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Annual Report

2020


Table of Contents 6

18

36

Corvus at a glance

Management and Governance

Financial statements

12

24

84

Financial Highlights

Sustainability

Audit report

16

28

Corvus history timeline

Board of directors report


Letter

from CEO 2020 was a year of contrasts. On one hand, the COVID 19 pandemic has changed our lives but, on the other, Corvus Energy has experienced its highest revenue in history and a first-time positive EBITDA. I would like to emphasize our employees’ health and safety has been our highest priority throughout this pandemic, with strict in-office and off-site working protocols being in place throughout the year. During this time, our employees have shown remarkable resilience. I would like to thank: our customer service team that have been required to travel to ensure 100% on-time delivery and installation of our products; our factory personnel that have been required to be on site every day to ensure on-time production; and all of our employees that have handled their responsibilities from home offices around the world. We know it has not been easy and having such a strong group of employees has contributed to our success during 2020. During the year, the COVID 19 pandemic did affect our order intake but, starting in the second half of 2020 and into 2021, the market has shown a steady increase in demand for more sustainable solutions. We continue to see growth in all of our segments due to the speed of decarbonization within the maritime industry. Things are moving quickly and Corvus will be an important player in this global transition.

I am proud that we have maintained our strong market position with more than 50% of the market share. To date, Corvus has delivered more than 500 projects across multiple segments and our solutions have logged more than three million running hours. This puts Corvus in a unique position to continue to deliver high quality ESS solutions with a unique safety level. We strongly believe in the future of the maritime battery and fuel cell market and expect significant growth over the next few years. Global IMO and local regulations for reductions in emissions, combined with passenger and end user demands for decarbonization, will mean an increased adoption rate in the maritime industry. This will create an estimated potential addressable market of $10 billion by 2030. The combination of our extensive product portfolio and the development of fuel cells with Toyota means we will continue to be the leading global provider of zero emission solutions for the maritime industry. Finally, I would like to thank our shareholders, banks, customers, suppliers, and all of our other stakeholders for their unwavering support during this turbulent year. We are ready for 2021 and will continue to power a clean future! Best regards,

Geir Bjørkeli Chief Executive Officer Corvus Energy


Mission

Powering a clean future


Vision

To be the leading provider of zero emission solutions for the maritime industry


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Annual report 2020

Corvus Energy

There are numerous secular tailwinds behind the electrification of shipping which is an ‘unstoppable trend’.

Economics Cost reductions and technology improvements in battery storage are creating performance enhancement with rapid investment paybacks

Lower port fees for low emission vessels 40 ports provide 5-25% discount on port fees for Green Award certified vessels with rapid investment paybacks

Oil majors’ action Targets carbon neutral operations by 2030-2050


Annual report 2020

Corvus Energy

IMO regulations Reduce CO2 emissions across international shipping by >40% by 2030 with rapid investment paybacks

Passenger demand for greener experiences EU Green Deal provides an action plan to move to climate neutral economy

Adoption rate Contractual developments increase Shipowner incentives to prioritize fuel savings

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Annual report 2020

Corvus Energy


Corvus Energy

Annual report 2020

Corvus operates in the ocean space

9


Annual report 2020

10

Corvus Energy

History 1st

First 1000+ passenger hybrid ferry

14

1st

First subsea application

1st

First hybrid OSV

Technological breakthroughs in less than 10 years

1st

First hybrid port cranes

1st

First marine installation

2009

Corvus is founded in Vancouver

2010

2011

2012

2013

2014

Becomes a shareholder

Office opened in Bergen

2015


Annual report 2020

Corvus Energy

1st

1st

First all electric car ferry

First hybrid fish factory vessel

1st

1st

First electrified cruise vessel

1st

First long-range autonomous underwater vehicle

First subsea construction vessel using battery solutions

First hybrid fishing vessel

2016

1st

1st

First hybrid fast ferry

2017

2018

2019

2020

Acquired by Corvus

Becomes a shareholder

Corporate office is moved to Bergen from Vancouver Becomes a shareholder Office opened in Singapore and Seattle to serve the APAC and US market

New fully automated factory in Norway

2021

$6m grant to develop hydrogen fuel cell systems with

JV with

11


Corvus at a glance


14

Annual report 2020

Corvus Energy

$10 billion

500

potential addressable market by 2030

projects across multiple segments

>100 years

>50%

combined management

market share

industry experience

c.1 GWh

20-100%

current production capacity

combined savings from fuel

located in Norway and Canada

and O&M, depending upon use cases

199,231,807

534,582,939

Liters diesel saved on

Kilograms CO2 reduced on

projects delivered

projects delivered


Annual report 2020

Corvus Energy

Operational highlights 2020

3,5 mill running hours

all projects delivered on time

16,000 modules delivered

58

commissiongs in 2020

NO HMS injuries in 2020

15


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Annual report 2020

Corvus Energy

Financial Highlights 2020 Revenue 61

(MUSD)

46 29

2018

2019

2020

EBITDA development 1 (MUSD)

-4

-13 2018

2019

2020


Annual report 2020

Corvus Energy

22.6% Gross margin 2020

first year with positive EBITDA

33%

5% increase in gross margin from 2019 to 2020.

revenue from 2019 to 2020

6,4 MUSD invested in R&D in 202

17


Executive Management and Board of Directors


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Annual report 2020

Corvus Energy

Executive Management team Geir Bjørkeli – Chief Executive Officer • Chairman of The Federation of Norwegian Industries – Maritime Branch • Board member of the Maritime Clean Tech cluster organization • Member of the International Advisory Panel on Maritime Decarbonation (IAP) • 20 years experience in marine systems and executive positions with Huisman, Ulstein and Rolls-Royce marine and merchant vessel divisions based in Korea and Japan

Halvard Hauso – Chief Commercial Officer • Leader of the company’s sales growth worldwide in both marine and land applications since he joined in 2015 • Previously held senior management and technical roles at Rolls-Royce Marine, Ulstein and ABB in Norway and Singapore

Mette Rokne Hanestad – Chief Financial Officer • State Authorized Public Accountant in Norway • Prior to joining Corvus in 2018, served as a finance manager at Avance Gas and worked for nine years as an auditor at EY covering large Norwegian and international companies


Annual report 2020

Corvus Energy

Gisle Frydenlund – Chief Operating Officer • Responsible for establishing the Norwegian factory, along with the Company’s new ERP systems • Previously served as EVP Major Projects & Added Services at Berenberg Corp. and as Department Manager in Imenco

Richard Wing – Chief Research & Development Officer • Joined Corvus in 2018 as responsible for all engineering and R&D programs globally • Passionate about helping technology companies achieve greater organizational effectiveness in bringing products and services to market, with shorter lead times and improved delivery accuracy

Henning Dahl – Chief Business Development Officer • Management consultant specializing in business innovation, digital strategies, change and brand management for over 15 years • Prior to joining Corvus in 2019, Colours and Knowit focusing on Ocean industries

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Corvus Energy

Board of Directors Terje Arnesen – Chairman • Has over 30 years experience in the marine equipment and oil service industry with exposure to turnaround and strategic repositioning • Currently serves as CEO in Perfect Temperature Group AS and previously at Rapp Marine Group, Rocksourse ASA, Scana Propulsion, Bergen Group ASA, Bennex Group and EVP Service in RollsRoyce Marine

Jan Ellevset – Board Director • Has 35 years experience with Equinor, formerly Statoil, an upstream oil and gas company in Norway • Currently works for Equinor Technology Ventures, whose mission is to invest in small, innovative technology companies that have a technology that can improve Equinor’s operations • Holds multiple Board positions in various technology companies

Rune Bruøygard – Board Director • Has more than 15 years experience from various commercial roles within the renewable energy sector • Serves as Director of Business Development at Hydro Batteries • Previously held numerous leading roles within Hydro’s power business including the establishment of Hydro’s activities in Brazil and the development of Hydro’s positioning within the energy storage market

Nick Andrews – Board Director • Owned, developed and sold clean energy companies over the past 20 years and now serves on a number of private co. boards • Works with companies to create value for shareholders and employees, through working with corporate management to implement effective financing, corporate and legal objectives • Previously worked as an investment banker for Deutsche Bank and Bankers Trust in New York and Toronto


Annual report 2020

Corvus Energy

Christian Bonfils – Board Director • Has over 20 years of experience in shipping and in particular a strong focus on innovation • Managing Director (MD) of BW Dry Cargo, an Affiliate of BW Group where also member of the Executive Committee • Previously founded and served as CEO of Nordic Bulk Carriers (2009-2015), a company that pioneered sailing on the Northern Sea Route

Mark Gainsborough – Board Director • Has over 30 years experience in the energy industry in a range of roles for Royal Dutch Shell is a fellow of the UK Energy Institute • After roles in sales, marketing, supply chain, strategy and M&A, he was until recently the head of Shell’s growing New Energies Business, investing in renewable power, biofuels and other low carbon solutions to help address climate change

Sonja Vernøy Hansen – Employee Representative Officer • Works as Marketing Communications Manager at Corvus and is the employee representative in the Board • Prior to joining Corvus, held various positions at itslearning AS, Palfinger Marine Norway and Norwegian Deck Machinery

23


Sustainability


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Annual report 2020

Corvus Energy

Product People

Planet

Practice


Annual report 2020

Corvus Energy

Sustainability is firmly placed within our mission; Powering a Clean Future. The core of sustainability in Corvus Energy is centered around the Products we offer to the market. The immediate break-even point of GHG and NOx emissions for the Maritime industry by installing ESS solutions are directly in-line with UN SDG #13 Climate Action. To further utilize the full potential of Corvus Energy within several of the UN SDGs, we have initiated the Sustainability Initiative to establish our ambition to ensure sustainable development throughout the Company and externally with our stakeholders, partners and suppliers.In order to make sustainable Products other input factors are necessary from a Cradle-to-Grave perspective. Our approach identifies the following supportive input factors:

P

People: How we affect the people in and around the Company determines how successful we are in making sustainable products. Safe and fair working conditions, competence acquisition and sharing, contributions to communities, partnerships with local businesses and charitable organizations, etc. are all part of our Cradle-to-Grave philosophy for our product portfolio and technology development.

P

Planet: Apart from the immediate reduction of GHG and NOx emissions our products offer to the Maritime industry, we acknowledge that throughout the Cradle-to-Grave perspective we affect the planet in other ways. Through a conscious supply chain footprint strategy, Life Cycle Analysis for products, Product Development, Support Second Life solutions, Clean Energy operated facilities, recycling, reusage of material, waste management etc., we are capturing the bigger picture to ensure sustainable development on our planet.

