integral component of our sustainability
efforts, and we seek to select and further develop
suppliers with high standards. We are committed to
work with our Supply chain in order to contribute to
the publicly-stated objective of a TCO (Total cost of
Ownership) of $1.50 per Kg of hydrogen.
One of the key activities for the 2021 was to strengthen
our supplier base with new competitive suppliers
capable of the managing the marked growth and also
being able to deliver large and complex systems. Nel
has qualified and entered supplier agreements with a
great number of new suppliers. This sums up in a robust
supply chain which enables Nel to continue the growth.
The corona pandemic challenged the process of
conducting on-site supplier audits. Both national and
international lockdowns impeded visitations throughout
the year, most considerably in the first quarters. Despite
the challenges, Nel managed to conduct 15 audits in
2021, well above the target of 10 key supplier audits. We
continue to perform supplier audits as a part of Nel’s
supplier selection process and aim to conduct audits on
100% of our key suppliers.
Nel ASA
I
Annual report 2021
37
Nel has met its 2021 target of developing and screening
new direct high-risk suppliers using a revised pre-
qualification process. The supplier pre-qualification
process has been implemented across the Nel Group for
complex projects. It contains a foundation of common
questions for all business units, with adjustments made
to fit the objective for each case or business unit. The
process has been formalized in a digital environment to
optimize the pre-qualification process.
Early in 2021, a Nel Procurement Community was
established consisting of key members across Nel. This
includes members from corporate projects, legal and
sustainability in Nel ASA, as well as supply chain and
procurement directors in all Nel Business Units. Nel
Procurement Community was established to:
• Have a forum for raising topics related to supply
chain, procurement, and contract topics
• Develop a robust supply chain across Nel
• Share knowledge, best practices and working
methods
• Align work processes and establish common
guidelines for the Nel Group
• Establish, monitor, and discuss common goals and
targets, guided by the targets presented in the Nel
Sustainability Report 2020
Nel experiences a continued increase of focus and
expectations related to ESG topics. The Community met
monthly throughout 2021, and consistently included
ESG as the backbone in all meetings. By working
towards integrating a systematic ESG approach, we
ensure compliance with both legal requirements as well
as alignment with initiatives in which Nel has committed
to. As a result, ESG has held a prominent position in
our supply chain efforts in 2021. The community will
continue its efforts of unifying our supply chain activities
across Nel in 2022.
Other signicant organizational developments
• Areas of competence that have been strengthened
throughout the year
• Changes in training and/or competence development
• Increased Total Cost of Ownership focus
• Strengthen the Supply chain organization
significantly to scale-up for increased number of
projects.
Signicant supply chain changes
• Ramp up for Supplier capacity to meet the increasing
demand.
• Opening of Herøya facility
• Established partnership with major EPC companies
• Increased local Contractor capacity
Building on the goals and targets laid out for this year,
the Nel Procurement Community has identified a
selection of key areas for development throughout 2022.
This includes continuing to develop the pre-qualification
and supplier development programme by establishing
a supplier portal enabling Nel suppliers readily available
access to amongst other our whistleblower programme,
the “Nel Ethics Hotline”, key documents and information
and other relevant tools for the engagement with Nel.
Responsible supply chain targets for 2022:
• Deliver on supplier cost savings plan in support of
TCO roadmap of USD 1.5 per kg of hydrogen by 2025.
• Secure the required capacity and supply of goods
in a challenging market, so the supply of goods will
be delivered on time and with no or limited delays in
operations and installation.
• Ensure highest quality and HSSE performance
through additional supplier audits and launch of
supplier development programme
CYBER SECURITY
IT and cyber security improvement initiatives are high
on our agenda. Protecting our operations is essential
and will become increasingly important as the global use
of connected devices continues to rise. Protecting our
intellectual property will remain a priority, especially as
the use of big data, such as at our fueling stations and
electrolysers, continues to increase in importance. All
relevant employees are required to complete IT-security
training on a monthly basis. External consultants have
been engaged to uncover and report on IT-related
security threats.
Our manufacturing facilities are only somewhat
integrated into the IT-systems and run mostly
independent. Part of the production process involves
higher degree of robotisation which are connected and
consequently constitutes an increased risk.
As far as we are aware, there were no breaches of
customers’ privacy in 2021, nor were there any reported
cases of identified leaks, thefts, or loss of customer data.
38
Report from the Board of Directors
DIRECTORS & OFFICERS INSURANCE D&O
Based on new 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.
WELLBEING AT WORK
From 2021 Nel has strengthened its focus on HR
development at the overall corporate level. The HR
directors in the business and the newly recruited
Chief HR Officer (CHRO) started to work in a matrix
organization, ensuring a better alignment of HR across
Nel and with the Nel Business System as backbone
for all development. This approach will help establish a
common HR governance, a strong foundation for people
and organizational development and support continuous
HR improvements across the business. In 2022 we will
also introduce more common systems and systematic
approaches to HR processes across our businesses. This
will also include a high focus on developing a common
culture with focused development tools at all levels of
the organization.
Our HR work is essential to continue attracting and
developing the best talents in our industry, in order to
develop world-class technology, products and solutions
for our customers. Managing people and competences
lies at the core of Nel’s further development.
Many competence development activities were
performed in 2021, linked to ISO certifications. Going
forward, more skills development programmes will be
adopted, in alignment with our culture and values, based
on the Nel Business System.
ABSOLUTE NUMBER AND RATE OF
EMPLOYMENT
Permanent and temporary employees,
by region and gender
202120202019
Norway1499855
Women(%)20 %22 %25 %
Men(%)80 %78 %75 %
Denmark182157127
Women(%)15 %15 %16 %
Men(%)85 %85 %84 %
USA151121118
Women(%)21 %23 %20 %
Men(%)79 %77 %80 %
South Korea251710
Women(%)17 %12 %10 %
Men(%)83 %88 %90 %
TOTAL507393310
We strive to increase our gender balance across the
different locations. We focus on diversity through the
recruitment process, ensuring that we offer equal
opportunity to all relevant applicants.
Age distribution of workforce
202120202019
Under 30736252
30-49281201154
50+153130104
TOTAL507393310
Collective bargain agreements
COLLECTIVE BARGAIN
AGREEMENTS
202120202019
Norway26 %24 %N/A
Denmark34 %42 %39 %
USA0 %0 %0 %
South Korea0 %0 %0 %
Nel ASA
I
Annual report 2021
39
Permanent and temporary positions
PERMANENT AND
TEMPORARY POSITIONS
1
202120202019
Permanent500390308
Temporary732
Women(%)14 %33 %0 %
Men(%)86 %67 %100 %
1)
the percentage of women and men are related to temporary positions
Sick leave
202120202019
Sick-leave2.40 %4.28 %2.36 %
Coverage of employees90 %91 %94 %
Parental leave
Nel encourages all female and male employees to take
parental leave and assures them employment after
their leave as it is important for our employees in terms
of work-life balance and well-being. There has been a
limited number of employees on parental leave during
2021.
