Condensed Consolidated Interim Financial Statements (Expressed in U.S. dollars) BALLARD POWER SYSTEMS INC. Three and six months ended June 30, 2022 and 2021 |
BALLARD POWER SYSTEMS INC.
Condensed Consolidated Interim Statements of Financial Position
Unaudited (Expressed in thousands of U.S. dollars)
Note | June 30, 2022 | December 31, 2021 | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 1,002,624 | $ | 1,123,895 | |||||||
Short-term investments | 2,007 | 3,004 | |||||||||
Trade and other receivables | 5 | 49,211 | 46,395 | ||||||||
Inventories | 6 | 58,970 | 51,518 | ||||||||
Prepaid expenses and other current assets | 7,997 | 4,374 | |||||||||
Total current assets | 1,120,809 | 1,229,186 | |||||||||
Non-current assets: | |||||||||||
Property, plant and equipment | 7 | 65,845 | 56,061 | ||||||||
Intangible assets | 8 | 19,632 | 20,788 | ||||||||
Goodwill | 64,268 | 64,268 | |||||||||
Investments | 9 | 62,018 | 70,292 | ||||||||
Other non-current assets | 355 | 348 | |||||||||
Total assets | $ | 1,332,927 | $ | 1,440,943 | |||||||
Liabilities and Equity | |||||||||||
Current liabilities: | |||||||||||
Trade and other payables | 10 | $ | 35,336 | $ | 39,555 | ||||||
Deferred revenue | 11 | 11,662 | 12,109 | ||||||||
Provisions and other current liabilities | 12 | 23,277 | 28,257 | ||||||||
Current lease liabilities | 13 | 3,649 | 3,238 | ||||||||
Total current liabilities | 73,924 | 83,159 | |||||||||
Non-current liabilities: | |||||||||||
Non-current lease liabilities | 13 | 13,729 | 13,882 | ||||||||
Deferred gain on finance lease liability | 13 | 1,110 | 1,318 | ||||||||
Provisions and other non-current liabilities | 12 | 7,012 | 8,895 | ||||||||
Employee future benefits | 1,927 | 1,894 | |||||||||
Deferred income tax liability | 3,458 | 3,578 | |||||||||
Total liabilities | 101,160 | 112,726 | |||||||||
Equity: | |||||||||||
Share capital | 14 | 2,418,151 | 2,416,256 | ||||||||
Contributed surplus | 14 | 298,542 | 297,819 | ||||||||
Accumulated deficit | (1,484,965) | (1,387,579) | |||||||||
Foreign currency reserve | 39 | 1,721 | |||||||||
Total equity | 1,231,767 | 1,328,217 | |||||||||
Total liabilities and equity | $ | 1,332,927 | $ | 1,440,943 |
See accompanying notes to condensed consolidated interim financial statements.
Approved on behalf of the Board:
“Doug Hayhurst” | “Jim Roche” | ||||
Director | Director |
BALLARD POWER SYSTEMS INC.
Condensed Consolidated Interim Statements of Loss and Comprehensive Loss
Unaudited (Expressed in thousands of U.S. dollars, except per share amounts and number of shares)
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
Note | 2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenues: | |||||||||||||||||
Product and service revenues | 15 | $ | 20,932 | $ | 24,961 | $ | 41,979 | $ | 42,580 | ||||||||
Cost of product and service revenues | 23,135 | 21,175 | 44,390 | 36,171 | |||||||||||||
Gross margin | (2,203) | 3,786 | (2,411) | 6,409 | |||||||||||||
Operating expenses: | |||||||||||||||||
Research and product development | 26,633 | 14,761 | 47,745 | 25,726 | |||||||||||||
General and administrative | 8,229 | 6,383 | 14,466 | 10,536 | |||||||||||||
Sales and marketing | 3,160 | 3,173 | 5,984 | 5,917 | |||||||||||||
Other expense | 16 | 439 | 82 | 577 | 187 | ||||||||||||
Total operating expenses | 38,461 | 24,399 | 68,772 | 42,366 | |||||||||||||
Results from operating activities | (40,664) | (20,613) | (71,183) | (35,957) | |||||||||||||
Finance income (loss) and other | 17 | (13,123) | 3,276 | (20,614) | 4,098 | ||||||||||||
Finance expense | 17 | (308) | (330) | (655) | (646) | ||||||||||||
Net finance income (loss) | (13,431) | 2,946 | (21,269) | 3,452 | |||||||||||||
Equity in loss of investment in joint venture and associates | 9 & 19 | (1,608) | (4,243) | (3,846) | (7,197) | ||||||||||||
Loss before income taxes | (55,703) | (21,910) | (96,298) | (39,702) | |||||||||||||
Income tax recovery (expense) | (88) | (3) | 112 | (14) | |||||||||||||
Net loss from continuing operations for the period | (55,791) | (21,913) | (96,186) | (39,716) | |||||||||||||
Net income from discontinued operations for the period | 18 | — | — | — | 164 | ||||||||||||
Net loss for the period | $ | (55,791) | $ | (21,913) | $ | (96,186) | $ | (39,552) | |||||||||
Other comprehensive loss: | |||||||||||||||||
Items that may be reclassified subsequently to profit or loss: | |||||||||||||||||
Foreign currency translation differences | (1,561) | 555 | (1,682) | 196 | |||||||||||||
Total comprehensive loss for the period | $ | (57,352) | $ | (21,358) | $ | (97,868) | $ | (39,356) | |||||||||
Basic and diluted loss per share | |||||||||||||||||
Continuing operations | $ | (0.19) | $ | (0.07) | $ | (0.32) | $ | (0.14) | |||||||||
Discontinued operations | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||
Loss per share for the period | $ | (0.19) | $ | (0.07) | $ | (0.32) | $ | (0.14) | |||||||||
Weighted average number of common shares outstanding | 298,155,452 | 297,568,681 | 297,991,134 | 292,914,927 | |||||||||||||
See accompany notes to condensed consolidated interim financial statements. |
BALLARD POWER SYSTEMS INC.