P

Practice: What we say, how we act, and how we choose to react will influence not only ourselves but also those around us. Corporate Governance set a commitment to act as we say in a responsible manner. Through our Code of Conduct policy, Strategies for responsible sourcing, consumption and production, ethically sourced raw material in cooperation with external partners, sustainable R&D and Product Development, etc. we strive to uphold the integrity level expected to succeed on our mission of Powering a Clean Future. 

27


Board of Director’s Report


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Annual report 2020

Corvus Energy

Corvus Energy Holding AS Board of Director’s report for the year ended December 31, 2020 Company and business Corvus Energy Holding AS’ and its subsidiaries’ (“the Company” or “the Group”) operations consist of developing

to pick up and Corvus experienced a 32%

and commercializing high energy

increase in revenue compared to 2019.

battery systems, battery management

During 2020 and the first part of 2021, the

systems and applications. The Company’s

market has shown a steady increase in

operations are located in Richmond,

demand for more sustainable solutions.

British Columbia, Canada (Corvus Energy

This is mainly driven by the Norwegian/

Inc.) and in Porsgrunn and Bergen,

European maritime market, but we are

Norway (Corvus Energy AS). The Company

also seeing an increase in both the North

sells its products to end customers and

American and Asian markets. We continue

integrators as well as through contract

to see growth in the passenger ferry

sales agents.

segment and are experiencing an increase in demand for battery systems for the

Market development

large passenger vessel segments.

With an increased focus on sustainable solutions world-wide, Corvus is attractive

The order book at the end of Q1 2021

as we are Powering a Clean Future.

represents more than the revenue for the

The global market has been impacted

year ended December 31, 2020 and shows

by the Covid 19 pandemic which has led

the strong focus on lower emissions in the

to lower order intake and revenue than

maritime market.

expected. The second quarter in 2020 was

The Company has secured the first sales

especially impacted by the insecurity of

order for its Blue Whale Energy Storage

the effect of the pandemic. During the

System (ESS) in North America and

second half of 2020, the market started

expects a further global growth in demand


Annual report 2020

Corvus Energy

for the Blue Whale technology. The

normalized operational activity compared

Company sees Japan, a maritime nation

to 2019 when the Company had a higher

with a clear path towards a green future,

cost level due to restructuring the group

as an important market and a big part of

and building up operations.

its future growth strategy. To tap into this

The Company’s total assets were MUSD

growth, the Company entered into a Joint

70.9 as of December 31, 2020 compared to

Venture Agreement with Sumitomo in

MUSD 67.7 as of December 31, 2019 mainly

Japan as of Q2 2021.

due to reduction in inventory offset by an increase in trade receivables.

Market Segments Our product portfolio covers seven

Cash flow from operating activities

individual maritime batteries, developed

was negative MUSD 3.3 for the year

to meet the specific requirements of

ended December 31, 2020 compared

different market segments. Lightweight

to negative MUSD 3.1 in 2019. Cash flow

batteries for fast passenger craft, large

from investing activities relates mainly to

battery systems for cruise and ro-pax,

product development and investment in

batteries with high cycling capability for

production facilities in Porsgrunn, Norway

ferries and offshore, and subsea batteries

and Richmond, Canada. Cash flow from

for ROV operations – Corvus supplies

financing consists mainly of changes in

competitive ESSs for these applications

working capital facilities and new debt.

and more.

Net cash flow in 2020 is negative MUSD 1.9 compared to positive MUSD 6.9 in 2019.

Financial results During the year ended December 31, 2020 Corvus Energy experienced a significant growth in revenues, with an increase of

Net loss in the parent company is MUSD 2.6 and negative net cash flow for the year is MUSD 3.5.

32% (compared with the year ending December 31, 2019). The net loss at year

Going concern

end 2020 was MUSD 4.5 compared to

In accordance with IAS1.25, the

MUSD 16.4 net loss for the year ended

Consolidated Financial Statements have

December 31, 2019.

been prepared based on accounting principles applicable to a going concern,

EBITDA for 2020 totaled a positive MUSD

which assumes that the Company will

0.9 compared with negative MUSD 12.8

continue operating in the foreseeable

in 2019. The positive EBITDA is due to

future and be able to realize its assets

an increase in revenue and margins

and discharge its liabilities in the normal

in 2020, and lower administration &

course of business.

operations cost. The lower costs are due to a cost reduction program and a more

The group is in a growth period and this

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Annual report 2020

Corvus Energy

requires liquidity. In 2020 the Company

In 2021 some uncertainties caused by

experienced effects of the Covid 19

Covid-19 pandemic remain and the

pandemic with lower revenues and order

Company’s revenues and order intake

intake than expected. Corvus experienced

for 2021 may be affected. In January

no order cancellations and has delivered

2021 the Company secured a convertible

all orders according to contract. The

shareholder loan with their shareholders

Company secured a MNOK 90 revolving

for MUSD 13.5 which will support growth,

credit facility with DNB in early 2020.

working capital and investments for 2021.

Together with increased revenue this

In addition, the revolving credit facility of

has contributed to sufficient liquidity in

MNOK in DNB has been renewed until

2020, and the Company has handled their

June 30, 2022.

obligations with customers, employees, banks, and vendors. The Company started

Corvus Energy AS, one of the

several cost cutting activities in 2020,

subsidiaries in the Group, is subjected

focused to secure revenue and experience

to various covenants under its financing

positive EBITDA of MUSD 0.9 in 2020 and

arrangements as described in notes to

a 32% increase in revenue, even in a year

the consolidated financial statements.

affected by the Covid 19 pandemic.

The Company has secured 75% of the expected revenue in 2021 and, even with some uncertainty remaining related to the Covid 19 effect, there is strong outlook for the ESS market, and the Company has secured financing through June 2022. As a result, no material uncertainty regarding the going concern capability of the Group exists. The consolidated financial statement has been prepared on a going concern basis.

Sustainability Sustainability and corporate social responsibility are areas of strategic importance to Corvus Energy. The company’s strategic and commercial priorities must help ensure sustainable development and make our operation attractive to our diverse stakeholders: shareholders, authorities, customers, suppliers, collaborative partners, employees, or voluntary organizations.


Corvus Energy

Through the entire value chain from design and procurement to production and operation of installed maritime battery systems, re-use and final recycling is an important part of our strategy.

Quality, Health, Environment, and Safety The Company is certified according to the ISO 9001:2015 and ISO 14001:2015 standards for Quality and Environmental Management, with a focus on carrying out our business in a manner that assures the best protection for our customers, the environment, employees, and external partners. We are compliant with local, regional, and global regulations. Requirements are followed up and ensured through both external and internal audit activities. Both ISO certificates were successfully renewed during the re-certification audit in 2020. All personnel are appropriately trained according to the Corvus Energy QHSE standard and are encouraged to participate in the proactive and preventive effort to ensure continued QHSE excellence. The Company has established a set of objectives and KPIs to ensure proper tracking and education to drive continuous improvement in the overall performance of Corvus Energy.

The Company has established a DNVGL MSA Agreement for its Bergen factory as result of the proven track record of production quality and has initiated Operational Excellence and Quality

Annual report 2020

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Annual report 2020

Corvus Energy

Bergen April 21, 2021

_______________________

_______________________

_______________________

Terje Arnesen Chairman

Jan Ellevset Director

Rune Bruøygard Director

_______________________

_______________________

_______________________

Christian Bonfils Director

Mark Gainsborough Director

Nick Andrews Chairman

_______________________

_______________________

Sonja Vernøy Hansen Director (Employee Rep)

Geir Bjørkeli CEO

* Board of Director’s report has been digitally signed.


Corvus Energy

Annual report 2020

35


Consolidated Financial Statements


38

Annual report 2020

Corvus Energy

Consolidated Financial Statements December 31, 2020

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CORVUS ENERGY HOLDING (United States Dollar)

Note

2020

2019

Revenue

19

60,918,705

46,283,655

Cost of sales

12

47,162,639

37,251,889

13,756,066

9,031,766

12, 13

8,364,565

11,580,995

12

4,477,663

10,279,254

913,838

(12,828,483)

2,854,771

2,280,784

(1,940,933)

(15,109,267)

Gross profit Administrative expenses Other operating expenses Operating profit before depreciation (loss) Depreciation and amortization expense

7, 8

Operating profit (loss) Finance cost

12

1,623,413

1,490,904

Finance income

12

7,827

493,166

Other income (loss)

12

(976,462)

(298,597)

(4,532,981)

(16,405,602)

(4,532,981)

(16,405,602)

(1,170,978)

(520,892)

(5,703,959)

(16,926,494)

Profit (loss) before tax Income tax expense Net profit (loss)

14

Other comprehensive income (loss) Items that will not be reclassified to profit or loss Currency translation adjustment TOTAL COMPREHENSIVE INCOME


Annual report 2020

Corvus Energy

39

CONSOLIDATED BALANCE SHEET CORVUS ENERGY HOLDING (United States Dollar)

ASSETS

Note

2020

2019

Property plant and equipment

7

26,637,828

21,602,206

Other intangible assets

8

5,472,566

5,122,504

32,110,394

26,724,710

5

12,083,766

20,815,685

17

20,435,068

10,459,127

711,888

1,633,297

5,541,023

8,043,255

38,771,745

40,951,364

70,882,139

67,676,074

10

6,876,055

4,423,568

7, 10

8,156,102

7,358,713

15,032,157

11,782,281

Non-current assets

Total non-current assets Current assets Inventory Trade and other receivables Prepaid expenses and other current assets Cash and cash equivalents

4

TOTAL ASSETS LIABILITIES Non-current liabilities Borrowings Lease liabilities Total non-current liabilities Current liabilities Trade and other payables

17

7,698,174

13,128,748

Current portion long-term debt

10

2,014,852

622,302

Overdraft facilities

10

12,459,154

6,778,417

Shareholder loan

9

1,575,045

-

7,10

679,592

597,538

Warranty reserve

1,821,183

833,198

Deferred revenue

19,426,468

15,901,334

3,649,428

6,646,135

49,323,896

44,507,672

Short term lease liabilities

Other payables Total current liabilities EQUITY Share capital

11

503,941

503,941

Own Shares

11

(193,072)

-

6,891,017

6,891,017

Share premium Share warrants

11

894,875

894,875

Stock based compensation

11

4,842,696

3,805,701

(647,167)

523,811

Retained loss

(5,766,205)

(1,233,224)

Total Equity

6,526,085

11,386,121

70,882,139

67,676,074

Currency translation adjustment

TOTAL LIABILITIES AND EQUITY


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Annual report 2020

Corvus Energy

Nature of operations and going concern (note 1) Business combination (note 6) Contingent liabilities (note 18) Subsequent event (note 20)

Bergen 21. April 2021

_______________________

_______________________

_______________________

Terje Arnesen

Jan Ellevset

Rune Bruøygard

Chairman

Director

Director

_______________________

_______________________

_______________________

Christian Bonfils

Mark Gainsborough

Director

Director

Nick Andrews Chairman

_______________________

_______________________

Sonja Vernøy Hansen

Geir Bjørkeli

Director (Employee

CEO

Rep)

* The Finacial Statement has been digitally signed.