NORWAYMALE FEMALE
Entitled to parental leave 31
Took parental leave 31
Returned to work after
parental leave ended 31
Still employed 12 months after
their return from parental leave 31
In Norway, 100% of employees entitled to parental leave
took parental leave during 2021. In addition, all such
employees returned to work and are still employed 12
months after their return.
DENMARKMALE FEMALE
Entitled to parental leave 92
Took parental leave 22
Returned to work after
parental leave ended 10
Still employed 12 months after
their return from parental leave NA0
It has not been possible to report on “still employed 12
months after their return from parental leave” in 2021 for
males in Denmark as 12 months has not passed as of 31
December 2021.
Photo: Unsplash.com40
Report from the Board of Directors
Governance
Ethical business conduct
and compliance
Nel conducts business on all continents and the demand
for Nel’s hydrogen solutions is growing internationally.
Through our expanding portfolio of international
projects, Nel has a significant number of third-party
relationships and we frequently participate in forms of
collaborations 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 2021, 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 requirements that
all Nel’s activities shall be conducted in an ethical and
sustainable manner.
The final quarter of 2020 saw the completion and launch
of the Nel Anti-Bribery and Corruption Policy (“ABAC
Policy”), the Nel Competition Law Policy and the Nel
Code of Conduct. The Nel Third-Party Management
and Integrity Due Diligence Procedure (“Third-Party
Procedure”) was completed and released in February
2021. Following the launch and gradual implementation
of the Third-Party Procedure throughout the
organization Nel is routinely conducting an integrity due
diligence on all third parties with which it does business.
Throughout 2021 Nel worked on developing policies
and procedures concerning data protection and export
compliance. In January 2022 the Nel Data Protection
Policy was launched. The purpose of the policy is to
ensure compliance with EU General Data Protection
Regulation (“GDPR”). As a necessary supplement to the
Data Protection Policy, Nel also launched the Procedure
for Handling Data Subject Requests and Procedure for
Handling Personal Data Breaches.
Finally, Nel will launch a revised Export Compliance
Procedure in April 2022. The release of the Export
Compliance Procedure marks the completion of the
process of revising Nel’s compliance system.
During 2021 the Nel Code of Conduct was published
on our website to increase the general public’s access
and insight into the efforts we are making within the
compliance field. We aim to publish more information
regarding our compliance system on our website during
2022.
All new employees need to confirm compliance with
Nel’s Code of Conduct as part of onboarding process.
Further, all employees will be required to sign off on Nel’s
Code of Conduct on an annual basis.
Training of employees is crucial for an effective
compliance program and following the completion of the
revised compliance system we will in 2022 increase our
focus and effort on training the organization. We have
entered into an agreement with a reputable third-party
provider of compliance services, including compliance
training, and we are conducting e-learning compliance
training of our personnel in topics such as anti-bribery
and corruption, export compliance and harassment. The
service providers’ training software allows Nel to enroll
our employees and efficiently monitor and follow up to
ensure that training is completed. It further allows us to
conduct targeted training for specific categories/groups
of employees. The e-learning is further supplemented by
digital training, and face-to-face training conducted by
Group Legal and compliance.
• 100% of Nel’s executive management team and
Board of Directors have completed the anti-bribery
and corruption and Code of Conduct training for
2021
Nel ASA
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Annual report 2021
41
Whistleblowing
In September 2020, our whistleblowing channel – the
Nel Ethics Hotline – was completed and launched on our
intranet, and we established a system for conducting
investigations of reported concerns. Following the
launch, we have worked to raise awareness of the
initiative within Nel and also with external stakeholder.
To this end we have added a link to our whistleblower
channel on our official website.
In 2021, Nel’s Ethics Hotline received 4 notifications
classified as harassment or discrimination. Of the
notifications, 3 are resolved and 1 is ongoing. The
outcomes of cases resolved resulted in disciplinary
sanctions including written warnings and dismissals.
Compliance targets for 2022:
• 100% of Nel’s executive management team and
Board of Directors to have completed the anti-bribery
and corruption training during 2022
• 100% of relevant Nel employees to have completed
e-learning compliance training in topics such as
anti-bribery and corruption, export compliance and
harassment.
42
Corporate governance
INNOVATION AND TECHNOLOGY
Financial investment contribution
All research and development (R&D) work at Nel is
targeting safe, well-performing and cost-efficient
products for our customers. This includes reducing both
initial capital expenditures, upgrades and operational
expenses during the products’ lifetime. Maintaining
a leading position requires that Nel pursues product
optimization and cost-reduction programs reducing
the products total cost of ownership (TCO) for Nel’s
customers. 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.
Including all development work at Nel during 2021, total
R&D spend was NOK 163.0 (115.8) million, of which
NOK 118.9 (84.3) million was capitalized as technology
development and NOK 44.1 (31.5) million was expensed
as research and maintenance. The total spends in
Electrolyser Norway, Electrolyser US and Fueling was
NOK 36.3 (32.7) million, NOK 60.6 (37.6) million and
NOK 66.1 (45.5) million, respectively. R&D spend in 2021
was 20% (18%) of annual revenue and other operating
income.
In the beginning of 2020, it was decided to establish a
Corporate technology team that reports to Nel’s CEO.
The team is responsible for Nel’s core technology areas
and includes a professional network which strengthens
the focus and knowledge of process safety and
performance across the different technology disciplines.
Nel’s technology portfolio includes multiple key
development programs for both electrolysers and fueling
stations. Nel has an active IP protection strategy and
has more than 100 active patents. Nel’s IPR strategy is
gatekept and further developed by a Nel IPR committee
that works across the organization and meets bi-weekly.
Electrolyser
Our electrode manufacturing process for alkaline
electrolysers in Norway has almost a century-long
history. Leveraging on the extensive experience, the
strategy continues to include further improving and
strengthening our electrode manufacturing. The goal
is to reduce the number of processes required, thus
markedly reducing the consumption of energy, raw
materials, chemicals, and the factory footprint. By
implementing these changes, Nel will be able to reduce
the cost and emission of electrode manufacturing. The
specific energy consumption of producing hydrogen
from Nel electrolysers is targeted to be reduced by
up to 10% through various improvement enablers.
Standardization is an important step for scaling up
manufacturing with related cost-reduction programs in
place. The standardization will be skid-based, containing
prefabricated modules where all safety standards are
embedded in the system. In addition, Nel sees the
potential to improve the efficiency and capacity of its cell
stacks. To achieve this, key enablers are improvements
to the electrode form, increasing the active electrode
area, and increasing current density.
Fueling
Nel has in recent years carried out vast development
activities to support its light-duty fueling station
products. Some of the core technologies are the
control and cooling systems, as these ensure a fast,
safe and complete fueling of the vehicle according
to the SAE J2601 standard, which is required by the
car manufacturers. Some of these components are
also compliant with international emission standards.