Condensed Consolidated Interim Statements of Changes in Equity
Unaudited (Expressed in thousands of U.S. dollars except number of shares)
Foreign | ||||||||||||||||||||
Number of | Share | Contributed | Accumulated | currency | Total | |||||||||||||||
shares | capital | surplus | deficit | reserve | equity | |||||||||||||||
Balance, December 31, 2021 | 297,700,295 | $ | 2,416,256 | $ | 297,819 | $ | (1,387,579) | $ | 1,721 | $ | 1,328,217 | |||||||||
Onerous contracts provision (notes 3 & 12) | — | — | — | (1,200) | — | (1,200) | ||||||||||||||
Restated balance, December 31, 2021 | 297,700,295 | 2,416,256 | 297,819 | (1,388,779) | 1,721 | 1,327,017 | ||||||||||||||
Net loss | — | — | — | (96,186) | — | (96,186) | ||||||||||||||
DSUs redeemed (note 14) | 58,990 | 244 | (997) | — | — | (753) | ||||||||||||||
RSUs redeemed (note 14) | 207,752 | 650 | (3,070) | — | — | (2,420) | ||||||||||||||
Options exercised (note 14) | 201,821 | 1,001 | (319) | — | — | 682 | ||||||||||||||
Share-based compensation (note 14) | — | — | 5,109 | — | — | 5,109 | ||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||
Foreign currency translation for foreign operations | — | — | — | — | (1,682) | (1,682) | ||||||||||||||
Balance, June 30, 2022 | 298,168,858 | $ | 2,418,151 | $ | 298,542 | $ | (1,484,965) | $ | 39 | $ | 1,231,767 | |||||||||
Foreign | ||||||||||||||||||||
Number of | Share | Contributed | Accumulated | currency | Total | |||||||||||||||
shares | capital | surplus | deficit | reserve | equity | |||||||||||||||
Balance, December 31, 2020 | 282,078,177 | $ | 1,884,735 | $ | 290,761 | $ | (1,275,516) | $ | 907 | $ | 900,887 | |||||||||
Net loss | — | — | — | (39,552) | — | (39,552) | ||||||||||||||
Equity offerings (note 14) | 14,870,000 | 527,291 | — | — | — | 527,291 | ||||||||||||||
DSUs redeemed (note 14) | 46,388 | 127 | (1,417) | — | — | (1,290) | ||||||||||||||
RSUs redeemed (note 14) | 152,001 | 571 | (4,856) | — | — | (4,285) | ||||||||||||||
Options exercised (note 14) | 456,846 | 3,070 | (966) | — | — | 2,104 | ||||||||||||||
Share-based compensation (note 14) | — | — | 4,873 | — | — | 4,873 | ||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||
Foreign currency translation for foreign operations | — | — | — | — | 196 | 196 | ||||||||||||||
Balance, June 30, 2021 | 297,603,412 | $ | 2,415,794 | $ | 288,395 | $ | (1,315,068) | $ | 1,103 | $ | 1,390,224 |
See accompanying notes to condensed consolidated interim financial statements.
BALLARD POWER SYSTEMS INC.
Condensed Consolidated Interim Statements of Cash Flows
Unaudited (Expressed in thousands of U.S. dollars)
Six months ended June 30, | |||||||||||
Note | 2022 | 2021 | |||||||||
Cash provided by (used in): | |||||||||||
Operating activities: | |||||||||||
Net loss for the period | $ | (96,186) | $ | (39,552) | |||||||
Adjustments for: | |||||||||||
Depreciation and amortization | 6,550 | 4,313 | |||||||||
Impairment loss on trade receivables | 16 & 22 | — | 49 | ||||||||
Unrealized loss on forward contracts | 331 | 342 | |||||||||
Equity in loss of investment in joint venture and associates | 9 & 19 | 3,846 | 7,197 | ||||||||
Net decrease (increase) in fair value of investment | 17 & 22 | 21,482 | (1,844) | ||||||||
Accretion on decommissioning liabilities | 12 | (9) | 73 | ||||||||
Employee future benefits | 40 | 65 | |||||||||
Employee future benefits plan contributions | (7) | (7) | |||||||||
Share-based compensation | 14 | 5,109 | 4,873 | ||||||||
Deferred income tax recovery | (120) | — | |||||||||
(58,964) | (24,491) | ||||||||||
Changes in non-cash working capital: | |||||||||||
Trade and other receivables | (3,208) | 1,036 | |||||||||
Inventories | (7,452) | (10,296) | |||||||||
Prepaid expenses and other current assets | (3,630) | (623) | |||||||||
Trade and other payables | (8,165) | (2,317) | |||||||||
Deferred revenue | (447) | 2,209 | |||||||||
Warranty provision | 1,197 | (880) | |||||||||
(21,705) | (10,871) | ||||||||||
Cash used in operating activities | (80,669) | (35,362) | |||||||||
Investing activities: | |||||||||||
Net increase in short-term investments | 22 | 1,010 | — | ||||||||
Contribution to long-term investments | 9 | (12,306) | — | ||||||||
Additions to property, plant and equipment | (12,580) | (5,857) | |||||||||
Investment in other intangible assets | 8 | (459) | (747) | ||||||||
Investment in joint venture and associates | 9 & 19 | (6,394) | (6,051) | ||||||||
Contingent consideration related to acquisition of Arcola Energy Ltd. | 12 | (9,300) | — | ||||||||
Cash used in investing activities | (40,029) | (12,655) | |||||||||
Financing activities: | |||||||||||
Principal payments of lease liabilities | 13 | (1,599) | (1,384) | ||||||||
Net proceeds on issuance of share capital from stock option exercises | 14 | 682 | 2,104 | ||||||||
Net proceeds on issuance of share capital from equity offering | 14 | — | 527,291 | ||||||||
Cash provided by (used in) financing activities | (917) | 528,011 | |||||||||
Effect of exchange rate fluctuations on cash and cash equivalents held | 344 | (440) | |||||||||
Increase (decrease) in cash and cash equivalents | (121,271) | 479,554 | |||||||||
Cash and cash equivalents, beginning of period | 1,123,895 | 763,430 | |||||||||
Cash and cash equivalents, end of period | $ | 1,002,624 | $ | 1,242,984 |
Supplemental disclosure of cash flow information (note 20).