Annual report 2020

Corvus Energy

41

CONSOLIDATED STATEMENT OF CASH FLOWS CORVUS ENERGY HOLDING (United States Dollar)

2020

2019

(4,532,981)

(16,405,602)

2,854,771

2,280,784

1,036,995

1,132,260

1,623,413

1,264,890

(9,975,941)

(2,516,663)

8,731,920

(3,863,858)

Prepaid expenses

921,409

2,929,423

Warranty reserve

987,985

337,992

Deferred revenue

3,525,134

5,398,959

(8,427,282)

6,297,854

(3,254,577)

(3,143,961)

(6,417,628)

(12,358,766)

-

(786,016)

Purchases of Intangible Assets

(698,133)

-

Cash (used in) provided by investing activities

(7,115,761)

(13,144,782)

Lease liabilities

(1,056,114)

(199,695)

Bank overdraft and revolver

5,680,737

286,843

New issue debts

3,804,828

4,766,758

ACTIVITES OPERATING Income/(loss) for the period Adjustments to reconcile net income to cashflows from operating activities Amortization of property, equipment and intangible assets Stock-based compensation Interest expense and financing costs Changes in operating working capital items Trade and other receivables Inventory

Trade and other payables Cash (used in) provided by operating activities ACTIVITES INVESTING Purchases of property and equipment Acquisition (note 6)

ACTIVITES FINANCING

Repayment of debts

(185,779)

(127,512)

(1,164,163)

(1,264,890)

-

(1,131,468)

Shareholder loan

1,575,045

-

Share buyback

(193,072)

-

-

20,900,123

8,461,483

23,230,159

(593,377)

1,121,182

(1,908,855)

6,941,416

8,043,255

(19,343)

5,541,023

8,043,255

Interest expense and financing costs paid Share issuance and subscription costs

Issuance of capital stock Cash (used in) provided by financing activities EFFECT OF FOREIGN EXCHANGE ON CASH INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS - END OF PERIOD


42

Annual report 2020

Corvus Energy

CONSOLIDATED STATEMENT OF

CORVUS ENERGY (United States

Share capital Balance January 1, 2019

Share subscriptions

Share warrants

Contributed surplus stock-based compensation

373,874

-

856,710

2,539,775

113,411

-

-

-

Share issuance costs

-

-

-

-

Transfer from contributed surplus to Deficit

-

-

-

-

Share-based payments

-

-

-

1,152,781

Adjustment for IFRS 16

-

-

-

-

16,656

-

38,166

113,145

-

-

-

-

Balance December 31, 2019

503,941

-

894,875

3,805,701

Balance January 1, 2020

503,941

-

894,875

3,805,701

Share buyback

-

-

-

-

Share-based payments

-

-

-

1,036,995

Currency translation

-

-

-

-

Net income/(loss) for the period

-

-

-

-

503,941

-

894,875

4,842,696

Issued during the year

Currency translation Net income/(loss) for the period

Balance December 31, 2020


Annual report 2020

Corvus Energy

F SHAREHOLDERS’ EQUITY

Y HOLDING Dollar)

Unregistered share capital

Own shares

Currency Translation adjustment

Contributed surplus other

Shareholder’s equity

Deficit

371,264

-

-

2,919

(3,497,419)

647,123

(371,264)

-

26,933,717

-

-

26,675,864

-

-

(1,131,468)

-

-

(1,131,468)

-

-

(19,182,371)

-

19,182,371

-

-

-

-

-

-

1,152,781

-

-

-

-

(59,438)

(59,438)

-

-

271,139

520,892

(453,135)

506,862

-

-

-

-

(16,405,602)

(16,405,602)

-

-

6,891,017

523,811

(1,233,224)

11,386,121

-

-

6,891,017

523,811

(1,233,224)

11,386,121

-

(193,072)

-

-

-

(193,072)

-

-

-

-

-

1,036,995

-

-

-

(1,170,978)

-

(1,170,978)

-

-

-

-

(4,532,981)

(4,532,981)

-

(193,072)

6,891,017

(647,167)

(5,766,205)

6,526,085

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Annual report 2020

Corvus Energy

Notes to Consolidated Financial Statements 2020 1. Nature of operations and going concern

COVID-19 pandemic.

Corvus Energy Holding AS (“The Company”) operations consist of developing and commercializing high energy battery systems, battery management systems and applications. The Company consists of the wholly- own subsidiaries Corvus Energy Holding AS (Norway), Corvus Energy AS (Norway), Corvus Energy Inc (Canada)., Corvus Energy USA Ltd (USA) and Corvus Energy Hong Kong Limited (Hong Kong). The Company’s operations are in Richmond, British Columbia, Canada, Bergen and Porsgrunn, Norway. The Company sells its products to end customers and integrators as well as through contract sales agents.

Going concern The group is in a growth period which requires liquidity. In 2020 the Company experienced effects of the COVID-19 pandemic with lower revenues and order intake than expected. Corvus experienced no cancellations and have delivered all orders according to contract. The Company secured a MUSD 10.5 revolving credit facility with DNB in early 2020. Together with increased revenue this has contributed

In 2021 still with some uncertainties

to sufficient liquidity in 2020, and the

caused by the COVID-19 pandemic, the

Company has handled their obligations

Company’s revenues for 2021 and order

with customers, employees, banks, and

intake in 2021 may be affected. In January

vendors during the year. The Company

2021, the Company secured a convertible

started several cost cutting activities in 2020,

shareholder loan with their shareholders

focused to secure revenue and experienced

for MUSD 13.5 which will support growth,

positive EBITDA of MUSD 1 in 2020 and 30%

working capital and investments for 2021.

increase in

In addition, the revolving credit facility of

revenue, even in a year affected by the

MUSD 10.5 in DNB is renewed until June


Annual report 2020

Corvus Energy

30, 2022.

Board (“IASB”), including International Accounting Standard 1, Presentation of

Corvus Energy AS, one of the subsidiaries

Financial Statements. The Company has

in the Group, is subjected to various

consistently applied the same accounting

covenants under its financing

policies throughout all periods presented,

arrangements, one of which pertains to

as if these policies had always been in

minimum EBITDA on a quarterly

effect. Subsidiaries are defined as entities over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to variable returns from its involvement with

basis for Corvus Energy AS of MUSD 0.5.

the entity and has the ability to affect the

The Company has secured 75% of the

returns through its power over the entity.

expected revenue in 2021 and even with

Subsidiaries are fully consolidated from

some uncertainty related to the COVID-19

the date on which control is transferred

effect, there is strong outlook for the ESS

to the Company. They are deconsolidated

market, and the Company has secured

from the date that control ceases.

financing through June 2022. As a result, no material uncertainty regarding the

Under the equity method of accounting,

going concern capability of the Group

interests in joint ventures are initially

exists. In accordance with IAS1.25, these

recognized at cost and adjusted thereafter

Consolidated Financial Statements have

to recognize the Company’s share of the

been prepared based on accounting

post-acquisition profits or losses and

principles applicable to a going concern,

movements in other comprehensive

which assumes that the Company will

income. When the Company’s share of

continue operating in the foreseeable

losses in a joint venture equals or exceeds

future and be able to realize its assets and

its interests in the joint ventures, the

discharge its liabilities in the normal

Company does not recognize further

course of business.

losses, unless it has incurred obligations or made payments on behalf of the joint

2. Significant accounting policies These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as adopted by the European Union, applicable to the preparation of consolidated financial statements as issued by the International Accounting Standards

ventures. Unrealized gains on transactions between the Company and its joint ventures are eliminated to the extent of the Company’s interest in the joint ventures. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures

45


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Annual report 2020

Corvus Energy

have been changed where necessary

using average rate of exchange.

to ensure consistency with the policies

• Net gains and losses arising on

adopted by the Company.

translations are included in the consolidated profit and loss statement.

Conversion of foreign currency Cash and cash equivalents Foreign currency

Cash and cash equivalents consist of cash

Items included in the financial statement

on deposit and highly liquid interest-

of each entities are measured using the

bearing securities with maturities at the

main currency that the entity conduct its

date of purchase of three months or less.

business, “the functional currency”. The

Interest earned is recognized immediately

Company’s functional currency is mainly

in the consolidated statement of

Norwegian Kroner (NOK) and Canadian

operations.

Dollar (CAD). The parent company’s functional currency is Norwegian Kroner

Inventory

(NOK).

In accordance with IAS 2, inventory is recorded at the lower of cost and net

Transactions and balances

realizable value. Costs of raw materials

Foreign currency transactions are

are determined using the first in first out

translated into functional currency

(FIFO) or weighted average cost formula.

using exchange rate at transaction date.

When inventories are sold, the carrying

Currency gain and loss resulting from

amount of those inventories is recognised

settlements are recognized at realized

as an expense in the period in which the

currency gain/loss. However, conversion

related revenue is recognised. The amount

of assets and liabilities during month end

of any write-down of inventories to net

are monetary recognized as unrealized

realizable value and all losses of inventories

currency gain/loss.

are recognized as an expense in the period the write-down or loss occurs.

Consolidation translation The consolidated financial statement is presented in United States dollar. Group Companies that have functional currency differ from the presentation currency (USD) are converted into the presentation currency as follows: • Assets and liabilities presented in at consolidation are converted to presentation currency using the period end exchange rates. • Revenues and expenses are converted


Annual report 2020

Corvus Energy

Property, plant and equipment Property, plant and equipment are recorded at cost less accumulated amortization. Amortization is provided using the following annual rates and methods: Furniture and equipment

5-year straight-line with half year rules

Plant equipment

5-year straight-line with half year rules

Computer equipment

100% with half year rules

Computer software

100% with half year rules

Leasehold improvements

Term of lease

The Company reviews the carrying amount of its property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The determination of any impairment would include a comparison of the greater of the fair value less costs to sell or value in use to the net carrying value of the asset. If impairment exists, the carrying value is written down to the greater of the fair value less costs to sell or value in use.

