Nel ASA

number one by nature

Annual report

2023

The publication can be downloaded on

nelhydrogen.com

Title:

Annual report 2023

Published date:

Oslo, 28 February 2024

[email protected]

+47 23 24 89 50

Karenslyst allé 49, PB 199 Skøyen,

0212 Oslo, Norway

Table of contents

Annual report 2023

1 Letter from CEO ........................................................................................................ 5

2 Member of the board .............................................................................................. 9

3 Management .............................................................................................................. 10

4 Report from the Board of Directors ..................................................................... 13

4.1 Financial development .................................................................................. 16

4.2 Environment, Social and Governance reporting ..................................... 29

5 Board of Directors’ report in relation to the

Norwegian code of practice for corporate governance ................................. 72

6 Consolidated financial statements 2023 Nel group ......................................... 78

Notes to the consolidated financial statements ................................................ 86

7 Parent company financial statements .................................................................. 142

7.1 Notes to the parent company financial statements ............................... 150

8 Alternative performance measures ...................................................................... 167

9 Auditor’s report ......................................................................................................... 169

Nel ASA

Annual report 2023

A mixed year

Nel is on a journey towards a decarbonized society where

renewable hydrogen plays a critical role. Over the past

couple of years, Nel and the hydrogen industry have made

enormous progress toward this vision. With unprecedented

speed, we have transitioned from building small hydrogen

plants to planning and installing large-scale plants with

hundreds of megawatts of electrolyser capacity. Since 2019,

Nel’s revenues have tripled.

In the first half of 2023, Nel received large electrolyser

purchase orders from HH2E in Germany, Bondalti in

Portugal, and Hyd’Occ in France. Furthermore, a record-

size contract for 16 fueling stations in California was signed.

These are all excellent contracts with Nel’s preferred scope

of supply and favorable terms and conditions. Still, our

expectations were higher. We had hoped to sign more

large-scale orders and end the year with a higher backlog.

Unfortunately, the whole hydrogen industry faced

headwinds in the second half of 2023. Market momentum

slowed down due to higher interest rates, tighter capital

markets, and cost escalations. Projects became more

challenging to qualify and took longer to mature. However,

I assure you we did not sit on our hands waiting for orders

to arrive. In 2023, we built a more robust Nel, uniquely

positioned when market demand picks up again.

A more robust company

Even if 2023 was a challenging year, we had a very clear

direction. We implemented our “Bigger Better Focused”

strategy and are taking the fastest route toward hydrogen

technology leadership by growing our production capacity,

improving our technology, and focusing on a smaller scope

of supply.

• Bigger: We increased actual output from Line 1 at

Herøya by a factor of 2.5 versus 2022 and started to build

Line 2. When this line is put into commercial operation in

Q2 2024, Nel will have 1 GW of fully automated annual

alkaline electrolyser production capacity. Similarly, we are

ramping up the production capacity for PEM electrolysers

in Wallingford by a factor of 10. Further capacity

expansion is possible in current locations, yet Nel has

secured financial support from the state of Michigan for a

future gigafactory in Plymouth. In the Fueling division, we

progressed our high-capacity station concept targeting

heavy-duty vehicles.

• Better: In a year troubled by inflation and cost increases,

Nel managed to reduce the cost of its electrolysers and

further enhance their energy efficiency. Equally important,

significant progress was made on the next-generation

PEM technology developed in partnership with General

Motors. We also took significant steps in developing Nel’s

pressurized alkaline system. Another key objective met

in 2023 was the massive reduction in the warranty cost

of installed fueling stations, which was made possible

by targeted hardware and software upgrades. These

improvements have also had a very positive impact on

station uptime.

• Focused: Europe and North America have remained

Nel’s target geographies in 2023, ensuring efficient

use of resources. In the Electrolyser division, Nel has

implemented its preferred scope of supply, which is stack

and balance of stack (including control system) on all

major contracts. We even changed the old contracts,

which initially had a larger scope for Nel. This reduces

Nel’s execution risk, improves margins, and enables the

company to run more projects in parallel. On the Fueling

side, Nel discontinued old product models and signed

development contracts with third-party companies for

modules outside Nel’s core scope.

Strategic adjustments are already starting to pay off

financially: Nel generated close to 1.8 billion NOK in

revenues in 2023, up almost 80 percent from 2022, and

profitability improved by more than NOK 300 million.

Although I am pleased with this development, the real

significance of the 2023 financial figures is that Nel’s

business model scales well. We know that if we continue to

grow revenues, we will be able to deliver positive earnings.

In March, we raised NOK 1.6 billion, which contributed

to Nel ending the year with a solid cash balance of close

to NOK 3.4 billion. Nel is now one of the world’s best-

capitalized and well-funded electrolyser OEMs. Although

we will be prudent and spend our money wisely, we

have enough money to continue to invest in technology

development and further capacity increases if needed.

Fundamental market drivers remain unchanged

Roy Amara was an American scientist and futurist,

probably best known for coining Amara’s law on the effect

of technology. “We tend to overestimate the effect of a

technology in the short run and underestimate the effect

in the long run,” he said. This is a fitting description of how

1 Letter from the CEO

Letter from the CEO

Best regards,

Håkon Volldal, CEO

the interest in renewable hydrogen has developed in recent

years. If hydrogen was overhyped before, the pendulum

has now swung too far in the other direction. Renewable

hydrogen plays a pivotal role in the energy transition, and

the fundamental market drivers remain unchanged.

Throughout the last few years, it has become clear that

energy security and supply must be rethought amid rising

geopolitical tensions. Dependence on hydrocarbons

produced by autocratic or unstable regimes is a short-

sighted energy policy. Hydrogen allows new energy markets

to be connected. It will work as a vector from areas where

it is cheap and possible to produce renewable energy to

areas where energy demand is high and local production is

insufficient.

Moreover, burning more hydrocarbons is not the answer to

a world increasingly suffocated by carbon dioxide emissions.

The world has agreed to cut carbon emissions dramatically,

and everyone has realized it is nearly impossible to

decarbonize the refinery, steel, and chemical industries

without renewable hydrogen. What is currently slowing

down the adoption of green hydrogen is the extra cost of

switching from fossil fuels. Fossil fuels are cheaper today

because the true cost of carbon is ignored: only a fraction

of CO2 emissions is taxed, and carbon prices are way too

low to reflect the real cost to society. Subsidies for green

hydrogen, through, for example, the Inflation Reduction Act

(IRA) in the US and the Hydrogen Bank in the EU. Ratified

mandatory targets for the use of green hydrogen in industry

and transportation and increasing demand for carbon-free

or low-carbon products among consumers and businesses

despite higher prices will also help.

A bright future

Nel’s fundamental business idea is based on the conviction

that global society will have to change from a polluting

and damaging fossil economy to a greener economy. This

transition has started and will accelerate dramatically in the

coming years. We know this, and our customers know this.

This is why our pipeline of large-scale prospects is growing

fast.

In 2022, our largest delivery project was a 20 MW plant.

Today, we are looking at initiatives involving hundreds

of megawatts of electrolyser capacity. These large-

scale projects will have a real positive impact on global

emissions and, not coincidentally, on Nel’s financials. When

projects increase in size, risk, and complexity, the need for

competence and experience rises accordingly. This plays to

Nel’s advantage, given our unrivaled track record: almost

a century of experience in combination with tested and

proven technology.

Building on this experience, we are continuously improving

efficiency and reducing the cost of our solutions while

rapidly progressing with game-changing next-generation

technology. Because of our 2.4 billion NOK order backlog

and solid cash balance we are better positioned for success

than most of our peers, and we have a workforce of close

to 700 highly skilled and passionate employees with the

deepest hydrogen knowledge in the industry.

So, even though we have been developing hydrogen

technology for almost a century, there is no doubt that the

most exciting part of the journey is still ahead of us. In 2023

we have taken further steps to ensure that Nel will be ready

to succeed on this journey

MORE THAN 90 YEARS OF HYDROGEN INNOVATION.

AND THAT’S JUST THE BEGINNING.

PROVEN TECHNOLOGY, TRUSTED PARTNER -

PIONEERING RENEWABLE HYDROGEN FOR

MORE THAN 90 YEARS

Started development of next generation PEM electrolyser platform with General Motors

Signed the first large scale 200MW electrolyser contract

Starting up the Herøya plant, first line

Record order sizes within both Electrolyser and Fueling

Nel opens first H2Station™ in Korea

Nel announces construction plans for the world’s largest electrolyser

manufacturing plant to accommodate multi-billion NOK orders

Nel completes construction of the world’s largest manufacturing plant

for hydrogen fueling stations

Nel acquires Proton OnSite, adding world leading PEM

electrolysis technology to product portfolio, becoming the

world’s largest electrolyser company

Nel acquires H2 Logic, adding world leading hydrogen fueling

technology to the product portfolio

Nel becomes the first 100% dedicated hydrogen company

listed on the Oslo Stock Exchange

Nel opens the world’s first publicly available hydrogen fueling

station in Reykjavik, Iceland

Our first pressurised electrolyser introduced to the market

The world’s first electrolyser supplier to provide non-asbestos

alkali electrolysers

Our renowned electrolyser technology made available for other

companies and other industries

Complete redesign of the electrolyser unit, forming the basis for

today’s atmospheric electrolyser from Nel

Starts up a second large scale hydropowered electrolyser plant for

supplying hydrogen to ammonia production, in Glomfjord, Norway

The largest installation in the world of water electrolysers at Rjukan, Norway,

with a total hydrogen production capacity exceeding 30.000 Nm3/hour, from

hydropower

The first small electrolyser installation at Norsk Hydro, Notodden, Norway. Testing for pure

hydrogen to fertilizer production

2023

2022

2021

2020

2019

2018

2017

2015

2014

2003

2001

1998

1974

1959

1953

1940

1927

Nel ASA

Annual report 2023

OLE ENGER, CHAIR OF THE BOARD

Mr. Enger (born 1948) has worked as

CEO in Nordsilmel, Elkem, SAPA, REC,

REC Solar and has been in the executive

management of Norsk Hydro and

Orkla. Ole Enger has an educational

background from Norwegian University

for Environment and Life Sciences, NHH

(Norwegian School of Economics) and IMD Business School.

He has board experience as both chairman and board member

of a number of private and listed companies. Mr. Enger is a

Norwegian citizen and lives in Oslo. Mr. Enger has been a board

member since 2017.

HANNE BLUME, BOARD MEMBER

Ms. Blume (born 1968) is the Executive

Vice President and CHRO in the DLG

Group and has previously held the

position as CHRO in TDC, Ørsted and

DONG Energy, vice president in QHSE

and different management positions in

the energy sector. Ms. Blume holds a

master’s degree in Business administration and commercial law

from Aarhus School of Business and Oregon State University.

She has management and board experience from both listed

and private companies. Ms. Blume is a Danish citizen and

resides in Juelsminde in Denmark. Ms. Blume has been a board

member since 2019 and currently chairs Nel’s Remuneration

Committee.

CHARLOTTA FALVIN, BOARD MEMBER

Ms. Falvin (born 1966) has held

various management positions in

the tech industry, including e.g COO

of Axis AB and CEO of TAT The

Astonishing Tribe AB, with a focus on

international business development

and organizational growth. Since

2011, she has worked as a professional board member in

primarily public companies in the Swedish tech sector, but

also in academia, banking and regional incubators for start-

ups. Charlotta Falvin holds a Master of Science in Business

Administration and Economics from Lund University in

Sweden. She is a Swedish citizen and resides in southern

Sweden. Ms. Falvin has been a board member since 2020.

ARVID MOSS, BOARD MEMBER

Mr. Moss (born 1958) is an experienced

executive who has been a member of

Norsk Hydro’s corporate management

board since 2008. Since July 2021 Mr.

Moss also is the Chair of the Board

in Norway’s Export Council (Norsk

Eksportråd). In Norsk Hydro, he has

been responsible for strategy and business development in

the aluminium area and on the corporate level for several

periods. He also led the process that resulted in the oil and

gas merger between Norsk Hydro and Statoil in 2006. Mr.

Moss also served as State Secretary and Chief of staff in the

Norwegian Prime Minister’s office (1989-1990). Mr. Moss

holds a Master’s degree in business economics from the

Norwegian School of Economics and Business Administration.

He is a Norwegian citizen.

BEATRIZ MALO DE MOLINA, BOARD MEMBER

Ms. Malo De Molina (born 1972) is a

Managing Director at Alvarez & Marsal, a

global professional services firm, and she

is the head of A&M’s Oslo office. Beatriz

has served as Senior Vice President

and Head of M&A at Orkla ASA and

has previously held positions at Kistefos

Private Equity and McKinsey & Co in Oslo, after a ten year

career in the Investment Banking Division of Goldman, Sachs

& Co. in London, Frankfurt, New York City and Mexico City. Ms.

Malo de Molina began her career in 1994 within Ernst & Young’s

financial advisory department in New York City. Ms. Malo de

Molina has board experience from publicly listed and privately

held companies both in Norway and internationally, including

chairmanship positions. Ms. Malo de Molina is a member of the

board and chair of the audit and risk committee of EMGS. Beatriz

graduated summa cum laude from Georgetown University in

Washington D.C., attended the Haupt- und Wirtschaftsuniversität

in Vienna and holds a Master’s degree in Philosophy from the

Law Faculty at UiO in Oslo.Ms. Malo de Molina is a Spanish

citizen and has been a resident of Norway since 2006. Ms. Malo

de Molina has been a board member since 2017 and currently

chairs Nel’s audit, risk and sustainability committee.

2 Members of the board

Members of the board

HÅKON VOLLDAL, CHIEF EXECUTIVE OFFICER

Håkon Volldal (born 1976) joined Nel

as CEO on 1 July 2022. Mr. Volldal

served as CEO of the traffic technology

company Q-Free ASA from 2016 to

2022. Prior to this he held various

positions during a 12-year career at

TOMRA, including EVP Collection

Solutions from 2013 until 2016. Mr. Volldal has also worked

as a management consultant for McKinsey & Company

and holds an MSc in Industrial Economics and Technology

Management from the Norwegian University of Science and

Technology (NTNU). He is a Norwegian citizen.

KJELL CHRISTIAN BJØRNSEN, CHIEF FINANCIAL OFFICER

Kjell Christian Bjørnsen (born 1976)

joined Nel as CFO on 1 March 2020.

Prior to this he served as Chief Financial

Officer of the Kavli Group from 2014.

Mr. Bjørnsen has also held positions

within business development, strategy

and finance in several global industrial

companies, including the CFO position of REC ASA. He

holds a MSc in Chemical Engineering from the Norwegian

University of Science and Technology (NTNU), and is a

Norwegian citizen.

MARIUS LØKEN, CHIEF TECHNOLOGY OFFICER

Marius Løken (born 1977) assumed his

role as Chief Technical Officer (CTO) of

Nel ASA in June 2023. Prior to this, he

honed his leadership at TOMRA Systems

ASA, ascending through positions like

Head of Europe Asia Pacific, Head

of Technology, and Head of Product

Management. In total, Marius spent over 23 years at TOMRA,

making significant contributions across various technological

and commercial facets. His academic foundation is rooted

in a Master of Science in Mechanical from the Norwegian

University of Science and Technology (NTNU), with the master

thesis conducted at Michigan Technological University.

CAROLINE DUYCKAERTS, CHIEF HUMAN RESOURCES OFFICER

Caroline Duyckaerts (born 1970) joined

Nel ASA as Chief Human Resources

Officer in January 2021. Mrs. Duyckaerts

comes from the position as head of

HR for one of Hydro’s business areas.

She previously also led the People &

Leadership development for Hydro and

has further HR and change management experience from

several well-known companies incl. Hydro, Deloitte, Yara

(Hydro Agri), Accenture. Caroline Duyckaerts holds a Master

of Engineering and Business Administration from HEC Liège,

complemented with an education as executive coach, and is a

Belgian citizen.

3 Management

TOM RØTJER, BOARD MEMBER

Mr. Røtjer (born 1953). former Senior

Vice President, Head of Projects in

Norsk Hydro ASA until 2018. He served

as Executive Vice President Projects

(member of Corporate Management

Board) in Norsk Hydro from 2007-2012.

He has held previous board positions in

Aibel AS, Det norske oljeselskap ASA (Aker BP ASA), Qatalum

Ltd., Hæhre & Isachsen Gruppen AS (Akh Gruppen AS) and

Green Energy Geothermal Ltd. Mr. Røtjer holds a master’s

degree in Mechanical Engineering from the University of

Trondheim, Norway. He is a Norwegian citizen and resides in

Oslo, Norway.

JENS BJØRN STAFF, BOARD MEMBER

Mr. Staff (born 1967), is the Group CEO

in Skagerak Energi, a Norwegian utility

company, since 2020. Mr. Staff has

broad executive experience from Orkla

where he served as Group CFO for 6

years and Statkraft where he was Group

CFO for 3 years. He has also had several

executive positions in Statoil over the course of 6 years. He

has previously held board positions in Statoil, corporate

assembly in Jotun, and currently is a board member in Isola

Holding AS. Mr. Staff holds an MBA from the Norwegian

School of Economics (2002) and an BA from the Norwegian

Business School in addition to an International Directors

Program from INSEAD (2022). He is a Norwegian citizen.

Nel ASA

Annual report 2023

TODD CARTWRIGHT, CHIEF COMMERCIAL OFFICER

Todd Cartwright (born 1966) joined Nel

as Chief Commercial Officer, effective

January 2nd, 2024. A US citizen with

a BS in Mechanical Engineering, he

brings over 30 years of energy sector

experience. Mr. Cartwright has held

key roles at CB&I and Technip Energies,

notably as Commercial Vice President at the latter. In this role,

he led business development, key account management, and

strategic partnerships, and was responsible for commercial

leadership of strategic projects across legacy and energy

transition markets such as CCUS, Hydrogen, Ammonia,

BioFuels, LNG, and Circularity.

ROBERT BORIN, SENIOR VICE PRESIDENT FUELING

Robert Borin (born 1977) was appointed

SVP Nel Fueling Division in April 2021.

Prior to joining Nel, Mr. Borin held

several senior management positions

in Vestas and Siemens. He is also the

founder of Borin Industrial Advisors.

Mr. Borin holds a Master of Science in

Mechanical Engineering and Industrial Management from

KTH Stockholm, and is a Swedish citizen.

STEIN OVE ERDAL, SENIOR VICE PRESIDENT LEGAL AND

GENERAL COUNSEL

Stein Ove Erdal (born 1979) joined Nel as

Vice President Legal and General Counsel

in May 2019. Erdal comes from a position

as an Associate General Counsel in

Nexans Norway AS where he worked for

nine years with complex offshore EPCI and

EPC projects. He also has experience from

working as a lawyer in the oil and gas division of Arntzen de

Besche, as a deputy judge and as a defence counsel. Erdal holds

a Cand. Jur., Qualifying Law Degree, from the University of Oslo,

and is a Norwegian citizen.

HANS H. HIDE, CHIEF PROJECT OFFICER

Hans H. Hide (born 1965) joined Nel in

March 2019. Mr. Hide has since 2012

held management positions in some of

Kvaerner’s largest projects within the

oil and gas sector. He has previously

served as Project Portfolio Manager in

ALSTOM, and as Vice President Projects in REC, where he also

held several management positions in the projects covering

REC’s expansion program within Solar and Silicon. He holds an

MSc in Process Technology and Process Control from Telemark

College of Engineering, and is a Norwegian citizen.

ESA LAUKKANEN, CHIEF OPERATING OFFICER

Esa Laukkanen (born 1966) was

appointed COO in August 2022. Esa

has a background from leading global

operations, industrialization and

automation processes, having worked

for twenty years in ABB, and later

leadership of products, operations, and

technology of automated systems at Jepptech. Mr. Laukkanen

holds an MSc in Industrial Engineering from Lappeenranta

University of Technology, and is a Finnish citizen.

Report from the Board of Directors

Highlights

• Revenue and income increased by 78% from 2022 to

2023.

• Year-end cash balance of NOK 3 363 million (2022: 3 139).

Nel raised NOK 1 609 million in gross proceeds in a

private placement on 6 March 2023.

• Order intake in 2023 was NOK 1 430 million (2022: NOK

2 275 million) which resulted in an order backlog at end

of 2023 of NOK 2 458 million, down 6% from 2022.

– Received purchase order for 120 MW alkaline

electrolyser from HH2E. The contract value is

approximately EUR 34 million.

– Selected Plymouth in Michigan for its next gigafactory

with an annual capacity of 4GW when fully developed.

– Received purchase order for 16 hydrogen fueling

stations in California from an undisclosed US energy

company.

KEY FIGURES

PERFORMANCE MEASURES 2023 2022 2021

Revenue and income 1 773 994 798

Operating expenses 2 473 2 272 1 381

EBITDA -474 -780 -475

Operating loss -700 -1 279 -583

Pre-tax income (loss) -873 -1 187 -1 684

Net income (loss) -855 -1 171 -1 667

Net cash flow from operating activities -670 -691 -449

Cash balance end of period 3 363 3 139 2 723

Order intake 1 430 2 275 967

Order backlog 2 458 2 613 1 230

TRIF

19.6 11.5 4.9

Number of fatal accidents 0 0 0

Number of employees 673 603 507

Women in executive management 11.1% 11.1% 10.0%

GHG intensity (excluding scope 3) 0.95 1.64 2.69

Alkaline OEE

67% 70% 50%

Alkaline stack yield

99% >90% >80%

PEM stack yield

94% 95% 95%

Total recordable injuries frequency (TRIF) is measured as total recordable

injuries per million hours worked.

Overall equipment effectiveness (OEE) considers all of availability,

performance and quality

³ Yield is defined as a complete product that is quality approved (without

repair and rework) and ready for the customer. Material from a not approved

product is reused.

⁴ Yield is defined as a complete product that is quality approved (without repair

and rework) and ready for the customer. Platinum is recovered.

4 Report from the

Board of Directors

Nel ASA

Annual report 2023

Report from the Board of Directors

WHERE WE ARE

Nel consists of electrolyser production facilities in Norway and Connecticut, USA, and one fueling station production facility

in Denmark, supported by headquarters in Norway. Nel has a sales and support network with global reach, including service

organizations close to the main markets for fueling stations – the U.S. West Coast, South Korea, and Northern Europe (based out

of Denmark).

Nel has historically delivered a few electrolyser systems in Russia. We have sold electrolyser systems to Ukraine during 2021.

Business is currently limited in these geographical areas.

MARKETS WE SERVE - A PURPLE WORLD

In total, we have delivered over 3500 electrolyser solutions to over 80 countries, and more than 120 H2Station™ solutions

delivered, or in progress to be delivered, to 14 countries.

FUELING STATION

SERVICE AND MAINTENANCE

San Leandro, CA, USA

PEM ELECTROLYSER

Wallingford, CT, USA

FUELING STATION

SERVICE AND MAINTENANCE

Seoul, South Korea

FUELING STATION

Herning, Denmark

HEADQUARTER AND

ALKALINE ELECTROLYSER

Oslo, Norway

Report from the Board of Directors

4.1 Financial development

Group

FINANCIAL REVIEW

Amounts in NOK million

2023 2022 2021

Revenue and income 1 773 994 798

Operating expenses 2 473 2 272 1 381

EBITDA -474 -780 -475

Operating loss -700 -1 279 -583

Order intake 1 430 2 275 967

Order backlog 2 458 2 613 1230

Number of employees 673 603 507

Total assets 7 857 6 951 6 007

REVENUE & ORDER INTAKE, ORDER BACKLOG AND EMPLOYEES

570

652

798

994

1 773

500

1 000

1 500

2 000

2 500

3 000

2019 2020 2021 2022 2023

Revenue and income

Order intake

513

981

1 230

2 613

2 458

500

1 000

1 500

2 000

2 500

3 000

2019 2020202120222023

Order backlog

310

393

507

603

673

100

200

300

400

500

600

700

800

2019 2020 2021 2022 2023

Employees

INCOME STATEMENT

Nel is committed to building the organizational and

production capacity to meet expected market growth,

while simultaneously delivering on increasingly larger and

more complex projects. This continues to negatively impact

the company’s profitability. Nel is still in the process of

establishing robust project execution protocols, partnership

frameworks, and other systems that are important to

Nel’s operational efficiency. While the company has made

notable improvements in ability and effectiveness, further

developments are necessary to secure margins and increase

profitability. Despite being the company with the most

experience in this field, both Fueling and Electrolyser face the

execution challenges in the company’s industrialization.

The company’s electrolyser strategy on large projects is to

narrow the scope and concentrate on stacks and balance-

of-stacks. To handle the scope Nel does not cover, Nel will

partner up with world-class EPC companies. This allows Nel to

focus on its core scope while bringing a competitive solution

for the hydrogen production system to the customer. Giving

up some of the scope will reduce execution risk and improve

margins for the equipment produced and sold. Similarly, Nel’s

Fueling division has narrowed its technology focus to the core

development necessary for high capacity fueling aimed for

the heavy-duty transportation segment.

Nel reported revenue and income in 2023 of NOK 1 773

million, up 78% from NOK 994 million in 2022. The growth is

the result of Nel Hydrogen Electrolyser’s revenue increasing

91% and Fueling increased 41%. Electrolyser constitutes 80%

(2022: 75%) of Nel’s total revenue in 2023

Order intake in 2023 was NOK 1 430 million (2 275) which

resulted in a order backlog at end of 2023 of NOK 2 458

million, down 6% from 2022. The backlog only includes

firm purchase orders with agreed price, volume, timing

Nel ASA

Annual report 2023

and terms and conditions. The decrease in order backlog is

mainly explained by higher delivery of alkaline electrolyser

equipment from Herøya production facility, combined with

lower order intake.

Raw materials expenses totalled NOK 857 million (585), an

increase of 47% from 2022. The increased raw materials

expenses are related to the 84% increase in revenue from

contracts with customers.

Personnel expenses amounted to NOK 821 million (665).

The 24% increase compared to 2022 is mainly explained by

a higher number of employees, up from 603 employees by

the end of 2022 to 673 at the end of 2023. Other operating

expenses also increased 9% and totalled NOK 569 million

(524) for the year. The high level of personnel and other

operating costs are the results of Nel’s strategic decision to

continue to invest in growth and higher activity levels. The

employees added are experienced project, production and

technology personnel.

EBITDA ended at NOK -474 million (-780), negatively

impacted by costs for scaling the organisation for growth

as mentioned in the section above for personnel expenses

and other operating expenses. The EBITDA is also negatively

impacted by Nel’s customer projects often including new

geography, customer segments, technological components

and/or products leading to additional costs and risk. Nel

is intent on improving its project execution capabilities,

which are still experiencing significant inefficiencies and cost

overruns in this early stage of market development. The

significant improvement in EBITDA shows that Nel’s business

model scales well.

Depreciation, amortisation and impairment increased to

NOK 226 million (499), and the decrease from 2022 is mainly

driven by the impairment of goodwill and technology in

Fueling of NOK 327 million in 2022.

As a result of all of the above, the operating loss amounted to

NOK -700 million (-1 279).

Net financial items amounted to NOK -173 million (92). Nel

received NOK 168 million in interest from banks in the current

year in comparison to NOK 72 million in 2022, caused by the

increased interest rates for NOK in particular. The negative

2023 financial items were driven by a negative fair value

adjustment of shareholdings in Everfuel, totalling NOK -304

million. Pre-tax loss totalled NOK -873 million (-1 187) and

the net loss for the year was NOK -855 million, compared to

a loss of NOK -1 171 million in 2022.

Financial position

Total assets were NOK 7 857 million at the end of 2023,

compared to NOK 6 951 million at the end of 2022. Total

equity was NOK 6 198 million. Thus, the equity ratio was 79%.

Cash flow

Net cash flow from operating activities in 2023 was NOK

-670 million, compared to NOK -691 million in 2022. The

development is positively impacted by the increased volumes

sold, offset by higher personnel expenses driven by an

increase in full time employees and increased net working

capital of NOK 458 million in 2023. Net cash flow from

investing activities was NOK -647 million (-403). Nel has

purchased property, plant and equipment for NOK 574 (160)

million in 2023, mainly related to the alkaline expansion at

Herøya, Norway, and PEM expansion in Wallingford, both in

the electrolyser division.

Nel’s cash balance at the end of 2023 was NOK 3 363 million

(3 139). The increase from end of 2022 is mainly due to

raising gross proceeds of NOK 1 609 million from the share

capital increase in March, offset by negative cash flow from

operations and investments.

The company estimates it has sufficient working capital

for the 12 months following the balance sheet date. In

accordance with section 3(3a) of the Norwegian Accounting

Act, the board of directors, therefore, confirms that the

financial statements have been prepared on the assumption

of a going concern.

Report from the Board of Directors

Nel Hydrogen Electrolyser

Financial review

Amounts in NOK million

2023 2022 CHANGE

Revenue and income 1 427 748 91 %

Operating expenses 1 749 1 168 50 %

EBITDA -159 -304

Operating loss -322 -420

Order intake 1 140 1 978 -42 %

Order backlog 2 093 2 224 -6 %

Number of employees 388 304 28 %

Total assets 3 619 2 427 49 %

Nel Hydrogen Electrolyser reported strong growth, and

revenue and income is 91% higher than in 2022. Revenues

from sales of alkaline electrolysers and PEM electrolysers

increased 156% and 35% compared to 2022, respectively.

EBITDA for the year was NOK -159 million (-304). The EBITDA

is improving from the increased volume sold. Nevertheless,

EBITDA continues to be negative as establishing project

execution protocols, partnerships and systems is at an early

stage at Nel. While significant improvements have been made

in our ability and effectiveness in executing projects for our

clients, continuous improvements are required in order to

safeguard margins and increase profitability. Bringing new

technologies to the market in the form of industrial projects

of increasing size and complexity is challenging. Nel intends

to continue improving its efficiency and margins in project

execution.

Electrolyser continued its scaling activities including a 28%

increase in number of employees. These increases are the

result of Nel’s ongoing preparation to deliver large-scale

projects in the coming years.

The electrolyser segment reports an order backlog of NOK

2 093 million, down 131 million from 2022. The decrease

in order backlog is mainly explained by higher delivery of

alkaline electrolyser equipment from Herøya production

facility, in addition to a lower order intake in 2023. Electrolyser

projects are large and reported order intake will therefore

vary significantly between years depending on the date of

signing of such larger contracts. Overall demand is increasing,

projects are getting larger, and customers are looking towards

suppliers with available capacity and a track record for

delivering equipment. In 2023, Nel has secured several paid

front end engineering studies for projects above 100 MW.

Order intake will vary depending on the progress in turning

these pre-studies into firm equipment orders.

The expansion program for the Herøya and Wallingford

facilities remain on plan. The increased capacity will allow for

a significant continued growth in revenues.

DEVELOPMENT AND KEY PROJECTS

Technology development

As the renewable hydrogen industry continues to develop,

Nel is at the forefront of the industrialization of electrolyser

production and of product development within several

electrolyser technologies. Nel is continuing to invest in the

development of large-scale industrialisation of electrolyser

products. In addition, Nel is working to develop a pressurized

alkaline electrolyser. As well as, further development of the

current atmospheric alkaline technology towards larger

capacity solutions. Finally, in order to meet new large-scale

opportunities within the PEM portfolio, Nel is developing a

next generation PEM platform. All of these three development

activities target increases in functionality and decreases

in levelised cost of hydrogen for our current and future

customers and are intended to increase demand for our

products globally.

Production capacity development

• Alkaline Water Electrolyser (“AWE”)

– In an effort to meet the global ambitions for renewable

hydrogen, Nel has initiated a continued expansion at

Herøya in Norway with an additional 500 MW alkaline

production line, expected to be operational from

April 2024. Given the significant pipeline of projects

globally, and the expectation that projects will continue

to grow in size, Nel is ready to continue to increase

its electrolyser production capacity. The carrying

amount for the Herøya second line expansion is NOK

281 million as of 31 December 2023. Total contractual

commitments beyond December 2023 for the second

line are NOK 118 million, including purchase contracts

for all the physical equipment needed.

– Further capacity expansion will be closely aligned

with commercial backlog. Nel has ordered building

modifications at Herøya and long-lead time items to

prepare for further expansion.

• Proton Exchange Membrane (“PEM”)

– In 2023, Nel initiated expansion and automation

of the PEM electrolyser production capacity in

Wallingford, Connecticut. The expansion will bring

annual production capacity towards 500 MW in 2025.

The carrying amount for the Wallingford expansion

is NOK 180 million as of 31 December 2023. Total

contractual commitments beyond December 2023 for

the expansion are NOK 100 million, including purchase

contracts for all the physical equipment needed.

Nel ASA

Annual report 2023

– PEM has been granted approximately USD 6 million in

funding from the U.S. Department of Defense (DoD)

for accelerating advanced PEM electrolyser stack

development, to enable low-cost hydrogen storage

and resiliency applications. The aim is to reduce both

operating and capital costs for hydrogen production

using PEM electrolyser technology.

• Nel has selected Plymouth in Michigan for its next

gigafactory. Fully developed, the factory will be among

the world’s largest electrode manufacturing facilities,

with a total annual capacity of 4 GW Alkaline and PEM

technology. The factory will be built in steps to match

supply with demand. A final investment decision for

constructing this facility has not been made yet.

Key commercial activities

• Order intake in 2023 was NOK 1 140 million (2022: 1 978)

which resulted in an order backlog at end of 2023 of NOK

2 093 million, down 6% from 2022.

• Nel Hydrogen Electrolyser received large purchase orders

for:

– An alkaline electrolyser to HH2E in Germany for

producing renewable hydrogen for several purposes.

Value approximately EUR 34 million.

– Alkaline electrolyser equipment sold to Bondalti

to inject green hydrogen into the natural gas grid,

long-haul transport and for chemical processes. Value

approximately EUR 11 million.

• Other purchase orders include:

– Multiple PEM electrolysers to several customers. The

offtake from the renewable hydrogen production in

these contracts are mainly for heating and gas.

Value approximately USD 20 million.

– Multiple alkaline electrolysers to several customers.

The renewable hydrogen will be used in refinery and

chemical processes, amongst other.

Value approximately EUR 30 million.

SUBSEQUENT EVENTS

• On January 19, 2024, Nel received purchase order from

Samsung C&T for a value of approximately EUR 5 million

• On February 2, 2024, Nel realigns relationship with

Nikola and will support Fortescue on its 80 MW Phoenix

hydrogen hub, for a total consideration of about USD 20

million.

Report from the Board of Directors

Nel Hydrogen Fueling

Financial review

Amounts in NOK million

2023 2022 CHANGE

Revenue and income 346 245 41 %

Operating expenses 602 972 -38 %

EBITDA -202 -352

Operating loss -256 -726

Order intake 290 297 -3 %

Order backlog 364 388 -6 %

Number of employees 255 269 -5 %

Total assets 811 1 005 -19 %

Revenue and income for the year increased 41% compared

to 2022, while operating expenses excluding impairment

decreased 7% in the same period. Nel has made significant

steps in the transformation of the Fueling division during 2023,

though there is still work to do. Fueling continues to operate

in a low order intake environment, and as a result backlog has

decreased by 6% during the year. Nevertheless, Nel Fueling

entered into a substantial agreement to deliver 16 hydrogen

fueling stations to be deployed in California, US from an

undisclosed US customer.

Gross margin continues to be negatively impacted by quality

costs. A hydrogen fueling station is a complex and relatively

new technology. The hydrogen industry, including Nel, is

still working to mature the technology as well as investing in

service and maintenance, robustness, and reliability. Nel will

continue to incur high costs related to these activities going

forward.

The EBITDA was NOK -202 million (-352) in 2023. An

improvement due to increased revenues, improved cost control

and quality and a decrease in personnel expenses resulting

from a 5% decrease in the number of employees. The results

continue to be unsatisfactory and Nel is intensifying actions to

improve the performance and profitability of this division.

The change in operating expenses from NOK 972 million in

2022 to NOK 602 million in 2023 is mainly because 2022 was

impacted by a NOK 327 million impairment of goodwill and

technology. Other changes include reduction in number of

employees from 269 to 255.

Nel continues to secure orders for its current product

specification while scaling up core technology components to

the specification necessary for high capacity fueling aimed for

the heavy-duty transportation segment.

DEVELOPMENT AND KEY PROJECTS

Technology development

Nel Hydrogen Fueling continues to see high utilisation

of many of the stations already installed. The utilisation is

generally at a similar level as in 2022, with some regions

impacted by issues with supply of hydrogen. The commercial

use enables accelerated learnings and improvements both

within product maturity and overall reliability. Fueling a

hydrogen vehicle (passenger or heavy duty) needs to be as

easy and reliable as fueling a gasoline or diesel vehicle. The

company will focus on developing its core technology with

special focus on high-pressure compression, cooling and

control. Nel will continue to incur research and development

costs in an effort to advance hydrogen-fueled transportation

as a viable and reliable option across the globe.

Nel continues to see the market of Heavy-Duty transportation

move towards hydrogen. Therefore, the fueling division will

continue to invest significantly in the development of next

generation Heavy-Duty Vehicle (“HDV”) equipment such as

high-capacity station modules and dispensers. This is to serve

customers who have a need for large capacity dispensing

capability, enabling fueling of a heavy-duty truck in 10-15

minutes, to achieve a range of 1 000 km. In addition, there

will be ongoing investments in factory and laboratory to be

able to accommodate HDV fueling equipment.

We believe that we are still at the very beginning of the

development of hydrogen as a viable fuel for passenger and

heavy-duty vehicles and other methods of transport. Nel

fueling continues to be one of the world’s leading innovators

and equipment providers in this important sector.

2019 2020 2021 2022 2023

Asia - 30 163 359 375

USA

23 110 169 222 169

Europe

35 19 126 239 302

35 19

126

239

302

110

169

222

169

163

359

375

TONNES OF H2 FUELED FROM NEL H2STATION

Nel ASA

Annual report 2023

70MPa CAR Dispenser

Production capacity development

• Manufacturing facility, Herning, Denmark

– Nel’s H2Station™ manufacturing plant is located in

Herning, Denmark. Combining technology innovations

with increased manufacturing capacity should enable

Nel to further reduce the cost of our hydrogen fueling

station solutions.

Key commercial activities

• Order intake in 2023 was NOK 290 million (2022: 297)

which resulted in an order backlog at end of 2023 of NOK

364 million, down 6% from 2022.

• Nel Hydrogen Fueling received large purchase orders for:

– 16 hydrogen fueling stations to be deployed in

California, US from an undisclosed US customer. Value

approximately USD 24 million.

• Other purchase orders for:

– Two H2Station™ hydrogen fueling module in France.

Value approximately EUR 2 million.

SUBSEQUENT EVENTS

On 7 February 2024, Nel was made aware that Iwatani

Corporation of America has filed a lawsuit with claims for

damages in an unspecified amount towards Nel and certain

of its subsidiaries in connection with certain agreements

for delivery of fueling equipment and services between Nel

Hydrogen Inc. and Iwatani Corporation of America. Nel and

its subsidiaries strongly reject the allegations made in the

lawsuit by Iwatani Corporation of America and will vigorously

oppose the allegations and the lawsuit. The lawsuit was filed

with the United States District Court in the Central District of

California.

Corporate developments

• Nel raised NOK 1 609 million in gross proceeds through a

private placement in March 2023

• During 2023, Nel has divested all its shares in Everfuel for

a total net consideration of about NOK 133 million.

• Nel received significantly reduced notice of fine related to

the Kjørbo incident from 2019, reducing fine from NOK 20

million to about NOK 1 million.

Report from the Board of Directors

SHAREHOLDERS AND

FINANCING

Nel’s shares are listed on the Oslo Stock Exchange under the

ticker “NEL”. At the end of 2023, the company had 1 671 325

304 issued shares, each with a nominal value of NOK 0.20 per

share. This comprised 1 670 907 271 outstanding shares and

418 033 treasury shares.

Euronext VPS recorded 25 741 known shareholders as of 31

December 2023. In addition, a substantial number of unknown

shareholders owning shares through custodians, such as

Clearstream Banking. The list of 25 741 known shareholders

includes a considerable number of Nordic institutional investors

and private investors. Regarding the unknown shareholders,

Nel’s last investigation of investors owning shares through

custodians indicated a large number of the shareholder base

was located in Continental Europe. Nel is currently in process

of mapping the entire shareholder structure, including the

unknown shareholders, following the implementation of the

Shareholders Rights Directive II (SRD II). However, at the time of

writing this process is not yet completed.

According to FactSet, which monitors filings from institutional

investors (not always visible on Euronext VPS), we find the

following top 20 shareholder overview (on an ultimate parent

level) as of 31 December 2023.

Distribution of known institutional shareholders

TOP 20 INSTITUTIONAL SHAREHOLDERS

% OF SHARES

OUTSTANDING

1 BlackRock, Inc. 3.97%

2 The Vanguard Group, Inc. 3.58%

3 Government of Norway 2.70%

4 DNB Bank ASA 1.72%

5 Storebrand ASA 1.55%

6 Legal & General Group Plc 1.05%

7 SAS Rue la Boetie 1.02%

8 Svenska Handelsbanken AB 0.88%

9 AXA SA 0.82%

10 Van Eck Associates Corp. 0.80%

11 Mirae Asset Global Investments Co., Ltd. 0.64%

12 Allianz SE 0.62%

13 Argenta Bank en Verzekeringsgroep NV 0.46%

14 New York Life Insurance Co. 0.38%

15 Deutscher Sparkassen-und Giroverband eV 0.38%

16 Erste Group Bank AG 0.38%

17 Eika Gruppen AS 0.37%

18 green benefit AG 0.35%

19 BNP Paribas SA 0.34%

20 FV Frankfurter Vermogen AG 0.31%

Source: FactSet, as of 31.12.2023

Country of known institutional shareholders/insiders

United States;

9.34%

Norway; 7.21%

United Kingdom;

3.48%

Germany; 1.81%

France; 1.47%

Sweden; 1.25%

Austria; 1.16%

Other; 2.63%

Unknown

shareholders

;

71.64%

source: FactSet as of 31.12.2023

The company has placed considerable emphasis on

providing shareholders, capital market participants and other

stakeholders with timely and relevant information about the

company and its activities in compliance with applicable laws

and regulations. Nel is committed to increasing awareness of

the share in Norway and abroad and believe in a transparent

and honest communication with the market.

Nel ASA

Annual report 2023

STRATEGY

Nel has a history tracing back to 1927 and is today a leading

pure play hydrogen technology company with a global

presence. The company specializes in electrolyser technology

for production of renewable hydrogen, and hydrogen fueling

equipment for road-going vehicles. Nel’s product offerings are

key enablers for a green hydrogen economy, making it possible

to decarbonize various industries such as transportation,

refining, steel, and ammonia.

Governments and companies continue to focus on their energy

transition and greenhouse gas reduction roadmaps. For many,

renewable hydrogen is an integral part of the strategy. Nel is

working to meet this rising demand by investing significantly in

developing reliable, efficient, and affordable energy solutions

that support environmentally sustainable activities.

NEL DIVISIONS’ STRATEGIES

Nel operates in two separate divisions, Nel Hydrogen

Electrolyser, producing electrolysers for hydrogen production

and Nel Hydrogen Fueling, producing hydrogen fueling

stations for cars, buses, trucks, and other on-road vehicles.

Serving different markets, each division develops and

executes its own strategy.

NEL HYDROGEN ELECTROLYSER

During 2022, the Nel Electrolyser division developed its 2025

strategy: Bigger, Better, Focused. In a market characterized by

rising demand for renewable hydrogen solutions, the strategy

focuses on maintaining Nel Electrolyser’s market leadership

position.

Nel Electrolyser’s analysis of the market is in line with

the industry trend reports, showing that investments in

electrolyser projects will continue to grow significantly in the

coming years. While today, some of Europe’s largest installed

hydrogen plants are approximately 20 MW in size, future

production plants are expected to scale to hundreds of MW

and then to GWs over the next years. Nel Electrolyser will

pursue a broad market strategy, with a view towards winning

large-scale orders.

The fully-automated production facility in Herøya, Norway

made Nel Electrolyser an early mover in the industrialization

of electrolyser production. To enable future growth and

decrease cost through scale, volume and automation, Nel

Electrolyser plans to further expand its production capacity in

Europe and North America.

Nel Electrolyser is the leading global electrolyser

manufacturer, offering both AWE (alkaline water electrolysis)

and PEM (proton exchange membrane) technology globally.

Nel’s electrolyser technologies have improved continuously

and set the industry standard for performance and levelized

cost of hydrogen. Key to Nel’s strategy is to continue to

improve and standardise current AWE and PEM products for

different operating conditions, as well as to develop adjacent

technologies.