In addition, the entire system and platform design
are key to achieving a stable and reliable system,
ensuring high availability for vehicle users. Nel has also
initiated a heavy-duty fueling station product platform
development that will serve the increased need for truck,
bus and train hydrogen fueling. Overall, we see a large
increase in utilization of our fueling stations and are
investing in engineering to continuously improve on their
safety and reliability.
Innovation and technology targets for 2022:
• At least 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 2022
RESILIENCE
Climate resilience in Nel’s strategy
Considering that 100 % of Nel’s revenue comes from
green hydrogen technology, the resilience of Nel’s
strategy within the different climate-related scenarios is
robust. Key considerations are how fast our customers’
industries move towards green hydrogen use, how
complex the green technology will be and price
competitiveness. The 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 electrolysis there are significant
opportunities to turn the existing market green. In
addition, we see regulations supporting the transition
across the globe, with the EU and the US pledging
hundreds of billions of dollars into their zero-emission
programs where hydrogen serves a vital part as the
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Corporate governance
energy carrier of choice. The growth will not only come
from industrial applications, but also from transforming
the current diesel-based heavy-duty transportation to
run on zero-emission and cost-efficient green hydrogen.
These developments require low-cost electrolysis and
ultra-fast fueling, both areas where Nel is the global
leader. Thus, we see a resilience in our strategy to invest
in both electrolyser technologies, PEM and Alkaline, and
hydrogen fueling technology.
There is uncertainty associated with the timing and pace
of the exponential growth expected in the hydrogen
industry. There is a risk that Nel is either moving too
quickly or too slowly, meaning we are either over- or
under investing in technology and ramp-up.
Resilience in manufacturing facilities
Nel has expanded electrolyser production to
accommodate large-scale projects by constructing
a fully automated manufacturing facility at Herøya,
Norway. The factory is designed according to lean
manufacturing and industry 4.0 principles and
represents the first industrial-scale production of
electrolysers. The capacity of the facilities is 500 MW
annually for the initial investments and can be expanded
to 2 000 MW. This compares to 40 MW annually at the
former production facility.
Nel ASA
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45
4.3 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
its operations and potential risk factors and takes steps
to reduce risk exposure.
Nel places strong emphasis on quality assurance
and has quality systems implemented, or under
implementation, in line with the requirements applicable
to its business operations.
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.
In this phase of fast growth there are especially risks
associated with technological change, both related
to technology elements within the field of hydrogen
as well as technology elements outside of the field of
hydrogen that potentially could make green hydrogen
less relevant for the future. Additionally, if competitors
gain advantages in the development of alternative
technologies, this could affect the competitive position
of the group.
Further, 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 a relatively small number of existing customers. 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 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 and hydrogen fueling
products. 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
and is at the risk of temporary supply chain disruptions
should one or more suppliers fail to deliver. 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. 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.
A complete range of operational, financial, market and
climate-related risk factors are discussed in detail in
notes 6.1, 6.2, 6.3 and 6.4, respectively.
Atmospheric Alkaline Electrolyser, A485
46
Corporate governance
4.4 Outlook
Sustainability future prospects
Being accountable for our environmental footprint
is emerging as a pivotal component in corporate
transparency, and we aim to provide information
as sought out by our key stakeholders. Nel strongly
believes that the green hydrogen market has a potential
of unknown 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, and renewable hydrogen
will be a part of the energy mix that enables the transition.
Ramp-up investments, organizational expansion and
new markets were a few of the highlights of this past
year, signalling that demand is growing fast. Combined
with an ambitious strategy of drastically reducing the
total cost of ownership (TCO) to customers, we have
established a solid framework for the years to come. We
must ensure that sustainable business is influencing all
of our decision-making and operations. Moving forward,
our global presence, coupled with strong financing, will
help us remain the preferred partner that provides world-
class safety. It will ensure that we maintain our position
as a technology front-runner, through scalability and cost
leadership.
Our goal is to further develop and improve our reporting in
the coming years, with the aim of including a wider range
of quantitative measures of the ESG-reporting metrics
into our report. Among other things, we aim to quantify
environmental targets and metrics, improve our emission
reporting and demonstrate our ESG commitment at all
levels of the organization.
Business outlook
Nel aims to capitalize on the developing opportunities
within the hydrogen industry as they relate to the coming
shift from hydrogen produced using fossil fuels to
hydrogen produced using renewable power. Nel sees a
rapidly increasing pipeline of opportunities. External and
internal analyses support a market view that multiple
gigawatts of electrolyser projects could reach final
investment decision before 2025. Within electrolysers,
the most near-term opportunities are within industrial
applications. Projects will likely come first in mature
markets near large hydrogen consumers, before sizeable
greenfield installations integrated with renewable
energy sources gradually become the leading market
segment. The increasing size of projects leads to a longer
preparation and negotiation phase with significant paid
and unpaid engineering work. For fueling applications, the
market is shifting from individual station orders to larger
framework contracts.
By leveraging our position as a technology front-runner,
with a continued high focus on safety, global presence,
cost leadership, strong financing and preferred-partner
status for industry participants, we look forward to
a future hydrogen landscape where Nel remains an
important global player.
To maintain and strengthen our leading position in the
growing market for green hydrogen applications, Nel
will continue to invest to build scale and to develop
our organization, and our fueling, alkaline and PEM
technology platforms. By building sufficient and flexible
capacity to accommodate multi-billion NOK orders, we
intend to meet the accelerating demand for industrial
and infrastructure applications of our products globally.
Further organizational growth will be closely linked to
increased order intake and tender activity.
As communicated, competition is intensifying as Nel
and others are ramping up production capacity. In
addition, Nel has continued to be negatively impacted by
disruptions in the value chain and travel restrictions due
to the Covid-pandemic. At the same time, raw material
costs have increased. In combination all of these factors
have put pressure on our margins and are expected to
continue to do so in the medium term.
Over time, Nel expects that increasing revenues will
support cost reduction and scale effects leading to
profitability. Our counterparties expect that Nel will be a
financially strong and stable counterparty and partner as
the global green hydrogen market continues to expand,
and contracts continue to grow in size, scope and
complexity.
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47
OSLO, 22 MARCH 2022
THE BOARD OF DIRECTORS
Ole Enger Beatriz Malo de Molina Charlotta Falvin
Chair Board member Board member
(Sign) (Sign) (Sign)
Finn Jebsen Hanne Blume Tom Røtjer
Board member Board member Board member
(Sign) (Sign) (Sign)
Jon André Løkke
CEO
(Sign)
RESPONSIBILITY STATEMENT
“We confirm that, to the best of our knowledge, the financial statements for the period from 1 January 2021, up to
and including 31 December 2021, 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.”
48
Corporate governance
Nel ASA
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Annual report 2021
49
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 of
Directors and management have resolved to follow the
recommendations of the Code to the extent deemed
reasonable in view of the company’s size.