See accompanying notes to condensed consolidated interim financial statements.
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
1. Reporting entity:
The principal business of Ballard Power Systems Inc. (the “Corporation”) is the sale and service of proton exchange membrane ("PEM") fuel cell products for the power product markets of Heavy-Duty Motive (consisting of bus, truck, rail and marine applications), Material Handling and Stationary Power Generation, as well as the delivery of Technology Solutions, including engineering services, technology transfer and the licensing and sale of the Corporation’s extensive intellectual property portfolio and fundamental knowledge for a variety of fuel cell applications. A fuel cell is an environmentally clean electrochemical device that combines hydrogen fuel with oxygen (from the air) to produce electricity.
The Corporation is a company domiciled in Canada and its registered office is located at 9000 Glenlyon Parkway, Burnaby, British Columbia, Canada, V5J 5J8. The condensed consolidated interim financial statements of the Corporation as at and for the three and six months ended June 30, 2022 and 2021 comprise the Corporation and its subsidiaries.
2. Basis of preparation:
(a) Statement of compliance:
These condensed consolidated interim financial statements of the Corporation have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”), on a basis consistent with those significant accounting policies followed in the most recent annual consolidated financial statements except as noted below, and therefore should be read in conjunction with the December 31, 2021 audited consolidated financial statements and the notes thereto.
The condensed consolidated interim financial statements were authorized for issue by the Audit Committee of the Board of Directors on August 9, 2022.
(b) Basis of measurement:
The condensed consolidated interim financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position:
•Financial assets classified as measured at fair value through profit or loss (FVTPL); and
•Employee future benefits liability is recognized as the net of the present value of the defined benefit obligation, less the fair value of plan assets.
(c) Functional and presentation currency:
These condensed consolidated interim financial statements are presented in U.S. dollars, which is the Corporation’s functional currency.
6
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
2. Basis of preparation (cont'd):
(d) Use of estimates:
The preparation of the condensed consolidated interim financial statements in conformity with International Financial Reporting Standards (“IFRS”) requires the Corporation’s management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Significant areas having estimation uncertainty include revenue recognition, asset impairment, warranty provision, inventory provision, financial assets including impairment of trade receivables, and employee future benefits. These assumptions are unchanged in these condensed consolidated interim financial statements and are the same as those applied in the Corporation’s consolidated financial statements as at and for the year ended December 31, 2021.
(e) Future operations:
The Corporation is required to assess its ability to continue as a going concern or whether substantial doubt exists as to the Corporation’s ability to continue as a going concern into the foreseeable future. The Corporation has forecast its cash flows for the foreseeable future and despite the ongoing volatility and uncertainties inherent in the business, the Corporation believes it has adequate liquidity in cash and working capital to finance its operations. The Corporation’s ability to continue as a going concern and realize its assets and discharge its liabilities and commitments in the normal course of business is dependent upon the Corporation having adequate liquidity and achieving profitable operations that are sustainable.
The Corporation’s strategy to mitigate this uncertainty is to continue its drive to attain profitable operations that are sustainable by executing a business plan that continues to focus on revenue growth, improving overall gross margins, maintaining discipline over operating expenses, managing working capital requirements, and securing additional financing to fund operations as needed until the Corporation does achieve profitable operations that are sustainable. Failure to implement this plan could have a material adverse effect on the Corporation’s financial condition and or results of operations.
3. Significant accounting policies:
Except as described below, the accounting policies in these condensed consolidated interim financial statements are the same as those applied in the Corporation’s consolidated financial statements as at and for the year ended December 31, 2021.
The Corporation has initially adopted Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37), effective January 1, 2022. A number of other new standards are also effective January 1, 2022 but they did not have a material impact on the Corporation's financial statements.
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)
IAS 37 does not specify which costs are included as a cost of fulfilling a contract when determining whether a contract is onerous. The IASB’s amendments address this issue by clarifying that the "costs of fulfilling a contract" comprise both:
7
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
3. Significant accounting policies (cont'd):
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37) (cont'd)
•the incremental costs – e.g. direct labour and materials; and
•an allocation of other direct costs – e.g. an allocation of the depreciation charge for an item of PPE used in fulfilling the contract.
The amendments are effective for annual periods beginning on or after January 1, 2022 and apply to contracts existing at the date when the amendments are first applied. At the date of initial application of the amendments to IAS 37, the cumulative effect of applying the amendments is recognized as an opening balance adjustment to retained earnings or other component of equity, as appropriate. The comparatives are not restated.
On completion of a review of the Corporation's "open" contracts as of December 31, 2021, it was determined that on adoption of the Amendments to IAS 37 on January 1, 2022, additional onerous contract costs of $1,200,000 were recognized as an opening balance adjustment to accumulated deficit. As of June 30, 2022, total onerous contract cost provisions of $1,500,000 have been accrued in provisions and other current liabilities.
4. Critical judgments in applying accounting policies and key sources of estimation uncertainty:
Critical judgments in applying accounting policies:
Critical judgments that management has made in the process of applying the Corporation’s accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements are limited to management’s assessment of the Corporation’s ability to continue as a going concern (note 2(e)).
Key sources of estimation uncertainty:
Key assumptions concerning the future and other key sources of estimation uncertainty that have significant risk of resulting in a material adjustment to the reported amount of assets, liabilities, income and expenses within the next fiscal year include the following: revenue recognition, asset impairment, warranty provision, inventory provision, financial assets including impairment of trade receivables, and employee future benefits. These assumptions are unchanged in these condensed consolidated interim financial statements and are the same as those applied in the Corporation’s consolidated financial statements as at and for the year ended December 31, 2021.
5. Trade and other receivables:
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Trade accounts receivable | $ | 20,463 | $ | 19,423 | ||||
Other receivables | 5,194 | 6,586 | ||||||
Contract assets | 23,554 | 20,386 | ||||||
$ | 49,211 | $ | 46,395 |
8
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
5. Trade and other receivables (cont'd):
Contract assets
Contract assets primarily relate to the Corporation's rights to consideration for work completed but not billed as at June 30, 2022 for engineering services and technology transfer services.