Nel expects to sell and deliver directly primarily in Europe

and North America over the next couple of years until larger

projects in other countries begin to materialize. As many of

the largest projects are likely to be located in geographical

areas with abundant resources of wind and solar energy,

reducing electricity prices and carbon footprint, important

export markets longer term are expected to include Chile

and Australia. Nel Electrolyser has a partnership strategy

and a network of agents across the globe to service other

geographical markets.

In addition, for larger capacity projects Nel is narrowing its

scope of supply, concentrating on offering high-efficiency/

low-cost cell stacks and gas separation units. Working

closely with selected EPC, energy providers and downstream

technology partners enables Nel to respond to customer

requests outside Nel’s preferred scope.

NEL HYDROGEN FUELING

Nel Hydrogen Fueling is a leading manufacturer of hydrogen

fueling stations that provide FCEVs (Fuel Cell Electric

Vehicles) with fast hydrogen fueling. The Nel H2Station™

manufacturing plant and headquarter is in Herning, Denmark,

while Nel Hydrogen Fueling also has installation and service

organizations in South Korea, California, U.S. and in Europe.

Since Nel began manufacturing hydrogen fueling stations in

2003, there has been significant investment into research and

development, and Nel Hydrogen Fueling was among the first

to achieve compliance with the international hydrogen fueling

standard (SAE J2601) required by major car manufacturers.

The H2Station™ technology is now being utilized daily in

several European countries as well as in South Korea, and

in the United States, providing fueling stations for mainly

light duty vehicles (such as passenger vehicles) as well as for

heavy-duty vehicles (such as buses and trucks).

There are ongoing strategic considerations on how to best

capitalize on a highly experienced workforce and market-

leading hydrogen fueling technology. Our current strategy is

focusing on developing high capacity fueling stations for heavy-duty

transportation, phase out old product platforms, and cultivate a

smaller and better product portfolio. From now on, Nel Fueling will

focus on developing its core technology with special focus on high-

pressure compression, cooling and control. Furthermore, Nel will

collaborate closely with world-class partners on other components to

offer the best product, reduce technology risk, and improve overall

profitability.

CLIMATE-RELATED SCENARIO RESILIENCE IN

NEL’S STRATEGY

Considering that 100 % of Nel’s revenue comes from renewable

hydrogen technology, the resilience of Nel’s strategy within the

different climate-related scenarios is robust. Key considerations

are how fast our customers’ industries will grow and develop, how

complex and price competitive green technology will be, and

developments within renewable energy and the related grid. Nel’s

strategy is stress-tested against different scenarios to assess parity

with both fossil energy, grey and blue hydrogen. The hydrogen

market is already large, but with only a fraction served by water

electrolysis there are significant opportunities to transition the

existing market into being increasingly renewable. In addition, we

see regulations supporting the transition across the globe, with the

EU and the US pledging hundreds of billions of dollars into zero-

emission programs where hydrogen is the energy carrier of choice.

Growth is expected not only to come from industrial applications,

but also from currently transitioning diesel-based heavy-duty

transportation into zero-emission renewable hydrogen. In order to

meet cost-efficiency comparisons with diesel, these developments

will require low-cost electrolysis and ultra-fast fueling, both areas

where Nel is the global leader.

There is significant uncertainty associated with the timing and

pace of the growth expected in the hydrogen industry as it relates

to renewable energy (as storage or carrier), the decarbonization

of industrial activity (in refinery, steel or fertilizer production), and

transportation (heavy duty or other). There is a risk that Nel is

moving either too quickly or too slowly, meaning we are either

over- or under investing in assets, technology and/or human capital

development. Nevertheless, the global focus on addressing climate

change through decarbonization is the megatrend that underpins

our current strategy, and which is being supported by our increasing

levels of multi-year order intake.

STRATEGIC ALLIANCES

Cooperation is vital in a rapidly growing renewable hydrogen

industry. Combining resources, expertise and knowledge is a key

enabler that allows us to improve our entire value chain effectively

and rapidly, from engineering and procurement through installation,

service, commissioning and aftersales. Strategic alliances can

help shorten the timeline to achieving full competitiveness for

Photo: Ferenc Horvath

Report from the Board of Directors

Nel ASA

Annual report 2023

our technologies. We are engaged in numerous strategic

alliances, both domestically and internationally, with

partners that share our values and commitment to customer

dedication. We are actively pursuing new alliances in all areas

of our business.

Some of our alliances include:

• EPC-partners: Enabling turnkey solutions for large scale

hydrogen production facilities with predictable project

execution.

• Energy sources: Working with solar, wind and other

technology providers to optimize the interface between

renewable energy and electrolysis and optimizing the

cost of renewable hydrogen production through seamless

operation between the power supply and the electrolysis

process.

• Downstream technology partners: Optimizing the total

offering through technical collaboration with specialists in

key customer segments such as ammonia, methanol and

local back-up power.

MEMBERSHIPS AND ASSOCIATIONS

Nel is member of several associations with a national,

European and global footprint. Our presence in these

associations enables us to communicate our position,

market our technologies and support the development of

appropriate hydrogen legislation and regulation.

Some of our memberships include:

MEMBERSHIP AND ASSOCIATION ROLE

Renewable Hydrogen Coalition (EU) Co-Chair

Hydrogen Europe (EU) Corporate member

Fuel Cell & Hydrogen Energy Association, FCHEA (US) Corporate Member

Hydrogen Council (International) Corporate member

Norsk Hydrogenforum (Norwegian Hydrogen Association) Corporate member

Renewable Hydrogen Alliance (US) Corporate member

Clean Hydrogen Futures Coalition, CHFC (US) Board member

California Hydrogen Business Council, CHBC (US) Board member

Brintbranchen (Danish Hydrogen Association) Board member

Ammonia Energy Association (US) Board member

Report from the Board of Directors

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

implemented quality-assurance systems 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 and make investments ahead of actual

market demand and revenue recognition, balanced with the

need to appropriately allocate capital and demonstrate a

viable business model, is a continual challenge.

In this phase of 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. Other

technologies under development could potentially make

renewable 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.

Nel’s ability to grow depends to a substantial degree on its

ability to successfully acquire new customers, and to maintain

and grow its relationships with existing customers. A number

of Nel’s existing and potential customers are themselves

planning for substantial growth, and should these customers

fail to succeed with their business plans or fail to fulfil their

contracts with Nel, Nel’s sales to such customers may be

adversely affected.

Nel is also to a certain degree dependent on a limited

number of third-party suppliers for key production

components for its electrolyser and hydrogen fueling

products. To reduce the sourcing risk Nel’s supply chain

strategy is to have dual supply chains on all components

and raw materials. 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.

CLIMATE-RELATED RISK FACTORS

Nel assesses climate transition risks into two major categories:

(1) risks related to the transition to a low-carbon economy

and (2) risks related to the physical impacts of climate

change. No climate related risk has been identified to affect

our physical assets or operations in the short and mid-term.

Climate events may increase the requirements for product

safety or the water supply for production of hydrogen via

electrolysis. These risks are not considered to have a severe

impact to our operations, although consideration shall be

taken for alternative sources of water in water stressed

regions (such as water desalination) or increased product

safety test against climate event (such as flooding and

earthquake).

The climate transition will also allow customers and

governments to select the product technology that better

suits their need. Nel foresee an increased risk related

to product failure and technology obsolescence. The

reputational damage risk from product failure and failure

to meet high expectation from our customers may affect

the eligibility of our equipment technology. Nel prioritize

investments in R&D, allocating sophisticated resources to

meet regulation and market demands.

Lastly, local authorities and governments have an important

role in the renewable hydrogen sector by enacting

legislation that support research and innovation and scalable

investments in production and infrastructure. Reduced

and/or delayed support from governments will delay the

development of the renewable hydrogen industry. Political

incentive schemes such as the Inflation Reduction Act in the

United States and the Hydrogen Bank in the EU are expected

to be important contributors to developing the industry.

Nel ASA

Annual report 2023

Outlook

SUSTAINABILITY FUTURE PROSPECTS

The growing urgency of shifting to a low carbon economy is

set as a high priority for several governments following the

warmest year since pre-industrial era. The COP28 signalled

what can be the beginning of the end of the fossil fuel

era. Being accountable for our environmental footprint is

emerging as a pivotal component in corporate transparency,

and we aim to provide information as expected by our

key stakeholders. Nel strongly believes that the renewable

hydrogen market has a potential of great magnitude,

supported by a wide body of research. Virtually every

industry needs to realign their energy mix if we are to stand a

chance of achieving the UN Sustainable Development Goals,

and renewable hydrogen will be a part of the energy mix that

enables the transition. Automation of manufacturing process,

organizational expansion, tax grants to offtakers of renewable

hydrogen, and larger order sizes were a few of the highlights

of this past year, signalling an important increase in demand.

Combined with an ambitious strategy of drastically reducing

the levelized cost of hydrogen (LCOH) to customers, we have

established a solid framework for our technology, engineering

and production divisions for the years to come. We must

ensure that sustainable business practices are guiding our

operations, with scalability, cost-leadership and world-class

safety at our core. During the ramp-up stage of our business,

taking a precautionary principal approach is necessary to

promote sustainability within the organization.

FINANCIAL OUTLOOK

External and internal analyses support a market view that

multiple gigawatts of electrolyser projects will reach final

investment decision before 2025. Industrial applications

represent the most promising near-term opportunities.

Projects are expected to commence first in mature markets,

before large greenfield installations integrated with renewable

energy sources gradually are expected to become another

important market segment. The increase in interest rates and

raw material prices makes renewable energy more expensive,

potentially negatively influencing the near- to mid-term

market outlook.

Nel is in a good position to maintain its leading position

in electrolysers. Nel’s proven track record and automated

production capability is an important differentiating factor.

Based on a large and growing pipeline of opportunities, Nel

has the ambition to win several new large-scale orders in the

coming periods. Higher revenues in combination with more

efficient execution are expected to yield greater profitability

in Electrolyser. This positive market outlook drives Nel’s

continued investments in engineering, project management,

project execution, and related personnel, which continues

to negatively affect current results. Larger projects are more

complex and require more work in all phases from planning

through execution. Order intake is likely to vary significantly

from quarter to quarter. The order backlog is subject to risks,

including delays and cancellations.

In Fueling, the current market dynamics and outlook are

different than in Electrolyser. The long-term market outlook is

positive, but short-term demand continues to be challenging.

Nel has high-quality energy companies on its customer

list that believe that tomorrow’s heavy-duty vehicles will

be powered by green hydrogen. Margins in the Fueling

division are currently improving as quality costs related to

the installed base decreases. Nel has implemented and will

continue to implement operational and strategic actions to

improve performance and profitability.

Nel ASA

Annual report 2023

4.2 Environment, Social and

Governance report

Nel is reporting on sustainability on a group level, and

reports on metrics and targets in an integrated annual

report, following the GRI Sustainability Reporting Standards

(GRI Standards: Core option). The report implements

considerations found in Norwegian Accounting Act, Task

Force on Finance Related Disclosures (TCFD), Euronext ESG

Guidelines for listed companies, UN Guiding Principles on

Business and Human rights, the UN Global Compact and the

OECD’s Guidelines for Multinational Enterprises. In addition,

Nel partially incorporated the requirements of the Corporate

Sustainability Reporting Directive (“CSRD”). The CSRD

requirements will be fully implemented for the reporting

period starting as of 1 January 2024.

ESG POLICY

At Nel, sustainability is an integral part of the identity. The

vision is to empower generations with clean energy forever.

This vision is driving ambitions and priorities. Combating

climate change is high on the corporate agenda, and

sustainability is always incorporated into the strategic

decision-making processes. The Board of Directors (BoD)

is responsible for sustainability at Nel and is the owner of

the ESG policy. The Board Audit, Risk and Sustainability

Committee (BARSC) is the preparatory body to assist the

BoD in exercising its oversight of ESG matters. Further, the

Chief Executive Officer (CEO) has delegated the authority

and responsibility to the Chief Financial Officer (CFO) for

implementation and execution of the key principles as

outlined in this policy. General follow-up and execution of

daily operations is conducted by a dedicated ESG committee,

consisting of members from group management and the

business line. The ESG policy is available on Nel’s website.

Visit www.nelhydrogen.com/sustainability.

DOUBLE MATERIALITY

The European Commission adopted legislative Corporate

Sustainability Reporting Directive (CSRD) and its European

Sustainability Reporting Standards (ESRS) will enter into force

for reporting periods starting as of 1 January 2024 in the

European Union and in Norway. In 2023, Nel developed a

double materiality methodology inspired by the CSRD due

diligence to identify impacts, risks and opportunities in its

value chain that may affect people and environment.

Nel’s double materiality is designed for increased dialogue

with stakeholders and a comprehensive due diligence process

of how our value chain impacts people and environment,

and which ESG risks and opportunities may affect Nel in the

short, mid and long-term. The preferred channels to engage

with stakeholders in 2023 were meetings, conferences, peer

reviews, monitoring of media and publications of organization

classes and focus groups.Nel combined these several

mechanisms to evaluate the scale, scope and irremediability

of the impacts from ESG topics that have been identified

during the engagement with stakeholders. In addition,

the magnitude of such ESG topics were considered in our

financial materiality process.The table below summarizes key

methods used to engage with stakeholders in 2023:

STAKEHOLDER GROUP: HOW DOES NEL ENGAGE WITH ITS STAKEHOLDERS:

MINIMAL FREQUENCY

OF ENGAGEMENT:

Customers

• Project meetings

• Site tours and audits

• Tender responses and presentation

Ongoing

Suppliers

• Site visits

• Screening and qualification processes

• Supplier Audit program

Ongoing

Employees

• Code of conduct and compliance training

• Performance dialogues and reviews

• Town hall meetings

• Culture engagement through Nel Business System (“NBS”)

• Negotiation with employee representatives (labor unions or equivalents)

Ongoing

Environment, Social and Governance report

Photo: Ferenc Horvath

Shareholders and capital

market participants

• Quarterly results presentations and capital market days

• Conferences, ad hoc meetings, and site visits

• Stock exchange filings, press releases

Quarterly, ad hoc

Governments

• Meetings

• Site visits

• Reports and websites

Ad hoc

Partners

• Joint projects

• Multi-stakeholder collaboration

Weekly, ad Hoc

An ESG research was performed assessing the impacts of our

value chain, on people and environment as well as a financial

materiality assessment evaluating how our impact on people

and environment can affect Nel’s profitability, access to capital

and market development.

In 2024, Nel plans to continue the stakeholder engagement

program with surveys to identify ESG topics of concern

and workshops with employees directly dealing with key

stakeholder groups. The ESG risk management process will

be embedded into the Enterprise Risk Management (“ERM”)

program for consolidation of risk governance in a unified risk

platform. As part of the ERM, key performance indicators

will be designed to measure and track the efficiency of ESG

policies and procedures for all material risks identified in

our double materiality assessment. The key performance

indicators and their respective targets are disclosed on the

sections for each subtopic of this ESG report.

The summary results of our preliminary Double Materiality

Assessment are disclosed in graphic format in a scoring scale

of 1 (not material) to 5 (highly material):

Climate impact

Cyber security

Product Safety

Governance

Innovation and R&D

Environmental impact

Organisation and

Occupational

Health and Safety

Well -being at work

Responsible Supply Chain

Sustainability in Electrolyser Production

Water

0.5

1.5

2.5

3.5

4.5

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5

Financial materiality

Impact materiality

Double Materiality assessment

Visit www.nelhydrogen.com/sustainability.

SOURCE OF ESTIMATE OR UNCERTAINTY

Stakeholder feedback for double materiality

assessment

The double materiality assessment implemented in 2023

relied on a streamlined process to obtain feedback from

key stakeholders that acted as a sample representative

for its stakeholder group communicating impacts, risks

and opportunities that affected their business relationship

with Nel. A sample methodology carries inherent risk of

misrepresentation. Nel has in place feedback mechanisms, such

as grievance mechanisms or the investor relation department,

aiming to identify material discrepancies arising from

inaccurate interaction with a stakeholder group representative.

Measurement of Greenhouse Emissions

Nel adopts the GHG protocol as the framework for

accounting of Greenhouse Gas emissions. For some

categories, such as transportation and business travelling,

Nel relies on CO2 emissions directly converted by

vendors. In some instances, Nel does not have access to

the methodology applied by vendors to convert its CO2

emissions.

Photo: Ferenc Horvath

Net Zero commitment

Nel is committed to achieve Net Zero emission before 2050. The 2050

Net Zero commitment relies on a successful climate transition of vendors

operating in hard-to-abate such as the steel industry. Nel does not have

sufficient control of when supply of low emissions goods and services will

be available for reduction of Greenhouse Gas emissions classified in the

scope 3 of its GHG inventory.

STAKEHOLDER DIALOGUE

Stakeholders are driving forces in Nel’s operations, and frequent

stakeholder interaction is important to account for input across our

value chain. Nel engages with a wide range of stakeholders. Overall, Nel

experiences continuously rising expectations in all aspects of our work

and we strive to address concerns that are expressed. We aim to improve

our stakeholder dialogue by setting up a structured stakeholder dialogue

program.

Nel’s activities show the following key stakeholders:

Employees

Employees generally express views related to occupational health and

safety, career development, and timely two-way communication as key

areas of concern. Employees are often the first to address risks and

opportunities, so efficient employee dialogue is important.

Shareholders and capital market participants

Our shareholders are vital contributors to the development of our company

and important stakeholders with the power to influence our operations.

As such, it is important to maintain regular stakeholder dialogue with our

shareholders as our business develops. Quarterly presentations, annual

reports, and investor relations activities are channels employed to keep

reporting on material events. During the year, the company arranged

site visits in smaller groups for institutional investors and capital market

participants to the Herøya facility and engaged with investors and capital

market participants in conferences, events and forums.

Customers

Customers are generally concerned with product performance, product

safety, cost of ownership, responsible supply chains, the applicability of

solutions, and general project execution. Our customer relations are formed

on a project basis and active communication is required throughout the

customer journey to deliver a satisfying product to the client, and to take

home learnings to the organization. Recently, customers have increased

the interest in the CO2 emissions of equipments in response to new carbon

regulations, net zero commitments, and tax incentives associated with low

CO2 emissions. Product certification and local regulations for production of

hydrogen are also high on their agenda for the coming years.

Suppliers

Through its supply chain screening and procurement efforts, Nel sets

requirements and requires insight into the ESG performance of suppliers.

Also, that Nel operates honestly in-line with rules and legislations is

important to provide to the suppliers. Most of the topics Nel raised to its

Environment, Social and Governance report

suppliers are related to quality, cost, delivery concerns, and

alignment on ESG related topics. Another emerging topic

subject to close dialogue is around growth, and whether a

supplier can, or has, the ambition to grow with Nel.

Partners

As we develop and mature our technologies, strategic

partners are significant drivers behind our progress. Their

concerns are usually aligned with those raised by suppliers

and customers, and our dialogue with them follows similar

procedures.

Governments

Governments play a vital role as the regulatory body that

forms policies and procedures, awards grants, and presents

roadmaps for the energy transition. Regular dialogue and

monitoring are necessary to ensure our product development

meets requirements set by different governments. During

2023, governors and government officials from the United

States, Norway and Germany, amongst others, have visited

our automated factory for large scale production in Herøya.

UNITED NATIONS SUSTAINABLE

DEVELOPMENT GOALS

Nel supports the United Nations Sustainable Development

Goals, and the company strive to document the actions

made to meet the targets. Presented in 2015, the 17 goals

were developed to address the most prominent sustainability

concerns the society is facing. The Sustainable Development

Goals are the most unifying and universally accepted set of

goals and aspirations that are to be met by 2030, to protect

our planet and the people who inhabit it. Nel continues its

commitment through investments and organisational changes

to optimise the company’s contribution to this transformative

agenda. The company will contribute to the industrialisation

of the green hydrogen economy, paving the way for the

development of a global hydrogen economy and the trading

of renewable hydrogen as a global commodity. Nel is fully

committed to the promotion and implementation of the

United Nations Sustainable Development Goals and limiting

global warming to 1.5 degrees Celsius.

Nel support all the sustainability goals outlined by the United

Nations; however, we have chosen to focus on those where

we can make a significant direct impact:

Our selected goals are:

Nel provides clean energy production solutions to a vast range of industries and applications. Nel’s product

offering is an enabler of clean energy infrastructure, and thus contributes to an increasing adaptation of

renewable energy. The main contribution towards SDG #7 is in line with its strategic ambitions of 1) capitalize

on the rapid development in the renewable industry by an extensive expansion of the company’s organizational

capabilities, and 2) to significantly decrease Levelized Cost of Hydrogen (“LCOH”) for renewable hydrogen

production and consequently improve the applicability of renewable energy.

At Nel, employees work in a safe and healthy environment. Nel never compromise on safety. The company

strongly believe this is an absolute minimum to any successful long term sustainable business. All Nel sites

have management systems put in place that safeguards employees’ health and safety. Nel aims to offer a

workplace free of harmful incidents and injuries, and to promote a culture that identifies and create awareness

through incident reporting and self-accountability. The company has set a QHSE target of zero-tolerance for

discrimination of any kind, and has put in place grievance mechanisms should such a case emerge.

Nel is committed to reducing the cost of renewable hydrogen production to enable affordable and easier

available renewable energy, and thus also adaptation. This is aligned with the company’s vision to empower

generations with clean energy forever. Nel is committed to offer market leading equipment for water

electrolysis. The company is a frontrunner in technology development, efficiency, and cost reductions. Another

key element is to industrialize equipment production at a scale with manufacturing concepts that allow for

further technological advancements.

Nel’s vision is to empower generations with clean energy forever. The business model is built on facilitating

and enabling the energy transition towards a more sustainable society making renewable energy solutions

commercially viable. Nel’s product offerings are key enablers for a renewable hydrogen economy, making it

possible to decarbonise various industries such as transportation, refining, steel, and ammonia.

Nel ASA

Annual report 2023

MATERIAL ISSUES IMPACTING STAKEHOLDERS

Material topics have been identified by assessing relevant issues that are of importance to key stakeholders and how these

issues impact Nel’s operations and strategy. Nel defines material topics as areas that have potential to substantially impact the

enterprise value of the company. These material topics will be disclosed and elaborated in the following annual report sections.

The material topics has been categorized within the three main sustainability categories: Environmental, Social, and Governance

factors and presented in the matrix below:

ESG UNIT OF MEASUREMENT PAGE SDGS 31 DECEMBER

2023

TARGETS

2024

E GHG Emissions 41 13

GHG intensity based on net revenue

tCOe2 (excluding scope 3)/net

revenue in NOK million 0.95 -

E EU Taxonomy 61 7, 13

Revenue eligible to EU Taxonomy % 93.3% -

Opex eligible to EU Taxonomy % 44% -

Capex eligible to EU Taxonomy % 95% -

E Energy 38 7, 13

Energy intensity based on net revenue (MWh/MNOK)

MWh/net revenue in NOK

million 9.80 -

E Water 41 7, 13

Water intensity based on net revenue

Water withdraws m³/ net

Revenue in MNOK 7.16 -

Ni particles in water – Herøya µg/m3 5.4 <6

Environment incidents* Reportable event None None

E Waste 38 7, 13

Recycled non-hazardous waste % 48%

Recycling rate

above 50%

E/S Sustainability in electrolysers production 45 9, 13

Overall equipment effectiveness (own production) -

Alkaline % 67% ~78%

Overall equipment effectiveness (own production) - PEM % 91% ~90%

Product quality yield (alkaline) % 99% >99%

Product quality yield (PEM) % 94% >98%

E/S Responsible supply chain 48 8, 9, 13

S/G Transparency Act 41 8

Supplier audits concluded within the fiscal year

Supplier audits completed

during the reporting period 23 strategic suppliers

30 strategic

suppliers

Integrity Due Diligences performed for suppliers with

active contracts 99.8% 100%

S Organisational and occupational health and safety 48 8

Percentage of employees covered by Nel's health and

safety systems % 100% 100%

Total recordable injuries frequency (TRIF)

TRIF per 1,000,000 hours

worked 19.67 <10.2

Lost time injury frequency (LTIF)

LTIF per 1,000,000 hours

worked 11.24 <5.2

Fatality rate

Recordable events in the last

12 months None None

S Training programs 41 8

Cyber Security Training Awareness % 100% 100%

Safety program awareness % 92% 100%

G Innovation and R&D 38 9

R&D spend in % of annual revenue and other income % 21% <10%

G Ethical business conduct and compliance 57 8

Total amount spent in fines for damages as a result of

violations regarding social and human rights factors NOK 0 0

Expenditure with lobby and donation to political parties NOK 0 0

G Payment practice 57 9

Confirmed incidents of corruption or bribery

Reportable event - per

incident 0 -

Number of contracts terminated due to confirmed

incidents relation to corruption or bribery

Reportable event - per

contract 0 -

G Board composition 57 9

Non-executive board members** Board member

7 (100% of board

members)

(100% of board

members)

* Environmental incidents are defined as notice of violation, notice of non-compliance or release of pollutants beyond the limits set in the environmental permit.

** Members of the Board of Directors who does not have a role in the leadership team

Nel ASA

Annual report 2023

Environment

CLIMATE CHANGE OPPORTUNITY AND

EMISSIONS AVOIDED

Governments, companies, and researchers are increasingly

looking into ways to accelerate the climate transition and

achieve carbon neutrality in a safe and sustainable manner. In

recent years, companies and policy makers have been facing

increased expectations to identify viable solutions to replace

the legacy systems dependent on fossil fuels to operate.

Hydrogen is the most abundant element in Earth, a rich

source of energy and contains the unique ability to carry

energy. These delightful combination of qualities places

renewable hydrogen as a pivotal player in the energy

transition with several possible applications. Hydrogen in

its grey form (produced from natural gas or methane) has

been traditionally applied on feedstock to produce ammonia,

methanol, or as a reducing agent to produce iron (DRI). Its

rich energy level and its ability to carry energy has allowed

new applications to be implemented for climate change

as a fueling for transport, for high-temperature heating in

hard-to-abate industries and for storage and generation of

electricity providing energy security for renewables source

with seasonal energy generation.

The broader scope for hydrogen in the climate transition is

forecasted to increase hydrogen demand from 95Mt in 2022

to up to 150Mt in 2030, with nearly 40% coming from new

applications

. In addition, hydrogen has accounted for 2.5%

of global emissions in 2022, generating more than 1Gt of

CO2 emissions that could have been avoided if replaced by

renewable hydrogen

Market development

During 2023, governments in strategic countries to Nel

took important steps enacting tax credit schemes that will

accelerate the economic viability for offtakes of climate

transition projects. The United States announced the first

projects qualified for tax credits to renewable hydrogen

producers in the Inflation Reduction Act. In the European

Union, a renewable hydrogen bank was announced in

March 2023 with EUR 800 million in budget for tax credits

to hydrogen producers through a fixed premium in €/

kg of renewable hydrogen produced. These important

developments support offtakes in the investment decisions

and demonstrate the potential of renewable hydrogen as an

1 IEA (2023), Global Hydrogen Review 2023, IEA, Paris https://www.iea.org/reports/global-

hydrogen-review-2023, License: CC BY 4.0

2 IEA (2023), Hydrogen Patents for a Clean Energy Future, IEA, Paris https://www.iea.org/

reports/hydrogen-patents-for-a-clean-energy-future, License: CC BY 4.0

enabler to decarbonize hard-to-abate sectors with critical

importance to society such as personal or public transport,

freight logistics, industrial heating, and industry feedstock.

The renewable hydrogen industry continues to navigate

through challenges related to the size of tax incentives and

unclear regulation for safety and infrastructure. For the

climate transition to meet the pace agreed in the 1.5 Cº Paris

Agreement, policymakers will have to increase the clarity

of regulation in the coming years and adjust the budget

for tax incentives, so projects become economically viable.

Nel works on the forefront of the renewable hydrogen

industry challenges towards industrial scale, cost reduction

and supplying safe and efficient equipment for renewable

hydrogen producers.

EMISSIONS AVOIDED

Nel’s mission is to unlock the potential of renewables

and enable global decarbonization. Nel believes that the

emissions avoided from reference hydrogen products based

on comparative assessments to renewable hydrogen will be

substantial. According to IEA there was demand for 95 million

metric tons of hydrogen in 2023, hydrogen predominantly

derived from fossil sources. Current production of grey

hydrogen is responsible for more than 1 100 million tons of

CO2 emissions². Water electrolysis from renewable energy

can reduce these emissions substantially, a transformation is

relatively easy from a technical point of view. The generally

accepted accounting methodologies for measuring emissions

avoided in the next years has not been readily available to

Nel. There are several challenges related to energy source

used for hydrogen production, as well as emissions from

equipment used for energy generation and transportation.

Nel has therefore not been able to report on the relative

emissions avoided for Nel’s customers globally current

year. The sections below showcase some of the significant

opportunities for renewable hydrogen, with emissions

avoided as the basis for such assumption.

FOSSIL FUEL PARITY

To increase the distribution and adaptation of renewable

hydrogen it must be cost competitive with hydrogen

made from natural gas. The hydrogen market is already

massive. 95 million tonnes per year is already produced

and used in various applications. According to International

Renewable Energy Agency (“IRENA”), about 4% of hydrogen

production comes from electrolysis, though with a global

average renewable share of about 33%, about 1% of

hydrogen production was derived directly from renewable

Environment, Social and Governance report

sources. The rest is derived using fossil fuels, which create

carbon emissions and are damaging to the environment.

It will therefore be a lower hurdle for companies to reduce

emissions when renewable hydrogen reaches the same

price level as fossil-based hydrogen. Nel is committed to

continue with cost reductions and efficiency improvements

for its technology in order to enable a renewable hydrogen

economy.

Electrolyser climate-related opportunities

Everything Nel is involved in relates to renewable hydrogen,

and the energy transition. As such, climate related

opportunities are the only opportunities for the company.

Nel’s capital expenditures and R&D investments (Investments)

and operating expenditures (Opex) are all related to

renewable hydrogen technology:

80 %

20 %

Revenues

Electroly ser

Fueling

56 %31 %

13 %

Opex

Electrolyser

Fueling

Corporate

93 %

7 %

Investments

Electroly ser

Fueling

86 %

14 %

Order backlog

Electrolyser

Fueling

Case 1: Decarbonizing ammonia (“industrial application”)

- How hydrogen is vital to sustainable farming- How

Renewable hydrogen production by electrolysis is proving

a viable pathway to sustainable ammonia, making fertilizer

manufacturing and modern agriculture green.

Renewable hydrogen is critical to sustainable ammonia

production. It can reduce costs, boost capacities, and achieve

decarbonization for the energy, mobility, and industrial

sectors.

This is to the benefit of the environment, as more than

235 million tons of ammonia produced globally every year

account for 1-2% of the world’s energy consumption and

around 1% of all human emissions.

The uniquely interesting ammonia

Although hydrogen’s role in producing ammonia for

fertilizer manufacturing is just one of the hundreds of current

and coming uses of hydrogen, ammonia is exceptionally

interesting.

Apart from unlocking the decarbonization potential, it can

play an essential role as a life-sustaining commodity and

be a high-density carrier of hydrogen energy, allowing the

exportation of hydrogen and, thereby, cost-effective energy.

Furthermore, it is relatively easy to ‘crack’ the ammonia to

liberate hydrogen at the point of use for various applications.

Also easing the cost is the fact that a massive ammonia

distribution infrastructure is already in place.

Case 2: Mobility (“fuel cell electric vehicles”) - Fueling

future transportation

Renewable hydrogen is witnessing a surge in demand, also

in the heavy-duty transportation sector, as companies and

governments strive to adopt greener energy sources. This

shift towards clean energy opens new opportunities for

renewable hydrogen technology companies like Nel.

Today, the transport sector accounts for as much as 15% of

the world’s greenhouse gas emissions. Many governments

are therefore setting ambitious targets to reduce their carbon

emissions, and hydrogen is seen as a promising solution

for reducing the footprint of the transportation sector. For

example, the EU enacted that hydrogen refuelling stations

serving both cars and lorries must be deployed from 2030

onwards in all urban nodes and every 200 km along the

TEN-T core network.

Renewable hydrogen, produced using renewable energy

sources such as wind and solar power, is particularly attractive

because it has no emissions during use, making it a cleaner

alternative to fossil fuels. In addition, hydrogen fuel cell

vehicles have a range like conventional vehicles and can

be fueled quickly, making it a practical choice for use cases

needing high utilization.

Nel is therefore investing in developing fueling stations and

electrolyser equipment. In 2022 Nel entered a collaboration

with General Motors, which has decades of experience

developing fuel cells for hydrogen vehicles. The partnership

aims to create more efficient and cost-effective hydrogen

production equipment, making renewable hydrogen

competitive with fossil fuels.

Many of Nel’s customers are planning to produce hydrogen

for heavy-duty vehicles. One of them is Woodside Energy,

which has ordered large-scale electrolyser equipment for a

hydrogen facility in Ardmore, Oklahoma, an area well suited

for hydrogen production with good availability of water

and energy. This further demonstrates Nel’s commitment to

supporting the growth of renewable hydrogen in heavy-duty

transportation and reinforces its position as a leader in the

industry.

Furthermore, Nel is delivering fueling station systems to

high-quality energy companies, that firmly believe tomorrow’s

heavy-duty vehicles will be powered by renewable hydrogen.

First, however, the technology must be further developed

and improved to meet society’s growing demand for fueling

stations. Nel will therefore focus on developing high capacity

fueling stations for heavy-duty transportation, phasing out

old product platforms and technology, and cultivating a

smaller and better product portfolio.

Photo: Unsplash.com

Environment, Social and Governance report

In addition, Nel will focus on developing its core technology

with a particular focus on high-pressure compression,

cooling, and control. Nel will also collaborate with world-class

partners on other components to offer the best product,

reduce technology risk, and improve overall profitability.

KEY PERFORMANCE INDICATORS UNIT OF MEASUREMENT 31 DECEMBER 2023 TARGET 2024

GHG Emissions

Scope 1 tCO2e 373 -

Scope 2 - Market based tCO2e 6 206 -

Scope 2 - Location based tCO2e 1 247 -

Scope 3 (without Capex emissions) tCO2e 17 129 -

Scope 3 (with Capex emissions) tCO2e 31 964 -

GHG intensity based on net revenue tCOe2/net revenue in NOK million 18.94 -

Energy consumption - non-renewable sources

Purchased gas for heating MWh 2 021 -

Purchased electricity MWh 14 708 -

Energy intensity based on net revenue MWh/net revenue in NOK million 9.8 -

Water

Water withdraws m³ 12 227 -

Water discharge m³ 8 387 -

Water intensity based on net revenue Water withdraws in m³/net revenue in

NOK million

7.16 -

Pollution

Nickel particles in water - Herøya µg/m3 5.4 <6

Environmental incidents* Reportable event None -

Waste

Total waste Kg 2 561 089 -

Hazardous waste Kg 2 405 670 -

Hazardous waste (treated by certified

outsourced partners)

Kg 2 405 670 -

Non-hazardous waste Kg 155 419 -

Recycled non-hazardous waste Kg 74 709 -

Recycled non-hazardous waste % 48% >50%

* Environmental incidents are defined as notice of violation, notice of non-compliance or release of pollutants beyond the limits set in the environmental permit.

Nel ASA

Annual report 2023

CLIMATE-RELATED RISK FACTORS

Climate scenarios

Nel’s climate-related risks are managed assessing the physical

impacts that climate events can have to the operations,

workforce, product safety, customer contracts, supply chain

and commercialized technology. Climate scenarios were

forecasted with the RCP8.5 (very high emissions) from the

Intergovernmental Panel on Climate Change (“IPCC”), fifth

assessment. Nel assesses climate events within time intervals

defined as short term (2024), mid-term (2025-2030) and

long term (2030-2040) in line with our expectations of

market scaling for the Electrolyser industry. Climate risks and

opportunities identified in the short and mid-term scenarios

are incorporated in the Enterprise Risk Management process

for risk monitoring, while a long-term scenario is forecasted

for reference purposes.

In our forecast, workforce, technology obsolescence and

safeguard of assets were critical dependencies that could

be affected by a climate event. Nel did not forecast severe

chronic climate events that could require reallocation of

assets nor result in constraints to its workforce. Nel facilities

are leased with contracts with termination options around

2030 and located in areas with developed transport access. In

case of unprecedent climate events, Nel’s operation could be

reallocated to areas with higher resilience to climate events

or Nel could negotiate with lessors to increase the climate

resilience of the buildings. A reallocation of assets is expected

to affect our highly skilled workforce, supply chain as well as

could arise potential disputes with customers for liquidation

damages due to delays to deliver projects. However, Nel

expects the largest impact to be the opportunity to provide

viable technology for production of hydrogen with a product

technology that requires low carbon emission.

Currently, the forecasts have significant complexity with a

very high level of uncertainty in the outcomes for different

scenarios. The climate events in the high emission scenario

(RCP 8.5) could have from no economic impact to up to

two times of our annual revenue invested in reallocation of

assets and employees, and potential losses from customer

contracts and production capacity. Nel has a catastrophe

policy in place to manage eventual climate acute event. Our

insurance policy aims to safeguard assets and resources in an

efficient manner, and it is expected to cover some or all losses

in case of acute climate events. The production capacity of

our facilities and the technology of our products are ready to

support companies in their climate transition before the long-

term impacts of conduct business as usual in a high emission

scenario.

Policymakers, tax incentives and carbon tax schemes

Policymakers such as local authorities and governments have

an important role in the renewable hydrogen industry by

enacting legislations that support research and innovation

and scalable investment in production and infrastructure. The

implementation of Carbon Emission Tax (“CET”) or Carbon

Border Emission (“CBE”) will contribute to making renewable

hydrogen projects economically viable due to expected

increase in the cost of producing raw materials from energy

sources that relies on fossil fuels.

Critical minerals

Critical minerals are in the spotlight due to the risk of limited

available supply for crucial technologies in the climate

transition. Raw materials supply issues could surface when the

value chain experiences exponential growth driven by efforts

to abate climate change. For example, raw material Iridium

is important for the manufacturing of PEM electrolysers. The

total supply is limited and a significant reduction of Iridium

consumption in PEM products and higher recycling rates will

be necessary to reduce the risk. In response, Nel encourages

customers to return PEM electrolysers for recycling and R&D

activities when product achieves its end-of-life.

Environment, Social and Governance report

PFAS ban in the European Union

In January 2023, some European countries (Norway,

Germany, Netherlands, Sweden and Denmark) initiated a

proposal to ban manufacturing of articles containing per-

and polyfluoroalkyl substances (“PFAS”) in its composition.

PFAS is a large class of synthetic chemicals with several

applications in society. PFAS has been increasingly detected

as an environmental pollutant due to its long resistance

to degradation. In Nel, PFAS is directly included in the

production of electrolysers with PEM technology and the

enactment of legislations altering current PFAS regulation

might affect our ability to continue the development of this

type of equipment in its current form.

Summary of climate adaptation risks and opportunities

Our most critical climate related risks and opportunities in

a high emissions scenarios were summarized in the table

below:

CATEGORY RISK AND OPPORTUNITIES 2024

2025-

2030

2030-

2040

Policy and legal

1 Carbon Emission Tax

• • •

2 Carbon Border Tax

• • •

3 Tax credits enacted to producers of hydrogen with low emission

• • •

4 Regulation on hydrogen production and its equipment (e.g. PFAS ban)

• • •

Market risk

5 Renewable Hydrogen certification

• • •

6 Insufficient supply of critical minerals n.i. n.i.

•

Technology risk

Disruption on supply of fresh water can affect market development of

Electrolysers

n.i. n.i.

•

Technology competition (preferred low carbon technology for production

of hydrogen)

• • •

Reputational risk

9 Product incidents related to extreme climate events n.i.

• •

10 Failure to reduce CO2 emissions n.i. n.i.

•

Physical climate

transition risks

11 Flooding affecting production facilities n.i. n.i.

•

12 Water scarcity on strategic markets n.i. n.i.

•

13 Product Safety incidents arising from climate acute events n.i.

• •

LEGEND FOR FINDINGS:

RISK OPPORTUNITY

RISK

CLASSIFICATION

• •

High

• •

Medium

• •

Low

n.i. n.i. No impact

Nel ASA

Annual report 2023

WATER

Water consumption

Nel consumes low amounts of water for cooling, production,

and testing of equipment. Nel ensures an appropriate

discharge of the water consumed in the operation with its

Wastewater Treatment Plants installed in Herøya, Norway and

Wallingford, United States. The QHSE department performs

periodical water sampling and laboratorial sampling to

control the pollutants level on the discharged water. Nel’s

QHSE team works on the assumption of best available

technique to ensure the correct monitoring and treatment of

pollutants.

The Hydrogen Fueling Station division does not directly

consume water in the manufacturing of equipment.

HERØYA WALLINGFORD TOTAL TARGET

2023 2023 2023 2024

Water withdrawal (m³) 9,056 3,171 12,227 -

Water discharge (m³) 7,732 655 8,387 -

Nickel Particles in the water (µg/m3) 5.4 * n.a.** <6

*Below 0.01 Nickel Particles per µg/m3

**Not applicable

Water consumption and withdrawal in water-stress areas

Based on the atomic properties of water, 1 kg of hydrogen

requires 8.92 litres of water. Comparing water consumption

for electrolysis with other energy processes, the water

footprint of certain fossil-based pathways exceeds that of

hydrogen. Crude oil recovery and diesel refining uses around

40% more water than the production of renewable hydrogen

per unit of energy.

From a circular economy perspective,

hydrogen technology does not consume water as water

is produced, in its purest form, at the end of the cycle. It

also avoids water contamination associated with various

fossil-fuel processes. Water is also produced as a biproduct

when hydrogen is used in mobility applications. However,

distribution of water could offer a challenge.

Currently, electrolyser technology uses highly purified water.

This does not mean, however, additional strain on freshwater

systems. The water needed for large-scale electrolysis, can

be provided by any water resource (sea water, wastewater,

etc.) once demineralised via reverse osmosis (RO) plants.

Continuous development of adjoint water desalination

plants, alternative modes of low-grade and saline surface

water electrolysis

, and water provision via wastewater

treatment plants provide evidence of their feasibility and cost-

effectiveness.

Water stress can also be minimised by adding desalination

3 (PDF) Development of a Life Cycle Inventory of Water Consumption Associated with the

Production of Transportation Fuels (researchgate.net)

4 Quantification of freshwater consumption and scarcity footprints of hydrogen from water

electrolysis: A methodology framework - ScienceDirect

5 Electrolysis of low-grade and saline surface water | Nature Energy

plants at the electrolyser site. This investment acts as a

precautionary instrument to shield local population from

water resource deprivation. In fact, should the need exist,

water desalination plants for electrolysis could be planned

to produce water not just for the production of hydrogen,

but also for local use as a freshwater resource for human

consumption and/or irrigation, thus creating multiple benefits

to the local area.

GREENHOUSE GAS (“GHG”) EMISSIONS

Nel strives to be transparent with regards to our impact

on the environment and continue to improve the internal

process for collecting data that provides an overview of our

emissions and their origins. Data collection for accounting

of CO2 emissions occurs at report from supplier, in-house

conversion of CO2 emissions based on metrics of product

consumption or conversion of nominal expense into average

CO2 emissions. Nel’s accounting policies for GHG inventory is

inspired by the Greenhouse Gas protocol, with full compliance

to be achieved in the annual report of 2024.

FUELING PEM AWE CORPORATE

Scope 1 Yes Yes Yes Yes

Scope 2 Yes Yes Yes Yes

Scope 3 Yes Yes Yes Yes

Business travel Yes In progress Ye s Yes

Capital goods Yes Yes Yes Yes

Waste Yes Yes Yes Immaterial

Purchased goods and services** Yes Yes Yes No reportable emission

Transportation and distribution Yes Yes Yes Immaterial

Use of sold products Yes Yes Yes Immaterial

*yes = data points have been included in the reported scope 1-3 emissions, while blank means it has not been included. All other scope 3 emissions categories not listed have not been

included in the scope 1-3 GHG inventory reported in 2023. While there will be emissions in all categories, Nel is a global company with global distribution and therefore estimates that

transportation (inbound and outbound) is the main data point missing for complete data.

**Purchased goods and services includes the emissions from significant raw materials.

Greenhouse Gas accounting - consolidation

method

The Greenhouse Gas emissions disclosed in this report

were consolidated using the control approach. Under the

control approach, a company accounts for 100% of the GHG

emissions from operations over which it has control.