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: we enable global decarbonization
of large 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 creating value for shareholders in a
sustainable manner.
3. Capital and dividend
The company’s registered share capital as of 31
December 2021 consisted of 1 460 799 488 shares,
including both outstanding shares and treasury shares,
with a par value of NOK 0.20 per share.
Under the company’s strategy, dividends are not
currently planned during this stage of the company’s
development.
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 15 April 2021, the
board was granted authorisation to increase the share
capital with up to NOK 29 145 949 through one or several
capital increases. The board has also been granted
authorisation to acquire shares in Nel on behalf of the
company, for a total nominal value not exceeding 10% 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.
Major transactions with related parties must be
approved by the general meeting.
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Corporate governance
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
of directors. 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 2021, the annual general meeting was held on 15
April and 10.96 percent of the total share capital was
represented. The annual general meeting was conducted
digitally due to the Covid-19 pandemic, with a live
webcast and electronic voting on each item.
The company will encourage 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 15 April 2021, the following
persons were elected to the nomination committee and
serve until the 2022 annual general meeting:
• Fredrik Thoresen, chair
• Leif Eriksrød, member
• Eivind Sars Veddeng, member
During the one-year term, the chair had to resign caused
by conflict of interest. The nomination committee
continued the remaining term with two members. This
has been a short-term deviation from the articles of
association. On the next annual general meeting, 21
April 2022, three to five members to the nomination
committee will be elected in accordance with articles of
association.
8. Board of Directors
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 15 April 2021, Ole Enger,
chair of the board, Hanne Blume, Finn Jebsen, Beatriz
Malo de Molina, Charlotta Falvin and Tom Røtjer were all
re-elected to the board of directors.
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 13 (parent company)
for transactions with related parties.
Nel ASA
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51
9. The work of the Board of
Directors
A plan for the board 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.
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 2021, 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 2021, the Board conducted 14 board meetings with
100% meeting attendance, held at group headquarters
in Oslo and/or virtual meetings due to travel restrictions
under covid, 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
and compliance system. The members of the audit
committee are appointed by and from the members
of the board, and currently consist of Finn Jebsen
as chair and Beatriz Malo de Molina as member.
Current members are independent of the company’s
management. The audit committee conducted 10
meetings with 100% meeting attendance.
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 was established
during 2021 and currently consist of Hanne Blume as
chair and Ole Enger as member. The committee has held
1 meeting with 100% meeting attendance. In addition to
this formal meeting, the remuneration committee worked
in 18 dedicated meetings, including on the recruitment
process leading to the selection of a new CEO . The
committee had also several meetings working on the
remuneration benchmark for the CEO and for the rest
of the Group Leadership team. The committee was also
involved in discussions related to the recruitment of
strategic positions for Nel and for scoping the focus of the
work through the Terms of Reference.
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.
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Corporate governance
Risk management and internal control requirements
have been evaluated by management and the board of
directors, 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 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 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 of directors 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 2021 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 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.
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Annual report 2021
53
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 new remuneration
report for 2021 will be presented to the general meeting
in 2022 for an advisory note. The remuneration
report will be available on March 24, 2022, 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. All press releases and stock exchange
notifications are posted on the company’s website, www.
nelhydrogen.com. 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.
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 of directors 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 audit committee
meetings for the quarterly report, status of the audit
and summary of the audit of annual report. 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 new
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 handled 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.
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Corporate governance
OSLO, 22 MARCH 2022
THE BOARD OF DIRECTORS
Ole Enger Beatriz Malo de Molina Charlotta Falvin
Chair Board member Board member
(Sign) (Sign) (Sign)
Finn Jebsen Hanne Blume Tom Røtjer
Board member Board member Board member
(Sign) (Sign) (Sign)
Jon André Løkke
CEO
(Sign)
Nel ASA
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Annual report 2021
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56
6 Consolidated nancial statements
2021 Nel group
Consolidated statement of comprehensive income ........................................................................................................ 58
Consolidated statement of financial position as of 31 December .................................................................................. 59
Consolidated statement of cash flows .............................................................................................................................. 61
Consolidated statement of changes in equity .................................................................................................................. 62
Note 1.1Corporate information ....................................................................................................................................... 64
Note 1.2Basis of preparation ........................................................................................................................................... 64
Note 1.4Changes in accounting policies ......................................................................................................................... 66
Note 1.5Significant accounting judgements and estimation uncertainty.................................................................... 66
Note 2.1Revenue from contracts with customers ......................................................................................................... 66
Note 2.2 Other operating income ..................................................................................................................................... 71
Note 2.3Segment information ......................................................................................................................................... 72
Note 2.7Finance income and cost ................................................................................................................................... 78
Note 4.3Prepaid expenses and other current assets ..................................................................................................... 97
Note 4.4Cash and cash equivalents ................................................................................................................................ 99
Note 5.1Share capital and shareholders ........................................................................................................................ 100
Note 5.2 Long-term debt and guarantees ...................................................................................................................... 101
Note 5.3Deferred income ................................................................................................................................................. 102
Note 6.7Contractual commitments and commitments for future investments ........................................................ 114
Note 7.1Composition of the group .................................................................................................................................. 115
Note 7.5Events after the balance sheet date ................................................................................................................. 118
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”.
CONTRACT BALANCES
20212020
CONTRACT
ASSETS
CONTRACT
LIABILITYTOTAL
CONTRACT
ASSETS
CONTRACT
LIABILITYTOTAL
Rights to consideration on contracts in progress
477 688332 324810 011518 820151 178669 999
Less - advances and progress billings
-298 919-693 145-992 063-390 845-344 260-735 105
TOTAL Contract assets (liabilities)
178 769-360 821127 976-193 082
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CONTRACT ASSETS20212020
Balance as of 01.01.
127 97637 103
Transfers from contract assets recognised at the beginning of the period to receivables
-103 613-19 313
Increases due to measure of progress in the period
161 251110 185
Revaluation
-6 845 0
Balance as of 31.12.
178 769127 976
CONTRACT LIABILITIES20212020
Balance as of 01.01.
-193 082-147 481
Revenue from amounts included in contract liabilities at the beginning of the period
129 125147 481
Billings and advances received not recognised as revenue in the period
-292 133-192 864
Basis adjustment - effect of hedge accounting
-4 731-217
Balance as of 31.12.
-360 821-193 082
Order backlog
The performance obligations in contracts with
customers vary from a few months to 4 years. The order
backlog as of December 31, 2021, was NOK 1 230.1
million (2020: NOK 981.1 million). The transaction price
allocated to the remaining performance obligations is
illustrated in table below:
AS OF 31.12.20212022202320242025 OR LATERTOTAL BACKLOG
Partly unsatisfied performance obligations
683 249176 41662 8183 758926 241
Unsatisfied performance obligations
249 73728 55715 54410 026303 864
TOTAL backlog
932 986204 97378 36213 7841 230 105
AS OF 31.12.20202021202220232024 OR LATERTOTAL BACKLOG
Partly unsatisfied performance obligations
470 251280 46012 7777 924771 412
Unsatisfied performance obligations
165 94825 92114 4643 356209 688
TOTAL backlog
636 199306 38027 24111 280981 100
Revenue recognised in 2021 for performance obligations delivered in prior years due to revenue being constrained was
NOK 0 (2020: 0).