Goodwill and intangible assets Goodwill represents amounts arising on the acquisition of subsidiaries. Goodwill arising on acquisition represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired and liabilities assumed. Goodwill is initially recognised at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is allocated to cashgenerating units and is not amortised but is tested annually for impairment, or more frequently when there is an indication that the cash generating unit is impaired.

Leases Leases are classified as either finance or operating leases. Leases, which transfer substantially all the benefits and risks of ownership of the property to the

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Annual report 2020

Company, are accounted for as finance leases as per IFRS 16 - Leases. All other leases are accounted for as operating leases wherein rental payments are expensed as incurred and no related liability is recorded on the consolidated balance sheet.

Revenue recognition The Company produces and sells energy storage solutions (ESS). The Company receives milestone payments according to contract. Milestone payments are determined by contract and differ from contract to contract. Revenue is recognized when the ESS product is delivered to the customer and the risk is transferred. On a special case, the company recognized revenue when the product was completed, and the customer had obtained control of the product under IFRS 15.B79 – Bill-andHold arrangement.

Share-based payments The Company has a stock option plan, which is described in note 9. When equitysettled share-based payments are made to employees and directors, compensation expense is recognized based on the fair value of the equity instrument issued on the date of grant, over the vesting period of the equity instrument. Share-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity

Corvus Energy


Annual report 2020

Corvus Energy

instruments issued/liabilities incurred,

where appropriate based on amounts

whichever is more reliably measurable. The

expected to be paid to the tax authorities.

fair value of share-based payments to nonemployees is periodically re-measured until

Deferred income tax is recognized,

counterparty performance is complete,

using the liability method, on temporary

and any change therein is recognized over

differences arising between the tax bases

the period and in the same manner as

of assets and liabilities and their carrying

if the Company had paid cash instead of

amounts in the consolidated financial

paying with or using equity instruments.

statements. However, the deferred income

The cost of share-based payments to non-

tax is not accounted for if it arises from

employees that are fully vested and non-

initial recognition of an asset or liability

forfeitable at the grant date is measured

in a transaction other than a business

and recognized at that date.

combination that at the time of the transaction affects neither accounting nor

The Company has elected to use the Black-

taxable profit or loss. Deferred income tax

Scholes option pricing model to determine

is determined on a non-discounted basis

the fair value on the grant date of its share-

using tax rates (and laws) that have been

based payment transactions.

enacted or substantively enacted by the balance sheet date and are expected to

Income taxes

apply when the related deferred income

The tax expense for the year comprises

tax asset is realized, or the deferred income

current and deferred tax. Tax is recognized

tax liability is settled.

in the consolidated statement of operations, except to the extent that

Deferred income tax assets are recognized

it relates to items recognized in other

only to the extent that it is probable that

comprehensive income or directly in

future taxable profit will be available

shareholders’ equity. In this case the tax is

against which the temporary differences

also recognized in other comprehensive

can be utilized.

income or directly in shareholders’ equity, respectively.

Research and development costs Research costs are expensed as incurred.

The current income tax charge is calculated

Where the deferral criteria established

based on the tax laws enacted or

under IFRS are satisfied in all material

substantively enacted at the consolidated

respects, development costs are capitalized

balance sheet date in the countries where

and amortized over the estimated life of the

the Company’s subsidiaries operate and

related products. Otherwise, development

generate taxable income. Management

costs are charged as an expense in the

periodically evaluates positions taken in

period incurred. All development costs to

tax returns with respect to situations in

date have been expensed as incurred.

which applicable tax regulation is subject to interpretation. It establishes provisions

49


50

Annual report 2020

Corvus Energy

Government grants

the Canada Revenue Agency (CRA) and

The Company receives government grants

reflect management’s best estimate of

from various government agencies. The

the recoverable amounts in light of CRA’s

Company records the related grants in

current practice.

operations when the criteria for receipt have been met. Government assistance

Financial instruments

related to the acquisition of equipment is

Financial assets represent a contractual

deducted from the carrying value of the

right by the Company to receive cash or

related equipment.

another financial asset in the future.

Investment tax credits

Trade receivables are initially recognized

The Company periodically applies for

at the transaction price, subsequently

financial assistance under available

accounted for at amortized cost and are

government incentive programs. The

reviewed for impairment on an ongoing

Company recognizes investment tax

basis.

credits (ITC) for qualifying research and development costs when there is reasonable

Financial liabilities represent a contractual

assurance the investment tax credit will be

obligation by the Company to deliver cash

realized. Government assistance relating

in the future and are classified as either

to refundable investment tax credits

short or long-term. Financial liabilities

resulting from research and development

are loans with fixed or determinable

expenditures is recorded as a reduction of

payments not quoted in an active market.

related expenses in the period when the qualifying expenditures have been incurred

Financial liabilities are initially recognized

and receipt of such assistance is reasonably

at fair value, including transaction costs

assured.

directly attributable to the transaction, and

Amounts recorded as investment tax

are subsequently measured at amortized

credits receivable are subject to audit by

cost. Financial liabilities are derecognized


Annual report 2020

Corvus Energy

when the obligation is discharged through

amendments to IFRS 9, IAS 39 and IFRS 7

payment or when the Company is legally

The amendments listed above did

released from the primary responsibility

not have any impact on the amounts

for the liability.

recognised in prior periods and are not expected to significantly affect the current

New and amended standards

or future periods.

The following new standards are applicable in the annual reporting period

New standards and interpretations

commencing 1 January 2020:

not yet adopted

• Definition of Material – amendments to

Certain new accounting standards and

IAS 1 and IAS 8 • Definition of a Business – amendments to IFRS 3

interpretations have been published that are not mandatory for 31 December 2020 reporting periods and have not been early

• Interest Rate Benchmark Reform –

adopted by the Company. These standards

amendments to IFRS 9, IAS 39 and

are not expected to have a material impact

IFRS 7

on the entity in the current or future

• Revised Conceptual Framework for Financial Reporting The group also elected to adopt the following amendments early: • Annual Improvements to IFRS Standards 2018-2020 Cycle. • Covid-19-Related Rent Concessions – amendments to IFRS 16 and Interest Rate Benchmark Reform –

reporting periods and on foreseeable future transactions.

3. Use of estimates Management makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing

51


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Annual report 2020

Corvus Energy

a material adjustment to the carrying amounts of assets and liabilities within the next financial year are mainly the estimates used for warranty reserves, valuation of accounts receivable and impairment of assets. Warranty reserve is accrued at the time of revenue recognition based on management’s best estimate of the total warranty costs over the duration of the warranty period. The included warranty is a performance warranty and does not represent a distinct performance obligation for revenue recognition. The rates range from 2% to 4%, depending on the type of product and warranty period.

4. Cash and cash equivalents Included in cash and cash equivalents is restricted cash of $54,249 in GICs as collateral for Toronto-Dominion Bank (TD) credit card facility and restricted cash related to tax deductions in Norway of $321,868.

5. Inventory

Raw material Work in progress Finished Goods

2020 $

2019 $

6,799,500

13,148,908

2,121,901

1,600,415

3,162,372

6,066,362

12,083,773

20,815,685

During the year ended December 31, 2020, inventory was reviewed for damage and obsolescence as part of ongoing operations and restructuring activities. The amount of costs written off against inventory for the year ended December 31, 2020 was a $135,286 (2019 – $362,020) and a recovery of $305,345 in the Nesttun factory.

6. Business Combination On February 6, 2019, the Company acquired 100% of the issued share capital of Grenland Energy AS, a manufacturer of light-weight lithium-ion batteries to compliment the portfolio of large-scale maritime ESSs to strengthen the Company’s market-leading position. Details of the purchase consideration, the net asset acquired and goodwill are as follows:


Annual report 2020

Corvus Energy

Purchase consideration

Cash paid

Common shares issued

Total purchase consideration

$ 786,016 5,765,968 6,551,984

The fair value of the 2,130,178 shares issued as part of the consideration paid for Grenland Energy AS was based on a share price of 22.66 NOK or $2.72 USD per share.

The assets and liabilities recognized as a result of the acquisition are as follows:

$

Cash

209,924

Plant and equipment

106,578

Trade and other receivables

Intangible assets: customer contracts

1,790,487

Loan

(297,863)

Trade and other payables

(795,236)

Net identifiable assets acquired

2,196,466

Add: goodwill

4,355,518

Net assets acquired

6,551,984

There were no business combinations in 2020.

1,182,577

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Annual report 2020

Corvus Energy

7. Property, plant and equipment

LeasedLeasehold Furnitur and Plant Premises improvments equipment equipment

Computer equipment

Computer software

Total

$

$

$

$

$

$

$

Balance – January 1, 2019

571,542

206,689

102,812

3,156,346

267,072

140,757

4,445,219

Additions

7,868,663

20,641

2,863

10,835,777

84,359

1,174,871

19,987,174

Disposals/write-offs

-

85,891

24,684

95,091

556

4,366

210,588

Balance – December 31, 2019

8,440,205

141,439

80,991

13,897,033

350,876

1,311,263 24,221,807

Balance – January 1, 2020

8,440,205

141,439

80,991

13,897,033

350,876

1,311,263

24,221,806

Additions

1,124,694

- 13,181

-

6,131,228

34,179

265,404

7,542,323

Disposals/write-offs

-

-

-

-

-

-

-

Balance – December 31, 2020

9,564,898

128,258

80,991

20,028,261

385,054

1,576,666

31,764,129

Balance – January 1, 2019

171,463

94,328

28,955

685,607

226,730

140,757

1,347,840

Depreciation for the year

481,545

14,338

14,446

712,061

76,088

47,320

1,345,799

Disposals/write-offs

-

25,06

6,075

-

42,901

-

74,038

Balance – December 31, 2019

653,008

83,604

37,326

1,397,668

259,918

188,077

2,619,601

Balance – January 1, 2020

653,008

83,604

37,326

1,397,668

259,918

188,077

2,619,601

Depreciation for the year

845,258

16,084

13,032

1,378,214

56,488

197,624

2,506,700

Disposals/write-offs

-

-

-

-

-

-

-

Balance – December 31, 2020

1,498,266

99,688

50,358

2,775,882

316,405

385,702

5,126,301

December 31, 2019

7,787,197

57,835

43,665

12,499,365

90,958

1,123,185

21,602,206

December 31, 2020

8,066,632

28,570

30,633

17,252,379

68,649

1,190,964

26,637,828

Cost

Cost

Accumulated depreciation

Accumulated depreciation

Net Book Value


Annual report 2020

Corvus Energy

On adoption of IFRS 16, the group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of January 1, 2019. The weighted average lessee’s incremental borrowing rates applied to the lease liabilities is 5%. The Company has also elected not to reassess whether a contract is or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the group relied on its assessment made applying IAS 17 and Interpretation 4 Determining whether an Arrangement contains a Lease.