Subsidiaries with less than 50 employees have not been

consolidated as aggregated emissions from these legal

entities are estimated to have immaterial contribution to the

consolidated GHG inventory (estimated at lower than 1% of

total inventory of CO2 emissions). Nel estimates its total CO2

emissions in the reporting period as follows:

Greenhouse Gas emissions in ktCO2e 31 December 2023

Scope 1 0.4

Scope 2 1.2

Scope 3 30.3

Total 32.0

Scope 1

The emissions within scope 1 arise from the fueling of cars

and forklifts, and facility heating.

Scope 2

The majority of emissions from scope 2 of 1 246 t CO2e is the

use of electricity from grid connected production in company

owned or leased locations. The electrolyser division consumes

energy while performing tests on our products before they

are shipped to our customers. Nel’s absolute emissions in

the next years will correlate with the activity level achieved.

An increase will occur if Nel continue to increase production

capacity. Nel’s goal is to decrease the CO2 footprint per

product produced. We will achieve this by improving the

stability and scalability of our production processes. In

addition, Nel pledges to become fully electrified and use

renewable energy to the extent available.

The measurement of the reported greenhouse gases is the

energy consumption multiplied with emissions factor for the

relevant connected grid. Nel’s manufacturing facilities are

connected to the grid in Norway, Denmark and Connecticut,

United States. Each grid has its own emission factor based

on location- and marked based emissions. These emissions

factors are updated regularly by the source provider.

Norway

The manufacturing facility in Herøya is connected to the grid

in price area NO1. Norway’s energy production mix comprise

of over 90% of hydro power, however Norway is connected

to the European continent by power cables resulting in a

lower percentage of renewable energy in the mix. Nel has

decided to not purchase green certificates for its electricity,

and has therefore used a ”Nordic Mix” to measure its CO2

emissions from energy consumption in Norway. The emission

factor for the energy use in Norway is measured at 0.0062

kgCO2/kWh.

Denmark

The electricity usage in Herning, Denmark, consist of mainly

heating and input to the production facility. Both location-

and market-based emissions are accounted for. The emission

factor for the energy use in Denmark is measured at 0.124

kgCO2/kWh.

Nel ASA

Annual report 2023

Connecticut, United States

The facility in Wallingford, Connecticut, has an energy mix

that consists of primarily gas, nuclear, hydro, wind and

biomass. In total, about 20% of the fuel mix is renewable. The

emission factor for the energy use in Wallingford is measured

at 0.24671 kgCO2/kWh.

0,4

0,1

0,4

1,7

1,2

0,1

7,3

15,5

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

18,0

2021 2022 2023

TOTAL GHG EMISSIONS, EXCLUDING

EMISSIONS FROM CAPEX (IN TCO2E)

Scope 3 wi thoutCO2 emissionsfromCapit al Goods(Capex)

Scope 2

Scope 1

Scope 3

Purchased goods

A significant portion of Nel’s greenhouse gas inventory stems

from purchased goods, such as metals, steel, nickel, platinum

and iridium.

Transportation

Nel engages freight forwarders to arrange transportation

of goods. Nel prioritizes rail and shipping transportation

types due to lower CO2 emissions. Currently, Nel has limited

intercontinental shipping of goods given that most goods

were transported inside the European Union and the United

States.

Capital goods

Nel accounts for the CO2 emissions from factory expansion

by applying an average emission factor for each nominal

capital expenditure. The CO2 conversion in Wallingford,

United States was measured at 0.245 kgCO2/USD and 0.028

kgCO2/NOK in Norway and Denmark.

Nel expects to have seasonal peaks of emissions from

acquisition or construction of capital goods as a result of the

workings for expansion of production capacity to meet the

forecast for market demand before 2030.

Use of sold products

Energy consumption

The fueling stations, alkaline electrolysers and PEM

electrolyser equipment produced by Nel have no emissions

in use when connected to renewable power sources like

wind, solar, or hydro power, either grid-connected or off-

grid. Nel has no control over the renewable energy mix in

its customers production facilities, and this will not be 100%

emission free until there is sufficient energy production from

renewable sources. All customers producing hydrogen from

water electrolysis plan to produce from renewable energy

sources to reduce the carbon footprint from operations. Nel

has in the scope 3 reporting assumed zero emissions from

use of sold products.

GHG intensity

GHG intensity is presented excluding scope 3 as the complete

scope 3 has not yet been finally determined. The GHG

intensity has decreased in 2023 compared to prior years as

a result of increased revenue in the group from particularly

the increased production in Norway. Norway has low GHG

emission, below the group’s average. For GHG intensity, Nel

calculates its turnover as the sum of revenue from customer

contracts and other operating income as applied to its

Income Statements in accordance with IFRS 15.

Environment, Social and Governance report

2,69

1,64

0,95

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2021 2022 2023

GHG intensity

(excluding scope 3)

tCO2e/MNOK turnover

Our products and projects are enablers of the energy

transition in hard-to-abate industries. Nel has not

implemented internal carbon prices in its decision-making

process as everything we do aims to enable successful offtake

of renewable energy for the production of hydrogen.

NET ZERO 2050 - GHG TRAJECTORY

The outlook for scope 1-3 in Nel includes several forward-

looking data points with significant estimation uncertainty and

involves risk of low reliability and/or comparability. Nel does

not provide any guiding on production volume or revenues,

therefore, Nel has not been able to show the detailed absolute

emission trajectory towards net zero. Nel reported that GHG

emissions this year are not significant, however, it is evident

that the renewable hydrogen industry will witness increasing

GHG emissions when going through industrialisation, while

the total absolute annual GHG emissions should be very

limited comparing to conventional technology. Thus, the

emissions avoided is significant, refer section “Climate change

opportunity and emissions avoided” above.

Nel’s ESG policy approved by the Board includes a pledge

to reduce greenhouse gas emissions per produced unit by

25%, 50% and 100% within 2030, 2035 and 2050, respectively,

compared to 2020. Nel will monitor the reduction plan

through improved reporting procedures and data quality for

material scope 1, 2 and 3 emissions. The majority of GHG

emissions in Nel would be categorised as Scope 3 emissions,

where reductions will mainly come from purchased goods

and transportation. An example of significant purchased

good in Nel is steel. The timing of decarbonization of the

steel industry is uncertain but roadmaps already include

likely decarbonization from sustainable amendments in steel

production (hot direct reduced iron, hot briquetted DRI and

blast furnace). It is therefore expected that a certain volume

of this type of steel will be available before 2030. Nel’s GHG

reduction trajectory includes estimates that the volume of

commercialised renewable steel will increase from 2030-2040.

The steel production market is a climate-related opportunity

for Nel. In addition to reductions within purchased goods, Nel

estimate GHG reductions in the transportation industry when

the mobility fleets become more sustainable (electrification,

e-fuels and biofuels). Also in this spectrum, Nel’s GHG reduction

trajectory estimate the majority of these reductions become

visible beyond 2030. Nel also estimates that GHG reductions

per unit will be achieved by increased volumes produced, as

some GHG emissions are not fully variable and correlated to

the production volume. Our net zero commitment does not

forecast the use of carbon offset schemes.

Greenhouse gas emissions per GW capacity

Base year

Stability and scalability

Electrification

Green steel (5%-10%)

Green steel (50%-75%)

Green steel (5%-25%)

Transport (5%-25%)

Transport (75%-100%)

Transport (5%-10%)

2035

2050

2030

Stability and scalability

Electrification

Other emissions

Nel ASA

Annual report 2023

SUSTAINABILITY IN ELECTROLYSER

PRODUCTION

Nel is committed through its company ESG Policy to state-

of-the-art sustainable production facilities for both current

productions, committed expansions and if further scaling

up. In 2024, Nel plans to conclude the factory expansions

of Wallingford, United States and Herøya, Norway. These

capacity expansions were designed with fully automated

manufacturing processes to enable efficient and scalable

production of electrolysers.

The environmental footprint of a product throughout its

lifetime, factoring the hydrogen output and production

costs, is markedly reduced by utilizing hydrogen solutions

compared to traditional energy sources. Electrolysers can

produce hydrogen without release direct GHG emissions.

This does not mean that the production of our applications is

entirely carbon neutral as CO2 is emitted with manufacturing

of equipment and its transportation.

Nel is certified on ISO 9001 and ISO 14001 in the Alkaline

business unit for the scope of Technology R&D, Product

Development, Procurement, Inbound and Outbound

Logistics, Manufacturing, Sales, Delivery Projects, Installation,

Commissioning and Servicing of Atmospheric Alkaline

Hydrogen water electrolysers and Hydrogen Plant system

solutions.

Nel is certified on ISO 9001 and ISO 14001 in the PEM

business unit for the scope of Design, Manufacture and

Servicing of Proton Exchange Membrane Electrolysis Systems.

RESILIENCE IN ELECTROLYSER MANUFACTURING

FACILITIES

In 2023, Nel announced Plymouth Charter Township,

a suburb of Detroit, Michigan as the selected site for a

factory of Alkaline and PEM electrolysers with up to 4GW in

production capacity. The government of Michigan secured to

Nel more than USD 50 million in tax credits and cash support,

with ongoing negotiations to expand the government grants

to up to USD 125 million. The construction of the production

facility in Michigan is in pre-FEED phase and requires

final investment decision. Nel reaffirms its commitment to

build robust manufacturing facilities with fully automatized

production concept, located close to highly skilled technology

personnel, with capacity aligned to the market, and close to

the customers allow for shorter transportation.

In addition, the workings for capacity expansion in Herøya,

Norway to 1 GW and Wallingford, United States to 500 MW

have been following the planned schedule with conclusion

expected in 2024. These expansions are important steps in

preparation for large-order intakes and represent the first

industrial-scale production of the most efficient electrolysers

on the market, at a significantly lower production cost.

Sustainability in electrolyser production metrics and future targets:

KPI 2022 2023

2025

TARGET

2030

TARGET

Electrolyser production, Alkaline

Stack yield >90% 99% >99% >99%

Overall equipment effectiveness 70% 67% >80% >85%

Electrolyser production, PEM

Stack yield 95% 94% >98% >98%

Overall equipment effectiveness 85% 91% >90% >90%

Nel ASA

Annual report 2023

Social

ORGANISATION AND OCCUPATIONAL

HEALTH AND SAFETY

At Nel, Organisation and Occupational Health and Safety is a

top priority. Nel focus on safety is integrated in the company-

wide culture program to foster a zero-tolerance attitude

towards Quality, Health, Safety and Environment (“QHSE”)

incidents. In 2023, the human resources and operations

departments implemented safety trainings to all employees

and an employee communication program focused on safety

risk awareness and basic safety knowledge of hydrogen risks.

The training sections have been mandatorily attended by all

employees in Nel and covered from basic safety principles to

operational knowledge of hydrogen storage and leakage risks.

The safety communication program included presentations

of safety awareness moments on townhall meetings, safety

workshops at operational facilities, implementation of

reminders for safety awareness on the employee’s workstation,

and thorough review of reported incidents for implementation

of preventive actions. In addition, Nel included targets for

personnel safety in the Short-Term Incentive scheme of

employees qualifiable to a financial bonus in 2024. The KPIs

allocated to the Short-Term Incentive scheme of COO and CEO

are expected to be cascaded down to the workforce involved

with prevention of incidents.

Nel production facilities have dedicated QHSE resources

reporting to the VP of Operations about safety incidents,

preventive safety actions and implemented responses to

incidents occurred in accordance with Nel’s procedure

for incident handling. Nel requires that all employees and

contractors in the production sites receive appropriate safety

training and equipment. In addition, Nel imposes restrict access

to hazardous areas such as areas with handling of harmful

chemicals.

Nel’s Alkaline business unit is ISO 45001 certified within the

scope of Technology R&D, Product Development, Procurement,

Inbound and Outbound Logistics, Manufacturing, Sales,

Delivery Projects, Installation, Commissioning and Servicing

of Atmospheric Alkaline Hydrogen water electrolysers and

Hydrogen Plant system solutions.

Nel’s PEM business unit is ISO 45001 within the scope of

Design, Manufacture and Servicing of Proton Exchange

Membrane Electrolysis Systems.

Nel recognises that ensuring i) workplace, ii) stakeholder

and iii) product safety in a diligent manner is a license to

operate within the Hydrogen industry.

The above three categories will have the following focus

areas:

1. Forster the “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 oganization

4. Training and evaluation of the organization and system

effectiveness

Organisation and Occupational Health and Safety targets for

2024:

• Reduction of LTIR rate to 5.2

• Reduction of TRIR rate to 10.2

• 100% completion of obligatory safety training

• Four Safety Observation Tours to be completed per

production facility

• Average 3 reports of near misses improvements or

hazardous reported per employee (linked to Short Term

Incentive bonus for all employees - more details can be

found in Nel’s remuneration report on Nel’s website at its

governance page)

Key Performance Indicators related to Health and Safety

KEY PERFORMANCE INDICATORS UNIT OF MEASUREMENT 31 DECEMBER 2023 KPI TARGET FOR 2024

Percentage of employees covered by Nel's

health and safe systems

% 100% 100%

Total recordable injuries rate (TRIR) TRI per 1,000,000 hours worked 19.7 <10.2

Lost time injury rate (LTIR) LTI per 1,000,000 hours worked 11.2 <5.2

H1 – injury-related absence from work Recordable events in the last 12 months 12 -

H2 – recordable injury events Recordable events in the last 12 months 21 -

Fatality rate Recordable events in the last 12 months None None

Environment, Social and Governance report

PRODUCT SAFETY

Safety is the number one priority in Nel. Management and all

employees are strongly committed to the company’s promise

of delivering fail-safe products to the customers. The product

safety risks include the risk range from major accidents to

near misses related to malfunctions in our products and/

or insufficient service during operations and maintenance.

Each division and legal entity in Nel are responsible for the

development, implementation and maintenance of risk

management framework and system within each discipline.

In our development of products, Nel never compromises on

safety requirements, codes and standards.

Nel’s product safety program is designed at product and

system levels following a Failure Mode, Effects & Criticality

Analysis (“FMECA”) approach for risk assessment at product

level, and a Hazard and Operability Analysis (“HAZOP”) at

system level. The QHSE departments of each business unit

are responsible for the product safety program, supported

by the engineering department for correction of product

development. The owners of product safety programs (QHSE

directors) are the primary resources involved to investigate

product defects and implement corrective measures where

applicable reporting to the VP of Operations. In addition,

a QHSE committee that works across the organizations

and consists of participants from each legal entity, as well

as the corporate function, ensures collaborative learning

and implementation of best practices to prevent incident.

Where applicable, safety requirements include third-party

product certification for design and manufacturing. Third-

party experts are involved as subject matter experts when

applicable. External consultants are involved on regular tests for

emergency response. In case applicable, the Board of Directors

review the remediation plan for product safety incidents

involving leakage of hydrogen with explosions or fatalities and/

or material cost impact.

In 2023, our employees participated in product safety trainings

for basic knowledge of hydrogen risks, common pitfalls on

handling and storage of hydrogen, and best practice to

avoid incidents in the production and storage of hydrogen.

As mentioned in the section “Sustainability in Electrolyser

Production”, the R&D department works on product designs

and safety applications to reduce the product safety risks

such as explosion or hydrogen leakage. During 2024, Nel

will continue the collaboration between R&D and QHSE

departments to increase the product safety program with

implementation of even more rigorous methodologies, e.g., a

review system where specific areas will be assessed to identify

areas of improvements.

Nel is certified at product level with ISO 22734:2019 -

hydrogen generators using water electrolysis for PEM

electrolysers of M-Series.

Product safety targets for 2024:

• 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

Upholding a responsible and efficient supply chain is pivotal

to our business resilience, sustainability agenda and goals.

Nel operates in a complex global footprint, ensuring business

resilience and at same time meeting the highest standards of

business integrity and human rights pose challenges to our

value chain and business partners.

During the reporting period, approximately NOK 1.9 billion

were spent across 40 countries in 5 continents. Despite the

complex global presence, Nel concentrates its supply chain

near to its production facilities or within the European Union

where business governance and human rights practices are

well developed and widely implemented. The continued

effort for transparency and resilience is done in conjunction

with reinforcing ties with existing partners. Suppliers that

comply to human rights frameworks are fundamental to

cultivate a resilient long-term relationship.

In 2024, our supply chain department will continue the

preparedness working anticipating the expected business

growth in the coming years.

Our approach

Nel expects that any business relationship with internal or

external partners are conducted with the highest standards

Nel ASA

Annual report 2023

of business integrity. The pre-qualification of vendors is

performed with an integrity due diligence (“IDD”) check and

the review of a self-assessment prepared by our vendors.

Nel also thrives for clear expectations with our business

partners. Transparency is an important step when setting the

minimal compliance requirements expected in our business

relationship. Nel’s supply chain has in place an awareness

program to distribute Nel’s code of conduct and Nel’s human

right policy to business partners, also having these policies

available on our website. In addition, a supplier quality,

health and safety & environmental manual is distributed with

guidance on these areas to applicable vendors.

In 2023, a Supplier Declaration formalizing the minimal

requirements for human rights, business integrity, compliance

with laws and regulations and health and safety have been

requested from vendors with substantial business activities

during the reporting period. The supplier declaration

is expected to cascade to business partners a formal

requirement of lowest acceptable level of compliance in

critical business areas.

Ongoing monitoring

Our Supplier Audit Program inspects business relationship

established with strategic suppliers on critical aspects of

businesses such as human rights, business integrity, health

and safety, quality management system, and operational

related matters. The Supplier Audit Program is managed with

a risk-based approach of which vendors have been classified

in a categorization matrix that evaluates Nel’s business

dependency to the supplier, the required effort to replace a

vendor and any eventual compliance risks as a consequence

of breaches to laws and regulations or non-compliance with

human right frameworks.

In 2023, Nel’s Supply Chain department audited 23 suppliers

out of 215 suppliers classified with strategic importance

to Nel’s value chain. The Supplier Audit Program covered

16.8% of the expenditure incurred 2023. The supply chain

department aims to increase the target to 30 supply audits of

strategic suppliers in 2024.

TRANSPARENCY ACT

General Supply Chain Risk Assessment of Nel’s Supply Chain

According to the Norwegian Transparency Act which entered

into force July 1st, 2022, Nel has a duty to carry out a

due diligence assessments related to fundamental human

rights and decent working conditions in its own businesses

and supply chains. In response, Nel has implemented in

2022 a thorough due diligence assessment implementing

a prequalification procedure before entering a contractual

relationship with new suppliers. This prequalification

procedure comes in addition to an integrity due diligence

(“IDD”) check Nel conducts on all suppliers (and all other

parties it contracts with). The IDD procedure is mandatory in

Nel for any contractual relationship and red flags are handled

in collaboration between supply chain and compliance

departments. In severe cases, the procurement process may

be stopped, and the supplier disqualified from being part of

Nel’s supply chain. If the procurement process is not stopped

as a result of the finding, adequate measure will be put in

place to prevent, monitor and/or mitigate the risk.

In 2023, a Supplier Declaration has been developed and

implemented in the procurement process. The Supplier

Declaration formalizes the minimum requirements we

expect and demand all suppliers in our value chain to meet,

including respect for fundamental human rights. The Supplier

Declaration establishes specific contractual obligations

between Nel and the supplier within the area of compliance.

These obligations come in addition to obligations in Nel’s

supply chain contracts.

General Supply Chain Risk Assessment of Nel’s Supply

Chain

The supply chain department manages the Supply Chain

Due Diligence procedure with support from the Compliance

department. The supply chain department acts under the CEO

mandate given to the CPO (“Chief Project Officer”).

Nel has adopted a risk-based approach when it performs the

due diligence of its value chain as required by the Transparency

Act. The supply chain department performs a risk assessment

to evaluate our business dependency on the suppliers and

our ability to find suitable alternative suppliers. After initial

due diligence of suppliers, they are classified as non-critical,

bottleneck, leverage or strategic. When a supplier with high risk

of non-compliance is identified, the Supply Chain department

performs a thorough supply audit program including steps to

assess Corporate Social Responsibility. A calibration process

will be agreed for suppliers with high-risk findings, however no

high-risk finding have been identified in 2023.

Environment, Social and Governance report

Integrity Due Diligence

Check

High risk findings

Low risk findings only

Yes

High risk finding

Low risk findings

Findings Assessement Calibration process

Strategic Supplier? Sampled in the Supplier

Audit Program

No further action No further action

The due diligence is performed independently by each business unit. We have assessed country risk in the supply chain of each

business unit and overall, across all business units and the result of this assessment is shown in the diagrams below. For the

purpose of the diagrams, we allocated the supplier expenditure by country of incorporation of the vendor and classified the

total expenditure per country in accordance with the Corruption Perception Index (“CPI”) (diagrams are based on supply chain

information from 2023):

Alkaline electrolysers:

• 75-100 88%

• 50-75 11%

• 25-50 1%

• 0-25 0%

PEM electrolysers:

• 75-100 99.6%

• 50-75 0.1%

• 25-50 0.3%

• 0-25 0%

Fueling:

• 75-100 90%

• 50-75 9.99%

• 25-50 0.01%

• 0-25 0%

Overall (across all three business units):

• 75-100 92.2%

• 50-75 7.37%

• 25-50 0.43%

• 0-25 0%

11 %

1 %

Supplier Expenditure – Alkaline Division

88 %

Top 25th percentile

25th-50th percentile

50th-75th percentile

75th-100th percentile

Supplier Expenditure - Proton Membrane Division

Top 25th percentile

25th-50th percentile

50th-75th percentile

75th-100th percentile

99.6%

0.1%

0.3%

Supplier Expenditure – Fueling Division

90 %

10 %

Top 25th percentile

25th-50th percentile

50th-75th percentile

75th-100th percentile

7 %

0.44%

Supply Chain Overall

92 %

Top 25th percentile

25th-50th percentile

50th-75th percentile

75th-100th percentile

Nel ASA

Annual report 2023

The figures above show that overall Nel predominantly

has suppliers from low-risk jurisdictions. 99.57% of Nel’s

suppliers are within the top two intervals (92.2% and 7.37%

respectively), and there are no suppliers in the bottom

interval. Based on an overall assessment of country risk,

risk of violations of fundamental human rights and decent

working conditions in Nel’s Supply chain is considered to be

low.

Top 5 country expenditure in 2023:

COUNTRY OF

SUPPLIERS

INCORPORATION %

CORRUPTION

PERCEPTION

INDEX (“CPI”)

HUMAN DE-

VELOPMENT

INDEX (“HDI”)

Norway 26% 84

Sporadic viola-

tion findings

United States 23% 69

Systematic vio-

lation findings

Sweden 17% 83

Sporadic viola-

tion findings

Denmark 11% 90

Sporadic viola-

tion findings

Germany 11% 79

Sporadic viola-

tion findings

Top 5 representation 88% - -

Labour rights

Some of Nel’s strategic suppliers operate in countries

classified with systematic violations or regular violations of

labour rights in accordance with the International Trade

Union Confederation (“ITUC”). Employees in our value chain

working in these specific countries have a higher risk to

be employed in companies that do not comply with the

minimal requirements required in Nel’s Human Rights policy

for employment security and reasonable working hours. Nel

monitors its value chain with site visits to strategic suppliers

and educate its value chain with policies and supplier

declaration available on Nel’s website.

Conflict minerals

Nel’s Alkaline electrolysers contain steel and nickel, the PEM

electrolyser contain steel, aluminium, nickel, copper, platinum,

titanium and iridium, and the Fueling stations contain steel

and cooper. Although none of these minerals are on the

European Union list of conflict minerals, Nel understands

that the value chain of mineral and steel suppliers has

particular complexity due to a complex cross border process

of production and transportation of minerals to Europe and

United States. These suppliers are continuously monitored by

our Integrity Due Diligence checks.

Overall assessment

No case of violation to Labour Rights, Code of Conduct or

Nel’s Human Rights policy have been identified in 2023.

General Supply Chain Risk assessment for own

operations

Nel operates in the United States, Denmark, and Norway.

Norway and Denmark have historically been assessed with

lowest risk for best practice resulting in inherent low risk

for Human Rights or Corruption. The United States has

also been assessed at low risk, placed in the 24th position

of Corruption Perception Index (“CPI”) and 20th position in

the HDI (“Human Development Index”). During our review

of internal risks that could affect Nel business and its value

chain, we have identified opportunities of improvement

for reduction of frequency of safety incidents at workplace

and implementation of a policy for diversity, equality and

inclusion.

Safety at workplace

Nel’s operations have an inherent health and safety risk of

safety incidents mainly caused by handling of chemicals,

weight handling or working at height. Instances of safety

incidents are managed by the safety committee and local

QHSE departments and tracked in the LTIF (Lost-time

Incidents Frequency) and TRIF (Total Recordable Injuries

Frequency). Safety is our number one priority, and this is

reflected in our culture, training programs, and monitored by

the Nel’s safety program. The safety responses implemented

to address the risks and opportunities related to safety at

workplace was described in the section “Organisation and

Occupational Health and Safety”.

Diversity, equality and inclusion

Nel has a diverse workforce strengthened by the knowledge

and experience from different working backgrounds, cultures,

beliefs, and races. Nel acknowledges the importance of a

culture that foster Diversity and Integrity providing equal

opportunity regardless of gender, culture background or race.

In response, Nel publicly commits in its job advertisements

to be an equal opportunity employer. The Human Resources

department is involved on the hiring process advising hiring

managers and ensuring that candidates are equally treated

in all steps of the recruitment process. In 2024, Nel will

implement a global diversity, equality and inclusion policy in

accordance with the conventions of the International Labour

Organization consolidating the minimal procedures expected

from the local human resource departments.

Environment, Social and Governance report

Duty to provide information

Nel has available a external whistleblowing channel and contact details in the Ethics and Compliance section of our website

where concerns related to our value chain can be submitted anonymously for investigation. No report was received in 2023.

Key performance indicators for responsible supply chain:

KEY PERFORMANCE INDICATOR UNIT OF MEASUREMENT 31 DECEMBER 2023 KPI TARGET FOR 2024

Supplier audits concluded within the fiscal

year

Supplier audits completed during

the reporting period

23 30

Total strategic suppliers Number of strategic suppliers 215 -

Total expenditure covered by supplier audits % 16% -

Site visits during supplier audit program Reportable event 23 -

Number of suppliers not renewed due to

breaches to compliance policy

Number of contracts not renewed

due to breaches of compliance

None -

Integrity Due Diligences ("IDD") performed in

suppliers with active contracts

IDD performed 99.8%

100% of active suppliers

shall have IDDs per-

formed in 2024.

Total suppliers with active contracts

Suppliers with active expenditure

during 2023 1,430 -

Cyber Security

Cyber security threats have continuously increased in scale

and sophistication in recent years. Nel’s global footprint

exposes our business to cyber-attacks from a variety of cyber

threat actors including nation states, criminals, terrorists,

hacktivists, and insiders.

Nel’s 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. A cyber breach could result in private or

confidential data leakage, loss of intellectual property and

temporarily disruption or safety incidents on the operation.

All of Nel’s critical cloud suppliers have the required

certifications and have been selected after a thorough supplier

due diligence process. There were no reported breaches of

customers’ privacy in 2023, nor were there any reported cases

of identified leaks, thefts, or loss of customer data. In 2024,

Nel will implement policies and procedures aligned to the

requirements of NIST SP 800-53 for selected products.

Risk management

Nel has a centralized IT department that manages

Cyber Security risks and ensure a reliable and resilient IT

infrastructure across the group. In 2023, Nel onboarded

a Head of Global IT reporting to the group CFO with the

mandate to consolidate the IT policies in the group. A global

IT department will establish efficient responses to incidents,

strength controls and procedures for management of data

security and implement IT policies based on ISO 27001.

Among the enhanced security measures implemented in

2023, Nel is implementing a global policy for IT Incident

Response and Business Continuity. During 2024, a global team

of IT security experts will be onboarded including a security

architect and an OT specialist, to strengthen the posture

and supporting best practices for Cyber Security, including

implementation of Cyber Security KPIs.

Culture and training

Nel continuously invest on cybersecurity training and

awareness to employees with an annual wheel of cybersecurity

training and vulnerability checks through phishing

campaigns. Nel fosters a culture of cybersecurity awareness

in communication campaigns in townhall meetings and IT

security moments shared on the intranet. Nel considers

prevention as the most efficient approach.

Directors & officers insurance

(D&O)

Based on requirements brought by the Norwegian Accounting

Act section 3-3a, information about our D&O insurance is

provided. Nel has entered into a D&O liability insurance. This

insurance is meant to prevent employees and members of

the Board at Nel from being held personally responsible for

decisions made by the company. The insurance applies to all

material decisions made by employees on behalf of Nel.

Nel ASA

Annual report 2023

Human Capital

The workforce is the most valuable resource in Nel. The highly

skilled characteristic of our workforce makes employment

retention and well-being at workplace critical dependencies

to our operations. On the other hand, large opportunities are

seen to attract high skilled personnel to renewable hydrogen

industry from industries operating in fossil fuel sectors

during the climate transition. The global human resource

department is committed with the highest HR standards for

talent attraction and retention, and well-being at workplace.

During 2023, our talent retention was tested in a

competitive labour market in the United States and Europe,

recording the lowest employment rates in the last two

decade. The reduction in the turnover rate from 20% to

13.7% demonstrate positive impact from our HR policies

implemented in recent years. For 2024, Nel’s HR aims

to implement a feedback calibration process ensuring

that employees receive timely feedback during the year,

therefore allowing employee development before the annual

performance appraisal. All employees in Nel participated of

the appraisal process in 2023.

In addition, the employee development program will be

strengthened with the design of a competence mapping of

Nel’s workforce and training on leadership capabilities.

AVERAGE TRAINING HOUR, PER EMPLOYEE 2023

Male 07:20

Female 07:20

In Nel, we prioritize an active two-way dialogue with our

workforce. The human resource department of each facility

engage in active feedback with the employee representatives

and organization classes. The proactive engagement allows

Nel to better understand the concerns of its workforce and

to negotiate balanced resolutions to impacts, risks and

opportunities affecting employees. Nel’s leadership have

open communication with employees through several

mechanisms, including town-hall meetings with at least

quarterly occurrence. Employees are also encouraged to

anonymously report unmanaged concerns in one of the

grievance mechanisms available in Nel (whistleblowing

channel, ethics hotline, direct report to HR managers or

direct report to line manager). The grievance mechanisms

are promoted on Nel’s intranet, at workspace, commented

on mandatory trainings, and townhall meetings. The legal

and compliance department addresses the reports received

in the whistleblowing channel or ethics hotline, with summary

of cases quarterly reported to the Board Audit, Risk and

Sustainability Committee (“BARSC”). All whistle-blowers are

protected against retaliation under Nel’s Ethics Hotline policy.

Nel is an equal opportunity employer and acknowledges the

relevance of integrate and represent its diverse workforce. In

all job advertised, Nel publicly states its commitment to be

an equal employer without discriminate employees due to

racial and ethnic origin, colour, sex, sexual orientation, gender

identity, disability, age, religion, political opinion, national

extraction or social origin, or other forms of discrimination

covered by Union regulation and national law. In 2024,

Nel plans to implement a policy for Diversity, equality and

inclusion in compliance with the conventions of International

Labour Organization.

Human Resources targets for 2024:

• To implement a global policy for Diversity, equality and

inclusion

• To implement a global employee onboarding process

• To implement engagement index survey for employees to

assess the workplace

WELL-BEING AT WORK

In 2023, Nel has continued the development of its NBS

(“Nel Business Systems”) aiming to unify the employees in

different legal entities and operations into a single common

culture behaviour. The one Nel culture will promote

efficiency gains and improved collaboration between

the business divisions, resulting in a more resilient and

knowledgeable workforce. For 2024, Nel will implement

its global onboarding program where new hires will be

introduced to Nel Business Systems (“NBS”), company

strategy and specific challenges and characteristics of each

business division. The onboarding program is expected to

provide easier integration of new hires promoting better

adaptability to our workplace. In addition, an employee

survey scoring employee engagement and satisfaction with

workplace will be implemented to involve employees in the

assessment of our workplace.

WORKING HOUR POLICY

Nel strives to ensure that employees do not exceed

reasonable working hours to provide a balance between

work and personal life. All managers in Nel are responsible

for monitoring the working hours of their direct reports,

making sure these are within acceptable limits and complying

with statutory rights for holiday, parental leave, or any

other employee right for work-absence. In addition, Nel has

in-place a working hours policy describing the statutory

rights for employees, the policy in place for shift work,

overtime policy and requirements for passive service in case

of emergency issues. Although Nel’s workforce is placed in

countries with strong labour unions and statutory labour laws,

Nel has the ambition to increase steering on the working

hours in the coming years with implementation of a working

hours systems for improved reporting of work shifts.

Corporate governance

United States 45 147 192 23.4% 21.0%

Denmark 32 147 179 17.9% 17.0%

Others 3 23 26 11.5% 12.0%

Total 136 526 662* 20.5% 12.0%

Permanent employees: Employees under work contracts that are renewed before a notice of termination.

Temporary employees: Employees with fixed-term work contracts.

*Employees that defines themselves as non-binary or undefined are excluded due to privacy concerns.

Employees are also encouraged to access the employee

handbook on Nel’s intranet containing a detailed description

of internal human resource policies and legislation guidelines

regarding employee benefits, expected working hours, labour

statutory rights and grievance mechanisms.

TALENT DEVELOPMENT AND RETENTION

PROGRAMS

Throughout 2023 Nel has onboarded approximately 215 new

employees. Nel’s Human Resource strategy is anchored on

talent attraction and retention. Among the actions for talent

attraction, Nel has implemented partnerships with well-known

universities, attended career fairs and events in relevant

institutions targeting a higher outreach of apprentices. In

2023, Nel has implemented a formal internship program

with a structured learning experience program, including the

allocation of a dedicated mentor with relevant expertise on

the subject covered during the internship.

For talent retention, Nel fully implemented a common HR-

system in 2022, optimising the HR processes and allowing

increased learning and comparison of results. In 2023,

the common HR-system has supported the performance

evaluation process, where targets were cascaded from the

department team-leader to its team members. Employees

were also encouraged by team leaders to contribute with

the definition of some targets describing areas of self-

development and career goals. The performance evaluation

program requires interim feedback ensuring both talent

development and corrective actions in appropriate time.

In Nel, managers have the mandate to monitor the needs

for on-the-job training, knowledge adoption and further

competence development needs through the new appraisal

and goals setting process. The purpose is to ensure that

development activities help employees in their current and/or

future role. Based on identified needs, some employees have

been assigned to specific external learning sessions.

In addition, the Human Resource department has delivered

behavioural trainings with dilemma situations to further

develop managers in their daily challenges to develop and

steer their team members.

Absolute number and rate of employment

Permanent and temporary employees, by region and gender

PERMANENT EMPLOYEES,

BY REGION AND GENDER

FEMALE (%)

FEMALE MALE TOTAL 2023 2022

Norway 56 209 265 21.1% 19.0%

Nel ASA

Annual report 2023

TEMPORARY EMPLOYEES,

BY REGION AND GENDER

FEMALE

(%)

FEMALE MALE TOTAL 2023

Norway 4 5 9 44.4%

United States 0 1 1 0.0%

Denmark 4 6 10 40.0%

Others 0 0 0 0.0%

Total 8 12 20 40.0%

Permanent employees: Employees under work contracts that are renewed before a notice of termination.

Temporary employees: Employees with fixed-term work contracts.

*Employees that defines themselves as non-binary or undefined are excluded due to privacy concerns.

We strive to increase our gender balance across the different

locations, we have a focus on diversity through recruitment

ensuring we offer equal opportunity to all relevant applicants.

Women in executive management is 1, or 11.1%. Women in

the Board of Directors is 3, or 42.9%.

Gender pay gap

MALE-FEMALE PAY GAP PERMANENT TEMPORARY

Norway 15% -142.0%

United States 19% -

Denmark 7% 53.0%

The male-female pay gap is the difference between

average gross hourly earnings of male paid employees and

of female paid employees expressed as a percentage of

average gross hourly earnings of male paid employees. The

high discrepancy on temporary employees is caused by

the small population of temporary employees resulting in

disproportional comparison of salaries of senior and junior

positions.

2023

Pay gap to highest paid individual and the average

remuneration for permanent employees (excluding

highest paid individual) 439%

Nel’s remuneration policy was approved by the General

Meeting 15th of April 2021. Refer to remuneration report 2023

which describes how the policy has been applied during 2023.

Employee turnover and new employee hire

Diversity focus including gender balance is included in our

recruitment and sourcing activities.

TURNOVER RATES PERMANENT TEMPORARY

Employee turnover rate 13.7% 160.0%**

Voluntarily turnover rate 11.3% 126.7%**

** Nel has a small headcount of temporary employees with contract duration shorter than

12 months. The small population and the preference for short term contracts are the main

contributor to the high percentages identified in the report.

Change in employee headcount by gender FEMALE MALE 2023

Total headcount 136 526 662*

Opening count 2023 112 488 600

Rate of change 18% 7% 9%

*Employees that defines themselves as non-binary or undefined are excluded due to privacy concerns.

AGE DISTRIBUTION OF WORKFORCE

PERMANENT EMPLOYEES, AGE GROUP <31 31-49 50+

31.12.2023 109 363 191

01.01.2023 113 314 176

Age group % of change -4% 16% 9%

TEMPORARY EMPLOYEES, AGE GROUP <31 31-49 50+

31.12.2023 12 4 5

Corporate governance

PARENTAL LEAVE

Nel facilitates for all female and male to take out parental leave and assure them to be employed after their leave as it is

important for our employees in terms of work-life balance and well-being.

MALE FEMALE

Entitled to parent leave 33 6

Took parental leave 32 6

Percentage of entitled employees that took parental leave

Returned to work after parental leave ended 32 3

Still employed 12 months after their return from parental leave * *

98% of employees entitled to parental leave took parental leave, one outstanding employee is due to parental leave in 2024.

* It has not been possible to report on “still employed 12 months after their return from parental leave” in 2023 as 12 months

has not passed as of 31 December 2023.

SICK LEAVE

SICK LEAVE COVERAGE PERMANENT TEMPORARY

Sick-leave rate 2.38% 0.18%

Sick-leave days paid out to employees 96% 100%

Coverage of employees 100% 100%

COLLECTIVE BARGAINING AGREEMENTS

2023 2022

Norway 86% 24%

Denmark 32% 34%

USA 0% 0%

Other 0% 0%

Nel operates in countries with strong social development, competitive labour markets and available benefits for social protection

in case of temporary unemployment, sick leave, or illness. Nel holds a group policy to financially support employees in case of

major life incidents including covering for medical disability, occupational disability, or death.

PERMANENT AND TEMPORARY POSITIONS

HEADCOUNT 2023

Permanent 669

Temporary work contracts 21

Non-guaranteed hours 70

Nel ASA

Annual report 2023

Governance

ETHICAL BUSINESS CONDUCT

AND COMPLIANCE

Nel conducts business on all continents and the demand

for Nel’s hydrogen solutions is growing. Through the

expanding portfolio of international projects, Nel has a

significant number of third-party relationships, and frequently

collaborates with other companies operating in the hydrogen

industry. For businesses with a significant international

footprint, a robust culture of compliance is vital to achieve

sustainable value creation and success.

In 2023, the Board of Directors and the executive

management team have continued their work to strengthen

Nel’s compliance system. The Board of Directors approves the

content of the overall compliance program and the individual

compliance policies. The individual procedures are approved

by the CEO. The Board of Directors and the executive

management team are enrolled in the compliance training

program and their training is monitored and followed up in

the same manner as for other employees.

The purpose of the compliance program is to prevent and

mitigate compliance risks by enabling all persons and entities

working for or on behalf of Nel to understand, observe, and

adhere to Nel’s governance framework. All Nel’s activities

must comply with national, regional, and international laws.

Through the Nel Code of Conduct, we stipulate the essential

requirement that all Nel’s activities should be conducted in an

ethical and sustainable manner.

During 2023, the compliance department has collaborated

closely with the supply chain department and continued its

work to adopt and implement the requirements stemming

from the Transparency Act. As part of this effort a Supplier

Declaration form was released and implemented in the fourth

quarter of 2023. The Supplier Declaration formalizes the

minimal requirements for Human Rights, Business Integrity,

Compliance with Laws and Regulations and Health and Safety

and have been requested from vendors with substantial

business activities during the reporting period. The Supplier

Declaration is expected to cascade to business partners a

formal requirement of lowest acceptable level of compliance

in critical business areas.

According to Nel’s Third-Party Management and Integrity

Due Diligence Procedure (“Third Party Procedure”) all third

parties Nel does business with shall be subject to an integrity

due diligence (“IDD”). Nel has conducted an audit to ascertain

the organisations compliance with the Third-Party Procedure

in 2023. The result of the audit shows that overall, across all

divisions and at the corporate level, the Third-Party Procedure

is followed in 99.8% of dealings with third parties. Nel will

continue to focus on this throughout 2024.

Training of employees is crucial for an effective compliance

program, and in Nel we conduct our compliance training in

accordance with an Annual Compliance Wheel. The Annual

Compliance Wheel provides a yearly compliance training

program for the BOD and all employees, and the number of

courses and type of training will differ depending on the role

the employee has in Nel. Compliance e-learning courses are

supplemented by face-to-face training conducted by Group

Legal and Compliance. The compliance training covers topics

such as anti-bribery and corruption, sexual harassment,

economic sanctions, competition law and introduction to data

protection and privacy. All compliance training is mandatory

and closely monitored and a failure to complete compliance

training will result in a reduction in the employee’s variable

compensation. For 2023 compliance with the training

program can be summarized as follows:

• 94% of the employees have completed training in

accordance with the Annual Compliance Wheel. This is an

increase of 1% from 2022.

• 93% of Nel’s executive management and Board of

Directors have completed the training in accordance with

Annual Compliance Wheel. This is an improvement from

2022 where the executive management and the BoD

combined for an 82% completion percentage.

Whistleblowing

The company’s whistleblowing channel – the Nel Ethics

Hotline – has been operational since September 2020. The

whistleblowing channel is operated by a third-party service

provider ensuring full anonymity for the reporter. In addition

to English, the channel is available in Norwegian and Korean

ensuring a low language barrier for reporting a concern.

The whistleblowing channel is open for third parties/external

stakeholders as well as employees of Nel and a link to the

whistleblowing channel is published on Nel’s official website.

The vast majority of reports are received from within the

organisation, however, the fact that we have also received

reports from outside the organization documents that there

is awareness of the whistleblowing channel also with external

stakeholders.

Corporate governance

During 2023 there have been 7 cases reported through the

whistleblower channel. This is significant reduction compared

to 2022 where 15 cases were reported. Nel believes the

reduction in part can be ascribed to specific initiatives in 2023

which were targeted to improve the work environment in

Nel. An example of this is a customized behavioural training

program which was launched during the first quarter of 2023.

The reports received in 2023 can be categorized as follows::

• Human Resources, 4 cases

• Harassment, 1 cases

• Financial, 1 case, and

• Other, 1 case

Of the 7 notifications received in 2023, all have been resolved.

Some of the cases that have involved specific individuals have

resulted in disciplinary sanctions and also dismissals in the

most severe cases.

All reports of concerns received through Nel’s Ethics

Hotline are handled in accordance with Nel’s Ethics Hotline

Procedure and Nel’s Investigation Procedure. According to

the procedures all reports of concern are received by a team

consisting of three people – the ethics hotline team – which

will initiate the investigation of the report. Depending on the

category of the case, subject matter experts will be involved

on a case-by-case basis. All received reports are kept

confidential and investigated in accordance with fundamental

principles of due process. The extent of management

involvement in a specific case will be determined on each

case dependent on a specific risk assessment.

Compliance targets for 2024:

• 100% of relevant Nel employees to have completed

e-learning compliance training in accordance with the

Annual Compliance Wheel.

• 100% of Nel’s executive management team and Board

of Directors to have completed the anti-bribery and

corruption training during 2024.

• Complete and roll out Code of Conduct behavioural

training during first quarter 2024.