70
Notes to the consolidated nancial statements 2021
2.2 Other operating income
OTHER OPERATING INCOME20212020
Government grants
14 67951 132
Research and design study reports
25 63719 059
Sub-lease
1 9202 379
Gain and loss on disposal of property, plant and equipment
2 2540
Other income
416978
TOTAL Other operating income
44 90573 548
Government grants within ‘other operating income’
SEGMENTCOUNTRY20212020
ElectrolyserUnited States
014 664
ElectrolyserNorway
46619 774
FuelingDenmark
14 21316 693
TOTAL
14 67951 132
Government grants related to assets, amortised
14 67936 468
Government grants related to income
014 664
TOTAL
14 67951 132
NOK 0.0 (14.7) million of the government grants recognised within ‘other operating income’ are related to COVID-19.
Nel ASA
I
Annual report 2021
71
2.3 Segment information
Nel operates within two operating segments, Nel
Hydrogen Fueling and Nel Hydrogen 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 operate in.
Nel Hydrogen Fueling
Nel Hydrogen Fueling is a leading manufacturer of
hydrogen fueling stations that provide FCEVs (Fuel Cell
Electric Vehicles) with the same fast fueling and long
range as conventional fossil fuel vehicles. Since Nel
began manufacturing hydrogen fueling stations in 2003,
we have invested significantly in R&D. Today, Nel is one
of the global leaders on hydrogen fueling stations for
mobility applications. The H2Station® technology is now
being installed in several European countries as well as
in South-Korea and California, U.S., providing hydrogen
fueling for FCEVs from major car manufacturers, as well
as forklifts, buses and trucks.
Nel was among the first to achieve compliance with
the international hydrogen fueling standard (SAE
J2601) required by major car manufacturers. With the
H2Station® technology, the ambition is to maintain
the position as a preferred supplier for international
hydrogen fueling infrastructure operators. Nel’s
Hydrogen Fueling division has global footprint, with
delivery of more than 120 H2Station® solutions
worldwide to 14 countries since 2003.
Nel’s H2Station® manufacturing plant is located
in Herning, Denmark. It has an annual production
capacity of 300 hydrogen stations per year. Combining
technology innovations with increased manufacturing
capacity should enable Nel to further reduce the cost of
hydrogen fueling station equipment.
Nel Hydrogen Electrolyser
The Nel Hydrogen Electrolyser division is a global
supplier of hydrogen production equipment and plants
based on both alkaline and PEM water electrolyser
technology. The operating segment dates back to 1927,
when Norsk Hydro developed large-scale electrolyser
plants, providing hydrogen for use in ammonia
production with fertilizer as the end-product. Since
then, the electrolyser technology has been improved
continuously, and Nel Hydrogen Electrolyser has
accumulated unique experience and knowledge about
hydrogen fueling stations and power-to-gas systems.
Nel’s Hydrogen Electrolyser division is responsible
for delivery of complete hydrogen plants. Nel has a
global reach through own sales representatives and
an extensive agent network. Since 1927 Nel Hydrogen
Electrolyser has delivered more than 800 alkaline and
2,700 PEM electrolysers, delivered to more than 80
countries worldwide.
Nel Hydrogen Electrolyser currently has production
facilities in Herøya, Norway, and in Wallingford,
Connecticut, USA. Nel has expanded electrolyser
production to accommodate large-scale projects by
constructing a fully automated manufacturing facility
at Herøya, Norway, which opened during 2021. The
capacity of the facilities is 500 MW annually for the initial
investments and can be expanded to 2 000 MW.
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. 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.
72
Notes to the consolidated nancial statements 2021
2021OPERATING SEGMENTS
REVENUES BY GEOGRAPHIC REGION
BASED ON CUSTOMER LOCATIONFUELINGELECTROLYSEROTHER
1
TOTAL
Norway
5384 47905 017
United States
203 794161 8050365 599
North America ex United States
9 9373 618013 555
Asia
38 61242 543081 155
Europe ex Norway
64 285204 7500269 034
Middle East
09 21609 216
Africa
01 66301 663
South America
02 08502 085
Oceania
05 77105 771
TOTAL REVENUE FROM CONTRACTS WITH CUSTOMERS317 165435 9300753 096
Other operating income
14 58930 316044 905
Operating expenses
-500 721-675 928-96 589-1 273 238
EBITDA
-168 967-209 681-96 589-475 237
Depreciation and amortisation
-39 886-56 385-6 845-103 116
Impairment of tangible and intangible assets
0-4 5000-4 500
OPERATING LOSS
-208 852-270 566-103 434-582 853
Finance income
186428 19428 276
Finance costs
-5 390-240-1 123 595-1 129 224
Share of loss from associates and joint ventures
00-35-35
Tax income (expense)
10 1755 88592416 984
PRE-TAX INCOME (LOSS)
-204 049-264 857-1 197 946-1 666 851
TOTAL ASSETS
1 038 3761 842 2533 126 3546 006 984
TOTAL LIABILITIES
276 511644 27447 494968 279
1)
Other and eliminations 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 2021, revenue from single customers above 10% of
total revenues include Iberdrola and Iwatani, recognised
revenue of NOK 128.4 and NOK 157.0, respectively.
No single customers have revenues above 10% of total
revenues for the group in 2020.
Nel ASA
I
Annual report 2021
73
(Amounts in NOK thousands)
2020OPERATING SEGMENTS
REVENUES BY GEOGRAPHIC REGION
BASED ON CUSTOMER LOCATIONFUELINGELECTROLYSEROTHER
1
TOTAL
Norway
9 9162 809012 725
United States
116 905114 3120231 218
North America ex United States
016 218016 218
Asia
105 70235 4240141 126
Europe ex Norway
65 30558 7880124 094
Middle East
011 823011 823
Africa
028 004028 004
South America
01 20001 200
Oceania
011 926011 926
TOTAL REVENUE FROM CONTRACTS WITH CUSTOMERS
297 829280 5040578 333
Other operating income
16 51557 033073 548
Operating expenses
-418 866-424 115-60 445-903 426
EBITDA
-104 522-86 578-60 445-251 545
Depreciation and amortisation
-31 578-23 433-36 275-91 286
Impairment of tangible and intangible assets
0-71 6660-71 666
OPERATING LOSS
-136 100-181 677-96 720-414 497
Finance income
64531 675 4501 675 567
Finance costs
-3 871-5 956-6 962-16 789
Share of loss from associates and joint ventures
2 5870-1 3441 242
Tax income (expense)
8 90507 45216 357
PRE-TAX INCOME (LOSS)
-128 415-187 5811 577 8761 261 880
TOTAL ASSETS
883 8141 256 3063 996 5766 136 696
TOTAL LIABILITIES
337 843289 51941 017668 379
1)
Other and eliminations 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.