June 30, | |||||
Contract assets | 2022 | ||||
At January 1, 2022 | $ | 20,386 | |||
Additions to contract assets | 8,341 | ||||
Invoiced during the period | (5,173) | ||||
At June 30, 2022 | $ | 23,554 |
Information about the Corporation's exposure to credit and market risks, and impairment losses for trade receivables and contract assets is included in note 22.
6. Inventories:
During the three and six months ended June 30, 2022, the write-down of inventories to net realizable value amounted to $862,000 and $1,003,000 (2021 – $552,000 and $659,000) and the reversal of previously recorded write-downs amounted to $3,000 and $5,000 (2021 – $7,000 and $38,000), resulting in a net write-down of $859,000 and $998,000 (2021 – $545,000 and $621,000). Write-downs and reversals are included in either cost of product and service revenues or research and product development expense, depending upon the nature of inventory.
7. Property, plant and equipment:
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Property, plant and equipment owned | $ | 52,828 | $ | 43,855 | ||||
Right-of-use assets | 13,017 | 12,206 | ||||||
$ | 65,845 | $ | 56,061 |
Property, plant, and equipment owned:
June 30, | December 31, | |||||||
Net carrying amounts | 2022 | 2021 | ||||||
Computer equipment | $ | 1,425 | $ | 1,599 | ||||
Furniture and fixtures | 1,105 | 762 | ||||||
Leasehold improvements | 1,435 | 1,518 | ||||||
Production and test equipment | 48,863 | 39,976 | ||||||
$ | 52,828 | $ | 43,855 |
Right-of-use assets:
The Corporation leases certain assets under lease agreements, comprising primarily of leases of land and buildings, office equipment, and vehicles (note 13).
9
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
7. Property, plant and equipment (cont'd):
June 30, | December 31, | |||||||
Net carrying amounts | 2022 | 2021 | ||||||
Property | $ | 12,654 | $ | 11,837 | ||||
Equipment | 121 | 139 | ||||||
Vehicle | 242 | 230 | ||||||
$ | 13,017 | $ | 12,206 |
8. Intangible assets:
June 30, | December 31, | ||||||||||
2022 | 2021 | ||||||||||
Intellectual property acquired from United Technology Corporation | $ | — | $ | 74 | |||||||
ERP management reporting software system | 3,332 | 3,631 | |||||||||
Intellectual property acquired from Ballard Motive Solutions | 16,300 | 17,083 | |||||||||
$ | 19,632 | $ | 20,788 |
Accumulated | Net carrying | ||||||||||
Balance | Cost | amortization | amount | ||||||||
At January 1, 2021 | $ | 59,855 | $ | 56,091 | $ | 3,764 | |||||
Acquisition of intangible assets | 17,279 | — | 17,279 | ||||||||
Additions to intangible assets | 1,543 | — | 1,543 | ||||||||
Amortization expense | — | 1,798 | (1,798) | ||||||||
At December 31, 2021 | 78,677 | 57,889 | 20,788 | ||||||||
Additions to intangible assets | 459 | — | 459 | ||||||||
Amortization expense | — | 1,615 | (1,615) | ||||||||
At June 30, 2022 | $ | 79,136 | $ | 59,504 | $ | 19,632 |
Amortization expense on intangible assets is allocated to research and product development expense or general and administration expense depending upon the nature of the underlying assets. For the three and six months ended June 30, 2022, amortization expense of $766,000 and $1,615,000 (2021 - $337,000 and $676,000) was recorded.
Additions of $459,000 (2021 - $747,000) to intangible assets in 2022 comprise a new Phase 3 of enhancements to the ERP management reporting software system.
9. Investments:
June 30, | December 31, | |||||||||||||
2022 | 2021 | |||||||||||||
Investment in Weichai Ballard JV | $ | 29,898 | $ | 28,982 | ||||||||||
Investment in Synergy Ballard JVCo | — | — | ||||||||||||
Investment in Forsee Power | 13,503 | 33,335 | ||||||||||||
Investment in Wisdom Motor | 10,000 | — | ||||||||||||
Investment in HyCap Fund I SCSp | 7,286 | 7,636 | ||||||||||||
Investment in Clean H2 Fund | 1,331 | 339 | ||||||||||||
$ | 62,018 | $ | 70,292 |
10
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
9. Investments (cont'd):
For the three and six months ended June 30, 2022, the Corporation recorded $1,608,000 and $3,846,000, (2021 - $4,243,000 and $7,197,000) in equity loss of investment in JV and associates, comprising of equity loss in Weichai Ballard Hy-Energy Technologies Co., Ltd. ("Weichai Ballard JV") of $1,608,000 and $3,846,000 (2021 - $4,203,000 and $7,157,000) and equity loss in Guangdong Synergy Ballard Hydrogen Power Co., Ltd. ("Synergy Ballard JVCo") of $nil (2021 - $40,000). The Corporation also made contributions of $6,394,000 to Weichai Ballard JV.
For the six months ended June 30, 2022, the Corporation made total contributions to its various long-term investments of $12,306,000 comprised of: $10,000,000 to Wisdom Group Holdings Ltd,; $899,000 to HyCap investment fund; and $1,407,000 to Clean H2 investment fund.