Key performance indicators related to Governance:

KEY PERFORMANCE INDICATOR UNIT OF MEASUREMENT 31 DECEMBER

2023

KPI TARGET FOR

2024

Ethical business conduct and compliance

Compliance annual wheel of training:

Compliance training (“Board of Directors and

Management”)

% 93% 100%

Compliance training (“Nel's employees”) % 94% 100%

Total amount spent in fines for damages as a

result of violations regarding social and human

rights factors

NOK 0 0

Expenditure with lobby and donation to political

parties

NOK 0 0

Whistleblower channel

Total number of reported concerns – YTD 7 Not

applicable

Of which related to business ethics and

corruption

Reportable event - per incident

None

Of which related to discrimination Reportable event - per incident

None

Others Reportable event - per incident 1 -

Investigations and inquires initiated by compli-

ance team in the reporting year

Reportable event - per incident 7 -

Cases open at beginning of reporting period Reportable event under investigation

None

Nel ASA

Annual report 2023

KEY PERFORMANCE INDICATOR UNIT OF MEASUREMENT 31 DECEMBER

2023

KPI TARGET FOR

2024

Cases open at end of reporting period Reportable event with investigation concluded None -

Payment practice

Confirmed incidents of corruption or bribery Reportable event - per incident None Not

applicable

Number of contracts terminated due to con-

firmed

Reportable event - per contract None -

Average payment term agreed with suppliers Standard contract term 30-60days -

Board composition

Non-executive board members Board member 7 -

Executive board members Board member None -

Gender diversity (female board members) Female board members (%) 43% -

Corporate governance

INNOVATION AND TECHNOLOGY

FINANCIAL INVESTMENT CONTRIBUTION (NOK million)

FUELING AWE PEM GROUP

2023

Research and maintenance 58 76 76 210

Capitalised technology 35 76 55 166

Total R&D spend (NOK millions) 93 152 131 376

R&D spend in % of annual revenue and other income 27% 17% 24% 21%

2022

Research and maintenance 56 29 44 130

Capitalised technology 27 50 40 118

Total R&D spend (NOK millions) 84 80 85 248

R&D spend in % of annual revenue and other income 34% 23% 21% 25%

At Nel, being “number one by nature” will always be our

strategic ambition, and consistent R&D is necessary to

maintain and develop this position further. The technology

portfolio includes several development programs for both

electrolysers and fueling stations.

Nel has an active IP protection strategy and has more than

100 active patents. Nel’s IPR strategy is managed and further

developed by a Nel IPR committee that works across the

organization and meets bi-weekly.

ELECTROLYSER

The Research and Development (“R&D”) team is the steward

of the product portfolio working to implement an eco-

design and the highest technology and safety standards.

Electrolysers can have increased acceptance in the climate

transition if achieving optimal utilization of physical space,

and reduced complexity on commission and transportation of

equipment. In the Electrolyser segment, Nel announced in the

presentation of third quarter results of 2023 the development

of a pressurized alkaline technology with potential to unlock

improvements to critical indicators of stack cost and efficiency

and simplified design. In the Proton Membrane division, the

partnership with General Motors have been a contributor

to develop a new cell stacks series with improvements on

production efficiency, equipment durability and consequential

reduction of Levelized Cost of Hydrogen (“LCOH”) . The

partnership was designed with a series of seven milestones of

which two of them were achieved in 2023.

FUELING

Nel has seen an increased interest from potential customers

and policymakers on use of hydrogen for fueling of heavy

duties. Renewable hydrogen can enable heavy-duty-vehicles

to conduct long-haul activities with a short fuelling time, and

significantly reduced emissions. During the next years, the

R&D department of our Fueling division will focus on the

development of a heavy-duty concept that will consolidate

the learnings from years of development of fueling stations

for light-duties and an efficient and safe approach for

pressurized heavy-duty vehicles.

In parallel, Nel continues to prioritize developments that will

improve safety and reliability for light-duty vehicles.

Innovation and technology targets for 2024:

• 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 2024.

Nel ASA

Annual report 2023

EU Taxonomy

SUBSTANTIAL CONTRIBUTION TO

CLIMATE MITIGATION

The EU Taxonomy is the cornerstone of EU’s sustainable

finance framework and an important market transparency

tool to channel capital towards climate-friendly investments.

The Norwegian Parliament resolved to include the EU

Taxonomy Regulation in the EEA Agreement on 29 April

2022. The Norwegian government established the regulation

as part of Norwegian law as of 1 January 2023, requires

mandatory reporting for the reporting period of 2023. That

said, Nel conducted a thorough assessment of revenue,

operational expenditure and capital expenditure to identify

the percentage of its operations aligned (contributing) to the

EU Taxonomy goals and complying with the EU Taxonomy

safeguards. For 2023, Nel decided to disclosure its eligibility

to the EU Taxonomy before assurance from third party

specialists.

The EU Taxonomy is organized by economic activities where

revenue, operational expenditure and capital expenditure

are assessed if Taxonomy-aligned, Taxonomy-eligible, or

not eligible. The pivotal criteria to qualify the revenue

stream is to have substantial contribution in at least one

of the six environmental objectives listed in the Taxonomy

without cause significant harm to the criteria not addressed.

Moreover, the Taxonomy has safeguards related to human

rights, ,tax policy, corruption and fair competition.

Nel manufacture electrolysers for hydrogen production and

hydrogen fueling stations for hydrogen distribution, which

both equipment are classified within EU Taxonomy economic

activity 3.2 “Manufacture of equipment for the production

and use of hydrogen”. To achieve the criteria for this activity

type, Nel’s equipment must provide technology where

the hydrogen for the production of which equipment is

manufactured complies with the technical screening criteria¹

resulting in life cycle GHG emissions lower than 3 tCO2e/tH2.

Life-cycle emissions is defined in the second act as well-to-

gate emissions and emissions from transportation type used

for delivery of hydrogen.

Nel’s electrolyser equipment produces hydrogen from

water electrolysis resulting in nearly zero emissions from the

utilization of the equipment and therefore contributing to the

1 Technical screening criteria in hydrogen economic activity 3.10: The life cycle GHG

emissions savings requirement of 73.4 % [resulting in life-cycle GHG emissions lower

than 3 tCO2e/tH2] and of 70% for hydrogen-based synthetic fuels relative to a fossil fuel

comparator of 94g CO2e/MJ in analogy to the approach set out in Article 25(2) of and

Annex V to Directive (EU) 2018/2001 of the European Parliament and of the Council.

substantial lowering of life-cycle emissions to below 3 tCO2e/

tH2. The GHG emissions in the production of hydrogen

will be mostly linked to the type of energy source used as

electricity to operate the hydrogen production plant and

eventual CO2 emitted during transportation of final goods

(e.g., fuel, chemicals, fertilizers) to end-users. Nel’s technology

for electrolysers have nearly no GHG emissions for hydrogen

production and therefore contributes to climate change

adaptation providing equipment that enable hydrogen

production without emit CO2 in the production process.

In addition, Nel provides engineering services in form of

FEED (“Front-End Engineering Design”) and pre-FEED studies

assisting customers in the development of Engineering,

Procurement and Construction (“EPC”) and Balance-of-

Plant activities for a complete renewable hydrogen plant.

Nel provides FEED studies to projects with installation of

Alkaline or PEM electrolysers, or hydrogen fueling stations.

These scopes set the boundaries for consulting projects with

renewable hydrogen production. Nel concludes that its FEED

studies comply with the activity “

9.1. Engineering activities

and related technical consultancy dedicated to adaptation to

climate change

”.

DO NO SIGNIFICANT HARM (“DNSH”)

ANALYSIS

Climate change adaptation

Nel facilities are in industrial parks with lease term expiring in

between 5 to 7 years. Nel does not forecast climate change

risks affecting its operation within this timeframe, making

possible the reallocation of assets and operations to areas

with lower climate risk, or negotiation with building owners

to implement climate security measures in accordance with

most recent climate forecast for the lease term. Facilities

located close to the sea have increased risk of flooding in

case the precipitation pattern suffers substantial increase in

the coming years. For now, the precipitation forecast does not

outcome in major risks of flooding, however, Nel has in place

an emergency policy for incident handling in case of an acute

climate catastrophe.

Nel did not identify any evidence that could cause significant

harm to the climate change adaptation in accordance with

the criteria described in the EU Taxonomy.

Sustainable use and protection of water and marine

resources

Nel has a Wastewater Treatment policy in place aimed

to make the best possible usage of water resources and

ensuring that its Wastewater Treatment Plants manage water

discharge within unharmful level of contamination in line with

local laws and regulations. Nel’s Wastewater Treatment policy

EU Taxonomy

is mentioned in the criteria for “pollution prevention and

control”. Nel’s QHSE team has a thorough process of water

monitoring in place with periodical testing of water samples

in laboratorial analysis. In addition, Nel does not have

operational facilities in water-stressed regions.

Nel did not identify any evidence that could cause significant

harm to the sustainable use and protection of water and

marine resources in accordance with the criteria described in

the EU Taxonomy.

Transition to a circular economy

Nel’s technologies are developed prioritizing the lifetime of

the equipment, as well as applying state of art techniques

when applying raw materials and resources onto the

manufacturing of equipment. Nel’s electrolyser equipment

has a lifetime estimated between 7-10 years. The estimated

lifetime is factored in Nel’s Research and Development

(“R&D”) process as an important assumption for a net zero

benefit to customers and the environment. Nel is constantly

working to increase the durability and recyclability of its

products.

Nel’s technology department aims to optimize products for

highest performance efficiency with reduced consumption of

raw materials and minerals, and optimal land utilization. Nel’s

products have steel as its primarily raw material which have

an active market for recycling. Nel encourages customers to

return end-of-life equipment for thorough recycling process

and R&D initiatives on the end-of-life cycle supporting a

circular economy.

Nel did not identify any evidence that could cause significant

harm to the transition to a circular economy in accordance

with the criteria described in the EU Taxonomy.

Pollution prevention and control

Nel complies with the environmental laws and regulations

in the countries where its facilities are located, working to

prevent air, noise, and water pollution where it can affect

local communities, partners, or its workforce. Nel’s facilities

have local environmental policies for management of

water discharge and waste treatment. Nel’s QHSE teams

implement thresholds below the requirement imposed by

local environmental authorities aimed to preventively identify

deviations in water quality prior major catastrophes. Nel’s

environmental policies require application of best available

techniques to mitigate risks of major disasters in a preventive

manner.

Nel understands that the correct workforce to monitor and

prevent harmful release of pollutants is an important part of

the process to implement the correct environmental policies

and procedures. Nel facilities have an appointed QHSE

director reporting to the management about the compliance

and efficiency of environmental policies. Nel’s Alkaline and

PEM divisions are certified with ISO 14001.

Water discharge points have approval from environmental

authorities before release. Where relevant, Nel has in place

Wastewater Treatment Plants to manage the water quality

prior the discharge points. Nel’s environmental assessment

did not identify material soil and noise pollution risks, such

that could affect local communities or neighbours outside

the industrial parks where our factories are located. Where

Nel operates chemical baths for production, a policy for air

pollution management is in place ensuring an appropriate

process for air filtering. Nel workforces must work with safety

equipment to protect from loud machinery or hazardous in

the workplace.

The waste management process in Nel has in place

procedures to log and dispose waste accordingly to the

waste type. Local QHSE teams have in place procedures

to maximize the recycling of non-hazardous waste. The

management of hazardous waste is outsourced with

environmental certified partners.

Nel did not identify any evidence that could cause significant

harm to the pollution prevention and control in accordance

with the criteria described in the EU Taxonomy.

Protection and restoration of biodiversity and

ecosystems

Nel’s facilities are in industrial parks selected due to their

location outside conservation areas, complying with

environmental laws and regulations. Nel does not operate

in locations within the red list from the International Union

for Conservation of Nature Red List of Threatened Species

(“IUCN”) or in natural areas protected by the UNESCO

World Heritage list. In addition, the environmental impact

assessment performed by the NGI (“Norwegian Geotechnical

Institute”) have not identified specific risks to biodiversity

and ecosystem in Herøya, Norway. Nel’s factories are in

industrial parks preventively located in areas outside of critical

biodiversity and ecosystems.

Nel did not identify any evidence that could cause significant

harm to the protection and restoration of biodiversity and

ecosystems in accordance with the criteria described in the

EU Taxonomy.

Nel ASA

Annual report 2023

Minimum safeguards

Human Rights

The Norwegian Transparency Act entered into force in

July 2022 to establish and promote enterprises’ respect to

fundamental human rights and decent working conditions.

Nel has in-place a Human Rights Policy reassuring its

commitment to the most established Human Rights

framework. Nel’s supply chain teams, with support from the

compliance team, carefully screen suppliers and business

partners before engaging in commercial partnerships. Nel’s

integrity due diligence check is a continuous process aimed

to identify risks and implement suitable measures to prevent

adverse impacts based on the most established Human

Rights frameworks. The complete list of Human Rights

framework can be found in the Human Rights policy available

in the Ethics and Compliance page of Nel’s website.

Nel believes to be compliant with the minimum safeguard for

Human.

Corruption

Nel Anti-Bribery and Corruption Policy sets out requirements

and responsibilities relating to the prevention of bribery

and corruption in Nel’s business dealings. Employees and

representatives are obliged to follow the strictest anti-bribery

and corruption standards when making their business

decisions. Nel does not tolerate corruption in any form, and

we are committed to conduct our business in an honest

and ethical manner in accordance with applicable law. The

purpose of our Anti-Bribery and Corruption Policy is to

prevent bribery and corruption throughout Nel’s business

activities, and it applies to all employees and business

partners working for or on behalf of Nel. To foster a culture

of zero tolerance against bribery and corruption, Nel has in-

place an annual wheel of compliance trainings that includes

modules to increase awareness and prevention in this area.

Nel also have available an ethics hotline and a whistleblowing

channel where internal and external stakeholders can

anonymously report the cases of concern for investigation.

Nel believes to be compliant with the minimum safeguard for

corruption aligned to the EU taxonomy.

Ta x

Nel has an international presence delivering projects in

Europe, Asia, Africa, and North America. Nel adopts a

responsible approach to taxation implementing its Tax

Policy in compliance with the local tax regulation and where

applicable, aligned with OECD Transfer Pricing guidelines. In

the fiscal year that ended 31 December 2023, Nel did not

operate in tax heavens nor countries where the domestic

legislation is not consistent with the OECD Transfer Pricing

guidelines. Moreover, Nel has a centralized tax accounting

team implementing tax risk strategies and processes aimed

at mitigating the risk of non-compliance with tax legislation

of countries where Nel holds employment, revenue, or

operations.

Nel believes to be compliant with the minimum safeguard for

tax aligned to the EU taxonomy.

Fair Competition

Nel carries out its activities in a manner consistent with all

applicable competition laws and regulations, complying with

the requirements in the jurisdictions of commercial activity.

Nel requires all employees to read and comply with its Code

of Conduct which, inter alia, addresses fair competition

in such a way to foster in the corporate culture the best

behaviour towards business practice. Management prohibits

all type of anti-competitive practices, including agreements

on prices between competitors, bid rigging/market sharing,

or to limit or restrict supply to customers.

Nel believes to be compliant with the minimum safeguard for

fair competition aligned to the EU taxonomy.

EU Taxonomy

EU TAXONOMY – ACCOUNTING POLICY

Turnover

EU Taxonomy eligible

Nel is a manufacturer of Fueling Stations for distribution

and use of renewable hydrogen and PEM Electrolysers and

Alkaline Water Electrolysers (collectively “Electrolysers”)

for production of renewable hydrogen. The technology of

these equipment enables the climate mitigation with supply

of renewable hydrogen. This equipment are EU Taxonomy

eligible under activity 3.2 (applying technical screening criteria

in 3.10) due to its substantial contribution to the climate

mitigation of energy-intense industries:

• Manufacture of equipment to produce renewable

hydrogen (“Electrolyser equipment”)

• Manufacture of equipment for use of renewable hydrogen

(“Fueling Station equipment”)

Nel provides consulting hours to design the concept of

renewable hydrogen projects. The income from engineering

consulting hours is covered within EU Taxonomy under activity

9.1 Engineering activities and related technical consultancy

dedicated to adaptation to climate change dedicated to

adaptation to climate change:

• Engineering consulting hours (“FEED Concept Studies”)

dedicated for renewable hydrogen

EU Taxonomy non-eligible

Nel provides operational and maintenance services for

Hydrogen Fueling Stations. Nel did not identify these activities

in the EU Taxonomy, although the services for operation and

maintenance of a Hydrogen Fueling Stations could be directly

linked to enabling low carbon transition from fossil fuel to

fueling of renewable hydrogen. These revenue streams have

been classified as non-eligible to the EU Taxonomy due to

the fact that we could not identify the economical activities

directly listed as an eligible economical activity in the EU

Taxonomy:

• Installation and commissioning of Fueling Stations

• Operational & maintenance services for Fueling Stations

(“Fueling Station services”)

Turnover numerator

The turnover numerator has been determined excluding non-

operational activities listed as eligible by the EU Taxonomy.

For the reporting period ended as of 31 December 2023, Nel

scoped out income from government grants for technology

research and development and study papers and insurance

compensation totalling NOK 92 million (see additional

information at note 2.2 Other Income).

Nel ASA

Annual report 2023

Proportion of turnover from products or services associated with taxonomy-aligned economic activities

SUBSTANTIAL CONTRIBUTION CRITERIA DNSH CRITERIA

Absolute

turnover

Proportion

of turnover

Minimal

safeguards

Taxonomy

aligned

proportion

of turnover

Category

(enabling

activity)

NOK % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/

Percent E

A: TAXONOMY-ELIGIBLE ACTIVITIES

A.1 Environmentally sustainable activities (Taxonomy- aligned)

Turnover of environmentally sustainable activities (Taxonomy-aligned)

(A.1)

- -

A.2 Environmentally sustainable activities (not Taxonomy- aligned)

3.2 Manufacture of equipment for production and use of renewable

hydrogen

1,496,143,531 89.% - 100% - - - - Y Y Y Y Y Y Y 89% E

9.1 FEED¹ Concept Studies

71,499,512 4.3% 4.3% E

Turnover of Taxonomy-eligible but not environmentally sustaina-

ble activities (not Taxonomy-aligned activities) (A.2)

1,567,643,043

93.3%

Total turnover of Taxonomy-eligible activities (A.1 + A.2)

1,567,643,043

93.3% 93.3% 93.3%

B. TAXONOMY NON-ELIGIBLE ACTIVITIES

Turnover of Taxonomy non-eligible activities (B)

113,427,148 6.7%

Total (A+B)

1,681,070,191 100%

EU Taxonomy

Capital expenditure (CapEx) and operating expenditure

(OpEx)

The EU Taxonomy defines the methods for calculating

Taxonomy-aligned proportions (KPIs). By analogy, Nel

allocates capital and operating expenditure that can be

aligned with EU taxonomy aligned with sales of the activity or

represent individual capital expenditure that is not associated

with an activity intended to be marketed under the delegated

regulation of the EU Taxonomy.

Operating expenditure (OpEx)

The denominator for operating expenditure is determined

with nominal value of the IFRS expenses for research and

development incurred on development of technologies

aligned with the EU Taxonomy, or expenses for building

renovation, short-term lease, maintenance and repair, and

any other direct expenditures relating to the day-to-day

servicing of assets of property, plant and equipment to ensure

the continued and effective functioning of such assets. This

approach scopes out of the analysis expenditures directly

related to the sale of equipment or services and depreciation

of assets to avoid double counting of expenses incurred to

generate income or from expenditure previously reported

within the capital expenditure KPI.

The numerator for operating expenditure includes

expenditure related to assets or processes associated

with Taxonomy-aligned economic activities, including

training and other human resources adaptation needs, and

research and development expenditure not capitalizable

under the IFRS requirements. Nel does not include in the

numerator corporate expenses directly linked to sales of

equipment or services, administrative activities, corporate

expenses, travelling expenses or meals and entertainment.

Although these expenditures have indirect contribution to

the development of technologies and income eligible in

accordance with the EU Taxonomy, Nel understands that

these expenditures may not be allocated to specific assets as

the benefits from administrative efforts are seen pervasively in

the business.

Nel ASA

Annual report 2023

Proportion of OpEx from products or services associated with taxonomy-aligned economic activities

SUBSTANTIAL CONTRIBUTION CRITERIA DNSH CRITERIA

Absolute

OpEx

Proportion

of OpEx

Minimal

safeguards

Taxonomy

aligned

proportion

of turnover

Category

(enabling

activities)

NOK % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/

Percent E

A: TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

OpEx of environmentally sustainable activities (Taxono-

my-aligned) (A.1)

- -

A.2 Environmentally sustainable activities (not Taxonomy- aligned)

3.2 Manufacture of equipment for the production and use of hydrogen

305,407,293 40% - 100% - - - - Y Y Y Y Y Y Y 40% E

9.1 FEED¹ Concept Studies

32,626,069 4% - 100% - - - - Y Y Y Y Y Y Y 4% E

OpEx of Taxonomy-eligible but not environmentally sustainable

activities (not Taxonomy-aligned activities) (A.2)

338,033,361 44% 44% 44%

Total OpEx of Taxonomy-eligible activities (A.1 + A.2)

338,033,361 44% 44% 44%

B. TAXONOMY NON-ELIGIBLE ACTIVITIES

OpEx of Taxonomy non-eligible activities (B)

430,713,109 56%

Total (A+B)

768,746,470 100%

¹ Front-end Engineering Design services for hydrogen production plant projects

EU Taxonomy

Capital expenditure (CapEx)

The denominator of the Capital Expenditure KPI covers

additions to property, plant and equipment and intangible

assets (including internally generated intangible assets)

during the financial year considered before depreciation,

amortisation revaluations and impairments. The denominator

includes increases in right-of-use assets for leases accounted

for in accordance with IFRS 16. The denominator covers

additions to tangible and intangible assets resulting from

business combinations. The additions should reconcile to

intangible assets in note 3.1, property, plant and equipment

in note 3.2 and right-of-use assets in note 3.3.

The numerator of the Capital Expenditure KPI equals the

capital expenditure included in the denominator that is

related to assets or processes associated with economic

activities aligned with the EU Taxonomy. The numerator

includes capitalised development expenditures disbursed

on Nel’s taxonomy eligible activities, such as purchase of

production tools and manufacturing equipment for expansion

of production capacity in Herøya, Norway and Wallingford,

United States, and costs capitalised for development and

quality enhancement of product related technologies.

Nel ASA

Annual report 2023

Proportion of OpEx from products or services associated with taxonomy-aligned economic activities

SUBSTANTIAL CONTRIBUTION CRITERIA DNSH CRITERIA

Absolute

CapEx

Proportion

of CapEx

Minimal

safeguards

Taxonomy

aligned

proportion

of turnover

Category

(enabling

activities)

NOK % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/

Percent E

A: TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxono-

my-aligned)

CapEx of environmentally sustainable activities (Taxono-

my-aligned) (A.1)

- -

A.2 Environmentally sustainable activities (not Taxono-

my-aligned)

3.2 Manufacture of equipment for the production and use of

hydrogen

736,052,720 95% - 100% - - - - Y Y Y Y Y Y Y 95% E

CapEx of Taxonomy-eligible but not environmentally sus-

tainable activities (not Taxonomy-aligned activities) (A.2)

Total CapEx of Taxonomy-eligible activities (A.1 + A.2)

736,052,720 95% 95% 95%

B. TAXONOMY NON-ELIGIBLE ACTIVITIES

CapEx of Taxonomy non-eligible activities (B)

35,175,280 5%

Total (A+B)

771,228,000 100%

RESPONSIBILITY STATEMENT

“We confirm that, to the best of our knowledge, the financial statements for the period from 1 January 2023, up to and including

31 December 2023, have been prepared in accordance with applicable accounting standards and give a true and fair view of the

assets, liabilities, financial position and profit or loss of the company, and that the directors’ report includes a fair review of the

development and performance of the business and the position of the company as a whole, together with a description of the

principal risks and uncertainties the company faces.”

OSLO, 27 FEBRUARY 2024

THE BOARD OF DIRECTORS

Ole Enger Beatriz Malo de Molina Charlotta Falvin

Chair Board member Board member

(Electronically signed) (Electronically signed) (Electronically signed)

Arvid Moss Hanne Blume Tom Røtjer

Board member Board member Board member

(Electronically signed) (Electronically signed) (Electronically signed)

Jens Bjørn Staff Håkon Volldal

Board member CEO

(Electronically signed) (Electronically signed)

Corporate governance

5 Board of Directors’ report in relation

to the Norwegian Code of practice

for corporate governance

1. Report on corporate

governance

The Board of Directors (also, the board) and management

of Nel are committed to maintaining high ethical standards

and promoting good corporate governance. The company

believes that good corporate governance builds confidence

among shareholders, employees, partners, customers, and

other stakeholders, and thereby supports maximum value

creation over time. The equal treatment of all shareholders

lies at the heart of the company’s corporate governance

policy.

Nel’s Corporate Governance Report is based on the

Norwegian Code of Practice for Corporate Governance

(“the code” from NUES), dated 17 October 2018 and its

amendments. The code is available on www.nues.no

Observance of the recommendations is based on the “comply

or explain” principle. Nel’s board and management have

resolved to follow the recommendations of the Code to the

extent deemed reasonable in view of the company’s size and

stage of development.

2. Business

Nel ASA’s business purpose is defined in the company’s

Articles of Association, section 3: “The Company’s business is

to conduct business, invest in and/or own rights in production

and sale of hydrogen plants, hydrogen fueling stations, or

other related areas.”

Nel is a leading pure play hydrogen technology company

with a global footprint, developing optimal solutions to

produce, store and distribute hydrogen from renewable

energy. Our hydrogen solutions cover important parts of the

value chain: enabling decarbonization of industries such as

cement, steel and fertilizer production, while also providing

fuel cell electric vehicles with the same fast fueling and

long driving range as fossil-fuelled vehicles - without any

emissions. Nel is committed to create value for shareholders

in a sustainable manner.

3. Capital and dividend

The company’s registered share capital as of 31 December

2023 consisted of 1 671 325 304 shares, including both

outstanding shares and treasury shares, with a par value of

NOK 0.20 per share.

The company has in place a shareholder return policy.

The distribution of dividends and repurchase of shares are

subject to the discretion of the Board of Directors at Nel

ASA. Nel ASA is currently in a growth phase, with substantial

investments directed towards capacity expansions and

organizational development. Considering the company’s

state, shareholder returns in the form of dividends or share

buy-backs are currently not prioritized.

4. Equal treatment of

shareholders and transactions

with related parties

All shares in Nel carry one vote, and the shares are freely

transferable. The company has only one share class, and all

shareholders have equal rights. Existing shareholders are

given priority in the event of share capital increases unless

special circumstances warrant deviation from this principle.

At the annual general meeting on 21 April 2023, the board

was granted authorisation to increase the share capital

with up to NOK 33 426 506 through one or several capital

increases. In addition, a separate authorisation to increase

the share capital of up to NOK 3 342 651 for issue of shares

in connection with incentive programs for employees. The

board has also been granted authorisation to acquire shares

in Nel on behalf of the company, for a total nominal value not

exceeding 9% of the share capital at any given time.

Transactions between the company and related parties,

including members of the board or persons employed by the

company either personally or through companies belonging

to related parties, must be based on terms achievable in

an open, free and independent market, or on a third-party

valuation.

Nel ASA

Annual report 2023

Major transactions with related parties must be approved by

the general meeting.

5. Free transferability

The company’s shares are listed on the Oslo Stock Exchange

under the ticker “NEL” and are freely transferable. The Articles

of Association contain no restrictions on transferability.

6. General meeting

Shareholders can exercise their rights at general meetings,

and the company wants general meetings to be a meeting

place for shareholders and the board. The company will seek

to enable as many shareholders as possible to participate in

general meetings. Meeting documents will be published on

the company’s website no later than 21 days before a general

meeting. The company endeavours to ensure that meeting

documents are sufficiently detailed to enable shareholders to

take a view on all matters to be considered. The deadline for

notifying attendance at a general meeting is set as close to the

meeting as possible.

Shareholders who are unable to participate themselves may

vote by proxy. The proxy form will be designed so that it can

be used to vote on all matters up for consideration, and on

candidates for election.

In 2023, the annual general meeting was held on 21 April and

12.59 percent of the total share capital was represented. The

annual general meeting was conducted digitally, with a live

webcast and electronic voting on each item.

The company encourages board members and nomination

committee to attend general meetings. The external auditors

are also invited to attend.

In accordance with the articles of association, general meetings

are chaired by the board chair if no-one else is elected to do

so. Minutes of general meetings are published in the form of

stock exchange notifications and on the company’s website.

7. Nomination committee

In accordance with Nel’s articles of association, the general

meeting shall establish a nomination committee comprising

of three to five members. These must be shareholders

or representatives of shareholders. The nomination

committee evaluates and proposes board members to the

general meeting and makes recommendations on director

remuneration. No board members or representatives of

company management are members of the nomination

committee. Nomination committee members are elected

for a one-year term. At the general meeting on 21 April

2023, the following persons were elected to the nomination

committee and serve until the 2024 annual general meeting:

• Eivind Sars Veddeng, chair

• Andreas Poole, member

8. Board composition

and independence

The board members and chair of the board are elected by

the general meeting. The board’s composition is designed

both to represent the interests of all shareholders and meet

the company’s need for expertise, capacity, and balanced

decision-making. The board should function as an effective

collegiate body.

The board is elected for a one-year term, and board

members may stand for re-election. The CEO is not a

member of the board. According to its articles of association,

Nel’s board must have between four and seven members.

At the annual general meeting 21 April 2023, Ole Enger, chair

of the board, Hanne Blume, Beatriz Malo de Molina, Charlotta

Falvin and Tom Røtjer were all re-elected to the board. Arvid

Moss and Jens Bjørn Staff were elected as new members of

the board.

Each of the board members are considered independent

from the company’s day-to-day management. The board

is qualified to assess the day-to-day management and

significant contracts entered into by the company on an

independent basis.

See also note 7.4 (group) and note 13 (parent company) for

transactions with related parties.

9. The work of the Board

A plan for the boards’ work is prepared every year. The board

has also adopted instructions for the board and CEO, detailing

the work and responsibilities of the board and CEO, respectively.

The board ensures the company’s business is properly organised

and that plans and budgets are prepared. The board’s plans

and rules of procedure ensure the board is kept informed of

the company’s financial position and that the business, asset

management, and accounts are subject to controls.

Corporate governance

Nel’s Code of Conduct includes guidelines for how conflicts

of interests that may arise should be handled with. The

code applies to all members of the board and employees of

Nel. The board are not aware of any transactions that were

material between the group and its shareholders, board

members, executive management or related parties in 2023,

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 2023, the board conducted 13 board meetings with 100%

meeting attendance, with the exception of one meeting

where one Board member had notified in advance his inability

to participate. The meetings were held at group headquarters

in Oslo, one meeting at the Danish subsidiary and/or virtual

meetings due to travel convenience, and also treated a

number of issues by circulation of documents.

The company has an audit committee consisting of 2

members from the board, which is governed by the

Norwegian Public Limited Liability Companies Act. The

audit committee assist the board in exercising its oversight

responsibility with respect to the integrity of the company’s

financial statements, financial reporting processes and

internal controls, risk management, compliance system and

the company’s environmental, social and governance (“ESG”)

reporting. With the broader mandate, the committee is

referred to as Board Audit, Risk and Sustainability Committee.

The members of the audit committee are appointed by

and from the members of the board, and currently consist

of Beatriz Malo de Molina as chair and Charlotta Falvin as

member. Current members are independent of the company’s

management. The audit committee conducted 6 meetings

with 100% meeting attendance in 2023.

The company has a remuneration committee, which consist

of 2 members from the board. The committee shall assist the

board in exercising its oversight responsibility, in particular

to compensation matters pertaining to the CEO and other

members of the executive management, compensation issues

of principal importance and strategic people process in the

company, in particular related to succession, recruitment,

talent and diversity and inclusion. The committee currently

consist of Hanne Blume as chair and Ole Enger as member.

The committee has held 5 meeting with 100% meeting

attendance in 2023. The committee was also involved in

discussions related to the recruitment of strategic positions for

Nel and key organisational adjustments through the year.

10. Risk management and

internal controls

Risk management and internal controls are important to

Nel. They enable the company to achieve its strategic

objectives, and are an integral part of management decision-

making processes, the organisational structure, and internal

procedures and systems.

Nel’s enterprise risk management process is value driven

and aims to identify, assess and manage risk factors that

could impact the value of the company. The process is to

mitigate potential damages and loss, and to explore business

opportunities.

The enterprise risk management function has the

responsibility to facilitate the legal and operational risk

management activities and develop risk policies and tools as

well as maintaining an aggregated view of risk exposure. The

function reports to the CFO, with active involvement by Nel’s

General Counsel.

Risk management and internal control requirements have

been evaluated by management and the board, and a set

of appropriate procedures and our established framework

is inspired by the Committee of Sponsoring Organisations

of the Treadway Commission (COSO) ERM framework and

the ISO 31000 risk management standard. The materiality

of each risk factor is determined by assessing the likelihood

and consequence. Risks are evaluated to determine whether

the level is acceptable or unacceptable and to prioritise

those that have the greatest potential to impact our value.

We implement mitigating strategies to ensure that each risk

is optimally managed. Risk mitigation plans are based on

evaluations of the cost of control and potential impacts relative

to the benefits of reducing the risk. The operating segments

are responsible to maintain business continuity plans. The

post-mitigation residual risks are continually monitored by the

Nel ASA

Annual report 2023

operating segments. The mitigation strategies, residual risks

and risk appetite are reviewed and updated by the executive

management during bi-yearly dedicated business review

meetings. The board believes that expressing the company’s

risk appetite within important areas of its business activity helps

to convey how the company approaches and evaluates risk to

investors, customers and society at large. The audit committee

performs ongoing evaluations of the Company’s Enterprise Risk

Management process.

In this context, emphasis is also given to ensuring that

the company operates in accordance with accepted

ethical guidelines and values, including guidelines on how

employees can communicate matters relating to illegal or

unethical behaviour on the company’s part to the board.

Nel believes that its values and control procedures meet

requirements found within the environmental, social, and

governance domain, and are proportionate to the scope and

nature of its business.

Nel’s regular business activities entail exposure to various

types of risk. The company proactively manages such risks,

and the board regularly analyses its operations and potential

risk factors and takes steps to reduce risk exposure. Nel places

a strong emphasis on quality assurance, and has quality

systems implemented, or under implementation, in line with

the requirements applicable to its business operations.

The full range of risk factors is discussed in more detail in the

notes 6.1-6.4 to the annual accounts.

The company’s financial reporting complies with the laws

and regulations applicable to companies listed on the Oslo

Stock Exchange. The board reviews the company’s financial

position frequently through reporting and reviews at board

meetings and reviews the financial statements at the end of

every quarter. At least once per year, the board assesses the

company’s risk profile by reference to strategic, operational,

and transactional factors.

As a listed company, Nel has a special responsibility relating

to the insider trading rules, the provision of information, and

share trading. The company has guidelines to ensure board

members, senior management, and other insiders comply

with relevant legislation and rules relating to insider trading in

the company’s shares.

11. Board remuneration

Nel’s general meeting determines the remuneration of the

board based on a recommendation by the nomination

committee. Board remuneration must reflect the board’s

expertise and time investment, as well as the complexity

of the business and the fact that Nel is a listed company.

Remuneration takes the form of a fixed annual amount and is

not tied to the company’s performance or share price.

An assessment regarding the independence of the directors

and chair of the board is set out in section 8 above.

The board remuneration for 2023 is outlined in note 7.4 to

the annual accounts.

12. Remuneration of senior

management

The board prepares guidelines on the remuneration of the

company’s senior management. These guidelines, as well as

details of the remuneration packages and incentive schemes of

the CEO and other senior executives, are set out in the note 7.2

to the annual accounts.

The guidelines on the remuneration of senior management

must be submitted to the general meeting. The remuneration

policy was approved by the shareholders at the general

meeting held in 2021. The board considers that the

remuneration paid to senior management reflects market

practice and that the remuneration packages do not include

any unreasonable terms, for example in connection with

resignation or termination of employment.

In accordance with section 6-16b of the Norwegian Public

Limited Liability Companies Act, the board has prepared a

report on salary and other remuneration to the executive

management. The remuneration report for 2023 will be

presented to the general meeting in 2024 for an advisory vote.

The remuneration report will become available during March

2024, on www.nelhydrogen.com.

The shareholdings of executive management are outlined in

note 7.2 (group).

13. Information and

communication

The company publishes a financial calendar on an annual

basis, which includes the dates of general meetings and dates

for the presentation of interim reports. Presentation of the

quarterly reports are broadcasted through webcasts. Press

releases and stock exchange notifications are typically posted

on the company’s website, www.nelhydrogen.com. All stock

exchange notifications are also available at www.newsweb.no.

The company complies with all applicable disclosure laws

and practice, including equal treatment requirements. The

Corporate governance

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 should at least once a year review

the company’s internal control procedures with the external

auditor, including weaknesses identified by the auditor and

proposals for improvement. The external auditor participates

in all meetings of the audit committee. The auditor presents

an annual audit plan to the audit committee.

The board has adopted guidelines on management’s use of

the auditor for services other than auditing. The Public Audit

Act entered into force on January 1, 2021. Extended tasks

including purchase of non-audit services and follow-up of the

external auditor are considered by the audit committee. Non-

audit services are subject to pre-approval as defined by the

audit committee. The fee payable to the auditor is specified in

note 7.3 to the annual accounts and is categorised under the

items statutory audit, attestation and non-auditing services.

The board submits proposals regarding the fees payable for

the statutory audit to the general meeting for approval.

Nel ASA

Annual report 2023

OSLO, 27 FEBRUARY 2024

THE BOARD OF DIRECTORS

Ole Enger Beatriz Malo de Molina Charlotta Falvin

Chair Board member Board member

(Electronically signed) (Electronically signed) (Electronically signed)

Arvid Moss Hanne Blume Tom Røtjer

Board member Board member Board member

(Electronically signed) (Electronically signed) (Electronically signed)

Jens Bjørn Staff Håkon Volldal

Board member CEO

(Electronically signed) (Electronically signed)

6 Consolidated financial statements 2023

Nel group

Nel ASA

Annual report 2023

Consolidated statement of comprehensive income ...................................................................................................................................... 80

Consolidated statement of financial position .................................................................................................................................................. 81

Consolidated statement of cash flows ............................................................................................................................................................... 83

Consolidated statement of changes in equity ................................................................................................................................................. 84

Note 1.1 Corporate information ....................................................................................................................................................................... 86

Note 1.2 Basis of preparation ............................................................................................................................................................................ 86

Note 1.3 Material accounting policies............................................................................................................................................................. 87

Note 1.4 Changes in accounting policies ....................................................................................................................................................... 88

Note 1.5 Significant accounting judgements and estimation uncertainty ............................................................................................. 88

Note 2.1 Revenue from contracts with customers ....................................................................................................................................... 88

Note 2.2 Other income ....................................................................................................................................................................................... 93

Note 2.3 Segment information ......................................................................................................................................................................... 94

Note 2.4 Raw materials ....................................................................................................................................................................................... 96

Note 2.5 Personnel expenses ............................................................................................................................................................................ 96

Note 2.6 Other operating expenses ................................................................................................................................................................ 99

Note 2.7 Finance income and cost .................................................................................................................................................................. 99

Note 2.8 Income taxes ........................................................................................................................................................................................ 100

Note 2.9 Earnings per share .............................................................................................................................................................................. 102

Note 3.1 Intangible assets .................................................................................................................................................................................. 103

Note 3.2 Property, plant and equipment ....................................................................................................................................................... 110

Note 3.3 Leases .................................................................................................................................................................................................... 111

Note 3.4 Investments in associated companies and joint ventures ......................................................................................................... 116

Note 3.5 Non-current financial assets ............................................................................................................................................................. 117

Note 4.1 Inventories ............................................................................................................................................................................................ 118

Note 4.2 Trade receivables ................................................................................................................................................................................. 118

Note 4.3 Prepaid expenses and other current assets.................................................................................................................................. 119

Note 4.4 Cash and cash equivalents ............................................................................................................................................................... 121

Note 5.1 Share capital and shareholders ....................................................................................................................................................... 122

Note 5.2 Long-term debt ................................................................................................................................................................................... 123

Note 5.3 Deferred income ................................................................................................................................................................................. 124

Note 5.4 Other liabilities ..................................................................................................................................................................................... 125

Note 5.5 Provisions .............................................................................................................................................................................................. 126

Note 6.1 Operational risk factors ..................................................................................................................................................................... 127

Note 6.2 Financial risk factors ........................................................................................................................................................................... 129

Note 6.3 Market risk factors .............................................................................................................................................................................. 132

Note 6.4 Climate-related risks and opportunities ........................................................................................................................................ 133

Note 6.5 Hedge accounting .............................................................................................................................................................................. 133

Note 6.6 Financial instruments .......................................................................................................................................................................... 136

Note 6.7 Contractual commitments and commitments for future investments ................................................................................. 137

Note 7.1 Composition of the group ................................................................................................................................................................ 138

Note 7.2 Executive management remuneration .......................................................................................................................................... 138

Note 7.3 External audit remuneration ............................................................................................................................................................. 139

Note 7.4 Related parties ..................................................................................................................................................................................... 140

Note 7.5 Events after the balance sheet date ................................................................................................................................ ............... 141

Note 7.6 Going concern ..................................................................................................................................................................................... 141

Consolidated financial statements

Consolidated statement of

comprehensive income

(Amounts in NOK thousands) Nel group

NOTE 2023 2022

Revenue from contracts with customers

2.1. 2.3

1 681 070 914 853

Other income 2.2 92 006 78 728

Total revenue and income 1 773 076 993 581

Raw materials 2.4 856 926 584 815

Personnel expenses 2.5 821 303 664 815

Depreciation and amortisation 3.1. 3.2 223 814 171 483

Impairment of tangible and intangible assets 3.1. 3.2 1 971 327 298

Other operating expenses 2.6 568 566 523 824

Total operating expenses 2 472 580 2 272 235

Operating loss -699 504 -1 278 654

Finance income 2.7 175 505 97 629

Finance costs 2.7 -344 821 -5 972

Share of profit (loss) from associates and joint ventures 3.4 -3 714 0

Pre-tax income (loss) -872 534 -1 186 997

Tax expense (-income) 2.8 -17 338 -15 828

Net income (loss) attributable to equity holders of the company -855 196 -1 171 169

OTHER COMPREHENSIVE INCOME THAT ARE OR MAY SUBSEQUENTLY BE RECLASSIFIED TO PROFIT OR LOSS (NET OF TAX)

Currency translation differences -1 253 65 035

Cash flow hedges. effective portion of changes in fair value 6.5 -18 504 -6 900

Cash flow hedges. reclassified 6.5 34 417 -6 848

Comprehensive income attributable to equity holders of the company -840 536 -1 119 882

Earnings per share (NOK) attributable to Nel shareholders 2.9 -0.52 -0.76

Diluted earnings per share (NOK) attributable to Nel shareholders 2.9 -0.52 -0.76

The accompanying notes are an integral part of the consolidated financial statements.

Nel ASA

Annual report 2023

(Amounts in NOK thousands) Nel group

ASSETS NOTE 2023 2022

NON-CURRENT ASSETS

Technology 3.1 631 521 547 387

Customer relationship 3.1 8 220 21 489

Goodwill 3.1 375 305 365 580

Property. plant and equipment 3.2. 3.3 1 305 678 785 488

Investments in associates and joint ventures 3.4 100 2 886

Non-current financial assets 3.5 159 259 250 072

Total non-current assets 2 480 083 1 972 902

CURRENT ASSETS

Inventories 4.1 703 990 504 595

Trade receivables 4.2 812 407 460 735

Contract assets 2.1 49 767 96 322

Other current assets 4.3 447 342 777 408

Cash and cash equivalents 4.4 3 363 431 3 138 550

Total current assets 5 376 937 4 977 610

TOTAL ASSETS 7 857 020 6 950 512

The accompanying notes are an integral part of the consolidated financial statements.

Consolidated statement of

financial position as of 31 December

Consolidated financial statements

(Amounts in NOK thousands) Nel group

EQUITY AND LIABILITIES NOTE 2023 2022

EQUITY

Share capital

5.1

334 265 312 665

Treasury shares 5.1 -84 -84

Share premium 5.1 8 661 090 7 098 186

Other capital reserves 5.1 65 928 61 768

Retained earnings 5.1 -2 998 001 -2 142 805

Other components of equity 5.1 134 538 119 878

Total equity 6 197 736 5 449 608

NON-CURRENT LIABILITIES

Deferred tax liabilities 2.8 38 436 45 529

Long-term debt 5.2 22 458 22 431

Lease liabilities 3.3 199 136 170 177

Deferred income 5.3 66 243 64 049

Other non-current liabilities 5.4 4 860 7 102

Total non-current liabilites 331 133 309 288

CURRENT LIABILITIES

Trade payables 204 863 201 744

Lease liabilities 3.3 38 067 30 438

Contract liabilities 2.1 715 288 672 291

Other current liabilities 5.4 238 216 133 704

Provisions 5.5 131 717 153 440

Total current liabilities 1 328 151 1 191 617

Total liabilities 1 659 284 1 500 905

TOTAL EQUITY AND LIABILITIES 7 857 020 6 950 512

The accompanying notes are an integral part of the consolidated financial statements.