PROPERTY, PLANT AND EQUIPMENT GEOGRAPHICAL AREA20212020
Norway
461 994210 548
Denmark
106 262114 489
USA
49 91948 622
South Korea
5 3394 392
Balance as of 31.12.
623 514378 052
The allocation of property, plant and equipment is based on the geographical location of the assets.
74
Notes to the consolidated nancial statements 2021
2.4 Raw materials
(Amounts in NOK thousands)
20212020
Raw material528 699370 872
Freight expense12 34613 306
Other consumables10 6509 804
TOTAL551 695393 982
2.5 Personnel expenses
(Amounts in NOK thousands)
20212020
Salaries384 497261 720
Social security tax37 54426 433
Pension expense22 92616 932
Other payroll expenses
1)
27 04224 317
TOTAL472 010329 402
1)
Included here are expenses amounting to NOK 8.9 million (8.6 in 2020) related to the Group’s share option program.
20212020
Average number of full time employees486360
Hereof women9068
Share option program
To incentivize and retain key employees, Nel currently
have a share-based incentive plans, a share option
program. The share option program is groupwide and
includes all employees in the group. All options have
only service-time based vesting conditions. Vesting
requires the option holder still to 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.
Options granted July 2019:
A total of 11.1 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 7.8 per share based on the
average price of the Nel ASA share price the five trading
days before grant date (NOK 7.22) and including an 8%
premium. Gain per instrument is capped at NOK 5.00
maximum per share option. The options that have not
been exercised will lapse 4 years after the date of grant.
Options granted July 2020:
A total of 12.8 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 21.72 per share based on the
average price of the Nel ASA share price the five trading
days before grant date (NOK 20.11) and including an 8%
premium. Gain per instrument is capped at NOK 5.00
maximum per share option. The options that have not
been exercised will lapse 4 years after the date of grant.
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.
Nel ASA
I
Annual report 2021
75
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 frequently 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 does have
sufficient traded history, however – the company 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 2021 was
NOK 9.5 (7.7) million. The total social security accruals
at the end of the year are NOK 0.70 (1.26) million (social
security costs on exercised options has been paid in
connection with the relevant exercises, hence taken out
of the accruals accounts). The total intrinsic value of the
company’s share-based instruments is NOK 37.9 (183.1)
million as of 31 December 2021.
Key assumptions option pricing model
• Volatility: 63.04%
• Interest rate 0.96%
• Dividend: 0.00
ESTIMATION UNCERTAINTY - Share-based payments
Estimating 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 group initially measures the cost of cash-settled transactions with employees using a binomial model to
determine the fair value of the liability incurred. For cash-settled share-based payment transactions, the liability
needs to be remeasured at the end of each reporting period up to the date of settlement, with any changes in fair
value recognised in profit or loss. This requires a reassessment of the estimates used at the end of each reporting
period. For the measurement of the fair value of equity-settled transactions with employees at the grant date. The
group has considered only hold equity instruments.
76
Notes to the consolidated nancial statements 2021
(amounts in NOK thousands and number of options/shares in thousands)
SHARE OPTION
PROGRAM
OPENING
BALANCEGRANTEDEXERCISEDFORFEITED
CLOSING
BALANCE
STRIKE
PRICEVALUE
1
REMAINING
CONTRACT UAL
LIFE
July 2018 tranche B
2)
600-6000 3.24 5.00 0.50
July 2019
2)
9 4350-3 442-9615 032 7.80 5.00 1.51
July 2020
2)
12 31100-1 49510 816 21.72 0 2.52
July 2021
2)
07 7680-1817 588 15.13 0 3.63
TOTAL
21 8067 768-3 501-2 63723 436
VESTED
2
EXPIRY
2
NAME 2021202220232024TOTAL202320242025
EXPENSE
FOR THE
PERIOD
3
Kjell Christian Bjørnsen
0128254934760321155197
Anders Søreng
030924893650185310155313
Filip Smeets
01282549347600476197
Robert Borin
4)
000000000
Jørn Rosenlund
031625493663188320155314
Hans Hide
030625496656180316160308
Stein Ove Erdal
032027496690180350160326
Caroline Duyckaerts
0062931550015539
Other employees
467 8057 9243 89619 6704 2998 8796 4937 791
TOTAL
469 3139 5254 55323 4365 03210 4967 9089 486
1)
The value of the share options equals share price less strike price, capped at NOK 5.0 for 2019 and 2020 program, and NOK 10.0 for 2021 program.
2)
All share options are granted, vested and expired at the beginning of July in a given fiscal year, expect for share option program 2021 which is August.
3)
Cost of period does not include social security
4)
Employed in Nel from April 2021
No share options expired during the period. The first
expiry date is 1. July 2023 for the options granted July
2019.
The weighted-average share price at the date of exercise
in 2021 was 13.8 (15.4). As shown in the table above, the
share options exercised during 2021 had a strike price of
mainly 7.8. Employee benefits were capped at NOK 5 or
share price 12.8.
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 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 Danish and the US
subsidiary have pension plans that meet their respective
requirements.
Nel ASA
I
Annual report 2021
77
2.6 Other operating expenses
(Amounts in NOK thousands)
20212020
Research and development expenditure
21 37812 936
Utilities
17 68212 504
Selling and administrative expenses
63 04356 277
Professional fees
75 64441 890
Travel expenses
20 48012 950
IT and communication costs
17 83616 573
Provision for potential fine
020 000
Other expenses
33 4706 911
TOTAL Other operating expenses
249 533180 042
2.7 Finance income and cost
(Amounts in NOK thousands)
20212020
Interest income
19 73514 356
Change in fair value financial instruments
7 5861 632 006
Reversal expected credit loss
022 443
Gain on loss of control of subsidiary
06 372
Other
954390
Finance income
28 2761 675 567
Interest expense
1 140800
Interest expense lease liabilities
8 7928 792
Capitalised interest
-5 902-5 181
Net foreign exchange loss
3 52611 967
Change in fair value financial instruments
1 120 7760
Other
893412
Finance cost
1 129 22416 789
Net finance income (cost)
-1 100 9481 658 777
The change in fair value financial instruments is mainly due to change in fair value of Nel’s shareholdings in Everfuel
and Nikola Corporation of NOK -1 073.0 million and NOK -47.8 million, respectively. For additional information, refer
note 4.3. Net foreign exchange loss is mainly unrealised effects from revaluing internal loans.
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.
78
Notes to the consolidated nancial statements 2021
In addition to the fees included in the remuneration table
above, the group incurred NOK 1.4 (1.3) million in 2021 of
attestation services and non-auditing services provided
by company other than EY, the group auditor.