Increase (decrease) in fair value due to MTM and | Three months ended June 30, | Six months ended June 30, | ||||||||||||
foreign exchange (note 22) | 2022 | 2021 | 2022 | 2021 | ||||||||||
Short-term investment - Green Hydrogen | — | 1,844 | 14 | 1,844 | ||||||||||
Investment in Forsee Power | (11,434) | — | (19,832) | — | ||||||||||
Investment in HyCap Fund I SCSp | (1,050) | — | (1,249) | — | ||||||||||
Investment in Clean H2 Fund | (424) | — | (415) | — | ||||||||||
Increase (decrease) in fair value of investments | (12,908) | 1,844 | (21,482) | 1,844 |
Investment in Weichai Ballard JV
June 30, | December 31, | |||||||
Investment in Weichai Ballard JV | 2022 | 2021 | ||||||
Beginning balance | $ | 28,982 | $ | 27,561 | ||||
Capital contribution to JV | 6,394 | 12,351 | ||||||
Recognition of 49% profit on inventory not yet sold to third party, net | 392 | 3,909 | ||||||
Equity in loss | (3,846) | (16,084) | ||||||
Cumulative translation adjustment due to foreign exchange | (2,024) | 1,245 | ||||||
Ending balance | $ | 29,898 | $ | 28,982 |
Weichai Ballard JV is an associate in which the Corporation has significant influence and a 49% ownership interest. During the three and six months ended June 30, 2022, the Corporation made committed capital contributions of $3,115,000 and $6,394,000, (RMB 20,825,000 and 41,650,000 equivalent) (2021 - $3,037,000 and $6,051,000 (RMB 19,600,000 and 39,200,000 equivalent)) to Weichai Ballard JV. As at June 30, 2022, as specified in the Equity Joint Venture Agreement, the Corporation is currently committed to its last remaining capital contribution to Weichai Ballard JV of $3,107,000 (RMB 20,825,000) in 2022.
The following tables summarize the financial information of Weichai Ballard JV as included in its own financial statements as of June 30, 2022, adjusted for foreign exchange differences, the application of the Corporation's accounting policies and the Corporation's incorporation costs.
11
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
9. Investments (cont'd):
Investment in Weichai Ballard JV (cont'd)
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Percentage ownership interest (49%) | ||||||||
Current assets | $ | 103,255 | $ | 104,907 | ||||
Non-current assets | 160 | 2,339 | ||||||
Current liabilities | (31,618) | (36,385) | ||||||
Non-current liabilities | (2,650) | (2,861) | ||||||
Net assets (100%) | 69,147 | 68,000 | ||||||
Corporation's share of net assets (49%) | 33,882 | 33,320 | ||||||
Incorporation costs | 324 | 324 | ||||||
Elimination of unrealized profit on downstream sales, net of sales to third party | (4,308) | (4,662) | ||||||
Carrying amount of investment in Weichai Ballard JV | $ | 29,898 | $ | 28,982 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
Revenue (100%) | $ | 869 | $ | 5,084 | $ | 5,059 | $ | 5,245 | ||||||
Net loss (100%) | 3,281 | 8,577 | 7,848 | 14,604 | ||||||||||
Corporation's share of net loss (49%) | $ | 1,608 | 4,203 | $ | 3,846 | $ | 7,157 |
Investment in Synergy Ballard JVCo
June 30, | December 31, | |||||||
Investment in Synergy Ballard JVCo | 2022 | 2021 | ||||||
Beginning balance | $ | — | $ | — | ||||
Recognition of 10% profit on inventory sold to third party, net | — | 56 | ||||||
Equity in loss | — | (56) | ||||||
Ending balance | $ | — | $ | — |
Synergy Ballard JVCo is an associate in which the Corporation has significant influence and a 10% ownership interest. During the three and six months ended June 30, 2022, the Corporation made committed capital contributions of $nil (2021 - $nil) to Synergy Ballard JVCo.
Investment in Forsee Power
The Corporation has entered into a strategic partnership with Forsee Power in which it has an ownership interest of 9.77%.
For the three and six months ended June 30, 2022, changes in fair value and foreign exchange adjustments totalling ($11,434,000) and ($19,832,000) were recognized as an unrealized loss in the consolidated statement of loss and comprehensive loss and included in finance income (loss) and other (note 17), resulting in net fair value investment in Forsee Power of $13,503,000 as of June 30, 2022, compared to net fair value of $33,335,000 as of December 31, 2021.
12
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
9. Investments (cont'd):
Investment in Wisdom Motor
In June 2022, the Corporation also acquired a non-controlling interest in Wisdom Group Holdings Ltd. ("Wisdom Motor"), a Cayman Island holding company with operating subsidiaries that intend to design and manufacture zero emission commercial vehicles primarily for Hong Kong.
On June 15, 2022, the Corporation purchased 898 Series A preferred shares for consideration of $10,000,000, resulting in an ownership interest of 7.169% in Wisdom Motor. The Corporation also appointed a board member to the Wisdom Motor board of directors. The Series A funds will support Wisdom’s organizational growth, R&D, and manufacturing platforms, including the expansion and development of its hydrogen zero emission fuel cell truck, bus, and specialty vehicle offerings for international markets.
Investment in Hydrogen Funds
HyCap Fund
The Corporation is a limited partner in HyCap Fund I SCSp ("HyCap"), a newly-created hydrogen infrastructure and growth equity fund. The Corporation has committed to investing £25,000,000 ($30,260,000) into this fund. In the three months ended December 31, 2021, the Corporation made initial contributions of £5,665,000 ($7,610,000). In the three and six months ended June 30, 2022, the Corporation made additional contributions of £nil and £687,000 ($nil and $899,000).
For the three and six months ended June 30, 2022, changes in fair value and foreign exchange adjustments totalling ($1,050,000) and ($1,249,000) were recognized as an unrealized loss in the consolidated statement of loss and comprehensive loss and included in finance income (loss) and other (note 17), resulting in net fair value investment in HyCap of $7,286,000 as of June 30, 2022, compared to net fair value of $7,636,000 as of December 31, 2021.
Clean H2 Infrastructure Fund
The Corporation is a limited partner in Clean H2 Infrastructure Fund I ("Clean H2"), another newly-created hydrogen infrastructure and growth equity fund. The Corporation has committed to investing €30,000,000 ($31,161,000) into this fund. In the three months ended December 31, 2021, the Corporation made its initial contribution of €300,000 ($337,000). In the three and six months ended June 30, 2022, the Corporation made additional or (received) return of contributions of €(142,000) and €1,274,000 ($(150,000) and $1,407,000).
For the three and six months ended June 30, 2022, changes in fair value and foreign exchange adjustments totalling ($424,000) and ($415,000) were recognized as an unrealized loss in the consolidated statement of loss and comprehensive loss and included in finance income (loss) and other (note 17), resulting in net fair value investment in Clean H2 of $1,331,000 as of June 30, 2022, compared to net fair value of $339,000 as of December 31, 2021.