The measurement of lease liabilities are as follows: Lease liability as at December 31, 2019

7,956,250

Addition of lease commitments

1,124,694

Currency translation

351,615

Rent payments

(1,081,833)

Interest payments

484,968

Lease liability recognised as at December 31, 2020

8,835,695

Further details on each of the leased assets and associated lease liabilities are:

Location

NBV

Lease Short-term Liability

Long-term

Remaining years

Delf Place, Richmond, Canada

686,795

862,522

102,730

759,792

5.33

Commerce Parkway, Richmond, Canada

175,806

190,169

114,574

75,596

1.50

6,718,947

7,282,658

392,121

6,890,537

13.50

485,085

500,345

70,168

430,177

6.25

8,066,632

8,835,695

679,592

8,156,102

6.65

Nesttun, Norway Porsgrunn, Norway

Interest expense on lease liabilities for 2020 was $484,968 (2019 - $222,120).

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Annual report 2020

Corvus Energy

8. Intangible and other assets Patents & Trademarks

Cost

Goodwill

Other Intangibles

Total

Balance January 1, 2019 Additions Disposals/write-offs

- -

4,356,517 -

1,790,487 -

6,147,004 -

Balance December 31, 2019

-

4,356,517

1,790,487

6,147,004

Balance January 1, 2020 Additions Disposals/write-offs

497,307 -

4,356,517 -

1,790,487 218,802 -

6,147,004 716,109 -

Balance December 31, 2020

497,307

4,356,517

2009,289

6,863,113

-

-

-

Accumulated amortization Balance January 1, 2019

-

Amortization for the year Disposals/write-offs

-

-

1,024,500 -

1,024,500 -

Balance December 31, 2019

-

-

1,024,501

1,024,501

Accumulated amortization Balance January 1, 2020 Amortization for the year Disposals/write-offs

-

-

1,024,501 366,046 -

1,024,501 366,046 -

Balance December 31, 2020

-

-

1,390,547

1,390,547

Net Book Value Balance December 31, 2019 Balance December 31, 2020

497,307

4,356,517 4,356,517

765,986 618,742

5,122,504 5,472,566

Intangible assets have been determined to have a useful life of five years. The total amortization for the year ended December 31, 2020 was $348,070 (2019 - $1,024,501). Tangible and intangible assets with a

Net sales value is based on valuation

defined economic life are tested for

indicators from independent parties.

impairment if indicators are identified that

Average net sales values from these

would suggest that the carrying amount

valuation reports exceeds carrying

of the assets exceed the recoverable

amounts for tangible and intangible

amount.

assets. Based on this, indicators of

The Group performs a quarterly

impairment were assessed December

assessment to determine any indicators

31, 2020 and it was concluded that no

of impairment for its intangible assets.

significant indicators for year ended

An impairment loss is recognized if the

December 31, 2021 were present.

carrying amount exceeds recoverable amount. The recoverable amount is based

Goodwill

on net sales value. The assessment is

For impairment testing goodwill acquired

done for each segment, and in 2020 the

through business combinations with

Company has one segment.

indefinite useful lives are allocated to


Annual report 2020

Corvus Energy

aggregate amount of up to $4,810,000 in the form of a revolving loan for working capital requirements with Eligible Export Contracts. The facility is secured by 1) all obligations for accounts receivables associated with the Eligible Export Contracts; and 2) general security arrangement (GSA) over all of the the one reportable segment. The Group

Company’s assets. The term loan bears

performed its annual impairment test in

interest at US prime rate plus a margin of

December 2020, comparing the carrying

8.90%. On December 31, 2020 the rate was

amount to the recoverable amount. The

12.15%.

Group applies fair value less costs of disposal as the recoverable amount which

The facility contained the following

is mainly based on average valuation

covenants:

indicators from independent parties. The impairment tests performed do not

i) Payments received from Eligible Export

indicate any impairment as per 31.12.2020.

Contracts financed by EDC are to be repaid within 5 business days;

9. Shareholder loan

ii) Facility draws will be permitted once the

Warrants were exercised on December

Company has satisfied

14, 2020 for a total of $1,575,045. However,

monthly reporting of accounts receivable

due to the shares not being approved and

and accounts payable listing and Project

registered the funds have been classified

Summary Report along with quarterly and

as a shareholder loan until such time the

annual financial statements;

shares are approved.

iii) Total Net Worth be maintained at no less than $3,000,000 on a

10. Debt a) The credit facility with Export Development Canada (EDC) provides an

quarterly basis. This credit facility was repaid in full in

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Annual report 2020

Corvus Energy

February 2021.

vendors for$1,756,075. Issuance fee of

b) The Company has a $2,500,000 (2019 -

0.2%, commitment fee of 0.5% per quarter

$1,650,000) Letter of Credit

and guarantee commissions of 2.4% per

Facility with fees at the rate of 2.25% per

quarter. Financial covenant is 30% book

annum. The facilities are secured by a

equity in Corvus Energy AS, measured

general security arrangement over all of

every 6 months. EBITDA covenant of

the Company’s assets and guaranteed by

$585,358 per quarter from 2020, rolling

EDC.

$2,341,433 for 12 months from Q4 2020.

c) In July 2019 the Company obtained an

f) In May 2020, the Company obtained a 90%

overdraft facility of $5,853,582 in

state-guaranteed loan for

DNB. This was increased to $10,536,448

$3,804,828 to cover a delayed customer

in Feb 2020 with interest of 3.0% p.a. and

payment. The customer payment will be

commitment fee of 0.25% per quarter.

received from Q2 2021 and the loan will

Financial covenants is 30% book equity

be repaid in 5 quarterly payments starting

in Corvus Energy AS, measured every

September 2021 with interest at 3.5% p.a.

6 months and EBITDA of MUSD 0.5,

with a 0.5% in guarantee provision and is

measured quarterly and rolling $2,341,433

covered in total from customer payments.

for 12 month from Q4 2020. The Company is compliant with all financial covenants

g) As part of the acquisition of Grenland

as of December 2020. In Q3 the Company

Energy in 2019, the Company

received a waiver for EBITDA covenant.

obtained a 5-yr $292,679 (MNOK 2.5) loan

The facility is renewed until June 2022 in

with quarterly payments starting August

February 2021.

2021. Reconciliation of movement in debt compared to cash flow from financing

d) In September 2019 the Company

activities:

obtained a $4,682,866 (MNOK 40) loan related to the Norwegian factory. 25%

Overdraft facilities of $12,4589,154 (2019 -

is with DNB and 75% is with Innovation

$6,778,417) represents the credit facilities

Norway. The loan has a ten-year profile,

with EDC and DNB.

average interest on 4.95% p.a. Payments to Innovation Norway were to start September 2020 but due to pandemic have been delayed 12 months with first quarterly payment August 2021 for 9 years. Financial covenant is 30% book equity in Corvus Energy AS, measured annually. e) In November 2019 the Company obtained a credit facility agreement for letter of credits, standby guarantees to


Annual report 2020

Corvus Energy

Borrowings

Lease Liabilities

Total

406,624 4,901,162 -87,691 -174,225

837,098 7,491,083 -371,930

1,243,722 4,901,162 7,491,083 -87,690 -546,155

Net debt as at 31 December 2019

5,045,870

7,956,251

13,002,121

Current portion Long term portion

622,302 4,423,568

597,538 7,358,713

1,219,840 13,002,121

Net debt as at 1 January 2020 New debt New lease liability

5,045,870 3,804,828 -

7,956,250 1,124,694

13,002,120 3,804,828 1,124,694

Currency revaluation

225,988

351,614

577,602

Repayment

-185,779

-596,864

-782,643

8,890,907

8,835,694

17,726,601

Current portion

2,014,852

679,592

2,694,444

Long term portion

6,876,055

8,156,102

15,032,157

Net debt as at 1 January 2019 New debt New lease liability Currency revaluation Repayment

Net debt as at 31 December 2020

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Annual report 2020

Corvus Energy

11. Share capital a) Share capital The Company has 45,658,992 shares, including 6,600,660 preference shares, with a par value of 0.10 NOK. During the year ended December 31, 2020, the Company issued 628,677 shares and repurchased 193,072 shares from current shareholders. b) Share warrants During the year 628,677 share warrants were exercised at a price of 2.45 per share. Settlement is registered as shareholder loan and will be registered as equity in 2021. Top shareholders: Shareholder BW Ventures Limited Hydro Energi Invest AS Shell Ventures B. V. Equinor Technology Ventures AS Canada Zhoufa Agricultural Holding Company Limited 0808276 B.C. Ltd. Grenland Energy Holding AS 0808277 B.C. Ltd. John D. Johnson El Cuervo Holdings Limited Partnership Ketcham Capital LLC IKAB AS SUM Other shareholders TOTAL

Shares

Percentage

9,970,207 9,513,484 6,600,660 6,507,644 3,187,528 1,560,460 1,253,606 1,227,695 963,710 912,176 749,849 494,457

22.14% 21.13% 14.66% 14.45% 7.08% 3.47% 2.78% 2.73% 2.14% 2.03% 1.67% 1.10%

42,941,476

95.36%

2,089,399

4.64%

45,030,875

100.00%


Annual report 2020

Corvus Energy

c) Stock option plan On December 10, 2015, the Company authorized a stock option plan with a maximum of 8% that can be allocated based on the total outstanding common shares, unconverted debentures and share warrants outstanding. Unless otherwise fixed by the board at the time of the grant, stock options will vest 33% after each participant’s anniversary. The value of unvested stock options is $5. On December 21, 2018, the Company authorized a new stock option plan with a maximum of 8% that can be allocated based on the total outstanding common shares. Unless otherwise fixed by the board at the time of the grant, stock options will vest 33% after each participant’s anniversary. The value of unvested stock options is $2,248,409. The following table summarizes activity under the Company’s stock option plans: Number of options

Weighted average exercise price ($)

Balance outstanding – December 31, 2018 Granted Forfeited

1,827,250 392,000 (124,400)

1.11 2.81 1.15

Balance outstanding – December 31, 2019 Granted Exercised Forfeited

2,094,850 543,000 (150,000) (43,900)

1.47 2.35 1.69 1.17

Balance – December 31, 2020

2,443,950

1.65

The computation of expected volatility is based on historical volatility of comparable companies from a representative peer group selected based on industry and market capitalization. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. Management made an estimate of expected forfeitures and is recognizing compensation costs for only those equity awards expected to vest. The weighted average fair value of options granted in the year was $2.81 (granted in December 31, 2018 – $1.02). The fair value of the options granted for the year ended December 31, 2019 was estimated at the date of grant using the following assumptions: Risk-free interest rates