FEES TO OTHER AUDITORS
ELECTED BY SUBSIDIARIES20212020
Statutory auditing services
00
Attestation services
882746
Non-auditing services
503510
TOTAL
1 3851 256
116
Notes to the consolidated nancial statements 2021
7.4Related 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.
2021
BOARD OF DIRECTORS 2021REMUNERATION NUMBER OF SHARESOWNERSHIP
Ole Enger - Chair of the Board589149 4620.01 %
Tom Røtjer31900.00 %
Beatriz Malo de Molina31900.00 %
Charlotta Falvin31900.00 %
Finn Jebsen
1)
319310 6200.02 %
Hanne Blume31900.00 %
TOTAL2 186460 0820.03 %
1)
Consisting of shares held through Fateburet AS
AUDIT COMMITTEE 2021REMUNERATION
Finn Jebsen - chair of the audit committee
85
Beatriz Malo de Molina
50
TOTAL
135
2020
BOARD OF DIRECTORS 2020REMUNERATION NUMBER OF SHARESOWNERSHIP
Ole Enger - Chair of the Board
563149 4620.01 %
Tom Røtjer
30600.00 %
Beatriz Malo de Molina
30600.00 %
Charlotta Falvin
30600.00 %
Finn Jebsen
1)
306310 6200.02 %
Hanne Blume
30600.00 %
TOTAL
2 094460 0820.03 %
1)
Consisting of shares held through Fateburet AS
AUDIT COMMITTEE 2020REMUNERATION
Finn Jebsen - chair of the audit committee
75
Beatriz Malo de Molina
40
TOTAL
115
Nel ASA
I
Annual report 2021
117
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. On 21 January 2022, Hyon AS, completed a
private placement at a price of NOK 2.34 per share
and subsequently a successful admission to Euronext
Growth Oslo. The private placement values the company,
based on the shares outstanding following the private
placement and the offer price, at approximately NOK
130 million. Nel ASA owns 9 080 000 shares, or 17.64%,
of the company. Hyon AS had its first day of trading on
Euronext Growth Oslo 14 February 2022. The war in
Ukraine impacts commodity prices relevant to Nel. The
financial impact is uncertain. Nel’s operational activities
in Russia and Ukraine are limited.
Other than Hyon AS’ admission to Euronext Growth
Oslo, there have been no significant changes in the
financial position of the Group since the date of the
interim financial statements for twelve months ended 31
December 2021.
7.6Going 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.
The Board of Directors confirmed on this basis that the
going concern assumption is valid, and that financial
statements are prepared in accordance with this
assumption.
118
Notes to the consolidated nancial statements 2021
Parent company nancial statements
120
7 Parent company
nancial statements
Statement of comprehensive income .............................................................................................................................. 122
Statement of financial position as of 31 December ......................................................................................................... 123
Statement of cash flows .................................................................................................................................................... 126
Statement of changes in equity ......................................................................................................................................... 127
Note 1Company information ......................................................................................................................................... 128
Note 2Basis for preparation and significant accounting principles ............................................................................ 128
Note 3Revenue from contracts with customers .......................................................................................................... 131
Note 7Property, plant and equipment........................................................................................................................... 136
Note 8Cash and cash equivalents ................................................................................................................................. 136
Note 9Share capital and shareholders .......................................................................................................................... 137
Note 10Specification of balance sheet items ................................................................................................................. 137
Note 11Subsidiaries, associates and joint ventures ...................................................................................................... 138
Note 13Transactions with related parties ....................................................................................................................... 139
Note 15Finance income and cost .................................................................................................................................... 141
Note 16Financial risk and derivatives ............................................................................................................................. 141
Changes in other current assets and other liabilities
-65 671-28 012
Net cash flow from operating activities
-71 127-66 706
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
7-499-68
Loan given to subsidiaries
13-871 099-507 364
Investments in associates and joint ventures
11-1 272-300
Investments in other financial assets
10-10 5720
Proceeds from sales of other investments
1039 5090
Net cash flow from investing activities
-843 932-507 732
CASH FLOWS FROM FINANCING ACTIVITIES
Interests paid
15-543-141
Gross cash flow from share issues
91 255 1032 383 259
Transaction costs related to capital increases
9-15 562-68 297
Payment of lease liabilities
14-2 233-920
Net cash flow from financing activities
1 236 7652 313 900
Net change in cash and cash equivalents
321 7061 739 462
Cash balance as of 01.01
82 219 029479 567
Cash balance as of 31.12
82 540 7342 219 029
Statement
of cash ows
126
Parent company nancial statements
(Amounts in NOK thousands) Nel ASA
SHARE
CAPITAL
SHARE
PREMIUM
OTHER
RESERVE
TREASURY
SHARES
RETAINED
EARNINGS
TOTAL
EQUITY
Equity as of 31.12.2019 244 420 2 089 418 36 253 -14 -111 546 2 258 532
Increase of capital 2020 37 139 2 277 822 2 314 961
Options and share program 65 7 681 -65 7 681
Total comprehensive income 156 406 156 406
Equity as of 31.12.2020 281 559 4 367 305 43 934 -79 44 860 4 737 580
Equity as of 31.12.2019 244 420 2 089 418 36 253 -14 -111 546 2 258 532
Increase of capital 2021 10 600 1 228 940 1 239 541
Options and share program 9 486 9 486
Total comprehensive income -24 456 -24 456
Equity as of 31.12.2021
292 160 5 596 246 53 420 -79 20 404 5 962 150
Statement of
changes in equity
Nel ASA
I
Annual report 2021
127
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. Nel ASA
is the parent company in a group that serves industry,
energy and gas companies with leading hydrogen
technology. Since its origins in 1927 as part of Norsk
Hydro, Nel has a proud history of development and
continuous improvement of hydrogen plants. Our
hydrogen solutions cover the value chain from hydrogen
production technologies to manufacturing of hydrogen
fueling stations, providing all fuel cell electric vehicles
(FCEVs) with the same fast fueling and long range as
conventional vehicles today.
The group has two divisions: Nel Hydrogen Electrolyser
and Nel Hydrogen Fueling.
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 22 March 2022.
Note 2 Basis for
preparation and signicant
accounting principles
Statement of compliance
The financial statements for 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 transaction 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 translated 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 2021. 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.
Denition and applying of materiality
judgements in preparation of these
nancial 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 materiality 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
7.1 Notes to the nancial
statements parent company
128
Notes to the nancial statements parent company
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.
Segment information
Nel ASA operates with only one operating segment,
providing management services to subsidiaries. A
separate disclosure for segment information is therefore
not applicable.
Signicant 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 comprise 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.
Nel ASA
I
Annual report 2021
129
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 certain 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 realisation 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 utilised. 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 adverse 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 of 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 ow
The cash flow statement is prepared using the indirect
method.