Consolidated statement of

financial position as of 31 December

Nel ASA

Annual report 2023

(Amounts in NOK thousands) Nel group

NOTE 2023 2022

CASH FLOWS FROM OPERATING ACTIVITIES

Pre-tax income (loss)

-872 534

-1 186 997

Adjustments for interest expense 2.7 15 461 11 166

Depreciation, amortisation and impairment 3.1, 3.2 225 785 498 781

Change in fair value equity instruments 2.7, 4.3 342 213 30 614

Equity-settled share-based compensation expense 2.,5 4 030 8 342

Change in provisions 5.5 -21 723 65 334

Change in inventories 4.1 -199 395 -176 130

Change in trade receivables and contract balances 2.1, 4.2 -262 120 144 590

Change in trade payables 3 119 68 782

Changes in other balances 4.3, 5.4 95 496 -155 062

Net cash flow from operating activities -669 668 -690 580

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment

3.2

-573 589 -160 486

Payments for capitalised technology 3.1 -166 242 -118 251

Purchase of other investments 3.5, 4.3 -92 219 -206 450

Investments in other financial assets 3.5 0 -5 296

Investments in associates and joint ventures 3.4 -973 -1 160

Proceeds from sales of other investments 3.5, 4.3 186 211 88 555

Net cash flow from investing activities -646 812 -403 088

CASH FLOWS FROM FINANCING ACTIVITIES

Interests paid

2.7

-15 461 -11 166

Gross cash flow from share issues 5.1 1 609 200 1 545 866

Transaction costs from share issues 5.1 -24 696 -23 426

Payment of lease liabilities 3.3 -25 773 -14 400

Payment of non-current liabilities 5.2 -1 533 -1 889

Net cash flow from financing activities 1 541 737 1 494 985

Effect of exchange rate changes on cash -376 14 464

Net change in cash and cash equivalents 224 881 415 781

Cash balance as of 01.01 4.4 3 138 550 2 722 769

Cash balance as of 31.12 4.4 3 363 431 3 138 550

The accompanying notes are an integral part of the consolidated financial statements.

Consolidated statement

of cash flows

Consolidated financial statements

(Amounts in NOK thousands) Nel group

NOTES

CAPITAL

TREASURY

PREMIUM

OTHER

RESERVE

RETAINED-

EARNINGS

CURRENCY

TRANSLATION

DIFFERENCE

HEDGING

RESERVE

TOTAL

EQUITY

Equity as of 31.12.2021 292 160 -81 5 596 248 53 422 -971 636 63 477 5 114 5 038 704

Total comprehensive income -1 171 169 65 035 -13 748 -1 119 882

Increase of capital 2022 4.4 20 505 1 501 935 1 522 440

Options and share program 2.5 -3 3 8 346 8 346

Equity as of 31.12.2022 312 665 -84 7 098 186 61 768 -2 142 805 128 512 -8 634 5 449 608

Total comprehensive income -855 196 -1 253 15 913 -840 536

Increase of capital 2023 4.4 21 600 1 562 904 1 584 504

Options and share program 2.5 4 160 4 160

Equity as of 31.12.2023 334 265 -84 8 661 090 65 928 -2 998 001 127 259 7 279 6 197 736

Consolidated statement

of changes in equity

OSLO, 27 FEBRUARY 2024

THE BOARD OF DIRECTORS

Ole Enger Beatriz Malo de Molina Charlotta Falvin

Chair Board member Board member

(Electronically signed) (Electronically signed) (Electronically signed)

Arvid Moss Hanne Blume Tom Røtjer

Board member Board member Board member

(Electronically signed) (Electronically signed) (Electronically signed)

Jens Bjørn Staff Håkon Volldal

Board member CEO

(Electronically signed) (Electronically signed)

Notes to the consolidated financial statements 2023

1.1 Corporate information

Nel ASA (Nel) is a global, dedicated hydrogen company,

delivering optimal solutions to produce, store and distribute

hydrogen from renewable energy. The company is domiciled

in Norway. The company specializes in electrolyser

technology for production of renewable hydrogen, and

hydrogen fueling equipment for road-going vehicles. Nel’s

product offerings are key enablers for a renewable hydrogen

economy, making it possible to decarbonize various industries

such as transportation, refining, steel, and ammonia.

The group has two divisions: Nel Hydrogen Electrolyser and

Nel Hydrogen Fueling.

The ultimate parent of the group Nel ASA (org. no 979 938

799) was formed in 1998, incorporated in Norway. Nel ASA

is a Norwegian public limited liability company listed on the

Oslo Stock Exchange. The group’s head office is in Karenslyst

allé 49, N-0279 Oslo, Norway.

1.2 Basis of preparation

The group’s consolidated financial statements have been

prepared in accordance with IFRS Accounting Standard as

adopted by the European Union (EU).

Accounts are based on the principle of historical cost, except

for certain financial instruments, which are measured at fair

value.

The consolidated financial statements are presented in

Norwegian kroner (NOK). The functional currency of Nel ASA

is NOK.

All values are rounded to the nearest thousand, unless when

indicated otherwise. As a result of rounding differences

numbers or percentages may not add up to the total. The

financial statements are prepared based on a going concern

assumption.

The consolidated financial statements were approved by

the Board of Directors and the Chief Executive Officer on

February 27, 2024.

DEFINITION AND APPLYING OF

MATERIALITY JUDGEMENTS IN

PREPARATION OF THESE CONSOLIDATED

FINANCIAL STATEMENTS

These consolidated financial statements aim to provide useful

financial information which increase the understandability

of Nel and its performance. To meet the information needs

of its primary users, Nel apply materiality judgments which

are necessary to meet this objective, and Nel has made such

judgments related to recognition, measurement, presentation

and disclosures. Within these consolidated financial

statements information is considered material if omitting,

misstating or obscuring it could reasonably be expected to

influence decisions taken by primary users based on the

information provided. In practice this will lead to Nel omitting

certain information if it is assessed it will obscure the material

information. The materiality judgments are reassessed at each

reporting date and updated based on changed facts and Nel

specific circumstances.

BASIS OF CONSOLIDATION

The consolidated financial statements comprise the financial

statements of the parent company and its subsidiaries as

of 31 December 2023. Consolidation of a subsidiary begins

when the group obtains control over the subsidiary and

ceases when the group loses control of the subsidiary. Control

is achieved if, and only if, the group has power over the

investee, is exposed to, or has rights to, variable returns from

its involvement with the investee, and has the ability to affect

those returns through its power over the investee.

Generally, there is a presumption that a majority of voting

rights result in control. To support this presumption and when

the group has less than a majority of the voting or similar

rights of an investee, the group considers all relevant facts

and circumstances in assessing whether it has power over an

investee, including: i) The contractual arrangement with the

other vote holders of the investee, ii) Rights arising from other

contractual arrangements and iii) The group’s voting rights

and potential voting rights.

The group re-assesses whether or not it controls an investee

if facts and circumstances indicate that there are changes

to one or more of the three elements of control. Assets,

liabilities, income and expenses of a subsidiary acquired or

Notes to the consolidated

financial statements

Nel ASA

Annual report 2023

disposed of during the year are included in the consolidated

financial statements from the date the group gains control

until the date the group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive

income (OCI) are attributed to the equity holders of the

parent of the group. There are no non-controlling interests

in the Group as all subsidiaries are 100 % owned. When

necessary, adjustments are made to the financial statements

of subsidiaries to bring their accounting policies into line with

the group’s accounting policies. All intra-group assets and

liabilities, equity, income, expenses and cash flows relating

to transactions between members of the group are fully

eliminated upon consolidation.

A change in the ownership interest of a subsidiary, without

a loss of control, is accounted for as an equity transaction.

If the group loses control over a subsidiary, it derecognises

the related assets (including goodwill), liabilities and other

components of equity while any transaction gain or loss is

recognised in statement of comprehensive income.

FOREIGN EXCHANGE AND CURRENCY

Transactions and balances

Transactions in foreign currencies are converted to functional

currency to the exchange rate on the transaction date.

Exchange rate gains and losses are recognised within ‘finance

cost’ in the profit or loss. Foreign currency monetary items

are translated into functional currency using the balance

sheet closing rates. Non-monetary items that are measured

in terms of historical cost in a foreign currency continue to be

translated using the exchange rate that prevailed at the date

of the transaction. Non-monetary items that are measured

at fair value in a foreign currency are translated using the

exchange rates that prevailed at the date when the fair value

was measured.

All foreign currency translations are recognised in profit or

loss as finance cost except for foreign currency translations

where a hedging relationship exists, and hedge accounting

has been applied. Additional information is provided in note

6.2 and 6.5.

Consolidation of subsidiaries

The individual financial statements of a subsidiary are

prepared in the subsidiary’s functional currency. In preparing

the consolidated financial statements, the statement of

comprehensive income items from the subsidiaries are

converted to NOK using the respective monthly average

exchange rates, while statement of financial position items

is converted using the rate at year-end. Exchange rate gains

and losses are recognised net within Other comprehensive

income and accumulated in Currency translation differences

in ‘Other components of equity’.

STATEMENT OF COMPREHENSIVE

INCOME

The Group present a single statement of ‘Consolidated

statement of comprehensive income’ which comprise all

components of profit or loss, OCI and the comprehensive

income for the period.

STATEMENT OF CASH FLOWS

The Group uses the indirect method for the presentation of

the cash flow statement.

1.3 Material accounting

policies

Accounting policies and estimate uncertainty are largely

incorporated into the individual notes.

Table of contents for where the material policies are

elaborated.

Revenue from contracts with customers 2.1Research and development 3.1Goodwill 3.1Property, plant and equipment 3.2Leases 3.3Investment in associates and joint ventures 3.4Inventories 4.1Trade receivables 4.2Impairment of non-derivative financial assets 4.4Government grants 5.3Provisions 5.5Derivative financial instruments and hedge accounting 6.5

Notes to the consolidated financial statements 2023

1.4 Changes in accounting

policies

A few amendments to IFRS have been implemented for the

first time in the current year:

Amendments to IAS 8 Accounting Policies, Changes in

Accounting Estimates and Errors— Definition of Accounting

Estimates

The amendments to IAS 8 replaced the definition of

accounting estimates to “monetary amounts in financial

statements that are subject to measurement uncertainty”. The

adoption of this definition did not have any material impact in

the group consolidated financial statements.

Amendments to IAS 1 Presentation of Financial Statements

and IFRS Practice Statement 2 Making Materiality

Judgements— Disclosure of Accounting Policies

The group has adopted the amendments to IAS 1 for the

first time in the current year. The amendments replace the

term ‘significant accounting policies’ with ‘material accounting

policy information’. Accounting policy information is material

if, when considered together with other information included

in an entity’s financial statements, it can reasonably be

expected to influence decisions that the primary users of

general-purpose financial statements make on the basis of

those financial statements. The adoption of this definition

did not have any material impact in the group consolidated

financial statements.

Amendments to IAS 12 Income Taxes—Deferred Tax related

to Assets and Liabilities arising from a Single Transaction

The group has adopted the amendments to IAS 12 for the

first time in the current year. Under the amendments, an

entity does not apply the initial recognition exemption for

transactions that give rise to equal taxable and deductible

temporary differences. It would require Nel to recognise the

related deferred tax asset and liability, with the recognition

of any deferred tax asset being subject to the recoverability

criteria in IAS 12. The adoption of this definition did not

have any material impact in the group consolidated financial

statements.

Other changes in IFRS related to “

Amendments to IAS 12

Income Taxes— International Tax Reform—Pillar Two Model

Rules

” and ”

IFRS 17 Insurance Contracts (including the June

2020 and December 2022 Amendments to IFRS 17)

” did not

affect any material transaction occurring in the reporting

period.

1.5 Significant accounting

judgements and estimation

uncertainty

The preparation of financial statements requires management

to make judgements and estimates that influence amounts

recognised in certain accounts for assets, liabilities, income

and expenses. The actual results may deviate from such

assumptions. Estimates and underlying assumptions are

subject to continuous assessment.

JUDGEMENTS

The following are Nel’s accounting policies that involves

significant judgement and complexity which have most

significant effect on the amounts recognised in the

consolidated financial statements, including reference to

where it is discussed:Revenue recognition 2.1Deferred tax assets 2.8Development costs 3.1Leases 3.3

ASSUMPTIONS AND ESTIMATION

UNCERTAINTY

Revenue recognition 2.1Share-based payments 2.5Impairment of goodwill and intangible assets 3.1Expected credit loss assessment 6.2

2.1 Revenue from contracts

with customers

The revenue in Nel is from sale of both complete hydrogen

electrolyser systems and hydrogen fueling stations,

including installation, commissioning, and long-term

service agreements. Additionally, Nel earns revenue from

replacement parts and accessories in the aftermarket. Project

execution is key in Nel’s large construction projects.

The group’s revenues result from the sale of goods or services

and reflect the consideration to which the group is and expect

to be entitled. IFRS 15 requires the group to assess revenue

recognition based on a five-step model. For its customer

Nel ASA

Annual report 2023

contracts, the group identifies the performance obligations

(goods or services), determines the transaction price,

allocates the contract transaction price to the performance

obligations, and recognises the revenue when (or as) the

performance obligations are satisfied.

Revenue recognition is determined on a contract-by-contract

basis by determining the terms and performance obligations

given in a specific contract. Based on the specific contract and

its obligations, revenue under IFRS 15 is either recognised

at a point in time or over time, 44% (49%) and 56% (51%)

of revenue in 2023, respectively. Revenue is recognised

over-time using the method that best depicts the pattern of

the transfer of control over time. The method applied is the

cost-to-cost input method, adjusted as time and goods are

delivered to the customer. Contract costs are expensed as

incurred.

Significant accounting judgements – revenue recognitionThe Group applied the following judgements that The other important criterion is that an enforceable right significantly affect the determination of the timing of to payment exists in the contract between the group and revenue from contracts with customers: the customer. Right to payment entails that the group has a right to receive payment from the customer if the contract would be terminated. Upon termination at a certain time, Performance obligationsthe group should be able to recover costs incurred and a In determining whether revenue from a specific contract reasonable margin.can be classified as customised and in turn recognised using a progress-based measurement, several criteria must Determining whether revenue from a contract should be evaluated. The first criterion is related to alternative use. be recognised over time or at point in time could have Manufacturing a customised product or piece of equipment a significant effect on the financial statements and are for a specific customer that would require significant cost to to some extent dependent upon judgements from modify to be able to transfer it to another customer, then management. the contract would likely meet the criteria of no alternative use.

Estimation uncertainty – revenue recognitionThe Group applied the following estimations that ii) Amountsignificantly affect the determination of the i) timing and ii) Liquidated damages (LDs)amount of revenue from contracts with customers:LDs are pre-defined penalties for breaches of contract. LDs are most commonly used with respect to delay. As i) Timingthe payment to the customer is not in exchange for a distinct good or service that transfers to Nel, LD’s must be Total contract costsaccounted for as a reduction of revenue. If a project does In a customised customer project, Nel uses cost-to-cost not meet the defined milestone in a contract, a provision input method when measuring progress; thus, the total reducing the transaction price is made unless it is highly cost estimates can significantly impact measured progress probable that LD will not be imposed. The estimated LD and revenue recognition. The total project cost comprises provision is highly judgmental. The assessment of the LD estimates on the ability to execute the planned engineering provision is based on experience from similar LD situations and design phase, the availability of skilled resources, in addition to client relationship, contractual position and performance of subcontractors, commodity prices, foreign status on negotiations. Nel estimates variable consideration currency and Nel’s manufacturing capacity, productivity and using the most likely amount.quality.

Notes to the consolidated financial statements 2023

TYPE OF GOODS OR SERVICES

The group generates revenue from customer contracts

from two principal sources: i) Equipment and projects and

ii) Service and aftermarket. The equipment and projects

sales are generated from both standard and customised

equipment.

Standard equipment

The group recognises revenue at the point in time at which it

satisfies a performance obligation by transferring the control

of a good or service to the customer, generally this upon

agreed incoterms, which is mainly at shipment. The customer

has control of a good or service when it has the ability to

direct the use of and obtain substantially all of the remaining

benefits from the good or service. If customer acceptance of

products is not assured, revenue is recorded only upon formal

customer acceptance.

The point in time measurement basis for standard equipment

has been the main method of recognising revenue in

Electrolyser US division, aftermarket segment in the

Electrolyser Norway division and the Fueling divison.

Customised equipment

Most of Nel’s revenue stems from standard equipment,

however, in certain contracts the customisation required

qualifies customised equipment. Customised equipment

occurs when Nel is creating a good that it cannot sell to

another customer without significant re-work and Nel

would incur significant economic losses to direct the asset

for another use. Such sale of customised equipment is

recognised as revenue over-time if Nel has an enforceable

right to payment for performance completed to date.

Projects

The project contracts typically comprise

• equipment (standard product or customised),

• design, siting, installation and commissioning of the

equipment,

Electrolyser. Revenue from sale of customised equipment

and projects is determined to be a bundle of goods where

all of the components constitute the combined output, i.e.

one performance obligation. The performance obligation is

satisfied over time and Nel recognise revenue over the period

the performance obligation is satisfied, using a cost-to-cost

input method that best depicts the pattern of the transfer of

control over time. The contracts have mainly firm contract

price including clauses for penalties (LDs). Additionally,

contracts usually include service agreement and extended

warranty for a specific period. Both service and extended

warranty are separate performance obligations satisfied over

12 months or more, refer service and aftermarket.

The progress-based measurement of revenue has been

the main method of recognising revenue from electrolyser

projects of large-scale electrolyser systems.

Fueling. Sale of fueling equipment often include a standard

installation service and commissioning, each assessed as

individual performance obligation. Revenue recognition

for equipment depends on assessment of standard or

customised equipment. Revenue for installation and

commissioning is recognised over-time measuring progress

using input method cost-to-cost.

Service and aftermarket

Service and aftermarket comprise operations and

maintenance (O&M), extended warranty, repair, replacement

parts and accessories.

For separately sold operating and maintenance contracts

where the group has agreed to provide routine maintenance

services over a period of time for a fixed price, revenue is

recognised on a straight-line basis over the contract period as

the stand-ready obligation is time elapsed.

For sales of replacement cell stacks and accessories, revenue

is recognised when performance obligation is satisfied,

generally upon delivery of the replacement parts and

accessories.

Nel ASA

Annual report 2023

The following table show the revenue from contracts with customers by type of goods or service:

2023 2022SEGMENTS FUELING ELECTROLYSER TOTAL FUELING ELECTROLYSER TOTALType of goods or serviceEquipment and projects 278 115 1 220 417 1 498 532 151 377 630 960 782 337Service and aftermarket 53 153 129 385 182 538 56 662 75 854 132 516TOTAL Revenue from contracts with customers 331 269 1 349 801 1 681 070 208 039 706 814 914 853Timing of revenue recognitionRevenue recognised at point in time 256 085 477 866 733 951 151 377 297 036 448 413Revenue recognised over time 75 184 871 935 947 119 56 662 409 777 466 440TOTAL Revenue from contracts with customers 331 269 1 349 801 1 681 070 208 039 706 814 914 853

Onerous contracts. In the circumstance that the unavoidable

costs directly related to project is expected to exceed the

economic benefits expected to be received under the

contract, the estimated loss on the contract will be recognised

in its entirety in the period when such loss is identified.

Additional information for onerous contracts is disclosed in

note 5.5 ‘Provisions’.

CONTRACT BALANCES

Equipment contracts with a customer will have milestone

payments with variable structures. The contract price will be

invoiced when certain criteria are met. A typical milestone

structure could be contract acceptance, placement of

major supplier purchases, delivery/shipment and complete

installation and commissioning. The payment structure of the

contracts typically results in advance payments and progress

billings exceed the satisfaction of performance obligations

in progress. Consequently, creating a net contract liability.

In certain circumstances based on the order value, credit

worthiness of geographic location, the group may require

payment in advance of shipment. The group does not accept

returns of product or provide customers refunds or other

similar concessions.

Contract assets

A contract asset is the right to consideration in exchange

for goods or services transferred to the customer. If the

group performs by transferring goods or services to a

customer before the customer pays consideration or before

payment is due, a contract asset is recognised for the earned

consideration that is conditional. As of the balance sheet

date, the cumulative costs incurred plus recognised profit

(less recognised loss) on each contract is compared against

the advances and progress billings. Where the cumulative

costs incurred plus the recognised profits (less recognised

losses) exceed advances and progress billings, the balance is

presented as due from customers on construction contracts

within “contract assets”. When the contract assets become

an unconditional right to consideration they are reclassified

and presented separately as trade receivables, usually when

invoices are issued to the customers.

Contract liabilities

A contract liability is the obligation to transfer goods or

services to a customer for which the group has received

consideration (or an amount of consideration is due) from the

customer. If a customer pays consideration before the group

transfers goods or services to the customer, a contract liability

is recognised when the payment is made, or the payment is

due (whichever is earlier). Contract liabilities are recognised as

revenue when the group performs under the contract. Where

advances and progress billings exceed the cumulative costs

incurred plus recognised profits (less recognised losses), the

balance is presented as due to customers on construction

contracts within “contract liabilities”.

2023 2022CONTRACT CONTRACT CONTRACT CONTRACT CONTRACT BALANCESASSETSLIABILITIES TOTALASSETSLIABILITIES TOTALRights to consideration on contracts in progress382 621 910 532 1 293 153 556 141 525 812 1 081 953Less - advances and progress billings -332 854 -1 625 820 -1 958 674 -459 819 -1 198 103 -1 657 922TOTAL Contract assets (liabilities) 49 767 -715 288 96 322 -672 291

Notes to the consolidated financial statements 2023

CONTRACT LIABILITIES 2023 2022Balance as of 01.01. -672 291 -360 821Revenue from amounts included in contract liabilities at the beginning of the period 492 165 251 205Billings and advances received not recognised as revenue in the period -554 127 -554 596Basis adjustment - effect of hedge accounting 18 966 -8 080Balance as of 31.12. -715 288 -672 291CONTRACT ASSETS 2023 2022Balance as of 01.01.96 322178 769Transfers from contract assets recognised at the beginning of the period to receivables -84 288 -167 774Increases due to measure of progress in the period 46 747 83 271Revaluation -3 221 2 056 Balance as of 31.12. 49 767 96 322

Order backlog

The performance obligations in contracts with customers

vary from a few months to 4 years. The order backlog as of

December 31, 2023, was NOK 2 457.7 million (2022: NOK

2 612.6 million). The order backlog in electrolyser and fueling

is NOK 2 093.5 million and NOK 364.2 million, respectively.

The transaction price allocated to the remaining performance

obligations is illustrated in table below:

AS OF 31.12.2023 2024 2025 2026 2027 OR LATER TOTAL BACKLOGPartly unsatisfied performance obligations1 712 249 385 616 60 841 2 396 2 161 102Unsatisfied performance obligations251 341 41 763 3 456 0 296 560TOTAL backlog1 963 591 427 379 64 297 2 396 2 457 663AS OF 31.12.2022 2023 2024 2025 2026 OR LATER TOTAL BACKLOGPartly unsatisfied performance obligations1 166 434 989 315 66 529 11 596 2 233 875Unsatisfied performance obligations336 133 42 602 0 0 378 735TOTAL backlog1 502 568 1 031 917 66 529 11 596 2 612 610

Nel ASA

Annual report 2023

2.2 Other income

OTHER INCOME 2023 2022Government grants12 028 22 307Research and design study reports69 891 34 549Sub-lease0 2 205Insurance compensation4 078 0Other income6 009 19 667TOTAL Other income92 006 78 728

Government grants within ‘other income’ SEGMENT COUNTRY 2023 2022Electrolyser Norway2 953 4 638Fueling Denmark9 075 17 668TOTAL12 028 22 307Government grants related to assets, amortised12 028 22 307TOTAL12 028 22 307

Notes to the consolidated financial statements 2023

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.

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 net income

(loss) in the consolidated financial statements.

Billing of goods and services between operating segments

are effected on an arm’s length basis.

NEL HYDROGEN FUELING

Nel Hydrogen Fueling is a manufacturer of hydrogen fueling

stations for Fuel Cell Electric Vehicles. Nel’s H2Station

manufacturing plant is located in Herning, Denmark.

NEL HYDROGEN ELECTROLYSER

The Nel Hydrogen Electrolyser division is a global supplier of

hydrogen production equipment based on both alkaline and

PEM water electrolysis technology. Nel Hydrogen Electrolyser

currently has production facilities in Herøya, Norway, and in

Wallingford, Connecticut, USA.

2023 OPERATING SEGMENTSREVENUES BY GEOGRAPHIC REGION 1)BASED ON CUSTOMER LOCATION FUELING ELECTROLYSER OTHERTOTALNorway1 53742 579 0 44 116United States 145 950 743 657 0 889 607North America ex United States 17 348 15 180 0 32 528Asia 13 815 145 408 0 159 223Europe ex Norway 152 619 328 857 0 481 476Middle East 0 45 718 0 45 718Africa 0 12 584 0 12 584South America 0 9 264 0 9 264Oceania 0 6 555 0 6 555TOTAL REVENUE FROM CONTRACTS WITH CUSTOMERS 331 269 1 349 801 0 1 681 070Other operating income 14 664 77 342 0 92 006Operating expenses excluding depreciation, amortisation and impairment -547 823 -1 585 729 -113 243 -2 246 795EBITDA -201 890 -158 586 -113 243 -473 719Depreciation and amortisation-53 547-161 979 -8 288 -223 814Impairment of tangible and intangible assets -547 -1 424 0 -1 971OPERATING LOSS -255 984 -321 989 -121 531 -699 504Finance income 1 751 3 345 170 409 175 505Finance costs -44 036 -32 039 -268 746 -344 821Share of loss from associates and joint ventures 0 0 -3 714 -3 714Tax income (expense) 9 177 7 237 924 17 338NET INCOME (LOSS) -289 092 -343 446 -222 658 -855 196TOTAL ASSETS 811 094 3 619 413 3 426 513 7 857 020TOTAL LIABILITIES 327 221 1 269 631 62 432 1 659 284Additions of property, plant and equipment and capitalised technology 48 921 690 909 0 739 8301) Other comprises parent company, holding entity, excess values on intangible assets and related depreciation and tax expense (income) derived from the consolidation of the financial statements not allocated to the operating segments.

In 2023, revenue from single customers above 10% of total

revenues include NOK 430.3 million in revenues from an

undisclosed US customer (electrolyser).

In 2022, revenue from single customers above 10% of total

revenues include Nikola Corporation (electrolyser), recognised

revenue of NOK 164.8 million.

Nel ASA

Annual report 2023

(Amounts in NOK thousands) 2022 OPERATING SEGMENTSREVENUES BY GEOGRAPHIC REGION 1)BASED ON CUSTOMER LOCATION FUELING ELECTROLYSER OTHERTOTALNorway4226 073 0 6 495United States 103 498 337 544 0 441 041North America ex United States 8 760 9 131 0 17 891Asia 28 979 108 247 0 137 226Europe ex Norway 66 380 201 397 0 267 777Middle East 0 26 218 0 26 218Africa 0 13 206 0 13 206South America 0 3 487 0 3 487Oceania 0 1 512 0 1 512TOTAL REVENUE FROM CONTRACTS WITH CUSTOMERS 208 039 706 814 0 914 853Other operating income 37 183 41 545 0 78 728Operating expenses excluding depreciation, amortisation and impair--596 925 -1 052 054 -124 475 -1 773 454mentEBITDA-351 703 -303 695-124 475 -779 873Depreciation and amortisation-47 448-116 372 -7 663 -171 483Impairment of tangible and intangible assets -327 298 0 0 -327 298OPERATING LOSS -726 449 -420 067 -132 138 -1 278 654Finance income 12 5 044 92 573 97 629Finance costs 3 417 -16 801 7 412 -5 972Tax income (expense) 8 318 6 586 924 15 828PRE-TAX INCOME (LOSS) -714 702 -425 238 -31 229 -1 171 169TOTAL ASSETS 1 005 347 2 427 284 3 517 881 6 950 512TOTAL LIABILITIES 456 231 977 392 67 282 1 500 905Additions of property, plant and equipment and capitalised technology 54 373 229 660 1 160 285 1931) Other comprises parent company, holding entity, excess values on intangible assets and related depreciation and tax expense (income) derived from the consolidation of the financial statements not allocated to the operating segments.

PROPERTY, PLANT AND EQUIPMENT GEOGRAPHICAL AREA 2023 2022Norway 906 172 562 761Denmark 114 157 111 225USA 282 856 107 959South Korea 2 493 3 543Balance as of 31.12. 1 305 678 785 488

Notes to the consolidated financial statements 2023

2.4 Raw materials

(Amounts in NOK thousands)2023 2022Raw material 837 765 557 149Freight expense 15 825 13 939Other consumables 3 336 13 728TOTAL 856 926 584 815

2.5 Personnel expenses

(Amounts in NOK thousands)2023 2022Salaries 701 119 581 677Social security tax 72 778 51 843Pension expense 35 904 29 5081)Other payroll expenses 48 378 41 584Capitalised salary to technology development -36 877 -39 796TOTAL 821 303 664 8151) Included here are expenses amounting to NOK 4.2 million (7.6) related to the Group’s share option program.

2023 2022Average number of full time equivalent 631 580Hereof women 129 105

SHARE OPTION PROGRAM UNTIL END OF

2021

Nel compensate employees with share options as part of

a program to incentivize and retain key employees. The

share option program was distributed groupwide until end

of 2021 and granted shares to all employees employed in

the group during 2021 on certain tenure conditions. When

granted, there is only service-time based vesting conditions.

Vesting requires the option holder to still be an employee

in the Group. The share-based payment is equity-settled.

Each option, when exercised, will give the right to acquire

one share in the Group. The options are granted without

consideration. Refer below for additional information on

share option program 2019, 2020 and 2021. The share

option program for all employees was terminated in 2022

and was replaced by a STI bonus scheme linked to employee

performance and Nel’s financial performance.

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.

SHARE OPTION PROGRAM BEYOND 2022

All options have only service-time based vesting conditions.

Vesting requires the option holder still to be an employee

Nel ASA

Annual report 2023

in the company. Specifically, options do not vest after the

date the employee serves his or her notice to terminate the

engagement with the company or has been notified in writing

of the termination of employment by the company. The strike

price is a premium of 8 % over the highest of the closing share

price on grant date and the volume-weighted average price

over the past 5 preceding trading days.

Options granted 2023:

Options was awarded in 2023 based on 2022 employment for

a selection of employees. A total of 1.4 million share options

were granted, with a 3-year vesting period, 5-year expiry and a

cap on gain per option of 10 NOK per share.

CEO OPTIONS

The CEO was awarded 500.000 options. Each option vests

after three years of grant and may, subject to continued

employment, be exercised over a two-year period thereafter.

Each option entitles him to acquire one new share of the

Company at an exercise price equal to the listed price at the

date of grant plus 10%. A maximum profit level has been

implemented which limits the accumulated profit for all options

to NOK 25 million, and to NOK 30 per option.

Assumptions, costs and social security provisions

The Group uses the Black-Scholes-Merton option pricing

model at time of grant to determine the impact of stock

option grants in accordance with IFRS 2 - Share-based

payment. The model utilises the following parameters as

input:

• the company’s share price

• the strike price of the options

• the expected lifetime of the options

• the risk-free interest rate equalling the expected lifetime

• the volatility associated with the historical price

development of the underlying share

As all employee options granted are “non-transferable”,

and the gains are taxed with personal income tax (higher),

whereas gains on ordinary shares are taxed with capital gains

tax (lower), it is reasonable to assume that participants tend

to exercise early. Hence estimated lifetime of the options is

expected to be shorter than the time from grant until expiry.

However, exercise patterns are monitored 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 2023 was NOK 4.0 (8.3)

million. The total social security accruals at the end of the

year are NOK 0.0 (0.0) million (social security costs are zero

because none of the options are in-the-money at the end of

2023). The total intrinsic value of the company’s share-based

instruments is NOK 0.0 (0.1) million as of 31 December 2023.

Key assumptions option pricing model per share option program2023 2022Volatility 67.59% na*Interest rate 3.56% na*Dividend 0.00 na*No new share options were issued in 2022.

Notes to the consolidated financial statements 2023

ESTIMATION UNCERTAINTY - Share-based paymentsEstimating fair value for share-based payment transactions requires determination of the most appropriate evaluation model, which depends on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option or appreciation right, volatility and dividend yield and making assumptions about them. The groups’ equity-settled share-based payments are measured at fair value at the grant date.

(amounts in NOK thousands and number of options/shares in thousands)REMAINING SHARE OPTION OPENING CLOSING STRIKE CONTRACT UAL 1)PROGRAMBALANCE GRANTED EXERCISED FORFEITEDBALANCEPRICE VALUE LIFE2)July 2019 170 -17 0 0 7,80 0 - 2)July 2020 9 508 0 0 -1 519 7 989 21,72 0 0,52 2)July 2021 6 699 0 0 -1 007 5 693 15,13 0 1,63 March 2023 0 1 370 0 -150 1 220 17,02 0 4,17 CEO 2023 0 500 0 0 500 13,85 0 4,50 TOTAL 16 225 1 870 -17 -2 675 15 4023 080SHARE OPTIONS HELD BY MEMBERS OF GROUP MANAGEMENT2)EXPIRY VESTED EXPENSE FOR THE 3) NAME 2023 2024 2025 2026 TOTAL 2024 2025 2028PERIOD Håkon Volldal00 0 500 500 0 0 500 0 Kjell Christian Bjørnsen 383 93 0 150 626 321 155 150 214 Marius Løken 0 0 0 0 0 0 0 0 0Esa Laukkanen 0 0 0 150 150 0 0 150 0 Robert Borin 0 0 0 0 0 0 0 0 0 Hans Hide 380 96 0 150 626 316 160 150 216 Stein Ove Erdal 414 96 0 150 660 350 160 150 221 Caroline Duyckaerts 62 93 0 150 305 0 155 150 166 Other employees 9 093 2 973 0 470 12 536 7 003 5 063 470 3 213 TOTAL 10 332 3 351 0 1 720 15 402 7 989 5 693 1 720 4 0301) The value of the share options equals share price less strike price, capped at NOK 5.0 for 2019 and 2020 program, and 10.0 for 2021, 2023 and CEO program.2) Cost of period does not include social security. The total social security accruals at the end of the year are NOK 0.0 (0.0) million.

No share options expired during the period. Next expiry date

is 1 July 2024 for options granted June 2020.

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

Annual report 2023

2.6 Other operating expenses

(Amounts in NOK thousands) 2023 2022Research and development expenditure53 779 73 942Utilities24 603 23 809Professional fees117 601 116 108Travel expenses46 436 37 227IT and communication costs38 883 25 891Changes in provisions6 520 46 178Repair and maintenance 16 278 10 572Premises costs 29 074 29 147Sub supplier services81 312 76 337Other expenses154 080 84 611TOTAL Other operating expenses568 566 523 824

2.7 Finance income and cost

(Amounts in NOK thousands) 2023 2022Interest income 167 834 72 201Change in fair value financial instruments 592 19 504Other 7 079 5 924Finance income 175 505 97 629Interest expense 2 758 693Interest expense lease liabilities 14 812 10 473Net foreign exchange loss -16 427 -56 459Change in fair value financial instruments 342 804 50 118Other 875 1 147Finance cost 344 821 5 972Net finance income (cost) -169 316 91 657

The change in fair value financial instruments is mainly due to change in fair value of Nel’s shareholdings in Everfuel of NOK

-304.1 (Everfuel and Nikola in 2022 equals NOK 26.2 million) million. For additional information, refer note 4.3. Net foreign

exchange gain is mainly unrealised effects from revaluing internal loans.

100

Notes to the consolidated financial statements 2023

2.8 Income taxes

TAX

The tax expense in the statement of comprehensive income

comprises of the tax payable for the period and of the change

in deferred tax. Deferred tax is calculated at the prevailing tax

rate in the respective countries where the parent company and

subsidiaries are tax resident. Deferred tax is calculated based

on temporary differences that exist between accounting and

tax values, as well as any tax loss carry forward at the end of

the financial year. The deferred tax asset is recognised if it is

probable that the company will have a sufficient tax profit to be

able to utilise the tax asset.

Significant accounting judgements - Deferred tax assetDeferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.The group has NOK 710.6 million of tax amounts from tax losses carried forward (NOK 497.3 million in 2022). These losses relate to subsidiaries that have a history of losses, do not expire, and to some extent may not be used to offset taxable income elsewhere in the group. On this basis, the group has determined that it cannot recognise deferred tax assets from the tax losses carried forward. Deferred tax assets not recognised in the statement of financial statement amount to NOK 746.8 million in 2023 (532.5 in 2022).

CALCULATIONS OF THE TAX BASE FOR THE YEAR 2023 2022Income (loss) before tax -872 534 -1 186 997Permanent differences 346 979 365 343Change in temporary differences 30 651 183 538Use of tax losses carried forward -89 145 -149 070The year's taxable income -584 049 -787 186RECONCILIATION OF TAX EXPENSE TO NORWEGIAN NOMINAL STATUTORY TAX RATE 2023 2022Nominal tax rate 22 %22 %Income (loss) before tax -872 534 -1 186 997Tax this years income (loss), estimated -191 957 -261 139Tax effect of: Tax rates different from Norway 3 189 2 833Permanent differences 71 637 78 196Change in tax rates recognised in temporary differences 0 -3 702Change in deferred tax -8 830 -8 103Change in not recognized deferred tax assets (tax liabilities) 115 233 163 930Other differences -6 609 12 158Income tax expense -17 338 -15 828

Nel ASA

Annual report 2023

101

INCOME TAX EXPENSE COMPRISE 2023 2022Income tax payable-8 508-7 726Change in deferred tax -8 830 -8 103Total income tax expense (income) -17 338 -15 828TAX EFFECTS OF TEMPORARY DIFFERENCES 2023 2022Trade receivables and customers contracts-6 131-12 949Intangible assets 43 490 38 663Property, plant and equipment 10 926 8 762Inventories 2 053 -147Accrued warranty -16 591 -16 726Leases -8 047 -6 530Deferred income -22 485 -15 700Other accruals -39 411 -30 500Tax losses carry forward -710 578 -497 326Deferred tax asset -746 774 -532 453RECONCILIATION TO STATEMENT OF FINANCIAL POSITION 2023 2022Deferred tax asset -746 774 -532 453Deferred tax asset not recognised in statement of financial position 785 211 577 982Deferred tax liability in the statement of financial position 38 436 45 529CHANGES IN RECOGNISED DEFERRED TAX LIABILITY 2023 2022Balance as of 01.01. 45 529 48 543Recognised in the income statement -8 830 -8 103Translation differences on deferred taxes 1 736 5 089Balance as of 31.12. 38 436 45 529

The majority of the deferred tax asset is related to tax losses carry forward. As of 31 December 2023, it is considered not to be

likely that the deferred tax asset can be utilised in near future, therefore no deferred tax asset has been capitalised. Table below

show net operating losses carried forward by country multiplied with the tax rate, the deferred tax asset not recognised.

TAX LOSSES CARRY FORWARD BY COUNTRY 2023 2022Norway 240 470 233 084Denmark 223 655 170 687United States 234 205 88 753South Korea 12 249 4 802Balance as of 31.12. 710 578 497 326

102

Notes to the consolidated financial statements 2023

2.9 Earnings per share

Earnings per share are calculated by dividing the profit/loss for the year by the corresponding weighted average of the number

of outstanding shares during the reporting period. ‘Diluted earnings per share’ is based on the same calculation as for earnings

per share, but it also considers all potential shares with dilutive effect that have been outstanding during the period. Potential

shares relate to agreements that confer the right to issue shares in future. Options are excluded if their effect would have been

anti-dilutive.

Earnings per share is calculated as profit/(loss) attributable to the equity holders of the parent company divided by the average

number of shares outstanding.

(Amounts in NOK thousands) 2023 2022Net loss attributable to the equity holders of the parent company and for the purpose of basic and diluted shares -855 196 -1 171 169Basic earnings per shareIssued ordinary shares at 1 January 1 563 325 1 460 799Share options exercised 0 4 487Share issued 108 000 98 039Issued ordinary shares at 31 December 1 671 325 1 563 325Effect of weighting (share options exercised and share issued during the year) -19 500 -25 202Weighted-average number of shares outstanding for the purpose of basic earnings per share 1 651 825 1 538 123Basic earnings per share for loss attributable to the equity holders of the parent company (NOK) -0.52 -0.76Diluted earnings per shareWeighted-average number of shares outstanding for the purpose of basic earnings per share 1 651 825 1 538 1231)Effect of share options on issue 0 0Weighted-average number of shares outstanding for the purpose of diluted earnings per share 1 651 825 1 538 123Diluted earnings per share for loss attributable to the equity holders of the parent company (NOK) -0.52 -0.761) As of 31 December 2023, 15 402 175 weighted-average options were excluded from the diluted weighted-average number of ordinary shares calculation because their effect would have been anti-dilutive (earnings per share is negative).

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103

3.1 Intangible assets

RESEARCH AND DEVELOPMENT

Research

Research activities are defined as activities whose purpose is

to generate new technological understanding or knowledge.

Research costs are expensed as incurred.

Development

Capitalised development costs are recognised at historical

cost after the deduction of accumulated amortisations and

impairments. The capitalised value is amortised over the

period of expected future earnings from the related project

on a straight-line basis.

Technology

As an indication of the level of internal technology costs, Nel

currently has 47 and 17 full time employees working directly

with R&D in the electrolyser and fueling division, respectively.

Of the 47 full time employees working with electrolysers, 33

engineers are dedicated to technology at Proton OnSite in

Wallingford, U.S. and 14 are dedicated to the technology at

Nel Hydrogen Electrolyser AS in Notodden, Norway

Electrolyser

Nel invests in development of large-scale industrialisation of

Electrolyser products. In its Alkaline division, Nel prioritizes the

development of a pressurized alkaline Electrolyser targeting

1000Nm3/h single cell stack to increase product efficiency

and safety. In the Proton Membrane division, the R&D team

focused on the collaboration with General Motors applying

the know-how acquired from the development of fuel cell

batteries into the development of a new cell stack series. In

addition, Nel’s electrolyser divisions initiated the development

of product concepts to larger sized projects meeting

the requirements of a more sophisticated and complex

electrolyser system.

The Electrolyser division has recognised on the statement of

Financial Position Technology from internal development of

NOK 359.1 (262.3) million as of 31.12.2023.

Fueling

Nel continues to see the market of Heavy-Duty transportation

move fast towards Hydrogen. Therefore, in the fueling

division there will be a significant investment in the

development of next generation HDV equipment like high-

capacity station modules and dispensers. This is to serve

customers who have a need for large capacity dispensing

capability, enabling fueling of a heavy-duty truck in 10-15

minutes, to achieve a range of 1 000 km. In addition, there

will be ongoing investments in factory and laboratory to be

able to accommodate HDV fueling equipment.

The Fueling division has recognised on the statement of

Financial Position Technology from internal development of

NOK 87.1 (71.9) million as of 31.12.2023.

Significant accounting judgements - Development costsDevelopment expenditures on an individual project are recognised as an intangible asset when the group can demonstrate:• The technical feasibility of completing the intangible asset so that the asset will be available for use or sale• How the asset will generate future economic benefits• Its intention to complete and its ability and intention to use or sell the asset• The availability of resources to complete the asset• The ability to measure reliably the expenditure during developmentTo demonstrate technical feasibility and availability of resources, it should be a high certainty that Nel have the intention and ability to complete. Nel categorise its intention and ability to complete in a matrix with the overarching risk to complete buckets low, medium and high. In the phase of a project where the risk of completing is medium to high, then the development costs are expensed as incurred. A capitalised development project commence amortisation when a succesful pilot is demonstrated. After a succesful pilot, the technology is in the condition necessary for it to be capable of operating in the manner indented by management and enters ‘ramp-up’ stage. Subsequent expenditure is maintenance of existing technology (expensed). Total technology spend for 2023 was NOK 393.2 (248.4) million, of which NOK 183.1 (118.3) million and NOK 210.1 (130.1) million has been capitalised and expensed, respectively.

104

Notes to the consolidated financial statements 2023

USEFUL LIFE, AMORTISATION PLAN

• Technology has a useful life of 3-7 years

• Customer relationship has a useful life of 7-10 years

• Goodwill has indefinite life

CUSTOMER RELATIONSHIP

Customer relationship is acquired through business

combinations. Customer relationship is initially measured at

cost and subsequently amortised over useful life, using the

straight-line method. At period end customer relationship

is recognised at historical cost after the deduction of

accumulated depreciation and impairments.