13
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
10. Trade and other payables:
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Trade accounts payable | $ | 17,691 | $ | 13,689 | ||||
Compensation payable | 10,919 | 15,830 | ||||||
Other liabilities | 6,489 | 9,130 | ||||||
Taxes payable | 237 | 906 | ||||||
$ | 35,336 | $ | 39,555 |
11. Deferred revenue:
Deferred revenue (i.e. contract liabilities) represents cash received from customers in excess of revenue recognized on uncompleted contracts.
June 30, | December 31, | |||||||
Deferred revenue | 2022 | 2021 | ||||||
Beginning balance | $ | 12,109 | $ | 9,888 | ||||
Additions to deferred revenue | 11,380 | 23,618 | ||||||
Revenue recognized during the period | (11,827) | (21,397) | ||||||
Ending balance | $ | 11,662 | $ | 12,109 |
12. Provisions and other liabilities:
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Restructuring provision | $ | 53 | $ | 5 | ||||
Warranty provision | 9,910 | 8,712 | ||||||
Onerous contracts provision | 1,500 | 300 | ||||||
Contingent consideration | 11,814 | 19,240 | ||||||
Current | $ | 23,277 | $ | 28,257 | ||||
Contingent consideration | $ | 5,144 | $ | 7,018 | ||||
Decommissioning liabilities provision | 1,868 | 1,877 | ||||||
Non-Current | $ | 7,012 | $ | 8,895 |
Onerous Contracts Provision
On completion of a review of the Corporation's "open" contracts as of December 31, 2021, it was determined that on adoption of the Amendments to IAS 37 on January 1, 2022, additional onerous contract costs of $1,200,000 were recognized as an opening balance adjustment to accumulated deficit. As of June 30, 2022, total onerous contract costs of $1,500,000 have been accrued in provisions and other current liabilities.
14
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
12. Provisions and other liabilities (cont'd):
Contingent Consideration
As part of the acquisition of Ballard Motive Solutions in 2021, total consideration includes earn-out cash consideration payable by the Corporation, based on the achievement of certain performance milestones over a three year period from the acquisition date. These future cash payments of up to $27,000,000 are contingently based on the successful attainment of numerous milestone objectives over a three-year period discounted for the estimated probability of successful occurrence and for the timing delay in receiving the cash payments.
During the three and six months ended June 30, 2022, the Corporation made cash payments totalling $4,500,000 and $9,300,000 for successful achievement of three and six performance milestones.
Other: Decommissioning liabilities
A provision for decommissioning liabilities for the Corporation’s head office building is related to estimated site restoration obligations at the end of the lease term. As at June 30, 2022, total decommissioning liabilities amounted to $1,868,000 (December 31, 2021 - $1,877,000), resulting from accretion of ($9,000) (2021 - $73,000).
13. Lease liability:
The Corporation leases certain assets under lease agreements. The lease liability consists primarily of leases of land and buildings, office equipment and vehicles. The leases have interest rates ranging from 2.45% to 7.39% per annum and expire between July 2022 and June 2032.
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Property | $ | 3,563 | $ | 3,117 | ||||
Equipment | 37 | 38 | ||||||
Vehicle | 49 | 83 | ||||||
Lease Liability, Current | $ | 3,649 | $ | 3,238 | ||||
Property | $ | 13,496 | $ | 13,647 | ||||
Equipment | 82 | 105 | ||||||
Vehicle | 151 | 130 | ||||||
Lease Liability, Non-Current | $ | 13,729 | $ | 13,882 | ||||
Lease Liability | $ | 17,378 | $ | 17,120 |
During the six months ended June 30, 2022, the Corporation made principal payments on lease liabilities totalling $1,599,000 (2021 - $1,384,000). The Corporation is committed to future minimum lease payments (comprising principal and interest) as follows:
Maturity Analysis | June 30, | ||||
2022 | |||||
Less than one year | $ | 4,755 | |||
Between one and five years | 13,944 | ||||
More than five years | 1,647 | ||||
Total undiscounted lease liabilities | $ | 20,346 |
15
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
13. Lease liability (cont'd):
Deferred gains on closing of finance lease agreements are amortized over the lease term. At June 30, 2022, the outstanding deferred gain was $1,110,000 (December 31, 2021 – $1,318,000).
14. Equity:
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
Option Expense | $ | 1,618 | $ | 1,547 | $ | 3,071 | $ | 3,050 | ||||||
DSU Expense | 134 | 293 | 273 | 452 | ||||||||||
RSU Expense | 1,027 | 695 | 1,765 | 1,371 | ||||||||||
Total Share-based Compensation | $ | 2,779 | $ | 2,535 | $ | 5,109 | $ | 4,873 |
(a) Share capital:
During the six months ended June 30, 2021, the Corporation completed a bought deal offering with a syndicate of financial institutions for 14,870,000 shares of the Corporation at $37.00 per share, resulting in gross offering proceeds of $550,190,000 and net offering proceeds of $527,291,000.
At June 30, 2022, 298,168,858 common shares were issued and outstanding.
(b) Share options:
Options for common shares | |||||
At January 1, 2022 | 4,041,567 | ||||
Options granted | 1,087,689 | ||||
Options exercised | (201,821) | ||||
Options cancelled | (122,729) | ||||
At June 30, 2022 | 4,804,706 |
During the three and six months ended June 30, 2022, compensation expense of $1,618,000 and $3,071,000 (2021 – $1,547,000 and $3,050,000) was recorded in net loss, based on the grant date fair value of the options recognized over the vesting period.
During the three and six months ended June 30, 2022, 63,081 and 201,821 (2021 – 123,010 and 456,846) options were exercised for a equal amount of common shares for proceeds of $210,000 and $682,000 (2021 – $528,000 and $2,104,000).
During the three and six months ended June 30, 2022, options to purchase 68,896 and 1,087,689 (2021 – 71,972 and 383,456) common shares were granted with a weighted average fair value of $0.25 and $5.15 (2021 – $1.66 and $12.17). All options have a term of seven years from the date of grant unless otherwise determined by the board of directors. One-third of the options vest and may be exercised, at the beginning of each of the second, third, and fourth years after granting.