130
Notes to the nancial statements parent company
Note 3 Revenue from contracts with customers
(Amounts in NOK thousands)
REVENUES BY GEOGRAPHIC REGION BASED ON CUSTOMER LOCATION20212020
Norway
16 1666 290
United States
32 32719 011
Denmark
22 65316 249
South Korea
4 4661 950
Total
75 61343 500
All revenues in 2020 and 2021 are internal revenue from management services. Revenues are recognised over
time based on 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.
CONTRACT ASSETS20212020
Balance as of 01.01.
43 50037 103
Transfers from contract assets recognised at the beginning of the period to receivables
-43 500-37 103
Increases due to measure of progress in the period
043 500
Revaluation
00
Balance as of 31.12.
043 500
Nel ASA
I
Annual report 2021
131
Note 4 Personnel expenses
(Amounts in NOK thousands)
SALARIES AND PERSONNEL EXPENSES20212020
Salaries36 92821 074
Social security tax
*
7 7294 858
Pension expense3 4422 048
Other payroll expenses
**
3 9335 573
Total52 03233 553
*
Social security tax includes provisions for social security related to the share option program.
**
Included in this amount are expenses amounting to NOK 1.8 (0.9) million related to the share option program.
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
23 13
Pension
The company has a defined contribution pension plan for its employees that meet the requirements of the Pension
Acts of Norway.
REMUNERATION OF MANAGEMENT 2021SALARYBONUS
PENSION
EXPENSE
OTHER
REMUNERATION
1
TOTAL
REMUNERATION
Jon André Løkke, CEO
2)
3 01575318103 949
Kjell Christian Bjørnsen, CFO2 579018102 760
Anders Søreng, CTO2 22601815963 003
Hans Hide, SVP Projects1 90601815812 668
Stein Ove Erdal, Vice President Legal and General Counsel2 07001815812 832
Caroline Duyckaerts, Chief Human Resources Officer1 632018101 813
Total13 4287531 0871 75817 026
1)
Other remuneration is mainly related to share options
2)
Jon André Løkke has a six months notice period, plus is entitled to six months severence pay.
REMUNERATION OF MANAGEMENT 2020SALARYBONUS
PENSION
EXPENSE
OTHER
REMUNERATION
1
TOTAL
REMUNERATION
Jon André Løkke, CEO
2)
2 73784117852 29656 052
Kjell Christian Bjørnsen, CFO
3)
2 090017802 268
Hans Hide, SVP Projects1 796017801 974
Stein Ove Erdal, Vice President Legal and General Counsel1 722017801 901
Total8 34584171452 29662 195
1)
Other remuneration is mainly related to exercised matching shares
2)
Jon André Løkke has a six months notice period, plus is entitled to six months severence pay.
3)
Employed in Nel from March 2020
4)
Employed in Nel from January 2021
132
Notes to the nancial statements parent company
To incentivize and retain key employees, Nel currently
has a share-based incentive plans, a share option
program. The share option program includes all
employees in the Company. All options have only
service-time based vesting conditions. Vesting requires
the option holder still to be an employee in the Company.
The share-based payment is equity-settled. Each
option, when exercised, will give the right to acquire one
share in the Company. The options are granted without
consideration.
Options granted July 2019:
A total of 2.1 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 7.8 per share based on the
average price of the Nel ASA share price the five trading
days before grant date (NOK 7.22) and including an 8%
premium. Gain per instrument is capped at NOK 5.00
maximum per share option. The options that have not
been exercised will lapse 4 years after the date of grant.
Options granted July 2020:
A total of 2.2 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 21.72 per share based on the
average price of the Nel ASA share price the five trading
days before grant date (NOK 20.11) and including an 8%
premium. Gain per instrument is capped at NOK 5.00
maximum per share option. The options that have not
been exercised will lapse 4 years after the date of grant.
Options granted July 2021:
A total of 1.3 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
OPENING
BALANCEGRANTEDEXERCISEDFORFEITED
CLOSING
BALANCESTRIKE PRICEVALUE
1
REMAINING
CONTRACTUAL LIFE
July 2019
2)
2 0700-592-590888 7.80 5.00 1.51
July 2020
2)
2 19100-3261 865 21.72 0 2.51
July 2021
2)
01 348001 348 12.10 0 3.51
Total4 2611 348-592-9164 101
NAME202220232024TOTAL202320242025
EXPENSE
FOR THE
PERIOD
3
Kjell Christian Bjørnsen128254934760321155197
Anders Søreng30924893650185310155313
Hans Hide30625496656180316160308
Stein Ove Erdal32027496690180350160326
Caroline Duyckaerts062931550015539
Other employees6355013401 4753436185147 791
Total1 6981 5937324 1018881 9151 2998 975
1)
The value of the share options equals share price less strike price, capped at NOK 5.0 for 2019 and 2020 program, and NOK 10.0 for 2021 program.
2)
All share options are granted, vested and expired at the beginning of July in a given fiscal year, expect for share option program 2021 which is August.
3)
Cost of period does not include social security
Nel ASA
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Annual report 2021
133
Note 5 Other operating expenses
SPECIFICATION OF OTHER OPERATING EXPENSES:20212020
Hardware and common cost office premises
2 474531
Administrative costs
12 6909 164
Professional fees
26 10910 250
Travel expenses
777861
Total
42 05020 806
Auditor fees
FEES TO THE AUDITOR20212020
Statutory auditing services
1 5871 544
Attestation services175150
Non-auditing services
327283
Total
2 0891 976
Amounts are exclusive VAT.
Note 6 Income taxes
CALCULATIONS OF THE TAX BASE FOR THE YEAR20212020
Income (loss) before tax
-24 456156 406
Permanent differences
35 847-202 847
Change in temporary differences
940-6 855
Use of tax losses carried forward
-12 3310
The year's taxable income
0-53 296
Tax rate
22 %22 %
Income (loss) before tax
-24 456156 406
Tax this years loss, estimated
-5 38034 409
Tax effect of:
Permanent differences
7 886-44 626
Change in temporary differences
-10 50722 039
Prior years adjustment
4190
Change in not recognised deferred tax assets (tax liabilities)
7 581-11 822
Total income tax expense (income)
00
Income tax expense (income) comprises
Income tax payable
00
Change in deferred tax
00
Total income tax expense (income)
00
134
Notes to the nancial statements parent company
CALCULATIONS OF THE TAX BASE FOR THE YEAR20212020
Specification of temporary differences:
Property, plant and equipment and goodwill
-353-381
Leases
-143-54
Provisions for liabilities
-2 354-1 474
Shares and other investments
54 189101 947
Tax losses carry forward
-523 707-537 945
Basis for deferred tax asset
-472 368-437 908
Nominal tax rates for next year
22 %22 %
Deferred tax asset
-103 921-96 340
Deferred tax asset not recognised in Statement of financial position
-103 921-96 340
Deferred tax asset in the Statement of financial position
00
The majority of the deferred tax asset is related to loss
carry forward. As of 31 December 2021 it is considered
not likely that the tax loss carry forward will be utilised in
the near future, therefore the deferred tax assets is not