GOODWILL

Goodwill recognised in the statement of financial positions

has been acquired through business combinations. Goodwill

occurs as the residual in the business combination, being the

excess of the aggregate of the consideration transferred and

any previous interest held, over the net identifiable assets

acquired and liabilities assumed. Goodwill is initially measured

at cost which is net of tax amount.

Subsequent to initial recognition, goodwill is measured at

cost less any accumulated impairment losses. For the purpose

of impairment testing, goodwill acquired in a business

combination is, from the acquisition date, allocated to each of

the group’s cash-generating units (CGUs) that are expected to

benefit from the combination, irrespective of whether other

assets or liabilities of the acquire are assigned to those units.

(Amounts in NOK thousands) CUSTOMER TECHNOLOGY RELATIONSHIP GOODWILL TOTALAcquisition cost as of 01.01.2022748 807 96 777 615 651 1 461 235Additions from internal development 115 742 0 0 115 742Additions aqcuired separately 2 509 0 0 2 509Disposals -26 100 0 0 -26 100Currency effects 45 598 2 418 46 835 94 851Acquisition cost as of 31.12.2022 886 556 99 195 662 485 1 648 237Additions from internal development 131 897 0 0 131 897Additions aqcuired separately 34 345 0 0 34 345Disposals -34 356 0 0 -34 356Currency effects 22 651 1 039 9 725 33 415Acquisition cost as of 31.12.2023 1 041 094 100 234 672 210 1 813 538Accumulated amortisation and impairment as of 01.01.2022 252 228 64 395 467 317 091Amortisation 69 313 13 310 0 82 623Reversed amortisation disposals -20 772 0 0 -20 772Reclassification 1 632 0 0 1 632Impairment 30 860 0 296 438 327 298Currency effects 5 908 0 0 5 908Accumulated amortisation and impairment as of 31.12.2022 339 169 77 705 296 905 713 779Amortisation 96 175 14 308 0 110 483Reversed amortisation disposals -34 356 0 0 -34 356Impairment 1 424 0 0 1 424Currency effects 7 161 0 0 7 161Accumulated amortisation and impairment as of 31.12.2023 409 572 92 013 296 905 798 491Carrying value as of 31.12.2022 547 387 21 489 365 580 934 456Carrying value as of 31.12.2023 631 521 8 220 375 305 1 015 046

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105

Impairment loss NOK 1.4 (326.3) million, from categories

Technology and Goodwill, is included within “Impairment

of tangible and intangible assets” in profit or loss. The

impairment of technology is related to not material

development projects in electrolyser segment. Prior year,

2022, included impairment in Fueling of NOK 326.3 million.

The assessment included uncertainty of future economic

benefits from these products, both from actuals historical

results and as Fueling develops new technology that will

replace existing. Fueling will focus on developing its core

technology with special focus on high-pressure compression,

cooling and control. The fueling division will continue to

invest in the development of next generation Heavy-Duty

Vehicle (“HDV”) equipment such as high-capacity station

modules and dispensers.

Specification of carrying amount

2023(Amounts in NOK thousands) CUSTOMER TECHNOLOGY RELATIONSHIP GOODWILL TOTALInternal development414 177 0 0 414 177Acquired separately 32 252 0 0 32 252Acquired through business combinations 185 092 8 220 375 305 568 618Carrying value as of 31.12.2023 631 521 8 220 375 305 1 015 0462022(Amounts in NOK thousands) CUSTOMER TECHNOLOGY RELATIONSHIP GOODWILL TOTALInternal development334 176 0 0 334 176Acquired separately 881 0 0 881Acquired through business combinations 212 331 21 489 365 580 599 401Carrying value as of 31.12.2022 547 387 21 489 365 580 934 456

ESTIMATION UNCERTAINTY - Impairment of goodwill and intangible assetsImpairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget and strategy forecasts for the next five years and do not include restructuring activities that the group is not yet committed to or significant future investments which has not commenced that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are disclosed and further explained in this note.

106

Notes to the consolidated financial statements 2023

GOODWILL AND INTANGIBLE ASSETS

WITH INDEFINITE USEFUL LIVES -

IMPAIRMENT CONSIDERATIONS

Goodwill, and CGUs where goodwill has been allocated, are

required to be tested for impairment annually. The group

performed its annual impairment test in December 2023.

Impairment losses are recognised where the recoverable

amount is less than the carrying amount. The group has not

recognised goodwill impairment expense in 2023. In 2022,

the group impaired the goodwill of NOK 296.4 million of

the Fueling division recognized initially from the business

acquisition of Fueling in 2015. The impairment charge was

primarily supported by a reduced projection of growth for

sales of light duties stations and an increased personnel

cost, combined with high quality costs on delivered stations

out in the field. In addition, the pre-tax nominal WACC rate

increased to 14.0% in 2022 (8.5% in 2021) mainly due to the

increase in the risk-free rate in response to raising inflation in

Europe during 2022.

ANNUAL IMPAIRMENT TEST -

ASSUMPTIONS

CGU

The annual impairment test is performed for all the Group’

Cash Generating Units (CGUs). A CGU is defined as the

smallest group of assets that generates cash inflows

from continuing use that are largely independent of the

cash inflows of other assets or groups thereof. The way

management monitors operations assisted in the judgements

of identifying the CGUs.

The Group’ CGUs are

• Electrolyser Norway,

• Electrolyser US and

• Fueling

SPECIFICATION OF ALLOCATED GOODWILL PER CGU 2023 2022Electrolyser US313 941 304 216Electrolyser Norway61 364 61 364Fueling0 0Balance as of 31.12.375 305 365 580

Market capitalisation

The group considers the relationship between its market

capitalisation and its book value, among other factors, when

reviewing indicators of impairment. As of 31 December 2023,

the market capitalisation of the group was approximately

3 times above the book value of equity, indicating no

impairment of goodwill and impairment of the assets. In 2022

the market capitalisation was 4 times above the book value of

equity

Key assumptions

The calculations of value in use are sensitive to several

assumptions, the following are assessed key assumptions in

the measured value:

• Revenue growth and gross margin

• EBITDA margins

• Discount rate / Weighted average cost of capital (WACC)

Forecast period

For each CGU, a recoverable amount has been measured.

The impairment test has been based on the business and

strategy plans approved by the Board of Directors and

management’s best estimate of cash flows. The recoverable

amount is based on a discounted cash flow model

determined value in use, which are based on the following:

i) the future expectations reflected in the current budget

and strategy over the next 5-year period (forecast period);

and

ii) Growth rates of 2.5% growth rate has been applied from

year 2029 to 2031, and in terminal value year, for the

CGUs Fueling and Electrolyser Norway. For Electrolyser US

a declining growth rate of -3.5% has been conservatively

applied between 2029 and 2031 to consider cost

reductions passing through to customers in the future.

Discount rate

Discount rates represent the current market assessment of

the risks, taking into consideration the time value of money

and individual risks of the underlying assets that have not

been incorporated in the cash flow estimates. The discount

rate calculation is based on the specific circumstances of

the group and its operating segments and is derived from

its weighted average cost of capital (WACC). The WACC

considers the cost of debt and equity. The cost of equity

is derived from the expected return on investment by the

group’s investors. The cost of debt is based on the interest-

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Annual report 2023

107

bearing borrowings the group is obliged to service. Segment

specific risk is incorporated by applying individual beta factors.

The beta factors are evaluated annually based on publicly

available market data. Adjustments to the discount rate are

made to factor in the specific amount and timing of the future

cash flows to reflect a pre-tax nominal discount rate. Pre-tax

nominal discount rate is in the range of 13.5 % to 14.9 %.

ANNUAL IMPAIRMENT TEST – RESULTS

AND SENSITIVITY

The impairment test has been prepared in accordance with

IAS 36 impairment of non-financial assets following the

discounted cash flow methodology for value in use within

the standard. The cash flows projections relate to the cash-

generating unit in the current condition which means future

investments not commenced has not been included in the

valuation. It excludes cash inflows and investments forecasted

to meet the market demand before 2030. Therefore, the

measured enterprise value calculated does not fully consider

the growth in the renewable hydrogen market, nor the

expansion plans and strategy of Nel. In addition, the standard

encourages a conservative valuation to ensure that assets are

not carried at more than their recoverable amount.

(Amounts in NOK thousands) ELECTROLYSER ELECTROLYSER FUELINGUSNORWAYGoodwill313 94161 364 0Other intangible assets 314 882 212 313 97 605Other invested capital 492 854 1 005 354 243 940Carrying value 1 121 677 1 279 032 341 544Recoverable amount 1 448 376 2 718 029 341 544Headroom 326 699 1 438 997 0Pre-tax nominal discount rate 13,5 % 14,9 % 14,1 %Terminal growth rate 2,5 % 2,5 % 2,5 %

ELECTROLYSER US

Electrolyser US is the Group’ segment for the PEM

electrolyser technology. The CGU covers the production and

manufacturing of PEM electrolyser equipment in Wallingford,

Connecticut, US. The operations consist of both assembly of

electrolyser, marketing activities and product development.

The table below show the sensitivity analysis for the range of

+/-2 percentage points in WACC and +/-4 percentage points

in EBITDA margin.

Sensitivity in headroom(amounts in NOK million) PERCENTAGE POINT CHANGE IN EBITDA MARGIN-4,0%-2,0% 0,0% 2,0% 4,0%-2,0% 186 578 970 1 361 1 753 -1,0% -87 255 596 938 1 280 0,0% -297 7 310* 613 916 CHANGES IN WACC1,0% -462 -190 83 355 628 2,0% -596 -349 -101 146 394 * Represents headroom in impairment calculation for the CGU. Negative numbers in the table indicate impairment.

108

Notes to the consolidated financial statements 2023

ELECTROLYSER NORWAY

Electrolyser Norway is the Group’ segment for the Alkaline

electrolyser technology. The CGU covers the production,

manufacturing and development of both atmospheric alkaline

and pressurised alkaline electrolyser equipment in Herøya

and Notodden, Norway. A newly automated plant in Herøya,

Norway started operations in 2021 with further production

expansion planned to be concluded in 2024. The operations

consist of both assembly of electrolyser, marketing activities

and product development

The table below show the sensitivity analysis for the range of

+/-2 percentage points in WACC and +/-4 percentage points

in EBITDA margin.

Sensitivity in headroom(amounts in NOK million) PERCENTAGE POINT CHANGE IN EBITDA MARGIN-4,0% -2,0% 0,0% 2,0% 4,0%-2,0% 1 118 2 055 2 992 3 929 4 865 -1,0% 500 1 302 2 104 2 905 3 707 CHANGES IN WACC0,0% 40 739 1439* 2 139 2 838 1,0% -313 306 926 1 545 2 165 2,0% -591 -36 519 1 074 1 629 * Represents headroom in impairment calculation for the CGU. Negative numbers in the table indicate impairment.

FUELING

Fueling is the Group’ segment for the Hydrogen fueling

technology. The CGU covers the production and manufacturing

of hydrogen refueling stations in Herning, Denmark. The

operations consist of both assembly of hydrogen refueling

stations, marketing activities and product development. The

Fueling segment offers H2Station® for fast fueling of fuel cell

electric vehicles as well as services in relation to the supply

of these stations. The objective to the segment is to deliver

world class fueling stations offering a complete solution from

sourcing and storage of hydrogen to fueling of vehicles.

The table below show the sensitivity analysis for the range of

+/-2 percentage points in WACC and +/-4 percentage points

in EBITDA margin.

Sensitivity in headroom(amounts in NOK million) PERCENTAGE POINT CHANGE IN EBITDA MARGIN-4,0% -2,0% 0,0% 2,0% 4,0%-2,0% -428 -8 413 833 1 253 -1,0% -534 -180 174 529 883 CHANGES IN WACC0,0% -610 -305 0* 305 610 1,0% -667 -400 -132 135 402 2,0% -710 -473 -236 1 238 * Represents headroom in impairment calculation for the CGU. Negative numbers in the table indicate impairment.

Nel ASA

Annual report 2023

109

Additional sensitivities –assumptions

The sensitivities in the table show the change in assumptions

that results in zero headroom, at perpetuity growth 2.5%,

all else being equal. Additional sensitivities for the Fueling

division has not been included as headroom in the valuation

is zero.

The table shows the sensitivities for the WACC used, but also

for WACC +/- one percentage point

KEY WACC CHANGE ELECTROLYSER ELECTROLYSER ASSUMPTIONS PERIODS CHANGED(PPS)USNO1)Revenue growth multiple Total multiple growth in NOK from 2023 to terminal 1,0%-0,1 -1,10,0% -0,4 -1,3-1,0% -0,6 -1,52)Gross margin Perecentage points in terminal1,0% -1,1% -3,7%0,0% -3,6% -5,0%-1,0% -5,8% -6,2%3)Free cash flow margin Perecentage points in terminal1,0% -0,9% -2,9%0,0% -2,7% -3,9%-1,0% -4,4% -4,8%1) If revenue assumption in terminal is reduced with this year’s revenue multiplied with this factor, the headroom is zero.2) If average gross margin rate assumption in the CGU is reduced with this percentage point in the terminal, the headroom is zero.3) If free cash flow margin rate assumption in the CGU is reduced with this percentage point in the terminal, the headroom is zero.

For the CGU Electrolyser Norway, the sensitivity table above

shows, all other equal, that if revenue assumption in terminal

value year 2031 is NOK 1 093 million lower than used in the

impairment test, the headroom is 0. Additionally, the sensitivity

in the impairment test shows that if gross margin in terminal

value year 2031 is 5.0% lower, blended, the headroom is zero.

Finally, it shows that if free cash flow margin in terminal value

year 2031 is 3.9% lower than projected, the headroom is zero.

The table shows all these sensitivities in scenarios where WACC

is +/- 1. CGU Fueling is not included in the table as headroom

is measured zero in the impairment test and any reducing

changes in the assumptions would lead to negative headroom.

110

Notes to the consolidated financial statements 2023

3.2 Property, plant and

equipment

Property, plant and equipment comprise owned and leased

assets.

Property, plant and equipment are measured using the cost

model; thus, recognised at cost price after deduction for

accumulated depreciation and any impairment. Cost prices

include purchase price and costs directly attributable to

bringing the asset to the location and condition necessary for

it to be capable of operating in the manner intended.

The assets are depreciated using the straight-line method

over the expected useful life of the asset. Costs of direct

maintenance on the operating assets are expensed as

incurred. Additional investments and improvements are

added to the asset’s cost price and depreciated in line with

the remaining useful life of the asset.

(Amounts in NOK thousands)MACHINERY AND EQUIPMENT BUILDINGSOFFICE RIGHT-OF- ASSET MACHINES USE UNDER CON-AND OTHER PRODUCTION TECHNICAL ASSETS STRUCTIONEQUIPMENTEQUIPMENT BUILDINGSINSTALLATIONS(NOTE 3.3) TOTALAcquisition cost as of 01.01.2022348 935 60 119 58 378 120 305 6 054 151 741 745 532Additions 86 653 32 211 41 097 405 120 35 961 196 447Disposals 0 -1 074 -2 738 0 -492 0 -4 304Reclassification -354 831 9 468 340 505 0 6 432 0 1 574Remeasurement 0 0 0 0 0 43 117 43 117Currency effects 857 6 890 3 293 4 508 26 2 013 17 587Acquisition cost as of 31.12.2022 81 614 107 614 440 535 125 218 12 139 232 833 999 953Additions 482 427 60 420 22 173 3 778 4 791 31 397 604 986Disposals 0 -2 936 0 0 0 0 -2 936Reclassification -5 658 486 5 172 0 0 0 0Remeasurement 0 0 0 0 0 28 661 28 661Currency effects -6 200 4 545 -2 005 6 033 34 1 459 3 866Acquisition cost as of 31.12.2023 552 183 170 128 465 875 135 029 16 964 294 350 1 634 529Accumulated depreciation as of 16 327 26 259 23 515 13 392 1 981 40 544 122 01801.01.2022Depreciation 0 20 703 42 055 4 078 667 21 358 88 860Impairment 0 0 0 0 0 0 0Reversed depreciation disposals 0 -1 017 -1 127 0 -306 0 -2 450Reclassification -16 327 217 16 051 0 0 0 -58Currency effects 0 3 400 2 162 531 1 0 6 094Accumulated depreciation as of 0 49 562 82 656 18 001 2 343 61 902 214 46431.12.2022Depreciation 0 29 146 46 866 4 674 826 31 820 113 331Impairment 0 0 360 187 0 0 547Reversed depreciation disposals 0 -2 936 0 0 0 0 -2 936Reclassification 0 0 0 0 0 0 0Currency effects 0 1 672 860 911 2 0 3 445Accumulated depreciation as of 0 77 443 130 742 23 774 3 171 93 722 328 85131.12.2023Carrying value as of 31.12.2022 81 614 58 052 357 879 107 216 9 796 170 931 785 488Carrying value as of 31.12.2023 552 183 92 685 335 134 111 255 13 793 200 628 1 305 678Useful life 3-5 years 3-8 years 30-40 years 15-20 years 2-10 yearsDepreciation plan Straight-line Straight-line Straight-line Straight-line Straight-line

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111

USEFUL LIFE, DEPRECIATION PLAN

• Office machines and other equipment has a useful life of

3-5 years

• Production equipment has a useful life of 3-8 years

• Buildings has a useful life of 30-40 years

• Technical installations have a useful life of 15-10 years

• Right of use assets has a useful life of 2-10 years

Alkaline Herøya expansion

In 2023, Nel continue executing the expansion at Herøya

in Norway with an additional 500 MW alkaline production

line, expected to be operational from April 2024. The

carrying amount for the Herøya second line expansion is

NOK 281 million as of 31 December 2023. Total contractual

commitments beyond December 2023 for the second line

are NOK 118 million, including purchase contracts for all the

physical equipment needed.

PEM Wallingford expansion

In 2023, Nel took final investment decision to expand the

production capacity at its PEM electrolyser manufacturing

facility in Wallingford, Connecticut. The expansion will bring

annual production capacity towards 500MW in 2025. The

carrying amount for the PEM expansion is NOK 180 million as

of 31 December 2023. Total contractual commitments beyond

December 2023 for the PEM expansion are NOK 100 million,

including purchase contracts for all the physical equipment

needed.

Impairment

An assessment of impairment of property, plant and equipment

is made if there is an indication of impairment. If the impairment

test reveals that an asset’s carrying amount is higher than the

recoverable amount, an impairment loss will be recognised.

Property, plant and equipment is included in ‘other invested

capital’ allocated to the respective CGU’s for the annual

impairment test where goodwill is allocated. See note 3.1 for

impairment considerations for other invested capital.

3.3 Leases

At inception of a contract, the Group assesses whether a

contract is, or contains, a lease. A contract is, or contains,

a lease if the contract conveys the right to control the use

of an identified asset for a period of time in exchange for

consideration. To assess whether a contract conveys the right

to control the use of an identified asset, the Group uses the

definition of a lease in IFRS 16.

AS A LESSEE

At commencement date or on modification of a contract

that contains a lease component, the Group allocates the

consideration in the contract to each lease component based

on its relative stand-alone prices. The Group has not chosen

to follow the practical expedient to account for the lease and

non-lease components as a single component. Non-lease

components are treated separately in other standards than

IFRS 16.

The group recognise a right-of-use asset and a lease liability

at the lease commencement date. The right-of-use asset is

initially measured at cost, which comprises the initial amount

of lease liability adjusted for any lease payments made at or

before the commencement date, plus any initial direct costs

incurred. The right-of-use asset is subsequently depreciated

using the straight-line method from the commencement date

to the end of the lease term. In addition, the right-of-use

asset is periodically reduced by impairment losses, if any, and

adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of

the lease payments that are not paid at the commencement

date, discounted using the interest rate implicit in the lease,

or if that rate cannot be readily determined, the Group’s

incremental borrowing rate. Generally, the Group uses its

incremental borrowing rate as the discount rate. Refer to

section significant accounting judgements – estimating the

incremental borrowing rate (IBR) for additional information.

Lease payments included in the measurement of the lease

liability comprise the following: i) fixed payments and ii)

variable lease payments that depend on an index, initially

measured using the index or rate as at the commencement

date. The lease liability is measured at amortised cost using

the effective interest method. It is remeasured when there is

a change in future lease payments arising from a change in

an index. When the lease liability is remeasured in this way, a

corresponding adjustment is made to the carrying amount of

the right-of-use asset.

Payments for insurance, property tax and VAT are excluded

from the lease payments amount as they are defined variable

lease payments.

The Group presents right-of-use assets in ‘property, plant and

equipment’ and the lease liabilities within ‘lease liabilities’,

divided into current and non-current portions.

Short-term leases and leases of low value assets

Nel has elected the practical expedient of expensing short-

term leases and low value assets as incurred.

112

Notes to the consolidated financial statements 2023

Significant accounting judgements - Estimating the incremental borrowing rate (IBR)The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its IBR to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group ‘would have to pay’, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions). The Group determines its incremental borrowing rate by considering various interest rates (risk free rate as 10-year government bonds, and risk premiums) and makes certain adjustments to reflect the terms of the lease, the type of the asset leased and certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating).

The group has lease contracts for various items of

manufacturing facilities, offices, warehouse, parking, vehicles

and other equipment used in its operations. Leases of

manufacturing facilities generally have lease terms 10 years,

while offices, warehouse and parking have 5 years and motor

vehicles and other equipment generally have lease terms

between 2 and 5 years. The Group’s obligations under its

leases are secured by the lessor’s title to the leased assets.

‘Manufacturing facilities’ comprise the Group’ two significant

leases in the manufacturing facilities at Herøya (Norway) and

Wallingford (US).

Right-of-use assets

(Amounts in NOK thousands)MANU- OFFICE, FACTURING WAREHOUSE MOTOR FACILITIESAND PARKINGVEHICLES EQUIPMENT TOTALAs of 01.01.202292 27215 841 2 563 522 111 197Additions 0 35 469 492 0 35 961Remeasurement 42 404 1 033 -320 0 43 117Depreciation -12 064 -7 940 -1 233 -121 -21 358Translation difference 1 449 435 108 22 2 013As of 31.12.2022 124 061 44 839 1 608 423 170 931Additions 0 23 756 7 641 0 31 397Remeasurement 7 542 21 013 94 13 28 661Depreciation -14 487 -15 283 -1 913 -137 -31 820Translation difference -73 200 15 958 58 671 30 1 459As of 31.12.2023 (note 3.2) 43 915 90 282 66 102 329 200 628

In December 2022, the group reassessed the extension

option within the lease agreement of Wallingford (US). The

lease agreement expires in July 2024 with two extension

options for 5-year periods exercisable in July 2024 (extending

termination date to July 2029) and July 2029 (extending

termination date to July 2034). The reassessment evaluated

Nel’s plan to increase the production capacity in the United

States, including the expenditure in 2023, and economic

incentives to do not reallocate skilled staff and its fixed

assets to a new production facility. During 2023, Nel invested

NOK 180 million in the capacity expansion reinforcing that

reassessment performed in 2022. The conclusion is that Nel

is reasonably certain to exercise the first extension option

expiring in July 2024.

Nel ASA

Annual report 2023

113

As of 31 December 2023, the economic incentives for the

extension due in July 2029 were considered unclear and not

reasonably certain due to the uncertainties about the size of

the capacity expansion, total investment and location.

The reassessment resulted in an increase of the right-of-use

assets and lease liabilities of NOK 42.4 million in 2022.

Remeasurement in 2023 includes mainly extension of lease

of storage facility in connection with production of alkaline

electrolysers in Herøya, Norway.

Lease liabilities

The table below show the carrying amounts of lease liabilities (both current and non-current portion) and the movements

during the period:

(Amounts in NOK thousands)2023 2022Balance as of 01.01. 200 615 133 421Additions 31 397 35 961Remeasurement 28 661 43 117Accretion of interest 14 812 10 473Lease payments -40 585 -24 873Translation differences 2 304 2 515Balance as of 31.12. 237 203 200 615Current38 067 30 438Non-current 199 136 170 177Balance as of 31.12.237 203 200 615

The maturity analysis of undiscounted cash flow in lease liabilities is disclosed in Note 5.2. The difference between discounted

cash flows and undiscounted cash flows (discount effect) is NOK 86.5 (73.8) million as of 31.12.2023. The discount effect is

mainly related to manufacturing facility at Herøya with included lease term until 2035

Reconciliation of liabilities arising from financing activities in statement of cash flows, split in cash flows and non-cash changes.

(Amounts in NOK thousands)2023 2022Balance as of 01.01.200 615 133 421Cash flows principal amount-25 773 -14 400Cash flows interests-14 812 -10 473Non-cash changes:Additions and remeasurements60 058 79 078Accretion of interest expense14 812 10 473Foreign currency effects2 304 2 515Balance as of 31.12.237 203 200 615

114

Notes to the consolidated financial statements 2023

Amounts recognised in profit or loss

(Amounts in NOK thousands)2023 2022Depreciation expense of right-of-use assets-31 820 -21 358Interest expense on lease liabilities-16 041 -10 473Income from subleasing right-of-use assets0 2 205Expense relating to leases of low-value assets-241 -208Expense relating to short-term leases, excluding short-term leases of low-value assets-885 -32TOTAL amount recognised in profit or loss-48 987 -29 866

Other informationTotal cash outflow for leases as a lessee41 711 25 113Weighted incremental borrowing rate used as discount rate for the measuring of lease liabilities6,7 % 6,9 %

Extension and termination options

The Group has several lease contracts that include extension and termination options. These options are negotiated by

management to provide flexibility in managing the leased-asset portfolio and align with the Group’s business needs.

Significant accounting judgements - Determining the lease term of contracts with renewal and termination options - Group as a lessee.The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Group has several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.In general, the renewal periods for leases of manufacturing facilities, offices, warehouse and parking with longer non-cancellable periods (i.e. 6-10 years) are not included as part of the lease term as these are not reasonably certain to be exercised. In addition, the renewal options for leases of motor vehicles are not included as part of the lease term because the Group typically leases motor vehicles for not more than three years and, hence is not exercising any renewal options. The periods covered by termination options are included as part of the lease term only when they are reasonably certain not to be exercised.

Nel ASA

Annual report 2023

115

Set out below are the material undiscounted potential future

rental payments relating to periods following the exercise

date of extension and termination options that are not

included in the lease term.

2024 2025 2026-2028 >2028Extension options not reasonably certain to exercise0 0 0 44 706Termination options expected to be exercised0 0 0 0TOTAL0 0 0 44 706

AS A LESSOR

The group have no leases as lessor except for sub-lease. All

sub-leases are office space that has been presented as right-

of-use assets as part of the property, plant and equipment.

When considering the lease term of the sub-lease and the

head lease a major part of the economic life of the asset is

retained by the Group. All sub-leases have been classified

as operating leases and the lease payments received is

recognised on a straight-line basis over the lease term as part

of ‘other income’.

116

Notes to the consolidated financial statements 2023

3.4 Investments in associated

companies and joint ventures

An associate is an entity where the group has significant

influence, but not control or joint control.

A joint venture is an entity where the group has joint control

contractually together with one or several other parties,

whereby the Group has rights to the net assets of the

arrangement, rather than rights to its assets and obligations

for its liabilities.

The group’s investments in its associates and joint ventures

are accounted for using the equity method. They are initially

recognised at cost, which includes transaction costs. The

statement of profit or loss reflects the group’s share of the

profit or loss in equity-accounted investees. Any change in

OCI of those investees are presented as part of the group’s

OCI.

No dividends have been received during 2023 or 2022.

The group is not committed to financing the losses and has

not provided any guarantee of equity-accounted investees’

obligations. This means that if equity in any of the equity-

accounted investees are negative, Nel recognise book value

of shares as NOK 0 at the end of the year, without any

provisions for liabilities.

(Amounts in NOK thousands) ACQUISITION COST CARRYING VALUESCOUNTRY SEGMENT OWNERSHIP TYPE 2023 2022 2023 2022Sagim SAS France Electrolyser 37.0% Associate 100 100 100 100Glomfjord Hydrogen AS Norway Electrolyser 23.2% Associate 0 2 786 0 2 786SUM associated companies 100 2 886 100 2 886TOTAL associated companies and joint ventures 100 2 886 100 2 886

Shares in Glomfjord Hydrogen AS has been divested in 2023.

Nel ASA

Annual report 2023

117

3.5 Non-current financial assets

(Amounts in NOK thousands)2023 2022Investment in Hydrogen Energy Network (HyNet) 9 800 39 110Long-term investments 147 053 208 066Fair value of derivatives 407 189Prepayments 161 159Other non-current financial assets 1 837 2 548Balance as of 31.12. 159 259 250 072

HYDROGEN ENERGY NETWORK (HyNet)

The group’s shareholdings in Hydrogen Energy Network

(HyNet) constitute a 4.75 % ownership interest. HyNet is

structured as a Special Purpose Company and is principally

engaged in expanding the hydrogen fueling infrastructure in

South Korea.

During 2023, the Group recognised negative fair value

adjustment of NOK 30.6 million in the HyNet investment. The

fair value adjustment is based on the financial situation in the

company is strained and the company needs additional capital

either through capital increases, investor loans or external

loans. Therefore, a negative fair value adjustment is assessed

prudent and unbiased. The accumulated cost of shares in

HyNet is NOK 39.2 (33.9) million. The transaction and book

value are in Korean Won, therefore, the shares are revalued

to NOK 9.8 (31.9) million as of 31 December 2023. The shares

are unquoted and there have not been any transactions of an

identical or similar instrument. Fair value information has not

been disclosed for the investment in note 6.6 because the fair

value cannot be measured reliably.

LONG-TERM INVESTMENTS

Nel occasionally enters contracts with customers with specific

guarantee clauses that require Nel to purchase certain

performance bonds or advance payment guarantee products

from financial institutions. The products are secured by cash

collateral.

In addition, Nel has some lease agreements which require

deposits in a restricted bank account throughout the lease

term.

Both cash collateral and deposits are assessed as investments

(i.e. not cash or cash equivalents) as the maturity exceeds 3

months. Long-term investments include the investments that

exceed 12 months.

Performance and warranty bonds

NOK 66.4 (50.8) million relates to outstanding irrevocable

letters of credit used as assurance for bid and contract

performance, these letters of credit mature between 31

December 2023 and 31 January 2027. As of 31 December

2023, the customers have drawn NOK 0.0 (0.0) million on the

letters of credit.

Advance payment guarantee

Generally, in the contracts with customers, Nel receives

advance payments. As of 31 December 2023, Nel has NOK

9.5 (107.0) as cash collateral for irrevocable letters of credit

issued for advance payment guarantees with financial

institutions. As of 31 December 2023, the customers have

drawn NOK 0.0 (0.0) million on the letters of credit.

Lease payments guarantee (deposits) and other

collateral

Deposits for lease payments comprise security for lease

payments throughout the lease terms for cars, office premises

and manufacturing facilities. In addition, collateral for bank

credit lines. As of 31 December 2023, the Group has NOK

67.1 (49.2) million in such deposits.

118

Notes to the consolidated financial statements 2023

4.1 Inventories

Inventories comprises purchased raw materials, work in

progress and finished goods. Obsolescence is considered for

inventories and write-down is performed on obsolete goods.

Inventories are measured under the weighted-average

cost formula. The cost of each item is determined from the

weighted average of the cost of similar items at the beginning

of a period and the cost of similar items bought or produced

during the period. The average is calculated on a quarterly

basis.

(Amounts in NOK thousands)2023 2022Raw material114 657 51 478Work in progress169 713 120 846Finished goods431 290 346 434Allowance for obscolete inventory-11 670 -14 163Balance as of 31.12.703 990 504 595

Inventories are measured at the lowest of cost and net

realisable value less costs to sell. In both 2023 and 2022, all

items of inventories are measured at cost.

The amount of inventories recognised as an expense was

NOK 943.1 (622.2) million during the period.

4.2 Trade receivables

Trade receivables are initially recognised at their transaction

price, i.e. the amount of consideration to which Nel expects to

be entitled for transferring the promised goods or services to

the customer. Trade receivables are subsequently accounted

for at amortised cost and are reviewed for impairment on an

ongoing basis. Trade receivables are generally not discounted.

Trade receivables are presented net of expected credit losses.

Changes in the expected credit loss are recognised within

other operating expenses in statement of comprehensive

income.

(Amounts in NOK thousands)2023 2022Receivables from third-party customers843 964 463 005Allowance for expected credit losses-31 557 -2 270Balance as of 31.12.812 407 460 735

Trade receivables are non-interest bearing and are generally

on terms 30 to 60 days

Movements in the allowance for impairment in respect of

trade receivables

(Amounts in NOK thousands)2023 2022Balance as of 01.01.2 270 1 177Net remeasurement of loss allowance29 287 1 093Balance as of 31.12.31 557 2 270

See note 6.2 on credit risk of trade receivables, which explains

how the group manages and measures expected credit loss

of trade receivables that are neither past due nor impaired.

Nel recognises loss allowances for ‘Expected Credit Loss’

(ECL) on:

a) Financial assets measured at amortised cost; and

b) Contract assets

Loss allowance for trade receivables and contract assets are

always measured at an amount equal to lifetime ECLs.

When determining whether the credit risk of a financial

asset has increased significantly since initial recognition and

when estimating ECLs, the Group considers reasonable and

supportable information that is relevant and available without

undue cost or effort. This includes both quantitative and

qualitative information and analysis, based on the Group’s

historical experience and informed credit assessment, that

includes forward-looking information.

MEASUREMENT OF ECLs

ECLs are a probability-weighted estimate of credit losses.

Credit losses are measured as the present value of all cash

shortfalls (i.e. the difference between the cash flows due to

Nel in accordance with the contract and the cash flows that

Nel expects to receive).

PRESENTATION OF ALLOWANCE FOR

ECL IN THE STATEMENT OF FINANCIAL

POSITION

Loss allowances for financial assets measured at amortised

cost are deducted from the gross carrying amount of the

assets.

Nel ASA

Annual report 2023

119

4.3 Prepaid expenses and other current assets

(Amounts in NOK thousands)2023 2022Equity instruments0 450 296VAT net receivable41 623 34 040Short-term investments24 013 96 861Prepayments214 855 147 422Other current assets145 456 48 351Fair value of derivatives21 396 438Balance as of 31.12.447 342 777 408

EQUITY INSTRUMENTS

Everfuel

The carrying value as of 31 December 2022 was NOK 435.8 million. As of 12 December 2023, Nel has divested all its shares in

Everfuel A/S. During the year, Nel divested shares for a total net consideration of about NOK 133 million.

Everfuel A/S(Amounts in NOK thousands)ACQUISITION COST NOK/FAIR VALUE NOK/BOOK SHARE HOLDINGPER SHAREPER SHAREVALUECarrying value as of 31.12.2021 12 359 109 1.12 38.18 471 871Fair value adjustment 2022 0 0 0 -26 215Sale of shares 2022 -218 854 0 0 -9 820Carrying value as of 31.12.2022 12 140 255 1.12 35.90 435 836Fair value adjustment 2023 0 0 0 -302 909Sale of shares 2023 -12 140 255 0 0 -132 926Carrying value as of 31.12.2023 0 0 0 0

120

Notes to the consolidated financial statements 2023

Hyon

The carrying value as of 31 December 2022 was NOK 14.4 million. As of 24 January 2023, Nel has divested all its shares in Hyon

AS for a total net consideration of about NOK 7 million.

HYON AS(Amounts in NOK thousands)ACQUISITION COST NOK/FAIR VALUE NOK/BOOK SHAREHOLDINGPER SHAREPER SHAREVALUECarrying value as of 31.12.2021 9 804 000 0.06 0.06 572Fair value adjustment 2022 0 0 1.42 13 889Carrying value as of 31.12.2022 9 804 000 0.06 1.48 14 461Fair value adjustment 2023 0 0 -0.75 -7 387Sale of shares -9 804 000 0 -0.72 -7 074Carrying value as of 31.12.2023 0 0 0.00 0

SHORT-TERM INVESTMENTS

H2NO AS

During 2023, Nel received consideration for sale of all shares

in the company of NOK 34.1 million. The total gain on sale of

shares is NOK 11.6 million, which the majority is recognised

as fair value changes in 2021 and 2022. A finance income of

0.4 million is recognised in 2023 from realisation of shares in

H2NO AS.

Performance and warranty bonds, advance

payment guarantee and lease payments

guarantee (deposits)

Guarantees are included as short-term investments with

NOK 24.0 (61.2) million. This is the short-term equivalent

to the long-term investments, see note 3.5 for additional

information.

Nel ASA

Annual report 2023

121

4.4 Cash and cash equivalents

Cash and cash equivalents include cash, bank deposits and all other monetary items due within three months or less.

(Amounts in NOK thousands)2023 2022Cash and cash equivalents3 347 803 3 125 757Restricted bank deposits for employees' withheld taxes at 31.1215 628 10 833 1)Other restricted bank accounts0 1 959Balance as of 31.12.3 363 431 3 138 5501) Other restricted bank accounts comprise short-term deposits and short-term guarantee payments which are assessed equivalent to demand deposits and short-term highly liquid investments that are subject to an insignificant risk of changes in value. 2023 2022Norwegian Kroner 3 081 002 2 982 974US Dollars 132 411 107 413Danish Kroner 57 406 5 266Swedish Kroner 5 557 7 165Euro 54 429 7 061GB Pounds 11 174 3 014Korean Won 5 815 10 452Polish Zloty 9 2 411Balance as of 31.12. 3 347 803 3 125 757

Cash and cash equivalents are 92% (95%) in the Norwegian Krone (NOK) at the end of 2023. NOK 2 684 million is placed in 30-

days locked interest accounts in a portfolio of banks.

122

Notes to the consolidated financial statements 2023

5.1 Share capital and shareholders

SHARE CAPITAL

The share capital comprises the number of shares multiplied by their par value and are classified as equity. Expenses which can

be attributed directly to the issue of new shares or options (less tax) are recognised in equity as a reduction in the proceeds

received.

As of 31 December 2023, the group’s share capital was NOK 334.3 (312.7) million, consisting of 1 671 325 304 (1 563 325 304)

shares each with a par value of NOK 0.20 (0.20).

The parent company has only one share class and no special regulations relating to the shares; thus, one share represents one

vote.

SHAREHOLDERS AS OF 31.12.2023 COUNTRY NUMBER OF SHARES OWNERSHIPBlackRock, Inc. United States 66 211 666 3.96 %The Vanguard Group, Inc. United States 59 008 511 3.53 %Government of Norway Norway 50 947 702 3.05 %DNB ASA Norway 28 705 616 1.72 %Storebrand ASA Norway 25 897 839 1.55 %Legal & General Group Plc United Kingdom 17 658 530 1.06 %SAS Rue la Boetie France 14 829 747 0.89 %Svenska Handelsbanken AB Sweden 14 677 025 0.88 %AXA SA France 13 542 082 0.81 %Van Eck Associates Corp. United States 13 377 500 0.80 %Mirae Asset Global Investments Co., Ltd. United Kingdom 10 739 608 0.64 %Allianz SE Germany 10 734 575 0.64 %Argenta Bank en Verzekeringsgroep NV Luxembourg 7 736 650 0.46 %Deutscher Sparkassen-und Giroverband eV Germany 6 534 530 0.39 %New York Life Insurance Co. United States 6 313 608 0.38 %Erste Group Bank AG Austria 6 199 760 0.37 %Eika Gruppen AS Norway 6 174 271 0.37 %green benefit AG Germany 5 789 841 0.35 %BNP Paribas SA France 5 726 416 0.34 %FV Frankfurter Vermogen AG Germany 5 230 000 0.31 %Total 20 largest shareholders 376 035 477 22.50 %Total remaining shareholders 1 295 289 827 77.50 %Total number of shares 1 671 325 304 100.00 %

As of 31 December 2023, Nel ASA owns 418 033 treasury shares. The par value NOK 0.20 per share is recognised within

‘treasury shares’ as a reduction of total equity, while excess consideration paid is recognised within share premium.

Nel ASA

Annual report 2023

123

5.2 Long-term debt

(Amounts in NOK thousands) LONG-TERM DEBT - LENDER LEGAL ENTITY MATURITY INTEREST RATE 2023 20222) Nykredit - Vejlevej 5 - Ejendom Nel Hydrogen A/S 2038 0,36 % 16 160 15 9953) Nykredit - Vejlevej 5 - Ejendom Nel Hydrogen A/S 2038 0,27 % 5 358 5 3534) Nykredit - Vejlevej 3 Nel Hydrogen A/S 2028 0,30 % 940 1 083Balance as of 31.12. 22 458 22 431

Reconciliation of liabilities arising from financing activities

(Amounts in NOK thousands)2023 2022Balance as of 01.01.22 431 23 191Payment of loan-1 533 -1 889Non-cash changes:Accretion of interest448 598Foreign currency effects1 113 530Balance as of 31.12.22 458 22 431

The reconciliation of lease liabilities arising from financing activities is disclosed in note 3.3 leases.

MATURITY ANALYSIS

Maturity analysis for long-term debt (undiscounted cash flows)

20232024 2025 2026 2027 >2027 TOTAL Nykredit 1 510 1 551 1 593 1 637 16 169 22 458Lease liabilities (note 3.3) 39 670 41 570 40 226 35 342 162 388 319 1951)Estimated interest cost 495 459 459 459 2 743 4 614TOTAL long-term debt including interest 41 674 43 579 42 278 37 437 181 299 346 2671) Based on prevailing debt installment agreements and interest rates.20222023 2024 2025 2026 >2026 TOTAL Nykredit 1 378 1 415 1 454 1 493 16 691 22 431Lease liabilities (note 3.3) 31 903 28 926 31 427 30 392 164 469 287 1181)Estimated interest cost 504 464 430 430 2 571 4 399TOTAL long-term debt including interest 33 785 30 805 33 310 32 316 183 731 313 9471) Based on prevailing debt installment agreements and interest rates.

(Amounts in NOK thousands)CARRYING AMOUNT OF ASSETS THAT ARE PLEDGED 2023 2022Other equipment0 92Building66 100 65 430TOTAL66 100 65 522GUARANTEES 2023 2022Bank guarantees167 492 267 748

124

Notes to the consolidated financial statements 2023

5.3 Deferred income

(Amounts in NOK thousands)2023 2022Government grants66 243 64 049TOTAL deferred income66 243 64 049

GOVERNMENT GRANTS

Government grants are recognised where there is reasonable

assurance that the grant will be received, and all attached

conditions will be complied with. When the grants relate to

an expense item, it is normally recognised as other income on

a systematic basis over the periods that the related costs, for

which it is intended to compensate, are expensed.

Grants received that relate to an acquisition or development

of assets has been presented “gross” in Nel’s financial

statements. A gross presentation entails that the grant

received is presented separately as deferred income. The

deferred income is presented as a non-current liability and

is amortised over the useful life of the related asset. The

amortised part of the deferred income is presented as other

income in the statement of comprehensive income.

(Amounts in NOK thousands)2023 2022As of 31.12.2022 64 049 69 537Grants received 9 280 15 291Income recognised within 'other operating income' in 2023 (note 2.2) -12 028 -22 307Translation difference 4 942 1 527As of 31.12.2023 66 243 64 049

The aging schedule shows the remaining governments grants divided in the year the grants was initially received.

DEFERRED INCOME AGING SCHEDULE <2020 2020 2021 2022 2023 SUMGovernment grants as of 31.12.202315 007 21 181 14 821 6 225 9 008 66 243Government grants as of 31.12.202219 972 23 039 14 923 6 116 - 64 049

The table below show the split of deferred income (government grant) per operating segment.

OPERATING SEGMENT COUNTRY 2023 2022Electrolyser Norway 50 601 42 908Fueling Denmark 15 642 21 141Balance as of 31.12. 66 243 64 049

The group is not aware of any unfulfilled conditions associated with these grants.

Nel ASA

Annual report 2023

125

5.4 Other liabilities

OTHER CURRENT LIABILITIES(Amounts in NOK thousands)2023 2022Vacation allowance and other salary related accruals 58 502 41 438Public duties payable 35 606 24 110Other current liabilities 127 985 60 417Fair value of derivatives 16 123 7 740Balance as of 31.12. 238 216 133 704

OTHER NON-CURRENT LIABILITIES(Amounts in NOK thousands)2023 2022Other non-current liabilities 4 860 4 919Fair value of derivatives (note 6.4) 0 2 182Balance as of 31.12. 4 860 7 102

126

Notes to the consolidated financial statements 2023

5.5 Provisions

PROVISIONS, CONTINGENT LIABILITIES

AND CONTINGENT ASSETS

The group makes provisions when a legal or constructive

obligation exists as a result of past events, it is more likely

than not that a transfer of financial resources will be required

to settle the obligation, and the amount of the obligation

can be reliably estimated. When the group expects some

or all of a provision to be reimbursed, for example, under

an insurance contract, the reimbursement is recognised

as a separate asset, but only when the reimbursement is

virtually certain. When the effect is significant, provisions are

calculated by discounting expected cash flows at a pre-tax

rate that reflects the time value of money and if appropriate

the risks specific to the liability. Increase in provisions as a

result of time passing, is presented as interest expense.