The fair values of the options granted during the period were determined using the Black-Scholes valuation model under the following weighted average assumptions:
16
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
14. Equity:
(b) Share options (cont'd):
Six months ended June 30, | ||||||||
2022 | 2021 | |||||||
Expected life | 4 years | 4 years | ||||||
Expected dividends | Nil | Nil | ||||||
Expected volatility | 68 | % | 67 | % | ||||
Risk-free interest rate | 2 | % | 1 | % |
As at June 30, 2022, options to purchase 4,804,706 common shares were outstanding (2021 - 4,021,023).
(c) Deferred share units:
DSUs for common shares | |||||
At January 1, 2022 | 756,223 | ||||
DSUs granted | 33,164 | ||||
DSUs exercised | (126,862) | ||||
At June 30, 2022 | 662,525 |
Deferred share units (“DSUs”) are granted to the board of directors and executives. Eligible directors must elect to receive at least half of their annual retainers and executives may elect to receive all or part of their annual bonuses in DSUs. Each DSU is redeemable for one common share, net of statutory tax withholdings, after the director or executive ceases to provide services to the Corporation. During the three and six months ended June 30, 2022, $134,000 and $273,000 (2021 - $293,000 and $452,000) of compensation expense was recorded in net loss relating to 21,278 and 33,164 (2021 - 5,374 and 19,266) DSUs granted during the period.
During the same period, nil and 126,862 (2021 - nil and 99,761) DSUs were exercised, net of applicable taxes, which resulted in in the issuance of nil and 58,990 common shares (2021 - nil and 46,388), resulting in an impact on equity of $nil and $753,000 (2021 - $nil and $1,290,000).
As at June 30, 2022, 662,525 deferred share units were outstanding (2021 - 739,536).
(d) Restricted share units:
Restricted share units (“RSUs”) are granted to employees and executives. Each RSU is convertible into one common share, net of statutory tax withholdings. The RSUs vest after a specified number of years from date of issuance and, under certain circumstances, are contingent on achieving specified performance criteria. A performance factor adjustment is made if there is an over-achievement (or under-achievement) of specified performance criteria, resulting in additional (or fewer) RSUs being converted.
RSUs for common shares | |||||
At January 1, 2022 | 966,220 | ||||
RSUs granted | 436,840 | ||||
RSU performance factor adjustment | (29,004) | ||||
RSUs exercised | (443,121) | ||||
RSUs forfeited | (12,120) | ||||
At June 30, 2022 | 918,815 |
17
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
14. Equity:
(d) Restricted share units (cont'd):
During the three and six months ended June 30, 2022, compensation expense of $1,027,000 and $1,765,000 (2021 – $695,000 and $1,371,000) was recorded in net loss.
During the three and six months ended June 30, 2022, 2,168 and 443,121 RSUs (2021 - 2,625 and 316,296) were exercised, net of applicable taxes, which resulted in the issuance of 1,104 and 207,752 common shares (2021 - 1,220 and 152,001) resulting in an impact on equity of $8,000 and $2,420,000 (2021 - $25,000 and $4,285,000).
As at June 30, 2022, 918,815 restricted share units were outstanding (2021 - 934,718).
15. Disaggregation of revenue:
The Corporation's operations and main revenue streams are the same as those described in the Corporation's consolidated financial statements as at and for the year ended December 31, 2021. The Corporation's revenue is derived from contracts with customers.
In the following table, revenue is disaggregated by geographical market (based on location of customer), by market application, and by timing of revenue recognition.
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
Geographical markets | ||||||||||||||
China | $ | 2,802 | $ | 7,940 | $ | 6,054 | $ | 12,751 | ||||||
Europe | 11,994 | 11,501 | 21,564 | 21,431 | ||||||||||
North America | 5,743 | 4,443 | 10,180 | 7,471 | ||||||||||
Other | 393 | 1,077 | 4,181 | 927 | ||||||||||
$ | 20,932 | $ | 24,961 | $ | 41,979 | $ | 42,580 | |||||||
Market application | ||||||||||||||
Heavy Duty Motive | $ | 10,715 | $ | 11,024 | $ | 17,616 | $ | 17,902 | ||||||
Material Handling | 834 | 1,971 | 3,063 | 3,718 | ||||||||||
Stationary Power Generation | 2,027 | 2,819 | 6,152 | 3,573 | ||||||||||
Technology Solutions | 7,356 | 9,147 | 15,148 | 17,387 | ||||||||||
$ | 20,932 | $ | 24,961 | $ | 41,979 | $ | 42,580 | |||||||
Timing of revenue recognition | ||||||||||||||
Products transferred at a point in time | $ | 12,956 | $ | 15,272 | $ | 25,534 | $ | 24,187 | ||||||
Products and services transferred over time | 7,976 | 9,689 | 16,445 | 18,393 | ||||||||||
$ | 20,932 | $ | 24,961 | $ | 41,979 | $ | 42,580 |
18
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
16. Other expense:
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
Net impairment loss on trade receivables | $ | — | $ | 49 | $ | — | $ | 49 | ||||||
Acquisition related costs | 372 | — | 490 | — | ||||||||||
Restructuring costs | 67 | 33 | 87 | 138 | ||||||||||
$ | 439 | $ | 82 | $ | 577 | $ | 187 |
Net impairment loss on trade receivables of $49,000 for the three and six months ended June 30, 2021 relates to amounts no longer considered to be collectible. In the event that the Corporation is able to recover on an impaired trade receivable, the recovered amount is recognized in the period of recovery as a reversal of the impairment loss.
Acquisition related costs of $372,000 and $490,000 for the three and six months ended June 30, 2022 (2021 - $nil) consist primarily of legal, advisory, and transaction-related costs incurred on ongoing corporate development activity.
Restructuring expense of $67,000 and $87,000 for the three and six months ended June 30, 2022 (2021 - $33,000 and $138,000) relates primarily to cost reduction initiatives.