0.45%

Expected dividend yield

0%

Expected life

10 years

Expected volatility Forfeiture rate The following table summarizes information about stock options outstanding as at December 31, 2020:

23% 0%

61


62

Annual report 2020

Exercise price $

1.09 2.78 2.17 2.32 1.69

Corvus Energy

Number outstanding

Weighted average exercise price $

Weighted average remaining Number contractual life exercisable (years)

Weighted average exercise price $

1,395,500 438,000 385,000 111,000 114,450

1.09 2.78 2.17 2.32 1.69

7.98 8.55 9.05 8.85 5.90

465,167 93,5000 37,000 114,417

1.09 2.78 2.32 1.69

2,443,950

1,65

8,19

710,703

1,47

12. Expense by nature

Materials - cost of sales Wages and Benefits Depreciation Consulting, Legal and Professional fees Interest and financing costs Warranty Rent Freight and other costs - cost of sales Bank charges and other costs Foreign exchange Production & Warehouse expense Office and other costs Travel & Events Software and computer-related Other personnel costs Promotion & Marketing Repairs & Maintenance Rework

2020 $

2019 $

43,585,130 9,852,771 2,854,771 2,365,481 1,623,413 917,235 904,381 632,249 455,500 513,135 367,143 349,464 341,493 277,682 197,716 126,370 87,991 (237)

32,604,139 9,516,495 2,280,784 2,715,818 1,264,890 1,125,808 986,010 1,181,048 524,610 (493,166) 446,667 1,303,043 1,041,077 355,214 273,736 229,873 135,689 6,710,444

65,451,687

62,202,179

13. Compensation of key management and auditor Key management includes the Company’s directors and Executive Officers. The remuneration of directors and other key management for the year are as follows: 2020 $

2019 $

1,292,054

1,098,232

Pension

150,068

129,217

Share-based compensation

564,183

484,529

2,006,305

1,711,979

Salaries and short-term benefits


Corvus Energy

Annual report 2020

Included in above is remuneration to CEO of $478,914 (2019 - $472,520) with salaries and short-term benefits of $242,485 (2019 -$248,996), pension of $58,140 (2019 - $52,212) and share-based compensation of $178,289 (2019 - $171,313). Audit fees for 2020 were $263,175 ($2019 - $218,584), fees for other services were $109,666 (2019 - $105,514).

14. Income taxes Deferred tax assets are recognized for deductible temporary differences, unused tax losses, and unused tax credits to the extent that the realization of the related tax benefit through future taxable profits is probable. The Company did not recognize deferred income tax assets. The net unrecognized deferred tax assets are as follows: 2020 $

2019 $

678,317

545,386

Non-Capital Loss Carry Forwards

13,011,353

11,849,554

Scientific Research pool and ITCs

1,617,477

1,582,354

Norwegian loss carry forward

951,335

901,322

Property, Plant and Equipment

267,918

167,320

15,575,065

15,045,937

Financing Fee & Other

15. Related party transactions Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Related parties include key management, the Board of Directors, their close family members and enterprises which are controlled by these individuals. During the years ended December 31, 2020 and 2019, there was no revenue or associated cost of sales for products and services provided to any significant corporate shareholder.

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Annual report 2020

Corvus Energy

16. Government grants The Company considers grant opportunities in Canada, Norway and EU for different projects. During 2019, the Company received from NRCIRAP, a final instalment of $34,942 ($44,550 CAD), for development of the liquid-based thermal management of its second generation of Orca ESS. On October 31, 2019, the Company was awarded a contribution agreement for a maximum of $4,705,956 ($6,000,000 CAD) from NRC-IRAP for development of Blue Whale and other enhanced features of the current Orca ESS. Due to receipt of Canada Employer Wage Subsidies (CEWS), the Company was required to reduce the NRC-IRAP funding for the project by $ 313,730 ($400,000 CAD). During the year, the Company claimed $1,434,423 ($2019 - $667,858). Of the amount $1,241,466 was for capital assets and $192,957 was for operating expenses. The contributions are as follows: a) October 1, 2019 to March 31, 2020

$1,680,000

b) April 1, 2020 to March 31, 2020

$1,920,000

c) April 1, 2021 to March 31, 2022

$2,000,000

On July 6, 2020, the Company was awarded $ 1,439,238 ($1,835,000 CAD) for a Technology Leadership Project under Canada’s Ocean Supercluster. These funds will be used for the Blue Whale equipment and facilities to build the test modules and field trial system in collaboration with an existing customer. These funds can be utilized for eligible expenditures up to March 31, 2022. The Company was awarded grants by the following funding bodies for various initiatives such as research and development, modelling and factory setup in Norway:


Annual report 2020

Corvus Energy

Award $ Erasmus+

53,739.84

H2020

821,364.60

Innovation Norway

528,238.20

Martera/NFR

274,806.00

Norwegian Research council

2,215,246.77

Pilot-E

533,268.84

Vestland fylke

21,984.48 4,448,648.73

During the year the Company received $867,118 on these projects, of which $218,391 was on account of property, plant and equipment and $648,727 was for operating expenses. In addition, in December 2020, the Company was awarded $5,853,582 for research and development into fuel cell technology. The first payment was received in January 2021.

17. Financial instruments and fair values Measurement categories, fair values and valuation methods All receivables are held in a business model to collect contractual cash flows and are therefore measured at amortized cost. The following table shows the carrying values of assets and liabilities for each of these categories at December 31, 2020 and December 31, 2019. The carrying value of the Company’s financial assets and liabilities is considered to be a reasonable approximation of fair value due to the short-term nature of these instruments.

65


66

Annual report 2020

Corvus Energy

Year ended December 31, 2020

Year ended December 31, 2019

Carrying values Fair values Carrying values $ $ $

Fair values $

Cash loans and receivables

25,976,091

25,976,091

18,502,382

18,502,382

Other financial liabilities

41,533,357

41,533,357

39,555,420

39,555,420

Credit risk Credit risk is the risk that the Company will incur a loss due to the failure by its customers or other parties to meet their contractual obligations. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company limits its exposure to credit risk by placing its cash and cash equivalents, with high credit rated financial institutions in Canada and Norway. The following table provides information regarding the aging of financial assets that are past due as at December 31, 2020: Neither past Past due 31due nor 60 days impaired

Past due 6190 days

Past due 90 days, not impaired

Total carrying values

$

$

$

$

$

Trade accounts receivable

3,461,303

999,600

226,336

2,361,951

7,049,190

Other accounts receivable

13,385,878

-

-

-

13,385,878

16,847,181

972,321

226,336

2,361,951

20,435,068

Trade receivables are categorised as hold to collect.


Annual report 2020

Corvus Energy

As at December 31, 2020, $3,587,887 of the Company’s accounts receivable balance of $7,049,190 was past due. The definition of items that are past due is determined by reference to terms agreed with individual customers. None of the unimpaired trade accounts receivable outstanding has been challenged by customers and the Company continues to provide services and products to them. As at March 15, 2020, the Company had collected $7,686,788 or 86% of the amounts outstanding.

Included in Other Accounts Receivable is a)

through current cash and cash equivalents

$12,208,291 for timing of customer invoices,

and working capital financing. Additional

b) $50,411 GST receivable c) $1,202,103

information regarding liquidity risk is

for government grants and 4) $74,926

disclosed in Note 1.

in allowance for doubtful accounts. Management believes that the remaining

At December 31, 2020, the Company’s

outstanding balances are fully collectible.

trade and other payables were $11,347,602 (December 31, 2019 – $19,774,883) of which

The Company reviews financial assets past

$4,939,975 (December 31, 2019 – $13,128,748)

due on an ongoing basis with the objective

was due and payable between 30 and 90

of identifying potential matters that could

days. As at March 15, 2021, the Company

delay the collection of funds at an early

had paid $7,977,818 or 70% of the amounts

stage.

owing.

During the year ended December 31, 2020,

At December 31, 2020 the Company had

there were three (2019 – four) customers

the following financial obligations:

comprising greater than 10% of sales and none of which, comprised approximately 50% of sales.

Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due. Itis the Company’s intention to meet these obligations

67


68

Annual report 2020

Corvus Energy

Due within 1 year

1 - 3 years

Greater than 3 years

Total

$

$

$

$

Accounts and other payables

11,347,602

-

-

11,347,602

Borrowings

2,014,852

3,420,767

3,455,287

8,890,907

Bank loans

12,459,154

-

-

12,459,154

Shareholder loan

1,575,045

-

-

1,575,045

679,592

1,388,208

6,767,894

8,835,695

28,076,245

4,808,975

10,223,182

43,108,402

Lease liabilities

Market risk a) Foreign exchange risk Foreign exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign currency exchange rates. The Company is exposed to foreign exchange risk on its cash and cash equivalents, trade and other receivables, trade and other payables, and derivative contracts. The Company monitors forecasted cash flows in foreign currencies and attempts to mitigate the risk by modifying the nature of cash and cash equivalents held or by entering into foreign exchange forward contracts with Canadian chartered banks as hedges against the sales and purchases denominated in foreign currencies. The Company has not adopted hedge accounting. The Company also maintains cash balances in foreign currencies sufficient to meet obligations to foreign suppliers. Periodically, excess balances of foreign currency are converted to local currency to meet Canadian dollar cash requirements. Foreign exchange contracts are only entered into for purposes of managing foreign exchange risk and not for speculative purposes. There were no such contracts as at December 31, 2020. Balances in foreign currencies at December 31, 2020 and December 31, 2019 are as follows:

Cash and cash equivalents

2020

2019

2020

2019

2020

2019

NOR Krons

NOR Krons

C$

C$

Euros

Euros

4,255,352

4,536,755

267,642

119,986

205,656

-

888,035

19,837,879

777,077

154,482

82,496

1,886

Accounts payable

(37,227,699)

(10,540,199)

(1,289,910)

(2,288,250)

(47,111)

(398,376)

Net identifiable assets and liabilities

(32,084,311)

13,834,435

(245,190)

(2,013,782)

241,041

(396,490)

Accounts receivable


Annual report 2020

Corvus Energy

At December 31, 2020, the Canadian/

The Company’s objective in managing

US foreign exchange rate was 1.274988

its cash and cash equivalents is to

(December 31, 2019 – 1.30328). If the

provide sufficient funds to meet day-

US dollar to Canadian dollar exchange

to-day requirements, securing interim

rate were to increase (decrease) by

financing through shareholder loans

10% relative to the rate for the year

at a fixed interest rate only at times

ended December 31, 2020, loss and

when there are timing differences

comprehensive loss for the year would

between cash outflows and cash inflows

be $31,261 lesser (greater).

and placing excess cash in short-term deposits.