Information regarding significant contingent liabilities

is disclosed. A contingent asset is not recognised, but

information is disclosed if there is a possibility that a

significant advantage will accrue to the group.

(Amounts in NOK thousands)ACCRUED EMPLOYEE SETTLEMENT ONEROUS WARRANTYBENEFITSAND CLAIMSCONTRACTS TOTALAs of 01.01.202255 460701 23 770 8 176 88 106Additions 36 894 21 792 2 748 37 374 98 809Used during the year -15 544 -701 -4 182 -5 458 -25 885Reversal of unused provisions -11 426 0 -818 -211 -12 454Foreign currency translation 3 162 0 243 1 459 4 864As of 31.12.2022 68 546 21 792 21 762 41 340 153 440Additions 44 902 36 896 0 23 249 105 047Used during the year -40 056 -13 490 -1 000 -37 769 -92 315Reversal of unused provisions -15 131 0 -22 434 -2 441 -40 006Foreign currency translation 1 551 1 261 1 672 1 067 5 551As of 31.12.2023 59 812 46 458 0 25 446 131 717

ACCRUED WARRANTY

The groups warranty to customers is limited to replacement

parts and services and generally expires one year from the

date of shipment or contract completion. Such warranties are

limited in time, for most products not exceeding 12 months.

Warranty is based on both contractual commitments and

caused by liability under background law.

Estimated warranty obligations are recorded in the period in

which the related revenue is recognised or when a project

is installed or commissioned. The group quantifies and

records an estimate for warranty related costs, which is

principally based on historical experience. The accounting

for warranties requires the Group to make assumptions

and apply judgments when estimating product failure rates

and expected material and labour costs. The group adjusts

accruals as warranty claim data and historical experience

warrant. If actual results are not consistent with the

assumptions and judgments used to calculate the warranty

liability because either failure rates or repair costs differ from

the groups assumptions, the group may be exposed to gains

or losses that could be material. Accrued warranty provision is

based on experience assumptions and provision comprises a

percentage of revenue from contracts with customers, in the

range of 3% to 8%.

EMPLOYEE BENEFITS

Nel has short term incentive bonuses in place for all

employees. The provision for bonus incurred in 2023 to be

finally measured and paid in 2024 is 46.5 NOK (21.8) million.

In addition, the employee benefits include provision for

social security on stock options for social security payable

in Norway, calculated at the intrinsic value at year end. The

provision fluctuates with the number of active options, timing

of exercise and Nel ASA share price. See note 2.5 for further

information on share option program.

SETTLEMENT AND CLAIMS

Settlement and claims comprise disputes, claims and fines

where cash outflow is assessed probable (more likely that

not to occur). At the beginning of 2023 the provisions for

settlement and claims were mainly related to the Kjørbo

incident from 2019. During 2023, the company received a

reduced notice of fine (no: forelegg) related to the Kjørbo

incident. This has resulted in a reversal of approximately NOK

15.0 million in unused provisions in 2023. At the end of 2023

there is no provision.

Nel ASA

Annual report 2023

127

ONEROUS CONTRACTS

An onerous contract is a contract in which the unavoidable

costs (i.e. the lower of the cost of fulfilling the contract and

any compensation or penalties arising from failure to fulfil it)

exceed the economic benefits expected to be received under

the contract. For all contracts that are onerous, the present

obligation under the contract is recognised and measured as

a provision.

6.1 Operational risk factors

OBJECTIVES, POLICIES AND PROCESSES

FOR MANAGING CAPITAL

The group’s objective is to manage the capital structure to

safeguard its ability to continue as a going concern, so that

it can provide returns for shareholders and benefits for other

stakeholders. The group sets the size of capital in proportion

to business strategy, risk and financial market conditions.

The group manages the capital structure and adjusts it in

the light of changes in economic conditions, perceived risk

associated with product development and risk characteristics

of the underlying assets. In order to maintain or adjust the

capital structure, the group may adjust the amount of new

share issue or increase the debt by taking up loans.

Technological change

Along with the significant increase in the development of

the hydrogen market comes increased competition. This

also results in increased activity and pace in research and

development across the hydrogen industry. Nel’s electrolyser

technology consist of both Alkaline and PEM. Currently, the

Alkaline technology platform presents the advantage of having

the lowest cost, the highest efficiency and of being the better

solution for large scale. PEM technology platform has the

advantage of dynamic response and intermittent operation.

It is a risk that one or both of the existing technologies in Nel

becomes obsolete. In addition, Nel continuously monitors

the developments and possibilities of a disruptive technology

emerging. Today, Anion Exchange Membrane (AEM) and

Solid Oxide (SOEL) represent possible disruptors. While

all technologies can potentially co-exist, the competing

technology and sharing market potential, including the

required investment in new technology constitutes a material

risk for Nel. In addition, we cannot know for certain whether

green hydrogen emerges as the preferred technology as the

world transitions into renewable energy.

There are risks associated with technological change, both

related to technology elements within the field of hydrogen as

well as technology elements outside the field of hydrogen that

potentially could make green hydrogen less relevant for the

future.

If any of these circumstances materialize in a negative direction,

it may have a significant adverse effect on the group’s business,

prospects, financial results or results of operations. A higher

price for renewable power could also negatively affect the

demand for green hydrogen technologies.

Expansion risk

The uneven pace of Nel’s anticipated expansion in facilities,

staff and operations may place serious demands on the

group’s managerial, technical, financial, and other resources.

The organisation is currently relatively small and there is no

guarantee that the group will be able to build a capable

organisation at a speed that is required to meet the demands

of its customers or potential customers. Nel’s failure to manage

its growth effectively or to implement its strategy in a timely

manner may significantly harm its ability to achieve profitability.

Dependence of third parties in manufacturing

The group’s electrolyser and hydrogen fueling manufacturing

operations rely on external subcontractors and suppliers

of services and goods to varying degrees. This operating

model inherently contains a risk to the group’s goodwill

and branding. If suppliers fail to meet agreed or generally

accepted standards in areas such as environmental

compliance, human rights, labor relations and product

quality, this could have a significant adverse effect on the

group’s business, prospects, financial results and results of

operations. In general, the company aims at dual sourcing of

critical components to limit risk. In addition, the majority of

the spending is directed towards large industrial companies

with full ISO compliance and smaller vendors that are in

compliance with local legislation. Further, Nel conducts

regular quality reviews, including production site visits for risk

assessment.

Nel is dependent on a limited number of third-party suppliers

for key production components for its electrolyser and

fueling equipment. All contract manufactured or purchased

components are designed and selected in order to avoid a

critical supply situation. However, in a worst case scenario,

if Nel fails to develop or maintain its relationships with its

suppliers or such suppliers are prevented from supplying, Nel

may be delayed in manufacturing its products or its products

may be available only at a higher cost which could prevent

Nel from timely delivering its products to its customers and

Nel may experience order cancellation, customer claims

and loss of market share. To reduce the sourcing risk Nel’s

supply chain strategy is to have dual supply chains on

all components. Nel currently has few components with

single source 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.

128

Notes to the consolidated financial statements 2023

Project risk

Nel participates in large commercial projects. Large

commercial projects are subject to risks of delay and cost

overruns inherent in any large construction project from

numerous factors, including:

• unexpectedly long delivery times for, or shortages of, key

equipment, parts and materials;

• unforeseen design and engineering problems leading to

delays;

• labor disputes and work stoppages;

• HSE accidents/incidents or other safety hazards;

• disputes with suppliers;

• last minute changes to the customer’s specifications;

• adverse weather conditions or any other force majeure

events; and

• inability or delay in obtaining regulatory approvals or

permits

Failure to complete a commercial project on time may result

in the delay, renegotiation or cancellation of the contract.

Further, significant delays could have a negative impact on

Nel’s reputation and customer relationships. Nel could also

be exposed to contractual penalties for failure to complete

the project and commence operations in a timely manner,

all of which would aadversely affect Nel’s business, financial

condition and results of operations.

Key personnel

The successful development and performance of the group’s

business depends on the group’s ability to attract and

retain skilled professionals with appropriate experience and

expertise. Further, if the group loses the service of its senior

management or key personnel, it may not be able to execute

its business strategy. There is no assurance, however, that

the group will be able to attract or retain such personnel on

acceptable terms or at all. Any failure to attract or retain such

personnel could have a material and adverse effect on the

group’s business and operations.

Customer risk

Nel’s ability to grow and generate incremental revenue depends

to a substantial degree on its ability to successfully acquire new

customers, and to maintain and grow its relationships with

existing customers. There can be no assurance that Nel will

be able to secure new customers, or maintain its relationships

with existing customers, in the future. Further, a number of

Nel’s existing and potential customers are themselves planning

substantial growth, and should these customers fail to succeed

with their business plans or fail to fulfill their contracts with Nel,

Nel’s sales to such customers may be adversely affected, and

Nel’s revenues and results may suffer as a result.

Intellectual property rights

Nel seeks to protect important proprietary manufacturing

processes, documentation and other written materials, and

other intellectual property primarily under patent, trade

secret and copyright laws. It also typically requires employees,

consultants and companies that have access to its proprietary

information to execute confidentiality agreements. The steps

taken by Nel to protect its proprietary information may not

be adequate to prevent misappropriation of its technology.

In addition, Nel’s proprietary rights may not be adequately

protected because:

• people may not be deterred from misappropriating its

technologies despite the existence of laws or contracts

prohibiting misappropriation:

• policing unauthorised use of Nel’s intellectual property

is difficult, expensive and time-consuming, and the

group may be unable to determine the extent of any

unauthorised use; and

• the laws and legislation of countries in which the group

sells or plans to sell its products may offer little or no

protection for its proprietary technologies.

Unauthorised copying or other misappropriation of Nel’s

proprietary technologies could enable third parties to benefit

from its technologies without paying for doing so. Any

inability to adequately protect its proprietary rights could

harm the group’s ability to compete, to generate revenue and

to grow its business. This could have a significant adverse

effect on the group’s business, prospects, financial results and

results of operations.

Some of the group’s patents are due to expire within the next

couple of years which means that the group will lose the

sole right to certain technology in certain areas. Although

the company believes that this will have little effect on the

company’s competitive position, no assurance can be made

to this point.

The group may not obtain sufficient patent protection on

the technology embodied in its products and production

processes, which could significantly harm its competitive

position. Patents may provide only limited protection for its

technology and may not be sufficient to provide competitive

advantages. For example, competitors could be successful

in challenging any issued patents or, alternatively, could

develop similar or more advantageous technologies on

their own or design around the group’s patents. Also, patent

protection in certain countries may not be available or may

be limited in scope and any patents obtained may not be as

readily enforceable as in all jurisdictions, making it difficult

for the group to effectively protect its intellectual property

from misuse or infringement by other companies in these

Nel ASA

Annual report 2023

129

countries. Any inability to obtain and enforce intellectual

property rights in some countries could have a significant

adverse effect on the group’s business, prospects, financial

results and results of operations. In addition, given the costs

of obtaining patent protection and the sometimes limited

potential for protection, the group may choose not to protect

certain innovations that later turn out to be important. There

is also a general risk that the group receives information

subject to confidentiality agreements, regarding other

parties’ know-how and trade secrets in relation to technology

which may hinder the group from development of similar

intellectual assets.

Adverse publicity and product liability

Product liability claims against the group could result in

adverse publicity and potentially monetary damages. It is

possible that its products could result in injury, whether by

product malfunctions, defects, improper installation or other

causes. The successful assertion of product liability claims

against the group could result in potentially significant

monetary damages, which could have a significant adverse

effect on the group’s business, prospects, financial results and

results of operations. As of the date of this annual report, the

group is unaware of any current or pending product liability

claims made against the group.

6.2 Financial risk factors

The key financial risks the group is exposed to are related to

liquidity, currency, interest rate, and credit risk.

Liquidity risk

Liquidity risk is the potential loss that occurs when the group

fails to fulfil its contractual obligations when they fall due. Nel

is operating in a fast-growing, emerging market, with a long

list of initiatives in many regions. The need to address growth

opportunities ahead of actual market demand, balanced

with the need to conserve cash, is a continual challenge. The

timing of addressing such elements and risks is important.

Moving too fast could result in an unnecessarily high cost

level, with cash requirements beyond the current financing

plan.

However, the group has a strong liquidity position, NOK 3 363.4

million, as per 31.12.2023. The strong cash position is a good

basis for the group’s growth strategy. The group monitors its

risks associated with lack of capital up against the company’s

planned activities.

The group will, if necessary, attempt to raise capital through

private placements, debt financing, partnerships, and

strategic alliances or from other sources. The group may fail

to raise capital on acceptable terms, or not do it at all, and

this can result in a liquidation of the group.

Currency risk

Nel operates internationally and is subject to currency risks

arising from foreign currency transactions and exposures.

As the group presents its consolidated results in NOK, any

change in exchange rates between NOK and its subsidiaries’

functional currencies, primarily with respect to changes in

USD and DKK, affects its consolidated statement of income

and consolidated statement of financial position. As the

group expands its operations with projects in new markets the

currency risk exposure increases.

The group is on an overall level managed as a NOK company

for currency risk management purposes with primary focus

on NOK cash flow.

The group’s gross foreign currency risk exposure is significant,

with the majority of revenue and expenses denominated

in foreign currency. The group mitigates the currency risk

exposure by entering into forward currency contracts with

financial institutions. The group has a residual net currency

risk exposure considering hedging which is considered low to

medium.

130

Notes to the consolidated financial statements 2023

(Amounts in thousands)PROFIT AND LOSS CHANGES IN EXCHANGE RATE NOK/FOREIGN CURRENCIESNET PROFIT IN VALUE IN VALUE IN FOREIGN CURRENCIESCURRENCYNOK-10% -5% +5% +10%DKK -213 094 -306 472 30 647 15 324 -15 324 -30 647 USD -13 470 -126 623 12 662 6 331 -6 331 -12 662 KRW -6 708 336 -53 465 5 347 2 673 -2 673 -5 347 SEK -104 372 -106 730 10 673 5 337 -5 337 -10 673 GBP 40 439 -44 -22 22 44 EUR 4 244 45 504 -4 550 -2 275 2 275 4 550 Effect on net income (loss) 54 735 27 367 -27 367 -54 735

STATEMENT OF FINANCIAL POSITIONNET RECEIVABLES/LIABILITIES IN FOREIGN CURRENCIESDKK -16 229 -22 835 2 284 1 142 -1 142 -2 284 USD 17 444 148 841 -14 884 -7 442 7 442 14 884 KRW -2 804 -22 2 1 -1 -2 SEK -15 321 -15 987 1 599 799 -799 -1 599 GBP -10 -110 11 6 -6 -11 EUR 47 970 502 263 -50 226 -25 113 25 113 50 226 Effect on net income (loss) -61 215 -30 607 30 607 61 215 Total effect on Net income (loss) and Equity -6 480 -3 240 3 240 6 480

The table shows the gross foreign currency exposure based

on each entity in the group’ functional currency, before

hedging. Nel’s hedging strategy and designated instruments

are elaborated and disclosed in note 6.5. The figures exclude

translation of intercompany loans in Nel ASA.

Interest rate risk

The group does not have a significant amount of interest

bearing long-term debt. Due to the low amount of debt in

the group it is assessed that a change in interest rates will not

have a material effect on the financial statements.

Credit risk

Credit risk is the risk that a counterparty will not meet its

obligations under a financial instrument or customer contract,

leading to a financial loss. Nel is exposed to credit risk from its

operating activities (primarily trade receivables and contract

assets) and from its financing activities, including deposits with

banks and financial institutions, foreign exchange transactions

and other financial instruments. The carrying amounts of

financial assets and contract assets represent the maximum

credit exposure.

Expected credit loss assessment

The Group uses an allowance matrix to measure the ECLs of

trade receivable from individual customers, which comprise

a very large number of small balances. Loss rates are

calculated using a factor method based on the probability

of a receivable progressing through successive stages of

delinquency to write-off. Roll rates are calculated separately

for exposures in different segments based on the following

common credit risk characteristics - geographic region, age

of customer relationship and type of products purchased.

The following table provides information about the exposure

to credit risk and ECLs for trade receivables from individual

customers as of 31 December 2022 and 2023.

Loss rates are based on actual credit loss experience over

the past two years. These rates are multiplied by a factor to

reflect differences between economic conditions during the

period over which the historical data has been collected,

current conditions and Nel’s view of economic conditions over

the expected lives of the receivables.

Nel ASA

Annual report 2023

131

WEIGHTED-AVERAGE GROSS CARRYING 1)2023LOSS RATEAMOUNTLOSS ALLOWANCECurrent (not past due) 0.1 % 183 159 184 1-30 days past due 0.2 % 135 484 271 31-60 days past due 0.5 % 127 945 640 61-90 days past due 2.0 % 29 066 581 91 days to one year past due 8.1 % 368 310 29 881 More than one year past due 10.0 % 0 0Total 843 964 31 557 3.7 %

WEIGHTED-AVERAGE GROSS CARRYING 2022LOSS RATEAMOUNT LOSS ALLOWANCECurrent (not past due) 0.1 % 207 178 208 1-30 days past due 0.2 % 118 921 238 31-60 days past due 0.5 % 22 145 111 61-90 days past due 0.8 % 21 822 164 91 days to one year past due 1.1 % 86 541 910 More than one year past due 10.0 % 6 399 640 Total 463 005 2 270 0.5 %1) During 2023, revenue from a single customer was about 26%. As of 31 December 2023, about 57% of the trade receivables past due are related to this customer. The total payment received from this customer to date equals the operating profit booked to date on the contract. Nel has security for unpaid receivables from this customer in the sold goods and can reclaim as inventory items in the event of default.

132

Notes to the consolidated financial statements 2023

6.3 Market risk factors

Market development risk

Significant markets for fueling products, other hydrogen energy

products or renewable energy as a major source for hydrogen

production may never develop or may develop more slowly

than the group anticipates. This would significantly harm

Nel’s revenues and may cause Nel to be unable to recover

the expenditures it has incurred and expects to incur in the

development of its products.

Regulatory issues

The group’s operations are subject to numerous environmental

requirements. Such laws and regulations govern, among other

matters, air pollution emissions, wastewater discharges, solid

and hazardous waste management, and the use, composition,

handling, distribution and transportation of hazardous

materials. Many of these laws and regulations are becoming

increasingly stringent (and may contain “strict liability”), and the

cost of compliance with these requirements can be expected to

increase over time.

The group’s electrolyser production depends on various

discharge permits granted by various authorities. From time

to time, breaches of the allowed emission limits set out in

such permits may occur. If such limits of the relevant permits

should be exceeded, this may have a significant effect on the

group’s operations and result, as the group may be ordered

to temporarily halt production, be subject to fines and/or be

ordered to undertake corrective measures.

The group cannot predict the impact of new or changed

laws or regulations relating to health, safety, the environment

or other concerns or changes in the ways that such laws

or regulations are administered, interpreted or enforced.

The requirements to be met, as well as the technology and

length of time available to meet those requirements, continue

to develop and change. To the extent that any of these

requirements impose substantial costs or constrain the group’s

ability to expand or change its processes, the group’s business,

prospects, financial results and results of operations could

suffer. Any breach of such requirements could in addition result

in fines or other substantial costs and/or constraint the group’s

ability to operate its production plant, which could have a

significant adverse effect on its business, prospects, financial

results and results of operations.

The fuel cell and hydrogen industry are in its development

phase and is not currently subject to industry specific

government regulations in the European Union, Asia and the

United States, as well as other jurisdictions, relating to matters

such as design, storage, transportation and installation of fuel

cell systems and hydrogen infrastructure products. However,

given that the production of electrical energy has typically been

an area of significant government regulation, the Company

expects it will encounter industry specific government

regulations in the future in the jurisdictions and markets in

which it operates. For example, regulatory approvals or permits

may be required for the design, installation and operation of

Nel’s products. To the extent there are delays in gaining such

regulatory approval, Nel’s development and growth may be

constrained. Nel’s business will suffer if environmental policies

change and no longer encourage the development and

growth of clean power technologies.

Nel depends substantially on government subsidies. Political

developments could lead to a material deterioration of the

conditions for, or a discontinuation of, the subsidies for its

technology. It is also possible that government financial support

for Nel’s technology will be subject to judicial review and

determined to be in violation of applicable constitutional or

legal requirements or be significantly reduced or discontinued

for other reasons. Without government subsidies, or with

reduced government subsidies, the availability of profitable

investment opportunities for Nel would be significantly lower,

which could have a material adverse effect on Nel’s business,

financial condition, results of operations and cash flows.

Competition

The group competes with a large number of competitors.

Many competitors are developing and are currently

producing products based on technologies that may have

costs similar to, or lower than, the group’s projected costs.

Many of the group’s existing and potential competitors may

have longer operating histories, greater name recognition,

structurally better cost positions through geographical

location or agreements with local authorities (including direct

and indirect subsidies), better access to skilled personnel,

better access to research and development partners, access

to larger customer bases and significantly greater financial,

sales and marketing, manufacturing, distribution, technical

and other resources than the group. As a result, they may

be able to respond more quickly than the group can to the

changing customer demands or to devote greater resources

to the development, promotion and sales of their products.

The group’s business relies on sales of its products, and

competitors with more diversified product offerings may be

better positioned to withstand a decline in the demand for

products of the types that the group offers. It is possible that

new competitors or alliances among existing competitors

could emerge and rapidly acquire a significant market share,

which would harm the group’s business. If the group fails to

compete successfully, it could have a significant adverse effect

on the group’s business, prospects, financial results and results

of operations.

Nel ASA

Annual report 2023

133

6.4 Climate-related risks and

opportunities

Climate-related opportunities

Nel is a pure play renewable hydrogen company. The climate-

related opportunities are the company’s only opportunities.

The assumption from climate-related opportunities in

climate-related scenarios have impacted the financial

statements. Specifically, the climate-related opportunities are

the driver for the revenue and activity growth included in the

company’s impairment tests. In addition, the climate-related

opportunities also impact the assessment of probable future

economic benefits from capitalised technology development.

Climate-related risks

The company pursue solely climate-related opportunities;

therefore, the company does not have any transformation

of any legacy business negatively impacted by the climate-

related scenarios. Further analysis of the climate-related risks

below:

Regulatory risks and Geopolitics

While climate change is the megatrend, the anticipated role

of green hydrogen as a sustainable activity contributing to

climate change mitigation could change. How geopolitics will

impact and shape climate policies going forward constitutes

a risk for Nel. We would not be significantly impacted by the

introduction of a potential carbon tax or restrictions on the

use of carbon-intensive assets. Further, we do not consume

products from conflict areas and our consumption of rare

materials is limited. However, we identify opportunities in the

enactment of a low carbon economy.

Reputation Risk

Nel recognizes the importance of maintaining a strong brand

in the developing renewable hydrogen industry. Reputational

risk comprises: i) any damage to brand value that will cause

lost opportunities, ii) challenges in recruiting and retaining

talent that in turn could halt technology developments and

damage customer experience, and iii) challenges in attracting

investors due to damaged reputation which could affect the

going concern status of the group.

Physical Risk

None of our manufacturing facilities are located in

environments overly exposed to physical risks. Relatedly,

our facilities are not located in the areas most exposed to

sustained long-term shifts in climate patterns. However, our

delivered solutions require continuous access to water and

electricity, a shortage of which could impact our products’

performance.

6.5 Hedge accounting

DERIVATIVE FINANCIAL INSTRUMENTS

AND HEDGE ACCOUNTING

The Group holds derivative financial instruments to hedge its

foreign currency risk exposures. Derivatives are both initially

and subsequently to initial recognition measured at fair value,

and changes therein are generally recognised in profit or loss.

The group designates certain derivatives as hedging

instruments to hedge the variability in cash flows associated

with firm commitments and highly probable forecast

transactions arising from changes in foreign exchange

rates. At the inception of designated hedging relationships,

the Group documents the risk management objective

and strategy for undertaking the hedge. The group also

documents the economic relationship between the hedged

item and the hedging instrument, including whether the

changes in cash flows of the hedged item and hedging

instrument are expected to offset each other.

Cash flow hedges

For the purpose of hedge accounting, hedges are classified

as cash flow hedges when hedging the exposure to changes

in the fair value of a recognised asset or liability or a highly

probable forecast transaction. Nel accounts for a hedge of

foreign currency risk as a cash flow hedge, including also

exposures to an unrecognised firm commitment. When a

derivative is designated as a cash flow hedging instrument, the

effective portion of changes in the fair value of the derivative

is recognised in OCI and accumulated in the hedging reserve.

The effective portion of changes in the fair value of the

derivative that is recognised in OCI is limited to the cumulative

change in fair value of the hedged item, determined on

a present value basis, from inception of the hedge. Any

ineffective portion of changes in the fair value of the derivative

is recognised immediately in profit or loss.

The group designates the currency forward contracts on a

‘forward basis’, which includes both the spot element and

the forward element. Then the full fair value of the hedging

instrument is used in measuring ineffectiveness. The amount

accumulated in the hedging reserve is reclassified to profit or

loss in the same period or periods during which the hedged

expected future cash flows affect profit or loss.

If the hedge no longer meets the criteria for hedge accounting

or the hedging instrument is sold, expires, is terminated or is

exercised, then hedge accounting is discontinued prospectively.

When hedge accounting for cash flow hedges is discontinued,

the amount that has been accumulated in the hedging reserve

134

Notes to the consolidated financial statements 2023

remains in equity until it is reclassified to profit or loss in the

same period or periods as the hedged expected cash flows

affect profit or loss.

The Group is exposed to certain risk relating to its ongoing

business operations. In 2023, foreign exchange forward

contracts are designated as hedging instruments in cash flow

hedges of firm sale commitment in U.S. dollar, Swedish krona,

Euro and British pound. In addition, highly probably forecast

transactions in Euro and Swedish Krona.

The foreign exchange forward contract balances vary in

particular with the magnitude of firm commitment foreign

currency sales and changes in foreign exchange forward rates.

As of 31 December 2023, the Group held the following

instruments to hedge exposures to changes in foreign currency.

MORE THAN MATURITY/HEDGING INSTRUMENTS 2024-Q1 2024-Q2 2024-Q3 2024-Q4ONE YEAR TOTALUSD forward contracts, net4410 0 0 0 441Average NOK:USD forward contracts rate 10.28 0.00 0.00 0.00 0.00 10.28USDHedged NOK, net (nominal amount) 4 531 0 0 0 0 4 531Fair value USD forward contracts 53 0 0 0 0 53SEK forward contracts, net-20 968-82 871 -20 634 0 0 -124 473Average NOK:SEK forward contracts rate 0.97 0.97 0.97 0.00 0.00 0.97SEKHedged NOK, net (nominal amount) -20 341 -80 185 -20 024 0 0 -120 549Fair value SEK forward contracts 921 4 133 1 016 0 0 6 070GBP forward contracts, net1 9330 0 0 0 1 933Average NOK:GBP forward contracts rate 13.21 0.00 0.00 0.00 0.00 13.21GBPHedged NOK, net (nominal amount) 25 536 0 0 0 0 25 536Fair value GBP forward contracts 560 0 0 0 0 560EUR forward contracts, net29 31919 919 19 378 12 226 1 260 82 102Average NOK:EUR forward contracts rate 11.46 11.17 11.03 11.06 11.73 11.23EURHedged NOK, net (nominal amount) 335 880 222 565 213 685 135 184 14 776 922 089Fair value EUR forward contracts 5 944 -2 111 -5 351 -3 341 407 -4 452TOTAL hedged NOK, net (nominal amount)345 606142 380 193 661 135 184 14 776 831 607TOTAL fair value, NOK 7 479 2 022 -4 335 -3 341 407 2 232

The effects that hedge accounting has had on the statement

of financial position, statement of profit or loss and OCI and

statement of changes in equity

Hedging instruments are measured at fair value and

recognised in the statement of financial position as either an

asset or a liability depending on the whether the instrument

has a positive or negative value. The fair values recognised

represents unrealised gains/losses driven by the changes in

foreign exchange rates.

Statement of financial position

The table below show the fair value of forward exchange

contracts designated as hedging instruments in the statement

of financial position.

Nel ASA

Annual report 2023

135

(Amounts in NOK thousands)CURRENT NON-CURRENT OTHER CURRENT NON-CURRENT TYPE OF HEDGE ITEMSASSETSASSETSLIABILITESLIABILITIES TOTALRevenue438189 -5 829 -50 -5 253Raw materials 0 0 -1 840 -2 132 -3 972As of 31.12.2022 438 189 -7 669 -2 182 -9 225Revenue11 877407 -16 123 0 -3 839Raw materials 6 070 0 0 0 6 070As of 31.12.2023 17 948 407 -16 123 0 2 232

Profit or loss and OCI

The table below includes the reconciliation of movements in hedging reserve, cash flow hedges, in OCI during the year.

(Amounts in NOK thousands)PROPERTY PLANT AND REVENUE RAW MATERIALS FINANCE COSTSEQUIPMENT TOTALAs of 01.01.20227 654-2 101 0 -439 5 114Effective portion of changes in fair value -7 876 -31 153 854 -6 900Reclassified to profit or loss -2 930 0 -153 0 -3 084Reclassified to statement of financial positions -3 349 0 0 -415 -3 764(basis adjustment)As of 01.01.2023 -6 502 -2 132 0 0 -8 634Effective portion of changes in fair value -13 236 -3 938 -1 330 0 -18 504Reclassified to profit or loss 6 042 0 1 330 0 7 372Reclassified to statement of financial positions 27 045 0 0 0 27 045(basis adjustment)As of 31.12.2023 13 350 -6 070 0 0 7 279

During the year, a hedging loss of NOK -6.0 (2.9) million has

been realised and reclassified to profit or loss within ‘Revenue

from contracts with customers’.

The timeline below illustrates when the unrealised changes

in fair value of the foreign currency forward contracts may

be reclassified to profit or loss and statement of financial

position.

(Amounts in NOK thousands)2023 2024 2025 2026 TOTALRevenue -6 640 138 0 0 -6 502Raw materials 0 -2 132 0 0 -2 132As of 31.12.2022 -8 634Revenue - 12 943 407 0 13 350Raw materials - -6 070 0 0 -6 070As of 31.12.2023 7 279

136

Notes to the consolidated financial statements 2023

Economic relationship and effectiveness

The hedged item creates an exposure to buy a foreign

currency and sell the functional currency. The forward

contract is to sell foreign currency and buy the functional

currency. As the hedged exposure is exactly matched by the

currency leg of the forward contract (i.e. they are the same

amount of currency with the same payment date), there is a

clear economic relationship between the hedging instrument

and the hedged item. Hedging less than 100 % is considered

when natural hedge positions could occur during the hedging

period, or to limit the risk of over-hedging given the inherent

uncertainties in any estimated cash flow.

If there’s no change in the hedge item cash magnitude

(e.g. contract termination or amendment) the hedge would

be effective as long as the timing of the hedge instrument

and hedge item are aligned. No ineffectiveness has been

recognised in the income statement in 2023 or 2022.

The Group does not have any fair value hedge or net

investment hedge.

6.6 Financial instruments

Nel uses the following hierarchy for determining and

disclosing the fair value of financial instruments by valuation

technique:

Level 1: Inputs are quoted prices in active markets for

identical assets or liabilities that are accessible at the

measurement date.

Level 2: The fair value of financial instruments that are not

quoted in an active market is determined using valuation

techniques which maximise the use of observable market

price and rely as little as possible on entity-specific estimates.

Level 3: Unobservable inputs are used to measure fair value

to the extent that relevant observable inputs are not available,

thereby allowing for situations in which there is little, if any,

market activity for the asset or liability at the measurement

date. Techniques that use inputs that have a significant effect

on the recorded fair value that are not based on observable

market data.

FINANCIAL INSTRUMENTS AND FAIR VALUES

2023CARRYING AMOUNT FAIR VALUEFAIR VALUE MANDATORILY FINANCIAL ASSETS - HEDGING AT FVTPL AND LIABILTIES AT INSTRUMENTS- OTHERSAMORTISED COST TOTAL LEVEL 1 LEVEL 2 LEVEL 3 TOTALAssetsFinancial assets measured at fair valueForward exchange contracts used for hedging18 354 0 0 18 354 0 18 354 0 18 354Financial asset - equity instruments0 9 800 0 9 800 0 0 9 800 9 800SUM 18 354 9 8000 28 155 0 18 354 9 800 28 155LiabilitiesFinancial liabilities measured at fair valueForward exchange contracts used for hedging-16 123 0 0 -16 123 0 -16 123 0 -16 123SUM -16 1230 0 -16 123 0 -16 123 0 -16 123Financial liabilities not measured at fair valueLong-term debt0 0 22 458 22 458 0 22 458 0 22 458SUM0 0 22 458 22 458 0 22 458 0 22 458

Nel ASA

Annual report 2023

137

2022CARRYING AMOUNT FAIR VALUEFAIR VALUE MANDATORILY FINANCIAL ASSETS - HEDGING AT FVTPL AND LIABILTIES AT INSTRUMENTS- OTHERSAMORTISED COST TOTAL LEVEL 1 LEVEL 2 LEVEL 3 TOTALAssetsFinancial assets measured at fair valueForward exchange contracts used for hedging626 0 0 626 0 626 0 626Financial asset - equity instruments0 489 406 0 489 406 450 296 0 39 110 489 406SUM 626 489 4060 490 033 450 296 626 39 110 490 033LiabilitiesFinancial liabilities measured at fair valueForward exchange contracts used for hedging-9 851 0 0 -9 851 0 -9 851 0 -9 851SUM -9 8510 0 -9 851 0 -9 851 0 -9 851Financial liabilities not measured at fair valueLong-term debt0 0 22 431 22 431 0 22 431 0 22 431SUM0 0 22 431 22 431 0 22 431 0 22 431

The management assessed that cash and short-term deposits,

trade receivables, other current assets, trade payables and

other current liabilities’ carrying amounts is a reasonable

approximation of their fair value largely due to the short-term

maturities of these instruments.

Nel enters into forward exchange contracts with financial

institutions, where the fair value of such instruments is

based on valuation techniques including market observable

inputs. The most frequently applied valuation techniques

include forward pricing and swap models using net present

value calculations. The models used incorporate various

inputs, including the credit quality of counterparties, foreign

exchange spot and forward rates and interest rate curves.

The valuation is performed by banks or external valuation

providers.

For recurring fair value measurements using significant

unobservable inputs (Level 3), the effect of the measurements

on profit or loss for the period has been 0.0 (0.0) million.

6.7 Contractual commitments

and commitments for future

investments

Nel is committed to future investments for Alkaline expansion

in Herøya, Norway and PEM expansion in Wallingford,

Connecticut, see note 3.2 for additional information.

138

Notes to the consolidated financial statements 2023

7.1 Composition of the group

The following subsidiaries are included in the consolidated financial statements:

MAIN CONSOLIDATED OWNERSHIP/ OWNERSHIP/ COMPANY LOCATIONOPERATIONSFROM:VOTES 2023VOTES 2022Nel Hydrogen Electrolyser AS Notodden, Norway Alkaline electrolysers 01.10.2015 100 % 100 %Hydrogen fueling Nel Hydrogen A/S Herning, Denmarkstations 01.07.2015 100 % 100 %Nel Fuel AS Oslo, Norway Investment/holding 01.07.2015 100 % 100 %Proton Energy Systems Inc Wallingford, Connecticut, USA PEM electrolysers 01.07.2017 100 % 100 %Nel Korea Co. Ltd Seoul, South Korea Service of H2Station® 01.07.2018 100 % 100 %Nel Hydrogen Inc San Leandro, California USA Service of H2Station® 01.01.2019 100 % 100 %Nel Hydrogen Electrolyser Germany GmbH Munich, Germany Electrolysers sales office 24.10.2022 100 % 100 %Nel Hydrogen Electrolyser Belgium BV Brussels, Belgium Electrolyser sales office 27.09.2021 100 % 100 %Nel Austria GmbH Wien, Austria Fueling sales office 30.03.2022 100 % 100 %Nel Hydrogen Chile SpA Santiago, Chile Electrolyser sales office 01.06.2023 100 % -

All subsidiaries are 100 % owned. There is no uncertainty about control and no restrictions on the ability to access or use assets

and settle liabilities in the group.

7.2 Executive management remuneration

Nel Executive Management Compensation and number of shares owned

2023(Amounts in NOK thousands)PENSION OTHER TOTAL NUMBER OF 1)REMUNERATION OF MANAGEMENT 2023 SALARY BONUSEXPENSEREMUNERATION REMUNERATIONSHARES2)Håkon Volldal, CEO 4 364 589 201 0 5 154 0Kjell Christian Bjørnsen, CFO 3 011 116 201 0 3 328 20 0003)Marius Løken, CTO 1 432 0 102 0 1 534 04)Anders Søreng, former CTO 712 0 32 0 744 naEsa Laukkanen, COO 2 964 55 0 0 3 019 0Robert Borin, SVP Nel Hydrogen Fueling 3 231 106 304 0 3 641 05)Filip Smeets, former CCO 2 603 69 91 2 180 4 943 0Hans Hide, SVP Projects 2 268 85 201 0 2 554 30 000Stein Ove Erdal, Senior Vice President Legal and General Counsel 2 371 126 201 0 2 698 0Caroline Duyckaerts, Chief Human Resources Officer 1 937 67 201 0 2 204 0TOTAL 24 893 1 214 1 534 2 180 29 821 50 0001) Other remuneration is mainly related to share option program and severance pay2) Has a six months notice period, plus is entitled to six months severence pay.3) Employed in Nel from June 20234) Left Nel end of March 20235) Left Nel end of December 2023

Nel ASA

Annual report 2023

139

2022(Amounts in NOK thousands)REMUNERATION OF PENSION OTHER TOTAL NUMBER OF 1)MANAGEMENT 2022 SALARY BONUSEXPENSEREMUNERATIONREMUNERATIONSHARES2)Håkon Volldal, CEO 2 156 589 96 0 2 842 03)Jon André Løkke, CEO 2 297 1 563 68 1 500 5 428 550 000Kjell Christian Bjørnsen, CFO 2 837 71 191 0 3 099 0Anders Søreng, CTO 2 381 62 191 894 3 528 135 0004)Jørn Rosenlund, CSO 1 185 0 66 911 2 161 05)Esa Laukkanen, COO 1 140 0 0 0 1 140 0Robert Borin, SVP Nel Hydrogen Fueling 3 084 79 257 0 3 419 0Filip Smeets, SVP Nel Hydrogen Electrolyser 2 173 58 0 0 2 232 0Hans Hide, SVP Projects 2 122 52 191 872 3 236 20 000Stein Ove Erdal, Vice President Legal and General Counsel 2 192 57 191 872 3 311 0Caroline Duyckaerts, Chief Human Resources Officer 1 866 50 191 0 2 107 0TOTAL 23 434 2 582 1 439 5 048 32 502 705 0001) Other remuneration is mainly related to share option program and severance pay2) Employed in Nel from July 2022. Has a six months notice period, plus is entitled to six months severence pay, if terminated by the company.3) Left Nel in June 20224) Left Nel in April 20225) Employed in Nel from August 2022

The Board of Directors determines the remuneration of the

CEO based on a proposal from the Remuneration Committee

and approves the general terms of the company’s incentive

plans for Executive Management and other key employees.

The CEO determines the compensation to the other

members of Nel’s Executive Management.

Nel’s approach is to provide the CEO and other members

of Nel’s executive Management as well as employees with

a market competitive offer for our renewable industry. The

compensation should be:

• attractive to recruit and retain executives and other talents

to Nel;

• market competitive in the respective locations but not

market leading, fitting for our renewable industry;

• Support the creation of sustainable value to Nel’s

shareholders

Total compensation for each member of Executive

Management is compared to the relevant market on a regular

basis. Nel’s remuneration of the Executive Management

includes the Base Salary, Bonus, Share Option Program,

Pension (defined contribution plans) and other compensation

elements such as car, cell phone and internet connection.

7.3 External audit

remuneration

FEES TO THE GROUP AUDITOR 2023 2022Statutory auditing services 2 949 3 073Attestation services 103 160Non-auditing services 512 0TOTAL 3 564 3 233

In addition to the fees included in the remuneration table

above, the group incurred NOK 1.2 (1.4) million in 2023 of

attestation services and non-auditing services provided by

companies other than EY, the group auditor.

FEES TO OTHER AUDITORS ELECTED BY SUBSIDIARIES 2023 2022Statutory auditing services 0 0Attestation services 1 217 1 435Non-auditing services00TOTAL 1 217 1 435

140

Notes to the consolidated financial statements 2023

7.4 Related parties

EXECUTIVE MANAGEMENT

Information on key management compensation is disclosed in note ‘7.2 executive management remuneration’.

ASSOCIATED AND JOINT VENTURES

Nel’s 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.

2023BOARD OF DIRECTORS 2023 REMUNERATION NUMBER OF SHARES OWNERSHIPOle Enger - Chair of the Board 672 149 462 0,01 %Tom Røtjer 366 0 0,00 %Beatriz Malo de Molina 366 0 0,00 %Charlotta Falvin 366 46 000 0,00 %Hanne Blume 366 0 0,00 %1)Jens Bjørn Staff 234 0 0,00 %1)Arvid Moss 234 0 0,00 %1)Finn Jebsen 131 na na1)Jon André Løkke 131 na naTOTAL 2 866 195 462 0,01 %1) At the Annual General Meeting in 2023, Jens Bjørn Staff and Arvid Moss were elected as board members, replacing Finn Jebsen and Jon André Løkke.AUDIT COMMITTEE 2023 REMUNERATIONBeatriz Malo de Molina - chair of the committee 115Charlotta Falvin 80TOTAL 195REMUNERATION COMMITTEE 2023 REMUNERATIONHanne Blume - chair of the committee95Ole Enger 65TOTAL 160

Nel ASA

Annual report 2023

141

2022BOARD OF DIRECTORS 2022 REMUNERATION NUMBER OF SHARES OWNERSHIPOle Enger - Chair of the Board 616 149 462 0,01 %Tom Røtjer 341 0 0,00 %Beatriz Malo de Molina 341 0 0,00 %Charlotta Falvin 341 0 0,00 %1)Finn Jebsen 341 50 620 0,00 %Hanne Blume 341 0 0,00 %Jon André Løkke 341 550 000 0,04 %TOTAL 2 659 750 082 0,05 %1) Consisting of shares held through Fateburet ASAUDIT COMMITTEE 2022 REMUNERATIONFinn Jebsen - chair of the audit committee 110Beatriz Malo de Molina 75TOTAL 185REMUNERATION COMMITTEE 2022 REMUNERATIONHanne Blume - chair of the committee 90Ole Enger 60TOTAL150

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 7 February 2024, Nel was made aware that Iwatani

Corporation of America has filed a lawsuit with claims for

damages in an unspecified amount towards Nel and certain

of its subsidiaries in connection with certain agreements

for delivery of fueling equipment and services between Nel

Hydrogen Inc. and Iwatani Corporation of America. Nel and

its subsidiaries strongly reject the allegations made in the

lawsuit by Iwatani Corporation of America and will vigorously

oppose the allegations and the lawsuit.

The lawsuit was filed with the United States District Court in

the Central District of California.

7.6 Going concern

The financial statement is presented on the going concern

assumption under International Financial Reporting

Standards. As per the date of this report the group has

sufficient working capital for its planned business activities

beyond 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.