17. Finance income and expense:
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
Employee future benefit plan expense | $ | (20) | $ | (32) | $ | (40) | $ | (65) | ||||||
Pension administration expense | (12) | — | (99) | (13) | ||||||||||
Investment income | 2,773 | 1,003 | 3,907 | 1,739 | ||||||||||
Other loss | (56) | (62) | (100) | (91) | ||||||||||
Mark-to-market gain (loss) on financial assets (notes 9 & 22) | (12,908) | 1,844 | (21,482) | 1,844 | ||||||||||
Foreign exchange gain ( loss) | (2,900) | 923 | (2,700) | 1,284 | ||||||||||
Government levies | — | (400) | (100) | (600) | ||||||||||
Finance income (loss) and other | $ | (13,123) | $ | 3,276 | $ | (20,614) | $ | 4,098 | ||||||
Finance expense | $ | (308) | $ | (330) | $ | (655) | $ | (646) |
18. Discontinued operations:
The Ballard Unmanned Systems subsidiary has been classified and accounted for as a discontinued operation. The historic operating results of the UAV market for 2021 have been removed from continued operating results and are instead presented separately in the statement of comprehensive loss as income (loss) from discontinued operations.
19. Related party transactions:
Related parties include shareholders with a significant ownership interest in the Corporation, including its subsidiaries and affiliates, and the Corporation’s equity accounted investees: Weichai Ballard JV and Synergy Ballard JVCo (note 9).
19
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
19. Related party transactions (cont'd):
For the three and six months ended June 30, 2022, related party transactions and balances with the Corporation's 49% owned equity accounted investee, Weichai Ballard JV, were as follows:
June 30, | December 31, | |||||||||||||
Balances with related party - Weichai Ballard JV | 2022 | 2021 | ||||||||||||
Trade and other receivables | $ | 11,875 | $ | 10,794 | ||||||||||
Investments | 29,898 | 28,982 | ||||||||||||
Deferred revenue | 2,282 | 2,730 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
Transactions during the period with Weichai Ballard JV | 2022 | 2021 | 2022 | 2021 | ||||||||||
Revenues | $ | 2,674 | $ | 7,545 | $ | 5,927 | $ | 12,218 | ||||||
Cost of goods sold and operating expense | 852 | $ | — | 1,099 | — |
For the three and six months ended June 30, 2022, related party transactions and balances with the Corporation's 10% owned equity accounted investee, Synergy Ballard JVCo, were as follows:
June 30, | December 31, | |||||||||||||
Balances with related party - Synergy Ballard JVCo | 2022 | 2021 | ||||||||||||
Trade and other receivables | $ | 99 | $ | 99 | ||||||||||
Investments | — | — | ||||||||||||
Deferred revenue | — | 16 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
Transactions during the period with Synergy Ballard JVCo | 2022 | 2021 | 2022 | 2021 | ||||||||||
Revenues | $ | — | $ | 317 | $ | — | $ | 412 |
20. Supplemental disclosure of cash flow information:
Six months ended June 30, | ||||||||||||||
Non-cash financing and investing activities: | 2022 | 2021 | ||||||||||||
Compensatory shares | $ | 894 | $ | 698 |
21. Operating segments:
The Corporation operates in a single segment, Fuel Cell Products and Services, which consists of the sale and service of PEM fuel cell products for the power product markets of Heavy Duty Motive (consisting of bus, truck, rail and marine applications), Material Handling and Stationary Power Generation, as well as the delivery of Technology Solutions including engineering services, technology transfer and the licensing and sale of the Corporation’s extensive intellectual property portfolio and fundamental knowledge for a variety of fuel cell applications.
The results of Ballard Motive Solutions are included in the Technology Solutions or Heavy Duty Motive market depending on the nature of the contracted revenue.
20
BALLARD POWER SYSTEMS INC. Notes to Condensed Consolidated Interim Financial Statements Three and six months ended June 30, 2022 and 2021 Unaudited (Tabular amounts expressed in thousands of U.S. dollars, except number of shares) | ||
22. Financial Instruments:
(a) Fair value:
The Corporation’s financial instruments consist of cash and cash equivalents, short-term investments, trade and other receivables, investments, and trade and other payables. The fair values of cash and cash equivalents, trade and other receivables, and trade and other payables approximate their carrying values because of the short-term nature of these instruments.
Short-term investments comprise term deposits with terms of greater than 90 days and a previously held investment in a Danish public company held by Ballard Power Systems Europe ("BPSE"). BPSE had an investment of approximately $5,000 in a Danish private company, Green Hydrogen Systems A/S which recently issued an initial public offering on the Danish stock exchange in June 2021. On June 17, 2021, BPSE received 259,551 shares in the new publicly-owned investment company (after relinquishing its shares in the previous privately-held company) initially valued at $1,681,000. During the six months ended June 30, 2022, the Corporation sold its remaining Green Hydrogen shares for net proceeds of $1,010,000.
Long-term investments (note 9) comprise newly-created hydrogen infrastructure and growth equity funds: HyCap Fund and Clean H2 Fund, and an investment in Forsee Power and Wisdom Motor, as well as equity-accounted investments: Weichai Ballard JV and Synergy Ballard JVCo. Changes in fair value and foreign exchange adjustments are recognized as gains or losses in the consolidated statement of loss and comprehensive loss and included in finance income (loss) and other (note 17). During the three and six months ended June 30, 2022, the Corporation recognized mark to market and foreign exchange losses of ($12,908,000) and ($21,482,000) (2021 - $1,844,000 and $1,844,000).
(b) Credit risk:
IFRS 9 Financial Instruments requires impairment losses to be recognized based on “expected losses” that will occur in the future, incorporating forward looking information relating to defaults and applies a single ECL impairment model that applies to all financial assets within scope. ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Corporation in accordance with the contract and the cash flows that the Corporation expects to receive). Under IFRS 9, at each reporting date the Corporation is required to assess whether financial assets carried at amortized cost are credit-impaired.
As a result of this review for the three and six months ended June 30, 2022, the Corporation did not recognize any additional estimated ECL impairment losses.
21