At December 31, 2020, the US/Euro foreign exchange rate was 1.22136

18. Contingent liabilities

(December 31, 2019 – 1.12128). If the US

On June 10, 2014, the Company was served

dollar to Euro exchange rate were to

with a Notice of Claim related to the

increase (decrease) by 10% relative to

termination of a former Executive for just

the rate for the year ended December

cause on May 5, 2014 seeking damages for

31, 2020, loss and comprehensive loss

breach of contract, breach of duty of good

for the year would be $29,440 greater

faith and fair dealing, and aggravated and

(lesser).

punitive damages. No accruals in the financial statements.

At December 31, 2020, the US/Norwegian Krone foreign exchange rate was 0.11661

On May 2, 2016, the Company was served

(December 31, 2019 – 0.11390). If the US

with a Notice of Claim related to the

dollar to Norwegian Krone exchange

termination of a former Executive for

rate were to increase (decrease) by

just cause on March 18, 2016 seeking

10% relative to the rated for the year

damages for breach of contract, wrongful

ended December 31, 2020, loss and

termination, breach of duty of good faith

comprehensive loss for the year would

and fair dealing. On February 11, 2021,

be $374,139 lesser (greater).

an out of court settlement was reach for $203,925 to be paid by March 11, 2021.

b) Interest rate risk

On January 2, 2019, the Company was

The Company is exposed to interest

served with a Notice of Civil Claim related

rate risk by virtue of holding cash and

to the termination of a former Executive

cash equivalents and incurring debt

without just cause on October 31, 2018,

obligations. If the interest rates were to

effective December 31, 2018, seeking

increase (decrease) by 10% during the

damages for breach of contract and

year ended December 31, 2020, pre-tax

wrongful termination as well as change

net income would be $104,528 (2019–

in control of the Company. On November

$92,136) lesser (greater).

23, 2020, an out of court settlement was

69


70

Annual report 2020

Corvus Energy

reached for $313,730.

19. Revenue The Company is the leading provider of hybrid and zero emission solutions to all maritime segments – on the ocean surface, in port and for subsea applications. The Company is developing its product portfolio to cover seven different maritime batteries, all developed to meet the specific requirements of different market segments: light weight batteries for fast passenger craft, large battery systems for cruise and ro-pax, batteries with high cycling capability for ferries and offshore, and subsea batteries for ROV. In 2020 the Company produced one product in the factory in Vancouver, Canada and in Bergen, Norway (). In 2020 the Company also produced products in Porsgrunn, Norway. In 2020, the Company only had one product, Orca, that had significant revenues. No further revenue segmentation. The remaining five products have not had revenue effect since 2019. The Company’s customers are mainly electrical integrators such as: Westcon, ABB, Norwegian Electric Systems, Wärtsila etc. The products are off the shelf products produced in the factory in Vancouver, Canada, Porsgrunn and Bergen in Norway, but is sized differently based on the size, weight and travel distance for the vessel. The Company’s revenue by geographic segmentation for the year ended December 31, 2020 is as follows: Europe 47,360,352 Asia 11,018,929 North America

2,539,425

60,918,705


Corvus Energy

Annual report 2020

Payment terms are based on milestones determined in the contract and differ from contract to contract. Each contract is different based on size of the installation.

20. Subsequent event On January 25, 2021 the company entered into a convertible shareholder loan agreement for $13,500,000with maturity after 12 months and interest of 6%. The loan can be converted by each individual shareholder during the loan period at conversion triggers defined by the loan agreement. On February 17, 2021 the company renewed its credit facility in DNB for MUSD 10.5 until June 30, 2022. On February 18, 2021, the Company repaid to EDC the revolving loan in the amount of $3,580,063. This enabled the release of the GSA and all existing financial and reporting covenants are no longer required.

71


72

Annual report 2020

Corvus Energy

REVENUE STATEMENT CORVUS ENERGY HOLDING AS (in Norwegian Kroner)

OPERATING INCOME AND OPERATING EXPENSES

Note

2020

2019

6, 8

19 587 992

13 381 480

19 587 992

13 381 480

9

20 255 956

22 246 961

12

19 061 787

0

9

8 106 238

3 327 850

47 423 982

25 574 811

-27 835 990

-12 193 331

Other interest income

1 532

16 901

Other interest expenses

2 262

868 048

-5 382 026

1 455 991

5 381 296

-2 307 138

Operating result before tax

-22 454 694

-14 500 468

Ordinary result after tax

-22 454 694

-14 500 468

-22 454 694

-14 500 468

Loss brought forward

22 454 694

14 500 468

Net brought forward

-22 454 694

-14 500 468

Revenue Total operating income Personnel expenses Depreciation of operating and intangible assets Other operating expenses Total operating expenses Operating profit FINANCIAL INCOME AND EXPENSES

Net other financial items Net financial items

10

EXTRAORDINARY INCOME AND EXPENSES Annual net profit BROUGHT FORWARD


Annual report 2020

Corvus Energy

73

BALANCE SHEET CORVUS ENERGY HOLDING AS (in Norwegian Kroner)

ASSETS

Note

2020

2019

Research and development

12

3 806 839

0

Concessions, patents, licences, trademarks, and similar rights

12

171 556 078

190 233 953

175 362 917

190 233 953

258 360 961

216 860 961

-15 168

0

Total financial fixed assets

258 345 793

216 860 961

Total fixed assets

433 708 710

407 094 914

6

28 161 907

6 725 293

5

367 318

1 016 663

28 529 226

7 741 956

1 920 969

31 591 829

30 450 194

39 333 786

464 158 904

446 428 700

FIXED ASSETS INTANGIBLE ASSETS

Total intangible assets TANGIBLE ASSETS FINANCIAL FIXED ASSETS Investments in subsidiaries

3

Other long-term receivables

CURRENT ASSETS DEBTORS Accounts receivables group companies Other short-term receivables Total receivables INVESTMENTS Cash and bank deposits Total current assets Total assets

4


74

Annual report 2020

Corvus Energy

BALANCE SHEET CORVUS ENERGY HOLDING AS (in Norwegian Kroner)

EQUITY AND LIABILITIES

Note

2020

2019

Share capital

4 503 032

4 503 032

Treasury stock

-1 757 166

0

280 183 729

270 868 503

282 929 595

275 371 535

Other equity

-36 962 717

-14 508 023

Total retained earnings

-36 962 717

-14 508 023

2

245 966 878

260 863 512

6

599 300

599 300

745 630

1 152 002

EQUITY PAID-UP EQUITY

Share premium reserve Total paid-up equity

2

RETAINED EARNINGS

Total equity LIABILITIES PROVISIONS FOR LIABILITIES OTHER LONG-TERM LIABILITIES CURRENT DEBT Trade creditors, intercompany Public duties payable Liabilities to group companies

6

201 929 451

183 813 886

Other current debt

7

14 917 645

0

Total current debt

218 192 026

185 565 188

Total liabilities

218 192 026

185 565 188

464 158 904

446 428 700

Total equity and liabilities


Annual report 2020

Corvus Energy

75

Bergen, 21.04.2021

_______________________

_______________________

_______________________

Terje Arnesen Chairman

Jan Ellevset Director

Rune Bruøygard Director

_______________________

_______________________

_______________________

Christian Bonfils Director

Mark Gainsborough Director

Nick Andrews Chairman

_______________________

_______________________

Sonja Vernøy Hansen Director (Employee Rep)

Geir Bjørkeli CEO

* The Finacial Statement has been digitally signed.


76

Annual report 2020

Corvus Energy

Notes to the accounts for 2020 Note 1: Accounting principles

to goods circulation. Other entries are classified as fixed assets and/or long term

The annual report is prepared according to

creditors.

the Norwegian Accounting Act 1998 and

Current assets are valued at the lower of

generally accepted accounting principles.

acquisition cost and fair value. Short term creditors are recognized at nominal value.

Subsidiaries and investment in associates

Fixed assets are valued by the cost of

Subsidiaries and investments in associates

acquisition, in the case of non incidental

are valued by the cost method in the

reduction in value the asset will be written

company accounts. The investment is

down to the fair value amount. Long term

valued as cost of acquiring shares in the

creditors are recognized at nominal value.

subsidiary, providing that write down is not required. Write down to fair value

Trade and other receivables

will be carried out if the reduction in

Trade receivables and other current

value is caused by circumstances which

receivables are recorded in the balance

may not be regarded as incidental, and

sheet at nominal value less provisions for

deemed necessary by generally accepted

doubtful debts. Provisions for doubtful

accounting principles. Write downs are

debts are calculated on the basis of

reversed when the cause of the initial write

individual assessments.

down are no longer present.

Income tax Dividends and other distributions

Tax expenses in the profit and loss

are recognized in the same year

account comprise both tax payable for

as appropriated in the subsidiary

the accounting period and changes in

accounts. If dividends exceed withheld

deferred tax. Deferred tax is calculated

profits after acquisition, the exceeding

at 22 percent on the basis of existing

amount represents reimbursement of

temporary differences between

invested capital, and the distribution

accounting profit and taxable profit

will be subtracted from the value of the

together with tax deductible deficits

acquisition in the balance sheet.

at the year end. Temporary differences both positive and negative, are balance

Balance sheet classification

out within the same period. Deferred tax

Net current assets comprise creditors

assets are recorded in the balance sheet

due within one year, and entries related

to the extent it is more likely than not that


Corvus Energy

Annual report 2020

the tax assets will be utilized.

Going concern

The Company has elected to use the Black-

The financial statements have been

Scholes option pricing model to determine

prepared on the basis of accounting

the fair value on the grant date of its share-

principles applicable to a going concern,

based payment transactions.

which assumes that the Company will continue operating in the foreseeable future and be able to realize its assets and discharge its liabilities in the normal course of business. Reference is made to the going concern section in note 1 in the Group disclosures.

Share-based payments The Company has a stock option plan. When equity-settled share-based payments are made to employees and directors, compensation expense is recognized based on the fair value of the equity instrument issued on the date of grant, over the vesting period of the equity instrument. Share-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued/liabilities incurred, whichever is more reliably measurable. The fair value of share-based payments to non-employees is periodically re- measured until counterparty performance is complete, and any change therein is recognized over the period and in the same manner as if the Company had paid cash instead of paying with or using equity instruments. The cost of share-based payments to nonemployees that are fully vested and nonforfeitable at the grant date is measured and recognized at that date.