Parent company financial statements

142

7 Parent company

financial statements

Nel ASA

Annual report 2023

143

Statement of comprehensive income ................................................................................................................................................................ 144

Statement of financial position as of 31 December ....................................................................................................................................... 145

Statement of cash flows ........................................................................................................................................................................................ 147

Statement of changes in equity .......................................................................................................................................................................... 148

Note 1 Company information ........................................................................................................................................................................... 150

Note 2 Basis for preparation and material accounting principles ............................................................................................................ 150

Note 3 Revenue from contracts with customers .......................................................................................................................................... 153

Note 4 Personnel expenses ............................................................................................................................................................................... 153

Note 5 Property, plant and equipment .......................................................................................................................................................... 155

Note 6 Other operating expenses ................................................................................................................................................................... 156

Note 7 Finance income and cost ..................................................................................................................................................................... 156

Note 8 Subsidiaries, associates and joint ventures ...................................................................................................................................... 157

Note 9 Income taxes ........................................................................................................................................................................................... 157

Note 10 Specification of balance sheet items ............................................................................................................................................... 159

Note 11 Other investments ............................................................................................................................................................................... 160

Note 12 Transactions with related parties ...................................................................................................................................................... 160

Note 13 Cash and cash equivalents ................................................................................................................................................................ 162

Note 14 Share capital and shareholders ........................................................................................................................................................ 162

Note 15 Lease liabilities ...................................................................................................................................................................................... 162

Note 16 Financial risk and derivatives ............................................................................................................................................................. 163

Note 17 Financial instruments........................................................................................................................................................................... 164

Note 18 Guarantees ............................................................................................................................................................................................ 165

144

Parent company financial statements

Statement of

comprehensive income

(Amounts in NOK thousands) Nel ASA

NOTE 2023 2022

Revenue from contracts with customers 3 77 757 87 989

Other income 2 010 1 958

Total revenue and income 79 767 89 947

Personnel expenses 4 67 541 69 070

Depreciation and amortisation 5 4 089 3 463

Other operating expenses 6 52 423 57 251

Total operating expenses 124 053 129 783

Operating loss -44 286 -39 837

Finance income

235 809 133 857

Finance costs 7 -198 475 -1 545 964

Net financial items 37 333 -1 412 107

Pre-tax income (loss) -6 952 -1 451 943

Tax expense 9 0 0

Net income (loss) attributable to equity holders of the company -6 952 -1 451 943

Other comprehensive income 0 0

Comprehensive income (loss) attributable to equity holders of the company -6 952 -1 451 943

Appropriation of comprehensive income (loss) and equity transfers

Dividends proposed 0 0

Retained earnings -6 952 -1 451 943

Total appropriation -6 952 -1 451 943

Nel ASA

Annual report 2023

145

Statement of financial position

as of 31 December

(Amounts in NOK thousands) Nel ASA

ASSETS NOTE 2023 2022

NON-CURRENT ASSETS

Property, plant and equipment 5 11 857 14 301

Investments in subsidiaries 8 3 989 624 2 485 429

Non-current financial assets 10, 16, 17 104 076 159 011

Long-term receivables group 12 266 259 306 779

Total non-current assets 4 371 816 2 965 521

CURRENT ASSETS

Trade receivables 29 74

Other current assets 10, 11, 16, 17 49 150 80 828

Cash and cash equivalents 13 3 204 108 2 931 508

Receivables group 12 159 673 148 019

Total current assets 3 412 960 3 160 430

TOTAL ASSETS 7 784 776 6 125 950

146

Parent company financial statements

Statement of financial position

as of 31 December

(Amounts in NOK thousands) Nel ASA

EQUITY AND LIABILITIES NOTE 2023 2022

EQUITY

Paid in capital

Share capital 14 334 265 312 665

Treasury shares 14 -84 -84

Share premium 14 8 661 089 7 098 185

Other capital reserves 14 65 927 61 764

Accumulated deficits / Retained earnings 14 -1 438 491 -1 431 539

Total equity 7 622 707 6 040 992

NON-CURRENT LIABILITIES

Lease liabilities 15 7 025 9 631

Long-term debt group 12 72 447 16 098

Other non-current liabilities 10, 17 0 2 182

Total non-current liabilites 79 472 27 912

CURRENT LIABILITIES

Trade payables 5 559 13 342

Lease liabilities

3 826 3 574

Provisions 8 047 2 399

Short-term liabilities group 12 29 551 12 565

Other non-current liabilities 10, 16, 17 35 615 25 166

Total current liabilities 82 597 57 046

Total liabilities 162 069 84 958

TOTAL EQUITY AND LIABILITIES 7 784 776 6 125 950

Nel ASA

Annual report 2023

147

(Amounts in NOK thousands) Nel ASA

NOTE 2023 2022

CASH FLOWS FROM OPERATING ACTIVITIES

Loss before tax

-6 952

-1 451 943

Adjustments for interest expense 7 532 614

Adjustments interests received 7, 12 -69 806 -46 192

Equity-settled share-based compensation expense 4 1 080 1 525

Depreciation 5 4 089 3 463

Impairment of financial assets 7 233 390 1 484 984

Change in fair value equity instruments 11 7 387 10 014

Change in provisions 5 647 1 954

Change in account receivables, group receivables -11 609 -51 395

Change in trade payable and group payables 9 203 -1 933

Changes in other current assets and other liabilities -30 064 -32 794

Net cash flow from operating activities 142 899 -81 704

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment

-584 -841

Loan given to subsidiaries

-1 528 531 -917 931

Investments in other financial assets 10 -92 219 -206 451

Proceeds from sales of other investments 10 170 479 78 735

Net cash flow from investing activities -1 450 854 -1 046 487

CASH FLOWS FROM FINANCING ACTIVITIES

Interests paid

-532 -614

Gross cash flow from share issues

1 609 200 1 545 866

Transaction costs related to capital increases

-24 696 -23 426

Payment of lease liabilities

-3 415 -2 861

Net cash flow from financing activities 1 580 556 1 518 966

Net change in cash and cash equivalents

272 600

390 773

Cash balance as of 01.01

2 931 508 2 540 734

Cash balance as of 31.12

3 204 108 2 931 508

Statement

of cash flows

148

Parent company financial statements

(Amounts in NOK thousands) Nel ASA

CAPITAL

PREMIUM

OTHER

RESERVE

TREASURY

RETAINED

EARNINGS

TOTAL

EQUITY

Equity as of 31.12.2021 292 160 5 596 247 53 420 -81 20 405 5 962 150

Increase of capital 2021 20 505 1 501 935 1 522 440

Options and share program 3 8 344 -3 8 344

Total comprehensive income -1 451 943 -1 451 943

Equity as of 31.12.2022 312 665 7 098 185 61 764 -84 -1 431 539 6 040 992

Increase of capital 2022 21 600 1 562 904 1 584 504

Options and share program 4 163 4 163

Total comprehensive income -6 952 -6 952

Equity as of 31.12.2023 334 265 8 661 089 65 927 -84 -1 438 491 7 622 707

Statement of

changes in equity

Nel ASA

Annual report 2023

149

OSLO, 27 FEBRUARY 2024

THE BOARD OF DIRECTORS

Ole Enger Beatriz Malo de Molina Charlotta Falvin

Chair Board member Board member

(Electronically signed) (Electronically signed) (Electronically signed)

Arvid Moss Hanne Blume Tom Røtjer

Board member Board member Board member

(Electronically signed) (Electronically signed) (Electronically signed)

Jens Bjørn Staff Håkon Volldal

Board member CEO

(Electronically signed) (Electronically signed)

150

Notes to the financial statements parent company

Note 1 Company information

Nel ASA (Nel) is a global, dedicated hydrogen company,

delivering optimal solutions to produce, store and distribute

hydrogen from renewable energy. The company is domiciled

in Norway. The company specializes in electrolyser

technology for production of renewable hydrogen, and

hydrogen fueling equipment for road-going vehicles. Nel’s

product offerings are key enablers for a renewable hydrogen

economy, making it possible to decarbonize various industries

such as transportation, refining, steel, and ammonia.

The group has two divisions: Nel 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 27

February 2024.

Note 2 Basis for preparation

and material accounting

principles

STATEMENT OF COMPLIANCE

The financial statements of Nel ASA have been prepared and

presented in accordance with simplified IFRS pursuant to

section 3-9 of the Norwegian Accounting Act.

BASIS FOR PREPARATION

These financial statements have been prepared on a historical

cost basis, except for certain financial instruments, which are

measured at fair value.

ACCOUNTING ESTIMATES AND

JUDGEMENTS

In preparing the financial statements, assumptions and

estimates that have had effect on the amounts and

presentation of assets and liabilities, income and expenses

and contingent liabilities must be made. Actual results could

differ from these assumptions and estimates.

FOREIGN CURRENCY TRANSLATION

The functional currency and presentation currency of the

company is Norwegian kroner (NOK). Transactions in

foreign currency are translated at the rate applicable on

the 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 2023. The amendments did not have any

material impact for the parent company. In addition, several

amendments to IFRS are issued up to the date of issuance

of these financial statements but are not yet effective. The

company has not applied the new IFRSs and the impact of

applying the amendments is not expected to have a material

impact on the Company’s financial statements.

DEFINITION AND APPLYING OF

MATERIALITY JUDGEMENTS IN

PREPARATION OF THESE FINANCIAL

STATEMENTS

The financial statements aim to provide useful financial

information which increase the understandability of Nel and

its performance. To meet the information needs of its primary

users, Nel apply 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 based on the information provided. In

practice this will lead to Nel omitting certain information if

7.1 Notes to the financial

statements parent company

Nel ASA

Annual report 2023

151

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 segments,

providing management services to subsidiaries. A separate

disclosure for segment information is therefore not applicable.

SIGNIFICANT ACCOUNTING JUDGEMENTS

AND ESTIMATION UNCERTAINTY

The preparation of financial statements requires management

to make judgements and estimates that influence amounts

recognised in certain accounts for assets, liabilities, income

and expenses. The actual results may deviate from such

assumptions. Estimates and underlying assumptions are

subject to continuous assessment.

REVENUE FROM CONTRACTS WITH

CUSTOMERS

In general, revenue comprises sale of intercompany services.

These are recognized when the services are delivered based

on intragroup allocation of costs.

PERSONNEL EXPENSES

Wages, salaries, bonuses, pension and social security

contributions, paid annual leave and sick leave are accrued

in the period in which the associated services are rendered

by employees of the company. The company has pension

plans for employees that are classified as defined contribution

plans. Contributions to defined contribution schemes are

recognised in the statement of comprehensive income in the

period in which the contribution amounts are earned by the

employees.

The company has an equity-settled share option program for

all employees. The Company uses the Black-Scholes-Merton

option pricing model at time of grant to determine the impact

of stock option grants in accordance with IFRS 2 – Share-

based payment. Refer to group financial statements note 2.5

for further accounting policies, including assumptions and

social security provisions.

For further information refer note 4 – Personnel expenses.

FINANCIAL INSTRUMENTS AND FAIR

VALUE

Nel uses the following hierarchy for determining and disclosing

the fair value of financial instruments by valuation technique:

Level 1: Inputs are quoted prices in active markets for identical

assets or liabilities that are accessible at the measurement date.

Level 2: The fair value of financial instruments that are not

quoted in an active market is determined using valuation

techniques which maximise the use of observable market price

and rely as little as possible on entity-specific estimates.

Level 3: Unobservable inputs are used to measure fair value

to the extent that relevant observable inputs are not available,

thereby allowing for situations in which there is little, if any,

market activity for the asset or liability at the measurement

date. Techniques that use inputs that have a significant effect

on the recorded fair value that are not based on observable

market data.

The Company has assessed that cash and short-term deposits,

trade receivables, other current assets, trade payables and

other current liabilities’ carrying amounts is a reasonable

approximation of their fair value largely due to the short-term

maturities of these instruments.

The Company enters into forward exchange contracts with

financial institutions, where the fair value of such instruments

is based on valuation techniques including market observable

inputs. The most frequently applied valuation techniques

include forward pricing and swap models using net present

value calculations. The models used incorporate various inputs,

including the credit quality of counterparties, foreign exchange

spot and forward rates and interest rate curves. The valuation

is performed by banks or external valuation providers.

INTEREST INCOME AND EXPENSES

Interest income and expenses are recognised in the statement

of comprehensive income within ‘finance income’ and

‘finance cost’ as they are accrued, based on the effective

interest method.

INCOME TAX EXPENSE

Income tax expense in the statement of comprehensive

income for the year comprises current tax and changes

in deferred tax. Income tax expense is recognised in the

statement of comprehensive income.

152

Notes to the financial statements parent company

Current tax is the expected tax payable on the taxable income

for the year and any adjustment to tax payable in respect

of previous years. Uncertain tax positions and potential tax

exposures are analysed individually and the best estimate

of the probable amount for liabilities to be paid (unpaid

potential tax exposure amounts, including penalties) and

virtually 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 utilized on

or settlement of the carrying amount of assets and liabilities,

using tax rates enacted or substantially enacted at the

balance sheet date.

A deferred tax asset is recognised only to the extent that it is

probable that future taxable profits will be available against

which the asset can be utilized. For a deferred tax asset to

be recognised based on future taxable profits, convincing

evidence is required.

SUBSIDIARIES

Subsidiaries are all entities controlled by Nel ASA. Control

is achieved when the company is exposed, or has rights, to

variable returns from its involvement with the investee and

has the ability to affect those returns through its power over

the investee.

Shares in subsidiaries are presented according to the cost

method. Shares in subsidiaries are reviewed for impairment

whenever events or changes in circumstances indicate

that the carrying amount may exceed the fair value of the

investment. Indications may be operating losses or 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 FLOW

The cash flow statement is prepared using the indirect

method.

Nel ASA

Annual report 2023

153

Note 3 Revenue from contracts with customers

(Amounts in NOK thousands)

REVENUES BY GEOGRAPHIC REGION BASED ON CUSTOMER LOCATION 2023 2022

Norway 34 665 36 849

United States 27 070 30 922

Denmark 15 299 18 498

South Korea 723 1 719

Total 77 757 87 989

All revenues in 2023 and 2022 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.

Note 4 Personnel expenses

(Amounts in NOK thousands)

SALARIES AND PERSONNEL EXPENSES 2023 2022

Salaries 48 894 51 019

Social security tax* 9 072 9 423

Pension expense 0 4 441

Other payroll expenses** 9 575 4 186

Total 67 541 69 070

Social security tax includes provisions for social security related to the share option program.

Included in this amount are expenses amounting to NOK 1.1 (2.0) 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

32 23

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 2023 SALARY BONUS

PENSION

EXPENSE

OTHER

REMUNERATION

TOTAL

REMUNERATION

Håkon Volldal, CEO

4 364 589 201 0 5 154

Kjell Christian Bjørnsen, CFO 3 011 116 201 0 3 328

Marius Løken, CTO

1 432 0 102 0 1 534

Anders Søreng, former CTO

712 0 32 0 744

Hans Hide, SVP Projects 2 268 85 201 0 2 554

Stein Ove Erdal, Senior Vice President Legal and General Counsel 2 371 126 201 0 2 698

Caroline Duyckaerts, Chief Human Resources Officer 1 937 67 201 0 2 204

Total 16 095 984 1 138 0 18 217

Other remuneration is mainly related to share options

Has a six months notice period, plus is entitled to six months severence pay, if terminated by company.

Employed in Nel from June 2023

Left Nel end of March 2023

154

Notes to the financial statements parent company

REMUNERATION OF MANAGEMENT 2022 SALARY BONUS

PENSION

EXPENSE

OTHER

REMUNERATION

TOTAL

REMUNERATION

Håkon Volldal, CEO

2 156 589 96 0 2 842

Jon André Løkke, CEO

2 297 1 563 68 1 500 5 428

Kjell Christian Bjørnsen, CFO 2 837 71 191 0 3 099

Anders Søreng, CTO 2 381 62 191 894 3 528

Hans Hide, SVP Projects 2 122 52 191 872 3 236

Stein Ove Erdal, Vice President Legal and General Counsel 2 192 57 191 872 3 311

Caroline Duyckaerts, Chief Human Resources Officer 1 866 50 191 0 2 107

Total 15 852 2 444 1 117 4 137 23 550

Other remuneration is mainly related to share options

Employed in Nel from July 2022. Has a six months notice period, plus is entitled to six months severence pay, if terminated by company.

Left Nel in June 2022

SHARE OPTION PROGRAM

Until 2022, Nel had a share-based incentive plan, a share

option program, to incentivize and retain key employees.

From 2023, this program was replaced by a financial short-

term incentive scheme.

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 higher of the average price of

the Nel ASA share the last five trading days and the closing

price of the Nel ASA share on the grant date (NOK 14.00) and

including an 8% premium. Gain per instrument is capped at

NOK 10.00 maximum per share option. The options that have

not been exercised will lapse 4 years after the date of grant.

SHARE OPTION PROGRAM BEYOND 2022

All options have only service-time based vesting conditions.

Vesting requires the option holder still to be an employee

in the company. Specifically, options do not vest after the

date the employee serves his or her notice to terminate the

engagement with the company or has been notified in writing

of the termination of employment by the company. The strike

price is a premium of 8 % over the highest of the closing

share price on grant date and the volume-weighted average

price over the past 5 preceding trading days.

Options granted 2023:

Options was awarded in 2023 based on 2022 employment for

a selection of employees. A total of 0.72 million share options

were granted, with a 3-year vesting period, 5-year expiry and

a cap on gain per option of 10 NOK per share.

CEO OPTIONS

The CEO was awarded 500.000 options. Each option vests

after three years of grant and may, subject to continued

employment, be exercised over a two-year period thereafter.

Each option entitles him to acquire one new share of the

Company at an exercise price equal to the listed price at the

date of grant plus 10%. A maximum profit level has been

implemented which limits the accumulated profit for all

options to NOK 25 million, and to NOK 30 per option.

Nel ASA

Annual report 2023

155

SHARE OPTION

PROGRAM

OPENING

BALANCE GRANTED EXERCISED FORFEITED

CLOSING

BALANCE

STRIKE

PRICE VALUE

REMAINING

CONTRACTUAL LIFE

July 2020

1 245 0 0 -8 1 237 21,72 0 0,52

July 2021

2 697 0 0 -1 688 1 009 15,13 0 1,63

March 2023

0 720 0 0 720 17,02 0 4,17

CEO 2023 0 500 0 0 500 13,85 0 4,50

TOTAL 3 942 1 220 0 -1 697 3 465

NAME 2023 2024 2025 2026 TOTAL 2024 2025 2028

EXPENSE

FOR THE

PERIOD

Håkon Volldal 0 0 0 500 500 0 0 500 0

Kjell Christian Bjørnsen 383 93 0 150 626 321 155 150 214

Hans Hide 380 96 0 150 626 316 160 150 216

Stein Ove Erdal 414 96 0 150 660 350 160 150 221

Caroline Duyckaerts 62 93 0 150 305 0 155 150 166

Other employees 402 227 0 120 749 250 379 120 263

TOTAL 1 640 605 0 1 220 3 465 1 237 1 009 1 220 1 080

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 and 2023 program.

All share options are granted, vested and expired at the beginning of the month.

Cost of period does not include social security

The CEO will be granted 500,000 options on each of the first, second and third anniversary of the commencement date of his employment (July 1, 2022). The CEO program is capped at

accumulated profit for all options to NOK 25 million, and to NOK 30 per option.

Note 5 Property, plant and equipment

PROPERTY, PLANT AND EQUIPMENT COMPRISE

OWNED AND LEASED ASSETS

OFFICE MACHINES

AND OTHER

EQUIPMENT

TECHNICAL

INSTALLATIONS

RIGHT-OF-USE

ASSETS TOTAL

Carrying amount as of 31.12.2022 1 393 63 12 845 14 301

Carrying amount as of 31.12.2023 1 447 38 10 372 11 857

Useful life 3 years 5 years 5 years

Depreciation plan Straight-line Straight-line Straight-line

156

Notes to the financial statements parent company

Note 6 Other operating expenses

SPECIFICATION OF OTHER OPERATING EXPENSES: 2023 2022

Hardware and common cost office premises 1 596 1 637

Administrative costs 15 216 14 566

Professional fees 30 816 37 291

Travel expenses 4 794 3 756

Total 52 423 57 251

Auditor fees

FEES TO THE AUDITOR 2023 2022

Statutory auditing services 1 612 1 610

Attestation services 25 75

Non-auditing services 225 0

Total 1 862 1 685

Amounts are exclusive VAT

Note 7 Finance income and cost

2023 2022

Internal interest income 69 805 46 192

Interest income 164 468 71 442

Change in fair value equity instruments 0 13 889

Other 1 536 2 335

Finance income 235 809 133 857

Internal interest cost

-512

Interest expense -31 -57

Interest expense lease liabilities -501 -557

Impairment shares in subsidiaries -195 869 -1 484 984

Net foreign exchange gain/(loss) 43 547 58 654

Expected credit loss receivables from subsidiaries -37 521 -94 624

Change in fair value equity instruments -7 387 -23 903

Other -201 -492

Finance cost -198 475 -1 545 964

Net finance income (cost) 37 333 -1 412 107

Changes in fair value equity instruments are from shareholdings in Hyon and Nikola Corporation, see note 12 for additional

information.

The net foreign exchange gain(loss) is mainly the unrealised currency exchange effectes related to internal loans

Nel ASA

Annual report 2023

157

Note 8 Subsidiaries, associates and joint ventures

SUBSIDIARIES

COMPANY OWNERSHIP

REGISTERED

OFFICE

FUNCTIONAL

CURRENCY

TOTAL EQUITY IN

2023 (FUNCTIONAL

CURRENCY

THOUSANDS)

NET INCOME(LOSS)

2023 (FUNCTIONAL

CURRENCY

THOUSANDS)

CARRYING

VALUE 2023

(NOK THOU-

SANDS)

CARRYING VALUE

2022 (NOK

THOUSANDS)

Nel Hydrogen Electrolyser AS 100 % Norway NOK 932 651 -185 760 1 912 006 1 301 047

Proton Energy Systems Inc 100 % USA USD 55 041 -22 583 1 721 703 1 147 328

Nel Hydrogen A/S 100 % Denmark DKK 188 445 -125 594 318 860 0

Nel Hydrogen Inc 100 % USA USD 8 838 -7 493 0 0

Nel Korea Co. Ltd 100 % South Korea KRW -17 333 275 -7 101 483 0 0

Nel Fuel AS 100 % Norway NOK 174 316 -296 723 37 055 37 055

Total 3 989 624 2 485 429

The increase in book value of shares in subsidiaries are mainly debt conversions. Refer note 11 for additional information of debt

conversions. In addition, there is an increase in book value from the established group share option program.

Note 9 Income taxes

CALCULATIONS OF THE TAX BASE FOR THE YEAR 2023 2022

Income (loss) before tax

-6 952

-1 451 943

Permanent differences 241 864 1 598 495

Change in temporary differences 6 146 2 519

Group contribution 435 0

Use of tax losses carried forward -241 492 -149 070

The year's taxable income 0 0

Tax rate 22 % 22 %

Income (loss) before tax -6 952 -1 451 943

Tax this years loss, estimated -1 530 -319 428

Tax effect of:

Permanent differences 53 210 351 669

Change in temporary differences 0 -11 922

Prior years adjustment 43 0

Change in not recognised deferred tax assets (tax liabilities) -51 724 -20 320

Total income tax expense (income) 0 0

Income tax expense (income) comprises

Income tax payable 0 0

Change in deferred tax 0 0

Total income tax expense (income) 0 0

158

Notes to the financial statements parent company

CALCULATIONS OF THE TAX BASE FOR THE YEAR 2023 2022

Specification of temporary differences:

Property, plant and equipment and goodwill -373 -288

Leases -479 -360

Provisions for liabilities -10 662 -4 720

Tax losses carry forward -133 383 -374 637

Basis for deferred tax asset -144 897 -380 005

Nominal tax rates for next year 22 % 22 %

Deferred tax asset -31 877 -83 601

Deferred tax asset not recognised in Statement of financial position -31 877 -83 601

Deferred tax asset in the Statement of financial position 0 0

The majority of the deferred tax assets are related to loss carry forward. As of 31 December 2023, it is considered not likely that

the tax loss carry forward will be fully utilised in the near future, therefore the deferred tax assets are not capitalised.

Nel ASA

Annual report 2023

159

Note 10 Specification of balance sheet items

SPECIFICATION OF OTHER CURRENT ASSETS: 2023 2022

Equity instruments 0 14 461

Other short-term investments 24 013 61 182

Prepayments 3 678 3 840

Fair value of currency contracts 21 396 438

Other current receivables 63 908

Total 49 150 80 828

SPECIFICATION OF NON-CURRENT FINANCIAL ASSETS: 2023 2022

Other non-current investments 103 670 158 823

Fair value of currency contracts 407 189

Total 104 076 159 011

SPECIFICATION OF OTHER CURRENT LIABILITIES: 2023 2022

Vacation allowance and other salary related accruals 9 416 8 191

VAT net payables 6 834 6 099

Fair value of currency contracts 16 123 7 740

Other current liabilities 3 243 3 136

Total 35 615 25 166

SPECIFICATION OF OTHER NON-CURRENT LIABILITIES: 2023 2022

Fair value of currency contracts 0 2 182

Total 0 2 182

160

Notes to the financial statements parent company

Note 11 Other investments

The fair value of Nel’s shareholding in Hyon AS per 31. December 2022 is based on quoted prices in an active market (level 1 in

fair value hierarchy) after the listing of Hyon AS on Euronext Growth on January 21, 2022. Fair value of shareholding in Hyon AS

per 31 December 2023 shareholding is 0 (0.6) million recognised within ‘other current assets‘. The shares were disposed of on

the 24 January 2023 for a consideration of NOK 7.04 million.

The company has sold all 1.106.520 Nikola shares during 2022 at an average share price 6.75 and USD/NOK 9.69. Total USD

and NOK received equals 7.471.721 and 72.417.203, respectively. Total realized gain was NOK 30.3 million, or 72% increase since

investment NOK 42.1 mill. P&L loss in 2022 equals NOK 23.9 million.

Note 12 Transactions with related parties

LONG TERM INTEREST BEARING

RECEIVABLES GROUP 2022

LOAN

ISSUE

DEBT

CONVERSION

ACCRUED

INTERESTS 2023

FX TRANSLATION

EFFECTS OTHER 2023

Nel Hydrogen Electrolyser AS 25 238 720 252 -610 000 25 608 0 0 161 098

Proton Energy Systems Inc 100 686 494 948 -573 297 22 389 12 778 0 57 504

Nel Hydrogen A/S 107 944 252 698 -367 871 15 645 14 269 0 22 684

Nel Hydrogen Inc 10 298 126 581 -145 812 5 861 3 072 0 0

Nel Korea Co. Ltd 34 235 -5 257 0 0 8 543 -37 521 0

Nel Fuel AS 11 006 -11 007 0 1 0 0 0

Nel Hydrogen Electrolyser Belgium BV 1 274 4 306 0 302 47 0 5 929

Total 290 681 1 582 522 -1 696 980 69 806 38 708 -37 521 247 215

LONG TERM INTEREST BEARING

PAYABLES GROUP 2022

LOAN

ISSUE

DEBT

CONVERSION

ACCRUED

INTERESTS 2023

FX TRANSLATION

EFFECTS OTHER 2023

Nel Fuel AS 0 53 991 0 512 0 0 54 503

Total 0 53 991 0 512 0 0 54 503

In the course of the ordinary business, intercompany financing is provided from Nel ASA to its subsidiaries. Long-term financing

is interest bearing and priced at arm’s length terms using a NIBOR 3 month interest rate + 3%-point margin.

LONG-TERM RECEIVABLE FINANCIAL LIABILITY

FINANCIAL GUARANTEES 2023 2022 2023 2022

Nel Hydrogen Electrolyser AS 17 608 15 334 16 699 15 334

Proton Energy Systems Inc 262 591 106 591

Nel Hydrogen A/S 89 110 862 110

Nel Korea Co. Ltd 1 086 63 276 63

Total 19 045 16 098 17 944 16 098

Refer note 18 for additional information of financial guarantees.

Nel ASA

Annual report 2023

161

CURRENT ASSETS 2023 2022

Nel Hydrogen Electrolyser AS 103 317 78 656

Proton Energy Systems Inc 26 127 31 391

Nel Hydrogen A/S 18 912 26 190

Nel Hydrogen Inc 3 404 4 990

Nel Korea Co. Ltd 7 478 6 793

Nel Fuel AS 435 0

Total 159 673 148 019

CURRENT LIABILITIES 2023 2022

Nel Hydrogen Electrolyser AS 21 354 6 463

Proton Energy Systems Inc 0 789

Nel Hydrogen A/S 4 347 3 705

Nel Hydrogen Electrolyser Belgium BV 3 850 1 608

Total 29 551 12 565

Current liabilities are mainly related to fair value of hedging instruments offered to subsidiaries. See Note 16 for additional

information.

All related party transactions have been carried out as part of the normal course of business and at arm’s length.

Nel ASA has during 2023 charged NOK 77.8 (88) million for corporate services provided to its subsidiaries. The management

services are priced with the cost plus method applying a 5 % mark-up for low value services. The management fee has been

allocated to the subsidiaries based on revenue, operating expenses and capital expenditures as allocation keys.

INTERNAL REVENUES 2023 2022

Nel Hydrogen Electrolyser AS 34 665 36 849

Proton Energy Systems Inc 23 712 26 395

Nel Hydrogen A/S 15 299 18 498

Nel Hydrogen Inc 3 358 4 527

Nel Korea Co. Ltd 723 1 719

Nel Fuel AS 0 0

Total 77 757 87 989

Board of Directors

Remuneration of Board of Directors is disclosed in note 7.4 in the consolidated financial statements.

162

Notes to the financial statements parent company

Note 13 Cash and cash equivalents

2023 2022

Cash and cash equivalents 3 201 223 2 929 035

Restricted cash (witheld employee taxes) 2 885 2 472

Total 3 204 108 2 931 508

Cash and cash equivalents are 99% in the Norwegian Krone (NOK) at the end of 2023. Approximately NOK 2.7 billion is placed

in 30-days locked interest accounts in several different banks.

Note 14 Share capital and shareholders

For information of shareholders as of 31 December 2023, shares hold by executive management and the board of directors

please refer to Note 7.2 and 7.4, respectively, in the consolidated financial statements. For information of top 20 shareholders in

Nel ASA refer to note 5.1 in the consolidated financial statements.

Note 15 Lease liabilities

Set out below are the carrying amounts of lease liabilities (included under other long-term debt and other current liabilities) and

the movements during the period:

2023 2022

1. January 13 205 8 942

Additions 106 7 243

Remeasurement 955 -119

Accretion of interest 501 557

Lease payments -3 916 -3 418

Balance as of 31.12. 10 851 13 205

Current 3 826 3 574

Non-current 7 025 9 631

Balance as of 31.12. 10 851 13 205

Nel ASA

Annual report 2023

163

Maturity analysis for lease liabilities (undiscounted cash flows)

2024 2025 2026 2027 >2027 TOTAL

Lease liabilities 3 921 3 889 3 451 284 0 11 545

(Amounts in NOK thousands)

2023 2022

Balance as of 01.01. 13 205 8 942

Cash flows principal amount -3 415 -2 861

Cash flows interests -501 -557

Non-cash changes:

Additions and remeasurements 1 061 7 124

Accretion of interest expense 501 557

Balance as of 31.12. 10 851 13 205

Note 16 Financial risk and derivatives

Financial risks in Nel and the use of derivative instruments are described in note 6.1 to the consolidated financial statement.

Nel ASA offers currency derivatives to subsidiaries using such instruments for risk management. The derivatives are measured

at fair value (level 2 in fair value hierarchy), using valuation techniques which maximise the use of observable market price. The

contracts with financial institutions are back-to-back with subsidiaries, thus, the contract has no P&L impact for Nel ASA. At the

end of 2023 and 2022, Nel is committed to the following outstanding forward foreign exchange contracts with subsidiaries:

2023 2022

Forward foreign exchange contracts (Nel Group internal), notional amount:

Current assets 21 396 438

Non-current assets 407 189

Current liabilities -16 123 -7 740

Non-current liabilities 0 -2 182

Total 5 680 -9 296

The contracts represents the subsidiaries exposure in US dollars, Euro, Swedish Krone and British pounds. The contracts mature

no later than 2025.

164

Notes to the financial statements parent company

Note 17 Financial instruments

Financial instruments and fair values

2023

CARRYING AMOUNT FAIR VALUE

FAIR VALUE

- HEDGING

INSTRUMENTS

MANDATORILY

AT FVTPL

- OTHERS

FINANCIAL ASSETS

AND LIABILTIES AT

AMORTISED COST TOTAL LEVEL 1 LEVEL 2 LEVEL 3 TOTAL

Assets

Financial assets measured at

fair value

Forward exchange contracts

21 802 0 0 21 802 0 21 802 0 21 802

SUM 21 802 0

0 21 802 0 21 802 0 21 802

Liabilities

Financial liabilities measured

at fair value

Forward exchange contracts -16 123

0 0 -16 123 0 -16 123 0 -16 123

SUM -16 123

0 0 -16 123 0 -16 123 0 -16 123

Nel ASA

Annual report 2023

165

2022

CARRYING AMOUNT FAIR VALUE

FAIR VALUE

- HEDGING

INSTRUMENTS

MANDATORILY

AT FVTPL

- OTHERS

FINANCIAL ASSETS

AND LIABILTIES AT

AMORTISED COST TOTAL LEVEL 1 LEVEL 2 LEVEL 3 TOTAL

Assets

Financial assets measured at

fair value

Forward exchange contracts 626

0 0 626 0 626 0 626

Financial asset - equity instru-

ments 0 14 461

0 14 461 14 461 0 14 461

SUM 626 14 461

0 15 087 14 461 626 0 15 087

Liabilities

Financial liabilities measured

at fair value

Forward exchange contracts -9 922

0 0 -9 922 0 -9 922 0 -9 922

SUM -9 922

0 0 -9 922 0 -9 922 0 -9 922

Note 18 Guarantees

Nel provides guarantees arising in the ordinary course of

business including stand-by letters of credit, performance

bonds and various payment, financial guarantees and parent

company guarantees. All commercial guarantees are on

behalf of subsidiaries.

Total financial guarantees recognised as financial liability

is NOK 17.9 (16.1) million as of 31. December 2023. The

financial liabilities will be amortised over the lifetime of the

guarantees, which is in the range of 1-7 years.

Nel ASA

Annual report 2023

167

Nel discloses alternative performance measures (APMs) in addition to those normally required by IFRS. This is based on the

group’s experience that APMs are frequently used by analysts, investors and other parties as supplemental information.

The purpose of APMs is to provide an enhanced insight into the operations, financing and future prospect of the group.

Management also uses these measures internally to drive performance in terms of monitoring operating performance and

long-term target setting. APMs are adjusted IFRS measures that are defined, calculated and used in a consistent and transparent

manner over the years and across the group where relevant.

Financial APMs should not be considered as a substitute for measures of performance in accordance with the IFRS.

NEL’S FINANCIAL APMs

EBITDA: is defined as earnings before interest, tax, depreciation, amortisation and impairment. EBITDA corresponds to

operating profit/(loss) plus depreciation, amortisation and impairment.

EBITDA margin: is defined as EBITDA divided by revenue and income.

Equity ratio: is defined as total equity divided by total assets.

Order intake: is defined as firm purchase orders with agreed price, volume, timing, terms and conditions entered within a

given period. The order intake includes both contracts and change orders. For service contracts and contracts with uncertain

transaction price, the order intake is based on estimated revenue. The measure does not include potential change orders.

Order backlog: is order intake where revenue is yet to be recognised.

8 Alternative Performance Measures

9 Auditor’s report

Statsautoriserte revisorer

Ernst & Young AS

Stortorvet 7, 0155 Oslo

Postboks 1156 Sentrum, 0107 Oslo

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www.ey.no

Medlemmer av Den norske Revisorforening

A member firm of Ernst & Young Global Limited

INDEPENDENT AUDITOR'S REPORT

To the Annual Shareholders' Meeting of Nel ASA

Report on the audit of the financial statements

Opinion

We have audited the financial statements of Nel ASA (the Company) which comprise the financial

statements of the Company and the consolidated financial statements of the Company and its

subsidiaries (the Group). The financial statements of the Company comprise the statement of financial

position as of 31 December 2023 and statement of comprehensive income, statement of cash flows and

statement of changes in equity for the year then ended and notes to the financial statements, including a

summary of significant accounting policies. The consolidated financial statements of the Group comprise

the statement of financial position as of 31 December 2023, statement of comprehensive income,

statement of cash flows and statement of changes in equity for the year then ended and notes to the

financial statements, including material accounting policy information.

In our opinion

 the financial statements comply with applicable legal requirements,

 the financial statements give a true and fair view of the financial position of the Company as at 31

December 2023 and its financial performance and cash flows for the year then ended in

accordance with simplified application of international accounting standards according to section

3-9 of the Norwegian Accounting Act,

 the consolidated financial statements give a true and fair view of the financial position of the

Group as at 31 December 2023 and its financial performance and cash flows for the year then

ended in accordance with IFRS Accounting Standards as adopted by the EU.

Our opinion is consistent with our additional report to the audit committee.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our

responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of

the financial statements section of our report. We are independent of the Company and the Group in

accordance with the requirements of the relevant laws and regulations in Norway and the International

Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants

(including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical

responsibilities in accordance with these requirements. We believe that the audit evidence we have

obtained is sufficient and appropriate to provide a basis for our opinion.

To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit

Regulation (537/2014) Article 5.1 have been provided.

We have been the auditor of the Company for since 2000, and in the period following the initial public

offering of the Company in 2004.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our

audit of the financial statements for 2023. These matters were addressed in the context of our audit of the

financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate

Independent auditor's report - Nel ASA 2023

A member firm of Ernst & Young Global Limited

opinion on these matters. For each matter below, our description of how our audit addressed the matter is

provided in that context.

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial

statements section of our report, including in relation to these matters. Accordingly, our audit included the

performance of procedures designed to respond to our assessment of the risks of material misstatement

of the financial statements. The results of our audit procedures, including the procedures performed to

address the matters below, provide the basis for our audit opinion on the financial statements.

Revenue from sale of customised products and equipment

Basis for the key audit matter

The Group derives a significant part of its

revenues from sale of customised products and

equipment. Such projects involve revenue

recognition over time based on measuring the

progress towards complete satisfaction of the

performance obligation. The assessment of

measuring progress requires subjectivity and

professional judgement and is therefore subject

to uncertainty and potential misstatements. The

main risks include management’s use of

estimates and judgments in relation to measuring

progress, including determining the contract’s

total revenues, expected costs to complete and

estimated project margin. We consider this a key

audit matter because of the significant amounts

and the management judgement applied in the

estimates.

Our audit response

We assessed the application of accounting

principles and routines for monitoring the

customised product and equipment sales. We

discussed the status of contracts with

management, finance and technical staff and tied

estimated revenues and cost to budgets. For new

contracts we tested the estimated revenue

against agreements. We have also recalculated

the measurement of progress and performed test

of details e.g., vouching to invoices and hours

incurred on the projects. We refer to the Groups

disclosures included in note 1.5 and 2.1 in the

consolidated financial statements.

Assessment of impairment of goodwill

Basis for the key audit matter

At 31 December 2023, the recorded amount of

goodwill was NOK 375 million, approximately 5

% of total assets. Estimating the recoverable

amount of the goodwill requires management

judgment including estimates of future sales,

gross margins, operating expenses, growth rates,

capital expenditures and discount rate.

Management’s annual impairment assessment

was a key audit matter because the assessment

requires significant judgment and includes

estimation uncertainties.

Our audit response

For each cash generating unit, we evaluated the

assumptions based on the development in the

market and compared the cash-flow projections

in the impairment calculation to board approved

budgets. We considered the accuracy of

management’s prior year estimates and

evaluated the level of consistency applied in the

valuation methodology from previous years.

Furthermore, we compared the risk premiums in

the weighted average cost of capital with external

data and considered management’s adjustments

for company specific factors. We also tested the

mathematical accuracy of the valuation model

and performed sensitivity analysis of the

assumptions used. We assessed the Group's

disclosures included in note 1.5 and 3.1 in the

consolidated financial statements about those

assumptions to which the outcome of the

impairment test is most sensitive.

Independent auditor's report - Nel ASA 2023

A member firm of Ernst & Young Global Limited

Other information

Other information consists of the information included in the annual report other than the financial

statements and our auditor’s report thereon. Management (the board of directors and the CEO) is

responsible for the other information. Our opinion on the financial statements does not cover the other

information, and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information,

and, in doing so, consider whether the board of directors’ report, the statement on corporate governance

and the statement on corporate social responsibility contain the information required by applicable legal

requirements and whether the other information is materially inconsistent with the financial statements or

our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the

work we have performed, we conclude that the other information is materially inconsistent with the

financial statements, there is a material misstatement in this other information or that the information

required by applicable legal requirements is not included in the board of directors’ report, the statement

on corporate governance or the statement on corporate social responsibility, we are required to report

that fact.

We have nothing to report in this regard, and in our opinion, the board of directors’ report, the statement

on corporate governance and the statement on corporate social responsibility are consistent with the

financial statements and contain the information required by applicable legal requirements.

Responsibilities of management for the financial statements

Management is responsible for the preparation of the financial statements of the Company that give a

true and fair view in accordance with simplified application of international accounting standards

according to section 3-9 of the Norwegian Accounting Act, and for the preparation of the consolidated

financial statements of the Group that give a true and fair view in accordance with IFRS Accounting

Standards as adopted by the EU. Management is responsible for such internal control as management

determines is necessary to enable the preparation of financial statements that are free from material

misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s and the

Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern

and using the going concern basis of accounting unless management either intends to liquidate the

Company or the Group, or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that

includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an

audit conducted in accordance with ISAs will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the

basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional

scepticism throughout the audit. We also:

Independent auditor's report - Nel ASA 2023

A member firm of Ernst & Young Global Limited

 Identify and assess the risks of material misstatement of the financial statements, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not

detecting a material misstatement resulting from fraud is higher than for one resulting from error,

as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override

of internal control.

 Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the Company’s and the Group’s internal control.

 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

 Conclude on the appropriateness of management’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to

events or conditions that may cast significant doubt on the Company’s and the Group’s ability to

continue as a going concern. If we conclude that a material uncertainty exists, we are required to

draw attention in our auditor’s report to the related disclosures in the financial statements or, if

such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit

evidence obtained up to the date of our auditor’s report. However, future events or conditions

may cause the Company and the Group to cease to continue as a going concern.

 Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and

events in a manner that achieves fair presentation.

 Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Group to express an opinion on the consolidated financial

statements. We are responsible for the direction, supervision and performance of the group audit.

We remain solely responsible for our audit opinion.

We communicate with the board of directors regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including any significant deficiencies in internal control

that we identify during our audit.

We also provide the audit committee with a statement that we have complied with relevant ethical

requirements regarding independence, and to communicate with them all relationships and other matters

that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the board of directors, we determine those matters that were of

most significance in the audit of the financial statements of the current period and are therefore the key

audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public

disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should

not be communicated in our report because the adverse consequences of doing so would reasonably be

expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirement

Report on compliance with regulation on European Single Electronic Format (ESEF)

Opinion

As part of the audit of the financial statements of Nel ASA we have performed an assurance engagement

to obtain reasonable assurance about whether the financial statements included in the annual report, with

the file name NELASA-2023-12-31-en, have been prepared, in all material respects, in compliance with

the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single

Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities

Independent auditor's report - Nel ASA 2023

A member firm of Ernst & Young Global Limited

Trading Act, which includes requirements related to the preparation of the annual report in XHTML format

and iXBRL tagging of the consolidated financial statements.

In our opinion, the financial statements, included in the annual report, have been prepared, in all material

respects, in compliance with the ESEF Regulation.

Management’s responsibilities

Management is responsible for the preparation of the annual report in compliance with the ESEF

Regulation. This responsibility comprises an adequate process and such internal control as management

determines is necessary.

Auditor’s responsibilities

Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all material

respects, the financial statements included in the annual report have been prepared in accordance with

the ESEF Regulation. We conduct our work in accordance with the International Standard for Assurance

Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of historical financial

information”. The standard requires us to plan and perform procedures to obtain reasonable assurance

about whether the financial statements included in the annual report have been prepared in accordance

with the ESEF Regulation.

As part of our work, we perform procedures to obtain an understanding of the company’s processes for

preparing the financial statements in accordance with the ESEF Regulation. We test whether the financial

statements are presented in XHTML-format. We evaluate the completeness and accuracy of the iXBRL

tagging of the consolidated financial statements and assess management’s use of judgement. Our

procedures include reconciliation of the iXBRL tagged data with the audited financial statements in

human-readable format. We believe that the evidence we have obtained is sufficient and appropriate to

provide a basis for our opinion.

Oslo, 28 February 2024

ERNST & YOUNG AS

The auditor's report is signed electronically

Petter Frode Larsen

State Authorised Public Accountant (Norway)

info@nelhydrogen.com

+47 23 24 89 50

www.nelhydrogen.com

Office address:

Karenslyst all é 49,

0279 Oslo, Norway