77


78

Annual report 2020

Corvus Energy

Note 2: Equity

Equity changes in the year Equity 01.01.

Share capital

Share premium reserve

Not registered capital increase

Other equity

Total equity

- 270 868 503

-

(14 508 023)

260 863 512

Treasury stock

4 503 032

Loss of the year

-

-

-

-

(22 454 694)

(22 454 694)

Purchase own shares

-

(1 757 166)

-

-

-

(1 757 166)

Share based compensation 2020

-

-

9 315 226

-

-

9 315 226

-1 757 166 280 183 729

-

Equity 31.12.

4 503 032

(36 962 717) 245 966 878

Share capital at Desember 31st, 2020, consist of 45 030 315 shares each with par value of NOK 0,1.

Ordninary shares

Ownersip share

Voting rights

BW Ventures Limited

9 970 207

22,14 %

22,14 %

Hydro Energi Invest AS

9 513 484

21,13 %

21,13 %

Shell Ventures B.V.

6 600 660

14,66 %

14,66 %

Equinor Technology Ventures AS

6 507 644

14,45 %

14,45 %

Canada Zhoufa Agricultural Holding Company Limited

3 187 528

7,08 %

7,08 %

0808276 B.C. Ltd.

1 560 460

3,47 %

3,47 %

Grenland Energy Holding AS

1 253 606

2,78 %

2,78 %

0808277 B.C. Ltd.

1 227 695

2,73 %

2,73 %

963 710

2,14 %

2,14 %

912 176

2,03 %

2,03 %

Ketcham Capital LLC

749 849

1,67 %

1,67 %

IKAB AS

494 457

1,10 %

1,10 %

Other shareholders

2 088 839

4,64 %

4,64 %

Total

45 030 315

100 %

100 %

Shareholders at 31.12:

John D. Johnson El Cuervo Holdings Limited Partnership

Note 3: Investments in subsidiaries and associates

Location

Shares owned

Voting rights

Book value 31.12 (NOK)

Result 2019

Equity 2019

Corvus Energy Inc (CAD)

Canada

100 %

100 %

34 215 552

27 207 755

14 787 953

Corvus Energy AS (NOK)

Norway

100 %

100 %

224 145 409

- 27 969 220

103 033 044

Company

Total

258 360 961

The shares are booked at cost. At the signing date the numbers for 2020 are not available.


Annual report 2020

Corvus Energy

79

Note 4: Restricted bank deposits The company has 435 358 as restricted funds as of 31. December 2020.

Note 5: Other current assets Trade debtors Prepaid expenses

2020

2019

367 318

1 016 663

Note 6: Balances with group companies Short term receivables from group companies consist of trade receivables. Short term debt to group companies consist of accounts payables and short term financing debt to group companies and group contributions. Other short term intercompany balances are non-interest bearing. Intercompany liabilities Corvus Energy Inc Corvus Energy AS - Group contribution Corvus Energy AS Total intercompany liabilitites Sale to associated companies

2020

2019

156 098 243

133 813 886

41 500 000

50 000 000

4 331 208

-

201 929 451

183 813 886

2020

2019

Corvus Energy Inc

7 893 502

6 690 875

Corvus Energy AS

11 694 490

6 690 605

Total income from related parties

19 587 992

13 381 480

Note 7: Short-term liabilities Other Short-term debt

2020

2019

1 463 958

-

Debt to owners

13 453 688

-

Total

14 917 646

-

Debt to employees

Note 8: Specification of income

Management fee Royalty income Total

2020

2019

14 788 980

13 381 480

4 799 012 19 587 992

13 381 480


80

Annual report 2020

Corvus Energy

Geographical distribution

2020

2019

Norway

11 694 490

6 690 605

Canada

7 893 502

6 690 875

19 587 992

13 381 480,00

Total

Note 9: Personnel expenses

Salaries

2020

2019

17 985 677

19 909 484

976 381

1 175 565

1 293 899

1 161 912

20 255 957

22 246 961

Pensions Other remuneration Total personnel expenses The company had 5 FTEs in 2020 (5 in 2019).

Norwegian businesses are obligated to follow the act on mandatory company pensions, and this is covered by the company’s pensions plan. Audit fee has been divided as follows:

2020

2019

Statutory audit fee

400 000

320 000

Technical assistance with financial statment preparation and tax preparation

40 000

20 000

Other assurance services

-

69 500

Assistance from PwC Tax and Legal Services

217 020

220 813

Total

657 020

630 313

The audit fees presented above are ex. VAT.

Note 10: Specification of other financial income and expenses Financial income

2020

2019

Exchange gains

6 049 228

41 012

Exchange losses

-667 202

-1 497 003

5 382 026

-1 455 991

Net other financial items


Annual report 2020

Corvus Energy

81

Note 11: Taxes Tax payable

2020

2019

(22 454 694)

(5 062 297)

-

(9 231 583)

22 454 694

14 293 880

-

-

22 %

22 %

-

-

2020

2019

Payable tax on this year's result

-

-

Tax effect on transaction costs

-

Change in deffered tax

-

-

Tax expense

-

-

Result before taxes Permanent differences Change in temporary differences Taxable income Nominal tax rate Payable tax on this year's result Components of the income tax expense

Components of the income tax expense

2020

2019

Payable tax on this year's result

-

-

Tax effect on transaction costs

-

Change in deffered tax

-

-

Tax expense

-

-

Temporary differences outlined Tax loss carried forward Intellectual property Stock options Temporary differences Deferred tax asset Deferred tax asset not recognised in the balance sheet Total

Change

2020

2019

5 538 407

(8 763 027)

(14 301 434)

(18 677 875)

(18 677 875)

-

(9 315 226)

(9 315 226)

-

-22 454 694

-36 756 128

-14 301 434

(4 940 033)

(8 086 348)

(3 146 315)

4 940 033

8 086 348

3 146 315

-

-

-


82

Annual report 2020

Corvus Energy

Note 12: Intellectual property

Intangible assets

Research and development

Intangible assets 01.01.2020 Additions

1 868 955

Depreciation for the year Intangible assets 31.12.2020

Intellectual property

Other Total intangible intangible assets assets

190 233 953

190 233 953

383 912

1 937 885

-19 061 787 1 868 955

171 556 078

4 190 752 -19 061 787

1 937 885

175 362 917


Annual report 2020

Corvus Energy

83

Statement of Cash Flows (expressed in Norwegian kroner)

Year ended 31.12.2020

Year ended 31.12.2019

(22 454 694)

(5 062 297)

Interest expense and financing costs

(5 381 296)

2 307 138

Amortization

19 061 787

Cash flows from operating activities Income/(loss) for the period Items not affecting cash

Share based compensation

9 315 226

Changes in operating working capital items Trade and other receivables

(21 436 614)

(6 725 293)

649 345

(1 016 663)

14 526 442

1 680 726

Intercompany payables

(23 384 435)

-

Cash flows from operating activities

(29 104 239)

(8 816 389)

Prepaid expenses Trade and other payables

Cash flows from investing activities Purchase of shares

(132 645 409)

Purchase of intangible assets

(4 190 751)

(190 233 953)

Cash flows from investing activities

(4 190 751)

(322 879 362)

Cash flows from financing activitites Intercompany payable from purchase of intellectual property Interest expense and financing costs Own shares

133 813 886 5 381 296 (1 757 166)

Issuance of capital stock

219 272 659

Payment of capital stock in 2019, issued in 2018

19 227 921

Share issuance and subscription costs Cash flows from financing activitites

(2 307 138)

(10 027 998) 3 624 130

359 979 330

Cash and cash equivalents - Beginning of period

31 591 829

3 308 252

Cash and cash equivalents - End of period

1 920 969

31 591 829


Auditor´s report


86

Annual report 2020

Corvus Energy

To the General Meeting of Corvus Energy Holding AS

Independent Auditor’s Report Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Corvus Energy Holding AS, which comprise: •

The financial statements of the parent company Corvus Energy Holding AS (the Company), which comprise the balance sheet as at 31 December 2020, the revenue statement and statement of cash flows for the year then ended, and notes to the accounts, including a summary of significant accounting policies, and

The consolidated financial statements of Corvus Energy Holding AS and its subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 December 2020, the consolidated statement of comprehensive income, consolidated statement of shareholders’ equity and consolidated statement of cash flows for the year then ended, and notes to consolidated financial statements, including a summary of significant accounting policies.

In our opinion: •

The financial statements are prepared in accordance with the law and regulations.

The accompanying financial statements give a true and fair view of the financial position of the Company as at 31 December 2020, and its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway.

The accompanying consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2020, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU.

Basis for Opinion We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including 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 as required by laws and regulations, and we have fulfilled our other ethical responsibilities in

PricewaterhouseCoopers AS, Sandviksbodene 2A, Postboks 3984 - Sandviken, NO-5835 Bergen T: 02316, org. no.: 987 009 713 VAT, www.pwc.no State authorised public accountants, members of The Norwegian Institute of Public Accountants, and authorised accounting firm


Annual report 2020

Corvus Energy

Independent Auditor's Report - Corvus Energy Holding AS

accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other information Management is responsible for the other information. The other information comprises information in the annual report, except the financial statements and our auditor's report thereon. 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 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 there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors and the Managing Director for the Financial Statements The Board of Directors and the Managing Director (Management) are responsible for the preparation in accordance with law and regulations, including a true and fair view of the financial statements of the Company in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation and true and fair view of the consolidated financial statements of the Group in accordance with International Financial Reporting Standards as adopted by the EU, and 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. The financial statements of the Company use the going concern basis of accounting insofar as it is not likely that the enterprise will cease operations. The consolidated financial statements of the Group use the going concern basis of accounting unless management either intends to liquidate 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 laws, regulations, and auditing standards and practices generally accepted in Norway, including 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

(2)

87


88

Annual report 2020

Corvus Energy

Independent Auditor's Report - Corvus Energy Holding AS

For further description of Auditor’s Responsibilities for the Audit of the Financial Statements reference is made to https://revisorforeningen.no/revisjonsberetninger

Report on Other Legal and Regulatory Requirements Opinion on the Board of Directors’ report Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors’ report concerning the financial statements and the going concern assumption is consistent with the financial statements and complies with the law and regulations.

Opinion on Registration and Documentation Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, it is our opinion that management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the Company’s accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway.

Bergen, 21 April 2021 PricewaterhouseCoopers AS

Marius Kaland Olsen State Authorised Public Accountant (This document is signed electronically)

(3)


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